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ÅF - Interim report January - June 2008

Published July 25, 2008
For further information:
Jonas Wiström, President/CEO          +46 (0)70-608 12 20
Viktor Svensson,
Director, Corporate Information          +46 (0)70-657 20 26

Q2 operating margin: 11.5%

Second quarter 2008

  * Net sales totalled SEK 1,173 million (Q2 2007: SEK 968 million)
  * Operating profit totalled SEK 135 million (SEK 85 million)
  * Earnings per share, before dilution, amounted to SEK 5.53 (SEK
    3.53)

First half-year 2008

  * Net sales totalled SEK 2,238 (Jan-June 2007: SEK 1,900 million)
  * Operating profit totalled SEK 251 million (SEK 159 million)
  * Earnings per share, before dilution, amounted to SEK 10.22 (SEK
    6.54)


A few words from the President, Jonas Wiström:

ÅF continues to grow at the same time as the company is increasing
its profits. On the back of rising volumes and an improvement in our
gross margin, we can report an increase of around 60 percent in
operating profit, both for the second quarter and for the first
half-year as a whole.

The operating margin for the second quarter rose by almost three
percentage points to 11.5 percent.

Growth during the same period amounted to 21 percent, of which
roughly half was organic. ÅF continues to attract the best
consultants and was recently singled out as the strongest brand in
the business.

The Process Division continues to go from strength to strength and,
for the first time, reports a margin in excess of 10 percent. Last
year's acquisition of ÅF-Colenco of Switzerland with 300 employees
and energy projects currently being carried out in 30 countries, has
played a major part in this positive development.

Three of ÅF's five divisions report margins of more than 12 percent,
with the progress made by the 1,100+ employees in the Engineering
Division (13.7% in Q2) deserving special mention.

So far, the widespread uncertainty about the current state of the
economy has not yet impacted on demand for our services. This leads
us to remain fundamentally positive about prospects for the second
half of the year, even if the economic situation in general is more
difficult to assess today than it has been for some time.

Important events during Q2 2008 and after the end of the reporting
period

AB Ångpanneföreningen changed its name to ÅF AB on 5 May when the
Swedish Companies Registration Office registered amendments to the
company's articles of association. These amendments, including
changing the company name to ÅF AB, had previously been approved by
the Annual General Meeting on 23 April.
ÅF won an order with the Swedish water utility Stockholm Vatten VA AB
worth SEK 125 million. ÅF is responsible for replacing and
modernising the existing control systems at Stockholm Vatten's water
purification plants at Henriksdal and Bromma.
ÅF was appointed principal technical consultant by the Swiss energy
company ATEL for the construction of two 400 MW gas-fuelled power
plants in San Severo, Italy, and in Bayet, France. The order is worth
approximately 6 million euros for ÅF.
ÅF signed a strategic partnership agreement with Swedish sheet steel
manufacturer SSAB Tunnplåt in Borlänge, relating to consulting
services in all the relevant areas of technical expertise, including
project management. It is anticipated that the new agreement will
lead to a significant increase in ÅF's assignment volumes for SSAB
Tunnplåt in Borlänge.
ÅF-Kontroll was entrusted by Swedish nuclear power generator,
Ringhals, with the task of developing equipment and technology for
non-destructive testing of reactor pressure vessels and the
connecting pipes at Ringhals 2, 3 and 4. The contract also includes
testing activities up until the end of 2012.

Sales and earnings, Q2 2008

Net sales for the second quarter totalled SEK 1,173 million, an
increase of 21 percent on the figure for the corresponding period in
2007 (SEK 968 million).

Operating profit was SEK 135 million (SEK 85 million), and the
operating margin was 11.5 percent (8.8 percent).

Capacity utilisation during the quarter was 75 percent (77 percent).

Profit after net financial items totalled SEK 132 million (SEK 84
million), and the profit margin was 11.3 percent (8.7 percent).

Profit after tax was SEK 94 million (SEK 58 million).

Earnings per share before dilution were SEK 5.53 (SEK 3.53).


Sales and earnings, Q1-Q2 2008

Net sales for the first half as a whole totalled SEK 2,238 million,
an increase of 18 percent on the first-half figure for 2007 (SEK
1,900 million).

Operating profit was SEK 251 million (SEK 159 million), and the
operating margin was 11.2 percent (8.4 percent).

Capacity utilisation for the first half-year was 75 percent (75
percent).

Profit after net financial items totalled SEK 241 million (SEK 156
million), and the profit margin was 10.8 percent (8.2 percent).

Profit after tax was SEK 174 million (SEK 107 million).

Earnings per share before dilution were SEK 10.22 (SEK 6.54).

Alecta

The reduction in occupational pension premiums introduced by Alecta
had a positive effect on ÅF's operating profit of SEK 9.5 million in
the first and second quarters of 2008, compared with 2007. In total
for January-June 2008: 19 MSEK.

Investments

Gross investment in property, plant and equipment for the period
January to June 2008 totalled SEK 26 million (Jan-Jun 2007: SEK 17
million).

Cash flow and financial position

Cash flow for the second quarter was SEK 42 million (SEK 57 million).

There was a negative cash flow for the period January to June of
minus SEK 4 million (Jan-Jun 2007: SEK +65 million). Cash flow during
the first half of the year has been affected by SEK 54 million that
relates to the cost of acquisitions (corresponding figure for 2007:
SEK 4 million), and by a shareholders' dividend of SEK 110 million
(SEK 49 million).

The Group's liquid assets totalled SEK 310 million (SEK 322 million)
at the end of the reporting period.

Equity per share was SEK 83.22, and the equity/assets ratio was 46.7
percent. At the beginning of 2008, equity per share was SEK 78.83 and
the equity/assets ratio was 47.9 percent.

The Group's net loan debt (cash and cash equivalents minus
interest-bearing liabilities) at the end of June totalled SEK 114
million (SEK 24 million).


Number of employees

The number of full-time equivalents employed by the company was 3,816
(3,526).
The total number of employees at the end of the reporting period was
4,063 (3,649): 3,147 of this number were employed in Sweden and 916
outside Sweden.

Acquisitions and disposals during the second quarter

Through its Engineering Division, ÅF acquired the technical
consulting company OrbiTec AB. The company, with 30 members of staff
based in Jönköping, Sweden, works primarily within the fields of
electrical engineering, automation and industrial IT.

Through its Infrastructure Division, ÅF acquired the technical
consulting company BergByggKonsult AB, with 12 employees in
Stockholm. The company possesses specialist expertise in rock
mechanics and rock engineering, geotechnical instrumentation and 3D
laser scanning.

Through ÅF-Kontroll, ÅF acquired the Swedish technical inspections
company Kvalitetsteknik NDT AB, with 30 employees in Trollhättan,
Stenungsund, Lysekil and Mönsterås. Operations focus mainly on
non-destructive testing.

Parent company

Parent company sales totalled SEK 127 million (SEK 91 million) and
relate primarily to intra-group services. The parent company reported
a loss after net financial income/expense of SEK 17 million (SEK -15
million).
Cash and cash equivalents totalled SEK 1 million (SEK 138 million),
and gross investment in machinery and equipment for the period
January to June 2008 amounted to SEK 7 million (Jan-Jun 2007: SEK 3
million).

Divisional performance

Engineering Division
Sales Q2, SEK 311 million (SEK 293 m)
Operating margin Q2: 13.7% (9.9%)

Sales Q1-Q2, SEK 599 million (SEK 582 m)
Operating margin Q1-Q2: 13.6% (9.5%)

The Engineering Division, which offers services within automation,
industrial IT and mechanical engineering, is a leader in its field in
the Nordic countries.

The market remained strong throughout the second quarter, even though
there were some isolated signs of a contraction, primarily in the
manufacturing industry. The division's capacity utilisation rate
remained high and all business areas reported improvements in
profitability.

The Engineering Division is active in all branches of industry.
Demand was strongest in the division's focus areas (energy, nuclear
power, petrochemicals, iron and steel, and mining), with clients
investing in increased automation to boost productivity and improve
profitability.

The division increased its workforce during the second quarter. This
is partly the result of the recruitment drive, particularly within
the area of nuclear power, that will continue throughout the year. A
new competence centre - Nuclear - has also been established within
the nuclear power segment to better meet the needs of Swedish and
international clients.

Engineering secured several significant orders during the second
quarter, including a strategically important project to modernise
purification plants for the Swedish water utility, Stockholm Vatten.

Infrastructure
Sales Q2, SEK 359 million (SEK 316 m)
Operating margin Q2: 12.7% (11.7%)

Sales Q1-Q2, SEK 692 million (SEK 614 m)
Operating margin Q1-Q2: 12.5% (11.6%)

The Infrastructure Division offers infrastructure consulting services
in the following business areas: Communications & Maintenance,
Installations, Infrastructure Planning, Electric Power and Sound &
Vibrations.

The market for qualified consulting services in the field of
infrastructure developments remained strong throughout the second
quarter. Demand has been good in all business areas and in June the
division's capacity utilisation rate rose to its highest level so
far.

The high price of oil together with increased environmental concern
is generating great interest in public transport and other traffic
issues, and this has resulted in a number of major projects. The
property-related side of the division is also reporting brisk demand
for its services from the commercial property market. Exposure to the
domestic property market is limited.

One area of growth that is currently the focus of particular interest
is wind power. The Infrastructure division recently won an order
linked to the expansion of offshore wind farms in the Great Belt, the
strait that separates the Danish islands of Zealand and Funen.

Among many other new assignments is one from Banverket, the Swedish
Rail Administration, relating to the introduction of an automatic
train control (ATC) system at the Sundsvall freight yard. In another
project, a proposal for a regulatory framework for signalling and
traffic management is being drawn up for the Swedish Rail Agency.

Inspection
Sales Q2, SEK 91 million (SEK 71 m)
Operating margin Q2: 15.8% (15.8%)

Sales Q1-Q2, SEK 156 million (SEK 127 m)
Operating margin Q1-Q2: 12.5% (11.6%)

The Inspection Division works with technical inspections, chiefly in
the form of periodic inspections, testing and certification. Major
clients include the engineering and nuclear power industries.

Demand has remained strong. At present there is a shortage of testing
and inspection engineers in Sweden, but after the success in
recruiting around 20 new members of staff during the second quarter,
organic growth within the division has been good.

The deterioration in capacity utilisation compared with the
corresponding period last year is due primarily to the fact that a
number of major plant shutdowns have been planned to take place later
in the year than was the case in 2007.

Demand has once again been strongest from the nuclear power and
process industries. The second quarter saw Inspection secure a major
testing assignment with Ringhals nuclear power plant, while another
large order from CRYO, part of the Linde Group, relates to the
testing and inspection of pressure vessels.

During the second quarter the Inspection Division attained the
position of market leader in Sweden in the field of non-destructive
testing following the acquisition of NDT specialist Kvalitetsteknik
NDT and its 30-strong workforce.

Process
Sales Q2, SEK 310 million (SEK 219 m)
Operating margin Q2: 10.8% (6.7%)

Sales Q1-Q2, SEK 590 million (SEK 432 m)
Operating margin Q1-Q2: 9.5% (6.2%)

The Process Division offers technical consulting services for the
energy and pulp & paper industries worldwide.
Demand from the market continued to be strong, particularly in the
field of energy production. In many parts of the world work is
underway to expand capacity to meet the increasing demand for
electricity and to make up for past decades of underinvestment.

While capacity utilisation fell during the second quarter - chiefly
as a consequence of low levels of activity in the Finnish pulp and
paper industry - this was offset by improvements in the division's
project control activities and by better project economy than before.

The Process Division has evolved to become a leading international
name in technical consulting for the energy market. Today energy
projects account for 85 percent of the division's sales with a
geographic focus on the Nordic countries, Eastern Europe, Russia and
Asia.

South America has become an important growth area as far as pulp and
paper are concerned. The formalisation in the second quarter of a
strategic alliance between ÅF and AMEC has paved the way for the two
companies to combine their global consulting capacity in pulp and
paper in order to collaborate in generating business in the South
American market.





Systems
Sales Q2, SEK 143 million (SEK 108 m)
Operating margin Q2: 10.8% (8.0%)

Sales Q1-Q2, SEK 273 million (SEK 214 m)
Operating margin Q1-Q2: 11.7% (7.5%)

The Systems Division offers services in the fields of embedded
systems, mechanical engineering and IT systems.

The Swedish market for IT and product development services was
somewhat stronger than during the corresponding period last year, and
this resulted in an improved capacity utilisation rate and an
increase in the number of enquiries. The growth reported by Systems -
in excess of 30 percent - is attributable first and foremost to new
recruitment and an increase in capacity utilisation.

One clear trend is for clients to request that environmental
expertise be factored into their product development activities. To
meet this need, the Systems Division has worked closely with the
Swedish Royal Institute of Technology (KTH) to establish the
EcoDesign Center, a network to facilitate clients' access both to the
division's core competences and to ÅF's extensive expertise within
the field of environmental consulting services. This has proved to be
a successful move that has, for example, already secured an order
from a leading manufacturer of telecommunication equipment to develop
more energy-efficient base stations. Another assignment within the
ambit of the EcoDesign Center is one from Bombardier that relates to
the development of eco-friendly trains. This assignment will be
carried out in China.
Accounting principles

This interim report has been prepared in accordance with IAS 34
("Interim Financial Reporting"). The report has been drawn up in
accordance with International Financial Reporting Standards (IFRS),
as well as with statements on interpretation from the International
Financial Reporting Interpretations Committee (IFRIC) as they have
been approved by the European Commission for use in the EU, and with
the relevant references to Chapter 9 of the Swedish Annual Accounts
Act. The report has been drawn up using the same accounting
principles and methods of calculation as those in the Annual Report
for 2007 (see Note 1, page 78). The parent company has implemented
the Swedish Financial Reporting Board's Recommendation RFR 2.1
("Accounting for Legal Entities"), which means that the parent
company in the legal entity shall apply all the IFRS and related
statements approved by the EU as far as this is possible while
continuing to apply the Swedish Annual Accounts Act in the
preparation of the legal entity's accounts.

Risks and uncertainty factors

The significant risks and uncertainty factors to which the ÅF Group
is exposed include business risks linked to the general economic
situation and the propensity of various markets to invest, the
ability to recruit and retain qualified co-workers, and the effect of
political decisions. In addition, the Group is exposed to a number of
financial risks, including currency risks, interest-rate risks and
credit risks. No significant risks are considered to have arisen over
and above those described on pages 57-60 of ÅF's Annual Report for
2007.

ÅF shares
The ÅF share price quoted at the end of the reporting period was SEK
171.50, which represents a rise of 3 percent since the beginning of
the year. During the same period the Stockholm Stock Exchange
all-share index (OMXSPI index) fell by 19 percent.

The final opportunity for conversion under the ÅF Convertible
Programme 2005-2008 was in June, when a further 62,982 class "B"
shares were issued. This marks the conclusion of the Convertible
Programme 2005-2008.

Capital Market Day

ÅF will hold its annual Capital Market Day on 24 September. The
proceedings will start at 14.00 (2 pm) at the Hotel/Restaurant J at
Nacka Strand in Stockholm.
For more detailed information and registration, please contact the ÅF
Group's Director of Corporate Information, Viktor Svensson, by phone
on +46 (0)70 657 20 26 or by e-mail to viktor.svensson@afconsult.com

Next reporting date

ÅF's interim report for the period January to September 2008 will be
published on 23 October.

The Board of Directors and the President/CEO confirm that this
first-half report gives a true and fair view of the operation,
performance and position of the company and the Group, and describes
the significant risks and uncertainty factors to which the company
and the companies comprising the Group are exposed.


Stockholm, Sweden - 25 July 2008

ÅF AB (publ)



This report  has not  been  subjected to  scrutiny by  the  company's
auditors.

The information in this interim report is that which ÅF is required
by Swedish law to disclose under the Securities Exchange and Clearing
Operations Act and/or the Financial Instruments Trading Act. The
information was released for publication at 08.15 CET on 25 July
2008.



         ÅF AB (publ) Corporate identity number 556120-6474
        Fleminggatan 7, Box 8133, SE-104 20 Stockholm, Sweden
    Telephone: +46 (0)10 505 00 00   Telefax: +46 (0)8 653 56 13
                     E-mail: info@afconsult.com
                          www.afconsult.com

The full report in cluding tables can be downloaded from the
following link:

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