Panostaja Oyj�s Financial Statement Bulletin 1.11.2021-31.10.2022

Panostaja Oyj� Financial Statement Bulletin December 15, 2022 at 10.00 a.m.

Growth continued but profitability development lagged behind the targets

August 2022-October 2022 (3 months) in brief:

Net sales increased in two out of four segments. Net sales for the Group as a whole increased by 4.0% to MEUR 36.8 (MEUR 35.4).
EBIT improved in one of the four segments. The entire Groups EBIT declined from the reference period, standing at MEUR -0.6 (MEUR 3.0).
Granos net sales for the review period increased by 4.2% from the reference period. EBIT totaled MEUR -0.5 (MEUR 3.8). Net sales for the review period increased by 9.9% from the reference period net sales that were adjusted based on the SokoPro sale. The reported profit/loss for the review period includes the impact of the MEUR 1.5 write-down of activated development costs related to rearrangements for the development of an internal ERP system.
Earnings per share (undiluted) were -1.1 cents (3.7 cents).

November 2021–October 2022 (12 months) in brief:

Net sales increased in three of the four segments. Net sales for the Group as a whole increased by 3.7% to MEUR 137.9 (MEUR 133.0).
EBIT improved in two of the four segments. The entire Groups EBIT improved from the reference period, standing at MEUR 5.2 (MEUR 2.0). Panostajas segment Grano sold its SokoPro business operations to the international iBinder company. The deal was carried out as a share transaction, and the purchase price of the shares was roughly MEUR 45.5.
Granos net sales for the review period increased by 3.4% from the reference period. EBIT was MEUR 8.7 (MEUR 5.6), including the SokoPro sales profit of MEUR 9.4. Net sales for the review period increased by 7.7% from the reference period net sales that were adjusted based on the SokoPro sale.
Earnings per share (undiluted) were 2.5 cents (-3.2 cents).

Proposal for the distribution of profits: The Board proposes to the Annual General Meeting of February 7, 2023 that a dividend of EUR 0.03 per share (MEUR 1.6 in total) be paid to shareholders for the financial year closed on October 31, 2022, based on the companys registered total number of shares at the time of the proposal.

CEO Tapio Tommila:

Panostajas 2022 financial period included notable successes, the most significant of which was the sale of the successful SokoPro business operations. That said, there were also challenges that dragged the development of our segments profitability clearly below our target levels. At the start of the financial period, we updated our strategy, according to which we will now focus on investments in the service and software sectors, with the aim of building the best concentration of competence in the capital investment field around them. The activities of the advisor network, which has been integrated into our core team, are now in full swing, and we are working actively together especially to explore new investment targets and assess value creation plans.

The corporate acquisition market has been active during the financial period. Our project flow has included plenty of high-quality operations in the target sectors. Conversely, we have been patient in our investment activities, even though this has meant ending some interesting negotiations within the highly competitive market. Overall, we are cautiously optimistic about the operating environment in our current situation of aiming for new investments during the strategy period; the generally more moderate valuation levels combined with our sector focus provides a good foundation for investment activities. On the other hand, the availability of external capital will become more difficult in the uncertain economic situation, and the price expectations of sellers of unlisted companies do not usually follow the developments of the listed market without some delay. Even taking these challenges into account, I find that the strategic choice to focus on specific sectors will serve us well we can leverage the sector-specific expertise to reliably build financeable projects and respond to our segments development needs even better than before.

The last quarter of the financial period was challenging for us overall in terms of the result, despite the fact that Grano began to show the positive impacts of the pricing measures and CoreHWs quarter was excellent. Alongside the active and profitable design services, CoreHW continued its investments in the development and commercialization of proprietary products. Moreover, the product family focused on indoor positioning solutions is garnering more and more market interest. As regards Hygga, the health care sectors resource shortage continued to hamper us, and resolving the resource-related challenges will require persistent efforts. On the other hand, Hygga has plenty of new software projects and the prospects are good, despite the fact that public health care projects involve uncertainties related to timing and require long-term efforts. For Oscar Software, our growth and development investments have held back the profits and we are clearly behind our growth targets. That said, the market situation is good and our focus is on ensuring profitable sales and operational efficiency.

All in all, we are heading into the new financial period with clear goals: we will emphasize measures to improve profitability across all of our segments and strive to prepare for any risks brought on by the uncertain economic situation. In accordance with our strategy, we will also strive to add new value-adding segments to our portfolio.

Key Figures MEUR	Q4	Q4	12 months	12 months
	8/22- 10/22	8/21- 10/21	11/21- 10/22	11/20- 10/21
Net sales, MEUR	36.8	35.4	137.9	133.0
EBIT, MEUR	-0.6	3.0	5.2	2.0
Profit before taxes, MEUR	-1.2	2.7	3.2	0.0
Profit/loss for the financial period, MEUR	-1.0	3.6	3.9	-1.0
Distribution:
Shareholders of the parent company	-0.6	1.9	1.3	-1.7
Minority shareholders	-0.4	1.6	2.6	0.7
Earnings per share, undiluted, EUR	-0.01	0.04	0.03	-0.03
Interest-bearing net liabilities	42.3	56.3	42.3	56.3
Gearing ratio, %	72.8	83.1	72.8	83.1
Equity ratio, %	39.1	37.2	39.1	37.2
Equity per share, EUR	0.71	0.75	0.71	0.75

Distribution of net sales by segment MEUR		Q4		Q4		12 months		12 months
Net sales		8/22- 10/22		8/21- 10/21		11/21- 10/22		11/20- 10/21
Grano		29.8		28.6		111.5		107.9
Hygga		1.7		2.2		7.3		8.1
CoreHW		2.6		1.8		8.0		6.1
Oscar Software		2.8		2.9		11.2		11.0
Others		0.0		0.0		0.0		0.0
Eliminations		0.0		0.0		-0.1		-0.1
Group in total		36.8		35.4		137.9		133.0
Distribution of EBIT by segment MEUR
EBIT	8/22- 10/22		8/21- 10/21		11/21- 10/22		11/20- 10/21
Grano	-0.5		3.8		8.7		5.6
Hygga	0.1		0.2		-0.4		-0.2
CoreHW	0.5		-0.2		-0.5		-1.4
Oscar Software	-0.1		0.0		-0.5		0.3
Others	-0.6		-0.8		-2.2		-2.2
Group in total	-0.6		3.0		5.2		2.0

Panostaja Groups business operations for the current review period are reported in five segments: Grano, Hygga, CoreHW, Oscar Software and Others (parent company and associated companies).

One associated company, Gugguu Group Oy, provided a report for the review period. The impact on profit/loss of the reported associated companies during the review period was MEUR 0.0 (MEUR 0.2), which is presented on a separate row in the consolidated income statement.

Gugguus deviating financial period ended during the review period in March. In this review period, Gugguus net sales increased by 2% to MEUR 4.8 and EBIT was MEUR 0.1.

Outlook for the 2023 Financial Period

As regards the corporate acquisition market, new opportunities are available and the market is active.SMEs will still need to utilize ownership arrangements and growth opportunities, but the consistently high market liquidity and the high price expectations of sellers, which tend to follow changes in economic trends with some delay, make the operating environment 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 Softwares demand will remain good. CoreHWs demand will improve to a good level.

The demand of Grano and Hygga will remain satisfactory.

The demand situation presented above involves uncertainties relating to any geopolitical and macroeconomic impacts that are difficult to anticipate. The effects of the war in Ukraine and the related economic sanctions and geopolitical tensions will increase economic uncertainty in Finland and abroad, which may negatively impact segment demand or the availability of materials, and thereby material prices and delivery capabilities. If strengthened and prolonged, the inflation may have a negative impact on the purchasing power of consumers and the willingness of companies to make investments, which may weaken the demand situation of our segments from the estimate provided above. Furthermore, the possible resurgence of the coronavirus pandemic 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 companies in the growing service and software sectors as 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.

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