Year-end report 1999

YEAR-END REPORT 1999 *Income before tax for 1999 amounted to SKr 1,460m (556). Earnings per share after full tax was SKr 4.61 (1.52). *Sales were largely unchanged at SKr 14,999m (15,088) after negative currency effects of approximately 2 percent. *Operating income, before items affecting comparability, amounted to SKr 1,747m (1,758). The corresponding operating margin was 11.6 percent (11.7). *Net cash flow from operations improved to SKr 521m (-14) after a dividend of SKr 730m (730). Capital expenditures for new plant amounted to SKr 1,450m (2,002) corresponding to 9.7 percent (13.3) of sales. *The number of employees decreased by 669 persons to 9,534. *Linde AG now owns 99.5 percent of the shares in AGA. On February 9, 2000, the EU Commission approved the acquisition, with certain reservations. Linde has declared its intention to call for redemption of the remaining shares. *The Board of Directors proposes an unchanged dividend of SKr 3 per share. Sales The AGA Group's sales in 1999 were largely unchanged compared with the previous year and amounted to SKr 14,999m (15,088). The net effect of acquired and sold operations was insignificant, while exchange rate fluctuations led to a decrease of approximately 2 percent. The negative effect of the Brazilian devaluation in January was partly compensated by higher exchange rates for other currencies. Economic growth remained good in the U.S. but was relatively weak in most markets in Europe, and the majority of countries in South America were in recession. Some improvement in the business climate in Western Europe in the second half had no appreciable effect on AGA, because this was mainly related to the service and information technology sectors rather than the industrial sectors where AGA has its customers. AGA's sales of industrial gases amounted to SKr 12,803m (13,050), a decline of 2 percent which was due entirely to exchange rate fluctuations. Volumes rose for pipeline deliveries and On-Site-Supply, as well as for liquid air gases. Volumes also increased somewhat for carbon dioxide and shielding gases, while they declined for oxygen and acetylene in cylinders. Price pressure continued in several markets, including the West European market for liquid air gases. Healthcare achieved a sales increase of 8 percent to SKr 2,196m (2,038) despite a substantial fall in the sales value in Brazil due to the devaluation. During the year, Healthcare acquired complementary home care companies in Sweden, Norway, the Czech Republic, Slovakia and Spain, which contributed to a 26 percent rise in sales for home care. AGA's product for treatment of persistent pulmonary hypertension of the @ newborn, INOmax , received approval as a pharmaceutical in the U.S. at the end of December and sales started in January 2000. Earnings Operating income for the year amounted to SKr 1,516m (783). The effect of exchange rate fluctuations was insignificant as was the effect of sold and acquired operations. Operating income includes items affecting comparability, in total a net cost amount of SKr 231m (975). Earnings for 1998 were charged with SKr 255m for write-down of certain assets and SKr 720m in provisions for the restructuring of the Group decided at that time. In 1999, SKr 404m of this provision was utilized and an additional SKr 75m has been allocated for restructuring in conjunction with the merger with Linde. In addition, earnings for 1999 were charged with SKr 112m for costs in connection with the sale of AGA and SKr 186m in initial costs for the INO operations in the U.S., where AGA's new product was not approved as a pharmaceutical until the end of December. The items affecting comparability in 1999 also include a capital gain of SKr 142m from the sale of AGA's subsidiary in the U.K. The operating margin amounted to 11.6 percent (11.7) excluding the items affecting comparability mentioned above. In Western Europe, the margin was 15.0 percent (15.9), in Eastern Europe 5.4 percent (-3.5), in North America 7.3 percent (7.4) and in South America 8.1 percent (7.4). AGA's costs for research, product development and market development amounted to SKr 286m (274), of which industrial gases accounted for SKr 236m (241) and Healthcare for SKr 50m (33), excluding the costs of INO development in the U.S. Development projects mainly focus on new and improved gas applications and are carried out both within AGA and in cooperation with research institutes, customers and other companies. The number of employees amounted to 9,534 at the end of the year, a reduction of 669 people during the year, of whom 103 in the sold U.K. company. The Group's net financial items comprised an expense of SKr 511m (227). Of the SKr 284m increase, SKr 115m was due to exchange rate fluctuations for the year which led to a loss of SKr 87m, while in 1998 they provided a gain of SKr 28m. Otherwise, the increase was mainly due to a lower return on liquid assets and the costs of financing AGA's redemption of shares at the end of June with a net amount of SKr 3,383m. Income before tax amounted to SKr 1,460m (556) including a capital gain of SKr 455m from the sale of AGA's shareholding in Industrivärden. Net profit for the year was SKr 1,066m (370) after deduction for tax of SKr 390m (184). Earnings per share after full tax amounted to SKr 4.61, while earnings per share in 1998 were SKr 1.52 after the year's provision for restructuring costs. Capital expenditures The extensive investment program started in 1995 has now been completed. In 1999, AGA invested SKr 1,450m (2,002) in new plant and equipment, corresponding to 9.7 percent (13.3) of the Group's sales. 52 percent of investments were made in Western Europe, 6 percent in Eastern Europe, 31 percent in North America and 11 percent in South America. A further SKr 403m (297) was invested in complementary acquisitions. In 1999, new air separation plants went into operation in Peru and in Italy as well as an extension to a plant in the U.S. In addition, a number of OSS installations were built for gas production on customer premises. Two more gas distributors were acquired in the U.S. and in Germany the previously 50-per-cent owned production company in Bremen was taken into the Group. AGA also acquired a propane business in Finland and gas operations in Ecuador, the latter in exchange for AGA's company in Bolivia. As already mentioned, a number of home care companies were acquired within Healthcare. Financing Net cash flow from operating activities amounted to SKr 521m (-14) after dividends to shareholders of SKr 730m (730) . The cash flow from investing activities decreased to SKr 671m (2,028), after the sale of shares in Industrivärden provided SKr 595m and the sale of subsidiaries SKr 455m. Furthermore, investments in new plant and equipment were SKr 552m lower than in the previous year. The Group's financial net debt, i.e. loans minus liquid assets and investments, increased during the period by SKr 2,698m to SKr 6,473m. The redemption of every tenth share decided by the Annual General Meeting was carried out at the end of June for a net of SKr 3,383m. This increase in net debt was counteracted to some extent by the positive net cash flow from operating activities. The net debt/equity ratio rose to 74 percent from 31 percent in the previous year. The Group's equity ratio at year-end was 35 percent compared with 47 percent at the beginning of the year. Liquid assets and short-term investments increased during the year by SKr 32m to SKr 2,466m and the Group's loans increased by SKr 3,029m to SKr 9,238m. Anticipated development in 2000 Following Linde AG obtaining the European Commission's approval of the acquisition on February 9, 2000, AGA's operations will be incorporated into Linde's gas division with Linde Gas AG in Germany as the parent company. A new organization will be drawn up and introduced before July. AGA's entire operations in Austria as well as the cylinder gas operations in the Netherlands will be sold in accordance with the EU Commission's requirements. Proposed dividend, etc. The Board of Directors proposes an unchanged dividend of SKr 3 per share, a total of SKr 658m. The Annual General Meeting will be held on March 27, 2000 in AGA's offices at Lidingö. March 30 is proposed as the record date with VPC and dividends are expected to be paid from VPC on April 4. AGA's Annual Report will be available in the Company's offices from March 1. It can be ordered from AGA AB by e-mail: info@aga.com, fax: +46 8 731 12 78 or phone: +46 8 731 10 85. Lidingö, February 23, 2000 AGA AB (publ) Lennart Selander President and CEO 5 QUARTERLY DATA SKr million Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 1998 1998 1998 1998 1999 1999 1999 1999 Sales 3,752 3,719 3,733 3,884 3,683 3,800 3,67 3,842 4 Operating income excl. items 501 461 452 344 492 500 405 350 affecting comparability Operating margin, 13.4 12.4 12.1 8.9 13.4 13.2 11.0 9.1 percent Net financial items -40 -11 -75 -101 -162 -128 -133 -88 Income before tax excl. items affecting 461 450 377 243 330 372 272 262 comparability and capital gains Cost items affecting - - - -975 -17 -29 -30 -297 comparability Capital gains - - - - 455 70 55 17 Earnings per share after full tax, SKr 1.31 1.26 1.11 -2.16 2.13 1.28 0.93 0.27 No. of employees, end 10,72010,49 10,29 10,20 10,14 9,881 9,68 9,534 of period 4 1 3 6 2 DATA BY GEOGRAPHIC MARKET Sales 1999 1998 SKr million Western Europe 8,388 8,460 Eastern Europe 738 751 North America 3,521 3,277 South America 2,352 2,600 Total 14,999 15,088 Of which, Industrial gas operations 12,803 13,050 Of which, Healthcare 2,196 2,038 Operating income SKr million, excl. items affecting comparability Western Europe 1,259 1,348 Eastern Europe 40 -26 North America 258 244 South America 190 192 Total 1,747 1,758 Operating margin Percent, excl. items affecting comparability Western Europe 15.0 15.9 Eastern Europe 5.4 -3.5 North America 7.3 7.4 South America 8.1 7.4 Total 11.6 11.7 CONSOLIDATED INCOME STATEMENT SKr million 1999 1998 Sales 14,999 15,088 Cost of sales -9,108 -9,176 Gross income 5,891 5,912 Selling expenses -2,619 -2,589 Administrative expenses, etc. -1,436 -1,489 Research and development costs -286 -274 Items affecting comparability -231 -975 (restructuring, etc.) Other operating earnings 285 300 Other operating expenses -123 -131 Share of income in associate companies 35 29 1 Operating income 1,516 783 Dividends - 22 Interest income, etc. 152 292 Interest expenses, etc. -663 -541 Capital gain on sale of shares in 455 - Industrivärden Income before tax 1,460 556 2 Tax -390 -184 Minority interests -4 -2 Net income 1,066 370 1 Depreciation charged to operating 1,880 1,822 income 2 Paid tax 338 330 Earnings per share, SKr After paid tax 4.83 0.92 After full tax 4.61 1.52 Return, percent On capital employed 11.2 5.5 On shareholders' equity 10.2 3.0 CONSOLIDATED BALANCE SHEET SKr million ASSETS 1999 1998 Goodwill 1,172 1,046 Plant and equipment 16,279 17,804 Shareholdings 241 544 Long-term investments 299 - Long-term operating receivables 202 157 Total fixed assets 18,193 19,551 Inventories 934 939 Current receivables 3,481 3,135 Short-term investments 1,291 1,438 Liquid assets 1,175 996 Total current assets 6,881 6,508 TOTAL ASSETS 25,074 26,059 SHAREHOLDERS' EQUITY AND LIABILITIES Share capital 1,096 1,217 Restricted reserves 5,999 6,226 Retained earnings 629 4,403 Net income 1,066 370 Total shareholders' equity 8,790 12,216 Minority interests 46 87 Provisions for pensions 1,193 1,141 Provisions for deferred tax 2,179 2,269 Provisions for restructuring 390 720 Total provisions 3,762 4,130 Long-term loans 5,959 2,628 Short-term loans 3,279 3,581 Total loans 9,238 6,209 Other long-term liabilities 442 476 Other current liabilities 2,796 2,941 Total other liabilities 3,238 3,417 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 25,074 26,059 Net debt 6,473 3,775 Net debt/equity ratio, percent 73.6 30.9 Equity ratio, percent 35.2 47.2 CONSOLIDATED STATEMENT OF CASH FLOWS SKr million 1999 1998 OPERATING ACTIVITIES Operating income 1,516 783 Reversal of depreciation 1,880 1,822 Reversal of restructuring reserve, etc. -388 975 Reversal of capital gains -146 - Adjustment for associate companies -23 -18 Net financial expense -511 -227 Paid tax, excl. tax for shares in -197 -319 Industrivärden Cash flow before change in working 2,131 3,016 capital Change in working capital -209 -272 Dividends to shareholders -730 -730 Cash flow from operating activities 1,192 2,014 INVESTING ACTIVITIES New plant and equipment -1,450 -2,002 Sale of plant and equipment, etc. 139 305 Acquisitions, etc. -403 -297 Sale of subsidiaries 455 - Sale of shares in Industrivärden, after 595 - tax Acquisition and sale of other shares -7 -34 Cash flow from investing activities -671 -2 028 NET CASH FLOW FROM OPERATIONS 521 -14 FINANCING ACTIVITIES Redemption of shares, net -3,383 - Change in loans 3,240 -401 Change in long-term investments -330 - Cash flow from financing activities -473 -401 NET CASH FLOW 48 -415 LIQUID ASSETS Liquid assets at the beginning of the 2,434 2,823 year Net cash flow for the period 48 -415 Exchange rate adjustment -16 26 Liquid assets at the end of the year 2,466 2,434 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/02/24/20000224BIT00130/bit0001.doc The full report http://www.bit.se/bitonline/2000/02/24/20000224BIT00130/bit0002.pdf The full report

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