Svolder : YEAR-END REPORT, 12 MONTHS, 2020/2021

Year-End Report 2020/2021

Svolder's

2020/2021 financial year has been the best to date

Results for the financial year

12 months: 1st September 2020-31st August 2021

• The company posted a result for the period of SEK 3,485 million (690 m), corresponding to SEK 136.10 (27.00) per share
• The net worth increased by 95.8%, including reinvested dividend, to SEK 277.90 per share
• The listed price of the Class B share increased by 115.8%, including reinvested dividend, to SEK 300.00 per share
• The Carnegie Small Cap Return Index rose by 51.6%
• Proposed dividend SEK 2.50 (2.20) per share

Major contributors to net worth

• Positive: GARO, Troax, XANO Industri
  - Negative: -

Major changes in the equities portfolio

• Bought: Wästbygg, Nolato, Arla Plast

• Sold: GARO, Elos Medtech, Magnolia Bostad

Result for current reporting period

3 months: 1st June-31st August 2021

• The company posted a result for the period of SEK 1,304 million (708 m), corresponding to SEK 50.90 (27.70) per share
• Net worth increased by 22.4%
• The listed price of the Class B share rose by 13.7%
• The Carnegie Small Cap Return Index increased by 12.1%

The Managing Director's comments, page 2

Latest published figures

10th September 2021

Share price	Net worth
288.20	275

SEKSEK/share

Dear

Shareholder,

The now ended 2020/2021 financial year has been the best	Stockholm Stock Exchange, small caps and Svolder is there-
to date for Svolder in both absolute and relative terms. This	fore continuing, as shown clearly in the graph below.
is true both of the company's net worth, and the Svolder	The listed price of the Class B share adjusted for divi-
share which closed the period at record levels.	dends rose by a full 116 per cent over the past 12 months,
The situation is dramatically different compared to a	which meant that on the closing day, the share was trading
year ago, when the effects of the coronavirus pandemic on	at a premium of 8 per cent in relation to net worth. This
society, citizens and businesses were very uncertain. The	is higher than the historical average, but follows a current
pandemic is, unfortunately, not over, even though busi-	trend on the stock market where Swedish investment com-
nesses and society are beginning			panies are being valued ever
to adapt to the new conditions,	» Svolder's annual growth in net	more highly in relation to their
opportunities and uncertainties,	worth has exceeded the entire	net worth. In terms of the com-
aided by vaccines and a high vac-	panies' long-term value crea-
Swedish stock market and CSRX.  »
cination levels.	tion, however, the valuation is

not unnatural if the companies

Continued positive results	also manage to create better value growth than most alter-
Svolder's net worth adjusted for dividends rose by 96 per	natives on the stock market moving forward.
Svolder's annual growth in net worth has exceeded the
cent during the financial year, exceeding the CSRX (Carn-
entire Swedish stock market (SIXRX) and CSRX, viewed
egie Small Cap Index) by 44 percentage points. The corre-
over different periods. From start-up just over 28 years ago,
sponding figure during the current three-month reporting
Svolder's annual return on net worth, with reinvested div-
period was 22 per cent, just over 10 points better than the
idends, has been almost 17 per cent. Historical comments
CSRX. The long-term positive and relative trend for the

Total return1) 10 years in % on 31st August 2021

1400											1400
1200	Svolder		1 year	3 years	5 years	10 years					1200
	Net worth	96	140	254	998
1000	Share price (Class B) 116	202	305	1195					1000
800	Stock market index									800
	CSRX		52	102	157	614
600	SIXRX		47	76	126	357					600
400											400
200											200
0											0
2011	2012	2013	2014		2015	2016	2017	2018	2019	2020	2021

1. Total return is calculated using comparable methods to reinvestment indices and funds, i.e. assuming that the dividend paid is reinvested at the time of the dividend in underlying types of assets.

Infront and Morningstar Svolder, Source:

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and future prospects should of course always be approached with some humility, although we are hugely proud as we look back on another strong financial year.

	Average annual return1)	Source:
30%					Infront
25%
				and
20%					Svolder
15%
10%
5%
0%
5 years	10 years		15 years	20 years	28 years
Svolder net worth	CSRX	SIXRX

1. Including reinvested dividends.

Dividends normalised

As the majority of companies have successfully managed to navigate their operations through the pandemic, their directors are once again resuming dividends. This is no surprise. Share dividends are the most natural way of compensating shareholders for invested capital, and are fundamental to the long-term supply of capital - at least this is certainly the way Svolder sees it. Moreover the profits are already taxed, and in many cases the dividend is taxed yet again.

The Board of Directors proposes a dividend of SEK 2.50/share (SEK 64 m) for the ended financial year, an increase of almost 14 per cent. Svolder's dividend policy is based on paying dividends received on to shareholders over time, with a deduction for ongoing management costs. Moreover, the ambition is to create long-term dividend growth. It should be noted here that Svolder, unlike most listed companies, paid out a higher dividend in the previous financial year, despite receiving far lower dividends from its portfolio companies than would usually warrant this under Svolder's long-term dividend policy. Assuming the proposed dividend is approved at the AGM in November, Svolder has paid out just over SEK 1.2 billion (approxi- mately SEK 50 per Svolder share) to shareholders since its inception. A dividend has historically been paid for every financial year.

Anchor investments

The portfolio companies that have contributed the most to Svolder's net worth during the year are GARO and Troax, with an impressive joint injection of SEK 1.2 billion. Both companies were originally anchor investments whereby ahead of the IPO, Svolder committed to acquire a certain number of shares at the introductory price. This means that

the new listed companies have Svolder as a significant owner with long-term ambitions and a willingness to closely monitor the companies during their growth journeys in the public environment.

During the financial year, Svolder made anchor investments in Wästbygg, Arla Plast, MilDef and Profoto in the total amount of SEK 437 million. Since being listed, the four holdings have all contributed to Svolder's net worth, jointly by SEK 145 million. Although for valuation reasons Svolder has been restrictive as regards the raft of IPOs over the past 12-month period, we do intend to act as an anchor investor in IPOs moving forward. As well as a reasonable valuation in the initial phase, we particularly value well-established business models, a good group of owners, listing on the Nasdaq Stockholm main list, a solid foundation for growth and long-term dividend capacity.

Impressive crisis management

among companies

The amazing job done by personnel in Swedish companies in general, and our portfolio companies in particular, is praiseworthy indeed. Although many internal and external contacts have had to be handled remotely and a great many delivery chains have been broken, altered or delayed, the companies have once again demonstrated an excellent ability to manage a crisis. Altered supply chains create disruptions and often lead to product shortages, transportation problems, stockpiling and price rises. The recent turbulence in goods deliveries remains, and will continue to affect most companies also in the near future. Personnel in roles such as purchasing and production will be especially pivotal to the ability of each goods-producing company to achieve success in a strong, rising economic situation.

The future

The stock markets are volatile, and investment trends tend to change. Even so, the most important parameters for valuation are future profits and return requirements/interest rates. The inflation tendencies that can be inferred from dramatically rising commodity prices, a global increase in capacity utilisation and higher employment are all reasons to expect rising long-term interest rates. Even though the stock market, on a general level, is highly valued, this does not mean that there are no interesting investment opportunities for an investment company like Svolder, which primarily invests in listed Swedish companies that have a market capitalisation of up to approximately SEK 20 billion.

Yours faithfully

ulf hedlundh

Managing Director

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the equities portfolio

31/8 2021

					% of the	% of the
		Share price	Market cap.	% of	company's	company's
Share	Number	(SEK)1)	(SEK m)	net worth	capital 2)	votes2)
GARO	4,560,305	211.50	965	13.6	9.1	9.1
Troax Group	2,553,412	355.00	906	12.7	4.3	4.3
Nordic Waterproofing	3,542,952	216.00	765	10.8	14.7	14.7
New Wave Group	4,583,646	136.20	624	8.8	6.9	1.9
XANO Industri	1,730,500	335.00	580	8.1	5.9	1.8
FM Mattsson Mora Group	1,976,000	264.00	522	7.3	14.0	6.1
Elanders	2,131,048	161.40	344	4.8	6.0	4.1
Wästbygg Gruppen	2,568,916	107.00	275	3.9	7.9	6.8
Beijer Electronics Group	4,381,875	61.60	270	3.8	15.1	15.2
Nolato	2,485,760	99.70	248	3.5	1.0	0.9
ITAB Shop Concept	12,172,550	16.60	202	2.8	5.6	5.6
Lime Technologies	422,665	399.60	169	2.4	3.2	3.2
Profoto Holding	1,515,151	103.40	157	2.2	3.8	3.8
Boule Diagnostics	2,414,194	55.70	134	1.9	12.4	12.4
MilDef Group	2,600,000	51.05	133	1.9	7.1	7.1
Arla Plast	2,209,981	55.40	122	1.7	11.1	11.1
Saab	430,000	257.20	111	1.6	0.3	0.3
Serneke Group	2,077,608	52.40	109	1.5	7.2	2.8
AGES Industri	584,000	70.00	41	0.6	8.3	2.5
Equities portfolio			6,676	93.8
Net receivable (+)/net debt (-)			439	6.2
Total/net worth			7,115	100.0
			277.90	SEK per Svolder share

All securities holdings come under level 1 of the value hierarchy.

1. In calculating the market capitalisation (fair value), the last price paid for the securities on Nasdaq Stockholm on the closing day has been used. 
2. Based on outstanding shares in the portfolio company.

The following information, for example, can be obtained from the table. Svolder's largest holding is GARO, which has a market capitalisation of SEK 965 million, corresponding to 13.6 per cent of net worth. A one-per-cent change in GARO's share price would affect Svolder's net worth by SEK 10 million, which equates to SEK 0.40 per Svolder share.

Year-End Report

1st September 2020 - 31st August 2021

Market commentary

Svolder's 2020/2021 financial year, 1st September 2020 to 31st August 2021, was a very strong year for listed companies in most countries around the world. All in all, the European stock exchanges rose by 31 per cent, and the US exchange (S&P 500) rose by 29 per cent. The World Index (WDJ) rose about one percentage point less, and exchange rate fluctuations were minor over the year as a whole. The Swedish stock exchange (SIXRX) continue to outperform the World Index, rising a full 47 per cent. Yet it was still exceeded by approximately five percentage points by small and medium-sized Swedish companies' shares (CSRX).

Index performance (12 months)

155

140

125

110

95

sep oct nov dec	jan feb mar apr may jun jul aug
2020			2021
	CSRX		SIXRX

The upward trend of the SEK came to an end during the financial year, and remained essentially unchanged compared to the USD and with a slight rise against the EUR.

Macroeconomic developments in the world showed a strong recovery after previous negative effects from COV- ID-19. Many countries virtually locked down their societies for limited periods of time last year, which had very palpable effects on each country's economy. Barely any nation was spared the impact of the pandemic, although the

Infront Source:

economic effects were less dramatic than expected thanks to very expansive fiscal and monetary policy around the world. Capital markets have therefore been able to discount gradual improvements in growth for the years to come.

Input prices rose dramatically during the financial year, and producers sometimes had trouble meeting demand. This was true of many input products, but especially components such as semiconductors. For example, over the 12-month period the price of copper rose by 43 per cent, and BRENT oil by 57 per cent. The price of gold, however, fell slightly, as is usual in times of recovery following great turbulence.

The capital markets have been unusually calm despite the coronavirus pandemic and bitter trade disputes, primarily between the US and China. A more conciliatory approach by the new American administration reduced concern among investors, politicians, economists and industry representatives. The UK's exit from the EU and the financing of support for EU countries that have been particularly hard hit by the pandemic are important issues that have been sidelined, as the tone among European politicians has been balanced and relatively mild. Geopolitical- ly, some trouble spots remain that could flare up when the great powers' interests risk being challenged, for example in and around Hong Kong, Taiwan, Belarus and Ukraine.

Share price trends

The closing price for Svolder's Class B share on the balance sheet date was SEK 300.00, which corresponds to an increase during the financial year of 115.8 per cent, including reinvested dividend. The Class B share's value on the closing day represented a premium of 7.9 per cent on its net worth. The Class B share was traded on all trading days during the period, with an average of approximately 57,000 shares traded each day of trading on Nasdaq Stockholm.

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