Interim report on the operations of AB Custos for the period january 1 - june 30, 2001

INTERIM REPORT ON THE OPERATIONS OF AB CUSTOS FOR THE PERIOD JANUARY 1 - JUNE 30, 2001 · Total return on Custos shares for the report period was 4.3 percent. · Custos divested its holding in Perstorp. Total return Total return on Custos shares for the report period was 4.3 percent. Return, January 1, 2001 - June 30, 2001 % Total return on Custos 4.3 shares1 Cost of shareholders' 4.0 equity2 SIX Portfolio Return -8.8 Index SIX Return Index -12.3 Morgan Stanley World - 11.2 Index3 1 Total return taking into account share price appreciation and, where appropriate, dividend paid and redemption of shares reinvested. 2 Measured as the average twelve-month Swedish treasury bill rate plus a risk premium of 4 percent during the six-month period. 3 MSCI Indices US$ World Index. In this Interim Report, total net asset value, net asset value per share etc. on December 31, 2000 are calculated on the assumption that the SCA shares that comprised payment in the redemption program being completed during 2001 had been distributed to Custos shareholders on December 31, 2000. An Extraordinary General Meeting on December 5, 2000 approved this redemption in principle. However, the Parent Company Condensed Balance Sheet on December 31, 2000 includes these SCA shares, because the approval and registration of Custos' redemption of ordinary shares with payment in the form of SCA shares was not completed until early in 2001. For further information, see the Custos Annual Report for 2000. Net asset value Total net asset value on June 30, 2001 was MSEK 5,239 (Dec. 31, 2000: 4,981), or SEK 291 (Dec. 31, 2000: 276) per share. Value per share is based on 18,030,654 Custos shares and is calculated on the assumption that the synthetically repurchased shares, as provided by a mandate from the Annual General Meeting on April 5, 2000, were redeemed. On June 30, 2001, Custos' discount to net asset value was 14 percent. This was higher than at year-end 2000, when the discount was 7 percent. Change in net asset value, MSEK Jan 1, 2001- Jun 30, 2001 Net asset value, January 11 4,981 Dividends 38 Administrative expenses -22 Other income and expenses 1 Financial income and expenses 1 Taxes -1 17 Change in value of securities portfolio Perstorp/Pergo2 555 Svedala 109 Perbio Science 79 SCA (including securities loans) 42 Bilia 13 Christian Salvesen -13 C. Tybring-Gjedde -56 Other holdings -144 585 Change in net asset value before 602 dividend, redemption etc. Dividend to shareholders -358 Change in value from synthetic buy- -63 backs of Custos' own shares (swap agreement 2) which arose during 2001 Transfer of market value of synthetic 936 share buy-backs on December 31, 2000 (swap agreement 2) Fixed redemption amount of synthetic -831 share buy-backs on June 30, 2001 (swap agreement 2)3 Other items -28 Net asset value at end of period 5,239 1 The Custos shares that were included in the synthetic buy-back program on December 31, 2000 as provided by a mandate from the Annual General Meeting on April 5, 2000 (swap agreement 2) are assumed to have been redeemed at the market value prevailing on December 31, 2000 (MSEK 936). 2 Also includes the change in the value of the debentures issued by Sydsvenska Kemi (see "Portfolio of listed shares"). 3 The Custos shares that were included in the synthetic buy-back program as provided by a mandate of the Annual General Meeting on April 5, 2000 (swap agreement 2) are assumed to have been redeemed at a fixed redemption amount (MSEK 831, see "Redemption"). Net asset value on June 30, 2001, allocated by assets and liabilities Price Market SEK per 1 Listed companies Number per value, Custos share, MSEK share SEK Perbio Science 14,101,2 136.00 1,918 106 26 Svedala 5,296,60 181.50 961 53 0 Christian Salvesen 27,090,0 19.15 519 29 00 SCA, Series A 1,412,71 230.50 326 2 18 5 Bilia 3,826,36 68.50 262 15 3 Pergo 3,964,28 62.00 246 14 4 C. Tybring-Gjedde 8,300,00 3.70 31 2 0 C. Tybring-Gjedde 4,900,00 11.95 58 3 3 (convertible loan) 0 Other listed companies 37 2 Subtotal listed companies 4,358 242 Options issued -16 -1 Total listed companies 4,342 241 Unlisted companies Acando 244 14 Other unlisted companies 114 6 Subtotal unlisted 358 20 companies Options issued, Acando -60 -3 Total unlisted companies 298 17 Debentures, Sydsvenska 14.28 226 13 Kemi 15,857,1 39 Other assets 1,364 4 75 Total assets 6,230 346 Liabilities -991 5 -55 Net asset value 5,239 291 1 Calculated on the basis of 18,030,654 shares. 2 SCA, Series A shares have been equated in value with SCA, Series B shares, which are more liquid. Furthermore, it is possible to convert SCA, Series A shares to SCA, Series B shares. 3 Convertible debenture loan equivalent to 4,900,000 shares. The market value presupposes that no conversion will take place. The loan has been calculated at its current value. 4 Adjusted for the surplus value of synthetically repurchased shares etc. 5 Adjusted for the market value of options issued, redemption proceeds for synthetically repurchased shares etc. In calculating net asset value, Custos has applied the same principles as in its Annual Report for 2000. Portfolio of listed shares On June 30, 2001, the market value of the portfolio of listed shares, taking into account options issued, was MSEK 4,342 (Dec. 31, 2000: 5,024, excluding the SCA shares distributed early in 2001, in accordance with a decision in principle by an Extraordinary General Meeting on December 5, 2000). The largest single change in the composition of the portfolio during the report period was Custos' divestment of its entire holding in Perstorp to Sydsvenska Kemi AB (a chemical company controlled by Industri Kapital). For its shares in Perstorp, Custos received a total of SEK 1.1 billion in cash plus 15,857,139 debentures issued by Sydsvenska Kemi with a total calculated value of MSEK 226 on June 30, 2001. Before the divestment, Perstorp had implemented a distribution of its laminate flooring subsidiary Pergo AB to the shareholders of Perstorp. Custos received 3,964,284 shares in Pergo, equivalent to 22.2 percent of the share capital and voting power in the company. In addition, Custos converted 2,261,102 SCA, Series A shares to SCA, Series B shares and repaid its securities loans. Custos' redemption offer with payment in the form of SCA shares was completed by distributing 12,170,874 SCA shares to Custos' shareholders. During June 2000, the Finnish-based engineering group Metso Corporation announced an offer to acquire all shares and convertible debentures in Svedala. Metso Corporation is offering SEK 185 per share. The application period has been extended until July 25, 2001. Custos has accepted the offer. During the report period, Custos carried out net sales of securities totaling MSEK 1,187. Unlisted companies On June 30, 2001, the market value of Custos' holdings in unlisted companies, taking into account options issued, amounted to an estimated MSEK 298 (Dec. 31, 2000: 447). Shares in unlisted Number Market SEK per companies value, Custos MSEK share1 Shares in unlisted Group 109 6 companies Shares in unlisted associated companies: Acando2 360,522 184 11 Others 5 0 Total unlisted companies 298 17 1 Calculated on the basis of 18,030,654 shares. 2 Taking into account options issued. Taking into account options issued, Custos' holding in Acando was valued on June 30, 2001 at MSEK 184. The corresponding value on December 31, 2000 was MSEK 335. The appraisal of Acando on June 30, 2001 took into account the change in the index for companies in the IT Consulting & Services sector during the report period. Custos is the largest single shareholder in Acando, with 30 percent of the share capital and voting power, taking into account options issued. Custos has invested a total of MSEK 66 in Acando, taking into account options issued. Securities portfolio, earnings and financial position The market value of the Parent Company's total securities on June 30, 2001, taking into account options issued, amounted to MSEK 4,866 (Dec. 31, 2000: 5,471, excluding the SCA shares distributed early in 2001, in accordance with a decision in principle by an Extraordinary General Meeting on December 5, 2000). The book value of the portfolio on the balance sheet date was MSEK 2,536 (Dec. 31, 2000: 2,760). The difference between the market value and book value of the portfolio, the so-called surplus value, thus amounted to MSEK 2,330 (Dec. 31, 2000: 2,711). During the period, Custos carried out net sales of securities totaling MSEK 1,188. The Parent Company's income before taxes for the period January 1 - June 30, 2001 amounted to MSEK 983 (year-earlier period: 600). Dividends received totaled MSEK 38 (238) and capital gains etc. totaled MSEK 965 (360). Taxes totaling MSEK 1 (2) were charged to income. The adjusted equity/assets ratio on June 30, 2001 was 83 percent (Dec. 31, 2000: 74). Net interest-bearing assets (interest-bearing assets minus interest-bearing liabilities) totaled MSEK 1,427 (Dec. 31, 2000: net interest-bearing liability 57). Redemption The ongoing redemption of Custos shares targeted to Svenska Handelsbanken in order to finally settle the synthetic buy-back program implemented as provided by a mandate of the Annual General Meeting on April 5, 2000, is proceeding as planned. Custos expects the redemption procedure to be completed during August. Change in share capital, 2001 Year Ordinary Series C Share shares shares capital, (1 vote (1/10 vote MSEK each) each) December 31, 2000 27,758,803 - 694 2001 new share - 6,085,437 152 issue1 2001 redemption2 -6,085,437 - -152 2001 redemption3 -6,085,437 -152 2001 redemption4 -3,642,712 - -91 2001 18,030,654 - 451 1 New share issue targeted to Svenska Handelsbanken to enable Custos to carry out the redemption program with payment in SCA shares, in accordance with a decision by the Extraordinary General Meeting on February 8, 2001, efficiently without delay. 2 Completed redemption with payment in SCA shares, in accordance with a decision by the Extraordinary General Meeting on February 8, 2001. 3 Completed redemption targeted to Svenska Handelsbanken. 4 Ongoing redemption targeted to Svenska Handelsbanken as final settlement of the synthetic buy-back program implemented as provided by a mandate from the Annual General Meeting on April 5, 2000 (swap agreement 2). The Group Custos is a non-diversified investment company, best analyzed on the basis of the Parent Company's accounts, in which the investment portfolio is valued at market value. Because the consolidated accounts for this type of investment company only serve as a complement to the Parent Company accounts, the consolidated balance sheets and income statements of the Custos Group are presented in an appendix to this Interim Report (see page 9). Miscellaneous The Board of Directors of Custos has approved the introduction of a new bonus program for employees related to the 2001 financial year. The program is mainly connected to the performance of Custos shares during 2001. The total return on Custos shares must exceed the cost of shareholders' equity and the SIX Portfolio Return Index in a certain way in order for bonuses to be payable. Accounting principles The same accounting principles and calculation methods have been used in the Interim Report as in the latest Annual Report. In addition, the Company applies the new recommendations of the Swedish Financial Accounting Standards Council, which went into effect on January 1, 2001 except Recommendation RR20 re current report period for the Group. This report will be prepared and available at the end of August, 2001. These new recommendations have not, however, had any impact on the accounts of the Parent Company and the Group. Information schedule · Interim Report, January 1 - September 30 October 17, 2001 · Annual General Meeting.......................... April 8, 2002 Only reports attributable to the full-year accounts will be distributed to the shareholders. Other reports will be available at the Company's office and will be sent to shareholders who request them. All reports are also available on the Company's website, www.custos.se. Stockholm, July 17, 2001 AKTIEBOLAGET CUSTOS (publ) Christer Gardell Chief Executive Officer Review report for AKTIEBOLAGET CUSTOS (publ) We have reviewed the Interim Report for the period January 1 June 30, 2001. In doing so, we have followed the recommendation issued by the Swedish Institute of Authorized Public Accountants (FAR). A review is substantially more limited than an audit. Nothing has emerged that indicates that this Interim Report does not fulfill the requirements of the Securities Exchange and Clearing Operations Act and the Annual Accounts Act. KPMG Per Bergman Authorized Public Accountant. The Interim Report is published in Swedish and English. In the event of any difference between the English version and the Swedish original, the Swedish version shall govern. AB Custos, P.O. Box 1738, SE-111 87 Stockholm. Phone +46 8 440 57 70, fax +46 8 440 57 80, website: www.custos.se Parent Company Condensed Income Jan Statement - Jun Apr - Jan - Apr - (Amounts in MSEK) 2001 Jun Jun Jun 2001 2000 2000 Income from securities management Dividends 38 27 238 216 Other income from holdings in 0 -1 - - associated companies other listed 965 546 360 -6 securities Total income from securities management 1,003 572 598 210 Administrative expenses -22 -13 -22 -13 Other income and expenses 1 4 11 9 Operating income 982 563 587 206 Income/loss from fixed-asset -7 -6 - - receivables Financial income and expenses 8 3 13 3 Income before taxes 983 560 600 209 Taxes -1 - -2 -1 Net income for the period 982 560 598 208 Net income per share (SEK) 42.53 25.87 18.79 6.54 Based on the following number of shares 23,093, 21,673, 31,845, 31,845 301 366 613 ,613 Parent Company Condensed Balance Sheet Jun Dec (Amounts in MSEK) 30, 31, 2001 2000 Fixed assets Tangible fixed assets 2 1 Financial fixed assets Holdings in Group companies 23 23 Holdings in associated 783 1 1, 490 2 companies Receivables from associated companies 52 52 Other long-term holdings of 1,477 2,349 securities Other long-term receivables (of 233 (229) 20 (20) which, interest-bearing) Current assets (of which, interest- 1,311 (1,306 524 (523) bearing) ) Total assets 3,881 4,459 Shareholders' equity3 3,723 3,711 Provisions 21 29 Current liabilities (of which, interest- 137 (108) 719 (600) bearing) Total shareholders' equity and 3,881 4,459 liabilities 1 Acando, C. Tybring-Gjedde, Firefly, Perbio Science, Pergo etc. 2 Acando, C. Tybring-Gjedde, Firefly, Perbio Science, SCA etc. 3 At the beginning of the period 3,711 4,292 Dividend -358 -366 New issue of Series C shares 152 - Redemption of Series C shares -153 - Other redemptions -611 -875 Ongoing transactions attributable to 0 95 buy-backs of Custos' own shares Net income for the period 982 565 At the end of the period 3,723 3,711 Of which, net shareholders' equity 831 611 utilized during Custos' redemptions Parent Company Condensed Cash Flow Jun Jun Statement 30, 30, (Amounts in MSEK) 2001 2000 Current operations Dividends received 38 238 Other operating income 944 349 Operating income 982 587 Adjustments for items not included in cash -966 -370 flow 16 217 Net interest received/paid and similar 7 12 items Taxes paid -2 -2 Cash flow from current operations before 21 227 changes in working capital Changes in working capital Increase (-)/decrease (+) in current -1 32 receivables Increase (+)/decrease (-) in current -36 9 liabilities Increase (+)/decrease (-) in provisions -8 -2 Cash flow from current operations -24 266 Investment operations Note 1 Acquisitions of holdings in companies -20 -465 Divestments of holdings in companies 1,189 1,217 Other investment operations - -12 Cash flow from investment operations 1,169 740 Financing operations Synthetic buy-backs of Custos' own shares 0 46 Dividend paid -358 -366 Amounts disbursed to shareholders for -153 - redemptions New share issue 152 - Cash flow from investment operations -359 -320 Increase(+)/decrease (-) in liquid funds 786 686 Liquid funds, beginning of the period 520 630 Liquid funds, end of the period Note 2 1,306 1,316 Note 1 Net sales of securities 1,188 758 Net investments in equipment 0 0 Increase (-)/decrease (+) in receivables 1 -3 related to divestments Increase (+)/decrease (-) in liabilities -20 -15 related to acquisitions Payments received 1,169 740 Note 2 Short-term investments 1,303 1,316 Cash and bank balances 3 0 Liquid funds, end of the period 1,306 1,316 Appendix INTERIM REPORT ON CUSTOS GROUP OPERATIONS FOR THE PERIOD JANUARY 1 - JUNE 30, 2001 Group Earnings The operating income of the Custos Group for the period January-June 2001 totaled MSEK 714 (671). After estimated taxes, consolidated income totaled MSEK 708 (609). Associated companies Shareholdings in associated companies in which the Group has long-term ownership of no less than 20 percent and no more than 50 percent of voting power are reported according to the equity method in the consolidated financial statements. Share of income in associated companies is mainly reported in Custos' financial statements with a time lag of one quarter. In cases where the acquisition value of an associated company exceeds the Group's holding in the shareholders' equity of the company, the surplus is classified as goodwill and is depreciated over a five-year period. Shareholdings previously reported as associated companies but in which Custos' stake has fallen below 20 percent of voting power are reported according to the acquisition method of accounting. SCA is reported in the consolidated financial statements according to the acquisition method from January 1, 2001 onward. The holdings that are classified in the consolidated financial statements as associated companies are: Jun 30, 2001 Dec 31, 2000 Jun 30, 2000 Company1 % of % of % of % of % of % of capita votes capita votes capita votes l l l Acando 49.9 49.9 49.9 49.9 49.9 49.9 C. Tybring-Gjedde 33.3 33.3 33.3 33.3 37.4 37.4 Firefly 38.4 38.4 43.0 43.0 43.0 43.0 Open Training 30.0 30.0 30.0 30.0 30.0 30.0 Perbio Science 39.0 39.0 39.5 39.5 38.7 38.7 Pergo 22.2 22.2 - - - - Plantvision - - 30.6 30.6 31.4 31.4 SCA - - 6.9 20.2 6.9 20.1 1 Custos' stake exclusive of options issued. Consolidated Condensed Income Statement Jan - Jan - Jan - (Amounts in MSEK) Jun Jun Dec 2001 2000 2000 Income from securities management Share of income in associated -1 171 487 companies Capital gains on divestments of 2 - 8 associated companies Income from other securities 735 491 553 management 736 662 1,048 Income from other operations 8 29 37 Expenses from other operations -5 -8 -35 3 21 2 Gross income 739 683 1,050 Administrative expenses -24 -23 -45 Other income and expenses -1 11 -55 Operating income 714 671 950 Income/loss from fixed-asset receivables -7 - -2 Financial income and expenses 12 16 29 Income after financial items 719 687 977 Taxes -11 -78 -144 Net income for the period 708 609 833 Net income per share, SEK 30.67 19.13 27.39 Based on the following number of shares 23,093, 31,845, 30,426, 301 613 582 Consolidated Condensed Balance Sheet Jun 30, Dec 31, (Amounts in MSEK) 2001 2000 ASSETS Fixed assets Tangible fixed assets 2 2 Financial fixed assets Holdings in associated companies 722 3,315 Receivables from associated 52 52 companies Other long-term holdings of 1,644 2,348 securities Other financial fixed assets 233 21 Current assets 1,364 609 Total assets 4,017 6,347 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity1 3,918 5,617 Provisions 21 29 Current liabilities 78 701 Total shareholders' equity and 4,017 6,347 liabilities 1 At the beginning of the period 5,617 5,818 Dividends -358 -366 New issue of Series C shares 152 - Redemption of Series C shares -153 - Other redemptions -2,069 -875 Ongoing transactions attributable to 0 95 buy-backs of Custos' own shares Translation differences etc. 21 112 Net income for the period 708 833 At the end of the period 3,918 5,617 Of which, net shareholders' equity 831 2,069 utilized during Custos' redemptions Consolidated condensed cash flow Jun 30, Jun 30, analysis 2001 2000 (Amounts in MSEK) Current operations Operating income 714 671 Adjustments for items not included in -697 -433 cash flow 17 238 Net interest received/paid and similar 12 16 items Taxes paid -2 -2 Cash flow from current operations before changes in working verksamheten före förändringar av rrrrörelserörelsekapitalet capital 27 252 Changes in working capital Increase (-)/decrease (+) in inventories 1 3 etc. Increase (-)/decrease (+) in current 32 6 receivables Increase (+)/decrease (-) in current -102 -8 liabilities Increase (+)/decrease (-) in provisions -8 -2 Cash flow from current operations -50 251 Investment operations Note 1 Acquisitions of holdings in companies - -450 Divestments of holdings in companies 1,193 1,217 Other investment operations - -12 Cash flow from investment operations 1,193 755 Financing operations Synthetic buy-backs of Custos' own 0 46 shares Dividend paid -358 -366 Amounts disbursed to shareholders for -153 - redemptions New share issues 152 - Cash flow from investment operations -359 -320 Increase (+)/decrease (-) in liquid 784 686 funds Liquid funds, beginning of the period 525 633 Liquid funds, end of the period 1,309 1,319 Note 2 Note 1 Net investments in securities 1,192 758 Net investments in equipment 0 0 Increase (-)/decrease (+) in receivables 1 -3 related to divestments Payments disbursed 1,193 755 Note 2 Short-term investments 1,303 1,316 Cash and bank balances 6 3 Liquid funds, end of the period 1,309 1,319 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/07/17/20010717BIT00180/bit0001.doc http://www.waymaker.net/bitonline/2001/07/17/20010717BIT00180/bit0002.pdf