Annual Report • Apr 24, 2009
Annual Report
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I nnovation by experience ANNUAL REPORT 2008
ÅF is a leader in technical consulting, with expertise founded on more than a century of experience.
We offer highly qualified services and solutions for industrial processes, infrastructure projects and the development of products and IT systems. We are also one of the leading names in testing and inspection.
Today ÅF has approximately 4,400 employees. Our base is in the Nordic region, but our business and our clients are found all over the world.
Net sales totalled SEK 4,569 million (2007: SEK 3,862 million).
Operating profit totalled SEK 479 million (SEK 332 million).
Profit after tax amounted to SEK 328 million (SEK 220 million).
Earnings per share before dilution: SEK 19.08 (SEK 13.15).
The Energy Division offers technical and financial consulting services for the energy sector and possesses world-class expertise in the field of nuclear power.
The Engineering Division is northern Europe's leading industrial consultant, offering services in process technology, automation, industrial IT, electrical power systems and mechanical engineering.
The Infrastructure Division holds a leading position in consulting services for infrastructure development in Scandinavia.
The Inspection Division is an independent third-party inspection body that inspects, tests and certifies plant and systems for clients in both industry and infrastructure.
Divisional shares of Group totals for 2008 are shown as a percentage.
| Financial summary |
2008 | 2007 |
|---|---|---|
| Net sales, in millions of SEK (MSEK) |
4,568.8 | 3,861.6 |
| Operating profit, MSEK |
478.7 | 331.9 |
| Operating margin, percent |
10.5 | 8.6 |
| Capacity utilisation, percent |
74.1 | Verkstadsproduktion Elektroindustri, 75.1 |
| Profit after net financial items, MSEK |
460.9 | 322.1 |
| Profit margin, percent |
10.1 Bygg |
8.3 och fastighet, VA |
| Employees (FTEs) |
3,948 | 3,623 |
| Equity per share, SEK |
99.5 | 78.8 |
| Equity/assets ratio, percent |
47.1 El, värme, |
47.9 gas, raffinaderi |
| Return on equity, percent |
21.6 | 18.1 |
| Earnings per share after tax, SEK |
19.08 | 13.15 |
| Dividend per share, SEK |
6.50* | 6.50 Myndighet, finans |
*Proposed dividend
The ÅF Group is an international technical consulting company with the Nordic countries, the Baltic countries and Switzerland as its domestic market. Because a local presence among clients and in the labour market is essential for success, ÅF has around 100 of its own offices in a total of more than 20 countries.
ÅF's organisation and management is characterised by a decentralised structure which contributes to quick decision-making processes.
ÅF consists of four divisions: Energy, Engineering, Infrastructure and Inspection. The divisions are based on the requirements of our clients as reflected in our own spectrum of skills.
On 23 February 1895 Södra Sveriges Ångpanneförening was created when a number of steam generator owners in the south of Sweden joined forces to prevent accidents and make more efficient use of steam power.
In the 114 years that have elapsed since then, ÅF has played a major role in the industrial developments that have revolutionised society. The company has guided its clients through four huge technology changes – steam, electricity, nuclear power and computerisation – and remained at the forefront of technology both in the industrial era and in today's information society.
Since AB Ångpanneföreningen was first listed on the Stockholm Stock Exchange in January 1986 the company has grown to become one of Europe's largest technical consulting companies.
On 5 May 2008 AB Ångpanneföreningen changed its name to ÅF AB.
"2008 was ÅF's best ever year with plenty of reasons to be positive. Thanks to our development programmes, new orders and a total of ten acquisitions we advanced our positions significantly, particularly in the fields of energy efficiency, hydropower and nuclear power.
"In the autumn we restructured our operations, realigning the Process Division more closely with the energy sector and changing the division's name to Energy. For the Swiss arm of this business, ÅF-Colenco, earnings and the inflow of orders exceeded expectations, and our purchase of the Russian technical consultant Lonas in the fourth quarter created a strong position for the division in Russia, a market in which we see long-term potential.
"Progress has also been very good in the Engineering Division, which maintained good earnings across the board. As a result of the autumn reorganisation, Engineering was bolstered by the addition of 250 experts in the fields of electrical power systems, pulp and paper, food processing and pharmaceuticals.
"When the Infrastructure and Systems Divisions were merged under the Infrastructure banner, one important motive for this was to spread Systems' culture of growth to the expansive area of infrastructure planning. The merger also creates opportunities for cross-fertilisation between different areas of expertise and paves the way for cost synergies.
"Developments in the Inspection Division have been positive for several years, and 2008 saw two more important steps with the acquisition of a company in Sweden and one in the Czech Republic, which is a key market for ÅF."
"One ÅF is the ethos of our corporate culture of internal cooperation, pooling the resources of all of ÅF's engineers regardless of organisational or geographical boundaries. It's the interweaving of structures, systems and cultures. Every ÅF consultant who visits a client should be able to use the entire spectrum of ÅF's resources to carry out the assignment. The chances are that we have already worked on something similar, and the experience we have gained from this should quickly be used to the client's advantage. One ÅF also signals that the whole of ÅF is a potential workplace for co-workers, as we work in a similar way throughout the entire Group.
"In 2008 we launched a brand new system for sharing experience and knowledge that gives ÅF employees worldwide access to our collective know-how in a variety of areas. Not surprisingly, perhaps, we have called this system 'ONE', since it enables every ÅF unit to serve as a local partner to its clients while tapping into the potential of ÅF's global activities."
"The most important thing is to regard environmental work as a profitable undertaking. Our own greatest contribution to a better environment is to systematically reduce our consumption of energy and resources by working towards a number of quantifiable environmental goals. But it is what we can do for our clients that makes the biggest impact of all. By supplying them with environmentally adapted and socially responsible solutions we can do the world a big favour while improving the profitability of our clients' operations. ÅF is well to the fore in this respect."
"My vision is for ÅF to be Europe's number one technical consulting company. By that I mean that we will be the most profitable among our 10 or 20 biggest competitors. Continued good profitability will enable us to recruit the most capable co-workers and give us the freedom to make strategic acquisitions. We will have more specialists and project leaders while undertaking more projects as fixed-price agreements rather than at hourly rates, sometimes with some kind of built-in incentive."
"In the short term we face tough times with some stiff challenges. But the long-term outlook remains very promising. Never before has the need for new breakthroughs in technology – particularly as regards infrastructure and energy – been so great. In this respect, ÅF is ideally placed to offer clients both peace of mind and cutting-edge expertise."
"Strategically one of our most important tasks is to win the battle for the most capable co-workers. We can only do this if the ÅF brand attracts the best talents in the marketplace. And, with operations in around 20 countries, we need to think internationally. Being title sponsor of the ÅF Golden League, the world's biggest annual series of athletics meetings watched by hundreds of millions of TV viewers in 100 countries, has been a big success.
"We often receive proof that awareness of our brand has increased. In ISI Wissing's annual survey of decision-makers in Sweden ÅF was ranked best technical consultant, and in the 2008 Universum survey of the best employers for Swedish engineers ÅF claimed eighth place overall and the number one spot among technical consulting companies.
"Also on this subject I'd like to mention how well last year's official name change from Ångpanneföreningen to ÅF has been received. We now have a name that is better suited to the modern consulting company that we are today."
"ÅF House is a symbol for ÅF in many ways. The physical layout, for instance – so suited to both scheduled meetings and spontaneous debate – demonstrates our open-minded approach to problem-solving. The building itself is a good example of how environmental thinking can be profitable. It is the first office in Sweden to win 'Green Building' certification, an eco-labelling system for properties with at least 25 percent lower energy use than what is prescribed in national
standards for new properties. We estimate saving SEK 6 million a year compared with our previous energy costs. And, as many aspects of the construction work were project-led by ÅF, the building is also an example of our engineering skills. It embodies both our brand and our soul."
"First of all I would like to thank all our clients for the confidence they show in us. And thanks, too, to our co-workers for a job well done. ÅF is now stronger than it has ever been, with an extensive database of experience readily available to help all of us to provide an even better service to our clients. We stand well equipped in sectors that have great potential and this will enable us to
build enduring values for our shareholders in line with the culture and spirit that characterises all that we do – innovation by experience."
Stockholm, March 2009
Jonas Wiström President and CEO
"In the short term we face tough times with some stiff challenges. But the long-term outlook remains very promising."
Jonas Wiström President and CEO
ÅF contributes to the sustainable development of industry and society as a whole. More than 100 years' experience in the business has taught us to raise our sights.
Our collective experience places ÅF firmly in the front rank of technological progress. Even so, the solution ÅF delivers is not necessarily the most technically sophisticated – but it's always the best! ÅF never experiments with its clients or their businesses, especially when their interests are best served by tried and tested technology.
Our indisputable independence from suppliers and other partners is our clients' guarantee of an optimum solution.
That's why ÅF creates solutions that are profitable, safe and sustainable for its clients.
Innovation by experience.
MSSON
ÅF has access to more than 100 million hours of engineering experience – know-how and solutions that are documented in "ONE", our unique knowledge bank that is available to every ÅF employee. This means that:
ÅF does not charge for its time, but for the value it creates. That increases the productivity of our projects and reduces costs for the clients. Partnership plays a central role in our assignments, because it is as a partner that ÅF can deliver real value – the right quality at the lowest overall cost.
Our outstanding co-workers are one step ahead in terms of technical expertise, business acumen and indisputable independence.
For our clients and competitors it is clear that here at ÅF we demand more of ourselves. We have the will to win.
ÅF will become Europe's leading technical consultant. For us, that means becoming the most profitable company among our biggest competitors in the business.
Our rate of growth will be high. We will grow both organically and through corporate acquisitions, but we will also be careful to ensure that the companies we acquire contribute positively to our profitability and to the ÅF culture.
Operations will be decentralised
ONE ÅF is a huge, shared bank of knowledge available to all ÅF co-workers that enables ÅF to improve profitability for its clients by proposing safe, sustainable solutions to a wide variety of challenges.
ONE ÅF is a common workplace where co-workers are encouraged to pursue their career within ÅF, for example in a different country or with new, technical challenges.
ONE ÅF is a joint sales organisation through which clients are offered the entire range of ÅF's services.
ONE ÅF is the firm base for the corporate culture and shared values of ÅF.
ÅF's acquisitions policy is based on the above. Every effort will be made to develop the business when the right opportunities arise, but expansion will not take place at the expense of profitability.
ÅF is constantly developing its consulting business and its capacity to carry out assignments in the best possible way. The ambition is to assure successful, sustainable, long-term development for both clients and ÅF.
One example of this is ONE, ÅF's recently developed IT platform. At the same time as it acts as a driving force for collaboration within ÅF and with our clients, ONE is also the guarantor of a modern approach to working with processes, projects and knowledge retrieval at ÅF. This web-based, predominantly English-language tool is accessible to employees throughout the ÅF Group.
ONE also serves as ÅF's business support system, a central operational control system that makes ÅF's business operations considerably more cost-effective while assuring the quality and consistency of the company's approach. The system includes tools for shared processes, project documentation and a searchable database of engineering and business experience that pinpoints the similarities between many of the assignments undertaken by ÅF. When a client commissions ÅF to perform an assignment, the chances are great that ÅF has already successfully completed a similar assignment elsewhere.
The ONE system enables ÅF management to control and support operations and meet the criteria for certification for environmental and quality management in accordance with ISO 14001:2004 and ISO 9001: 2000.
ÅF shall be the most profitable company among its closest comparable competitors in the industry and achieve an operating margin (EBIT) of at least 10 percent over a business cycle.
ÅF shall have net debt, but net indebtedness shall not exceed 40 percent of equity.
Sales of 1 billion euros by 2015.
Client surveys to show that at least 90 percent of clients perceive that the service provided by ÅF exceeds their expectations.
Better balance in the gender ratio. An initial target is for at least 25 percent of the company's consultants and managers to be women.
Staff turnover to be 7–13 percent.
All employees (with at least one year's service) to take part in a personal development interview each year.
In 2008 ÅF resolved to adopt entirely new environmental objectives for its operational activities. 2008 is the base year for the new objectives and for the new key values. After the results have been analysed, three new environmental objectives will be adopted: two for the company's direct environmental impact (through its own internal operations) and one for the company's indirect impact (through the assignments ÅF carries out for its clients). Please refer to pages 23–26 for further details.
ÅF's operational activities comprise four divisions offering technical consulting services for industry (approximately 70 percent of revenue) and infrastructure projects (approximately 30 percent).
The Energy Division focuses on technical and financial consulting for the energy sector, from advice in connection with business models to implementing investments in power plants and all manner of environmental considerations associated with this. The division possesses world-class expertise in nuclear power.
The Engineering Division is northern Europe's leading industrial consultant offering services in process technology, automation, industrial IT, electrical power systems and mechanical engineering.
The Infrastructure Division holds a leading position in consulting services for infrastructure development in Scandinavia with clients in industry, the public sector, defence and the property sector.
The Inspection Division is an independent third-party inspection body that inspects, tests and certifies plant and systems for clients in both industry and infrastructure.
ÅF's ten largest clients in 2008 were Atel, Banverket (the Swedish National Rail Administration), Ericsson, Fortum, FMV (the
Swedish Defence Materiel Administration), Peab, Stockholm's regional transport authority (SL), Vattenfall, Volvo Cars and Westinghouse. Together these clients accounted for 21 percent of total invoiced sales.
The market for ÅF's services was very good in 2008, although there was a slight dip in demand towards the end of the year.
The market for the Energy Division started the year strong in all segments, with the rise in global energy consumption leading to widespread capacity shortages. Demand eased as the year drew to a close, however, as many investment decisions were shelved as a result of the financial crisis.
The market for the Engineering Division was very strong during the year but here, too, demand began to flag towards the end of the year, particularly from manufacturing industries. Orders came chiefly in the form of efficiency improvements in manufacturing plants, environmental engineering projects, the development of alternative fuels and conversion to efficient energy management.
The market for infrastructure consulting services was also strong with the exception of consulting services in product development, where demand tailed off at the year-end. Environmental adaptations and energy-efficiency projects are the clear engines for growth in this market and are acquiring ever greater significance.
Demand for the services of the Inspection Division remained stable and the trend pointed upwards in 2008. The market as a whole has grown slightly, but Inspection has expanded more quickly, capturing new shares of the market. Demand was particularly brisk within testing, which led to some shortage of capacity. The ongoing harmonisation processes in the EU and the fact that increasing numbers of sectors are now regulated by technical inspections are fuelling an increase in demand in this field.
Demand for technical consulting services of the kind offered by ÅF is expected to remain good despite the downturn in the economy. We are well prepared to meet rapid changes, and capacity shortages in certain areas enable us to transfer resources to meet shifts in patterns of demand.
The prevailing trend of globalisation is unaffected by the economic downturn and will continue to intensify the competitive situation for industry in Sweden and among its Nordic neighbours. Many industrial plants still need modernising to improve efficiency so that they can compete successfully in a global market.
Over the next few years the Nordic energy market will begin to see the implementation of investment decisions, chiefly in the form of an increased focus on nuclear power in Finland and on biofuels in the other Nordic countries. There is often an energy or environmental perspective to industry's demands for
improved efficiency, and this will fuel demand for technical consulting services throughout the Nordic region for a long time to come.
Within the Nordic process industries, demand is expected to remain high for projects aimed at making production facilities more efficient and at reducing costs by saving energy. Demand is expected to remain high in industries such as mining, petrochemicals, energy, food processing and pharmaceuticals whereas on the manufacturing side, for example the automotive industry, demand is expected to fall even further in 2009. Projects dependent on venture capital will no doubt continue to be under pressure.
Several environmentally-oriented pilot projects in Swedish industry are expected to be turned into export products and should thus contribute to maintaining the demand for technical consulting services.
Sweden stands at the threshold of huge investments in road and rail infrastructure at the same time as interest in environmental initiatives and energy-efficiency projects remains keen. As a result, ÅF believes the market for technical consulting services in infrastructure will continue to remain favourable. It is a similar picture in certain other Nordic regions. As far as the Installations business area is concerned, however, there is growing uncertainty throughout the Nordic market about the immediate future of major projects in the property sector, such as shopping malls and office blocks.
Number of employees per country, December 2008
ÅF's domestic markets are the Nordic countries, the Baltic countries and Switzerland, but the company is becoming increasingly international. It has offices in more than 20 countries, but conducts business activities and attracts clients all over the world. Of a total of some 4,400 employees, approximately 1,200 are based outside Sweden. 0 10 2005 2006 2007 0 10
In the field of technical inspections, a gradual deregulation of the Nordic markets is taking place. The Inspection Division is following this development carefully and intends to take an active role in the changes that this may lead to.
Despite economic unrest in the wake of the financial crisis there is still great potential in Russia and other Eastern European markets. Many industries are in dire need of modernisation and all the signs are that future demand for energy will be great.
It is expected that Western Europe will expand its nuclear power generation capacity and make coal-fired power plants more efficient and better adapted to the environment. Russia is badly affected by the financial crisis but will nonetheless carry out new projects primarily within coal and gas. The economic situation is much the same in India and South-East Asia, where current investments in hydropower and thermal power plants will be carried out, but fewer new ones will be initiated.
European industry's appetite for energy remains insatiable and this will lead to strong demand for services in power generation and transmission while demand for environmentally-related industrial projects is also expected to be high.
As far as pulp and paper are concerned, ÅF sees interesting markets in Africa and South America, while demand in Europe is expected to be weak, except for the paper recycling sector, where ÅF also possesses special expertise.
There is plenty of potential, too, in the market for inspection services in Europe. Not only is there a clear need for qualified inspection services in the wake of deregulation, but the process of EU harmonisation is also fuelling growth in this sector. ÅF has chosen the Czech Republic as its platform for expansion in this field in Central Europe.
With each passing year ÅF becomes increasingly international. A great deal of effort has been made to standardise the structure of our international competence centres, internal information banks, intranet and graphic profile, and to communicate shared corporate values and aims. Each part of ÅF enjoys considerable autonomy which helps secure strong local roots at the same time as there is always access to the company's global structure and capacity.
Of a total of approximately 4,400 ÅF co-workers, some 1,200 now work outside Sweden.
The process of change at ÅF continues. Working methods are updated and developed. The number of international assignments increases. ÅF has a presence in more than 20 countries and is involved in projects across the globe. More than 25 percent of the company's 4,400 employees are now based outside Sweden.
ÅF aims to have 10,000 employees by 2015. But growth and rapid change place great demands on ÅF as an employer. The company must offer an attractive working environment and good opportunities for development.
ÅF has identified three distinct career paths within the company: as project manager, specialist/expert and manager. Within each of these pathways to development there are various levels and stages. Career paths provide support for creating individual targets and action plans, not least as part of the annual personal development interviews between a manager and his or her coworkers. In practice, there may be far more development routes than these: co-workers can, for example, switch between roles within the company, acting either as project leader or specialist depending on the circumstances. These different career paths are described in an ÅF publication entitled "Five of Five Thousand".
There are also various opportunities for development within the traditional role of consultant that the majority of ÅF employees hold. In 2008 there was considerable focus on continuous professional development for consultants, with courses in sales, entrepreneurial skills and service aimed at better equipping co-workers to communicate and develop a variety of client needs within ÅF.
The ÅF Academy is ÅF's own training facility which provides support for the ÅF career paths and the development of the consultant's role. The offer includes comprehensive basic courses for new consultants as well as highly specialised advanced courses and training tailored to individual requirements. Facilitators and lecturers come both from within and outside ÅF, but it is ÅF's views on business acumen and entrepreneurial skills that provide the foundation for all the courses on offer. In 2008, some 40 training exercises were conducted.
In 2009 ÅF's commitment to increase its competence in nuclear power to meet the more stringent requirements of the industry and the regulatory authorities will be underpinned by the ÅF Nuclear Academy. Set up in the autumn of 2008 the ÅF Nuclear Academy offers courses that will lead to certification at four levels for experienced ÅF engineers and for new co-workers assigned to work within the nuclear power sector. The initiative has met with considerable interest from the industry and it also gives ÅF employees exciting opportunities for professional development. The aim is to certify all ÅF employees working on nuclear power assignments and also to offer certification to clients and other stakeholders.
At the ÅF Academy, ÅF project managers undergo training to obtain certification in accordance with the European accreditation standard, IPMA. There are four levels of certification: A, B, C and D. For project managers involved in international projects, the certification process is conducted in English. 29 consultants were accredited in 2008.
A number of competence centres were established in 2008. These cut across divisional structures within the ÅF Group in order to strengthen levels of expertise within a particular area and encourage the exchange of experiences between countries.
Also in 2008 the new "ÅF Recruits" tool was launched. This is a searchable, net-based database that makes it easier for ÅF managers to identify new co-workers with the right profile. In addition to taking care of all recruitment-related administration from advertising to drawing up the contract of employment, the system also contributes to better internal mobility within the Group.
By using flexible interfaces, "ÅF Recruits" can be used both for our own homepage and for external recruiting services. In 2008 alone more than 1,000 people declared an interest in working for ÅF, and the new system has led to substantial savings in time and raised the quality of recruitment work.
"ÅF Recruits" will be rolled out internationally during 2009.
ÅF is actively involved in keeping potential new employees informed about its business activities. One way of doing this is by regularly participating in both physical and virtual careers conventions and the contact days that are held at Sweden's technical universities.
A special Talent Manager is tasked with promoting ÅF's image in an appropriate way in the labour market, and great emphasis is placed on creating contacts with young jobseekers in ways that they will find appealing. For example, we ran two well-received internet recruitment campaigns – "The Wall" and "The List" – in 2008 that subsequently spread to internet forums worldwide. The campaigns took the form of a competition where candidates were required to solve various tasks as part of an initial selection screening process.
The ÅF divisions have adopted a number of systems for variable remuneration packages, based either on the results of the division or linked directly to the performance of the individual.
ÅF sees great value in the degree of commitment shown by employees in both the short and the long term. To underline the link between the efforts made by every co-worker and the profitability of the ÅF Group, a new bonus model was introduced in 2008. In broad terms the new model means that the portion of profit that is generated at Group level is shared out in the form of bonus payments that are the same for co-workers in all parts of the company's operations.
ÅF wants employees to take pride in their work and the company, to feel confidence in their managers and to enjoy the company of their colleagues. This requires focused, long-term efforts at all levels within the company. Employees are given feedback about how they are performing in their work via regular personal development interviews – dialogues between manager and co-worker that also form the basis for individual development plans. When a member of staff leaves ÅF, an exit interview is held to summarise the person's impressions of the time spent at ÅF and create a positive platform for any future relations.
Preventive healthcare takes the form of both occupational healthcare and support for employees' personal choices of health-promoting leisure activities.
Club ÅF is the collective name for the local staff clubs engaged in activities aimed at promoting social interaction and meaningful leisure activities, including a wide variety of cultural activities, for all ÅF employees who are interested.
All ÅF Group employees are entitled to rent one of the cottages or apartments that are owned, managed or leased by the Staff Foundation. A couple of hundred families take advantage of this opportunity every year.
Other benefits open to ÅF employees vary from country to country, depending, for example, on the local tax regime. In Sweden, benefits include occupational pensions, attractive insurance offers, the option of a company car and various discounts.
To make clear its position in a number of employee-related issues, the ÅF Group has formulated policies in key areas such as human resources, salaries, equal opportunities and the work environment.
Sick leave among ÅF employees was 2.4 percent in 2008 (2007: 2.6 percent).
Total absenteeism, including holidays, was 15.7 (16.3) percent of normal working hours. Holidays accounted for 10.3 (9.7) percent and leave of absence for 3.6 (4.0) percent.
Employees are encouraged to take parental leave and ÅF adds an extra 10 percent to state benefits paid to both male and female employees on parental leave who earn salaries up to a total of 7.5 times the so-called "basic statistical amount" used in Sweden for calculating national social security benefits, etc. Employees whose salaries exceed 7.5 times this basic amount receive 90 percent of their monthly salary for between 60 and 90 days, up to a maximum of 15 basic amounts.
ÅF strives to be a workplace where both men and women can feel comfortable and enjoy the opportunity to develop. Traditionally, the technical industry has been male-dominated, but ÅF works hard to create a better gender balance, an ambition that is also reflected in the company's recruitment activities. The first step towards a more even male-female ratio is to raise the proportion of female consultants and managers to 25 percent of the total. The proportion of female consultants was 17 percent at the end of 2008 (2007: 14 percent). The proportion of female senior consultants was 12 (13) percent, while female employees made up 21 (18) percent of the total workforce.
Three of the eight ÅF directors elected by the Annual General Meeting are women: this corresponds to a 37 percent representation on the board. One of the four employee representatives on the board is a woman.
The ÅF Group's invoiced-time ratio – the proportion of time charged to clients relative to the total number of hours spent at work by all employees – was 74.1 percent (2007: 75.1 percent). Non-invoiced time includes marketing, training, technical development, management and administration activities.
| Career Barometer 2008 |
Pos. |
|---|---|
| Volvo Group |
1 |
| Ericsson | 2 |
| IKEA | 3 |
| Sony Ericsson |
4 |
| Saab | 5 |
| ABB | 6 |
| Scania | 7 |
| ÅF | 8 |
| Vattenfall | 9 |
| Sweco | 10 |
In a survey of 6,000 professional engineers, ÅF was ranked in eighth place overall among Sweden's most attractive employers, successfully defending its position as the nation's most attractive consulting company.
The Career Barometer is an annual attitude survey conducted by Universum Communications. All respondents are "young professionals", which means that they have a degree in engineering from a university or college of similar standing and between two and eight years of working experience in their specialist area.
| Percentage | ||||||
|---|---|---|---|---|---|---|
| Age group, yrs |
2006 | 2007 | 2008 | |||
| –29 | 10 | 12 | 14 | |||
| 30–39 | 33 | 30 | 30 | |||
| 40–49 | 26 | 28 | 27 | |||
| 50–59 | 21 | 20 | 19 | |||
| 60– | 10 | 10 | 10 |
The average age was 43.1 (2007: 43.5) years.
Staff turnover based on resignations
Total 2008: 13.1 percent.
December 2008
Length of employment
| Length of |
Percentage | |||
|---|---|---|---|---|
| employment, yrs |
2006 | 2007 | 2008 | |
| –2 | 75 | 57 | 43 | |
| 3–5 | 10 | 15 | 32 | |
| 6–10 | 9 | 15 | 12 | |
| 11–20 | 4 | 9 | 9 | |
| 21– | 2 | 4 | 4 |
Average length of employment was 7.8 (7.2) years.
| SEK | '000/year/FTE | |||||
|---|---|---|---|---|---|---|
| 2006 | 2007 | 2008 | ||||
| Net sales* |
983 | 1,066 | 1,157 | |||
| Profit** | 46 | 90 | 120 | |||
| Personnel costs |
605 | 611 | 616 | |||
| Value added*** |
650 | 701 | 736 |
*) Revenue excluding other operating income.
**) Operating profit before net financial items, excluding participation in profit/loss of associated companies and other operating income.
***) Salaries and social security contributions including profit/loss before net financial items excluding other operating income.
| SEK '000/year/FTE |
||||
|---|---|---|---|---|
| 2006 | 2007 | 2008 | ||
| Training | 14 | 17 | 23 | |
| Research & development |
9 | 7 | 9 | |
| Total per FTE |
23 | 24 | 32 |
Each employee received an average of 39 hours of training in 2008 (2007: 49 hrs).
Linda Andersson is ÅF's Talent Manager. This new position, created in Sweden in 2008, will become progressively more international in its focus.
"I'm responsible for ÅF's marketing strategy to students and young professionals. The aim is to present ÅF as an attractive employer. I work on activities and events that strengthen our employer brand: that means explaining what we do and what we stand for in a way that arouses interest in ÅF among the kind of talented people that we one day hope to recruit. It's also my job to manage contacts with representatives for student unions, participate in careers conventions and answer questions about student tutoring assignments at ÅF and about ÅF as an employer."
"It's essential that a company with the kind of breadth that ÅF has adopts a multifaceted approach to communication. We have selected a few key universities where we maintain a strong presence. Students can meet our consultants and ask questions, for example as part of the special evening activities we host. We also give lectures and let students try their hand at consulting by solving fictitious problems. The important thing is to convey a sense of what our corporate culture means, the kind of jobs people can do at ÅF, and what a consultant's role involves. The students who can identify with these three cornerstones of our business are the ones most likely to be offered a job at ÅF – and to enjoy working with us. But I hope that all budding engineers form a good impression of ÅF that lasts throughout their working life, wherever they choose to work."
"ÅF is working on several levels with this. In my field, for instance, we have become partners and sponsors for female networks at Chalmers University of Technology and Sweden's Royal Institute of Technology, where we conduct career-related activities. Female students can meet female ÅF consultants to talk about work and development opportunities. We've also planned an ÅF Talent Tour for 2009 with visits to various education establishments to talk about careers and health.
"We want to show that ÅF is a modern company with an innovative approach. Women are still in a minority among our consultants, but we know that greater diversity among co-workers leads to improvements in quality and skills in our business operations. That means that we need to increase the number of women on our staff in order to make sure we can attract the very best male and female engineers."
"Autumn 2009 sees the start of our new ÅF Nuclear Trainee programme. This is the first ÅF trainee programme and will be aimed at new engineering graduates or engineers with up to eight
years' working experience. We have already started the ÅF Nuclear Academy as part of the activities of the ÅF Academy, the Group's own educational organisation. These initiatives will secure access to a new generation of skilled, top engineers in a sector that we believe has great potential."
"If you're intelligent, ambitious and have the right attitude, it's an open door to a consulting career working on highly qualified, international projects in a company with a special corporate culture that is a unique blend of modesty and self-belief."
Sustainable development is founded on financial, social and environmental change, and ÅF recognises its responsibility for the impact the company has in all three of these areas.
This impact can take the form of ÅF's influences on local trade and industry, the natural environment, its employees, owners, clients, suppliers and other stakeholders. ÅF has considerable opportunity to influence the development of its clients' businesses, and in this respect ÅF shoulders a great responsibility for making sure that development is undertaken in a sustainable manner. The ambition is always to endeavour to safeguard longterm success and sustainable development for both its clients and for ÅF itself. That ambition also forms the basis for the ÅF mission statement: "ÅF's collective technical expertise and experience create solutions that are profitable, safe and sustainable."
ÅF works to achieve this ambition in many ways, some of which are described below.
ÅF does all it can to ensure co-workers of an unbeatable environment in which to work. In 2008 Universum conducted a survey among young engineers who ranked ÅF as the most attractive employer among Swedish technical consulting companies.
Ångpanneföreningen's Foundation for Research and Development is one of the company's largest shareholders and uses some of its earnings as an owner to offer support in the form of research grants and scholarships to projects at Sweden's universities, colleges and research institutes in fields that include energy, environmental engineering, security and industrial processes.
ÅF AB and its subsidiaries are certified in accordance with ISO 9001: 2000 (quality) and ISO 14001: 2004 (environment). The most significant aspect of ÅF's environmental work is indirect via the effect that its consulting services have on its clients' environmental performance. Other aspects are the company's own, direct environmental impact in the form of business travel and electricity consumption in its offices. As a technical consultant ÅF can make a big difference to its clients' environmental impact. This is often a question of improving energy efficiency in buildings or processes, but it also includes the choice of materials and management of chemicals, reducing the risk of accidents that can affect people and the environment, or improving client skills through training. In addition there are opportunities to investigate and analyse alternative purification techniques, calculate or mitigate environmental impact in the form of emissions to air, noise or odours, or simply to help clients with their strategic sustainability work.
Even if the indirect effect ÅF can exert via its clients is far in excess of the impact the company itself exerts on the environment, it is nevertheless very important to work with these internal factors and, as a leading technical consultant, to set a good example.
In 2008 ÅF resolved to adopt entirely new environmental objectives for its operational activities. 2008 is the base year for the new objectives and for the new key values. After the results have been analysed, three new environmental objectives will be adopted: two for the company's direct environmental impact (through its own internal operations) and one for the company's indirect impact (through the assignments ÅF carries out for its clients).
ÅF does not own its office premises but the company does have an opportunity to influence its landlords and its own consumption of resources. Figures from ÅF offices are logged and analysed to find a reasonable target level, where the ambition is to be in the best quartile among comparable organisations. In 2008 ÅF's head office moved to new premises, a so-called "Green Building" in Solna, north of Stockholm.
Modes of travel, distances and carbon dioxide emissions were measured and analysed in 2008. Targets for reducing the environmental impact of travel will be set with effect from 2009 onwards. Here, too, the ambition is to be among the best in the industry. ÅF is working to develop IT applications that will reduce the need for physical meetings, for example, by increasing the number of web meetings.
ÅF's indirect impact is the greatest and perhaps the most important. As the nature of assignments differs widely between divisions, each division will set its own targets for how to reduce environmental impact through the assignments it carries out. Each division established target areas in 2008, but the detailed work of formulating the targets is still ongoing.
During the year ÅF has adopted a new Code of Conduct that extends to include the board and all the company's employees. This Code of Conduct follows below:
The Code of Conduct summarizes the principles by which ÅF conducts its operations and relations with clients, business partners, employees and other stakeholders. It applies to all members of the board of directors and to all employees. The code is based on OECD's guidelines for multinational corporations, UN's declaration of human and children's rights, and ILO's central conventions.
ÅF is to comply with the laws and regulations and to respect the culture and traditions in the countries where ÅF operates.
ÅF shall not offer clients or business partners any benefits in violation of laws or accepted business practices.
ÅF employees shall observe good business practice and an ethical conduct in all operations and relations with stakeholders.
Employees shall not accept payments or other kinds of reimbursement from a third party that could affect their objectivity in their business decisions.
All financial transactions must be reported in accordance with generally accepted accounting practices, and accounting records must show the nature of all transactions in a correct and non-misleading manner.
Employees and members of the board of directors shall conduct their private and external financial interests in a manner that is not in conflict or appears to be in conflict with the interests of the group.
ÅF observes neutrality with regard to political parties and candidates.
ÅF encourages an ongoing dialogue with its stakeholders.
ÅF supports and respects the protection of internationally proclaimed human rights.
ÅF hires and treats its employees in a manner that does not discriminate with regard to gender, race, religion, age, disability, sexual orientation, nationality, political opinion, union affiliation, and social or ethnic origin. Workplace diversity is encouraged.
No form of compulsory or child labour is tolerated.
Freedom of association shall be respected in all operations.
A safe and healthy work environment shall be provided for all employees.
ÅF assignments and operations are designed to contribute to sustainable development and to enhance efficient use of energy and raw materials.
The majority of assignments have a positive effect on the environment since most of the division's consulting work comprises environmental, energy and climate services in conjunction with investigating or improving clients' environmental performance.
To use its consulting services to make further inroads into reducing the environmental impact of its clients' activities, the division is committed in 2009 to working to increase the degree of environmental benefit in its assignments as well as to increase the overall number of environment-related assignments. This work includes working on target areas such as energy efficiency, conversion to new fuels and further improvements with regard to the environmental benefit in other services.
The Engineering Division has seen a clear increase in the number of industrial projects involving biofuels and is therefore amassing competence in this highly interesting growth area. The division plans to start a Biofuels business area in 2009 in order to capitalise on its extensive technical expertise in the chemical, petrochemical and other process industries with regard to process design and the project engineering of biofuel production facilities.
Current projects include, for example, biogas generation from food waste and black liquor, and the project engineering of ethanol and biogas production plants.
Today ÅF has almost 100 experts who work on energy efficiency measures in clients' plants. Experience shows clearly that it is in the actual operation of the plant that the greatest savings can be made. For this reason, work usually focuses on ensuring that all fixed installations, equipment and apparatus is used as effectively as possible. The services that ÅF offers in this field extend from qualified energy-mapping and proposals for action plans to full-service undertakings that include responsibility for the implementation and realisation of the savings.
Eco-design is the name given to the process of developing products that are better adapted to the environment by ensuring that they are designed from the start to minimise impact on the environment throughout their entire life cycle. Examples include products that are energy-efficient and recyclable. Eco-design also paves the way towards the evolution of products and services for a sustainable society through the intelligent use of resources and raw materials, and the optimisation of functionality, quality and cost through a fully integrated approach to environmental work. ÅF's services in this area are offered through the ÅF EcoDesign Center.
The main emphasis of the Inspection Division's services lies in assessing whether clients' plant and equipment meets current safety and environmental criteria. Clients can then use ÅF's assessment to prevent any negative environmental impact.
To use its consulting services to make further inroads into reducing the environmental impact of its clients' activities, the division will endeavour in 2009 to increase the number of assignments where a breakdown would lead to a severe negative impact. This initiative includes educating clients about current regulations so that, by preventive maintenance, they can carry out operations and run their plants safely and in an optimal way from an environmental perspective.
The Energy Division offers technical consulting services for the energy sector. It is active worldwide with a position as a market leader in the Nordic countries, Switzerland and the Baltic countries, and a very strong standing in many areas of expertise, particularly nuclear power, where it is a world leader. The Energy Division accounts for 27 percent of ÅF Group sales.
The realignment of operations continued in 2008, and the division changed its name from Process to Energy in October in conjunction with the transfer of 177 pulp and paper specialists to the Engineering Division.
| The Energy Division offers technical and financial consulting |
|---|
| services for the energy sector with the main emphasis on power |
| generation. |
Services include everything from advice in connection with business models to implementing investments in power plants and all manner of environmental considerations associated with this.
The division is one of the largest independent international consulting companies in the field of energy. It enjoys a reputation as a world leader in nuclear power, and is one of the leading names in Europe in conventional power generation. In Russia ÅF has established a position as a leading energy consultant, and in South-East Asia and India, where business is expanding rapidly, ÅF has already achieved widespread recognition in certain segments.
One clear factor behind the Energy Division's success is its track record of implementation processes – the ability to take
| Adjusted* | ||||
|---|---|---|---|---|
| Key figures |
2008 | 2007 | 2008 | 2007 |
| Net sales (in millions of SEK) |
1,268 | 975 | 1,051 | 700 |
| Operating profit (in millions of SEK) |
124.3 | 67.5 | 130.0 | 57.2 |
| Operating margin, percent |
9.8 | 6.9 | 12.4 | 8.2 |
| Share of Group sales, percent |
27 | 24 | 23 | 18 |
| Number of co-workers (FTEs) |
841 | 752 | 697 | 552 |
| Operating profit/FTE |
||||
| (in thousands of SEK) |
148 | 90 | 186 | 104 |
*On 1 October 2008 the following organisational changes were made that affected the Energy Division: 177 employees working primarily in the Pulp & Paper business area were transferred from the Energy Division to the Engineering Division. At the same time 13 employees moved from Energy to the Inspection Division. The adjusted columns show what the key figures would have been if these internal transfers had been made on 1 January 2007 and 2008 respectively.
complex projects all the way from the planning stage through to commissioning and operation.
The Energy Division has approximately 950 employees and is represented in Sweden, Switzerland, Finland, Russia, Estonia, Lithuania, India, Thailand and Vietnam. In addition there are sales and project offices in more than 10 countries. Approximately 90 percent of the division's assignments are undertaken outside Sweden.
The Energy Division offers a broad spectrum of energy-sector consulting services that includes aspects relating to technology, financing, management and energy consulting. A large portion of assignments are connected to major investment projects. The division offers services throughout the entire life cycle of an investment: analyses and feasibility studies in the initial stages, pre-engineering and engineering once the investment decision has been made, and overall project management during the implementation phase, which can include services such as project management/project control, the basic design of process solutions, procurement negotiations, manufacturing, design and installations inspections, and functionality testing. During the operation of the plant the division offers assistance with various other services, from troubleshooting to maintenance planning.
The division also offers consulting services that are not directly linked to investment projects, such as investigations, environmental reviews, safety studies and capacity-expansion programmes.
Clients are private and publicly owned energy companies, other energy-intensive industries, public institutions and financial institutions. These clients' investments are often large-scale and extend over many years. The division seeks long-term relationships with a stable circle of clients who generate a large portion of repeat business. The division enjoys a good reputation among its clients, and cooperation is characterised by a sense of partnership, largely thanks to ÅF's geographical presence and its proximity to its clients.
The division has several hundred clients, of whom the biggest are energy companies and industrial companies with operations in countries where the division has an office. Examples include ATEL, Fortum, GdF-Suez, Eesti Energia, Latvenergo, Lietuvos Elektrinai, Vattenfall and many large Russian energy producers.
At the start of 2008 the division's order books were already fuller than they had ever been, and many new assignments were won during the year. Below is a review of just some of the major contracts and other important events.
In January ÅF won a contract to supply technical consulting services in connection with the construction of a new, gas-fired power station in Cikarang, Indonesia. The client is the private power generator PT Cikarang Listrindo, which produces electricity and steam for the Cikarang industrial estate, 30 km east of Jakarta.
In February ÅF won a contract linked to the construction of a new, coal-fired power plant in Vietnam. The plant is being built by the Vietnamese state utility EVN with financing provided by the Japanese Bank of International Cooperation, J-BIC. The assignment will be carried out jointly with the Japanese company J-Power.
In April ÅF was appointed principal technical consultant by the Swiss energy company ATEL for the construction of two 400 MW gas-fuelled power plants in San Severo, Italy, and in Bayet, France. ÅF is responsible for project control and supplier monitoring at both sites.
"The division is one of the largest independent international consulting companies in the field of energy, with a reputation as a world leader in nuclear power."
In August ÅF won an assignment in Estonia to assume responsibility for project control, project engineering and contractor monitoring services for Fortum in connection with the construction of a new biofuel-powered district-heating power plant in the city of Pärnu.
The well-established Lithuanian energy and environmental consulting company TSP Termosistemy Projektai was acquired in 2008. TSP is active mainly in the Lithuanian market but also has assignments in Belarus.
In the fourth quarter ÅF made a major acquisition via a 75 percent stake in the Russian technical consulting company ZAO Lonas Technologija (Lonas) with 250 employees. The Lonas head office is located in St Petersburg and the company also has offices in Yekaterinburg and Kiev. The lion's share of Lonas's business comes from within Russia, but in recent years the company has also won contracts in the CIS countries, Kazakhstan and Ukraine. Lonas specialises in the construction of and full-service undertakings in connection with power plants, district-heating plants and turbine plants.
As 2008 began, the market was very strong, with spiralling global energy consumption and the urgent need for an expansion of capacity highlighting the severe shortage of consultants in this area. Towards the end of the year, however, the international financial crisis had already begun to impact on new investment projects, and a number of decisions were shelved or postponed.
In addition to the obvious correlation between growth rates in the world's economies and the demand for electricity and heating, the energy sector is also affected by demands for energy efficiency, the need for capacity expansion, tougher targets for CO2 emissions and requirements to switch to renewable sources of energy. All of this means that the division remains confident that energy sector consulting will, in the long run, be a growth area with very good potential.
Eero Auranne, Divisional President, tells us what he believes the future holds.
"We have set our sights on becoming the market leader in the sectors in which we are active and will give priority to markets that show potential for growth. In the short term, because the financial crisis has deferred the start of a few new projects, we need to maintain our levels of profitability and make sure our workforce is kept busy. We will be aggressive in certain areas: we want to expand operations even more in the nuclear power and hydropower sectors, and we will, of course, sharpen our focus on renewables, with special emphasis on biofuels, waste recycling and new, eco-friendly technology. This may also involve new corporate acquisitions within these areas."
"Through our work we can make a strong contribution to a world better adapted to the natural environment in which we live. Smart applications of new technology can pave the way for eco-friendly solutions. We need to be at the forefront of developments in renewable energy, to help our clients to use energy more efficiently and to manage traditional energy assets in a way that minimises their environmental impact. As we have so many clients across the entire globe, we have enormous potential to help improve the environment."
"Smart applications of new technology can pave the way for ecofriendly solutions."
Eero Auranne President, Energy Division J y v äsky äbuidst heDSTRCT-HEAT INGPLA NTof t hef ut ure
"Jyväskylä is an expansive university city in Finland, 280 kilometres north of Helsinki, famous as the birthplace of the world-renowned architect, Alvar Aalto. When the municipal energy company Jyväskylän Energia Oy was considering connecting new areas of the city to the district-heating grid, it needed a longterm solution for energy production that would meet tomorrow's increasingly stringent requirements for low CO2 emissions. At the same time the company also needed a financial solution that did not put too great a strain on the budget and the balance sheet. It is very unusual, even for a large city, to make an investment of this magnitude that involves numerous stakeholders and financial backers. For ÅF's part the assignment was extensive. It began with a needs analysis, investment strategy and a proposal for funding, but later expanded to include design, construction and project engineering for a brand new CHP plant in Keljonlahti. When it is commissioned early in 2010 this will offer great flexibility in terms of the energy source, from either peat or forestry waste."
Risto Marttinen Project leader, Energy Division
The Engineering Division is northern Europe's leading industrial consultant. The division is represented in ten countries and offers services to all sectors of industry. The Engineering Division accounts for 26 percent of ÅF Group sales.
In October the Engineering Division was reinforced by the transfer from the Infrastructure and Energy Divisions of more than 250 consultants with expertise in electrical power, and process engineers from the pulp and paper, food processing and pharmaceutical sectors. This substantially bolstered the division's expertise in industrial processes, greatly improving its opportunities to become involved at an early stage in these processes.
| Adjusted* | ||||
|---|---|---|---|---|
| Key figures |
2008 | 2007 | 2008 | 2007 |
| Net sales (in millions of SEK) |
1,210 | 1,110 | 1,452 | 1,407 |
| Operating profit (in millions of SEK) |
162.1 | 105.6 | 160.1 | 117.2 |
| Operating margin, percent |
13.4 | 9.5 | 11.0 | 8.3 |
| Share of Group sales, percent |
26 | 28 | 32 | 36 |
| Number of co-workers (FTEs) |
1,103 | 1,068 | 1,273 | 1,297 |
| Operating profit/FTE (in thousands of SEK) |
147 | 99 | 126 | 90 |
*On 1 October 2008 the following organisational changes were made that affected the Engineering Division: 177 employees working primarily in the Pulp & Paper business area were transferred from the Energy Division to the Engineering Division. At the same time 73 employees working with Electrical Power Systems moved from Infrastructure to the Engineering Division, and 25 employees were transferred from Engineering to Infrastructure. The adjusted columns show what the key figures would have been if these internal transfers had been made on 1 January 2007 and 2008 respectively.
The division focuses firmly on improving profitability for its clients. Experience from previous projects provides security and stability and enables the division to use its know-how to benefit clients quickly and efficiently – a process further facilitated not only by geographical proximity to clients, but also by a shared mindset.
Engineering has approximately 1,300 employees in some 50 offices in Sweden, Norway, Finland, Denmark, Estonia, Germany, the Czech Republic, Spain, South Africa and Brazil. The ambition is for 80 percent of the division's business to focus on local projects, while the remaining 20 percent of earnings derive from joint projects between other units in the Engineering Division or together with other ÅF divisions. This creates a flexible working environment and an opportunity to accompany clients who are committed to international expansion. By the end of 2008 international assignments corresponded to approximately 35 percent of the division's total undertakings.
In northern Europe the Engineering Division is the largest independent consultant in its field. The division offers a portfolio of services for all types of industrial production companies that covers the entire chain from initial idea through feasibility studies, process analyses, calculation and project engineering to the construction, programming and commissioning of plant. The division also runs extensive electrical inspection operations. Consultants can work as an integral part of the client's own organisation, or the division can assume total overall responsibility for the delivery of an entire project or a specific function.
Areas of technology that form the core of the division's business include process technology, industrial IT, automation, electrical power systems and mechanical engineering. Much of the emphasis is on rationalising or modernising existing production processes and plant through assignments that typically include new control technology for production lines in manufacturing facilities, the integration of production systems and business management systems, investigations into plugging wind-farm power into the national grid, and design engineering for biofuel furnaces or nuclear power plants.
Engineering is active in all sectors of industry, but enjoys a particularly strong standing in nuclear power, energy, pulp and paper, food processing, pharmaceuticals, mining and other process industries. Not only does this breadth leave the division relatively insensitive to ups and downs in the business cycle, but by their nature the projects themselves – productivity improvements, environmental adaptations and measures to raise safety and save energy – tend to be worthwhile regardless of the state of the economy.
For many of the division's 2,600-plus active clients it is essential to have guaranteed access to reliable resources and skills, and for this reason relations increasingly take the form of partnerships.
Another trend in demand, albeit one that is more dependent on the state of the economy, is that an increasing number of clients expect their partners to assume a greater degree of responsibility in projects, a requirement that is entirely in line with the Engineering Division's strategy.
The division has enjoyed an uninterrupted business relationship with each of its ten largest clients over the past ten years and more. Together this constellation accounts for 37 percent of the division's earnings, while the largest individual client accounts for 7 percent.
Clients include ABB, Alstom, Billerud, Fortum, LKAB, Metso, Siemens, the Swedish Nuclear Fuel and Waste Management Company (SKB), Stora Enso, Westinghouse and Sweden's nuclear power plants at Forsmark, Oskarshamn and Ringhals.
Some of the many new orders and other highlights of the year are reviewed below:
In February ÅF won an order from ABB for the plant design of facilities at the kraft unit at Stora Enso's plant at Hyltebruk, Sweden.
In May ÅF acquired the technical consulting company OrbiTec with 30 employees in Jönköping, Sweden.
Also in May ÅF signed a strategic alliance with AMEC that paved the way for the two companies to combine their global consulting capacity in pulp and paper in order to collaborate in generating business in the South American market. This new agreement is a natural consequence of 20 years of close cooperation.
In July the division won a large order from the Swedish water utility Stockholm Vatten to replace the existing control systems at water purification plants at Henriksdal and Bromma.
In September ÅF signed a major cooperation agreement with Ringhals regarding services relating to reactor safety and plant development.
In October the division won a commission with Korsnäs that involves project engineering and planning work in conjunction with Korsnäs's investment in a new evaporation line and rebuilt kraft recovery units at its plant in Gävle, Sweden.
In December the division was commissioned by Iggesund Paperboard (Holmen) to supply a customised PaperLine system for roll, sheet and warehouse management at Holmen's production facilities at Iggesund and Strömsbruk.
The market remained strong for most of 2008 and capacity utilisation throughout the division was very high. There were signs of a slowdown as the year came to a close, particularly in the automotive and other manufacturing industries, but the division was able to rapidly redeploy its resources to respond to capacity shortages in other segments of the market and thus maintain a satisfactory level of profitability.
Demand came chiefly in the form of efficiency improvements in manufacturing plants, environmental engineering projects, the development of alternative fuels and conversion to efficient energy management.
The Engineering Division enjoys a leading position on the Nordic market with a market share of approximately 10 percent.
"The market remained strong for most of 2008 and capacity utilisation throughout the division was very high."
Per Magnusson, Divisional President, tells us about his goals and strategies.
"Our most important goal is to help our clients to improve profitability in a market that is becoming tougher all the time. To succeed in this we need to retain and develop the skills and talents we have, for example through a strategic recruitment policy for key sectors such as nuclear power. We must also offer clients an enhanced sense of security through attractive partnership agreements. For example, in 2008 we initiated a five-year project with Ringhals to build up shared specialist expertise in nuclear power that will confirm our capacity to jointly undertake major rebuilds and new construction work. The environment is also high on our agenda. We are already engaged on a large number of environmental projects and will increase our focus in this area by building further on our expertise in alternative fuels."
"If you convert the division's workforce to a measure of our experience, our offer to clients is based on 25,000 years of engineering experience or 50 million consulting hours. Every year we add another 2.5 million hours of knowledge about the very latest technology to this fund of expertise. In other words, the chances are great that we already know the solutions to at least some of our clients' problems. For the client, using ÅF should be a way to earn money! Every hour we work must improve profits for our clients. To remain at the top of our game we are investing in competence centres, where experience and skills from different fields come together to provide the best possible solutions for new developments. Each centre – for nuclear power, pulp and paper, food processing and pharmaceuticals, electrical power systems and industrial IT – incorporates co-workers from all ten of the division's countries."
"For the client, using ÅF should be a way to earn money! Every hour we work must improve profits for our clients."
Per Magnusson President, Engineering Division
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toring systems. Carsf ueedby OODWA STE
"SYSAV (Sydvästra Skånes Avfallsaktiebolag) is responsible for regional waste management and recycling in the far south of Sweden. The company's CHP in Malmö converts 550,000 tonnes of combustible waste a year into electricity that it delivers to the grid and hot water for the district-heating network. When a new incineration line was to be built, ÅF won the contract to supply all the automation functions for the project. The fixed-price assignment includes everything from project management and construction to tried-and-tested, turnkey control and moni-
"A SYSAV subsidiary that manages the region's food waste has engaged ÅF to work on another interesting automation assignment, also a fixed-price contract. To meet Sweden's national environmental objective of recovering at least 35 percent of all food waste by 2010, SYSAV Biotec is building a facility for receiving and processing food waste to produce biogas and biofertilisers. Each year 10,000 tonnes of food waste from the region's households, restaurants and food processing companies will be pulverised to produce fuel for cars and buses – and move society one step closer towards a sustainable eco-cycle."
Magnus Grenthe Section leader, Engineering Division
The Infrastructure Division has a leading position in the market for infrastructure consulting services in Scandinavia, with clients in industry, telecommunications, road and rail, defence and property management. The division accounts for 40 percent of ÅF Group sales.
Early in the fourth quarter of 2008 the Infrastructure and Systems Divisions were amalgamated under the Infrastructure name at the same time as the Electrical Power Systems business area was transferred to the Engineering Division. In addition to creating competence synergies, the reorganisation also enables ÅF to
| Adjusted* | ||||
|---|---|---|---|---|
| Key figures |
2008 | 2007 | 2008 | 2007 |
| Net sales (in millions of SEK) |
1,894 | 1,641 | 1,859 | 1,602 |
| Operating profit (in millions of SEK) |
199.2 | 155.9 | 195.7 | 153.6 |
| Operating margin, percent |
10.5 | 9.5 | 10.5 | 9.6 |
| Share of Group sales, percent |
40 | 41 | 41 | 41 |
| Number of co-workers (FTEs) |
1,602 | 1,486 | 1,566 | 1,444 |
| Operating profit/FTE (in thousands of SEK) |
124 | 105 | 125 | 106 |
*On 1 October 2008 the following organisational changes were made that affected the Infrastructure Division. The Systems Division with 450 FTEs was integrated into the Infrastructure Division as a separate business area. At the same time 73 employees working with Electrical Power Systems moved from Infrastructure to the Engineering Division, and 25 employees were transferred from Engineering to Infrastructure. The adjusted columns show what the key figures would have been if these internal transfers had been made on 1 January 2007 and 2008 respectively.
respond to an economic downturn by steering capacity to sectors with potential.
The majority of Infrastructure's clients are found among Swedish industrial companies, in the public sector, defence and the Nordic property and infrastructure market.
The division enjoys a leading position in all these areas. Factors key to success include a strong sales organisation and high levels of business skills among all co-workers. The division attaches great importance to delivering ideas that stimulate its clients' ability to grow and, by doing so, increase the potential for ÅF as well.
Approximately 1,600 people are employed in some 60 offices in Sweden, Norway and Denmark and the division also undertakes individual assignments all over the world.
Infrastructure is organised into seven business areas: Communications & Defence, Installations, Sound & Vibrations, Infrastructure Planning, and three regional units for Product Development & IT
(East, West and South). The division offers a broad spectrum of services from the development of an initial idea through to implementation in the form of both full-service undertakings and specific assignments within the chain.
For assignments in Communications & Defence the division offers consulting services in fixed and mobile telephony, maintenance technology and integrated logistic support (ILS). Clients come from both the private and defence sectors.
The division is Sweden's largest installations consultant, offering qualified services related to the construction and modernisation of commercial, industrial and public-sector premises. Clients frequently demand not only functionality and environmental adaptation, but also low operating costs throughout the entire life cycle of an investment. Installations is the largest of the division's business areas.
In Sound & Vibrations (ÅF-Ingemansson) the division possesses unique cutting-edge expertise in acoustics and vibrations to meet the needs of industry, infrastructure planners, architects, property management companies and product developers.
Through Infrastructure Planning the division offers services relating to urban and rural planning, road and rail traffic, and public transport. These include everything from surveys and investigations to installations-oriented assignments for major road and rail infrastructure projects in Sweden.
The regional East, South and West business areas that work with Product Development offer services related to product development and high-tech IT applications that include embedded systems, mechanical engineering and programming. One muchappreciated feature of operations is the ÅF EcoDesign Center, where clients can improve profitability with the help of eco-friendly product development.
Many of the division's clients are leading names in their field. Relations are long-term and there is a high proportion of repeat business. All in all, almost 65 percent of business derives from the public sector and 35 percent from private companies.
A broad client base, coupled with the fact that the investment horizon for many infrastructure projects extends beyond a single economic cycle, limits the division's sensitivity to the ups and downs of the economy. Many projects are driven by the need for environmental adaptation and other demands to improve efficiency.
Among the division's biggest clients are Avinor, BAE Systems, the National Swedish Rail Administration (Banverket), the Danish Road Directorate, Diligentia, Danish State Railways (DSB), Ericsson, the Swedish Defence Materiel Administration (FMV), Fortum, Hägglunds, Skanska, Stockholm's regional transport authority (SL), Statsbygg, Statsnett, Vasakronan, Vattenfall, the Swedish Road Administration (Vägverket), Västfastigheter and local and regional authorities.
"A broad client base, and the fact that many infrastructure projects extend beyond a single economic cycle, limits the division's sensitivity to ups and downs in the economy."
An eventful year saw several acquisitions and many new assignments for the division. Some of the more important events of the year are reviewed below:
In February ÅF acquired the consulting company Proplate IT, with 22 employees in Karlskoga, Örebro and Karlstad. Proplate offers qualified IT consulting services to industrial clients in Sweden.
In April a contract was signed to serve the Hertz car rental company as principal supplier of administration services and development support for Hertz business systems in the Nordic countries.
Spring 2008 also saw the signing of a framework agreement with Saab AB relating to support with systems work, software development, electronic design and project management.
In June a framework agreement was signed with BAE Systems Bofors AB, covering 14 areas of technology for which BAE Systems Bofors AB requires support and assistance from technical engineering consultants and project managers.
Another deal signed in the summer was the takeover of the technical consulting company BergByggKonsult (BBK), a specialist in rock mechanics and rock engineering, geotechnical instrumentation and 3D laser scanning.
In the autumn a major contract was signed with Ericsson relating to test systems for radio base stations.
Additionally, thanks to its involvement in the ÅF EcoDesign Center, the division won a software development order from Morphic Systems.
Strong demand from clients in 2008 led to a shortage of capacity in the market, unleashing competition for some key skills. However, the fourth quarter did show signs of a slowdown, primarily among industrial clients.
Notwithstanding this, ÅF believes that interest for environmental adaptation and increased efficiency will remain keen.
Demand is also expected to remain good from the Swedish road and rail network. Fluctuations in the economy have only a marginal impact on really large, long-term infrastructure projects, and labour market policy is also expected to give a boost to other infrastructure investments that are currently in the pipeline. These may well be relatively short-term projects and the division is well prepared to meet this need.
Johan Olsson, Divisional President, tells us where his focus lies.
"To offer our clients an even more attractive portfolio of services, we will improve collaboration both between our business areas and with the rest of ÅF. In order to achieve our long-term vision of becoming Europe's number one infrastructure consulting company, we are continually investigating the possibility of establishing a foothold on other major ÅF markets. Finland, the Baltic countries, Russia, the Czech Republic and Switzerland are all under consideration."
"We work with environmental issues in virtually all our projects. In 2009 we will reinforce the ÅF EcoDesign concept even more in order to offer clients product development services with a dual focus on environmental adaptation and profitability. We will also reinforce our position in Infrastructure Planning to better meet market demands for environmental impact analyses and the like. And thirdly, we will develop our offer with regard to energy-efficient buildings. Our own new headquarters, for example, are the first office premises in Sweden to be awarded 'Green Building' certification. And we can link our expertise in this area to our 'green IT' skills. Finally, we also need to take a long, hard look at the way we ourselves use resources. Can we make more efficient use of our office premises, for example? Or can we meet without having to travel?"
"Our long-term vision is to become Europe's number one infrastructure consulting company."
Johan Olsson President, Infrastructure Division.
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"The new Karolinska University Hospital is the largest project ever undertaken by Stockholm County Council – a brand new, state-of-the-art hospital scheduled to open in 2015 or 2016. The new hospital is designed to meet tomorrow's demands for highly specialised medical care. Safety for patients and staff alike will improve and the status of patients will be enhanced at the same time as the links between institutional care, research and education are strengthened. The venture has a far-reaching impact on the local area and is spawning many other infrastructure projects. The county council's property management company, Locum, arranged a design competition that ÅF won in partnership with White Architects (architectural design) and Ramböll (construction). ÅF is responsible for installations and energy solutions and for ensuring that the project balances demands for function, ethics, aesthetics, technology and overall economy with a holistic approach that is based on a strong underlying idea that can be developed to meet future needs. Thanks to the magnitude of the undertaking, the innovative design and the technical solutions, the project has attracted a great deal of international interest. Now it moves into the next exciting phase – tendering for the construction work and operational management as a public-private partnership venture."
Björn Qvist Business Area Manager, Infrastructure Division
The Inspection Division offers third-party technical inspections, testing and certification. Operations extend over many sectors of industry and include many different clients, from nuclear power stations to fairgrounds. The Inspection Division currently has offices in Sweden, the Czech Republic and Lithuania. Earnings account for 7 percent of ÅF Group sales.
The services offered by Inspection – inspection, testing, certification, environmental monitoring and training – help to improve profitability for the division's clients, by assuring the operational
| Adjusted* | ||||
|---|---|---|---|---|
| Key figures |
2008 | 2007 | 2008 | 2007 |
| Net sales (in millions of SEK) |
350 | 270 | 361 | 287 |
| Operating profit (in millions of SEK) |
43.9 | 41.4 | 43.9 | 42.3 |
| Operating margin, percent |
12.5 | 15.3 | 12.1 | 14.8 |
| Share of Group sales, percent |
7 | 7 | 8 | 7 |
| Number of co-workers (FTEs) |
341 | 257 | 351 | 270 |
| Operating profit/FTE (in thousands of SEK) |
129 | 161 | 125 | 157 |
*On 1 October 2008 the following organisational change was made that affected the Inspection Division: 13 employees were transferred from the Energy Division to the Inspection Division. The adjusted columns show what the key figures would have been if this internal transfer had been made on 1 January 2007 and 2008 respectively.
reliability of clients' plant in the best interests of workers, production and the environment.
The division is a "notified body" for inspections required by EU directives for pressure vessels, lifts and machinery, and is accredited by the Swedish Board for Accreditation and Conformity Assessment (SWEDAC) to carry out impartial inspections of clients' facilities and operations in order to verify compliance with ordinances and regulations issued by the relevant authorities.
Over the past five years the Inspection Division has improved its profitability and increased sales by an average of 15–20 percent a year.
Sweden is the division's largest market, where Inspection enjoys a very strong standing and is represented locally throughout the country.
Thanks to an acquisition towards the end of 2008, the Czech Republic is also now one of the division's markets, where it enjoys a leading position in non-destructive testing. An office was also established in Lithuania during the year to work the market in the
Baltic countries and to the east, with the focus on nuclear power and other test-intensive industries. In addition, each year the division performs a number of specialist assignments in other countries. In 2008 business outside Sweden accounted for approximately 6 percent of the division's sales.
The Inspection Division is an independent third-party inspection body, which also maintains its independence with regard to other parts of the ÅF Group. The division seeks to establish openness in its working relations with clients, offering short turnaround times and providing clear, straightforward information as early as possible in the process in order to give clients an opportunity to identify problems and propose improvements. Other key factors behind the division's success are a firmly established commercial approach and a corporate culture that encourages a positive team spirit and high service levels.
The business focuses on three main areas: Inspection, Testing and Certification. Inspection involves periodic independent checks of lifts, lifting devices, boilers, escalators, ski-lifts, fairground attractions, tanks, pressure vessels, etc. Testing involves examining components and devices using non-destructive techniques, such as radiography, ultrasound and visual checks. The division also offers advanced testing services, condition monitoring, calibration services and certification services for its clients' quality and environmental management systems. Certification is carried out by ÅF-TÜV Nord, a 50/50 joint venture with Germany's TÜV Nord Group. Certifications include ISO 9000, ISO 14000 and ISO/TS 16949 (Automotive). ÅF-TÜV Nord also acts as an accredited inspection body for Swedish nuclear power stations.
The services offered are becoming progressively more advanced. Today the division offers complete systems for automated testing and quality control. ÅF consultants have also developed sophisticated testing systems for periodic inspections of reactor pressure vessels for the nuclear power industry.
In addition, the division offers environmental monitoring, advisory services, training, and consulting services in CE-marking and the interpretation and implementation of various EU directives.
In 2008 the division performed 32,000 assignments for clients from virtually all sectors of trade and industry. As repeat orders are common, approximately 12,000 of the division's 20,000 clients use Inspection's services on an annual basis. Around 40 percent of the division's business comes from the 20 largest clients who include Cramo, EuroMaint, Fortum Värme, LKAB, Metso, Peab, Shell, Södra Cell, Tågia, Uddcomb, VEÅ, Volvo, Westinghouse Electric, YIT and Sweden's nuclear power plants at Forsmark, Oskarshamn and Ringhals.
One clear trend is the desire among clients for long-term partnerships. Preventive measures with regard to the working environment, operational safety and environmental issues facilitate the planning of maintenance, minimising unplanned interruptions and improving profitability. The Inspection Division is well equipped to meet these needs and can offer clients the kind of long-term collaboration they are seeking.
Business continued to grow in 2008.
In April the acquisition of Kvalitetsteknik NDT AB, Sweden's fourth largest technical inspections company with offices in Trollhättan, Stenungsund, Lysekil and Mönsterås, lifted ÅF to a leading position in the field of non-destructive testing in Sweden.
Another corporate acquisition was made in September. The Czech company Qualitest s.r.o. has around 150 clients in the engineering, petrochemicals and energy sectors and is the market leader for non-destructive testing in the Czech Republic, one of
ÅF's high-priority markets. This is the Inspection Division's first acquisition outside Sweden and will be used as a springboard for further expansion in Europe.
Major orders during the year include an extensive and prestigious testing assignment for the Ringhals nuclear power plant that was secured in July. This involves developing equipment and technology for non-destructive testing of reactor pressure vessels up to and including 2012. This is a complex order that includes both project engineering and implementation services, and the Inspection Division made substantial reinforcements to its resources in these fields during the year in order to meet its commitments.
For Peab the Inspection Division undertook an extensive educational programme focusing on safety in the workplace, attended by between 7,000 and 8,000 of the client's employees.
The Inspection Division, already the biggest Swedish-owned company in the business, continued to grow at a faster rate than its competitors in 2008 by capturing new shares of the market. At current estimates it has just over a 30 percent share of the total market in Sweden. Demand during the year was strongest from the nuclear power and petrochemical industries and from clients working on rail transport.
The process of technical harmonisation within the EU is expected to continue to fuel strong growth, and the division also expects that deregulation in more countries will create a more international market, leading to changes in the competitive situation and greater consolidation. The Inspection Division is monitoring developments here closely and has initiated strategic alliances with other accredited inspection companies throughout Europe.
Jörgen Backersgård, Divisional President, tells us about the future.
"To grow while still maintaining good levels of profitability! That means organic growth of 10–15 percent a year in Sweden while we also grow on the new markets where we are represented. It's also important to consolidate our operations to exploit the full potential of the acquisitions we have made and to capitalise on all we have done to increase the breadth of our offer by equipping ourselves to tackle projects of ever greater complexity. We must offer an even better service and make sure we have committed, motivated co-workers so that we can cement relations with our clients in the form of long-term collaboration that benefits all concerned."
"Much of our work to improve the safety of our clients' plant and work environments focuses on minimising the impact on the natural environment. We're working to make this kind of environmental thinking a natural part of our overall assessments of plant and components. Another example is to develop our existing Power Boiler course so that clients can subsequently run their power boilers in a way that shows the greatest possible consideration to the environment. The skills we possess in environmental issues are exactly what the market is demanding right now. This will enable us to grow our business at the same time as we make the world a cleaner, safer place."
"We must offer even better service and make sure we have committed, motivated co-workers so that we can cement relations with our clients in the form of longterm collaboration that benefits all concerned."
Jörgen Backersgård President, Inspection Division SA FERskiif t sinSw eden
"Skistar is a ski-lift operator in the Swedish winter sports centre of Sälen and many other places in Sweden. The Inspection Division is accredited to inspect ski-lift installations and does so regularly for many of Skistar's chair-lifts and cable-cars. We scrutinise everything – even the cables, each one of which is run through magnetic induction equipment to reveal any wear or defects. We also conduct the initial inspection when new equipment is installed. Last year, for example, Skistar wanted to move a cableway from Lindvallen to Tandådalen Östra to increase capacity and improve comfort. On occasions like these there is a great deal of testing to be done as the equipment must be adapted to the new topography of the slope. It was an unusual assignment, but everything went very well.
Maintenance planning has become increasingly important for Skistar. The ski slopes are filled with people and any interruptions in operations are costly. To this end the Inspection Division has developed a totally new system for preventive maintenance that facilitates continuous monitoring of the equipment."
Stig Westman Inspection engineer, Inspection Division
ÅF's class B shares have been quoted on the Stockholm Stock Exchange since January 1986. Prior to this, ÅF traded as a cooperative association from 1895 until 1980, and as a joint-stock company from 1981. ÅF's B shares are traded in Stockholm on the OMX Nordic Exchange's Mid Cap list under the 'AF B' ticker symbol. At the end of 2008 the combined market value of the company's shares, including class A shares, was SEK 2,022 million (2007: SEK 2,862 million).
The quota value of the share is SEK 10. A trading lot comprises 100 shares. ÅF's class B shares traded at SEK 119 at the end of 2008, compared with SEK 169 at the beginning of the year, a fall in value of 29.6 percent. During the same period the Stockholm (OMXSPI) all-share index fell by 42 percent. During the year a total of 12,184,948 shares were traded (2007: 9,230,962) for an aggregate value of SEK 1,885 million (SEK 1,585 million). Turnover per trading day averaged SEK 7.32 million (SEK 6.34 million). The share was traded on 100 percent (100 percent) of trading days.
The board has adopted a dividend policy according to which the dividend should correspond to approximately 50 percent of the consolidated profit after tax excluding capital gains. For the company's operations during 2008 the board proposes a dividend of SEK 6.50 per share (2007: SEK 6.50 per share).
ÅF's positive development is reflected by interest in the ÅF share. The company adopts a long-term approach to its communications with the capital market.
In 2008 this included a Capital Market Day in Stockholm on 24 September, which focused on the Engineering Division. ÅF President/CEO Jonas Wiström outlined the Group's current situation and sketched future scenarios. The guest speaker for the day was former ice-hockey professional Anders Kallur, fourtime Stanley Cup winner and the father of ÅF's Susanna Kallur. The audience comprised around 40 analysts, institutional shareholders, asset managers and representatives of the media.
To meet the interest in ÅF shown by the international capital market, ÅF's CEO and the Executive Vice President for Corporate Information undertook "road shows" to London and Zürich.
Stefan Wård, Handelsbanken Capital Markets Johan Dahl, Swedbank Markets David Jacobsson, Öhman Fondkommission Andreas Koski, HQ Bank Daniel Djurberg, Carnegie
Annual turnover in ÅF class B shares
Stefan Wård, a stock market analyst with Handelsbanken Capital Markets, has been following ÅF since 2003. "ÅF stands out as an interesting company in a sector with great potential. Operationally, developments have been highly positive and the company has made some impressive improvements in recent years. ÅF is also the technical consulting company that has reported the best profitability. On the whole, prospects for technical consultants look good even though the shaky state of the economy has increased risks in manufacturing industry. Signals from the infrastructure and energy sectors remain positive, so ÅF seems to be well placed for the future.
To this you can add the fact that the state of the economy has very little effect on ÅF's testing and inspection operations. Against this background I expect ÅF to continue its steady development in 2009. I would also like to point out that ÅF's financial position is so strong that
this, too, gives the company plenty of leverage to act freely in the future. For investors with longterm horizons I believe ÅF remains an alternative that is at least as attractive as it has been before."
| Change in number of shares | Numbers of shares | Share total | Share capital | |||||
|---|---|---|---|---|---|---|---|---|
| Year | Par value | Change | A shares | B shares | A shares | B shares | SEK '000 | |
| 1984 | 50 | ÅF issues convertible debentures to employees |
727,460 | 727,460 | 36,373 | |||
| 1985 | 50 | Redesignation | –42,600 | 42,600 | 684,860 | 42,600 | 727,460 | 36,373 |
| 1986 | 50 | New issue and B share floated on A list |
300,000 | 684,860 | 342,600 | 1,027,460 | 51,373 | |
| 1987 | 20 | Bonus issue and split |
684,860 | 1,370,060 | 1,369,720 | 1,712,660 | 3,082,380 | 61,648 |
| 1990 | 20 | Conversion of convertible debentures from 1984 |
269,420 | 480,580 | 1,639,140 | 2,193,240 | 3,832,380 | 76,648 |
| 1994 | 20 | Redesignation | –810,475 | 810,475 | 828,665 | 3,003,715 | 3,832,380 | 76,648 |
| 1996 | 20 | Bonus issue |
414,332 | 1,501,857 | 1,242,997 | 4,505,572 | 5,748,569 | 114,971 |
| 1997 | 20 | Redesignation | –840,778 | 840,778 | 402,219 | 5,346,350 | 5,748,569 | 114,971 |
| 2004 | 20 | New issue |
175,807 | 402,219 | 5,522,157 | 5,924,376 | 118,488 | |
| 2005 | 20 | New issue |
37,766 | 402,219 | 5,559,923 | 5,962,142 | 119,243 | |
| 2006 | 10 | Split 1:2 |
402,219 | 5,559,923 | 804,438 | 11,119,846 | 11,924,284 | 119,243 |
| 2006 | 10 | New issue |
1,121,527 | 804,438 | 12,241,373 | 13,045,811 | 130,458 | |
| 2006 | 10 | New issue |
3,232,164 | 804,438 | 15,473,537 | 16,277,975 | 162,780 | |
| 2007 | 10 | New issue |
90,951 | 804,438 | 15,564,488 | 16,368,926 | 163,689 | |
| 2007 | 10 | Conversion of convertible debentures from 2005/2008 |
566,307 | 804,438 | 16,130,795 | 16,935,233 | 169,352 | |
| 2008 | 10 | Conversion of convertible debentures from 2005/2008 |
94,268 | 804,438 | 16,225,063 | 17,029,501* | 170,295 |
*Of which 37,000 are held by the company.
| 31 December 2008 | Percent of capital |
|---|---|
| Sweden | 59.4 |
| Other Nordic countries |
9.0 |
| Rest of Europe |
20.6 |
| USA | 9.7 |
| Others | 1.3 |
| 31 December 2008 Percent of capital |
|
|---|---|
| Foreign owners |
41 |
| Swedish owners |
59 |
| of which: |
|
| Institutions | 90 |
| Private individuals (incl. close companies) |
10 |
| 31 December 2008 | Percent of capital | |
|---|---|---|
| Number of shares |
Share- holders |
Percentage of shares |
| <500 | 4,301 | 2.5 |
| 500–5,000 | 894 | 5.6 |
| >5,000 | 184 | 91.9 |
| Total | 5,379 | 100.0 |
The number of shareholders rose by 770 during 2008 to a total of 5,379.
| Owner | A shares | B shares Holding % | Votes % | |
|---|---|---|---|---|
| Ångpanneföreningen's Foundation |
||||
| for Research & Development |
690,934 | 2,062,612 | 16.17 | 36.97 |
| Nordea Bank Finland |
0 | 754,593 | 4.43 | 3.11 |
| JP Morgan Chase Bank |
0 | 689,629 | 4.05 | 2.84 |
| ÅFOND (ÅF Group Trust) |
108,704 | 569,089 | 3.98 | 6.82 |
| Client Omnibus AC Fund |
0 | 576,145 | 3.38 | 2.37 |
| Nordea Nordenfond |
0 | 428,797 | 2.52 | 1.77 |
| BNP Paribas |
0 | 373,425 | 2.19 | 1.54 |
| Swedbank Robur |
||||
| Småbolagsfond Norden |
0 | 365,974 | 2.15 | 1.51 |
| Northern TR Guernsey-Treaty |
Client 0 |
338,000 | 1.98 | 1.39 |
| Fortis Banque Luxembourg |
0 | 330,365 | 1.94 | 1.36 |
| Total, 10 largest owners |
799,638 | 6,488,629 | 42.80 | 59.68 |
| Total, other owners |
4,800 | 9,736,434 | 57.20 | 40.32 |
| Total 31 Dec 2008 |
804,438 | 16,225,063 | 100.00 | 100.00 |
| 2004 | 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|---|
| Share price, 31 Dec. |
66 | 118 | 146 | 169 | 119 |
| Pre-tax profit |
2.54 | 17.33 | 10.81 | 19.26 | 26.83 |
| Profit after tax |
2.92 | 15.96 | 7.38 | 13.15 | 19.08 |
| Profit after tax after full conversion 05/08 |
— | 15.63 | 7.16 | 13.11 | 19.08 |
| Equity, excluding minority interests |
31 | 46 | 67 | 79 | 99 |
| Yield, % |
2.0 | 2.1 | 2.1 | 3.8 | 5.51) |
| Dividend | 1.30 | 2.50 | 3.00 | 6.50 | 6.502) |
| Annual turnover rate, times |
28.9 | 65.3 | 95.3 | 59.7 | 75.0 |
| Market capitalisation |
379.4 | 699.1 | 2,376.6 | 2,862.1 | 2,022.1 |
1) Based on proposed dividend for 2008
2) Proposed dividend
At present, the Nordic region is ÅF's largest market, where clients operate in a number of industries, including construction, engineering, the public sector and energy. This means that ÅF is dependent on a reasonably stable trend in these areas to achieve its targets. The general economic situation and propensity to invest are also highly significant, but ÅF's diversification over a number of markets and in areas that experience different business cycles reduces any risk.
To reduce dependence on the Nordic market and take advantage of growth opportunities, ÅF is expanding outside the Nordic region. ÅF's strategy is to grow in the segments in which the Group is already a market leader in the Nordic countries. Increasing the geographical spread will help to even out the effect of local business cycles.
A consulting firm's capacity utilisation rate is important for its ability to generate a profit. Every percentage point difference in this invoiced-time ratio equates to a rise or fall of SEK 48 million in ÅF's annual earnings. The hourly rate itself is also, of course, another essential component for the profitability of a consulting company. Increasing the hourly rate by SEK 10 would, if all other factors remained unchanged, improve profits for ÅF by some SEK 49 million a year.
Various approaches are adopted to reduce sensitivity, including employing contracted consultants and personnel on fixed-term contracts, increasing the variable component in salaries, broadening expertise and markets, and developing "packages" of services to increase competitiveness and reduce clients'
sensitivity to pricing. ÅF is also increasingly taking over the management of large-scale projects for its clients and liaising directly with sub-contractors with regard to the detailed project planning services that are necessary during the various phases of the project.
Fixed-price contracts for carefully specified consulting services can be beneficial to both parties. Often consultants are able to make use of past experience to serve their clients more efficiently and are well placed to make an accurate assessment of the amount of time and resources required. A fixed-price contract may, however, involve an increased risk – for client and consultant alike – if the time required to complete the assignment is not correctly estimated. In the event that the fixed price is exceeded, ÅF suffers a write-down in its fee. Training and tuition in factors such as project management and the formulation of constructive terms and conditions is the key to reducing the risks associated with this kind of agreement. Continuous monitoring and evaluations of the amount of work remaining in fixed-price contracts also reduce this risk. Major fixed-price assignments may be led only by assignment managers who have received the appropriate training.
Over the past decade or so the technical consulting sector has undergone a process of consolidation and this process continues unabated. Failure to follow this industry trend could result in the gradual erosion of competitive strength. While ÅF remains committed to taking an active part in this process, it also recognises that growth and the takeover of other consulting companies is not risk-free. To minimise the risks, ÅF has adopted a systematic
approach to acquisitions with strict criteria for obligatory documentation and thorough reviews. The ÅF board conducts an annual evaluation of any companies that have been taken over, and a special Acquisitions Unit has been set up to ensure a proactive and systematic approach to corporate acquisitions and expansion into new geographical markets.
To achieve the targets that have been set, it is crucial that employees in a consulting company are motivated and possess the relevant skills and knowledge. There is always a risk that skilled employees may join competitors or clients, or set up their own businesses. The risk is exacerbated if these people are able to use their inside knowledge of the company to cherry-pick the best of their colleagues. A situation like this could make it difficult for ÅF to deliver the services it is contracted to supply and incur extra costs for the company.
In order to attract and retain co-workers of the right calibre, ÅF invests (for example via the ÅF Academy) in continuous professional development, skills development and management training. It is highly unusual for large numbers of key employees to leave the ÅF Group, and regular attitude surveys show that employees are largely happy in their work. ÅF is able to offer the opportunity to work on large and highly sophisticated international projects, which is attractive to potential ÅF employees. Competition for qualified members of staff at all levels is increasing, and with it the pressure on ÅF to present itself as an attractive employer. For this reason ÅF invests large sums each year in recruitment and induction activities.
Competition in the technical consulting industry comes from a number of major international companies and various small local competitors in each individual market. Competition is fierce, both for projects and for the best personnel. And, at the same time, competition from consulting companies in countries with significantly lower cost structures is increasing. However, the impact of international consulting firms in the Nordic region remains limited, and, thanks to the company's breadth and depth of skills, ÅF's own competitive appeal is steadily increasing.
For some years the Swedish companies in the ÅF Group have had access to a business support system for managing, following up, controlling and documenting both fixed-price and open-account assignments. The system has been certified in accordance with ISO 9001:2000 (quality) and ISO 14001:2004 (environment). In 2008 work continued towards the integration into this shared support system of other units within the ÅF Group.
Under the provisions of current environmental legislation the ÅF Group does not require any environmental permits nor has any obligations to report on its activities. The business's environmental risks are restricted to the possible consequences of contravening existing environmental legislation. However, ÅF has sophisticated follow-up procedures built into its certified business support system to ensure that all units within the Group comply with environmental law. ÅF is not involved in any environmental disputes or incidents.
ÅF's business activities do involve a risk of dispute. Disputes may arise if ÅF disagrees with a client about the conditions that apply to a certain assignment. Disputes can also arise in conjunction with takeovers. Drawing up contracts for all assignments and detailing the terms of the agreement reduce the risk. In most instances, ÅF contracts are carried out under the terms of "The General Conditions for the ÅF Group", which in turn are based on ABK96 (General Conditions for Consulting Assignments for Architects and Engineers, 1996). For corporate acquisitions and purchases of the net assets of businesses, a standard contract is used that has been drawn up by ÅF. ÅF has a triedand-tested body of rules and regulations to be used when taking over another company's business operations. For more complex transactions, legal advice is always sought.
In order to reduce risk in its business activities, ÅF has a high level of insurance cover. In line with good practice in the industry, the Group has taken out consulting liability insurance. This covers ÅF for the liability involved in any given project (normally the same as the project fee), up to a ceiling of 120 times the so-called "basic amount" used in Sweden in these contexts. The maximum excess borne by ÅF in conjunction with an insurance claim is usually restricted to SEK 100,000, except in a few instances when it is set at a maximum of SEK 250,000. ÅF is covered for loss of contribution to cover fixed or additional costs in the event that its premises/equipment are damaged, stolen or in any other way rendered unusable.
The majority of ÅF's IT support has been outsourced to highly reputable suppliers. Although agreement has been reached with these service providers on response and action times, there can be no cast-iron guarantees that unplanned interruptions will not lead to loss of income at one or more of the Group's offices.
Through its operations the ÅF Group is exposed to various types of financial risk in the form of fluctuations in the company's results and cash flow as a consequence of changes in exchange rates, interest rates and credit risks. Responsibility for the Group's financial transactions and risks is handled centrally by the parent company's Corporate Finance department in accordance with policies laid down by the Board of Directors. The overall goal is to provide cost-effective financing and to minimise the negative effects of market fluctuations on the Group's earnings. Overall, the financial risks within the Group are relatively low.
Currency risk comprises the risk that fluctuations in exchange rates will have a negative impact on the consolidated income statement, balance sheet and cash flow. Currency risk can be split into transactions exposure and translation exposure. Transactions exposure is the net of operating and financial inflows and outflows in foreign currencies. Currency risks related to changes in expected and contracted payment flows are relatively limited for ÅF, as the
majority of sales and expenses take place/arise in local currencies. In accordance with current policy, payment flows in foreign currencies are hedged only when it is possible to determine the amount and time of the transaction with a great degree of certainty. In the event of an incoming payment in foreign currency that involves a net exposure in excess of 100,000 euros the risk is hedged through derivatives. The risk is also hedged through derivatives in the event of an outgoing payment in foreign currency that involves a net exposure in excess of 50,000 euros.
Translation exposure comprises foreign subsidiaries' net assets and profits/losses in foreign currency. In line with established policy ÅF does not hedge translation exposure.
Interest rate risk comprises the risk that changes in interest rates will affect the Group's net interest income/expense and/or cash flow. The Group's financing expense is affected by changes in market interest rates. For the purpose of reducing the effect of changes in interest rates on the Group's performance, ÅF's policy is that the average fixed-rate period on loans taken out must be between three and twelve months. During 2008 the fixed-rate period for the company's borrowing averaged 3 months. With current borrowing requirements, the effect on the Group's profit/ loss of a change of 1 percent in interest rates will be in the region of SEK 5 million. ÅF's policy is for cash and cash equivalents to be deposited in bank accounts with local banks. Loans from credit institutions consist largely of overdraft facilities.
ÅF's financial transactions give rise to credit risks in relation to financial counterparties. The risk of a counterparty being unable to fulfil its obligations is reduced through the careful selection of creditworthy counterparties and the capping of involvement with each counterparty.
This form of credit risk relates to the outstanding accounts receivable at any given time: in other words, the credit extended to ÅF's clients. This risk is limited through ÅF's highly effective credit policy, which specifies how the company's credit management procedures are to be implemented to avoid any uncontrolled assumption of risks and prevent any unnecessary bad debt losses. This includes, for example, rules on advance payments and advice on how to avoid clients who are likely to have payment problems. Historically the Group has reported only very limited credit losses. ÅF's ten largest clients, who represent 21 percent of the Group's sales, are all large listed companies or publicly owned institutions. There are, therefore, no exceptional credit risks in relation to any one major client.
| Change (all other |
Effect on earnings |
|
|---|---|---|
| Factor | factors unchanged) |
SEK/share (after tax) |
| Capacity utilisation |
±1 % |
±2.82 |
| Hourly rate |
±1 % |
±2.12 |
| Payroll costs |
±1 % |
±1.41 |
| Overheads | ±1 % |
±0.56 |
| Number of co-workers |
(FTEs) ±1 % |
±0.28 |
ÅF's new head office was officially opened on 26 November 2008. The office block is Sweden's first so-called "Green Building" and ÅF moved in on the exact date that had been set three years earlier when the project was initiated together with the Skanska construction company. The new premises provide a good working environment, reduce ÅF's costs, save energy and mean that ÅF can deliver even better solutions to its clients within the appointed time.
As they approach ÅF House, visitors are met by a new landmark built on the firm foundations of modern science: the building's plinth is made of graphic concrete with mathematical and physical formulae imprinted on the surface. Inside the handsome, glassclad edifice is a bright, spacious atrium that creates contact between the various storeys. The space is permeated by an atmosphere of calm, accentuated by mounds topped with green plants, an arbour-like "green room", and plenty of areas for impromptu meetings.
On each of the floors, co-workers sit in an open-plan office landscape that provides numerous places to meet in groups or for confidential discussions. Together, the people who work here and who come here from other parts of the organisation represent the strongest combination of expertise and experience in the business – people able to exploit the knowledge that ÅF has amassed, with a passion for innovative solutions and a profound understanding of their clients' needs.
The architects for the new building were Strategisk Arkitektur with Jonas Falk as the architect in charge. SandellSandberg Arkitekter under the leadership of Thomas Sandell with practical assistance from Ida Wanler were responsible for the interior design of public spaces.
The new headquarters were awarded the City of Solna's Environmental Prize in 2008, with the motivation that this was "a building that will make a lasting contribution to beautifying the city's built environment."
ÅF has, of course, been project leader for much of the work on the premises and utilised the talents of various disciplines within the company, from acoustics, electricity, heating/cooling, sanitation and ventilation to telecommunications, lighting design and fire safety.
ÅF's headquarters are the first Swedish office building to be certified as a "Green Building" in accordance with the stringent criteria of the Swedish National Board of Housing, Building and Planning's building regulations. "Green Building" certification is an eco-labelling programme initiated by the EU Commission to commend the construction of environmentally efficient premises designed to reduce C02 emissions into the atmosphere. Energy consumption in these buildings must be at least 25 percent lower than what is prescribed in national standards for newly built properties.
The official inauguration in November was attended by more than 600 clients, partners and co-workers who made full use of the opportunity to look around, eat, chat and listen to Swedish astronaut Christer Fuglesang, athletics star Susanna Kallur and ÅF's CEO Jonas Wiström debate the topic of "World-class performances" with ÅF's Information Director, Viktor Svensson, as moderator. Christer Fuglesang described his journey from a university engineering degree via doctoral studies in particle physics to become the first Swede to travel into outer space. Susanna Kallur spoke of the importance of working towards clear goals – and enjoying yourself while you do so. Training and preparation build up the self-confidence that leads to really good results.
Satisfied customers and co-workers at ÅF were in wholehearted agreement. It was a successful evening in outstanding surroundings at a company whose achievements are truly world-class.
The ÅF Golden League is the world's biggest annual circuit of one-day athletics meetings. It attracts worldwide television audiences of more than 100 million each year and around 200,000 spectators crowd the arenas to see the world's finest athletes perform at the top of their game.
ÅF was title sponsor of the Golden League for the first time in 2008. This commitment is a natural extension of the company's involvement in sport and athletics that began with ÅF's sponsorship of Swedish state television broadcasts from the Olympic Games in Athens in 2004 and Winter Olympics in Turin in 2006 and continued in 2007 when ÅF employed Susanna Kallur and became her principal sponsor. Athletics, the world's biggest sport after
football, attracts as many women as it does men, both as competitors and spectators. For the stars competing in the ÅF Golden League, success at the very highest international level means achieving the optimum combination of careful preparation, flawless technique and the will to win. That is precisely the mix that also epitomises the ÅF brand and ÅF's operations.
For ÅF, the ÅF Golden League presents several opportunities. It promotes the ÅF brand worldwide, increases commitment and pride among the company's co-workers, boosts interest in recruitment from universities both within and outside our domestic markets, and facilitates the integration of the company's corporate acquisitions in Europe. ÅF has also used the competition in connection with client events, and with conferences and motivation projects for co-workers. This has been especially appreciated in Oslo and Zürich, two cities of great strategic significance for ÅF.
Don't miss this summer's sporting highlights!
Since 2004 ÅF has chosen sponsorship as its main channel of communication. The ÅF Golden League enjoys wide media coverage, which gives good exposure and creates attention around the ÅF brand.
The Golden Wheel is awarded annually by the Swedish Sponsorship and Event Association in recognition of Sweden's best sponsorship and event projects. ÅF has been nominated for the year's best Swedish sponsorship project in the B2B class, together with SEB, Ericsson, Samsung and DHL.
| Berlin | 14 June |
|---|---|
| Oslo | 3 July |
| Rome | 10 July |
| Paris | 17 July |
| Zürich | 28 August |
| Brussels | 4 September |
Read more about the ÅF Golden League on www.iaaf.org
Operating profit/loss in relation to operating income.
Profit/loss after net financial items,
in relation to operating income.
Equity including non-controlling interests in relation to the balance sheet total.
Current assets in relation to current liabilities and current provisions.
Profit/loss after tax in relation to average shareholders' equity including non-controlling interests.
Profit/loss after net financial items and restoration of interest expense, in relation to the average balance sheet total.
Profit/loss after net financial items and restoration of interest expense in relation to the average balance sheet total, minus current liabilities and the net figure for deferred tax liabilities.
Profit/loss after net financial items and restoration of interest expenses, in relation to interest expense.
Earnings attributable to the parent company's shareholders relative to the average number of shares.
Dividend per share in relation to the year-end share price.
Equity attributable to the parent company's shareholders relative to the total number of shares.
Cash flow from operating activities in relation to the average number of shares.
The time invoiced to clients as a percentage of the total time all employees are present at work.
Number of employees during the year converted to the equivalent number of year-long, full-time positions. The actual number of employees is higher, owing to part-time employment and the fact that some employees work only part of the year.
| Figures in millions of SEK unless otherwise stated | 2008 | 2007 | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|
| Operating income and profit | |||||
| Operating income | 4,569.7 | 3,862.3 | 3,133.6 | 2,405.4 | 2,159.8 |
| Operating profit | 478.7 | 331.9 | 168.3 | 226.3 | 36.5 |
| Operating profit excluding other operating income | 477.9 | 331.2 | 148.4 | 89.9 | 12.2 |
| Profit after net financial items | 460.9 | 322.1 | 157.9 | 221.8 | 31.3 |
| Profit for the year | 327.8 | 220.0 | 107.8 | 204.4 | 36.0 |
| Capital structure | |||||
| Non-current assets | 1,727.3 | 1,320.2 | 997.1 | 254.1 | 237.9 |
| Current assets | 1,882.2 | 1,475.4 | 1,303.1 | 966.0 | 1,063.9 |
| Equity incl. non-controlling interests | 1,698.6 | 1,339.2 | 1,091.5 | 581.2 | 390.9 |
| Non-current provisions | 189.8 | 89.7 | 96.7 | 90.1 | 84.4 |
| Non-current liabilities, excluding provisions | 183.2 | 185.9 | 118.1 | 63.1 | 109.8 |
| Current provisions | 8.3 | 9.6 | 1.4 | 1.5 | — |
| Current liabilities, excluding provisions | 1,529.6 | 1,171.1 | 992.5 | 484.3 | 716.7 |
| Balance sheet total | 3,609.5 | 2,795.6 | 2,300.2 | 1,220.1 | 1,301.7 |
| Equity (annual average) | 1,518.9 | 1,215.3 | 836.4 | 486.0 | 367.5 |
| Total capital (annual average) | 3,202.6 | 2,547.9 | 1,760.2 | 1,260.9 | 1,211.7 |
| Capital employed (annual average) | 1,845.2 | 1,450.3 | 1,010.2 | 646.9 | 528.1 |
| Key figures | |||||
| Operating margin, percent | 10.5 | 8.6 | 5.4 | 9.4 | 1.7 |
| Operating margin excluding other operating income, percent | 10.5 | 8.6 | 4.8 | 4.0 | 0.6 |
| Profit margin, percent | 10.1 | 8.3 | 5.0 | 9.2 | 1.4 |
| Equity ratio, percent | 47.1 | 47.9 | 47.5 | 47.6 | 30.0 |
| Current ratio, times | 1.2 | 1.2 | 1.3 | 2.0 | 1.5 |
| Return on equity, percent | 21.6 | 18.1 | 12.9 | 42.0 | 9.8 |
| Return on total capital, percent | 15.1 | 13.4 | 10.1 | 18.1 | 3.4 |
| Return on capital employed, percent | 26.2 | 23.4 | 17.5 | 35.4 | 7.9 |
| Interest cover, times | 20.7 | 18.7 | 9.3 | 32.8 | 4.8 |
| ÅF share | |||||
| Earnings per share, SEK | 19.1 | 13.1 | 7.4 | 16.0 | 2.9 |
| Earnings per share after dilution 2005–2008, SEK | 19.1 | 13.1 | 7.2 | 15.6 | — |
| Yield, percent | 5.5 | 3.8 | 2.1 | 2.1 | 2.0 |
| Equity per share, SEK | 99.5 | 78.8 | 67.1 | 45.6 | 31.3 |
| Equity per share after dilution, SEK | 99.5 | 78.8 | 67.7 | 47.4 | — |
| Cash flow from operating activities per share, SEK | 18.9 | 18.9 | 8.3 | –4.7 | 4.4 |
| Cash flow from operating activities per share after dilution, SEK | 18.9 | 18.8 | 8.0 | –4.4 | — |
| Buying rate 31 Dec, SEK | 119 | 169 | 146 | 118 | 66 |
| Market value | 2,022.1 | 2,862.1 | 2,376.6 | 699.1 | 379.4 |
| Ordinary dividend per share, SEK | 6.50* | 6.50 | 3.00 | 2.50 | 1.30 |
| Other | |||||
| Invoiced-time ratio, percent | 74.1 | 75.1 | 72.9 | 71.5 | 68.5 |
| Gross investment in equipment | 91.8 | 45.0 | 60.4 | 44.7 | 49.4 |
| Gross investment in property | 32.4 | — | — | — | 1.3 |
| FTEs excluding associated companies | 3,948 | 3,623 | 3,167 | 2,538 | 2,531 |
* Proposed dividend
Corporate identity number 556120-6474
The Board of Directors and the President of ÅF AB (publ) herewith submit their annual report for the year 2008. ÅF AB, which has its registered office in Stockholm, is the parent company of the ÅF Group.
ÅF is a leading company in the technical consulting industry, with expertise founded on more than a century of experience. ÅF offers highly qualified services and solutions for industrial processes, infrastructure projects and the development of products and IT systems. ÅF is also one of the leading names in testing and inspection. The Group's operational base is in northern Europe, but its business and clients are found all over the world.
ÅF bases its consulting business on the development of systems and products, and on investments, maintenance measures and ongoing modification work relating to its clients' plant, processes, machinery and buildings. The majority of projects originate in Swedish and international industrial companies, service companies and the real estate sector.
ÅF performed well during 2008. Net sales rose by 18 percent, with organic growth totalling 8 percent. Operating profit improved by 44 percent. This improvement in profits is largely due to our continuing efforts to reduce costs and to the fact that the range of services we now offer is more profitable.
ÅF advanced its positions significantly during 2008, especially within the fields of energy, the environment and technical inspections.
Net sales amounted to SEK 4,569 million (2007: SEK 3,862 million), an increase of 18 percent.
Operating profit totalled SEK 479 million (SEK 332 million), an increase of 44 percent. The operating margin was 10.5 (8.6) percent.
The capacity utilisation rate was 74 (75) percent.
Profit after tax was SEK 328 million (SEK 220 million).
Earnings per share, before dilution, totalled SEK 19.08 (SEK 13.15).
The reduction in occupational pension premiums introduced by Alecta had a positive effect on ÅF's operating profit of SEK 40 million in 2008, compared with 2007.
The figures for Sales & Earnings have been adjusted as if the internal restructuring had taken place on 1 January of the respective year.
The Energy Division is a leading energy consultant with assignments in approximately 40 countries worldwide.
On 1 October the division was restructured to focus exclusively on energy consulting: 177 consultants for the pulp and paper industry were transferred to the Engineering Division, and the Division's name was changed from Process to Energy.
The market for energy consulting services remained strong throughout 2008. However, towards the end of the year there were some signs of growing uncertainty in the wake of the financial crisis, and a number of clients in different markets, including Finland, the Baltic states and South-East Asia, chose to postpone their investment decisions.
The Energy Division's clients include private and public sector power companies, government authorities and financial institutions. Client investments are often largescale and extend over many years. The Energy Division has a substantial order book corresponding to a sales value of approximately SEK 2 billion.
As an expression of its long-term confidence in the development of the Russian energy market, ÅF has acquired a 75 percent stake in the Russian energy consultant Lonas, which employs 250 people in Russia. Lonas was consolidated into the ÅF Group w.e.f. October 2008. The strategy is to expand Lonas in the CIS countries and to utilise the company as a subcontractor for international power generation projects.
The Engineering Division is northern Europe's leading technical consultant for industry. The division has operations in ten countries and offers technical consulting services in all sectors of industry.
A strong performance by the industrial sector helped ensure a high level of demand during the year with a high capacity utilisation rate for the Engineering Division. Demand was particularly brisk in mining and energy, with especially high levels of activity in the nuclear power sector, where the division enjoys a leading position in Sweden.
Client investments focused mainly on efficiency improvements in manufacturing plants, environmental engineering projects, the development of alternative fuels and conversion to efficient energy management.
Towards the end of the year the market in several industrial sectors began to flag. Fortunately, however, the Engineering Division was able to rapidly redistribute its consulting resources to respond to the shortage of capacity in certain growing segments of the market and thus maintain a satisfactory level of profitability.
On 1 October the Engineering Division received an injection of new resources following the transfer from the Energy Division of more than 250 experts in electrical power and process engineers in the fields of pulp & paper, food technology and pharmaceuticals. This has boosted the division's expertise in industrial processes and strengthened its ability to participate in client projects from an early stage.
The Infrastructure Division enjoys a leading position in consulting services for infrastructure development in Scandinavia.
On 1 October, as part of a corporate restructuring programme, the Infrastructure and System Divisions were amalgamated under the Infrastructure name to reduce costs and present clients with a stronger offer.
The market for infrastructure consulting services remained strong in 2008. The majority of business areas reported high levels of capacity utilisation and the inflow of orders was good. The sole exception was the fall-off in demand for consulting services in product development towards the end of the year.
Levels of activity remained notably high in the largest business area, Installations, which now employs 600 people in Sweden and Norway. Demand for more efficient energy solutions in commercial, industrial and public sector premises was strong.
The second-largest business area, Infrastructure Planning, also enjoyed the benefits of a market that, thanks to substantial investments in Swedish rail infrastructure, continues to be buoyant. New environmental standards and the anticipated escalation in energy prices are fuelling growing political interest in rail transport solutions.
The Inspection Division works with technical inspections, chiefly in the form of periodic inspections, testing and certification.
The market for inspections remained strong in 2008. There is a shortage of experienced testing engineers and inspectors, both in Sweden and in neighbouring countries.
A charge of SEK 5 million was made to profit for the year for the establishment of a specialist operation for the nuclear power industry.
The process of technical harmonisation within the EU will become a powerful new driving force for the division's development in the future. The Inspection Division expects a number of European markets to be deregulated, which will lead to a more international market and radically alter the current competitive situation.
Following an acquisition in September, the Inspection Division, gained a leading position for itself in the field of non-destructive testing in the Czech Republic. Late in the year an office was also opened in Lithuania; here the focus is on clients in the nuclear power industry and other test-intensive industries in the Baltic States.
The Inspection Division continued to provide Peab with services relating to a comprehensive training programme focusing on safety in the workplace. In all, some 8,000 Peab employees have now participated in the programme.
Through its Energy Division ÅF acquired a 75 percent stake in the Russian technical consulting company ZAO Lonas Technologija (Lonas) in the fourth quarter of the year. The Lonas head office is located in St Petersburg and the company also has offices in Yekaterinburg and Kiev. Lonas has 250 employees, around 190 of whom are based in St Petersburg, and specialises in power plants, district-heating plants and turbine plants.
The Inspection Division, acquired the Czech inspection company Qualitest s.r.o. in the third quarter. This acquisition is a step in ÅF's strategy to establish itself as a well-known international name in the technical inspection and testing market and to underpin further growth in the Czech Republic. Qualitest, based in the town of Pardubice, has a workforce of 80 and is the market leader for non-destructive testing in the Czech Republic.
Also in the third quarter ÅF acquired the well-known Lithuanian energy consulting company UAB Termosistemy Projektai (TSP) through the ÅF Energy Division. TSP has 16 employees in Kaunas and Vilnius.
In the second quarter ÅF acquired the technical consulting company OrbiTec AB through its Engineering Division. OrbiTec, with 30 members of staff in Jönköping, Sweden, works primarily within the fields of electrical engineering, automation and industrial IT.
Also in the second quarter ÅF acquired the technical consulting company BergByggKonsult AB through the ÅF Infrastructure Division, The company has 12 employees in Stockholm and possesses specialist expertise in rock mechanics and rock engineering, geotechnical instrumentation and 3D laser scanning.
Through the Inspection Division ÅF acquired the Swedish technical inspections company Kvalitetsteknik NDT AB, with 30 employees in Trollhättan, Stenungsund, Lysekil and Mönsterås in the second quarter. The company's operations focus mainly on non-destructive testing.
In the first quarter ÅF acquired the consulting company Proplate IT, via the Infrastructure Division. Proplate, with 22 employees in three locations in Sweden (Karlskoga, Örebro and Karlstad), offers qualified IT consulting services to industrial clients in Sweden. Its major client is Outokumpu.
When consulting businesses are acquired, the price paid relates not solely to the carrying amount of tangible assets in the company, but also includes a premium to reflect the benefit of acquiring expert, well-qualified and experienced consultants. This premium in the form of human capital, which is recorded as an asset in the acquired company, is recognised primarily as goodwill in the ÅF Group.
The goodwill item on the acquisition of Lonas was SEK 88 million. Other acquisitions and additional considerations gave rise to goodwill of SEK 92 million. In total, the value of ÅF's goodwill rose by SEK 266 million net to SEK 1,329 million, with exchange differences accounting for SEK 86 million of this total. For further information on goodwill, see Note 13.
On 5 May 2008 Aktiebolaget Ångpanneföreningen changed its name to ÅF AB following a decision made by the Annual General Meeting on 23 April 2008.
The divisions carry out research and development work in conjunction with universities and trade organisations, but also internationally with EU funding. In-house method development also forms part of this R&D work. For the Group as a whole, investment in R&D during the year totalled SEK 36 million (2007: SEK 26 million), mostly in the form of the costs for time spent on R&D projects by ÅF's own salaried employees.
Cash flow for the period January–December 2008 was SEK –54 million (Jan–Dec 2007: SEK 53 million). Cash flow was affected by SEK 142 million relating to the cost of acquisitions (SEK 224 million), by investments totalling SEK 124 million (SEK 45 million) and by a shareholders' dividend of SEK 110 million (SEK 49 million).
The Group's liquid assets totalled SEK 290 million (SEK 310 million), and the net loan debt at the end of the year amounted to SEK 174 million (SEK 88 million).
Equity per share was SEK 99 and the equity/assets ratio was 47.1 percent. At the beginning of 2008 equity per share was SEK 79 and the equity/assets ratio was 47.9 percent.
Equity on 31 December 2008 totalled SEK 1,699 million. This is an increase of SEK 360 million on the figure for 2007 and includes SEK 172 million relating to a change in the translation reserve.
Excluding corporate acquisitions, gross investment in tangible assets during 2008 totalled SEK 124 million (2007: SEK 45 million). During the course of the year SEK 32 million was invested in land and buildings for ÅF's Swiss subsidiary, ÅF-Colenco, and SEK 43 million was invested in ÅF's new head office in Solna.
Parent company income from business operations totalled SEK 253 million (2007: SEK 197 million), and the loss after net financial items was SEK 39 million (SEK –25 million). Cash and cash equivalents totalled SEK 4 million (SEK 2 million), and gross investment in machinery and equipment for the period January to December amounted to SEK 51 million (SEK 9 million).
Together with its stakeholders and society in general ÅF has an important duty to work towards sustainable development. In many instances, ÅF is tasked with introducing new and better technology, implementing rationalisations and reducing emissions. With more than a century's experience as an established name in technical consulting, ÅF adopts a long-term perspective to business and has its sights firmly set on making a positive contribution to sustainable development.
ÅF frequently participates in collaboration between different players in trade and industry, the public sector and the world of research. Its role as a consultant is to act as a bridge by facilitating understanding and the exchange of knowledge among those involved. ÅF also acts as an expert resource for ISO in the work of producing international guidelines for Corporate Social Responsibility, ISO 26000. For more details of ÅF's environmental policy and its work in this field, please see pages 23–26.
The number of FTEs was 3,948 (2007: 3,623).
The total number of employees at the end of the reporting period was 4,448 (3,892): 3,168 in Sweden and 1,280 outside Sweden.
ÅF adopts an active, long-term perspective to attract and retain skilled employees. This work involves marketing ÅF as an employer externally, but also providing clear information to both current and presumptive employees about the various career paths and opportunities for development available at ÅF.
ÅF maintains a strong position as an attractive employer. In Universum's annual survey of 6,500 engineering graduates, ÅF was ranked in eighth place overall among Swedish companies in the league table of "ideal employers".
During 2007 and 2008 the "Five of Five Thousand" project has identified and defined three main career paths within ÅF: as specialist/expert, project manager and manager. At the same time the ÅF Academy has also been established to support these career paths and the development of co-workers in their specific professional role within the company and to assist managers in this development work. All the courses that are offered by this internal training organisation include modules of entrepreneurial skills. For further details about ÅF's work with human resources, please see pages 16–22.
The capacity utilisation rate of a consulting company is crucial for its ability to generate a profit. Every percentage point change in this figure affects ÅF's results by plus/minus approximately SEK 48 million. The hourly rate, of course, is also a key component in the results of a consulting company. An increase in the hourly rate of SEK 10 would, if all other factors remained unchanged, improve profits for ÅF by around SEK 49 million. Methods of reducing sensitivity include the use of sub-consultants, fixed-term employment contracts and increases in the variable salary component, along with measures to broaden expertise and markets and to productise services, which involves packaging a number of services to improve competitiveness and reduce price sensitivity.
While most ÅF assignments are carried out on an open-account basis, fixed price contracts are also agreed in a number of cases. This does, of course, represent a financial risk if the costs involved in a project are miscalculated. Careful estimates of costs and follow-ups of fixed-price assignments are carried out to minimise the risk of impairment.
If the set targets are to be reached, it is absolutely crucial for a consulting company that its staff are motivated and possess the relevant skills and expertise. There is always a risk that skilled employees may leave ÅF and set up their own company or be headhunted by the competition. In order to attract and retain staff, ÅF invests in continual training, skills development and leadership development. ÅF's ambition is to make every employee perceive some form of added value in working for ÅF.
ÅF's business activities involve a risk of dispute. Drawing up contracts for all assignments and specifying in detail the terms of the agreement reduces the risk. In most instances, ÅF's Swedish contracts are carried out in accordance with ÅF's General Conditions (based on ABK96: General Conditions for Consulting Assignments for Architects and Engineers, 1996).
ÅF's ambition is to augment growth by acquiring other consulting companies. The increased risk that this involves is minimised by adopting a systematic approach to acquisitions and insisting on the relevant documentation and reviews. An annual evaluation of recent acquisitions is carried out by the ÅF Board.
Through its operations, ÅF is exposed to a range of financial risks, such as currency risk, interest rate risk, financial credit risk and customer credit risk. Responsibility for the Group's financial transactions and risks is held centrally by the parent company's Corporate Finance department in accordance with the policies adopted by the board. The overriding goal is to provide cost-effective financing and to minimise the negative impact on the Group's earnings of market fluctuations. To minimise the currency risk in contracted payment flows in foreign currencies, large contracts are hedged using derivatives. For a more detailed description of risk management and sensitivity analysis, please refer to Note 26 and pages 56–60 in this annual report.
ÅF's B shares have been quoted on the OMX Nordic Exchange Stockholm (Mid Cap) since January 1986. Prior to that, Ångpanneföreningen traded as a cooperative association from 1895 until 1980 and as a joint-stock company from 1981.
ÅF shares traded at SEK 119 at the end of 2008, a depreciation in value of 29.6 percent over the year. The Stockholm Stock Exchange's (OMXSPI) all-share index fell by 42 percent during the same period.
ÅF's market capitalisation as at 31 December 2008 was SEK 2,022 million (SEK 2,862 million).
During the year there was a turnover of 12,184,948 (9,230,962) shares, valued at a total of SEK 1,885 million (SEK 1,585 million). The average turnover per trading day was SEK 7.32 million (SEK 6.34 million). Shares were traded on 100 (100) percent of trading days.
The total number of ÅF shares on 31 December 2008 amounted to 17,029,501, of which 804,438 were class A shares and 16,225,063 were class B shares. ÅF AB held 37,000 of its own class B shares on 31 December 2008.
The ten largest shareholders in ÅF are listed on page 54 of this annual report.
At their Annual General Meeting held on 23 April 2008 shareholders in ÅF AB resolved to implement a new performance-related share savings programme for up to 150 key individuals in the company, including the President/CEO.
Employees who participate in the programme can reserve a sum corresponding to a maximum of 5 percent of their gross salary for the purchase of ÅF shares on the OMX Nordic Exchange in Stockholm over a 12-month period with effect from the implementation of the programme. On expiry of the application period 100 ÅF employees in key positions had expressed an interest in purchasing approximately 20,600 shares for the entire 2008 programme, based on the share price at the end of the application period.
In the event that the performance targets that have been set up are met in full, some 87,000 shares will be transferred to these employees without consideration during 2011 and 2012. This can lead to dilution of a maximum 0.5 percent of earnings per share.
During Q4 2008 a total of 37,000 ÅF shares was acquired under the mandate given to the Board of Directors at the Annual General Meeting of ÅF shareholders on 23
April 2008. The mandate authorised the purchase of up to 230,000 of the company's class B shares in the period prior to the Annual General Meeting on 5 May 2009.
The purpose of the buy-backs is to safeguard the company's obligations with regard to the 2008 performance-related share programme approved by the AGM.
Following the recommendation of the Nomination Committee eight directors (without deputies) were elected by the Annual General Meeting to serve in 2008: Ulf Dinkelspiel, Patrik Enblad, Magnus Grill, Eva-Lotta Kraft, Jon Risfelt, Helena Skåntorp and Lena Treschow Torell were re-elected, and Tor Ericson was elected to serve a first term as a director of the company.
Ulf Dinkelspiel was re-elected as Chairman of the Board.
Patrik Tillack was appointed as an employee representative on the board. Eva Lindén is already an employee representative on the board, and Oscar Stridh and Daniel Westman are deputies in this capacity.
At its inaugural meeting following the general meeting, the board elected Lena Treschow Torell as its Deputy Chair.
Please turn to pages 132–133 for a more detailed presentation of board members and directors.
During the 2008 financial year, the board held ten meetings, of which one was the inaugural meeting. The work of the board focuses chiefly on strategic issues, business plans, financial statements, major investments and takeovers and other decisions which, according to the written rules of procedure, are to be dealt with by the board. A presentation of developments with regard to the company's business operations and financial position has been a standing item on the agenda. In conjunction with each ordinary meeting of the board one business area within the company is also scrutinised in greater detail. At the board meeting in August a strategy seminar was arranged with a special review of each division.
Other ÅF employees have participated in board meetings to present reports. ÅF's Executive Vice President, Corporate Information, has served as secretary to the board.
An evaluation of the board's work during the year has been carried out. ÅF's Corporate Governance Report is presented separately on pages 125–130.
In 2008 senior group management comprised Jonas Wiström (President and CEO), Jonas Ågrup (CFO), Viktor Svensson (Executive Vice President, Corporate Information), together with the Divisional Presidents, Jörgen Backersgård, Eero Auranne, Per Magnusson and Johan Olsson. Gunilla Fladvad is the secretary to the senior management group. Åke Rosenius left ÅF and his position on the senior management group in 2008.
Please turn to pages 134–135 for a presentation of the senior executives in the company.
The 2008 Annual General Meeting resolved that the principles below relating to remuneration and other conditions of employment for senior executives of the company will apply for contracts of employment signed or modified after the Annual General Meeting. By "senior executives of the company" is meant the President/ CEO and other members of the senior management group. Remuneration paid to senior executives of the company is to be based on market conditions at the same time as it supports the interests of the company's owners. Remuneration shall, in the main, consist of a fixed salary element, a variable salary element, share-related
remuneration, pension benefits and other benefits; for example, use of a company car. The guidelines for remuneration are intended to ensure that ÅF can attract and retain the best available resources in order to support the ÅF mission and strategy.
The fixed salary element shall be determined with regard to personal skills, scope of responsibility and achievements, and shall be based on market conditions.
The variable salary element shall be based on a performance-based programme and shall be set at a rate of between 60 and 100 percent of the individual's fixed annual salary. The variable salary element shall not qualify as income for pension purposes.
The period of notice shall be six months on the employee's side. In the event that notice is issued by the company, the period of notice and the time during which severance pay is paid out shall not together exceed a total of 24 months.
Pension benefits shall be in the form of either defined-benefit or defined-contribution retirement plans, or a combination of the two. The standard retirement age is 65 years. In the event that a senior executive of the company retires before pensionable age, he or she shall be given a paid-up policy from the age of 60.
Issues relating to the remuneration of senior executives of the company are dealt with by a Remuneration Committee and, in matters relating to the President/CEO, are finally determined by the Board of Directors.
The 2008 Annual General Meeting authorised the board to deviate from the guidelines for remuneration drawn up by the Annual General Meeting, if there are special reasons for doing so in individual instances.
For information regarding previously approved remuneration which has not become due for payment, please refer to Note 8 in this annual report.
The board proposes that the 2009 Annual General Meeting resolves that the principles for remuneration and other conditions of employment for the senior management group for 2009 shall be in line with the principles that have been applied during 2008.
The economic situation has deteriorated in the wake of the financial crisis and ÅF is bracing itself for a relatively tough 2009 in a very challenging marketplace. The importance of a strong market position increases as the market grows more uncertain. Fortunately, ÅF is in a favourable financial position with well-established client relations and a strong brand, all of which bodes well for the future. Moreover, the bulk of ÅF's operations is concentrated on industries such as energy, environmental engineering, infrastructure and inspection, where the prospects for long-term expansion remain excellent.
Non-restricted profits of SEK 1,138,935,543 are at the disposal of the Annual General Meeting.
The Board of Directors and CEO propose that these profits be appropriated as follows:
To the shareholders:
| 1,138,935,543 |
|---|
| 1,028,484,286 |
| 110,451,257 |
The board's motivation with regard to the proposed appropriation of profits will be posted on the company's website, www.afconsult.com. It can also be ordered from the company.
| 1 January – 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Operating income |
|||
| Net sales |
2 | 4,568,835 | 3,861,618 |
| Other operating income |
5 | 820 | 727 |
| 4,569,655 | 3,862,345 | ||
| Operating expenses |
6 | ||
| Other external costs |
7, 27 |
–1,488,979 | –1,162,344 |
| Personnel costs |
8 | –2,540,421 | –2,310,209 |
| Depreciation/amortisation and impairment of tangible and intangible assets |
13, 14 |
–54,060 | –48,827 |
| Other operating expenses |
9 | –11,098 | –13,217 |
| Share of associated companies' profit/loss |
15 | 3,566 | 4,131 |
| Operating profit/loss |
2 | 478,663 | 331,879 |
| Result from financial investments |
|||
| Financial income |
12,903 | 14,889 | |
| Financial expenses |
–30,686 | –24,716 | |
| Net financial items |
10 | –17,783 | –9,827 |
| Profit after financial items |
460,880 | 322,052 | |
| Tax | 23 | –133,129 | –102,051 |
| Profit for the year |
327,751 | 220,001 | |
| Attributable to: |
|||
| Shareholders in the parent company |
324,184 | 217,528 | |
| Non-controlling interest |
3,567 | 2,473 | |
| 327,751 | 220,001 | ||
| Earnings per share with regard to profit |
|||
| attributable to shareholders in the parent company |
12 | ||
| before dilution, SEK |
19.08 | 13.15 | |
| after dilution, SEK |
19.08 | 13.11 |
| 1 January – 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Change in translation reserve for the year |
171,755 | 14,583 | |
| Cash flow hedging, recognised in equity |
576 | –206 | |
| Fair value, adjustment securities |
–7 | 7 | |
| Pensions | –44,603 | –2,735 | |
| Tax attributable to items recognised in equity |
9,965 | 844 | |
| Effect of change in tax rate |
–85 | — | |
| Changes in assets recognised in equity, excluding transactions with the company's owners |
137,601 | 12,493 | |
| Profit for the year |
18 | 327,751 | 220,001 |
| Total change in assets, excluding transactions with the company's |
owners | 465,352 | 232,494 |
| Attributable to: |
|||
| Shareholders in parent company |
460,875 | 229,996 | |
| Non-controlling interest |
4,477 | 2,498 | |
| 465,352 | 232,494 |
| As per 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Assets | 3, 4 |
||
| Intangible assets |
13 | 1,357,067 | 1,083,720 |
| Tangible assets |
14 | 338,638 | 210,715 |
| Participations in associated companies |
15 | 13,426 | 11,216 |
| Financial investments |
16 | 1,269 | 946 |
| Non-current receivables |
2,104 | 2,026 | |
| Deferred tax asset |
23 | 14,805 | 11,603 |
| Total non-current assets |
1,727,309 | 1,320,226 | |
| Accounts receivable |
25 | 978,706 | 799,854 |
| Revenue generated but not invoiced |
423,634 | 261,025 | |
| Other receivables |
29 | 132,897 | 37,986 |
| Prepaid expenses and accrued income |
17 | 56,643 | 66,105 |
| Cash and cash equivalents |
290,338 | 310,382 | |
| Total current assets |
1,882,218 | 1,475,352 | |
| Total assets |
3,609,527 | 2,795,578 |
| As per 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Equity and liabilities |
|||
| Equity | 18 | ||
| Share capital |
170,295 | 169,352 | |
| Other contributed capital |
482,011 | 478,599 | |
| Reserves | 179,142 | 7,883 | |
| Retained earnings including profit for the year |
858,646 | 679,110 | |
| Equity attributable to shareholders in parent company |
1,690,094 | 1,334,944 | |
| Non-controlling interest |
8,548 | 4,220 | |
| Total equity |
1,698,642 | 1,339,164 | |
| Liabilities | 3, 4 |
||
| Liabilities to credit institutions |
19, 26 |
95,716 | 68,599 |
| Convertible debenture |
20 | — | 7,613 |
| Provisions for pensions |
21 | 103,823 | 60,135 |
| Other provisions |
22 | 66,286 | 8,874 |
| Deferred tax liabilities |
23 | 19,675 | 20,734 |
| Other liabilities |
87,500 | 109,710 | |
| Total non-current liabilities |
373,000 | 275,665 | |
| Liabilities to credit institutions |
19, 26 |
264,999 | 261,688 |
| Work invoiced but not yet carried out |
298,440 | 140,595 | |
| Accounts payable – trade |
231,337 | 181,798 | |
| Current tax liability |
23 | 79,010 | 40,352 |
| Other liabilities |
29 | 183,767 | 153,003 |
| Accrued expenses and prepaid income |
24 | 472,023 | 393,705 |
| Provisions | 22 | 8,309 | 9,608 |
| Total current liabilities |
1,537,885 | 1,180,749 | |
| Total liabilities |
1,910,885 | 1,456,414 | |
| Total equity and liabilities |
3,609,527 | 2,795,578 |
For information about the Group's pledged assets and contingent liabilities, please refer to Note 28.
| 1 January – 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Operating activities |
3, 4, 32 |
||
| Profit after financial items |
460,880 | 322,052 | |
| Adjustment for items not included in cash flow |
66,040 | 73,604 | |
| Income tax paid |
–135,907 | –77,992 | |
| Cash flow from operating activities |
|||
| before changes in working capital |
391,013 | 317,664 | |
| Cash flow from changes in working capital |
|||
| Change in operating receivables |
–103,202 | –79,771 | |
| Change in operating liabilities |
33,380 | 75,231 | |
| Cash flow from operating activities |
321,191 | 313,124 | |
| Investing activities |
|||
| Acquisition of tangible assets |
–124,115 | –45,094 | |
| Disposal of tangible assets |
— | 6,970 | |
| Acquisition of intangible assets |
–2,300 | –1,022 | |
| Acquisition of subsidiaries |
–142,056 | –224,482 | |
| Additional considerations paid |
–3,421 | — | |
| Disposal of line of business |
— | 20,672 | |
| Acquisition of financial assets |
–526 | –433 | |
| Disposal of financial assets |
— | 7,366 | |
| Cash flow from investing activities |
–272,418 | –236,023 | |
| Financing activities |
|||
| Proceeds from borrowing |
29,156 | 42,900 | |
| Amortisation of loans |
–15,384 | –18,260 | |
| Dividend paid to parent company shareholders and non-controlling shareholders |
–112,163 | –48,833 | |
| Share buy-backs |
–4,456 | — | |
| Cash flow from financing activities |
–102,847 | –24,193 | |
| Cash flow for the year |
–54,074 | 52,908 | |
| Cash and cash equivalents brought forward |
310,382 | 257,474 | |
| Exchange difference in cash/cash equivalents |
34,030 | 0 | |
| Cash and cash equivalents carried forward |
290,338 | 310,382 |
| 1 January – 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Operating income |
|||
| Net sales |
179,392 | 142,077 | |
| Other operating income |
5 | 73,599 | 54,510 |
| 252,991 | 196,587 | ||
| Operating expenses |
|||
| Other external costs |
7, 27 |
–135,176 | –99,117 |
| Personnel costs |
8 | –81,460 | –56,152 |
| Depreciation and impairment of tangible assets |
14 | –5,090 | –4,371 |
| Other operating expenses |
–80,567 | –75,868 | |
| Operating loss |
–49,302 | –38,921 | |
| Result from financial investments |
|||
| Result from shares in Group companies |
10 | 173 | — |
| Interest income and similar profit/loss items |
10 | 28,623 | 27,520 |
| Interest expense and similar profit/loss items |
10 | –18,657 | –13,998 |
| 10,139 | 13,522 | ||
| Loss after financial items |
–39,163 | –25,399 | |
| Appropriations | 11 | –10,881 | 83,908 |
| Pre-tax profit/loss |
–50,044 | 58,509 | |
| Tax | 23 | 13,846 | –16,500 |
| Profit/loss for the year |
–36,198 | 42,009 |
| 1 January – 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Cash flow hedging, recognised in equity |
587 | — | |
| Tax attributable to items recognised in equity |
–154 | — | |
| Changes in assets recognised in equity, |
|||
| excluding transactions with the company's owners |
433 | — | |
| Profit/loss for the year |
18 | –36,198 | 42,009 |
| Total change in assets, excluding transactions with the company's |
owners | –35,765 | 42,009 |
| As per 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Assets | |||
| Non-current assets |
|||
| Tangible assets |
14 | 56,473 | 14,643 |
| Participations in Group companies |
30 | 1,018,464 | 998,463 |
| Investments in associated companies |
15 | 613 | — |
| Receivables from Group companies |
29 | 3,114 | — |
| Deferred tax asset |
23 | 4,810 | 3,811 |
| Total non-current assets |
1,083,474 | 1,016,917 | |
| Current assets |
|||
| Accounts receivable |
2,760 | 2,995 | |
| Receivables from Group companies |
29 | 889,507 | 687,292 |
| Receivables from associated companies |
29 | 129 | 60 |
| Receivables from other related parties |
29 | — | 28 |
| Revenue generated but not invoiced |
2,607 | 1,447 | |
| Other receivables |
18,920 | 4,445 | |
| Prepaid expenses and accrued income |
17 | 26,903 | 25,146 |
| Total current receivables |
940,826 | 721,413 | |
| Cash and bank balances |
3,869 | 2,415 | |
| Total current assets |
944,695 | 723,828 | |
| Total assets |
2,028,169 | 1,740,745 | |
| Equity and liabilities |
|||
| Equity | 18 | ||
| Restricted equity |
|||
| Share capital (804,438 class A shares and 16,225,063 class B shares: total 17,029,501 shares with a quota value of SEK 10) |
170,295 | 169,352 | |
| Statutory reserve |
46,948 | 46,948 |
| As per 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Non-restricted equity |
|||
| Fair value reserve |
433 | — | |
| Share premium reserve |
457,183 | 454,974 | |
| Profit brought forward |
717,518 | 543,340 | |
| Profit/loss for the year |
–36,198 | 42,009 | |
| Total equity |
1,356,179 | 1,256,623 | |
| Untaxed reserves |
31 | 12,518 | 1,638 |
| Provisions | |||
| Provisions for pensions and similar obligations |
21 | 27,185 | 27,161 |
| Deferred tax liabilities |
23 | 154 | 5 |
| Other provisions |
22 | 17,086 | 13,611 |
| Total provisions |
44,425 | 40,777 | |
| Non-current liabilities |
|||
| Convertible debenture |
20 | — | 7,613 |
| Liabilities to Group companies |
29 | 156 | 156 |
| Total non-current liabilities |
156 | 7,769 | |
| Current liabilities |
|||
| Liabilities to credit institutions |
19, 26 |
240,785 | 243,195 |
| Accounts payable – trade |
55,195 | 27,307 | |
| Liabilities to Group companies |
29 | 241,392 | 78,894 |
| Current tax liabilities |
23 | 53,123 | 66,153 |
| Other liabilities |
2,612 | 2,688 | |
| Accrued expenses and prepaid income |
24 | 21,784 | 15,701 |
| Total current liabilities |
614,891 | 433,938 | |
| Total equity and liabilities |
2,028,169 | 1,740,745 | |
| Pledged assets and contingent liabilities for the parent company |
|||
| Pledged assets |
28 | None | None |
| Contingent liabilities |
28 | 176,447 | 140,915 |
| 1 January – 31 December (in thousands of SEK) |
Note | 2008 | 2007 |
|---|---|---|---|
| Operating activities |
32 | ||
| Loss after financial items |
–39,163 | –25,399 | |
| Adjustment for items not included in the cash flow |
13,656 | 13,657 | |
| Income tax paid |
–98,372 | –31,892 | |
| Cash flow from operating activities |
|||
| before changes in working capital |
–123,879 | –43,634 | |
| Cash flow from changes in working capital |
|||
| Change in operating receivables |
190,793 | 168,116 | |
| Change in operating liabilities |
125,996 | 10,103 | |
| Cash flow from operating activities |
192,910 | 134,585 | |
| Investing activities |
|||
| Acquisition of tangible assets |
–50,784 | –8,758 | |
| Disposal of tangible assets |
— | 4,920 | |
| Acquisition of financial assets |
–23,727 | –239,392 | |
| Disposal of financial assets |
— | 16,857 | |
| Cash flow from investing activities |
–74,511 | –226,373 | |
| Financing activities |
|||
| Proceeds from borrowing |
— | 41,308 | |
| Amortisation of loans |
–2,410 | — | |
| Dividends paid |
–110,079 | –48,833 | |
| Share buy-backs |
–4,456 | — | |
| Cash flow from financing activities |
–116,945 | –7,525 | |
| Cash flow for the year |
1,454 | –99,313 | |
| Cash and cash equivalents brought forward |
2,415 | 101,728 | |
| Cash and cash equivalents carried forward |
3,869 | 2,415 |
| P a g e |
||
|---|---|---|
| N o t e 1 |
A c c o u n t i n g p r i n c i p l e s |
8 3 |
| N o t e 2 |
S e g m e n t r e p o r t i n g |
9 1 |
| N o t e 3 |
S a l e o f b u s i n e s s o p e r a t i o n s |
9 2 |
| N o t e 4 |
A c q u i s i t i o n o f b u s i n e s s o p e r a t i o n s |
9 3 |
| N o t e 5 |
O t h e r o p e r a t i n g i n c o m e |
9 4 |
| N o t e 6 |
R e s e a r c h a n d d e v e l o p m e n t |
9 4 |
| N o t e 7 |
F e e s a n d r e m u n e r a t i o n o f a u d i t o r s |
9 4 |
| N o t e 8 |
E m p l o y e e s a n d p e r s o n n e l c o s t s |
9 4 |
| N o t e 9 |
O t h e r o p e r a t i n g e x p e n s e s |
9 7 |
| N o t e 1 0 |
N e t fi n a n c i a l i n c o m e/e x p e n s e |
9 7 |
| N o t e 1 1 |
A p p r o p r i a t i o n s |
9 8 |
| N o t e 1 2 |
E a r n i n g s p e r s h a r e |
9 8 |
| N o t e 1 3 |
I n t a n g i b l e a s s e t s |
9 9 |
| N o t e 1 4 |
Ta n g i b l e a s s e t s |
1 0 0 |
| N o t e 1 5 |
P a r t i c i p a t i o n s i n a s s o c i a t e d c o m p a n i e s |
1 0 1 |
| N o t e 1 6 |
F i n a n c i a l i n v e s t m e n t s |
1 0 2 |
| N o t e 1 7 |
P r e p a i d e x p e n s e s a n d a c c r u e d i n c o m e |
1 0 2 |
| N o t e 1 8 |
E q u i t y |
1 0 3 |
| N o t e 1 9 |
L i a b i l i t i e s t o c r e d i t i n s t i t u t i o n s |
1 0 6 |
| N o t e 2 0 |
C o n v e r t i b l e d e b e n t u r e |
1 0 7 |
| N o t e 2 1 |
R e t i r e m e n t b e n e fi t o b l i g a t i o n s |
1 0 7 |
| N o t e 2 2 |
P r o v i s i o n s |
1 0 9 |
| N o t e 2 3 |
Ta x e s |
1 1 0 |
| N o t e 2 4 |
A c c r u e d e x p e n s e s a n d p r e p a i d i n c o m e |
1 1 2 |
| N o t e 2 5 |
F i n a n c i a l a s s e t s a n d l i a b i l i t i e s |
1 1 3 |
| N o t e 2 6 |
F i n a n c i a l r i s k s a n d fi n a n c i a l p o l i c y |
1 1 5 |
| N o t e 2 7 |
O p e r a t i n g l e a s e s |
1 1 6 |
| N o t e 2 8 |
P l e d g e d a s s e t s , c o n t i n g e n t l i a b i l i t i e s a n d c o n t i n g e n t a s s e t s |
1 1 6 |
| N o t e 2 9 |
T r a n s a c t i o n s w i t h r e l a t e d p a r t i e s |
1 1 7 |
| N o t e 3 0 |
G r o u p s u b s i d i a r i e s |
1 1 7 |
| N o t e 3 1 |
U n t a x e d r e s e r v e s |
1 2 0 |
| N o t e 3 2 |
S t a t e m e n t o f c a s h fl o w s |
1 2 0 |
| N o t e 3 3 |
E v e n t s a f t e r t h e a c c o u n t i n g y e a r - e n d |
1 2 0 |
| N o t e 3 4 |
C r i t i c a l e s t i m a t e s a n d a s s u m p t i o n s |
1 2 1 |
| N o t e 3 5 |
I n f o r m a t i o n a b o u t t h e p a r e n t c o m p a n y |
1 2 1 |
Financial values in the tables of accounts are in thousands of SEK unless otherwise stated.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretations published by the International Financial Reporting Interpretations Committee (IFRIC) approved by the European Commission for application in the EU. In addition, the Swedish Financial Reporting Board's recommendation RFR 1.1 (Supplementary Accounting Rules for Groups) has been applied.
The parent company applies the same accounting policies as the Group except as stated below in the section "Parent company accounting policies". The differences between the accounting policies of the parent company and the Group are due to limitations in the parent company's scope to apply IFRS imposed by the Swedish Annual Accounts Act and the act on the safeguarding of pensions benefits (Tryggandelagen), and in some cases due to tax reasons.
The parent company's functional currency is the Swedish krona (SEK), which is also the reporting currency for the parent company and the Group. This means that the financial statements are presented in SEK. All amounts are rounded to the nearest thousand unless otherwise stated.
Assets and liabilities are reported at historical cost, with the exception of various financial assets and liabilities which are carried at fair value. The financial assets and liabilities which are carried at fair value are derivative instruments and financial assets classified as available for sale. Non-current assets held for sale are carried at the lower of previous carrying amount and fair value less costs to sell.
The preparation of financial statements in accordance with IFRS requires management to make judgements and estimates, and to make assumptions which affect the application of the accounting policies and the carrying amounts of assets, liabilities, income and expenses. These estimates and assumptions are based on historical experience and a number of other factors deemed reasonable under the circumstances. The results of these estimates and assumptions are then used to judge the carrying amounts of assets and liabilities where these are not clear from other sources. The actual outcome may differ from these estimates and judgements.
These estimates and assumptions are reviewed regularly. Changes in estimates are recognised in the period in which the change is made if the change affects only that period, or in both the period in which the change is made and future periods if the change affects both the current period and future periods.
Judgements made by management in applying IFRS which have a significant effect on the financial statements, and estimates made which could result in material adjustments in subsequent years' financial statements are described in more detail in Note 34.
The following accounting policies for the Group have been applied consistently to all periods presented in the Group's financial statements unless otherwise stated below. The Group's accounting policies have been applied consistently in the reporting and consolidation of the parent company, subsidiaries and the inclusion of associated companies in the consolidated accounts.
The annual report and consolidated financial statements were approved for release by the Board of Directors on 12 March 2009. The consolidated income statement and balance sheet and the parent company income statement and balance sheet will be put forward for adoption at the Annual General Meeting on 5 May 2009.
The new and amended standards and interpretations from IASB/IFRIC, which have been endorsed by the EU and which entered into force in 2008, have not had any effect on the financial statements and disclosures of the company.
Of all the new and revised standards and interpretations approved by IASB/ IFRIC with effective dates after the reporting period, the following standards are judged to be applicable:
This standard contains disclosure requirements in respect of the Group's operating segments, and replaces the requirement to define primary and secondary segments for the Group based on lines of business and geographical areas according to IAS 14. The new standard requires that segment information is presented from the perspective of the "chief operating decision maker", which means that it is presented in the manner used for internal reports. IFRS 8 is effective for annual periods beginning on or after 1 January 2009. The Group has concluded that the operating segments determined on the basis of IFRS 8 are identical to the segment reports previously identified on the basis of IAS 14.
The revised standard was issued in September 2007, and will apply to financial years beginning on or after 1 January 2009. The standard divides changes in equity into those arising from transactions with owners and other changes. The statement of changes in equity will contain details in respect of transactions with owners only. Changes in equity other than those resulting from transactions with owners are presented in a line in the statement of changes in equity. In addition, the standard introduces the concept of "statement of comprehensive income", which shows all items relating to income and expense, either in a single statement or in two separate statements. The Group has not yet decided whether one or two statements will be used.
IFRS 3R Business Combinations and IAS 27R Consolidated and Separate Financial Statements
The revised standards were issued in January 2008 and will apply to financial years beginning on or after 1 July 2009. IFRS 3 introduces a number of changes in accounting for business acquisitions made after this date, which will affect the amount of recognised goodwill, recognised profit/loss in the period in which the acquisition was made and future recognised profit/loss.
IAS 27R requires that changes in a parent's ownership interest in a subsidiary that do not result in loss of control are accounted for as equity transactions. In consequence of this change, these transactions will no longer give rise to goodwill or lead to gains or losses. In addition, IAS 27R changes the accounting for losses arising in a subsidiary, as well as loss of control of a subsidiary. These changes have also led to consequential changes being made in IAS 7 (Statement of Cash Flows), IAS 12 (Income Taxes), IAS 21 (The Effects of Changes in Foreign Exchange Rates), IAS 28 (Investments in Associates) and IAS 31 (Interests in Joint Ventures).
The changes in IFRS 3R and IAS 27R will affect the accounting for future acquisitions, loss of control and transactions with non-controlling shareholders. Early application of the revised standards is permitted, but the Group does not intend to avail itself of this option.
A segment is a distinguishable component of the Group which provides either particular products or services (business segment) or products or services within a particular economic environment (geographical segment) and which is subject to risks and returns that are different from those of other segments.
The Group's internal reporting system is designed to follow up the return on the Group's services, and so business segments are the primary format for reporting segment information. Geographical segments are the Group's secondary format.
Segment information is provided only for the Group (in accordance with IAS 14).
In both the parent company and consolidated financial statements, non-current assets and non-current liabilities consist essentially of amounts expected to be recovered or settled more than 12 months after the end of the reporting period. Current assets and liabilities consist essentially of amounts expected to be recovered or settled within 12 months of the end of the reporting period.
Subsidiaries are companies over which ÅF AB has a controlling influence. A controlling influence means, directly or indirectly, the power to govern a company's financial and operating policies with a view to deriving economic benefits. Potential voting rights which are currently exercisable or convertible are taken into account when assessing whether a controlling influence is held.
Subsidiaries are accounted for using the purchase method. This means that the acquisition of a subsidiary is treated as a transaction where the Group indirectly acquires the subsidiary's assets and assumes its liabilities and contingent liabilities. The consolidated cost is determined by means of an analysis undertaken in connection with the acquisition of a business. The analysis determines the acquisition value of participations or businesses, the fair value of acquired identifiable assets and assumed liabilities, contingent liabilities and equity instruments issued as consideration for the net assets acquired, plus transaction costs directly attributable to the acquisition.
The difference between the cost of the shares in the subsidiary and the fair value of the assets acquired on the one hand, and liabilities and contingent liabilities assumed on the other, is treated as goodwill.
Subsidiaries' financial statements are consolidated from the date of acquisition until such time as the controlling influence is relinquished.
Associates are companies over whose operational and financial management the Group exercises a significant but not controlling influence, generally through a holding of 20–50 percent of the votes. Investments in associates are accounted for in the consolidated financial statements using the equity method from the time significant influence is obtained. This means that the carrying amount of the shares in the associate recognised in the consolidated financial statements consists of the Group's share of the associate's equity plus goodwill and any other remaining fair value adjustments. The Group's share of the associate's profit/loss after tax and non-controlling interests, adjusted for any amortisation, write-down or reversal of fair value adjustments, is recognised in the consolidated income statement under "Share of associated companies' profit/loss". Any dividends received from the associate reduce the carrying amount of the investment.
Any difference at the time of acquisition between the cost of the investment and the investor's interest in the net fair value of the associate's identifiable assets, liabilities and contingent liabilities is recognised in accordance with IFRS 3 "Business combinations".
If the Group's interest in the recognised losses of an associate exceeds the carrying amount of the shares in the consolidated balance sheet, the carrying amount of the shares is reduced to zero. Losses are also allocated against unsecured non-current financial balances which effectively form part of the investor's net investment in the associate. Further losses are not recognised unless the Group has issued guarantees to cover losses arising at the associate. The equity method is applied until such time as significant influence is relinquished.
Intra-group receivables, liabilities, income and expenses, and unrealised gains and losses arising on transactions between Group companies, are eliminated in their entirety when preparing the consolidated financial statements.
Unrealised gains arising on transactions with associates and joint ventures are eliminated in proportion to the Group's interests in the company. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no indication of impairment.
Transactions in foreign currency are translated into the functional currency at the exchange rate ruling on the transaction date. Monetary assets and liabilities in foreign currency are translated into the functional currency at the exchange rate ruling at the end of the reporting period. Exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities carried at historical cost are translated at the exchange rate ruling on the transaction date. Non-monetary assets and liabilities carried at fair value are translated into the functional currency at the exchange rate ruling when their fair value was determined, and changes in exchange rates are then recognised in the same way as other changes in the value of the asset or liability.
The functional currency is the currency of the primary economic environments in which the companies in the Group operate. The parent company's functional currency and reporting currency is the Swedish krona (SEK). The Group's reporting currency is SEK.
The assets and liabilities of foreign operations, including goodwill and other fair value adjustments, are translated into SEK at the exchange rate ruling at the end of the reporting period. The income and expenses of foreign operations are translated into SEK at an average exchange rate which approximates the exchange rates on the various transaction dates.
Translation differences arising on the translation of net investments in foreign operations are recognised in a translation reserve in equity. When a foreign operation is sold, the accumulated translation differences attributable to the operation are realised net of any currency hedging in the consolidated balance sheet.
Revenue from services rendered is recognised in accordance with IAS 18. The percentage of completion method is applied to all assignments whose outcome can be measured reliably. The majority of assignments are performed on an open-account basis, according to which income is entered into the accounts when the work is performed, and clients are normally invoiced one month after the work is carried out. Where assignments are carried out on a fixed-price basis, revenue is recognised in the income statement on the basis of the stage of completion at the end of the reporting period. If it is probable that the total assignment expenditure will exceed the total assignment revenue, the anticipated loss is immediately recognised as an expense in its entirety. Revenue is not recognised if it is probable that the economic benefits will not flow to the Group. In the event of significant uncertainty about payment or associated expenses, no revenue is recognised.
Payments under operating leases are recognised in the income statement on a straight-line basis over the lease term. Benefits received in connection with signing a lease are reported as part of the total lease cost in the income statement. Contingent rents are recognised in the periods in which they arise.
Minimum lease payments are apportioned between a finance charge and a reduction of the outstanding liability. The finance charge is spread over the lease term so that the amount charged in each reporting period corresponds to a fixed rate of interest on the liability recognised in that period. Contingent rents are recognised in the periods in which they arise.
Financial income and expenses consist of interest receivable on bank balances and receivables, interest payable on loans, dividend income and exchange differences on loans.
Interest receivable on receivables and interest payable on liabilities are calculated using the effective interest rate method. The effective interest rate is the rate of interest which makes the present value of all future inflows and outflows over the life of the receivable or liability equal to its carrying amount. The interest component of finance lease payments is recognised in the income statement by applying the effective interest rate method. Interest receivable includes accrued transaction costs and any discounts, premiums or other differences between the original value of the receivable and the amount received at maturity.
Dividend income is recognised when the right to receive payment has been ascertained.
The Group and parent company do not capitalise interest in the cost of assets.
Financial instruments recognised on the asset side of the balance sheet include cash and cash equivalents, trade receivables, shares and other equity instruments, and derivatives. Included in equity and liabilities are trade payables, issued debt and equity instruments, borrowings and derivatives.
A financial asset or financial liability is recognised in the balance sheet when the company becomes a party to the contractual terms of the instrument. Trade receivables are recognised in the balance sheet when an invoice has been sent. Liabilities are recognised once the counterparty has performed and there is a contractual obligation to pay, even if an invoice has not yet been received. Trade payables are recognised when an invoice has been received.
A financial asset is derecognised from the balance sheet when the rights in the contract are transferred or expire or the company loses control over them. The same applies to parts of a financial asset. A financial liability is derecognised when the obligation in the contract is discharged or in some other way extinguished. The same applies to parts of a financial liability.
Acquisitions and disposals of financial assets are recognised on the trade date, which is the day when the company makes a binding commitment to buy or sell the asset.
The fair value of quoted financial assets is the asset's quoted bid price at the end of the reporting period. For further information, see Note 25.
Financial instruments that are not derivatives are recognised initially at an acquisition value equivalent to the fair value of the instrument with the addition of transaction costs for all financial instruments except those in the financial assets category, which are recognised at fair value excluding transaction costs. A financial instrument is classified on initial recognition on the basis of the purpose for which the instrument was acquired. The classification determines how the financial instrument is to be valued after initial recognition, as described below.
Derivative instruments are recognised initially at fair value, indicating that transaction costs are charged to profit or loss for the period. Subsequent to the initial recognition, derivative instruments are recognised in the manner described below. If a derivative instrument is used for hedging, to the extent that this is effective, changes in value of the derivative instrument are recognised on the same line in the income statement as the hedged item. Even if hedge accounting is not applied, increases or decreases in the value of the derivative are recognised as income or expense in the operating profit/loss or in net financial income/expense depending on the intention behind the use of the derivative and whether the use relates to an operating item or a financial item. With hedge accounting, the ineffectiveness of the hedge is recognised in the same way as changes in the value of a derivative which is not used for hedge accounting.
Loans and receivables are non-derivative financial assets with fixed or determinable payments and that are not quoted in an active market. These assets are valued at amortised cost. Amortised cost is determined on the basis of the effective interest rate calculated on the date of acquisition. Assets with a short term are not discounted.
Accounts receivable are recognised at the amount which it is estimated will be received, i.e. after the deduction of bad debts and as the result of individual evaluation. Impairments of accounts receivable are recognised in operating expense.
Other receivables are classified as non-current receivables if the holding period exceeds one year and if it is shorter than other receivables.
Cash and cash equivalents consist of cash, immediately accessible deposits with banks and similar institutions, and short-term liquid investments with a maturity of less than three months from the date of purchase, which are subject to only an insignificant risk of changes in value.
The category available-for-sale financial assets includes financial assets that are not classified in any other category or financial assets that the company initially chose to designate in this category. Holdings of shares and participations that are not recognised as subsidiaries, associated companies or joint ventures are recognised here. Assets in this category are valued at fair value, with changes in value recognised in equity, except for those due to impairment, interest on debt instruments and dividend income, as well as exchange differences on monetary items, which are recognised in profit or loss. On derecognition of the asset, accumulated gains/losses previously recognised in equity are recognised in profit or loss.
Financial investments constitute, depending on the intention with which they are held, either non-current assets if the holding period is longer than one year or current assets if the holding period is less than one year.
Loans and other financial liabilities, e.g. accounts payable, are included in this category. The liabilities are valued at amortised acquisition value. Accounts payable have a short expected term and are valued without discounting at their nominal amount.
Non-current liabilities have an expected term longer than one year, while current liabilities have a term shorter than one year.
Convertible debentures can be converted into shares by the counterparty exercising an option to convert the instrument into shares. Convertible debentures are recognised as a compound financial instrument comprising a liability component and an equity component. The fair value of the liability is calculated by discounting future cash flows using the current market interest rate for an equivalent liability without a conversion right. The value of the equity instrument is calculated as the difference between the issue proceeds when the convertible debenture was issued and the fair value of the financial liability at the time of issue. Any deferred tax attributable to the liability on the date of issue is deducted from the recognised value of the equity instrument. The transaction costs relating to the issue of a compound financial instrument are apportioned between the liability component and the equity component in the same proportions as the issue proceeds. The interest cost is recognised in the income statement and calculated using the effective interest rate method.
ÅF makes only limited use of derivatives to hedge future flows. Derivatives used for hedging future cash flows are recognised in the balance sheet at fair value. The changes in value are recognised directly in equity in the hedge reserve until such time as the hedged flow affects profit or loss, upon which the accumulated changes in value of the hedging instrument are recycled into profit or loss simultaneously with the profit or loss effects of the hedged transaction. Flows from both contracted and forecast transactions can be hedged.
To meet the requirements for hedge accounting under IAS 39, there must be an unequivocal link to the hedged item. In addition, the hedging of the item must be effective, hedging documentation must have been prepared and it must be possible for effectiveness to be measured. Gains and losses on hedging are recognised in the income statement on the same date as gains and losses on the hedged items are recognised.
Tangible (non-current) assets are recognised as assets in the balance sheet if it is probable that future economic benefits will flow to the company, and that the cost of the item can be measured reliably. Tangible assets are recognised in the consolidated financial statements at cost less accumulated depreciation and any impairment losses. Cost is defined as the purchase price plus any additional expenses directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the intended manner. Examples of directly attributable additional expenses included in cost are the costs of delivery and handling, installation, title deeds, consulting services and legal services. Borrowing costs are not included in the cost of self-constructed assets. The accounting policies for impairment are set out below.
Tangible assets which consist of parts with different useful lives are treated as separate components of tangible assets.
The carrying amount of an asset is derecognised from the balance sheet on retirement or disposal or when no future economic benefits are expected to flow from the use or retirement/disposal of the asset. The gain or loss arising on the disposal or retirement of an asset is the difference between the disposal proceeds and the carrying amount less direct costs to sell. The gain or loss is recognised under other operating income/expenses.
Future expenditure is added to the acquisition value only if it is probable that future economic benefits that are attributable to the asset will flow to the company, and the acquisition value can be measured reliably. All other future expenditure is recognised as an expense in the period in which it arises. In determining when an additional expenditure is to be added to the acquisition value, the decisive factor is whether the expenditure relates to the replacement of identified components, or parts of such components, in which case the expenditure is capitalised. In instances where a new component has been created, the expenditure is also added to the acquisition value. Any undepreciated carrying amount on replaced components or parts of components is retired and recognised as an expense when the replacement is carried out. Repairs are recognised as an expense as they are carried out.
Linear depreciation is applied over the estimated useful life of the asset. Land is not depreciated. The Group applies component depreciation, which means that the estimated useful life of the components forms the basis for depreciation.
Leased assets are accounted for in accordance with IAS 17. Leases are classified as either finance leases or operating leases in the consolidated financial statements. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership to the lessee. Otherwise it is classified as an operating lease.
Assets held under finance leases are recognised as assets in the consolidated balance sheet. The liability to make future lease payments is recognised under non-current and current liabilities. The leased assets are depreciated on a straight-line basis, while the lease payments are recognised as a finance charge and a reduction in the liability.
With operating leases, the lease payments are recognised as expense over the lease term on a straight-line basis.
Depreciation is charged on a straight-line basis over the estimated useful life of an asset. Estimated useful lives are:
| Computer | 3 |
|---|---|
| equipment | years |
| Vehicles | 5 years |
| Office | 5 |
| equipment | years |
| Office | 10 |
| furnishings | years |
| Buildings (business premises) |
40–100 years |
Business premises consist of a number of components with different useful lives. The primary division is between buildings and land. No depreciation is applied to the land component, which is regarded as having an unlimited useful life. The buildings, however, consist of many components with varying useful lives. The useful lives of these components have been assessed as varying between 40 and 100 years.
The following main groups of components have been identified, which form the basis for depreciation of buildings:
| Structure and foundations |
100 years |
|---|---|
| Outer surface finish; facades, roofs, etc. |
67 years |
| Floors, doors and electrical installations |
67 years |
| Installations; heating, water, sanitation, |
|
| ventilation, lifts, etc. |
40 years |
The residual value and useful life of an asset are reviewed annually.
Goodwill is the difference between the cost of a business combination (i.e. corporate acquisition, takeover, etc.) and the fair value of the assets acquired and liabilities and contingent liabilities assumed.
When it comes to goodwill arising on business combinations before 1 January 2004, the Group has not applied IFRS retroactively; instead, the carrying amount on that date will continue to be the historical cost of acquisition in the consolidated financial statements, net of impairment losses.
Goodwill is apportioned between cash-generating units and is instead tested annually for impairment (see §1.14 below). Thus goodwill is carried at cost less accumulated impairment losses. Goodwill arising on the acquisition of associates is included in the carrying amount of the investment in the associate.
Where the cost of a business combination is less than the net fair value of the assets acquired and liabilities and contingent liabilities assumed, the difference is recognised immediately in the income statement.
Expenditure on research aimed at obtaining new scientific or technical knowledge is recognised as expense as it is incurred.
Expenditure on development where research results or other knowledge is applied to achieve new or improved products or processes is recognised as an asset in the balance sheet if the product or process is technically and commercially feasible and the company has sufficient resources to complete its development and then use or sell the intangible asset. The carrying amount includes the cost of materials, direct payroll costs and indirect costs which can reasonably and consistently be attributed to the asset. Other development expenditure is recognised in the income statement as expense as it is incurred. Development expenditure recognised in the balance sheet is carried at cost less accumulated amortisation and impairment losses.
Other intangible assets acquired by the Group are recognised at cost less accumulated amortisation (see §1.13.5) and impairment losses (see §1.14).
Costs incurred in respect of internally generated goodwill and internally generated trademarks are recognised in the income statement as they are incurred.
Subsequent expenditure on capitalised intangible assets is recognised as an asset in the balance sheet only if it increases the future economic benefits from the specific asset to which it relates. All other expenditure is recognised as expense as it is incurred.
Amortisation is recognised in the income statement on a straight-line basis over the estimated useful life of the asset, unless its useful life is indefinite. Goodwill and intangible assets with an indefinite life are tested for impairment annually or as soon as there are indications that the asset in question has diminished in value. Amortisable intangible assets are amortised from the date they become available for use. The estimated useful lives are as follows:
| Capitalised development expenditure |
1–3 years |
|---|---|
| Acquired intangible assets: |
1–5 years |
The carrying amounts of the Group's assets – with the exception of assets held for sale recognised in accordance with IFRS 5 and deferred tax assets – are tested at the end of each reporting period to assess whether there is any indication of impairment. If there is any such indication, the asset's recoverable amount is determined. The carrying amounts of the exceptions stated above are tested in accordance with the relevant standard.
The recoverable amount is the higher of fair value less costs to sell and value in use. When calculating value in use, future cash flows are discounted at a discount rate which reflects the risk-free rate of interest and the risk associated with the specific asset. Where an asset does not generate cash flows that are essentially independent of other assets, the recoverable amount is calculated for the cash-generating unit to which the asset belongs. The impairment loss is the amount by which the asset's carrying amount exceeds its recoverable amount. Impairment losses in respect of cash-generating units are allocated in the first instance to goodwill and then to the other assets included in the unit on a pro rata basis.
In the case of goodwill, other intangible assets with an indefinite life and intangible assets not yet ready for use, the recoverable amount is calculated annually.
At the end of each reporting period, the company assesses whether there is objective evidence that a financial asset or group of assets requires impairment. Objective evidence consists both of observable circumstances that have arisen and which have a negative effect on the ability to recover the acquisition cost, and of significant and long-lasting reductions in the fair value of an investment in an available-for-sale financial asset.
On the impairment of an equity instrument designated as an available-forsale financial asset, accumulated losses already recognised in equity are reversed through the income statement.
The recoverable amount of assets in the loans and receivables category which are recognised at amortised cost is measured as the present value of the future cash flow discounted at the effective interest rate current on the date on which the asset was first recognised. Assets with a short term are not discounted. Impairment is charged to profit or loss.
An impairment loss is reversed if there are indications that the impairment requirement no longer exists and there has been a change in the assumptions which formed the basis for the measurement of the recoverable amount. Impairment of goodwill is never reversed. A reversal is made only to the extent that the carrying amount due to reversal should not be more than what the depreciated historical cost would have been if the impairment had not been recognised.
Impairment of loans and receivables that has been recognised at amortised cost is reversed if a subsequent increase in the recoverable amount can be attributed objectively to an event occurring after the impairment had been made.
Impairment losses on equity instruments designated as available-for-sale financial assets that have already been recognised in profit or loss may not subsequently be reversed on the income statement. The impaired value is the value from which subsequent revaluations are made, and these are recognised directly in equity. Impairment losses on interest-bearing instruments designated as available-for-sale financial assets, are reversed in the income statement if the fair value increases and the increase can be attributed objectively to an event occurring after the impairment had been made.
Dividends are recognised as a liability once they have been approved by the general meeting.
Obligations to contribute to defined-contribution plans are recognised as an expense in the income statement as they arise.
The Group's obligations under defined-benefit plans are calculated separately for each plan by estimating the future benefits earned by employees through their employment in both the current and prior periods. These benefits are discounted to present value. The discount rate is the market yield at the end of the reporting period on a first-class corporate bond with a maturity corresponding to that of the Group's retirement benefit obligations. Where there is no active market for such corporate bonds, the market yield on government bonds with a corresponding maturity is used instead. The calculations are performed by a qualified actuary using the projected unit credit method.
When the benefits under a plan are increased, that part of the increase relating to employees' service in prior periods is recognised as expense in the income statement on a straight-line basis over the average period until the benefits become fully vested. If the benefits are fully vested, the expense is recognised immediately in the income statement.
Actuarial gains and losses are recognised in equity.
Where there is a difference between how retirement benefit costs are determined by the Group and its constituent companies, a provision or receivable is recognised in respect of special employer's contributions to reflect this difference. The provision or receivable is not discounted to present value.
The same principles are applied as to defined-benefit retirement benefit plans.
A provision is made for termination benefits only when the company is demonstrably committed to terminating employment before the normal date, or when the benefits are the result of an offer made in order to encourage voluntary redundancy. In the event that the company is obliged to lay off members of staff, a detailed plan is drawn up specifying as a minimum the location, function and approximate number of employees involved, the benefits for each job classification or function, and the time at which the plan will be implemented.
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and when it is probable that an outflow of economic resources will be required to meet this obligation, and a reliable estimate of the amount of the obligation can be made. Where the effect of the point in time when payment takes place is significant, provisions are calculated by discounting expected future cash flows at a rate of interest before tax which reflects current market assessments of the time value of money and, where appropriate, the risks associated with the liability.
Provisions for restructuring are booked once the Group has adopted a detailed and formal restructuring plan, and the work of restructuring has either begun or been publicly announced. No provisions are made for future operating expenses.
Income taxes comprise current tax and deferred tax. Income taxes are recognised in the income statement except where the underlying transaction is recognised in equity, in which case the associated tax effect is also recognised in equity.
Current tax is the tax payable or recoverable in respect of the current year, based on the tax rates enacted or substantively enacted as at the end of the reporting period, including adjustments of current tax in respect of prior periods.
Deferred tax is calculated using the liability method on the basis of temporary differences between the carrying amount and tax base of assets and liabilities. The following temporary differences are disregarded: temporary differences arising on the initial recognition of goodwill; the initial recognition of assets and liabilities which do not constitute business combinations and affect neither recognised nor taxable income at the time of the transaction; and temporary differences attributable to investments in subsidiaries and associates, in cases where the parent company, investor or joint owner can exert some influence over the point in time when the temporary differences will be reversed and when it is not anticipated that this reversal will take place in the foreseeable future. The valuation of deferred tax is based on how the carrying amounts of assets and liabilities are expected to be realised or adjusted. Deferred tax is calculated using the tax rates and tax rules enacted or substantively enacted as at the end of the reporting period.
Deferred tax assets in respect of deductible temporary differences and unused tax losses are recognised only to the extent that it is probable that they can be utilised. The value of deferred tax assets is reduced when it is no longer deemed probable that they can be utilised.
Any additional income tax arising on the payment of dividends is recognised at the same time as the dividend is recognised as a liability.
A non-current asset is classified as held for sale if its carrying amount will be recovered primarily through sale and not through use.
When first classified as held for sale, non-current assets are recognised at the lower of carrying amount and fair value less costs to sell.
A contingent liability is reported when there is a potential obligation relating to past events whose existence will be confirmed only by one or more uncertain future events, or when there is an obligation which is not recognised as a liability or provision because it is not probable that an outflow of resources will be required, or the amount cannot be measured reliably.
The calculation of earnings per share is based on the consolidated profit or loss attributable to the parent company's shareholders and on the weighted average number of shares outstanding during the year. In calculating earnings per share after dilution, the profit or loss and the weighted average number of shares are adjusted to take account of the effects of potential diluting ordinary shares, which derive during the reporting period from convertible debentures and matching shares in the savings scheme.
The parent company has prepared its annual report in accordance with the Swedish Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Board's recommendation RFR 2.1 (Accounting for Legal Entities). RFR 2.1 requires that the parent company's annual report applies all IFRS standards and interpretations approved by the EU as far as is possible within the constraints of the Annual Accounts Act and the act on the safeguarding of pensions benefits (Tryggandelagen), and while taking into account the relationship between reporting and taxation. The recommendation specifies which exceptions and supplements are to be made with respect to IFRS. The differences between the accounting policies of the Group and parent company are presented below.
The accounting principles outlined below have been applied consistently to all periods presented in the parent company's financial statements.
Shares in subsidiaries and associated companies are recognised in the parent company using the acquisition method. Only dividends received are recognised as revenue provided that they derive from profits earned after the acquisition. Dividends in excess of these earned profits are regarded as a repayment of the investments and reduce the carrying amount of the shares.
The parent company reports all leases on the basis of the rules for operating leases.
The parent company recognises all development expenditure as expense in the income statement.
The parent company applies IFRS 5 with the exceptions set out in RFR 2.1, 8–9. Under the provisions of IFRS 5, assets held for sale are recognised separately in the balance sheet, and discontinued operations are recognised separately in the income statement. This does not, however, correspond to the layout in the Swedish Annual Accounts Act. The information referred to, along with other information which must be disclosed under IFRS 5, is, therefore, presented in notes. In addition, the rules in IFRS 5 which prescribe that non-current assets held for sale are not to be depreciated are not applied. Depreciation is calculated in accordance with the Swedish Annual Accounts Act.
The parent company's financial guarantee contracts consist primarily of guarantees for the benefit of subsidiaries and associated companies. Financial guarantees mean that the company has an obligation to recompense the holder of a debt instrument for losses incurred due to the failure of a specified debtor to make full payment on the due date in accordance with the terms of the contract. For the recognition of financial guarantee contracts, the parent company applies RFR 2.1, 72, which involves a relief compared with the provisions of IAS 39 in respect of financial guarantee contracts issued for the benefit of subsidiaries and associated companies. The parent company recognises financial guarantee contracts as a provision in the balance sheet when the company has an obligation for which payment will probably be required to settle the obligation.
The parent company applies a different basis for the calculation of definedbenefit plans to that set out in IAS 19. The parent company complies instead with the provisions of the act on the safeguarding of pensions benefits (Tryggandelagen) and the regulations of the Swedish financial supervisory authority (Finansinspektionen) as this is a requirement for tax deductibility. The most important differences relative to the provisions of IAS 19 are the way in which the discount rate is determined, the calculation of defined-benefit obligations on the basis of current salary levels without making assumptions about future wage growth, and the recognition of all actuarial gains and losses in the income statement as they arise.
The parent company reports untaxed reserves inclusive of deferred tax liabilities. In the consolidated financial statements, untaxed reserves are apportioned between a deferred tax liability and equity.
The company reports Group contributions and shareholder contributions in accordance with the statement issued by the Swedish Financial Reporting Board. Shareholder contributions are recognised by the recipient in equity and capitalised under shares and participations by the contributor net of impairment losses.
Group contributions are reported on the basis of economic reality. This means that Group contributions paid in order to minimise the Group's overall tax liability are recognised in retained earnings net of their current tax effect. Group contributions comparable with dividends are treated as dividends. This means that Group contributions received and their current tax effect are recognised in the income statement. Group contributions paid and their current tax effect are recognised in retained earnings. Group contributions comparable with shareholder contributions are recognised by the recipient in retained earnings taking account of the current tax effect. Where appropriate, the contributor reports the Group contribution and its current tax effect under "Participations in Group companies" net of impairment losses.
Primary segments – by division (in millions of Swedish kronor, MSEK)
| Energy | Engineering | Infrastructure | Inspection | Others & elim. | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 adjusted adjusted adjusted adjusted adjusted adjusted adjusted adjusted |
2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| Income | ||||||||||||
| Sales to external clients | 1,017.4 | 600.4 | 1,367.0 | 1,396.9 | 1,751.5 | 1,526.8 | 357.5 | 285.4 | 75.4 | 52.0 | 4,568.8 | 3,861.6 |
| Other operating income | — | — | — | — | — | — | — | — | 0.8 | 0.7 | 0.8 | 0.7 |
| Sales between segments | 33.6 | 99.7 | 84.6 | 9.7 | 107.0 | 74.7 | 3.8 | 1.6 | –229.0 | –185.7 | — | — |
| Total income | 1,051.0 | 700.1 | 1,451.6 | 1,406.6 | 1,858.5 | 1,601.5 | 361.3 | 287.0 | –152.8 | –133.0 | 4,569.7 | 3,862.3 |
| Operating expenses | –908.4 | –630.9 | –1,285.9 | –1,286.0 | –1,647.3 | –1,432.2 | –310.0 | –238.3 | 114.8 | 105.8 –4,036.9 | –3,481.7 | |
| Depreciation and impairment of intangible assets |
–3.4 | –3.2 | –1.6 | –1.3 | –3.5 | –3.1 | –1.5 | –0.9 | — | –0.6 | –10.0 | –9.1 |
| Depreciation and impairment of tangible assets |
–9.1 | –8.9 | –3.9 | –2.0 | –12.1 | –12.6 | –6.0 | –5.5 | –12.9 | –10.7 | –44.0 | –39.7 |
| Operating profit/loss | 130.0 | 57.2 | 160.1 | 117.2 | 195.7 | 153.6 | 43.9 | 42.3 | –50.9 | –38.5 | 478.7 | 331.9 |
| Of which participations in profit/loss of associated companies |
0.8 | 0.6 | — | — | — | 1.0 | 2.7 | 2.5 | — | — | 3.6 | 4.1 |
| Operating margin, % | 12.4 | 8.2 | 11.0 | 8.3 | 10.5 | 9.6 | 12.1 | 14.8 | 33.3 | 28.9 | 10.5 | 8.6 |
| Assets and liabilities | ||||||||||||
| Intangible assets | 554.8 | 395.6 | 501.3 | 488.0 | 226.6 | 199.6 | 74.4 | 0.5 | — | — | 1,357.1 | 1,083.7 |
| Tangible assets | 183.3 | 126.3 | 14.2 | 1.2 | 32.5 | 32.4 | 25.9 | 10.8 | 82.7 | 40.0 | 338.6 | 210.7 |
| Other assets | 1,143.6 | 853.0 | 443.9 | 94.3 | 715.8 | 602.7 | 109.4 | 130.4 | –498.9 | –179.2 | 1,913.8 | 1,501.2 |
| Of which proportion of equity in associated companies |
— | 6.1 | 7.6 | — | 1.0 | 0.9 | 4.8 | 4.2 | — | — | 13.4 | 11.2 |
| Total assets | 1,881.7 | 1,374.9 | 959.4 | 583.5 | 974.9 | 834.7 | 209.7 | 141.7 | –416.2 | –139.2 | 3,609.5 | 2,795.6 |
| Equity | 439.2 | 141.6 | 442.1 | 117.8 | 387.7 | 347.5 | 88.8 | 82.8 | 340.8 | 649.5 | 1,698.6 | 1,339.2 |
| Total liabilities | 1,442.5 | 1,233.3 | 517.3 | 465.7 | 587.2 | 487.2 | 120.9 | 58.9 | –757.0 | –788.7 | 1,910.9 | 1,456.4 |
| Other segment information | ||||||||||||
| Investment for the year in intangible assets |
91.6 | 215.4 | 2.3 | 9.3 | 28.5 | 28.7 | 73.4 | — | –0.2 | — | 195.6 | 253.4 |
| Investment for the year in tangible assets |
50.3 | 117.7 | 5.4 | 3.6 | 16.3 | 19.4 | 22.1 | 5.9 | 53.1 | 22.0 | 147.2 | 168.6 |
With effect from 1 October 2008 the following structural changes were made within the ÅF Group:
– Systems Division with 450 FTEs was incorporated into the Infrastructure Division as a separate business area
– 177 employees working primarily in the Pulp & Paper business area were transferred from the Energy Division to the Engineering Division
– 73 employees working with Electrical Power Systems were transferred from the Infrastructure Division to the Engineering Division
– 25 employees moved from Engineering to the Infrastructure Division
– 13 employees moved from Energy to the Inspection Division
The above figures have been adjusted as if the internal restructuring had taken place on 1 January 2007.
The primary basis for classification into segments is line of business, i.e. the Group's divisions. The aim is to classify the divisions with reference to their clients and their own expertise. The Group's operational structure and internal reporting to Group management and the board is based on reporting by division. Intra-group sales between segments take place at an internal market price on an "arm's length" basis, i.e. between parties who are independent of
each other, are well-informed and who have an interest in completing the transactions.
All the Group's operational assets and liabilities have been attributed directly to divisions or allocated per division. Investment in tangible assets within the segment includes all investment.
| Sweden | Outside Sweden | Total | ||||
|---|---|---|---|---|---|---|
| Secondary segments – by geographical area (in millions of Swedish kronor, MSEK) | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Total revenue | 3,202.2 | 2,914.9 | 1,367.5 | 947.4 | 4,569.7 | 3,862.3 |
| Assets | 2,479.4 | 2,045.4 | 1,130.1 | 750.2 | 3,609.5 | 2,795.6 |
| Investment for the year in intangible assets | 188.5 | 32.2 | 7.1 | 221.2 | 195.6 | 253.4 |
| Investment for the year in tangible assets | 86.4 | 76.0 | 60.8 | 92.6 | 147.2 | 168.6 |
Net assets of companies disposed of on date of disposal
| 2008 | 2007 | |
|---|---|---|
| Tangible assets |
— | 2,817 |
| Accounts receivable and other receivables |
— | 72,122 |
| Cash and cash equivalents |
— | 16,212 |
| Interest-bearing liabilities |
— | –1,418 |
| Accounts payable and other liabilities |
— | –70,734 |
| Net identifiable assets and liabilities |
— | 18,999 |
| Consolidated goodwill |
— | 18,214 |
| Adjustment for capital gain or loss |
— | –329 |
| Selling price |
— | 36,884 |
| Deduct: | ||
| Cash balance (disposed) |
— | 16,212 |
| Net cash inflow |
— | 20,672 |
Disposals in 2007 refer to ÅF-CTS Oy and ÅF-Chleq Froté S.A.
In 2008 ÅF acquired Proplate IT, Nordblads VVS konstruktioner AB, Kvalitetsteknik NDT AB, OrbiTec AB, BergBygg Konsult AB, JTASS AB, Igernta AB, UAB TPS, Qualitest s.r.o. and the ZAO Lonas Group.
The acquisition of Proplate IT took the form of the acquisition of a business operation. 75 percent of the shares of the ZAO Lonas Group were acquired. In the other companies, all the shares were acquired.
The effects that the acquisitions have had on the Group's assets and liabilities are shown below.
| Recognised value of total acquired companies |
Fair value adjustment |
Fair value recognised in Group |
|
|---|---|---|---|
| Intangible assets |
400 | 12,506 | 12,906 |
| Tangible assets |
9,302 | — | 9,302 |
| Financial assets |
3,952 | — | 3,952 |
| Accounts receivable and other receivables |
154,321 | — | 154,321 |
| Cash and cash equivalents |
23,470 | — | 23,470 |
| Non-current provisions |
— | — | — |
| Interest-bearing liabilities |
–250 | — | –250 |
| Accounts payable and other liabilities |
–164,271 | –2,561 | –166,832 |
| Net identifiable assets |
|||
| and liabilities |
26,924 | 9,945 | 36,869 |
| Consolidated goodwill |
177,812 | ||
| Liability to non-controlling shareholders |
–1,934 | ||
| Consideration paid, cash |
212,747 | ||
| Deduct: | |||
| Cash (acquired) |
23,470 | ||
| Liability to sellers |
47,221 | ||
| Net cash outflow |
142,056 |
Acquisition analyses for 2008 were preliminary at the end of the year.
Goodwill which arose on the acquisitions relates to staff and to strategic opportunities and synergies. Other intangible assets recognised in connection with the acquisition are customer base, brands and order book.
| Sales after date of acquisition |
196.1 MSEK |
|---|---|
| Effect on profit/loss after date of acquisition |
20.0 MSEK |
If the acquisitions had taken place on 1 January 2008, the Group's sales and operating profit for the year would have totalled SEK 4,757.7 million and SEK 501.3 million respectively.
| Recognised value of total acquired companies |
Fair value adjustment |
Fair value recognised in Group |
|
|---|---|---|---|
| Intangible assets |
423 | 7,543 | 7,966 |
| Tangible assets |
85,721 | 24,572 | 110,293 |
| Financial assets |
6,528 | — | 6,528 |
| Accounts receivable and other receivables |
94,544 | — | 94,544 |
| Cash and cash equivalents |
113,580 | — | 113,580 |
| Non-current provisions |
–2,829 | — | –2,829 |
| Interest-bearing liabilities |
–41,846 | — | –41,846 |
| Accounts payable and other liabilities |
–79,165 | –9,359 | –88,524 |
| Net identifiable assets and liabilities |
176,956 | 22,756 | 199,712 |
| Consolidated goodwill |
243,349 | ||
| Correction for former holding in ÅF-Hansen & Henneberg AS |
–3,933 | ||
| Consideration paid |
439,128 | ||
| Deduct: |
| Net cash outflow |
224,482 |
|---|---|
| Shares issued (number of shares 90,951) |
16,826 |
| Liability to seller |
84,240 |
| Cash (acquired) |
113,580 |
| 2008 | 2007 | |
|---|---|---|
| Rental income |
820 | 727 |
| 820 | 727 | |
| Parent company |
||
| 2008 | 2007 | |
| Rental income |
73,599 | 54,510 |
Of the total amount of rental income received by the parent company, SEK 72,779,000 (2007: SEK 53,783,000) relates to rental payments from Group companies.
The Group's costs for research and development totalled SEK 36,447,000 (2007: SEK 26,466,000). The amount comprises mostly costs for time spent on research and development projects by ÅF's own salaried employees.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Accountants Ernst & Young |
|||||
| Audit assignments |
3,174 | 2,349 | 625 | 595 | |
| Other assignments |
1,381 | 1,224 | 901 | 974 | |
| 4,555 | 3,573 | 1,526 | 1,569 | ||
| Accountants KPMG |
|||||
| Audit assignments |
— | 106 | — | — | |
| Other assignments |
155 | 1,613 | 125 | 1,313 | |
| 155 | 1,719 | 125 | 1,313 | ||
| Other accounting companies |
|||||
| Audit assignments |
629 | 776 | — | — | |
| Other assignments |
261 | 326 | 29 | 52 | |
| 890 | 1,102 | 29 | 52 |
Audit assignments refer to the auditing of the annual report, the accounting records and the administration by the Board of Directors and the Managing Director, other duties which it is incumbent upon the company's auditors to carry out, as well as advice and other assistance stemming from observations made during such audits or the execution of such other duties. Everything else is recognised under "Other assignments".
Total remuneration is recognised in "Personnel costs".
| 2008 | 2007 | ||||
|---|---|---|---|---|---|
| Women | Men | Women | Men | ||
| Parent company |
|||||
| Sweden | 42 | 19 | 28 | 18 | |
| Subsidiaries | |||||
| Sweden | 446 | 2,464 | 486 | 2,299 | |
| Finland | 69 | 264 | 52 | 309 | |
| Norway | 28 | 129 | 24 | 119 | |
| Denmark | 11 | 66 | 11 | 63 | |
| Switzerland | 50 | 214 | 26 | 106 | |
| Czech Rep. |
2 | 42 | 1 | 17 | |
| Germany | 5 | 11 | 4 | 16 | |
| Russia | 34 | 24 | — | — | |
| Others | 2 | 26 | 5 | 39 | |
| Group total |
689 | 3,259 | 637 | 2,986 | |
| Total average number of employees |
3,948 | 3,623 | |||
| Total for associated companies |
72 | 75 | |||
| Total average number of employees including associated companies |
4,020 | 3,698 |
| Women, % | ||
|---|---|---|
| Parent company |
2008 | 2007 |
| Directors | 37 | 37 |
| Other senior positions |
13 | 10 |
| Group overall |
||
| Directors | 7 | 8 |
| Other senior positions |
8 | 11 |
| 2008 | 2007 | |||
|---|---|---|---|---|
| Salaries and remu nerations |
Social costs |
Salaries and remu nerations |
Social costs |
|
| Parent company |
||||
| Board & President/CEO |
6,969 | 3,144 | 6,872 | 3,106 |
| (of which, pension expenses) |
— | 906 | — | 878 |
| Other employees |
29,671 | 17,517 | 22,216 | 12,458 |
| (of which, pension expenses) |
— | 4,624 | — | 5,649 |
| 36,640 | 20,661 | 29,088 | 15,564 |
| 2008 | 2007 | |||
|---|---|---|---|---|
| Salaries and remu nerations |
Social costs |
Salaries and remu nerations |
Social costs |
|
| Group | ||||
| Boards & Managing Directors |
33,650 | 12,204 | 35,576 | 12,823 |
| (of which, pension expenses) |
— | 4,469 | — | 4,377 |
| Other employees |
1,781,201 | 605,775 | 1,601,328 | 564,941 |
| (of which, pension expenses) |
— | 174,373 | — | 188,047 |
| 1,814,851 | 617,979 | 1,636,904 | 577,764 |
| 2008 2007 |
||||
|---|---|---|---|---|
| Board and MDs |
Other employees |
Board and MDs |
Other employees |
|
| Parent company |
||||
| Sweden | 6,969 | 29,671 | 6,872 | 22,216 |
| (of which, bonus/performance related earnings) |
2,088 | 1,769 | 2,341 | 1,588 |
| Subsidiaries | ||||
| Sweden | 12,560 | 1,249,569 | 12,037 | 1,139,023 |
| (of which, bonus/performance related earnings) |
3,198 | 52,593 | 2,612 | 24,973 |
| Finland | 1,998 | 148,434 | 953 | 200,887 |
| (of which, bonus/performance related earnings) |
— | 1,518 | — | — |
| Norway | 3,327 | 117,156 | 3,363 | 88,679 |
| (of which, bonus/performance related earnings) |
164 | 35 | 288 | 199 |
| Denmark | 2,348 | 59,789 | 6,393 | 47,560 |
| (of which, bonus/performance related earnings) |
215 | 1,729 | 231 | 701 |
| Switzerland | 2,575 | 146,763 | 1,104 | 67,882 |
| (of which, bonus/performance related earnings) |
957 | 11,639 | 400 | 4,477 |
| Czech Rep. |
533 | 5,648 | 329 | 3,095 |
| (of which, bonus/performance related earnings) |
6 | 39 | — | — |
| Germany | 2,276 | 8,659 | 2,571 | 8,397 |
| (of which, bonus/performance related earnings) |
144 | 18 | 472 | — |
| Russia | 214 | 8,820 | — | — |
| (of which, bonus/performance related earnings) |
— | 1,455 | — | — |
| Other countries |
850 | 6,692 | 1,954 | 23,589 |
| (of which, bonus/performance related earnings) |
— | 47 | — | — |
| Group total |
33,650 | 1,781,201 | 35,576 | 1,601,328 |
Other personnel costs total SEK 107,591,000 (2007: SEK 95,541,000).
Remuneration to senior executives
The AGM on 23 April 2008 approved remuneration totalling SEK 1,450,000 for the work of the board in 2008. The Chairman received SEK 400,000 and members of the board not employed in the Group received SEK 175,000 each.
In addition, it was resolved to pay fees for committee work of SEK 35,000 to each committee member who is not employed in the Group, and that a fee of SEK 75,000 be paid to the Chair of the Audit Committee and a fee of SEK 50,000 to be paid to the Chair of the Remuneration Committee. The total remuneration payable to the board is thus SEK 1,715,000, of which SEK 1,450,000 is for the ordinary work of the board and SEK 265,000 for committee work.
Remuneration to the board is payable quarterly. This means that the remuneration to the board was at the rate determined by the AGM in 2007 for the first two quarters and at the rate determined by the AGM in 2008 for the remaining two quarters.
During 2008 a total of SEK 1,570,000 (2007: SEK 1,287,000) was recognised as an expense for remuneration to the board in the parent company accounts. In addition, the employee representatives on the board received a total of SEK 50,000 (SEK 50,000).
No agreements have been signed concerning future pensions or severance pay for the Chairman or other members of the board.
| Director's name | Board | Committee | Total |
|---|---|---|---|
| Ulf Dinkelspiel |
375,000 | 67,500 | 442,500 |
| Patrik Enblad |
162,500 | — | 162,500 |
| Eva-Lotta Kraft |
162,500 | 30,000 | 192,500 |
| Magnus Grill |
162,500 | 30,000 | 192,500 |
| Jon Risfelt |
162,500 | — | 162,500 |
| Helena Skåntorp |
162,500 | 62,500 | 225,000 |
| Lena Treschow Torell |
162,500 | 30,000 | 192,500 |
| Total | 1,350,000 | 220,000 | 1,570,000 |
Remuneration in SEK
| Director's name | Board | Committee | Total |
|---|---|---|---|
| Ulf Dinkelspiel |
237,500 | 37,500 | 275,000 |
| Patrik Enblad |
75,000 | — | 75,000 |
| Eva-Lotta Kraft |
137,500 | 25,000 | 162,500 |
| Magnus Grill |
137,500 | 25,000 | 162,500 |
| Jon Risfelt |
75,000 | — | 75,000 |
| Helena Skåntorp |
137,500 | 50,000 | 187,500 |
| Lena Treschow Torell |
137,500 | 12,500 | 150,000 |
| Carl-Erik Nyquist |
175,000 | 25,000 | 200,00 |
| Totalt | 1,112,500 | 175,000 | 1,287,500 |
Salary payments and bonus totalling SEK 5,399,000 (2007: SEK 5,535,000) were made to the Chief Executive Officer, who is also the President of ÅF AB. In addition, social security contributions of SEK 2,635,000 (SEK 2,673,000) were charged to profit/loss, of which pensions costs were SEK 906,000
(SEK 878,000). Benefits include a company car. A bonus of SEK 2,088,000 (SEK 2,341,000) was recognised as an expense. This bonus is based on the earnings for the Group and may amount to a maximum of 75 percent of the fixed annual salary. The fixed annual salary for 2008 is SEK 3,311,000 (SEK 3,172,000).
The President of the parent company is subject to two years' notice from the company and has the right to a pension at the age of 60. The President's pension is a defined-contribution pension, for which provisions are made each year for an amount corresponding to 27.5 percent of the President's basic salary for the respective year. An unchanged monthly salary is paid out as usual during the period of notice. The requirement to continue working during the period of notice cannot be extended beyond a maximum of one year.
Salary payments, bonus and other remuneration to Boards of Directors and Managing Directors in the Group totalled SEK 33,650,000 (2007: SEK 35,576,000). Benefits include company cars.
Group management consists of seven (2007: eight) people excluding the President/CEO. During the first nine months of the year the Group's senior management team comprised eight people excluding the President.
The costs for salaries and other remuneration for the members of the senior management group have been recognised in the respective company's accounts. The total cost recognised for salaries and other remuneration is SEK 19,913,000 (SEK 20,576,000), in addition to social security contributions of SEK 10,101,000 (SEK 10,148,000).
Bonus payments totalled SEK 5,033,000 (SEK 6,245,000). Benefits to Group management include company cars.
For managers of subsidiaries and for two departmental managers in the parent company, the period of notice from the company's side is 12 months. During the period of notice, the salary payable will remain unchanged.
The manager of one subsidiary has retirement benefit conditions in line with the ITP occupational pension plan. Others have defined-contribution retirement benefits, towards which an amount equivalent to 27.5 percent of basic salary is paid in annually.
At the beginning of 2007, the ÅF Board approved the establishment of a threeyear reward system for some 30 key management personnel. The scheme runs from 2007–2009 and aims to retain the services of key individuals at ÅF. The payment will be made if the profit trend for the company is better than that of a number of competing firms, and if ÅF's share price reaches preset targets. Those individuals participating in the three-year reward system are not entitled to take part in the 2008 performance-related share savings scheme at the same time. At the end of 2008 a total of 20 senior executives were taking part in the reward system, for which a provision of SEK 16.2 million was recognised as at 31 December 2008, equivalent to the estimated entitlement under the system.
A performance-related share savings scheme was introduced for key members of staff in 2008. The aim of the incentive scheme is to encourage continued loyalty and excellent performance, and also to make the Group even more attractive as an employer. To participate in the scheme, employees must invest their own money. Senior managers, including the Group's senior management team, have been selected and allocated four, five or six shares (matching shares) for every share they buy under the scheme.
In the 2008 share savings scheme, 94 business area managers, section managers and certain specialists may be given the right to performancematching of up to four shares for every share they buy. Five members of the Group's senior management team may be given the right to performance matching of up to five shares for every share they buy, and the President may be given the right to performance matching of up to six shares for every share bought. Employees who participate in the Performance-related Share Scheme 2008 may save an amount equivalent to a maximum of 5 percent of their fixed salary. The total number of matching shares which may be issued under the Performance-related Share Scheme 2008 is approximately 87,000, based on the share price quoted at the end of the application period.
Performance matching requires that certain set targets are achieved. The terms for performance matching are based on the company's operating margin before extraordinary items in relation to a basket of comparable companies, as well as to the company's growth in earnings per share over a threeyear period. In addition, performance matching requires that the key individual in question has been employed throughout the entire three-year period.
Before the number of performance shares for matching is finally determined, the Board of Directors will consider whether performance matching is reasonable with regard to the company's financial performance and position, and the situation on the stock market and in general. Should the board conclude that full matching is not appropriate, it may reduce the number of performance shares to a number it deems appropriate.
The profit targets are not to be reviewed after the close of the three-year period. If the minimum targets have not been achieved, no distribution of performance-matching shares will be made.
In the financial statements for 2008, an expense of SEK 1.6 million has been charged against profits for the performance-based share savings scheme. The expense is arrived at by periodising a straight-line estimated expense over three years.
During the past year no employees who have previously served in ÅF's Group senior management team have received severance payments.
The level of remuneration paid to the President/CEO for financial year 2008 was set by the Board of Directors following a proposal drafted by the board's Remuneration Committee. Remuneration paid to other senior executives was set by the President/CEO in consultation with the Chairman of the Board.
| Absence from work due to illness |
Parent company | |
|---|---|---|
| (Figures in percent) | 2008 | 2007 |
| Total sick leave as a percentage of ordinary working time |
1.3 | 4.3 |
| Portion of the total sick leave comprising absences of 60 consecutive days or more |
— | 35.2 |
| By gender: |
||
|---|---|---|
| Men | 0.8 | 3.9 |
| Women | 1.5 | 4.6 |
| By age: |
||
| 29 years old or below |
1.0 | 0.7 |
| 30–49 years |
0.5 | 2.9 |
| 50 years or above |
2.4 | 6.5 |
| Group | 2008 | 2007 |
|---|---|---|
| Overheads | 829 | 13,571 |
| Exchange gains/losses, net |
10,269 | –683 |
| Loss in conjunction with sale of subsidiary |
— | 329 |
| 11,098 | 13,217 |
| Group | 2008 | 2007 |
|---|---|---|
| Interest income |
12,903 | 14,829 |
| Dividends | — | 12 |
| Profit on sale of investments in securities, etc. |
— | 48 |
| Financial income |
12,903 | 14,889 |
| Interest expense* |
–23,421 | –18,245 |
| Net loss on the disposal of financial assets held for sale |
–67 | –192 |
| Net changes in exchange rates |
–7,198 | –6,279 |
| Financial expense |
–30,686 | –24,716 |
| Net financial expense |
–17,783 | –9,827 |
| Results from participations in Group companies |
Interest income and similar profit/loss items |
Interest expense and similar profit/loss items |
|||||
|---|---|---|---|---|---|---|---|
| Parent company |
2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| Interest, Group companies |
— | — | 28,237 | 24,964 | –3,186 | –1,402 | |
| Interest, other* |
— | — | 386 | 2,554 | –15,471 | –12,596 | |
| Dividends | 173 | — | — | — | — | — | |
| Other | — | — | — | 2 | — | — | |
| 173 | — | 28,623 | 27,520 | –18,657 | –13,998 |
* Including interest on retirement benefit provisions.
| Parent company |
2008 | 2007 |
|---|---|---|
| Difference between depreciation in accounts and depreciation according to plan |
–10,881 | –1,638 |
| Tax allocation reserve, liquidation during the year |
— | 85,546 |
| –10,881 | 83,908 |
| Before dilution | After dilution | |||
|---|---|---|---|---|
| SEK | 2008 | 2007 | 2008 | 2007 |
| Earnings per share |
19.08 | 13.15 | 19.08 | 13.11 |
The calculation of the numerators and denominators used in the above calculations of earnings per share is explained below.
The calculation of earnings per share for 2008 is based on the net profit for the year attributable to the parent company's ordinary shareholders amounting to SEK 324,184,000 (2007: SEK 217,528,000) and on a weighted average number of outstanding shares during 2008 amounting to 16,989,266 (2007: 16,543,598).
| Weighted average number of ordinary shares during the year, before dilution |
16,989,266 | 16,543,598 |
|---|---|---|
| Effect of share buy-backs in 2008 |
–5,009 | — |
| Effect of conversion of conv. debentures to shares in June 2008 |
34,013 | — |
| Effect of conversion of conv. debentures to shares in March 2008 |
25,029 | — |
| Effect of conversion of conv. debentures to shares in December 2007 |
— | 3,159 |
| Effect of conversion of conv. debentures to shares in August 2007 |
— | 206,897 |
| Effect of new issue on acquiring ÅF-Hansen & Henneberg AS in May 2007 |
— | 55,567 |
| Total number of ordinary shares 1 January |
16,935,233 | 16,277,975 |
| 2008 | 2007 |
In calculating earnings per share after dilution, the weighted number of outstanding ordinary shares is adjusted for the dilution effect of all outstanding potential ordinary shares. When calculating earnings per share after dilution, outstanding ordinary shares have been adjusted for a potential dilution effect for shares in the outstanding share savings scheme.
| Profit attributable to the parent company's ordinary shareholders, after dilution |
324,184 | 218,046 |
|---|---|---|
| Effect of interest on convertible debentures (after tax) |
— | 518 |
| Profit attributable to the parent company's ordinary shareholders |
324,184 | 217,528 |
| 2008 | 2007 |
| Weighted average number of ordinary shares during the year, after dilution |
16,991,538 | 16,637,935 |
|---|---|---|
| Effect of outstanding share savings scheme |
2,272 | — |
| Effect of conversion of convertible debentures |
— | 94,337 |
| Weighted average number of ordinary shares during the year, before dilution |
16,989,266 | 16,543,598 |
| 2008 | 2007 |
| Group | Goodwill | Development expenditure |
Other intan gible assets |
Total |
|---|---|---|---|---|
| Accumulated acquisition cost |
||||
| Balance brought fwd 1 Jan 2007 |
834,879 | 13,155 | 28,292 | 876,326 |
| Corporate acquisitions |
243,349 | — | 7,966 | 251,315 |
| Additional consideration |
1,053 | — | — | 1,053 |
| Acquisitions | — | — | 1,022 | 1,022 |
| Disposals and retirements |
–18,214 | — | — | –18,214 |
| Exchange differences for the |
||||
| year | 4,510 | 6 | 143 | 4,659 |
| Balance carried fwd |
||||
| 31 Dec 2007 |
1,065,577 | 13,161 | 37,423 | 1,116,161 |
| Balance brought fwd 1 Jan 2008 |
1,065,577 | 13,161 | 37,423 | 1,116,161 |
| Corporate acquisitions |
177,812 | — | 12,938 | 190,750 |
| Additional consideration |
2,607 | — | — | 2,607 |
| Acquisitions | — | — | 709 | 709 |
| Assets developed in-house |
— | 1,591 | — | 1,591 |
| Disposals and retirements |
— | — | –1,508 | –1,508 |
| Exchange differences for the year |
85,880 | 1,350 | 4,483 | 91,713 |
| Balance carried fwd |
||||
| 31 Dec 2008 |
1,331,876 | 16,102 | 54,045 | 1,402,023 |
| Accumulated depreciation and |
write-downs | |||
| Balance brought fwd 1 Jan 2007 Depreciation during the year |
–2,596 — |
–12,024 –892 |
–8,774 –8,155 |
–23,394 –9,047 |
| Balance carried fwd |
||||
| 31 Dec 2007 |
–2,596 | –12,916 | –16,929 | –32,441 |
| Balance brought fwd 1 Jan 2008 |
–2,596 | –12,916 | –16,929 | –32,441 |
| Corporate acquisitions |
— | — | –32 | –32 |
| Depreciation during the year |
— | –156 | –9,870 | –10,026 |
| Disposals and retirements |
— | — | 1,508 | 1,508 |
| Exchange differences for the year |
— | –1,342 | –2,623 | –3,965 |
| Balance carried fwd |
||||
| 31 Dec 2008 |
–2,596 | –14,414 | –27,946 | –44,956 |
| Carrying amounts |
||||
| Per 1 Jan 2007 |
832,283 | 1,131 | 19,518 | 852,932 |
| Per 31 Dec 2007 |
1,062,981 | 245 | 20,494 | 1,083,720 |
| Per 1 Jan 2008 |
1,062,981 | 245 | 20,494 | 1,083,720 |
| Per 31 Dec 2008 |
1,329,280 | 1,688 | 26,099 | 1,357,067 |
Goodwill has been apportioned between cash-generating units, corresponding in the first instance to the Group's divisions, but also to major identifiable corporate investments. Goodwill is tested annually for impairment, during the fourth quarter or when a need for impairment is indicated, by discounting the expected future cash flow by a weighted average cost of capital per cash-generating unit. The present value of cash flows, the recoverable amount, is compared with the carrying amount including goodwill.
In calculating the recoverable amounts of the cash-generating units, a number of assumptions on future circumstances and estimates of parameters have been made. Changes in these assumptions and estimates would affect the carrying amount of goodwill.
The forecasts of future cash flows used are based on the forecast made by the company management for the next year, supplemented by an individual assessment of a further four years. From that point onwards the calculation is based on an annual growth rate of 2 percent. The net present values of forecast cash flows have been calculated using a discount rate of 11.4 percent before tax.
At the end of 2008, goodwill amounted to SEK 1,329,280,000 (2007: SEK 1,062,981,000). Goodwill on the acquisition of Lonas amounted to SEK 87,935,000. Other acquisitions along with additional considerations gave rise to goodwill of SEK 92,484,000. In total, goodwill carried by ÅF increased by SEK 266,299,000, of which exchange differences were SEK 85,880,000.
The carrying amount of goodwill is allocated as follows:
| Division | 2008 | 2007 |
|---|---|---|
| Energy | 540,553 | 384,282 |
| Engineering | 497,633 | 483,370 |
| Infrastructure | 222,603 | 195,329 |
| Inspection | 68,491 | — |
| ÅF AB |
— | — |
| Total | 1,329,280 | 1,062,981 |
In assessing goodwill, the value in use exceeded the goodwill values. It is, therefore, the view of the company management that no reasonably conceivable changes in the important assumptions for the cash-generating units would lead to an impairment need.
| Group | Equipment, tools, fixtures and fittings |
Land and buildings |
Total |
|---|---|---|---|
| Acquisition costs |
|||
| Balance brought fwd 1 Jan 2007 |
298,581 | — | 298,581 |
| Corporate acquisitions |
8,518 | 101,775 | 110,293 |
| Acquisitions | 58,293 | — | 58,293 |
| Disposals and retirements |
–106,916 | — | –106,916 |
| Exchange differences |
4,724 | –12 | 4,712 |
| Balance carried fwd 31 Dec 2007 |
263,200 | 101,763 | 364,963 |
| Balance brought fwd 1 Jan 2008 |
263,200 | 101,763 | 364,963 |
| Corporate acquisitions |
10,262 | 6,475 | 16,737 |
| Acquisitions | 105,508 | 32,359 | 137,867 |
| Disposals and retirements |
–47,795 | — | –47,795 |
| Exchange differences |
8,634 | 36,621 | 45,255 |
| Balance carried fwd |
|||
| 31 Dec 2008 |
339,809 | 177,218 | 517,027 |
| Depreciation and write-downs |
|||
| Balance brought fwd 1 Jan 2007 |
–195,237 | — | –195,237 |
| Depreciation during the year |
–38,586 | –1,194 | –39,780 |
| Disposals and retirements |
85,394 | — | 85,394 |
| Exchange differences |
–4,625 | — | –4,625 |
| Balance carried fwd 31 Dec 2007 |
–153,054 | –1,194 | –154,248 |
| Balance brought fwd 1 Jan 2008 |
–153,054 | –1,194 | –154,248 |
| Corporate acquisitions |
–6,325 | –1,110 | –7,435 |
| Depreciation during the year |
–40,812 | –3,222 | –44,034 |
| Disposals and retirements |
34,223 | — | 34,223 |
| Exchange differences |
–6,011 | –884 | –6,895 |
| Balance carried fwd 31 Dec 2008 |
–171,979 | –6,410 | –178,389 |
| Carrying amounts |
|||
| Per 1 Jan 2007 |
103,344 | — | 103,344 |
| Per 31 Dec 2007 |
110,146 | 100,569 | 210,715 |
| Per 1 Jan 2008 |
110,146 | 100,569 | 210,715 |
| Per 31 Dec 2008 |
167,830 | 170,808 | 338,638 |
Equipment held under financial leasing agreements is included in the Group at the carrying amount of SEK 26,195,000 (2007: SEK 26,432,000).
Current and non-current liabilities in the consolidated balance sheet include future payments in respect of leasing obligations entered as liabilities. See also Note 19 "Liabilities to credit institutions".
| Equipment, tools, | |
|---|---|
| Parent company |
fixtures and fittings |
| Acquisition costs |
|
| Balance brought fwd 1 Jan 2007 |
50,253 |
| Acquisitions | 8,758 |
| Disposals and retirements |
–16,179 |
| Balance carried fwd 31 Dec 2007 |
42,832 |
| Balance brought fwd 1 Jan 2008 |
42,832 |
| Acquisitions | 50,784 |
| Disposals and retirements |
–5,417 |
| Balance carried fwd 31 Dec 2008 |
88,199 |
| Depreciation | |
| Balance brought fwd 1 Jan 2007 |
–30,383 |
| Depreciation during the year |
–4,370 |
| Disposals and retirements |
6,564 |
| Balance carried fwd 31 Dec 2007 |
–28,189 |
| Balance brought fwd 1 Jan 2008 |
–28,189 |
| Depreciation during the year |
–5,090 |
| Disposals and retirements |
1,553 |
| Balance carried fwd 31 Dec 2008 |
–31,726 |
| Carrying amounts |
|
| Per 1 Jan 2007 |
19,870 |
| Per 31 Dec 2007 |
14,643 |
| Per 1 Jan 2008 |
14,643 |
| Per 31 Dec 2008 |
56,473 |
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Carrying amount at start of year |
11,216 | 23,487 | — | — |
| Acquisition of associated com panies |
— | — | 613 | — |
| Conversion to participations in Group companies |
— | –15,789 | — | — |
| Participations in the results of associated companies after tax |
3,566 | 4,131 | — | — |
| Dividend received and repayment of shareholders' contribution |
–2,549 | –1,050 | — | — |
| Translation difference |
1,193 | 437 | — | — |
| Carrying amount at end of year |
13,426 | 11,216 | 613 | — |
The total earnings, profit, assets and liabilities of associated companies are specified in the tables below.
| Country | Earnings | Profit | Assets | Liabilities | Equity | Ownership % | |
|---|---|---|---|---|---|---|---|
| ÅF-TÜV Nord AB |
Sweden | 42,075 | 3,766 | 17,045 | 11,633 | 5,412 | 50 |
| ÅF-Incepal S.A |
Spain | 33,974 | 1,825 | 61,238 | 45,492 | 15,746 | 47 |
| NDT Training Center AB |
Sweden | 14,129 | 2,484 | 10,463 | 4,831 | 5,632 | 33 |
| ITP-Infra Trans Project Ltd |
Albania | 0 | 0 | 2,401 | 2,481 | –80 | 49 |
| 90,178 | 8,075 | 91,147 | 64,437 | 26,710 | |||
| Associated companies 2007 |
Country | Earnings | Profit | Assets | Liabilities | Equity | Ownership % |
| ÅF-TÜV Nord AB |
Sweden | 36,038 | 2,546 | 13,878 | 9,686 | 4,192 | 50 |
| ÅF-Incepal S.A |
Spain | 27,846 | 1,295 | 25,885 | 13,687 | 12,198 | 47 |
| NDT Training Center AB |
Sweden | 13,034 | 3,665 | 9,658 | 3,788 | 5,870 | 33 |
| ITP-Infra Trans Project Ltd |
Albania | 694 | 1,032 | 2,123 | 2,194 | –71 | 49 |
| 77,612 | 8,538 | 51,544 | 29,355 | 22,189 |
| Group | 2008 | 2007 |
|---|---|---|
| Financial assets which are non-current assets |
||
| Listed shares and participations |
— | 115 |
| Unlisted shares and participations |
918 | 480 |
| Tenant-owner property holdings |
351 | 351 |
| 1,269 | 946 |
Specification of changes in carrying amounts for the year
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Carrying amount brought forward |
946 | 1,950 | — | — | |
| Acquisitions | 448 | 433 | — | — | |
| Disposals/impairments | –174 | –1,496 | — | — | |
| Change in realisable value |
–7 | 7 | — | — | |
| Translation difference |
56 | 52 | — | — | |
| Carrying amount carried forward |
1,269 | 946 | — | — |
The carrying amount of participations is deemed to be equivalent to the realisable value.
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Rent | 26,747 | 26,106 | 20,768 | 16,998 |
| Support and maintenance contracts |
3,785 | 4,872 | 832 | 903 |
| Other | 26,111 | 35,127 | 5,303 | 7,245 |
| 56,643 | 66,105 | 26,903 | 25,146 |
| Equity attributable to shareholders in parent company | |||||||
|---|---|---|---|---|---|---|---|
| Group | Share capital | Other contributed capital |
Reserves | Profits brought forward incl. profit for the year |
Total | Non controlling interest |
Total equity |
| Equity brought forward 1 Jan 2007 |
162,780 | 422,922 | –6,532 | 512,363 | 1,091,533 | 0 | 1,091,533 |
| Change in translation reserve for the year |
14,558 | 14,558 | 25 | 14,583 | |||
| Change in hedging reserve for the year |
–206 | –206 | –206 | ||||
| Change in fair value reserve for the year |
7 | 7 | 7 | ||||
| Pensions | –2,735 | –2,735 | –2,735 | ||||
| Tax attributable to items recognised in equity |
56 | 788 | 844 | 844 | |||
| Total changes in assets recognised in equity, excluding transactions with the company's owners |
0 | 0 | 14,415 | –1,947 | 12,468 | 25 | 12,493 |
| Profit for the year |
217,528 | 217,528 | 2,473 | 220,001 | |||
| Total changes in assets, excluding transactions with the company's owners |
0 | 0 | 14,415 | 215,581 | 229,996 | 2,498 | 232,494 |
| Dividends | –48,834 | –48,834 | –378 | –49,212 | |||
| New issue (convertible) |
6,572 | 55,677 | 62,249 | 62,249 | |||
| Non-controlling interest in acquired companies |
0 | 2,100 | 2,100 | ||||
| Equity carried forward 31 Dec 2007 |
169,352 | 478,599 | 7,883 | 679,110 | 1,334,944 | 4,220 | 1,339,164 |
| Equity brought forward 1 Jan 2008 |
169,352 | 478,599 | 7,883 | 679,110 | 1,334,944 | 4,220 | 1,339,164 |
| Change in translation reserve for the year |
170,844 | 170,844 | 911 | 171,755 | |||
| Change in hedging reserve for the year |
576 | 576 | 576 | ||||
| Change in fair value reserve for the year |
–7 | –7 | –7 | ||||
| Pensions | –44,603 | –44,603 | –44,603 | ||||
| Tax attributable to items recognised directly in equity |
–150 | 10,115 | 9,965 | 9,965 | |||
| Effect of change in tax rate |
–4 | –81 | –85 | –85 | |||
| Total changes in assets recognised in equity, excluding transactions with the company's owners |
0 | 0 | 171,259 | –34,569 | 136,690 | 911 | 137,601 |
| Profit for the year |
324,184 | 324,184 | 3,567 | 327,751 | |||
| Total changes in assets, excluding transactions with the company's owners |
0 | 0 | 171,259 | 289,615 | 460,874 | 4,478 | 465,352 |
| Dividends | –110,079 | –110,079 | –2,084 | –112,163 | |||
| New issue (convertible) |
943 | 6,665 | 7,608 | 7,608 | |||
| Share buy-backs |
–4,456 | –4,456 | –4,456 | ||||
| Share savings scheme 2008 |
1,203 | 1,203 | 1,203 | ||||
| Non-controlling shareholdings in acquired companies |
0 | 1,934 | 1,934 | ||||
| Equity carried forward 31 Dec 2008 |
170,295 | 482,011 | 179,142 | 858,646 | 1,690,094 | 8,548 | 1,698,642 |
The total number of shares as at 31 December 2008 comprised 804,438 class A shares (10 votes per share) and 16,225,063 class B shares (1 vote per share). Holders of ordinary shares are entitled to dividends which are determined in due course. All shares have the same right to the company's remaining net assets. As a result of the share buy-back authorised by the Annual General Meeting, ÅF AB held 37,000 of the company's own class B shares on 31 December 2008. These shares do not participate in dividends. The dividends
paid out during 2008 and 2007 amounted to SEK 110,079,000 (SEK 6.50 per share) and SEK 48,834,000 (SEK 3.00 per share) respectively. At the Annual General meeting on 5 May 2009, a dividend in respect of financial year 2008 of SEK 6.50 per share will be proposed, equivalent to a total pay-out of SEK 110,451,000. The proposed dividend has not been recognised in these financial reports.
The quota value of the share for 2008 was SEK 10 (2007: SEK 10).
| Reserves | ||||
|---|---|---|---|---|
| Translation | Hedging | Fair value | Total | |
| reserve | reserve | reserve | reserves | |
| Balance brought forward as at 1 Jan 2007 |
–6,603 | 71 | 0 | –6,532 |
| Exchange differences for the year |
14,558 | 14,558 | ||
| Revaluations recognised in equity |
7 | 7 | ||
| Cash flow hedging recognised in equity |
–206 | –206 | ||
| Tax attributable to items recognised in equity |
58 | –2 | 56 | |
| Balance carried forward as at 31 Dec 2007 |
7,955 | –77 | 5 | 7,883 |
| Balance brought forward as at 1 Jan 2008 |
7,955 | –77 | 5 | 7,883 |
| Exchange differences for the year |
170,844 | 170,844 | ||
| Revaluations recognised in equity |
–7 | –7 | ||
| Cash flow hedging recognised in equity |
576 | 576 | ||
| Tax attributable to items recognised in equity |
–152 | 2 | –150 | |
| Effect of change in tax rate |
–4 | –4 | ||
| Balance carried forward as at 31 Dec 2008 |
178,799 | 343 | 0 | 179,142 |
This refers to equity which has been contributed by the shareholders. It includes premium reserve transferred to statutory reserve as at 31 December 2005. Provisions to the premium reserve on and after 1 January 2006 are also recognised as contributed capital.
The translation reserve includes all exchange differences arising on the translation of financial reports from foreign operations which have prepared their financial reports in a currency other than that in which the consolidated financial reports are presented. The currency in which the parent company and the Group present their financial reports is the Swedish krona (SEK).
The fair value reserve includes the accumulated net changes in fair value of financial assets which may be sold until such time as these assets are derecognised from the balance sheet.
The hedging reserve includes the effective portion of the accumulated net changes of fair value of a cash-flow hedging instrument attributable to hedging transactions which have not yet taken place.
Pensions include actuarial gains and losses and the employer's contribution on these, which are recognised in equity.
Convertible debentures which can be converted into shares by a counterparty exercising the option to convert the instrument into shares are recognised as a compound financial instrument comprising a liability component and an equity component.
Profits brought forward including net profit for the year include profits earned by the parent company and its subsidiaries and associated companies. Previous transfers to the statutory reserve, excluding premium reserve transferred, are included in this equity item.
| Restricted equity | Non-restricted equity | Total equity | ||||||
|---|---|---|---|---|---|---|---|---|
| Parent company |
Share capital | Statutory reserve |
Fair value reserve |
Premium reserve |
Profit carried forward |
Profit/Loss for the year |
||
| Equity brought forward 1 Jan 2007 |
162,780 | 46,948 | 0 | 399,298 | 404,088 | 0 | 1,013,114 | |
| Profit for the year |
42,009 | 42,009 | ||||||
| Total change in assets, excluding transactions with the company's owners |
0 | 0 | 0 | 0 | 0 | 42,009 | 42,009 | |
| Dividends | –48,834 | –48,834 | ||||||
| New issue (convertible) |
6,572 | 55,676 | 62,248 | |||||
| Group contributions |
261,230 | 261,230 | ||||||
| Tax attributable to Group contribution |
–73,144 | –73,144 | ||||||
| Equity carried forward 31 Dec 2007 |
169,352 | 46,948 | 0 | 454,974 | 543,340 | 42,009 | 1,256,623 | |
| Equity brought forward 1 Jan 2008 |
169,352 | 46,948 | 0 | 454,974 | 585,349 | 0 | 1,256,623 | |
| Change in hedge reserve for the year |
587 | 587 | ||||||
| Tax attributable to items recognised in equity |
–154 | –154 | ||||||
| Total changes in assets recognised in equity, excluding transactions with the company's owners |
0 | 0 | 433 | 0 | 0 | 0 | 433 | |
| Loss for the year |
–36,198 | –36,198 | ||||||
| Total change in assets, excluding transactions with the company's owners |
0 | 0 | 433 | 0 | 0 | –36,198 | –35,765 | |
| Dividends | –110,079 | –110,079 | ||||||
| New issue (convertible) |
943 | 6,665 | 7,608 | |||||
| Group contributions |
334,785 | 334,785 | ||||||
| Tax attributable to Group contribution |
–93,740 | –93,740 | ||||||
| Share buy-backs |
–4,456 | –4,456 | ||||||
| Share savings scheme |
1,203 | 1,203 | ||||||
| Equity carried forward 31 Dec 2008 |
170,295 | 46,948 | 433 | 457,183 | 717,518 | –36,198 | 1,356,179 |
Restricted reserves must not be reduced through dividends.
The purpose of the statutory reserve is to block a portion of net profits, which are not to be used to cover losses brought forward. With effect from 2006, it is no longer obligatory to make transfers to the statutory reserve.
The fair value reserve includes the effective proportion of the accumulated net changes in fair value of a cash-flow hedging instrument attributable to hedging transactions which have not yet been entered into.
When shares are issued at a premium, i.e. when shareholders pay more than the quota value of the shares, an amount equivalent to the amount received in excess of the quota value of the shares is transferred to the premium reserve. Premium reserves attributable to transactions before 1 January 2006 have been transferred to the statutory reserve. Premium reserves which arise after that date are recognised as non-restricted equity.
These constitute non-restricted equity from previous years after any transfer to reserves and after the payment of any dividends. Along with net profit for the year and any reserve for fair value, these constitute total non-restricted equity, i.e. the amount available for dividends to shareholders.
The note includes information on the company's contractual terms in respect of interest-bearing liabilities.
For more information on the company's interest rate risk and exchange rate risk, please refer to Note 26.
| Non-current liabilities |
2008 | 2007 |
|---|---|---|
| Bank loans |
75,966 | 48,894 |
| Financial leasing liabilities |
19,750 | 19,705 |
| 95,716 | 68,599 | |
| Current liabilities |
||
| Short-term bank loans |
256,935 | 254,961 |
| Current portion of financial leasing liabilities |
8,064 | 6,727 |
| 264,999 | 261,688 |
| Non-current liabilities |
2008 | 2007 |
|---|---|---|
| Bank loans 1) |
240,785 | 243,195 |
| 240,785 | 243,195 |
1) Current liabilities have a maturity of between 3 and 12 months from the end of the reporting period. ÅF AB has credit facilities totalling SEK 500 million.
| Nom. amount | |||||
|---|---|---|---|---|---|
| Group | Interest rate, % | in original currency |
Carrying amount |
Due, year | Fair value |
| Long-term bank loans |
|||||
| Norway, NOK, floating interest |
7.6 | 1,200 | 1,324 | 2010 | 1,324 |
| Switzerland, CHF, fixed interest |
3.3 | 2,000 | 14,691 | 2011 | 14,233 |
| Switzerland, CHF, fixed interest |
3.5 | 5,120 | 37,609 | 2010 | 37,084 |
| Switzerland, CHF, floating interest |
3.3 | 3,000 | 22,036 | 2010 | 22,036 |
| Finland, EUR, fixed interest |
1.8 | 28 | 306 | 2010 | 306 |
| 75,966 | 74,983 | ||||
| Short-term bank loans |
|||||
| Norway, NOK, floating interest |
4.1 | 4,673 | 5,157 | 2009 | 5,157 |
| Norway, NOK, floating interest |
4.1 | 1,110 | 1,225 | 2009 | 1,225 |
| Sweden, SEK, floating interest |
4.8 | 90 | 90 | 2009 | 90 |
| Sweden, SEK, floating interest |
2.4 | 140,785 | 140,785 | 2009 | 140,785 |
| Sweden, SEK, floating interest |
2.5 | 50,000 | 50,000 | 2009 | 50,000 |
| Sweden, SEK, floating interest |
2.6 | 50,000 | 50,000 | 2009 | 50,000 |
| Latvia, EEK, floating interest |
6.8 | 57 | 40 | 2009 | 40 |
| Finland, EUR, floating interest |
1.8 | 28 | 306 | 2009 | 306 |
| Russia, RUB, fixed interest |
21.0 | 35,000 | 9,212 | 2009 | 9,212 |
| Czech Rep, CZK, floating interest |
6.6 | 293 | 120 | 2009 | 120 |
| 256,935 | 256,935 |
For the bank loans of SEK 240,785,000 taken out by the parent company, there are certain special obligations stemming from the credit agreement. There are limitations on changes in the company's activities, securities and equity/assets ratio, as well as on the debt/equity ratio and the interest coverage ratio.
Financial leasing liabilities fall due for payment as shown in the table below:
| 2008 | 2007 | |||||
|---|---|---|---|---|---|---|
| Group | Minimum leasing fees |
Interest | Principal amount |
Minimum leasing fees |
Interest | Principal amount |
| Within one year |
9,170 | 1,107 | 8,064 | 7,991 | 1,264 | 6,727 |
| 1–5 years |
20,382 | 632 | 19,750 | 20,496 | 791 | 19,705 |
| 29,552 | 1,739 | 27,814 | 28,487 | 2,055 | 26,432 |
In 2005 ÅF AB raised a convertible debenture loan aimed at employees in Sweden, Norway and Finland. The loan carried an annual interest rate of STIBOR 360. The debentures fell due three years from the date of issue at their nominal value, or could be converted into shares at the request of the holder at a price of SEK 81.36 per share. Conversion to shares took place during the periods 2–13 July 2007, 12–30 November 2007, 18 February–7 March 2008 and 5–30 May 2008. The programme was terminated in 2008.
| Convertible debentures |
2008 | 2007 |
|---|---|---|
| Value after the issue of convertible debentures |
— | 7,675 |
| Transaction costs |
— | –250 |
| Net proceeds |
— | 7,425 |
| Amount classified as equity |
— | –106 |
| Capitalised interest 2005 |
— | 57 |
| Capitalised interest for 2006 |
— | 117 |
| Capitalised interest for 2007 |
— | 120 |
| Recognised liability 31 December |
— | 7,613 |
The fair values of the liability component and the equity component were determined in connection with the issue of the debentures.
| Group | 2008 | 2007 |
|---|---|---|
| Present value of funded obligations |
374,613 | 272,975 |
| Fair value of plan assets |
–333,405 | –270,126 |
| 41,208 | 2,849 | |
| Present value of unfunded obligations |
62,615 | 57,286 |
| Net amount recognised in respect of defined-benefit plans |
103,823 | 60,135 |
Net amount recognised in the balance sheet under the heading "Provisions for pensions".
The Group has defined-benefit plans in Sweden and Switzerland. The definedbenefit plans provide payments to employees when they retire.
| Group | 2008 | 2007 |
|---|---|---|
| At start of year |
270,126 | — |
| Acquisition of companies |
— | 270,126 |
| Actuarial gains (+) and losses (–) recognised in equity |
–28,148 | — |
| Expected return |
11,014 | — |
| Payments made |
10,548 | — |
| Payments disbursed |
–10,548 | — |
| Exchange differences |
80,413 | — |
| At close of year |
333,405 | 270,126 |
| Group | 2008 | 2007 |
|---|---|---|
| At start of year |
330,261 | 55,855 |
| Acquisition of companies |
— | 272,975 |
| Sale of companies |
— | –1,440 |
| Payments disbursed |
–13,063 | –2,109 |
| Curtailment | — | –58 |
| Actuarial gains (–) and losses (+) recognised in equity |
14,607 | 2,735 |
| Cost recognised in the income statement |
24,187 | 2,239 |
| Exchange differences |
81,236 | 64 |
| At close of year |
437,228 | 330,261 |
| Group | 2008 | 2007 |
|---|---|---|
| Recognised in equity as at 1 January |
7,823 | 5,088 |
| Recognised in equity during the year |
42,755 | 2,735 |
| Recognised in equity as at 31 December |
50,578 | 7,823 |
| Group | 2008 | 2007 |
|---|---|---|
| Current service cost |
10,548 | — |
| Interest expense for the obligation, net |
2,625 | 2,239 |
| Total net cost in the income statement |
13,173 | 2,239 |
The cost of defined-benefit plans is recognised in the Personnel costs line in the income statement, apart from SEK 2,625,000 (2007: SEK 2,438,000) which is recognised under Interest expense and similar profit/loss items. The cost for defined-benefit plans in 2009 is expected to be on a par with the cost recognised in 2008.
The most significant actuarial assumptions as at the end of the reporting period.
| Sweden | 2008 | 2007 |
|---|---|---|
| Discount rate as at 31 December, % |
4.0 | 4.7 |
| Future increase in retirement benefits, % |
2.0 | 2.0 |
| Annual increase in paid-up policies, % |
2.0 | 2.0 |
| Anticipated remaining period of service, in years |
— | — |
| Switzerland | 2008 | 2007 |
|---|---|---|
| Discount rate as at 31 December, % |
3.6 | 3.8 |
| Expected return on plan assets, % |
4.0 | 4.0 |
| Future increase in retirement benefits, % |
1.2 | 1.5 |
| Future increases in salaries, % |
1.5 | 2.0 |
| Expected remaining period of service, years |
8.8 | 8.8 |
For some of the Group's employees, the obligations in respect of retirement pension and family pension for salaried staff in Sweden are secured through insurance with Alecta. According to a statement from the Swedish Financial Reporting Board (UFR 3) this is a defined-benefit multi-employer plan. For financial year 2008, the company has not had access to the information required to recognise this plan as a defined-benefit plan. The ITP supplementary pensions plan for salaried employees' retirement benefits that is secured through insurance with Alecta is, therefore, recognised as a defined-contribution plan. Contributions during the year for retirement benefit insurance with Alecta amounted to SEK 55,392,000 (2007: SEK 79,283,000). Alecta's surplus may be allocated to the insurance policy holder and/or the insured. At the close of 2008 Alecta's surplus in the form of the collective funding ratio was 112.0 percent (2007: 152.0 percent). The collective funding ratio is the market value of Alecta's assets as a percentage of the insurance obligations calculated in accordance with Alecta's actuarial calculation assumptions, which are not in conformity with IAS 19.
| 2008 | 2007 | |
|---|---|---|
| Present value of unfunded obligations1) |
27,185 | 27,161 |
| Recognised in respect of defined-benefit plans |
27,185 | 27,161 |
| Of which covered by a credit insurance through FPG/PRI |
27,185 | 27,161 |
1) In accordance with Swedish principles for calculating pensions obligations.
| end of year |
27,185 | 27,161 |
|---|---|---|
| Net present value of pension obligations at |
||
| Pensions paid |
–1,544 | –1,272 |
| Interest expense |
1,534 | 1,191 |
| Cost excluding interest expense charged to profit |
34 | 273 |
| Net present value of pension obligations at start of year |
27,161 | 26,969 |
| 2008 | 2007 |
| Total net expense in the income statement |
1,568 | 1,464 |
|---|---|---|
| Interest expense on obligations |
1,534 | 1,191 |
| Cost of credit insurance |
34 | 273 |
| 2008 | 2007 |
The discount rate for the parent company's pension obligations in 2008 is 3.8 percent (2007: 3.6 percent).
The Group has defined-contribution plans in Sweden and abroad. Contributions to these plans are made continuously in accordance with the regulations for each plan.
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Cost of defined contribution plans |
166,362 | 192,623 | 5,530 | 6,562 |
Of the Group's total expense for defined-contribution plans, SEK 55,392,000 (2007: SEK 79,283,000) refers to the ITP plan financed through Alecta, see above.
| Provisions which are non-current liabilities |
2008 | 2007 |
|---|---|---|
| Restructuring costs |
691 | 546 |
| Provision for additional consideration |
45,099 | — |
| Other | 20,496 | 8,328 |
| Total | 66,286 | 8,874 |
| Provisions which are current liabilities |
||
| Restructuring costs |
3,300 | — |
| 501 | 9,211 |
|---|---|
| 4,508 | 397 |
| 8,309 | 9,608 |
| 74,595 | 18,482 |
| 546 | 1,252 |
| 3,445 | — |
| — | –706 |
| 3,991 | 546 |
| — |
|---|
| — |
| Carrying amount at end of period |
501 | 9,211 |
|---|---|---|
| Amount used during period |
–8,710 | — |
| Carrying amount at start of period |
9,211 | 9,211 |
| Carrying amount at end of period |
25,004 | 8,725 |
|---|---|---|
| Other | 609 | — |
| Amount used during period |
–715 | –4,012 |
| Transfers during reporting period |
16,385 | 4,400 |
| Carrying amount at start of period |
8,725 | 8,337 |
| Group's total provisions |
2008 | 2007 |
|---|---|---|
| Total carrying amount at start of period |
18,482 | 18,800 |
| Transfers during reporting period |
64,929 | 4,400 |
| Amount used during period |
–9,425 | –4,718 |
| Other | 609 | — |
| Total carrying amount at end of period |
74,595 | 18,482 |
| Parent company |
||
| Provisions | 2008 | 2007 |
| Provisions for future removal costs |
501 | 9,211 |
| Provisions for incentive programme |
16,585 | 4,400 |
| Total | 17,086 | 13,611 |
| Change in provisions |
||
| Carrying amount at start of period |
13,611 | 9,211 |
| Transfers during reporting period |
12,185 | 4,400 |
| Amount used during period |
–8,710 | — |
In 2008, ÅF AB transferred its head office to Hagaporten, Solna. SEK 8,710,000 from the reserve for future removal costs was utilised for this purpose.
During 2007 and 2008 provisions were also made for an incentive programme. (See Note 8.)
Carrying amount at end of period 17,086 13,611
It is anticipated that non-current provisions will be settled within the next three years.
| Current tax |
2008 | 2007 |
|---|---|---|
| Tax expense for the period |
–130,105 | –117,563 |
| Adjustment of tax attributable to previous years |
–1,889 | –5,083 |
| Deferred tax |
||
| Deferred tax in respect of temporary differences |
789 | 24,161 |
| Deferred tax expense resulting from the utilisation of the tax base of loss carry-forwards previously capitalised |
–1,924 | –3,566 |
| Total recognised tax expense in the Group |
–133,129 | –102,051 |
| Total recognised tax receipt/expense in the parent company |
13,846 | –16,500 |
|---|---|---|
| Deferred tax in respect of temporary differences |
1,004 | 1,336 |
| Deferred tax |
||
| Tax in respect of group contributions paid/received |
93,740 | 73,144 |
| Adjustment of tax attributable to previous years |
60 | 134 |
| Tax expense for the period |
–80,958 | –91,114 |
| Current tax |
2008 | 2007 |
| Group | 2008 (%) | 2008 | 2007 (%) | 2007 |
|---|---|---|---|---|
| Profit before tax |
460,880 | 322,052 | ||
| Tax in accordance with current tax rate for parent company |
–28.00 | –129,046 | –28.00 | –90,175 |
| Effect of other tax rates for foreign subsidiaries |
1,34 | 6,178 | –0.06 | –205 |
| Non-deductible expenses |
–1.19 | –5,499 | –3.47 | –11,165 |
| Non-taxable income |
0.42 | 1,928 | 3.73 | 12,016 |
| Increase in loss carry-forwards without the corresponding capi talisation of deferred tax |
–0.24 | –1,115 | –0.95 | –3,073 |
| Tax attributable to previous years |
–0.41 | –1,889 | –1.58 | –5,083 |
| Change in deferred tax rate to 26.3% |
0.04 | 167 | — | — |
| Standardised interest rate on tax allocation reserve |
— | — | –0.21 | –678 |
| Other | –0.84 | –3,853 | –1.15 | –3,688 |
| Recognised effective tax |
–28.88 | –133,129 | –31.69 | –102,051 |
| Parent company |
2008 (%) | 2008 | 2007 (%) | 2007 |
|---|---|---|---|---|
| Profit/loss before tax |
–50,044 | 58,508 | ||
| Tax in accordance with current tax rate for the parent company |
–28.00 | 14,012 | –28.00 | –16,382 |
| Non-deductible expenses |
1.21 | –606 | –0.41 | –241 |
| Non-taxable income |
–1.38 | 691 | 1.02 | 599 |
| Tax attributable to previous years |
–0.12 | 60 | 0.23 | 134 |
| Change in deferred tax rate to 26.3% |
0.62 | –311 | — | — |
| Standardised interest rate on tax allocation reserve |
— | — | –1.04 | –610 |
| Recognised effective tax |
–27.67 | 13,846 | –28.20 | –16,500 |
The current tax liability in the Group totals SEK 79,010,000 (2007: SEK 40,352,000). The current tax liability in the parent company amounts to SEK 53,123,000 (SEK 66,153,000).
Deferred tax assets and tax liabilities relate to the following:
| Deferred tax assets |
Deferred tax liability |
Net | ||||
|---|---|---|---|---|---|---|
| Group | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Non-current assets |
786 | 924 | –19,381 | –12,387 | –18,595 | –11,463 |
| Shares and participations |
— | — | — | –2 | — | –2 |
| Current receivables and liabilities |
9,112 | 4,177 | –1,143 | — | 7,969 | 4,177 |
| Other non-current liabilities |
— | — | — | –5 | — | –5 |
| Provisions | 18,238 | 5,783 | –11,400 | –9,100 | 6,838 | –3,317 |
| Loss carry-forwards |
4,596 | 8,491 | — | — | 4,596 | 8,491 |
| Untaxed reserves |
— | — | –5,678 | –7,012 | –5,678 | –7,012 |
| Tax assets/tax liabilities |
32,732 | 19,375 | –37,602 | –28,506 | –4,870 | –9,131 |
| Set-off | –17,927 | –7,772 | 17,927 | 7,772 | — | — |
| Tax assets/tax liabilities, net |
14,805 | 11,603 | –19,675 | –20,734 | –4,870 | –9,131 |
The unutilised loss carry-forwards include losses in Norway equivalent to SEK 9,436,000 (2007: SEK 16,086,000), where losses that arose before 1 January 2006 have a time limitation of 10 years, while losses after that date have no time limitation.
| Deferred tax assets |
Deferred tax liability |
Net | ||||
|---|---|---|---|---|---|---|
| Parent company |
2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Interest-bearing liabilities |
— | — | — | –5 | — | –5 |
| Current receivables and liabilities |
— | — | –154 | — | –154 | — |
| Provisions | 4,810 | 3,811 | — | — | 4,810 | 3,811 |
| Tax assets/tax liabilities, net |
4,810 | 3,811 | –154 | –5 | 4,656 | 3,806 |
ÅF recognises no deferred tax in respect of temporary differences relating to investments in subsidiaries. Any future effects (tax deduction at source and other deferred tax on profit-taking within the Group) are recognised when ÅF is no longer able to control the reversal of such differences or when, for other reasons, it is no longer unlikely that the reversal will take place in the foreseeable future.
Deductible temporary differences and loss carry-forwards for tax purposes for which deferred tax assets have not been recognised in the income statements and balance sheets:
| Group | 2008 | 2007 |
|---|---|---|
| Loss for tax purposes |
17,374 | 13,512 |
| 17,374 | 13,512 |
Deferred tax assets have not been recognised in respect of these losses for tax purposes since it has not yet been deemed likely that the Group will be able to utilise them against future taxable profits. The losses are attributable to parts of the Group's Norwegian and German operations, as well as to blocked losses in Sweden.
| Group | Balance 1 January 2008 |
Recognised in the income statement |
Recognised in equity |
Acquisition/disposal of business |
Balance 31 December 2008 |
|---|---|---|---|---|---|
| Non-current assets |
–11,463 | 1,408 | –5,666 | –2,874 | –18,595 |
| Current receivables and liabilities |
4,175 | 2,432 | 243 | 1,119 | 7,969 |
| Interest-bearing liabilities |
–5 | 5 | — | — | — |
| Provisions | –3,317 | 1,558 | 7,186 | 1,411 | 6,838 |
| Untaxed reserves |
–7,012 | –1,824 | 3,158 | — | –5,678 |
| Utilisation of loss carry-forwards |
8,491 | –4,714 | 819 | — | 4,596 |
| –9,131 | –1,135 | 5,740 | –344 | –4,870 |
| Parent company |
Balance 1 January 2008 |
Recognised in the income statement |
Recognised in equity |
Balance 31 December 2008 |
|---|---|---|---|---|
| Interest-bearing liabilities |
–5 | 5 | — | — |
| Current receivables and liabilities |
— | — | –154 | –154 |
| Provisions | 3,811 | 999 | — | 4,810 |
| 3,806 | 1,004 | –154 | 4,656 |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Personnel-related liabilities |
397,357 | 333,456 | 16,481 | 10,943 | |
| Accrued expenses, sub-consultants |
20,212 | 10,705 | — | — | |
| Other | 54,454 | 49,544 | 5,303 | 4,758 | |
| 472,023 | 393,705 | 21,784 | 15,701 |
Fair value and carrying amount are reported in the balance sheet below:
| Group 2008 | Group 2007 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Derivatives used in hedge accounting |
Financial assets valued at fair value via equity |
Accounts receivable and loan receivables |
Financial liabilities |
Total carrying amount |
Fair value | Derivatives used in hedge accounting |
Financial assets valued at fair value via equity |
Accounts receivable and loan receivables |
Financial liabilities |
Total carrying amount |
Fair value | |
| Financial investments | — | 1,269 | — | — | 1,269 | 1,269 | — | 946 | — | — | 946 | 946 |
| Non-current receivables | — | — | 2,104 | — | 2,104 | 2,104 | — | — | 2,026 | — | 2,026 | 2,026 |
| Accounts receivable | — | — | 978,706 | — | 978,706 | 978,706 | — | — | 799,854 | — | 799,854 | 799,854 |
| Other receivables | 7,010 | — | — | — | 7,010 | 7,010 | — | — | — | — | — | — |
| Cash and cash equivalents | — | — | 290,338 | — | 290,338 | 290,338 | — | — | 310,382 | — | 310,382 | 310,382 |
| Total | 7,010 | 1,269 1,271,148 | — 1,279,427 1,279,427 | — | 946 1,112,262 | — 1,113,208 1,113,208 | ||||||
| Liabilities to credit institutions | — | — | — | 95,716 | 95,716 | 94,733 | — | — | — | 64,815 | 64,815 | 64,684 |
| Other non-current liabilities | — | — | — | 6,610 | 6,610 | 6,610 | — | — | — | 25,470 | 25,470 | 25,470 |
| Current interest-bearing liabilities | — | — | — | 264,999 | 264,999 | 264,999 | — | — | — | 273,085 | 273,085 | 273,085 |
| Accounts payable – trade | — | — | — | 231,337 | 231,337 | 231,337 | — | — | — | 181,798 | 181,798 | 181,798 |
| Other liabilities | 217 | — | — | — | 217 | 217 | 206 | — | — | — | 206 | 206 |
| Total | 217 | — | — | 598,662 | 598,879 | 597,896 | 206 | — | — | 545,168 | 545,374 | 545,243 |
| Parent company 2008 | Parent company 2007 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Derivatives used in hedge accounting |
Financial assets valued at fair value via equity |
Accounts receivable and loan receivables |
Financial liabilities |
Total carrying amount |
Fair value | Derivatives used in hedge accounting |
Financial assets valued at fair value via equity |
Accounts receivable and loan receivables |
Financial liabilities |
Total carrying amount |
Fair value | |
| Accounts receivable | — | — | 2,760 | — | 2,760 | 2,760 | — | — | 2,995 | — | 2,995 | 2,995 |
| Other receivables | 7,010 | — | 39,936 | — | 46,946 | 46,946 | — | — | 11,838 | — | 11,838 | 11,838 |
| Cash and bank | — | — | 3,869 | — | 3,869 | 3,869 | — | — | 2,415 | — | 2,415 | 2,415 |
| Total | 7,010 | — | 46,565 | — | 53,575 | 53,575 | — | — | 17,248 | — | 17,248 | 17,248 |
| Convertible debenture | — | — | — | — | — | — | — | — | — | 7,613 | 7,613 | 7,613 |
| Liabilities to credit institutions | — | — | — | 240,785 | 240,785 | 240,785 | — | — | — | 243,195 | 243,195 | 243,195 |
| Accounts payable – trade | — | — | — | 55,195 | 55,195 | 55,195 | — | — | — | 27,307 | 27,307 | 27,307 |
| Other liabilities | — | — | — | 2,434 | 2,434 | 2,434 | — | — | — | 3,852 | 3,852 | 3,852 |
| Total | — | — | — | 298,414 | 298,414 | 298,414 | — | — | — | 281,967 | 281,967 | 281,967 |
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| < 30 days |
311,604 | 118,676 | 1,633 | 34 |
| 30–90 days |
52,762 | 26,774 | 365 | 8 |
| 91–180 days |
33,554 | 21,096 | — | 5 |
| > 180 days |
22,812 | 19,690 | 28 | — |
| Total | 420,732 | 186,236 | 2,026 | 47 |
| Group | Parent company | |||
|---|---|---|---|---|
| Provision for doubtful receivables |
2008 | 2007 | 2008 | 2007 |
| Provision at start of year |
4,310 | 5,722 | — | — |
| Provision for probable losses |
16,471 | 1,983 | — | — |
| Realised losses |
–172 | –31 | — | — |
| Recovered losses |
–616 | –3,364 | — | — |
| Provision at end of year |
19,993 | 4,310 | — | — |
Fair value agrees in all essentials with recognised value, except in the case of certain fixed-interest non-current liabilities to credit institutions and the convertible debenture loan (Notes 19 and 20).
The following provides a summary of the main methods and assumptions used to determine the fair value of the Group's financial instruments.
Fair value is based on the quoted market price at the end of the reporting period less transaction costs.
Forward contracts are valued at market value.
Non-current liabilities are valued by adding to the loan the discounted interest rate difference between the agreed loan interest rate and the market rate up to maturity for equivalent loans.
The Group's overall risk management policy is intended to reduce financial risks to a level which is reasonable for ÅF AB. The aim is to ensure cost-effective financing while minimising the negative effects of market fluctuations on the Group's earnings. Derivative instruments are used to hedge some risk exposure.
The Group's risk management is handled centrally by the parent company's Corporate Finance department on the basis of policies adopted by the Board of Directors. Corporate Finance identifies, evaluates and hedges financial risks in close collaboration with the Group's operating units.
The Group is exposed to many different kinds of financial risk through its operations, including exchange rate risk, interest rate risk, credit risk and financing risk.
Exchange rate risk covers future business transactions, recognised assets and liabilities in foreign currency, and net investments in foreign operations. Exchange rate risk is relatively limited in the ÅF Group.
Loans are raised, and investments made, in the functional currency.
Translation exposure consists of the net assets and profit/loss of foreign subsidiaries in foreign currency. In line with Group policy, ÅF does not hedge translation exposure.
Exchange rate risks are relatively limited as most payments are made in the functional currency. Where this is not the case, large sums are hedged using derivatives. The Group classifies the forward contracts used for hedging forecast transactions as cash flow hedges. The net fair value of these forward contracts was equivalent to SEK 6,793,000 (2007: SEK –206,000). Assets totalled SEK 7,010,000 (SEK 42,000) and liabilities totalled SEK 217,000 (SEK 248,000). Receivables of SEK 7,010,000 are recognised in the balance sheet under Other receivables. Liabilities of SEK 217,000 are recognised in the balance sheet under Other liabilities.
| 2008 | 2007 | |||
|---|---|---|---|---|
| Receivables | Fair value | Book value | Fair value | Book value |
| EUR | 2,388 | 2,388 | — | — |
| USD | 587 | 587 | 42 | 42 |
| CHF | 4,035 | 4,035 | — | — |
| Liabilities | ||||
| EUR | 217 | 217 | 87 | 87 |
| DKK | — | — | 161 | 161 |
| Net | 6,793 | 6,793 | –206 | –206 |
In accordance with ÅF policy, the Group's cash and cash equivalents are deposited in bank accounts at local banks. There are no other material interest-bearing assets, and so income and cash flows from operating activities are essentially independent of changes in market interest rates.
Liabilities to credit institutions consist largely of bank loans at floating interest rates, but since indebtedness is not very great, the exposure to changes in market interest rates is not significant. Information about the terms of the loans, annual rates and maturity structure is provided in Note 19.
Credit risk is a result of the company having at all times a substantial number of outstanding trade receivables, as well as fees earned but not invoiced, in other words the credit granted to clients. This risk is limited through the Group's well-established principles for ensuring that sales are made to clients with an appropriate payment history, and through advance payments. ÅF's ten largest clients, who together account for 21 percent of the Group's invoiced sales, are all large listed companies or government institutions. There is, therefore, not deemed to be any significant credit risk with regard to any single major client. Counterparties for derivative contracts and cash transactions are limited to financial institutions with a high credit rating. Historically ÅF has suffered very limited credit losses.
Financing risk is the risk of not being able to obtain financing at all, or only at a greatly inflated price. For ÅF, prudent management of financing risk means having adequate cash and cash equivalents and committed credit lines.
81 percent of the Group's total borrowings at the close of the reporting period comprise loans at floating interest rates. A change of +/– 1 percent in the annual average interestrate on these loans affects interest expense by +/– SEK 2.7 million.
32 percent of the Group's earnings arise from foreign units, with 11 percent arising from units which have the euro (EUR) as their functional currency and 14 percent with CHF as the local currency. A change of +/– SEK 0.25 in the average exchange rate for the euro in 2008 would have affected pre-tax earnings by +/– SEK 1.3 million, and a change of +/– SEK 0.25 in the average exchange rate for CHF would have affected pre-tax earnings by +/– SEK 2.6 million.
Operating leases cover rental agreements for properties, leasing agreements for vehicles under which employees assume all the financial risks and benefits associated with the vehicles, and the lease of certain items of office equipment. Vehicles are generally leased for three years. The outstanding leasing stock is worth approximately SEK 35,000,000 (SEK 27,000,000).
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Within one year |
119,544 | 109,053 | 82,993 | 72,485 |
| 1–5 years |
436,228 | 436,330 | 373,451 | 385,277 |
| More than 5 years |
444,261 | 458,912 | 416,906 | 457,524 |
| 1,000,033 | 1,004,295 | 873,350 | 915,286 |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Premises | 110,397 | 102,174 | 72,051 | 60,194 | |
| Other | 23,086 | 22,700 | 724 | 684 | |
| 133,483 | 124,874 | 72,775 | 60,878 |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Pledged assets |
|||||
| In the form of pledged assets for the Group's own liabilities and provisions |
|||||
| Property mortgages |
74,336 | 41,485 | — | — | |
| Floating charges |
117,890 | 132,755 | — | — | |
| Blocked bank accounts |
230 | 38 | — | — | |
| Pledged assets, others |
2,207 | 5,243 | — | — | |
| Total pledged assets |
194,663 | 179,521 | — | — | |
| Contingent liabilities |
|||||
| Guarantees, FPG/PRI |
1,074 | 1,059 | 544 | 543 | |
| Other guarantees |
— | — | — | — | |
| Sureties given for the benefit of subsidiaries |
— | — | 53,954 | 140,372 | |
| Sureties given |
319,240 | 159,003 | 121,949 | — | |
| Total contingent liabilities |
320,314 | 160,062 | 176,447 | 140,915 |
Sureties refer primarily to performance guarantees for quotations and the completion of projects.
The Group does not anticipate that any contingent assets will arise.
The parent company has a related party relationship with its subsidiaries, see Note 30.
The term "related parties" in the Group refers primarily to Ångpanneföreningen's Foundation for Research and Development and associated companies. Transactions with these parties have taken place on market terms.
| Year | Sale of services to related parties |
Purchase of services from related parties |
Liabilities to related par ties: 31 Dec. |
Receivables from related parties: 31 Dec. |
|
|---|---|---|---|---|---|
| Associated companies |
2008 | 13,811 | 4,289 | — | 1,259 |
| Associated companies |
2007 | 9,114 | 2,532 | — | 722 |
| Ångpanneföreningen's Foundation for R&D |
2008 | 373 | — | — | — |
| Ångpanneföreningen's Foundation for R&D |
2007 | 271 | — | — | 28 |
During 2008, in addition to the above, the Group received grants from Ångpanneföreningen's Foundation for Research and Development amounting to SEK 3,392,000 (2007: SEK 1,914,000). These grants were for projects administered by the Group.
For remuneration to senior executives, see Note 8.
| Year | Sale of services to related parties |
Purchase of services from related parties |
Liabilities to related par ties: 31 Dec. |
Receivables from related parties: 31 Dec. |
|
|---|---|---|---|---|---|
| Subsidiaries | 2008 | 256,140 | 14,734 | 241,548 | 892,621 |
| Subsidiaries | 2007 | 126,409 | 11,572 | 79,050 | 687,292 |
| Associated companies |
2008 | 945 | — | — | 129 |
| Associated companies |
2007 | 781 | — | — | 60 |
| Ångpanneföreningen's Foundation for R&D |
2008 | 153 | — | — | — |
| Ångpanneföreningen's Foundation for R&D |
2007 | 271 | — | — | 28 |
| Companies owned directly by the parent company |
2008 | 2007 | |||||
|---|---|---|---|---|---|---|---|
| Corporate ID | Reg'd office | Number of shares |
Interest, percent 1) |
Carrying amount |
Interest, percent 1) |
Carrying amount |
|
| ÅF-System AB |
556092-4044 | Stockholm | 60,000 | 100 | 71,517 | 100 | 71,517 |
| ÅF-Infrastruktur AB |
556185-2103 | Stockholm | 1,000 | 100 | 278,507 | 100 | 258,507 |
| ÅF-Consult AB |
556101-7384 | Stockholm | 50,000 | 100 | 582,798 | 100 | 582,798 |
| ÅF-Kontroll AB |
556033-5977 | Stockholm | 20,000 | 100 | 73,923 | 100 | 73,923 |
| AB Ångpanneföreningen |
556158-1249 | Stockholm | 2,000 | 100 | 155 | 100 | 155 |
| ÅF-Teknik & Miljö AB |
556534-7423 | Stockholm | 3,076 | 100 | 10,494 | 100 | 10,494 |
| ÅF-Engineering s.r.o |
263 66 550 |
Czech Rep. |
20,000 | 10 | 1,069 | 10 | 1,069 |
| ÅF-Brasil Consultoria Em Processos Industrias Ltda |
08.164.752/0001-08 | Brazil | 10 | 1 | 1 | 1 | — |
| 1,018,464 | 998,463 |
1) Participating interest refers to both the voting share and the proportion of the total number of shares.
| Value carried forward |
1,018,464 | 998,463 |
|---|---|---|
| Disposals | — | — |
| Impairment | — | — |
| Shareholders' contributions |
20,000 | 238,856 |
| Acquisitions | 1 | 1,069 |
| Carrying amount brought forward |
998,463 | 758,538 |
| 2008 | 2007 | |
| Comprehensive list of Group subsidiaries |
2008 | 2007 | |||||
|---|---|---|---|---|---|---|---|
| Corporate ID | Reg'd office | Number of shares |
Interest percent 1) |
Carrying amount |
Interest percent 1) |
Carrying amount |
|
| ÅF-System AB |
556092-4044 | Stockholm | 60,000 | 100 | 71,517 | 100 | 71,517 |
| Arjano Data AB |
556257-0563 | Stockholm | — | 100 | — | 100 | — |
| ÅF-Combra AB |
556562-3245 | Sollentuna | — | 100 | — | 100 | — |
| Combra Industriteknik AB |
556498-6221 | Sollentuna | — | 100 | — | 100 | — |
| Combra Systemutveckling AB |
556498-6239 | Sollentuna | — | 100 | — | 100 | — |
| Combra Syd AB |
556662-7203 | Lund | — | 100 | — | 100 | — |
| ÅF-Infrastruktur AB |
556185-2103 | Stockholm | 1,000 | 100 | 278,507 | 100 | 258,507 |
| ECC Teknik AB |
556446-9855 | Falun | — | — | — | 100 | — |
| Elektrokonsult i Jönköping AB |
556069-7103 | Jönköping | — | — | — | 100 | — |
| Ingenjörsbyrån Elektrokonsult Civilingenjör Lars Svensson AB |
556320-3602 | Gothenburg | — | — | — | 100 | — |
| Lekab i Dalarna AB |
556142-1818 | Orsa | — | — | — | 100 | — |
| LHT Konsult AB |
556209-3160 | Uppsala | — | — | — | 100 | — |
| ÅF-Infraplan AB |
556345-9600 | Umeå | — | — | — | 100 | — |
| SwedRail AB |
556209-1644 | Stockholm | — | 100 | — | 100 | — |
| ÅF-Installation AB |
556070-5039 | Stockholm | — | 100 | — | 100 | — |
| JämtTeknik vid Storsjön AB |
556601-0624 | Östersund | — | 100 | — | 100 | — |
| SIDUS Konsult AB |
556371-7874 | Stockholm | — | 100 | — | 100 | — |
| ÅF-Funktionspartner AB |
556099-8071 | Malmö | — | 100 | — | 100 | — |
| ÅF-STIBI AB |
556583-9973 | Stockholm | — | 100 | — | 100 | — |
| Nordblads VVS-Konstruktioner AB |
556460-5797 | Malmö | — | 100 | — | — | — |
| BergBygg Konsult AB |
556471-5976 | Solna | — | 100 | — | — | — |
| JTASS AB |
556759-2851 | Kungsbacka | — | 100 | — | — | — |
| Igernta AB |
556755-8175 | Alingsås | — | 100 | — | — | — |
| ÅF-Ingemansson AB |
556067-5067 | Malmö | — | 100 | — | 100 | — |
| ÅF-Ingemansson Automotive AB |
556555-2022 | Malmö | — | — | — | 100 | — |
| ÅF-Brekke & Strand akustikk AS |
959 138 923 |
Norway | — | 100 | — | 100 | — |
| ÅF-Consult AS |
955 021 037 |
Norway | — | 100 | — | 100 | — |
| Benolund AS |
977 263 425 |
Norway | — | — | — | 100 | — |
| ÅF-Hansen & Henneberg AS |
13 59 08 85 |
Denmark | — | 80 | — | 80 | — |
| ÅF-Consult AB |
556101-7384 | Stockholm | 50,000 | 100 | 582,798 | 100 | 528,798 |
| Graphium Consult AB |
556056-2018 | Stockholm | — | — | — | 100 | — |
| ÅF-Proinstall Sp.z.o.o |
0000252538 | Poland | — | — | — | 99 | — |
| ÅF-Energi & Miljö AB |
556329-2159 | Stockholm | — | 100 | — | 100 | — |
| Göteborg Energi International AB |
556317-6014 | Gothenburg | — | 100 | — | 100 | — |
| ZAO AF Lonas Holding |
1 089 847 318 923 |
Russia | — | 100 | — | — | — |
| ZAO Lonas Technologia |
1 037 808 021 228 |
Russia | — | 75 | — | — | — |
| ÅF-Process GmbH |
218 403 818 |
Germany | — | 90 | — | 90 | — |
| ÅF-Process b.v |
09157996 | Netherlands | — | 100 | — | 100 | — |
1) Participating interest refers to both the voting share and the proportion of the total number of shares.
| Comprehensive list of Group subsidiaries |
2008 | ||||||
|---|---|---|---|---|---|---|---|
| Corporate ID | Reg'd office | Number of shares |
Interest percent 1) |
Carrying amount |
Interest percent 1) |
Carrying amount |
|
| ÅF Brasil Consultoria Em Processos Industrias Ltda |
08.164.752/0001-08 | Brazil | — | 99 | — | 99 | — |
| ÅF-Colenco AG |
CH-400.3.924.101-4 | Switzerland | — | 100 | — | 100 | — |
| International Power Design Ltd. |
CH-400.3.025.445-4 | Switzerland | — | 100 | — | 100 | — |
| Colenco Italia S.r.l |
MI-1808529 | Italy | — | 100 | — | 100 | — |
| Colenco Engineering S.R.L. |
17 669 779 |
Romania | — | 51 | — | 51 | — |
| Colenco Thailand Ltd. |
3 011 879 733 |
Thailand | — | 100 | — | 100 | — |
| ÅF-Consult Oy |
FI18001896 | Finland | — | 100 | — | 100 | — |
| LLC AF-Enprima |
1037800096641 | Russia | — | 95 | — | 100 | — |
| AF-Estivo AS |
10 449 422 |
Estonia | — | 100 | — | 100 | — |
| UAB AF-Enprima |
300 544 325 |
Lithuania | — | 100 | — | 100 | — |
| UAB AF-TPS |
135 744 077 |
Lithuania | — | 100 | — | — | — |
| Elron Oy |
FI21206454 | Finland | — | 50 | — | — | — |
| Enprima Engineering Oy |
18 001 896 |
Finland | — | 100 | — | 100 | — |
| Enprima Engineering GmbH |
24/388/00843 | Germany | — | 100 | — | 100 | — |
| Fortum Engineering S.r.l |
R10224145 | Romania | — | 100 | — | 100 | — |
| Fortum Engineering UK in liquidation |
2 873 332 |
England | — | 100 | — | 100 | — |
| ÅF A/S |
21 007 994 |
Denmark | — | 100 | — | 100 | — |
| ÅF Engineering Oy |
0725503-0 | Finland | — | 100 | — | 100 | — |
| ÅF Engineering AS |
936 097 367 |
Norway | — | 100 | — | 100 | — |
| Benima AB |
556212-3728 | Mölndal | — | 100 | — | 100 | — |
| Benima SydOst AB |
556443-6722 | Kalmar | — | — | — | 100 | — |
| Benima Mellan AB |
556366-5156 | Stockholm | — | — | — | 100 | — |
| Benima Norr AB |
556223-5621 | Piteå | — | — | — | 100 | — |
| Cordinor Energi & Miljö AB |
556344-7787 | Luleå | — | — | — | 100 | — |
| ÅF-Engineering AB |
556224-8012 | Stockholm | — | 100 | — | 100 | — |
| OrbiTec AB |
556470-7015 | Jönköping | — | 100 | — | — | — |
| Industrial Vision Systems IVS AB |
556447-3329 | Jönköping | — | 100 | — | — | — |
| ÅF Engineering s.r.o |
263 66 550 |
Czech Rep. |
— | 90 | — | 90 | — |
| ÅF-Automaatika OÜ |
11297301 | Estonia | — | 100 | — | 100 | — |
| ÅF-Kontroll AB |
556033-5977 | Stockholm | 20,000 | 100 | 73,923 | 100 | 73,923 |
| Kvalitetsteknik NDT AB |
556227-5874 | Stenungssund | — | 100 | — | — | — |
| ÅF-Qualitest s.r.o |
474 72 448 |
Czech Rep. |
— | 100 | — | — | — |
| UAB AF-Inspection |
301 845 573 |
Lithuania | — | 100 | — | — | — |
| AB Ångpanneföreningen |
556158-1249 | Stockholm | 2,000 | 100 | 155 | 100 | 155 |
| ÅF-Teknik & Miljö AB |
556534-7423 | Stockholm | 3,076 | 100 | 10,494 | 100 | 10,494 |
| ÅF-Engineering s.r.o |
263 66 550 |
Czech Rep. |
20,000 | 10 | 1,069 | 10 | 1,069 |
| ÅF-Brasil Consultoria Em Processos Industrias Ltda |
08.164.752/0001-08 | Brazil | 10 | 1 | 1 | 1 | — |
| 1,018,464 | 998,463 |
1) Participating interest refers to both the voting share and the proportion of the total number of shares.
| Accumulated depreciation in excess of plan |
2008 | 2007 |
|---|---|---|
| Opening balance 1 January |
1,638 | — |
| Depreciation during the year, equipment & fittings |
10,880 | 1,638 |
| Closing balance 31 December |
12,518 | 1,638 |
At the beginning of 2009 it became apparent that demand for consulting operations related to product development was starting to fall. In consequence, redundancy notices were issued to around 80 co-workers in the consulting operations and in ÅF's parent company on 17 February.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Dividends received |
— | 12 | 173 | — | |
| Interest received |
12,976 | 13,291 | 29,227 | 27,519 | |
| Interest paid |
–19,626 | –17,080 | –16,728 | –13,883 | |
| –6,650 | –3,777 | 12,672 | 13,636 |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Depreciation/amortisation | 54,060 | 48,827 | 5,090 | 4,370 | |
| Impairment/retirements | 8,599 | 11,298 | 3,864 | 4,695 | |
| Other | 3,381 | 13,479 | 4,702 | 4,592 | |
| 66,040 | 73,604 | 13,656 | 13,657 |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Acquisition of assets through financial lease |
13,791 | 13,199 | — | — | |
| Conversion of convertible loan |
7,608 | 46,075 | 7,608 | 46,075 |
The Group makes estimates and assumptions about the future. By definition, the resulting accounting estimates will rarely correspond to the actual outcome. Estimates and judgements are reviewed regularly and are based on historical experience and other factors, including the expected outcomes of future events that are considered reasonable under the circumstances.
Estimates and assumptions which, if they prove to be incorrect, can result in material adjustments to the carrying amounts of assets and liabilities during the coming financial year are presented below.
When calculating the recoverable amount of cash-generating units, a number of assumptions about future circumstances and estimates of parameters have been made. Changes to these assumptions and estimates could have an effect on the carrying amount of goodwill (see Note 13).
Forecasts used in respect of future cash flows are based on the forecast made by the company management for the next year supplemented by an individual assessment of a further four years. From that point onwards the calculation is based on an annual growth rate of 2 percent. The forecast cash flows have been discounted to present value at a discount rate of 11.4 percent before tax.
The impairment test for the year did not give rise to any impairments.
A lower assumed rate of growth would result in a lower recoverable amount. The reverse applies if the calculation of the recoverable amount is based on a higher assumed growth rate. Were future cash flows to be discounted at a higher rate of interest, the recoverable amount would be lower; conversely, the recoverable amount would be higher with a lower discount rate.
The Group's net obligations under defined-benefit plans are calculated separately for each plan by estimating the future benefits earned by employees through their employment in prior periods. These benefits are discounted to present value. The calculation of the size of the Group's total retirement benefit obligations is based on a number of assumptions (see Note 21). The discount rate is the market yield at the end of the reporting period on government bonds with a maturity corresponding to that of the Group's estimated average retirement benefit obligations. The discount rate used is 4.0 percent in Sweden and 3.6 percent in Switzerland. The calculations have been performed by a qualified actuary using the projected unit credit method. Were a lower discount rate to be used, the obligations would increase and have a negative effect on the Group's equity. The reverse applies if a higher discount rate is used.
The percentage of completion method is applied to all assignments whose outcome can be measured reliably. The majority of assignments are performed on an open-account basis, and clients are normally invoiced the month after the work is carried out. Where assignments are carried out on a fixed-price basis, revenue is recognised in the income statement on the basis of the stage of completion at the end of the reporting period. The stage of completion is determined by having an assignment manager make an assessment of the amount of work that has been completed in relation to the amount of work still remaining. In the event of significant uncertainty about its value, no revenue is recognised.
AB Ångpanneföreningen changed its name to ÅF AB on 5 May 2008 when the Swedish Companies Registration Office registered the change in the Articles of Association.
ÅF AB is registered in Sweden as a joint-stock company. The parent company's shares are listed on the OMX Nordic Exchange in Stockholm. The company's registered office is Frösundaleden 2, SE-169 99 Stockholm, Sweden.
The Group consolidated accounts for the financial year 2008 comprise the accounts for the parent company and its subsidiaries, which together form "the Group". The Group also includes participations in associated companies.
The undersigned declare that the consolidated accounts and annual report have been drawn up in accordance with IFRS, as approved by the EU, and with generally accepted accounting practice, to give a faithful representation of the position and performance of the Group and the company, and that the Group administration report and the administration report give a faithful review of the progress of the Group's and the company's operations, position and performance, as well as describing the material risks and uncertainty factors to which the companies that are members of the Group are exposed.
Stockholm, Sweden – 12 March 2009
Ulf Dinkelspiel Jonas Wiström Patrik Enblad Chairman of the Board President/CEO Director
Director Director Director
Tor Ericson Magnus Grill Eva-Lotta Kraft
Jon Risfelt Helena Skåntorp Lena Treschow Torell Director Director Deputy Chair
Eva Lindén Patrik Tillack Employee representative Employee representative
Our Audit Report was presented on 12 March 2009
Ernst & Young AB
Lars Träff Authorised Public Accountant
To the Annual General Meeting of ÅF AB Corporate Identity Number 556120–6474
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President/CEO of ÅF AB for the financial year 2008. The annual accounts and the consolidated accounts of the company are included in the printed version of this document on pages 68–122. The Board of Directors and the President/CEO are responsible for these accounts and the administration of the company as well as for the application of the Swedish Annual Accounts Act when preparing the annual accounts and the application of international financing reporting standards (IFRS) as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the President/CEO and significant estimates made by the Board of Directors and the President/ CEO when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our
opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the President/CEO. We also examined whether any board member or the President/CEO has, in any other way, acted in contravention of the Swedish Companies Act, the Swedish Annual Accounts Act or the company's Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.
The annual accounts have been prepared in accordance with the Swedish Annual Accounts Act and give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financing reporting standards (IFRS) as adopted by the EU and the Annual Accounts Act and give a true and fair view of the Group's financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.
We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the Group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report and that the members of the Board of Directors and the President/CEO be discharged from liability for the financial year.
Stockholm, Sweden – 12 March 2009
Ernst & Young AB
Lars Träff Authorised Public Accountant
ÅF AB is a Swedish public company with its registered office in Stockholm. The company's class B shares are listed on the Stockholm Stock Exchange. ÅF is governed in accordance with Swedish company law, the company's articles of association, the listing agreement for the company's shares traded on the OMX Nordic Exchange in Stockholm and the Swedish Code of Corporate Governance. ÅF also complies with other applicable Swedish and foreign laws and regulations that govern its operations. The application in practice of the Swedish Code of Corporate Governance at ÅF began during 2005.
This corporate governance report does not form part of the formal annual report documents, and has not been reviewed by the Company's auditors.
Since January 1986, ÅF's class B shares have been listed on the Stockholm Stock Exchange. Total market capitalisation at the close of the year amounted to SEK 2,022 million. Shares in ÅF are issued in two classes: A and B. Each class A share carries an entitlement to ten votes, and each class B share carries an entitlement to one vote. All shares carry the same right to participate in the company's assets and profits, and entitle shareholders to the same dividend. For the distribution of the number of shares and votes, and for the ownership structure, you are referred to pages 52–54.
On request, shares of class A can be converted into shares of class B. Such a conversion request must be made in writing to the Board of Directors in January or February. After the conversion is approved, it is
to be reported to the Swedish Companies Registration Office. Conversion takes effect on registration.
ÅF's dividend policy lays down that share dividends are to be equivalent to roughly 50 percent of the consolidated profit after tax, excluding capital gains. Due attention should, however, be given to, among other factors, the company's financial position and capital requirements for future expansion.
An Annual General Meeting of ÅF shareholders is held in Stockholm or Solna during the first half of each calendar year. The date and venue for the AGM are announced no later than in conjunction with the third quarterly report. Information about the right of shareholders to raise matters for consideration at the meeting, as well as information regarding the dates by which such a request must be received by the company to ensure that the matter will be included in the notice convening the AGM, are also communicated to shareholders no later than in conjunction with the publication of the third quarterly report.
The procedure for convening the shareholders' meeting is set out in the articles of association. Notification of the meeting is to be given through advertisements in the Swedish Official Gazette (Post- och Inrikes Tidningar), and in the business newspaper, Dagens Industri. Notification of an ordinary shareholders' meeting (AGM) and notification of other shareholders' meetings, at which any changes to the
articles of association are to be discussed, must be given no earlier than six weeks and no later than four weeks before the meeting. Notifications of other shareholders' meetings are to be issued no earlier than six weeks and no later than two weeks before the meeting.
At the AGM information is provided on the company's performance over the past year, and resolutions are passed on a number of issues of central importance, such as amendments to the articles of association, the election of auditors, the discharge of the Board of Directors from liability, the remuneration of the Board of Directors and the auditors, the determination of the number of directors, the election of the Board of Directors for the period until the close of the next AGM and the approval of a dividend. The board, the senior management group and the auditors are normally present to answer questions.
To be entitled to participate in shareholders' meetings and vote for the shares they hold, shareholders must be entered in the share register and must duly notify the company of their intention to participate before the specified deadline. Shareholders who are unable to be present in person may participate through a proxy.
The AGM for 2008 was held at what was then the ÅF Group's head office in Stockholm on 23 April. It was attended by 89 shareholders, representing 45 percent of the share capital and 61 percent of the total number of votes. The minutes of the AGM meeting have since been published on the company's website in Swedish and English, together with all the documentation that was issued according to requirements prior to the AGM.
The 2009 Annual General Meeting will be held at ÅF's new headquarters (address: Frösundaleden 2, Solna, Stockholm) at 17.00 (5 p.m.) on 5 May.
The Annual General Meeting determines how the Nomination Committee is to be appointed. The 2008 AGM resolved that, for the period until a new Nomination Committee is appointed under a mandate from the next AGM, the Nomination Committee shall consist of the Chairman of the Board together with one representative from each of the company's three largest shareholders as at the end of the third quarter. The Nomination Committee shall appoint a Chair from the largest shareholder in terms of votes. In the event that any member of the Nomination Committee should leave before the work of the committee is completed, if it is considered necessary to appoint a successor, this successor shall then be appointed by the same shareholder who appointed the departing member or, if the shareholder in question is no longer one of the three largest shareholders, by another as yet unrepresented shareholder from among the three largest shareholders. No fees are paid to members of the Nomination Committee.
The composition of the Nomination Committee for the 2009 AGM was announced on 1 November 2008. The Nomination Committee consists of Anders Snell, Chair, representing Ångpanneföreningen's Foundation for Research & Development, Ulf Dinkelspiel, Chairman of the Board of ÅF, Åsa Nisell, Swedbank Robur, and Peter Rudman, Nordea Fonder.
Under the authority of a resolution passed at ÅF's 2008 AGM, the Nomination Committee is to draw up and present proposals for submission to the 2009 AGM on the Chairman for the Annual General Meeting, the Board of Directors and the Chairman of the Board of Directors, the directors' fees (divided among the Chairman and directors, and as remuneration for committee work) and auditors' fees. The Nomination Committee will also propose rules for the work of the Nomination Committee in preparation for the 2010 AGM.
Since the 2008 AGM the Nomination Committee has held three minuted meetings and maintained contact between meetings. To assess how well the present Board of Directors meets the demands that will be placed on the board in consequence of the company's position and future focus, the Nomination Committee has discussed the size and composition of the board in relation, for example, to experience in the industry and specialist expertise. As a basis for its work, the Nomination Committee has also familiarised itself with assessments of the board and its work.
The Nomination Committee's proposals, the report of the Nomination Committee's work prior to the 2009 AGM, along with supplementary information on the proposed members of the board will be published in connection with the notice convening the 2009 AGM, and will be presented to the shareholders' meeting.
The Board of Directors is elected by the shareholders at the Annual General Meeting with a term of office until the close of the next Annual General Meeting. The board manages the company on behalf of the shareholders by setting targets and adopting strategies, evaluating the operational management and ensuring that systems are in place to follow up and check the performance of the company with regard to the targets that have been adopted.
The board is also responsible for ensuring that correct information is given to the company's stakeholders, that laws and regulations are complied with and that ethical guidelines and internal policies are established. The board's approach to ensuring the quality of financial reporting is detailed in the section on Internal Controls in respect of the financial reports below.
The Board of Directors of ÅF shall consist of a minimum of six and a maximum of ten members, with a maximum of five deputies. These directors and their deputies are elected by the general meeting of shareholders. The 2008 AGM elected eight directors with no deputies. The President/CEO is not a member of the board. The company's employees are, however, represented on the board.
The Chairman of the Board leads the work of the board and is responsible for ensuring that this work is well organised and efficiently conducted, and that the board discharges its duties properly. The Chairman maintains regular contact with the President/CEO to monitor the Group's operations and progress in strategic issues. The Chairman of the Board also represents the company in matters relating to ownership.
Since the 2008 AGM the board has consisted of eight directors without deputies. The 2008 AGM re-elected Ulf Dinkelspiel, Patrik Enblad, Magnus Grill, Eva-Lotta Kraft, Jon Risfelt, Helena Skåntorp and Lena Treschow Torell, and Tor Ericson was elected to serve a first term as a director of the company. Ulf Dinkelspiel was elected by the AGM to serve as Chairman of the Board up until the next AGM. The board subsequently elected Lena Treschow Torell as its Deputy Chair. A more detailed presentation of the board follows on pages 132–133.
The composition of the board of ÅF meets the requirements for independent directors laid down by the Stockholm Stock Exchange and the Swedish Code of Corporate Governance. Magnus Grill (Director) holds a position of dependence with regard to the largest shareholder, Ångpanneföreningen's Foundation for Research & Development. Tor Ericson (Director) holds a position of dependence with regard to ÅFOND (the ÅF Group Trust) and the company itself.
In addition to the inaugural board meeting, which is held in connection with the AGM, the ÅF Board is required to meet at least four times per year. During 2008, in addition to the inaugural meeting, the board held nine meetings, of which one was per capsulam and two were telephone meetings, with supporting material sent out in advance. Four of the meetings were held in connection with the publication of the company's interim reports. In connection with the board meeting and strategy seminar in August, board members visited the company's office in Baden, Switzerland.
The work of the board revolves mostly around strategic issues, business plans, annual accounts, major investments and acquisitions, in addition to other decisions which, under the provisions of the company's rules for decision-making, are to be dealt with by the board. Reports on the progress of the company's operational activities and finances are a standing item on the agenda. At the meeting in August, a strategic seminar was held, which included a special review of each division. At every ordinary board meeting, there is a more in-depth presentation of one of the various lines of business.
On one occasion each year the board discusses issues related to succession planning for senior executives within the company.
Other key management personnel in ÅF have participated in board meetings to present reports. The Executive Vice President, Corporate Information, has served as secretary to the board.
| Remuneration | Audit | ||
|---|---|---|---|
| Board | Committee | Committee | |
| Number of meetings |
10 | 3 | 4 |
| Ulf Dinkelspiel |
10 | 3 | 4 |
| Patrik Enblad |
10 | ||
| Tor Ericson* |
6 | ||
| Magnus Grill |
9 | 3 | |
| Eva-Lotta Kraft |
10 | 4 | |
| Jon Risfelt |
10 | ||
| Helena Skåntorp |
8 | 4 | |
| Lena Treschow Torell |
8 | 3 | |
| Employee representatives: |
|||
| Eva Lindén |
10 | ||
| Patrik Tillack* |
6 | ||
| Oskar Strid, deputy** |
1 (inaug.) |
||
| Daniel Westman, deputy** |
1 (inaug.) |
* Joined the Board on 23 April 2008
** Deputy employee representatives do not normally attend board meetings
The work of the board is governed, in addition to laws and recommendations, by the board's formal work plan, which includes instructions for the division of responsibility between the board and the President/CEO. It is updated annually, and adopted by a formal resolution of the Board of Directors. The formal work plan lays down the tasks of the board, the division of responsibility within the board, the number of meetings, the dates and times of meetings and the main theme for each board meeting, as well as providing instructions for the agenda and the nature of the information required in order to consider a variety of issues, etc.
Once a year, the Chairman of the Board initiates an evaluation of the work of the board by issuing each director with a detailed questionnaire, which is answered anonymously. The questionnaire covers areas such as the climate of cooperation, the breadth of expertise available and the manner in which the work of the board has been carried out. The object of the evaluation is to obtain an understanding of how the work of the board has been carried out and what measures may be taken to improve the efficiency of this work. The results of the evaluation are discussed by the board and shared with the Nomination Committee.
The Board of Directors evaluates the work of the President/CEO on an ongoing basis, by monitoring the progress of the business against the targets that have been set. A formal evaluation is carried out annually, and the results are discussed with the President/CEO.
The AGM on 23 April 2008 approved remunerations totalling SEK 1,450,000 for the work of the board in 2008. The Chairman received SEK 400,000 and members of the board not employed by the Group received SEK 175,000 each.
In addition, it was resolved that, for the work carried out by the Audit Committee, a fee of SEK 75,000 should be paid to the Chair and a fee of SEK 35,000 to each committee member who is not employed by the Group. For the work carried out by the Remuneration Committee it was resolved that a fee of SEK 50,000 be paid to the Chair and a fee of SEK 35,000 to each committee member who is not employed by the Group. The total remuneration payable to the board is thus SEK 1,715,000, of which SEK 1,450,000 is for the ordinary work of the board and SEK 265,000 for committee work. Employee representatives receive no directors' fees.
It was also resolved that the auditors' fee will be payable against invoices.
At their inaugural board meeting the directors of the company appoint a Remuneration Committee which is tasked with considering matters relating to remuneration, retirement benefits and bonus programmes for the President/CEO and other senior executives in the company, and with presenting its proposals with regard to these to the board for ratification. Prior to the 2009 AGM the Remuneration Committee has met on three occasions. The Remuneration Committee consists of Ulf Dinkelspiel (Chair), Magnus Grill and Lena Treschow Torell. The President/CEO attends as a co-opted member, as does the Group CFO and the HR director.
The Audit Committee is a vital communications link between the board and the company's auditors. The Audit Committee supports the work of the board by ensuring the quality of the financial reports and following up the results of the reviews and audits carried out by the external auditors. The Internal Control staff support the Audit Committee in its work. The Audit Committee is appointed at the inaugural meeting of the board for one year at a time, and its work is regulated by the formal work plan that is adopted each year.
In the period since the 2008 AGM the Audit Committee has consisted of three directors of the company; Helena Skåntorp (Chair), Ulf Dinkelspiel and Eva-Lotta Kraft. All members are independent of the shareholders and the company management. In 2008 the committee held four minuted meetings. In addition, the committee's Chair has taken part in the auditors' report of the final accounts. The company's auditors participated in all Audit Committee meetings during the year. The President/CEO attends as a co-opted member, as does the Group CFO and the manager responsible for ÅF's corporate finance.
The Audit Committee's work of ensuring the quality of ÅF's financial reporting on a continuous basis involves analysing the auditors' report on the final accounts and routine reviews.
Auditors are appointed by the AGM every four years. The auditors work for and on behalf of the shareholders to audit the company's accounting records, the annual accounts and the administration of the Board of Directors and the managing director. The 2008 AGM elected the accounting firm Ernst & Young, represented by Lars Träff as auditor in charge, as the company's auditors to serve to the end of the AGM in 2011.
Ernst & Young carries out the audit of ÅF AB and major units. A "hard close" audit is performed for the period January–September and for the annual accounts. At the same time, an audit of internal routines and control systems is carried out. The audit of the annual accounts and the annual report takes place in January–February. During 2008 the auditors reported to the entire ÅF board on one occasion and, in addition, to the Audit Committee and to the President/CEO on four occasions.
Over and above the audit assignments, ÅF has used Ernst & Young for consultations relating to tax matters, for various accounting issues and for investigations in conjunction with major projects such as acquisitions. The remuneration paid to the auditors is shown in Note 7.
The Board of Directors has delegated operational responsibility for the administration of the company and the Group to the company's CEO. The CEO leads operations within the framework laid down by the board. The board has adopted instructions for the division of responsibility between the board and the CEO which are updated and approved each year.
The CEO has appointed a senior management group with day-to-day responsibility for various aspects of the Group's operation. During 2008 ÅF's senior management group consisted of the CEO, the divisional President/CEOs, the Executive Vice President for Corporate Information and the CFO. For information about the members of the senior management group, see pages 134–135.
ÅF's senior management group normally meets once a month, to discuss matters such as the Group's financial performance, acquisitions, group-wide development projects, succession planning and the availability of management resources and specialist expertise, together with various other strategic issues. The senior management group is assisted by the Information, Finance, HR, IT and Legal departments.
ÅF's business activities are organised into four divisions, each led by a Divisional President.
ÅF's organisation reflects a far-reaching strategy of decentralisation, in which each unit enjoys a considerable degree of autonomy and authority. Control of the divisions by the senior management group is exercised not only through regular contacts, but also and more closely through monthly internal reports presented by the Divisional Presidents and finance managers.
The Group has an authorisation plan and written rules for decisionmaking procedures that clearly define the authority exercised at every level in the company, from individual consultant to senior management. The areas covered include issuing quotations and making tenders, investments, rental and leasing agreements, overhead expenses and guarantees.
Approximately 62,000 assignments were carried out in 2008. The organisation for a project varies according to the size, location and complexity of the assignment. Each assignment is run by a contract manager. ÅF and its Swedish subsidiaries are certified under quality and environmental management systems in accordance with ISO 9001: 2000 (Quality) and ISO 14001: 2004 (Environment) for which audits are carried out on a regular basis by external auditors.
Fixed-price assignments with an invoice value that exceeds 200,000 euros are monitored at Group management level.
Sustainable development is founded on financial, social and environmental change. ÅF recognises its responsibility for the impact that the company has on society in these areas: for example, the effect that ÅF's business operations have on the natural environment and the influence it exerts on its employees, clients, suppliers and other stakeholders. As a consulting company ÅF is well-placed to influence the development of its clients' businesses, and in this respect ÅF bears a heavy responsibility for making sure that development is both successful and sustainable. ÅF's ambition is always to ensure long-term success and sustainable development for its clients and for ÅF itself. For further details of ÅF's work in the fields of sustainable development and corporate social responsibility, please refer to pages 23–26.
Under the provisions of the Swedish Companies Act and the Swedish Code of Corporate Governance, the ÅF Board is responsible for ensuring that ÅF implements an effective system of internal controls. Board members must keep themselves informed about the state of affairs in the company and evaluate the internal controls on a regular basis.
Internal controls at ÅF are so designed to ensure that the company's operation is efficient and fit for purpose and that financial reporting is reliable and complies with applicable laws and regulations.
A description of ÅF's internal control system is included in the process-orientated management system used for business control and business support. This system is firmly rooted in ÅF's mission, vision, goals and values, and it also describes the organisational structure, together with the authority and responsibility vested in the various roles in the operation. Additional components include HR policies and a focus on employee expertise. The process orientation of the management system guides users to the relevant routines and appropriate tools for the particular task in question, thus providing very good conditions to ensure compliance with requirements and the achievement of the objectives that have been set. The management system is available via the ÅF intranet to all those for whom it is intended.
ÅF divides its internal controls into the following components: Control environment, Risk assessment, Control measures, Information & communication, and Follow-up.
"Control environment" describes the organisation, decision paths, authority and responsibility for financial reporting. Requirements and expectations are laid down in the policies, process descriptions, routines and tools contained in the individual process (Finance) in the management system.
Through its operations, ÅF is exposed to a variety of business and financial risks. It is extremely important that these risks are dealt with effectively, that risk management routines are followed and that risk management tools are used. For a description of the financial risks to which ÅF is exposed and how these are managed, you are referred to the section on Sensitivity Analysis on pages 56–60. Risk assessment is also a high-priority aspect of the business processes to minimise risks in the technical, environmental and financial areas, and also to exploit opportunities to maximum advantage. Risk assessment is carried out annually on the processes included in the management system, and it forms part of the basis for the evaluation of the management system to ensure that these processes cover important areas affecting financial reports.
ÅF's financial reports depend on the implementation of a number of control measures in all areas that affect financial reporting. ÅF controllers are responsible at Group, Division and Business area level for carrying out internal controls on their respective level. They monitor operations by following up and analysing budgets, forecasts, trends and results. The evaluation of assignments, as well as the assessment of
risks and calculations associated with the assignments, also forms part of internal control measures. Reports are submitted regularly to the appropriate management level.
Information about and the communication of policies, process descriptions, routines and tools applicable to financial reports are contained in the management system which is available via the ÅF intranet to all those for whom it is intended. Updates are carried out in the event of any changes in internal or external requirements or expectations on financial reports.
ÅF's system for financial management and control paves the way for effective financial follow-up procedures throughout ÅF. Reports are submitted monthly for each profit centre, and the reports on the financial performance of assignments reflect the highest standards of reliability and detail. This system also supports the follow-up of internal controls in respect of financial reports. Identified errors and any measures that are taken are reported to the next level up in the line organisation. ÅF's internal auditing carries out independent audits to monitor whether the internal control and management systems live up to ÅF's internal ambitions at the same time as they comply with external requirements and expectations. Prioritised areas for ÅF's internal audits are the ÅF brand, ÅF's values and ethics, processes and systems, as well as the assignments that ÅF has undertaken. Reports are submitted to the President/CEO and the board's Audit Committee.
ÅF keeps the market continually updated on the Group's financial position and performance through interim and annual reports in both Swedish and English. In addition, press releases are issued relating to news and events that may be considered to have an effect on ÅF's share price. Presentations are made to shareholders, financial analysts and investors in Sweden and abroad. ÅF also hosts an annual Capital Market Day in Stockholm in September. The information described above is also published on the Group's website, www.afconsult.com.
Born 1939. Graduate business administrator, Stockholm School of Economics. Ambassador, E Öhman j:or AB.
Director of ÅF AB since 2004 and Chairman since 2007. Chairman of Landshypotek AB, Sveriges Allmänna Hypoteksbank, Springtime AB, the Sweden in Europe Foundation, the Association for Swedes Worldwide and ICC Sweden. Director of E. Öhman j:or AB, Nordnet AB, Premiefinans AB and Bockholmen Hav och Restaurang AB. Member of the Royal Swedish Academy of Engineering Sciences (IVA). Shareholding in ÅF: 29,000 shares
Born 1966. Director of ÅF AB since 2007. Founder of and partner in Böös Enblad AB. Director of ORC Software AB and the Royal Swedish Yacht Club (KSSS). Shareholding in ÅF: 2,000 shares
Born 1968, M.Sc. (Mechanical Engineering) from the Royal Swedish Institute of Technology (KTH). Director of ÅF AB since 2008. Chairman of the Board of the ÅFOND Foundation. Chairman of ICES (Innovative Centre of Embedded Systems) at the Royal Swedish Institute of Technology (KTH). Active as section leader in ÅF's Infrastructure Division. Shareholding in ÅF: 381 shares
Born 1945. Graduate business administrator. Director of ÅF AB since 2002. Chair of Ångpanneföreningen's Foundation for Research and Development since 2006. Chairman of the Board of HS Kraft AB, Värmeforsk and Värmeforsk Service AB Shareholding in ÅF: 250 shares
Born 1951. M.Sc. (Chemical Engineering), MBA. Director of ÅF AB since 2002. Director of Munters AB, Samhall AB and Svolder AB. Shareholding in ÅF: 3,500 shares
Born 1961, M.Sc. (Engineering) from the Royal Swedish Institute of Technology (KTH). Employee representative on the board of ÅF AB since 2005. Employed in the Infrastructure Division. Shareholding in ÅF: 0 shares
Born 1961, M.Sc. (Chemical Technology) from the Royal Swedish Institute of Technology (KTH). Director of ÅF AB since 2007. Chairman of the Board of Ortivus AB. Director of TeliaSonera AB, Bilia AB and Enea AB. Shareholding in ÅF: 750 shares
Born 1960. Graduate business administrator. President and CEO of SBC (the Swedish Owner-Occupier Centre AB). Director of ÅF AB since 2002. Director of Mekonomen AB. Shareholding in ÅF: 0 shares.
Born 1967. Automation engineer. Employee representative on the board of ÅF AB since 2008. Employed in the Engineering Division. Shareholding in ÅF: 15 shares
Born 1946. Professor, Chalmers University of Technology. President of the Royal Swedish Academy of Engineering Sciences (IVA).
Director of ÅF AB since 2006. Director of Saab AB, Micronic Laser System AB, Investor AB, SKF AB, Dagens Industri AB and the Chalmers University of Technology Foundation.
Chair of The Foundation for Strategic Environmental Research (MISTRA) and Euro-CASE, an umbrella organisation for Europe's national academies of science and technology. Member of the Swedish government's Globalisation Council and the European Commission's research advisory board, ERAB. Shareholding in ÅF: 0 shares
Born 1973, M.Sc. (Engineering). Employee representative (deputy) on the board of ÅF AB since 2006. Employed in the Inspection Division. Shareholding in ÅF: 0 shares
Born 1978, automation engineer. Employee representative (deputy) on the board of ÅF AB since 2007. Employed in the Engineering Division. Shareholding in ÅF: 0 shares
Born 1960, Graduate business administrator. CFO since 2007. Employed by ÅF since 2007. Shareholding in ÅF: 1,384 shares
Born 1975, Graduate business administrator. Executive Vice President, Corporate Information since 2003. Employed by ÅF since 2003. Shareholding in ÅF: 4,000 shares
Born 1964, M.Sc. President, Inspection Division since 2004. Employed by ÅF since 1998. Shareholding in ÅF: 1,659 shares
Born 1960, M.Sc. President and CEO since 2002. Member of the Royal Swedish Academy of Engineering Sciences (IVA). Director of Procure It Right AB. Employed by ÅF since 2002. Shareholding in ÅF: 9,930 shares
Born 1947, DIHM Marketing & Communication. PA to the President. Employed by ÅF since 1979. Shareholding in ÅF: 1,285 shares
Born 1956, M.Sc. President, Infrastructure Division (incl. former Systems Division) since 2005. Employed by ÅF since 2005. Shareholding in ÅF: 5,386 shares
Born 1954, B.Sc. President, Engineering Division since 2006. Employed by ÅF since 2006. Shareholding in ÅF: 412 shares
Born 1959, M.Sc. President, Energy Division since 2006. Employed by ÅF since 2006. Shareholding in ÅF: 205 shares
Shareholders in ÅF AB (publ) are invited to the Annual General Meeting that will take place at 17.00 (5.00 pm) on Tuesday 5 May 2009 at the company's head office (address: Frösundaleden 2, Solna, Sweden).
Shareholders who wish to participate in the Annual General Meeting must:
Shareholders who have elected to use a nominee for their shareholding must temporarily re-register their shares in their own name if they wish to exercise the right to participate in the Annual General Meeting. Shareholders who wish to do this must inform their nominee of their intention in good time before 28 April.
Notice of an intention to participate in the Annual General Meeting may be made to: ÅF AB Legal SE-169 99 Stockholm Sweden
or by fax to +46 (0)8-653 56 13
or via www.afconsult.com/arsstamma2009 Please specify your name, personal or corporate identity number, address, phone number and your registered shareholding. The notification of attendance must be accompanied by documentary proof of entitlement to attend the meeting (power of attorney, registration certificate, etc).
The Board of Directors proposes a dividend to shareholders of SEK 6.50 per share. It is proposed that Friday 8 May 2009 be made the record day for the right to receive this dividend. It is anticipated that payment will be made via VPC on Wednesday 13 May.
Interim report (3 months): 5 May Interim report (6 months): 17 July Interim report (9 months): 21 October
ÅF's annual Capital Market Day will be held in September. The annual report is sent to shareholders who request information about the company. The annual report is published in a Swedish and an English version. Financial information about ÅF is also posted on the Group's website www.afconsult.com
SWEDEN Alingsås Arboga Borlänge Borås Enköping Eskilstuna Fagersta Falun Gävle Gothenburg Halmstad Helsingborg Hudiksvall Hässleholm
Kalmar Karlshamn Karlskoga Karlskrona Karlstad Kiruna Kristianstad Linköping Ludvika Luleå Lund Lysekil Malmberget Malmö
Jönköping
Mora Mölndal
Piteå Skara
Skövde
Mönsterås Norrköping Nynäshamn Oskarshamn Skellefteå Sollefteå Stenungsund Stockholm/Solna Strömstad Sundsvall Söderhamn Södertälje Tavelsjö Trollhättan Uddevalla Umeå Uppsala Varberg Västerås Västra Frölunda Växjö Åmål Örebro Örnsköldsvik Östersund
BRAZIL Curitiba CROATIA Zagreb CZECH REPUBLIC Brno Pardubice Plzen DENMARK Brøndby Fredriksberg Kalundborg Copenhagen Randers
FINLAND INDIA Noida Riga Vilnius
Tallinn Viljandi
Narva
Vöru
Tampere Vantaa GERMANY Dresden Ravensburg INDONESIA Jakarta LATVIA LITHUANIA Kaunas
NORWAY Billingstad Bodö Lilleström Moss Oslo Sandefjord POLAND Warsaw ROMANIA Bucharest RUSSIA Moscow
St Petersburg Yekateringburg SOUTH AFRICA Edenvale Johannesburg SPAIN San Sebastian SWITZERLAND
Baden
THAILAND Bangkok
TURKMENISTAN
Ashgabat UKRAINE Kremenchuk
VIETNAM
Hanoi
ÅF AB Visitor's address: Frösundaleden 2, Solna Post address: SE-169 99 Stockholm, Sweden
Tel +46 (0)10-505 00 00
Fax – Group Management: +46 (0)8-653 56 13 Fax – Reception: +46 (0)10-505 00 10
For further information about addresses, please see www.afconsult.com
A090417-02 Produced by Solberg in collaboration with the ÅF Group's Corporate Information and Corporate Finance Departments. Printed by Strokirk-Landströms. Photos: Peter Bartholdsson and others. Translation: AB Språkman.
Å F i s a l e a d e r i n t e c h n i c a l c o n s u l t i n g , w i t h e x p e r t i s e f o u n d e d o n m o r e t h a n a c e n t u r y o f e x p e r i e n c e .
W e o f f e r h i g h l y q u a l i f i e d s e r v i c e s a n d s o l u t i o n s f o r i n d u s t r i a l p r o c e s s e s , i n f r a s t r u c t u r e p r o j e c t s a n d t h e d e v e l o p m e n t o f p r o d u c t s a n d I T s y s t e m s . W e a r e a l s o o n e o f t h e l e a d i n g n a m e s i n t e s t i n g a n d i n s p e c t i o n .
To d a y Å F h a s a p p r o x i m a t e l y 4 , 4 0 0 e m p l o y e e s . O u r b a s e i s i n t h e N o r d i c r e g i o n , b u t o u r b u s i n e s s a n d o u r c l i e n t s a r e f o u n d a l l o v e r t h e w o r l d .
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