English 2007

Outline of Lundbergs 2

The year in brief 3

The President’s review 4

Lundbergs as an investment company 7

Net asset value 10

Cash flow 11

The Lundberg share 12

Fastighets AB L E Lundberg 14

Hufvudstaden 18

Holmen 20

Cardo 22

Industrivärden 24

NCC 25

Indutrade 26

Husqvarna 26

Handelsbanken 27

Sandvik 27

29 Report of the Board of Directors 30

Definitions 35

Group

Financial statements 36

Notes 40

Parent Company

Financial statements 63

Notes 66

Proposed distribution of profits 72

Auditors’ report 73

Corporate Governance Report 74

Board of Directors 78

Senior executives 80

Annual General Meeting Subsidiaries and other major shareholdings

Annual Report

Corporate governance

Lundbergs

28 (52) 45 (88)

Industrivärden

NCC

Husqvarna Hufvudstaden

Holmen

Cardo Fastighets AB L E Lundberg

100

36 (36)

10 (20) 11 (15)

1.8 (1.8)

Sandvik ^{1.2 (1.2)}

Indutrade ^{10 (10)}

Handelsbanken

4.0 (11.4)

Principal shareholder Other major shareholdings

Outline of Lundbergs

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

The portfolio includes the wholly owned unlisted real estate company, Fastighets AB L E Lundberg, and the publicly traded subsidiaries and associated companies Cardo,

Holmen, Hufvudstaden and NCC. Lundberg also has major shareholdings in Handelsbanken, Husqvarna, Industrivärden, Indutrade and Sandvik.

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

Properties in Fastighets AB L E Lundberg 27.6%

Cardo 5.4%

Holmen 14.3%

Hufvudstaden 18.7%

Indutrade 1.5%

Handelsbanken 6.1%

Sandvik 4.3%

Husqvarna 3.2%

Industrivärden 12.9%

NCC 5.2%

Others 0.8%

Percentage share of Lundbergs’ marked-valued assets, approx. SEK 34 billion, on February 19, 2008

0 100 200 300 400 500 600

Feb 19, 2008 2007 2006 2005 2004 2003 SEK

Net asset value per share after deferred tax, SEK

300 340 380 420 460 500 540 SEK

Feb Jan 08 Nov Sept July May March Jan 07

The Lundberg share 2

The figures denote the percentage of share capital (voting rights) held on February 19, 2008.

s 2 00 7

• On December 31, 2007, net asset value after deferred tax amounted to SEK 30.4 billion (SEK 490 per share), compared with SEK 33.1 billion (SEK 535 per share) at the end of 2006. On February 19, 2008, the correspond ing value was SEK 28.9 billion (SEK 467 per share).

• The Group’s net sales totaled SEK 23,049 m. (21,937).

• The Group’s profit after tax was SEK 5,010 m. (6,121), of which the minority share accounted for SEK 2,404 m.

(2,929).

• Profit (excluding minority share) per share amounted to SEK 42.02 (51.50).

• An increase in the dividend to SEK 9.00 (8.50) per share is proposed.

EarNiNgS aNd KEy daTa

2007 2006

Net asset value after deferred tax, SEK billion 30.4 33.1

Net asset value per share after deferred tax, SEK 490 535

Shareholders’ equity per share attributable to Parent Company’s shareholders, SEK 425 407

Net sales, SEK m. 23,049 21,937

Profit after tax, SEK m. 5,010 6,121

of which, minority share, SEK m. 2,404 2,929

Earnings per share, excluding minority share, SEK 42.02 51.50

Dividend per share, SEK 9.00

8.50

Debt/equity ratio, % 0.28 0.27

Equity/assets ratio, % 59 60

1) The Board of Directors’ proposal.

7

President’s review

Stock market turbulence in 2007

The strong economic growth that we have noted in large parts of the world for the past several years continued during 2007.

Growth was particularly strong in Eastern Europe, Russia, China, India and parts of South America, while the Nordic countries also showed favorable economic growth. Globali- zation continued, enabling many companies to capitalize on this trend. Generally speaking, it may be said that 2007 was a year of strong growth and healthy profitability for industry, although there were naturally some variations between differ- ent sectors and companies.

The OMX Stockholm Exchange and most other stock mar- kets performed strongly during the first half of 2007, and many

share prices rose to new record-highs during the summer.

Subsequently, the trend was reversed due to the turbulence that arose in international financial systems. The turbulence was rooted in the US home mortgage market.

The financial crisis accelerated during the autumn in paral- lel with growing needs to implement very large write-downs of financial instruments. Banks in many parts of the world were also drawn into the crisis. As a result, capital markets became very nervous during the autumn and stock markets declined. From the peak level during the summer through year-end, the OMX Stockholm Exchange declined 18% and closed at minus 6% for full-year 2007. The negative trend continued during January and February 2008, during which the stock exchange has fallen by another 10%.

Lundbergs’ performance

Lundbergs reported consolidated earnings after tax totaling SEK 5,010 m., (6,121) in 2007. The main reason for the decline was Hufvudstaden’s divestment of the WTC-property in Stock- holm, which was included in 2006 earnings.

Net asset value per share after deferred tax decreased 8%

during the year to SEK 490 (535). The Lundberg share price declined 17%, resulting in a total return to shareholders of mi- nus 16% in 2007. Accordingly, the discount on net asset value rose by 8 percentage points during 2007 to about 25% (17).

The negative trend in our net asset value during 2007 was due to the decline in stock markets, while our property port- folio increased in value.

Over the past five years, shareholders in Lundbergs have received an average total return of 16% annually, compared with an average return on the benchmark index of 23%. The corresponding return over the past 10 years is also 16%, com- pared with an average return on the benchmark index of 10%.

Lundberg’s Board of Directors proposes that the Annual General Meeting approve a dividend of SEK 9.00 per share, compared with SEK 8.50 per share for the preceding year.

Accordingly, dividend growth over the past 10 years has aver- aged 9% annually.

Our financial position remains strong. In relation to the market value of our assets (see page 10), net debt amounted to 10%. It has always been Lundberg’s philosophy to maintain a low level of net debt, which has proved to be a successful principle over time. Our financial strength has enabled us, on many occasions, to accept challenges and act aggressively in situations that were uncertain and risk-filled. As a result, we have been able to capitalize on investment opportunities that, in retrospect, have generated favorable returns.

Fastighets AB L E Lundberg

Lundbergs’ consolidated accounts include operating profit of SEK 1,247 m. (1,109) reported by Fastighets AB L E Lund- berg. The increase was mainly attributable to value changes 4

s 2 00 7

in the property portfolio, while the current return was largely unchanged compared with the preceding year.

After adjustment for divestments and investments, the property portfolio’s value growth during 2007 was about 10%. Higher rent levels and, to some extent, a lower required yield were the reasons for the increase in value. Investor inter- est in Swedish properties remained strong, although some caution was noted toward year-end.

During 2007, our only property in Landskrona was sold for SEK 201 m., yielding a capital gain of SEK 63 m., and a centrally located office and retail sales property was acquired in Linköping for SEK 56 m.

The rental market for housing, office and retail premises continued to improve in 2007, which means that market rent for commercial premises has risen sharply in many locations during recent years.

The total vacancy rate in our property portfolio in February 2008 was about 2%, comprising 0.5% for residential proper- ties and 3% for commercial premises.

As a result of the improved rental market, we plan to invest in some new commercial projects in Norrköping, Linköping and Jönköping in the next few years.

The plans include development of new areas for retail premises, indoor car parking and housing in the inner city part of Norrköping.

Portfolio companies

During 2007, we acquired 3.9 million Sandvik shares for SEK 459 m., 2.5 million Handelsbanken shares for SEK 527 m. and 1.5 million Industrivärden shares for SEK 223 m. In February 2008, we acquired an additional 1.1 million Sandvik shares for SEK 103 m.

A new shareholding in Husqvarna was added to the portfo- lio in 2007. A total of 15.4 million shares were acquired for a net investment of SEK 1,446 m., making us the company’s sec- ond largest shareholder, with 11.4% of voting rights and 4.0%

of the share capital. We believe that Husqvarna is an interest- ing company to be a shareholder in, viewed long term. The company has reported favorable sales and earnings growth for many years and has strong brands and market positions. In the short-term perspective, we have noted that Husqvarna’s market capitalization has been impacted strongly by the nega- tive stock market trend and, as a result, we have impaired our holding to SEK 344 m. in the annual accounts for 2007.

Holmen’s earnings in 2007 were on a par with the preced- ing year’s level. Demand for Holmen’s newsprint, carton- board and sawn wood products remained strong. Sharp price increases for timber and recycled paper impacted earnings, as did extraordinary costs for rebuilding and maintenance stop- pages. The weak USD also led to increased supply of news- print in Europe.

Holmen Paper (printing paper) initiated a savings and efficiency-enhancement program and a review of its produc- tion strategies. Changes will include the shutdown of the oldest paper machine at Hallsta Mill. Combined with certain production adjustments, this means that Holmen will reduce its newsprint production by about 15%.

A decision was made to invest approximately SEK 1.1 billion in a new sawmill adjacent to the Braviken paper mill in Norrköping. Operations are scheduled to start in autumn 2009.

Hufvudstaden showed very strong growth in 2007. Earnings from property management operations improved as a result of higher rent levels and reduced vacancies. Activity involving tenant adaptations and rebuilding remained comprehensive.

The value of property holdings continued to rise at about the same rate as 2006. A property was acquired at Norr- malmstorg in Stockholm, and Hufvudstaden now owns the entire Rännilen block.

Cardo reported continued strong growth during 2007.

However, earnings were charged with costs for restructuring in the production of docking systems and goodwill impairment in the Residential Garage Doors Division. Favorable business trends were noted in the Pump Division and in the segment comprising equipment for the pulp and paper industry, which generated higher margins and increased earnings.

NCC had a very good year, with increased sales and order bookings. The company reported record earnings and its financial objectives were comfortably surpassed. Particularly favorable development was noted in NCC’s construction operations in Sweden and Finland, and in NCC Roads and Property Development. Its cash flow was strong. As in the preceding year, the Board has proposed an extraordinary divi- dend of slightly more than SEK 1 billion.

Industrivärden’s net asset value, including re-invested dividends, declined by 3% during the year, in line with the benchmark index. The total return for shareholders was minus 14% for Series A shares, which was due a doubling of the discount on net asset value.

Industrivärden’s portfolio of companies generally per- formed well. The shareholdings in Volvo, SSAB and Sandvik were increased during the year.

Indutrade reported strong growth and increased earnings during 2007. A number of companies were acquired during the year.

Sandvik’s favorable development continued during 2007, with all business areas reporting higher sales and earnings.

Order bookings were strong. Several companies were ac- quired during the year.

Handelsbanken also reported higher earnings in 2007. SPP was divested toward year-end, which will lead to stronger fo- cus on core business. Strong growth and higher earnings were

reported for branch office operations outside Sweden. ₇

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

1997 1998

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

1994

Principal shareholder in MoDo, currently Holmen.

1993

Additional capital contribution to Östgöta Enskilda Bank.

1992

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

1991

Incentive holding is sold.

1990

Major purchases of shares in MoDo, currently Holmen.

The holding in Skaraborgs- banken was divested.

1988 6

Future outlook

The decline in the world’s stock markets since summer 2007 has led to sharply reduced share prices for our portfolio com- panies. As a result, Lundberg’s net asset value and share price have decreased. As this report is written, substantial uncertain- ty and concern continue to prevail in the international financial system, and it is impossible to forecast what might happen over the short and medium term. Continued turbulence cannot be ruled out.

Lundbergs has nine major investments in publicly listed companies and one wholly owned property business. We have tried for many years to invest in solid companies with healthy future potential. It is also important for us to understand the operations and business models of the different companies, and to assume an active role in their business development.

Property management activities, which by tradition are an important part of Lundbergs, have developed extremely favora- bly in recent years. The concentration of holdings in Sweden’s largest cities, and strong economic growth in our country, indicate continued favorable business growth.

With regard to the nine publicly listed portfolio companies, their business activities are diversified throughout many differ- ent industries and markets, providing a favorable spread of risks in our portfolio.

Future business prospects for the various companies vary, but are generally favorable in terms of financial strength and market positions. Many of the companies also have strong brands.

By assuming an active role through representation on the Boards of our portfolio companies, we have good insights and opportunities to influence their business development. This

is a great advantage compared with just standing on the side watching. During the troubled time that we are now experienc- ing, we are focusing exclusively on the development of these companies, not on their current share prices. If the companies develop well, we can look forward to increased dividends and, over time, value appreciation.

Lundbergs’ cash flow before investments, but after divi- dends to our shareholders, has been clearly positive for many years and is expected to remain positive in the future. Our cash flow, combined with a low level of debt, provides oppor- tunities to make new investments even during troubled times, when others might not have the same ability. Over the years, there have been many examples of this.

Lundbergs is well equipped for the future, and we intend to continue working to achieve a favorable return on our various investments. It is my belief and aim that Lundberg’s sharehold- ers, over time, will continue to receive a strong total return, compared with other investment alternatives.

Stockholm, February 29, 2008

Fredrik Lundberg

President’s review

Danske Bank acquires Lundbergs’

holding in Östgöta Enskilda Bank.

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

s 2 00 7

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

Lundbergs also has substantial holdings in Handelsbanken, Husqvarna, Industrivärden, Indutrade and Sandvik.

Lundbergs’ objective is to generate a return on invested capi- tal over time that substantially exceeds the yield on a risk-free interest-bearing investment. Lundbergs’ strategy is to generate such a return and value appreciation while maintaining a low risk. Investments focus mainly on companies characterized by solid market positions, strong and stable cash flow and that have their own products and brands. The financial risk is minimized by combining low indebtedness with good access to funds.

The time perspective of Lundbergs’ ownership enables the companies and their management to adopt a long-term approach in their efforts to develop market positions and competitive strengths. Long-term ownership is usually accom- panied by participation on boards of directors. Lundbergs is represented on the boards of all of its portfolio companies.

Assets

Lundbergs’ assets are concentrated to a few major holdings.

The real estate holdings, through wholly owned subsidiary Fastighets AB L E Lundberg and shares in Hufvudstaden, represented a value of SEK 15.3 billion at the end of 2007, or 44% of the Group’s total assets. The shareholdings in Cardo, Handelsbanken Holmen, Husqvarna, Industrivärden, Indu- trade, NCC and Sandvik accounted for SEK 19.6 billion or 56% of total assets.

Organization

Lundbergs long-term investment work is conducted in a small organization that represents a wealth of collective experience.

The organization that focuses on investment activities and active ownership has about ten employees, including the per- sonnel of the subsidiary L E Lundberg Kapitalförvaltning. The wholly owned real estate holdings are separated in organiza- tional terms from the Parent Company and are assigned the same status as the Group’s other major investments. Manage- ment expenses in relation to total assets amounted to 0.11%

during 2007.

2007

Continued acquisition of Industrivärden shares.

Participates in structural transaction when Ramirent

Continues to acquire shares in Handelsbanken and Sandvik.

2003 2006

Acquisition of Industrivärden shares.

2002

Lundbergs launches a share buyback program.

2000

Acquires 20% of Stadium through a private placement.

2001

Divests holdings in Stadium and Ramirent. Acquires shares in Indutrade, Handels- banken and Sandvik.

2005

Husqvarna shares are acquired.

Continued acquisitions of shares in Handelsbanken, Industrivärden and Sandvik

1) Husqvarna’s Nomination Committee has proposed that Ulf Lundahl be elected new member of the Husqvarna Board at the 2008 Annual General Meeting.

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

7

L E Lundberg Kapitalförvaltning AB

L E Lundberg Kapitalförvaltning is a subsidiary that engages in securities trading. The objective of operations is to utilize macroeconomic and corporate analyses in order to generate a favorable return on capital employed. In addition to securities trading, the company accounts for the analysis and follow-up of other investments within the Group.

The securities trading activities include equities and equity-related instruments. Although shares listed on the OMX Stockholm Exchange account for most of the investments, investments may also be made in other mature markets. Gross exposure, calculated as the sum total of the market value of long-term and short-term holdings, as well as exposure via de- rivatives, amounted to SEK 290 m. at year-end. The organiza- tion consists of five employees.

Investment activities

A new holding was added to the portfolio in 2007. Lundbergs invested a net total of SEK 1,446 m. in Husqvarna during the year and, at year-end, owned shares corresponding to 4.0% of the share capital and 11.4% of voting rights. Husqvarna is the world’s largest manufacturer of lawnmowers and power saws.

The company also has a world-leading position in cutting equipment and diamond tools for the construction and stone industries.

During 2007, shares in Handelsbanken and Sandvik were acquired for SEK 527 m. and SEK 459 m., respectively, a total of SEK 986 m. In February 2008, an additional 1.1 million shares in Sandvik were acquired for SEK 103 m. Handelsbank- en is one the leading universal banks in the Nordic region, and Sandvik is one of Sweden’s leading global engineering companies. The investments in these two major Swedish com- panies provided further diversification of Lundbergs’ assets and increased the portfolio’s liquidity. During May 2007, 1.5 million Industrivärden shares were acquired for SEK 223 m.

Lundbergs has made several investments outside the prop- erty and forest sectors since 2002. Investments in companies such as Industrivärden, Indutrade, Handelsbanken, Sandvik and Husqvarna have totaled SEK 7,565 m. since 2002. The combined market capitalization of these assets at year-end 2007 was SEK 10,144 m., accounting for 29% of Lundbergs’

total assets. These investments have enabled Lundbergs to cre- ate greater diversification while increasing its exposure to the

global economy. Interest-bearing net debt as a percentage of total assets at year-end 2007 was about the same as the level reported at year-end 2001.

Return

Lundbergs’ mission is to generate a healthy absolute return for its shareholders through growth in dividends and net asset value. Since 1998, net asset value per share after deferred tax has grown by an average of 12% annually. During 2007, how- ever, net asset value after deferred tax declined by 8%.

Total annual return

over the past 10 years, and the past five-year period, has averaged 16%. The total return in 2007 was minus 16%. Interest-bearing net debt in relation to mar- ket-valued assets on December 31, 2007 amounted to 10%

(7). The corresponding value during the past 10-year period has varied between 4 and 13%. Accordingly, the total return has been consistently generated together with low financial risk.

Net asset value

At December 31, 2007, net asset value less deferred tax amounted to SEK 30,409 m. (SEK 490 per share), compared with SEK 33,147 m. (535) at December 31, 2006; see table on page 10.

At February 19, 2008, net asset value less deferred tax was estimated at SEK 28,931 m. (SEK 467 per share).

Cash flow

Dividends received during 2007 amounted to SEK 2,048 m.

(877). Funds received from sales of securities totaled SEK 99 m.

(124), and SEK 542 m. (399) was received from real estate operations. Accordingly, total funds received amounted to SEK 2,689 m. (1,401).

Investments in shares during the year amounted to SEK 2,729 m. (937) and investments in real estate totaled SEK 104 m. (86).

Dividends paid by Lundbergs amounted to SEK 527 m. (481).

Interest-bearing assets declined by SEK 32 m. and interest- bearing liabilities increased by SEK 992 m. Accordingly, interest-bearing net debt rose by SEK 1,024 m. to SEK 3,543 m.

(2,519) at December 31, 2007. For additional information, see the cash flow report on page 11.

Lundbergs as an investment company

8

s 2 00 7

SEK billion

0 10 20 30 40 50 60 70 80 90 100

%

Handelsbanken Sandvik Husqvarna Other Indutrade

Industrivärden NCC

Cardo Holmen

Hufvudstaden Properties

2007 2006

2005 2004

2003 2002

2001 2000

1999 1998

0 5 10 15 20 25 30 35 40

Total value, left scale

diSTriBUTiON OF marKET-vaLUEd aSSETS aS a PErCENTagE OF TOTaL aSSET vaLUE, SEK BiLLiON

PrOPOrTiON OF SHarE CaPiTaL, vOTiNg rigHTS, aCQUiSiTiON vaLUE aNd Fair vaLUE OF SHarEHOLdiNgS

Feb. 19, 2008 dec. 31, 2007 dec. 31, 2006

%

Share capital voting rights Share capital voting rights Share capital voting rights

Cardo 36.0 36.0 36.0 36.0 36.0 36.0

Handelsbanken 1.8 1.8 1.8 1.8 1.3 1.4

Holmen 27.6 51.8 27.6 51.8 27.9 51.9

Hufvudstaden 45.2 88.0 45.2 88.0 45.2 88.0

Husqvarna 4.0 11.4 4.0 11.4 - -

Industrivärden 10.9 15.0 10.9 15.0 10.5 14.4

Indutrade 10.0 10.0 10.0 10.0 10.0 10.0

NCC

10.0 20.4 10.0 20.4 10.0 20.2

Sandvik 1.2 1.2 1.1 1.1 0.8 0.8

Feb. 19, 2008 dec. 31, 2007 dec. 31, 2006

SEK m. Fair value

acquisition value

Fair value

acquisition value

Fair value

acquisition value

Cardo 1,809 2,021 2,171 2,021 2,808 2,021

Handelsbanken 2,041 2,096 2,277 2,096 1,760 1,568

Holmen 4,836 2,917 5,751 2,917 7,056 2,941

Hufvudstaden 6,308 2,828 6,015 2,828 7,424 2,828

Husqvarna 1,070 1,175 1,182 1,175 - -

Industrivärden 4,358 2,504 4,757 2,504 5,508 2,280

Indutrade 492 288 493 288 540 288

NCC 1,741 775 1,492 775 2,029 775

Sandvik 1,446 1,258 1,435 1,155 896 696

Other shares 288 283 291 281 287 276

TOTaL 24,387 16,145 25,863 16,040 28,307 13,673

1) The percentage of voting rights and share capital has been calculated after a deduction for treasury shares. 7

dec. 31, 2007 dec. 31, 2006 CaLCULaTiON OF NET aSSET vaLUE SEK m SEK per share SEK m SEK per share Properties in Fastighets AB L E Lundberg

9,312 150 8,521 137

Cardo

2,171 35 2,808 45

Handelsbanken

2,277 37 1,760 28

Holmen

5,751 93 7,056 114

Hufvudstaden

6,015 97 7,424 120

Husqvarna

1,182 19 - -

Industrivärden

4,757 77 5,508 89

Indutrade

493 8 540 9

NCC

1,492 24 2,029 33

Sandvik

1,435 23 896 14

Other securities

291 5 287 5

Total market-valued assets 35,175 567 36,828 594

Other assets, provisions and liabilities

-3,759 -61 -2,784 -45 Net asset value before deferred tax 31,416 507 34,043 549

Deferred tax

-1,006 -16 -896 -14

NET aSSET vaLUE aFTEr dEFErrEd TaX 30,409 490 33,147 535

Market value 22,816 368 27,528 444

Price/NAV,% 75 83

0 50 100 150 200 250 300 350 400 450 500 550

2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 SEK

NET aSSET vaLUE aFTEr dEFErrEd TaX, PEr SHarE

-20 -10 0 10 20 30 40

2007 2006 2005 2004 2003 2002 2001 2000 1999 1998

%

CHaNgES iN NET aSSET vaLUE PEr SHarE

1) The properties’ estimated fair value on December 31, 2007 was SEK 9,312 m. (8,521), of which develop- ment properties accounted for SEK 208 m. (249).

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

3) Other assets, provisions (excl. deferred tax) and liabilities have been entered at the carrying amount at December 31, 2007 and 2006.

4) Deferred tax (28%) 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. Deferred tax on the difference between estimated market value and tax-assessment value of properties in Fastighets AB L E Lundberg was assessed at a standard rate of 10%.

KEy FigUrES

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Net asset value, SEK m. 10,783 14,874 13,380 13,665 13,692 18,024 21,520 26,078 33,147 30 ,409

Net asset value/share, SEK 142 196 205 220 221 290 347 421 535 490

Changes in net asset value/share, % -10 38 5 7 0 32 20 21 27 -8

Lundbergs as an investment company - Net asset value

10

s 2 00 7

CaSH FLOw rEPOrT

SEK m. 2007 2006 2005 2004 2003

dividends

Cardo 97 86 86 86 402

Handelsbanken 88 50

Holmen 281 260 236 881 242

Hufvudstaden 1,082 135 373 112 103

Husqvarna 14

Industrivärden 182 142 122 100 65

Indutrade 15 11

NCC

195 168 157 38 38

Sandvik

77 14

Other 17 12 19 11 12

2,048 877 994 1,229 863

Trading in securities 99 124 965 0 171

Results, property management 289 252 330 433 396

Sales, property management 253 147 457 28 50

Total assets contributed 2,689 1,401 2,745 1,690 1,480

investments, equity management

Cardo 131

Handelsbanken 527 493 1,075

Holmen 344 9

Husqvarna 1,519

Industrivärden 223 701 651

Indutrade 288

NCC 14

Sandvik 459 443 252

Other 105 17

2,729 937 1,630 1,151 808

Investments, real estate operations 104 86 168 106 33

Own dividend 527 481 434 403 372

Repurchase of shares 17

Group-wide costs 28 27 27 26 21

Taxes paid 163 97 125 92 29

Financial items 97 81 65 151 83

Other 35 -30 79 -43 -61

Total assets used 3,684 1,678 2,528 1,902 1,286

Change in net receivable/debt -995 -277 217 -213 194

Closing net receivable/debt -3,901 -2,906 -2,629 -2,846 -2,633

Of which, interest-bearing -3,543 -2,519 -2,210 -2,477 -2,296

1) In addition to the cash dividend, shares in Altima were also received in 2003 with a value corresponding to SEK 94 m.

2) Including redemption of shares in 2007.

7

0 100 200 300 400 500 600

2008 Feb 2007

2006 2005

2004 2003

2002 2001

2000 1999

1998 SEK

Lundbergs Series B SIX General index SIX Investment and Management Index

12

Series B Lundberg shares are listed on the OMX Stockholm Exchange’s O List. A round lot consists of 25 shares. An aver- age of 28,484 Series B shares were traded per trading day in 2007. Total share turnover amounted to 7.1 million Series B shares, corresponding to 19% of the total number of Series B shares. The lowest price paid for the share in 2007 was SEK 344 and the highest was SEK 538.

Market capitalization

Lundbergs’ market capitalization at year-end was SEK 22,816 m. (27,528). The share price rose by 17% during the year.

Share capital

The share capital of L E Lundbergföretagen AB (publ) amount- ed to SEK 621 m. (621) during the year. On December 31, 2007, the total number of shares was 62,145,483 (62,145,483),

each with a par value of SEK 10. The shares are divided into 24,000,000 (24,000,000) Series A shares, carrying ten votes per share, 38,000,000 (38,000,000) Series B shares, carrying one vote per share, plus 145,483 (145,483) repurchased Series B shares.

Repurchase of own shares

The Board has been authorized to purchase Lundberg shares.

For more detailed information, see page 36.

Ownership structure

Lundbergs has a total of about 14,000 shareholders (12,400), of whom some 10,500 (8,700) are registered in a nominee’s name and about 3,500 (approx 3,700) in the owner’s own name. Foreign ownership amounts to 5.1% (5.6) of the share capital.

KEy FigUrES

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Dividend per share, SEK 4.25 4.75 5.25 5.75 6.00 6.50 7.00 7.75 8.50 9.001

Growth in dividend per share, % 13 12 11 10 4 8 8 11 10 6

Direct return, % 4.5 5.1 4.6 3.6 3.1 2.8 2.5 2.3 1.9 2.4

Total return, % -17.0 27.9 28.6 15.4 27.2 23.1 25.9 20.4 34.9 -15.6

Stock market price, SEK 94.00 94.00 115.00 158.00 195.00 232.50 284.50 335.50 444.00 368.00

1) Board of Directors’ proposal

Lundbergs as an investment company – The Lundberg share

s 2 00 7

0 1 2 3 4 5 6 7 8 9

-07

-06 -05 -04 -03 -02 -01 -00 -99 -98

SEK/share %

0 1 2 3 4 5 6 7 8 9

Dividend/share Direct return, right scale 1) Board of Directors’ proposal.

dividENd aNd dirECT rETUrN diSTriBUTiON OF SHarEHOLdiNgS

No. of

shareholders As% of all

shareholders No. of shares

held As% of share capital

Average no.

of shares/

shareholders

1 - 500 11,559 82.6 1,398,593 2.3 121

501 - 2,000 1,756 12.6 1,874,757 3.0 1,068 2,001 - 5,000 311 2.2 1,066,276 1.7 3,429 5,001 - 20,000 232 1.7 2,403,024 3.9 10,358 20,001 - 50,000 59 0.4 1,829,021 2.9 31,000

50,001 - 65 0.5 53,573,812 86.2 824,212

TOTAL 13,982 100.0 62,145,483 100.0 4,445

TrENd OF SHarE CaPiTaL, SEK m.

Share capital Total paid in/

paid-out amount Added/

canceled Total

1981 Bonus issue, 3:1 75 100

1982 Bonus issue, 1:1 100 200

1983 New issue 300 30 230

1984 Bonus issue, 1:1 230 460

1989 New issue 412 46 506

1990 Bonus issue, 1:2 253 759

2000 Cancellation of repurchased shares -909 -76 683 2002 Cancellation of repurchased shares -884 -62 621 LargEST SHarEHOLdErS

Feb 2008

Holdings as% of Feb 2007 Holdings as% of share capital votes share capital votes Fredrik Lundberg

incl. companies 52.5 89.4 52.0 89.3

Louise Lindh 7.5 1.7 7.5 1.7

Katarina Lundberg 7.5 1.7 7.5 1.7

FPG 2.1 0.5 2.0 0.5

Second AP Fund 1.2 0.3 0.4 0.1

Swedbank Robur Funds 1.2 0.3 1.3 0.3

AMF Pension 1.2 0.3 2.4 0.5

Knowledge Foundation 1.1 0.3 1.1 0.3

SEB Funds 0.9 0.2 1.2 0.3

Handelsbanken Funds 0.9 0.2 0.8 0.2

Others 23.9 5.1 23.6 5.1

Subtotal 99.8 100.0 99.8 100.0

Repurchased Lundberg shares

0.2 - 0.2 -

TOTaL 100.0 100.0 100.0 100.0

Swedish shareholders 94.9 98.9 94.4 98.8

Foreign shareholders 5.1 1.1 5.6 1.2

TOTaL 100.0 100.0 100.0 100.0

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

-20 -10 0 10 20 30 40

-07 -06 -05 -04 -03 -02 -01 -00 -99 -98

%

TOTaL rETUrN

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

Direct return – Dividend per share as a percentage of share price ⁷

Fastighets AB L E Lundberg

Housing 48%

Office 26%

Retail 15%

Other 11%

distribution of annual rental revenues by type of premises Share of Lundbergs’

total assets, dec 31, 2007

Properties 27.6%

14

Housing 55%

Retail 9%

Office 18%

Other 18%

distribution of floor space by category

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

Fastighets AB L E Lundberg is one of the major private real estate owners in Sweden. The real estate portfolio consists largely of centrally located residential, office and retail premises.

With strategic positions in several of Sweden’s expansive municipalities, the company is well positioned for contin- ued strong growth.

The real estate holdings include 149 wholly or jointly owned investment properties in 15 municipalities through- out central and southern Sweden, with particular focus on major metropolitan areas and university cities. The portfolio also includes about 80 development objects. Most of the structures in the real estate portfolio were built during the construction-intensive years of the 1960s and 1970s, and consist largely of structures built on a proprietary basis.

The division between residential and commercial properties is relatively even at 48% and 52%, respectively, of rental value.

Business concept and strategy Fastighets AB L E Lundbergs’ business concept is to manage and develop resi- dential and commercial properties in municipalities where favorable growth is expected.

The company focuses on:

– low sensitivity to economic fluctua- tions through an even distribution between residential and commercial properties.

– comprehensive local market knowl- edge through a decentralized organi- zation.

– providing effective management with high levels of tenant service.

– within project development and development operations, to strive for optimal operating and development gains based on the potential of each individual property.

Market trend

Most of the municipalities in which the company is active have shown popula- tion growth in recent years, which is fa- vorable for the market for the leasing of commercial premises. The rental market for commercial premises was favorable during 2007, which was evident in the improvement in net rentals and rents in regions where we operate. Demand for offices increased somewhat and the demand for retail premises remained favorable. Demand for housing in major metropolitan regions and cities with colleges and universities also remained favorable.

The real estate portfolio is concen- trated in central locations, and it is es- timated that Fastighets AB L E Lundberg will be able to capitalize on a future increase in demand for commercial properties in attractive locations.

Organization

As of January 1, 2008, the company’s management is divided into four re- gions: Gothenburg, Stockholm, Western and Eastern. The management group includes the President, Vice President, regional managers, financial direc- tor, project development manager and rental administration manager. The organization provides excellent prereq- uisites for continued focus on current management operations, and the pos- sibility to further improve and develop new and existing properties in attractive locations.

Property-management and property- development operations are led by the four regional managers. Everyday man- agement and rental activities are han- dled locally by the respective offices.

Project-development operations are conducted centrally from the head office in Norrköping, which also has resources for administration, operation, accounting, purchasing, information, IT, and environmental and quality matters.

Eastern 35%

Western Gothenburg 16%

16%

Stockholm 33%

distribution of annual rental revenues by region

Eastern 37%

Western 18%

Gothenburg 15%

Stockholm 30%

distribution of floor space by region

Fair value by region

Eastern 33%

Western 15%

Stockholm 36%

Gothenburg

16%

Regions

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

In Gothenburg, a major office remodeling project is under way at the Stampen property. At the Ansvaret property block in Jönköping, prepara- tions are under way for the construction of new retail and office space.

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

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

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

The Western region consists of Arvika, Karlstad and Örebro. Supported by strong demand for housing and for of- fice and retail space, the rental situa- tion is favorable throughout the entire region.

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

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

In Norrköping, a major remodeling was completed of the Stabben property, which has been converted to educa- tional premises. Retail, parking and housing projects have been initiated to further strengthen the inner-city part of Norrköping.

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

Development properties

The development properties are situated mainly in central Sweden and comprise 2,630 hectares of farmland, forests and centrally located sites distributed among about 80 objects. The aims of the property-development operations are to develop the properties into sites suitable for commercial development and to create new projects for resale. This is achieved through active involvement in planning and property formation mat- ters, and through cooperation with the parties who need developable land.

Detailed development planning is under way for approximately 730 single-family homes and apartments in

such locations as Enköping, Eskilstuna, Nacka, Norrköping, Strängnäs and Ha- ninge. In 2007, detailed development plans for approximately 160 single- family houses and apartments gained legal force.

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

The company is actively engaged in efforts to increase the energy ef- ficiency of its properties. Its objective is to reduce total energy consumption by providing better indoor climate conditions for the tenants. The normal year corrected energy consumption has been reduced by 6% over the past three years, corresponding to the total one-year consumption for about 300 single-family homes. Annual water con- sumption has been reduced by 10%.

During recent years, the last oil-fired furnaces have been taken out of opera- tion. As a result, combined with lower heat and energy consumption, annual carbon dioxide emissions have been reduced by 9%, or approximately 900 tons, since 2005.

The efficiency of waste management operations has been further improved

Fastighets AB L E Lundberg

31% 1960-1969 1980-1989 19%

1970-1979 33%

12% 5%

1990- -1959

1 room 14%

38% 32%

13%

2 rooms 4 rooms

3 rooms

More than 5 rooms, 3%

age structure of investment properties, by rental revenues

residential apartments by type

Housing 48%

22%

6%

14%

10%

< 1 Mkr

1 - 3 Mkr 3-5 Mkr

> 5 Mkr value of rental contracts,

dec 31, 2007

Housing 48%

7%

9%

14%

7%

9% 6%

2008 2009

2012 2010

2011

2013-

maturity of rental contracts

distributed by rental revenues

16

through the expansion of environmental stations in the properties.

Investments and divestments Sales of investment properties during the year amounted to SEK 201 m. (83), gener- ating capital gains of SEK 64 m. (60).

Braxen 17, the office and retail property in central Norrköping, was acquired in November for SEK 56 m.

In Gothenburg, a major office reno- vation project was started in 2006 at the Stampen property for the local police authorities. The project is scheduled for completion in 2009 and total expendi- ture is estimated at slightly more than SEK 100 m.

During 2007, a major renovation of the Stabben property in Norrköping was also completed to create space for training and education facilities for the

Swedish Universities’ Extension Organi- zation. Expenditure on the project is expected to total SEK 31 m.

Sales of development properties during the year amounted to SEK 52 m.

(64), of which SEK 41 was attributable to single-family housing sites and SEK 11 m. to other land holdings. The sales generated capital gains of SEK 45 m. (39).

Sales and earnings

Net sales, including revenues from divestments of development proper- ties, amounted to SEK 912 m. (888).

The increase was attributable primarily to higher rental revenues. Operating expenses for electricity, heat, water and waste disposal were held at the same level as during previous years.

Maintenance costs declined to SEK 258 m. (266). The decline was attributable

mainly to lower costs for tenant adapta- tions totaling SEK 34 m. and higher costs for planned maintenance meas- ures amounting to SEK 27 m. Operating profit amounted to SEK 353 m. (331).

In February 2008, the vacancy rate in the real estate portfolio was slightly less than 2%, of which residential premises accounted for 0.5% and other premises for about 3%. Fair value of the real es- tate portfolio’s managed property hold- ings on December 31, 2007 was SEK 9,104 m. (8,272); the corresponding value of development properties was SEK 208 m. (249). Low vacancy rates, continued investments in the existing real estate holdings and favorable trends in the overall real estate market are key factors that contribute to changes in the value of the portfolio of investment properties.

Key figures 2007

Operating 2007

Stockholm region western

region gothenburg region Eastern

region Total

Number of properties

37 32 22 58 149

Carrying amount, SEK m. 635 437 460 1,057 2,589

Fair value, SEK m. 1,374 1,451 2,999 9,104

Number of apartments 2,495 1,641 605 2,168 6,909

Residential, sqm 187,750 116,008 43,507 156,414 503,679

Residential, rent per sqm, SEK 818 831 828 817 821

Residential, rental value, SEK 000s 153,668 96,419 36,008 127,714 413,759

Residential, rent-based vacancy rate, % 0.8 0.4 1.2 0.8

Office and retail, sqm 51,923 29,721 72,153 96,141 249,938

Other premises, sqm 38,581 22,090 16,179 91,294 168,144

Office/retail, rent per sqm, SEK 2,121 1,047 1,264 1,308 1,433

Other premises, rent per sqm, SEK 597 503 451 528 553

Office/retail, rental value, SEK 000s 110,127 31,111 91,227 125,783 358,248 Other premises, rental value, SEK 000s 23,016 11,114 7,296 48,169 89,595

according to aaa according to iFrS

SEK m. 2007 2006 2007 2006

Net revenues

912 888 912 888

Operating expenses -243 -243 -186 -179

Maintenance -258 -266 -174 -134

Personnel costs - - -92 -94

Property tax -40 -32 -40 -33

Divested development properties -25 -7 -25

Depreciation -44 -40 -5 -4

Sales and administrative costs -28 -30 - -

Gain on sale of investment properties 64 60 - -

Reversal of impairments -2 19 - -

Value change in investment properties - 838 690

Operating profit 353 331 1,247 1,109

1) As a supplement to reporting in accordance with the Annual Accounts Act (AAA) on pages 15-17, operating profit

Hufvudstaden

Stockholm Eastern City Stockholm 48%

Western City 40%

Gothenburg 12%

The Hufvudstaden share distribution of annual rental

revenues by type of premises annual rental revenues

by business area Proportion of Lundbergs’ total assets

on February 19, 2008

50 60 70 80 90 100

SIX Properties Index Hufvudstaden A

SEK

Feb Jan 08 Nov Sept July May March Jan 07 Offices 48%

Retail and Restaurants 44%

Other 8%

Hufvudstaden 18.7%

18

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

In March 2007, an extraordinary dividend of SEK 10 per share was

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

Today, Hufvudstaden’s real estate port- folio is concentrated in the central parts of Stockholm and Gothenburg. The company owns commercial office and retail properties within the city centers’

business districts, including Hamngatan, Norrmalmstorg, Biblioteksgatan and Kungsgatan in Stockholm and Vall- graden and Östra Nordstan in Gothen- burg. This makes Hufvudstaden one of the most specialized and geographically concentrated real estate companies in Sweden. Total rentable space amounts to 354,000 square meters with an an- nual rental value of SEK 1.2 billion. The fair value of the real estate portfolio at the end of the year was SEK 20.5 bil- lion.

The operation is divided into three business areas. Stockholm Eastern City comprises 16 properties with total rent-

able space of 145,000 square meters.

Stockholm Western City comprises nine properties with total rentable space of 150,000 square meters. This business area also includes the NK properties in Stockholm and Gothenburg and the NK brand. It also includes the subsidiary Parkaden, which has parking operations in two of Hufvudstaden’s properties. The Gothenburg business area consists of four properties with total rentable space of 59,000 square meters.

Hufvudstaden is actively involved in developing the high quality and ef- ficiency of its real estate portfolio with the aim of creating favorable value growth. Changes and improvements are implemented on a regular basis.

Through development measures, the premises retain high technology stand- ards and more space-efficient layouts, resulting in an improved operating net and higher returns.

Hufvudstaden’s financial goal is to achieve satisfactory dividend growth over time and that the dividend shall represent more than half of the net profit from operating activities. The eq- uity/assets ratio shall amount to at least 40% over time.

In May, Hufvudstaden entered into an agreement regarding the acqui- sition of the Rännilen 15 property, situated at Smålandsgatan 12 in Stockholm. The purchase consid- eration was SEK 312.5 m. and the property has 3,353 square meters of rentable floor space. As a result of this acquisition, Hufvudstaden now owns the entire Rännilen property block.

The year-end market value of the property portfolio was established as SEK 20.5 billion (17.4).

Key financial data

2007 2006 Net revenues, SEK m. 1,276 1,153 Profit after net financial items, SEK m. 3,322 3,221 Profit after tax, SEK m. 2,401 3,423 Earnings/share after tax, SEK 11.64 16.60 Dividend/share, SEK 1.75

11.60

Share price, Dec. 31, SEK, Series A share 62.00 77.50

1) Including revenues from divested operations 2) Including an extraordinary dividend of SEK 10.00 per share.

Largest shareholders, december 31, 2007

% of share capital voting rights

Lundbergs 45.2 88.0

SEB Trygg Liv 11.4 2.3

Mellon Funds 3.0 0.6

JP Morgan 2.2 0.4

Citibank Funds 2.1 0.4

State Street Bank & Trust 1.9 0.4

Lundbergs’ holding February 19, 2008

Series A shares 85,141,229

Series C shares 8,177,680

The trend in Hufvudstaden’s markets was favorable, with rising rents and a decrease in vacancy rates. The vacancy rate in terms of rental revenues from the property portfolio is down to a historically low level of 3.3%.

Highlights of the year

Sweden 23%

United Kingdom 12%

Germany 13%

Spain 9%

France 4%

Netherlands 4%

Italy 5%

Rest of Europe 19%

Rest of World 11%

The Holmen Share External net

sales by business area

External net sales by market Proportion of Lundbergs’ total assets,

February 19, 2008

160 200 240 280 320

SIX Forest Products Index Holmen B

SEK

Feb Jan 08 Nov Sept July May March Jan 07 Holmen

Paper 54%

Holmen Skog 14%

Iggesund Paperboard 27%

Holmen Timber 3%

Holmen Energi 2%

Holmen 14.3%

Holmen

20

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

Holmen is a forest industry group that manufactures newsprint, board and wood products. The Group also owns forests and energy assets. Europe is the company’s most important market, accounting for about 90% of sales. The number of employees is approximately 4,900, of whom slightly more than one fourth work outside Sweden.

Holmen is organized in five business areas. Holmen Paper produces and sells wood-containing newsprint based on virgin-fiber and recycled fiber raw mate- rials. The products are used mainly in the production of newspapers, magazines, catalogs and advertising materials. Pro- duction capacity amounts to nearly 2.2 million metric tons annually. The busi- ness area’s main markets are Sweden, the UK, Germany and Spain.

Iggesund Paperboard manufactures and sells solid board and folding box- board based solely on virgin-fiber raw materials. The products are used mainly as packaging materials for products such as food, cosmetics, pharmaceu- ticals, tobacco and confectionery, and for graphic-design applications. Annual production capacity amounts to 590,000 metric tons. The business area’s larg- est markets are the UK, Germany and France.

Holmen Timber manufactures and sells sawn redwood timber to industrial manufacturers of consumer products. Its largest markets are the UK and Scandi- navia.

Holmen Skog is responsible for timber supplies to the group’s Swedish units and manages slightly more than one million hectares of productive forestland. Hol- men’s annual felling in wholly owned forests totals approximately 2.5 million cubic meters. It self-sufficiency rate in terms of timber is about 50%.

Holmen Energi is responsible for energy supply to Holmen’s industries and other energy related issues in the Group. A normal year’s production, at the wholly and partly owned hydro- electric power plants in Sweden, is approximately 1,100 GWh of electricity.

In addition, approximately 500 GWh back-pressure power is produced at the plant, which is included in other business areas’ operations. The group’s self-sufficiency rate in terms of electricity is slightly more than 30%.

Holmen is strengthening its raw materials procurements by integrating backwards in the value chain and attain- ing ownership of forests and wastepaper collection operations, as well as power production.

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

Demand for Holmen’s newsprint, board and wood products re- mained favorable. Deliveries of newsprint remained unchanged compared with 2006, while deliv- eries of wood products increased and those of board declined due to a major stoppage for rebuilding.

The business areas’ average product price levels were higher than in 2006.

Key financial data

2007 2006 Net sales, SEK m. 19,159 18,592 Profit after net financial items, SEK m. 2,5821 2,056 Profit after tax, SEK m. 1,5052 1,459 Earnings/share after tax, SEK 17.80 17.20 Dividend/share, SEK 12.00 3 12.00 Share price, Dec. 31, Holmen B, SEK 240.00 298.00

1) Including items affecting comparability of SEK 557 m.

2) Including items affecting comparability of SEK 36 m.

3) Board of Directors’ proposal.

Largest shareholders december 31, 2007

% of share % of capital voting rights

Lundbergs 27.6 51.8

Silchester International

Investors 8.6 2.5

Kempe Foundations 6.9 16.8 Handelsbanken with

pension foundation 3.1 9.1 Swedbank Robur Funds 2.3 0.7

HQ Funds 1.8 0.5

Lundbergs’ holding February 19, 2008

Series A shares 14,010,196

Series B shares 9,398,720

Earnings were charged with sharply increased costs for timber and wastepaper, as well as extra costs connected to the rebuilding and maintenance stoppage.

Holmen Paper launched a savings and efficiency program, as well as a review of its production strategy.

The Board decided to invest approxi- mately SEK 1.1 billion in a new saw mill close to the paper mill in Norrköping. The new sawmill is expected to be deployed in autumn 2009.

Highlights of the year

Cardo

Door &

Logistics Solutions Wastewater 48%

Technology Solutions 29%

9%

Pulp & Paper 14%

Solutions Residential Garage Doors

Europe 83%

North America 6%

Asia 6% Other 5%

The Cardo share Net sales by division

Net sales by geographic area Proportion of Lundbergs’

total assets, February 19, 2008

Cardo 5.4%

150 200 250 300 350 400

SIX Industrial Conglomerates Index Cardo

SEK

Feb Jan 08 Nov Sept July May March Jan 07

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

22

Cardo is a multinational industrial en- gineering group with leading brands.

The company offers solutions based on quality products, a high level of service and extensive application knowledge to industrial customers. It has strong positions in the markets for docking solutions, water and waste- water treatment technologies, systems for the pulp and paper industry and garage doors. Cardo has subsidiaries in slightly more than 30 countries, mainly in Western Europe. The number of employees is 6,000, of whom approxi- mately 80% work outside Sweden.

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

The Wastewater Technology Solu- tions Division is one of Europe’s leading suppliers of turnkey solutions for waste- water and water treatment applications.

ABS, which is the primary brand, has the market’s widest product range, with submersible and dry-installed sewage pumps, agitators, aerators, compressors, control and remote monitoring system and drainage pumps. The Pumpex brand is used for drainage pumps in the construction sector.

The Pulp & Paper Solutions Division includes partly Lorentzen & Wettre, one of the world’s leading suppliers of advanced equipment for quality control and process optimization for the paper industry, and partly Scanpump, which supplies pumps, agitators and aerators for the paper and pulp industry. Both of these companies are represented in the approximately 50 countries in which most of the world’s pulp and paper are produced.

The Residential Garage Doors Divi- sion develops, manufactures and sells garage doors for private consumers and related products, combined with service and support. Sales offices are located in several countries in Western Europe and China. The range includes most types of garage doors, which are marketed under the Crawford, Normstahl and Henderson brands.

The group’s financial goals are to reach an operating margin of at least 10% by 2008, and to generate average organic growth of at least 5% annually over a complete economic cycle and a minimum return on capital employed of 20%.

In October, Cardo opened its new plant in Hunedoara, Romania, for the production of docking equip- ment. With this plant, Cardo Door &

Logistics Solutions is able to satisfy market requirements for manufac- turing in Eastern Europe while also strengthening Cardo’s position in the emerging markets around the Black Sea and in Romania.

Cardo Door & Logistics Solutions has acquired the rights to the German company Fuhrrheydt’s solution for horizontal sliding doors. As a result of this acquisi- tion, Cardo expands its offering to customers, who now have access to vertical and horizontal doors under the Megadoor brand.

Key financial data

2007 2006 Net sales, SEK m. 9,308 8,556 Profit after net financial

items, SEK m. 343

558

Profit after tax, SEK m. 170 401 Earnings/share after tax, SEK 5.67 13.38 Dividend/share, SEK 9.00

9.00 Share price, Dec. 31, SEK 201.00 260.00

1) Including items affecting comparability totaling SEK 317 m.

2) Board of Directors’ proposal.

Largest shareholders, dec 31, 2007

% of share capital and voting rights

Lundbergs 36.0

If Skadeförsäkring 10.0

HQ Funds 4.2

Lannebo Funds 3.6

AMF Pension 2.5

Swedbank Robur Funds 2.1

Lundbergs’ holding, February 19, 2008

Number of shares 10,800,000

Highlights of the year

Cardo’s order intake increased 8%

during the year, adjusted for

exchange-rate effects. The largest

growth occurred in countries

outside the EU. Order intake

increased 29% in Eastern Europe,

12% in Asia Pacific and 28% in

Latin America.