Preliminary Report On the Operations of AB Custos During 1999.

Business Editors/High Tech Writers

STOCKHOLM--(BUSINESS WIRE)--Jan. 11, 2000

The total return on Custos' shares during 1999 was 52.9

percent for Series A shares and 51.2 percent for Series B shares.

A dividend of SEK 11.50 (11.50) per share is proposed.

Custos' investments during 1999 amounted to SEK 3.3 billion, equivalent to 64 percent of the market value of its securities portfolio at the beginning of the year. This has included investments in the information technology company Acando, the auto distributor Bilia, the British third-party logistics company Christian Salvesen Plc, the Norwegian office materials company C. Tybring-Gjedde ASA, Custos (synthetic buy-backs), the investment company Industrivarden, the biotechnology company Perbio Science and the chemicals group Perstorp.

Custos carried out divestments totaling SEK 2.4 billion during 1999, including the sale of its entire holding in the transport and logistics company ASG.

In 1999 a total of SEK 2.7 billion was disbursed to Custos' shareholders in the form of dividends, share redemptions and synthetic buy-backs.

CEO's comments

In 1999 the Stockholm Stock Exchange had its best year ever gaining 70 percent, mainly due to an almost incredible rally in information technology (IT) and telecom shares toward the end of the year. During November-December, the General Index climbed from 3,800 to 5,400, a gain of more than 40 percent. We are pleased with the stable price increase in Custos shares during the year, with return figures exceeding 50 percent for both Series A and Series B shares. With these return figures, Custos exceeded the median return on the Exchange's A and O lists by about 15 percentage points.

The year was characterized by a high level of activity. The biggest event on the divestment side was the sale of Custos' entire shareholding in ASG to Deutsche Post/Danzas, a transaction totaling SEK 1.2 billion. The total return on Custos' holding in ASG thus amounted to 123 percent calculated from Custos' initial investment in ASG in 1997 through April 1999. During the year, Custos added the shares of several companies to its portfolio, mostly in the service and knowledge sectors. These included the British third-party logistic company Christian Salvesen, the biotechnology company Perbio Science and the Internet consulting company Acando. The point of departure for these investments is the same as for all of Custos' investments - low initial valuations and thereby controlled risk.

In light of the continued large discount to net asset value of Custos' shares, we implemented sizeable cash transfers to our shareholders. The sum of SEK 2.7 billion was transferred to our shareholders in the form of redemption proceeds, dividends and synthetic buy-backs.

Custos is entering 2000 with a company portfolio that, in our judgment, has good potential for attractive sales and earnings growth. Most of our portfolio companies are benefiting from the general economic situation. In addition, we expect the restructuring measures that are underway to have a positive impact on these companies in the future. Custos' shareholders will also be able to profit from further buy-backs of Custos shares as long as the large discount level remains. We are in a good starting position.

Total return

Total return on Custos shares - taking into account share price appreciation, dividend paid and redemption of shares - was 52.9 percent for Series A shares and 51.2 percent for Series B shares. The return was thus about 18 percent lower than the gain in the Findata Yield Index, which was 69.8 percent. The return on Custos shares was higher than the cost of shareholders' equity, which amounted to 7.6 percent during the year. The cost of shareholders' equity is Custos' primary measure of financial return. Total return on Custos shares up to January 24, 2000 was 4.1 percent for Series A shares and 5.4 percent for Series B shares, compared to 4.0 percent for the Findata Yield Index.

Return in 1999, percent
                             Custos     Custos
                            Series A   Series B

Total return                  52.9       51.2
Consists of the
following components:
Change in net asset value     40.2       40.2
Change in discount to
 net asset value              -7.9       -9.1
Redemption (reinvested)       10.7       10.8
Dividend (reinvested)          7.1        7.1

Cost of shareholders'
 equity 1)                     7.6
Findata Yield Index           69.8

1) Measured as the average 12-month Swedish treasury bill rate
plus a risk premium of 4 percent.

The total return of some of Custos' holdings is shown below.

Return, 1999

Portfolio holding    %

Tybring-Gjedde 1)   66.7
Industrivarden 2)   59.8
Salvesen 3)         57.3
SCA                 56.3
Aspo                47.0
Bilia  4)           40.0
Svedala             37.4
Perstorp            36.3
Perbio Science 5)    8.4

1) Beginning on the initial acquisition date in mid-July.
2) Beginning on the initial acquisition date in late February.
3) Beginning on the initial acquisition date in early March.
4) Beginning on the initial acquisition date in early March.
5) Beginning on the initial acquisition date in mid-October.

Net asset value

Total net asset value on December 31, 1999 was MSEK 8,568 (Dec. 31, 1998: 7,617), equivalent to SEK 269 (Dec. 31, 1998: 192) per share. Comparisons with total net asset value for the preceding year must take into account that during 1999 the sum of MSEK 2,106 was disbursed to Custos' shareholders in the form of dividends and redemption proceeds.

Net asset value on January 24, 2000 was estimated at a total of MSEK 8,739, or SEK 274 per share. Net asset value is calculated on the basis of Custos' current 31,845,613 shares outstanding, with the Custos shares included in the synthetic buy-backs valued at market value. Otherwise, in calculating net asset value, the same principles have been used as presented in the 1998 Annual Report.

On December 31, 1999, Custos' discount to net asset value was 23 percent for Series A shares and 24 percent for Series B shares. This was higher than at year-end 1998, when the discount was 17 percent for both classes of shares.

During 1999, Custos entered into swap agreements (related to synthetic buy-backs of its own shares) equivalent to 1,992,496 Series A shares and 1,280,080 Series B shares, for a total of 3,272,576 Custos shares. If these shares were considered redeemed as of December 31, 1999, total net asset value would amount to MSEK 7,896, equivalent to SEK 276 per share. The discount to net asset value would be 25 percent for Series A shares and 26 percent for Series B shares. The equivalent net asset value on January 24, 2000 was estimated at a total of MSEK 7,906 or SEK 283 per share (see &uot;Synthetic buy-backs of Custos' own shares&uot; on page 10).

As of January 24, 2000, the total underlying value of Custos' synthetic buy-backs amounted to MSEK 741. If the synthetic share buy-backs were redeemed, Custos would generate a gain of MSEK 320 or a return of 43 percent. The average &uot;acquisition date&uot; in value terms is October 26, 1999.

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