Ponsse Plc
Interim Report

Ponsse's Interim Report for 1 January - 30 September 2023

Ponsse Plc, Interim Report, 24 October 2023 9:00 a.m.

July-September (continuing operations):
- Net sales amounted to EUR 169.2 (178.5) million
- Operating profit totalled EUR 6.5 (13.0) million, equalling 3.9 (7.3) per cent of net sales
January-September (continuing operations):
- Net sales amounted to EUR 579.0 (530.5) million
- Operating profit totalled EUR 33.4 (34.9) million, equalling 5.8 (6.6) per cent of net sales
- Net result was EUR 22.4 (24.2) million
- Earnings per share were EUR 0.80 (0.86)
- Order books stood at EUR 278.1 (365.5) million at the end of period under review
- Cash flow from business operations was EUR -4.8 (-50.8) million (continuing and discontinued operations)
- Equity ratio was 54.8 (56.7) per cent at the end of period under review (continuing and discontinued operations)
- Ponsse issued a new performance guidance on October 18th, 2023: The company's euro-denominated operating profit in 2023 is expected to be on par with the comparable operating profit of its continuing operations in 2022 (EUR 46.6 million).
- Ponsse has classified the Russian operations subject to trade as assets held for sale and reported them as discontinued operations. Unless otherwise specified, the figures presented in this interim report refer to continuing operations.
PRESIDENT AND CEO JUHO NUMMELA:
The weakening demand in the forest sector and general uncertainty led to a decrease in the demand for PONSSE forest machines during the last quarter. During the third quarter, order intake totaled roughly EUR 153.1 million. At the end of the period under review, the company's order books stood at EUR 278.1 (365.5) million.
Our customers' business situation is decent, but logging volumes for the current year are expected to decrease. The weakening of the market is reflected in a reduction in the order books whilst the factory's production volumes still remain close to a normal level. The availability of parts and components has improved significantly as the general demand has decreased in our suppliers' business areas.
The company's net sales amounted to EUR 169.2 (178.5) million during the last quarter. New machine invoicing didn't reach last year's numbers, but we were able to both improve the delivery of used machines and boost their net sales. Our technology company, Epec, managed to grow a little. During the past quarter, we were able to finish the sales process of our Russian subsidiary.
Our relative profitability during the past quarter was poor, 3.9 (7.3) per cent. The main factors affecting our profitability were the persistent inflation, the operating expenses that grew faster than what the net sales developed, and the slower-than-expected improvement of the operative challenges of our subsidiary, Ponsse Latin America Ltda. Entering a weakening business cycle, also the discontinuation of our Russian operations and the challenges in the organization's overall cost structure are reflected in the company's profitability. The growth in our net sales originates from the less profitable market areas.
The company's cash flow was EUR -4.8 (-50.8) million. Part of our capital is still temporarily tied to raw material stocks and, especially, to used machine stocks. The growth of the used machine stock took a turn during the quarter and started decreasing, but the used machine stock rotation is still on a too poor level.
In order to secure the fulfilment of our strategy and goals, we are developing the company's operative model. We want to ensure even stronger customer service, respond to market changes, and secure the growth of the company's profitability in the changed business environment. The development of the operative model will have a clear impact on our competitiveness. Ponsse evaluates investments very carefully, prioritizes operations, and will cut costs. The investments are made in the development of new products and technologies, the Group's information systems, and digital services.
NET SALES
Consolidated net sales for the period under review amounted to EUR 579.0 (530.5) million, which is 9.1 per cent more than in the comparison period. International business operations accounted for 73.8 (79.5) per cent of net sales.
Net sales were regionally distributed as follows: Northern Europe 44.9 (37.7) per cent, Central and Southern Europe 21.7 (23.1) per cent, North and South America 30.3 (36.1) per cent and other countries 3.1 (4.2) per cent.

1-9/23 1-9/22
Net sales from continuing operations 579,010 530,516
Net sales from discontinued operations 3,576 28,269
Net sales total 582,586 558,785

PROFIT PERFORMANCE
The operating profit amounted to EUR 33.4 (34.9) million. The operating profit equalled 5.8 (6.6) per cent of net sales for the period under review.

1-9/23 1-9/22
Operating profit from continuing operations 33,361 34,888
Operating profit from discontinued operations 1,247 3,340
Operating profit total 34,608 38,228

Consolidated return on capital employed (ROCE) stood at 7,6 (12.5) per cent.
Staff costs for the period totalled EUR 86.0 (79.1) million. Other operating expenses stood at EUR 62.6 (55.7) million. The net total of financial income and expenses amounted to EUR 1.2 (-2.2) million. Exchange rate gains and losses due to currency rate fluctuations were recognised under financial items, having a net impact of EUR 1.6 (-3.3) million. During the period under review, an EUR -0.1 million interest swap appreciation was recognised through loss. The parent company's receivables from subsidiaries stood at EUR 126.5 (102.7) million net. Receivables from subsidiaries mainly consist of trade receivables.
Result for the period under review totalled EUR 22.4 (24.2) million. Diluted and undiluted earnings per share (EPS) came to EUR 0.80 (0.86).
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 588.6 (578.5) million. Inventories stood at EUR 258.3 (240.0) million. Trade receivables totalled EUR 61.5 (60.1) million, while cash and cash equivalents stood at EUR 49.4 (50.8) million. Group shareholders' equity stood at EUR 321.0 (320.6) million and parent company shareholders' equity (FAS) at EUR 277.1 (245.4) million. The amount of interest-bearing liabilities was EUR 119.5 (92.2) million. The company has ensured its liquidity by credit facility limits and commercial paper programs. Group's loans from financial institutions are non-collateral bank loans without financial covenants. Consolidated net liabilities totalled EUR 70.1 (40.8) million, and the debt-equity ratio (net gearing) was 21.8 (12.7) per cent. The equity ratio stood at 54.8 (56.7) per cent at the end of the period under review.
Cash flow from operating activities amounted to EUR -4.8 (-50.8) million. Cash flow from investment activities came to EUR -26.4 (-33.9) million.
ORDER INTAKE AND ORDER BOOKS
Order intake for the period totaled EUR 503.4 (583.4) million, while period-end order books were valued at EUR 278.1 (365.5) million.
DISTRIBUTION NETWORK AND GROUP STRUCTURE
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; Ponsse Asia-Pacific Ltd, Hong Kong; Ponsse China Ltd, China; Ponsse Chile SpA, Chile; Ponsse Czech s.r.o., Czech Republic and Epec Oy, Finland.
The Group includes also the EAI PON1V Holding Oy in Finland and Sunit Oy in Finland, which is Ponsse Plc's associate with a holding of 34 per cent.
ACQUISITIONS AND SALES OF OPERATIONS
On September 18th, 2023, Ponsse Plc completed the sale of all shares in OOO Ponsse, its subsidiary that provided PONSSE services in Russia and Belarus. After the conditions of the transaction were met, Ponsse's business operations in Russia transferred to OOO Bison and the trade received the approval of the local authorities. On 15 June 2022, Ponsse announced its intention to divest its operations in Russia, and on 28 June 2022, Ponsse informed that it had signed a deed of sale regarding all shares in OOO Ponsse. All facilities of OOO Ponsse, including spare parts warehouses and maintenance vehicles, as well as its personnel have been transferred to OOO Bison. Additionally, the deal included the Russian real-estate company, Ponsse Centre, that was 100% owned by OOO Ponsse. As a result of the completion of the deal, all Ponsse's activities in Russia ended. Ponsse has classified the traded functions as asset items available for sale and reported them as discontinued operations since its mid-year report published on 9 August 2022. The impact of the business arrangement is described in more detail in the note Discontinued operations.
On August 7th, 2023, Ponsse announced that it had signed a retail agreement with PacWest Machinery from the US. At the same time, the two companies signed a deed of sale, in which Ponsse undertook to sell its maintenance service operations in Coburg, Oregon, to PacWest Machinery. Hereafter, PacWest will be responsible for the sale and maintenance of PONSSE forest machines in the states of Oregon, Washington, and Idaho on the West Coast of the United States. The transaction price was not made public since the price has no impact on the measurement of Ponsse's value or result.
R&D AND CAPITAL EXPENDITURE
Group's R&D expenses during the period under review totalled EUR 21.4 (20,3) million, of which EUR 8.2 (8,2) million was capitalised.
Investments during the period under review totalled EUR 27.6 (28,8) million. In addition to capitalised R&D expenses, they consisted of investments in buildings and ordinary maintenance and replacement investments for machinery and equipment.
MANAGEMENT
The following persons were members of the Management Team: Juho Nummela, President and CEO, acting as the chairman; Petri Härkönen, Deputy CEO, Chief Financial Officer; Juha Inberg, Chief R&D and Technology officer; Tiina Kautonen, Chief Human Resources Official; Marko Mattila, Chief, Sales, Service and Marketing Officer; Tapio Mertanen, Chief Service Business Officer; Katja Paananen, Chief Responsibility Officer; Miika Soininen, Chief Digital officer and Tommi Väänänen, Chief Operations officer. The company management has regular management liability insurance.
The international PONSSE service network is led by Marko Mattila, Chief, Sales, Service and Marketing Officer, and Tapio Mertanen, Chief Service Business Officer. Managing directors of Ponsse's subsidiaries and Jussi Hentunen report to Marko Mattila, Chief, Sales, Service and Marketing Officer. Group area directors report to Jussi Hentunen, Director, Dealer Development.
The geographical distribution and the responsible persons are presented below.
Northern Europe:
Jani Liukkonen (Finland),
Carl-Henrik Hammar (Sweden, Denmark and Norway) and
Tarmo Saks (the Baltic countries).
Central and Southern Europe:
Tuomo Moilanen (Germany and Austria),
Jean Sionneau (France),
Janne Tarvainen (Spain and Portugal),
Gary Glendinning (United Kingdom and Ireland),
Antti Räsänen (Hungary, Italy, Romania, Slovenia, Croatia, Serbia and Bulgaria),
Tarmo Saks (Poland and Slovakia) and
Jakub Hacura (Czech Republic).
North and South America:
Pekka Ruuskanen (the United States),
Eero Lukkarinen (Canada),
Fernando Campos (Brazil) and
Martin Toledo (Uruguay, Chile, and Argentina).
Other countries:
Janne Tarvainen (Australia and South Africa) and
Risto Kääriäinen (China and Japan).

PERSONNEL
The Group had an average staff of 2,106 (2,024) during the period and employed 2,113 (2,014) people at period-end.
SHARE-BASED INCENTIVE PLANS
The Board of Directors of Ponsse Plc has approved two new Ponsse Group's share-based incentive plans. A stock exchange release regarding the incentive plans has been published on 3 March 2023. The aim of the new plans is to align the objectives of the shareholders and plan participants for increasing the value of the company in the long-term, to retain the participants at the company and to offer them competitive reward schemes that are based on earning and accumulating the company's shares.
The CEO plan consists of five performance periods, calendar years 2023, 2023-2024, 2023-2025, 2024-2026 and 2025-2027. A restriction period is included in performance periods 2023 and 2023-2024, which begins from the reward payment and ends on 31 December 2025. The matching reward will be paid by the end of May 2024, 2025 and 2026. The matching shares delivered as a matching reward cannot be transferred during a restriction period that will end on 31 December 2025, 31 December 2026 and 31 December 2027. The performance-based reward will be paid by the end of May after the end of each performance period. The shares received as reward based on performance periods 2023 and 2023-2024 cannot be transferred during the restriction period, i.e. 31 December 2025. The amount of rewards to be paid based on the performance periods that began in 2023 will correspond to an approximate maximum total of 75,000 Ponsse Plc shares, also including the portion to be paid in cash (gross reward).
The key employee plan consists of three performance periods, each lasting for three calendar years, performance periods 2023-2025, 2024-2026 and 2025-2027. The matching reward will be paid in 2023, 2024 and 2025 after the acquisition of the investment shares and confirmation of reward, as soon as practically possible. The matching shares delivered as a matching reward cannot be transferred during a restriction period that will end on 31 December 2025, 31 December 2026, and 31 December 2027. The performance-based reward will be paid by the end of May after the end of each performance period. The share acquisitions for the first performance periods began on April 28, 2023, and ended on July 12, 2023. The number of shares acquired totaled 16,500.
During the period under review, the cost effect of the share-based incentive plans was approximately EUR 0.6 million. For the restriction periods that started in 2023, the total cost effect of the share-based incentive plans is estimated to be around EUR 2.0 million in the years 2023-2025.
During the financial period 2021, the Group implemented the restricted share plan, where the reward is based on the participant's valid employment or director contract and the continuity of the employment or service during a restriction period. The 24-month restriction period of the system ended in 2023 and accordingly, 3,000 company shares were paid as a reward. The expenses were distributed over the entire period, of which the 2023 portion is EUR 56 thousand.
SHARE PERFORMANCE
The company's registered share capital consists of 28,000,000 shares. The trading volume of Ponsse Plc shares for 1 January - 30 September 2023 totalled 450,013, accounting for 1.61 per cent of the total number of shares. Share turnover amounted to EUR 13.0 million, with the period's lowest and highest share prices amounting to EUR 25.55 and EUR 35.00, respectively.
At the end of the period, shares closed at EUR 26.20, and market capitalisation totalled EUR 733.6 million.
At the end of the period under review, the company held 14,562 treasury shares.
ANNUAL GENERAL MEETING
A separate release was issued on 12 April 2023 regarding the authorizations given to the Board of Directors and other resolutions at the AGM.
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. 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.
NON-FINANCIAL INFORMATION REPORTING
Each year, Ponsse publishes its responsibility report in conjunction with its annual report. The report is also available on the company's website under responsibility and investors.
RISK MANAGEMENT
Our risk management is based on the company's values and strategic and financial goals. The purpose of risk management is to support the company's strategic objectives and to secure its financial development and the continuity of its business. Ponsse's management conducts an annual risk assessment that includes the sustainability risks and opportunities impacting the company's business. Within them, aspects related to climate change, biodiversity, and resource efficiency together with digitalisation and technological development are emphasised.
The purpose of risk management is to identify, assess, and monitor business-related risks that may impact the realisation of the company's strategic and financial objectives or the continuity of business. This information is used to decide what measures will be required to prevent risks and respond to current risks.
Risk management is part of the company's daily business and has been incorporated into its management system. Risk management is directed by the risk management policy approved by the Board of Directors.
A risk is any event that may prevent the company from achieving its objectives or threatens the continuity of business. 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. The company's risk management methods include the avoidance, mitigation, and transfer of risk. Risks may also be managed by controlling and minimising their impacts.

SHORT-TERM RISK MANAGEMENT
Our major short-term risks are related to the geopolitical situation, sudden economic fluctuations, and both persistent and high inflation which has led to rising interest rates. The geopolitical situation also increases uncertainty through financial market operability and sanctions. The risks in the financial market may also increase the volatility of developing countries' foreign exchange markets. The instability of the world economy and increasing financing costs may also reduce demand for forest machines.
In the challenging situation, Ponsse's strong financial position is important. In terms of financing, Ponsse has carried out all measures necessary to ensure business continuity, and financial situation is regularly evaluated.
The key objective of the company's financial risk management policy is to manage liquidity, interest, and currency risks. The company's financial position has remained strong due to good liquidity and binding credit limit facilities agreed with several 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 partly mitigated through derivative contracts.
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. General delivery problems in the supply chain have made it more difficult to manage PONSSE forest machine production schedules, tied up more capital in the supply chain, and increased the risks related to working capital management.
The parent company monitors the changes in the Group's internal and external trade receivables and the associated risk of impairment. The company has long-term and extensive service contracts, which may involve operational risks.
In order to strengthen cybersecurity, Ponsse has clarified software update policy and user manual. We will improve our ability to detect and react to abnormal activity on our networks, and we will regularly test our digital services with our partners against cyber-attacks.
OUTLOOK FOR THE FUTURE
The company's euro-denominated operating profit in 2023 is expected to be on par with the comparable operating profit of its continuing operations in 2022 (EUR 46.6 million).
Due to the uncertainty in the markets, the company will keep prioritising its investments, continues to monitor its costs, and develops its operative model in order to improve competitiveness. The development work to improve profitability continues. The company monitors changes in the operating environment and customers operating conditions closely.
We monitor Ponsse Latin America Ltda -subsidiary's situation in an enhanced manner and the company takes measures to improve the situation.
EVENTS AFTER THE PERIOD
On October 18th, 2023, Ponsse issued a new performance guidance which expects the company's euro-denominated operating profit in 2023 to be on par with the comparable operating profit of its continuing operations in 2022 (EUR 46.6 million). Essentially, the new performance guidance was issued since the development of the company's profitability was weaker than previously expected.
Persistent inflation has kept affecting the profitability of the business. Entering a weakening business cycle, the discontinuation of the Russian operations and the challenges in the organization's overall cost structure are reflected in the company's profitability. The growth in the company's net sales has originated from the less profitable market areas. The company's profitability has also been affected by the operating expenses that grew faster than the net sales, and the slower-than-expected improvement of the operative challenges of Ponsse's subsidiary, Ponsse Latin America Ltda.
In the previous interim reports of 2023, Ponsse's estimation about the near-future results has been as follows: "the company's euro-denominated operating profit in 2023 is expected to be slightly higher than the comparable operating profit of its continuing operations in 2022 (EUR 46.6 million)."
There have been no other subsequent events after the review period that require recognition or disclosure.
 

PONSSE GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000)

1-9/23 1-9/22 1-12/22
NET SALES 579,010 530,516 755,123
Increase (+)/decrease 15,591 37,000 33,633
(-) in inventories of
finished goods and
work in progress
Other operating 3,807 2,342 3,677
income
Raw materials and -393,050 -379,816 -525,040
services
Expenditure on -85,997 -79,130 -107,873
employment-related
benefits
Depreciation and -23,377 -20,348 -27,671
amortisation
Other operating -62,623 -55,677 -85,270
expenses
OPERATING PROFIT 33,361 34,888 46,577
Share of results of 245 108 147
associated companies
Financial income and -1,506 -2,237 -3,504
expenses
RESULT BEFORE TAXES 32,100 32,759 43,219
Income taxes -9,687 -8,589 -9,037
NET RESULT FROM THE 22,414 24,171 34,182
CONTINUING OPERATIONS
Net result from the -11,133 760 2,930
discontinued
operations
NET RESULT FOR THE 11,281 24,931 37,113
PERIOD

OTHER ITEMS INCLUDED
IN TOTAL
COMPREHENSIVE RESULT:
Translation 4,906 15,384 4,354
differences related
to foreign units

TOTAL COMPREHENSIVE 16,187 40,315 41,467
RESULT FOR THE PERIOD

Diluted and undiluted 0.80 0.86 1.22
earnings per share
from continuing
operations
Diluted and undiluted -0.40 0.03 0.10
earnings per share
from discontinued
operations
Diluted and undiluted 0.40 0.89 1.33
earnings per share

7-9/23 7-9/22
NET SALES 169,182 178,472
Increase (+)/decrease 8,488 -1,147
(-) in inventories of
finished goods and
work in progress
Other operating 1,710 946
income
Raw materials and -118,873 -115,194
services
Expenditure on -25,403 -23,443
employment-related
benefits
Depreciation and -7,813 -6,946
amortisation
Other operating -20,764 -19,673
expenses
OPERATING PROFIT 6,527 13,014
Share of results of 101 -9
associated companies
Financial income and -3,649 -613
expenses
RESULT BEFORE TAXES 2,980 12,392
Income taxes -2,334 -2,788
NET RESULT FROM THE 646 9,604
CONTINUING OPERATIONS
Net result from the -12,176 959
discontinued
operations
NET RESULT FOR THE -11,530 10,564
PERIOD

OTHER ITEMS INCLUDED
IN TOTAL
COMPREHENSIVE RESULT:
Translation 10,163 1,752
differences related
to foreign units

TOTAL COMPREHENSIVE -1,367 12,316
RESULT FOR THE PERIOD

Diluted and undiluted 0.02 0.34
earnings per share
from continuing
operations
Diluted and undiluted -0.44 0.03
earnings per share
from discontinued
operations

Diluted and undiluted -0.41 0.38
earnings per share

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000)

ASSETS 30 Sep 23 30 Sep 22 31 Dec 22
NON-CURRENT ASSETS
Intangible assets 53,093 46,431 49,583
Goodwill 5,677 5,680 5,707
Property, plant and equipment 117,509 112,530 114,732
Financial assets 375 428 375
Investments in associated companies 1,057 842 881
Non-current receivables 3,308 244 63
Deferred tax assets 7,013 4,526 4,422
TOTAL NON-CURRENT ASSETS 188,032 170,681 175,763

CURRENT ASSETS
Inventories 258,297 239,998 229,648
Trade receivables 61,466 60,139 62,305
Income tax receivables 1,761 1,766 1,013
Other current receivables 29,705 21,097 24,817
Cash and cash equivalents 49,362 50,754 73,451
TOTAL CURRENT ASSETS 400,593 373,754 391,234

Assets related to assets held for sale 0 34,057 21,650

TOTAL ASSETS 588,625 578,492 588,648

SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 7,000 7,000 7,000
Other reserves 3,460 3,460 3,460
Translation differences 17,606 23,731 12,701
Treasury shares -463 -274 -274
Retained earnings 293,436 286,640 298,926
EQUITY OWNED BY PARENT COMPANY SHAREHOLDERS 321,039 320,557 321,813

NON-CURRENT LIABILITIES
Interest-bearing liabilities 59,493 58,036 42,484
Deferred tax liabilities 838 857 942
Other non-current liabilities 80 82 81
TOTAL NON-CURRENT LIABILITIES 60,410 58,975 43,507

CURRENT LIABILITIES
Interest-bearing liabilities 60,004 34,173 53,804
Provisions 10,860 4,346 10,647
Tax liabilities for the period 2,708 6,969 4,664
Trade creditors and other current liabilities 133,603 145,428 153,476
TOTAL CURRENT LIABILITIES 207,175 190,916 222,591

Liabilities related to assets held for sale 0 8,045 738

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 588,625 578,492 588,648

CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000)
Continuing and discontinued operations

1-9/23 1-9/22 1-12/22
CASH FLOWS FROM OPERATING ACTIVITIES:
Net result for the period 11,281 24,931 37,113
Adjustments:
Financial income and expenses 13,692 4,660 5,893
Change in provisions -190 -204 6,291
Share of the result of associated companies -245 -108 -147
Depreciation and amortisation 23,444 21,563 28,853
Income taxes 9,880 8,746 9,562
Other adjustments -1,298 -1,016 -3,753
Cash flow before changes in working capital 56,565 58,570 83,812

Change in working capital:
Change in trade receivables and other receivables -6,204 -21,131 -21,858
Change in inventories -25,837 -73,566 -67,087
Change in trade creditors and other liabilities -12,870 -7,396 -4,173
Interest received 394 199 309
Interest paid -2,458 -1,273 -1,627
Other financial items 394 235 600
Income taxes paid -14,817 -6,478 -7,921
NET CASH FLOWS FROM OPERATING ACTIVITIES (A) -4,833 -50,840 -17,945

CASH FLOWS USED IN INVESTING ACTIVITIES
Investments in tangible and intangible assets -27,569 -28,804 -41,917
Proceeds from sale of tangible and intangible assets 1,169 396 612
Acquisition of subsidiaries* 0 -5,514 -5,516
NET CASH FLOWS USED IN INVESTMENT ACTIVITIES (B) -26,427 -33,922 -46,821

CASH FLOWS FROM FINANCING ACTIVITIES
Withdrawal/Repayment of current loans 14,230 28,793 29,575
Withdrawal of non-current loans 10,000 7,000 11,170
Withdrawal/Repayment of finance lease liabilities -2,896 -2,606 -3,755
Dividends paid 16,794 -16,800 -16,800
NET CASH FLOWS FROM FINANCING ACTIVITIES (C) 4,540 16,388 20,191

Change in cash and cash equivalents (A+B+C) -26,720 -68,374 -44,575

Cash and cash equivalents on 1 Jan 76,545 120,900 120,900
Impact of exchange rate changes -463 -1,120 220
Cash and cash equivalents on 30Sep/31 Dec 49,362 51,632 76,545

*) Acquisition of subsidiaries Ponsse Chile SpA, Chile and Ponsse Czech s.r.o., Czech Republic decreased by cash and cash equivalents at the time of acquisition
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 7,000 3,460 12,701 -274 298,926 321,813
JAN 2023
Comprehensive result:
  Net result for the 11,281 11,281
period
  Other items included in
total comprehensive
result:
  Translation differences 4,905 4,905
Total comprehensive result 4,905 11,281 16,186
for the period
Direct entries to retained 22 22
earnings
Transactions with
shareholders
  Share Plan 343 343
  Dividend distribution -16,793 -16,793
  Acquisition of treasury -532 -532
shares
Transactions with -189 -16,793 -16,982
shareholders in total
Other changes
SHAREHOLDERS' EQUITY 30 7,000 3,460 17,606 -463 293,436 321,039
SEP 2023

SHAREHOLDERS' EQUITY     1 7,000 3,460 8,347 -2 278,462 297,267
JAN 2022
Comprehensive result:
  Net result for the 24,931 24,931
period
  Other items included in
total comprehensive
result:
  Translation differences 15,384 15,384
Total comprehensive result 15,384 24,931 40,315
for the period
Direct entries to retained
earnings
Transactions with
shareholders
  Share Plan 47 47
  Dividend distribution -16,800 -16,800
  Acquisition of treasury -272 -272
shares
Transactions with -16,753 -16,753
shareholders in total
Other changes
SHAREHOLDERS' EQUITY 30 7,000 3,460 23,731 -274 286,640 320,557
SEP 2022

NOTES TO THE RELEASE FOR THE INTERIM REPORT
The stock exchange release for the interim report has been prepared observing
the recognition and valuation principles of IFRS, but some of the IAS 34
requirements have not been complied with. The same accounting principles were
observed for the closing of the books as for the annual financial statements
dated 31 December 2022, except for the IAS/IFRS standard and interpretation
modifications that came into effect on January 1st, 2023. These interpretation
and standard modifications haven't had a material impact on the interim
report.
Ponsse has classified the Russian operations subject to trade as assets held
for sale and reported them as discontinued operations. Unless otherwise
specified, the figures presented in this interim report refer to continuing
operations.
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.
Ponsse is preparing for the adoption of Pillar 2 minimum tax rules in the
beginning of 2024 and will disclosure information about the impacts in 2023
financial statements according to IAS 12.
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.

1. PROVISIONS (EUR 1,000) Guarantee provision Other provisions Total
1 January 2023 4,164 6,483 10,647
Provisions added 482 16 498
Provisions cancelled -691 0 -691
Exchange rate difference 0 405 405
30 September 2023 3,955 6,905 10,860

To item other provisions the Group has recognised a provision based on an agreement entered into by Ponsse Latin America Ltda, as the fulfilment of the contractual obligations is estimated to generate expenses that exceed the expected economic benefits obtained from the agreement. The provision has been measured based on the best possible estimate of the expenses arising from the fulfilment of the obligations on the closing date.
2. DISCONTINUED OPERATIONS
The sale of all Ponsse's shares in its Russian subsidiary, OOO Ponsse, to the Russian company, OOO Bison, came to a completion in September after the conditions of the transaction were met. As the trade received the approval of the local authorities on September 18th, 2023, it is considered the official date of the sale of Ponsse's Russian operations. On 15 June 2022, Ponsse had announced its intention to divest its operations in Russia, and on 28 June 2022, Ponsse informed that it had signed a deed of sale regarding all shares in OOO Ponsse. As a result of the sale, all facilities of OOO Ponsse, including spare parts warehouses and maintenance vehicles, as well as its personnel have been transferred to OOO Bison. Additionally, the deal included the Russian real-estate company, Ponsse Centre, that was 100% owned by OOO Ponsse. Ponsse has classified the traded functions as asset items available for sale and reported them as discontinued operations since its mid-year report published in August 2022.
Because of the deal, Ponsse made a sales loss of EUR 12.3 million which includes a total of EUR 9.7 million in RUB/EUR translation difference. The transaction price is not made public due to contractual reasons. The sales price includes EUR 3 million receivable which is due in 18 months. The receivable has not been discounted in the interim report since its impact is not material. The deal's effect on the parent company's distributable reserves is EUR +14.9 million.
PROFIT AND LOSS STATEMENT FROM DISCONTINUED OPERATIONS (EUR 1,000)

1-9/23 1-9/22 1-12/22
NET SALES 3,576 28,269 32,561
Increase -17 -1,521 -1,992
(+)/decrease (-) in
inventories of
finished goods and
work in progress
Other operating 534 218 496
income
Raw materials and -1,190 -16,111 -17,320
services
Expenditure on -1,019 -3,652 -4,246
employment-related
benefits
Depreciation and -68 -1,215 -1,182
amortisation
Other operating -570 -2,649 -2,472
expenses
OPERATING PROFIT 1,247 3,340 5,844
Financial income 111 -2,423 -2,389
and expenses
RESULT BEFORE TAXES 1,358 917 3,456
Income taxes -194 -157 -526
NET RESULT FOR THE -1,164 760 2,930
PERIOD
Sales loss -2,628 0 0
Translation -9,669 0 0
difference
NET RESULT FROM -11,133 760 2,930
DISCONTINUED
OPERATIONS

THE EFFECT OF DISCONTINUED OPERATIONS ON THE STATEMENT OF FINANCIAL POSITION (EUR 1,000)

30 Sep 23
SOLD ASSETS
Intangible 13
assets
Property, 6,480
plant and
equipment
Deferred tax 370
assets
Inventories 4,073
Trade 3,480
receivables
Income tax -16
receivables
Other current 1,420
receivables
Cash and cash 1,802
equivalents
SOLD ASSETS 17,622
TOTAL

SOLD
LIABILITIES
Interest 0
-bearing
liabilities
Deferred tax 10
liabilities
Tax 3
liabilities
for the
period
Trade 221
creditors and
other current
liabilities
SOLD 234
LIABILITIES
TOTAL

KEY FIGURES 30 Sep 23 30 Sep 22 31 Dec 22
AND RATIOS
R&D 21.4 20.3 27.7
expenditure,
MEUR
Capital 27.6 28.8 41.9
expenditure,
MEUR
as % of net 4.8 5.4 5.6
sales
Average 2,106 2,024 2,016
number of
employees
Order books, 278.1 365.5 353.7
MEUR
Equity ratio, 54.8 56.7 55.0
%
Diluted and 0.80 0.86 1.22
undiluted
earnings per
share (EUR),
continuing
operations
Diluted and -0.40 0.03 0.10
undiluted
earnings per
share (EUR),
discontinued
operations
Diluted and 0.40 0.89 1.33
undiluted
earnings per
share (EUR)
Equity per 11.47 11.45 11.49
share (EUR)
Order intake, 503.4 583.4 796.2
MEUR

FORMULAE FOR FINANCIAL INDICATORS
Return on capital employed, % (including discontinued operations):
Result before taxes + financial expenses
---------------------------------------------------------------------------------------------------------------------
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 from continuing operations. The calculation has been adjusted for part-time employees.
Net gearing, % (including discontinued operations):
Interest-bearing financial liabilities - cash and cash equivalents
-----------------------------------------------------------------------------------
Shareholders' equity * 100
Equity ratio, % (including discontinued operations):
Shareholders' equity + Non-controlling interests
------------------------------------------------------------------------
Balance sheet total - advance payments received * 100
Earnings per share, continuing operations:
Net result from continuing operations for the period - Non-controlling interests
-----------------------------------------------------------------------------------------------------------
Average number of shares during the accounting period, adjusted for share issues
Earnings per share, discontinued operations:
Net result from discontinued operations for the period - Non-controlling interests
-----------------------------------------------------------------------------------------------------------
Average number of shares during the accounting period, adjusted for share issues
Earnings per share (including discontinued operations):
Net result for the period - Non-controlling interests
-----------------------------------------------------------------------------------------------------------
Average number of shares during the accounting period, adjusted for share issues

Equity per share (including discontinued operations):
Shareholders' equity
---------------------------------------------------------------------------------------------
Number of shares on the balance sheet date, adjusted for share issues
Order intake:
Net sales from continuing operations for the period + Change in order books from continuing operations during the period
Vieremä, 24 October 2023
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 Vidgren 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.