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ÅF: Interim report January-June 2007: 36 % growth and profits more than doubled

Published august 21, 2007
For further information:
Jonas Wiström, President/CEO              +46 (0)70-608 12 20
Viktor Svensson,
Director, Corporate Information           +46 (0)70-657 20 26

Second quarter 2007

  * Net sales totalled SEK 968 million (Q2 2006: SEK 771 million)
  * Operating profit was SEK 85 million (SEK 30 million)
  * Operating profit, excluding other operating income, was SEK 85
    (SEK 30 million)
  * Profit after tax rose to SEK 58 million (SEK 15 million)
  * Earnings per share, before dilution, amounted to SEK 3:53 (SEK

First half-year 2007

  * Net sales totalled SEK 1,900 million (Jan-June 2006: SEK 1,394
  * Operating profit totalled SEK 159 million (SEK 74 million)
  * Operating profit, excluding other operating income, was SEK 159
    million (SEK 55 million)
  * Profit after tax rose to SEK 107 million (SEK 46 million)
  * Earnings per share, before dilution, amounted to SEK 6.54 (SEK

A few words from the President, Jonas Wiström

2007 has got off to an excellent start for ÅF. Sales have risen by 36
percent, and the operating margin was 8.4 percent, compared to 4.0
percent last year.

Capacity utilisation (the proportion of time debitable to clients
relative to the time that all the Group's employees spend at work)
rose by more than three percentage points to 75.4 percent.

It is especially gratifying that the profit for the second quarter
has exceeded the profit for the first quarter, despite the fact that
the second quarter this year is one working week shorter.

Truly admirable efforts from ÅF's co-workers have enabled us to
report a profit after just six months that is equal to the full-year
figure for 2006.

During the summer, we have completed the realignment of the Process
Division, with the sale of two companies. This restructuring work
will improve our opportunities to continue to achieve higher
earnings, and we will once again be able to focus on growth, not
least within the expanding energy area.

Other divisions performed above or in line with expectations, and the
immediate future looks promising. As things stand today, our
operations are well positioned in a market that remains buoyant.

This all adds up to a promising outlook for the ÅF Group as a whole.

Corporate acquisitions and disposals

ÅF increased its stake in the Danish technical consulting firm Hansen& Henneberg, which has a workforce of 55, from 49 percent to 80
percent. The acquisition was a natural consequence of the positive
collaboration between ÅF and Hansen & Henneberg over recent years. ÅF
acquired 49 percent of the shares in 2001.

ÅF acquired the Swedish technical consulting firm Cordinor, with 15
members of staff in Luleå and Kiruna. Cordinor provides advanced
engineering services, first and foremost for the mining industry.

ÅF sold its Finnish subsidiary ÅF-CTS Oy with 130 co-workers, for EUR
4 million (a value in line with the carrying amount) to ÅF-CTS Oy's
management team. Previously, on 1 January 2007 a total of 70 of
ÅF-CTS Oy's co-workers had transferred to ÅF-Enprima Oy. The buy-out
was approved by an extraordinary general meeting of
AB Ångpanneföreningen on 14 August.

There was also a management buy-out of ÅF's French subsidiary, AF
Chleq Froté S.A., which has 50 members of staff. The purchase price
was EUR 3 million. This disposal will have no impact on results,
since a provision was made in the 2006 accounts. The buy-out was
approved by an extraordinary general meeting of AB Ångpanneföreningen
on 14 August 2007.

Important events during the second quarter

ÅF won a major consulting assignment involving a new co-generation
plant in Tartu, Estonia. The project will be carried out by ÅF's
units in Estonia and Finland. ÅF's share of the order is worth more
than SEK 30 million.

ÅF won a substantial consulting assignment relating to a new peat and
biomass-fuelled CHP plant to be built in the town of Jyväskylä in
central Finland. The order is worth around SEK 80 million to ÅF.

ÅF has recruited Jonas Ågrup as its new Chief Financial Officer.
Ågrup, who will take up the post as CFO on 3 September 2007, is a
graduate in economics with many years' experience of working in
listed companies and international business. He joins ÅF from WM-Data
Sweden, where he has been Vice President with responsibility for
Finance and Administration since 2006.

Important events after the close of the period

ÅF received a very large order from Banverket, the Swedish National
Rail Authority, in respect of the Stockholm City Line rail link. ÅF's
assignment is estimated to total around SEK 200 million, and is
expected to continue until 2016. The assignment comprises three
technical projects: Tomteboda freight yards, the double-track tunnel
and new commuter stations, and a risk and safety management
assignment. ÅF's involvement with regard to the Tomteboda project and
the twin-track tunnel relates to the project engineering of all
aspects of the technical rail installations, including ground survey
work, track, electrics, signalling and telecommunications, SCADA and
channelling as well as technical support up to the time when the
facilities are taken into use.

In conjunction with the first conversion opportunity for the ÅF
co-worker convertibles programme for 2005/2008, a new issue has been
made of a total of 523,608 of a possible 625,000 class B shares. This
gives a 3.1 percent dilution of the share capital and a 2.2 percent
dilution of the votes. The new share total in ÅF is now 16,892,534,
of which 804,438 are class A shares, and 16,088,096 class B shares.

Sales and profits

Net sales for the period totalled SEK 1,900 million (Jan-Jun 2006:
SEK 1,394 million), an increase of 36 percent. Sales in the second
quarter amounted to SEK 968 million (SEK 771 million), an increase of
25 percent.

Operating profit for the period was SEK 159 million (SEK 74 million),
and the operating margin rose to 8.4 percent (5.3 percent). For the
second quarter, operating profit was SEK 85 million (SEK 30 million),
and the operating margin was 8.8 percent (3.9 percent).

When comparing these results with those from 2006 it is important to
bear in mind that the figures for the first quarter of 2006 were
positively affected by a capital gain of SEK 19 million following the
sale of the software company PX Business Solutions. If the profits
from this sale are excluded from last year's figures, operating
profit totalled SEK 55 million and the operating margin was 4.0

Capacity utilisation for the period was 75.4 percent (72.1 percent).
For the second quarter, capacity utilisation was 76.6 percent (70.5

Profit after net financial income/expense was SEK 156 million (SEK 72
million) with a profit margin of 8.2 percent (5.1 percent). For the
second quarter, profit after net financial income/expense rose to SEK
84 million (SEK 29 million), and the profit margin was 8.7 percent
(3.7 percent).

Profit after tax amounted to SEK 107 million (SEK 46 million). For
the second quarter, profit after tax was SEK 58 million (SEK 15

Earnings per share before dilution amounted to SEK 6.54 (SEK 3.45).
For the second quarter, earnings per share before dilution were SEK
3.53 (SEK 1.10).

Cash flow and financial position

Cash flow for the period was SEK 65 million (SEK 17 million). Before
dividends and borrowings, cash flow was SEK 129 million (compared to
a negative cash flow of SEK -454 million for the corresponding period
in 2006).

Cash flow for the second quarter was SEK 57 million (SEK 4 million).

The Group's liquid assets totalled SEK 322 million (SEK 260 million).

Equity per share totalled SEK 72, and the equity/assets ratio was 49
percent. At the beginning of the year, equity per share was SEK 67
and the equity/assets ratio was 48 percent.

The Group's net loan debt (cash and cash equivalents minus
interest-bearing liabilities) at the close of the half-year totalled
SEK 24 million (SEK 390 million).


Gross investment in machinery and equipment totalled SEK 17 million
for the period January-June 2007 (Jan-Jun 2006: SEK 16 million).

Divisional performance

Operating margin 6 mths: 9.5% (7.9%)

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 during the second quarter, and this
contributed to the high level of capacity utilisation experienced by
the division. The introduction of a new tender database and a new
sales support system has boosted the efficiency of sales work. The
inflow of orders was very good in the second quarter.

Mechanical engineering operations with a staff of around 150, which
were amalgamated into the Engineering Division on 1 January 2007,
have developed well. The acquisition of the technical consulting firm
Cordinor represents another step into the field of mechanical
engineering consulting operations. This acquisition is strategically
important, as it strengthens the division's leading position in the
Norrbotten region of northern Sweden and expands the range of
services the division can offer to LKAB and other mining concerns.

During the second quarter, the Engineering Division's involvement at
the Forsmark nuclear power plant was expanded. Consequently, a
decision was made to establish a local presence at the plant. The
division also won a major assignment from Vägverket Färjerederiet,
the Swedish Road Administration's ferry operation, which will call
upon the division's technical expertise in control systems and
hydraulics. In addition, there was a marked increase in activity in
paper and pulp, including assignments from Iggesund in connection
with the refurbishment of a lime kiln, and projects for Metso Paper
in Portugal, India and China.

Infrastructure Division                                     Operating
margin 6 mths: 11.6% (8.8%)

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

The market remained very strong during the second quarter, and in
consequence capacity utilisation was at least as high as during the
preceding quarter.

The division grew in Denmark by expanding its stake in the Danish
technical consulting company Hansen & Henneberg from 49 to 80 percent
via an agreement that also includes an option to acquire the
remaining shares. Hansen & Henneberg contributes highly specialised
technical expertise in lighting systems, traffic control and
electrical engineering.

During the second quarter, the Sound & Vibrations business area was
contracted to carry out two noise surveys for the Swedish Road
Administration and the Municipality of Norrköping respectively. The
division also won contracts to plan electrical, heating, water and
sanitation installations at the Psychiatric Unit at Uppsala
University Hospital.

At the end of the period, the division was entrusted with the
planning of key aspects of the projected City Rail Link in Stockholm.
This assignment is estimated to be worth around SEK 200 million to

Inspection Division                              Operating margin 6
mths: 11.6% (8.1%)

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.

Strong demand helped ensure that the division had a significantly
higher level of capacity utilisation during the second quarter of
2007 than over the corresponding period last year. Demand was
especially strong in the nuclear power and petrochemical industries.

Organic growth was good, strengthening the Inspection Division's
market position.

Inspection won a number of exciting assignments during the second
quarter. These included extensive condition monitoring of harbour
installations at Valetta on Malta and in Venice. In addition, the
division secured a major training contract for the Swedish
construction company Peab on working environment safety.

Process Division
Operating margin 6 mths: 6.2% (0.5%)

The Process Division offers consulting services for every aspect of
an industrial process and possesses world-leading expertise in
certain specialist areas of the pulp and paper industry and in the
energy sector.

The market continued to remain strong in the second quarter,
especially with regard to the energy industry. Demand from the pulp
and paper industry increased slightly. As a result, the division's
overall capacity utilisation showed a rising tendency during the
second quarter.

Internationally, the level of economic activity in the energy sector
is high. The inflow of orders was very good for ÅF in the second
quarter, not least in Finland and the Baltic countries. Demand for
consulting services in biomass-fuelled combined heat and power plants
was particularly good. ÅF is a market leader in this area, and has
already signed four major contracts for this type of CHP plant this

As an important step in the previously announced strategy of
realigning operations within the Process Division, two subsidiaries,
ÅF-CTS in Finland and AF Chleq Froté in France with a combined total
of 180 co-workers, were sold during the second quarter.

Systems Division
Operating margin 6 mths: 7.5% (6.7%)

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

The market continued to strengthen in the second quarter, with
visible improvements across all of the division's customer segments:
telecoms, vehicles, life science and engineering.

Activity during the period was highest in the telecoms segment, where
by way of example, the division won a test systems development
assignment from Ericsson. In life science, the division took on a
development project for a new generation of products from Raysearch.

Organic growth remained excellent and now exceeds 20 percent over the
most recent 12 month period. The strongest growth took place in the
Öresund region (Copenhagen-Malmö).

Parent Company

Parent company sales totalled SEK 91 million (SEK 99 million) and
related primarily to intra-group services. There was a loss after net
financial income/expense of SEK 15 million, as opposed to a profit of
SEK 13 million for the corresponding period in 2006.
Cash and cash equivalents totalled SEK 139 million (SEK 23 million),
and gross investment in machinery and equipment for the period
January-June 2007 amounted to SEK 3 million (Jan-Jun 2006: SEK 6

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 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 in accordance with the
Swedish Financial Accounting Standards Council's Recommendation RR 31
("Interim Reporting for Groups"), and 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 2006 (see Note 2, page

The parent company has implemented the Swedish Financial Accounting
Standards Council's Recommendation RR 32:06, which means that the
parent company 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, the propensity of various markets to invest, the ability
to recruit and retain qualified co-workers and the effect of
political decisions. The Group is further exposed to a range of
financial risks such as currency risk, interest-rate risk and credit
risks. No significant risks are considered to have arisen over and
above those risks described on pages 36-38 in ÅF's annual report.

ÅF shares

The ÅF share price was SEK 188 at the close of the report period,
which represents a rise of 28.3 percent since the beginning of the
year. The Stockholm Stock Exchange all-share index (OMXSPI index)
grew by 8.4 percent during the same period.

Capital Market Day

ÅF will hold its annual Capital Market Day on 20 September from 14.00
(2 p.m.) onwards at the Hotel/Restaurant J at Nacka Strand in
For more detailed information and registration, please contact the ÅF
Group's Director of Corporate Information, Viktor Svensson, by phone
on +46 (0)8-657 12 01 or by e-mail,

Next reporting date

ÅF's interim report for the period January-September 2007 will be
published on 9 November 2007.
The Board of Directors and the President/CEO confirm that the interim
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 - 21 August 2007

AB Ångpanneföreningen (publ)
Jonas Wiström,
President & CEO

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

The information in this interim report  is that which ÅF is  required
by 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 09.30  CET on 21  August

The full report including tables can be downloaded from the following

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