• ÅF Group profit SEK 17.9 (28.3) million
• Turnover SEK 270 (283) million
• Profit per share SEK 2.24 (3.54)
• Net worth per share SEK 81 (74)
• A 7-8% profit margin is forecast for whole year 1997
• Acquisition of minority holding in an educational company, SIFU

The market for the ÅF Group’s services declined somewhat during the first quarter of 1997. Group capacity utilisation dropped to 70% (71%). However, orders improved somewhat during the period. Turnover and profit trends were affected by the fact that the first quarter saw much fewer working hours than the corresponding quarter in 1996. Most of the time lost in the first quarter will be recovered during the remainder of 1997.

Consolidated profit after net financial items and interest in associated companies was SEK 17.9 (28.3) million, corresponding to a return on shareholders’ equity of 13.8% (23.7%). Turnover fell to SEK 270 (283) million. The profit margin was 6.6% (10.0%). The ÅF Group’s profit has been charged with a calculated bonus to the employees of SEK 1.5 (4.0) million. The number of full-time equivalent employees including those in associated companies abroad, was 1,740 (1,682) during the period.

The parent company’s turnover was SEK 18.0 (17.3) million and profit/loss after net financial items was SEK 6.6 (-0.3) million. The Group's net worth, after a 20% standardised tax on estimated surplus value in properties, was SEK 81 (74) per share. At the end of the period the adjusted equity ratio amounted to 55% (52%).

After the end of the period, the ÅF Group signed an agreement in principle with ISF, the Swedish Society of Engineers, to acquire a minority holding of 19% in the educational company SIFU. This agreement also includes an option for the ÅF Group to obtain a majority holding by year end 1998 at the latest.
SIFU holds training courses in technology subjects and the environment. It has a turnover of SEK 60 million and 65 employees.

Consulting businesses
The consulting businesses’ profits was SEK 12.6 (30.4) million. Turnover was SEK 301 (309) million. At the end of the period orders amounted to SEK 340 (330) million.
Despite some decline, business areas Electrical Engineering and Instrumentation and Mechanical Engineering and Electronics posted satisfactory profits and profit margins.
Business areas Energy, HVAC and Sanitation Engineering and Process and Environment did not reach their profit margin objective. A main reason for the decline in profits was the shorter working hours during the first quarter and reduced capacity utilisation. The consulting businesses’ profits were also affected by the cost of the move at year end of all the ÅF Group units in Gothenburg, with a total of 275 employees, to new premises. This move will increase efficiency.

The trend in business area Inspection and Testing was unsatisfactory during the period. The tendency towards a favourable profit which could be noted in the second half of 1996 was broken at the beginning of 1997. Although capacity utilisation increased marginally, price competition increased. After the end of the period, certain cost-reducing steps have been taken.

ÅF-Industriteknik acquired a computer firm, PRIMO System AB, thereby reinforcing ÅF-Industriteknik’s competitive strength in electronics and systems development.
At the beginning of April ÅF-IPK received certification in conformity with the ISO 9001 quality management standard.

With that, more than half of the ÅF Group companies have ISO 9001 certification.
Current projects include a comprehensive natural gas investigation for the Nordic Council of Ministers, with the aim of reducing environmental impact in the Baltic region. Electronic and telecom installations are under way for Norsk Hydro’s big new head office in Oslo, and for Volvo’s new Swedish automobile safety facility, where the ÅF Group is also designing control and monitoring installations.

Also for Volvo, the ÅF Group is preparing a feasibility study for the expansion of a facility for high-temperature testing in Arizona, USA. Saab Automobile has retained the ÅF Group to inspect electrical equipment and design data of the final assembly plant for the new car models to be introduced later this year.

Process consultants within the ÅF Group have several interesting projects abroad for, among others, Stora Celbi Projekt C99, Patria Frantschach in Austria and Pontevedra in Spain. For the Swedish forest industry, a preliminary study is being carried out for the refurbishment of paper machine PM7 at the Husum mill.

A strategically important total commitment is under way for Ericsson, involving the overall design of computer cards. For Stora Fors, the ÅF Group is designing the electrical installations for a paperboard machine.

Forest industry projects in Norway continued to be significant and the ÅF Group is now the dominant actor in this field.

For Astra Hässle, the ÅF Group will transfer know-how from Swedish projects to Astra’s new laboratory in Boston, USA.

Profit/loss, turnover and profit margin by business area

Profit for ÅF-Data amounted to SEK 0.4 (0.0) million.

Real Estate and Finance Administration
At year end 1996 the Group had 34,000 sq. m of real estate. Properties were then valued by VM Fastighetsekonomer at SEK 316 million. Their book value was SEK 212 (199) million.
Real estate investments amounted to SEK 3.7 (2.4) million. Surplus value of the properties amounted to SEK 83 million after 20% deferred tax.

At year end the Group's liquid assets amounted to SEK 111 (93) million, of which SEK 47 (31) million was in listed stocks. Surplus value of the stock portfolio was SEK 6 million. Net financial items amounted to SEK 5.5 (0.6) million of which SEK 7.1 (0.7) million was capital gain following the sale of listed stocks.

Outlook for 1997
After a few years of high industrial investment, this is expected to decline somewhat in 1997. It is uncertain how the three-party decision on Sweden’s energy policy will affect ÅF Group activities during the year. Despite a distinct downturn, the market for ÅF Group services is expected to continue to be good throughout 1997.
With due consideration to the reduced profits of the first quarter, the profit margin for whole year 1997 is expected to reach 7-8%. This corresponds to a return on shareholders’ equity of 15%,

Stockholm, 6 May 1997

AB ÅNGPANNEFÖRENINGEN (PUBL)
Gunnar Grönkvist
Managing Director and CEO

Account in figures Jan-Mar 1997