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ANNUAL REPORT 2005

Garry Winogrand (1928-1984)

New York-born artist Garry Winogranddeveloped his personal photographic style asa freelance photojournalist. In 1963 theMuseum of Modern Art in New Yorkpresented the first major show ofWinogrand´s works, which was laterfollowed by two exhibitions, The Animals, in1969, and Public Relations, in 1976. The photographs of Garry Winograndpresented urban American post-war societyand social diversity, and portrayed a super-power which was at a cultural crossroads,becoming increasingly associated with consu-merism and television. With predecessorssuch as Walker Evans and Robert Frank,Winogrand and his contemporaries LeeFriedlander, William Eggleston and DianeArbus left an indelible mark on the historyof photography.

Winogrand is generally credited with havingestablished "street photography" as a genre,and with his much copied use of the wide-angle lens and tilted picture-frame he

exerted considerable influence over contem-porary and later photographers. With a focuson the celebratory and humorous,Winogrand immortalized scenes from thebeach, town halls and livestock shows,tourist attractions and sporting events.Noted works from his portfolio convey amanic sense of life balanced somewherebetween animal high spirits and an appre-hension of moral disaster. Winogrand com-bined dramatic formalism with generous andat times palpable empathy for both hissubject and his country. The images are oftenladen with visual puns, disquieting juxta-positions and uncomfortable confrontations,often with an element of the tragicomic.Winogrand was an extremely productiveartist and left behind a prodigious archive ofboth unedited and unprocessed work. Thismaterial has since his death been at theCenter for Creative Photography in Arizona,where research into the different aspects ofWinogrand’s considerable contribution tothe history of photography continues.

Art in the ABGSC Annual Report

Over the last few years, ABG Sundal Collierhas had the pleasure of presenting the workof an important Scandinavian artist throug-out the pages of the Annual Report.For the 2005 edition we have chosen to focuson the work of two of the most importantand influential American photographicartists of the 20th century: Garry Winograndand William Eggleston. Garry Winogrand iswidely credited as having established “streetphotography” as a genre, with snapshot-likecompositions presenting American society onthe verge of economic and social change.William Eggleston’s characteristic

dye-transfer prints and exaggerated perspec-tives lend an air of psychological drama toeveryday motifs, making him one of theforemost contributors to photography. Thereis a considerable renewed interest in thework of these pioneers all across the artscene, as their work continues to inspire newgenerations of artists, curators and collectors.ABG Sundal Collier would like to thank theWilliam Eggleston Artistic Trust and theEstate of Garry Winogrand for their coope-ration, as well as the galleries Cheim & Readin New York, Fraenkel in San Francisco andRiis in Oslo for helping in organizing thiscontribution.

Images

Cover: Central Park Zoo, New York City, 1967

Page 3: Park Avenue, New York, 1959

Page 6: New Mexico, 1957

Page 12: Los Angeles, 1964

Page 13: Untitled, ca 1967

Page 15: Elliot Richardson Press Conference, Austin, 1973

Page 17: Untitled, 1972

Page 18: Central Park Zoo, New York City, 1967

1: Texas State Fair, Dallas, 1964

Page 22: Dallas, Texas, 1964

Page 25: Hippy Hollow, Lake Travis, Austin, Texas, 1973

Page 29: Untitled (Texas?), ca 1975

Page 31: World’s Fair, New York City, 1964

Page 34: State Dinner, Apollo 11 Astronauts,

Los Angeles, 1969

Page 41: Central Park Zoo, New York City, 1962

Page 55: New York City, 1968

The Winogrand images are all silver-gelatin prints

© The Estate of Garry Winogrand, courtesy Fraenkel Gallery, San Francisco

4

William Eggleston (b. 1939)

William Eggleston is considered to be one ofthe most important photographers in theUSA. Influences on his early black and whitephotographs were Walker Evans and HenriCartier-Bresson. He later joined LeeFriedlander and Garry Winogrand as part ofthe post-war generation that liberated themedium from the restrictions and conven-tions so characteristic of this period. Thenovelty of his style manifested itself in theunusual framing of the compositions, andthe unpretentious presentation of the every-day.

Eggleston does not use photography as amedium of documentation in the classicalsense, but rather as a means to express hispersonal and unconventional view of theworld. He studies the rural and urban land-scape, old hotel rooms and market places,the forlorn objects of the American Dream,the poetic beauty of the deserted Americansmall-town. His sensational debut exhibitionin the Museum of Modern Art in New Yorkin 1976, presented color photographs from1969 to 1971, with such everyday motifs as atricycle seen from the floor, a shower’s tiled

walls, or the inside of an oven. The artworldwas shocked by the banality of the motifs,the obvious snapshot quality of the pictures,and mainly Eggleston’s daring use of color.Eggleston used the so-called dye transfertechnique for the color photographs, whichallowed him to control both the hues of thecolor, as well as the intensity of each. Theintense color produced in this process wouldeventually be characteristic of Eggleston’sworks. His compositions are the result ofcareful planning, often confusing thebeholder and creating a certain ambiguity.Subjectively controlled colors and exagge-rated perspectives change everyday objectsinto visual metaphors for an alienated world.The interaction of the colors, form and con-tent in Eggelston’s photographs, lend normalthings or situations an additional meaning.The every day life of Middle-class Americacan suddenly seem threatening. WilliamEggleston’s works, however, can not bereduced to a typical mood or style, nor canthey be limited to the American landscape.In recent years, he has worked in Japan,Africa, and Europe.

Images

Page 5: Untitled (Black Family by the Sea) from the

Los Alamos Portfolio, 1965–74

Page 59: Untitled, ca 1973

Page 64: Untitled (Louisiana), 1980

Page 66: Untitled (Yellow Market Sign and Parking Lot),

1999-2001

Page 67: Untitled (Peaches), 1971


Page 70: Untitled (Memphis, Tennessee), 1971

Page 72: Untitled (Greenwood, Mississippi), 1970

Page 74: Untitled (Mika on Subway), 2001

Page 76: Untitled (Mississippi), ca 1970


Page 80: Untitled (Sumner, Mississippi), ca 1972


Page 84: Untitled (Glass in Airplane) from the Los Alamos

Portfolio, 1965–74


The Eggleston images are either Dye-transfer- or color-prints

© 2006 Eggleston Artistic Trust, courtesy Cheim & Read, New York

Tab l e o f Con t en t s

Profile of ABG Sundal Collier................................................................ 8

2005 Highlights ..................................................................................... 9

Key Figures ............................................................................................. 10

Letter from the Chairman .................................................................... 14

Letter from the Chief Executive ........................................................... 16

Market Review....................................................................................... 19

Equities Division..................................................................................... 20

Corporate Finance Division ................................................................... 26

Directors´ Report.................................................................................... 32

Consolidated Financial Statements ...................................................... 36

Notes to the Consolidated Financial Statements ................................ 42

Financial Statements – Parent Company.............................................. 56

Notes to the Financial Statements – Parent Company........................ 61

Auditor´s Report .................................................................................... 69

Group Management .............................................................................. 71

Shareholder Information & Corporate Governance............................ 78

Financial Calendar 2006 ........................................................................ 85

Addresses................................................................................................ 87

7

8 Profile of ABG Sundal Collier

Pro f i l e o f ABG Sunda l Co l l i e r

ABG Sundal Collier was established in 2001through the merger of ABG Securities andSundal Collier. Drawing on the strong partner-ship inheritance of its historic componentsand their strengths in both investmentresearch and corporate advisory work in theNordic region, the combined firm has quicklyestablished itself as an important force in theNordic investment banking sector with itscore research knowledge base as a drivingforce.

ABG Sundal Collier ASA is a publicly quotedcompany listed on the Oslo Stock Exchange(ticker: ASC). The firm operates under thedirection of its Board, led by a non-executivedirector as its Chairman and with a majorityof non-executive directors. The firm uses amanagement matrix that provides both localdepth of knowledge and cross-border functio-nal control. ABGSC is focused exclusively onthe Nordic region of Europe, an area ofeconomic strength, diversity and innovation.The firm serves an audience of largely institu-tional investment clients and corporations toprovide advice that is both locally aware andin a clear international context. We operatefrom offices in five countries and under thehighest governance and regulatory standardsof our industry. The trust and confidence ofour clients is the essence of our past historyand our future success.

ABG Sundal Collier has two operatingdivisions and a global support structure.Under the direction of our Chief Executiveand the Executive Committee, the Equitiesand Corporate Finance Divisions operate asparallel units with robust governance controlsto assure proper integrity of information atall times. The firm’s investment research teamis considered among the most outstanding inthe region and remains a lynchpin of ourability to deliver the most informed andknowledgeable advice to our various clientgroups around the world.

ABGSC styles itself as a partnership and 108 of the firm’s active staff are partner-share-holders. This partner-shareholder groupcontrolled approximately 56% of the firm’sequity as at year-end 2005. The firm’s partnersare committed under a partnership agree-ment that restricts the manner andcircumstances in which shares can be disposedand generally helps to ensure that keymembers of the ABGSC team have animportant economic stake in the success ofthe entire enterprise.

Our Vision and Mission

We are developing a leading Nordic investment bank built on specialist research knowledge and committed to delive-ring long term, superior value for all our key stakeholders by

• ensuring an ethos that always puts client interests first• building a passion for real quality in everything we do• delivering our work in the most cost effective manner• pursuing value in ways that reaches all our stakeholders

92005 Highlights

2005 High l i gh t s

• Despite ongoing concerns about faltering economic growth in the face of high energy pricesand notwithstanding an array of unsettling geo-political events, markets around the worldposted significant gains for 2005. World markets rose despite a disappointing result in theUS. European markets were strong on average, rising 25.5% in local currency terms. Leadingthe way once again as the best market region in Europe were the Nordic markets which rose36.3% (local currency). Only the markets of the Far East showed a better performance lastyear.

• ABGSC Stockbroking revenues increased by 25.3% to NOK 573.9 mil for the year, animprovement that reflected increased market share and that occurred despite continuingpressure on commission rates.

• Corporate Finance had record revenues for 2005 of NOK 554.9 mil, up 52.9% for the year.Real Estate transactions were of particular importance in 2005.

• While new investments in people and facilities continued during 2005, ABGSC costs for theyear increased a modest 1.8% after a much larger increase during 2004. There were no newoffice moves during the year but headcount grew from 198 to 222 as the firm added staff inrevenue generating front office activities to support growth.

• Pre-tax pre-bonus profit margins for 2005 were 69.9% compared with 73.3% for theprevious year.

• ABGSC research was again confirmed as among the top three in the Nordic region amongboth domestic and international investors. Coverage was expanded in both small capresearch and in Denmark.

• ABGSC made several changes to its Board during 2005, in keeping with the firm's growthand the diversity of its business. In accordance with good international practice the firm'sBoard is now predominantly composed of non-executive directors.

• Reflecting its growing importance as a Nordic investment bank, ABGSC initiated aprogramme of new graduate recruitment, training and mentoring during 2005 to expose thevery best new talent to our business with an innovative regime for young professionals.

• ABGSC has an established and publicly articulated policy of paying substantially all itsearnings to shareholders as dividends and this policy continues. Reflecting both strong 2005earnings as well as the availability of balance sheet gains, the Board would have liked topropose a dividend in respect of 2005. However a transitional tax regulation for the year2005 leaves dividends declared as a part of the annual accounts subject to extra taxation forlarge groups of shareholders. It is therefore the Board's intention to ask the AGM forapproval of the annual accounts without the declaration of any dividend for the year 2005.However, it is also the Board's intention to call for an EGM during the 2nd quarter of 2006,to seek approval of an interim dividend of NOK 1.40 per share.

Our ownership culture and commitment to do thingsright, have ensured that 2005 was the best year in ourbusiness history with strong revenue growth and solidmargins leading to record profits for the firm.

Key Figures

Key Fi gu re s

Group Key Figures (NOK 1,000) 20056) 20046) 20036) 20026)

Revenues:Equities Division 573 541 457 818 380 249 353 923Corporate Finance Division 554 904 362 933 246 086 119 630Other revenues 64 928 18 782 1 521 -7 245Total revenues 1 193 373 839 533 627 856 466 308

EBIT before bonus and profit to partners 798 174 451 296 295 282 151 234EBIT after bonus and profit to partners 391 120 226 698 147 241 55 608

Profit before taxes 426 920 390 383 159 825 85 516Net result for the period 338 780 300 578 108 797 55 833

Return on Equity (%) 1) 53.7% 79.1% 29.2% 13.2%Earnings per share (NOK) 2) 1.14 1.12 0.41 0.22Book value per share (NOK) 3) 2.74 2.19 1.57 1.64Payment to shareholders per share (NOK) 4) 1.40 1.10 0.50 0.50

Share price at 31/12 (NOK) 8.80 7.39 4.80 2.65Number of shares outstanding at 31/12 (in 1,000) 5) 269 289 262 874 264 045 261036Diluted average number of shares (in 1,000) 5) 302 810 269 307 263 386 253 552

Price/Earnings 7.7 6.6 11.7 12.0Price/Book value equity 3.2 3.4 3.1 1.6Number of employees/partners per 31/12 222 198 171 165

Definitions:1) Net result for the period / Average equity for the period2) Average number of shares adjusted for dilution effect of the company's short position of treasury shares3) (Book equity per 31/12 + dividend) / (total number of shares - treasury shares)4) Dividends, proposed past year end interim dividends or reduction in share premium fund (for 2002 and 2003)5) Adjusted for treasury shares6) 2005 and 2004 according to IFRS, 2003 and 2002 according to NGAAP

10

200420032002 2005

500

600

400

300

200

100

0120

363

555

246

Cost/Income Ratio Compensation/Income Ratio

2004 20052002 200340 %

60 %

80 %

100 %

50 % 50 % 51 %53 %

74 %67 %

77 %

88 %

20042002 2003 2005

Operating Profit Margin Return on Equity

79,1 %

66,9 %

53,7 %

53,2 %

80 %

90 %

70 %

60 %

50 %

40 %

30 %

20 %

10 %

0 %

47,0 %

32,4 %

29,2 %

13,2 %

200420032002 2005

500

600

400

300

200

100

0

574

458

380352

Cost/Income Ratio

Corporate Finance Revenues (NOKm)

Return on Equity

Stockbroking Revenues (NOKm)

Key Figures

15

6

55104

36

GRUN

NLAG

Geographic Revenue Distribution 2005

New York

London

Bergen

6Copenhagen

OsloStockholm

Geographic Partner and Employee Distribution

11

222 employees per31 December 2005

Norway• Brokerage Services• Equity Research• Corporate Finance• Structured Products• Back Office• Group Compliance• Group Admin

Sweden• Brokerage Services• Equity Research• Corporate Finance

Denmark• Brokerage Services• Equity Research

United Kingdom• Brokerage Services• Equity Research

USA• Brokerage Services• Group Compliance

Operational Revenue Distribution 2005

UK/ContinentalEurope 14 %

USA 10 %

Sweden11 %

Norway63 %

CorporateFinance

46 %

Other 5 % Brokerage

Services49 %

GRUN

NLAG

Denmark 2 %

Letter from the Chairman

Yours sincerely,

Terje Moe Gustavsen

Le t t e r f rom the Cha i rman

As this report so clearly describes, 2005 hasbeen both eventful and rewarding for ABGSC,its Partners, staff and our key stakeholderconstituencies. The broadly satisfactoryeconomic environment combined withsubdued inflation has encouraged more activecorporate decision-making, while investorsbenefited from rising markets on the back ofgood industry profit growth. For a Nordicinvestment bank, the strength of energyprices added even more to the positive mixand we have taken successful advantage ofthe opportunities.

The year saw an important set of changesfrom a governance perspective for our firm aswe established a “best practice” position inthe structure of our Board and its relationshipto the management of the firm. As you know,ABGSC continues to style itself on a partner-ship model, an approach we believe isconsistent with the nature of our business anda model that aligns the interests of our keypeople with those of our broader stakeholderaudience. Over the last two years we havegradually changed the nature and mix of theABGSC Board from one dominated byworking partners to a Board with morebalanced membership and chaired by a non-executive director. In 2005 we took the nextlogical step, one that brings more demandingexternal resource to our Board and establishedeven more clearly, the boundary responsi-bilities of both Management and the Board ofthe firm.

As approved by the EGM in October, MereteHaugli and Gunn Ovesen joined the ABGSCBoard. At the same time, Jan Petter Collierretired from the Board but participates in ourmeetings in his capacity as Chief Executive.Carl Palmstierna also left the Board andbecame the personal deputy Board memberfor Arild Engh, who remains the only workingpartner as an active Board member. Thesechanges bring new skills to the Board andbegin the process of achieving a balancebetween male and female board members.The Board is now predominantly composed ofnon-executive directors. At the same time, thenew arrangements recognize the importanceof the partnership structure of the companyby ensuring that at least one working partneris always present at Board meetings.

We will continue to strive for the best gover-nance standards at ABGSC and will considerother changes from time to time. For now,the new Board and company managementare working effectively and smoothly toimplement the strategy we have all embracedas the way forward. I anticipate that will leadto further success in 2006.

I would like to take this opportunity to thankour Board, partners, staff, clients and friendsfor their support over the past year. 2006 willbe a challenge as always but with the help ofall our stakeholders we are confident offurther success.

14

16 Letter from the Chief Executive

Le t t e r f rom the Ch i e f Exe cu t i ve

It is difficult not to be broadly satisfied withthe performance of our firm in 2005 and asChief Executive I am pleased with the accom-plishments of our team in a competitive,albeit buoyant market environment. WithNordic markets showing consistent strengththrough the year, good corporate profitperformance and clear opportunities forvalue-enhancing mergers, acquisitions andcapital fundraising, there has been a suppor-tive business backdrop for our work during2005. Across the ABGSC business divisions ourpeople have grasped opportunities todevelop client relationships, pursue innova-tion and create money-making ideas fromstrong research, all in ways that have helpedus grow the business further during the year.The 76.9% growth we have achieved in ourPre bonus EBIT results reflects this progressalong with the rise in our operating profitmargins to 66.9%. I am particularly pleasedby the management discipline implied bythese results.

This year's annual report reviews the activi-ties of each of our operating areas, providinga window on some of the highlights of 2005in each segment of our business and showingsome of the ideas and transactions we thinkwere among the most interesting and give aprofile on our real estate team which hasbecome a leader in this sector in the NordicRegion.

2005 was the first full year of operation forour branch in Denmark and I wanted to notethe importance of this part of our businessfor the future growth of ABGSC. Denmark isa vital, diverse market within the Nordicregion with some of our largest companiesand some of the most innovative. Choosingto establish a base in Copenhagen was animportant strategic decision and we can nowlook back on that event, assessing results sofar. First and most important for the longerterm, we have extended the depth and sizeof our Danish client base and the ABGSCfranchise. While in the past our sales teamssuccessfully served international clients withresearch on the largest Danish companies, wehave now established good links to agrowing local client base, thus increasing theliquidity of our offering. Accompanying thishas been the expansion of our research basein Copenhagen in conjunction with a re-alignment of research responsibilities across

the group. We believe this has led to bettercoverage of both Danish companies andcertain sectors as well.

The growth of our business in both corporatefinance and stockbroking this year has beenstrong in terms of revenues and profits. Thisgrowth does mask some variations in oursuccess that represent challenges to us asmanagers and on which we will be focusingmore attention this year. The strength of ouractivities in Oslo has been outstanding ininstitutional and High Net Worth (HNW)stockbroking and their work with the corpo-rate team on ECM transactions has beenhighly effective. While the corporate teamhad a good year in 2005, we want to buildfor the future through improving our positionin certain specialist sectors, most importantlyoffshore and energy.

Sweden represents our potentially largestmarket, twice the size of Norway in terms ofmarket cap and therefore potentially our lar-gest office. While we have invested in theStockholm business and continue to do so, ithas yet to achieve the real breakthrough ofwhich we believe we are capable. 2006 willbe a decisive year for us to make that break-through as we take advantage of the pro-gress already made in expanding our marketshare, enhancing our client relationships andestablishing a good beachhead in corporatefinance. I look forward to making this a reality.

In keeping with our overall staff develop-ment efforts I am especially pleased with thefirm’s commitment during 2005 to a newcareer development programme for newentrants to ABGSC. This is part of a revisedrecruiting strategy aimed at making the mostof our most important resource – our people.Its initial success makes me optimistic aboutour future.

As you will recall, our results last year bene-fited significantly from investment gains. Wedecided to distribute substantially all thesegains to shareholders as part of the 2004dividend in keeping with our policy of agenerally full payout. This year we have alsobenefited from investment gains but notnearly to the same extent and comparisonsbetween years can therefore be difficult.However, as a result of changes in internatio-nal accounting standards, a gain equivalent

to NOK 0.31 per share was booked directly toequity in the balance sheet in 2005. This doesenhance the total amount available fordividends and it is the Board’s intention todeclare a payment to shareholders ofNOK 1.40 per share.

For the second year in a row, the world faceddevastating natural disasters during 2005 andthe firm has been anxious to make acontribution toward relief efforts. Workingtogether with others in our industry, ABGSCand many of its individual partners werepleased to participate in an effort thatmobilised substantial resources from theNordic region for the South AsianEarthquake.

Against the backdrop of our strong resultsfor 2005 it is only reasonable to be somewhatcautious about the remainder of 2006. Afterall, underlying profits are not likely to rise sosharply every year, pleasing as that might be.As always, we completed our planning pro-cess in late 2005, reviewing areas of businessstrength on which to capitalise and areas of

weakness requiring improvement. Based onthis review it is clear that the scope forgrowth in our Stockbroking business inEurope and Sweden remains compelling. Sotoo does the opportunity to make seriousprogress in building our corporate financefranchise in Sweden. With satisfactory successin these areas and the continued momentumof the firm’s established business, I amconfident that we will see more growth in2006. The year is off to a good start in allareas of the firm and that bodes well for thefuture.

It remains only to thank our partners, staff,board members, clients and friends for theirsupport last year and the prospect of theirongoing contribution in the future.

17Letter from the Chief Executive

Yours sincerely,

Jan Petter Collier

Market Review

Marke t Rev i ew

Rising energy prices, strong corporate profitsgrowth and some multiple expansion allcontributed to strong market returns in theNordic region during 2005. For the thirdconsecutive year, Nordic markets (up 36.3%including dividends in local currency) out-distanced other European equity markets (up25.5%) and were behind only those of theFar East (up 41.1%) in producing the bestglobal returns. Even taking account of thesurprising strength of the US dollar duringthe year, dollar based investors in Nordicmarkets achieved significantly better returnsthan those of their base currency market.Copenhagen led all Nordic markets with a44.8% index return with Norway not farbehind at 40.5%. It is a tribute to the rate ofcorporate profits improvement that afterthree successive years of substantial gains,Nordic valuations remain broadly in line withother European markets.

So what happened that made this third yearof sharp increases possible? Dramatic commo-dity and oil prices gains and continued lowinterest rates were once again a primarydriver. Oil hit new records with prices above$70 per barrel. Notwithstanding thecontinued uptick in oil prices, there appearsto have been little negative effect on theworld economy (or on the dollar) despite thedire predictions of some analysts and econo-mists. In fact, global economic growthshowed another year of strong performancewith the emerging market economies leadingthe way once again. China took the lead withan impressive increase of 9.9% but westerneconomies too showed strength with US GDPup an impressive 3.5% while the EU grew1.6%.

In 2005 markets clearly benefited from highlevels of M&A activity. Among the mostremarkable was the bid for TDC, the Danishtelephone operator by a private equity groupalong with Old Mutual’s difficult butultimately successful bid for Skandia. Privateequity players were active across the regionas they found good values among listed com-panies and were aggressive in paying higherprices for target companies than prevailingstock market levels. However, 2005 also saw anumber of new names arrive on Nordicmarkets such as Hemtex, Tradedoubler,Indutrade (Sweden) and Biomar in Denmark.The bullish sentiment in Norway clearlyattracted new issue activity as well with along list of new names added during theyear.

While it is easy to describe the past it is hardto predict the future. Going into 2006 we areclearly still experiencing exciting times. Whatwill happen to economic growth? Will thecommodity bull market cycle end tomorrowor is this time different from past increases assome would suggest? Will the higher commo-dity prices create rising inflation? Or willinterest rates stay at current levels for alonger time than currently expected, leadingto higher valuation of equities?

A lot of question marks - the only certainity is that 2006 will be another challenging andinteresting year for equity investors. Withcontinued good relative values and strongcorporate profit growth, the Nordic regionremains a source of attraction and potential.

19

2003 2004 2005 2003 2004 2005

800

900

1000

1100

1200

OBX Index (2005)Market Share Turnover

9.16%

7.80% 7.58%

NOK 1,105bn

NOK 1,814bn

NOK 3,026bn

Market Share Turnover OMX Stockholm (2005)

2.68% 2.61% 2.65%

SEK 4,994bn

2003 2004 2005 2003 2004 2005

SEK 6,781bn

SEK 7,528bn

700

750

800

850

900

950

1000

Oslo Stock Exchange Data Stockholm Stock Exchange Data

Equities Division20

Equ i t i e s Div i s i on

Stockbroking Services

The four Nordic markets achieved higher andmore consistent returns in 2005 in contrast tothe more disparate results of recent prioryears. Stockholm was the lowest performingmarket in the region but turned in localcurrency gains of 33.3% so that the range ofmarket returns in the Nordic area wasbetween 33% and 45%. On top of the strongprice moves, traded volume also increased sig-nificantly across the region during 2005, risingby 22.5% for the four markets in total. Strongeconomic development supported the expansi-on of sales and profitability for machinery andengineering companies such as ABB (+102%),Electrolux (+33%) and SKF (+47%). Oil mayhave been the most discussed commodity in2005 but one should not forget the sizableprice increases for Zinc (+51%), Aluminium (+ 16%) and other metals. This developmentpositively affected companies such as Boliden(+132%) and Lundin Mining (+88%). In the oilsector Norsk Hydro and Statoil showed remar-kable price increases, rising +46% and +65%respectively. In addition, a number of smalleroil companies saw their stock prices explode,including such companies as DNO (+870%),Lundin Petroleum (+120%) and PA Resources(+389%).

Against this positive market backdrop, ABGSCsales activities were intense throughout theyear as research sales and sales trading profes-sionals worked to keep clients abreast of the

latest ideas, changes in our views and relevantmarket developments. The firm continued tomake additions to sales teams across Europeduring 2005 and made added commitments toour relatively new Copenhagen group as well.In Norway, we have extended the resourcesdirected at high net worth private clients toprovide a more comprehensive service andthese efforts were well received.

Total Stockbroking revenues increased by25.3% to NOK 573.9 mill for the year. The firm’sStockbroking activities in Norway showed themost impressive rate of growth during 2005with gains from both institutional and HNWaspects of the business. London also posted afast rate of increase as we improved our posi-tion with both UK and continental Europeanclients. These changes were underscored bygains in market share for the year in the regionoverall. Revenue development is shown ingreater historical detail in the graph below.

200420032002 2005

500

600

400

300

200

100

0

574

458

380352

Stockbroking Revenues (NOKm)

Market Share Turnover OMX Copenhagen (2005)

2003 2004 2005 2003 2004 2005

DKK 2,061bn

DKK 1,265bn

DKK 883bn

1.30%1.36%1.39%

280

300

320

340

360

380

400

OMX Helsinki (2005)Market Share Turnover

6000

6500

7000

7500

8000

8500

2003 2004 2005 2003 2004 2005

EUR 291bn

0.88% 0.92%

1.25%

EUR 360bn

EUR 447bn

Copenhagen Stock Exchange Data Helsinki Stock Exchange Data

Equities Division 21

Equities Division

Research and Corporate Access Services

The lifeblood of an investment bank is itsknowledge base and its ability to providevalue-added insights that capitalise success-fully on that knowledge. ABGSC has beenresearch driven from its foundation and thatremains a key feature of our business model.During 2005, the research team grew onlymodestly (from 40 to 42) but the real storylies behind those figures. With a generationalchange occurring in our coverage in severalimportant sectors, ABGSC research took theopportunity to re-focus and re-balance itsteams across the four locations in which wemaintain research staff. This was especiallyapparent in finance and healthcare coverage.

Small/mid cap stocks were an importantfeature of the markets in 2005 and ourexpansion of coverage in this area wasextremely timely as a result. The ABGSC“Small Caps in a Nutshell” book continued tobe well received by investors and wasexpanded to include coverage of around fiftymore firms. It was interesting to note thatthe small cap firms recommended in ourbook this past year had very strong marketreturns. All our research has benefited fromthe establishment of a research group inCopenhagen where we now have close andregular contact with a much wider range ofDanish firms and use our cross border know-ledge to greater effect as well.

In many client markets, 2006 will see thearrival of commission “unbundling”, a changethat will in future explicitly expose the cost ofresearch to clients and allow them to pickexactly who they pay for what in a very targe-ted fashion. As a firm that invests heavily inresearch, we think this new transparency hasthe possibility of helping business as investorsdirect more of their commissions toward thecounterparties that provide them with themost valuable investment ideas. It is a set ofchanges that will be implemented in differentways between Europe and the US and we willbe monitoring results carefully to assess theongoing impact.

ABGSC and many of its clients participate in avariety of surveys each year that attempt topresent a picture of how effectively we pro-duce and present our core research product.Taken together, the picture this year is littlechanged with overall results remaining at a

fairly high level in most markets and amongmost client groups. We think there is stillmore work to do to improve our product/idea delivery and will be working hard againthis year to achieve more progress.

The Corporate Access Group (CAG) wasestablished three years ago to improve theway in which we worked with Nordic compa-nies to provide investor access and enhancedunderstanding. Our aim was to distinguishthe service we provided such that companieswould want to use us as their preferredmeans of investor contact because of thequality of our service and its value to them.Now, three years later, we are in a position tojudge our progress and access both areas ofsuccess and places we need to improvefurther. First, the sheer volume of activitysuggests that we are an attractive corporateaccess provider. Total roadshow days excee-ded 480 this year while we had a 58%increase (to 349) in the number of individualcompany roadshows. Our team also workedhard to expand the number of roadshows forlarger firms, achieving a significant increasethroughout the year and ending on a verystrong note.

The CAG has also focused on the specialvalue of client visits to companies, providinggreater insights into strategy, managementskills and product developments. ABGSCclients find this type of access to be helpfuland companies with a desire to reach a moresophisticated investor audience find the timeis well spent. The number of managementmeetings associated with these client visitsrose by over 60% in 2005 to 470.

Seminars have a controversial reputationamong investors as their quality has varied sowidely, both with respect to company partici-pation and client numbers. For that reasonABGSC stepped back from seminars for aperiod of analysis in order to refine the typeof seminar that would provide most value toboth investor and corporate attendees. 2005saw the re-start of the ABGSC seminar pro-gramme with two carefully designed eventsfocusing on Media and Real Estate. Bothwere clearly successful with complementarysupport from companies presenting andthose listening. The format used will beapplied to other such events in 2006 and weintend to make the Media and Real Estateforums an annual fixture.

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24 Equities Division

Key Research Calls

2005 was a year dominated by all thingsenergy related and some of the mostrewarding recommendations of the yearwere in this group of related companies.ABGSC has a strong research team coveringthe full range of energy related firms and wehave selected just three out of manyinteresting ideas that proved rewarding forour clients during the year. We have alsoincluded one recommendation in non-energyraw materials to emphasize that not every-thing that went up was in the oil sector.

Fred Olsen Energy: As energy marketstightened during 2004 it became increasinglyclear to ABGSC analysts that drilling activitywould rise sharply over the ensuing severalyears. With such an outlook, the mostleveraged exposure to the improvingfundamentals of the drilling market madeour recommendation of Fred Olsen Energy alogical choice - the combination of sharplybetter oil prices and rapidly increasingdrilling activity with lower quality rig assetswould make for a volatile earnings mix onthe upside. ABGSC Research made an earlycall on FOE that led to gains of nearly 300 %for investors between the recommendationdate and year-end 2005. Key to this view wasour belief that as drilling picked up, FOE'solder rigs would become active once again atrising day rates and with increasingutilization levels as well. This is exactly whathappened with capacity booked out at highlevels, newer rigs coming online in a timelyfashion and drilling activity intensifyingfurther.

Stolt Offshore: In 2004, Stolt undertook amajor re-structuring of its business, includingthe spin-off of many low margin, non-coreassets and a massive balance sheet re-finan-cing exercise. The company also began finalcompletion phases of some troublesomelegacy contracts so that with its new,revitalized structure, it could again competesuccessfully in a much improved marketenvironment. ABGSC Research first spottedthese changes and their potential back in2004 and we followed the results closely.Strong oil prices were inevitably leading torising exploration and development activitiesand thus, new contracts for oil service firms.Stolt's capabilities in field development andmaintenance have always been good and

with the company's stronger financialposition, subsea construction gaveopportunities for growth at an opportunemoment in the energy cycle. Projects in theNorth Sea as well as West Africa and Asiahave provided the growth in revenues andrising demand has permitted better margins.With these improvements, Stolt produced ashare price increase of over 70% for investorsduring 2005.

While companies such as Norsk Hydro andStatoil had strong performances during 2005,one of the more interesting phenomenonwas the rapid growth of small cap oils duringthe year. Among our picks in this area, DNOhas proved both a rewarding investment anda good example of how solid fundamentalresearch can make an important difference inresults. DNO was on our buy list all yearbased on a very substantial discount to itspeers that our analysts felt was unwarranted.DNO had strong cash flow from "safe" activi-ties but also had the potential for a dramaticexpansion of both production and reserves inareas that had political risk. While werecognised the risks, the discounts implied animprobably low level of success. With aportfolio of exciting exploration assets inplaces like Yemen, Iraq, Mozambique, etc,only very modest success would be needed toachieve a big impact on results. This is exactlywhat has happened during the year as pro-duction rose 50% and is expected to increaseby 300% through 2007. The share price hasrisen more than eightfold over the year.

Boliden: Analysts and portfolio managers likecheap stocks, companies where there is clearvalue and with the prospect of muchimproved recognition leading to a higherstock price. Boliden was just such a stock pickback in mid-2004 based on our view of mid-cycle prices for base metals. The story wasstraightforward for this Swedish raw materi-als play - as economic activity continued torise, base metal prices would behave in theirtypical fashion as the cycle progressed. Asmetal prices rose, Boliden would see its cashflow and earnings rise dramatically. Our viewwas that the share price would follow.Investors were skeptical about the basemetals story for a surprising period of timebut eventually, the fundamentals exerted acompelling force on prices. Boliden's shareprice moved from about SEK 26 at the startof the year to over SEK 100 by year-end.

Corporate Finance Division

If 2004 was a year of uncertainty and sur-prises, 2005 unfolded more along expectedlines. The re-establishment of corporateconfidence underpinned a much strongerpace of deal flows that became so evident inthe latter part of 2004 and continuedthroughout 2005. This improved backdropalong with the high activity level of our teamprovided the impetus for growth in bothadvisory, M&A and ECM transactions withinour Corporate Finance business.

Activity in the region was consistent withgrowth in both the US and the rest of Europealthough energy related transactions had anespecially prominent role in the Nordic area.As was the case last year as well, Q4 saw asurge in corporate activity both in generaland at ABGSC. European M&A activity con-tinued its strong momentum from 2004 withM&A deal volume surpassing US$1 trillion forthe first time since 2000. Full year volumesrose to a staggering US$1.2 trillion, anincrease of approx 37% compared to thesolid 2004 level.

The most active sector in Europe was onceagain Energy and Power, with a volume ofUS$182.3 billion (+15.4% from 2004), followedby the Financial sector, with US$152.5 billion(+58.4%) in deal volume. Capital raisingactivity was also a feature of 2005 asEuropean issuers raised US$213.5 billion inthe equity and equity-related markets, anincrease of 10.8% compared to 2004. Totalproceeds for European IPOs increased by71.1% to US$66.8 billion, with French and UKissuers being the most active players.4

ABGSC has aimed to improve its position inoverall ECM activity and 2005 showed someof the success of those efforts. With dedica-ted ECM capacity now in place, we were ableto expand our share of this important marketarea in combination with a solid backbone ofM&A transactions. Compared to previousyears, the earnings contribution from ECMtransactions increased as a percentage oftotal Corporate Finance revenues. ECMactivity contributed to strong results in bothCorporate Finance and the Equities Division.

We will comment on our real estate activitieslater in this report. It is worth noting that thefirm enjoyed considerable growth in realestate related transactions during 2005. Suchtransactions and advisory work represented

the largest single business segment for ourcorporate finance teams last year. TotalCorporate Finance revenues outnumbered all past records during 2005, climbing 52.9 %from the previous high of NOK 362.9 millionin 2004 to NOK 554.9 million in 2005. Resultsbenefitted from the finalisation of theFredensborg Boligutleie transaction fromwhich approx. NOK 90 million is included in 2005 revenues. We have also been pleased to note that ABGSC has entered 2006 with a strong backlog of mandates includingmilestone transactions such as the upcomingREC IPO. Revenue development is shown ingreater historical detail in the graph below:

Norway

ABGSC started 2005 on a strong positive noteby completing the sale of the PGS Explora-tion and Production business, Pertra, toTalisman Energy. This set the tone for trans-actions in Norway over the rest of 2005 asbooming demand for a range of oil and off-shore services was a key driver of NorwegianECM activity. ABGSC played a significant rolein this during the year through such trans-actions as the IPO of PetroJack and privateplacements in companies such as FairmountHeavy Transport, SeaBird, Petromena andPetrolia Drilling.

2005 was not only about the energy sectorhowever as the aquaculture industry experi-enced a solid upturn in terms of share priceperformance and transaction activity. ABGSChas been a leader in this field and was veryactive during the year in a wide variety ofroles including: manager and advisor to FjordSeafood in its private placement and acquisi-tion of Cermaq shares, advisor to NorskHydro in the sale of its majority position in

Corpora t e Finance Div i s i on

26

4 Thomson Financial

200420032002 2005

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600

400

300

200

100

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363

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Corporate Finance Revenues (NOKm)


BioMar, advisor to Aqua Farms acquired byPan Fish as well as manager for the MarineFarms private placements.

Other significant ECM transactions includedthe IPOs of Allianse, Nemi, Artumas andFunCom as well as equity issues in Stepstoneand Kverneland.

While ECM activity was more dominantduring 2005, ABGSC also played its usual veryactive role as advisor in a wide range of M&Atransactions. These included the trade sale ofHandicare to Ferd, FSN Capital’s acquisition ofVIA Travel, Reitangruppen’s acquisition ofSpaceworld and the merger betweenAndword and Tybring-Gjedde.

Sweden

The process of building a market leadingposition in Swedish corporate financecontinued during 2005 as we strengthenedour team of deal professionals and sharpenedour focus to improve the market impact ofwhat we do. The corporate finance market-place in Sweden has been dominated by asmall group of both international anddomestic players. The creation of a new, fullservice competitor has taken both conside-rable time and significant resources as a longterm investment by ABGSC. Through thecreation of teams with specialist skills in keyareas that we believe have particularpotential, ABGSC has achieved growingmarket recognition for its specialist corporatefinance skills in the Life Sciences, IT/Tech/Media, Real Estate and Retail sectors. Inconjunction with this development, we havealso established a dedicated focus on thedomestic and international Private Equitysector, firms that are very active in theSwedish market and play an increasinglyimportant role in capital markets as bothbuyers and sellers. This focused approach hasimproved our mandate portfolio and resultedin a number of important new assignments.The most significant of these was ABGSCsfirst ever IPO in Sweden, where we had a lead position in the launch of Orexo, a successful drug delivery company that wasemerging from the private equity portfolio of Health Cap, a leading life sciences privateequity firm.

KEY TRANSACTION PROFILES

We have selected a few transactions from thewide array of 2005 to provide a flavour ofthe range of ABGSC Corporate Financeefforts last year. These include both energyand non-energy related deals undertakenthroughout the Nordic region and covered avariety of different transaction types.

PRIVATE EQUITY TRANSACTIONS

Private equity investors have played anincreasingly active role in markets around theworld over the last few years and 2005 saw afurther increase in such investments, some ofwhich are noted below.

Kid Interior

One of the Nordic region's most significantprivate equity firms is Industri Kapital. InJune 2005, Industri Kapital announced theacquisition of 75% of Kid Interior, theleading home textile retailer in Norway with90 wholly-owned stores across the country.Turnover in 2004 was NOK 716 million (EUR90 million). ABGSC acted as financial advisorto Industri Kapital in the transaction, one ofseveral on which we have assisted over thelast three years.

VIA Travel Group

In September 2005, FSN Capital completed itsoffer for the Norwegian stock listed companyVIA Travel Group, announcing the acquisitionof 99.7% of the shares outstanding in thecompany. VIA Travel Group is the leadingScandinavian travel management company,and was listed on the Oslo Stock Exchangeearlier in 2005. The company's core businessis focused on the corporate travel market.ABGSC acted as financial advisor to FSNCapital in the transaction.

Handicare

In June 2005, Ferd Private Equity announcedthe acquisition of Handicare, following astructured trade sale process directedtowards a broad range of financial andindustrial buyers. Handicare is the largestdealer and producer of technical aids for theelderly and handicapped in Norway. ABGSCacted as financial advisor to the sellers, ABN

27


Amro Capital, Foinco Invest and Handicaremanagement.

Arexis

ABGSC has a well regarded focus on the lifesciences within its Stockholm corporatefinance team. In 2005, we were engaged toadvise the shareholders of Arexis in connec-tion with its sale to Biovitrum. Arexis is a bio-tech and pharmaceutical company with anextensive portfolio of projects in preclinicaland clinical development. The two companieshave very complimentary programs in priori-tized therapeutic areas such as metabolic andinflammatory diseases. Biovitrum alsomaintains its strong, longstanding position inrecombinant proteins. The advanced Arexis'project portfolio gives Biovitrum an improvedstructure in terms of product time to marketand provided an enhanced exit opportunityfor some existing shareholders. This was amilestone transaction in the life sciencesindustry with a number of private equityinvestors selling to an industrial buyercommitted to continued development of theArexis product portfolio.

ENERGY & RELATED

The energy sector and its various supportservice areas have been extremely active in2005. ABGSC has assisted a number of firmsin this area, examples of which are notedbelow:

Fairmount Heavy Transport

In July 2005, ABGSC was engaged as financialadvisor to Fairmount Heavy Transport. TheCompany will convert two modern, state-of-the-art barges to self-propelled semi-submer-sible heavy transport vessels in 2006 and 2007to take advantage of the strong ocean trans-portation market. With ABGSC as manager,Fairmount Heavy Transport raised US$ 50 milin new equity to acquire the two semi-sub-mersible barges from BOA Offshore AS inTrondheim, Norway. ABGSC is acting asfinancial advisor to the Company for itscontemplated listing on Oslo Børs.

SeaBird Exploration

In October 2005, ABGSC was engaged asadvisor to SeaBird Exploration. The Company

has played an active role in the seismicmarket since 1996 and is now one of thelargest privately owned providers of seismicservices in the industry. With ABGSC asmanager, SeaBird Exploration raised approxi-mately US$ 25 mil to fund its fleet expansion.ABGSC is acting as financial advisor to theCompany for its contemplated listing on OsloBørs.

Petrojack

In 2005, the Norwegian stock market saw anunprecedented number of new rig companiesseeking risk capital. ABG Sundal Collieradvised several such rig companies, the firstbeing Petrojack. Petrojack had secured threeattractive construction slots with a reputableyard in Singapore, when ABG Sundal Collier asjoint-lead manager, raised Petrojack's firstequity in November 2004. In February 2005,Petrojack was listed on the Oslo StockExchange where the shares have risen bysome 400% relative to the first fund raisingin November 2004.

Petromena

Established Norwegian rig pioneers alsorecognised the special opportunity exempli-fied by the extraordinary performance ofnew jack-up rig companies entering theNorwegian stock market during 2004 and2005 and many of them ordered bigger, moreadvanced, and more expensive rigs in 2005.Petromena was one such established leader,ordering 6th generation semi submersiblerigs - the world's most advanced drillingunits. Since September 2005, ABG SundalCollier has raised almost NOK 1.4 bil as jointor sole manager for Petromena, funding twoultra deepwater rigs under construction inSingapore. ABG Sundal Collier will alsomanage the IPO and listing of Petromena onthe Oslo Stock exchange in 2006.

OTHER TRANSACTIONS

Funcom

In the autumn of 2005 ABGSC was engagedas Joint Global Coordinator and JointBookrunner for the IPO of Funcom. Thecompany is a world leading, independentdeveloper and publisher of computer andconsole games with a focus on Action

28


Adventure and Massively Multiplayer OnlineGames (MMOG). Funcom was successfullylisted on the Oslo Stock Exchange inDecember 2005 after an extensive pre-marketing and roadshow in the Nordicregion, Europe and the US. Including theover-allotment facility, NOK 190 mil worth ofshares were placed with investors. Since theoffering, Funcom's share price has increasedby some 110%.

Orexo

ABGSC was appointed Joint Lead Managerand Joint Bookrunner in July 2005 for the IPOof Orexo. Orexo is a Swedish company thatdevelops proprietary pharmaceuticals toaddress areas of unmet therapeutic need.Orexo exploits its special competence withinclinical practice and drug development toidentify and assess areas of therapeutic needthat can be met by developing proprietarypharmaceuticals based on Orexo's uniquedrug delivery technologies. Orexo was listedon the Stockholm Stock Exchange on 9 Novem-ber 2005, following extensive pre-marketingand roadshow in the Nordic region, Europeand the US. Including the over-allotmentoption, approximately SEK 340 mil was raised

through a bookbuilding process. Since thelisting at SEK 90 per share, Orexo's shareprice has increased by over 46% (as at6 March 2006). The transaction was the firstIPO in the Swedish life science sector for anumber of years and cements ABG SundalCollier's strong position in this field.

Oslo Areal

Oslo Areal was established in late 2004 as aproperty investment company through aninitiative by ABGSC and Enskilda Securities.The envisioned strategy was to acquire officeproperties in the Oslo area with short tomedium term contract duration, to capitaliseon an expected improvement in the rentalmarket in Oslo. In hindsight the timing wasvery favourable, with vacancies coming downand rents increasing, resulting in a substantialyield contraction.

In the fourth quarter of 2004 and the firstquarter of 2005, the company carried outtwo private placements directed towardsNorwegian and foreign professionalinvestors, totalling NOK 800 million. Startingwith three property acquisitions in December2004, Oslo Areal carried out a number of

29

30 Corporate Finance Division

property acquisitions in rapid succession. Intotal, the company acquired 19 properties inthis period at a total value of nearly NOK4 billion.

After an extensive international roadshow,Oslo Areal was listed on the Oslo Børs on3 May 2005. In connection with the listing,the company carried out an IPO totalingNOK 270 million, including both the sale ofsecondary shares and raising of new equity.

In November 2005, Gjensidige Forsikringacquired 69.4% of the shares in Oslo Arealbringing its ownership to 96.4%. GjensidigeForsikring later launched a mandatory offerfor the remaining shares in the company. Inless than one year, the initial investors in OsloAreal experienced a share price increase of34%, from NOK 50 to NOK 67. ABGSC actedas financial advisor in connection with theestablishment of Oslo Areal as well as advisoron all property acquisitions performed.

REAL ESTATE ACTIVITIES

Background

ABGSC started a specialised real estate groupwithin its Corporate Finance division in 2002after a more ad hoc approach since 1999.Today, this group comprises 15 professionalswho work with the acquisition and assetmanagement of properties in addition tomore traditional corporate finance activities.The acquisition group identifies propertiesaccording to client investment criteria,initializes negotiations, leads the duediligence process and closes the transactionwith the relevant external financing.Thereafter, our asset management grouptakes over the baton and drives additionalvalue creation by choosing and monitoringthe best operators, reporting to investors andenhancing value through further develop-ment of the properties.

Distribution

External retail distribution - ABGSC has along-standing cooperation agreement withActa Holding ASA ("Acta"), whereby ABGSCcreates real estate investment products fordistribution by Acta through theme-basedreal estate holding companies. In 2003, asharp fall in Norwegian interest rates (from

7% to 3% over the course of 7 months)created a shift in retail investor appetitesfrom bank savings to other risk savingsproducts such as those ABGSC manufacturesfor Acta. Reflecting this change in sentiment,Acta's syndication of real estate equityproducts has increased from approx NOK 0.5billion in 2002 to more than NOK 3 billion in2005, making the Acta funds Norway's largestprivate real estate owner with a total ofmore than 3 million sq m under manage-ment. Acta's real estate funds are alsoSweden's largest private holder of residentialproperty.

ABGSC's own distribution of real estatesavings products has been limited by capacityconstraints in the face of strong externalclient demand and the limits of satisfactoryproperty supply. We established an internalsales group during Q3 2005 to distributefinancial products, of which real estate willbe one, that will cater to the high net worthclients that prefer tailor made products. Weexpect this area to experience solid growth inthe years to come.

Real Estate Corporate Finance

On the more traditional corporate financeside, ABGSC managed two IPOs of real estatecompanies in 2005, Oslo Areal ASA andNorgani ASA in Oslo. These two companieswere both established and successfully listedduring 2005. In addition, ABGSC carried outpublic offerings for Sagax AB of Sweden andTechnopolis Oyj of Finland during the year.All transactions were placed through ourinternational distribution network.

Products and Product Development

Product development has been an essentialingredient in the success of ABGSC's realestate group. From 1999 to 2002 all projectswere Norwegian commercial properties withlong leases and bond-like financial characte-ristics. In 2003 sales of regulated Swedishapartments was introduced, and have beenan overwhelming success, especially in Norway.The relatively low square meter prices thatreflect governmental rent constraints havegiven investors a safe investment vehicle withacceptable cash flows and an interestingpotential for condominiumisation.Unfortunately, our success has not goneunnoticed and competition in this segment

31Corporate Finance Division

has increased to such an extent that cashflow oriented products are now hard toconstruct in the Swedish residential market.This has led to further innovation.

We turned to the German residential market,where 20 years of insipid economic perfor-mance has left the market price of an apart-ment at about one third of the typicalScandinavian apartment. This has also beenwell received in the retail market, and giventhe size of the German market, we hope forseveral years of attractive investment activitybefore this market-window closes.

Our latest area of focus is the very large USreal estate market where we find propertiesreasonably priced compared to Europeancounterparts, especially in the commercialsector. We are now working to identifyinvestor partners that can distribute prefer-red dividends to take advantage of low yieldspreads in the US market. This is only one ofseveral real estate market opportunities thatwe believe will allow us to achieve furthersuccess in 2006.

32 Directors´ Report

Dire c to r s ' Repor t

Introduction

ABG Sundal Collier is a Nordic investmentbank listed on the Oslo Stock Exchange. TheGroup is organised into two operatingdivisions, Equities and Corporate Finance plusa central support services group. The companyhas its offices in Oslo, Bergen, Stockholm,Copenhagen, London and New York.

ABG Sundal Collier was formally establishedon 22 October 2001, the effective date of themerger between ABG Securities ASA, AskiaInvest ASA and Sundal Collier Holding ASA.

The Group is authorised to engage in invest-ment services in Norway, Sweden, Denmark,the UK and the US. Further, the Company hasnotified The Financial Supervisory Authorityof Norway (Kredittilsynet) regarding cross-border activities in a number of otherEuropean countries. The group is one of thelargest Scandinavian participants in Nordicmarkets and works constantly to strengthenits position both within current businessactivities and related areas, but still withinthe current Nordic frame.

Highlights

Earnings for 2005 improved at both theoperating and Net Profit levels. In accordancewith IFRS accounting rules, financial holdingshave been re-valued and accounted for as adirect adjustment of equity. As a result ofstrong operating results and a significant netgain on investments recorded directly as anequity adjustment, the Board is of theopinion that the earnings will support a divi-dend level of NOK 1.40 per share. While allScandinavian markets strengthened during2005. ABGSC was able to increase its com-bined Scandinavian market share and growthe volume of its activities at an even fasterrate. The Board believes that the companyhas performed well in the current positivemarket environment.

All four Nordic markets posted gains for theyear as the Nordic index rose by 31% in localcurrency terms, a better result than both thebroad European and US indices. The Boardbelieves that ABGSC has continued to buildits franchise among corporate and institutio-nal clients with strong showings among allmajor investor surveys for investmentresearch and client services. And the Board

believes that the company continues to movetoward the realisation of its vision of astrong, specialised, value added approach toinvestment research and Nordic investmentbanking.

The firm officially opened its Danish office inCopenhagen on February 1st 2005. The localpresence in Denmark enhanced our directlinks to larger institutional investors inDenmark and an increase in our researchstaff has lead to a broader coverage ofDanish companies, especially in the small andmedium cap sector.

In the start of 2005 we were working toacquire the investment management firmSundal Collier Forvaltning in order to gain astrategic foothold within the asset manage-ment industry. While issues arising during thedue diligence process lead us to cancel thetransaction, the Board is still of the opinionthat ABGSC over time should have a presencewithin the asset management business andwe continue to look for expansion opportuni-ties in the sector.

2005 has been characterised by a high levelof activity within the capital market sectorincluding IPOs and other advisory business.Improved profitability among corporateclients raised management confidence andled to increased acquisition activity. A lowinterest rate environment in combinationwith abundant liquidity ensured an environ-ment conducive to a variety of investmentprojects and syndication of investments.ABGSC is an important player within themarket for IPOs and other advisory businessin the Nordic region. Norway has been ourmost active market, but our Swedish opera-tion achieved a milestone, completing theirfirst IPO on the Stockholm exchange in 2005.Using our strong regional corporate team thefirm has also begun to extend a virtualpresence in the Danish corporate financemarket.

ABGSC continued to expand its activities incore markets during the year with new initia-tives in Norwegian private banking with theaim of distributing financial products to highnet worth investors in the Norwegian market.

Pursuant to the Norwegian Accounting Act,the Company confirms that parent companyaccounts have been prepared on a going

33Directors´ Report

concern basis under Norwegian GAAP. Groupaccounts have also been prepared on a goingconcern basis but based on InternationalAccounting Standards (IAS).

Income Statement

Total revenues for 2005 were NOK 1.193 million(vs. NOK 840 million in 2004), with EquitiesDivision revenues rising by 25% andCorporate Finance Division revenues rising by53%. Measured by revenues, the 2 divisionsare now around equal size.

The Corporate Finances Division revenuesbenefited by the finalisation of the Fredens-borg Boligutleie project, an effort that hasbeen underway for several years but wasrecorded as income only upon completion inthe last quarter of 2005. Total transactionvolumes in the Nordic markets increased by22.5% for the full year while ABGSCincreased overall transaction volume by35.2% reflecting an increase in market share.Corporate finance announced transactionswithin the Nordic region rose by 36% for thefull year, while ABGSC had a 52.9% increasein revenues from this area.

Operating expenses for 2005 (excludingbonuses) were NOK 395 million (NOK 388million in 2004), an increase of 2%. Themodest cost increase is due to good cost con-trol and the impact of generally favourablemovement in exchange rates. Pre bonus cost /income ratio improved from 46% in 2004 to33% in 2005. Relating to cost 2005 have beena good year with focus on smooth operationsand no unforeseen or non-recurring costs ofany significance.

Pre-bonus profits for 2005 were NOK 798 mil-lion (NOK 451 million in 2004), an increase of77%. Net financial income of NOK 36 millionis significantly down compared to NOK 164million in 2004. The 2004 figures included anon recurring gain from the sale of Actashares of NOK 164 million.

After tax profits were NOK 339 million (NOK301 million in 2004). In addition, a positiveadjustment to balance sheet equity of NOK94 million was recorded as noted previously.Net profit is equivalent to an EPS of NOK1.14 (1.12) while the equity adjustment isequivalent to NOK 0.31 per share (0.00).

Balance Sheet and Liquidity

In the opinion of the Board, ABG SundalCollier ended 2005 with a strong balancesheet. The Group’s capital ratio was 135% asat year-end 2005 while the capital ratiorequired by The Financial SupervisoryAuthority of Norway is 8%. Except for pensi-on liabilities and deposits from partners, theCompany has no long-term debt and retainssubstantial flexibility in the use of its balancesheet in the future.

Cash flow from operations is positive butworking capital requirements fluctuatesignificantly on a daily basis, and hence alsobetween reporting dates. In order to meetthe varying liquidity demands from the ope-rational activities the group has establishedoverdraft facilities with its main bank.

Allocation of Profit

ABG Sundal Collier’s consolidated accountsand the annual accounts for ABG SundalCollier ASA are presented in the annualreport. The net profit of ABG Sundal CollierASA was NOK 369 million and the board pro-poses that the annual general meeting adoptthe following allocation;

Amounts in NOK (in thousands)To other equity 369,254 Total allocation 369,254

Following the allocation above the parentcompany ABG Sundal Collier ASA will haveother equity of NOK 465.4 millions of which437 millions is the maximum amountavailable for dividend distribution.

The Company has consistently noted itscommitment to maintain a high dividendyield to shareholders and the Board has beenpleased with an opportunity to increase thefirm’s payout to shareholders. For this yearhowever transitional tax regulations for theyear 2005 makes dividends declared as a partof the annual accounts subject to extrataxation for large groups of shareholders. It’sthe Boards proposal to ask the AGM forapproval of the annual accounts withoutdeclaration of any dividend for the year2005. However it is also the Boards intentionto call en EGM during the 2nd quarter of 2006seeking approval of an interim dividend tobe declared of NOK 1.40 per share.

34

The Board does wish to reiterate the compa-ny’s dividend policy of paying out most of itsannual earnings in dividends. However theBoard will always consider the legal andregulatory requirements in place as well asthe tax efficiency of the dividend payments.

Shareholders

The closing price of the ABG Sundal CollierASA share at 31 December 2005 was NOK8.80 compared to NOK 7.39 the year before.Shareholders received a NOK 1.10 dividend inrespect of 2004, so that the total return forthe period was 34%. The Oslo StockExchange’s main index (OSEAX) rose by52.2% over the same period.

ABG Sundal Collier has some 3,900 share-holders and the Company’s partners ownapproximately 51% of the total sharesoutstanding as at the date of this report.

The Board believes that ABG Sundal Collier asa publicly listed company has managed toretain a partnership ethos. The Company’skey people are significant owners of the firmand there is a reassuring parallel set ofinterests between shareholders and staff as aresult. We believe strongly that these coinci-dent interests help us focus on providing the

best possible advice and the creation of trulylong term relationships, while maintaining aclear understanding of the importance of thebottom line.

Organisation, management andenvironmental information

The Group had a total of 222 partners andemployees as of 31 December 2005, of which110 in Norway, 55 in Sweden, 6 in Denmark,36 in the UK and 15 in the US. As of 31 Decem-ber 2004, the Group had a total of 198 part-ners and employees. The employees andpartners consisted of 187 males and 35 females.

The Group’s working environment is con-sidered to be good and absence due to illnessof 1.3 per cent continues to be low. Theactivities carried out by ABG Sundal Colliercause no pollution to the outside environ-ment.

Norwegian legislation enacted in 2003 hasrequired companies to make specific com-ments on their efforts to recruit women tothe labour force. ABGSC has a long-standinganti-discrimination policy and women occupyimportant positions in various parts of thefirm. We seek to identify highly qualified

Directors´ Report

35

candidates for all positions and maintain anenvironment that is “gender-neutral”.Women occupy senior positions in researchsales, trading, research, and compliance/legalin locations across the organisation and weare committed to policies that should makethe company an attractive working environ-ment for female investment professionals.

The number of non-executive Board membershas been increased during the year. In accor-dance with good international practice thefirm’s Board now has a majority of non-exe-cutive directors and the Chief Executive is nolonger a Board member. 2 out of 6 Boardmembers are females.

Other conditions

Since year-end, no matters have arisen whichhave a material negative affect on either theparent company or Group business position.Legal matters are reviewed in note 13 to theannual accounts.

For a description of the Group's risk profileand risk management, see further note 17 to the annual accounts. The ExecutiveCommittee of the firm has established limitsfor market risks within the trading operati-

ons. The main trading activities are carriedout on a short term basis with a low level ofovernight exposures. A breach of any of theset limits are reported to the Board of direc-tors of the subsidiary. The purpose of the tra-ding activities is to facilitate client orders, toprofit from arbitrage opportunities in themarket and to profit from market volatility.

Prospects for 2006

2005 results reflected continued growth inthe health and vitality of the ABGSC businessand the firm is in a good position to takefurther advantage of a continuing robustmarket environment over the rest of 2006.

Broader research coverage, selective expansionin the Nordic markets and the broadening ofour business model with private bankingservices should all contribute to results in2006. We expect a further expansion ofcorporate finance activities in Sweden thisyear along with ongoing progress in expand-ing the continental Europe client base in theEquities Division. The Board believes thecompany is well positioned to make the mostof its improved position in all operating areasas it continues to focus on building for thefuture.

Merete Haugli

Gunn Ovesen

Arild A. Engh

Jan Petter CollierChief Executive Officer

Per-Anders Ovin Michael Tetzschner

Oslo, 28 March 2006

Terje Moe GustavsenChairman

Directors´ Report

36 Consolidated Financial Statements

Conso l ida t ed Financ i a l St a t emen t sConso l ida t ed Income St a t emen tAmount in NOK 1,000

IFRS IFRS NGAAP NGAAP

OPERATING REVENUES AND EXPENSES NOTES 2005 2004 2004 2003

Stockbroking Services 573 541 457 818 457 818 380 249

Corporate Finance 554 904 362 933 362 933 246 086

Other revenues 64 928 18 782 18 404 1 521

Total operating revenues 2 1 193 373 839 533 839 155 627 856

Wages and social costs 11 , 14 202 871 192 295 191 376 166 410

Administration costs 6 , 19 179 848 183 002 183 328 146 133

Depreciation 8 , 9 12 480 12 940 17 601 20 031

Total operating expenses 2 395 199 388 237 392 305 332 574

Operating profit before bonus to employees

and profit-sharing to partners 2 798 174 451 296 446 850 295 282

Bonus to employees and profit-sharing to partners 407 054 224 598 224 975 148 041

Operating profit 391 120 226 698 221 875 147 241

FINANCIAL INCOME AND EXPENSES

Interest income 41 187 29 439 29 454 26 526

Other financial income 18 294 164 326 164 330 5 736

Interest expense -15 158 -19 011 -19 001 -19 590

Other financial expenses -8 523 -11 069 -11 069 -88

Net financial result 35 800 163 685 163 714 12 584

Profit before taxes 426 920 390 383 385 589 159 825

Tax expense 4 88 140 89 805 89 873 51 028

NET PROFIT FOR THE YEAR 338 780 300 578 295 716 108 797

37Consolidated Financial Statements

Conso l ida t ed Ba l ance Shee t a s a t 31 DecemberAmount in NOK 1,000

IFRS IFRS

ASSETS NOTES 2005 2004

Non-current assets

Intangible assets

Deferred tax assets 4 15 577 14 368

Goodwill 9 34 870 34 870

Total intangible assets 50 447 49 238

Fixed assets

Office equipment and fittings 8 22 364 25 972

Total fixed assets 22 364 25 972

Financial non-current assets

Other shares 7 , 12 8 394 112 960

Total financial non-current assets 8 394 112 960

Total non-current assets 81 206 188 170

Current assets

Receivables

Accounts receivables 6 1 711 480 1 004 443

Receivables from other stockbrokers 412 425 248 710

Other current receivables 96 065 94 631

Total receivables 12 2 219 971 1 347 784

Investments

Securities and financial instruments 7 , 12 11 203 137 174

Cash and bank deposits

Cash and bank deposits 5 732 295 385 888

Total current assets 2 963 469 1 870 846

TOTAL ASSETS 3 044 675 2 059 016


Oslo, 28 March 2006

The board of ABG Sundal Collier ASA

Merete Haugli

Gunn Ovesen

Arild A. Engh

Michael Tetzschner Jan Petter CollierChief Executive Officer

Per-Anders Ovin


Conso l ida t ed Ba l ance Shee t a s a t 31 DecemberAmount in NOK 1,000

IFRS IFRS

EQUITY AND LIABILITIES NOTES 2005 2004

Equity

Paid-in-capital

Share capital 15 61 936 61 545

Treasury shares at nominal value -9 -1 084

Share premium reserve 19 326 18 187

Total paid-in-capital 81 254 78 648

Retained earnings

Other equity 657 675 590 726

Total equity 738 929 669 374

Liabilities

Provisions

Deferred tax 4 2 969 0

Pension liabilities 11 15 693 14 147

Total provisions 18 662 14 147

Other non-current liabilities

Deposits from partners 5 067 4 690

Current liabilities

Bank overdraft facility 5 , 12 122 268 52 164

Accounts payable 18 232 19 748

Liabilities payable to customers 1 158 063 528 551

Liabilities payable to other stockbrokers 355 015 349 531

Income tax payable 4 95 321 80 356

Social security tax, tax withholdings, holiday pay etc. 11 341 13 811

Other current liabilities 10 521 777 326 644

Total current liabilities 2 282 017 1 370 805

Total liabilities 2 305 746 1 389 642

TOTAL EQUITY AND LIABILITIES 3 044 675 2 059 016

39Consolidated Financial Statements

Conso l ida t ed Ca sh F lowAmount in NOK 1,000

IFRS IFRS

CASH FLOW FROM OPERATING ACTIVITIES: 2005 2004

Profit before taxes 426 920 390 383

Taxes paid -68 082 -43 304

Depreciation and amortisation of fixed assets and intangible assets 12 480 12 940

Pension costs, net of contributions 1 546 -237

Profit/loss of foreign currency transactions 367 -89

Items classified as investing or financing activities -102 533 -282 071

Change in accounts receivables/ receivables from other stockbrokers -870 753 478 929

Change in accounts payable/ payable to customers and other stockbrokers 633 480 -247 590

Change in other current assets/liabilities 191 270 89 965

Net cash inflow from operating activities 224 696 398 927

CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of fixed assets -9 293 -16 209

Proceeds from sale of fixed financial items 333 070 173 266

Net cash inflow from investing activities 323 777 157 057

CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from long-term loans 378 -266

Proceeds from short-term loans 70 104 0

Repayment of short-term loans 0 -242 066

Paid-in share capital 1 530 19 002

Change in own shares/ foreign currency adjustments 20 258 -23 021

Paid dividend -294 336 -132 022

Net cash outflow from financing activities -202 066 -378 373

Net increase in bank deposits, cash and cash equivalents 346 407 177 611

Bank deposits, cash and cash equivalents at beginning of year 385 888 208 276

Bank deposit, cash and cash equivalents at end of year 732 295 385 888


Conso l ida t ed St a t emen t o f Change s i n Equ i t yAmount in NOK 1,000

Share Share Own premium Other Total

capital shares reserves equity equity

Shareholders equity at 1 January 2004 60 730 222 332 283 062

Net profit for the year 295 716 295 716

Dividend to be paid out -300 253 -300 253

Increase in Share Capital 815 18 187 19 002

Change in own shares -1 084 -21 897 -22 981

Other -39 -39

Shareholders equity at 31 December 2004 NGAAP 61 545 -1 084 18 187 195 859 274 507

IFRS adjustment, pension cost 2004 -721 -721

IFRS adjustment, goodwill amortisation 2004 4 649 4 649

IFRS adjustment, implementation effect pension liability -3 071 -3 071

IFRS adjustment, reversed dividend accrual 300 253 300 253

Shareholders equity at 31 December 2004 IFRS 61 545 -1 084 18 187 496 969 575 617

IFRS adjustment, implementation effect IAS 39 93 758 93 758

Shareholders equity at 1 January 2005 IFRS 61 545 -1 084 18 187 590 727 669 375

Net profit for the year 338 780 338 780

Dividend paid out -291 032 -291 032

Increase in Share Capital 391 1 139 1 530

Change in own shares 1 075 19 183 20 258

Exchange rate effect from consolidation of foreign subsidiaries 18 18

Shareholders equity at 31 December 2005 IFRS 61 936 -9 19 326 657 676 738 929

42 Notes to the Consolidated Financial Statements

Note s t o th e Conso l ida t ed Financ i a lSt a t emen t s 2005All amounts are in thousands unless otherwise indicated

Note 1 – Accounting Principles

The consolidated accounts for the Group are prepared in accordance with the International Financial Reporting Standards(IFRS) published by International Accounting Standards Board (IASB) and all interpretations from the Financial ReportingInterpretations Committee (IFRIC), which have been endorsed by the EU commission for adoption within the EU.

Financial statement preparation requires estimates and assumptions that affect the reported amounts of assets, liabilities,revenues and expenses as well as disclosures of contingencies. Actual results may differ from estimates.

Changed accounting policies and reclassificationsThe transition to IFRS was prepared in accordance with IFRS 1. Interim reports for 2005, the comparative information for2004 and the Group's opening balance as at 1 January 2004 were prepared with all IFRS standards except IAS 39 regardingFinancial Instruments which was implemented as at 1 January 2005. For ABG Sundal Collier, the most significant effects fromthe transition relates to Goodwill and Financial Instruments. For more information on the transition effects on the Group'sincome statement, balance sheet and equity, see note 20.

Group accountsThe Group's activities include securities brokerage and research services, mergers and acquisitions, restructuring and othercorporate finance advisory activities, as well as real estate business.

The Group accounts show the total profit/loss and the total financial position of the parent company ABG Sundal CollierASA and its controlling interests as a financial whole. The Group accounts include companies where ABG Sundal Collier ASAowns shares, directly or indirectly, such that the shares owned represent the majority of voting rights in the company orallow the Group the right to appoint the majority of the members of the company's board of directors.

The Group's subsidiaries Sundal Collier & Co ASA, ABG Sundal Collier Norge ASA, ABG Sundal Collier Real Estate AS and ABGSundal Collier Eiendom AS are the principal partners in the Sundal Collier & Co partnership, ABG Sundal Collier Norgepartnership, ABG Sundal Collier Real Estate partnership and ABG Sundal Collier Eiendom partnership.

The Group has not recognised exchange gains or losses on shareholdings in foreign subsidiaries in the profit/loss since 2003,due to hedging of the corresponding currency risks. The currency exchange gain/loss on both the subsidiaries and thehedging instrument have been recorded against equity, and will not be recognised in the profit/loss until the subsidiaries arerealised.

Revenue recognitionRevenue is recognised in conjunction with the performance of the services used to complete an engagement. Revenues fromperformance fees are recognised upon completion of the transaction. Fixed fees are recognised as earned.Commissions from equity trades are recognised at the trade date.

Classification of assets and liabilitiesReceivables that are to be repaid within one year and assets that are not of a permanent nature or use in the business areclassified as currents assets. Other assets are classified as non-current assets.

Liabilities are classified as a non-current liability if the liability is due to be repaid after more then one year after the balancesheet date. All other liabilities are classified as current liabilities.

Current assets are valued at the lower of original cost and net realisable value.

GoodwillExcess value on the purchase of operations that cannot be allocated to assets or liabilities on the acquisition date is classifiedin the balance sheet as goodwill. In the case of investments in associates, goodwill is included in the cost price of the investment.

The identifiable assets and liabilities on the transaction date are to be recognised at fair value on the transaction date. Theminority’s share of identifiable assets and liabilities is calculated on the basis of the minority’s share of the fair value of theidentifiable assets and liabilities.

Should further information on assets and liabilities as at the transaction date come to light after the acquisition has takenplace, the assessment of the fair value of assets and liabilities may be altered until the date when the first annual financialstatements have been authorised for issue.

Goodwill is not amortised, but an assessment is made each year as to whether the carrying amount can be justified by futureearnings. If there are indications of any need to recognise impairment losses relating to goodwill, an assessment will bemade of whether the discounted cash flow relating to the goodwill exceeds the carrying amount of goodwill. If thediscounted cash flow is less than the carrying amount, goodwill will be written down to its fair value.

Fixed assets and depreciationFixed assets are carried at original cost less accumulated depreciations. If the fair value of a fixed asset or group of assets islower than the recorded cost value, and such fair value is not expected to be of temporary nature, the assets are writtendown to fair value. The same principles are applied to current and non-current debt.

43Notes to the Consolidated Financial Statements

Other financial instrumentsFinancial Instruments are recognised in the group's accounts in accordance with IAS 39. Financial instruments included in thebalance sheet, include accounts receivable, receivables from other stockbrokers, other current receivables, other shares andsecurities and financial instruments on the asset side. On the liability and equity side, financial instruments include accountspayable, borrowings, payables to other stockbrokers and customers. Financial instruments are initially recognised at costwhich corresponds to the financial instrument's fair value plus transaction costs for all instruments except those classified asfinancial assets, which are recognised at fair value in the income statement. Fair values are determined based on pricequoted in an active market or based on valuation. The way in which a financial instrument is recognised depends on how ithas been classified. See below for a summary of classifications. A financial asset or liability is recognised in the balance sheet when the company becomes engaged by contract. Accountsreceivable are entered into the balance sheet when an invoice has been issued. Liabilities are entered when the counter-party has performed and the agreed liability is due for payment, even if an invoice has not yet been received. Accountspayable are entered when an invoice has been received. A financial asset is removed from the balance sheet when the rightper agreements are realised, expired or ceased. A financial liability is removed from the balance sheet when the under-takings in the agreement have been fulfilled or extinguished.

IAS 39 operates with four categories of financial instruments, based on the reason for the acquisition:

Financial assets recognised at fair value in the income statementThis category has two sub-groups, financial assets held for trading and other financial assets which were initially meant tobe invested into this category. Assets in this category are measured at fair value and changes in fair value are recognised inthe income statement.

Financial liabilities recognised at fair value in the income statementThis category holds financial liabilities held for trading and derivatives not used for hedge accounting. Liabilities in thiscategory are measured at fair value and changes in fair value are recognised in the income statement.

Loan receivables and accounts receivableThis category holds financial assets that are not-derivative with fixed payments that are not quoted on an active market andthat are not meant for trading. Assets in this category are measured at the amortized cost.

Other financial liabilitiesFinancial assets not held for trading are measured at their accrued acquisition cost, which is based on the effective rate ofinterest determined when the liability originated. Gains, losses and direct issue costs are allocated over the life of the liability.

Cash and bank depositsCash and bank deposits include cash, bank deposits and other monetary instruments where the maturity is less than threemonths from the date of purchase.

Unsettled tradesSecurity trades transacted prior to the year-end but for which settlement does not occur until after year-end are recordedunder accounts receivable and accounts payable to customers. Allowance is made against receivables for estimated losses.

Assets and liabilities in foreign currencyRealised and unrealised profit or losses arising from transactions, assets or liabilities denominated in foreign currencies areincluded in the net result for the year. Exchange rates at year-end are used to convert foreign currency amounts to NOK.

Accounting of partnershipThe partnership's accounts are fully incorporated in the accounts of the principal partner. Unpaid profits to partners areclassified as current liabilities. Deposits from partners are classified as long-term liabilities.

Income taxesTax expenses are matched with profit/ loss before tax. Tax related to equity transactions, for example group contribution, isposted directly towards equity.

The tax expense consists of current income tax expense. Deferred tax is calculated at the nominal tax rate for timingdifferences arising between accounting and tax values.

PensionsThe Group’s Norwegian companies have pension schemes, which entitle the employees to agreed future pension benefits(defined benefits plans).

The basis for recording pension liabilities in the firm's defined benefit plans is the estimated salary level upon retirementand years of service. Deviations from estimates and effects of changes in assumptions are amortised over the expectedremaining years of service if exceeding 10% of the greater of pension liabilities and pension funds. Changes in the pensionplan are dispersed over the remaining years of service. These figures include social security tax.

The Group’s non-Norwegian subsidiaries have pension schemes where the company’s commitment is to contribute to theindividual employee’s pension scheme (defined contribution plans).


Note 2 – Information about Segments and Geographical Markets

The Group's two business segments are Equities and Corporate Finance. The internal management system is matrix-based.Revenues and expenses are recorded both by business segment and geographical markets. Assets and liabilities except fromdirectly allocatable items specified below, and equity and cash flow are recorded by geographical markets.

Operating profit reported by primary segment (business segment)Operating costs, bonus to

employees and profit-Operating revenues sharing to partners Operating Profit

2005 2004 2005 2004 2005 2004

Stockbroking Services 573 541 457 818 383 196 337 528 190 346 120 290Corporate Finance 554 904 362 933 372 305 259 822 182 600 103 111Unallocated 64 928 18 782 46 753 15 485 18 175 3 297

Total 1 193 373 839 533 802 253 612 835 391 120 226 698

Depreciations, 12,480 in 2005 and 12,940 in 2004, are included as operating costs under Unallocated.

Allocation of balance sheet items by primary segment (business segment)2005

Stockbroking Corporateservices finance Unallocated Total

Accounts receivables 1 552 441 85 060 73 979 1 711 480Receivables from other stockbrokers 412 425 0 0 412 425Other assets 0 0 920 769 920 769

Total assets 1 964 866 85 060 994 749 3 044 675

Liabilities payable to customers 1 158 063 0 0 1 158 063Liabilities payable to other stockbrokers 355 015 0 0 355 015Other liabilites 0 0 792 668 792 668

Total liabilities 1 513 078 0 792 668 2 305 746

2004Stockbroking Corporate

services finance Unallocated Total

Accounts receivables 935 184 126 319 -57 061 1 004 443Receivables from other stockbrokers 249 538 0 -828 248 710Other assets 0 0 805 863 805 863

Total assets 1 184 722 126 319 747 974 2 059 016

Liabilities payable to customers 529 727 0 -1 176 528 551Liabilities payable to other stockbrokers 349 520 0 11 349 531Other liabilites 0 0 511 560 511 560

Total liabilities 879 247 0 510 395 1 389 642


Operating costs, bonus toemployees and profit-

Operating revenues sharing to partners Operating Profit2005 2004 2005 2004 2005 2004

Norway 751 595 469 990 418 736 270 498 332 859 199 491Sweden 134 462 124 370 138 267 125 830 -3 805 -1 459Denmark 19 724 0 20 055 19 -331 -19UK *) 168 983 121 155 132 171 110 623 36 812 10 533US 118 609 124 018 93 024 105 866 25 585 18 152

Total 1 193 373 839 533 802 253 612 835 391 120 226 698

*) Incl. Continental Europe

Allocation of balance sheet items by secondary segment (geographical markets)

Total assets Total liabilities Total equity2005 2004 2005 2004 2005 2004

Norway 2 612 284 1 660 600 2 107 673 1 200 617 504 611 459 983Sweden 129 103 188 066 65 112 102 591 63 991 85 475Denmark 7 474 260 7 474 260 0 0UK *) 182 204 126 133 72 664 44 209 109 540 81 924US 113 610 83 958 52 823 41 966 60 786 41 992

Total 3 044 675 2 059 016 2 305 746 1 389 642 738 929 669 374


Cash flow statement by secondary segment (geographical markets)2005

Norway Sweden Denmark UK *) US Total

Net cash flow from operating activities 45 216 156 697 3 105 3 228 16 451 224 696Net cash flow from investing activities 327 182 -726 -2 094 -228 -357 323 777Net cash flow from financing activities -59 302 -142 764 0 0 0 -202 066

Net change in cash and cash equivalents 313 095 13 207 1 011 3 000 16 094 346 407

Cash and cash equivalents - opening balance 217 168 113 113 0 5 196 50 412 385 888

Cash and cash equivalents - ending balance 530 263 126 319 1 011 8 196 66 506 732 295

2004Norway Sweden Denmark UK *) US Total

Net cash flow from operating activities 489 790 -109 847 0 8 607 10 377 398 927Net cash flow from investing activities 168 048 -2 255 0 -8 544 -192 157 057Net cash flow from financing activities -580 678 202 304 0 0 0 -378 373

Net change in cash and cash equivalents 77 160 90 202 0 62 10 185 177 610

Cash and cash equivalents - opening balance 140 005 22 910 0 5 133 40 227 208 276

Cash and cash equivalents - ending balance 217 168 113 113 0 5 196 50 412 385 888



Note 3 – Related parties

The Group's ultimate parent company is ABG Sundal Collier ASA. The consolidated financial statements include the financialstatements of ABG Sundal Collier ASA and the subsidiaries, all 100% controlled, listed in the following table:

ABG Sundal Collier Norge ASA ABG Sundal Collier Ltd.ABG Sundal Collier Real Estate AS ABG Sundal Collier ABABG Sundal Collier Eiendom AS Sundal Collier & Co ASAABG Sundal Collier Forvaltning ASA Sandberggården ASABG Sundal Collier Inc. Lagerselskapet Holding AS

The Group has no other related parties than mentioned above, in note 14 about wages and other payments, or note 15about shareholder information. All transactions between these related parties are carried out on an arm's-length basis.

Note 4 – Taxes

Tax expense in the income statement: 2005 2004

Tax payable in Norway 66 886 65 190Tax payable outside Norway 27 118 7 410

Total tax payable 94 004 72 600

Change in deferred tax in Norway -4 852 20 047Change in deferred tax outside Norway -1 012 -2 842

Total change in deferred tax -5 864 17 205

Total tax expense 88 140 89 805

Reconciliation from nominal to effective tax rate:

Profit before taxes 426 920 390 383Expected tax expenses based on nominal tax rate (28%) 119 538 109 307

Tax-free income -39 799 -39 164Non deductible expenses 3 271 0Prior year adjustment -1 365 -2 549Correction tax on dividend 0 12 000Differences in tax rates outside Norway 6 495 5 453Implementation of new tax rules 0 4 758

Tax expense on ordinary profit 88 140 89 805

Effective tax rate 20,6 % 23,0 %

Tax effect on temporary differences at year end:

Current itemsReceivables 6 565 4 899Provisions 3 704 4 659Other current items -68 184

Total current items 10 201 9 741

Non current itemsFixed assets 17 696 19 373Net pension liabilities 2 988 1 710Valuation allowance -20 780 -22 440Other non current items 357 0

Total non current items 261 -1 357

Loss carried forward 2 147 5 983

Total deferred tax asset 12 609 14 368


Note 6 – Accounts Receivable2005 2004

Gross accounts receivable 1 737 525 1 028 945Allowance for doubtful accounts -26 044 -24 503

Net accounts receivable 1 711 480 1 004 443

Specific allowance for doubtful accounts at 1 January 24 503 28 195+ New specific allowance 2 962 4 874- Reversal of specific allowance -1 421 -8 566

= Specific allowance for doubtful accounts at 31 December 26 044 24 503

New specific allowance 2 962 4 874+ Realised loss 255 5 005- Reversal of specific allowance -1 421 -8 566

= Allowance for doubtful accounts 1 796 1 313

Note 7 – Securities and Financial Assets

Current investments:

Securities and financial instruments:Acquisition Market Delta Profit/

Company name Number cost value position (loss)

Fast Search & Transfer ASA 165 400 4 068 4 102 4 102 33Opticom ASA 38 400 5 260 5 107 5 107 -153Stolt Offshore ASA -38 100 -2 850 -2 991 -2 991 -141BIO Invest International AB 160 000 1 199 1 660 1 660 461Financial instruments < NOK 1 million 2 808 500 3 324 3 324 3 324 0

11 002 11 203 11 203 201

Non-current investments:

Other shares:Acquisition Market Delta

Company name Number cost value position Profit

Kanikenäsholmen AB 500 3 974 3 974 3 974 0Kompetansekapital AS 13 318 143 3 682 3 862 3 862 180Other 558 558 558 0

8 214 8 394 8 394 180

Note 5 - Cash and Bank Deposits

Foreign currency holdings have been valued at the exchange rate as at 31 December. Included in Group balance of cash andbank deposits are amounts of restricted cash of NOK 17 million and amounts representing balances on client accounts ofNOK 375 million. The Group has a bank overdraft facility with a limit of NOK 500 million.


Note 8 – Fixed Assets

Office and Furniturecomputer equipment and fixtures Total

Acquisition cost at 1.1.05 61 724 31 336 93 060FX-adjustment 239 1 923 2 162Disposals at cost -1 888 -1 969 -3 857Additions 2005 6 961 2 278 9 239

Acquisition cost at 31.12.05 67 036 33 568 100 604

Accumulated depreciation 1.1.05 49 839 17 249 67 088FX-adjustment -1 531 202 -1 330Depreciation 2005 7 335 5 146 12 481Accumulated depreciation 31.12.05 55 643 22 596 78 239

Book value 31.12.05 11 393 10 971 22 364

Depreciation rates (linear method) 20 - 33% 10 %

Note 9 – Goodwill

Total

Acquisition cost at 1.1.05 46 493Additions 2005 0

Acquisition cost at 31.12.05 46 493

Depreciation/ write down 2005 0Accumulated depreciation 31.12.05 11 623

Book value 31.12.05 34 870

Note 10 – Other Current Liabilities

2005 2004

Other current liabilities consist of :

Amounts due to partners in silent partnership 297 589 165 979Accrued expenses and other short-term liabilities 224 188 160 665

Total other current liabilities 521 777 326 644


Note 11 – Pensions

The total pension liabilities are related to employees and partners of the subsidiaries in Norway. Employees at the officesoutside Norway are all part of defined contribution plans.

Employees and partners in Norway are covered by a collective pension plan. At 31.12.05 there were a total of 57 employeesand 57 partners covered under the plan. The collective plan is accounted for as a defined benefit plan. Normally these retire-ment benefits are based on the number of years of service and the expected salary level upon retirement, and the level ofthe state pension from the national insurance.

The Company's legal obligations under the plans are not influenced by the accounting methods used or the assumptions usedin calculating the amounts recorded in the financial statements.

The pension costs for the year are calculated by an independent actuary and are based on information provided by theCompany as at 1.1.05 and updated based on most recent information available at year end. Social security taxes related tothe net pension expense for the period are charged as an expense.

Assumptions in determination of the pension liability and expense: 2005 2004

Discount rate 4.75 % 5.00 %Future salary increase 3.00 % 3.00 %Assumed pension increases 2.50 % 2.50 %Assumed changes in G 3.00 % 3.00 %Assumed rate of return on plan assets 5.75 % 6.00 %Voluntary departures of participants up to 40 years 3.00 % 3.00 %Voluntary departures of participants after 40 years 0.50 % 0.50 %

Accrued pension liability : 31.12.05 31.12.04

Change in Projected Benefit Obligation (PBO)PBO at the beginning of year 44 367 34 085 Service cost 7 398 5 641 Interest cost 2 222 1 874 Actuarial loss/(gain) -1 744 3 161 Benefits paid -407 -393

PBO at end of year 51 837 44 367

Change in plan assetsPlan assets at beginning of year 28 201 21 309 Estimated return on plan assets 1 772 1 434 Actuarial loss/(gain) -1 759 287 Contribution 6 429 5 565 Benefits paid -407 -393

Plan assets at end of year 34 235 28 201

Obligation in financial statementFunded status 17 602 16 167 Social Security Tax 1 069 855 Unrecognised actuarial loss -2 978 -2 874

Obligation in financial statement 15 693 14 148

ReconciliationBalance sheet provision at beginning of year 14 148 13 383 Cost in financial statement 8 278 6 533 Contributions/benefits paid during year (including Social Security Tax) -6 733 -5 768

Balance sheet provision at end of year 15 693 14 147


Net pension expense in income statement:Service cost 7 398 5 641 Interest cost 2 222 1 874 Estimated return on plan assets -1 772 -1 434 Amortisation of actuarial losses 48 0 Net pension cost 7 897 6 081 Social Security Tax 381 452

Pension expense defined benefit plan 8 278 6 533

Pension expense defined contribution plan 16 911 14 910

Total pension expense in income statement 25 189 21 443

Note 12 – Guarantees and Mortgages2005 2004

Book value of assets pledged as collateral:Shares 19 597 156 377Receivables 2 219 971 1 347 784

Total assets pledged as collateral 2 239 568 1 504 161

Book value of mortgaged liabilities 122 268 52 164

Note 14 – Wages and Social Costs2005 2004

Wages/partner remuneration 142 044 139 820Social security tax 20 530 20 085Pension costs including social security tax 25 139 21 443Other personnel costs 15 158 10 947

Total wages and social costs 202 871 192 295

Average number of man-years 222 185Number of man-years associated with silent partnerships 57 44

Note 13 – Legal Matters / Disputes

The ABGSC ASA subsidiary Sundal Collier & Co ASA (SCC) has been party to a legal dispute with Procedo Capital Corporation(Procedo), relating to unsettled trades undertaken by Procedo and a counter-suit from Procedo concerning alleged ground-less attachments of Procedo's assets. On 22 January 2004, Borgarting Court of Appeal ruled that Procedo is to pay SCC NOK18.1 mill plus interests, and found in favour of SCC also in the counter-suit. In addition, the court ruled that Procedo is to paySCC NOK 8.7 mill in legal costs. The decision was appealed by Procedo. The appeal was dismissed by the Supreme CourtInterlocutory Appeals Committee on 16 July 2004, making the decision by Borgarting Court of Appeal legally binding andenforceable. SCC is now in the process of enforcing payment from Procedo, including in Luxembourg, where SCC has had anattachment of Procedo's fund pending the outcome of the legal dispute since 1998.

SCC has previously received notice from certain issuers and clients asserting to have recourse against SCC for possible losscaused them. The claim relates to Norwegian Inland Revenue authorities demanding that tax should be paid for past dividendsto certain Norwegian shareholders, as foreign clients were the beneficial owners of the shares and as such subject to with-holding tax in Norway. The total potential claim of recourse is approximately NOK 18 mill. Several lawsuits between issuers andNorwegian Inland Revenue authorities regarding the withholding tax are in progress or have taken place. In a press release on27 January 2006, the Norwegian Ministry of Finance referred to an advisory statement in a lawsuit against Fokus Bank where-by the Norwegian withholding tax rules are deemed to be in breach with EEC regulation, and that the government acceptsthat EEC-regulations has been implemented in a way that can be invoked in other cases. On this basis, SCC assumes that theissuers mentioned and clients will win their lawsuits and avoid withholding tax, and thus eliminate the recourse claims. SCC hasalways considered the claim as unfounded, but will if necessary seek recourse from the foreign clients involved.

The silent partners in ABG Sundal Collier Silent Partnership have received letters from Akershus County Revenue Officeregarding a possible change in the tax assessments for 2002 and 2003. The silent partners do not agree with the CountyRevenue Office's assessment. Any change of the tax assessment will not affect the General Partner or the Group tax expense.

In the normal course of business the Group will from time to time be involved with minor complaints with various partiesthat will have no material impact on the Group's overall financial position.


Jan Petter Collier, CEO, has received NOK 600,000 in remuneration in 2005, NOK 8,250,000 in profit participation in respect of2004, and has taken part in the Norwegian entity's defined benefit pension plan. The leading personnel of the Group, 10people including the CEO, have received NOK 6,937,000 in remuneration in 2005, NOK 40,625,000 in profit participation inrespect of 2004, and they have taken part in the Group's pension plans.

External board members have received fees of NOK 300,000, and NOK 100,000 in consulting fees in 2005.

There are no specific agreements regarding salary at termination or change of conditions of employment for the Chairman ofthe Board, other members of the Board or the management of the Group. The CEO and one board member (Arild A. Engh)are partners in ABG Sundal Collier Group and receive through this a salary/ remuneration, bonus and/or profit participation.

The Group accounts for 2005 include a fee to the auditor Deloitte and associated companies of NOK 1,452,000 for audit services,NOK 97,700 for other attest services, NOK 1,710,000 for tax-related services and NOK 448,000 for other non-audit services.

Note 15 – Shareholder Information

There are a total of 269,289,001 shares at face value of NOK 0.23 in the company. The Company has forward-agreements withpartners purchasing a total of 38,839,000 shares from the company with settlement in 2006-2009. The Company owns 37,750Treasury shares. The Company has authorisation to re-purchase its shares in the market or to issue new shares. In 2005, theCompany purchased 112,500 shares at NOK 25,875 to cover the forward-agreements, and in 2005 the Company sold 4,790,000shares to partners at NOK 20,909,244 regarding previous forward-agreements and purchases by new partners.

Overview of shareholders registered in VPS on 31.12.05:Number of shares Share

Vika 45 AS (controlled by partners of ABG Sundal Collier ASA) 45 817 149 17.0 %Sanden AS (controlled by Jan Petter Collier and his family) 30 473 927 11.3 %SEB Enskilda 6 555 829 2.4 %Carl Palmstierna 6 400 000 2.4 %Goldman Sachs & Co 6 312 500 2.3 %Fidelity Funds - Eur. Sm. Comp 5 882 692 2.2 %Goldman Sachs International 4 816 100 1.8 %State Street Bank & Trust Co. 4 684 755 1.7 %David Feinburg 4 640 000 1.7 %Paul Sisson 4 000 000 1.5 %Anders Bråtenius 3 800 000 1.4 %Stichting Shell Pensioenfonds 3 682 590 1.4 %Credit Suisse First Boston 3 500 000 1.3 %Straumur - Burdaras Investment 3 403 611 1.3 %Sigmund Håland 3 015 578 1.1 %Skagen vekst 2 980 000 1.1 %Bank of New York, Brussels Branch 2 956 000 1.1 %Morgan Stanley & Co Inc. 2 927 100 1.1 %BNP Paribas Sec. Services Paris 2 880 000 1.1 %Storebrand Livsforsikring 2 683 737 1.0 %Other shareholders 117 877 433 43.8 %

Total 269 289 001 100 %

Board members, shares owned directly and indirectly as at 31.12.05

Terje Moe Gustavsen, Chairman 100 000Arild A. Engh 1) 6 875 167Merete Haugli 0Gunn Ovesen 0Per Anders Ovin 0Michael Tetzschner 01) Owned through partial ownership of Vika 45 AS

Leading personnel, shares owned directly and indirectly as at 31.12.05:

Jan Petter Collier, CEO (incl. shares owned by his family) 30 473 927Arild A. Engh, Global Head of Corporate Finance 1) 6 875 167Carl Palmstierna, Managing Partner Sweden 6 400 000 Has obligation to purchase additional

1,000,000 shares through forward-agreement.


David Feinburg, Global Head of Sales 4 640 000 Has obligation to purchase additional 300,000 shares through forward-agreement.

Geir Ringstad, Global Head of Prop. trading & Risk 1) 3 951 406 Ståle Rodahl, Head of Oslo Sales 1) 3 350 000 Has obligation to purchase additional

100,000 shares through forward-agreement.Mats Kummelstedt, Global Head of Research 2 240 000Steinar Nordengen, CFO 1) 1 037 786 Has obligation to purchase additional

348,000 shares through forward-agreement.Tore Grøttum, COO 0 Has obligation to purchase 500,000 shares

through forward-agreement.Eivind Haugan, Global Head of Compliance 0 Has obligation to purchase 1,000,000 shares

through forward-agreement.

1) Holdings include proportional part of shares owned through Vika 45 AS and shares owned by companies controlled by thepartner.

Note 16 – Earnings per ShareYear 2005 2004

Net profit for the year NOK 1,000 338 780 300 578Average number of shares Numbers in 1,000 266 349 264 390Diluted Average number of shares Numbers in 1,000 302 810 269 307

Earnings per share NOK 1.27 1.14Diluted Earnings per share NOK 1.14 1.12

Note 17 – Risk Management

Risk managementABG Sundal Collier ASA aims to maintain a low risk profile. In managing its risk, distinction is made between market, liquidityand foreign currency risk. Risk is managed through clearly defined decision making processes, authorisation systems andexposure limits.

Market riskThe Group is exposed to fluctuations in the value of its own investments, market-making and settlement from customers.Financial market risk is managed under rules established in the Norwegian Companies Act and internal control regulationsestablished by the Banking, Insurance and Securities Commission. The ABG Sundal Collier Board has established proceduresfor internal control designed to monitor financial market risk and ensure a robust control discipline.

In order to facilitate settlement on the Group's agency business, the Group may borrow stock or fund the purchase of stockleaving the Group with a risk that the buyer or seller may not be able to complete their obligation under the trade. Settle-ment risk is mitigated by only trading with good quality, credit worthy clients who are usually large institutional investors orhigh net-worth individuals. Generally, the underlying stocks are highly liquid blue chip stocks for which there is a trans-parent and liquid market.

Liquidity risk The Group's operation demands rapid access to liquidity. Liquidity needs are secured by a liquidity fund and bank overdraftprovisions. The assets of the Group are generally short-term and are due within one month.

Foreign currency risk The Group's foreign currency exposure is linked to future cash flow and balance-sheet items in all operations. The foreigncurrency risk is mitigated by use of drawing rights in the respective currencies and a variety of financial instruments such asforward contracts.


Note 18 – Capital Ratio

The Group must have a capital ratio of a minimum 8% of a basis of computation, which is established in a regulation fromthe Banking, Insurance and Securities Commission. The capital ratio at year end is (figures in NOK 1,000):

Note 20 – Transition to IFRS

The transition to IFRS was prepared in accordance with IFRS 1. Interim reports for 2005, the comparative information for2004 and the Group's opening balance as at 1 January 2004 were prepared with all IFRS standards except IAS 39 regardingFinancial Instruments which was implemented as at 1 January 2005. The tables below outline the reconciliation fromNorwegian GAAP (NGAAP) to IFRS for Income statement, balance sheet and equity for fiscal year 2004 and per openingbalance as at 1 January 2004 and 2005:

Note 19 – Rental Expenses and Lease Commitments

Rental and leasing expenses included in 2005 operating expenses:

Office/warehouse rental 15 533 Other 974

Total 16 507

Minimum lease commitments under non-cancellable leases having aremaining lease term in excess of one year as at 31 December 2005:

Year Lease expense Sub-lease income

2006 15 739 2 280 2007 18 061 2 326 2008 13 558 2 372 2009 13 829 2 420 2010 5 618 0 2011 5 730 0 Thereafter 14 248 0

2005 2004

Total basis of computation currency risk and risk from the trading portfolio 170 444 215 324 + Total basis of computation from risk outside the trading portfolio 342 269 283 764 - Deductions 0 -5 822

Total basis of computation 512 713 493 266

Core capital 738 929 669 374 - Intangible assets -47 478 -43 114 - Deductions 0 -5 822

Total capital 691 451 620 438

Capital ratio 134.9 % 125.8 %


Income StatementNGAAP Adjust- IFRS

2004 ments 2004

Operating revenuesStockbroking services 457 818 0 457 818Corporate Finance 362 933 0 362 933Other revenues 18 404 378 18 782

Total operating revenues 839 155 378 839 533

Operating expensesPersonnel expenses -191 376 -919 -192 295Other operating expenses -183 328 326 -183 002Depreciation -17 601 4 661 -12 940

Total operating expenses -392 305 4 068 -388 237

EBIT Pre-bonus and profit to partners 446 850 4 446 451 296

Bonus and profit to partners -224 975 377 -224 598

EBIT Post-bonus and profit to partners 221 875 4 823 226 698

Net financial result 163 714 -29 163 685

Pre-tax income 385 589 4 794 390 383

Taxes -89 873 68 -89 805

Net result for the period 295 716 4 862 300 578

Specification of items Net result for the period NGAAP 295 716 0 295 716Pension cost (after tax) 0 -721 -721Goodwill amortisation 0 4 649 4 649Fx conversion of subsidiaries 0 934 934

Net result for the period IFRS 295 716 4 862 300 578

Balance Sheet31 Dec 1 Jan 31 Dec 31 Dec 1 Jan

2003 Adjust- 2004 2004 Adjust- 2004 Adjust- 2005Amount in NOK 1,000 NGAAP ments IFRS NGAAP ments IFRS ments IFRS

Intangible assets 73 772 1 194 74 966 43 114 6 124 49 238 0 49 238Plant and equipment 22 626 0 22 626 25 972 0 25 972 0 25 972Financial non-current assets 36 828 0 36 828 19 202 0 19 202 93 758 112 960

Total non-current assets 133 226 1 194 134 420 88 288 6 124 94 412 93 758 188 170

Receivables 1 778 159 0 1 778 159 1 347 784 0 1 347 784 0 1 347 784Investments 19 110 0 19 110 137 174 0 137 174 0 137 174Cash and bank deposits 208 276 0 208 276 385 888 0 385 888 0 385 888

Total current assets 2 005 545 0 2 005 545 1 870 846 0 1 870 846 0 1 870 846

Total assets 2 138 771 1 194 2 139 965 1 959 134 6 124 1 965 258 93 758 2 059 016

Paid-in capital 60 730 0 60 730 78 648 0 78 648 0 78 648Retained earnings 222 332 -3 071 219 261 195 859 301 109 496 968 93 758 590 726

Total equity 283 062 -3 071 279 991 274 507 301 109 575 616 93 758 669 374

Long-term liabilities 14 073 4 265 18 338 13 570 5 267 18 837 0 18 837Current liabilities 1 841 636 0 1 841 636 1 671 058 -300 253 1 370 805 0 1 370 805

Total liabilities 1 855 709 4 265 1 859 974 1 684 628 -294 986 1 389 642 0 1 389 642

Total equity and liabilities 2 138 771 1 194 2 139 965 1 959 135 6 124 1 965 258 93 758 2 059 016


31 Dec 31 Dec 1 JanEquity reconciliation 2004 Adjust- 2004 Adjust- 2005

NGAAP ments IFRS ments IFRS

Equity beginning of period 283 062 0 283 062 0 283 062Net result for the period 295 716 4 862 300 578 0 300 578Exchange rate conversion of subsidiaries 0 -934 -934 0 -934Dividend -300 253 0 -300 253 0 -300 253Increase in Share Capital 19 002 0 19 002 0 19 002Change in own shares -22 981 0 -22 981 0 -22 981Other -39 0 -39 0 -39Implementation effect pension liability 0 -3 071 -3 071 0 -3 071Dividend 0 300 253 300 253 0 300 253Implementation effect IAS 39 0 0 0 93 758 93 758

Equity end of period 274 507 301 110 575 616 93 758 669 374

56 Financial Statements – Parent Company

Financ i a l St a t emen t s – Pa ren t CompanyIncome St a t emen tAmount in NOK 1,000

OPERATING REVENUES AND EXPENSES NOTES 2005 2004

Other revenues 4 583 0

Total operating revenues 4 583 0

Wages and social costs 8 365 228

Administration costs 7 6 689 7 794

Depreciation 5 4 649 4 648

Total operating expenses 11 703 12 670

Operating loss -7 120 -12 670

FINANCIAL INCOME AND EXPENSES

Interest income 1 092 720

Other financial income 214 080 129 409

Dividend/contribution from group companies 7 230 608 233 500

Interest expense to group companies 7 -551 -2 797

Interest expense -580 -1 904

Other financial expenses 0 -8 937

Net financial result 444 649 349 990


Tax expense 3 68 275 66 222

NET PROFIT FOR THE YEAR 369 254 271 098

ALLOCATIONS AND TRANSFERS

To/(From) other equity 369 254 -29 155

Proposed dividend 0 300 253

Total allocations and transfers 369 254 271 098

57Financial Statements – Parent Company

Ba l ance Shee t a s a t 31 DecemberAmount in NOK 1,000

ASSETS NOTES 2005 2004

Non-current assets

Intangible assets

Deferred tax assets 3 2 712 3 125

Goodwill 5 25 572 30 221

Total intangible assets 28 284 33 346

Financial non-current assets

Shares in subsidiaries 4 , 6 417 597 421 377

Other shares 4 , 6 5 330 19 006

Total financial non-current assets 422 928 440 383

Total non-current assets 451 212 473 729

Current assets

Receivables

Receivables from group companies 7 284 075 176 388

Total receivables 284 075 176 577

Cash and bank deposits

Cash and bank deposits 88 934 48 521

Total current assets 373 009 225 098

TOTAL ASSETS 824 221 698 827


Oslo, 28 March 2006

The board of ABG Sundal Collier ASA

Ba l ance Shee t a s a t 31 DecemberAmount in NOK 1,000

EQUITY AND LIABILITIES NOTES 2005 2004

Equity 2

Paid-in-capital

Share capital 9 61 936 61 545

Treasury shares at nominal value -9 -1 084

Share premium reserve 19 326 18 187

Total paid-in-capital 81 254 78 648

Retained earnings

Other equity 465 386 67 717

Total equity 546 640 146 365

Liabilities

Current liabilities

Accounts payable 16 125

Liabilities payable to group companies 7 185 457 190 331

Income tax payable 3 78 877 58 142

Dividend/reduction share premium fund 0 300 253

Other current liabilities 13 230 3 612

Total current liabilities 277 581 552 462

Total liabilities 277 581 552 462

TOTAL EQUITY AND LIABILITIES 824 221 698 827

Merete Haugli

Gunn Ovesen

Arild A. Engh

Jan Petter CollierChief Executive Officer

Per-Anders Ovin Michael Tetzschner



Cash F low St a t emen tAmount in NOK 1,000

CASH FLOW FROM OPERATING ACTIVITIES: 2005 2004


Taxes paid -43 811 0

Depreciation and amortisation of fixed assets and intangible assets 4 649 4 648

Items classified as investing or financing activities -214 080 -182 909

Change in accounts payable/ payable to customers and other stockbrokers -108 125

Change in intercompany accounts -112 561 -209 300

Change in other current assets/liabilities 9 807 4 714

Net cash inflow / (outflow) from operating activities 81 426 -45 402

CASH FLOW FROM INVESTING ACTIVITIES:

Proceeds from sale of fixed financial items 231 535 180 959

Purchase of fixed financial items 0 -10 000

Proceeds from investments in financial items 0 53 500

Net cash inflow from investing activities 231 535 224 459

CASH FLOW FROM FINANCING ACTIVITIES:

Paid-in share capital 1 530 19 002

Change in own shares/ foreign currency adjustments 20 258 -22 982

Paid dividend -294 336 -132 022

Net cash inflow outflow from financing activities -272 548 -136 002

Net increase in bank deposits, cash and cash equivalents 40 413 43 055

Bank deposits, cash and cash equivalents at beginning of year 48 521 5 466

Bank deposit, cash and cash equivalents at end of year 88 934 48 521

61Notes to the Financial Statements – Parent Company

Note s t o th e Financ i a l St a t emen t s 2005 – Pa ren t Company

All amounts in are in thousands unless otherwise indicated

Note 1 – Accounting Principles

The accounts are prepared in accordance with the Norwegian Accounting Act and Norwegian Generally Accepted AccountingPrinciples (NGAAP).

Financial statement preparation requires estimates and assumptions that affect the reported amounts of assets, liabilities,revenues and expenses as well as disclosures of contingencies. Actual results may differ from estimates.

Revenue recognitionRevenue is recognised in conjunction with the performance of the services used to complete an engagement. Revenues fromperformance fees are recognised upon completion of the transaction. Fixed fees are recognised as earned.Commissions from equity trades are recognised at the trade date.

Classification of assets and liabilitiesReceivables that are to be repaid within one year and assets that are not of a permanent nature or use in the business areclassified as currents assets. Other assets are classified as long-term assets.

Liabilities are classified as a long-term liability if the liability is due to be repaid after more then one year after the balancesheet date. All other liabilities are classified as current liabilities.

Current assets are valued at the lower of original cost and net realisable value.

GoodwillWhen a business is acquired, a purchase price in excess of the identified fair value of assets and liabilities is accounted for asgoodwill. Goodwill is amortised using a straight-line method over the expected economic life of the asset not exceeding 10years.

Financial non-current assetsOther non-current shareholdings, minor investments where the company does not hold substantial influence and invest-ments in subsidiaries, are in general carried at original cost. If a decline in fair value below the carrying amount is expectedto be permanent, the investments are written down. Dividends received and other surplus distributions from these companiesare recognised as financial income.

ReceivablesReceivables are carried at face value less provision for expected loss. An estimate is made for doubtful receivables based on areview of all outstanding amounts at the year-end. Losses on receivables are written off in the year in which they are identified.

Cash and bank depositsCash and bank deposits include cash, bank deposits and other monetary instruments where the maturity is less than threemonths from the date of purchase.

Assets and liabilities in foreign currencyRealised and unrealised profit or losses arising from transactions, assets or liabilities denominated in foreign currencies areincluded in the net result for the year. Exchange rates at year-end are used to convert foreign currency amounts to NOK.

Income taxesTax expenses are matched with profit/ loss before tax. Tax related to equity transactions, for example group contribution, isposted directly towards equity.

The tax expense consists of current income tax expense, reimbursements of taxes to other partners under the Norwegian taxlaw § 16-40 and change in net deferred tax. Deferred tax is calculated at the nominal tax rate for timing differences arisingbetween accounting and tax values. Deferred tax liabilities and deferred tax assets are presented in the balance sheet as anet amount.

62 Notes to the Financial Statements – Parent Company

Note 2 – Shareholders EquityShare premium

Share capital Own shares reserves Other equity Total equity

Shareholders equity at 1 January 2004 60 730 118 769 179 499Net profit for the year 271 098 271 098Dividend to be paid out -300 253 -300 253Increase in Share Capital 815 18 187 19 002Change in own shares -1 084 -21 897 -22 981

Shareholders equity at 31 December 2004 61 545 -1 084 18 187 67 717 146 365

Net profit for the year 369 254 369 254Accrued dividend not paid 5 917 5 917Increase in Share Capital 391 1 139 1 530Dividend on own shares 3 316 3 316Change in own shares 1 075 19 183 20 258

Shareholders equity at 31 December 2005 61 936 -9 19 326 465 387 546 640

Note 3 – Taxes

Tax expense in the income statement: 2005 2004

Tax payable in Norway 68 353 58 142Tax payable outside Norway 0 0

Total tax payable 67 862 58 142

Change in deferred tax in Norway -78 8 080Change in deferred tax outside Norway 0 0

Total change in deferred tax 413 8 080

Total tax expense 68 275 66 222

Reconciliation from nominal to effective tax rate:

Profit before taxes 437 529 337 320Expected tax expenses based on nominal tax rate (28%) 122 508 94 450

Tax-free income -56 854 -48 819Goodwill amortisation 1 302 0Non deductible expenses 267 0Prior year adjustment 1 052 -427Correction tax on dividend 0 12 000Implementation of new tax rules 0 9 018

Tax expense on ordinary profit 68 275 66 222

Effective tax rate 15.6 % 19.6 %

Tax effect on temporary differences at year end

Current itemsReceivables 1 546 1 546Provisions 1 121 1 032

Total current items 2 667 2 578

Non current itemsFixed assets 45 56Investments 0 0Other non current items 0 491

Total non current items 45 547

Total deferred tax asset 2 712 3 125


Note 4 – Financial non-current assets

Shares in subsidiaries:Company name Registered office Number Ownership Voting right Book value

Sundal Collier & Co ASA Oslo 256 000 100 % 100 % 201 049ABG Sundal Collier Norge ASA Oslo 1 070 000 100 % 100 % 197 070ABG Sundal Collier Forvaltning ASA Oslo 10 000 100 % 100 % 10 000ABG Sundal Collier Real Estate AS Oslo 1 000 100 % 100 % 6 208ABG Sundal Collier Eiendom AS Oslo 30 000 100 % 100 % 3 020Sandberggården AS Oslo 170 100 % 100 % 250

Book value of shares in subsidiaries at 31 December 2005 417 597

Other shares:Company name Registered office Number Ownership Voting right Book value

Kompetansekapital AS Oslo 13 318 000 6 % 6 % 3 682Other shares Oslo 1 648

Book value of other shares at 31 December 2005 5 330

Note 7 – Related Parties

Details of transactions with subsidiaries as at 31 December 2005 are as follows:

Interest Management Dividend/GroupCompany Liability Receivable expense expense contribution

ABG Sundal Collier Eiendom AS 0 16 642 -124 0 11 000ABG Sundal Collier Norge ASA 0 259 476 -2 137 3 920 211 608ABG Sundal Collier Real Estate AS 8 748 0 311 0 8 000Sandberggården AS 0 7 957 -1 812 0 0Sundal Collier & Co ASA 176 709 0 4 313 0 0

Total intercompany balance transactions 185 457 284 075 551 3 920 230 608

The Group has no other related parties than mentioned above, in note 8 about wages and other payments, or note 9 aboutshareholder information. All transactions between these related parties are carried out on an arms-length basis.

Note 5 – Goodwill

Acquisition cost at 1.1.05 46 493Additions 2005 0

Acquisition cost at 31.12.05 46 493

Depreciation 2005 4 649Accumulated depreciation 31.12.05 20 922

Book value 31.12.05 25 572

Depreciation rate (linear method) 10 %

Note 6 – Guarantees and Mortgages

2005 2004

Book value of assets pledged as collateralShares 422 928 440 383Receivables 284 075 176 577

Total assets pledged as collateral 707 003 475 938

The company has issued a guarantee of NOK 10 mill in favour of ABG Sundal Collier Eiendom AS.

64 Notes to the Financial Statements – Parent Company

Note 8 – Wages and Social Costs

2005 2004

Fees to external board members 300 200Social security tax 42 28Other costs 23 0

Total wages and social costs 365 228

The company has no employees.External board members have received fees of NOK 300,000, and NOK 100,000 in consulting fees in 2005.

There are no specific agreements regarding salary at termination or change of conditions of employment for the Chairman of the Board, other members of the Board or the management. The CEO and two other board members (Arild A. Engh andCarl Palmstierna) are partners in ABG Sundal Collier Group and receive through this a salary/ remuneration, bonus and/orprofit participation.

The accounts for 2005 include a fee to the auditor Deloitte and associated companies of NOK 287,500 for audit services,NOK 56,250 for tax-related services and NOK 54,200 for other non-audit services.


Note 9 – Shareholder Information

There are a total of 269,289,001 shares at face value of NOK 0.23 in the company. The Company has forward-agreements withpartners purchasing a total of 38,839,000 shares from the company with settlement in 2006-2009. The Company owns 37,750Treasury shares. The Company has authorisation to re-purchase its shares in the market or to issue new shares. In 2005, theCompany purchased 112,500 shares at NOK 25,875 to cover the forward-agreements, and in 2005 the Company sold 4,790,000shares to partners at NOK 20,909,244 regarding previous forward-agreements and purchases by new partners.

Overview of shareholders registered in VPS on 31.12.05:Number of shares Share

Vika 45 AS (controlled by partners of ABG Sundal Collier ASA) 45 817 149 17.0 %Sanden AS (controlled by Jan Petter Collier and his family) 30 473 927 11.3 %SEB Enskilda 6 555 829 2.4 %Carl Palmstierna 6 400 000 2.4 %Goldman Sachs & Co 6 312 500 2.3 %Fidelity Funds - Eur. Sm. Comp 5 882 692 2.2 %Goldman Sachs International 4 816 100 1.8 %State Street Bank & Trust Co. 4 684 755 1.7 %David Feinburg 4 640 000 1.7 %Paul Sisson 4 000 000 1.5 %Anders Bråtenius 3 800 000 1.4 %Stichting Shell Pensioenfonds 3 682 590 1.4 %Credit Suisse First Boston 3 500 000 1.3 %Straumur - Burdaras Investment 3 403 611 1.3 %Sigmund Håland 3 015 578 1.1 %Skagen vekst 2 980 000 1.1 %Bank of New York, Brussels Branch 2 956 000 1.1 %Morgan Stanley & Co Inc. 2 927 100 1.1 %BNP Paribas Sec. Services Paris 2 880 000 1.1 %Storebrand Livsforsikring 2 683 737 1.0 %Other shareholders 117 877 433 43.8 %

Total 269 289 001 100 %

Board members, shares owned directly and indirectly as at 31.12.05

Terje Moe Gustavsen, Chairman 100 000Arild A. Engh 1) 6 875 167Merete Haugli 0Gunn Ovesen 0Per Anders Ovin 0Michael Tetzschner 01) Owned through partial ownership of Vika 45 AS

Leading personnel, shares owned directly and indirectly as at 31.12.05:

Jan Petter Collier, CEO (incl. shares owned by his family) 30 473 927Arild A. Engh, Global Head of Corporate Finance 1) 6 875 167Carl Palmstierna, Managing Partner Sweden 6 400 000 Has obligation to purchase additional

1,000,000 shares through forward-agreement.David Feinburg, Global Head of Sales 4 640 000 Has obligation to purchase additional

300,000 shares through forward-agreement.Geir Ringstad, Global Head of Prop. trading & Risk 1) 3 951 406 Ståle Rodahl, Head of Oslo Sales 1) 3 350 000 Has obligation to purchase additional

100,000 shares through forward-agreement.Mats Kummelstedt, Global Head of Research 2 240 000Steinar Nordengen, CFO 1) 1 037 786 Has obligation to purchase additional

348,000 shares through forward-agreement.Tore Grøttum, COO 0 Has obligation to purchase 500,000 shares

through forward-agreement.Eivind Haugan, Global Head of Compliance 0 Has obligation to purchase 1,000,000 shares

through forward-agreement.

1) Holdings include proportional part of shares owned through Vika 45 AS and shares owned by companies controlled by thepartner.

6969Auditor´s Report

Aud i to r ' s Repor t

71Group Management

Group Managemen t

ORGANISATIONAL STRUCTURE

Board of Directors

• Terje Moe Gustavsen (Chairman)• Arild Engh• Merete Haugli• Gunn Ovesen• Per-Anders Ovin• Michael Tetzschner

Executive Committee1)

• Jan Petter Collier• Arild Engh• David Feinburg• Mats Kummelstedt• Carl Palmstierna• Geir Ringstad• Ståle Rodahl

1) As of April 2nd 2006, Petter Bjertnes and Andrew Stuttaford will join our Executive Committee and Mats Kummelstedt will take up the position as managing partner in London.

CEOJan Petter Collier

CFOSteinar Nordengen

ComplianceEivind Haugan/Douglas Miller

Equity ResearchMats Kummelstedt

DenmarkGustav Lassen

Equity SalesDavid Feinburg

NorwayJan Petter Collier

Prop Trading & RiskGeir Ringstad

SwedenCarl Palmstierna

Corporate FinanceArild Engh

UKDavid Feinburg

OperationsTore Grøttum

USAAndrew Stuttaford

EXECUTIVE COMMITTEE

Jan Petter Collier (55)Jan Petter Collier was one of the two foundersof Sundal Collier in 1984. He was ExecutiveChairman from 1992, and in 2004 he becameChief Executive and Managing Partner of theOslo office. Prior to founding Sundal Collier hewas Chief Executive of Tennant and DeputyGeneral Manager of Rogalandsbanken.

Carl Palmstierna (52)Carl Palmstierna joined the firm in 2002 andis now Managing Partner of the Swedish officeand deputy head of the Corporate FinanceDivision. Before joining ABGSC, Palmstiernaworked in the investment banking industry(1977-1998) in London and New York, primarilyat (1986-1998) Goldman Sachs where he waselected Partner in 1992. In 1998 he movedback to Sweden and spent four years inprivate equity before joining ABGSC.

Arild Engh (42)Arild Engh joined Sundal Collier in 1993and has been Global Head of the CorporateFinance Division since 1999. Engh is a memberof the Board of ABGSC. Before joining SundalCollier, he was involved in the cruise andoilservice sectors.

David Feinburg (54)David Feinburg joined ABG in 1997 and isGlobal Head of Equity Sales and ManagingPartner of the London office. Before joiningABG, he worked for Goldman Sachs from 1979,the last three years as Head of European Sales.

Mats Kummelstedt (40)Mats Kummelstedt joined ABG in 1998 and isGlobal Head of Research, a position he hasheld since 2000. Over the last 15 years heworked with Nordic Equities for domestic andinternational institutions. Prior to joining ABGhe worked for Svenska Handelsbanken 1991-1996 (New York, London) and HSBC 1996-1998(London).

Ståle Rodahl (41)Ståle Rodahl joined the firm in 2002 andis now Head of Equity Sales in Oslo. He hasmore than 15 years experience in sales andresearch domestically and internationally,primarily related to various positions inAlfred Berg/ ABN AMRO.

Geir Ringstad (45)Geir Ringstad joined Sundal Collier in 1991and is now Global Head of Proprietary Trading& Risk. Ringstad has held a number of leadingpositions in the firm both with respect toEquities and Fixed Income.

72 Group Management

SETTING THE COMPLIANCE ETHOS AT ABGSC

The importance of managing potentialconflicts in an investment bank is a verycritical issue for the firm and we use signifi-cant resources in establishing guidelines toensure that we maintain a compliant culturethroughout the firm. Below we have summa-rized the basic truths and operating princi-ples that form the basis for our compliancework.

Basic truth #1

The integrity of each person in a firm will either support or undermine the reputationof all. Any organisation that is seen to tolerateless than the highest standards of integrity asa result of the questionable behaviour of anyof its people will lose trust. In a business likeours, such a breach will have a very directand negative impact on the firm.

Basic Truth #2

The attitude of a firm's leaders will set thetone for those around them.

If leadership cheats, the message to others is that such behaviour is acceptable. If leader-ship fails to set high standards in all areas,the message to others is that laxity is okay. If leadership is seen to place the short-termdeal above the longer-term integrity value of our franchise, others will follow. None ofthese behaviours is acceptable in the contextof the ABGSC partnership.

Basic Truth #3

Shortcuts are inherently flawed and thoseflaws will surface sooner or later.

Good advisors must be understood to giveconsidered, robust and well-reasoned advice.Shortcuts are inconsistent with this and willcompromise a reputation for thoroughnessand probity.

Basic Truth #4

Transparency, independence and fairnessalways strengthen integrity.

The overriding idea here is simple – no oneshould ever be able to suggest or infer thatwe do not hold to the highest standards ofethics in our daily activities. No one in thefirm is above these rules and they will beenforced with the passionate commitmentour clients would expect from us and that weshould expect of ourselves.

Basic Truth #5

The potential for conflicts is inherent in ourbusiness. How we handle them is what makesthe difference between public confidence andpublic disdain.

Basic Truth #6

There are always some people who will seekunfair advantage.

Clients have a right to assume that we areknowledgeable, sophisticated professionalswith an understanding of the markets inwhich we operate, the way its participantsbehave and the dangers that can accompanyany investment decision. Naiveté must not beallowed to compromise the value of our advice.

Basic Truth #7

You can delegate many things in business but NOT your responsibility for the ethics andstandards of yourself and those around you.

At ABGSC, we have always espoused the notionthat the effective management of conflict isthe business of management in investmentbanking. What this means in practice is thatwe have a broad framework of principles within which to operate whereby managersexercise supervision in their areas of responsi-bility across the firm. This is what managementis all about and it cannot be delegated. Indeed,the principles-based approach taken by Euro-pean regulators consistently emphasizes thatmanagement responsibility must reflect thedifferences that exist from firm to firm. Euro-pean regulators have resisted rigid, universalstandards in favour of our own use of judge-ment. That puts a burden on each of us to beknowledgeable, observant and active in seek-ing a compliant culture throughout the firm.

73Group Management

74 Group Management

If there are a small number of inescapabletruths about our business, they must be refle-cted in the fundamental operating principlesof the firm to ensure good governance and a compliant culture. The principles below canbe elaborated extensively and our GroupCompliance & Business Standards do just that,but the essence of our governance culture iscaptured accurately in these four basic points:

Operating Principle #1

When we publish research, it is objective.ABGSC must never be perceived as havingcompromised in this area or the credibility of our business model will be compromisedas well. Much of our approach to conflictmanagement is the common sense out-growth of this imperative.


The boundaries between research and all the other areas of our firm must be clearlydefined so that analysts are never placed in a potentially compromising position. Thismeans that research cannot be too closelyidentified with the management's of thecompanies followed, cannot be thought to be providing direct assistance or be influ-enced by corporate finance and must notpermit the special knowledge they haveabout future research to be compromised.


Corporate finance management must exercisecare regarding the way in which they ask forgeneral help from research and the point atwhich that help must stop. Corporate financemanagement has a direct responsibility toensure that analysts are not compromised bytheir association with transactions and thatsuch a perception does not develop.


Equity capital market (“ECM”) situations createperhaps the greatest potential for conflict orthe appearance of conflict. It is in such trans-actions that sales may be drawn intoawkward circumstances and regulators arevery aware of how the book building processworks in theory as well as practice. Issue size,pricing and client allocations are all areas inwhich the possibilities for perceived or actual conflict are very real. Both Equities and ECMmanagement share a responsibility to preventcircumstances that might call our position intoquestion.

75

78 Shareholder Information & Corporate Governance

The basic organisation of ABG Sundal CollierASA (ABGSC) reflects its legal structure as alimited liability company in Norway. Theorganisation is also influenced by its underly-ing Partnership ethos and the way in whichpartnership-shareholder interests help toensure an atmosphere of continuity, long-term development and a coincidence of inter-ests with our broader shareholders group.

Board of Directors

The highest-level governance body of the firmis its Board of Directors. The Board determinesbroad policy, strategy, standards and procedu-res for the firm, generally upon the recom-mendations of management. The Boardretains sole discretion over its decisions andwill call upon external resources for supportwhen deemed appropriate.

The governance, management structure andprocedures of ABGSC must conform to allcurrent legal and regulatory requirements aswell as the evolving needs of a growing orga-nisation in a rapidly changing environment.

In 2005, ABGSC increased the number of non-executive boardmembers. The Chief executivestepped down from the Board and the firm’sBoard now has a majority of non-executivedirectors.

Executive Committee

The core decision-making group of the firm isthe Executive Committee (Excom). That groupis composed of seven members, the composi-tion intended to include both functional headsand all key geographic interests of the firm.The Excom is chaired by the Chief Executive.The Group Compliance Officer (GCO) is an exofficio member of the Excom, receives allExcom papers and attends Excom meetings athis/her discretion. The role and functions ofthe Excom include decisions relating to allsubstantial business matters at the firm.

Divisions

ABGSC is organised into two functionallybased operating divisions in a matrix withfive primary geographic entities. The numberof functional divisions will vary over time asand when the firm adds to its current rangeof services. Each division is headed by a Mana-

ging Partner, as is each geographic unit. TheDivision heads report to the Chief Executive.

In addition, the Compliance and RiskManagement functions are global across thefirm and report directly to the ChiefExecutive. In circumstances he/she deemsappropriate, the GCO will also have directaccess to the Board.

The Partnership

ABGSC is a publicly listed company born from apartnership tradition. In conjunction with thecompany’s creation, it was agreed that the bestinterests of all stakeholders would be served bymaintaining the partnership tradition by crea-ting a structure that retained the basic ethos ofa partnership within the broader context of ashareholder owned listed company. The part-nership model has permitted the company toimprove the retention of key staff while closelyaligning the interests of staff and shareholders.Partners held 49.7% of total shares as at 31December 2005. In addition partners of thefirm held forward contracts in ASC shares thatwould bring the ownership up to 56.0% oftotal shares.

In 2004, the Board of ABGSC reviewed thepartnership programme of the firm with aview to making it more responsive to the com-pany’s changing needs and the changing com-petitive environment. As a result of this review,the firm has implemented a model governingthe acquisition of partner shares (which arerestricted) and the sale of such shares after aminimum holding period that is set at threeyears. Also, partners will be permitted to dis-pose of a limited proportion of their partnershares annually after the initial holding periodthrough a company sponsored sale process.The Board anticipates that this will improvethe overall liquidity of the shares for investorswhile creating a legitimate opportunity forlong standing partners to better balance theirportfolio of assets. It is the intention of thepartnership that it will continue to retainaround 50% of shares outstanding over time(including forward contracts).

SHAREHOLDER INFORMATION

Listing

ABG Sundal Collier is listed under the ticker

Sha reho lde r In fo rma t ion & Corpora t eGove rnance

code “ASC” on the Oslo Exchange. As of 31 December 2005 the Group had a marketcapitalisation of NOK 2,370 million.

Share capital

As at 31 December 2005, the share capital of ABG Sundal Collier was NOK 61,936,470.23divided into 269,289,001 shares of NOK 0.23each. The Group held a total of 37,750Treasury shares per 31 December 2005 andhas agreements with partners purchasing38,971,250 shares with settlement in theperiod 2006-2008. The settlement price ofthese shares are between NOK 0.90 and NOK 7.30 per share. ABGSC has authorisationto re-purchase its shares in the market or toissue new shares.

Share price development

The closing price of the ASC share as at

31 December 2005 was NOK 8.80 per share,compared to NOK 7.39 as at 31 December2004. Adjusted for dividends of NOK 1.10 pershare, shareholders have had a total returnof 34.0% during 2005. The Oslo BenchmarkIndex (OSEBX) increased by 52.2% during thesame period.

Share Price Development and Volume - 2005

79Shareholder Information & Corporate Governance

Equity-related Key Figures

Key Figures (in NOK unless otherwise stated) 2005 2004 2003 2002

ASC shareHighest share price (closing price) 9.00 7.39 4.80 4.79Lowest share price (closing price) 5.20 4.15 2.20 2.20Share price as at 31 December 8.80 7.39 4.80 2.65

Number of outstanding shares (in 1,000)Number of shares at 31 December 269 289 262 874 264 045 261 036Average number of shares 1) 302 810 269 307 261 456 253 552

RatiosEarnings per share 1.14 1.12 0.41 0.22Book value per share 2) 2.74 2.19 1.57 1.64Payment to shareholders 3) 1.40 1.10 0.50 0.50Price/Earnings ratio (P/E) 7.7 6.6 11.7 12.0Price/Book value per share (P/B) 3.2 3.4 3.1 1.6Yield to shareholders 15.9 14.9 10.4 18.9

2004 and 2005 based on IFRS. 2002 and 2003 based on Norwegian GAAP

Shareholders and shareholder structureAs at 31 December 2005, ABGSC had 3,918shareholders. The corresponding figure ayear earlier was 4,085. The 20 largest share-

holders held 56.2% of the total sharesoutstanding, while the direct and indirectownership of the Company’s partners was49.3%, excluding forward contracts.

9.409.209.008.808.608.408.208.007.807.607.407.207.006.806.606.406.206.005.805.605.405.205.00

12 000

10 000

8 000

6 000

0

4 000

2 000

Volume Close

3-Jan

31-Jan

28-Feb

31-Mar

28-Apr

31-May

30-jun

29-Jul

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30-Dec

1) Including the effect of shares on forward contracts and treasury shares.2) Including any unpaid dividend for the year and adjusted for treasury shares.3) Payment to shareholders by dividends, reduction in the share premium fund or past year end interim dividends.


Overview of shareholders registered in VPS per 31 December 2005:

No Shareholder Number of shares Share

1 Vika 45 AS1 45,817,149 17.0 %2 Sanden AS2 30,473,927 11.3 %3 Skandinaviska Enskilda Banken 6,555,829 2.4 %4 Carl Palmstierna 6,400,000 2.4 %5 Goldman Sachs & Co 6,312,500 2.3 %6 Fidelity Funds - Eur. Sm. Comp 5,882,692 2.2 %7 Goldman Sachs International 4,816,100 1.8 %8 State Street Bank & Trust Co 4,684,755 1.7 %9 David Feinburg 4,640,000 1.7 %10 Paul Sisson 4,000,000 1.5 %11 Anders Bråtenius 3,800,000 1.4 %12 Stichting Shell Pensionsfund 3,682,590 1.4 %13 Credit Suisse First Boston 3,500,000 1.3 %14 Straumur – Burdaras Investment 3,403,611 1.3 %15 Sigmund Håland 3,015,578 1.1 %16 Skagen Vekst 2,980,000 1.1 %17 Bank of New York, Brussels Branch 2,956,000 1.1 %18 Morgan Stanley & Co 2,927,100 1.1 %19 BNP Securities Service 2,880,000 1.1 %20 Storebrand Livsforsikring 2,683,737 1.0 %

Total top 20 shareholders 151,411,568 56.2 %Other shareholders 117,877,433 43.8 %

Total outstanding shares 269,289,001 100%

1) Company controlled by group of working partners of the firm2) Company controlled by Jan Petter Collier and his family


Dividend/Reduction of the Company'sShare Premium Fund

The Company has a policy of maintaining ahigh dividend yield to shareholders. Earningsfor 2005 and financial revaluations bookeddirectly to equity will support a dividend ofNOK 1.40 per share.

Due to the negative but temporary effectsarising from Norwegian transitional regula-

tions relating to the taxation of dividendsdeclared in respect of the accounting year2005, the Board has decided to not propose adividend for 2005. It is the Board's intentionhowever, to return cash to shareholders andthe Board will call an extraordinary generalmeeting during Q2 2006 seeking approval ofan interim dividend of NOK 1.40 per share. Inthe event of such approval, we anticipate adividend ex-date in May with payment sometwo weeks after.

Power of attorney to issue new shares

The General Meeting has authorised the Boardto increase the share capital by subscription ofnew shares. The share capital may be increasedby NOK 6,154,547, which equals 26,758,900shares or approx. 10% of the share capital. Theauthorisation is valid until 30 June 2006. Theauthorisation comprises capital increase bynon-cash payment and a right to charge thecompany with special obligations and merger.1,700,000 shares have been issued under the

GRUN

NLAG

Shareholder structure:

Shareholders by size:

Numbers Number ofof shares Percentage shareholders Percentage

> 1,000,000 shares 197,428,174 73.3 % 47 1.2 %> 500,000 shares but < 1,000,000 28,770,321 10.7 % 39 1.0 %> 250,000 shares but < 500,000 18,900,571 7.0 % 53 1.4 %> 100,000 shares but < 250,000 12,821,445 4.8 % 83 2.1 %> 50,000 shares but < 100,000 4,262,959 1.6 % 146 3.7 %> 1,000 shares but < 50,000 6,434,125 2.4 % 794 20.3 %less than 1 round lot 671,406 0.2 % 2,756 70.3 %

TOTAL 269,289,001 100.0 % 3,918 100.0 %

Shareholders by country:

Numbers Number ofof shares Percentage shareholders Percentage

Norway 128,221,742 47.6 % 3,679 93.9 %Great Britain 60,811,061 22.6 % 66 1.7 %U.S.A 28,447,123 10.6 % 37 0.9 %Sweden 24,791,829 9.2 % 37 0.9 %Luxembourg 10,010,852 3.7 % 6 0.2 %Belgium 7,705,905 2.9 % 12 0.3 %Iceland 3,521,611 1.3 % 3 0.1 %France 2,883,437 1.1 % 2 0.1 %Other countries 2,895,411 1.0 % 76 1.9 %

Total 269,289,001 100.0 % 3,918 100.0 %

Partners 49.7 %

Other shareholders 50.3 %


authorisation in 2005 and an additional6,568,000 used in Q1 of 2006.

The Board will propose to the General Meetingto be held 27 April 2006, that the GeneralMeeting issues a new authorisation to issueshares up to aprox. 20% of the share capitaland that the authorisation should be validuntil 30 June 2007.

Power of attorney to purchase own shares

The General Meeting has authorised the Boardto acquire treasury shares, and to acquire char-ges created by agreement relating to its ownshares. The highest nominal value of the sharesto be acquired pursuant to the authorisation isNOK 6,154,547, which equals 26,758,900 sharesor approx. 10% of the Company’s share capital.The authorisation is valid until 30 June 2006.The acquisition, disposal of and acquisition ofcharges created by agreement may be carriedout at the discretion of the Board of Directors,hereunder as part of the company’s incentiveprogram. The Board of Directors purchased112,500 shares and sold 4,789,750 own sharesduring 2005, and booked a loss on these salesof NOK 625,192 (booked directly against share-holder’s equity).

The Board will propose to the General Meetingto be held 27 April 2006, that the GeneralMeeting issues a new authorisation to purchaseown shares and that the authorisation shouldbe valid until 30 June 2007.

Restrictions on shares

As of 31 December 2005, partners of ABGSCheld a total of 133,760,609 shares in theCompany. These shares are subject to salesrestrictions. A total of 88,660,834 shares areheld as “Partner Shares” and regulated bythe Partnership Agreement.

Shareholder rights / General Meeting

ABGSC has one share class, and one share hasone vote at the General Meeting. Thecompany has no rules for negotiability of theshare, but an acquisition of a qualifyingholding (10%) must be notified to TheFinancial Supervisory Authority of Norway(Kredittilsynet) cf. Securities Trading Act, andKredittilsynet can refuse such an acquisition.

Partnership Agreement

Partners in the company own 49.7% of thecompany as of 31 December 2005. We believestrongly that the Partnership model helps usfocus on providing the best advice, the crea-tion of truly long term relationships and aclear understanding of the importance of thebottom line. The partners have entered intoa Partnership Agreement that regulates someconditions between the partner and theCompany. A partner cannot buy shares in theCompany without approval from the Board,nor can a partner sell partner shares withoutapproval from the Board. The PartnershipAgreement also regulates non-competitionand bonuses.

If the Company should receive proposalsinvolving a possible sale or change of controlof the firm, there will be a meeting ofpartners to consider the proposal. In theevent partners representing 51% or morevotes in favour of a sale or change of control,all partner shares will be bound to vote infavour of such proposal at the GeneralMeeting.

Profits to partners and bonuses toemployees

The investment banking industry is characte-rised by strong competition for high qualitypersonnel and a competitive compensationmodel is of great importance in order torecruit and retain competent staff. Compen-sation to partners and employees consists ofa fixed salary and a variable discretionarybonus, the amount of which is dependent ona combination of company results and indivi-dual performance. The size and allocation ofthe bonus pool is decided by the Board uponrecommendation from the Partner Compen-sation Committee. In general, the bonus poolwill be set at 50% of profit before tax less acalculated interest on the average equity ofthe Company.

Board of Directors

The Board shall consist of between 4 and 8directors. Today there are six directors ofwhom one is a partner in the Company. Inorder to secure partner representation on theBoard at all times, the partner representativehas a personal deputy. The Chairman of theBoard is a non-executive. ABGSC has now


completed its earlier commitment to achievecontrol of the Board by non-executives.

The internal directors do not receive compen-sation for their role as directors. TheCompany intends to pay external directorscompetitive fees based on remuneration incomparable enterprises.

Shareholder and Information PolicyABGSC aims to maximise the long-term valueof the Company’s equity. Further, theCompany pursues a predictable dividend poli-cy. The company paid out NOK 0.50 per sharein dividend for 2001, NOK 0.50 in 2002 and2003 through reductions in the share pre-

mium fund, NOK 1.10 per share as dividendfor 2004 and the Board has the intention topay out a interim dividend during the Q22006 of NOK 1.40 to compensate for the lackof an ordinary dividend for the year 2005

The Company will inform the market aboutimportant events, through Oslo Børs releases,quarterly reports and annual reports. Allpress releases and reports are provided onwww.abgsc.com as well as www.newsweb.no.On our website you will also find a generalpresentation of the Company. Quarterlyreports are available online and annualreports are printed and sent to shareholderswith more than 25,000 shares.

85Financial Calendar 2006

Financ i a l Ca l enda r 2006

ABG Sundal Collier ASA has approved the following financial

calendar for the accounting year 2006:

• 27 April 2006, Earnings release 1st quarter 2006

• 27 July 2006, Earnings release 2nd quarter 2006

• 26 October 2006, Earnings release 3rd quarter 2006

• 15 February 2007, Earnings release 4th quarter 2006

The Annual General Meeting will take place on 27 April 2006.

All the dates above are important because they representmilestones toward our core goal during the year – maximisinglong term shareholder value. We look forward to discussingour progress with shareholders on each of these occasions,examining our results, our challenges and our successes.Please join us at 09:00 am on reporting days at our offices inOslo for a presentation of the figures and what they represent.

87Addresses

Norway (Oslo)ABG Sundal Collier ASAPO Box 1444 VikaMunkedamsveien 45DNO-0115 OSLONORWAYTel +47 22 01 60 00Fax +47 22 01 60 60

SwedenABG Sundal Collier ABPO Box 7269Biblioteksgatan 3SE-103 89 STOCKHOLMSWEDENTel +46 8 566 28 600Fax +46 8 566 28 601

Norway (Bergen)ABG Sundal Collier ASARådhusgt. 4NO-5014 BERGENNORWAYTel +47 55 21 60 00Fax +47 55 21 60 60

United KingdomABG Sundal Collier LtdSt. Martins Court10 Paternoster RowLondon EC4M 7EJUKTel +44 (0) 20 7905 5600Fax +44 (0) 20 7905 5601

Denmark (Copenhagen)ABG Sundal CollierEsplanaden 34A,DK-1263Köbenhavn KDENMARKTel + 45 33 186 100Fax + 45 33 186 110

USAABG Sundal Collier Inc535 Madison Avenue17th FloorNew York, NY 10022USATel +1 212 605 38 00Fax +1 212 605 38 01

Addre s s e s

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