AFRY

Earnings Release • Jul 18, 2023

AFRY Interim report January–June 2023

Strong organic growth in a mixed market

Second quarter 2023

• Net sales increased by 15.0 percent to SEK 6,869 million (5,975)
• Organic growth adjusted for calendar effects was 10.8 percent (7.5)
• –EBITA, excl. items affecting comparability, was SEK 421 million (451)
• EBITA margin, excl. items affecting comparability, was 6.1 percent (7.6)
• EBITA totalled SEK 398 million (432)
• EBITA margin was 5.8 percent (7.2)
• EBIT (operating profit) amounted to SEK 363 million (335)
• Basic earnings per share: SEK 1.77 (1.53)

Net sales, SEK MILLION EBITA1, SEK MILLION

January–June 2023

• Net sales increased by 18.4 percent to SEK 13,784 million (11,645)
• Organic growth adjusted for calendar effects was 13.2 percent (5.4)
• –EBITA, excl. items affecting comparability was SEK 1,110 million (924)
• EBITA margin, excl. items affecting comparability, was 8.0 percent (7.9)
• EBITA totalled SEK 1,087 million (791)
• EBITA margin was 7.9 percent (6.8)
• EBIT (operating profit) amounted to SEK 1,008 million (652)
• Basic earnings per share: SEK 5.62 (3.50)

1) Excluding items affecting comparability.

Comments from the CEO

In the second quarter we had a continued strong demand within our industry and energy segments and reported a strong organic growth as well as a high order stock. The result was impacted by a lower utilisation rate and negative calendar effect.

The market is mixed with a strong underlying demand in most industry and energy segments, where AFRY has a leading position in decarbonisation, energy and biobased materials. However, the real estate market clearly slowed down in the second quarter, while public sector investments in infrastructure and transport are at a stable level.

Net sales came in at SEK 6,869 million, an increase of 15 percent compared with the same period last year. Organic growth was 11 percent adjusted for calendar effects. All divisions reported positive organic growth, which was particularly strong in Process Industries. The order stock continued to strengthen in the quarter and amounted to SEK 21 billion.

EBITA, excluding items affecting comparability, decreased by 7 percent during the quarter and amounted to SEK 421 million (451), which corresponded to a EBITA margin of 6.1 percent (7.6). The result was affected by a lower utilisation rate and negative calendar effect.

Process Industries, Energy and Management Consulting reported continued strong results. Industrial & Digital Solutions had a stable development in the quarter, while AFRY X had a weak development.

The result in Infrastructure was negatively impacted by a lower utilisation rate as a result of a clearly weaker real estate market in Sweden and Finland in particular. During the quarter, we have taken measures, such as staff reductions, to address the declining demand. We will take further actions and at the same time, the long-term work to strengthen profitability and the position in the division continues.

The work to re-shape our office premises continues, which during the quarter resulted in one-off costs of SEK 23 million.

Operating cash flow totalled SEK 504 million, which is a clear improvement compared to last year.

During the quarter, we communicated the acquisition of KSH, a Canadian engineering company within the process industry with annual sales of around SEK 180 million and 130 employees. Through the acquisition, we create a strong platform in North America and strengthen our offering within pulp and paper, mining and metals, as well as chemicals.

Finally, I would like to thank our clients, partners and fantastic colleagues for a great collaboration and wish everyone a nice summer.

Jonas Gustavsson President and CEO

AFRY in short

AFRY provides engineering, design, digital and advisory services to accelerate the transition towards a sustainable society. We are 19,000 devoted experts in industry, energy and infrastructure sectors, creating impact for generations to come. AFRY has Nordic roots with a global reach, net sales of SEK 24 billion and is listed on Nasdaq Stockholm.

Business strategy

Strengthen position

Pioneers of technology and leading partner in the sustainability transition

Be the employer of choice

Scale globally in decarbonisation, and profitability in infrastructure

Increase client value

energy and biobased materials

Grow Nordic industrial and digital portfolio, expand internationally in niches

3

Drive operational excellence

Who we are

Our vision

Making future

Our mission

We accelerate the transition towards a sustainable society

Our values

Brave Devoted Team players

Our people

Inclusive and diverse teams with deep sector knowledge

Interim report January–June 2023

A clear vision

AFRY strives for profitable growth to generate long-term value for our shareholders and the society. The financial targets focus on growth, profitability and a strong financial position. The sustainability targets are key elements of our strategy. The targets focus on the development of sustainable solutions, responsible and ethical operations and our people.

Financial targets

• Annual growth of 10 percent. The target includes add-on acquisitions
• EBITA margin of 10 percent (excluding items affecting comparability)
• Net debt in relation to EBITDA of 2.5
• Dividend policy of approximately 50 percent of profit after tax excluding capital gains

Sustainability targets

• Increase taxonomy-eligible turnover
• 95 percent completion rate for sustainability training
• Halve CO₂ emissions by 2030 and achieve net zero emissions by 2040
• 95 percent completion rate for training in AFRY's Code of Conduct
• 40 percent female leaders by 2030
• Increase employee engagement

Net sales, billion SEK

24

Taxonomy-eligible net sales

Number of employees

19 000

CO₂ emissions reduction since

base year 2019

-31%

Countries with projects

100

Share of female leaders

Numbers refer to full-year 2022

New assignments

Fortum

Finnish-based energy company Fortum and AFRY have agreed on an engineering assignment, when Fortum explores prerequisites for fossil-free hydrogen production at steel company SSAB's site in Raahe, Finland. Fossil-free hydrogen plays a significant role as industries strive to reduce their carbon dioxide emissions and also helps balance the fluctuations in energy production and consumption. AFRY is responsible for the basic engineering of the plant.

Stena Recycling

AFRY and Stena Recycling develop large-scale recycling plant for electric car batteries in Halmstad, Sweden. The recycling plant's establishment is a significant step towards addressing the demand for a sustainable and environmentally friendly recycling process for used batteries, which is crucial for the growing use of electric cars. The new recycling plant has an initial yearly recycling capacity of 10,000 tons.

Swedish Transport Administration

AFRY is commissioned by the Swedish Transport Administration for the Södertörn Crosslink. The project aims to contribute to increased safety and smoother transportation options on one of the most accident-prone stretches in Stockholm County. AFRY is responsible for the project from Gladö Kvarn interchange to Lissma. The Södertörn Crosslink will make it easier for road users, reduce the risk of accidents, and at the same time protect the surrounding nature.

Financial summary

Second quarter Net sales

Net sales for the quarter amounted to SEK 6,869 million (5,975), an increase of 15.0 percent (15.4). Organic growth was 9.4 percent (6.3) and 10.8 percent (7.5) when adjusted for calendar effects.

EBITA

Adjusted for items affecting comparability, EBITA amounted to SEK 421 million (451). The corresponding EBITA margin was 6.1 percent (7.6). Items affecting comparability amounted to SEK -23 million (-19), which refers to costs for early termination of lease office premises. The comparability period relates to adaption and configuration of cloud-based IT systems. For more information, see alternative performance measures for EBITA on page 27.

EBITA and the EBITA margin were SEK 398 million (432) and 5.8 percent (7.2) respectively. The effects of IFRS 16 Leases were SEK -3 million (-5) on EBITA and SEK 159 million (132) on EBITDA.

Capacity utilisation

Capacity utilisation was 74.2 percent (75.8) for the quarter.

Operating profit

EBIT totalled SEK 363 million (335). The difference between EBIT and EBITA consists of acquisitionrelated non-cash items: amortisation of acquisitionrelated assets amounting to SEK -45 million (-42), change in estimates of future contingent considerations of SEK 9 million (5), divestment of operations in Russia of SEK 1 million (0) and capital loss mainly from divestment of a property of SEK 0 million (-60).

Financial items

Profit after financial items was SEK 287 million (237) and the profit after tax for the period was SEK 201 million (173). Net financial items for the quarter totalled SEK -76 million (-98).

In addition to increased interest expenses, net financial items were affected by discount rates related to leasing in accordance with IFRS 16 Leases of SEK -17 million (-12) as well as discounting of contingent considerations of SEK -2 million (4), which did not impact cash flow.

Income tax

The tax expense amounted to SEK -86 million (-63), corresponding to a tax rate of 30.0 percent (26.8). The tax rate for the quarter was affected by the divestment of operations in Russia and tax attributable to the previous year.

Cash flow and financial position Consolidated net debt including IFRS 16 Leases amounted to SEK 7,839 million (6,923).

Consolidated net debt excluding IFRS 16 Leases amounted to SEK 5,708 million (4,792) at the end of the quarter, and SEK 4,941 million (4,217) at the start of the quarter. Cash flow from operating activities reduced net debt by SEK 352 million (170) in the second quarter. The Group paid a dividend during the second quarter that increased net debt by SEK 623 million. During the quarter, the Group divested one of its subsidiaries and made one acquisition, which together increased net debt by SEK 449 million.

	Q2 2023	Q2 2022	Jan–Jun 2023	Jan–Jun 2022	Full year 2022
Net sales
Net sales, SEK million	6,869	5,975	13,784	11,645	23,552
Total growth, %	15.0	15.4	18.4	14.4	17.1
(-) Acquired, %	1.0	5.2	0.9	5.3	4.5
(-) Currency effects, %	4.5	3.9	4.2	3.7	4.9
Organic, %	9.4	6.3	13.3	5.4	7.8
(-) Calendar effect, %	-1.4	-1.2	0.0	0.0	-0.3
Organic growth adjusted for calendar effect, %	10.8	7.5	13.2	5.4	8.1
Order stock	–	–	20,590	18,052	19,440
Profit/loss
EBITA excl. items affecting comparability, SEK million	421	451	1,110	924	1,886
EBITA margin excl. items affecting comparability, %	6.1	7.6	8.0	7.9	8.0
EBITA, SEK million	398	432	1,087	791	1,729
EBITA margin, %	5.8	7.2	7.9	6.8	7.3
Operating profit/loss (EBIT), SEK million	363	335	1,008	652	1,444
Profit/loss after financial items, SEK million	287	237	855	526	1,220
Profit/loss after tax, SEK million	201	173	636	396	974
Key ratios
Basic earnings per share, SEK	1.77	1.53	5.62	3.50	8.60
Diluted earnings per share, SEK	1.771	1.531	5.621	3.501	8.601
Cash flow from operating activities, SEK million	504	290	558	553	1,042
Net debt, SEK million 2	–	–	5,708	4,792	4,646
Net debt/equity ratio, percent 2	–	–	45.5	42.3	38.2
Net debt/EBITDA, rolling 12 months, times 3	–	–	2.6	2.7	2.5
Number of employees	–	–	19,187	18,201	18,687
Capacity utilisation, %	74.2	75.8	73.8	75.1	74.7

1) Issued convertibles did not lead to any dilution during the period.

2) Excluding effects of IFRS 16 Leases.

3) Net debt/EBITDA excluding the effect of IFRS 16 and items affecting comparability over a rolling 12 months was 2.6 (2.5).

6

The Group raised a five-year bilateral bank loan during the quarter of SEK 800 million and one threeyear bond of SEK 500 million. The Group repaid a previous bond loan of SEK 171 million that fell due in April and a bond of SEK 500 million that fell due in June.

The Group issued commercial papers at the end of the quarter to the value of SEK 1,078 million as part of its commercial paper programme.

Consolidated cash and cash equivalents totalled SEK 1,079 million (1,187) at the end of the period and unused credit facilities amounted to SEK 3,059 million (2,654).

Significant events during the quarter

Changes to Group Executive Management Per Kristian Egseth has left his position as Head of Division for AFRY X and Henrik Tegnér, Head of Strategy and Sustainability, is now also appointed Deputy Head of the Division.

Acquisitions

KSH Solutions Inc,. Canada, with annual net sales of around SEK 180 million and 130 employees.

Divestments

AFRY has concluded the divestment of its Russian subsidiary to the local management team. The business in Russia includes around 125 employees and accounts for less than 1 percent of AFRY's total net sales. The Group's realised result amounted to SEK -64 million, of which SEK -66 million affected net profit in 2022 as a result of the write-down for the operation in Russia. The divestment had an impact on the Group's cash flow of SEK -107 million.

January–June Net sales

Net sales for the period amounted to SEK 13,784 million (11,645), an increase of 18.4 percent (14.4). Organic growth was 13.3 percent (5.4) and 13.2 percent (5.4) when adjusted for calendar effects.

Order stock for the period amounted to SEK 20,590 million (18,052), an increase of 14.1 percent compared to previous year.

EBITA

Adjusted for items affecting comparability, EBITA amounted to SEK 1,110 million (924). The corresponding EBITA margin was 8.0 percent (7.9). Items affecting comparability amounted to SEK -23 million (-133), which refers to costs for early termination of lease office premises. The comparability period relates to costs for adaption and configuration of cloud- -based IT systems and restructuring costs for the Infrastructure Division and Group functions. For more information, see alternative performance measures for EBITA on page 28.

EBITA and the EBITA margin were SEK 1,087 million (791) and 7.9 percent (6.8) respectively. The effects of IFRS 16 Leases were SEK 0 million (-9) on EBITA and SEK 322 million (261) on EBITDA.

Capacity utilisation

Capacity utilisation was 73.8 percent (75.1) for the period.

Operating profit

EBIT totalled SEK 1,008 million (652). The difference between EBIT and EBITA consists of

acquisition-related non-cash items: amortisation of acquisition-related assets amounting to SEK -88 million (-84), change in estimates of future contingent considerations of SEK 9 million (5), divestment of operations in Russia of SEK 1 million (0) and capital loss mainly from divestment of a property of SEK 0 million (-60).

Financial items

Profit after financial items was SEK 855 million (526) and the profit after tax for the period was SEK 636 million (396). Net financial items for the period totalled SEK -153 million (-125).

In addition to increased interest expenses, net financial items were impacted by discount rates related to leases in accordance with IFRS 16 Leases, amounting to SEK -34 million (-22) and discounting of contingent considerations of SEK -6 million (2), which did not impact cash flow.

Income tax

The tax expense amounted to SEK -219 million (-130), corresponding to a tax rate of 25.6 percent (24.7). The tax rate during the period was affected by the divestment of operations in Russia and tax attributable to the previous year.

Parent company

Parent company's operating income totalled SEK 796 million (693) and relates primarily to internal services within the Group. Profit after net financial items was SEK 74 million (173). Cash and cash equivalents amounted to SEK 281 million (420). The tax rate for the period was affected by non-taxable income in the form of dividends from subsidiaries.

Gross investments in intangible assets and property, plant and equipment totalled SEK 32 million (13).

Number of employees

The average number of FTEs was 18,212 (17,041). The total number of employees at the end of the period was 19,187 (18,201).

Calendar effects

The number of normal working hours during 2023, based on a 12-months' sales-weighted business mix, is broken down as follows.

	2023	2022	Difference
Q1	511	504	7
Q2	476	482	-7
Q3	518	526	-9
Q4	498	502	-4
Full year	2,002	2,014	-12

Shares

The AFRY share price was SEK 159.20 (140.40) at the end of the reporting period.

Class A shares	4,290,336
B shares	108,961,405
Total number of shares	113,251,741
of which own Class B shares	–
Number of votes	151,864,765

Significant events after the end of the reporting period

No significant events after the end of the reporting period were identified.

AFRY operates in six divisions

Infrastructure

The division offers engineering and consulting services for buildings and infrastructure, for example in the areas of road and rail as well as water and environment. The division also operates in the fields of architecture and design. The division operates in the Nordics and Central Europe.

37% of net sales, 32% of EBITA

Process Industries

The division offers engineering and consulting services, from earlystage studies to project implementation, in the areas of digitalisation, safety and sustainability solutions. The division operates in pulp and paper, chemicals, biorefining, mines and metals, as well as growth sectors such as batteries, hydrogen, textiles and plastics. The division operates globally.

19% of net sales, 24% of EBITA

AFRY X

The division primarily offers consulting services in digitalisation. The division helps organisations undergoing digital transformation to reshape their businesses for the digital age. Key sectors are industry, energy and the public sector. The division operates predominantly in the Nordic region.

5% of net sales, 1% of EBITA

Industrial & Digital Solutions The division offers engineering and consulting services in the areas of product development, production systems & equipment, IT and defence. The division operates in all industry sectors with an emphasis on vehicles and food & pharma, and operates primarily in the Nordics.

22% of net sales, 21% of EBITA

Energy

The division offers engineering and consulting services in energy production from various energy sources such as hydro, gas, bio & waste fuels, nuclear power and renewable energy sources as well as services in transmission & distribution and energy storage. The division delivers solutions globally and has a leading position in hydropower.

12% of net sales, 15% of EBITA

The division works to meet challenges and opportunities in the energy, bioindustry, infrastructure, industry and mobility sectors through strategic consulting, forward-looking market analysis, operational and digital transformation as well as M&A and transaction services. The division operates globally.

5% of net sales, 7% of EBITA

Numbers refer to full-year 2022

Net sales

Net sales during the second quarter amounted to SEK 2,565 million (2,268), an increase of 13.1 percent. Adjusted for calendar effects, organic growth was 9.5 percent. The growth was driven by a general good order intake and a solid market in Central Europe and Denmark. The order stock remains at a stable level.

EBITA and EBITA margin

EBITA amounted to SEK 103 million (172), which corresponds to a margin of 4.0 percent (7.6). The margin was negatively impacted by a lower utilisation rate due to a clear slowdown in the real estate market in Sweden and Finland in particular, restructuring costs to meet the weaker market and a negative calendar effect.

Market development

Public investments in infrastructure and the transition towards sustainable transport are at a stable level in all markets. The real estate market, on the other hand, shows a continued downward trend, which affected the division's employment within the construction and real estate offering in Sweden and Finland. During the quarter, the division has taken measures to mitigate the effects of the slowdown, including staff reductions and that we continue to shift towards industrial and energy segments that show a stable investment level. Underinvestment, stricter environmental regulations and climate change continue to drive the need for large investments in water and sewage infrastructure.

Net sales and EBITA, MSEK Key ratios

	Q2 2023	Q2 2022	Jan-Jun 2023	Jan-Jun 2022	Full year 2022
Net sales, SEK million	2,565	2,268	5,146	4,500	8,899
EBITA, SEK million	103	172	356	354	666
EBITA margin, %	4.0	7.6	6.9	7.9	7.5
Order stock	–	–	8,848	7,523	8,133
Average full-time equivalents (FTEs)	6,853	6,414	6,773	6,411	6,443
Organic growth
Total growth, %	13.1	11.4	14.4	12.5	15.9
(-) Acquired, %	0.9	7.1	0.6	7.1	6.6
(-) Currency effects, %	4.2	2.7	3.5	3.1	3.9
Organic, %	8.0	1.5	10.2	2.3	5.4
(-) Calendar effect, %	-1.5	-1.1	-0.1	0.3	-0.3
Organic growth adjusted for calendar effects, %	9.5	2.7	10.3	2.0	5.6

The historical figures above have been adjusted to account for organisational changes.

Division Industrial & Digital Solutions

Net sales

Net sales during the second quarter amounted to SEK 1,504 million (1,375), an increase of 9.4 percent. Adjusted for calendar effects, organic growth was 9.8 percent. The growth was driven by continued good demand in most segments, especially in manufacturing and automotive. The order stock is at a continued stable level.

EBITA and EBITA margin

EBITA amounted to SEK 95 million (100) and the corresponding margin was 6.3 percent (7.3). The margin was negatively impacted by a lower utilisation rate and negative calendar effect, while higher average fees impacted the margin positively.

Market development

Demand for design and development of products, services and production capacity was stable during the quarter. Clients have displayed continued high ambitions and needs driven by the transition towards a sustainable society, while there is a continued caution linked to the uncertainty in the market. During the quarter, the defence sector showed a strong and increasing level of activity, and the manufacturing industry showed continued high demand. Within the automotive industry, telecom and life science, the level of activity remain on a stable level.

	Q2 2023	Q2 2022	Jan-Jun 2023	Jan-Jun 2022	Full year 2022
Net sales, SEK million	1,504	1,375	3,071	2,731	5,454
EBITA, SEK million	95	100	254	221	444
EBITA margin, %	6.3	7.3	8.3	8.1	8.1
Order stock	–	–	2,547	2,407	2,572
Average full-time equi valents (FTEs)	3,337	3,206	3,329	3,173	3,230
Organic growth
Total growth, %	9.4	10.9	12.5	12.5	11.6
(-) Acquired, %	0.0	2.1	0.0	2.3	1.7
(-) Currency effects, %	1.1	1.0	1.0	0.7	1.1
Organic, %	8.3	7.8	11.4	9.5	8.8
(-) Calendar effect, %	-1.4	-1.6	0.0	0.0	0.0
Organic growth adjusted for calendar effects, %	9.8	9.4	11.4	9.5	8.8

10

The historical figures above have been adjusted to account for organisational changes.

Net sales

Net sales in the second quarter amounted to SEK 1 457 million (1 157), an increase by 25.9 percent. Adjusted for calendar effects, the adjusted organic growth was 20.5 percent. The growth was driven by good performance especially in Finland, Sweden, North America, and Central Europe. The order stock remains on a high level.

EBITA and EBITA margin

EBITA amounted to SEK 168 million (113) and the corresponding margin was 11.5 percent (9.8). The margin was positively impacted by good project performance, a high utilisation rate and good cost control.

Market development

Market activities continued to remain on a high level in the quarter. There is an increased uncertainty in pulp & paper CAPEX investments driven by global pulp price decrease. Several new CAPEX projects started in chemicals, biorefining and mining & metals sectors as well as in new growth sectors like hydrogen, battery sector, regenerated textile fibers and plastics recycling. Efficiency improvement project demand in pulp & paper sector continues strong.

Net sales and EBITA, MSEK Key ratios

	Q2 2023	Q2 2022	Jan-Jun 2023	Jan-Jun 2022	Full year 2022
Net sales, SEK million	1,457	1,157	2,858	2,217	4,617
EBITA, SEK million	168	113	367	236	486
EBITA margin, %	11.5	9.8	12.8	10.7	10.5
Order stock	–	–	3,587	3,365	3,428
Average full-time equi valents (FTEs)	4,383	4,072	4,389	3,970	4,116
Organic growth
Total growth, %	25.9	17.3	28.9	16.9	21.0
(-) Acquired, %	0.5	1.6	0.5	2.1	1.1
(-) Currency effects, %	5.7	7.6	6.5	6.3	8.6
Organic, %	19.7	8.1	22.0	8.6	11.3
(-) Calendar effect, %	-0.8	-1.7	0.7	-0.6	-0.5
Organic growth adjusted for calendar effects, %	20.5	9.8	21.3	9.2	11.8

Division Energy

Net sales

Net sales in the second quarter amounted to SEK 884 million (771), an increase by 14.6 percent. Adjusted for calendar effects, the organic growth was 4.7 percent. Three segments out of four reported positive organic growth. The order stock is at a continued high level.

EBITA and EBITA margin

EBITA amounted to SEK 80 million (71) and the corresponding margin was 9.0 percent (9.2). The margin was positively impacted by good project execution and a strong performance in nuclear.

Market development

The general outlook for the energy sector is strong in most areas and green capex industry investment drive the clean energy transition. There is a strong focus on solar and wind projects, both on-shore and off-shore, on hydro and nuclear rehabilitation/life extension investments, waste-to-energy projects, pump storage projects as well as green ammonia/ hydrogen. There is also a strong market for electrical power grids to connect new energy production, but also to strengthen and modernise the existing grids.

Key ratios	Q2 2023	Q2 2022	Jan-Jun 2023	Jan-Jun 2022	Full year 2022
Net sales, SEK million	884	771	1,751	1,466	3,032
EBITA, SEK million	80	71	170	142	294
EBITA margin, %	9.0	9.2	9.7	9.7	9.7
Order stock	–	–	4,947	4,068	4,798
Average full-time equi valents (FTEs)	1,907	1,738	1,878	1,706	1,754
Organic growth
Total growth, %	14.6	14.4	19.4	6.2	13.0
(-) Acquired, %	4.3	1.5	3.7	1.4	2.1
(-) Currency effects, %	7.7	5.4	7.2	4.7	6.6
Organic, %	2.7	7.5	8.6	0.1	4.3
(-) Calendar effect, %	-2.0	0.7	-0.8	0.8	-0.6
Organic growth adjusted for calendar effects, %	4.7	6.7	9.4	-0.7	4.9

Division AFRY X

Net sales

Net sales in the second quarter amounted to SEK 324 million (325), a decrease by -0.3 percent. Adjusted for calendar effects, the organic growth was 1.6 percent. The growth was mainly supported by price increases and an increased sale of sub-consultants.

EBITA and EBITA margin

EBITA amounted to SEK 2 million (8) and the corresponding margin was 0.5 percent (2.4). The result was negatively impacted by lower utilisation due to lost assignments during the quarter, and a negative calendar effect.

Market development

The demand for digital services is at a stable level overall, however we see a more challenging market in the Stockholm region and longer decision-making processes. The expertise with the highest demand is senior competence in cyber security, business intelligence and consulting. The division see good demand in the public sector as well as a high demand in industry segments and defence, where AFRY X is well positioned.

During the quarter there has been a change in management as Henrik Tegnér, Head of Strategy & Sustainability, is now also acting Head of Division AFRY X.

Net sales and EBITA, MSEK

Key ratios	Q2 2023	Q2 2022	Jan-Jun 2023	Jan-Jun 2022	Full year 2022
Net sales, SEK million	324	325	664	629	1,222
EBITA, SEK million	2	8	27	9	13
EBITA margin, %	0.5	2.4	4.1	1.5	1.1
Orders tock	–	–	236	326	204
Average full-time equi valents (FTEs)	678	770	684	760	745
Organic growth
Total growth, %	-0.3	29.7	5.7	32.8	24.6
(-) Acquired, %	0.0	29.1	1.2	29.9	18.3
(-) Currency effects, %	-0.1	0.4	-0.1	0.2	1.5
Organic, %	-0.2	0.2	4.5	2.6	4.9
(-) Calendar effect, %	-1.8	-1.7	0.2	-0.2	0.7
Organic growth adjusted for calendar effects, %	1.6	1.9	4.3	2.8	4.2

The historical figures above have been adjusted to account for organisational changes.

Division Management Consulting

Net sales

Net sales in the second quarter amounted to SEK 366 million (307), an increase by 19,1 percent. Adjusted for calendar effects the organic growth was 10.0 percent. The growth reflects the continued strong market for consulting services along the energy and sustainability transitions.

EBITA and EBITA margin

Adjusted EBITA amounted to SEK 48 million (49) and the corresponding margin was 13,1 percent (15,9). The continued high margin was a result of strong demand for the division's consulting services.

Market development

The balance between ensuring security of supply in the short-term and ongoing decarbonisation is a key area of discussion across the global economy. As a result, companies are adapting their strategies and seeking our advisory services. The demand for consulting services along the energy and sustainability transitions remains strong. The shift towards sustainable practices is continuously increasing need for bio-based alternatives and circular solutions and is in turn driving demand for consulting services. At the same time, companies in the traditional bioindustry sectors of pulp and paper are showing slower decision-making processes. The recruitment market remains tight.

Key ratios	Q2 2023	Q2 2022	Jan-Jun 2023	Jan-Jun 2022	Full year 2022
Net sales, SEK million	366	307	709	570	1,195
EBITA, SEK million	48	49	93	83	165
EBITA margin, %	13.1	15.9	13.1	14.6	13.8
Orders tock	–	–	424	363	304
Average full-time equi valents (FTEs)	668	550	648	531	560
Organic growth
Total growth, %	19.1	29.2	24.4	23.7	22.8
(-) Acquired, %	0.0	0.0	0.0	0.0	0.0
(-) Currency effects, %	11.0	8.2	9.8	8.0	9.5
Organic, %	8.1	21.0	14.6	15.7	13.3
(-) Calendar effect, %	-2.0	1.3	-0.3	0.4	-0.2
Organic growth adjusted for calendar effects, %	10.0	19.7	14.9	15.2	13.6

14

The historical figures above have been adjusted to account for organisational changes.

Financial statements

SEK million	Q2 2023	Q2 2022	Jan–Jun 2023	Jan–Jun 2022	Full year 2022	July 2022– Jun 2023
Net sales	6,869	5,975	13,784	11,645	23,552	25,692
Personnel costs	-4,299	-3,733	-8,326	-7,345	-14,428	-15,409
Purchases of services and materials	-1,394	-1,185	-2,801	-2,300	-4,897	-5,398
Other costs	-580	-467	-1,182	-890	-1,903	-2,195
Other income	-1	10	–	15	98	83
Profit/loss attributable to participations in associates	–	2	–	3	8	5
EBITDA	594	602	1,476	1,128	2,430	2,778
Depreciation/amortisation and impairment of non-current assets1	-197	-170	-389	-337	-702	-753
EBITA	398	432	1,087	791	1,729	2,025
Acquisition-related items2	-35	-97	-79	-139	-285	-225
Operating profit/loss (EBIT)	363	335	1,008	652	1,444	1,800
Financial items	-76	-98	-153	-125	-224	-252
Profit/loss from financial items	287	237	855	526	1,220	1,549
Tax	-86	-63	-219	-130	-246	-335
Profit/loss for the period	201	173	636	396	974	1,214
Attributable to:
Shareholders of the parent company	201	173	636	396	974	1,214
Non-controlling interest	0	0	0	0	0	0
Profit/loss for the period	201	173	636	396	974	1,214
Basic earnings per share, SEK	1.77	1.53	5.62	3.50	8.60
Diluted earnings per share, SEK	1.773	1.533	5.623	3.503	8.603
Number of shares outstanding	113,251,741	113,251,741	113,251,741	113,251,741	113,251,741
Average number of basic shares outstanding	113,251,741	113,251,741	113,251,741	113,243,954	113,247,847
Average number of diluted shares outstanding	113,251,741	113,251,7413	113,251,741	113,243,9543	113,247,8473

Condensed consolidated income statement Statement of consolidated comprehensive income

SEK million	Q2 2023	Q2 2022	Jan–Jun 2023	Jan–Jun 2022	Full year 2022
Profit/loss for the period	201	173	636	396	974
Items which have or will be classified to profit/loss for the period
Change in translation reserve	368	285	371	397	624
Change in hedging reserve	8	68	-8	161	202
Tax	0	-6	1	-13	-16
Items which will not be classified to profit/loss for the period
Revaluation of defined-benefit pension plans	-5	1	-5	0	-11
Tax	2	0	1	0	27
Other comprehensive income	373	348	361	544	826
Comprehensive income for the period	573	521	997	941	1,800
Attributable to:
Shareholders of the parent company	573	521	998	941	1,800
Non-controlling interest	0	0	0	0	0
Total	573	521	997	941	1,800

1) Depreciation/amortisation and impairment of non-current assets refers to non-current assets excluding acquisition-related intangible assets.

2) Acquisition-related items are defined as depreciation/amortisation and impairment of goodwill and acquisition-related intangible assets, revaluation of contingent considerations and gains/losses on divestment of companies and operations. For more details, see Note 5, Note 6 and alternative performance measures for EBITA on page 27.

3) Issued convertibles did not result in dilution during the period.

Condensed consolidated balance sheet

Condensed statement of change in consolidated equity

SEK MILLION	30 Jun 2023	30 Jun 2022	31 Dec 2022
ASSETS
Non-current assets
Intangible assets	16,391	15,221	15,590
Property, plant and equipment	387	338	355
Other non-current assets	2,176	2,221	2,272
Total non-current assets	18,954	17,780	18,217
Current assets
Current receivables	9,480	7,950	8,690
Cash and cash equivalents	1,079	1,187	1,088
Total current assets	10,559	9,136	9,778
Total assets	29,513	26,917	27,996
EQUITY AND LIABILITIES
Equity
Attributable to shareholders of the parent company	12,550	11,317	12,176
Attributable to non-controlling interest	2	1	2
Total equity	12,552	11,318	12,178
Non-current liabilities
Provisions	613	668	657
Non-current liabilities	5,964	6,350	6,139
Total non-current liabilities	6,577	7,017	6,797
Current liabilities
Provisions	48	85	45
Current liabilities	10,334	8,495	8,975
Total current liabilities	10,382	8,581	9,021
Total equity and liabilities	29,513	26,917	27,996

SEK MILLION	30 Jun 2023	30 Jun 2022	31 Dec 2022
Equity at start of period	12,178	10,993	10,993
Comprehensive income for the period	997	941	1,800
Dividends paid	-623	-623	-623
Conversion of convertible bonds into shares	–	8	8
Equity at end of period	12,552	11,318	12,178

Condensed statement of consolidated cash flows Change in consolidated net debt (excluding IFRS 16)

SEK MILLION	Q2 2023	Q2 2022	Jan–Jun 2023	Jan–Jun 2022	Full year 2022
Profit/loss after financial items	287	237	855	526	1,220
Adjustment for non-cash items, etc.	364	392	579	743	1,005
Income tax paid	-136	-79	-257	-221	-385
Cash flow from operating activities before changes in working capital	514	550	1,177	1,049	1,840
Cash flow from change in working capital	-11	-260	-619	-495	-797
Cash flow from operating activities	504	290	558	553	1,042
Cash flow from investing activities	-381	-28	-549	-748	-873
Cash flow from financing activities	-112	124	89	-588	-1,012
Cash flow for the period	11	386	98	-782	-843
Opening cash and cash equivalents	1,162	902	1,088	2,112	2,112
Exchange difference in cash and cash equivalents	-94	-101	-107	-143	-180
Closing cash and cash equivalents	1,079	1,187	1,079	1,187	1,088

SEK MILLION	Q2 2023	Q2 2022	Jan–Jun 2023	Jan–Jun 2022	Full year 2022
Opening balance	4,941	4,217	4,646	3,565	3,565
Cash flow from operating activities (excl. IFRS 16)	-352	-170	-260	-316	-550
Investments	50	-52	90	-22	46
Acquisitions/divestments and contingent considerations	337	82	462	773	817
Dividend distribution	623	623	623	623	623
Other	108	92	147	170	147
Closing balance	5,708	4,792	5,708	4,792	4,646

Parent company income statement Parent company balance sheet

SEK MILLION	Q2 2023	Q2 2022	Jan–Jun 2023	Jan–Jun 2022	Full year 2022	SEK MILLION	30 Jun 2023	30 Jun 2022	31 Dec 2022
Net sales	280	254	554	500	1,020	ASSETS
Other operating income	119	100	241	193	397	Non-current assets
Operating income	399	353	796	693	1,417	Intangible assets	4	7	5
						Property, plant and equipment	146	122	133
Personnel costs	-103	-931	-199	-1691	-328	Financial assets	14,143	14,149	14,142
Other costs	-413	-360	-799	-722	-1,431	Total non-current assets	14,293	14,279	14,281
Depreciation/amortisation	-10	-9	-20	-18	-37
Operating profit/loss	-127	-109	-222	-216	-379	Current assets
						Current receivables	5,306	4,489	5,033
Financial items	290	-15	296	389	423	Cash and cash equivalents	281	420	308
Profit/loss after financial items	163	-123	74	173	44	Total current assets	5,587	4,910	5,340
						Total assets	19,880	19,189	19,622
Appropriations	–	–	0	–	299
Profit/loss before tax	163	-123	74	173	343	EQUITY AND LIABILITIES
						Equity	8,687	9,048	9,204
Tax	17	24	27	44	11	Untaxed reserves	103	101	103
Profit/loss for the period	180	-99	101	217	353	Provisions	29	36	36
						Non-current liabilities	4,324	4,613	4,349
Other comprehensive income	9	251	4	53	73	Current liabilities	6,737	5,391	5,930
Comprehensive income for the period	189	-74	106	270	427	Total equity and liabilities	19,880	19,189	19,622

1) Adjusted due to incorrect summation in 2022.

Notes

Accounting policies

This report was prepared in accordance with IAS 34, Interim Financial Reporting. The accounting policies conform with International Financial Reporting Standards (IFRS), as well as with the EU-approved interpretations of the relevant standards, the International Financial Reporting Interpretations Committee (IFRIC) and Chapter 9 of the Swedish Annual Accounts Act. The report has been drawn up using the same accounting policies and methods of calculation as those in AFRY's Annual and Sustainability Report 2022 (Note 1).

New or revised IFRS standards that came into force in 2023 did not have any material impact on the Group. Regarding the amendments to IAS 12, Deferred Tax related to Assets and Liabilities arising from a Single Transaction that the International Accounting Standards Board (IASB) published in May 2021, the change is that the exception at the time of accounting does not apply to transactions where equal amounts of deductible and taxable temporary differences occur. The changes to IAS 12 take effect for reporting periods which begin on or after 1 January 2023. AFRY has analysed the future impact on the Group and the net effect will not have a significant impact on the financial statements.

The parent company complies with the Swedish Financial reporting Board's Recommendation RFR2, which requires that the parent company's annual reports apply all IFRS standards and interpretations approved by the EU as far as possible within the constraints of the Annual Accounts Act and the Pension Obligations Vesting Act (Tryggandelagen), and while considering the relationship reporting and taxation. Disclosures according to IAS 34.16A can partly be found on the pages preceding the condensed consolidated income statement.

Note 1 Note 2

Risks and uncertainties

The significant risks and uncertainties to which the AFRY Group is exposed include strategic risks linked to the market, acquisitions, sustainability and IT, and operational risks related to projects and the ability to recruit and retain qualified employees. In addition, the Group is exposed to several financial risks, such as currency risks, interest-rate risks and credit risks. The risks to which the Group is exposed are described in detail in AFRY's Annual and Sustainability Report 2022.

Geopolitical and macroeconomic uncertainties

Geopolitical tensions and the uncertain economic situation entails various risks for AFRY and are mainly related to delayed decision processes. In April 2023, AFRY concluded the divestment of the Russian subsidiary to the local management team. In April 2023, AFRY decided to terminate ongoing hydropower projects in Myanmar due to the negative developments around human rights in the country.

Contingent liabilities

Reported contingent liabilities reflect one part of the AFRY Group's exposure to risk. AFRY provides clients with both corporate and bank guarantees when clients request them. This typically involves tender guarantees, advance payment guarantees or performance guarantees. Corporate guarantees are mainly provided by the parent company, AFRY AB, and bank guarantees by AFRY's banks. At 30 June 2023, the Group's corporate guarantees amounted to SEK 499 million (363) and bank guarantees to SEK 758 million (516). The guarantee amounts do not include pension guarantees, advance payment guarantees or leasing as these are already reported on the debt side in the balance sheet.

Note 3

Income

Net sales according to the business model

		Jan-Jun 2023
SEK MILLION	Project Business	Professional Services	Total
Infrastructure	5,008	139	5,146
Industrial & Digital Solutions	1,223	1,847	3,071
Process Industries	2,058	801	2,858
Energy	1,440	311	1,751
AFRY X	275	389	664
Management Consulting	695	14	709
Group common/eliminations	-300	-115	-415
Group	10,399	3,386	13,784

The Group applies the accounting standard IFRS 15 Revenue from Contracts with Customers. AFRY's business model is divided into two client offerings: Project Business and Professional Services. Project Business is AFRY's offering for major projects and end-toend solutions. In such projects, AFRY acts as a partner to the client, leading and running the entire project. Professional Services is AFRY's offering in which the client manages and runs the project, while AFRY provides suitable expertise at the appropriate time.

Invoicing in Project Business takes place as work proceeds in accordance with agreed terms and conditions, either periodically (monthly) or when contractual milestones are reached. Invoicing ordinarily takes place after the income has been recorded, resulting in contract assets. However, AFRY sometimes receives advance payments or deposits from our clients before the income is recognised, which then results in contract liabilities. In Professional Services, hours spent on a project are ordinarily invoiced at the end of each month. Performance obligations in Project Business are fulfilled over time as the service is provided. Revenue recognition is based on costs with accumulated costs set in relation to total estimated costs. In Professional Services, revenue is recognised by the amount that the unit is entitled to invoice, in accordance with IFRS 15 B16.

Order stock

SEK MILLION	30 Jun 2023	30 Jun 2022	31 Dec 2022
Infrastructure	8,848	7,523	8,136
Industrial & Digital Solutions	2,547	2,407	2,572
Process Industries	3,587	3,365	3,428
Energy	4,947	4,068	4,798
AFRY X	236	326	204
Management Consulting	424	363	301
Group	20,590	18,052	19,440

Note 4

Quarterly information by division

		2021			2022			2023				2021 1			20221			20231
Net sales, SEK million	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Average number of employees	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
Infrastructure	2,045	1,638	2,058	2,232	2,268	1,946	2,453	2,581	2,565	Infrastructure	5,955	5,901	5,998	6,408	6,414	6,398	6,554	6,699	6,853
Industrial & Digital Solutions	1,252	1,099	1,382	1,355	1,375	1,191	1,532	1,566	1,504	Industrial & Digital Solutions	2,962	2,999	3,141	3,141	3,206	3,233	3,340	3,322	3,337
Process Industries	986	851	1,070	1,060	1,157	1,107	1,294	1,402	1,457	Process Industries	3,518	3,684	3,734	3,870	4,072	4,202	4,314	4,394	4,383
Energy	674	581	721	695	771	726	840	867	884	Energy	1,791	1,678	1,603	1,676	1,738	1,783	1,819	1,851	1,907
AFRY X	241	193	293	303	325	250	344	340	324	AFRY X	538	643	702	751	770	743	716	690	678
Management Consulting	230	245	253	263	307	293	332	343	366	Management Consulting	465	451	485	512	550	570	609	629	668
Group common/eliminations	-251	-187	-269	-240	-228	-215	-185	-184	-231	Group functions	387	414	432	468	514	488	492	506	515
Group	5,177	4,419	5,509	5,670	5,975	5,298	6,609	6,916	6,869	Group	15,618	15,770	16,096	16,826	17,265	17,418	17,843	18,091	18,341

		2021			2022	2023
EBITA, SEK million	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
Infrastructure	156	86	175	183	172	120	192	253	103
Industrial & Digital Solutions	89	92	139	121	100	94	129	159	95
Process Industries	119	95	138	123	113	101	148	199	168
Energy	67	68	90	72	71	58	94	91	80
AFRY X	15	-5	15	2	8	-5	9	26	2
Management Consulting	38	52	30	34	49	41	41	45	48
Group common/eliminations	-72	-21	-122	-176	-80	-32	-51	-84	-98
Group	411	367	465	359	432	376	562	689	398

		2021			2022	2023
EBITA margin, %	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
Infrastructure	7.6	5.3	8.5	8.2	7.6	6.2	7.8	9.8	4.0
Industrial & Digital Solutions	7.1	8.4	10.1	8.9	7.3	7.9	8.4	10.2	6.3
Process Industries	12.0	11.1	12.9	11.6	9.8	9.2	11.5	14.2	11.5
Energy	10.0	11.6	12.5	10.3	9.2	8.0	11.2	10.5	9.0
AFRY X	6.1	-2.6	5.1	0.5	2.4	-2.2	2.6	7.5	0.5
Management Consulting	16.3	21.4	12.1	13.1	15.9	13.9	12.3	13.2	13.1
Group	7.9	8.3	8.4	6.3	7.2	7.1	8.5	10.0	5.8

2021 2022 2023 Number of working days Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Sweden only 61 66 63 63 60 66 63 64 59 All countries 61 66 63 63 60 66 63 64 59

		As a result of organisational changes, comparative figures have been adjusted to provide a better reflection of the business.

1) The calculation of the average number of FTEs has changed in connection with organisational changes. This has led to a more accurate and weighted calculation of the number of available hours for all divisions.

Acquisitions and divestments

The following acquisitions have been made during the period

Consolidated from	Company 1	Country	Division	Annual net sales, SEK million	Average number of employees
March	BLIX Consultancy B.V.	Netherlands	Energy	50	25
March	XPRO AS	Norway	Infrastructure	71	40
April	Grünenfelder + Keller Winterthur	Switzerland	Infrastructure	19	11
May	KSH Solutions Inc.	Canada	Process Industries	180	130
Total				320	206

1) Company name at time of acquisition.

Acquired companies

Acquisition analyses are preliminary as the net assets in the companies acquired have not been conclusively analysed. The purchase considerations for acquisitions for the year were larger than the booked net assets of the acquired companies, which means that the acquisition analyses have resulted in intangible assets.

Contingent consideration

Total undiscounted contingent consideration for the companies acquired during the year is a maximum of SEK 23 million.

Holdback

Part of the purchase price withheld by the buyer as security for any claims against the seller, paid to the seller according to the agreed payment plan. The withheld parts of the purchase price are independent of conditions linked to the future performance of acquired companies.

Goodwill

Goodwill consists mainly of human capital in the form of employee skills and synergy effects. Goodwill is not expected to be tax-deductible on acquisition of a company. The acquisition of a consulting business essentially involves the acquisition of human capital, and most of the intangible assets in the company acquired are thus attributable to goodwill.

Other intangible assets

Order stock and client relationships are identified and assessed in connection with completed acquisitions.

Transaction costs

Transaction costs are recognised in other external costs in profit or loss. Transaction costs amounted to SEK 10 million for the period.

Revenue and profit from acquired companies

The acquired companies are expected to contribute net sales of approximately SEK 320 million and operating profit of roughly SEK 56 million over a full year.

Since their acquisition dates, acquired companies have contributed SEK 78 million to consolidated revenue and SEK 10 million to operating profit.

Divestments

AFRY has concluded the divestment of its Russian subsidiary to the local management team. The business in Russia includes around 125 employees and accounts for less than 1 percent of AFRY's total sales. The Group's estimated capital gains amounted to SEK -64 million, of which SEK -66 million affected net profit in 2022 as a result of the write-down for the operation in Russia. The divestment had an impact on the Group's cash flow of SEK -107 million.

Acquisitions after the end of the reporting period

After the end of the reporting period, no acquisitions have been concluded.

Acquired companies' net assets on acquisition date

SEK million	Jan–Jun 2023
Intangible assets	–
Property, plant and equipment	4
Right-of-use assets	6
Financial assets	0
Trade and other receivables	74
Deferred tax asset	0
Cash and cash equivalents	57
Trade payable, loans and other liabilities	-70
Net identifiable assets and liabilities	72
Goodwill	337
Fair value adjustment, intangible assets	13
Fair value adjustment, non-current provisions	-3
Purchase consideration including estimated contingent consid eration	419
Transaction costs	10
Less:
Cash (acquired)	57
Estimated contingent consideration	20
Holdback	10
Net cash outflow	341

22

Note 6

Financial instruments

Valuation principles and classification of the Group's financial assets and liabilities, as described in Note 13 of AFRY's 2022 Annual and Sustainability Report, have been applied consistently throughout the reporting period.

Financial assets and liabilities

SEK MILLION	Level	30 Jun 2023	30 Jun 2022	31 Dec 2022
Financial assets measured at fair value
Interest rate derivatives, hedge accounting applied	2	107	114	132
Forward exchange contracts, hedge accounting applied	2	27	5	15
Forward exchange contracts, hedge accounting not applied	2	67	45	45
Bought foreign exchange options	2	0	–	4
Total		202	164	197
Financial assets not recognised at fair value
Trade receivable		4,822	4,170	5,205
Revenue generated but not invoiced		3,226	2,560	2,325
Financial investments		9	10	8
Non-current receivables		10	14	12
Cash and cash equivalents		1,079	1,187	1,088
Total		9,147	7,941	8,638

SEK MILLION	Level	30 Jun 2023	30 Jun 2022	31 Dec 2022
Financial liabilities measured at fair value
Interest rate derivatives, hedge accounting applied	2	118	9	17
Forward exchange contracts, hedge accounting applied	2	29	11	18
Forward exchange contracts, hedge accounting not applied	2	56	59	54
Sold foreign exchange options	2	0	–	2
Contingent considerations	3	210	196	197
Total		413	276	287
Financial liabilities not recognised at fair value
Bank loans		2,931	2,571	2,587
Bonds		2,500	2,500	2,500
Commercial paper		1,064	400	189
Staff convertibles		147	314	316
Lease liabilities		2,131	2,132	2,203
Work invoiced but not yet carried out		2,106	1,973	2,134
Trade payables		1,115	981	1,286
Total		11,995	10,871	11,214

Fair value of financial assets and liabilities

Recognised and fair values of the Group's financial assets and liabilities are presented in the tables to the left. The fair value of derivatives is based on level 2 of the fair value hierarchy. Contingent considerations are valued at market value in accordance with level 3. Derivative instruments where hedge accounting is not applied are measured at fair value through profit/loss, and derivatives where hedge accounting is applied are measured at fair value through other comprehensive income. All other financial assets and liabilities are measured at amortised cost. Compared with 2022, no switches have been made between different levels in the fair value hierarchy for derivatives or loans. Nor have any significant changes been made in terms of valuation techniques, inputs or assumptions.

Contingent considerations

Contingent considerations are valued at market value in accordance with level 3. The calculation of contingent consideration is dependent on parameters in the relevant agreements. These parameters are chiefly linked to expected EBIT for the acquired companies over the next two to three years. The changes in the balance sheet is recognised in the table below.

SEK million	30 Jun 2023
Opening balance 1 January 2023	197
Acquisitions for the year	20
Payments	-12
Changes in value recognised in income statement	-9
Adjustment of preliminary acquisition analysis	–
Discounting	6
Translation differences	8
Closing balance	210

Note 6, cont.

Derivative instruments

SEK MILLION	Level	30 Jun 2023	30 Jun 2022	31 Dec 2022
Forward exchange contracts, hedge account ing not applied
Total nominal values		3,604	3,073	2,741
Fair value, gains	2	67	45	45
Fair value, loss	2	-56	-59	-54
Fair value, net		11	-14	-9
Forward exchange contracts, cash flow hedging reporting
Total nominal values		897	499	702
Fair value, gains	2	27	5	15
Fair value, loss	2	-29	-11	-18
Fair value, net		-2	-6	-2

Bought foreign exchange options, no hedge accounting
Total nominal values		79	–	270
Fair value, profit	2	–	–	2
Fair value, loss	2	0	–	–
Fair value, net		0	–	2

SEK MILLION	Level	30 Jun 2023	30 Jun 2022	31 Dec 2022
Sold currency options, no hedge accounting
Total nominal values		158	–	540
Fair value, profit	2	0	–	1
Fair value, loss	2	–	–	0
Fair value, net		0	–	1

Cross currency rate swaps, hedge accounting

Fair value, net		-118	33	14
Fair value, loss	2	-118	-9	-17
Fair value, profit	2	–	42	31
Total nominal values		1,850	1,850	1,850
for net investments applied

Interest rate swaps, cash flow hedge account-

Fair value, net		107	72	101
Fair value, loss	2	–	–	–
Fair value, profit	2	107	72	101
Total nominal values		1,390	1,036	1,056
ing applied

Note 7

Note 8

Related party transactions

There were no material transactions between AFRY and its related parties during the period.

Significant events after the end of the reporting period

No significant events after the end of the reporting period were identified.

Signatures

The Board of Directors and Chief Executive Officer provide assurance that this interim report for the January–June 2023 period gives an accurate overview of the company and Group's operations, financial position and earnings, and describes significant risks and uncertainties to which the company and companies included in the Group are exposed.

Stockholm, Sweden – 18 July 2023

Tom Erixon	Jonas Gustavsson	Gunilla Berg	Henrik Ehrnrooth
Chairman of the Board	President and CEO	Director	Director
Carina Håkansson	Neil McArthur	Joakim Rubin	Kristina Schauman
Director	Director	Director	Director
Tuula Teeri Director	Fredrik Sundin Director, employee representative	Jessica Åkerdahl Director, employee representative

Alternative performance measures

The consolidated financial statements contain financial ratios defined according to IFRS. They also include measurements not defined according to IFRS, known as alternative performance measures. The purpose of this is to provide information for comparing trends across years and to understand the underlying operations. These terms may be defined in a different way by other companies and are therefore not always comparable to similar measures used by other companies.

Definitions

The key ratios and alternative performance measures (APMs) used in this report are defined in AFRY's Annual and Sustainability Report 2022 and on our website: https://afry.com/en/investor-relations/.

Organic growth

Since the Group is active in a global market, sales are transacted in currencies other than the Swedish krona, which is the presentation currency. Exchange rates have been relatively volatile historically, and the Group carries out acquisitions/divestments of operations on an ongoing basis. Taken together, this has led to the Group's sales and performance being evaluated on the basis of organic growth. Organic sales growth represents comparable sales growth or sales reduction and enables separate valuations to be carried out on the impact of acquisitions/divestments and exchange rate fluctuations.

		Infrastructure		Industrial & Digital Solutions		Process Industries		Energy		AFRY X		Management Consulting		Group1
%	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022
Total growth	13.1	11.4	9.4	10.9	25.9	17.3	14.6	14.4	-0.3	29.7	19.1	29.2	15.0	15.4
(-) Acquired	0.9	7.1	0.0	2.1	0.5	1.6	4.3	1.5	0.0	29.1	0.0	0.0	1.0	5.2
(-) Currency effect	4.2	2.7	1.1	1.0	5.7	7.6	7.7	5.4	-0.1	0.4	11.0	8.2	4.5	3.9
Organic	8.0	1.5	8.3	7.8	19.7	8.1	2.7	7.5	-0.2	0.2	8.1	21.0	9.4	6.3
(-) Calendar effect	-1.5	-1.1	-1.4	-1.6	-0.8	-1.7	-2.0	0.7	-1.8	-1.7	-2.0	1.3	-1.4	-1.2
Organic growth adjusted for calendar effects	9.5	2.7	9.8	9.4	20.5	9.8	4.7	6.7	1.6	1.9	10.0	19.7	10.8	7.5
SEK million
Total growth	297	233	129	137	300	170	113	97	-1	72	59	67	894	797
(-) Acquired	21	146	0	27	6	15	33	10	0	70	0	0	61	268
(-) Currency effect	94	56	14	13	66	75	59	36	0	1	34	19	269	203
Organic	182	31	115	97	228	80	21	50	-1	0	25	48	563	326
(-) Calendar effect	-34	-23	-20	-20	-9	-17	-16	5	-6	-4	-6	3	-82	-60
Organic growth adjusted for calendar effects	216	55	134	117	237	97	36	45	5	5	31	45	646	386

1) The Group includes eliminations.

Organic growth cont.

	Infrastructure		Industrial & Digital Solutions		Process Industries		Energy		AFRY X		Management Consulting		Group1
%	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022
Total growth	14.4	12.5	12.5	12.5	28.9	16.9	19.4	6.2	5.7	32.8	24.4	23.7	18.4	14.4
(-) Acquired	0.6	7.1	0.0	2.3	0.5	2.1	3.7	1.4	1.2	29.9	0.0	0.0	0.9	5.3
(-) Currency effect	3.5	3.1	1.0	0.7	6.5	6.3	7.2	4.7	-0.1	0.2	9.8	8.0	4.2	3.7
Organic	10.2	2.3	11.4	9.5	22.0	8.6	8.6	0.1	4.5	2.6	14.6	15.7	13.3	5.4
(-) Calendar effect	-0.1	0.3	0.0	0.0	0.7	-0.6	-0.8	0.8	0.2	-0.2	-0.3	0.4	0.0	0.0
Organic growth adjusted for calendar effects	10.3	2.0	11.4	9.5	21.3	9.2	9.4	-0.7	4.3	2.8	14.9	15.2	13.2	5.4
SEK million
Total growth	646	501	340	305	642	321	285	85	36	151	139	106	2,140	1,468
(-) Acquired	29	286	0	56	10	40	54	19	8	138	0	0	100	539
(-) Currency effect	157	124	28	16	143	119	105	64	0	1	56	36	493	377
Organic	460	91	312	233	488	162	126	1	28	12	83	70	1,547	552
(-) Calendar effect	-5	12	-1	1	16	-12	-11	11	1	-1	-2	2	5	5
Organic growth adjusted for calendar effects	465	79	312	232	472	174	137	-10	27	13	85	68	1,542	547

1) The Group includes eliminations.

EBITA/EBITA excluding items affecting comparability

Operating profit before associates and items affecting comparability refers to the operating profit after restored tangible items and events related to changes in the Group's structure and operations which are relevant for an understanding of the Group's performance on a comparable basis. This metric is used by Group Executive Management to monitor and analyse underlying profit/loss and to provide comparable figures between periods.

	Infrastructure		Industrial & Digital Solutions		Process Industries		Energy		AFRY X		Management Consulting		Group1
SEK million	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022	Q2 2023	Q2 2022
EBIT (operating profit/loss)	103	172	95	100	168	113	80	71	2	8	48	49	363	335
Acquisition-related items
Amortisation and impairment of intangible assets	–	–	–	–	–	–	–	–	–	–	–	–	45	42
Revaluation of contingent considerations	–	–	–	–	–	–	–	–	–	–	–	–	-9	-5
Divestment of operations	–	–	–	–	–	–	–	–	–	–	–	–	-1	60
Profit (EBITA)	103	172	95	100	168	113	80	71	2	8	48	49	398	432
Items affecting comparability
Costs for early termination of lease office premises	–	–	–	–	–	–	–	–	–	–	–	–	23	–
Cost of customisation/configuration of cloud-based IT systems	–	–	–	–	–	–	–	–	–	–	–	–	–	19
EBITA excl. items affecting comparability	103	172	95	100	168	113	80	71	2	8	48	49	421	451
%
EBIT margin	4.0	7.6	6.3	7.3	11.5	9.8	9.0	9.2	0.5	2.4	13.1	15.9	5.3	5.6
Acquisition-related items
Amortisation and impairment of intangible assets	–	–	–	–	–	–	–	–	–	–	–	–	0.7	0.7
Revaluation of contingent considerations	–	–	–	–	–	–	–	–	–	–	–	–	-0.1	-0.1
Divestment of operations	–	–	–	–	–	–	–	–	–	–	–	–	-0.0	1.1
Profit/loss (EBITA margin)	4.0	7.6	6.3	7.3	11.5	9.8	9.0	9.2	0.5	2.4	13.1	15.9	5.8	7.2
Items affecting comparability	–	–	–	–	–	–	–	–	–	–	–	–	0.3	0.3
EBITA margin excl. items affecting comparability	4.0	7.6	6.3	7.3	11.5	9.8	9.0	9.2	0.5	2.4	13.1	15.9	6.1	7.6

The historical figures above have been adjusted to account for organisational changes.

1)The Group includes eliminations.

EBITA/EBITA excluding items affecting comparability cont.

	Infrastructure		Industrial & Digital Solutions		Process Industries		Energy		AFRY X		Management Consulting		Group1
SEK million	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022
EBIT (operating profit/loss)	356	354	254	221	367	236	170	142	27	9	93	83	1,008	652
Acquisition-related items
Amortisation and impairment of intangible assets	–	–	–	–	–	–	–	–	–	–	–	–	88	84
Revaluation of contingent considerations	–	–	–	–	–	–	–	–	–	–	–	–	-9	-5
Divestment of operations	–	–	–	–	–	–	–	–	–	–	–	–	-1	60
Profit/loss (EBITA)	356	354	254	221	367	236	170	142	27	9	93	83	1,087	791
Items affecting comparability
Costs for early termination of lease office premises	–	–	–	–	–	–	–	–	–	–	–	–	23	–
Restructuring costs Infrastructure Division	–	–	–	–	–	–	–	–	–	–	–	–	–	80
Restructuring costs Group functions	–	–	–	–	–	–	–	–	–	–	–	–	–	20
Cost of customisation/configuration of cloud-based IT systems	–	–	–	–	–	–	–	–	–	–	–	–	–	33
EBITA excl. items affecting comparability	356	354	254	221	367	236	170	142	27	9	93	83	1,110	924
%
EBIT margin	6.9	7.9	8.3	8.1	12.8	10.7	9.7	9.7	4.1	1.5	13.1	14.6	7.3	5.6
Acquisition-related items
Amortisation and impairment of intangible assets	–	–	–	–	–	–	–	–	–	–	–	–	0.6	0.7
Revaluation of contingent considerations	–	–	–	–	–	–	–	–	–	–	–	–	-0.1	0.0
Divestment of operations	–	–	–	–	–	–	–	–	–	–	–	–	-0.0	0.5
Profit/loss (EBITA margin)	6.9	7.9	8.3	8.1	12.8	10.7	9.7	9.7	4.1	1.5	13.1	14.6	7.9	6.8
Items affecting comparability	–	–	–	–	–	–	–	–	–	–	–	–	0.2	1.1
EBITA margin excl. items affecting comparability	6.9	7.9	8.3	8.1	12.8	10.7	9.7	9.7	4.1	1.5	13.1	14.6	8.0	7.9

The historical figures above have been adjusted to account for organisational changes.

1)The Group includes eliminations.

Net debt

Net debt is the total of interest-bearing liabilities less cash and cash equivalents and interest-bearing assets. Lease liabilities after the deduction of receivables relating to subleases are included in net debt. Net debt also includes dividends approved but not yet paid out. Net debt is used by Group Executive Management to monitor and analyse the debt trend in the Group and evaluate the Group's refinancing requirements. Net

debt/EBITDA is a key ratio for net debt in relation to cash-generating profit in the operation, which provides an indication of the business's ability to pay its debts. This metric is commonly used by financial institutions to measure creditworthiness. A negative figure means that the Group has a net cash balance (cash and cash equivalents exceed interest-bearing liabilities).

Consolidated net debt (excl. IFRS 16)

SEK MILLION	30 Sep 2021	31 Dec 2021	31 Mar 2022	30 Jun 2022	30 Sep 2022	31 Dec 2022	31 Mar 2023	30 Jun 2023
Loans and credit facilities	4,729	5,471	4,913	5,771	5,667	5,580	5,947	6,631
Net pension liability	342	205	206	207	174	155	156	155
Cash and cash equivalents	-852	-2,112	-902	-1,187	-862	-1,088	-1,162	-1,079
Total net debt	4,219	3,565	4,217	4,792	4,979	4,646	4,941	5,708

Net debt/equity ratio

SEK million	30 Sep 2021	31 Dec 2021	31 Mar 2022	30 Jun 2022	30 Sep 2022	31 Dec 2022	31 Mar 2023	30 Jun 2023
Net debt	4,219	3,565	4,217	4,792	4,979	4,646	4,941	5,708
Equity	10,422	10,993	11,420	11,318	11,703	12,178	12,602	12,552
Net debt/equity ratio, %	40.5	32.4	36.9	42.3	42.5	38.2	39.2	45.5

SEK MILLION Oct 2020– Sep 2021 Full year 2021 Apr 2021– Mar 2022 Jul 2021– Jun 2022 Oct 2021– Sep 2022 Full year 2022 Apr 2022– Mar 2023 Jul 2022– Jun 2023 Profit/loss (EBITA) 1,649 1,662 1,602 1,623 1,632 1,729 2,059 2,025 Depreciation/amortisation and impairment of non-current assets 686 697 703 695 685 702 727 753 EBITDA 2,335 2,359 2,305 2,318 2,317 2,430 2,786 2,778 Lease expenses -561 -564 -554 -543 -535 -540 -577 -614 EBITDA excl. IFRS 16 1,774 1,796 1,751 1,775 1,783 1,890 2,209 2,164 Net debt 4,219 3,565 4,217 4,792 4,979 4,646 4,941 5,708 Net debt/EBITDA, excl. IFRS 16, rolling 12 months, times 2.4 2.0 2.4 2.7 2.8 2.5 2.2 2.6 Items affecting comparability 57 50 150 165 171 157 44 47 EBITDA excl. IFRS 16 and items affecting comparability 1,832 1,846 1,901 1,940 1,953 2,047 2,253 2,212 Net debt 4,219 3,565 4,217 4,792 4,979 4,646 4,941 5,708 Net debt/EBITDA, excl. IFRS 16 and items affecting comparability, rolling 12 months, times 2.3 1.9 2.2 2.5 2.5 2.3 2.2 2.6

Consolidated net debt (incl. IFRS 16)

SEK million	30 Sep 2021	31 Dec 2021	31 Mar 2022	30 Jun 2022	30 Sep 2022	31 Dec 2022	31 Mar 2023	30 Jun 2023
Loans and credit facilities	7,014	7,633	7,022	7,903	7,819	7,783	8,136	8,763
Net pension liability	342	205	206	207	174	155	156	155
Cash and cash equivalents	-852	-2,112	-902	-1,187	-862	-1,088	-1,162	-1,079
Total net debt	6,504	5,726	6,326	6,923	7,131	6,849	7,130	7,839

Net debt/EBITDA excl. IFRS 16 rolling 12 months, times

Return on equity

Return on equity is the business's profit after tax during the period in relation to average equity. This key ratio is used to show the return on the owners' invested capital, which gives an indication of the business's ability to create value for its owners.

SEK million	30 Sep 2021	31 Dec 2021	31 Mar 2022	30 Jun 2022	30 Sep 2022	31 Dec 2022	31 Mar 2023	30 Jun 2023
Profit/loss after tax, rolling 12 months	1,166	1,130	1,062	945	877	974	1,187	1,214
Average equity	10,215	10,433	10,715	10,872	11,171	11,522	11,844	12,071
Return on equity, %	11.4	10.8	9.9	8.7	7.8	8.5	10.0	10.1

Equity ratio

The equity ratio shows the business's equity in relation to total capital and describes how large a proportion of the business's assets are not matched by liabilities. The equity ratio can be seen as the business's ability to pay in the long term. The key ratio is impacted by profitability during the period and by how the business is financed. This metric is often used to provide an indication of how the company is financed and also to see trends in how the business's funds are utilised. A change in the equity ratio over time may, for example, be an indication that the business is reviewing its financing structure or is utilising its equity to finance an expansion.

SEK million	30 Sep 2021	31 Dec 2021	31 Mar 2022	30 Jun 2022	30 Sep 2022	31 Dec 2022	31 Mar 2023	30 Jun 2023
Equity	10,422	10,993	11,420	11,318	11,703	12,178	12,602	12,553
Balance sheet total	24,001	25,913	25,762	26,917	26,971	27,996	28,411	29,513
Equity ratio, %	43.4	42.4	44.3	42.0	43.4	43.5	44.4	42.5

Return on capital employed

Return on capital employed shows the business's profit/loss after financial items, adjusted for interest expenses in relation to average interest-bearing capital in the business's balance sheet total. The key ratio is used to evaluate how the company utilises capital which has some form of return requirement (for example, dividends on invested capital from shareholders as well as interest on bank loans).

SEK million	30 Sep 2021	31 Dec 2021	31 Mar 2022	30 Jun 2022	30 Sep 2022	31 Dec 2022	31 Mar 2023	30 Jun 2023
Profit/loss after financial items, rolling 12 months	1,433	1,393	1,324	1,196	1,116	1,220	1,498	1,549
Financial expenses, rolling 12 months	10	148	167	162	117	206	247	306
Profit/loss	1,442	1,542	1,491	1,358	1,233	1,426	1,746	1,855
Average balance sheet total	23,860	24,383	24,831	25,373	25,912	26,711	27,211	27,961
Average other current liabilities	-5,824	-6,020	-6,164	-6,386	-6,496	-6,853	-6,964	-7,184
Average other non-current liabilities	-185	-200	-216	-229	-235	-237	-232	-210
Average deferred tax liability	-226	-229	-219	-210	-197	-190	-184	-186
Capital employed	17,625	17,934	18,232	18,547	18,985	19,432	19,831	20,382
Return on capital employed, %	8.2	8.6	8.2	7.3	6.5	7.3	8.8	9.1

Stockholm, Sweden – 18 July 2023

AFRY AB (publ) Jonas Gustavsson President and CEO

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

This information fulfils AFRY AB (publ)'s disclosure requirements under the provisions of the EU's Market Abuse Regulation and the Swedish Securities Markets Act. This information was released, through the agency of the abovementioned contact person, for publication on 18 July 2023, at 07.00 CEST.

All forward-looking statements in this report are based on the company's best assessment at the time the report was written. As is the case with all assessments of the future, such assumptions are subject to risks and uncertainties, which may mean that the actual outcome differs from the anticipated result.

Head Office: AFRY AB, SE-169 99 Stockholm, Sweden Visiting address: Frösundaleden 2, Solna, Sweden Tel: +46 10 505 00 00 www.afry.com info@afry.com Corp. ID no. 556120-6474

Investor presentation

Time:	18 July 2023 at 10.00 CEST
Webcast:	https://youtube.com/live/dvqdF4P-2P4
For analysts/ investors:	Click here to connect to the meeting With the opportunity to ask questions

Calendar

Q3 2023	27 October 2023
Q4 2023	2 February 2024