PONSSE'S IFRS-COMPLIANT FINANCIAL STATEMENTS FOR 2005
PONSSE OYJ STOCK EXCHANGE RELEASE 14 FEBRUARY 2006, 8:30 a.m.
PONSSE'S IFRS-COMPLIANT FINANCIAL STATEMENTS FOR 2005
ACCOUNTING PERIOD 2005
- Consolidated turnover: EUR 226.1 million (2004, EUR 177.9 million)
- International business operations accounted for 65.4% of turnover (2004, 62.0%)
- Operating profit: EUR 29.1 million (2004, EUR 19.7 million)
- Operating profit accounted for 12.8% of turnover (2004, 11.1%)
- Profit after extraordinary items: EUR 28.1 million (2004, EUR 19.2 million)
- Earnings per share: EUR 1.40 (2004, EUR 0.97)
- Board of Directors' proposal for the distribution of dividend: EUR 0.80 per
share (2004, EUR 0.20). In addition, Board of Directors´ proposal is to double
the amount of shares (split 1:2).
OCTOBER - DECEMBER 2005
- Consolidated turnover: EUR 67.8 million (Q4/2004, EUR 55.9 million)
- Operating profit: EUR 9.6 million (Q4/2004, EUR 6.5 million)
Arto Tiitinen, President and CEO, states the following:
- Our key success factors in 2005 were the positive development of our
international business operations, sales volumes, and maintenance service sales.
The share of export in consolidated turnover increased to 65.4 per cent, which
is the highest to date in the company's history. Our maintenance service sales
grew by 28.2 per cent on the previous year.
- During the year, we made a number of significant decisions to ensure
our competitiveness: We decided to establish a harvester head factory in
Brazil, while developing and expanding the operations of our subsidiary Epec Oy
into a state-of-the-art technology company. The enlargement of the Vieremä
assembly plant was completed at the end of the accounting period and put into
production use at the beginning of 2006.
- The new subsidiaries established in the strategically important markets
of Russia and Brazil at the beginning of the year will ensure the future growth
of our international business operations. Our distribution network was
strengthened in December when we signed a contract concerning Estonia, Latvia
and Lithuania with Konekesko Ltd.
TURNOVER
Consolidated turnover rose by 27.1 per cent year on year, to EUR 226.1 million
(EUR 177.9 million). This highly favourable development was due, in particular, to
strong growth in international operations.
International business operations accounted for 65.4 per cent (62.0 per cent) of
turnover. The sales were regionally distributed as follows: Nordic countries 53.6
per cent (54.9 per cent), the rest of Europe 31.4 per cent (30.0 per cent), North
and South America 14.7 per cent (15.1 per cent), and other countries 0.3 per cent
(0.0 per cent).
PROFIT PERFORMANCE
Consolidated operating profit for the accounting period came to EUR 29.1 million
(EUR 19.7 million), up 47.5 per cent on the previous year, accounting for 12.8 per
cent of consolidated turnover (11.1 per cent). Return on investment (ROI) stood at
37.7 per cent (29.5 per cent).
The profit after extraordinary items was EUR 28.1 million (2004, EUR 19.2
million). Income and expenses resulting from currency risk hedging were included
in financial items. Extraordinary items amounted to EUR -1 thousand (2004, no
extraordinary items).
Profit for the accounting period totalled EUR 19.6 million (2004, EUR 13.5
million). Earnings per share were EUR 1.40 (EUR 0.97).
BALANCE SHEET AND FINANCIAL POSITION
At the end of the accounting period, the consolidated balance sheet total amounted
to EUR 108.3 million (EUR 97.5 million). Interest-bearing liabilities totalled EUR
24.4 million (EUR 32.3 million) and net liabilities EUR 11.7 million (EUR 16.3
million). Equity ratio stood at 47.6 per cent (36.0 per cent). Cash in hand and at
banks came to EUR 12.3 million (EUR 15.7 million). The Groups liquidity remained
at a good level during the accounting period, despite a large-scale investment
programme. To maintain financial flexibility and balance seasonal fluctuations,
the company uses finance credit agreements of which EUR 37.3 remained unused at
the end of the accounting period.
Reported cash flow from business operations totalled EUR 18.4 million (EUR 22.0
million), while that from investing activities was EUR -11.1 million (EUR -8.9
million).
ORDER INTAKE AND ORDER BOOKS
The order intake for the period totalled EUR 236.9 million (EUR 189.3 million),
while period-end order books were valued at EUR 54.9 million (EUR 44.4 million).
The order intake for the last quarter totalled EUR 74.6 million (Q4/2004, EUR 59.6
million). The order books included dealers minimum purchase commitments, based on
previous practice.
DISTRIBUTION NETWORK
In December 2005, Ponsse acquired an 8 per cent stake in Epec Oy of Seinäjoki.
Following the acquisition, Ponsse has 100% ownership of the company.
The range of operations of our Northern American subsidiary was expanded to also
include responsibility for providing support to Ponsse's dealers in Canada as well
as the comprehensive development of the maintenance and distribution network in
North America. Following the expansion of operations, the business name of
Ponsse's subsidiary Ponsse USA Inc was changed to Ponsse North America Inc.
During the accounting period, Ponsse's distribution network was expanded in Russia
and the Baltic States.
CAPITAL EXPENDITURE AND R&D
The most significant capital expenditure during the accounting period came from
the construction of a customer service centre, the increase in the automation rate
of the Vieremä plant and the purchase of equipment for the new assembly plant. In
September, the company's financial administration moved to the new premises
constructed at the Vieremä plant. The remainder comprised routine replacement and
maintenance investments.
During the accounting period, capital expenditure totalled EUR 11.2 million (EUR
9.0 million).
R&D expenses totalled EUR 3.7 million (EUR 3.7 million). The amount of activated
R&D expenses during the period was EUR 461 thousand (EUR 329 thousand).
PERSONNEL
The Group had an average staff of 729 (607) during the period and employed 770
(663) people at the period-end.
MANAGEMENT AND AUDITORS
Ponsse Oyjs Board of Directors comprised six members during the accounting
period: Einari Vidgrén, Industrial Counsellor (Chairman); Juha Vidgrén. M.Sc.
Educ. (Deputy Chairman); Nils Hagman, M.Sc. Econ, Managing Director;
Ilkka Kylävainio, Technician, President; Seppo Remes, Lic.Sc.
(Economics & Business Adm.), Director; and Mirja Ryynänen, M.Sc.
The Board of Directors convened 12 times during the accounting period.
Board members assiduously attended the meetings, whose attendance rate was 88.9
per cent.
President and CEO during the accounting period was Arto Tiitinen, MBA, with Mikko
Paananen, LLM, CFO, acting as deputy.
Paula Oksman, M.A., started as HR Director, Principal of the Ponsse Academy and a
member of the Management Team in August 2005. Seppo Taatila, M.Sc. (Eng), will
start as Director of Technology and Engineering and a member of the Management
Team during 2006. He will replace Veikko Rintamäki, M.Sc. (Eng), who resigned from
his position in January 2006. Prior to Mr. Taatila assuming the position, Arto
Tiitinen, CEO, will oversee the technology and engineering activities in addition
to his own responsibilities.
The Annual General Meeting of 15 March 2005 re-appointed Ernst & Young Oy as the
companys auditors, with Heikki Laitinen, APA, as the principal auditor.
SHARE PERFORMANCE
The trading volume of Ponsse Oyj shares for 1 January - 31 December 2005 totalled
2,185,216, accounting for 15.6 per cent of the total number of shares. Share
turnover came to EUR 39.7 million, with the periods lowest and highest per-share
price amounting to EUR 14.50 and EUR 23.29, respectively. At the end of the
period, the share closed at EUR 22.29 and the market capitalisation totalled EUR
312.1 million.
SHAREHOLDERS
At year-end 2005, Ponsse Oyj had 3,535 shareholders (2,511 on 31 December 2004).
The number of shareholders was increased by 40.8 per cent during the year. 535,285
shares were nominee-registered (3.8 per cent of the total), and 29,274 shares
(0.21 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.
ADOPTION OF IFRS
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 have been
prepared according to Finnish Accounting Standards (FAS).
EVENTS AFTER THE PERIOD
In January 2006, Ponsse acquired an 8 per cent stake in Lako Oy of Turku.
Following the acquisition, Ponsse has 100% ownership of the company's shares.
PROSPECTS
During the course of the year, logging volumes and industrial consumption of wood
have been estimated to increase on the previous year. Logging volumes show strong
growth in South America in particular. The company estimates that the proportional
share of cut-to-length harvesting in the total volume of timber harvesting will
increase in comparison with other harvesting methods. The development is estimated
be especially rapid in Russia.
During the course of 2006, Ponsse will invest heavily in expanding its
distribution and maintenance network and, in the second quarter of 2006, start
industrial manufacture of harvester heads in Brazil. The company may supplement
its organic growth with corporate acquisitions and arrangements if they support
the company's strategy and strengthen its market value, market position,
competitiveness and profitability.
Considering the general prospects for the forest sector, the total value of the
order book and the ongoing business development initiatives, the company forecasts
that the result for the current accounting period will outperform that of the
previous year.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at the company's registered office at
Ponssentie 22, 74200 Vieremä, on Wednesday, 15 March 2006, 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 15
March 2006 that a dividend of EUR 0.80 per share be paid for 2005.
PONSSE GROUP
CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1,000)
IFRS IFRS IFRS IFRS
10-12/'05 10-12/'04 1-12/'05 1-12/'04
TURNOVER 67,824 55,859 226,095 177,934
Increase (+)/decrease (-) in stocks of -4,408 -1,469 730 968
finished goods and work in progress
Other operating income 309 443 1,326 1,453
Raw materials and services -36,257 -35,135 -139,304 -113,587
Staff costs -9,736 -7,553 -34,317 -26,917
Depreciation -1,474 -786 -4,041 -3,089
Other operating expenses -6,704 -4,814 -21,437 -17,063
OPERATING PROFIT 9,552 6,546 29,051 19,700
Share of results of associated 144 114 285 251
companies
Financial income and -673 -587 -1 225 -778
expenses
RESULT BEFORE EXTRAORDINARY ITEMS 9,023 6,071 28,111 19,172
Extraordinary items -1 0 -1 0
RESULT AFTER EXTRAORDINARY
ITEMS 9,023 6,071 28,110 19,172
Income taxes -3,090 -1,132 -8,480 -5,630
Minority interest 164 -11 0 -11
PROFIT FOR THE PERIOD 6,096 4,929 19,629 13,532
In the financial statements for 2005, Ponsse Group has 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. Previously, until the end of Q3, this type of change in value has been
presented under the item 'Materials and services'. In order to ensure
comparability between financial statements, a corresponding adjustment has been
made in the financial statement for 2004.
Actual changes in the value of used machinery that are made after the time of sale
will we handled as a write-down of inventory value in the same manner as
previously.
CONSOLIDATED BALANCE SHEET (EUR 1,000)
IFRS IFRS
ASSETS 31.12.05 31.12.04
FIXED AND OTHER NON-CURRENT ASSETS
Intangible assets 2,652 2,426
Goodwill 3,773 3,466
Property, plant and equipment 24,270 18,095
Financial assets 35 25
Holdings in associated companies 1,013 829
Non-current receivables 103 107
Deferred tax assets 537 540
TOTAL FIXED AND OTHER NON-CURRENT 32,383 25,488
ASSETS
CURRENT ASSETS
Stocks 45,161 36,381
Trade receivables 14,782 19,228
Other current receivables 3,594 717
Current investments 2 0
Cash in hand and at banks 12,339 15,706
TOTAL CURRENT ASSETS 75,879 72,032
TOTAL ASSETS 108,262 97,520
CAPITAL AND RESERVES, AND LIABILITIES
SHAREHOLDERS EQUITY
Share capital 7,000 7,000
Other reserves 19 20
Translation differences -442 -838
Retained earnings 44,811 28,424
CAPITAL AND RESERVES OWNED
BY PARENT COMPANY SHAREHOLDERS 51,389 34,606
Minority interest 0 419
TOTAL CAPITAL AND RESERVES 51,389 35,025
NON-CURRENT CREDITORS
Interest-bearing liabilities 18,953 23,937
Deferred tax liabilities 1,142 1,131
Other non-current creditors 359 336
TOTAL NON-CURRENT CREDITORS 20,453 25,404
CURRENT CREDITORS
Interest-bearing liabilities 5,444 8,353
Provisions 6,324 4,153
Tax liabilities for the period 1,216 2,343
Trade creditors and other current 23,436 22,243
creditors
TOTAL CURRENT CREDITORS 36,420 37,091
TOTAL CAPITAL AND RESERVES, AND 108,262 97,520
LIABILITIES
CONSOLIDATED CASH FLOW STATEMENT (EUR 1,000)
IFRS IFRS
1-12/'05 1-12/'04
BUSINESS OPERATIONS:
Profit for the period 19,629 13,532
Adjustments:
Financial income and expenses 1,225 778
Share of the result of associated -285 -251
companies
Depreciation 4,041 3,089
Deferred taxes 22 -227
Income taxes 8,458 5,857
Other adjustments 256 197
Cash flow before change in working 33,346 22,975
capital
Change in working capital:
Increase (-)/decrease (+) in current non- 1,501 -2,145
interest-bearing receivables
Increase (-) / decrease (+) in -9,052 -3,778
stocks
Increase (-)/decrease (+) in current non- 1,279 8,658
interest-bearing creditors
Change in provisions for 2,171 1,869
liabilities and charges
Interest received 277 227
Interest paid -932 -661
Other financial items -656 -312
Income taxes paid -9,517 -4,784
NET CASH FLOW FROM BUSINESS 18,417 22,049
OPERATIONS (A)
INVESTMENTS
Investment in tangible and intangible -11,209 -9,029
assets
Investment in other assets -11 0
Dividends received 101 85
CASH OUTFLOW FROM INVESTING -11,119 -8,944
ACTIVITIES (B)
FINANCING
Withdrawal of current loans 0 3,673
Repayment of current
loans -2,677 0
Increase (-) / decrease (+) in current interest- 0 77
bearing liabilities
Withdrawal/repayment of non-current loans -4,961 9,444
Payment of finance lease liabilities -231 -269
Increase (-) / decrease (+) in non- 4 111
current receivables
Paid dividends - 2,800 -21,000
NET CASH OUTFLOW FROM -10,665 -7,964
FINANCING (C)
Increase (-) / decrease (+) in -3,367 5,141
liquid assets (A+B+C)
Liquid assets 1 Jan. 15,706 10,565
Liquid assets 31 Dec. 12,339 15,706
RECONCILIATION OF CAPITAL AND RESERVES (EUR 1,000)
31.12.04 31.12.03
Capital and reserves under FAS 35,550 43,094
IAS 17 Leases and IAS 18 Revenue -530 -807
IAS 16 Property, Plant and Equipment -841 -841
IAS 2 Inventories 387 643
IAS 12 Income taxes 40 48
IFRS 3 Business combinations: goodwill 0 0
Capital and reserves under IFRS 34,606 42,137
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 31 3, 500 2,562 -646 37,678 0 43,094
DEC 2003
Effects of adopting
IFRS 0 0 0 -957 0 -957
ADJUSTED CAPITAL AND
RESERVES
1.1.2004 3,500 2,562 -646 36,721 0 42,137
Effects of tax rate
change 0 0 0 80 0 80
Translation differences 0 0 -192 61 0 -131
NET INCOME RECOGNISED
DIRECTLY IN CAPITAL AND 0 0 -192 141 0 -51
RESERVES
Net profit for the 0 0 0 13,521 11 13,532
period
TOTAL RECOGNISED
INCOME AND EXPENSES 0 0 -192 13,662 11 13,480
Subsidiary acquisition 0 0 0 0 408 408
Dividend distribution 0 0 0 -21,000 0 -21,000
Share issue 3,500 -2,542 0 -958 0 0
CAPITAL AND RESERVES 31 7,000 20 -838 28,425 419 35,025
DEC 2004
Translation differences 0 0 396 -443 0 -47
NET INCOME RECOGNISED
DIRECTLY IN CAPITAL AND 0 0 396 -443 0 -47
RESERVES
Net profit for the 0 0 0 19,629 0 19,629
period
TOTAL RECOGNISED INCOME 0
AND EXPENSES 0 396 19,186 0 19,583
Dividend distribution 0 0 0 -2,800 0 -2,800
Change in minority 0 0 0 0 -419 -419
interest
CAPITAL AND RESERVES 31 7,000 20 -442 44,811 0 51,389
DEC 2005
RECONCILIATION OF PROFIT FOR THE PERIOD (EUR 1,000)
1-12/'04
Profit for the period under FAS 13,518
IAS 17 Leases and IAS 18 Revenue 276
IAS 2 Inventories -256
IAS 12 Income taxes -6
IFRS 3 Business combinations: goodwill 0
Profit for the period under IFRS 13,532
SEGMENT INFORMATION (EUR 1,000)
GEOGRAPHICAL SEGMENTS
2005 2004
TURNOVER
Nordic countries 154,017 122,509
Rest of Europe 71,758 53,442
North and South America 33,775 27,009
Elimination -34,697 -25,289
Unallocated 1,242 263
GROUP TOTAL 226,095 177,934
OPERATING PROFIT
Nordic countries 18,825 14,643
Rest of Europe 10,761 7,049
North and South America 2,027 1,864
Unallocated -2,562 -3,856
GROUP TOTAL 29,051 19,700
PLEDGES GIVEN, CONTINGENT AND OTHER LIABILITIES (EUR 1,000)
31.12.05 31.12.04
1. FOR OWN DEBT
Debts for which mortgages have been pledged as
collateral
Loans from financial 0 1,261
institutions
Mortgages given on land and buildings 101 1,126
Chattel mortgages given 336 820
MORTGAGES GIVEN AS PLEDGES, TOTAL 437 1,946
2. LEASING COMMITMENTS (EUR 1,996 445
1,000)
3. CONTINGENT LIABILITIES ON BEHALF OF GROUP COMPANIES (EUR 1,000)
Guarantees given on behalf of Group
companies 884 763
4. LIABILITIES BASED ON DERIVATIVE CONTRACTS (EUR 1,000)
4.1 Nominal values
Currency derivatives
Options 0 0
Forward contracts 14,690 10,616
4.2 Market values
Currency derivatives
Options 0 0
Forward contracts -70 136
5. OTHER CONTINGENT LIABILITIES (EUR 1,000)
Guarantees given on others 1,289 831
behalf
Repurchase commitments 7,163 7,851
Other liabilities 0 0
Total 8,452 8,681
KEY FIGURES AND RATIOS 31.12.05 31.12.04
R&D expenditure, MEUR 3.7 3.7
Capital expenditure, MEUR 11.2 9.0
% of turnover 5.0 5.1
Average number of staff 729 607
Order books, MEUR 54.9 44.4
Equity ratio, % 47.6 36.0
Earnings per share, EUR 1.40 0.97
Equity per share, EUR 3.67 2.47
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/'05 1-12/'04
Ponsse Group 236.9 189.3
The above figures have been audited.
The above figures have been rounded and so may differ from those given in the
official financial statements.
Vieremä, 14 February 2006
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
