Panostaja Oyj�s Financial Statement Bulletin 1.11.2020-31.10.2021

Panostaja Oyj�    Financial Statement Bulletin      December 14, 2021 at 10.00 a.m.

The process of updating the investment portfolio continues

August–October 2021 (3 months) in brief:

• Net sales increased in two out of four segments. Net sales for the Group as a whole increased by 2% to MEUR 35.4 (MEUR 34.8).
• EBIT improved in two out of four segments. The entire Group’s EBIT improved from the reference period, standing at MEUR 3.0 (MEUR 2.7).
• Grano’s net sales for the review period declined by 2% from the reference period in the previous year. EBIT totaled MEUR 3.8 (MEUR 3.2).
• Earnings per share (undiluted) were 3.7 cents (-4.7 cents).
• After the review period on November 9, 2021, Panostaja signed an agreement to sell Carrot Palvelut Group Oy’s shares to shareholders of the company who are actual persons. As a result of the deal, Panostaja’s ownership in Carrot Palvelut Group Oy will drop to 19%. The Carrot segment is presented under sold and discontinued operations in the financial statements.

November 2020-October 2021 (12 months) in brief:

• Net sales increased in two out of four segments. For the Group as a whole, net sales remained at the same level at MEUR 133.0 (MEUR 132.9).
• EBIT improved in two out of four segments. The entire Group’s EBIT declined from the reference period, standing at MEUR 2.0 (MEUR 4.1).
• Grano’s net sales for the review period declined by 2% from the reference period in the previous year. EBIT totaled MEUR 5.6 (MEUR 4.8).
• Earnings per share (undiluted) were -3.2 cents (-8.3 cents).
• After the review period on November 9, 2021, Panostaja signed an agreement to sell Carrot Palvelut Group Oy’s shares to shareholders of the company who are actual persons. As a result of the deal, Panostaja’s ownership in Carrot Palvelut Group Oy will drop to 19%. The Carrot segment is presented under sold and discontinued operations in the financial statements.

Proposal for the distribution of profits: The Board proposes to the Annual General Meeting of February 7, 2022 that a dividend of EUR 0.03 per share (MEUR 1.6) be paid for the financial year closed on October 31, 2021, based on the company’s registered total number of shares at the time of the proposal.

CEO Tapio Tommila:  

“We ended the busy year of divestments with an arrangement implemented at the beginning of November, which reduced Panostaja’s ownership of Carrot Palvelut to less than 20%. At the same time, we relinquished the responsibility for steering the company. Our journey together with Carrot has been challenging, and the company will now head toward new opportunities under the management of private shareholders. In other respects, too, the process of updating our investment portfolio has progressed widely as we sold our ownership in Helakeskus in February, Heatmasters in June and Spectra Yhtiöt in July. The divestments effectively support the goal of actively developing our portfolio, resulting in the clarification of our portfolio of investments and freeing up additional capacity for developing current segments and making new investments.

In the final quarter of the 2021 financial period, we were headed in the right direction in terms of the business operations of our segments, but the market environment remained partially challenging. The total net sales of the segments increased by 2%, while EBIT climbed by almost 11% compared to the same period of last year, standing at MEUR 3.0 (MEUR 2.7). The most significant increase in net sales took place at Hygga, where the outsourcing services resulted in significant growth. Grano was responsible for the most significant improvement in profit/loss; the company’s EBIT increased by MEUR 0.6 thanks to good cost structure control, despite a slight drop in net sales.

Even though the financial period as a whole was challenging for our segments in terms of results, we have promoted the strategy defined with the managements of all of our segments to accelerate growth and value creation. Grano is taking steps forward with its strategy of becoming the most significant provider of communications services as value-added services and comprehensive solutions continue to become increasingly important in its product range. In addition to this, the company aims to substantially improve the cost efficiency of traditional production functions. Next year, Grano will be opening the largest competence cluster in the printing field in the Nordics in Vantaa. Representing state-of-the-art technology, the factory will significantly improve the cost efficiency of production and supports Grano’s goal of being the most environmentally responsible operator in its field – the modern factory will considerably reduce material wastage and increase energy efficiency.

Oscar Software is continuing its determined progress from a strong ERP provider to a widely cloud-based SaaS software company. Oscar Software has focused on strengthening its sales, platform development and project delivery organizations. Over the course of the financial period, this manifested itself as challenges with profitability development, but going forward it will provide the capability to accelerate profitable growth with regard to continuously invoiced, heavily scalable business.

In the period under review, the commencement of outsourcing services resulted in a growth spurt in Hygga’s business and the process of building the foundation for international growth continued in the licensing business. Gugguu’s net sales have also continued their strong climb, and the measures to build growth in the nearby markets have progressed. CoreHW suffered from low customer volumes almost throughout the financial period. At the same time, however, the company utilized its available resources more extensively in a strategic capacity to promote its product business. The travel restrictions that continued until the end of the financial period partially slowed both companies down in seizing new opportunities.

The corporate acquisitions market remained active in the period under review. The market is rife with companies available for purchase as well as buyers actively scanning for businesses to acquire. For Finland as a whole, 2021 will be recorded as a year of active corporate acquisitions and divestments.

In the 2021 financial period, Panostaja has been determined in driving its strategy to update the investment portfolio and focus it more to fields where the value generation opportunities are supported by an increasing customer need and Panostaja’s stronger-than-ever efforts to build field-specific competence and competence synergies between segments – in the coming financial period, our focus will be even more on the software and service business in our investment activities as well as the strategies of our current segments. I see our performance in the final quarter of the financial period as a good starting point for pushing our segments forward in the new financial period and continuing to update our portfolio with new investments that align with our strategy.”

Key Figures

MEUR	Q4	Q4	12 months	12 months
	8/21- 10/21	8/20- 10/20	11/20- 10/21	11/19- 10/20
Net sales, MEUR	35.4	34.8	133.0	132.9
EBIT, MEUR	3.0	2.7	2.0	4.1
Profit before taxes, MEUR	2.7	2.0	0.0	1.8
Profit/loss for the financial period, MEUR	3.6	-1.5	-1.0	-3.4
Earnings per share, undiluted (EUR)	0.04	-0.05	-0.03	-0.08
Equity per share (EUR)	0.75	0.82	0.75	0.82
Operating cash flow (MEUR)	-1.9	4.5	3.2	28.6

Division of the net sales by segment MEUR	Q4	Q4	12 months	12 months
Net sales	8/21- 10/21	8/20- 10/20	11/20- 10/21	11/19- 10/20
Grano	28.6	29.0	107.9	109.9
Hygga	2.2	1.1	8.1	4.1
CoreHW	1.8	1.9	6.1	8.1
Oscar Software	2.9	2.8	11.0	11.0
Others	0.0	0.0	0.0	0.0
Eliminations	0.0	0.0	-0.1	-0.2
Group in total	35.4	34.8	133.0	132.9

Division of EBIT by segment MEUR	Q4	Q4	12 months	12 months
EBIT	8/21- 10/21	8/20- 10/20	11/20- 10/21	11/19- 10/20
Grano	3.8	3.2	5.6	4.8
Hygga	0.2	-0.2	-0.2	-0.3
CoreHW	-0.2	0.1	-1.4	0.5
Oscar Software	0.0	0.2	0.3	1.1
Others	-0.8	-0.6	-2.2	-2.0
Group in total	3.0	2.7	2.0	4.1

Panostaja Group’s business operations for the current review period are reported in five segments: Grano, Hygga, CoreHW, Oscar Software and Others (parent company and associated companies). The Carrot segment, which was sold after the review period, is presented under sold and discontinued operations.

One associated company, Gugguu Group Oy, provided a report for the review period. During the financial period, Panostaja sold its ownership in Spectra Yhtiöt Oy. The profit/loss of the reported associated companies in the review period was MEUR 0.2 (MEUR 0.2), which is presented on a separate row in the consolidated income statement. 

Gugguu’s deviating financial period ended during the review period in March. In this review period, Gugguu’s net sales increased by 18% to MEUR 4.6 (MEUR 3.9) and EBIT increased to MEUR 0.4 (MEUR 0.1).

Impacts of Covid-19

The wide-ranging national and regional restrictions imposed due to the coronavirus pandemic have impacted the economic behavior of companies and consumers significantly and caused general uncertainty regarding the development of the demand situation of products and services. Moreover, the demand and supply disruptions resulting from the pandemic have caused uncertainty in terms of the availability and pricing of components. Panostaja and its segments are working to ensure the health security of their staff through a variety of arrangements, such as remote work methods suitable for the pandemic as well as restrictions on meetings. In addition to this, the companies have responded to the weaker demand through cost adaptation measures and taken action to secure key material procurement arrangements. The companies have also implemented a wide range of measures to secure funding. In the review period, the coronavirus pandemic continued to impact the development of the Panostaja segments’ net sales through low demand, slow customer negotiations and decisions, and caution brought on by the uncertainty regarding the general market situation.

Outlook for the 2022 Financial Period

As regards the corporate acquisition market, plenty of opportunities are available and the market is active.The need to leverage ownership arrangements and growth opportunities will persist for SMEs, but the high market liquidity and increased price expectations of sellers are making the operating environment more challenging for corporate acquisitions.We will continue exploring new possible investment targets in accordance with our strategy and assess divestment possibilities as part of the ownership strategies of the investment targets.

It is thought that the demand situation for different investments will develop in the short term as follows:

•        Oscar Software’s demand will remain good.??

•        Hygga’s, Grano’s and CoreHW’s will remain satisfactory.

The demand information presented above involves uncertainties relating to the possible escalation of the COVID-19 pandemic. This may impact the future development of Grano and Hygga, in particular, and rapidly and dramatically change the estimate provided above.

Panostaja Oyj

Board of Directors

For further information, contact CEO Tapio Tommila, +358 (0)40 527 6311

Panostaja Oyj

Tapio Tommila
CEO

Panostaja is an investment company developing Finnish start-ups in the role of an active shareholder. The company aims to be the most sought-after partner for business owners selling their companies as well as for the best managers and investors. Together with its partners, Panostaja increases the Group’s shareholder value and creates Finnish success stories.

Panostaja has a majority holding in four investment targets. Grano Oy is the most versatile expert of content services in Finland. Hygga Oy is a company providing health care services and the ERP system for health care providers. CoreHW provides high added value RF IC design services.Oscar Software provides ERP systems and financial management services.

Attachment

• Panostaja Oyj Financial Statement 14.12.2021_Appendix