Panostaja Oyj Business Review Q1 1.11.2020-31.1.2021

Panostaja Oyj Business Review Q1 March 16, 2021 10.00 a.m.

Business continues to suffer from the coronavirus but positive trends were seen in the corporate acquisitions market

November 1, 2020-January 31, 2021 (3 months)

• Net sales dropped in six of the seven segments. Overall, net sales for the Group as a whole weakened by 10% to MEUR 38.5 (MEUR 42.6).

• EBIT improved in four of the seven segments. The entire Group’s EBIT declined from the reference period, standing at MEUR -1.3 (MEUR -0.6).

• Grano’s net sales for the review period declined by 6% from the reference period in the previous year. EBIT improved to MEUR -0.1 (MEUR -0.4).

• Earnings per share (undiluted) were -3.4 cents (-1.9 cents).

• After the review period, an agreement was signed for the sale of the entire share capital of Suomen Helakeskus Oy.

CEO Tapio Tommila:

“During the three-month review period, the total net sales dropped by 10% and EBIT also declined from the reference period. The coronavirus pandemic, which began spreading in Finland in spring 2020, did not yet affect the reference period’s figures, but the impacts were still clearly visible in the review period. The most notable drops in net sales during the review period were experienced by Grano, Carrot and CoreHW. Conversely, net sales increased significantly for Hygga, where the initiation of outsourcing services increased the volumes of the clinic business.

The decline in Grano’s net sales is due to the dwindling demand for traditional printing services, especially during the last month of the review period. However, the company’s profit/loss were supported by the completed cutbacks and adaptation measures, which is why the company’s EBIT improved slightly despite the drop in net sales. The development of Carrot’s net sales in the review period was very poor, and the company’s net sales eventually ended up 50% below the reference period level. The company’s profitability improved over the reference period thanks to cost adaptation and streamlining measures. Despite this, the company’s operating result remained negative and the measures to reverse this trend will continue. The drop in CoreHW’s net sales resulted from slower customer acquisition, customers postponing their decisions and resulting delays in project initiations. Thanks to strong growth in the previous financial period, the company’s number of employees has increased over the reference period, which encumbers the company’s profitability as the number of realized customer projects is lower then intended. However, available resources have been used to accelerate the development of the company’s own product.

In the review period, Hygga’s net sales increased significantly due to the start of the outsourcing services for the City of Helsinki on November 1, 2020. The start-up costs and adoption of new operating models weighed down the review period result, which dropped to MEUR -0.3. According to current estimates, the expenses resulting from the initiation of the outsourcing services have now been mostly covered.

The corporate acquisitions market remained active in the period under review, and the availability of new opportunities has been high. The markets continue to provide opportunities for both new select acquisitions and divestments. After the review period on February 18, 2021, Panostaja announced that it has signed an agreement to sell the entire share capital of Suomen Helakeskus Oy to HTF Group Oy. Panostaja has been the owner of Suomen Helakeskus for a long time, and this divestment supports the goal of actively developing our portfolio.

The coronavirus pandemic and related impacts in Finland worsened further during the review period, and the second quarter of the financial period is expected to continue to be challenging due to the continuing crisis. This may cause significant impacts on Panostaja segments.”

Key Figures MEUR	Q1	Q1	12 months
	11/20- 1/21	11/19- 1/20	11/19- 10/20
Net sales, MEUR	38.5	42.6	159.0
EBIT, MEUR	-1.3	-0.6	0.8
Profit before taxes, MEUR	-2.0	-1.0	-1.8
Profit/loss for the financial period, MEUR	-2.5	-1.4	-3.4
Distribution:
Shareholders of the parent company	-1.8	-1.0	-4.4
Minority shareholders	-0.7	-0.4	0.9
Earnings per share, undiluted (EUR)	-0.03	-0.02	-0.08
Interest-bearing net liabilities	66.2	81.0	64.0
Gearing ratio, %	97.0	104.3	90.1
Equity ratio, %	34.3	36.5	33.6
Equity per share (EUR)	0.78	0.95	0.82

Division of the net sales by segment MEUR	Q1	Q1	12 months
Net sales	11/20- 1/21	11/19- 1/20	11/19- 10/20
Grano	27.3	29.2	109.9
Helakeskus	1.8	1.8	7.6
Hygga	1.9	1.1	4.1
Heatmasters	1.0	1.1	4.0
CoreHW	1.6	2.4	8.1
Carrot	2.1	4.3	14.5
Oscar Software	2.8	2.8	11.0
Others	0.0	0.0	0.0
Eliminations	0.0	-0.1	-0.2
Group in total	38.5	42.6	159.0

Division of EBIT by segment MEUR	Q1	Q1	12 months
EBIT	11/20- 1/21	11/19- 1/20	11/19- 10/20
Grano	-0.1	-0.4	4.8
Helakeskus	0.0	0.0	0.5
Hygga	-0.3	0.0	-0.3
Heatmasters	0.0	0.1	0.3
CoreHW	-0.4	0.5	0.5
Carrot	-0.2	-0.4	-4.0
Oscar Software	0.2	0.2	1.1
Others	-0.6	-0.6	-2.0
Group in total	-1.3	-0.6	0.8

Panostaja Group’s business operations for the current review period are reported in eight segments: Grano, Helakeskus, Heatmasters, Hygga, CoreHW, Carrot, Oscar Software and Others (parent company and associated companies).

In the review period, two associated companies, Gugguu Group Oy and Spectra Yhtiöt Oy, issued reports to the parent company. The profit/loss of the reported associated companies in the review period was MEUR 0.1 (MEUR 0.1), which is presented on a separate row in the consolidated income statement.

Outlook for the 2021 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:

• The demand for CoreHW and Oscar Software will remain good.

• The demand for Hygga and Heatmasters will remain satisfactory.

• Carrot’s demand will remain poor, and Grano’s short-term demand has weakened.

As regards traditional sheet printing, Grano’s demand is poor due to the ongoing third wave of the coronavirus pandemic and the related restrictions. For this reason, Grano’s Q2 outlook entails significant uncertainties.

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, Carrot 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

All forecasts and assessments presented in this financial statement bulletin are based on the current outlook of Panostaja and the views of the management of the various investments with regard to the state of the economy and its development. The results attained may be substantially different.

This is not an interim report compliant with the IAS 34 standard. The company observes the six-monthly reporting practice prescribed in the Finnish Securities Markets Act and publishes business reports for the initial three and nine months of each year, presenting the key information on the company’s financial development. The financial information presented in the business review has not been audited.

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 six investment targets. Grano Oy is the most versatile expert of content services in Finland. Heatmasters Group offers heat treatment services for metals in Finland and internationally, as well as produces, develops and markets heat treatment technology. 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. Carrot provides staffing, recruitment and outsourcing services. Oscar Software provides ERP systems and financial management services.

Attachment

• Panostaja Oyj Business Review 16.3.2021 Q1_Appendix