During the first half of 1998, the market for the ÅF Group’s services improved over the corresponding period last year. Increased industrial investment was the main factor to affect the market positively. Capacity utilisation within the Group rose to 71% (70%). The order book amounted to SEK 425 (373) million.

Consolidated profit after net financial items and interest in associated companies amounted to SEK 40.6 (33.5) million. This corresponds to a return on shareholders’ equity of 16.2 (13.7)%.

Turnover amounted to SEK 647 (556) million and profit margin was 6.3% (6.0%). Profit margin for the whole year 1997 was 5.8%.

The consolidated profit was charged with a calculated bonus to the employees of SEK 2.8 (2.5) million.

The number of full-time equivalent employees during the period was 1,885 (1,762), of whom 140 were in associated companies.

The parent company's turnover amounted to SEK 40.4 (36.4) million and profit after net financial items was SEK 3.5 (9.5) million.

The Group’s net worth, after 20% standard tax on the estimated surplus value of property, was SEK 79 (77) per share. The equity ratio after dividends was 46% (50%).

At the beginning of the period, ISO Swedish Management Group was acquired and its name was changed to ÅF-Swedish Management Group. P-electronic was also acquired and became part of ÅF-Rateko. WO-Konsult was acquired as of 1 July and will be merged with ÅF-Elteknik and ÅF-VVS Projekt. The three new member companies have a total of 70 employees.

As of 1 Jan. 1998, a new business area has been established: Education & Management. It consists of the educational company SIFU, with a turnover of approx. SEK 70 million. The ÅF Group’s share in SIFU is limited to 19% in 1998. The ÅF Group has an option to acquire majority ownership of SIFU at year end 1998.

As of 1 Jan. 1998, the energy consultancy units joined business area Energy, Environment & Process Technology, at which time HVAC & Sanitation Engineering formed a business area of its own.

Also as of 1 Jan., ÅF-Data is part of business area Software, Electronics & Mechanical Engineering. With that, important parts of the Group’s software and electronics competence have been merged.

Consulting businesses
The consolidated profit for the consulting businesses after financial items amounted to SEK 40.9 (25.8) million. Turnover rose to SEK 693 (624) million.

All business areas except Software, Electronics & Mechanical Engineering posted improved profits. The increase was particularly large for HVAC & Sanitation Engineering and Inspection & Testing.

Business areas Electrical Engineering & Instrumentation and Education & Management showed the highest profit margins, at 11% and 9% respectively.

The profit for Software, Electronics & Mechanical Engineering was SEK 4 million lower than the same period last year. This is explained by the increased costs in marketing the new financial administration system PX Control, and the establishment of software operations in Norway. The drop in profits for this business area is expected to be temporary.

The market continued to stabilise for business area Inspection & Testing. The pressure on prices is now somewhat less than at the beginning of the year and overestablishment in the market is declining, albeit slowly. The business area’s rate of loss was halved during the period, compared with the first half of 1997.

Current projects include a comprehensive EU-financed study of qualified energy solutions for hotels in mainly Italy, Portugal, Greece and Cyprus. The study aims at providing local solutions with simultaneous cooling, heating and electric power generation.

The ÅF Group also has the main responsibility for building a new recycled paper facility for 140,000 tonnes of finished pulp for Norske Skog in Skogn, Norway.

For Pharmacia & Upjohn, the ÅF Group will supply filling equipment for the growth hormone Genotropin.

Financed by international aid funds, the ÅF Group will develop methods for handling methane gas released in Chinese coal mines, which would otherwise pose an environmental problem.

Licences for PX Control have been sold for use by the Norwegian consulting firm Multiconsult Holding A/S, with some 400 consultants. This means that ÅF-Data has established a company in the Norwegian market.

Real Estate and Finance Administration
The ÅF Group’s real estate is 95% office space, used mainly by the Group’s consulting businesses. Vacancy at year end was 5%.

At year end 1996 the Group had 39,000 sq. m of real estate, valued by VM Fastighetsekonomer at SEK 316 million. An internal valuation estimated its value to be SEK 349 million at year end 1997. The book value was SEK 236 (209) million.

In the first half of 1998, a building on North Djurgården island in Stockholm was sold to a foundation, Vetenskapsstaden International Centre, for SEK 25 million, which corresponds to the book value. The property has 3,650 sq. m of floor space.

The ÅF Group's liquid assets amounted to SEK 107 (94) million at the end of the period, of which SEK 38 (39) was in listed Swedish and foreign stocks. The surplus value of the stock portfolio was SEK 14 (9) million. The remainder of the liquid assets were in interest-bearing securities in Sweden.

Forecast for 1998
Market conditions are expected to continue to be favourable during the autumn. The ÅF Group’s profits for the whole year 1998 are expected to reach SEK 80 million, or a profit of SEK 10 per share. This corresponds to a return on shareholders’ equity of 17 (13)%.

Stockholm, 19 August 1998
AB Ångpanneföreningen (publ)
Gunnar Grönkvist
Managing Director and CEO

Profits after net financial items and turnover by business area
Jan-June 1998 (Jan-June 1997) and whole of 1997