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The ÅF Group - Summary of Annual Report for 2006 - Significantly improved profits excl. capital gains

Published February 22, 2007
Jonas Wiström, President/CEO         +46 (0)8-657 11 15 / +46
(0)70-608 12 20
Viktor Svensson,
Director, Corporate Information         +46 (0)8-657 12 01 / +46
(0)70-657 20 26

FY 2006
* Net sales rose to SEK 3,114 million (2005: SEK 2,269 million)
* Operating profit totalled SEK 168 million (SEK 226 million)
* Operating profit excl. other interest income totalled SEK 149
  million (SEK 90 million)
* Profit after tax totalled SEK 108 million (SEK 204 million)
* Earnings per share before dilution were SEK 7.77 (SEK 17.15)
* The Board proposes a shareholders' dividend for 2006 of 3:00 (2:50)
  SEK per share

Q4 2006
* Net sales rose to SEK 973 million (2005: SEK 586 million)
* Operating profit totalled SEK 57 million (SEK 150 million)
* Operating profit excl. other interest income totalled SEK 57
  million (SEK 14 million)

A few words from the President, Jonas Wiström

ÅF grew its business by almost 40 percent in 2006 and improved
earnings by 65 percent compared to the year before, excluding capital
gains following the sale of the Group's properties in 2005 and the
sale of a minor business operation in 2006.

The improved result is due first and foremost to the robust state of
health in industry and the economy and the successful integration of
the companies acquired by ÅF during the year. All of the acquisitions
made in 2006 (involving a total of approximately 1,000 employees)
delivered results on a par with or better than anticipated.

We advanced our positions in the market in 2006, especially within
the fields of Industrial Automation and Energy. Capacity utilisation
(the proportion of time debitable to clients relative to the time
that all the Group's employees spend at work) rose by 1.5 percentage
points to 73 percent for the year as a whole, and was in excess of 74
percent for the fourth quarter.

At the same time we strengthened our position as an attractive
employer. In Universum's 2006 survey of some 4,000 engineering
graduates, ÅF was ranked in fourth place among Swedish companies of
all categories in the league table of "ideal employers".

The outlook for 2007 is positive. At present there is nothing to
indicate that the economy is about to slow down, and the prospects
look good for all the divisions to grow and improve their earnings.
This is particularly true of the Process Division, which after
fine-tuning its strategy has set its sights on significantly better

Today ÅF stands on a sound financial footing and we are determined to
continue to seize the initiative in the process of structural change
that is taking place in the industry. The aim is to continue to grow,
particularly in the Nordic countries, Eastern Europe and Russia.

Sales and profits

Net sales for 2006 rose by 37 percent to SEK 3,114 million (2005: SEK
2,269 million): of this figure, SEK 783 million was attributable to
corporate acquisitions made during the year. Fourth-quarter sales
totalled SEK 973 million (corresponding period 2005: SEK 586
million), with SEK 337 million of this amount deriving from
businesses acquired in 2006.

Operating profit for the year totalled SEK 168 million (SEK 226
million). SEK 71 million of the operating profit derived from
acquisitions made in 2006. If the figure for "other operating income"
is excluded, operating profit was SEK 149 million (SEK 90 million).
These figures are equivalent to operating margins of 5.4 percent and
4.8 percent respectively (compared to 9.4 percent and 4.0 percent in

Fourth-quarter operating profit was SEK 57 million (SEK 150 million),
and the operating margin was 5.9 percent (20.7 percent). If the
figure for "other operating income" is excluded, operating profit was
SEK 57 million (SEK 14 million) and the operating margin was 5.9
percent (2.3 percent). A total of SEK 37 million in the
fourth-quarter results derived from businesses acquired in 2006.

Capacity utilisation was 72.9 percent (71.5 percent) for the year as
a whole, and 74.1 percent (70.5 percent) for the fourth quarter.

Profit after tax was SEK 108 million (SEK 204 million) for the year
and SEK 47 million (SEK 152 million) for the fourth quarter.

ÅF's tax bill for the year totalled SEK 50 million (SEK 18 million),
equivalent to a tax rate of 32 percent. This relatively high tax
expense was the result of that fact that it has not been deemed
possible to utilise certain of the deficits arising in overseas
companies during the period.

Earnings per share, before dilution, were SEK 7.77 (SEK 17.15) for
the year as a whole. If the figure for "other operating income" is
excluded, EPS was SEK 6.74 (SEK 5.69). The equivalent figures for the
fourth quarter - again before dilution - were SEK 2.87 (SEK 12.79)
and SEK 2.84 (SEK 1.37) respectively

Significant events  during the fourth quarter

ÅF was contracted by TeliaSonera to assume technical responsibility
for Skanova's "joint-financed base-station sharing" service. ÅF won
the role of technical project leader thanks to its status as an
independent technical consulting company with extensive skills within
the field of telecommunications.

ÅF won an order for supervising the construction of a new flue gas
desulphurisation plant at the Maritsa East 2 district-heating power
station in Bulgaria. The new plant will reduce emissions of sulphur
dioxide to a level that meets EU requirements.
ÅF signed a 2-year framework agreement with the Swedish Defence
Materiel Administration (FMV) for "service production for mobile
command centres". Procurement negotiations concerned eight possible
areas of technology: ÅF won contracts for four of these areas,
including Integration and System Safety.

Significant events after the end of the reporting period

ÅF acquired the Estonian technical consulting company Automaatika
with 20 employees. The company was consolidated into the ÅF Group
(Engineering Division) with effect from 1 January 2007. Automaatika
offers consulting services for automatic solutions for industrial

Divisional performance

Infrastructure                                      Operating  margin
12 mths: 8.1% (7.3%)

The Infrastructure Division offers infrastructure consulting services
in four sectors: telecoms, installations, infrastructure planning and
electrical power systems.

The market remained strong in all four of the division's business
areas. This was particularly true of the largest of the business
areas, Installations, which works with clients in the construction
and property sectors. It was also gratifying to see a dramatic
improvement in earnings for the Telecoms business area over the year.

In all essentials, the integration of businesses acquired during
2006, among which the largest were Ingemansson Technology and
Jämtteknik, was concluded on schedule by the end of the year, making
the division even more competitive as a supplier of consulting
services to major infrastructure projects in the Nordic countries.

Major orders won by the division in the fourth quarter include
projects for the Swedish Defence Materiel Administration (FMV),
TeliaSonera and an assignment in conjunction with the Citybanan rail
link in Stockholm.

Process                                                     Operating
margin 12 mths: 0.9% (3.5%)

The Process Division offers consulting and project-management
services for process industries, particularly the energy and pulp &
paper industries.

Earnings for the Process Division were disappointing in 2006,
although there was some improvement in the fourth quarter. The
reasons behind this poor performance were comparatively high losses
in fixed-price projects and continuing problems with profitability in
relation to mechanical construction and design assignments for the
pulp and paper industry outside Sweden.

Since the division was put under new management in the fourth quarter
a clear strategy has been devised, supported by organisational change
and new processes, to minimise the risks involved in fixed-price
projects. The organisation is focusing firmly on just two sectors:
Energy and Pulp & Paper.

Within the Energy segment the division will concentrate its marketing
activities to Sweden, Finland, the Baltic states and Russia. The
prospects are good for establishing and developing ÅF as the market
leader in energy consulting operations in these markets.

Pulp & Paper operations will continue worldwide, but the division
will fine-tune its offer to correspond more closely to client
requirements. The focus will be firmly on expertise in specialist
consulting and on project management, while the resources the
division currently has within the field of mechanical construction
and design will be sold or reorganised. The costs for this change of
strategy are estimated at around SEK 11 million: funds for this were
earmarked in the fourth quarter.

As part of this new strategy, 130 employees specialising in
mechanical constructions and design (in Sweden) were transferred from
the Process Division to the Engineering Division on 1 January 2007.

Among contracts won by the Process Division in the fourth quarter
were two major assignments relating to project engineering work on
power stations in Russia and Latvia.

Inspection                                            Operating
margin 12 mths: 9.7% (10.5%)

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.

On the whole, the market for technical inspections has been good
during 2006.

After a somewhat more sluggish start to the year than anticipated,
the Inspection Division enjoyed a strong second half, with
particularly good demand for services within testing. To ensure the
availability of sufficient resources to meet this demand, a large
number of testing engineers were recruited during the fourth quarter.

The division has noted a steady increase in demand from the energy
sector. In the fourth quarter, for example, the division won a
contract with Göteborg Energi, the municipal energy company in
Gothenburg, to carry out technical inspections of the city's
district-heating grid. Undertakings for the Swedish nuclear power
industry also increased in scope and size during the year.

Systems                                                     Operating
margin 12 mths: 5.5% (0.6%)

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

The market for IT and product development grew gradually stronger
throughout 2006 fuelling increased demand and generating many
enquiries from clients for assistance from the System Division. All
areas of the market have developed positively, particularly
Telecommunications and Life Science.

The significant improvement in the division's earnings can be
explained chiefly by the strong market and the success of internal
programmes to make business operations more effective. The division
also worked actively with recruitment and succeeded in its plans to
employ a total of 100 new members of staff during the course of the

The integration of the IT consulting company Combra and its 65-strong
workforce acquired in June has proceeded smoothly, with shared
premises and joint sales activities producing the desired positive
effects. Combra has reinforced the division's position with clients
such as Ericsson and Sony Ericsson, not least via its office in Lund.

In the fourth quarter the division won an extended and expanded
contract with a leading telecom supplier for the development and
management of a test system for GSM base stations, and its services
were also engaged by Alfa Laval for a product development assignment.

Engineering (formerly ÅF-Benima)            Operating margin May-Dec:
8.8% (-)

The division, which offers services within automation and industrial
IT, is a leader in its field in the Nordic countries. Engineering is
a newly formed division, following the acquisition of Benima in May

Engineering has enjoyed a high level of capacity utilisation with a
good inflow of orders throughout the second half of the year, thanks
above all to the strong performance of the Swedish and Nordic
industrial sectors. Business has been particularly brisk in fields
such as Energy and Pharmaceuticals. For example, the division won a
major contract from the Ringhals (Sweden) nuclear power plant in the
fourth quarter and the contract for technical calculations for the
Oskarshamn (Sweden) nuclear power plant was extended.

By the end of the fourth quarter, most of the process of integrating
ÅF and Benima had been completed. A new management and organisational
structure are in place and staff now work together under the same
roof at many of the 40 or so locations where the division has a
presence. This coordination process has been extremely valuable and
helped to create new business opportunities.

With effect from the beginning of 2007 the operations of the newly
acquired Estonian technical consulting company Automaatika with 20
employees were consolidated into the Engineering Division, at the
same time as 130 personnel in Sweden were transferred from Process to

Accounting principles

This consolidated 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 2005 (see Note 2, page

The parent company has implemented the Swedish Financial Accounting
Standards Council's Recommendation RR 32:05 ("Reporting for Legal
Entities"), 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. As a result, ÅF
amended its accounting principles with effect from 1 January 2006 by
applying IAS 39 ("Financial Instruments") in the parent company
accounts to comply with the provisions of Chapter 4, §14, a-e of the
Swedish Annual Accounts Act.

Cash flow and financial position

The cash flow for the year was SEK 15 million (SEK 67 million). Cash
flow for the fourth quarter before the amortisation of loans was SEK
86 million. The corresponding figure for 2005 was SEK 48 million,
excluding the extensive sale of the Group's properties that took
place during that year.

The substantial cash flow from investing activities of SEK -565
million was the result of acquisitions made during the year, which
added approximately 1,100 new members of staff to the ÅF workforce.
These acquisitions had a negative impact of SEK 552 million on cash
flow. The similarly large cash flow from financing operations was SEK
459 million. To finance its acquisitions, ÅF made a new issue during
the summer, which provided the Group with SEK 287 million. ÅF also
borrowed SEK 202 million net, and paid out dividends of SEK 30
million to shareholders.
The ÅF Group's liquid assets totalled SEK 258 million (SEK 242
million) at the end of the reporting period. Equity per share was SEK
67 (SEK 49) and the Group's equity/assets ratio was 47 percent (48

The Group's level of net loan debt (cash and cash equivalents minus
interest-bearing liabilities) totalled SEK 97 million.


Gross investment in machinery and equipment for the period January to
December 2006 totalled SEK 40 million (SEK 44 million).

Parent company

Parent company sales totalled SEK 188 million (SEK 147 million),
yielding a profit after net financial items of SEK 1 million (SEK 172

ÅF shares

At the end of 2006, the ÅF share price had risen to SEK 146.25,
equivalent to an appreciation in value of approximately 36 percent
during the year. The Stockholm Stock Exchange's (OMXSPI) all-share
index rose by approximately 24 percent during the same period.


The Board of Directors proposes a shareholders' dividend for 2006 of
SEK 3:00 per share (SEK 2:50 per share).

Reporting dates for financial information 2007

The ÅF Group will publish financial information on the following
dates in 2007:

Interim report January-March 2007                            8 May

Interim report January-June 2007                               21

Interim report January-September 2007                      9 November

Annual General Meeting

The Annual General Meeting of Shareholders will take place take place
at 17.00 (5.00 pm) on 8 May at AB Ångpanneföreningen's head office at
number 7 Fleminggatan in Stockholm, Sweden. A formal call to the
meeting will be issued via an advertisement placed in a national
Swedish daily newspaper.

The ÅF Group's Annual Report for 2006 will be despatched by post to
shareholders who have indicated their interest. It will also be
available at the ÅF Group's offices from 12 April.

Stockholm, 22 February 2007
AB Ångpanneföreningen (publ)

Jonas Wiström
President and CEO

The full report including tables can be downloaded from the following

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