The Jaakko Pöyry Group's net sales for the period under review were EUR 206.3 (203.9 during the same period 2002) million. The profit before extraordinary items was EUR 21.6 (10.2) million, including a gain of EUR 11.0 million from the sale of Jaakko Pöyry Group Oyj's headquarter property.
The Group's consolidated balance sheet is healthy. The equity ratio was 50.7 (46.3) per cent and the net debt/equity ratio (gearing)
-20.5 (9.7) per cent.
The Jaakko Pöyry Group's earnings per share were EUR 1.03 (0.45) and the return on investment 34.5 (14.7) per cent.
The Group's order stock was EUR 320.8 million. It increased by EUR 12.4 million during the period under review.
The Group's operating profit will improve in 2003 and most of the improvement will take place during the second half of the year. In addition, the earnings will improve by the EUR 11 million gain from the sale of the headquarter property.
Business groups
Forest Industry
Net sales for the period under review were EUR 88.5 (94.5) million. Operating profit amounted to EUR 7.5 (9.5) million. The order stock was EUR 91.6 (at the end of 2002 85.2) million.
Energy
Net sales for the period under review were EUR 48.1 (51.9) million. Operating profit was EUR 1.5 (-1.9) million. The order stock amounted to EUR 114.9 (123.8) million.
Infrastructure & Environment
Net sales for the period under review were EUR 69.8 (57.9) million. Operating profit was EUR 4.1 (3.6) million. The order stock was EUR 114.3 (99.4) million.
Other operations
On February 5, 2003 Nordisk Renting Oy, a subsidiary of Nordea Bank, bought Jaakko Pöyry Group Oyj's headquarter property in Vantaa, Finland. At the same time, Jaakko Pöyry Group Oyj and Nordisk Renting Oy signed a rental agreement for the property, extending over the next 20 years.
Before the present deal, the Jaakko Pöyry Group rented its headquarter office building from Nordea Finance Ltd, with the option to buy back the property. Following the deal, the entire office property, including the
Jaakko Pöyry Group's headquarter office building, the site and half of the Martinparkki Oy car park, were taken over by Nordisk Renting Oy. Jaakko Pöyry Group Oyj has an option to buy back these at a later date.
The deal is a continuation of Jaakko Pöyry Group Oyj's effort to focus its financial resources on the company's core business, consulting and engineering. The deal improves the Jaakko Pöyry Group's profit before extraordinary items by EUR 11 million for the period under review.
Group structure
Efforts to further develop the Group's structure and business operations continued during the period under review.
Jaakko Pöyry Group Oyj reshaped its organisational structure as of May 1, 2003 by integrating the forest industry consulting and engineering businesses into one forest industry business group. Following the integration the Jaakko Pöyry Group consists of three business groups: Forest Industry, Energy, and Infrastructure & Environment. Each business group offers a full range of consulting, investment planning and implementation as well as maintenance planning and operations improvement services to its clients in the entire life-cycle of their business. The target of the new structure is also to streamline overlapping operations and to improve the efficiency of business operations.
Acquisitions
Forest Industry
The business group has in March acquired the business of Redbeard Consulting B.V. Redbeard Consulting's line of business included strategic and IT consulting services to the European paper industry. The company employed 4 people, who have taken up new positions within the Forest Industry business group.
Energy
The business group has in June expanded its energy consulting operations by acquiring ILEX Energy Consulting Ltd, situated in Oxford, United Kingdom. The company's net sales for 2002 were EUR 3.7 million. With this acquisition Electrowatt-Ekono will become the leading energy management consultant serving the European energy sector. ILEX Energy Consulting Ltd employs 25 people.
Infrastructure & Environment
JP-Terasto Oy, which belongs to this business group, acquired HT-Rakennuttajat Oy of Turku, Finland in February, thereby expanding its operations in the southwestern parts of the country. HT-Rakennuttajat specialises in project and construction management services. HT-Rakennuttajat Oy employs 10 people.
In April the business group acquired Fintact Oy, Finland, which specialises in soil, bedrock and groundwater studies. In 2002 Fintact Oy's net sales amounted to EUR 0.8 million and it currently employs 11 people.
In June the business group acquired 74 per cent of the shares in TransTec Consult GmbH. The company is active in Germany as well as internationally and specialises in operation, system and organisation consulting for light rail train systems. In 2002 the company's net sales amounted to EUR 3.0 million and it employs 25 people.
Order stock
The Group's order stock is good. It has increased by EUR 12.4 million during the period under review, totalling EUR 320.8 million at the end of June (EUR 280.9 million at the end of June 2002).
Capital expenditure
The Group's capital expenditure for the period under review totalled EUR 10.5 (3.9) million, of which EUR 4.7 (3.9) million consisted of computer software, systems and hardware. Capital expenditure due to business acquisitions were EUR 5.8 (0.0) million.
Share capital and shares
The total number of shares at the end of 2002 was 13 791 601. During the period under review 8650 new shares were subscribed based on warrants pursuant to the Bond Loan with Warrants of 1998. In addition, 36 500 new shares were subscribed in July. Following these subscriptions, the number of shares totals 13 836 751.
The warrants related to the Bond Loan with Warrants issued by Jaakko Pöyry Group Oyj in 1998 to the Group personnel and the parent company's Board of Directors carry subscription rights for a total of 1.3 million of the company's shares, with the subscription period having begun partly (390 000 shares) on April 1, 2000, partly (390 000 shares) on April 1, 2001, and partly on April 1, 2002 (520 000 shares). The subscription period ends for all warrants on April 30, 2005. A total of 475 765 shares have been subscribed based on the warrants.
The Annual General Meeting on March 5, 2003 authorised the Board of Directors to decide on an increase of the share capital by a new issue and/or by taking a convertible loan and/or by issuing option rights so that based on the new issue, the convertible bonds and option rights, the share capital can be increased by a maximum of EUR 1.0 million by issuing for subscription a maximum of 1.0 million new shares. The authorisation is in force until March 5, 2004.
The Annual General Meeting authorised the Board of Directors to acquire and convey the company's own shares to a maximum of 689 500, which is less than 5 per cent of the company's share capital. The Board of Directors decided on March 5, 2003 to exercise the authorisations. The authorisations are in force until March 5, 2004. The company has
acquired a total of 152 700 own shares during the period February 18 - June 19, 2003. The average acquisition price was EUR 14.63. During 2002 a total of 10 000 shares were acquired.
The company's shares are quoted on the Helsinki Exchanges. The average trading price during the period under review was EUR 14.50, with a high of EUR 15.50 and a low of EUR 13.00. A total of 1.6 million of the company's shares (equalling 11.6 per cent of the total number of shares) were traded, corresponding to a turnover of EUR 23.3 million.
The Annual General Meeting approved the Board of Directors' proposal that a dividend of EUR 0.60 be paid per share for 2002 (EUR 0.60 for 2001), totalling EUR 8.3 million. The dividend was paid on March 17, 2003.
Prospects
World economic prospects for 2003 are still uncertain. Economic growth is expected to be modest in 2003, and growth is not expected to resume until 2004.
The Jaakko Pöyry Group's balance sheet structure, liquidity and order stock are good, having improved further during the period under review.
The forest industry's investment activity has remained relatively low and the depressed earnings of forest industry companies do not support a quick recovery. Also the demand for services related to forest industry consulting has remained low. However, services related to consulting as well as investment planning and implementation are showing a growing trend in emerging markets, such as China and Brazil. Taking into account the market prospects the Forest Industry business group's earnings development is satisfactory and its order stock has grown. The business group's operating profit will improve slightly in 2003 compared with the previous year.
Demand for services related to renewable energy resources, plant modernisations and consulting expertise is growing in the energy sector. There are also signs of renewed investment activity in the production of primary energy. The Energy business group streamlined its activities in 2001-2002 in line with the reduced demand. As a result, its earnings have improved and its operating profit for 2003 will improve clearly compared with 2002.
The Infrastructure & Environment business group has continued to grow steadily. Its order stock has grown and its operating profit for 2003 will improve slightly compared with the previous year.
The general market situation for the current year is challenging. The Jaakko Pöyry Group's order stock, market position and balance sheet structure have strengthened. In view of the business groups' prospects outlined above, the Group's operating profit will improve in 2003 and most of the improvement will take place during the second half of the year. In addition, the Group's earnings will be improved by the EUR 11 million gain from the sale of the headquarter property.
Vantaa, July 30, 2003
JAAKKO PÖYRY GROUP OYJ
Board of Directors
JAAKKO PÖYRY GROUP OYJ
Erkki Pehu-Lehtonen
President and CEO
President and CEO
Teuvo Salminen
Deputy to President and CEO
Deputy to President and CEO
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