2012 - investis digital · husqvarna 27 annual report 29 report of the board of directors 30...

2012 2012

Contents

Outline of Lundbergs 2The year in brief 3President’s review 4Lundbergs as an investment company 8

Net asset value 10Cash flow report 11The Lundberg share 12

Subsidiaries and portfolio companiesFastighets AB L E Lundberg 14Hufvudstaden 18Holmen 20Industrivärden 22Handelsbanken 23Sandvik 24Skanska 25Indutrade 26 Husqvarna 27

Annual Report 29

Report of the Board of Directors 30Definitions 39Group

Financial statements 40Notes 43

Parent Company Financial statements 67Notes 70

Proposed distribution of earnings 76 Auditors’ report 77

Board of Directors and Auditors 78 Senior executives 80 Annual General Meeting and Financial statements 82Addresses 83

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.

2 3

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 Hufvudstaden and Holmen.

Lundbergs also has major shareholdings in Industrivärden, Handelsbanken, Sandvik,

Skanska, Indutrade and Husqvarna.

Lundbergs’ objective is to generate a return on invested capital over time that substantially

exceeds the yield on a risk-free interest-bearing investment.

22.4%Fastighets AB L E Lundberg

Holmen 13.3%Hufvudstaden

20.8%

Skanska 4.2%Sandvik 7.5%

Indutrade 3.1%

Handels-banken 8.5%

Industrivärden 15.3%

Husqvarna 3.9%Other 0.9%

Share of Lundbergs’ market- valued holdings, SEK 40 billion, on February 19, 2013

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SEK

Net asset value per share after deferred tax

Nasdaq OMX Stockholm IndexLundbergs

180

210

240

270SEK

FebJan 13NovSeptJulyMayMarchJan 12

The Lundberg share

Fastighets AB L E Lundberg

Holmen33 (62)

Hufvudstaden45 (88)

100

Husqvarna

Industrivärden

Handelsbanken

Indutrade

6.8 (22)

2.0 (2.0)

Sandvik 2.2 (2.2)

13 (18)

14 (14)

3.4 (12)

Principal shareholderOther major shareholdings

Skanska

Lundbergs

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The figures denote the percentage of share capital (voting rights) held on February 19, 2013.

2 3

The year in brief

V On December 31, 2012, net asset value after deferred tax amounted to SEK 302 per share (267).

V Consolidated net sales amounted to SEK 21,618 m. (22,604).

V Profit after financial items totaled SEK 4,360 m. (10,753). Profit for the preceding year included a capital gain of

SEK 2,523 m. on the sale of the Cardo holding.

V Profit after financial items excluding impairment losses, reversals of impairment losses and unrealized changes

in value amounted to SEK 3,087 m. (5,914).

V Consolidated profit after taxes amounted to SEK 5,568 m. (8,673), of which non-controlling interests accounted

for SEK 2,327 m. (3,521).

V Earnings per share attributable to the Parent Company’s shareholders amounted to SEK 26.14 (41.26).

V Investments in Fastighets AB L E Lundberg totaled SEK 948 m.

V Publicly traded shares in an amount of SEK 618 m. were acquired.

Earnings and key data2012 2011

Net asset value after deferred tax, SEK billion 37.5 33.0Net asset value per share after deferred tax, SEK 302 267Shareholders’ equity per share attributable to Parent Company’s shareholders, SEK 289 250Net sales, SEK m. 21,618 22,604Profit after tax, SEK m. 5,568 8,637

of which, non-controlling interests, SEK m. 2,327 3,521Earnings per share, excluding non-controlling interests, SEK 26.14 41.26Dividend per share, SEK 4.301 4.00 Debt/equity ratio 0.24 0.26Equity/assets ratio, % 64 60 1) The Board of Directors’ proposal.

President’s review

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4

During the first six months of 2012, global demand was

relatively favorable, subject to considerable geographi-

cal differences. As currently remains the case, Southern

European countries were in recession, while China

was reporting substantially lower growth than we had

become accustomed to. Demand in the US was healthy

in parts of the economy amid major unrest concerning

the future.

The Euro crisis deepened and the effects spread steadily to northern

parts of Europe, including Scandinavia. To stabilize financial markets

and the Euro, the European Central Bank and the International

Monetary Fund adopted forceful measures. These actions gener-

ated effects during the autumn, resulting in a stabilization of capital

markets.

Weak demand in Europe and parts of Asia continued during

the autumn, adversely impacting order bookings in the business

community. In Sweden, this resulted in many companies adjusting

their workforce to match the lower volumes. The result was a sharp

slowdown in the economy of our country. The strong Swedish krona

also had a negative impact on the export industry.

Financial markets continued to stabilize towards the close of

the year. CDS spreads narrowed and volatility on stock markets

subsided. The US could also confirm a continuing improvement in

the economy. Southern European countries continued to imple-

ment wide-ranging action programs to sanitize their economies and

enhance the competitiveness.

In summing up 2012, we can state that it was a good year for

many of the world’s stock markets, despite the crisis we witnessed

in a number of Western economies. As a result of a stabilization of

global financial markets, combined with improving conditions in

parts of the world economy late in 2012, expectations have become

increasingly positive. Many stock markets have also started 2013 with

relatively substantial upturns.

Lundbergs’ performanceFor 2012, Lundbergs reported consolidated after-tax profit of SEK

5.6 billion (8.6). After minority interests, profit amounted to SEK 3.2

billion (5.1). Excluding reversals/impairments and unrealized value

changes, profit after financial items totaled SEK 3.1 billion (5.9). Net

asset value per share after deferred tax (see page 10) increased dur-

ing the year by 13% to SEK 302 (267). Lundbergs’ Board of Directors

proposes that the Annual General Meeting approve an increase in

the dividend to SEK 4.30 (4.00). Our long-term aim is to offer share-

holders favorable and stable dividend growth.

At year-end 2012, interest-bearing net debt totaled SEK 3.1 billion

(2.7), corresponding to 7% (7) of assets. Since our financial policy

entails that we do not mortgage shares but only property, up to a

maximum of 50% of market value, our debt is totally attributable

to real estate operations. Consequently, the loan-to-value ratio was

24% at year-end 2012.

Our credit rating with Standard & Poor’s, which was confirmed in

October 2012, remains unchanged at a strong A+, with a stable out-

look. In September, we issued SEK 1 billion in unsecured corporate

bonds with a maturity of 6.5 years and a fixed interest rate of 3.05%.

At year-end 2012, the average interest rate on our debt financing

was 3.5%.

Fastighets AB L E LundbergLundbergs’ consolidated financial statements include operat-

ing profit of SEK 769 m. (825) from the wholly owned subsidiary

Fastighets AB L E Lundberg. This profit includes unrealized increases

in the value of investment properties of SEK 196 m. (343), or a value

increase of 1.7% (3.3) since the preceding year-end. The reason for

the value increase was higher rents, while the yield requirement

remained essentially unchanged.

During 2012, a total of SEK 940 m. (821) was invested in refurbish-

ments, new construction and acquisitions of investment properties,

while sales totaled SEK 278 m. (0). The market value of investment

properties at year-end was SEK 12.5 billion (11.6).

The rental market for housing and office space was generally

strong during 2012, while demand for retail premises slackened. The

vacancy rate was 2.6% during the year, of which housing accounted

for 0.8% and commercial premises for 3.9%.

The property market remained strong in 2012. New funding

solutions and continuing low interest rates contributed to this trend.

Primarily Swedish institutions and highly capitalized companies

were active in terms of acquisitions. The total transaction volume

was almost SEK 110 billion, thus exceeding the level in 2011.

During the second quarter, we acquired an office property in

Kungsholmen, central Stockholm, for SEK 483 m. We regard this

office location as attractive, with favorable rental potential. We also

acquired a combined retail and office property in central Linköping

for SEK 134 m., directly adjacent to our other properties in the city

and complements them in an excellent manner. During recent

years, we have invested about SEK 900 m. in Linköping’s commercial

district, where we are now the largest property owner.

We started two new construction projects in 2012. One of these,

in central Linköping, contains some 7,000 square meters of office

space and garage facilities. The project has a leasing rate of 70%,

and the total investment is estimated at approximately SEK 240 m.

The project will be completed during the first quarter of 2014.

5

The second is a housing project in central Norrköping comprising

112 rental units with retail premises on the first floor. The estimated

investment cost is about SEK 330 m. and the property will be com-

pleted during the second quarter of 2014.

During the third quarter of the current year, we plan to start

building a small retail and office project in central Norrköping. This

investment is estimated at approximately SEK 80 m. and is the final

stage of our expansion of Norrköping’s commercial center. Overall,

Lundbergs will subsequently own properties comprising retail space

of 43,000 square meters and office space of 33,000 square meters in

central Norrköping, making us the clearly dominant property owner in

the location.

Portfolio companiesDuring 2012, publicly listed shares were acquired for a total of SEK 618 m.

The largest purchases were made in Holmen in the amount of

SEK 289 m. and in Skanska for SEK 266 m.

Hufvudstaden’s current earnings improved further during 2012.

As a result of lower unrealized increases in property values, however,

total earnings were weaker than in the preceding year. The leasing

markets in Stockholm and Gothenburg remained buoyant, leading to

a low vacancy rate and higher rent levels. Hufvudstaden also has the

most satisfied office tenants in the industry, as reflected once again by

the industry’s Customer Satisfaction Index. Hufvudstaden’s multi-year

focus on high-quality retail facilities has provided results. Both the NK

and Bibliotekstan locations in Stockholm have managed to attract a

number of top-class international brands that further develop and

enhance both marketplaces. In December, Hufvudstaden acquired a

strategically significant property for SEK 1.3 billion in the Nordstans

commercial center in central Gothenburg. The total floor space

amounts to 21,000 square meters, with about two thirds of revenue

deriving from retail operations and the remainder from offices.

Hufvudstaden’s financial position remains highly robust.

Holmen’s earnings declined during 2012. One reason for this was

continued weak demand and continued excess capacity in the print-

ing paper area. Demand in the cartonboard area remained favorable

but supply increased. This led to production ceilings which, combined

with costs connected to investments in a new recovery boiler in

Iggesund and a new biofuel boiler in Workington, reduced earnings.

Demand for sawn timber products was sluggish while timber prices

remained high, resulting in negative earnings. The trend for commodity-

related activities – forest products and energy – was favorable. Dur-

ing the year, a number of rationalization projects were undertaken

in the printing paper segment as part of efforts to improve business

conditions. In September, a decision was made to phase out another

paper machine in Hallsta. Continued action will be taken to improve

earnings.

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Industrivärden’s net asset value, including reinvested dividends,

increased during the past year by 29%. The performance of its

portfolio companies was primarily positive, although a slowdown

in order bookings was noted in a number of companies during the

autumn. In December, additional Series A Volvo shares were acquired

in connection with Renault’s divestment of its entire holding in the

company. As a result, Industrivärden is the largest shareholder in

Volvo, in terms of both capital and voting rights. Additional Skanska

shares were also acquired during the year.

Handelsbanken’s performance in 2012 was positive, with the bank

reporting record earnings. Its financial position was further improved.

Expansion in the UK continued and earnings increased sharply in of-

fice operations outside Sweden. In early 2013, a British asset manage-

ment group was acquired, thereby creating a platform for growth in

wealth management in the UK.

For Sandvik, 2012 was an eventful year. The company celebrated

its 150th jubilee, the new strategy was implemented and higher

earnings were reported. During the latter half of the year, industrial

conditions weakened, which led to order bookings being less than

invoicing. Additional measures to strengthen profitability were

implemented.

Skanska’s profit in 2012 remained at the same level as in the pre-

ceding year, excluding the sale of Autopista Central in Chile. Several

of its construction operations delivered favorable earnings, while op-

erations in Latin America reported a weak trend. Commercial project

development continued to report favorable earnings and many new

projects were started during the year.

Indutrade reported stable earnings for 2012, albeit at a somewhat

lower operating margin than in the preceding year. Following a

strong start to the year, conditions during the second half of the year

were weaker, which encompassed a number of geographical markets

and customer segments. Twelve new companies of varying size, with

total revenues of about SEK 800 m., were acquired during the year.

Husqvarna’s earnings for 2012 remained at the same level as in

the preceding year, but with a significant improvement in cash flow.

Demand in Europe was weak, as a result of unfavorable weather con-

ditions and macroeconomic uncertainty. Demand in North America

increased for the full year but the operating margin remained

negative. The Construction business area reported a positive trend

thanks to high activity in the US construction market. In early 2013,

Husqvarna presented an investment of SEK 1 billion in key technolo-

gies, which are expected to further enhance the company’s leading

position in the chain saw segment.

Future outlookLundbergs’ business model has been developed and functioned

well over several years. The streamlined structure is easy to analyze

and provides us with the right focus when addressing decisive issues.

The current balance between our real estate operations and other

investments seems right. Our business model offers us considerable

flexibility. A key factor in the allocation of our resources is future de-

velopment potential, combined with the desired risk diversification.

Our financial policy has long been established and entails a low

risk level. This gives us strength to be proactive as a shareholder and

be able to capitalize on new business opportunities. Our current

operations are reporting a positive cash flow, thus permitting new

investments without raising indebtedness.

Our property activities currently account for about 43% of our

net asset value and have reported excellent value growth over a pro-

tracted period. We believe that the conditions for continued healthy

long-term growth are favorable.

Our investments in publicly listed companies represent various

industries and risk levels. We are the primary shareholder or a major

shareholder in all companies and are also represented on the boards.

Our business model entails that we assume ownership responsibility

with a long-term perspective, a working method that has generated

a favorable return for a number of decades. Our portfolio companies

are consistently very high-quality organizations and many of them

are leaders in their particular industry. Consequently, we expect

higher dividends and robust value growth over the long term.

In the years ahead, we will continue to invest in new property

projects and acquiring attractive projects in cities where healthy

growth is expected. In the future, we also plan to continue to invest

in publicly traded companies, both those in which we are already

shareholders and possibly in new companies.

I have considerable confidence in Lundbergs’ future and my aim

is to be able to report favorable earnings in the future too, combined

with a continuing competitive return for our shareholders.

Stockholm, March 6, 2013

Fredrik Lundberg

6

20112012

2007

2010

2006

2009

2005

2008

20032002

2010 NCC shareholding divested. Continued acquisitions of shares in several of the existing portfolio companies. Increased activity in Fastighets AB L E Lundberg through acquisitions and projects. Agreement entered into with Assa Abloy concerning divestment of all Cardo shares.

2008 Minor acquisitions of Sandvik, Husqvarna and Cardo shares.

2009 Participation in new share issue and minor acquisitions of Husqvarna shares.

2006 Continued share acquisitions in Handelsbanken and Sandvik.

2007 Husqvarna shares acquired. Continued acquisition of Handelsbanken, Industrivärden and Sandvik shares.

2005 Shareholdings in Stadium and Ramirent divested. Shares in Indutrade, Handelsbanken and Sandvik acquired.

2011 Cardo shareholding divested. Skanska shares acquired for SEK 1.2 billion, making Skanska a new portfolio company. Continued acquisition of Holmen, Husqvarna, Industrivärden and Sandvik shares.

2012 Continued acquisition of Holmen, Husqvarna, Sandvik and Skanska shares.

2003 Continued acquisition of Industrivärden shares. Participation in structural transaction when Ramirent acquires Altima.

Holmen

7

2002 Acquisition of Industrivärden shares.

8 9

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 real estate company Fastighets AB

L E Lundberg and the publicly traded subsidiaries

Hufvudstaden and Holmen. Lundbergs also has signifi-

cant shareholdings in Industrivärden, Handelsbanken,

Sandvik, Skanska, Indutrade and Husqvarna.

Strategy and objectiveLundbergs’ objective is to generate a return on invested capital

over time that substantially exceeds the yield on risk-free interest-

bearing investments. Lundbergs’ strategy is to generate such a

return and value appreciation while maintaining a low risk. Invest-

ments focus mainly on companies characterized by solid market

positions, strong and stable cash flow and which have their own

products and brands. The financial risk is minimized by combining

low indebtedness with good access to funds. The time perspec-

tive of Lundbergs’ ownership enables the companies and their

management to adopt a long-term approach in their efforts to

improve 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.

Ownership and responsibilityLundbergs’ business concept is based on a long-term approach

and active ownership. Lundbergs’ Parent Company has limited im-

pact on the environment and the community at large, but through

active ownership it can influence the portfolio companies in these

matters. It is on the boards of directors of the various companies

that Lundbergs conducts its development and value-creation

work. Lundbergs has considerable competencies and longstanding

experience within the sectors in which the portfolio companies

operate. Responsible and persevering actions are a key prerequisite

for enabling the portfolio companies over time to continue to be

both profitable and sustainable operations.

AssetsLundbergs’ assets are concentrated to a number of major holdings.

The real estate holdings, through the wholly owned subsidiary

Fastighets AB L E Lundberg and shares in Hufvudstaden, rep-

resented a value of SEK 17.3 billion on February 19, 2013, or 43%

of the market-valued holdings. The shareholdings in Holmen,

Industrivärden, Handelsbanken, Sandvik, Skanska, Indutrade and

Husqvarna accounted for SEK 22.4 billion or 56% of the market-

valued holdings.

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 own-

ership has about ten employees, including the personnel of the

subsidiary L E Lundberg Kapitalförvaltning. Management expenses

in relation to the holdings measured at market value amounted to

0.11% during 2012. Organizationally, the wholly owned real estate

holdings are separated from the Parent Company and are assigned

the same status as the Group’s other major investments.

L E Lundberg Kapitalförvaltning ABL E Lundberg Kapitalförvaltning is a subsidiary that engages in

securities trading. The objective of the operations is to utilize

macroeconomic and corporate analyses in order to generate a

favorable return on capital employed. In addition to securities trad-

ing, 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 a considerable part of

the investments, investments may also be made in other markets.

The value of the portfolio at year-end was SEK 309 m. The organiza-

tion consists of five employees.

Investment activitiesIn total, Lundbergs invested approximately SEK 618 billion in the

portfolio companies during 2012. Of these investments, Holmen

accounted for SEK 289 m., Skanska for SEK 266 m., Sandvik for

SEK 45 m. and Husqvarna for SEK 18 m.

ReturnLundbergs’ mission is to generate a healthy absolute return for its

shareholders through growth in dividends and net asset value.

Over the past ten years, net asset value per share after deferred tax

has grown by an average of 10.6% annually. During 2012, net asset

value per share after deferred tax increased 13.1%. Total annual re-

turn1 over the past 10 years has averaged 11.3%. Total annual return

over the past five-year period has averaged 6.6%.

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

8 9

Net asset value On December 31, 2012, net asset value

after deferred tax amounted to SEK 37,501 m.

(33,048), corresponding to SEK 302 per

share (267); see table on page 10. On

February 19, 2013, estimated net asset

value per share after deferred tax amount-

ed to SEK 39,566 m. corresponding to SEK

319 per share.

As of December 31, 2012, the market

value of a Series C Hufvudstaden share is

calculated including a premium of 10% in

relation to the value of the publicly traded

Series A share. Previously, the actual market

price was used.

Fastighets AB L E Lundberg has been

measured at its net asset value, which has

been calculated as the market value of the

company’s properties minus interest-bear-

ing net indebtedness. The interest-bearing

net indebtedness of the Parent Company

and the wholly owned subsidiaries has

been attributed in its entirety to Fastighets

AB L E Lundberg.

Cash flowDuring 2012, dividends totaling SEK 1,047 m.

(881) were received. Sales of securities

amounted to a loss of SEK 4 m. (gain: 4,636)

and funds contributed from real estate op-

erations to SEK 881 m. (541), of which sales

accounted for SEK 310 m. (22). Accordingly,

total funds received in 2012 amounted to

SEK 1,924 m. (6,058).

During the year, SEK 618 m. (2,943) was

invested in shares and SEK 948 m. (821) in

properties. Dividends paid by Lundbergs

amounted to SEK 496 m. (465). Interest-

bearing assets rose SEK 223 m. and interest-

bearing liabilities by SEK 621 m. Accord-

ingly, interest-bearing net debt increased

by SEK 398 m. to SEK 3,094 m. (2,696) at

December 31, 2012. For additional informa-

tion, see the cash flow report on page 11.

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Husqvarna Skanska Other Holdings soldSandvikHandelsbankenIndutrade

Industrivärden Holmen HufvudstadenFastighets AB L E LundbergTotal value, left scale

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Distribution of market-valued holdings as a percentage of total asset value and total asset value in SEK billion

Feb 19, 2013 Dec 31, 2012 Dec 31, 2011 SEK m.

Marked value 2

Acquisition value 3

Marked value 2

Acquisition value 3

Marked value 2

Acquisition value 3

Handelsbanken 3,408 2,419 2,905 2,419 2,263 2,263Holmen 5,307 3,828 5,336 3,828 5,184 3,539Hufvudstaden 8,341 2,830 7,719 2,830 7,118 2,830Husqvarna 1,558 1,532 1,538 1,532 1,225 1,225Industrivärden 6,130 3,318 5,545 3,318 4,358 3,318Indutrade 1,249 545 1,084 545 1,007 545Sandvik 3,016 2,518 2,898 2,518 2,322 2,322Skanska 1,695 1,552 1,560 1,552 1,389 1,338Other shares 359 341 309 295 270 262

Total 31,061 18,884 28,894 18,837 25,135 17,643

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. The market value of the Series A Skanska shares has been calculated based on a 10% premium on the price of publicly traded Series B shares. As of December 31, 2012, the market value of Series C Hufvudstaden shares is calculated including a premium of 10% in relation to the value of the publicly traded Series A share.

3) Where applicable, after impairment losses.

Feb 19, 2013 Dec 31, 2012 Dec 31, 2011 % 1

Sharecapital

Votingrights

Sharecapital

Votingrights

Sharecapital

Votingrights

Handelsbanken 2.0 2.0 2.0 2.0 2.0 2.0Holmen 32.9 61.6 32.9 61.6 31.1 61.1Hufvudstaden 45.3 88.1 45.3 88.1 45.3 88.1Husqvarna 6.8 22.3 6.8 22.2 6.8 22.0Industrivärden 12.9 17.8 12.9 17.8 12.9 17.8Indutrade 13.8 13.8 13.8 13.8 13.8 13.8Sandvik 2.2 2.2 2.2 2.2 2.3 2.3Skanska 3.4 11.6 3.4 11.6 2.8 11.1

Proportion of share capital, voting rights, market value and acquisition value of shareholdings

10 1110 11

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SEK

Net asset value after deferred tax, per share

Net asset value

1) The interest-bearing net indebtedness of the Parent Company and the wholly owned subsidiaries has been attributed in its entirety to Fastighets AB L E Lundberg, which thereby has net indebtedness of 24% (23) of the market value of the properties. Fastighets AB L E Lundberg has been measured at its net asset value, which has been calculated as the market value of the company’s properties less interest-bearing net indebtedness. Net asset value has also been charged with the net of other assets, provisions and liabilities, as well as deferred tax on the difference between estimated market value and the tax-assessment value of the properties. As of December 31, 2012, the deferred tax has been estimated at a standard rate of 5% (10).

2) Publicly traded assets have been entered at the current market price. The market value of Series A Skanska shares has been calculated based on a 10% premium on the price of the publicly traded Series B shares. As of December 31, 2012, the market value of Series C Hufvudstaden shares is calculated including a premium of 10% in relation to the value of the publicly traded Series A share.

3) Other assets, provisions (excluding deferred tax) and liabilities have been entered at the carrying amount at December 31, 2012 and 2011.

4) Deferred tax of 22% (26.3) has been computed on the basis of the provision to the tax deferral reserve and the difference between the market value and tax-assessment value. In accordance with current legislation, deferred tax on business-related participations was not computed on the basis of the difference between the market value and the tax-assessment value.

Key figures 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Net asset value, SEK m. 18,024 21,520 26,078 33,147 30,409 22,073 28,046 37,214 33,048 37,501Net asset value/share, SEK 145 174 210 267 245 178 226 300 267 302Changes in NAV/share, % 32 20 21 27 - 8 - 27 27 33 - 11 13

Calculation of net asset value Dec 31, 2012 Dec 31, 2011

SEK m. SEK per share SEK m. SEK per share

Fastighets AB L E Lundberg 1 8,926 72 8,057 65Handelsbanken 2 2,905 23 2,263 18Holmen 2 5,336 43 5,184 42Hufvudstaden 2 7,719 62 7,118 57Husqvarna 2 1,538 12 1,225 10Industrivärden 2 5,545 45 4,358 35Indutrade 2 1,084 9 1,007 8Sandvik 2 2,898 23 2,322 19Skanska 2 1,560 13 1,389 11Other shares 2 309 2 270 2

Total market-valued holdings 37,820 305 33,193 268

Other assets, provisions and liabilities 3 - 9 0 - 39 0

Net asset value before deferred tax 37,811 305 33,154 267

Deferred tax 4 - 310 - 3 - 106 - 1

Net asset value after deferred tax 37,501 302 33,048 267

Market value 28,508 230 25,172 203

Price/NAV, % 76 76

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Changes in net asset value per share

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Cash-flow report

SEK m. 2012 2011 2010 2009 2008

DividendsCardo 100 100 97Handelsbanken 122 113 88 77 149Holmen 209 183 165 212 281Hufvudstaden 229 215 196 177 163Husqvarna 59 45 29 35Industrivärden 225 200 130 195 210Indutrade 37 28 24 26 21NCC 43 228Sandvik 89 72 21 44 56Skanska 69 12Other 8 14 6 7 11

1,047 881 759 882 1,251

Trading in securities 1 - 4 4,636 1,269 - 95 129Real estate operations 571 519 449 442 441Sales, real estate operations 310 22 22 12 47

Total assets contributed 1,924 6,058 2,499 1,241 1,868

Investments, equity managementCardo 38Handelsbanken 323Holmen 289 606 15Hufvudstaden 3Husqvarna 18 376 54 266 141Industrivärden 345 391 78Indutrade 258Sandvik 45 392 822 103Skanska 266 1,224 130

618 2,943 1,978 362 281

Investments, real estate operations 948 821 1,074 360 202Own dividends 496 465 403 372 558Group-wide costs 28 31 29 28 27Taxes paid 88 80 69 72 133Financial items 127 109 149 131 137Other 52 - 51 34 50 13

Total assets used 2,356 4,399 3,736 1,374 1,352

Change in net debt - 432 1,660 - 1,237 - 133 516

Closing net debt - 3,527 - 3,095 - 4,755 - 3,518 - 3,385of which, interest-bearing - 3,094 - 2,696 - 4,225 - 3,070 - 3,016

1) L E Lundberg Kapitalförvaltning AB is recognized net.

12 1312 13

Series B Lundberg shares are listed on NASDAQ OMX Nordic, Large

Cap. On average, 57,397 Series B shares were traded per trading

day in 2012. Total share turnover amounted to 14.3 million Series

B shares, corresponding to 19% of the total number of Series B

shares. The lowest price paid for the share in 2012 was SEK 195 and

the highest was SEK 237.

Market capitalizationLundbergs’ market capitalization at year-end was SEK 28,508 m.

(25,172). The share price increased 13% during the year.

Share capitalThe share capital of L E Lundbergföretagen AB (publ) amounted to

SEK 1,240 m. at year-end. On December 31, 2012, the total number

of shares was 124,000,000, each with a quotient value of SEK 10.

The shares are divided into 48,000,000 Series A shares, carrying ten

votes per share, and 76,000,000 Series B shares, carrying one vote

per share.

Repurchase of own sharesThe Board has been authorized to purchase Lundberg shares.

For more detailed information, see page 34.

Ownership structureLundbergs has a total of about 16,500 shareholders (16 500), of

whom some 12,800 (12,800) are registered in a nominee’s name

and about 3,700 (3,700) in the owner’s own name. Foreign owner-

ship amounts to 6.5% (5.8) of the share capital.

The Lundberg share

0

100

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300

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Feb, 20132012201120102009200820072006200520042003

Nasdaq OMX Stockholm IndexLundbergs Series B

Key figures2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Dividend per share, SEK 3.25 3.50 3.88 4.25 4.50 3.00 3.25 3.75 4.00 4.30 1

Growth in dividend per share, % 8 8 11 10 6 -33 8 15 7 8Direct return, % 2.8 2.5 2.3 1.9 2.4 2.0 1.8 1.5 2.0 1.9Total return, % 23.1 25.9 20.4 34.9 - 15.6 - 15.3 22.2 40.1 - 17.6 15.3Stock market price, Dec 31, SEK 116.25 142.25 167.75 222.00 184.00 152.00 182.00 250.00 203.00 229.90

1) Board of Directors’ proposal.

12 1312 13

Distribution of shareholders

No. of shareholders

As % of all shareholders

No. of shares held

As % of share capital

Average no. of shares/

shareholder1 - 500 12,070 73.2 1,772,762 1.4 147501 - 2,000 3,153 19.1 3,453,078 2.8 1,0952,001 - 5,000 655 4.0 2,180,993 1.8 3,3305,001 - 20,000 405 2.5 3,810,804 3.1 9,40920,001 - 50,000 189 1.1 14,120,525 11.4 74,71250,001 - 15 0.1 98,661,838 79.6 6,577,456

Total 16,487 100.0 124,000,000 100.0 7,521

Trend of share capital, SEK m. Share capital

Total paid in/ paid-out amount

Added/canceled Total

1981 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 6212011 Cancellation of repurchased shares - 30 - 1 6202011 Bonus issue, 1:1 620 1,240

Largest shareholders Feb 2013

Holdings as % of Feb 2012

Holdings as % ofshare capital votes share capital votes

Fredrik Lundberg incl. companies 54.0 89.7 53.4 89.6Louise Lindh 7.5 1.7 7.5 1.7Katarina Martinson 7.5 1.7 7.5 1.7Alecta Pensionsförsäkring 2.2 0.5 2.2 0.5SEB Fonder och Trygg Liv 2.1 0.5 2.3 0.5Nordea Funds 2.0 0.4 0.5 0.1Handelsbanken Funds 1.2 0.3 1.4 0.3Placeringsfond Small Cap Fund, Nordic Region 1.1 0.2 1.6 0.4Carnegie Funds 1.0 0.2 2.3 0.5Second AP Fund 0.8 0.2 0.6 0.1Others 20.6 4.6 20.7 4.6

Total 100.0 100.0 100.0 100.0

Swedish shareholders 93.5 98.5 94.2 98.7Foreign shareholders 6.5 1.5 5.8 1.3

Total 100.0 100.0 100.0 100.0

0

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Dividend/share Direct return, right scale

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-10

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20

30

40

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2012201120102009200820072006200520042003

%

Dividend and direct return

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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Housing 42%

Office 30%

Retail 19%

Other 9%

Annual rental revenues by type of premises

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Chairman Fredrik Lundberg CEO Peter Whass www.lundbergs.se

Share of Lundbergs’ total assets 22.4%

0

40

80

120

160

2018-20172016201520142013

SEK m.

Maturity structure of rental contracts, commercial premises

East 46%

Stockholm 31%

West 23%

Annual rental revenues by region

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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

properties.

The real estate holdings include 150 wholly and jointly owned investment proper-ties in 14 municipalities in 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 hold-ings in the real estate portfolio were built during the construction-intensive years of the 1960s and 1970s, and consist largely of proprietarily built structures. Residential properties account for about 42% of rental value.

Business concept and strategyFastighets AB L E Lundberg’s business concept is to engage in the long-term ownership management and development of residential and commercial properties in municipalities where favorable growth is expected. With strategic positions in several of Sweden’s expansive municipali-ties, the company is well positioned for continued healthy growth.

The company focuses on:• reducing sensitivity to economic fluctua-

tions through the management of both residential and commercial properties

• comprehensive local market knowledge through a decentralized organization

• providing effective management with a high level of tenant service

• striving to achieve the best possible development gains based on the potential of each individual property

• actively developing the existing real estate portfolio in order to reduce the properties’ carbon footprint

• creating opportunities for new invest-ment in profitable residential and com-mercial premises projects

• developing the proprietary holding of undeveloped land to provide oppor-tunities both for sales of land and new production for proprietary management.

Market trendThe year was marked by unrest in the global economy, notably in Europe with the deepening Euro crisis. In Sweden, the slowdown became distinct during the second half of the year and, in line with slackening growth, the real estate market was adversely affected and demand for commercial premises declined. However, transaction volume, primarily in terms of properties with secure cash flows and low risk, such as housing in growth areas and properties with long-term leases, remained robust throughout 2012.

With a property value of about SEK 12.8 billion, Fastighets AB L E Lundberg is one of the major privately owned property com-panies in Sweden. The company is active primarily in municipalities that are display-ing positive population growth, which is a key condition for the development of the local rental market.

In those municipalities in which Lund-berg is active, demand for housing is highly favorable while demand for retail facilities has declined in certain locations. The real estate portfolio is in good condition and its concentration to central locations, plus a smoothly functioning organization, leads the company to believe it has good poten-tial to retain a high leasing ratio.

Property investmentsFastighets AB L E Lundberg works actively in developing the existing real estate port-folio, parallel with the implementation of new projects. Real estate acquisitions are conducted in central locations in which the company already has management activities and where synergies with the existing portfolio property holdings can be achieved. During the year, the company ac-quired two properties and started up two new construction projects. During 2012, a total of SEK 940 m. was invested in acquisi-tions, new construction and refurbishment projects.

Fastighets AB L E Lundberg

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-1960 4%

1961-196930%

1970-1979 28%

1990- 21%

1980-1989 17%

Age structure of investment properties, by rental revenues

All diagrams and tables present information as at Dec 31, 2012.

East 47%

Stockholm 33%

West 20%

Fair value by region

Key figures

StockholmRegion

WestRegion

East Region Total

Number of properties 33 37 80 150Fair value, SEK m. 4,117 2,544 5,820 12,481Number of apartments 2,249 1,733 2,586 6,568Residential, sqm 169,489 122,911 187,421 479,821Residential, rent per sqm, SEK 966 965 993 976Residential, rental value, SEK 000s 163,648 118,587 186,148 468,383Residential,

rent-based vacancy rate, % 0.8 0.8 0.5 0.8

Office and retail, sqm 59,768 84,988 164,508 309,264Other premises, sqm 43,535 32,908 112,183 188,626Office/retail, rent per sqm, SEK 2,405 1,368 1,734 1,763Other premises, rent per sqm, SEK 641 524 419 488Office/retail,

rental value, SEK 000s 143,723 116,303 285,265 545,291Other premises,

rental value, SEK 000s 27,894 17,246 46,991 92,131Office/retail,

rent-based vacancy rate, %

2.5

1.5

5.9

3.9Premises, number of rental

contracts 288 267 707 1,262

16 1716 17

In Norrköping City, a major new construction project and adaptations of the existing real estate portfolio have been in progress since 2009. In autumn 2012, the refurbishment and extension of retail facilities in the Spiralen shopping mall were completed at a cost of SEK 94 m. During the year, new construction commenced on the Spinnrocken residential block, which comprises 112 housing units plus retail premises on the first floor. About 65% of the housing units are leased. The investment is estimated to approximately SEK 330 m. During 2013, construction will start on an approximately 2,800-square-meter retail and office building, which is expected to be completed in autumn 2014. The investment amounts to about SEK 80 m. and represents the final stage of the development of the Norrköping commercial center. These pro-jects, along with the previously newly con-structed Lyckan block and the development of existing properties in central Norrköping, entail an increase of the rentable space by some 31,000 square meters and a total investment of about SEK 1.1 billion over a five-year period.

In Linköping, new construction of an approximately 7,000-square-meter office building has started. The total investment is estimated at some SEK 240 m. Leases have been signed for about 70% of the prop-erty’s floor space, and the initial tenants are scheduled to move in on January 1, 2014.

During the year, investment properties were acquired for a total of SEK 623 m. On May 31, access was gained to the Murmäs-taren 13 office property in Kungsholmen in Stockholm. The property has rentable space of 11,000 square meters, plus 100 garage spaces, and the acquisition cost was SEK 483 m.

On June 9, access was gained to the Decimalen 16 property in Linköping, with rentable space of 4,620 square meters, of which retail premises account for 1,700 square meters. The purchase price for the property was SEK 134 m.

A sale of all properties in Nyköping and four small properties in Norrköping was completed on October 1. The sales price was SEK 278 m.

OrganizationThe company’s operational activities are divided into three regions: Stockholm, West and East. Property management and development operations are led by three regional managers. Everyday management and rental activities are handled locally. Property upkeep is conducted using the company’s workforce, which is a major contributory factor to the local presence among our tenants.

Project development operations are conducted centrally from the head office in Norrköping, which also has resources for administration, operation, accounting, infor-mation, purchasing, IT, and environmental and quality matters. The management group includes the President, regional man-agers, the project development manager, financial director and rental administration manager.

An employee survey is conducted an-nually to ensure a favorable work environ-ment and the continuous development of the company’s personnel. The results of the survey during the year point to an equitable work environment and a strong loyalty to the company’s values, which contribute to a favorable working climate.

The organization constitutes an excellent platform for continued focus on current property management, and for the develop ment of new and existing properties.

RegionsThe Stockholm region comprises six munici-palities. The real estate holdings in Solna, Stockholm, Uppsala and Enköping consist mainly of commercial premises, while housing accounts for most of the properties managed in Eskilstuna and Södertälje.

The West region comprises Arvika, Goth-enburg, Karlstad and Örebro. The real estate portfolio in Gothenburg mainly consists of offices. In other parts of the region, residen-tial premises account for about 70%.

The East region comprises Jönköping, Katrineholm, Linköping and Norrköping. The real estate holdings in the region con-tain large elements of retail premises, and revenue from stores, residential properties and offices each accounts for about one third.

Development propertiesThe development properties are situated mainly in central Sweden and comprise 2,422 hectares of farmland, forestland and centrally located sites distributed among about 70 objects. The property develop-ment operations transform the properties into developable land and create projects for resale. Detailed development plans are currently being prepared for approximately 1,500 single-family homes and apartments in such locations as Haninge, Norrköping, Eskilstuna, Mariefred and Örebro. During 2012, sales of development properties gen-erated revenues of SEK 33 m. (22).

Quality and the environmentThe management system for the property management, land development and project development conducted in Fastig-hets AB L E Lundberg is quality certified in accordance with ISO 9001:2008, environ-mentally certified in accordance with ISO 14001:2004 and energy certified in accord-ance with SS-EN 16001:2009.

The company endeavors to offer well-maintained and attractively located housing and commercial premises in properties, where the focus is on security and safety. Long-term tenant relations are created through high service standards and personal meetings.

Customer value, efficiency and profit-ability characterize all aspects of the com-pany’s operations. Work procedures aim to be systematic without any unnecessary bureaucracy, while ensuring compliance with concluded agreements.

The environment and energy policy stipulates that Lundbergs’ property management operations should work to support long-term, sustainable develop-

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Operating profit

Investment properties

SEK m. 2012 2011Net sales 1,137 1,077Operating expenses - 559 - 590Depreciation/amortization - 5 - 5Changes in value 196 343

Operating profit 769 825

Change in fair value, SEK m. 2012Opening fair value 11,623Acquisitions 623Investments in investment properties 152Investments in property projects 165Divested properties - 278Unrealized change in value 196

Closing fair value 12,481 LU

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ment of the environment and, through

continuous improvements, reduce the

company’s carbon footprint. The aim is that

both construction and management will

be conducted with due regard for resource

management and creating a sustainably

healthy indoor environment with a low

environmental impact. The company aims to maintain its

environmental expertise at a high level to ensure compliance with applicable laws and ordinances and to reduce the risks that contaminated substances could harm people or the environment.

Environmental objectives have been set for the principal environmental aspects. The greatest environmental impact derives from consumption of energy for operating the properties, combined with the materials and chemicals used in refurbishment, main-tenance and property upkeep.

The energy savings target over time is to reduce total energy consumption in the form of heat, electricity and cooling. Energy statistics were introduced for the company about 15 years ago and the properties’ consumption of energy and water is moni-tored continuously. The aim is that property operation should be adapted to the de-mands of the business and to the specific requirements of each property. During the past ten years, normal-year-adjusted total energy consumption has been reduced by 14 percent.

Purchases of electricity for property operation meet the Good Environmental Choice criteria of the Swedish Society for Nature Conservation. Heating is based on district heating and heat pumps, thus result-ing in low CO

2 emissions.

Since the indoor environment of Lund-bergs’ properties must be able to satisfy the tenants’ varying needs over time, the com-pany focuses on creating good living and work environments for its tenants. Another purpose of this is to minimize relocations, which in turn reduces the use of materials and chemicals. Tenant opinions and service

reports are registered and monitored to en-sure that proper priorities are made. Waste management is adapted to local conditions to secure a meaningful level of sorting at source.

When choosing building products, the aim is that contractors, building materials suppliers and consultants will comply with Lundbergs’ environmental rules, which means that the use of eco-approved build-ing materials should be sought.

The intention is that all planned new projects will be eco-classified in accord-ance with the EU GreenBuilding and Sweden Green Building Council certification systems. The Gold level is sought for com-mercial premises and the Silver level for resi-dential properties. A certification process is under way for existing properties that meet the GreenBuilding requirements. At present, four properties are certified.

Sales and earningsNet sales, including revenues from sales of development properties, amounted to SEK 1,137 m. (1,077). The increase primarily derived from rental revenues, which rose to SEK 1,095 m. (1,015). Operating costs increased to SEK 275 m. (254), mainly as a result of additional properties and higher rates for heat, electricity and water. Mainte-nance costs totaled SEK 155 m. (152). Oper-ating profit amounted to SEK 769 m. (825). In February 2013, the vacancy rate in the real estate portfolio was 2.8%, with the vacancy rate for residential premises amounting to 0.7% and other premises to 4.1%.

In the real estate portfolio, holdings of investment properties had a fair value of SEK 12,481 m. (11,623) on December 31, 2012 and development properties a fair value of SEK 270 m. (273). Investments amounted to SEK 152 m. (198) in investment properties, SEK 165 m. (288) in new property projects and SEK 5 m. (7) in equipment. During the year, properties were acquired for SEK 623 m. (331) and divested for SEK 278 m. (0).

In June 2012, the Decimalen 16 property in Linköping was acquired. The property has the best retail and office location in central Linköping.

-1960 4%

1961-196930%

1970-1979 28%

1990- 21%

1980-1989 17%

Commercial premisesHousing

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120

140

160

180

kWh/sqm of rentable floor space200

201220102008200620042002

Total energy consumption per square meter, normal-year adjusted

18 19

Stockholm City East 47%

StockholmCity West40%

Gothenburg 13%

Annual rental revenues by business area

Offices 48%

Retail andrestaurants45%

Other 7%

Annual rental revenues by type of premises

60

70

80

90


Nasdaq OMX Real Estate IndexHufvudstaden A

SEK

The Hufvudstaden share

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Chairman Fredrik Lundberg CEO Ivo Stopner www.hufvudstaden.se

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Highlights of the year

Hufvudstaden

Hufvudstaden, which was founded

in 1915, is one of Sweden’s leading

real estate companies. The com-

pany’s business concept is to use its

own properties in central Stock-

holm and central Gothenburg to

offer high-quality office and retail

premises to successful companies

in attractive marketplaces.

Hufvudstaden’s real estate portfolio is

concentrated in prime locations in inner-

city parts of Stockholm and Gothenburg. In

these cities, the company owns commercial

office and retail properties in the central

business districts, including Hamngatan,

Norrmalmstorg, Biblioteksgatan and Kungs-

gatan in Stockholm and Inom Vallgraven

and Östra Nordstan in Gothenburg. This

makes Hufvudstaden one of the most spe-

cialized and geographically concentrated

real estate companies in Sweden. Rentable

space totals slightly more than 367,100

square meters, with an annual rental value

of SEK 1.5 billion. The fair value of the real

estate portfolio at year-end 2012 was SEK

23.1 billion.

Business areasThe operation is divided into three busi-

ness areas. Stockholm City East comprises

17 properties with total rentable space of

151,000 square meters. Stockholm City West

comprises nine properties with total rent-

able space of 149,700 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

66,400 square meters. The largest property

includes the Femman department store,

which is part of the Nordstan shopping

mall.

Hufvudstaden works actively to

develop the high quality and efficiency

of its real estate portfolio with the aim of

creating favorable value growth. The com-

pany has proprietary resources for ongoing

operations and maintenance. Through

development measures, the premises gain

higher technology standards and more

space-efficient layouts, thus contributing to

improved operating net and higher returns.

Financial objectivesHufvudstaden’s financial objective is to

achieve favorable, sustained dividend

growth, and the dividend should represent

more than half of the net profit from oper-

ating activities. Over time, the equity/assets

ratio should amount to at least 40%.

Key financial data2012 2011

Net sales, SEK m. 1,542 1,437Operating profit before

change in value, SEK m. 1,051 933Operating profit, SEK m. 1,646 2,079Profit after net financial items, SEK m. 1,486 1,956Earnings/share, SEK 9.40 6.96Dividend/share, SEK 2.601 2.45Share price, Series A, Dec 31, SEK 81.95 70.05


Largest shareholders, Dec 31, 2012Percentage of share voting

capital rights Lundbergs 45.3 88.1State Street Bank and Trust 6.6 1.3JP Morgan funds 5.1 1.0Mellon funds 3.2 0.6NTC Wealth 2.8 0.6

Lundbergs’ holding, Feb. 19, 2013Number of Series A shares 85,200,000Number of Series C shares 8,177,680


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In November, the Nordstaden 8:26 property was acquired for some SEK 1.3 billion. The property, which is located in the Nord stan commercial center in Gothenburg, encompasses some 21,000 square meters. Occupancy is planned for March 2013.

The market value of the real estate port-folio was assessed at SEK 23.1 billion (22.3), at year-end 2012, resulting in net asset value of SEK 84 per share (76).

According to the Swedish Property Barometer’s annual customer survey, Cus-tomer Satisfaction Index, Hufvudstaden has the industry’s most satisfied office tenants.

20 21

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Sweden 23%

Spain 6%France 4%

Rest of Europe 19%

Rest of the world 12%

Netherlands 4%

Italy 4%

United Kingdom13%

Germany14%

Net sales by geographical market

Holmen Paper 46%

IggesundPaperboard 28%

Holmen Timber 6%

Holmen Skog 18%Holmen Energi 2%

Net sales by business area

150

175

200

225

250


Nasdaq OMX Forestry & Paper IndexHolmen B

SEK

The Holmen share

Chairman Fredrik Lundberg CEO Magnus Hall www.holmen.com

20 21

Holmen is a forest industry group

whose business concept is to

develop and conduct operations

in three product-oriented business

areas comprising printing paper,

board and wood products, and

two business areas based on raw

materials – forestry and energy.

The company’s own large forest

holdings and the high degree of

proprietarily generated energy are

strategically important resources

that enhance Holmen’s position and

future development.

The group has annual production capacity

of some 1.75 million metric tons of print-

ing paper, 540,000 metric tons of paper-

board and 880,000 cubic meters of wood

products. Europe accounts for about 90%

of sales via Holmen’s own sales companies

and the group has about 3,950 employees.

Business areasHolmen Paper produces printing paper for

magazines, product catalogs, direct adver-

tising, books, newspapers and telephone

directories. The paper is produced at two

Swedish and one Spanish mill. The business

area’s principal markets are the Nordic

region, 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 primarily as

consumer packaging materials for confec-

tionary, perfume, wine, spirits, pharmaceu-

ticals, cosmetics and tobacco, as well as for

graphic-design applications. The largest

markets are Germany and the UK.

Holmen Timber manufactures timber

products at two large-scale sawmills

in Sweden that are integrated with the

group’s paperboard and printing paper

production. Braviken Sawmill produces

spruce timber for the construction industry.

The Iggesund sawmill produces redwood

carpentry timber. The main markets are

Europe, North Africa and the Middle East.

Holmen Skog is responsible for the man-

agement and development of Holmen’s

forest holdings and for efficient supply to

the Holmen group’s Swedish production

units. Holmen’s holding of land slightly

exceeds one million hectares of produc-

tive forests in Sweden and annual felling in

wholly owned forests amounts to approxi-

mately 3.2 million cubic meters, providing

the group with a self-sufficiency rate of

about 60%.

Holmen Energi is responsible for the

Holmen group’s hydro-power and wind-

power assets, as well as electricity supply

to Holmen’s Swedish units. Hydro-power

generation during a normal year slightly

exceeds 1 TWh and, together with the elec-

tricity produced at the mills, this accounts

for approximately 40% of the group’s elec-

tricity consumption. The business area is

also responsible for developing the group’s

operations in the energy area.

Financial objectivesHolmen aims to show profitability that

sustainably exceeds the cost of capital in

the market. The dividend is based on the

group’s profitability, future investment

plans and the goal of maintaining a strong

financial position, with a debt/equity multi-

ple of 0.3–0.8.


Net sales, SEK m. 17,852 18,656Operating profit, excl. items

affecting comparability, SEK m. 1,713 1,980Profit after tax, SEK m.1 1,853 3,955Earnings/share, SEK 22.10 47.10Dividend/share, SEK 9.00 2 8.00Share price, Series B, Dec 31, SEK 192.40 197.70

1) Profit after tax for 2012 includes impairment losses and restructuring costs of SEK 193 m. and non-recurring tax effects corresponding to revenue of SEK 911 m. Profit after tax in 2011 included SEK 2,648 from the revaluation of forest holdings.


Largest shareholders, Dec 31, 2012Percentage of share voting

capital rightsLundbergs 32.9 61.6Kempe Foundations 7.0 16.9Carnegie Funds Sweden 4.5 1.3Alecta 3.6 1.0AMF Försäkring and funds 2.8 0.8

Lundbergs’ holding, Feb. 19, 2013Number of Series A shares 16,622,000Number of Series B shares 11,000,000


Holmen

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During the second quarter of the year, the new recovery boiler and turbine were com-missioned at Iggesunds Bruk. The invest-ment amounts to SEK 2.3 billion.

In September, Iggesunds Bruk announced the efficiency enhancement of the organ-ization, corresponding to a workforce reduction of about 100 employees over a two-year period.

In October, Hallsta Pappersbruk announced a restructuring and focusing of operations in an effort to strengthen future competive-ness. This includes the planned phase-out of a paper machine and an investment in energy efficiency.

Highlights of the year

22 23

Sandvik 22%

Handelsbanken 22%Volvo 17%

SCA 15%

SSAB 5%Ericsson 8%

Skanska 5%

Höganäs 2%Indutrade 4%

Composition of stock portfolio, market value, Dec 31, 2012

Largest shareholders, Dec 31, 2012Percentage ofshare voting

capital rightsLundbergs 12.9 17.8Handelsbanken’s

Pension Foundation 7.7 10.6Handelsbanken’s Pension Fund 7.6 10.5Jan Wallanders & Tom Hedelius

Foundation 6.7 9.2SCA Pension Foundation 4.5 6.3

Lundbergs’ holding, Feb. 19, 2013Number of Series A shares 50,000,000



Profit/loss after tax, SEK m. 11,008 - 15,647Net asset value, SEK billion 49.8 40.1Net asset value per share, SEK 129 104Net debt/equity ratio, % 27 29Dividend/share, SEK 5.00 1 4.50Share price, Series A, Dec 31, SEK 110.90 87.15


Chairman Sverker Martin-Löf CEO Anders Nyrén www.industrivarden.se

Industrivärden

Industrivärden is one of the

Nordic region’s leading investment

companies, with holdings in a

concentrated selection of Swedish

listed companies with healthy

development potential. The busi-

ness concept is to create share-

holder value based on professional

investment operations and active

ownership. The active ownership

is based on Industrivärden’s model

for value creation in the portfolio

companies and is 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

portfolio companies are characterized by

leading positions in selected market seg-

ments and by a substantial element of

international operations. The largest hold-

ings are Handelsbanken, Sandvik, Volvo,

SCA and Ericsson. Industrivärden is also

a major owner of shares in Skanska, SSAB

and Indutrade. In early 2013, Industrivärden

divested its shareholding in Höganäs.

Meanwhile, it was announced that

Industrivärden was to become a long-term

shareholder in ICA, one of the leading retail

companies in the Nordic region. The share-

holding will amount to 10% of the voting

rights and capital.

Financial objectivesIndustrivärden’s objective is to generate

sustained high growth in net asset value,

yielding a total return that exceeds the

average for Nasdaq OMX Nordic, Stock-

holm, computed over a long period

of time. The investments will be made

primarily in large and midsize, publicly

traded Nordic companies. Industrivärden’s

dividend policy is to distribute a direct

return to shareholders that exceeds the

average for shares listed on the Stockholm

Exchange. Over the past 10 years, the total

annual return on Series A shares has aver-

aged 13%.

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70

90

110

130


Nasdaq OMX Financial Services IndexIndustrivärden A

SEK

The Industrivärden share

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SNet interest income 74%

Net commission income 21%

Net profit after financial items1 3%

Other income 2%

Income by type of revenue

150

180

210

240

270

300


Nasdaq OMX Banks IndexHandelsbanken A

SEK

The Handelsbanken share


Revenues, SEK m. 35,062 32,809Profit before loan losses, SEK m. 18,818 17,345Operating profit, SEK m. 17,564 16,536Earnings/share, SEK 23.151 19.78Dividend/share, SEK 10.75 2 9.75Share price, Series A, Dec 31, SEK 232.40 181.00

1) Changes in Swedish corporate tax resulted in a reversal of SEK 1,682 m. in previously booked deferred tax; excluding this, earnings per share rose to SEK 20.47.


Chairman Hans Larsson CEO Pär Boman www.handelsbanken.se


capital rightsOktogonen Foundation 10.2 10.3Industrivärden 10.2 10.3Swedbank Robur funds 3.2 3.2AMF Försäkring and funds 2.5 2.5Lundbergs 2.0 2.0

Lundbergs’ holding, Feb. 19, 2013Number of Series A shares 12,500,000


1) Measured at fair value.

Handelsbanken is a full-service bank

for private and corporate custom-

ers, with nationwide networks of

branch offices in Sweden, the UK,

Denmark, Finland and Norway.

In January 2013, Handelsbanken

established a regional bank in the

Netherlands. The bank regards

these countries as its home markets.

Handelsbanken covers the entire banking

sector; that is, traditional business transac-

tions, investment banking and asset manage-

ment, as well as private business, including

life insurance and other insurance-based

savings. Handelsbanken, which was founded

in 1871, has a workforce of more than 11,000

employees distributed among 770 branch

offices in 24 countries. The bank is expand-

ing internationally by applying its business

model in selected markets.

Handelsbanken’s organization is strong-

ly decentralized and its operations are

always focused on customer requirements.

This means that all business decisions that

affect the individual customer’s relations

with the bank are reached close to the

customer. The group’s principal control

instruments are its deeply rooted corporate

culture and effective follow-up system.

While business decisions are strongly

decentralized, the bank’s credit policy is

uniform for the entire group and is thus

centralized. The assessment of the credit

risk always proceeds on the basis of the

customer’s repayment capacity. For major

loans, decisions are made at the regional

or central level, depending on the amount

of the loan, but all loans are subject to ap-

proval by the customer account office. For

a long time, Handelsbanken’s loan loss ratio

has been lower than that of competitors.

Financial objectivesHandelsbanken’s financial objective is to

achieve a higher return on shareholders’

equity than the weighted average for

comparable banks in home markets. The

objective is to be achieved primarily by

having more satisfied customers along with

lower costs than competing banks. Each year

over the past 41-year period, Handelsbanken

has met the company’s objective.

Handelsbanken

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Sandvik

Sandvik is a high-tech engineering

group with advanced products and

a leading global position in selected

market niches. The business concept

is to develop, manufacture and

market high-tech products and

services that help to improve

productivity and profitability for

customers. With some 49,000

employees and representation in

130 countries, operations cover the

entire globe.

Sandvik’s customers operate in many dif-

ferent industrial sectors, primarily mining,

engineering, construction, automotive and

energy. Industrial consumption products

account for about two-thirds of Sandvik’s

products and investment goods for one-

third.

Business areasSandvik pursues operations in five business

areas that are independently responsible

for research and development, produc-

tion and sales: Mining, with a focus on

global leadership in both surface and

underground mining. Machining Solutions,

a market-leading operation in advanced

industrial machining. Materials Technology,

which offers high-value-added and ad-

vanced metal products in selected niches.

Construction, with advanced solutions for

selected segments of the construction and

civil-engineering industry. Venture, which

focuses on smaller yet high-growth prod-

uct areas with limited connections to one

or several of the other business areas.

Financial objectivesSandvik’s financial objectives are to achieve

annual organic sales growth of 8%, a return

on capital employed of 25%, a dividend

pay-out ratio of 50% of earnings per share

and a debt/equity ratio of less than 0.8.

Sandvik Construction 10%

Sandvik Machining

Solutions 29%

Sandvik Mining 38%

Sandvik Venture 7%

Sandvik Materials

Technology 16%

Sales by business area

80

90

100

110


Nasdaq OMX Industrial Engineering IndexSandvik

SEK

The Sandvik share

Largest shareholders, Dec 31, 2012Percentage of share capital and voting rights

Industrivärden 11.4JP Morgan Chase 4.9Swedbank Robur Funds 4.7Handelsbanken’s Pension Foundation 3.8Omnibus Account W FD OM80 3.6Alecta 2.9Lundbergs 2.2

Lundbergs’ holding, Feb. 19, 2013Number of shares 28,000,000



Invoiced sales, SEK m. 98,529 94,084Adjusted operating profit, SEK m. 14,747 13,518Profit after net financial items, SEK m. 11,516 8,179Earnings/share, SEK 6.51 4.63Dividend/share, SEK 3.50 1 3.25Share price, Dec 31, SEK 103.50 84.45


Chairman Anders Nyrén CEO Olof Faxander www.sandvik.se

24 25

Sweden 23%

Norway11%

Finland 6%

Poland 7%Czech Republic 5%

United Kingdom 10%

USA Building21%

USA Civil 10%

Latin America 7%

Revenues per market, construction

90

110

130

150


Nasdaq OMX Construction & Materials Index

Skanska

SEK

The Skanska share


Net sales, SEK m. 131,931 122,534Operating profit, SEK m. 4,605 9,0871

Profit after net financial items, SEK m. 4,371 9,099 1

Earnings/share, SEK 8.00 19.72 1

Dividend/share, SEK 6.00 2 6.00Share price, Dec 31, SEK 106.20 114.00

1) Including a capital gain of SEK 4.5 billion.


Chairman Stuart E. Graham CEO Johan Karlström www.skanska.com


capital rightsIndustrivärden 8.3 24.9Lundbergs 3.4 11.6Alecta 8.2 5.8AMF Försäkring and funds 4.2 2.9Swedbank Robur funds 4.2 2.9



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Skanska

Skanska is one of the world’s lead-

ing construction groups with

expertise in construction, develop-

ment of commercial and residential

projects and public-private partner-

ships. The group has nearly 57,000

employees in selected domestic

markets in Europe, the US and Latin

America.

Business streamsSkanska’s operations are conducted in four

business streams.

Construction is the group’s largest busi-

ness stream and includes residential and

nonresidential building construction as

well as civil construction. Construction as-

signments are conducted both for external

customers and for Skanska’s development

activities.

Residential development initiates and

develops residential projects primarily for

resale to private customers.

Commercial property development initi-

ates, develops, leases and sells commercial

real estate projects, with a focus on offices,

retail centers and logistics properties.

Infrastructure development initiates,

develops, operates and sells public-private

partnership infrastructure projects, such as

roads, hospitals, schools and power plants.

Financial synergism is created because

construction is conducted with negative

working capital and generates a positive

cash flow over time. Cash flow is invested in

the group’s project-development opera-

tions, thus creating a healthy return on

invested capital and also generating new

assignments for the construction opera-

tions.

Financial objectivesSkanska’s financial objective for 2011-2015

is that the group will achieve an annual

return on equity of 18-20%. The aim is that

construction will achieve an average op-

erating margin of 3.5-4.0% over a business

cycle. On the whole, the project develop-

ment operations are to generate an annual

return on capital employed of 10-15%.

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Indutrade

Indutrade is a group focused on

sales of industrial components,

systems and services. All products

are characterized by highly

advanced technological content.

Indutrade comprises about 180 companies

in 25 countries on four continents.

Activities are concentrated in two main

areas of operation – companies with sales

of industrial technology and companies

with proprietary products. During 2012, the

group’s three main markets – Sweden,

Finland and the Benelux countries – jointly

accounted for about 59% of consolidated

net sales. Indutrade has widespread

representation in different customer

segments. The dominant segments are

engineering, energy and water and

sewage, jointly accounting for approxi-

mately half of net sales.

Indutrade has multi-year experience

of company acquisitions. During the past

decade, 90 companies have been acquired.

Through its strong history of acquisitions,

Indutrade has the size and the favorable

reputation, experience and prerequisites

needed to implement value-creating ac-

quisitions. During 2012, twelve companies

with combined annual sales of about SEK

800 m. were acquired.

Business areasAs of January 1, 2013, the group is divided

into five business areas: Engineering &

Equipment, Flow Technology, Industrial

Components, Special Products and Fluids

& Mechanical Solutions. The organization is

strongly decentralized and the subsidiaries

operate within clearly defined market

niches. The companies have sophisticated

skills in their respective areas of technology,

which makes it possible to generate added

value for their customers.

Financial objectivesThe objective is that average sales growth

and the EBITA margin should exceed 10%

annually over an economic cycle. The net

debt/equity ratio should normally not

exceed 100%. Over time, dividend

payments should correspond to at least

50% of profit after tax.

Engineering & Equipment 16%

Flow Technology 25%Industrial

Components 18%

Special Products 29%

Fluids & Mechanical Solutions 12%

Net sales per business area, pro forma

160

180

200

220

240


Nasdaq OMX Industrial IndexIndutrade

SEK

The Indutrade share

Largest shareholders, Dec 31, 2012Percentage of share capital and voting rights

Industrivärden 36.8Lundbergs 13.8Afa Försäkring 5.6Pensionskassan SHB 4.9Lannebo Funds 4.0

Lundbergs’ holding, Feb. 19, 2013Number of shares 5,500,000



Net sales, SEK m. 8,384 7,994Operating profit, SEK m. 797 822Profit after net financial items, SEK m. 710 729Earnings/share, SEK 14.13 13.50Dividend/share, SEK 7.05 1 6.75Share price, Dec 31, SEK 197.00 183.00


Chairman Bengt Kjell CEO Johnny Alvarsson www.indutrade.se

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SEurope and Asia/Pacific

50%Construction 9%

America 41%

Net sales by business area

20

30

40

50


Nasdaq OMX Household Goods & Home Construction Index

Husqvarna A

SEK

The Husqvarna share


capital rightsInvestor 16.8 30.4Lundbergs 6.8 22.2Alecta 6.7 6.3If Skadeförsäkring 1.4 3.5Nordea funds 7.0 3.0




Net sales, SEK m. 30,834 30,357Operating profit, SEK m. 1,615 1,551Profit after net financial items, SEK m. 1,169 1,147Earnings/share, SEK 1.78 1.73Dividend/share, SEK 1.50 1 1.50Share price, Series A, Dec 31, SEK 39.24 31.66


Chairman Lars Westerberg CEO Hans Linnarson www.husqvarnagroup.com

Husqvarna is one of the world’s

largest manufacturers of outdoor

products such as robotic lawn-

mowers, garden tractors, chain

saws and trimmers. The group is

also a European market leader in

watering products and one of the

global market leaders in cutting

equipment and diamond tools for

construction and stone industries.

Husqvarna offers products both for private

customers and professional users. The

group’s products are sold mainly through

specialized retail stores in more than 100

countries. Husqvarna has a portfolio of

strong brands, a broad global distribution

network and a competitive product range

based on high-tech expertise. The group

has production units in the US, Europe,

China, Japan and South America. Large

volumes provide high cost effectiveness in

production. The delivery chain is character-

ized by high flexibility, thus enabling the

group to manage seasonal variations and

fluctuations in demand due to changing

weather conditions, for example.

The group has decided to invest in a

new production facility in Huskvarna for

the manufacture of chains for chain saws.

Chains are a key component of chain saw

performance and they represent the largest

segment in the aftermarket for chain saws.

The operating unit Sales and Service Europe

& Asia/Pacific has been divided into two

units, one for Europe and one for Asia/

Pacific. The change permits more concen-

trated efforts in Europe while emerging

markets in Asia/Pacific area gain a keener

focus.

Financial objectivesHusqvarna’s long-term objective is to

achieve an operating margin exceeding

10% over an economic cycle. The season-

ally adjusted net debt in relation to EBITDA

should not exceed 2.5 in the long term. The

dividend should normally exceed 40% of

net profit for the year.

Husqvarna

28 MB

indutrade

Handelsbanken

Husqvarna

Holmen Hufvudstaden

industrivärden

fastighets aB L E Lundberg

Skanska

Sandvik

MB 29

Annual report

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 2012 for the Group and the Parent Company.

Report of the Board of Directors 30Definitions 39Group

Income statement 40Statement of comprehensive income 40Balance sheet 41Statement of changes in

shareholders’ equity 42Cash flow statement 42Notes 43

Parent CompanyIncome statement 67Statement of comprehensive income 67Balance sheet 68Statement of changes in

shareholders’ equity 69Cash flow statement 69Notes 70

Proposed distribution of earnings 76Auditors’ report 77

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Lundbergs is an investment company with a portfolio

of assets primarily including a wholly owned real estate

company and a number of major holdings in listed

companies. Two of these listed companies, Holmen and

Hufvudstaden, are subsidiaries and are thus consolida-

ted in the consolidated financial statements.

GroupOperations consist of real estate operations, the manufacture and

sale of printing paper, paperboard and sawn wood products, forest

and power operations, and equity management (including securi-

ties trading). The Group’s operations are described below. Informa-

tion about the Group’s business sectors (Lundbergs, Hufvudstaden

and Holmen) is presented on pages 30-34. The Parent Company

is described on pages 34-35. The Corporate Governance Report

appears on pages 35-39.

Sales and earnings

The Group’s net sales amounted to SEK 21,618 m. (22,604). Operat-

ing profit amounted to SEK 4,874 m. (11,228). Profit includes reversals

of impairment losses/impairment losses pertaining to listed shares

and participations in associated companies amounting to profit of

SEK 295 m. (loss: 184). Other impairment losses and other unrealized

changes in value had a positive effect on profit of SEK 978 m. (5,023).

Net financial items resulted in an expense of SEK 514 m. (475).

Profit after financial items amounted to SEK 4,360 m. (10,753).

Profit after tax amounted to SEK 5,568 m. (8,637). Earnings per share

attributable to the Parent Company’s shareholders amounted to

SEK 26.14 (41.26).

Tax

The Group’s tax charges amounted to revenue of SEK 1,208 m.

(expense: 2,116). Recognized deferred tax was affected positively in

an amount of SEK 2.4 billion following a reduction in the Swedish

corporate tax rate from 26.3% to 22% as of 2013. Information about

ongoing tax processes is presented in Note 15 on page 53.

Investments

Investments are recognized under the various business sectors and

the Parent Company below.

Shareholders’ equity

The Group’s shareholders’ equity increased by SEK 6,047 m. The

increase comprised profit for the year of SEK 5,568 m., dividends paid

of SEK 1,236 m., a change in the Group’s composition amounting to

an expense of SEK 289 m. and other comprehensive income of

SEK 2,004 m.

The Group’s shareholders’ equity amounted to SEK 57,531 m.

(51,484), of which non-controlling interest accounted for SEK

21,650 m. (20,515).

Financing

Interest-bearing net debt increased by SEK 753 m. to SEK 13,998 m.

(13,246). Interest-bearing liabilities amounted to SEK 15,843 m.

(14,580) and interest-bearing assets to SEK 1,845 m. (1,334). The eq-

uity/assets ratio was 64% (60). The debt/equity ratio was 0.24 (0.26).

Information about risks and uncertainties

The manner in which financial risks are managed is decided by

the Board of Directors of Lundbergs, Hufvudstaden and Holmen,

respectively. Risk management is conducted in accordance with the

finance policy adopted by the Boards of the respective companies,

with the shared aim of achieving a low level of risk. Within all three

companies, risk management is centralized in a special department.

For a more detailed account of the management of financial

risks, refer to Note 37 on page 62. Other information about risks

and uncertainties is presented under the various business sectors.

Information on important accounting assumptions and estimates is

presented in Note 36 on page 62.

Business sectorsLUNDBERGS

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 operations and equity management (securities trading). The

operations are divided into two business sectors, Real Estate Opera-

tions and Equity Management.

Sales and earnings

Net sales totaled SEK 2,224 m. (2,511) and operating profit amounted

to SEK 1,737 m. (3,610).

Real Estate Operations


to SEK 769 m. (825). The decline was due to a year-on-year decrease

in unrealized changes in the value of investment properties. The

average vacancy rate was 2.6% (2.8).

Investments in investment properties amounted to SEK 152 m.

(198), in new property projects to SEK 165 m. (288) and in equipment

to SEK 5 m. (7).

Report of the Board of Directors

30 31

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During the year, properties were acquired for SEK 623 m.,

of which SEK 483 m. pertained to the Murmästaren 13 property

in Stockholm and SEK 134 m. to the Decimalen 16 property in

Linköping.

In October 2012, all of the properties in Nyköping and four prop-

erties in Norrköping were sold for a total of SEK 278 m.

An internal valuation was conducted of the real estate portfolio

at December 31, 2012, by assessing the fair value of each individual

property. The valuations were based on both the location-price

method and the present value of estimated future payment flows.

The internal valuation was ascertained by commissioning independ-

ent external valuations. The fair value is estimated at SEK 12,481 m.

(11,623). The valuation method and assumptions are described in

Note 19 on page 55.

The development properties are recognized in the balance

sheet in an amount of SEK 94 m., constituting the lower of the acqui-

sition value and net realizable value. Development properties were

sold for SEK 32 m. (22).

Equity Management


to SEK 968 m. (2,785).

Operating profit included profit of SEK 435 m. (1,884) from the

results of shares in associated companies. The profit includes a re-

versal of SEK 347 m. of a previous impairment loss on the Husqvarna

shareholding.

During the year, 1,500,000 series B Holmen shares were acquired

for SEK 289 m., 510,000 series B Husqvarna shares for SEK 18 m.,

500,000 Sandvik shares for SEK 45 m. and 2,500,000 series B Skanska

shares for SEK 266 m. Net investments in shares amounted to

SEK 610 m. (divestment: 1,734).


Real estate operations

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.

Over the short term, opportunities to influence earnings from

current operations are limited. Revenues from the commercial

premises are regulated by relatively long-term leases, normally

three to five years.

The residential properties are rented under contracts that ap-

ply until further notice, with the tenant entitled to terminate the

contract with three months’ notice. Operating expenses are difficult

to change in a short-term perspective while maintaining service

and quality. Profitability, current operations and new projects are

impacted by the economy and interest rates, but also by political

decisions. Accordingly, successful management of the opportuni-

ties and risks in a real estate company requires a long-term business

approach.

Lundbergs’ real estate portfolio consists of centrally situated resi-

dential and commercial properties. The properties are concentrated

mainly in large cities characterized by favorable development.

Residential properties account for 49% of total rentable space in

the real estate portfolio and commercial premises for 51%. The even

division between residential and commercial makes the operations

less sensitive to economic fluctuations.

The company works actively to optimize the properties’ use of

utilities, thereby reducing operating costs. The company also moni-

tors and controls costs for each individual property.

All properties are covered by full-value insurance.

Equity Management

Equity risk includes share price risk and liquidity risk. Share price risk

pertains to the risk of value loss due to movements in share prices

on the stock market. Liquidity risk could arise if a shareholding is

difficult to divest. Lundbergs’ policy is to hold large sharehold-

ings in a limited number of companies. These shareholdings may

change over time. At present, the Group’s shareholdings are partly

in companies with operations in the same or similar industries. The

portfolio focus on certain industries could continue in the future,

which could give rise to greater risk exposure to individual industries

and/or companies.

Non-financial profit indicators

Lundbergs has collective bargaining agreements with both white-

collar and blue-collar employees. Sickness absence and employee

turnover are low. There are distinct guidelines for ensuring that no

discrimination or unfounded wage differences arise.

All work conducted in the company is characterized by a high

level of personal service, customer value, efficiency and profitability.

Property management operations are quality certified according

to ISO 9001:2008, environmentally certified in accordance with

ISO 14001:2004 and energy certified in accordance with SS-EN

16001:2009. This entails that the company offers well-managed

and well-situated properties with the focus on security and safety,

maintaining a high service level characterized by personal meetings

and working for sustainable development of the environment, while

reducing its carbon footprint through continuous improvements.

Electricity consumption and real estate operations meet the Good

Environmental Choice criteria of the Swedish Society for Nature

Conservation. Heating is based on district heating and heat pumps.

Lundbergs is a member of the EU Green Building Council and

its intention is that the planning of new projects will be environ-

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mentally classified in accordance with the EU GreenBuilding and the

Sweden Green Building Council certification systems. For existing

properties that satisfy the requirements for GreenBuilding, certifica-

tion work is under way.

No operations were conducted during 2012 that require permits

or notification in accordance with the Ordinance (1998:899) concern-

ing Environmentally Hazardous Activities and the Protection of

Public Health.

Outlook

Because the real estate portfolio is concentrated in central locations,

it is anticipated that demand for the company’s housing and com-

mercial premises will be stable. The leasing rate at the start of 2013

is favorable.

Lundbergs continues to actively develop its existing real estate

portfolio, at the same time as the company implements investments

in new projects.

HUFVUDSTADEN

Hufvudstaden’s operations comprise the ownership and manage-

ment of commercial office and retail properties in central Stockholm

and central Gothenburg.

For a more detailed description, refer to Hufvudstaden’s 2012

annual report.

Sales and earnings

Net sales totaled SEK 1,542 m. (1,437). Operating profit amounted to

SEK 1,645 m. (2,078). The deterioration was primarily due to lower

unrealized changes in the value of the real estate portfolio com-

pared with 2011.

The total vacancy rate at December 31 was 3.7% (3.9).

Investment properties

During the year, SEK 186 m. (945) was invested in properties and SEK

1 m. (2) in equipment.

An internal valuation was conducted of the real estate portfolio

at December 31, 2012, by assessing the fair value of each individual

property. The value was established through utilization of a variation

on the location-price method called the net capitalization method.

This method means that the market’s yield requirement is placed

in relation to the property’s net operating income. To confirm the

values arrived at, external valuations were commissioned for part of

the real estate portfolio.

The fair value is estimated at SEK 23,058 m. (22,251). The valua-

tion method and assumptions are described in Note 19 on page 55.


Over the short term, Hufvudstaden’s opportunities to influence

earnings from current operations are limited. Revenues are regu-

lated by relatively long-term leases, 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 operations are impacted mainly

by macroeconomic factors such as the economy, interest rates and

regional business development in Stockholm and Gothenburg, but

also by political resolutions. Accordingly, to successfully manage the

opportunities and risks of a real estate company, a long-term busi-

ness approach and clear strategies are required.

Changes in the fair value of properties, resulting from such fac-

tors as economic fluctuations, constitute both a risk and an oppor-

tunity. However, the properties’ concentration in the most attractive

commercial locations limits the risk.


Responsible enterprise, both internally and externally, is a prerequi-

site for success. Hufvudstaden contributes to social development

by accepting responsibility for its properties and the surrounding

environment, while ensuring compliance with prevailing laws and

agreements by enforcing requirements on its contractors and

subcontractors. Hufvudstaden’s value foundation characterizes the

employees’ actions and serves as an active tool in daily activities.

Hufvudstaden works actively to reduce its environmental impact by,

for example, reducing energy consumption and demanding eco-

friendly products.

Outlook

Hufvudstaden’s assessment is that demand in the leasing market will

be stable for the company’s top-quality premises in prime locations.

Vacant space was stable during the year and is at the lower end of

the range that can be regarded as a normal vacancy rate, 4-6%. The

assessment is that vacancy rates can be kept at this level at the same

time as vacancy rates for retail premises remain at low levels. Since

international fashion brands are continuing to show considerable

interest in establishing operations in Hufvudstaden’s marketplaces,

market rents are expected to remain at favorable levels.

Hufvudstaden’s strong balance sheet and stable cash flow

provide opportunities for initiatives involving new projects and

property acquisitions.

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HOLMEN

Holmen manufactures printing paper, paperboard and sawn wood

products as well as conducting forest and power operations.

For a more detailed description than that provided below, refer

to Holmen’s 2012 annual report.

Sales and earnings

Net sales amounted to SEK 17,852 m. (18,656).

Operating profit amounted to SEK 1,520 m. (5,573). Excluding

items affecting comparability, operating profit amounted to

SEK 1,713 m. (1,980).

The contribution from currency hedges declined while the value

of forest holdings increased.

Investments

Investments amounted to SEK 1,975 m. (1,849).


Holmen’s earnings are affected by various revenue and cost items.

Revenues from the product-focused business areas mainly derive

from sales of printing paper, paperboard and sawn wood products.

Changes in prices and deliveries are greatly affected by the market

balance in Europe, which is in turn affected by several factors, in-

cluding demand, the production trend among European producers,

changes in imports to Europe and opportunities to profitably export

from Europe.

Revenue from the raw material business areas derives from the

sale of timber and electricity in Sweden. Deliveries can vary from

year to year, but are predictable over the long term.

At the same time, timber and electricity constitute the two larg-

est raw material cost items for the product-oriented business areas.

To reduce the impact on earnings of changes in electricity prices,

Holmen uses physical, fixed-price supply contracts and financial

hedges.

Holmen’s earnings are also affected by exchange-rate fluctua-

tions, mainly because a significant amount of sales is paid for in

currencies other than those in which costs are incurred. To reduce

the impact on earnings of changes in exchange rates, net flows are

hedged using currency forward contracts.

Holmen insures its plants at the replacement value against

property damage and business interruption losses. The excess varies

among the different plants, but generally does not exceed 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 large-scale simultaneous damage is not

considered sufficient to warrant the costs involved in insuring the

forest holdings.


Personnel

Holmen’s HR activities are governed by laws and agreements, as

well as policies, and the emphasis is on having employees who are

committed and proud, both of the work they perform and the com-

pany as a whole. Holmen also works actively to promote committed

leadership, whereby managers really want to lead, and who do this

by engaging, motivating and coaching employees.

Holmen adopts a preventive approach to sickness absence,

which was 3.4 percent in 2012 (3.5). Occupational accidents for 2012

remained at the same unsatisfactorily high level as in 2011. A fatal

occupational accident occurred in July at the Iggesund Mill.

Environment

The environmental aspects of Holmen’s business are regulated by

laws and permits in each country. Holmen’s environmental and

energy policy provides the platform for organizing and managing

environmental activities.

Over the years, Holmen’s ambitions in the environmental area,

combined with environmental legislation and official requirements,

have resulted in Holmen integrating environmental and energy con-

siderations into the planning of production and investments. To this

should be added the ongoing improvements implemented within

the framework of the environmental and energy management sys-

tems at the sites and statutory supervision conducted by authorities.

This ensures compliance with regulations and official requirements

within the environmental area.

Emissions to air and water and the generation of noise and

waste constitute the main environmental impact arising at the

plants. Measurements of emissions to air and water are performed

on a daily basis to check compliance with the emission requirements

set by the environmental authorities.

At year-end 2012, production operations conducted at seven

Holmen plants required environmental permits. Permits include

specifications of terms for permitted production volumes as well as

permissible emissions to air and water.

At the end of 2012, the activities conducted in the company’s

facilities were certified in accordance with energy, quality and envi-

ronmental management systems. In addition to this certification, all

plants had chain-of-custody certification for wood used. Holmen’s

forestry operations are certified in accordance with environmental

management systems, and also pursuant to the requirements of the

PEFC and FSC.

Outlook

The market for printing paper is challenging and characterized by

reduced demand and pressure on prices. Holmen Paper contin-

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ues its realignment towards specialty paper and is implementing

additional efficiency measures. Demand for cartonboard is stable

but the supply has increased, thus exerting pressure on the market.

Iggesund Paperboard can capitalize on the major investments it has

made in energy supply. For sawn timber products, demand is weak

and prices under pressure, at the same time as raw material costs are

historically high. Holmen Timber is continuing to fine tune its opera-

tions. Harvesting in Holmen’s is expected to remain at the 2012 level

while production in Holmen’s hydropower plants is expected to

decline from the historically high level noted in 2012. Investments

will decline following the substantial investment programs of recent

years.

Parent CompanyNet profit for the year amounted to SEK 1,209 m. (3,274). The result

includes dividends of SEK 1,039 m. (869) and a reversal of SEK 290 m.

of a previous impairment loss on the Husqvarna shareholding. Profit

for the preceding year also included a capital gain of SEK 2,625 m.

from the sale of the shareholding in Cardo.

Net investments in exchange-listed shares amounted to

SEK 618 m. (divestment: 1,745).

For company information regarding L E Lundbergföretagen AB,

refer to Note 2 on page 48.

Guidelines for the remuneration of senior executives

Fees payable to the Chairman of the Board and other Board mem-

bers are as resolved at the Annual General Meeting (AGM). The 2012

AGM adopted guidelines in respect of remuneration of manage-

ment, which are specified in Note 5 on page 49.

The Board of Directors proposes that the 2013 AGM resolve to

adopt the following guidelines for determining salaries and other

remuneration of senior executives.

Remuneration of senior executives may consist of fixed salary,

bonus payments, other benefits and pensions. The total remunera-

tion should be competitive in the market and be proportionate to

each executive’s performance, responsibility and authority.

For senior executives employed by L E Lundbergföretagen AB or

Fastighets AB L E Lundberg, any bonus payments must be connect-

ed to predefined and measurable criteria based on earnings and

profitability targets and capped at the equivalent of three months’

salary. For senior executives of L E Lundberg Kapitalförvaltning AB,

any bonus payments are to be based on the results of activities and

capped at approximately 15% of reported earnings over time. Bonus

payments are not normally pensionable.

Should notice of employment termination be served by the

company, the maximum term of notice is 12 months. Should notice

be served by the company, severance pay corresponding to six

months’ salary is payable in certain cases. Pension benefits for

the President and other senior executives apply from age 65, with

benefits corresponding to the ITP (Individual Supplementary Insur-

ance) plan. Supplementary pension solutions may be added. No

remuneration in the form of options or other share-based incentive

programs is payable.

These guidelines encompass those persons who, during the

period when the guidelines apply, constitute senior executives in

L E Lundbergföretagen AB and its wholly owned subsidiaries

Fastighets AB L E Lundberg and L E Lundberg Kapitalförvaltning AB.

The guidelines apply to any contracts entered into after the AGM’s

resolution or to any changes made in existing agreements after that

particular point in time. The Board of Directors is entitled to disapply

the guidelines if there is reason for doing so in an individual case.

For guidelines concerning senior executives of Holmen and

Hufvudstaden, refer to their respective annual reports.

Share information

The year-end share capital of L E Lundbergföretagen AB (publ)

amounted to SEK 1,240 m. The total number of shares was

124,000,000, each with a quotient value of SEK 10. The shares are

divided into 48,000,000 Series A shares, carrying ten votes per share,

and 76,000,000 Series B shares, carrying one vote per share. At the

request of owners of Series A shares, it is to be possible to convert

Series A shares into 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 AGM.

The largest shareholder is Fredrik Lundberg, who owns 54.0% of

the total share capital and 89.7% of the voting rights. The holdings

of all other shareholders amounted to less than 10% of the voting

rights.

Employees do not have any shareholdings through pension

funds or other pledges.

No known agreements have been entered into that would be

affected by a public takeover offer.

Repurchase of own shares

On April 12, 2012, the AGM renewed the Board of Directors’ authori-

zation to make decisions regarding the purchase of up to 10% of

the company’s shares. The authorization was not utilized, however.

The Board proposes that the 2013 AGM also authorize the Board to

repurchase up to 10% of the company’s Series B shares.

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Proposed dividend and distribution of earnings

The Board of Directors has proposed a dividend of SEK 4.30 per

share, or a total of SEK 533 m. The Board’s proposal concerning the

distribution of earnings is presented in its entirety on page 76.

Corporate governance reportIntroduction

Corporate Governance in L E Lundbergföretagen AB is based on,

inter alia, the Articles of Association, the Swedish Companies Act,

the rules and regulations for issuers as published by NASDAQ

OMX Stockholm (the Exchange), the Swedish Code of Corporate

Governance (available at www.bolagsstyrning.se) (“the Code”) and

other applicable laws and regulations. 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 and describe the alternative solution selected.

This Corporate Governance Report was prepared by the Board of

L E Lundbergföretagen AB in accordance with the provisions of

the Code and the Annual Accounts Act.

Division of responsibilities

The shareholders exercise their influence over L E Lundbergföreta-

gen AB at the AGM, which is the highest decision-making body in

the company, while responsibility for the management and control

of the company rests with the Board of Directors and the President,

in accordance 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.

Shareholders

In February 2013, the company had 16,487 shareholders. The ten

largest owners had total holdings corresponding to 79.4% of the

share capital. Foreign investors owned about 6.5% of the share

capital. For additional information on owners, refer to page 13.

Annual General Meeting

The AGM is the highest decision-making body in L E Lundberg-

företagen AB. The AGM, which is held in Stockholm or Norrköping

within six months of the close of the fiscal year, adopts the income

statement and balance sheet, passes resolutions regarding divi-

dends and the discharge of Board members and the CEO from

personal liability, elects members of the Board and approves their

fees, and, when applicable, elects auditors and approves their fees,

while dealing with other statutory matters and making resolutions

on guidelines for remuneration of senior executives and on other

proposals 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 enti-

tled to participate in the meeting and exercise voting rights equal

to the total number of shares they hold. Shareholders may partici-

pate via proxy. To be able to exercise their voting rights at the AGM,

shareholders whose shares are trustee-registered must temporarily

re-register their shares in their own name in accordance with the

terms in the notification of the AGM.

The 2012 AGM was held on April 12, 2012. The annual accounts

and auditors’ report, as well as the consolidated financial statements

and auditors’ report on the consolidated financial statements, were

presented at the meeting. In conjunction with this, the Chairman of

the Board presented information concerning the work performed

by the Board and information regarding cooperation with the audi-

tors. In addition, President and CEO Fredrik Lundberg provided a

presentation of Group operations during 2011.

The auditors presented a report on their audit to the AGM

through the submitted auditors’ report and a verbal account of their

work during the past year. At the AGM, it was resolved to adopt the

presented income statements and balance sheets and to discharge

the Board members and the CEO from personal liability for the fiscal

year. The AGM also resolved on guidelines for the remuneration of

senior executives in accordance with what is stated on page 49 of

the Annual Report, in addition to authorizing the Board to decide on

the acquisition of company shares.

Official notification of the AGM is to take the form of an an-

nouncement in Post- och Inrikes Tidningar and on the company’s

website. An advertisement in Dagens Nyheter is to announce the

fact that notification has been sent. Notification of the AGM and

extraordinary general meetings that will not deal with amendments

to the Articles of Association must be provided no earlier than six

weeks and no later than four weeks prior to the meeting. Notifica-

tion of other extraordinary general meetings must be carried out

no earlier than six weeks and no later than three weeks prior to

the meeting.

Nomination Committee

In view of the composition of shareholders, it has not been deemed

necessary to appoint a Nomination Committee. Accordingly,

proposals for the election of a Chairperson for the AGM, elections

of Board members and, when appropriate, of the auditors, as well

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as proposals concerning the remuneration to be paid to Board

members and the auditors are submitted by the company’s major

shareholders and presented in the official notification of the AGM

and on the company’s website. On this point, the company does

not comply with the rules of the Code concerning nomination

committees.

Board of Directors and its work

Composition of the Board

The Articles of Association stipulate that the Board of Directors is to

consist of no fewer than five and not more than ten AGM-elected

members, with a maximum of three deputy members, for the

period extending to the next AGM. The L E Lundbergföretagen AB

Board of Directors currently elected by the 2012 AGM consists of

eight members, including the President.

Mats Guldbrand, Chairman of the Board, was formerly Equity

Manager at AMF Pension, among other positions. Carl Bennet is

Chairman of the Board of Getinge and Elanders, among other posi-

tions. Gunilla Berg is Executive Vice President and CFO of Teracom

Group. Louise Lindh is Executive Vice President of Fastighets AB

L E Lundberg. Fredrik Lundberg is President and CEO of L E Lund-

bergföretagen AB. Katarina Martinson is, among other positions,

Chairman of the Board of Bellbox AB and of Djursjukhus gruppen.

Sten Peterson is President of Byggnads AB Karlsson & Wingesjö.

Lars Pettersson has, among other positions, served as President

and CEO of Sandvik AB.

All members of the Board, with the exception of Fredrik Lund-

berg (in his capacity as President and CEO of L E Lundbergföretagen

AB), Louise Lindh (in her capacity as Executive Vice President of

the wholly owned subsidiary Fastighets AB L E Lundberg) and Sten

Peterson (in his capacity as President of Byggnads AB Karlsson &

Wingesjö, in which Fredrik Lundberg is Chairman of the Board and

majority shareholder), are regarded as being independent in relation

to the company. In addition, all of the Board members, apart from

Fredrik Lundberg and Sten Peterson, are regarded as being inde-

pendent in relation to the company’s major shareholders.

Accordingly, the Board complies with the independence require-

ments imposed in the Code. However, the composition of the Board

does deviate from the Code in respect of provision 4.3 in that two of

the Board members are senior executives of the company and the

company’s subsidiary, respectively. This deviation is motivated on

the grounds that it is suitable that the Board’s composition reflects

ownership conditions in the company.

Chairman

At the 2012 AGM, Mats Guldbrand was elected Chairman of the

Board. The Chairman organizes and directs the Board’s efforts to

ensure that the work is conducted effectively and in compliance

with the Swedish Companies Act, other laws and regulations, perti-

nent rules for stock market companies (including the Code) and the

Board’s internal control instruments. The Chairman monitors the

operations in dialog with the President, is responsible for ensur-

ing that other Board members receive satisfactory information

and appropriate decision-making documentation and passes on

any opinions from the shareholders to the Board. The Chairman is

responsible for keeping Board members up to date on and broaden-

ing their knowledge of the company and otherwise providing what-

ever training might be required for them to effectively conduct their

Board work. The Chairman is also responsible for annual evaluations

of the Board’s work.

Board of Directors’ work

The Board of Directors establishes written working procedures every

year that regulate the Board’s work agenda and its internal division

of duties, decision-making priorities within the Board, the Board’s

meeting procedures and the Chairman’s duties. The Board has also

issued a finance policy, an information policy and written instruc-

tions regarding the allocation of responsibilities between the Board

and the President.

The Board monitors the President’s work through continuous

efforts to follow up operations during the year, assumes responsibil-

ity for ensuring that the organization, management and guidelines

for administration of the company’s business are suitably designed

and ensures that satisfactory internal controls are in place. The Board

is also responsible for developing and ensuring compliance with the

company’s strategies through plans and goals, decisions regarding

acquisitions and divestments of business operations, major invest-

ments and remuneration of the President, in accordance with the

guidelines for remuneration of senior executives that were resolved

by the AGM. Once annually, the Board addresses the evaluation of

the President’s work, during which no one from company manage-

ment is present. The Board of Directors also approves any significant

assignments that the President may have outside the company.

In accordance with the applicable working procedures, the

Board is to hold at least four scheduled meetings and one statutory

meeting per year. Whenever required, unscheduled meetings are

held to address special items. Six meetings of the Board were held

during 2012. The Board focused special attention on strategic and

financial issues, issues relating to the economy, investment issues

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and accounting issues during the year. Furthermore, presentations

were made at every scheduled Board meeting regarding the busi-

ness development of Fastighets AB L E Lundberg and L E Lundberg

Kapitalförvaltning AB and of the portfolio companies.

Attendance at Board meetings during the year was very high. All

Board members were present at all Board meetings, with the excep-

tion of one meeting that Louise Lindh was unable to attend. The

Group’s CFO participates in Board meetings, as does the Board’s sec-

retary, who is a lawyer that is independent from the company. Other

senior executives of the company also participate in Board meetings

to present special issues or whenever deemed appropriate.

Remuneration of the Board

Fees paid to the elected members of the Board are established by

the AGM based on proposals submitted by the company’s largest

shareholders. At the 2012 AGM, it was resolved that fees to the Board

for the period extending from the 2012 AGM to the 2013 AGM would

total SEK 1,800,000, of which SEK 600,000 to the Chairman of the

Board. The other AGM-elected Board members, with the exception

of the President, are each to receive a fee of SEK 200,000. Any further

remuneration paid to any member of the Board, including the Presi-

dent, is explained in the consolidated financial statements, Note 5.

Audit Committee

The Board has considered the matter of whether to establish an

Audit Committee and decided not to. Instead, the Board as a whole

fulfills the responsibilities otherwise assigned to an audit committee.

This structure functions satisfactorily 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. Accordingly, the Board monitored the system for

internal control of financial reporting during 2012. This supervision

is intended to ensure the efficiency of the operations, their compli-

ance with laws and regulations and the reliability of the financial

reporting. The Board has reviewed and evaluated the procedures

for financial accounting and reporting and followed this up with

evaluations of the work performed by the external auditors, their

qualifications and independence. The Board also provides Group

management with identification and evaluations of the primary risks

to which the operations are exposed and ensures that management

focuses on efforts to address these risks. During 2012, the Board con-

ducted 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.

Remuneration Committee

Matters involving remuneration and other terms of employment for

the President are prepared by the Chairman of the Board. Decisions

on such matters are made by the Board of Directors without the

participation of the President. Remuneration and other terms of

employment for other executives are negotiated and agreed upon

with the President.

The Board also monitors and evaluates all programs for vari-

able remuneration of senior executives. The Board also monitors

and evaluates compliance with the guidelines for remuneration of

senior executives adopted by the AGM and applicable remunera-

tion systems and remuneration levels in the company. The matter of

whether to establish a remuneration committee has been consid-

ered by the Board, which has concluded that the means of prepara-

tion 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.

Company management

The 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 instru-

ments, and in accordance with the objectives and strategies

established by the Board. In consultation 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 proposals. President and CEO Fredrik

Lundberg, born 1951, has degrees in engineering and business ad-

ministration and is a Doctor of Economics and a Doctor of Engineer-

ing. Fredrik Lundberg is the Chairman of Fastighets AB L E Lundberg,

Holmen and Hufvudstaden, Deputy Chairman of Handelsbanken

and a Board member of Industrivärden, Sandvik and Skanska.

Through direct ownership and companies, Fredrik Lundberg and his

wife held 48,000,000 Series A shares and 19,536,000 Series B shares

in the company, or a total of 67,536,000 shares, at December 31, 2012.

Remuneration of the President and other senior executives

The 2012 AGM resolved on unchanged guidelines for the remunera-

tion of senior executives. The guidelines are described in greater

detail on page 49. The company has no outstanding share-based or

share-price-related incentive programs.

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Active ownership

L E Lundbergbergföretagen AB is an active owner of its portfolio

companies. In each of these companies, the company is represented

through one or more of the positions of President, Executive Vice

President or Board member of LE Lundbergföretagen AB. Active

ownership is also exercised through representation on the Nomina-

tion Committees of the portfolio companies.

Internal audit

The 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 control 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.

Auditors

According to the Articles of Association, the company must have

two auditors with or without deputies, or alternatively a registered

public accounting firm. At the 2012 AGM, KPMG AB was elected the

company’s audit firm for a term of office of one year. Authorized

Public Accountant George Pettersson is auditor-in-charge. Other

major assignments performed by George Pettersson include being

auditor of Skanska, B&B Tools, Holmen, Hufvudstaden and Sandvik.

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 AGM concerning adoption of the

income statement and the balance sheet for the Parent Company

and the Group, the appropriation of the profit in the Parent Com-

pany and the discharge of the members of the Board and the Presi-

dent from liability for their administration during the preceding fiscal

year. The auditor’s 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), 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, the company has also

consulted KPMG AB in matters mainly related to the consolidated

financial statements. The amounts of remuneration paid to KPMG AB

over the past two years are presented on page 50. In its capacity as

auditor of L E Lundbergföretagen AB and its subsidiaries, KPMG AB is

obliged to verify its independence before deciding to conduct other

assignments.

Articles of Association

The Articles of Association include established directives concerning

the company’s business operations, the number of Board members

and auditors, instructions for the official notification of the AGM,

business for discussion at the AGM and where the AGM should be

held. For more information about the current Articles of Association,

please refer to the company’s website, www.lundbergforetagen.se,

under Corporate Governance/Articles of Association.

Information

Lundbergs’ information to shareholders and other interested parties

is provided via the Annual Report, year-end and interim reports, press

releases and the company’s website, www.lundbergforetagen.se.

The website also includes financial statements and press releases for

the past year, as well as information concerning corporate govern-

ance. The disclosure of information in the company complies with

an information policy adopted by the Board.

Internal control and risk management concerning the financial

reporting for the 2012 fiscal year

The Swedish Annual Accounts Act stipulates that the Board must

annually submit a description of the principal elements of the com-

pany’s system for internal control and risk management with regard

to financial reporting.

Control environment

The control environment forms the foundation for the internal con-

trol of financial reporting. The company’s internal control structure is

based on a distinct division of responsibilities and work between the

Board of Directors and the President, as well as within the business

operations. Policies and guidelines are documented and evaluated

continuously by management and the Board of Directors. These

control documents, and carefully prepared process descriptions are

communicated via established information and communication

paths and are thus made available and known to the employees

concerned.

Risk assessment

The company identifies, analyzes and takes decisions on the man-

agement of the risk that errors could 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 operational risks are related to property

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valuation and financial transactions (primarily with respect to hold-

ings of publicly traded shares).

Control measures

Based on the completed risk assessment, the company has es-

tablished a number of control measures. These measures are of a

preventive nature, meaning that they are designed to avoid losses

or errors in financial reporting, and of an investigative nature.

Another aim of the controls is to ensure that errors are corrected.

Examples of processes with carefully prepared control measures are

new builds, refurbishment, maintenance and leasing activities within

real estate management, and securities management within equity

management.

Information and communications

At an overall level, internal information and external communica-

tion activities are governed by, inter alia, an information policy.

Internal communications to and from the Board of Directors and

management occur through, inter alia, 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,

instructions and equivalent documents that control and support

business operations are also published on the intranet.

Follow-up

The company continuously evaluates the internal controls concern-

ing financial reporting, primarily by asking questions and familiar-

izing itself with the work of the controller function. The Board

receives quarterly reports of financial results, including manage-

ment’s comments on business operations. At every scheduled

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 systems. 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.

Definitions

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

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

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.

40 MB

Income statement, seK m. Note 2012 2011 Net sales 3 21,618 22,604 Other revenues, etc. 4 549 883

22,167 23,487

Raw materials, consumables and cost of sold inventory shares - 10,298 - 10,808 Personnel costs 5 - 2,712 - 2,681 Other external costs 6, 7 - 4,406 - 5,122 Depreciation/amortization 8 - 1,321 - 1,269 Impairment losses/reversal of impairment losses 9 - 205 474 Result from participations in associated companies 10 482 1,968

- 18,460 - 17,439

Changes in value of investment properties 11 816 1,587 Changes in biological assets 12 350 3,593

operating profit 13 4,874 11,228

Financial income 31 62 Financial expense - 545 - 537

net financial items 14 - 514 - 475

Profit after financial items 4,360 10,753

Tax 15 1,208 - 2,116

net profit for the year 5,568 8,637

attributable toParent Company’s shareholders 3,241 5,116 Non-controlling interests 2,327 3,521

5,568 8,637

Earnings per share, SEK 1 26.14 41.261) Attributable to the Parent Company’s shareholders. There is no dilution effect.

statement oF comPReHensIVe Income, seK m. Note 2012 2011 net profit for the year 5,568 8,637

other comprehensive incomeCash-flow hedging

Revaluation 62 6 Transferred to net profit for the year - 198 - 562 Transferred to fixed assets 59 33

Translation difference on foreign operations - 129 - 4 Hedging of currency risk in foreign operations 88 31 Available-for-sale financial assets

Year’s change in fair value 2,393 - 3,666 Transferred to profit and loss when reclassified - 474

Actuarial gains/losses on pensions - 17 - 193 Tax attributable to other comprehensive income 15 - 168 476 Other comprehensive income/loss from associated companies - 87 46

2,004 - 4,307

total comprehensive income for the year 7,572 4,330

attributable toParent Company’s shareholders 5,340 1,159 Non-controlling interests 2,232 3,171

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Income Statement and Statement of Comprehensive Income, Group

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Balance sheet, Group

Balance sheet, seK m. Note Dec 31, 2012 Dec 31, 2011assets 38

Fixed assetsIntangible fixed assets 16 140 109 Tangible fixed assets 17 12,578 12,547 Biological assets 18 16,227 15,771 Investment properties 19 35,538 33,874 Participations in associated companies 20 3,353 3,039 Financial investments 21, 37 13,991 11,338 Other shares and participations 22 15 15 Long-term financial receivables 23, 37 46 88 Deferred tax assets 15 2 194

total fixed assets 81,890 76,975

current assetsProperties classified as current assets 24 94 99 Inventories 25 3,530 3,827 Accounts receivable 26 2,310 2,410 Tax receivable 15 125 49 Other current receivables 26 515 813 Current financial receivables 23, 37 33 48 Cash and cash equivalents 23 1,767 1,198

total current assets 8,373 8,444

tOtal assets 90,263 85,420

shaRehOlDeRs’ eQUItY anD lIaBIlItIes

shareholders’ equity 28Share capital 1,240 1,240 Reserves 29 4,734 2,630 Earnings brought forward, including current-year profit 29,908 27,099

shareholders’ equity attributable to Parent company shareholders 35,881 30,969

Non-controlling interests 30 21,650 20,515

total shareholders’ equity 57,531 51,484

liabilitiesLong-term liabilitiesLong-term financial liabilities 23, 37 8,169 10,128 Other long-term liabilities 13 5 Provision for pensions 31 445 445 Other provisions 15, 32 520 496 Deferred tax liabilities 15 12,298 14,236

Total long-term liabilities 21,444 25,310

Current liabilitiesCurrent financial liabilities 23, 37 7,230 4,008 Accounts payable 33 2,396 2,790 Current tax liability 15 82 17 Provisions 15, 32 68 157 Other current liabilities 33 1,512 1,654

Total current liabilities 11,287 8,626

total liabilities 32,732 33,936

tOtal shaRehOlDeRs’ eQUItY anD lIaBIlItIes 90,263 85,420

Information on the assets pledged by the Group and contingent liabilities is presented in Note 35.

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Statement of changes in shareholders’ equity and Cash flow statement, Group

cash FlOW stateMent, seK m. Note 27 2012 2011 Operating activitiesProfit before taxes 4,360 10,753 Adjustments for items not included in cash flow ¹ - 201 - 6,299 Taxes paid - 726 - 873

cash flow from operating activities before changes in working capital 3,433 3,581

cash flow from changes in working capitalChange in inventories 286 - 252 Change in current receivables 286 - 20 Change in current liabilities - 275 27

cash FlOW FROM OPeRatInG actIVItIes 3,730 3,337

Investing activitiesAcquisition of tangible fixed assets - 1,840 - 1,799 Sale of tangible fixed assets 14 42 Investment in investment properties - 1,126 - 1,762 Sale of investment properties 278 87 Change in financial receivables 37 58 Acquisition of financial assets - 312 - 2,853 Sale of financial assets 622 Acquisition of subsidiaries and associated companies - 318 - 790 Sale of associated companies 4,761 Acquisition of other fixed assets - 139 - 51 Sale of other fixed assets 4 16 cash FlOW FROM InVestInG actIVItIes - 3,402 - 1,670

Financing activitiesLong-termed loans raised 2,900 775 Repayment of long-term loans - 2 448 - 498 Change in current financial liabilities 1,027 - 354 Change in current financial receivables 1 - 4 Dividend paid to Parent Company’s shareholders - 496 - 465 Dividend paid to non-controlling interest - 740 - 665

cash FlOW FROM FInancInG actIVItIes 244 - 1,212

cash FlOW DURInG the YeaR 572 455

Cash and cash equivalents on January 1 1,198 743 Exchange-rate effects - 3 - 1

cash and cash equivalents on December 31 1,767 1,198 1) Adjustments pertain mainly to depreciation/amortization, impairment losses, results on sales of fixed assets, participations in results of associated companies and revaluation effects in

accordance with IAS 39, 40 and 41.

chanGes In shaRehOlDeRs’ eQUItY, seK m.

share

capital Reserves 1

earnings brought forward, including current-year profit total

non- controlling

interests

total shareholders’

equityOpening balance on January 1, 2011 621 6,529 23,208 30,359 18,531 48,890

Net profit for the year 5,116 5,116 3,521 8,637 Other comprehensive income - 3,900 - 58 - 3,957 - 350 - 4,307

- 3,900 5,058 1,159 3,171 4,330

Cancelation of treasury shares - 1 1 Bonus issue 620 - 620 Dividend - 465 - 465 - 665 - 1,130 Changes in Group composition - 84 - 84 - 523 - 606

shaRehOlDeRs’ eQUItY On DeceMBeR 31, 2011 1,240 2,630 27,099 30,969 20,515 51,484

Net profit for the year 3,241 3,241 2,327 5,568 Other comprehensive income 2,104 - 5 2,099 - 95 2,004

2,104 3,236 5,340 2,232 7,572

Dividend - 496 - 496 - 740 - 1,236 Changes in Group composition 68 68 - 357 - 289

shaRehOlDeRs’ eQUItY On DeceMBeR 31, 2012 1,240 4,734 29,908 35,881 21,650 57,531 1) See Note 29, for a specification.

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note 1 - accounting policies

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

compliance with norms and lawThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as adopted by the EU. RFR 1, Supplementary accounting rules for corporate groups, issued by the Swedish Financial Reporting Council, has also been applied.

The Parent Company applies the same accounting policies as the Group, with the exception of entries specified in the Parent Company accounting policies. The deviations between the policies applied by the Parent Company and the Group were caused by limita-tions 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, for tax reasons.

Valuation bases applied for the preparation of financial statementsAssets and liabilities are recognized at acquisition value (cost), with the exception of certain financial assets and liabilities, investment properties and biological assets, which are meas-ured at fair value. Financial assets and liabilities measured at fair value consist of derivative instruments, financial assets classified as financial assets measured at fair value via profit and loss or available-for-sale 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 assumptions and estimatesIn order to prepare the financial statements in accordance with IFRS, company management is required to make accounting estimates as well as assumptions that affect the application of the accounting policies and the recognized amounts of assets, liabilities, revenues and costs. Actual results may deviate from these accounting estimates.

The accounting assumptions and estimates are reviewed regularly. Changes in esti-mates are recognized in the period during which the change is made, only if the change affects the period, or in the period the change is made and future periods if the change affects both the current period and future periods.

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

amended accounting policiesNo new or revised accounting policies that became effective as of 2012 have had any material impact on the consolidated financial statements.

new IFRss and interpretations that have not yet become effectiveA number of new or amended IFRSs will not become effective until the forthcoming fiscal year and Lundbergs has elected not to apply any of these standards in advance. Nor does Lund-bergs intend to apply in advance any new or amended standards that will become effective as of fiscal years following 2013. New or amended IFRSs that will become effective as of 2013 and 2014 are not estimated to have a material impact on the financial statements but will result in expanded disclosure requirements.

segment reportingAn operating segment is a part of the Group that conducts operations from which it can gen-erate revenues and incur costs and for which independent financial information is available. The Group’s operations are divided into operating segments based on the parts of the opera-tions that are followed up by the company’s senior executive decision-maker, also known as a management approach or company management perspective.

An operating segment’s earnings are followed up by the company’s senior executive decision-maker in order to evaluate the earnings and be able to allocate resources to the operating segment. Operating profit is the earnings measurement against which the

follow-up is conducted. Included in the operating segments’ earnings, assets and liabilities are directly attributable items as well as items that can be allocated to the segments in a reasonable and reliable manner. Refer to Note 13, for a more detailed description of the division and presentation of operating segments.

classification, etc.Virtually all significant fixed assets and long-term 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 consist of amounts expected to be recovered or paid within 12 months of the balance sheet date.

consolidation policies

SubsidiariesSubsidiaries 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 fi-nancial and operating strategies in order to reap financial benefits. Assessments of controlling influence must include determinations of whether potential shares can be used or converted without delay.

Subsidiaries are recognized in accordance with the purchase method, which means that the indirectly acquired assets and liabilities of the subsidiary are measured at fair value in accordance with an established acquisition analysis.

The difference between the acquisition cost of the shares in the subsidiary and the fair value of the acquired identifiable net assets constitutes goodwill. When the difference is negative, it is recognized directly in profit and loss.

Should the acquisition not pertain to 100% of the subsidiary, non-controlling interests arise. There are two alternative ways of recognizing non-controlling interests. These two alternatives are, firstly, to recognize the non-controlling interests’ proportionate share of net assets or, secondly, to recognize the non-controlling interests at fair value, which en-tails that the non-controlling interest accounts for a share of goodwill. The choice between these two alternative methods of recognizing non-controlling interests can be made separately for each acquisition.

Should the acquisition be achieved in stages, goodwill is established on the day that the controlling interest arises. The previous holding is measured at fair value and the change in value is recognized in profit and loss.

Remaining holdings are measured at fair value and the change in value is recognized in profit and loss when divestments lead to the loss of controlling interest.

The financial statements of subsidiaries are included in the consolidated financial state-ments from the acquisition date until the final date of controlling influence.

Associated companiesAssociated companies are companies over 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. Participations in associated companies are recognized in the consolidated financial statements 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 after-tax share in the results of associated companies is recognized in profit and loss as “Results of participations in associated companies,” after adjustments for any depreciation/amortization, impairment losses or liquidations of acquired surplus and deficit values. Dividends received from associated companies are deducted from the carrying amount of the investments. The Group’s portion of other comprehensive income is recognized on a separate line in the Group’s other comprehensive income.

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 net assets are recognized in accordance with the same policies as those used for the acquisition of subsidiaries. Transaction expenditure that arises in con-nection with acquisition is included in the acquisition value.

When the Group’s share of recognized losses in an 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 long-term financial transactions entered into without collateral, which by their financial nature represent a part of the ownership company’s net investment in the associated company. Continued losses are not recognized, LU

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unless the Group has issued guarantees to cover losses arising in the associated company. The equity accounting method is applied up to the date when significant control ceases.

Joint venturesFor accounting purposes, joint ventures are defined as companies in which the Group has a controlling influence over operating and financial governance through cooperation agree-ments with one or more partners. In the consolidated financial statements, holdings in joint ventures are consolidated in accordance with the proportional accounting method, whereby the Group’s share of revenues, expenses, assets and liabilities in joint ventures is recognized in the consolidated income statement and balance sheet. This is achieved by aggregating item-by-item the joint owner’s share of assets, liabilities, revenues and expenses in a joint venture with corresponding entries in the joint venture owners’ consolidated financial statements. Shareholders’ equity accrued after the acquisition is the only item recognized under Group eq-uity. The proportional accounting method is applied from the date on which joint controlling interest is acquired until the date when such influence ceases.

Transactions to be eliminated on consolidationAll intra-Group receivables, liabilities, revenues or expenses and unrealized gains or losses attributable to intra-Group transactions between Group companies are eliminated when the consolidated financial statements are prepared. Unrealized gains arising from transactions with associated companies and jointly controlled companies are eliminated to an extent corre-sponding 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 insofar as there is some indication of impairment requirements.

Foreign currency

Transactions 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 balance-sheet date. Exchange-rate differences arising from currency translations are recognized in profit and loss. Non-monetary assets and liabilities that are recognized at historical acquisition values are translated using the exchange rate prevailing on the transaction date.

Financial statements 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 using the exchange rate prevailing on the balance-sheet 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 translation of for-eign operations, as well as associated effects of hedges of net investments, are recognized in other comprehensive income and are accumulated in a separate component of shareholders’ equity known as the translation reserve.

When a foreign operation is divested, the accumulated translation differences attribut-able to the operation are realized in profit and loss 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.

conditions for companies operated on a commission basisHolmen’s operations are operated mainly on a commission basis through Holmen Paper AB, Iggesund Paperboard AB, Holmen Timber AB, Holmen Skog AB and Holmen Energi AB.

Revenues

Net salesRental revenues are accrued in accordance with the leases. Accordingly, rent paid in advance is recognized as prepaid rental revenue. Discounts granted as compensation for successive occupancies, for example, are recognized in the period they are granted. Other discounts are distributed over the term of the leases. Rental revenues include items related to forward-invoicing of costs incurred, such as property tax and the cost of utilities.

Also recognized as net sales are revenues from parking and construction operations, sales of properties classed as current assets and marketable securities, as well as dividend income. Dividend income is recognized when the dividend has been approved and the entitlement to receive payment is considered secure.

For Holmen, invoiced sales, excluding value added tax, attributable to products, timber and energy are recognized as net sales. Recognized amounts are reduced by product

discounts granted and similar revenue reductions and include exchange-rate differences on sales in foreign currency. Sales are recognized after the Group has transferred the critical risks and value in use 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 inven-tories and capitalized work on the company’s own behalf are recognized as other revenues.

Government assistanceGovernment assistance is recognized in the balance sheet as accrued 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 systematically in profit and 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 recognized on the date of transfer. Circumstances beyond the control of the seller and/or buyer that could affect completion of the transaction are also taken into consideration.

Sales of products and implementation of service assignmentsRevenues attributable to sales of products are recognized in profit and loss when significant risks and benefits related to ownership of the products have been transferred to the buyer. Revenues attributable to service assignments are recognized in profit and 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 profit and loss in relation to the assignment’s degree of completion, also known as the degree-of-completion method. The degree-of-completion 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 profit and loss.

Financial income and expenseFinancial income and expense consists of interest income and interest expense, dividends not included in the Equity Management business area (which are recognized as net sales), unreal-ized and realized gains on financial investments and revaluations of financial instruments measured at fair value as well as unrealized and realized exchange rate losses and gains.

Calculations of interest income on receivables and interest expense on liabilities are based on the effective interest-rate method. The effective rate is the interest rate that ren-ders 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 normally recognized in profit and loss for the period to which the amounts pertain. Borrowing costs attributable to the purchase or production of what are known as qualified assets must be capitalized as a part of the asset’s acquisition value. A qualified asset is an asset that takes a substantial period of time to complete. In the Group, capitalization of borrowing costs becomes relevant in connection with major investment projects. taxesIncome taxes consist of current tax and deferred tax. Income taxes are recognized in profit and loss, apart from when underlying transactions are recognized in other comprehensive income or in shareholders’ equity, whereby the related tax effect must be recognized in other comprehensive income or in equity.

note 1, continued

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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 balance-sheet date. Adjustment of current tax attributable to previous periods is also included in current tax.

Deferred tax is calculated in accordance with the balance-sheet method, on the basis of the temporary differences between the recognized and tax-assessment value of assets and liabilities, based on the tax rates and tax regulations that have been decided or decided in essence on the balance-sheet date. Temporary differences are not taken into account in consolidated goodwill; nor are temporary 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 recognized insofar as they are likely to be utilized in the future. Deferred tax assets and deferred tax liabilities in the same country are recognized net insofar as offsetting is permissible.

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.

Financial instruments

Recognition in and derecognition from the balance sheetA financial instrument that is not a derivative instrument is measured initially at acquisition value (cost), which corresponds to the instrument’s fair value plus transaction expenses, with the exception of assets belonging to 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 be-comes party to the instrument’s terms of agreement. 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 is derecognized from the balance sheet when the rights in the agreement are realized, expire or the company no longer has control over them. A financial liability is derecognized when the obligation in the agreement is fulfilled or is extinguished in some other manner.

Spot transactions are recognized in accordance with the trade day method. A financial asset and a financial liability are offset against each other and recognized in 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 assets, excluding shares, and financial liabilities have been classified as current if the amounts are expected to be recovered or paid within 12 months from the balance sheet date. Shares have been classified as long term if they are intended to be held permanently in the operation.

Subsequent measurement of financial instrumentsFinancial assets measured at fair value through profit and loss comprise a category consisting of two groups: financial assets held for sale and other financial assets that the company has initially decided to place in this category (in accordance with the Fair Value Option). Financial instruments in this category are measured on a current-account basis at fair value in cases where changes in value are recognized in profit and loss.

The first group includes derivative instruments with a positive fair value, with the exception of derivative instruments that comprise an identified and effective hedging instrument, as well as shares held primarily for trading purposes.

Loan receivables and accounts receivable are financial assets that are not derivative instru-ments, that are subject to determined or determinable payments and that are not listed on an active market. These assets are measured at accrued acquisition value. Accrued acquisition value is determined on the basis of the effective interest rate that is calculated on the date of acquisition.

Interest-bearing receivables and securities, cash and cash equivalents, rental receiva-bles and accounts receivable are recognized in this category. Accounts receivable are

recognized at the amount expected to be received, meaning after deductions for uncertain receivables.

Rental receivables and accounts receivable that have an original maturity of less than six months are measured without any discounting of nominal amounts.

Available-for-sale financial assets. This category includes financial assets that are not classi-fied in any other category or financial assets that the company has initially chosen to classify in this category. The assets are measured on a current-account basis at fair value with the period’s changes in value recognized in other comprehensive income and the accumulated changes in value in a specific component of shareholders’ equity (fair value reserve), although not the type of changes in value resulting from impairment losses, and not interest on instru-ments of debt and dividend income as well as exchange-rate differences on monetary items that are recognized in profit and loss. When the asset is divested, the accumulated gain/loss that was previously recognized in other comprehensive income is recognized in profit and loss. Assets for which it has not been possible to determine a fair value have been measured at acquisition value, which is in contrast to the description above.

Shareholdings that are not recognized as subsidiaries or associated companies or are held for trading purposes are recognized in this category.

Financial liabilities measured at fair value through profit and loss comprise a category consist-ing of two groups: financial liabilities held for sale and other financial liabilities that the company initially chose to place in this category (in accordance with the Fair Value Option). Financial instruments in this category are measured on a current-account basis at fair value whereby changes in value are recognized in profit and loss.

The first group includes derivative instruments with a negative fair value, with the exception of derivative instruments that comprise an identified and effective hedging instrument. The second group includes loans that are measured at fair value, whereby the Fair Value Option has been applied to achieve a fairer recognition of profit/loss, and thus match the changes in value of the interest-rate swap belonging to the loan. No loans were remeasured pursuant to the Fair Value Option during the year.

Other financial liabilities are measured at accrued acquisition value. Accrued acquisition value is determined on the basis of the effective interest rate that is calculated on the date of acquisition. Accounts payable, overdraft facilities and loan liabilities are recognized in this category, with the exception of loans that are measured at fair value pursuant to the Fair Value Option. Loans that have been hedged against changes in value are recognized initially including any transaction costs and continuously at market value. Accounts payable that have an original maturity of less than six months are measured without any discounting of nominal amounts.

Derivative instruments and hedge accounting. All derivative instruments are measured and continuously recognized at fair value in the balance sheet. For derivative instruments that do not meet the requirements for hedge accounting, changes in value are recognized in operating profit or net financial items, depending on the purpose of the holding. In those cases where hedge accounting has been applied, the changes in value are recognized in the following manner.

Cash-flow hedges. The effective portion of changes in value is recognized in other compre-hensive income and accumulated in shareholders’ equity (hedging reserve) until the hedged flow meets profit and loss, at which time the accumulated changes in value are transferred from shareholders’ equity via other comprehensive income to profit and loss in order to offset and match the hedged transaction. For hedges of investments, the acquisition value (cost) of the hedged item is instead adjusted when it occurs. Hedges of the ineffective component are recognized directly in profit and loss. Currency forward contracts and currency swaps are used as cash flow hedges to counter changes in exchange rates. For changes in interest rates, interest-rate swaps are used as cash flow hedges.

Hedging of fair value. Changes in the value of derivative instruments are recognized directly in profit and loss. Changes in the value of hedged items are recognized in a corresponding manner.

Hedging of net investment. Changes in the value of hedges of net investments in foreign operations are recognized in other comprehensive income. Accumulated changes in value are recognized as a component of shareholders’ equity (translation reserve) until the operation is divested, at which time the accumulated changes in value are recognized in profit and loss.

note 1, continued

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Calculating fair value. The fair value of financial instruments traded on an active market is based on quoted market prices and belongs to Level 1, as stipulated in IFRS 7. If no quoted market prices are available, fair value has been calculated by discounting cash flows. When calculations of discounted cash flows have been performed, all variables, such as discount interest rates and exchange rates used in the calculations, have been derived from market quotations, wherever possible. When calculating discounted cash flows, the average of the exchange rates and discounting interest rates is used. These valuations belong to Level 2. Valuations of currency options applying the Black & Scholes formula are performed when this is appropriate.

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

Intangible fixed assetsIntangible assets consist of goodwill, development expenses, patents, licenses and IT systems.

Goodwill represents the difference between the acquisition value of acquired business operations and the fair value of the acquired assets and liabilities and contingent liabilities. Goodwill is measured 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 capital-ized insofar as it is expected to generate economic benefits in the future. Other develop-ment expenditure is recognized in profit and loss when it is incurred. The development expenditure recognized in the balance sheet is booked at acquisition value, less accumu-lated amortization and impairment losses.

Patents, licenses and IT systems are recognized at acquisition value less accumulated amortization and any impairment losses.

Amortization principlesAmortization is recognized straight-line in profit and loss over the estimated useful life of the intangible assets, provided such useful life is not indeterminable. Intangible assets, apart from goodwill, are amortized over a period of 3-20 years.

Amortizable intangible assets are amortized from the date they become available for use.

tangible fixed assetsTangible fixed assets (property, plant and equipment) 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 expenditure 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 compo-nents are created. Any non-depreciated carrying amounts for replaced components, or parts thereof, are scrapped and expensed in connection with the replacement.

Depreciation principlesDepreciation is applied straight-line over the estimated useful life. The following useful life (years) is used:

Machinery for hydro-power generation 20-40Investment and storage buildings, housing (Holmen) 20-33 Operational buildings, land improvements and pulp, paper and board production machinery 20 Sawmill machinery 12Other machines 10 Forest motor roads 10 Fixtures and fitting 4-5

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

Impairment lossesCarrying amounts for the Group’s assets are impairment tested at the close of every fiscal year to assess whether there are indications of impairment requirements. Exceptions are made for biological assets, investment properties, financial assets, deferred tax assets, inventories, available-for-sale assets and divestment groups recognized 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. Any goodwill is allocated to cash-generating units. Both goodwill and other intangible assets are impairment tested annually. 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. The net realizable value is the estimated selling price less the estimated cost of making the asset ready for sale. Value in use is measured as the projected future discounted cash flow. Impair-ment losses correspond to the difference between the carrying amount and recoverable value. Impairment losses are reversed if a positive change has occurred in the parameters used to determine the asset’s recoverable value. A reversal may not exceed the carrying amount that would have been recognized, less depreciation, if no impairment had been posted.

Available-for-sale financial assets. Impairment testing is conducted on a continuous basis. Impairment losses are posted when the decline in fair value is material or protracted over time. If there is a need for an impairment loss, any changes in value that had previously been recognized in comprehensive income are restated in profit and loss. Any reversal of previously posted impairment losses is recognized in other comprehensive income. For listed shares, the impairment requirement is based on the current share price at each particular time.

Loan receivables and accounts receivable. Impairment testing of instruments in this category is conducted on a continuous basis by determining whether there is any objective evidence that an impairment requirement prevails. Examples of objective evidence are non-payment or delayed payment and other factors indicating that the debtor is experiencing financial difficulties, such as indications of imminent bankruptcy or of financial reconstruction.

Biological assetsThe Group reports its forest assets by dividing up standing forests, which are recognized as biological assets at fair value, and land, which is recognized at acquisition cost. Changes in the fair value of standing forests are recognized in profit and loss. The assessment is that no relevant market prices are available to value forest holdings the size of Holmen’s forests. Accordingly, the valuation is based on the estimated present value of the projected future cash flow (less selling costs) from the standing forests. Reference is also made to Notes 12 and 18.

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

Investment propertiesInvestment properties are properties held in order to receive rental revenues and/or value growth. Initially, investment properties are recognized at acquisition value, which includes expenditures directly attributable to the acquisition. Investment properties are recognized in the balance sheet in accordance with the fair value method.

Fair value is based on internal valuations that are quality assured with the help of exter-nal valuations of a selection of properties. Continuous analyses are conducted to determine if there are 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 recognized in profit and loss. Changes in value are recognized net in profit and loss, but divided among unrealized and realized changes in value, as presented in Note 11.

Additional expenditures – investment propertiesAdditional expenditures are added to the carrying amount only if the future economic bene-fits 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 recognized as costs in the period they are incurred. The critical factor in assessments of when an additional

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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 measured at the lower of acquisition value and production cost, after an allowance for necessary obsolescence, or the net realizable value. The acquisition cost of in-ventories is calculated using the FIFO (first-in first-out) 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 com-pany consists of direct production costs and a reasonable portion of indirect costs.

Emission rights received are initially recognized as inventories and prepaid income at market price on allocation. During the year, the allocation is recognized as income, at the same time as an interim liability, corresponding to actual emissions, is expensed.

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 recognized under operating costs.

leasingLeasing is classified in the consolidated financial statements as financial leasing or operational leasing. Leased 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.

Leasing of assets for which the lessor retains all material ownership of the asset is classified as operational leasing. Costs pertaining to operational leasing agreements are recognized in profit and loss straight line over the term of the leasing agreement. Variable fees are expensed during the periods in which they arise.

All of the Group’s leases for the rental of premises are classified as operational leasing agreements with the Group as the lessor. All rental, ground rent and leasehold agreements that the Group has entered into as lessee are classified as operational leasing agreements. The cost of these is expensed continuously.

Borrowing costsBorrowing costs attributable to the purchase or production of what are known as qualified assets are capitalized as a part of the asset’s acquisition value. A qualified asset is an asset that takes a substantial time to complete. Capitalization primarily takes place for borrowing costs that have arisen on loans that are specific to the qualified asset. Secondarily, capitalization takes place for borrowing costs that have arisen on general loans that are not specific to any other qualified asset. In the Group, capitalization of borrowing costs becomes relevant in con-nection with major investment projects.

Repurchase of own sharesAcquisitions of own shares are recognized as a deductible item from retained earnings and proceeds from the divestment of shares held in treasury are recognized as an increase in retained earnings. Transaction costs are recognized directly against retained earnings.

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

employee benefits

Defined-contribution plansPension plans for which the company’s obligation is limited to the contributions the company pledges to pay are classified as defined-contribution 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 defined-contribution plans are recognized as an expense in profit and loss during the period the employee performed the services for which the fee is intended.

Defined-benefit pension plansThe Group’s salaried employees in Sweden are included in the so-called 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 is-sued by the Swedish Financial Reporting Council, this is a defined-benefit plan that includes several employers. During the 2012 fiscal year, the company did not have access to the infor-mation necessary to support recognition of this plan as a defined-benefit plan. Accordingly, the ITP pension plan covered by insurance in Alecta is recognized as a defined-contribution plan. Obligations regarding fees for defined-contribution plans are recognized as expenses in profit and loss when they arise. In addition to the above exceptions, there are defined-benefit obligations for:

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

Net obligations for defined-benefit 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 balance-sheet date on a first-class corporate bond with a term corresponding to the pen-sion obligations of the various plans. When there is no active market for corporate bonds, the market interest rate for government bonds with a corresponding term is used. The computa-tion is made by a qualified actuary based on the projected unit credit method. If the benefit is fully vested, an expense is entered in profit and loss.

When determining the obligation resulting from defined-benefit plans, actuarial gains and losses could arise and these are recognized in other comprehensive income.

All components included in the period’s costs for a defined-benefit plan are recognized in profit and loss.

When how the pension liability is measured in the Group differs from how it is meas-ured 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.

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 remunera-tion 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 remunerationShort-term 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 balance-sheet date. If the effect of when payment is made is significant, the calculation of the provision is discounted by the antici-pated future cash flow at a pre-tax interest rate that reflects current market assessments of the time value of the monies involved and, where applicable, risks associated with the liability.

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A provision for restructuring is recognized 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 pay-ment liability will arise and the amount concerned can be reliably estimated.

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

contingent liabilitiesA contingent liability is recognized 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 commit-ment that has not been recognized 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 calcula-tions do not always tally. In texts and tables, figures between 0 and 0.5 are reported as 0.

note 2 - Information about the company

L E Lundbergföretagen AB (publ) is a Swedish limited liability company with its registered office in Stockholm. The company’s shares are listed on NASDAQ OMX Nordic, Large Cap, Stockholm. The address to the company’s Head Office is PO Box 14048, SE-104 40 Stockholm.

note 3 - net sales, seK m.

2012 2011

Investment propertiesRental revenues, etc. ¹ 2,567 2,384 Sales of properties classed as current assets 32 22 Other revenues 80 108

Equity managementSales of marketable securities, etc. 544 962 Dividends 543 472

Printing paper and magazine paper 7,849 8,302 Paperboard 4,819 4,994 Timber 3,211 3,502 Sawn wood products 1,125 871 Power 407 532 Pulp 88 67 Other 354 388

21,618 22,604 1) Of total rental revenues, sales-based rent accounts for SEK 12 m. (13).

note 4 - Other revenues, etc. seK m.

2012 2011

Non-core activitiesSales of byproducts ¹ 300 313 Forestry assignments 72 59 Electricity certificates ² 54 31 Emission rights ³ 20 40 Sales of fixed assets 14 51 Other 160 168

621 661

Change in inventories of shares - 39 46 Change in inventories - 34 176

- 72 222

549 883 1) Of sales of byproducts, surplus products from production accounted for SEK 128 m. (148), sawdust, bark,

wood chips, etc. for SEK 86 m. (89) and external sales of energy for SEK 86 m. (75).

2) Revenue received from the production of renewable energy at the Group’s Swedish plants.

3) Allotment of emission rights, which are used largely in Holmen’s production operations. The surplus resulted in SEK 20 m. (40) being recognized as profit.

note 5 - employees and personnel costs

average number of employees 2012of whom

men, % 2011of whom

men, %

Parent Company – Sweden 8 77 8 77

total in Parent company 8 77 8 77

Wholly owned subsidiaries – Sweden 159 74 160 74Hufvudstaden – Sweden 94 61 93 58Holmen

- Sweden 2,930 81 2,988 81- Australia 0 0- Estonia 17 71 17 71- France 30 77 30 73- Hong Kong 5 89 5 89- Italy 8 50 8 50- Netherlands 100 65 95 64- Poland 6 50 6 50- Portugal 1 100 1 100- Switzerland 4 75 5 80- Singapore 5 40 5 40- Spain 362 77 424 79- United Kingdom 446 90 425 90- Germany 25 72 25 68- United States 7 62 7 57

total in subsidiaries 4,198 80 4,294 80

total in Group 4,206 80 4,302 80

Distribution of company management by gender Percentage of women 2012 2011

Parent CompanyBoard of Directors 38 38Other senior executives - -

Group totalBoard of Directors 24 24Other senior executives 17 14

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Guidelines resolved by the annual General Meeting for determining salary and other remuneration of senior executivesThe 2012 Annual General Meeting resolved to adopt the following guidelines for determining salaries and other remuneration paid to 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 is to consist of fixed salary, bonus pay-ments, other benefits and pension privileges. The total remuneration should be competi-tive in the market and be proportionate to each executive’s performance, responsibility and authority.

For senior executives employed by L E Lundbergföretagen AB or Fastighets AB L E Lund-berg, any bonus payments are to be connected to predetermined and measurable criteria based on earnings and profitability targets and capped at three months’ salary. For senior executives of L E Lundberg Kapitalförvaltning AB, any bonus payments are to be based on the results of activities and capped at approximately 15% of reported earnings over time. Bonus payments should normally not be pensionable.

Should notice of employment termination be served by the company, the maximum term of notice is 12 months. Should notice be served by the company, severance pay cor-responding 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. Supplemen-tary pension solutions may occur. No remuneration is to be provided in the form of options or other share-based incentive programs.

In certain cases, the Board of Directors is to be entitled to deviate from the guidelines if required under special circumstances.

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

Remuneration and other benefits, Parent company, seK m. 1

Basic salary, 2012 Director fees

Variable remun-eration

Other benefits

Pension cost total

Chairman of the Board Mats Guldbrand 0.6 0.6Member of the Board Carl Bennet

Remuneration from the Parent Company 0.2 0.2Remuneration from subsidiaries 0.3 0.3

Member of the Board Gunilla Berg 0.2 0.2Member of the Board Louise Lindh

Remuneration from the Parent Company 0.2 0.2Remuneration from subsidiaries 0.9 0.1 0.0 1.0

Member of the Board Katarina Martinson 0.2 0.2Member of the Board Sten Peterson


Member of the Board Lars Pettersson 0.2 0.2President Fredrik Lundberg

Remuneration from the Parent Company 1.5 0.4 2.0Remuneration from subsidiaries 1.0 1.0

Other senior executives 2

Remuneration from the Parent Company 4.5 0.1 0.1 0.8 5.5Remuneration from subsidiaries 3.1 0.1 0.4 3.5

total 13.2 0.2 0.1 1.6 15.1

Basic salary, 2011 Director fees

Variable remun-eration

Other benefits

Pension cost total

Chairman of the Board Mats Guldbrand 0.6 0.6Member of the Board Carl Bennet


Member of the Board Gunilla Berg 0.2 0.2Member of the Board Louise Lindh

Remuneration from the Parent Company 0.2 0.2Remuneration from subsidiaries 1.4 0.1 0.2 1.7

Member of the Board Katarina Martinson 0.2 0.2Member of the Board Sten Peterson


Member of the Board Christer Zetterberg 0.2 0.2President Fredrik Lundberg

Remuneration from the Parent Company 1.5 0.4 1.9Remuneration from subsidiaries 1.0 1.0

Other senior executives 2

Remuneration from the Parent Company 4.6 0.2 0.1 0.8 5.7Remuneration from subsidiaries 3.2 0.3 3.5

total 13.9 0.3 0.1 1.7 16.01) There are no pension obligations for the President and members of the Board. Pension obligations for

senior executives amount to SEK 0.7 m. (0.7).

2) The senior executives who report directly to the President are Ulf Lundahl, Claes Boustedt and Lars Johansson.

salaries, other remuneration and social security costs, seK m.

2012salaries and

remuneration

Of which, members of the Board, senior executives

and President 1

social security

costs

Of which pension

costs

Parent Company 2 11 8 6 2 Wholly owned subsidiaries 72 11 35 9

total in Parent company andwholly owned subsidiaries

84 19 41 11

Hufvudstaden 57 14 28 8 Holmen 1,743 28 684 185

total in other subsidiaries 1,800 43 712 193

Total in Group 3 1,884 62 752 205

2011salaries and

remuneration

Of which, members of the Board, senior executives

and President 1

social security

costs

Of which pension

costs

Parent Company 2 12 8 6 2 Wholly owned subsidiaries 72 12 38 12

total in Parent company andwholly owned subsidiaries

84 20 44 14

Hufvudstaden 52 13 26 8 Holmen 1,746 26 662 157

total in other subsidiaries 1,798 40 688 165

Total in Group 3 1,882 60 732 179

1) In the Parent Company, the Board of Directors (excluding the President) comprises 7 people (7) and senior executives comprise 4 people (4) (including one who receives a salary from wholly owned subsidiaries). The wholly owned subsidiaries comprise ten people (11), Hufvudstaden comprises 15 people (15) and Holmen comprises 22 people (22).

2) The President and senior executives accounted for SEK 1.2 m. (1.2) of the Parent Company’s pension costs.

3) The President and senior executives accounted for SEK 20.3 m. (20.5) of the Group’s pension costs. On De-cember 31, 2012, the Group’s outstanding pension obligations regarding these pension costs amounted to SEK 91.5 m. (85.8). The obligations are mainly covered by plan assets in independent pension foundations and through reinsurance in FPG.

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note 6 - Fees and other remuneration to auditors, seK m.

2012 2011

Remuneration to KPMG ABAuditing assignments 8 9 Tax advice 2 2 Other assignments 1 5

12 16 Other auditors 0 0

12 16 Auditing assignments are defined as statutory examinations of the Annual Report and financial accounts, as well as of the administration of the Board of Directors and President and other duties in accordance with agreements or contracts. This includes 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.

Tax advice pertains to all consultations in the tax area.Other assignments pertain to advice on accounting issues, advice on divestment and

acquisition of operations and advice on processes and internal control.

note 7 - Other external costs, seK m.

Operational leasingLeasing charges during the year amounted to SEK 31 m. (30). The leases pertained to fees for trucks, cars, ground rent and a lease with an external tenant. Future leasing charges are distributed as follows:

- 1 year 1-5 years 5 years -

27 39 1

At the close of the preceding year, future leasing fees for existing agreements amounted to SEK 68 m.

note 8 - Depreciation/amortization, seK m.

2012 2011

Intangible fixed assets 8 12 Tangible fixed assets

Buildings and land 136 135 Machinery and equipment 1,177 1,122

1,321 1,269

note 9 - Impairment losses/Reversals of impairment losses, seK m.

2012 2011

Intangible fixed assets - 10 Tangible fixed assets

Impairment losses during the year 290 Recovery of previous impairment losses - 127

Effects of reclassification to associated company - 474 Financial investments 52 1

205 - 474

As a result of Husqvarna AB being recognized as an associated company as of May 27, 2011, implemented reversals of impairment losses have been restated in profit and loss.

note 10 - Results from participations in associated companies, seK m.

2012 2011

Participation in profit 1 135 103 Impairment gains/losses 2 347 - 658 Divestment 3 2,523

482 1,968 1) Husqvarna AB is recognized as an associated company as of May 27, 2011. Earnings are recognized with a

quarterly delay.2) Reversal/impairment of the Husqvarna shareholding down to a value corresponding to the share price on

December 31.3) In 2011, all shares in Cardo were divested.

note 11 - changes in value of investment properties, seK m.

2012 2011

Realized 1 Unrealized 816 1,587

816 1,587

note 12 - changes in value of biological assets, seK m.

2012 2011

Changes resulting from harvesting - 574 - 724 Change in fair value 924 4,317

350 3,593

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Fixed assets by country ¹ 2012 2011

Sweden 61,278 59,446 Spain 1,654 2,033 United Kingdom 1,523 788 Other 28 34

64,483 62,301 1) Carrying amount pertains to intangible and tangible fixed assets, biological assets and investment

properties.

Assets are reported in those countries where the operations are located.

net sales by market 2012 2011

Sweden 7,895 8,392 France 772 923 Italy 770 958 Netherlands 802 844 Spain 1,096 1,446 United Kingdom 2,329 1,993 Germany 2,474 2,791 Rest of Europe 3,341 3,368 Rest of world 2,139 1,889

21,618 22,604

Net sales are reported in accordance with the customers’ location, apart from net sales generated by equity management, which are reported solely under Sweden. The distribution of sales among products and services is presented in Note 3.

note 13 - Reporting by operating segment, seK m.

Four operating segments have been identified in the Group, namely: Lundbergs’ real estate operations and equity management, as well as Hufvudstaden and Holmen. Revenues in Lundbergs’ and Hufvudstaden’s real estate operations primarily comprise revenues from the leasing of own properties, while Lundbergs’ equity-management revenues comprise dividends from equities and securities trading. Holmen obtains revenues from the manufacture and sale of printing paper, paperboard and wood products, as well as from forestry and power-generation operations.

lundbergs lundbergs Real estate operations equity management hufvudstaden holmen total

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

Net sales 1,137 1,077 1,087 1,434 1,542 1,437 17,852 18,656 21,618 22,604 Operating expenses¹ - 459 - 486 - 493 - 1,002 - 427 - 522 - 12,765 - 13,023 - 14,143 - 15,033 Personnel costs - 100 - 104 - 9 - 5 - 88 - 79 - 2,499 - 2,477 - 2,696 - 2,665 Depreciation/amortization - 5 - 5 - 0 - 0 - 3 - 3 - 1,313 - 1,260 - 1,321 - 1,268 Impairment losses/reversals of impairment losses - 52 474 - 153 - 205 474 Profit from participation in associated companies 435 1,884 47 84 482 1,968 Changes in value, investment properties 196 343 621 1,245 816 1,587 Changes in value, biological assets 350 3,593 350 3,593

769 825 968 2,785 1,645 2,078 1,520 5,573 4,903 11,260

Unallocated costs - 29 - 32

Operating profit 769 825 968 2,785 1,645 2,078 1,520 5,573 4,874 11,228

Net financial items - 514 - 475 Taxes 1,208 - 2,116


1) Including other revenues, etc.; see Note 4.

lundbergs lundbergs Real estate operations equity management hufvudstaden holmen totaltOther information 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

Assets 12,659 11,819 13,132 11,693 23,653 22,695 35,224 35,402 84,668 81,609Participation in associated companies 1,532 1,225 1,821 1,815 3,353 3,039Unallocated assets 2,242 771

90,263 85,420

Liabilities 9,732 10,208 16,233 17,443 25,965 27,651Unallocated liabilities 6,767 6,285

32,732 33,936

InvestmentsFixed assets 944 824 187 948 1,975 1,849 3,106 3,621In associated companies 18 179 12 5 30 184

Depreciation/amortization 5 5 0 0 3 3 1,313 1,260 1,321 1,268

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note 14 - net financial items, seK m.

2012 2011

Financial incomePurchase consideration, etc., for divestment of subsidiary 10 Net gain/loss

Assets and liabilities measured at fair value through profit and lossHeld for sale - 4 - 7

Cash and cash equivalents 5 10 Other financial receivables 3 4 Interest income 27 45

31 62

Financial expenseNet gain/loss

Assets and liabilities measured at fair value through profit and lossHeld for sale - 3 5

Other financial liabilities 1 - 9 Interest expense - 543 - 532

- 545 - 537

net financial items - 514 - 475

All interest income pertains to financial instruments that are not measured at fair value.

Of total interest expense, SEK 463 m. (440) pertains to financial instruments not meas-ured at fair value.

The net gains/losses recognized in net financial items pertain primarily to currency revaluation of internal loans and hedging of internal loans, as well as currency revaluation and hedging of cash and cash equivalents. They also include revaluation of interest rate swaps used for hedging loans at fixed interest rates.

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

2012 2011

Exchange rate gain/loss on accounts receivable and accounts payable - 14 - 464 Net gain/loss pertaining to derivative instruments recognized in

working capital

176

451

The derivatives that are recognized in operating profit pertain to the hedging of accounts receivable, accounts payable and interest rates, as well as financial electricity derivatives.

note 15 - tax, seK m.

RecOGnIZeD In PROFIt anD lOss2012 2011

Current taxTax cost during the year - 627 - 637 Tax attributable to preceding years - 61 - 16

Deferred tax 1

Temporary differences 1,897 - 1,463

1,208 - 2,116

The deferred tax income that is recognized mainly pertains to the change in tax rate in Sweden in 2012.1) Pertains primarily to tax calculated on the difference between acquisition value and fair value of biological

assets and investment properties.

Reconciliation of effective tax 2012 2011

Profit before tax 4,360 10,753

Swedish income tax rate 26% - 1,147 26% - 2,828 Difference in tax rates for foreign operations - 0% 1 0% - 7 Non-taxable revenues and

non-tax-deductible costs - 4% 183 - 6% 690 Standard interest on tax-deferral reserve 0% - 12 0% - 19 Tax attributable to prior years 1% - 46 0% - 4 Effect of booked-up loss carryforwards and

temporary differences

- 0% 27 Change in tax rate for deferred tax

assets/liabilities - 55% 2,390

Other 4% - 162 - 0% 26

- 28% 1,208 20% - 2,116

RecOGnIZeD In cOMPRehensIVe IncOMe FOR the YeaR

2012 Before

tax taxafter

tax

Hedge accounting - 77 18 - 60 Translation difference deriving from foreign operations - 129 - 129 Hedging of currency risk in foreign operations 88 - 23 65 Financial assets held for sale 2,393 - 160 2,233 Actuarial revaluations - 17 - 2 - 19 Other comprehensive income in associated companies - net - 87

2,258 - 168 2,004

2011 Before

tax taxafter

tax

Hedge accounting - 523 137 - 386 Translation difference deriving from foreign operations - 4 - 4 Hedging of currency risk in foreign operations 31 - 8 23 Financial assets held for sale - 4,141 303 - 3,838 Actuarial revaluations - 193 44 - 149 Other comprehensive income in associated companies - net 46

- 4,830 476 - 4,307

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RecOGnIZeD In Balance sheetReceivables 2012 2011

Deferred tax assets 2 194 Current tax assets 125 49

127 243

liabilities 2012 2011

Provision for taxesDeferred tax liability 12,298 14,236 Other provisions 104 83

Current tax liability 82 17

12,484 14,336

Deferred tax assets and liabilities

2012 asset liability net

Tangible fixed assets - 1,304 - 1,304 Biological assets - 3,587 - 3,587 Investment properties - 6,336 - 6,336 Financial investments - 164 - 164 Pension provisions 75 75 Untaxed reserves - 872 - 872 Hedge-accounted transactions 10 10 Other provisions, including deferred tax assets reported

net among deferred tax liabilities 2 - 120 - 118

2 - 12,298 - 12,296

2011 asset liability net

Tangible fixed assets - 1,724 - 1,724 Biological assets - 4,194 - 4,194 Investment properties - 7,304 - 7,304 Financial investments - 2 - 2 Pension provisions 74 74 Untaxed reserves - 1,036 - 1,036 Loss carryforwards 184 184 Deferred tax liabilities reported

net among deferred tax assets - 60 - 60 Hedge-accounted transactions - 9 - 9 Other provisions, including deferred tax assets reported

net among deferred tax liabilities - 4 33 29

194 - 14,236 - 14,042

At year-end, there were tax loss carryforwards and temporary differences corresponding to approximately SEK 800 m. in tax, for which deferred tax assets have not been recognized in profit and loss or in the balance sheet. Of this amount, SEK 520 m. pertains to loss carryfor-wards, of which approximately SEK 400 m. will expire in 2024-2030. The factor determin-ing whether or not deferred tax assets are recognized is the probability that the Group will be able to utilize them to offset future taxable profits.

change in deferred tax on temporary differences and loss carryforwards

Recognized Recognized in profit in other translation Opening and loss comprehen- differences closing 2012 balance for the year sive income and other balance

Tangible fixed assets - 1,724 384 34 2 - 1,304 Biological assets - 4,194 607 - 3,587 Investment properties - 7,304 968 - 6,336 Financial investments - 2 - 1 - 160 - 164 Pension provisions 74 - 6 - 2 8 75 Untaxed reserves - 1,036 164 - 872 Loss carryforwards 184 - 180 - 4 0 Other - 40 - 41 - 40 14 - 108

- 14,042 1,895 - 168 20 - 12,296

Recognized Recognized in profit in other translation Opening and loss comprehen- differences closing 2011 balance for the year sive income and other balance

Tangible fixed assets - 1,823 100 - 1 - 1,724 Biological assets - 3,241 - 953 - 4,194 Investment properties - 6,727 - 577 - 7,304 Financial investments - 307 2 302 - 2 Pension provisions 37 - 5 44 - 1 74 Untaxed reserves - 1,013 - 22 - 1,036 Loss carryforwards 242 - 56 - 2 184 Other - 228 29 130 28 - 40

- 13,059 - 1,483 476 25 - 14,042

Ongoing tax disputes Holmen is involved in an unresolved major tax dispute. In 2012, the Administrative Court of Appeal affirmed the Administrative Court’s judgment, which was not in favor of the com-pany. The judgment has been appealed to the Supreme Administrative Court of Sweden. In 2010, Holmen paid the litigated amount of SEK 611 m. to the Swedish Tax Agency.

The Tax Agency has decided to change the distribution between direct deductions and capitalization pertaining to an implemented foundation reinforcement project in Hufvud-staden. The estimated amount is SEK 40 m. and will have no impact on total recognized tax but will solely involve a transfer between current and deferred tax. The decision will be appealed.

note 16 - Intangible fixed assets, seK m.

Goodwill Other total2012 2011 2012 2011 2012 2011

accumulated acquisition valueOpening balance 83 83 114 95 197 178 Investments 29 20 29 20 Divestments and scrappage 0 - 1 0 - 1 Translation differences - 1 1 - 1 1

83 83 142 114 225 197

accumulated depreciation and impairment lossesOpening balance 88 - 76 - 88 - 76 Amortization during the year - 8 - 12 - 8 - 12 Impairment losses during the year 10 10 Translation differences 1 - 0 1 - 0

- 85 - 88 - 85 - 88 closing balance 83 83 57 26 140 109

Goodwill pertains to Lundbergs’ acquisition of Holmen, whose recoverable amount is determined on the basis of the stock market price of the shares on December 31.

Other intangible fixed assets consist mainly of SEK 43 m. (22) for IT systems. The assets were mainly acquired externally. Apart from goodwill, all assets have a determinable useful life that is amortized over 3-20 years.

note 15, continued

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note 17 - tangible fixed assets, seK m.

2012Buildings, land and forestland

Machinery and equipment

Work in progress and

advanced payments total

acquisition valueOpening balance 6,208 28,437 545 35,190 Investments 433 551 637 1,622 Reclassification 15 21 - 36 0 Divestments and scrappage - 29 - 572 - 37 - 638 Translation differences - 55 - 185 - 22 - 262

6,572 28,253 1,088 35,912

Depreciation and impairment lossesOpening balance - 3,117 - 19,526 - 22,643 Depreciation during the year - 136 - 1,177 - 1,313 Impairment losses/reversals of

impairment losses during the year- 91 - 72 - 163

Divestments and scrappage 30 588 618 Translation differences 28 139 167

- 3,286 - 20,048 - 23,334

closing balance 3,286 8,204 1,088 12,578

2011Buildings, land and forestland

Machinery and equipment

Work in progress and

advanced payments total

acquisition valueOpening balance 5,811 26,727 839 33,377 Investments 409 1,786 - 295 1,899 Reclassification 1 1 - 3 - 1 Divestments and scrappage - 4 - 81 - 3 - 88 Translation differences - 9 4 8 3

6,208 28,437 545 35,190

Depreciation and impairment lossesOpening balance - 2,985 - 18,471 - 21,456 Depreciation during the year - 135 - 1,122 - 1,256 Divestments and scrappage 2 72 74 Reclassification - 0 - 0 - 1 Translation differences 1 - 6 - 5

- 3,117 - 19,526 - 22,643

closing balance 3,091 8,911 545 12,547 In 2012, the estimated recoverable value of Holmen’s Spanish operations fell below the previous carrying amount because market conditions deteriorated at the end of the year. This required the posting of an impairment loss totaling SEK 290 m. on tangible fixed assets. The recoverable value is the value in use calculated on the basis of assump-tions regarding future changes in prices, volumes and costs, as well as the estimated market cost of capital of 10% before tax. The market-based cost of capital remains un-changed compared with the most recent estimation of value in use. At the same time, a portion of the impairment loss recognized in 2010, in connection with the closure of a paper machine in Madrid, was reversed, increasing the value of tangible fixed assets by SEK 127 m. The reversal is due to the paper machine, which was closed in 2010, being divested in 2012 and its expected transfer in 2013. Recoverable value has been calcu-lated as fair value (selling price) after adjustments for selling costs. Impairment losses, and reversal of impairment losses, on tangible fixed assets are recognized in profit and loss under Impairment losses/reversals of impairment losses.

Investment commitments pertaining to approved and ongoing projects amounted to SEK 856 m. (1,920) at the end of the year. In 2012, capitalized loan charges amounted to SEK 51 m. (35). To determine the amount, an interest rate of 4.0% (4.5) was used.

note 18 - Biological assets

The Group divides all of Holmen’s forest assets for accounting purposes into growing forests, which are recognized as biological assets at fair value, and land, which is stated at acquisition cost. Because the assessment is that there are no relevant market prices available that can be used to value forest holdings that are as extensive as Holmen’s, they are valued by estimating the present value of expected future cash flows. 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 trends. The cost of replanting has been taken into account, because re-planting after harvesting is a statu-tory obligation. The cash flows are discounted using an interest rate of 5.5%.

In total, Holmen owns 1,033,000 hectares of productive forest land, with a volume of standing forest totaling 119 million cubic meters of growing stock, of which 72,000 hectares with a standing forest of 12 million cubic meters of growing stock have been set aside as nature reserves. According to the current plan, which is from 2011, harvesting will amount to 3.2 million cubic meters per year, of which 0.2 million cubic meters will be biofuel in the form of branches and treetops. It is believed that this level will remain largely unchanged until 2030. Thereafter, harvesting is expected to increase gradually to over 4 million cubic meters per year by 2110. Around 40% of the wood harvested consists of pulpwood that is sold to the pulp and paper industry, 50% is timber sold to sawmills and the remainder mainly consists of branches and treetops, which are used primarily as forest fuel.

The valuation is based on a long-term trend price that matches the average price over the past ten years but is slightly lower than current market prices. The trend price is adjust-ed upwards annually by an inflation rate of 2%. The cost forecast is based on present-day levels and is adjusted upwardly by just over 2% annually.

Holmen’s forest holdings are recognized at SEK 16,227 m. before tax. A deferred tax liability of SEK 3,587 m. is stated in relation to that figure, representing the tax that is ex-pected to be charged against harvesting earnings in the future. On that basis, the growing forest, net after tax, will be stated at SEK 12,640 m.

The change in the value of the growing forest can be divided as follows:

seK m. 2012 2011

Opening balance 15,771 12,161 Acquisition of growing forest 107 18 Sales of growing forest - 1 Change due to harvesting - 574 - 724 Change in fair value 924 4,317

closing carrying amount 16,227 15,771

The net effect of the change in fair value and the change resulting from harvesting is recognized in profit and loss as a change in value of biological assets. In 2012, this item amounted to SEK 350 m. (3,593).

The table below shows how the value of forest 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 700 520 Price inflation 1,080 790 Cost inflation - 610 - 450

Change in level, +1%Harvesting 240 180 Prices 400 300 Costs - 240 - 180

Discount rate, +0.1% - 430 - 320

Annual change refers to the annual rate of change used in the valuation of each parameter.Change in level refers to the changes in level of each parameter and year.

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note 19 - Investment properties, seK m.

Investment properties are measured at fair value. Fair value is the amount at which an asset could be sold in an arms-length transaction between a willing buyer and a willing seller.

2012 Divested

properties acquired

properties

Properties owned

throughout the year total

Fair value, Jan 1 247 33,628 33,874 Acquisitions 623 623 Investments 6 496 502 Unrealized change in value 26 791 816 Realized change in value - 278 - 278

closing fair value 623 34,915 35,538

2011 Divested

properties acquired

properties

Properties owned

throughout the year total

Fair value, Jan 1 77 30,535 30,611 Acquisitions 874 874 Investments 3 886 889 Unrealized change in value 6 1,580 1,587 Realized change in value - 86 - 86

closing fair value 874 33,001 33,874

Information about fair value of investment propertiesAll 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 internally by fair valuing every single property. The investment amount includes capitalized loan expenses of SEK 3 m. (17) during the year.

Valuation methodLundbergs – The real estate portfolio was valued by assessing the fair value of every single property. The valuations were based on both location-price data and the present value of estimated future payment flows.

The present value calculation is based on discounted cash flow over the coming ten-year period and thereafter calculating a perpetual yield. The discount factor varies from 6.5 to 9.0%. The calculation of cash flow is based on assumed inflation of 2%, normalized mainte-nance costs and a normalized vacancy rate. Subsequently, this calculation is weighed using various location-price factors in a final valuation. The following yield requirements have been used to calculate residual value.

category, %stockholm

regionRegion

WestRegion

east

Housing 2.5-5.8 3.0-7.8 3.7-6.5Commercial 5.0-10.0 6.5-9.3 5.3-8.5Industrial 8.5-9.0

The estimated yield requirements are based on information obtained on the yield require-ment in the market, based on current purchases and sales of comparable properties in similar locations. The yield requirements used may differ between various regions and different subareas within the regions. The information is checked with valuation and consulting companies.

To safeguard the valuation, external valuations were obtained for 37 properties, correspond-ing to 56% of the portfolio in terms of value. The external valuations arrived at a market value of SEK 7,183 m. for these properties, while the internal valuation amounted to SEK 6,950 m.

Hufvudstaden – The real estate portfolio was valued by assessing the fair value of every single property. The fair value was determined based on a valuation according to a varia-tion on the location price method, known as the net capitalization method. The method entails that the market yield requirement is placed in relation to the net operating income of the properties.

The estimated required yield is based on information received about yield requirements in the market in terms of current purchases and sales of comparable properties in similar locations. If few or no business transactions have been conducted in the property’s subarea, the transactions in the adjacent areas are analyzed. Transactions that are not completed are still able to give indi-cations of the yield requirements in the market. Consideration was also given to the various

types of properties, technical standards and building structures. The yield requirements used in the valuation differ between various regions and different subareas within the regions. The information is checked with valuation and consulting companies.

Since 2007, Hufvudstaden’s average yield requirement has varied from 4.6% to 5.3% and amounted to 4.8% at December 31, 2012. For leasehold properties, the calculation has been based on a required yield that is 0.25% higher. Net operating income is based on market rental income, which is market adapted by adjusting current rents to newly signed and renegotiated leases, taking into account anticipated rent development. Income has been reduced for an assessed long-term rental vacancy rate. The vacancy rate is based on the real estate portfolio’s actual outcome over a business cycle, and the anticipated rental situation for the individual property. In the valuation, the average vacancy rate was assessed at 5%. The actual vacancy rate during 2003 – 2012 varied between 3 and 8% and amounted to 3.7% on December 31, 2012.

Deductions were made for standard operation and maintenance costs, excluding charges passed on to tenants and parts of property administration. These are based on actual outcome and adjusted for temporary deviations. The average cost per square meter in the past five years has been within the SEK 400-450 interval and the estimated cost in the valuation on December 31, 2012 was at a corresponding level. The following data was used in valuation.

Rental revenues, seK m.

net operating in-come, seK m.

Required yield, % 1

Stockholm, commercial 4.5-5.1Gothenburg, commercial 4.9-6.0

1,510 1,103 4.8 ²1) Office and commercial properties.2) Average all properties.

Hufvudstaden’s real estate portfolio was valued at SEK 23.1 billion. To safeguard the valuation, external valuations of ten properties were obtained, corresponding to 33% of the internally estimated fair value. The external valuation firms arrived at a market value amounting to SEK 8.0 billion. Hufvudstaden’s internal valuation of the same properties amounted to SEK 7.6 billion.

sensitivity analysisThe fair value of a property can only be established with certainty at divestment. In con-nection with valuation, an interval is often stated to demonstrate the uncertainty in the estimation of a property’s value. The value interval usually amounts to ± 5% but may vary depending on such criteria as the market situation, the property’s technical standard and investment requirements.

Lundbergs’ real estate portfolio is valued at SEK 12.5 billion based on an assumed uncertainty interval of ± 5%, which corresponds to a change in the property value of approximately SEK 0.6 billion.

Hufvudstaden’s real estate portfolio is valued at SEK 23.1 billion based on an assumed uncer-tainty interval of ± 5%, which corresponds to a change in the property value of approximately SEK 1.2 billion.

Impact on profit during the yearAll investment properties generate rental revenues. Rental revenues for the year (gross less vacancies) amounted to SEK 2,567 m. (2,384). Costs distributed by type are presented in the table below.

type of cost, seK m. 2012 2011

Operation and administration 368 364 Maintenance 189 198 Personnel costs 181 178 Property taxes 179 172 Site leaseholds 17 16 Amortization 7 7

942 936

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

annual rents, seK m. 2013 2014 2015 2016 2017 2018- total

Housing 482 482Retail 117 196 244 188 70 29 844Offices 112 202 205 161 137 216 1,032Övrigt 79 50 50 26 12 8 224

total 790 448 498 375 219 252 2,582

Percentage 31 17 19 15 8 10 100

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note 20 - Participations in associated companies, seK m.

2012 2011

acquisition value and carrying amountOn January 1 2,758 1,593 Investments 30 184 Divestments - 85 Impairment losses - 658 Reversal 347 Reclassification ¹ 1,724

3,135 2,758

accumulated results from participations, etc.On January 1 282 155 Current year’s profit participations 2 135 103 Dividend received - 106 - 20 Change in associated companies’ shareholders’ equity - 92 44

219 282

3,353 3,039 1) In 2011, shares in Husqvarna AB were acquired to such an extent that the share of voting rights exceeded

20%. The value of these shareholdings at the time when Husqvarna AB’s status was changed to that of an associated company has been reclassified from a financial investment.

2) Profit after tax and non-controlling interest in associated companies.

holdings of participations 1

numbers of shares shareholding in % 2 carrying amount

Dec 31, 2012 2012 2011 2012 2011

Parent company’sHusqvarna AB (publ) ³ 39,200,000 6.8 (22.2) 6.8 (22.0) 1,532 1,225

subsidiaries’Baluarte Sociedade de Recolha e

Recuperação de Desperdicios, Lda 2 50.0 50.0 36 40 Brännälvens Kraft AB 5,556 13.9 13.9 36 36 Harrsele AB 9,886 49.4 49.4 1,473 1,474 Melodea Ltd 119 21.1 9 Peninsular Cogeneración S.A. 4,500 50.0 50.0 102 103 SAS Saica Natur sud 678 24.0 24.0 20 21 ScandFibre Logistics AB 2,000 20.0 20.0 2 2 Uni4 Marketing AB 1,800 36.0 36.0 18 16 Vattenfall Tuggen AB 683 6.8 6.8 75 75 VindIn AB 200 17.7 17.7 50 47 Various shares 0 0

3,353 3,039 1) 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 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 if it is not the same as the percentage shareholding.

3) At December 31, 2012, Husqvarna had a fair value of SEK 1,538 m. (1,225).

condensed financial information for associated companies

Parent company’s subsidiaries’Owned percentage ¹ 2012 2011 2012 2011

Revenues 2,132 658 1,179 1,142 Profit 88 19 18 34 Assets 1,865 1,983 828 810 Liabilities 1,049 1,119 502 463 Shareholders’ equity 816 864 341 372

1) For Husqvarna AB, the values have been consolidated subject to a quarterly delay, meaning as of Septem-ber 30. Revenues and profit are recognized for the period from May 27, 2011 when Husqvarna’s status was changed to that of an associated company.

note 21 - Financial investments, seK m.

Percentage on Dec 31, 2012 of share

capital voting rights 2012 2011

Available-for-sale financial assets 1, 2

Handelsbanken A 2.0 2.0 2,905 2,263Industrivärden A 12.9 17.8 5,545 4,358Indutrade 13.8 13.8 1,084 1,007Sandvik 2.2 2.2 2,898 2,322Skanska A ³

3.4 11.6705 756

Skanska B ³ 855 633

13,991 11,338

1) The assets have been measured at fair value based on the current stock-market price.

2) Since the fair value of some shares at December 31, 2012 was less than the acquisition value, an accumu-lated impairment loss of SEK 52 m. (307) was posted.

3) The market value of Series A Skanska shares has been calculated based on a 10% premium in relation to the price of publicly traded Series B shares. The shareholding and voting rights are stated jointly for the Skanska holding.

note 22 - Other shares and participations, seK m.

2012 2011

accumulated acquisition valueOn January 1 15 14 Investments 1 1 Divestments - 0 - 0 Impairment losses, etc. - 0 - 0

15 15

2012 2011

SweTree Technologies AB 7 7Industrikraft i Sverige AB 5 5Other shares 3 3

15 15

Since it has not been possible to establish a reliable fair value for these items, the share-holdings have been measured at acquisition value.

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note 23 - Financial instruments, seK m.

Items measured at fair value through profit and loss

2012 sharesDerivative

instruments

available-for-sale financial

assets

hedge accounted derivative

instruments

accounts and loans

receivableOther

liabilities

total carrying amount Fair value

Financial instruments included in net financial debt

long-term financial receivablesOther financial receivables 46 46 46

46 46 46

current financial receivablesAccrued interest 4 4 4Derivative instruments 5 4 9 9Other financial receivables 20 20 20

5 4 24 33 33

cash and cash equivalentsShort-term investments 237 237 237Bank balances 1,530 1,530 1,530

1,767 1,767 1,767

long-term financial liabilitiesMTN loans 1,800 1,800 1,823Liabilities to banks and other credit institutions 6,289 6,289 6,412Derivative instruments 23 57 80 80

23 57 8,089 8,169 8,315

current financial liabilitiesCommercial paper programs 3,981 3,981 3,981MTN loans 1,343 1,343 1,370Loans from credit institutions 10 10 10Current portion of long-term loans 1,600 1,600 1,613Derivative instruments 66 21 87 87Accrued interest 99 99 99Other current liabilities 109 109 110

66 21 7,142 7,230 7,271

Financial instruments not included in net financial debt

Financial investments 13,991 13,991 13,991Shares in listed companies 309 309 309Shares in unlisted companies 15 15Accounts receivable 2,310 2,310 2,310

Derivative instruments (recognized among current receivables)

9 52 61 61

Accounts payable 2,396 2,396 2,396Derivative instruments

(recognized among current liabilities)3 18 21 21

In accordance with IFRS 7, disclosures must be provided concerning how fair value has been established for instruments measured at fair value in the balance sheet, which include instruments attributable to the categories: items measured at fair value through profit and loss, available-for-sale financial assets and derivative instruments subject to hedge accounting.

Measurement of financial investments (shares) and shares in listed companies is based on quoted prices for similar instruments, meaning that they are attributable to Level 1 in

accordance with IFRS 7. Since Series A Skanska shares are not publicly traded, their value has been calculated based on a 10% premium on the price of publicly traded Series B shares, whereby the valuation belongs to Level 3 in accordance with IFRS 7.

Input data for measurement of derivative instruments and other financial liabilities has been based on observable market prices, meaning that they are attributable to Level 2 in accordance with IFRS 7.

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note 23, continued

Items measured at fair value through profit and loss

2011 sharesDerivative

instruments

available-for-sale financial

assets

hedge accounted derivative

instruments

accounts and loans

receivableOther

liabilities

total carrying amount Fair value


long-term financial receivablesOther financial receivables 88 88 88

88 88 88

current financial receivablesAccrued interest 5 5 5Derivative instruments 5 17 22 22Other financial receivables 21 21 21

5 17 26 48 48

cash and cash equivalentsShort-term investments 337 337 337Bank balances 861 861 861

1,198 1,198 1,198

long-term financial liabilitiesMTN loans 1,808 1,808 1,872Liabilities to banks and other credit institutions 8,076 8,076 8,051Derivative instruments 184 59 243 243

184 59 9,885 10,128 10,166

current financial liabilitiesCommercial paper programs 2,274 2,274 2,274Loans from credit institutions 93 93 93Current portion of long-term loans 1,096 1,096 1,098Derivative instruments 47 10 57 57Accrued interest 108 108 108Other current liabilities 380 380 380

47 10 3,951 4,008 4,010


Financial investments 11,338 11,338 11,338Shares in listed companies 271 271 271Shares in unlisted companies 15 15Accounts receivable 2,410 2,410 2,410

Derivative instruments (recognized among current receivables)

89 152 241 241

Accounts payable 2,790 2,790 2,790Derivative instruments

(recognized among current liabilities)3 28 31 31

In the tables, fair value has either been based directly on listed market prices or on a calcu-lation of discounted cash flows. If discounted cash flows have been calculated, all variables 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 shareholdings 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.

2012 2011

On January 1 99 96 Acquisitions during the year 3 11 Divestments and scrappage - 9 - 7

94 99 Includes SEK 49 m. (51) for accumulated impairment losses.The estimated fair value in accordance with internal valuations was SEK 270 m. (273).

note 25 - Inventories, seK m.

2012 2011

Shares in listed companies 309 271 Harvesting rights and similar assets 590 851 Finished products and products in progress 1,227 1,268 Raw materials and consumables 922 943 Timber and pulpwood 325 364 Electricity certificates and emission rights 157 130

3,530 3,827 Shares in listed companies are recognized in profit and loss for the year in accordance with IAS 39, meaning at fair value based on current market price. During the year, impairment losses and the reversal of prior years’ impairment losses on inventories had a negative impact net of SEK 56 m. (neg: 8) on profit and loss.

note 26 - current receivables, seK m.

2012 2011

Rental and accounts receivable¹ 2,310 2,410 Other current receivables

Prepaid expenses 155 169 Accrued rental revenues 16 18 Receivable from associated companies 35 25 Derivative instruments 61 241 Other receivables 247 360

515 813

2,825 3,223 1) The amount for accounts receivable includes SEK 36 m. (31) for receivables from associated companies.

Accounts receivable are recognized in the amount that is expected to be paid based on an individual assessment of each customer. Accounts receivable are primarily from European customers. Accounts receivable in foreign currency have been valued at the year-end ex-change rate. The market value of derivative instruments pertains to hedges of future cash flows. Refer also to Note 37.

note 27 - cash-flow statement

Interest, seK m. 2012 2011

Interest received 9 45 Interest paid - 550 - 507

- 541 - 461 change in current financial liabilitiesThe change in current financial liabilities pertains primarily to borrowing under commercial paper programs. Under commercial paper programs, a total of SEK 8,730 m. (8,598) was bor-rowed on a short-term basis, divided among several different loans, and SEK 7,024 m. (8,790) was repaid.

note 28 - shareholders’ equity

share capital

Dec 31, 2012 numberQuotient

value seK m.

Series A 48,000,000 SEK 10 480 Series B 76,000,000 SEK 10 760

total shares outstanding 124,000,000 1,240

Dec 31, 2011 numberQuotient

value seK m.

Series A 48,000,000 SEK 10 480 Series B 76,000,000 SEK 10 760

total shares outstanding 124,000,000 1,240

The company’s share capital comprises shares issued in two series, Series A, each carrying ten votes, and Series B shares, each carrying one vote. Series B shares are listed on the Nasdaq OMX Nordic Exchange in Stockholm. Shareholders are entitled to request conversion of Series A shares to Series B shares. No such conversions were effected during the year.

shareholders’ equityShareholders’ equity comprises share capital, reserves and profit brought forward includ-ing profit for the year. The profit brought forward comprises the preceding year’s profit brought forward and profit after deduction for dividends paid during the year.

DividendsThe Board of Directors’ proposes that the Annual General Meeting on April 8, 2013 approve a dividend of SEK 4.30 per share. The proposed dividend totals SEK 533 m. In the preceding year, a dividend of SEK 4.00 per share (SEK 496 m.) was paid.

note 29 - Provisions, seK m.

hedging provision 2012 2011

Provision, January 1 7 113 Cash-flow hedging for the year - 27 - 144 Tax attributable to hedging during the year 6 38

- 14 7

translation provision 2012 2011

Provision, January 1 - 27 - 71 Translation differences during the year - 102 44 Tax attributable to translation provision during the year - 6 1

- 135 - 27

Fair value provision 2012 2011

Provision, January 1 2,649 6,487 Change in value recognized directly in other comprehensive income 2,393 - 3,666 Recognized in profit and loss on reclassification ¹ - 474 Tax attributable to valuation during the year - 160 303

4,882 2,649

total provisions 2012 2011

Provision, January 1 2,630 6,529 Change during the year in:

Hedging provision - 21 - 106 Translation provision - 108 44 Fair value provision 2,233 - 3,838

4,734 2,630

1) The reversal of implemented impairment losses for Husqvarna AB was previously recognized in the fair value provision. Due to Husqvarna being recognized as an associated company as of May 27, 2011, the implemented reversals have been restated in profit and loss.

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The hedging provision includes the effective portion of accumulated net changes in the fair value of a cash-flow hedging instrument attributable to hedging transactions that have not yet occurred.

The translation provision includes all exchange-rate differences that arise in the transla-tion of financial statements from foreign operations that were prepared in currencies other than SEK. The translation provision also includes exchange-rate differences that arise from the revaluation of liabilities that were entered as hedging instruments in a net investment in a foreign operation.

The fair value provision includes the accumulated net change in the fair value of available-for-sale financial assets.

note 30 - non-controlling interest, seK m.

Non-controlling interests arise from the occurrence of subsidiaries that are not wholly owned. In the L E Lundbergföretagen Group, this comprises mainly the non-owned portions of Holmen AB (publ) and Hufvudstaden AB (publ). capital attributable to non-controlling interests 2012 2011

Opening balance 20,515 18,531 Profit for the year 2,327 3,521 Other comprehensive income

Provisions - 83 - 139 Actuarial revaluation of pension liability - 12 - 211

Dividend - 740 - 665 Changes in Group composition - 357 - 523

closing balance 21,650 20,515

note 31 - Provision for pensions

For a description of pension commitments within the Group, see Accounting policies, Note 1. Occupational pension plans in Sweden (ITP plan), for which premiums are paid to Alecta and alternative ITP plans, total SEK 44 m. (42).

The provision for pensions totals SEK 455 m., of which Lundbergs accounted for SEK 81 m., Holmen for SEK 355 m. and Hufvudstaden for SEK 8 m. Information on plans recognized as defined-benefit obligations in accordance with IAS 19 is presented below.

Lundbergs – Defined-benefit occupational pension plans exist in accordance with the FPG/PRI programs. The change in the defined-benefit obligation is specified in the summary below.

seK m. 2012 2011

Obligation, January 1 79 69 Benefits vested during the period 2 1 Interest 3 3 Actuarial gain/loss 0 9 Pension payments - 3 - 2

Obligation, December 31 81 79

Of which, credit insured via FPG 59 58 During the year, pension costs of SEK 3 m. (2) pertaining to defined-benefit plans were recognized in profit and loss. Interest expense during the year on the pension liability amounted to SEK 3 m. (3). The actuarial revaluation during the year amounted to SEK 0 m. (9) and was recognized in other comprehensive income. The entire actuarial revaluation derives from experience-based changes. On an accumulated basis, actuarial revaluations amounted to SEK 24 m. (24).

significant actuarial assumptions, % 2012 2011

Discount interest rate 3.5 3.5Future pay increases 3.0 3.0Future inflation 2.0 2.0

historical information, seK m. 2012 2011 2010 2009 2008

Present value of obligation 81 79 69 66 61

Hufvudstaden - A provision of SEK 8 m. (8) has been posted for pension liabilities corre-sponding to endowment policies for the CEO and former executives.

Holmen - There are pension commitments in trusts in the UK. Defined-benefit pension commitments for group management in Sweden that exceed the ITP plan are secured via a foundation. The change in the defined-benefit pension commitments and the change in plan assets are specified the compilation below. Most of the commitments below pertain to pension plans in the UK.

seK m. 2012 2011

ObligationObligation, January 1 1,843 1,650 Cost of service, current year 21 18 Interest expense 82 82 Actuarial gains/losses 107 137 Receipts from employees 5 5 Pension payments - 100 - 101 Transferred from provisions 38 20 Adjustments 0 - 0 Exchange-rate difference - 33 33

Obligation, December 31 1,963 1,843

Plan assetsFair value of plan assets, January 1 1,485 1,438 Anticipated return 67 75 Actuarial gains/losses 91 - 46 Receipts from employer 59 54 Receipts from employees 5 5 Pension payments - 72 - 66 Exchange-rate difference - 28 27

Fair value of plan assets, December 31 1,608 1,485

Provision for pensions, net 355 358 Of the total obligations, non-funded obligations accounted for SEK 68 m. (57), with the remainder comprising fully or partly funded obligations.

During the year, pension costs of SEK 18 m. (18) pertaining to defined-benefit plans were recognized as personnel expenses. Interest expense on the pension liability amounted to SEK 82 m. (82) during the year and the anticipated return on the plan assets amounted to SEK 67 m. (75). The net of these items has been recognized in net financial items as interest expense.

The year’s actuarial revaluation amounted to SEK 16 m. (184) and has been recognized in other comprehensive income. On an accumulated basis, actuarial revaluations amounted to SEK 216 m. (200). In 2013, Holmen’s payments to defined-benefit plans are estimated at SEK 56 m. The distribution of plan assets is presented in the table below.

note 29, continued

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Plan assets, seK m. 2012 2011

Shares 786 688 Bonds 806 770 Short-term interest-bearing investments 16 27

1,608 1,485

The plan assets do not include any financial instruments issued by Holmen companies or any assets used by Holmen.

significant actuarial assumptions, % (weighted average) 2012 2011

Discount interest rate 4.2 4.6Expected return on plan assets 4.2 4.6Future pay increases 3.6 3.7Future inflation 2.8 2.9

The anticipated return on interest-bearing securities has been calculated on the basis of first-class long-term bonds and, for shares, a supplement has been added corresponding to a risk premium.

historical information, seK m. 2012 2011 2010 2009 2008

Present value of obligation 1,963 1,843 1,650 1,706 1,553Fair value of plan assets - 1,608 - 1,485 - 1,438 - 1,385 - 1,199

net 355 358 213 320 354

experience-based adjustments, seK m. 2012 2011 2010 2009 2008

Defined-benefit obligations 45 - 13 29 - 11 - 3Plan assets 91 - 46 118 131 - 237

note 32 - Other provisions, seK m.

2012 taxesOther

provisions total

On January 1 83 569 653 Provisions during the year 21 75 95 Utilized during the year 0 - 159 - 159 Reclassification, etc. 0 - 1 - 1

104 484 588

Long-term portion 104 416 520 Current portion 0 68 68

104 484 588

2011 taxesOther

provisions total

On January 1 65 686 750 Provisions during the year 20 94 114 Utilized during the year - 1 - 210 - 211 Reclassification, etc. - 0 - 0

83 569 653

Long-term portion 83 412 496 Current portion 0 157 157

83 569 653

Holmen is involved in an unresolved major tax dispute whereby the Administrative Court of Appeal issued a judgment in 2012 that was not in favor of the company. Holmen has appealed the matter to the Supreme Administrative Court. In 2010, Holmen paid the litigated amount of SEK 611 m. to the Swedish Tax Agency.

Other provisions pertain primarily to obligations to restore the environment, as well as personnel and restructuring costs. This also includes provision for future measures for re-forestation following implemented harvesting (SEK 184 m.), which is normally performed three years after harvesting.

During 2012, new provisions were made for the restructuring of Holmen. At the end of 2012, there was approximately SEK 65 m. in provisions to cover restructuring costs. These are expected to be paid mainly in 2013.

note 33 - current liabilities, seK m.

2012 2011

Accounts payable ¹ 2,396 2,790 Other current liabilities

Accrued expenses and prepaid incomeRental revenues 342 360 Other 835 809

Other current liabilitiesLiabilities to associated companies 24 8 Derivative instruments ² 21 31 VAT deduction 71 96 Other 220 350

1,512 1,654

3,908 4,444 1) Liabilities of associated companies accounted for SEK 68 m. (41) 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.

Key personnel Other associated in executive related companies positions parties

2012 2011 2012 2011 2012 2011

Sales to related parties 250 203 10 10 0 0 Purchases from related parties 332 256 Interest paid to related parties 1 1 0 0 Receivables from related parties, Dec 31 115 142 Debt to related parties, Dec 31 87 68 48 55 0 10

Transactions with related parties are priced on normal commercial terms.Participations in associated companies that produce hydro and wind power entitle

Holmen to purchase produced electricity at cost price in relation to its shareholding, which means that only limited profits arise in associated companies. Purchased electricity is sold externally at market price. In Spain, power and recycled paper are purchased from associ-ated companies.

Key personnel in executive positionsVia his wholly owned company Byggnads AB Karlsson & Wingesjö (including subsidiaries), Fredrik Lundberg and his wife directly or indirectly hold 89.8% (89.7) of the voting rights and 54.5% (53.8) of the share capital in L E Lundbergföretagen AB (publ). Fredrik Lund-berg, who is the President and a member of the Board of the Parent Company, received salary during the year 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 1.0 m. (0.9). No variable or other types of remuneration were received.

The total remuneration is included in personnel expenses in Note 5.

note 31, continued

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note 35 - Pledged assets and contingent liabilities, seK m.

Pledged assets 2012 2011

Real estate mortgages 4,157 5,008 Other commitments 13 12

4,169 5,020

contingent liabilities 2012 2011

Liability as main partner in limited partnership 3 3 Other contingent liabilities 101 119

104 122

Supported by provisions under the Environmental Code, Swedish environmental authori-ties are currently focusing on matters involving land surveys and post-processing of closed down operations. In each individual case, the responsibility for post-processing 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 estimates and assessments

The compilation of financial statements requires that company management make account-ing 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 hold-ings of the size owned by Holmen. Accordingly, the valuation is based on the estimated present value of the projected future cash flow from the standing forests. The principal as-sumptions pertain to how much harvesting 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 estimates is described in Note 18.

Investment propertiesIn the financial statements, the properties are estimated at fair value. In this valuation, assessments are made of future rent levels, vacancy rates and property costs. In the calcula-tion 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 proceeds from a sale have been received. The valuation process is described in greater detail in Note 19.

taxHolmen has a major unresolved tax dispute. Refer to Notes 15 and 32.

At year-end, there were loss carryforwards and temporary differences for tax purposes corresponding to tax of about SEK 800 m. that were not recognized due to assessments of the probability of their being utilized.

PensionsThe value of pension commitments is estimated on the basis of assumptions regarding discount interest 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 shareholders’ equity. The 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. Refer also to Note 31.

environmentAt Holmen, provisions have been posted to cover costs for environment-related measures associated with former activities on the basis of estimated future site-restoration costs.In addition, it is considered that there is a liability for environmentally related measures that cannot be quantified at present but that could give rise to costs in the future. Refer also to Note 35.

RestructuringAdaptation of operations at Holmen Paper is in progress. At the end of 2012, approximately SEK 65 m. had been reserved to cover restructuring costs. Although no additional major changes have been announced, further provisions may become necessary should conditions change.

Impairment testingDuring 2012, impairment losses in a net amount of SEK 153 m. were recognized on fixed assets in Holmen. These impairment losses derived from 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. Changes in conditions could impact the estimated recoverable value applied in connection with forthcoming impairment tests.

note 37 - Financial risks

The Lundberg Group’s risk management is established 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 primary risks that are managed are the interest rate risk and the refinancing risk associated with financing. Within Holmen, exchange-rate and commodity risks associated with business operations (transaction exposure), financing and net invest-ments in foreign operations are also managed.

lUnDBeRGsLundbergs’ strategy is to create long-term value growth while maintaining financial bal-ance. 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 equity-managing company, a strong financial position is an essential requirement. The Group’s strong financial position is confirmed by the Standard & Poor’s credit-rating agency, which has assigned Lundbergs a long-term rating of A+/stable outlook and short-term ratings of A-1 and K-1. 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, 2012, Lundbergs’ interest-bearing net debt totaled SEK 3,176 m. (2,760), of which interest-bearing liabilities and interest-bearing pension provisions accounted for SEK 4,138 m. (3,500) and interest-bearing assets for SEK 962 m. (739). The average capital maturity was 53 months (47). The maturity structure for financial liabilities is presented in the table below. In addition to raised loans of approximately SEK 3,900 m., Lundbergs had committed long-term lines of credit totaling SEK 2,000 m. and SEK 100 m. in committed lines of credit with a maturity of less than 12 months. Lundbergs has deriva-tive instruments recognized in the category of financial assets and liabilities measured at fair value via profit or loss. Hedge accounting is not applied. Lundbergs has a commercial paper program with a committed issue limit of a nominal SEK 3,000 m. At December 31, 2012, none of this had been utilized. Lundbergs also has a Swedish Medium Term Note program with an upper limit of SEK 2,000 M, which provides the option of issuing bonds in SEK or EUR primarily to Swedish investors. During 2012, bonds in an amount of SEK 1,000 m. were issued.

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Financial liabilities 1, December 31, 2012

Maturity seK m. Proportion, %

2013 747 192015 400 102017 1,300 332019 1,350 342020- 200 5

total 3,997 1001) Excluding derivative instruments of SEK 59 m. and pension provisions of SEK 81 m.

The maturity structure of undiscounted amounts is presented in the table below.

seK m. 2013 2014 2015 2016 2017-

Financial liabilitiesDerivative instruments 24 24 24 24 24Other financial liabilities 846 91 491 78 3,043

Financial liabilitiesOther financial assets 962

Interest rate riskThe interest rate 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 interest rate risk is limited. The average period of fixed interest on December 31, 2012 was 53 months (46). Based on periods of fixed interest and net indebtedness on December 31, 2012, a one percentage-point increase in market interest rates would have an effect of approximately SEK 3 m. on net finan-cial items in 2013. Longer term, changes in interest rates would impact the entire net debt. The maturity structure of fixed-interest loans is presented in the table below.

Maturity structure, fixed-interest loans, December 31, 2012

Maturity liabilities 1,

seK m. Proportion, % average effective

interest rate, %

2013 747 19 3.42015 400 10 3.22017 1,300 33 3.72019 1,350 34 3.32020- 200 5 4.2

total 3,997 100 3.51) Excluding derivative instruments of SEK 59 m. and pension provisions of SEK 81 m.

credit riskLundbergs has limited exposure to credit risks. The exposure that does exist mainly derives from past-due accounts receivable and rent. The risks are limited through conscious selec-tion 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% of sales invoiced by property management. The credit risk is also limited by the fact that financial assets consist solely of instruments with a high credit rating.

Customer/rent receivables at the end of the year totaled SEK 8 m. (36), of which SEK 3 m. (2) matures after more than 60 days. The credit quality of the financial assets that are neither overdue nor require impairment is assessed as good.

share riskShare risk pertains to the share-price risk and liquidity risk. The share-price 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 shareholdings in a limited number of companies. The share-price risk is limited by Lundbergs operating as an active and long-term 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 140 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 56, amounts to a total of SEK 13,991 m.

hUFVUDstaDenHufvudstaden is mainly exposed to financing and interest rate risks. Hufvudstaden en-deavors to have a loan portfolio with diversified capital maturities that enable loan repay-ment, if required. Borrowing normally occurs on the basis of short interest rate maturities and interest rate swaps are used to attain the desired interest-maturity structure. Deriva-tive instruments are used only to minimize risk and must be connected to the underlying exposure. At present, the company has derivative instruments recognized in the category of financial assets and liabilities measured at fair value through profit and loss. Hedge accounting is not applied.

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 highly liquid, low-risk instru-ments.

Financing riskThe financing risk occurs 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 requires committed lines of credit that cover the renegotiation of loans and investments.

On December 31, Hufvudstaden’s interest-bearing net debt totaled SEK 4,233 m. (4,226), of which interest-bearing liabilities accounted for SEK 4,738 m. (4,581) and interest-bearing assets for SEK 506 m. (355). On December 31, 2012, Hufvudstaden had committed lines of credit totaling SEK 4,000 m., of which SEK 2,500 m. had been utilized. The average capital maturity was 47 months (54). The maturity structure of financial liabilities is presented below.



2013 957 202016 600 132017 2,650 562018 500 11

total 4,707 1001) Excluding derivative instruments of SEK 23 m. and pension provisions of SEK 8 m.


seK m. 2013 2014 2015 2016 2017-

Financial liabilitiesDerivative instruments 12 12 12 12 19Other financial liabilities 1,032 51 51 651 3,202

Interest rate riskThe interest rate risk pertains to the impact on earnings that a lasting change in interest rates would have on net financial items. Hufvudstaden’s sources of funds consist mainly of shareholders’ equity, cash flow from operating activities, borrowing and lines of credit. Surplus liquidity is invested in financial instruments with short interest rate maturities, thus limiting Hufvudstaden’s exposure to the interest rate risk associated with its invest-ments.

Interest-bearing borrowing gives rise to exposure to the interest rate risk. Hufvudstaden’s finance policy establishes frameworks for how the interest rate 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 well-considered 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 interest rate maturity of Hufvudstaden’s net debt is normally 12-48 months. Borrowing is normally raised at variable interest rates and derivative instruments are used to attain the desired interest rate maturity. The average period of fixed interest on December 31, 2012 was 47 months (24). Assuming an unchanged borrowing volume and unchanged interest-rate maturities, a one-percentage-point change in the interest rates for the current derivative instruments would affect Hufvudstaden’s net financial expense in 2013 by SEK 9 m. At the same time, a change in interest rates would result in changes in the value of derivative instruments by SEK 168 m. in profit and loss.

note 37, continued

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Maturity liabilities 1,

seK m. Proportion, %average effective

interest rate, %

2013 1,157 24 1.92016 500 11 2.12017 1,500 32 1.82018 1,300 28 2.42019 250 5 2.1

total 4,707 100 2.11) Excluding derivative instruments of SEK 23 m. and pension provisions of SEK 8 m.

credit riskThe credit risk mainly derives from past-due accounts receivable, rent receivables, cash and cash equivalents and financial derivatives with a positive value, which at year-end had a total value of SEK 355 m., entailing that Hufvudstaden’s exposure to credit risks is limited.

Losses on past-due 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 well-documented 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.

Hufvudstaden’s ten largest customers account for 24% of total contractual rental revenue, of which the largest individual customer accounts for 8%, which means that Hufvudstaden’s exposure to the credit risk of its customers is relatively limited. 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 and with which the company has had long-term relations. 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 have a strong financial position that will generate financial stability and the opportunity to make correct and long-term business decisions that are relatively independent of the business climate and external financial opportunities. Holmen’s goal is that the debt/equity ratio will be in the range of 0.3-0.8 and adapting to this goal is part of strategic planning.

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. At the start of 2012, flows in EUR, GBP and USD were partially hedged for 2012. A weakening of SEK by one percentage point compared with year-end levels would have a positive impact on 2013 earnings of approxi-mately SEK 50 m. compared with 2012. Without taking into account currency hedging, a one-percentage-point depreciation of SEK in relation to the currencies specified below would have the following impact on earnings:

seK m. net

SEK against EUR 37SEK against USD 12SEK against GBP 15SEK against other currencies 5

The result of currency hedges is recognized in operating profit in pace with the recognition of the hedged item and in 2012 this amounted to SEK 221 m. (570). Hedging of estimated net flows is stated in the table below.

transaction exposure, 31 December, 2012 1

12 months estimated net flows, seK m.

2013

hedges %seK m. Rate2

EUR/SEK 3,730 1,090 8.66 30USD/SEK 1,230 310 6.63 30GBP/SEK 1,540 420 10.70 30Other/SEK 460EUR/GBP 710 630 0.86 901) The figures in the table are rounded.

2) Rate pertains to the average hedging exchange rate.

The market value of outstanding transaction hedges as at December 31, 2012 was SEK 55 m. (215). Of this, SEK 6 m. (86) was recognized in profit and loss in 2012 and the remainder was recognized in other comprehensive income, since hedge accounting is applied, all of which pertaining to 2013. The market value of investment hedges is recognized in other comprehensive income until maturity when profit and loss is added to the acquisition value of the hedged fixed assets. The market value of outstanding investment hedges was a negative SEK 4 m. on December 31, 2012. During the period, the acquisition value of hedged items increased by SEK 58 m.

Exposure arising when earnings from foreign subsidiaries are translated into SEK is normally not hedged. Hedging of exposure arising when foreign assets and liabilities are translated to SEK (known as equity hedging) is judged from case to case and is arranged on the basis of the value of the net assets. Hedging takes the form of loans in foreign currency or currency forward contracts.

net assets and equity hedges at December 31, 2012

seK m. net assets equity hedges

EUR 2,455 1,493GBP 1,559Other 20

Gains on equity hedges amounted to SEK 88 m. (31) in 2012 and are recognized in other comprehensive income since hedge accounting is applied. The translation of net foreign assets had an impact of SEK 134 m. (2) on Holmen’s shareholders’ equity. The market value of outstanding equity hedges at December 31, 2012 was SEK 43 m. (61), of which SEK 39 m. related to loans and SEK 4 m. to financial derivatives.

A one-percentage-point weakening of SEK would have increased shareholders’ equity by SEK 25 m., including translation of foreign subsidiaries and taking into account currency hedging.

Financing riskHolmen’s financing mainly comprises bank loans, bond loans and commercial paper.

Holmen’s Swedish commercial paper program has a framework limit of SEK 6,000 m. Commercial paper with a time-to-maturity of up to one year may be issued in both SEK and EUR. Holmen’s Medium Term Note (MTN) program for issuing bonds has a framework of SEK 6,000 m. Bonds with maturities of 1–15 years may be issued in both SEK and EUR.

Financing during the year was arranged mainly via Holmen’s commercial paper pro-gram and short-term bank loans. As of December 31, 2012, short-term borrowing amount-ed to SEK 4,866 m. Holmen has a five-year committed line of credit in an amount of EUR 400 m. (SEK 3,432 m.) signed with a syndicate of ten banks. In addition, there is a bilateral credit facility of SEK 1,300 m. that matures in 2016, as well as an additional facility of SEK 570 m. that matures in 2017. All credit facilities were unutilized at the end of the year.

note 37, continued

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Interest-bearing net debt at December 31, 2012 amounted to SEK 6,590 m. (6,259), of which interest-bearing liabilities and interest-bearing pension provisions accounted for SEK 6,967 m. (6,499), cash and cash equivalents for SEK 308 m. (112) and interest-bearing assets for SEK 70 m. (128). The maturity structure of financial liabilities and assets is shown in the table below.

Standard & Poor’s long-term credit rating for Holmen is BBB with stable outlook. The short-term rating is A-2/K-2.



2013 4,866 732014 519 82015 900 142016 10 02017- 317 5

total 6,612 1001) Excluding pension provisions of SEK 355 m.


seK m. 2013 2014 2015 2016 2017-

Financial liabilitiesDerivative instruments 33 14 62Other financial liabilities 5,531 534 911 5 303

Financial assetsDerivative instruments 9Other financial assets 328 4 9 1 14

Interest rate riskThe fixed interest period for Holmen’s financial assets and liabilities is normally short. The Holmen Board can decide to lengthen the period in order to limit the effect of a rise in interest rates.

The net debt’s interest rate maturity and currency distribution for various fixed periods are stated in the table below, where consideration is given to derivatives that affect the liabilities’ currency distribution and fixed-interest rate maturities. Holmen’s average interest rate on loans in 2012 was 4.1%. At the end of 2012, the average borrowing cost corresponded to 3.6%, based on current market interest rates and existing fixed-interest rate maturities. A one-percentage-point increase in the average market interest rate from the level prevailing at the end of the year would have an impact of approximately SEK 33 m. on earnings in 2013. As fixed-interest loans mature, the exposure to changes in market interest rates will increase. Disregarding the interest rate maturity period, exposure to a one-percentage-point change in the market interest rate corresponded to SEK 66 m., calculated on the basis of the size of the liability on December 31, 2012. On December 31, 2012, the market value of the instruments used to steer the fixed-interest rate was a nega-tive SEK 78 m. (neg: 67), which was recognized in other comprehensive income since hedge accounting is applied. This value is expected to be recognized in profit and loss in 2013 or later. Based on existing interest rate hedges, a one-percentage-point increase in market interest rates would impact shareholders’ equity by SEK 45 m.


total -1 year 1-3 years 3-5 years >5 years Other

SEK 5,514 4,309 500 607 99EUR 854 161 686 7GBP 276 27 249Other currencies - 55 - 55 1

total 6,590 4,442 1,186 607 355The column “Other” pertains to provision for pensions.

Price riskIn order to reduce exposure to changes in electricity prices, the Holmen group makes use of physical supply agreements at fixed prices as well as financial hedges. In 2012, net pur-chases of electricity amounted to about 2,684 GWh, of which Sweden accounted for about 2,484 GWh. Of the estimated net consumption of electricity in Sweden, approximately 90% has been hedged for 2013-2015, 50% for 2016-2017 and 35% for 2018-2021. The hedges consist predominantly of physical fixed price contracts, which are supplemented with financial hedges. The result of the financial electricity hedges is recognized in profit and loss upon maturity and, in 2012, amounted to SEK 1 m. (29). The market value of out-standing financial hedges at December 31, 2012 was a negative SEK 11 m. (pos: 13), which is recognized in other comprehensive income since hedge accounting is applied. Based on prevailing hedges, a one-percentage-point increase in the price of electricity would impact shareholders’ equity by SEK 4 m. 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. The hedging opportunities for other input goods are limited.

credit riskHolmen’s financial transactions give rise to credit risks in relation to financial counter-parties. For each financial counterparty, a maximum credit risk is established and the settlement risk is monitored continuously. At December 31, 2012, Holmen had outstanding derivative contracts with a nominal value of approximately SEK 7 billion and a negative net market value of SEK 36 m. Calculated on the basis of the risk factors and the methods used in the Swedish Financial Supervisory Authority’s provisions for financial institutions (FFFS 2007:1), Holmen’s total counterparty risk on its derivative instruments amounted to SEK 510 m. at December 31, 2012. It is estimated that the maximum credit risk associated with other financial assets matches the nominal value.

The 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. At December 31, 2012, accounts receivable amounted to SEK 2,290 m., of which approximately 49% (52) was insured against credit losses. Sales to the five largest customers accounted for a total of 10% of Holmen’s sales in 2012. During the year, losses on accounts receivable in the form of provisions and impairments had a negative impact of SEK 15 m. (neg: 14) on earnings. As of December 31, 2012, accounts receivable totaling SEK 62 m. (54) were more than 30 days overdue. Following an individual assessment of all accounts receivable, a provision for possible loan losses of SEK 34 m. was posted. The credit quality of the financial assets that are neither overdue nor require impairment is assessed as good.

OtheR FInancIal RIsK ManaGeMent

InsuranceAll of Lundbergs’ and Hufvudstaden’s properties are covered by full-value insurance.

Holmen insures its plants at replacement value against property damage and business interruption losses. The deductible varies between different plants, but generally does not exceed 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 37, continued

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note 38 - Group companies

Participations in subsidiaries 1

number of shares Percentage of share capital ²shareholding Registered office country Dec 31, 2012 2012 2011

Fastighets aB l e lundberg Norrköping Sweden 250,000 100 100Byggnads AB L E Lundberg Norrköping Sweden 1,000 100 100Fastighets AB Strömstaden Norrköping Sweden 4,587 68 68L E Lundberg Nordic AB Stockholm Sweden 1,251 100 100

l e lundberg Kapitalförvaltning aB Stockholm Sweden 150,000 100 100Östgöta holding aB Stockholm Sweden 1,000 100 100

hufvudstaden aB (publ) Stockholm Sweden 93,377,680 45.3 45.3AB Citypalatset Stockholm Sweden 1,200 100 100

Fastighetsaktiebolaget Stockholm City Stockholm Sweden 7,776 100 100Hotel Stockholm AB Stockholm Sweden 10,000 100 100

Fastighets AB Kåkenhusen Stockholm Sweden 50,000 100 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 100Inom Vallgraven Fastighets AB Stockholm Sweden 1,000 100 100

holmen aB (publ) Stockholm Sweden 27,622,000 32.9 31.1Holmen 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 100Holmens Bruk AB Stockholm Sweden 1,000 100 100Holmen Försäkring AB Stockholm Sweden 10,000 100 100MoDo Capital AB Örnsköldsvik Sweden 1,000 100 100Holmen Energi Elnät AB Örnsköldsvik Sweden 500 100Varsvik AB Umeå Sweden 500 100Holmen S.A.S. Paris France 40,000 100 100Holmen UK Ltd Workington United Kingdom 1,197,100 100 100

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

Holmen GmbH Hamburg Germany 100 100Holmen Suecia Holding S.L. Madrid Spain 9,448,557 100 100

Holmen Paper Madrid S.L. Madrid Spain 100 100Cartón y Papel Reciclado S.A. Madrid Spain 100 100

Iggesund Paperboard Asia Pte Ltd Singapore Singapore 800,000 100 100Holmen B.V. Amsterdam Netherlands 35 100 100AS Holmen Mets Tallinn Estonia 500 100 100

1) The principal shareholdings 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 matches the capital share in all respects, except for Hufvudstaden AB (publ) and Holmen AB (publ). For Hufvudstaden, the percentage of voting rights at December 31 was 88.1% (88.1) and for Holmen 61.6% (61.1).

During the year, a number of mergers and liquidations were implemented designed to simplify the corporate structure.

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Income Statement and Statement of Comprehensive Income, Parent Company

IncOMe stateMent, seK m. Note 2012 2011 Personnel costs 2 - 16 - 16 Depreciation 3 - 1 - 1 Other external costs 4 - 12 - 15

Operating loss - 29 - 32

Result from financial items 5Result from participations in Group companies 473 354 Result from participations in associated companies 348 2,033 Result from other securities and receivables classed as fixed assets 491 952 Interest income 25 44 Interest expense and similar costs - 21 - 24

Profit after financial items 1,288 3,327

Appropriations 6 - 26 - 20

Profit before taxes 1,262 3,307

Tax 7 - 53 - 33


stateMent OF cOMPRehensIVe IncOMe, seK m. Note 2012 2011 net profit for the year 1,209 3,274

Other comprehensive incomeAvailable-for-sale financial assets 11

Year’s change in fair value 2,393 - 3,666 Transferred to profit and loss when reclassified - 474

Tax attributable to other comprehensive income 7 - 160 303

2,233 - 3,838

total comprehensive income for the year 3,441 - 564

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Balance sheet, Parent Company

Balance sheet, seK m. Note Dec 31, 2012 Dec 31, 2011

assets

Fixed assets

Tangible fixed assets 8 5 4

Financial fixed assetsParticipations in Group companies 9 6,838 6,549 Participations in associated companies 10 1,532 1,225 Other long-term holdings of securities 11 13,991 11,338

Total financial fixed assets 22,361 19,112

total fixed assets 22,366 19,116

current assets

Current receivablesReceivable from Group companies 12, 13 616 360 Current tax assets 5 8 Other financial receivables 12 0 0 Other current receivables 2 2

Total current receivables 622 370

Cash and bank balances 12, 14 987 858

total current assets 1,609 1,227

tOtal assets 23,975 20,343

shaRehOlDeRs’ eQUItY anD lIaBIlItIes

shareholders’ equity 15Restricted shareholders’ equityShare capital (124,000,000 shares) 1,240 1,240

Unrestricted shareholders’ equityFair value provision 4,882 2,649 Earnings brought forward 14,562 11,784 Net profit for the year 1,209 3,274

total shareholders’ equity 21,892 18,947

Untaxed reserves 16 438 412

Provisions 17 160

long-term liabilities 12 1,400

current liabilitiesLiabilities to Group companies 12, 13 15 876 Other financial liabilities 12, 13 48 74 Other current liabilities 18 21 34

total current liabilities 84 984

tOtal shaRehOlDeRs’ eQUItY anD lIaBIlItIes 23,975 20,343

PleDGeD assets anD cOntInGent lIaBIlItIes 19 1,014 1,014

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Statement of changes in shareholders’ equity and Cash flow statement, Parent Company

cash FlOW stateMent, seK m. Note 14 2012 2011 Operating activitiesProfit after financial items 1,288 3,327 Adjustments for depreciation and impairment losses/reversal of impairment losses - 238 119 Adjustments for capital gain on sale of shares - 2,632 Income tax paid - 51 - 77

cash flow from operating activities before changes in working capital 999 737

cash flow from changes in working capitalChange in current receivables 0 3 Change in current liabilities - 12 8

cash FlOW FROM OPeRatInG actIVItIes 988 748

Investing activitiesAcquisition of tangible fixed assets - 1Acquisition of financial assets - 618 - 3,638 Divestment of financial assets 5,383

cash FlOW FROM InVestInG actIVItIes - 620 1,745

Financing activitiesLoans raised 1,400Loans repaid - 1,143 - 1,369 Dividend paid - 496 - 465

cash FlOW FROM FInancInG actIVItIes - 239 - 1,834

cash FlOW DURInG the YeaR 129 659

Cash and cash equivalents on January 1 858 199

cash and cash equivalents on December 31 987 858

Restricted shareholders’ equity

Unrestricted shareholders’ equity

total shareholders’ equity

chanGes In shaRehOlDeRs’ eQUItY, seK m.

share capital

statutory reserves

Fair value provision

earnings brought forward

net profit for the year

Opening balance, January 1, 2011 621 344 6,487 11,317 1,207 19,976 Distribution of profits 1,207 - 1,207 Cancelation of treasury shares - 1 1 Bonus issue 620 - 344 - 276 Total comprehensive income for the year - 3,838 3,274 - 564 Dividend - 465 - 465

shaRehOlDeRs’ eQUItY On DeceMBeR 31, 2011 1,240 2,649 11,784 3,274 18,947

Distribution of profits 3,274 - 3,274 Total comprehensive income for the year 2,233 1,209 3,441 Dividend - 496 - 496

shaRehOlDeRs’ eQUItY On DeceMBeR 31, 2012 1,240 4,882 14,562 1,209 21,892

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Notes, Parent Company

note 1 - Parent company’s accounting policies

The Parent Company applies the same accounting policies as the Group, apart from the cases specified below. The deviations that exist between the Parent Company’s and the Group’s accounting policies result from limitations in the ability to apply IFRS within the Parent Company, due to the Annual Accounts Act (AAA) and the Pension Obligations Vest-ing Act (Tryggandelagen) and in certain cases for tax purposes.

The Parent Company has prepared its annual accounts in accordance with the AAA (1995:1554) and the Swedish Financial Reporting Council’s Recommendation RFR 2, Accounting for Listed Legal Entities. According to RFR 2, 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 AAA and the Pension Obligations Vesting 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 AAA, while the statement of comprehensive income and the statement of changes in shareholders’ equity are based on IAS 1 Presentation of Financial Statements. The differences in relation to the consolidated financial statements that arise in the Parent Company’s income statement and balance sheet mainly comprise the recognition of results from financial items, fixed assets and shareholders’ equity, as well as the existence of provisions as a separate item in the balance sheet.

significant applied accounting policiesThe rules of Chapter 4, Section 14 a-d of the AAA, concerning the fair valuation of certain financial instruments, are applied. This means that “Other long-term holdings of securi-ties” are measured at fair value.

subsidiaries and associated companiesParticipations in subsidiaries and associated companies are recognized in the Parent Company according to the acquisition value method. This means that transaction charges are included in the carrying amount for shareholdings in subsidiaries and associated companies.

RevenuesDividend income is recognized when the right to receive the dividend is considered certain.

tangible fixed assetsTangible fixed assets are recognized at acquisition value less accumulated depreciation and any impairment losses.

Borrowing costsIn the Parent Company, borrowing costs are charged against profit and loss during the period to which they pertain. No borrowing costs are capitalized as assets.

taxesIn the Parent Company, untaxed reserves are recognized without being divided up into shareholders’ equity and deferred tax liabilities, which means this approach differs from the consolidated financial statements.

Group and shareholder contributions Shareholder contributions are entered directly in the shareholders’ equity of the recipient and are capitalized in shares and participations by the donor. Group contributions, granted and received, are recognized in profit and loss.

Financial guarantee agreementsThe Parent Company’s financial guarantee agreements consist mainly of sureties for the benefit of subsidiaries. For the recognition of financial guarantee agreements, the Parent Company applies one of the relief rules permitted by the Swedish Financial Reporting Council, as compared with the rules of IAS 39.

note 2 - Personnel costs for employees

Information regarding the Parent Company’s employees and personnel costs is presented in Note 5 in the consolidated financial statements.

PensionsThe company’s employees are covered by the ITP plan. Obligations for old-age pension and family pension are secured in part through insurance in Alecta and in part through the payment of premiums.

2012 2011

Costs for defined-benefit plans 2 2

The above cost includes SEK 1 m. (1) pertaining to ITP-plan commitments funded in Alecta.

note 3 - Depreciation according to plan, seK m.

2012 2011

Equipment 1 1

note 4 - Fees and remuneration paid to the auditors, seK m.

2012 2011

Remuneration of KPMG AB Auditing assignments 0.3 0.3 Other assignments 0.2 0.2

0.5 0.5

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note 5 - Financial items, seK m.

Results from participations in Group companies 2012 2011

Dividends 438 398 Group contributions 35 - 43

473 354

Results from participations in associated companies 2012 2011

Dividends 59 Capital gains 2,625 Impairment losses ¹ - 592Reversals of impairment losses ¹ 290 1

348 2,033

Results from other securities and receivables classed as fixed assets

2012

2011

Dividends 543 472 Capital gains 7 Effect of reclassification as associated company ² 474 Impairment losses ¹ - 52 - 1

491 952

Interest income 2012 2011

Interest income, Group companies 7 8 Interest income, others 18 36

25 44

Interest expenses and similar expenses 2012 2011

Interest expenses, Group companies - 4 - 15 Interest expenses, others - 16 - 9 Other - 1 - 0

- 21 - 24 1) Impairment/reversal of impairment to the current share price has occurred.

2) Refer to information on Note 11.

note 6 - appropriations, seK m.

2012 2011

Difference between book depreciation and depreciation according to plan - Equipment - 0 0

Tax allocation reserve, provision during the year - 67 - 44 Tax allocation reserve, reversal during the year 41 24

- 26 - 20

note 7 - tax, seK m.

2012 2011

Current tax costTax cost during the year - 53 - 35 Tax attributable to preceding years - 0 2

- 53 - 33

Reconciliation of effective tax 2012 2011

Profit before tax 1,262 3,307

Swedish income tax rate 26% - 332 26% - 870 Non-tax-deductible costs 1% - 14 1% - 32 Non-taxable revenues - 23% 294 - 26% 873 Standard tax on tax allocation reserve 0% - 1 0% - 2 Tax attributable to prior years 0% - 0 - 0% 2 Other 0% - 0 0% - 5

Reported effective tax 4% - 53 1% - 33

2012 2011

tax attributable to other comprehensive income

Before tax

tax

after tax

Before tax

tax

after tax

Fair value of participations 2,393 - 160 2,233 - 4,141 303 - 3,838

note 8 - tangible fixed assets, seK m.

equipment 2012 2011

accumulated acquisition valueOn January 1 7 7 Acquisitions during the year 1 Divestments and scrappage during the year - 1

7 7 accumulated depreciation according to plan On January 1 - 3 - 2 Divestments and scrappage during the year 1 Depreciation according to plan during the year - 1 - 1

- 3 - 3

5 4

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note 10 - Participations in associated companies, seK m.

2012 2011

On January 1 1,225 2,058 Reclassification ¹ 1,724 Acquisitions 18 179 Divestments - 2,144 Impairment losses - 592Reversals of impairment losses 290

1,532 1,225 number of

specification of shareholdings in associated companies

Registered participations holding as a % 2 Fair value carrying amount corp. Reg. no. headquarters Dec 31, 2012 2012 2011 Dec 31, 2012 2012 2011

Husqvarna AB (publ) 556000-5331 Jönköping 39,200,000 6.8 (22.2) 6.8 (22.0) 1,538 1,532 1,225

1) In 2011, shares in Husqvarna AB were acquired to such an extent that the company’s shareholding was reclassified as an associated company.

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. Further information about the Parent Company’s associated companies is presented in Note 20 to the consolidated financial statements.

note 9 - Participations in Group companies, seK m.

2012 2011

accumulated acquisition valueOn January 1 6,549 5,943 Acquisitions during the year 289 606 Impairment losses during the year - 0

6,838 6,549 number of

specification of direct holdings of participations in subsidiaries

Registered participations holding as a % 1 Fair value carrying amount corp. Reg. no. headquarters Dec 31, 2012 2012 2011 Dec 31, 2012 2012 2011

Fastighets AB L E Lundberg 556049-0483 Norrköping 250,000 100 100 165 165 L E Lundberg Kapitalförvaltning AB 556188-2290 Stockholm 150,000 100 100 15 15 Holmen AB (publ) 556001-3301 Stockholm 27,622,000 32.9 (61.6) 31.1 (61.6) 5,336 3,828 3,539 Hufvudstaden AB (publ)2 556012-8240 Stockholm 93,377,680 45.3 (88.1) 45.3 (88.1) 7,719 2,830 2,830 Other direct holdings 0 0

6,838 6,549

Indirectly owned subsidiaries (major holdings)Owned by Holmen AB (publ)

Holmens Bruk AB 556537-4286 Stockholm 1,000 100 100Holmen Suecia Holding S.L., Spain Madrid 9,448,557 100 100Holmen UK Ltd, United Kingdom Workington 1,197,100 100 100

Owned by Hufvudstaden AB (publ)AB Citypalatset 556034-7246 Stockholm 1,200 100 100AB Nordiska kompaniet 556008-6281 Stockholm 19,460,666 100 100

1) 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.

2) The market value of Series C shares has been calculated based on a 10% premium on the price of publicly traded Series A shares.

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note 11 - Other long-term holdings of securities, seK m.

2012 2011

accumulated acquisition valueOn January 1 11,645 14,836 Purchases 311 2,852 Sales - 705 Reclassification ¹ - 2,185 Year’s changes in value 2,087 - 3,153

14,043 11,645

accumulated impairment lossesOn January 1 - 307 - 352 Reclassification ¹ 462 Sales 97 Impairment losses for the year - 52 - 514 Reversals for the year 306

- 52 - 307

13,991 11,338

holdings of securities measured at fair value

2012 2011

acquisition value of listed sharesOn January 1 10,093 10,034 Purchases 311 2,852 Reclassification ¹ - 2,185 Sales - 608

10,404 10,093

Year’s changes in fair value through profit and lossOn January 1 - 1,404 - 2,339 Reclassification ¹ 462 Effects of reclassification as associated company ¹ 474 Impairment losses - 52 - 1

- 1,456 - 1,404

Year’s changes in fair value through the balance sheet On January 1 2,649 6,790 Effects of reclassification as associated company ¹ - 474 Changes in value 2,393 - 3,666

5,042 2,649

13,991 11,338 1) In 2011, shares in Husqvarna AB were acquired to such an extent that the share of voting rights exceeded 20%,

which led to the investment being reclassified from May 27 onward as an associated company. Due to the reclassification as an associated company, reversals of impairment losses that had previously been recognized in shareholders’ equity were restated in profit or loss.

shareholding, Dec 31, 2012 as a % of

specification of holdings 1 share capital voting rights 2012 2011

Handelsbanken A 2.0 2.0 2,905 2,263Industrivärden A 12.9 17.8 5,545 4,358Indutrade 13.8 13.8 1,084 1,007Sandvik 2.2 2.2 2,898 2,322Skanska A ²

3.4 11.6 705 756

Skanska B ² 855 633

13,991 11,3381) The assets have been measured at fair value based on the current stock-market price. The market value of

Series A Skanska shares has been calculated based on a 10% premium on the price of publicly traded Series B shares.

2) The percentage of share capital and voting rights is presented together for shareholdings in Skanska.

note 12 - Financial instruments, seK m.

2012

available- for-sale

financial assets

accounts and loans

receivableOther

liabilities

total carrying amount


current financial receivablesReceivables from Group companies 616 616Other financial receivables 0 0

616 616

cash and cash equivalentsBank balances 987 987

987 987long-term liabilitiesMTN loans 1,000 1,000Liabilities to credit institutions 400 400

1,400 1,400

current liabilitiesLiabilities to Group companies 15 15Other financial liabilities 48 48

63 63


Financial investments 13,991 13,991Accounts payable 1 1

2011

available- for-sale

financial assets

accounts and loans

receivableOther

liabilities

total carrying amount


current financial receivablesReceivables from Group companies 360 360Other financial receivables 0 0

360 360

cash and cash equivalentsBank balances 858 858

858 858

current liabilitiesLiabilities to Group companies 876 876Other financial liabilities 74 74

950 950Financial instruments not included in net financial debt

Financial investments 11,338 11,338Accounts payable 1 1

The fair value matches the carrying amount. The appraisal of financial investments (shares) that were measured at fair value in the balance sheet is based on listed prices for similar instruments, which means that they are attributable to Level 1, in accordance with IFRS 7.

Since Series A Skanska shares are not publicly traded, their value has been calculated based on a 10% premium on the price of publicly traded Series B shares, whereby the valu-ation belongs to Level 3 in accordance with IFRS 7.

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note 13 - Related parties, seK m.

2012 subsidiaries

Key personnel in executive

positions

Other related parties

Sales to related parties 10 0 Interest received from related parties 7 Interest paid to related parties 4 1 0 Receivable from related parties, Dec 31 616 Debt to related parties, Dec 31 15 48

2011 subsidiaries

Key personnel in executive

positions

Other related parties

Sales to related parties 10 0 Interest received from related parties 8 Interest paid to related parties 15 1 0 Receivable from related parties, Dec 31 360 Debt to related parties, Dec 31 876 55 10

Transactions with related parties were priced on commercial terms.

Key personnel in executive positionsVia his wholly owned company Byggnads AB Karlsson & Wingesjö (including subsidiaries), Fredrik Lundberg and his wife hold, directly or indirectly, 89.8% of the voting rights (89.7) and 54.5% of the share capital (53.8) in L E Lundbergföretagen AB (publ). Fredrik Lundberg, who is 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.

note 14 - cash-flow statement, seK m.

The cash-flow statement was compiled in accordance with the indirect method. Recog-nized cash flow only comprises transactions that involved receipts and disbursements. Interest and dividends received 2012 2011

Interest received 25 44 Interest paid - 18 - 23 Dividends received 1,039 869

1,047 891

cash and bank balances ¹ 2012 2011

Bank balances 868 736 Balance on overdraft facility 119 121

987 858 1) The overdraft facility granted totals SEK 100 m. (100).

During 2012, SEK 1,000 m. was borrowed under the MTN program and SEK 400 m. was borrowed from banks, while the commercial paper program was not utilized.

During 2011, a total of SEK 1,650 m. was borrowed on a short-term basis under the commercial paper program divided into various loans and SEK 2,150 m. was repaid.

note 15 - shareholders’ equity

In 2011, the 1:1 bonus issue and the reduction of the company’s share capital through the cancelation of shares were implemented. For the implementation of the bonus issue, SEK 344 m. from statutory reserves and SEK 276 m. from earnings brought forward were utilized.

Unrestricted shareholders’ equityThe fair value provision, earnings brought forward and net profit 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 a-d. The fair value provision includes the accumulated net change in the fair value of available-for-sale financial assets up to the time the asset is derecognized from the balance sheet.

Fair value provision, seK m. 2012 2011

Opening value 2,649 6,487 Changes in value 2,393 - 4,141 Tax attributable to changes in value - 160 303

4,882 2,649

Earnings brought forwardConsists of unrestricted shareholders’ equity and profit for the preceding year after divi-dend has been paid.

Other information is presented in Note 28 to the consolidated financial statements.

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note 16 - Untaxed reserves, seK m.

2012 2011

equipmentOn January 1 0 1 Accelerated depreciation during the year 0 - 0

0 0

tax-allocation reservesAllocated for 2007 tax year 41 Allocated for 2008 tax year 68 68 Allocated for 2009 tax year 75 75 Allocated for 2010 tax year 108 108 Allocated for 2011 tax year 75 75 Allocated for 2012 tax year 44 44 Allocated for 2013 tax year 67

438 412

438 412 Untaxed reserves include deferred tax of SEK 96 m. (108).

note 17 - Provisions, seK m.

Provisions for taxes 2012 2011

Holdings of securities measured at fair value On January 1 303 Provisions during the year 160Reversals during the year - 303

160

note 18 - Other current liabilities, seK m.

2012 2011

Accounts payable 1 1 Other liabilities 0 24 Accrued expenses and prepaid income 19 9

21 34

note 19 - Pledged assets and contingent liabilities, seK m.

No assets were pledged.

contingent liabilities 2012 2011

Contingent liabilities on behalf of subsidiaries 1,014 1,014

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Proposed Distribution of Earnings

Stockholm, February 21, 2013

Mats GuldbrandChairman of the Board

Carl BennetMember of the Board

Gunilla BergMember of the Board

Louise LindhMember of the Board

Katarina MartinsonMember of the Board

Sten PetersonMember of the Board

Lars Pettersson Member of the Board

Fredrik LundbergPresident and Chief Executive Officer

Member of the Board

Our audit report was submitted on February 25, 2013

KPMG AB

George PetterssonAuthorized Public Accountant

The Board of Directors proposes that the funds available for distribution by the Annual General Meeting,

in an amount of SEK 20,652 m. (SEK 20,652,375,433), be distributed as follows:

To shareholders, a dividend of SEK 4.30 per share SEK 533 m.To be carried forward SEK 20,119 m.

SEK 20,652 m.

The company has 124,000,000 registered shares. The sum total of the dividend above, SEK 533 m., may change

if the number of treasury shares changes before the record date for dividends.

A reasoned statement motivating the dividend proposal will be available on the company’s website

www.lundbergforetagen.se no later than three 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 financial statements have been

prepared in accordance with generally acceptable accounting practices in Sweden and that the consoli-

dated financial statements have been prepared in compliance 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. The annual report and the consolidated

financial statements provide a fair and just impression of the Parent Company’s and the Group’s finan-

cial position and earnings. The Report of the Board of Directors for the Parent Company and the Group

provides a fair and just summary of the development of the Parent Company’s and the Group’s operations,

financial position and earnings and describes the significant risks and uncertainties faced by the Parent

Company and the companies included in the Group.

As stated above, the annual report and the consolidated financial statements were approved for

publication by the Board and the President on February 21, 2013. The consolidated income statement and

balance sheet and the Parent Company’s income statement and balance sheet will be subject to adop-

tion at the Annual General Meeting on April 8, 2013. Thursday, April 11, 2013 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 Tuesday, April 16, 2013.

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Auditors’ Report

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Comments on the annual report and consolidated financial statementsWe have performed an audit of 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 for the 2012 fiscal year. The company’s annual accounts and consolidated financial statements are included in the printed version of this document on pages 29-76.

Responsibilities of the Board of Directors and the President for the annual report and consolidated financial statementsThe Board of Directors and the President are responsible for preparing an annual report that provides a true and fair view in accordance with the Swedish Annual Accounts Act, and consolidated financial state-ments that provide a true and fair view in accordance with International Financial Reporting Standards such as those adopted by the EU and the Swedish Annual Accounts Act, and for the internal controls that the Board of Directors and the President deem necessary for the preparation of annual reports and consolidated financial statements that are free of material misstatement, whether they be due to impropriety or genuine error.

Responsibilities of the auditorsOur responsibility is to express an opinion on the annual accounts and consolidated financial statements based on our audit. We conducted our audit in accordance with the International Standards on Auditing and with Generally Accepted Auditing Standards in Sweden. These standards require that we adhere to professional codes of conduct, and that we plan and perform the audit to obtain reasonable assurance that the annual report and consolidated financial statements are free of material misstatement.

An audit includes the use of various measures to gather audit evidence supporting amounts and other information in the annual report and consolidated financial statements. The auditor chooses the measures that will be performed, such as by assessing the risks of material misstatement in the annual report and consolidated financial statements, be they due to impropriety or genuine error. In the course of such risk assessments, the auditor observes the components of the internal controls that are relevant to the manner in which the company prepares the annual report and consolidated financial statements to provide a true and fair view with the aim of creating audit procedures that are appropriate with regard to the circumstances, but not for the purpose of expressing an opinion on the efficiency of the company’s internal controls. An audit also includes an assessment of the appropria-teness of the accounting policies applied and the reasonableness of the material estimations made by the Board of Directors and the President, as well as evaluating the overall presentation of the annual report and the consolidated financial statements.

We believe that the audit evidence we have collected is sufficient and forms a reasonable basis for our opinion set out below.

Auditors’ opinionIt is our opinion that the annual report was prepared in accordance with the Swedish Annual Accounts Act and provides in all significant regards, a true and fair view of the Parent Company’s financial position as of

December 31, 2012, and of its financial profit or loss and cash flow for the year in accordance with the Swedish Annual Accounts Act. The consolidated financial statements were prepared in accordance with the Annual Accounts Act and provides in all significant regards, a true and fair view of the Group’s financial position as of December 31, 2012, and of its financial profit or loss and cash flow for the year in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. A corporate governance report has been prepared. The Report of the Board of Directors and the corporate governance report are compatible with the other sections of the annual report and consolidated financial statements.

Therefore, we recommend that the Annual General Meeting adopt the income statements and balance sheets of the Parent Company and the Group.

Statement regarding other requirements according to legal and other statutesIn addition to our audit of the annual report and consolidated financial statements, we have performed an audit of the proposal on the alloca-tion of the company’s profit or loss and the Board of Directors and the President’s administration of L E Lundbergföretagen AB (publ) for 2012.

Responsibilities of the Board of Directors and the PresidentThe Board of Directors is responsible for proposals regarding the alloca-tion of the company’s profit or loss, and the Board of Directors and the President are responsible for the company’s administration in accor-dance with the Companies Act.

Auditor’s responsibilitiesOur responsibility is to express a reasonably assured opinion regarding the proposal concerning the allocation of the company’s profit or loss, and regarding its administration on the basis of our audit. We have performed the audit in accordance with Generally Accepted Auditing Standards in Sweden.

As the basis for our opinion regarding the Board of Directors’ propo-sal on the allocation of the company’s profit and loss, we have reviewed the Board of Directors’ supporting statements and a selection of basis material for this in order to evaluate whether the proposal is compatible with the Companies Act.

As the basis for our opinion regarding discharge from liability, we have, in addition to our audit of the annual report and consolidated financial statements, examined significant decisions, measures and relationship in the company in order to determine whether any Board member or the President has liabilities to the company. We have also examined whether Board members or the President have in any other manner acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

We believe that the audit evidence we have collected is sufficient and forms a reasonable basis for our opinion set out below.

Auditors’ opinionWe recommend that the Annual General Meeting allocate the profit in accordance with the proposal in the Report of the Board of Directors and grant the Board of Directors and the President discharge from liability for the fiscal year.

To the Annual General Meeting of L E Lundbergföretagen AB, Corp. Reg. No: 556056-8817

Stockholm, February 25, 2013 KPMG AB

George PetterssonAuthorized Public Accountant

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Board of Directors

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Lars Pettersson Born 1954MSc, PhD h cElected to the Board 2012Board member of Skanska, PMC Group and Uppsala University ConsistoryNumber of shares: 2,000

Gunilla Berg Born 1960MBAElected to the Board in 2004Executive Vice President and CFO of Teracom GroupBoard member of Alfa Laval and VattenfallNumber of shares: 1,700

Louise Lindh Born 1979MBAElected to the Board in 2010Executive Vice President of Fastighets AB L E LundbergBoard member of Fastighets AB L E Lundberg, Hufvudstaden and Holmen Number of shares: 9,338,602

Mats Guldbrand Born 1945MBAChairman of the BoardElected to the Board in 2008Board member of Procordia Pension Foundation II, The King Gustav V 80th Anniversary Fund Foundation and Lönnbacken Fastigheter ABNumber of shares: 77,700

Auditors KPMG AB. Auditor-in-charge George Pettersson, Authorized Public Accountant. Born 1964.

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Fredrik Lundberg Born 1951B.Sc., MBA, Hon. PhD in Economics and Hon. PhD in TechnologyPresident and Chief Executive Officer of L E Lundbergföretagen ABElected to the Board in 1975Chairman of Fastighets AB LE Lundberg, Hufvudstaden and Holmen Deputy Chairman of HandelsbankenBoard member of Industrivärden, Sandvik and SkanskaNumber of shares (including companies): 66,952,000

Carl Bennet Born 1951MBA, Hon. PhD in TechnologyElected to the Board in 2009Chairman of Getinge, Elanders and LifcoChairman of the University of GothenburgBoard member of HolmenNumber of shares: 200,000

Sten Peterson Born 1956B.Sc.Elected to the Board in 2001President of Byggnads AB Karlsson & WingesjöBoard member of Fastighets AB LE Lundberg and Hufvudstaden Number of shares: 28,000Number of call options: 50,000

Katarina Martinson Born 1981MBAElected to the Board in 2009Chairman of Bellbox and DjursjukhusgruppenBoard member of Fastighets AB LE Lundberg, Husqvarna och Fidelio CapitalNumber of shares: 9,338,602

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Lars JohanssonBorn in 1966, employed since 1991Chief Financial Officer

Senior executives L E Lundbergföretagen AB

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Fredrik LundbergBorn in 1951, employed since 1977President and CEONumber of shares (including companies): 66,952,000

Ulf LundahlBorn in 1952, employed since 2004Executive Vice President and Deputy CEONumber of shares: 28,000Number of call options: 50,000

Claes BoustedtBorn in 1962, employed since 1991Executive Vice PresidentPresident of L E Lundberg Kapitalförvaltning ABNumber of shares: 10,000Number of call options: 50,000

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Senior executives Fastighets AB L E Lundberg

Roger EkströmBorn in 1961, employed since 2001Executive Vice President, Regional Manager EastInformation Manager at L E Lundbergföretagen ABNumber of shares: 2,000Number of call options: 50,000

Peter LundgrenBorn in 1970, employed since 1994Regional Manager WestNumber of shares: 600

Louise LindhBorn in 1979, employed since 2005Executive Vice President, Regional Manager StockholmNumber of shares: 9,338,602

Johan LadenbergBorn in 1966, employed since 2005Head of Rental and Property AdministrationNumber of shares: 525

Peter WhassBorn in 1954, employed since 1989President and CEONumber of shares: 2,000Number of call options: 50,000

Henrik LandeliusBorn in 1975, employed since 2011Head of Project DevelopmentNumber of shares: 166

Pernilla CronerudBorn in 1968, employed since 1999Chief AccountantHead of Corporate Accounting at L E Lundbergföretagen AB

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Annual General Meeting and Financial statements

Information about the Annual General Meeting L E Lundbergföretagen’s Annual General Meeting will be held on

Monday, April 8, 2013, at 2.00 p.m. at Grand Hotel, Stallgatan 6,

Stockholm, Sweden.

Participation in the Meeting Shareholders wishing to participate in the business of the Mee-

ting must be recorded in the Securities Register maintained by

Euroclear Sweden AB no later than Tuesday, April 2, 2013, and notify

the company of their intention to participate no later than Tuesday,

April 2, 2013.

Notifications can be made in any of the following manners:– by post to L E Lundbergföretagen AB (publ),

SE-601 85 Norrköping, Sweden

– by telephone to Int. +46-11-21 65 00

– by telefax to Int. +46-11-21 65 65, or

– by e-mail to [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 any advisors. If

participation is to be based on proxy, the proxy document must be

sent to the company in connection with notification. An original

version of the proxy document, a registration certificate and other

authorizing documents must be shown at the Annual General

Meeting. A form for proxies is available at the company and on the

company’s website www.lundbergforetagen.se.

To be able to vote at the Meeting, shareholders whose shares

are registered in a nominee’s name, through a bank’s trust depart-

ment or an individual broker, must temporarily register their shares

in their own names. Such registration must be completed by Tues-

day, April 2, 2013. This means the nominee must be given adequate

notice of the shareholder’s wishes before this date.

DividendThe Board of Directors proposes a dividend of SEK 4.30 per share

for the 2012 fiscal year. Thursday, April 11, 2013 is proposed as

the record date for payment of dividends. If the Annual General

Meeting approves the Board’s proposal, it is estimated that the

dividends will be distributed by Euroclear Sweden AB on Tuesday,

April 16, 2013.

Financial informationThe following financial statements will be published in Swedish

and English on our website, www.lundbergforetagen.se

May 23, 2013 Interim Report January – March 2013

August 27, 2013 Interim Report January – June 2013

November 28, 2013 Interim Report January – September 2013

February 2014 Year-end Report for 2013

The Annual Report will be sent to shareholders who have

notified their desire to receive it. Notification is easiest via

www.lundbergforetagen.se, under the heading Investor

Relations/Order Form.

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Addresses

L E Lundbergföretagen AB (publ) Corp. Reg. No: 556056-8817

Registered headquarters: Stockholm

PO Box 14048, SE-104 40 Stockholm, Sweden

Street address: Hovslagargatan 5 B

Tel: +46 (0)8 463 06 00

E-mail: [email protected]

www.lundbergforetagen.se

Fastighets AB L E Lundberg Corp. Reg. No: 556049-0483

SE-601 65, Norrköping, Sweden

Street address: S:t Persgatan 105

Tel: +46 (0)11 21 65 00

E-mail: [email protected]

www.lundbergs.se

www.lundbergforetagen.seOn Lundbergs’ website, you will find general

information about the company, financial

information and the current share price.

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Format and production: Anfang Reklambyrå, NorrköpingText: LundbergsTranslation: The Bugli Company ABReproduction: Skånsk ReproPrint: DanagårdLITHOCover Invercote Creato 300 g. Contents: Multiart Silk 150 g and Multi Design Original White 130 gPhotography: Rolf Andersson/Bildbolaget, Jäger Arén, Göran Billeson, Husqvarna, Jörgen Lorentzon, M&F Foto, Peter Hoelstad, Pär Olsson, Sandvik, Skanska, Q Image.Print date: April 2, 2013

2012 - investis digital · husqvarna 27 annual report 29 report of the board of directors 30...

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