Annual Report
2006
I I A B Å n g p a n n e f ö r e n i n g e n 2 0 0 6
A leading name in technical consulting
The ÅF Group is a leader in technical consulting, with expertise founded on more than a century of experi- ence. 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 the ÅF Group has more than 3,500 employees.
Our base is in Northern Europe, but our business and our clients are found all over the world.
1 Figures at a glance 2 This is ÅF
4 The President’s comments
6 Mission, vision, objectives and strategies 8 The market and the world around us 12 Human Resources
16 ÅF and sustainable development
Divisions
19 Engineering 22 Infrastructure 25 Inspection 28 Process 31 Systems 34 ÅF shares 36 Sensitivity analysis 39 Five-year financial summary
Annual Report
40 Administration report
44 Consolidated income statement 45 Statement of consolidated recognised
income and expense 46 Consolidated balance sheet 47 Cash flow analyses for the Group 48 Parent company income statement 48 Statement of parent company’s recognised
income and expense
49 Parent company balance sheet
51 Cash flow analyses for the parent company 52 Notes
77 Audit report
78 Corporate governance report 80 Board of directors
82 Senior management 84 Annual general meeting 85 ÅF’s offices
Financial summary 2006 2005
Net sales, in millions of SEK (MSEK) 3,114.0 2,269.0
Operating profit excl. other operating income, MSEK 148.4 89.9
Operating margin excl. other operating income, percent 4.8 4.0
Profit after net financial items, MSEK 157.9 221.8
Profit margin, percent 5.0 9.2
Employees (FTE’s) excluding associated companies 3,167 2,538
Equity/assets ratio, percent 47.5 47.6
Return on equity, percent 12.9 42.0
Earnings per share after tax, SEK 7.38 15.96
Dividend per share, SEK 3.00* 2.50
*As proposed by the Board of Directors to the Annual General Meeting.
Figures at a glance
• Net sales totalled SEK 3,114 million (2005: SEK 2,269 million)
• Operating profit excl. other operating income totalled SEK 149 million (SEK 90 million)
• Profit after tax amounted to SEK 108 million (SEK 204 million)
• Earnings per share before dilution: SEK 7.38 (SEK 15.96)
• Objectives for 2007:
– to continue to show improvements in earnings and margins and to grow more quickly than the market as a whole (Swedish Association of Architects and Consulting Engineers index).
– expansion will take place primarily in the Nordic countries and in Eastern Europe.
F i g u r e s a t a g l a n c e
A brief historical summary
On 23 February 1895 Södra Sveriges Ångpanneförening (“The South Sweden Boiler Association”) was created when a number of steam generator owners joined forces to prevent accidents and utilise steam power more efficiently.
Ever since, ÅF has played a major role in the industrial developments that have revo- lutionised our society over the past century. ÅF has witnessed four huge technology changes – steam, electricity, nuclear power and computerisation – and remained at the leading edge of technology both in the industrial era and in today’s information society.
Today AB Ångpanneföreningen, which has been listed on the Stockholm Stock Exchange since January 1986, is one of Europe’s largest technical consulting companies.
2 A B Å n g p a n n e f ö r e n i n g e n 2 0 0 6
This is ÅF
Areas of expertise Division
Organisation
The ÅF Group is an international technical consulting company with northern Europe as its domestic market. A local presence among clients and in the labour market is essential for success. For that reason ÅF has around 80 of its own offices in some 15 countries.
ÅF’s organisation and management is characterised by a decentralised structure which contributes to quick decision-making processes.
ÅF consists of five divisions: Engineering, Infrastructure, Inspection, Process and Systems. The divisions are based on the requirements of our clients as reflected in our own spectrum of skills.
AB Ångpanneföreningen
Inspection Process Systems
Infrastructure Engineering
Consulting services within the field of infrastructure developments and improvements in four business areas: Communications & Maintenance, Installations, Electric Power and Infrastructure Planning.
Services relating primarily to inspection, testing and certification, but also a number of supplementary services such as training, risk analysis, CE marking and the imple- mentation of various EU directives.
ÅF’s IT consulting services focus on product development and high-tech IT applications.
Assignments include both one-off projects and full-service solutions, from the initial idea and implementation phases to testing and product care.
Consulting services chiefly in the pulp & paper industry and in the fields of energy and the environment.
Consulting services for industrial projects in the fields of industrial IT, electrical engineering and automation, mechanical engineering and pipework, and combinations of these. The division supplies expertise and resources and can undertake full-service undertakings and full-function assignments with or without materials content.
Engineering
Inspection Inspection Engineering
Infrastructure Infrastructure
Process Process
Systems
Systems
T h i s i s Å F
Clients Operating income Operating profit Employees (FTE’s) Share of Group business 2006 (in percent)
Total incl. other activities/eliminations
Key figures 2006
Income from Operating Operating operations, MSEK profit, MSEK margin, %
Engineering 602 53.0 8.8
Infrastructure 994 80.1 8.1
Inspection 216 20.9 9.7
Process 1,092 9.8 0.9
Systems 309 17.0 5.5
Other/eliminations –79 –12.5
Total 3,134 168.3 5.4
SEK 3,134 m SEK 168.3 m 3,167
Operating profit per FTE
SEK 53,000
• State-controlled authorities and government offices
• Swedish Armed Forces
• Telecom operators and network owners
• Industry
• Property owners and property
management bodies SEK 994 m SEK 80.1 m 946 SEK 85,000
32 % 48 % 30 %
33 % 48 % 32 %
Sales by client category
• All industries and sectors
SEK 216 m SEK 20.9 m 235 SEK 89,000
7 % 12 % 7 %
9% 18% 9%
• Telecommunications
• Motor industry
• Medical technology
• Defence industry
• Engineering industry
SEK 309 m SEK 17.0 m 279 SEK 61,000
10 % 10 % 9 %
11 % 1 % 10 %
• Pulp and paper industry
• Power industry and energy companies
• Manufacturing industry
• Trade organisations
• Aid and development organisations
SEK 1,092 m SEK 9.8 m 1,023 SEK 10,000
35 % 6 % 32 %
47 % 33 % 49 %
Assigments by sector
Electrical engineering, telecoms Forest industry
Pharmaceuticals, chemicals
Construction & property management, water &
sanitation Public sector, finance Other service industries
Electric, heating, gas, refineries
Other manufacturing
Engineering, automotive industry
Assigments by sector
Sales by client category
Private industry Local government (Sweden)
Countries other than Sweden National government (Sweden)
• All types of industry
SEK 602 m SEK 53.0 m 624 SEK 85,000
19 % 31 % 20 %
11 % 31 % 10 %
4 A B Å n g p a n n e f ö r e n i n g e n 2 0 0 6
2006 was a good year for ÅF. In an exceptionally strong market ÅF strength- ened its standing among clients, shareholders and employees alike. More gratifying still, the future, too, looks promising.
ÅF has recently sold off its properties to release capital for investment in core activities. During 2006 we invested some SEK 900 million in takeovers to leverage our competitive strength and meet the increase in demand from our clients. The following were among the year’s acquisitions:
• Ingemansson Technology, a world leader in acoustics and vibrations, two areas of growing importance in indus- try, infrastructure projects and product development.
• Enprima, the acquisition of which has really boosted ÅF’s opportunities to carry out major projects in the rapidly expanding area of energy. Enprima has an impressive track record of project management for the construction and modernisation of power plants in Finland, Russia, Eastern Europe and Asia.
• The Benima Group, the largest acqui- sition in 2006, added more than 500 industrial automation and industrial IT consultants to ÅF’s workforce in the Nordic countries. These have subse- quently been merged with ÅF’s own industrial automation resources to create the new and already highly suc- cessful Engineering Division. This is by far the Nordic region’s biggest consult- ing company in this specialised field and its creation has substantially enhanced our ability to handle large and complex projects in this area.
The injection of 1,000 new co-workers into the workforce also has a profound impact on our corporate culture. It expands our opportunities for learning more about “best practice” at the same time as it provides opportunities to question one another’s routines and processes. I am convinced that this will make a huge contribution to increasing profitability.
Strengths for the future
During the year a new share issue open to all shareholders generated an inflow of some SEK 290 million in new capital, ensuring that we have the funds we need to remain active in the process of consol- idation that is taking place in our indus- try. In addition, three non-cash issues were made in conjunction with corporate acquisitions.
A key factor behind a decision to finance ÅF’s expansion through new share issues is that the transaction shall have a positive effect on earnings per share. In all, the number of shares rose by 37 percent. It is gratifying to note that the EPS has risen as a direct consequence of the takeovers during the year and that the ÅF share has developed well in rela- tion to the Stockholm all-share index.
A consulting company’s most impor- tant resource is competent, motivated co-workers. It is therefore a great pleas- ure to report that, in a Swedish survey among aspiring engineers and engineer- ing graduates, ÅF was ranked as the country’s most popular technical consult- ing company to work for. Among practis- ing engineers, ÅF was ranked fourth in all categories of company, after Volvo, Ericsson and Volvo Cars.
Divisional performance
The Engineering Division (formerly ÅF- Benima) enjoyed a high level of capacity utilisation and a good inflow of orders
throughout the year, particularly in the fields of pharmaceuticals and energy, with major assignments from Sweden’s Ringhals and Oskarshamn nuclear power plants. From the start of 2007 the oper- ations of the newly acquired Estonian technical consulting company Automaatika with 20 employees were consolidated into the Engineering Division, at the same time as a structural reorganisation saw the transfer of 130 personnel in Sweden from Process to Engineering.
The market for the Infrastructure Division remained strong, particularly for installations in the construction and prop- erty management market. There was a substantial improvement in the perform- ance of telecommunications, where the acquisition of JämtTeknik has made the division even more competitive, espe- cially with regard to the defence sector.
Major orders were won during the year for the Swedish Defence Materiel Administration (FMV), TeliaSonera and the Citybanan rail link in Stockholm.
After a more sluggish start to the year than anticipated, the Inspection Division enjoyed a strong second half, with par- ticularly brisk demand for services within testing. To secure the availability of suffi- cient resources to meet this demand, a large number of testing engineers were recruited during the fourth quarter.
For the Process Division, despite significant improvements in the fourth quarter, it was a year of below-par profit- ability. The reasons behind this poor per- formance were continuing problems with profitability in relation to mechanical con- struction and design assignments for the pulp and paper industry outside Sweden.
However, since taking the reins, new management has quickly devised a clear, new strategy, supported by organisa- tional change and new processes. The focus now is on just two sectors: energy and pulp and paper. The division will con-
A new ÅF takes shape
T h e P r e s i d e n t ’ s c o m m e n t s
centrate its marketing activities for energy consulting services to Sweden, Finland, the Baltic states and Russia, where prospects look good for establish- ing ÅF as the market leader. Pulp and paper operations will continue world- wide, but the division will fine-tune its offer around expertise in specialist consulting and project management.
Contracts won by the Process Division in 2006 included major project engineering assignments for power stations in Russia and Latvia, and work on a new pulp mill in South Africa.
The Systems Divisions reported strong organic growth during the year and a significant improvement in profita- bility. Over 100 new members of staff were recruited in 2006 as all areas of the market developed positively, particularly telecommunications and life science.
The integration of the IT consulting com- pany Combra and its 60-strong work- force acquired in June has proceeded smoothly, and sales activities have produced the desired positive effects.
Combra has reinforced the division’s position with clients such as Ericsson and Sony Ericsson, not least via its office in Lund.
Outlook for 2007
At present there is nothing to indicate that the economy is about to slow down.
A significant proportion of ÅF clients are affected positively by globalisation, with strong growth in Asia, Russia and Eastern Europe. This, together with the fact that investments in energy production have lagged behind for several years in large parts of the world, suggests that demand may remain strong for some time to come. ÅF will focus less on Western Europe and more on Eastern Europe and Russia, particularly in the area of energy, where ÅF enjoys a strong position follow- ing the acquisition of Enprima. I believe that all the divisions have the potential to improve their earnings in 2007.
ONE ÅF
ÅF carries out more than 45,000 assign- ments every year. When a client chooses ÅF to solve a problem or develop a new solution, the chances are that we have already done something similar some- where else. That’s why the most impor- tant weapon in our competitive arsenal is the ability to learn from and use our past experiences to solve new challenges.
This improves the quality of our product at the same time as it reduces our costs
for producing it. And every improvement in productivity also creates the opportu- nity for us to increase our profitability.
That is why, over the past few years, we have focused on what we call ONE ÅF.
The ultimate vision is a decentralised network, where all ÅF consultants can communicate freely with one another.
We are pulling down the internal walls within our organisational structure and building a common working platform that provides unlimited access to the huge fund of experience and expertise in ÅF.
Consistency throughout the organisation strengthens the ÅF brand. But most important of all, it helps to create a cul- ture based on localised decision making, close collaboration and the kind of pro- fessionalism and commercial thinking that, at ÅF, we call “businessmanship”.
Over the past four years we have made a great deal of progress. That, and a mar- ket which remains strong and buoyant, pave the way for an even better year in 2007.
Stockholm, March 2007
Jonas Wiström President and CEO
“I believe that all the divisions
have the potential to improve
their earnings in 2007.”
6 A B Å n g p a n n e f ö r e n i n g e n 2 0 0 6
Mission, vision, objectives and strategies
Mission
ÅF makes its clients’ businesses more profitable, safer and better adapted to environmental sustainability by presenting clients with technical solutions and assessments shaped by the demands of industry.
The hallmarks of the ÅF Group are:
• High levels of skills and expertise
• Innovation by experience
• An unbeatable working environment
Mission
The ÅF mission statement is predicated on the ambition and the ability to contrib- ute to the development of trade, industry and society in general.
ÅF makes its clients’ businesses more profitable, safer and better adapted to environmental demands. In fact, ÅF does much more – but these three main issues remain the chief focus. Every day.
Experience, a passion for innovation and a thorough understanding of each cli- ent’s business enables ÅF to determine the best solution in each individual instance. ÅF has expanded and diversified together with the industry, which is one reason why it shares its clients’ values.
The solution ÅF delivers is not always the most technically sophisticated, but it’s the best! ÅF never experiments with its clients or their businesses, especially when their interests are best served by tried and tested technology.
Vision Development
In concrete terms the ÅF vision means building customer relations founded on value added.
The time ÅF devotes to an assignment will continue to be important, but most important of all is the relationship between the time spent and the value this represents to the client. By always focusing on the value it adds, ÅF works more effectively and in a more commer- cially viable manner.
This is what makes ÅF stand out from the crowd. ÅF is a partner that is driven to
exceed expectations. Clients and ÅF alike share a common interest in staying within or below the agreed cost of an assign- ment, as value added is of importance to both parties.
ÅF believes that productivity – and, by extension, profitability for its clients – can be significantly improved by doing more business on a fixed-price basis. The aim is to do the job at the lowest possible price in the shortest possible time. By consistently calculating costs correctly and working within the parameters established, ÅF can create confidence and the right expecta- tions among clients.
Growth
ÅF is proud to be one of Scandinavia’s leading technical consulting companies with an unparalleled track record of expe- rience. It is important to maintain this initi- ative, and expansion is one way to do this.
ÅF is committed to growth, both organi- cally and by takeovers, acquiring a major- ity shareholding in companies that can contribute positively to the profitability and culture of ÅF.
By 2010 the target is for the ÅF Group to have sales of SEK 5 billion. Or more! But this requires continued strong growth.
Focus
ÅF is committed to becoming number one or two in size in each market where it chooses to establish operations. This will give improved access to assignments by ensuring that ÅF is perceived as a consult- ing company in the foremost rank of the industry.
Strategies
Operations will be carried out
• under one and the same brand,
• with common processes and systems,
Profitability
Profit averaging SEK 100,000 per employee (FTE) per year.
Environment
Two new environmental targets were adopted in autumn 2005. One relates to resource management and ÅF’s work to make client companies’ plants more energy efficient. The second relates to corporate travel, including the number of environmentally adapted vehicles in the company’s fleet of cars. Further details on pages 16–18.
Growth
Sales of SEK 5 billion by 2010.
Market
Customer surveys to show that at least 90 percent of clients are satisfied with the service ÅF provides.
Employees
• Better balance in the gender ratio. An initial target is for at least 20 percent of consultants 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 devel- opment interview each year.
Long-term objectives
A B Å n g p a n n e f ö r e n i n g e n 2 0 0 6 7
Vision
Development: ÅF will spearhead the process of change in the technical consulting industry by introducing methods of cooperation that give a new dimension to the concept “value added” for clients.
Growth: Sales will rise to SEK 5 billion by 2010.
Focus: ÅF will be number one or two in the fields within which the company is active.
• with shared values and a common cor- porate culture in order to concert efforts and fully exploit the potential of the wealth of experience in the ÅF Group.
Acquisitions strategy
ÅF’s acquisitions strategy is based on the above, and every effort will be made to develop the business when the right oppor- tunities arise. However, expansion will not take place at the expense of profitability.
Business support and shared processes
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, sustain- able, long-term development for both clients and ÅF.
One example of this is the introduction of the ÅF Business Support System, a cen- tral operational control system that makes ÅF’s business operations considerably more cost-effective at the same time as it assures the quality and consistency of the company’s approach.
This 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.
At present, the shared processes business support system encompasses only the Group’s Swedish companies.
Pooling knowledge, methods and skills in this way and making information more easily accessible improves opportuni- ties for securing and succeeding in more
prestigious assignments and conventional projects alike. It helps ÅF to make full use of its size and breadth of experience.
The system also supports a methodical approach by gathering tools and assign- ments in one place in a common structure supported by document management functions. The system’s search functions enable the best ideas to be “recycled” and provide easy access to ÅF’s structural capital and references.
The system also serves as a guide for ÅF employees, regardless of their assign- ment, position or geographical location.
Here best practice routines at ÅF are described from start to finish, comple- mented by tools such as checklists, tem- plates, guidelines and forms. The system, which also contains descriptions of Group policy on a variety of issues, is adapted to assignments and available via internet.
M i s s i o n , v i s i o n , o b j e c t i v e s a n d s t r a t e g i e s
Personnel administration system The administrative heart of the Group’s activities is a personnel administration system run by the Group HR department together with local representatives respon- sible for updating data for each division.
The system administers everything from monitoring IT access codes to salary details, indexing details of skills in CVs and managing the rental of the Group staff trust’s holiday homes for employees.
IT support
Since February 2007 ÅF’s central IT oper- ations have been outsourced to an external supplier. This not only reduces ÅF’s costs, but also provides access to all the experi- ence and expertise of a big-name IT part- ner and the best IT security that money can buy.
60
20
0 80
40 100
05
04 06
03
Profitability target per employee (FTE), (in SEK ‘000)
Actual ÅF’s target
60
20
0 80
40 100
Lönsamhetsmål per årsmedarbetare, TSEK Sales growth target (in millions of SEK)
05 04
03 06 07
4,000
3,000
2,000
08 5,000
10 09
Utfall ÅFs mål
60
20
0 80
40 100
05
04 06
03
Profitability target per employee (FTE), (in SEK ‘000)
Actual ÅF’s target
8 A B Å n g p a n n e f ö r e n i n g e n 2 0 0 6
The market and the world around us
Services
Each year ÅF carries out more than 45,000 assignments for some 20,000 clients. Projects vary in duration from just a few hours to over 200,000 hours and total contract fees can amount to as much as SEK 200 million.
ÅF works with technical consulting for industry (approximately 70 percent of revenue) and infrastructure projects (approximately 30 percent).
ÅF works with both pro cess and manufacturing industries through out the entire chain from product development (Systems Division) to automation and industrial IT (Engineering Division), as well as with the planning and develop- ment of production plant and the pro- cesses and environmental considerations
associated with this (Process Division).
The Infrastructure Division supplies systems, mostly electrical, IT and HVAC and sanitation, to commercial properties and infrastructure investments. Projects include everything from railway signalling systems to highly sophisticated climate control technology for buildings and fac- tories.
The Inspection Division inspects, tests and certifies plant and systems for clients in both industry and infrastructure: here, too, the work is split approximately 70/30 between industry and infrastructure.
Clients
ÅF’s ten largest clients during 2006 were Banverket (the Swedish National Rail Administration), Ericsson, FMV (the Swedish Defence Materiel Administration), Fortum, PT Tanjung Jati Prima Service, Sappi, Stockholm’s regional transport authority, Vattenfall, Volvo Cars and Westinghouse. Together these clients accounted for 22 percent of total invoiced sales.
Market
Technical consulting is a significant indus- try in Sweden. According to the Swedish Federation of Consulting Engineers and Architects (STD), sales for Swedish com- panies working in this field totalled some
SEK 35 billion in 2006, with the ÅF Group accounting for almost 9 percent of this amount. The industry employed 39,300 people, slightly more than 8 percent of whom worked for the ÅF Group.
During 2006 the market for ÅF’s ser- vices as a whole was good. A short description of the market situation for ÅF’s five divisions follows below: a more comprehensive account is included in the section for each division on pages 19–
33.
The market for Engineering was strong more or less across the board, with especially big investments in the environ- ment, energy and the mining industry.
The market for the services of Infrastructure was good in 2006, with strong construction and plant sectors in both Norway and Sweden. There was also an increase in demand for energy consulting and from the infrastructure planning sector as a result of major projects, both ongoing and projected.
While the Swedish inspections market remained relatively stable, the Inspection Division nevertheless succeeded in increasing its market share in 2006. The energy sector showed good growth, par- ticularly towards the end of the year.
The Process Division is working in an expanding market, and here too the energy sector again developed in a
Size of ÅF projects Number of hours
101 – 1,000
– 100 1,001 –
10,000 2005
2006 1,200,000
800,000
0
10,000 – 1,600,000
400,000
Project duration in hours
ÅF is an international consult- ing company. Of a total of approximately 3,500 employ- ees, some 800 are based in the Czech Republic, Denmark, Estonia, Finland, France, Germany, Guatemala, Holland, Latvia, Lithuania, Norway, Poland, Romania, Russia, South Africa and Spain.
T h e m a r k e t a n d t h e w o r l d a r o u n d u s
highly positive direction, primarily due to rising energy prices and the need for capacity development. In Europe the pulp and paper industry remained fairly quiet, while South America and South- East Asia saw a number of large-scale investments in plant.
The Systems Division also flourished in a more positive climate in 2006, with strong demand in all regions as a number of major clients invested heavily in research and product development.
Outlook – Sweden
Globalisation continues to put Swedish industry under a great deal of pressure, at the same time as all the signs suggest that the economy as a whole will remain buoyant. Ageing industrial plants in Sweden need to be modernised and made more efficient, and many indus- tries need to rationalise and automate in order to improve profitability. Growth fuels brisk demand for ÅF’s services, and development accelerates the pace of evolution of new technology. New tech- nology is not only changing the face of today’s industry; it is also creating brand new companies with huge product and systems development needs.
The potential for consulting services for environmental and energy-related projects in industry over the coming
years is expected to be enormous. The infrastructure market is also looking very promising, with decisions already made on many large, publicly funded road and rail projects.
Outlook – other Nordic countries The process of internationalisation is exerting strong pressure on industry in the other Nordic countries to transform.
ÅF expects demand from industry in Finland to remain strong, particularly in the energy area. Most energy sector projects relate to the expansion of the country’s nuclear power capacity, or to biofuel and waste incineration invest- ments. In pulp and paper most of the investments, as elsewhere in Europe, relate to capacity reductions or the replacement of existing plants. Invest- ment in new plant is confined primarily to Asia and South America, close to the sources of cheap raw materials.
Norway has one of the world’s strong- est economies and demand for technical consulting services in infrastructure and energy is expected to remain strong here as long as high energy prices con- tinue to drive the process of change in the oil and gas industries.
In Denmark foodstuffs and pharmaceu- ticals are performing very strongly. The biotech industry is an engine of growth
on both sides of the narrow body of water that separates Denmark from southern Sweden. ÅF has won a good position for itself in the areas of IT, prod- uct development and automation, and is also benefiting from an increase in demand for services from the Danish oil and gas industries.
Outlook – Eastern Europe
ÅF sees great potential in developments in Eastern Europe. The strong economic growth there is fuelled by significant needs for modernising existing industry and building up a brand new infrastruc- ture. To meet the needs of an expand- ing economy, it is essential to increase energy production. This, too, creates demand for ÅF’s services, and ÅF antici- pates that it will continue to secure major contracts from the gas, coal and biofuel industries. As just one example of the size of the investments being made in the region, Russia alone is investing in build- ing up new capacity over the next five years that is equivalent to the total energy consumption of the entire Nordic region.
In matters relating to technical safety and requirements for independent third- party inspections, EU law is becoming increasingly rigorous. This development – which affects both member states and candidate countries, as all companies
0 5 10 15 20 25 30
Pre-broadcast survey Post-broadcast survey ÅF
WSP
Teleca
Sweco
Semcon
20 %
27 %
3 % 3 % 4 %
5 %
10 % 11 %
12 % 8 %
ÅF sponsored Swedish televi- sion’s broadcasts from the 2006 winter Olympics in Turin. In con- junction with this, OMD carried out a brand awareness survey.
Just under 1,900 respondents chosen at random (878 before the broadcasts and 976 after) replied to the question “How well (“Very well”/“Fairly well”) do you know the following technical consulting companies?”
Source: OMD ÅF – Sweden’s best known technical consulting company
1 0 A B Å n g p a n n e f ö r e n i n g e n 2 0 0 6 T h e m a r k e t a n d t h e w o r l d a r o u n d u s
Bengt O. Andreasson, industry analyst at STD and responsible for the Sector Review, which sectors do you think will perform well in the future?
“The outlook is bright for most sectors, with energy, infrastructure and the environment being particularly strong.
Among these, the energy sector has the very best development prospects, both in a domestic and an international perspective. Escalating energy prices are creating urgent needs for rationalisa- tion and capacity expansion, at the same time as the new and rapidly expanding economies of nations such as China and India require ever greater amounts of energy.”
What kind of standing do Swedish technical consultants have interna- tionally?
“It’s good! The largest of them have consolidated their positions substantially over recent years by establishing more offices abroad. There is great potential, not least ‘close to home’ in the Baltic states, Central and Eastern Europe, and Russia – but there is plenty of competi- tion, too! In these countries there is an enormous need to clean up the environ- ment, build up the infrastructure and develop energy supplies. In the industrial
sector, the positioning of the various consulting companies is closely related to their willingness to accompany their international clients as they expand into new areas. But, once a bridgehead has been established, it is important to find new clients in these markets. Swedish consulting companies perform well in this competitive environment. They are highly skilled at organising projects and accustomed to regarding energy and the environment as natural assets that need to be dealt with carefully and extremely effectively.”
Do you see any clear trends in industry developments?
“There are signs that there is a short- age of technical consultants. The same applies to managers and other key figures. The big companies are buying capacity by taking over their smaller competitors. It’s a trend that will con- tinue as it gives larger players a better chance to assert themselves in the international arena. It’s also the best way to grow as the mature domestic markets are not expanding anywhere near as quickly as those in Eastern Europe, for example.”
How do you see developments for ÅF?
“Times like these are good for ÅF.
The company is highly active in sectors where growth is and will be greatest.
ÅF has achieved a size that will enable it to continue to grow and expand on new markets in competition with other big international players. At the same time, the companies it has taken over here in the Nordic region have given it a broader and firmer domestic base on which to stand.”
ÅF asserts itself well in the international arena
must show compliance in order to sell their products in the EU – is clearly bene- ficial to ÅF’s technical inspections.
Besides providing access to a strong market, expansion in Eastern Europe brings other benefits for ÅF. In addition to the short-term advantage of a lower level of costs (which facilitates ÅF’s expansion in the region) Eastern Europe has a strong tradition of good technical education, and local engineers are highly accomplished.
This means that ÅF can create a long- term platform for itself on which to build a reputation as good as that it already enjoys in Sweden and Scandinavia.
Internationalisation
The work of establishing an international structure for ÅF’s operations continued during 2006. The focus was on coordi- nating the various national operations by the adoption of a common graphic profile, guidelines in the form of methods, systems and processes, and shared cor- porate values and targets. The creation of an English-language intranet has also given a significant boost to the interna- tional exchange of information and ideas.
The ÅF brand
ÅF sponsored Swedish television’s broad- casts from the 2006 winter Olympics in Turin, a decision that exposed the ÅF brand to a massive audience via 300
“TV billboards” over a period of 17 days.
The result, according to a major survey carried out by media communications specialists OMD, was an increase of 35 percent in public awareness of ÅF. The OMD survey shows that ÅF is now the best-known technical consulting company in Sweden.
ÅF ranks high in the industry In its latest Sector Review the STD reports that ÅF is number 54 among the world’s 200 largest technical consulting companies, and is ranked third among the 300 Swedish companies reviewed.
T h e m a r k e t a n d t h e w o r l d a r o u n d u s
Consulting industry in Sweden – development (%) in FTE’s
6.0 5.0 4.0 3.0 2.0 1.0 0 -1.0 -2.0
2000 2001 2002 2003 2004 2005 2006p* 2007p* 2008p*
Swedish consulting and architectural companies abroad – development (%) in FTE’s
80 70 60 50 40 30 20 10 0 -10 -20
2000 2001 2002 2003 2004 2005 2006p* 2007p* 2008p*
*forecast figures
The big Swedish consulting companies have focused more and more attention on the Nordic market. However, it is the region’s “neighbours” – the Baltic states, Central and Eastern Europe and Russia – that now account for the big- gest growth on the back of an influx of private capital and EU grants. The greatest needs for investment are in the environment and energy sectors and in infrastructure, but huge sums are also being invested in building up industry.
These are the geographical markets where the big Swedish and international consulting companies are now expanding their business.
(Source: STD) GDP – development (%) in fixed prices
5.0
4.0
3.0
2.0
1.0
0
2000 2001 2002 2003 2004 2005 2006p* 2007p* 2008p*
Economic growth in Sweden has been relatively good in recent years. Although now starting to slacken off, it is still expected to remain well above three percent over the next two years. Notwithstanding this, the consulting industry as a whole (technical, industrial and architectural) shows only a moderate increase in the number of FTEs in Sweden.
(Source:STD)
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ÅF – a popular place to work
In Universum’s Career Barometer survey for 2006, ÅF was ranked an impressive fourth among Sweden’s most attractive employers. More than 4,000 engineering graduates and young professionals took part in the study.
Maintaining regular contact with stu- dents is very important for ÅF’s develop- ment. For more than 20 years ÅF has maintained a regular presence at various careers fairs hosted by Sweden’s techni- cal universities. During the 2006–2007 academic year ÅF took part in 14 con- tact days at universities and colleges throughout Sweden. Some 90 ÅF employees met thousands of technology students, among whom the general impression of ÅF was of an attractive employer able to offer a wide variety of stimulating career opportunities.
Clear objectives and long-term commitments
ÅF believes that the hallmarks of a good workplace include employees’ pride in their work and the company they work for, confidence in their managers, and solidarity and togetherness with their co- workers. This can only be achieved by clear objectives and long-term commit- ments at all levels in a company.
Feedback about how successful an individual is in his or her work is a key factor behind job satisfaction, and this is provided via scheduled personal develop- ment talks between employees and their line managers.
Another initiative of long-term impor- tance is the dialogue that is always held with employees who decide to leave ÅF.
Its purpose is twofold: to ascertain the individual’s perceptions of the positive and negative aspects of the time spent with the company, and to terminate the relationship in a positive spirit in order to pave the way for possible future collabo- ration.
A further very important consideration is preventive healthcare, which is catered for via occupational healthcare services and the Group’s support for employees’
leisure activities.
Continuing professional development
Working as a consultant or in any other capacity for ÅF means developing both professionally and personally. Consultants require special tuition in leadership skills, law, marketing and finance in order to cope adequately with the administrative side of their work. This training is gener-
ÅF has a firmly established reputation as a good place to work. Survey after survey confirms that many people, particularly engineers, are eager to work for ÅF.
Pla ts för bi ld
It is hoped that one of the results of the project, which is supported by various development measures, will be to stimu- late new recruitment. This is documented in a form that also serves as a tool for managers during development dialogues with their co-workers.
A workplace for men and women alike
ÅF stands firmly in favour of equality and is committed to being a company in which everyone – male and female – can feel at home and develop. But, as equal- ity does not create itself, efforts to increase the number of women consult- ants at ÅF continue, even though the Futura project has now drawn to a close.
As a first stage, the aim is for women to represent 20 percent of the consulting workforce. Among ÅF consultants women accounted for 15 percent of the total at the end of 2006 (17.5 percent in 2005). The proportion of females among consulting managers was 11 (10) percent and the proportion of female managers as a whole was 12 (12) percent.
Women accounted for 19 (22) percent of the company’s workforce as a whole.
ally provided by the Group through the ÅF School’s introductory courses and courses in sales training, presentation techniques, project management and various forms of management and lead- ership development.
In recent years the Group has placed particular emphasis on the role of the project manager, with 700 employees graduating from courses in project man- agement. Another initiative is training designed to provide insights into the rudi- ments of subjects such as contract law, finance and the consultant’s behaviour when on assignments. To date, more than 500 ÅF employees have partici- pated in this course.
As well as tuition, the ÅF School also provides added benefits in the form of an exchange of experiences and knowledge transfer between participants from dif- ferent ÅF units, creating a broad-based internal network that is clearly in the interests of clients.
Career paths
“Five of Five Thousand” is a project which commenced late in 2006 to pro- vide information about the various career paths and opportunities for development that are available at ÅF.
Female directors
Three of the seven members of the board of Ångpanneföreningen (43 percent) elected by the annual general meeting are women, as are two of the four employee representatives.
Policies
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 climate at work.
This latter area includes activities to combat discrimination of all kinds.
A personal development plan is made for each individual employee.
Number of employees
In 2006 the ÅF Group employed a total of 3,167 (2,538) full-time equivalents (FTEs). The proportion of new employees during the year, including those with acquired companies, stood at 43.0 (12.1 percent).
Holidays, parental leave and sick leave
Sick leave among ÅF employees was 2.7 percent in 2006 (3.1 percent).
H u m a n r e s o u r c e s
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Capacity utilisation
The ÅF Group’s invoiced-time ratio for 2006 – the proportion of time charged to clients relative to the total number of hours spent at work by all employees – was 72.9 percent (71.5 percent).
Non-invoiced time includes marketing, training, technical development, manage- ment, administration and non-productive working time. 95 percent of employees worked mainly for external clients, while the remaining 5 percent were employed in a purely administrative capacity.
Bonus system
The ÅF Group operates profit-related bonus systems for employees that gen- erate a bonus based on both consoli- dated profit and the profit of the relevant division. In 2006 employees received bonuses totalling SEK 6.9 million (6.9 million).
Salary systems with variable component
Many ÅF employees currently participate in salary systems where up to 40 per- cent of the individual’s salary consists of Total absenteeism, including holidays,
was 17.2 (17.0) percent of normal work- ing hours. Holidays accounted for 10.4 (10.0) percent and leave of absence for 4.0 (3.9) percent.
Employees are encouraged to stay at home to look after their new-born babies. ÅF adds an extra 10 percent to the 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 the
“basic amount” receive 90 percent of their monthly salary for either 60 or 90 days, depending on how long the person has been employed.
Joint ownership
AB Ångpanneföreningen sees great value in involving employees as part-owners in the company. Employees have a financial stake in operations directly through their ownership of shares and convertibles, and indirectly through ÅFOND, the ÅF Group Trust.
a variable component linked directly to performance. So far, experiences of this have been highly positive.
Recreational activities
ÅF Group employees may rent one of the cottages or apartments owned or leased by the Ångpanneföreningen Staff Foundation. The cottages are located in attractive areas of Sweden, mainly in the mountains and along the coasts. A couple of hundred families take advantage of this opportunity every year.
The Group also runs clubs offering employees a wide range of leisure-time activities, such as keep-fit classes, long- distance skating, golf, swimming, mas- sage and weight reduction courses. There are also cultural activities such as theatre visits and art appreciation forums.
Other popular activities include the annual parties held early in the new year at several ÅF offices, when employees and their families are invited to “plunder the Christmas tree” in traditional Swedish fashion.
H u m a n r e s o u r c e s
ÅF in 4th place in 2006 Career Barometer survey
In a survey of 4,000 professional engineers, ÅF was ranked in fourth place among Sweden’s most attractive employers after Volvo Car Corporation, the Volvo Group and Ericsson.
More than 4,000 young professionals took part in the study and no less than 13.7 percent rated ÅF as the ideal company to work for.
The Career Barometer is an annual attitude survey conducted by Universum Communications.
All respondents are “young professionals”, which means that
• The respondent has a degree in engineering from a university or college of similar standing
• The respondent has between two and eight years of working experience in his/her specialist area
YP Ideal Ranking Engineers 2006 Rank Volvo Car Corporation 1 Volvo Group 2 Ericsson 3 Ångpanneföreningen 4 ABB 5 Sony Ericsson 6 IKEA 7 Scania 8
