The Jaakko Pöyry Group's net sales for the period under review were EUR 378.3 (344.7 in the same period 2004) million. Profit before taxes was EUR 26.9 (21.2) million.
The Group's consolidated balance sheet is healthy. The equity ratio was 50.7 (49.6) per cent and the net debt/equity ratio (gearing)
-23.6 (-26.9) per cent.
Earnings per share were EUR 1.27 (1.05) and the return on investment 24.4 (20.0) per cent.
The order stock was EUR 420.3 million. It increased by EUR 47.1 million during the period under review.
Consolidated net sales will increase during 2005. Profit before taxes will improve in 2005.
Adoption of IFRS standards
The Jaakko Pöyry Group reports its accounts according to the International Financial Reporting Standards (IFRS) from the beginning of 2005. All comparable figures for 2004 in this Interim Report are also in accordance with IFRS. The main adjustments to the statement of income and balance sheet relate to calculation and recording of pension arrangements, deferred tax receivables and goodwill. As the Group's accounting and reporting principles already have been largely in line with the IFRS standards, the adoption of IFRS standards does not have any other significant effects on the Group's profit, balance sheet and equity.
The Jaakko Pöyry Group published a separate stock exchange notice on February 3, 2005 regarding the impact of the IFRS changes. The same information is included in the Financial Statements part of the Annual Report 2004.
Business groups
Forest Industry
Net sales for the period under review were EUR 148.9 (136.2 million). Operating profit amounted to EUR 14.7 (11.9) million. The operating profit for the third quarter was particularly good because of items from completed projects.
Investment activity in the forest industry has remained low. Demand has focused on rebuild and maintenance investments. Demand for consulting services increased slightly during the review period.
Taking into account the market situation, the business group's order stock has remained good. The most significant new project was the new pulp mill project of Botnia S.A. in Uruguay (EUR 15 million). In addition, several rebuild and maintenance investments and consulting assignments have been added to the order stock. The order stock was EUR 78.3 million (EUR 82.5 million, end of 2004).
Energy
Net sales for the period under review were EUR 114.5 (104.2) million. Operating profit was EUR 5.9 (4.5) million.
Demand for energy-related services has remained good and the business group has strengthened its market position.
The order stock has remained good, increasing to EUR 197.6 (171.8) million. The most important new projects were Amata Power Ltd's gas-fired cogeneration power plant in Thailand (EUR 32 million), Brunei Shell Petroleum's design engineering and services contract in Brunei (EUR 10 million) and the frame agreement for engineering services signed with Tecnicas Reunidas in Spain (EUR 10 million). Furthermore, numerous small and medium-size projects in Europe and Asia were added to the order stock.
Infrastructure & Environment
Net sales for the period under review were EUR 114.6 (104.8) million. Operating profit was EUR 6.2 (4.9) million.
Demand for the business group's services has remained basically stable. Investments in traffic systems in Germany have remained low. In Eastern Europe, including Russia, demand and investments are growing, which has had a positive impact on the result for the period under review.
The order stock amounted to EUR 144.2 (118.8) million. The order stock is good. The order stock of GKW GmbH, which was acquired at the end of July, was EUR 22.0 million at the end of September. The most important new projects were the project management contract for the Olkiluoto nuclear power plant in Finland, the railway management agreement with the Finnish Rail Administration and the extensions of transportation project contracts in Venezuela and Taiwan (EUR 8.2 million). In addition, numerous small and medium-size projects in all of the business group's areas of operation in Europe and Asia were added to the order stock.
Group structure
Forest Industry
Jaakko Pöyry AB, Sweden, acquired the entire share capital of Scancontrol AB at the end of June. Scancontrol's net sales are about EUR 4 million and it has a staff of 55. The company has been consolidated into the Jaakko Pöyry Group as of July 1, 2005.
Founded in 1995, Scancontrol is an automation and electrical engineering company specialising in industrial applications. Its main offices are in Lund and Helsingborg in southern Sweden. The company's expertise covers automation and electrical design for the paper, packaging and converting sectors.
The merger of Jaakko Pöyry Consulting Oy into its parent company Jaakko Pöyry Group Oyj has been registered with the Trade Register on August 31, 2005. The purpose of the merger was to clarify the corporate structure of the Jaakko Pöyry Group and to simplify administration.
Energy
There were no changes in the Energy business group's structure during the period under review.
Infrastructure & Environment
At the beginning of July, JP-Transplan Ltd, Finland, acquired the entire share capital of Inframan Ltd. Inframan Ltd's net sales are about EUR 0.7 million and it has a staff of seven. The acquisition of Inframan Ltd expands Jaakko Pöyry Group's life-cycle expertise in transportation infrastructure asset management in Finland and the rest of northern Europe.
At the end of July, the Jaakko Pöyry Group acquired the entire share capital of GKW GmbH in Germany. The transaction price was EUR 6.3 million. The company is debt-free. GKW's net sales for 2004 amounted to about EUR 30 million and its operating profit was EUR 0.7 million. GKW has operations in various locations in Germany and it has 270 employees. The company has been consolidated into the Jaakko Pöyry Group as of September 1, 2005. GKW's net sales for September were EUR 2.4 million, and its effect on the Group's result was neutral. The company's order stock on September 30, 2005 amounted to EUR 22.0 million.
GKW GmbH strengthens the Jaakko Pöyry Group's market position in the water and environment sector especially in Western Europe and also in the international markets relying on public funding. The company is market leader in its sector in Germany and it has a strong position in international markets, especially in Africa.
Order stock
The Group's order stock is good. It increased by EUR 47.1 million during the period under review, totalling EUR 420.3 million at the end of September. At the end of 2004 the order stock was EUR 373.2 million. The order stock has continued to develop favourably after the review period. The most important projects received after the review period include engineering services for Myllykoski's new paper machine to be built in the Czech Republic (more than EUR 10 million) and the underground station and tunnel engineering contract in Canton Zurich in Switzerland (EUR 8 million).
Capital expenditure
The Group's capital expenditure for the period under review totalled EUR 16.5 (11.5) million, of which EUR 5.5 (4.9) million consisted of computer software, hardware and systems and EUR 11.0 (6.6) million were due to share investments.
Share capital and shares
The total number of shares at the end of 2004 was 14 109 851. During the period under review 387 450 new shares were subscribed based on warrants pursuant to the Bond Loan with Warrants issued in 1998. Following the registration of the subscribed shares, the number of shares totalled 14 497 301.
The merger of Jaakko Pöyry Consulting Oy into its parent company Jaakko Pöyry Group Oyj has been registered with the Trade Register on August 31, 2005. The shareholders of Jaakko Pöyry Consulting Oy were disbursed a merger consideration in new shares issued by Jaakko Pöyry Group Oyj. Following the issuance of the new shares, the registered share capital of the company increased by EUR 47 735 from EUR 14 497 301 to EUR 14 545 036 and the total number of authorised shares increased to 14 545 036.
The subscription period based on warrants pursuant to the Bond Loan with Warrants issued in 1998 ended on April 30, 2005. The warrants carried subscription rights for a total of 1 300 000 shares of which 1 299 015 shares have been subscribed based on the warrants.
Jaakko Pöyry Group Oyj issued in 2004 stock options to the management of the Group as well as to a wholly-owned subsidiary of Jaakko Pöyry Group Oyj. The stock options entitle to subscription of a maximum of 550 000 shares in Jaakko Pöyry Group Oyj. Each stock option entitles the holder to subscribe one share in the company. The share subscription periods are the following: for 165 000 shares between March 1, 2007 and March 31, 2010, for 165 000 shares between March 1, 2008 and March 31, 2011, and for 220 000 shares between March 1, 2009 and March 31, 2012. All stock options have been issued and their receipt confirmed.
The Annual General Meeting on March 3, 2005 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 1.0 million by issuing for subscription a maximum of 1.0 million new shares. The authorisation is in force until March 3, 2006.
The Annual General Meeting authorised the Board of Directors to acquire and convey the company's own shares to a maximum of 700 000 shares, which equals less than 5 per cent of the company's share capital. The authorisations are in force until March 3, 2006.
The Annual General Meeting decided that a dividend of EUR 1.20 be distributed per outstanding share for 2004 (for 2003 1.00 and additional dividend 0.50), totalling EUR 16.9 million. The dividend was paid on March 15, 2005.
The company's shares are quoted on the Helsinki Stock Exchange. The average trading price during the period under review was EUR 25.73, with a high of EUR 29.00 and a low of EUR 22.20. A total of 3.5 million of the company's shares were traded, equalling 24.2 per cent of the total number of shares and corresponding to a turnover of EUR 90.5 million.
Prospects
Demand for forest industry engineering services is not expected to change during the rest of the year. The number of new investments in Europe and North America is expected to remain low during 2005 and investments will primarily focus on modernisations. However, large new investments are expected to go ahead during this and next year mainly in South America. Demand for consulting and investment banking services is growing in industrialised countries as well as in emerging markets. The Forest Industry business group's operating profit will improve somewhat in 2005.
The recovery of energy markets in the Far East, China and partly also in Europe, and the expansion of the EU, create good opportunities for growth in demand for energy-related services. This applies in particular to renewable energy, plant modernisations and management consulting services. The market position of the Energy business group has improved and its order stock is good. The business group's operating profit will improve in 2005.
Demand for the Infrastructure & Environment business group's traffic systems expertise has remained good in emerging markets. Demand for traffic systems expertise remains slack in Germany. In the water and environment sector, demand is expected to remain good. Demand for building services has picked up in all of this business area's main markets, i.e. in Finland, the Baltic countries and Russia. The business group's order stock is good. Its operating profit will improve in 2005.
The Group has a solid market position in all of its business groups. The order stock increased during the period under review. The Group's balance sheet structure and liquidity are good. Consolidated net sales will increase in 2005. Profit before taxes will improve in 2005.
Vantaa, October 27, 2005
JAAKKO PÖYRY GROUP OYJ
Board of Directors
JAAKKO PÖYRY GROUP OYJ
Erkki Pehu-Lehtonen Teuvo Salminen
President and CEO Deputy to President and CEO
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