Account of President's speech at AGM

Welcome to smart forestry An account of President Gunnar Palme's speech at AssiDomän's Annual General Meeting. The speech is available audiovisually at AssiDomän's website, www.asdo.se, as of Wednesday. "From now on, AssiDomän's new, long-term prime focus will be the ownership, management and utilisation of our extensive forest assets. Our aim is to be one of Europe's largest listed forest owners, with assets of 2.4 million hectares of productive timberland, and number two globally. Sharply-focused, listed forest ownership means that we occupy a unique position in Europe." These were the comments of AssiDomän's President and CEO Gunnar Palme when he addressed the Annual General Meeting which convened in Stockholm on Tuesday. He summarised 2000 as a year full of expectations, when AssiDomän attracted a lot of attention from its owners and the forestry sector. Its principal tasks were to maintain a fast pace in areas of profitability and streamlining, advance the structure process, define the future focus of AssiDomän, and create added shareholder value: "We have put a lot of effort into this work, and I can inform you that we have achieved our objective. This means strengthened competitiveness for all the operational areas in the Group. Through recent consolidation and structural measures, we have also taken the decisive step into a new phase, which will see well-focused forest ownership and forest utilisation in the AssiDomän Group. In terms of results, we intensified our efforts in 2000 on raising our income and margins, concurrent with which we enhanced our ability to utilise a favourable market situation. Our earnings in the first quarter of 2001 confirm the consolidation of our business operations and their profitability." Strategy & structure With regard to a comprehensive, strategic overview and AssiDomän's future focus, Gunnar Palme made the following comments: "The driving force has been to ensure profitability and long-term sustainable growth for all operational areas - in other words, arriving at competitive structures and in this way creating shareholder value. The process has been propelled by the necessity of sharpening the focus of operations. Stiffer competition in our industry demands opportunities to consolidate leading positions. This, in turn, makes demands with regard to critical mass and wide-ranging proficiency. The need for a sharper focus was a key factor which led to the decision to sell sack operations, the Dynäs and Sepap sack paper mills, and Barrier Coating to Frantschach. The deal enabled us to transfer SEK 4.4 billion of the purchase sum to our shareholders through the redemption of more than 23 million shares. Similarly, we implemented an industrially and structurally appropriate solution for the pulp and paper mills in Skärblacka and Karlsborg. Together with Stora Enso's Gruvön unit, they form the new company Billerud AB, of which AssiDomän and Stora Enso own each fifty per cent. The intention is that Billerud AB will be listed on Stockholmsbörsen this year. Through the agreement with Kappa Holding, we can now also create an appropriate, stronger ownership structure for our Corrugated and Containerboard operations. In industrial terms, the sale to Kappa is logical and favourable for all the parties involved. The deal has been completed and we are in a position to transfer even greater value to our shareholders - SEK 12 billion to be precise, equivalent to SEK 126 per share. " Uniquely focused and listed forest ownership Gunnar Palme pointed out that AssiDomän has entered a new phase as a forestry company concentrating on forest ownership and utilisation. "We are continuing our work on finding stronger structures for the Group's remaining industrial operations. Here, I have in mind the Cartonboard business unit and the board mill in Frövi, our sawmill operations and our fifty per cent holding in Billerud. But we should not arrive at the intended solutions too quickly. As we have previously stated, we do not want to risk losing value on the way. AssiDomän's new, long-term prime focus - and the core of our operations - will from now on be the ownership, management and utilisation of our extensive forest assets. We will be the biggest listed forest owner in Europe with assets of 2.4 million hectares of productive timberland, and number two globally. Sharply-focused, listed forest ownership means that we occupy a unique position in Europe. Swedish timberland grows relatively slowly, but annual growth means that it is constantly renewed without any actual costs. We currently harvest approximately 70 per cent of growth, and although growth is relatively slow at our latitude, there's scope to increase the timber harvest in the future. We can increase the net volume of timber from our forests by 20 per cent over the next 20 years, while maintaining the level of felling. We have captured our vision of a sharply-focused forest company in the concept smart forestry, which imparts our intention of being the foremost player in creating value from forest assets. This means that we aim to be the most prominent - and the best - supplier of high-quality sawn timber and pulpwood, based on certified forestry which is sustainable in the long term, high-quality raw material and flexibility in the supply chain. From having principally supplied our own industries, we will now - to a greater extent than previously - be a commercially active market player, where our extensive forest assets provide the basis for our operations. We anticipate that AssiDomän's know-how in forestry and commercial areas, along with the collective experience of our workforce, will consolidate our role as a long-term supplier of raw material for the industry. At the same time, there is potential for new, exciting business opportunities. An important element in our strategy is an active forest holding. We will continue to buy and sell timberland. There is considerable scope for land deals, particularly in the south of Sweden. Prices are higher in this region, where we own areas corresponding to 65 per cent of the total tax assessment value of our timberland. I also see interesting opportunities for the utilisation and development of the potential which exists in the form of hunting, fishing and other special kinds of land concessions. From a historical perspective, forest ownership has involved a low-risk investment and a good return. Forest has generated stable cash flows with high and stable margins. The strategy of a sharply-focused forestry company therefore includes safeguarding our ability to secure cash flows, and, as I have pointed out, we will adapt the capital structure to a degree of indebtedness appropriate for the company and its operations. Growing forest produces carbon dioxide through photosynthesis. Each year, roughly 30 per cent of growth remains in AssiDomän's timberland. This means that the timber stock, and thereby the amount of combined carbon dioxide, increases. Sweden, and AssiDomän, should promote, at the international level, an approach whereby areas of growing forest are given greater economic value and are accepted as carbon sinks. Discussions are also in progress in the UN which in the long term can result in trade in emission rights. Prospects are therefore favourable for the new AssiDomän. As a forestry company focusing sharply on forest ownership, we have the capacity to generate a strong, stable cash flow. Fluctuations in earnings are therefore lower than those found in the industry, and this gives scope for a high dividend payout ratio vis-à-vis earnings. Investing in AssiDomän therefore involves low risk, and a favourable, even rate of return - aspects which both large and small investors should find attractive." AssiDomän AB Corporate Communications 22 May 2001 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/22/20010522BIT00480/bit0002.doc http://www.bit.se/bitonline/2001/05/22/20010522BIT00480/bit0002.pdf