Panostaja Oyj’s Half-year Financial Report November 1, 2021–April 30, 2022

Panostaja Oyj

Panostaja Oyj’s Half-year Financial Report November 1, 2021–April 30, 2022

Panostaja Oyj          Half-year Financial Report         June 2, 2022 10.00 a.m.

Investment Capacity Bolstered by SokoPro Trade

February 2022–April 2022 (3 months) in brief:

• Net sales increased in two out of four segments. Net sales for the Group as a whole weakened by 1% to MEUR 33.0 (MEUR 33.3).

• EBIT improved in two of the four segments. The entire Group’s EBIT improved from the reference period, standing at MEUR 7.9 (MEUR -0.4). The EBIT for the review period includes MEUR 9.4 in sales profit from the SokoPro deal.

• Panostaja’s 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.

• Grano’s net sales for the review period dropped by 3% from the reference period. EBIT was MEUR 8.6 (MEUR 0.8), including the SokoPro sales profit of MEUR 9.4. Net sales for the review period increased by 2% from the reference period net sales that were adjusted based on the SokoPro sale.

• Earnings per share (undiluted) were 7.2 cents (-4.1 cents).
  
  

November 2021–April 2022 (6 months) in brief:

• Net sales increased in three of the four segments. Net sales for the Group as a whole increased by 2.9% to MEUR 68.8 (MEUR 66.8).

• EBIT improved for three of the four segments. The entire Group’s EBIT improved from the reference period, standing at MEUR 7.0 (MEUR -1.6).

• Grano’s net sales for the review period increased by 1% from the reference period in the previous year. EBIT was MEUR 9.0 (MEUR 0.7), including the SokoPro sales profit of MEUR 9.4.

• Earnings per share (undiluted) were 5.9 cents (-7.5 cents).

CEO Tapio Tommila:

“The second quarter of the financial period was two-sided: there were notable successes and the implementation of the updated strategy progressed, but the performance of our segments was somewhat lacking. The SokoPro deal, which is important to our updated strategy, was completed successfully, which freed up a significant amount of investment capital for acquiring new segments. In accordance with our strategy, we intend to make several new investments in our strategy period extending to 2024.

The development of the financial markets early in the year has been generally challenging due to the inflation pressure as well as the resulting stricter monetary policy and probability of interest rate hikes. Russia’s invasion of Ukraine has caused significant uncertainty in terms of general economic development, particularly due to possible disruptions in the markets for energy, raw materials and food. The increased demand and inflation pressure also affect our segments, but the partial settling down of company valuation levels, as seen in the markets early in the year, gives cause to some cautious optimism in a situation where our strategy phase is focused on new investments. We find that the corporate acquisitions market has remained active and there are plenty of good investments available in the target sectors and our size category.

The sector-specific focus at the core of our strategy will be built around a new operating model in which our advisor network providing expertise on each sector will boost the competitiveness of Panostaja’s investment activities and bring added value to the development of our segments. In the second quarter, our team gained six top experts in the focus sectors, who have extensive value creation experience in our target sectors. Our core team works closely with our advisors in exploring and assessing new investment targets and drawing up a value creation strategy. We got a good start in the second quarter, and we now have an excellent and motivated team.

The second quarter as a whole was challenging for us and we fell substantially short of our target result; Grano’s net sales were low as the crisis in Ukraine caused demand to stall due to general caution and, at the same time, activity in the construction cluster declined significantly. The poor net sales weakened Grano’s profitability, but the reinvigoration of the demand at the end of the quarter and the fact that the availability of materials improved due to the end of the UPM strike give hope for an upward trend during the remainder of the financial period. Oscar Software has continued to increase its number of tenders, but our efforts to accelerate the realization of profits from deals continue. Hygga’s development was still burdened by the challenges related to the availability of clinical staff. CoreHW’s development continued on an expected positive trend as customer project activity improved. Gugguu’s financial period ended in March, and we reported a 2% increase in net sales. The company made progress in entering the international markets, albeit slightly slower than we intended.”

Financial Development November 1, 2021–April 30, 2022

Key Figures MEUR	Q2	Q2	6 months	6 months	12 months
	2/22- 4/22	2/21- 4/21	11/21- 4/22	11/20- 4/21	11/20- 10/21
Net sales, MEUR	33.0	33.3	68.8	66.8	133.0
EBIT, MEUR	7.9	-0.4	7.0	-1.6	2.0
Profit before taxes, MEUR	7.4	-0.9	6.0	-2.8	0.0
Profit/loss for the financial period, MEUR	7.4	-2.4	6.5	-4.9	-1.0
Distribution:
Shareholders of the parent company	3.8	-2.2	3.1	-3.9	-1.7
Minority shareholders	3.6	-0.2	3.4	-1.0	0.7
Earnings per share, undiluted, EUR	0.07	-0.04	0.06	-0.08	-0.03
Interest-bearing net liabilities	35.9	61.7	35.9	61.7	56.3
Gearing ratio, %	56.9	95.9	56.9	95.9	83.1
Equity ratio, %	41.0	34.1	41.0	34.1	37.2
Equity per share, EUR	0.79	0.71	0.79	0.71	0.75

Division of the net sales by segment MEUR	Q2	Q2	6 months	6 months	12 months
Net sales	2/22- 4/22	2/21- 4/21	11/21- 4/22	11/20- 4/21	11/20- 10/21
Grano	26.1	26.9	55.0	54.2	107.9
Hygga	2.0	2.1	4.0	4.0	8.1
CoreHW	2.1	1.4	4.1	3.1	6.1
Oscar Software	2.9	2.8	5.8	5.6	11.0
Others	0.0	0.0	0.0	0.0	0.0
Eliminations	0.0	0.0	-0.1	-0.1	-0.1
Group in total	33.0	33.3	68.8	66.8	133.0

Division of EBIT by segment MEUR	Q2	Q2	6 months	6 months	12 months
EBIT	2/22- 4/22	2/21- 4/21	11/21- 4/22	11/20- 4/21	11/20- 10/21
Grano	8.6	0.8	9.0	0.7	5.6
Hygga	-0.1	-0.1	-0.3	-0.4	-0.2
CoreHW	0.0	-0.6	-0.2	-1.0	-1.4
Oscar Software	-0.2	0.1	-0.3	0.4	0.3
Others	-0.5	-0.7	-1.1	-1.3	-2.2
Group in total	7.9	-0.4	7.0	-1.6	2.0

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).

One associated company, Gugguu Group Oy, provided a report for the review period. The impact on profit/loss of the reported associated companies in the review period was MEUR -0.1 (MEUR 0.1), which is presented in 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 2% to MEUR 4.8 (MEUR 4.6) and EBIT was MEUR 0.1 (MEUR 0.4).

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.

•        The demand for Grano, Hygga and CoreHW will remain satisfactory.

The demand information presented above involves uncertainties relating to the possible escalation of the COVID-19 pandemic and any economic impacts of the war in Ukraine, which are difficult to anticipate. The escalation of the pandemic may impact the future development of Grano and Hygga, in particular, and rapidly and dramatically change the estimate provided above. The effects of the war in Ukraine and the related economic sanctions 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.

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.

Attachment

• Panostaja Oyj Half-year Report 2.6.2022