PONSSE'S FINANCIAL STATEMENTS FOR 2006
PONSSE OYJ STOCK EXCHANGE RELEASE 13 FEBRUARY 2007, 8:30 a.m.
PONSSE'S FINANCIAL STATEMENTS FOR 2006
JANUARY - DECEMBER 2006
- Consolidated turnover: EUR 238.6 million (2005, EUR 226.1 million)
- Operating profit: EUR 29.6 million (2005, EUR 29.1 million)
- Operating profit accounted for 12.4% of turnover (2005, 12.8%)
- Earnings per share: EUR 0.75 (EUR 0.70)
- Board of Directors' proposal for the distribution of dividend: EUR 0.40 per
share (2005, EUR 0.40, split adjusted)
OCTOBER - DECEMBER 2006
- Consolidated turnover: EUR 82.7 million (Q4/2005, EUR 67.8 million)
- Operating profit: EUR 10.2 million (Q4/2005, EUR 9.6 million)
Arto Tiitinen, President and CEO, states the following:
- During the year, Ponsse's business operations developed. Development
occurred despite the fact that the worldwide market did not grow. We succeeded
in increasing our market share both domestically and globally. Our order books
began to rise in the last quarter, increasing by 22 per cent on the previous
year.
- Market development was modest, but we maintained good profitability.
- During the course of the year, we continued the investment programme
of our industrial operations and enhanced our response ability by setting up
six strategic sales areas. We decided to focus on developing forest energy and
small wood harvesting technology, and invited Hannu Airavaara to lead the
operation.
- During the year, our ability to respond to market challenges and
needs strengthened considerably.
TURNOVER
Ponsses turnover for the accounting period amounted to EUR 238.6 million
(EUR 226.1 million). The turnover was distributed in the business areas as
follows: Nordic countries 52.2 per cent (53.6 per cent), the rest of Europe
36.2 per cent (31.4 per cent), North and South America 10.8 per cent (14.7 per
cent), and other countries 0.8 per cent (0.3 per cent).
PROFIT PERFORMANCE
Ponsse recorded an operating profit of EUR 29.6 million (EUR 29.1 million) for
the period, accounting for 12.4 per cent of turnover (12.8 per cent). Return on
capital employed (ROCE) stood at 35.5 per cent (40.5 per cent).
Staff costs for the period totalled EUR 37.6 million (EUR 34.3 million), and
other operating expenses were EUR 24.5 million (EUR 21.4 million). Net
financial expenses were EUR -1.5 million (EUR -1.2 million). Income and
expenses resulting from currency risk hedging were included in the financial
items. Profit for the accounting period totalled EUR 21.0 million (EUR 19.6
million). Earnings per share were EUR 0.75 (EUR 0.70).
BALANCE SHEET AND FINANCIAL POSITION
At the end of the accounting period, the consolidated balance sheet total
amounted to EUR 125.0 million (EUR 108.3 million). The amount of current assets
was EUR 58.6 million (EUR 45.2 million). Interest-bearing liabilities totalled
EUR 30.9 million (EUR 24.4 million), of which current creditors amounted to EUR
8.5 million (EUR 5.4 million) and non-current creditors EUR 22.4 million (EUR
19.0 million). Net liabilities were EUR 21.9 million (EUR 11.7 million). Equity
ratio stood at 49.1 per cent (47.6 per cent). Trade receivables totalled EUR
20.7 million (EUR 14.8 million). Cash in hand and at banks came to EUR 8.6
million (EUR 12.3 million).
The reported cash flow from business operations totalled EUR 6.8 million (EUR
18.4 million), while that from investing activities was EUR -5.2 million (EUR -
11.1 million).
ORDER INTAKE AND ORDER BOOKS
The order intake for the period totalled EUR 242.9 million (EUR 236.9 million),
while period-end order books were valued at EUR 59.2 million (EUR 54.9
million). The order intake for the last quarter totalled EUR 90.9 million
(Q4/2005, EUR 74.6 million). The order books included dealers minimum purchase
commitments, based on previous practice.
DEALER CHANNELS
In October, Ponsse unveiled a new, worldwide sales and maintenance service
network. Comprising six strategic areas, the organisation's tasks include
reacting quickly to changes in markets and customer needs, development of the
distribution network and the creation of the prerequisites for increasing
sales. Each area is responsible for customer and organisation training in co-
operation with the Ponsse Academy.
In November, the company signed a distributor agreement with Babcock Africa
(PTY) Ltd. The agreement deals with the retail and support of Ponsse's forest
machinery, harvester heads and information systems in the Republic of South
Africa.
CAPITAL EXPENDITURE AND R&D
Capital expenditure totalled EUR 5.3 million (EUR 11.2 million).
R&D expenses totalled EUR 4.0 million (EUR 3.7 million). The amount of
activated R&D expenses during the period was EUR 808 thousand (EUR 461
thousand).
PERSONNEL
The Group had an average staff of 795 (729) during the period
and employed 795 people at the period-end (770).
SHARE PERFORMANCE
The trading volume of Ponsse Oyj shares for 1 January - 31 December 2006
totalled 3,576,975, accounting for 12.8 per cent of the total number of shares.
Share turnover came to EUR 44.7 million, with the periods lowest and highest
share price amounting to EUR 10.89 and EUR 15.00, respectively.
At the end of the period, the share closed at EUR 13.00 and the market
capitalisation totalled EUR 364.0 million.
SHAREHOLDERS
At year-end 2006, Ponsse Oyj had 4,305 shareholders (3,535 on 31 December
2005). The number of shareholders was increased by 21.8 per cent during the
year. 1,012,074 shares were nominee-registered (3.6 per cent of the total), and
27,608 shares (0.10 per cent of the total) were under foreign ownership.
During the accounting period, there were no disclosures pursuant to Chapter 2,
Section 9 of the Securities Market Act concerning the portion of any person's
holdings reaching or exceeding or falling below the limit prescribed by law.
GOVERNANCE
The company adheres to the insider regulations approved by the OMX Nordic
Exchange Board of Directors and the guidelines on listed companies' governance
and control systems (Corporate Governance). The governance principles are
available from Ponsses web site, in the Investors section.
RISK MANAGEMENT
The Group's risk management policy seeks to maintain and further develop a
practical and comprehensive system for the management and reporting of risks.
This entails systematic risk assessment for each function and unit, integrating
risk management into the business processes, constant quality development and
disseminating information on best practices.
Internal supervision constitutes an essential part of risk management. The
Board of Directors is responsible for the organisation of operations and their
adequacy, whilst the President and CEO are responsible for the implementation
of supervision in practice. Methods of internal supervision include internal
guidelines, reporting and various technical systems related to activities. An
internal auditor is responsible for the company's internal supervision in
practice, and he reports to the Board of Directors.
BUSINESS UNCERTAINTIES
General economic fluctuations affect Ponsse's product demand and its economic
position. The effect is balanced by the fact that the company's business
operations are spread out in several geographical areas.
With regard to Ponsse's operations, risks dealing with raw materials and the
subcontractor & supplier network are fundamental. In 2005, in order to control
risks, the company started a supplier network development program implemented
by a full-time project manager. One part of the program is to place
strategically important suppliers in the immediate vicinity of Ponsse's Vieremä
factory. Component-related risks are also controlled by manufacturing a large
number of key components in Ponsse Group's own production facilities. Raw
material and component suppliers' possible delivery problems may increase the
prices of raw materials used in Ponsse products and lengthen their delivery
times. Ponsse has strengthened the control of these risks by adjusting the
conditions of its supplier agreements and by extending their periods of
validity.
Ponsse Group's financing risk management controls liquidity, interest and
currency risks and secures credit capital's conditional financing availability
by competitive conditions.
FUTURE PROSPECTS
According to the company's estimate, wood and paper demand will develop
favourably. Approximately 50 million cubic metres of trees was toppled in the
European storms in January, which has already had an effect on the order flow
of new and used machinery.
World economy prospects are favourable. It is estimated that demand for
environmentally friendly cut-to-length machinery will continue to grow
globally. Also maintenance service operations are estimated to grow along with
machine base growth.
Investments and successful new customer acquisitions implemented by the
technology company Epec Oy will enable the company's profitable growth.
In the autumn 2006, the company introduced a new harvester and a forwarder,
which belong to the heavy duty category of the product line. The machines have
been very well received in the market. Their serial production will start in
spring 2007. The new products expand the product range and improve
competitiveness.
The near future prospects of the company are supported by order books, which
are valued higher than in 2005. This was achieved despite the fact that
production capacity grew during the year. During the accounting period, the
company implemented productional development measures, and measures targeting
the distribution network and the organisation. The measures are believed to
strengthen business operations during the present accounting period.
The company believes that its business operations' profitable growth will
continue in the near future.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at the company's registered office at
Ponssentie 22, 74200 Vieremä, on 12 April 2007, commencing at 10:00 a.m.
BOARD OF DIRECTORS PROPOSAL FOR THE DISPOSAL OF PROFIT
Ponsse Oyjs Board of Directors will recommend to the Annual General Meeting on
12 April 2007 that a dividend of EUR 0.40 per share be paid for 2006.
PONSSE GROUP
CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1,000)
IFRS IFRS IFRS IFRS
10-12/06 10-12/05 1-12/06 1-12/05
TURNOVER 82,671 67,824 238,642 226,095
Increase (+)/decrease (-) in stocks of
finished goods and work in progress -4,360 -4,408 5,774 730
Other operating income 1,029 309 2,132 1,326
Raw materials and services -50,051 -36,260 -150,621 -139,304
Expenditure on employment related
benefits -10,329 -9,736 -37,612 -34,317
Depreciation -1,043 -1,474 -4,256 -4,041
Other operating expenses -7,679 -6,704 -24,469 -21,437
OPERATING PROFIT 10,239 9,552 29,590 29,051
Share of the results of associated
companies 170 144 441 285
Financial income and
expenses -258 -674 -1,525 -1,225
PROFIT BEFORE TAXES 10,149 9,023 28,505 28,111
Income tax -1,771 -3,090 -7,463 -8,480
Minority interest 0 164 0 0
PROFIT FOR THE PERIOD 8,378 6,096 21,042 19,629
In the financial statements for 2005, Ponsse Group changed the accounting
policy concerning the purchase of used machines in connection with the sale of
new machines. In accordance with the general IFRS principles (Chapter 35), the
value adjustment made at the time of purchase of used machinery has been
interpreted as actually being a discount on the sales price of new machinery
and, therefore, the change in value has been accounted for as an adjustment
item in the consolidated turnover. Until the end of Q3/2005, this type of
change in value was presented under the item 'Materials and services'.
Comparison data for 2005 has been adjusted accordingly. Actual changes in the
value of used machinery that has been made after the time of sale will be
handled as a write-down of inventory value in the same manner as previously.
CONSOLIDATED BALANCE SHEET (EUR 1,000)
IFRS IFRS
ASSETS 31.12.06 31.12.05
NON-CURRENT ASSETS
Intangible assets 3,605 2,652
Goodwill 3,791 3,773
Property, plant and equipment 24,308 24,270
Financial assets 39 35
Holdings in associated companies 1,328 1,013
Non-current receivables 165 103
Deferred tax assets 972 537
TOTAL NON-CURRENT ASSETS 34,206 32,383
CURRENT ASSETS
Stocks 58,615 45,161
Trade receivables 20,715 14,782
Income tax receivable 349 0
Other current receivables 2,568 3,594
Liquid assets 8,564 12,341
TOTAL CURRENT ASSETS 90,811 75,879
TOTAL ASSETS 125,017 108,262
CAPITAL AND RESERVES, AND LIABILITIES
SHAREHOLDERS EQUITY
Share capital 7,000 7,000
Other reserves 20 19
Translation differences -750 -442
Retained earnings 54,888 44,811
CAPITAL AND RESERVES OWNED
BY PARENT COMPANY SHAREHOLDERS 61,157 51,389
Minority interest 0 0
TOTAL CAPITAL AND RESERVES 61,157 51,389
NON-CURRENT LIABILITIES
Interest-bearing liabilities 22,408 18,953
Deferred tax liabilities 869 1,142
Other non-current liabilities 74 359
TOTAL NON-CURRENT LIABILITIES 23,351 20,453
CURRENT LIABILITIES
Interest-bearing liabilities 8,487 5,444
Provisions 3,517 6,324
Tax liabilities for the period 230 1,216
Trade creditors and other current liabilities 28,275 23,436
TOTAL CURRENT LIABILITIES 40,509 36,420
TOTAL CAPITAL AND RESERVES, AND LIABILITIES 125,017 108,262
CONSOLIDATED CASH FLOW STATEMENT (EUR 1,000)
IFRS IFRS
1-12/'06 1-12/'05
BUSINESS OPERATIONS:
Profit for the period 21,042 19,629
Adjustments:
Financial income and expenses 1,525 1,225
Share of the result of associated companies -441 -285
Depreciation 4,256 4,041
Income tax 7,866 8,458
Other adjustments -424 278
Cash flow before change in working capital 33,824 33,346
Change in working capital:
Change in current
non-interest-bearing receivables -4,551 1,501
Change in stocks -13,454 -9,052
Change in current
non-interest-bearing creditors 4,542 1,279
Change in provisions for liabilities and charges -2,807 2,171
Interest received 269 277
Interest paid -1,273 -932
Other financial items -527 -656
Income taxes paid -9,201 -9,517
NET CASH FLOW FROM BUSINESS OPERATIONS (A) 6,822 18,417
INVESTMENTS
Investment in tangible and intangible assets -5,318 -11,209
Investment in other assets -2 -11
Dividends received 126 101
CASH OUTFLOW FROM INVESTING ACTIVITIES (B) -5,194 -11,119
FINANCING
Withdrawal/Repayment of current loans 2,729 -2,677
Change in current interest-bearing liabilities -356 0
Withdrawal/Repayment of non-current loans 3,170 -4,961
Payment of finance lease liabilities 313 -231
Change in non-current receivables -61 4
Paid dividends -11,200 -2,800
NET CASH OUTFLOW FROM FINANCING (C) -5,405 -10,665
Change in liquid assets (A+B+C) -3,777 -3,367
Liquid assets 1 Jan. 12,339 15,706
Liquid assets 31 Dec. 8,562 12,339
RECONCILIATION OF CAPITAL AND RESERVES (EUR 1,000)
A = Share Capital
B = Share premium and other reserves
C = Translation differences
D = Retained earnings
E = Minority interest
F = Total capital and reserves
CAPITAL AND RESERVES OWNED BY
PARENT COMPANY SHAREHOLDERS
A B C D E F
CAPITAL AND RESERVES
1 JAN 2005 7,000 20 -838 28,425 419 35,025
Translation differences 0 0 396 -443 0 -47
NET INCOME RECOGNISED
DIRECTLY IN CAPITAL AND
RESERVES 0 0 396 -443 0 -47
Net profit for the period 0 0 0 19,629 -419 19,210
TOTAL RECOGNISED INCOME
AND EXPENSES 0 0 396 19,186 -419 19,163
Dividend distribution 0 0 0 -2,800 0 -2,800
CAPITAL AND RESERVES
31 DEC 2005 7,000 20 -442 44,811 0 51,389
CAPITAL AND RESERVES
1 JAN 2006 7,000 20 -442 44,811 0 51,389
Translation differences 0 0 -308 234 0 -74
NET INCOME RECOGNISED
DIRECTLY IN CAPITAL AND
RESERVES 0 0 -308 234 0 -74
Net profit for the period 0 0 0 21,042 0 21,042
TOTAL RECOGNISED INCOME
AND EXPENSES 0 0 -308 21,276 0 20,968
Dividend distribution 0 0 0 -11,200 0 -11,200
CAPITAL AND RESERVES
31 DEC 2006 7,000 20 -750 54,887 0 61,157
SEGMENT INFORMATION (EUR 1,000)
GEOGRAPHIC SEGMENTS
1-12/'06 1-12/'05
TURNOVER
Nordic countries 156,180 154,017
Rest of Europe 87,503 71,758
North and South America 25,562 33,775
Elimination -33,294 -34,697
Unallocated 2,691 1,242
TOTAL 238,642 226,095
OPERATING PROFIT
Nordic countries 14,406 18,825
Rest of Europe 13,822 10,761
North and South America 902 2,027
Unallocated 460 -2,562
TOTAL 29,590 29,051
PLEDGES GIVEN, CONTINGENT AND OTHER
LIABILITIES (EUR 1,000)
31.12.06 31.12.05
1. FOR OWN DEBT
Debts for which mortgages have been pledged as
collateral
Loans from financial institutions 0 0
Mortgages given on land and buildings 0 101
Chattel mortgages given 0 336
MORTGAGES GIVEN AS PLEDGES, TOTAL 0 437
2. LEASING COMMITMENTS (EUR 1,000) 2,442 1,996
3. CONTINGENT LIABILITIES ON BEHALF OF GROUP
COMPANIES (EUR 1,000)
Guarantees given on behalf of Group companies 797 884
4. LIABILITIES BASED ON DERIVATIVE CONTRACTS
(EUR 1,000)
4.1 Nominal values
Interest rate derivatives
Interest rate swap agreements 4,500 0
Currency derivatives
Forward contracts 21,189 14,690
4.2 Market values
Interest rate derivatives
Interest rate swap agreements 15 0
Currency derivatives
Forward contracts 219 -70
5. OTHER CONTINGENT LIABILITIES (EUR 1,000)
Guarantees given on others behalf 1,648 1,289
Repurchase commitments 2,164 7,163
Other liabilities 0 0
Total 3,812 8,452
KEY FIGURES AND RATIOS 31.12.06 31.12.05
R&D expenditure, MEUR 4.0 3.7
Capital expenditure, MEUR 5.3 11.2
% of turnover 2.2 5.0
Average number of staff 795 729
Order books, MEUR 59.2 54.9
Equity ratio, % 49.1 47.6
Earnings per share, EUR 0.75 0.70
Equity per share, EUR 2.18 1.84
The per share indicators have taken into account the split (1:2) of the number
of shares listed in the Trade Register on 28 March 2006.
Income taxes based on profit for the period are included in the Profit and Loss
Account and earnings per share.
ORDER INTAKE, MEUR 1-12/'06 1-12/'05
Ponsse Group 242.9 236.9
Ponsse Group has applied International Financial Reporting Standards (IFRS) to
its financial reporting as of 1 January 2005. The first IFRS-compliant annual
financial statement was drawn up for the accounting period 2005. Prior to the
adoption of IFRS, Ponsse Oyj's consolidated financial statements were prepared
according to Finnish Accounting Standards (FAS). The comparison figures are
Ponsses figures presented in the adjusted financial statements for the
corresponding period in 2005. The preparation of the financial statement has
adhered to standards valid at the end of the period under review.
The above figures have not been audited.
The above figures have been rounded and may therefore differ from those given
in the official financial statements.
Vieremä, 13 February 2007
Arto Tiitinen
President and CEO
FOR FURTHER 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 8648 or +358 (0)400 817 036
DISTRIBUTION
Helsinki Stock Exchange
Principal media
www.ponsse.com
