EFFECT OF IFRS ON THE OPENING BALANCE SHEET
PONSSE OYJ STOCK EXCHANGE BULLETIN 22 MARCH 2005 AT 9:00 A.M.
EFFECT OF IFRS ON THE OPENING BALANCE SHEET
On 1 January 2005, Ponsse Group adopted the International Financial Reporting
Standards (IFRS), its first IFRS-compliant financial statements being prepared for
the financial year ending 31 December 2005 and its first IFRS-compliant interim
report being prepared for the first quarter of 2005 ending 31 March 2005.
This bulletin presents the effects of IFRS adoption on the opening balance sheet
of 1 January 2004 and capital and reserves. The companys previous financial
statements and interim reports were based on the Finnish Accounting Standards
(FAS). The 2005 interim reports will show IFRS-compliant comparative data for 2004
on a quarterly basis.
Ponsse Group has used IFRS 1 (First-Time-Adoption) governing certain exemptions in
applying individual standards retrospectively. When preparing IFRS-based data, the
company used the International Financial Reporting Standards valid at the time of
preparation. The opening balance sheet may be subject to changes if any standard
or interpretation alters before the disclosure of IFRS-compliant financial
statements for 1 January31 December 2005.
The most significant effects resulting from Ponsse Groups adoption of IFRS relate
to revenue recognition, revaluation of tangible assets, measurement of stocks
(inventories), and deferred tax assets and liabilities. As a result, Ponsse
Groups capital and reserves (shareholders equity) will decrease by EUR 957
thousand and the balance sheet total will increase by EUR 1,863 thousand.
PENSION OBLIGATIONS
The adoption of IFRS will not change pension obligations stated on the
consolidated balance sheet since the recognition principle governing the
disability pension obligation under the current Finnish Employees Pension Act
(TEL) is interpreted as practically corresponding to the current accounting
practice based on FAS. Based on IAS 19, disability pension is a long-term employee
benefit, the level of which does not depend on the length of employment at the
company preparing IFRS-compliant financial statements. According to the provisions
of IAS 19.130, the so-called event leading to an obligation in the case of
disability pension is an event of disability. Expenses and liabilities are
recognised once such an event has occurred. Our foreign subsidiaries apply defined
contribution pension plans.
SEGMENT REPORTING
The primary format of Ponsse Groups segment reporting is based on geographical
segments (the Nordic countries, North and South America) and the secondary
reporting format is based on business segments (machinery sales and maintenance
services).
RESEARCH AND DEVELOPMENT COSTS
Under IAS 38, development costs are capitalised, provided they fulfil the criteria
stipulated by this standard, and are amortised over the assets expected useful
life. Applying to these principles in the financial statements of 31 December
2003, the company has begun to capitalise development costs.
IFRS OPENING BALANCE SHEET 1 JANUARY 2004
EUR 1,000 FAS 1 IFRS IFRS 1
Jan. 2004 transitio Jan. 2004
n effect
ASSETS
Non-current assets
Intangible assets 1,541 0 1,541
Tangible assets 1) 15,479 986 16,465
Financial assets 22 0 22
Holdings in associated 638 0 638
companies
Non-current receivables 218 0 218
Deferred tax assets 2) 240 234 474
Total non-current assets 18,138 1,220 19,358
Current assets
Stocks 3) 31,688 643 32,331
Trade receivables 16,664 0 16,664
Other current receivables 1,145 0 1,145
Cash in hand and at banks 10,565 0 10,565
Total current assets 60,062 643 60,705
TOTAL ASSETS 78,200 1,863 80,063
CAPITAL AND RESERVES AND
LIABILITIES
Capital and reserves
Share capital 3,500 0 3,500
Share premium account 2,554 0 2,554
Other reserves 8 0 8
Retained earnings 4) 37,678 -957 36,721
Other capital and reserves -646 0 -646
TOTAL CAPITAL AND RESERVES 43,094 -957 42,137
LIABILITIES
Non-current creditors
Non-current interest-bearing 5) 13,164 1,414 14,578
liabilities
Deferred tax liabilities 6) 838 186 1,024
Other non-current creditors 7) 121 492 613
Total non-current creditors 14,123 2092 16,215
Current creditors
Current interest-bearing 5) 4,603 346 4,949
liabilities
Trade creditors 5,314 0 5,314
Tax liabilities for the 961 0 961
financial year
Other current creditors 7) 7,821 382 8,203
Provisions 2,284 0 2,284
Total current creditors 20,983 728 21,711
TOTAL LIABILITIES 35,106 2,820 37,926
TOTAL CAPITAL AND RESERVES 78,200 1,863 80,063
AND LIABILITIES
1. Tangible assets of EUR 986 thousands
Leases classified as finance leases were capitalised as required by IAS
17 and items under IAS 18 resulting from revenue recognition were capitalised on
the balance sheet, increasing the balance sheet value by a total of EUR 1,827
thousand.
Under IAS 16, the revaluation of EUR 841 thousand for Ponsse Oyjs premises in
Vieremä was reversed on the IFRS opening balance sheet, with its net effect on
tangible assets amounting to EUR 986 thousand.
2. Deferred tax assets of EUR 234 thousand
Deferred tax assets are based on the difference between the IFRS balance sheet and
taxation resulting from revenue recognition. As a result of the decreasing
temporary difference, deferred tax assets will disappear during upcoming financial
periods.
3. Stocks of EUR 643 thousand
Stocks were stated as required by IAS 2 i.e., fixed acquisition and manufacturing
costs and depreciation attributed to stocks were capitalised, totalling EUR 643
thousand.
4. Retained earnings of EUR 957 thousand
Retained earnings are adjusted by:
revenue recognition of EUR 807 thousand (IAS 17 and 18),
EUR 841 thousand revaluation reversal of tangible assets (IAS 16),
EUR 643 thousand change in the acquisition cost of stocks (IAS 2),
deferred tax assets of EUR 234 thousand (IAS 12) and
deferred tax liabilities of EUR -186 thousand (IAS 12).
5. Interest-bearing liabilities of EUR 1,760 thousand
Items resulting from finance leases (IAS 17) and revenue recognition (IAS 18)
increased non-current interest-bearing liabilities by EUR 1,414 thousand and
current interest-bearing liabilities by EUR 346 thousand, or a total of EUR 1,769
thousand.
6. Deferred tax liabilities of EUR 186 thousand
Deferred tax liabilities (IAS 12) were recognised based on the difference between
the IFRS balance sheet and taxation resulting from stocks.
7. Other liabilities of EUR 874 thousand
Residual-value guarantees resulting from Ponsse Groups repurchase commitments
were recognised under other non-current creditors, EUR 492 thousand, and other
current creditors, EUR 382 thousand, in the IFRS balance sheet, totalling EUR 874
thousand. These items will be recognised as income when the related contractual
obligations cease.
FINANCIAL INDICATORS
FAS 1 IFRS 1
Jan. 2004 Jan. 2004
Capital and reserves, EUR 43,094 42,137
1,000
Equity per share 3.08 3.01
Equity ratio, % 55.7 53.2
Gearing, % 16.7 21.3
Balance sheet total 78,200 80,063
Vieremä, 22 March 2005
Arto Tiitinen
President and CEO
FOR MORE INFORMATION, PLEASE CONTACT:
Arto Tiitinen, President and CEO, tel. +358 (0)20 768 4621 or +358 (0)400 566 875
Mikko Paananen, CFO, tel. +358 (0)20 768 4648 or +358 (0)400 817 036
DISTRIBUTION
Helsinki Stock Exchange
Major media
www.ponsse.com
