Panostaja Oyj´s Half Year Financial Report November 1, 2019-April 30, 2020

Panostaja Oyj           Half Year Financial Report     June 4, 2020        10.00 a.m.

Coronavirus pandemic challenges business

February 1, 2020-April 30, 2020 (3 months)

• Net sales increased in three of the seven segments. Net sales for the Group as a whole weakened by 13% to MEUR 41.2 (MEUR 47.2).
• EBIT improved in three of seven segments. The entire Group’s EBIT declined from the reference period, standing at MEUR 1.0 (MEUR 1.9).
• Grano’s net sales for the review period declined by 17% from the reference period in the previous year. EBIT totaled MEUR 1.2 (MEUR 2.5).
• Earnings per share (undiluted) were -1.4 cents (0.2 cents).
• In the review period, Panostaja made an agreement on selling the majority of Tilatukku Group Oy’s share capital to the acting management. Panostaja Group recorded a sales loss of about MEUR 0.5 for the trade.

November 1, 2019-April 30, 2020 (6 months)

• Net sales increased in three of the seven segments. Net sales for the Group as a whole weakened by 9% to MEUR 83.8 (MEUR 92.2).
• EBIT improved in three of seven segments. The entire Group’s EBIT declined from the reference period, standing at MEUR 0.5 (MEUR 2.1). The reference period’s EBIT includes sales profit for Ecosir Group in the amount of MEUR 1.6.
• Grano’s net sales for the review period declined by 13.5% from the reference period in the previous year. EBIT totaled MEUR 0.8 (MEUR 2.2).
• Earnings per share (undiluted) were -3.2 cents (0.1 cents).

CEO Tapio Tommila:

“In the six-month review period, the total net sales of the segments declined by 9% from the reference period. After six months, the operational EBIT of the investment targets was at the reference year level, not including the Ecosir Group sales profit of MEUR 1.6, which was included in the profit/loss of the reference period. In the second quarter, however, the development of the segments’ net sales and profitability was severely impacted by the coronavirus outbreak in March and the related economic lockdown measures.

Net sales and EBIT in the second quarter improved from the reference period for CoreHW, Oscar Software and Heatmasters. At the same time, Grano’s net sales and EBIT dropped significantly from the reference period. The lockdown and restriction measures initiated in Finland in March weakened Grano’s demand and net sales significantly. Despite the new cutbacks implemented due to the circumstances, the clear decline in net sales also dragged EBIT down from the reference period. Carrot’s net sales dropped by 26% from the reference period during the second quarter, and EBIT loss remained at the level of the reference period. In March, the company’s CEO changed and the company kicked off a development project aimed at revitalizing the company’s operations and steering them back toward growth. The coronavirus pandemic has also impacted Carrot’s business activities due to the decreased economic activity resulting from the lockdown measures and general uncertainty.

The pandemic’s impact on the corporate acquisition market was equally severe. The effects of the economic lockdown measures affected business operations and prospects, and the uncertain growth and deteriorated loan terms led to a clear decline in activity as well as the suspension of many on-going projects on the markets. Despite the challenging market situation, we carried out the sale of Tilatukku Group’s share capital to the acting management in April. The divestment was in line with Panostaja’s strategy and supported the objective of actively developing the portfolio.

At the end of the review period, the impacts of the coronavirus pandemic and the related economic lockdown measures would seem to have stabilized among our segments for the time being, and the measures required by each company to respond to the situation have been initiated. Overall, our segments have succeeded in responding to the extraordinary circumstances quite well. We are currently keeping a close eye on how the staggered measures to open up the economy begin to affect demand in various fields.”

Financial Development: November 1, 2019-April 30, 2020

MEUR	Q2	Q2	6 months	6 months	12 months
	2/20- 4/20	2/19- 4/19	11/19- 4/20	11/18- 4/19	11/18- 10/19
Net sales, MEUR	41.2	47.2	83.8	92.2	182.9
EBIT, MEUR	1.0	1.9	0.5	2.1	3.8
Profit before taxes, MEUR	0.4	1.4	-0.6	1.2	1.9
Profit/loss for the financial period, MEUR	-0.4	1.1	-1.7	0.4	2.5
Earnings per share, undiluted (EUR)	-0.01	0.00	-0.03	0.00	0.03
Equity per share (EUR)	0.88	0.96	0.88	0.96	0.96
Operating cash flow (MEUR)	16.1	2.9	17.6	4.2	10.8

Impacts of COVID 19

The impacts of the coronavirus pandemic on the business operations of Panostaja and its segments started in mid-March with the pandemic itself and the lockdown and restriction measures implemented to prevent its propagation began to eat into demand and cause general uncertainty. Global and domestic forecasts regarding economic growth have declined significantly after the onset of the pandemic. Panostaja and its segments instituted a number of measures to safeguard their staff immediately after the outbreak.Remote work arrangements and restrictions on meetings were implemented where possible. In addition to this, the companies have responded to the decreased demand through cutbacks and layoffs. The companies have also implemented a wide range of measures to secure funding in the event that the crisis persists. These measures include flexibility in terms of funding, such as postponing loan payments, utilizing the full extent of the payment terms of fiscal payments, and active efforts to repatriate any receivables.

Panostaja tests intangible and tangible assets for impairment whenever there are signs that their value may have decreased. Goodwill and other intangible assets with infinite useful life are tested for impairment at least once a year. For the purposes of the testing, goodwill and intangible assets with infinite useful life are allocated to cash-generating units. The amount recoverable by cash-generating units is based on calculations of service value. Formulating these calculations requires the use of estimates. Panostaja has recognized the depreciation risk with regard to certain segments and prepared estimates on their future prospects. During the coronavirus pandemic, the estimates have entailed a significant degree of uncertainty and write-downs have been deemed unnecessary at this time. However, the situation will be monitored closely and reassessed during the financial period.

Division of the net sales by segment MEUR	Q2	Q2	6 months	6 months	12 months
Net sales	2/20- 4/20	2/19- 4/20	11/19- 4/20	11/18- 4/19	11/18- 10/19
Grano	28.5	34.5	57.8	66.7	129.7
Helakeskus	2.0	2.1	3.8	4.0	8.0
Hygga	1.0	1.2	2.1	2.4	4.7
Heatmasters	1.1	0.8	2.2	1.6	4.2
CoreHW	2.3	1.5	4.7	2.5	5.7
Carrot	3.4	4.6	7.8	9.9	20.8
Oscar Software	2.9	2.6	5.6	5.1	10.1
Others	0.0	0.0	0.0	0.0	0.0
Eliminations	0.0	-0.1	-0.1	-0.1	-0.3
Group in total	41.2	47.2	83.8	92.2	182.9

Division of EBIT by segment MEUR	Q2	Q2	6 months	6 months	12 months
EBIT	2/20- 4/20	2/19- 4/20	11/19- 4/20	11/18- 4/19	11/18- 10/19
Grano	1.2	2.5	0.8	2.2	4.1
Helakeskus	0.1	0.1	0.2	0.2	0.5
Hygga	-0.1	0.0	-0.1	-0.1	-0.2
Heatmasters	0.1	0.0	0.2	-0.1	0.2
CoreHW	0.2	0.2	0.6	-0.1	0.4
Carrot	-0.2	-0.2	-0.6	-0.6	-0.4
Oscar Software	0.3	0.1	0.5	0.2	0.2
Others	-0.5	-0.7	-1.1	0.3	-1.1
Group in total	1.0	1.9	0.5	2.1	3.8

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 2020 Financial Period

The onset of the coronavirus pandemic and the measures implemented to curb it are affecting the markets in which Panostaja Oyj’s segments operate. This has a substantial impact on Panostaja’s net sales and profit/loss for the 2020 financial period. At the moment, it is impossible to determine the full extent of the financial effects as they are dependent on the duration and scope of the measures to limit the propagation of the virus and the rate at which the markets eventually recover. Due to this, Panostaja withdrew the forecasts for the 2020 financial period on March 27, 2020 and has not released new forecasts.

Panostaja Oyj

Board of Directors

For further information, contact CEO Tapio Tommila, [phone]

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 seven 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. Suomen Helakeskus Oy is a major wholesaler of furniture fittings in Finland. 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 Half Year Report_4.6.2020 Q2_Appendix