Net Sales and Earnings
The Jaakko Pöyry Group's net sales for the period January - June 2000 amounted to EUR 238.9 million (EUR 191.5 million in the same period 1999). The Group's operating profit was EUR 14.7 (12.2) million and profit after financial items EUR 13.3 (11.4) million. The Group's profit for the period under review was EUR 7.8 (6.9) million and earnings per share EUR 0.57 (0.51).
Net sales increased in all business groups during the period under review. The operating profit improved in Forest Industry Consulting and Energy business groups. The Forest Industry business group's result has been affected by certain earlier indicated lower margin projects and under utilization of resources in some companies within the local office network. The Forest Industry Consulting business group's result has been favourably influenced by its activities as an adviser in M & A transactions. Investments in expanding the Infrastructure & Environment business group's telecommunications scope and services have had a negative impact on the business group's result. The Group's financial items include a cost of EUR 0.6 million of foreign exchange forward contracts. The parent company has hedged the Group's long-term USD-based order stock and USD-based fixed assets.
Order Stock
The Group's order stock was at the same level as at the end of last year and amounted to EUR 350.8 million at the end of June. The order stock amounted to EUR 348.9 million at the end of December 1999.
Financing
The Group's liquidity remained good during the period under review. At the end of June, the Group's cash in hand and at banks totalled EUR 34.8 million and interest-bearing liabilities EUR 57.9 million, so interest-bearing net debts amounted to EUR 23.1 million. At the end of 1999 interest-bearing net debts amounted to EUR 11.7 million. The net debt/equity ratio, gearing, rose from 13.5 per cent at the end of the year to 25.7 per cent.
The agreement made in 1999 for insuring the Jaakko Pöyry Group's pension fund's liabilities in an outside insurance company became effective as of the beginning of 2000.
According to information from Swedish Staff Society (SPP), an amount of EUR 6.1 million deriving from SPP's consolidation surplus has been allocated to companies within the Jaakko Pöyry Group in Sweden. In the end of August about EUR 1 million will be paid to the Group. The repayment is not taken into account in the interim report.
Capital Expenditure
The Group's capital expenditure for the report period totalled EUR 6.0 (13.7) million. The capital expenditure consisted mostly of costs related to computer software, systems and hardware.
After the period under review Jaakko Pöyry Group has sold its 50.0 per cent share of an office building in Le Pecq, France. The purchase price was about EUR 5 million. The sale has no effect on the Groups' result.
The figures in the interim report are unaudited.
Group Structure
Following a reorganisation effective from the beginning of the year 2000, the Process Industry business group has been merged with the Energy business group.
The activities of the French engineering companies Beture-Environnement S.A. and Beture-Cerec S.A. have been integrated into the Energy and Infrastructure & Environment business groups. Acquired in December last year, these two companies have about 150 employees.
In June 2000, Jaakko Pöyry Group Oyj has in a targeted share issue subscribed thirty per cent of the shares in Star Communications Oy, a company specialising in consulting services and network planning for the telecommunication sector. At the same time, Jaakko Pöyry Group Oyj has redirected the strategy of its Infrastructure & Environment business group, selecting the telecommunications sector as one of the business group's main growth areas. Star Communications Oy is intended to supplement Jaakko Pöyry Group Oyj's service package in the areas of network planning and network integration. Jaakko Pöyry Group Oyj aims to expand its telecommunications business within the next few years and to be able to offer turn-key deliveries of telecommunications networks to operators and equipment suppliers. For project implementation services Jaakko Pöyry Group Oyj will rely on the resources of its global network of offices in 34 countries and the Group's experience of project implementation in more than 100 countries.
Efforts to develop the Group's structure and organisation will continue during the current year. In response to the continued globalisation of the forest products industry, the Forest Industry business group's local office network will be expanded further in North America and Central Europe. There are also plans to expand the operations of the Energy and Infrastructure & Environment business groups.
Share capital and shares
Jaakko Pöyry Group Oyj's Annual General Meeting on March 8, 2000 authorised the Board of Directors to invalidate 597 200 of the company's own shares and to reduce the company's share capital from EUR 12.0 million to EUR 11.5 million. The Annual General Meeting approved the Board of Directors' proposal to convert the company's share capital into euros and to raise it to EUR 13 670 286 through a bonus issue by transferring EUR 2.2 million from the legal reserve to the share capital. After the increase, the accounting par value of the company's shares is EUR 1.00. The amount of shares is 13 670 286.
The Annual General Meeting approved the Board of Directors' proposal that a dividend of 1999 of EUR 0.45 (0.34 for 1998) be paid per share, totalling EUR 6.2 million. The dividend was paid March 20, 2000.
The Annual General Meeting authorised the Board of Directors to raise the share capital by a new issue or by taking a convertible loan or by issuing option rights, so that based on the new issue, the convertible bonds and option rights, the share capital can be raised 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 8, 2001.
Jaakko Pöyry Group Oyj issued in 1998 a bond loan with warrants to all employees in the Group, with a total value of EUR 2.2 million. The bonds with warrants were wholly subscribed. The warrants carry subscription rights for a maximum of 1.3 million of the company's shares, with the subscription period beginning partly (390 000 shares) on April 1, 2000 and ending for all warrants on April 30, 2005. In July 53 850 shares are subscribed.
The Annual General Meeting authorised the Board of Directors to acquire and convey the company's own shares to a maximum of 5.0 per cent of the company's share capital. The Board of Directors decided on May 3, 2000 to exercise the authorisations. The authorisations are in force until March 8, 2001.
The company's shares are quoted on the Helsinki Stock Exchanges. The average trading price during the report period was EUR 19.71, with a high of EUR 24.00 and a low of EUR 15.00. A total of 1.3 million of the company's shares (equalling 9.2 per cent of the total number of shares) were traded, corresponding to a turnover of EUR 24.9 million. The company's share is delisted from the Stockholm Exchanges. The last trading date was May 31, 2000. The amount of shares traded on the Stockholm Exchanges during year 2000 was 27 466.
Prospects
The favourable economic development in the forest products industry has continued. This has kept investment activity on a good level. The consolidation of the industry will also continue. The Forest industry business group's order stock is good. The business group's relative profitability will increase during the rest of the year. The Forest Industry Consulting business group's market position has improved and its order stock is good. The business group's earnings will improve significantly compared with last year. The Energy business group's order stock and market position have remained good and will create a firm basis for stable development of the business group's operations. The order stock and market position of the Infrastructure & Environment business group have remained good. The business group's earnings will remain at last year's level.
The Jaakko Pöyry Group aims to achieve a return on investment (ROI) of 20.0 per cent or more and to improve earnings per share at an average rate of 15.0 per cent a year. Taking into account the
general economic development and the Group's order stock and market position, the Group's prospects for achieving its goals are good.
Vantaa, July 31, 2000
Jaakko Pöyry Group Oyj
Board of Directors
Jaakko Pöyry Group Oyj
Erkki Pehu-Lehtonen
Teuvo Salminen
The full report including tables can be down loaded from the enclosed link.
