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					2006                                 We are


                                              the challengers

          that are revolutionizing




savings
Nordnet – shares, mutual funds and pensions
Nordnet offers user-friendly and cost-efficient services to                                         Luxembourg. The Nordnet Model is designed to make it
private investors and companies investing in shares, mutual                                        relatively easy to add new clients, services, and markets
funds, and pensions. Nordnet is the largest private broker in                                      at low cost. The cost-efficient structure gives us a unique
the Nordic region with some 150,000 account holders in Swe-                                        ability to compete on services, client benefits, and prices.
den, Norway, Denmark, Finland, Germany, and Luxembourg.
                                                                                                   Create growth in several dimensions
Mission                                                                                            Our strategy is to create growth in several different ways:
We are the challenger that is revolutionizing savings.                                               More clients and larger volumes in existing services
                                                                                                     New services on existing markets
Business concept                                                                                     Geographic expansion into new markets
Through innovation and service, improve and simplify                                                 Innovative new services.
private savings in shares, mutual funds, and pension plans
by offering freedom of choice and availability on the best                                         The growth pyramid
possible terms.                                                                                                                   Innovation

Strategy
Nordnet’s strategy to reach its goals concerning satisfied
clients, growth, and financial development is to:
                                                                                                                                                               New
                                                                                                                                   149,500                    markets
Improve and simplify things for clients                                                                                           accounts
Our ambition to improve and simplify things for our                                                New                                                          New
clients can be summarized in four main points:                                                   services                                                     services

    Freedom of choice
    Availability                                                                                                Larger volumes in existing services

    Innovation and creative thinking
    Best possible terms.
                                                                                                   Naturally, you can’t pull off a revolution without innovation.
Operate in a cost-efficient manner                                                                  We always ask ourselves whether things can be done dif-
We base our operations on the Nordnet Model, which means                                           ferently and better. We aim to constantly make things easier,
business is concentrated in Stockholm in a single organi-                                          smarter, and cheaper.
zation and infrastructure while operating on the markets
in Sweden, Norway, Denmark, Finland, Germany, and                                                  For the client’s best!



Nordnet’s financials by geographic market
                                 Sweden              Norway              Denmark              Finland            Germany              Luxembourg             Total
      Share of income, 2006




                                          51.7%                28.9%               12.5%               0.8%                2.7%                    3.3%

                                                                                                                                                          SEK 661.1
                                                                                                                                                            million


                              SEK 341.9 million   SEK 191.2 million    SEK 82.4 million    SEK 5.6 million     SEK 18.1 million       SEK 21.8 million
 operating profit, 2006




                                          51.5%                34.9%               16.2%                                                           5.0%
       Share of




                                                                                               Neg.                Neg.                                   SEK 292.1
                                                                                                                                                            million

                              SEK 150.4 million   SEK 102.0 million    SEK 47.2 million    SEK -6.3 million   SEK -15.7 million       SEK 14.5 million
                                                                                                                       A day at Nordnet
                                                                                                                        134 new accounts are opened
                                                                                                                          45,815 clients log on
                                                                                                                            41,358 trades in shares and derivatives are
                                                                                                                          made on the stock exchanges in Sweden, Norway,
                                                                                                                           Denmark, Finland, Germany, USA and Canada
                                                                                                                              3,948 visits are made to the Mutual fund
                                                                                                     1.4%                 supermarket
                                                                                                                          810 calls are answered in Swedish, Norwegian,
                                                       13.0% 6.9%                                                   Danish, Finnish, and German
                                                                                                                    786 e-mails from Swedish, Norwegian, Danish, Finnish,
                                                                                                                  and German clients are answered
                                                                                                                  6,301 SMS are sent out
                                                                                                                  3,622 news articles from 12 news sources are published
                                                       7.0%                                                       55,810,137 web enquiries are received.



                                                                                                              The largest equity broker
                                                                                                              in the Nordic region
                                                          0.6%                                                The percentages refer to Nordnet’s market share of the
                                                                                                              number of trades done in 2006 on the main exchange
                                                                                                              of each country.




Nordnet’s operations by geographic market
                                   Sweden                 Norway                Denmark                Finland               Germany             Luxembourg              Total
       Share of trades, 2006




                                               42.5%                 28.1%                   14.4%                3.1%                   10.4%                1.5%

                                                                                                                                                                      8,003,000
                                                                                                                                                                         trades

                                   3,403,000              2,248,000              1,153,000              247,000                835,000               117,000
 counts, Dec. 31, 2006
  Share of active ac-




                                               67.1%                  19.7%                  6.3%                 1.2%                   4.5%                  1.2%

                                                                                                                                                                       149,500
                                                                                                                                                                        accounts

                                    100,200                 29,400                 9,400                 1,800                  6,800                 1,900
 custody, Dec. 31, 2006
   Share of assets in




                                              64.8%                  16.4%                   9.5%                 1.0%                   2.3%                  6.1%

                                                                                                                                                                      SEK 49,400
                                                                                                                                                                         million

                               SEK 32,000 million      SEK 8,100 million      SEK 4,700 million      SEK 500 million       SEK 1,100 million     SEK 3,000 million
                                                                                  The year in brief




The year in brief

  Revenues increased by 52 per cent                     Nordnet received several awards and honours
                                                                                                                 Awards and honours
  to SEK 661.1 (434.1) million                          Strong growth in shares, mutual funds and pensions:
  Operating profit increased by 46 per cent                The number of active accounts increased
  to SEK 292.1 (200.1) million                            by 27 per cent to 149,500
  Profit after tax increased by 42 per cent                Total assets in custody increased by 36 per cent
  to SEK 206.7 (145.7) million                            to SEK 49.4 billion
  Earnings per share increased by 42 per cent             Number of trades increased by 42 per cent to 8,003,000
  to SEK 1.25 (0.88).                                     Assets in custody in mutual funds increased
                                                          by 46 per cent to SEK 5.2 billion
                                                          Assets in custody in Nordnet Pension increased
                                                          by 200 per cent to SEK 3.6 billion.


Summary income statements and ratios
                                                                        2006                  2005                  Change
Revenues, MSEK                                                          661.1                434.1                       52%
Operating profit, MSEK                                                   292.1                200.1                       46%
Operating margin, %                                                       44                      46
Profit after tax, MSEK                                                   206.7                145.7                       42%
Profit margin, %                                                           31                      34
Earnings per share, SEK                                                  1.25                  0.88                      42%
Equity, MSEK                                                            691.4                514.4                       34%
Equity per share, SEK                                                    4.19                  3.12                      34%
Capital adequacy ratio, %                                                10.3                  10.9
Number of active accounts                                         149,500                  117,300                       27%
Assets in custody, SEK billion                                           49.4                  36.3                      36%
Deposits, SEK billion                                                     5.9                     4.1                    40%
Lending and margin lending, SEK billion                                   3.3                     2.6                    27%
Number of trades                                                 8,003,000                5,641,000                      42%
Number of employees                                                    238                      164                      45%




Revenues                             Operating profit                             Active accounts                               Assets in custody

MSEK                                 MSEK                                        MSEK                                          MSEK
                                                                292.1                                          149,500                                  49,400
 800                                      300                                   150,000                                    50,000
 700                        661.1
                                          250                                                       117,300                40,000
                                                                                120,000                                                        36,300
 600
                                                        200.1                             101,400
                                          200
 500                                                                             90,000                                    30,000
                  434.1
 400                                      150
                                                                                                                                      20,900
 300    280.5                                   107.4                            60,000                                    20,000
                                          100
 200
                                                                                 30,000                                    10,000
                                           50
 100
   0                                       0                                         0                                            0
        2004      2005      2006                2004    2005    2006                       2004         2005    2006                   2004     2005     2006




                                                                                                                    NORDNET ANNUAL REPORT 2006                   1
      CEO’s comment




    Dear Shareholder,




    Once again I’m writing my comment after another exceptionally           of being honest, dedicated, unconventional and considerate, in an
    good year: 27 per cent more accounts, assets in custody increased       absolutely fantastic way.
    by 36 per cent, our best result ever, extremely satisfied clients, the
    Bank of the Year award in Sweden, great success in pensions and         Will we sit back and blow our own trumpet now when business
    strong international growth. And we will keep our growth goal of at     is going so well? No, we will always be an extraordinarily com-
    least 25 per cent more accounts per year in the years to come. This     mitted challenger. One of our greatest challenges is to adapt,
    means that our goal is to double our client base through organic        change and develop ourselves, as we have grown into a larger
    growth over the next three years. We offer maximum freedom in           company that need a more structured way of working. Parallel
    investment choices, leading online services and the best possible       to this, we must safeguard and strengthen our entrepreneurial
    terms, so your savings will be able to develop as well as possible.     spirit and innovative thinking. Nordnet is a value-steered growth
    A winning combination in our opinion and many investors seem            company and we grew by 45 per cent in 2006 as regards the
    to agree.                                                               number of employees. It’s important that new Nordnet employ-
                                                                            ees are quickly assimilated into our corporate culture, so that we
    What could be more fun and stimulating than steering Nordnet            can move in the same direction together, in unison. We worked
    along the highway of success at full speed? Nothing. We have my         hard during the year with our corporate values, management
    colleagues to thank for our success. They truly live by our values      training and developing our organization, and will continue to


2      NORDNET ANNUAL REPORT 2006
                                                                        CEO’s comment




do so in 2007. Although, I haven’t worked at IKEA and have no         slightly higher level. Our marketing efforts are very beneficial in
detailed insight into its business, I usually refer to this company   a good market, while it’s also important to increase knowledge of
as an example of what we are in the process of creating – with        our brand as we expand our product offering with mutual funds
the difference that we work with savings. An international            and pensions. In 2006, our brand-recognition increased signifi-
growth company with an institutionalized entrepreneurial spirit       cantly in Sweden.
where innovation, freedom of choice, continual improvements
and simplifications are the best possible ingredients in a recipe      I usually comment on cuts in prices and margins. This is an im-
for success.                                                          portant topic, so I’ll mention it here too. In share trading, it’s clear




‘‘
                                                                      that price cuts will continue as regards the actual execution of a
        The revolution continues!                                     share trade. The overall picture, however, is a little more complex.
                                                                      If commissions continue to drop, it may lead to account, infor-
        Free your savings!                                            mation and other services – which are currently partly funded
                                                                      indirectly through commissions – being charged directly. This
We take increasingly more responsibility for our clients and their    trend can already be seen among some market players. Within
savings. When we offer freedom of choice, we shall also help our      mutual funds and pensions, I see no cuts in margins in relation to
clients make use of the opportunity. Otherwise this freedom of        current levels as things stand.
choice can be seen by some as complicated and daunting. The
best example of our increasing responsibility is the NordnetSchool    “First with the latest” is as appropriate today as it was ten years
and its success. The demand for investment knowledge and how to       ago when as a newly started challenger we used it in our market-
use our services for shares, mutual funds and pensions is greater     ing. In 2006 we were showered with awards and honours. In
than we ever imagined. Last year our Oslo office arranged 75           Norway, Denmark and Germany we were named the best and least
courses attended by 2,000 participants. In Sweden we launched         expensive in various contexts. In Sweden we made the grand slam
the NordnetSchool toward the end of the year and have already         with two of the most prestigious awards. We were named Bank
had to increase the number of courses.                                of the Year by the Swedish finance magazine, Privata Affärer,
                                                                      and Sweden’s best website in the Banking & Finance category by
We have an exceptional growth potential right around the corner.      the Swedish magazine Internetworld. In Denmark Nordnet was
Given that our product offering is complete only in Sweden, with      named Bank/Broker of the Year 2007. Naturally, these awards are
services in shares as well as in mutual funds and pensions. In the    of great encouragement to us. But despite all the praise, in 2007
coming years we’ll launch mutual funds and pension products on        we’ll launch a completely new website. However, in order to be
several of our existing markets. Our development in Norway has        Bank of the Year, a good website is not enough. We must also pro-
been remarkable, but the potential is even greater and that’s why     vide the best service offering on the best terms. We conducted a
we’re starting there. Next in line is Denmark, where we’ve also had   client survey just before the end of the year and found that 95 per
good development and where pensions are of particular interest.       cent of our clients are satisfied. But we won’t be content with this.
In Finland things are looking very exciting and at the end of the     In 2007 we’ll launch a number of new services to further improve
year growth really took off. In the Finnish market it’s important     and simplify our clients’ investment activities. And of course this
that we first add mutual funds alongside shares. In Germany we’ll      will increase our growth potential. Among other things, we’ll take
introduce trading on the Eurex derivative exchange toward the         the step towards being a full service bank on the Internet in 2007
end of 2007. This and other improvements in our product offering      by launching several new banking services in Sweden, such as
are important for increasing growth in Germany. We’ll also aim at     the possibility to pay bills, transfer funds and receive salaries via
establishing operations in one or more markets in Eastern Europe.     Nordnet. Everything connected to the Nordnet account, of course.
There are many issues to solve if our strategy is to be applied
there, but my hope is to have launched our services in one Eastern    Free your savings! Start saving with us.
European market by mid-2008.

2006 was a year of major investments in personnel, expanded
infrastructure and marketing. In 2007 we’ll continue to add to our
team, but at a slower rate. Marketing will remain at the same or a    Klas Danielsson, CEO


                                                                                                      NORDNET ANNUAL REPORT 2006                 3
      Mission and business concept




    We revolutionize savings

    At Nordnet, we have a lodestar for everything we do –                   revolutionizing pension savings when we launched an individual
    our mission:                                                            pension savings, IPS, with the best terms on the market. Since
    We are the challenger that is revolutionizing savings.                  then we’ve launched a complete offering of pension products with
                                                                            revolutionary possibilities and conditions.
    Naturally, you can’t pull off a revolution without innovation. We
    always ask ourselves whether things could be done differently           Improving and simplifying things for our clients is our business. If
    and better. We aim to constantly make things easier, smarter and        we succeed in this, client satisfaction increases, which attracts even
    cheaper. For the client’s best.                                         more clients. So it creates growth. And many satisfied clients pave
       Another key concept is freedom of choice. This is often lacking      the way for good financial results. So it creates profitability – on the
    in the financial market, where many players prefer to sell their         condition that we run our business in a cost-efficient manner.
    own products with high margins. For us, objectivity is important.
    For the client’s best.                                                  A decade of revolution
       The way in which we carry out our revolution is summarized in        Nordnet’s savings revolution began ten years ago. Here are a few
    our business concept:                                                   examples of how savings has been made easier, smarter and cheaper.
    Through innovation and service, improve and simplify private
    savings in shares, mutual funds and pension plans by offering            2006     Tjänstepension, an occupational pension offering the best
                                                                                      terms on the market, is launched as well as a
    freedom of choice and availability on the best possible terms.                    Structured products supermarket.


    Our driving force is the desire to continually improve and simplify      2005     Insurance and pension products are launched, such as
    matters for our clients. We help private investors improve their                  Kapitalpension, with no insurance fees and full freedom
                                                                                      of investment in shares and mutual funds, and Kapital-
    finances by offering lower fees, better services and more freedom                  försäkring with the possibility to current withdrawals.
    of choice. Quite simply, we make people richer.
       We’ve been doing this for more than ten years and there’s no
                                                                             2004     The first step in revolutionizing pension savings is taken
    doubt as to whether we’ve created a revolution.                                   through the launch of Individuellt Pensionssparande (IPS,




    ‘‘
                                                                                      individual pension savings), offering the best terms on
                                                                                      the market with a minimum commission of just SEK 39.
            Revolution demands
                                                                             2003     Aktiedirekt is launched with an extremely low minimum
            innovation.                                                               commission of SEK 9.


    Until the mid-1990s, all share trading involved a middleman and          2002     Nordnet Hedge – Sweden’s first marketplace for hedge funds
                                                                                      is launched.
    this meant delays. The client had to submit an order to a bank or
    a broker and then wait to find out when and at what price the deal
    went through. Administration was mostly manual, a very costly            2001     WinTrade, a Windows-based trading application, is launched.

    process for the client.
       Then, the Internet and Nordnet arrived. Technical advance-            2000     A short selling service is launched.
    ments suddenly made it possible to dramatically optimize the
    entire share trading process. The major banks and traditional
    sharebrokers, however, had little interest in improving services         1999     First online broker to offer trading in mutual funds in a mutual
                                                                                      fund supermarket with no additional fees.
    and cutting prices. A challenger was needed to get the revolution
    off the ground. Nordnet became that challenger.
                                                                             1998     First online broker to offer real time trading in options and
                                                                                      futures, and trading in American shares over the Internet.
    And the revolution goes on. There are always improvements to
    make and innovations to create. Nordnet has launched a long list         1997     First online broker to launch an application with real time
    of revolutionary share trading and financial information services.                 share prices.
    And this list will get longer. Our new area in savings to revolution-
    ize is pensions. In the past, pensions have been characterized           1996     One of the first brokers in the Nordic region to offer trading
                                                                                      over the Internet.
    by high fees and little choice. In 2004, we took the first step in


4      NORDNET ANNUAL REPORT 2006
                                                                             Goals




Satisfied clients become
our ambassadors
                                Nordnet’s goals are split into three categories:
Web survey results
                                clients, growth and financial development.
How satisfied are you,
generally speaking, with
being a client of Nordnet?      1. Client focus
                                Satisfied clients become ambassadors
                                Satisfied clients are a must for growth and success.
                                They confirm that we are doing things right while
                                creating ambassadors – clients who recommend
                                Nordnet. This is why we have very strict goals
                                regarding clients and conduct an annual survey on
                                client opinions of Nordnet.




                                ‘‘       95 per cent rated
                                         three or better.
                                                                                            Our Head of research, Peter Malmqvist,
                                In November 2006, 8,988 Nordnet clients com-                held many presentations throughout the
Would you recommend
Nordnet to a friend or          pleted a web survey aimed at our web service users.         year, all well appreciated by our clients.
acquaintance?                   Users of the WinTrade trading application only
               3                participated in the survey to a very limited extent.
                       1
       2                        The charts in the margin show the survey results.        The goal is for 90 per cent of clients to rate Nord-
                                                                                         net’s service four or better by 2008.
                                  By 2008, 90 per cent of those using our web
                                  service shall be satisfied or very satisfied Nordnet   In 2006, 88 per cent of clients rated Nordnet three
                                  clients (rated 4 or better).                         or better and 70 per cent four or better. The best
                                                                                       result was achieved in Denmark, where 83 per cent
      1. Yes        86%         In 2006, 82 per cent rated Nordnet four or more.       of clients rated us four or better.
      2. No          3%
      3. Don’t know 11%
                                95 per cent rated us three or better.
                                                                                         The goal for Client Services is for 95 per cent
                                  By 2008, 90 per cent of clients using our web          of all incoming calls to be answered within
When you contact Nordnet,         service shall gladly recommend Nordnet.                90 seconds by 2007.
do you get excellent service?
                   1            In the 2006 survey, 86 per cent said they would        In 2006, 92 per cent of the calls were answered
           2           5
                                recommend Nordnet. 11 per cent responded Don’t         within three minutes. During the second half
  3                             know, a common response from new clients yet to        of 2006, 95 per cent of all incoming calls were
                                form a definite opinion. Only 3 per cent answered       answered within two and a half minutes.
                                No. This means that of the clients responding Yes or
                       4        No, 96 per cent would recommend Nordnet.                 During Client Services opening hours, 95 per
      Standard of service                                                                cent of enquiries received by Nordnet’s mes-
      on scale of one to five   At Nordnet, good service means, for example, easy-       sage center and by mail shall be answered within
      1=worst
      5=best
                                to-use and readily available services and the more       30 minutes. 95 per cent of mail and messages
      5. 32%                    traditional friendly and helpful reception in areas      received during the night and on the weekend
      4. 38%                    such as client calls, e-mail and general administra-     shall be answered by nine in the morning the next
      3. 18%
      2.   8%
                                tive routines.                                           business day.
      1.   4%




                                                                                                        NORDNET ANNUAL REPORT 2006              5
         Goals




    2. Growth                                                                   3. Financial development
    Account growth                                                              Capital adequacy
      The goal is to achieve organic growth of at least 25 per cent in          Capital adequacy is the ratio between the capital base (simply put,
      the number of accounts in 2007.                                           equity less intangible assets) and risk-weighted assets (simply put,
                                                                                mainly lending classified into various risk classes and counter-
    In 2006, organic growth totaled 27 per cent, compared to the goal           party risks).
    of 25 per cent.
                                                                                  The goal is for the Group and the bank’s capital adequacy to
    New savings                                                                   not drop below 10.0 per cent.
      The goal for new savings in assets in custody, from new and
      existing account clients, is to amount to at least account growth,        At the end of 2006, capital adequacy stood at 10.3 per cent. In
      that is the minimum of 25 per cent for 2007.                              conjunction with the new capital adequacy regulations applica-
                                                                                ble as of February 1, 2007, this goal may be revised. For more
    In 2006, new savings amounted to about 16.5 per cent, compared              information on the new capital adequacy regulations, see page 51
    to the goal of 25 per cent.                                                 of the Directors’ report.




    ‘‘
                                                                                Solvency ratio
              Largest in the Nordic region.                                     Subsidiary Nordnet Pensionförsäkring AB’s solvency ratio is the
                                                                                ratio between equity less intangible assets and policyholders’
                                                                                (clients’) assets.
    Market shares
      The goal is to see a long-term increase in Nordnet’s market                 The goal is for the solvency ratio to always exceed 1.00 by a
      share of all trades (considering private trade) on the exchanges            good margin.
      of which Nordnet is a member. Nordnet will achieve this by
      gaining an increasing share of private investors’ trade in shares,        At the end of last year, it was 1.76. The statutory requirement is
      warrants, options and futures, through organic growth and                 a minimum of 1.00.
      acquisitions.
                                                                                Operating costs
    In 2006, Nordnet’s market shares generally exhibited a positive               The operating costs, excluding direct sales and marketing costs,
    trend and in the Nordic region Nordnet had the highest total                  are estimated to increase by 25 per cent in 2007.
    market share of all brokers measured in number of trades, includ-
    ing those with instiutional clients. See page 15 for more informa-          In 2006, operating costs amounted to SEK 279.6 million, com-
    tion on market shares.                                                      pared to the goal of SEK 250–270 million. This is equavalent to
                                                                                SEK 23.3 million in operating costs excluding marketing costs
    Nordnet’s market share of the number of trades, %                           per month.
     %
    15                    13.9
                                                                                Acquisition cost per new net account
                                                                         2004
                             13.0                                                 The goal is for the average acquisition cost per new net account
                                                                         2005
    12                                                                   2006     to not exceed SEK 2,500 in direct sales and marketing costs
           8.8 8.6      8.4                                                       in 2007.
     9
                  6.9                       7.0
                                      6.4
     6
                                    4.0                                         In 2006, the average acquisition cost per account was SEK 2,800,
     3
                                                         1.4                    compared to the goal SEK 2,000.
                                                   0.7                   0.6
                                                               0.1 0.3
     0
          Stockholm       Oslo  Copenhagen        Helsinki       Xetra
            Stock        Stock     Stock           Stock       (Germany)
           Exchange     Exchange Exchange         Exchange




6        NORDNET ANNUAL REPORT 2006
                                                                         Goals




                                                                                Breakeven
                                                                                Breakeven is the number of registered trades required
                                                                                to generate enough commission income to cover the
                                                                                     remaining operating costs after cost coverage from
                                                                                     other income.

                                                                                  Expressed as the number of trades per trading day,
                                                                                breakeven for 2007 will be between 4,000 and 8,000.
                                                                                As the long-term cost coverage goal is 100 per cent,
                                                                                the long-term breakeven goal is zero trades per day.

                                                                                In 2006, breakeven was 7,800 trades per trading day,
                                                                                compared to the estimated breakeven between
                                                                                4,000–8,000.
                                            Lennart is representing
                                          Nordnet at a Share trading
                                                  fair in Stockholm.


Cost coverage                                                          Cost coverage ratio per year
Cost coverage is the share of total operating costs that are covered       %
by non-direct transaction-related commission income.                    100

                                                                         80            71                   72                  74
  The goal for 2007 is a cost coverage ratio of 70–75 per cent.
  Increased marketing costs have a negative effect on cost cover-        60

  age. The long-term goal is to achieve a cost coverage of 100           40
  per cent.
                                                                         20

In 2006, cost coverage was 74 per cent, compared to the goal of           0
                                                                                     2004                  2005                2006
70–75 per cent. Excluding marketing costs, the cost coverage was
97 per cent.                                                           Operating income excluding transaction-related income in relation to
                                                                       operating costs.




Quarterly breakeven analysis per month

                                                  Q1 06        Q2 06   Q3 06         Q4 06       Q1 05            Q2 05     Q3 05        Q4 05

 Costs, MSEK                                       28.7         30.1     29.2          36.2        18.5            19.5      19.7         22.9
 Operating income excluding transaction
 commission income, MSEK                           21.6         23.3     21.5          25.6        12.4            13.2      14.7         17.6
 Cost coverage ratio, %                              75           77      74            71           67             68         74             77
 Transaction commission income
 required for breakeven, MSEK                       7.1          6.8      7.7          10.6         6.1             6.3       5.0             5.3
 Net income per trade, SEK                           50           49      46            47           43             44         49             48
 Number of trades per day for breakeven           6,600        6,600    7,700        10,600       6,900           6,700     4,700        5,200
 Number of trades done per day
                                                 33,700       34,200   24,700        31,600      19,900          19,100    23,500       25,900




                                                                                                          NORDNET ANNUAL REPORT 2006                7
      Strategy




    Improvement and simplification –
    a natural strategy
    In order to reach our goals, we apply a three-pronged strategy:        Finally, we offer all this on the best possible terms. We can do
                                                                           this because we run a very cost-efficient business. Our terms are
      to improve and simplify things for clients                           also important for other reasons. Such as the fact that we never
      to create growth in several dimensions                               employ conditions that bind clients to us or otherwise restrict their
      to operate in a cost-efficient manner.                                flexibility.

    Improve and simplify                                                   Create growth
    To improve and simplify things for our clients is the natural          The technical development, in combination with the harsh com-
    linchpin of our strategy. If we succeed in this, client satisfaction   petition, continue to cut prices and reduce margins. This makes it
    increases all the more, which in turn helps increase client            increasingly important to increase transaction volumes to com-
    numbers. And many satisfied clients pave the way for good               pensate for decreasing margins on transactions. Parallel to this, it’s
    financial results. In other words, the three areas into which we        becoming increasingly difficult for clients to differentiate between
    have divided our goals on the previous pages: clients, growth and      different players’ services. This increases the need to stick out from
    financial development.                                                  the crowd and innovation becomes vital to future success.
    Our ambition to improve and simplify things for our clients can
    be summarized in four main points.
                                                                           The growth pyramid            Innovation




    ‘‘      The Nordnet Model is
            cost-efficient.
                                                                                                                                       New
                                                                                                          149,500                     markets
    The first is freedom of choice. We offer our investors as wide a                                      accounts
    choice as possible of the shares, mutual funds and pensions avail-       New                                                         New
    able on the market. True freedom of choice requires independ-          services                                                    services
    ence, that is, we must refrain from producing inhouse products
    such as mutual funds and fund management services. Instead, we                         Larger volumes in existing services
    are objective. We are brokers who mediate, improve and package
    what the market offers in the most attractive way possible.
       We consider the opportunity to develop a savings portfolio          Nordnet’s strategy is to create growth in several different ways,
    without referrals to the broker’s proprietary products to be in the    as illustrated by the growth pyramid shown above. Our growth has
    client’s best interest. This is where we stick out from most other     four dimensions:
    players in the market, including some of our direct competitors
    which, in addition to acting as online brokers, have also begun          More clients and larger volumes in existing services, wich,
    producing inhouse products.                                              among other things, refers to the current growth. We also create
                                                                             volumes through cooperation with partners such as investment
    Availability is the second main point. We have a technical and           management companies and financial advisors.
    administrative system that is fast, reliable and easy to use. Trad-      By gradually introducing more of our services on our existing
    ing takes place in real time with no middlemen. And Nordnet can          geographic markets. One example is mutual funds and pen-
    be contacted in several ways.                                            sions, which are being launched in the other Nordic countries
                                                                             during 2007.
    Innovation and fresh approaches are essential when creating              By entering completely new geographic markets. We aim at es-
    something to improve and simplify. We continually strive to              tablishing operations in one or more markets in Eastern Europe
    further improve our services. Innovative services enable clients to      during the next few years.
    truly benefit from the wide choice.                                       Innovation. We work hard to continue profiling Nordnet as the
                                                                             most innovative player in the industry – as the player who con-
                                                                             stantly creates new value-added for the client. The launch of our
                                                                             new web service in 2007 will be a good example of innovation.

8     NORDNET ANNUAL REPORT 2006
                                                                          Strategy




                                                                        services and markets. As a result, we can expand our client base,
Share of trades made by clients outside Sweden                          broaden our service offering and increase the number of geo-
   %                                                                    graphic markets at low costs. The model is also very well suited
100                                                                     to rapid international expansion. We can begin operating in a
 80
                                                                        new country without the need to acquire local offices or recruit
                                                    57
                                                                        personnel.
 60                             56
                                                                           As the Nordnet Model facilitates entering new markets, it also
             38                                                         helps spread risks in the Group. Nordnet has extensive operations
 40
                                                                        in several countries, leaving us well equipped to survive fierce
 20
                                                                        competition in any one of these markets for some time.
  0
           2004                2005                2006
                                                                        Economies of scale and cost-efficiency are deciding factors.
                                                                        Nordnet’s cost-efficient structure gives us a unique ability to com-
                                                                        pete on services, client benefits and prices. There are countless
Cost-efficiency                                                          companies that talk about the EU as a single market. Nordnet is on
In order for client satisfaction and growth to lead to good financial    the way to realizing that vision.
results, we must also run our business in a cost-efficient manner.          Size also means that we have resources to develop and improve
This is achieved with the Nordnet Model, which means business           a broad service offering. In the long run, local players will find it
is concentrated in Stockholm while we operate in markets in             difficult to make the necessary investments.
Sweden, Norway, Denmark, Finland, Germany and Luxembourg.                  The Nordnet Model is unique when compared to our competi-
Clients meet Nordnet locally on their computer screens.                 tors, which to varying degrees operate through autonomous units
   The system is designed to make it easy to add new clients,           in each country or tend to focus on a single market.



The Nordnet Model

         Nordnet         Nordnet         Nordnet          Nordnet        Nordnet         Nordnet
         Sweden          Norway          Denmark          Finland        Germany         Luxembourg Aktiedirekt           Partners
          www             www             www              www            www             www        www                   www




                  Administration              Infrastructure                  Development                   Operations




                                                                        i i i i
       Mutual fund companies          Stock exchanges                  Information providers           Clearing centres



                                                                                                      NORDNET ANNUAL REPORT 2006               9
       Corporate culture and organization




     Four core values, one corporate culture

     Corporate culture                                                      Rapid expansion, with many new recruits joining our company,
     Nordnet’s lodestar is to be the challenger that revolutionizes sav-    makes this especially important. And we don’t expect new em-
     ings. Together with our business concept this lodestar has created     ployees to absorb a rooted culture all at once. The more we grow,
     our corporate culture. The corporate culture is how we work and        the more important it becomes to have a clear corporate culture
     function in the best way. It is vital to future success.               that as effectively as possible helps us work under our lodestar: to
        Our corporate culture can be described as the common values         be the challenger that revolutionizes savings.
     and behaviors of our employees. It’s the sum of the lifetime expe-




                                                                            ‘‘
     riences of our organization. It’s a shared history that determines
     what’s acceptable and what’s not, what will lead to success and                Our corporate culture is
     what will lead to failure.
                                                                                    a key to success.
     Nordnet’s corporate culture is described by four core values and
     what they mean to us.                                                  The four core values are reflected in everything we do. In our
     We are:                                                                client offering. In our service. In our business development. In the
                                                                            recruitment of new employees. In management training. And in
     Honest.                                                                staff performance reviews.
       We say things as they are and that’s okay                               Equally important is that our core values influence our contact
       We are humble                                                        with clients. In black and white, this means, for example, provid-
       We are frank and clear                                               ing the best possible prices and terms, acting independently and
       We have high moral and ethical standards                             offering great freedom of choice. In our eyes, small clients are as
       We only promise what we can deliver.                                 important as big clients. We take every opportunity to ensure our
                                                                            clients are satisfied and shall always be able to meet them with
     Dedicated.                                                             honesty and pride. We continually improve and simplify
       We get things done and take responsibility, from start to finish      our services.
       We seek information and knowledge
       We have a broad perspective and see the whole                        Organization
       We do that little extra.                                             Nordnet employs a matrix organization, with departmental
                                                                            responsibility working in tandem with process and functional
     Unconventional.                                                        responsibilities. Some examples:
       We seek better solutions
       We dare to try; nothing is impossible                                  The Client desk manager is responsible for all client service as
       We do what others think is impossible                                  well as replies to client enquiries, but also has a number of groups
       We are fast on our feet                                                with subordinate personnel responsible for individual countries
       We like change.                                                        and services. If necessary, work is conducted across units.
                                                                              The Sales managers for each country cooperate with each
     Considerate.                                                             other and with process and function managers with no country
       We care and show respect                                               affiliation.
       We learn from each other                                               Within IT, Nordnet uses a common platform and a common
       We succeed together                                                    system for all countries and services.
       We have respect for money
       We are open and happy to share                                       At the end of 2006, the largest departments were IT and product
       We help out.                                                         development with 49 employees, back office with 46 employees
                                                                            and the client desk with 38 employees. Other large departments
     A strong corporate culture is a characteristic of a successful         are brokers, finance and accounting, marketing, credit and central
     company. This is why we highly value our corporate culture.            administrative functions.
       We strive to make it as clear as possible, as quickly as possible.




10      NORDNET ANNUAL REPORT 2006
                                                                           Corporate culture and organization




The IT and product development department is responsible for
development, projects and the operation and maintenance (O&M)                       Rina welcomes a participant
of all Nordnet systems. These systems include the trading system,                         in the NordnetSchool.
together with underlying systems and client web services and
trading applications, as well as the administrative systems for
trade processing, administration, communication and control.
System O&M, as well as the client side of service and application
development, is handled internally. Some system components are
purchased externally.

The Back office registers new clients and processes trades, as well
as other orders and events, on client accounts. In addition to share
trades, mutual fund trades, cash deposits and withdrawals, securi-
ties transfers, settlement notes, debit card withdrawals, dividends,
new share issues, foreign exchange and more having to be booked
correctly and shown on each individual account, these events also
have to be booked and reconciled with stock exchanges, clear-
ing organizations, mutual fund companies and other banks and             The Broker desk is staffed by Nordnet’s licensed brokers. Clients
brokers.                                                                 without access to the Internet, mobile services or voice recogni-
                                                                         tion services can always call in their orders. Our brokers also deal
The Client desk consists of client service and technical support.        with complicated combination orders that can’t be placed over the
Telephone calls, communication via the message center and e-             Internet. Nordnet has a large number of partners, including small
mail from all markets in local languages are handled by the Client       brokerage firms, small independent banks, investment manage-
desk. Enquiries can cover everything from simple questions about         ment companies, financial advisors and insurance brokers. Our
services and prices, through requests for detailed information           brokers assist these partners in various matters, such as in placing
about pension products to user training for the WinTrade trading         orders. Nordnet’s Private Banking clients and other highly active
application.                                                             clients are offered a personal service by our brokers.



Organization chart
                                                                            CEO

                                                              Risk                   Luxembourg

                                                        Human resources             Other activities

                                                          Information


                       IT                Product             Marketing            Client services       Broker desk         Admin & finance
                                       development                                                                         Back office, accounting,
                                                                                                                               legal services
   Sweden
   Norway
   Denmark
   Finland
   Germany
   Pension
   Partners




                                                                                                       NORDNET ANNUAL REPORT 2006                     11
       IT




     More trades on the Nordic exchanges
     than any other broker

     Nordnet’s IT systems are very sophisticated. Due to the enor-           for this are increasing trading volumes and Nordnet mediating
     mous amounts of financial information continuously flowing over           increasingly more information from increasingly more markets
     the Internet between logged-in clients and Nordnet’s systems,           and other sources to increasingly more clients. This requires a
     demands on availability, speed, reliability and security are high.      substantial margin for extreme loads. We are widening the
                                                                             motorway and reduce the risk of traffic jams. In addition, the flex-
     Our clients can trade and save in more than 250,000 different           ibility to meet future needs increases.
     securities in seven markets. Ten stock exchanges are linked                Last year also saw regular investments in the shape of internal
     together for more than 149,500 clients (at the end of 2006).            and external software and systems development, upgrades and
     The system must function 24 hours a day, 365 days a year with-          optimizations, and replacement of components with new, improved
     out interruption and with a very high security level. Moreover,         technology. In 2006, investments in software, development,
     most user activity must be archived for many years.                     licenses and hardware totaled approximately SEK 70 million.




                                                                             ‘‘
     The fact that Nordnet conducts more transactions on the Nordic
     exchanges than any other broker means the demands on us are                     Technology is best when
     high. If anything goes wrong, not only do Nordnet and its clients
     suffer, the entire financial system is also affected. Nordnet’s infra-            it’s invisible.
     structure must be the best available and contain the most reliable
     technical solutions. At the same time, we attach great importance       Availability
     to these solutions being easy to use for clients. Technology is best    Availability is one of the most important characteristics of
     when it’s invisible.                                                    Nordnet’s IT system. This means the system must function without
                                                                             interruption, operate fast, handle large quantities of information
     Investments                                                             and have backup facilities to ensure clients are not affected if
     In 2006, several major investments were initiated and conducted         problems arise.
     to further enhance IT system capacity and reliability. The reasons




                                                                                                 Johan tests a new functionality
                                                                                                 in WinTrade, a real-time trading
                                                                                                 application with, among other
                                                                                                 things, information from seven
                                                                                                 markets and news from twelve
                                                                                                 news agencies.




12      NORDNET ANNUAL REPORT 2006
                                                                                IT




                                                                             ‘‘
Sometimes things go wrong. It’s unavoidable. That’s why we                              Full control over the
attach much importance to the immediate availability of an
alternative in such situations, another subsystem to switch to,                         entire process.
additional hardware and other components to quickly take over,
without our clients’ notice.                                                 compared to employing external consultants. As the entire
                                                                             securities transaction process is part of our core operations, com-
An important factor in reducing the risk of interruption is our              plete control over the entire chain is required in order to achieve
position as our own Internet provider. That is, we have the same             the lowest possible marginal costs. This control provides us with a
status on the Internet as other Internet provides (such as Telia).           high degree of flexibility and enables us to more rapidly develop
This means we avoid the risk of being affected by problems expe-             and launch new services. Moreover, and equally important, we
rienced by an external Internet provider.                                    ourselves are closest to our clients and have the greatest opportu-
                                                                             nities to ensure that development is in their best interest.
Security
Security is of central importance to an Internet-based player. Dur-          With our own in-house development, we retain control over inter-
ing the year we started an upgrade of our security from an already           nal processes and can better understand them, which is important
extremely high level. Simply put, we have drawn even clearer                 if we are to quickly resolve any problems that arise. Further, this
security lines between different parts of our system.                        way is cheaper, at least as long as our in-house development de-
   Continual security improvements are a necessity; in part as we            partment is working at capacity, and that’s a certainty at Nordnet.
grow and add new services, in part as outside threats multiply and           Last, but not least, in-house development leads to greater innova-
take new forms.                                                              tion, which makes it easier for us to expand and create.
                                                                                Our development department is home to broad expertise
In-house development                                                         covering, for example, design, security, networks, databases and
Essentially, all IT development is conducted by Nordnet’s in-                programming. Productivity is high.
house development department. This provides many advantages



Why did you choose Nordnet?




Niels Haack Josefsen, Denmark       Hávard Evensen, Norway          Mats Lundberg, Sweden     Mette Hansgaard, Denmark         Matti Kannasoja, Finland


“I compared prices and          “I got curious about the      “I wanted an account          “Nordnet has a very user-      “I began trading actively in
found Nordnet to be the         NordnetSchool when I saw      with good service and         friendly website that’s both   about 2000. I used to be a
cheapest alternative.”          an advert on the Oslo Stock   low commission. I used        simple and flexible to use.”    client at a traditional bank,
                                Exchange website. I was       another broker before,                                       but changed to Nordnet
                                impressed by the evening      but they didn’t meet my                                      because of the broader of-
                                course I attended in Oslo     requirements. At Nordnet                                     fering, favorable prices and
                                and ended up becoming         I get exactly what I want                                    well-functioning trading
                                a Nordnet client. The         – low commission, good                                       service. I’m very pleased
                                friendly reception in my      availability and very good                                   with the functionality and
                                contact with Nordnet also     service.”                                                    versatility of the service.”
                                contributed.”



                                                                                                             NORDNET ANNUAL REPORT 2006                    13
       Competition and external factors




     Stiffer competition raises
     demands on innovation
     In the first instance, our growth and profitability is affected by          Shares
     how well we succeed in improving and simplifying things for               Within share trading, Nordnet competes with a number of online
     clients while remaining cost-efficient. However, our growth is also        brokers, as well as with major banks and specialist banks offering
     affected by other factors over which we have more limited influ-           securities trading over the Internet. Most competitors mainly focus
     ence. The most important of these is what our competitors do.             on a single country. Nordnet has the broadest coverage of the




     ‘‘
                                                                               Nordic region.
                                                                                   Measured in number of trades, in 2006 Nordnet was the larg-
               Nordnet is the largest                                          est stockbroker in the Nordic stock market (Stockholm, Oslo,
               broker in the Nordic                                            Copenhagen and Helsinki), with a market share of 7.1 per cent.
                                                                                   Based on this strong position, the current trend toward
               stock market.                                                   increased interest in cross-border share trading in the Nordic
                                                                               countries is very interesting. A central component of this trend
     Competition                                                               is the common Nordic List that OMX introduced on October 2,
     A long-term general trend within financial services is decreasing          2006. Our assessment is that interest in Nordic investments will
     income per trade. This is related to technical developments mak-          increase, partly due to increased media coverage, which ought to
     ing it possible to conduct securities trading at lower costs and the      favor Nordnet more than any of our competitors.
     increasing numbers of players adopting this new technology. So
     the competition is stiffening. This leads to increasing demands on        Specialist online brokers in the Nordic region include Avanza
     innovation, to create services with clear client benefits.                 and E*trade in Sweden, NetFonds in Norway, E*trade in Denmark,
                                                                               eQ Online and E*trade in Finland. E*trade, a subsidiary of the
                                                                               American bank and online brokerage group of the same name, is
     Online brokers’ market share                                              represented in several countries, but operates through offices in
     Number of trades                                                          Stockholm and Copenhagen.
        %
       50        Stockholm Stock Exchange                                      Nordnet has strong market positions in Sweden, Norway and
                 Oslo Stock Exchange                                           Denmark. In Finland and Germany, operations are still under
       40        Copenhagen Stock Exchange
                 Helsinki Stock Exchange                                       establishment and market shares are lower.
       30                                                                         Nordnet’s most important competitive advantages are our
       20                                                                      broader and more advanced service offering, the high availability
                                                                               of our trading system, our lead in the development of new services
       10
                                                                               and our highly competitive terms. In some markets, Nordnet uses
        0                                                                      price as a strong means of competition.
              Q1 Q2     Q3   Q4   Q1 Q2      Q3   Q4   Q1 Q2     Q3       Q4
              2004                2005                 2006
                                                                               On the Stockholm Stock Exchange, Nordnet was the fourth largest
     Volume                                                                    broker in 2006, with a market share of 6.9 per cent of the total
         %                                                                     number of trades. In Oslo, Nordnet was the largest broker, with
       12         Stockholm Stock Exchange
                  Oslo Stock Exchange
                                                                               a market share of 13 per cent of the total number of trades. In
       10         Copenhagen Stock Exchange                                    Copenhagen, Nordnet was by far the largest online broker and
        8         Helsinki Stock Exchange                                      the third largest among all brokers, with a market share of 7 per
        6                                                                      cent. In Finland, our market share was 1.4 per cent. In Germany,
        4                                                                      Nordnet is a small player with a market share of some 0.6 per cent
        2
                                                                               on Xetra, the largest exchange in Germany.
        0
             Q1 Q2      Q3   Q4   Q1 Q2    Q3     Q4   Q1 Q2    Q3    Q4       Extremely competitive pricing continues. The toughest competi-
             2004                 2005                 2006                    tion is found in Denmark, where we have almost seen a price war.
     Source: Official statistics from each exchange compiled by Nordnet.        During the fall, one player even went so far as to market ‘free’ trad-
                                                                               ing. The terms of this offer, however, did include reservations.


14      NORDNET ANNUAL REPORT 2006
                                                                               Competition and external factors




Price cuts were also seen in Sweden, but not to the same extent as
in Denmark. In Finland, pricing continued to be a little less               Market shares in the Nordic region
aggressive than in the other markets in 2006. In Germany, under-            Broker                                           2006, %         2005, %
cutting gathered momentum. During the year, the average com-
                                                                              1. Nordnet                                       7.08%           7.66%
mission in the German market dropped by 7 per cent according to               2. SEB                                           5.70%           6.34%
a report compiled by Broker Test. Contributing factors included               3. Morgan Stanley                                5.51%           4.18%
relatively large price cuts by the major banks.                               4. Nordea                                        5.34%           6.43%
                                                                              5. Fischer Partners                              5.03%           4.57%
In recent years, the market shares of the number of trades on the             6. Handelsbanken                                 4.55%           4.84%
Nordic stock exchanges have been affected by the market shares                7. Lehman Brothers                               4.43%           2.90%
of several international investment banks climbing relatively                 8. Deutsche Bank                                 4.22%           2.96%
steeply. Nordnet’s assessment is that their increasing shares of              9. Avanza                                        4.03%           4.23%
trades mostly comprise the banks’ own trading and new and con-               10. Danske Bank                                   3.40%           4.14%
siderably sized volumes from, in general, the international market.
                                                                            The ten largest brokers in the Nordic region by number of trades on the
This means that despite strong growth for Nordnet and some other            Stockholm, Oslo, Helsinki and Copenhagen stock exchanges in 2006,
online brokers in the private client segment, the market share held         together with figures for 2005.
by this segment may have dropped in recent years. The table list-
                                                                            Source: Official statistics from each stock exchange, compiled by Nordnet.
ing the total market shares of the ten largest Nordic brokers clearly
illustrates this trend.
                                                                            creates more competition for Nordnet, but also increases the




‘‘
                                                                            clients’ insight of the importance of freedom of choice.
          We offer freedom of choice,                                       Savings in mutual funds is very common in Sweden. 77 per cent
          control and low prices –                                          of the Swedes save in mutual funds. Including the PPM savings as
                                                                            much as 94 per cent have savings in mutual funds. Measured as a
          in line with client wishes.                                       share of total managed capital, the large Swedish banks still domi-
                                                                            nate, though their share is gradually decreasing and have fallen
Mutual funds                                                                to 65 per cent. Instead, we are seeing an increase in the shares
Competition is a little different in mutual funds trading. The main         held by independent fund managers and international investment
difference is that many players sell their own mutual funds, rather         companies.
than broker the broader market offering. Nordnet provides clients              In the beginning of 2007, Nordnet is launching a mutual fund
with freedom of choice, offering some 800 mutual funds from                 supermarket in Norway. In Finland, savings in mutual funds are
more than 50 fund managers.                                                 growing fast, but from an initially low level. In Denmark, just
                                                                            about all mutual funds managed by Danish investment companies
The market trend is for more players to allow clients to choose             are listed on the stock exchange, which means trading takes place
between mutual funds from several different fund managers. This             in the same way as with shares.


The five largest brokers in 2006 by share of the number of trades

       Stockholm Stock Exchange          Oslo Stock Exchange                Copenhagen Stock Exchange            Helsinki Stock Exchange
        Broker                      %     Broker                        %    Broker                          %    Broker                          %
  1.    Avanza                    9.27    Nordnet                12.95       Danske Bank                 14.38    Nordea                       8.19
  2.    SEB                       8.33    DnB Nor                  9.86      Nordea                       9.02    Morgan Stanley               7.35
  3.    Handelsbanken             6.98    Morgan Stanley           5.75      Nordnet                      7.00    eQ                           6.35
  4.    Nordnet                   6.91    Net Fonds                5.55      Sydbank                      4.49    Deutsche Bank                6.33
  5.    Fischer Partners          6.90    Deutsche Bank            4.90      Jyske Bank                   4.61    Lehman Brothers              6.06




                                                                                                             NORDNET ANNUAL REPORT 2006                 15
       Competition and external factors




     Pensions
                                                                              Quarterly breakeven analysis 2004–2006
     Within share trading, the traditional players have gradually
     adapted their prices to the revolution initiated by Nordnet and          Number
                                                                                            Number of trades done per day
                                                                              40,000        Number of trades that makes operating profit
     other online brokers, but there are still important differences in
                                                                                            Number of trades per day required for breakeven
     the services offered. A similar effect is yet to be seen in pensions.
                                                                              32,000
        In pensions, Nordnet competes primarily with traditional insur-
     ance companies, but also with a number of new players.
        In competition with traditional insurance companies, Nordnet          24,000

     is well positioned since our client offering is considerably better in
     terms of fees, freedom of choice and client control.                     16,000


     Allow us to provide an example. Eva is 35 and has 30 years before         8,000

     retirement. Her current monthly salary is SEK 35,000 kronor and
     her employer pays SEK 5,000 a month into her occupational pen-               0
                                                                                       Q1 Q2     Q3   Q4   Q1 Q2      Q3   Q4   Q1 Q2         Q3   Q4
     sion. If Eva’s pension is managed by one of the major traditional                 2004                2005                 2006

     insurance companies, on retirement she will have paid SEK
     294,104 in fees. If Eva instead chooses to transfer her pension sav-     Trading volumes
     ings to Nordnet, these fees will not be paid and the SEK 294,104         To a large extent, our costs are fixed, giving low marginal costs
     will be included in her pension. This means that when Eva retires,       per new client and transaction. One consequence of this is that
     she will receive some SEK 8,000 more a month over a five-year             increased trading volumes have a strong and favorable influence
     period from her Nordnet pension. This is based on the assumption         on our financial result. Almost 100 per cent of the net income gen-
     of an average return of five per cent on Eva’s occupational pen-          erated by an increase in the number of transactions is pure profit.
     sion during the 30 years she has until retirement.                       The net income is our income from the client less the commission
                                                                              we pay to the stock exchange and clearing organization. On the
     Other external factors                                                   other hand, our financial result is soon adversely affected if share
     Aside from the competition, there are a number of other external         trading volumes go down.




                                                                              ‘‘
     factors that influence our growth and profitability. A few of the
     most important follow:
                                                                                       Nordnet offers 800 mutual
                                                                                       funds from more than 50 fund
                                                                                       managers.
                                                                              Stock market trend
                                                                              In the short term, Nordnet benefits from a volatile stock market.
                                                                              Short-term trading increases and the options market thrives.
                                                                              Active investors become even more active. Parallel to this, we can
                                                                              experience a reverse effect, though somewhat weaker, as some
                                                                              investors are frightened off by a volatile market.

                                                                              Rising share prices attract new investors and increase risk
                                                                              propensity and margin trading among existing inventors, whereas
                                                                              falling prices scare off investors and reduce risk propensity among
                                                                              those who remain.
                                       Anna-Lena testing the new
                                       mutual fund supermarket in
                                       Norway.                                Static share prices result in reduced activity and lower commis-
                                                                              sion income, and after some time also cause a decline in other


16      NORDNET ANNUAL REPORT 2006
                                                                          Competition and external factors




income as clients use fewer services and cut back on margin
trading. In the short term, we earn more income from falling prices
than stagnant prices. In the long term, it is best for both clients           Linda and
and Nordnet if prices exhibit a stable, upward trend.                        Tommi are
                                                                          improving the
                                                                        services for one
Interest rates                                                          of our partners.
Low interest rates are favorable as they increase risk propensity
along with client activity and margin trading. In general, Nord-
net’s interest margin is not significantly affected by interest rates.
However, very low interest rates reduce the interest margin and
thereby net interest income.

Internationalization
Increasing internationalization improves Nordnet’s chances of
entering new markets. As the differences between markets and            due to a new EU directive that includes stricter requirements in
between client behavior narrow, it becomes easier to adapt serv-        several areas. Nonetheless, common EU financial regulations are
ices to local conditions. Conversely, the same trend clears the way     a benefit, since we operate in several EU markets and will most
for foreign players to get a better foothold in the Nordic markets.     likely establish operations in others.

Laws and regulations                                                    Technical development
New laws and regulations can both simplify and complicate               Technical development is of great benefit to Nordnet as we gain
Nordnet’s operations. The general trend, however, is for them to        a competitive edge by rapidly adopting new technology. There
provide new opportunities. In Sweden there is a discussion about        is, however, also a risk in that our competitors could succeed in
allowing transferring assets between mutual funds without tax,          gaining technical advantages in the future. As increasingly more
which would stimulate and positively effect fund trading. The right     players adopt the new technology, price cutting will increase.
to transfer pension funds for free has been proposed by, among
others, the Swedish Financial Supervisory Authority. Such a right       Client behavior
for pension plan holders would be great news for Nordnet. On            A marked trend within financial services is for clients to place
February 1, 2007, the Swedish government annulled the right to          much importance on the relation between price and quality, while
transfer pension funds until further notice. At the time of writing,    wanting more freedom of choice and greater control over their own
the matter was still under consideration. Among the negative ef-        savings. This trend is clearly beneficial to Nordnet because free-
fects of new regulations is an increase in our administrative costs,    dom of choice, control and low prices are precisely what we offer.



Sensitivity analysis
                                                          Change in income
Driving force                   Change                    per year, MSEK            Comments

Deposits                        +/- MSEK 100                     1.2                Assumed average interest margin in 2006
Lending                         +/- MSEK 100                     4.0                Assumed average interest margin in 2006
Interest margin, deposits       +/- 0.25%                       12.6                Assumed average deposits volume in 2006
Interest margin, lending        +/- 0.25%                        7.3                Assumed average lending volume in 2006
Number of trades                +/- 1,000 a day                 12.0                Assumed average income per trade in 2006
Net income per trade            +/- SEK 1 per trade              8.0                Assumed total number of trades in 2006
Number of active accounts       +/- 1,000 accounts               5.0                Assumed average income per active account in 2006
Assets in custody, securities   +/- SEK 1 billion               15.4                Assumed income in relation to assets in custody on
                                                                                    average, in 2006



                                                                                                       NORDNET ANNUAL REPORT 2006            17
        Clients




     Increasing number of female clients

     In innovative operations such as Nordnet’s, it’s natural for clients
                                                                                           Foreign trades as % of
     to initially comprise people with a strong interest in and know-       Country                   total trades    Most popular foreign share
     ledge of technology and shares. In the next phase, the client base     Sweden                              5.0                  DNO, Norway
     is broadened, but still mostly comprises clients with above-aver-      Norway                              5.0                   Canargo, US
     age knowledge and interest.                                            Denmark                            24.0                  DNO, Norway




     ‘‘
                                                                            Finland                             7.0        Genta Incorporated, US
                                                                            Germany                             4.0     Generex Biotechnology, US
             Our clients are people                                         Total                              8.0

             with Internet access.                                          Most actively traded shares in:
                                                                            Sweden       Ericsson, Boliden, Vostok Nafta
     In 2006 it became clear that we have definitely entered a third         Norway       DNO, Pan Fish, Int Gold Exploration
     phase. The clients now flocking to us are, quite simply and if          Denmark      Vestas Wind Systems, Maersk, GN Store Nord
                                                                            Finland      Nokia, Fortum, Metso
     we may phrase it so, regular people. Taking care of your savings
                                                                            Germany      Solarworld, Premiere, Vivacon
     over the Internet has become so natural that we now find clients
     throughout the large group of people with home Internet access.
                                                                            Nordnet’s clients’ largest fund investments at Dec. 31, 2006:
                                                                            1.   Catella Hedge
     Growth in new client groups is reflected, for example, in increas-
                                                                            2.   Helios (Brummer & Partners)
     ing numbers of female clients. Women accounted for 18 per cent         3.   ODIN Sverige
     of clients on December 31, 2006. 23 per cent of new clients in         4.   ODIN Offshore
     2006 were women. The proportion of women savings in pensions           5.   East Capital Russia Fund
     is higher.
        In Sweden, Nordnet’s oldest market, 22 per cent of clients were     During the year, we noted a widespread need for education in
     women at year-end and 29 per cent of new clients gained during         savings and securities trading. The courses we started in Norway
     the year were women.                                                   at the NordnetSchool quickly gained in popularity. At the end of
        The average age of Nordnet’s clients was 42 at year-end.            the year, we started up similar activities in Sweden. One aspect of
                                                                            educating our clients is the new, revised version of the book “Save
     An important trend during 2006 was the sharpened focus on              Smarter”, which contains everything you need to know about
     the Nordic market, especially in the media. Naturally, a strong        savings in shares, mutual funds and pensions over the Internet.
     contributing factor to this was OMX’s introduction of a common         Including previous editions, we’ve now distributed 15,000 copies.
     Nordic List on October 2, 2006. This is a favorable development
     for Nordnet as we are the largest broker in the Nordic region in       Interest in Nordnet’s mutual fund supermarket further intensified
     terms of number of trades and the entire region comprises our          during the year. The number of clients with mutual funds in their
     home arena. During the fourth quarter, that is, once the Nordic        accounts increased by 51 per cent to 23,900. At year-end, invest-
     list was introduced, 8 per cent of transactions were conducted         ments in mutual funds accounted for some 10 per cent of total
     in markets outside clients’ domestic markets. This is the same         assets in custody. The proportion of pensions invested in mutual
     number as during the first nine months of the year. However, in         funds is considerably higher. There are three categories of mutual
     the long term, we are convinced that the interest in trading foreign   funds that attract the most interest – hedge funds, emerging
     shares will increase.                                                  markets and Swedish shares. The trend is still for a large share of
                                                                            the investments to be made through specialist fund managers. This
     The client surveys we conducted clearly showed that clients want       can be seen in the most popular mutual funds, which at the end of
     control over their investments – they want to decide for them-         the year were Catella Hedge, Helios and ODIN Sverige.
     selves. This attitude existed before, but intensified during the
     year. This is especially true in pensions, where many clients would    Most gratifying for us is that our clients are satisfied. In fact,
     like both lower costs and tighter control over the size of their       client satisfaction increased during 2006. The client survey (see
     costs. That investors want more control and freedom of choice is a     also page 5) we conducted in November showed that a full 95 per
     trend that benefits Nordnet as this is precisely what we offer.         cent were satisfied with Nordnet. As many as 96 per cent of those


18      NORDNET ANNUAL REPORT 2006
                                                                       Clients




who expressed an opinion said they would recommend Nordnet to
friends and acquaintances. Asked whether clients receive excel-
lent service when contacting Nordnet, 88 per cent gave Nordnet
three or better out of five.




‘‘       The desire for more control
         and freedom of choice
         benefits Nordnet.
Client events
We continued to greatly intensify our marketing activities in
2006. An important part of this is client events, where clients
and prospective clients are provided the opportunity for personal
                                                                    Increasingly more clients appreciate the freedom of choice offered
contact with Nordnet representatives. 67 such events were held in   by Nordnet’s mutual fund supermarket, which makes it possible to
Sweden, Norway, Denmark and Finland throughout the year.            choose from more than 800 funds from 50 different fund managers.


A few client events from 2006:
  Investor meetings with the Experts                                Partners
  Investor meetings in collaboration with the Swedish               During the year we also noticed continued increased interest
  Shareholders’ Association                                         from other financial players in using our share, fund and pension
  Investor meetings covering the Nordic market                      services through various partnership agreements in order to create
  Seminars and exhibitions at major share and investment            added value and more effective administration for their clients.
  conventions                                                       Our independent status, freedom of choice and cost-efficiency
  Private Banking meetings in small groups                          create new opportunities for financial advisors, investment
  Information meetings on trading in, for example, options,         managers, brokers and others. Demand for more comprehensive
  in collaboration with other players                               solutions with the NASP (Nordnet Application Service Provider)
  Future pension product presentations                              framework also increased. An important agreement with ICA
  Sponsor meetings with, for example, Mora Hockey                   Banken AB was entered during the year. A package solution
  Mutual fund evenings together with fund managers                  developed, supplied and maintained by Nordnet gives ICA
  Tax seminars with the Swedish Taxpayers’ Association.             Banken’s clients access to the market’s broadest investment offer-
                                                                    ing in shares, mutual funds and pensions. The ICA Banken service
Client events in 2007 will be at least as extensive as last year.   will be launched in 2007.

New for 2006 was our NordnetSchool, an important part of client
                                                                    Average account value per market and year
relations. We rolled out the school in Norway in March 2006 and
in December 2006 we held the first course at the NordnetSchool       SEK ‘000
                                                                                                                                           1,623




in Sweden. The school is open to anyone interested in learn-        1,800
                                                                                  2004
                                                                                                                                   1,200




ing more about the securities market, shares, mutual funds and      1,500         2005
                                                                                  2006
pension savings. The school offers courses and seminars covering    1,200
everything from basic share trading for beginners to derivatives
                                                                                                                                 676




                                                                     900
                                                                                                     500




for more advanced traders. The courses are run by experts from
                                                                                                    459




                                                                     600
                                                                                                                 353
                                                                                 319




                                                                                                  338
                                                                                297




                                                                                           276




                                                                                                                          260
                                                                                          254




Nordnet and, on occasion, external lecturers. The NordnetSchool
                                                                               205




                                                                                                                         182
                                                                                         162




                                                                                                              165

                                                                                                                        132




                                                                     300
in Norway was an immediate success, and during the year some
2,000 people participated in the 75 courses held there.                0
                                                                               Sweden    Norway   Denmark   Finland    Germany Luxembourg




                                                                                                    NORDNET ANNUAL REPORT 2006                     19
       Services




     Greatest possible choice

     Nordnet offers a complete range of services for savings in shares,         With an individual pension savings account, IPS, investors can
     mutual funds and pensions. We quite simply want to offer clients           make tax-deductible deposits up to a certain annual limit
     as big a choice as possible.                                               (SEK 39,700 in 2006). The money is however taxed when
        Another central ingredient is our independency. We don’t sell           withdrawn and withdrawals cannot be made until the investor is
     any products of our own. Instead we strive to package and broker           55 years old. The capital can be invested in shares and mutual
     the broad market offering in the best possible manner. This means          funds without paying capital gains tax, but is subject to a flat
     that aside from trading in all available securities and financial in-       rate tax on returns.
     struments, we also provide clients with access to market informa-          Privatpension is more or less the same type of product as IPS.
     tion and support services to make good deals easier to achieve.            The difference is that IPS is offered by Nordnet Bank AB and
                                                                                Privatpension by Nordnet Pensionförsäkring AB. The Privat-
     We also strive to offer all these services on the best possible            pension account also offers somewhat greater freedom of
     terms. It’s cheaper to trade with Nordnet. We can do this because          investment in, for example, certain types of mutual funds.
     the Nordnet Model (see page 9) keeps down our costs.
        Nordnet’s service offering is currently the broadest in Sweden
     and is gradually being broadened in our other markets. Our long-
     term goal is for the Group’s entire offering to be available in all of
     Nordnet’s markets. There may, however, be some variations due
     to local conditions, laws and regulations.
        Depending on time scales and ambitions, clients can invest              Kapitalpension, a hybrid pension/endowment policy, is a rela-
     their savings in a standard account or in pension and insurance            tively new type of investment account permitted since Novem-
     products. In principle, the full service offering is available to each     ber 2004. Deposits are not tax deductible, but then nor is the
     of the different investment types, subject to restrictions imposed         capital liable to taxation when withdrawn. As with the Kapi-
     by laws and tax regulations.                                               talförsäkring product, this account is not subject to capital gains




     ‘‘
                                                                                tax, though returns are taxed. What is unique is that the value of
                                                                                a Kapitalpension is not subject to wealth tax, as it isn’t counted
              Complete offering of shares,                                      as taxable wealth. From 2 February, 2007, new subscription and
                                                                                deposits are stopped due to a governmental decision.
              mutual funds and pensions.                                        Tjänstepension, an occupational pension, was launched in
                                                                                March 2006. Employers enter an agreement with Nordnet
     At the beginning of 2007, there were six account types: Standard           wherein their employees are able to choose Nordnet as the
     account, Kapitalförsäkring, IPS, Kapitalpension, Privatpension             insurance company for their occupational pension scheme.
     and Tjänstepension.                                                        An account is opened for each employee offering the same
                                                                                individual freedom of choice and broad investment opportu-
       The Standard account is a regular securities deposit account             nities as Nordnet’s other accounts.
       offering unrestricted investments in all types of securities. The
       client can freely make deposits and withdrawals, decide to buy         All these savings alternatives provide the client with access to
       or sell securities and make full use of our services. In 2006 we       most of Nordnet’s broad service offering. The services available to
       launched the Mini Account (Minidepån), which has a lower               each account type are shown in the chart on page 22.
       minimum commission and is suited to clients who trade in                 The services can be divided into six main groups: savings,
       smaller amounts.                                                       account services, loans, information, research and monitoring.
       Nordnet’s endowment insurance product Kapitalförsäkring is
       unique in the field and has many similarities to the Standard           Savings
       account. However, as this investment comprises an insurance            Shares and derivatives
       policy, it’s not subject to capital gains tax but is instead subject   Nordnet offers trading in shares, options, futures and warrants on
       to a flat rate tax on returns. In 2006, it became possible to           stock exchanges in Sweden, Norway, Denmark, Finland, Germany,
       margin lend on endowment insurance. Company-owned Kapi-                USA and Canada. In total, more than 250,000 financial instru-
       talförsäkring is a new product, especially suitable for smaller        ments. Trading takes place in real time, that is, without delay, and
       companies.                                                             there are many choices of order terms.

20      NORDNET ANNUAL REPORT 2006
                                                                                Services




Mutual fund supermarket                                                     Account services
Clients can choose between some 800 mutual funds from more                  Account holders are provided with comprehensive service. Nordnet
than 50 fund managers at no extra cost. Instead, Nordnet receives           keeps securities and liquid assets in safe custody, deals with com-
compensation from the investment companies. In some cases,                  pany events (such as new share issues), reports dividends, transac-
clients can even get better terms by trading via Nordnet instead            tions, and settlement notes, and much more. Some of these functions
of directly with the investment companies. Purchase fees and                and services are described below.
minimum deposits, for example, may be lower through Nordnet.
                                                                            Automatic deposits and withdrawals
Hedge funds                                                                 A client can link one or more bank accounts to their Nordnet
In Nordnet Hedge, our hedge fund marketplace, clients can invest            account, making it easy to transfer funds between other banks
in a unique offering that encompasses some of the leading hedge             and Nordnet.
funds on the market.
                                                                            Nordnet AssetCard
Structured products                                                         A debit card linked to a Nordnet account. When a client pays
At the end of 2006, we launched a marketplace for different types           with a Nordnet AssetCard, the amount is drawn directly from the
of structured savings products, such as equity index linked bonds.          account. As the Nordnet AssetCard is affiliated with MasterCard,
The offering is both extensive and unique, as players normally              it can be used throughout the world.
only sell proprietary products.
                                                                            Risk parameters
Monthly savings                                                             Account statements include a number of risk parameters for the
Monthly savings in the account can be made as cash deposits or              holdings. This makes it much easier for clients to decide their
in one or more mutual funds, the spread determined by the client.           preferred risk levels.
In 2006, it became possible to decide that all liquid assets in an
account on a certain day of the month are invested in mutual funds          Currency account and currency trading
in accordance with a specific investment plan.                               Normally, borrowing and lending are booked on client accounts in
                                                                            several different currencies, such as SEK, NOK, DKK, EUR, USD


What do you like most about Nordnet?




  Nils Tage Harrysson, Sweden      Tommy Stubsveen, Norway          Ralf Reimer, Germany        Henrik Moselius, Sweden           Erik Austená, Norway


“The best thing about           “The thing I like most        “The good terms con-         “Easy and good prices. You     “I saw the advert for the
Nordnet is the availability,    about Nordnet is that         vinced me. No other broker   do everything yourself and     NordnetSchool. On taking
that you can trade from         it’s so easy. The trading     charges such low fees.”      don’t need to call anyone.     a closer look at the course
home. You have access to        services are user-friendly                                 Instead, you take care of      offering, I found suitable
all the share prices and        and reliable, and they’re                                  everything from home. I        subjects at my level. The
news in real time and can       suited to different trading                                can turn on my computer        professional lecturers
turn thoughts into actions      patterns. When I’m                                         at any time and log on to      in the different subjects
without delay. As a client,     more active on the stock                                   my account. You get a lot of   about share trading make
I myself control all my         exchange, WinTrade is the                                  information with a Nordnet     it all a great deal more
transactions and get a          natural choice. When I’m                                   account. I get good tips and   interesting and exciting.”
good trading overview.”         trading less frequently, I                                 research from the Experts,
                                use Nordnet’s Norwegian                                    which I enjoy reading.”
                                website.”

                                                                                                             NORDNET ANNUAL REPORT 2006                  21
           Services




     and CAD. Accounts can also be used to trade or exchange these                                                                                              The VIPP limit must be regulated before the trading day is over.
     currencies.
                                                                                                                                                                Kredit50
     Tax return program                                                                                                                                         Kredit50 is a credit facility that enables clients to borrow up to
     A program that automatically handles all Nordnet transactions                                                                                              SEK 50,000 without collateral. Private Banking clients can borrow
     conducted by the client throughout the year. Can be supplemented                                                                                           up to SEK 250,000.
     with transactions conducted via other brokers. When it’s time to
     submit tax returns, clients can simply print the forms.                                                                                                    Short selling
                                                                                                                                                                Clients can now borrow a large number of shares in each market in
     Loans, limits and short selling                                                                                                                            order to sell them short. Short selling, or selling shares one doesn’t
     Margin lending                                                                                                                                             own, is used when speculating on share price falls, for hedging
     Securities can be used for margin lending up to a certain limit, the                                                                                       other positions or as part of complex derivatives positions.
     margin level. Margin levels are based on factors such as a share’s
     risk level and trading volume. On the whole, Nordnet has the                                                                                               Information
     market’s highest margin levels for shares and mutual funds. We                                                                                             Price information, indexes and other indicators
     offer up to 80 per cent for shares and 95 per cent for mutual funds.                                                                                       The web service provides real-time price information, free of
     Structured products can have margin levels all the way up to 100                                                                                           charge since 2006. The web service also provides information on
     per cent. New for 2006 was the possibility to use margin lending                                                                                           order depth, closing price tickers, broker statistics, historic clos-
     on a Kapitalförsäkring account.                                                                                                                            ing prices, winners and losers, and so on. Price information covers
                                                                                                                                                                shares, warrants, options, futures and mutual funds. To follow
     Trading limits                                                                                                                                             general market trends, information is given on numerous indexes,
     A VIPP limit increases the client’s trading limits for each individ-                                                                                       currencies, interest rates and commodities.
     ual day, as the limit is normally equal to the equity in the account.


     Service offerings for the different account types in each market

                                                                                                                                                                                                                                                                         Price/news alarms


                                                                                                                                                                                                                                                                                             Analysis / Experts
                                                                                                                                                                                      Currency account
                                                                                        savings products




                                                                                                                                                                                                                                                      Charts/technical



                                                                                                                                                                                                                                                                         via text message
                                                                                                                                                       Monthly savings




                                                                                                                                                                                                                                                                                                                             WinTrade Mobil
                                                                                                           Margin lending
                                                                         Mutual funds




                                                                                                                            Short selling




                                                                                                                                                                                                                                        information




                                                                                                                                                                                                                                                                                                                                              VoiceTrade
                                                                                        Structured




                                                                                                                                                                         Debit card



                                                                                                                                                                                                         Tax return




                                                                                                                                                                                                                                        Real-time




                                                                                                                                                                                                                                                                                                                  WinTrade
                                          Warrants




                                                                                                                                                                                                                      StopLoss
                                                                                                                                            Kredit50




                                                                                                                                                                                                                                                      analysis
                                                               Futures
                                                     Options
                                 Shares




                                                                                                                                                                                                                                 News




      Nordnet Sweden

           ‘Standard account’
           IPS
           Kapitalförsäkring
           Kapitalpension1)
           Privatpension
           Tjänstepension
      Nordnet Norway
      Nordnet Denmark
      Nordnet Finland
      Nordnet Germany
      Nordnet Luxembourg
      Aktiedirekt Sweden
      1)
           From 2 February, 2007, new subscription and deposits are stopped due to a governmental decision.


22         NORDNET ANNUAL REPORT 2006
                                                                                Services




  Our model portfolios are
examples of how to invest
 in different combinations
           of mutual funds.                                                  Accessibility
                                                                             In order to make use of our services, clients need to get in touch
                                                                             with us. This can be achieved in a number of ways.
    News
    News is offered in both real time and delayed from a large number        Website
    of leading news sources. News agencies include Direkt in Sweden,         A free, broad and comprehensive trading and information
    Dow Jones Newswire in the USA, RB-Børsen and CSE in Denmark,             service. On our website, clients can find all of Nordnet’s services,
    TDN Finans and OB in Norway, VWD in Germany and Kauppa-                  functions and markets. Last year, www.nordnet.se was named
    lehtti in Finland, while press releases come from Waymaker,              Sweden’s best website in the Banking & Finance category by the
    Hugin and NG News.                                                       Swedish periodical Internetworld, which said, “Sweden’s best
                                                                             share trading site is also the sharpest, with a clean design, bold
    Fundamental data, share charts, technical analysis                       colors and fine illustrations to lighten up the heavy numbers. A
    With the aid of the Aktiekompassen analysis tool, clients can sort       well-made guide to becoming a client provides good insight –
    information, study key ratios and share charts, or find out, for          before deciding. But what really stole our hearts are the fun
    example, which sector performed best during a period, the best           services, with the Experts to the fore. We love following these
    shares in that sector and so on. Aktiekompassen also provides            professional traders’ deals and reading their personal comments
    powerful technical analysis functions.                                   on purchases and sales. Nordnet is moving in the right direction:
                                                                             Unique, high-quality content. Now we’re just waiting for the pro
    Analysis                                                                 traders to start video blogging.”
    Nordnet Analysis
    Nordnet Analysis provides clients with education and general             WinTrade
    stock market coverage. Our analysts report on issues such as earn-       Proprietary software with more than 10,000 users. WinTrade is the
    ings prospects in a particular industry or the effect of changing        most widely-used real-time application for securities trading and
    interest rates in the USA on the Nordic stock market.                    financial information in the Nordic region. WinTrade presents all
                                                                             relevant financial information in real time and features an intui-
    The Experts                                                              tive interface. The WinTrade program is easily downloaded from
    The Experts are a unique analysis service openly conducting and          Nordnet’s website and installed on the client computer. Clients
    motivating real-life share trading for all Nordnet clients to see.       pay to use WinTrade and the current monthly fee is SEK 99. The
    All portfolios are presented in real time, that is, purchases and        bigger and most active clients can use WinTrade for free. A new,
    sales are shown immediately. The Experts, all of whom are well re-       upgraded version of WinTrade was launched in 2006.
    nowned in the share trading world, have each received an account
    with SEK 1 million in funds to manage.                                   VoiceTrade
                                                                             A voice recognition service enabling clients to call and say what
    Mutual fund portfolios                                                   they want to know or do. The system automatically provides the
    In 2006, we launched model mutual fund portfolios to provide             requested information and implements any instructions.
    examples of how to invest in a number of different combinations          A important complement to the Internet service when clients
    of mutual funds with different risk levels. These portfolios are         don’t have access to a computer.
    put together by an investment committee chaired by our Head of
    research Peter Malmqvist.                                                WinTrade Mobile
                                                                             A service that enables clients to trade in securities in real time us-
    Monitoring                                                               ing a cell phone. Nordnet was the first online broker in the Nordic
    StopLoss                                                                 region to offer this advanced yet user-friendly service. In 2005,
    A monitoring service that enables clients to decide in advance           WinTrade Mobile was named IT project innovation of the year by
    when a given position is to be closed or opened. The more sophisti-      the periodical CIO Sweden. In 2006, the service was further devel-
    cated version, Automatic Trade, can test several different conditions.   oped and can now be accessed with a wide range of cell phones.

    Price and news alarms                                                    Personal broker service
    Clients can receive text messages on their cell phones with all the      Clients who are unable to use the Internet, WinTrade Mobile, or
    latest about a particular share or news of when a share reaches a        VoiceTrade can call and make transactions via a broker, though
    certain price.                                                           the commission is higher.

                                                                                                            NORDNET ANNUAL REPORT 2006                23
       Sweden




     A great year for mutual funds and
     pension savings
                                        Our growth                                             The selection of mutual funds in our Mutual fund
     Revenues                           The Swedish stock market showed positive devel-        supermarket further increased and at year-end
                                        opment for the year and the market index (OMXS         totaled about 800, with interest in mutual funds
                                        30) rose by 19,5 per cent. The road to this success,   continuing to grow. At year-end, Nordnet’s mutual
                                        however, was anything but straight. During the         fund holdings totaled SEK 5.2 billion, compared to
                                        second quarter, especially in May, the market was      SEK 3.6 billion the previous year. Nordnet’s income
                                        characterized by falling prices and a great deal of    from mutual fund activities consists primarily of
                                        uneasiness.                                            commission from the fund managers in the form of a
                                           This pattern was reflected in the influx of new       percentage of the annual management fee.
     Sweden’s share of the
     Group’s revenues in 2006
                                        clients, which was strong during the first half of         The influx of clients to Nordnet’s insurance and
                                        the year, slowed during the third quarter and then     pension services was very good. At year-end, assets
                                        regained momentum during the fourth quarter.           in custody in Nordnet Pension was SEK 3.6 million,
     Number of trades                      The turbulent market month of May proved to be      an increase of 200 per cent. The number of pension
                                        the most active month ever for Nordnet, since con-     accounts increased from 3,500 to 10,600 during
                                        ditions led to many clients trading in an extremely    the year.




                                                                                               ‘‘
                                        active fashion. The number of trades was 247 per
                                        cent more than in May 2005.
                                           By year-end, the number of active accounts had              Bank of the Year 2006.
                                        risen by 26 per cent to 100,300 (79,400). Assets
                                        in custody increased by 35 per cent to SEK 32.0
     Sweden’s share of                  billion.                                               In 2006, despite tough competition, Nordnet was
     the Group’s trades in 2006
                                                                                               named Bank of the Year by the Swedish finance
                                        Nordnet continued to take market shares from the       magazine Privata Affärer. Among the jury’s motiva-
     Active accounts                    major banks. Our share of the number of trades on      tions were the following:
                                        the Stockholm Stock Exchange was 6.9 per cent
                                        (8.6). On page 15, we provide an explanation of how     first-class service for private investors
                                        we have gained market shares even if the per cent-      one of the industry’s best mutual fund markets
                                        age has declined.                                       pension plan with no fees
                                           The Experts, an analysis service where a number      a proactive and client-friendly attitude.
                                        of well-renowned share and mutual fund pros
                                        make real investments and then comment on them,        Our website, www.nordnet.se, was named the best
     Sweden’s share of                  continued to be highly appreciated and reported        Swedish website for 2006 in the Banking & Finance
     the Group’s active accounts
     as of Dec. 31, 2006
                                        high visitor rates.                                    category by the Swedish magazine Internetworld.
                                           Interest in trading in foreign shares increased     The jury praised the site’s design and bold use of
                                        during the year. Among Nordnet Sweden’s clients,       color. But what really got them was the unique con-
     Number of accounts                 5 per cent of trades made were in foreign shares,      tent, the fun functions and the personal comments
                                        compared to about 4 per cent in 2005.                  from Nordnet’s Experts.
     ‘000
      120
                              100,200   Sweden
      90             79,400                                                                               2006             2005           Change, %
            68,500
      60                                Revenues, MSEK                                                   341.9             235.8                  45
                                        Operating profit, MSEK                                            150.4             121.2                  24
      30
                                        Operating margin, %                                                 44               51                      -
                                        Number of trades                                             3,403,000         2,462,000                  38
       0
            2004      2005     2006     Assets in custody as of Dec. 31, MSEK                           32,000            23,700                  35
                                        Number of active accounts                                      100,200            79,400                  26




24      NORDNET ANNUAL REPORT 2006
                                                                        Sweden




In September, headquarters in Bromma relocated to larger and
more suitable premises in the same area. The move resulted in,
among other things, an improved work environment and room for
continued growth.
  At the end of 2006, we started the NordnetSchool, along the
same lines as in Norway (see page 27).

New services
Naturally, we continued to launch new services during 2006 as
well, all the while with the intention of increasing the opportuni-
ties and options for our clients. In February, we launched a new          Juan’s job is to consider
account type, the Mini Account (Minidepå), with a minimum              how Nordnet can constantly
commission of just SEK 39 for trade in Nordic shares. The Mini         improve through innovation
                                                                            and creative thinking.
Account is primarily intended for less active clients.

Among the news on the mutual fund front, we find model mutual
fund portfolios to aid private investors by giving an example
of how one can invest in a number of different combinations of
mutual funds, with different risk levels. These portfolios are put
together by a committee that includes some of the Experts. The
Experts were joined during the year by two mutual fund experts,       with our marketing message. For this reason, we made considerable
Niklas Lundberg and Niklas Tell.                                      investments in TV advertisements and TV program sponsorship.
                                                                      This was supplemented with comprehensive advertising in the daily
At the end of the year, we launched an investment market offering     papers.
a wide range of structured savings products, such as equity index        During the year, we also produced a large number of more clearly
linked bonds. Nordnet is the first in Sweden to offer such an offer-   product-focused campaigns, including campaigns for the Mini
ing. The market for structured products is otherwise completely       Account, the Experts, Kapitalförsäkring and Private Banking.
dominated by other players, such as the major banks, which only
sell their own products.                                              The brand-building campaigns were successful. Between January
                                                                      and August 2006, our brand awareness increased by more than 50




‘‘
                                                                      per cent according to a TEMO survey.
         First in Sweden to offer a                                      Nordnet sponsors the ice hockey team Mora IK, which in
                                                                      2004 quite unexpectedly advanced to the Swedish major league.
         marketplace for structured                                   Mora IK is a challenger to the major clubs, just like Nordnet is
         savings products.                                            a challenger to the major banks. We also sponsor the cyclists
                                                                      Sara Danielsson and Mattias Lundqvist, and through Aktiedirekt
                                                                      Nordnet sponsors Edsbyn bandy club.
In March, we launched Tjänstepension, an occupational pension
plan and the final piece of the puzzle in Nordnet’s now complete       The future
offering of pension services. On the pension front, we also intro-    We predict continued strong growth in shares, mutual funds and
duced the ability to margin lend on our Kapitalförsäkring product.    pensions. Interest in trading foreign shares is expected to continue
                                                                      to increase. An important contributing factor to this growth is the
Marketing                                                             OMX Nordic List, which stimulates interest among both investors
Investments in marketing increased dramatically during the year.      and the media.
The purpose was in part to increase the influx of new clients and
in part to strengthen our brand.                                      The potential in pensions is judged to be very high, due in part to
   The strategy was built on reaching a broad based target group      the scope of total pension savings and in part to the high fees and


                                                                                                      NORDNET ANNUAL REPORT 2006             25
       Sweden




     limitations that characterize a large part of the market. In other              Aktiedirekt
     words, there are good opportunities for pension plan holders to                 The idea behind Aktiedirekt can be described in two words:
     reduce their costs. Any coming relaxation of the laws concerning                simple and cheap. Aktiedirekt is the Swedish low price channel
     the transfer of pension funds will also drive strong growth.                    for clients whose activities primarily involve smaller share trades,
                                                                                     and who can therefore benefit most from Aktiedirekt’s very low
     Assets in custody in mutual funds is expected to increase, due                  minimum commission of just SEK 9. Aktiedirekt is run as an
     in part to growth in the pension sector. Pension accounts tend                  independent online broker within Nordnet with its own brand and
     to contain a considerably larger number of mutual funds than                    profile.
     standard accounts.
                                                                                     Operations continued to grow rapidly during 2006. At year-end,
     A new and improved web service is under development and will                    Aktiedirekt had about 23,000 active accounts, an increase of 34
     be launched during 2007.                                                        per cent. Only a small per centage of the new clients came from
                                                                                     Nordnet.
     In 2007, the offering of banking services will be extended to,                     In February 2007, the service offering was broadened with the
     among other things, the possibility to pay bills, make transfers and            launch of a mutual fund supermarket. Aktiedirekt’s service offer-
     have the salary payed to the Nordnet account.                                   ing is still not as comprehensive as that of Nordnet Sweden, which
                                                                                     is understandable considering the focus on simplicity.




     What do you like most about Nordnet?




       Knut Georg Engebu, Norway           Lena Lindgren, Sweden    Erik Munk Christiansen, Denmark      Mattias Wallmark, Sweden          Hans Renström, Sweden


     “I did the course in how        “When I discovered I could    “The website is very               “In my opinion, being able     “The best thing about
     to use WinTrade and was         handle my pension savings     user friendly and easy to          to combine shares and mu-      having an account with
     quite surprised at how          on Nordnet, I decided to      navigate, giving me a good         tual funds from a variety of   Nordnet is that there is
     good it is. I was impressed     open an IPS account. With     overview of my account.”           sources in the same place      considerably less admin-
     with how easy it was to use     my account, I can trade in                                       is the greatest advantage      istration to deal with than
     and understand WinTrade’s       both shares and mutual                                           of having a Nordnet ac-        when trading via a regular
     user interface. WinTrade        funds, with a huge selec-                                        count. The account has         bank. The settlement notes
     is really ‘state-of-the-art’,   tion to choose from. It’s                                        an easy-to-understand          are in the system and you
     with all the features for       fun to follow the Experts.                                       structure, making it easy      don’t need to print them
     analysis and statistics in      Doing so gives me good                                           to get an overview and to      out unless you want to.
     real-time – a must for all      market information.”                                             quickly and easily find the     Working with Nordnet is
     day traders.”                                                                                    information you’re looking     easier, more trouble-free
                                                                                                      for. It’s great that you can   and more convenient.”
                                                                                                      buy shares in an IPS.”




26      NORDNET ANNUAL REPORT 2006
                                                                                  Norway




Major success for the NordnetSchool

                                  Our growth                                                 Most of the courses are free of charge, while a few
Revenues
                                  Nordnet Norway expanded well during the year.              require payment.
                                  The number of active accounts rose by 24 per cent
                                  to 29,400. The number of trades increased by 46            The school’s success showed the large and latent
                                  per cent and this means we maintained our position         need for education among Norwegian private inves-
                                  as the largest broker on the Oslo Stock Exchange in        tors. In addition to increasing the level of investor
                                  terms of the number of trades.                             knowledge, the school plays an important role in
                                     One important factor behind the growth in               recruiting new clients and strengthening our ties
Norway’s share of                 number of trades was the growth experienced by             with existing clients.
the Group’s revenues in
2006
                                  the Norwegian stock market, in part due to broad
                                  international interest in oil shares. The Oslo Stock       During the year, we launched Nordnet Analysis
                                  Exchange’s general index rose by 33 per cent.              in Norway. This service gives clients support from
Number of trades                     Online brokers had a 21 per cent market share           Nordnet’s analysts, helping interpret overall market
                                  of the number of trades, which was more or less            trends, such as the effects of changing interest rates
                                  unchanged in relation to the previous year.                or earnings prospects in a particular industry.
                                  The strong growth on the home front contributed               Free real-time prices were also introduced for all
                                  to little increase in the interest in trading in foreign   investors in 2006.
                                  shares. 5 per cent of the trades made by Nordnet
                                  Norway’s clients during the year were in foreign           Marketing
                                  shares, compared to 6 per cent in 2005.                    Investments in marketing increased during the
Norway’s share of




                                  ‘‘
                                                                                             year. A large number of campaigns were launched,
the Group’s trades in 2006
                                                                                             for such things as share trading, derivative trading
                                            Launch of mutual                                 and the Experts. The NordnetSchool played a key
Active accounts                                                                              role in this marketing, not least in the way it got
                                            funds and pensions.                              participants to spread the message to friends and
                                                                                             acquaintances.
                                  New services
                                  In March 2006, we started the NordnetSchool, fol-          The future
                                  lowing the rebuilding of some of Nordnet’s offices          2007 will be the big year when it comes to the
                                  in Oslo into a training center. The school was an          launch of mutual funds and pensions in Norway and
                                  immediate success. Interest was extremely high and         this will bring the service offering to a level almost
Norway’s share of                 75 courses were held during the year, with 2,000 par-      as complete as that offered in Sweden.
the Group’s active accounts
as of Dec. 31, 2006
                                  ticipants. There was a wide range of course offerings,
                                  running from basic share trading on the Internet for       On the mutual fund side, we’ll be launching a Mu-
                                  beginners to derivatives for more advanced traders.        tual fund supermarket during the first half of 2007,
Number of accounts

‘000
  30                     29,400
                                  Norway
                23,700
       21,500                                                                                           2006              2005           Change, %
  20
                                  Revenues, MSEK                                                       191.2              120.5                    59
                                  Operating profit, MSEK                                                102.0               59.1                    73
  10
                                  Operating margin, %                                                     53                40                      -
                                  Number of trades                                                  2,248,000         1,543,000                    46
   0                              Assets in custody as of Dec. 31, MSEK                                8,100              6,200                    30
       2004      2005     2006
                                  Number of active accounts                                           29,400             23,700                    24




                                                                                                                NORDNET ANNUAL REPORT 2006              27
       Norway




                           Anders is adding the new
                            Norwegian Expert to the
                                   analysis service.




     the equivalent of the one already offered by Nordnet Sweden.                  The NordnetSchool will be expanded with several courses and
     This will enable clients to choose from a large variety of different          a number of these will be arranged in other parts of the country
     mutual funds and fund managers. The Mutual fund supermarket                   outside Oslo. Within training, the collaborations with student
     will be followed by a number of support services, such as mutual              organizations, the Shareholders’ Association and the Taxpayers’
     fund experts and example portfolios.                                          Association will be increased.
                                                                                      In 2007 we also plan to launch an investment market for
     The pension reform implemented in 2006 made it mandatory for                  structured products, such as equity index linked bonds. Private
     all Norwegian companies to offer their employees occupational                 Banking will also be introduced.
     pension plans. At the same time, the option to choose certain                    The launch of mutual funds and pensions is expected to
     other types of pension plans disappeared, which will most likely              make an important contribution to continued rapid growth. We
     lead to increased demand for regular mutual fund savings. The                 see a large degree of interest, especially among existing clients, in
     pension reform has a further positive effect since it is assumed              these new options.
     to increase the awareness of investment options among the
     Norwegian population.

     Why do you trade shares on markets other than your home market?




            Arne Bliddal, Denmark          Mikael Gidlund, Sweden    Wolfgang Floessel, Germany    Tor Dagfinn Hansen, Norway      Bjarne Westerberg, Finland


     “I’ve bought a few shares       “I worked in Norway            “Most of the day, I trade     “I like trading in markets     “Since I’m retired, invest-
     in Germany; I believe there     previously and became          solely in German shares       where the liquidity is good    ment has become almost
     will be a positive trend        interested in the Nor-         (DAX, TecDax, MDAX,           and volumes high, that ma-     like a hobby for me. I
     there after many years of       wegian market. Since a         SDAX). From 3.30 pm           kes it easy to both buy and    currently invest primarily
     low growth. Unfortunately,      Nordnet account allows         onwards, I also watch the     sell shares, and S&P500        in Finnish securities, but
     the big payoff has been a       you to trade freely in         US market (DJI, NASDAQ)       is just such a market.         when I opened my account
     bit slow in coming, but I       several different markets,     and the trends there. The     Another advantage is that      I also traded in Swedish
     can be patient a little while   I was able to trade on the     real-time index and share     you don’t have to trade in     securities due to the
     longer.”                        Norwegian market directly      prices until 10 pm are        round lots, instead all or-    higher liquidity. I’m very
                                     from my Swedish account.       crucial to day traders like   ders are treated the same.     happy with my relationship
                                     Nordnet makes it very easy     me.”                          I think my home market,        as a Nordnet client and
                                     to follow several different                                  the Oslo Stock Exchange,       think it will be a long-term
                                     markets and it’s just like                                   is a little too dependent on   relation.”
                                     trading on the Swedish                                       oil prices. The uncertainty
                                     market.”                                                     that entails is something I
                                                                                                  would like to avoid.”

28      NORDNET ANNUAL REPORT 2006
                                                                            Denmark




Strong interest in Nordic shares

                               Our growth                                              listed securities. We also launched a new version of
Revenues
                               Nordnet continued to show rapid growth in Den-          WinTrade during the year.
                   12%         mark during 2006. The number of active accounts
                               grew by 34 per cent to 9,400. The number of trades      Marketing
                               rose by 52 per cent to 1,153,000.                       Marketing investments increased during the year. In
                                                                                       May, we began a campaign together with a number
                               One important factor behind this growth was the         of investment associations to promote the fact that
                               increase in general interest in shares in Denmark. In   purchasing commission is no longer debited.
                               addition, Nordnet continued to increase its market         Another main marketing theme was Nordic trade,
Denmark’s share of
the Group’s revenues           share. Our share of the total number of trades on       especially in conjunction with OMX introducing its
in 2006                        the Copenhagen Stock Exchange was 7 percent. The        Nordic List in October. Danish interest, especially in
                               online brokers’ total market share was 11.4 per cent    Norwegian and Swedish shares, was high and rising.
Number of trades
                               of the total number of trades, an increase of 1.2 per      Other marketing was primarily focused on pricing
                               centage points.                                         campaigns. Pricing competition was tough through-
                   14%
                                  Of all our markets, Denmark was the one whose        out the year.




                                                                                       ‘‘
                               clients showed the greatest interest in foreign
                               trading in 2006. The already high level of interest
                               increased even further. A full 24 per cent of the                Bank/Broker of
                               transactions carried out were in foreign shares,
                               compared to 23 per cent in 2005.
                                                                                                the Year.
Denmark’s share of
the Group’s trades in 2006     A study comparing the costs of foreign trading car-     The future
                               ried out by the Danish financial periodical Penge &      Interest in shares in Denmark is expected to
                               Privatøkonomi named Nordnet the clear winner and        continue to grow and provide good opportunities in
Active accounts
                               the best alternative for both active and less active    share trading, mutual fund investment and pension
                6%
                               investors. Nordnet was also namned Bank/Broker          savings.
                               of the Year 2007 by the Danish Shareholders’
                               Association.                                            In 2007 we continue to broaden our service offering,
                                  Our service level was highly rated in our client     among others with an improved information service
                               surveys. Nordnet’s clients in Denmark are more          for funds. We also plan to launch pensions, probably
                               satisfied than in any of our other markets.              in the end of 2007. Interest in pensions is high
                                                                                       among Nordnet’s clients.
Denmark’s share of
the Group’s active accounts    New services                                               Furthermore, we intend to establish the Nord-
as of Dec. 31, 2006            During the year we also made it possible to trade in    netSchool, though it will differ from the schools in
                               shares in 46 different investment associations with     Sweden and Norway since we have no local office in
Number of accounts
                               no purchase commission. Investment associations         Denmark.
                               are the Danish equivalent of mutual funds and are
‘000
 10                    9,400
                               Denmark
  8                                                                                               2006              2005           Change, %
               7,000
  6    5,400
                               Revenues, MSEK                                                      82.4             55.8                   48
  4                            Operating profit, MSEK                                               47.2             33.0                   43
                               Operating margin, %                                                  57                59                      -
  2
                               Number of trades                                               1,153,000          761,000                   52
  0                            Assets in custody as of Dec. 31, MSEK                             4,700             3,300                   43
       2004    2005    2006
                               Number of active accounts                                         9,400             7,000                   34




                                                                                                          NORDNET ANNUAL REPORT 2006              29
       Finland




     Faster growth

                                   Our growth                                              The future
     Revenues
                   1%
                                   The number of clients in Finland showed a good          Our collaboration with the Shareholders’ Associa-
                                   growth during the year. By year-end, the number of      tion will continue throughout 2007 and is expected
                                   active accounts totaled 1,800, an increase of 255 per   to lead to a continued influx of clients. Together
                                   cent.                                                   with the Shareholders’ Association we are planning
                                                                                           a training course designed to increase private inves-
                                   There are two main factors behind this good             tors’ share trading knowledge.
                                   growth. Nordnet continued to offer competitive
     Finland’s share of            prices and services. And we also began a collabora-     A Mutual fund supermarket with a wide selection
     the Group’s revenues
     in 2006                       tion with the Finnish Shareholders’ Association,        of mutual funds are intended to be launched at the
                                   which improved the influx of clients during the          end of 2007 or at the beginning of 2008, which
                                   fourth quarter.                                         will considerably broaden our potential client base.
     Number of trades                 Nordnet’s share of the number of trades on the       Mutual fund investment is showing a strong upswing
                   3%              Helsinki Stock Exchange totaled 1.8 per cent during     in Finland.
                                   the fourth quarter.                                        The new common Nordic List is expected to
                                                                                           increase Finnish investors’ interest in trading in
                                   New services                                            foreign shares.
                                   During the year we also further upgraded the Finish
                                   service with regard to both functionality and
                                   appearance. At the beginning of 2007, we intro-                                        Elize and Joakim answer a
     Finland’s share of                                                                                                       question from a client.
     the Group’s trades in 2006
                                   duced our analysis service, The Experts, and during
                                   the latter half of 2007 we’ll launch derivative
                                   trading on Eurex.
     Active accounts
                   1%              Marketing
                                   Marketing was intensified and focused on, among
                                   other things, changing the common misconception
                                   that trading is expensive, complicated and requires
                                   a great deal of capital.
                                      In conjunction with the launch of the OMX
                                   Nordic List, we emphasized Nordnet’s position as
     Finland’s share of            the Nordic region’s largest online broker.
     the Group’s active accounts
     as of Dec. 31, 2006              During the last two months of the year, we ran a
                                   campaign where Nordnet offered new clients free
                                   membership in the Shareholders’ Association.
     Number of accounts

     ‘000
        2                 1,800    Finland
                                                                                                     2006              2005             Change, %

                                   Revenues, MSEK                                                      5.6               0.5                 1,020
       1
                                   Operating profit, MSEK                                              -6.3              -7.9                    20
                   500             Operating margin, %                                                neg               neg                      -
                                   Number of trades                                                247,100            78,000                   215
             0
       0                           Assets in custody as of Dec. 31, MSEK                               500               200                   150
            2004   2005     2006   Number of active accounts                                         1,800               500                   255




30      NORDNET ANNUAL REPORT 2006
                                                                             Germany




A very large market

                               Our growth                                               Nordnet’s low prices and on generally strengthen-
Revenues
                               The number of clients in Germany increased during        ing our brand. This was achieved through print
               3%
                               2006. At year-end, Nordnet Germany had 6,800 ac-         advertisements, Internet advertising and convention
                               tive account, an increase of 35 per cent compared to     participation.
                               the previous year. This was despite the fact that the
                               total number of share investors in Germany actually      New clients were attracted with an initial offer of
                               declined during the year.                                being able to trade for a minimum commission of
                                                                                        just EUR 2.49 for the first six months.




                                                                                        ‘‘
Germany’s share of             One important factor behind our growth was in-
the Group’s revenues
in 2006                        creased marketing activities, which led to increased
                               awareness among German investors of Nordnet and                  The market’s lowest
                               our low prices. The overwhelming majority of the
Number of trades               new clients came from the major banks.
                                                                                                commission.
                  10%
                               Nordnet offers trading in shares and derivatives on      It’s important to Nordnet that existing clients
                               Xetra, which is the largest electronic stock exchange    recommend us to their friends. During the year, we
                               in Germany, and on all regional stock exchanges of       ran a campaign wherein clients who recruited a new
                               any importance. Since the total German market is         client received EUR 50.
                               very large, Nordnet’s market share is still small.
                                                                                        The future
Germany’s share of
                               Focus Money Magazin named Nordnet the market’s           In 2007, we intend to continue to improve our
the Group’s trades in 2006
                               best online broker for small, medium and large cli-      service offering. Trade on the Eurex derivative
                               ents, due to the fact that we offer th market’s lowest   market will most likely be launched during the latter
Active accounts                commissions.                                             half of the year. The Experts analysis service will be
                5%                                                                      launched in March 2007.
                               New services
                               During the year we introduced the options to short
                               sell and margin lend, services that are primarily
                               geared toward active clients.

                               Marketing
Germany’s share of             Investments in marketing increased dramatically.
the Group’s active accounts
as of Dec. 31, 2006            The focus was on spreading the message about



Number of accounts

‘000
   8
                       6,800   Germany
  6                                                                                               2006               2005           Change, %
               5,000
       4,400                   Operating income, MSEK                                              18.1                 9                  101
  4
                               Operating profit, MSEK                                              -15.7             -11.1                  -41
  2                            Operating margin, %                                                 neg                neg                      -
                               Number of trades                                                 835,000           714,000                     17
  0                            Assets in custody as of Dec. 31, MSEK                              1,100               900                     22
       2004    2005     2006
                               Number of active accounts                                          6,800             5,000                     35




                                                                                                          NORDNET ANNUAL REPORT 2006               31
       Luxembourg




     An increasingly European online broker

                                    Our growth
     Revenues
                                    Nordnet Securities Luxembourg showed a relatively
                    3%              low growth in clients, but a better growth in assets
                                    in custody. Assets in custody rose by 48 per cent to
                                    approximately SEK 3 billion. Average account value
                                    was considerably higher in Luxembourg than on
                                    Nordnet’s other markets. The number of accounts
                                    rose by 9 per cent.
     Luxembourg’s share
     of the Group’s revenues        Historically speaking, operations in Luxembourg
     in 2006                        have been focused on Nordic citizens living abroad
                                    and with an interest in the Nordic stock markets.
     Number of trades
                                    Subsequently, however, Nordnet Luxembourg has
                                    become more and more of a European online broker.
                    2%
                                                                                                                      David improves the information
                                    New services                                                                            service for mutual funds.
                                    In 2006, we expanded the options in margin lend-
                                    ing on securities. In addition, a new and improved
                                    version of the trading application WinTrade was
                                    launched.                                                The future




                                    ‘‘
     Luxembourg’s share of
                                                                                             The prognosis for continued growth is good,
     the Group’s trades in 2006                                                              especially among German clients. As a result, in
                                             The prognosis for                               the spring of 2007 we’ll strengthen our service for
     Active accounts                         continued growth                                German clients by recruiting German-speaking staff
                                                                                             in Luxembourg.
                    1%                       is good.
                                                                                             The goal is to also introduce trading on other
                                    Marketing                                                exchanges. This will increase investment oppor-
                                    By changing company name at the end of 2005 from         tunities for existing clients, while simultaneously
                                    Eurotrade Securities to Nordnet Securities Luxem-        increasing our ability to attract new clients in
                                    bourg, in 2006 operations in Luxembourg could take       Luxembourg’s neighboring countries.
                                    greater advantage of the Group’s combined brand-
     Luxembourg’s share of
     the Group’s active accounts    building activities than had previously been the case.
     as of Dec. 31, 2006


     Number of accounts

     ‘000
        2                   1,900
                                    Luxembourg
                    1,700
            1,600
                                                                                                        2006              2005            Change, %

                                    Revenues, MSEK                                                      21.8               12.6                    73
        1
                                    Operating profit, MSEK                                               14.5                5.8                    150
                                    Operating margin                                                      67                46                       -
                                    Number of trades                                                 117,000            83,000                     41
        0                           Assets in custody as of Dec. 31, MSEK                              3,000              2,000                    48
            2004     2005   2006    Number of active accounts                                          1,900              1,700                     9




32      NORDNET ANNUAL REPORT 2006
                                                                                  Other operations




Thousands of people are discussing shares




                              Maria is calculating how to secure
                                    a portfolio by using options.




 VCW Internet Services                                                          The service is free for all visitors. Nordnet’s account clients also
 VCW is Sweden’s leading share discussion service, measured in                  have access to posts from the share discussion service in their web
 the number of contributions and comments.                                      service and WinTrade.
                                                                                   Sales of advertising space increased somewhat during the year,
                                                                                but are still at a very low level.
Number of visits and contributions per month
                                                                                   VCW offers daily contact with a large number of people inter-
 Visits                           Number of contributions    Contributions      ested in the stock market and as such functions as a marketing
 ‘000                             Number of visits                    ‘000      channel for Nordnet’s services.
                                                                        90




                                                                                ‘‘
1,200

                                                                           75
1,000
                                                                                        70.000 unique users
                                                                           60
 800
                                                                                        per month.
 600                                                                       45


 400                                                                       30
                                                                                Nordnet Försäkringsförmedling
                                                                                Nordnet Försäkringsförmedling distributes private insurance poli-
 200                                                                       15   cies to consumers.
    0                                                                      0
                                                                                   Operations are primarily focused on policies sold under the
        jan    mar   sep   jan    mar   sep    jan    mar   sep      dec        company’s name in collaboration with third-party insurance
        2004               2005                2006                 2006        providers. The policies are specially formulated for Nordnet’s
                                                                                account clients and offer very competitive terms.

 The high level of activity on the exchange contributed to the con-             Sales for the year were on roughly the same level as the previous
 tinued increase in traffic to the site. The average number of unique            year and operations generated a small profit. We predict that there
 users per month totaled 70,000. The number of pages visited                    are good possibilities of additional sales of savings products to
 increased during the year by 22 per cent to a total of 53 million.             the clients.
 On average, over 3,000 contributions were written per day.




                                                                                                               NORDNET ANNUAL REPORT 2006              33
       Employees




     Streamlined process dealt successfully
     with rapid staff increases

                               Nordnet aims to be a workplace where personnel          Nordnet seeks to attain a high level of diversity
     Employees by gender       can have fun while developing both intellectually       among our employees. Many different personali-
                               and professionally. In order for a person to enjoy      ties, roles and backgrounds are required. We have
           2          1
                               their work environment and do a good job for us, we     no desire to make all employees fit the same mold.
                               consider it crucial that he or she fits the four core    We need people with a wide range of expertise in
                               values of our corporate culture: honest, dedicated,     the different areas of our operations, with a wide
                               unconventional and considerate (see a more detailed     range of linguistic skills and an understanding of the
                               description of the core values on page 10).             cultures of the markets in which we operate. We also
        1. Female   45%                                                                believe that diversity promotes innovation, creativ-
        2. Male     55%        New employees                                           ity and quality.
                               At year-end, the number of employees was 238
                               (164). Of these, 45 per cent were women. The aver-      Our primary language is Swedish. Other languages
     Education
                               age age in 2006 was 31.5. The age distribution shows    are Norwegian, Danish, Finnish and German. 29 per
                      67%      a distinct peak in the cohort of 28–34 year-olds.       cent of our employees speak one of these languages
                                                                                       fluently. In addition, several of our employees speak
                               During 2006, the number of employees increased          a language other than English, such as Spanish,
                               by 74, or a full 45 per cent. With such a high          French, Estonian, Polish or Croatian.




                                                                                       ‘‘
                               recruitment rate, it’s especially important that new
                               employees are quickly and effectively integrated
                               into our operations. In order for each new employee            Diversity promotes
     Percentage university/-
     college graduates among   to be taken care of in the best possible way, an               innovation, creativity,
     employees                 approximately three-week long individual intro-
                               duction program is provided. The programs have a               and quality.
                               common basic structure that includes such things
                               as participating in Client desk activities. Each new    Competence development
                               employee also receives an introductory training         Our employees are highly skilled. However, since
                               program covering the meaning of the four core           Nordnet is the challenger that is revolutionizing
                               values, our mission, business concept, policies and     savings, we must renew our expertise all the time in
                               guidelines and internal regulations.                    order to be able to create new services and improve
                                                                                       our work methods. This was reflected in our training
                               Recruitment                                             activities, which increased during the year.
                               With the high rate of new recruitment that Nordnet
                               has had during the past two years, a well function-     During the fall, 69 people took a comprehensive,
                               ing and structured recruitment process is of utmost     company-specific SwedSec course, which leads to a
                               importance. The process was further developed           license to deal in securities. This course was offered
                               and refined during the year. Expertise is of course      to all employees. As of January 1, 2006, all employ-
                               important, but we also place a great deal of emphasis   ees that have completed the SwedSec course receive
                               on how new employees fit into our corporate culture.     a salary supplement. By year-end, 47 employees
                               The process has worked well and our experience          were licensed by SwedSec.
                               so far indicates a high degree of accuracy in our          During the year we also held regular courses in
                               recruitment process. In 2007 we’ll continue the         how to discover money laundering.
                               work in order to guarantee that new employees fit in        Additional courses covered such things as
                               well with our corporate culture.                        derivative instruments, presentation techniques and
                                                                                       service for Client desk employees. We also provided
                                                                                       regular training in our own services.




34     NORDNET ANNUAL REPORT 2006
                                                                      Employees




                                                                         Kristina, My and Thomas discuss
                                                                         the development of functions for
                                                                                           new countries.




Since Nordnet is growing so quickly, demands on management          than men do. Nordnet actively strives to create a work environ-
training increase as well, in part because there are more demands   ment where both men and women can combine their careers with
on our management and in part because we simply need more           parenthood.
managers. Management training was strengthened during the             The gender breakdown among managers, including Executive
year, by such measures as intensified work with regular Leader-      committee, is 18 women and 20 men, while among management
ship Forums, which are held every six weeks for all managers with   outside Executive committee the split is 15 women and 15 men.
responsibility for personnel. A wide range of management issues     Taking all employees into account, the breakdown is 107 women
are raised in the forums. A special course for new managers was     and 131 men.
also arranged. For 2007, we have planned management training
to teach managers how to mediate our values and our corporate       Incentives and variable salary
culture.                                                            As of 2006, we have a variable salary program encompassing all
                                                                    employees. The variable salary program means that employees
Equality of opportunity                                             who have been employed for at least one year can receive a vari-
We are proud to be an equal opportunity employer. Since the aver-   able salary of up to one month’s salary, provided the company
age age is just over 30, many of our employees are parents with     has, in the Board’s opinion, performed well in the following five
small children. Use of parental leave is more evenly split among    areas: earnings trend, market share and market position, client
the sexes than in most companies, but women take out more leave     growth, cost control and business development. In light of the


                                                                                                   NORDNET ANNUAL REPORT 2006          35
       Employees




     extremely good progress shown in 2006, a variable salary of one
                                                                             Gender distribution by department
     month’s salary was paid to all employees who had been employed
     for at least one year at the end of the year. Key employees received                                                                  No. of employees
                                                                                                                                            per department
     a variable salary after individual evaluation.                                                           52%                    48%
                                                                                     Client table                                                          38
        Since 2005, we’ve had an incentive program in the form of
     a convertible debenture loan, under which 48 employees have                                        15%                          85%
                                                                                        Brokers                                                            13
     subscribed to a total of SEK 45.5 million. The conversion price is
                                                                                                              57%                    43%
     SEK 10.05 and the loan matures in December 2010.                                Back office                                                           46
                                                                                                              37%                    63%
     Work environment                                                        IT / Development                                                              49
     By far the most important improvement to our work environ-                                               38%                    62%
                                                                                      Marketing                                                            13
     ment during the year was the move to our new premises. The new
     premises bring a range of improvements, such as better ergonom-                                          44%                    56%
                                                                                           Other                                                           79
     ics, improved functionality and more pleasant surroundings.
                                                                                                    0         20    40          60         80      100 %
     Practically speaking, this means such things as height-adjustable
                                                                                                         Female     Male
     desks for all employees. The premises are also built in such a way
     as to help foster increased collaboration and social interaction        Total per function: 238, of whom 45% are female and 55% are male.
     between different departments. A work environment group with
     representatives from most departments has been formed and is
     charged with developing an action plan for work environment             Personnel statistics                                               2006            2005
     efforts.                                                                Operating income per employee, SEK ‘000s                        3,133            3,146
        The special health group continued during the year, following        Training cost per employee, SEK ‘000s                             7.5              4.0
     2005’s Year of Healthy Living with all sorts of activities to encour-   Number of employees at year-end                                   238              164
     age healthier lifestyles, including better eating habits and more       SwedSec-licensed employees                                         47               31
     exercise. 2007 will also be a Year of Healthy Living at Nordnet.        Employee turnover                                                13%              13%
                                                                             Average age                                                      31.5             32.2
                                                                             Sick leave                                                     2.12%            0.98%




                                                                             Average number of employees

                                                                             Number
                                                                               250
                                                                                                                                                       211
                                                                               200

                                                                              150                                                      138

                                                                                            95                           94
                                                                               100                            82

                                                                                50

                                                                                 0
                                                                                           2002           2003           2004          2005            2006




36      NORDNET ANNUAL REPORT 2006
                                                                          Employees




Senior managers, managers
and key personnel                                                                                             3. Victoria Thore
                                                                                                                 Country manager Sweden and
                                                                                                                 Head of marketing
                                                                              Fredrik Svederman
                                                                              Head of accounting

                              Stefan Kuhl                    2. Anders Råge
                             Senior project manager            CAO and CFO                    Oscar Lindvall
                                                                                              CEO Nordnet Pension




              1. Klas Danielsson
                 CEO




                                      Peter Malmqvist
4. Lars Thorstensen                   Head of research
  Operations manager,
  Oslo Branch
                        5. Jessica Gertun                Sarah Bucknell
                          Head of corporate              Credit manager
                          communication




                                                                                                   6. Torbjörn Östman
                                                                                                     Head of project management
                                                                                                     and acting Head of product
                                                                                                     development




                                                                                                       NORDNET ANNUAL REPORT 2006             37
     Employees




                                                                                                          7. Maria Zalamans
                                                                                                            Head of HR


                                                                                              Max Gandrup                     Sven Kruth
                                                                                              Country manager                 Head of back office
                                                                             Mirre Laurell    Denmark
                                                                             Legal officer




                               Daniel Ljungel
                               Product manager




          Martin Andersson
          Head of trading


                      8. Juan Segura
                            Head of new technology           Taru Rantala
                            and innovation                   Country manager Finland


                                     Lennart Södergren
                                     Acting Head of client
                                     services


                                                                                 David Craelius
                                                                                 Head of IT




                                                                                                         Missing in the pictures


                                                                                                         Anders Thonning
                                                                                                         CEO Nordnet Securities Luxembourg S.A.

                                                                                                         Markus Muth
                                                                                                         Country manager Germany




38   NORDNET ANNUAL REPORT 2006
                                                                   Employees




Executive committee
The numbers below refer to the numbers on pages 37–38, which     5. Jessica Gertun, age 32
identify the members of Executive committee                         Head of corporate communication
                                                                    Education: B.Sc. (Econ.)
1. Klas Danielsson, age 43                                          Employed since 1998
   CEO                                                              Shares in Nordnet (incl. related parties): 34,000
   Education: Business administration and legal studies             Convertibles: entitled to convert into 99,502 shares.
   Other appointments:
   Board member, Swedish Securities Dealers’ Association and     6. Torbjörn Östman, age 42
   The Swedish Consumers’ Banking & Finance Bureau                  Head of project management and acting Head of product
   Employed since 1997                                              development
   Background and previous employers: Co-founder of Nordnet         Education: Business administration studies
   (formerly Danielsson & Partners and TeleTrade), SBC Warburg      Employed since 1997
   Shares in Nordnet (incl. related parties): 8, 776                Previous employers: OMX
   Convertibles: entitled to convert into 995,024 shares.           Shares in Nordnet (incl. related parties): 0
                                                                    Convertibles: entitled to convert into 298,507 shares.
2. Anders Råge, age 49
   CAO and CFO                                                   7. Maria Zalamans, age 42
   Education: B.Sc. (Eng)                                           Head of HR
   Employed since 1999                                              Education: Behavioral science/B.Sc. (Econ.)
   Previous employers: Aragon Fondkommission AB,                    Employed since 2005
   Götabanken                                                       Previous employers: Cell Network, Svenska Torget
   Shares in Nordnet (incl. related parties): 40,000                AB, PostNet
   Convertibles: entitled to convert into 497,512 shares.           Shares in Nordnet (incl. related parties): 2,000.

3. Victoria Thore, age 39                                        8. Juan Segura, age 33
   Country manager Sweden and Head of marketing                     Head of new technology and innovation
   Education: B.Sc. (Econ.), MBA                                    Education: Computing and systems analysis studies
   Employed since 2005                                              Employed since 1998
   Previous employers: BGC AB, A-Comgruppen, Lexivision/            Previous employers: YASK Systemutveckling AB
   ins, Östgöta Enskilda Bank AB                                    Shares in Nordnet (incl. related parties): 16
   Shares in Nordnet (incl. related parties): 0.                    Convertibles: entitled to convert into 497,512 shares.

4. Lars Thorstensen, age 32
   Operations manager, Oslo Branch
   Education: B.Sc. (Econ.)
   Employed since 2000
   Previous employers: Lilleborg (Orkla)
   Shares in Nordnet (incl. related parties): 12,000
   Convertibles: entitled to convert into 199,005 shares.




                                                                                              NORDNET ANNUAL REPORT 2006     39
       Board of Directors




     Board of Directors
     Nils Nilsson, age 45, Member                 Sven Skarendahl, age 64, Member          Ulf Dinkelspiel, age 67, Member
     Education: Stockholm School of Economics     Education: Pol.mag, Uppsala University   Education: B.Sc. (Econ.)
     Other main appointments: Founder and         Other main appointments: Chairman:       Stockholm School of Economics
     chairman of Russian Real Estate Investment   LBI International AB. Board member,      Other main appointments:
     Company AB. Board member, Invest Real        Libertas Capital PLC in London and       Chairman: Landshypotek AB, Sveriges
     Asset Fund AB and Malka Oil.                 British-Swedish Chamber of Commerce in   Allmänna Hypoteksbank, Springtime AB,
     Board Member since: 2005                     Stockholm.                               Stiftelsen Sverige i Europa and Föreningen
                                                  Board Member since: 2001                 Svenskar i Världen. Deputy chairman:
     Shares in Nordnet: 0                                                                  Royal Institute of Technology, ICC Sverige.
     Independent according to Stockholm           Committees: Remuneration                 Board member, E. Öhman J:or AB, AB
     Stock Exchange listing agreement             Shares in Nordnet: 0                     Ångpanneföreningen and Bockholmen Hav
                                                  Independent according to Stockholm       och Restaurang AB. Member of the Board
                                                  Stock Exchange listing agreement         of IVA.
                                                                                           Board Member since: 2001
                                                                                           Committees: Remuneration
                                                                                           Shares in Nordnet: 5,906,177
                                                                                           Dependent according to Stockholm
                                                                                           Stock Exchange listing agreement




40      NORDNET ANNUAL REPORT 2006
                                                               Board of Directors




Bo Mattsson, age 46, Member                  Annica Axelsson, age 36, Member              Claes Dinkelspiel, age 65, Chairman
Education: B.Sc. (Econ.) Stockholm School    Education: B.Sc. Högskolan Falun/            Education: B.Sc. (Econ.) Stockholm School
of Economics                                 Borlänge. MBA, University of Colorado        of Economics. MBA Insead, France
Previous positions with Nordnet              Other main appointments:                     Other main appointments:
or related companies:                        Current appointment: Head of Agents          Chairman: E. Öhman J:or AB, Emric AB,
Founder of Eurotrade, president of Nordnet   Division, Svenska Spel. Honorary appoint-    Gummesson Gruppen AB, MPS Holding AB
Holding AB                                   ments: Advertisers’ Committee,               and Stockholms Köpmansklubb. Board-
Other main appointments:                     Sweden’s Advertisers’ Organization.          member, Intellecta AB, Prevas AB, Små-
Founder and president of CINT AB (Cint.      Board Member since: 2006                     företagarinvest AB, FBN Sweden Service AB
com). Board member, Room328 AB and                                                        and Stiftelsen Silviahemmet.
                                             Shares in Nordnet: 0
Sponsorhuset.                                                                             Board Member since: 2001
                                             Independent according to
Board Member since: 2003                                                                  Committees: Nominating, Remuneration
                                             Stockholm Stock Exchange
Committees: Remuneration                                                                  Shares in Nordnet: 4,800,338
                                             listing agreement
Shares in Nordnet: 15,012                                                                 Dependent according to Stockholm
Independent according to Stockholm                                                        Stock Exchange listing agreement
Stock Exchange listing agreement




                                                                                         NORDNET ANNUAL REPORT 2006              41
       Corporate governance




     Corporate governance

     The management, direction and control of Nordnet is divided                         that Claes Dinkelspiel be elected chair of the Board; and
     between the shareholders (via the Annual General Meeting),                          that a Nomination committee comprising Fred Wennerholm
     the Board and the CEO in accordance with the Swedish Compa-                         (chair), Olle Isberg and Claes Dinkelspiel be appointed.
     nies Act and the Articles of Incorporation. The company is not
     covered by the Stockholm Stock Exchange requirement to comply                See www.nordnet.se (About Nordnet) for the minutes of
     with the Swedish Code of Corporate Governance. However, the               the AGM.
     company has taken note of the Code and actions have been taken
     to be prepared to comply with it when it comes into question.             Nomination committee
        The following account of Nordnet’s corporate governance has            Nominations for candidates for Nordnet’s Board are made through
     not been examined by the company’s auditors.                              the Nomination committee appointed by the AGM. The members
                                                                               of the Nomination committee are described in the table below and
     Articles of Incorporation                                                 represent shareholders controlling some 36 per cent of the capital
     Nordnet AB (publ)’s Articles of Incorporation, adopted at the             on December 31, 2006.
     2006 Annual General Meeting, stipulate, among other things,
     that the company’s business is to pursue, through subsidiaries or
     associate companies, banking, securities trading and insurance            Nomination committee
     operations and related activities, as well as, directly or through sub-   Member                                                       Shareholding
     sidiaries or associate companies, pursue insurance brokerage and          Fred Wennerholm                                                     10,000
     provide financial information over the Internet and related activi-        Olle Isberg                                                      2,500,000
     ties. The Board shall comprise at least three but no more than ten        Claes Dinkelspiel1)                                             55,774,488
     members. The company is headquartered in Stockholm, Sweden.               1)
                                                                                    Representing E. Öhman J:or AB and private shareholding, see page 47.


        See www.nordnet.se (About Nordnet) for the Articles
     of Incorporation.                                                         The committee had two meetings. The committee’s work began with
                                                                               an assessment of the incumbent Board, conducted by attorney Fred
     Annual General Meeting 2006                                               Wennerholm. Background material was provided in the shape of
     The Annual General Meeting, or AGM, is Nordnet’s highest                  details of the company’s business and strategic development, an
     decision-making body. The AGM was held on April 26, 2006 in               analysis of the Board members’ strategic competence, Board work
     Stockholm, Sweden. Claes Dinkelspiel, Chair of the Board, was             and education, and reports on the work of the company’s Remu-
     elected to chair the meeting.                                             neration committee and Board meetings with the auditors. The
                                                                               principal shareholders were also canvassed for opinions.
     The AGM passed the following decisions:
        Adopted the income statement and balance sheet, dealt with                The Nomination committee’s proposal is included in the
        the profit in accordance with the adopted balance sheet, dis-           invitation to the AGM and additional information is available at
        charged the members of the Board and the CEO from liability            www.nordnet.se (About Nordnet).
        A dividend of SEK 0.10 per share was paid for 2005,
        equivalent to SEK 16,501,888, leaving retained profits of SEK           Remuneration for members of the Nomination committee
        14,554,135 to be carried forward                                       amounted to SEK 25,000, paid to Fred Wennerholm.
        The AGM decided, in accordance with the proposal of the
        Nomination committee (which represented the owners of about            The Board and its work
        38 per cent the company share):                                        General
           that the number of Board members elected by the AGM                 In 2006, Nordnet’s Board had six members elected by the Annual
           should be six, with no deputy members;                              General Meeting. The CEO is not a member of the Board, but does
           that the Board be paid remuneration of SEK 875,000                  participate in meetings. Normally, one of the company lawyers
           (650,000);                                                          acts as secretary at Board meetings. Other company officers have
           that Claes Dinkelspiel, Ulf Dinkelspiel, Bo Mattsson,               participated in Board meetings to present business.
           Nils Nilsson and Sven Skarendahl be re-elected to the Board.           The Board’s work adheres to a fixed plan, particularly in the
           Annica Axelsson, Head of Agents Division, Svenska                   case of recurrent business. The Board adopted the latest applica-
           Spel AB, was elected a new member of the Board;                     ble set of procedures on December 14, 2006. The agenda of each


42      NORDNET ANNUAL REPORT 2006
                                                                             Corporate governance




meeting includes a number of strategic issues and items important         operations, major investments, the appointment and remuneration
to business, often with the participation of the concerned business       of executives, and regular business reviews throughout the year.
heads. The Board meeting in February covered the year-end                 The Board also approves business plans and the annual financial
report for the previous year. The Board considers its dividend            statements. The latest instructions for the CEO were adopted on
proposal and any updates/additions to the business plan for the           April 26, 2006.
year. The March meeting deals with the annual report. April meet-
ings are held on the day before and the day of the AGM to deal            Chairman
with the results of the first quarter and any review of the Group’s        Claes Dinkelspiel was elected Chairman of the Board at the
strategies. The statutory Board meeting is held in conjunction with       Annual General Meeting on April 26, 2006 for the period until
the AGM to decide on authorized signatories and other formal              the end of the next AGM. The Chairman supervises the Board’s
matters, such as Board procedures and other important points.             work to ensure it is conducted in accordance with the Swedish
The July meeting deals with the results of the first six months,           Companies Act and other applicable laws. The Chairman monitors
while the October meeting deals with the interim report for the           the business through a dialogue with the CEO and is responsible
third quarter and the focus of the business plan for the coming           for ensuring that the other Board members receive the information
financial year. The last ordinary meeting in December deals with           necessary to maintain the quality of discussions and decisions.
preparations for the annual financial statements and the approval          The Chairman also participates in the assessment and develop-
of the business plan for the coming year.                                 ment of the Group’s senior managerss. The Chairman represents
   Other business is dealt with according to its nature. Each             the company in shareholder relations.
month, the Board receives a report on the company’s earnings
trend, credit and risk exposure, and relevant industry data. The          The Board’s work
Board’s work is also influenced by the set of procedures adopted           During the year, the Board held eight minuted meetings, excluding
for the division of responsibility between the Board and the CEO.         those held per capsulam. On two occasions, telephone meetings
   Separate instructions are drawn up for the company’s CEO. The          were held on the basis of previously distributed material. There
Board supervises the CEO’s work and is responsible for ensuring           were also five per capsulam meetings. It is typical for the Board of
that the organization, leadership and guidelines used to manage           a growth company such as Nordnet to meet frequently. The Board
the company’s assets are suitably structured. The Board is also re-       works intensively as a means of supporting company management.
sponsible for the development and following up of the company’s           Our successful growth is the result of factors such as very active
strategies through plans and goals, decisions to acquire or divest        cooperation between the Board and company management.


Attendance
Members of the Board and number of minuted meetings

                                                                     Dependent/              Remuneration
                                                    Attendance     Independent 1)               committee      Remuneration 2)   Shareholding
Claes Dinkelspiel, Chairman                                 8/8                               3/3                    250,000       4,800,338
Ulf Dinkelspiel                                             8/8                               3/3                      125,000      5,906,177
Bo Mattsson                                                 8/8                               3/3                      125,000         15,012
Nils Nilsson                                                4/8                                                        125,000             0
Sven Skarendahl                                             7/8                               3/3                      125,000             0
Annica Axelsson 3)                                          5/8                                                        125,000             0
Average duration                                     2 h 50 min
Total, SEK                                                                                                             875,000
    = The member is to be considered dependent on the company and its management.
    = The member is to be considered independent of the company and its management, as well as of major shareholders.
To April 26, 2006 Bengt Marnfeldt was member of the Board.
1) According to the definition in the Swedish Code of Corporate Governance.
2) This amount refers to the Board member’s remuneration decided by the AGM. Sven Skarendahl also received SEK 22,674

   in travel expenses in 2006. Each member of the Remuneration committee have also received a remuneration of SEK 25,000.
3) Elected at the AGM on April 26, 2006.




                                                                                                          NORDNET ANNUAL REPORT 2006            43
       Corporate governance




     Important decisions during the year                                     ing, including year-end reports, interim reports, annual reports,
     Important business covered during the year:                             press releases with financial content and presentation material
                                                                             in conjunction with meetings with the media, shareholders and
        management and organizational development                            financial institutions.
        geographic expansion and an assessment of this expansion                The interim reports for the first, second and third quarters of
        broadening of services and client offering                           2006 were also subject to review by the company’s auditors.
        system and capacity development and associated investments              In the competition held by the Swedish Stockholders’ Asso-
        continued development of the company’s pension services              ciation and the Swedish financial daily Dagens Industri on the
        business plan.                                                       quality of the financial reporting and information of listed Swedish
                                                                             companies, Nordnet came in tenth.
     Contact with the auditors
     In order to ensure the Board is fully informed, each year the com-      Executive committee
     pany’s auditors in charge report their audit findings to the entire      The CEO runs the business within the limits established by the
     Board. In view of it’s size, Nordnet’s Board has not considered it      Board. The CEO compiles the information required for Board meet-
     worthwhile to appoint a separate audit committee.                       ings, presenting business and motivating proposed decisions. The
                                                                             CEO heads Executive committee’s work and makes decisions in
     Committee work                                                          consultation with other managers (see table below):
     The Board has full insight into and ultimate responsibility for all
     matters on which it is required to decide. The preparation of remu-
                                                                             Executive committee
     neration issues has been delegated to a Remuneration committee
                                                                             Senior executives     Title
     established by the Board.
                                                                             Klas Danielsson       CEO
                                                                             Anders Råge           CAO, CFO and VP of Nordnet Bank AB
     Remuneration committee                                                  Victoria Thore        Country manager Sweden and Head of marketing
     The Remuneration committee consists of Chairman Claes Dinkel-           Lars Thorstensen      Operations manager Oslo Branch
     spiel and Board members Ulf Dinkelspiel, Bo Mattsson and Sven           Jessica Gertun        Head of corporate communication
     Skarendahl. The committee prepares matters relating to the CEO’s        Torbjörn Östman       Head of project management and acting Head
                                                                                                   of product development
     salary, variable salary and terms of employment for decision by the
                                                                             Maria Zalamans        Head of HR
     Board. Further, the committee deals with the salaries, variable sala-   Juan Segura           Head of new technology and innovation
     ries and other benefits of Group executives for decision by the Board.
     Finally, the committee also prepared business for decision by the
     Board concerning the variable salaries and salaries of other managers   The Executive committee holds eight to twelve minuted business
     and key personnel.                                                      meetings chaired by the CEO each year. Most managers also meet
        The Remuneration committee held three meetings during the year.      daily. The company’s rapid development makes daily contact es-
     Remuneration of SEK 25,000 was paid to each committee member.           sential for effective management and control. The internal reporting
                                                                             and control system is based on annual financial planning and daily
     Board remuneration                                                      checks of all financial key ratios with monthly reports. During the
     The total remuneration paid to the members of the Board is              year the Chairman of the Board held performance reviews with the
     decided by the AGM based on the Nomination committee’s                  CEO in line with the CEO instructions and requirements.
     proposal. Remuneration for 2006 totaled SEK 875,000, of which
     SEK 250,000 was paid to the Chairman and SEK 125,000 to each            Remuneration
     of the other members. In addition to this, remuneration of SEK          Remuneration to the CEO and the other seven members of execu-
     25,000 is paid for each committee membership (see the table on          tive management consists of a basic salary, a variable salary, other
     page 43 for details).                                                   benefits and a pension plan. The division between basic salary
                                                                             and variable salary shall be in proportion to each executive’s
     Reporting                                                               responsibility and authority.
     The Board monitors the quality of the company’s financial report-           The CEO’s variable salary for 2006 was limited to SEK 1,320,000
     ing by means of regular follow-ups within the Board and instruc-        (corresponding to 50 per cent of the basic salary). The variable sala-
     tions for the CEO.                                                      ries received by the other executives were limited to 25–30 per cent
        It is the duty of the CEO, together with the CFO and the Head of     of their basic salaries. Variable salaries are based on the Group’s
     Accounting, to scrutinize and verify all external financial report-      financial development and individual performance.


44      NORDNET ANNUAL REPORT 2006
                                                                               Corporate governance




Nordnet has defined contribution pension plans for all employees.            ing and the administration of the Board and the CEO. The auditors
The CEO retires at 60 years of age. In 2006, the pension level in           reported their observations in conjunction with the February
relation to salary was 19 per cent of the pensionable income. Pen-          2007 Board meeting covering the annual financial statements. In
sionable income comprises basic salary including vacation pay.              addition to Ernst & Young, the subsidiaries Nordnet Bank AB and
   In addition to a mutual period of notice of six months, the              Nordnet Pensionsförsäkring AB have an official auditor appointed
CEO is entitled to 18 months’ severance pay at the same rate as             by the Swedish Financial Supervisory Authority. Catarina Erics-
the salary paid during the period of notice. If the CEO takes up a          son, authorized public accountant, of PricewaterhouseCoopers AB
new position or starts a business during the period of notice, any          has held this position since 2006.
income from such employment or business shall be deducted from
the severance pay. Other senior executives have mutual periods of           Remuneration
notice of 3–6 months. There are no severance pay agreements for             The following remuneration has been paid to auditors and auditing
other senior executives.                                                    firms for audits and other statutory reviews, consulting services
   The CEO and other senior executives are entitled to a company            and other assistance resulting from observations made in audits.
car. This is neutral in terms of cost to the company, as a gross salary     Remuneration has also been paid for independent consulting
deduction is made from the basic salary to cover the company’s              services, most of which relate to audits and concern accounting
costs.                                                                      and tax issues.

Auditors                                                                    Independent audit (internal audit)
External auditors                                                           In accordance with Nordnet Bank AB’s Board procedures and the
At the 2004 AGM, Ernst & Young were elected auditors of Nord-               Swedish Financial Supervisory Authority’s guidelines, Nordnet
net AB for a period of four years. The next ordinary election of au-        Bank’s Board has appointed an independent audit group. The
ditors will take place in 2008. Björn Fernström, authorized public          Board is responsible for coordinating the work of this group and
accountant, was elected auditor in charge. Ernst & Young was also           evaluating the results. The independent auditor, acting on behalf
elected auditor for all subsidiaries. In addition to Nordnet, Björn         of the Board, shall audit the company. Each year, the Board de-
Fernström is also auditor for the listed companies Elektronikgrup-          cides on an audit plan for the independent auditor to follow. The
pen, Klövern, Munters, OMX, Orc Software, Protect Data, Saab                auditor may also take the initiative to employ outside expertise to
and also for AMF Pension. The auditors’ role is to examine the an-          assist with the audit, which has taken place during 2006.
nual report, the consolidated financial statements, the bookkeep-




Remuneration to auditors
                                                                     Group                                        Parent company
SEK                                                        2006             2005           2004           2006                2005              2004
Auditing                                               2,809,000      2,803,000        3,049,000        893,000            600,000           655,000
Other consulting services                               580,000           982,000      1,465,000        300,000                        -      87,000


Remuneration to Executive committee
                                                       Variable         Other                            Financial
SEK                                 Basic salary         salary       benefits       Pension cost      instruments          Other               Total
CEO                                   2,585,000       1,155,000           33,000        502,000                    -               -       4,275,000
Other Group executives                6,054,000       1,398,000           92,000       1,054,000                   -               -       8,598,000




                                                                                                          NORDNET ANNUAL REPORT 2006                   45
       The share




     A market value of SEK 3.9 billion

                                       Nordnet’s share has been listed on the OMX Nordic        Stockholm and Carnegie Small Cap indexes rose by
     Shareholder domicile
                                       Exchange under the ticker symbol NN B since Octo-        29 per cent and 34 per cent respectively.
             2             1           ber 2, 2006. Prior to this, the share had been listed
                                       on the Stockholm Stock Exchange O-List since April       The year high of SEK 30 was noted on April 26, while
                                       2000. On the Nordic Exchange, Nordnet is included        the year low of SEK 17.10 was noted on January 18,
                                       in the finance and real estate sector under the Mid       2006. At the end of 2006, Nordnet’s market value
                                       Cap segment.                                             was SEK 3,944 (3,482) million.

           1. Sweden          85%      Share capital                                            The average annual total return for the past five
           2. Other countries 15%
                                       On December 31, 2006, Nordnet had 165,018,878            years for Nordnet share was 70 per cent. The corre-
     Distribution of ownership,        outstanding shares and the ratio value was 1.0. All      sponding trend for the SIX Return Index for the same
     Dec. 31, 2006                     shares are B Series, providing equal voting rights       period was 17 per cent a year.
                                       and equal shares of the company’s capital and
     Shareholders by                   profits.                                                  Trading volume
     category                                                                                   In 2006, 103,563,231 shares were traded in 53,434
                   56                  In 2005, a convertible loan program was introduced       transactions, corresponding to a value of SEK 2,302
              4           1
                                       for Nordnet’s key personnel and other employees.         million. On average, this means 395,262 shares in
                                       48 employees subscribed to the convertible loan.         213 transactions at a value of SEK 9.2 million each
       3                               Subscriptions totaled SEK 55 million, of which SEK       trading day. On an annual basis, Nordnet share was
                                       9.5 million came from the affiliated company Go4us        traded at a turnover rate of 60 per cent (35). Nordic
                                       Nordic AB. The conversion price is SEK 10.05 and         Mid Cap Stockholm had a turnover rate of 98 per cent
                        2
     1. Financial and other
                                       the conversion period runs from July 1, 2009 to          (87) during the same period.
        institutions           36%     November 30, 2010. The convertible loan carries
     2. Private individuals    33%
                                       interest at a rate corresponding to the 7-day STIBOR     Shareholders
     3. Shareholders abroad    15%
     4. Non-financial                  plus 1.20 per centage points. Consequently, the          On December 31, 2006, Nordnet had 7,745 share-
        enterprises            14%     interest rate at the end of 2006 was 4.35 per cent.      holders (7,133), an increase of 9 per cent over the
     5. Charities and
        associations              1%   Assuming full conversion, the number of shares will      previous year. E. Öhman J:or AB is the largest share-
     6. Public sector             1%   increase by 5,472,636, corresponding to a dilution       holder with 30.9 per cent of the capital (30.9). The
     Distribution of ownership,        of some 3.3 per cent.                                    ten largest shareholders control 66.2 per cent (68.2)
     Dec. 31, 2006                                                                              of the votes and capital.
                                       Share price trend and total return
                                       In 2006, Nordnet’s share price rose by 13 per cent       Shareholders living in Sweden own 85 per cent (85)
        Current share price            (172), from a buying price of SEK 21.10 per share        of the capital. At the end of the year, financial and in-
     at www.nordnet.se                 at the close of 2005 to SEK 23.90 at the close of        stitutional investors, 36 per cent, and private investors,
     (About Nordnet)                   2006. During the same period, the Nordic Mid Cap         33 per cent, were the largest shareholder categories.



     Shareholding by size, Dec. 31, 2006
                                                                                                       Average shares per
     Shareholding size                       No. of Shareholders                No. of shares                shareholder       Share of votes and capital

     1              - 5 000                                6,889                    7,816,804                        1,135                        4.74%
     5 001          - 50 000                                 733                   10,695,751                       14,592                        6.48%
     50 001         - 500 000                                 95                   14,003,851                      147,409                        8.49%
     500 001        - 5 000 000                               23                   44,588,751                    1,938,641                       27.02%
     5 000 001 - 50 000 000                                    4                   36,939,571                    9,234,893                       22.39%
     50 000 001 -                                              1                   50,974,150                   50,974,150                       30.89%
     Total                                                 7,745                165,018,878                        21,307                        100.0%




46      NORDNET ANNUAL REPORT 2006
                                                                                      The share




Dividend
                                                                             Nordnet, share price trend and trading volume 2006
Nordnet’s dividend policy stipulates that profits that are not
                                                                              SEK                                                                    ‘000 shares
needed to finance the consolidation, development and growth
                                                                              30                                                                             8,000
of operations shall be transferred to the shareholders. The
dividend shall in the long term not be less than 40 per cent of                                                                                              7,000
the profit. The Board and the CEO propose a dividend of SEK                                                                                                   6,000
0.50 per share.




‘‘
                                                                              25
                                                                                                                                                             5,000


            E. Öhman J:or AB is the                                                                                                                          4,000

                                                                                                                                                             3,000
            largest shareholder.                                              20
                                                                                                                                                             2,000

Largest shareholders                                                                                                                                         1,000
Shareholder                        Shareholding    Votes and capital, %
                                                                              15                                                                             0
E. Öhman J:or AB                      50,974,150                 30.9%                  jan    feb mar apr may june july aug sept oct nov dec
Premiefinans AB                        17,663,878                 10.7%                          Carnegie Small Cap Index           Source: SIX/Hallvarsson&Halvarsson

SIS Segaintersettle AG                 7,502,593                  4.6%                          Nordic MidCap Sweden
                                                                                                Nordnet share price             Number of Nordnet shares traded
Dinkelspiel, Ulf                       5,906,177                  3.6%
Versteegh, Catharina                   5,886,550                  3.6%
Bredberg, Micaela                      5,886,550                  3.6%       Nordnet, total return and trading volume 2002–2006
Dinkelspiel, Tom C-son                 4,886,550                  3.0%       SEK                                                                      ‘000 shares
Dinkelspiel, Claes                     4,800,338                  2.9%
                                                                              30                                                                            25,000
Åhlgren, Per                           3,122,024                  1.9%
UBS AG                                 2,594,500                  1.6%
                                                                              25
Isberg, Olle                           2,300,000                  1.4%                                                                                      20,000
Sydbank A/S                            2,027,690                  1.2%
                                                                              20
Dinkelspiel, Peder                     1,994,263                  1.2%
                                                                                                                                                            15,000
Dinkelspiel, Jan                       1,966,263                  1.2%
                                                                              15
Dinkelspiel, Louise                    1,962,977                  1.2%
IDG International Data Group           1,940,000                  1.2%                                                                                      10,000
                                                                              10
Dinkelspiel, Anna                      1,926,406                  1.2%
Danske Fonder Sverige                  1,609,200                  1.0%                                                                                      5,000
                                                                                  5
Roburs fonder                          1,531,000                  0.9%
Fjärde AP-Fonden                       1,370,400                  0.8%
                                                                                  0                                                                         0
Total, 20 largest shareholders     127,851,509                  77.5%                         2002          2003       2004        2005            2006
Total, other shareholders           37,167,369                  22.5%                                                             Source: SIX/Hallvarsson&Halvarsson
                                                                                              SIX Return Index
Total                              165,018,878                 100.0%                         Nordnet, total return           Number of Nordnet shares traded


 Data per share, SEK                                                      2006                    2005                2004                2003                   2002
 Profit/loss before tax                                                     1.77                      1.21             0,64                 0.26                  -0.12
 Profit/loss after tax                                                      1.25                      0.88             0,49                 0.19                  -0.12
 Operative cash flow                                                        1.21                      1.11             0,84                 0.34                     neg
 Dividend                                                                 0.501)                     0.10                -                     -                        -
 P/E-ratio                                                                  19                        24                16                   20                     neg
 Equity per share                                                          4.19                      3.12             2,03                 1.22                     1.03
 Closing share price                                                      23.90                   21.10               7,75                 3.85                     2.00
 Average number of shares before dilution                       165,018,878              165,018,878           158,063,701       155,745,308            155,745,308
 Average number of shares after dilution                        170,491,514              167,907,214           158,063,701       155,745,308            155,745,308
 Closing number of shares                                       165,018,878              165,018,878           165,018,878       155,745,308            155,745,308
1)
     Proposed dividend


                                                                                                                      NORDNET ANNUAL REPORT 2006                            47
      Contents: Directors’ Report and Accounts




     Contents: Directors’ Report
     and Accounts
     Directors’ Report                                                  49     Note 24. Intangible fixed assets                                      78
                                                                               Note 25. Tangible fixed assets                                        79
     Consolidated income statements                                     54     Note 26. Other assets                                                79
                                                                               Note 27. Prepaid expenses and accrued income                         79
     Consolidated balance sheets                                        55     Note 28. Liabilities to credit institutions                          79
                                                                               Note 29. Deposits and borrowing from the public                      79
     Changes in consolidated equity                                     56     Note 30. Other liabilities                                           79
                                                                               Note 31. Accrued expenses and deferred income                        80
     Consolidated cash flow statements                                   57     Note 32. Subordinated liabilities                                    80
                                                                               Note 33. Equity                                                      81
     Consolidated operating cash flow statements 58                             Note 34. Pledged assets & contigent liabilities                      81

     Parent company income statements                                   59     Parent company
                                                                               Note 35. Other operating income                                      81
     Parent company balance sheets                                      60     Note 36. Other external costs                                        81
                                                                               Note 37. Personnel costs                                             82
     Changes in parent company equity                                   61
                                                                               Note 38. Depreciation, amortization, and impairment
                                                                                        of tangible and intangible fixed assets                      82
     Parent company cash flow statements                                 62
                                                                               Note 39. Income from participations in affiliated companies           82
                                                                               Note 40. Other interest income and interest expense                  82

     Notes                                                              63     Note 41. Taxes                                                       83
                                                                               Note 42. Tangible fixed assets                                        83
       Note 1. Company information                                      63
                                                                               Note 43. Participations in affiliated companies                       84
       Note 2. Accounting principles applied in the report              63
                                                                               Note 44. Other receivables                                           85
       Note 3. Changed accounting principles                            63
                                                                               Note 45. Prepaid expenses and accrued income                         85
       Note 4. Important estimates and assessments                      63
                                                                               Note 46. Equity                                                      85
       Note 5. Applied accounting principles                            63
                                                                               Note 47. Other liabilities                                           85
       Note 6. Transactions with affiliated companies                    69
                                                                               Note 48. Accrued expenses and deferred income                        85
       Note 7. Risks                                                    70
                                                                               Note 49. Information on intra-Group purchases and sales              85

       Group                                                                   Note 50. Book and fair values of balance sheet items                 85

       Note 8. Net interest                                             71     Note 51. Fixed rate terms                                            86

       Note 9. Net commission                                           72     Note 52. Valuation of assets and liabilities in foreign currencies   87

       Note 10. Net income from financial transactions                   72     Note 53. Capital adequacy                                            87

       Note 11. Other operating income                                  72
       Note 12. Other general administrative expenses                   72
       Note 13. Depreciation, amortization, and impairment
                                                                             Five-year summary                                                      88
                of tangible and intangible fixed assets                  74
                                                                             Key ratios                                                             89
       Note 14. Other operating expenses                                74
       Note 15. Net credit losses                                       74
                                                                             Proposed profit distribution                                            91
       Note 16. Taxes                                                   75
       Note 17. Earnings per share                                      76   Audit report                                                           92
       Note 18. Eligible government securities                          76
       Note 19. Lending to credit institutions                          76   Definitions                                                             93
       Note 20. Lending to the public                                   76
       Note 21. Financial assets at fair value through profit and loss   77   Addresses                                                              94
       Note 22. Financial assets available for sale                     77
       Note 23. Assets and liabilities in insurance business            77   Awards and honours                                                     96


48    NORDNET ANNUAL REPORT 2006
                                                                         Directors’ Report




Directors’ Report

Introduction                                                           During the first quarter, Nordnet Pensionsförsäkring AB launched
The Board and Chief Executive Officer of Nordnet AB (publ),             Tjänstepension, an occupational pension plan, to follow up the
(Nordnet), Swedish corporate identity number 556249-1687,              Kapitalpension, Kapitalförsäkring, and Privatpension product
hereby present the annual report and the consolidated financial         launches of 2005. Together with IPS (Individual Pension Savings),
statements for the 2006 financial year. Nordnet AB (publ)’s share       which was already available from Nordnet Bank AB, this range
has been listed on the OMX Nordic Exchange Midcap list since           comprises Nordnet Pension.
October 2, 2006. Prior to this, the share had been listed on the
Stockholm Stock Exchange O-list since April 2000. The compa-           At the end of May, the Swedish magazine Internetworld named
ny’s principal shareholder is E. Öhman J:or AB. For additional         Nordnet’s Swedish website the Best Website in its Banking and
shareholder information, see page 47.                                  Finance category.
                                                                          In May, we issued a letter of intent together with ICA Banken
Business operations                                                    outlining the plan to administer ICA Banken’s future share and
Nordnet offers savings and securities trading services through its     mutual fund trading service within the Nordnet ASP framework.
subsidiary Nordnet Bank AB. In addition to savings and trading, the    The final agreement was signed in the fall.
company offers a large number of account and information services.        In September, Nordnet moved to its new premises in Alviks
Business is primarily conducted over the Internet. Through the sub-    Strand, more suited to our enlarged organization and operations.
sidiary and the brand Aktiedirekt, basic online brokerage services        In the third quarter, we began collaborating with The Royal
are offered to the lowest commission on the market.                    Bank of Scotland (RBS), with Nordnet Bank AB acting as a Swed-
   Transnational operations are conducted in Denmark, Finland,         ish distributor for RBS’s structured products.
and Germany. Business in Norway is handled through a branch.              In October, OMX launched its Nordic List, quoting companies
Nordnet Securities Luxembourg S.A., a wholly owned subsidiary in       from Sweden, Denmark, and Finland on the same lists. The former
Luxembourg, offers an online brokerage service primarily aimed         Swedish A-list and O-list were thereby replaced by the Nordic
at Nordic citizens living abroad.                                      Largecap, Midcap, and Smallcap lists.
   The Nordnet subsidiary Nordnet Pensionsförsäkring AB offers            In November, Nordnet Bank AB was voted Bank of the Year
life insurance, with a focus on pension products.                      by the Swedish finance magazine Privata Affärer in its annual
   Nordnet’s other operations include Nordnet Försäkringsförmed-       evaluation. In November, we began cooperating with the Finnish
ling AB, which brokers property insurance, and the share trading       Stockholders’ Association.
chat site VCW Internet Services AB.
                                                                       Operating income excluding brokerage commissions corre-
Significant events of the year                                          sponded to 74 per cent of operating costs for the year. Operating
The year got off to a very strong start with far larger transaction    costs before credit losses for the year totaled an average of SEK
volumes than the previous year. Late spring saw a rapid and rela-      30.7 million per month. Breakeven was 7,800 trades per day.
tively deep stock market decline, leading to very high activity with
peaks in excess of 60,000 trades per day. The following period         Nordnet’s market share developed well in 2006, and all in all
was marked by greatly reduced activity, partly the result of market    Nordnet had the highest market share by number of trades of any
uncertainty, partly due to seasonal variations, since the summer       brokerage on the four largest Nordic stock markets. Aggregate
months generally see less activity. In August, activity climbed to     assets in custody grew by 36 per cent. Savings in mutual funds
new levels in excess of those of the previous year. The fall was       and pensions exhibited a very strong growth trend. In 2006, the
marked by high activity. All markets on which Nordnet operates         Group’s clients outside Sweden accounted for 57 per cent of the
exhibited good growth.                                                 Group’s total number of trades. In view of our continued expansion
   The year was marked by intense work to broaden and improve          in other markets, Sweden’s share is expected to decline further.
Nordnet’s offering and to refine the business organization. Exten-
sive efforts were made in recruitment and training. Major market-      Profits and financial overview
ing initiatives were conducted throughout the year, such as those      Group
aiming to increase brand recognition (mainly focused on Sweden).       Operating income for the financial year increased by 52 per cent
   In February, Nordnet launched a new account type, the Mini          to SEK 661.0 (434.2) million. Operating income included net
Account (Minidepå), in Sweden, Norway, and Denmark offering            commission of SEK 421.5 (278.2) million, net interest of SEK 201.6
a very low minimum commission of just SEK 39 for trades in             (124.0) million, fees and other income of SEK 32.1 (26.8) mil-
Nordic shares.

                                                                                                     NORDNET ANNUAL REPORT 2006             49
       Directors’ Report




     lion, and net income from financial transactions of SEK 5.8 (5.2)        Growth targets
     million.                                                                  Organic growth in the number of accounts shall be a minimum
        Operating costs before credit losses increased by 59 per cent to       of 25 per cent a year.
     total SEK -368.8 (-232.6) million. Operating profit for the finan-          New savings from new and existing account holders shall be a
     cial year totaled SEK 292.1 (200.1) million. The operating margin         minimum of 25 per cent a year.
     was 44 (46) per cent.                                                     Our market share of the number of trades by private inves-
        Profit after tax totaled SEK 206.7 (145.7) million. The profit           tors on all the exchanges of which Nordnet is a member shall
     margin was 31 (34) per cent. Earnings per share were SEK 1.25             increase in the long term.
     (0.88), and after dilution SEK 1.22 (0.87).
        The Group’s goodwill totaled SEK 140.4 million at year-end. On       Dividend policy
     December 31, 2006, the Group’s liquid funds totaled SEK 2,687           Profits and funds that are not required to consolidate, develop and
     million, of which SEK 740 million were blocked. On December             expand the business shall be transferred to the shareholders. In
     31, 2006, the Group’s equity totaled SEK 691.4 million divided          the long term, the dividend shall comprise no less than 40% of the
     among 165,018,878 shares, corresponding to SEK 4.19 per share.          profit.
     The Group’s capital adequacy ratio was 10.3 per cent. Investments
     in tangible fixed assets amounted to SEK 59.8 (13.7) for the year.       Future prospects
     Investments in intangible assets such as capitalized development        The favorable development of the stock market and increasing
     costs amounted to SEK 33.4 (28.3) million for the year, of which        market activity of 2006 continued into the beginning of 2007, but
     SEK 12.2 (9.3) was internally capitalized development costs.            suffered a sudden and dramatic fall at the end of February. How-
     Marketing costs amounted to SEK 89.4 (31.2) million. The Group’s        ever, the beginning of March saw some recovery from this decline.
     five-year summary and key ratios are presented on pages 88–90.           Market shares in relation to banks and traditional stockbrokers
                                                                             have exhibited healthy growth, a trend we have seen since the
     Parent company                                                          business was founded in 1996 and which is expected to continue.
     The parent company’s net interest costs for the financial year           The work to broaden our service offering while establishing
     totaled SEK 9.9 million. This sum includes intra-group interest costs   operations in new markets encourages Nordnet and we see good
     of SEK 0.3 million. The parent company’s profit before tax was SEK       opportunities to retain our strong growth and good profitability
     123.1 million for the year. The parent company is a holding company     over the coming years. The extensive expansion of our business
     with no business activities. The parent company’s liquid funds          and organization in 2006 has provided a solid foundation for
     totaled SEK 5.8 million and its equity SEK 583.4 million at year-end.   continued growth. Resources for IT development and client service
     The above amount includes anticipated dividends from subsidiaries       are important means of meeting the new demands and opportuni-
     totaling SEK 138.0 million.                                             ties offered by growing interest in savings and banking services.
                                                                             Nordnet’s banking services will be broadened with the option
     Financial targets, growth targets,                                      to pay bills and transfer funds. Interest in trading and investing
     and dividend policy 2007                                                in foreign shares is expected to continue to grow and Nordnet
     Financial targets                                                       will broaden its offering to encompass more stock markets and
       The capital adequacy of the Group and the bank should not fall        marketplaces. The creation of European standards provides better
       below 10.0 per cent.                                                  and more easily accessible opportunities for Nordnet to establish
       Nordnet Pensionsförsäkring AB’s solvency ratio shall exceed           operations in other markets. On November 1, 2007, new securi-
       1.0 by a good margin.                                                 ties legislation comes into force in the EU, namely the Directive
       Operating expenses (excluding direct marketing and sales              on Markets in Financial Instruments (MiFID). These regulations,
       costs) are expected to increase by about 25% during the year.         though complex, are a step toward introducing uniform business
       The average acquisition cost per new net account shall not            rules for all players in the securities market. All of Nordnet’s
       exceed SEK 2,500 in terms of direct marketing and sales costs.        foreign markets are expected to exhibit good growth. Mutual
       Cost coverage, the share of total operating costs covered by          fund investments are expected to develop strongly as Nordnet’s
       non-direct transaction-related commission income, shall               mutual fund offering will be available through Aktiedirekt, as well
       amount to 70–75 per cent.                                             as in Norway, Denmark, and Finland. Pensions will see continued
       Breakeven is estimated at 4,000–8,000 trades per trading day.         development of the model portfolios and our management services
                                                                             will provide important tools for our clients. Our venture into the


50      NORDNET ANNUAL REPORT 2006
                                                                        Directors’ Report




pensions market is expected to show continued strong growth.          Pillar 1 contains regulations on how the basic minimum capital
Despite current favorable circumstances, it is important to keep in   requirement for credit, market, and operational risks is to be
mind that we should be able to adapt costs quickly should market      calculated. New in this pillar is the completely new capital require-
terms deteriorate.                                                    ment for operational risk, while the capital requirement for credit
                                                                      risk has been modified in order to better reflect the actual lending
Risk management and risk control                                      risk and thereby improve risk sensitivity. The market risk regula-
Nordnet’s Board has ultimate responsibility for Nordnet’s opera-      tions are essentially unchanged.
tions and for ensuring that these operations include satisfactory        Pillar 2 contains requirements on combined capital assess-
internal controls. The Board issues central policy documents stipu-   ment, wherein the bank shall identify any risks other than those
lating how risks are to be managed. The CEO is responsible for the    calculated in pillar 1 and assess its own risk management capabil-
day-to-day running of the business by implementing the Board’s        ity. From this starting point, the bank shall then make a combined
policies for different risk areas. Additionally, the company has an   assessment of the total capital requirement.
independent unit, Risk & Internal Control, charged with examin-          Pillar 3 contains requirements on public disclosures about risks,
ing and controlling identified risks and control procedures. The       risk management, and capital. The aim here is to provide market
Risk & Internal Control unit reports direct to the chief executive    players with better opportunities to assess the bank’s risk levels
officer and the Board. Business risks are managed on several levels    and creditworthiness. Pillars 2 and 3 are both completely new
at Nordnet. Individual departments and Groups are delegated           additions to the capital adequacy regulations.
responsibility through various procedures and instructions for
reconciliation and other control measures in their areas, as well     For Nordnet’s part, the main consequence of the changes to the
as for reporting risks to the CEO or Risk & Internal Control. The     capital requirement for credit risk is that lending on shares will
company also has a mandatory independent internal audit unit          involve a much lower capital requirement. This is because the risk
appointed by the Board in accordance with Swedish Financial Su-       involved in such lending is considerably lower than unsecured
pervisory Authority regulations. This unit is charged with auditing   lending, which is how lending on shares was previously classi-
operations and reporting its findings direct to the Board. Respon-     fied. The capital requirement for operational risk is a completely
sibility for ensuring that information about laws, regulations, and   new capital requirement calculated as 15 per cent of the average
internal instructions is distributed within Nordnet rests with the    of the past three years’ operating income. In Nordnet’s case,
legal/compliance unit. All Nordnet employees encompassed by           this means a reduced capital requirement for credit risk and the
SwedSec’s licensing requirements have undergone training and          addition of a capital requirement for operational risk. In addi-
received their licenses. Further to this, many other employees not    tion to the risks covered by pillar 1, within the pillar 2 framework
formerly encompassed by licensing requirements have received          Nordnet must assess the other risks to which the company is
equivalent training and passed tests arranged by SwedSec. Detailed    exposed. This assessment must take into account both Nordnet’s
descriptions of the identified risks are provided in Note 7.           risk profile and how Nordnet plans to manage the risks to which
                                                                      the company is exposed. Other risks to which Nordnet is exposed
Development activities                                                include strategic risk, liquidity risk, and concentration risk. Based
Nordnet conducts development activities in its core business          on the assessed risks and risk management, Nordnet must also
areas. Nordnet’s strategy is to ensure that the majority of the       make an overall assessment of its total capital requirement. Each
services and applications clients use are proprietary. Services       year, the Swedish Financial Supervisory Authority will assess the
and applications encompass trading, account, information, and         tenability of the assumptions and whether Nordnet’s total capital
mobile services and software. Development activities also include     requirement is sufficient in the view of the authority. In order to
the solutions needed to ensure high availability and reliability in   improve transparency and thereby enable market players to better
the shape of server and database technologies and general system      assess Nordnet’s risk level, Nordnet shall publish detailed capital
architecture solutions.                                               adequacy information every quarter.

New capital adequacy regulations for the bank                         Taxes
The capital adequacy ratio was 10.3 per cent on December 31,          Sales tax
2006. As of February 1, 2007, new capital adequacy regulations        Following the decision of the court of appeal in the fourth quarter
apply, known as the Basel II Regulations. These new regulations       of 2005, which repealed the county court’s decision in a sales tax
include a framework based on three pillars.                           dispute, new calculations have been made wherein additional sales


                                                                                                     NORDNET ANNUAL REPORT 2006               51
       Directors’ Report




     tax claims totaling SEK 5.2 million had a positive effect on profits    Other information
     for the first quarter of 2006.                                          Insurance policies
                                                                            Nordnet’s insurance policies include professional liability insur-
     Income tax                                                             ance for the company’s securities activities. Nordnet also has
     The Group’s tax position has changed over the past five years as        property insurance, property crime insurance, CEO and Board
     a consequence of the favorable earnings trend. Unutilized deficit       liability insurance, and other necessary insurance. Nordnet’s
     deductions resulting from losses incurred in previous years were       Board considers the Group’s insurance cover to be appropriate for
     fully utilized during the year. Consequently, the year’s tax cost      the business conducted.
     affects liquidity. As of January 1, 2007, a further SEK 72.2 million
     in blocked deficits will be freed, corresponding to a taxable value     Pensions
     of SEK 20.2 million.. These deficits were blocked for five years as      The Group’s pension commitments to employees in Sweden are
     a result of the merger between TeleTrade and the former Nordnet        secured by means of insurance policies held with third-party
     Group in 2001, when the present Group was formed.                      insurance companies.
        As a consequence of accelerated depreciation for tax purposes,
     the Group’s income tax for 2006 will include some SEK 79 million       Convertibles program etc.
     regarding 2006.                                                        The 2005 Nordnet Annual General Meeting decided to introduce
                                                                            an incentive program for Nordnet Group senior executives and
     Agreements and business relations                                      other employees in the form of a convertible debenture loan of up
     Nordnet has a number of contractually binding development, col-        to SEK 55 million entitling holders to convert their holdings into
     laborative, and other agreements with both clients and suppliers.      Nordnet share.
     Most of these are standard agreements for companies in Nordnet’s          The company had no option programs at the end of the year.
     sphere of business. Nordnet’s Board is not aware of any agreement
     of any significance that is subject to termination or renegotiation.    Trademarks
                                                                            Nordnet strives to protect its trademarks and other distinguish-
     Agreements with E. Öhman J:or AB                                       ing attributes used in operations. This is mainly achieved by
     As a part of the financing of the acquisition of Stocknet-Aston Se-     registering trade names, establishing trademarks, and registering
     curities ASA during 2004, E. Öhman J:or AB issued Nordnet two          web domain names. Nordnet, VCW, Aktiedirekt, and even other
     perpetual subordinated loans for a combined total of SEK 50 mil-       names and trademarks used within the Group are registered as
     lion. According to the Board, these loans were issued on market        domain names in several geographic markets.
     terms, which has been verified by outside parties. An application
     for a permit to repay the perpetual subordinated loans before          Disputes
     maturity has been submitted to the Swedish Financial Supervisory       Occasionally, the Group may become involved in disputes, which
     Authority. See Note 32.                                                can go to court or require arbitration. If the risk of liability falling
                                                                            to Nordnet is deemed probable, appropriate provisions are made
     Ongoing business relations with E. Öhman J:or                          in the accounts.
     Fondkommission AB                                                         The Group also receives various complaints related to the busi-
     Nordnet Bank AB regularly enters various business relations with       ness activities of Nordnet Bank AB, Nordnet Pensionsförsäkring
     E. Öhman J:or Fondkommission AB in the same way it enters such         AB, and Nordnet Försäkringsförmedling AB. In the Board’s
     business relations with other stockbrokers and banks.                  assessment, none of the individual disputes or complaints has had
        Business relations within our business sector are a natural part    or can be expected to have any significant financial impact on the
     of operations. The most normal practice is for Nordnet Bank AB to      companies concerned or the Group.
     act as a broker and distributor of financial products and services
     from E. Öhman J:or Fondkommission AB or any other bank or              Transactions with affiliated parties
     stockbroker, such as invitations to subscribe to new share issues      In addition to what has been stated about certain contractual
     or to buy shares in mutual funds or structured products. Accord-       relationships and transactions between the Group and its
     ing to Nordnet’s Board, business relations with E. Öhman J:or          shareholders, no member of the Board and no senior executive
     Fondkommission AB are entered on market terms.                         has been directly or indirectly involved in business transactions
                                                                            with Group companies that are or were of an irregular character


52     NORDNET ANNUAL REPORT 2006
                                                                            Directors’ Report




or that involved irregular terms and that occurred during the            Chief Executive Officer and other company officers participated
current or previous financial years and remain unsettled or               in Board meetings to present business or in administrative capaci-
incomplete. See also Note 6.                                             ties. The company’s auditors participated in one Board meeting
   No other Group company has granted loans, guarantees, or              to report the findings of their audit. As questions pertaining to
sureties to any of the above-mentioned persons.                          auditing are central to the activities of a financial company, they
                                                                         are dealt with by the entire Board.
Regulatory supervision                                                      The Board is accountable to the shareholders for the company’s
Introduction                                                             organization and administration, as well as for ensuring the com-
Several of Nordnet’s business activities are subject to regulatory       pany has a well functioning reporting system. The Board adopted
supervision.                                                             the latest applicable set of procedures on December 14, 2006.
  These activities are largely regulated by laws, regulations, general      According to these procedures, the Board’s tasks include exam-
guidelines, and business sector agreements. The Group’s compli-          ining the company’s business, which encompasses administrative
ance with such rules is therefore of the utmost importance and is        procedures and any other circumstances in the company that could
subject to regular controls and audits by bodies such as the Board       affect its ability to fulfill its obligations and achieve agreed targets,
and the independent internal audit unit appointed by the Board.          making decisions on matters concerning the company’s targets and
The compliance manager appointed by the Board is charged with            strategies, meeting the auditors at least once a year, and ensuring
ensuring that Group employees and the Board are kept informed of         that the company complies with applicable laws and regulations.
the rules applicable to the company’s business operations.                  In accordance with recommendations such as the Swedish
                                                                         Financial Supervisory Authority’s general guidelines on the
Licenses held                                                            governance and control of financial companies, the company’s
Nordnet Bank AB is licensed by the Swedish Financial Super-              Board has appointed an independent internal audit unit for the
visory Authority to engage in the activities referred to in the          subsidiaries Nordnet Bank AB and Nordnet Pensionsförsäkring
Swedish Act on Banking and Financing Activities (2004:297).              AB. This unit is to independently audit the business alongside the
The company received its license on June 19, 2002. The company           external auditors. The Board is responsible for coordinating the
is also licensed to pursue securities operations in accordance           work of this unit and for evaluating its findings.
with Chapter 1, Section 3, Paragraphs 1–5 of the Swedish Act on             The latest instructions for the CEO were adopted on April 26,
Securities Activities (1991:981). These licenses were received on        2006. The CEO is responsible for ensuring that the Board receives re-
May 26, 2000, January 19, 2004, and December 16, 2004. The               ports in accordance with these instructions for use at Board meetings.
company also received a license to engage in pension activities in
accordance with the Swedish Act on Individual Pension Savings            Committees
(1993:931) on November 26, 2004.                                         Remuneration committee
   Nordnet Pensionsförsäkring AB has been licensed by the                The Board appointed a Remuneration committee of four members
Swedish Financial Supervisory Authority to engage in insurance           for the period until the next Annual General Meeting at its statu-
activities in accordance with the Swedish Act on Insurance Activi-       tory meeting. The members of this committee are the chairman of
ties (1982:713). This license was received on May 31, 2005.              the Board, Claes Dinkelspiel, and Board members Ulf Dinkelspiel,
   Nordnet Securities Luxembourg S.A., Luxembourg has a license          Bo Mattsson, and Sven Skarendahl. The committee deals with
from Commission de Surveillance du Secteur Financier (CSSF),             matters concerning the remuneration of the CEO and other senior
Luxembourg to operate as a broker for the receipt and transfer of        executives.
financial instruments for execution on client accounts.
   Nordnet Försäkringsförmedling AB’s business operations entail         Nomination committee
brokering property insurance.                                            The Annual General Meeting held on April 26, 2006 appointed
                                                                         a Nomination committee of three members, namely the chairman
Corporate governance                                                     of the Board, Claes Dinkelspiel, Olle Isberg (private shareholder),
The Board’s work                                                         and attorney Fred Wennerholm (private shareholder) of law firm
In 2006, the Board had six members elected by the Annual                 Setterwalls Advokatbyrå.
General Meeting. For additional information on Board members,
see page 40–41. During the financial year, the Board held eight
minuted meetings, as well as five meetings held per capsulam. The


                                                                                                         NORDNET ANNUAL REPORT 2006                 53
      Accounts




     Consolidated income statements
     SEK thousands
                                                              Note      2006       2005

     Interest income                                             8    269,276    150,116
     Interest expense                                            8    -67,647    -26,123
     Commission income                                           9    691,189    473,226
     Commission expense                                          9   -269,749   -195,053
     Net profit from financial transactions                       10      5,836      5,209
     Other operating income                                     11     32,152     26,773
     Total operating income                                          661,057    434,148


     General administrative expenses                            12   -240,549   -173,473
     Depreciation, amortization, and impairment of tangible
     and intangible fixed assets                                 13    -36,340    -25,406
     Other operating expenses                                   14    -91,926    -33,706
     Total expenses before credit losses                             -368,815   -232,585



     Profit before credit losses                                      292,242    201,563


     Net credit losses                                          15       -113     -1,468


     Operating profit                                                 292,129    200,095



     Tax on profit for the year                                  16    -85,410    -54,398

     Net profit for the year                                          206,719    145,697


     Basic earnings per share, SEK                              17       1.25       0.88
     Diluted earnings per share, SEK                            17       1.22       0.87
     Proposed dividend per share, SEK                           33       0.50       0.10




54     NORDNET ANNUAL REPORT 2006
                                                         Accounts




Consolidated balance sheets
SEK thousands
                                                        Note        Dec 31, 2006        Dec 31, 2005

Assets
Eligible government securities etc.                       18           2,391,789            996,000
Lending to credit institutions                            19            276,503             697,604
Lending to the public                                     20           3,282,384           2,597,289
Financial assets at fair value through profit and loss     21             18,141              10,365
Financial assets held for sale                            22               3,061               3,453
Assets in insurance business                              23           3,376,278           1,041,287
Intangible fixed assets                                    24            278,326             281,003
Tangible assets                                           25             67,472              20,471
Deferred tax claims                                       16             20,216              20,664
Other assets                                              26            340,470             183,554
Prepaid expenses and accrued income                       27             23,196              21,983
Total assets                                                        10,077,835            5,873,673



Liabilities
Liabilities to credit institutions                        28             15,000              20,000
Deposits and borrowing from the public                    29           5,271,879           3,732,439
Liabilities in insurance business                         23           3,376,771           1,041,287
Other liabilities                                         30            438,394             357,635
Current tax liabilities                                   16            109,680              39,199
Deferred tax liabilities                                  16             11,281                7,117
Accrued expenses and deferred income                      31             49,943              41,091
Subordinated liabilities                                  32            113,474             120,474
Total liabilities                                                     9,386,422           5,359,242


Equity                                                    33
Share capital                                                           165,019             165,019
Paid-up capital                                                         319,525             319,525
Other reserves                                                             2,409             15,644
Earned profits                                                           204,460              14,243
Total equity                                                            691,413             514,431


Total liabilities and equity                                        10,077,835            5,873,673


Pledged assets                                            34
Contingent liabilities                                    34




                                                                        NORDNET ANNUAL REPORT 2006     55
           Accounts




     Changes in consolidated equity
     SEK thousands
                                                                             Share     Paid-up        Other     Earned
                                                                           capital1)    capital   reserves1)     profits    Total2)


          Opening balance, January 1, 2005                                165,019      309,519       -1,615    -131,454   341,469
          Items reported direct against equity
          Translation difference from translation of
          foreign operations                                                      -           -      16,701           -    16,701
          Change in value of financial assets held for sale                        -           -         558           -       558
          Net sum of items reported direct against equity                         -          -      17,259            -    17,259



          Net profit for the year                                                  -           -            -    145,697   145,697


          Total income and expenses for the period                                -          -      17,259     145,697    162,956


          Transactions with shareholders                                          -           -            -          -         -
          Option component of convertible debenture loan
          (see Note 32)                                                           -     10,006             -          -    10,006
          Closing balance, December 31, 2005                              165,019      319,525      15,644      14,243    514,431


          Items reported direct against equity
          Change in value of financial assets held for sale                        -           -        -139           -      -139
          Translation difference from translation of
          foreign operations                                                      -           -     -13,096           -   -13,096
          Net sum of items reported direct against equity                         -          -      -13,235           -   -13,235



          Net profit for the year                                                  -           -                 206,719   206,719


          Total income and expenses for the period                                -          -     -13,235     206,719    193,484


          Transactions with shareholders
          Paid dividend                                                           -           -            -    -16,502   -16,502
          Closing balance, December 31, 2006                              165,019      319,525        2,409    204,460    691,413

     1)
          See Note 33 for further information.
     2)
          Equity is fully attributable to the parent company’s shareholders.




56          NORDNET ANNUAL REPORT 2006
                                                                                 Accounts




Consolidated cash flow statements
SEK thousands
                                                                                                 2006                  2005

Operating activities
Interest and commission received                                                              967,042               629,043
Interest paid                                                                                -336,105               -221,176
Payments to suppliers and employees                                                          -302,555               -180,898
                                                                                             328,582                226,969
Increase/decrease in operating assets
Increase (-) / Decrease (+) in lending to the public                                         -685,095             -1,111,850
Increase (-) / Decrease (+) in other assets                                                   -89,429               -210,137

Increase/Decrease in operating liabilities
Increase (+) / Decrease (-) in deposits and borrowing from the public                       1,539,440              1,538,555
Increase (+) / Decrease (-) in liabilities                                                    181,175               301,624
Income tax paid                                                                               -70,202                      -
Cash flow from operating activities                                                          1,204,472               745,161

Investment activities
Acquisitions of intangible fixed assets                                                        -33,444                -28,258
Acquisitions of tangible fixed assets                                                          -59,758                -13,695
Net investments in securities                                                                  - 7,384                -8,310
Cash flow from investment activities                                                         -100,586                -50,263

Financing activities                                                                                 -
Loans raised                                                                                         -               45,480
Loan amortization                                                                             -12,000                      -
Paid dividend                                                                                 -16,502                      -
Cash flow from financing activities                                                            -28,502                 45,480


Exchange rate differences in cash and cash equivalents                                           -696                  1,811
Cash flow for the year                                                                       1,074,688               742,190

Cash and cash equivalents at beginning of year                                              1,593,604               851,415
Cash and cash equivalents at year-end                                                       2,668,292             1,593,604


Cash and cash equivalents include: 3)
Eligible government securities4)                                                            2,391,789               896,000
Lending to credit institutions (bank deposits)                                                276,503               697,604
                                                                                            2,668,292             1,593,604
3)
     This amount includes SEK 740,280 (557,100) thousand in blocked funds. See Note 34.
4)
     This amount includes eligible government securities maturing in less than 90 days.




                                                                                                NORDNET ANNUAL REPORT 2006     57
      Accounts




     Consolidated operating cash flow statements
     SEK thousands, excluding client funds
                                                                               2006       2005

     Operating activities
     Profit after financial items                                              292,129   200,095
     Adjustments for items not included in cash flow etc.                      36,340    26,885
     Tax paid                                                                -70,202         -
     Cash flow from operating activities before changes in working capital   258,267    226,980

     Cash flow from changes in working capital
     Increase (-) / Decrease (+) in other assets                              -4,494      -134
     Increase (+) / Decrease (-) in liabilities                               46,627     5,715
                                                                             42,133      5,581


     Cash flow from operating activities                                     300,400    232,561


     Investment activities
     Acquisitions of intangible fixed assets                                  -33,444   -28,258
     Acquisitions of tangible fixed assets                                    -59,758   -13,695
     Net investments in securities                                            -7,384    -8,309
                                                                            -100,586   -50,262

     Operating cash flow after investment activities                         199,814    182,299


     Financing activities
     Loans raised                                                                  -    45,480
     Loan amortization                                                       -12,000         -
     Paid dividend                                                           -16,502         -


     Cash flow for the year                                                  171,312    227,779


     Cash and cash equivalents at beginning of year                         404,755    176,976
     Cash and cash equivalents at year-end                                  576,067    404,755

     Cash and cash equivalents include:
     Eligible government securities                                          276,503         -
     Lending to credit institutions (bank deposits)                          299,564   404,755
                                                                            576,067    404,755




58     NORDNET ANNUAL REPORT 2006
                                                             Accounts




Parent company income statements
SEK thousands
                                                             Note          2006               2005


Other operating income                                         35         9,487              7,945
Total operating income                                                    9,487              7,945


Other external costs                                           36        -5,415              -5,349
Personnel costs                                                37        -7,923              -6,541
Depreciation, amortization, and impairment of tangible and
intangible fixed assets                                         38           -54                -54
Other operating expenses                                                 -1,048              -2,237
Operating profit                                                          -4,953             -6,236


Profit from financial investments
Income from participations in affiliated companies              39       138,000             24,000
Other interest and similar income                              40           541                225
Interest expense                                               40       -10,461              -9,463
Profit after financial items                                              123,127              8,526


Tax on profit for the year                                      41         4,165              4,333

Net profit for the year                                                  127,292             12,859




                                                                        NORDNET ANNUAL REPORT 2006    59
      Accounts




     Parent company balance sheets
     SEK thousands
                                             Note   Dec 31, 2006   Dec 31, 2005

     Assets
     Fixed assets
     Tangible fixed assets
     Equipment                                 42            38             92
                                                             38             92
     Financial fixed assets
     Participations in affiliated companies     43       665,843        655,843
     Other investments held as fixed assets                  422            317
     Deferred tax claims                       41          3,367          3,367
                                                        669,632        659,527
     Total fixed assets                                  669,670        659,619

     Current assets
     Receivables from affiliated companies               171,223         36,586
     Other receivables                         44           211            341
     Prepaid expenses and accrued income       45          1,805          2,653
                                                        173,239         39,580
     Cash and bank balances                                5,762          7,820
     Total current assets                               179,001         47,400

     Total assets                                       848,671        707,019

     Equity                                    46
     Restricted equity
     Share capital                                      165,019        165,019
     Statutory reserve                                  262,111        262,111
     Other                                               12,100         12,100
                                                        439,230        439,230
     Non-restricted equity
     Retained earnings                                   16,857         18,197
     Net profit for the year                             127,292         12,859
                                                        144,149         31,056
     Total equity                                       583,379        470,286

     Liabilities
     Current liabilities
     Accounts payable                                          -           938
     Liabilities to affiliated companies                 124,093         84,935
     Other liabilities                         47       136,249        148,019
     Accrued expenses and deferred income      48          4,950          2,841
     Total liabilities                                  265,292        236,733

     Total liabilities and equity                       848,671        707,019

     Memorandum items:
     Pledged assets                                        None           None
     Contingent liabilities                                None           None




60     NORDNET ANNUAL REPORT 2006
                                                              Accounts




Changes in parent company equity
                                                                  Share
SEK thousands                            Share    Statutory    premium       Other      Non-restric-
                                        capital    reserve      reserve   reserves        ted equity   Total equity


 Equity, December 31, 2004             165,019            -    262,111           -           16,200       443,330


 Option component of convertible
 debenture loan                               -           -           -     12,100                 -        12,100
 Transfer to statutory reserve in
 accordance with Swedish Annual
 Accounts Act                                 -    262,111     -262,111          -                 -              -
 Group contributions received                 -           -           -          -           18,250         18,250
 Tax on Group contributions received          -           -           -          -            -5,110        -5,110
 Taxed profit transfer                         -           -           -          -           -11,143       -11,143


 Net profit for the year                       -           -           -          -           12,859         12,859


 Equity, December 31, 2005             165,019    262,111             -    12,100            31,056       470,286


 Paid dividend                                -           -           -          -           -16,502       -16,502
 Group contributions received                 -           -           -          -           14,875         14,875
 Tax on Group contributions received          -           -           -          -            -4,165        -4,165
 Taxed profit transfer                         -           -           -          -            -8,407        -8,407


 Net profit for the year                       -           -           -          -          127,292        127,292


 Equity, December 31, 2006             165,019    262,111             -    12,100           144,149       583,379

See Note 46 for further information.




                                                                                     NORDNET ANNUAL REPORT 2006       61
       Accounts




     Parent company cash flow statements
     SEK thousands
                                                                                     2006      2005

     Operating activities
     Profit after financial items                                                    123,127     8,526
     Adjustments for items not included in cash flow etc.                          -137,946   -23,946
                                                                                   -14,819   -15,420
     Tax paid                                                                            -         -
     Cash flow from operating activities before changes in working capital          -14,819   -15,420

     Cash flow from changes in working capital
     Decrease (+) / Increase (-) in other receivables                               10,704     8,665
     Increase (+) / Decrease (-) in liabilities                                     40,559     8,280

                                                                                   51,263    16,945


     Cash flow from operating activities                                            36,444     1,525


     Investment activities
     Acquisitions of tangible fixed assets                                                -       -21
     Acquisitions of subsidiaries                                                  -10,000   -50,000
     Cash flow from investment activities                                           -10,000   -50,021


     Financing activities
     Paid dividend                                                                 -16,502         -
     Loans raised                                                                        -    55,000
     Loan amortization                                                             -12,000         -
     Cash flow from financing activities                                             -28,502   55,000


     Cash flow for the year                                                          -2,058    6,504


     Cash and cash equivalents at beginning of year                                  7,820    1,316
     Cash and cash equivalents at year-end                                           5,762    7,820
     Cash and cash equivalents comprise the company’s cash and bank balances


     Adjustments for items not included in cash flow etc. include the following:
     Anticipated dividend                                                         -138,000   -24,000
     Depreciation of fixed assets                                                        54       54
                                                                                  -137,946   -23,946




62     NORDNET ANNUAL REPORT 2006
                                                                         Notes



                                                                                                                                                       1
Notes                                                                                                                                                  2
                                                                                                                                                       3
All figures in the tables below are presented in SEK thousands.         company and its subsidiaries as of December 31 each year. The                   4
                                                                       financial reports of the parent company and its subsidiaries                     5
                                                                       included in the consolidated financial statements relate to the                  6
Note 1. Company information                                            same period and are prepared in accordance with the accounting                  7
The consolidated financial statements of Nordnet AB (the parent         principles applied to the Group.                                                8
company) for the financial year ending December 31, 2006 were              All intra-Group business - income, expenses, profits, or losses               9
approved for publication by the Board and Chief Executive Officer       arising in transactions between companies included in the consoli-             10
on March 22, 2007 and will be presented to the Annual Sharehold-       dated financial statements - is eliminated in its entirety.                     11
ers Meeting on April 24, 2007 for adoption. The parent company is         A subsidiary is included in the consolidated financial statements            12
a Swedish stock corporation headquartered in Stockholm, Sweden.        from the date of acquisition, which is the date when the parent                13
The company’s stock has been listed on the OMX Nordic Exchange         company gains a determining influence, and remains included in the              14
Midcap list since October 2, 2006. Prior to this, the share had been   consolidated financial statements until the day when the parent com-            15
listed on the Stockholm Stock Exchange O-List since April 2000.        pany ceases to have a determining influence. The parent company                 16
   The Group’s primary business is described in the Directors’         has a determining influence when it holds more than half the votes in           17
Report on page 49.                                                     a company, either directly or indirectly through a subsidiary.                 18
                                                                          Assets and liabilities in the consolidated balance sheet are
                                                                                                                                                      19
                                                                       generally presented in the order of liquidity, as this classification is
Note 2. Accounting principles                                          more relevant to a bank.
                                                                                                                                                      20
              applied in the report                                                                                                                   21
                                                                                                                                                      22
The consolidated financial statements are based on historic
acquisition values, with the exception of derivative financial
                                                                       Note 3. Changed accounting principles                                          23
instruments, financial assets available for sale, and financial assets   As of January 1, 2006, the Group applies FFFS 2005:33. This                    24
valued at fair value in the income statement. All amounts are stated   means the Group applies IFRS 7 Financial Instruments: Disclosures              25
in thousands of Swedish kronor (SEK), unless otherwise indicated.      (August 2005). This standard was adopted by the EU Commission                  26
                                                                       on January 27, 2006. Aside from this, the Group’s accounting                   27
Statement on compliance with                                           principles are unchanged.                                                      28
applicable accounting standards                                                                                                                       29
The consolidated financial statements are prepared in accordance                                                                                       30
with International Financial Reporting Standards (IFRS). As the
                                                                       Note 4. Important estimates                                                    31
                                                                                      and assessments
parent company is a company within the EU, only the IFRS adopted                                                                                      32
by the EU are applied.                                                 Certain assumptions about the future and certain estimates and                 33
   The consolidated financial statements are prepared in accordan-      assessments on closing day are of particular importance in valuing             34
ce with the Swedish Annual Accounts Act for Credit Institutions        assets and liabilities in the balance sheet. Areas with the greatest           35
and Securities Companies (ÅRKL 1995:1559) since Nordnet AB is          risk of changes during the coming year due to the possible need to             36
considered a financial holding company, which means the com-            alter assumptions or estimates are discussed below.                            37
pany must also abide by the provisions of this law when preparing                                                                                     38
the consolidated financial statements. Further, the consolidated        Goodwill impairment test                                                       39
financial statements are prepared in accordance with the Swedish        Reported goodwill is tested for impairment at least once a year to de-         40
Financial Supervisory Authority’s instructions and general guide-      termine whether any write-downs are needed. This test requires an              41
lines for the Swedish Annual Accounts Act for Credit Institutions      assessment of the utility value of the cash-generating unit, or Groups
                                                                                                                                                      42
and Securities Companies (FFFS 2005:33), as well as the Swedish        of cash-generating units, to which the goodwill value is attributable.
                                                                                                                                                      43
Financial Accounting Standards Council’s recommendation RR             This in turn requires an estimate of the expected future cash flow
                                                                                                                                                      44
30:05 on complementary accounting rules for Groups and the             from the cash-generating unit and the establishment of a relevant
                                                                                                                                                      45
Council’s Emerging Issues Task Force’s recommendations.                discount rate for computing the present value of the cash flow. The
                                                                                                                                                      46
   The parent company’s annual report is prepared in accordance        assessments made on December 31, 2006 are specified in Note 24.
with the Swedish Annual Accounts Act (ÅRL 1995:1554) and with                                                                                         47
the application of the Swedish Financial Accounting Standards                                                                                         48
Council’s recommendation RR 32:05 on reporting by legal entities.      Note 5. Applied accounting principles                                          49
Consequently, IFRS valuation and disclosure policies are applied,      Business combinations                                                          50
with the exceptions detailed in the section entitled Parent company    The Group complies with IFRS 3 Business Combinations.                          51
accounting principles.                                                    IFRS 3 has been applied to corporate acquisitions conducted                 52
                                                                       since January 1, 2004, in line with IFRS 1 and consequently an                 53
Principles of consolidation                                            exception to the main rule for the retroactive application of IFRS.
The consolidated financial statements encompass the parent              IFRS 3 states that the fair values of the acquired operation’s iden-


                                                                                                      NORDNET ANNUAL REPORT 2006                 63
       Notes



     tifiable assets and liabilities are established at the time of the ac-    issue of the financial asset. When a financial asset is valued after
     quisition. These fair values also include the proportion of the assets   the first reporting occasion, it is reported in accordance with one
     and liabilities attributable to any remaining minority shareholders      of the following three categories under which the financial asset
     of the acquired business. Identifiable assets and liabilities also        was classified at the time of acquisition.
     include assets, liabilities, and provisions, including commitments          Acquisitions and divestments of financial assets are reported on
     from and claims made by outside parties, that are not reported in        the transaction date, which is the day when the company underta-
     the acquired company’s balance sheet.                                    kes to acquire or divest the asset.
        Provisions are not made for expenditure relating to restructuring        The fair value of a financial asset that is listed on an active mar-
     planned as a result of the acquisition. The difference between the       ket is determined as the closing price on closing day. In the case
     acquisition value and the acquired proportion of the net assets of       of financial assets for which there is no active market, fair value is
     the acquired business is classified as goodwill and reported as an        established through a variety of valuation techniques using recently
     intangible asset in the balance sheet.                                   executed transactions between informed parties who are indepen-
        The utility period of each individual intangible asset is determi-    dent of each other, cash flow models, and option valuation models.
     ned and the asset amortized over this period. If the utility period         A financial asset and a financial liability are set off and reported
     is considered to be indeterminable, no amortization is made. An          at a net value in the balance sheet when there is a legal right to
     assessment that returns an indeterminable utility period for an          set off the reported amounts and there is an intention to settle the
     intangible asset takes into account all relevant circumstances and is    items with a net amount or simultaneously realize the asset and
     based on there not being any foreseeable final time limit for the net     settle the liability.
     cash flow that the asset generates. The utility period of goodwill is
     generally deemed to be indeterminate.                                    Financial assets valued at fair value in the income statement
                                                                              Financial assets classified as being held for trading are reported as
     Foreign currency effects and translation                                 financial assets valued at fair value in the income statement. A fi-
     of foreign subsidiary accounts                                           nancial asset is classified as being held for trading if it was acquired
     The Group complies with IAS 21 Effects of Changes in Foreign             or arose with the main object of being sold or repurchased in the
     Exchange Rates.                                                          short term; or if it is part of a portfolio of identified and collectively
        The consolidated financial statements are presented in Swedish         managed financial instruments for which there is a demonstrated,
     kronor, which is the functional and reporting currency of both the       recent, and actual pattern of short-term profit realization; or if the
     parent company and Nordnet Bank AB. All Group companies de-              financial instrument is a derivative, aside from those cases where
     termine their own functional currency, and each item in the finan-        the derivative is held as a hedge. Profits and losses from assets held
     cial reports is valued based on the functional currency. Transac-        for trading are reported in the income statement.
     tions in foreign currencies are originally reported in the functional       Financial assets that are not held for trading and that are neither
     currency after translation using transaction date exchange rates.        loans receivable nor accounts receivable, nor financial assets held
     Monetary assets and liabilities denominated in foreign currencies        for sale, are also classified as financial assets valued at fair value in
     are translated into the Group’s functional currency using closing        the income statement.
     day exchange rates. All exchange gains and losses are reported in
     the income statement. Non-monetary items in foreign currencies,          Loans receivable and accounts receivable
     which are valued at historic acquisition value, are translated into      Loans receivable and accounts receivable are financial assets that
     the functional currency using the exchange rate at the time of the       are not derivatives, have determined or determinable payments,
     original transaction.                                                    and are not listed on an active market. They are valued at their
                                                                              accrued acquisition values, after deductions for write-downs and
     Translation differences, foreign subsidiaries                            specific provisions for credit losses. Profits and losses are reported
     The translation involves all assets, provisions, and liabilities being   in the income statement when the financial asset is removed from
     translated at closing day rates and all income statement items being     the balance sheet or written down and else through accrual ac-
     translated at average rates for the reporting period. Any currency       counting. Accounts receivable and accounts payable are reported
     differences arising are posted direct to equity. If a foreign subsidi-   at net value in the balance sheet under other assets in accordance
     ary is divested, the accumulated currency difference is reported in      with IAS 32. Accounts receivable are entered in the balance sheet
     the income statement.                                                    once invoiced. A financial asset is removed from the balance sheet
                                                                              when the contractual rights have been realized or expired or when
     Financial assets and financial liabilities                                the company has lost control over said asset. The same applies to
     The Group complies with IAS 39 Financial Instruments.                    part of a financial asset.
        Financial assets are classified as financial assets valued at              If there is objective evidence showing that a need has arisen
     fair value in the income statement, loans receivable or accounts         to write down the value of a financial asset in the category loans
     receivable, financial assets held to maturity, or financial assets held    receivable and accounts receivable, the write-down is computed
     for sale. When a financial asset is reported for the first time, it is     as the difference between the asset’s book value and the present
     valued at fair value plus, in the case of financial assets not in the     value of estimated future cash flows discounted to the financial
     category of financial assets valued at fair value in the income state-    asset’s original effective yield. The write-down is entered in the
     ment, transaction costs directly attributable to the acquisition or      income statement.


64      NORDNET ANNUAL REPORT 2006
                                                                            Notes



Credit losses are entered in the accounts partly as confirmed              the acquisition or issue of the financial liability.                                1
losses during the year and partly as a provision for probable credit          After the first reporting occasion, all financial liabilities are valued         2
losses. All or part of a receivable that is not considered collect-       at accrued acquisition value using the effective interest method.                  3
able or obtainable by realization of the collateral is reported as a          A liability is entered in the balance sheet when the counterparty              4
confirmed loss. Confirmed losses are written down when there is             has performed and there is a contractual obligation to pay, even                   5
no realistic possibility of recovery. An amount corresponding to          if the invoice has not yet been received. Accounts payable are                     6
the difference between the loan receivable’s book value and its           entered in the balance sheet when invoices have been received.                     7
estimated recovery value is entered in the accounts as a provision            A financial liability is removed from the balance sheet when the                8
for probable losses.                                                      contractual obligations have been fulfilled or otherwise expired.                   9
                                                                          The same applies to part of a financial liability.                                 10
Provisions for probable credit losses are made if a receivable is             Financial liabilities in the insurance business, where clients                11
uncertain, that is:                                                       carry the investment risk, are categorized in the same manner as                  12
                                                                          the corresponding assets, that is, as financial assets and liabilities             13
   if on the basis of past events and prevailing circumstances on         valued at fair value.                                                             14
   closing day it is probable that payments will not be                                                                                                     15
   forthcoming in accordance with the contracted terms; and               Tangible fixed assets                                                              16
   there is no collateral that covers with an adequate margin             The Group complies with IAS 16 Property, Plant and Equipment.                     17
   both the loan and the interest, including compensation for                Tangible fixed assets are reported at acquisition value, less accu-             18
   any overdue payments.                                                  mulated depreciation and any accumulated write-downs. Assets are
                                                                                                                                                            19
                                                                          depreciated linearly over the utility period to an estimated residual
                                                                                                                                                            20
Loans receivable are valued individually when determining the             value. If there is any indication of a loss of value, an impairment
                                                                                                                                                            21
need for provisions for probable credit losses.                           test is used to determine a recovery value. If this falls short of the
                                                                                                                                                            22
   Loans receivable restructured as a result of the modification of        book value, a write-down is made.
                                                                                                                                                            23
loan conditions, such as reduced interest rates, due to borrowers’           The book value of a tangible asset is removed from the balance
financial difficulties are not deemed uncertain if it is considered         sheet in conjunction with a sale or disposal, and when no future                  24
likely that payments will be made in accordance with the contrac-         financial benefit can be expected. Profits and losses arising when a                 25
ted terms after restructuring.                                            tangible fixed asset is removed from the balance sheet are determi-                26
   Recovered credit losses are reported as a reduction in the net         ned as the difference between any net sales income, in the event of               27
cost of credit losses for the year.                                       a sale, and the asset’s book value.                                               28
                                                                             The residual values and utility periods of tangible fixed assets                29
Financial assets held for sale                                            are reviewed at least once a year (at the end of each financial year)              30
Financial assets held for sale are assets that are not derivatives,       and, if necessary, an adjustment is made to the depreciation period.              31
have been identified as being available for sale, and have not been           Equipment, computers, and other hardware are normally depre-                   32
classified as belonging to any of the three categories mentioned           ciated over four years. Expenditure on improvements to third-party                33
above. The change in value is reported directly under equity, under       real estate is depreciated linearly over the shorter of the remaining             34
changes in equity, with the exception of write-downs and currency         duration of the tenancy agreement and the utility period of the                   35
gains and losses, until the financial asset is removed from the bal-       improvements.                                                                     36
ance sheet, at which point the accumulated profit or loss previously                                                                                         37
reported under equity is entered in the income statement.                 Intangible assets                                                                 38
   If there is objective evidence for a need to write down the value      The Group complies with IAS 38 Intangible Assets.                                 39
of a financial asset in the category assets held for sale, the accumu-        An intangible asset is valued at acquisition value the first time it            40
lated loss reported directly against equity is removed from equity        is entered in the balance sheet. After the first reporting occasion,               41
and entered in the income statement, even if the financial asset           an intangible asset is entered in the balance sheet at acquisition
                                                                                                                                                            42
has not been removed from the balance sheet. The amount of the            value, less any accumulated amortization and accumulated write-
                                                                                                                                                            43
accumulated loss that can be removed from equity and reported in          downs. Internally-generated intangible assets, apart from capitali-
                                                                                                                                                            44
the income statement is the difference between the acquisition cost       zed development expenditure, are not capitalized, but entered in
                                                                                                                                                            45
and the fair value, less any write-down in the value of the financial      the income statement for the period the expenditure was incurred.
                                                                                                                                                            46
asset previously reported in the income statement.                        The asset is amortized linearly throughout its utility period to an
   Write-downs reported in the income statement for an investment         estimated residual value and amortization is not begun until the                  47
in an equity capital instrument classified as a financial asset held        asset is ready to be used. The residual values and utility periods                48
for sale are not reversed in the income statement.                        of intangible assets are reviewed, regardless of whether there is                 49
                                                                          any indication of loss of value, at least once a year (at the end of              50
Financial liabilities                                                     each financial year) and if necessary the amortization period is                   51
When a financial liability is reported for the first time, it is valued     adjusted and/or a write-down is made. If there is an indication                   52
at fair value plus, in the case of a financial liability that does not     of a loss of value, the asset is impairment tested and a recovery                 53
belong to the category financial liabilities valued at fair value in the   value estimated. If this falls short of the book value, this value is
income statement, transaction costs that are directly attributable to     written down. Intangible assets that have not yet been utilized are


                                                                                                          NORDNET ANNUAL REPORT 2006                   65
       Notes



     also impairment tested annually, even if there is no indication that        is estimated and then discounted to present value using a discount
     write-downs may be necessary.                                               factor before tax, taking into account the time value of money and
                                                                                 the risks specifically related to the asset for which future cash flow
     Capitalized development expenditure                                         estimates have not been adjusted. Write-downs are entered in the
     Capitalized development expenditure consists partly of externally           income statement under the specific income statement items and
     purchased services and partly of capitalized personnel costs.               for the period to which the write-downs relate.
     Capitalized expenditure relates to the development of trading sys-              Each closing day the company also determines whether there is
     tems and other applications that will generate long-term financial           any indication that an earlier write-down in the value of an asset,
     benefits for the Group in the form of higher income or lower costs.          apart from goodwill, is no longer justified, whether in part or in full.
     Such expenditure is reported as an asset when incurred. Capital-            If there are such indications, the asset’s recovery value is compu-
     ized development costs are reported in the balance sheet at acqui-          ted. Any previous write-down of an asset, apart from goodwill, is
     sition value less amortization and write-downs. Once an asset has           only reversed if there has been a change in the assumptions used to
     been completed, the capitalized development costs are amortized             determine the asset’s recovery value when it was last written down.
     over the estimated utility period.                                          If this is the case, the asset’s book value shall be increased to the
        Capitalized development expenditure is amortized over three to           recovery value. The increase is reported in the income statement as
     five years, depending on the estimated utility period.                       a reversed write-down. An increase in the book value of an asset,
                                                                                 other than goodwill, as a consequence of the reversal of an earlier
     Goodwill                                                                    write-down may not result in the book value exceeding what the
     The Group complies with IFRS 3 Business Combinations.                       company would have reported had it not written down the value of
        At the time of acquisition, the goodwill arising from a corporate        the asset. A reversal of a write-down in the value of an asset, other
     acquisition is reported as an asset, valued at acquisition value, and       than goodwill, is reported immediately in the income statement,
     corresponds to the proportion of the acquisition value that exceeds         unless the asset is reported at a reappraised value, in which case
     the net fair value of the acquired proportion of the acquired unit’s        it is treated as an increase in value instead. When a write-down
     identifiable assets, liabilities, and contingent liabilities. After the      is reversed, future depreciation is adjusted so that the new book
     first reporting occasion, the accrued goodwill is valued at acquisi-         value, after deducting any residual value, is distributed over the
     tion value less any accumulated write-downs. Accrued goodwill is            asset’s remaining utility period.
     impairment tested at least once a year to determine any need for
     write-downs. Impairment tests may be made more frequently if                Convertible debenture loan
     events or circumstances indicate that a write-down may be needed.           The Group complies with IAS 32 Financial Instruments: Disclosure
        When reviewing the need to write down the value of acquired              and Presentation.
     goodwill, it is allocated among the Group’s cash-generating units or           The convertible debenture loan is reported partly as a financial
     Groups of cash-generating units that are expected to benefit from            liability and partly as equity. The division between the two catego-
     the synergies associated with the acquisition, regardless of whether        ries is based on the valuation made in conjunction with the issue.
     other assets or liabilities of the acquired company are allocated to        The original division is not changed over the duration of the loan,
     these units or Groups of units. Each unit or Group of units to which        but upon maturity if required. Interest costs are distributed over the
     goodwill is allocated shall:                                                duration of the loan.

       correspond to the lowest level in the company at which the good           Liquid funds
       will in question is monitored by the company’s internal control           The Group complies with IAS 7 Cash Flow Statements.
       routines and                                                                 Liquid funds in the balance sheet consist of lending to credit
       shall not be larger than a segment, based on the criteria for the         institutions and eligible treasury securities maturing within 90 days
       company’s primary and secondary segments as defined in IAS                 of the acquisition date. Liquid funds can readily be converted into
       14 Segment Reporting.                                                     cash of a known amount and are not exposed to any significant
                                                                                 value fluctuation risk.
     The goodwill value for a cash-generating unit (Group of units) is              Liquid funds in the cash flow statement are defined as above.
     written down when the associated recovery value is less than the            The consolidated cash flow statements are prepared using the
     associated book value.                                                      direct method, while the parent company’s cash flow statements
                                                                                 are prepared using the indirect method. The consolidated cash flow
     Impairment of Assets                                                        statements are prepared using the direct method since this method
     The Group complies with IAS 36 Impairment of Assets.                        best reflects the character of the business.
         On each closing day, the company determines whether there                  The Group’s operative cash flow statements exclude cash flow
     is any indication that an asset may have declined in value. If this         related to client funds, which means only cash flow generated by
     is the case, the asset’s recovery value is calculated. The recovery         the business is included.
     value of an asset or cash-generating unit is the higher of the fair
     value less selling costs and the utility value. If the book value is less
     than the recovery value, the value shall be written down to the reco-
     very value. When computing the recovery value, future cash flow


66      NORDNET ANNUAL REPORT 2006
                                                                              Notes



Leasing                                                                     to cover a provision will be settled by a third party, the payment is          1
The Group complies with IAS 17 Leases.                                      reported when – and only when – it is almost certain that it will be           2
   Leasing contract classifications are determined by the extent to          received if the commitment is fulfilled. The settlement is reported as          3
which the financial risks and benefits associated with ownership of           a separate asset in the balance sheet. The reported settlement cannot          4
each leasing object are borne by/fall to the lessor or the lessee. A        exceed the provision. The cost of a provision is reported net in the           5
leasing contract is classified as a financial leasing contract if the fi-      income statement after deducting any payment from a third party.               6
nancial benefits and risks associated with ownership of the leasing             A provision for restructuring is reported only when a detailed              7
object are transferred, in all essentials, from the lessor to the lessee.   restructuring plan has been drawn up and the restructuring process             8
A leasing contract is classified as operational if these benefits and         has either begun or been announced to the parties concerned.                   9
risks are not transferred, in all essentials, to the lessee.                                                                                              10
   Objects held on the basis of financial leasing contracts are              Contingent liabilities                                                        11
reported in the balance sheet as fixed assets while obligations to           A contingent liability is reported when: there is a possible com-             12
pay future leasing charges are reported as liabilities. Depreciation        mitment originating in past events, the existence of which will be            13
of and interest on such liabilities are charged to the accounts over        confirmed only by the occurrence or non-occurrence of one or                   14
the duration of the contract on the basis of utility.                       more uncertain future events not entirely within the company’s                15
   Objects held on the basis of operational leasing contracts are not       control; or when there is a commitment originating in past events             16
reported in the balance sheet. The leasing fees associated with an          and it has not been reported as a liability or provision as it is not         17
operational leasing contract are charged to the accounts over the           likely that an outflow of resources will be needed to fulfill the com-          18
duration of the contract on the basis of utility.                           mitment or the amount of the commitment cannot be estimated
                                                                                                                                                          19
                                                                            with sufficient accuracy.
                                                                                                                                                          20
Employee benefits
                                                                                                                                                          21
The Group complies with IAS 19 Employee Benefits.                            Income recognition
                                                                                                                                                          22
                                                                            The Group complies with IAS 18 Revenue.
                                                                                                                                                          23
Short-term benefits                                                             Income is recognized at the fair value of what has been or will be
Short-term benefits, including salaries, social security expenses,           received. Income is recognized when the financial outcome can be               24
paid short-term leave, variable salaries, and certain non-monetary          reliably calculated, significant risks have been transferred to the            25
benefits are reported in the income statement for the period during          buyer, and it is likely that the financial benefits associated with the         26
which the employee earned the benefits.                                      transaction will fall to the Group.                                           27
                                                                               The Group’s most important incomes sources are described below.            28
Benefits post-employment                                                                                                                                   29
Benefits post-employment comprise pensions. The Group only                   Interest income                                                               30
has defined contribution pension plans, which are included in the            Interest income attributable to loans to credit institutions and loans        31
income statement for the period during which the employee worked            to private individuals is recognized as income when earned, which             32
for the Group. A defined contribution pension plan entails paying a          means interest income is distributed over the period to which it              33
defined contribution based on a certain percentage of the employ-            belongs using the effective interest method. The effective interest           34
ee’s salary into said employee’s pension account, which is opened           method is a method for calculating the accrued acquisition value of           35
by the company with an external insurance company. The final size            a financial asset and for distributing interest income over time.              36
of the employee’s pension depends on how much money has been                                                                                              37
paid in and what return the money has earned. This contrasts with           Commission income                                                             38
a defined benefit pension plan, where the employer guarantees the             Commission income, which mainly comprises the commission                      39
employee a certain predetermined pension.                                   charged in conjunction with the buying and selling of securities, is          40
                                                                            recognized as income when the transaction is completed. Commis-               41
Severance pay                                                               sion for mediating securities in conjunction with new share issues,
                                                                                                                                                          42
Severance pay in the case of termination of employment is reported          the sale of products, and underwritten share issues is recognized as
                                                                                                                                                          43
immediately as a cost as the Group will not receive any future              income in the period when the service is rendered. Commission from
                                                                                                                                                          44
financial benefits.                                                           mutual fund operations mainly comprises account opening commis-
                                                                                                                                                          45
                                                                            sion, which is recognized as income in conjunction with the buying of
                                                                                                                                                          46
Provisions and contingent liabilities                                       mutual funds, and commission based on mutual fund volumes, which
The Group complies with IAS 37 Provisions, Contingent Liabilities           is recognized as income monthly and based on actual volumes.                  47
and Contingent Assets.                                                                                                                                    48
                                                                            Other operating income                                                        49
Provisions                                                                  Other operating income includes income from account-related                   50
A provision is reported in the balance sheet when a formal or               services, information services, software, service and support fees            51
informal commitment exists as a consequence of a past event and             from partners, and fees for certain insurance and pension products.           52
it is likely that an outflow of resources will be needed to fulfill the       This income is recognized in the period in which the service is               53
commitment and a reliable estimate of the amount can be made. In            rendered and provided to the client.
cases where it is expected that all or part of the amount required


                                                                                                           NORDNET ANNUAL REPORT 2006                67
       Notes



     Borrowing costs                                                           the tax rates expected to be applicable for the period the asset
     The Group complies with IAS 23 Borrowing Costs.                           was realized or the liability was settled using the tax rates and tax
        Borrowing costs are charged against profit for the period to which      regulations that had been decided or announced as of closing day.
     the costs relate, regardless of how the borrowed funds are used.          Deferred tax is reported direct against equity if the tax is attribut-
                                                                               able to items that in the same period or another period are reported
     Income taxes                                                              direct against equity.
     The Group complies with IAS 12 Income Taxes.                                 Deferred tax claims and deferred tax liabilities are reported net
     The Group’s total tax consists of current tax and deferred tax.           only if there is a legal right to set off the current tax claims against
                                                                               current tax liabilities and if they relate to taxes debited by the same
     Current tax                                                               tax authority and for the same tax subject.
     Current tax is tax to be paid or received for the current year. This
     also includes adjustments to current tax attributable to previous         Segment reporting
     periods.                                                                  The Group complies with IAS 14 Segment Reporting.
        Current tax liabilities and current tax claims attributable to the        A segment is a line of business or a geographic region. A line
     current or earlier periods are valued at the amounts which, in the        of business is part of a company that is identifiable in accounting
     company’s assessment, are to be paid to or received from the tax          terms, that provides an individual product or service or a Group
     authorities. The amounts are calculated using the tax rates and           of similar products or services, and that is exposed to risks and
     regulations that have been decided on or, in practice, have been          opportunities that differ from those that apply to other lines of
     decided on as of closing day.                                             business. A geographic region is part of a company that is identi-
        Current tax is reported direct against equity if the tax is attribu-   fiable in accounting terms and that provides products or services
     table to items reported direct against equity in the same period.         within an economic environment that is exposed to risks and
                                                                               opportunities that differ from those that apply to other economic
     Deferred tax                                                              environments.
     Deferred tax liabilities for all taxable temporary differences are re-       The Group has identified lines of business as its primary seg-
     ported in the balance sheet with the exception of tax liabilities at-     ments and geographic regions as its secondary segments.
     tributable to the first entry of goodwill or the first entry of an asset       The Group is considered to have two lines of business: securities
     or a liability originating from a transaction that is not a corporate     trading and insurance brokerage. The securities business includes
     acquisition and that at the time of the transaction affected neither      the services provided by Nordnet Bank AB and Nordnet Pensions-
     reported nor taxable profit. Deferred tax liabilities attributable         försäkring AB. As insurance brokerage represents less than 10% of
     to taxable temporary differences due to interests in subsidiaries,        the Group’s income, profit, and assets, there is no obligation to report
     branches, associated companies, or joint ventures are reported            this segment separately. In the Group’s assessment, there is only one
     unless the following two conditions are satisfied:                         geographic region since the countries in which the Group operates do
                                                                               not differ significantly in terms of risks or opportunities.
       The parent company, investor, or joint-owner can determine
       when the temporary differences will be reversed and                     Insurance contracts
       it is probable that the reversal will not be made within the            The Group complies with IFRS 4 Insurance Contracts.
       immediate foreseeable future.                                              Nordnet’s insurance contracts are conventional insurance
                                                                               policies. With conventional insurance, the policy value is simply
     Deferred tax claims for all deductible temporary differences are          the contracted dividend, which means the insurance has no
     reported in the balance sheet to the extent it is probable that the       guaranteed insurance capital. The policyholders carry the invest-
     amounts can be set off against future taxable surpluses, with the         ment risk of investments.
     exception of tax claims attributable to the first entry of an asset or        Upon payment, the Kapitalpension and Privat Pension
     a liability in a transaction that is not a corporate acquisition, and     products can be converted into mutual fund insurance. If the in-
     that, at the time of the transaction, affects neither reported nor        surance remains a conventional policy, during the first five years
     taxable profit.                                                            payments are fixed at an amount calculated from the value of the
        Deferred tax claims attributable to deductible temporary diffe-        policy on the day of the first payment. This amount is guaranteed
     rences attributable to interests in subsidiaries, branches, associated    for the first five years.
     companies, and joint ventures are reported only to the extent it is          The value of a mutual fund policy depends on the investments
     probable that the temporary difference will result in a tax deduc-        made by the policyholder. The policyholders carry the invest-
     tion in the foreseeable future and that there are sufficient taxable       ment risk of investments.
     surpluses against which the deduction can be set off.                        IFRS differentiates between insurance contracts and invest-
        The book value of a deferred tax claim is reviewed at the end          ment contracts. Insurance contracts are contracts wherein
     of each financial year. The value is reduced to the extent it is no        the Group accepts a significant insurance risk on behalf of the
     longer probable that sufficient taxable surpluses will be available.       policyholder by agreeing to compensate the policyholder or
     The reduction is reversed to the extent it is later considered to be      another beneficiary should a predetermined insured event
     probable that sufficient taxable surpluses will be available.              occur. Investment contracts are financial instruments that
        Deferred tax claims and deferred tax liabilities are valued at         cannot be defined as insurance contracts since they do not transfer


68      NORDNET ANNUAL REPORT 2006
                                                                                Notes



any significant insurance risk from the policyholder to                        the accounts of legal entities in accordance with the recommenda-            1
the Group.                                                                    tion of the Swedish Financial Accounting Standards Council’s                 2
                                                                              Emerging Issues Task Force. Shareholder contributions are posted             3
Assets in insurance business                                                  direct to equity by the recipient and capitalized in shares and              4
Assets in the insurance business comprise the policyholders’                  participations by the provider to the extent write-downs are not             5
investments in securities in the Kapitalförsäkring, Kapitalpension,           required. Group contributions are reported in accordance with                6
Privat Pension, and Tjänstepension products. The policyholders                their financial purpose. Group contributions provided and received            7
carry the investment risk of these investments, with the exception            in order to minimize the Group’s tax burden are reported in the              8
of any guaranteed amount invested in a conventional insurance                 parent company as a decrease or an increase respectively in non-             9
policy. The assets in the insurance business are valued at fair value         restricted equity adjusted for estimated tax.                               10
in the income statement. The fair values of the investments are                                                                                           11
based on the most recent bid prices. The amounts received from                Financial fixed assets                                                       12
and paid to policyholders are reported in the balance sheet as                Financial fixed assets are reported at acquisition value less any            13
deposits and withdrawals respectively.                                        write-downs.                                                                14
                                                                                                                                                          15
Investment contract commitments                                               Untaxed reserves                                                            16
The commitments of contracts classified as investment contracts are            Swedish tax legislation permits companies to make provisions to             17
reported as a liability to the policyholders. The size of this liability is   reserves and funds. In this way, within certain limits companies            18
directly proportional to changes in the value of the underlying secu-         can control and retain reported business profits without immediate
                                                                                                                                                          19
rities, as well as deposits and withdrawals. The liability is reported as     taxation. Untaxed reserves later become liable to taxation when
                                                                                                                                                          20
liabilities valued at fair value in the income statement.                     reversed.
                                                                                                                                                          21
    Changes in the value of the assets in the insurance business and
                                                                                                                                                          22
the corresponding changes in the commitments of investment cont-              Goodwill amortization
                                                                                                                                                          23
racts are reported net in the income statement. The reason for this is        Goodwill is regularly amortized over the utility period from the
that the changes in value are fully attributable to the policyholders.        original acquisition value to a residual value. Amortization periods        24
Reporting these changes as a net value simplifies matters for the              are 5–20 years.                                                             25
policyholders and other interested parties in understanding the trans-                                                                                    26
actions and assessing the company’s earnings and future cash flow.                                                                                         27
                                                                              Note 6.         Transactions with affiliated companies                       28
Insurance contract commitments                                                The Group conducts certain transactions with affiliated companies,           29
Contracts classified as insurance contracts are reported as a li-              which are described below. No provisions for doubtful receivables           30
ability to the policyholders. This liability is attributable to pension       or expenses for doubtful receivables were reported during the               31
insurance without repayment protection and reserves for unknown               financial year.                                                              32
damages. The liability for pension insurance without repayment                                                                                            33
protection is directly related to the market value of the investments.        Contracts with E. Öhman J:or AB                                             34
The liability for unknown damages is calculated on an actuarial               E. Öhman J:or AB is affiliated with Nordnet AB (publ) in part                35
basis. The liability for insurance contracts has not been discounted,         because the company owns a direct holding and in part because               36
with the exception of the reserve for unknown damages.                        relatives of the family that owns E. Öhman J:or AB have a direct            37
                                                                              holding. Nordnet AB (publ) has issued two perpetual subordinated            38
Parent company’s accounting principles                                        loans of SEK 20 million and SEK 30 million respectively to the par-         39
The parent company’s annual report is prepared in accordance                  ent company of the Öhman Group. According to Nordnet’s Board,               40
with the Swedish Annual Accounts Act (ÅRL 1995:1554) and with                 these loans are on market terms. This has also been verified by an           41
the application of the Swedish Financial Accounting Standards                 independent external party. For additional information, see Note 32.
                                                                                                                                                          42
Council’s recommendation RR 32:05 on reporting by legal entities.
                                                                                                                                                          43
This means the IFRS valuation and disclosure rules are applied with           Ongoing business relations with E. Öhman J:or
                                                                                                                                                          44
the following significant exceptions:                                          Fondkommission AB
                                                                                                                                                          45
                                                                              E. Öhman J:or Fondkommission AB is a subsidiary of the above-
                                                                                                                                                          46
Classification                                                                 mentioned E. Öhman J:or AB.
Fixed assets, long-term liabilities, and provisions consist, in all               Nordnet Bank AB regularly enters into a variety of business re-         47
essentials, of amounts that are expected to be realized (recovered)           lations with E. Öhman J:or Fondkommission AB in the same way as             48
or paid more than 12 months after closing day. Current assets and             it regularly does so with other stockbrokers and banks. According           49
current liabilities consist, in all essentials, only of amounts that are      to Nordnet’s Board, these business relations have been entered on           50
expected to be realized (recovered) or paid within 12 months of               market terms. Internal audit services are occasionally purchased            51
closing day.                                                                  from the E. Öhman J:or Group on market terms. During the year,              52
                                                                              Nordnet Bank AB received commission income and other income                 53
Group contributions and shareholder contributions                             totaling SEK 724 thousand. As of December 31, 2006, there was a
Group contributions and shareholder contributions are reported in             receivable of SEK 41 thousand yet to fall due.


                                                                                                            NORDNET ANNUAL REPORT 2006               69
       Notes



     Transactions with other affiliated parties                               the client’s creditworthiness. In order to limit the credit risk, the
     For information on the salaries and other remuneration, costs, and      pledged securities portfolio shall, depending on the size of the loan,
     commitments, such as pensions and similar benefits, as well as           normally be well diversified in terms of risk. Loans are granted wit-
     contractual severance pay, for the Board, CEO, and other senior         hin the framework of a special credit policy and margin limits based
     executives, see Note12 and page 52.                                     on an internally developed VaR (Value-at-Risk) model. This model
        In 2004, a loan was granted to a senior executive of the subsidia-   is based primarily on the liquidity and volatility of individual shares
     ry Nordnet Bank AB. The original loan was for SEK 250 thousand.         and is regularly updated with new information. The margin level
     After installments, as of December 31, 2006 the remaining debt          for shares currently varies between 0 and 80 per cent of the current
     was SEK 165 (193) thousand. The loan is an annuity loan. Interest is    market value, while for mutual funds the margin level lies between
     charged at 4.4% and the loan falls due in February 2012.                0 and 95 per cent of the current market value. The margin levels are
        No other Group company has granted loans, guarantees, or             updated at least every quarter, or more frequently if necessary.
     sureties to any other senior executive.                                    In order to maintain good control over lending, clients are
                                                                             assigned credit limits. These limits are based on the client’s
                                                                             requirements, the quality of the collateral, and the client’s credit-
     Note 7.         Risks                                                   worthiness. The credit policy stipulates which Nordnet personnel
     Nordnet’s business is influenced by a number of external factors,        are entitled to approve an increased credit limit. Nordnet’s credit
     the effects of which on the Group’s profit and financial position         committee, staffed by senior executives, decides on matters concer-
     can be controlled to varying degrees. When assessing the Group’s        ning larger credit limits while the Board decides on the very largest
     future potential, it is important to consider any risks alongside       credit issues. Nordnet’s credit department continually monitors
     potential earnings growth. Here we present the risk factors             lending at aggregate and individual levels and attends to clients who
     considered especially important to the Group’s future develop-          have exceeded their credit limits. The credit department reports to
     ment. These factors are not presented in any order of precedence,       management weekly, and at other times when required, providing a
     and other risks may exist. Naturally, we cannot describe every risk     summary of the current credit situation. The Group’s assessment is
     factor in detail, and they must be considered in combination with       that there is no concentration of credit risks. The Group’s lending
     the other information presented in the annual report and a general      exhibits a good spread in the geographic markets, see Note 20.
     assessment of the world at large. The risk factors conform with the
     new capital adequacy regulations included in pillars 1 and 2. Please    Market risk
     refer to the Directors’ Report on page 51 for a presentation of the     The most important market risks in financing activities are interest
     different pillars and Nordnet’s risk management.                        rate risks, currency risks, and equities price risks. In Nordnet’s case,
                                                                             the equities price risk is the principal market risk.
     Pillar 1                                                                   Interest rate risk is defined as the risk that the market value of
     Nordnet’s business faces various types of risk, such as credit          the bank’s fixed interest assets will fall when market interest rates
     risk, market risk, liquidity risk, and operational risk. In order to    rise. The level of interest rate risk, or interest price risk, increases
     limit and control these risks and the company’s risk exposure,          the longer the duration of the commitment. Another kind of interest
     Nordnet’s Board, which has ultimate responsibility for Nordnet’s        rate risk is net interest income risk, that is, the risk that net interest
     internal control system, has adopted policies and instructions for      income will drop when interest rates rise since the fixed rate term for
     lending and other financing activities. The overall philosophy is        borrowing is generally shorter than for lending. Nordnet’s interest
     that Nordnet’s risk exposure in all areas shall be minimal unless       rate risk is low since the company’s investment policy stipulates
     otherwise decided by the Board. This means that Nordnet does not        that liquid funds must not be invested in fixed-income securities or
     trade itself or otherwise expose itself to financial risks, with the     otherwise invested such that the average maturity exceeds fifteen
     exception of the Experts service described on page 23.                  months. Further, investments are to prioritize treasury bills. Note 51,
                                                                             Other supplementary information, includes interest rate terms.
     Credit risk                                                                Currency risks stem from assets and liabilities of differing amounts
     Credit risk is the risk that Nordnet will not receive agreed payment    in the same foreign currency and client positions in different curren-
     and/or will incur a loss as a result of a counterparty’s inability to   cies, since exchange rates can fluctuate widely and result in negative
     fulfill its obligations. The underlying transaction could comprise a     net assets. In those cases where clients do not have a currency ac-
     loan, a security, a derivative contract, or a currency transaction.     count, Nordnet hedges any currency exposure by buying and selling
        Nordnet’s credit risk primarily comprises loans granted with         currencies several times a day. Only small flow-related currency
     listed shares and mutual funds (primarily Nordic, German, and           positions can normally remain open for longer than one banking day.
     American securities) as collateral. The investment of surplus           The net assets of foreign operations are not hedged against currency
     liquid funds involves a certain amount of credit risk, though such      fluctuations, as this is not Group policy.
     surpluses are mostly invested in treasury bills, which entail very         Equities price risk is the risk that the market value of an equity
     low risk exposure.                                                      investment will fall as result of changes in market assessments. For
        Nordnet’s lending is subject to rigorous demands as regards          Nordnet, this is an indirect risk as loans are granted with eligible
     ethics, quality, and control. The deciding factors in Nordnet’s         securities as collateral. Normally, the collateral value of listed
     decision to lend are the collateral for the loan in the form of         shares does not exceed 80 per cent of their market value. Before
     eligible securities and account balances in various currencies and      a definite credit loss can arise when settling a debt, the pledged


70      NORDNET ANNUAL REPORT 2006
                                                                          Notes



share would have to be sold on the market at a price lower than         large number of clients, mostly spread throughout the Nordic coun-            1
after a 20 per cent drop. Nordnet’s own exposure to equities price      tries and Germany. Consequently, for Nordnet’s part concentra-                2
risk is considered to be low since the Group does not normally have     tion risk primarily arises in the collateral pledged by clients being         3
any major holdings as operations are focused on brokering, with         concentrated on stock market holdings.                                        4
the exception of the Experts service described on page 23. Nordnet                                                                                    5
does, however, maintain a smaller trading share to facilitate trade     Risks in the insurance business                                               6
in certain shares and mutual funds (see Note 21).                       Insurance risks                                                               7
                                                                        Insurance risks comprise mortality and morbidity. The premiums                8
Operational risk                                                        for risk products apply for one year and are limited in scope in              9
Operational risk is the risk of financial losses or loss of face as a    accordance with the stipulations of the Articles of Incorporation.           10
result of flaws or shortcomings in procedures and controls, disrup-      Product calculations, and therewith pricing, are based on the                11
tions in internal and external systems, human error, or external        commitments in the case of insurance risks being realized. Insur-            12
events such as embezzlement, fire, and sabotage. Operational risk        ance risks are primarily analyzed by following up each product,              13
also includes legal risk. In order to keep operational risk as low as   examining the various stages of the products, and comparing these            14
possible, Nordnet continually updates its procedures and systems,       findings with the commitments. The risk outcome is affected by                15
trains its personnel, and maintains good internal control. In 2006,     the quality of the company’s procedures for risk assessment when             16
we also established an independent Risk & Internal Control unit, as     issuing insurance policies and when settling claims. The Group has           17
a complement to the existing Compliance unit.                           established a reinsurance policy, according to which reinsurance             18
                                                                        policies have been taken out in order to reduce potential insurance
                                                                                                                                                     19
Pillar 2                                                                risks to the chosen level.
                                                                                                                                                     20
Liquidity risk
                                                                                                                                                     21
Liquidity risk is the risk that Nordnet cannot fulfill its obligation    Investment risks
                                                                                                                                                     22
to pay on the due date without considerably increasing its means        The insurance business offers conventional insurance policies with
                                                                                                                                                     23
of payment costs. Surplus liquid funds invested in short-duration       agreed dividends wherein the policyholder carries the investment
treasury bills, deposits from the public, and bank credit facilities    risk and mutual fund insurance policies arranged so that the policy-         24
enable Nordnet to manage this risk well.                                holder carries the investment risk. Conventional insurance offers a          25
                                                                        guaranteed payment of 3% a year during the first five years of pay-            26
Legal compliance and ethical risk                                       ments. This guarantee amounts to a maximum of 15%. As payments               27
Legal and ethical risks stem partly from the extensive external rules   are made, the guarantee is deducted annually at 3% per year.                 28
that regulate the business and partly from market demands that the                                                                                   29
business is conducted in a manner that inspires confidence. The                                                                                       30
main instruments for managing these risks are the set of internal       Note 8.           Group – Net interest                                       31
rules regulating company business, the Compliance unit mentioned                                                                                     32
                                                                                                                 2006-01-01–    2005-01-01–
above, and competent personnel.                                                                                                                      33
                                                                        Net interest                              2006-12-31     2005-12-31
                                                                                                                                                     34
                                                                        Interest income
Key personnel dependence                                                                                                                             35
                                                                        Interest income – lending
Nordnet is a development-intensive company and is dependent on          to credit institutions                         43,219        13,705          36
a number of key employees. There is no guarantee that Nordnet           Interest income – fixed                                                       37
will succeed in retaining or recruiting individuals who could be of     income securities                              30,856        15,373          38
importance to the company’s success.                                    Interest income – lending                                                    39
                                                                        to the public                                 194,620       120,898
                                                                                                                                                     40
Strategic risk                                                          Other interest income                             581           140
                                                                                                                                                     41
The risk of institutional changes and changes in basic market con-                                                    269,276       150,116
                                                                                                                                                     42
ditions, as well as the risk of Nordnet making less than successful     Interest expense
                                                                                                                                                     43
business decisions or failing to implement business decisions.          Interest expense – liabilities to
                                                                                                                                                     44
                                                                        credit institutions                            -1,137          -888
                                                                        Interest expense – deposits and                                              45
Earnings risk
                                                                        borrowing from the public                     -57,655        -17,533         46
The risk that Nordnet’s income does not develop as well as
expected as a result of, for example, reduced volumes or increased      Interest expense – subordinated                                              47
                                                                        liabilities                                    -8,424        -7,596          48
competition. Earnings risk can also be said to include reputation
                                                                        Other interest expense                           -431          -106          49
risk, that is, the risk that Nordnet’s income declines as a result of
                                                                                                                      -67,647       -26,123          50
damage to Nordnet’s reputation in the market or the media.
                                                                        Net interest                                  201,630       123,993          51
Concentration risk                                                                                                                                   52
This is the risk that business is concentrated on a limited number      The average annual interest rate on lending to the public was 6.63%          53
of clients, a particular sector or geographic region, or some other     (6.10%). The average interest rate paid on deposits and borrowing
similar focal point, thereby increasing vulnerability. Nordnet has a    from the public was 1.04% (0.53%).


                                                                                                        NORDNET ANNUAL REPORT 2006              71
       Notes




     Net interest by geographic market:
                                              2006-01-01–
                                               2006-12-31
                                                            2005-01-01–
                                                             2005-12-31
                                                                              Note 11. Group – Other operating income
     Sweden                                       115,833        72,192                                                 2006-01-01–   2005-01-01–
     Norway                                        52,122        31,621       Other operating income                     2006-12-31    2005-12-31
     Denmark                                       25,466        15,014       Fixed account fees                              6,597         7,695
     Germany                                        1,744         1,983       Other account-related incidental income        16,918        12,367
     Finland                                        1,011           277       Portal-related advertising income                 331           101
     Luxembourg                                     5,454         2,906       Other                                           8,306         6,610
                                                  201,630          123,993                                                   32,152        26,773

     Net interest income of SEK 30,856 (15,373) thousand is attributable
     to fixed-income securities for trading.                                   Other operating income by                 2006-01-01–   2005-01-01–
                                                                              geographic market:                         2006-12-31    2005-12-31
                                                                              Sweden                                         20,448        17,604
     Note 9.          Group – Net commission                                  Norway                                          6,534         4,761
                                                                              Denmark                                         2,356         2,175
                                              2006-01-01–   2005-01-01–       Germany                                         1,194           683
     Net commission                            2006-12-31    2005-12-31       Finland                                           119             4
     Commission income                                                        Luxembourg                                      1,501         1,546
     Commission on securities                     689,779          471,305                                                   32,152        26,773
     Insurance broking commission, Property         1,410            1,921
                                                  691,189          473,226    Note 12.         Group – Other general
     Commission expense                                                                        administrative expenses
     Commission on securities                    -269,749          -195,053
     Net commission                               421,440           278,173                                             2006-01-01–   2005-01-01–
                                                                              General administrative expenses            2006-12-31    2005-12-31
                                                                              Personnel costs                              -128,862       -90,675
     Net commission by geographic market:
                                                                              Information costs                             -33,165       -27,092
     Sweden                                       204,422          140,779
                                                                              System and communication costs                -27,646       -22,355
     Norway                                       130,298           83,995
                                                                              Purchased services (see below for audit
     Denmark                                       53,605           38,500
                                                                              costs specification)                           -18,123       -11,871
     Germany                                       14,426            6,490
                                                                              Lease and real estate costs                   -12,702        -9,842
     Finland                                        4,270              186
                                                                              Other operational leasing costs (see
     Luxembourg                                    14,419            8,223
                                                                              specification below)                            -1,100        -1,009
                                                  421,440          278,173
                                                                              Other general administrative expenses         -18,951       -10,629


     Note 10.         Group – Net income from                                 Total general                                -240,549      -173,473
                      financial transactions                                   administrative expenses

     Net income from financial                 2006-01-01–   2005-01-01–       Average number of employees during
     transactions                              2006-12-31    2005-12-31       the year:
     Capital gains/losses from shares and           1,532         2,102       Total                                            211           138
     participations                                                           - of which female                                 93            60
     Unrealized changes in value of shares                                    - of which male                                  118            78
     and participations                            -3,183              684
     Capital gains/losses from fixed-income                                    Average number of employees
     securities                                       119              317    by geographic market:
     Unrealized changes in value of fixed-                                     Sweden                                           194           126
     income securities                                -25              -579   Norway                                             9             6
     Currency-related                               7,393             2,685   Luxembourg                                         8             6
                                                    5,836             5,209                                                    211           138


     Net income from financial transactions by geographic market:              Personnel costs breakdown:
     Sweden                                          1,231            5,084   Wages, salaries, and other remuneration       -94,219       -65,925
     Norway                                          2,299              227   Social security contributions                 -24,819       -19,025
     Denmark                                           963               72   Pension costs                                 -11,315        -9,289
     Germany                                           757             -137   Other personnel costs                         -10,701        -5,686
     Finland                                           173               -8   Total personnel costs                        -141,054       -99,925
     Luxembourg                                        413              -29   Of which capitalized personnel costs           12,192         9,250
                                                    5,836             5,209   Total reported personnel costs               -128,862       -90,675



72     NORDNET ANNUAL REPORT 2006
                                                                             Notes



                                   2006-01-01–          2005-01-01–        Board                                                                         1
                                    2006-12-31           2005-12-31                                                                                      2
Sick leave                        Men Women           Men Women            The Board received the following          2006-01-01–    2005-01-01–          3
Sick leave was as                                                          remuneration and other benefits:            2006-12-31     2005-12-31          4
follows:                                                                   Board fee                                         875            650
                                                                                                                                                         5
Up to 29 years of age                                                      of which to the chair                             250            150
                                                                                                                                                         6
Percentage of planned                                                                                                                                    7
regular working hours*          1.17%     3.23%     0.85%      1.39%       In addition to the Board fee, remuneration of SEK 25,000 was
                                                                                                                                                         8
30-49 years of age                                                         paid to each member of the Remuneration committee. See page
                                                                                                                                                         9
Percentage of planned                                                      44. No other remuneration was paid to the Board. There are no
                                                                                                                                                        10
regular working hours           1.84%     2.60%     0.50%      1.34%       other contractual pension or severance pay arrangements.
                                                                                                                                                        11
                                                                              There are 5 (6) male and 1 (0) female Board members. The
* Planned regular working hours corresponds to regular working hours                                                                                    12
                                                                           number of Board members is unchanged in comparison with
less leave of absence and vacation time.                                   2005. The Board conducts the planning and decision-making                    13
                                                                           process used to determine the remuneration of the chair of the               14
As fewer than 10 employees are over 50, no information is provided on                                                                                   15
                                                                           Board. Board remuneration was distributed in accordance with the
sick leave for this cohort. Total sick leave was 2.12 (0.98) %. In 2006,                                                                                16
                                                                           decision adopted by the Annual General Meeting. For information
long-term sick leave accounted for 15.44 (14.36) % of all sick leave.                                                                                   17
                                                                           about Board member shareholdings, please see page 43.
Long-term sick leave is consecutive sick leave of 60 days or more.                                                                                      18
                                                                                                                                                        19
Remuneration to senior executives                                          Senior executives
                                                                                                                                                        20
                                                                                                                                                        21
CEO                                                                        Seven (7) senior executives received
                                                                           the following remuneration and other      2006-01-01–    2005-01-01–         22
                                                                           benefits:                                   2006-12-31     2005-12-31         23
The CEO received the following              2006-01-01–     2005-01-01–
remuneration and other benefits:              2006-12-31      2005-12-31    Wages, salaries, and other remuneration         -6,146         -5,519        24
Basic salary                                      -2,585          -2,632   Variable salary                                 -1,398         -1,145        25
Variable salary                                   -1,155         -1 ,188   Pension costs                                   -1,054         -1,094        26
Company car                                          -33             -34                                                  -8,598         -7,758         27
Pension costs                                       -502            -502                                                                                28
                                                 -4,275          -4,356    Senior executives refers to members of Group management other
                                                                                                                                                        29
                                                                           than the CEO. Of these members, four (4) are male and three (3) are
                                                                                                                                                        30
The maximum contracted variable salary for 2006 is SEK 1,320               female. Six are employed in Sweden and one in Norway. See page
                                                                                                                                                        31
(1,320) thousand, which corresponds to 50% of the basic salary,            44 for more information.
                                                                                                                                                        32
as decided by the Board. The final variable salary is based on the             Senior executive variable salaries were limited to 25–30% of
                                                                                                                                                        33
Board’s assessment of business developments and the employee’s             basic salary. Variable salaries for the 2006 financial year totaling
                                                                                                                                                        34
role as CEO and Group President. The CEO’s variable salary for             SEK 1,398 thousand were paid in February 2007. A provision for
2006 was SEK 1,155 thousand, which was paid in March 2007. A               the full amount was made on December 31, 2006. Variable salaries             35
provision for the full amount was made on December 31, 2006.               for 2007 are limited to 30–40% of basic salary.                              36
   The CEO’s remuneration for 2007 total SEK 250 (220) thousand               Proposals for salary adjustments or other remuneration for senior         37
a month plus a maximum variable salary of 60% (50%) of the basic           executives are submitted by the CEO to the Remuneration com-                 38
salary. Occupational pension provisions for 2007 total 30% (19%)           mittee, which has been mandated by the Board to prepare such                 39
of pensionable income. Pensionable income comprises basic salary           matters.                                                                     40
including vacation pay. Amounts in parentheses are for 2006.                  There is a mutual period of notice of 3–6 months between the              41
   The CEO and the company have a mutual period of notice of               company and senior executives, including subsidiary CEOs and                 42
six months. If the CEO takes up a new position or starts a business        VPs. There are no severance pay agreements.                                  43
during the period of notice, any income from such employment or               The Group’s pension policy is to offer a defined contribution              44
business shall be deducted from the severance pay. Should the com-         plan that applies to all Group personnel, with the exception of the          45
pany serve notice, the CEO is entitled to severance pay equal to 18        Group President/CEO (see above). Pension costs amount to an                  46
months’ basic salary. The Group President/CEO is entitled to retire        average of 14% depending on age and salary.                                  47
at the age of 60. The company car is neutral in terms of costs to the         There are no special benefits for senior executives apart from             48
company as a gross salary deduction is made from the basic salary          company cars arranged to be neutral in terms of costs to the company.        49
to cover the company’s costs. The planning and decision-making                A loan has been granted to one senior executive. The principal            50
process with regard to the remuneration and other benefits of the           was SEK 250 thousand. After installments, as of December 31, 2006            51
CEO is a matter for the Board, which has appointed a Remuneration          the remaining debt was SEK 165 (193) thousand. The loan is an an-
                                                                                                                                                        52
committee to prepare such matters. The members of the Remunera-            nuity loan. Interest is charged at 4.4% and the loan shall be paid in
                                                                                                                                                        53
tion committee are presented under “Corporate governance” on               full by February 2012. Senior executives subscribed to convertibles
page 44. The CEO subscribed to convertibles in 2005. Refer to page         in 2005. Refer to page 39 and Note 32 for holdings and terms.
39 and Note 32 for holdings and terms. At year-end, there were no             There were no option programs at the end of the year.
option programs.
                                                                                                         NORDNET ANNUAL REPORT 2006                73
       Notes



                                              2006-01-01–    2005-01-01–      Note 13.            Group – Depreciation, amortization,
     Audit costs                               2006-12-31     2005-12-31                          and impairment of tangible and
     Ernst & Young                                                                                intangible fixed assets
     Auditing                                       -2,529           -2,687
     Other assignments                                -580             -786   Depreciation, amortization, and
                                                    -3,109           -3,473   impairment of tangible and intangible        2006-01-01–    2005-01-01–
     Pricewaterhouse Coopers                                                  fixed assets                                   2006-12-31     2005-12-31
     Auditing                                        -280             -116    Capitalized development
     Other assignments                                  -                -    expenditure                                       -18,375        -13,319
                                                     -280             -116    Consolidated goodwill (write-down)                 -1,218              -
                                                                              Intangible asset, client portfolio                 -3,931         -3,948
     Deloitte
                                                                              Equipment                                         -12,816         -8,139
     Auditing                                            -                -
                                                                                                                                -36,340        -25,406
     Other assignments                                -519             -196
                                                      -519             -196
     Total                                          -3,908           -3,785
     Auditing refers to audits of the annual report and the accounts, as
                                                                              Note 14.            Group – Other operating expenses
     well as the administration of the Board of Directors and CEO, other                                                   2006-01-01–    2005-01-01–
     assignments falling to the company’s auditors to perform, and            Other operating expenses                      2006-12-31     2005-12-31
     consulting services and other assistance resulting from observa-         Marketing expenses                               -89,409        -31,242
     tions made in such audits or the implementation of other such            Other                                              -2,517         -2,464
     assignments. All other tasks fall under Other assignments.                                                                -91,926        -33,706




     Operational leasing contracts
                                              2006-01-01–
                                               2006-12-31
                                                             2005-01-01–
                                                              2005-12-31
                                                                              Note 15.            Group – Net credit losses
     Premises                                       -9,615         -7,700                                                  2006-01-01–    2005-01-01–
     Equipment                                      -1,100         -1,009     Net credit losses                             2006-12-31     2005-12-31
                                                  -10,715         -8,709      A. Specific provision for individually
                                                                                 valued loans receivable:

                                                   Within one year            1. Confirmed credit losses written off
     Contracted future charges                 2006-12-31     2005-12-31         during the year                                 -2,553          -734
     Premises                                     -13,092         -8,585
     Equipment                                     -1,080           -436      2. Previous years’ provisions for probable
                                                                                 credit losses now reported as confir-
                                                                                 med losses in the annual accounts
                                                   One to five years                                                               2,458         1,072

                                               2006-12-31     2005-12-31      3. Year’s provision for probable
     Premises                                     -43,901        -38,326         credit losses                                     -620         -1,923
     Equipment                                     -1,715           -352
                                                                              4. Recovered confirmed credit losses
                                                 More than five years             from previous years                                  -              -

                                               2006-12-31     2005-12-31      5. Provisions for probable credit losses
     Premises                                     -14,645        -20,941         reversed as no longer necessary                   602            117
     Equipment                                          -              -
                                                                              6. Net credit losses for the year                    -113         -1,468

                                                                              B. Collective provision for individually
                                                                                 valued loans receivable                              -              -

                                                                              C. Collectively valued homogeneous
                                                                                 Groups of loans receivable of limited
                                                                                 value and with similar credit risk                   -              -

                                                                               D. Transfer risk                                       -             -

                                                                               E. Contingent liabilities                              -             -
                                                                               Net expense of credit losses for the year          -113         -1,468


                                                                              All credit losses are attributable to receivables from the public and
                                                                              amount to 0.00% (0.06%) of the closing book value of loans receivable.
74     NORDNET ANNUAL REPORT 2006
                                                                            Notes



Note 16.          Group – Taxes                                                                                                                         1
                                                                                                                                                        2
                                                                                       2006-01-01–                                2005-01-01–
                                                                                                                                                        3
Tax reported in income statement                                                        2006-12-31                                 2005-12-31
Current tax expense (-) / tax income (+)
                                                                                                                                                        4
                                                                                                                                                        5
Current tax on net profit for the year                                                       -80,798                                    -38,044
                                                                                                                                                        6
                                                                                                                                                        7
Deferred tax expense (-) / tax income (+)
                                                                                                                                                        8
Deferred tax for temporary differences                                                       -4,164                                     -6,221
                                                                                                                                                        9
Deferred tax due to utilization of previously
                                                                                                                                                       10
capitalized taxable value of deficit deductions                                                 -448                                    -10,133
                                                                                                                                                       11
                                                                                             -4,612                                    -16,354
                                                                                                                                                       12
                                                                                                                                                       13
Tax on profit for the year                                                                   -85,410                                    -54,398
                                                                                                                                                       14
                                                                                                                                                       15
                                                                                       2006-01-01–                                2005-01-01–
                                                                                                                                                       16
Reconciliation of effective tax                                             %           2006-12-31                      %          2005-12-31
                                                                                                                                                       17
Profit before tax                                                                           292,129                                    200,095
                                                                                                                                                       18
                                                                                                                                                       19
Tax at applicable tax rate for parent company                            28.0%              -81,796                 28.0%              -56,027
                                                                                                                                                       20
Effect of other tax rates for foreign affiliated companies                 0.7%               -2,002                 -0.5%                  913
Effect of non-deductible costs                                            0.3%                 -788                  0.1%                 -216
                                                                                                                                                       21
Effect of non-taxable income                                              0.0%                   68                  0.0%                    6         22
Effect of write-down of consolidated goodwill                             0.1%                 -341                     -                    -         23
Effect of corrected tax from previous years                               0.1%                 -206                    -                     -         24
Effect of other items                                                     0.1%                 -345                -0.5%                   926         25
Reported effective tax                                                   29.2%              -85,410                27.2%               -54,398         26
                                                                                                                                                       27
                                                                                           Deferred              Deferred                              28
Deferred tax claims and tax liabilities                                                   tax claims        tax liabilities          Net 2006          29
Deficit deductions                                                                            20,216                                    20,216          30
Tangible and intangible fixed assets                                                                               -11,281              -11,218         31
Deferred tax claims and tax liabilities, net                                                 20,216               -11,218                8,935         32
                                                                                                                                                       33
                                                                                           Deferred              Deferred                              34
                                                                                          tax claims        tax liabilities          Net 2005          35
Deficit deductions                                                                            20,664                     -              20,664          36
Tangible and intangible fixed assets                                                               -                -7,117              -7,117          37
Deferred tax claims and tax liabilities, net                                                 20,664                -7,117              13,547
                                                                                                                                                       38
                                                                                                                                                       39
Change in deferred tax component of                          Opening balance     Reported in income           Charged to       Closing balance         40
temporary differences and deficit deductions                      2006-01-01              statement                equity           2006-12-31
                                                                                                                                                       41
Utilization of deficit deductions                                      20,664                    -448                   -                20,216
                                                                                                                                                       42
Untaxed reserves                                                     -21,667                  -9,207                   -               -30,874
                                                                                                                                                       43
Other provisions                                                      14,550                   5,043                   -                19,593
Deferred tax claims and tax liabilities, net                          13,547                  -4,612                   -                 8,935         44
                                                                                                                                                       45
                                                                                                                                                       46
                                                                                                                                                       47
Deferred tax claims on unutilized deficit deductions have been cap-        able value. The company considers there to be no uncertainty in the          48
italized as they are assessed to most likely result in lower tax costs    ability to utilize these deductions in the future. Sustained low cost        49
in the future. The taxable value of the Group’s deficits is SEK 20.2       levels and favorable market developments will improve the Group’s
                                                                                                                                                       50
million. These deficits cannot be charged against profits at Group          earnings potential, mainly through its subsidiary Nordnet Bank AB.
                                                                                                                                                       51
level before 2007 as a consequence of the merger between the               Current tax liabilities of SEK 109,680 thousand are attributable
                                                                                                                                                       52
former TeleTrade and the former Nordnet in 2001. SEK 20.2 million         to Nordnet Bank AB, the Norwegian branch Nordnet Bank NUF,
                                                                                                                                                       53
has been capitalized in the balance sheet, corresponding to the tax-      Stocknet Securities AS, and Nordnet Securities Luxembourg S.A.




                                                                                                         NORDNET ANNUAL REPORT 2006               75
       Notes



     Note 17.          Group –Earnings per share                             Note 19.         Group – Lending to credit institutions
                                               2006-01-01–    2005-01-01–    Since loans to credit institutions can be converted before maturity
     Basic earnings per share                   2006-12-31     2005-12-31
                                                                             and are therefore not considered to be permanently used or owned
     Net profit for the year                        206,719        145,697
                                                                             by the business, they are classified as current assets. Loans to credit
     Weighted average number of outstan-
                                                                             institutions are payable in full on demand.
     ding shares before dilution                165,018,878   165,018,878
     Basic earnings per share                          1.25          0.88
                                                                                                                        2006-12-31     2005-12-31
                                                                             Remaining duration
     Diluted earnings per share                                              - payable on demand                           276,503         697,604
     Net profit for the year                        206,719        145,697    - no more than three months                         -               -
     Reversal of interest expense after tax,                                 - more than three months
     convertible debenture loan                      1,225            519    but less than one year                               -              -
     Adjusted profit                                207,944        146,216    Total                                         276,503        697,604
                                                                             Average remaining duration (years)                 0.0            0.0
      Average number of outstanding shares     170,491,514    167,907,214
      Diluted earnings per share                      1.22            0.87


      Weighted average number of outstan-                                    Note 20.         Group – Lending to the public
      ding shares before dilution              165,018,878    165,018,878
                                                                             Since loans to the public can be converted before maturity and are
      Weighted average number of additional                                  therefore not considered to be permanently used or owned by the
      shares on full conversion                  5,472,636      2,888,336
                                                                             business, they are classified as current assets.
      Total weighted average number of         170,491,514    167,907,214
      shares after dilution                                                                                             2006-12-31     2005-12-31
                                                                             Remaining duration
     The terms for conversion of the convertible debenture loan are
                                                                             - payable on demand                          3,282,384      2,597,289
     presented in Note 32.                                                   - no more than three months                          -              -
                                                                             - more than three months but less than
                                                                             one year                                              -              -
     Note 18.          Group – Eligible government                           Total                                        3,282,384      2,597,289
                       securities                                            Average remaining duration (years)                  0.1            0.1

     The Swedish Government is the issuer of all treasury bills, which
                                                                             On the basis of borrowers’ countries of
     are all listed. Since eligible government securities can be converted
                                                                             residence, the company’s loans receivable
     before maturity and are therefore not considered to be permanently      are geographically attributable to:       2006-12-31      2005-12-31
     used or owned by the business, they are classified as current assets.    Sweden                                         44.3%           53.6%
                                                                             Norway                                         38.1%           30.5%
                                               2006-12-31      2005-12-31
                                                                             Denmark                                        16.5%           14.8%
     Remaining duration                                                      Germany                                         0.5%            0.6%
     - up to one month                           1,497,848                   Finland                                         0.6%            0.5%
     - one to three months                         893,941        896,923
     - more than three months
                                                                             Loans receivable break down as
     but less than one year                               -        99,077
                                                                             follows:                                   2006-12-31     2005-12-31
     Total                                       2,391,789        996,000
                                                                             Entrepreneurs                                  243,669        294,064
     Average remaining duration (years)                 0.1            0.2
                                                                             Other consumers                              1,008,088        904,511
                                                                             Foreign consumers                            1,841,216      1,213,689
                                                                             Non-financial corporate sector                  187,203        178,693
                                                                             Other                                            2,208          6,332
                                                                                                                          3,282,384      2,597,289




76      NORDNET ANNUAL REPORT 2006
                                                                              Notes



Note 21.          Group – Financial assets at fair                         Note 23.           Group – Assets and liabilities in                             1
                                                                                                                                                            2
                  value through profit and loss                                                insurance business
                                                                                                                                                            3
                                            2006-12-31    2005-12-31       Assets and liabilities in                                                        4
Shares held for trading                         11,620         6,704       insurance business                     2006-12-31           2005-12-31           5
Other shareholdings                              6,521         3,661                                                                                        6
                                                18,141        10,365       Assets in insurance business                                                     7
                                                                           Shares and participations                 2,598 965             550,841
                                                                                                                                                            8
Shares held for trading are attributable to the Experts service (see       Interest-bearing securities                150,397              64 560           9
page 23). Other shareholdings are attributable to temporary hold-          Cash and cash equivalents                  626,916             425,886          10
ings held primarily in conjunction with share issues.                                                               3,376,278           1,041,287          11
                                                                                                                                                           12
                                                                           Liabilities in insurance business
                                                                                                                                                           13
Note 22.          Group – Financial assets
                                                                           Investment contracts
                                                                           Insurance contracts
                                                                                                                     3,376,278
                                                                                                                          493
                                                                                                                                         1,041,287
                                                                                                                                                 -
                                                                                                                                                           14
                  available for sale                                                                                3,376,771           1,041,287
                                                                                                                                                           15
                                                                                                                                                           16
                      Capital interests     2006-12-31    2005-12-31
                                                                           Liabilities in insurance business                                               17
Awardit AB,
                                                                           Opening balance                           1,041,158                   -         18
556575-8843, Stockholm           13.2%             422            317
                                                                           Received premiums                         2,810,660           1,112,887         19
Rasta Group AB,
556569-0400, Gothenburg             0%               0                 0   Paid-in capital                              32,570               2,344         20
Mangold AB,                                                                Change in value of investment               433,441              60,872         21
556628-5408, Stockholm            0.1%              16            535      assets                                                                          22
NGM Holding AB,                                                            Fees                                        -3,546                -248          23
556468-1491, Stockholm            3.7%           2,531          2,509      Benefits paid                              -932,402            -134,697          24
Edsbyn Arena AB,                                                           Change in actuarial provisions                 493                   -
                                                                                                                                                           25
556617-7530, Ovanåker               0%               5                 5   Capital gains tax                           -5,822                   -
                                                                                                                                                           26
VPC AB,                                                                    Other actuarial expenses                       219                   -
                                                                                                                                                           27
556112-8074, Stockholm              0%              87             87      Closing balance                          3,376,771           1,041,158
                                                                                                                                                           28
                                                 3,061          3,453
                                                                           All assets of the insurance business are assets for which policyhold-           29
                                                                           ers directly bear the investment risk. The risk for liabilities in the          30
Mangold AB is the parent company of Mangold Fondkommission
AB, which is a securities company. The application for a permit to         insurance business associated with investment contracts are borne               31
acquire Mangold was submitted to and approved by the Swedish               directly by the policyholders. This means policyholders receive the             32
Financial Supervisory Authority in conjunction with the initial            income, but also bear the risk associated with the assets and liabili-          33
acquisition in 2000.                                                       ties of the insurance business. The Group has no right to the cash              34
   Nordic Growth Market (NGM) is an authorized exchange under              flow attributable to these invested funds. These assets and liabilities          35
the supervision of the Swedish Financial Supervisory Authority.            are valued, as for financial assets and liabilities, at fair value in the        36
NGM offers listing and share trading on the NGM Official and NGM            income statement. The net effect on profit of acquired securities,               37
Equity lists and trading in derivatives on the Nordic Derivatives          unrealized changes in value, realized changes in value, interest and            38
Exchange (NDX).                                                            dividends received, premiums paid, and changes in the value of                  39
   VPC AB is both a securities supervisor and a clearing organiza-         liabilities is zero.                                                            40
tion. The permit to acquire these shares was granted by the Swedish           Liabilities in the insurance business associated with insurance              41
Financial Supervisory Authority in January 2004.                           contracts are liabilities wherein the Group accepts a significant                42
   Rasta Group AB, formerly known as Snapcat, is listed on the             insurance risk on behalf of the policyholder by agreeing to compen-             43
Göteborg List.                                                             sate the policyholder or another beneficiary should a predetermi-                44
   Rasta Group AB is traded unofficially on the Göteborg List. The          ned insured event occur.                                                        45
fair values of holdings not subject to regular trading have been                                                                                           46
computed using information on profits and future prospects issued                                                                                           47
by the companies themselves. The fair value is judged to be in the                                                                                         48
same interval as the book value +/- 10%.
                                                                                                                                                           49
                                                                                                                                                           50
                                                                                                                                                           51
                                                                                                                                                           52
                                                                                                                                                           53




                                                                                                           NORDNET ANNUAL REPORT 2006                 77
          Notes



     Note 24.           Group – Intangible fixed assets
                                                                                                                 Capitalized
      Intangible                              Consolidated                                                      development
      fixed assets                               goodwill            Acquired goodwill    Client portfolios      expenditure              Total
                                               2006      2005          2006      2005      2006        2005      2006       2005      2006         2005
      Accumulated
      acquisition value
      Opening acquisition value              214,540   205,995         5,821     5,821   80,317     74,000    105,170    76,890    405,848       362,706
      Acquisitions during the year                 -         -             -         -        -          -     33,444    28,258     33,444        28,258
      Translation differences for the year    -7,529     8,545             -         -   -5,566      6,317       -188        22    -13,283        14,884
                                             207,011   214,540         5,821     5,821   74,751     80,317    138,426   105,170    426,009       405,848
      Accumulated
      amortization and impairment
      Opening value                          -65,374    -65,373            -         -   -5,020       -925    -54,451    -41,006   -124,845   -107,304
      Amortization and write-downs for
      the year                                 1,218         -             -         -   -3,931     -3,948    -18,375    -13,319  -23,524      -17,267
      Translation differences for the year         1         -             -         -      541       -147        144       -126      686         -274
                                             -66,591   -65,374             -         -   -8,410     -5,020    -72,682    -54,451 -147,683     -124 845


      Closing book value                     140,420   149,166         5,821     5,821   66,341     75,297     65,744    50,719    278,326       281,003


     The most important items of capitalized development expenditure             Write-down needs of the Group’s cash-generating units are based
     are investments in the administrative system and WinTrade, Nord-            on estimated utility values. These values are established from cash
     net’s largely proprietary stock trader application. The book values         flow forecasts based on economic forecasts. Cash flow forecasts
     of the administrative system and WinTrade are SEK 32.5 (28.9) mil-          are converted into current values using a discounting rate before
     lion and SEK 7.9 (7.3) million respectively. Development is ongoing         tax. The utility value of the cash-generating units comprises the
     and the depreciation period for both the administrative system and          current value of the cash flows. This utility value is compared with
     WinTrade is 5 years. The average remaining depreciation period is           the unit’s book value in the consolidated accounts to determine the
     about 3.3 years for the administrative system and some 3.6 years for        need, if any, of a write-down.
     WinTrade.                                                                      The cash-generating units belonging to the core business of
        Other intangible assets are attributable to Stocknet’s client            online securities trading, namely AD Aktiedirekt AB, Nordnet Se-
     portfolio, which was identified in conjunction with the acquisition          curities Luxembourg S.A., and Stocknet Securities AS, account for
     of Stocknet Securities ASA.                                                 some 38% of Nordnet’s core business. When calculating the utility
        The book value is NOK 60.6 (64.0) million. The depreciation              value of these units, a forecast is made of the future cash flow of the
     period is 20 years, reflecting the estimated utility period. The             entire core business, after which 38% of the current value of this
     remaining depreciation period is 17.8 (18.8) years. Other intangible        cash flow is allocated proportionally to these three cash-generating
     assets and capitalized development expenditure are depreciated              units. These figures are then compared to the units’ book values.
     using the straight-line method. Capitalized development expendit-           Nordnet Försäkringsförmedling’s utility value is calculated by
     ure includes SEK 41,895 (29,703) in personnel costs accumulated             forecasting future cash flow from the business as well as from ad-
     since 2000.                                                                 ditional sales to clients who open accounts and the net income of
                                                                                 these accounts.
     Impairment testing of cash-generating units                                    The future cash flows used for the core business are based on
     containing goodwill                                                         the Group’s strategic plan, which stretches to the end of 2009.
     Businesses and clients were acquired during the year, which                 Cash flow forecasts after 2009 assume an annual growth of 5%.
     together altered and strengthened the company in terms of size and          The discount rate is set at 11.5% before tax, corresponding to the
     market position. These acquisitions have been instrumental in shap-         estimated required return. Important assumptions, that is, assump-
     ing the present Group and are now an integral part of the business.         tions with major impact on cash flow forecasts, are those regarding
     The book value (in SEK) of the Group’s remaining goodwill items in          future growth in the number of accounts, assets under management,
     cash-generating units are presented below.                                  and net income per account. A sensitivity analysis with the discount
                                                                                 rate changed by 5 percentage points did not result in any need to
      Residual goodwill                          2006-12-31         2005-12-31   write down.
      AD Aktiedirekt AB                              29,697             29,687
                                                                                    A need to write down does, however, arise in Nordnet Försäkrings-
      Nordnet Försäkringsförmedling AB                4,163              5,399
                                                                                 förmedling AB’s other operations. Over the next few years, operations
      Nordnet Securities Luxembourg S.A.              5,453              5,445
                                                                                 will be trimmed and the discounted future cash flows need to be writ-
      Stocknet Securities ASA1)                     101,107            108,635
                                                                                 ten down by SEK 1.2 million.
                                                    140,420            149,166
                                                                                    The closing accumulated consolidated goodwill write-down was
     1)
      The consolidated goodwill of Stocknet Securities ASA totals                SEK -66.6 (-65.4) million.
     NOK 92.4 million.

78        NORDNET ANNUAL REPORT 2006
                                                                             Notes



Note 25.          Group – Tangible                                        Note 27.          Group – Prepaid expenses                                       1
                                                                                                                                                           2
                  fixed assets                                                               and accrued income
                                                                                                                                                           3
                                          2006-12-31     2005-12-31                                                    2006-12-31      2005-12-31          4
Accumulated acquisition value                                             Prepaid expenses                                 15,520          15,406          5
Opening value                                  70,174        56,382       Accrued interest income                               -           6,577          6
Acquisitions during the year                   59,758        13,695       Other accrued income                              7,676               -          7
Sales and retirements                          -6,609             -                                                        23,196          21,983          8
Translation differences for the year              -92            97                                                                                        9
                                              123,231        70,174       Prepaid expenses and accrued income consist entirely of current                 10
Accumulated depreciation according                                        assets.                                                                         11
to plan                                                                                                                                                   12
Opening value                                 -49,703        -41,745
Sales and retirements                           6,740              -
                                                                          Note 28.          Group – Liabilities to                                        13

Depreciation according to plan
                                                                                            credit institutions                                           14
                                                                                                                                                          15
for the year                                  -12,816         -8,139
                                                                          Liabilities to credit institutions comprise a loan from Danske Bank             16
Translation differences for the year               20            181
                                                                          for SEK 15 (20) million. The loan bears a floating interest rate of              17
                                              -55,759        -49,703
                                                                          7-day STIBOR + 1.5% and full settlement is due on March 31, 2009.               18
                                                                          The average outstanding duration is 2.3 (3.3) years.
                                                                                                                                                          19
Closing book value                             67,472            20,471
                                                                                                                                                          20
The accumulated acquisition value includes expenditure on                 Note 29.          Group – Deposits and borrowing                                21
improvements to third-party real estate of SEK 22,416 (1,325) thou-                         from the public                                               22
sand, attributable to the subsidiary Nordnet Bank AB. The depre-                                                                                          23
                                                                          The amounts comprise deposits and are defined as the balance of
ciation plan is based on a utility period of 60 months and a planned                                                                                      24
                                                                          the accounts encompassed by the deposit guarantee. The amounts
residual value of SEK 20,874 (1,166) thousand. The straight-line                                                                                          25
                                                                          comprise the total balance of the accounts with disregard for the
method is used when depreciating tangible fixed assets.                    deposit guarantee limit. Deposits from the public are payable in full           26
                                                                                                                                                          27
                                                                          on demand.
Note 26.          Group – Other assets                                                                                                                    28
                                                                                                                                                          29
Other assets                               2006-12-31    2005-12-31
                                                                          Note 30.          Group – Other liabilities                                     30
Accounts receivable                           243,042       157,603                                                                                       31
                                                                                                                       2006-12-31      2005-12-31
Receivables from cash clients                       -         4,076                                                                                       32
                                                                          Accounts payable                                360,795         283,848
Other                                          97,428        21,875                                                                                       33
                                                                          Accounts payable                                 33,845          23,633
                                              340,470       183,554                                                                                       34
                                                                          Uninvested premiums in
                                                                          insurance business                                 8,047         10,665         35
Gross unsettled fund receivables amounts to SEK 3,251,836                 Other                                             35,707         39,489         36
(2,656,654) thousand. Other assets consist entirely of current                                                             438,394        357,635         37
assets.                                                                                                                                                   38
                                                                          Gross unsettled fund liabilities totals SEK 3,362,132 (2,879,353)               39
                                                                          thousand.                                                                       40
                                                                            Other liabilities are all current liabilities, that is, payment is due        41
                                                                          within 12 months of closing day.                                                42
                                                                                                                                                          43
                                                                                                                                                          44
                                                                                                                                                          45
                                                                                                                                                          46
                                                                                                                                                          47
                                                                                                                                                          48
                                                                                                                                                          49
                                                                                                                                                          50
                                                                                                                                                          51
                                                                                                                                                          52
                                                                                                                                                          53




                                                                                                           NORDNET ANNUAL REPORT 2006                79
       Notes



     Note 31.          Group – Accrued expenses                            Aston Holding AS
                       and deferred income                                 The interest-bearing subordinated loan from Aston Holding AS
                                                                           is a loan of originally SEK 35 million. The interest rate is 6-month
                                               2006-12-31    2005-12-31    STIBOR + 5.00% and the loan matures on January 31, 2010. The
     Accrued                                                               loan is amortized at SEK 7.0 million per installment. The lender can
     - Personnel costs                             12,597          8,593   demand immediate payment of the principal and accrued interest if
     - Other general administrative                                        any of the following apply:
       expenses                                    35,111        29,525
     - Accrued interest expense                     1,391           100    a) The borrower fails to fulfill its obligations to the lender
     Other deferred items                             844         2,873       in accordance with the agreed terms and the company fails to
                                                   49,943        41,091       rectify matters within 30 banking days of the lender providing
                                                                              written notification; or
     Accrued expenses and deferred income are current liabilities, that    b) the borrower is declared bankrupt or enters liquidation.
     is, payment is due within 12 months of closing day.
                                                                           The agreements do not include terms that enable the loans to be
                                                                           converted into conditional capital infusions.
     Note 32.          Group – Subordinated liabilities
                                                                           Subordinated convertible debenture loan
                                               2006-12-31    2005-12-31    Convertible debenture loan 2005/2010 of up to SEK 55 million.
     Interest-bearing subordinated loan -                                  The interest rate is 7-day STIBOR + 1.20% and the loan matures on
     Aston Holding AS                              28,000         35,000   December 30, 2010, unless converted prior to this date. Conversion
     Interest-bearing subordinated loan -                                  into equity can take place between July 1, 2009 and November 30,
     E. Öhman J:or AB                              50,000         50,000   2010. The conversion price has been set at SEK 10.05.
     Interest-bearing subordinated                                            The loan may only be repaid before maturity if the company
     convertible debenture loan                    35,474        35,474    is declared bankrupt or enters liquidation. The company is not
                                                  113,474       120,474    entitled to call for early redemption of the loan.
     Liabilities are reported in SEK.                                         In the event of liquidation or bankruptcy, the debt instruments
                                                                           stipulate that the lender is entitled to payment from the company’s
     E. Öhman J:or AB                                                      assets after the company’s non-subordinated liabilities and on
     The interest-bearing subordinated loan from E. Öhman J:or AB          equal grounds (pari passu) to other subordinated liabilities that are
     consists of two loans, one for SEK 20 million and one for SEK 30      not specifically subordinated to this loan.
     million. The interest rate is 6-month STIBOR + 7.00% and the loans       On conversion of the debt instrument into equity, the share
     are perpetual. The lender can demand immediate payment of the         capital shall be able to increase by a maximum of SEK 5,472,636
     principal and accrued interest if any of the following apply:         and the number of shares by a maximum of 5,472,636.
                                                                              SEK 9.5 million of the convertible debenture loan was subscribed
     a) The borrower fails to fulfill its obligations to the lender in      to by affiliated company Go4us Nordic AB. The remaining SEK
        accordance with the agreed terms and the company                   45.5 million has been reported as a debt of SEK 35.5 million and an
        fails to rectify matters within 30 banking days of the lender      option of SEK 10.0 million, which is reported under equity.
        providing written notification, conditional on the approval of
        the Swedish Financial Supervisory Authority; or
     b) The borrower is declared bankrupt or enters liquidation. The
        agreements include certain terms that enable the loans to be
        converted into conditional capital infusions. See the
        “Agreements” section of the Administration Report, more
        specifically contracts with E. Öhman J:or AB on page 52.




80     NORDNET ANNUAL REPORT 2006
                                                                            Notes



Note 33.          Group – Equity                                                                                                                      1
                                                                                                                                                      2
A summary of changes in equity is provided in the table on page 56.      The Board proposes that a dividend of SEK 0.50 (0.10) per share              3
None of the company’s share was acquired or transferred during the       be distributed for the 2006 financial year, corresponding to total of         4
year. The company had no shareholdings as of December 31, 2006.          SEK 82.5 (16.5) million.                                                     5
  On December 31, 2006, the capital stock amounted to SEK                  The proposed dividend corresponds to 40% of the profit after tax            6
165,018,878, split between 165,018,878 Series B shares. All shares       and the proposal will be submitted to the Annual General Meeting             7
carry equal voting rights and equal rights to the company’s profits       on April 24, 2007.                                                           8
and capital.                                                               Restricted equity totals SEK 541,071 (441,854) thousand and                9
                                                                         non-restricted equity totals SEK 146,342 (72,577) thousand.
                                                                                                                                                     10
                                                                                                    Reserve for     Reserve for
                                                                                                                                                     11
                                                                                         translation differences      fair value        Total        12
Opening balance, January 1, 2005                                                                           -1,615              -       -1,615        13
Translation difference, foreign subsidiary                                                                16,701               -       16,701        14
Realized profit on assets held for sale                                                                          -            558          558        15
Closing balance, December 31, 2005                                                                        15,086             558       15,644        16
                                                                                                                                                     17
Translation difference, foreign subsidiary                                                               -13,096              -       -13,096        18
Unrealized profit on assets held for sale                                                                       -           -139          -143        19
Closing balance, December 31, 2005                                                                         1,990            419         2,409        20
                                                                                                                                                     21
                                                                                                                                                     22
Note 34.          Group – Pledged assets & contingent                    Note 35.         Parent company – Other operating                           23
                  liabilities                                                             income
                                                                                                                                                     24
                                             2006-12-31    2005-12-31    Other operating income consists entirely of intra-Group invoicing-          25
Assets pledged for the company’s                                         for both 2006 and 2005.                                                     26
liabilities                                                                                                                                          27
Eligible government securities etc.
Lending to credit institutions
                                               730,000
                                                10,280
                                                               553,338
                                                                 3,772
                                                                         Note 36.         Parent company – Other external                            28
                                                                                                                                                     29
                                                                                          costs
                                               740,280         557,110                                                                               30
The above pledged assets are                                             Audit costs                                2006-12-31     2005-12-31        31
attributable to:                                                         Ernst & Young                                                               32
Deposits in credit institutions                283,725         217,528   Auditing                                          -893         -600         33
Deposits in credit clearing organizations      456,555         335,810   Other assignments                                 -300            -         34
Other                                                -           3,772                                                   -1,193         -600         35
                                               740,280         557,110
                                                                                                                                                     36
The assets pledged for the company’s liabilities consist of eligible                                                                                 37
government securities and other the like, pledged as collateral for                                                                                  38
clients’ securities loans and for payments to clearing organiza-                                                                                     39
tions, and liquid funds in the form of lending to credit institutions,                                                                               40
provided as collateral for lease agreements and the like. The                                                                                        41
counterparties in the securities loan transactions are other credit                                                                                  42
institutions.                                                                                                                                        43
                                                                                                                                                     44
Contingent liabilities                                                                                                                               45
In June 2004, securities firm CTA Lind & Co Scandinavia AB was                                                                                        46
declared bankrupt. The company’s core activity was to manage                                                                                         47
Italian investors’ funds. Following the bankruptcy, the Swedish                                                                                      48
Deposit Guarantee Board (Insättningsgarantinämnden, IGN) has                                                                                         49
received applications from Italian investors for compensation
                                                                                                                                                     50
through the Swedish investment protection scheme. IGN estimates
                                                                                                                                                     51
the compensation to total some SEK 100 million. IGN will, once
                                                                                                                                                     52
the principles for this compensation are established, debit the
                                                                                                                                                     53
amount from the approximately 200 institutions covered by the
investment protection scheme. It is not presently possible to
estimate Nordnet Bank AB’s share of this amount.

                                                                                                        NORDNET ANNUAL REPORT 2006              81
       Notes



     Note 37.         Parent company – Personnel costs                     Note 38.         Parent company – Depreciation,
                                                                                            amortization, and impairment of
     Personnel costs                          2006-12-31    2005-12-31                      tangible and intangible fixed assets
     Salaries and fees                             -5,853        -4,739
      (of which to CEO and Board)                (-5,853)      (-4,739)    Depreciation according to plan           2006-12-31    2005-12-31
     Social security contributions                 -1,503        -1,272    Equipment                                       -54           -54
     Pension costs                                   -502          -502                                                    -54           -54
      (of which to CEO and Board)                  (-502)        (-502)
     Other personnel costs                            -65           -28
                                                  -7,923        -6,541
                                                                           Note 39.         Parent company – Income from
     No information on sick leave has been provided for the parent                          participations in affiliated companies
     company as it has only one employee.
       A variable salary was paid to the Group President/CEO. See                                                   2006-12-31   2005-12-31
     Note 12 for more information.                                         Dividends from subsidiaries                 138,000       24,000


     Average number of parent company
     employees during the year                                             Note 40.         Parent company – Other interest
     Total                                            1.0            1.0                    income and interest expense
       of which female                                  -              -
       of which male                                  1.0            1.0   Interest expenses of SEK 1,207 (1,071) thousand and interest
                                                                           income of SEK 343 (151) thousand comprise intra-Group interest.
     The parent company’s employee is employed in Sweden. For other        The remaining interest concerns external counterparties.
     information concerning senior executive personnel and remunera-
     tion costs, see Note 12. In 2006, only the Group President/CEO and
     Board members received remuneration from the parent company.
     Other senior executives are employed by the second tier subsidiary
     Nordnet Bank AB.
        For information on the remuneration paid to the Board, see
     Note 12.




82     NORDNET ANNUAL REPORT 2006
                                                                           Notes



Note 41.            Parent company – Taxes                                                                                                                1
                                                                                                                                                          2
                                                                                         2006-01-01                                    2005-01-01
                                                                                                                                                          3
Tax reported in income statement                                                       - 2006-12-31                                  - 2005-12-31
                                                                                                                                                          4
Current tax expense (-) / tax income (+)
                                                                                                                                                          5
Current tax on net profit for the year                                                           4,165                                       5,110
                                                                                                                                                          6
                                                                                                                                                          7
Deferred tax expense (-) / tax income (+)
                                                                                                                                                          8
Deferred tax as result of utilization of previously capitalized
taxable value of deficit deductions                                                                  -                                       -777          9
                                                                                                                                                         10
Tax on profit for the year                                                                      4,165                                       4,333
                                                                                                                                                         11
                                                                                                                                                         12
                                                                                         2006-01-01                                    2005-01-01
Reconciliation of effective tax                                                        - 2006-12-31                                  - 2005-12-31
                                                                                                                                                         13
                                                                                                                                                         14
Profit before tax                                                                              123,127                                       8,526
                                                                                                                                                         15
                                                                                                                                                         16
Tax at applicable tax rate for parent company                            28.0%                -34,475               28.0%                  -2,387
                                                                                                                                                         17
Effect of anticipated dividend                                          -31.4%                 38,640              -78.8%                   6,720
                                                                                                                                                         18
Reported effective tax                                                   -3.4%                  4,165              -50.8%                   4,333
                                                                                                                                                         19
                                                                                                                                                         20
                                                                                          Deferred               Deferred                    Net
                                                                                                                                                         21
Deferred tax claims and tax liabilities                                                  tax claims         tax liabilities                 2006
                                                                                                                                                         22
Deficit deductions                                                                               3,367                    -                  3,367
                                                                                                                                                         23
Deferred tax claims and tax liabilities, net                                                   3,367                     -                 3,367         24
                                                                                                                                                         25
                                                                                          Deferred               Deferred                    Net         26
Deferred tax claims and tax liabilities                                                  tax claims         tax liabilities                 2005
                                                                                                                                                         27
Deficit deductions                                                                               3,367                    -                  3,367        28
Deferred tax claims and tax liabilities, net                                                   3,367                     -                 3,367         29
                                                                                                                                                         30
                                                                      Opening            Reported                 Charged                 Closing        31
Change in deferred tax component of                                   balance                  in                       to               balance         32
temporary differences and deficit deductions                        Jan 1, 2006   Income statement                   equity           Dec 31, 2006        33
Utilization of deficit deductions                                         3,367                  -                        -                  3,367        34
                                                                                                                                                         35
                                                                      Opening            Reported                 Charged                 Closing
                                                                                                                                                         36
Change in deferred tax component of                                   balance                  in                       to               balance
temporary differences and deficit deductions                        Jan 1, 2005   Income statement                   equity           Dec 31, 2005        37
Utilization of deficit deductions                                         4,144               -777                        -                  3,367        38
                                                                                                                                                         39
Deferred tax claims attributable to deductible deficits are entered in                                                                                    40
the accounts when a taxable profit will probably be earned during the
                                                                        Note 42.           Parent company – Tangible                                     41
                                                                                           fixed assets                                                   42
period in which the deficit deductions are utilized in the company’s
tax returns. There is some scope for tax planning, making it possible    Equipment                                    2006-12-31      2005-12-31         43
to create a taxable profit in the period when the deductions are uti-     Accumulated acquisition value                                                   44
lized in the company’s tax returns. Deferred tax claims attributable     Opening value                                        209            188         45
to unutilized deficit deductions have been capitalized. The taxable       Acquisitions during the year                           -             21         46
value of the parent company’s deficit deductions is SEK 3.4 million.                                                           209            209         47
However, these deficits cannot be charged against profits at Group         Accumulated depreciation according to                                           48
level before 2007 as a consequence of the merger between the former      plan                                                                            49
TeleTrade and the former Nordnet in 2001. SEK 3.4 million has been       Opening value                                        -117            -63        50
capitalized in the balance sheet, corresponding to the taxable value     Depreciation according to plan for the                -54            -54        51
of the company’s deficits. The company considers there to be no           year                                                                            52
uncertainty in the ability to utilize these deductions in the future.                                                         -171          -117         53
The Group’s earnings trend between the years 2004–2006 and the           Closing book value                                    38             92
estimated future earnings, mainly from the subsidiary Nordnet Bank
AB, more than justify the reported tax claims. Nordnet regularly
values its deferred tax claims by means of the income and cash flow
statements.                                                                                              NORDNET ANNUAL REPORT 2006                 83
       Notes



     Note 43.          Parent company – Participations in affiliated companies

     All affiliated companies are wholly owned. Shares of the votes and equity are the same in all cases.
     Name                                                          CIN                Headquarters          Shareholding    Book value
     TeleTrade Technology AB                                       556520-1703        Stockholm                    1,000           100
     Nordnet Pensionsförsäkring AB                                 516406-0286        Stockholm                  285,000        60,000
     VCW Internet Services AB                                      556541-8752        Stockholm                  150,003        10,000
        Nättidningen Dagens Finans AB                              556370-9228        Stockholm
     TeleTrade Solutions AB                                        556541-9057        Stockholm                3,200,000        69,926
        AD Aktiedirekt AB                                          556579-1455        Stockholm
          Nordnet Försäkringsförmedling AB                         556517-0031        Stockholm
               Go4us Nordic AB                                     556576-7323        Stockholm
        Fondex Sweden AB                                           556555-0109        Stockholm
        Nordnet Försäljning AB                                     556342-7946        Stockholm
     Nordnet Family AB                                             556608-8893        Stockholm                  142,434       524,213
       Nordnet Holding AB                                          556573-1360        Stockholm
        Nordnet Bank AB                                            516406-0021        Stockholm
            TeleTrade Solutions A/S                                981 023 358        Oslo
             Stocknet Securities ASA                               980 527 182        Oslo
               Stocknet Deutschland GmBH                           HRB 5954           Bad Soden am Taunus
        Nordnet Securities Luxembourg S.A.                         B68553             Luxembourg
     Nordnet Securities OY                                         1917411-5          Helsinki                     1,000            74
     ALLX Financial Marketplace AB                                 556588-3419        Stockholm                    4,100         1,530
                                                                                                                               665,843



                                                                                                            2006-01-01-    2005-01-01-
                                                                                                             2006-12-31     2005-12-31
     Accumulated acquisition value
     Opening value                                                                                               821,980       771,980
     Formation of Nordnet Försäkringsförmedling                                                                        -        50,000
     Shareholder contribution, Nordnet Försäkringsförmedling AB                                                   10,000             -
                                                                                                                831,980        821,980
     Write-downs, for the year and accumulated
     Opening value                                                                                              -166,137      -166,137
                                                                                                                -166,137      -166,137
     Closing book value                                                                                         665,843        655,843




84     NORDNET ANNUAL REPORT 2006
                                                                            Notes



Note 44.            Parent company –                                     Note 48.          Parent company – Accrued                                       1
                                                                                                                                                          2
                    Other receivables                                                      expenses and deferred income
                                                                                                                                                          3
                                          2006-12-31       2005-12-31                                               2006-12-31       2005-12-31           4
Convertibles in Awardit                            -              130    Accrued social security contributions              90               73           5
Tax claims                                       211              211    Accrued vacation pay                               71                -           6
                                                 211              341    Accrued payroll tax                                94              103           7
                                                                         Accrued interest expenses                         941              398           8
                                                                         Other accrued expenses                          3,754            2,267           9
                                                                                                                         4,950            2,841
Note 45.            Parent company – Prepaid                                                                                                             10
                                                                                                                                                         11
                    expenses and accrued income
                                                                         Note 49.          Information on intra-Group                                    12
                                          2006-12-31       2005-12-31                      purchases and sales                                           13
Prepaid pension costs                             38                3                                                                                    14
Prepaid corporate insurance                      578              750    Of the parent company’s total purchases and sales (measured in SEK),            15
Other prepaid expenses                         1,189            1,900    0% of purchases and 100% of sales involved affiliated companies.                 16
                                               1,805            2,653                                                                                    17
                                                                                                                                                         18
                                                                         Note 50.          Group – Book and fair values of
                                                                                                                                                         19
                                                                                           balance sheet items
Note 46.            Parent company – Equity
                                                                         The book value is equal to the fair value in the case of eligible
                                                                                                                                                         20
                                                                                                                                                         21
A summary of changes in equity is provided in the table on page          government securities, lending to credit institutions, lending to the           22
61. On December 31, 2006, the capital stock amounted to SEK              public, financial assets valued at fair value, financial assets held for          23
165,018,878, split between 165,018,878 Series B shares. Restricted       sale, assets in the insurance business, liabilities to credit institu-          24
reserves comprise a share premium reserve of SEK 262,111 (262,111)       tions, deposits and borrowing from the public, liabilities in the               25
thousand and the option component of the convertible debenture           insurance business, and subordinated liabilities. The latest bid price          26
loan of SEK 12,100 (12,100) thousand, making a total of SEK 274,211      has been used for valuing eligible government securities. As lend-              27
(274,211) thousand.                                                      ing to credit institutions, lending to the public, liabilities to credit        28
                                                                         institutions, and deposits and borrowing from the public carry                  29
                                                                         floating interest rates, the fair value is approximated to the book              30
                                                                         value. As the subordinated liabilities bear interest at 7-day STIBOR
Note 47.            Parent company – Other liabilities
                                                                         and 6-month STIBOR respectively, the fair value is approximated
                                                                                                                                                         31
                                                                                                                                                         32
                                          2006-12-31       2005-12-31
                                                                         to the book value.
                                                                                                                                                         33
Interest-bearing subordinated                                               Information on fair values is not provided for intangible fixed-
                                                                                                                                                         34
debenture loan                                 78,000           85,000   assets as this is not a requirement. No amount is reported for other
                                                                                                                                                         35
Interest-bearing subordinated con-                                       items for which the fair value cannot be provided with acceptable
                                                                         accuracy. However, it is the company’s opinion that the fair value              36
vertible debenture loan                        42,900           42,900
                                                                         can generally be approximated to the book value.                                37
Liabilities to credit institutions            15,000           20,000
Other liabilities                                349              119                                                                                    38
                                             136,249          148,019                                                                                    39
                                                                                                                                                         40
Liabilities to credit institutions and other liabilities are current                                                                                     41
liabilities, that is, payment is due within twelve months of closing                                                                                     42
day. For information on interest-bearing subordinated debenture                                                                                          43
loans, see Note 32.                                                                                                                                      44
                                                                                                                                                         45
                                                                                                                                                         46
                                                                                                                                                         47
                                                                                                                                                         48
                                                                                                                                                         49
                                                                                                                                                         50
                                                                                                                                                         51
                                                                                                                                                         52
                                                                                                                                                         53




                                                                                                         NORDNET ANNUAL REPORT 2006                 85
       Notes



     Note 51.            Fixed rate terms
                                                                                                                Floating
     Fixed rate terms, Group, 2006            0–1 month    1–3 months   3–6 months   6–12 months   1–5 years    interest        Total

     Eligible government securities            1,497,848      893,941            -             -           -           -    2,391,789
     Lending
     - to credit institutions                    276,503            -            -             -           -           -      276,503
     - to the public                           3,282,384            -            -             -           -           -    3,282,384
     Financial assets at fair value through
     profit and loss                                   -             -            -             -           -      18,141       18,141
     Financial assets held for sale                   -             -            -             -           -       3,061        3,061
     Other assets                                     -             -            -             -           -   4,105,957    4,105,957
     Total                                    5,056,735       893,941            -             -           -   4,127,159   10,077,835


     Liabilities to credit institutions          15,000             -            -             -           -           -       15,000
     Deposits and borrowing
     from the public                          5,271,879             -            -             -           -           -    5,271,879
     Other liabilities                           35,474             -       78,000             -           -   3,986,068    4,099,542
     Equity                                           -             -            -             -           -     691,413      691,413
                                              5,322,354             -       78,000             -           -   4,677,481   10 077,835


     Difference, assets and liabilities        -265,618       893,941      -78,000             -           -    -550,323            -

     Weightings                                 0.00958       0.00833      0.00625       0.00250     0.00000           -            -
     Total net interest rate risk                -2,545         7,447         -488             -           -           -        4,414


                                                                                                                Floating
     Fixed rate terms, Group, 2005            0–1 month    1–3 months   3–6 months   6–12 months   1–5 years    interest        Total

     Eligible government securities                    -      896,923       99,077             -           -           -      996,000
     Lending
     - to credit institutions                    697,604            -            -             -           -           -      697,604
     - to the public                           2,597,289            -            -             -           -           -    2,597,289
     Financial assets at fair value through
     profit and loss                                   -             -            -             -           -      10,365       10,365
     Financial assets held for sale                   -             -            -             -           -       3,453        3,453
     Other assets                                     -             -            -             -           -   1,568,962    1,568,962
     Total                                    3,294,893       896,923       99,077             -           -   1,582,780    5,873,673


     Liabilities to credit institutions          20,000             -            -             -           -           -       20,000
     Deposits and borrowing
     from the public                           3,732,439            -            -             -           -           -    3,732,439
     Other liabilities                           35,474             -       85,000             -           -   1,486,329    1,606 803
     Equity                                           -             -            -             -           -     514,431      514,431
                                              3,787,913             -       85,000             -           -   2,000,760    5,873,673


     Difference, assets and liabilities        -493,020       896,923       14,077             -           -    -417,981            -


     Weightings                                 0.00958       0.00833      0.00625       0.00250     0.00000           -            -
     Total net interest rate risk                -4,723         7,471           88             -           -           -        2,836




86     NORDNET ANNUAL REPORT 2006
                                                                           Notes



Note 52.            Valuation of assets and liabilities in foreign currencies                                                                                1
                                                                                                                                                             2
Assets and liabilities are valued at closing day rates. Aggregate equivalents                                                                                3
in Swedish kronor of assets and liabilities held in foreign currencies:                                                                                      4
                                                                                                                         2006                  2005          5
Assets                                                                                                                                                       6
                                                                                                                                                             7
Lending to credit institutions                                                                                      374,316                  477,127
                                                                                                                                                             8
Lending to the public                                                                                             1,868,274                1,261,351
                                                                                                                                                             9
Other assets                                                                                                        423,179                  169,681
                                                                                                                                                            10
Total assets                                                                                                      2,665,770                1,908,158        11
                                                                                                                                                            12
Liabilities                                                                                                                                                 13
Deposits and borrowing from the public                                                                            1,761,560                1,364,652        14
Other liabilities                                                                                                   706,399                  118,485        15
                                                                                                                                                            16
Total liabilities                                                                                                 2,467,960                1,483,137
                                                                                                                                                            17
                                                                                                                                                            18
Aggregate equivalents in Swedish kronor of assets and liabilities                                                                                           19
according to currency:                                                                                                                                      20
                                                                            Assets                                Liabilities           Net exposure
                                                                                                                                                            21
NOK                                                                       1,513,699                               1,347,488                  166,211        22
DKK                                                                        538,912                                  544,176                   -5,264        23
USD                                                                        168,630                                  151,601                   17,029        24
EUR                                                                        381,074                                  360,663                   20,412        25
OTHER                                                                       63,455                                      64,033                  -579        26
                                                                         2,665,770                                2,467,960                 197,810         27
                                                                                                                                                            28
                                                                                                                                                            29
                                                                                                                                                            30

Note 53.            Capital adequacy                                    Risk-weighted amounts
                                                                                                                                                            31
                                                                                                                                                            32
The financial Group of companies of which Nordnet AB (publ)               Credit risks       Balance       Off balance     Weightings Risk-weigh-            33
is the parent company is subject to statutory capital adequacy                           sheet items      sheet items                 ted amount            34
rules. These rules stipulate that at least 8% of the risk-weighted       Group                                                                              35
assets must be covered by the capital base. Assets refers to both        A               2,790,602               -                 0%              0        36
balance sheet and non-balance sheet items.                               B                 962,456               -                20%        192,491        37
                                                                         C                        -              -                50%              -        38
Capital adequacy breakdown, Group                                        D               3,446,352          64,024               100%      3,510,376        39
Capital base                                                             Risk-weighted amount, credit risks                                3,702,867
                                                                                                                                                            40
                                                                                                                                                            41
The capital base includes the Board’s proposals for                     Risk-weighted amount, interest rate risks                                 0
                                                                                                                                                            42
                                                                        Risk-weighted amount, share price risks                              19,794
balance sheet appropriations and profit distribution.                                                                                                        43
                                                                        Risk-weighted amount, settlement risks                                2,500
                                                                        Risk-weighted amount, market risks                                   22,294         44
                                     2006-12-31          2005-12-31
                                                                        Total risk-weighted amount                                        3,725,161         45
Primary capital (tier 1)                 322,665             235,444                                                                                        46
Supplementary capital                                                                                                                                       47
(tier 2)                                  60,187             82,284     Capital adequacy ratio                   2006-12-31             2005-12-31
                                                                        Total capital base                          382,852                317,728          48
Total capital base                       382,852            317,728
                                                                        Total risk-weighted amount                 3,725,161              2,921,405         49
                                                                        Total capital adequacy ratio, %              10.28%                 10.88%          50
                                                                                                                                                            51
                                                                                                                                                            52
                                                                                                                                                            53




                                                                                                           NORDNET ANNUAL REPORT 2006                  87
           Five-year summary




     Five-year summary
     Group


                                                                                                                                       Annual
                                                                                                                                       change
                                                                         2006           2005        2004       20031)      20021)   2002–2006

     Income statements, SEK thousands
     Net interest                                                     201,630        123,993       84,271      47,252      40,543        49%
     Net commission                                                   421,440        278,173     176,167     121,554     107,155         41%
     Net profit from financial transactions                               5,836           5,209      -3,240       2,179       2,613        22%
     Other income                                                      32,152          26,773      23,344      19,679      20,707        12%
     Total operating income                                           661,057        434,148     280,542     190,664     171,018         40%


     Operating costs                                                 -368,815        -232,585    -172,825    -148,552    -187,246        18%
     Credit losses                                                       -113          -1,468       -300        -906       -2,217       -52%
     Write-downs of financial fixed assets                                        -           -           -      -1,000       -258            -
     Reversal of write-downs of financial fixed assets                            -           -           -       1,000           -           -
     Operating profit                                                  292,129        200,095     107,417      41,206     -18,703            -


     Tax                                                              -85,410         -54,398     -23,470     -12,327        534            -
     Net profit for the year                                           206,719        145,697      83,947      28,879     -18,169            -


     Of which non-recurring items, amortization and write-
     downs of goodwill, and tax                                        86,628          54,398      30,577      25,915      23,101        39%
     Operating profit before non-recurring items,
     amortization and write-downs of goodwill                         293,347        200,095     114,524      54,794       4,932        178%


     Balance sheets SEK thousands
     Eligible government securities etc.                            2,391,789        996,000     629,066     545,599     580,497         42%
     Lending to credit institutions                                   276,503        697,604     222,349     369,428     283,112         -1%
     Lending to the public                                          3,282,384       2,597,289   1,485,439    620,877     318,478         79%
     Other assets                                                   4,127,159       1,582,780    446,917     278,120     255,086        101%
     Total assets                                                  10,077,835       5,873,673   2,783,771   1,814,024   1,437,173        63%


     Liabilities to credit institutions                                15,000          20,000      20,000           -           -           -
     Deposits and borrowing from the public                         5,271,879       3,732,439   2,193,884   1,533,221   1,193,746        45%
     Other liabilities                                              4,099,543       1,606,803    228,418       90,974      82,324       166%
     Total liabilities                                              9,386,422       5,359,242   2,442,302   1,624,195   1,276,070        65%


     Equity                                                           691,413        514,431     341,469     189,829     161,103         44%
     Total liabilities and equity                                  10,077,835       5,873,673   2,783,771   1,814,024   1,437,173        63%



     1)
          The years 2002–2003 have not been restated in accordance with IFRS.




88         NORDNET ANNUAL REPORT 2006
                                                                            Key ratios




Key ratios
Group


                                                                                                                                  Annual
                                                                                                                                  change
                                                                 2006         2005         2004         20031)        20021)   2002–2006

Operating margin, %                                                44          46            38            22           neg            -
Profit margin, %                                                    31          34            30            15           neg            -
Investments in tangible assets, MSEK                              59.8        13.7           8.5           5.5           3.9        98%
Investments in intangible assets, MSEK                            33.4        28.2          24.7          15.6           8.0        43%
  of which internal development expenditure, MSEK                 12.2         9.3           6.2           5.0           4.7        27%
Marketing costs, MSEK                                             89.4        31.2          18.9           7.8           8.3        81%


Basic earnings per share after tax, SEK                           1.25        0.88          0.53          0.19         -0.12           -
Diluted earnings per share after tax, SEK                         1.22        0.87          0.53          0.19         -0.12           -
Return on equity, %                                                34          34            30            16           neg            -
Equity per share, SEK                                             4.19        3.12          2.16          1.22          1.03        42%
Share price, SEK                                                23.90        21.10          7.75          3.85          2.00        86%
Market value at end of period, MSEK                            3,944.0     3,481.9       1,278.9         599.6         311.5        89%
Share turnover rate, %                                             60          35            49            13            22            -
Equity, MSEK                                                    691.4        514.4         341.5         189.8         161.1        44%
Capital base, MSEK                                              382.9        317.7         174.8         143.8         107.5        37%
Capital adequacy ratio, %                                          10          11            11            16            19        -15%
Average number of shares before dilution                   165,018,878 165,018,878   158,063,701   155,745,308   155,745,308          1%
Average number of shares after dilution                    170,491,514 167,907,214   158,063,701   155,745,308   155,745,308          2%
Total number of outstanding shares at end of period        165,018,878 165,018,878   165,018,878   155,745,308   155,745,308          1%
Total number of permanent employees at end of period              238         164           119            82            81         31%


Client-related key ratios:
Total number of active accounts at end of period              149,500      117,300       101,400       62,200        63,000         24%
Assets in custody at end of period, SEK billions                  49.4        36.3          20.9          11.0           6.6        65%
Average assets in custody per active account at end of
period, SEK                                                   330,437      309,762       206,319      174,170       105,015         33%
Deposits, including client funds, at end of period, MSEK       5,912.8     4,138.4       2,642.9       1,736.4       1,353.5        45%
Lending at end of period, MSEK                                 3,282.4     2,597.3       1,485.4         620.9         318.5        79%
Lending/borrowing ratio, %                                         50          57            56            36            24         20%
Number of trades per year                                    8,003,233   5,641,024     3,133,029     1,809,960     1,494,930        52%
Number of trades per trading day                               31,020       22,122        12,335         7,269         6,004        51%
Number of trades per active account                               59.7        52.1           42            29            23         27%
Number of trades per active account per month                      5.0         4.3           3.5           2.5           2.0        26%
Average net commission per trade, SEK                              48          46            52            63            66         -8%
Average commission per trading day, SEK                      2,455,000   1,730,000       975,000      615,000       517,000         48%
Average annual income/assets under management, %                   1.5         1.5           1.8           2.1           2.1        -8%
Average annual income per account client, SEK                   4,913        3,990         4,039         2,939         2,598        17%
Average annual operating cost per account client, SEK           -2,715      -2,119        -2,389        -2,102        -2,426          3%
Average annual profit per account client, SEK                    2 198        1,871         1,650          837           172         89%




                                                                                                         NORDNET ANNUAL REPORT 2006        89
      Key ratios




     Key ratios
     Group



     Number of active accounts         Dec 31, 2006   Dec 31, 2005    Change     Change
     Sweden                                100,200         79,400       20,800     26%
     Norway                                 29,400         23,700        5,700     24%
     Denmark                                  9,400          7,000       2,400     34%
     Finland                                 1,800            500        1,300    255%
     Germany                                  6,800          5,000       1,800     35%
     Luxembourg                               1,900          1,700        200       9%
     Total                                 149,500        117,300      32,200      27%


     Assets in custody, SEK billions   Dec 31, 2006   Dec 31, 2005    Change     Change
     Sweden                                    32.0           23.7         8.3     35%
     Norway                                     8.1            6.2         1.9     30%
     Denmark                                    4.7            3.3         1.4     43%
     Finland                                   0.5             0.2         0.3    150%
     Germany                                    1.1            0.9         0.2     22%
     Luxembourg                                 3.0            2.0         1.0     48%
     Total                                    49.4           36.3         13.1     36%


     Number of trades                         2006           2005     Change     Change
     Sweden                               3,403,000      2,462,000    941,000      38%
     Norway                               2,248,000      1,543,000    705,000      46%
     Denmark                              1,153,000       761,000     392,000      52%
     Finland                               247,000         78,000     169,000     215%
     Germany                               835,000        714,000     121,000      17%
     Luxembourg                            117,000         83,000       34,000     41%
     Total                               8,003,000      5,641,000    2,362,000     42%




90     NORDNET ANNUAL REPORT 2006
                                                                              Proposed profit distribution




Proposed profit distribution

Nordnet has a strong market position in both the industry and the           per cent, from 12.5 per cent to 10.3 per cent. The capital adequacy
countries in which it operates. The company strives to continually          ratio is satisfactory given the fact that the company and the Group
improve and optimize the business. The prospects of long-term               are expected to continue operating at a good profit. The company
success are judged to be good.                                              and the Group are expected to maintain equally satisfactory levels
                                                                            of liquidity. The company’s equity does not include any unreal-
Proposed profit distribution                                                 ized profit or loss resulting from reporting financial instruments
The following unappropriated earnings (in SEK) are at the disposal of the   at market value. The Board is of the opinion that the proposed
Annual General Meeting:                                                     dividend will not prevent the parent company or any affiliated
Profit bought forward                                          16,856,854    company from fulfilling their immediate or long-term obligations,
Net profit for the year                                       127,291,550    from making any necessary investments, or from expanding. The
Total                                                        144,148,404    proposed dividend is therefore justifiable as regards the require-
                                                                            ments (prudence rule) of Chapter 17, Section 3, Paragraphs 2 and
The Board proposes that the unappropriated earnings be dealt with           3 of the Swedish Companies Act. The proposed distribution shall
as follows:                                                                 be decided on and the proposed income statements and balance
                                                                            sheets adopted at the Annual General Meeting on April 24, 2007.
Shareholder dividends of                                                    As regards the profits and financial positions of the Group and
SEK 0.50 per share (165,018,878 * 0.50), a total of          82,509,439     the parent company, please refer to the income statements and
Profit carried forward                                        61,638,965     balance sheets.
                                                            144,148,404
                                                                            Declaration
Statement on proposed dividends in
                                                                            To the best of our knowledge, this annual report has been prepared
accordance with Chapter 18, Section 4
                                                                            in accordance with generally accepted accounting principles for
of the Swedish Companies Act
                                                                            stock market companies. The information presented is in agreement
Distribution of the proposed dividend to the shareholders will              with actual circumstances and nothing of significant importance
reduce the capital adequacy ratio of the financial Group of com-             that could otherwise alter the picture provided by the annual report
panies, of which Nordnet AB (publ) is the parent company, by 2.2            has been omitted.


                                                       Stockholm, Sweden, March 22, 2007


                   Claes Dinkelspiel                                Bo Mattsson                              Ulf Dinkelspiel
                Chairman of the Board


                   Annica Axelsson                                Sven Skarendahl                              Nils Nilsson



                                                                  Klas Danielsson
                                                                        CEO



                                                Our audit report was submitted on March 22, 2007.

                                                                 Ernst & Young AB

                                                                  Björn Fernström
                                                          Authorized Public Accountant



                                                                                                          NORDNET ANNUAL REPORT 2006               91
       Audit Report




     Audit Report


     To the annual meeting of the shareholders
     of Nordnet AB (publ)
     Corporate identity number 556249-1687

     We have audited the annual accounts, the consolidated accounts,      As a basis for our opinion concerning discharge from liability, we
     the accounting records and the administration of the Board of        examined significant decisions, actions taken and circumstances
     directors and the CEO of Nordnet AB (publ) for the year 2006.        of the company in order to be able to determine the liability, if
     The company’s annual accounts and the Group’s consolidated           any, to the company of any Board member or the managing direc-
     accounts are part of this document on pages 48–91. The Board         tor. We also examined whether any Board member or the CEO
     of directors and the CEO are responsible for these accounts and      has, in any other way, acted in contravention of the Companies
     the administration of the company as well as for the application     Act, Banking and Financing Business Act, the Annual Accounts
     of the Annual Accounts Act when preparing the annual accounts        Act, the Annual Accounts Act of Credit Institutions and Securi-
     and the application of international financial reporting standards    ties Company or the Articles of Association. We believe that our
     IFRSs as adopted by the EU and the Annual Accounts Act of            audit provides a reasonable basis for our opinion set out below.
     Credit Institutions and Security Company when preparing the
     consolidated accounts. Our responsibility is to express an opinion   The annual accounts have been prepared in accordance with the
     on the annual accounts, the consolidated accounts and the admin-     Annual Accounts Act and give a true and fair view of the com-
     istration based on our audit.                                        pany’s financial position and results of operations in accordance
                                                                          with generally accepted accounting principles in Sweden. The
     We conducted our audit in accordance with generally accepted         consolidated accounts have been prepared in accordance with the
     auditing standards in Sweden. Those standards require that we        international financial reporting standards IFRSs as adopted by
     plan and perform the audit to obtain reasonable assurance that       the EU and the Annual Accounts Act of Credit Institutions and
     the annual accounts and the consolidated accounts are free of        Security Company and give a true and fair view of the Group’s
     material misstatement. An audit includes examining, on a test        financial position and results of operations. The statutory admin-
     basis, evidence supporting the amounts and disclosures in the ac-    istration report is consistent with the other parts of the annual
     counts. An audit also includes assessing the accounting principles   accounts and the consolidated accounts..
     used and their application by the Board of Directors and the CEO
     and significant estimates made by the Board of Directors and          We recommend to the annual meeting of shareholders that the
     the managing director when preparing the annual accounts and         income statements and balance sheets of the parent company
     consolidated accounts as well as evaluating the overall presenta-    and the Group be adopted, that the profit of the parent company
     tion of information in the annual accounts and the consolidated      be dealt with in accordance with the proposal in the statutory
     accounts.                                                            administration report and that the members of the Board of direc-
                                                                          tors and the managing director be discharged from liability for the
                                                                          financial year.



                                                           Stockholm March 22, 2007

                                                               Ernst & Young AB

                                                                Björn Fernström
                                                         Authorized Public Accountant




92     NORDNET ANNUAL REPORT 2006
                                                                          Definitions




Definitions


Definitions, general                                                    P/E ratio: The share price in relation to earnings per share.
Active account: Client account with liquid funds and/or other
assets.                                                                Profit margin: Net profit (after tax) as a percentage of operating
                                                                       income.
Average net commission revenue: Average commission revenue
per a trade after deducting for commission expenses and other          Return on equity: Net profit as a percentage of average adjusted
non-trading related commission income.                                 equity during the period.

Average number of shares after dilution: Weighted average              Total assets under management: Total liquid funds and market
number of shares in issue during the year plus possible additional     value of securities in all active accounts.
shares in accordance with IAS 33.
                                                                       Trade: A registered transaction on a stock market or marketplace.
Average number of shares before dilution: Weighted average             An order can often involve several trades.
number of shares in issue during the year in accordance with IAS 33.

Break-even level: Average number of trades per trading day that        Definitions, banking and securities activities
Nordnet needs to achieve ±0 per cent before goodwill amortisa-         Capital adequacy (ratio): Total capital base divided in relation to
tion and tax.                                                          the total risk-weighted volume of Capital. The capital adequacy
                                                                       ratio shall amount to at least 8 per cent.
Development costs: The cost of internal and externally financed
development of trading systems and other applications that will        Capital base: Consolidated equity for the financial Group of com-
generate long-term financial benefits.                                   panies of which Nordnet AB (publ) is the parent company.

Earnings per share before and after dilution: Profit (after tax) in     Risk-weighted volume: Determined by placing assets and off
relation to average number of shares in issue during the period,       balance sheet items in different risk classes in accordance with the
before and after dilution.                                             Act concerning Adequacy and Large Exposures of Credit Institu-
                                                                       tions and Securities Companies. The volumes are then weighted
Market capitalisation: Number of outstanding Nordnet Series B          on the basis of estimated risk so that 0 per cent, 20 per cent, 50
shares multiplied by the share price.                                  per cent or 100 per cent of the volumes are included in the total
                                                                       risk-weighted volume.
Net commission revenue: Commission revenue per trade after
deduction of commission costs and non-trade related commission
income.                                                                Definitions, insurance activities
                                                                       Capital base: Consists predominantly of equity.
Operative cash flow: Cash flow excluding changes in client funds.
The purpose is to show the cash flows that the business actually        Guarantee amount: Euro 3 million, according to the Insurance
generates, keeping client funds apart.                                 Activities Act.

Operating costs: Costs incurred on the business, excluding credit      Solvency margin: In all essentials, the sum of 1 per cent of the
losses and goodwill amortisation.                                      conditional bonus and 0.1-0.3 per cent of the mortality risks.

Operating margin: Operating profit in relation to operating             Solvency ratio: Capital base in relation to the solvency margin or
income.                                                                the guarantee amount, whichever is the larger. It shall amount to
                                                                       a minimum of 1.0.




                                                                                                       NORDNET ANNUAL REPORT 2006             93
       Addresses




     Addresses

     Nordnet AB (publ)                                   Nordnet Bank AB                                     Nordnet Försäkringsförmedling AB
     Gustavslundsvägen 141                               Honnörsgatan 26                                     Gustavslundsvägen 141
     Box 14077                                           SE-352 36 Växjö                                     Box 14077
     SE-167 14 Bromma                                    Telephone: +46 8 506 330 00                         SE-167 14 Bromma
     Telephone: +46 8 506 330 30                         Order/brokers: +46 8 506 331 00                     Telephone: +46 8 506 330 00
     Telefax: +46 8 506 330 50                           Telefax: +46 8 506 330 65                           Telefax: +46 8 506 330 97
     E-mail: info@nordnet.se                             VoiceTrade: +46 8 506 34 100                        E-mail: nordnet.forsakring@nordnet.se
     www.nordnet.se                                      E-mail: info@nordnet.se                             www.nordnet.se
                                                         www.nordnet.se



     Nordnet Sweden                                      Nordnet Pensionsförsäkring AB                       VCW Internet Services AB
     Nordnet Bank AB                                     Gustavslundsvägen 141                               Gustavslundsvägen 141
     Gustavslundsvägen 141                               Box 14095                                           Box 14077
     Box 14077                                           SE-167 14 Bromma                                    SE-167 14 Bromma
     SE-167 14 Bromma                                    Telephone: +46 8 506 330 00                         Telephone: +46 8 506 330 30
     Telephone: +46 8 506 330 00                         Telefax: +46 8 506 330 67                           Telephone editorial office: +46 31 778 55 10
     Order/brokers: +46 8 506 331 00                     E-mail: pension@nordnet.se                          Telefax: +46 8 506 330 50
     Telefax: +46 8 506 330 65                           www.nordnet.se                                      www.vcw.se
     VoiceTrade: +46 8 506 34 100
     E-mail: info@nordnet.se
     www.nordnet.se




     What’s it like to work at Nordnet?




           Anna-Lena Costermans                    Robel Alazar                     Trine Eknes                 Mark Richardy             Birgit Vaattovaara


     “I work as a supervisor        “I work with structured         “As a broker, I handle         “I work in Client Care        “In my role as an events
     in the Test department.        product administration in       business transactions for      where I answer e-mails        organizer, I travel around
     We test all products and       the Back Office. I handle        our clients. I mainly work     and calls from our Danish     visiting conventions
     services from a user           incoming subscription           with our Norwegian clients     clients. They’re often new    and events in Sweden. I
     perspective before they are    applications, register se-      who want to trade in listed    clients who want some         present Nordnet to clients
     launched. We work with         curities transactions, and      and unlisted shares and        guidance on our trading       and other interested par-
     WinTrade, for example,         deal directly with clients      derivatives in our different   system so they can get        ties, explaining who we
     and are very involved in the   and partners. It’s a job with   markets. I continually         started properly. My job      are and the services we
     development of our new         a lot of variation – my days    learn new things in this       demands broad knowledge       offer. I used to work in the
     website. We have a great       go fast. I like the work en-    job, which feels good.         of the stock market, which    Back Office, and then I was
     deal of influence over the      vironment here – everyone       There are a lot of young       I have a great interest in.   offered this job – I didn’t
     final products, and it’s fun    says hi to each other and       people here and everyone       I like the atmosphere at      hesitate for a second. I love
     to have such an influence.      we help each other out          has different backgrounds      Nordnet. I feel that the      my job! It’s fun to travel so
     We always need to think        – we stick together, quite      – which is perfect for me      company invests in its        much and I’ve never had a
     creatively and we all work     simply.”                        as I come from another         employees, which always       better employer.”
     toward the same goals.”                                        country and want to get to     pays in the long run.”
                                                                    know others in the same
                                                                    situation.”



94      NORDNET ANNUAL REPORT 2006
                                                                                     Addresses




Aktiedirekt                                            Nordnet Denmark                                       Nordnet Germany
Gustavslundsvägen 141                                  Nordnet Bank AB                                       Nordnet Bank AB
Box 14132                                              Postboks 2307                                         Postfach 1440
SE-167 14 Bromma                                       DK-1026 Copenhagen K                                  D-65799 Bad Soden a. T.
Telephone: +46 8 505 981 00                            Telephone: +45 70 20 66 85                            Telephone: +49 69 2222 7800
Telefax: +46 8 505 981 19                              Telefax: +45 70 20 66 90                              Telefax: +49 69 2222 7801
E-mail: info@aktiedirekt.se                            E-mail: nordnet@nordnet.dk                            E-mail: info@nordnetbank.de
www.aktiedirekt.se                                     www.nordnet.dk                                        www.nordnetbank.de




Nordnet Norway                                         Nordnet Finland                                       Nordnet Securities Luxembourg S.A.
Nordnet Bank NUF                                       Nordnet Bank AB                                       70, Grand Rue
Sørkedalsveien 10 D                                    PL 3510                                               P.O. Box 773
Postboks 33 Majorstuen                                 FIN-00002 Helsinki                                    L-2017 Luxembourg
N-0330 Oslo                                            Telephone: +358 20 198 5898                           Telephone: +352 468 444
Telephone: +47 22 22 53 70                             Telefax: +358 20 198 5899                             Telefax: +352 468 449
Telefax: +47 22 22 53 71                               E-mail: asiakaspalvelu@nordnetpankki.fi                E-mail: client.support@nordnet.lu
VoiceTrade: +47 815 58 008                             www.nordnet.fi                                         www.nordnet.lu
E-mail: kundeservice@nordnet.no
www.nordnet.no




What’s it like to work at Nordnet?




             Francis Delattre                  Jenny Axelsson                  Malin Ahlberg                  Ken Grapenqvist                 Anders Nilsson


“My work mostly involves          “I work with the ad-           “I’m a mutual funds prod-        “I’m a software developer      “I’m an account man-
business development;             ministration of Nordnet        uct manager. My colleague        and work with the Win-         ager for our collaborative
I look at markets and             Pension’s occupational         and I are responsible for        Trade trading application,     partners, which include
services to see what op-          pensions. My job includes      Nordnet’s mutual fund            making refinements and          investment managers,
portunities exist. I’m a link     handling new corporate         service. We have contact         fixing bugs. I mostly sit       financial advisors, brokers
between IT/development            contracts, registering         with the mutual fund             programming. It’s the          and insurance agents.
and the business side,            details in the insurance       management companies,            perfect job for a developer.   I work with everything
coordinating different            system, and refining our        review the mutual fund           There’s a lot of freedom       from sales and negotia-
projects. One example is          administrative procedures.     offering, and develop the        and I get to do something      tions through contracts to
the Canadian trading we           It’s been fun to be a part     offering by adding new mu-       I find fun.”                    procedures and follow-ups.
launched last fall, which         of setting up pension sav-     tual funds. I also arrange                                      I enjoy working with clients
has been a great success.         ings at Nordnet. Everyone      different activities, such as                                   and it’s exciting to work
I learn a lot in this job, it’s   at the company is very         mutual fund evenings and                                        for such a fast growing
a good environment, and           amicable and happy to help     NordnetSchool courses.                                          company with such great
there’s always something          each other. The vibe is that   It’s a job with a lot of vari-                                  development potential.”
happening.”                       nothing is impossible!”        ation and I get to meet a
                                                                 lot of people. The gang at
                                                                 Nordnet is young and mo-
                                                                 tivated, so there’s always
                                                                 something happening.”
                                                                                                                    NORDNET ANNUAL REPORT 2006                  95
       Awards and honours




     Awards and honours


                                                    The jury’s decision:
                                                    “Sweden’s best share trading site is also
                                                    the sharpest, with clean lines, bold colors,
                                                    and fine illustrations to lighten up the
                                                    heavy numbers. A well-made guide to
                                                    becoming a client provides good insight
                                                    – before deciding. But what really stole
                                                    our hearts are the fun services, with the
                                                    ‘Experts’ to the fore. We love following
     Bank of the Year                               these professional traders’ deals and read-
     In November 2006, Nordnet was named            ing their personal comments on purchases
     Bank of the Year by the Swedish private        and sales. Nordnet is moving in the right      Cheapest share trading
     finance magazine Privata Affärer.               direction: unique, high-quality content.       in Denmark
                                                    Now we’re just waiting for the pro traders     The Danish financial periodical Børsen’s




     ‘‘
                                                    to start video blogging.”                      survey from November 2006 showed
              A proactive                                                                          Nordnet to be the cheapest share trading
                                                                                                   alternative in Denmark when considering
              and client-                                                                          all costs. Mostly thanks to Nordnet’s low
                                                                                                   share trading prices throughout the Nordic
              friendly attitude.                                                                   region and low exchange commission.




                                                                                                   ‘‘
     The jury’s decision:
     “Nordnet is a full-fledged low-price online                                                            Continual pro-
     store for investing in shares, mutual funds,
     and pensions, the latter increasing in                                                                duct and service
     importance. With its proactive and cli-
     ent-friendly attitude, Nordnet has what it     Bank/Stockbroker of the Year                           development.
     takes to become a viable alternative to the    At the beginning of 2007, the members
     established banks.”                            of the Danish Stockholders’ Association        Best online broker in Germany
                                                    voted Nordnet Bank/Stockbroker of the          Focus Money Magazine named Nordnet
     Privata Affärer praises us for continually     Year.                                          the German market’s best online broker




                                                    ‘‘
     improving the information and advice                                                          for small, medium, and large clients, much
     offered to our clients. They state that our                                                   due to our commissions being the lowest
     consumer-oriented terms, such as very low              Unique, high-                          on the market.
     fees and transfer rights, are of consider-
     able importance to clients’ long-term
                                                            quality content.
     finances.
                                                    Nordnet received top marks in all catego-
     Best Banking & Finance                         ries, with the survey participants empha-
     Website                                        sizing the importance of the high quality
     In May 2006, Nordnet was named Best            service and information we offer, the lack
     Banking & Financing Website by the             of an account fee, and our low prices.
     Swedish magazine Internetworld.                   Our high ratings in the survey show that
                                                    Nordnet has long focused on good client
                                                    service and continual product and service
                                                    development, such as the Experts, our tax
                                                    return program, and WinTrade Mobile.




96     NORDNET ANNUAL REPORT 2006
Calendar
Activity                                     Date
Annual General Meeting                       24 April 2007
Interim report January–March 2007            24 April 2007
Interim report January–June 2007             18 July 2007
Interim report January–September 2007        24 October 2007
End-of-year financial report 2007             February 2008




Text, graphic design and production: Hallvarsson & Halvarsson
Photo: Christoffer Edling
Illustrations: Niklas Elmehed, Nordnet and Klas Fahlén
Photoretusch: Bildrepro Stockholm
Translation: Semantix
Printed by: Elanders, 2007

				
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