Year End Report 1998

YEAR END REPORT 1998 Income after financial items increased to SEK 170 M (130) After a seasonally weak start in 1998, earnings for the full-year rose 31% to SEK 170 M, corresponding to SEK 2.60 per share (2.00). Order bookings and sales by core operations up 17% and 12%, respectively Order bookings by the Group's core installation activities rose to SEK 6,115 M (5,223), and sales increased to SEK 5,972 M (5,349). The Group's total order bookings and sales amounted to SEK 6,226 M (5,677) and SEK 6,121 M (5,775), respectively. Net sales by installation operations increased nearly 10% to SEK 6,217 M (5,664), and net sales by the Group totaled SEK 6,382 M (6,086). Strong growth in Norway BPA's operations in Norway continued to show strong growth. Earnings for the year nearly doubled to SEK 66 M (34). Order bookings rose to SEK 1,126 M (797), covering a large part of production capacity in 1999. Proposed dividend increase to SEK 0.70 per share (0.50) The Board of Directors has proposed a dividend for 1998 of SEK 0.70 (0.50) per share, corresponding to total dividends of SEK 45.8 M. Outlook for 1999 Demand in the Swedish market is expected to increase marginally in 1999, while Norwegian market demand will stabilize at a relatively high level. In view of BPA's market position and the Group's clearly defined growth strategy, projected volume and earnings growth in 1999 will be 10-15%. Stockholm, February 23, 1999 For additional information, contact: Johan Karlström, President, tel. +46 8-799 8510 Kjell Granberg, Controller, tel. +46 8-799 8542 or +46 070-536 5155 Per Blixt, Vice President Corporate Communications, tel. +46 8-799 8516 or +46 070-5492808 BPA AB (publ) YEAR END REPORT 1998 Market After a weak start, the Swedish installation market reflected growing demand in 1998. Contracts were dominated by repairs, rebuilding and renovation (R&R) projects, as well as service and maintenance work. The strongest growth is concentrated in major metropolitan areas and university cities. Low and stable interest rates are creating potential for continued favorable market conditions. An interesting partnership agreement was signed in the autumn with Folksam. The agreement provides BPA with exclusive rights to correct certain damages incurred by the insurance company's 410,000 private customers. BPA also signed a nationwide service agreement in the autumn with Gullspång Kraft, whereby the power company's 360,000 household customers can access BPA's service organization to correct electrical installation and heating system faults. Over the course of a few years, BPA's operations in Norway have grown from activities that generated sales of a few hundred million kronor into a billion-kronor company. Growth in the Norwegian market is attributable to successful investments and acquisitions of heating and plumbing, electrical and ventilation companies. The activities are concentrated in the Oslo area, where BPA is a leading player. Operations in the Danish market are undergoing structural change. BPA concentrates on heating and plumbing in Denmark, with industry accounting for about 70% of sales and traditional installation services about 30%. In 1998, efforts were made to strengthen the focus of operations on traditional installations. As part of the strategy, BPA acquired a few small electrical and ventilation companies during the year. Structural changes Acquisitions In the beginning of 1998, BPA completed its build-up of complete-coverage installation operations in the Oslo region through acquisitions of several local installation companies. The acquired companies have annual sales of SEK 400 M and about 220 employees. In Denmark, two small companies were acquired, a ventilation company and an electrical installation business. The acquired units have combined annual sales of approximately SEK 50 M and about 90 employees. Through acquisitions in Sweden, BPA continued to expand its operations in the interesting market sector comprising security, IT-related installations and service. Acquired units in Sweden have annual sales of approximately 75 M and about 60 employees. Companies acquired during the year contributed a combined total of SEK 470 M to the Group's net sales in 1998. Through additional acquisitions in January 1999, the Group continued to strengthen its positions in Sweden and Norway. Companies acquired in January have annual sales of SEK 240 M and 250 employees. Divestments BPA sold its electrical wholesale operations in Norway, effective July 1, 1998. The activities has annual sales of approximately SEK 200 M and 50 employees. Industrifilter i Borås, a production unit with annual sales of approximately SEK 100 M and about 60 employees, was also sold effective July 1. Order bookings After a weak start in 1998, order bookings developed favorably, increasing 10% compared with 1997 to SEK 6,226 M (5,677). The increase for comparable units was 12% Order bookings in core installation activities rose 17% to SEK 6,115 M (5,223). Swedish installation operations reported order bookings of SEK 4,534 M (4,099), an increase of 11%. Business development in Norway remained highly positive. No signs of decline were noted in BPA's market sectors. Order bookings amounted to SEK 1,126 M (797), a sharp increase of 41%. In Denmark, BPA has entered a restructuring phase designed to broaden operations toward traditional installations. Order bookings rose 40% to SEK 455 M (326). The BPA Group's order backlog increased 13% during the year to SEK 1,614 M (1,423). Sales Invoiced sales rose 6% to SEK 6,121 M (5,775). The increase for comparable units was also 6%. Overall sales by the Group's installation operations increased nearly 12% to SEK 5,972 M (5,349). Sales by BPA's Swedish installation operations recovered after a weak start in 1998. Invoicing amounted to SEK 4,343 M (4,294). Sales in Norway were up 80% to SEK 1,198 (666). Most of the increase was attributable to acquisitions. In Denmark, sales rose to SEK 431 M (388), an increase of 11%. Consolidated net sales increased 5% to SEK 6,382 M (6,086). Net sales invoiced by installation operations rose nearly 10% to SEK 6,217 M (5,664). Operating income Consolidated operating income amounted to SEK 169 M (142), an improvement of 19%. The operating margin rose to 2.6% (2.3). The operating income from installation operations increased to SEK 230 M (207), with an operating margin of 3.7% (3.7). Operations in Norway accounted for the BPA Group's strongest business development in 1998. Operating income nearly doubled to SEK 66 M (34), compared with the preceding year, as a result of strong growth. The operating margin rose to 5.5% (5.1). Weak market conditions in Sweden toward year-end 1997 resulted in lower production volumes in the beginning of 1998. Some recovery was noted later in the year, and net sales for full-year 1998 were virtually the same as sales in 1997. Operating income amounted to SEK 170 M (177), resulting in a modest decline in the operating margin to 3.7% (3.8). The electrical installation product area had the most favorable business development, while earnings from heating and plumbing operations were weak. Operations in Denmark are being restructured, which incurred short-term costs to develop a full range of installation operations. The operating result for the year amounted to a loss of SEK 6 M (loss: 4). Earnings Net financial items improved to SEK 1 M (expense: 12). Earnings after financial items, accordingly, amounted to SEK 170 M (130), up 31% compared with the preceding year. Associated companies BPA has three associated companies: Oskarsborg AB, a property company in which the Group has a 48% ownership interest, as well as Ecuro Sverige AB and Maintech Industripartner AB in which BPA owns a 50% interest in each. Oskarsborg is not included in BPA's core activities, and the Group plans to divest its interests at a rate that will yield maximal values for the assets. According to the present time plan, the interests in Oskarsborg are expected to be divested by year-end 2000. PEAB, a building and contracting company, and BPA merged their respective units for property management and industrial maintenance in 1998 in two jointly owned companies, Ecuro Sverige AB and Maintech Industripartner AB. Establishment of the joint venture companies created some structural changes and expenses in 1998. Both companies are expected to show a profit in 1999. BPA's share in the profit/loss of associated companies amounted to a loss of SEK 18 M (0), which includes a shareholder contribution of SEK 12 M to Oskarsborg AB. Investments The Group's net investments amounted to SEK 149 M (72). Financial position Liquid funds at year-end 1998 amounted to SEK 242 M (157). Including credit lines granted but not yet utilized, liquid funds totaled SEK 607 M (550). Interest-bearing loans rose to SEK 418 M (311). The net financial position, defined as liquid funds in relation to interest-bearing loans, amounted to a deficit of SEK 176 M (deficit: 154). BPA's financial position remains strong. The equity/assets ratio rose to 36.9% (35.1). Personnel The number of BPA employees at year-end 1998 was 6,319 (6,352). Dividend The Board of Directors proposes a dividend for 1998 of SEK 0.70 per share, (0.50), corresponding to total dividends of SEK 45.8 M. Outlook for 1999 Demand in the Swedish market is expected to increase marginally in 1999, while Norwegian market demand will stabilize at a relatively high level. In view of BPA's market position and the Group's clearly defined growth strategy, projected volume and earnings growth in 1999 will be 10-15%. Stockholm, February 23, 1999 Johan Karlström President Financial information from BPA during 1999 Annual General Meeting April 8 Interim report, three months ended March 31, 1999 May 4 Interim report, six months ended June 30, 1999 August 16 Interim report, nine months ended September 30, 1999 November 2 CONSOLIDATED INCOME STATEMENT, January - (SEK M) December 1998 1997 1996 Invocied sales 6,121 5,7755,43 3 Net sales 6,382 6,0865,31 7 Operating expenses *) -6,195 -5,944 - 5,19 7 Participation in -18 0 -1 associated companies Operating income 169 142 119 Loss from financial 1 -12 -19 investments Income after financial 170 130 100 items Minority interests - 1 -3 Tax -48 -28 -27 NET PROFIT FOR PERIOD 122 103 70 *) Operating expenses include depreciation amounting to SEK 75 (68) 1996 SEK 55 NET SALES AND OPERATING INCOME BY SUBSIDIARY Net Operating sales income January - Januari- December December 1998 1997 1998 1997 BPA Nord 767 768 17 27 BPA Öst 775 777 24 34 BPA Mellersta 570 608 19 19 BPA Väst 808 861 24 26 BPA Syd 639 649 25 24 Tisab-gruppen 988 950 42 47 Gemensamt Installation 38 3 19 0 Installation Sweden 4,585 4,616 170 177 Installation Norway 1,207 664 66 34 Installation Denmark 425 384 -6 -4 Total Installation 6,217 5,664 230 207 Maintenance and - 321 - 1 Management *) Shared Group expense - - -54 -58 Other items and 165 101 11 -8 eliminations Associated companies - - -18 0 GROUP 6,382 6,086 169 142 *) Reported as associated company, effective 1998. NET SALES AND OPERATING INCOME BY PRODUCT GROUP, (SEK M) Net Operating sales income January- January- December December 1998 1997 1998 1997 Eletrical 1,735 1,977 103 81 Telecom/Data *) 305 21 Heating and Plumbing 2,140 2,020 40 46 Ventilation 1,657 1,369 55 66 Property-technical 380 298 11 14 Service Total, Installation 6 217 5 664 230 207 *) Telecom/data was included in product group electrical 1997 GROUP BALANCE SHEET, (SEK M) Dec Dec 31 Dec 31 31 ASSETS 1998 1997 1996 Intangible fixed 208 170 117 assets Tangible fixed assets 102 110 138 Financial fixed assets 710 666 688 Property assets held 79 83 67 for resale Inventories 94 107 86 Accounts receivable 1,068 1,019 873 Other current 164 160 200 receivables Interest-bearing 211 315 130 current receivables Liquid funds and 242 157 199 ivestments TOTAL ASSETS 2,878 2,787 2,498 SHAREHOLDERS' EQUITY AND LIABILITES Shareholders' equity 1,060 978 894 Minority interests 1 1 5 Non-interest-bearing 70 46 94 provisions Provision for pensions 28 27 30 Non-intrest-Bearing long-term 12 13 22 liabilities Interest-bearing long- 139 99 18 term liabilites Balance of work in 62 82 89 progress Non-interest-bearing 1,227 1,329 1,178 current liabilites Interest-bearing 279 12 168 current liabilites TOTAL SHAREHOLDERS' EQUITY AND LIABILITES 2,878 2,787 2,498 STATEMENT OF CHANGES IN FINANCIAL POSITION, Summary 1998 1997 1996 Funds generated from the 197 171 129 year's operations Change in operating -53 -207 -143 income Net financing from the year's 144 -36 -14 operations Net financing -149 -72 -68 Cash flow from -5 -108 -82 operations Financing 90 66 -115 Chage in liguid funds 85 -42 -197 Dec Dec 31 Dec 31 31 BPA GROUP KEY FIGUERS 1998 1997 1996 No. Of shares at close of 65,4 65,4 65,4 period, millions SEK/SHARE Income after financial 2,60 2,00 1,55 items Income after full tax 1,90 1,60 1,10 Dividend *) 0,70 0,50 0,30 Adjusted shareholders' 16,20 14,95 13,70 equity KEY RATIOS, % Operating margin 2,6 2,3 2,2 Profit margin 2,7 2,1 1,9 Return on adjusted 12,0 10,9 8,5 sharehodlers' equity Return on capital 13,6 12,9 13,1 employed Equity/assets ratio 36,9 35,1 36,0 *) Dividend for 1998 proposed by the Board ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/02/23/19990223BIT00370/bit0001.doc http://www.bit.se/bitonline/1999/02/23/19990223BIT00370/bit0002.pdf