Industrivärden

Interim / Quarterly Report • Jul 5, 2013

During the last twenty-year period, net asset value, incl. reinvested dividends, has increased by 12% per year.

For the longer 5-, 10-, 15- and 20-year periods, Industrivärden's Class C shares generated a higher total return than the Stockholm Stock Exchange's total return index. This performance is even stronger in comparison with a European or world index.

CEO's message

More positive climate

The global economy continues to improve, albeit at a slow pace. Increasingly the U.S. stands out to be a key future engine of growth for the global economy, not least through its access to cheap energy from the production of shale gas and oil. Europe is wrestling with continued problems and is

"To balance the equities portfolio's exposure to cyclical businesses, a number of transactions were carried out during the first half of the vear.'

being weighed down by negative growth in southern Europe. Development is strong in China, although there are concerns that the anticipated growth figures will not be met. This. together with uncertainty surrounding the Chinese

central bank's actions, has created anxiety in the Chinese capital market. Although several questions remain, the world economy is gradually improving. This is illustrated by the fact that the IMF adjusted its recent GDP forecast for 2013 downward while leaving the forecast for 2014 unchanged. Global growth is now expected to rise from 3.3% in 2013 to 4.0% in 2014.

Sweden is performing relatively well, although with continued high unemployment and a low level of industrial investment. The strong Swedish krona has had a negative impact on companies' international competitiveness. especially companies with a large capital base in Sweden. such as SSAB.

The world's financial markets are experiencing yet another period of turbulence and uncertainty. This time the worries are coming from indications from the U.S. Federal Reserve Bank that it is prepared to take actions to reduce the scope of its QE bond buying programs and to phase these out in 2014. This is rooted in positive development, since the Fed is now beginning to see that growth in the economy has attained such strength that it no longer needs to be stimulated through abnormally low long-term interest rates. Rising long-term rates also mean that the more than tenyear bond rally that the U.S. and world in general have experienced will come to an end.

A large share of global liquidity has migrated to the bond market, which is the world's largest. This capital will now be reallocated and adapted to more normal levels of interest rates and risk in the world economy. Against this backdrop, all indications are that equities as an asset class will see a resurgence. This would benefit Industrivärden in our capacity as a long-term investor in well-positioned listed companies.

Stable performance for Industrivärden during first half of the year

Industrivärden's stock has had stable performance during 2013 on par with the index. The total return for the Class A and C shares during the first half was 12% and 8%, respectively, compared with 9% for the total return index.

To balance the equities portfolio's exposure to cyclical businesses, a number of transactions were carried out during the first half of the year. The entire holding in Höganäs was sold for SEK 1.4 billion, and a new investment of SEK 2.4 billion was made in ICA Gruppen, including a new issue of SEK 0.5 billion. As part of the reweightings above, we have also opted to reduce our holding in Indutrade by SEK 1.7 billion.

Continued conversion of convertible loans

During the spring Industrivarden's Class C shares reached prices that make it attractive for holders of our convertible loans to convert to new Class C shares. Such was also the case, and during the first half of the year, 5,498,739 new Class C shares in Industrivärden were issued.

Anders Nyrén

Overview

COMPOSITION OF NET ASSET VALUE AND TOTAL RETURN FOR THE PORTFOLIO COMPANIES

			6/30/2013				6M: 2013
		Ownership in company, %				Market value	Total return
Portfolio companies	No. of shares Capital, %			Share of Votes, % value, %		SEK M SEK/share	SEK M	%
Handelsbanken A	64 351 679	10.1	10.3	25	17 323	44	3 0 2 8	20
Sandvik	149 474 257	11.9	11.9	17	11988	31	$-2975$	$-20$
SCAA	42 000 000	10.0	29.6	17	7073	30	2 2 7 8	23
SCAB	28 800 000				4847
Volvo A	131 506 918	6.2	18.9	17	11 7 17	30	339	3
Ericsson A	86 052 615	2.6	15.2	9	6 2 8 6	16	995	19
ICA Gruppen	20 125 000	10.0	10.0	5	3 6 4 3	9	1 2 4 7	53
Skanska A	12 667 500	7.1	24.0	5	1410	9	379	11
Skanska B	17 343 995				1930
SSAB A	58 105 972	18.2	23.4	3	2 3 2 6	6	$-903$	$-28$
SSAB B	754 985				26
Indutrade	6 551 817	16.4	16.4	$\mathbf{2}$	1 3 6 0	3	282	9
Höganäs B							315	29
Other				$\mathbf{1}$	648	$\mathbf{2}$	36	12
Equities portfolio				100	70 577	180	5 0 2 1	$\overline{7}$
Interest-bearing net debt					$-17876$	$-46$	Index:	9
of which, convertible loans					$-8143$	$-21$
Net asset value					52 701	135
Net debt-equities ratio						25%
Net asset value after full conversion						131
Net debt-equities ratio after full conversion						14%

DEVELOPMENT OF NET ASSET VALUE DURING THE PAST YEAR

SEK/share	6/30/2013	3/31/2013	12/31/2012	9/30/2012	6/30/2012
Equities portfolio	180	198	176	164	155
Interest-bearing net debt	$-46$	-48	$-47$	-43	$-42$
of which, convertible loans	$-21$	$-21$	$-22$	$-21$	$-22$
Net asset value	135	150	129	121	113
Net debt-equities ratio	25%	24%	27%	26%	27%
Net asset value after full conversion	131	144	126	119	113
Net debt-equities ratio after full conversion	14%	13%	14%	13%	13%

Performance

Net asset value

Net asset value increased by SEK 2.8 billion during the first half of the year, to SEK 52.7 billion. Net asset value per share increased by SEK 6 to SEK 135, or 8% including reinvested dividends, compared with a 9% rise in the SIXRX total return index. At the same point in time, net asset value amounted to SEK 131 per share after full conversion of the convertible loans.

DEVELOPMENT OF EQUITIES PORTFOLIO INCL. REINVESTED DIVIDEND, 6M:2013

Equities portfolio

During the first half of 2013 the value of the equities portfolio, adjusted for purchases and sales, increased by SEK 2.6 billion to 70.6 billion. The shareholdings in ICA Gruppen, SCA, Handelsbanken, Ericsson and Skanska generated higher returns than the total return index. The total return for the portfolio was 7%, compared with 9% for the total return index.

SPLIT OF EQUITIES PORTFOLIO AS PER JUNE 30, 2013

Investment activities

During the first half of 2013, stocks were purchased for SEK 5 617 M and sold for SEK 5 717 M. The largest sales were in Indutrade, for SEK 1 734 M, and Höganäs, for SEK 1411 M. The largest purchases were in ICA Gruppen, for SEK 2 395 M, followed by Sandvik, for SEK 644 M.

To balance the equities portfolio's exposure to cyclical businesses, a number of transactions were carried out during the first half of the year.

In February 2013 it was announced that Industrivarden will become a new, long-term owner with 10% of the votes and capital in the new ICA Gruppen, one of the leading retail companies in the Nordic region. The investment amounts to SEK 2.4 billion, including SEK 0.5 billion in the completed new issue, in which Industrivärden subscribed for its share. At mid-year the market value of the holding was SEK 3.6 billion.

In February 2013 Industrivärden also sold its entire holding in Höganäs to H Intressenter, a company jointly owned by Lindéngruppen and FAM, which at the same time made a public offer for Höganäs. Including dividends received and stock repurchases during the holding period since 2004, Industrivärden's total return was 11% per year, compared with 10% per year for the total return index.

During the first half of 2013 Industrivarden down-weighted its holding in Indutrade from 36.8% to 16.4% of the capital and votes. The proceeds from the sale amounted to approximately SEK 1.7 billion, with a capital gain of approximately SEK 1.6 billion.

Dividends

Dividends received from portfolio companies amounted to SEK 2.5 bn during the first half of 2013. Industrivärden distributed SEK 2.0 billion in dividends to the shareholders during 2013. The dividend of SEK 5.00 per share corresponded to a dividend vield of 4.6% for the Class C shares at year-end 2012. The estimated dividend yield for the Stockholm Stock Exchange was 3.7% at the same point in time.

Net debt

Industrivarden's interest-bearing net debt amounted to SEK 17.9 billion on June 30, 2013. The debt-equities ratio was 25%, and the equity ratio was 72% (71%). Assuming full conversion of outstanding convertible loans, totaling SEK 8.1 billion, interest-bearing net debt amounted to SEK 9.7 billion, and the debt-equities ratio was 14%.

At mid-year 2013, interest-bearing liabilities had an average fixed interest period and capital duration of approximately 2.5 years and carried an average interest rate of 3.3%. No part of the Group's borrowings is conditional on a certain credit rating or actual debt-equities ratio. Industrivärden's current credit rating is A-/Stable/A-2 $(S\&P)$ .

Convertible loans

For the convertible loan that matures in 2015, the conversion price has been adjusted from SEK 112.87 to SEK 111.39 (corresponding to EUR 10.89/share), whereby a maximum of 45.9 million Class C shares would be added upon full conversion. For the convertible loan that matures in 2017, the conversion price is unchanged at SEK 159.91 (corresponding to EUR 18.01/share), whereby a maximum of 30.5 million Class C shares would be added upon full conversion.

Conversion is done at a fixed exchange rate of SEK 10.2258/EUR 1, entailing that at an actual exchange rate of SEK 8.71/EUR 1, it is profitable to convert when the share price exceeds SEK 95/share. For the convertible loan that matures in 2017, the fixed exchange rate is SEK 8.8803/EUR 1, and in the corresponding manner, it is profitable to convert when the share price exceeds SEK 157/share.

During the first half of 2013, 5,498,739 new Class C shares, corresponding to 12% of the convertible loan, were issued as a result of requests to convert convertibles to shares within the scope of Industrivarden's convertible loan 2010–2015. Following these conversions, the number of votes in the Company is 280,854,572, and the total number of registered shares in the Company is 391,769,963, of which 268 530 640 are Class A shares and 123,239,323 are Class C shares.

Upon conversion of the loans, the debt is converted to equity, and the number of shares outstanding increases. Net asset value per share will therefore decrease; however, it would have been lower if the shareholders had not benefited from the leverage effect provided by the convertible loans. Conversion does not give rise to any financial dilution, since the loans are invested in the equities portfolio, and the conversion price has been set at a premium to net asset value.

Short-term trading and management costs

During the first half of 2013. Industrivarden's short-term trading generated a profit of SEK 16 M (51). Management costs amounted to SEK 67 M (58). Industrivärden's management cost was 0.19% of managed assets, which is considerably lower than for most comparable investment alternatives.

SEK M April-June April-June Jan.-June Jan.-June Jan.-Dec. INCOME STATEMENT 1796 1 3 4 8 2 4 8 7 2 3 9 1 2 3 9 1 Dividend income from stocks 2 9 6 2 $-5235$ $-3951$ 2 3 3 8 9 2 0 5 Change in value of stocks, etc. $-44$ $-31$ $-51$ Other income and expenses $-7$ $-5$ $-2634$ 11 591 $-3483$ 4 7 7 4 5346 Operating income $-289$ $-294$ Financial items -145 -143 -583 $-2777$ $-3628$ 5 0 5 2 Income after financial items 4485 11 008 Tax $-3628$ $-2777$ 4 4 8 5 5 0 5 2 Net income for the period 11 008 28.50 $-7.19$ 13.08 $-9.34$ 11.58 Earnings per share, SEK $-9.34$ $-7.19$ 10.58 11.75 25.83 Earnings per share after dilution, SEK STATEMENT OF COMPREHENSIVE INCOME $-3628$ $-2777$ 4 4 8 5 5 0 5 2 11 008 Income for the period Items that are not to be reversed in the inc. statement Actuarial gains and losses on pensions $-39$ Items that can later be reversed in the inc. statement 20 5 Change in hedging reserve 7 74 27 $-3623$ $-2770$ 4 5 5 9 5 0 7 2 10 996 Comprehensive income for the period BALANCE SHEET as per end of period 70 577 59 753 68 077 Equities 86 64 85 Other non-current assets 70 663 59 817 68 162 Total non-current assets 579 61 Short-term equity investments 86 70 44 55 Cash and cash equivalents 220 100 299 Other current assets 869 205 Total current assets 440 71 532 Total assets 60 022 68 602 42 474 48 378 51 616 Shareholders' equity Non-current interest-bearing liabilities 15 550 14 708 14 2 35 Non-current non interest-bearing liabilities 1513 906 1 2 8 5 Total non-current liabilities 17 063 15614 15 5 20 2 5 0 1 4 3 0 5 Current interest-bearing liabilities 1479 352 Other liabilities 455 399 2853 1934 4 7 0 4 Total current liabilities 71 532 Total shareholders' equity and liabilities 60 022 68 602 CASH FLOW Cash flow from operating activities 1785 2 1 9 2 1809 Cash flow from investing activities 100 432 $-1114$ Cash flow from financing activities** $-1870$ $-2639$ -699 $-15$ Cash flow for the period 15 -4 $\sqrt{2}$ Exchange rate difference in cash and cash equivalents $\mathbf 0$ 2 44 55 70 Cash and cash equivalents at end of period		2013	2012	2013	2012	2012

* Including short-term trading and management costs.

** Of which, the option portion of the convertible loans, totaling SEK 1 175 M (707), which at the times of issue amounted to a combined total of SEK 982 M.

*** Of which, dividends of SEK 1 738 M paid to the shareholders in 2012 and SEK 1 950 M in 2013.

	2013	2012	2012
SEK M	Jan.-June	Jan.-June	Jan.-Dec
CHANGES IN SHAREHOLDERS' EQUITY
Opening shareholders' equity as per balance sheet	48 378	39 140	39 1 20
Comprehensive income for the period	4 5 5 9	5072	10 996
Conversion	629
Dividend	$-1950$	$-1738$	$-1738$
Closing shareholders' equity as per balance sheet	51 616	42 474	48 378
KEY DATA as per end of the period
Net asset value per share, SEK	135	113	129
Net asset value per share after full conversion, SEK	131	113	126
Share price (Class A), SEK	120	94	111
Share price (Class C), SEK	112	89	108
Number of shares (thousands)*	391 770	386 271	386 271
INTEREST-BEARING NET DEBT at end of the period
Cash and cash equivalents	70	44	55
Interest-bearing assets	105	63	190
Non-current interest-bearing liabilities**	15 550	14 708	14 2 3 5
Current interest-bearing liabilities	2 5 0 1	1479	4 3 0 5
Interest-bearing net debt	17876	16 080	18 295
* Number of shares upon full conversion (thousands), 462 715.
** Of which, convertible loans SEK 8 143 M (8 472).
INDUSTRIVÄRDEN PARENT COMPANY
	2013	2012	2012
SEK M	Jan.-June	Jan.-June	Jan.-Dec.
INCOME STATEMENT
Operating income	$-904$	978	4 100
Income after financial items	$-1092$	836	3 849
Income for the period	$-1092$	836	3849
Comprehensive income for the period	$-1078$	836	3846
BALANCE SHEET AS PER END OF THE PERIOD
Non-current assets	44 337	39 859	44 889
Current assets	110	1796	1830
Total assets	44 447	41 655	46 719
SHAREHOLDERS' EQUITY	29 061	28 509	31 460
Non-current liabilities	12 805	10867	13 2 38
Current liabilities	2 5 8 1	2 2 7 9	2021
Total shareholders' equity and liabilities	44 447	41 655	46 719

Accounting policies and notes

Accounting policies

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU, and the Swedish Annual Accounts Act. The Parent Company's financial statements have been prepared in accordance with RFR 2 - Accounting for Legal Entities, and the Swedish Annual Accounts Act.

Effective January 1, 2013, the amendments to IAS 19 Employee Benefits took effect. The amendments entail elimination of the opportunity to use the corridor method, and that the expected return is no longer used for calculating the return on plan assets. All changes in the pension liability are recognized in the period in which they were incurred. Service and interest costs are recognized in the income statement, while remeasurements of actuarial gains and losses are recognized in other comprehensive income. The revised standard is applied retrospectively. and the reported amounts for 2012 have been recalculated. An actuarial computation is performed once a year, and the effects are reported in the fourth quarter.

In accordance with IAS 19 (revised), in the opening balance for 2012, the reported pension liability has increased by SEK 16 M, since the unrecognized portion of the pension liability cannot be recognized off the balance sheet. Shareholders' equity has decreased by SEK 20 M. Comprehensive income for 2012 has decreased by SEK 39 M

Application of the new IFRS 13 and the amendments in IFRS 7 entails that additional disclosures have been provided. Other new or amended IFRSs and IFRIC interpretations have not had any effect on the Group's or Parent Company's results of operations or financial position.

Risks and uncertainties

The dominant risk in Industrivärden's business is share price risk, i.e., the risk of a decrease in value caused by changes in share prices.

A 1% change in the share price of the holdings in the equities portfolio as per June 30, 2013, would have affected its market value by approximately +/- SEK 700 M.

Fair value measurement of financial instruments

In accordance with IFRS 7, financial instruments are measured at fair value according to a three level hierarchy. Classification is based on input data that is used in measuring the instruments. Level 1 uses quoted prices in an active market, such as stocks listed on the Stockholm Stock Exchange. Level 2 uses other observable market data for the asset or liability than quoted prices, such as volatility. For level 3, fair value is determined according to a valuation technique that is based on assumptions that are not based on prices or observable data.

Responsibility for fair value measurement, which is based on documentation produced by the Company's risk manager, rests with management. ISDA agreements exist with the pertinent counterparties.

6/30/2013	Level 1	Level 2	Level 3	Total
Assets
Equities	71 023		40	71 063
Equity derivatives	108			108
Derivative instruments used
for hedging		7
Other derivatives	77			77
Total assets	71 208	7	40	71 255
	Level 1	Level 2	Level 3	Total
Liabilities
Other non-current liabilities
Option portion of conv. Ioans		1 175		1 175
Equity derivatives	13	254		267
Other current liabilities
Equities	24			24
Equity derivatives, etc.	76			76
Other derivatives	34	51		85
Total liabilities	147	1 480		1 627

No changes have been made between levels compared with the preceding year.

Related party transactions

During the first half of 2013, dividend income was received from associated companies.

Other

Resolutions at Annual General Meeting

The 2013 Annual General Meeting was held on May 7, at which the following resolutions, among others, were made. The dividend was set at SEK 5.00 per share (4.50). Christian Caspar, Boel Flodgren, Stuart Graham, Fredrik Lundberg, Sverker Martin-Löf and Anders Nyrén were reelected as directors on the Board. Hans Larsson declined re-election, Pär Boman, President and CEO of Handelsbanken, was elected as a new director. He has served in various positions at Handelsbanken since 1991. The Annual General Meeting voted in favor of the Board's proposal for a long-term share savings program for a maximum of 28 employees of the Industrivarden Group, with a maximum scope of 150,000 Industrivarden Class C shares

Board's assurance

The Board of Directors and President certify that the halfyear interim report gives a true and fair presentation of the Parent Company's and Group's business, financial position and result of operations, and describes material risks and uncertainties facing the Parent Company and the companies included in the Group.

Stockholm, July 5, 2013 AB Industrivärden (publ)

Sverker Martin-Löf	Pär Boman	Christian Caspar
Chairman	Director	Director
Boel Flodgren	Stuart Graham	Fredrik Lundberg
Director	Director	Director

Anders Nyrén, President and CEO, director

Financial calendar 2013

Interim report January-September: October 7

Publication

The information provided in this interim report is such that AB Industrivärden (publ) is obligated to publish pursuant to the Securities Market Act. Submitted for publication at 10.00 a.m. on July 5, 2013.

Contact persons

Anders Gustavsson, Investor Relations, tel. +46-8-666 64 41, agn@industrivarden.se Sverker Sivall, Head of Corporate Communication Martin Hamner, CFO Anders Nyrén, President and CEO Tel. (switchboard) +46-8-666 64 00

Contacts and further information

Industrivärden's complete contact information can be found on page 1. For further information, please visit Industrivärden's website: www.industrivarden.net.

Auditors' Review Report

Following is the auditors' review report of interim financial information prepared in accordance with IAS 34 and Ch. 9 of the Swedish Annual Accounts Act.

Introduction

We have reviewed the interim report for AB Industrivarden (publ) for the period January 1-June 30, 2013. The Board of Directors and President are responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim financial information based on our review.

Focus and scope of review

We conducted our review in accordance with the Swedish standard for such reviews, SÖG 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries. primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the International Standards on Auditing (IAS) and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Annual Accounts Act for the Group, and in accordance with the Annual Accounts Act for the Parent Company.

Stockholm, July 5, 2013 PricewaterhouseCoopers AB

Magnus Svensson Henryson, Authorized Public Accountant

Value creation

Active ownership - business concept and strategy

Industrivärden's business concept is to contribute to growth in the value of the portfolio companies through long-term active ownership, which enhances Industrivärden's net asset value and enables a total return for the shareholders which, over time, is higher than the average for the Stockholm Stock Exchange. The business is built upon substantial ownership influence, involvement, extensive

experience, knowledgeable employees, a strong business model and a large network. Active ownership is exercised primarily through board representation and emanates from strategic issues of significance for the companies' longterm growth in value. Our portfolio companies are leaders in their respective areas and have extensive geographic coverage.

Our view of Handelsbanken - case study

Handelsbanken, which is the largest holding in Industrivärden's equities portfolio, has shown high profitability and favorable growth for many years. Its success is based on a unique organizational model in which overall responsibility for each customer rests with the local branch that serves the customer. This model has created a strong company culture distinguished by first-hand knowledge about the customers' needs, genuine involvement, cost efficiency and low loan losses. Altogether this has enabled a years-long tradition of the most satisfied banking customers in the bank's home markets. For the 41st year in a row, Handelsbanken has generated higher profitability than the average for its

peer competitors. The bank's model has been proven to work well also outside Sweden, and newly opened branches are quickly achieving good profitability. Handelsbanken has developed a successful growth model and is growing organically - among other places in the UK, where 133 branches have been opened, and in the Netherlands, with 15 branches. Handelsbanken has a strong and stable financial position, which is illustrated by the fact that Handelsbanken continues to have the lowest funding costs among European banks. During the last five-year period, which has been a challenging time for many European banks, Handelsbanken's stock has generated a total return of 18%, compared with 9% for the Stockholm Stock Exchange and 2% for MSCI Europe.

Further information on the portfolio companies

Handelsbanken	High customer satisfaction through local customer responsibility.	www.handelsbanken.com
SANDVIK	Unique know-how in customer-adapted materials technology.	www.sandvik.com
	Innovative hygiene and forest products.	www.sca.com
VOLVO	Leading position in modern transport solutions.	www.volvo.com
ERICSSON 2	Leadership in telecom.	www.ericsson.com
RUPPEN	Market-leading retail chain with local entrepreneurship.	www.icagruppen.se
SKANSKA	International construction and project development operation.	www.skanska.com
SSAB	Niche focus on high-strength steel.	www.ssab.com
II Indutrade	Customer-focused technology sales with successful growth model.	www.indutrade.se

AB Industrivärden (publ) · Reg. no. 556043-4200 · Box 5403 · SE-114 84 Stockholm, Sweden · Phone +46-8-666 64 00 · info@industrivarden.se