FINANCIAL YEAR 2005

Ahlsell is one of the leading trading companies in the Nordic region within installation products, tools and machinery. The Group offers professional users a wide range of goods and peripheral services within the product areas of Heating & Plumbing, Electrical, Tools & Machinery and Refrigeration. A smaller proportion of sales goes to retail companies within the DIY (Do-It-Yourself) area.

Ahlsell’s strategy rests on five cornerstones:

-- auniquelybroadrangeofproductsfromtheheating&plumbing,electrical,tools&

machineryaswellasrefrigerationarea

- localpresencewithindependentsalesunitsclosetothecustomers

- specialistexpertisewithineachmarketsegmentandproductarea

- centralisedfunctionsforpurchasing,administrationandlogistics

- growththroughacquisition

TheGrouphasanannualturnoverofapprox.SEK18billionandhasover4,000employees.

ThemajorityownersareCinvenandGoldmanSachs.

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Contents

The year in summary 3Interview with the CEO 4Operations by country 6

Sweden 6Norway 7Finland 8Denmark 9

The Ahlsell concept 10Market, trends andcompetitors 12History 13

”At Ahlsell, we are willing to do that little bit extra to make life easier for our customers”

- TheGroup’snetsalesincreasedby15percent,adjustedforexchangeratefluctuationsandacquisitions, to SEK 16,245 m (11,119).

- Income (EBITA) rose by 79 percent to SEK 1,041 m (583) with an operating margin (ROS) of 6.4 percent (5.2).

- The acquisition of Nexans Distribusjon, with a turnover of approximately SEK 1,200 m, substantially reinforces Ahlsell’s position on the wholesale electrical market in Norway.

- Through the acquisition of Malk OY, the Finnish market leader with a turnover of about SEK 60 m, Ahlsell became market leader in the Do-It-Yourself area in Finland.

- Ahlsell’s position as market leader within Tools & Machinery in Sweden was further strengthe-ned through the acquisition of Ljungby Industrileverantör and Skaraborgs Industriservice.

SE8,87355 %

NO5,05131 %

FIN*1,81411 %

DK5073 %

*Incl. Russia SEK 61 m, 0.4%

Heating &Plumbing10,15463 %

Electrical3,14919 %

Tools & Machinery

1,91912 %

Refrigeration5063 %

DIY5173 %

External sales in 2005 by country, SEK m

External sales in 2005 by product area, SEK m

Key ratios in the group

2005 2004 2003 2002 2001Netsales,SEKm 16,245 11,119 9,883 10,069 8,589

Income(EBITA),SEKm 1,041 583 455 394 417

Operatingmargin(ROS)% 6.4 5.2 4.6 3.9 4.9

Netincome,SEKm 463 251 101 9 30

Returnonoperatingcapital% 40.5 34.4 27.3 21.1 23.3

Averagenumberofemployees 4,252 3,145 2,944 3,057 2,446

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The year in summary

Interview with the CEO

How would you describe the financial results for 2005?Ahlsell has had a fantastic year. Profitability increased as earnings

(EBITA)rosefromSEK583millionin2004toSEK1,041millionin

2005.Thisisthebesteverresultandmuchbetterthantheforecast.

Adjusted for exchange rate fluctuations and acquisitions, sales

increasedby15percenttoSEK16,245m.Moreover,developments

arelookinggoodinallcountries.

Can you describe developments in the countries where you operate in more detail?InSweden,theHeating&Plumbingbusinesshasperformedvery

strongly.TheproductareasofTools&MachineryandRefrigeration

havealsodonereallywell.

Themarketingorganisationintroducedattheendof2003has

nowbecomeestablishedandwehaveboostedoursalescapabi-

litybyacquiringanevenbetterunderstandingofourcustomers’

needsthankstosegmentation.OurNorwegianoperationshave

beencharacterisedbymergersandeffortstointegrateBergensand

StavangerRörhandel,whichweacquiredinOctober2004.During

the financial year three units have been merged, the head office

hasbeenmoved,theorganisationhasbeenrestructuredandanew

businesssystemhasbeenintroduced.Allofthishasbeendone

whileretainingourcustomerfocus,andwesucceededinachieving

growthofover10percentin2005.Finlandistherealsuccessstory

withinAhlsell.Fiveyearsago,ourFinnishoperationwasstruggling

toachieveanoperatingmargin(EBITA)of1-2percent.In2005they

achieved a figure of 6 percent. Our Danish operations have also

improvedtheirperformance.

With such superb results, is it possible for Ahlsell to do even better? Wecertainlycanbeevenbetter.Ouraimistobethebesttrading

companyinEuropewithinourareaofoperation.Torealiseour

ambitionofbeingbestinEurope,ourcurrentobjectives,whichIsee

aspositiveandassertive,mustbebasedonfourmainelements.

Thesecompriseaplatformofstableandcost-effectivesystemsfor

administration,logisticsanddistribution,afocusedsalesforce,

boldinitiativeandnewacquisitions.Thisfoundationisessentially

alreadyinplaceatAhlsell.Whatremainsistobreakthroughthe

mentalbarrier.Ifwecandothat,thenAhlsell’sfantasticjourneycan

continue.

What has the new ownership configuration meant for Ahlsell?Ahlsellhasgoodexperiencefromownershipofaprivateequity

company,andourcustomers,suppliersandemployeeswillnotice

nodifferencenowthatCinvenandGoldmanSachsareourprin-

cipal owners. I know that our new owners have confidence in the

businessplanthatwehavenowadoptedforthecomingyearsand

willsupportourmanagementintheirambitiontorealiseourbold

objectives.

Ahlsell has acquired a number of companies during the last ten years. How has this affected the Group?Ithasnaturallyhadaneffectonusinmanyways.Mostobviously,

weareaconsiderablylargeroperationtoday.Tenyearsagoour

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8,000

10,000

12,000

14,000

16,000

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Sales EBITA

SEK m SEK m

Sales and income 1996 - 2005

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An increase in profitability by 79%, Ahlsell’s best ever operating result, plus strategic acquisitions. CEO Göran Näsholm reviews the record year of 2005 and outlines his expectations for the future.

turnoverwasapproximatelySEK3billion,todayitisover

SEK16billion.WearealeadingtradingcompanyintheNordic

marketandwehaveexpandedintonewproductareassuchasDIY

andTools&Machinery.

The acquisitions have also had a major influence on the culture

and flow of ideas into the Group. We have a tradition of our staff

stayingwithusforalongtimeandIamobviouslypleasedabout

that.Wealsotryinavarietyofwaystoencouragepeopletogrow

withinthecompany.However,allcompaniesalsoneedacertainin-

jectionof“newblood”fromoutside.Theacquisitionshavebrought

usmanynewcolleagueswithexcitingideasandexperience.Today,

Ahlsell’semployeesareapowerfulresource,andIamproudofthe

skillsandcommitmentfoundintheGroup.

Wehavealsolearntsomelessonsovertheyearsandhavebe-

comebetteratbuyingandintegratingcompanies.Thisappliesboth

toourcapacitytoidentifyandanalysepotentialacquisitionsaswell

totheproceduresandlegalprocessesinvolved.I’mnotsayingthat

it’seasytointegratealargeacquisition,afterall,mergingdifferent

organisations,exchangingITsystemsandchangingthelogistics

apparatusisademandingtask.Itwouldbebestifallthiscouldbe

donewithoutlosingmarketfocus,butthereisalwaysacertainloss

ofmomentumforawhile.However,theimportantthingistomake

thisperiodasshortaspossible,andIfeelthatthisissomethingwe

arenowgoodat.

Will Ahlsell continue to acquire companies?AsIsaid,wearenowaleadingtradingcompanyinalltheNordic

countries,butthisisnotthecaseinalloursubmarkets,thatisto

say,withineachproductarea.Moreover,severalofthesemarkets

arestillrelativelyfragmented.Ourambitionistobeactiveinthe

consolidationthatisnowunderway,sothatwecanachieveour

long-termgoalofbeingmarketleaderineveryproductareainall

ourgeographicregions.

How do you think the market will evolve?

AllAhlsell’smarketsegmentshaveperformedwellduring2005.The

increasedinvestmentinconstructionandtraditionalindustrieshas

beenanimportantfactorforus.Butwithintherefrigerationseg-

menttoo,anumberofsuccessfulproductlauncheshaveenabled

ustocreatesolidgrowth.IseeRefrigerationasaninterestingarea

forfutureexpansion.Examplesofotherinterestinggrowthareas

aresmallandmedium-sizedinstallersofHeating&Plumbingand

Electricalsystems,theConstruction,Manufacturing,Computerand

TelecomsindustriesaswellasPowerSupplyUtilities.

In2006IexpectthemarkettoremainstronginSweden,Den-

markandFinlandandtheNorwegianmarkettocontinueatitshigh

level.

What other expectations do you have for 2006?Basedonourpositiveviewofmarketdevelopments,ourvolumes

shouldcontinuetoincrease.Wewillcontinuetofocusonimproving

our margins, cost-efficiency, cash flow and capital tie-ups. In con-

junctionwithourfocusareasineachcountryofoperation,thiswill

lead to improved profits and volumes for 2006 as well.

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Operations by country

OPERATIONSAhlsell’shistorydatesbackto1877when

thesalescompanyBernström&Cowas

established.Thefoundationsofthepresent

Groupwerelaidin1922whenBernström

&ComergedwithRAhlsell&Co,shifting

thefocusmoretoheatingandplumbing

products.TodayAhlsellisSweden’sleading

tradingcompanyininstallationproducts,

toolsandmachinery.Theoperationinclu-

des all five of the Group’s product areas:

HeatingandPlumbing,Electrical,Tools&

Machinery,RefrigerationandDIY.In2005,

55percentoftheGroup’snetexternalsales

weregeneratedintheSwedishmarket.

Atyear-end,Ahlsellhadsome80esta-

blishmentsinSweden.Duringtheyearthis

numberincreasedbytwoasaresultofthe

acquisitionsofLjungbyIndustrileverantör

withaturnoverofSEK20mandSkaraborgs

IndustriservicewithaturnoverofSEK30m.

ThecentralwarehousefortheSwedish

operationsislocatedinHallsberg.

Theaveragenumberofemployeesin

Swedenduring2005was2,246,anincrease

of109overthepreviousyear.Thenumber

ofcustomersservicedduringtheyear

amountedtoover50,000.Thetenlargest

customersaccountedfor15percentofnet

sales.

POSITION AND COMPETITORSIntheHeating&Plumbingproductarea,

Ahlsell’smarketshareisestimatedat

slightlyover40percent,whichmakesthe

GroupmarketleaderinSweden.

IntheElectricalproductarea,Ahlsell

nowranksnumbertwoamongelectrical

wholesalerswithamarketshareofapprox-

imately20percent.Elektroskandia(owned

byDutchcompanyHagemeyer)isthe

largestplayerandSelga(ownedbyFrench

companyRexel)isthird.

TheSwedishmarketinTools&

Machineryisfragmented,asinNorwayand

Finland,withalargenumberoflocalcom-

panieswithanetturnoverintherangeof

SEK20to80m.Ahlsell’spositionasmarket

leaderwasfurtherstrengthenedduringthe

yearthroughtheacquisitionsofLjungby

IndustrileverantörandSkaraborgsIndu-

striservice.ThesecomplementAhlsell’s

existingsaleswithintheTools&Machi-

neryproductarea,whichgomainlytothe

traditionalengineeringindustries.Today

AhlsellisaleaderinTools&Machinerywith

amarketshareofabout30percent.Another

playerinthemarketisBergman&Beving.

Ahlsell’smarketshareincommercial

refrigerationamountstoabout30percent,

whichmakestheGroupnumbertwointhe

market.Kylma(ownedbyG&LBeijerof

Sweden)islargestandTempcold*isthird.

Inthemorefragmentedmarketforresi-

dentialcooling,Ahlsellisoneamongmany

players.

IntheDIYsegmentforElectricaland

Heating&Plumbingproducts,Ahlsellis

marketleaderwithapproximately35percent

ofthemarketforelectricalproductsandjust

under10percentinHeating&Plumbing.

OthermajorplayersincludeGGCarat

(ownedbyDahl),Amiga,Malmbergsand

Schneider.

DEVELOPMENT IN 2005 AND FUTURE PROSPECTSExternalnetsalesoftheSwedishoperations

increasedby18percenttoSEK8,873m.The

growthwasgeneratedprimarilywithinthe

Heating&Plumbingproductarea.Asmaller

proportionofthesalesincreaseinTools

&Machinerywasduetotheacquisitionof

LjungbyIndustrileverantörandSkaraborgs

Industriservice.

Thereisconsiderablepressureonprices

intheSwedishElectricalmarket,andthe

dropinvolumeispartiallyexplainedbythe

factthatAhlsellelectedtodivestitselfof

unprofitable contracts and withdraw from

someareasofbusiness.

Income(EBITA)totalledSEK722m,

equivalenttogrowthof42percent.An

operatingmarginof8.1percentisthebest

everrecordedbyAhlsellinSweden.This

improvement is chiefly due to a higher level

of cost-efficiency and a change in the custo-

mermix.

Duringthelatterpartof2003,anew

salesorganisation,basedonmarketand

customersegments,wasintroducedin

Sweden.Ithascontributedtoboostingthe

Group’ssellingpowerin2005asAhlsell

isevenbetteratmeetingtheneedsofits

customerswithineachsegment.Anumber

of growth and profitability initiatives have

alsobeenlaunched,andtheseareexpected

toproducepositiveresultsandeconomies

ofscaleduringthecomingyears.

Ahlselltakesapositiveviewofecono-

mictrendsinSwedenfor2006.Investments

areexpectedtoincreaseinboththecon-

structionandindustrialsectors.Animpro-

ved market and intensified sales efforts, in

combinationwithcontinuedcostcontrols,

areexpectedtoleadtobettermarginsand

profits in 2006.

* In April 2006 Ahlsell entered into an

agreement to acquire Tempcold.

Shareofexternalsales

Shareofincome(EBITA)

Marketshare/productarea

Sweden55 %

Sweden69 %

Sales/productarea

Heating &Plumbing47 %

Electrical25 %

Tools &Machinery

22 %

Refrigeration3 %

DIY3 %

0 20 40 60 80 100

Heating & Plumbing Slightly more than 40%

Refrigeration 30 %

DIY within H&P Just under 10 %

DIY within electrical 35 %

Electrical 20 %Tools &

Machinery 30 %

Sweden

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OPERATIONSAhlsellestablisheditsoperationsinNorway

in1990throughacquisitionsintheRefrige-

rationproductarea.Theyhavesincebeen

expandedandnowencompasstheproduct

areasofHeating&Plumbing,Electrical,

RefrigerationandDIY.TheNorwegian

operationsaccountedfor31percentofthe

Group’sexternalnetsalesin2005.Asa

resultoftheacquisitionofelectricalwho-

lesalerNexansDistribusjon,thenumberof

establishmentsinNorwayincreasedby24,

bringingtheirnumberupto80attheclose

oftheyear.

TheNorwegianorganisationhas

severaldistributionwarehouses.Areview

oflogisticswillbecarriedoutin2006with

theaimofintroducingamorecostand

capital-efficient logistics solution. After the

acquisitionofNexansDistibusjon,witha

turnoverofSEK1,200mand300employ-

ees,Ahlsellhasabout1,300employeesin

Norway.TurnoveramountedtoSEK5,051m

at the end of the financial year. The total

numberofcustomersduringtheyearwas

about25,000.Thetenlargestcustomersac-

countedforapproximately15percentofnet

sales.

POSITION AND COMPETITORSIntheHeating&Plumbingproductarea,

Ahlsell’spositionintheNorwegian

wholesale market has been significantly

strengthenedthroughtheacquisitionof

BergensandStavangerRørhandel(BR/SR)

in2004.Ahlsell’smarketshareisestimated

toamounttojustover40percentinHeating

&Plumbing,whichmakesitmarketleader

togetherwithBrøderneDahl.Inthirdposi-

tioninthemarketisNorway’sHeidenreich.

During the financial year, Ahlsell acquired

theelectricalwholesalerNexansDistribus-

jonwithaturnoverofSEK1,200m,thus

becomingaleadingplayerintheelectrical

market.

Ahlsell’smarketshareintheelectrical

segmentisestimatedatapproximately

15percent.OtherplayersareOnninen,Elek-

troskandiaandDanishcompanySolar.

InRefrigeration,Ahlsellisestimatedto

haveabout15percentofthemarketforboth

commercialrefrigerationandresidential

cooling. This makes it one of the five largest

playersintherefrigerationmarket.The

majorplayersareSchløsserMøller(owned

byG&LBeijer),Tempcold*,andthetwo

family-ownedcompaniesModerneKjøling

andBørresen.

IntheDIYsegment,Ahlsellhasastrong

positioninelectricalgoods.Thetotal

marketshareforElectricalandHeating&

Plumbinggoodsisestimatedatabout10

percent.

DEVELOPMENT IN 2005 AND FUTURE PROSPECTSExternalnetsalesinNorwayincreasedby

225percentduringtheyeartoSEK5,051m.

Theincreaseismainlyduetotheacqui-

sitionsofNexansDistibusjonandBR/SR,

alongwiththestrongmarket.

Income(EBITA)amountedtoSEK194m.

Theoperationhasbeencharacterisedby

mergersandeffortsdesignedtointegrate

theacquisitionof(BR/SR)inOctober2004

andNexansDistribusjonin2005.Duringthe

financial year, three units have been mer-

ged, the head office has been moved, the

organisationhasbeenrestructuredanda

newbusinesssystemhasbeenintroduced.

TheGroup-wideITsystemallowsecono-

miesofscaleinpurchasing,logisticsand

administration.Measureshavealsobeen

takentostreamlineadministrativefunctions

andlogistics.

ForAhlsellinNorway,2006willbe

distinguishedlargelybythecontinuedinte-

grationofBR/SRandNexansDistribusjon

andtherealisationofcostsavings.

Positivedevelopmentsareexpectedto

continueintheconstruction-relatedmarket.

Investmentsintheoilandgasindustries

alsoappeartobecontinuingatahighlevel.

IntermsofAhlsell’soveralloperationsin

Norway,acontinuedhighmarketlevelin

combinationwithstructuralmeasuresthat

havealreadybeenimplementedorareplan-

nedisexpectedtohaveapositiveeffecton

profitability and income during 2006.

* In April 2006 Ahlsell entered into an

agreement to acquire Tempcold.

Norway

Shareofexternalsales

Shareofincome(EBITA)

Marketshare/productarea

Norway31 %

Norway19 %

Sales/productarea

Heating &Plumbing81 %

Electrical17 %

Refrigeration1 %

DIY1 %

0 20 40 60 80 100

Heating & Plumbing 44 %

Refrigeration 15 %

15 %

Less than 5 %

Electrical 15 %

DIY within H&P

DIY within electrical

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OPERATIONSAhlsellestablishedoperationsinFinlandin

1990throughacquisitionsintheRefrigera-

tionproductarea.Theywereexpandedin

1999throughtheacquisitionofaleading

wholesalerofHeating&Plumbingproducts.

In2005,AhlsellestablisheditselfinDIYin

Finlandthroughtheacquisitionofleading

DIYwholesalerMalkOY,withaturnoverof

SEK60mand20employees.Elevenpercent

oftheGroup’sexternalsalesweregenera-

tedinFinland.

Ahlsellhas25salesunitsinFinland,

andthecentralwarehouseissituatedin

Hyvinge,outsideHelsinki.Theaverage

numberofemployeesinFinlandwas318,a

reductionof4percent.Thecompanyservi-

cedsome13,000customersduringtheyear.

Thetenlargestoftheseaccountedforjust

over15percentofnetsales.

Ahlsellalsohasasmalleroperationin

Russia,whichcomesundertheumbrellaof

Finland.Theoperationwasestablishedin

1996inSt.Petersburgandcomprisesthe

Heating&Plumbingproductarea.In2004a

secondestablishmentwasstartedinEkate-

rinburg.In2005,salesinRussiaamounted

toSEK61Millionwithanoperatingmargin

of3.6percent.Theaveragenumberofem-

ployeeswas52.

POSITION AND COMPETITORSAhlsellhasastrongpositioninFinlandin

bothHeating&PlumbingandRefrigeration.

IntheHeating&Plumbingproductarea,the

marketshareisestimatedtoexceed

20percent,makingAhlsellnumberthree

inthewholesalemarketafterOnninenand

Dahl.

InRefrigeration,Ahlsellisthirdwith

amarketshareofabout15percentwithin

bothcommercialrefrigerationandresi-

dentialcooling.Thelargestplayerinthe

refrigerationmarketisOnninen,followedby

CombiCool(G&LBeijer)andTempcold*.

In2005,Ahlsellestablisheditselfinthe

DIYsegmentinFinlandthroughtheacquisi-

tionofleadingDIYwholesalerMalkOY,with

aturnoverofSEK60mand20employees.

Aftertheacquisition,Ahlsell’smarketshare

inHeating&PlumbingproductsintheDIY

marketisestimatedatapproximately

40percent.

DEVELOPMENT IN 2005 AND FUTURE PROSPECTSAhlsell’sexternalnetsalesinFinland

increasedby16percentduringtheyearto

SEK1,753m.Income(EBITA)amountedto

SEK101m.Theimprovementinincomeis

duemainlytolowerrelativecostlevelsand

highergrossmargins,whichinturnresult

frominvestmentspreviouslymadeina

centralwarehouseandlogisticssystemsas

wellasbetterpurchasing.

Duringtheyear,theFinnishoperation

hasfocussedonimprovingandstreamli-

ningprocessesandhasalsomaintained

afocusonexpensesandmargins.The

FinnishmarketremainedstronginAhlsell’s

productareas.

Themarketisnotexpectedtochange

andwillremainstrongin2006.Ahlsellaims

toexpanditspresenceinFinland.Invest-

mentsandrestructuringcarriedoutduring

previousyears,incombinationwithaconti-

nuedfocusoncostsandmargins,constitute

agoodbasisforfurtherimprovementsin

profit in 2006.

* In April 2006 Ahlsell entered into an agre-

ement to acquire Tempcold.

Finland

Shareofexternalsales

Shareofincome(EBITA)

Marketshare/productarea

Finland11 %

Finland10 %

Sales/productarea

Heating &Plumbing94 %

Tools &Machinery

1 %

Refrigeration3 %

DIY2 %

0 20 40 60 80 100

Heating & Plumbing 22 %

Refrigeration 15 %

40 %DIY within H&P

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OPERATIONSAhlsellhashadapresenceinDenmark

since1990whentherefrigerationoperation

wasacquired.Sincethen,thenumberof

productareashasexpandedtoincludeDIY

in1998andHeating&PlumbingandElectri-

calin2000.TheDanishoperationaccounted

forthreepercentoftheGroup’sexternal

salesin2005.

Thenumberofsalesoutletswas11at

thecloseoftheyear.Theaveragenumber

ofemployeesintheDanishoperationwas

159.Thecompanyservicedabout2,500

customersduringtheyear.Thetenlargest

customersaccountedforjustover20per-

centofsales.

POSITION AND COMPETITORSAhlsellisasmallbutfast-growingplayerin

theDanishHeating&Plumbingwholesale

market,withashareofseveralpercent.The

dominantplayerisDahl,followedbyDanish

wholesalersA&OJohansenandSanistål.

Ahlsell’smarketshareisalsolimited

intheElectricalproductarea,wherethe

marketisdominatedbythetwoDanish

wholesalersSolarandLouisPoulsen.

Ahlselloccupiesastrongpositioninthe

Refrigerationmarket,withabout25percent

ofcommercialrefrigerationproductsand

10percentofresidentialcoolingproducts.

Ahlsellisoneofthethreeleadingplayers,

alongwithHJessenJürgensenandTemp-

cold*.

InDIY,Ahlsellismarketleaderinthe

Heating&Plumbingproductarea.Other

majorplayersareDahlandA&OJohansen.

DEVELOPMENT IN 2005 AND FUTURE PROSPECTSAhlsell’ssalesinDenmarkamountedto

SEK507m.BoththeRefrigerationandDIY

operations are well established and profi-

table.Inthelessestablishedproductareas,

namelyHeating&PlumbingandElectrical,

salesareoutpacingthemarket.Asawhole,

income(EBITA)intheDanishoperation

improvedby122percenttoSEK20m.

Ahlsell’sassessmentisthattheDanish

marketwilldeveloprelativelystronglyin

2006.Thecompany’sgrowthstrategyin

Heating&PlumbingandElectricalsremains

unchanged,whileoperationswithinRefri-

gerationandDIYareexpectedtocontinue

to perform well with good profitability. The

Danishoperationwillcontinuetofocus

stronglyonimprovingcost-effectiveness

andmarginswhich,alongwithlocalbusi-

nessinitiatives,shouldleadtoincreased

volumes and improved profits for 2006.

* In April 2006 Ahlsell entered into an agre-

ement to acquire Tempcold.

Denmark

Shareofexternalsales

Shareofincome(EBITA)

Marketshare/productarea

Denmark3 %

Denmark2 %

Sales/productarea

Heating &Plumbing24%

Electrical17 %

Refrigeration20 %

DIY39 %

0 20 40 60 80 100

Heating & Plumbing less than 5 %

less than 5 %

less than 5 %

Refrigeration 25 %

DIY within H&P 30 %

DIY within electrical

Electrical

�

The Ahlsell concept

Business conceptTo create an efficient trade in installation products, tools andmachineryforprofessionalusersintheNordicregion.

Vision and goalsAhlsell shall be the obvious choice for customers in the field of installation products, tools and machinery. The Group’s overall objective is to generate high growth and profitability andbecomealeadingplayerinallproductareasineachNordiccountry.

The Ahlsell concept reflects the Group’s overall strategy for guiding the business in line with its vision and goals. This strategy consists of five cornerstones.

Proximitytothecustomerandfamiliarity

withthelocalmarketarenecessaryto

satisfycustomerneedsinanoptimalway.

Ahlsellcurrentlyhasabout200outlets

and sales offices throughout the Nordic

region.Theoutletsofferfastandaccessible

serviceandareanaturalmeetingplacefor

manyprofessionals.

Sincethebusinesscomprisesalarge

numberoflocalunitswithahighdegree

of autonomy and clearly defined respon-

sibility for profits, local managers are able

toprovideoptimumqualityincustomer

relationsaswellasmotivatetheirstaff.

Ahlselloffersacomprehensiveselection

ofgoodsfromleadingmanufacturersof

installationproducts,toolsandmachinery.

Thisgivescustomersaccesstoawide

rangeofproductsandmostperipheral

servicesthroughasinglecontact,allowing

them to increase efficiency and reduce

costs.

Thewideproductrange,incombination

withlargevolumes,alsoallowsAhlsell

tomaintainacost-effectivesupplychain.

Theproductrangeandrelationshipswith

suppliersareconstantlybeingdeveloped.

Ahlsellendeavourstoprovidediversity

withineachproductareaintermsofpro-

ductdesignandfunctionaswellasquality

andcost.

WIDE PRODUCT RANGE LOCAL PRESENCE SKILLED SPECIALISTS

Skilledstaffareindispensableforproviding

customerswithexpertadvicebasedon

theirindividualneeds.Extensiveindustry

experiencecombinedwithcontinuous

trainingandmonitoringofthemarketen-

vironmentmeansthatAhlsell’sstaffhave

in-depthknowledgeofproducts,markets

andtrends.

Thesalesorganisationisorganised

intomarketsegmentsandrespondsto

customers on the basis of their specific

needs.Thecombinationofawideproduct

rangeandspecialistexpertisewithineach

marketsegmentprovidesanexcellentbasis

forlong-termcustomerrelationsandnew

business.

10

CENTRALISED PURCHASING, ADM. AND LOGISTICS

GROWTH THROUGH ACQUISITIONS

Centralisedpurchasingfunctionscreate

costsynergiesinthepurchasingprocess

while simultaneously benefiting relations

withsuppliers.TheuseofITsystemsand

supportfunctionsthroughouttheGroup

also facilitates efforts to benefit from eco-

nomiesofscale.

AtthehubofAhlsell’sbusinessisthe

Group’s efficient logistics system with

state-of-the-artcentralwarehousesin

strategiclocationsthroughouttheNordic

region. A cost and capital-efficient supply

chain,alongwithlargevolumes,formsthe

basis of a profitable business. With central

warehousing,fasthandlingofordersand

directdeliveriesfromstock,customers

receivetherightgoodsattherighttimeand

attherightplace.

Assoonasacriticalvolumeisreached,

acentralwarehouseisestablishedineach

countrywheretheGroupoperates.Theaim

istorunabusinessineachcountrythrough

alegalunitwithsharedlogistics,ITand

administrativesystems.

Potentialacquisitionscanbedividedinto

thosecarriedouttoexpandthecompany’s

geographicalpresenceandthosethatcom-

plementexistingproductareasinmarkets

whereAhlsellisalreadyoperating.

The aim of the first category is to broa-

denthecustomerbaseandservicealarger

marketinlinewithAhlsell’sconcept.

Acquisitionsenableustobecomean

evenstrongerpartnerforourcustomers

andsuppliers.Ahlsellprioritisesthoseac-

quisitionsthatprovideclearcostsynergies

anditsaimistointegrateallofthemintoits

existingsystemwithintwelvemonths.In

mostcases,thisinvolvesthecoordination

ofdiverseadministrative,purchasing,IT

andlogisticssystemsaswellassalesof-

fices.

Historically,Ahlsellhastendedtoacqu-

ire businesses with a low level of profitabi-

litythatimprovedafterintegration.Insuch

cases,theAhlsellconcepthascontributed

to a significant creation of added value.

11

•Gelia

1996

19971998

1999

2000

2001 2002

2003

2004

2005

2006*

•SkoogsEl

•Landol

•PeFo

•HilcoKulde

•Tornab

•Elwar

•StormElektro

•VVS-Trading

•Värmekällani

Östersund

•Sjörlie&Birch

•SuomenLVI-Tukku

•Sinex

•Ramo

•Elektroskandia

Ventilation

•TibnorIVH

•TriatorIsoler

•KLundEngros

•Värnamo

Maskinverktyg

•TotalPartner

•HässleholmsJärn

•BergenRörhandel

•StavangerRörhandel

•LjungbyIndustrileverantör

•SkaraborgsIndustrisevice

•MalkTeollisuuspalveluOy

•Nexansdistribusjon

Acquisitions 1996 - 2006* •MCOM

•TIAB

•Tempcold

•Kojaltek

Since 1996, up to and including May 3, 2006, 31 companies have been acquired, with a combined turnover of SEK 10 billion.

* Up to and including 3 May 2006

Market, trends and competitors

Ahlsellisawholesalerintheproductareas

ofHeating&Plumbing,Electricals,Tools

&MachineryandRefrigeration.Asmaller

shareofsalesofHeating&Plumbingand

Electricalproductsgoestoretailersinthe

DIY(Do-It-Yourself)segment.Ahlsellhas

operationsinSweden,Norway,Finlandand

DenmarkandonasmallerscaleinRussia.

MarketSalesofinstallationproducts,toolsand

machineryintheNordicmarketareprima-

rilyatwholesalelevel.Ahlsellestimates

thatabout80percentofallsaleswithinthe

Nordicregioninitsvariousproductareas

gothroughwholesalers.Theremainder

comprisesalesdirectfromsupplierto

customerandasmallershareofDIYsales.

ThetotalmarketforAhlsell’sproductareas

isestimatedatSEK80billion.

Ahlsell’slargestproductareas,namely

Heating&PlumbingandElectricals,to-

getheraccountedforabout80percentof

totalsalesin2005.

ThemarketforHeating&Plumbingand

ElectricalproductsintheNordicregion

grewby3-4percent*annuallyovera10-

yearperiod.Severalofthesegmentswithin

whichAhlselloperateshavearelativelylow

degreeofconsolidation.ThisgivesAhlsell

furtheropportunitiesforacquisitionsand

offerssolidgrowthpotential.

CustomersAhlsell’scustomersconsistmainlyof

installation,industrial,constructionand

propertycompanies,sewageanddrainage

contractors,powerutilitiesaswellasmuni-

cipalitiesandretailers.

TheGrouphasapproximately100,000

customers.Thetenlargestaccountedfor

about15percentoftheGroup’snetsales,

andnosinglecustomeraccountedformore

than3percentofnetsales.

Wholesalers are playing a greater role in the marketTheNordicwholesalemarketwithin

Ahlsell’sproductareasisaffectedbyse-

veraltrends–includingabroaderproduct

range,consolidationamongsuppliers,the

transferofproductiontolow-costcountries

aswellaschangesinorderingpatterns.

Duringthelastdecade,theproduct

rangeavailableinthemarkethasextended

significantly and this trend is expected to

continue.Thisisduetoincreaseddemand

fromcustomersforagreatervarietyof

products,bothfromadesignandacost

perspective,butalsototheincreasing

technicalcontentoftheproducts.

Essentiallyallproductsuppliers,both

globallyandlocally,makeuseofwholesa-

lersasasaleschanneltoreachouttolocal

markets.Thesupplierstructurevariesto

someextentbetweenthedifferentproduct

areas,partlyasaresultofdifferencesin

designanddegreeofstandardisation.

Anoverridingtrendisthatproductionin

manufacturingindustryisbeingmovedto

low-costcountries.Thisisalsohappening

inAhlsell’sproductareas,creatingboth

challengesandopportunities.Customer

orderingpatternshavealsochangedduring

recentyears.

Theconstructionofnewhousing,above

allinSweden,hasbeenlimitedandindivi-

dualconstructionprojectshavegenerally

declinedinscope.Asaresult,construction

andinstallationcompanieshaveshortened

theiradvanceplanningandhavebecome

reluctanttokeepproductsinstock.Taken

together,thesetrendshaveproducedan

increasinglyunclearsituationforboth

customersandsuppliers,thusstrengthe-

ningtheroleofwholesalers.

Competitive situationInthewholesalemarketsforHeating&

Plumbing,Electricals,Tools&Machinery,

RefrigerationandDIY,afewlargecompa-

nies together command a significant share

oftheoverallmarketintheNordicregion.

However,AhlsellandFinland’sOnninenare

theonlytwoplayersthatareestablished

withinseveralproductareas.Ahlsellisa

leadingcompanywithinalltheseareas,

thoughnotineachindividualcountry,and

aimstostrengthenitspositionfurther.

The heating and plumbing market may

nowberegardedasfullyconsolidated,

withthethreemajorplayerstotallingmore

than50percentinallcountries.Together

withDahl,AhlsellistheleaderinSweden,

FinlandandNorway.

The Electrical markethasseensig-

nificant consolidation in recent years,

comprisingasmallnumberofplayerswith

substantialmarketshares.Thisismost

clearlyevidentinFinlandandDenmark.

AhlsellisamajorplayerinSwedenand

NorwayandaminoroneinDenmark.

The market for commercial refrigeration

productsisfairlymatureandconcentrated,

withAhlsellandG&LBeijerastheleading

players.However,thefaster-growingresi-

dentialcoolingsegmentisfragmentedwith

severalsmallerplayers.

In Tools & Machinery,thelevelofcon-

centrationisgenerallylowandthemarket

ischaracterisedbyalargenumberofsmall

companies,withtheexceptionofDenmark,

whichhasthreelargeplayers.Inthispro-

ductarea,AhlsellisactiveonlyinSweden,

whereitisthemarketleader.

The Nordic market in the DIY segment is

fragmented,withanumberofsmallcompa-

niesfocusingonlocalmarkets.

* Source: Association of Nordic Wholesa-

lersandAhlsell

Unconsolidated share of the market (excl. DIY). The higher the figure, the greater the

potentialforacquisition.

CountryHeating & Plumbing

ElectricalTools & Machinery

Commercial refrigeration

DIY

Sweden <10% <20% approx.60% approx.15%

Marketposition

1 2 1 2** 1

Norway approx.15% <20% approx.70% approx.60%

Marketposition

1 3 - 4** 1

Finland approx.5% approx.10% approx.70% <20%

Marketposition

3 - - 3** 1

Denmark approx.40% approx.40% approx.70% <20%

Marketposition

5 4 - 2** 1

Acquisition potential

** In April 2006 Ahlsell entered into an agreement to acquire Tempcold. Ahlsell will subsequently be market leader in Refrigeration in all countries.

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History

SWEDEN

AhlsellAB

11798Stockholm

Visiting address: Liljeholmsvägen 30

Tel: 08 685 70 00

Fax: 08 685 70 96

www.ahlsell.se

NORWAY

AhlsellNorgeAS

Postboks184

4065Stavanger,Norway

Visiting address: Gamle Forusvei 53

Forus,4033Stavanger

Tel: +47 51 81 85 00

Fax: +47 51 81 86 00

www.ahlsell.no

FINLAND

AhlsellOy

01510Vantaa,Finland

Visiting address: Äyritie 12 C

Tel: +358 20 584 5000

Fax: +358 20 584 5101

www.ahlsell.fi

DENMARK

AhlsellA/S

2610Rødovre,Denmark

Visiting address: Islevdalvej 142

Tel: +45 44 54 40 01

Fax: +45 44 54 40 41

www.ahlsell.dk

RUSSIA

ZAOAhlsellSPb

Box7001,190000StPetersburg,

Russia

Visiting address: Rentgena 5

Tel: +7 812 325 2424

Fax: +7 812 325 2407

www.ahlsell.ru

PARENTCOMPANY

AhlsellHoldingAB

11798Stockholm

Visiting address: Liljeholmsvägen 30

Tel: 08 685 70 00 Fax: 08 685 70 96

www.ahlsell.com

THEHISTORYOFAHLSELL

beganin1877withtheestablish-

mentofthetradingcompany

Bernström&Co.Thecompany

mergedwithRAhlsell&Coin

1922,whichledtoastronger

focusonheatingandplumbing

andlaidthefoundationsforthe

presentGroup.

Thecompany’sshares

arelaunchedonthe

Stockholmstock

exchange.

1964 1986 AcquisitionofEl-Partner,

El-Hågeandothercompanies

establishesthebusinesswithin

theElectricalsegment.Boliden

acquiresAhlsellandthe

companyisdelisted.

1987

Ahlsellbecomesa

subsidiarywithinthe

TrelleborgGroup,which

acquiresBoliden.

1990 AcquisitionofSandblom

&Stohneestablishes

thebusinesswithinthe

Refrigerationarea.A

centralwarehouseisset

upinHallsberg.

1996Acquisitionof

Geliaestablishes

thecompany’sDIY

business.

1999NordicCapitalbecomes

thenewmajorityowner

ofAhlsellbyacquiring

51%ofitsshares.

2001

AcquisitionofTibnor

Industrivaruhus

establishesthebusiness

withintheTools&

Machineryarea.

2002Ahlsellcelebratesits

125thanniversary.A

centralwarehouseis

setupinNorway.

2003

20042005

Reorganisationfroma

product-basedtoamarket-

basedorganisation.Acentral

warehouseissetupin

Finland.

AcquisitionofBergensandStavanger

RörhandelmakesAhlsellmarketleader

inHeating&PlumbinginNorway.

AcquisitionofTotalPartnerreinforces

itspositionasmarketleaderinthe

Tools&MachineryareainSweden.

NordicCapitalbecomessolemajority

ownerofAhlsell.

AhlsellacquiresNexansDistribusjonASandbecomes

marketleaderintheElectricalproductareainNorway.

AcquisitionofMalkOYmakesAhlsellmarketleader

inDIYinFinland.Ahlsellhasacquired27companies

since1996.CinvenandGoldmanSachsCapital

Partners,twoofEurope’sleadingprivateequity

companies,acquireAhlsellandthusbecomenew

majorityownersfromJanuary2006.

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