The Pöyry Group's net sales for the period under review were EUR 450.9 million (378.3 million in the same period 2005). Profit before taxes was EUR 34.1 (26.9) million.
The Group's consolidated balance sheet is healthy. The equity ratio was 47.3 (50.7) per cent and the net debt/equity ratio (gearing)
-22.3 (-23.6) per cent.
Earnings per share were EUR 0.38 (0.32) and the return on investment 28.1 (24.4) per cent.
The order stock increased by EUR 65.2 million during the period under review to EUR 517.3 million. The number of personnel increased, amounting to 6252 at the end of the review period (5608 at the end of 2005).
Consolidated net sales will increase during 2006. Profit before taxes will improve clearly in 2006.
This interim report has been prepared in accordance with the International Financial Reporting Standards (IFRS). The data in this interim report are unaudited.
Business groups
Energy
Net sales for the period under review were EUR 137.5 (114.5) million. Operating profit was EUR 10.2 (5.9) million.
Demand for energy-related services has remained good and the business group has strengthened its global market position.
The order stock is good, amounting to EUR 222.6 million at the end of the review period (195.2 at the end of 2005). The most important new projects were the hydropower plant contract with Verbund Austrian Hydro Power in Austria (EUR 13 million), the power plant engineering contract with EGL Group in Italy (EUR 7.3 million), the hydropower plant contract with SouthEast Asia Energy Limited in Laos (EUR 8.9 million), the hydropower plant contract with Hochtief Glendoe Joint Venture in the United Kingdom (EUR 5 million) and the sea water cooling project for Qatar Petroleum in Abu Dhabi (EUR 17 million).
Forest Industry
Net sales for the period under review were EUR 164.6 (148.9) million. Operating profit amounted to EUR 15.4 (14.7) million.
Most of the forest industry's new investments have been directed to emerging markets. Demand for local engineering services and operations
improvement services has remained stable. Demand for consulting services has grown.
The business group's order stock has remained stable, amounting to EUR 111.0 million (97.3 million at the end of 2005), which is a good figure. The most important new projects received during the review period were the hydrogen peroxide plant engineering and project services contract with Solvay S.A. in Belgium, the recovery line project for UPM-Kymmene's Kymi pulp mill in Finland (EUR 10 million) and engineering, procurement and construction management, and owner's engineering services for the Klabin and Aracruz pulp mills in Brazil (about EUR 20 million).
Infrastructure & Environment
Net sales for the period under review were EUR 147.7 (114.6) million. Operating profit was EUR 9.5 (6.2) million.
Demand in the infrastructure and environment markets has remained stable. The business group has continued to strengthen its position in local and international markets.
The order stock amounted to EUR 183.7 million (159.5 at the end of 2005), which is a good level. The most important new projects were the light rail transport system contract with Metro de Maracaibo C.A. in Venezuela (EUR 13.1 million), the high-speed railway construction supervision contract with Zhengzhou-Xian Passenger Dedicated Line Company Ltd in China (EUR 2.6 million) and the continuation of implementation services for line No. 1 of C.A. Metro de Valencia's light rail system in Venezuela (EUR 12.6 million).
Pöyry Group adopted Pöyry brand
The extraordinary General Meeting on March 28, 2006 decided to change the company's business name to Pöyry Oyj, Pöyry Plc in English. The change was registered in the Trade Register on April 3, 2006.
The Pöyry Group's entire business has been brought together under one brand, Pöyry. Accordingly, all Group companies will be named in a uniform manner, beginning with "Pöyry". They also use the common brand in all markets. The introduction of the Pöyry brand will be completed during 2006.
The objective of this change is to unite the resources of the Group's extensive office network and to concentrate all communications clearly and effectively under one name. In addition to supporting the company's growth objectives, the change will strengthen the Global Network Company concept and promote the company's international recognition.
Group structure
Energy
The Energy business group has expanded its global presence in the oil and gas engineering and consulting sector by acquiring in May IGL Consultants Ltd, headquartered in Aberdeen, UK. IGL's main operational bases are in Aberdeen (UK), Stavanger (Norway), Perth (Australia) and Kuala Lumpur (Malaysia) and it has 117 employees. IGL's net sales amounted to EUR 11 million in 2005. It has a wide client base that includes international and national oil companies and independents. IGL was consolidated into Pöyry Group as of May 2006.
After the period under review the Energy business group in October expanded its management consulting business by acquiring Convergence Utility Consultants Ltd, headquartered in Switzerland. The joining of forces represents an excellent strategic fit and strengthens Pöyry's position as the biggest consultant in the European energy market. Convergence's main operational bases are in Dusseldorf, Milan, Paris, Warsaw and Zurich and it has 70 employees. Convergence is a business, strategy and economics consulting firm serving utility companies, regulators and energy-sector institutions. Its service portfolio covers a broad spectrum relating to producers, network carriers, retailers and suppliers. The company's net sales amounted to EUR 8 million in 2005.
Forest Industry
Pöyry Civil Oy (formerly JP-Kakko Oy) acquired in February 100 per cent of the shares of Salminen & Sorasalmi Oy of Espoo, Finland. The company's net sales are EUR 0.7 million and it has a staff of nine. Salminen & Sorasalmi strengthens the structural engineering operations of Pöyry Civil Oy and broadens its business in Russia and the Baltic countries. Salminen & Sorasalmi Oy was merged into Pöyry Civil Oy on September 30, 2006.
In March, the Forest Industry business group formed a joint venture with the Shandong Light Industry Design Institute to provide detail engineering services in China. The joint venture, Pöyry Shandong Engineering Consulting Co. Ltd, is 70 per cent owned by Pöyry. The company is based in Jinan, Shandong Province in eastern China, and has a staff of about 100. The joint venture is a major step in strengthening Pöyry's local engineering presence in China, building on the existing operations in Shanghai and Beijing.
In June, Pöyry Civil Oy bought the entire share capital of TH Consulting Oy, Espoo, Finland. The company specialises in structural design. Its net sales amount to EUR 0.4 million.
Infrastructure & Environment
Pöyry Environment Oy (formerly Soil and Water Ltd) in February acquired 100 per cent of the shares of Savon Tekmi Oy, based in Kuopio, Finland. Savon Tekmi Oy has net sales of EUR 0.9 million and a staff of twelve. The acquisition strengthens Pöyry's local operations in eastern Finland. Savon Tekmi Oy specialises in geotechnical, foundation and municipal engineering. It also has expertise in surveying and in planning, and in research related to contaminated soils. Savon Tekmi Oy was merged into Pöyry Environment Oy on September 30, 2006.
In August the business group increased its ownership in Entec A.S., Estonia. Pöyry Environment Oy's ownership increased from 42 per cent to 67 per cent of Entec's shares. Entec's net sales amount to about EUR 1 million and it has 30 employees. The transaction strengthens Pöyry's position in the Estonian engineering services market. Entec A.S. specialises in consulting and engineering services in the fields of water supply, community planning, municipal engineering, waste management, environmental consulting and contaminated soils. The company has a leading position in its own business sector in Estonia. Its main clients are governmental bodies, cities, municipalities, industry, trade, construction companies and other private enterprises.
Order stock
The Group's order stock is good. It increased by EUR 65.2 million during the period under review, totalling EUR 517.3 million at the end of September. At the end of 2005 the order stock was EUR 452.1 million.
Capital expenditure
The Group's capital expenditure for the period under review totalled EUR 20.3 (16.5) million, of which EUR 6.8 (5.5) million consisted of computer software, hardware and systems and EUR 13.5 (11.0) million were capital expenditure due to share investments.
Share capital and shares
The total number of shares at the end of 2005 was 14 545 036.
The Annual General Meeting on March 7, 2006 decided to increase the number of shares in proportion to the ownership of the shareholders, without increasing the share capital ("share split"). The share split was realised so that all shares of the company with an accounting par value of EUR 1.00 were split so that each share entitled to four (4) new shares with an accounting par value of EUR 0.25 each. The share split was registered in the Trade Register on March 13, 2006. As a result, the total number of shares in the company quadrupled from 14 545 036 to 58 180 144 shares. The share capital remained unchanged at EUR 14 545 036. The new shares created through the share split were available for public trading on the Helsinki Stock Exchange as of March 14, 2006.
Pöyry Plc issued in 2004 stock options to the management of the Group as well as to a wholly-owned subsidiary of Pöyry Plc. According to the original terms, the stock options entitle to subscription of a maximum of 550 000 shares in Pöyry Plc, and each stock option entitles the holder to subscribe one share in the company.
Because of the share split, the General Meeting decided on March 7, 2006 to amend the terms and conditions of the stock options issued in 2004 accordingly. Each stock option will entitle the holder to subscribe four (4) shares in the company with an accounting par value of EUR 0.25 each, with the total subscription price remaining unchanged.
The share subscription periods are the following: for 660 000 shares (after the share split) between March 1, 2007 and March 31, 2010, for 660 000 shares (after the share split) between March 1, 2008 and March 31, 2011, and for 880 000 shares (after the share split) between March 1, 2009 and March 31, 2012. All stock options have been issued and their receipt confirmed.
The Annual General Meeting authorised the Board of Directors to decide on an increase in 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 the option rights the share capital can be increased by a maximum of EUR 2.8 million by issuing for subscription 2.8 million new shares (no more than 11.2 million after the share split). The authorisation is in force until March 7, 2007.
The Annual General Meeting authorised the Board of Directors to acquire and convey the company's own shares to a maximum of 1 400 000 shares (no more than 5 600 000 new shares after the share split). The authorisations are in force until March 7, 2007.
The Annual General Meeting decided that a dividend of EUR 1.30 be distributed per outstanding share for 2005 (EUR 1.20 for 2004), which equals EUR 0.325 (0.30) after the share split, totalling EUR 18.9 million. The dividend was paid on March 17, 2006.
The company's shares are quoted on the Helsinki Stock Exchange. The average trading price during the period under review was EUR 8.87, with a high of EUR 10.10 and a low of EUR 7.65 (share prices after share split). A total of 19.2 million of the company's shares were traded, equalling 33.1 per cent of the total number of shares and corresponding to a turnover of EUR 170.4 million.
Prospects
Energy
Good opportunities for growth in demand for energy-related services are created as the economies of Southeast Asia, Latin America and Europe are growing, and as the EU expands. Increasing EU energy legislation is driving demand for industry-specific management consulting services in the energy sector, and therefore Pöyry has strengthened its position in this area by an acquisition. Environmental legislation continues to boost demand for renewable energy and plant refurbishment services. The high price of crude oil is creating new opportunities within the oil and gas sectors. In the thermal power sector clients focus on diversifying their energy mix. The Energy business group's market position has improved further and its order stock is good. The business group's operating profit will improve clearly in 2006.
Forest Industry
Investment activity in the forest industry will remain relatively strong in emerging markets. Rising production costs continue to call for operational and productivity improvements in mature markets. Industry
restructurings will increase demand for consulting and investment banking services. The business group's order stock is good. The business group's operating profit will improve somewhat during 2006.
Infrastructure & Environment
The infrastructure and environment markets have improved in the course of 2006. Demand prospects have improved especially in Western Europe, where the recovery of national economies has boosted investments in the public sector. Maintaining a local presence is becoming more important in emerging markets. The business group's order stock has remained good. The operating profit will improve clearly in 2006.
Group
The Group has a strong market position in all of its business areas. The order stock is good and has increased by EUR 65.2 million during the period under review. Consolidated net sales will increase in 2006. Profit before taxes will improve clearly in 2006.
Vantaa, Finland, October 26, 2006
PÖYRY PLC
Board of Directors
PÖYRY PLC
Erkki Pehu-Lehtonen Teuvo Salminen
President and CEO Deputy to 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 President and CEO, Pöyry Plc
tel. +358 10 33 22872, +358 400 420 285
Satu Perälampi, Investor Relations Manager, Pöyry Plc
tel. +358 10 33 23002, +358 40 526 3388
DISTRIBUTION:
Helsinki Stock Exchange
Major media
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