Industrivärdens Year-End Report 2006

- Industrivärden’s net asset value was SEK 62,092 M on February 13, 2007, an increase of SEK 3,581 M since the start of 2007. Net asset value on December 31, 2006, was SEK 58,511 M (48,252), an increase of SEK 10,259 M, or 21% in 2006.

- Net asset value per share on February 13, 2007, was SEK 321, an increase of SEK 18 per share since the start of the year. Net asset value on December 31, 2006, was SEK 303 per share (250). Including reinvested dividends, the increase was SEK 61 per share (68), or 24% in 2006. Average annual growth in net asset value over the last ten-year period, including reinvested dividends, was 17%. Earnings per share for 2006 were SEK 60.17 (73.54).

- The total return in 2006 for Industrivärden Class A shares was 29%, and the total return for the Class C shares was 32%, compared with 28% for the return index. The average annual total return for the Class A shares over the last ten-year period was 5 percentage points higher than the return index.

- During the year, purchases of stocks totaled SEK 3.2 billion (3.0) and sales totaled SEK 2.1 billion (4.0). The last remaining operating subsidiary, Isaberg Rapid, was sold in December, with the buyer taking possession in January 2007.

- The Board of Directors proposes a dividend of SEK 9.00 per share (7.00), an increase of 29%. In addition, the Board proposes a 2:1 stock split.

CEO’s Message

2006 was yet another strong year for the world economy. Europe’s economy is now gaining momentum, while the rapid growth in China and India is expected to continue. Following the Fed’s increases in the short-term borrowing rate, the U.S. economy appears to be headed toward a phase of slower growth. Both short-term and long-term interest rates have begun to rise, which is natural in this phase of the economic cycle. In summary, there is reason to be optimistic about economic development in 2007.

The trend in 2006 was positive for Industrivärden, despite sharp price fluctuations in the stock market along the way. During the year, our net asset value rose by SEK 10 billion, to SEK 58 billion, which is an increase of 24% assuming reinvestment of dividends. The total return for the Class A and C shares was 29% and 32%, respectively, compared with 28% for the total return index. We thereby once again achieved our goal of generating a better return than the index. What’s important, however, is that we have succeeded in achieving a very competitive return over time.

On the whole, our portfolio companies experienced good growth in value, which is a clear reflection of their fine earnings and profitability levels. Our strong performance rests on a foundation of a diversified portfolio of holdings in companies with leading positions in their respective niches. The portfolio companies that made the greatest contribution to the favorable growth in Industrivärden’s net asset value were Sandvik, which gained 34%, SSAB, which rose 69%, and SCA, which gained 23% for the year. Due to favorable earnings performance and subsequently good cash flow, several of our portfolio companies today have a larger capital base than what is deemed necessary in relation to their mid-term needs. For this reason, the boards of several of our portfolio companies have, among other things, proposed share redemption and repurchase programs as a means of adapting the companies’ capital structures.

In December we announced the sale of our last remaining operating subsidiary, Isaberg Rapid. The sale entails that we are now fully dedicated to our strategy of investing in listed Nordic companies. Industrivärden’s organization, experience and culture are well-adapted for this strategy.

Our short-term trading continued to do well despite the major swings in the stock market in 2006. Earnings for the year from this activity totaled SEK 173 M, an increase of SEK 51 M compared with 2005. Since starting our short-term trading three and a half years ago, we have earned about a half-billion kronor.

For 2006 the Board of Directors has proposed raising the dividend by 29%, to SEK 9.00 per share. The Board has also proposed a 2:1 stock split, whereby each share would be converted to two new shares of the same class. This measure aims to facilitate trading in round lots for our shareholders with small holdings.


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