Investment AB Bure Halvårsrapport 1(1)

Consolidated earnings after financial items increased by 37 per cent and amounted to SEK 703 M (514). Profit per share increased to SEK 9.40 per share (7.80). On a rolling 12- month basis, profit amounted to SEK 12.60 per share (1997 full-year: 11.00) Health Care's sales increased by 78 per cent. Operating profit of included operations before goodwill depreciation more than doubled to SEK 52M (21). IT/InfoMedia's profit improved to SEK 292M (52). The result includes Scribona's divestment of Svanströms at SEK 168M. Stockmarket introduction of Guide Konsult created a surplus value of SEK 304M. In total, the listing increased Bure's net asset value by SEK 6.20 per share. Summary of Consolidated profit after financial items operations increased to SEK 703M (514). The figure includes results by the Group's consolidated companies at SEK 290M, of which SEK 168M is attributable to Scribona's divestment of Svanströms. The Business Areas Health Care and IT/InfoMedia continued to develop strongly. Consolidated sales increased to SEK 6,630M (4,111). The increase is due to the high growth in the operations in Business Areas Health Care and IT/InfoMedia and that Scribona is consolidated fpr the first full six months of 1998. Profit per share amounted to SEK 9.40 (7.80) which provides for a profit of SEK 12.60 per share for the latest twelve- month period. Group investments amounted to SEK 732M, of which SEK 146M in shares and participations. At 30 June, the equity ratio in the Group amounted to 47 per cent (52). At the turn of the year, the equity ratio amounted to 46 per cent. During the period, growth in Health Care was high and several acquisitions were carried out. Above all, the Business Area expanded in Norway following the acquisitions of Bergen Medisinske Senter AS, Norlab AS and Vennersborg AS. During the period, IT/InfoMedia acquired 55 per cent of the shares in Dimension AB and 75 per cent of the shares in Erda AB. Within Investments, Chematur Engineering acquired the German engineering company, Plinke GmbH, during the period. In connection with Nobel Biocare's acquisition of the American implant company, Steri-Oss, the American vendors offered Bure the opportunity to acquire additional shares in Nobel Biocare which Bure accepted. In addition, Bure intends to participate in the planned new share issue. As a result, Bure's ownership in Nobel Biocare will increase from 12 to approximately 15 per cent. The reconstruction of the sawmill equipment manufacturer, Troponor, which was carried out in March, was charged to consolidated profit at SEK 33M. In connection with the reconstruction, Bure's ownership decreased to 40 per cent. In May, the stockmarket listing of Guide Konsult was carried out. The listing made visible a surplus value which amounted to SEK 304M at the period-end. In connection with spreading the ownership, Bure reduced its holding from 46 per cent to 34 per cent which provided for a consolidated capital gain of SEK 39M. Capital gains in the Parent Company amounted to SEK 108M. The yield of the stock portfolio including dividends received amounted to 32.4 per cent. During the same period, the Findata Yield Index rose by 27.9 per cent. Six months 30 Jun 31 Dec Income Statement, 1998 1997 Balance Sheet, 1998 1997 SEK M SEK M Net sales 6 630 4 111 Assets Operating expenses -6 301 -4 022 Fixed assets 4 874 3 794 Share in results of 44 41 Current assets 3 868 3 378 associated companies Operating profit 373 130 Total assets 8 742 7 172 before goodwill depreciation Equity and liabilities Goodwill -69 -33 Equity 4 151 3 761 depreciation Operating profit 304 97 Minority 641 664 interest Provisions 309 141 Dividends 23 29 Long-term 666 253 liabilities Capital gains, net 377 349 Current 2 975 2 352 liabilities Interest income 22 40 Total equity 8 742 7 172 and liabilities Interest expenses -31 -12 Other financial 8 11 items Earnings after 703 514 financial items Minority interest -121 -47 Taxes -69 -41 Net profit 513 426 In the first six months, Bure's net asset value increased from SEK 88 to SEK 104 per share. Including dividend paid to the shareholders, growth in net asset value amounted to 24.4 per cent during the period. Of the investments, approximately one-third is unlisted holdings which have been valued at book value. In April, SEK 5.50 per share or SEK 300M in total was paid in dividend to the shareholders. The Bure share During the first part of the period, the share developed very strongly and an all- time-high of SEK 134 was registered on 25 March. From 27 March, the share was quoted excluding right to dividend of SEK 5.50 per share. On 30 June, the share price was SEK 127 and on the same date, net asset value amounted to SEK 104. Total yield for shareholders including dividend received amounted to 26.8 per cent during the period. The number of shareholders has increased strongly during the year, from 7,700 to approximately 10,300. Key figures per share 980630 971231 961231 Net profit*, Group SEK 12.60 11.00 7.55 Equity, Group SEK 76.10 72.20 66.00 Net asset value, Parent Company SEK 104 88 81 Market price, SEK 127 104.50 81.00 Dividend, SEK 5.50 5.00 3.25 Total yield*, % 27 35 91 Share data Number of shares, 000 54 550 54 550 54 550 Number of owners 10 300 7 700 4 500 * Latest 12 months Health Care, SEK M Six- Six- Full- monthsmonth year 98 s 97 1997 Net sales 1077 605 1488 Operating expenses -1025 -584 -1423 Operating profit before goodwill depreciation 52 21 65 Goodwill depreciation -14 -7 -19 Management and new projects -13 -8 -26 Capital result 2 3 7 Operating profit 27 9 27 Health Care Bure Health Care's net sales increased by 78 per cent to SEK 1,077M (605). The Business Area Operating profit of operations before is to be the player goodwill depreciation improved on the health care significantly and amounted to SEK 52M market which best meets the demands (21). placed by patients and the principals Health care services of the health care Specialist Care's operating profit sector before goodwill depreciation increased to SEK 21M (5). Net sales amounted to SEK 281M (87). Inflow of patients remains positive and makes possible further organic expansion. In February, the option was exercised to acquire the remaining 50 per cent in Smärtkliniken Kronan which is now a wholly-owned subsidiary. In the same month, operations in Norway were expanded following Volvat's acquisition of all the shares in Bergen Medisinske Senter. Geriatric Care reported operating profit before goodwill depreciation of SEK 7M (5). Net sales amounted to SEK 58 (44). The sales increase is mainly attributable to increased contract volume in all units. During the period, the investment in geriatric care was strengthened through the acquisition of the Norwegian geriatric care company, Vennersborg AS. In addition, a decision was made to build a geriatric care facility in Gothenburg under Bure's management. The operations in MiaMedica and Oxie Vårdhem were merged with Bure Vård och Omsorg AB at the beginning of the year. Occupational Health Care reported operating profit before goodwill depreciation of SEK 3M (3). Net sales amounted to SEK 251M (240). From January 1998, in addition to Previa, Volvat's occupational health care as well as Skånehälsan within Cityklinikerna are also included in the Business Sector. The sector is characterised by continued negative volume development for traditional occupational health care services, whereas health care-related occupational health care shows positive growth. Net sales Operating profit before goodwill depreciation SEK M Q2-98 Q1-98 Q4-97 Q3-97 Q2-97 Q2-98 Q1-98 Q4-97 Q3-97 Q2-97 Specialist 137 144 137 101 43 7 14 12 6 2 Care Geriatric 30 28 31 21 26 4 3 2 5 3 Care Occupationa 125 126 152 108 118 3 0 14 -1 2 l Health Care Diagnostics 117 114 90 72 78 7 4 4 2 3 Materials 133 141 133 69 33 5 6 -1 2 1 Supply Elimination -9 -8 -23 -8 7 - - -2 1 2 , divested Total 532 544 520 363 305 26 26 29 15 13 Operating 4.8 4.8 5.6 4.1 4.3 margin, % Medical Service Diagnostic's operating profit before goodwill depreciation improved to more than SEK 11M (5). Net sales increased to SEK 231M (155). Medilab in Copenhagen and Norlab in Oslo develop positively with satisfactory profit, whereas the Swedish operations have still too low margins. During 1998, several old contracts will be renegotiated. Profit was charged with costs for additional investments in Poland. Material Supply's operating profit before goodwill depreciation amounted to SEK 11M (3). Net sales increased to SEK 274M (65). The merger into a Nordic organisation under the name, Simonsen, continues according to plan. The One- Stop@ concept which contains, among other things, electronic trading is gradually being implemented. During the period, growth was high and several new contracts were signed with municipalities, county councils and hotels. In June, an agreement was made to acquire the health care products supply depot in Västernorrland County Council. Following the acquisition, net sales on an annual basis amount to approximately SEK 600M. Bure Managed Care Bure Managed Care operates a number of development projects in several European countries. Through Picker Europe - which is a joint venture between Bure and The Picker Institute in Boston, USA - investigations are being carried out into the quality of care at hospitals in Sweden, Switzerland and Great Britain. In Britain, the assignment from the Department of Health comprises 250 hospitals. In addition, Bure Managed Care focuses on innovative care concepts for different groups of chronic invalids, including a project for diabetes patients in Gothenburg. Bure Managed Care is financed by Investment AB Bure. IT/InfoMedia, Six- Six- Full- SEK M months months year 98 97 1997 Net sales 5191 3119 7623 Operating -4918 -3055 -7464 expenses Shares in results of 2 8 11 associated companies Operating profit 275 72 170 before goodwill depreciation Goodwill -27 -17 -49 depreciation Management & new -6 -3 -8 projects Capital result 50 - - Operating profit 292 52 113 IT/InfoMedia During the period, Bure IT/InfoMedia carried out several acquisitions within The Business Area's both IT services and information vision is to create services. the leading network of companies within IT services and In May, Guide Konsult was quoted on the O information services list of the Stockholm Stock Exchange. The in the Nordic value of the Guide share has thereafter countries increased by more than 80 per cent and amounted to SEK 160M on 30 June. In connection with the listing of Guide Konsult, Bure's holding reduced from 46 per cent to 34 per cent. The sale generated a capital gain of SEK 39M. In addition, Bure received a dividend of SEK 12M during the first quarter. In total, the listing of Guide Konsult increased Bure's net asset value by SEK 6.20 per share. During the period, Scribona continued its streamlining through the divestment of Svanströms and the decision regarding distribution of the shares in Sifo Group to the shareholders. Sifo Group will be quoted on the O list of the Stockholm Stock Exchange on 10 September. Sifo Group will be included as an important unit in the establishment of Business Sector Information Services within Bure. In May, Bure received a dividend of SEK 181M from Scribona, equivalent to SEK 10.50 per share. In January, the acquisition of Dimension was completed which is involved with complex IT systems based on, among other things, Unix solutions. In June, 75 per cent was acquired of the Linköping-based IT consulting company, Erda, which operates in systems development and development of advanced real time systems. The company is expected to have sales of approximately SEK 30M in the 1997/98 financial year. IT Services Total invoicing of IT Services increased to SEK 793M. The companies' total earnings after Financial items amounted to SEK 40M, of which Bure's share before goodwill depreciation and other Group adjustments amounted to SEK 32M. Guide Konsult continued to develop positively, earnings after Financial items increased to SEK 12M. The company has continued high capacity utilisation and a sound inflow of orders. (SEK M) Net sales Earnings after InvestedOwner- financial items 1 1 Q2 -98 Q2 -97 1997 Q2 -98 Q2 -97 1997capital ship % Guide 265 210 430 12 11 26 88 34 Konsult 2 CR&T 11 - - 2 - - 8 45 Salcom 223 158 328 6 4 5 62 57 2 Dimension 218 - - 22 - - 100 55 3 Udac 51 12 54 -2 - - 33 100 Citat 85 41 83 6 2 5 31 85 Scribona 4 619 4 154 8 474 241 89 185 1 210 50 1 Book value at period-end and ownership of capital. 2 Acquired after the second quarter of 1997. 3 Udac acquired Adapt at 31 December 1997. Comparative figures for Q2 1997 refer only to Adapt as the acquisition of UDAC was carried out on 1 January 1997. Salcom Communication increased its sales by 41 per cent to SEK 223M. Earnings after financial items amounted to SEK 6M. Salcom is developing positively. However, earnings are essentially generated in the second half of the year. Costs for establishing the new Business Sector, Enterprise System Management, were taken during the period. Dimension enjoyed very positive development. Earnings after financial items amounted to SEK 22M with sales of SEK 218M. Udac has consisted of the merged companies, Udac and Adapt, since the beginning of the year. Net sales amounted to SEK 51M. The result is still unsatisfactory and refers in full to the operations of the former Adapt. Development in the computer technology and computer science company, CR&T, was favourable. Profit increased to SEK 2M, A new computer safety product, Firedoor, was launched and was positively received. Information services Citat increased net sales by 107 per cent to SEK 85M (41). Earnings after financial items amounted to SEK 6M (2). During the period, Citat established an operation in Stockholm by acquiring Reptil Grafiska. As a result, Citat's position is strengthened as one of the leading companies in Sweden in its market segment. Scribona Net sales of the Scribona Group amounted to SEK 4,619M (4,154), an increase of 11 per cent for comparable units. Earnings after financial items amounted to SEK 241M (89) and includes the capital gain in the divestment of Svanströms of SEK 168M which was carried out at the beginning of the year. Business Area Computer Products increased sales by 27 per cent to SEK 3,632M (2,852) with an operating profit of SEK 21M (24). Significant deliveries of PCs generated a positive contribution to earnings. However, the focusing on PCs at the same time involved a slow-down in other demand which caused further pressure on margins. In Business Area Office Machines, sales amounted to SEK 590M (707) which is an increase of 2 per cent for comparable units. Operating profit improved to SEK 29M (16). Sifo Group increased sales to SEK 401M (334) with an operating profit of SEK 36M (34). The sales increase is above all attributable to Observer which continues to develop favourably. Investments, SEK Six Six Full- M months months year 98 97 1997 Net sales 361 388 632 Operating -328 -343 -615 expenses Shares in results of 20 38 88 associated companies Operating profit 53 83 105 before goodwill depreciation Goodwill -7 -3 -6 depreciation Management & new -8 -3 -15 projects Capital result 256 133 251 Operating profit 294 210 335 Investments During the period, several transactions were carried out. The holding in The Business Area Fritidsresor was sold with a capital gain will in the short to of SEK 128M. Divestments were also made medium term create of the remaining holdings in Karlshamns growth in value and dividend capacity as which generated a capital gain of SEK a complement to the 82M. Total net capital gains within other Business Investments amounted to SEK 227M. Areas. In June, a decision was made to participate in the new share issue in Nobel Biocare and in connection with this to increase the ownership to approximately 15 per cent. The implementation is subject to the approval of an Extraordinary General Meeting of Nobel Biocare on 2 September. Via Nordic Capital, SEK 96M was invested in Mölnlycke Health Care which is equivalent to an ownership of 14 per cent. The ownership in Troponor decreased from 66 to 40 per cent following the implemented reconstruction and after the company got a new principal owner. The reconstruction involved charging Bure's consolidated profit with SEK 33M, of which SEK 21M refers to capital loss on sale of shares. Wholly-owned companies Chematur Engineering's result after financial items amounted to SEK -20M (- 1). The result was negatively affected by the postponement of awarded projects, among other things due to the financial developments in Asia. Earnings arise as the projects are processed (gradual income recognition) and the result is therefore expected to increase during the later part of the year. The backlog amounts to approximately SEK 1 billion. In April, the German engineering company, Plinke, was acquired which operated in the recycling, treatment and concentration of acids segments. A stockmarket listing of Chematur Engineering is planned during the first half of 1999. However, if the start of awarded projects is delayed still further, the date for the stockmarket introduction may be reconsidered Åre Vemdalen's profit amounted to SEK 62M (63) after financial items. In January, a decision was made to invest vigorously in lifts, service and snow production equipment with the aim of strengthening still further Åre's profile as the leading alpine centre in the Nordic countries. Net sales Earnings after Invested Owner- financial items 3 3 Q2 -98 Q2 97 1997 Q2 -98Q2 97 1997 capital ship Chematur 172 243 447 -20 -1 20 247 100 Åre 173 169 195 62 63 29 143 100 1 Vemdalen Gunnebo 1745 1435 3086 95 70 155 202 33 2 Svolder - - - 96 120 277 110 26 Nobel 561 533 1 068 3 39 112 222 12 Biocare Troponor 209 195 462 -10 -14 -59 49 40 Citykurorte 13 - 10 -10 -5 -23 5 100 r 1 Pro forma for 1997 values 2 Refers to the period, 1 December-28 February 3 Bure book value at the period-end and ownership of capital Partly-owned companies Gunnebo's earnings after financial items increased by 36 per cent and amounted to SEK 95M (70) during the period. Net sales increased by 22 per cent and amounted to SEK 1,745M (1,435). In June, a global collaboration agreement was signed with the British company, De La Rue and, as a step in this, the German company, Garny Sicherheitstechnik, was acquired. Garny is the leading manufacturer in Germany of bank safes and lockers products with sales of approximately SEK 300M. In addition, the collaboration means that Gunnebo will take over De La Rue's production of safes in Sweden. Svolder has a split financial year with 31 August as the closing date. Earnings after taxes in the latest nine months amounted to SEK 146M (163). During the same period, net asset value increased by 23 per cent including dividend paid. On 14 August, net asset value amounted to SEK 150 per share or SEK 960M in total. Nobel Biocare's operating profit, excluding items affecting comparability which relate to a patent dispute in the USA, amounted to SEK 54M (40). Net sales amounted to SEK 561M (533). In June, Nobel Biocare acquired the American implant company, Steri-Oss. Through the acquisition, Nobel Biocare is doubling its business volume in the USA and becomes the market leader in Germany. The acquisition is subject to approval by an Extraordinary General Meeting of Nobel Biocare on 2 September. Business Area Procera is developing very strongly with a sales increase of 260 per cent. Troponor reports a result after financial items of SEK -10M (-14). Reconstruction work is now being implemented which is expected to give positive effects on the result later during the year. Funds During the period, Nordic Capital, in addition to 14 per cent of the shares in Mölnlycke Health Care, 7 per cent was acquired in Essex for an investment of SEK 15M. Mölnlycke Health Care, which is a merger of Mölnlycke Clinical Products and Tamro Kolmi Set, is the market leader in Europe in surgical products. Essex, which is a contract manufacturer of electronic products with an emphasis on medical technology, telecom and industrial process control, is the first investment in Nordic Capital's newly- established third fund. Asset management, 30 June 31 December SEK M 1998 1997 1996 1995 1994 Shares 1056 836 713 593 1 182 Interest-bearing - 431 1 033 864 1 014 investments Total 1 056 1 267 1 746 1 457 2 196 Capital gains, 108 318 79 185 361 net Yield of stock 32.4 26.4 54.5 17.4 9.8 portfolio, % The Findata Yield 27.9 27.8 43.3 20.6 6.5 Index, % Parent Company The Parent Company's profit after tax amounted to SEK 555M (481). The result includes dividends received amounting to SEK 231M (135). Profit was charged with SEK 10M in provisions for increase in value in the synthetic options which have been issued by the Company to the staff. Since the turn of the year, Bure's net asset value has increased by 24.4 per cent including dividend paid and amounted to SEK 104 per share on 30 June. During the period, the stock portfolio of Asset management generated a yield of 32.4 per cent compared with the Findata Yield Index of 27.9 per cent. The surplus value in the stock portfolio rose from SEK 16M to SEK 170M while the net result of capital gains and capital losses amounted to SEK 108M at the same time. During the period, the Parent Company invested SEK 406M. The Parent Company's equity ration amounted to 96 per cent (95). In April, Asset management's interest- bearing investments were phased out Personal The average number of employees amounted to till 6,004 (3,897) in the Group and to 25 in the Parent Company, of whom 8 belong to the Business Area Managements in IT/InfoMedia and Investments. After the end of the In July, Salcom acquired the Finnish reporting period network company, Finternet OY. The company develops and constructs advanced networks and is estimated to have sales of SEK 20M in 1998. Health Care acquired Hjärtmottagningen i Helsingborg AB in July. In July, IT/InfoMedia acquired 6 per cent of the shares in the American web measurement company, Relevant Knowledge. In addition, Bure has an option to acquire an additional approximately 5 per cent in the company. In August, Picker Europe was assigned by the Department of Health in Great Britain to carry out the first nation-wide study of patients' perception and experiences of health care. The study will be carried out at approximately 250 hospitals over six years and is valued at approximately SEK 160M. Picker Europe, which has its registered office in London, is owned in equal parts by Picker Institute in Boston and Bure Health Care. Since 30 June, the General Index of the Stockholm Stock Exchange has fallen sharply. Bure's net asset value, which to 70 per cent consists of market-listed assets, has fared better that the stockmarket on average. Net asset value on 25 August amounted to SEK x per share. Roger Holtback President and CEO Gothenburg, 27 August 1998 Investment AB Bure (publ) Consolidated Income Q2 -98 Q1 -98 Q4 -97 Q3 -97 Q2 -97 Statement, SEK M Net sales 3 501.93 128.0 3423.4 2306.1 2796.6 Operating expenses -3 -2 -3343.8 -2317.4-2770.1 450.7 849.8 Shares in results of 38.6 4.9 16.2 40.7 26.4 associated companies Operating profit before 89.8 283.1 95.8 29.4 52.9 goodwill depreciation Goodwill depreciation -41.1 -27.5 -49.9 -24.1 -19.2 Operating profit 48.7 255.6 45.9 5.3 33.7 Dividend 22.5 0.6 0.8 0.3 17.2 Capital gains, net 130.6 246.3 37.8 170 109.4 Interest income 12.6 9.2 11.3 14.1 20.8 Interest expenses -17.0 -14.0 -14.1 -4.8 -9.4 Other financial items 4.6 3.8 6.3 -5.7 8.9 Earnings after 201.9 501.5 88.0 179.2 180.6 financial items Minority interest -12.6 -109.0 -12.8 -14.4 -34.8 Taxes -37.7 -31.6 -56.8 -8.1 -18.9 Net profit 151.7 360.9 18.4 156.7 126.9 Net asset value Parent Q2 -98 Q1 -98 Q4 -97 Q3 -97 Q2 -97 Company, SEK M Health Care 554 517 501 480 396 IT/InfoMedia: Scribona 1645 1 813 1 575 1 434 1 437 Guide 393 104 104 93 93 Unlisted 275 236 136 142 110 companies Investments: Gunnebo 560 632 485 603 501 Svolder 265 246 264 293 245 Nobel 281 210 227 - - Biocare Åre 143 143 143 143 117 Vemdalen Chematur 247 125 125 125 125 Troponor 49 49 59 94 94 Karlshamns - - 99 81 73 Nordic 154 160 71 55 55 Capital Spira - - - - 183 Other 49 47 47 32 48 companies Asset management: 1056 977 836 999 778 Shares Interest- - 247 431 403 453 bearing Other 138 144 85 58 43 Total assets 5 809 5 650 5 188 5 035 4 751 Liabilities -152 -231 -370 -20 -18 Net asset value 5657 5 419 4 818 5 015 4 733 Per share, SEK 104 99 88 92 87 Calculation of Bure's net asset value The net asset value is defined as the difference between the Parent Company's assets and liabilities where the market-listed assets have been valued at market value. The calculation of Bure's net asset value is made on the basis of the Parent Company's Balance Sheet and consists of visible equity, including profits during the period and surplus values in market-listed assets. Listed securities are valued at current market price without taking into account any value-added in control holdings. Bure's holdings of money market instruments are valued at a price calculated at current market interest. Bure's holdings of shares in unlisted companies are entered at book values. Detailed Audit Report We have reviewed this Interim Report. The examination has been carried out in accordance with the recommendation issued by the Swedish Institute of Authorised Public Accountants, FAR. The market-listed associated companies, which are reported in accordance with the equity method, are not included in this Report. A review is significantly limited compared with an audit. Nothing has emerged which indicates that the Interim Report does not comply with the requirements of the Stockmarket and Annual Account Acts. Gothenburg, 27 August 1998 Bertel Enlund Staffan Landén Authorised Public Accountant Authorised Public Accountant For further information, please contact: ger Holtback, President, +48 31-335 76 35 ns LjungQist, Chief Financial Officer, +46 31-335 76 35 ut Leman, Head of Investor Relations, +46 31-335 76 75 formation is also avialable on: www.bure.se ture Reports: terim Report January-September will be published on 5 November 1998 eliminary Accounts Report will be published in February 1999