AF Group Interim Report January-June 2001.Business Editors STOCKHOLM, Sweden--(BUSINESS WIRE)--Aug. 9, 2001 AF Group: -- Profits double in size to SEK 59 million. (Corresponding period 2000: SEK 27 million excluding refunds from SPP pensions insurance) -- Operating margin 6.5 (4.3) percent -- Sales expand by 18 percent to SEK 1,002 (849) million -- Inspection & Testing reports a profit Demand for the consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" offered by the AF Group has remained good throughout the second quarter of 2001 with capacity utilisation running close to 72 percent. During the first six months of 2001 capacity utilisation was 71 (68) percent. The first indications of a general downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the market have been noted in the company's dealings with the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. sector, but, given the AF Group's status as a "preferred supplier" to Ericsson, this slackening demand is expected to be of a temporary character. The framework agreement that the company has signed with Ericsson means that over the next few years the AF Group will be well placed to take further shares of the market. Of the Group's six business areas, all except for Software, Electronics & Mechanical Engineering reported substantial improvements on their margins from the corresponding period in 2000. Inspection & Testing was able to report its first half-year of profits since it was established as a business area. The balance between supply and demand in this area is now more favourable than before and capacity utilisation for the period was 65 (58) percent. The trend in rising profits for Software, Electronics & Mechanical Engineering has stalled stall 1 n. 1. A compartment for one domestic animal in a barn or shed. 2. a. A booth, cubicle, or stand used by a vendor, as at a market. b. as a result of falling demand from the telecom industry, but business areas working in the field of installations have continued to report good operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . The Group's Swedish-based operations serving plant and process industries showed an improvement, and the companies in France, Finland and the UK also reported good results and good levels of capacity utilisation. During the reporting period certain acquisitions were made with regard to shareholdings in companies outside Sweden. At the beginning of the year the Group acquired a 20 percent share in the Finnish consulting company Noun 1. consulting company - a firm of experts providing professional advice to an organization for a fee consulting firm business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a CTS (1) (Clear To Send) The RS-232 signal sent from the receiving station to the transmitting station that indicates it is ready to accept data. Contrast with RTS. (2) (Common Type System) The data typing used in . Engineering, with an option to subsequently increase ownership to 33 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 consulting companies that work mostly with the pulp and paper industry The global pulp and paper industry is dominated by North American (United States, Canada), northern European (Finland, Sweden) and East Asian countries (such as Japan). Australasia and Latin America also have significant pulp and paper industries. . The AF Group's shareholding has risen too in the Danish company Hansen & Henneberg, from 25 to 49 percent. Hansen & Henneberg has around 60 employees and works with installation consulting services in Electrical Engineering electrical engineering: see engineering. electrical engineering Branch of engineering concerned with the practical applications of electricity in all its forms, including those of electronics. & Instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. . Since the end of the reporting period two further acquisitions have been made. The management consultants Graphium Consult and the IT consulting company Arjano Data will add extra strength to the AF Group's resources within the areas of Education & Management and Software, Electronics & Mechanical Engineering respectively. Together these two companies employ around 25 people and have a turnover of approximately SEK SEK In currencies, this is the abbreviation for the Swedish Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 50 million a year. Group profit after net financial items and proportions of associated companies' profits amounted to SEK 59 million, compared to a figure for the corresponding period in 2000 of SEK 27 million excluding premium refunds from SPP (1) (Scalable Parallel Processor) A multiprocessing computer that can be upgraded by adding more CPUs. (2) (Standard Parallel Port) The Centronics parallel port that was used on the first PCs. pensions insurance. This gives an operating margin of 6.5 (4.3) percent and a profit margin of 5.9 (3.1) percent. These profits are charged with unrealised losses in the share portfolio of SEK 2.0 million, and have also been influenced by a bonus to AF Group staff calculated at SEK 7 (1) million. Return on equity was 14.9 (10.1) percent. When comparing the quarterly results, it is important to note that the second quarter was four working days shorter than the first. Sales amounted to SEK 1,002 (849) million, with order stock remaining at a level more or less identical to that in the corresponding period last year, namely SEK 464 (468) million. The number of employees (calculated as full-time equivalents Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or a student's enrollment at an educational institution. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. ) during the period was 2,433 (2,215) including those in associated companies associated company associate n → Partnerfirma f associated company n → società collegata , or 2,157 (2,069) excluding those in associated companies. The increase in staff was attributable chiefly to the CTS acquisition. Parent company sales totalled SEK 52 (52) million, and the result after net financial items was SEK -6.9 (-0.6) million. The AF Group's net worth, after a 20 percent standard tax deduction Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. on the estimated surplus value of property was SEK 117 (109) per share. Adjusted equity ratio was 45 (43) percent. Last year AF Group employees were given the opportunity to subscribe to Verb 1. subscribe to - receive or obtain regularly; "We take the Times every day" subscribe, take buy, purchase - obtain by purchase; acquire by means of a financial transaction; "The family purchased a new car"; "The conglomerate acquired a new company"; a convertible bond loan, which may be converted to shares in 2004-2005. More than 700 people made use of this offer. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the conditions of this offer, 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 exceeded an agreed level.
Profit and sales by business area
Amounts in millions of SEK
Business area Profit Sales Profit Sales Profit Sales
April-June April-June Jan-June Jan-June Full Full
year year
2001 2000 2001 2000 2001 2000 2001 2000 2000 2000
Electrical 6 9 145 129 22 16 300 258 38 522
Engineering &
Instrumentation
Energy, 7 -1 165 102 10 -6 271 202 1 442
Environment &
Process
Technology
HVAC & 8 4 61 46 16 8 120 95 17 191
Sanitation Eng.
Software, 7 12 123 113 22 24 256 229 50 462
Electronics &
Mechanical
Engineering
Inspection & 2 -2 32 30 1 -7 59 58 -8 115
Testing
Education & -1 0 33 35 0 -2 65 67 0 136
Management
Total 28 21 560 454 70 33 1,069 908 98 1,868
The profits generated by the Group's consulting businesses for the first six months of 2001 were more than double those in the corresponding period for 2000, totalling SEK 70 (33) million. Capacity utilisation level rose to 73 (69) percent and sales increased by 18 percent to SEK 1,069 (908) million. Five percentage points of this rise were attributable to the incorporation of Chleq Frote into the Group's consolidated accounts. If the performance of the French company is excluded, sales rose by 13 percent. Real Estate and Finance Administration The Group's properties, 95 percent of which are offices, are used primarily by the Group's consulting businesses. The vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. ratio at the end of the reporting period was 5 (5) percent. The Group currently owns 33,500 sq.m. of real estate. In an evaluation carried out by Fastighetsforum at the end of 2000 the market value of the Group's properties was assessed at SEK 469 (394) million. Book value was SEK 272 million. Gross investments in machinery and equipment amounted to SEK 27 (23) million, excluding investments made via corporate acquisitions. The Group's liquid assets Cash, or property immediately convertible to cash, such as Securities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable. totalled SEK 158 (92) million, with SEK 27 million of this figure being invested in Swedish and foreign shares. Interest-bearing liabilities and allocations totalled SEK 369 (357) million, bringing the Group's net borrowing to SEK 211 (265) million. The negative cash flow for the period of SEK -142 (+20) million is attributable partly to the payment of tax on the large premium refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies from Alecta (formerly SPP), which was entered in the Group's accounts for last year, and partly to the SEK 75 million that was paid out as a shareholders' dividend during the second quarter. Major change in ownership Early in July 2001 Sweco AB acquired 751,700 B shares in AB Angpanneforeningen from Traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. AB. This corresponds to 13 percent of the capital and 8 percent of the shares. Prior to this SWECO owned no shares in AB Angpanneforeningen. The acquisition was agreed at a price of SEK 180 per share. Accounting and valuation principles The principles and calculation methods used in this interim report remain unchanged from those used in the AF Group's most recent annual report. Outlook for 2001 as a whole Market conditions for all the AF Group's business areas with the exception of Software, Electronics & Mechanical Engineering are anticipated to be somewhat more favourable throughout the remainder of 2001 than they were in 2000. Notwithstanding a degree of uncertainty with regard both to the downturn in the telecom sector as well as to the state of the economy as a whole and the effect this may have on investment, we remain confident that the consolidated profit for the AF Group in 2001 will show a marked improvement on the result for 2000 excluding SPP refunds. Stockholm, 9 August 2001 AB ANGPANNEFORENINGEN (publ) Gunnar Gronkvist Managing Director and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. |
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