Investor AB Year-End Report 1998

Business Wire, Feb 11, 1999

Investor also acquired a large block of ABB shares by exercising the purchase rights included in the Gambro holding. In addition to these acquisitions, Investor increased its shareholdings primarily in Astra and Ericsson in the fall.

The shareholding we had in Svenska Dagbladet for many years was sold to the Norwegian media group Schibsted. This provided a long-term and stable solution which will allow the newspaper to continue as an editorially independent Swedish daily.

Our activities in the area of new investments included the launch during the year of two new private equity funds, EQT Scandinavia II and EQT Danmark, in which Investor participates both as a general partner and as a significant investor. The background to this investment, which will probably be followed by the establishment of additional funds, is the favorable development of EQT Scandinavia I, which was launched a couple of years ago.

In spite of all activities during the past year, Investor shares failed to develop as we had hoped. One reason for this is that our portfolio of main holdings developed less favorably than the market as a whole, which was connected to some extent with our underweighted growth stocks.

Furthermore, the discount to net asset value rose during the year from 13 percent to 23 percent at year-end. In view of our efforts to create shareholder value, this was naturally a disappointment. At the same time, we have been able to see for many years that the discount to net asset value tends to rise when the stock market is uneasy or bearish and to fall in a bull market. The adjacent diagram shows accordingly that Investor's shares fluctuate more strongly than the market as a whole. Therefore, I am not worried about our development viewed in a more long-term perspective.

Investing in competent employees

Investor's task and responsibility as an active owner demands highly competent and motivated employees. Accordingly, we devote a lot of time and resources to recruiting, developing and retaining our staff. It is therefore gratifying that several surveys among students rank Investor as one of the most attractive employers.

Just as it is important to recruit, it is equally important to be able to keep our employees and today, when it is normal for both parents in a family to work, the workload for many people easily becomes inhuman. In common with many other companies, we have therefore decided to offer our employees an opportunity to lighten the load of practical duties in the home by engaging a domestic services and cleaning company.

In this context, I would like to mention that we have a very even balance between the sexes in managerial positions at Investor and we are endeavoring to make this a lasting trend.

Additionally, a new salary system for executive management comes into effect in 1999. In future, basic salary will consist of two components: a cash salary and an employee stock option program, designed in accordance with the parliamentary resolution which came into force in July 1998. For many employees, the basic salary will be complemented with a bonus program according to strict criteria.