ÅF Group takes over CTS Engineering Oy

Monday, 22. March 2004 14:30

The ÅF Group has acquired CTS Engineering Oy, one of Finland's
largest engineering consultancies for the pulp and paper industry
with 260 employees. The acquisition consolidates the position of the
ÅF Group's Pulp & Paper Division as one of the two pre-eminent
consulting companies for the European forest industry.

The forest industry consultant CTS reported turnover for 2003 in
excess of 16 million euros. The company works on consulting
assignments in Finland and throughout most of Europe. Established in
1973, CTS now has names such as Norske Skog, Stora Enso, UPM Kymmene
and Metso among its portfolio of clients.

CTS's strengths in printing-paper technology provide the ideal
complement to the ÅF Group's traditional focus on pulp production and
waste paper.

"CTS is set to play an important role in the international
organisation that the ÅF Group's Pulp & Paper Division is in the
process of creating," comments Jonas Wiström, President and CEO of
the ÅF Group. "Together with CTS we now form a one-stop consulting
resource for the pulp and paper industry that is able to call upon
the skills and experience of 650 consultants in around a dozen
countries. The acquisition of CTS will enable us to tackle even
larger projects in the future at the same time as it provides us with
a springboard for growth in and around the Baltic region."

The takeover will make the ÅF Group an all-round international
supplier of consulting services for the pulp and paper industry, with
units in Sweden, Finland, France, Germany, Spain, the Czech Republic
and South Africa.

The ÅF Group will acquire 67.6 per cent of the shares in CTS, with an
option on a further 12.4 per cent during 2005. As the ÅF Group
already has a 20 per cent stake in CTS, this means that it will own
100 per cent of the shares by 2005 at the latest. The new shares will
be transferred from the 27 shareholders in CTS, the majority of whom
are actively employed in the company.

The transfer of the 67.6 per cent stake in CTS will be settled partly
by a cash payment totalling SEK 34 million, and partly in the form of
a new issue of "B" class shares in AB Ångpanneföreningen with a
nominal value of SEK 23 million.

Part-payment in the form of a new share issue is effected with the
support of the authority to do so invested in the board by the Annual
General Meeting of ÅF shareholders on 7 May 2003. After the takeover
the sellers will own 3.1 percent of the capital and 1.9 percent of
the voting rights in ÅF.

It is anticipated that the merger will give rise to substantial
synergies in earnings. According to preliminary estimates the cost
for achieving these synergies, including transaction costs, will
total approximately SEK 6 million. Overall the acquisition is
expected to contribute positively to ÅF's profitability and cash flow
during the course of the coming year.

Timo Juvonen, Managing Director of CTS, says. "Our merger with the ÅF
Group improves our opportunities for growth and is the right move
from an industrial point of view. It brings us into line with the
globalisation of the pulp and paper industry and enables us to offer
clients a broad spectrum of world-class services."

Financial trends for CTS Engineering Oy 1999-2003

| | 1999 | 2000 | 2001 | 2002 | 2003 | 5-year |
| | | | | | | average |
| Sales | 13.3 | 15.1 | 17.2 | 15.0 | 16.2 | 15.4 |
| (millions of | | | | | | |
| euros) | | | | | | |
| Profit margin | 5.0% | 7.5% | 7.1% | 3.6% | 2.4% | 5.2% |

AB Ångpanneföreningen

Corporate Information
The ÅF Group is a leading name in technical consulting. We provide
cutting-edge expertise in IT and engineering to serve the needs of
clients working with energy and the environment, the pulp and paper
industry, inspections, the development of industrial systems and
products, the design of installations and infrastructure technology.
The Group currently employs 2,600 people in around 50 locations
throughout Sweden and almost a dozen other European countries.
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