Subsidiaries and other major shareholdings

(1)

2009

(2)

LUNDBERGS 2009 – LOREM IPSUM

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 real estate company, Fastighets AB L E Lundberg, and the publicly traded subsidiaries and associated companies Cardo, Holmen and Hufvudstaden. 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.

30.8%

Properties in Fastighets AB L E Lundberg

Holmen 13.4% Hufvudstaden 18.1%

Indutrade 1.9%

Handelsbanken 6.8%

Husqvarna 4.3%

Sandvik 4.2%

Industri- värden 11.7%

Other 0.8%

Cardo 7.9%

Western Region

Proportion of Lundbergs’ marked- valued assets, SEK 31 billion, on February 19, 2010

0 100 200 300 400 500 600

Feb 19, 2010 2009 2008 2007 2006 2005 SEK

Net asset value per share after deferred tax, SEK

OMX Stockholm Diversified Financial Services Index Lundbergs

200 260 320 380 440 500SEK

Jan 10 Feb Nov

Sept July May March Jan 09

The Lundberg share

Lundbergs

LUNDBERGS 2009

The figures denote the percentage of share capital (voting rights) held on February 19, 2010.

(4)

The year in brief

V On December 31, 2009, net asset value after deferred tax amounted to SEK 28.0 billion (SEK 452 per share), compared with SEK 22.1 billion (SEK 356 per share) at December 31, 2008. The corresponding values on February 19, 2010 were SEK 27.6 billion (SEK 444 per share).

V Operating profit totaled SEK 2,987 m. (loss: 1,965). Operating profit excluding impairment losses, reversals of impairment losses and unrealized changes in value amounted to SEK 3,544 m. (3,186).

V Earnings (excluding minorities) per share amounted to SEK 25.61 (loss: 36.19).

V SEK 266 m. was invested in Husqvarna through participation in rights issues and purchases of shares.

V Holmen commenced investments in a new sawmill adjacent to the Braviken paper mill outside Norrköping.

V Construction of a new block of commercial premises in central Norrköping was started.

V A large commercial property in central Linköping was acquired for SEK 372 m.

v In February 2010, the entire holding in NCC was divested for SEK 1.2 billion, generating a capital gain of SEK 439 m.

Earnings and key data

2009 2008

Net asset value after deferred tax, SEK billion 28.0 22.1

Net asset value per share after deferred tax, SEK 452 356

Shareholders’ equity per share attributable to Parent Company’s shareholders, SEK 410 329

Net sales, SEK m. 21,073 22,350

Profit after tax, SEK m. 2,119 -2,025

of which, minority share, SEK m. 531 219

Earnings per share, excluding minority share, SEK 25.61 -36.19

Dividend per share, SEK 6.50 ¹ 6.00

Debt/equity ratio 0.28 0.36

Equity/assets ratio, % 59 53

1) The Board of Director’s proposal.

(5)

The early part of 2009 was also strongly marked by the global financial crisis that started in the US in 2007, leading to a sharp decline in most economies through- out the world. What happened may be likened to a global cramp in the world economy. As a result of massive fiscal and monetary policy efforts from the G20 countries, some economic stabilization occurred during the summer and autumn of 2009. When this re- port was written, the economic decline had bottomed out. Recovery is pending, but its strength is difficult to project at this time. The financial system has stabilized and is now functioning relatively well, although new surprises cannot be ruled out.

Stock markets worldwide started to recover in the second quarter of 2009 and, as always, were well ahead of real economic growth. The Swedish stock market rose a favorable 47% in 2009, the strongest year for the stock market since 1999. In the fourth quarter, many industrial companies reported an increase in order bookings, a trend that is expected to continue during 2010.

A challenge in the years ahead will be the gradual but inevitable discontinuation of stimulus measures, which will present a difficult tightrope act for G20 member countries. Personally, I believe we will begin to see a return to growth in most of the world’s major economies. For Sweden, which has managed the financial crisis quite well, the situation looks promising. Swedish industry has a strong position in relation to its international competitors. The Swedish stock market has discounted an improvement for its companies, but additional upside potential will probably emerge in parallel with the confirma- tion of increased business activity.

Lundbergs’ performance

For 2009, Lundbergs reported consolidated after-tax profit of SEK 2,119 m (loss: 2,025). As in the preceding year, unrealized changes in property values were charged against earnings. Excluding impairment losses/reversals of impairment losses and unrealized value changes, Lundbergs’ operating profit amounted to SEK 3,544 m.

(3,186). Net asset value per share after deferred tax rose 27% during the year to SEK 452 (356).

Lundbergs’ Board of Directors proposes that the Annual General Meeting approve a dividend of SEK 6.50 (6.00) per share. The motion

should be viewed in the light of the ongoing stabilization in the global economy and our strong financial position. As noted during many other financial crises and periods of economic recession, we recognize the importance of maintaining a strong financial position.

The ability to remain composed and not become dependent on external financiers is of critical importance to our capacity to protect the values in our company.

After rain comes sun, and so it is again. Instead of being forced to sell assets in a weak market, or pay high costs for loans, we are concentrating on managing our investments as prudently as possible. We also have scope to take advantage of new business opportunities that weaker players are not able to pursue. As a major shareholder in various companies, the capacity to infuse fresh capital if and when necessary is an important strength. The companies would otherwise run the risk of weakening and, in turn, decline in value. During 2009, we subscribed for our share of Husqvarna’s new issue and guaranteed additional money over and above our allot- ment. The issue was completed successfully, and the share value has increased sharply since the issue.

Our interest-bearing liabilities at year-end 2009 amounted to SEK 3.1 billion, corresponding to 10% of our assets (see page 12). If our liabilities were attributed totally to our property operations, the loan- to-value ratio would amount to 33%, and our publicly listed shares would be completely free of debt. Our credit rating with Standard

& Poor’s, which was confirmed in August 2009, remains strong, A+, with a stable outlook.

Fastighets AB L E Lundberg

Lundbergs’ consolidated financial statements include operating profit of SEK 157 m. (60) reported by the wholly owned subsidiary Fastighets AB L E Lundberg. As in the preceding year, profit was charged with unrealized declines in values in the real estate portfolio, which were estimated at 2.7% (4.4) in 2009, excluding new investments. The decline was due mainly to a higher required yield on commercial properties.

The rental market for housing remained strong during the year. A modest decline was noted in demand for office and retail premises, primarily in Stockholm. The vacancy rate in February 2010 was about 3.4%, comprising 2.2% for residential properties and 4.3%

for commercial premises.

The new investment project in a commercial property in the center of Jönköping (about SEK 165 m.) was completed during the first quarter of 2010. A new construction project comprising a com- plete city block in central Norrköping was started in August 2009, and includes garage space, retail premises and offices. The project

President’s review

(6)

“I can assure you that the level of activity in our portfolio compa- nies is high, and that difficult and important decisions are being made continuously concerning acquisi- tions, investments, financing issues, appointments to management positions and other concerns. This is where value is created for our shareholders, one building stone at a time, from a long-term industrial perspective.”

LUNDBERGS 2009

is scheduled for completion in autumn 2011 and the investment will total about SEK 420 m. Two-thirds of the office space is leased to the Swedish Transport Agency in Norrköping.

Total investments in properties during 2009 amounted to SEK 321 m.

In December 2009, an agreement was signed to acquire a centrally located retail sales and office building in Linköping for SEK 372 m. The property is situated in the city’s best commercial location for retail stores, and we took over the property on January 15, 2010.

We currently also have several new construction projects in the analysis and planning stages in centrally located parts of Linköping and Norrköping. The projects, which are expected to begin in the next few years, have a total investment volume of approximately SEK 2 billion.

Portfolio companies

During 2009, we acquired publicly listed shares for a total of SEK 362 m., including investments in Husqvarna and Industrivärden amounting to SEK 266 m. and SEK 78 m., respectively, as well as lesser amounts in Holmen and Hufvudstaden.

In February 2010, we divested our entire shareholding in NCC for SEK 1.2 billion, generating a capital gain of SEK 439 m. Lundbergs has been part owner of NCC since the merger with Siab 13 years ago, and we achieved a favorable return that comfortably exceeded the stock market average.

Holmen reported higher earnings in 2009 as a result of increased prices for newsprint and board. Weak demand, however, necessitated comprehensive production cutbacks that had a negative impact on earnings. Construction of Holmen’s new sawmill next to the Braviken paper

(7)

mill outside Norrköping is proceeding as planned. The new sawmill is expected to begin operations at year-end 2010.

During 2009, continued improvement was noted in earnings from Hufvudstaden’s ongoing business operations. As in the preceding year, however, earnings were charged with unrealized value declines in the property portfolio and, as a result, Hufvudstaden reported a loss for 2009. The rental market declined during the first half of the year, but some stabilization was noted during the fourth quarter and the early part of 2010. The company’s financial position remained strong.

Cardo’s order bookings and sales declined in 2009 due to the global economic slowdown. Thanks to a reduction in costs and unchanged or higher margins, the shortfall in earnings was curtailed.

Cardo’s cash flow was extremely strong, which led to a sharp decline in net debt.

Industrivärden’s net asset value increased at a faster rate than the stock-market average in 2009. The portfolio remained largely unchanged during the year. In January 2010, Industrivärden issued a five-year convertible loan totaling EUR 500 m. The loan was raised to take advantage of a good market opportunity to access favorable financing with potential to strengthen its capital base.

Indutrade was impacted by the economic slowdown, which resulted in lower order bookings and sales. The decline in its profit margin was limited, however, and the company reported favorable earnings under the conditions prevailing in 2009.

During the past year, Husqvarna implemented comprehensive changes to reduce costs and improve its competitiveness. Weak demand in Europe and the US, combined with nonrecurring costs, had a negative impact on earnings, although cash flow remained strong.

Sandvik was impacted severely by the weak market conditions during 2009. Order bookings declined for all business areas, but remained strong in the energy sector and large parts of the Asian market. Efforts to reduce the company’s working capital and cost base were charged against earnings, but improved the operating cash flow.

Handelsbanken reported strong earnings in 2009. Net interest items continued to improve. Loan losses rose, but remained at a low level in relation to other Nordic banks.

Future outlook

Our property operations are now entering a new phase in the shape of the new construction projects now in progress and others that we plan to pursue. These projects will rejuvenate our property portfolio and create completely new properties, both residential and commercial, with high standards, modern design and healthy operating economies. We also plan to strengthen our project organization, while the management organization does not need to be increased more than marginally. We might even consider acquisitions of centrally located commercial properties in some of the cities

where we are already established, in order to develop these holdings through refurbishment and expansion projects.

Our wholly owned property operations consist of stable business activities with strong cash flow and favorable long-term value growth, which provides us with a strong base.

Our investments in eight publicly listed companies represent different industrial sectors, sizes and risk levels. We are the principal shareholder in Holmen, Hufvudstaden and Cardo, and one of the major shareholders in our other portfolio companies.

We see favorable development opportunities in all our portfolio companies, naturally with different risk levels and potential. Our business model is based on exercising active ownership in order to promote the development of these companies and, thereby, create a healthy direct return and value growth in our investments. And we have been successful in these endeavors for many years. Over the past 10 years, shareholders in Lundbergs have received an average total return of 15.3% annually, compared with stock market’s average return of 2.2% annually. Accordingly, an investment of SEK 100 made 10 years ago is now worth slightly more than SEK 400, compared with the stock market average return of about SEK 125. During the next few years, we plan to continue to invest in the portfolio companies, and some new companies may also be added to the portfolio.

Lundbergs is criticized occasionally for not being sufficiently active. Our critics claim that we do not buy or sell shareholdings very often, and that we are boring over the long term. I can assure you that we have a high level of activity in our portfolio companies, where difficult and important decisions are being made continuously concerning acquisitions, investments, financing issues, appointments to management positions and other concerns. This is where value is created for our shareholders, one building stone at a time, from a long-term industrial perspective. The facts speak for themselves, and I am convinced that our shareholders would not have received a higher return with a short-term business model that changes shareholdings with much greater frequency.

Granted, there are many different ways to generate a strong return on capital, but we will continue to operate with our model.

Our financial policy is important for the creation of discipline and our success as a strong player both in the portfolio companies and other investment situations. I believe our approach has been a critical fac- tor in the successful development of our various companies.

It is my belief and my aim that, in the future, our shareholders will continue to receive a favorable return on the Lundberg share..

Stockholm. March 1, 2010

Fredrik Lundberg

LUNDBERGS 2009

(8)

LUNDBERGS 2009 – LOREM IPSUM

”Our investments in eight publicly listed companies represent different industrial sectors, sizes and risk levels.”

”Our business model is based on exercising active ownership in order to promote the develop

ment of these companies and, thereby, create a healthy direct return and value growth in our

Holmen

Indutrade

Hufvudstaden

Sandvik Husqvarna

Handelsbanken

Cardo Industrivärden

(9)

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 and associated companies Cardo, Holmen and Hufvud- staden. Lundbergs also has substantial holdings in Handelsbanken, Husqvarna, Industrivärden, Indutrade and Sandvik.

Strategy and objective

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

Assets

Lundbergs’ assets are concentrated to a few major holdings. The real estate holdings, through the wholly owned subsidiary Fastig- hets AB L E Lundberg and shares in Hufvudstaden, represented a value of SEK 15.2 billion on February 19, 2010, or 49% of the Group’s total assets. The shareholdings in Cardo, Handelsbanken Holmen, Husqvarna, Industrivärden, Indutrade and Sandvik accounted for SEK 15.7 billion or 50% of total assets.

Lundbergs as an investment company

2009 2008

2007 2006

2005 2004

2003 2002

2001 2000

SEK billion

0 10 20 30 40 50 60 70 80 90 100

%

Handelsbanken Sandvik Husqvarna Other

Indutrade Industrivärden

NCC Cardo Holmen

Hufvudstaden Properties

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 and total asset value, SEK billion

(10)

LUNDBERGS 2009 - LUNDBERGS aS aN INvEStMENt COMPaNy

Lyckan property, Norrköping Iggesund mill

(11)

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 personnel of the subsidiary L E Lundberg Kapitalförvaltning. The wholly owned real estate holdings are separated in organizational terms from the Par- ent Company and are assigned the same status as the Group’s other major investments. Management expenses in relation to total assets amounted to 0.15% during 2009.

L E Lundberg Kapitalförvaltning AB

L E Lundberg Kapitalförvaltning is a subsidiary that engages in securities trading. The objective of operations is to utilize macro- economic and corporate analyses in order to generate a favorable return on capital employed. In addition to securities trading, the company accounts for the analysis and follow-up of other investments within the Group. The securities trading activities include equities and equity-related instruments. Although shares listed on Nasdaq OMX Nordic account for most of the investments, investments may also be made in other mature markets. The value of the portfolio at year-end was SEK 288 m. The organization consists of five employees.

Investment activities

In 2009, shares with a total value of SEK 362 m. were acquired, primarily in Husqvarna and Industrivärden. A total of SEK 266 m. was invested in Husqvarna through participation in a rights issue and share purchases. Industrivärden shares at a value of SEK 78 m. were acquired.

In February 2010, the entire holding in NCC, corresponding to 10% of the share capital and 22% of the voting rights, was divested.

In total, the sale generated slightly more than SEK 1.2 billion and the capital gain was SEK 439 m. after tax. Lundbergs had been a shareholder of NCC since 1997. The total return on the investment over the entire holding period amounted to slightly more than 11%

percent annually.

Return

Lundbergs’ mission is to generate a healthy absolute return for its shareholders through growth in dividends and net asset value. Since 2000, net asset value per share after deferred tax has grown by an average of 8.2% annually. During 2009, net asset value after deferred tax increased 27%. Total annual return1 over the past 10 years has averaged 15.3%. Total annual return over the past five-year period has averaged 7.2%. The total return in 2009 was 22.2%. Interest- bearing net debt in relation to market-valued assets on December 31, 2009 amounted to 10% (12). The corresponding value during the past 10-year period has varied between 7 and 13%. Accordingly, the total return has been generated consistently together with low financial risk.

Net asset value

On December 31, 2009, net asset value after deferred tax amounted to SEK 28,046 m. (SEK 452 per share), compared with SEK 22,073 m.

(SEK 356 per share) at December 31, 2008; see table page 12. On February 19, 2010, estimated net asset value per share after deferred tax amounted to SEK 27,550 m. (SEK 444 per share).

Cash flow

During 2009, dividends totaling SEK 882 m. (1,251) were received.

Funds contributed through real estate operations amounted to SEK 274 m. (385), while the sale of securities generated an expense of SEK 95 m. (revenues: 129). Accordingly, total funds received amounted to SEK 1,061 m. (1,765). During the year, SEK 362 m. (281) was invested in shares and SEK 178 m. (99) in properties. Dividends paid by Lund- bergs amounted to SEK 372 m. (558). Interest-bearing assets rose SEK 153 m. and interest-bearing liabilities rose SEK 207 m. Accordingly, interest-bearing net debt increased SEK 54 m. to SEK 3,070 m. (3,016) at December 31, 2009. For additional information, see the cash flow report on page 13.

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

(12)

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

Feb. 19, 2010 Dec. 31, 2009 Dec. 31, 2008

% ¹ Share capital Voting rights Share capital Voting rights Share capital Voting rights

Cardo 41.3 41.3 41.3 41.3 41.3 41.3

Handelsbanken 1.8 1.8 1.8 1.8 1.8 1.8

Holmen 28.0 52.0 28.0 52.0 27.9 52.0

Hufvudstaden 45.3 88.1 45.3 88.1 45.2 88.0

Husqvarna 5.1 14.4 5.1 14.4 4.3 13.1

Industrivärden 11.2 15.5 11.2 15.5 10.9 15.0

Indutrade 10.0 10.0 10.0 10.0 10.0 10.0

NCC 10.0 22.1 10.0 20.6

Sandvik 1.3 1.3 1.2 1.2 1.2 1.2

Feb. 19, 2010 Dec. 31, 2009 Dec. 31, 2008

SEK m. Market value ² Acquisition value ³ Market value ² Acquisition value ³ Market value ² Acquisition value ³

Cardo 2,453 2,058 2,397 2,058 1,277 1,277

Handelsbanken 2,126 2,096 2,246 2,096 1,386 1,386

Holmen 4,180 2,933 4,331 2,933 4,516 2,917

Hufvudstaden 5,630 2,830 5,540 2,830 5,301 2,828

Husqvarna 1,354 1,416 1,450 1,416 629 629

Industrivärden 3,656 2,582 3,830 2,582 2,405 2,405

Indutrade 580 288 540 288 265 265

NCC 1,280 775 541 541

Sandvik 1,304 1,370 1,210 1,210 686 686

Other shares 254 243 288 276 146 144

TOTAL 21,537 15,816 23,112 16,464 17,151 13,078

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

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

3) Where applicable, after impairment losses.

(13)

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

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 SEK

Net asset value after deferred tax, per share

Net asset value

1) The properties’ estimated fair value on December 31, 2009 was SEK 9,195 m. (9,048), of which develop ment properties accounted for SEK 231 m.

(212).

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

3) Other assets, provisions (excluding deferred tax) and liabilities have been entered at the carrying amount at December 31, 2009 and 2008.

4) Deferred tax (26.3%) has been computed on the basis of the provision to the tax deferral reserve and the difference between the market value and 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

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net asset value, SEK m. 13,380 13,665 13,692 18,024 21,520 26,078 33,147 30,409 22,073 28,046 Net asset value/share, SEK 205 220 221 290 347 421 535 490 356 452 Changes in net asset

value/share, % 5 7 0 32 20 21 27 - 8 - 27 27

Net asset value

Dec. 31, 2009 Dec. 31, 2008 SEK m. SEK per share SEK m. SEK per share Properties in Fastighets AB L E Lundberg ¹ 9,195 148 9,048 146

Cardo ² 2,397 39 1,277 21

Handelsbanken ² 2,246 36 1,386 22

Holmen ² 4,331 70 4,516 73

Hufvudstaden ² 5,540 89 5,301 86

Husqvarna ² 1,450 23 629 10

Industrivärden ² 3,830 62 2,405 39

Indutrade ² 540 9 265 4

NCC ² 1,280 21 541 9

Sandvik ² 1,210 20 686 11

Other securities ² 288 5 146 2

Total market-valued assets 32,306 521 26,199 423

Other assets, provitions and liablilites ³ -3,345 -54 -3,233 -52

Net asset value before deferred tax 28,961 467 22,966 370

Deferred tax ⁴ -915 -15 -894 -14

NET ASSET VALUE AFTER DEFERRED TAX 28,046 452 22,073 356

Market value 22,506 363 18,848 304

Price/NAV,% 80 85

-30 -20 -10 0 10 20 30 40

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

%

Changes in net asset value per share

(14)

Cash flow report

SEK m. 2009 2008 2007 2006 2005

Dividends

Cardo 100 97 97 86 86

Handelsbanken 77 149 88 50

Holmen 212 281 281 260 236

Hufvudstaden 177 163 1,082 135 373

Husqvarna 35 14

Industrivärden 195 210 182 142 122

Indutrade 26 21 15 11

NCC 43 228 195 168 157

Sandvik ¹ 44 56 77 14

Other 7 11 17 12 19

882 1,251 2,048 877 994

Trading in securities ² -95 129 99 124 965

Results, property management 262 338 289 252 330

Sales, property management 12 47 253 147 457

Total assets contributed 1,061 1,765 2,689 1,401 2,745

Investments, equity management

Cardo 38

Handelsbanken 527 493 1,075

Holmen 15

Hufvudstaden 3

Husqvarna 266 141 1,519

Industrivärden 78 223

Indutrade 288

NCC 14

Sandvik 103 459 443 252

362 281 2,729 937 1,630

Investments, real estate operations 178 99 104 86 168

Own dividends 372 558 527 481 434

Group-wide costs 28 27 28 27 27

Taxes paid 72 133 163 97 125

Financial items 132 137 97 81 65

Other 50 13 35 -30 79

Total assets used 1,194 1,249 3,684 1,678 2,528

Change in net receivable/debt -133 516 -995 -277 217

Closing net receivable/debt -3,518 -3,385 -3,901 -2,906 -2,629

of which, interest-bearing -3,070 -3,016 -3,543 -2,519 -2,210

1) Including redemption of shares in 2007.

2) L E Lundberg Kapitalförvaltning AB is recognized net.

(15)

Series B Lundberg shares are listed on Nasdaq OMX Nordic, Large Cap. An average of 38,153 Series B shares were traded per trading day in 2009. Total share turnover amounted to 9.6 million Series B shares, corresponding to 25% of the total number of Series B shares.

The lowest price paid for the share in 2009 was SEK 235 and the highest was SEK 364.

Market capitalization

Lundbergs’ market capitalization at year-end was SEK 22,506 m.

(18,848). The share price rose 19% during the year.

Share capital

The share capital of L E Lundbergföretagen AB (publ) amounted to SEK 621 m. (621) during the year. On December 31, 2009, 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, and 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 40.

Ownership structure

Lundbergs has a total of about 15,100 shareholders (13,800), of whom some 11,400 (10,200) are registered in a nominee’s name and about 3,700 (3,600) in the owner’s own name. Foreign ownership amounts to 6.9% (5.2) of the share capital.

The Lundberg share

0 100 200 300 400 500 600 SEK

2010 Feb 2009

2008 2007

2006 2005

2004 2003

2002 2001

2000

OMX Stockholm Diversified Financial Services Index Lundbergs Series B

Key figures

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Dividend per share, SEK 5.25 5.75 6.00 6.50 7.00 7.75 8.50 9.00 6.00 6.50¹

Growth in dividend per share, % 11 10 4 8 8 11 10 6 -33 8

Direct return, % 3.7 3.6 3.1 2.8 2.5 2.3 1.9 2.4 2.0 1.8

Total return, % 28.6 15.4 27.2 23.1 25.9 20.4 34.9 -15.6 -15.3 22.2

Stock market price, SEK 142.00 158.00 195.00 232.50 284.50 335.50 444.00 368.00 304.00 363.00

(16)

Distribution of shareholders No. of

shareholders As % of all

shareholders No. of

shares held As % of share capital

Average no.

of shares/

shareholders

1 - 500 12,495 82.9 1,590,631 2.6 127

501 - 2,000 1,844 12.2 1,944,674 3.1 1,055

2,001 - 5,000 382 2.5 1,305,214 2.1 3,417

5,001 - 20,000 228 1.5 2,346,844 3.8 10,293

20,001 - 50,000 59 0.4 1,829,853 2.9 31,014

50,001 - 66 0.4 53,128,267 85.5 804,974

TOTAL 15,074 100.0 62,145,483 100.0 4,123

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 emission 300 30 230

1984 Bonus issue 1:1 230 460

1989 New emission 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 2010

Holdings as % of Feb 2009 Holdings as % of share capital votes share capital votes

Fredrik Lundberg incl. companies 53.0 89.5 52.7 89.5

Louise Lindh 7.5 1.7 7.5 1.7

Katarina Martinson 7.5 1.7 7.5 1.7

PRI 1.9 0.4 1.8 0.4

SEB Funds 1.3 0.3 0.8 0.2

Robur Funds 1.1 0.2 3.8 0.8

Handelsbanken Funds 0.9 0.2 0.8 0.2

Second AP Fund 0.9 0.2 2.0 0.4

Livförsäkringsaktiebolaget Skandia 0.5 0.1 0.4 0.1

Confederation of Swedish Enterprise 0.5 0.1 0.5 0.1

Others 25.0 5.6 22.1 4.9

Subtotal 99.8 100.0 99.8 100.0

Repurchased Lundberg shares¹ 0.2 - 0.2 -

TOTAL 100.0 100.0 100.0 100.0

Swedish shareholders 93.1 98.5 94.8 98.8

Foreign shareholders 6.9 1.5 5.2 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).

0 1 2 3 4 5 6 7 8 9

2009¹ 2008 2007 2006 2005 2004 2003 2002 2001 2000

SEK/share %

0 1 2 3 4 5 6 7 8 9

Dividend/share Direct return, right scale -20

-10 0 10 20 30 40

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

%

Dividend and direct return Total return

1) Board of Directors’ proposal.

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.

(17)

Lundbergs’ mission is to generate a healthy absolute return for its shareholders through growth in dividends and net asset value. Since 2000, net asset value per share after deferred tax has grown by an average of 8.2% annually. Total annual return for the Lundbergs share over the past 10 years has averaged 15.3%.

LUNDBERGS 2009

Lundbergs throughout the ages

In 1944, Lars Erik Lundberg founded the construction company that came to serve as the basis of the Lundbergs that we have today. Through the construction, ownership and management of both residential and commercial properties, the company has gradually developed from a local construction company to a stable and financially strong investment company.

Since its initial listing on the stock exchange in 1983, the company has grown in several different industries.

Today, Lundbergs is the principal or major owner of a number of carefully selected portfolio companies with solid market positions and stable cash flows.

Continued acquisition of Industrivärden shares.

Participates in structural transaction when Ramirent acquires Altima.

2003

Acquisition of Industrivärden shares.

2002

Acquires 20% of Stadium through a private placement.

2001

Lundbergs launches a share buyback program.

2000

Husqvarna

Hufvudstaden

(18)

FASTIGHETS AB L E LUNDBERG has many attractive projects in the pipeline in cities as Jönköping, Linköping and Norrköping.

The sketch below is an architect’s sketch of the Lyckan property block in Norrköping in the future.

Continued acquisitions of Handelsbanken and Sandvik shares.

2006 2005

Divests holdings in Stadium and Ramirent.

Acquires shares in Indu- trade, Handelsbanken and Sandvik.

2008

Minor acquisitions of Sandvik, Husqvarna and Cardo shares.

2010

Entire NCC holding divested in February.

2007

Husqvarna shares acquired. Continued acquisitions of Handels- banken, Industri värden and Sandvik shares.

Participation in new share issue and minor acquisition of Husqvarna shares.

2009

Fastighets aB L E Lundberg

Sandvik

(19)

Housing 49%

Oﬃce 26%

Retail 16%

Other 9%

Housing 55%

Oﬃce 18%

Retail 9%

Other 18%

Distribution of floor space by category

Distribution of annual rental revenues by type of premises

LUNDBERGS 2009 – SUBSIDIaRIES aND OtHER MajOR SHaREHOLDINGS

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

Share of Lundbergs’ total assets: 30.8%

(20)

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

The real estate holdings include 150 wholly and jointly owned management properties in 15 municipalities throughout 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 holdings 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 49% and 51%, respectively, of rental value.

Business concept and strategy

Fastighets AB L E Lundberg’s business concept is to manage and develop residential and commercial properties in municipalities where favorable growth is expected.

The company focuses on:

low sensitivity to economic fluctuations

•

through even distribution between residential and commercial properties comprehensive local market knowledge

•

through a decentralized organization effective management with high levels of

•

tenant service

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 population growth in recent years, which is favorable for the local rental market. The rental market for commercial premises was stable during 2009, although some signs of sluggishness were noted in the Stockholm and Gothen- burg markets. Demand for office space improved somewhat during the fourth quarter of 2009, and demand for residential and retail premises remained strong.

Since the real estate portfolio is concentrated in central locations, it is believed that Fastighets AB L E Lundberg will have favorable opportunities to maintain a high leasing rate. Because a number of the municipalities in which the company is represented show favorable growth, several centrally located new construction projects have been studied, and some of these projects may be started in the next few years.

Organization

The company’s property management is divided into four regions: Gothenburg, Stockholm, Western and Eastern. The management group includes the President, Vice President, regional managers, financial director, project development manager and rental administration manager. The organization constitutes an excellent platform for a continued focus on current property management operations, combined with opportunities to further improve and develop new and existing properties in attractive locations. Property management and development operations are led by four regional managers. Everyday management and rental activities are handled locally by the respective offices. Project development operations are conducted centrally from the head office in Norrköping, which also has resources for administration, operation, accounting, information, purchasing, IT, and environmental and quality matters.

Fastighets AB L E Lundberg

Housing 49%

< 1 SEK m. 18%

Garage and operation 6%

3-5 SEK m. 5%

> 5 SEK m. 6%

1-3 SEK m.

16%

Value of rental contracts

Housing 49%

2011 10%

2010 12%

2015- 11%

2012 9%

2013 7%

2014 2%

Maturity of rental contracts distributed by rental revenues

-1959 5%

1960-1969 31%

1970–1979 33%

1990- 12%

1980-1989 19%

Age structure of investment properties, by rental revenues

1 room 14%

2 rooms 32%

3 rooms 38%

4 rooms 13%

5 rooms and larger 3%

Residental apartments by type

All diagrams present information as at Dec 31, 2009.

(21)

Regions

The Gothenburg region comprises Gothenburg and Jönköping. Robust demand for housing is creating a favorable rental situation in the region. Demand for commercial properties is stable. In Gothenburg, a major office remod- eling project on behalf of the police authori- ties at the Stampen property started in 2006.

The project was completed in January 2010 at a total investment of about SEK 130 m. At the Ansvaret block in Jönköping, construction of a new retail and office property is under way.

The project will be completed and ready for occupancy during the first quarter of 2010, and the investment will total about SEK 165 m.

The Stockholm region consists of Enköping, Eskilstuna, Nyköping, Solna, Stockholm, Södertälje and Uppsala. The close proximity of the municipalities to Stockholm contributes to favorable 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 Eskilstuna, Nyköping and Södertälje. Demand for housing in the region is healthy. The rental situation for commercial premises remains favorable.

The Western region consists of Arvika, Karl- stad and Örebro. Supported by strong demand for housing, as well as office and retail space, the rental situation is favorable throughout the region. In Karlstad, a major refurbishment of the Potatisen residential property was completed during the first quarter of 2009 and the investment amounted to SEK 20 m.

The Eastern region comprises Katrineholm, Linköping and Norrköping, with about 70% of the portfolio concentrated in Norrköping. The rental situation for housing, retail premises and offices is favorable throughout the region. In Norrköping, a major renovation project has been in progress since July 2009 in the Lyckan property. The project will consist of 16,000 square meters of office space, 2,300 square meters of retail premises and about 300 parking places. A total of two-thirds of the

Agency. The investment is estimated at SEK 420 m. Disponenten 2, a retail and office property in central Linköping, was acquired for a purchase price of SEK 371.5 m. and access was gained on January 15, 2010. An agreement was signed on February 24 with Linköping’s municipal property company for the acquisition of Konsuln 3. The property is situated at Stångån, a highly attractive location in the center of the city, where the company plans to build residential and commercial premises.

Development properties

The development properties are situated mainly in central Sweden and comprise 2,520 hectares of farmland, forestland and centrally located sites distributed among about 70 objects. The property development operations transform properties into sites suitable for commercial development and create new projects for resale. This is achieved through active involvement in planning and property formation matters, and through cooperation with parties who need developable land. De- tailed development plans are being prepared for approximately 1,000 single-family homes and apartments in such locations as Haninge, Mariefred, Norrköping and Nyköping. During 2009, sales of development properties generated revenues of SEK 5 m. (47).

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 is also environmentally certified in accordance with ISO 14001:2004 and energy certified in accordance with SS-EN 16001:2009. In addition, one of the company’s subsidiaries is an accredited control unit for conducting energy declarations. The company works proactively to increase the energy efficiency of its properties, with the aim of reducing total energy consumption and improving the indoor residential climate for tenants. Since September 1, 2008, Fastighets AB L E Lundberg’s electricity

East 35%

Stockholm 34%

West 16%

Gothenburg 15%

Distribution of annual rental revenues by region

East 37%

Stockholm 30%

West 18%

Gothenburg 15%

Distribution of floor space by region

East 34%

Stocholm 34%

West 16%

Gothenburg 16%

Fair value by region

All diagrams present information as at Dec 31, 2009.

(22)

marked with the “Good Environmental Choice” label, as approved by the Swedish Society for Nature Conservation. New projects now being planned will be implemented in full compli- ance with environmental awareness considerations with respect to materials and energy consumption. The property included in the Lyckan project in Norrköping will be heated and air con- ditioned via ground-source heat pumps which, combined with electricity marked with the Good Environmental Choice label, result in zero CO2 emissions from heating and cooling.

Sales and earnings

Net sales, including revenues from sales of development properties, amounted to SEK 914 m. (930). The decline was due to reduced sales of development properties. Operating expenses for electricity, heat, water and waste disposal increased SEK 8 m.

compared with the preceding year, due to higher fees and taxes. Maintenance costs rose to SEK 329 m. (251). The rise derived from an increase of SEK 94 m. in costs for tenant adaptations and a decrease of SEK 16 m. in costs for planned maintenance measures. Operating profit amounted to SEK 185 m. (313).

In February 2009, the vacancy rate in the real estate portfolio was 3.4%, with the vacancy rate for residential premises amounting to 2.2% and that for other premises to 4.3%. In the real estate portfolio, holdings of investment properties had a fair value of SEK 8,964 m. (8,836) on December 31, 2009 and development properties a fair value of SEK 231 m. (212). Proper- ties in prime locations and well-maintained buildings, combined with low vacancy rates and continued investments in the existing real estate portfolio, are key factors contributing to the unchanged or increased value of the investment properties.

Key figures 2009

Gothenburg Region

Stockholm Region

West Region

East Region Total

Number of properties 23 37 32 58 150

Carrying amount, SEK m. 582 612 441 1,088 2,723

Fair value, SEK m. 1,456 3,063 1,389 3,056 8,964

Number of apartments 605 2,493 1,658 2,166 6,922

Residential, sqm 43,505 187,581 117,078 156,214 504,378

Residential, rent per sqm, SEK 879 879 885 880 881

Residential, rental value, SEK 000s 38,262 164,936 103,701 137,609 444,508 Residential, rent-based vacancy rate, % 0.3 2.2 0.5 0.8 1.2

Office and retail, sqm 72,324 50,300 29,108 94,596 246,328

Other premises, sqm 16,749 39,560 19,921 93,931 170,161

Office/retail, rent per sqm, SEK 1,272 2,341 1,143 1,476 1,553

Other premises, rent per sqm, SEK 371 645 586 467 513

Office/retail, rental value, SEK 000s 92,005 117,751 33,276 139,619 382,651 Other premises, rental value, SEK 000s 6,214 25,523 11,666 43,849 87,252 Office/retail, rent-based vacancy rate, % 3.6 2.0 1.6 3.8 3.0

Premises, number of rental contracts 139 194 108 412 853

Operating results ¹

According to AAA According to IFRS

SEK m. 2009 2008 2009 2008

Net revenues² 914 930 914 930

Operating expenses -288 -245 -215 -177

Maintenance -329 -251 -149 -148

Personnel costs -101 -97

Property tax -39 -33 -39 -33

Divested development properties -5 -16 -5 -16

Depreciation -44 -43 -4 -4

Sales and administrative costs -25 -29

Gain on sale of investment properties 2

Reversal of impairment losses 1 0

Value change in investment properties -243 -397

Operating profit 185 313 157 60

1) As a supplement to reporting in accordance with the Annual Accounts Act (AAA) on pages 18-21 operating profit in the table above is also reported in accordance with IFRS. The presentation in accordance with AAA is divided by function, while that in accordance with IFRS is divided by cost.

2) Net sales include revenues from divested development properties. LUNDBERGS 2009 – SUBSIDIaRIES aND OtHER MajOR SHaREHOLDINGS Potatisen residential property, Karlstad

(23)

Stockholm Eastern City 47%

Stockholm Western City 41%

Gothenburg 12%

Annual rental revenues by business area

Oﬃces 48%

Retail and Restaurants 45%

Other 7%

Distribution of annual rental revenues by type of premises

40 45 50 55 60 65 70

Jan 10 Feb Nov

OMX Stockholm Real Estate Index Hufvudstaden A

SEK

The Hufvudstaden share

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

(24)

Hufvudstaden

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

Hufvudstaden’s real estate portfolio is concentrated in inner-city parts of Stock- holm and Gothenburg. The company owns commercial office and retail properties within the city centers’ business districts, including Hamngatan, Norrmalmstorg, Biblioteksgatan and Kungsgatan in Stock- holm and Vallgraven and Östra Nordstan in Gothenburg. This makes Hufvudstaden one of the most specialized and geographi- cally concentrated real estate companies in Sweden. Rentable space totals slightly more than 350,000 square meters, with an annual rental value of SEK 1.4 billion. The fair value of the real estate portfolio at year-end 2009 was SEK 18.1 billion.

Business areas

The operation is divided into three business areas. Stockholm Eastern City comprises 16 properties with total rentable space of 145,000 square meters.

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

The Gothenburg business area con- sists of four properties with total rentable space of 59,000 square meters. The largest property includes the Femman department store, which is part of the Nordstans shop- ping mall.

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

Financial objective

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

Key financial data

2009 2008

Net sales, SEK m. 1,372 1,348 Operating profit before change

in value, SEK m. 915 875

Operating loss, SEK m. -350 -881 Loss after net financial items, SEK m. -478 -1,025 Earnings/share, SEK -1.73 -2.18 Dividend/share, SEK 2.10¹ 1.90 Share price, Dec. 31, SEK, Series A 54.25 55.25

1) Board of Directors’ proposal.

Largest shareholders, Dec 31, 2009

% of share capital voting

rights L E Lundbergföretagen 44.2 87.6

SEB Trygg Liv 11.1 2.3

State Street Bank and Trust 2.3 0.5

Mellon funds 2.1 0.4

JP Morgan funds, incl. Chase Bank 2.0 0.4 Danske Capital Sweden 1.5 0.3

Lundbergs’ shareholding, Feb 19, 2010 Number of Series A shares 85,200,000 Number of Series C shares 8,177,680

Share of Lundbergs’ total assets: 18.1%

Highlights of the year

Operating profit before value changes increased 5% to SEK 915 m. The improvement was mainly attributable to higher rents and lower maintenance costs.

The market value of the property portfolio at year-end 2009 was assessed at SEK 18.1 billion (19.1). The equity ratio amounted to 55% and the net loan-to-value ratio was 16%.

For the second year in a row, Hufvudsta- den had the most satisfied office tenants, according to the Satisfied Customer Index property barometer.

(25)

LUNDBERGS 2009 – SUBSIDIaRIES aND OtHER MajOR SHaREHOLDINGS Sweden 23%

Spain 8%

France 4%

Rest of Europe 17%

Rest of the world 12%

Nether- lands 4%

Italy 5% United Kingdom

12%

Germany 15%

External net sales by geographical market

Holmen Paper 52%

Iggesund Paperboard 28%

Holmen Timber 3%

Holmen Skog 15%

Holmen Energi 2%

External net sales by business area

130 155 180 205 230 255 280

Jan 10 Feb Nov

OMX Stockholm Paper & Forest Products Index

Holmen B SEK

The Holmen share

Chairman: Fredrik Lundberg CEO: Magnus Hall www.holmen.com

Subsidiaries and other major shareholdings

2009

Contents