Interim Report January - September 99

ADMINISTRATION During the last fifteen years, Kinnevik shares have generated an average effective yield of 34 per cent per year as a result of increased market value and dividends, including the value of offers to subscribe to shares. The value of the Group's holdings of listed securities was MSEK 12,277 as of September 30, 1999. By November 22, 1999, the value was MSEK 17,783. Consequently, the premium over the book value of the Group's portfolio of listed shares was MSEK 15,832 on that date. Net turnover for the first nine months of 1999 amounted to MSEK 5,176 (4,983). Korsnäs Holding AB's net turnover amounted to MSEK 3,720 (3,861). The net turnover of other subsidiaries amounted to MSEK 1,474 (1,135). Operating income after depreciation amounted to MSEK 316 (1,352), including income of MSEK 101 (961) from corporate development and sales of securities. Kinnevik's interest in the earnings of affiliated companies amounted to a net loss of MSEK 955 (loss 657), of which the interest in the loss incurred by Millicom International Cellular S.A. (MIC) amounted to MSEK 372 and in that of Société Européenne de Communication S.A. (SEC) to MSEK 548. Financial revenue and expense amounted to a net expense of MSEK 120 (expense 213). Income after financial revenue and expense amounted to a loss of MSEK 759 (income of 482). The net result for the period was a loss of MSEK 804 (net income 421). The loss per share for the period was SEK 12.78 (income 6.69). The comparative figures for the first nine months of 1998 are pro forma and relate to the Kinnevik Group and the companies now belonging to the group. MELLERSTA SVERIGES LANTBRUKS AB After a sunny summer, this year's harvest was completed according to plan. The year's volumes can be regarded as normal. Nothing else was expected, as last year's poor weather inevitably also affected this year's crops. On the whole, quality appears to have been good. Only in Skåne, where there was a very rainy August, was there a problem with falling numbers, especially in the case of wheat. Net turnover amounted to MSEK 10 (11) and operating income amounted to MSEK 3 (4). KORSNÄS HOLDING AB Korsnäs Holding AB is the parent company of Korsnäs AB, which, together with its subsidiaries, makes up the Korsnäs Group. After the Group experienced slightly lower demand and considerably lower prices during the first half of the year than in the corresponding period last year, demand and price levels recovered during the third quarter. The production volume during the first nine months was 3 per cent down on last year's level. Net turnover for the first nine months of the year amounted to MSEK 3,720 (3,861). Operating income amounted to MSEK 328 (616). The profit margin was 9 per cent (16). Income after financial net amounted to MSEK 320 (527). Korsnäs Forestry Prices were gradually reduced during the year across the entire product range. The price of Swedish pulpwood was reduced by some SEK 20 per m3 at the beginning of 1999, and the price of imported pulpwood has also been gradually lowered. Saw timber prices were reduced slightly around the end of June but have now stabilised. Korsnäs Forestry's net turnover for the nine-month period amounted to MSEK1,047 (1,115) and operating income amounted to MSEK 153 (152). This figure includes capital gains of MSEK 9 (13) on sales of land. Korsnäs Industrial There has been a distinct improvement in the state of the market for paper, paperboard and fluff pulp since the late spring. All products experienced a strong order intake, and total deliveries for the third quarter were 11 per cent above those for the corresponding period last year. Paperboard and paper volumes exceeded last year's, while deliveries of fluff pulp were slightly lower. Capacity utilisation remained high during the third quarter, although it was slightly lower than in the third quarter of 1998 (down by 2%). Further increases in fluff pulp prices have been implemented, and for certain paperboard products and paper, prices have been firmed up, although this was partly offset by the strengthening of the krona. The first nine months of the year were characterised by slacker demand throughout Europe than during the corresponding period last year. In combination with excess capacity, this resulted in narrower margins. Deliveries declined by five per cent on the previous year. The final phase of the consolidation program in Germany will be implemented in December when the factory in Freden will be closed and its production transferred to Aachern. At the English plant, a rationalisation program was carried out during the third quarter, involving a reduction of 20 per cent in the work force due to greater automation. The plants in Croatia and Serbia are now back in full production. The sawn timber market was weak during the period. Deliveries in the third quarter were five per cent lower than for the corresponding period in 1998, as a result of start-up problems with the new sawing equipment. The net turnover for Korsnäs Industrial for the first three quarters amounted to MSEK 3,440 (3,579) and the operating income was MSEK 185 (465). TRANSCOM AB Transom designs, maintains and develops tailored customer care programs for consumer-intensive companies and is the leading supplier in this field in Scandinavia. Since the company was founded in 1995, its business has expanded rapidly in terms of scope, quality and volume. Today, Transcom offers tailor- made solutions based on each customer company's specific service requirements. This year the company has opened facilities in Norrköping and Helsinki, Finland. The investment in outgoing telephony has gathered speed and is expanding rapidly. Outgoing calls have increased from some 50,000 last year to about 700,000, and incoming calls from some 5 million to around 8.9 million. In addition to this, some 3.3 million chargeable administrative tasks where handled, compared with around 1.9 million last year. As of September 30, 1999, Transcom had 1,805 employees, of whom 1,314 are in Sweden, 280 in Denmark, 191 in Norway and 20 in Finland. At the same time in 1998, the number of employees was 1,321. The market for customer services is expected to continue to grow by 35-40 per cent a year. Transcom's net turnover for the first three quarters rose by 76 per cent to MSEK 399 (227). Operating income for the same period was MSEK 19 (4). ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/11/23/19991123BIT00450/bit0001.doc http://www.bit.se/bitonline/1999/11/23/19991123BIT00450/bit0002.pdf