Strategy 2000 PRESENTATION

1. Strategy 2000PRESENTATION July 21, 2000

2. Summary • In view of the past year’s events, FLS has now decided to take specific action to improve performance • The new strategy seeks to- Aggressively grow FFE and APH - Turn around FLS Aerospace and FLS miljø • To achieve its objectives, FLS will pursue individual key company agendas, strengthen the corporate portfolio, and implement a new operating model and stronger performance culture • The strategy aims at ROS and ROCE on a par with peer group companies.

3. FLS Industries is ready to take tough action in view of recent events • Management transition • Board fully committed to change • FLS is now ready for change! • Exclusion from the KFX index • Successful divestitures • Unsatisfactory performance of several key companies • Strong market positions in key businesses

4. A new aspiration has been defined • FLS Industries will become a high-performing industrial owner achieving financial returns at least on a par with peer group companies

5. Significantly improve financial performance • Return on capital employed • Per cent • Return on sales • Per cent • 8–9 • 14–17 • FLS should achieve ROS and ROCE approaching peers within the next 5 years • 3–4 • 4–8 • FLS today • Peer group today • FLS today • Peer group today

6. An ambitious action plan has been defined • 1. • Aggressively develop the key companies • 2. • Strengthen the corporate portfolio • 3. • Implement a new operating model to strengthen the performance culture

7. Aggressively develop the key companies • FFE • Establish an integrated global cement engineering organisation, and pursue aggressive after-market growth in cement and metallic minerals • FLS miljø • Exit weak product and market positions, achieve aggressive cost reductions and participate in the ongoing industry consolidation • APH • Strengthen regional strongholds in grey cement, concrete and fibre-cement, and pursue growth in selected niche products worldwide • FLS Aerospace • Pursue an aggressive turnaround

8. FFE will establish an integrated global cement engineering organisation and pursue aggressive after-market growth in Cement and Metallic Minerals • Establish an integrated global cement engineering organisation and achieve annual savings of DKK 100 million • Aggressively grow the cement and metallic minerals after-market businesses through organic growth initiatives and acquisitions • Reinforce the position in cement plant engineering • Pursue product line expansion and further industry consolidation • Develop strong turn-key contract and civil engineering capabilities • Improve technical R&D capabilities • Grow metallic minerals through downstream acquisition of service-intensive products • Further improve operational performance, for example through procurement initiatives • Transfer businesses outside cement and metallic minerals to a separate organisational unit • Restructuring costs estimated at DKK 100 million

9. Pursue large and profitable growth opportunities in the after-market – Cement • FFE market share • Total = • ~ 4,5 • 100-120* • DKK billions • Key after-market elements • Spare parts • Service contracts • Operations contracts • 50% • 5% • Cement • main • equipment • Total market, including • after-market • * Conservative estimate

10. A number of actions have been defined to capture after-market potential • Proactive Sales and Marketing approach • Standardised Parts & Services programmes • Sales and marketing • Guaranteed parts supply through strategic alliances with suppliers • Improved parts availability through targeted inventory • Supply chain • Parts & Services business unit with selected centralised functions to improve coordination • Improved IT support • Increased recruitment and training • New capabilities through pilot projects (e.g. Chilean maintenance pilot project for Minerals) • Organisation • Local service companies acquired • M&A

11. FLS miljø will restructure weak positions, achieve aggressive cost reductions and participate in the ongoing industry consolidation • Finalise reorganisation into business areas • Restructure weak product and market positions • Focus on current strongholds • High-end fossil fuel boiler and auxiliary technology • Turnkey FGD plants • Industrial APC for the cement industry • Turnkey biomass plants • Operations and maintenance contracts for biomass plants • Implement aggressive cost improvement initiatives to achieve savings of DKK 150 million over two years (sufficient to match the expected price decline) • Design-to-cost/Procurement (Project standardisation) • Core process redesign • Continued outsourcing • Exploit synergies between Group companies • Actively participate in the ongoing industry consolidation • Restructuring costs estimated at DKK 65 million

12. APH will strengthen regional strongholds in grey cement and concrete, and pursue growth in selected niche products worldwide • Expand global leadership in white cement • Defend strong Danish position in grey cement and support concrete operations abroad • Strengthen regional positions in concrete through acquisitions • Continue European expansion in fibre cement • Aggressively grow high-strength specialty mortar worldwide

13. Grey • Strong no. 1 position in Denmark White • Above average market growth • Global no. 1 position Concrete • No. 1 position in Scandinavia • Among top three in other key regions Fibre cement • Broaden position as no. 3 in Europe Specialty mortar • No. 1 in niche-markets APH will reinforce and grow its strong market positions

14. FLS Aerospace will pursue an aggressive turnaround • What has been done? • What will be done? • CEO with turnaround and aerospace experience in place • Turnaround plan under implementation • New organisation under implementation • Bottom-line focus established throughout the organisation –“earning the right to grow” • Right-sizing staff to 3,600 (reduction by ~250) • Back in black Q4 • Restructuring costs in 2000 estimated at DKK 200 million • Ambitious business process re-engineering will continue after 2000 • Capacity utilisation improved through increased sales to both current and new customers

15. FLS Industries will strengthen the corporate portfolio • Continuously reevaluate the corporate portfolio, and focus resources on growth businesses where FLS can achieve dominant positions • Pursue aggressive acquisitions to strengthen FLS’ position in attractive businesses • Manage non-core businesses separately to facilitate development and/or exits • Continuously evaluate further actions to improve the corporate structure

16. FLS Industries will implement a new operating model to strengthen the performance culture The new operating model build on seven key principles 1. Checks and balances Separation between transaction, registration and control functions 2. Transparency In terms of financials, risks and strategic target achievements 3. “Frihed under ansvar” Well defined structure of authorities ( investments, guarantees, contractual commitments, etc.) 4. Consequence Not fulfilling targets will have consequences Management 5. Performance focus Pay is linked to measurable performance targets 6. Stock market focus Within the frame of the current ownership, conform with market requirements ( accounting standards, information, etc.) 7. Group mindset Exploit scale advantages meaningfully (financing, risk management, M&A, procurement, etc.)

17. FLS Industries will implement a new operating model to strengthen the performance culture These principles have been translated into a revised group model * Clarify division of roles between management bodies • Board • Corporate management • Key company management • FLS to be managed as one group • performance culture with active target setting • consequence management • adopting a FLS way of doing things (best practice) • value at risk focus • Improve operational procedures and routines (information transparency) • Profitability to be achieved through • harvesting synergies through corporate restructuring • achieving economies of scale through coordination and corporation between group companies • Strengthen human resource processes • FLS Academy • Rotate people across key companies

18. FFE • World leader of cement plant engineering • Regional organisation • World leader in engineering and after- market solutions for the cement and selected minerals industries • An integrated global organisation for cement and minerals, respectively FLS miljø • Broad presence in multiple customer and product segments • Emphasis on continued sales growth • Focused industry player • Emphasis on improved bottom-line performance APH • Strong positions in grey (local), concrete (regional), fibre cement (regional) and white cement (global) • Strong growth in global niche markets (e.g. white cement) • Reinforced positions in grey, concrete and fibre cement FLS Aerospace • Fragmented organisation with poor profitability • One profitable company Corporate • Unfocused conglomerate with poor financial performance and value creation • High performing industrial owner achieving financial returns on a par with peer group companies What is different? • Today • In the future