No. 11/2002. For immediate release 14 February 2002.
For more information:
Gunnar Grönkvist, CEO, or Kaj Sandart, Director, Corporate Information.
Tel. +46 - 8 657 10 00.

AB Ångpanneföreningen (publ)
Summary of Annual Report 2001

• Group profits before tax SEK 88 million (corresponding figure for 2000: SEK 331 million)

• Sales of SEK 1,963 (1,747) million make the ÅF Group the biggest technical consulting organisation in Sweden

• Structural investments designed to strengthen the ÅF Group’s position as the leading forest industry consulting company in Europe

• Proposed dividend: SEK 13 (13) per share

At the beginning of 2001 demand for the majority of the ÅF Group’s services was good, but, as we moved into the second half of the year, there was a marked change in this state of affairs. While, particularly in the installation part of the business, demand continued to remain brisk throughout the year, the general downturn was most evident in the telecom sector.

Slackening demand towards the end of 2001 resulted in an operating profit of SEK 11 (23) million for the fourth quarter. The improvement in net financial income during the last quarter was due to a substantially quicker than anticipated inflow of premium refunds from Alecta, the restoration of unrealised losses in the share portfolio and the previous overestimation of interest payments on the Group’s pensions provisions.

Capacity utilisation (measured as the proportion of time charged to clients relative to the total time that all employees spend at work) slipped from 71 percent during the first quarter to 68 percent during the autumn to finish at 70 percent for the year as a whole, the same figure as that for 2000. It is our view, however, that the ÅF Group has captured new shares of the market and moved forward its position to become the biggest technical consulting organisation in Sweden and one of the top twenty in Europe.

Net sales rose by 12 percent to SEK 1,963 (1747) million, five percentage points of this increase being attributable to the consolidation of foreign subsidiaries. The total number of co-workers, excluding those in associated companies, calculated as the number of full-time equivalents for the year amounted to 2,167 (2,044). If employees in associated companies are included, this figure rises to 2,470 (2,191).

Consolidated profit after net financial items, together with proportional interests in associated companies amounted to SEK 88 (331) million. The profit margin was 4.5 (18.9) percent. During the last quarter of 2001 the Group’s pension provisions of more than SEK 100 million were reduced by slightly more than half by utilising the insurance premium refunds from Alecta. This improved the result by SEK 12 million, which is shown in the accounts as an item affecting comparability.

Earnings per share amounted to SEK 9.91 (40.40).

Net sales for the parent company totalled SEK 99 (106) million, with profit after net financial items amounting to SEK 4 (25) million.

Net worth, calculated as shareholders’ equity with the addition of 80 percent of the surplus value of property held by the Group, amounted at the year-end 2001 to an equivalent of SEK 118 (122) per share.

During the year, in order to consolidate even further its position as a leading consultant to the European forest industry in preparation for the large-scale industrial projects being planned on the continent, the ÅF Group acquired shares in foreign-based companies active in the fields of Energy, Environment and Process Technology. Early in 2001 the ÅF Group acquired 20 percent of the shares in CTS Engineering of Finland, with an option on a further 13 percent. The Group’s stake in Chleq Froté (France) was increased from 49 to 66 percent, which means that with effect from the 2001 accounts the company will be consolidated as an ÅF subsidiary. In both CTS and Chleq Froté as well as in the latter’s associated company in Spain (Incepal), the total workforce of more than 300 employees concentrate the bulk of their consulting activities on the pulp and paper industry. Since the year’s accounts were closed a cooperation agreement has also been drawn up with the North American forest industry consulting company, Tessag KSH Ltd.

The Group increased its stake in the Danish company Hansen & Henneberg from 25 to 49 percent. Hansen & Henneberg, which has a staff of 50, is active in the Electrical Engineering & Instrumentation sectors.

Another acquisition during the course of the year was Svensk Trafikkompetens from SL (the Greater Stockholm public transport authority). As a result of this particular take-over the ÅF Group has become one of Sweden’s premier consulting resources in the field of traffic planning, able to call upon the resources of some 60 consultants. In addition a handful of fairly small consulting companies working with IT and heating, ventilation and sanitation were acquired in 2001, bringing a further 50 co-workers under the ÅF Group umbrella.

ÅF-Kontroll and TÜV Nord of Germany formed a joint-owned (50-50) company in 2001 to undertake third-party inspections of nuclear facilities. The new company, ÅF-TÜV Nord AB immediately secured the contract to inspect Sweden’s nuclear power stations at both Ringhals and Barsebäck for the next two to three years.

Consulting activities
The consolidated profit for the Group’s consulting activities in 2001 totalled SEK 83 (99) million. The tables below show recent trends for the consulting activities by business area.

The sudden downturn in business from the six-month mark onwards had the greatest affect on Software, Electronics and Mechanical Engineering, whose profit for the year as whole was halved compared to its result for 2000. Nevertheless, despite the deterioration in the market, which has affected the entire market for consulting, the business area did just manage to record a positive result over the final three months of the year. A raft of measures is now being implemented within the business area to adapt operations to the weak demand and by so doing to further strengthen the ÅF Group in terms of competence and capacity. The latter is of particular significance as this business area is one of the Group’s highest priorities.

The second major victim was the Group’s Education & Management operations, which suffered mainly as a result of the sluggish market for education services during the autumn. Work on tailoring operations to the market’s current requirements and shaving SEK 10 million off the business area’s costs began late in the autumn. Aid agency operations were reorganised by transferring all aid agency related business within the Group to ÅF International. It is anticipated that, by being able to offer a broader range of services in this way, the reorganisation will begin to produce positive results from the summer of 2002 onwards.

With capacity utilisation levels in HVAC & Sanitation remaining high, the business area recorded a very good result – and there is much to suggest that this encouraging situation will prevail, at least throughout the first six months of 2002.

Profitability was also good within Electrical Engineering & Instrumentation, particularly those areas of the business involved in the installation and infrastructure markets. For those areas dealing with processing industries and the power industry, however, the market conditions were far less favourable, and this is inevitably reflected in lower profitability.

Weak demand from the processing industry and power sector also had a negative effect on operations within Energy, Environment and Process Technology. The deterioration in profits from the third to the fourth quarter is due in part to certain restructuring costs and the fact that operations in France experienced a short, but sharp, fall in capacity towards the end of the year. 

For Inspection & Testing, on the other hand, the improvement in results compared to 2000 held throughout the year to produce a profit at the year-end and a result that was SEK 10 million better than in 2000. Demand for these services is expected to remain satisfactory and the balance between supply and demand now seems to be acceptable. Business for the new joint-owned company ÅF-TÜV Nord AB has got off to a good start.

Real Estate and Finance Administration
The Group’s properties, 97 percent of which are offices, are used primarily by the Group’s consulting businesses. The Group owned 33,000 square metres of real estate at the end of 2001. Net investments in real estate over the year totalled SEK 8 (10) million. In an evaluation carried out by Forum Fastighets AB at the end of 2001, the market value of the Group’s properties was assessed at SEK 460 (469) million. Book value was SEK 273 (271) million. 

The Group’s liquid assets, including current investments totalled SEK 216 (301) million. Interest-bearing liabilities and provisions amounted to SEK 313 (368) million, bringing the Group’s net borrowings to SEK 97 (67) million

At the end of 2001 the ÅF Group had 4,000 shareholders (31 Dec 2000: 3,900).

In September 2001 Sweco AB made an unsecured bid for the company. The main owners, the Ångpanneföreningen Foundation for Research & Development, ÅFOND (the Ångpanneföreningen Staff Foundation) and a majority on the company’s board of directors rejected the Sweco bid, which was subsequently withdrawn. In conjunction with discussions about this bid three of the directors of the ÅF Group – Hans Dalborg, Lars Westerberg and Anders Narvinger – opted to resign from their positions on the Board. At an extraordinary general meeting of the company in January 2002 two new members were elected to the Board, Mr Carl-Erik Nyquist and Ms Eva-Lotta Kraft. At the initial meeting of the Board following immediately upon the extraordinary general meeting, Carl-Erik Nyquist was appointed Chairman of the Board. 

Dividend
It is company policy to propose a shareholders’ dividend equivalent to approximately 50 percent of the Group’s profit after tax. For 2001 profit after tax equates to SEK 10.00 per share. The Board proposes that 50 percent of the consolidated profit after tax or SEK 5.00 per share be issued as a share dividend.

In addition the Board proposes an extra dividend corresponding to SEK 8.00 per share. This extra dividend is motivated by the refunds that, excluding the liquidation of part of the Group’s pension provisions, have been transferred to the Group’s account from Alecta in 2001. This brings the Board’s proposal for a shareholders’ dividend for the year 2001 to a total of SEK 13.00 per share.

Accounting and valuation principles
The principles and calculation methods used in this financial report remain unchanged from those used in the ÅF Group’s most recent annual report.

Prospects for 2002
The weakening of the market that affected the Group’s result for the second half of 2001 is expected to persist for at least the first six months of 2002. Although the first signs of a slight improvement in the economy as a whole have begun to make themselves felt, it is likely to take until the autumn 2002 before these begin to have any widespread effect on the demand for the ÅF Group’s services. There are, however, sectors where demand is somewhat brisker, such as installations, infrastructure and the forest and power industries. In this way, the broad base of our operations provides a better opportunity for the ÅF Group to balance its overall result, a circumstance which is of great value in today’s situation. Taken all round, therefore, the year is expected to begin on a rather subdued note, but prospects for a second-half rally and a more favourable end to 2002 are in sight.

Stockholm, Sweden, 14 February 2002
The Board of AB Ångpanneföreningen (publ)

Account for previous year in figures