Interim report for January-September 1999

Interim report for January-September 1999 * Earnings growth of 31 per cent compared with 1998 * Profit before tax of MSEK 26 (20) * Net sales up 2 to MSEK 1,186 * SWECO to receive MSEK 575 from SPP PROFIT AND FINANCIAL POSITION Income and profit The Group's net sales amounted to MSEK 1,185.7 (1,115.8) and profit before tax was MSEK 26.4 (20.2). Redemption of pension liabilities has given rise to a gain of MSEK 5.0, which was charged to profit for the period January- September 1999. Profit summary 1999 1998 MSEK 9 mon.9 mon. Architecture, Construction and Installation 17.8 6.7 Environment, Civil Engineering and Industry 17.6 1.6 Real Estate consulting -2.5 -3.4 Capital gains - 41.4 Group eliminations/ - joint, incl. goodwill -6.4 -8.7 Consolidated net financial items -0.4 1.4 Minority share 0.3 -18.8 Profit before tax 26.4 20.2 Earnings per share Profit after tax corresponded to earnings per share of SEK 1.30 (1.00). Investments The Group's net investments in tangible fixed assets totalled MSEK 22.8 (22.9). Financial position The Group's interest-bearing assets in the form of liquid assets and interest-bearing receivables amounted to MSEK 38.8 (184.7 at year-end). Interest-bearing liabilities for the same periods amounted to MSEK 48.6 (87.2). Personnel The number of full-time employees in the Group during the period was 2,225 (2,336). Parent Company Parent Company income totalled MSEK 62.3 (41.3) and profit before tax was MSEK 5.8 (1.3). Reallocation of Pension Funds According to SPP, SWECO will be reallocated pension funds of approximately MSEK 575, which is significantly more than indicated by our preliminary estimates. SPP previously stated that the returned funds could be used mainly for pension purposes within the framework of the SPP system. SPP has requested a statement from the Competition Authority as to whether this is consistent with competition law. Since the Competition Authority has not yet notified SPP of its decision on this matter, SPP has announced that the allocated amount will be available as of 1 December 1999, as originally intended. Because neither the rules nor the date for application of the returned funds have been established, the allocated funds do not meet the criteria for assets to be taken up on the balance sheet. Aside from this repayment from SPP, SWECO will receive pension funds from the Architects' Pension Fund (AP) in an amount previously estimated at MSEK 40-50. Final notification from AP of the amount to be repaid is not awaited until the beginning of 2000. No portion of the funds expected to be received from SPP/AP have been included in the result for the first nine months of the year. OPERATIONS SWECO's operations are focused on architecture and technical consulting, which are conducted in two business areas. Both business areas showed increased net sales and considerably higher profit than in the corresponding period of 1998. The two business areas' combined profit for the period improved by MSEK 27.1 to MSEK 35.4 (8.3). This increase is attributable to higher capacity utilisation owing to positive market development. Architecture, Construction and Installation The market for building-related operations has improved successively during the year. Growth is especially distinct in metropolitan areas and university cities, and mainly refers to new production of housing, as well as private and public sector construction of offices and facilities. The business area's net sales rose by 12 per cent to MSEK 581.8 (521.6). Operating profit improved by MSEK 11.1 to MSEK 17.8 (6.7) and the operating margin strengthened from 1.3 to 3.1 per cent. The number of full-time employees was 1,084 (1,088). Environment, Civil Engineering and Industry The environmental market remains expansive in both Sweden and abroad. In the road and railways segment, the market has slackened somewhat. There has been a gradual upturn in the power installations segment, while the market for heavy industrial engineering remains sluggish. SWECO's resources in this area are being adapted to create balance with the market. SWECO's international operations, which are mainly conducted in this business area, are showing favourable development and several major environmental and civil engineering contracts were signed. The business area's net sales rose by 6 per cent and amounted to MSEK 603.8 (568.1). Operating profit improved by MSEK 16.0 to MSEK 17.6 (1.6), and the operating margin rose from 0.3 to 2.9 per cent. The number of full-time employees was 1,059 (1,103). TRAINEE PROGRAMME In 2000, SWECO will carry out an extensive training programme called New Generation. Of the more than 300 applicants to the programme, around 50 will be selected to participate. FORECAST The market is continuing to expand. SWECO's full-year profit for 1999 is expected to exceed the 1998 level and amount to approximately MSEK 50 before tax (35.5), corresponding to SEK 2.40 per share after tax (1.60). Profit for 1998 included a net capital gain of MSEK 22.8. Since SPP currently is unable to state when the reallocated pension funds will be at the company's disposal, it is not possible to forecast the related profit effect for 1999. Stockholm, 28 October 1999 SWECO AB (publ) Lars Hansson Managing Director & CEO This interim report has not been examined by the company's auditors. SWECO AB (publ) Org no. 556542-9841, Gjörwellsgatan 22, Box 34044, SE-100 26 Stockholm, Sweden Telephone: +46 8 695 60 00, Fax: +46 8 695 66 10, E-mail: info@sweco.se, www.sweco.se PROFIT AND LOSS ACCOUNT, MSEK 1999 1998 1998 9 months 9 months full year Net sales 1,185.7 1,115.8 1,588.7 Capital gains - 41.4 41.4 Share in profit of associated companies 0.1 0.8 0.8 Total operating income 1,185.8 1,158.0 1,630.9 Other external costs -358.7 -344.0 -492.9 Staff costs -769.2 -749.0 -1,045.1 Depreciation -31.4 -27.4 -39.5 Operating profit 26.5 37.6 53.4 Net financial items -0.4 1.4 1.1 Profit after net financial items 26.1 39.0 54.5 Minority share 0.3 -18.8 -19.0 Profit before tax 26.4 20.2 35.5 Tax -7.3 -10.9 -16.8 Minority share in tax - 5.2 5.2 Profit after tax 19.1 14.5 23.9 BALANCE SHEET, MSEK 30 Sept. 99 30 Sept. 98 31 Dec. 98 Fixed assets 94.7 89.5 105.8 Other current assets 414.4 418.5 446.8 Cash and bank 38.8 155.2 184.7 Total assets 547.9 663.2 737.3 Shareholders' equity 195.6 185.1 194.6 Minority share 0.9 10.2 8.6 Provisions 63.0 151.6 126.6 Liabilities to credit institutions 23.7 18.3 22.0 Other liabilities 264.7 298.0 385.5 Total shareholders' equity and 547.9 663.2 737.3 liabilities CASH FLOW STATEMENT, MSEK 1999 1998 1998 9 months 9 months full year Cash flow from operating activities -54.8 19.0 95.5 Cash flow from investing activities -58.1 3.2 -25.4 Cash flow from financing activities -32.7 15.6 -2.9 Change in liquid assets -145.6 37.8 67.2 KEY RATIOS Profit margin, % 2 3 3 Return on shareholders' equity, %* 15 16 13 Return on capital employed, %* 17 21 22 Earnings per share, SEK 1.30 1.00 1.60 Equity/assets ratio, % 36 28 26 Shareholders' equity per share, SEK 13 13 13 Number of full-time employees 2,225 2,336 2,334 Number of shares, 14,803,605 *Return on shareholders' equity and capital employed is calculated according to moving 12-month profit. Ratios for the preceding period have been similarly adjusted. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/10/28/20000418BIT00070/bit0001.doc http://www.bit.se/bitonline/1999/10/28/20000418BIT00070/bit0002.pdf