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19.2.2019

PONSSE’S FINANCIAL STATEMENTS FOR 1 JANUARY – 31 DECEMBER 2018


– Net sales amounted to EUR 612.4 (Q1-Q4/2017 576.6) million.

– Q4 net sales amounted to EUR 196.6 (Q4/2017 178.3) million.

– Operating result totalled EUR 61.7 (Q1-Q4/2017 67.4) million, equalling 10.1 (11.7) per cent of net sales.

– Q4 operating result totalled EUR 22.4 (Q4/2017 20.6) million, equalling 11.4 (11.5) per cent of net sales.

– Profit before taxes was EUR 56.3 (Q1-Q4/2017 57.8) million.

– Cash flow from business operations was EUR 61.3 (56.5) million.

– Earnings per share were EUR 1.56 (1.60).

– Equity ratio was 54.0 (51.9) per cent.

– Order books stood at EUR 294.9 (124.6) million.

– The Board of Directors´ proposal for the distribution of profit is EUR 0.80 (0.75) per share.

– Group´s euro-denominated operating profit is expected to be slightly higher in 2019 than in 2018.


PRESIDENT AND CEO JUHO NUMMELA:

The year 2018 was a busy one as a result of high demand, the significant factory investment and challenges in the availability of components. For Ponsse, the year was an excellent success and, despite the highly challenging situation, our profitability was more than 10 per cent and our cash flow was high at EUR 61 million. We were able to continue our growth, even though the ramp-up of the Vieremä factory limited the use of our capacity. We manufactured nearly the same number of PONSSE forest machines as in the record year of 2017.

Our order flow reached a new record in 2018. High demand during the second half of the year had a significant impact on our delivery times, as the order book reached a new record level. At the end of the year, our order book totalled EUR 294.9 (124.6) million, being 136.7 per cent higher than in the year before.

Russia, Finland and Sweden were our fastest growing market areas. Russia held its place as the world’s largest market for cut-to-length forest machines, followed by Sweden, with Finland being the third largest market. The market situation was excellent in most parts of our market areas throughout the year.

All our business areas grew steadily throughout the year. Sales of new machines developed well, while our service and trade-in machine businesses grew faster than our other operations. Cumulative net sales rose to a historical level of EUR 612.4 (576.6) million and the operating profit amounted to EUR 61.7 (67.4). From the beginning of the year, the company’s net sales increased by 6.2 per cent and operating profit decreased by 8.5 per cent year-on-year. Operating profit accounted for 10.1 (11.7) per cent of net sales during the period under review. Our operating profit during the second half of the year was affected by the significant factory ramp-up, which increased operating costs.

Our sales teams did an excellent job throughout the year, and the rotation of our trade-in machine stock reached a good level. Cash flow from business operations amounted to EUR 61.3 (56.5) million during the period under review. Stocks of both new machines and trade-in machines were at a good level at the end of the year.

We are developing Ponsse with a long-term focus in order to support our customers’ businesses. The continuous renewal of our operations and our products is important. Since 2010, we have increasingly invested around EUR 100 million in product development and around EUR 186 million in fixed assets.

During 2018, we launched a breath-taking number of new products. At the FinnMETKO exhibition, we demonstrated ten new products and significant product features. Our R&D, sales and marketing teams succeeded well, and our new products have received an enthusiastic welcome in the markets. We are investing in harvesting solutions and technologies related to them in accordance with sustainable development.

The investment in the Vieremä factory exceeded all our expectations. The deployment of the storage system during week 10 was a success, and the storage automation system stabilised quickly both in terms of technology and our employees. The ramp-up of the new assembly factory took place after the summer holidays, and it succeeded well, considering the size of the project. Despite any problems in the availability of components and in the new production system, the factory was running on schedule by the end of the year. In this situation, the success of the factory was vital to us and showed that our employees are very skilled, capable and persistent. Our factory is going strong, for which I would like to thank all people at Ponsse’s factory in Vieremä.

The year 2018 was an excellent success for all Ponsse employees and our distribution network.


NET SALES

Consolidated net sales for the period under review amounted to EUR 612.4 (576.6) million, which is 6.2 per cent more than in the comparison period. International business operations accounted for 77.6 (77.3) per cent of net sales.

Net sales were regionally distributed as follows: Northern Europe 37.6 (38.0) per cent, Central and Southern Europe 20.0 (18.6) per cent, Russia and Asia 22.5 (20.1) per cent, North and South America 19.2 (22.9) per cent and other countries 0.7 (0.5) per cent.


PROFIT PERFORMANCE

The operating result amounted to EUR 61.7 (67.4) million. The operating result equalled 10.1 (11.7) per cent of net sales for the period under review. Consolidated return on capital employed (ROCE) stood at 22.6 (26.4) per cent.

Staff costs for the period totalled EUR 85.3 (80.3) million. Other operating expenses stood at EUR 55.2 (49.7) million. The net total of financial income and expenses amounted to EUR -5.3 (-9.7) million. Exchange rate gains and losses with a net effect of EUR -4.0 (-7.8) million were recognised under financial items for the period. Result for the period under review totalled EUR 43.7 (44.8) million. Diluted and undiluted earnings per share (EPS) came to EUR 1.56 (1.60).


STATEMENT OF FINANCIAL POSITION AND FINANCING ACTIVITIES

At the end of the period under review, the total consolidated statements of financial position amounted to EUR 379.1 (345.2) million. Inventories stood at EUR 126.6 (122.3) million. Trade receivables totalled EUR 43.4 (41.5) million, while liquid assets stood at EUR 51.1 (42.6) million. Group shareholders’ equity stood at EUR 200.2 (176.8) million and parent company shareholders’ equity (FAS) at EUR 180.1 (162.9) million. The amount of interest-bearing liabilities was EUR 69.6 (68.2) million. The company has used five per cent of its credit facility limit. The parent company's net receivables from other Group companies stood at EUR 76.7 (85.3) million. The parent company’s receivables from subsidiaries mainly consisted of trade receivables. Consolidated net liabilities totalled EUR 18.4 (25.5) million, and the debt-equity ratio (net gearing) was 9.2 (14.4) per cent. The equity ratio stood at 54.0 (51.9) percent at the end of the period under review.

Cash flow from operating activities amounted to EUR 61.3 (56.5) million. Cash flow from investment activities came to EUR -31.8 (-37.7) million.


ORDER INTAKE AND ORDER BOOKS

Order intake for the period totalled EUR 785.7 (582.1) million, while period-end order books were valued at EUR 294.9 (124.6) million.


DISTRIBUTION NETWORK

The subsidiaries included in the Ponsse Group are Ponsse AB, Sweden; Ponsse AS, Norway; Ponssé S.A.S., France; Ponsse UK Ltd, the United Kingdom; Ponsse Machines Ireland Ltd, Ireland, Ponsse North America, Inc., the United States; Ponsse Latin America Ltda, Brazil; Ponsse Uruguay S.A., Uruguay; OOO Ponsse, Russia; Ponsse Asia-Pacific Ltd, Hong Kong; Ponsse China Ltd, China and Epec Oy, Finland. The Group includes also the property company Ponsse Centre, Russia. Sunit Oy, Finland, is an associate in which Ponsse Plc has a holding of 34 per cent.


R&D AND CAPITAL EXPENDITURE

Group’s R&D expenses during the period under review totalled EUR 17.5 (14.8) million, of which EUR 6.1 (4.7) million was capitalised.

Capital expenditure totalled EUR 32.5 (37.8) million. It consisted in addition to capitalised R&D expenses of investments in buildings and ordinary maintenance and replacement investments for machinery and equipment.


ANNUAL GENERAL MEETING

Annual General Meeting was held in Vieremä, Finland 9 April 2018. The AGM approved the parent company financial statements and the consolidated financial statements, and members of the Board of Directors and the President and CEO were discharged from liability for the 2017 financial period.

The AGM decided to pay a dividend of EUR 0.75 per share for 2017 (dividends totaling EUR 20,975,181). No dividend were paid to shares owned by the company itself (33,092 shares). The dividend payment record date was 11 April 2018, and the dividends were paid on 18 April 2018.

Annual General Meeting authorised the Board of Directors to decide on the acquisition of treasury shares so that shares can be acquired in one or several instalments to a maximum of 250,000 shares. The maximum amount corresponds to approximately 0.89 per cent of the company’s total shares and votes.

The shares will be acquired in public trading organised by NASDAQ OMX Helsinki Ltd (“the Stock Exchange”). Furthermore, they will be acquired and paid according to the rules of the Stock Exchange and Euroclear Finland Ltd.

The Board may, pursuant to the authorisation, only decide upon the acquisition of the treasury shares using the company’s unrestricted shareholders’ equity.

The authorisation is proposed for use in supporting the Company’s growth strategy in the Company's potential corporate acquisitions or other arrangements. In addition, the shares can be issued to the Company’s current shareholders, used for increasing shareholders’ ownership value by invalidating shares after their acquisition or used in personnel incentive systems. The authorisation includes the right of the Board to decide upon all other terms and conditions of the share issue.

The authorisation is valid until the next Annual General Meeting; however, no later than 30 June 2019. The previous authorisations are cancelled.

The AGM authorised the Board of Directors to decide on the assignment of treasury shares held by the company against payment or free of charge so that a maximum of 250,000 shares will be issued on the basis of the authorisation. The maximum amount corresponds to approximately 0.89 per cent of the company’s total shares and votes.

The authorisation includes the right of the Board to decide upon all other terms and conditions of the share issue. Thus, the authorisation includes a right to organise a directed issue in deviation of the shareholders' subscription rights under the provisions prescribed by law.

The authorisation is proposed for use in supporting the Company’s growth strategy in the Company's potential corporate acquisitions or other arrangements. In addition, the shares can be issued to the Company’s current shareholders, sold through public trading or used in personnel incentive systems. A directed share issue may be free of charge only if there is a particularly weighty financial reason for it, one that is beneficial for all the company’s shareholders.

The authorisation is valid until the next Annual General Meeting; however, no later than 30 June 2019. The previous authorisations are cancelled.


BOARD OF DIRECTORS AND THE COMPANY’S AUDITORS

Juha Vidgrén acted as Chairman of the Board and Mammu Kaario as Vice Chairman of the Board. Members of the Board were Matti Kylävainio, Juha Vanhainen (starting from 9 April 2018), Janne Vidgrén and Jukka Vidgrén. In addition to, Ossi Saksman was member of the Board until the Annual General Meeting held on 9 April 2018.

The Board of Directors did not establish any committees or commissions from among its members.

The Board of Directors convened nine times during the period under review. The attendance rate was 90.7 percent.

During the period under review, auditing firm PricewaterhouseCoopers Oy acted as the company auditor with Juha Toppinen, Authorised Public Accountant, as the principal auditor.


MANAGEMENT

The following persons were members of the Management Team: Juho Nummela, President and CEO, acting as the chairman; Petri Härkönen, CFO; Juha Inberg, Technology and R&D Director; Tapio Mertanen, Service Director; Paula Oksman, HR Director; Tommi Väänänen, Director of Delivery Chain Process and Jarmo Vidgrén, Deputy CEO, Sales and Marketing Director. The company management has regular management liability insurance.

The area director organisation of sales is led by Jarmo Vidgrén, the Group's sales and marketing director, and Tapio Mertanen, service director. Area directors report to Marko Mattila, Ponsse retail network manager. Managing directors of subsidiaries and Marko Mattila report to Jarmo Vidgrén, Ponsse Plc's sales and marketing director.

The geographical distribution and the responsible persons are presented below:
Northern Europe:
Jani Liukkonen (Finland),
Carl-Henrik Hammar (Sweden and Denmark),
Jussi Hentunen (the Baltic countries) and
Sigurd Skotte (Norway),

Central and Southern Europe:
Tuomo Moilanen (Germany and Austria),
Clément Puybaret (France),
Janne Tarvainen (Spain and Portugal),
Dean Robson (the United Kingdom),
Gary Glendinning (Ireland, Hungary, Romania, Slovenia, Croatia and Serbia) and
Jussi Hentunen (Poland, Czech Republic and Slovakia).

Russia and Asia:
Jaakko Laurila (Russia and Belarus),
Janne Tarvainen (Australia and South Africa) and
Risto Kääriäinen (China and Japan),

North and South America:
Pekka Ruuskanen (the United States),
Eero Lukkarinen (Canada),
Fernando Campos (Brazil) starting from 1 August 2018 and
Martin Toledo (Uruguay, Chile and Argentina).


PERSONNEL

The Group had an average staff of 1,635 (1,508) during the period and employed 1,692 (1,546) people at period-end.


SHARE PERFORMANCE

The company’s registered share capital consists of 28,000,000 shares. The trading volume of Ponsse Plc shares for 1 January – 31 December 2018 totalled 2,327,277, accounting for 8.3 per cent of the total number of shares. Share turnover amounted to EUR 67.0 million, with the period’s lowest and highest share prices amounting to EUR 23.85 and EUR 32.35, respectively.

At the end of the period, shares closed at EUR 24.75, and market capitalisation totalled EUR 693.0 million.

At the end of the period under review, the company held no treasury shares.


QUALITY AND ENVIRONMENT

Ponsse is committed to observing the ISO 9001 quality standard, the ISO 14001 environmental system standard and the OHSAS 18001 occupational safety and health standard, the first two of which are certified. The aim of the management systems based on international standards is to standardise operations at the Group level and to ensure a continuous development. Lloyd’s Register Quality Assurance conducted an audit of the ISO 9001:2015 quality system and the ISO 14001:2015 environmental system during the period under review.

Implementation of the principles of sustainable development and responsible leadership are guided by the management systems based on the company's quality, environmental and occupational safety and health standards. At Ponsse, sustainable development means taking the economic, social and ecological points of view and the principles related to them equally into account in the company's operations. According to the point of view of ecological sustainability we want to avoid and minimise the negative impacts of our products, services, operations and decisions on biodiversity, the ecosystem and sufficiency of natural resources. Our investments in minimising the fuel consumption and emissions of our products and surface damage of trees and in our maintenance services processes also influence the sustainability of the operations of our customers. According to the point of view of social sustainability we ensure occupational well-being and safety and equal treatment and support employment and the development of professional human resources. The point of view of economical sustainability is related to profitability, cash flow from business operations and growth and ensures the company’s economic performance in the long term. This brings stability and continuity to the local community and the society in the whole of our global field of operations.

At Ponsse, operating methods and production processes are developed with both internal and external audits. The company’s audit system has been a key tool in promoting the development during 2018. During the period under review, internal audits assessing the procedures and working environment of services were deepened in the company's service business network. The aim of the quality audits of services is to ensure efficient and safe procedures in the entire PONSSE service network. During the period under review, there has been invested in the management of the subsidiaries’ strategy and leading principles, taking advantage of the earlier developed assessment model.

Production processes are continuously developed in accordance with the operating model of continuous improvement. The company’s quality assurance system emphasises the importance of prevention. During the period under review, great focus was put on a procedure development model internal to the company, which is based on principles of Ponsse Production System.


GOVERNANCE

In its decision-making and administration, the company observes the Finnish Limited Liability Companies Act, other regulations governing publicly listed companies and the company’s Articles of Association. The company’s Board of Directors has adopted the Code of Governance that complies with the Finnish Corporate Governance Code approved by the Board of the Securities Market Association in 2015. The purpose of the code is to ensure that the company is professionally managed and that its business principles and practices are of a high ethical and professional standard.

The Code of Governance is available on Ponsse’s website in the Investors section.


RISK MANAGEMENT

Risk management is based on the company’s values, as well as strategic and financial objectives. Risk management aims to support the achievement of the objectives specified in the company’s strategy, as well as to ensure the financial development of the company and the continuity of its business.

Furthermore, risk management aims to identify, assess and monitor business-related risks which may influence the achievement of the company’s strategic and financial goals or the continuity of its business. Decisions on the necessary measures to anticipate risks and react to observed risks are made on the basis of this information.

Risk management is a part of regular daily business, and it is also included in the management system. Risk management is controlled by the risk management policy approved by the Board.

A risk is any event that may prevent the company from reaching its objectives or that threatens the continuity of business. On the other hand, a risk may also be a positive event, in which case the risk is treated as an opportunity. Each risk is assessed on the basis of its impact and probability. Methods of risk management include avoiding, mitigating and transferring risks. Risks can also be managed by controlling and minimising their impact.


SHORT-TERM RISK MANAGEMENT

The insecurity in the world economy may result in a decline in the demand for forest machines. The uncertainty may be increased by the volatility of developing countries’ foreign exchange markets. The geopolitical situation, in particular, will increase the uncertainty through financial market operations and sanctions. Changes taking place in the fiscal and customs legislation in countries to which Ponsse exports may hamper the company’s export trade or its profitability. The risks in the supplier network may cause problems in material availability.

The parent company monitors the changes in the Group’s internal and external trade receivables and the associated risk of impairment.

The key objective of the company’s financial risk management policy is to manage liquidity, interest and currency risks. The company ensures its liquidity through credit limit facilities agreed with a number of financial institutions. The effect of adverse changes in interest rates is minimised by utilising credit linked to different reference rates and by concluding interest rate swaps. The effects of currency rate fluctuations are mitigated through derivative contracts.


EVENTS AFTER THE PERIOD

The company has no important events after the conclusion of the period under review.


OUTLOOK FOR THE FUTURE

The Group's euro-denominated operating profit is expected to be slightly higher in 2019 than in 2018.

Ponsse’s updated and competitive product range and service solutions have had a significant impact on the company’s growth. The market situation has remained favourable. Availability of components will remain challenging during the first half of year 2019.

The trend of our investments will increasingly be in R&D and product technology and also developing the service network both in Finland and abroad. In Vieremä factory there will be focused in ramp-up of new products and increasing the capacity taking product quality and reliability into account.


ANNUAL GENERAL MEETING

Ponsse Plc’s Annual General Meeting will be held on 3 April 2019, starting at 11:00 a.m. at the company’s registered office at Ponssentie 22, FI-74200 Vieremä, Finland.


BOARD OF DIRECTORS’ PROPOSAL FOR THE DISPOSAL OF PROFIT

The parent company Ponsse Plc had 149,873,188.81 euros of distributable funds on 31 December 2018.

The company’s Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.80 per share shall be paid for the year 2018. The Board proposes to the Annual General Meeting that a profit bonus will be paid to the staff for the year 2018.



PONSSE GROUP


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000)

         
    IFRS IFRS  
    1-12/18 1-12/17  
NET SALES 612,435 576,553  
Increase (+)/decrease (-) in inventories of finished goods and work in progress -1,508 7,900  
Other operating income   2,768 1,618  
Raw materials and services   -395,660 -375,529  
Expenditure on employment-related benefits -85,289 -80,263  
Depreciation and amortisation   -15,836 -13,112  
Other operating expenses   -55,193 -49,734  
OPERATING RESULT   61,717 67,432  
Share of results of associated companies -77 19  
Financial income and expenses   -5,317 -9,660  
RESULT BEFORE TAXES 56,324 57,792  
Income taxes   -12,625 -13,021  
NET RESULT FOR THE PERIOD   43,699 44,771  
         
OTHER ITEMS INCLUDED IN TOTAL COMPREHENSIVE RESULT:      
Translation differences related to foreign units -318 -941  
       
TOTAL COMPREHENSIVE RESULT FOR THE PERIOD 43,381 43,830  
         
Diluted and undiluted earnings per share* 1.56 1.60  
         
         
    IFRS IFRS  
    10-12/18 10-12/17  
NET SALES 196,552 178,264  
Increase (+)/decrease (-) in inventories of finished goods and work in progress -10,031 -9,950  
Other operating income   825 412  
Raw materials and services   -120,416 -106,747  
Expenditure on employment-related benefits -24,602 -23,175  
Depreciation and amortisation   -4,385 -3,446  
Other operating expenses   -15,567 -14,774  
OPERATING RESULT   22,377 20,584  
Share of results of associated companies -12 -28  
Financial income and expenses   -326 -3,137  
RESULT BEFORE TAXES 22,039 17,419  
Income taxes   -3,475 -2,717  
NET RESULT FOR THE PERIOD   18,563 14,702  
         
OTHER ITEMS INCLUDED IN TOTAL COMPREHENSIVE RESULT:      
Translation differences related to foreign units -969 155  
         
TOTAL COMPREHENSIVE RESULT FOR THE PERIOD 17,595 14,857  
         
Diluted and undiluted earnings per share* 0.63 0.53  
         

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000)

       
  IFRS IFRS  
ASSETS 31 Dec 18 31 Dec 17  
NON-CURRENT ASSETS      
Intangible assets 26,298 22,975  
Goodwill 3,800 3,816  
Property, plant and equipment 108,818 95,454  
Financial assets 103 103  
Investments in associated companies 545 714  
Non-current receivables 2,447 916  
Deferred tax assets 3,242 3,538  
TOTAL NON-CURRENT ASSETS 145,252 127,516  
       
CURRENT ASSETS      
Inventories 126,628 122,302  
Trade receivables 43,379 41,481  
Income tax receivables 1,423 413  
Other current receivables 11,275 10,864  
Cash and cash equivalents 51,105 42,596  
TOTAL CURRENT ASSETS 233,811 217,656  
       
TOTAL ASSETS 379,063 345,172  
       
SHAREHOLDERS’ EQUITY AND LIABILITIES      
SHAREHOLDERS’ EQUITY      
Share capital 7,000 7,000  
Other reserves 3,462 2,452  
Translation differences 3,027 -183  
Treasury shares 0 -346  
Retained earnings 186,667 167,923  
EQUITY OWNED BY PARENT COMPANY SHAREHOLDERS 200,155 176,846  
       
NON-CURRENT LIABILITIES      
Interest-bearing liabilities 45,651 46,126  
Deferred tax liabilities 1,295 823  
Other non-current liabilities 43 57  
TOTAL NON-CURRENT LIABILITIES 46,990 47,006  
       
CURRENT LIABILITIES      
Interest-bearing liabilities 23,920 22,115  
Provisions 5,418 5,769  
Tax liabilities for the period 808 738  
Trade creditors and other current liabilities 101,773 92,698  
TOTAL CURRENT LIABILITIES 131,919 121,320  
       
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 379,063 345,172  



CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000)

         
    IFRS IFRS  
    1-12/18 1-12/17  
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net result for the period   43,699 44,771  
Adjustments:        
Financial income and expenses   5,317 9,660  
Share of the result of associated companies 77 -19  
Depreciation and amortisation   15,836 13,112  
Income taxes   12,625 13,021  
Other adjustments   -3,368 -1,202  
Cash flow before changes in working capital 74,186 79,342  
         
Change in working capital:        
Change in trade receivables and other receivables -111 -9,885  
Change in inventories   -4,326 -4,018  
Change in trade creditors and other liabilities 7,794 10,572  
Change in provisions for liabilities and charges -351 -201  
Interest received   244 240  
Interest paid   -770 -954  
Other financial items   -2,458 -3,518  
Income taxes paid   -12,866 -15,030  
NET CASH FLOWS FROM OPERATING ACTIVITIES (A) 61,341 56,549  
         
CASH FLOWS USED IN INVESTING ACTIVITIES      
Investments in tangible and intangible assets -32,508 -37,836  
Proceeds from sale of tangible and intangible assets 675 127  
NET CASH FLOWS USED IN INVESTMENT ACTIVITIES (B) -31,833 -37,709  
         
CASH FLOWS FROM FINANCING ACTIVITIES      
Acquisition of treasury shares -93 0  
Withdrawal/Repayment of current loans 1,851 7,944  
Repayment of non-current loans -450 -900  
Withdrawal/Repayment of finance lease liabilities 22 1,082  
Change in non-current receivables 970 520  
Dividends paid -20,975 -16,780  
NET CASH FLOWS FROM FINANCING ACTIVITIES (C) -18,675 -8,135  
         
Change in cash and cash equivalents (A+B+C) 10,834 10,705  
         
Cash and cash equivalents on 1 Jan   42,596 37,342  
Impact of exchange rate changes -2,324 -5,451  
Cash and cash equivalents on 31 Dec 51,105 42,596  


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR 1,000)

A = Share capital            
B = Share premium and other reserves          
C = Translation differences            
D = Treasury shares          
E = Retained earnings
F = Total shareholders’ equity            
   
  EQUITY OWNED BY PARENT COMPANY SHAREHOLDERS
  A B C D E F
SHAREHOLDERS’ EQUITY 1 JAN 2018 7,000 2,452 -183 -346 167,923 176,846
Adjustment for previous periods *)   -29 3,528   -3,525 -26
SHAREHOLDERS’ EQUITY 1 JAN 2018 7,000 2,423 3,345 -346 164,398 176,819
Translation differences     -318     -318
Result for the period         43,699 43,699
Total comprehensive income for the period     -318   43,699 43,381
Direct entries to retained earnings         -16 -16
Matching Share Plan   1,039   439 -439 1,039
Dividend distribution         -20,975 -20,975
Acquisition of treasury shares       -93   -93
SHAREHOLDERS' EQUITY 31 DEC 2018 7,000 3,462 3,027 0 186,667 200,155
             
             
SHAREHOLDERS’ EQUITY 1 JAN 2017 7,000 2,452 758 -346 139,932 149,796
Translation differences     -941     -941
Result for the period         44,771 44,771
Total comprehensive income for the period     -941   44,771 43,830
Dividend distribution         -16,780 -16,780
SHAREHOLDERS' EQUITY 31 DEC 2017 7,000 2,452 -183 -346 167,923 176,846


*) As a result of the new consolidation system, the company is now able to present, from the beginning of the financial year 2018, all exchange rate differences on equity in the translation difference. Exchange differences for previously accrued retained earnings are presented within the profits. The change has no effect on previously reported key figures.


  31 Dec 18 31 Dec 17  
1. LEASING COMMITMENTS (EUR 1,000) 1,342 1,490  
2. CONTINGENT LIABILITIES (EUR 1,000) 31 Dec 18 31 Dec 17  
Guarantees given on behalf of others 1,459 1,541  
Repurchase commitments   552 3,464  
Responsibility of checking the VAT deductions made on real property investments   7,839 8,752  
Other commitments   87 58  
TOTAL   9,937 13,815  
3. PROVISIONS (EUR 1,000)   Guarantee provision  
1 Jan 2018     5,769  
Provisions added     533  
Provisions cancelled     -884  
31 Dec 2018     5,418  

KEY FIGURES AND RATIOS
    31 Dec 18 31 Dec 17
R&D expenditure, MEUR   17.5 14.8
Capital expenditure, MEUR   32.5 37.8
as % of net sales     5.3 6.6
Average number of employees     1,635 1,508
Order books, MEUR     294.9 124.6
Equity ratio, %     54.0 51.9
Diluted and undiluted earnings per share (EUR)   1.56 1.60
Equity per share (EUR)     7.15 6.32


FORMULAE FOR FINANCIAL INDICATORS

Return on capital employed, %:
Result before tax + financial expenses
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Shareholder´s equity + interest-bearing financial liabilities (average during the year) * 100

Average number of employees:
Average of the number of personnel at the end of each month. The calculation has been adjusted for part-time employees.

Net gearing, %:
Interest-bearing financial liabilities – cash and cash equivalents
-----------------------------------------------------------------------------------
Shareholders’ equity * 100

Equity ratio, %:
Shareholders’ equity + Non-controlling interests
------------------------------------------------------------------------
Balance sheet total - advance payments received * 100

Earnings per share:
Net result for the period - Non-controlling interests
-----------------------------------------------------------------------------------------------------------
Average number of shares during the accounting period, adjusted for share issues

Equity per share:
Shareholders’ equity
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Number of shares on the balance sheet date, adjusted for share issues

ORDER INTAKE (EUR million)   1-12/18 1-12/17
Ponsse Group   785.7 582.1


The stock exchange release for annual financial statements has been prepared observing the recognition and valuation principles of IFRS standards and all of the requirements of IAS 34 have been complied with. The same accounting principles were observed for the closing of the books as for the annual financial statements dated 31 December 2017, with the exception of the new standards introduced on 1 January 2018. These standards are IFRS 15, Revenue from Contracts with Customers, and IFRS 9, Financial Instruments as Amended.

The IFRS 15 standard had not any significant effect on the time when net sales are recognised, or the amount of net sales recognized, and therefore on the consolidated income statement or balance sheet. However, IFRS 15 had a minor impact on the time when net sales are recognised and liabilities based on agreements, for example regarding the service-based component of warranties provided for new machines and any options provided for customers to acquire additional services with a discount. In addition, the new standard had an impact on financial statements as a result of new requirements regarding notes. A standard transition method was applied in implementing the standard. The effects on the comparability of financial periods and the profit and loss account and balance sheet of the reporting period are minor.

The group is adopting the standard IFRS 9, Financial Instruments as Amended. With regard to possible decline in value of financial assets, an expected credit loss model is applied. The standard amendment is not expected to have any significant impact on the consolidated financial statements. Expected credit losses are recorded customer-specifically, based on predetermined criteria.

IFRS 16 Leases will be applicable to financial periods beginning on or after 1 January 2019. As a result of this, nearly all leases will be recognised on the balance sheet, since operational leases and financing leases are no longer separated. In accordance with the new standard, an asset item (the right to use a leased asset) and a financial liability regarding payment of leases is recognised. The only exceptions are short-term leases and leases regarding asset items of low value. The Group has assessed the effects of the implementation of the standard. The standard mainly has effect on accounting methods of the Group’s operational leases. At the end of the accounting period the Group has worth of EUR 3.554 thousand of non-cancellable leases based on operational leases.

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.

This communication includes future-oriented statements that are based on the assumptions currently made by the company’s management and its current decisions and plans. Although the management believes that the future expectations are well founded, there is no certainty that these expectations will prove to be correct. This is why the results may significantly deviate from the assumptions included in the future-oriented statements as a result of, among other things, changes in the economy, markets, competitive conditions, legislation or currency exchange rates.


Vieremä, 19 February 2019

PONSSE PLC


Juho Nummela
President and CEO


FURTHER INFORMATION
Juho Nummela, President and CEO, tel. +358 400 495 690
Petri Härkönen, CFO, tel. +358 50 409 8362

DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Principal media
www.ponsse.com


Ponsse Plc is a company specialising in the sales, manufacture, servicing and technology of cut-to-length method forest machines and is driven by genuine interest in its customers and their business. Ponsse develops and manufactures sustainable and innovative harvesting solutions based on customers’ needs.

The company was established by forest machine entrepreneur Einari Vidgrén in 1970, and it has been a leader in timber harvesting solutions based on the cut-to-length method ever since. Ponsse is headquartered in Vieremä, Finland. The company’s shares are quoted on the NASDAQ OMX Nordic List.

 

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