Swedish Government Presentation Objective and Vision Parliament objective

Swedish Government Presentation

Objective and Vision Parliament objective Professional management of state portfolio Government’s vision Valuable corporations create valuable jobs 0080791 AL 1

Implementation Introducing private sector discipline — Shareholder value Active ownership — Exit not an option Commercial ownership tools — Transparency is the key to unlock “the black box” 0080791 AL 2

Changing the Government’s Role as Owner Earlier Ownership responsibility spread between several ministries Closely related to political issues Now Ownership concentrated to Ministry Independent units with only one focus Conflict of interest at all levels Separation of sector political aspects and ownership Competence, focus and resources 0080791 AL 3

Value of Portfolio Estimated market value of managed portfolio (e billion)(1) 60 60 50 40 30 20 20 8 10 3. 5 1. 8 1. 7 1. 2 0. 8 0. 5 Ö re su nd to s C us os at R ur La to gs Lu nd be r k vi In ik nn ev vä tri du s Ki n rd e st ve In In G ov er n m en t or 0 Note: 1 As of 30 June 2000 0080791 AL 4

The Swedish Government’s Portfolio Total value: e 60 billion Others 23% Assi. Domän AB 1% Vasakronan AB 2% LKAB 2% Telia AB 31% Akademiska Hus AB 3% Posten AB 3% V&S Vin & Sprit AB Nordic Baltic 4% Holding AB 7% Vattenfall AB 14% Svenska Spel AB 10% Note: 1 As of 4 September 2000 0080791 AL 5

The Larger Companies—Total Sales Total sales e 37 billion 0080791 AL 6

Number of Employees in Sweden, 1999 Wholly or partly Government owned Source: Sweden’s largest companies 0080791 AL 7

Ministries Responsible for the Government Portfolio Government owned companies by responsible Ministry (by number of employees) 0080791 AL 8

Transformation Phase 1 Financial transformation Phase 2 e-Transformation Transparency Capital structure Board nomination e-enabling the Portfolio companies Creating value Survival Year 1998– 2000 Year 2000– 2002 Quarterly report the ultimate No internet strategy transparency 0080791 AL 9

Phase I: Financial Transformation Enhance Operating Performance Maximise Shareholder Value Optimise Capital Structure Focus and Earn Growth 0080791 AL 10

Portfolio Management—Main Tools Transparency Consistent — Swift — Transparent — Capital structure Optimise capital structure — Dividend policy — Profit sharing based on value based management system for all — Board nominations Transparent and active — Based on company’s strategic situation — 0080791 AL 11

Transparency Consolidated balance sheet and income statement Quarterly reporting Value based management system foundation for profit sharing 0080791 AL 12

Capital Structure Common understanding of cost of equity Investments exceeding WACC Focus on core business 0080791 AL 13

Board Nomination Six to eight persons Remuneration — Competitive Cutting-edge corporate government guidelines Clear responsibility and accountability — Committees — Evolution and feedback — 0080791 AL 14

Active Ownership—Examples of Recent Events Trade sales Sale of 25% stake in Celsius to Saab AB / Bae Sale of SAQ Kontroll to Det Norske Veritas Sale of 50% stake in VPC to Equity offerings Sale of 30% of Telia in e 9. 1 billion IPO Sale of remaining stake in Pharmacia & Upjohn for e 1. 8 billion a group of Swedish banks 0080791 AL 15

Active Ownership—Examples of Recent Events (continued) Portfolio company acquisitions / divestitures Telia acquisition of Netcom asa Vattenfall acquisitions in Germany, Poland, Finland Nordic Baltic Holding acquisition of Unibank and bid for CBK Sweden Post sale of Postgirot Portfolio company restructurings Sveaskog—the Government gained control over 1/3 of the forestry assets of Assi. Domän SJ—focus on passenger traffic, divestment of hotels, ferries, restaurants etc. Assi. Domän—restructuring and focus on industrial portfolio to a group of Swedish banks 0080791 AL 16

Phase II: e-Transformation In the new economy, corporations will need to marry business and financial strategy with technology strategy Define and Implement Technology Strategies Understand how technology changes business model Develop new technology strategies Maximise Shareholder Value Enhance Operating Performance Optimise Capital Structure Focus and Earn Growth 0080791 AL 17

Potential Impact Varies by Industry Average Many buyers, many sellers e. Bay Schwab Transform the industry Industry fragmentation Average Cost reduction opportunity One buyer, one seller Boeing 40% Low spending Information intensity High spending 0080791 AL 18

Most Companies. . . … are facing a significant discontinuity Average Many buyers, many sellers Lernia Posten SAS SJ Telia SOS Alarm Sv. Bilprovning Sv. Kraftnät Rymdaktiebolaget Vattenfall Industry fragmentation One buyer, one seller Low spending Average LKAB Luftfartsverket Samhall Sveaskog Sv. Skogsplantor Information intensity High spending 0080791 AL 19

The Greatest Benefits. . . are also the most difficult to achieve Supplier / procurement management Internal processes Customer / distribution management Internal policies Company information Product information On-line admin / HR Pricing and inventory Electronic ordering Processes / Transactions visible to suppliers and payment possible Intranet for primary processes Electronic buying / auctions Value added services online Seamless data flow / knowledge sharing Electronic-only supply chain Unique online offering 0080791 AL 20

Savings Achieved 0080791 AL 21

Determination of Threat / Opportunity Securities Insurance Industry fragmentation Banks Aerospace Financial Services Publishing Computers Utilities Telecom Chemicals Consumer Products Mining Transportation Electronic Construction Automotive Health Capital Goods Metal Fabrication Oil and Gas Information intensity 0080791 AL 22

100 88 80 60 60 40 20 31 8 14 0 Cost ROI % position Percentage of total Inventory turns Times per year Stock price index (1 -Jan-1990) = 100 Dell Outperforms the Competition 125 100 75 50 25 0 1990 DELL 1994 CPQ 1998 Nasdaq 0080791 AL 23

The Panel Sees Far Less Impact Today. . . … than others What is the impact of e-commerce on your business today? 0080791 AL 24

Anxiety About Competitors. . . … is much higher elsewhere How much do your competitors spend on e-business? 0080791 AL 25

There is a Clearly Recognised Gap … … especially in procurement 0080791 AL 26

Procurement is a Gap for all Companies What percentage of companies are e-enabled? 0080791 AL 27

Procurement Savings can be Substantial Efficiency improvement Procurement cost savings 0080791 AL 28

Government-owned Companies 25% of domestic business community Total sales e 39 billion Indirect material 60% of total costs Cost reductions through e-procurement 5– 10% Total savings e 1. 5– 2. 5 billion 0080791 AL 29

Transparency Shows the Real Value Government balance sheet 1999, e billion Companies valued at book value Companies valued at market value Sources: The Swedish National Financial Management Authority and Ministry of Industry With government owned companies valued at market price the government position is positive. 0080791 AL 30

Listed Companies—Relative Performance Share price performance 2000 to 30 August 2000 Notes: Government shareholding 1 NBH 18. 1% 2 SAS 21. 4% 3 Assi. Domän 35. 3% 4 OM Gruppen AB 7. 7% 5 Telia 70. 6% since listing (13 June) 0080791 AL 31

Value creation can also be measured using… … the EVA methodology 1998 EVA (economic value added) (e million) Total EVA: e 267. 9 m Notes: 1 35. 3% of Assi. Domän 2 21. 4% of SAS 0080791 AL 32