Interim report January-June 2001

INTERIM REPORT JANUARY-JUNE 2001 * The first half-year's result after net financial items was a loss of MSEK 162 after a write-down of 150 MSEK in the value of the portfolio (half of which is attributable to Digital Mobility). * Equity of MSEK 616 or SEK 5.65 per share. Equity ratio of 99 per cent. * Investments in portfolio companies amounted to MSEK 114. * Closing liquid funds amounted to MSEK 323 or SEK 2.96 per share. * Ledstiernan opts to plan its business to present market conditions: - concentrating on Ledstiernan's existing portfolio companies - gradually reduction in operating costs. Ledstiernan has adequate financial resources to support this strategy, excluding any cash injections as a result of exits within 24-36 months. * Alliance with MIC, Japanese venture capital company in which NTT DoCoMo, Japan's largest mobile telecom operator, is a large share holder. Ledstiernan is building Europe's leading seed and venture capital company with a special focus on Mobile Communication. FINANCIAL DEVELOPMENTS Ledstiernan incurred a loss of MSEK 162 before net financial items for the first half of 2001. This figure includes write-downs of MSEK 150 in the value of the portfolio, of which Digital Mobility accounted for MSEK 74. During the second quarter, Digital Mobility Ltd, a portfolio company based in London, applied to a British court for "Administration", a procedure prior to a possible financial reconstruction. In view of this, Ledstiernan has written off its entire holding of 54.3 per cent in this company. Write-downs of MSEK 76 have been made in the value of other portfolio companies whose current market value is believed to be below their acquisition value. However, this should be seen more as a precaution and the provisions shall not to be regarded as proven losses. Accumulated write-downs in the value of the portfolio amount to MSEK 250, of which MSEK 172 are deemed to be transfers to valuation reserves. The shareholding in Mobile Garden was divested during the second quarter, which resulted in a small capital gain of MSEK 1,7. Hotvision has signed a Letter of Intent with Kamera Interactive, whereby the businesses of Hotvision and Kamera will be merged into a new company in which Ledstiernan will own 6.5 per cent of the shares in return for its existing interest of 32.5 per cent in Hotvision. Ledstiernan's operating expenses consist primarily of personnel costs, rent, and direct costs associated with its investment activities. These have increased in relation to the same period last year, and amounted to MSEK 25 for the first half of the year. However, operating costs will be markedly lower in the future, and eventually fall to an annual level of below MSEK 30. CHANGES IN PORTFOLI0 The company continued to focus on developing its existing portfolio. A new investment of MSEK 5 was made in North Node during the period. During the period, the portfolio holdings in most cases developed as planned. Ledstiernan's decision not to invest any more in Digital Mobility, which was based on a detailed analysis of the company and the markets it serves, resulted in the company applying for "Administration", as mentioned above. Ledstiernan has opted to exercise its existing options to acquire shares in portfolio companies in those cases where they were attractively priced Prior to the finalisation of the quarterly accounts, each company in the portfolio has been evaluated to determine whether it is overvalued or undervalued in relation to its acquisition value. The portfolio companies are stated in the books at the lower of acquisition value and estimated market value. Ledstiernan also presents the portfolio in the section entitled supplementary information at acquisition value, which is identical to invested capital. In those cases where a third party has provided a high level of financing or the company is listed on a stock market, the latest price paid for the shares as at June 30th 2001 is also shown, in accordance with the European Venture Capital Association's standards. At the end of the period Ledstiernan had interests in 36 portfolio companies, of which 15 are in the mobile communication focus area, which accounts for 53 per cent of the invested capital (after exercise of options: 58 per cent). During the period, many of the portfolios made significant commercial advances. Interesting cases include the following: Ambio Tech - mobile online solution for the property industry - has signed contracts and delivered its system to Vasakronan, BodenBo and the Swedish Armed Forces, etc. CCNOX - security consultants. Customers now include Handelsbanken, Swedish Match, Expressen and Stora Enso. Fondmarknaden now has 35,000 customers (B2C) and has signed a contract to operate a market place for funds with its first foreign customer (B2B). GoPro Landsteinar Group is ranked no. 16 among Europe's fastest growing companies. Infomakers has signed a contract with SEB to operate a service that will enable SEB to improve its customer service at bank branches via Internet terminals. Other customers include ICA and Nordea. MGON - one of the leading online computer games portals has reached a figure of 1.5 million unique visits per month and 50 million hits (Source: DoubleClick). This represents traffic growth of more than 100 per cent in the period. Mint - the company that enables you to use your mobile phone to pay for your shopping - has entered into agreements with Stockholm Parkering for the payment of parking charges via the mobile phone, with GEAB The Phone House, the mobile phone chain, and with CEKAB, which processes electronic card transactions on behalf of banks and financial institutions. A contract (B2B) has also been signed with Unisys to distribute secure and cost-efficient systems for mobile payment services. Nordic Circle has signed a contract with Mainspring, an American firm of strategy consultants covering the provision of in-depth strategic counselling for its clients. RoamInfo will soon launch a unique access service for mobile internet for business travellers. Voice Provider has entered into agreements to deliver its voice control services to Expressen, Aftonbladet, Svenska Spel and others. The technically- and development-intensive companies ipUnplugged, Columbitech, the Phone Pages and Incomit are at present at their early development phase. These companies have considerable potential and are progressing as planned. . DIVESTMENTS AND EXIT PROFITS DURING FIRST HALF-YEAR. The 48 per cent holding in Mobile Garden, an incubatorcompany, has been sold to Livförsäkrings AB Skandia for a capital gain of MSEK 1.7. The 32.5 per cent holding in Hotvision will be exchanged for a 6.5 per cent interest in Kamera a new company that will be been formed when leading online TV company Kamera acquires Hotvision on the basis of the Letter of Intent signed in June. ALLIANCES In May Ledstiernan entered into an alliance with Mobile Internet Capital (MIC), a Japanese seed and venture capital company, with the object of supporting those of Ledstiernan's portfolio companies that wish to enter the Japanese market, of handling joint investments in mobile communication in Japan and the Nordic region, and of exchanging information and experience. NTT DoCoMo, Japan's largest mobile telecom operator, has a 30 per cent interest in MIC. INVESTMENTS AND SECOND PHASE INVESTMENTS The flow of new business proposals has remained strong, although it slackened slightly towards the end of the period. Among the total investments of MSEK 114, of which follow-up investments amounted to MSEK 109, made during the period, the following may be mentioned: Ledstiernan, together with Denmark's 2M Invest and the Norwegian company Telenor Venture, has made a follow-up investment totalling MSEK 6 - MSEK 2 each - for an interest of 10 per cent each in Voice Provider, a company that is developing solutions for voice control services. Ledstiernan has made a follow-up investment of just over MSEK 6 together with Telia Mobile in TicketAnywhere to give it 17.2 per cent of the votes and capital. TicketAnywhere is developing a platform for the mobile handling of documents of value, such as tickets, etc. Ledstiernan, Purpose and NextGear have jointly invested MSEK 2 in Ekonomi24. The parties have also guaranteed MSEK 8, of which Ledstiernan has guaranteed MSEK 2.4, of an issue of up to MSEK 10 that is planned for September 2001. In May, a new investment was made together with Telenor Ventures in North Node, one of the Nordic region's leading providers of hardware and software for intelligent homes and property. North Node's products and services are already being used by several major property owners. Ledstiernan and Telenor Ventures have each invested MSEK 5 to give them a combined 38.8 per cent interest in this company; they also have an option to invest a further MSEK 11 for a further 28.2 per cent in the company. By the end of the period, Ledstiernan had interests in 36 portfolio companies, acquired at a total cost of MSEK 541 in. Of this capital investment in the existing portfolio, write-downs of MSEK 100 were made as of December 31st 2000 and of MSEK 150 as of June 30th 2001, of which MSEK 78 are to be regarded as losses, and MSEK 172 as provisions to cover holdings whose current market values are believed to be below the acquisition value. The book value of the portfolio at June 30th 2001 thus amounted to MSEK 291. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/22/20010822BIT00350/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/08/22/20010822BIT00350/bit0002.pdf The full report