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Pöyry Oyj PÖYRY PLC Interim Report 23 July 2008 at 8.30 a.m.
INTERIM REPORT 1 JANUARY - 30 JUNE 2008
The Pöyry Group's net sales for the period under review increased by 21.8 per cent and were EUR 414.2 million (340.0 million in the same period 2007). Profit before taxes increased by 59.5 per cent to EUR 53.1 (33.3) million.
The Group's consolidated balance sheet is healthy. The equity ratio was 44.9 (46.2) per cent and the net debt/equity ratio (gearing) -31.2 (-29.7) per cent.
Earnings per share improved by 60.5 per cent to EUR 0.61 (0.38) and the return on investment 52.3 (38.2) per cent.
The order stock was EUR 555.7 million (562.8 at the end of 2007). The number of personnel increased by 9.3 per cent and was 7943 at the end of the review period (7269 at the end of 2007).
Consolidated net sales will increase during 2008. Profit before taxes will improve clearly in 2008.
At the beginning of 2008 the Group announced that the profit before taxes for 2008 was expected to improve compared to 2007. In June the Group specified its 2008 earnings estimate, stating that the profit before taxes is estimated to improve clearly in 2008. The improvement of the profit expectation was caused by the Forest Industry business group's favourable earnings development during January-May, and by orders received during the spring which create a good work load also for the rest of the year in the Forest Industry business group.
The interim report has been prepared in accordance with the IAS 34 following the same accounting principles as in the annual financial statements for 2007. In the Financial Statements for 2008 the Group will also adopt the new pronouncement "IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction". The pronouncement has no significant effect for the Group.
The data in this interim report are unaudited.
Business groups
Energy
Net sales for the period under review were EUR 120.2 (103.2) million. Operating profit was EUR 13.9 (9.9) million.
Demand for energy related services has remained good in Europe. The demand situation in other geographical market areas is stable. Investments in the energy sector have grown strongly during the past few years, resulting in a shortage of project implementation capacity. This has also resulted in increased investment costs. These factors have contributed to the delays in implementing certain projects.
The order stock is good, amounting to EUR 195.8 million at the end of the review period (212.7 at the end of 2007). The most important new projects were the engineering services contract for a new 750 MW combined cycle power plant in Vietnam by PetroVietnam Nhon Trach 2 Power JS Company (EUR 3.8 million), the implementation engineering services contracts by Stora Enso Oyj for combined heat and power plant projects in Belgium and Germany (EUR 3 million) and the engineering services contract for a new 2x30 MW coal-fired power plant project in Kalimantan, Indonesia by PT Makmur Sejahtera Wisesa (EUR 2 million).
Forest Industry
Net sales for the period under review were EUR 165.2 (132.0) million. Operating profit amounted to EUR 30.5 (16.4) million. The favourable earnings development during the review period is due to good capacity utilisation, the successful completion of some major projects, and the good financial performance and demand situation in Latin America. Because of the limited availability of pulpwood the volume of investments in Latin America is not estimated to remain at its current level over the next few years.
New investments in the forest industry have mostly taken place in emerging markets. Demand for chemical industry related and local services has remained stable, as has demand for management consulting services.
The business group's order stock has increased and is on a good level, amounting to EUR 126.7 million (123.8 at the end of 2007). The most important new projects received during the review period were the engineering contract with Propapier GmbH for their paper machine project at a new site in Eisenhüttenstadt, Germany (EUR 10 million), the EPCM (Engineering, Procurement and Construction Management) services contract with Roal Oy for an enzyme plant development project in Rajamäki, Finland (EUR 3 million) and engineering services for the rebuild of Mondi's Syktyvkar pulp mill in Russia (EUR 10 million).
Infrastructure & Environment
Net sales for the period under review were EUR 128.0 (104.2) million. Operating profit was EUR 9.8 (7.2) million.
Demand for infrastructure and environment related services has remained stable. The business group continued to strengthen its position in local and international markets.
The order stock amounted to EUR 232.8 million (226.3 at the end of 2007), which is a good level. The most important new projects were the extension to the existing consultancy engineering contract with Metro de Maracaibo C.A., Venezuela (EUR 5.5 million), the consultancy assignments for three water sector projects in Nigeria, West Africa, financed by the World Bank (EUR 3 million), the consultancy assignment in a water sector project in Vietnam, financed by the World Bank (EUR 2.5 million), the engineering contract with the Ministry of Transport of Bulgaria for the rehabilitation of the railway line between Sofia and Plovdiv (EUR 1.3 million), the assignment by Vinh Phuc People's Committee, Vietnam to provide engineering services for a multi-sector infrastructure upgrading project (EUR 2.5 million) and the railway engineering services contract in the Gotthard Base Tunnel project by the Swiss Transtec Gotthard Consortium (EUR 10 million).
Group structure
Forest Industry
During the period under review, Pöyry acquired the remaining 30 per cent of the shares of CJSC "Giprobum-Pöyry" (formerly ZAO Giprobum Engineering), based in St. Petersburg, Russia. Pöyry now owns the company's entire share capital. The company was consolidated into Pöyry 100 per cent in 2007. The company is Russia's leading forest industry engineering firm, which employs about 250 experts.
Infrastructure & Environment
IDP Consult Incorporated in the Philippines, which was acquired in 2007, has been consolidated into Pöyry as of the beginning of 2008. The company has a staff of 30 and annual net sales of about EUR 1.0 million.
Pöyry has expanded its transportation business and market presence in the infrastructure sector by acquiring 100 per cent of the shares of Consilier Construct S.R.L, Romania in May 2008. Established in 1995, Consilier Construct is today a leading engineering consulting firm, employing about 220 experts. The company focuses on the transportation market, in particular on the road and rail sectors. Consilier Construct has a strong position in the transportation sector but is also active in the water and environment and the building sectors. In 2007 the company's net sales amounted to about EUR 10 million. The acquisition represents an important step in developing Pöyry's transportation sector activities in the Eastern European market, which is expected to benefit substantially from the integration of Romania and the other new EU member states into the European Union. Consilier Construct will also play an active role in expanding other Pöyry Group activities in Eastern Europe. Consilier Construct has been consolidated into Pöyry as of 1 June 2008.
Pöyry has expanded its architectural design operations by acquiring the entire share capital of Arket Oy, Espoo, Finland. Employing nine architects, the company had net sales of EUR 0.8 million in 2007. Arket Oy will be merged with Pöyry Architects Oy. Founded in 1988, Arket Oy provides architectural design services for healthcare, office, retail and industrial buildings. The company has also extensive experience of total design and construction management services projects.
Pöyry has expanded the services of its Infrastructure & Environment business group by acquiring 100 per cent of the shares of Geopale Oy, Jyväskylä, Finland. The company specialises in bedrock core drillings. Employing 14 experts, the company's net sales in 2007 amounted to EUR 1.1 million. Founded in 1995, Geopale Oy has a clientele of exploration and mining companies, and its operations are concentrated to Eastern and Northern Finland. Geopale Oy will be merged with Pöyry Environment Oy.
President and CEO
The new President and CEO of Pöyry PLC, Heikki Malinen, M.Sc. (Econ), MBA, has started in the position on 1 June 2008.
Order stock
The Group's order stock is good and was EUR 555.7 million at the end of June. At the end of 2007 the order stock was EUR 562.8 million.
Personnel
The number of personnel in the Group has increased, amounting to 7943 (7269 at the end of 2007).
Balance sheet structure and financial position
The Group's consolidated balance sheet is healthy. The equity ratio at the end of the review period was 44.9 (50.7 at the end of 2007) per cent. The Group's liquidity is good. The net debt/equity ratio (gearing) was -31.2 (-47.4 at the end of 2007) per cent.
Capital expenditure
The Group's capital expenditure for the period under review totalled EUR 11.2 (15.7) million, of which EUR 5.9 (3.8) million was invested mainly in IT hardware, software and systems. Capital expenditure due to share investments was EUR 5.3 (11.9) million.
Risks and uncertainties
No such new major risks or uncertainties were identified during the reporting period which, if realised, could be estimated to have a significant impact on the Group. A detailed report on the Group's risks and risk management is given in the Financial Statements of 2007.
Share capital and shares
The total number of shares at the end of 2007 was 58 652 614. In April 2008 69 600 new shares were subscribed with stock options 2004A and 2004B pursuant to the stock option programme 2004 of Pöyry PLC and in July 2008 80 728 new shares were subscribed with the stock options 2004A and 2004B. Following the registration of the subscribed shares the total number of shares will increase to 58 802 942.
Option programme 2004
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 the following: 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 2007 173 768 new shares were subscribed with 43 442 stock options 2004A. During the period under review a total amount of 69 600 new shares were subscribed with 10 000 stock options 2004A and 7 400 stock options 2004B. After the period under review 80 728 new shares were subscribed with 4 600 stock options 2004A and 15 582 stock options 2004B.
Performance share plan 2008-2010
In December 2007 the Board of Directors of Pöyry PLC has approved a new share-based incentive plan for key personnel of Pöyry.
The plan comprises 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.
The shares must be held for an approximate period of two years from the transfer date. No rewards shall be paid if the person or the company gives notice of termination before the end of an earning period. The paid reward must be returned to the company if the person or the company gives notice of termination within two years from the end of the earning period.
In the first earning period 2008, the incentive plan will include approximately 300 persons. The value of the plan for the earning period 2008 will correspond to the value of 270 000 shares if the performance of the Group is in line with the earnings criteria for target performance set by the Board of Directors. If the Group'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 for the earning period 2008. The potential reward from the plan for the first earning period 2008 will be based on the Group's earnings per share (EPS) and net sales growth.
During the period under review 90.8 per cent of the maximum rewards for the earning period 2008 have been granted.
The fair value of the reward is expensed until the target group is entitled to the reward and the shares are freely transferable. The fair value of the share is the share price on the date at which the target group has agreed to the conditions of the plan reduced by the estimated dividends. The fair value of the cash proportion is remeasured at each reporting date based on the share price at the reporting date.
Authorisation to issue shares
The Annual General Meeting (AGM) on 10 March 2008 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 for three years from the decision of the AGM.
The decision made by the AGM was published in its entirety in a stock exchange notice on 10 March 2008.
The Board has not exercised the authorisation during the period under review.
Authorisation to acquire the company's own shares
The AGM on 10 March 2008 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 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 for 18 months from the decisions of the AGM.
The decision made by the AGM was published in its entirety in a stock exchange notice on 10 March 2008.
The AGM on 5 March 2007 authorised the Board of Directors to decide to acquire a maximum of 5 800 000 own shares of the company. On 10 December 2007 the Board of Directors resolved to exercise the authorisation for the implementation of the Performance share plan 2008-2010 described above. 237 557 own shares were acquired during the period 6 February to 7 March 2008. On 10 March 2008 the Board of Directors resolved to exercise the authorisation given by the Annual General Meeting 2008 and to continue the share buy back. By the end of June 2008, 97 510 own shares have been acquired based on this authorisation. The average price of the shares acquired on the basis of the said authorisations was EUR 15.20. Furthermore a subsidiary of Pöyry PLC owns 8 914 Pöyry PLC shares and thus the total amount of own shares held by the company on 30 June 2008 was 343 981 representing 0.6 per cent of all shares and 0.6 per cent of all votes. Additionally 10 000 own shares have been acquired after the period under review.
Dividend
The Annual General Meeting decided that a dividend of EUR 0.65 be distributed per outstanding share for 2007 (EUR 0.50 for 2006), totalling EUR 38.0 million. The dividend was paid on 20 March 2008.
Share price
The company's shares are quoted on the OMX Nordic Exchange in Helsinki. The average trading price during the period under review was EUR 15.10, with a high of EUR 17.85 and a low of EUR 11.79. A total of 9.2 million of the company's shares were traded, equalling 15.8 per cent of the total number of shares and corresponding to a turnover of EUR 139.7 million.
Prospects
Energy
The economic development in China, Russia and Latin America, combined with the expansion of the EU, create the basis for the demand for energy-related services. The EU's expanding energy legislation will continue to increase 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. Because of the partly overheated investment situation in the energy sector the implementation of certain projects may be postponed. The business group has a strong market 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 global market position of the business group is strong and its order stock is good. The business group's operating profit will improve clearly in 2008.
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 in the Finnish construction market is levelling off during 2008. The business group's comprehensive service packages and its focus on specific competence areas will improve its competitiveness. The business group's order stock has increased and its market position is good. The business group's operating profit will improve clearly in 2008.
Group
The Group has a strong market position in all of its business areas. The order stock is good. Consolidated net sales will increase in 2008. Profit before taxes will improve clearly in 2008. The repercussions in other national economies of the uncertainty in the US economy may have a negative impact on investment demand.
Vantaa, Finland, 22 July 2008
PÖYRY PLC Board of Directors
PÖYRY PLC
Heikki Malinen President and CEO
Teuvo Salminen Deputy to President and CEO
Additional information by: Heikki Malinen, President and CEO, Pöyry PLC tel. +358 10 33 21307, +358 400 464 276 Teuvo Salminen, Deputy to 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
Consolidated statement of income EUR million 4-6/2008 4-6/2007 1-6/2008 1-6/2007 1-12/2007
NET SALES 218.0 173.0 414.2 340.0 718.2
Other operating income 0.2 0.2 0.3 0.9 2.5 Share of associated companies' results 1.2 0.1 1.3 0.2 0.4
PROFIT BEFORE TAXES 30.5 16.8 53.1 33.3 76.5 Proportion of net sales, % 14.0 9.7 12.8 9.8 10.7
Income taxes -9.4 -5.4 -16.5 -10.7 -23.7
NET PROFIT FOR THE PERIOD 21.1 11.4 36.6 22.6 52.8
Attributable to: Equity holders of the parent company 20.5 11.0 35.6 21.9 51.3 Minority interest 0.6 0.4 1.0 0.7 1.5
Earnings per share, EUR 0.35 0.19 0.61 0.38 0.88 Corrected with dilution effect 0.35 0.19 0.60 0.37 0.86
30 June 30 June 31 December Consolidated balance sheet 2008 2007 2007 EUR million
ASSETS
NON-CURRENT ASSETS Goodwill 94.9 74.6 95.6 Intangible assets 6.6 7.1 6.6 Tangible assets 19.4 17.3 17.8 Shares in associated companies 5.8 4.7 5.2 Other shares 1.7 6.9 2.4 Loans receivable 0.7 1.1 0.1 Deferred tax receivables 6.1 5.5 5.7 Pension receivables 0.6 2.4 0.6 Other 5.3 8.3 4.9 141.1 127.9 138.9 CURRENT ASSETS Work in progress 78.1 70.5 64.5 Accounts receivable 143.5 131.5 141.9 Loans receivable 0.2 0.0 0.6 Other receivables 16.0 15.4 15.6 Prepaid expenses and accrued income 11.9 11.7 10.9 Cash and cash equivalents 92.4 68.9 98.7 342.1 298.0 332.2
TOTAL 483.2 425.9 471.1
EQUITY AND LIABILITIES
EQUITY Equity attributable to the equity holders of the parent company Share capital 14.6 14.5 14.6 Share premium reserve 32.4 31.6 32.4 Legal reserve 20.3 19.1 19.5 Invested free equity reserve 5.0 0.0 4.6 Translation difference -16.6 -10.7 -13.9 Retained earnings 117.4 95.8 125.4 173.1 150.3 182.6 Minority interest 7.5 6.5 6.9 180.6 156.8 189.5 LIABILITIES Non-current liabilities Interest bearing non-current liabilities 21.3 3.1 1.9 Pension obligations 6.8 6.8 6.6 Deferred tax liability 8.2 3.7 3.3 Other non-current liabilities 7.9 7.8 9.4 44.2 21.4 21.2 Current liabilities Amortisations of interest bearing non-current liabilities 1.7 2.7 2.6 Interest bearing current liabilities 12.9 16.7 4.4 Provisions 3.6 2.5 5.0 Project advances 80.7 86.4 97.3 Accounts payable 24.6 22.5 22.9 Other current liabilities 41.5 38.0 38.3 Current tax payable 7.7 2.1 13.7 Accrued expenses and deferred income 85.7 76.8 76.2 258.4 247.7 260.4
TOTAL 483.2 425.9 471.1
Statement of changes in financial position 4-6/ 4-6/ 1-6/ 1-6/ 1-12/ EUR million 2008 2007 2008 2007 2007
FROM OPERATING ACTIVITIES Net profit for the period 21.1 11.4 36.6 22.6 52.8 Depreciation and value decrease 2.2 2.0 4.2 4.1 8.4 Gain on sale of fixed assets 0.0 0.0 0.0 -0.7 -2.3 Share of associated companies' results -1.2 -0.1 -1.3 -0.2 -0.4 Financial income and expenses -0.5 -0.5 -1.1 -1.0 -2.8 Income taxes 9.4 5.4 16.5 10.7 23.7 Change in work in progress 4.4 -2.2 -13.6 -17.9 -11.7 Change in accounts and other receivables -13.7 -10.8 -4.0 1.1 -5.6 Change in advances received -16.6 4.6 -16.6 15.9 27.4 Change in payables and other liabilities 15.5 10.1 11.9 6.4 13.1 Received financial income 1.0 0.9 2.3 1.7 4.3 Paid financial expenses -0.1 -0.4 -1.0 -0.7 -1.5 Paid income taxes -8.0 -6.7 -14.6 -10.8 -19.1
Total from operating activities 13.5 13.7 19.3 31.2 86.4
CAPITAL EXPENDITURE Investments in shares in subsidiaries deducted with cash acquired -2.4 -11.9 -4.9 -13.6 -23.4 Sales of shares in subsidiaries 0.0 0.0 0.0 0.0 0.3 Investments in other shares 0.0 0.0 0.0 0.0 0.0 Investments in fixed assets -3.3 -1.8 -5.9 -3.8 -9.9 Sales of shares in associated companies 0.0 0.0 0.0 0.0 1.8 Sales of other shares 0.7 0.0 0.7 0.6 2.2 Sales of fixed assets 0.6 0.0 0.6 0.3 1.2
Capital expenditure total, net -4.4 -13.7 -9.5 -16.5 -27.8
Net cash before financing 9.1 0.0 9.8 14.7 58.6
FINANCING New loans 0.0 0.0 20.5 0.0 0,0 Repayments of loans -0.8 -0.9 -1.3 -1.4 -2.6 Change in current financing -3.7 3.3 8.2 10.1 -2.2 Change in non-current investments 0.0 0.0 0.0 0.0 0.5 Dividends -1.7 -1.3 -38.5 -29.5 -30.0 Acquisition of own shares -0.9 0.0 -4.9 0.0 0.0 Share subscription 0.4 0.1 0.4 0.1 0.9
Net cash from financing -6.7 1.2 -15.6 -20.7 -33.4
Change in cash and cash equivalents 2.4 1.2 -5.8 -6.0 25.2
Cash and cash equivalents at the beginning of period 88.2 67.7 98.7 74.9 74.9
Impact of translation differences in exchange rates 1.8 0.0 -0.5 0.0 -1.4
Cash and cash equivalents at the end of period 92.4 68.9 92.4 68.9 98.7
Statement of changes in equity
Share Inves- pre- ted Trans- Re- Minor- Share mium Legal free lation tained ity cap- re- re- equity differ- earn- inter- Total EUR million ital serve serve reserve ences ings Total est equity
Net income recorded direct to equity 0.0 0.0 0.0 Translation differences 0.3 0.3 -0.1 0.2 Net profit for the period 11.0 11.0 0.4 11.4 Income and expenses for the period 0.3 11.0 11.3 0.3 11.6
Share issue 0.0 0.0 Shares sub- scribed with stock options 0.0 0.1 0.1 0.1 Payment of dividend 0.0 0.0 Expenses from incentive programme 0.3 0.3 0.3 Other changes 0.0 0.1 0.0 0.0 0.0 0.3 0.4 0.0 0.4
Net income recorded direct to equity 0.0 0.0 0.0 Translation differences 0.2 0.2 -0.1 0.1 Net profit for the period 21.9 21.9 0.7 22.6 Income and expenses for the period 0.2 21.9 22.1 0.6 22.7
Share issue 0.0 0.0 Shares sub- scribed with stock options 0.0 0.1 0.1 0.1 Payment of dividend -29.1 -29.1 -0.2 -29.3 Expenses from incentive programme 0.4 0.4 0.4 Other changes 0.0 0.1 0.0 0.0 0.0 -28.7 -28.6 -0.2 -28.8
Net income recorded direct to equity 0.0 0.0 0.0 Translation differences -2.9 -2.9 -2.9 Net profit for the period 51.3 51.3 1.5 52.8 Income and expenses for the period -2.9 51.3 48.4 1.5 49.9
Net income recorded direct to equity 0.0 0.0 0.0 Translation differences 0.4 0.4 0.4 Net profit for the period 20.5 20.5 0.6 21.1 Income and expenses for the period 0.4 20.5 20.9 0.6 21.5
Acquisition of own shares -1.1 -1.1 -1.1 Shares sub- scribed with stock options 0.4 0.4 0.4 Payment of dividend 0.0 0.0 -0.4 -0.4 Transfer, retained earnings 0.8 -0.8 0.0 0.0 Expenses from incentive programme 0.2 0.2 0.2 Other changes 0.0 0.0 0.8 0.4 0.0 -1.7 -0.5 -0.4 -0.9
Net income recorded direct to equity 0.0 0.0 0.0 Translation differences -2.7 -2.7 -2.7 Net profit for the period 35.6 35.6 1.0 36.6 Income and expenses for the period -2.7 35.6 32.9 1.0 33.9
Acquisition of own shares -5.1 -5.1 -5.1 Shares sub- scribed with stock options 0.4 0.4 0.4 Payment of dividend -38.0 -38.0 -0.4 -38.4 Transfer, retained earnings 0.8 -0.8 0.0 0.0 Expenses from incentive programme 0.3 0.3 0,3 Other changes 0.0 0.0 0.8 0.4 0.0 -43.6 -42.4 -0.4 -42.8
Pöyry PLC has made interest rate swaps for EUR 12.4 million external loans. Related party transactions
The transactions with the associated companies are determined on an arm's length basis.
Sales to associated companies 0.2 0.1 0.1 Loans receivable from associated companies 0.1 0.6 0.1 Accounts receivable from associated companies 0.0 0.0 0.0
Shareholding and option rights of related parties
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 30 June 2008 a total of 165 437 shares and 168 654 stock options (on 31 December 2007 a total of 207 107 shares, and 236 975 stock options 2004).
With the stock options the shareholding can be increased by 674 616 shares equalling 1.1 per cent of the total number of shares and 1.2 per cent of the total votes.
The stock option programme is described in the Financial Statements 2007.
Performance share plan 2008-2010
In December 2007 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.
During the period under review 42 000 grants have been awarded to the President and CEO, to the Deputy to the President and CEO and to the members of the Group Executive Committee, corresponding to the value of not more than 42 000 shares.
The Performance share plan is described in the verbal part of the Interim Report.
Equity attributable to equity holders of the parent company/share, EUR 2.97 2.58 3.11
Return on investment, % p.a. 52.3 38.2 41.7
Return on equity, % p.a. 39.5 28.2 30.0
Equity ratio, % 44.9 46.2 50.7
Equity/Assets ratio, % 37.4 36.8 40.2
Net debt/Equity ratio (gearing), % -31.2 -29.7 -47.4
Net debt, EUR million -56.5 -46.4 -89.9
Consulting and engineering, EUR million 551.5 558.1 551.4 EPC, EUR million 4.2 20.8 11.4 Order stock total, EUR million 555.7 578.9 562.8
Capital expenditure, operating, EUR million 3.3 1.8 5.9 3.8 9.1 Capital expenditure in shares, EUR million 5.1 11.9 5.3 11.9 44.2
Personnel in Group companies on average 7529 6545 6852 Personnel in Group companies at the end of the period 7943 6960 7269 Personnel in associated companies at the end of the period 305 271 277
Change in intangible assets EUR million
Book value at beginning of period 5.4 7.3 6.6 7.9 7.9 Acquired companies 0.0 0.1 0.0 0.1 0.9 Capital expenditure 1.2 0.4 1.4 0.4 1.4 Decreases 0.0 0.0 0.0 0.0 0.0 Depreciation and expenses -0.6 -0.7 -1.2 -1.3 -3.5 Translation difference 0.6 0.0 -0.2 0.0 -0.1 Book value at end of period 6.6 7.1 6.6 7.1 6.6
Change in tangible assets
Book value at beginning of period 18.3 17.1 17.8 17.0 17.0 Acquired companies 0.7 0.3 0.7 0.3 0.6 Capital expenditure 2.1 1.5 4.5 3.4 7.1 Decreases -0.5 0.0 -0.6 -0.3 -0.8 Depreciation -1.6 -1.6 -3.0 -3.1 -6.0 Translation difference 0.4 0.0 0.0 0.0 -0.1 Book value at end of period 19.4 17.3 19.4 17.3 17.8
Segment information 1-6/2008 1-6/2007 1-12/2007 EUR million
NET SALES Energy 120.2 103.2 217.5 Forest Industry 165.2 132.0 276.9 Infrastructure & Environment 128.0 104.2 222.5 Unallocated 0.8 0.6 1.3 Total 414.2 340.0 718.2
OPERATING PROFIT AND NET PROFIT FOR THE PERIOD Energy 13.9 9.9 21.0 Forest Industry 30.5 16.4 39.0 Infrastructure & Environment 9.8 7.2 16.8 Unallocated -2.2 -1.2 -3.0 Operating profit total 52.0 32.3 73.8
Financial income and expenses 1.1 1.0 2.7 Profit before taxes 53.1 33.3 76.5
Income taxes -16.5 -10.7 -23.7 Net profit for the period 36.6 22.6 52.8 Profit attributable to: Equity holders of the parent company 35.6 21.9 51.3 Minority interest 1.0 0.7 1.5
OPERATING PROFIT % Energy 11.6 9.6 9.7 Forest Industry 18.5 12.4 14.1 Infrastructure & Environment 7.6 6.9 7.5 Total 12.5 9.5 10.3
ORDER STOCK Energy 195.8 233.8 212.7 Forest Industry 126.7 140.2 123.8 Infrastructure & Environment 232.8 204.6 226.3 Unallocated 0.4 0.3 0.0 Total 555.7 578.9 562.8
Consulting and engineering 551.5 558.1 551.4 EPC 4.2 20.8 11.4 Total 555.7 578.9 562.8
NET SALES BY AREA The Nordic countries 123.2 98.4 201.1 Europe 181.7 145.1 307.8 Asia 33.9 33.3 67.3 North America 16.2 17.4 34.2 South America 44.8 35.2 82.2 Other 14.4 10.6 25.6 Total 414.2 340.0 718.2
Segment information 7-9/06 10-12/06 1-3/07 4-6/07 EUR million
NET SALES Energy 49.1 59.9 51.4 51.8 Forest Industry 54.8 60.3 64.6 67.4 Infrastructure & Environment 48.7 54.1 50.8 53.4 Unallocated 0.4 -1.9 0.2 0.4 Total 153.0 172.4 167.0 173.0
OPERATING PROFIT AND NET PROFIT FOR THE PERIOD Energy 3.7 4.4 5.3 4.6 Forest Industry 6.4 7.5 7.8 8.6 Infrastructure & Environment 3.4 3.5 3.7 3.5 Unallocated -0.3 0.8 -0.8 -0.4 Operating profit total 13.2 16.2 16.0 16.3
Financial income and expenses 0,0 -0.1 0.5 0.5 Profit before taxes 13.2 16.1 16.5 16.8
Income taxes -4.2 -4.5 -5.3 -5.4 Net profit for the period 9.0 11.6 11.2 11.4
Profit attributable to: Equity holders of the parent company 8.6 11.2 10.9 11.0 Minority interest 0.4 0.4 0.3 0.4
OPERATING PROFIT % Energy 7.5 7.3 10.3 8.9 Forest Industry 11.7 12.4 12.1 12.8 Infrastructure & Environment 7.0 6.5 7.3 6.6 Total 8.6 9.4 9.6 9.4
ORDER STOCK Energy 222.6 204.9 214.8 233.8 Forest Industry 111.0 111.4 154.1 140.2 Infrastructure & Environment 183.7 191.0 198.4 204.6 Unallocated 0.0 0.3 0.3 0.3 Total 517.3 507.6 567.6 578.9
Consulting and engineering 502.1 500.8 553.1 558.1 EPC 15.2 6.8 14.5 20.8 Total 517.3 507.6 567.6 578.9
Segment information 7-9/07 10-12/07 1-3/08 4-6/08 EUR million
NET SALES Energy 51.6 62.7 58.1 62.1 Forest Industry 65.2 79.7 76.8 88.4 Infrastructure & Environment 55.6 62.7 60.9 67.1 Unallocated 0.3 0.4 0.4 0.4 Total 172.7 205.5 196.2 218.0
OPERATING PROFIT AND NET PROFIT FOR THE PERIOD Energy 5.7 5.4 5.6 8.3 Forest Industry 9.9 12.7 12.8 17.7 Infrastructure & Environment 4.4 5.2 4.4 5.4 Unallocated -0.7 -1.1 -0.8 -1.4 Operating profit total 19.3 22.2 22.0 30.0
Financial income and expenses 0.6 1.1 0.6 0.5 Profit before taxes 19.9 23.3 22.6 30.5
Income taxes -6.3 -6.7 -7.1 -9.4 Net profit for the period 13.6 16.6 15.5 21.1
Profit attributable to: Equity holders of the parent company 13.5 15.9 15.1 20.5 Minority interest 0.1 0.7 0.4 0.6
OPERATING PROFIT % 11.0 8.6 9.6 13.4 Energy 15.2 15.9 16.6 20.0 Forest Industry 7.9 8.3 7.3 8.0 Infrastructure & Environment 11.2 10.8 11.2 13.8 Total
ORDER STOCK 223.7 212.7 205.8 195.8 Energy 143.3 123.8 135.6 126.7 Forest Industry 216.7 226.3 232.5 232.8 Infrastructure & Environment 0.0 0.0 0.4 0.4 Unallocated 583.7 562.8 574.3 555.7 Total 566.2 551.4 568.5 551,5 Consulting and engineering 17.5 11.4 5.8 4.2 EPC 583.7 562.8 574.3 555.7 Total
Calculation of key figures
Return on investment, ROI %
profit before taxes + interest and other financial expenses 100 x --------------------------------------------------------- balance sheet total - non-interest bearing liabilities (average)
Return on equity, ROE %
net profit 100 x --------------------- equity (average)
Equity ratio %
equity 100 x ----------------------------------------------- balance sheet total - advance payments received
Equity/assets ratio %
equity 100 x --------------------- balance sheet total
Net debt/equity ratio, gearing %
interest-bearing liabilities - cash and cash equivalents 100 x ---------------------------------------------------- equity
Earnings/share, EPS
net profit attributable to the equity holders of the parent company ------------------------------------------------------------ issue-adjusted average number of shares for the fiscal year
Equity attributable to the equity holders of the parent company/share
equity attributable to the equity holders of the parent company ------------------------------------------------------------- issue-adjusted number of shares at the end of the fiscal year
Acquisitions during 2008
Acquisition Acquired Name and business date interest %
Arket Oy 7 May 2008 100
The company specialises in architectural design services for healthcare, office, retail and industrial buildings. The company is based in Espoo, Finland employing nine persons.
Geopale Oy 12 May 2008 100
The company specialises in bedrock core drillings. The company is based in Jyväskylä, Finland employing 14 persons.
Consilier Construct S.R.L. 27 May 2008 100
The company focuses on the transportation market in particular on the road and rail sector. The company is based in Bucharest in Romania and has a staff of 220.
Acquisitions during 2007 Acquisition Acquired Name and business date interest %
Rakennuslaskenta NHL Oy 25 May 2007 100 (Merged into Pöyry Building Services Oy 31 December 2007)
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.
CJSC "Giprobum-Pöyry" (former ZAO 15 June 2007 70 Giprobum Engineering) 19 March 2008 30 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.
Pöyry Evata Oy (former Evata Worldwide Oy) 27 June 2007 70 The company specialises in architectural and interior design, 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 Pöyry AS (former ECON Analyse AS) 27 August 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 September 2007 100 (Merged into Pöyry Civil Oy 31 March 2008)
The company specialises in industrial building construction and structural engineering of office and commercial buildings. The company is based in Helsinki, Kuopio and Oulu in Finland and has a staff of 100.
Ingenieurgemeinschaft Witzenhausen Fricke & Turk GmbH (IGW) 5 October 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 November 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 November 2007 100 (Merged into Pöyry Building Services Oy 31 May 2008)
The company specialises in HVAC design. The company is based in Espoo, Finland and has a staff of 14.
IDP Consult Incorporated 18 December 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.
Aggregate figures for the above acquisitions EUR million 2008 2007
Price allocation Equity 3.8 10.5 Fair value adjustments: Client relationship 0.0 0.0 Order stock 0.0 0.3 Other 0.0 0.0 Total 3.8 10.8
Goodwill (remaining) 1.5 33.4
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
Operating profit from acquisition date to end of June 2008 / December 2007 0.2 2.0 Sales volume on a 12-month calendar year basis 13.3 50.1 Operating profit on 12-month calendar year basis 2.1 5.3
Impact on the Pöyry Group's number of personnel 273 637
Impact on the Pöyry Group's assets and liabilities EUR million 2008 2007
Book Book values values at Fair Adjus- at Fair Adjus- acqui- value ted acqui- value ted sition adjust- IFRS sition adjust- IFRS date ments values date ments values
Net identifiable assets and liabilities 3.8 0.0 3.8 10.5 0.3 10.8
Total cost of business combinations 5.3 44.2
Goodwill 1.5 33.4
Consideration paid, satisfied in cash 4.7 30.4 Cash acquired 2.2 8.6 Net cash outflow 2.5 21.8
Based on the purchase agreements the companies acquired during the period under review are consolidated 100% into the Pöyry Group as of the end of the month when acquired.
