Sandvik clarifies: no increased tax cost

All Swedish-owned patents and brands were transferred to Sandvik Intellectual Property AB (the IP company). The reason for the reorganization was the need to streamline intellectual property operations into a separate company, which emphasizes the considerable values of intellectual property rights and generates operative gains.

The Swedish National Tax Board has approved Sandvik's income tax return for 2005. The National Tax Board subsequently appealed its own tax ruling through the Public Attorney with regard to the effect of the reorganization set forth above. If the appeal is approved, it would not impact Sandvik's earnings. If this is the case, the additional tax expense of SEK 5 billion would, according to Sandviks opinion, correspond to the taxable value of amortizations in the IP company. If Sandvik's view is accepted by the court, it would entail a reduction in Sandvik's tax expense of approximately SEK 5 billion, which will be taken up as revenue in the Group when the Court order has gained legal force.

Sandviken, 9 January 2008

Sandvik AB; (publ)