Preliminary Report on the Operations of AB Custos during 2000

PRELIMINARY REPORT ON THE OPERATIONS OF AB CUSTOS DURING 2000 * The total return on Custos' shares during 2000 was 56.4 percent. * The Board proposes a 43 percent increase in the dividend to SEK 16.50 (11.50) per share. * The Board proposes that the Annual General Meeting approve a mandate to implement synthetic buy-backs up to maximum of 4 million shares. CEO's comments During 2000 the OM Stockholm Stock Exchange was very volatile. After dramatic price gains during the first two months of the year, especially in the information technology (IT) and telecom sectors, prices fell in equally dramatic fashion. Despite the unsteady stock market climate, Custos shares had a stable upturn during the year, with a total return of 56 percent, compared to the SIX Portfolio Return Index and the SIX Return Index, which fell by about 11 percent during the same period. The level of return that Custos achieved during 2000 was also at a substantially lower risk level than the Exchange as a whole. Viewed in a five-year perspective, Custos has had an average annual total return of 33 percent, exceeding the SIX Portfolio Return Index and SIX Return Index by about 10 percentage points per year. This is a satisfactory performance level. Last year, the biotechnology company Perbio Science was clearly the shining star in the Custos portfolio. Since it gained a listing in October 1999, the value of its shares has more than tripled. The point of departure for this investment was a low initial valuation, stable earnings capacity and strong long-term growth. The unlisted IT/management consulting company Acando's fine growth during the year was also gratifying and we noted a good earning capacity during the fourth quarter of 2000. At year-end, Custos' shares were trading at a 7 percent discount to net asset value. This was by far the lowest discount among major Swedish investment companies and a substantial improvement on prior years. However, we do not consider this a satisfactory level and we are continuing our efforts to eliminate the discount. In light of this, the Board of Directors once again proposed the Annual General Meeting to approve a mandate to implement synthetic share buy-backs up to a maximum of 4 million of Custos' own shares. Custos is in a good starting position for 2001, with an investment portfolio that has good value and growth potential, as well as an opportunity to earn money on the discount as long as it remains. Total return Total return on Custos shares - taking into account share price appreciation, dividend paid and redemption of shares - was 56.4 percent. Return in 2000 % Total return on Custos shares 56.4 1 Cost of shareholders' equity 8.5 SIX Portfolio Return Index -10.4 SIX Return Index -10.8 Morgan Stanley World Index -13.9 1. Measured as the average 12-month Swedish treasury bill rate plus a risk premium of 4 percent. In this preliminary report on 2000 operations, total net asset value, net asset value per share etc. are calculated on the assumption of full participation in Custos offer to redeem its shares with payment in SCA shares and that the SCA shares have thus been distributed (see "Custos shares"). Custos expects the final count of the number of Custos shares registered for redemption and thus the number of SCA shares for distribution to be completed on January 29, 2001. The Annual Report for 2000 will present the updated figures. However, the Company's formal accounts include Custos' entire holding of SCA shares, because Custos' shareholders have been invited to an Extraordinary General Meeting on February 8, 2001, among other things to vote on the Board's proposal to reduce the share capital by means of a redemption of ordinary shares. The Board's proposal represents a completion of the redemption offer with payment in SCA shares that was approved by an Extraordinary General Meeting on December 5, 2000. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/01/25/20010125BIT00870/bit0001.doc http://www.bit.se/bitonline/2001/01/25/20010125BIT00870/bit0002.pdf