Earnings per share for the financial year were EUR 0.88. The return
on investment exceeded the strategic target, amounting to 41.7 per
cent. The consolidated balance sheet is healthy; the net debt/equity
ratio (gearing) was -47.4 per cent. The order stock increased,
amounting to EUR 562.8 million at the end of the year. The Board of
Directors proposes to the Annual General Meeting that a dividend of
EUR 0.65 per share be paid.
Consolidated earnings and balance sheet
As a result of good demand, the Pöyry Group's strong market position
and the streamlining of its operations, consolidated net sales
increased to EUR 718.2 (623.3 in the previous year) million and
profit before taxes improved significantly during the year under
review. Profit before taxes was EUR 76.5 (50.2 in the previous year)
million. The net profit for the period was EUR 52.8 (34.8) million.
Earnings per share improved by 51.7 per cent during the year to EUR
0.88 (0.58).
The target for the Group's return on investment is 20 per cent or
more on average; in 2007 the return on investment was 41.7 (31.1) per
cent.
The consolidated balance sheet is healthy. The equity ratio is 50.7
(49.2) per cent. The Group's liquidity is good. The net debt/equity
ratio (gearing) was -47.4 (-37.6) per cent.
The Group's order stock increased during the financial year. At the
end of the year it amounted to EUR 562.8 (507.6) million.
Prospects
The Pöyry Group has a strong market position in all of its business
areas. The order stock is good, having increased by EUR 55 million
during 2007. Consolidated net sales will grow during 2008.
Consolidated profit before taxes is expected to improve in 2008. The
repercussions in other national economies of the uncertainty in the
US economy may have a negative impact on investment demand during
2008.
The Auditors' Report is dated 31 January 2008.
Dividend
The parent company of Pöyry Group, Pöyry Plc's net profit for 2007
was EUR 32 050 336.92 and retained earnings was EUR 19 008 344.17
thus the total amount of distributable earnings was EUR
51 058 681.09. The Board of Directors of Pöyry Plc proposes to the
Annual General Meeting on 10 March 2008 that a dividend of EUR 0.65
(0.50) per share be paid for the year 2007. The number of shares is
58 652 614 and the total amount of dividends thus EUR 38 124 199.10.
The Board of Directors proposes that the dividend be paid on 20 March
2008.
Annual General Meeting
Pöyry Plc's Annual General Meeting will be held on March 10, 2008 at
the Pöyry House, Vantaa, Finland. The invitation to the Annual
General Meeting will be published in its entirety as a separate
notice on 1 February 2008 at 9.00 a.m.
Enclosures
Board of Directors' Report, 1 January - 31 December 2007
Consolidated statement of income, balance sheet, statement of changes
in financial position, changes in equity and liabilities, related
party transactions, key figures and acquisitions
PÖYRY PLC
Erkki Pehu-Lehtonen
President and CEO
Teuvo Salminen
Deputy to the President and CEO
Additional information by:
Erkki Pehu-Lehtonen, President and CEO, Pöyry Plc
Tel. +358 10 33 22999, +358 400 468 084
Teuvo Salminen, Deputy to the President and CEO, Pöyry Plc
Tel. +358 10 33 22872, +358 400 420 285
www.poyry.com
DISTRIBUTION:
OMX Nordic Exchange Helsinki
Major Media
PÖYRY GROUP
BOARD OF DIRECTORS' REPORT, 1 JANUARY - 31 DECEMBER 2007
Consolidated earnings and balance sheet
As a result of good demand, the Pöyry Group's strong market position
and the streamlining of its operations, consolidated net sales
increased to EUR 718.2 million and profit before taxes improved
significantly during the year under review. Profit before taxes was
EUR 76.5 (50.2 in the previous year) million, which equals 10.7 per
cent of net sales. The strike in the consulting engineering sector in
Finland in November reduced consolidated earnings by an estimated EUR
2-3 million. The net profit for the period was EUR 52.8 (34.8)
million. Earnings per share improved by 51.7 per cent during the year
to EUR 0.88 (0.58). The Group's financial target is to achieve an
improvement in earnings per share averaging 15 per cent a year.
The target for the Group's return on investment is 20 per cent or
more on average. In 2007 the return on investment was 41.7 (31.1) per
cent.
The consolidated balance sheet is healthy. The equity ratio is 50.7
(49.2) per cent. The Group's liquidity is good. At the end of the
year, the Group's cash and cash equivalents amounted to EUR 98.7
(74.9) million. Interest-bearing debts totalled EUR 8.9 (13.6)
million. The net debt/equity ratio (gearing) was -47.4 (-37.6) per
cent.
At the beginning of 2007, the Pöyry Group expected profit before
taxes for the year under review to improve compared with 2006. In the
interim report for the first quarter the earnings estimate was raised
and earnings were forecast to improve clearly. In the interim report
for the third quarter, the earnings estimate was raised and earnings
were forecast to improve significantly. The improvement in earnings
in 2007 was primarily due to better demand, successful integration
and favourable earnings development of mergers and acquisitions, and
improved internal efficiency mostly in the use of Group resources and
in project implementation.
+-------------------------------------------------------------------+
| Key figures, EUR million | 2007 | 2006 | 2005 |
|-------------------------------------------+-------+-------+-------|
| | | | |
|-------------------------------------------+-------+-------+-------|
| Net sales | 718.2 | 623.3 | 523.6 |
|-------------------------------------------+-------+-------+-------|
| Profit before taxes | 76.5 | 50.2 | 38.6 |
|-------------------------------------------+-------+-------+-------|
| Profit for the year, of which | 52.8 | 34.8 | 26.3 |
| attributable to equity holders of the | 51.3 | 33.6 | 25.9 |
| parent company | | | |
|-------------------------------------------+-------+-------+-------|
| Earnings/share, EUR | 0.88 | 0.58 | 0.45 |
|-------------------------------------------+-------+-------+-------|
| Return on investment, % | 41.7 | 31.1 | 25.8 |
|-------------------------------------------+-------+-------+-------|
| Equity ratio | 50.7 | 49.2 | 49.8 |
|-------------------------------------------+-------+-------+-------|
| Cash and cash equivalents | 98.7 | 74.9 | 64.5 |
|-------------------------------------------+-------+-------+-------|
| Interest-bearing debts | 8.9 | 13.6 | 10.7 |
|-------------------------------------------+-------+-------+-------|
| Gearing, % | -47.4 | -37.6 | -36.1 |
+-------------------------------------------------------------------+
Business groups
The parent company of the Pöyry Group is Pöyry Plc. The parent
company is responsible, among other things, for developing the
Group's strategy and for supervising its implementation, for
financing, for exploiting synergistic benefits and for general
co-ordination of the Group's operations. The parent company has
charged service fees for general administration and parent company
costs to the business groups. The relative share charged is derived
from the business groups' payroll costs.
The Pöyry Group's business operations are conducted through three
business groups: Energy, Forest Industry, and Infrastructure &
Environment. The business groups are globally responsible for their
operations. All three business groups offer a full range of
consulting, investment planning and implementation, maintenance
planning and operations improvement services to their clients,
covering the entire lifecycle of their business.
Energy
Supported by the continued economic growth in 2007, the brisk
activity in the world's energy markets continued. The desire to
mitigate the impacts of climate change and to diversify the
production based on crude oil promoted interest in renewable sources
of energy.
To be able to meet the strongly increased demand for its services and
to optimise the use of its resources, the business group focused on
utilising its international network effectively across business unit
and national borders. This business concept proved successful in
several projects and there was major progress in its application.
The Energy business group's net sales in 2007 were EUR 217.5 (197.4)
million. Operating profit was EUR 21.0 (14.6) million. Demand for
energy-related services remained good and the business group further
strengthened its global market position. The successful integration
of the management consulting and oil and gas businesses acquired in
2006 and 2007 had a favourable impact on earnings during the year
under review.
The order stock remained good, amounting to EUR 212.7 (204.9) million
at the end of the year. The most important new projects were the
bioethanol plant for San Carlos Bioenergy Inc. in the Philippines
(EUR 10 million), the Puttalam coal-fired power plant project in Sri
Lanka (EUR 7 million), the combined heat and power plant project with
Propower GmbH in Germany (EUR 6.2 million), Fortum Power and Heat
Oy's combined heat and power plant project in Finland (EUR 5
million), the Rudbar-e-Lorestan hydropower project in Iran (EUR 7
million), the diesel oil storage EPC contract with Esergui s.a. in
Spain (EUR 9.5 million), the Vung Ang coal-fired power plant in
Vietnam (EUR 11 million) and the Winterthur waste to energy plant
rehabilitation project in Switzerland (EUR 5.5 million).
+-----------------------------------------------+
| Energy, EUR million | 2007 | 2006 | 2005 |
|-----------------------+-------+-------+-------|
| | | | |
|-----------------------+-------+-------+-------|
| Net sales | 217.5 | 197,4 | 160,0 |
|-----------------------+-------+-------+-------|
| Operating profit | 21.0 | 14,6 | 9,1 |
|-----------------------+-------+-------+-------|
| Operating profit, % | 9.7 | 7,4 | 5,7 |
|-----------------------+-------+-------+-------|
| Order stock | 212.7 | 204,9 | 195,2 |
|-----------------------+-------+-------+-------|
| Personnel at year-end | 1838 | 1692 | 1463 |
+-----------------------------------------------+
Forest Industry
The focus of new investment projects was in the emerging markets of
South America and Asia. In North America the business group carried
out a few paper mill rebuilds, and in Europe a number of new paper
mill engineering projects were completed. In Russia, preparations for
new investments gained momentum. Project activity in the chemical
sector continued briskly, as did the development and implementation
of biofuel projects. The business group continued to expand and
diversify its range of integrated engineering, procurement and
construction management (EPCM) services. Local services were extended
to cover also other sectors of industry outside the forest industry.
Demand for management consulting services was boosted by
competitiveness enhancement projects, industry restructuring,
operations improvement projects and the challenges and opportunities
related to bioenergy currently facing the forest industry.
The Forest Industry business group's net sales for 2007 were 276.9
(224.9) million and operating profit was EUR 39.0 (22.9) million. The
favourable development was due to global networking, major inputs in
emerging markets, a more diversified range of services and
successfully implemented projects.
The order stock is good, amounting to EUR 123.8 (111.4) million at
the end of the year. The most important new projects during the
review period were the implementation of the new bleached hardwood
kraft pulp mill of VCP - MS Celulose Sul Mato-Grossense Ltda in
Brazil (EUR 54 million), Stora Enso's board machine rebuild at
Wisconsin Rapids in the United States, the rebuilds of two paper
machines for Billerud AB in Sweden, Holmen Paper AB's TMP plant
upgrade at the Braviken mill in Sweden (EUR 2 million), the new
containerboard production line project with Mondi Packaging Paper
GmbH (EUR 12 million) and Portucel's new fine paper line in Portugal
(EUR 10 million).
+------------------------------------------------------+
| Forest Industry, EUR million | 2007 | 2006 | 2005 |
|------------------------------+-------+-------+-------|
| | | | |
|------------------------------+-------+-------+-------|
| Net sales | 276.9 | 224.9 | 199.3 |
|------------------------------+-------+-------+-------|
| Operating profit | 39.0 | 22.9 | 19.7 |
|------------------------------+-------+-------+-------|
| Operating profit, % | 14.1 | 10.2 | 9.9 |
|------------------------------+-------+-------+-------|
| Order stock | 123.8 | 111.4 | 97.3 |
|------------------------------+-------+-------+-------|
| Personnel at year-end | 2961 | 2418 | 2123 |
+------------------------------------------------------+
Infrastructure & Environment
Demand for infrastructure- and environment related services remained
stable in 2007. The business group continued to strengthen its
position in local and international markets. Pöyry's ability to react
quickly to changes in the business environment represents a
significant competitive advantage. Also, combining the company's
global network of experts with a local presence in key markets is
becoming increasingly important.
In Europe, new growth markets in 2007 were Romania and Bulgaria, who
have received major funding from the European Union. In Asia, India
and Vietnam became more important, in addition to the previously
established markets. The private sector accounted for a more
diversified proportion of the clientele. The business group
participated in an increasing number of Public Partnership Projects.
Operated by private stakeholders, these projects get their financing
from both public and private sources. There was also major progress
in top-level management consulting work. For example, Pöyry was
appointed engineering consultant for the water supply development
project of the City of Paris.
Boosted by the good demand situation and increased productivity
achieved through streamlining of operations, the Infrastructure &
Environment business group's net sales and operating profit increased
during the year. Net sales for 2007 amounted to EUR 222.5 (201.8)
million and operating profit was EUR 16.8 (13.0) million. By
systematically combining its expertise in different business units
and across national borders the business group successfully expanded
its service capabilities to provide clients with a more comprehensive
package of services. This has also boosted net sales.
The order stock was good, amounting to EUR 226.3 (191.0) million at
the end of the year. The most important new projects were the
contract with the German Railways (DB ProjektBau GmbH) for
improvement of the railway network of Berlin (EUR 3 million), waste
water management projects in Brno, Czech Republic and Paris, France
(totally EUR 2.5 million), the traffic control system project with
ASFINAG (Autobahnen- und Schnellstrassen- Finanzierungs-
Aktiengesellschaft) Verkehrstelematik GmbH in Linz, Austria (EUR 1.3
million), railway line projects in Algeria and Finland (totally EUR
3.5 million), the contract with the Latvian real estate company SIA
Vertikala Pasaule for construction management and site inspection
services in Latvia (EUR 3 million), the contract with the Finnish
Rail Administration to improve the service standard on the Lahti -
Luumäki railway track (EUR 3 million), the urban mass transit project
in Munich, Germany, a road engineering assignment in Romania (EUR 7
million) and a railway engineering assignment, also in Romania (EUR
14 million).
+-------------------------------------------------------------------+
| Infrastructure & Environment, EUR million | 2007 | 2006 | 2005 |
|-------------------------------------------+-------+-------+-------|
| | | | |
|-------------------------------------------+-------+-------+-------|
| Net sales | 222.5 | 201.8 | 164.9 |
|-------------------------------------------+-------+-------+-------|
| Operating profit | 16.8 | 13.0 | 9.2 |
|-------------------------------------------+-------+-------+-------|
| Operating profit, % | 7.5 | 6.4 | 5.6 |
|-------------------------------------------+-------+-------+-------|
| Order stock | 226.3 | 191.0 | 159.5 |
|-------------------------------------------+-------+-------+-------|
| Personnel at year-end | 2378 | 2207 | 1979 |
+-------------------------------------------------------------------+
Development of Group structure
The Pöyry Group's clients are globalising and consolidating their
operations. Through its comprehensive global network of offices the
Group serves its clients as an adviser and project implementation
specialist, globally and locally. The Pöyry Group's local network of
offices offers clients a good alternative for outsourcing their
engineering and project implementation services. The Group is
actively expanding its office network. The Group also intends to
expand its technology and know-how base by acquiring technology
leaders within its main business sectors. These companies' expertise
can also be efficiently marketed via the Group's global network of
offices.
Turnkey project activity has decreased in recent years, accounting
for 1.4 per cent of consolidated net sales in 2007. Turnkey projects
are only undertaken by the Energy business group and the objective is
to keep their volume below 30 per cent of the business group's net
sales. This equals about 10-15 per cent of the Group's consolidated
net sales.
Acquisitions and divestments
Energy
Pöyry expanded its management consulting services portfolio and
market presence in the energy sector by acquiring in August ECON
Analyse AS of Norway, renamed Econ Pöyry AS. The company's main
operational bases are in Oslo and Stavanger, Norway, Stockholm,
Sweden and Copenhagen, Denmark, and it is well-established in all of
its markets. The company's net sales for 2006 amounted to EUR 13
million and it employs 85 experts. Following the transaction, Pöyry
further strengthened its position as the leading energy management
consultant in Europe, employing 250 experts. Econ Pöyry AS was
consolidated into Pöyry on 1 September 2007.
Pöyry divested its French subsidiary Pöyry Energy (Lyon) SAS and sold
its 100 per cent ownership in the company. The reason for the sale
was that the company's profile and product portfolio were not in line
with the current strategy of the Energy business group. The income
from the sale was EUR 0.7 million. Pöyry divested its French
subsidiary Pöyry Energy (Strasbourg) SAS and sold its 100 per cent
ownership in the company. The reason for the sale was that the
company's profile and product portfolio were not in line with the
current strategy of the Energy business group. The income from the
sale was EUR 0.2 million.
The business group aims to expand its network of local offices in
Europe, Asia, Russia and Latin America. In addition, the business
group intends to expand its technological expertise, especially in
the areas of renewable energy, management consulting, deep water, oil
sands, oil and gas reserves, nuclear energy and environmental
protection.
Forest Industry
Pöyry expanded its business in Russia by acquiring in June 70 per
cent of the shares of ZAO Giprobum Engineering, renamed ZAO
Giprobum-Pöyry, based in St. Petersburg, Russia. The transaction
includes an option to acquire the remaining 30 per cent of the shares
during the first half of 2009. The company's services include
investment studies, services related to permitting and agreements
with authorities, plant engineering, and construction management
services. ZAO-Giprobum Pöyry has a wide clientele both in pulp and
paper and mechanical wood industries in Russia, Ukraine, Belarus and
several Eastern European countries. The company's net sales are about
EUR 5 million and it has a staff of 260. ZAO Giprobum-Pöyry was
consolidated into the Pöyry Group on 1 July 2007.
In September Pöyry acquired 100 per cent of the share capital and
votes of Insinööritoimisto Pöysälä & Sandberg Oy, a Finnish company
specialising in structural engineering. Pöyry Civil Oy and Pöysälä &
Sandberg together constitute the largest structural engineering
company in the industrial investment building sector in Finland.
Pöysälä & Sandberg specialises in industrial building construction
and structural engineering of office and commercial buildings. Its
net sales amounted to EUR 7.5 million in 2006. The company employs
about 100 experts in offices in Helsinki, Kuopio and Oulu in Finland.
Insinööritoimisto Pöysälä & Sandberg Oy was consolidated into the
Pöyry Group as of 1 September 2007.
Pöyry expanded its management consulting services portfolio in North
America by acquiring Perforex Inc., Canada. The company's main
operational bases are in Toronto, Canada, and Atlanta and Portland
(Oregon), USA. The transaction strengthened Pöyry's position as the
leading forest industry management consultant in the world, employing
more than 300 experts globally. The company's net sales in 2006
amounted to EUR 4.5 million and it employs 35 experts. Perforex Inc.
was consolidated into Pöyry as of 1 December 2007.
The business group's office network will be expanded in the next few
years in line with market developments. The expansion is likely to
take place primarily in emerging markets, where investment activity
is expected to grow, and partly in Europe and North America, where
demand for Pöyry's services is expected to increase in the areas of
biofuels, chemical industry, maintenance engineering and other local
services.
Infrastructure & Environment
Pöyry strengthened its quantity and cost calculation know-how by
acquiring in May 100 per cent of the shares of Insinööritoimisto
Rakennuslaskenta NHL Oy, Finland. Rakennuslaskenta NHL had net sales
of more than EUR 2 million in 2006. The company was consolidated into
the Pöyry Group as of 1 June 2007 and was merged to Pöyry Building
Services Oy as of 31 December 2007.
In June Pöyry acquired 70 per cent of the shares of Evata Worldwide
Oy, a Finnish architectural design and real estate consulting firm.
The deal includes an option to acquire the remaining 30 per cent of
the company's shares in 2010, at the earliest. Evata employs about
100 experts in its headquarters in Helsinki, and in offices in
Tallinn, Estonia, and Beijing, China. It also has a representative
office in St. Petersburg, Russia. Evata offers architectural and
interior design, workplace design, office property consulting and
services related to real estate development. The company's annual net
sales are about EUR 10 million. Following this acquisition, Pöyry's
real estate expertise covers all major sectors of the business:
project management, design, real estate consulting and architecture.
Evata Worldwide Oy was consolidated into the Pöyry Group as of 1 July
2007.
In October Pöyry expanded its waste management services portfolio and
market presence in the environmental business by acquiring
Ingenieurgemeinschaft Witzenhausen Fricke & Turk GmbH, Germany. The
acquisition strengthens Pöyry's position in Germany as a leading
consultant in environmental consulting and engineering, employing
more than 300 experts. The company's net sales in 2006 amounted to
EUR 2 million and it employs 20 experts. Ingenieurgemeinschaft
Witzenhausen Fricke & Turk GmbH was consolidated into the Pöyry Group
as of 1 October 2007.
In November Pöyry strengthened the operations of its real estate and
telecommunications business by acquiring 100 per cent of the shares
of Quatrocon Oy, a company specialising in HVAC design. Its office is
situated in Espoo, Finland, and it also has experience of the Russian
market. The company's net sales amounted to EUR 1.1 million in 2006
and it employs 14 experts. The company was consolidated into the
Pöyry Group as of 1 December 2007.
In December Pöyry expanded its presence in the water and environment
market in Asia by acquiring 67 per cent of the shares of IDP Consult
Incorporated. IDP is a consulting company based in Manila,
Philippines serving mainly international donors such as the Asian
Development Bank and World Bank in technical assistance projects in
the water sector. The company's net sales amounted to EUR 0.8 million
in 2006 and it employs about 30 experts. IDP Consult Incorporated
will be consolidated into the Pöyry Group as of 1 January 2008.
The business group aims to expand its network of local offices in
Europe and Asia.
Order stock
The Group's order stock increased during the financial year. At the
end of 2007, the order stock totalled EUR 562.8 million, compared
with EUR 507.6 million at the end of 2006. The order stock of the
consulting and engineering business increased by 50.6 million during
the year.
The share of consulting services and operation and maintenance
services of the order stock has increased. Assignments in these areas
are short-term and are partly booked under net sales without being
recorded in the order stock.
+----------------------------------------------------+
| Order stock, EUR million | 2007 | 2006 | 2005 |
|----------------------------+-------+-------+-------|
| | | | |
|----------------------------+-------+-------+-------|
| Consulting and engineering | 551.4 | 500.8 | 428.1 |
|----------------------------+-------+-------+-------|
| EPC | 11.4 | 6.8 | 24.0 |
|----------------------------+-------+-------+-------|
| Order stock, total | 562.8 | 507.6 | 452.1 |
+----------------------------------------------------+
Human resources
Personnel structure
The total number of personnel in the Group increased during 2007. The
Group had an average of 6852 employees during the year, which is 13.5
per cent more than in 2006. The number of personnel at the end of the
year was 7269. Mergers and acquisitions added 637 people to the
total. Of the total personnel, 91 per cent were employed in operative
project work.
+-----------------------------------------------+
| Personnel, average | 2007 | 2006 | 2005 |
|--------------------------+------+------+------|
| | | | |
|--------------------------+------+------+------|
| Operative personnel | 6270 | 5514 | 4936 |
|--------------------------+------+------+------|
| Administrative personnel | 582 | 524 | 487 |
|--------------------------+------+------+------|
| Personnel, total | 6852 | 6038 | 5423 |
+-----------------------------------------------+
Salaries and bonuses
Salaries and bonuses in the Pöyry Group are determined on the basis
of collective and individual agreements, the employee's performance
and the required qualification level. Supplementing the basic salary,
the Group has implemented bonus schemes which are primarily aimed at
Group companies' line management. In addition, separately agreed
incentive schemes were implemented in selected projects. In 2007,
salaries paid totalled EUR 313.4 million, of which bonuses accounted
for EUR 15.6 million.
+-----------------------------------------------------------+
| Salaries and bonuses, EUR million | 2007 | 2006 | 2005 |
|-----------------------------------+-------+-------+-------|
| | | | |
|-----------------------------------+-------+-------+-------|
| Salaries and remunerations | 297.8 | 262.3 | 223.6 |
|-----------------------------------+-------+-------+-------|
| Bonuses | 15.6 | 11.1 | 9.3 |
|-----------------------------------+-------+-------+-------|
| Salaries and bonuses, total | 313.4 | 273.4 | 232.9 |
+-----------------------------------------------------------+
Human resources management
The year under review was a year of strong growth for Pöyry. To make
the best possible use of its resources for project work, the company
utilised its global office network more effectively than ever before.
To ensure that the Pöyry Group's capabilities will develop in
accordance with business needs, the principles and actions for
competence development are defined as a part of the annual strategy
process.
Pöyry's Human Resources function supported the company's growth by
focusing on development of management and leadership skills and on
promoting internal staff mobility. Uniform operating principles were
promoted in 2007 by intensifying the co-operation within the Group's
HR network and by developing joint operating models. Incentive
systems were reviewed and benchmarked during the year. As a result,
e.g. a new performance share plan was approved at the end of the
year. The agreed changes in common incentive systems is an important
part of Pöyry's overall reward programme, which will be developed
further during 2008. The benefits of adopting aligned operating
practices are already clearly visible.
Research and development
The Pöyry Group's research and development co-operation committee
consists of representatives of the business groups, IT staff and the
company's management. Its main objectives are to promote internal
research and development, to assist in obtaining supplementary
financing and engaging clients in development processes, and to keep
the research and development focus on the Group's strategic
objectives.
The Pöyry Group is engaged in hundreds of research and development
projects each year, relying on the expertise, experience and
innovativeness of its employees. Research and development efforts are
conducted in partnership with clients and research institutions,
often in an interdisciplinary manner, making use of the Group's
technical and technological expertise to improve the competitiveness
of the Group and its clients.
The income and expenses attributable to research and development are
mostly part of the Group's client work and cannot therefore be
defined in exact monetary terms. The income and expenses have been
taken into account in the statement of income for the financial year.
Capital expenditure and depreciation
The Group's capital expenditure totalled EUR 53.3 million, of which
EUR 9.1 million consisted of computer software, systems and hardware
and EUR 44.2 was due to business acquisitions.
+-------------------------------------------------------------------+
| Capital expenditure and depreciation, EUR | 2007 | 2006 | 2005 |
| million | | | |
|----------------------------------------------+------+------+------|
| | | | |
|----------------------------------------------+------+------+------|
| Capital expenditure, operative | 9.1 | 9.8 | 8.0 |
|----------------------------------------------+------+------+------|
| Capital expenditure, shares | 44.2 | 27.9 | 17.8 |
|----------------------------------------------+------+------+------|
| Capital expenditure, total | 53.3 | 37.7 | 25.8 |
|----------------------------------------------+------+------+------|
| Depreciation | 8.4 | 7.8 | 7.9 |
+-------------------------------------------------------------------+
Financing
The Group's liquidity remained good during the financial year. At the
end of the year, the Group's cash and cash equivalents totalled EUR
98.7 (74.9) million. Interest-bearing debts amounted to EUR 8.9
(13.6) million. The net debt/equity ratio (gearing) was -47.4 (-37.6)
per cent, which was clearly better than the target of keeping gearing
below 30 per cent.
+------------------------------------------------------+
| Financing, EUR million | 2007 | 2006 | 2005 |
|------------------------------+-------+-------+-------|
| | | | |
|------------------------------+-------+-------+-------|
| Cash and cash equivalents | 98.7 | 74.9 | 64.5 |
|------------------------------+-------+-------+-------|
| Interest-bearing debts | 8.9 | 13.6 | 10.7 |
|------------------------------+-------+-------+-------|
| Unutilised credit facilities | 37.9 | 25.3 | 31.1 |
|------------------------------+-------+-------+-------|
| Gearing, % | -47.4 | -37.6 | -36.1 |
|------------------------------+-------+-------+-------|
| Cash flow before financing | 58.6 | 26.4 | 18.6 |
+------------------------------------------------------+
Assessment of operational risks and uncertainties
In the Pöyry Group risks are managed in accordance with the Group's
risk management policy and instructions. The various risks related to
the Group's business operations are being monitored in line with a
risk classification of external and internal risks. Internal risks
include strategic and operational risks, and financing risks. If
realised, identified risks could have a material negative impact on
Pöyry's business operations, earnings, financial position or
reputation. All identified major risks have been quantified and
qualified and measures defined for managing them. The effectiveness
of risk management actions is being regularly monitored in the Group.
The most significant group-level risks identified in the group-wide
risk management process of 2006 are described in the following.
External risks
With the exception of the risk related to the general economic
development, no major external risks were identified in the risk
management process of 2007.
Strategic risks
Pöyry's most significant strategic risks are related to business
development and to the adoption of the one-brand strategy.
The most significant strategic risks related to business development
consist of risks concerned with company acquisitions, and the
establishment of operations in new markets. Risks related to
acquisitions are managed by complying with Pöyry's acquisition
policy, and the operating procedures and models prepared on the basis
of it. To manage the risks related to establishment in new markets,
market-specific strategies have been prepared for new market areas.
In addition to acquisitions, organic growth is an important part of
Pöyry's growth strategy. In order to reach the growth targets plans
have been made to ensure the availability of required resources.
The Group adopted a one-brand strategy during 2006. The risks related
to the Group's reputation and international recognition arising from
the one-brand strategy are addressed by introducing brand management
procedures, which are currently under preparation, and by adhering to
strict business practices, as stipulated in the Group's operating
guidelines.
Operational risks
Pöyry's most significant operational risks are related to its
assignments and staff.
Pöyry's assignments involve a risk that the service or work performed
contains a professional error, oversight or some other undesirable
effect, which causes a significant economic or other liability. The
following procedures are designed to manage these risks:
- adhering to quality systems, operating procedures and approval
procedures
- appointing a supervisory body for major projects
- training project managers and staff for project management and
project administration tasks
- complying with instructions for the processing of proposals and
contracts, especially with a view to limiting contractual
liabilities. However, the instructions for limiting contractual
liabilities cannot always be taken into account particularly in
dealing with public-sector clients
- maintaining a group-wide liability insurance programme to cover
liability risks related to project work. Insurances do not, however,
cover all liability risks
Pöyry's business success depends on its professional staff. The
availability of qualified professionals is an important factor for
the growth and profitability of the business. Group-wide HR processes
are being developed and implemented, including recruitment of
additional HR personnel.
Financial risks
The financial risks have been described in the Notes to the Financial
Statements.
Realisation of risks, court processes
No such risks, court processes, other legal proceedings or actions by
authorities were realised in the risk management process during 2007
which would have had a material impact for the Group.
Share capital and shares
The share capital of Pöyry Plc was on 31 December 2006 EUR 14 545 036
and the total number of shares was 58 180 144. During 2007 Pöyry Plc
issued 298 702 new shares as compensation in an acquisition of a
company. As a result, the number of shares increased by 298 702, the
share capital remaining unchanged. During 2007 173 768 new shares
were subscribed with stock options 2004A and accordingly the share
capital increased by EUR 43 442. On 31 December 2007 the share
capital of Pöyry Plc was EUR 14 588 478 and the total number of
shares was 58 652 614.
Authorisation to issue shares
The Annual General Meeting on 5 March 2007 authorised the Board of
Directors to decide to issue new shares and to convey the company's
own shares held by the company in one or more tranches. The share
issue can be carried out as a share issue against payment or without
consideration on terms to be determined by the Board of Directors and
in relation to a share issue against payment at a price to be
determined by the Board of Directors.
A maximum of 11 600 000 new shares can be issued. A maximum of
5 800 000 own shares held by the company can be conveyed. The
authorisation is in force until 10 March 2008.
During the period under review Pöyry Plc issued new shares as
compensation in the acquisition of Insinööritoimisto Pöysälä &
Sandberg Oy. The acquisition was realised as an exchange of shares
where the sellers were granted 298 702 new shares in Pöyry Plc. After
this issue the number of new shares which can be issued is not more
than 11 301 298 new shares.
Authorisation to acquire the company's own shares
The Annual General Meeting on 5 March 2007 authorised the Board of
Directors to decide to acquire the company's own shares with
distributable funds on the terms given below. The acquisition of
shares reduces the company's distributable non-restricted
shareholders' equity.
A maximum of 5 800 000 shares can be acquired. The company's own
shares can be acquired in accordance with the decision of the Board
of Directors either through public trading or by public offer at
their market price at the time of purchase.
The authorisation is in force until 10 March 2008.
For the implementation of the performance share plan 2008-2010, the
Board of Directors has further resolved to exercise the authorisation
by the Annual General Meeting on 5 March 2007 to acquire the
company's own shares. According to the resolution of the Board of
Directors, a maximum of 400 000 shares may be acquired. The Board of
Directors authorised the President and CEO to decide on the details
and implementation of the acquisition of own shares.
The Board has not exercised the authorisation during the period under
review.
Shares can be acquired with funds distributable as profit. The shares
will be acquired in order to strengthen the company's capital
structure and also to be used as compensation in business
acquisitions or in acquisition of assets related to the company's
business.
Pöyry Plc does not hold its own shares. A subsidiary of Pöyry Plc
owns 8914 Pöyry Plc shares with a nominal value of EUR 2 228.50,
which equals 0.02 per cent of the total number of shares and voting
rights.
The afore mentioned decisions made by the Annual General Meeting was
published in its entirety as a stock exchange notice on 5 March 2007.
Stock options
Pöyry Plc issued in 2004 stock options to the management of the Group
as well as to a wholly-owned subsidiary of Pöyry Plc. The number of
stock options is 550 000, entitling to subscription of four shares
each, i.e. a total of 2 200 000 shares in Pöyry Plc.
The share subscription periods are for stock options 2004A (660 000
shares) between 1 March 2007 and 31 March 2010, for 2004B (660 000
shares) between 1 March 2008 and 31 March 2011, and for 2004C
(880 000 shares) between 1 March 2009 and 31 March 2012. All stock
options have been issued and their receipt confirmed.
During the financial year 173 768 new shares were subscribed with
stock options 2004A.
Performance share plan 2008-2010
In December the Board of Directors of Pöyry Plc approved a new
share-based incentive plan for key personnel.
The plan includes three earning periods which are the calendar years
2008, 2009 and 2010. The rewards will be paid partly in the company's
shares and partly in cash in 2009, 2010 and 2011. Shares must be held
for a period of two years from the transfer date.
In the first earning period 2008, the incentive plan will include
approximately 300 persons. The value of the plan will correspond to
270 000 shares, if the performance of the company is in line with the
earnings criteria for target performance set by the Board of
Directors. If the company's performance exceeds the target and
reaches maximum performance, as defined by the Board, the value of
the plan can reach up to the value of 540 000 shares.
Board of Directors' proposal
The parent company of Pöyry Group, Pöyry Plc's net profit for 2007
was EUR 32 050 336.92 euros and retained earnings was EUR
19 008 344.17 thus the total amount of distributable earnings was EUR
51 058 681.09. The Board of Directors of Pöyry Plc proposes to the
Annual General Meeting on 10 March 2008 that a dividend of EUR 0.65
(0.50) per share be paid for the year 2007. The number of shares is
58 652 614 and the total amount of dividends thus EUR 38 124 199.10.
The proposed dividend corresponds to 73.9 (86.2) per cent of the
earnings per share for the financial year. The Board of Directors
proposes that the dividend be paid on 20 March 2008.
Board of Directors and President
Members of the Board of Directors of Pöyry Plc elected in the Annual
General Meeting are Henrik Ehrnrooth (Chairman), Heikki Lehtonen
(Vice Chairman), Pekka Ala-Pietilä, Matti Lehti, Harri Piehl, Karen
de Segundo and Franz Steinegger.
President and CEO of the company is Mr Erkki Pehu-Lehtonen, M.Sc.
(Eng.) and Deputy to the President and CEO is Mr Teuvo Salminen,
M.Sc. (Econ.).
On 22 January 2008 the Board of Directors appointed Heikki Malinen
new President and CEO of Pöyry Plc. Heikki Malinen (45) holds an MBA
from Harvard and a Master of Science degree in Economics. Mr Malinen
will take up the position of President and CEO of Pöyry as of 1 June
2008. Erkki Pehu-Lehtonen, current President and CEO of Pöyry, will
continue with advisory assignments from the Board.
Auditors
Auditors have been KPMG Oy Ab, Authorised Public Accountants, with Mr
Sixten Nyman, Authorised Public Accountant, as responsible auditor.
Prospects
Energy
The good economic development in China, Russia and Latin America,
combined with the expansion of the EU, create favourable conditions
for growth in demand for energy-related services. The EU's expanding
energy legislation will continue to boost demand for management
consulting services in the energy sector. In addition, environmental
legislation, focused in particular on combating climate change, will
boost demand for services related to renewable energy and power plant
modernisation. The price of crude oil is not expected to decline
much, which creates new business opportunities in the oil and gas
sectors. In the thermal power sector, clients' actions will focus on
diversifying the structure of their energy supply to secure the
continued availability of energy. Nuclear power will acquire greater
importance in diversifying the energy supply. The Energy business
group has a strong position and a good order stock. The business
group's operating profit will improve in 2008.
Forest Industry
Overall demand for engineering services is not expected to change
much during 2008. Chemical pulp mill investments will mostly take
place in South America, Asia and Russia. The focus of paper machine
investments will be in the emerging markets of Asia and in some
economies in transition. Because of overcapacity and cost pressures
the challenging situation in the European and North American forest
industry will continue. Demand for project implementation and local
services will be promoted by new investments in biofuels and chemical
industry. To improve the competitiveness of the forest industry, new
solutions and actions will be needed to improve the efficiency of
operations and overall productivity. Possible forest industry
restructuring measures may result in increased demand for management
consulting and investment banking services. The Forest Industry
business group's operating profit will remain stable in 2008,
provided that the world economic situation will not deteriorate
materially from its current level.
Infrastructure & Environment
Transportation system investments will increase in Eastern Europe,
Asia and Latin America. The investment growth is supported by inputs
in this sector by various financial institutions. Transportation
system investments in Western Europe will remain stable. Climate
change and environmental problems create a need for services in the
water and environment sector. The strong growth of construction will
continue in Russia. The volume growth of construction in the Finnish
market is expected to level off during 2008. The business group's
comprehensive service packages and its focus on specific competence
areas will improve its competitiveness. The strongly increased order
stock and the good market situation create opportunities for
increasing the business group's operating profit in 2008.
Group
The Group has a strong market position in all of its business areas.
The order stock is good and has increased by EUR 55 million during
2007. Consolidated net sales will increase in 2008. Profit before
taxes is expected to improve in 2008. The repercussions in other
national economies of the uncertainty in the US economy may have a
negative impact on investment demand during 2008.
PÖYRY GROUP
STATEMENT OF INCOME
EUR million 10-12/2007 10-12/2006 1-12/2007 1-12/2006
NET SALES 205.5 172.4 718.2 623.3
Other operating income 0.6 0.1 2.5 0.3
Share of associated
companies' results +0.0 +0.3 +0.4 +1.2
Materials and supplies -5.4 -7.8 -14.3 -24.0
External charges,
subconsulting -25.7 -23.1 -89.5 -73.2
Personnel expenses -103.9 -87.0 -375.9 -327.7
Depreciation -2.2 -2.0 -8.4 -7.8
Other operating expenses -46.7 -36.7 -159.2 -142.2
OPERATING PROFIT 22.2 16.2 73.8 49.9
Proportion of net sales, % 10.8 9.4 10.3 8.0
Financial income +1.4 +0.5 +4.3 +2.3
Financial expenses -0.1 -0.2 -1.3 -1.2
Exchange rate differences -0.1 -0.4 -0.2 -0.8
Value decrease -0.1 -0.0 -0.1 -0.0
PROFIT BEFORE TAXES 23.3 16.1 76.5 50.2
Proportion of net sales, % 11.3 9.3 10.7 8.1
Income taxes -6.7 -4.5 -23.7 -15.4
NET PROFIT FOR THE PERIOD 16.6 11.6 52.8 34.8
Attributable to:
Equity holders of the
parent company 15.9 11.2 51.3 33.6
Minority interest 0.7 0.4 1.5 1.2
Earnings/share,
attributable to the equity
holders of the parent
company, EUR 0.27 0.20 0.88 0.58
Corrected with dilution
effect 0.27 0.18 0.86 0.57
BALANCE SHEET
EUR million 31 Dec. 2007 31 Dec. 2006
ASSETS
NON-CURRENT ASSETS
Goodwill 95.6 61.4
Intangible assets 6.6 7.9
Tangible assets 17.8 17.0
Shares in associated companies 5.2 5.0
Other shares 2.4 6.7
Loans receivable 0.1 0.6
Deferred tax receivables 5.7 5.8
Pension receivables 0.6 3.1
Other 4.9 9.0
Total 138.9 116.5
CURRENT ASSETS
Work in progress 64.5 52.7
Accounts receivable 141.9 134.2
Loans receivable 0.6 0.6
Other receivables 15.6 12.1
Prepaid expenses and accrued income 10.9 9.8
Cash and cash equivalents 98.7 74.9
Total 332.2 284.3
TOTAL 471.1 400.8
EQUITY AND LIABILITIES
EQUITY
EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS
OF THE PARENT COMPANY
Share capital 14.6 14.5
Share premium reserve 32.4 31.5
Legal reserve 19.5 19.1
Invested free equity reserve 4.6 0.0
Translation difference -13.9 -10.9
Retained earnings 125.4 102.6
Total 182.6 156.8
Minority interest 6.9 6.1
Total 189.5 162.9
LIABILITIES
NON-CURRENT LIABILITIES
Interest bearing non-current liabilities 1.9 4.2
Pension obligations 6.6 6.9
Deferred tax liability 3.3 3.3
Other non-current liabilities 9.4 3.4
Total 21.2 17.8
CURRENT LIABILITIES
Amortisations of interest bearing
non-current liabilities 2.6 2.7
Interest bearing current liabilities 4.4 6.6
Provisions 5.0 3.7
Project advances 97.3 70.0
Accounts payable 22.9 25.1
Other current liabilities 38.3 37.2
Current tax payable 13.7 8.2
Accrued expenses and deferred income 76.2 66.6
Total 260.4 220.1
TOTAL 471.1 400.8
STATEMENT OF CHANGES IN
FINANCIAL POSITION
EUR million 10-12/2007 10-12/2006 1-12/2007 1-12/2006
FROM OPERATING ACTIVITIES
Net profit for the period 16.6 11.6 52.8 34.8
Depreciation and value
decrease +2.2 +2.0 +8.4 +7.8
Gain on sale of fixed
assets -1.6 -0.0 -2.3 -0.1
Share of associated
companies' results -0.0 -0.3 -0.4 -1.2
Financial items -1.1 +0.1 -2.7 -0.3
Income taxes +6.7 +4.5 +23.7 +15.4
Change in work in progress +9.1 +15.3 -11.7 +3.9
Change in accounts and
other receivables -11.0 -7.5 -5.6 -25.5
Change in advances received +8.3 +6.4 +27.4 +18.9
Change in payables and
other liabilities +7.1 +10.2 +13.1 +15.5
Received financial income +1.4 +0.0 +4.3 +1.9
Paid financial expenses -0.3 +0.3 -1.5 -0.4
Paid income taxes -4.7 -4.0 -19.1 -13.1
Total from operating
activities +32.7 +38.6 +86.4 +57.6
CAPITAL EXPENDITURE
Investments in shares in
subsidiaries
deducted with cash acquired -3.0 -9.3 -23.4 -22.4
Sales of shares in
subsidiaries +0.3 +0.0 +0.3 +0.0
Investments in other shares -0.0 -0.0 -0.0 -0.0
Investments in fixed assets -4.0 -3.0 -9.9 -9.8
Sales of shares in
associated companies +1.8 +0.0 +1.8 +0.0
Sales of other shares +1.6 +0.0 +2.2 +0.5
Sales of fixed assets +0.5 +0.4 +1.2 +0.5
Capital expenditure total,
net -2.8 -11.9 -27.8 -31.2
Net cash before financing +29.9 +26.7 +58.6 +26.4
FINANCING
Repayments of loans -0.8 -0.8 -2.6 -2.5
Change in current financing -19.0 -10.9 -2.2 +5.4
Change in non-current
investments +0.5 +0.8 +0.5 +0.5
Dividends -0.5 -0.0 -30.0 -19.4
Share subscription +0.2 +0.0 +0.9 +0.0
Net cash from financing -19.6 -10.9 -33.4 -16.0
Change in cash and cash
equivalents +10.3 +15.8 +25.2 +10.4
Cash and cash equivalents 1
January 89.8 59.1 74.9 64.5
Impact of translation
differences in exchange
rates -1.4 0.0 -1.4 0.0
Cash and cash equivalents31 December 98.7 74.9 98.7 74.9
CHANGES IN EQUITY 10-12/2007 10-12/2006 1-12/2007 1-12/2006
EUR million
Share capital beginning of
period 14.6 14.5 14.5 14.5
Shares subscribed with
stock options 0.0 0.0 0.1 0.0
Share capital end of period 14.6 14.5 14.6 14.5
Share premium reserve
beginning of period 32.1 31.5 31.5 31.5
Shares subscribed with
stock options 0.3 0.0 0.9 0.0
Share premium reserve end
of period 32.4 31.5 32.4 31.5
Legal reserve beginning of
period 19.3 18.6 19.1 18.6
Transfer, retained earnings 0.2 0.5 0.4 0.5
Legal reserve beginning of
period 19.5 19.1 19.5 19.1
Invested free equity
reserve beginning of period 4.6 0.0 0.0 0.0
Share issue 0.0 0.0 4.6 0.0
Invested free equity
reserve end of period 4.6 0.0 4.6 0.0
Translation differences
beginning of period -12.2 -10.4 -11.0 -8.6
Change during the period -1.7 -0.5 -2.9 -2.3
Translation differences end
of period -13.9 -11.0 -13.9 -11.0
Retained earnings beginning
of period 109.5 91.6 102.7 88.1
Share issue +0.0 +0.0 +0.4 +0.0
Payment of dividend -0.0 -0.0 -29.1 -18.9
Minority change -0.0 -0.2 -0.0 -0.2
Transfer, retained earnings -0.2 -0.5 -0.4 -0.5
Other changes +0.2 +0.8 +0.5 +0.8
Translation differences
included
in the result -0.0 -0.2 -0.0 -0.2
Income direct to equity -0.0 0.0 -0.0 0.0
Net profit for the period 15.9 11.2 51.3 33.6
Retained earnings end of
period 125.4 102.7 125.4 102.7
Minority interest beginning
of period 6.1 5.7 6.1 4.7
Payment of dividend -0.0 0.0 -0.7 0.0
Change during the period 0.1 +0.0 0.0 +0.2
Net profit for the period 0.7 0.4 1.5 1.2
Minority interest end of
period 6.9 6.1 6.9 6.1
Total equity beginning of
period 174.0 151.5 162.9 148.9
Payment of dividend -0.0 -0.0 -29.8 -18.9
Shares subscribed with
stock options 0.2 0.0 1.0 0.0
Share issue 0.0 0.0 5.0 0.0
Other changes 0.3 0.7 0.5 0.8
Translation differences -1.6 -0.8 -2.9 -2.6
Income direct to equity -0.0 -0.0 -0.0 -0.0
Net profit for the period 16.6 11.6 52.8 34.8
Total equity end of period 189.5 162.9 189.5 162.9
PROFITABILITY AND OTHER KEY
FIGURES 10-12/07 10-12/06 1-12/2007 1-12/2006
Return on investment, % 41.7 31.1
Return on equity, % 30.0 22.3
Equity ratio, % 50.7 49.2
Equity/assets ratio, % 40.2 40.7
Net debt/equity ratio
(gearing), % -47.4 -37.6
Net debt, EUR million -89.9 -61.3
Current ratio 1.3 1.3
Consulting and engineering,
EUR million 551.4 500.8
EPC, EUR million 11.4 6.8
Order stock total, EUR
million 562.8 507.6
Capital expenditure,
operating
EUR million 3.1 3.0 9.1 9.8
Proportion of net sales, % 1.5 1.7 1.3 1.6
Capital expenditure in
shares, EUR million 7.9 14.4 44.2 27.9
Proportion of net sales, % 3.8 8.4 6.2 4.5
Personnel in group companies
on average 6852 6038
Personnel in associated
companies on average 271 251
Personnel in group companies
at year-end 7269 6389
Personnel in associated
companies at year-end 277 236
KEY FIGURES FOR THE SHARES 10-12/07 10-12/06 1-12/2007 1-12/2006
Earnings/share, EUR 0.27 0.20 0.88 0.58
Diluted 0.27 0.18 0.86 0.57
Shareholders'
equity/share, EUR 3.11 2.70
Dividend, EUR million 38.1 1) 29.1
Dividend/share, EUR 0.65 1) 0.50
Dividend/earnings, % 73.9 86.2
Effective return on
dividend, % 3.8 4.2
Price/earnings multiple 19.7 20.3
Issue-adjusted trading
prices, EUR
Average trading price 16.08 9.15
Highest trading price 20.14 12.61
Lowest trading price 11.37 7.65
Closing price at year-end 17.31 11.80
Total market value of
shares,
outstanding shares, EUR
million 1015.3 686.5
Trading volume of shares
Shares, 1000 17 326 23 581
Proportion of total
volume, % 29.7 40.5
Issue-adjusted number of
outstanding shares, 1000
On average 58 323 58 180
At year-end 58 653 58 180
1) Board of Directors'
proposal.
Change in intangible assets
EUR million 10-12/2007 10-12/2006 1-12/2007 1-12/2006
Book value at beginning of
period 7.1 7.2 7.9 8.5
Acquired companies 0.2 0.4 0.9 0.6
Capital expenditure 0.6 2.3 1.4 3.1
Decreases 0.0 -0.9 0.0 -0.9
Depreciation and expensed -1.2 -1.1 -3.5 -3.4
Translation difference -0.1 0.0 -0.1 0.0
Book value at end of period 6.6 7.9 6.6 7.9
Change in tangible assets
Book value at beginning of
period 17.6 16.0 17.0 15.2
Acquired companies 0 0.8 0.6 1.4
Capital expenditure 1.9 2.2 7.1 6.7
Decreases -0.1 -0.4 -0.8 -0.5
Depreciation -1.5 -1.5 -6.0 -5.7
Translation difference -0.1 -0.1 -0.1 -0.1
Book value at end of period 17.8 17.0 17.8 17.0
CONTINGENT LIABILITIES
EUR million 1-12/2007 1-12/2006
Other obligations
Pledged assets 0.3 0.5
Other obligations 40.4 46.4
Total 40.7 46.9
For others
Pledged assets 0.1 0.1
Other obligations 0.1 0.0
Total 0.2 0.1
Rent and lease obligations 113.6 107.0
RELATED PARTY TRANSACTIONS
EUR million 1-12/2007 1-12/2006
Employee benefits for the Board of Directors, the
President and CEO, the Deputy to the President
and CEO and the members of the Group Executive
Committee
Salaries, bonuses and other short-term employee
benefits 3.2 2.8
Shareholding and option rights of related
parties, option programme 2004
The members of the Board of Directors, the
President and CEO, the Deputy to the President
and CEO and the members of the Group Executive
Committee owned on 31 December 2007 a total of
207 107 shares and 236 975 stock options (on 31
December 2006 a total of 209 120 shares, and 295
000 stock options 2004). With the stock options
the shareholding can be increased by 947 900
shares equalling 1.6 per cent of the total number
of shares and votes.
In December the Board of Directors of Pöyry Plc
has approved a new share-based incentive plan for
key personnel. The plan includes three earning
periods which are the calendar years 2008, 2009
and 2010.
The option programme 2004 and the performance
share plan 2008-2010 is described in the Board of
Directors' report.
A subsidiary of Pöyry Plc owns 8914 shares.
The transactions with the associated companies
are determined on an arm's length basis.
Sales to associated companies 0.1 0.7
Loans receivable from associated companies 0.1 0.6
Accounts receivable from associated companies 0.0 0.1
BUSINESS SEGMENTS
EUR million 1-12/2007 1-12/2006
NET SALES
Energy 217.5 197.4
Forest Industry 276.9 224.9
Infrastructure & Environment 222.5 201.8
Unallocated 1.3 -0.8
Total 718.2 623.3
OPERATING PROFIT AND NET PROFIT FOR THE
PERIOD
EUR million, proportion of net sales, % % %
Energy 21.0 9.7 14.6 7.4
Forest Industry 39.0 14.1 22.9 10.2
Infrastructure & Environment 16.8 7.5 13.0 6.4
Unallocated -3.0 -0.6
OPERATING PROFIT TOTAL 73.8 10.3 49.9 8.0
Financial items 2.7 0.3
PROFIT BEFORE TAXES 76.5 50.2
Income taxes -23.7 -15.4
NET PROFIT FOR THE PERIOD 52.8 34.8
Attributable to:
Equity holders of the parent company 51.3 33.6
Minority interest 1.5 1.2
ORDER STOCK
Energy 212.7 204.9
Forest Industry 123.8 111.4
Infrastructure & Environment 226.3 191.0
Unallocated 0.0 0.3
Total 562.8 507.6
Consulting and engineering 551.4 500.8
EPC 11.4 6.8
Total 562.8 507.6
GEOGRAPHICAL SEGMENTS
The Nordic countries 201.1 154.6
Europe 307.8 277.3
Asia 67.3 79.5
North America 34.2 26.6
South America 82.2 63.9
Other 25.6 21.4
Total 718.2 623.3
PERSONNEL
Energy 1838 1692
Forest Industry 2961 2418
Infrastructure & Environment 2378 2207
Unallocated 92 72
Total 31 December 7269 6389
BUSINESS SEGMENTS
EUR million 1-3/07 4-6/07 7-9/07 10-12/07
NET SALES
Energy 51.4 51.8 51.6 62.7
Forest Industry 64.6 67.4 65.2 79.7
Infrastructure & Environment 50.8 53.4 55.6 62.7
Unallocated 0.2 0.4 0.3 0.4
Total 167.0 173.0 172.7 205.5
OPERATING PROFIT AND NET PROFIT FOR THE
PERIOD
Energy 5.3 4.6 5.7 5.4
Forest Industry 7.8 8.6 9.9 12.7
Infrastructure & Environment 3.7 3.5 4.4 5.2
Unallocated -0.8 -0.4 -0.7 -1.1
OPERATING PROFIT TOTAL 16.0 16.3 19.3 22.2
Financial items 0.5 0.5 0.6 1.1
PROFIT BEFORE TAXES 16.5 16.8 19.9 23.3
Income taxes -5.3 -5.4 -6.3 -6.7
NET PROFIT FOR THE PERIOD 11.2 11.4 13.6 16.6
Attributable to:
Equity holders of the parent company 10.9 11.0 13.5 15.9
Minority interest 0.3 0.4 0.1 0.7
OPERATING PROFIT %
Energy 10.3 8.9 11.0 8.6
Forest Industry 12.1 12.8 15.2 15.9
Infrastructure & Environment 7.3 6.6 7.9 8.3
OPERATING PROFIT TOTAL 9.6 9.4 11.2 10.8
ORDER STOCK
Energy 214.8 233.8 223.7 212.7
Forest Industry 154.1 140.2 143.3 123.8
Infrastructure & Environment 198.4 204.6 216.7 226.3
Unallocated 0.3 0.3 0.0 0.0
Total 567.6 578.9 583.7 562.8
Consulting and engineering 553.1 558.1 566.2 551.4
EPC 14.5 20.8 17.5 11.4
Total 567.6 578.9 583.7 562.8
BUSINESS SEGMENTS
EUR million 1-3/06 4-6/06 7-9/06 10-12/06
NET SALES
Energy 42.8 45.6 49.1 59.9
Forest Industry 52.8 57.0 54.8 60.3
Infrastructure & Environment 48.3 50.7 48.7 54.1
Unallocated 0.1 0.6 0.4 -1.9
Total 144.0 153.9 153.0 172.4
OPERATING PROFIT AND NET PROFIT FOR THE
PERIOD
Energy 3.2 3.3 3.7 4.4
Forest Industry 4.4 4.6 6.4 7.5
Infrastructure & Environment 3.3 2.8 3.4 3.5
Unallocated -0.7 -0.4 -0.3 0.8
OPERATING PROFIT TOTAL 10.2 10.3 13.2 16.2
Financial items 0.3 0.1 0.0 -0.1
PROFIT BEFORE TAXES 10.5 10.4 13.2 16.1
Income taxes -3.5 -3.2 -4.2 -4.5
NET PROFIT FOR THE PERIOD 7.0 7.2 9.0 11.6
Attributable to:
Equity holders of the parent company 6.9 6.9 8.6 11.2
Minority interest 0.1 0.3 0.4 0.4
OPERATING PROFIT %
Energy 7.5 7.2 7.5 7.3
Forest Industry 8.3 8.1 11.7 12.4
Infrastructure & Environment 6.8 5.5 7.0 6.5
OPERATING PROFIT TOTAL 7.1 6.7 8.6 9.4
ORDER STOCK
Energy 220.0 237.1 222.6 204.9
Forest Industry 111.4 109.1 111.0 111.4
Infrastructure & Environment 187.6 185.3 183.7 191.0
Unallocated 0.1 0.0 0.0 0.3
Total 519.1 531.5 517.3 507.6
Consulting and engineering 496.9 514.0 502.1 500.8
EPC 22.2 17.5 15.2 6.8
Total 519.1 531.5 517.3 507.6
ACQUISITIONS DURING 2007
Acquisition Acquired
Name and business date interest %
Rakennuslaskenta NHL Oy 25 May 2007 100
The company specialises in
quantity and cost
calculations, building
consulting and condition
assessment services. The
company is based in Turku,
Finland and has a staff of
23.
ZAO Giprobum Engineering, now
ZAO Giprobum-Pöyry 15 June 2007 70
The company specialises in
investment studies, services
related to permitting and
agreements with authorities,
various sectors of plant
engineering, and construction
management in the forest
industry. The company is based
in St. Petersburg, Russia and
has a staff of 260.
Evata Worldwide Oy 27 June 2007 70
The company specialises in
architectural and interior
design, workplace design,
office property consulting and
services workplace design,
office property consulting and
services related to real
estate development. The
company is based in Helsinki,
Finland and has a staff of
100.
ECON Analyse AS, now Econ
Analyse Pöyry AS 27 Aug. 2007 100
The company provides research,
analysis and strategic advice
relating to the interaction of
markets and policies. In
addition to consulting
assignments, the company
offers a set of subscription
services related to energy and
carbon markets as well as
manages multi-client and
scenario studies. The company
is based in Oslo and
Stavanger, Norway and
Stockholm, Sweden and
Copenhagen, Denmark, and has a
staff of 85.
Insinööritoimisto Pöysälä &
Sandberg Oy 5 Sept. 2007 100
The company specialises in
industrial building
construction and structural
engineering of office and and
commercial buildings. The
company is based in Helsinki,
Kuopio and Oulu in Finland and
has a staff of 100.
Ingenieurgemeinschaft
Wirzenhausen Fricke & Türk
GmbH (IGW) 5 Oct. 2007 100
The company specialises in
waste management, especially
in mechanical and biological
waste treatment. The company
is based in Germany and has a
staff of 20.
Perforex Inc. 21 Nov. 2007 100
The company specialises in
management consulting services
in forest industry. The
company's main operational
bases are in Toronto, Canada
and in Atlanta and Portland
(Oregon), USA. The company has
a staff of 35.
Quatrocon Oy 30 Nov. 2007 100
The company specialises in
HVAC design. The company is
based in Espoo, Finland and
has a staff of 14.
IDP Consult Incorporated 18 Dec. 2007 67
The company is serving
international donors in
technical assistance projects
in the water sector. The
company is based in Manila,
Philippines and has a staff of
30.
The company will be
consolidated into Pöyry Group
as of the beginning of 2008
and therefore not included in
the figures above. The
company's net sales in 2006
amounted to EUR 0.8 million.
Aggregate figures for the
above acquisitions, EUR
million 2007 2006
Fixed price, paid 30.2 25.9
Fixed price, unpaid 0.3 0.0
Additional 30%, estimate 3.0 0.0
Earnout estimate 5.4 1.6
Share issue 5.0 0.0
Order intake estimate 0.0 0.0
Fees 0.2 0.4
Total 44.1 27.9
Price allocation
Equity 10.5 5.2
Fair value adjustments:
Client relationship 0.0 0.0
Order stock 0.3 0.4
Other 0.0 0.0
Total 10.8 5.6
Remaining = goodwill 33.3 22.3
Market leadership, experienced
management and staff, and
earnings expectations are
factors contributing to the
amount booked as goodwill.
Impact on the Pöyry Group's
income statement,
EUR million 2007 2006
Operating profit from
acquisition date to 31
December 2007 2.0 2.5
Sales volume on a 12-month
calendar year basis 2007 50.1 28.8
Operating profit on 12-month
calendar year basis 2007 5.3 4.1
Impact on the Pöyry Group's
number of personnel 637 243
Impact on the Pöyry Group's
assets and liabilities, EUR
million 2007
Book values at Adjusted
acqui-sition Fair value IFRS
date adjustments values
Goodwill 0.0 -0.1 -0.1
Intangible assets 0.7 0.3 1.0
Tangible assets 0.5 0.0 0.5
Shares 0.1 0.1 0.2
Deferred tax receivables 0.0 0.0
Work in progress 1.6 1.6
Accounts receivable 6.5 6.5
Other receivables 1.7 1.7
Cash and cash equivalents 8.9 -0.2 8.7
Assets total 20.0 0.1 20.1
Deferred tax liability 0.0 0.0
Provisions 0.0 0.0
Interest bearing liabilities 0.4 0.4
Project advances 0.6 0.6
Accounts payable 1.1 1.1
Other current liabilities 7.4 -0.2 7.2
Liabilities total 9.5 -0.2 9.3
Net identifiable assets and
liabilities 10.5 0.3 10.8
Total cost of business
combinations 44.1
Goodwill 33.3
Consideration paid, satisfied
in cash 30.4
Cash acquired 8.7
Net cash outflow 21.7
