Ponsse Oyj

Quarterly Report • Aug 7, 2018

PONSSE PLC, STOCK EXCHANGE RELEASE, 7 AUGUST 2018, 9:00 a.m.

PONSSE'S INTERIM REPORT FOR 1 JANUARY – 30 JUNE 2018

– Net sales amounted to EUR 291.1 (H1/2017 258.7) million.

– Q2 net sales amounted to EUR 149.0 (Q2/2017 128.8) million.

– Operating result totalled EUR 29.5 (H1/2017 28.2) million, equalling 10.1 (10.9) per cent of net sales.

– Q2 operating result totalled EUR 12.4 (Q2/2017 13.9) million, equalling 8.3 (10.8) per cent of net sales.

• Profit before taxes was EUR 25.5 (H1/2017 22.6) million.
• Cash flow from business operations was EUR 23.5 (-0.7) million.
• Earnings per share were EUR 0.68 (0.60).
• Equity ratio was 51.1 (47.3) per cent.
• Order books stood at EUR 187.0 (141.4) million.

PRESIDENT AND CEO JUHO NUMMELA:

The forest machine market continued to be extremely strong in the second quarter of the year. Of our market areas, North and Central Europe, as well as Russia, grew most strongly. Order intake for the quarter was excellent, and the order books for the period under review showed a result of EUR 187.0 (141.4) million. Good demand, long order books and investment in the factory have had an effect on the length of delivery times. In the current situation, demand exceeds capacity considerably, and the pressures to accelerate delivery times have continued to grow. With the heated economic situation, it has been difficult to get components, and the situation will remain challenging in the near future. However, Ponsse has been able to manufacture machines according to the plan.

The company's net sales for the second quarter were EUR 149.0 (128.8) million. Growth in net sales compared to the reference period was 15.7 percent. The net sales of maintenance services and the trade-in machine business increased greatly. The growth of net sales is at a good level, given that the ramp-up of the new Ponsse factory started at the end of the first quarter of 2018. The effects of the ramp-up of the factory will show in the number of machines in

the second and third quarters. International business accounted for 78.4 (74.5) per cent of turnover.

Operating result for the past quarter amounted to EUR 12.4 (13.9) million. The operating result percentage for the period under review was 8.3 (10.8) per cent. The ramp-up of the factory has had an impact on the profitability. Profitability in the first half of the year increased by approximately 4.5 per cent, compared to the reference period, and the operating profit amounted to EUR 29.5 (28.2) million. The operating profit equalled 10.1 (10.9) per cent of net sales for the first half of the year, thanks to the good first quarter.

Cash flow continued to develop very well, and cash flow from business operations amounted to EUR 23.5 (-0.7) million at the end of the second quarter. The company's working capital was well under control, and particularly the stock of trade-in machines was at a good level compared to the growth.

The Vieremä plant investment is proceeding on schedule. During the second quarter, we built new production lines and renovated facilities in the factory. At the same time, we continued to develop our practices systematically to improve the use of the new warehouse system. The factory expansion including the new warehouse system has been a big change and the input from our personnel and their hard work to enable our success has been considerable. The new factory and the new production lines will start operating at the beginning of August.

NET SALES

Consolidated net sales for the period under review amounted to EUR 291.1 (258.7) million, which is 12.5 per cent more than in the comparison period. International business operations accounted for 78.4 (74.5) per cent of net sales.

Net sales were regionally distributed as follows: Northern Europe 38.1 (42.0) per cent, Central and Southern Europe 21.5 (19.8) per cent, Russia and Asia 21.0 (17.2) per cent, North and South America 18.5 (20.5) per cent and other countries 0.8 (0.6) per cent.

PROFIT PERFORMANCE

The operating result amounted to EUR 29.5 (28.2) million. The operating result equalled 10.1 (10.9) per cent of net sales for the period under review. Consolidated return on capital employed (ROCE) stood at 21.6 (21.5) per cent.

Staff costs for the period totalled EUR 43.4 (40.4) million. Other operating expenses stood at EUR 26.7 (23.9) million. The net total of financial income and expenses amounted to EUR -3.9 (-5.6) million. Exchange rate gains and losses with a net effect of EUR -3.3 (-5.1) million were recognised under financial items for the period. Result for the period under review totalled EUR 19.1 (16.6) million. Diluted and undiluted earnings per share (EPS) came to EUR 0.68 (0.60).

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 353.1 (320.6) million. Inventories stood at EUR 139.7 (141.9) million. Trade receivables totalled EUR 40.0 (39.2) million, while liquid assets stood at EUR 28.0 (14.1) million. Group shareholders' equity stood at EUR 174.6 (149.1) million and parent company shareholders' equity (FAS) at EUR 165.7 (140.1) million. The amount of interest-bearing liabilities was EUR 68.8 (76.0) million. The company has used 0 per cent of its credit facility limit. The parent company's net receivables from other Group companies stood at EUR 90.5 (99.9) million. The parent company's receivables from subsidiaries mainly consisted of trade receivables. Consolidated net liabilities totalled EUR 40.7 (61.8) million, and the debt-equity ratio (net gearing) was 23.3 (41.4) per cent. The equity ratio stood at 51.1 (47.3) percent at the end of the period under review.

Cash flow from operating activities amounted to EUR 23.5 (-0.7) million. Cash flow from investment activities came to EUR -14.9 (-16.7) million.

ORDER INTAKE AND ORDER BOOKS

Order intake for the period totalled EUR 355.7 (280.9) million, while period-end order books were valued at EUR 187.0 (141.4) 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 OOO Ocean Safety Center, 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 8.4 (7.1) million, of which EUR 2.5 (2.0) million was capitalised.

Capital expenditure totalled EUR 15.1 (16.8) million. It consisted in addition to capitalised R&D expenses of investments in buildings and ordinary maintenance and replacement investments for machinery and equipment.

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 and managing directors of subsidiaries 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), Marko Mattila (Brazil) and Martin Toledo (Uruguay, Chile and Argentina).

PERSONNEL

The Group had an average staff of 1,601 (1,483) during the period and employed 1,664 (1,534) 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 – 30 June 2018 totalled 1,171,197, accounting for 4.2 per cent of the total number of shares. Share turnover amounted to EUR 33.4 million, with the period's lowest and highest share prices amounting to EUR 24.15 and EUR 32.35, respectively.

At the end of the period, shares closed at EUR 30.05, and market capitalisation totalled EUR 841.4 million.

At the end of the period under review, the company held 33,092 treasury shares.

ANNUAL GENERAL MEETING

A separate release was issued on 9 April 2018 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 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.

OUTLOOK FOR THE FUTURE

The Group's euro-denominated operating profit is expected to be at the same level in 2018 as it was in 2017.

Ponsse's updated and competitive product range and service solutions have had a significant impact on the company's growth. The market situation has continued to be favourable.

Our investments are focused on developing the level of service and capacity of the supply chain and spare part logistics and developing the service network in Finland and abroad. Expansion of the Vieremä factory is progressing in schedule. The investment in the factory is related to the development of safety, productivity, product quality and flexibility of the Vieremä factory. The added benefits of the expansion will begin to be realised in the second half of 2018.

PONSSE GROUP

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000)

	IFRS	IFRS	IFRS
	1-6/18	1-6/17	1-12/17
NET SALES	291,068	258,661	576,553
Increase (+)/decrease (-) in inventories of finished
goods and work in progress	11,738	22,822	7,900
Other operating income	992	929	1,618
Raw materials and services	-196,671	-183,461	-375,529
Expenditure on employment-related benefits	-43,377	-40,436	-80,263
Depreciation and amortisation	-7,536	-6,360	-13,112
Other operating expenses	-26,744	-23,943	-49,734
OPERATING RESULT	29,470	28,211	67,432
Share of results of associated companies	2	-12	19
Financial income and expenses	-3,930	-5,579	-9,660
RESULT BEFORE TAXES	25,541	22,620	57,792
Income taxes	-6,404	-5,973	-13,021
NET RESULT FOR THE PERIOD	19,137	16,647	44,771
OTHER ITEMS INCLUDED IN TOTAL
COMPREHENSIVE RESULT:
Translation differences related to foreign units	-466	-518	-941
TOTAL COMPREHENSIVE
RESULT FOR THE PERIOD	18,671	16,130	43,830
Diluted and undiluted earnings per share*	0.68	0.60	1.60
	IFRS	IFRS
	4-6/18	4-6/17
NET SALES	148,953	128,754
Increase (+)/decrease (-) in inventories of finished
goods and work in progress	4,078	14,942
Other operating income	668	504
Raw materials and services	-100,488	-92,460
Expenditure on employment-related benefits	-23,106	-21,787
Depreciation and amortisation	-3,784	-3,198
Other operating expenses	-13,921	-12,865
OPERATING RESULT	12,399	13,889
Share of results of associated companies	-23	-23
Financial income and expenses	-2,237	-5,723
RESULT BEFORE TAXES	10,139	8,143

Income taxes NET RESULT FOR THE PERIOD	-2,697 7,442	-2,708 5,435
OTHER ITEMS INCLUDED IN TOTAL COMPREHENSIVE RESULT:
Translation differences related to foreign units	1,284	-841
TOTAL COMPREHENSIVE RESULT FOR THE PERIOD	8,725	4,593
Diluted and undiluted earnings per share*	0.27	0.19

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000)

	IFRS	IFRS	IFRS
ASSETS		30 Jun 18 30 Jun 17 31 Dec 17
NON-CURRENT ASSETS
Intangible assets	24,437	21,111	22,975
Goodwill	3,794	3,823	3,816
Property, plant and equipment	101,573	83,066	95,454
Financial assets	103	102	103
Investments in associated companies	623	709	714
Non-current receivables	814	1,584	916
Deferred tax assets	2,949	2,487	3,538
TOTAL NON-CURRENT ASSETS	134,292	112,883	127,516
CURRENT ASSETS
Inventories	139,651	141,863	122,302
Trade receivables	39,987	39,248	41,481
Income tax receivables	374	553	413
Other current receivables	10,849	12,022	10,864
Cash and cash equivalents	27,956	14,071	42,596
TOTAL CURRENT ASSETS	218,816	207,757	217,656
TOTAL ASSETS	353,108	320,639	345,172
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital Other reserves	7,000 2,423	7,000 2,452	7,000 2,452
Translation differences	2,874	240	-183
Treasury shares	-346	-346	-346
Retained earnings	162,606	139,799	167,923
EQUITY OWNED BY PARENT COMPANY
SHAREHOLDERS	174,556	149,146	176,846

9/15
------	--

NON-CURRENT LIABILITIES Interest-bearing liabilities Deferred tax liabilities Other non-current liabilities TOTAL NON-CURRENT LIABILITIES	46,693 504 117 47,315	47,770 542 52 48,364	46,126 823 57 47,006
CURRENT LIABILITIES Interest-bearing liabilities Provisions Tax liabilities for the period Trade creditors and other current liabilities TOTAL CURRENT LIABILITIES	22,102 5,184 1,464 102,488 131,237	28,253 6,284 1,133 87,459 123,129	22,115 5,769 738 92,698 121,320
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	353,108	320,639	345,172
CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000)
CASH FLOWS FROM OPERATING ACTIVITIES:	IFRS 1-6/18	IFRS 1-6/17	IFRS 1-12/17
Net result for the period Adjustments:	19,137	16,647	44,771
Financial income and expenses Share of the result of associated companies Depreciation and amortisation Income taxes Other adjustments Cash flow before changes in working capital	3,929 -2 7,536 6,404 1,766 38,770	5,579 12 6,360 5,973 -2,297 32,274	9,660 -19 13,112 13,021 -923 79,621
Change in working capital: Change in trade receivables and other receivables Change in inventories Change in trade creditors and other liabilities Change in provisions for liabilities and charges Interest received Interest paid Other financial items Income taxes paid NET CASH FLOWS FROM OPERATING ACTIVITIES (A)	1,146 -17,349 8,953 -585 94 -388 -601 -6,504 23,536	-8,512 -23,580 5,559 314 127 -432 420 -6,861 -691	-10,165 -4,018 10,572 -201 240 -954 -3,518 -15,030 56,549
CASH FLOWS USED IN INVESTING ACTIVITIES Investments in tangible and intangible assets Proceeds from sale of tangible and intangible assets NET CASH FLOWS USED IN INVESTMENT ACTIVITIES (B)	-15,094 221 -14,873	-16,839 111 -16,728	-37,836 127 -37,709

CASH FLOWS FROM FINANCING ACTIVITIES
Withdrawal/Repayment of current loans	451	15,172	7,944
Withdrawal of non-current loans	0	0	0
Repayment of non-current loans	-450	-450	-900
Payment of finance lease liabilities	53	1,193	1,082
Change in non-current receivables	678	710	520
Dividends paid	-20,975	-16,780	-16,780
NET CASH FLOWS FROM FINANCING ACTIVITIES (C)	-20,242	-156	-8,135
Change in cash and cash equivalents (A+B+C)	-11,579	-17,575	10,705
Cash and cash equivalents on 1 Jan	42,596	37,342	37,342
Impact of exchange rate changes	-3,061	-5,696	-5,451
Cash and cash equivalents on 30 Jun/31 Dec	27,956	14,071	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
SHAREHOLDERS' EQUITY 1	A	B	C	D	E	F
JAN 2018 Adjustment for previous	7,000	2,452	-183	-346	167,923 176,846
periods SHAREHOLDERS' EQUITY 1		-29	3,523		-3,560	-66
JAN 2018 Translation differences	7,000	2,423	3,340 -466	-346	164,363 176,779	-466
Result for the period Total comprehensive income					19,137	19,137
for the period Dividend distribution			-466		19,137 -20,975	18,671 -20,975
Other changes SHAREHOLDERS' EQUITY					81	81
30 JUN 2018	7,000	2,423	2,874	-346	162,606 174,556
SHAREHOLDERS' EQUITY 1
JAN 2017 Translation differences	7,000	2,452	758 -518	-346	139,932 149,796	-518
Result for the period					16,647	16,647

Total comprehensive income
for the period			-518		16,647	16,129
Dividend distribution					-16,780	-16,780
SHAREHOLDERS' EQUITY
30 JUN 2017	7,000	2,452	240	-346	139,799 149,146

SEGMENT INFORMATION (EUR 1,000)

OPERATING SEGMENTS

				Total
				385,562
-94,486	-1,215	-454	-714	-96,870 2,376
111,000	62,699	61,124	53,869	291,068
5,458	8,648	11,498	3,776	29,381 89
5,458	8,648	11,498	3,776	29,470
	Europe 205,487	Central and Northern Southern Europe 63,914	Russia and Asia 61,578	North and South America 54,583

OPERATING SEGMENTS

		Central and		North and
	Northern	Southern	Russia	South
1-6/2017	Europe	Europe	and Asia	America	Total
Net sales of the segment	200,125	52,258	44,975	54,570	351,928
Sales between segments Unallocated sales NET SALES FROM	-91,445	-1,163	-502	-1,610	-94,721 1,453
EXTERNAL CUSTOMERS	108,680	51,094	44,473	52,961	258,661
Operating result of the segment Unallocated items	4,916	7,119	8,390	6,331	26,756 1,456
OPERATING RESULT	4,916	7,119	8,390	6,331	28,211

1. LEASING COMMITMENTS (EUR 1,000) 1,265 2,100 1,490

³⁰ Jun 18 30 Jun 17 31 Dec 17

2. CONTINGENT LIABILITIES (EUR 1,000)	30 Jun 18 30 Jun 17 31 Dec 17
Guarantees given on behalf of others	0	543	1,541
Repurchase commitments	0	3,371	3,464
Other commitments	847	967	963
TOTAL	847	4,881	5,968
3. PROVISIONS (EUR 1,000)	Guarantee provision
1 January 2018	5,769
Provisions added	118
Provisions cancelled	-703
30 June 2018	5,184
4. DIVIDENDS PAID (EUR 1,000)		30 Jun 18 30 Jun 17
Dividends per share EUR 0.75 (EUR 0.60)	20,975	16,780
5. PROPERTY, PLANT AND EQUIPMENT (EUR 1,000)	1-6/18	1-6/17
Increase	11,833	14,721
Decrease	-439	-350
TOTAL	11,394	14,371
6. RELATED PARTY TRANSACTIONS Management's employment-related benefits (EUR 1,000)	1-6/18	1-6/17
Salaries and other short-term employment-related benefits	2,293	2,019
Benefits paid upon termination of employment	0	0
Pension liabilities, statutory pension security	345	286
Compensation of the members of the Board of Directors	118	114
KEY FIGURES AND RATIOS		30 Jun 18 30 Jun 17 31 Dec 17
R&D expenditure, MEUR	8.4	7.1	14.8
Capital expenditure, MEUR	15.1	16.8	37.8
as % of net sales	5.2	6.5	6.6
Average number of employees	1,601	1,483	1,508
Order books, MEUR	187.0	141.4	124.6
Equity ratio, %	51.1	47.3	51.9
Diluted and undiluted earnings per share (EUR)	0.68	0.60	1.60
Equity per share (EUR)	6.23	5.33	6.32

FORMULAE FOR FINANCIAL INDICATORS

Return on capital employed, %: Result before tax + 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. 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

---

Number of shares on the balance sheet date, adjusted for share issues

ORDER INTAKE (EUR million)	1-6/18	1-6/17	1-12/17
Ponsse Group	355.7	280.9	582.1

The stock exchange release for the interim report 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 interim report as for the annual financial statements dated 31 December 2016, 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 Group´s assessment of the impact of the new standards IFRS 9 "Financial Instruments", IFRS 15 "Revenue from Contracts with Customers" and IFRS 16 "Leases" are described in the annual financial statements dated 31 December 2017 and the assessment has not changed during the financial period.

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.

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 impact of the IFRS 16 "Leases" are described in the annual financial statements dated 31 December 2017 and the assessment has not changed during the financial period.

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, 7 August 2018

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.