AB Angpanneforeningen Interim Report January-September 2001.

Business Editors

STOCKHOLM, Sweden--(BUSINESS WIRE)--Oct. 24, 2001

Angpanneforeningen:

-- Profits SEK 60 million. (Corresponding period 2000: SEK 46 million)

-- Operating margin 5.3 (4.9) percent

-- Sales increase by 16 percent to SEK 1,396 (1,200) million

-- Acquisitions within Software, Electronics & Mechanical Engineering

-- Revised profits forecast: Consolidated result for 2001 now forecast to
remain at same level as in 2000

-- Public bid for the AF Group

Demand for the consulting services offered by the AF Group fell during the third quarter of 2001 and capacity utilisation was lower than that for the preceding year. For the period as a whole capacity utilisation was, however, 70 percent (2000: 69 percent).

The effect of the general downturn in the state of the economy, compounded by the mounting sense of insecurity in the world, makes forecasting the future difficult. There has been a slowdown in demand for consulting services within the areas in which the AF Group is active, most noticeably for Software, Electronics & Mechanical Engineering, for whom the plight of the telecom industry has had a markedly negative impact on both capacity utilisation and profits.

The AF Group has, however, signed a framework agreement with Ericsson as a corporate preferred supplier, and in view of the Group's strong standing in the telecom industry, it is anticipated that this reduced demand will be only temporary in nature.

Of the Group's six business areas, all except for Software, Electronics & Mechanical Engineering reported better or substantially better results compared with the corresponding period in 2000. This applied in particular to the business areas Energy, Environment & Process Technology, HVAC & Sanitation Engineering and Inspection & Testing, which together constitute half of the AF Group. Inspection & Testing continued to show improvements throughout the third quarter and so far in 2001 has reported profits which are fully SEK 9 million better than the business area's result last year. The fact that the balance between supply and demand in this area is now more favourable than before has had positive effects on both capacity utilisation and prices. The cooperation with TUV Nord is also continuing to proceed according to plan.

Operations within HVAC & Sanitation Engineering and in those areas of Electrical Engineering & Instrumentation which work with installations in buildings generated very good results, while Electrical Engineering & Instrumentation operations which concentrate on the weaker industrial and energy markets had a lower capacity utilisation.

There was also an improvement in the result for Energy, Environment & Process Technology, with the Group's companies in France, Finland and Great Britain reporting good levels of capacity utilisation and good profits.

During the reporting period certain acquisitions were made with regard to shareholdings in companies outside Sweden that are active within the area of Energy, Environment & Process Technology. At the beginning of the year the Group acquired a 20 percent share in the Finnish consulting company CTS Engineering, with an option to subsequently increase ownership by a further 13 percent. CTS has 250 employees. The Group also increased its interest in the French company Chleq Frote from 49 to 66 percent, thereby conferring subsidiary status on the company and incorporating its results into the consolidated accounts. CTS and Chleq Frote are both consulting companies specialising in the pulp and paper industry. The AF Group's shareholding has risen too in the Danish company Hansen & Henneberg, from 25 to 49 percent. Hansen & Henneberg has around 50 employees and works with Electrical Engineering & Instrumentation.

Operations within Software, Electronics & Mechanical Engineering were hard hit in the third quarter as a result of the economic downturn, especially that affecting the telecom sector. Capacity utilisation for the business area fell sharply and profits did not exceed SEK 1 (12) million. Although this steep decline in the market is expected to continue throughout the first half of 2002, it is nevertheless the ambition of the AF Group to find ways of strengthening the business area's position during this period in order to realise the aim of expansion.

During the reporting period the AF Group acquired the operations of the management consultants Graphium Consult and the IT consulting company Arjano Data, together with the electrical consulting company Elikab. These companies add extra muscle to the AF Group's resources in areas where we work with major IT clients. During the summer the Group also acquired Svensk Trafikkompetens from SL (the Greater Stockholm public transport authority), making AF a major name in traffic planning and, with around sixty specialists, one of Sweden's leading consulting companies in this area. Together the four companies acquired have just under 100 employees.

Group profit after net financial items and proportions of associated companies' profits amounted to SEK 60 million, compared to a figure for the corresponding period in 2000 of SEK 46 million excluding premium refunds from SPP pensions insurance. This gives an operating margin of 5.3 (4.9) percent and a profit margin of 4.3 (3.9) percent. These profits are charged with unrealised losses in the share portfolio of SEK 6.4 million, and have also been influenced by a bonus to AF Group staff calculated at SEK 8.4 (5.6) million. Return on equity was 10.1 (12.9) percent.

Sales amounted to SEK 1,396 (1,200) million, while order stocks were SEK 435 (476) million. The number of employees (calculated as full-time equivalents) during the period was 2,440 (2,198) including those in associated companies, or 2,145 (2,050) excluding those in associated companies. The increase in staff was attributable chiefly to the acquisition of CTS.

Parent company sales totalled SEK 75 (77) million, and the result after net financial items was SEK -11 (1.0) million. The AF Group's net worth, after a 20 percent standard tax deduction on the estimated surplus value of property, was SEK 117 (111) per share. Adjusted equity ratio was 46 (43) percent.

Last year AF Group employees were given the opportunity to subscribe to a convertible bond loan, which may be converted to shares in 2004-2005. More than 700 people made use of this offer. In accordance with the conditions, the conversion rate was re-calculated in June 2001 and revised from SEK 171.00 to SEK 162.70 as the shareholders' dividend for 2000 approved by the Annual General Meeting had exceeded an agreed level.