Quarterly Report • Jul 13, 2017
Quarterly Report
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"ÅF continues to grow and shows a strong profit. We won new business during the quarter where we support our clients in the ongoing digitalisation of industry, in the development of sustainable cities and in a more efficient energy supply. This means that we have a good platform for continued growth in 2017," says Jonas Gustavsson, President and CEO.
ÅF's EBITA for the second quarter totalled SEK 302 million (292) excluding items affecting comparability. At the same time, we can report a stable growth of 10 percent and strong cash flow. Profit was affected negatively by the Easter holiday and by fewer working days compared with last year. Items affecting comparability are related to restructuring costs of SEK 20 million.
The industrial climate is strong in Sweden, which is reflected in the performance of the automotive industry, the pulp and paper industry, the pharmaceutical industry and other manufacturing industries. The mining and steel industries continue to show signs of increased demand, but from low levels. Investments in infrastructure in Sweden and Norway remain at a high level, while the ongoing digitalisation is resulting in a good market for embedded systems and IT. The energy market in Europe remains weak, while demand continues to grow in Southeast Asia and Africa.
The Industry Division continues to show profitable growth. Demand for end-to-end solutions is increasing and outstanding orders for fixed-price projects continued to grow during the quarter. Among other things, demand for industrial digitalisation and automation solutions is increasing. During the quarter, a number of major projects were won for production
facilities in the automotive industry, as well as control and monitoring of power and lighting systems for airports.
The Infrastructure Division reports continued good profitability. However, the organic growth rate has decreased slightly in the current year. A number of major projects are being wound up, while several major investment projects are in the procurement stage. At the same time, the market for sustainable properties is growing, which drives demand for the division's services, such as installations in properties, project management and architecture. The architect company Koncept Stockholm was acquired during the quarter, which has a leading market position in the premium segment for commercial clients. The integration of Midtconsult in Denmark is proceeding according to plan, and ÅF has been commissioned to deliver all technical installations for Denmark's highest residential building when it is built.
Business in the International Division continued to be influenced by the weak European energy market. At the same time, the division continues to win new projects, most recently an assignment related to the construction of a new nuclear power plant in Turkey and a new hydropower plant in Egypt. Growth in the quarter is good and is largely related to the acquisition of the Swiss infrastructure company AF Toscano.
The Technology Division continues to grow with healthy profitability on an expanding market in digitalisation and embedded systems. Demand for the division's services is strong, especially from the automotive industry, but demand is also increasing in other sectors where the need for digitalisation is significant. Several new deals were secured this quarter, including with SAAB, CEVT and Scania.
Overall, we continue to grow and our technical breadth combined with high quality and delivery reliability continues to be appreciated by our clients. In order to take further steps in ÅF's development and thereby ensure that ÅF's long-term targets are met, a strategy review is now being carried out, combined with a restructuring program. The implementation is expected to entail additional restructuring costs estimated not to exceed SEK 70 million and will impact profit in the third quarter.
The target for 2020 remains: ÅF will generate net sales of EUR 2 billion and achieve an operating margin of 10 percent over a business cycle.
Stockholm, Sweden – 13 July, 2017
Jonas Gustavsson President and CEO
Net sales for the quarter totalled SEK 3,231 million (2,942). Growth was 9.8 percent. The calendar effect meant three fewer working days than the previous year for the period. This, along with Easter as a whole falling in March last year, resulted in organic growth of -1.3 percent or -2.3 percent when adjusted for currency effects. Adjusted for calendar effects and currency effects, underlying organic growth was 2.1 percent.
Adjusted for items affecting comparability, EBITA totalled SEK 302 million (292) and the EBITA margin was 9.4 percent (9.9). EBITA and the EBITA margin were SEK 282 million (288) and 8.7 percent (9.8), respectively. The calendar effect had a negative effect on profit.
During the quarter, a strategy review was initiated combined with a restructuring program. The strategy work, which is aimed at achieving the Group's growth and profitability targets, includes a review of the Group's structure. The review will include ensuring that ÅF has the relevant expertise for meeting the future demands of our clients. The cost of implementing the strategy, including the restructuring
program, is estimated to not exceed SEK 90 million, of which SEK 20 million has been charged to the second quarter and is recognised as items affecting comparability under 'Group-wide' items. The remaining amount will be charged to the third quarter.
EBIT totalled SEK 273 million (281). The difference between EBIT and EBITA consists entirely of acquisition-related items, namely, amortisation of acquisition-related assets amounting to SEK 8 million (8) and a change in future contingent considerations amounting to SEK 1 million (-1).
Profit after financial items was SEK 253 million (270) and profit after tax was SEK 196 million (211).
Net financial items during the quarter totalled SEK -20 million (-11). Interest expense increased due to increased borrowing. In addition, net financial items was charged with increased cost for discount rates for contingent considerations, which do not affect cash flow, amounting to SEK 4 million (1).
Capacity utilisation was 78.2 percent (78.6).
Net sales for the year totalled SEK 6,496 million (5,585). Growth was 16.3 percent. Organic growth was 3.9 percent or 2.8 percent in local currencies. The period had the same number of working days as last year. Adjusted for items affecting comparability, EBITA totalled SEK 589 million (520) and the EBITA margin was 9.1 percent (9.3). EBITA and the EBITA margin were SEK 568 million (516) and 8.7 percent (9.2), respectively.
EBIT totalled SEK 560 million (501). The difference between EBIT and EBITA consists entirely of acquisition-related items, namely, amortisation of acquisition-related assets amounting to SEK 18 million (16) and a change in future contingent considerations amounting to SEK -10 million (-1).
Profit after financial items was SEK 520 million (481) and profit after tax was SEK 402 million (372).
Net financial items for the period were SEK -40 million (-20). Interest expense increased due to increased borrowing. In addition, net financial items was charged with increased cost for discount rates for contingent considerations, which do not affect cash flow, amounting to SEK 10 million (1).
Capacity utilisation was 77.7 percent (77.8).
| Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|
|---|---|---|---|---|---|
| Net sales, SEK million | 3,231 | 2,942 | 6,496 | 5,585 | 11,070 |
| Total growth, % | 9.8 | 13.6 | 16.3 | 12.0 | 12.4 |
| Acquired, % | 11.2 | 8.3 | 12.4 | 9.0 | 9.5 |
| Organic, % | -1.3 | 5.3 | 3.9 | 3.0 | 2.9 |
| whereof currency, % | 1.0 | -1.0 | 1.1 | -1.0 | -0.2 |
| EBITA excl items affecting comparability, SEK million | 302 | 292 | 589 | 520 | 996 |
| EBITA margin excl items affecting comparability, % | 9.4 | 9.9 | 9.1 | 9.3 | 9.0 |
| EBITA, SEK million | 282 | 288 | 568 | 516 | 992 |
| EBITA margin, % | 8.7 | 9.8 | 8.7 | 9.2 | 9.0 |
| Operating profit (EBIT), SEK million | 273 | 281 | 560 | 501 | 965 |
| Profit after financial items, SEK million | 253 | 270 | 520 | 481 | 923 |
| Earnings per share, before dillution, SEK | 2.52 | 2.75 | 5.17 | 4.85 | 9.32 |
| Net debt, SEK million | - | - | 2,639 | 1,851 | 2,298 |
| Net debt/EBITDA rolling 12-month, times | - | - | 2.3 | 1.9 | 2.1 |
| Net debt-equity ratio, % | - | - | 55.6 | 42.1 | 48.9 |
| Total number of employees | - | - | 9,705 | 8,549 | 9,133 |
| Capacity utilisation, % | 78.2 | 78.6 | 77.7 | 77.8 | 77.6 |
Consolidated net debt totalled SEK 2,639 million (1,851) at the end of the quarter and SEK 2,431 million (1,748) at the start of the quarter. Cash flow from operating activities reduced net debt by SEK 235 million. Net debt increased through investments in non-current assets amounting to SEK 25 million, dividends paid of SEK 350 million and considerations paid, including contingent considerations, of SEK 67 million.
At the beginning of the year, consolidated net debt totalled SEK 2,298 million (1,486), generating an accumulated increase in net debt of SEK 341 million (365). Cash flow from operating activities reduced net debt by SEK 368 million. Net debt increased through investments in non-current assets amounting to SEK 51 million, dividends paid of SEK 350 million and considerations paid, including contingent considerations, of SEK 285 million.
During the second quarter, ÅF established a Commercial Paper Program with a total value of SEK 1,000 million. The commercial paper program is a complement to ÅF's core funding. In connection with the establishment of the Commercial Paper Program, ÅF has entered into a new Multi-Currency Revolving Credit Facility of SEK 1,000 million to ensure underlying available credit facilities for the Commercial Paper Program. The facility has a tenure of 2 years with extension options.
Consolidated cash and cash equivalents totalled SEK 206 million (255) at the end of the period and unused credit facilities amounted to SEK 1,375 million (1,071). Equity per share was SEK 60.68 (56.22). The equity ratio was 43.3 percent (48.2). Equity totalled SEK 4,746 million (4,398).
Parent company operating income for the January–June period totalled SEK 374 million (315) and relates chiefly to internal services within the Group. Profit after net financial items was SEK 66 million (28). Cash and cash equivalents totalled SEK 16 million (77) and gross investment in non-current assets was SEK 21 million (27).
Eight businesses have been acquired since the beginning of the year, and they are expected to contribute sales of SEK 500 million over the full year.
The average number of FTEs was 9,160 (7,978). The total number of employees at the end of the period was 9,705 (8,549).
Jonas Gustavsson took over as President and CEO of ÅF on 1 April 2017. He had been head of Sandvik Machining Solutions since 2013 and previously held various leading positions at Sandvik since 2008. Jonas Wiström left his post as CEO when Jonas Gustavsson took over.
In May 2017, ÅF acquired Koncept Stockholm, thereby further strengthening its offer in architecture and infrastructure planning. Koncept Stockholm is a fast-growing company with a strong brand. The company has a leading market position in the premium segment for commercial clients in the hotel-restaurant, retail and office sectors. The company has around 70 employees with current sales of approximately SEK 85 million. Koncept Stockholm was consolidated as of May 2017.
In July, ÅF acquired Eitech's automation business, thereby strengthening its offer in automation to industrial clients. The company has annual sales of approximately SEK 90 million and 42 employees. The company will be consolidated as of 1 September 2017 and integrated with ÅF's Industry Division.
The Industry Division is the Nordic region's leading consultant in product development, process and production systems. Its mission is clear: to improve profitability for its clients. Experience from previous projects guarantees stability, competitive strength and peace of mind for clients. Geographical proximity to clients and a thorough understanding of the sectors in which they work are the most important foundations for longterm client relations.
The market for industrial investment is strong and demand is increasing, with the exception of a few industries. The division's growth was 5.8 percent and was due entirely to i acquired growth. When adjusted for calendar effects, organic growth amounted to 4.2 percent. EBITA and the EBITA margin were SEK 118 million (122) and 9.4 percent (10.3), respectively. Profit was affected negatively by the Easter holiday and by fewer working days compared with last year.
Demand for end-to-end solutions is increasing and outstanding orders for fixed-price projects reached a high level during the quarter. With our technical breadth and years of experience running large, complex projects, we can meet clients' high demands for innovative solutions, delivery reliability and quality.
Demand for industrial digitalisation and automation solutions is also increasing. During the quarter, a number of major projects were won for production facilities in the automotive industry and projects for control and monitoring of power and lighting systems for airports.
4
LKAB in Malmberget has given ÅF the task of carrying out extensive electrical engineering to enable a flexible production system. The assignment includes an extension of the concentrator plant, and the reconstruction of the existing plant.
ÅF has been commissioned by Stora Enso Skutskär to mount, install and deploy a new control system as part of its efforts to further improve accessibility in the production process.
| Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|
|---|---|---|---|---|---|
| Net sales, SEK million | 1,256 | 1,187 | 2,516 | 2,256 | 4,437 |
| EBITA, SEK million | 118 | 122 | 227 | 207 | 403 |
| EBITA margin, % | 9.4 | 10.3 | 9.0 | 9.2 | 9.1 |
| Average number of employees, FTEs | 3,361 | 3,144 | 3,355 | 3,172 | 3,177 |
| Total growth, % | 5.8 | 3.7 | 11.5 | 5.2 | 7.0 |
| of which organic growth, % | -0.3 | 2.6 | 4.9 | 0.9 | 2.1 |
The Infrastructure Division enjoys a leading position in design and technical solutions for Scandinavian properties and infrastructure. One strength is the division's solid know-how in sustainable and hightech solutions, and its ability to transform experience into innovation. The community builders in Infrastructure are united by their drive to create, along with our clients, places people can live, work and visit for generations to come.
In Scandinavia, demand for the division's services remains high. Several major infrastructure initiatives are on their way to the market and investments in sustainable properties are increasing. This drives demand for the division's services in road and rail, architecture and installations in properties.
The division continues to grow with strong profitability. Growth for the period was 6.2 percent. Acquired growth amounted to 10.6 percent, mainly from the Danish infrastructure company Midtconsult and the architectural firms Sandellsandberg and Koncept Stockholm. The companies are developing according to plan, both in terms of sales and profit. Organic growth was negative 4.4 percent, of which currency effects had a positive impact of 1 percentage point. Adjusted for the calendar effect, organic growth was negative 0.5 percent and the corresponding accumulative figure was 1.8 percent. The organic growth rate has decreased slightly in the current year compared with the previous year, mainly due
to the fact that several major projects are being wound up. However, as mentioned above, several major investment projects are in the procurement stage.
EBITA and the EBITA margin were SEK 125 million (125) and 10.9 percent (11.5), respectively. Profit was impacted by a weak earnings trend in the acquired company Reinertsen in Norway, now ÅF Engineering AS.
The division continues to drive the development of Sweden's care and treatment facilities and is engaged in three major projects at Borås Hospital. In total, the projects comprise approximately 40,000 m2, of which over half are new construction.
The bicycle road network is in focus throughout Scandinavia as more municipalities see a shift in travel behaviour. The division has won several urban development and sustainable transportation assignments to meet a growing trend of greener communities.
In the second quarter, the division acquired the architect firm Koncept Stockholm with more than 70 employees. The company has a leading market position in the premium segment for commercial clients in the hotel-restaurant, retail and office sectors. Within the division there are now more than 350 employees working with design, architecture and configuration, and ÅF is ranked as one of Sweden's largest employers of architects.
New business in Norway includes project management of a new national police response centre.
In Denmark, integration of the acquired company Midtconsult is proceeding according to plan. In the second quarter, ÅF was commissioned to deliver the technical installations for Denmark's highest residential building.
| Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|
|---|---|---|---|---|---|
| Net sales, SEK million | 1,155 | 1,087 | 2,345 | 2,009 | 4,037 |
| EBITA, SEK million | 125 | 125 | 252 | 224 | 421 |
| EBITA margin, % | 10.9 | 11.5 | 10.8 | 11.1 | 10.4 |
| Average number of employees, FTEs | 3,467 | 2,977 | 3,412 | 2,851 | 2,966 |
| Total growth, % | 6.2 | 36.3 | 16.8 | 30.6 | 29.7 |
| of which organic growth, % | -4.4 | 11.3 | 3.4 | 7.7 | 7.6 |
The historical figures above are adjusted based on the organisational changes implemented on 1 January 2017, when ÅF Technology AS (previously ÅF AdvansIT AS) was transferred from Infrastructure Division to Technology Division.
The International Division offers technical consulting services, in the energy, Industry and infrastructure sectors. Most of the services provided are within the energy sector. The division's domestic markets are Switzerland, Finland and the Baltic countries, and the Czech Republic, but it also performs projects in around 70 countries worldwide. The division enjoys a strong position within renewable energy, thermal power, hydropower and nuclear power.
The energy market in the division's home market of Europe remains weak, while demand continues to grow in Southeast Asia and Africa.
Growth in the second quarter reached 55.7 percent, of which 47.8 percentage points were aquired growth. Acquired growth relates to the Swiss infrastructure company AF Toscano and the solar energy company Aries. Following the acquisition of AF Toscano, infrastructure operations represent approximately 30 percent of net sales in the division. Organic growth, which is mainly related to the energy sector, was 7.9 percent or 2.5 percent in local currencies.
EBITA amounted to SEK 30 million (17) and the EBITA margin was 7.3 percent (6.3). The acquired infrastructure businesses contribute positively to the division's profit and margin. Weak performance in the energy sector, with a low willingness to invest, continues to be a challenge. Nevertheless, the division continues to receive new assignments and the capacity utilisation rate has gradually improved, meaning profit has improved compared to the weak first quarter. Excluding acquired units, the EBITA margin amounted to 5.7 percent.
6
Assignments during the quarter include an Owner's Engineering contract for a new hydropower plant in Egypt. The assignment runs over seven years, and the power plant will meet the increased demand for electricity in the area.
The division has also won an Owner's Engineering contract for a new nuclear power plant in northern Turkey. The length of the assignment is expected to be one year. Several contracts have also been received in the field of transmission and distribution in Southeast Asia and Africa.
| Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|
|---|---|---|---|---|---|
| Net sales, SEK million | 409 | 263 | 784 | 541 | 1,098 |
| EBITA, SEK million | 30 | 17 | 45 | 30 | 58 |
| EBITA margin, % | 7.3 | 6.3 | 5.7 | 5.6 | 5.3 |
| Average number of employees, FTEs | 1,171 | 842 | 1,185 | 850 | 844 |
| Total growth, % | 55.7 | -12.0 | 45.0 | -6.8 | -6.9 |
| of which organic growth, % | 7.9 | -12.0 | -0.5 | -6.8 | -7.4 |
The Technology Division's main operations are in Sweden, where it works with R&D, communication technology, and IT. Technology helps companies, government agencies, and the military take advantage of the possibilities of the connected world. A firm base and a long track record of success provide stability and give clients peace of mind.
The market for embedded systems and digital solutions remains strong and we are seeing increased demand. The digital content of products is increasing while the need to link mechanical and electronic devices with different software is growing. ÅF's extensive expertise combined with in-depth knowledge of application and systems development in the connected world constitutes a strong offering.
We see a slowly increasing demand for product development undertakings. With our broad competence and project experience, we can offer both end-to-end solutions and crossfunctional teams where we are responsible for project management as well as gathering resources and expertise.
Compared to the previous quarter, EBITA and the EBITA margin improved, despite negative calendar effects. This is mainly due to increased demand, a continued high capacity utilisation and a good recruitment rate. EBITA and the EBITA margin were SEK 48 million (48) and 9.7 percent (10.1), respectively, for the quarter. Adjusted for the calendar effect of three fewer working days in the quarter, organic growth was 4.6 percent.
7
Demand continues to be strong in the automotive industry, mainly in embedded systems with applications in active safety, hybrid development, autonomous driving intelligence and IT services related to telematics. ÅF is now established as one of Sweden's leading development partners to the Swedish automotive industry.
Demand from the telecom sector's operators increased slightly after a period of low demand. The Technology Division continues to see good opportunities to win telecom business by composing cross-functional teams and undertaking cost-effective outsourcing projects. The Division also continued to grow in the public IT sector, where the need for digitalisation is significant. The defence industry, another of the division's selected main markets, was stable with good demand in the second quarter. Erik Heilborn has been appointed new head of telecom and defense operations. Erik comes most recently from TDC in Sweden where he served as CEO for seven years. He will start his new position at ÅF on 1 September.
Several new assignments were secured in the second quarter with customers such as BAE Systems, Scania, SAAB, CEVT and the security company Verisure. New significant framework agreements signed in the quarter included Zenuity, which is Volvo Cars and Autoliv's joint development company.
| Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|
|---|---|---|---|---|---|
| Net sales, SEK million | 490 | 476 | 1,005 | 914 | 1,793 |
| EBITA, SEK million | 48 | 48 | 95 | 91 | 167 |
| EBITA margin, % | 9.7 | 10.1 | 9.4 | 9.9 | 9.3 |
| Average number of employees, FTEs | 1,078 | 979 | 1,081 | 984 | 1,006 |
| Total growth, % | 3.0 | 13.5 | 10.0 | 7.9 | 8.5 |
| of which organic growth, % | -0.1 | 13.5 | 6.8 | 7.9 | 6.9 |
The historical figures above are adjusted based on the organisational changes implemented on 1 January 2017, when ÅF Technology AS (previously ÅF AdvansIT AS) was transferred from Infrastructure Division to Technology Division.
The significant risks and uncertainty factors to which the ÅF 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 co-workers. In addition, the Group is exposed to a number of financial risks, including currency risks, interest-rate risks and credit risks. The risks to which the Group is exposed are described in detail in ÅF's Annual Report for 2016. No significant risks are considered to have arisen since the publication of the annual report.
This report has been 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 the Annual Report for 2016 (Note 1). New or revised IFRS standards that came into force in 2017 did not have any material impact on the Group. The parent company has implemented the Swedish Financial Reporting Board's Recommendation RFR 2, which means that the parent in the legal entity shall apply all EU approved IFRS and related statements as far as this is possible, while continuing to apply the Swedish Annual Accounts Act and the Pension Obligations Vesting Act and paying due regard to the relationship between accounting and taxation.
Work with the new IFRS 9 and 15 standards continues according to plan. The Group does not expect the new standards to have any significant impact on the balance sheet and income statement.
Key ratios in this report are defined in ÅF's Annual Report for 2016. ÅF is changing its operating income measure from EBIT to EBITA. EBITA is defined by ÅF as operating profit with restoration of acquisition-related items. Operating profit is thereby adjusted with amortisation and impairment of acquisition-related intangible assets including goodwill, revaluation of contingent considerations and gains/losses on the divestment of companies and businesses.
The purpose of the measure is to present a picture of business operations and their earnings capacity in an acquisition-intense company like ÅF. ÅF can thus help the reader to easily distinguish between income items attributable to operating activities and income items attributable to acquisition activity.
EBITA – Operating profit with restoration of acquisition-related items.
EBITA margin – EBITA in relation to net sales.
Acquisition-related items – Amortisation and impairment of goodwill and acquisition-related intangible assets, revaluation of contingent considerations and gains/losses on the divestment of companies and businesses.
Operating profit (EBIT) – Profit before net financial items and tax.
The ÅF share price was 174.10 (140.25) kronor at the end of the reporting period, representing an increase of 6.8 percent since year-end, adjusted for dividends. Total shareholder return on the OMX Stockholm Allshare index amounted to 10.9 percent.
| A shares | 3,217,752 |
|---|---|
| B shares | 75,879,601 |
| Total shares | 79,097,353 |
| Of which own B shares | 1,179,488 |
| Votes | 108,057,121 |
In 2017, 23,262 own shares were used for matching of the 2013 share savings programme. Shares were converted during the period as per the 2013 staff convertible programme, increasing the number of B shares by 183,600.
Stockholm, Sweden - 13 July, 2017 ÅF AB (publ)
Jonas Gustavsson President and CEO
This report has not been subject to review by the company's auditors.
This information is information that ÅF AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 13 July at 11.00 am CET.
All assumptions about the future that are made in this report are based on the best information available to the company 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.
ÅF invites analysts and investors to an online presentation of the interim report for the second quarter, 2017, on July 13 at 2.00 pm with Jonas Gustavsson, CEO and Stefan Johansson, CFO.
The presentation will be in English. Link to the webcast and presentation can be found at www.afconsult.com/en/investor-relations/ financial-reports.
You can also participate by telephone:
Sweden: +46 8 506 539 36 UK: +44 20 342 719 18 USA: +1 646 2543 365
Confirmation code 7074733
13 July, Interim report January-June 23 October, Interim report January-September 8 November, Capital Markets Day
Jonas Gustavsson, President and CEO +46 70 509 16 26
Stefan Johansson, CFO +46 70 224 24 01
ÅF AB, SE-169 99 Stockholm, Sweden Visitors' address: Frösundaleden 2, Solna, Sweden Tel. +46 10 505 00 00 www.afconsult.com [email protected] Corp. ID no. 556120-6474
Stockholm, Sweden, 13 July 2017
ÅF AB (publ) 556120-6474
Anders Narvinger Jonas Gustavsson Gunilla Berg Chairman of the Board CEO Director
Staffan Jufors Björn O. Nilsson Maud Olofsson Director Director Director
Joakim Rubin Kristina Schauman Anders Snell Director Director Director
Gunnar Parkefelt Anders Toll Employee Rep. Employee Rep.
| Consolidated income statement | ||||||
|---|---|---|---|---|---|---|
| SEK million | Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
Jul 2016- Jun 2017 |
| Net sales | 3,231 | 2,942 | 6,496 | 5,585 | 11,070 | 11,981 |
| Personnel costs | -1,832 | -1,621 | -3,755 | -3,137 | -6,139 | -6,757 |
| Purchases of services and materials | -822 | -780 | -1,585 | -1,450 | -2,944 | -3,080 |
| Other costs | -268 | -231 | -535 | -442 | -918 | -1,010 |
| Other income | 0 | -2 | 0 | 1 | 4 | 3 |
| Profit attributable to participations in associates | 0 | 0 | 0 | 0 | 0 | 0 |
| EBITDA | 309 | 308 | 620 | 556 | 1,074 | 1,138 |
| Amortisation and impairment of non-current assets 1) | -27 | -20 | -52 | -40 | -82 | -94 |
| EBITA | 282 | 288 | 568 | 516 | 992 | 1,044 |
| Acquisition-related items 2) | -9 | -7 | -8 | -15 | -27 | -20 |
| Operating profit (EBIT) | 273 | 281 | 560 | 501 | 965 | 1,025 |
| Net financial items | -20 | -11 | -40 | -20 | -42 | -62 |
| Profit after financial items | 253 | 270 | 520 | 481 | 923 | 962 |
| Tax | -57 | -59 | -119 | -109 | -212 | -222 |
| Profit for the period | 196 | 211 | 402 | 372 | 711 | 741 |
| Attributable to: | ||||||
| Shareholders in the parent | 196 | 214 | 402 | 377 | 726 | 751 |
| Non-controlling interest | 0 | -3 | -1 | -5 | -15 | -10 |
| Profit for the period | 196 | 211 | 402 | 372 | 711 | 741 |
| Earnings per share before dilution, SEK | 2.52 | 2.75 | 5.17 | 4.85 | 9.32 | - |
| Earnings per share after dilution, SEK | 2.48 | 2.70 | 5.08 | 4.76 | 9.14 | - |
| Number of shares outstanding | 77,917,865 | 78,100,463 | 77,917,865 | 78,100,463 | 77,711,003 | |
| Average number of outstanding shares before dilution | 77,888,668 | 77,881,872 | 77,819,902 | 77,770,940 | 77,937,176 | |
| Average number of outstanding shares after dilution | 79,970,350 | 79,917,592 | 79,966,476 | 79,932,109 | 80,220,366 |
1) Depreciation/amortisation and impairment of non-current assets refers to property, plant and equipment and intangible non-current assets excluding intangible non-current assets related to acquisitions.
2) Acquisition-related items are defined as depreciation/amortisation and impairment of acquisition-related intangible non-current assets including goodwill, revaluation of contingent considerations and gains/losses on divestment of companies and businesses. See page 14 for further details.
| SEK million | Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|---|---|---|---|---|---|
| Profit for the period | 196 | 211 | 402 | 372 | 711 |
| Items which will be tranfserred to profit or loss | |||||
| Change in translation reserve | -17 | 43 | -27 | 63 | 112 |
| Change in hedge reserve | 0 | -5 | 2 | -13 | -11 |
| Tax | 0 | 1 | 0 | 3 | 2 |
| Items which will not be be transferred to profit or loss | |||||
| Pensions | 0 | 0 | 0 | 1 | -5 |
| Tax | 0 | 0 | 0 | 0 | 1 |
| Other comprehensive income for the period | -17 | 39 | -26 | 53 | 99 |
| Comprehensive income for the period | 179 | 250 | 376 | 425 | 810 |
| Attributable to: | |||||
| Shareholders in the parent | 180 | 251 | 377 | 428 | 818 |
| Non-controlling interest | -1 | -1 | -1 | -3 | -8 |
| Total | 179 | 250 | 376 | 425 | 810 |
| Consolidated balance sheet | |
|---|---|
| SEK million | 30 Jun 2017 |
30 Jun 2016 |
31 Dec 2016 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 6,433 | 5,323 | 5,955 |
| Property, plant and equipment | 513 | 402 | 476 |
| Other non-current assets | 18 | 24 | 31 |
| Total non-current assets | 6,964 | 5,749 | 6,462 |
| Current assets | |||
| Current receivables | 3,777 | 3,116 | 3,616 |
| Cash and cash equivalents | 206 | 255 | 329 |
| Total current assets | 3,984 | 3,371 | 3,945 |
| Total assets | 10,948 | 9,120 | 10,407 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Attributable to shareholders in the parent | 4,728 | 4,391 | 4,677 |
| Attributable to non-controlling interest | 18 | 7 | 19 |
| Total equity | 4,746 | 4,398 | 4,697 |
| Non-current liabilities | |||
| Provisions | 353 | 264 | 360 |
| Non-current liabilities | 1,833 | 1,794 | 2,520 |
| Total non-current liabilities | 2,187 | 2,058 | 2,880 |
| Current liabilities | |||
| Provisions | 75 | 35 | 39 |
| Current liabilities | 3,940 | 2,630 | 2,791 |
| Total current liabilities | 4,015 | 2,664 | 2,830 |
| Total equity and liabilities | 10,948 | 9,120 | 10,407 |
| SEK million | 30 Jun 2017 |
30 Jun 2016 |
31 Dec 2016 |
|---|---|---|---|
| Equity at start of period | 4,697 | 4,230 | 4,230 |
| Comprehensive inocome for the period | 376 | 425 | 810 |
| Dividends | -350 | -292 | -292 |
| Conversion into shares under the staff convertible debenture program | 18 | 21 | 79 |
| Value of conversion right | - | - | 8 |
| Share buy-backs/sales | - | - | -128 |
| Transactions related to non-controlling interest | - | 8 | -20 |
| Share savings programmes | 5 | 6 | 10 |
| Equity at end of period | 4,746 | 4,398 | 4,697 |
| SEK million | Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|---|---|---|---|---|---|
| Profit after financial items | 253 | 270 | 520 | 481 | 923 |
| Adjustment for items not included in cash flow | 43 | 55 | 53 | 79 | 95 |
| Income tax paid | -43 | -42 | -133 | -116 | -188 |
| Cash flow from operating activities before changes in working capital | 253 | 283 | 441 | 444 | 830 |
| Cash flow from changes in working capital | -18 | 25 | -73 | -59 | -208 |
| Cash flow from operating activities | 235 | 307 | 367 | 386 | 622 |
| Cash flow from investing activities | -91 | -113 | -335 | -419 | -963 |
| Cash flow from financing activities | -160 | -129 | -155 | 27 | 411 |
| Cash flow for the period | -16 | 65 | -122 | -7 | 70 |
| Opening cash and cash equivalents | 223 | 192 | 329 | 264 | 264 |
| Exchange difference in cash and cash equivalents | -1 | -2 | -1 | -2 | -5 |
| Closing cash and cash equivalents | 206 | 255 | 206 | 255 | 329 |
| SEK million | Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|---|---|---|---|---|---|
| Opening balance | 2,431 | 1,748 | 2,298 | 1,486 | 1,486 |
| Cash flow from operating activities | -235 | -307 | -368 | -386 | -622 |
| Acquisitions of intangible assets, property, plant and equipment | 25 | 26 | 51 | 50 | 97 |
| Acquistion and contingent considerations paid | 67 | 90 | 285 | 421 | 917 |
| Dividend | 350 | 292 | 350 | 292 | 292 |
| Share buy-backs/sales | - | - | - | - | 128 |
| Other | 1 | 3 | 22 | -12 | 0 |
| Closing balance | 2,639 | 1,851 | 2,639 | 1,851 | 2,298 |
| SEK million | 30 Jun 2017 |
30 Jun 2016 |
31 Dec 2016 |
|---|---|---|---|
| Loans and credit facilities | 2,697 | 1,998 | 2,464 |
| Net pension liability | 148 | 109 | 163 |
| Cash and cash equivalents | -206 | -255 | -329 |
| Group | 2,639 | 1,851 | 2,298 |
| Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|
|---|---|---|---|
| Return on equity, % | 15.9 | 14.8 | 15.9 |
| Return on capital employed, % | 14.2 | 14.3 | 14.7 |
| Equity ratio, % | 43.3 | 48.2 | 45.1 |
| Equity per share, SEK | 60.68 | 56.22 | 60.19 |
| Interest-bearing liabilities, SEK million | 2,845 | 2,107 | 2,627 |
| Average number of employees (FTEs) | 9,160 | 7,978 | 8,115 |
| SEK million | Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|---|---|---|---|---|---|
| Restructuring costs | -20 | -25 | -20 | -25 | -25 |
| Pension refunds | - | 22 | - | 22 | 22 |
| Total | -20 | -4 | -20 | -4 | -4 |
| 2016 | 2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| NET SALES, SEK million | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | Q3 | Q4 | Full year |
| Industry | 1,070 | 1,187 | 930 | 1,251 | 4,437 | 1,260 | 1,256 | |||
| Infrastructure | 921 | 1,087 | 861 | 1,167 | 4,037 | 1,190 | 1,155 | |||
| International | 278 | 263 | 257 | 300 | 1,098 | 375 | 409 | |||
| Technology | 438 | 476 | 366 | 513 | 1,793 | 515 | 490 | |||
| Group-wide/ eliminations | -64 | -71 | -66 | -94 | -295 | -76 | -79 | |||
| Group | 2,643 | 2,942 | 2,348 | 3,138 | 11,070 | 3,265 | 3,231 |
| 2016 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| EBITA, SEK million | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | |
| Industry | 85 | 122 | 72 | 123 | 403 | 109 | 118 | |
| Infrastructure | 99 | 125 | 72 | 126 | 421 | 127 | 125 | |
| International | 14 | 17 | 0 | 28 | 58 | 15 | 30 | |
| Technology | 42 | 48 | 29 | 47 | 167 | 47 | 48 | |
| Group-wide/ eliminations | -12 | -24 | -3 | -18 | -58 | -12 | -39 | |
| Group | 228 | 288 | 170 | 306 | 992 | 286 | 282 |
| 2016 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| EBITA MARGIN (%) | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | |
| Industry | 8.0 | 10.3 | 7.7 | 9.9 | 9.1 | 8.7 | 9.4 | |
| Infrastructure | 10.8 | 11.5 | 8.4 | 10.8 | 10.4 | 10.6 | 10.9 | |
| International | 4.9 | 6.3 | 0.1 | 9.3 | 5.3 | 3.9 | 7.3 | |
| Technology | 9.7 | 10.1 | 8.1 | 9.2 | 9.3 | 9.1 | 9.7 | |
| Group | 8.6 | 9.8 | 7.3 | 9.7 | 9.0 | 8.8 | 8.7 |
| 2016 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| EMPLOYEES (FTES) | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | |
| Industry | 3,200 | 3,144 | 3,085 | 3,284 | 3,177 | 3,350 | 3,361 | |
| Infrastructure | 2,724 | 2,977 | 2,976 | 3,178 | 2,966 | 3,361 | 3,467 | |
| International | 859 | 842 | 826 | 851 | 844 | 1,199 | 1,171 | |
| Technology | 988 | 979 | 980 | 1,076 | 1,006 | 1,085 | 1,078 | |
| ÅF AB | 127 | 116 | 131 | 117 | 122 | 116 | 137 | |
| Group | 7,898 | 8,057 | 7,998 | 8,505 | 8,115 | 9,110 | 9,214 |
| NUMBER OF WORKING | 2016 | 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DAYS | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | ||||
| Sweden only | 61 | 62 | 66 | 63 | 252 | 64 | 59 | 65 | 63 | 251 |
| All countries | 61 | 62 | 66 | 63 | 252 | 64 | 59 | 65 1) | 63 1) | 252 1) |
1) Estimated weighted average.
The historical figures above are adjusted based on the organisational changes implemented on 1 January 2017, where ÅF Technology AS (formerly ÅF AdvansIT) was transferred from the Infrastructure Division to the Technology Division.
| SEK million | Jan-Jun 2017 |
|---|---|
| Intangible assets | 3 |
| Property, plant and equipment | 11 |
| Financial assets | 0 |
| Accounts receivable and other receivables | 120 |
| Cash and cash equivalents | 20 |
| Accounts payable and other liabilities | -145 |
| Net identifiable assets and liabilities | 10 |
| Goodwill | 457 |
| Fair value adjustment intangible assets | 29 |
| Fair value adjustment non-current provisions | -6 |
| Purchase price incl estimated contingent consideration | 490 |
| Transaction costs | - |
| Deduct: | |
| Cash (acquired) | -20 |
| Estimated contingent consideration/option | -232 |
| Net outflow of cash | 238 |
Acquisition analyses are preliminary as the assets in the companies acquired have not been definitively analysed. In the case of the above acquisitions, the purchase price has been greater than the assets recognised in the companies acquired: as a result, the acquisition analysis has created intangible assets. The acquisition of a consulting business involves in the first instance the acquisition of human capital in the form of the skills and expertise of the workforce: thus, the greater part of the intangible assets in the companies acquired is attributable to goodwill.
The acquisitions refer to AB Teknoplan, Midtconsult P/S, Quality Engineering Group AB, Vatten & Miljöbyrån i Sverige AB, Teroc Engineering AB Climate Energy Consulting Piteå AB and Koncept Stockholm AB. None of the acquisitions are significant individually, so the information has been consolidated for presentation.
Eitech's automation business was acquired after the end of the reporting period. An acquisition analysis has not yet been prepared for this acquisition.
| SEK million | Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|---|---|---|---|---|---|
| Amortisation and impairment of intangible assets | -8 | -8 | -18 | -16 | -33 |
| Revaluation of contingent considerations | -1 | 1 | 10 | 1 | 6 |
| Total | -9 | -7 | -8 | -15 | -27 |
Contingent considerations are valued to fair value in accordance with level 3. The changes in the balance are reported in the table below.
| SEK million | 30 Jun 2017 |
|---|---|
| Opening balance as at 1 January 2017 | 385 |
| Acquisitions this year | 232 |
| Payments | -51 |
| Changes in value recognised in other operational income | -11 |
| Adjustment, preliminary acquisition analysis | -7 |
| Discounting | 10 |
| Exchange differences | -2 |
| Closing balance | 557 |
As regards other financial assets and liabilities, no significant changes in fair value measurement have been made since the 2016 Annual Report. Fair values are essentially consistent with carrying amounts.
Information in accordance with IAS 34.16A can partly be found on pages prior to the consolidated income statement for the group.
| SEK million | Apr-Jun 2017 |
Apr-Jun 2016 |
Jan-Jun 2017 |
Jan-Jun 2016 |
Full year 2016 |
|---|---|---|---|---|---|
| Net sales | 145 | 114 | 275 | 217 | 456 |
| Other operating income | 49 | 50 | 100 | 98 | 202 |
| Operating income | 194 | 163 | 374 | 315 | 658 |
| Personnel costs | -44 | -39 | -84 | -74 | -149 |
| Other costs | -162 | -131 | -305 | -248 | -517 |
| Depreciation and amortisation | -9 | -7 | -17 | -15 | -31 |
| Operating profit/loss | -22 | -15 | -32 | -22 | -39 |
| Net financial items | 72 | -4 | 98 | 50 | 561 |
| Profit/loss after financial items | 51 | -19 | 66 | 28 | 522 |
| Appropriations | - | - | - | - | 65 |
| Pre-tax profit/loss | 51 | -19 | 66 | 28 | 588 |
| Tax | 6 | 5 | 11 | 7 | -1 |
| Profit/loss for the period | 57 | -15 | 77 | 35 | 587 |
| Other comprehensive income | 0 | -3 | 1 | -10 | -9 |
| Comprehensive income for the period | 57 | -18 | 78 | 25 | 579 |
| SEK million | 30 Jun 2017 |
30 Jun 2016 |
31 Dec 2016 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 15 | 21 | 19 |
| Property, plant and equipment | 116 | 96 | 107 |
| Financial assets | 1,862 | 5,511 | 5,764 |
| Total non-current assets | 1,993 | 5,628 | 5,890 |
| Current assets | |||
| Current receivables | 6,176 | 899 | 1,875 |
| Cash and bank balances | 16 | 77 | 62 |
| Total current assets | 6,191 | 976 | 1,937 |
| Total assets | 8,184 | 6,604 | 7,828 |
| EQUITY AND LIABILITIES | |||
| Equity | 4,182 | 3,935 | 4,436 |
| Untaxed reserves | 134 | 129 | 134 |
| Provisions | 159 | 68 | 85 |
| Non-current liabilities | 1,335 | 1,523 | 2,157 |
Current liabilities 2,375 949 1,016 Total equity and liabilities 8,184 6,604 7,828
INTERIM REPORT ÅF AB
ÅF is an engineering and consulting company with assignments in the energy, industrial and infrastructure sectors, creating progress for our clients since 1895.
By connecting technologies and skills, we provide profitable, innovative, and sustainable solutions to shape the future and improve people's lives. Building on our strong base in Europe, our business and clients are found all over the world.
ÅF – Innovation by experience.
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