annual report 2003 Contents

CEO report ...... 4-7 Business concept, vision

and objectives ...... 7

Organisation ...... 8-9 KEY FIGURES 2003 2002 2001 Board of Directors’ report . 10-17 Operating revenues (MNOK) 15 559 15 106 15 008 EBIT (MNOK) 512 - 33 843 Key figures for the group ...... 18 Government procurements (MNOK) 305 372 540 Income statement ...... 19 Value creation (MNOK) 5 500 6 300 4 800* Balance sheet ...... 20 Revenues from licensed area 26,7 % 31,6 % 33,3 % Cash flow statement ...... 21

Revenues from international activities (MNOK) 1 350 1 096 724 Communications ...... 24-25

Total parcel volume (million items) 25 24,7 24,5 Logistics ...... 26-27 Total letter volume (million items) 2 652 2 546 2 504 Consumer ...... 28-29 Development A and B mail - 0,7 % - 4,0 % - 9,1 % ErgoGroup ...... 30-31 Delivery quality A priority mail (delivered overnight) 87,7 % 86,7 % 86,3 % Distribution Network ...... 32-33 Machine-sorted, small letters 79 % 75 % 71 % Market overview ...... 34-37 Machine-sorted, all letters 54 % 48 % 38 % Community ...... 38-39

y figures Employees (full-time equivalents) 21 640 23 509 24 506 Employee satisfaction (points, max 100) 80 79 75 Corporate governance . . . . . 40-41 Number of sales outlets (post offices/Post in Shop) 1 503 1 474 1 373 Environment ...... 42-43 Norway Post reputation, share «Good impression» (MMI) 46 % 43 % 48 % Notes to the ke * 2000 financial statements ...... 46-64

Auditor’s report ...... 65

Highlights ...... 66-67

3 CEO report

«Long-term planning and Change and development flexibility are prerequisites for our success» Technological development, political frame- work and competition affect Norway Post and our strategies, and we have to develop continually in order to meet these challenges.

Norway Post is one of Norway’s oldest business parable postal services all over the country, enterprises, established in 1647. Now as then, with the greatest possible degree of competiti- our activity is based on our customers’ and on. At times this is a demanding combination society’s trust in us. Norway Post is the compa- for Norway Post. The company’s aim is to exce- ny most frequently commented on by people in ed licence requirements, while at the same time this country. Everybody has an opinion about point out that regulations must not be so the job we do and should do. restrictive and bureaucratic that they prevent People’s impression of Norway Post is based us from competing on the same terms as our on tradition, the experiences of the individual, competitors. and to what extent the company manages to Changes in the competitive situation are fulfil customer expectations and the expectati- most obvious in the distribution of advertising ons of a rapidly changing society. material, newspapers/magazines and logistics. Therefore, long-term planning combined Within distribution of unaddressed adverti- with flexibility are prerequisites for our success. sing, newspapers are our most important com- petitor. Together we have about 80 per cent of Physical and electronic services this market. Developments in information technology, Newspapers have chosen not to respect con- especially the popularity and possible applicati- sumer reservations against receiving adverti- ons of the Internet have brought about large sing, regarding advertising in newspapers as technological changes. The result is that email being part of the editorial product. Norway is taking over from physical letters. However, Post, however, has decided to respect consu- this development also brings new opportuniti- mers who do not want to receive advertising. es to Norway Post in providing solutions for We believe that in the long run, this will be the electronic invoicing, electronic message com- most successful approach for advertisers. In munication and electronic processing of mar- 2003 newspapers also declared that they want ket databases for their customers. In addition to compete with Norway Post for distribution information technology enables us to provide of other products, for example weekly papers our logistics customers with electronically and magazines. We welcome this competition. based supplementary services. These are inte- In our opinion, competition is healthy. A clea- grated with our physical services in the form of rer picture of the competitive situation will EDI solutions, inventory surveys, electronic contribute to reducing the misconception that tracking of products, etc. Norway Post has a monopoly on such services. Norway Post’s strategy is to offer electronic services, either as a supplement to or as a repla- International market cement for physical services, as required by our Internationally, the competition in the logistics customers. Only in this way can we be the total market has developed along two axes: First, by supplier we aim to be. a merger of what was previously parcels with Politically, former monopolistic, national bulk and general cargo. The customers want postal services are becoming increasingly libe- one provider, regardless of the size and shape ralised and competitive. Liberalisation is taking of parcels and goods. place across Europe, and Norway Post's mono- Second, competition within logistics is beco- poly currently is limited to closed, addressed ming increasingly internationalised. In Norway, letters weighing up to 100 grams. About 73 per large foreign companies are well established in cent of our revenues come from the competiti- the market. DHL (the German postal opera- ve part of the market, with only 27 per cent tor), TNT (the Dutch postal operator), being protected by licensing. Linjegods (owned by German Schenker Liberalisation of the postal market will cont- BTL/Deutsche Bahn) og TollpostGlobe (50 per inue in the years ahead. From 1 January 2006, cent owned by Sweden Post) are all examples of Norway Post’s licensed area will be reduced these. from 100 to 50 grams, with full liberalisation Norway Post’s acquisition of Nor-Cargo in soon afterwards, probably by 2007 or 2008. March 2004 is both a defensive and aggressive Parallel with this liberalisation, Norwegian aut- move to meet the competition in the logistics horities use Norway Post’s licence and a strict market. The acquisition of Nor-Cargo regulatory regime as a means of ensuring com- means that Norway Post can offer its 5 CEO report

Norway Post’s vision Our vision is that Norway Post will become: The world’s most future-oriented postal company. This vision expresses Norway Post’s long-term ambition, stating how we want our company to be perceived. The vision is intended to create a common understanding of Norway Post’s choice of direction, and serve as an ideal for all of us working in the company to strive for. The world’s underscores our goal of being the world-leader in our industry. No other postal company should perform better in its market than Norway Post does in Norway. We will seek inspiration from the best performers in our sector. Most means that we will be the best. We will win the profitable competitions most ofen. Future-oriented means that we will be in the forefront of development. We will offer solutions adapted to current and future requirements and focus on the customer’s needs. We operate in a dynamic industry with rapidly developing markets. Our vision acknowledges the fact that changes and development will be continous. Postal company is not a static concept. It is up to us to decide what to include in the "post" concept in the future, based on our history and our trusted position in the market. Business concept Norway Post develops and delivers complete, value-adding com- «Norway Post’s acquisition of munications and logistics solutions to domestic and international customers through physical and electronic networks. Nor-Cargo is both a defensive and Norway post will develop complete, value-adding communications and logistics solutions. This means that we will not only transport aggressive move to meet the items from A to B, but offer complete services based on the customer’s needs. We will develop solutions for delivery through physical and electro- competition in the logistics market» nic networks. This means that we will continue to offer physical transport services while at the same time providing electronic products such as payment services, secure ID and secure email through our own production and through alliance partners. We serve both personal and business customers. Our main focus is logistics customers complete services Norway Post’s investment in IT-based deve- cent of all Norwegian households six days a still customers in Norway, but our network covers the entire world. regardless of the size and shape of the lopment and infrastructure services through week, represent our interface with the country's goods, at the same time as significantly impro- ErgoGroup is the part of our core activity that people and business enterprises. A strong dis- Overall objectives ving the company’s competitive edge vis-à-vis enables us to offer our customers integrated tributive muscle will be decisive in the con- Based on our business consept, vision, values and future challeng- the major international players. Two of the lar- services. Administrative support services (sala- stantly increasing competitive situation. es, we have defined the following overall objectives for Norway gest international logistics companies currently ries and accounting), on the other hand, are no Therefore, we will continue to develop our Post’s activity: established in the Norwegian market are longer a natural part of our core areas. The competitive edge of being able to meet our cus- owned by two of Europe’s (and the world’s) conclusion of our evaluations was that we can tomers every day through the country’s most • Satisfied customers leading postal operators. Both have clearly no longer add value to these business areas. comprehensive sales and distribution network. Will be measured by the development in customer satisfaction, expressed their interest in competing for part Therefore, ErgoBluegarden was sold at the end 2003 was Norway Post’s first full business indicating the customer’s overall impression of Norway Post. of the Norwegian letter market once full libera- of 2003, and sale of Adviso accountancy firm year as a limited company. Both in terms of • A strong market position lisation is a fact. Their focus on logistics is only has been initiated. market and financial conditions, the year exce- Will be measured by the development in market shares in existing and new areas. We will be the leading operator in Norway and in the beginning. In addition to the strategy of including IT as eded our expectations. An improvement in net income of NOK 562 million and a return on niche markets in the Nordic countries. We will form alliances with part of our core activity, it is a clear aim that a other players abroad. Integrated services larger share of ErgoGroup’s revenues should capital employed of 11.2 per cent indicate that • Attractive workplaces Norway Post operates in four market segments, come from sales to customers outside the we are on our way towards satisfactory profita- Will be measured by the development in workplace attractiveness, of which the communications segment is the Norway Post group. This would provide anot- bility and competitiveness. in which employee satisfaction is a central factor. largest, accounting for 57 per cent of the com- her sound financial foothold for Norway Post. Norway Post is 357 years old. We have a long • Competitive value creation pany's revenues in 2003. Logistics services con- The restructuring of Norway Post’s past, but are not stagnating. Our development Will be measured by the development in Norway Post’s overall value. tributed 24 per cent, information technology Consumer division from over 900 company- is immense, and we are looking forward to the We will create higher value for Norway Post’s owners than they (ErgoGroup) 11 per cent and the consumer operated post offices to a combination of 328 years ahead. would have achieved in alternative investments. segment (post office, Post in Shop) 7 per cent. post offices and 1 175 Post in Shops has now The acquisition of Nor-Cargo will give a more been completed. The first Post in Shop was even distribution of revenues between the opened in March 2001, not without scepticism Values Norway Post’s reputation will be supported and based on its communications and logistics segments, cor- from customers and politicians. Today we are fundamental values. These will form the basis for company culture responding to 47 per cent and 37 per cent, happy to see that this scepticism has disappea- and serve as a guideline in all decisions. respectively, of total revenues. In this way fluc- red. Customer surveys show that Post in Shop Kaare Frydenberg Norway Post’s four fundamental values are: tuations within one of the two major market has become our most popular sales channel. Chief Executive Officer honesty, respect, innovation and interaction. segments will have a lesser impact on the com- Norway Post’s over 1 500 sales outlets and pany. 15 000 postmen and -women visiting 99.96 per 6 Organisation

NORWAY POST GROUP MANAGEMENT

KAARE FRYDENBERG (53) Chief Executive Officer from April, 2000 Former positions: Senior Vice President Pripps Ringnes AB Stockholm, Managing Director Aftenposten AS and Dagens Næringsliv Education: Master of Science and Business Offices: Chairman of the Board of Ergo- Group AS, director, PNL AS and NAVO

KLAUS-ANDERS NYSTEEN (38) Senior Vice President, CFO, Corporate Staffs from January, 2001 Former positions: Finance Manager Hydro Seafood, Controller Hydro Seafood Norway, various positions in the Norwegian navy Education: MBA, Norwegian School of Business Administration (NHH), Naval College Offices: ErgoGroup AS and Box Group AS

ELISABETH HEGG GJØLME (43) Senior Vice President, Corporate Information from April, 2000 Former positions: Vice President Information Telenor Mobil, Information Manager Telenor, Marketing and Information Manager Oslobanken AS, Secretary General, Young Conservatives Education: Norwegian School of Management (BI) Offices: NAVO

LARS HARALD TENDAL (37) Senior Vice President Communications from January, 2001 Former positions: Sales/Marketing Manager ICA Norge, Sales Manager Sætre AS, Sales Manager Chains Sætre AS. Education: Master of Business and Marketing, Norwegian School of Management (BI) Offices: City Mail Sweden, ErgoIDP Danmark

ARNE BJØRNDAHL (51) Senior Vice President Logistics from January, 2002 Former positions: Deputy Managing Director, Logistics Manager and Finance Manager of Ringnes, Managing Director of Emo AS Education: Bachelor of Business Administration, Norwegian School of Management (BI) Offices: Wajens AS, Oslo Container Stevedor AS, Box Group AS, Nettlast AS, Nettlast Hadeland AS and Nor- Cargo ASA

KAARE ØSTGAARD (39) Acting Managing Director of Norway Post’s group management comprises Kaare Frydenberg, CEO (front), Lars Tendal, Sr. Vice President Communications (left), Erik Johannessen, Sr. Vice President Consu mer, Kaare Østgaard, acting Managing Director of ErgoGroup, Elisabeth H. Gjølme, Sr. Vice President Corporate ErgoGroup AS from January, 2004 Information, and Aniela Gjøs, Sr. Vice President Distribution Network. Back row from left: Arne Bjørndahl, Sr. Vice President Logistics, and Klaus-Anders Nysteen, CFO/Sr. Vice President Corporate Staffs. Former positions: Deputy Managing Director and controller of ErgoGroup AS Education: Master of Business and Economics, Norwegian School of NORWAY POST Management (BI) Divisionally-based market approach CHIEF EXECUTIVE Offices: ErgoSolutions AS, OFFICER ErgoIntegration AS, ErgoEphorma AS, Adviso AS, TransWare AB, ZebSign AS and Buypass AS The Norway Post group aims to use most ded to satisfy current and future customer Norway Post’s group resources on developing its market and satisfy- demands. The activities of the divisions are ANIELA GJØS (44) Senior Vice President Distribution ing customer demand. Its five divisions focus integrated, and together constitute Norway structure has remai- CORPORATE CORPORATE Network on markets and results, whereas its four corpo- Post’s core activity. INFORMATION STAFFS from October 2003 Former positions: Logistics Manager rate staff units focus on development. for the Ringnes group ned unchanged for the Although the overall group structure has not Operational management team Education: Master of Science been changed for four years, extensive restruc- The group's senior management consists of the (approved NTH, Norway ’88), Business last four years, con- Candidate ‘98 turing has taken place within the individual Chief Executive Officer, the heads of the five Offices: ErgoGroup AS, Avishuset divisions. divisions and the heads of two of the corporate INTERNATIONAL MARKETS Dagbladet AS and Dagbladet AS sisting of five market- staff units. The group management is operatio- ALLIANCES GROUP ERIK JOHANNESSEN (52) Strenghten value creation nal, focusing on complete solutions for the Senior Vice President Consumer oriented divisions and The group structure is an aid to achieving goals market. from September 2000 Former positions: Manager Telenor and realising strategies, thereby adding to the The group structure is not static, and both International AS, Project Manager Tele- four corporate staff value of the company. The five divisions: the structure itself and the interfaces between nor ASA, Marketing Manager Ericsson AB Communications, Logistics, Consumer, the different units must continuously be evalu- Education: Business Candidate from divisions. Norwegian School of Management (BI) Distribution Network and ErgoGroup AS, are ated with the aim to achieve the most efficient & engineer DISTRIBUTION LOGISTICS COMMUNICATIONS CONSUMER ERGOGROUP AS Offices: City Mail AB, MMI AS, NORTIB, responsible for separately and jointly develo- implementation possible of the group's strate- NETWORK NAVO ping and providing competitive concepts inten- gies. 9 Board of Directors’ report

Higher quality and better service Norway Post’s results improved significantly in 2003. Growth in revenues and the streamlining

process resulted in higher profitability. OPERATING REVENUES AND OPERATING EXPENSES in MNOK On its way towards becoming «The world’s the Nordic countries the company aims to 16000 most future-oriented postal company», form strategic alliances. Norway Post succeeded in making its organisa- 14000 tion more efficient and at the same time consi- Higher delivery quality 12000 derably improving service and quality. Delivery Significant improvements were made in 2003. quality in 2003 was record-breaking and Norway Post’s accessibility was improved by 10000 remained stable at a level well above the licen- increasing its number of sales outlets and ce requirement. extending opening hours. The statutory licence 8000 Group results improved substantially from requirements of equally good services throug- 6000 the preceding year, but earnings must increase hout the country were satisfied in 2003. The further in the time ahead in order to achieve a quality of Norway Post's postal services has 4000 satisfactory rate og return. Group earnings never been higher than in 2003 and remains 2000 before tax were NOK 456 million, an improve- stable, above the requirements of the compa- ment of NOK 562 million from 2002, and total ny's licence. This means that letters and parcels 0 letter and parcel volumes increased. IT results arrive faster than ever before. 2000 2001 2002 2003 remained stable while the decline in bank In 2003, 87.7 per cent of A-priority mail was transactions continued. New products have delivered the next day. This is up one percenta- Operating revenues been launched and electronic services develo- ge point, from 86.7 per cent, in the preceding Operating expenses ped to replace or supplement traditional postal year. Measurements of international letter mail services. quality show an overall quality improvement Competition increases in all of Norway in the postal industry in recent years, with Post's business areas. On 1 July 2003 Norway Norway Post having advanced from below to Post’s licensed area for closed, addressed letters well above the European average. was reduced from 350 to 100 grams. This The number of visits to post offices in 2003 DEVELOPMENT IN REVENUES means that only 27 per cent of Norway Post’s was higher than in the preceding year, and in MNOK revenues come from its monopoly area. To waiting time has been reduced. During the ensure an acceptable restructuring process, year, 29 new «Post in Shops» were opened. Norway Post assumes that Norway will be fol- Norway Post now has over 1 500 sales outlets, lowing the EU’s liberalisation time schedule, including 1 175 Post in Shops. Additional which largely means free competition from expansions are planned for 2004. Post office 2006 when the licensed area is reduced to lett- opening hours were extended in 2003, and the ers under 50 grams. company now adheres to local opening hours. Norway Post's strategy for strengthening the In December 2003 post offices were open on company in an increasingly competitive mar- Sundays for the first time. ket is to streamline all parts of its activity and Customer surveys carried out by Norway at the same time improve service and quality. Post indicate progress, and the work of streng- The company focuses on solutions that combi- thening customer satisfaction will continue. ne electronic information and physical distri- bution. The group’s subsidiary ErgoGroup AS Improved cost-effectiveness is becoming increasingly important in this Norway Post has implemented significant development, and is decisive in ensuring a suc- restructuring and efficiency improvement *incl. mail marketing weekend cessful integration of services as required by measures in order to make the company more Letters the customers. competitive. Divestiture and outsourcing have Parcels Within its core activity Norway Post aims to reduced operating costs and increased cost fle- be the market leader in Norway. In the Nordic xibility. Streamlining efforts will continue as Total countries Norway Post pursues a niche strategy an ongoing process. and is engaged in letter distribution and After major restructuring of the sales net- express services. The company’s largest invest- work from 2000 to 2002, the distribution net- ments in the Nordic countries are CityMail work is now undergoing significant changes. Sweden, Box Delivery and Pan Nordic Distribution and transport services were mer- Logistics. Revenues from Nordic activities ged in 2003, so that letters and parcels are now increased by NOK 254 million, or 23.2 per distributed together. The change has cent, from 2002 to 2003, representing 8.7 per resulted in fewer mail delivery vans on cent of Norway Post's total turnover. Outside the road and more mail in each van. 11 Board of Directors’ report

VOLUME DEVELOPMENT, PARCELS In the autumn of 2003 the decision was made - Newspaper and magazine postage will be million items to introduce a new terminal structure, to be increased over a three-year period to ensure established by the end of 2006. Hence, letter that here too, Norway Post will meet the licen- 30,0 and parcel processing will take place at fewer, ce requirements for cost-based prices. Norway 29,0 but larger, sorting terminals. Investment in Post no longer has the opportunity to favour 28,0 new machinery will increase machine sorting newspapers in the way it has previously done, from 54 per cent in 2003 to 84 per cent in but will have to demand the same price for «The restructuring work will be an 27,0 2007. The number of letter terminals will con- newspaper distribution as for other customers. 26,0 sequently be reduced from 32 to 12, while the The average price increase of 17 per cent for 25,0 number of parcel terminals will be cut from 21 newspaper postage and 15 per cent for magazi- ongoing process in 2004 and the years 24,0 to 13. Norway Post will subsequently maintain ne postage from 1 January 2004 is the first step terminals at 15 locations throughout the coun- in this three-year adjustment programme. 23,0 try and close down its operations at 18 places - A new volume-based pricing model was 22,0 during the three-year period. The aim is to introduced for parcels on 1 March 2003 as ahead. Satisfactory profitability by 2006 21,0 achieve increased profitability and higher volume, not weight, is the primary cost driver. quality. - In May 2003, the company introduced a 20,0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 fee for redirection of mail to a permanent, new Divestiture of activities/procurement address after one month’s free redirection ser- is a realistic, but demanding ambition» Total letter volume Since 1999 a number of non-strategic business vices. areas have been divested from the group, and these services are being purchased back as Development in results and markets cost-effectively as possible. After a transitional Norway Post’s profitability increased signifi- VOLUME COMPARISON million items period, competitive tendering was introduced cantly in 2003. The group's earnings before or prepared for in all areas. Such outsourcing interest and tax (EBIT) were NOK 512 million, 2700 of activity has taken place within transport, compared with NOK -33 million for 2002. 2550 cafeteria, cleaning and construction services Adjusted for non-recurring items, lower 2400 and within real estate, accounting, personnel, government procurement and provisions for items were NOK 48 million, compared with express services to continue. unrecognised company commitment. At year- 2250 HSE and IT. restructuring, the result of underlying operati- NOK 114 million in 2002. Including sales gai- Growth in ecommerce increases the need end, the total unrecognised parent company 2100 Within IT, Norway Post initially transferred ons improved by NOK 654 million. In parallel ns from ErgoBluegarden and ErgoEnet, Ergo- for secure and efficient distribution and pay- commitment amounted to NOK 1 278 milli- 1950 activity and employees to its subsidiary with the streamlining of Norway Post, govern- Group’s net income was NOK 117 million, an ment solutions, resulting in growth in areas in on, cf. note 3 to the annual financial state- 1800 ErgoGroup, and agreed to buy back services ment procurement of unprofitable postal ser- improvement from NOK 28 million in 2002. which Norway Post is well positioned. ment. The book equity of Posten Norge AS is 1650 for a period. During this period, IT services vices has almost halved in five years, from The market situation is characterised by the In 2003 DnB Markets performed a valuati- NOK 4 925 million. Taking into account the 1500 will be specified and prepared for bidding NOK 570 million to NOK 305 million in 2003. transition to electronic alternatives. The total on of the Norway Post group at the request of unrecognised pension commitment, the grou- 1350 according to public procurement regulations. Group revenues for 2003 were NOK 15 559 volume of letter products increased in 2003, the Norwegian Ministry of Transport and p's book equity would be NOK 3 647 million. 1200 By the end of 2007, Norway Post’s 47 IT agree- million, which is an increase of NOK 453 mil- the growth coming from advertising products. Communications. The group’s equity was The pension scheme also represents a risk 1050 ments will be subjected to competitive tende- lion, or 3.0 per cent, from 2002. Volumes of A and B mail peaked in 1999 and valued at NOK 5.5 billion. as regards return on pension funds. Pension 900 ring, with 91 per cent having been put out for The parent company revenues increased by have since declined by a total of 14.7 per cent. premiums to the Norwegian Public Service 750 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001*2002*2003* tender by the end of 2005. 1.8 per cent, accounting for 78 per cent of the Uncertainty is attached to the development in Capital Pension Fund are fictively invested in *incl. mail marketing weekend Activities defined to be outside Norway group's revenues, against 79 per cent in the volumes in the years ahead, but volumes are On 31 December 2003 Norway Post's total Norwegian government bonds with the long- Total letter volume Post’s strategic core, will be considered for sale. preceding year. About 85 per cent of the reve- expected to sink. assets were NOK 10 052 million, up from est remaining life at any given time (10 years). A and B mail In 2003 the company ErgoBluegarden AS and nues come from the business market. The Competition in the newspaper and magazi- NOK 9 327 million one year earlier. The current system was established on 1 the activities of ErgoEnet As were sold. revenues of the subsidiaries increased by 3.1 ne distribution market is fierce. Norway Post’s When, in 2002, the Norwegian parliament December 1996, with the initial fund of NOK The operations of the company Posten per cent. share of the market for newspaper distribution decided that Posten Norge AS would have to 4 479 million being fictively invested in a bond Forbruker-Kontakt AS was closed down in The total letter volume for the year rose by is 25 per cent, with the newspapers themselves cover the shortfall of NOK 1 475 million in with a yield of 6.46 percent, maturing on 15 2003 after an aggregate loss during its last four 3.2 per cent. The volumes of A-priority and B- accounting for the remaining 75 per cent. the Norwegian Public Service Pension Fund, it January 2007. A continued low interest level DELIVERY QUALITY A-PRIORITY MAIL years of operations of NOK 30 million and a economy mail declined by 0.7 per cent from In addition, newspapers have a strong posi- was also decided to supply the company with ahead will involve a risk with a negative effect in % loss of market shares within the distribution of 2002, and the average price for letter products tion with regard to distribution of unaddres- NOK 600 million in new equity to compensate when the initial fund is refinanced in 2007. sed advertising, and are gaining market shares for the negative effect of this measure. This Efforts have been initiated to reduce risk to a 100 advertising. fell. The Communications division accounted In 2003 Norway Post decided to move the for 57 per cent of Norway Post's operating in this segment. At the same time newspapers supply of equity took place on 1 July 2003. In minimum, and the company’s pension sche- 95 Postal Museum to Maihaugen at Lillehammer. revenues. are expanding their distribution services to 2003 it was paid a total of NOK 2 208 million mes are currently being evaluated. The stamp exhibition was opened in 2003, Logistics volumes were 1.4 per cent higher also include traditional postal services. The to the Norwegian Public Service Pension fund Return on capital employed (ROCE) in the 90 to be followed in June 2004 by the opening of in 2003 than in 2002. Parcels and logistics acti- establishment of the company Mediapost in the form of coverage of the shortfall and in group was 11.2 per cent in 2003, compared 85 85% the Postal Museum’s main exhibition and its vities experienced a growth in revenues of 8 shows that the large media groups have ambi- pension premiums. with 1.7 per cent in 2002. Adjusted for non- own museum post office in the city section of per cent during the year, which represents 24 tions in this field and may become a major On 31 December 2003 the group's book recurring items the figures were 10.1 per cent 80 Maihaugen. per cent of the group’s revenues. The decline in competitor to Norway Post. equity was NOK 4 776 million, which is an and 1.2 per cent, respectively. Return on equity the volume of bank transactions in the sales The market for logistics services has been increase from NOK 4 034 million in the prece- after tax in 2003 was 6.2 per cent. The compa- 75 Price changes network continued, down 6.5 per cent from fully deregulated and is characterized by fierce ding year. The equity ratio increased to 47.5 ny is making every effort to satisfy the owner’s 70 As part of Norway Post’s efforts to strengthen 2002. The Consumer division accounted for competition and pressure on margins. The per cent in 2003, from 43.3 per cent in 2002. requirement of 10.8 per cent return on equity its competitive edge, the company in recent 7 per cent of Norway Post's revenues. players in the market are becoming increasing- The pension costs of the parent company after tax. 65 years has been reluctant to increase prices. ErgoGroup’s revenues in 2003 were NOK ly international, with the large international are accounted for in accordance with standard Cash flow from operations in 2003 was 60 However, price changes have nevertheless been 2 900 million, which means that the company postal operators actively promoting the ong- Norwegian and international practice. NOK -915 million. This is a reduction of NOK 2000 2001 2002 2003 necessary to meet the requirement for cost- managed to maintain revenues at the same oing consolidation. Both Deutsche Post/DHL, Large salary increases and high disability 1 099 million from 2002, resulting from the based prices of licensed services and in other level as in the preceding year. Of ErgoGroup's the Dutch postal operator TPG/TNT and benefits as well as changes in pension schemes payment to cover the shortfall in pensions. Quality requirement areas to ensure commerciality. revenues, 39 per cent come from Norway Post. Sweden Post/Tollpost are represented in in recent years have contributed to a signifi- Cash flow from investing activities was NOK Last 12 month average - After three years of price freeze of stamps ErgoGroup aims to increase its share of reve- Norway.Together with Linjegods/Schenker cant increase in net pension obligations. In 941 million higher than in the preceding year. and franked letter mail, prices were increased nues from external parties. The IT division BTL they are pursuing an aggressive strategy in accordance with generally accepted accounting Investments in 2003 amounted to NOK 455 by an average 3.9 per cent from 1 January accounts for 11 per cent of Norway Post’s reve- the Norwegian market. Norway Post expects principles, this increase is not classified as a million, which is NOK 986 million lower 2004. nues. ErgoGroup’s EBIT before non-recurring the volume increase in logistics products and balance sheet item, but is accounted for as an than in 2002. 12 Board of Directors’ report «The new, open offices are designed for new work forms, contributing

significantly to increased cooperation DISTRIBUTION OF REVENUES and communication» in %

A-priority mail (23.2%) B-economy mail (11.0%) Newspapers/magazines (4.1%) Other communications (14.1%) Norway Parcel (1.1%) Other logistics products (15.3%) ErgoGroup (11.3%) Postbanken (5.4%) Government procurements (2.0%) Other (1.4%) Other subsidiaries (11.1%)

REVENUES FROM LICENSED AREA in %

100

A risk assessment for the group is made every Employees and working environment space requirements from 48 000 to 15 000 Norway Post practices a moderate gender- The Norwegian employers' association for 80 year as part of its corporate governance, follo- Norway Post’s work force was reduced by square metres, and reduced office rental from based quota system in order to increase the public corporations, NAVO, in October 2003 wed up by measures and recommendations to 1 869 full-time equivalent jobs in 2003, 554 of NOK 67 million to NOK 35 million. This number of female managers and employees in chose Norway Post as the encompassing work- reduce individual risk factors. Norway Post is which relate to ErgoGroup. The number of move to the Norway Post building formed an male-dominated job categories. This is incor- place of the month, on the grounds that 60 exposed to financial market risk. Financial full-time annual work equivalents at the end important part of Norway Post's organisatio- porated in the company’s recruitment policy Norway Post has an efficient tool for systema- instruments are used to reduce risk associated of 2003 was 21 640, compared to 23 509 one nal development. The new, open-plan offices and collective wage agreement. When accep- tic management and follow-up of health, safe- 40 ting trainees for the company's management ty and environmental work. 34,0 with variations in interest rates, currencies and year earlier. are designed for new work forms, contributing 33,3 31,6 electric power prices. Pensions, the introducti- The annual employee satisfaction survey for significantly to increased cooperation and development programme, emphasis is placed Norway Post has employees from 75 diffe- 27,0 on of IFRS accounting principles, 2003 indicated continuously increasing job communication. The company has also gathe- on finding and developing female managers rent nationalities. For three years the company 20 goodwill/intangible fixed assets and change in satisfaction among Norway Post employees. red administrative functions centrally in and management candidates. 30 per cent of has had a zero tolerance approach to racism. number of people on disability benefits are The survey shows an increase in the score for Trondheim, Bergen, Bodø, Stavanger, the managerial staff recruited in 2003 were A number of measures and activities have been areas in which Norway Post actively monitors job satisfaction to 80 from 79 in the preceding Kristiansand and Hamar. By coordinating the women. initiated, focusing on Norway Post being a 0 the company’s risk exposure. year and 75 in 2001. The survey also shows office functions in these seven places, the com- In 2003 the average annual salary in the place where everybody is welcome regardless 2000 2001 2002 2003 The Board of Directors confirms that com- that employees’ loyalty to Norway Post has pany reduces its total need for office premises parent company was NOK 268 660 for women of colour of their skin, religion or cultural pany’s annual financial statements have been strengthened. by 77 000 square metres and saves NOK 88 and NOK 270 322 for men. Female managers background. Employees and managers fully prepared on the basis of ongoing activities and The company emphasises development of million in rent every year. received NOK 382 968, while male managers support this work. that the underlying assumptions for these have expertise based on the needs of the organisati- 8 500 postmen and women were given new, received NOK 406 846. From and including 2003, reporting of been met. on, with development programmes focusing modern uniforms in 2003, as an important Although sick leave in Norway Post is now occupational injuries is electronic. During the DEVELOPMENT IN NUMBER OF EMPLOYEES on strategically important competence. part of Norway Post's profiling strategy. stable, it is still too high. In 2003 sickness year a total of 286 lost time injuries were Allocations Norway Post emphasises a value-based and The state Labour Inspection carried out an absence was 11.29 per cent, down from 11.35 reported. 35000 In 2003 Posten Norge AS had a net income of business-oriented management development. extensive review of Norway Post’s activity in per cent in the preceding year. Sickness absen- This is a decline from the preceding year, NOK 402 million. The Board of Directors pro- During the last two years, 220 top and inter- spring 2003, focusing on the company’s wor- ce among women amounted to 12.8 per cent, when 297 lost time injuries were reported. In 28000 poses to the Annual General Meeting that a mediate level managers have completed deve- king environment during the restructuring while the figure for men was 9.3 per cent. The 2001 the figure was 357. There has also been a dividend be paid out corresponding to 30 per lopment programmes. In 2004, an additional processes. The review included 80 visits to number of people on disability benefit has decline in the number of days of absence due cent of the group’s net income, which is in 110 managers will go through the same pro- Norway Post workplaces in Nordland and declined in recent years, from 668 in 2001, 629 to occupational injuries. Falls clearly constitute 21000 accordance with the current dividend policy. gramme. The training programme for first- Oslo. The Labour Inspection’s report imposed in 2002 to 547 in 2003. 61 per cent were the most frequent cause of injuries. The injury This gives the following allocation of the net line managers will be launched in 2004, targe- 15 areas for improvement, which are being fol- women. Increased focus on and systematic frequency, that is the number of lost-time inci- 14000 income for the year: ted at 800 people. Processes are being imple- lowed up in accordance with Norway Post’s efforts to reduce sickness absence and the dents per one million hours worked was 9.2 in mented to establish Norway Post's fundamen- plans. number of people on disability benefit are 2003, compared with 8.7 in 2002 and 9.8 in Provisions for dividend to owner MNOK 121 tal values in all divisions of the organisation. At the end of 2003, 46 per cent of the beginning to yield results. 2001. 7000 Transferred to other equity MNOK 281 In 2003 Norway Post set up an internal group’s employees were women. The corres- Norway Post was the first large company to After several years of a decreasing number employment service with the aim of keeping a ponding figure for the parent company was sign an «Encompassing Workplace agreement» of postal robberies, 11 post offices experienced 0 The company’s unrestricted equity after the survey of personnel needs in the company’s 49 per cent. Women accounted for 38 per cent in 2002. The agreement will continue in 2004. robberies in 2003, compared with 6 in the pre- 2000 proposed dividend is NOK 235 million. The different units and contribute to efficient com- of the group’s permanent employees, while the The aim is to reduce sickness absence by 20 ceding year. In addition, Norway Post’s letter 2001 2002 2003 requirement of the Norwegian Companies' Act munication of internal and external jobs for figure for part-time employees was 65 per per cent by the end of 2005, increase average terminal in Oslo was subject to an armed rob- that distribution of dividend must not result redundant employees. cent. The percentage of female directors on retirement age and increase measures to inclu- bery. Experience shows that Norway Post’s Number of employees in an equity ratio lower than 10 per cent or the The company moved its headquarters to the Norway Post’s board is 40. de more people with disabilities in working security systems and routines are satisfactory, Full-time positions company distributing more than is agreeable Norway Post building in Oslo, gathering func- 25 per cent of the group management is life. Norway Post was awarded the and that the follow-up of managers with prudent and generally accepted accoun- tions from 14 different addresses in one place. women, while the percentage of women «Encompassing Workplace Award» for 2003 and the HSE system is good. Security ting principles, is fulfilled. The move to a single location reduced office among the company’s 1 633 managers is 31. by the Working Life Centre in Oslo. measures have nevertheless been inten- 15 Board of Directors’ report

NET INCOME sified, and renewed focus has been placed on possible conflicts of interest and has establis- in MNOK emergency preparedness and exercises. hed a register of board functions and owners- The Board of Directors would like to thank hip interests for the board of directors, the 600 480 all employees for their active participation and group management, employees and other 400 responsible behaviour during the demanding interested parties influencing company decisi- 274 restructuring process. ons. 200 Natural environment Outlook 0 Throughout its value chain Norway Post's acti- The restructuring work will continue as an

-110 vities have an impact on the natural environ- ongoing process in 2004 and the years ahead. -200 ment. Purchases of goods, energy and services Satisfactory profitability by 2006 is a realistic, indirectly affect the environment, whereas con- but demanding ambition. Service and quality -400 sumption of goods and energy in Norway will be further improved. A new terminal -600 Post’s production have a direct environmental structure will be in place by the end of 2006, -655 impact in the form of emissions to air and dis- with full effect on results from 2007. -800 charge to water, and generation of noise and A deregulated postal services market will 2000 2001 2002 2003 waste. Norway Post aims to reduce the envi- attract several national and international play- ronmental impact of its activities by lowering ers. Norway Post intends to maintain and the consumption of resources and prevent and strengthen its market position by constantly Net income reduce emissions, discharges and waste. focusing on efficiency, quality, service and inn- During the year the company further deve- ovation. In addition to maintaining traditional loped its determined environmental efforts. An sources of revenue, new products and services environmental action plan for 2004-2006 was are being developed, geared to the communi- prepared, and concrete goals and measures RETURN ON EQUITY cations and logistics market. With ErgoGroup in % were defined within prioritised areas. To ensu- as an integrated part of the company’s activity, re high-quality environmental reporting and the group is able to offer complete solutions. 30 more efficient follow-up, an electronic envi- In order for Norway Post to be able to achi- ronmental accounting system has been intro- eve its strategic objectives and compete effecti- 20 duced. The environmental work carried out in vely, the company must be given a predictable Owner’s required 2003 had several positive effects. Norway Post’s and competitive framework. Especially in a rate of return 10.8% 10 energy programme, for example, reduced ener- situation of deregulation and a new licence gy consumption by 13 per cent in the buil- from 2006, the company will need long-term 0 dings participating in the project. In addition, stability in order to develop. The Storting’s district heating systems’ share of the total ener- (Norwegian parliament) consideration of gy consumption increased from 13 to 20 per Report no. 11 (2003-2004) shows that there is -10 cent. broad political agreement about Norway Post’s During the year, Norway Post increased its development and choice of direction. -20 use of trains, hired cars and its own vehicles, The Storting has determined that from 2006 while the company’s use of aircraft was redu- Norway Post will be free to choose banking -30 ced. Norway Post’s emissions of CO2 and NOx partners and offer financial services from diffe- 2000 2001 2002 2003 increased by 5 and 7.4 per cent, respectively. rent suppliers through the company's sales Return on equity Most of the company’s emissions relate to network. Norway Post and DnB/Postbanken transport, of which Norway Post’s own vehi- disagreed on the financial settlement of their Norway Post’s Board of Directors. From left: Asbjørn Birkeland, Odd Christian Øverland, Erik Døvle, Inger Marie Gulvik Holten, Liv Stette (Vice-Chairman), Arvid cles account for 60 per cent. business agreements, and at the end of March Moss (Chairman), Terje Christoffersen, Gry Mølleskog, Ingeborg Anne Sætre and Thore Strøm (Deputy for Hans Fredrik Danielsen). 2004 the disputes were settled by arbitration. The Board of Directors This will have a positive effect on Norway RETURN ON CAPITAL EMPLOYED At Norway Post's Annual General Meeting in Post’s results for the first quarter of 2004, OSLO, 25 MARCH 2004 in % June 2003 Gry Mølleskog was elected new amounting to about NOK 65 million. The cur- 30 director, succeeding Wenche Pedersen. Kari rent agreement with DnBNOR/Postbanken for Lund was elected deputy director after Ingrid banking services expires on 31 December 2005. Svendsen. During 2004, therefore, Norway Post will Arvid Moss Liv Stette 20 The Board of Directors emphasises the renew its strategy for the sale of financial servi- (Chairman) (Vice-Chairman) importance of Norway Post having practical ces. and efficient management and control systems The acquisition of Nor-Cargo Holding ASA, 10 to ensure satisfactory management of the announced in March 2004, is part of Norway group for its owner and other interested parti- Post’s aggressive strategy to become a provider Terje Christoffersen Asbjørn Birkeland Inger Marie Gulvik Holten 0 es. For Norway Post «Corporate Governance» of complete logistics services in the Norwegian involves the goals and overall policies by which market. This acquisition will strengthen the group is managed and controlled and the Norway Post’s core activity and increase its -10 structures regulating the interaction between ability to meet the strong competition from the company’s governing bodies and its other international players. The agreement is condi- Gry Mølleskog Odd Chr. Øverland Hans Fredrik Danielsen -20 interest groups. The basic principles for corpo- tional upon approval by the Norwegian 2000 2001 2002 2003 rate governance in Norway Post and planned Competition Authority. further work in this field were defined by the Norway Post will continue to make selective Return on capital employed Board and incorporated in Norway Post's acquisitions and form alliances to strengthen Corporate Governance Policy. the group’s core activity. Ingeborg Anne Sætre Erik Døvle Kaare Frydenberg Norway Post has prepared guidelines for (Chief Executive Officer) 16 Financial statements Financial statements

KEY FIGURES INCOME STATEMENT Amounts in MNOK

NORWAY POST GROUP POSTEN NORGE AS NORWAY POST GROUP

2003 2002 2001 2001 2002 2003 Note 2003 2002 2001 RESULTS Operating revenues MNOK 15 559 15 106 15 008 12 486 11 983 12 193 Operating revenues 1 15 559 15 106 15 008 Earnings before interest and taxes (EBIT) MNOK 512 -33 843 Earnings before tax (EBT) MNOK 456 -106 718 984 1 406 1 528 Cost of goods and services 3 233 3 133 2 578 7 326 6 906 6 562 Payroll expenses 2, 3 8 217 8 485 8 628 PROFITABILITY AND RETURNS 549 461 448 Depreciation 8, 9 944 903 805 Financial key ratios incl. non-recurring items: 62 19 8 Write-downs 8, 9 60 22 71 Net operating margin 1) % 3,3 -0,2 5,6 3 343 3 237 3 143 Other operating expenses 4 2 651 2 620 2 608 Profit margin 2) % 2,9 -0,7 4,8 Operating income(loss) before Return on capital employed 3) % 11,2 1,7 24,6 222 (46) 504 other revenues and expenses 454 (57) 318 Return on equity after tax 4) % 6,2 -3,5 22,8 (458) 158 Other revenues and expenses 5 (58) (24) (525) Financial key ratios excluding non-recurring items: Net operating margin % 2,9 -0,4 2,1 680 (46) 346 Earnings before interest and taxes (EBIT) 512 (33) 843 Profit margin % 2,6 -0,9 1,3 Return on capital employed % 10,1 1,2 11,0 174 194 393 Financial income 6 120 114 105 215 209 169 Financial expenses 6 176 187 230 CAPITAL AND LIQUIDITY Cash flow from operations 5) MNOK -915 184 77 639 (61) 570 Earnings before taxes (EBT) 456 (106) 718 Investments MNOK 455 1 441 2 033 Equity ratio 6) % 47,5 43,3 23,9 178 (18) 168 Taxes 7 182 4 238 Net debt ratio 7) % 0,1 0,1 0,5 461 (43) 402 Net income (loss) 274 (110) 480 DEFINITIONS 1) Net operating margin: EBIT/operating revenues Net income (loss) attributable to minority interests 28 (17) 17 2) Profit margin: Earnings before tax/operating revenues 3) Return on capital employed: (EBIT + financial income)/average capital employed Transfers and allocations Capital employed: Equity + interest-bearing liabilities (300) (121) Provisions for dividend 4) Return on equity after tax: Net income/average equity (161) 43 (281) Transferred (to)/from equity 5) Cash flow from operations: EBITDA + net financial items + payable taxes + change in net current assets (461) 43 (402) Total transfers and allocations 16 6) Equity ratio: equity/total assets 7) Net debt ratio: (interest-bearing liabilities – liquid assets/ total equity

18 19 Financial statements Financial statements

BALANCE SHEET CASH FLOW STATEMENT Amounts in MNOK Amounts in MNOK

POSTEN NORGE AS NORWAY POST GROUP POSTEN NORGE AS NORWAY POST GROUP

2001 2002 2003 Note 2003 2002 2001 2001 2 002 2 003 2 003 2 002 2001 Assets Cash flows from operational activities 370 185 33 Intangible assets 8 1 282 1 639 1 301 613 370 867 Provided by operations* 1 048 692 855 3 560 3 468 3 104 Tangible assets 9 3 516 4 034 3 938 (2) (15) 4 Change in inventories 1 (14) (2) 821 951 951 Investments in shares 10 152 150 135 Change in non-interest bearing short-term 38 259 2 289 Non-interest bearing long-term receivables 11 2 235 236 60 (627) 104 (119) receivables, excluding group contribution 221 38 (794) 721 1 184 804 Interest bearing long-term receivables 12 45 58 556 25 (62) Change in interest-free short-term liabilities, excl. dividend (339) 215 630 5 510 6 047 7 181 Fixed assets 7 230 6 117 5 434 (388) (345) 131 Change in provisions for liabilities and charges 160 (405) (411) Difference between expensed pensions and 49 64 60 Inventories 13 64 65 51 (203) (355) (2 021) payments to/from pension schemes (2 006) (342) (201) 1 978 1 846 1 962 Non-interest bearing short-term receivables 14 2 066 2 287 2 518 (51) (216) (1 200) Net cash flow from operational activities (915) 184 77 633 706 559 Cash and cash equivalents 15 692 858 872 2 660 2 616 2 581 Current assets 2 822 3 210 3 441 Cash flows from investing activities (1 186) (654) (179) Investments in tangible assets/IT development etc. (455) (1 441) (2 033) 8 170 8 663 9 762 Total assets 10 052 9 327 8 875 1 248 601 69 Sale of tangible assets 379 258 1 384 (526) (496) 367 Changes in other fixed assets 6 172 104 Equity and liabilities (464) (549) 257 Net cash flow from investing activities (70) (1 011) (545) 1 515 3 060 3 120 Share capital 3 120 3 060 1 515 505 1 020 1 560 Share premium account 1 560 1 020 505 Cash flows from financing activities 129 (35) 245 Other equity 78 (94) 138 80 139 452 New long-term loan 507 139 80 Minority interests 18 48 35 432 100 New short-term loan 103 442 2 149 4 045 4 925 Equity 16 4 776 4 034 2 193 28 Group contribution/dividends received (11) (436) (56) Repayment of long-term loan (86) (461) (18) 702 403 367 Provisions for liabilities and charges 17 431 446 796 (532) (300) Repayment of short-term loan (305) (532) (300) Group contribution/dividends paid (300) 1 048 751 1 147 Interest-bearing long-term liabilities 18 1 266 846 1 133 1 939 600 Additional equity payment 600 1 939 501 838 796 Net cash flow from financing activities 819 785 505 832 300 100 Interest-bearing short-term liabilities 18 101 304 841 (14) 73 (147) Total change in liquid assets (166) (42) 37 3 439 3 164 3 223 Interest-free short-term liabilities 19 3 478 3 697 3 912

8 170 8 663 9 762 Total equity and liabilities 10 052 9 327 8 875 647 633 706 Cash and cash equivalents at start of period 858 872 823 Cash and cash equivalents from acquisition Guarantees/mortgages 20 of subsidiaries 28 12

Oslo, 25. mars 2004 633 706 559 Cash and cash equivalents at end of period 692 858 872

Arvid Moss Liv Stette (Chairman) (Vice-Chairman) *) Generated as follows: 461 (43) 402 Net income/(loss) for the year 274 (110) 480 634 489 461 + Depreciation/write-downs 1 004 934 928 Terje Christoffersen Asbjørn Birkeland Inger Marie Gulvik Holten (482) (76) 4 - Loss/(Gain) from sale of fixed assets (230) (132) (553) 613 370 867 = Provided by operations in 2003 1 048 692 855 Gry Mølleskog Odd Chr. Øverland Hans Fredrik Danielsen In the cash flow statement, depreciation, write-downs and gain from sale of fixed assets also include shares etc.

Ingeborg Anne Sætre Erik Døvle Kaare Frydenberg (Chief Executive Officer) NOTES The notes, found on pages 46-64, are an integral part of the annual financial statements.

20 21 Bright and airy: In May 2003 Norway Post moved its headquarters to the Norway Post building in Oslo, gathering together functions from 14 different addresses in one place. The move to the new, open offi- ces, has reduced rent from NOK 67 million to NOK 35 million, which gives annual savings of NOK 32 million. Corresponding office reor- ganisation took place in Trondheim, Bergen, Bodø, Stavanger, Kristiansand and Hamar. Communications Magazine distribution: Afour-year New opportunities: CPR agreement entered into in 2003 for postcards enable private and distribution of all Hjemmet Mortensen corporate customers to send magazines has strengthened Norway traditional postcards via the Post’s position in this market. Internet.

Total supplier of communications solutions Norway Post offers letter mail and market communication services through physical and electronic By combining new electronic services with traditional postal channels. services, Norway Post is able to offer private customers and firms a wide variety of communications solutions.

SHARE OF GROUP REVENUES FROM EXTERNAL PARTIES In keeping with development since 1999, Norway Post had to liquidate its subsidiary

Communications 57% Norway Post is planning for a decline in letter Posten Forbruker-Kontakt AS in 2003 . This volumes. company was bought in 1997 to add to Other Surprisingly, however, the volume of traditi- Norway Post’s revenue from weekend distribu- divisions 43% onal letter services increased in 2003, in con- tion of advertising, but lost in the increasingly trast to the preceding year. tough competition with newspapers and «Intense focus on innovation has resulted in Norway Post’s other nationwide quality distri- new services and further development of tradi- bution. tional services, which have given efficiency gains both for our customers and ourselves,» Won important contract SHARE OF NORWAY POST’S EMPLOYEES says Lars Tendal, Senior Vice President, A four-year agreement for distribution of all Communications 7% Communications. the Hjemmet Mortensen group magazines has Norway Post offers electronic solutions back strengthened Norway Post’s position in this to back with its physical services. Through fiercely competitive market. Other eLetters and eInvoicing customers can combi- As for newspaper distribution, the situation divisions 93% ne electronic and physical communication. is more complex. «We have developed into a flexible supplier «Our efforts towards cooperation with the «We have developed into a flexible supplier of fast, secure and of fast, secure and cost-effective complete newspapers turned out to be unsuccessful. communications solutions,» Tendal says. Norway Post and newspapers have coincident cost-effective total communications solutions» During the year, many important eInvoice value chains. Joint distribution of newspapers agreements were made with large-volume cus- and mail would mean a considerable synergy LARS TENDAL tomers such as municipalities, educational effect for both parties. However, to date, our Senior Vice President institutions, insurance companies and accoun- respective business strategies have put a stop to Communications ting firms. this cooperation,» Tendal emphasises. Based on the Norwegian Post and Customer care with cards Telecommunications Authority’s requirement EMPLOYEES CPR postcards (Create online Postcards for for cost-based prices, Norway Post invited 2003 1 792 Real) enable private and corporate customers newspaper publishers for talks on a new pri- 2002 429 to send traditional postcards via the Internet. cing model in June. The talks were unproduc- 2001 403 Norway Post handles the printing, franking tive, and from the new year Norway Post rai- REVENUES IN MNOK and physical delivery to the recipient. During sed newspaper postage by an average of 17 per 2003 8 949 December, 90 000 such cards were distributed. cent. Through a three-year escalation plan, 2002 8 356 By the end of the year, Norway Post had ente- postage on newspapers will reflect actual costs. 2001 8 508 red into over 250 agreements with companies who wished to use CPR cards as part of their Addresses in the telephone directory MILLION PHYSICAL ITEMS customer relations management. From the new year Norway Post increased let- 2003 2 652 «With CPR we offer our customers the best ter postage for the first time in three years, and 2002 2 546 of two worlds. We make use of our electronic at the same time introduced a difference in 2001 2 503 services, yet keep much of the personal touch price between stamps and machine-franked SUBSIDIARIES that characterises a traditional postcard,» says letters. CityMail Sweden distribution Tendal. Norway Post entered into an agreement company which services the Whereas the total advertising market increa- with the issuer of Norwegian telephone direc- largest cities in Sweden. sed by four per cent, Norway Post’s sale of mail tories, Findexa, whereby postal addresses and The Communications division marketing rose by 13 per cent. useful information about Norway Post will be has production units (printing, «Mail marketing is central in our range of printed in the telephone directories from and packing, scanning,etc.) at Alnabru and Mo i Rana. media, and innovation is important to win a including 2004. greater proportion of the market. We are con- Norway Post’s Key Accounts unit ensures stantly improving at identifying customers and one point of contact for major customers. their needs. One example is the «Me and Extensive cooperation agreements have been mine» service, which enables consumers to signed with for example the Orkla group. The Invests in the Nordic countries: The acquisition register their interests with us, making it pos- new Orkla agreement replaces 150 individual of CityMail in Sweden sible for us to distribute relevant mail marke- agreements between Orkla and Norway Post’s contributes to Norway ting to them either to their physical or their various divisions. A corresponding unit will be Post’s focus on niche electronic mailboxes,» Tendal explains. Despite established for private customers and small markets in the Nordic the postive development of mail marketing, firms. countries. 24 Logistics

Parcel delivery using SMS notification, trac- Norway Post. The aim is that anything to be The senior vice president says Logistics passed Teaming up king and alert, which reduce parcel returns, are sent to people’s homes, will be delivered by several milestones during 2003, and that there examples of electronic services developed by Norway Post,» Bjørndahl says. was a conciderable marked growth in both Norway Post over the last few years. The offer Norway Post offers physical delivery of par- parcel volume and profitability. with ecommerce companies of value-adding, electronic services will be cels with integrated electronic information «The results are due to good solutions further developed. regarding ordering, delivery and payment, so- combined with low costs,» says Bjørndahl. The Logistics Division is responsible called EDI solutions. The EDI system makes it On 1 March 2003 Norway Post introduced for sale and distribution of logistics Norway Post is the first company in Norway to offer inte- Provider of complete logistics services possible to track parcels, and Norway Post also its weight and volume based prices for parcels. products, express services and grated logistics solutions that combine physical transport, With acquisition of Nor-Cargo Norway Post offers supplementary electronic services which «We have achieved our aim of a fairer price general cargo combined with infor- has become a provider of a complete range of simplify customers’ parcel management. Since system that takes into account the actual cost mation and payment services. exchange of information and payment services. Norway Post logistics services, including everything from its introduction in 1998, the share of EDI par- of transporting parcels. The new system focuses especially on companies engaged in ecommerce. parcels to general cargo and bulk cargo. Nor- cels has increased steadily. More than half of rewards customers who pack cleverly,» Cargo is represented in around 90 locations in the almost 25 million parcels sent via Norway Bjørndahl says. Norway and has a well developed distribution Post in 2002 were EDI parcels. In 2003 this In 2003 endeavours were made to improve

SHARE OF GROUP REVENUES FROM and agent network, especially along the coast figure had risen to 60 per cent. the accuracy of delivery addresses on business EXTERNAL PARTIES and in the northern part of the country. «The EDI system makes our customers' par- parcels. When work started in March, 25 per Surveys show that companies actively engaged and urban areas enhances service and accessi- «Norway Post and Nor-Cargo complement cel information and parcel flow handling more cent of all addresses were wrong. In December, Logistics 24% in ecommerce experience the largest growth. bility. Norway Post has worked together with one another, enabling us to offer our custo- efficient. Buffer stocks at our warehouses the figure was down to less than 10 per cent. Norway Post has positioned itself towards this ecommerce companies to increase the response mers complete logistics solutions,» says Arne enable customers to centralise their own ware- «This has been achieved through good coo- market, and has developed a wide variety of to delivered parcels, their joint goal being Bjørndahl, Senior Vice President, Logistics. house function. Customers may also choose to peration with our customers. Both parties Other divisions 76% logistics solutions intended for ecommerce. increased sales for Norway Post's customers «Many companies delegate the handling of let us handle all their warehousing needs, benefit from parcels arriving promptly at the Door-to-door delivery in more than 50 towns and the lowest possible return of parcels. physical goods from purchase to delivery to requiring the use of EDI,» Bjørndahl explains. right address. The process becomes less costly and the number of returns declines. Our aim for 2004 is to become even better,» Bjørndahl states. SHARE OF NORWAY POST’S EMPLOYEES

Logistics 8% The largest in Scandinavia With more than a thousand vehicles Norway Other Post is Scandinavia’s largest delivery service divisions 92% company. In 2003 the company’s profile was strengthened by the merger of IL-X, Tiny, Sam's budbil, KBE and the bicycle messenger company «Førstemann» under the joint green and white Nordic brand name «Box Delivery». 215 cars in Norway and 150 in Sweden were reprofiled in 2003. ARNE BJØRNDAHL «There is no doubt that we have become Senior Vice President Logistics more visible in the cities and across national boundaries,» Bjørndahl holds.

EMPLOYEES New clearance system 2003 1 890 Norway Post has worked actively to raise the 2002 1 227 «Our most important duty-free limit for private imports, to make it 2001 1 357 easier to shop abroad. During spring 2004 a challenge will be new, simpler customs clearance system will be REVENUES IN NOK MILLION introduced for goods worth between NOK 200 2003 3 823 to grow in step and NOK 1 000. 2002 3 225 «We are doing this so that our customers 2001 2 840 with ecommerce may receive their goods faster without having TOTAL NUMBER OF PARCELS IN MILLION companies» to think about customs clearance rules. With 2003 25.0 the new system, our customers will receive 2002 24.7 parcels from abroad as quickly as they receive 2001 24.5 domestic parcels,» Bjørndahl explains. SUBSIDIARIES Our most important challenge in 2004 will Box Group AS, Oslo Container be to grow in line with our ecommerce custo- Stevedore AS (OCS), Wajens AS, mers and assist companies that want to use the KortProsess AS, Pan Nordic Internet as a supplement to traditional sales Logistics (PNL) AB, Nettlast AS channels. and Nettlast Hadeland AS. «We will, of course, strive to increase the share of EDI parcels and develop value-adding services based on electronic communication. In several of these areas we are well ahead of our competitors,» Bjørndahl concludes.

Productive partnership: The Norwegian wine monopoly's etrade solution is connected to Norway Post's logistics and trac king systems. Visible: Norway Post’s Box Delivery is easily spotted. 26 Consumer

As for the post offices, the product range has been adapted to the customers’ wishes in kee- ping with Norway Post's focus on communica- tions and logistics solutions. «Our product line has become more con- centrated, consisting mainly of mail-related The Consumer division is respon- products, packaging, office supplies and enter- sible for Norway Post’s nationwide tainment products like CDs and video films,» sales network consisting of physical, Johannessen explains. electronic and telephonic customer contact points represented by post Tailored postal solutions offices, Post in Shops, Business The Business Centres, offering business custo- Centres and Call Centres. mers postal services and value-added solutions like for example franking and internal mail processing, may be found at 25 locations throughout the country. Feedback from custo- mers indicates that they are very satisfied with SHARE OF GROUP REVENUES FROM this specialised service. EXTERNAL PARTIES «We are pleased that our business customers Consumer 7% greatly appreciate our contribution to their productivity. Generally speaking, our customer Other surveys show that through our sales network divisions 93% we are able to carry out simple assignments and services for the general public in a satis- factory manner at the same time as being an important partner for our business custo- mers,» Johannessen states, explaining that SHARE OF NORWAY POST’S EMPLOYEES Norway Post is also targeting new groups of

Consumer 17% business customers, and is engaged in a num- ber of projects offering complete solutions to Other Norway's municipalities. divisions 83% «The aim is increased efficiency Introduces best practice Norway Post’s five Call Centres handle custo- mer service, complaints, sales and switchboard in the sales network and better services. In 2003 the centres answered almost two million incoming calls. Furthermore, the customer service» Call Centres carried out 700 000 redirections, answered 180 000 written customer requests and handled 136 000 complaints. ERIK JOHANNESSEN Senior Vice President Norway Post aims to become a competitive Consumer Increased accessibility: With 1175 Post in Shops and 328 post offices Norway Post has improved the acces- More customers: The post offices had some 28 million customer visits in 2003. Surveys show that the postal operator. This year sales outlets will sibility of its sales network. customers’ waiting time was reduced compared with the preceding year. improve their services by emulating the best practices from the best units. EMPLOYEES «We will develop the most efficient way in 2003 4 259 The post offices had some 28 million customer interviewed. What they appreciated most were which to operate a post office. This means that 2002 4 800 Increasingly visits during 2003, which is higher than ever long opening hours, the dispersed geographi- we will copy the best practice from the units 2001 5 775 before. Surveys show that the customers' wai- cal locations and the service-minded employe- achieving the best results,» Johannessen says. ting time was reduced. In 2002, 92.6 per cent es. REVENUES IN MNOK of the customers waited less than ten minutes. «We are especially satisfied that Post in Shop More sales outlets 2003 2 532 closer to the customers 2002 2 705 The figure for 2003 was 96.3 per cent. This is now fully accepted as a good alternative by The Senior Vice President explains that plans 2001 2 698 year, the service is to be further improved, the our customers,» Johannessen says, adding that exist for the establishment of more sales out- In 2003 Norway Post improved the accessibility and service goal being that 95 per cent of all customers he is very pleased that the customers regard lets to further increase access to postal services. of its sales network. Customers are now offered postal and should be attended to in less than seven and a the expertise of the employees in Post in Shop «We are constantly aiming to develop half minutes. as good. Norway Post into a good and efficient sales banking services at more than 1500 sales outlets all over the «We have focused especially on reducing «This shows that our focus on training and and service channel, and work hard to increase queues, and have achieved a large improve- increased skills has produced results,» he says. our service level at the same time as continu- country. ment. We will continue this work in 2004 to ing to streamline our operations.» further reduce waiting time,» says Erik Higher sales Johannessen, Senior Vice President, Consumer A survey carried out by ACNielsen also shows division. that Post in Shop is good business for the retail At the end of 2003 Norway Post’s sales net- offices have been extended. Since the major shops. The conclusion of the survey is that work consisted of 1 175 Post in Shops, 328 restructuring of the company’s sales network Increased accessibility grocery shops offering postal services on ave- post offices and five Call Centres. began in spring 2001, total opening hours have Two extensive customer surveys carried out in rage have significantly higher sales during the In addition to improving accessibility, the been increased by more than 2003 show that customers appreciate greater year compared with shops that do not offer opening hours of Norway Post operated post 25 000 hours a week. accessibility. Over 12 000 customers were these services. 28 ErgoGroup

ket, makes the outlook brighter. entire health sector, but initially will be used by In Bykle, as many as 50 per cent of the voters Simpler electronic «A large volume of new orders puts us in a physicians to submit doctors’ verifications for voted electronically by means of ErgoGroup’s good situation in 2004. The response from sick-leave and medical certificates. Every year eElection system. In Oppdal and Larvik the external customers shows that we are regarded 3.5 million such forms are submitted to the figures were 30 and 15 per cent respectively. everyday life as a competitive and dependable supplier. We National Insurance Administration. Norway Post aims to increase the organisati- are winning important contracts, one good In May, a record high 1.1 million tax payers on's focus on complete communications and ErgoGroup develops and provides example being the Norwegian Directorate of submitted their tax returns electronically via logistics solutions. information and communications Like the rest of the IT industry, Norway Post’s IT company Taxes, which has chosen to place all its tele- the Internet and SMS. This was the fourth time Just before Christmas, ErgoBluegarden was technologies services, supporting and information communications orders with Norwegians were allowed to report electroni- sold to the Swedish investment company Ratos. Norway Post's role as a trusted ErgoGroup had to cut costs in 2003. However, the company third party for electronic business. us.» cally, and the service was provided by «As ErgoBluegarden’s services were not part won important contracts in 2003 and is well prepared for Other examples are Norway Post eInvoicing ErgoGroup. This shows how the Norway Post of Norway Post’s core activities, it was not rele- agreements with the Norwegian public is developing and providing new electronic vant to invest in further growth in other simi- 2004. employment service (Aetat) and with Bergen solutions combined with traditional postal lar operations in the Nordic countries. In our

SHARE OF GROUP REVENUES FROM municipality. The latter agreement included services. opinion, it would be more advantageous for EXTERNAL PARTIES integration of Norway Post eInvoicing in the In 2003 Norway's largest IT conference the company to find new owners. In this way ErgoGroup is Norway’s third largest IT com- but absolutely necessary to maintain the com- municipality’s financial management system,» gathered the industry for the 20th time, this we have also realised a significant added value,» ErgoGroup 11% pany. The aim of Norway Post’s electronic sub- pany's competitive edge. It is important for us Østgaaard says. year in Molde, with the conference subject Kaare Østgaard points out.

Other sidiary is to strengthen Norway Post’s position to carry out this process in an orderly manner. being restructuring processes and how IT can divisions 89% in eBusiness and develop new electronic postal Thus we are extremely pleased that the Labour Encrypted health information optimise customers’ profits. Contract with Norges Bank services. In order to improve efficiency, the Inspection report gives us positive feedback on In 2003 ErgoGroup signed an agreement In 2003 ErgoGroup won a three-year operating company had to reduce its workforce by 554 the process we have implemented,» says Kaare with the Norwegian National Insurance Testing eElection agreement with Norges Bank, the central bank full-time equivalentes including the sale of Østgaard, Acting Managing Director. Administration for signature and encryption of The local elections in the autumn became an of Norway, worth NOK 80 million, whereby ErgoBluegarden. The fact that the company won several large health information sent over the Internet. The important IT milestone, with eElections being Norges Bank will outsource IT operations and «This has been tough on the people affected, contracts in 2003 in an otherwise tight IT mar- system will gradually be made available to the tested in three of the country’s municipalities. the management of the payment and central SHARE OF NORWAY POST’S EMPLOYEES bank systems. ErgoGroup 6% This contract also means that ErgoGroup will take over employees with core expertise in Other these fields. divisions 94% «This is an important agreement to us as it «We will focus on strengthens our position as provider of services focusing on communication and bank transac- further growth in tions for time critical systems. At the same time it proves that our oursourcing solutions are very competitive,» Østgaard says. communications and When Norway Post's main office moved into KAARE ØSTGAARD Acting Managing the ultra modern Norway Post House in spring Director logistics services» 2003, ErgoGroup was an important contractor. ErgoGroup AS Open-plan offices with flexible work stations required a new electronic infrastructure which was delivered by ErgoGroup. EMPLOYEES 2003 1 506 Supports Norway Post’s vision 2002 2 123 As for the future and further development of 2001 1 836 Norway Post’s IT division, Østgaard is very REVENUES IN MNOK clear: 2003 2 900 «We will focus on further growth in com- 2002 2 907 munications and logistics services, aiming to 2001 2 454 support Norway Post’s vision and strategy of SUBSIDIARIES providing complete solutions within these ErgoEphorma, ErgoIntegration, fields,» Østgaard says. ErgoRunit, ErgoSolutions, After Norway Post spun off its IT activity ElectricFarm, Buypass (50%), into ErgoGroup in 2002, its services to Norway TransWare (70%) ZebSign (50%), Post were defined in 47 service agreements. ErgoIDP (International Data Post). Bids will gradually be invited for these agree- ErgoGroup also has ownership ments, and by 2007 all of these agreements will interests in Atento, Adviso and have been put out for tender. Interprise Consulting. «ErgoGroup is prepared to compete for Norway Post deliveries and will endeavour to make competitive offers,» Kaare Østgaard concludes.

IT flagship: Norway Post’s IT division headquarters are located at Nydalen, Oslo. Large: ErgoGroup is Norway’s third largest IT company. 30 Distribution Network

The Distribution Network division develops and operates Norway Post’s physical network, including collection, sorting and distribution of letters and parcels. With more than 15 000 employees, Distribution Network is the company’s largest unit.

SHARE OF GROUP REVENUES FROM EXTERNAL PARTIES

The Distribution Network does not generate revenues from external par- ties as the division supplies its servi- ces internally. «We aim to become

SHARE OF NORWAY POST’S EMPLOYEES the customers’ Distribution Network 61% prefered letter and

Other divisions 39% parcel carrier»

Delivers: One person can sort about 1 400 letters an hour, whereas a machine can handle some 27 000 Record quality: The quality of Norwegian postal services has never been better. Figures from 2003 show that 87.7 percent of A-priority mail ANIELA GJØS letters during the same time. This photo is taken at the terminal at Stokke, Vestfold county. was delivered the next day. The figure for 2002 was 86.7 per cent. Senior Vice President Distribution Network

ving to the same address. This change has number of parcel terminals will be reduced by 2008, which will raise Norway Post to the EMPLOYEES Everything is ready for resulted in fewer mail vans on the road and from 21 to 13. Total investments amount to level of the best international postal operators, 2003 14 942 more mail in each van. For Norway Post, this about NOK one billion, with estimated annual some of which sort as much as 90 per cent by 2002 16 083 gave savings of about NOK 150 million during cost savings of close to NOK 500 million from machine. 2001 17 277 tomorrow’s postal network the first year of operation as well as a better and including 2007. The changes will result in Fewer terminals and increased machine- quality service. In 2003 the productivity of the a reduction of about 880 full time equivalents, sorting are expected to increase delivery quality REVENUES IN MNOK distribution system increased by 12.5 per cent mostly from the Distribution Network divisi- by up to three percentage points. 2003 6 387 The quality and service of Norwegian postal services have compared with 2002, while the productivity of on. The detail plan for implementation will be The new terminal structure also includes a 2002 6 423 the processing system improved by 14.6 per completed in 2004, and the first terminal will new letter terminal in the eastern part of 2001 6 537 never been better. The new terminal structure is part of cent. be closed down. Norway,but its location has not yet been deci- Norway Post’s efforts to improve quality and reduce costs. MACHINE-SORTED, ALL LETTERS «The introduction of the new distribution «We have come to a point where it is diffi- ded. The decision is to be made during 2004. 2003 54% system has simplified processes and made us cult to further increase the efficiency of the As part of Norway Post’s profiling, 8500 2002 48% more flexible, which is an important step in the individual employees. Now we have to invest in postmen and –women were given new uni- 2001 38% In 2003 the Distribution Network division being the best ever achieved since measure- direction of becoming the world’s most future- new technology in order to bring Norway Post forms in 2003. The new red and blue uniforms focused on quality and efficiency – simultane- ments began,» says Aniela Gjøs, senior vice oriented postal operator,» Gjøs says. forward in an increasinly more open letter are intended to promote the impression of ously and with good results. The delivery president, Distribution Network. market with constantly tougher competition. Norway Post as a modern business enterprise. quality for A-priority mail has never been hig- New terminal structure Our new terminal solution enables us to opti- «The uniforms are important profiling tools her. For the year as a whole, 87.7 per cent of all Coordination The decision made in the autumn of 2003 to mise the ratio between production and trans- for Norway Post and a distinguishing characte- A-priority mail was delivered the next day. The The senior vice president says several measures change the terminal structure is another port costs,» the senior vice president says. ristic when Norway Post's employees meet figure for 2002 was 86.7 per cent. have been initiated to increase efficiency and important move in this direction. Fewer and their customers. When designing the uniforms, streamline operations. One important step larger sorting terminals with new technology Increased machine-sorting emphasis was placed on comfort and profiling. «This is well above the licence requirement implemented in 2003 was to coordinate the and new machinery will increase the degree of An important premise for the new structure to The clothes are made for the new work routi- which states that 85 per cent of A-priority mail handling of letters and parcels during the day- automation and standardisation. The new ter- give the forecasted gains is that the proportion nes and our need for flexibility,» the senior vice must be delivered the next day. Our results time. By carrying both letters and parcels in minal structure, to be established by the end of of machine-sorted mail increases. The share of president explains. have remained stable for three years, above the the same car with one delivery to the customer 2006, means that the number of letter termi- machine-sorted mail is expected to increase licence requirement, with the results for 2003 Norway Post avoids several delivery vans dri- nals will be reduced from 32 to 12, while the from about 50 per cent in 2003 to 84 per cent 32 Market overview

The market is changing rapidly The markets in which Norway Post operates are undergoing a major, dynamic process of change. The shift to electronic solutions and

Liberalisation of the letter market: increasing direct competition result in a de- On 1 July 2003 Norway Post’s licen- sed area for addressed mail was cline in letter volumes and pressure on profit reduced from 350 to 100 grams. According to the EU’s postal market margins. liberalisation plan, Norway Post’s licensed area will be reduced to letters under 50 grams from 2006. Full liberalisation will most probably At the same time the logistics market is subject moving their production to other European be carried out in 2007/2008. to large structural changes. This development countries. Large firms and groups have centra- creates major challenges for Norway Post with lised purchasing functions outside Norway regard to development of products and servi- where decisions concerning purchase of com- ces, its service level, efficiency, market position munications and transport services are made and workforce restructuring. for the entire value chain.

Driving forces • Trade differences become less clear: The most important driving forces in the mar- Technological developments have made diffe- ket development can be summarised as follows: rences between trades less distinct, and this is also the case between the postal and other sec- • Development of electronic alternatives: tors. Having previously been providers of dis- Easier communication through electronic tribution services, the postal companies are channels gives expectations of a significant now becoming suppliers of integrated logistics increase in the overall communications market. and communications services. The number of physical items (letters), especi- ally administrative correspondence/payment • A few powerful players: notes is expected to decline however, and the The large postal companies in Europe are postal companies are therefore positioning expanding across national boundaries through themselves in electronic communications acquisitions and alliances. Their focus is on channels. Increased ecommerce is expected to addressed and unaddressed letter mail, express result in growth in the logistics market. delivery, logistics and financial services. In this way they strengthen their position in relation • Globalisation: to the ongoing liberalisation of the letter mar- Commodity trade across national boundaries is ket. Volumes are transferred to transport and growing rapidly, and a rising number of natio- distribution networks developed outside tradi- nally restricted sectors are being opened for tional postal networks. This presents smaller competition. Integrated networks for producti- postal companies with large strategic challeng- on and information exchange are being esta- es. blished without regard to national boundaries. Geographical, national and regional borders • Partial privatisation and deregulation of are challenged. Structural streamlining is public postal operators: taking place in a number of industries in Two of the major postal companies in Europe. Norwegian industrial firms too, are Europe, Dutch TPG and Deutsche Post in 35 Market overview

Norway Post’s activities abroad cur- rently comprise parcels, express ser- vices, distribution of addressed and unaddressed letter mail and IT servi- ces through the following companies: CityMail Sweden AB, BoxGroup AS, Pan Nordic Logistics AB (50 %), ErgoIDP AS and Transware AB. Operating revenues from internatio- nal activities increased by NOK 254 million, from NOK 1 096 million in 2002 to NOK 1 350 million in 2003. International activities accounted for 8.7 per cent of Norway Post’s total revenues. «To an increasing degree customers will request global, tailormade and complete solutions instead of individual products

REVENUES, INTERNATIONAL ACTIVITIES and services» in MNOK

1400 1350

1200 1096 1000 Germany, have been partly privatised, and thus mes as traditional letters are increasingly being is constantly becoming clearer, meaning that kets through TNT. Their competitive edge will abroad to ensure proximity to international 800 have been given access to capital markets which replaced by electronic message communicati- decision-making and purchasing processes for first and foremost be built on multinational customers, access to future networks and the 724 other, wholly state-owned companies do not on. After a period of aggressive activity in services across national boundaries take place solutions. As the letter market is gradually libe- opportunity to deliver services to larger parts 600 have. Efforts are being made in several other international markets, the large European play- outside Norway, also when the service is nee- ralised, these players are expected to also be of the value chains of international customers. countries to deregulate and partly privatise ers last year restructured and consolidated their ded in Norway. When customers regard the offering letter distribution. Through their 400 state-owned postal companies. domestic markets in order to become less Nordic countries as one market, it is only natu- international networks they are significant Acquisitions and alliances dependent on revenues from the letter market. ral for the postal providers to do the same. competitors for customers with large volumes Norway Post will implement its strategy 200 • Additional liberalisation and increased com- Focus was on cutting fixed costs, and the posi- Sweden Post, the Swedish postal operator, is of international transport. through selective acquisitions and the formati- petition in the letter market: tive results of the restructuring process can represented in Norway through its interest in The following strategic choices have been on of an international network of alliances. 0 EU's Postal Services Directive proposes remo- now be seen. Tollpost Globe. Norway Post and Post made in order to strengthen Norway Post's Norway Post’s activities abroad currently com- 2001 2002 2003 val of national monopoly areas. This process There is every reason to expect other aggres- Denmark jointly own the Scandinavian logis- position in a liberalised and increasingly globa- prise parcels, express services, distribution of will open markets, increase competition and sive moves in the future. Especially the domi- tics company PNL. By acquiring City Mail in lised communications and logistics market: addressed and unaddressed letter mail and IT produce an even stronger pressure on prices. nant players in Europe aim to position thems- Sweden, Norway Post assumed an important services. elves in relation to full liberalisation of the let- position in relation to developments in the let- • Norway Post will deliver integrated services to • Changing customer demands: ter market. Several companies intend to beco- ter market. Norway Post moreover has interests a larger part of the customer’s value chain. Increased global focus and sharpened competi- me global providers of integrated solutions and in the express market through Box Delivery in tion are changing customer behaviour. To an networks for letter, express delivery, logistics Sweden and Denmark and in the IT market • Norway Post will be the leading operator in increasing degree customers will request global, and financial services. This is particularly the through its stake in the Swedish company Norway in its core areas, offering a broad range tailormade and complete solutions instead of case for the major postal companies: Deutsche Transware AB. of services and representing an attractive individual products and services. Their need Post World Net (Germany), TPG (Nether- domestic distributor and cooperation partner. for one cooperation partner who can provide lands), La Poste (France) and Royal Mail (UK). Global ambitions total communications and logistics services will Both Deutsche Post and TPG clearly have glo- • Norway Post will be a leader in niche markets grow. Nordic countries –an attractive market bal ambitions and are already heavily represen- in the Nordic countries, utilising its expertise International enterprises are increasingly loo- ted in the Nordic countries. Deutsche Post is to add to the company's revenues and further European postal companies in the lead king at the Nordic countries as one market. present in the goods logistics and express mar- develop its operations. A general trend in the mature part of the Norway is a part of this market. ket in all the Nordic countries through European postal market is declining letter volu- Within a number of industries this approach DHL/Danzas. TPG is present in the same mar- • Norway Post will form alliances with players 36 Corporate governance «Norway Post’s fundamental values aim to characterise the company’s business culture and form the basis for its management model»

THE BOARD OF DIRECTORS OF NORWAY POST

ARVID MOSS (46) Chairman President Hydro Aluminium Metal Products

LIV STETTE (46) Vice-Chairman the company’s business culture and form the cer, the group controller and group treasurer. limited to two months' salary. Personnel Manager in Ålesund municipality Corporate Governance basis for its management model. Together with The Remuneration Committee includes four It is possible for the group management to these fundamental values, Norway Post’s visi- Norway Post board members, headed by achieve a bonus of up to 25 per cent of their INGER MARIE GULVIK HOLTEN (44) on, business concept, overall objectives and the board chairman. The Remuneration salary. Final decisions concerning bonuses are Director strategies make up the main elements of the Committee's task is to evaluate, propose and made by the board of directors (the CEO for Marketing Manager, For Norway Post corporate governance GjensidigeNor Næringseiendom AS company’s management model. adjust the remuneration of the chief executive the group management). Payments under the involves the goals and overall policies by which Norway Post’s reputation is to be supported officer and give him/her feedback on his/her bonus scheme are conditional upon positive by and based on its fundamental values. These evaluations of the remaining group manage- pre-tax results. If an employee leaves the com- ASBJØRN BIRKELAND (58) fundamental values also describe Norway Post’s ment. The committee shall also prepare princi- pany before the bonus payment date, no bonus Director the group is managed and controlled. Managing Director, Data Invest AS business ethics, the guidelines stating that ples for the company's bonus schemes for is paid. Norway Post will board consideration. For Norway Post «Corporate Governance» owner and four the company’s employees. To • behave with honesty in all contexts The company’s auditor participates in the Risk TERJE CHRISTOFFERSEN (52) Director involves the goals and overall policies by which ensure satisfactory integrity the directors must • not abuse its strong market position board meeting considering the annual financial An overall risk assessment for the group is Group Vice President, executive the group is managed and controlled and the not have significant involvement with the • not tolerate malpractice statements. At this meeting the auditor reviews made every year. The different risks are graded team of TeliaSonera Group structures regulating the interaction between Norway Post group. The company's conflict of • be a responsible player in society the audit and his view on the group’s accoun- according to their significance and probability. the company’s governing bodies and its other interests register aims to ensure that neither ting principles, risks, internal control routines The risk assessment includes presentation of GRY MØLLESKOG (42) interest groups. The basic principles for corpo- directors, employees in management positions Governing documentation and the group’s accounting practice. The audi- measures and recommendations intended to Director The Royal Palace – Staff Chief rate governance in Norway Post and planned nor hired consultants participate in activities in The responsibilities and functions of the board tor’s evaluation of these aspects is summarised reduce the individual risks. for the Crown Prince and Princess further work in this field are found in Norway which their interests may conflict with those of of directors and the chief executive officer are annually in a letter to the board of directors. In Norway Post is exposed to financial market Post’s Corporate Governance Policy. the company. regulated by specific guidelines. Corporate addition to carrying out the audit of the annu- risk because of variations in currency, interest KARI LUND (46) The Norwegian act relating to registered governance documents have been prepared to al financial statements, Norway Post’s auditor rates and electric power markets. Pensions, the Deputy Director Share capital and ownership limited companies («Aksjeloven») sets guideli- ensure economies of scale, reduce risk and also conducts a yearly review of the product introduction of IFSR accounting principles, Executive Vice President, On 31 December 2003 the company’s share nes for the board's work. The board's main ensure that best practice is employed throug- accounts and government procurement estima- goodwill/intangible fixed assets and develop- Storebrand Bank ASA capital was NOK 3 120 million comprising 3.12 tasks and administrative procedure are descri- hout the group. tes. The auditor is also widely used as an advi- ment in number of people on disability benefit million shares, each with a nominal value of bed in more detail in the document «Norway The board of directors and the group mana- sor as regards financial due diligence in con- are areas in which Norway Post closely follows ODD CHR. ØVERLAND (47) NOK 1 000. The Norway Post group is owned Post board functions and responsibilities». The gement are responsible for the necessary super- nection with acquisition of new activity and in up the company's risk exposure. Strategic risk Director by the Norwegian state, represented by the board of directors convenes 7-8 times a year. Its vision of the company’s activity in compliance issues concerning taxes and duties. The auditor relates to the company's relationship with its Employee representative (Postkom) Ministry of Transport and Communications. main functions include strategic planning, with internal control regulations. This is ensu- is not used as a consultant in connection with competitors and customers. In addition, new The Minister of Transport and Communi- together with supervisory and organisational red by, for example, the continuous controller strategic or operational issues. rules and decisions in regulatory matters repre- INGEBORG SÆTRE (49) cations is the company’s Annual General responsibilities. The board evaluates its wor- function, external auditors, legal quality assu- sent a strategic risk for Norway Post. Director Meeting. Some of Norway Post’s business areas king processes every year, and reviews the con- rance, quarterly strategic and business reviews Remuneration of directors and executives Reputation risk relates to Norway Post's relati- Employee representative (Postkom) are licensed pursuant to Norwegian postal tents of the board instructions as required. and annual management audits. These proces- The board of directors is paid a fixed fee, deter- onship with the media, politicians, owners and services legislation, supplemented by the Directors elected by the owners are elected for ses are intended to ensure sufficient review and mined by the Annual General Meeting. The important customer groups. Internal risk ele- Norwegian postal services regulations. The a period of two years. The practice of only half control of operating activity in compliance directors’ remuneration is presented in note 2. ments associated with reputation concerns fai- HANS FREDRIK DANIELSEN (46) Director current licence expires in 2005. The Norwegian the directors coming up for election at once with applicable legislation and principles for Norway Post considers it important to make ling quality, service and routines, labour con- Employee representative (Postkom) Post and Telecommunications Authority ensu- ensures continuity in the management of the good corporate governance. use of incentives in order to encourage mana- flicts and leaks or disloyalty. Operational risk is res that the company fulfils its licence require- company. In addition, the Investment Committee gement to focus on long-term value creation in associated with factors such as systems operati- ments. appointed by the chief executive officer and the keeping with the interests of the company's on and the natural environment. ERIK DØVLE (55) Fundamental values Remuneration Committee established by the owners. On this basis a bonus scheme has been Director Employee representative (PL) The board of directors Norway Post’s four fundamental values are board of directors are responsible for following introduced for persons in key positions in the The board of directors of Norway Post compri- honesty, respect, innovation and interaction. up their respective areas. The Investment group. The bonus scheme currently encompas- ses ten directors, with six representing the These fundamental values aim to characterise Committee consists of the chief financial offi- ses some 35 managers. Maximum bonus is 39 Community report

«Norway Post aims NUMBER OF SALES OUTLETS 2000 2001 2002 2003 to distribute mail to Posts offices 875 431 304 328* Post in Shops 378 897 1 146 1 175 as many customers In all 1 253 1 328 1 450 1 503 *including 25 business centres as possible six days

DELIVERY OF A PRIORITY MAIL IN 2003 a week» RESULT IN % 1Q. 2Q. 3Q. 4Q.TOTAL The next day: requirement:: 85 % 86,5 88,4 88,3 87,5 87,7 In three days: requirement: 97 % 99,5 99,6 99,6 99,5 99,5 2003 the number of sales outlets increased as households/activities in Norway have mail Decline in government procurements Equally good postal services 29 Post in Shops were established. delivered 6 days a week. Norway Post’s additional costs relating to stat- Norway Post wants an open dialogue with utory services are presupposed covered by the TAXES AND DUTIES Extended opening hours its customers concerning the location of mail- monopoly profit and by government procure- IN BNOK 2001 2002 2003 throughout the country Value added tax 0,973 1,570 1,545 Opening hours were extended in 2003 as post boxes. Since the requirement for joint mailbox ments of specified unprofitable postal services. Employers' insur.contr. 0,896 0,850 1,023 offices began to adjust their opening hours to racks in residential areas was removed in the In keeping with Norway Post’s streamlining Taxes 1,795 1,671 1,538 Norway Post’s social obligation is to provide those of the local business community. Post autumn of 2001, over 93 000 households have process, the need for government procure- Corporation tax 0,075 0 0 offices located at shopping centres are open moved their mailboxes back to their own gates ments has been significantly reduced in recent In all 3,739 4,091 4,101 when the centres are open. Post in Shops or driveways. years. the same good postal services throughout observe the opening hours of the shop/petrol Postal services partly financed by the station. In December 2003, post offices were Higher quality Norwegian State under this system include: the country. open on Sundays for the first time. Delivery quality improved in 2003. The licence DIVIDEND one extra distribution day for 15 per cent of all IN MNOK KRONER 2001 2002 2003 2004 In order to fulfil licence requirements, requirement for delivery of 85 per cent of all A households, four extra distribution days for 5 Dividend paid 0 300 0 121* Norway Post is part of the infrastructure of the concern: requirements for the range of pro- Norway Post has post boxes centrally placed in priority mail the next day and 97 per cent deli- per cent of all households, free distribution of * decided by the Annual General Meeting Norwegian society and is the largest workplace ducts offered, accessibility of statutory services, residential and business areas, at traffic cen- very within three days, was met with good Braille material for the blind and the cost of in Norway in terms of the number of employ- and delivery time. tres, outside its permanent outlets and on its margins. In 2003 87.7 per cent of all A priority maintaining rural postal services and a nation- ees. Norway Post’s obligation to society is to In 2003 Norway Post fulfilled the licence rural postal services routes. At the end of 2003, mail was delivered the next day, with 99.5 per wide sales network. GOVERNMENT PROCUREMENT provide good and equivalent postal services in requirements for statutory postal services and the company had 27 295 post boxes, compared cent being delivered within three days. Priority In MNOK accordance with the licence requirements and basic banking services. The standard terms for with 27 762 one year earlier. In addition, agre- was also given to delivery quality improve- Taxes and duties at the same time operate commercially and be statutory postal services were renewed in 2003. ements can be made for delivery of large ments in 2003. Being one of Norway’s largest companies and 700 competitive in a market that is open to con- The requirement for basic banking services quantities of mail to postal terminals, or for employers, Norway Post contributes signifi- stantly increasing competition. was met through the following products offe- collection from the customer. Thus mail could Cost-based prices cantly to the Norwegian state in the form of 600 Society’s demands and expectations of red on behalf of DnBNOR/Postbanken: ope- be posted at nearly 31 000 places in 2003. The licence demands cost-based prices on payment of taxes and duties. Norway Post’s operations are regulated ning of bank accounts, deposits, withdrawals statutory and associated services. The same through its licence pursuant to Norwegian and payment services. Distribution six days a week applies to discounts. In addition, uniform Dividend 500 postal services legislation. The current licence, Norway Post aims to deliver mail to as many postage rates are required within the geograp- In addition Norway Post pays dividend to its which was granted by the Norwegian Ministry Improved accessibility customers as possible six days a week. The hical area covered by the licence. Monopoly owner when the company makes a profit and 400 of Transport and Communications in In recent years Norway Post’s service has been company has no intention of reducing distri- services and statutory services must be offered has unrestricted equity. Being the owner of September 2001, expires in 2005. The licence expanded and improved. bution to five days a week, as in, for example, with clear, non-discriminatory terms. Norway Post, the Norwegian state requires a requirements entail additional costs for the Accessibility to the company’s services has Sweden. Exceptions from daily mail distributi- To fulfil the licence requirement, Norway dividend corresponding to 30 per cent of the 300 company compared with commercial operati- increased, especially through the establishment on reflect special geographic conditions which Post presented a three-year plan for adjust- company's net income. ons. The additional costs are covered by any of Post in Shops, and by extended opening make it impossible or unreasonably costly to ment of newspaper and magazine postage in gains from the company’s licensed activities hours at post offices. deliver mail every day. This applies to a decli- 2003. According to its licence, Norway Post has 200 1999 2000 2001 2002 2003 2004 and by the government’s purchase of unprofi- The licence requires a nationwide sales net- ning number of households and firms. In 2003 to demand the same price for newspaper dis- table postal services. work with a minimum of one permanent out- the number of households/activities without tribution as for other customers. This means let in each municipality. All sales outlets and six-day distribution was reduced by 202, to that the company is no longer able to favour Licence requirements fulfilled rural postal services must provide statutory 801, representing 0.04 per cent of all mail reci- newspapers and magazines in the same way as The social requirements of the licence mainly postal services and basic banking services. In pients. This means that 99.96 per cent of all earlier. 40 Environmental report

FACTS AND FIGURES ENERGY CONSUMP. UNITS 2002 2003 Electricity kWh 176 253 405 155 494 364 District heating kWh 10 059 352 12 982 849 Fuel oil kWh 11 359 096 10 433 431 Est. energy consump.* kWh 14 582 586 - Tot. energy consump. kWh 212 254 439 178 910 644

NORWAY POST VEHICLES Vehicles Number 5700 5825 Lorries = Euro2% 70 80 Kilometres travelled Km 101 179 142 106 787 000

HIRED TRANSPORT SERVICES Vehicles Tonkm 32 126 164 61 575 500 Aircraft Tonkm 10 579 121 9 965 888 Trains*** Tonkm 80 902 283 106 910 950

BUSINESS TRAVEL ** Private cars Km 12 049 769 11 747 689 Air travel (r)**** Number 3219 3557

CONSUMPTION OF RAW MATERIALS Petrol Litres 4 107 273 4 538 200 Diesel Litres 14 202 890 14 688 800 «Norway Post will con- Fuel Oil Litres 1 124 663 1 033 013 tribute to a sustainable Copying paper**** Tonnes 326 216 * Estimated energy consumption in rented buildings ** Incl. subsidiaries *** By electric trains, approx. 81 % in 2003 development through ****Numbers from ErgoGroup not included environmentally effici-

ent operations» WASTE TYPE UNIT 2002 2003 Residual waste Tonnes 4 160 3 898 Paper Tonnes 987 958 Cardboard Tonnes 161 435 Cardboard/paper mix Tonnes 2 187 3 039 Norway Post’s environmental vision: transport. About 60 per cent of total emissions work processes and technology have been Plastic Tonnes 64 61 «Norway Post will contribute to a sustai- Norway Post becomes greener from transport come from Norway Post’s own introduced. Construction companies were pre- Wood Tonnes 840 1 185 nable development through environmen- vehicles. The share of residual waste declined sented with specifications of environmental Waste paper Tonnes 92 67 tally efficient operations» from about 48 per cent in 2002 to about 39 per requirements, and such requirements were also Metal Tonnes 97 102 As part of Norway Post’s continuous endeavours Food Tonnes 38 46 Environmental objectives and action plan cent in 2003. During the same period the regis- made to the purchase of products and services. Tyres Tonnes 35 108 The environmental action plan for 2004- tered total waste increased. The increase was Equipment and furniture have been re-used to reduce the impact of its activities on the Building waste Tonnes - 4 2006 defines objectives, proposes measu- mainly a one-time effect related to the move to internally, and much furniture has been sold EE-waste Tonnes 31 18 res to improve performance and establis- new premises, but also partly reflects improved for external re-use. Only defective and dama- natural environment, the company introduced a Hazardous waste Tonnes 105 109 hes benchmarks for prioritised areas: registration routines. ged equipment was discarded. Car batteries Tonnes 7 9 transport, waste, energy consumption in The company’s continuous search for opti- new environmental management system in 2003. TOTAL WASTE TONNES 8699* 10 039* buildings and environmentally efficient mal logistics solutions involves changes in ope- Environmental plan *Waste from rented buildings is estimated purchases. rations and transport. Mapping of environ- A number of activities will take place during Throughout its value chain Norway Post's acti- Norway Post has started using an electronic mental effects is an important part of this the year: • Emissions from transport CO2 and NOx emissions from Norway vities have an impact on the natural environ- environmental accounting system. In this way work.In 2003 it was decided that a new termi- • Norway Post’s energy programme will be Post’s own fleet of vehicles will be redu- ment. Purchase of goods, energy and services the company’s environmental impact is quanti- nal structure for Norway Post would be intro- continued. Expected reduction in energy con- EMISSIONS TO AIR ced by 5 and 10 per cent respectively by indirectly affect the environment, whereas con- fied and documented, forming the basis for the duced. The implementation of the new struc- sumption is 20 per cent from project initiation FOSSIL FUELS CO2 SO2 NOX the end of 2006. sumption of goods and energy in Norway annual environmental report. ture will start in 2004, resulting in increased until the end of 2004. TOTAL EMISSIONS 2002 85467 6,4 283 Post’s production have a direct environmental road transport of mail. At the same time, • Norway Post’s fleet of vehicles will be rene- TOTAL EMISSIONS 2003 89910 7,3 303 • Waste impact in the form of emissions to air and dis- Environmental activities however, air traffic will be reduced and will be wed; 200 vans and 100 lorries from Euro 1 and Change 2002-2003 5 % 14 % 7 % All waste will be sorted, and total waste charge to water, and generation of noise and The objective of Norway Post’s energy pro- made more efficient by means of charter air- 2 to Euro 3. In addition, 100 drivers will be quantities will be reduced. By the end of Norway Post’s share of emissions waste. Norway Post aims to reduce the environ- gramme is to reduce energy consumption in craft. On the whole, the resultant environmen- trained in environmentally efficient driving. from road traffic in Norway* 0,6% 0,9% 0,6% 2006, residual waste (unsorted waste) will mental impact of its activities by lowering the the company and increase the use of renewable tal impact of the change will be minimal to • Waste management at Norway Post’s termi- not constitute more than 30 per cent of consumption of resources and by preventing energy sources. In all, energy consumption in positive. nals will be optimised, and the programme for *Excluding emissions from CityMail Sweden AB. Estimated based on the weight of the total waste. emission figures from Statistics Norway (2002). and reducing emissions, discharges and waste. the buildings included in the programme was optimal use of the company’s premises will be • Energy consumption in buildings reduced by 16 per cent in 2003. The goal was a Reduced air traffic continued, as will Norway Post’s participation Buildings included in the energy economi- Environmental management reduction of 6 per cent. The energy program- Centralised sorting on Saturdays from 1 in Bellona’s hydrogen car project. sing project will reduce energy consump- The aim of environmental management is to me covers 21 of Norway Post's buildings, or 30 February 2004 will reduce air traffic by 2.4 per • The group's internal newspaper and its DISTRIBUTION OF CO2 EMISSIONS DISTRIBUTION OF NOX EMISSIONS tion by 20 per cent and increase their use meet government requirements and focus on per cent of all company-operated premises. cent compared with 2003, and reduce annual Dialogue magazine meet the criteria for use of 3% 1% of renewable energy during the period environmental work. Norway Post’s environ- From 2002 to 2003, the proportion of heating energy consumption at mail terminals by 450 the Nordic Swan eco-label. 9% 22% 2002-2005. mental management system will ensure syste- from a distant supply source to total energy 000 kWh. Distribution Network's coordination • The divisions will prepare their own environ- 28% 9% matic, preventive and documented environ- consumption increased from 13 to 20 per cent. of letter and parcel deliveries has improved mental action plans to contribute to meeting 1% 6% • Environmentally efficient purchases mental work and contribute to continuous During the year, Norway Post increased its utilisation of Norway Post's vehicle capacity, corporate environmental objectives, and will 3% 1% Norway Post will make environmentally 55% 60% efficient purchases. By the end of 2006, improvements in environmental results. use of trains, hired cars and its own vehicles. and reduced mileage. The vehicle fleet has been implement the electronic environmental 80 per cent of all framework agreements The new system was introduced in 2003, and From 2003 the registered use of vehicles inclu- upgraded, and Agder sorting area has been re- accounting system. for purchases of products and services will be implemented in the divisions in 2004. ded the entire group. During the same period certified as an "Eco-Lighthouse” firm. • In addition, corporate environmental key will be environmentally documented. the company’s use of aircraft was reduced. The environmental aspect of Norway Post’s indicators will be defined, and procedures will Registration and measurement Norway Post’s emissions of CO2 and NOx joint premises project was concluded in 2003. be prepared for environmentally efficient pur- To increase the efficiency of its follow-up of increased by 5 per cent and 7.5 per cent, Office premises with high utilisation were cho- chases. environmental work and reporting of results, respectively. These emissions mainly relate to sen, and resource-efficient and waste-reducing * Including emissions from CityMail Sweden AB 42 A good overview: Norway Post has nearly 22 000 employees spread throug- hout the country. Mail is distributed to about two million households six days a week, and the quality of the company's delivery services has never been higher. In 2003, 87.7 per cent of all A-priority mail was delivered the next day. This is 2.7 percentage points above the 85 per cent licence requirement. Notes NotesNoter

GENERAL Mondex Norge Originator AS. the Norwegian state, represented by AS, and Wajens AS bought Arntsen statement, meaning that all income statement. Prepaid pensions are classi- On 1 July 2002, Posten Norge AS, the Ministry of Transport and Tungtransport. statement items include the minority fied as a long-term asset in the balan- established as a statutory company on 2000 Communications. Posten Norge BA interest's share. The minority interest’s ce sheet provided that it is likely that 1 December 1996, became a joint-stock With effect from 1 January 2000 existing paid-in capital was converted 2004 share of equity is shown as a separate the excess value can be utilised or company with the Norwegian state as Posten Norge AS cafeteria services to equity together with a subordinated In March, Posten Norge AS signed an item under group equity. repaid. Similarly, when pension obligati- sole shareholder, represented by the were transferred to Posten Renhold AS, loan of NOK 400 million from the agreement to buy Nor-Cargo Holding ons exceed pension scheme assets, the Ministry of Transport and Communi- which changed its name to Postens Norwegian state. In addition, NOK 1 660 ASA. The balance sheets of foreign compani- difference is classified as a long-term cations. Accounting and taxation cont- servicepartner AS. Posten Norge BA million in new equity was supplied. In es are translated using exchange rates liability. Net pension cost is recognised inuity was maintained during the transi- retained its 85% ownership interest. connection with the change to limited ACCOUNTING PRINCIPLES at the balance sheet date, whereas as payroll expenses in the income sta- tion, and consequently, 2002 figures Posten Norge BA acquired Oslo company, the severance pay commit- Consolidation income statements are translated tement. Changes in the pension obliga- include the total activities of the two Container Stevedore AS (100 %), ment was transferred from the The consolidated financial statements using average exchange rates for the tion due to changes in pension schemes companies. Norway Post's annual finan- Wajens AS (100 %), Kort Prosess AS Norwegian state to Posten Norge AS present the financial position and year. Translation differences are dealt are amortised on a straight line basis cial statements are presented in (51 %), Nettlast AS (100 %), Nettlast and NOK 121 million was charged to result of operations of the parent com- with in reserves. over the average expected remaining accordance with the Norwegian Hadeland AS (100 %), Nettlast other equity and transferred to provisi- pany Posten Norge AS and companies service lives of the current employees. accounting act and Norwegian generally Helgeland AS (100 %) and Netaxept AS ons for liabilities and charges. in which it is a controlling interest. All Accrual, classification and valuation accepted accounting principles. (48 %). Posten SDS AS spun off payroll Accounting and taxation continuity was consolidated financial statements are principles Any changes in pension obligation and systems and human resources services maintained during the transition from presented according to uniform The annual financial statements are pension scheme assets due to changes SIGNIFICANT EVENTS into a separate company, statutory company to limited company. accounting and valuation principles and prepared in accordance with the in and deviations from estimates exce- Since its establishment in 1996, the ErgoBluegarden AS. Corresponding ser- In 2002 Sweden Post sold its 33.3 % all income statement and balance sheet Norwegian accounting act and eding 10 per cent of the higher of the group has conducted the following sig- vices in Merkantildata and IBM were interest in Pan Nordic Logistics (PNL). items are classified using uniform clas- Norwegian generally accepted accoun- pension obligations or pension scheme nificant transactions: acquired and placed under Bluegarden. Post Denmark and Posten Norge AS sification definitions. All significant ting principles. assets at the beginning of the year, are Posten SDS AS acquired 40% of increased their interests to 50 %. PNL intercompany transactions and balan- amortised on a straight line over the 1996 TransWare AB, Gothenburg, which provi- bought 99.78 % in AB Expressgods dag ces have been eliminated. All assets relating to the flow of goods, average expected remaining service Posten Norge BA was established at des solutions for the transport indus- och natt. The shares in Postens ser- receivables payable within one year and lives of the current employees (“corri- the end of 1996 with Posten SDS AS try, securing a majority interest on the vicepartner AS were sold to ISS Norge Shares in subsidiaries have been elimi- assets not intended for permanent dor solution"). Non-amortised deviati- (100%) as a subsidiary company and board and an option to acquire additio- AS.Posten Norge AS further streng- nated according to the acquisition ownership or use in the activity are ons in estimates and changes in pensi- Billettservice AS (50%) as an associa- nal interest. thened its market position in Sweden method of accounting. The difference classified as current assets. Other on schemes appear from note 3. ted company. Subsidiaries of Posten through its acquisition of 57 % of the between the purchase price of the sha- assets are classified as fixed assets. Pension scheme assets are classified SDS AS included Computas AS, 2001 shares in CityMail Sweden AB. Posten res and the group’s share of the acqui- as non-interest bearing long-term DeltaPro AS and Enet AS. On 1 January 2001 Posten SDS AS, Norge AS increased its ownership inte- red company’s book value of net assets All liabilities relating directly to the flow receivables because the interest ele- including its subsidiaries, changed its rest in TSI from 79.47 % to 100 %. The at the time of purchase is analysed and of goods are classified as current liabi- ment is recognised as payroll expenses 1997 name, the new name of the parent shares in Netaxept AS and the con- included in the balance sheet item to lities, even if some of the liabilities are together with pension costs. Posten Norge BA acquired 100 % of company being ErgoGroup AS. Posten tents of Nettlast Helgeland AS were which the excess/reduced value relates. due for payment after one year. Billettservice AS and Forbruker-Kontakt Norge BA acquired 95 % of the shares sold in 2002. ErgoGroup acquired the Any excess value that cannot be inclu- Other revenues and expenses AS and 25 % of NordPack AB, in which in Itol Factory AS, a subsidiary of the operations of Runit AS which continued ded in specific balance sheet items is Current assets are valued at the lower Other revenues and expenses include the other Nordic postal operators held listed company E-Line Group ASA. At in the new company ErgoRunit AS. In classified as goodwill. Goodwill is depre- of their historical cost and market for example cost of restructuring, gains corresponding interests. Posten SDS the same time E-Line Group ASA took addition, ErgoGroup increased its inte- ciated on a straight-line basis over its value. Fixed assets are valued at their and losses from sale of fixed assets, AS spun off school administration sys- over 100 % of the shares in Posten rest in Objectware AB from 40% to useful economic life. Companies acqui- cost price less depreciation, if any. If and gains and losses from sale of sub- tems into a separate, wholly owned Escape AS. Billettservice was sold to 70%. ErgoConnect AS was sold to red during the year are included in the the market value of the fixed assets is sidiaries in the group. company, IPOS AS. Ticketmaster UK Limited. ErgoGroup Adviso AS. accounts from the date of their acqui- lower than the balance sheet value and and Telenor established a new company, sition, while companies sold are included the decline in value is not considered to Taxes 1998 ZebSign AS, in order to offer electronic 2003 in the accounts until their date of sale. be temporary, the fixed assets are Taxes include payable taxes for the At the end of 1998 Posten Norge BA ID solutions. Each of the parties owned In connection with Posten Norge AS Subsidiaries are consolidated from the written down. If the basis for the write- period and changes in deferred tax/tax transferred cleaning services to Posten 50% of the new company. Together with coverage of the shortfall in the date the group achieves control. down no longer exists, it is reversed. assets. Payable taxes are calculated Renhold AS (85 %). The interest in Telenor, DnB and Accenture, ErgoGroup Norwegian Public Service Fund, the based on earnings before tax (EBT). Net Billettservice AS was reduced to 77 %. established a company to offer electro- company was supplied NOK 600 million Companies are defined as joint ventu- Revenues deferred tax/tax assets is calculated NordPack AB changed its name to Pan nic procurement services to their in new equity. Based on the adopted res when the group has entered into Revenues from stamp sales are classi- based on temporary differences bet- Nordic Logistics AB (PNL). Posten SDS parent companies and the market in changes to the EU’s postal directive, agreements with other co-venturers fied as advance payment of postal ser- ween accounting and tax values and tax AS sold some small subsidiaries, inclu- general. the Storting (Norwegian parliament) for shared control. Ownership interests vices sold. Revenues from other servi- losses carried forward at the end of ding Computas AS. In cooperation with Norsk Tipping AS, decided to limit Posten Norge AS in joint ventures are recognised based ces are recognised when delivered. the financial year. Tax-increasing and ErgoGroup set up Buypass AS. monopoly to the distribution of letters on the straight-line method of depreci- Revenues from long-term projects are tax-reducing temporary differences 1999 ErgoGroup took over operation of IT up to 100 grams and reduce the price ation, meaning that the group’s propor- recognised on the basis of current that are reversed or can be reversed, Posten Norge BA established Posten services in Gjensidige NOR Forsikring limit to three times the basic rate for tion of revenues, costs, assets and lia- settlement according to the degree of are equalised. Recognition of deferred Escape AS (100 %) and acquired and Gjensidige NOR Spareforsikring. letters in the first weight category. At bilities are consolidated line by line in completion. tax assets on net tax-reducing diffe- Transport Systems International AS ErgoGroup bought 50% of the shares in the same time, the market for mail sent the consolidated financial statements. rences that are not equalised and los- (40%), the latter being treated as a Ephorma AS, increasing its ownership out of Norway was fully deregulated. Pensions ses carried forward is based on the joint venture together with PNL. At the interest to 100%. In addition, the con- The Storting also decided that no value Associated companies are defined as Net pension cost consists of the perio- assumption of future earnings. end of 1999 Posten Norge BA financial tents of Ergo Business AS were sold to added tax is to be charged on bulk mail companies in which the group has signi- d’s earned pensions including future Deferred tax and deferred tax assets services were transferred to Postens Adviso AS, in which Ergo Business held a to other countries, which will place ficant influence. Interests in associated salary increases and interest expense that can be carried forward are netted Økonomitjenester AS, wholly owned by 27% ownership interest. Through its Posten Norge AS services on an equal companies are accounted for under the on the estimated pension obligation, in the balance sheet. Posten SDS AS. At the beginning of subsidiary Transport Systems footing with other direct transport of equity method, with share of the asso- less contributions from employees and 1999 part of the Professional services International AS (TSI) Posten Norge BA goods to international destinations. The ciated company's net income for the expected return on pension scheme Tangible fixed assets and depreciation division of Posten SDS AS was spun off acquired the Danish courier company activities of Posten Forbruker-kontakt year being offset against the cost price assets. Prepaid pensions correspond to Tangible fixed assets are recorded at into Ephorma AS and merged with «De Grønne Bude». AS were wound up. ErgoGroup sold its of the interest and included under the difference between estimated pen- their historical cost after deduction of Telenor Allianse AS. Ephorma was owned shares in ErgoBluegarden AS and the financial income or financial expenses. sion scheme assets and the present accumulated depreciation and write- 50% by Posten SDS AS. In the autumn 2002 contents of ErgoEnet AS. Oslo value of estimated pension obligations downs. For large investments with a of 1999 Posten SDS AS set up the On 1 July 2002, Posten Norge BA beca- Container Stevedore AS acquired the The minority interest’s share of net less changes in estimates and pension long manufacturing period, interest is companies Mondex Norge AS and me a limited company owned 100% by logistics operations of Fellestransport income after tax is shown in the income schemes not recognised in the income capitalised as part of the acquisition

46 47 Notes Notes

cost. Tangible fixed assets are valued at Accounts receivable are recognised in foreign companies is recognised in the the lower of their book value and mar- the balance sheet at their nominal value group's financial statements at the ket value. If the market value is assu- less deductions for bad debts. exchange rate used for the transaction. NOTE 1 OPERATING REVENUES med to be lower than the book value and the decline is not assumed to be Contingent liabilities Cash flow statement temporary, the tangible assets are Contingent liabilities are recognised The cash flow statement is prepared POSTEN NORGE AS NORWAY POST GROUP written down to their market value. Any when it is more likely than not that they based on the indirect method. Cash and write-down of a tangible asset is consi- will be settled and their value can be cash equivalents consist of liquid 2001 2002 2003 2003 2002 2001 dered individually. If the basis for the fairly estimated. Best estimate is used assets, including liquid assets relating write-down no longer exists, the write- when calculating settlement value. to the sales network. 8 813 8 278 8 484 Communications products 8 874 8 473 8 805 down is reversed. Tangible assets are 2 115 2 305 2 505 Logistics operations 3 744 3 470 3 152 depreciated on a straight-line basis Restructuring costs and severance IFRS over their useful economic life. Ordinary pay By 2005, all EU listed companies must 1 364 1 361 1 151 Consumer 1 151 1 358 1 387 depreciation starts when the tangible Restructuring is defined as a planned apply international financial reporting IT services 1 742 1 767 1 460 fixed asset is put into normal operation. programme which significantly changes standards (IFRS). This requirement does 194 39 53 Other, including eliminations 48 38 204 This means that no depreciation is the scope of the activity or the way in not apply to Norway Post, but prepara- 12 486 11 983 12 193 Operating revenues 15 559 15 106 15 008 made of facilities under construction. which it is run. tions are nevertheless being made for a Costs relating to normal maintenance Provisions for restructuring are expen- possible transfer to IFRS in 2005 or in Operating revenues and expenses relating to internal deliveries have been reclassified. Corresponding adjustments have been made to comparable figures. and repairs are expensed when incur- sed when the programme has been the subsequent year. red. Costs of replacements and rene- adopted and the costs are identifiable, wals which significantly increase the quantifiable and not covered by corres- In 2003, Norway Post worked to clarify The proportion of the group’s operating revenues relating to activity abroad was 7.2 per cent in 2002 and 8.7 per cent in 2003. standard of the assets are capitalised. ponding revenues. possible differences between its Severance pay is paid to redundant accounting principles and current inter- Development costs employees for a period until they get national financial reporting standards. The group’s development costs mainly new jobs. The severance pay commit- According to preliminary analyses, there relate to the development of IT sys- ment is calculated on a best estimate does not seem to be many significant tems intended for use in the group's basis. differences between the company’s NOTE 2 PAYROLL EXPENSES AND OTHER REMUNERATION services and to some extent for sale accounting principles and IFRS. The and licensing. The cost of developing Leases financial reporting of Norway Post acti- new solutions or further development Lease agreements are recognised as vities is not complicated. Within certain POSTEN NORGE AS NORWAY POST GROUP resulting in new functionality is capitali- ordinary leases or financial leases areas, however, the effects of a pos- sed and depreciated on a straight-line depending on their actual contents. In sible change to IFRS are regarded as 2001 2002 2003 2003 2002 2001 basis over assumed useful economic case of financial leases, the asset is relatively large. Examples of such areas life. The time of capitalisation is deter- capitalised at its historical cost on the are pensions, financial instruments, lea- 5 854 5 596 5 319 Salaries 6 640 6 825 6 952 mined individually for each project date the asset is transferred. The ses and acquisitions. based on its status and progress and asset is depreciated using the same 803 755 720 National insurance contributions 962 968 957 estimated future earnings. Expenses method that is used for corresponding 359 348 335 Pension costs 403 446 420 relating to current adjustments of exis- fixed assets. The interest expense is 310 207 188 Other benefits 212 246 299 ting systems are recognised as mainte- recognised as a financial expense. 7 326 6 906 6 562 Payroll expenses 8 217 8 485 8 628 nance expenses. Other development costs incurred by the group in order to Foreign currency transactions 1 056 920 1 246 428 1 332 692 Board of Directors develop new and further develop exis- Current receivables and liabilities deno- 225 982 Corporate assembly ting products, production processes, minated in foreign currencies are con- 1 300 000 1 350 000 1 390 000 Auditor’s fee for audit of annual fin. statements 6 093 823 6 389 485 4 440 510 etc. are expensed as incurred. verted using exchange rates on the 1 715 750 1 388 050 1 838 204 Auditor’s fee for other fin. audit 3 997 994 4 711 923 6 379 589 balance sheet date. Exchange gains and 518 000 138 624 483 924 Auditor’s fee for other services 2 171 999 3 671 454 518 000 Shares and long-term investments losses are recognised as financial inco- 21 211 19 407 18 158 No. of full-time positions/full-time equivalents 21 640 23 509 24 506 In Posten Norge AS financial state- me and expenses, respectively with the 25 126 22 807 21 132 No. of employees at 31 Dec. 24 544 26 886 29 563 ments the cost method is used for all exception of exchange gains and losses 26 861 27 198 26 774 No. in pension scheme at 31 Dec. 28 512 29 442 29 643 assets in limited companies, including on certain international mail exchange subsidiaries. Long-term strategic share transactions which are recorded as investments in subsidiaries, joint ventu- operating revenues and operating res and associated companies are clas- expenses, respectively. sified as fixed assets. Other strategic Remuneration and fees total pension amounting to 66 per cent the bonus payment date, no bonus is share investments are also classified as Translation differences relating to The Board of Directors neither has of his salary at the time of retirement. paid. For 2003, provisions made for fixed assets. The cost also includes financial instruments designated as and pension schemes nor any other arran- Pension premium paid in 2003 was NOK bonuses to the group management transaction costs relating to the acqui- proved effective in hedging net invest- gements other than directors' fees. 1 057 523. amount to NOK 2.4 million. sition. Write-downs are made individual- ment in foreign companies, are recogni- Remuneration of the Board of ly provided that the decline in value is sed as translation differences under Directors and the corporate assembly In 2002, Norway Post introduced a Of NOK 12.3 million in total auditors’ not of a temporary nature. group equity. In the company's annual is expensed. The corporate assembly bonus scheme for the CEO and the fees of in 2003, NOK 8.8 million were financial statements foreign currency was dissolved in 2001. group management, making it possible fees to the group auditor. Group audi- Inventories loans used for hedging purposes are for them to achieve a bonus of up to 25 tor fees included NOK 4.2 million in Inventories are recognised in the balan- recognised at their historical exchange The Chief Executive Officer has an per cent of their salary. Payments auditing fees, NOK 3 million in payment ce sheet at the lower of their cost and rates. The hedging is accounted for by annual salary of NOK 2 070 000. Salary under the bonus scheme are conditional for other financial auditing and NOK 1.6 estimated net market value. capitalising realised exchange gains and and other remuneration for 2003 of upon positive pre-tax results. Positive million for other services. Payment for Accounts receivable losses. Goodwill relating to acquired NOK 2 323 733 includes NOK 100 000 in pre-tax results also open up for pay- other services mainly concerned assis- director's fee in ErgoGroup. The CEO's ment of individual, performance-based tance in connection with taxes and pension agreement stipulates a retire- bonuses. The final decision to pay bonu- duties. ment age of 65, but includes a right to ses is made by the Board of Directors retire at the age of 60 with a supple- (the CEO for the group management). If mentary pension which will give him a an employee leaves the company before 48 49 Notes Notes

Fund for premium calculation, Posten Posten Norge AS with NOK 600 million schemes entitling the employees to Norge AS in 2003 paid an ordinary pre- in new equity on 1 July 2003. The com- certain future pension benefits. Other NOTE 3 PENSIONS mium of NOK 733 million. In addition, pany’s pension schemes are currently subsidiaries offer contribution schemes NOK 1 475 million was paid to cover the being reviewed. where the premium is expensed as shortfall as decided in the government incurred. The companies in the group POSTEN NORGE AS NORWAY POST GROUP budget for 2003. The government bud- Norway Post Group mainly base themselves on the same get also decided to compensate for its Most subsidiaries have pension sche- long-term financial assumptions as payment of the shortfall by supplying mes. Some companies have benefit Posten Norge AS. 2001 2002 2003 2003 2002 2001 Net pension cost 480 461 492 Present value of pensions earned for the year 546 532 537 560 606 634 Interest expenses of pension obligation 653 625 583 (528) (567) (659) Return on pension funds (677) (585) (552) NOTE 4 OTHER OPERATING EXPENSES (116) (116) (111) Employee contribution 2% (111) (117) (116) 2 11 Changes in and deviations from estimates 13 5 10 10 11 Pension scheme changes 9 9 12 POSTEN NORGE AS NORWAY POST GROUP 406 396 378 Net pension cost 433 469 464 2001 2002 2003 2003 2002 2001 Net pension obligation (10 243) (11 064) (11 442) Estimated accrued obligation (11 726) (11 445) (10 720) 943 988 974 Cost of premises 1 141 1 129 845 9 365 10 114 12 418 Estimated value of pension funds 12 643 10 433 9 807 229 260 218 Other rental expenses 165 175 173 (878) (950) 976 Net estimated pension obligation 917 (1 012) (913) 328 277 284 Accounting and payroll services 139 139 27 147 136 126 Unrecorded changes in pension schemes 92 118 146 520 597 719 IT services 40 41 51 609 1 047 1 152 Unrecorded estimate changes 1 197 1 095 626 351 414 308 Other external services 238 200 262 225 118 99 Travel expenses 167 199 303 (122) 233 2 254 Net scheme assets/ (obligations) 2 206 201 (141) 90 126 151 Marketing 194 162 119 657 457 390 Other expenses 567 575 828 3 343 3 237 3 143 Operating expenses 2 651 2 620 2 608

Posten Norge AS on changes in the pension scheme Unrecognised deviations from estima- Posten Norge AS provides a group pen- assets corresponds to the development tes (corridor) increased by NOK 105 mil- sion scheme for its employees through in the bond yield. Pension payments are lion for Posten Norge AS from 2002 to IT services in Posten Norge AS included million in 2001, NOK 559 million in 2002 the Norwegian Public Service Pension guaranteed by the Norwegian state. 2003. In accordance with Norwegian intercompany purchases of NOK 469 and NOK 697 million in 2003. Fund (SPK), including the following accounting standards for pension benefits pursuant to the Act relating to Posten Norge AS pension obligation costs, deviations in estimates are char- the Norwegian Public Service Pension also includes a pension scheme in ged to the “corridor”, with the excess Fund: Storebrand for employees in manage- amount being amortised on a straight ment positions. Pension costs and pen- line over an average expected remaining Retirement pension: sion obligations are recognised in service period of 10 years in 2003, com- NOTE 5 OTHER REVENUES AND EXPENSES - 66% of salary at retirement, from the accordance with Norwegian accounting pared with 15 years up to and including age of 70 with the right to retire at the standards for pension costs. Posten 2002. Changes in the pension obligation POSTEN NORGE AS NORWAY POST GROUP age of 67 Norge AS pension cost for 2003 is esti- due to changes in pension schemes are Disability pension: mated based on the following financial amortised on a straight line basis over - 66% of salary at the time of disability and actuarial assumptions: the average expected remaining service 2001 2002 2003 2003 2002 2001 Spouse pension: lives of the current employees. The - 9% of final salary Discount rate in % 6,0 above figures do not include employers’ 105 43 Restructuring 61 110 Child’s pension: Salary increase in % 3,3 national insurance contributions. 111 Severance pay 111 -15 % of final salary Increase in National Insurance (458) (105) 4 Net loss (gain) on fixed assets 1 (116) (447) Fund's base amount (G) in % 2,9 Net pension assets at 31 December Gain on sale of subsidiaries (231) (18) (78) Posten Norge AS has entered into an Pension indexation in % 2,9 2003 were NOK 2 254 million. Posten (458) 0 158 Other revenues and expenses (58) (24) (525) agreement with its employees for con- Return on scheme assets in % 6,1 Norge AS has not recognised changes tractual pension (AFP). This scheme Voluntary retirement in scheme, estimates and deviations of means that employees may choose to (under 50 years) in % 8,0 in all NOK 1 278 million. Actual pension retire at the age of 62. The AFP scheme Voluntary retirement (over 50 years) in % 2,5 scheme assets according to Norwegian is part of the SPK scheme, and pension accounting standards therefore Restructuring costs and severance pay Sale of fixed assets 2002 amounted to NOK 105 million. This payments are covered by the ordinary From and including 2002, estimated amounted to NOK 976 million. The pensi- Restructuring expenses include person- In 2001 Posten Norge AS sold most of its includes NOK 46 million in additional fee. premiums. Scheme financing commen- voluntary retirement under the SPK on premium payment which increases nel measures and rental of vacated pre- post buildings and the Norway Post buil- In 2002, Posten Norge AS sold 5 other ces at the time of employment. scheme was increased to 8 per cent for scheme assets is based on Norwegian mises. Provisions have been made for ding, the group's current main office. In post buildings, 3 postal terminals, 2 stu- employees under 50 and 2.5 per cent Public Service Pension Fund estimates, severance pay to personnel dismissed in connection with the sale of the Norway dio apartment buildings and two sites. The SPK pension scheme, however, is for employees over 50. The disability which require the pension scheme to be 2003, or expected to be dismissed as a Post building, an agreement was entered not based on funds, but fund asset rate K1963 was increased by 140 per actuarially balanced. This means that result of the restructuring programme into whereby the buyer would pay an Sale of subsidiaries management is simulated ("fictive cent because of the development in obligations should correspond to sche- adopted in 2003. Severance pay provisi- additional fee per square metre for an In 2003, ErgoGroup sold ErgoBluegarden fund") as if the assets were invested in number of people on disability benefit in me assets without using the accounting ons are made where other personnel approved plan for additions to the pro- AS and the contents of ErgoEnet AS. long-term government bonds. Return the company. Long-term financial principle of corridor and scheme chang- measures turn out not to be possible. perty. The additional fee was paid in on the initial fund, from 1 December assumptions were not changed in 2003. es. Based on the assumptions used by See note 17. 2002. Net gains on sale of fixed assets in 1996, is 6.46 per cent, while the return the Norwegian Public Service Pension 50 51 Notes Notes

NOTE 6 FINANCIAL INCOME AND EXPENSES NOTE 8 INTANGIBLE ASSETS

POSTEN NORGE AS NORWAY POST GROUP POSTEN NORGE AS NORWAY POST GROUP

2001 2002 2003 2003 2002 2001 2001 2002 2003 2003 2002 2001

44 90 76 Interest income from group companies 234 22 23 IT development, rights, etc. 411 474 330 68 68 40 Other interest income 50 88 93 136 154 Deferred tax assets 32 208 153 24 5 Gains on sale of subsidiaries 9 10 Goodwill 839 957 818 6 9 26 Gains on financial investments 29 3 8 370 185 33 Intangible assets 1 282 1 639 1 301 28 212 Group contribution and dividend received 4 22 39 Other financial income 41 23 4 174 194 393 Financial income 120 114 105 IT develop- Facilities ment, under POSTEN NORGE AS rights construction Total Goodwill 4 2 11 Intercompany interest expenses 164 137 87 Other interest expenses 97 158 181 5 33 Losses on sale of subsidiaries Cost 1 January 83 10 93 11 15 5 6 Losses on financial investments 7 6 37 Additions in 2003 7 7 3 27 32 65 Other financial expenses 72 23 12 Transfers 2003 1 (1) 0 215 209 169 Financial expenses 176 187 230 Disposals 2003 (2) (2) Accum. depr. and write-downs 31 Dec. (75) (75) (4) Book value 31 Dec.2003 9 14 23 10

Depreciation 2003 4 4 2 Write-downs 2003 Economic life 2 - 6 years 5 years NOTE 7 TAXES

POSTEN NORGE AS NORWAY POST GROUP NORWAY POST GROUP

617 103 720 1 193 2001 2002 2003 2003 2002 2001 Cost 1 January Additions in 2003 92 65 157 38 4 (1) 3 (145) (198) (106) Diff. rel. to current balance sheet items (157) (225) (208) Transfers 2003 25 (226) 38 (104) Diff. rel. to long-term balance sheet items (170) (37) (199) Translation difference (64) (37) (101) (36) (20) (647) (2 009) Losses carried forward (2 233) (847) (157) Disposals 2003 (368) 0 (368) (381) (86) 265 2 271 Net pension obligation 2 223 231 (109) Accum. depr. and write-downs 31 Dec. 281 130 411 839 No basis for capitalisation 229 142 82 Book value 31 Dec.2003 (477) (542) 52 Basis for deferred taxes/(tax assets) (108) (736) (591) 134 134 134 (134) (152) 15 Deferred taxes/(tax assets) (30) (206) (165) Depreciation 2003 41 41 10 (2) (2) (2) Payment on dividend/other (2) (2) 12 Write-downs 2003 2 - 6 years (136) (154) 13 Deferred taxes/(tax assets) (32) (208) (153) Economic life

639 (61) 570 Earnings before tax (639) 61 (570) Accounting/tax differences 0 0 0 Basis for payable taxes IT development, rights, etc. systems to ErgoGroup at a total mar- years, depending on the individually 0 0 0 Payable taxes The group’s development costs mainly ket value of NOK 257 million. estimated economic life of each sys- relate to the development of IT sys- tem. tems. In 2002 Posten Norge AS sold IT The period of depreciation is 2 – 6 Payable taxes 6 62 42 178 (18) 168 Change in deferred taxes/(tax assets) 176 (58) 196 178 (18) 168 Taxes 182 4 238

179 (17) 160 28% tax on earnings before tax (EBT) 2 1 3 Tax on permanent differences (3) (2) 5 Too much/little provided in previous years 178 (18) 168 Taxes for the year

Net deferred tax asset is capitalised as Losses carried forward arose in the in the annual financial statements is it is assumed that it may be utilised in years 2001-2003. Classification of accounted for in notes 17 and 8, while connection with future earnings. deferred taxes and deferred tax assets payable taxes are included in note 19. 52 53 Notes Notes

NOTE 8 INTANGIBLE ASSETS CONTINUED NOTE 9 TANGIBLE ASSETS

Vehicles, Buildings, Machinery Buildings NORWAY POST GROUP fixtures and fixed under under Book value Translation Disposals Additions Depreciation/ Book value Depreciation POSTEN NORGE AS Cost 1 Jan. differences 2003 2003 write-downs 31 Dec. period Machinery fittings property construction construction Total

Goodwill in the group: Cost 1 January 946 2 353 2 711 97 36 6 143 Box Group AS 133 105 12 93 10 years Additions in 2003 11 79 3 65 11 169 Wajens AS 28 20 3 17 10 years Transfers 2003 22 136 30 (160) (28) 0 Oslo Container Stevedore AS 95 67 9 58 10 years Disposals 2003 (4) (296) (128) (428) KortProsess AS 1 1 1 2 0 4-5 years Accum. depr. and write-downs 31 Dec. (609) (1 350) (821) (2 780) CityMail AB 71 65 2 5 58 10 years Book value 31 Dec.2003 366 922 1 795 2 19 3 104

Goodwill in the companies: Depreciation 2003 90 269 83 442 Posten Norge AS 11 9 3 2 10 5 years Write-downs 2003 8 8 ErgoGroup konsern 600 491 -2 33 75 381 10 years Economic life 4 - 8 år 4 - 10 år 15 - 40 år Box Group konsern 181 143 14 30 1 17 169 12 years PNL konsern 14 7 4 4 7 5 years Wajens AS 4 4 4 1 7 10 years NORWAY POST GROUP CityMail AB 55 45 7 14 38 6 years Oslo Container Stevedore AS 2 2 10 years Cost 1 January 946 3 448 2 808 97 37 7 336 Total goodwill group 1 193 957 25 38 36 145 839 Additions in 2003 11 171 3 65 10 260 Transfers 2003 22 136 30 (160) (28) 0 Disposals 2003 (4) (468) (129) (601) Accum. depr. and write-downs 31 Dec. (609) (2 016) (854) (3 479) Goodwill acquired through the purchase for a long time to come. Box Group AS’ minimum 10 years, and the goodwill is Book value 31 Dec.2003 366 1 271 1 858 2 19 3 516 of 57 per cent of the shares in CityMail business concept provides the basis for depreciated on a straight line over this Sweden AB in 2001 amounted to NOK 71 positive transfer of expertise and expe- period. Depreciation 2003 90 498 88 676 million. Based on profitability assess- rience to other parts of Norway Post’s Write-downs 2003 9 9 ments made at the time of purchase, business operations, and for added Oslo Container Stevedore AS and Economic life 4 - 8 år 3 - 10 år 15 - 40 år earnings are expected to span minimum long-term value to the group. Wajens AS are financially sound compa- 10 years. Goodwill is depreciated on a nies with earnings among the best in straight-line basis over this period. In 2001 the Box Group acquired activity their fields. Both companies are consi- in Sweden and Denmark. Acquired dered strong brand names in their Goodwill achieved through the acquisiti- goodwill is depreciated over 10 years respective fields (third-party logistics Posten Norge AS ordinary depreciation million. Capitalised IT development costs million, recognised net in the income on of a 100 per cent interest in Box based on expected earnings. and distribution/pick-up and delivery and write-downs for the year, including and goodwill appear from note 8. statement under cost of goods, payroll Group AS (previously TSI AS) is depreci- services). Posten Norge AS therefore depreciation of IT development costs, expenses and other operating expenses. ated over an expected economic life of Acquired goodwill of NOK 381 million in assumes to make a long-term commer- were NOK 456 million. The group's In the group, addition of internally pro- 10 years. Being the leading courier ser- ErgoGroup relates to acquisition of cial profit on these investments, and depreciation for the year was NOK 1 004 duced fixed assets amounted to NOK 111 vice in the Nordic countries, the compa- activity in ErgoIntegration AS in 2000 for this reason has chosen to deprecia- ny's profitability remains high and its and Gjensidige NOR’s computer operati- te goodwill in these companies over a market position strong, from which ons in 2001. Estimated earnings from period of ten years. Posten Norge AS will be able to benefit the acquisitions are expected to span

54 55 Notes Notes

NOTE 10 INVESTMENT IN SHARES NOTE 11 NON-INTEREST BEARING LONG-TERM RECEIVABLES

Ownership/ voting interest Book value at POSTEN NORGE AS POSTEN NORGE GROUP POSTEN NORGE AS Acquired Address at 31.12.2003 31.12.2003 2001 2002 2003 2003 2002 2001 Subsidiaries ErgoGroup AS 01.12.1996 Oslo 100 % 431 233 2 254 Pension scheme assets 2 206 201 Oslo Container Stevedore AS 12.04.2000 Oslo 100 % 107 10 12 9 Receivable from employees 9 14 12 Box Group AS (formerly TSI AS) 01.01.1999 Oslo 100 % 167 28 14 26 Other long-term receivables 20 21 48 Wajens AS 12.04.2000 Oslo 100 % 36 38 259 2 289 Non-interest bearing long-term receivables 2 235 236 60 Nettlast AS 15.11.2000 Oslo 100 % 30 Nettlast Hadeland AS 15.11.2000 Jaren 100 % 5 Nettlast Helgeland AS 15.11.2000 Mosjøen 100 % 3 Posten Forbruker-Kontakt AS 01.10.1997 Oslo 100 % 0 Posten Norge AS in 2003 made an scheme assets is found in note 3. ted together with pension costs under Kort Prosess AS 26.06.2000 Oslo 100 % 1 extraordinary payment of NOK 1 475 mil- Pension scheme assets are classified as payroll expenses. CityMail Sweden AB 01.05.2002 Sweden 57 % 138 lion to the Norwegian Public Service non-interest bearing long-term receiva- Fund. Information about net pension bles as the interest element is presen- Joint ventures Pan Nordic Logistics AB (PNL) 28 The remaining interests consist of small sharehol- Sweden 50 % dings held directly by Norway Post. 5 NOTE 12 INTEREST BEARING LONG-TERM RECEIVABLES TOTAL 951 POSTEN NORGE AS POSTEN NORGE GROUP

NORWAY POST GROUP 2001 2002 2003 2003 2002 2001 Group’s investment in shares Transportinvest AS Oslo 9 % 55 10 10 Other long-term receivables 45 58 Adviso AS Oslo 27 % 68 721 1 174 794 Loans to subsidiaries Atento AS Oslo 29 % 4 721 1 184 804 Interest bearing long-term receivables 45 58 Gecko AS Kristiansand 34 % 2 Interprice Consulting AS Denmark 34 % 2 237 Repayments 2004 OptiMail AB Sweden 12 % 12 233 Repayments 2005 Other interests 9 190 Repayments 2006 TOTAL 152 69 Repayments 2007 27 Repayments 2008 38 2008+ Joint ventures PNL Zebsign Buypass NITS 794 Loans to subsidiaries

Share of operating revenues 480 16 16 Share of operating expenses 495 32 24 2 Share of taxes (6) (1) Share of net income (9) (16) (8) (1)

Share of fixed assets 37 10 24 Share of current assets 104 11 24 1 Total assets 141 21 48 1 NOTE 13 INVENTORIES

Share of long-term liabilities 34 16 29 2 POSTEN NORGE AS POSTEN NORGE GROUP Share of short-term liabilities 109 5 13 6 Total liabilities 143 21 42 8 2001 2002 2003 2003 2002 2001 Ownership interest 50 % 50 % 45 % 50 % 58 80 71 Cost 75 81 60 (9) (16) (11) Write-downs (11) (16) (9) 49 64 60 Inventories 64 65 51 Posten Norge AS has an obligation to in 2003, with OCS as the takeover com- (PNL). The remaining 50 per cent are buy the remaining 43 per cent of the pany. In 2003, shares in the subsidiaries held by Post Denmark. ErgoGroup AS has shares in CityMail Sweden AB from the Posten Forbruker-Kontakt AS and Kort ownership interests in Zebsign AS, two other owners by the end of the first Prosess AS were written down by NOK 3 Buypass AS and Norwegian IT Solutions Inventories mainly consist of postage stamps and other goods sold through the sales network. quarter of 2006. The wholly owned sub- million each. AS (NITS). sidiaries Oslo Container Stevedore AS Posten Norge AS holds 50 per cent of (OCS) and 1to1 Factory AS were merged the shares in Pan Nordic Logistics AB 56 57 Notes Notes

NOTE 14 NON-INTEREST BEARING SHORT-TERM RECEIVABLES NOTE 16 EQUITY

Share Equity POSTEN NORGE AS NORWAY POST GROUP Share premium Other parent Group Equity capital account equity company reserve group

2001 2002 2003 2003 2002 2001 Equity 1 January 2001 1 515 505 (32) 1 988 24 2 012 Net income, parent company after dividend 161 161 (161) 1 561 1 397 1 192 Accounts receivable 1 703 1 917 2 018 Net income, group after dividend 180 180 3 2 2 Receivable from employees 4 6 8 Translation differences, etc. 1 80 253 599 Receivable from companies in the group Equity 31 December 2001 1 515 505 129 2 149 43 2 193 48 50 60 Prepaid expenses 158 133 108 Supply of equity capital 1 545 515 (121) 1 939 1 939 286 144 109 Other receivables 201 231 384 Equity after supply of equity capital 3 060 1 020 8 4 088 43 4 132 1 978 1 846 1 962 Non-interest bearing short-term receivables 2 066 2 287 2 518 Net income, parent company after dividend (43) (43) 43 Net income, group after dividend (110) (110) 11 17 18 Provision for bad debts 40 40 36 Translation differences, etc. 12 12 4 25 28 Bad debts 30 30 9 Equity 31 December 2002 3 060 1 020 (35) 4 045 (12) 4 034 Supply of equity capital 60 540 600 600 From 2003, settlements with Postbanken relating to bank transactions in the postal network are classified as non-interest bearing short- Equity after supply of equity capital 3 120 1 560 (35) 4 645 (12) 4 634 term receivables. Liquid assets under transport have been reclassified as cash and cash equivalents. Advance payments to and from foreign Net income, parent company after dividend 280 280 (280) postal operators have been reclassified. Corresponding adjustments have been made to comparable figures. Net income, group after dividend 153 153 Translation differences, etc. (10) (10) Equity 31 December 2003 3 120 1 560 245 4 925 (149) 4 776 Accounts receivable have been reduced by provisions for bad debts. Unrestricted equity:

2001 2002 2003

129 (35) 245 Other equity (9) (10) Capitalised goodwill (136) (154) Deferred tax assets (7) (198) 235 Unrestricted equity after dividend NOTE 15 CASH AND CASH EQUIVALENTS

POSTEN NORGE AS NORWAY POST GROUP Minority’s share of equity at 31 In connection with the payment of the the companies’ shares are held by the December was NOK 18 million (2003), shortfall in the Norwegian Public Service Norwegian state, represented by the 2001 2002 2003 2003 2002 2001 NOK 48 million (2002) and NOK 35 million Pension Fund, the government budget Ministry of Transport and (2001). for 2003 supplied Posten Norge AS with Communications. 24 111 135 Cash and cash equivalents 254 242 232 NOK 600 million in new equity. The supply Bonds 8 11 In connection with the change from of equity was carried out on 1 July 2003. The requirement of the Norwegian act 609 595 424 Restricted assets 438 608 629 statutory company to limited company The share capital was increased by NOK relating to limited companies that distri- 633 706 559 Cash and cash equivalents 692 858 872 on 1 December 1996, the Norwegian 60 million with NOK 540 million being bution of dividend must not result in an state, represented by the Ministry of added to the share premium fund. The equity ratio lower than 10 per cent, and Transport and Communications, in addi- called up and fully paid share capital of that the company must not distribute From 2003, settlements with Postbanken relating to bank transactions in the postal network are classified as non-interest bearing short- term receivables. Liquid assets under transport have been reclassified from non-interest bearing short-term receivables to cash and cash tion to the equity at 31 December 2001 Posten Norge AS after this supply of more than is agreeable with prudent and equivalents. Corresponding adjustments have been made to comparable figures. paid in NOK 2 060 million. At the same equity is NOK 4 680 million. generally accepted accounting principles, time severance pay obligations estima- has been met. ted at NOK 121 million were transferred On 31 December 2003 the share capital A significant share of cash and cash interest on the cash holding is recogni- account system with Posten Norge AS to Posten Norge AS and charged to consisted of 3 120 000 shares at a equivalents relates to the sales networ- sed as financial income. as group account holder. Banks may off- other equity. nominal value of NOK 1 000 each. All of k’s requirements for liquid assets. set withdrawals against deposits, with Posten Norge AS restricted assets con- Posten Norge AS has obtained a bank the net position representing the out- sist of the cash holding for Postbanken. guarantee as security for advance tax standing balance between the bank and Remuneration for these services is payments of NOK 350 million for employ- the group account holder. included in operating revenues, while ees. The group has established a group

58 59 Notes Notes

NOTE 17 PROVISIONS FOR LIABILITIES AND CHARGES NOTE 18 INTEREST-BEARING LONG-TERM AND SHORT-TERM LIABILITIES

POSTEN NORGE AS NORWAY POST GROUP POSTEN NORGE AS NORWAY POST GROUP

2001 2002 2003 2003 2002 2001 2001 2002 2003 2003 2002 2001

122 Net pension obligation 141 481 403 799 Amounts owed to credit institutions 801 409 490 578 282 134 Restructuring obligation 153 294 578 193 242 Foreign currency loans 254 189 121 220 Severance pay obligation 220 121 167 155 106 Other long-term liabilities 197 248 243 13 Deferred taxes 400 Subordinated loan 14 400 2 Other obligations 58 31 77 1 048 751 1 147 Interest-bearing long-term liabilities 1 266 846 1 133 702 403 367 Provisions for liabilities and charges 431 446 796 14 Repayments 2004 34 See note 3. 239 Repayments 2005 259 15 Repayments 2006 21 13 Repayments 2007 18 Specification of restructuring obligation 10 Repayments 2008 14 856 2008+ 920 1 147 Long-term liabilities 1 266 2001 2002 2003 2003 2002 2001

800 Amounts owed to credit institutions 800 6 914 578 282 Provisions 1 Jan. 294 578 915 105 68 56 Other long-term liabilities 106 118 159 105 43 Provisions in 2003 61 119 Subordinated loan 14 (336) (401) (191) Payments (202) (403) (337) 105 68 856 Liabilities maturing after 5 years 920 124 159 578 282 134 Provisions 31 Dec. 153 294 578

600 300 100 Loan certificates 100 300 600 See note 5. 232 Amounts owed to credit institutions 1 4 241 832 300 100 Interest-bearing short-term liabilities 101 304 841

Specification of severance pay obligation

On 31 December 2003, total unused dra- Other long-term liabilities include obliga- currency loan of SEK 150 million has 2001 2002 2003 2003 2002 2001 wing rights valid until 30 November 2005 tions relating to financial leases, which been used for hedging purposes, and amounted to NOK 1 559 million. In additi- are reduced by regular payments of loan therefore has been recognised at its 121 Provisions 1 Jan. 121 on to this comes EUR 325 million in unu- instalments. See note 21. historical exchange rate. 121 Obligation transferred 121 sed drawing rights valid until 10 June Posten Norge AS takes out foreign cur- The weighted average interest rate for 111 Provisions in 2003 111 2008. When Posten Norge BA became a rency loans to hedge investments in total long-term liabilities in 2003 was 5.6 (12) Payments (12) limited company on 1 July 2002, a NOK foreign subsidiaries. In the consolidated per cent. At 31 December 2003, fixed- 121 220 Provisions 31 Dec. 220 121 400 million subordinated loan from the financial statements all foreign currency interest rate agreements had been Norwegian state was converted to equi- loans have been recognised using cur- entered into for NOK 500 million at an ty.Average interest rate until 30 June rent exchange rates. In the company’s interest rate of 5.2 per cent, valid until 2002 was 8.2 per cent. annual financial statements a foreign 17 December 2008.

Restructuring terminal units and staff reductions at dismissals made up to and including 31 Provisions at 31 December 2003 of NOK post offices, post in shops and business December 2004. When Posten Norge AS 134 million correspond to estimated obli- centres. became a limited company on 1 July NOTE 19 INTEREST-FREE SHORT-TERM LIABILITIES gations. Anticipated use is as follows: 2002, the Norwegian government deter- Other restructuring expenses in the mined that the company itself should Personnel measures NOK 85 million group relate to provisons for severance cover severance pay expenses relating POSTEN NORGE AS NORWAY POST GROUP Rent, vacated premises NOK 49 million pay in ErgoGroup. to dismissals made during the period 1 July 2002 to 31 December 2004. 2001 2002 2003 2003 2002 2001 Most of the payments will be made Severance pay Payments in 2003 amounted to NOK 12 during 2004 and 2005. Provisions for Severance pay is paid to redundant million. Provisions at 31 December 2003 1 751 1 629 1 589 Provisions for payroll expenses and public fees 1 858 1 864 1 974 personnel measures relate to expenses state employees for a period until they were NOK 220 million. 345 433 317 Provisions for accrued expenses 464 542 437 in connection with staff reduction to be get new jobs. For employees in Posten 300 0 121 Provisions for dividend 121 1 307 implemented in 2004, shutdown of three Norge AS the arrangement applies to 0 0 0 Payable taxes 7 65 41 231 243 277 Deferred income 333 274 278 383 471 345 Accounts payable 533 703 651 394 374 539 Debt to group companies 0 0 0 35 14 35 Other liabilities 162 248 224 3 439 3 164 3 223 Interest-free short-term liabilities 3 478 3 697 3 912

Advance payments to and from foreign postal operators have been reclassified. In the group's financial statements public fees, accounts payable and other liabilities have been reclassified. Corresponding adjustments have been made to comparable figures. See note 7 for details on payable taxes. 60 61 Notes Notes

NOTE 20 GUARANTEES/COLLATERALS AND SIMILAR OBLIGATIONS NOTE 22 FINANCIAL RISK

Posten Norge AS has provided a parent Den norske Bank ASA for the cash sys- million, compared with NOK 117 million one Finances will help to neutralise any currency effect Based on an overall assessment of the company guarantee to DnB NOR ASA of tem in Post in Shops. The guarantee year earlier. Some of Norway Post’s loan Posten Norge AS employs financial of these investments. At 31 December risk associated with future pension bene- 37 per cent of the annual contractual amounts to NOK 150 million. In addition, agreements contain negative pledge clau- instruments to manage its exposure to 2003, total interest-bearing foreign cur- fits, we have chosen to use a discount value of IT services delivery. In 2003 the the company has provided a guarantee to ses, committing the group to maintain changes in foreign exchange rates and rency loans amounted to SEK 260 million rate of 6 per cent when estimating our guarantee amounted to NOK 28.9 million. Den norske Bank ASA for employee loans defined levels for financial key ratios. At electric power prices. Various financial and DKK 14 million. pension obligation. Norway Post is making A parent company guarantee has also for purchase of vehicles for use in their the end of 2003 the group was well within instruments are employed in connection every effort to reduce the risk associa- been provided for rent on behalf of acti- jobs. At 31 December 2003 the total loans the defined limits. with large purchases from foreign suppli- Pension scheme assets ted with the obligation and the scheme vity in ErgoGroup AS. This guarantee were NOK 1.1 million (NOK 17.7 million in ers, mainly forward contracts. Options Posten Norge AS has significant future assets’ sensitivity to interest rate chang- amounts to NOK 35.5 million. Another 2002). A guarantee has been provided to The group’s total guarantee commitment and forward contracts are used to mana- pension obligations and assets managed es. Continued low interest rates will mean parent company guarantee has been pro- Nord Pool ASA for purchase of electric at 31 December 2003 was NOK 350 milli- ge price risk associated with expected through the pension scheme of the that Posten Norge AS will have to recon- vided to Oslo Kemnerkontor (municipal power. At 31 December 2003 this guaran- on. future electric power consumption. Norwegian Public Service Pension Fund sider the discount rate used when esti- treasurer) of NOK 4.8 million, also on tee amounted to NOK 12.1 million. (see note 3). Assets are built up by the mating its pension obligation. behalf of ErgoGroup AS. Financial instruments are used to reduce annual net premium to the Norwegian At 31 December 2003 the company’s total the risk of financial exposure, and there- Public Pension Fund fictively being inve- Insurance schemes The company has provided a guarantee to guarantee commitment was NOK 232.4 fore are normally classified as hedges for sted in Norwegian government bonds with The company has insured the major part accounting purposes when there is a the longest remaining time to maturity at of its activities and tangible assets under clear connection with underlying assets any given time (10 years). traditional insurance schemes. For the or liabilities. Options and forward con- company's vehicles only the statutory tracts have been entered into to hedge The bonds are recognised as fixed third-party insurance is taken out. The part of the power consumption. Existing government bonds, meaning that they are company itself covers accidental damage. contracts at 31 December 2003 cover 65 not subject to any market value assess- per cent of expected consumption in ment in Norway Post’s financial state- As an insurance policy holder the compa- NOTE 21 RENTAL COMMITMENTS 2004. At 31 December 2003, unrealised ments. The current system was establis- ny is entitled to manage agreed parts of gains amounted to NOK 5.2 million. No hed on 1 December 1996, with the initial the risk exposure of the activity under POSTEN NORGE AS NORWAY POST GROUP contracts have been entered into for the fund of NOK 4 479 million being fictively the insurance companies’ insurance licen- period beyond 2004. At 31 December invested in NST467 with a yield of 6.46 ce. The financial and risk aspects of this 2003, Posten Norge AS had entered into per cent, maturing on 15 January 2007. insurance activity are handled separately 2001 2002 2003 2003 2002 2001 fixed-interest agreements for NOK 500 Average return on the total portfolio was from the Insurance company’s remaining Financial leases million, maturing on 17 December 2008. approx. 6.1 per cent in 2003. The current activity by the company using a separate 160 152 104 Book value buildings 160 212 223 The agreements cover 40 per cent of situation in the Norwegian interest-rate account to handle these risks. Since 1 78 86 60 Accumulated depreciation 89 89 81 total interest-bearing liabilities. market means that net premium to the December 1996 Posten Norge AS has 163 151 98 Commitments, buildings 161 217 232 Norwegian Public Pension Fund is inve- made use of an accounts solution for No currency hedging agreements have sted at a lower interest rate than the certain selected coverages. Book value, computer equipment 3 4 been entered into for the period beyond yield on the total portfolio, thus reducing 2003, and thus there were no outstanding future average yield. Continued low inte- The extent of damage covered under the Commitment, computer equipment 3 4 hedging amounts at 31 December 2003. rest rates ahead will involve a risk of a accounts system has been positive, with Consequently, no unrealised gains or los- negative effect when the initial fund is to no payments being made in 2003. The Operational leases ses on such agreements were recognised be refinanced in 2007. Norway Post has credit balance on the account at 31 518 550 552 Annual rent, buildings 691 682 625 at 31 December 2003. In connection with initiated efforts to reduce this risk to a December 2003 was approximately NOK 100 109 112 Annual rent, vehicles 120 109 100 the acquisition of activities abroad, fore- minimum. 70 million. Annual rent, computer equipment 74 52 58 ign currency loans were taken out. This

Number of 5 5 4 Financial leases, buildings at 31 Dec. 5 6 6 1 192 1 071 884 Operational leases, buildings at 31 Dec. 948 1 215 1 258 4 243 4 348 4 590 Operational leases, vehicles at 31 Dec. 4 660 4 348 4 243

Financial leases December 2006. The commitment is inclu- into with LeasePlan Norge As for lease of Buildings are classified as buildings and ded in note 18. vans, whereby new individual contracts other fixed property, while corresponding may be entered into until 26 June 2004. obligations are classified as interest-bea- Operational leases Normally, the contract period for the indi- ring long-term liabilities and included in Posten Norge AS has entered into lease vidual vehicle is 2 to 5 years. note 18. agreements for most of its offices. The above survey shows how many buil- ErgoIntegration AS has a lease agree- ErgoRunit AS has entered into lease dings are rented and associated rent. ment for computer equipment. The lease agreements for various computer equip- agreements expire on 31 December 2005. ment, with commitment until 31 In June 2001 an agreement was entered

62 63 Notes Auditors Report

NOTE 23 OTHER

Disputes With effect from 1 July 2003, Posten and sole right to offer basic banking ser- ESA is currently considering a complaint Norge AS licence was reduced to 100 vices through Posten Norge AS nationwi- regarding inter alia the prices of the grams/3 times the base rate for domes- de network. After the merger, Postbanken logistics products and the system of tic A-priority letters. At the same time, no longer has this statutory obligation government procurement. Posten Norge the market for letter post sent out of and exclusive right. AS has submitted its opinion on the com- Norway was fully deregulated. plaint, rejecting its contents. The com- The obligation has now been imposed on plaint does not contain specific claims The licence requirements entail additional Posten Norge AS by a special act and by and therefore no provisions have been costs for Posten Norge AS compared the licence, expiring on 31 December made in the company's financial state- with commercial operations. The additio- 2005, requiring that Posten Norge AS ments. nal costs are covered by any gains from offer basic banking services throughout the company’s licensed activities and by the company’s nationwide sales network. Posten Norge AS has received a claim for the government’s purchase of unprofi- compensation from a supplier of equip- table postal services. Government procu- The postal network is owned and opera- ment and furnishings. rements in 2003 amounted to NOK 305 ted by Posten Norge AS. A cooperation million. In the government budget for agreement has been entered into with Posten Norge AS and Den norske Bank 2004 government procurements are esti- Den norske Bank ASA, giving the bank the ASA/Postbanken disagreed on the finan- mated at NOK 316 million. The licence exclusive right and duty to offer basic cial settlement of their business agree- requires Posten Norge AS to document banking services. The agreement also ments, and at the end of March 2004 the that no illegal cross-subsidising takes covers sale of other products/services dispute was settled by arbitration. This place between licensed services and fully and development of the network. The cur- will have a positive effect of about NOK liberated services. This documentation is rent agreement, transferred from 65 million on Posten Norge AS results for submitted to the Norwegian Post and Postbanken BA, expires on 31 December the first quarter of 2004. Telecommunications Authority in the form 2005. It is based entirely on commercial of special product accounts. The auditor principles. Significant transactions conducts annual audits in accordance Posten Norge AS in 2003 made an extra- with the licence. In accordance with the Post in Shops ordinary payment of NOK 1 475 million to licence requirements the product In the autumn of 2000, Posten Norge AS the Norwegian Public Service Fund. See accounts for 2003 will be submitted wit- entered into a five-year cooperation note 3. hin three months after the company's agreement with Norgesgruppen ASA and annual financial statements have been AS Norske Shell as main partners for the The Norwegian state approved. establishment of Post in Shops. Posten Norge AS is wholly owned by the Agreements have also been signed with Norwegian state. The Norwegian state, In 2003 Posten Norge AS was supplied Coop and Hakon. At the end of 2003, the represented by the Ministry of Transport with NOK 600 million in new equity from planned 1 175 Post in Shops were in ope- and Communications, has granted Posten its owner as partial compensation for the ration. According to customer satisfacti- Norge AS an exclusive licence for specific extraordinary payment of NOK 1 475 milli- on surveys, the Post in Shop concept is letter post services up to and including on to the Norwegian Public Service Fund. currently developing an operational stan- 31 December 2005. According to this dard in several areas which the custo- licence, Posten Norge AS will ensure that Den Norske Bank ASA mers consider equal to that of Posten statutory services and basic banking ser- Up until the merger of Postbanken BA Norge AS operated units. vices are accessible for the population and Den norske Bank ASA on 1 December throughout the country via a nationwide 1999, in accordance with the Act relating postal network. to Postbanken, Postbanken had the duty

64 65 Highlights 2003

OCTOBER

Norway Post adopts a new terminal structu- re which is intended to JUNE result in fewer and Norway Post stream- larger sorting termi- lines its distribution nals by 2006. network, merging let- ter and parcel distri- Norway Post announ- bution. ces postage increase for letters from 1 Jan- The year in brief Norway Post and uary 2004 after three Visma sign an agree- years of unchanged ment for eInvoicing, SEPTEMBER letter postage. giving 25 000 business customers access to The Labour Norway Post increa- Norway Post’s Inspection is very ses the opening hours satisfied with Norway for Post in Shops and eInvoicing system. DECEMBER Post’s follow-up of its post offices by 23 000 The Norwegian inspection report – hours a week. Post in Shop no 1175 government decides and with the action is opened at Kiwi to change Norwegian plans presented. Norway Post launches NOVEMBER Ikenberget, Alversund MAY postal services 25 new Post in Shops outside of Bergen. legislation, limiting The Ministry of in 2003, the total The Office of the Norway Post introdu- the monopoly area to Transport and number now being Auditor General For the first time ces a fee for redirec- letter mail of up to Communications sup- 1175 such units. claims that in some Norway Post opens tion of mail to a per- 100 grams from 1 July. ports Norway Post’s cases when contracts post offices on Sun- manent, new address tendering practice Norway Post decides have been awarded days in the hectic after a one-month after several critical to increase newspa- ErgoGroup, Norway weeks before Christ- MARCH Norway Post signs a JULY JANUARY non-fee period. borrowing agreement articles in Dagens per postage rates by Post has not observed mas. Norway Post introdu- limited to EURO 325 From 1 July 2003 Næringsliv. an average of 17 per public procurement Norway Post signs an ces volume-based pri- The Norwegian state million (approx. BNOK Norway Post’s mono- cent from the new regulations. Norway Post sells agreement with cing for logistics pro- demands MNOK 54 in 2.6) through an inter- poly is reduced to let- Aetat, the Norwegian year after unsuccess- ErgoBluegarden AS to Interpress whereby ducts. dividend from Norway national loan syndi- ter mail of up to 100 public employment ful negotiations with Aftenposten, Orkla the Swedish invest- Norway Post will distri- Post despite the com- cate. grams. service, chooses the newspaper publis- Media and A-pressen ment company Ratos bute books and inter- DnB Markets presents pany showing a deficit ErgoEphorma and hers. establishes for MNOK 355. national magazines to its valuation of Norway for 2002. The claim is The Norwegian Post According to a survey Norway Post’s «Mediapost». The new about 4 000 kiosks and Post. later withdrawn. and Telecommuni- by ACNielsen Post in eInvoicing system to Norway Post’s letter company will compete 90 000 CPR cards are sales outlets around process its more than terminal in Oslo is APRIL cations Authority (PT) Shop is a profitable AUGUST with Norway Post for sent during the the country. Grieg Logistics choo- Norway Post moves demands that Norway concept. Grocery 60 000 invoices a subject to an armed distribution of new- Christmas season. ses Norway Post and Norway Post decides its headquarters to Post increases post- shops offering postal New prices of cash on year. robbery, nobody is spapers, magazines ErgoGroup signs an signs a framework to move the Postal the Norway Post buil- age on newspapers services experience a delivery (COD) intro- seriously hurt. and books. Norway Post delays agreement with the agreement for the Museum to Maihaugen ding in Oslo, providing and magazines to higher sales increase duced from 1 August. Norway Post introdu- postage increase for Norwegian National FEBRUARY transport of 33 000 at Lillehammer. The 800 employees with satisfy the licence than corresponding ces «Active alert» for Norway Post signs a The annual employee letters between 100 Insurance Admini- items in Norway and museum will include a new, modern workpla- requirement for cost- shops that do not Scandinavia’s largest businesses, thereby cooperation agree- survey shows that job and 350 grams after stration for secure US and UK parcels abroad. philatelic exhibition, a ces. based prices. offer such services. express company reducing parcel ment whereby 13 com- satisfaction among objections from the transmission of health revert to Norway Post. postal exhibition and a appears under the returns. panies will work toget- Norway Post employe- Norwegian Post and information via the USPS and Royal Mail go The miniature sheet separate museum The mail distributors The Labour Inspection Norway Post introdu- new name Box her on a social infra- es is even higher this Telecommunications Internet. back to Norway Post issued by Norway Post post office. are given new uni- criticises Norway Post ces CPR cards, mea- Delivery. 215 vehicles Norway Post tests a structure for electro- year than in the pre- Authority. after Norway Post lost to commemorate the forms. for the lack of risk ning that one can send in Norway change system for electronic nic signatures. ceding year. Norway Post’s proposal the contract to Nor- hundred-year anniver- Having implemented a assessment and safe- genuine postcards via colours. Motorcyclist voting in three muni- The Civil Aviation to the Ministry of Cargo Pakketrans the sary of the Nobel number of environ- 1.1 million Norwegian ty service involvement the Internet. Pål Anders Ullevålseter cipalities during the Quality figures for Over 8 500 Norway Authority delays the Finance to raise the previous year. Peace Prize is chosen mental measures, chose to submit their in the restructuring is part of the team, local election. In Bykle northern Norway and Post mail distributers introduction of new duty-free limit for pri- as the world’s most Agder sorting area tax returns electroni- process. Norges Bank, the cen- sponsored by the municipality almost 50 Finnmark show an A- and couriers get new safety regulations vate imports from NOK Pan Nordic Logistics beautiful. becomes an «eco- cally by means of tral bank of Norway, Norway Post owned per cent of the voters priority quality below uniforms. requiring full screening 200 to NOK 1 000 is (PNL) signs agreements lighthouse» certified ErgoEphorma’s IT solu- Norway Post decides enters into an agree- company. voted electronically. the national average. of all air mail. unsuccessful. with the postal compa- Competition is sharpe- company. tion. to liquidate Posten ment with Ergo- Local election is carri- nies in Estonia, Latvia ned by Deutsche Post Forbrukerkontakt AS Integration for IT The newspaper Low local election Norway Post and ed out electronically In 2003 the number of Oppdal municipality and Lithuania, thereby gathering its express The collective wage Norway Post signs a from 1 September operations and mana- Dagens Næringsliv turnout was explained Telenor merge their at Longyearbyen, customer visits to launches Norway Post servicing all businesses and logistics services settlement is imple- sponsor agreement after five years of gement of Norges criticises Norway by the lack of advance operational HSE Svalbard based on a post offices is record- Smartcard pilot pro- and households in the under the DHL brand mented with an with Det Norske loss-making operati- Bank’s settlement and Post’s tendering prac- voting opportunities departments, establis- solution supplied by high, while queues are ject. Baltic states. name. acceptable result. Teater. ons. central bank systems. tice. at the post offices. hing HMS Norge AS. ErgoEphorma. significantly reduced.

JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER

Oppdal is the first municipa- The stamp issued to commemorate the hundred- The Postal Museum moves from Over 8500 couriers and drivers are given According to a survey by 215 vehicles in Norway change The new terminal structure, to be established by 2003 became a year with a record- lity to introduce Norway year anniversary of the Nobel Peace Prize is the capital to idyllic Maihaugen at new uniforms, olive and mustard colours ACNielsen, shops offering postal colours when Scandinavia’s largest 2006, will mean fewer and larger sorting terminals high number of customer visits Post's Smartcard, which is chosen as the world’s most beautiful. Lillehammer. being replaced by up-to-date outfits in blue services are more profitable than express company appears under for letters and parcels. The result will be increased to post offices. Another positive intended to simplify life in and red. corresponding shops without such the new name Box Delivery. profitability and higher quality. feature was the strong reduction the bureaucracy. services. in queues during the year. 66 67 Production: Corporate Information,Production: Corporate Norway • Design: Dinamo PR Photography: Post AS & Co Øivind Haug • Printing: Folkestad

NORWAY POST 0001 OSLO TELEPHONE: + 47 23 14 90 00 TELEFAX: +47 23 14 90 01

CUSTOMER ENQUIRIES: +47 810 00 710 INTERNET: WWW.POSTEN.NO