Panostaja Oyj´s Half Year Report November 1, 2017-April

Panostaja Oyj           Half Year Report     May 31, 2018        10.00 a.m.

Two new segments for Panostaja: Carrot Palvelut and Oscar Software

February 1, 2018–April 30, 2018 (3 months)

• As a result of corporate acquisitions during the previous financial period, Grano's net sales for the review period increased by 37% from the corresponding period last year. EBIT increased to MEUR 2.9 from MEUR 2.4 in the reference period.
• Panostaja invested in the HR services sector and secured a majority shareholding in Carrot Palvelut Oy.
• After the review period, Panostaja acquired a majority shareholding in Oscar Software Group Oy, a company providing SMEs with ERP systems and financial management services.
• Net sales increased in three of the seven segments. The profit/loss of Carrot Palvelut Oy, which was acquired at the end of the review period, will be consolidated into the Group’s profit/loss as of May 1, 2018. Overall, the Group’s net sales for the review period increased by 27% to MEUR 45.9 (MEUR 36.2).
• EBIT improved in four of seven segments, and the entire Group’s EBIT remained at the level of the reference period, standing at MEUR 1.9 (MEUR 1.5).
• Earnings per share (undiluted) were 0.4 cents (-3.0 cents)

November 1, 2017–April 30, 2018 (6 months)

• Net sales increased in three of the seven segments. Overall, the Group’s net sales for the review period increased by 30% to MEUR 90.8 (MEUR 69.9).
• EBIT improved in four of the seven segments, and the EBIT of the entire Group increased from MEUR 0.5 to MEUR 3.7.
• Panostaja divested itself of KotiSun and recorded a profit of MEUR 32.9 before taxes for the sale.
• Earnings per share (undiluted) were 51.3 cents (-4.9 cents).

CEO Juha Sarsama: Two new segments for Panostaja

“Panostaja acquired two new investment targets over the course of the spring. At the end of the review period, Panostaja invested in the growth of the HR services sector and purchased a majority shareholding in Carrot Palvelut Oy, which provides staffing, recruitment and outsourcing services. Our aim is to expedite Carrot’s growth amid the current shift in employment and working methods. The prospects for HR services are good and the foundation for growth is strong. We are confident that the company is capable of continuing its positive development and updating and expanding its services.

After the review period, Panostaja acquired a majority shareholding in Oscar Software Group Oy, a company providing SMEs with ERP systems and financial management services. We want to contribute to helping the Finnish SME field prosper amid the changes brought on by digitalization, and our goal is to expedite Oscar’s growth and help it develop the leading and most comprehensive business platform for SMEs in Finland. The company is at a very interesting stage of its development and it has a strong brand on the growing market of SMEs’ enterprise resource planning systems.

Thanks to Grano’s growth the total net sales of Panostaja’s segments continued its notable growth, climbing to 27%. Alongside Grano, however, only KL-Varaosat showed significant growth, and the development of the segments’ net sales was partially weaker than expected. CoreHW, which was purchased last year, also increased the total net sales, but the company’s net sales were exceptionally low in the review period, even though seasonal variations are typical of the company’s project-oriented operations. Increased net sales and the stabilization of Megaklinikka’s profitability improved EBIT for the review period, increasing it to MEUR 1.9 from MEUR 1.5 in the reference period.

The streamlining measures initiated at Grano in the fall were completed as planned, and we expect them to support the company’s profitability over the remaining financial period. The operations and profitability of Megaklinikka have also been stabilized. On the other hand, CoreHW’s quarter was exceptionally weak as the commencement of new customer projects was delayed and the proportion of customer work remained low. However, the company directed available resources to the development of its own products, which was a strong focus during the review period. Net sales were also lower than expected at Helakeskus, where net sales continued to decline. The company’s new management has initiated measures to rectify the situation. We will keep an eye on how things progress at Helakeskus and whether or not CoreHW manages to recover from the decline of its net sales.

The corporate acquisitions market remained generally active in the period under review, and the availability of new opportunities has been relatively good. The markets provide opportunities for both new select acquisitions and divestments, and we will continue to actively explore new corporate acquisition opportunities.”

Panostaja Group’s business operations for the current review period are reported in nine segments: Grano, Selog, Helakeskus, KL-Varaosat, Heatmasters, Megaklinikka, CoreHW, Carrot and Others (parent company and associated companies). Only assets and liabilities for the review period are reported in the Carrot segment. Carrot’s profit/loss will be consolidated into the Group’s figures and reported under the relevant segment as of May 1, 2018.

In the review period, two associated companies, Ecosir Group Oy and Spectra Yhtiöt Oy, issued reports to the parent company. The result of the reported associated companies has developed well and its impact on profit/loss in the review period was MEUR 0.2 (MEUR 0.0), which is presented on a separate row in the consolidated income statement. During the period under review, Panostaja sold its shareholding in Juuri Partners Oy, which is a capital investment company making minority investments.

The process of dismantling PE-Kiinteistörahasto progressed during the review period, as a result of which Panostaja removed from its balance sheet a MEUR 3.0 pre-allocation share receivable and liability from PE-Kiinteistörahasto.

Outlook for the 2018 Financial Period

The corporate acquisitions market remained generally active in the period under review, and the availability of new opportunities has been relatively good. The need to exploit ownership arrangements and growth opportunities in SMEs will continue, and as our own activity complements the supply of possible acquisitions from outside, there are plenty of possibilities for corporate acquisitions on the market. Panostaja aims to implement its growth strategy by means of controlled acquisitions in current investments, and new potential investments are also being actively studied. Divestment possibilities will also continue to be assessed actively as part of the ownership strategies of the investment targets.

The demand situation for different investments is thought to develop in the short term as follows:

• The demand for Selog, Helakeskus and CoreHW will remain good, and the demand for KL-Varaosat will improve to a good level (previously moderate). The demand situation for the new investment Carrot will remain good
• The demand for Grano and Heatmasters will remain satisfactory
• Demand for Megaklinikka will remain weak

Panostaja Oyj

Board of Directors

For further information, contact CEO Juha Sarsama: tel. +358 (0)40 774 2099.

Panostaja Oyj

Juha Sarsama CEO

Attachment

• Panostaja Oyj 31.5.2018 Half Year Report