Interim Report January - June 2000

INTERIM REPORT JANUARY - JUNE 2000 *Investor's net asset value on June 30, 2000, amounted to SEK 160,114 m. (113,856). This corresponds to SEK 200 (142) per share. At year-end 1999, Investor's net asset value amounted to SEK 153,259 m., corresponding to SEK 191 per share. In the first six months of the year, net asset value increased by SEK 6,855 m. (20,354) or 4 percent (22). *On June 30, 2000, the value of all Investor's holdings was SEK 171,817 m. (123,810). At year-end 1999, the value of all Investor's holdings amounted to SEK 172,172 m. *Total return on Investor shares amounted to 3 percent (7) in the first half of 2000. For the full year 1999, total return amounted to 35 percent. *In the first six months of the year, Investor increased its holdings in AstraZeneca and SEB through new investments amounting to SEK 544 m. *The agreement between Investor AB and Volkswagen AG regarding the sale of Scania shares was approved by the companies' boards in the second quarter of 2000. 37.4 million A shares were sold for SEK 13,838 m., which provided a capital gain of SEK 10,202 m. *In June, Investor and Hutchison Whampoa decided to form a company that will apply for a third generation mobile telephony license in Sweden. The agreed ownership structure means that Hutchison Whampoa owns 60 percent and Investor 40 percent. *The deal flow within new investments was favorable in the first half of the year. On June 30, 2000, the market value of new investments amounted to SEK 14,171 m., an increase of SEK 6,553 m. since year-end 1999. *First-round financing for Investor Capital Partners - Asia Fund was completed and resulted in commitments from investors amounting to USD 322 m., of which Investor's commitment amounts to USD 200 m. During the year the fund made a first investment, in partnership with Investor, Ericsson and Hutchison Whampoa, in imGO, a company focused on investments in mobile telecommunications in Asia. The interim report can also be accessed on the Internet www.investorab.com PRESIDENT'S COMMENTS STRONG FOCUS ON NEW INVESTMENTS In the first half of 2000, the stock market was characterized by substantial price fluctuations, mainly in that area generally referred to as the new economy. The Nasdaq, where many companies within technology and medicine are listed, experienced an uneasy spring. Strong market development at the end of 1999 and in the first quarter of this year, with a record number of new listings, was followed by dramatic swings in the second quarter. A number of listings were either postponed or canceled. The trend in the market for unlisted companies, where Investor's new investments arm plays an active role, was also very interesting. In the first quarter, a large number of companies at the venture stage, with aggressive business plans and valuations, were seeking capital. In the second quarter, the strong deal flow continued, but with more cautious valuations. The share price trend for our core holdings was mixed in the first half. The favorable market capitalization development for Ericsson and OM Gruppen continued. The second quarter also saw a gratifying recovery in AstraZeneca's share price. The situation was more difficult for some other companies, which, despite favorable development in their underlying operations, experienced a weak share price trend. As long-term owners, we should devote ourselves to the long-term development of these operations rather than focusing on short-term price fluctuations. We remain confident that the results of good and profitable companies will be reflected in market capitalization over time. The total value growth for the core holdings in the first half of the year was just over SEK 5 billion, but, after adjustment for the sale of Scania shares for nearly SEK 14 billion, the total value of the core holdings decreased from SEK 150 billion to SEK 142 billion. For Investor, development for its new investments has been rewarding. In the main this means we have received many new business propositions and that we have been able to maintain a high level of business intensity. It is gratifying than an owner of Investor's character has been able to attract so many new entrepreneurs both in Sweden and abroad. This has allowed us to focus even more on investments in new operations, where we have seen an increasing value growth. The value of our new investments was just over SEK 14 billion at the end of the first half, compared with just below SEK 8 billion at the beginning of the year. In its new investments, Investor has deliberately chosen to diversify risks and opportunities rather than making a few major investments. We must therefore continuously adapt our organization. We continue to allocate resources to our new investments business, the costs of which now account for almost half of the company's total costs. The challenge is to find a sufficient number of qualified employees to take advantage of the opportunities available. At the same time as we are strengthening our own organization with international recruitment of well-educated and qualified analysts and investors, we must ensure that we find various forms of cooperation and co-investments with others. One recent example is our stake in Startupfactory. In addition to our belief that this is a good investment, it also gives us an opportunity to enter a new area, namely investments at a very early development stage. Such investments require special resources of a type that we have decided not to build up within our own organization. b-business partners, the company formed in the first quarter as a joint venture between Investor, ABB, SEB and a number of other companies, made its first investments in the second quarter. The acquisition of imGO, a company focused on the mobile Internet in Asia and formed in a cooperation between Investor, Ericsson and Hutchison Whampoa, was completed in the second quarter. In another cooperation with Hutchison Whampoa, we will apply for a license for the third generation of mobile telephony systems, 3G, in Sweden. Investor's wholly owned venture capital company Novare Kapital, specialized in early-stage investments, was merged with Investor Growth Capital during the spring. This was done so that synergies in deal flows and competence can be exploited which allows Investor to give priority to investments in a later development phase. Following this merger, we can function as a natural partner for growth companies at different stages of their development. The new economy makes high demands on broad-based communication where corporate peer contacts are formed between employees at all levels. Individual employees are entrusted with greater responsibility for making decisions and seeing them through, and this means changing the way we work. When we build a bridge between the old and the new economy, contacts and networks are of utmost importance. By acting as one company under our new Investor logotype, we will achieve a stronger market presence. For decades, the Investor name has represented a combination of financial strength and a large network of contacts. These factors are essential in our endeavors to take part in the buildup and development of the companies in which we are involved. This is a tradition which we will continue to nurture and develop in the best possible way, adapted to the age in which we live. Marcus Wallenberg ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/07/12/20000712BIT00080/bit0001.doc The full report http://www.bit.se/bitonline/2000/07/12/20000712BIT00080/bit0002.pdf The full report