Year end release 1999 for Bong Ljungdahl AB

2/23/2000 9:00 AM EST

YEAR END RELEASE 1999 FOR BONG LJUNGDAHL AB

* NET TURNOVER INCREASED BY 12% TO SKR 1.223 MILLION (1.095)

* PROFIT AFTER NET FINANCIAL ITEMS INCREASED BY MORE THAN 80 % TO SKR 75
MILLION (41)

* EARNING PER SHARE AFTER TAX: SKR 7.83 (4.32)

* EUROPE'S LARGEST ENVELOPE COMPANY FORMED BY ACQUISITION OF BAUWENS-
GROUP. SUBSTANTIAL SYNERGIES EXPECTED, AND STRONG PLATFORM FOR FURTHER
EXPANSION ESTABLISHED

* BOARD PROPOSES DIVIDEND INCREASE TO SKR 2.60 PER SHARE (2.10)

MARKETS
Demand on the Group's main markets in the Nordic region remained
relatively stable in 1999 as a whole. The slacker period on the Swedish
market in the third quarter was followed by renewed growth towards the end
of the year. The activities of international competitors, mainly in
Denmark and Norway, have intensified the competitive situation somewhat.
In Belgium and adjacent markets, the main features were a healthy volume
trend in combination with relatively stiff price competition.

Earlier assessments of sustainable volume growth on the European envelope
market of some 2-3 % per year, remain unchanged. This growth is mainly
generated by a continued strong increase in direct mail-related product
segments, reflected in a tendency towards more highly processed products.

SALES AND RESULT
The Group's net turnover increased by 12 % to SKr 1,223 million (1,095),
and is largely due to the acquisition of the Finnish business in October,
1998.

The operating profit improved by SKr 36 million to SKr 92 million (56).

The operating margin was 7.5 % (5.1). The full effect of already completed
structural measures within the Scandinavian envelope business, the
acquisition of the Finnish business and some impact from further
rationalisation within the Swedish envelope units, are the main factors
behind the improved profit. In the Binder division in Sweden, intensifying
pressure on prices, in combination with too low a level of capacity
utilisation, has resulted in a severely weakened situation, particularly
towards the end of the financial year.

A decision was made in September 1999 to relocate binder production from
Kristianstad to the Group's unit in Danzig, Poland. This measure, which is
being taken to adapt the Group's binder activities to the prevailing
competitive climate and market conditions, will lead to a reduction of
some fifty in the work force at the Kristianstad unit. A decision has also
been made to concentrate the printed envelope activities within Envelope
Sweden at Kristianstad, which will lead to a reduction of thirty in the
numbers employed at the unit in Nybro. The changes are expected to be
fully implemented by the end of June 2000, and they will further improve
the efficiency of the business, mainly as a result of a total reduction of
around fifty in the work force. The SKr 12 million cost of implementing
these changes has been taken direct against the result. Capital gains of a
corresponding amount have been generated by the sale of retired equipment.

The fourth quarter operating profit amounted to SKr 24 million (24). The
Envelope division continued its positive development and increased
operating profit by SKr 3 million in the fourth quarter. A weaker order
intake and intensifying pressure on prices in the Binder division caused a
deterioration of SKr 3 million, in relation to the corresponding quarter
in the previous year.

Net financial costs for the whole year amounted to SKr 17 million (cost
15). As a result of acquisitions interest costs increased by just under
SKr 3 million. The profit after net financial items amounted to SKr 75
million, which may be compared with SKr 41 million (excluding capital
gains of SKr 7 million) in the previous year.

Envelopes Sweden
The Swedish envelope business made further very good progress. A stronger
market position and a significantly improved operating margin as a result
of completed and ongoing rationalisation projects have generated a
substantial increase in profits. A wide-ranging investment programme at
Nybro, the Group's unit for special products, has now been completed; this
involved the extensive upgrading of the technical level and capacity.

Envelopes Sweden's turnover amounted to SKr 517 million (496).

Envelopes Denmark
A more visible presence by foreign companies has resulted in some
intensification of the competitive conditions on the Danish market.

Further successful ventures within the envelope printing business have,
however, more than offset the slightly lower volume of deliveries. The
result for the year as a whole is far better than in the previous year.
Turnover amounted to DKr 151 million (163).

Envelopes Norway
The effects of the acquisition of PDC printing company, in combination
with some cost adjustments, have strengthened the Group's position. The
result is markedly better that last year's, despite the slightly weaker
market situation in the second half-year. Turnover amounted to NKr 165
million (176).

Envelopes Finland
The far-reaching structuring programme initiated in connection with the
acquisition of the Finnish business in the autumn in 1998 with the object
of integrating this unit into Bong's structural model was completed
according to plan by the end of 1999. The cost of integration, which
involved a reduction in the work force from 226 (October 1998) to 165 at
the end of 1999, amounted to SKr 10 million, which is well in line with
the estimate and the provisions made at the time of acquisition. Turnover
amounted to FMk 121 million.

Envelopes Belgium
The Belgian envelope business has experienced healthy volume growth.
Capital expenditure has gradually created a more effective business
structure and enabled the unit to strengthen its position. Although result
moved in the right direction it has not yet reached a satisfactory level.

Turnover increased to BFr 734 million (683).

Envelopes Poland
The Group's Polish business is making further relatively good progress.
The re-location to new, more suitable premises has now been completed,
which is an important pre-condition for further expansion on the Polish
market. The result is now positive and improving. Turnover increased in
pace with market growth to Zlotys 14 million (12).

Binders
A weaker order intake within the Swedish binder business resulted in
serious under-utilisation of available capacity. This situation, combined
with intensifying pressure on prices, had a relatively serious adverse
effect on the result, especially during the fourth quarter. The decision
to re-locate the Swedish production activities to the Group's facility in
Danzig will lead to a significant reduction in costs and thus close
alignment to prevailing market conditions. The Binder division's turnover
amounted to SKr 70 million (65).

ACQUISITION OF BAUWENS-GROUP
th
An agreement was reached on January 17 2000 for an aquisition of Wolf
Bauwens/R Schmidt Group (Bauwens). The new Group will be the largest
envelope manufacturer in Europe with a turnover of some SKr 2.5 billion
and 1,800 employees. The aggregate production volume amounts to some 15
billion envelopes, which corresponds to 15 % of the European market. The
acquisition will create a structurally strong and internationally well
positioned group. A position of unchallenged market leadership in northern
Europe provides the Group with useful opportunities for further
development and expansion in a changing European envelope industry. The
companies complement each other very well in both geographical and product
terms. The acquisition is expected to generate synergies in the region of
SKr 40-60 million in purchasing, production co-ordination and investment.
The synergies are expected to show through gradually from the second half
of 2000 and to have their full effect towards the end of 2001.

The purchase price, excluding transaction and integration costs, amounts
to some SKr 500 million. As one element in the financing of the
acquisition, an Extraordinary General Meeting of Bong Ljungdahl AB, held
on February 8 th 2000, resolved in favour of issuing 1,634,651 shares to
Michael Wolf-Bauwens, the owner of Bauwens. This issue corresponds to 19.0
% of capital and votes in Bong after the acquisition. The new shares are
entitled to dividend as of the 1999 financial year. The transaction is
expected to be finalised by the end of February 2000. Bauwens will be
consolidated with effect from January 1 st, 2000.

ACQUISITION OF PDC KONVOLUTTER
In the third quarter Bongs acquired PDC Konvolutter. This transaction is
one stage in the Group's policy of integrating forwards along the value
chain. Together with existing capacity, it will put the Group in a
position of market leadership on the growing market for printed envelopes
in Norway. PDC Konvolutter, which has a turnover of SKr 37 million and 25
employees, has been consolidated as of September 1 st, 1999.

LIQUID FUNDS AND FINANCING
Closing liquid funds amounted to SKr 30 million (36) and net debt to SKr
316 million (317). The equity ratio was 40 % (38) and the debt equity
ratio 0.73 (0.78).

CAPITAL EXPENDITURE
An extensive investment programme, concentrating on the modernisation and
technical upgrading of the machinery at the envelope units, was completed
at the end of 1999 as planned. Excluding acquisitions, capital expenditure
amounted to SKr 188 million (77). As a result of completed and current
structural changes, retired equipment was sold for SKr 28 million.
Investments in the existing structure during the coming few years are
expected to be at significantly lower levels.

EMPLOYEES
The average number of employees was 1,132 (1,078). The increase is
attributable to the acquisition of the Finnish business in 1998 and of PDC
in 1999. The number of employees in the Group has declined by 115 since
the end of 1998.

PARENT COMPANY
The parent company's business now consists of administering the operating
subsidiary companies and Group management functions. Profit after net
financial items amounted to SKr 33 million (22).

SURPLUS FUNDS FROM SPP
Some SKr 13 million of the excess insurance funds held by SPP have been
allocated to companies within the Bong Ljungdahl Group. As the date when
and the conditions on which these funds will be made available has not yet
been decided, their effect has therefore not been taken into the
consolidated accounts.

YEAR 2000
The Bong Ljungdahl Group has not experienced any disturbances in
connection with the transition to the new millennium.

DIVIDEND
The Board has decided to recommend to the Annual General Meeting that a
dividend of SKr 2:60 per share (2.10) be paid for 1999. The new shares
issued in connection with the acquisition of Bauwens are entitled to
dividend as of the 1999 financial year.

OUTLOOK
Conditions are considered to be favourable for continued improvement
within the existing Group structure. This assessment is based on the
assumption that conditions will remain reasonably stable on the Group's
main markets and that the Group can take full advantage of the effects of
the structural measures and rationalisation projects that were initiated
in 1999.

ANNUAL GENERAL MEETING
The Annual General Meeting will be held at the Yllan Trade Fair Centre,

Kristianstad, at 5 p.m. on May 8 th 2000.

Kristianstad, February 23 rd 2000.

BONG LJUNGDAHL AB (publ)

Board

For further information please contact:
Lennart Pihl, Managing Director and Group Chief Executive of Bong
Telephone: +46 44 20 70 50 or mobile +46 70 594 68 66