Interim report january - june 2000

Interim report january-june 2000 HIGHLIGHTS * Net asset value at 30 June 2000 amounted to $77.7m (SEK 682.6m), equivalent to $6.61 (SEK 58.08) per share, compared with $6.72 (SEK 56.85) for the same period last year. * Profit after tax was $1.17m (SEK 10.29m) for the second quarter and $0.75m (SEK 6.59m) for the six-month period, equivalent to $0.06 (SEK 0.56) per share, compared with $0.38 (SEK 3.22) per share for the same period a year earlier. * 74% of net assets invested in Poland. * Continued strong revenue growth for Medicover, with further margin improvements in key markets. * A new commitment of $1.58m for 33% of Medinsite, an eHealth start-up targeting the European hospital supply market. * Key management recruited for new joint venture with Ledstiernan AB targeting the Polish TIME sector. A further announcement will be made in coming weeks. Oresa Ventures is pleased to report a positive result of $1.17m (SEK 10.29m) for the second quarter and $0.74m (SEK 6.54m) for the first six months of 2000. Net asset value amounted to $6.61 (SEK 58.08) per share. The gains during the second quarter came from recouping a portion of the value of the Russian bonds which we had fully provided for in the third quarter of 1998. During the second quarter, we saw significant improvement in the value of Russian debt. Applying a conservative valuation, we have returned $2.6m to the balance sheet. This increase was partly offset by a reduction during the second quarter in the value of the remaining listed Russian shares we still hold. Operating expenses were in line with budget at $1.98m, which includes a total of $0.43m further expensed on the eHealth project in Poland which we commented on in previous reports. We have focused on identifying and recruiting key individuals for our new joint venture with Ledstiernan within the TIME sector in Poland. We expect to release a separate announcement regarding this project in coming weeks. We have also made our first pure eHealth investment, in Medinsite. MACROECONOMIC OUTLOOK Poland The first half of the year saw a breakdown in the coalition government in Poland after the small Freedom Union party walked out due to disagreement on a number of issues. The financial markets reacted calmly, however. The zloty has held its value against major western currencies. Of the region's markets, Warsaw's has most closely followed the Nasdaq due to its technology weighting. As a result, it fell substantially following the March correction. On a year-to-date basis, however, the Polish market is in positive territory expressed in USD. The main issue in the economy continues to be the current account deficit, which needs to be reduced. Although the budget for next year proposed by the minority government has been criticized for not being austere enough, the overall economy continues to perform well and growth projections for the years ahead remain around the five-percent level. Negotiations to join the European Union continue. Poland has faced criticism for lagging behind in the necessary legislative work. To ensure that the country catches up and shows a strong commitment to meeting the required deadlines, a special parliamentary committee was formed during the summer recess to work on EU related legislation. Expect-ations remain that Poland will join the Union sometime between 2003-2006. Romania The Romanian economy has bottomed out and started to grow in the first half of 2000 after three years of contraction caused by uncontrolled deficits, the Russian crisis and hesitant restructuring of loss-making industries. GDP growth for the first half, estimated at 1.5%, exceeded the government's forecast. Exports are the main growth driver. Most macroeconomic indicators, including the trade balance, exports, import coverage and inflation, have im- proved. International financial institutions, the IMF, WB and EU have all expressed their satisfaction at Romania's economic accomplishments and committed their financial support. S&P has changed its outlook from negative to stable and is likely to increase its rating toward the end of the year. It is generally expected that Romania's economic policies and reforms, including its IMF program and EU accession efforts, will broadly remain on track ahead of and following the presidential election in November. This sets the stage for healthy, non-inflationary growth for the second half of the year and strong growth in 2001. NEW DIRECT INVESTMENTS After the conclusion of the reporting period, we made a commitment to invest in Medinsite AB, an eHealth start-up targeting the European hospital supply industry, together with IT Provider, a leading Swedish Internet investment firm. IT Provider and Oresa Ventures have both committed $1.58m (SEK 14.5m) for 33% stakes in Medinsite, with the balance controlled by the founders. Management has a long track record in the medical products industry across Europe. Medinsite is active in Europe´s 15 bn euro market for medical products and supplies, which are mainly sold via tenders governed by EU directives and local laws. It intends to facilitate the tender process for buyers and suppliers throughout Europe, making it possible for healthcare providers to purchase medical products on a pan-European basis. Medinsite will thus implement the EU´s ideas in practice, facilitating lower business costs and reducing prices. An improved tender process will free up hospitals´ purchasing organizations, which often devote hundreds of hours to tenders, allowing them to concentrate on real value-added, such as customer contacts and information exchanges. Medinsite will expand throughout the European market from its initial focus on Germany and Sweden. Medinsite is Oresa Ventures´ first pure eHealth investment and targets a segment of the healthcare industry that we consider very suitable for Internet-enabled efficiencies and cost savings. DIRECT INVESTMENT REVIEW In line with our policy, we report more extensively on our existing holdings, as shown in the table below, in our six- and 12-month reports. We now hold investments in the following unlisted companies: ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/17/20000817BIT00530/bit0001.doc The full report http://www.bit.se/bitonline/2000/08/17/20000817BIT00530/bit0002.pdf The full report

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