PONSSE?S 2004 FINANCIAL STATEMENTS
PONSSE OYJ STOCK EXCHANGE RELEASE 11 FEBRUARY 2005 AT 9 A.M.
PONSSES 2004 FINANCIAL STATEMENTS
Ponsse Groups turnover and financial result enjoyed a marked growth in 2004.
Group turnover rose by 14.4 per cent to EUR 190.0 million (EUR 166.0m in 2003) and
operating profit by 37.7 per cent to EUR 19.6 million (EUR 14.3m). Earnings per
share were EUR 0.97 (EUR 0.65) and equity ratio 37.5 per cent (55.7%).
The Board of Directors will recommend to the Annual General Meeting that a
dividend of EUR 0.20 per share be paid for 2004.
ARTO TIITINEN, PRESIDENT AND CEO
Ponsses foreign business operations moved forward in 2005. We strengthened our
position in Europe, our Russian operations progressed according to plan, and at
the end of the year we decided to continue our overseas investments by
establishing a sales and service company in Russia. Despite US dollar exchange
rates, we made good progress in the United States, thanks to our upgrading of our
operations. In Finland, where competition in the forest machine market is the
fiercest in the world, our position remained strong.
TURNOVER AND RESULT
Ponsse Groups turnover rose by 14.4 per cent to EUR 190.0 million (EUR 166.0m),
outstripping the 2003 figures for each quarter, with particularly strong sales in
the second half of the year.
Exports and foreign business operations accounted for 60.7 per cent (55.8%) of the
groups turnover. Finland accounted for 39.3 per cent (44.2%) of turnover, the
rest of Europe for 41.0 per cent (39.4%), North America for 14.8 per cent (14.6%)
and the rest of the world for 4.9 per cent (1.8%). Sales developed favourably,
particularly in Central Europe and Russia.
During the financial year, Ponsse secured new orders worth EUR 201.3 million (EUR
168.0m). At year-end, the Groups order books totalled EUR 44.4 million (EUR
33.7m). In keeping with the practices of earlier years, these figures include
dealers minimum purchase commitments.
The Groups operating profit came to EUR 19.6 million (EUR 14.3m), equivalent to
10.3 per cent (8.6%) of turnover. Return on investment (ROI) further strengthened
to 29.6 per cent (22.5%).
The result after financial items was EUR 19.2 million (EUR 13.1m). There were no
extraordinary items during the report year or during 2003.
The Groups profit for the financial year was EUR 13.5 million (EUR 9.1m) and that
of the parent company EUR 13.8 million (EUR 8.9m).
FINANCIAL SITUATION
The consolidated balance sheet total at 31 December 2004 was EUR 96.1 million (EUR
78.2m). This growth stemmed from excellent year-end sales figures, higher than
usual raw material stocks and the acquisition of Epec Oy at the end of the year.
The Groups interest-bearing liabilities totalled EUR 30.9 million (EUR 17.8m)
while net liabilities were EUR 14.9 million (EUR 6.3m). Equity ratio declined to
37.5 per cent (55.7%). This was attributable to investments of EUR 9.0 million
implemented during the report year as well as dividend payments.
Liquidity remained satisfactory throughout the year. At year-end, the Groups cash
assets totalled EUR 15.7 million (EUR 10.6m). To maintain financing flexibility
and balance seasonal fluctuations, Ponsse uses finance credit agreements of which
EUR 43.9 million remained unused at the end of the year.
Total contingent liabilities related to outside customer financing and refinancing
commitments amounted to EUR 6.1 million (EUR 8.7m) at the year-end.
INVESTMENTS
Fixed asset investments totalled EUR 9.0 million (EUR 4.5m), the main investments
being the enlargement and modernisation of the repair workshop centre in Iisalmi
and the construction of R&D premises at the Vieremä plant. The remainder comprised
routine replacement and maintenance investments.
MARKETS AND SALES
During the financial year, the general economic news was more positive than in
2003. Higher demand for timber within the forestry sector was reflected directly
in the use of, and demand for, forest machines. Market interest rates remained
low, which also fuelled forest machine sales. While the strength of the euro
against the US dollar burdened profitability in the USA, the strong international
competitiveness of North American wood-processing companies increased demand for
forest machines.
The Groups international sales take place through the parent companys wholly
owned subsidiaries in Norway, the United States of America, France, Sweden and the
United Kingdom and through independent dealers.
The Managing Director of Scotland-based Ponsse UK Ltd was changed in 2004. The
parent companys Export Director, Jari Kartano, was appointed the new Managing
Director of the company while Jukka Hakala assumed the post of Country Director,
responsible for the subsidiarys daily operations, at the end of the year.
There were no major changes in the operations of Ponsses other overseas
subsidiaries in 2004.
Ponsse further strengthened its international dealer network in 2004 with OOO
Zeppelin Russland debuting as Ponsses dealer in Russia in June. One of the
largest Caterpillar dealers, Zeppelin thus replaced OOO Veho, Ponsses previous
dealer in the St. Petersburg area.
In December, Hydromec Inc. started as Ponsses new dealer in western and central
Quebec, Canada, replacing Ponsses previous dealer, Tanquay Industry. Ponsses
other Canadian dealers are ReadyQuip Equipment Sales Ltd in North-Eastern and
Southern Ontario and A.L.P.A. Equipment Ltd in Eastern Quebec.
There were no other major changes in the operations and structure of Ponsses
international dealer network.
On 18 March 2004, the President of Finland honoured Ponsse Oyj with the
Internationalisation Award for 2003 for its achievements in international business
operations.
Ponsses position as significant supplier of harvesters and forwarders remained
strong in Finland. The company moved into new premises in Mikkeli and Joensuu in
2004.
RESEARCH AND DEVELOPMENT
Group R&D expenses amounted to EUR 3.7 million (EUR 3.0m) during the report year,
accounting for 2.0 per cent (1.8%) of Group turnover.
At the year-end of 2004, a total of 68 people (55), 10.3 per cent (9.9%) of Group
personnel, were employed in R&D.
In 2004, Ponsse complemented its forwarder range with BuffaloKing, which has an 18-
tonne load carrying capacity.
With respect to harvester heads, product development investments were channelled
into further improvements in reliability and measuring precision. The company also
launched the EH25 energy wood harvesting head for multi-stem handling.
The Opti4G harvester data system used in harvesters was further developed, the new
version providing features that increase logging efficiency and improve wood
quality. At the Metko2004 exhibition organised in Finland in the autumn, Ponsse
launched the new OptiProgressControl system enabling office-based monitoring of
forest machine operation, break and transfer times and fuel consumption as well as
reporting on interruptions. At the same venue, Ponsse also introduced
OptiLogFinder, a map location system designed for forwarders. The system registers
harvester location during logging, after which the forwarder operator is able to
view the location of woodpiles using GPS equipment.
Ponsse has a long tradition of close co-operation with forestry colleges and
forestry companies, which continued in 2004.
PERSONNEL
The Group employed an average number of 607 (553) persons during the financial
year. At 31 December 2004, the Group employed 663 (555) people.
In 2004, Ponsse established Ponsse Academy, a human resources development centre,
which began by carrying out a Group-wide skills analysis and a staff satisfaction
survey.
Ponsses mission, vision and values were revised during 2004. The discussion
initiated by the Management Team in the summer continued throughout the autumn in
all Group units and companies. Finally, in its December meeting, the Groups Board
of Directors approved the values proposed by staff. Ponsses values - closeness to
the customer, reliability, the Ponsse spirit, the will to serve, and innovation -
guide the entire Groups operations.
QUALITY
Ponsse is committed to complying with the ISO 9001:2000 quality management
standard, the ISO 14001 environmental management standard and the OHSAS 18001
occupational health and safety management system. ISO 9001:2000 is certified and
was audited by DNV in August 2003. A system based on three different standards
creates a congruent model on which further development of the companys operations
can be based.
MANAGEMENT AND AUDITORS
Ponsse Oyjs Board of Directors comprised six members during the report year:
Einari Vidgrén (Chairman); Juha Vidgrén (Deputy Chairman); Nils Hagman, MSc (Econ)
(as of 16 March 2004); Ilkka Kylävainio, President; Mika Vidgrén, Pharmacist,
Doctor of Pharmacology (until 16 March 2004); Samuli Perttala, MSc (Econ) (until
16 March 2004); Seppo Remes, President, LicSc (Econ & Bus Adm) (as of 16 March
2004); Mirja Ryynänen, MSc (as of 16 March 2004); and Orvo Siimestö, MSc (Econ)
(until 16 March 2004).
The Board of Directors convened 11 times during 2004. Board members assiduously
attended the meetings, whose attendance rate was 88.3.
The companys president and CEO until 12 February 2004 was Tommi Ruha, MSc (For),
and as of 1 April 2004, Arto Tiitinen, MBA. From 12 February to 31 March 2004 the
companys Vice President, Juha Vidgrén, acted as President and CEO of Ponsse.
Vice President Juha Vidgrén acted as Deputy to the President and CEO from 1
January to 11 February and from 1 April to 31 July, and CFO Mikko Paananen from 1
August to 31 December.
The Annual General Meeting of 16 March 2004 re-appointed Authorised Public
Accountants Ernst & Young Oy as the companys auditors, with Heikki Laitinen APA
as the principal auditor.
ADMINISTRATION
In 2004, Ponsse Oyj implemented the Corporate Governance recommendation for listed
companies issued by HEX Helsinki Exchanges, the Central Chamber of Commerce and
the Confederation of Finnish Industry and Employers. These principles, whose
adoption was approved by Ponsses Board of Directors can be viewed on Ponsses
website at www.ponsse.com/investor information.
GROUP ORGANISATION
In December, Ponsse Oyj acquired 91 per cent of the shares and votes of Epec Oy, a
Seinäjoki-based company which develops and manufactures control systems for off-
road machinery. In the same month Ponsse also announced that it would establish a
Russian subsidiary that would begin operating in the St. Petersburg area during
the first half of 2005. There were no other changes in Groups organisation during
the report year. The Group includes the subsidiaries Ponsse AB in Sweden, Ponsse
AS in Norway, Ponssé S.A.S. in France, Ponsse UK Ltd. in the UK and Ponsse USA
Inc. in the USA. Sunit Oy in Kajaani is an associated company in which Ponsse Oyj
has a 34 per cent stake.
SHARE TRADING AND PRICES
Ponsse Oyj shares are listed on the Main List of the Helsinki Exchanges. The
trading code of the companys share on the Helsinki Exchanges is PON1V. Its shares
are registered in the book-entry system.
A total of 3,745,292 Ponsse Oyj shares, 26.8 per cent of the total number, were
traded between 1 January and 31 December 2004 for a total of EUR 39.1 million. The
lowest price was EUR 8.23 and the highest EUR 16.00. The closing price on the last
trading day of the financial year was EUR 14.30. Ponsse Oyjs Extraordinary
General Meeting, which convened on 24 November 2004, decided to implement a scrip
issue, through which the companys share capital was increased from EUR 3,500,000
to EUR 7,000,000 by issuing shareholders, without consideration, with one new
share for each old share held. The new shares were registered in shareholders
book-entry securities accounts on 30 November 2004. The above information on share
trading volumes and quotations has been issue-adjusted, and the companys market
capitalisation value on 31 December 2004 was EUR 200.2 million.
SHAREHOLDERS
At year-end 2004, Ponsse Oyj had 2,511 shareholders (1,890 on 31 December 2003).
506,606 shares (3.62 per cent of the total) were nominee-registered and 21,544
shares (0.15 percent of the total) were under foreign ownership.
MANAGEMENT INTERESTS
At 31 December 2004, members of the Board of Directors and the President and CEO
owned 8,247,224 shares, equivalent to 58.91 per cent of the total shares and
votes.
INSIDER HOLDINGS
Under Chapter 5, Section 5 of the Securities Market Act, Ponsse Oyj keeps a list
of insider holdings at the Finnish Central Securities Depository Ltd (APK),
address Unioninkatu 32 B, 00130 Helsinki.
Ponsse Oyj complies with insider holdings regulation A6.24 adopted by the Board of
Directors of the Helsinki Exchanges on 28 October 1999.
REDEMPTION OBLIGATION CLAUSE
Under Article 14 of Ponsses Articles of Association, a shareholder whose share of
all the companys shares or the votes conveyed by the shares, held either alone or
jointly with other shareholders, equals or exceeds 331/3 per cent or 50 per cent,
shall be obliged to redeem, on request, the shares of other shareholders and other
securities entitling thereto under the Companies Act, subject to the more detailed
terms and conditions provided for in Article 14 of the Articles of Association.
SHAREHOLDER AGREEMENTS
Ponsse Oyj is not aware of any shareholder agreements related to ownership of the
companys shares or exercising votes that would materially affect the value of the
companys share.
INTRODUCTION OF IFRS
Ponsses preparations for drawing up IFRS compliant financial statements have
proceeded according to plan. The company will publish its first IFRS compliant
financial statements in 2005. The first interim report drawn up in accordance with
IFRS compliant accounting and valuation principles will be that for the first
quarter of 2005. Ponsse will publish a detailed report on the effects of these
changes in March 2005. Based on the companys studies, the effect of changes in
the companys balance sheet caused by the implementation of IFRS compliant
accounting practices will remain minor.
OUTLOOK FOR THE CURRENT YEAR
The outlook for the world economy and the forest sector is more positive than a
year ago, and upward movement is expected in the overall market for forest
machines in 2005. The company predicts that cut-to-length harvesting will account
for an increasing share of total harvesting during the current year. Sales in
products manufactured by Ponsse saw vigorous growth in 2004, and this trend is
expected to continue in the near future.
Storm damage in Sweden and the Baltic countries will affect forest machine sales
in and close to Sweden over the next few months. In particular, demand for rapid-
delivery second-hand machines is expected to remain high in the near future.
Ponsse delivered the best operating profit in its history in 2004. Due to seasonal
fluctuations typical of the industry, accumulated profits were weighted towards
the latter part of the year. The company forecasts that the result for 2005 will
outperform that of 2004, most profit accumulating again in the second half of the
year.
BOARD OF DIRECTORS PROPOSAL FOR THE DISPOSAL OF PROFIT
Ponsse Oyjs Board of Directors will recommend to the Annual General Meeting that
a dividend of EUR 0.20 per share be paid for 2004. The record date for the payment
of the dividend is 18 March 2005, and payments will be made on 30 March 2005. The
Finnish Central Securities Depository has granted the company an exceptional
permit for the payment date. Moreover, the Board of Directors proposes to the
Annual General Meeting that a salary bonus be paid to all Ponsse Oyj personnel.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at Metsäpirtin koulutus- ja leirikeskus,
address Vanha Kainuuntie 6 a, 74100 Iisalmi, on 15 March 2005, commencing at 10
a.m.
ANNUAL REPORT
The companys annual report for 2004 will be published during week 10.
PONSSE GROUP
PROFIT AND LOSS ACCOUNT 2004 2003
(TEUR)
TURNOVER 190,002 166,034
Increase (+)/decrease (-) in stocks of
finished goods and work in progress 968 -482
Other operating income 1,453 1,457
Raw materials and services -126,136 -110,776
Staff costs -26,917 -24,093
Depreciation -2,676 -2,788
Other operating expenses -17,062 -15,099
OPERATING PROFIT 19,632 14,253
Share of results of associated undertakings 251 208
Financial income and expenses -730 -1,411
RESULT BEFORE APPROPRIATIONS AND TAXES 19,153 13,050
Income taxes -5,624 -3,911
Minority interest -11 0
RESULT FOR THE FINANCIAL PERIOD 13,518 9,139
BALANCE SHEET (TEUR) 2004 2003
ASSETS
FIXED ASSETS AND OTHER NON-CURRENT ASSETS
Intangible assets 6,250 1,541
Tangible assets 17,119 15,479
Financial assets 854 660
STOCKS AND CURRENT ASSETS
Stocks 35,722 31,688
Receivables 20,439 18,267
Cash in hand and at banks 15,706 10,565
ASSETS, TOTAL 96,090 78,200
LIABILITIES
SHAREHOLDERS EQUITY
Share capital 7,000 3,500
Other equity 28,550 39,594
MINORITY INTEREST 419 0
PROVISIONS FOR LIABILITIES AND CHARGES 4,153 2,284
CREDITORS
Non-current 23,712 14,123
Current 32,256 18,699
LIABILITIES, TOTAL 96,090 78,200
Receivables on 31 December 2004 included a deferred tax asset of EUR 387 thousand
(EUR 240k on 31 December 2003). Non-current creditors on 31 December 2004 included
a deferred tax liability of EUR 706 thousand (EUR 838k on 31 December 2003).
CASH FLOW STATEMENT (TEUR) 1-12/2004 1-12/2003
BUSINESS OPERATIONS:
Operating profit 19,632 14,253
Depreciation and value adjustments 2,676 2,788
Change in reserves 1,869 2,284
Other adjustments 271 -21
Cash flow before change in working capital 24,448 19,304
Change in working capital:
Increase (-)/decrease (+) in current
interest-free receivables -2,145 -6,087
Increase (-)/decrease (+) in stocks -4,034 2,232
Increase (+)/decrease(-) in current interest-
free creditors 8,958 503
Cash flow from operations before financial items
and income taxes 27,227 15,952
Financial income and expenses -570 -1,443
Income taxes paid -4,784 -2,290
Cash flow before exceptional items 21,873 12,219
Net cash flow from exceptional items in business
operations 0 0
NET CASH FLOW FROM BUSINESS OPERATIONS 21,873 12,219
PLEDGES GIVEN, CONTINGENT AND OTHER LIABILITIES (TEUR)
2004 2003
1. FOR OWN DEBT
Debts for which mortgages have been pledged as
collateral
Loans from credit institutions 1,261 12,021
Mortgages given on land and buildings 1,126 3,866
Chattel mortgages given 820 3,293
MORTGAGES GIVEN AS PLEDGES, TOTAL 1,946 7,159
2. LEASING COMMITMENTS (TEUR) 445 536
3. CONTINGENT LIABILITIES ON BEHALF OF GROUP COMPANIES (TEUR)
Guarantees given on behalf of Group companies 763 1,025
4. LIABILITIES ARISING FROM DERIVATIVE CONTRACTS (TEUR)
4.1 Nominal values
Currency derivatives
Options 0 3,568
Forward contracts 10,616 13,060
4.2 Market values
Options 0 34
Forward contracts 136 728
5. OTHER CONTINGENT LIABILITIES (TEUR)
Guarantees given on behalf of others 831 756
Repurchase commitments 5,309 7,943
Other liabilities 0 0
Total 6,140 8,699
KEY INDICATORS 2004 2003
R&D expenditure (MEUR) 3.7 3.0
Fixed asset investments (MEUR) 9.0 4.5
as % of turnover 4.7 2.7
Average number of staff 607 553
Order book (MEUR) 44.4 33.7
Equity ratio, % 37.5 55.7
Earnings per share (EPS) (EUR) 0.97 0.65
Equity per share (EUR) 2.54 3.08
Taxes corresponding to profit for the financial period have been included as
income tax in the Profit and Loss Account and in earnings per share.
NEW ORDERS (MEUR) 2004 2003
Ponsse Group 201.3 168.0
QUARTERLY INFORMATION (TEUR) 10-12/03 1-3/04 4-6/04 7-9/04 10-12/04
Turnover 48,441 43,874 45,629 40,921 59,578
Operating profit 4,558 4,807 3,707 4,664 6,454
Result before
appropriations and taxes 4,479 5,010 3,672 4,481 5,990
The above figures have been audited.
Since the above figures have been rounded, they may differ from those given in the
official financial statements.
Vieremä, 11 February 2005
Arto Tiitinen
President and CEO
FURTHER INFORMATION FROM:
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 8648 or +358 (0)400 817 036
DISTRIBUTION
Helsinki Exchanges
Main media
www.ponsse.com
