2008 - L E Lundbergföretagen · in 2007. The total vacancy rate in February 2009 was about 1.9%, comprising 0.7% for residential properties and 2.6% for commercial premises. A new

2008

2008

Contents

Outline of Lundbergs 2

The year in brief 3

The president’s review 4

Lundbergs as an investment company 7

Net asset value 10

Cash flow 11

The Lundberg share 12

Fastighets AB L E Lundberg 14

Hufvudstaden 18

Holmen 20

Cardo 22

Industrivärden 24

NCC 25

Indutrade 26

Husqvarna 26

Handelsbanken 27

Sandvik 27

29

Report of the Board of Directors 30

Definitions 36

Group

Financial statements 37

Notes 40

Parent Company

Financial statements 63

Notes 66

Proposed distribution of profits 72

Auditor’s report 73

Corporate Governance Report 74

Board of Directors 78

Senior executives 80

Annual General Meeting and Financial Reports 82

Addresses 83

Subsidiaries and other major shareholders

Annual report

Corporate governance

This is a translation of the original Swedish Annual Report. In the event of differences between the English translation and the Swedish original, the Swedish Annual Report shall prevail.

28 (52)

45 (88)

Industrivärden

NCC

Husqvarna

Hufvudstaden

Holmen

Cardo

Fastighets AB L E Lundberg100

41 (41)

10 (21)

11 (15)

1.8 (1.8)

Sandvik 1.2 (1.2)

Indutrade 10 (10)

Handelsbanken

4.3 (13.1)

Principal shareholder Other major shareholdings

Lundbergs

Outline of Lundbergs

Lundbergs is an investment company that manages and develops a number of companies by being an active, long-term owner.

The portfolio includes the wholly owned unlisted real estate company, Fastighets AB L E Lundberg, and the publicly traded subsidiaries and associated companies Cardo, Holmen, Hufvudstaden and NCC. Lundberg also has major

shareholdings in Handelsbanken, Husqvarna, Industrivärden, Indutrade and Sandvik.

Lundbergs’ objective is to generate a return on invested capital over time that substantially exceeds the yield on a risk-free interest-bearing investment.

35.4%

Properties inFastighets AB L E Lundberg

Cardo 6.5%

Holmen 15.3%

Hufvudstaden 19.9%

Indutrade 1.4%

Handelsbanken 4.7%Husqvarna 2.4%

Sandvik 2.7%

Industrivärden 8.8%NCC 2.2%

Other 0.7%

Proportion of Lundbergs’ marked-valued assets,

approx. SEK 26 billion, on February 17, 2009

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The Lundberg share

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The figures denote the percentage of share capital (voting rights) held on February 17, 2009.

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•OnDecember31,2008,netassetvalueafterdeferredtax amounted to SEK 22.1 billion (SEK 356 per share), com pared with SEK 30.4 billion (SEK 490 per share) at December 31, 2007. The corresponding values on February 17, 2009 were SEK 21.4 billion (SEK 345 per share).

•ConsolidatednetsalesamountedtoSEK22,350m.(23,049).

•TheoperatingresultamountedtoalossofSEK1,965m. (profit: 7,934). Excluding impairment losses and un-

realized changes in value, operating profit amounted to SEK 3,186 m. (4,255).

•Aftertaxes,aconsolidatedlossofSEK2,025m. (profit: 5,010) was reported, of which minorities accounted for a profit of SEK 219 m. (2,404).

•Aloss(excludingminorities)pershareofSEK36.19(earnings: 42.02) was reported.

•TheBoardofDirectorsproposesadividendofSEK6.00(9.00) per share.

EARNINGS AND KEY DATA

2008 2007

Net asset value after deferred tax, SEK billion 22.1 30.4Net asset value per share after deferred tax, SEK 356 490

Shareholders’ equity per share attributable to Parent Company’s shareholders, SEK 329 425

Net sales, SEK m. 22,350 23,049Operating profit/loss, SEK m. -1,965 7,934 excluding impairment losses and unrealized changes in value, SEK m. 3,186 4,255Profit after tax, SEK m. -2,025 5,010 of which, minority share, SEK m. 219 2,404Earnings/loss per share, excluding minority share, SEK -36.19 42.02Dividend per share, SEK 6.00 1 9.00Debt/equity ratio 0.36 0.28Equity/assets ratio, % 53 59 1) The Board of Directors’ proposal.

The year in brief 3

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President’s review

Global financial crisisThe financial crisis that started in the US in 2007 evolved into a global crisis during 2008. Financial institutions throughout the world have suffered more or less serious consequences. The governments of countries with our largest economies have presented highly comprehensive stimulus packages to offset the severity of the crisis and save the financial system. Central banks have reduced interest rates aggressively.

The strong economic growth we experienced in large parts of the world over a period of several years was gradu-ally transformed during 2008 into stagnation or decline. The economic slowdown was particularly pronounced during the fourth quarter.

Stock markets worldwide started the year on a negative note, but some stabilization during the spring and summer was followed by a very sharp decline in the autumn. Nasdaq OMX

Stockholm finished the year down 42%, the largest decline in more than 100 years. Most industrial companies reported relatively favorable business development through the end of the third quarter, but order bookings fell sharply in the fourth quarter. The 2009 fiscal year has started weakly, with virtually total uncertainty characterizing many industrial sectors. It is clear that large sections of the Western World have undergone a period characterized by unsustainable credit expansion. The contraction of the credit market that must now take place is a painful process with very serious consequences for banks, companies and private households. It will take time before the proper balance can be restored and we, once again, are able to see our economies reflecting steady growth. In general, I believe the world’s stock markets have discounted this scenario and, therefore, there is reason to believe that the markets have bottomed out or are approaching the low point.

Lundbergs’ performanceThe total return to Lundberg’s shareholders during 2008 amounted to minus 15%. While we are definitely not satisfied with a negative total return, we performed relatively well in comparison with other major listed Swedish investment companies. All the other companies reported results that were even worse, with some showing total capital return deficits of 50 to 60%. Our well-balanced portfolio consisting of solid companies and large property holdings was a key factor in our relatively favorable development. Over the past ten years, shareholders in Lundbergs have received an average total return of 16% annually, and have thus fared well in compari-son with those of other investment companies.

For 2008, Lundbergs reported a consolidated financial loss after tax of SEK 2,025 m. (profit: 5,010). The negative result was due to impairment losses on publicly traded shares and participations, and unrealized changes in property values. Excluding impairment losses and unrealized value changes, Lundbergs would have reported operating profit of SEK 3,186 m. (4,255).

Net asset value per share after deferred tax declined 27% during the year to SEK 356 (490). The discount on net asset value declined to about 15% (25).

Lundberg’s Board of Directors will propose that the Annual General Meeting approve a dividend of SEK 6 (9) per share. The reason for the proposal is that several of our portfolio companies are reducing their dividends this year, and we want to strengthen our cash flow and, in turn, enhance our ability to pursue the investment opportunities that we are convinced will arise in the future. For the shareholders, we believe it is more advantageous to retain a large proportion of our cash flow in the company, as opposed to distributing the funds to shareholders.

It has always been Lundberg’s philosophy to maintain low indebtedness, which has proved to be a successful principle

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over time. Our financial strength has enabled us, on many occasions, to accept challenges and act aggressively in situa-tions that were uncertain and risk-filled. As a result, we have been able to capitalize on investment opportunities that, in retrospect, have generated favorable returns. During the next few years, we believe that we will be able to take advantage of similar investment opportunities.

Our financial position at year-end 2008 remained strong. In relation to the market value of our assets, our debt amount-ed to 12% (see page 10). If our total interest-bearing net debt of SEK 3 billion were attributed totally to our property operations, the loan to value ratio for this would amount to 33%, and our publicly listed shares would be totally free of debt. Our credit rating with Standard & Poor’s, which was confirmed in January 2009, remains strong, A+, with a stable outlook.

Fastighets AB L E LundbergLundbergs’ consolidated accounts include operating profit of SEK 60 m. (1,247) reported by Fastighets AB L E Lundberg. The decline was due to lower unrealized values in the property portfolio, which were estimated at 4.4% in 2008, excluding new investments. The decline was a result of a higher required yield on commercial properties.

On the other hand, earnings attributable to property management operations increased during 2008. The rental market for housing, office and retail premises remained strong during the year. Rental revenues increased, while costs for operations and maintenance remained at the same level as in 2007. The total vacancy rate in February 2009 was about 1.9%, comprising 0.7% for residential properties and 2.6% for commercial premises.

A new investment project was started during 2008 in a commercial property in central Jönköping. Investments will total about SEK 150 m. and the project is expected to be completed in late 2009. Several projects in Linköping and Norrköping are now in the analysis and planning stages and could be started in the next few years.

Portfolio companiesDuring 2008, we acquired shares for a net total of SEK 201 m., including investments in Sandvik totaling SEK 103 m., Husqvarna SEK 60 m. and Cardo SEK 38 m. In February 2009, we acquired shares in Industrivärden valued at SEK 78 m.

Holmen reported lower earnings in 2008, compared with the preceding year. Demand for newsprint was relatively favorable during the year, while a gradual decline was noted for board. Sharp price increases for timber and recovered paper were charged against earnings. Newsprint prices were under pressure and totally inadequate to offset the increased costs. Although the price of board was raised somewhat, low capacity utilization impacted earnings. During the autumn, Holmen closed the oldest paper machine at the Hallsta paper mill, and all operations were discontinued at the Wargön mill. Costs for these cutbacks were charged against earnings for the year. Plans for Holmen’s new sawmill, next to the Braviken paper mill outside Norrköping, are proceeding as planned.

Hufvudstaden’s reported earnings declined sharply in 2008 due to unrealized value changes in the property portfolio. However, earnings from property management operations con-tinued to improve as a result of higher rents and lower vacancies. The strong rental market slackened gradually during the year.

Hufvudstaden’s financial position remains strong, with a loan to value ratio corresponding to 16% of the value of its properties.

Cardo reported strong earnings in 2008. Particularly favo-rable trends were noted for door operations, and the Pump Division also reported a successful business trend. Service operations continued to account for a growing percentage of Cardo sales, which contributed to the improvement in earnings.

Cardo bought back 10% of all shares in the company during 2008, which was financed entirely by cash flow from business operations.

NCC reported favorable results in 2008. The company’s construction operations were particularly successful in Sweden, while conditions for its housing business slackened, due to the economic crisis. Order bookings declined, particu-larly during the fourth quarter. Organizational adjustments were made to meet the anticipated decline in the construction market during the next few years.

Industrivärden was impacted strongly by the negative stock market trend in 2008. The company’s net asset value declined sharply, and the total return was lower than average

5

“As always, the fundamental concern for Lundbergs is to safeguard our financial strength. Accordingly, we will adopt a cautious approach to undertaking new commitments, although we are naturally prepared to make investments within certain specific parameters.”

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19981997 199419931992199119901988

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for the equities market. Over a long period of time, however, Industrivärden has yielded a favorable return. Continued acquisitions of shares in Volvo were made during the year, and Industrivärden is now Volvo’s second largest shareholder.

Indutrade reported continued strong growth and a positive earnings trend during 2008. The growth was generated both by organically and through acquisitions.

Sandvik performed favorably during the year’s first three quarters. During the fourth quarter, however, the company was affected by the global economic slowdown, which led to lower full-year earnings.

Handelsbanken reported strong earnings in 2008. Net inter-est items and lending rose sharply, and costs were kept under good control. A smaller bank was acquired in Denmark during the year.

Although Husqvarna was impacted negatively by weak private consumption in the US and its earnings declined com-pared with the preceding year, we still believe the long-term outlook for Husqvarna remains favorable. A new CEO was appointed in the autumn. In February 2009, the Board of Direc-tors of Husqvarna announced its decision to implement a rights issue totaling approximately SEK 3 billion, pending approval by an Extraordinary General Meeting. Lundbergs supports the issue and will subscribe for its allotment.

Future outlookThe global financial crisis and serious economic recession have created widespread uncertainty concerning developments in the immediate future. 2009 is expected to be a weak year, and we cannot rule out the possibility that several more could follow.

As always, the fundamental concern for Lundbergs is to safeguard our financial strength. Accordingly, we will adopt a cautious approach to undertaking new commitments, although we are naturally prepared to make investments within certain specific parameters.

Our net debt must never exceed 50% of property values, and share investments shall never be financed by loans. We strive to maintain long-term capital maturities for our loan financing based mainly on fixed interest rates.

Our portfolio companies and our wholly owned property operations maintain high levels of quality with favorable future potential. We intend to continue our long-term efforts to develop and refine our investments in order to provide our shareholders with a healthy return on their investments.

Although the immediate future will be characterized by challenges, in a more long-term perspective, I believe and hope that Lundberg’s shareholders will continue to receive a strong total return, compared with other investment alternatives.

Stockholm, March 6, 2009

Fredrik Lundberg

President’s review

Lundbergs becomes the principal owner of Cardo. Wholly owned property portfolio is concentrated through divestment to Realia.

Structural transaction whereby Lundbergs’ construction operations are merged with Siab.

Principal shareholder in MoDo, currently Holmen.

Additional capital contribution to Östgöta Enskilda Bank.

Tetra Pak’s public offer to acquire Alfa Laval was accepted. Major new issue of shares in Östgöta Enskilda Bank.

Incentive holding is sold.

Major purchases of shares in MoDo, currently Holmen. The holding in Skaraborgsbanken was divested.

Danske Bank acquires Lundbergs’ holding in Östgöta Enskilda Bank. Lundbergs becomes a major shareholder in NCC through NCC’s acquisition of Siab. Lundbergs acquires major holding in Cardo.

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Lundbergs as an investment company

Lundbergs is an investment company that manages and develops a number of companies based on active, long-term ownership. The asset portfolio includes the wholly owned unlisted real estate company Fastighets AB L E Lundberg and the publicly traded subsidiaries and associ-ated companies Cardo, Holmen, Hufvudstaden and NCC. Lundbergs also has substantial holdings in Handelsbanken, Husqvarna, Industrivärden, Indutrade and Sandvik.

Lundbergs’ objective is to generate a return on invested capital over time that substantially exceeds the yield on a risk-free interest-bearing investment. Lundbergs’ strategy is to generate such a return and value appreciation while main-taining a low risk. Investments focus mainly on companies characterized by solid market positions, strong and stable cash flow and that have their own products and brands. The financial risk is minimized by combining low indebtedness with good access to funds. The time perspective of Lundbergs’ ownership enables the companies and their management to adopt a long-term approach in their efforts to develop market positions and competitive strengths. Long-term ownership is usually accompanied by participation on boards of directors. Lundbergs is represented on the boards of all of its portfolio companies.

AssetsLundbergs’ assets are concentrated to a few major holdings. The real estate holdings, through wholly owned subsidiary Fastighets AB L E Lundberg and shares in Hufvudstaden, represented a value of SEK 14.3 billion at the end of 2008, or 55% of the Group’s total assets. The shareholdings in Cardo, Handelsbanken Holmen, Husqvarna, Industrivärden, Indutrade, NCC and Sandvik accounted for SEK 11.7 billion or 45% of total assets.

OrganizationLundbergs long-term investment work is conducted in a small organization that represents a wealth of collective experience. The organization that focuses on investment activities and active ownership has about ten employees, including the personnel of the subsidiary L E Lundberg Kapitalförvaltning. The wholly owned real estate holdings are separated in or-ganizational terms from the Parent Company and are assigned the same status as the Group’s other major investments. Management expenses in relation to total assets amounted to 0.13% during 2008.

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As a supplement to reporting in accordance with IFRS (pages 29-72), Lundberg’s cash flow is reported in this section as if it were an investment company based on the Parent Company and the wholly owned subsidiaries. This procedure means that Fastighets AB L E Lundberg is reported as a fully consolidated company and not as a shareholding.

2007

Continued acquisition of Industrivärden shares. Participates in structural transaction when Ramirent acquires Altima.

Continued acquisitions of Handelsbanken and Sandvik shares.

Acquisition of Industrivärden shares.

Lundbergs launches a share buyback program.

Acquires 20% of Stadium through a private placement.

Divests holdings in Stadium and Ramirent. Acquires shares in Indutrade, Handelsbanken and Sandvik.

Husqvarna shares acquired. Continued acquisitions of Handelsbanken, Industrivärden and Sandvik shares.

Minor acquisitions of Sandvik, Husqvarna and Cardo shares.

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L E Lundberg Kapitalförvaltning AB L E Lundberg Kapitalförvaltning is a subsidiary that engages in securities trading. The objective of operations is to utilize macroeconomic and corporate analyses in order to generate a favorable return on capital employed. In addition to securities trading, the company accounts for the analysis and follow-up of other investments within the Group. The securities trading activities include equities and equity-related instruments. Although shares listed on Nasdaq OMX Nordic account for most of the investments, investments may also be made in other mature markets. Gross exposure, calculated as the sum total of the market value of long-term and short-term holdings, as well as exposure via derivatives, amounted to SEK 150 m. at year-end. The organization consists of five employees.

Investment activitiesDuring 2008, investments in shares totaled SEK 201 m., of which Sandvik shares accounted for SEK 103 m., Husqvarna shares for SEK 60 m. and Cardo shares for SEK 38 m. In Febru-ary 2009, Industrivärden shares at a value of SEK 78 m. were acquired.

ReturnLundbergs’ mission is to generate a healthy absolute return for its shareholders through growth in dividends and net asset value. Since 1999, net asset value per share after deferred tax has grown by an average of 10% annually. During 2008, however, net asset value after deferred tax declined 27%. Total annual return1 over the past 10 years has averaged 16%. Total annual return over the past five-year period has averaged 8%. The total return in 2008 was minus 15%. Interest-bearing net debt in relation to market-valued assets on December 31, 2008 amounted to 12% (10). The corresponding value during the past 10-year period has varied between 4 and 13%. Accordingly, the total return has been consistently generated together with low financial risk.

Net asset valueOn December 31, 2008, net asset value after deferred tax amounted to SEK 22,073 m. (SEK 356 per share), compared with SEK 30,409 m. (SEK 490 per share) at December 31, 2007; see table page 10. On February 17, 2009, estimated net asset value per share after deferred tax amounted to SEK 21,416 m. (SEK 345 per share).

Cash flowDuring the year, dividends totaling SEK 1,251 m. (2,048) were received. Funds contributed through the sale of securities amounted to SEK 129 m. (99) and through real estate opera-tions to SEK 385 m. (542). Accordingly, total funds received amounted to SEK 1,765 m. (2,689). During the year, SEK 281 m. (2,729) was invested in shares and SEK 99 m. (104) in properties. Dividends paid by Lundbergs amounted to SEK 558 m. (527). Interest-bearing assets rose SEK 379 m. and interest-bearing liabilities decreased SEK 148 m. Accordingly, interest-bearing net debt declined by SEK 527 m. to SEK 3,016 m. (3,543) at December 31, 2008. For additional information, see the cash flow report on page 11.

Lundbergs as an investment company8

1) The total return is defined as the sum total of the change in the share price and reinvested dividends.

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DISTRIBUTION OF MARKET-VALUED ASSETS AS A PERCENTAGE OF TOTAL ASSET VALUE, SEK BILLION

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PROPORTION OF SHARE CAPITAL, VOTING RIGHTS, ACQUSITION VALUE AND FAIR VALUE OF SHAREHOLDERS Feb. 17, 2009 Dec. 31, 2008 Dec. 31, 2007 % 1 Share capital Voting rights Share capital Voting rights Share capital Voting rights Cardo 41.3 41.3 41.3 41.3 36.0 36.0Handelsbanken 1.8 1.8 1.8 1.8 1.8 1.8Holmen 27.9 52.0 27.9 52.0 27.6 51.8Hufvudstaden 45.2 88.0 45.2 88.0 45.2 88.0Husqvarna 4.3 13.1 4.3 13.1 4.0 11.4Industrivärden 10.9 15.0 10.9 15.0 10.9 15.0Indutrade 10.0 10.0 10.0 10.0 10.0 10.0NCC 10.0 20.6 10.0 20.6 10.0 20.4Sandvik 1.2 1.2 1.2 1.2 1.1 1.1

Feb. 17, 2009 Dec. 31, 2008 Dec. 31, 2007 SEK m. Market value2 Acquisition value3 Market value2 Acquisition value3 Market value2 Acquisition value3

Cardo 1,656 1,277 1,277 1,277 2,171 2,021Handelsbanken 1,213 1,386 1,386 1,386 2,277 2,096Holmen 3,919 2,917 4,516 2,917 5,751 2,917Hufvudstaden 5,077 2,828 5,301 2,828 6,015 2,828Husqvarna 611 629 629 629 1,182 1,175Industrivärden 2,258 2,405 2,405 2,405 4,757 2,504Indutrade 366 265 265 265 493 288NCC 564 541 541 541 1,492 775Sandvik 694 686 686 686 1,435 1,155Other shares 145 142 146 144 291 281

TOTAL 16,502 13,075 17,151 13,078 25,863 16,040

1) The percentage of voting rights and share capital has been calculated after a deduction for treasury shares.2) Publicly traded assets have been entered at the current market price or at the exercise price for written options if the latter price is lower. 3) Where applicable, after impairment losses.

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1) The properties’ estimated fair value on December 31, 2008 was SEK 9,048 m. (9,312), of which develop ment properties accounted for SEK 212 m. (208).

2) Publicly traded assets have been entered at the current market price or at the exercise price for written options if the latter price is lower.

3) Other assets, provisions (excluding deferred tax) and liabilities have been entered at the carrying amount at December 31, 2008 and 2007.

4) Deferred tax (26.3%) has been computed on the basis of the provision to the tax deferral reserve and the difference between the market value and taxassessment value. In accordance with current legislation, deferred tax on businessrelated participations was not computed on the basis of the difference between the market value and the taxassessment value. Deferred tax on the difference between estimated market value and taxassessment value of properties in Fastighets AB L E Lundberg was assessed at a standard rate of 10%.

KEY FIGURES

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Net asset value, SEK m. 14,874 13,380 13,665 13,692 18,024 21,520 26,078 33,147 30,409 22,073Net asset value/share, SEK 196 205 220 221 290 347 421 535 490 356Changes in net asset value/share, % 38 5 7 0 32 20 21 27 8 27

Lundbergs as an investment company - Net asset value10

Dec. 31, 2008 Dec. 31, 2007CALCULATION OF NET ASSET VALUE SEK m. SEK per share SEK m. SEK per shareProperties in Fastighets AB L E Lundberg 1 9,048 146 9,312 150Cardo 2 1,277 21 2,171 35Handelsbanken 2 1,386 22 2,277 37Holmen 2 4,516 73 5,751 93Hufvudstaden 2 5,301 86 6,015 97Husqvarna 2 629 10 1,182 19Industrivärden 2 2,405 39 4,757 77Indutrade 2 265 4 493 8NCC 2 541 9 1,492 24Sandvik 2 686 11 1,435 23Other securities 2 146 2 291 5

Total marked-valued assets 26,199 423 35,175 567

Other assets, provitions and liabilities 3 3,233 52 3,759 61

Net asset value before deferred tax 22,966 370 31,416 507

Deferred tax 4 894 14 1,006 16

NET ASSET VALUE AFTER DEFERRED TAX 22,073 356 30,409 490

Market value 18,848 304 22,816 368

Price/NAV,% 85 75

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CASH FLOW REPORT

SEK m. 2008 2007 2006 2005 2004

Dividends Cardo 97 97 86 86 86 Handelsbanken 149 88 50 Holmen 281 281 260 236 881 Hufvudstaden 163 1,082 135 373 112 Husqvarna 35 14 Industrivärden 210 182 142 122 100 Indutrade 21 15 11 NCC 228 195 168 157 38 Sandvik 1 56 77 14 Other 11 17 12 19 11 1,251 2,048 877 994 1,229

Trading in securities 2 129 99 124 965 105Results, property management 338 289 252 330 433Sales, property management 47 253 147 457 28Total assets contributed 1,765 2,689 1,401 2,745 1,584

Investments, equity management Cardo 38 Handelsbanken 527 493 1,075 Holmen 344 Husqvarna 141 1,519 Industrivärden 223 701 Indutrade 288 NCC 14 Sandvik 103 459 443 252 281 2,729 937 1,630 1,045

Investments, real estate operations 99 104 86 168 106Own dividends 558 527 481 434 403Repurchase of shares 17Groupwide costs 27 28 27 27 26Taxes paid 133 163 97 125 92Financial items 137 97 81 65 151Other 13 35 30 79 43Total assets used 1,249 3,684 1,678 2,528 1,797Change in net receivable/debt 516 -995 -277 217 -213 Closing net receivable/debt -3,385 -3,901 -2,906 -2,629 -2,846 Of which, interest-bearing -3,016 -3,543 -2,519 -2,210 -2,477

1) Including redemption of shares in 2007.

2) L E Lundberg Kapitalförvaltning AB is reported net.

Lundbergs as an investment company - Cash flow report

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Lundbergs Series B SIX General Index SIX Investment and Management Index

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Series B Lundberg shares are listed on Nasdaq OMX Nordic, Large Cap. An average of 30,935 Series B shares were traded per trading day in 2008. Total share turnover amounted to 7.8 million Series B shares, corresponding to 21% of the total number of Series B shares. The lowest price paid for the share in 2008 was SEK 203 and the highest was SEK 386.

Market capitalizationLundbergs’ market capitalization at year-end was SEK 18,848 m. (22,816). The share price declined 17% during the year.

Share capital The share capital of L E Lundbergföretagen AB (publ) amount-ed to SEK 621 m. (621) during the year. On December 31, 2008, the total number of shares was 62,145,483 (62,145,483), each with a par value of SEK 10. The shares are divided into 24,000,000 (24,000,000) Series A shares, carrying ten votes

per share, 38,000,000 (38,000,000) Series B shares, carrying one vote per share, plus 145,483 (145,483) repurchased Series B shares.

Repurchase of own shares The Board has been authorized to purchase Lundberg shares. For more detailed information, see page 36.

Ownership structureLundbergs has a total of about 13,800 shareholders (14,000), of whom some 10,200 (10,500) are registered in a nominee’s name and about 3,600 (3,500) in the owner’s own name. Foreign ownership amounts to 5.2% (5.1) of the share capital.

KEY FIGURES

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Dividend per share, SEK 4.75 5.25 5.75 6.00 6.50 7.00 7.75 8.50 9.00 6.001Growth in dividend per share, % 12 11 10 4 8 8 11 10 6 33Direct return, % 5,1 4,6 3,6 3,1 2,8 2,5 2,3 1,9 2,4 2,0Total return, % 27,9 28,6 15,4 27,2 23,1 25,9 20,4 34,9 15,6 15,3Stock market price, SEK 94.00 115.00 158.00 195.00 232.50 284.50 335.50 444.00 368.00 304.00

1) Board of Director´s proposal.

Lundbergs as an investment company - The Lundberg share

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1) Board of Directors’ proposal.

DIVIDEND AND DIRECT RETURNDISTRIBUTION OF SHAREHOLDERS

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capital

Average no.of shares/

shareholders1 500 11,454 83.2 1,393,224 2.2 122501 2,000 1,651 12.0 1,746,385 2.8 1,0582,001 5,000 320 2.3 1,102,888 1.8 3,4475,001 20,000 216 1.6 2,254,122 3.6 10,43620,001 50,000 51 0.4 1,605,038 2.6 31,47150,001 66 0.5 54,043,826 87.0 818,846

TOTAL 13,758 100.0 62,145,483 100.0 4,517

TREND OF SHARE CAPITAL, SEK M.

Share capitalTotal paid in/

paidout amountAdded/

canceled Total1981 Bonus issue, 3:1 75 1001982 Bonus issue, 1:1 100 2001983 New issue 300 30 2301984 Bonus issue 1:1 230 4601989 New issue 412 46 5061990 Bonus issue 1:2 253 7592000 Cancellation of repurchased shares 909 76 6832002 Cancellation of repurchased shares 884 62 621

LARGEST SHAREHOLDERS

Feb 2009Holdings as % of

Feb 2008Holdings as % of

share capital votes share capital votesFredrik Lundberg incl. companies 52.7 89.5 52.5 89.4Louise Lindh 7.5 1.7 7.5 1.7Katarina Lundberg 7.5 1.7 7.5 1.7Robur Funds 3.8 0.8 1.2 0.3Second AP Fund 2.0 0.4 1.2 0.3FPG 1.8 0.4 2.1 0.5Fourth AP Fund 0.9 0.2 0.9 0.2SEB Funds 0.8 0.2 0.9 0.2Handelsbanken Funds 0.8 0.2 0.9 0.2Knowledge Foundation 0.6 0.1 1.1 0.3Others 21.6 4.8 24.0 5.2Subtotal 99.8 100.0 99.8 100.0

Repurchased Lundberg shares1 0.2 0.2

TOTAL 100.0 100.0 100.0 100.0

Swedish shareholders 94.8 98.8 94.9 98.9Foreign shareholders 5.2 1.2 5.1 1.1

TOTAL 100.0 100.0 100.0 100.0

1) The Company’s own holding of repurchased Lundberg shares amounts to 145 483 (145 483).

-20

-10

0

10

20

30

40

2008200720062005200420032002200120001999

%

TOTAL RETURN

Direct return – Dividend per share as a percentage of share price on December 31.

Total return – Sum total of change in share price and reinvested dividends.

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Fastighets AB L E Lundberg

Housing 48%

Office 26%

Retail 15%

Other 11%

Distribution of annual rentalrevenues by type of premises

Proportion of Lundbergs’total asset, Feb 17, 2009

Properties 35.4%

14

Housing 55%Retail 9%

Office 18%

Other 18%

Distribution of floor space by category

Chairman: Fredrik Lundberg CEO: Peter Whass www.lundbergs.se

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Fastighets AB L E Lundberg is one of the major private real estate owners in Sweden. The real estate portfolio consists largely of centrally located residential, office and retail premises. With strategic positions in several of Sweden’s expansive municipalities, the company is well positioned for continued strong growth.

The real estate holdings include 149 wholly or jointly owned investment properties in 15 municipalities through-out central and southern Sweden, with particular focus on major metropolitan areas and university cities. The portfolio also includes about 70 development objects. Most of the structures in the real estate portfolio were built during the construction-intensive years of the 1960s and 1970s, and consist largely of structures built on a proprietary basis. The division between residential and commercial properties is relatively even at 48% and 52%, respectively, of rental value.

Business concept and strategyFastighets AB L E Lundbergs’ business concept is to manage and develop residential and commercial properties in municipalities where favorable growth is expected.

The company focuses on:– low sensitivity to economic fluctua-

tions through an even distribution between residential and commercial properties.

– comprehensive local market know-ledge through a decentralized organization.

– providing effective management with high levels of tenant service.

– striving for optimal operating and development gains based on the potential of each individual property.

Market trendMost of the municipalities in which the company is active have shown popula-tion growth in recent years, which is fa-vorable for the market for the leasing of commercial premises. The rental market for commercial premises was favorable during 2008, which was evident in the improvement in rentals and increased rents. Demand for offices and retail premises declined somewhat during the final quarter of 2008. Demand for housing in major metropolitan regions and cities with colleges and universities also remained favorable.

Since the real estate portfolio is concentrated in central locations, it is estimated that Fastighets AB L E Lundberg will have favorable opportuni-ties to maintain a high leasing rate.

OrganizationAs of January 1, 2009, the company’s management is divided into four regions: Gothenburg, Stockholm, Western and Eastern. The management group includes the President, Vice Presidents, regional managers, financial director, project development manager and rental administration manager. The organization provides excellent prerequisites for continued focus on current management operations, and the possibility to further improve and develop new and existing properties in attractive locations.

Property-management and property-development operations are led by the four regional managers. Everyday management and rental activities are handled locally by the respective offices. Project-development operations are conducted centrally from the head office in Norrköping, which also has resources for administration, operation, accounting, purchasing, information, IT, and environmental and quality matters.

15

Eastern35%

Western 16%

Gothenburg15%

Stockholm 34%

Distribution of annual rentalrevenues by region

Eastern 37%

Western 18%

Gothenburg15%

Stockholm 30%

Distribution of floorspace by region

Fair value by region

Eastern 33%

Western 16%

Stockholm 35%

Gothenburg16%

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RegionsThe Gothenburg Region comprises Gothenburg and Jönköping. Healthy demand for housing and commercial premises is resulting in a favorable rental situation in the region.

In Gothenburg, a major office remodeling project on behalf of the police authorities has been in progress at the Stampen property since 2006. Completion of the project is scheduled for 2009 and total expenditure amounts to approximately SEK 125 m. At the Ansvaret block in Jönköping, construction is under way of a new retail and office property. Completion of the project is scheduled for late 2009 and expenditure will total about SEK 150 m.

The Stockholm region consists of Enköping, Eskilstuna, Nyköping, Solna, Stockholm, Södertälje and Uppsala.

The municipalities’ close proximity to Stockholm is contributing to healthy rental conditions. The company’s real estate holdings in Solna, Stockholm and Uppsala consist mainly of commercial premises, while housing accounts for 84% of managed properties in Eskils-tuna, Nyköping and Södertälje.

Demand for housing in the region is good. The rental situation for commer-cial premises remains favorable.

The Western region consists of Arvika, Karlstad and Örebro. Supported by strong demand for housing and for office and retail space, the rental situa-tion is favorable throughout the entire region. In Karlstad, major re fur bishment of the Potatisen residential property is under way. Completion of the project is scheduled for spring 2009 and expendi-ture is estimated at SEK 20 m.

The Eastern region comprises Katrine-holm, Linköping and Norrköping, with about 70% of the region’s portfolio concentrated in Norrköping.

The rental situation for housing, retail premises and offices is favorable throughout the region.

In Norrköping, a major remodeling project has commenced in the Torget property, where premises are being adapted for banking operations.

In Linköping, the development of retail space is being planned at the Braxen property block.

Development propertiesThe development properties are situated mainly in central Sweden and comprise 2,520 hectares of farmland, forests and centrally located sites distributed among about 70 objects. The property-development operations develop properties into sites suitable for

commercial development and create new projects for resale. This is achieved through active involvement in planning and property formation matters, and through cooperation with the parties who need developable land.

Detailed development plans are being prepared for approximately 1,000 single-family homes and apartments in such locations as Haninge, Marie fred, Enköping, Norrköping and Ny köping. In 2008, detailed develop ment plans for approximately 160 single-family houses and apartments gained legal force.

During 2008, sales of development properties generated revenues of SEK 47 m. (52), generating a gain of SEK 31 m. (45).

Quality and the environmentThe operations of Fastighets AB L E Lundberg have been quality certified in accordance with ISO 9001:2000 since 1998. The company’s quality policy, in which security and safety are key considerations, also includes the principal environmental issues.

The company is working proac-tively on efforts to increase the energy effici ency of its properties. The aim is to reduce total energy consumption while improving the indoor residential climate for tenants. In 2008, the focus on in crea sing the energy efficiency of properties resulted in heat and electricity


37%1960-1969

13%

1980-1989

34%

1970-1979

12% 4%

1990- -19591 room

14%

32%38%

13%

2 rooms

4 rooms

3 rooms

More than 5 rooms, 3%

Age structure of investmentproperties, by rental revenues

Residential apartments by type

Housing 48%

22%

6%

14%

10%

< 1 Mkr

1 - 3 Mkr

3-5 Mkr

> 5 Mkr

Value of rental contracts,Dec 31, 2008

Housing48%

7%

9%

14%

7%

6%9%

2009

2010

2013

2011

2012

2014-

Maturity of rental contractsdistibuted by rental revenues

16

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Rubrik 17

con sumption during the year, adjusted to conditions during a normal year, decreasing by 3.7%, corresponding to total savings of 4.7 GWh compared with 2007. Water consumption was reduced by 2.5% in 2008, corresponding to 22,000 cubic meters. Since Septem-ber 1, 2008, Fastighets AB L E Lundberg purchases electricity marked with the “Good Environmental Choice” label, as approved by the Swedish Society for Nature Conservation (SSNC).

In total, this means that carbon dioxide emissions were reduced by 10% in 2008, corresponding to approximately 1,000 tons compared with the preced-ing year.

Sales and earningsNet sales, including revenues from divestments of development properties, amounted to SEK 930 m. (912). The increase was attributable primarily to higher rental revenues. Operating expenses for electricity, heat, water and waste disposal were held at the same level as during previous years. Maintenance costs declined to SEK 251 m. (258). The change was attributable mainly to an SEK 12 m. decrease in costs for tenant adaptations and an SEK 5 m. increase in costs for planned maintenance measures. Operating profit amounted to SEK 313 m. (353).

In February 2009, the vacancy rate in the real estate portfolio was nearly

1.4%, with the vacancy rate for residen-tial premises amounting to 0.7% and that for other premises to about 2.1%.

Fair value of the real estate port folio’s managed property holdings on December 31, 2008 was SEK 8,836 m. (9,104); the corresponding value of de velop ment properties was SEK 212 m. (208). Properties in prime locations and well-maintained buildings, combined with low vacancy rates and continued investments in the existing real estate portfolio are key factors contributing to the fact that the the value of the portfolio of investment properties did not decline by more than 4%.

17

Key figures 2008 Operating results1

StockholmRegion

Western Region

Gothenburg Region

Eastern Region Total

Number of properties 32 32 22 58 150Carrying amount, SEK m. 625 441 511 1,059 2,637Fair value, SEK m. 3,145 1,400 1,383 2,908 8,836Number of apartments 2,495 1,641 605 2,170 6,911Residential, sqm 187,581 116,155 43,506 156,565 503,807Residential, rent per sqm, SEK 848 857 849 847 850Residential, rental value, SEK 000s 159,028 99,461 36,944 132,492 427,925Residential, rentbased vacancy rate, % 0.6 0.4 0.3 0.7 0.6Office and retail, sqm 52,201 29,735 73,027 94,621 249,584Other premises, sqm 38,126 22,013 16,002 90,779 166,920Office/retail, rent per sqm, SEK 2,209 1,091 1,246 1,379 1,479Other premises, rent per sqm, SEK 678 494 431 581 578Office/retail, rental value, SEK 000s 115,326 32,430 90,967 130,458 369,182Other premises, rental value, SEK 000s 25,847 10,873 6,904 52,777 96,399Office/retail, rentbased vacancy rate, % 1.8 0.3 1.2 2.9 1.9Premises, number of rental contracts 197 103 131 400 831

According to AAA According to IFRSSEK m. 2008 2007 2008 2007Net revenues2 930 912 930 912

Operating expenses 245 243 177 186Maintenance 251 258 148 174Personnel costs 97 92Property tax 33 40 33 40Divested development properties 16 7 16 7Depreciation 43 44 4 5Sales and administrative costs 29 28 Gain on sale of investment properties 64 Impairment losses/reversal of impairment losses 0 2 Value change in investment properties 397 838Operating profit 313 353 60 1,247 1) As a supplement to reporting in accordance with the Annual Accounts Act (AAA) on pages 1417, operating profit in the table above is

also reported in accordance with IFRS. The presentation in accordance with AAA is divided by function, while that in accordance with IFRS is divided by cost.

2) Net sales include revenues from divested development properties.

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Hufvudstaden

Stockholm Eastern City 47%

Stockholm Western City 41%

Gothenburg 12%

The Hufvudstaden shareDistribution of annual rentalrevenues by type of premises

Annual rental revenuesby business area

Proportion of Lundbergs’ total assets on February 17, 2009

30

40

50

60

70

SIX Properties IndexHufvudstaden A

SEK

Feb Jan 09 Nov Sept July May March Jan 08

Offices 48%Retail and Restaurants 45%

Other 7%Hufvudstaden 19.9%

18

Chairman: Fredrik Lundberg CEO: Ivo Stopner www.hufvudstaden.se

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Hufvudstaden, which was founded in 1915, is one of Sweden’s leading real estate companies. The company’s business concept is to use its own properties in central Stockholm and Gothenburg to offer high-quality of-fice and retail premises to successful companies in attractive marketplaces.

Hufvudstaden’s current real estate port-folio is concentrated in the central parts of Stockholm and Gothenburg. The company owns commercial office and retail properties within the city centers’ business districts, including Hamngatan, Norrmalmstorg, Biblioteksgatan and Kungsgatan in Stockholm and Vall-graden and Östra Nordstan in Gothen-burg. This makes Hufvudstaden one of the most specialized and geographically concentrated real estate companies in Sweden. Total rentable space amounts to slightly more than 350,000 square meters with an annual rental value of SEK 1.3 billion. The fair value of the real estate portfolio at year-end 2008 was SEK 19.1 billion.

The operation is divided into three business areas. Stockholm Eastern City comprises 16 properties with total rent-able space of 146,000 square meters.

Stockholm Western City comprises nine properties with total rentable space of 150,000 square meters. This business area includes the NK properties in Stockholm and Gothenburg and the

NK brand. It also includes the subsidiary Parkaden, which has parking operations in two of Hufvudstaden’s properties. The Gothenburg business area consists of four properties with total rentable space of 59,000 square meters. The largest property includes the Femman department store, which is part of the Nordstans shopping mall.

Hufvudstaden has proprietary resources for everyday operations and maintenance and works actively to develop the high quality and efficiency of its real estate portfolio with the aim of creating favorable value growth. Changes and improvements are im-plemented on a regular basis. Through development measures, the premises are given high technology standards and more space-efficient layouts, which contribute to improved operating net and higher returns.

Hufvudstaden’s financial goal is to achieve favorable, sustained dividend growth, and that the dividend should represent more than half of the net profit from operating activities. Over the long term, the equity/assets ratio should amount to at least 40%.

A comprehensive remodeling of the Rännilen 18 property in Stockholm was started during the year. The rebuilding project is expected to be completed in autumn 2009 and will create open and space-efficient office premises.

The market value of the property portfolio at year-end 2008 was assessed at SEK 19.1 billion (20.5). The equity ratio amounted to 56% and the net loan to value ratio was 16%.

•Styrelsenharföreslagitenhöjningav den ordinarie utdelningen till 1:30 kronor per aktie och därutöver en extra utdelning om 2:70 kronor per aktie. Total utdelning föreslås därmed bli 4:00 kronor per aktie.

Key financial data

2008 2007Net sales, SEK m. 1,348 1,276Operating profit/loss, SEK m. 881 3,449Profit/loss after net financial items, SEK m. 1,025 3,322Earnings/share, SEK 2.18 11.64Dividend/share, SEK 1.90 1 1.75Share price, Dec. 31, SEK, Series A share 55.25 62.001) Board of Directors’ proposal.

Largest shareholders, Dec. 31, 2008% of

share capital voting rightsLundbergs 45.2 88.0SEB Trygg Liv 11.4 2.3State Street Bank & Trust funds 3.5 0.7Mellon Funds 3.3 0.7Second AP Fund 2.6 0.5Swedbank Robur Funds 2.4 0.5

Lundbergs’ shareholding, February 17, 2009

Series A shares 85,141,229Series C shares 8,177,680

According to the Satisfied Customer Index property barometer, Hufvud-staden has the most satisfied office tenants.

19

Highlights of the year

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Sweden 26% 1

United Kingdom 10%

Germany 13%

Spain 10%

France 4%

Netherlands 4%

Italy 5%

Rest of Europe 18%

Rest of the World 10%

The Holmen shareExternal net sales by business area

External net sales by geographical market

Proportion of Lundbergs’ total assets, February 17, 2009

120

140

160

180

200

220

240

SIX Forest Products IndexHolmen B

SEK


Holmen Paper 53%

Holmen Skog 16%

IggesundPaperboard

25%

Holmen Timber 3%

Holmen Energi 3%Holmen 15.3%

Holmen20

Chairman: Fredrik Lundberg CEO: Magnus Hall www.holmen.com 1) Of which, forest and power 16%.

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Holmen is a forest industry group whose business concept is to develop and conducts operations in three product-oriented business areas com-prising newsprint, board and wood products, and two business areas based on raw materials – forestry and energy. Europe is the company’s primary market, accounting for about 90% of sales. The number of employees is approximately 4,800.

Holmen Paper produces wood-con-taining newsprint based on virgin-fiber and recycled fiber raw materials at two mills in Sweden and one in Spain. The products are used mainly to produce newspapers, magazines, catalogs, advertising materials and books. The business area’s principal markets are Sweden, the UK, Germany and Spain.

Iggesund Paperboard manufactures and sells solid board and folding boxboard based solely on virgin-fiber raw materials at one mill in Sweden and another in the UK. The products are used as packaging materials for cosmet-ics, pharmaceuticals, tobacco, confec-tionery and food, and for graphic-design applications. The business area’s largest markets are Germany and the UK.

Holmen Timber manufactures red-wood timber products at one sawmill in Sweden for industrial manufacturers of consumer products. Its main markets are Scandinavia, the UK, North Africa and the Middle East.

The Group’s annual production

capacity amounts to 1.9 million metric tons of newsprint, 590,000 metric tons of board and 340,000 cubic meters of wood products.

Holmen Skog is responsible for the Group’s forests, which comprise slightly more than one million hectares. Annual felling in wholly owned forests totals approximately 2.5 million cubic meters. Holmen’s self-sufficiency rate in terms of timber is about 55%.

Holmen Energi is responsible for the Group’s hydroelectric power assets and development of Group operations in the energy sector. Production at the wholly and partly owned hydroelectric power plants in Sweden during a normal year amounts to approximately 1,100 GWh of electricity. The self-sufficiency rate in terms of electricity is slightly more than 30%.

Holmen Skog and Holmen Energi are also responsible for the Group’s timber and electricity supplies, respectively, which are important raw materials for the industrial operations.

Holmen’s goal is to have a strong financial position, with a debt/equity multiple of 0.3–0.8. Annual ordinary dividend payments shall correspond to 5–7% of shareholders’ equity. Extraor-dinary dividends and share repurchases may be effected when permitted by the company’s capital structure and the financing requirements of its business operations. Holmen aims to show favorable profitability, with a return that consistently and sustainably exceeds the cost of capital in the market.

Holmen Paper reduced its produc-tion capacity and implemented organizational adjustments as part of efforts to align operations to changes in market conditions for newsprint. Substantial personnel cutbacks were made at the Hallsta Paper Mill, and the mill’s oldest paper machine and recycled paper line were shut down. In Madrid, some production adjust-ments were made from newsprint to coated printing paper. Production at Wargöns Mill was discontinued in December following a prolonged period of insufficient profitability.

Key financial data

2008 2007Net sales, SEK m. 19,334 19,159Profit after net financial items SEK m. 1,051 2,843Operating profit, SEK m.1 740 2,582Earnings/share, SEK 7.60 17.80Dividend/share, SEK 9.00 2 12.00Share price, Dec. 31, Holmen B, SEK 193.50 240.001) Including items affecting comparability in 2008 amounting to an expense of SEK

361 m. Items affecting comparability in 2007 amounted to income of SEK 557 m. 2) Board of Directors’ proposal.


share capital voting rightsLundbergs 27.9 52.0Silchester International Investors 10.5 3.1Kempe Foundations 7.0 16.9Handelsbanken with pension foundation 3.1 9.1Swedbank Robur Funds 2.3 0.7Alecta 1.4 0.4


Series A shares 14,010,196Series B shares 9,398,720

During the summer, Iggesund Paperboard launched Invercote, the new generation of solid board.

Planning of the new sawmill at Bravikens Paper Mill in Norrköping continued during the year. Deploy-ment of the new plant is scheduled for year-end 2010.

A new, energy-efficient pulp supply plant was placed in operation during the year at Bravikens Paper Mill.


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Cardo

Door & LogisticsSolutions 49%

Wastewater Technology

Solutions 31%

8% 12%

Pulp & PaperSolutions

Residential Garage Doors

Europe 82%

North Amerika 6%

Asia 6%Other 6%

The Cardo shareNet sales by division Net sales by geographic areaProportion of Lundbergs’ total assets, February 17, 2009

Cardo 6.5%

70

90

110

130

150

170

190

210

SIX Industrial Conglomerates IndexCardo

SEK


Chairman: Fredrik Lundberg CEO: Peter Aru www.cardo.com

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23

Cardo is a multinational industrial engineering group with leading brands. The company offers solutions based on quality products, high levels of service and extensive application knowledge to industrial customers. It has strong positions in the markets for docking solutions, water and wastewater treatment technologies, systems for the pulp and paper industry and garage doors. Cardo has subsidiaries in more than 30 countries, mainly in Western Europe. The number of employees is 6,000, of whom approximately 80% work outside Sweden.

Business operations are divided into four divisions. The Door & Logistics Solutions Division offers industrial doors and docking solutions. Under the Crawford name, turnkey solutions, service and specialist knowledge is offered to customers worldwide. Crawford’s customers in the transport, logistics and retail segments include DHL, Schenker, Carrefour, Ahold and Lidl. The Hafa and Combursa brands are also used for docking systems. Under the Megadoor brand, Cardo markets a number of the world’s largest doors for hangars used in the aviation industry. The division has one of Europe’s largest service organiza-tions, with more than 600,000 customer service visits annually.

The Wastewater Technology Solu-tions Division is one of Europe’s leading

suppliers of turnkey solutions for waste-water and water treatment applications. ABS, the division’s primary brand, has the market’s widest product range, with submersible and dry-installed sewage pumps, agitators, aerators, compressors, control and remote monitoring systems and drainage pumps. The Pumpex brand is used for drainage pumps in the construction sector.

The Pulp & Paper Solutions Division includes Lorentzen & Wettre, one of the world’s leading suppliers of advanced equipment for quality control and proc-ess optimization for the paper industry, and Scanpump, which supplies pumps, agitators and aerators for the paper and pulp industry.

The Residential Garage Doors Division develops, manufactures and sells garage doors and related products, combined with service and support. Sales offices are situated in most coun-tries in Western Europe and in China. The product range includes most types of garage doors, which are marketed under the Crawford, Normstahl and Henderson brands.

The Group’s financial goals are to maintain an operating margin of at least 10% and generate average organic growth of at least 5% annually over the course of a complete economic cycle, with a minimum return on capital employed of 20%.

Cardo Pulp & Paper Solutions acquired Kajaani Process Measure-ment Ltd, a Finnish measurement company, during the year. The acquisition strengthened the division’s position in measurement instruments for pulp.

A decision was reached during the year to retain the Residential Garage Doors Division. In Decem-ber, garage door operations in the UK were sold to focus on the premium segment in Europe.

Key financial data

2008 2007Net sales, SEK m. 9,810 9,116Operating profit, SEK m. 941 426 1

Profit after net financial items, SEK m. 825 355Earnings/share, SEK 18.10 5.67Dividend/share, SEK 9.00 2 9.00Share price, Dec. 31, SEK 114.50 201.001) Including items affecting comparability amounting to SEK 210 m and restructur

ing costs totaling SEK 107 m.2) Board of Directors’ proposal.

Largest shareholders, Dec. 31, 2008

% of share capital and voting rightsLundbergs 41.3If Skadeförsäkring 11.1HQ Funds 3.7Lannebo Funds 3.7Odin Funds 2.0Orkla ASA 1.9

Lundbergs’ holding, February 17, 2009

Number of shares 11,150,000


Cardo achieved all of its financial goals in 2008. Operating profit improved in the remaining opera-tions of all divisions, while the order intake increased or remained unchanged in three of the Group’s four divisions

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Industrivärden is one of the Nordic region’s leading investment compa-nies, with holdings in a concentrated number of Swedish listed companies with favorable development poten-tial. The business concept is to create shareholder value based on profes-sional investment operations and active ownership. Active ownership is based on Industrivärden’s model for value creation and exercised through representation on boards of directors.

Industrivärden’s stock portfolio is highly diversified, with major shareholdings in some of Sweden’s leading companies. The largest shareholdings are Sandvik, Handelsbanken, Ericsson, SCA and SSAB. Industrivärden is also a major owner of shares in Volvo, Skanska, Indu trade, Munters and Höganäs.

Industrivärden’s objective is to generate high growth in net asset value, yielding a total return that exceeds the average for Nasdaq OMX Stockholm, computed over a long-term period. The investments are made primarily in large and midsize, publicly listed Nordic companies. Industrivärden’s dividend policy is to distribute a direct return to shareholders that exceeds the average for Swedish listed shares. Over the past 10 years, the total return on Series A shares has averaged 5% annually, outperforming the SIX return index by two percentage points.

Key Financial data

2008 2007Loss after tax, SEK m. 29,114 1,942Net asset value, SEK billion 23.9 54.8Net asset value per share, SEK 62 142Net debt/equity ratio, % 31.1 16.6Dividend/share, SEK 4.501 5.00Share price, Dec. 31, SEK, Series A shares 57.25 113.251) Board of DIrector’s proposal.


share capital

votingrights

Lundbergs 10.9 15.0AMF Pension 7.4 1.0Handelsbanken’s Pension Foundation 7.2 9.9Handelsbanken’s Pension Fund 7.1 9.8Jan Wallanders & Tom Hedelius Pension Foundation 6.2 8.5SCA Pension Foundation 4.4 6.1


Number of Series A shares 42,000,000

On February 18, 2009, an additional 1.4 million Series A shares in Industrivärden were acquired.

Handelsbanken 23%

Ericsson 13%

Sandvik 19%

SCA 14%

SSAB 10%

Volvo 9%

Other 5%Skanska 7%

The Industrivärden shareComposition of stock portfolio,market value, on December 31, 2008


40

60

80

100

120

SIX Investment and holding company IndexIndustrivärden A

SEK


Industrivärden 8.8%

Chairman: Tom Hedelius CEO: Anders Nyrén www.industrivarden.se

24 Industrivärden

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NCC

NCC is one of the leading construction and property development companies in the Nordic region. Sales in 2008 slightly exceeded SEK 57 billion, with approximately 20,000 employees.

NCC develops and builds housing and commercial properties, industrial premises and public buildings, roads and civil engineering installations and other types of infrastructure. The company also offers construction input materials such as aggregates and asphalt used for paving, operation and maintenance of roads. NCC’s primary geographic area is the Nordic region, but limited business opera-tions are also conducted in Germany, the Baltic countries and St. Petersburg.

The Group’s construction opera-tions, NCC Construction, are organized geographically and build homes, offices and other buildings, industrial premises, roads, civil engineering installations

and other types of infrastructure. NCC Property Development develops and sells commercial properties in the Nor-dic countries, while the core business of NCC Roads is to produce aggregates and asphalt, as well as engaging in paving and road service operations. Effective January 1, 2009, development and sales of private housing, formerly included in the Construction units, has been concentrated in NCC Housing, a central business area for all NCC opera-tions in the housing development area.

NCC’s financial objective is to gener-ate a return on equity of 20% after taxes. Net debt shall not exceed sharehold-ers’ equity, and the group shall have a positive cash flow before investments in properties classed as current assets and other investments. The dividend policy is to distribute at least half of after-tax profit for the year to the shareholders.

Key financial data

2008 2007Net sales, SEK m. 57,465 58,397Operating profit, SEK m. 2,219 2,790Profit after net financial items SEK m. 2,385 2,608Earnings per share, SEK1 16.69 20.73Dividend/share, SEK 4.002 21.00 3

Share price, Dec. 31, NCC B, SEK 49.90 139.001) After dilution.2) Board of Directors’ proposal.3) Of which, extraordinary dividend of SEK 10.


share capital

votingrights

Nordstjernan 26.7 55.1Lundbergs 10.0 20.6Swedbank Robur Funds 4.0 4.6AMF Pension 3.0 0.6Alecta 2.6 0.5


Number of Series A shares 10,850,000

Chairman: Tomas Billing CEO: Olle Ehrlén www.ncc.se

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Construction Sweden 41%

Construction Denmark 7%Construction Finland 13%

Construction Norway 12%

Construction Germany 4%

Property Development 4%

Roads 19%

The NCC shareDistribution of netsales per business area

Proportion of Lundbergs’ total assets February 17, 2009

20

60

100

140

180

SIX Construction and civil engineering IndexNCC B

SEK


NCC 2.2%

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Indutrade

40

60

80

100

120

140

160

SIX WholesalerIndutrade

SEK


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Chairman: Bengt Kjell CEO : Johnny Alvarsson www.indutrade.se

The Indutrade share Proportion of Lundbergs’ total assets, Feb 17, 2009

Indutrade 1.4% Husqvarna 2.4%

Chairman: Lars Westerberg CEO: Magnus Yngen www.husqvarna.com

30

40

50

60

70

80

SIX Consumer Discretionaries Husqvarna B

SEK

FebJan 09NovSeptJulyMayMarchJan 08

The Husqvarna share

INDUTRADE 2008 2007Net sales, SEK m. 6,778 5,673Operating profit, SEK m. 760 609Profit after net financial items SEK m. 692 578Earnings/share, SEK 12.75 10.48Dividend/share, SEK 6.40 1 5.25Share price, Dec. 31, SEK 66.25 123.251) Board of Directors’ proposal.

Lundbergs’ holding, Februry 17, 2009

Number of shares 4,000,000Share capital and voting rights, % 10.0

HUSQVARNA 2008 2007

Net sales, SEK m. 32,342 33,284Operating profit, SEK m. 2,361 3,564Profit after net financial items SEK m. 1,767 2,889Earnings/share, SEK 3.34 5.29Dividend/share, SEK 0.00 1 2.25

Share price, Dec. 31, SEK 41.30 76.751) Board of Directors’ proposal.


Number of Series A shares 16,600,000Share capital (voting rights), % 4.3 (13.1)

Husqvarna is a global leader in the market for motor-driven products for forest, park and garden applications, as well as cutting equipment for the construction and stone industries. The product range comprises equipment for both private customers and profes-sional users. The Husqvarna Group also includes Gardena, a leader in watering products for the European consumer market.

Husqvarna’s long-term goal is to achieve organic growth of about 5% annually over a complete economic cycle, and an operating margin exceeding 10%. The company also strives to grow through acquisitions of supplementary business operations. In a long-term perspective, the annual dividend shall correspond to 25-50% of profits over the same period.

Indutrade markets and sells high-tech components, systems and services in selected market niches. Customers consist primarily of companies in the processing industry. The group creates value for its customers by structuring their supply chains and increasing the efficiency of their utilization of technological components and systems.

The commercial technology companies are supplemented by several companies that manufacture proprietary products. Indutrade has more than 100 subsidiaries. Group operations are concentrated in Europe, with Sweden and Finland jointly accounting for 65% of net sales during 2008. The aim is that annual sales growth should average 10% over a complete eco-nomic cycle and that the net debt/equity ratio should normally not exceed 100%.

Husqvarna

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Sandvik 2.7%Handelsbanken 4.7%

Chairman: Hans Larsson CEO: Pär Boman www.handelsbanken.com Chairman: Clas Åke Hedström CEO: Lars Pettersson www.sandvik.se

40

60

80

100

120

SIX Automotive & MachinerySandvik

SEK

FebJan 09NovSeptJulyMayMarchJan 0860

100

140

180

220

SIX Bank & Insurance Handelsbanken A

SEK


The Sandvik shareThe Handelsbanken share

HANDELSBANKEN 1 2008 2007Revenues, SEK m. 29,890 27,126Operating profit, SEK m. 15,326 14,732Profit after tax, SEK m. 11,944 10,853Earnings/share, SEK 19.16 17.39Dividend/share, SEK 7.00 2 13.50 3

Share price, Dec. 31, SEK, Series A share 126.00 207.001) Figures apply to remaining operations, i.e., excluding SPP and capital gain from

sale of SPP.2) Board of Directors’ proposal.3) Of which, an extraordinary dividend accounted for SEK 5.00.


Number of Series A shares 11,000,000Share capital and voting rights, % 1.8

SANDVIK 2008 2007Revenues, SEK m. 92,654 86,338Operating profit, SEK m. 12,794 14,394Profit after net financial items, SEK m. 10,577 12,997Earnings/share, SEK 6.30 7.65Dividend/share, SEK 3.151 4.00Share price, Dec. 31, SEK 49.00 111.25 1) Board of Directors’ proposal.


Number of shares 14,000,000Share capital and voting rights, % 1.2

Sandvik is a high-tech engineering group with advanced products and a leading global position within selected areas.

Sandvik Tooling specializes in cemented carbide and high-speed steel tools for metal processing. Sandvik Mining and Construction focuses on equipment, tools and services for mining. Sandvik Materials Technology is the global leader in stainless steel and high-alloy steel, special metals, high-resistance materi-als and processing systems. The group also includes Seco Tools, an independent listed group of companies that, like Sandvik Tool-ing, specializes in cemented carbide tools.

Sandvik’s financial objectives over the course of a complete economic cycle are to achieve annual organic sales growth of 8%, return on capital employed of 25%, a pay-out ratio of at least 50% and a net debt/equity ratio of 0.7 to 1.0.

Handelsbanken is a universal bank that supplies services in the entire banking area, including traditional business transactions, investment banking and trading, as well as banking services for private individuals. The bank’s funda-mental philosophy is to have a strong decentralized organization based on the assumption of responsibility for individual customers by all branch offices.

Handelsbanken has a strong position in the Swedish market. Over the past 20 years, universal banking operations have been developed in the other Nordic countries and since 2000 also in the UK. The overall financial objective is to achieve above average profitability in relation to its competitors.

SandvikHandelsbanken 27

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The Board of Directors and President of L E Lundbergföretagen AB (publ), whose corporate registration number is 556056-8817, hereby submit their Annual Report for fiscal year 2008 for the Group and the Parent Company.

Annual Report 29

Report of the Board of Directors 30

Definitions 36

Group

Income statements 37

Balance sheets 38

Account of recognized

revenues and costs 39

Cash flow statements 39

Notes 40

Parent Company

Income statements 63

Balance sheets 64

Account of recognized

revenues and costs 65

Cash flow statements 65

Notes 66

Proposed distribution of profits 72

Auditors’ report 73

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Lundbergs is an investment company with a portfolio of as sets including a wholly owned unlisted real estate com-pany and nine major holdings in listed companies. Two of these listed companies, Holmen and Hufvudstaden, are subsidiaries, which means they are consolidated in the consolidated financial statements.

GroupOperations consist of real estate management operations, the manufacture and sale of newsprint, magazine paper, paper-board and sawn wood products, forest and power operations, as well as equity management (including securities trading).

The Group’s operations are described below. Information about the Group’s business sectors (Lundbergs, Hufvudstaden and Holmen) is presented on pages 30-35. The Parent Com-pany is described on pages 35-36.

Sales and earningsThe Group’s net sales amounted to SEK 22,350 m. (23,049).

The operating result amounted to a loss of SEK 1,965 m. (profit: 7,934). The result includes impairment losses of SEK 2,921 m. (344) on listed shares and participations in associ-ated companies, as well as other impairment losses and un-realized changes in value amounting to a loss of SEK 2,230 m. (4,023).

The loss after financial items amounted to SEK 2,571 m (profit: 7,426). After taxes, a loss of SEK 2,025 m. (profit: 5,010) was reported. The loss (excluding minority interest) per share amounted to SEK 36.19 (earnings: 42.02).

InvestmentsInvestments are reported under the different business sectors and the Parent Company below.

FinancingInterest-bearing net debt increased by SEK 1,044 m. to SEK 13,645 m. (12,600). Interest-bearing liabilities amounted to SEK 15,320 m. (13,514) and interest-bearing assets to SEK 1,676 m. (914). The equity/assets ratio was 53% (59). The debt/equity ratio was 0.36 (0.28). The Group’s shareholders’ equity was SEK 37,714 m. (45,085), of which minority interest accounted for SEK 17,318 m. (18,723).

TaxThe Group’s tax charges amounted to a recovery of SEK 545 m. (expense: 2,417). The reduction in Swedish corporate tax to 26.3% as of 2009 reduced the Group’s deferred tax liability, which resulted in recognized tax revenue of SEK 757 m. Information about ongoing tax processes is presented in Note 14 on page 49.

Information about risks and uncertaintiesThe way financial risks are managed is decided by the Board

of Directors of Lundbergs, Holmen and Hufvudstaden, respectively. Risk management is conducted in accordance with the finance policy adopted by the Board of the respective companies, with the aim of achieving a low level of risk being a shared feature. Within all three companies, risk management is centralized in a special department. For a more detailed ac-count of the management of financial risks, reference is made to Note 37 on page 60.

Other information about risks and uncertainties is present-ed under the various business sectors. Information on impor-tant accounting estimates is presented in Note 36 on page 59.

Significant events after the balance-sheet dateNo significant events occurred after the close of the fiscal year.

Business sectors

LUNDBERGS In this context, Lundbergs is defined as the Parent Company L E Lundbergföretagen AB, its wholly owned subsidiaries and, where appropriate, the subsidiaries’ groups of companies active within real estate management and equity management operations (securities trading). The operations are divided into two business sectors, Property Management and Equity Management.

Sales and earningsNet sales totaled SEK 1,668 m. (2,597) and the operating result amounted to a loss of SEK 2,106 m. (profit: 1,663).

Real estate managementNet sales totaled SEK 930 m. (912) and operating profit amounted to SEK 60 m. (1,247). The decrease in profit derived from an SEK 397 m. decline (increase: 838) in the value of the real estate portfolio. The average vacancy rate was 1.6% (2.3).

Investments in existing properties amounted to SEK 129 m. (116) and in equipment to SEK 8 m. (5). An internal valuation was conducted of the real estate portfolio at December 31, 2008 by assessing the fair value of each individual property. The value was established through a combination of the yield and the location-price method. The internal valuation was as-certained by commissioning independent valuations of certain properties. The fair value is estimated at SEK 8,836 m. (9,104). The valuation method and assumptions are described in Note 19 on page 52.

The development properties are carried in the balance sheet in an amount of SEK 86 m., constituting the lower of the acquisition value and net realizable value. Development properties were sold for SEK 47 m. (52).

Asset management Net sales totaled SEK 738 m. (1,685) and the operating result amounted to a loss of SEK 2,166 m. (profit: 416). Impairment

30 Report of the Board of Directors

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losses totaled SEK 710 m. on the Handelsbanken sharehold-ing, SEK 592 m. on the Husqvarna shareholding, SEK 99 m. on the Industrivärden shareholding, SEK 23 m. on the Indutrade shareholding and SEK 572 m. on the Sandvik shareholding. The operating result includes shares in the results of associated companies, which amounted to a loss of SEK 558 m. (profit: 286). Earnings were charged with impairment losses of SEK 777 m. and SEK 149 m. on the participations in Cardo and NCC, respectively. Net investments in shares amounted to SEK 127 m. (2,621).

Information about risks and uncertainties

Real estate managementChanges in the real estate market, such as those that result from economic fluctuations, affect the fair value of the proper-ties, which constitutes both a risk and an opportunity.

Opportunities to influence earnings from current operations over the short term are limited. Revenues from the commercial premises are regulated by relatively long-term rental contracts, normally three to five years. The residential properties are rented under contracts that apply until further notice, with the tenant entitled to terminate the contract with three months’ notice. Operating expenses are difficult to change over a short-term perspective with unchanged service and quality. Profitability and the operations are impacted by the economy and interest rates, but also by political resolutions. According-ly, to successfully manage the opportunities and risks in a real estate company, a long-term business approach is required.

Rental trendThe rental trend comprises both a risk and an opportunity. The rent level for vacant office premises is impacted by stronger or weaker economic trends. Rent levels for leased premises with contract periods of three years or more are normally linked to the consumer price index. Rents are nor-mally changed when contracts are renewed. The rental trend for residential properties is more stable because of prevailing utility value system.

Property taxIncreases in property tax represent a risk. However, the risk is limited since a significant portion of property taxes on rental premises is charged to the tenants. Rent losses - vacant housing/commercial premisesWhen the economy enters recession, a risk arises that vacancy rates for office premises will exceed those for retail premises and housing. There should always be a certain vacancy rate in order to offer customers of commercial premises expansion opportunities, to facilitate rebuilding and to test the market’s willingness to accept higher rent levels.

Contractual periodA long average contractual period for rentals of premises is an advantage during periods of declining market rents and

a disadvantage during periods of rising rent levels. Frequent relocations and removals create substantial costs in terms of adaptations of the rental premises. These costs cannot always be offset by higher rents.

Sales-based rentFor rentals of retail premises, sales-based rents are applied to a certain extent. The goal is to increase the proportion of sales-based rents, since they create upward potential and, at the same time, the guaranteed minimum rent in sales-based contracts limits the risk.

Operations and maintenanceOperating costs are difficult to influence over the short term. Lundbergs works actively to optimize utilization of the properties, thereby reducing operating costs. Procurements of energy are generally made on future contracts to reduce the sensitivity to fluctuations in energy prices. Reviews are conducted regularly to determine if conditions have changed. The property portfolio is well maintained. Lundbergs focuses strongly on efforts to monitor and control costs for each indi-vidual property, thereby reducing the risk of unforeseen cost increases.

Geographical spread and residential/commercial distributionLundberg’s property portfolio consists of centrally situated residential and commercial properties. The properties are concentrated mainly in large cities characterized by favorable development. Residential properties account for 55% of total rentable space in the property portfolio, with commercial premises accounting for 45%. The even division between residential and commercial makes the operations less sensitive to economic fluctuations.

InsuranceAll properties are insured at full value.

Equity managementEquity risk includes share price risk and liquidity risk. Share price risk pertains to the risk for value declines due to changes in share prices on the stock market. A liquidity risk may arise if a shareholding is difficult to divest.

Lundbergs’ policy is to hold large shareholdings in a limited number of companies. These shareholdings may change over time. The Group’s present shareholdings pertain to companies with operations in the same or similar industries. In the future, the portfolio will continue to be focused on certain industries, which creates greater risk exposure to individual industries and/or companies.

Non-financial profit indicatorsLundbergs has collective bargaining agreements with both white-collar and blue-collar employees. Sickness absence and employee turnover are both low. There are distinct guidelines for ensuring that no discrimination or unfounded wage differ-ences arise.

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All work conducted in the company is characterized by a high level of personal service, customer value, efficiency and profitability. This work is performed systematically without un-necessary bureaucracy, whereby one of the aims is to estab-lish long-term relations with tenants and live up to concluded agreements.

For some time now, Lundbergs has worked on increas-ing the energy efficiency of its properties. The objective is to reduce energy consumption, while improving or maintain-ing the indoor climate of the tenants. In 2008, the focus on increasing the energy efficiency of properties resulted in heat and electricity consumption, adjusted normal-year conditions, decreasing by 4.7 GWh (3.7%) compared with 2007. Water consumption was reduced by 22,000 cubic meters (2.5%). Since September 1, 2008, Lundbergs purchases electricity marked with the “Good Environmental Choice” label, as approved by the Swedish Society for Nature Conservation (SSNC). Together with the decrease in energy consumption, this means that CO2 emissions in 2008 were approximately 1,000 tons (10%) lower than in 2007.

No operations were conducted during 2008 that require permits or notification in accordance with the Ordinance (1998:899) concerning environmentally hazardous activities.

OutlookMarket conditions characterized by significantly lower growth will result in an increase in the vacancy rate during 2009. Operating costs will increase, due to increased rates and taxes. The cost for tenant adaptations and projects will rise.

Cash flow from equity management in 2009 will be affected negatively by decreases in ordinary dividends.

HUFvUDSTADENHufvudstaden’s operations comprise the ownership and man-agement of commercial office and retail properties in central Stockholm and central Gothenburg.

Sales and earningsNet sales totaled SEK 1,348 m. (1,294). The operating result amounted to a loss of SEK 882 m. (profit: 3,456). The decrease in profit derived from an unrealized decline in the value of the real estate portfolio by SEK 1,629 m. (increase: 2,598). The total vacancy rate at December 31, 2008 was 5.3% (3.3).

Real estate management During the year, SEK 182 m. (524) was invested in properties and SEK 3 m. (4) in equipment. An internal valuation was con-ducted of the real estate portfolio at December 31, 2008 by assessing the fair value of each individual property. The value was established through the yield method. To confirm the internal values, external valuations have been commissioned corresponding. The fair value is estimated at SEK 19,083 m. (20,531). The valuation method and assumptions are described in Note 19 on page 52.

Information about risks and uncertaintiesHufvudstaden’s opportunities to influence earnings from cur-rent operations over the short term are limited. Revenues are regulated by relatively long-term contracts, normally three to five years, while operating expenses are difficult to change over a short-term perspective while maintaining service and quality. Hufvudstaden’s profitability and the operations are impacted mainly by macro-economical factors such as the economy, interest rates and business development in Stock-holm and Gothenburg, but also by political resolutions. Accordingly, to successfully manage the opportunities and risks in a real estate company, a long-term business approach and clearly defined strategies are required. Hufvudstaden has not identified any significant risks or uncertainties apart from those described below. Changes in the real estate market, such as those that result from economic fluctuations, affect the fair value of the properties, which constitutes both a risk and an opportunity. However, the properties’ concentration in the most attractive locations limits the risk.

Rental trendThe rental trend comprises both a risk and an opportunity. The risk is limited, however, by Hufvudstaden’s concentration on properties with premises in the most attractive commercial locations. The rent level for vacant office premises is impacted quickly by stronger or weaker economic trends. Rent levels for leased premises with contracts periods of three years or more are linked to the consumer price index.

Changes in rental charges are made when the contracts are renewed.

Property taxIncreases in property tax represent a risk. However, the risk is limited since a significant portion of property taxes on rental premises are charged to Hufvudstaden’s tenants.

Rent losses - vacant premisesWhen the economy weakens, a risk arises that vacancy rates for office premises will exceed that for retail premises. There should always be a certain vacancy rate in order to offer cus-tomers expansion opportunities, to facilitate rebuilding and to test the market’s willingness to accept higher rent levels.

Contractual periodA long average contractual period is an advantage during periods of declining market rents and a disadvantage during periods of rising rent levels. Frequent relocations and removals create substantial costs for adaptations of the rental premises. These costs cannot always be offset by higher rents.

Sales-based rentSales-based rents are applied mainly in the NK department store. Hufvudstaden strives to increase the proportion of sales-based rents, since they a create an upward potential and, at the same time, the guaranteed minimum rent in sales-based contracts limits the risk for declines in rental revenues.

Report of the Board of Directors

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Operation and maintenanceOperating costs are difficult to influence over the short term. Hufvudstaden works actively to optimize utilization of the properties, thereby reducing operating costs. Procurements of energy are generally made on future contracts to reduce the sensitivity to fluctuations in energy prices. Reviews are con-ducted regularly to determine if conditions have changed. The property portfolio is well maintained. Hufvudstaden closely monitors and controls costs for each individual property, thereby reducing the risk of unforeseen cost increases.

Concentration in Central Stockholm and Central GothenburgThe concentration of a property portfolio in a geographical market region can potentially increase the inherent risk due to lower diversification. In Hufvudstaden’s case, however, the risk is considered limited since Stockholm and Gothenburg have traditionally been the country’s strongest market regions and Sweden’s most attractive growth markets.

InsuranceAll properties are insured at full value. A special terrorist insurance policy that provides coverage for damages up to SEK 25 m. has been raised.

Non-financial profit indicatorsResponsible enterprise both internally and externally is a prerequisite for success. Hufvudstaden contributes to social de-velopment by accepting responsibility for its properties and the surrounding environment. The company ensures compliance with prevailing laws and agreements by subjecting its contrac-tors and subcontractors to demands. Hufvudstaden’s value foundation characterizes the employees’ actions and serves as an active tool in daily activities. The company endeavors to counter all types of discrimination and unfounded wage differ-ences. A comprehensive management program for all managers within the company was implemented during the year.

Hufvudstaden works actively to reduce the environmen-tal load by, for example, demanding environment-friendly products.

No operations were conducted during 2008 that require permits or notification in accordance with the Ordinance (1998:899) concerning environmentally hazardous activities.

OutlookHufvudstaden will continue to devote its efforts to managing, refining and developing its property holdings to ensure the highest possible yield. The global financial crisis and the de-terioration in the economy in Sweden will affect the property industry in 2009 and will in all probability result in a slightly cooler rental market. Despite this we believe that demand will be stable with satisfactory rent levels for the Company’s well-located, high-standard office and retailing premises.

Hufvudstaden’s stable finances will facilitate the imple-mentation of current projects and an evaluation of new investments that will in time increase the attractiveness of the property holdings.

Our assessment is that we will see an unchanged or slight increase in direct yield requirements on the property market. Strategic acquisitions and sales of individual properties cannot be excluded.

HOLMENHolmen’s operations consist of the manufacture and sale of newsprint and magazine paper (Holmen Paper), paperboard (Iggesund Paperboard) and sawn wood products, as well as forest and power operations.

Sales and earningsNet sales amounted to SEK 19,334 m. (19,159).

Operating profit amounted to SEK 1,051 m. (2,843). Profit included an expense of SEK 361 m. for items affecting com-parability, mainly due to the closure of production facilities during the year. Profit was also affected by lower prices for newsprint and wood raw materials, as well as increased costs for timber and other intermediate products.

InvestmentsInvestments amounted to SEK 1,160 m. (1,433).

Information about risks and uncertaintiesHolmen’s earnings are mainly affected by revenue and cost items.

RevenuesHolmen’s revenues mainly derive from sales of newsprint, paperboard and sawn wood products in Europe. The trend of prices and deliveries is greatly affected by the market bal-ance in Europe, which is in turn affected by the way demand develops in Europe, the production trend among European producers and changes in imports to Europe and opportunities to profitably export from Europe.

ExpensesHolmen’s largest production expenses comprise timber, recy-cled paper, energy, pulp and chemicals. The cost of deliveries, personnel, maintenance and capital is also significant. The cost trend is governed mainly by the price trend for intermedi-ates and human resources, and how well the group succeeds in increasing is production and administration efficiency.

Raw materialsTo reduce its exposure to changes in electricity price, Hol-men uses physical, fixed-price supply contracts and financial hedges. For certain pulp and paper products, there is an OTC exchange in financial contracts. Holmen did not trade in any such contracts during the year.

Exchange ratesHolmen’s earnings are affected by exchange-rate fluctuations, mainly because a significant amount of sales is paid for in cur-rencies other than costs. Currency hedges are used to reduce this exposure.

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InsuranceHolmen insures its plants against property damage and busi-ness interruption losses. The excess varies between different plants, but generally amounts to no more than about SEK 30 m. for an individual claim. Holmen’s forest holdings are not insured. The woodland areas are spread over large parts of the country, and the risk of significant damage is not considered to warrant the costs involved in insuring the forest holding.

Research and developmentHolmen engages in both internal and external research and development. External R&D operations are conducted in cooperation with other players, often on a sector-wide basis or through collaboration with universities and colleges.

Non-financial profit indicators

PersonnelThe average number of employees in Holmen decreased in 2008. The change was mainly due to redundancies in connec-tion with the closure of the Wargön Mill and a program of job cuts in connection with the ceasing of production on the PM 2 paper machine and the recovered paper line at the Hallsta Paper Mill in November. A total of 318 employees were affect-ed by the closure of the Wargön Mill, which was announced in August 2008. Production ceased in December. About fifty employees will be retained to work on the closure project until April 2010. By the end of the year, some 60 employees had accepted a company pension, or retirement after the closure period, and around 55 had accepted jobs with other employers. The remaining 200 or so employees have joined an adjustment program that provides active support with ap-plications for new employment, training, or support for start-ing their own businesses. One consequence of the restructur-ing at the Hallsta Paper Mill is that the workforce was reduced by approximately 150 positions in 2008 and that another 110 or so will leave during the coming two years. During the year, agreements were reached with 188 employees who are leaving the company at their own request, and have accepted severance pay or company pension from the age of 62.

The rate of sickness absence at the Holmen Group declined to 4.6% in 2008 from the preceding year’s level of 4.7%. This means that the declining trend of the past several years is continuing. In 2003, Holmen began to measure what is known as the good health index, which is defined as the proportion of the employees who had no day of sickness absence during a calendar year. During the past few years, this index has been running at around 45%.

The number of occupational accidents resulting in sickness absence rose during the year to 33 (23) per 1,000 employees. Each unit is taking action to significantly reduce the number of occupational accidents, based on a customized local action plan. No fatal accidents have occurred in Holmen for a very long time.

EnvironmentThe environmental aspects of Holmen’s business are regu - lated by laws and permits in each country. The allocation of environmental responsibility and the organization and management of its environmental activities are based on Holmen’s environmental policy. At the production sites, various types of rules are integrated as key elements in the planning of production and investments. Holmen’s environ-mental policy was revised in 2008 and it now focuses on the importance of energy and the climate for business operations.

The environmental status of Holmen’s facilities is high as a result of investments in process and treatment equipment and the continuous improvement measures within the framework of the environmental and energy management systems at the mills and the statutory, official supervision. Environmental activities largely involve planning issues relating to the envi-ronmental permits issued by the environmental authorities. The main environmental impact of Holmen’s facilities consists of emissions to air and water, and the occurrence of noise and waste. Since considerable attention is currently being focused on energy and the climate, fossil fuels and bio-fuels are at-tracting great interest.

Several projects, studies and measures relating to the envi-ronment were carried out in 2008.

At the end of 2008, Holmen was engaged in environmen-tally hazardous activities at seven facilities, three of which had environmental permits pursuant to the Environment Protection Act and another three had permits pursuant to the Environ-mental Code. As of January 1, 2008, the seventh facility, the processing unit at Strömsbruk, has been classified as a busi-ness required to submit an environmental report.

The Braviken and Wargön pulp and paper mills were audited in accordance with the Environmental Code in 2002. The Skärnäs Terminal has had a permit pursuant to the Envi-ronmental Code since 1999. The Hallsta Paper Mill has had a permit in accordance with the Environment Protection Act since 2000. Iggesunds Bruk had its permit renewed in 2003 in accordance with the same Act, under which the Iggesund Sawmill also received a permit in 1994. The first steps will be taken to apply for a new environmental permit in accordance with the Environmental Code at the Iggesund Sawmill will be taken in 2009. No other permits of any significance need to be renewed or reviewed in 2009. Holmen has decided to build a sawmill adjacent to the paper mill in Braviken. The County Administrative Authority is expected to grant a permit under the Environmental Code in early 2009 along with related permits for the building of the sawmill and the business to be conducted there.

Holmen Energi produces electricity at Holmen’s wholly and partly owned hydro-power plants. The permits that all of these units have pursuant to the Water Rights act (rules in the Environmental Code) include environmental conditions. In 2006, a decision by the Environmental Court gave the


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go-ahead to construct a new power station on the river Iggesund. This power plant, which will come in production at the end of 2009, will replace three old existing power stations on the site.

A review of past water rights decisions may be requested on the basis of the Code of Environmental Statutes. In the case of the river Ljusnan, on which Holmen Energi has power sta-tions, such a review is now under way.

Holmen’s mills are participating in the EU trade in carbon dioxide emission rights. The Swedish mills are also active in the trade in electricity certificates. The activities in Holmen’s forests, and at all facilities, were certified at the end of 2008 in accordance with ISO 14001. The group’s forestry was also certified in accordance with FSC and PEFC.

During the year, there were a few cases of exceeded threshold values, incidents, and some complaints relating to mill and forestry activities. They did not have any effect on earnings and were resolved by means of corrective measures within the environmental management systems.

Of the operations outside Sweden, the facilities in Work-ington, UK, and in Madrid, Spain, are engaged in activities having some kind of environmental impact. The sales of these units corresponded to 21% of Holmen’s net sales.

Outlook Market conditions for printing paper, paperboard and sawn timber weakened during the autumn of 2008, and the eco-nomic downturn is creating uncertainty regarding demand in 2009. Negotiations on printing paper prices have not yet been concluded. Paperboard prices in Europe have been raised in some market segments. The currency situation is likely to have a positive effect on the result, even though Holmen’s existing currency hedges mean that it will not benefit from the weakening of the swedish krona against the euro during the current year.

An easing of the sharp rise in costs in recent years looks possible, as a consequence of the announced reduction in the price of wood and a decline in the market price of recovered paper. The upward pressure on the prices of energy and other input goods appears to be easing, even though Holmen’s long-term electricity contracts mean that the Swedish mills will not be affected by changes in electricity prices in Sweden during the next few years. Holmen’s level of capital expendi-ture is expected to amount to almost SEK 1,500 m., but the level will depend on the magnitude of the investment in the new sawmill at Braviken and other projects during the year.

Parent CompanyThe Parent Company reported a net loss for the year of SEK 1,825 m. (profit: 863). This loss included dividends totaling SEK 1,440 m. (1,249), as well as impairment losses of SEK 782 m. on the Cardo shareholding, SEK 710 m. on the Han-delsbanken shareholding, SEK 592 m. on the Husqvarna share-

holding, SEK 99 m. on the Industrivärden shareholding, SEK 23 m. on the Indutrade shareholding, SEK 234 m. on the NCC shareholding and SEK 572 m. on the Sandvik shareholding.

In September, the wholly owned subsidiary L E Lundberg Holding AB was merged with the Parent Company, which re-sulted in an increase in shareholders’ equity by SEK 2,645 m. Following the merger, the shares in Hufvudstaden are owned directly by the Parent Company.

Net investments totaled SEK 201 m. (2,613), of which Cardo shares accounted for SEK 38 m., Sandvik shares for SEK 103 m. and Series A and B Husqvarna shares for SEK 116 m. and SEK 25 m., respectively. A total of 1,500,000 Series B shares in Husqvarna were divested for SEK 81 m.

Corporate information regarding L E Lundbergföretagen AB is presented in Note 2 on page 44.

Board of DirectorsSee the Corporate Governance Report on page 74 for a de-scription of the work conducted by the Board.

Guidelines proposed by the Board for the remuneration of senior executives The Board of Directors will propose that the 2009 Annual General Meeting resolve to adopt the following guidelines for determining salaries and other remuneration to senior execu-tives. For guidelines adopted by the 2008 Annual General Meeting, see Note 5 on page 45.

Remuneration of senior executives may consist of fixed salary, bonus payments, other benefits and pension privileges. The total remuneration should be competitive in the market and be proportionate to each executive’s responsibility and authority.

For senior executives employed by L E Lundbergföretagen AB or Fastighets AB L E Lundberg, bonus payments are based on earnings and profitability targets. The maximum bonus may not exceed the equivalent of three months’ salary. For senior executives of L E Lundberg Kapitalförvaltning AB, bonus pay-ments are based on the results of activities. The maximum bonus is approximately 15% of reported earnings over time. Bonus payments are not normally pensionable.

In the event that notice of termination is served by the company, the maximum term of notice is 12 months. In some cases, if notice is served by the company, severance pay cor-responding to six months’ salary is payable.

Pension benefits for the President and other senior execu-tives apply from age 65, with benefits corresponding to the ITP (Individual Supplementary Insurance) plan. No remunera-tion shall be provided in the form of options or other share-based incentive programs.

These guidelines apply to persons who during the app li-cable term of the guidelines are employed as senior execu-tives of L E Lundbergföretagen AB and its wholly owned subsidiaries Fastighets AB L E Lundberg and L E Lund berg

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Kapital förvaltning AB. The guidelines apply to agree ments entered into after the resolutions have been passed by the Annual General Meeting and, in the case of amend ments to the current agreement, from the date of such amendments. The Board of Directors is entitled to deviate from the guide-lines if required under special circumstances in certain cases.

For guidelines concerning senior executives of Holmen and Hufvudstaden, reference is made to their respective annual reports.

Share informationThe share capital of L E Lundbergföretagen AB at year-end 2008 amounted to SEK 621 m. The number of shares totaled 62,145,483, each with a par value of SEK 10. The total number of shares comprises 24,000,000 Series A shares carrying 10 votes each, 38,000,000 Series B shares carrying one vote each and 145,483 treasury shares. At the request of holders of Series A shares, their Series A shares may be converted to Series B shares.

The Articles of Association do not impose any limitations on share transfers. There is no limitation on the number of votes each shareholder is entitled to cast at the Annual General Meeting.

The largest shareholder is Fredrik Lundberg, who owns 52.7% of the total share capital and 89.5% of voting rights. The holdings of all other shareholders amounted to less than 10% of voting rights.

Employees do not have any shareholdings through pension funds or any other trust funds.

The Articles of Association stipulate that, in addition to members appointed by an authority other than the Annual General Meeting, the Board of Directors shall comprise a minimum of five and maximum of ten members, with a maxi-mum of three deputies. Board members and deputies shall be elected at General Shareholder Meetings.

No known agreements have been entered that would other wise be affected by a public acquisition offer.

Repurchase of own sharesThe Annual General Meeting on April 10, 2008 renewed the Board of Directors’ authorization to make decisions regard-ing the purchase of up to 10% of the company’s shares. The authorization was not exercised, however. The Board pro-poses that the Annual General Meeting of 2009 also authorize the Board to repurchase up to 10% of the company’s Series B shares. The company’s holdings of Series B treasury shares amounted to 145,483 shares at December 31, 2008.

Proposed dividend and distribution of earningsThe Board of Directors has proposed a dividend of SEK 6.00 per share, or a total of SEK 372 m. The Board’s motion con-cerning the distribution of earnings is presented in its entirety on page 72.

Definitions

Cash and cash equivalentsCash and bank balances and short-term investments (maxi-mum term of three months).

Interest-bearing assetsInterest-bearing receivables, short-term investments and cash and bank balances.

Net interest-bearing debtInterest-bearing liabilities and interest-bearing provisions less interest-bearing assets.

TaxesCurrent and deferred tax.

Debt/equity ratioInterest-bearing net debt divided by total shareholders’ equity.

Equity/assets ratioShareholders’ equity expressed as a percentage of total assets.

vacancy rateThe total possible rental revenues less actual rental revenues during the year as a percentage of the total possible annual rental revenues.

Earnings per shareNet profit after tax divided by the average number of shares outstanding.


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SEK m. 2008 2007

Net sales Note 3 22,350 23,049 Other revenues, etc. Note 4 985 2,908

23,335 25,958

Raw materials, goods for resale and consumable, and cost of sold inventory shares 11,167 10,626 Personnel costs Note 5 3,157 2,853 Other external costs Note 6, 7 5,040 5,046 Depreciation Note 8 1,350 1,346 Impairment losses Note 9 2,052 1,887 Result from participations in associated companies Note 10 508 298

- 23,274 - 21,460

Changes in value of investment properties Note 11 2,026 3,436

Operating profit Note 12 - 1,965 7,934

Financial income 49 48 Financial expense 655 555

Net financial items Note 13 - 606 - 507

Profit before taxes - 2,571 7,426

Tax Note 14 545 2,417

Net profit for the year - 2,025 5,010

Attributable toParent Company’s shareholders 2,244 2,605 Minority interest 219 2,404

- 2,025 5,010

Earnings per share, SEK ¹ 36.19 42.02

1) There is no dilution effect.

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SEK m. Dec 31, 2008 Dec 31, 2007

ASSETS Note 15

Fixed assets Intangible fixed assets Note 16 192 128 Tangible assets Note 17 13,244 13,018 Biological assets Note 18 11,080 11,073 Investment properties Note 19 27,920 29,634 Participations in associated companies Note 20 3,642 4,460 Financial investments Note 21, 37 5,386 10,163 Other shares and participations Note 22 14 8 Longterm receivables Note 23, 37 91 169 Deferred tax assets Note 14 361 320

Total fixed assets 61,930 68,972 Current assetsProperties classified as current assets Note 24 86 86 Inventories Note 25 3,565 3,334 Accounts receivable Note 26 3,164 3,029 Tax receivable Note 14 141 22 Other current receivables Note 26 594 515 Current financial receivables Note 23, 37 97 51 Cash and cash equivalents Note 23 1,488 694

Total current assets 9,135 7,731

TOTAL ASSETS 71,065 76,704

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity Note 28Share capital 621 621 Reserves Note 29 196 2,850 Earnings brought forward, including currentyear profit 19,970 22,890

Shareholders’ equity attributable to Parent Company shareholders 20,395 26,361 Minority interest 17,318 18,723

Total shareholders’ equity 37,714 45,085

LiabilitiesLong-term liabilitiesLongterm interestbearing liabilities Note 23, 37 9,317 8,052 Other longterm liabilities Note 30 10 10 Provision for pensions Note 31 420 309 Other provisions Note 14, 32 1,100 678 Deferred tax liabilities Note 14 11,491 13,142

Total long-term liabilities 22,338 22,192 Current liabilitiesCurrent financial liabilities Note 23, 37 5,583 5,153 Accounts payable Note 33 2,403 2,458 Current tax liability Note 14 103 77 Provisions Note 14, 32 277 102 Other current liabilities Note 33 2,647 1,638

Total current liabilities 11,013 9,427 Total liabilities 33,351 31,619

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 71,065 76,704 Information on the assets pledged by the Group and contingent liabilities is presented in Note 35.

Balance sheet, Group

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ACCOUNT OF RECOGNIZED REVENUES AND COSTS, GROUP, SEK m. 2008 2007

Cashflow hedges Recognized directly in shareholders’ equity 1,345 189 Transferred from shareholders’ equity to income statement 309 34 Transferred from shareholders’ equity to fixed assets 1 2

Translation difference on foreign operations 445 29 Hedging of net investment in foreign operations 541 33 Available for sale financial assets

Revaluations recognized directly in shareholders’ equity 2,924 939 Recognized in income statement on sale 7

Actuarial revaluation of pension liability 170 58 Tax attributable to items recognized directly in shareholders’ equity 570 41 Changes in associated companies’ shareholders’ equity 50 36

Changes in net asset value recognized directly in shareholders’ equity, excluding transactions with the company’s owners - 3,715 - 1,086

Net profit during the year 2,025 5,010

Total changes in net asset value, excluding transactions with the company’s owners - 5,741 3,923

Attributable toParent Company’s shareholders 5,370 1,651 Minority interest 371 2,273

- 5,741 3,923

CASH FLOW STATEMENT, GROUP, SEK m. Note 23, 27 2008 2007

Operating activities Profit before taxes 2,571 7,426 Adjustments for items not included in cash flow ¹ 6,862 2,558 Taxes paid 397 651

Cash flow from operating activities before changes in working capital 3,895 4,218

Cash flow from changes in working capital Change in inventories 236 432 Change in current receivables 26 210 Change in current liabilities 230 175

CASH FLOW FROM OPERATING ACTIVITIES 3,402 3,401

Investing activities Acquisition of tangible fixed assets 1,211 1,383 Sale of tangible fixed assets 23 11 Investment in investment properties 312 333 Acquisition of properties/subsidiaries 369 Sale of properties/subsidiaries 3,372 Acquisition of financial assets 270 3,503 Sale of financial assets 83 759 Acquisition of other fixed assets 20 60Sale of other fixed assets 12 6

CASH FLOW FROM INVESTING ACTIVITIES - 1,695 - 1,500

Financing activities Loans raised 1,377 1,800 Repayment of loans 709 809 Change in financial liabilities 19 201 Change in financial receivables 17 1 Dividend paid to Parent Company’s shareholder 558 527 Dividend paid to minority interests 1,072 2,046

CASH FLOW FROM FINANCING ACTIVITIES - 926 - 1,784

CASH FLOW DURING THE YEAR 782 118

Cash and cash equivalents on January 1 694 575 Exchangerate effects 12 1

Cash and cash equivalents on December 31 1,488 694

1) The adjustment pertains mainly to depreciation, results on sales of fixed assets, participations in results of associated companies and revaluation effects in accordance with IAS 40, 41 and 39.

Account of recognized revenues and costs and Cash flow statement

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Note 1 - Accounting principles

The accounting principles for the Group below have been applied consistently for all periods presented in the Group’s financial statements, unless specified below. The Group’s accounting principles have been applied consistently in the reporting and consolidating of the Parent Company, subsidiaries and joint ventures, as well as the inclusion of associated companies.

Compliance with norms and lawThe consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretative statements issued by the International Financial Reporting Interpretations Committee (IFRIC) as approved by the EU Commission for application within the EU. In addition, RFR 1.1, Supplementary accounting rules for corporate groups, issued by the Swedish Financial Reporting Council, has been applied.

The Parent Company applies the same accounting principles as the Group, with the exception of entries specified in Note 1, Parent company accounting principles, on page 66. The deviations between the Parent Company and Group principles were caused by limitations in terms of opportunities to apply IFRS in the Parent Company due to the Annual Accounts Act, the Pension Security Act and, in certain cases, tax considerations.

Valuation basis applied for the preparation of Parent Company and Group financial reportsAssets and liabilities are reported at historical acquisition values, with the exception of certain financial assets and liabilities, investment properties and biological assets, which are measured at fair value. Financial assets and liabilities reported at fair value consist of derivative instruments, financial assets classified as financial assets that are measured at fair value via the profit and loss or availableforsale financial assets.

Functional currency and reporting currencyThe Parent Company’s functional currency is Swedish krona (SEK), which is also the reporting currency for the Parent Company and the Group. Accordingly, the financial statements are presented in SEK. Unless stated otherwise, all amounts are rounded off to the nearest million.

Accounting estimatesIn order to prepare the financial reports in accordance with IFRS, corporate management is required to make accounting estimates as well as assumptions that effect the application of the accounting principles and the reported amounts of assets, liabilities, revenues and costs. Actual results may deviate from these accounting estimates.

The accounting estimates are reviewed regularly. Changes in estimates are reported in the period during which the change is made, only if it affects the period, or in the period the change is made and future periods if the change affects the current period and future periods.

Assessments made by corporate management in the application of IFRS that have a significant impact on the financial reports and estimates that may require substantial adjustments in the financial reports of future years are described in greater detail in Note 36.

Changes in accounting principlesNo new standards for 2008 have been applied when compiling the current financial statements.

New IFRS and interpretations that have yet to be appliedIFRS 8 Operating segments describes what an operating segment is and the type of information that has to be provided concerning such segments in financial statements. The standard is to be applied as of fiscal years beginning January 1, 2009 or later. Application of IFRS 8 is not expected to result in any difference in terms of classification of business segments, compared with the current financial statements.

Revised IAS 1, Presentation of Financial Statements, entails certain changes in the presentation of financial statements and proposes new, nonstatutory designations for financial statements. The change does not affect the designation of the amounts that are reported. The revised IAS 1 is to be applied as of fiscal years beginning January 1, 2009 or later.

Amendment of IAS 23, Borrowing Costs, states that borrowing costs that are directly attributable to assets that require considerable time to complete must be capitalized. The amendment is to be applied as of fiscal years beginning January 1, 2009 or later.

Lundbergs has elected not to apply this standard in advance.

Segment reportingA segment is a distinguishable component of the Group for accounting purposes that either provides goods or services (line of business) or provides goods or services in a certain economic environment (geographical area)) that is exposed to risks and opportunities that differ from those of other segments. Lines of business are the primary basis for the division of the Group’s segments. Because the Group’s internal reporting systems are structured with due consideration

for efforts to monitor returns on the Group’s products and services, lines of business represent the primary basis for division of segments.

Conditions for companies operated on a commission basisHolmen’s operations are conducted mainly through the following companies on behalf of Holmen: Holmen Paper AB, Iggesund Paperboard AB, Holmen Timber AB, Holmen Skog AB and Holmen Energi AB.

Classifications, etc.Virtually all significant fixed assets and longterm liabilities consist of amounts expected to be recovered or paid more than 12 months after the balance sheet date. Virtually all significant current assets and current liabilities in the Parent Company and Group consist of amounts expected to be recovered or paid within 12 months of the balance sheet date.

Consolidated accountsSubsidiariesSubsidiaries are companies under the controlling influence of L E Lundbergföretagen AB. Controlling influence is defined as direct or indirect entitlement to formulate a company’s financial and operating strategies in order to reap financial benefits. Assessments of controlling influence must include determinations of whether shares with potential voting entitlements can be used or converted without undue delay.

Subsidiaries are reported in accordance with the purchase method, whereby the acquisition of a subsidiary is treated as a transaction through which the Group indirectly acquires the subsidiary’s assets and assumes responsibility for its liabilities and contingent liabilities. The consolidated acquisition value is determined through an acquisition analysis conducted in conjunction with business acquisitions. The analysis establishes the acquisition value of the shares or business operations, the fair value on the date of acquisition of the acquired, identifiable assets and assumed liabilities and contingent liabilities.

The acquisition value of shares in subsidiaries or in business operations comprises the sum total of the fair value on the date of acquisition of assets provided, liabilities that have arisen or been taken over and issued equity instruments that have been provided as payment in return for the acquired net assets, plus transaction costs that are directly attributable to the acquisition. For business acquisitions in which the acquisition value of the subsidiary’s shares exceeds the fair value of the acquired assets, assumed liabilities and contingent liabilities, the difference comprises consolidated goodwill. When the difference is negative, it is entered directly in profit or loss.

The financial reports of subsidiaries are included in the consolidated accounts from the acquisition date until the final date of controlling influence.

Associated companiesAssociated companies are companies in which the Group has a significant but not a controlling influence over operating and financial control, usually through shareholdings ranging from 20 to 50% of total voting rights. Shares in associated companies are reported in the consolidated accounts in accordance with the equity method, as of the effective date on which significant influence is acquired. In accordance with the equity method, the Group’s carrying amounts for shares in associated companies correspond with the Group’s share of equity in the associated companies, as well as consolidated goodwill and other possible residual values of consolidated surplus and deficit values. The Group’s share in the net result of associated companies after financial items and minority interests reported in the consolidated income statement as “Participations in results of associated companies,” after adjustments for any depreciation, impairments or liquidations of acquired surplus and deficit values. Dividends received from associated companies are deducted from the carrying amount of the investments.

In connection with acquisitions, any differences between the acquisition value of the acquired holding and the owning company’s share in the net fair value of the associated company’s identifiable assets, liabilities and contingent liabilities are reported in accordance with IFRS 3, Business Combinations.

When the Group’s share of reported losses in the associated company exceeds the carrying amount of shares held by the Group, the value of the shares is reduced to zero. Settlements for losses are also made against longterm financial dealings entered into without collateral, which by their financial nature represent a part of the ownership company’s net investment in the associated company. Subsequent losses are not reported, provided that the Group has not issued guarantees to cover losses arising in the associated company. The equity accounting method is applied up to the final date of significant control.

Joint venturesFor accounting purposes, joint ventures are defined as companies in which the Group has a controlling influence over operating and financial control through cooperation agreements with one or more partners. In the consolidated accounts, holdings in joint ventures are consolidated in accordance with the proportional accounting method, whereby the Group’s share of rev

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enues, expenses, assets and liabilities in joint ventures is reported in the consolidated income statement and balance sheet. This is effected by combining the joint owner’s share of assets, liabilities, revenues and expenses in a joint venture is itembyitem with corresponding entries in the joint venture owners’ consolidated accounts. Shareholders’ equity accrued after the acquisition is the only item reported under Group equity. The proportional accounting method is applied from the date on which joint controlling interest is acquired until the date when such influence is terminated.

Transactions to be eliminated on consolidationAll intraGroup receivables, liabilities, revenues or expenses and unrealized gains or losses attributable to intraGroup transactions between Group companies are eliminated when the consolidated accounts are prepared. Unrealized gains arising from transactions with associated companies and jointly controlled companies are eliminated to an extent corresponding to the Group’s ownership share in the companies. Unrealized losses are eliminated in accordance with the same criteria as eliminations of unrealized gains, but only to the extent that there is some indication of impairment requirements.

Foreign currencyTransactions in foreign currencyTransactions in foreign currency are translated to the functional currency using the exchange rate on the transaction date. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency using the exchange rate prevailing on the balancesheet date. Exchangerate differences arising from currency translations are reported in profit or loss. Nonmonetary assets and liabilities that are reported at historical acquisition values are translated using the exchange rate on the transaction date.

Financial reports of foreign operationsAssets and liabilities in foreign operations, including goodwill and other consolidated surplus and deficit values, are translated from the functional currencies of the foreign business operations to the Group’s reporting currency, Swedish krona (SEK), using the exchange rate prevailing on the balancesheet date. Revenues and expenses in foreign operations are translated to SEK using an average exchange rate that represents an approximation of the exchange rates for each transaction date in question. Translation differences arising from currency translations of foreign operations are reported directly under shareholders’ equity as a translation reserve. Associated effects of hedges of net investments are recognized directly in the translation reserve in equity. When a foreign operation is divested, the accumulated translation differences attributable to the operation are realized in the consolidated income statements less currency hedging. At the date of the transition to IFRS, the Group elected to assign a zero value to accumulated translation differences attributable to foreign operations.

RevenuesNet salesRental revenues are accrued in accordance with the rental contracts. Accordingly, rent paid in advance is reported as prepaid rental revenue. Discounts granted as compensation for successive occupancies, for example, are reported in the period they are granted. Other discounts are distributed over the term of the rental contracts. Rental revenues include items related to forwardinvoicing of costs incurred, such as property tax and media expenses.

In Lundbergs’ Real Estate Management operations, sales of properties classed as current assets are also recognized as net sales.

For Lundbergs’ Equity Management segment, net sales comprise sales of securities and dividend income. Dividend income is reported when the dividend has been approved and the entitlement to receive payment is considered secure.

In Hufvudstaden, net sales from parking operations are also recognized.For the Holmen business area, invoiced sales, excluding value added tax, attributable to

products, timber and energy are recognized as net sales. Reported amounts are reduced by product discounts granted and similar revenue reductions and include exchangerate differences on sales in foreign currency. Sales are reported after the Group has transferred the critical risks and useful value related to ownership rights to goods sold to the purchaser, and there is no power of appointment or any remaining possibility to exercise actual control over the goods that were sold.

Other revenuesRevenues attributable to activities outside the ordinary business operations, changes in inventories, capitalized work on the company’s own behalf and value changes in biological assets are recognized as other revenues.

Government assistanceGovernment assistance is recognized in the Balance Sheet as prepaid revenue when it can be stated with reasonable certainty that the assistance will be received and that the Group will fulfill the terms and conditions associated with the assistance. The assistance is accrued systemati

cally in profit or loss in the same way and over the same periods as the costs that the assistance is intended to offset. Government assistance related to assets is recognized in the Balance Sheet as a reduction in the asset’s carrying amount.

Revenues from property salesRevenues from property sales are normally reported on the date of transfer, provided that no risks and benefits have been transferred to the buyer prior to the transfer date. If control over the asset has been transferred at a time earlier than the possession transfer date, revenue from the property sales is reported at the earlier point of time. In assessments of revenue reporting dates, due consideration is taken for agreements between the parties with regard to risks and benefits and involvement in continued management. In addition, circumstances beyond the control of the seller and/or buyer that might affect completion of the transaction are also taken into consideration.

Sales of products and implementation of service assignmentsRevenues attributable to sales of products are reported in profit or loss when significant risks and benefits related to ownership of the products have been transferred to the buyer. Revenues attributable to service assignments are reported in profit or loss based on the degree of completion on the balance sheet date.

Construction contractsWhen the outcome of a construction contract can be reliably estimated, the income from the assignment and the expenses attributable to the assignment are recognized as revenues and costs, respectively, in the consolidated income statement in relation to the assignment’s degree of completion, also known as the degreeofcompletion method. The degreeofcompletion is established by calculating the relationship between costs incurred for work performed on the assignment at the balance sheet date and estimated total expenditure for the assignment.

For assignments whose outcome cannot be reliably estimated, revenue corresponding to costs incurred is recognized. An anticipated loss on a construction contract assignment is recognized immediately in the consolidated income statement.

Financial income and expenseFinancial income and expense consists of interest income attributable to bank balances and receivables, interestbearing securities, interest expense on loans, dividends not included in the Equity Management business area, unrealized and realized gains on financial investments and revaluations of financial instruments recognized at fair value and unrealized and realized exchange rate losses and gains.

Calculations of interest income on receivables and interest expense on liabilities are based on the effective interestrate method. The effective rate is the interest rate that renders the present value of all future cash receipts and disbursements during the anticipated remaining fixed interest maturity equal to the net carrying amount of the receivable or liability. The calculation includes all amounts paid or received by the contractual parties as part of the effective rate of interest, transaction costs and all surplus or deficit amounts. Dividend income is recognized when the right to receive the dividend has been established. Results from the divestment of financial instruments are recognized when the risks and benefits associated with ownership of the instrument are transferred to the buyer and the Group no longer has control over the instrument.

Interest income and interest expense are recognized in profit or loss for the period to which the amounts pertain.

TaxesIncome taxes are reported in profit or loss consist of current tax and deferred tax. Income taxes are recognized in profit or loss, apart from when underlying transactions are recognized directly in equity, whereby the related tax effect must also be recognized in equity. Current tax is the tax to be paid or received for the current year, applying the tax rate decided or decided in principle on the balancesheet date. Adjustment of current tax attributable to previous periods is also included here. Deferred tax is calculated in accordance with the balancesheet method, on the basis of the temporary differences between the reported and taxassessment value of assets and liabilities, based on the tax rates and tax regulations that have been decided or announced on the balancesheet date. Temporary differences are not taken into account in consolidated goodwill or in differences pertaining to participations in subsidiaries or associated companies that are not expected to become subject to tax in the foreseeable future.

Deferred tax assets pertaining to deductible temporary differences and tax loss carryforwards are only reported insofar as they are likely to be utilized in the future. Deferred tax assets and deferred tax liabilities in the same country are reported net.

Earnings per shareEarnings per share are calculated on the basis of consolidated earnings attributable to the Parent Company’s shareholders and on the weighted average number of shares outstanding during the year.

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Note 1, continued

Financial instrumentsFinancial instruments are valued and recognized in profit or loss in accordance with the rules in IAS 39. A financial instrument that is not a derivative instrument is valued initially at acquisition value (cost), which corresponds to the instrument’s fair value plus transaction expenses, with the exception of the categories of financial assets or financial liabilities measured at fair value through profit and loss, which are recognized excluding transaction expenses. On the first accounting occasion, a financial instrument is classified on the basis of the reason for acquiring the instrument.

Financial assets or liabilities are recognized in accordance with the trade day method. A financial asset or financial liability is entered in the balance sheet when the company becomes party to the instrument’s terms of agreement. Trade accounts receivable are entered in the balance sheet when the invoice has been sent. Rent receivables, however, are entered at the beginning of each rental period. Liabilities are entered when the counterparty has fulfilled his obligation and a contractual obligation to pay has arisen, even if the invoice has not been received. A financial asset (or part thereof) is removed from the balance sheet when the rights in the agreement are realized, expire or the company sells all significant risks and benefits associated with ownership. A financial liability (or part thereof) is removed from the balance sheet when the obligation in the agreement is fulfilled or is otherwise nullified.

A financial asset and a financial liability are offset and reported with a net amount in the balance sheet only when there is a legal entitlement to offset the amounts, and the company intends to adjust the entries by a net amount or to simultaneously realize the asset and settle the liability.

Financial instruments intended to be held permanently in the operations are classified as fixed assets.

Cash and cash equivalents consist of cash and immediately available bank deposits, as well as shortterm investments (with a maturity of not more than three months from the date of acquisition). Bank overdraft facilities are classified as loan liabilities under current liabilities.

Interest-bearing receivables and marketable securities are valued continuously at accrued acquisition value in accordance with the effective interestrate method.

Shares held as investments are measured at fair value through profit and loss. Some shareholdings are classified in the category availableforsale financial assets, valuations of which are adjusted continuously to fair value, with the change in value entered directly under equity. When the investments are removed from the balance sheet, the previously reported accumulated profit or loss is transferred to equity in profit or loss.

Rental and trade accounts receivable are valued continuously at accrued acquisition value, since these items have short anticipated durations, and the valuation is made without discounting to nominal amounts. A receivable is tested individually with regard to anticipated loss risk and booked at the projected payment amount.

Trade accounts payable are valued continuously at accrued acquisition value, since accounts payable have short anticipated durations, and the valuation is made without discounting to nominal amounts.

Loans are reported on a current account basis at accrued acquisition value applying the effective annual interest rate method. In Holmen, however, loans are reported as hedged against change in values and loans reported with the support of the fairvalue option are reported continuously at market value.

Derivative and hedge reporting. Derivative instruments are measured at fair value, with change in values charged against profit and loss. Derivative instruments include forward contract agreements, options and swaps that are used to cover the risk of equity and exchange rate fluctuations and exposure to interestrate and commodity risks. Hedge accounting may be applied when there is a link to the hedged item and hedging effectively covers the hedged position. Whenever derivatives are used for hedge accounting, to the extent they provide effective coverage, change in values in the derivative are recognized in profit and loss on the same line as the hedged item. Even if hedge accounting is not applied, value increases and declines in derivatives are reported as income and expense, respectively, under operating profit or net financial items, based on the intended purpose of the derivative instrument and whether or not its application relates to an operational item or financial item. If hedge accounting is not applied in the utilization of interest swaps, the interest coupon is reported as interest and other changes in the value of the interest swap are reported as other financial income or other financial expense.

Calculating fair value. The fair value of financial instruments traded on an active market is based on quoted market prices. If no quoted market prices are available, fair value has been calculated by discounting cash flows. When calculations of discounted cash flows are performed, all variables, such as discount interest rates and exchange rates, for the calculations are derived from

market quotations. Valuations of currency options have been performed applying the Black & Scholes formula.

Cash flow hedging. The derivative instruments used for hedging future cash flows are recognized at fair value in the balance sheet. The effective portion of the change in value of cash flow hedges is recognized in shareholders’ equity up to the time the hedged flow reaches the income statement, whereby the accumulated change in value of the hedging instrument is transferred to the income statement to offset the effects on profit/loss of the hedged transaction. The ineffective portion is reported in profit or loss. Whenever a derivative instrument no longer meets the requirements for hedge accounting, or when the hedging instrument expires, is sold or terminated, the possible profit or loss that has arisen is reported as an adjustment of interest expense, and all hedged future interest payments are recognized in profit or loss. If the hedged future interest payments are not expected to be made, any accumulated losses are recognized directly under profit/loss, and any gains are recognized as revenues when the derivative expires, is sold or is terminated.

Hedging of fair value. The derivative instrument is recognized at fair value in the balance sheet, and the hedged asset/liability is also entered at fair value with regard to the hedged risk. The change in value in the derivative is reported in profit or loss with the change in value reported in the hedged item.

Hedging of net investments. Changes in the value of hedging pertaining to net investments in foreign operations are recognized in shareholders’ equity on a continuous basis. Accumulated changes in value are maintained in shareholders’ equity until the operation is divested, when the accumulated value change is recognized in profit or loss.

Other operating receivables and operating liabilitiesAfter individual valuations, changes have been reported in amounts expected to be received.

Intangible fixed assetsIntangible assets consist of goodwill, patents, licenses, emission rights and IT systems.

Goodwill represents the difference between the acquisition value of an acquired business operation and the fair value of the acquired assets and liabilities and contingent liabilities. Goodwill is valued at acquisition value, less any accumulated impairment. Goodwill arising from acquisitions of associated companies is included in the carrying amount of shares in associated companies.

Research expenditure is expensed as it occurs. Expenditure for development is capitalized insofar as it is expected to generate economic benefits in the future.

Other development expenditure is reported in profit or loss when it is incurred. The development expenditure recognized in the balance sheet is booked at acquisition value, less accumulated amortization and impairments.

Emission rights are reported initially at market price upon allotment. During the year, this allotment is entered as revenue at the same time as a provision corresponding to emissions during the year, is expensed.

Amortization principlesAmortization is reported straightline in profit or loss over the estimated useful life of the intangible assets, provided such useful life cannot be determined. Intangible assets are amortized over a period of 310 years, with the exception of goodwill and emission rights.

Amortizable intangible assets are amortized from the date they become available for utilization. The estimated useful life (years) is:

Patents and licenses 510IT systems 310

Tangible fixed assetsTangible fixed are recognized at acquisition value less accumulated depreciation and any impairment. Tangible fixed assets that consist of components with different useful lives are treated as separate components of tangible fixed assets. The acquisition value includes the purchase price and costs directly attributable to measures implemented to adapt the asset to the site and to a condition whereby it can be utilized for the purpose that it was acquired. Additional expenditure is capitalized only if it is adjudged to generate financial benefits for the company. The critical factor in assessments of when an additional expenditure should be added to the carrying amount is whether or not it replaces identified components, or parts thereof, and in such cases the expenditure is capitalized. The expenditure is also added to the carrying amount in cases where new components are created. Any recognized values for replaced components, or parts thereof, that has not been depreciated, is scrapped and expensed in connection with the replacement. Interest on the acquisition value of assets is not capitalized.

Properties that are being built or developed for future use as investment properties are classified as tangible fixed assets and recognized at acquisition value until work on them has been completed. Subsequently, the properties are reclassified as investment properties and restated at fair value, whereby the change in value is recognized in profit or loss.

Notes, Group

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Depreciation principlesDepreciation is reported in profit or loss as straightline depreciation over the estimated useful life. The Group applies component depreciation, whereby the estimated useful life is the basis for depreciation. Depreciation according to plan is based on the historical acquisition value, less estimated residual value, with due consideration for impairments. The following useful life (years) is used:

Machinery for hydroelectric power generation 2040Investment and storage buildings, housing (Holmen) 2033Operational buildings, land improvements and pulp, paper and board production machinery 20Sawmill machinery 12Other machines 10Forest motor roads 10Fixtures and fitting 35

Land is not depreciated. Assessments of an asset’s residual value and useful life are made at regular intervals.

ImpairmentsCarrying amounts for the Group’s assets are impairment tested at the close of every fiscal year to determine if there are indications of impairment requirements. Exceptions are made for biological assets, investment properties, financial assets, deferred tax assets, inventories, availableforsale assets and divestment groups reported in accordance with IFRS 5, and investment properties used to finance employee benefits. If any indication of impairment arises, an estimate is made to determine the asset’s recoverable value. For the exempted assets, as listed above, values are tested in accordance with the respective standard.

Intangible fixed assets. Goodwill is allocated to cashgenerating units and is tested annually for impairment requirements. Emission rights are tested for impairment requirements on the basis of current market prices. Amortization of goodwill is not reversed.

Tangible fixed assets. If there are indications that carrying amounts of Group assets are too high, an analysis is conducted whereby the recoverable value of individual assets or naturally related asset types is determined as the higher of net realizable value and value in use. Value in use is measured as the projected future discounted cash flow. Impairment corresponds to the difference between the carrying amount and recoverable value. Impairments may be reversed if a positive change has occurred in the parameters used to determine the asset’s recoverable value. A reversal is posted only insofar as the carrying amount of the asset after reversal does not exceed the carrying amount that would have been recognized, less depreciation if applicable, if no impairment had been posted.

Financial assets. For equity instruments classified as availableforsale assets, a significant and protracted decline in their fair value to a level less than their acquisition value is required before impairment can be posted. If an availableforsale asset qualifies for impairment, any previously accumulated value decline that has been recognized directly in equity must be reversed to the income statement. Impairment of equity instruments that is recognized in profit or loss may not subsequently be reversed through profit and loss. For listed shares, the impairment requirement is based on the current share price at each particular time.

Biological assetsThe Group reports its forest assets by dividing up standing forests, which are reported as biological assets at fair value, and land, which is reported at acquisition cost. Changes in the fair value of standing forests are reported in profit or loss. It is Holmen’s assessment that no relevant market prices are available to value forest holdings the size of Holmen’s forests. Accordingly, the valuation is based on estimated present value of the projected future cash flow from the standing forests. Reference is also made to Note 18.

Felling rights are recognized as inventories. These rights are acquired with a view to ensuring Holmen’s requirement of raw materials by means of felling. No measurable biological transformation occurs from the date of acquisition until the felling date.

Investment propertiesInvestment properties are properties held in order to receive rental revenues and/or value growth. Initially, investment properties are reported at acquisition value, which includes expenditures directly attributable to the acquisition. Investment properties are reported at fair value in the balance sheet. Fair value is based on internal valuations that are quality assured with the help of external valuations of a selection of properties. Updates are made continuously during the year of the properties’ fair value based on acquisitions and divestments. Analyses are also made to determine if there are other indications of changes in fair value of the properties. If there are indications of significant changes in value during an ongoing year, revaluation occurs in connection with the following quarterly interim report. Also refer to Note 19. Both unrealized

and realized changes in values are reported in profit or loss. Changes in values are reported net in profit or loss, but divided among unrealized and realized change in values, as presented in Note 11.

Additional expenditures – investment propertiesAdditional expenditures are added to the carrying amount only if the future economic benefits linked to the asset are likely to become available to the company and the acquisition value can be estimated in a reliable manner. All other additional expenditures are reported as costs in the period they are incurred. The critical factor in assessments of when an additional expenditure should be added to the carrying amount is whether or not it replaces identified components, or parts thereof, and in such cases the expenditure is capitalized. The expenditure is also added to the carrying amount in cases where new components are created. The cost of repairs is expensed as they occur.

InventoriesInventories are valued at the lower of acquisition value and production cost after an allowance for obsolescence or the net realizable value. The acquisition cost of inventories is calculated using the FIFO (firstin firstout) method. The net realizable value is the estimated selling price in operating activities less the estimated cost of finishing the product and making it available for sale. The acquisition cost of products manufactured by the company consists of direct production costs and a reasonable portion of indirect costs. Properties classed as current assetsProperties classed as current assets (development properties) are valued in accordance with the lowest value principle per property or per valuation unit. Required impairment and recovery of previous impairments in accordance with this principle are reported under operating costs.

LeasingLeasing is classified in the consolidated accounts as financial leasing or operational leasing. Leasing of fixed assets, for which the Group is exposed to virtually the same risks and benefits as direct ownership of fixed assets, is classified as financial leasing. Accordingly, the leased asset is reported as a fixed asset and future leasing fees are reported as interestbearing liabilities. Leasing charges are distributed over the leasing period so that each reporting period is charged with an amount that corresponds to a fixed interest rate for the amount recognized as a liability during the particular period. Variable charges are expensed during the period when they arise. Leasing of assets for which the lessor retains all practical ownership of the asset is classified as operational leasing, and the leasing fees are expensed.

Employee benefitsDefined-contribution plansPension plans for which the company’s obligation is limited to the contributions the company pledges to pay are classified as definedcontribution pension plans. In such cases, the size of the employee’s pension depends on the contributions paid by the company to the plan or to an insurance company plus the capital return that the contributions yield. Accordingly, the employee is exposed to the actuarial risk (that the remuneration will be lower than expected) and the investment risk (that the invested assets will not be sufficient to yield the expected remuneration). Obligations concerning fees to definedcontribution plans are reported as an expense in profit or loss during the period the employee performed the services for which the fee is intended.

Defined-benefit plansThe Group’s salaried employees in Sweden are included in the socalled ITP plan, which consists of the following benefits:

Retirement pensions ITPK (supplementary retirement pension) Disability pensions Collective family pensions

Obligations for retirement pensions and family pension plans for salaried employees in Sweden are covered through insurance in Alecta. In accordance with UFR 3, a statement issued by the Swedish Financial Reporting Council, the coverage is a definedbenefit plan that includes several employers. Since the company did not have access to information to support reporting of this plan as a definedbenefit plan, the ITP pension plan covered by insurance in Alecta is reported as a definedcontribution plan. Obligations regarding fees for definedcontribution plans are reported in profit or loss as expenses when they arise. In addition to the above exceptions, there are definedbenefit obligations for:

Lundbergs Obligations in accordance with the FPG/PRI systemHolmen Obligations in excess of the ITP plan for Group management in Sweden, secured through foundations Pensions plans in the UK, in socalled trusts.

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Note 1, continued

The Group’s net obligations for definedbenefit plans are calculated separately for each plan based on estimates of the future benefits employees have vested through their employment in both current and previous periods of employment; this benefit is discounted to a present value and the fair value of any plan assets is deducted. The discount rate is the interest rate prevailing on the balancesheet date on a firstclass corporate bond with a term corresponding to the Group’s pension obligations. When there is no active market for such corporate bonds, the market interest rate for government bonds with a corresponding term is used. The computation is made by a qualified actuary based on the projected unit credit method. When the benefits in a plan improve, the percentage of increased benefits attributable to the employee’s service during previous periods is reported straight line in profit or loss as an expense distributed over the average period until the benefits are fully vested.If the benefit is fully vested, an expense is entered directly in profit or loss.

The Group recognizes all actuarial gains and losses resulting from definedbenefit plans directly in equity.

The net amount of the interest on the pension liability and the anticipated return on associated plan assets is recognized in net financial items. All components included in the period’s costs for a definedbenefit plan are recognized in operating profit.

When how the pension liability is measured in the Group differs from how it is measured in the legal entity, a provision or a receivable pertaining to the special payroll tax based on this difference is recognized. The provision or receivable is not present valued.

Options issued to employeesSince a fairmarket premium has been paid for issued options, IFRS 2 is not applicable. The premium received has been expensed. For cases in which the premium and redemption price are less than market value at the balancesheet date, the difference is recognized in the balance sheet as a liability. Also refer to Note 5.

Remuneration in the event of employment terminationA cost for remuneration paid in connection with employment termination is recognized only if there is evidence that that Group is obliged, without any realistic opportunity of withdrawal, by a formal detailed plan to terminate employment before the normal time. When remuneration is paid as an offer to encourage voluntary retirement, a cost is recognized if it is probable that the offer will be accepted and the number of employees who will accept the offer can be reliably estimated.

Short-term remunerationShortterm remuneration to employees is estimated without discounting and is expensed when the related services have been received.

ProvisionsA provision differs from other liabilities in that uncertainty prevails concerning the date of payment or the amount that will be required to settle the provision. A provision is recognized in the balance sheet when the Group has an existing legal or informal commitment resulting from an event that has occurred, it is probable that an outflow of resources will be required to settle the commitment and the amount concerned can be reliably estimated. The provision is posted in an amount that represents the best estimate of what will be required to settle the existing obligation on the balancesheet date. If the effect of when payment is made is significant, the calculation of the provision is discounted by the anticipated future cash flow at a pretax interest rate that reflects current market assessments of the time value of the monies involved and, where applicable, risks associated with the liability.

A provision for restructuring is reported when the Group has established a detailed and formal restructuring plan, and restructuring has either been started or announced publicly. No provisions are made for future operating expenses.

Provisions are posted for environmental measures associated with prior operations on condition that they do not contribute to current of future revenues, it is probable that payment liability will arise and the amount concerned can be reliably estimated.

Based on interpretations of current environmental legislation and forestry regulations, reserves for future forestry charges are calculated when it is considered likely that a payment obligation will arise and a reasonable estimation of the amount can be made.

Contingent liabilitiesA contingent liability is reported when there is a possible commitment deriving from events that have occurred whose existence can only be confirmed if one or more uncertain future events that are not fully within the control of the company occur or when there is a commitment that has not been reported as a liability or entered as a provision because it is not certain that an outflow of resources will be required.

OtherSome of the reported figures have been rounded off, which means that tables and calculations do not always tally. In texts and tables, figures between 0 and 0.5 are reported as 0. If a value is not available, this is indicated by a dash ().

Note 2 - Information about the company

L E Lundbergföretagen AB (publ) is a Swedishregistered limited liability company with Stockholm as the registered office of the Parent Company. The Parent Company’s shares are listed on Nasdaq OMX Nordic, Large Cap. The address to the company’s Head Office is PO Box 14048, SE104 40 Stockholm.

Note 3 - Net sales, SEK m.

2008 2007

Investment properties Rental revenues, etc. 2,161 2,084 Sales of properties classed as current assets 47 52 Other revenues 69 69

Equity managementSales of marketable securities, etc. 256 1,293 Dividends 482 392

Newsprint and magazine paper 10,177 10,149 Paperboard 4,677 4,953 Timber 3,064 2,727 Energy 550 415 Sawn wood products 499 589 Other 368 327

22,350 23,049

Note 4 - Other revenues, etc. SEK m.

2008 2007

Noncore activities Sale of byproducts 1 253 264 Electricity certificates 2 72 49 Sale of fixed assets 29 9 Forestry assignments 44 53 Emission rights 3 18 1Other 4 339 266

755 642

Change in fair value of biological assets 16 2,189 Change in inventories of shares 140 15 Change in inventories of finished products and work in progress 106 62

230 2,266

985 2,908

1) Of sales of byproducts, surplus products from production accounted for SEK 160 m. (92), sawdust, bark, wood chips, etc. for SEK 53 m. (126) and external sales of energy for SEK 40 m. (46).

2) Revenue received from the production of renewable energy at the Group’s Swedish mills.3) Allotment of emission rights, which are used largely in Holmen’s production operations. The surplus resulted

in SEK 18 m. (1) being recognized as profit.4) For 2008, the Other category includes SEK 154 m. for such revenues as insurance compensation arising from

a fire at the Braviken paper mill. The figure for 2007 included SEK 117 m. from the sale of shares and participating rights.

Notes, Group

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of whom of whom Average number of employees 2008 men, % 2007 men, %

Parent Company – Sweden 9 72 9 75

Total in Parent Company 9 72 9 75

Wholly owned subsidiaries – Sweden 164 75 168 74Hufvudstaden Sweden 87 50 88 48Holmen

Sweden 3,511 83 3,628 84 Australia 3 67 3 67 Belgium 3 33 3 33 Denmark 3 33 3 33 Estonia 22 73 22 73 France 31 81 30 77 Hongkong 5 80 5 80 Italy 7 43 7 43 Netherlands 112 73 122 61 Poland 6 50 6 50 Portugal 2 50 2 50 Switzerland 7 57 7 57 Singapore 5 40 5 40 Spain 573 82 540 84 United Kingdom 511 89 521 91 Germany 17 53 17 59 United States 11 73 10 70

Total in subsidiaries 5,080 82 5,187 83

Total in Group 5,089 82 5,196 83

Distribution of company management by gender Percentage of women 2008 2007

Parent CompanyBoard of Directors 11 13Other senior executives 10 11

Group totalBoard of Directors 13 14Other senior executives 11 6

Guidelines resolved by the Annual General Meeting for remuneration of senior executives The 2008 Annual General Meeting resolved to adopt the following guidelines for determining salaries and other remuneration paid to the President and other senior executives in L E Lundbergföretagen AB and its wholly owned subsidiaries Fastighets AB L E Lundberg and L E Lundberg Kapitalförvaltning AB.

Remuneration of the Group’s senior executives shall consist of fixed salary, bonus payments, other benefits and pension privileges. The total remuneration should be competitive in the market and be proportionate to each executive’s responsibility and authority.

For senior executives employed by L E Lundbergföretagen AB or Fastighets AB L E Lundberg, bonus payments shall be based on earnings and profitability targets, and be maximized so that they do not exceed three months’ salary. For senior executives of L E Lundberg Kapitalförvaltning AB, any bonus payments are based on the results of activities, and be maximized to approximately 15% of reported earnings over time. Bonus payments should normally not be pensionable.

In the event that notice of termination is served by the company, the maximum term of notice is 12 months. In the event that notice is served by the company, severance pay corresponding to six months’ salary could, in appropriate cases, be payable.

Pension benefits for the President and other senior executives apply from age 65, with benefits corresponding to the ITP (Individual Supplementary Insurance) plan. No remuneration shall be provided in the form of options or other sharebased incentive programs.

The Board of Directors shall be entitled to deviate from the guidelines if required under special circumstances in certain cases.

The remuneration paid to Board members and senior executives in the Parent Company is presented in the table below.

Note 5 - Employees and personnel costs

Remuneration and other benefits, Parent Company, SEK m.1

Basic salary, Director

fees

Variable remunera-

tionOther

benefitsPension

cost Total

Basic salary, Director

fees

Variable remunera-

tionOther

benefitsPension

cost Total

Chairman of the Board Per Welin 0.4 0.4 0.4 0.4Member of the Board Gunilla Berg 0.2 0.2 0.2 0.2Member of the Board Lennart Bylock 0.2 0.2 0.2 0.2Member of the Board Mats Guldbrand 0.2 0.2 -Member of the Board Tom Hedelius 0.2 0.2 0.2 0.2Member of the Board Sten Peterson

Remuneration from the Parent Company 0.2 0.2 0.2 0.2Remuneration from subsidiaries 0.2 0.2 0.2 0.2

Member of the Board Bengt PetterssonRemuneration from the Parent Company 0.2 0.2 0.2 0.2Remuneration from subsidiaries 0.3 0.3 0.3 0.3

Member of the Board Christer Zetterberg 0.2 0.2 0.2 0.2President Fredrik Lundberg

Remuneration from the Parent Company 1.5 0.2 1.8 1.5 0.4 1.9Remuneration from subsidiaries 0.9 0.9 0.9 0.9

Other senior executives (4 people)2

Remuneration from the Parent Company 8.5 0.2 0.1 1.1 9.9 8.9 0.2 0.1 1.3 10.5Remuneration from subsidiaries 0.5 0.5 0.4 0.4

Total 13.4 0.2 0.1 1.4 15.1 13.6 0.2 0.1 1.7 15.6

1) There are no pension obligations for the President and Members of the Board. Pension obligations for senior executives amount to SEK 0.5 m. (0.8).2) The senior executives who report directly to the President are Ulf Lundahl, Claes Boustedt, Michael Grundberg and Lars Johansson.

2008 2007

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OPTIONSIn 2006, Lundbergs issued a total of 295,000 options to senior Cardo executives with payment based on commercial market terms. The paid premium amounted to SEK 21.50 per option. Each option provides entitlement during the period May 1, 2010 to October 1, 2010 to acquire one Series B Cardo share for SEK 259.00. The calculated value based on fictive exercise at December 31, 2008 was SEK 0 m., which for the option holders implied a net loss of SEK 6.3 m.

Change in number of options Cardoheld by employees 2008 2007

Options outstanding, beginning of year 295,000 Issued 295,000

Options outstanding, year-end 295,000 295,000

Terms and conditions for optionsoutstanding at year-end 2008 2007

Maturity May 1Oct 1, 2010 May 1Oct 1, 2010Exercise price, SEK 259.00 259.00Number 295,000 295,000

In 2003, Lundbergs issued a total of 256,000 options to senior Holmen executives with payment based on commercial market terms. The paid premium amounted to SEK 25 per option. During 2007, all of the options were exercised or repurchased; other information is presented below.

Change in number of options Holmenheld by employees 2008 2007

Options outstanding, beginning of year 186,800Exercised 177,800 Repurchased 9,000

Options outstanding, year-end - -

Information regarding stock options exercised during the year 2008 2007

Maturity March 15, 2007Exercise price, SEK 194.70Amount recognized in balance sheet, SEK 000s 1,659

Information regarding stock options repurchased during the year 2008 2007

Maturity March 15, 2007Price per option, SEK 124.00Total amount disbursed, SEK 000s 1,116Amount recognized in income statement, SEK 000s 60

Notes, Group

Note 5, continued

2008 2007

Of which, Members Of which, Members Salaries, other remuneration of the Board, Social Of which, of the Board, Social Of which,and social security Salaries and senior executives security pension Salaries and senior executives security pensioncosts, SEK m. remuneration and President 3 costs costs remuneration and President 3 costs costs

Parent Company1 11 7 5 1 12 8 6 2 Wholly owned subsidiaries 70 14 33 8 64 12 32 9

Total in Parent Company and 81 22 38 9 76 20 38 10 wholly owned subsidiaries Hufvudstaden 46 12 23 7 46 12 23 7 Holmen 2,054 25 807 129 1,926 22 744 131

Total in other subsidiaries 2,100 37 830 136 1,972 34 767 138

Total in Group 2 2,181 58 869 145 2,048 54 805 148

1) The President and senior executives in the Parent Company accounted for SEK 0.8 m. (1.1) of the senior executives’ pension costs. 2) The President and senior executives accounted for SEK 16.5 m. (22.1) of the Group’s pension costs. On December 31, 2008, the Group’s outstanding pension obligations regarding these pension costs amounted to

SEK 79.3 m. (81.5). The obligations are mainly covered by plan assets in independent pension foundations and through reinsurance in FPG.3) In the Parent Company, the Board of Directors (excluding the President) comprises eight people (7) and senior executives comprise five people (5) (including two who receive their salary from wholly owned subsidiaries).

The wholly owned subsidiaries comprise 12 people (11), Hufvudstaden comprises 15 people (15) and Holmen comprises 23 people (23).

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Note 6 - Fees and other remuneration to auditors, SEK m.

2008 2007 2006

Remuneration to KPMG ABAuditing assignments 9 9 8 Other assignments 5 5 7

14 15 16

Other auditors 0 0 0

14 15 16 Auditing assignments are defined as examinations of the Annual Report and financial accounts, as well as of the administration of the Board of Directors and President, other duties that the Company’s auditors are obliged to conduct and advice or other assistance required due to observations made during such examinations or during the performance of such other duties. All other work is defined as other assignments. In addition to audit assignments, KPMG AB was consulted within the area of taxation, for accounting matters and for various inquiries.

Note 7 - Other external costs

Operational leasing The Group’s leasing charges during the year amounted to SEK 43 m. (40). The amount pertained mainly to fees for trucks, ground rent and a lease with an external tenant. Future irrevocable leasing charges are distributed as follows:

SEK m. - 1 year 1 year - 5 years 5 years -

37 36 14

Note 8 - Depreciation/amortization according to plan, SEK m.

2008 2007

Intangible fixed assets 13 12Tangible fixed assets

Buildings and land 137 114 Machinery and equipment 1,200 1,220

1,350 1,346

Note 9 - Impairment losses, SEK m.

2008 2007

Intangible fixed assets 569 Tangible fixed assets

Impairment losses for the year 57 1,034 Reversal of previous impairment losses 60

Financial investments 1,995 344

2,052 1,887

Note 10 - Results from participations in associated companies, SEK m.

2008 2007

Participation in profit 418 298Impairment losses 926 -

- 508 298

Note 11 - Changes in value of investment properties, SEK m.

2008 2007

Realized 63 Unrealized 2,026 3,372

- 2,026 3,436

Note 12 - Segment reporting, SEK m.

The primary criterion for classification of the Group’s segments is by line of business. The Board of Directors monitors the return at the business sector level when controlling Holmen and Hufvudstaden. BUSINESS SEGMENTS Lundbergs’ Lundbergs’ Real estate management Equity management Hufvudstaden Holmen Total 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Net sales 930 912 738 1,685 1,348 1,294 19,334 19,159 22,350 23,049 Operating expenses ¹ 373 407 341 1,201 526 360 13,968 10,784 15,209 12,751 Personnel costs 97 92 10 9 70 72 2,965 2,664 3,142 2,837 Depreciation 4 5 0 0 3 4 1,343 1,337 1,350 1,346 Impairment losses 1,995 344 57 1,543 2,052 1,887 Participations in results of associated companies 558 286 50 12 508 298 Changes in value, investment properties 397 838 1,629 2,598 2,026 3,436

Profit per business segment 60 1,247 - 2,166 416 - 882 3,456 1,051 2,843 - 1,937 7,962

Unallocated costs 28 29

Operating profit 60 1,247 - 2,166 416 - 882 3,456 1,051 2,843 - 1,965 7,934

Net financial items 606 507 Taxes 545 2,417

Net profit for the year - 2,025 5,010

Minority interest 219 2,404

1) Including a change in the value of biological assets; see Note 4.

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Note 12, continued

OTHER INFORMATION Lundbergs’ Lundbergs’ Real estate management Equity management Hufvudstaden Holmen Total 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Assets 9,026 9,228 5,519 10,435 19,145 20,663 32,165 30,655 65,854 70,981Participations in associated companies 1,818 2,714 1,824 1,745 3,642 4,460Unallocated assets 1,568 1,263

71,065 76,704 Liabilities 266 234 398 376 6,366 4,310 7,030 4,920Unallocated liabilities 43,639 45,422

50,670 50,342 Investments 137 46 92 2,742 185 528 1,160 1,433 1,574 4,748Depreciation 4 5 0 0 3 4 1,343 1,337 1,350 1,346Impairment losses 1,995 344 57 1,543

GEOGRAPHIC MARKETS Sweden United Kingdom Spain Other areas Total 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

External sales 7,956 8,377 1,943 2,383 1,909 1,709 10,542 10,580 22,350 23,049Net assets ¹ 57,088 65,559 1,054 1,146 4,257 3,758 67 57 62,466 70,520Investments 1,481 4,550 31 73 56 95 6 30 1,574 4,7481) Excluding undistributed assets/liabilities.

External sales are reported in accordance with the customers’ location. Net assets and investments are reported in accordance with the country in which the operations are located. The Group’s products and services are presented on page 30.

Notes, Group

2008 2007

Financial income Dividends 2 6 Assets and liabilities measured at fair value through profit and loss

Held for sale 3 4 Interest income 44 37

49 48Financial expenseNet gain/loss

Assets and liabilities measured at fair value through profit and lossHeld for sale 2 118 Other 2 6

Cash and cash equivalents 15 1 Financial liabilities valued at accrued acquisition value 53 100

Interest expense 692 530

- 655 - 555

Net financial items - 606 - 507

The net gains/losses recognized in net financial items pertain primarily to currency revaluation concerning internal loans, hedging of internal loans and currency revaluation of cash and cash equivalents and hedging of cash and cash equivalents. They also include revaluation of loans measured at fair value through profit and loss and interest rate swaps used for hedging loans at fixed interest.

Earnings from financial instruments recognized in operating profit (the principal items) are presented in the table below.

2008 2007

Exchange rate gain/loss on accounts receivable and accounts payable 232 76 Net profit/loss pertaining to derivative instruments recognized

in working capital 436 50 Impairment of accounts receivable 5 12

Note 13 - Net financial items, SEK m.

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Note 14 - Tax, SEK m.

RECOGNIZED IN INCOME STATEMENT

2008 2007

Current tax cost/tax income Tax cost during the year 714 737 Tax attributable to previous years 1 1

Deferred tax cost/tax revenue Temporary differences 1,259 1,679

545 - 2,417

Deferred tax on temporary differences mainly comprises the effect of the revaluation of investment properties and biological assets. The deferred tax revenue in 2008 also includes the impact of the reduction of the Swedish corporate tax rate from 28 to 26.3%.

Reconciliation of effective tax 2008 2007

Profit/loss before tax - 2,571 7,426

Swedish income tax rate 28% 720 28% 2,079 Difference in tax rates for foreign operations 0% 2 0% 2 Nontaxable revenues and

nontaxdeductible costs 27% 703 1% 57 Standard interest on taxdeferral reserve 1% 33 0% 25 Tax disputes 9% 225 1% 66 Tax attributable to prior years 0% 2 0% 13 Effect of bookedup loss carryforwards

and temporary differences 1% 16 5% 379 Changed tax rate for

deferred tax asset/liability 29% 757 0% 5 Other 1% 14 1% 69

- 21% 545 33% - 2,417

Tax items recognized directly in equity 2008 2007

Deferred tax attributable to hedge accounting 68 31 Deferred tax attributable to translation reserve 253 67 Deferred tax attributable to actuarial revaluation 154 11 Deferred tax attributable to fair value of participations 90 6 Deferred tax attributable to investment properties 4

570 41

RECOGNIZED IN BALANCE SHEET

Receivables 2008 2007

Deferred tax assets 361 320 Current tax assets 141 22

502 342

Liabilities 2008 2007

Provision for taxes Deferred tax liability 11,491 13,142 Other provisions 710 444

Current tax liability 103 77

12,304 13,663

Deferred tax assets and liabilities 2008 2007 Asset Liability Net Asset Liability Net

Tangible fixed assets 1,512 1,512 1,692 1,692 Biological assets 2,914 2,914 3,100 3,100 Investment properties 6,307 6,307 7,165 7,165 Financial investments 100 100 Pension provisions 79 79 53 3 50 Untaxed reserves 1,131 1,131 1,137 1,137 Loss carryforwards 347 347 348 348 Deferred tax liabilities

reported net among deferred tax assets 85 85 105 105

Other 20 372 392 23 54 78

361 - 11,491 - 11,130 320 - 13,142 - 12,823

Of the deferred tax assets pertaining to loss carryforwards, SEK 122 m. is attributable to loss carryforwards that are not subject to time limitations in terms of utilization. The remaining loss carryforwards expire if they are not utilized before 20152023.

Tax loss carryforwards and temporary differences for which deferred tax assets have not been recognized in profit or loss and balance sheets amount to SEK 2,030 m., of which SEK 229 m. will expire in 2012 and SEK 269 m. in 20222023. The factor determining whether or not deferred tax assets are recognized is the probability that the Group will be able utilize them to offset future taxable profits.

Change in deferred tax on temporary differences and loss carryforwards Reported via Reported via Balance at income Other shareholders’ Balance at Jan. 1, 2007 statement changes equity Dec. 31, 2007

Tangible fixed assets 1,813 116 5 1,692 Biological assets 2,472 627 1 3,100 Investment properties 6,136 1,029 7,165 Financial investments 89 6 6 100 Pension provisions 91 13 4 24 50 Untaxed reserves 1,043 94 1,137Loss carryforwards 408 52 8 348 Other 167 25 43 71 28

- 11,221 - 1,679 36 41 - 12,823 Reported via Reported via Balance at income Other shareholders’ Balance at Jan. 1, 2008 statement changes equity Dec. 31, 2008

Tangible fixed assets 1,692 189 10 19 1,512 Biological assets 3,100 186 0 2,914 Investment properties 7,165 854 4 6,307 Financial investments 100 100 Pension provisions 50 15 6 50 79 Untaxed reserves 1,137 14 8 1,131 Loss carryforwards 348 13 12 347 Other 28 44 151 443 307

- 12,823 1,259 - 135 570 - 11,130

Ongoing tax disputesLundbergs has appealed to the administrative court of appeal regarding a decision made by the district court to only partially approve the exemption of leasing fees from taxation. This case traces its roots to previously rejected claims for value depletion in the 1989 – 1991 tax returns and should be viewed in the same light. A deferred tax asset of SEK 18 m. has been posted.

Holmen has posted provisions of SEK 692 m. to cover disputes and uncertainties pertaining to tax. Holmen is involved in two noncompleted major tax disputes. One of them involves Holmen’s subsidiary MoDo Capital (a total of approximately SEK 636 m. in taxes and charges), a case that is being heard by the district court. The second involves Holmen’s French subsidiary, whereby the Swedish Tax Agency have petitioned to the county court that the tax be increased by about SEK 509 m. In this case, the district court ruled in favor of Holmen, but the verdict has yet to become legally effective.

A Hufvudstaden subsidiary is involved in a dispute with the Swedish Tax Agency concerning the amount of costs that may be capitalized as a building. Since Hufvudstaden does not share the Swedish Tax Agency’s view, the decision had been appealed to the district court. During the year, the district court ruled in favor of Hufvudstaden. The Swedish Tax Agency has been appealed to the court of administrative appeal. The amount for taxes and charges totals approximately SEK 25 m. and will have no impact on total recognized tax but will simply involve a transfer between current and deferred tax.

Hufvudstaden is involved in a dispute with the Swedish Tax Agency concerning the amount of costs that may be capitalized as a building and the right to deductions for valueadded tax on consultancy costs in connection with the divestment of subsidiaries. The Agency’s decision will be appealed. The amount for taxes and charges totals some SEK 15 m. and will have no impact on total recognized tax but will simply involve a transfer between current and deferred tax.

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Note 15 - Other holdings

During the year, L E Lundberg Holding AB was merged with the Parent Company. For more information, refer to Note 21 in the Parent Company accounts. A number of mergers were also implemented during the year at Holmen in order to simplify its corporate structure in Sweden.

Participations in subsidiaries 1 Number of shares Percentage of share capital 2

Holding Registered office Country Dec. 31, 2008 2008 2007

Fastighets AB L E Lundberg Norrköping Sweden 250,000 100 100Fastighets AB Strömstaden Norrköping Sweden 4,587 68 68L E Lundberg Nordic AB Stockholm Sweden 1,251 100 100

Förvaltnings AB L E Lundberg Stockholm Sweden 1,000 100 100Senda i Sverige AB Stockholm Sweden 25,000 100 100

L E Lundberg Kapitalförvaltning AB Stockholm Sweden 150,000 100 100 Hufvudstaden AB (publ) Stockholm Sweden 93,318,909 (88.0) 45.2 (88.0) 45.2

AB Citypalatset Stockholm Sweden 1,200 100 100Fastighetsaktiebolaget Stockholm City Stockholm Sweden 7,776 100 100

Hotel Stockholm AB Stockholm Sweden 10,000 100 100Fastighetsaktiebolaget Medusa Stockholm Sweden 300 100 100Aktiebolaget Hamngatsgaraget Stockholm Sweden 3,000 100 100AB Nordiska kompaniet Stockholm Sweden 19,460,666 100 100

NK Cityfastigheter AB Stockholm Sweden 1,680 100 100NK Concession Aktiebolag Stockholm Sweden 1,000 100 100

Parkaden Aktiebolag Stockholm Sweden 5,000 100 100 Holmen AB (publ) Stockholm Sweden 23,408,916 (52.0) 27.9 (51.8) 27.6

Holmen Paper AB Norrköping Sweden 100 100 100Iggesund Paperboard AB Hudiksvall Sweden 1,000 100 100Holmen Timber AB Hudiksvall Sweden 1,000 100 100Holmen Skog AB Örnsköldsvik Sweden 1,000 100 100Holmen Energi AB Örnsköldsvik Sweden 1,000 100 100Fiskeby AB Norrköping Sweden 2,000,000 100 100Holmen Energi Elhandel AB Stockholm Sweden 1,000 100 100Holmens Bruk AB Norrköping Sweden 49,514,201 100 100Holmen Försäkring AB Stockholm Sweden 10,000 100 100AB Iggesunds Bruk Hudiksvall Sweden 6,002,500 100 100Iggesund Kraft AB Örnsköldsvik Sweden 116,000 100 100Junkaravan AB Örnsköldsvik Sweden 1,537,398 100 100MoDo Capital AB Örnsköldsvik Sweden 1,000 100 100MoDo Holding AB Örnsköldsvik Sweden 100 100 100Skärnäs Terminal AB Hudiksvall Sweden 4,800 100 100Holmen France Holding S.A.S. Paris France 40,000 100 100

Iggesund Decoupe France S.A. Valance France 100 100Holmen UK Ltd Workington UK 1,197,100 100 100

Holmen Paper UK Ltd London UK 100 100Iggesund Paperboard Ltd Workington UK 100 100

Holmen Suecia Holding S.L. Madrid Spain 9,448,557 100 100Holmen Paper Madrid S.L. Madrid Spain 100 100

Cartón y Papel Reciclado S.A. (Carpa) Madrid Spain 100 100Iggesund Paperboard Asia Pte Ltd Singapore Singapore 800,000 100 100Iggesund Paperboard Europe B.V. Amsterdam Netherlands 35 100

Iggesund (Paper & Board) Services B.V. Utrecht Netherlands 100 100AS MoDo Mets Tallin Estonia 500 100 100

1) The principal holdings are stated above.2) The percentage of share capital and voting rights is calculated after a deduction for treasury shares. The share of the voting rights is presented in parentheses if it is not the same as the percentage of the share capital.

Notes, Group

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Note 16 - Intangible fixed assets, SEK m.

Goodwill Other Total 2008 2007 2008 2007 2008 2007

Accumulated acquisition value Opening balance 86 643 91 107 178 750 Change in emission rights 70 20 70 20 Impairment losses during the year 569 569 Investments during the year 0 8 7 8 7 Translation differences, etc. 12 4 2 4 10

Closing balance 86 86 172 91 259 178

Accumulated amortization according to planOpening balance 49 37 49 37 Amortization during the year 13 12 13 12 Translation differences, etc. 4 1 4 1

Closing balance - 66 - 49 - 66 - 49

Carrying amountsOpening balance 86 643 42 70 128 713 Closing balance 86 86 106 42 192 128

Remaining goodwill of SEK 86 m. comprises Lundbergs acquisition of Holmen, whose recoverable amount is determined on the basis of the shares’ stock market price on December 31, 2008.

In Holmen, goodwill was impaired in 2007, which derived mainly from the acquisition of the newsprint mill in Madrid in 2000.

Other intangible fixed assets consist mainly of SEK 70 m. (0) for emission rights, SEK 8 m. (12) for the right to use electricity networks and SEK 24 m. (19) for IT systems. Intangible fixed assets were mainly acquired externally. Apart from emission rights, other intangible fixed assets have a specified useful life that is amortized over 310 years. The year’s investments pertained mainly to IT projects.

Note 17 - Tangible fixed assets, SEK m.

Work in Buildings, Machinery progress and land and and advanced forestland equipment payments Total

Acquisition valueOn Jan. 1, 2007 5,593 24,864 201 30,658 Investments 30 1,284 80 1,394 Reclassification 5 7 2 Divestments and scrappage 3 265 268 Translation differences, etc. 47 39 86

On Dec. 31, 2007 5,661 25,928 281 31,871

On Jan. 1, 2008 5,661 25,928 281 31,871 Investments 127 878 205 1,211 Reclassification 49 147 195 1 Divestments and scrappage 5 86 91 Translation differences, etc. 175 294 5 475

On Dec. 31, 2008 6,007 27,162 297 33,466

Work in Buildings, Machinery progress and land and and advanced forestland equipment payments Total

Depreciation and impairmentOn Jan. 1, 2007 2,385 14,468 16,853 Depreciation during the year 114 1,219 1,333 Impairment losses during the year 127 907 1,034 Reversal of prioryear impairment losses 60 60 Divestments and scrappage 3 256 259 Translation differences, etc. 5 43 48

On Dec. 31, 2007 - 2,618 - 16,235 - - 18,853

On Jan. 1, 2008 2,618 16,235 18,853 Depreciation during the year 137 1,200 1,337 Impairment losses during the year 6 51 57 Divestments and scrappage 3 80 82 Translation differences, etc. 16 40 56

On Dec. 31, 2008 - 2,776 - 17,446 - - 20,221

Carrying amountsOn Jan. 1, 2007 3,209 10,395 201 13,804 On Dec. 31, 2007 3,043 9,694 281 13,018 On Jan. 1, 2008 3,043 9,694 281 13,018 On Dec. 31, 2008 3,231 9,716 297 13,244

In 2008, the operations at Wargöns Bruk were closed, resulting in an impairment loss of SEK 57 m. The impairment loss for 2007 pertained to assets in Holmen. Tax-assessment value (pertains to properties in Sweden) 2008 2007

Forest and agricultural properties 14,520 10,106 Buildings, other land and land improvements 3,049 3,031

17,569 13,137

During 2008, a new tax assessment of property values was conducted, which increased the taxassessment value of forest and agricultural properties by slightly more than 40% compared with 2007.

Note 18 – Biological assets

In Holmen, forest assets are classified as growing forest, which is stated as a biological asset at fair value, and land, which is stated at acquisition cost. Holmen’s assessment is that no relevant market prices are available that can be used to value forest holdings as extensive as Holmen’s. The valuation is therefore made by calculating the present value of expected cash flows from the growing forests. This calculation of cash flows is made for the coming 100 years, which is regarded as the harvesting cycle of the forests. The cash flows are calculated on the basis of harvesting volumes according to Holmen’s current harvesting plan and assessments of future price and cost changes. The cost of replanting has been taken into account as replanting after harvesting is a statutory obligation.

In total, Holmen owns 1,033,000 hectares of productive forestland, with a volume of 118 million forest cubic meters of standing timber, of which 67,000 hectares with 12 million cubic meters of standing timber have been set aside as nature reserves. According to the current plan, which came into effect in 2000, annual harvesting during 20002009 will average 2.5 million cubic meters per year. The harvesting volume is then planned to increase successively to 3.0 million cubic meters per year in about 40 years’ time. This corresponds to an average increase in harvesting of 0.4% per year. Some 55% of the wood harvested consists of saw logs, which is sold to sawmills, and the remainder consists of pulpwood, which is sold to the pulp and paper industry.

In 2008, the cash flow from the growing forests rose to SEK 622 m. (547), mainly as a result of higher prices, at the same time as felling and forestry costs increased. On average, the cash flows in 20012008 have been approximately SEK 480 m. per year. Holmen based its valuation of December 31, 2008 on the prices prevailing at the end of the year. The assumption was then made that prices will decline up to 2010. From 2010 and thereafter longterm price assumptions for prices have been used, with an annual increase of 1% until 2035 and of 2% thereafter. Costs are estimated to rise from their current level at a rate of about 2% a year. The forecast for 20092015 is shown in the graph on the following page. The cash flows for the period 20162035 are estimated to increase by 0.5% per year, after which they are expected to increase by the assumed level of inflation of 2%.

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Note 18, continued

The cash flows are discounted using an interest rate of 5.5% (5.5) after tax. The discount rate has been calculated on the basis of the Group’s target for its debt/equity ratio (on average 0.55), an assumed longterm, nominal riskfree return of 4.5%, a risk premium of 1% for borrowed capital and of 2% for equity. Tax is taken into account at a rate of 26.3%. Deferred tax, meaning the tax that is expected to be charged against the result of harvesting in the future, has been calculated on the total value of growing forests.

The value of the biological assets, meaning the value of the estimated cash flows before tax, was estimated at the end of 2008 at SEK 11,080 m. The attributable deferred tax liability was estimated at SEK 2,914 m. The net carrying amount after tax of the growing forests was thus SEK 8,166 m. The change in the value of the growing forests can be divided into.

SEK m. 2008 2007

Opening balance 11,073 8,830 Acquisition of growing forest 12 53Sales of growing forest 2 0 Change due to harvesting 622 547 Change in fair value 606 2,736 Other changes 13 1

Closing book value 11,080 11,073

The net effect of the change in fair value and the change as a result of harvesting is stated in profit or loss as change in value of biological assets. In 2008, this item declined by SEK 16 m. (increase: 2,189). The positive change in value in 2007 included approximately SEK 550 m. for the effects of changed assumptions regarding future prices and costs and some SEK 1,550 m. for changes in the discount rate.

The table below shows how the value of biological assets would be affected by changes in the most significant valuation assumptions. Change in valueSEK m. before tax after tax

Annual change, + 0.1% per yearHarvesting rate 400 290 Price inflation 420 310 Cost inflation 230 170

Change in level, +1% Harvesting 160 120 Prices 280 210 Costs 160 120

Discount rate, + 0.1% 240 180

By annual change is meant the annual rate of change used in the valuation of each parameter. For example, an increase of 0.1% means that the annual rate of inflation will be increased from 1.0% to 1.1% in the calculations. Change in level means that the level of each parameter and year changes. For example, a 1% price increase means that the wood prices that the calculations are based on are raised by 1% for all years (change of level).

Note 19 - Investment properties, SEK m.

Investment properties are measured at fair value.

Properties owned Sold Acquired throughout 2007 properties properties the year Total

Fair value, Jan. 1 132 25,549 25,681 Investments 5 369 328 702 Sales revenues 201 201 Reclassification as properties

classed as current assets 16 16 Unrealized change in value 3,372 3,372 Realized change in value 63 63

Closing fair value - 369 29,266 29,634

Properties owned Sold Acquired throughout 2008 properties properties the year Total

Fair value, Jan. 1 29,634 29,634 Investments 312 312 Unrealized change in value 2,026 2,026

Closing fair value - - 27,920 27,920

Tax assessment value of properties reported as investment assets 2008 2007

Buildings 12,229 12,172 Land 5,768 5,774

17,997 17,946 Information about fair value of investment properties All properties classified as investment properties are owned by the Group and encompass land, buildings, building equipment and refurbishment of existing properties. The value of the real estate portfolio has been assessed by fair valuing every single property. 2008 2007

On Jan. 1 29,634 25,681On Dec. 31 27,920 29,634

Valuation methodFair value is based on an internal valuation and the fair value of every single property has been established.

Lundbergs - Fair value has been established through a combination of the locationprice and the yield method. The calculation of the yield value is based on discounted cash flow over the coming tenyear period and thereafter calculating a perpetual yield.

The discount factor varies from 6.25 to 9.25%. The calculation of cash flow is based on assumed inflation of 2%, normalized maintenance costs and a normalized vacancy rate. This calculation is then weighted with various locationprice factors in a final valuation. To safeguard the internal valuation, independent valuations of 33 properties were obtained. The independent valuations of these properties amounted to SEK 4,636 m., while the internal valuations properties amounted to SEK 4,389 m.

Hufvudstaden Fair value has been established in accordance with the yield method. The operating surplus is based on marketadapted rental revenues, reduced for an estimated longterm vacancy rate of 57%. Normalized operation and maintenance costs have been deducted. The required yield used in the valuation varies from region to region and among the various subregions within regions. The estimated required yield is based on information received about yield requirements in the market in terms of the purchase and sale of comparable properties in similar locations. Such factors as different types of properties, technical standard and building design have also been taken into account. For leasehold properties, the calculation has been based on a required yield that is 0.25 of a percentage point higher than that for properties for which the land is owned. The following data was used in the valuation:

Rental Net operating Required revenues, income, yield, SEK m. SEK m. % 1

Stockholm, commercial 4.755.50Göteborg, commercial 5.256.00

1,356 979 5.1 2

1) Office and retail properties.2) Average.

To safeguard the valuation, independent valuations were obtained for ten properties, which corresponded to 22% of the internally estimated fair value. The independent valuations arrived at a market value amounting to SEK 4.3 billion within a range of +/ 27%. Hufvudstaden’s internal valuation of the same properties amounted to SEK 4.3 billion. Accordingly, the internal valuations were approximately SEK 0.1 billion lower than the independent valuations. Based on a comparison between the internal and the independent valuations, it may be stated that Hufvudstaden’s valuation lies within the value interval stated by the independent valuation companies.

Notes, Group

0

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201420122010200820062004

SEK m.

History Forecast

Cash flow – history and forecast

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Condensed financial information for associated companies

Owned percentage on Revenues Profit Assets Liabilities Shareholders’ equity Shareholding, %the balance-sheet date 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Parent Company’s Cardo AB (publ), Sweden 3,697 3,351 193 61 2,520 2,317 1,390 1,262 1,131 1,056 37.2 36.0 NCC AB (publ), Sweden 5,747 5,840 182 225 3,625 3,407 2,938 2,683 687 724 10.0 10.0

Subsidiaries’ 861 735 51 13 728 466 362 255 366 211

Note 19, continued

Investment properties – Impact on profit during the yearAll investment properties generate rental revenues. Rental revenues for the year (gross less vacancies) amounted to SEK 2,161 m. (2,084). See Note 12 for revenues and costs.

Maturity structure, rental revenuesThe maturity structure of operational leasing contracts is presented in the table.

Annual rents, SEK m. 2009 2010 2011 2012 2013 2014 - Total

Housing 444 444Retail 149 157 179 74 41 47 647Offices 139 236 170 125 44 92 806Other 99 50 32 13 6 11 211

Total 830 443 380 212 92 150 2,107

Percentage 39 21 18 10 4 7 100

2008 2007

Acquisition value and carrying amount On January 1 4,367 4,367Investments 36 0Divestments 2 Impairment losses 926 Reclassification, etc. 0

3,474 4,367 Accumulated results from participations, etc. On January 1 93 49 Current year’s profit participations 1 96 5 Change in associated companies’ equity 20 39 Divestments 0 0

168 93

3,642 4,460 1) Profit after tax and minority interests in associated companies.

Specification of the Parent Company’s holdings of participations in associated companies 1 Number of shares Shareholding in % 2 Carrying amount Dec. 31, 2008 2008 2007 2008 2007

Parent Company’s 3

Cardo AB (publ) 11,150,000 37.2 36.0 1,277 1,987 (41.3)NCC AB (publ) 10,850,000 10.0 10.0 541 727

Series A shares (20.6) (20.4)

1,818 2,714 Subsidiaries’Baluarte Sociedade de

Recolha e Recuperaçãode Desperdicios, Lda 2 50.0 50.0 42 35

Brännälvens Kraft AB 5,556 13.9 13.9 36 36 Ets Emilie Llau SA 1,073 38.0 38.0 41 36 Harrsele AB 9,886 49.4 49.4 1,482 1,482 Uni4 Marketing AB 1,800 36.0 50.0 8 6 Peninsular Cogeneración SA 4,500 50.0 50.0 140 76 Vattenfall Tuggen AB 683 6,8 6,8 75 75 Various shares 0 0

3,642 4,4601) Associated companies are classified in accordance with AAA Chapter 1, Section 5, whereby certain criteria

must be met before a company is classified as an associated company. In cases where Lundbergs does not hold 20% of the share capital but exercises significant control of over the companies’ operations through ownership agreements, such companies are categorized as associated companies above.

2) The percentage of voting rights is calculated less treasury shares. The share of voting rights is stated in parentheses in cases where it is not the same as the percentage shareholding.

3) At December 31, 2008, Cardo had a fair value of SEK 1,277 m. and NCC of SEK 541 m.

Note 21 - Financial investments, SEK m.

Percentage on Dec. 31, 2008 of share voting 2008 2007 capital rights

Availableforsale financial assets 1, 2

Handelsbanken A 1.8 1.8 1,386 2,277Husqvarna A 4.3 13.1 629 1,105Husqvarna B 77Industrivärden A 10.9 15.0 2,405 4,757Indutrade 10.0 10.0 265 493Sandvik 1.2 1.2 686 1,435Other shares 15 20

5,386 10,1631) The assets have been measured at fair value based on the current stockmarket price.2) Since the fair value at December 31, 2008 was less than the acquisition value, an impairment loss of

SEK 1,995 m. (loss: 344) was posted.

Note 22 – Other shares and participations, SEK m.

2008 2007

SweTree Technologies AB 6 5Other shares 8 3

14 8Accumulated acquisition value On January 1 8 12 Investments 6 1 Divestments 0 5

14 8

Since it has not been possible to establish a reliable fair value for these items, the holdings have been valued at accrued acquisition value. No shares or participations were impaired during the year.

Note 20 - Participations in associated companies, SEK m.

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Note 23 - Financial instruments, SEK m.

Items that are fair valued via profit and loss

Financial assets Hedge accounted Accounts Total Derivative available derivative and loans Other carrying Fair 2008 Shares Loans instruments for sale instruments receivable liabilities amount value

Financial instruments included in net financial debt

Long-term financial receivablesInvestments in credit institutions 26 26 26Derivative instruments 32 32 32Other financial receivables 33 33 33

32 59 91 91

Current financial receivablesCurrent financial receivablesUnrealized exchange rate

difference and accrued interest 15 15 15Derivative instruments 31 34 66 66Other financial receivables 16 16 16

31 34 31 97 97

Cash and cash equivalents Current settlement deposits 818 818 818Bank balances 670 670 670

1,488 1,488 1,488Long-term finacial liabilities MTN loans 1,266 1,266 1,282Liabilities to credit institutions 5,950 5,950 5,993Derivative instruments 123 161 284 284Other financial liabilities 394 1,423 1,817 1,825

394 123 161 8,639 9,317 9,384

Current financial liabilitiesCorporate paper programs 1,467 1,467 1,467Liabilities to credit institutions 146 146 146Current portion of longterm loans 1,267 1,267 1,267Derivative instruments 60 95 155 155Unrealized exchange rate difference

and accrued interest 215 215 215Other current liabilities 2,334 2,334 2,334

60 95 5,428 5,583 5,583Financial instruments not included in net financial debt

Financial investments 5,386 5,386 5,386Shares in unlisted companies 14 14 Shares in listed companies 131 131 131Accounts receivable 3,164 3,164 3,164

Derivative instruments (recognized among current receivables) 14 144 157 157

Accounts payable 2,403 2,403 2,403Derivative instruments

(recognized among current liabilities) 135 1,056 1,191 1,191

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Note 23, continued

Items that are fair valued via profit and loss

Financial assets Hedge accounted Accounts Total Derivative available derivative and loans Other carrying Fair 2007 Shares Loans instruments for sale instruments receivable liabilities amount value


Long-term financial receivablesInvestments in credit institutions 18 18 18Derivative instruments 33 60 93 93Other financial receivables 58 58 58

33 60 76 169 169Current financial receivablesUnrealized exchange rate

difference and accrued interest 17 17 17Derivative instruments 1 15 17 17Other financial receivables 17 17 17

1 15 34 51 51Cash and cash equivalentsCurrent settlement deposits 174 174 174Bank balances 521 521 521

694 694 694Long-term financial liabilitiesMTN loans 196 1,365 1,562 1,519Liabilities to credit institutions 5,600 5,600 5,523Derivative instruments 16 8 24 24Other financial liabilities 392 475 866 952

588 16 8 7,440 8,052 8,018Current financial liabilitiesCorporate paper programs 4,009 4,009 4,009Liabilities to credit institutions 132 132 132Current portion of longterm loans 701 701 701Derivative instruments 14 47 61 61Unrealized exchange rate difference

and accrued interest 150 150 150Other current liabilities 99 99 99

14 47 5,092 5,153 5,153Financial instruments not included in net financial debt

Financial investments 10,163 10,163 10,163Shares in unlisted companies 8 8 Shares in listed companies 271 271 271Accounts receivable 3,029 3,029 3,029

Derivative instruments (recognized among current receivables) 9 19 27 27

Accounts payable 2,458 2,458 2,458Derivative instruments

(recognized among current liabilities) 17 130 147 147

In the tables, fair value has either been based directly on listed market prices or on a calculation of discounted cash flows. If discounted cash flows have been calculated, all variables for calculations, such as discount interest rates and exchange rates, have been based on market prices. The reason for the difference between fair value and carrying amount is that certain liabilities have not been market valued in the Balance Sheet and have instead been recognized at accrued acquisition value. Since it has not been possible to obtain a reliable market value for shares in unlisted companies, these holdings have been omitted from the column for fair value. For Accounts receivable and accounts payable, the carrying amount has been stated as the fair value, since it is regarded as reflecting the fair value.

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Note 24 - Properties classified as current assets, SEK m.

2008 2007

On January 1 86 108 Acquisitions during the year 16 6 Reclassifications 0 17Divestments and scrappage 17 10 Impairments/reversals 1 1

86 86

Includes SEK 51 m. (54) for accumulated impairment losses. The taxassessment value of the Group’s properties was SEK 157 m. (146). The estimated fair value in accordance with internal valuations was SEK 212 m. (208).

Note 25 - Inventories, etc., SEK m.

2008 2007

Shares in listed companies 131 271 Felling rights and similar assets 737 554 Finished products, goods for resale and products in progress 1,454 1,376Raw materials and consumables 947 890Timber and pulpwood 297 243

3,565 3,334

Shares in listed companies are recognized in profit or loss in accordance with IAS 39, whereby they are measured at fair value at current market price. The year’s impairment loss on inventories that was charged against net profit amounted to SEK 89 m. (31).

Note 26 - Current receivables, SEK m.

2008 2007

Rental and accounts receivable 1 3,164 3,029Other current receivables

Prepaid expenses 181 116 Accrued rental revenues 20 32Receivable from associated companies 5 37Derivative instruments 157 27Other receivables 231 302

3,758 3,544 1) The amount for accounts receivable includes SEK 64 m. pertaining to receivables from associated companies.

Accounts receivable are reported after a deduction for anticipated and confirmed losses, and are mainly from European customers. Accounts receivable in foreign currency have been valued at the yearend exchange rate. The market value of derivative instruments pertains to hedges of future cash flows. Also see Note 37.

Note 27 - Cash-flow statement

Interest, SEK m. 2008 2007

Interest paid 40 26 Interest received 641 464

- 601 - 437 Change in current financial liabilities The change in current financial liabilities pertains primarily to borrowing under commercial paper programs, the utilization of longterm credit facilities and a change in current liabilities to credit institutions and others. Under commercial paper programs, a total of SEK 9,627 m. (21,241) was borrowed on a shortterm basis, divided among several different loans, and SEK 12,198 m. (21,455) was repaid. Under longterm credit facilities, SEK 2,852 m. () was borrowed on a shortterm basis and SEK 516 m. () was repaid.

Notes, Group

Note 28 - Shareholders’ equity, SEK m.

Shareholders’ equity attributable to Parent Company shareholders

Earnings brought Share forward including Minority Total capital Reserves 2 profit for the year Total interests equity

Opening balance, January 1, 2007 621 3,850 20,767 25,238 18,458 43,695

Change in hedging reserve during the year 57 57 163 220 Change in translation reserve during the year 17 17 46 63 Financial assets available for sale

Revaluation recognized directly in equity 939 939 939Actuarial revaluations 14 14 44 58 Tax attributable to items reported directly against equity 13 5 8 33 41 Changes in equity of associated companies 36 36 36

Total change in net asset value reported directly against equity 1 - - 1,000 45 - 955 - 132 - 1,086 Net profit for the year 2,605 2,605 2,404 5,010

Total change in net asset value 1 - - 1,000 2,651 1,651 2,273 3,923 Capital gain on sale of minority 39 39 Dividend 527 527 2,046 2,573

SHAREHOLDERS’ EQUITY ON DECEMBER 31, 2007 621 2,850 22,890 26,361 18,723 45,085

1) Excluding transactions involving the Company’s owners.2) See Note 29 for a breakdown.

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Note 28, continued

Shareholders’ equity attributable to Parent Company shareholders

Earnings brought Share forward including Minority Total capital Reserves 2 profit for the year Total interests equity

Opening balance, January 1, 2007 621 2,850 22,890 26,361 18,723 45,085

Change in hedging reserve during the year 299 299 738 1,037 Change in translation reserve during the year 27 27 70 96 Financial assets available for sale

Revaluation recognized directly in equity 2,924 2,924 2,924 Recognized in profit and loss on divestment 7 7 7

Actuarial revaluations 48 48 122 170 Tax attributable to items reported directly against equity 211 18 229 341 570

Changes in equity of associated companies 50 50 50

Total change in net asset value reported directly against equity ¹ - - 3,046 - 81 - 3,126 - 590 - 3,715

Net profit for the year 2,244 2,244 219 2,025

Total change in net asset value ¹ - - 3,046 - 2,325 - 5,370 - 371 - 5,741

Capital gain on sale of minority 38 38 100 138 Dividend 558 558 934 1,492

SHAREHOLDERS’ EQUITY ON DECEMBER 31, 2008 621 - 196 19,970 20,395 17,318 37,714

1) Excluding transactions involving the Company’s owners.2) See Note 29 for a breakdown.

Shareholders’ equityShare capitalTreasury sharesHoldings of treasury shares and other equity instruments are recognized as a decrease inequity. Acquisitions of such instrument are recognized as a deductible from shareholders’ equity. Proceeds from the divestment of equity instruments are recognized as an increase in equity. Any transaction costs are recognized directly in equity.

DividendsDividends are recognized as a liability after the Annual General Meeting has approved the dividend.

ProvisionsHedging provisionThe hedging provision includes the effective portion of the accumulated net change in the fair value of a cash flow hedging instrument attributable to hedging transactions yet to occur.

Translation provisionThe translation provision includes all exchange rate differences arising from translation of the financial reports of foreign operations that are denominated in a currency other than that in which the Group’s financial reports are presented. The Group presents its financial reports in SEK. The translation provision also includes exchange rate differences arising from revaluation of liabilities and derivative instruments that have been entered as instruments to hedge a net investment in foreign operations.

Fair value provisionThe fair value provision includes the accumulated net change in the fair value of availableforsale financial assets up to the time the asset is removed from the balance sheet.

Profit brought forward including net profit for the yearProfit brought forward including net profit for the year includes funds earned by the Parent Company and its subsidiaries, associated companies and joint ventures, as well as the portion of untaxed reserves attributable to equity.

The Board of Directors proposes that the Annual General Meeting on March 31, 2009 approve a dividend of SEK 6.00 per share. The proposed dividend payment totals SEK 372 m. A dividend of SEK 9.00 per share (SEK 558 m.) was paid in the preceding year.

Note 29 - Provisions, SEK m.

Hedging provision 2008 2007

Provision, January 1 2 39 Cash flow hedges recognized directly against shareholders’ equity 299 57 Tax attributable to hedging during the year 79 16

- 222 - 2

Translation provision 2008 2007

Provision, January 1 10 24 Translation differences during the year 27 17 Tax attributable to translation provision during the year 42 2

25 10

Fair value provision 2008 2007

Provision, January 1 2,842 3,787 Valuation recognized directly in shareholders’ equity 2,924 939 Recognized in income statement on sale 7 Tax attributable to valuation during the year 90 6

1 2,842 Total provisions 2008 2007

Provision, January 1 2,850 3,850 Change during the year in:

Hedging provision 220 41 Translation provision 15 15 Fair value provision 2,841 944

- 196 2,850

Note 30 - Other long-term liabilities, SEK m.

2008 2007

Other liabilities 10 10

Other longterm liabilities include call options on shares issued to senior executives in Cardo with a fair value of SEK 6 m.

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Note 31 - Provision for pensions

For a description of pension commitments within the Group, see Accounting Principles, Note 1. Occupational pension plans in Sweden (ITP plan) for which premiums are paid to Alecta and alternative ITP plans total SEK 31 m. (46).

The provision for pensions totals SEK 420 m., of which Lundbergs accounted for SEK 61 m., Holmen for SEK 354 m. and Hufvudstaden for SEK 5 m. Information on plans recognized as definedbenefit obligations in accordance with IAS 19 is presented below.

Lundbergs – Definedbenefit occupational pension plans exist in accordance with the FPG/PRI programs. The change in the definedbenefit obligation is specified in the summary below. SEK m. 2008 2007

Obligation, January 1 56 50 Benefits vested during the period 1 1 Interest 2 2 Actuarial gain/loss 1 3 Pension payments 0 0

Obligation, December 31 61 56

Of which, credit insured via FPG 48 45

During the year, pension costs pertaining to definedbenefit plans amounting to SEK 3 m. (3) were recognized as personnel costs. Interest expense during the year on the pension liability amounted to SEK 2 m. (2). The actuarial revaluation during the year amounted to SEK 1 m. (3) and was recognized directly in equity. The entire actuarial revaluation derives from experiencebased changes. On an accumulated basis, an expense of SEK 10 m. pertaining to actuarial revaluations has been recognized directly in equity.

Significant actuarial assumptions, % 2008 2007

Discount interest rate 4.0 4.3Future pay increases 3.0 3.0Future inflation 2.0 2.0 Historical information, SEK m. 2008 2007 2006 2005 2004

Present value of obligation 61 56 50 50 39

Hufvudstaden – A provision of SEK 5 m. (6) has been posted for definedbenefit pension plans for previously employed executives.

Holmen – There are pension commitments in trusts in the UK. Definedbenefit pension commitments for group management in Sweden that exceed the ITP plan are secured via a foundation. In the compilation below, the change in the definedbenefit pension commitments and the change in plan assets are specified. Most of the commitments below pertain to pension plans in the UK.

SEK m. 2008 2007

ObligationObligation, January 1 1,769 1,866 Cost of service, current year 20 33 Interest expense 88 90 Actuarial gain/loss 75 67 Receipts from employees 7 9 Pension payments 89 89 Transferred from provisions 36 10 Reclassifications 6 7 Exchangerate difference 198 76

Obligation, December 31 1,553 1,769

Plan assets Value of plan assets, January 1 1,521 1,510 Anticipated return 83 85 Actuarial gain/loss 237 6 Receipts from employer 54 67 Receipts from employees 7 9 Pension payments 63 76 Exchangerate difference 167 67

Fair value of plan assets, December 31 1,199 1,521

Provision for pensions, net 354 247

Of the total obligations, SEK 68 m. (54) pertains to nonfunded obligations, while the remainder is fully or partly funded obligations.

During the year, pension costs of SEK 20 m. (33) pertaining to definedbenefit plans were recognized as personnel expenses. Interest expense on the pension liability amounted to SEK 88 m. (90) during the year and the anticipated return on the plan assets amounted to SEK 83 m. (85). The net of these items has been recognized in net financial items as interest expense.

The year’s actuarial revaluation amounted to SEK 169 m. (neg: 61) and has been recognized directly in equity. On an accumulated basis, actuarial revaluations amounting to SEK 128 m. (neg: 41) have been recognized directly in equity. In 2009, Holmen’s payments to definedbenefit plans are estimated at SEK 50 m. The distribution of plan assets is presented in the table below. Plan assets, SEK m. 2008 2007

Shares 457 694 Bonds 617 681 Cash and cash equivalents 125 147

1,199 1,521

The plan assets do not include any financial instruments issued by Group companies or assets used in the Group.

Significant actuarial assumptions, % (weighted average) 2008 2007

Discount interest rate 5.4 5.5Expected return on plan assets 4.9 6.0Future pay increases 3.9 4.3Future inflation 2.9 3.3

The anticipated return on interestbearing securities has been calculated on the basis of firstclass longterm bonds and for shares a supplement has been added pertaining to a risk premium.

Historical information, SEK m. 2008 2007 2006 2005 2004

Present value of obligation 1,553 1,769 1,866 1,818 1,474Fair value of plan assets 1,199 1,521 1,510 1,400 1,138

Net 354 247 356 418 336

Experience-based adjustments, SEK m. 2008 2007 2006

Definedbenefit obligations 3 4 15 Plan assets 237 6 32

Note 32 - Other provisions, SEK m.

Forestry Other Taxes reserve provisions Total

January 1, 2007 442 140 170 752 Provisions during the year 2 77 62 140 Utilized during the year 75 37 112

December 31, 2007 444 141 195 780

Longterm portion 444 60 175 678 Current portion 82 20 102

444 141 195 780

January 1, 2008 444 141 195 780 Provisions during the year 267 101 392 759 Utilized during the year 88 74 162

December 31, 2008 710 153 514 1,377 Longterm portion 710 54 336 1,100 Current portion 99 178 277

710 153 514 1,377

The provision for taxes pertains primarily to disputes with tax authorities in various countries. The forestry reserve pertains to provisions for future reforestation measures after final felling, which are normally performed within three years of felling. Other provisions pertain mainly to obligations to restore the environment, and to personnel and restructuring costs.

In 2008, a provision of SEK 356 m. was posted to cover the closure of the operations at Wargöns Bruk and of a paper machine and recovered paper line at the Hallsta paper mill. Of the provision, SEK 58 m. was utilized in 2008.

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Note 33 - Current liabilities, SEK m.

2008 2007

Accounts payable 1 2,403 2,458Accrued expenses and prepaid income

Rental revenues 280 258 Other 829 834

Other current liabilitiesLiabilities to associated companies 2 45 Derivative instruments 2 1,191 147 VAT deduction 58 39 Other 288 315

5,050 4,096

1) Liabilities of associated companies account for SEK 63 m. of the accounts payable.2) In all significant respects, the market value of derivative instruments pertains to hedges of future cash flows.

Note 34 - Related parties, SEK m.

Associated Key personnel in Other related companies executive positions parties 2008 2007 2008 2007 2008 2007

Sales of goods to related parties 8 9 Purchases of goods from

related parties 58 56Interest received from

related parties 0 0Interest paid to related parties 2 2 0 0Debt to related parties, Dec 31 1 3 45 62 2 1

Services resulting from related party transactions were priced on normal commercial terms.

Key personnel in executive positions Via his wholly owned company Byggnads AB Karlsson & Wingesjö (including subsidiaries), Fredrik Lundberg and his wife directly or indirectly hold 89.6% of the voting rights and 53.2% of the share capital in L E Lundbergföretagen AB (publ). Fredrik Lundberg, who is the President and a Member of the Board of the Parent Company, received salary of SEK 1.5 m. (1.5) and, in his capacity as Chairman of the Board of the subsidiaries Holmen and Hufvudstaden, received total director fees of SEK 0.9 m. (0.9). No variable or other types of remuneration were received.

Note 35 - Pledged assets and contingent liabilities, SEK m.

Pledged assets 2008 2007

Real estate mortgages 3,857 3,705 Other commitments 29 104

3,885 3,810

Contingent liabilities 2008 2007

Liability as main partner in limited partnership 2 3 Other contingent liabilities 672 916

674 918 The Group’s other contingent liabilities pertain mainly to the ongoing tax processes, for which provisions to cover the amount in dispute have not been posted. Also see Note 14.

Supported by provisions under the Environmental Code, Swedish environmental authorities are currently focusing on matters involving land surveys and postprocessing of closed down operations. In each individual case, the responsibility for postprocessing is determined with the help of feasibility assessments. Holmen has environmentally related contingent liabilities that cannot be quantified at present but that could give rise to costs in the future

Note 36 - Important accounting estimates

The compilation of financial reports requires that company management make accounting estimates that affect the carrying amounts. The accounting estimates that company management believes are of importance to the carrying amounts in the annual report, and for which there is a significant risk that future events and new information could change these accounting estimates, mainly include:

Biological assetsIt is Holmen’s assessment that no relevant market prices are available to value forest holdings of the size owned by Holmen. Accordingly, the valuation is based on estimated present value of the projected future cash flow from the standing forests. The principal assumptions pertain to how much felling can be increased in future years, how the prices of pulpwood and timber will develop, the rate of cost inflation and the discount interest rate used. The valuation’s sensitivity to changes in these assumptions is described in Note 18.

Investment propertiesThe fair value of these properties is estimated in the financial statements. In this valuation, assessments are made of future rent levels, vacancy rates and property costs. In the calculation model, an assessment is also made of the required yield for each individual property. However, the value of a property cannot be established definitively until the sales proceeds have been received. The valuation process is described in greater detail in Note 19.

TaxHolmen has posted a provision of SEK 692 m. for disputes and uncertainties pertaining to tax. Deferred tax assets in a net amount of SEK 342 m. have been recognized on the basis of the assessment that this amount will probably be used and result in lower tax payments in the future. In addition, there were loss carryforwards and temporary differences for tax purposes at yearend corresponding to about SEK 600 m. that were not recognized due to assessments of the probability of their being utilized. Also see Note 14.

PensionsThe value of pension commitments is estimated on the basis of assumptions regarding discount rates, inflation, future pay increases, and demographic factors. These assumptions are normally updated each year, which has an effect on the size of the stated pension liability and equity. These assumptions will have an impact on the coming year’s recognized pension cost and, concerning Holmen, assumptions regarding the expected return on plan assets reserved to cover pension obligations will also have an impact. Also refer to Note 31.

EnvironmentAt Holmen, provisions have been posted to cover costs related to environmentrelated measures associated with former activities on the basis of estimated future siterestoration costs. Holmen’s assessment is that it has a liability for environmentally related measures that cannot be quantified at present but that could give rise to costs in the future. Also refer to Note 35.

RestructuringThe Wargön mill ceased production in 2008, and production was discontinued on the PM 2 paper machine and the recovered paper line at the Hallsta Paper Mill. A provision of SEK 356 m. was posted in 2008 for estimated closure costs, of which SEK 298 m. remained at yearend. The uncertainty regarding the amount of the provision relates primarily to the cost of restoring the mill site and how much income will be received from the sale of machinery. Restructuring costs normally arise as a consequence of changes in business operations. Minor changes are implemented on a regular basis, and costs associated with these are not normally specified separately. No major changes have been announced but should the situation alter further provisions may become necessary.

Impairment testingIn 2007, the value of goodwill and tangible fixed assets at Holmen was impaired by a total of SEK 1,603 m. These impairment losses were based on estimates of recoverable values on the basis of assumptions regarding future changes in prices, volumes and costs, as well as the estimated market cost of capital. Holmen has an obligation to carry out regular impairment tests to determine the need for new impairment losses and/or reversals. Changes in conditions could impact on he estimated recoverable value applied in connection with future impairment tests.

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Note 37 - Financial risks

The Lundberg Group’s risk management is decided by the respective Board of Directors of Lundbergs, Holmen and Hufvudstaden. Risk management is pursued in accordance with the finance policy established by the Board of the particular company with the aim of minimizing the risk level. In all three companies, risk management is centralized in a special department. The risks that are managed primarily are the interestrate risk and the refinancingrisk associated with financing. Within Holmen, exchangerate and commodity risks associated with business operations (transaction exposure), financing and net investments in foreign operations are also managed. LUNDBERGSLundbergs’ strategy is to create longterm value growth while maintaining financial balance. The financial risk is limited by maintaining a low debt/equity ratio combined with good access to funds. Since, to a considerable extent, Lundbergs is an equitymanaging company, a strong financial position is an essential requirement. The Group’s strong financial position is confirmed by the Standard & Poor’s creditrating institute, which has assigned Lundbergs a longterm rating of A/stable outlook and shortterm ratings of A1 and K1. These high ratings facilitate less expensive borrowing and more effective access to money and bond markets.

Financing riskThe financing risk is the risk that it will not be possible to secure necessary financing for operations at a given point in time.

On December 31, 2008, Lundbergs’ interestbearing net debt totaled SEK 3,028 m. (3,554), of which interestbearing liabilities accounted for SEK 3,427 m. (3,574) and interestbearing assets for SEK 399 m. (20). The average capitalmaturity period was 44 months (47). The maturity structure for financial liabilities is presented in the table below. In addition to raised loans of approximately SEK 3,250 m. Lundbergs had committed, longterm lines of credit totaling SEK 1,550 m. and a total of SEK 100 m. in committed lines of credit with a maturity of less than 12 months. Following fiscal yearend, loans corresponding to SEK 700 m. and with maturities in 2009 were renegotiated. As a result, the capital and interestrate maturity periods for these loans now have due dates of 2017 or later. Lundbergs has a corporate paper program with a committed issue limit of a nominal SEK 3,000 m. At December 31, 2008, none of this limit had been utilized (500). Lundbergs also has an unutilized Swedish Medium Term Note program with a contracted limit of a nominal SEK 2,000 m. which provides an opportunity to issue bonds in SEK or EUR mainly to Swedish investors.

Financial liabilities, December 31, 2008

Maturity SEK m. Proportion, %

2009 816 242010 2011 400 122012 1,200 352013 450 132017 561 16

Total 3,427 100

Interest-rate riskThe interestrate risk pertains to the impact of a change in market interest rates on the Group’s financing costs.

Lundbergs’ indebtedness is low, which means its interestrate risk is limited. The average period of fixed interest on December 31, 2008 was 42 months (46). Based on periods of fixed interest and net indebtedness on December 31, 2008, a onepercentage point change in market interest rates would have an effect of approximately SEK 3 m. on earnings in 2009. Longer term, changes in interest rates would impact on the entire net indebtedness. The maturity structure for fixedinterest loans on December 31, 2008 is presented in the table below.

Maturity structure, fixed-interest loans, December 31, 2008 Average effective Maturity Liabilities, SEK m Proportion,% interest rate, %

2009 1,027 30 4.052010 2011 400 12 4.852012 1,200 35 4.482013 300 9 4.932017 500 15 4.62

Total 3,427 100 4.45

Credit riskLundbergs has limited exposure to credit risks. The exposure that does exist mainly derives from pastdue accounts receivable and rent. The risks are limited through conscious selection of customers with good payment ability and advance invoicing of rent. Exposure to individual customers/tenants is limited and the ten largest customers/tenants account for a combined total of 10% sales by property management. The maturity structure for accounts receivable/rent receivables at December 31, 2008 is presented in the table below. The credit risk is also limited by the fact that financial assets consist solely of instruments with a high credit rating.

SEK m. 2008 2007

Total accounts receivable/rent receivables 6 9Of which past due > 30 days 1 1 4Of which past due > 60 days 2 1 2

1) Including past due > 60 days.2) Excluding customer bad debts/provisions recognized in profit or loss.

Share riskShare risk pertains to the shareprice risk and liquidity risk. The shareprice risk is the risk of a decline in value due to changes in share prices in the stock market. Lundbergs’ strategy is to have major holdings in a limited number of companies. The shareprice risk is limited by Lundbergs operating as an active and longterm owner, which enables it to influence the companies’ strategies and decisions. A change in the share price by one percentage point would affect the value of the stock portfolio by SEK 54 m.

Liquidity risk could arise, for example, if a share is difficult to divest. Since Lundbergs’ portfolio comprises listed shares showing favorable liquidity, the liquidity risk is limited.

The stock portfolio, which is presented in Note 21 on page 53, amounts to a total of SEK 5,386 m.

HUFVUDSTADENHufvudstaden is mainly exposed to financing and interestrate risks. Hufvudstaden endeavors to have a credit portfolio with diversified capital maturities that enable amortization, if required. Borrowing normally occurs on the basis of short interest maturities and interest swaps are used to attain the desired interestmaturity structure. Derivative instruments are used only to minimize risk and must be connected to underlying exposure. At present, the company only has derivative instruments that fulfill the requirement for hedge reporting and derivative instruments recognized in the category of financial assets and liabilities measured at fair value through profit and loss. No imbedded instruments have been identified that should be removed from their host contracts and reported separately.

Hufvudstaden aims to use surplus liquidity to repay existing loans. The surplus liquidity that is not used for such repayments may only be invested in instruments with a high liquidity and a low risk.

Financing riskThe financing risk arises when difficulties arise in obtaining financing for operations at a given point in time. To minimize the cost of Hufvudstaden’s borrowing and to ensure that financing can be obtained, the company must have committed lines of credit that cover the need of operating credits.

On December 31, 2008, Hufvudstaden’s interestbearing net debt totaled SEK 3,112 m. (3,069), of which interestbearing liabilities accounted for SEK 3,561 m. (3,422) and interestbearing assets for SEK 449 m. (353). On December 31, 2008, Hufvudstaden had committed lines of credit totaling SEK 2,000 m., of which none had been utilized. The average capital maturity was 51 months (53). The maturity structure of financial liabilities is presented in the table below (excluding derivative instruments of SEK 145 m.). Financial liabilities, December 31, 2008


2009 11 02010 500 152011 950 282012 250 72013 950 282017 755 22

Totalt 3,416 100

Interest-rate riskThe interestrate risk pertains to the impact on earnings that a lasting change in interest rates has on net financial items. Hufvudstaden’s financing sources consist mainly of shareholders’ equity, cash flow from operating activities, borrowing and lines of credit. Surplus liquidity is

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invested in financial instruments with short interestrate maturities, which limits Hufvudstaden’s exposure to the interestrate risk.

Interestbearing borrowing gives risk to exposure to the interestrate risk. Hufvudstaden’s finance policy establishes frameworks for how the interestrate risk is to be managed. A fundamental objective is that the expiration structure of tenant leases must be taken into account when deciding maturity periods, and that there must be a wellconsidered balance between current borrowing costs and the risk of a significant negative impact on earnings arising from a sudden major change in interest rates. This means that the interestrate maturity of Hufvudstaden’s net debt is normally 1248 months. Derivative instruments are used to attain the desired interestrate maturity.

Assuming that the borrowing volume and the interest maturities remain unchanged, a onepercentagepoint change in the interest rates for the current derivative instruments would affect Hufvudstaden’s interest expense in 2009 by SEK 5 m. At the same time, a change in interest rates would result in changes in the value of derivative instruments by SEK 85 m. in profit or loss and by SEK 30 m. via equity.

The average interest maturity was 43 months (40) and the average interest expense was 4.0% (4.6).

Maturity structure, fixed-interest loans, December 31, 2008 Of which, hedge Average effective Maturity Liabilities, SEK m. accounting Proportion, % interest rate, %

2009 711 21 3.32010 500 500 15 4.12011 600 350 18 3.62012 250 7 4.92013 600 350 18 3.92017 755 22 4.8

Total 3,416 1,200 100 4.0

1) Excluding dervative instruments of SEK 145 m.

Credit risksThe credit risk mainly derives from pastdue accounts receivable, rent receivables, cash and cash equivalents and financial derivatives with a positive value. Exposure to credit risks is limited.

Losses on pastdue accounts receivable and rent receivables arise when customers are declared bankrupt or cannot fulfill their payment commitments for other reasons. The risks are limited through conscious selection of customers who have welldocumented business acumen and competitive operations.

To limit the risk, the customers’ financial position is subject to credit checks by obtaining information from various credit information firms. A bank guarantee or a surety is normally required in connection with new leasing. Rent is invoiced in advance.

There is no concentration of credit risks pertaining to accounts receivable, because Hufvudstaden has many customers. No individual tenant accounts for more than 9% of total contractual rental revenue. The ten largest customers/tenants account for a total of 21% of contractual rental revenue. Exposure to financial derivative contracts is limited by Hufvudstaden’s policy of only concluding such contracts with large financial institutions with a high credit rating. In addition, framework agreements with these institutions have been concluded regarding the netting of various derivative contracts, which further reduces exposure to credit risks.

HOLMENHolmen aims to minimize it capital costs through appropriate financing and efficient control and management of financial risks.

Currency riskHolmen has considerable amounts of sales in currencies other than the cost currency. In order to reduce the impact of currency fluctuations on earnings, Holmen hedges its net currency flows by means of currency forward contracts, occasionally supplemented by currency options. Taking into account the estimated currency flows, a onepercentagepoint change in the average exchange rate would have the following impact:

SEK m. Net

SEK against EUR 56SEK against USD 10SEK against GBP 1Currency hedging has not been taken into account.

A onepercentagepoint depreciation of the exchange rate against SEK would affect equity by SEK 62 m., including translation of foreign subsidiaries.

The net flows in EUR, GBP and USD for the coming four months are always hedged, which normally corresponds to accounts receivable and outstanding orders. The Holmen Board could decide to hedge the flows for a longer period if this is deemed appropriate taking product profitability, the company’s competitiveness and the currency situation into account.

At the beginning of 2008, Holmen had hedged most of its estimated currency flows in EUR for 2008 and some of the flows in GBP and USD. The result of currency hedges is recognized in operating profit in pace with the recognition of the hedged item and in 2008 this resulted in a loss of SEK 336 m. (profit: 38). At the end of 2008, about 80% of the estimated net currency flows for 2009 were hedged, some 55% of estimated flows for 2010 and about 30% of estimated flows for 2011.

Transaction exposure, 31 December 2008 1

2009 2010 2011 12 months Total Total Total estimated net hedges, Average hedges, Average hedges, Average flows, SEK m. SEK m. rate % SEK m. rate % SEK m. rate %

EUR 5,600 5,100 9.37 90 4,000 9.62 70 2,000 10.46 35GBP 100 0 USD 1,000 600 7.97 60 Other 400

Total 7,100 5,700 80 4,000 55 2,000 30

1) The figures in the table are rounded.

The market value of outstanding currency hedges December 31, 2008 was a negative SEK 1,123 m., of which a negative SEK 123 m. was recognized in profit or loss for 2008 and the remainder was recognized in equity, since hedge accounting is applied. Of these amounts, a negative SEK 577 m. will be recognized in profit or loss in 2009, a negative SEK 370 m. in profit or loss for 2010, and a negative SEK 53 m. in profit or loss for 2011.

Currency exposure arising from capital expenditure in a foreign currency is distinguished from normal transaction exposure. Normally, 90100% of the currency exposure associated with major investments is hedged. The market value of outstanding investment hedges on December 31, 2008 was SEK 0 m. (1), which has been recognized in equity. When a hedge expires, the result is added to the acquisition value of the fixed asset that has been hedged. During the period, hedged items had an effect of SEK 1 m acquisition value.

Holmen’s earnings are affected by changes in exchange rates when the results of foreign subsidiaries are translated into SEK. This exposure is normally not hedged. Holmen’s equity is affected by changes in exchange rates when assets and liabilities of foreign subsidiaries are translated into SEK. The need to hedge this exposure (known as equity hedging) is judged from case to case, and is arranged on the basis of the consolidated value of net assets. The hedges take the form of currency forwards or foreign currency loans.

Net assets and equity-hedge at December 31, 2008, SEK m.

Net assets, SEK m. Equity hedges, SEK m.

EUR 4,628 4,404GBP 1,289 448Other 44

In 2008, the result of equity hedging was a loss of SEK 541 m., which has been recognized directly in equity, because hedge accounting is applied (a loss of SEK 390 m. after tax). The translation of foreign net assets had an impact of SEK 445 m. on Holmen’s equity. On December 31, 2008, outstanding hedges had a negative market value of SEK 456 m., of which a negative SEK 396 m. related to loans and a negative SEK 60 m. related to financial derivatives. The accumulated change in value resulting from equity hedging is recognized in profit or loss in connection with the divestment of the foreign operations.

Financing riskHolmen reduces the risk that raising capital and refinancing of maturing loans will be difficult or expensive by spreading the maturities of its financial liabilities and by having committed credit facilities available.

Holmen has an unutilized committed credit facility of EUR 600 m. which matures in 2012 and is available for use on condition that the debt/equity ratio does not fall below 1.5. Interestbearing net debt at December 31, 2008 amounted to SEK 7,504 m. (5,977), of which interestbearing liabilities accounted for SEK 8,332 m. (6,518), cash and cash equivalents for SEK 653 m. (394) and interestbearing assets for SEK 175 m. (147). The maturity structure of financial liabilities and assets is shown in the table below.

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Note 37, continued

During the year, two new longterm loans totaling SEK 923 m. were raised. Other financing was arranged mainly via Holmen’s Swedish commercial paper program with a limit of SEK 6,000 m. Towards the end of the year, it became difficult to issue new commercial paper as a consequence of the financial turbulence on world markets. Accordingly, maturing certificates were refinanced by drawing on the committed credit facility. At December 31, 2008, SEK 1,544 m. remained outstanding within the commercial paper program and SEK 2,248 m. of the credit facility had been utilized; this is stated under current financial liabilities. Holmen also has a Swedish Medium Term Note program with a limit of SEK 4,000 m., of which SEK 1,712 m. was outstanding at the yearend. Holmen has a BBB+ longterm corporate credit rating and an A2/K1 shortterm rating from Standard & Poor’s. The outlook for this was altered from stable to negative during the year.

Financial liabilities, December 31, 2008


2009 4,756 572010 1,111 132011 279 32012 503 62013 1,683 20

Total 8,332 100

Interest rate riskHolmen’s financing costs are affected by changes in the market interest rate. The interest rate duration of the Group’s financial assets and liabilities is normally short. The Board is empowered to decide to lengthen the duration in order to limit the effect of a rise in interest rates.

During the year, the average duration varied between 18 and 25 months, and was 22 months at the end of 2008. Derivatives in the form of interest swaps and FRAs are used to manage the duration without altering the underlying loans. On December 31, 2008, the market value of these instruments was a negative SEK 132 m., which is stated against equity, since hedge accounting is applied. This value is expected to be recognized in profit or loss for 2009 and later. The duration of the net debt, its breakdown by currency and the average interest rate for various durations are shown in the table below, in which derivatives that have an effect on the currency distribution and duration of the liabilities are taken into account.

Maturity structure, fixed-interest loans, December 31, 2008

Total -1 yr 1-3 yrs 3-5 yrs >5 yrs Other

SEK 3,191 2,305 300 500 86EUR 4,160 1,334 1,001 1,435 383 6GBP 250 11 261Other 96 97 1

Total 7,504 3,531 1,301 1,935 383 354

Average interest rate, % 4.2 3.6 4.1 5.0 3.9 7.5

The items in the Other column mainly relate to pension provisions in the UK.

Raw materialsIn order to reduce the exposure to changes in electricity prices, the Group makes use of physical supply agreements at fixed prices as well as financial hedges. Decisions to hedge electricity prices are made on the basis of guidelines adopted by the Board. In 2008, Holmen’s net purchases of electricity in Sweden amounted to about 2,900 GWh. (The Group’s total net purchases amounted totaled about 3,500 GWh.) The prices of the Group’s estimated net consumption of electricity in Sweden for 2009–2012 is fully hedged. For 2013– 2015, the price of some 85% has been hedged. The hedges consist predominantly of physical fixed price contracts. The result of financial hedges is recognized in profit or loss upon maturity and amounted in 2008 to SEK 27 m. The market value of outstanding financial hedges at December 31, 2008 was SEK 88 m., which is recognized in equity, since hedge accounting is applied. These amounts are expected to be recognized in profit or loss in 2009 and later. There is an OTC market for trading in financial contracts based on certain paper and pulp products. Holmen did not trade in such contracts during the year.

Credit riskHolmen’s financial transactions give rise to credit risks in relation to financial counterparties. The risk of a counterparty not meeting its commitments is limited by selecting creditworthy counterparties, limiting exposure to individual counterparties, and by the use of ISDA and FEMA agreements. At December 31, 2008, Holmen had outstanding derivative contracts for a nominal value of approximately SEK 17,664 m. and a negative market value of SEK 1,231 m. Calculated in accordance with the Swedish Financial Supervisory Authority’s guidelines for financial institutions (FFFS 20071), Holmen’s total counterparty risk on its derivative instruments would have amounted to SEK 236 m. at December 31, 2008. It is estimated that the maximum credit risk associated with other financial assets corresponds to the nominal value.

Customer credit riskThe risk that Holmen’s customers will not meet their payment obligations is limited by conducting checks of credit ratings, applying internal credit limits per customer and, in certain cases, by insuring accounts receivable against bad customer debts. As of December 31, 2008, about 54% (58) of the Group’s accounts receivable were insured against credit losses. Holmen’s exposure to individual customers is limited and in 2008 sales to the five largest customers accounted for just under 10% of the Group’s total sales. During the year, losses on accounts receivable had a negative effect of SEK 1 m. (neg: 6) on earnings. The provision for expected credit losses on accounts receivable amounted to SEK 39 m. (60) at December 31, 2008 and it has been recognized net together with accounts receivable. During the year, the provision was reduced by SEK 22 m. (reduction: 23) as expected losses were verified and increased by SEK 2 m. (10) due to changes in the provision for bad debt. At December 31, 2008, accounts receivable of SEK 106 m. (64) had been due for payment for more than 30 days, excluding accounts receivable for which provisions had been made. The maturity structure of these items is shown in the table below:

SEK m. 2008 2007

Total accounts receivable 3,144 3,004Of which past due > 30 days 1 106 64Of which past due > 60 days 2 33 10

1) Including past due > 60 days.2) Excluding customer bad debts/provisions recognized in profit or loss.

OTHER FINANCIAL RISK MANAGEMENT

InsuranceAll of Lundbergs’ and Hufvudstaden’s properties are covered by fullvalue insurance.

Hufvudstaden has a special terrorist insurance that covers damage up to SEK 25 m. Holmen insures its plants against property damage and business interruption losses.

The deductible varies between different plants, but generally amounts to no more than about SEK 30 M for an individual claim. Holmen’s forest holdings are not insured. The woodland areas are spread over large parts of the country, and the risk of significant damage is not considered to warrant the costs involved in insuring the forest holding.

Note 38 - Events after the balance-sheet date

No significant events occurred after the close of the fiscal year.

Notes, Group

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63Income Statement, Parent Company

SEK m. 2008 2007

Personnel costs Note 2 15 16 Depreciation Note 3 0 0 Other external costs Note 4 12 12

Operating loss - 28 - 28

Result from financial items Note 5Result from participations in Group companies 644 615 Result from participations in associated companies 690 293 Result from other securities and receivables classed as fixed assets 1,537 111 Other interest income and similar income 20 18 Interest expense and similar costs 87 67

Profit/loss after financial items - 1,677 942

Appropriations Note 6 76 67

Profit/loss before taxes - 1,753 875

Tax Note 7 72 12

Net profit/loss for the year - 1,825 863

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SEK m. Dec. 31, 2008 Dec. 31, 2007

ASSETS

Fixed assets

Tangible fixed assets Note 8 4 4

Financial fixed assetsParticipations in Group companies Note 9 5,925 4,251 Participations in associated companies Note 10 1,818 2,796 Other longterm holdings of securities Note 11 5,386 10,163 Other longterm receivables Note 12, 13 0 0 Deferred tax assets Note 7 1 1

Total financial fixed assets 13,131 17,211

Total fixed assets 13,134 17,215

Current assetsCurrent receivables

Receivable from Group companies Note 12, 14 84 233 Other financial receivables Note 12 6 Other current receivables 1 1

Total current receivables 84 239

Cash and bank balances Note 12, 15 345 83

Total current assets 429 322

TOTAL ASSETS 13,563 17,536

SHAREHOLDERS’ EQUITY AND LIABILITIES

SHAREHOLDERS’ EQUITY Note 16Restricted shareholders’ equity

Share capital (62,145,483 shares) 621 621 Statutory reserves 344 344

Unrestricted shareholders’ equityFair value provision 1 2,833 Earnings brought forward 11,744 8,817 Net profit/loss for the year 1,825 863

Total shareholders’ equity 10,886 13,478

Untaxed reserves Note 17 358 283

Provisions Note 18 - 99

Current liabilitiesLiabilities to Group companies Note 12, 14 2,219 3,051 Other financial liabilities Note 12, 14 69 581 Current tax liabilities 23 37 Other current liabilities Note 19 8 8

Total current liabilities 2,319 3,677

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 13,563 17,536

PLEDGED ASSETS AND CONTINGENT LIABILITIES Note 20 1,549 1,646

Balance sheet, Parent Company

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65Account of recognized revenues and costs and Cash-flow statement

ACCOUNT OF REVENUES AND COSTS RECOGNIZED IN THE PARENT COMPANY, SEK m. 2008 2007

Merger difference 2,645 Available for sale financial assets

Revaluations recognized directly in equity 2,825 939 Recognized in income statement on sale 7

Effects of Group contributions 23 10

Changes in net asset value recognized directly in equity, excluding transactions with the company’s owners - 210 - 948

Net profit/loss for the year 1,825 863

Total changes in net asset value, excluding transactions with the company’s owners - 2,034 - 86

CASH FLOW STATEMENT, PARENT COMPANY, SEK m. Note 15 2008 2007

Operating activitiesProfit/loss after financial items 1,677 942 Adjustments for depreciation and impairment 3,011 344 Adjustments for capital gain on sale of shares 14 107 Taxes paid 78 36

Cash flow from operating activities before changes in working capital 1,270 1,142

Cash flow from changes in working capital Change in current receivables 6 2 Change in current liabilities 0 0

CASH FLOW FROM OPERATING ACTIVITIES 1,276 1,140

Investing activities Acquisition of tangible fixed assets 0 0 Acquisition of financial assets 281 3,429 Divestment of financial assets 81 817

CASH FLOW FROM INVESTING ACTIVITIES - 201 - 2,613

Financing activities Loans raised 0 2,441 Loans repaid 224 450 Group contributions granted 90 15 Group contributions received 59 1 Dividend paid 558 527

CASH FLOW FROM FINANCING ACTIVITIES - 814 1,451

CASH FLOW DURING THE YEAR 262 - 22 Cash and cash equivalents on January 1 83 105

Cash and cash equivalents on December 31 345 83

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Notes, Parent Company

Note 1 - Parent Company’s accounting principles

The Parent Company applies the same accounting principles as the Group, apart from the cases specified below. The deviations that exist between the Parent Company’s and the Group’s accounting principles result from limitations in the ability to apply IFRS within the Parent Company, due to the Annual Accounts Act and the Pension Security Act, and in certain cases for tax purposes. The Parent Company has prepared the annual report in accordance with the Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Council’s Recommendation RFR 2.1, Accounting for Listed Legal Entities. According to RFR 2.1, the Parent Company, as the legal entity, must apply all of the EU approved IFRS and statements insofar as this is possible within the framework of the Annual Accounts Act and taking into account the correlation between accounting and taxation. This recommendation specifies the exceptions from and additions to IFRS that may be applied. The Swedish Financial Reporting Council’s issued statements concerning listed companies have also been applied.

Classification and presentationThe Parent Company’s income statement and balance sheet are presented in accordance with the specifications stipulated in AAA. The main difference in relation to IAS 1 Presentation of Financial Statements, which is applied for the presentation of the consolidated financial statements, pertains to the recognition of results from financial items and fixed assets.

Significant applied accounting principlesThe rules of Chapter 4, Section 14 ae of AAA, concerning the fair valuation of certain financial instruments and the application of hedge reporting, are applied. This means that “Other longterm holdings of securities” are measured at fair value.

Subsidiaries and associated companiesParticipations in subsidiaries and associated companies are reported in the Parent Company according to the acquisition value method. Dividends received are reported as revenue only if they derive from earnings accrued after the acquisition. Dividends exceeding these accrued earnings are regarded as repayment of investments and reduce the carrying amount of the shareholdings.

RevenuesDividend income is reported when the right to receive the dividend is considered certain.

Tangible fixed assetsTangible fixed assets are reported at acquisition value less accumulated depreciation and any impairment losses.

TaxesIn the Parent Company, untaxed reserves are recognized in the balance sheet without being divided up into shareholders’ equity and deferred tax liabilities, which is the case in the consolidated accounts.

Group and shareholder contributionsIn the Parent Company, Group and shareholder contributions are reported in accordance with the statement, UFR 2, issued by the Swedish Financial Reporting Council. Shareholder contributions are entered directly in the equity of the recipient and are capitalized in shares and participations by the donor, insofar as no impairment is required. Group contributions are reported in accordance with their financial implication, which means that Group contributions granted in order to minimize the Group’s total tax must be reported directly against earnings brought forward, less the current tax effect.

Financial guarantee agreementsThe Parent Company’s financial guarantee agreements consist mainly of sureties for the benefit of subsidiaries. For the reporting of financial guarantee agreements, the Parent Company applies one of the relief rules permitted by the Swedish Financial Reporting Council, which are specified in RFR 2.1, Item 72 compared with the rules of IAS 39.

MergerThe merger is reported in accordance with BFNAR 1999:1.

Note 2 - Personnel costs for employees

Sickness absenceSince the average number of employees has been less than ten in the past two years, no figures on sickness absence are presented. Other information on the Parent Company’s employees and personnel costs is presented in Note 5 on the consolidated financial statements. PensionsThe company’s employees are covered by the ITP plan. Commitments for oldage pension and family pension are secured in part through insurance in Alecta and in part through the payment of premiums

SEK m. 2008 2007

Costs for definedcontribution plans 1 2

The above cost includes SEK 1 m. (1) pertaining to ITPplan commitments funded in Alecta.

Note 3 - Depreciation/amortization according to plan, SEK m.

2008 2007

Machinery and equipment 0 0

Note 4 - Fees and remuneration paid to the auditors, SEK m.

2008 2007 2006

Remuneration of KPMG Bohlins Auditing assignments 0.3 0.3 0.3 Other assignments 0.3 1.0 1.3

0.6 1.3 1.6

Note 5 - Net financial items, SEK m.

Results from Results from participations in participations in Group companies associated companies 2008 2007 2008 2007

Dividends 644 581 325 293 Capital gains 34 Impairment losses 1 1,015

644 615 - 690 293 Results from other Interest income/ securities and expenses and receivables classed similar income as fixed assets statement items 2008 2007 2008 2007

Dividends 471 376 Capital gains 14 73 Impairment losses 1 1,995 344 Interest income, Group companies 12 12 Interest income, others 8 6Interest expense, Group companies 76 33Interest expense, others 12 33Other 2 6 0 0

- 1,537 111 - 67 - 48 1) Securities have been impaired down to the current share price.

Note 6 - Appropriations, SEK m.

2008 2007

Difference between book depreciation and depreciation according to plan Equipment 0 0

Tax allocation reserve, provision during the year 76 68 Tax allocation reserve, reversal during the year 0 1

- 76 - 67

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Note 7 - Tax, SEK m.

2008 2007

Current tax costTax cost during the year 72 57 Tax attributable to previous years 0 47

Deferred tax costTemporary differences 0 2

- 72 - 12

Reconciliation of effective tax 2008 2007

Profit before taxes - 1,753 875

Swedish income tax rate 28% 491 28% 245 Nontaxdeductible costs 48% 847 11% 97 Nontaxable revenues 16% 286 33% 286 Standard tax on tax allocation reserve 0% 2 0% 2 Tax attributable to prior years 0% 0 5% 47 Other 0% 0 0% 2

Reported effective tax 4% - 72 1% - 12

Tax items recognized directly in shareholders’ equity 2008 2007

Group contributions received/granted 32 4 Reported deferred tax assets, SEK m 2008 2007

Financial fixed assets 1 1

Note 8 - Tangible fixed assets, SEK m.

Equipment 2008 2007

Accumulated acquisition value On January 1 6 5 Acquisitions during the year 0 1 Divestments and scrappage during the year 0 1

6 6Accumulated depreciation according to plan

On January 1 2 2 Divestments and scrappage during the year 0 0 Depreciation according to plan during the year 0 0

- 2 - 2

4 4

Note 9 - Participations in Group companies, SEK m.

2008 2007

Accumulated acquisition value On January 1 4,251 4,275 Merger ¹ 1,674 Divestments during the year 24

5,925 4,251 Specification of the ParentCompany’s direct holdings of Registered Number of shares, Shareholding as a % 1 Fair value, Carrying amountparticipations in subsidiaries Corp. Reg. No. headquarters Dec. 31, 2008 2008 2007 Dec. 31, 2008 2008 2007

Fastighets AB L E Lundberg 5560490483 Norrköping 250,000 100 100 165 165 L E Lundberg Kapitalförvaltning AB 5561882290 Stockholm 150,000 100 100 15 15 L E Lundberg Holding AB 1 5565632477 Stockholm 100 1,153 Holmen AB (publ) 5560013301 Stockholm 23,408,916 27.9 (52.0) 27.6 (51.8) 4,516 2,917 2,917 Hufvudstaden AB (publ) 5560128240 Stockholm 93,318,909 45.2 (88.0) 45.2 (88.0) 5,301 2,828 Other direct holdings 0 0

5,925 4,251 Indirectly owned subsidiaries (major shareholdings) Owned by Holmen AB (publ) Holmens Bruk AB 5560020264 Norrköping 49,514,201 100 100 AB Iggesunds Bruk 5560008053 Hudiksvall 6,002,500 100 100 Holmen Suecia Holding S.L., Spanien Madrid 9,448,557 100 100Holmen UK Ltd, Storbritannien Workington 1,197,100 100 100

Owned by Hufvudstaden AB (publ) AB Citypalatset 5560347246 Stockholm 1,200 100 100 AB Nordiska kompaniet 5560086281 Stockholm 19,460,666 100 100

1) On September 23, 2008, L E Lundberg Holding AB was merged with the Parent Company. L E Lundberg Holding AB owned the shares in Hufvudstaden AB, which are now owned directly by the Parent Company.2) The percentage of share capital and voting rights is calculated after a deduction for treasury shares. The share of the voting rights is presented in parentheses if it is not the same as the percentage of the share capital.

Note 10 - Participations in associated companies, SEK m.

Acquisition value and carrying amount 2008 2007

On January 1 2,796 2,796 Acquisitions 38 Impairment losses ¹ 1,015

1,818 2,796Specification of holdings of participations in associated companies Registered Number of shares, Shareholding as a % 1 Fair value, Carrying amount Corp. Reg. No. headquarters Dec. 31, 2008 2008 2007 Dec. 31, 2008 2008 2007

Cardo AB (publ) 5560268517 Malmö 11,150,000 41.3 36.0 1,277 1,277 2,021 NCC AB (publ) Series A Shares 5560345174 Solna 10,850,000 10.0 (20.6) 10.0 (20.4) 541 541 775

1,818 2,796 1) The shares in Cardo and NCC have been impaired to current market value, which means by SEK 782 m. and SEK 234 m., respectively.2) The proportion of share capital and voting rights is calculated after a deduction for treasury shares. The proportion of voting rights is presented within parentheses to the right of the proportion of share capital,

if these two percentages are not identical. More information about the Parent Company’s associated companies is presented in Note 20 to the consolidated accounts. Lu

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Note 11 - Other long-term holdings of securities, SEK m.

2008 2007

Accumulated acquisition value On January 1 10,604 8,800 Purchases 244 3,429 Sales/adjustments 95 686 Year’s changes in value via balance sheet 2,931 939

7,822 10,604 Accumulated impairment losse On January 1 441 97 Impairment losses during the year 1,995 344

- 2,436 - 441

5,386 10,163 Holdings of securities measured at fair value Acquisition value of listed shares 2008 2007

On January 1 7,575 4,832 Purchases 244 3,429 Sales 95 686

7,724 7,575

Year’s changes in fair value through profit and loss

On January 1 344 Impairment losses 1,995 344

- 2,339 - 344

Year’s changes in fair value via balance sheet

On January 1 2,932 3,871 Sales 7 Changes in value 2,924 939

1 2,932

Carrying amount, December 31, 2008 5,386 10,163 Shareholding, Dec. 31, 2008 as a % of Specification of holdings 1 share capital voting rights 2008 2007

Handelsbanken A 1.8 1.8 1,386 2,277Husqvarna A 4.3 13.1 629 1,105Husqvarna B 77Industrivärden A 10.9 15.0 2,405 4,757Indutrade 10.0 10.0 265 493Sandvik 1.2 1.2 686 1,435Other 16 20

5,386 10,1631) The assets have been measured at fair value based on the current stockmarket price.

Note 12 - Financial instruments, SEK m.

Available- for-sale Accounts Total financial and loans Other carrying Fair 2008 assets receivable liabilities amount value


Other long-term financial receivablesOther financial receivables 0 0 0

0 0 0Current financial receivablesReceivable from Group companies 84 84 84

84 84 84Cash and cash equivalentsBank balances 345 345 345

345 345 345Current liabilitiesLiabilities to Group companies 2,219 2,219 2,219Other financial liabilities 69 69 69

2,288 2,288 2,288 Financial instruments not included in net financial debt

Financial investments 1 5,386 5,386 5,386Accounts receivable 0 0 0Accounts payable 0 0 01) An impairment loss of SEK 1,995 m. was recognized in profit or loss.

Available- for-sale Accounts Total financial and loans Other carrying Fair 2007 assets receivable liabilities amount value


Other long-term financial receivablesOther financial receivables 0 0 0

0 0 0Current financial receivablesReceivable from Group companies 233 233 233Accrued interest 6 6 6

238 238 238Cash and cash equivalentsBank balances 83 83 83

83 83 83Current liabilitiesLiabilities to Group companies 3,051 3,051 3,051Corporate paper programs 500 500 500Other financial liabilities 81 81 81

3,631 3,631 3,631Financial instruments not included in net financial debt

Financial investments 1 10,163 10,163 10,163Accounts receivable 0 0 0Accounts payable 1 1 11) An impairment loss of SEK 344 m. was recognized in the income statement.


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Note 14 - Related parties, SEK m.

Sales of goods to Interest received from Interest paid to Debt to related Receivable from related Summary of related related parties related parties related parties parties, Dec. 31 parties, Dec. 31party transactions 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Subsidiaries (see note 9) 12 12 76 31 2,219 3,051 84 233 Key personnel in executive positions 8 9 2 2 45 62 Other related parties 0 0 2 1

Services resulting from related party transactions were priced on normal commercial terms.

Key personnel in executive positionsVia his wholly owned company Byggnads AB Karlsson & Wingesjö (including subsidiaries), Fredrik Lundberg and his wife directly or indirectly hold 89.6% of the voting rights and 53.2% of the share capital in L E Lundbergföretagen AB (publ.). Fredrik Lundberg, who is the President and a Member of the Board of the Parent Company received salary of SEK 1.5 m. (1.5). No variable or other types of remuneration were received. Total remuneration in the Group is included in personnel costs in Note 5, page 45.

Note 13 - Other long-term receivables, SEK m.

Long-term receivable 2008 2007

Promissory note receivables 0 0 Other receivables 0 0

0 0 Accumulated acquisition valueOn January 1 0 0

0 0 Accumulated impairment lossesOn January 1 0 0

- 0 - 0

0 0

Note 15 - Cash-flow statement, SEK m.

The cashflow statement was compiled in accordance with the indirect method. Recognized cash flow only comprises transactions that involved receipts and disbursements.

Interest and dividends received 2008 2007

Interest paid 21 14Interest received 82 72Dividends received 1,442 1,249

1,381 1,191Cash and bank balances 1 Bank balances 208 0Balance on overdraft facility 137 83

Total according to balance sheet/cash-flow statement 345 831) The overdraft facility granted totals SEK 100 m. (100).

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Restricted shareholders’ equity Unrestricted shareholders’ equity Total equity

Share Statutory Fair value Earnings brought Net profit Changes in shareholders’ equity, SEK m. capital reserves provision forward for the year

Opening equity, January 1, 2007 621 344 3,772 8,269 1,084 14,091

Profit for 2006 brought forward 1,084 1,084Financial assets available for sale

Revaluation recognized directly in equity 939 939 Group contributions granted 15 15 Group contributions received 1 1 Tax attributable to items recognized directly in equity 0 4 4

Changes in net asset value recognized directly in equity 1 - - - 939 1,074 - 1 084 - 948

Net profit for the year 863 863

Total change in net asset value ¹ - - - 939 1,074 - 221 -86

Dividend 527 527

SHAREHOLDERS’ EQUITY ON DECEMBER 31, 2007 621 344 2,833 8,817 863 13,478

Opening equity, January 1, 2008 621 344 2,833 8,817 863 13,478

Profit for 2007 brought forward 863 863 Merger difference 2,645 2,645Financial assets available for sale

Revaluation recognized directly in equity 2,924 2,924Reported through profit and loss on divestment 7 7

Group contributions granted 90 90Group contributions received 59 59Tax attributable to items recognized directly in equity 99 9 108

Changes in net asset value recognized directly in equity 1 - - - 2,832 3,485 - 863 - 210

Net profit for the year 1,825 1,825

Total change in net asset value ¹ - - - 2,832 3,485 - 2,688 2,034

Dividend 558 558

SHAREHOLDERS’ EQUITY ON DECEMBER 31, 2008 621 344 1 11,744 - 1,825 10,8861) Excluding transactions with the company’s owners.

Restricted ReservesRestricted funds may not be reduced by means of profit distribution.

Statutory reserves – The purpose of statutory reserves is to save a portion of the net profit that was not required to cover any carried forward loss.

Unrestricted shareholders’ equityThe fair value provision, earnings brought forward and net profit/loss for the year constitute unrestricted shareholders’ equity, meaning the amount available for distribution to the shareholders.

Fair value provisionThe company applies the AAA rules pertaining to financial instruments measured at fair value pursuant to Chapter 4, Subsection 14 ae. The fair value provision includes the accumulated net change in the fair value of availableforsale financial assets up to the time the asset is removed from the balance sheet.

Earnings brought forward Consists of the preceding year’s unrestricted shareholders’ equity and profit after any dividend has been paid.

Series A shares Par value Series B shares Par value

Total shares issued (all shares are fully paid) 24,000,000 SEK 10 38,145,483 SEK 10

Number of shares outstanding at beginning of year 24,000,000 38,000,000 at end of year 24,000,000 38,000,000

Number of voting rights per share 10 1

The average number of shares outstanding in 2008 was 62,000,000 (62,000,000).Series B shares are listed on Nasdaq OMX Nordic. Shareholders are entitled to request conver

sion of Series A shares to Series B shares. No such conversions were effected during the year.

Treasury sharesHoldings of treasury shares and other equity instruments are recognized as a decrease in equity. Acquisitions of such instrument are recognized as a deductible from shareholders’ equity. Proceeds from the divestment of equity instruments are recognized as an increase in equity. Any transaction costs are recognized directly in equity.

Number of shares 2008 2007

Opening number of treasury shares 145,483 145,483

145,483 145,483

DividendsThe Board of Directors has proposed a dividend of SEK 6.00 per share, or a total of SEK 372 m. The dividend will be proposed for adoption at the Annual General Meeting on March 31, 2009.

Note 16 - Shareholders’ equity


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Note 17 - Untaxed reserves, SEK m.

2008 2007

Machinery and equipmentOpening balance, Jan. 1 0 0 Accelerated depreciation during the year 0 0

Closing balance, December 31 0 0

Tax allocation reserves Allocated for 2004 tax year 101 101 Allocated for 2005 tax year 48 48 Allocated for 2006 tax year 24 24 Allocated for 2007 tax year 41 41 Allocated for 2008 tax year 68 68Allocated for 2009 tax year 76

358 282

358 283Untaxed reserves include deferred tax of SEK 94 m. (79).

Note 18 - Provisions, SEK m.

Holdings of securities measured at fair value 2008 2007

Holdings of securities measured at fair valueOn January 1 99 99 Allocated during the year 0 Utilized during the year 99

- 99

Note 19 - Other liabilities, SEK m.

2008 2007

Accounts payable 0 1 Other liabilities 0 0Accrued expenses and prepaid income 7 7

8 8

Note 20 - Pledged assets and contingent liabilities, SEK m.

No assets were pledged.

Contingent liabilities 2008 2007

Contingent liabilities for the benefit of subsidiaries 1,549 1,646

1,549 1,646

Note 21 - Merger, SEK m.

During the year, the subsidiary L E Lundberg Holding AB (Corp. Reg. No. 5565632477) was merged with the Parent Company. The income statements and balance sheets of L E Lundberg Holding AB as of the merger date are presented below. Sept. 23, 2008

Operating profit 163

Fixed assets 2,262 Current assets 1,134 Shareholders’ equity 3,396

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The Board of Directors proposes that the funds available for distribution by the Annual General Meeting, in an amount of SEK 9,921 m. or to be precise SEK 9,920,620,795.65, be distributed as follows:

To shareholders, a dividend of SEK 6.00 per share SEK 372 m.To be carried forward SEK 9,549 m. SEK 9,921 m.

The company has 62,145,483 registered shares, of which 145,483 are currently treasury shares that do not qualify for dividends. The sum total of the dividend above, SEK 372 m. may change if the number of treasury shares changes before the record date for dividends.

A statement motivating the dividend proposal will be available on the company’s website www.lundbergs.se no later than two week before the Annual General Meeting. The statement will also be sent to those shareholders who request it.

The Board of Directors and the President give their assurance that the consolidated financial statements have been prepared in accordance with the international accounting standards referred to in the European Parliament’s and the Council’s Ordinance (EC) No. 1606/2002 of July 19, 2002 concerning the application of international accounting standards and the Annual Report has been prepared in accordance with generally acceptable accounting practices, and provide a fair and just impression of the Parent Company’s and the Group’s financial position and earnings. The man-agement reports for the Parent Company and the Group provide a fair and just summary of the development of the Parent Company’s and the Group’s operations, financial position and earnings and describe the significant risks and uncertainties faced by the Parent Company and companies included in the Group.

The annual report and the consolidated financial statements were approved for publication by the Board on February 19, 2009. The consolidated income statement and balance sheet and the Parent Company’s income statement and balance sheet will be subject to adoption at the Annual General Meeting on March 31, 2009. April 3, 2009 is proposed as the record date for payment of dividends. If the Annual General Meeting approves the proposal, it is estimated that the dividends will be distributed by Euroclear Sweden AB on April 8, 2009.

Stockholm, February 19, 2009

Per Welin Gunilla Berg Lennart Bylock Chairman of the Board Member of the Board Member of the Board

Mats Guldbrand Tom Hedelius Sten Peterson Member of the Board Member of the Board Member of the Board

Bengt Pettersson Christer Zetterberg Fredrik Lundberg Member of the Board Member of the Board President and Chief Executive Officer Member of the Board

Our audit report was submitted on February 19, 2009

George Pettersson Kjell Bidenäs Authorized Public Accountant Authorized Public Accountant

KPMG KPMG

Proposed Distribution Of Profits

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73Auditors’ Report

We have audited the annual report, the consolidated financial statements, the accounts and the administration of the Board of Directors and the President of L E Lundbergföretagen AB (publ) for the 2008 fiscal year. The company’s annual accounts are included in the printed version of this document on pages 29-72. The Board of Directors and the President are responsible for these ac-counts and the administration of the Company, and for ensuring that the Annual Accounts Act is applied when the annual report and the consolidated financial statements are compiled, and that the International Financial Reporting Standards (IFRS) adopted by the EU and the Annual Accounts Act are applied for compiling the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with Generally Accepted Auditing Standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement. An audit includes examin-ing, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the President, evaluating the material estimations made by the Board of Directors and President when compiling the annual report and the consolidated financial statements, and evaluating the overall presentation of information in the annual report and consolidated financial statements. We examined significant decisions, actions taken and circumstances of the Company in order to be able to determine the possible liability to the Company of any Board member or the President or whether they have in some other way acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.

The annual accounts and consolidated accounts have been prepared in accordance with the Annual Accounts Act and consequently provide a true and fair picture of the Company’s earnings and financial position in accordance with Generally Accepted Auditing Standards in Sweden. The consolidated financial statements have been compiled in accordance with the International Finan-cial Reporting Standards adopted by the EU and with the Annual Accounts Act and provide a true and fair picture of the Group’s earnings and financial position. The Report of the Board of Directors is compatible with the other parts of the annual report and consolidated financial statements.

We recommend that the Annual General Meeting adopt the income statements and balance sheets of the Parent Company and the Group, that the profit in the Parent Company be dealt with in accordance with the proposal in the Report of the Board of Directors, and that the members of the Board and the President be discharged from liability for the fiscal year.

Stockholm, February 19, 2009

George Pettersson Kjell Bidenäs Authorized Public Accountant Authorized Public Accountant

KPMG KPMG

Auditors’ ReportTo the Annual General Meeting of L E Lundbergföretagen AB (publ)

Corporate Registration Number: 556056-8817

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74 Corporate governance report

IntroductionL E Lundbergföretagen AB applies the Swedish Code of Corporate Governance (the Code), in accordance with OMX Nordic Exchange’s listing requirements. The Code is a form of self-regulation within Swedish industry based on the “comply or explain” principle, whereby companies that apply the Code may deviate from individual rules but, in such cases, must explain the reason for each deviation. This Corporate Govern-ance Report was prepared by the Board of L E Lundbergföre-tagen AB in accordance with the Code’s rules. The report does not constitute a section of the formal annual accounts and has not been reviewed by the company’s auditors.

Division of responsibilitiesResponsibility for the management and control of L E Lund-bergföretagen AB is divided among the shareholders at the Annual General Meeting, the Board of Directors, its elected committees and the President, in accordance with the Swed-ish Companies Act, other laws and regulations, pertinent rules for stock market companies, the Articles of Association and the Board’s internal control instruments.

ShareholdersIn February 2009, the company had 13,758 shareholders. The ten largest owners had total holdings corresponding to 78.3% of the share capital. Foreign investors owned about 5.2% of the share capital. For additional ownership information, see page 13.

Annual General MeetingThe Annual General Meeting is the highest decision-making body in LE Lundbergföretagen AB. The Annual General Meet-ing, which is held within six months of the close of the fiscal year, adopts the income statement and balance sheet, makes a resolution regarding dividends, elects members of the Board and, when applicable, auditors and approves their fees, and makes resolutions concerning motions submitted by the Board of Directors and shareholders.

All shareholders who are listed in the share register on a given record day, and who have notified the company of their intention to participate in the meeting within the allotted time period, are entitled to participate in the meeting and exercise voting rights equal to the total number of shares they hold. Shareholders may participate via proxy.

The 2008 Annual General Meeting was held on April 10, 2008. The annual accounts and auditors’ report were pre-sented at the meeting. In conjunction with this, the Board Chairman presented information concerning the Board’s duties and information concerning cooperation with the auditors. In addition, President and CEO Fredrik Lundberg provided a presentation of Group operations during 2007.

The auditors presented a report on their audit to the Annual General Meeting through the submitted auditors’ report and a

verbal account of their work during the past year. The Annual General Meeting also resolved on guidelines for the remunera-tion of senior executives in accordance with what is stated on page 45 of the Annual Report. In addition, the Annual General Meeting resolved to authorize the Board to decide on acquisi-tion of treasury shares and to approve the call option program in the company’s subsidiary Holmen AB, as well as transfer-ring shares in connection with exercise of the options.

Nomination Committee In view of the composition of shareholders, it has not been deemed necessary to appoint a Nomination Committee. Therefore, motions for the election of a Chairperson for the Annual General Meeting, elections of Board members and auditors, as well as remuneration to be paid to Board members and the auditors are submitted by the company’s major shareholders and presented in the announcement of the Annual General Meeting and on the company’s website. The company, accordingly, does not comply with rules of the Code concerning nomination committees.

Board of Directors and its workComposition of the BoardIn accordance with the Articles of Association, the Board of Directors shall consist of no less than three and no more than eight members elected by the Annual General Meeting for the period extending to the next Annual General Meeting. L E Lundbergföretagen AB’s Board of Directors, which is elected by the Annual General Meeting, consists today of nine mem-bers, including the President.

Per Welin, Chairman of the Board, has previously served as Chief Financial Officer of shipping and insurance companies and was vice president of Göteborgs Bank. Gunilla Berg was formerly CFO of the SAS Group and worked previously as executive vice president and CFO of Kooperativa Förbundet, among other positions. Lennart Bylock has served as Presi-dent, Chairman and Board member of a large number of com-panies, including several stock market companies. Mats Gul-dbrand was formerly Equity Manager at AMF Pension, among other positions. Tom Hedelius has served as President and Board Chairman of Handelsbanken. Fredrik Lundberg is Presi-dent and CEO of L E Lundbergföretagen AB. Sten Peterson is President of Byggnads AB Karlsson & Wingesjö. Bengt Petters-son has served as President and CEO of Holmen AB. Christer Zetterberg has served as President and CEO of Holmens Bruk, PK-banken and AB Volvo, among other companies. A descrip-tion of the assignments currently held by Board members is presented on pages 78 and 79 of the Annual Report.

As President and CEO of L E Lundbergföretagen AB, Fredrik Lundberg must be deemed as being dependent in relation to the company. Other Board members are currently regarded as independent in relation to the company, since the “12-year rule” has been removed from the Code, effective July 1, 2008.

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All of the Board members, apart from Fredrik Lundberg and Sten Petersson are independent in relation to the company’s major shareholders. Accordingly, the Board complies with the requirements concerning independence that are imposed in both the Code and in the Exchange’s listing requirements.

ChairmanAt the 2008 Annual General Meeting, Per Welin was elected Chairman of the Board. The Chairman organizes and directs the Board’s efforts to ensure the work is conducted effectively and in compliance with the Swedish Companies Act, other laws and regulations, pertinent rules for stock market com-panies (including the Code) and the Board’s internal control instruments. The Chairman monitors the operations in a dialog with the President and is responsible for ensuring that other Board members receive satisfactory information and appropri-ate decision-making documentation. The Chairman is respon-sible for keeping Board members up to date and broadening their knowledge of the company and otherwise providing whatever training might be required to effectively conduct their Board work. The Chairman is also responsible for annual evaluations of the Board’s work.

Board of Directors’ workThe Board of Directors establishes written working procedures every year that regulate the Board’s work agenda and its inter-nal distribution of duties, decision-making priorities within the Board, the Board’s meeting procedures and the Chairman’s responsibilities. In addition, the Board has issued a finance policy, information policy and written instructions regarding the allocation of responsibilities between the Board and the President.

The Board monitors the President’s work through continu-ous efforts to follow up operations during the year, assumes responsibility to ensure that the organization, management and guidelines for administration of the company’s business are based on established goals and that satisfactory internal controls have been established. The Board is also responsible for development and ensuring compliance with the company’s strategies through plans and goals, decisions regarding acquisi-tions and divestments of business operations, major invest-ments and remuneration to the President, in accordance with the guidelines for remuneration of senior executives that were resolved by the Annual General Meeting.

In accordance with the applicable working procedures, the Board shall meet at least four times per year and hold one statutory meeting per year. Whenever required, extraordinary meetings shall be held to address special items. Five meet-ings of the Board were held during 2008. The Board focused special attention on strategic, financial and accounting issues during the year. Furthermore, at every Board meeting, presen-tations were made regarding the business development of

Fastighets AB L E Lundberg and L E Lundberg Kapitalför-valtning and in portfolio companies.

Attendance at Board meetings during the year was ex-tremely high. All Board members were present at all Board meetings, with the exception of Gunilla Berg who was unable to attend one meeting.

The Group’s CFO participates in Board meetings, as does the Board’s secretary, who is an independent lawyer. Other senior executives of the company also participate in Board meetings to present special issues or whenever deemed ap-propriate.

Remuneration of the BoardFees paid to the elected members of the Board are established by the Annual General Meeting based on motions submitted by the company’s largest shareholders. At the 2008 Annual General Meeting, it was resolved that fees to the Board for the period extending from the 2008 Annual General Meeting to the 2009 Annual General Meeting would total SEK 1,575,000, of which SEK 350,000 to the Chairman of the Board. Each of the other Board members elected by the Annual General Meeting, with the exception of the President, will receive a fee of SEK 175,000. No other remuneration was paid to any Members of the Board.

Audit CommitteeThe Board has considered the matter of whether to establish an Audit Committee and decided not to. Instead, the Board of Directors fulfills the responsibilities otherwise assigned by the Code to an audit committee. This structure functions satis-factorily considering the company’s relatively small Board of Directors and provides the entire Board with full insight into and opportunities to assume an active role in these important issues. During 2008, accordingly, the Board monitored the system for internal control and financial reporting. This super-vision is intended to ensure the efficiency of the operations, their compliance with laws and regulations and the accuracy of the financial reporting. The Board has reviewed and evalu-ated the procedures for financial accounting and reporting and followed up with evaluations of the work performed by the external auditors, their qualifications and independence. The Board also provides Group management with identifica-tion and evaluations of the primary risks in the operations and ensures that management focuses on efforts to address these risks. During 2008, the Board conducted two reviews with and received reports from the company’s external auditors, once without the attendance of President or other members of company management. The reports by the auditors did not necessitate any special actions by the Board.

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Remuneration CommitteeMatters pertaining to remuneration and other terms of em-ployment for the President and CEO are prepared by two Board Members, currently the Chairman of the Board and Lennart Bylock. Decisions pertaining to such matters are made by the Board of Directors. Remuneration and other terms of employment for other executives are negotiated and agreed upon with the President and CEO. The Board of Directors has considered the matter of whether to establish a Remuneration Committee but has concluded that the means of preparation and the division of competencies that are applied in respect of remuneration are appropriate and sound. Accordingly, the Board has not found any reason to change its position on the matter, even if this constitutes a deviation from the Code’s rules.

Corporate managementThe President manages and ensures that business operations are conducted in compliance with the Swedish Companies Act, other laws and regulations, pertinent rules for stock market companies, the Articles of Association and the Board’s internal control instruments, and in accordance with the objectives and strategies established by the Board. In consulta-tion with the Chairman of the Board, the President prepares required information and decision-making documentation prior to Board meetings, presents the issues and provides justification for motions.

President and CEO Fredrik Lundberg, born 1951, has de-grees in engineering and business administration and is a Doctor of Economics and a Doctor of Engineering. Fredrik Lundberg is the Chairman of Cardo, Holmen and Hufvud-staden, Deputy Chairman of Handelsbanken and NCC and a Board member of Industrivärden and Sandvik. Through direct ownership and companies, Fredrik Lundberg holds 32,760,000 shares in the company.

For a more detailed presentation of the President and other senior executives, reference is made to page 80.

Remuneration of the President and senior executivesThe 2008 Annual General Meeting resolved on guidelines for the remuneration of senior executives, which are described in greater detail on page 45 of the Annual Report. Information on the current remuneration of the President and other senior executives is also presented on page 45 of the Annual Report. The company has no outstanding share-based or share-price-related incentive programs.

A motion concerning guidelines for the remuneration of senior executives will be presented to the 2009 Annual General Meeting for resolution.

Active OwnershipL E Lundbergbergföretagen AB is an active owner of its port-folio companies. The company is represented in each of these

companies through one or more Presidents, Executive Vice Presidents or Board members in LE Lundbergföretagen AB. Active ownership is also exercised through representation on the Nomination Committees of the portfolio companies.

Internal auditThe company has a simple legal and operating structure and a carefully formulated control and internal audit system. The Board monitors the company’s evaluations of its internal con-trol through contacts with the company’s auditors and other means. In view of the information presented above, the Board has decided not to establish a special internal audit function.

AuditorsAt the 2007 Annual General Meeting, Authorized Public Ac-countant Kjell Bidenäs was re-elected auditor of the company and Authorized Public Accountant George Pettersson was newly elected auditor of the company, both from KPMG, for a term of office of four years. Other major assignments performed by Kjell Bidenäs include being auditor for Hyres-bostäder in Norrköping and Enics Sweden. Other major assignments performed by George Pettersson include being auditor for B&B Tools, Holmen, Hufvudstaden and Seco Tools.

The audit is reported to the shareholders in the form of an audit report that constitutes a recommendation to the shareholders ahead of items of business at the Annual General Meeting concerning adoption of the income statement and the balance sheet for the Parent Company and the Group, the disposition to be made of the profit in the Parent Company and discharging the members of the Board of Directors and the President from liability for their administration during the preceding fiscal year.

Their duties include checking compliance with the Articles of Association, the Swedish Companies Act and the Annual Accounts Act, and with International Financial Reporting Standards (IFRS) and Exchange recommendations, matters involving valuation of balance sheet items and follow-ups of significant accounting processes and of the management of the company and financial control.

In addition to the audit assignment, Lundbergs has also consulted KPMG in matters related to the consolidated accounts. The amounts of remuneration paid to KPMG for audit services over the past three years are presented on page 47 of the Annual Report. In its capacity as auditors for Lundbergs and its subsidiaries, KPMG is obliged to verify its independence before deciding to conduct other assignments.

Articles of AssociationThe Articles of Association include established directives concerning the company’s business operations, the number of Board members and auditors, instructions for announcements to attend the Annual General Meeting, business for discus-

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sion at the Annual General Meeting and where the Annual General Meeting should be held. For more information about the current Articles of Association, which were adopted on April 4, 2006, reference is made to the company’s website, www.lundbergs.se, under Corporate Governance/Articles of Association.

InformationLundbergs’ information to shareholders and other interested parties is provided via the Annual Report, year-end and interim reports, press releases and the company’s web site, www.lundbergs.se. The website also includes financial reports and press releases for the past year, as well as information concerning corporate governance. Information released by the company complies with an information policy established by the Board of Directors.

Internal control and risk management concerning financial reporting for the 2008 fiscal yearThe Code stipulates that the Board shall annually submit a de-scription of how the internal control is organized with regard to financial reporting.

Control environmentThe control environment forms the foundation for the internal controls pertaining to financial reporting. The company’s inter-nal control structure is based on a distinct division of responsi-bilities and work both between the Board of Directors and the President and within business operations. Policies and guide-lines are documented and evaluated continuously by manage-ment and the Board of Directors. These control documents, and well-worked-out process descriptions are communicated via established information and communication paths and are thus made available and known to the employees concerned.

Risk assessmentThe company identifies, analyzes and takes decisions on the handling of the risk that errors will arise in financial reporting. The Board addresses the outcome of the company’s risk-assessment and risk-management processes, in order to ensure that they cover all significant areas and, wherever required, identifies necessary actions. The company’s largest opera-tional risks are related to property valuation and financial transactions (primarily with respect to holdings of publicly traded shares).

Control measuresBased on the completed risk assessment, the company has es-tablished a number of control measures. These measures are of both a preventive nature, meaning that they are designed to avoid losses or errors in financial reporting, and of an inves-tigative nature. Another aim of the controls is to ensure that

errors are corrected. Examples of processes with well-worked-out control measures are repair, refurbishment, maintenance and leasing activities within real estate management and securities handling within equity management.

Information and communicationsAt an overall level, internal information and external commu-nication activities are governed by, for example, an informa-tion policy. Internal communications to and from the Board of Directors and management occur through, for example, regular information meetings arranged by management. Another important communications channel is the company’s intranet, through which all employees have access to up-to-date information.

Internal policies, guidelines, instruc¬tions and equivalent documents that control and support business operations are also published on the intranet.

Follow-upThe company continuously evaluates the internal controls concerning financial reporting, primarily by asking questions and familiarizing itself with the work of the controller function.

The Board receives quarterly reports of financial results, including management’s comments on business operations. At every Board meeting, the financial situation is addressed. The company’s auditors participate in Board meetings on two occasions annually and provide information about their observations of the company’s internal procedures and control sys¬tems. On these occasions, the Members of the Board have an opportunity to ask questions. On an annual basis, the Board takes decisions on significant risk areas and evaluates the internal controls.

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78 Board of Directors

Per WelinBorn 1936MBA, Licentiate in EngineeringChairman of the BoardElected to the Board 1990. Board member of AutolivNumber of shares (incl. companies): 10,300

Mats GuldbrandBorn 1945MBAElected to the Board 2008Board member of Svolder AB, Procordia’s Pension II and the King Gustav V 80th Anniversary Fund’s Foundation.Number of shares: 33,070

Gunilla BergBorn 1960MBAElected to the Board 2004Board member of Alfa Laval

Lennart BylockBorn 1940Elected to the Board 1997Chairman of Swede Ship Marine AB and Endomines ABBoard member of the Swedish Nature and Culture Foundation, Cloetta Fazer AB and AS 3 Holdings.Number of shares (incl. companies): 40,000

Tom HedeliusBorn 1939MBA, Honorary Doctor of EconomicsElected to the Board 2004Chairman of Industrivärden, B & B Tools, Anders Sandrew Foundation and the Jan Wallanders and Tom Hedelius Foundation. Deputy Chairman of Addtech and Lagercrantz Group.Board member of SCA and Volvo, among other companiesHonorary Chairman of HandelsbankenNumber of shares: 1,000

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AuditorsGeorge Pettersson, Authorized Public Accountant, KPMG AB. Born 1964. Elected 2007.

Kjell Bidenäs, Authorized Public Accountant, KPMG AB. Born 1960. Elected 2005. Re-elected 2007.

DEPUTY AUDITORS

Carl Lindgren, Authorized Public Accountant, KPMG AB. Born 1958. Elected 1998. Re-elected 2003 and 2007.

Hans Åkervall, Authorized Public Accountant, KPMG AB. Born 1953. Elected 1994. Re-elected 2003 and 2007.

Sten PetersonBorn 1956MBAPresident of Byggnads AB Karlsson & WingesjöElected to the Board 2001Board member of Hufvudstaden and Fastighets AB L E Lundberg, among other companiesNumber of shares: 4,000Number of call options: 50,000

Christer ZetterbergBorn 1941Elected to the Board 1990Chairman of Nike Hydraulics ABBoard member of Cloetta Fazer AB, Boo Forssjö AB, Camfil AB and Swede Ship Marine AB.Member of the Swedish Academy of Engineering SciencesNumber of shares: 10,000

Fredrik LundbergBorn 1951MBA, Doctor of EconomicsPresident and Chief Executive Officer of LundbergsElected to the Board 1975Chairman of Cardo, Holmen and HufvudstadenDeputy chairman of Handelsbanken and NCCBoard member of Industrivärden and SandvikNumber of shares (including companies): 32,760,000

Bengt PetterssonBorn 1938Licentiate in EngineeringElected to the Board 1999Chairman of BabyBjörnBoard member of Econova and HolmenNumber of shares: 1,000

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Senior executives in L E Lundbergföretagen AB80

Ulf LundahlBorn 1952, employed since 2004 Executive Vice President and Deputy CEONumber of shares: 10,000Number of call options: 50,000

Lars JohanssonBorn 1966, employed since 1991Chief Financial Officer

Fredrik LundbergBorn 1951, employed since 1977 President and Chief Executive Officer Number of shares (including companies): 32,760,000

Claes BoustedtBorn 1962, employed since 1991 Executive Vice President, President of L E Lundberg Kapitalförvaltning ABNumber of call options: 50,000

Michael GrundbergBorn 1961, employed since 2002 Portfolio Manager

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81

Peter LundgrenBorn 1970, employed since 1994Regional Manager, Western Sweden since January 1, 2009

Senior executives in Fastighets AB L E Lundberg

Kjell JohanssonBorn 1957, employed since 2006Regional Manager, Gothenburg

Roger EkströmBorn 1961, employed since 2001Executive Vice President, Regional Manager, Eastern Region, Fastighets AB L E LundbergInformation Manager, L E Lundbergföretagen ABNumber of call options: 20,000

Johan LadenbergBorn 1966, employed since 2006Head of Rental and Property Administration

Peter WhassBorn 1954, employed since 1989President Number of call options: 20,000

Louise LindhBorn 1979, employed since 2006Executive Vice President Number of shares: 4,644,301

Pernilla CronerudBorn 1968, employed since 1999Chief AccountantHead of Corporate Accounting at L E Lundbergföretagen AB

Erik RydströmBorn 1975, employed since 2001Regional Manager, StockholmNumber of shares: 800

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Information about the Annual General Meeting

L E Lundbergföretagen’s Annual General Meeting will be held on Tuesday, March 31, 2009, at 2.00 p.m. at Grand Hotel, Vinterträdgården, Stallgatan 6, Stockholm, Sweden.

Participation in the MeetingShareholders wishing to participate in the business of the Meeting shall be recorded in the Securities Register main-tained by Euroclear Sweden AB (formerly VPC AB) no later than Wednesday, March 25, 2009, and notify the Company of their intention to participate no later than noon, Wednesday, March 25, 2009.

Notifications can be made in any of the following manners: •ByposttoLELundbergföretagenAB(publ), S-601 85 Norrköping, Sweden •bytelephonetoInt.+46-11-216500•bytelefaxtoInt.+46-11-216565,or•[email protected],whereby the company’s e-mail confirmation that the notification has been received is required.

Notifications must include details of the shareholder’s name, address, telephone number, personal identification/corporate registration number, number of shares held and number of advisors. If participation is to be based on proxy, the proxy document must be sent to the Company before the Annual General Meeting.

To be able to vote at the Meeting, shareholders whose shares are registered in a nominee’s name, through a bank’s trust department or an individual broker, must temporarily register their shares in their own names. Such registration must be completed by Wednesday, March 25, 2009. This means the nominee must be given adequate notice of the shareholder’s wishes before this date.

DividendThe Board of Directors has proposed a dividend of SEK 6.00 per share for the 2008 fiscal year. April 3, 2009 is proposed as the record date for payment of dividends. If the Annual General Meeting approves the Board’s motion, it is estimated that the dividends will be distributed by Euroclear Sweden AB on April 8, 2009.

Financial information

The following financial reports will be published in Swedish and English on our web site, www.lundbergs.se

May 25, 2009 Interim Report January – March, 2009August 27, 2009 Interim Report January – June, 2009November 26, 2009 Interim Report January – September, 2009February 2010 Year-end Report for 2009

The Annual Report will be sent to shareholders who have notified that they wish to receive it. Notification is easiest via www.lundbergs.se, under the heading Investor relations/shareholder service.

Annual General Meeting and Financial reports

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83Addresses

L E Lundbergföretagen AB (publ)

Corp Reg No: 556056-8817Registered headquarters: StockholmPO Box 14048, SE-104 40 Stockholm, SwedenStreet address: Hovslagargatan 5BTel: +46 (0)8 463 06 00, Fax +46 (0)8 611 66 09E-mail:[email protected]


Corp Reg No: 556049-0483SE-601 65, Norrköping, SwedenStreet address: S:t Persgatan 105Tel: +46 (0)11 21 65 00Fax: +46 (0)11 21 65 65E-mail:[email protected]

www.lundbergs.se

On Lundbergs’ website, you will find general information about the company, financial information and current share price.

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Format and production: Anfang Reklambyrå, NorrköpingText: LundbergsTranslation: The Bugli Company ABPrinting and reproduction: Strokirk-Landströms ABCover Invercote Creato 300 g.Photography: Göran Billeson page 4, Magnus Pajnert page 7, M&F Foto pages 7, 14, 17, Stewen Quigley, Q Image pages 7, 24, Sandvik pages 7, 27, Lars Strandberg pages 7, 22, Jäger Arén pages 8, 18, Sten Jansin pages 8, 25, Alexander V Dokukin page 8, MC Photograpy page 8, Holmen page 8, Rolf Andersson, Bildbolaget, Västervik page 20, Manfred Zentsch page 26, Curt Wass page 26, Getimage page 27, Pix Gallery page 28.

Printing date: March 30, 2009

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Documents

2008 - L E Lundbergföretagen · in 2007. The total vacancy rate in February 2009 was about 1.9%, comprising 0.7% for residential properties and 2.6% for commercial premises. A new