• Consolidated profit SEK 44.6 (66.0) million
• Turnover SEK 803 (764) million
• Profit per share SEK 5.59 (8.27)
• Net worth per share SEK 76 (75)
• Profit forecast for whole year 1997: SEK 60-70 million or approx. SEK 8 (11) per share

For the period Jan.-Sept. 1997 the market for the ÅF Group’s services declined somewhat compared with the corresponding period in 1996. Group capacity utilisation remained unchanged, however, at 70% (70%). The somewhat poorer market had a negative effect mainly on pricing. The order book remained unchanged.

The ÅF Group's profit after net financial items and interest in associated companies amounted to SEK 44.6 (66.0) million. This corresponds to a return on shareholders' equity of 11.9% (19.0%). The consolidated profit at the end of the first nine months was SEK 21 million lower than for the corresponding period in 1996. During the third quarter, however, the profit difference amounted to only SEK 2 million. There are good indications that the negative profit trend of the most recent quarters is about to be broken.

Turnover amounted to SEK 803 (764) million and the profit margin was 5.5% (8.6%).

The consolidated profit was charged with a calculated bonus to the employees of SEK 3.6 (5.9) million.

The number of full-time equivalent employees, including those in associated companies, was 1,756 (1,687).

The parent company's turnover amounted to SEK 54.1 (36.4) million and profit after net financial items was SEK 15.7 (9.5) million.

The Group's net worth, after 20% standard tax on estimated surplus value of property, was SEK 76 (75) per share. Net worth at year end 1996 was SEK 79. The adjusted equity ratio was 53% (55%).

During the summer the ÅF Group signed an agreement in principle with the Swedish Society of Engineers (ISF) to acquire a 19% minority holding in the educational company SIFU. The agreement also includes an option for the ÅF Group to become majority owner by year end 1998. SIFU provides educational services mainly in the fields of technology and the environment. It has a turnover of SEK 70 million and 60 employees. The purpose of the acquisition is that SIFU will form the basis of a sixth business area, Education, within the ÅF Group, with strong links to the other consulting business areas.

At the end of summer an agreement was signed to acquire ISO Swedish Management Group as of 1 Jan. 1998. The operations are being integrated immediately with the ÅF Group’s international foreign-aid-financed activities under the name of ÅF-International. ISO Swedish Management Group has 20 employees and a turnover of SEK 40 million in the field of management consulting, mainly in developing countries. With this acquisition, the ÅF Group has a total turnover of SEK 100 million via aid-financed projects. It is expected that this volume will increase substantially during the coming years.

Consulting businesses
Profit for the consulting businesses amounted to SEK 33.1 (66.0) million. Turnover rose to SEK 889 (839) million.

Business areas Electrical Engineering and Instrumentation, and Mechanical Engineering and Electronics, continued to post good profits. Other business areas did not show satisfactory profits. Operations in Energy, HVAC and Sanitation Engineering were affected mainly by low activity in building and construction. P

Capacity utilisation and profits in business area Process and Environment were lower, mainly due to a decline in investment in the pulp and paper industry.

Competition in the field of what was formerly a government monopoly, inspection and testing, continued to be very tough, with pressure to keep prices down as a result. There are signs, however, that the market is slowly beginning to stabilise.

During the period business area Inspection and Testing carried out a cost-reduction programme to improve competitiveness and reach a profit.

As a result of this, the profit/loss trend has improved somewhat. A loss of SEK -4 (-6) million was posted in the third quarter.

ÅF-Data, in the IT sector, continued to show an increase in turnover and improved profits.

Profit/loss, turnover and profit margin by business area

ÅF-Data’s profit amounted to SEK 0.7 (0.0) million

ÅF-Industriteknik’s expanding activities in electronics and systems development were reinforced by the acquisition of operations in the IT company PRIMO System AB.

Current projects include one of the biggest technical consulting projects in Norway in recent years. The client is Peterson Linerboard and the project will take more than 36,000 hours. As main consultant, the ÅF Group will lead the refurbishment of a paper machine. Another important and significant project is the refurbishment of a paper machine at STORA Grycksbo for greater capacity, quality and availability. The assignment requires competence in process engineering as well as in electrical installation and instrumentation. The brief to be the main electrical, control and monitoring consultant for ABB Stal has been further enlarged.

The ÅF Group’s financial and project accounting system PX Control continues to enjoy a very favourable reception on the market. It has now also been chosen by consulting firms BenimaFerator, Bjerkings Ingenjörsbyrå, FB Engineering, Rejlers Ingenjörer and PRONYX. With that, ÅF-Data has confirmed its position as the market leader in this field.

Real Estate and Finance Administration
At year end 1996 the Group had 34,000 sq. m of real estate, then valued by VM Fastighetsekonomer at SEK 316 million. The book value was SEK 212 (202) million. During the period the Norrköping building in which the ÅF Group has its consultancy operations, with 100 employees, was acquired from the property management company Näckebro.

The purchase price for 4,000 sq. m was SEK 16 million. The contract includes a rental guarantee for those parts of the building that are not rented out at the moment.

Real estate investments amounted to SEK 8 (2) million. Surplus value of the properties, after acquisition of the Norrköping property and 20% deferred tax, amounted to SEK 83 million, corresponding to SEK 14 per share.

The ÅF Group's liquid assets amounted to SEK 65 (98) million at the end of the period, of which SEK 53 (36) was in listed stocks. The surplus value of the stock portfolio was SEK 10 million. At year end 1996 the surplus value was SEK 7 million. Net financial items amounted to SEK 10.3 (1.6) million, of which SEK 15.7 (3.7) million corresponded to capital gain from the sale of listed stocks.

Forecast for 1997
The high industrial investment of recent years is decreasing somewhat in 1997. Despite this decline, the market for the ÅF Group’s services is expected to be relatively good during the rest of this year.

In consideration of the drop in profits during the first nine months, the whole-year profit for 1997 is expected to be in the range of SEK 60-70 million, or about SEK 8 per share. This corresponds to a return on shareholders’ equity of approx. 15%.