Ratos Preliminary report 1999

P R E L I M I N A R Y R E P O R T 1 9 9 9 * Result for the year SEK 1,761M (897) * Profit per share SEK 20.95 (9.78) * Proposed dividend SEK 4.50 (3.50) * NAV growth in 1999 34% (7) * NAV per share SEK 118 on 23 February 2000 The Swedish Investment company Ratos has adopted a new strategy oriented forwards Private Equity investments. The Company's business concept is, as it always has been, based on creating values by actively developing owned companies. During the 1990s, Ratos invested mainly in listed companies. The evaluation is now that the opportunties for creating values are greater outside the stockmarket. Ratos' assets will therefore be invested in a limited number of primarily unlisted companies. Thus, Ratos becomes a listed operator on the Private Equity market. In accordance with the new strategy, the transfer of Ratos' assets was initiated during 1999. The proportion of unlisted, and therefore for the stockmarket unique holdings, now represents nearly 20 per cent of the Company's NAV compared with 8 per cent at the start of the year. Active holdings' proportion of the assets has increased to more than 50 per cent. Strong result improvement Consolidated result before taxes amounted to SEK 1,761M (897). The figure includes results of Active holdings of SEK 824M (584) and results of Asset management of SEK 1,023M (397). Management costs amounted to SEK 81M (65) and net financial income and expenses to SEK -5M (-19). Total goodwill depreciation in the Group in associated companies for the year amounted to SEK 89M. Result and share in result of the Active holdings amounted to SEK 128M (241). The subsidiaries, especially TV8 which was sold during the year, generated losses of SEK 49M in total. The positive shares in results of Dahl, Scandic Hotels, Capona, Meto and Superfos totalled SEK 216M. Shares in results of Esselte, PriFast and Telelogic were all negative and totalled SEK -39M. Shares in results include Ratos' depreciation of goodwill for the respective holding. ACTIVE HOLDINGS ASSET MANAGEMENT Exit results of Active holdings amounted to SEK 696M (343). The sale of PriFast's holding in Meto accounted in total for SEK 537M of the exit result. The Dahl transaction also generated a positive exit result of SEK 182M. The sale of TV8 during the autumn resulted in a capital loss of SEK 35M. Asset management 46% The yield of Asset management amounted to 46 per cent during the year. Dividends received amounted to SEK 102M (96) and net capital result was SEK 921M (301). Shares were acquired for SEK 1,446M and sold for SEK 2,022M. At the year-end, Asset management's portfolio excluding investments in Industri Kapital Private Equity funds of SEK 348M had a market value of SEK 5,002M (4,029). The hidden reserve in the portfolio was SEK 2,134M (1,386). Central income and expenses The organisation's costs amounted to SEK 81M (65), of which transaction- related costs relating to investments in Industri Kapital's funds constituted SEK 23M. Personnel costs amounted to SEK 27M (32) and other costs, including costs in connection with acquisition processes, to SEK 31M (29). The central income and expenses therefore amounted to 0.6 per cent of the average NAV during the year. The financial net amounted to SEK -5M (-19). Liquidity and cash flow The cash flow from the current operations and the investment operations for the period amounted to SEK 1,149M (156) and liquid assets amounted to SEK 227M (36) at year-end. Active holdings During the year, three Active holdings (PriFast, TV8 and Meto) were divested, whereas Capona and Superfos were added. In December 1999, Ratos announced its intention to invest approximately SEK 250M in yet another Active holding - the IT consulting company, DataVis. The investment was carried out at the end of January 2000. Telelogic At the turn of the year, Ratos' holding in the software company, Telelogic, was equivalent to an ownership of 20 per cent. The market value of the holding is currently approximately SEK 1.2 billion. Telelogic's strong growth continued in 1999 and sales increased by 78 per cent during the year. The organic growth amounted to 54 per cent. The company's earnings after financial income and expenses amounted to SEK 2.2M. The recruitment rate was high and the number of employees has more than doubled to 450 at the year-end. The acceptance increased for the company's products, which are used to rationalise the development of software for real time applications within mainly the telecom sector. Several new orders were received from customers such as NEC, Motorola, Ericsson and Nokia. At the end of the year, Telelogic acquired Verilog by issuing new shares. Through the acquisition, the customer base is expanded to the automotive and aircraft industries. With the aim of preparing for further expansion the company made another new share issue at the beginning of the year 2000, which was mainly directed at US investors. Following the issue, Ratos' ownership before exercising outstanding warrants amounts to approximately 17 per cent. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/02/25/20000225BIT00500/bit0001.doc Full Report http://www.bit.se/bitonline/2000/02/25/20000225BIT00500/bit0002.pdf Full Report

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