Interim Report January - September 2000

Press Release November 10, 2000 Interim Report January -September 2000 (This interim report relates to the seed and venture capital activities conducted by Ledstiernan AB to support entrepreneurs and start-ups. It does not relate to the business activities formerly carried on by The Empire AB.) January - June 2000 · Stock market flotation on April 14, 2000 · New board · New share issue of MSEK 725 · Investments of MSEK 223 - 22 companies - MSEK 91 in mobile communication July - September 2000 · Five new investments to a total value of MSEK 25, which 52 per cent within the mobile communication investment sector · New unit opened in London · Strengthened organisation with additional technical and strategic competence and support for future financing of portfolio companies · MSEK 568 in liquid funds · Total investments at September 30 amounted to MSEK 360 in 35 companies. For further information, please contact: Johan Wachtmeister, President, telephone +46 8 545 035 00, +46 708 78 41 20 Ledstiernan is the leading Nordic seed and venture capital company focusing specifically on Mobile Communication. Ledstiernan is the leading Nordic seed and venture capital company focusing specifically on Mobile Communication. Interim Report January -September 2000 (This interim report relates to the seed and venture capital activities conducted by Ledstiernan AB to support entrepreneurs and start-ups. It does not relate to the business activities formerly carried on by The Empire AB.) January - June 2000 · Stock market flotation on April 14, 2000 · New board · New share issue of MSEK 725 · Investments of MSEK 223 - 22 companies - MSEK 91 in mobile communication July - September 2000 · Five new investments to a total value of MSEK 25, which 52 per cent within the mobile communication investment sector · New unit opened in London · Strengthened organisation with additional technical and strategic competence and support for future financing of portfolio companies · MSEK 568 in liquid funds · Total investments at September 30 amounted to MSEK 360 in 35 companies. Significant events during the period Flotation on the OM Stockholm Stock Exchange's "O" list Ledstiernan's Series "B" shares were listed on the Stockholm Stock Exchange's "O" list on April 14, 2000. New board members with international experience and networks in the IT, telecom and mobile communication sector Lars Berg, formerly with Mannesmann, Frankfurt, Telia and Ericsson. Currently member of the Boards of several IT- and telecom-related companies, among others Telefonica, Spain. Tomas Isaksson, Vodafone Airtouch, San Fransisco. Head of Global Platform and Internet Services. Birgitta Klasén, Pharmacia Corporation, New York. Senior Vice President, Corporate Officer and Chief Information Officer with responsibility for Pharmacia Corporation's IT activities. Kaj-Erik Relander, Sonera, Helsinki. Executive Vice President (prospective CEO as of January 1, 2001) with responsibility for Mobile & Media Business Area. Jan Carlzon, Chairman and Founding Partner, Ledstiernan. Per Lundberg, Founding Partner, Ledstiernan. Olof Stenhammar, Founding Partner, Ledstiernan, Chairman of OM Gruppen and Ratos. Share issue An MSEK 725 share issue was carried out in June to broaden ownership of the company's shares and improve market liquidity. As of September 30 this year, Ledstiernan had 108,954,383 shares in issue owned by more than 7,000 shareholders. Investments At the end of the period, Ledstiernan had investments in 35 portfolio companies and two wholly owned incubators: Ledstiernan Mobile Ventures and New World Technology Ventures. As of September 30, 2000, Ledstiernan had 13 portfolio companies in the mobile communication investment sector, which represented 46 per cent of its invested capital. [REMOVED GRAPHICS][REMOVED GRAPHICS] Nordic alliances In April, Ledstiernan set up Global Venture Alliance (GVA) together with Norway's Telenor Venture and the Danish company 2M Invest. The role of GVA is to exploit synergies between the owners and to co-invest in certain projects. GVA will eventually be expanded to include leading players on other geographical markets. Significant events during the third quarter The following investments/agreements were made during the third quarter: Ambio (formerly CareTec) Provides efficient property management with the aid of mobile IT support. (Mobile communication sector). Incomit, which has developed two products: A platform that simplifies the development of sophisticated telecom-based services in an internet environment, and a "lock" which guarantees secure telecom networks in connection with the use of external internet-based services (Mobile communications sector). CCNOX: Start-up consulting company providing information security in digital environments. CCNOX focuses on mobile Internet, e-business, B2B. (Software sector). Start and Run: Tools and information on the Internet for starting and running a business. Also ASP provider. (Software & E-business sectors). Avisator: Scandinavia's largest independent media sales company, concentrating on specialist magazines in digital media. A placement of shares with Ledstiernan and Skandia generated MSEK 25. Since 1997 Avisator companies have been developing and providing a service known as Linkpool for banner advertising on the Internet. With the object of streamlining the business, Linkpool has been spun off into a separate company financed by Avisator's shareholders and outside financiers. In view of the changed market prospects for banner advertising, further development of Linkpool has been discontinued. In connection with this Ledstiernan has written off its MSEK 4 investment. International developments Ledstiernan has opened an office in London to support the portfolio companies' contacts with international capital markets in connection with investments in the future. This unit is managed by Jan Risberg (formerly of Enskilda Securities). Ledstiernan's chairman Jan Carlzon will also carry out some of his activities from this office. As previously announced, the unit in Helsinki is expected to be up and running during the fourth quarter. Ledstiernan has signed a preliminary agreement with Oresa Ventures on joint ownership of the venture capital company i-start to handle investments in the TIME sector (Telecom, IT, Media and Entertainment). i- start has opened an office in Warsaw with local management. Strengthened organisation Jan Snygg, formerly responsible for Ericsson Datacom Networks and IP Services, Silicon Valley, joined the company in August as President of its wholly owned incubator Ledstiernan Mobile Ventures. Jan Snygg also has responsibility for Ledstiernan's overall investment strategy within the mobile communication sector. Arne Nabseth, formerly Senior Manger of KPMG Consulting, Line of Business High Tech, Silicon Valley, has been apopinted operational manager of Mobile Ventures. Marcus Bäcklund, formerly President and CEO of Cell Network, was appointed Senior Partner in July with the main task of managing the build-up of B2B activities within mobile internet and of strengthening the management of Ledstiernan's strategic alliances. Anna Carnefeldt (formerly UBS Warburg), Katalin Gereny (formerly Europolitan), Jonas Lindgren (formerly Aros Securities) and Jan Risberg, who is also responsible for the business in London, have joined the company as investment managers. This has deepened and broadened the competence of the investment organisation. Ledstiernan consists of 23 people with experience from newly started companies, mobile communication, and the financial sector, and who also possess strategic technical competence. Incentive programme An Extraordinary General Meeting held on August 15 voted in favour of the proposed option programme for key employees and external board members. In accordance with this decision, a wholly owned subsidiary has subscribed to loan stock involving a total of 1,200,000 options to subscribe to an equal number of Series "B" shares in Ledstiernan, which will be sold to those who have received an allotment. By September 30, 1,050,000 options had been subscribed to. The price at which the stock options may be exercised is SEK 43.50. The subscription period is August 1-29, 2003. The EGM also decided in favour of the Board's proposal concerning the principles for the issue to partners of options to acquire shares in portfolio companies. A maximum of 5 per cent of the shares that Ledstiernan will own in investments made after the EGM's decision on August 15, 2000, shall be subscribed to by each founding partner at market prices. This is an obligation as well as a right. As of September 30, options had been issued to acquire shares in CCNOX AB. Financial developments January - September 2000 Ledstiernan's operating income before depreciation will consist of capital gains on divestments (sales of shares and companies) and its interest in the earnings of associate companies, as well as administrative costs. During the first nine months of 2000, Ledstiernan invested a total of MSEK 274. This, together with previous investments, gives it an accumulated invested capital of MSEK 360. Ledstiernan has options to increase its holding in existing portfolio companies by an aggregate amount of MSEK 282. Most of the portfolio consists of newly started companies, most of which have not yet shown an operating profit. Only minor divestments were made during the period, which resulted in capital gains of MSEK 5.1. The presentation of the portfolio (see table) therefore mainly contains information concerning invested capital and, in those cases where issues have been made or the companies are listed on a stock market, the latest share prices paid as of September 30, 2000. Ledstiernan's result before tax for the period was a loss of MSEK 86, of which MSEK 70 relates to its interest in the losses of associate companies. Research and development costs are taken into the income statement regularly along with the interest in associate company earnings. MSEK 76 of the result have no effect on cash flow (interest in earnings of associates, and depreciation). Ledstiernan's operating expense consists primarily of personnel costs and rent, both of which are higher than in the previous quarter on account of the expanded organisation. Liquid funds and financing Closing liquid funds amounted to MSEK 568. Approved credit facilities amounted to MSEK 25, of which MSEK 0 had been utilised as of September 30, 2000. Ledstiernan has no external loan liabilities. Parent company The parent company's result before allocations was a loss of MSEK 7.2. Investments in fixed assets during the period amounted to MSEK 251, of which MSEK 230 relates to the acquisition of Ledstiernan Investment AB financed by a share issue. The business has been conducted through Ledstiernan AB since July 1, after having been conducted through a wholly owned subsidiary Ledstiernan Investment AB. Closing liquid funds amounted to MSEK 560. Significant events after the end of the period Further restructuring at Landsteinar Landsteinar Svenska and Landsteinar International have merged to form Landsteiner International, which then merged with Icelandic company GoPro in October. The new international company will have some 550 consultants. GoPro is Iceland's largest firm of consultants in e-business and e- document management systems. The principal shareholder in the new company will be Icelandic Software. Ledstiernan's interest is approximately 6 per cent. Investments A preliminary agreement with a Madrid-based Spanish venture capital company Grupo Kanguru (formerly Pinta 2) that is active in mobile communication has been finalised and resulted in the investment of MSEK 7.6 in October, giving Ledstiernan a 49 per cent holding in the company. Ledstiernan's part-owned incubator, Mobile Garden, has invested MSEK 2 in a 15.2 per cent interest in Voice Provider, a newly started company in mobile communication and voice control. Ledstiernan also has options to make direct investments in the company,Voice Provider that would bring its direct interest up to 27 per cent. Future prospects Ledstiernan has a strong portfolio that is concentrated on technology and mobile communication, and with limited exposure to the Internet and e- business sectors where problems are currently being experienced. Cash reserves are ample, and no additional financing is expected to be required during the coming 12-16 months. In 2001, measures will be concentrated on streamlining the existing portfolio and selling all or part of the investments in companies that are deemed to have reached maturity. Next financial report The year-end report for the fiscal year 2000 will be released on February 15, 2001. Coming reports will also be available on www.ledstiernan.com Stockholm, November 10, 2000 Ledstiernan AB (publ) Johan Wachtmeister President and CEO This report has not been subject to a general examination by the company's auditors. Portfolio holdings at September 30, 2000 Listed holdings Company List Date Curren Intere Market of t st Acquis value acquis intere after ition SEK '000 ition st exerci value se of in option SEK'00 s 0 Cellpoi Nasdaq Dec 99 0.2 % 0.2 % 293 4,241 nt Unlisted holdings Company Date Curren Intere Value of t st Acquis in acquis intere after ition extern ition st exerci value al se of in transa option SEK ctions s '000 SEK '000 Nordic July 35.8 % 30.8 % 37,011 61,331 Circle AB 99 e-respect Dec 99 23.8 % 27.1 % 15,100 19,051 Avisator Jul 99 39.6 % 39.6 % 26,003 65,328 Chinsay April 1.9 % 1.9 % 1,485 00 Columbitech May 00 4.8 % 4.8 % 3,000 CCNOX Sept 30.1 % 49.6 % 2,530 00 Digital Oct 99 51.4 % 40.2 % 55,470 Mobility 1) Ltd Ekonomi24 April 11.4 % 10.1 % 10,000 00 Euroflower. March 15.0 % 18.4 % 10,000 net 00 FM Fond- Oct 99 24.5 % 22.9 % 17,458 marknaden GCC Aug 00 0.0 % 36.0 % 0 Hotvision April 25.0 % 36.4 % 3,800 00 Infomakers July 25.0 % 35.8 % 5,401 99 Incomit Aug 00 9.6 % 34.9 % 8,050 Infonation March 12.5 % 12.0 % 15,000 00 ip Jan 00 25.0 % 50.7 % 10,091 Unplugged Iquity Jan 00 2.2 % 2.1 % 8,442 2) Systems 3) Kimoda March 10.0 % 9.0 % 10,065 00 Landsteinar Aug 00 12.7 % 12.2 % 24,931 Int hf 4) LinkPool July 33.2 % 47.7 % 3,978 00 Millennium Dec 99 18.0 % 32.4 % 9,058 Media Group Mint May 00 27.5 % 49.0 % 15,033 MGON Feb 00 38.0 % 38.0 % 6,000 Internation al The Phone March 20.0 % 25.7 % 8,690 Pages 00 Roaminfo Dec 00 36.9 % 51.7 % 11,619 Start and Jan 00 33.3 % 30.0 % 5,500 Run Steget Ten Four March 3.3 % 3.1 % 7,428 00 Travis Feb 00 20.3 % 16.4 % 6,746 Incubators Ledstiernan March 100.0 100.0 Mobile 00 % % Ventures *Ambio Sept 21.7 % 34.5 % 5,000 (formerly 00 Care Tec) Mobile Garden March 48.0 % 48.0 % 10,000 AB 00 * Repeat IT March 0.0 % 40.1 % 0 00 NWT Ventures March 100.0 100.0 00 % % * Adventagon March 20.0 % 20.0 % 3,007 00 * June 30.0 % 30.0 % 3,000 InfoAccelerat 00 or * AB VsMarket June 0.8 % 5.0 % 642 00 4) * LinkPool July 16.7 % 8.9 % 22 00 Total invested capital 359,85 portfolio companies 3 5) September 30, 2000 1) As Ledstiernan controls 38.4% of the votes, the company is not treated as a subsidiary. 2) The company was previously valued at latest paid price prior to its delisting. As this happened more than one year ago, a decision has been made to value the company at acquisition price pending a new listing. 3) Ledstiernan has an option to sell 100 % of its holding in Kimoda to Karl Stockman AB, and Karl Stockman AB has an option to buy 30 % of Ledstiernan's holding. 4) Ledstiernan has written down the value of this holding to zero,. 5) In addition to investments in portfolio companies, MSEK 48.85 has been invested in Ledstiernan's wholly owned subsidiaries. These were previously stated among total portfolio investments. Portfolio holdings by investment sector Consolidated income statement Amounts in SEK '000 January- Pro forma September June- 2000 September 1999 1) Operating Revenue Income from sales of other shares and 5,854 0 participations Operating Expense Interest in results of associate -70,551 -1,553 companies before tax Administrative expense -21,391 -3,881 2 Depreciation -5,110 -12 Operating Loss -91,198 -5,446 Financial net 5,130 0 Loss before tax -86,068 -5,446 Tax 0 0 Net loss for the period -86,068 -5,446 1) As the business commenced in June 1999, comparative figures cover 4 months only. 2) Equipment 192 (12), goodwill 4,918 (0). Consolidated balance sheet Amounts in SEK '000 Pro forma Sept 30, December 2000 31, 1999 ASSETS Subscribed capital not yet paid up - 2,625 Intangible fixed assets, goodwill 44,925 - Tangible fixed assets 1,222 765 Interests in associate companies 172,004 61,884 Other shares and participations 108,400 15,288 Total financial fixed assets 280,404 77,172 Total fixed assets 326,551 77,937 Current assets 7,573 2,129 Cash and bank 568,115 48,061 TOTAL ASSETS 902,239 130,752 902,239 130,752 LIABILITIES AND EQUITY Equity 870,089 128,052 Interest-bearing liabilities - - Interest-free liabilities 32,150 2,700 TOTAL LIABILITIES AND EQUITY 902,239 130,752 Consolidated cash flow analysis Amounts in SEK '000 January- Pro forma September June- , 2000 September, 1) 1999 Funds provided from operations -15,435 -3,881 Change in working capital -561 -182 Cash flow from business operations -15,996 -4,063 Cash flow from investment operations -281,206 -28,857 FINANCING OPERATIONS Shareholder contribution 164,124 45,225 Share issue and Premium over book 653,132 0 2) value of options Cash flow from financing operations 817,256 45,225 Cash flow for the period Opening liquid funds 520,054 12,305 Closing liquid funds 48,061 0 568,115 12,305 1) As the business commenced in June 1999, comparative figures cover 4 months only. 2) Issue liquidity of MSEK 730, with deductions for costs. Financial ratios Sept 30, 2000 Earnings/share, SEK 1) Invested capital/share, SEK Neg. 1) Equity/share, SEK 3.30 Equity ratio, % 7.99 Closing listed price, SEK 96 23 1) No. of shares after issue: 108,954,383. On full warrant subscription, a maximum of 1,200,000 will be issued. Accounting principles The consolidated financial statements are made up using the purchase method. The transaction whereby The Empire formally acquired Ledstiernan Investment AB is treated in the accounts as a reverse take-over; i.e. based on the fact that Ledstiernan Investment AB actually acquired The Empire. Goodwill of MSEK 16 arose in connection with the acquisition; this will be depreciated over five years. As Ledstiernan is deemed to be the acquiring company and all the metal wholesaling and distribution activities formerly conducted by The Empire have been distributed to its former shareholders, this business is not included in this interim report. Figures for earlier periods relate to the business conducted by Ledstiernan. As this business commenced in June 1999 meaningful comparative figures are available for four months only. The balance sheet, income statement and cash flow analysis for 1999 are pro forma, as the business was not consolidated into a group until 2000. Shareholdings carrying voting rights of 20-50% are stated using the equity interest method, which means that Ledstiernan's interest in the associate companies' result is taken into the income statement. Investments carrying voting rights of less than 20% are stated at acquisition value. The need for write-downs in asset values is reviewed regularly. Research and development costs are taken into the income statement regularly in the case of companies consolidated using the equity interest method. Total costs of MSEK 81 incurred on the share issue and the flotation of the company on the OM Stockholm Stock Exchange's "O" list are stated as issue expense, and netted off against the issue proceeds taken to equity. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/11/10/20001110BIT00080/bit0001.doc http://www.bit.se/bitonline/2000/11/10/20001110BIT00080/bit0002.pdf