Ratos's Interim Report January - September 2000

I N T E R I M R E P O R T January - September 2000 VISIT OUR NEW WEBSITE WWW.RATOS.SE * Profit before tax SEK 1,775m (1,166) * Earnings per share up 54% to SEK 21.37 (13.85) * Current profits from active holdings SEK 231m (81) * NAV increases 17% to SEK 127 per share * SEK 190m is invested in Q-Labs Good value growth The value growth in Ratos's holdings was good in the first nine months of 2000. In the active holdings portfolio, the share price trend for three of the four listed companies was very good. In most cases, the unlisted holdings report good development in line with set targets. The assets managed within the framework of Ratos's asset management performed well and the return on the portfolio amounted to 4% during the period. Ratos's net asset value rose 17% in the first nine months of the year and the total return on Ratos's B shares amounted to 17%. The SIX Return Index (formerly Findata's Total Return Index) rose 1% in the same period. Several new and follow-on investments New and follow-on investments in active holdings were made during the period for a total amount of SEK 1,069m (588). Exits from active holdings corresponding to SEK 688m (1,439) were carried out. Within asset management, the re-investments made in spring 2000 in order to increase risk diversification and liquidity resulted, among other things, in the divestment of shares for SEK 3,680m (1,370) and share purchases for SEK 3,315m (1,030). In the spring, Ratos invested in the Sundsvall-based IT consultant DataVis. In June, DataVis announced the acquisition of the Gothenburg- based IT consultant Systemintegration. Ratos's investment in the mobile telephony company Telia Overseas was increased by SEK 184m. The ownership stake remains unchanged at 9%. Ratos's wholly owned air and sea freight company, ACE, acquired the Conmel Group's logistics division. ACE has thus taken a key step in its strategy to become a leading player in the Nordic air and sea freight sector. In the spring Ratos invested in the air filter manufacturing company Camfil. One effect of Ratos's investment was to make it possible for Camfil to merge with its US competitor Farr. It is the joint intention of Camfil's principal owner and Ratos to further strengthen Camfil's market position, among other things through continued acquisitions. Ratos's stake in Camfil is 30%. Follow-on investments totalling just over SEK 53m were also made in Esselte. Together with the network operator Tera-com and the international investment bank Nomura, Ratos has formed the company Tenora which applied for one of the four Swedish UMTS licences. The Swedish National Post and Telecom Agency, which issues the licenses, is expected to announce its decision at the end of November 2000. Q-Labs At the beginning of October, Ratos concluded an agreement to invest SEK 190m in Q-Labs. The company, which was founded within Ericsson in 1989, is a world-leading consultant for services relating to quality assurance of software development. Dependence on software is rising in industry's manufacturing processes as well as in product development in a growing number of sectors. This increases investments in and the need for effective risk management in software engineering. Q-Labs' major customers include international companies such as Ericsson, ABB and Robert Bosch. The company holds a strong position in Europe and has started penetrating the US market. Ratos's holding is expected to amount to 40% after subscription for the new issue. Det Norske Veritas and Ericsson own the remaining 40% and 20% respectively. Q-Labs has experienced strong growth over the past year, mainly due to acquisition of its French competitor Objectif Technologies and the takeover of a former Ericsson-owned operation in the UK. In the first nine months of the year sales therefore rose 237% compared with the same period in 1999. Profit before depreciation and business development costs of SEK 16m (14) amounts to SEK 8m for the period (0). This corresponds to an operating profit margin (EBITDA) of 5.9%. The loss after net financial items and business development costs amounted to SEK -15m (-17). The full-year result is also expected to be negative. The business development costs are attributable to the breakthrough in the German and British markets. Historically, the company has shown good prof-itability and the goal is to re-establish a good profitability level within 2-3 years with an operating profit margin of at least 10%. Ratos's investment in Q-Labs is still subject to approval from the relevant competition authorities. Profit before tax SEK 1,775m The Group's profit before tax amounted to SEK 1,775m (1,166). This result includes profit from active holdings of SEK 920m (565) and profit from asset management of SEK 897m (664). The Group's profit, including share of profits of associated companies, includes a bonus from SPP totalling SEK 77m. Stockholm, 9 November 2000 RATOS AB (publ) Arne Karlsson CEO This interim report has not been the subject of a special review by the auditors of Ratos AB (publ). For information: Arne Karlsson, CEO, +46 8 700 17 43 Anna-Karin Celsing, Head of Corporate Communications, +46 8 700 17 49, +46 8 70 399 62 39 Financial calendar 2001 22 February Year-end Report March Annual Report 5 April Annual General Meeting 9 May Interim Report Jan-March 24 AugustInterim Report Jan-June 13 November Interim Report Jan-Sept Ratos, one of Sweden's oldest and largest private equity companies, is listed on the OM Stockholm Exchange. Ratos's business concept is to maximise shareholder value through the professional and responsible management of its investments, including an active involvement in the governance of its portfolio companies. The net asset value of Ratos's investments exceeds SEK 10 billion. The company's current holdings include ACE, Camfil, Capona, Dahl, DataVis, Esselte, Scandic Hotels, Superfos, Telelogic and Telia Overseas. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/11/09/20001109BIT00630/bit0001.doc The full report http://www.bit.se/bitonline/2000/11/09/20001109BIT00630/bit0002.pdf The full report