The Pöyry Group's net sales for the period under review were EUR 144.0 million (123.3 in the same period 2005). Profit before taxes was EUR 10.5 (7.5) million. The timing of the Easter holidays, which in 2006 fell in the second quarter and in 2005 in the first quarter, had a significant impact on the improvement in profit during the period under review.
The Group's consolidated balance sheet is healthy. The equity ratio was 48.4 (48.9) per cent and the net debt/equity ratio (gearing) -27.9 (-28.3) per cent.
Earnings per share were EUR 0.12 (0.08) and the return on investment 28.3 (21.3) per cent.
The order stock was EUR 519.1 million, increasing by EUR 67.0 million during the period under review.
Consolidated net sales will increase during 2006. Profit before taxes is estimated to improve in 2006.
This Interim Report has been prepared in accordance with IFRS booking and valuing principles. Information in this Interim Report has not been audited.
Business groups
Energy
Net sales for the period under review were EUR 42.8 (37.8) million. Operating profit was EUR 3.2 (2.0) million.
Demand for energy-related services has remained good and the business group has strengthened its global market position.
The order stock has grown, amounting to EUR 220.0 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 high-voltage substation reconstruction contracts with Verbund Austrian Power Grid and Verbund Austrian Hydro Power in Austria (over EUR 4 million) and the operation and maintenance (O&M) contract with CIPP II Power Corporation in the Philippines (EUR 3 million).
Forest Industry
Net sales for the period under review were EUR 52.8 (50.0) million. Operating profit amounted to EUR 4.4 (4.1) million.
Investment activity in the forest industry has remained low. Demand has focused on rebuilding and maintenance investments. Demand for consulting services increased slightly during the review period.
The business group's order stock has improved, and, taking into account the market situation, it is good. The order stock was EUR 111.4 million (97.3 at the end of 2005). The most important new project received during the review period was the hydrogen peroxide plant engineering and project services contract with Solvay S.A. in Belgium.
Infrastructure & Environment
Net sales for the period under review were EUR 48.3 (35.7) million. Operating profit was EUR 3.3 (1.3) million.
Demand in the infrastructure and environment markets has remained basically stable. The business group has continued to strengthen its position in local and international markets.
The order stock continued to grow, amounting to EUR 187.6 million (159.5 at the end of 2005). The most important new projects were the light rail transport system contract with Metro de Maracaibo C.A. in Venezuela (EUR 13.1 million)and the high-speed railway construction supervision contract with Zhengzhou-Xian Passenger Dedicated Line Company Ltd in China (EUR 2.6 million).
Group structure
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.
In March Pöyry's 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.
Infrastructure & Environment
Pöyry Environment Oy (formerly Soil and Water Ltd) acquired in February 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 research related to contaminated soils.
Pöyry Group adopts Pöyry brand
The extraordinary General Meeting on March 28, 2006 decided to change the company's business name to Pöyry Oyj, in English Pöyry Plc. The change was registered in the Trade Register on April 3, 2006.
The Pöyry Group's entire business will be brought together under one brand, Pöyry. Accordingly, all Group companies will be named in a uniform manner, beginning with "Pöyry". They will also begin to 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.
Order stock
The Group's order stock is good. It increased by EUR 67.0 million during the period under review, totalling EUR 519.1 million at the end of March. 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 3.0 (3.1) million, of which EUR 1.7 (1.9) million consisted of computer software, hardware and systems and EUR 1.3 (1.2) 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 8.86, with a high of EUR 9.35 and a low of EUR 7.83 (share prices after share split). A total of 6.3 million of the company's shares were traded, equalling 10.8 per cent of the total number of shares and corresponding to a turnover of EUR 53.4 million.
Prospects
Energy
Good opportunities for growth in demand for energy-related services are emerging as the economies of Southeast Asia and Europe are growing, and as the EU expands. This applies in particular to renewable energy, plant refurbishments and management consulting 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 and its order stock is good. The business group's operating profit will improve in 2006.
Forest Industry
Demand for engineering services is not expected to change significantly in 2006. Investment activity will continue in emerging markets. Rising production costs will call for operational and productivity improvements in mature markets. Industry restructurings will increase demand for consulting and investment banking services. The Forest Industry business group's operating profit will remain stable during 2006, provided that the business cycle and investment activity in the world pulp and paper industry will not change materially.
Infrastructure & Environment
The infrastructure and environment markets are stable. Demand prospects have improved in Western Europe, where the recovery of national economies has also boosted investments in the public sector to some extent. Maintaining a local presence is becoming more important in emerging markets. The business group's order stock has grown to a good level. The operating profit will improve in 2006.
Group
The Group has a strong market position in all of its business areas. The order stock has increased by EUR 67.0 million during the period under review. Consolidated net sales will increase in 2006. Profit before taxes is estimated to improve in 2006.
Vantaa, Finland, April 25, 2006
PÖYRY PLC Board of Directors
PÖYRY PLC
Erkki Pehu-Lehtonen Teuvo Salminen President and CEO Deputy to President and CEO
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