Investor´s Interim Report for January - June 2001

3 Interim Report, January - June 2001 Investor's net asset value* on June 30, 2001 amounted to SEK 127,941 m. (compared with SEK 156,071 m. on June 30, 2000), corresponding to SEK 167 (203) per share. At year-end 2000, Investor's net asset value amounted to SEK 144,433 m., corresponding to SEK 188 per share. In the first six months of 2001, the net asset value changed SEK -16,492 m. (6,713) or -11 (4) percent. In the second quarter, Investor's net asset value increased SEK 1,725 m. (after paying a dividend of SEK 4,218 m.) or 2 percent. The value of all Investor's holdings was SEK 138,565 m. on June 30, 2001 (167,774), compared with SEK 154,561 m. at year-end 2000, a decrease of SEK 15,996 m. for the period. In the second quarter, the value of all Investor's holdings increased SEK 5,103 m. Net debt increased SEK 496 m. to SEK 10,624 m. in the first six months of the year. The total return on Investor shares amounted to 3 (3) percent during the period and was 16 (-11) percent in the second quarter. The total return was 20 (30) percent during the past 12-month period. Investor increased its holdings in Ericsson and SEB and divested shares in Stora Enso, SKF and SAS in the second quarter. After the transaction, Investor holds shares amounting to 4.7 percent of the share capital and 38.7 percent of the voting rights in Ericsson, and 19.2 percent of the capital and 20.0 percent of the votes in SEB. In the New investments business, SEK 2,181 m. (5,305) was invested during the period, of which SEK 1,643 m. in the second quarter. Divestments totaled SEK 929 m. (1,161), of which SEK 204 m. in the second quarter. Realized capital gains amounted to SEK 110 m. (731) for the period, of which SEK 45 m. was in the second quarter. Write-downs in the first half of the year totaled SEK 1,407 m., of which SEK 243 m. was in the second quarter. The Investor Group's income for the period totaled SEK 9,171 m. (13,893). Income in the second quarter amounted to SEK 7,759 m. (11,310). The interim report can also be accessed on the Internet at www.investorab.com * During the year Investor eliminated its holding of own convertibles. Comparative figures have been adjusted in net asset value calculations to take this into account. President's comments Sharper focus in Investor's portfolio At mid-year, sentiment on the world's stock exchanges remains uncertain and the third quarter started out weakly. However, a longer downward trend was broken during the second quarter, resulting in a rebound on several exchanges. The Stockholm exchange recorded an increase of 6 percent in the second quarter but fell a total of 17 percent during the first half of the year. The pattern was similar for the S&P 500 and Nasdaq. During the second quarter of the year, as in the first, a number of major U.S. and European corporations, in different industries, released negative reports with earnings warnings. The slowdown of the U.S. economy appears to have spread to Europe. Growth in these economies is now expected to be lower than earlier forecasts. The trend of private consumption is a critical factor in the uncertain economic outlook. The U.S. Federal Reserve has lowered the Federal Funds and discount rates a total of six times, or 2.75 percentage points, since the beginning of 2001. Historically, these rate reductions were notably swift and sharp. The European Central Bank has been more cautious about reducing rates and Sweden's Riksbank actually raised its repo rate in the beginning of July. The Swedish krona has been weak, especially against the dollar, although the low krona exchange rate is expected to have a positive effect on the earnings of many Swedish export companies, partially compensating for weak product markets. Investor's vision is to deliver superior returns by establishing Investor as a globally recognized entrepreneurial and active owner of companies with high growth and profit potential. In line with this vision, a major transaction was implemented in June, when Investor increased its ownership in Ericsson and SEB and divested holdings in Stora Enso, SKF and SAS. After the transaction, Investor's holdings in the growth sectors Healthcare, Technology and Financial Services now total 40 percent, 25 percent and 12 percent, respectively. Investor's Core Holdings portfolio is now more focused after the transaction and the synergies between these holdings and Investor's New Investments business are more apparent. Stora Enso, SKF and SAS, three well-managed and successful companies, have in turn gained a long-term and stable owner that will also manage its portfolio actively. AstraZeneca also continued to perform strongly on the stock exchange in the second quarter and Investor remains highly confident in the company and its research portfolio, despite the discontinuation of Viozan. The coming months will continue to be very interesting, considering the prospects of Nexium and Crestor. Nexium has been positively received in a number of countries since its launch. Due to the good results achieved with Crestor in a clinical development program, AstraZeneca has submitted the superstatin to the U.S. Food and Drug Administration for regulatory approval. In the second quarter, Ericsson recorded a continuing strong trend of order bookings for systems equipment and announced in April that the first commercial 3G communications test was successfully conducted in a network provided by Ericsson. The announced joint venture with Sony, concerning development and sales of mobile phones, is creating the basis for turning the negative earnings trend of this business area in the long term. Ericsson is continuing to implement the important cost- savings program announced earlier. In June, SEB and Swedbank filed notification about their proposed merger with the EU's competition authority and a decision is expected during the second half of the year. The two banks are working intensely to ensure an effective merger process that benefits customers and employees. Investor supports the merger and the new bank has attractive prospects for becoming a competitive and innovative player in the European financial services market. At the end of June, Hi3G announced that it had signed a letter of intent with Ericsson to purchase 3G network infrastructure for its own UMTS network in Sweden. It was also announced that Hi3G and Ericsson, together with other Hutchison 3G ventures, will jointly develop strategic UMTS applications and services. In June, the county administrative court in Stockholm ruled that the UMTS license decisions made by the Swedish Post and Telecom Agency (PTS) should stand. Hi3G is proceeding with its intensive program to build up operations in Sweden. During the first half of the year the venture capital market continued its return to normal business conditions with traditional valuation methods and a focus on unique business models. Investor continues to believe firmly in the potential of its New Investments business and is continuing to work actively with present holdings while constantly evaluating new investment opportunities. The New Investments portfolio has developed in a balanced manner, due to conscious diversification of geographies, industries and development stages of holdings. Companies in the biotechnology, medical technology and pharmaceutical industries, as well as our holdings in Asia, have had a positive impact on the portfolio during the year. Holdings in the technology sector have developed less favorably. It is worth emphasizing once again that Investor focuses on growing net asset value to generate an attractive total return for shareholders. Investor aims to manage shareholders' capital in a way to achieve returns that are superior to the yields of comparable investment alternatives in the long term. Going forward, Investor will continue this focused investment strategy, and actively support and develop companies, in order to deliver high returns to shareholders. Marcus Wallenberg ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/07/10/20010710BIT00050/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/07/10/20010710BIT00050/bit0002.pdf The full report http://www.waymaker.net/bitonline/2001/07/10/20010710BIT00050/bit0001.pdf The full report Low Resulotion http://www.waymaker.net/bitonline/2001/07/10/20010710BIT00050/bit0003.doc The full report Low Resulotion