Setting a new course through corporate transactions
The coronavirus pandemic continued to impact the operations of Panostaja and its segments through 2021. As a result, the financial year was still exceptional but also extremely active.Read more
CEO Tapio Tommila:
Setting a new course through corporate transactions
The coronavirus pandemic continued to impact the operations of Panostaja and its segments through 2021. As a result, the financial year was still exceptional but also extremely active. Panostaja’s year was characterized by three divestments most of all: Helakeskus in February, Heatmasters in June and Spectra at the beginning of July. We had already made a long journey together with all of the divested companies. Helakeskus and Spectra were incorporated into larger organizations by industrial buyers. Heatmasters, in turn, will continue as the Finnish market leader in its field with support from new investors.
Immediately after the end of the financial period, we also made an arrangement that reduced Panostaja’s shareholding in Carrot Palvelut to less than 20%. At the same time, we relinquished the responsibility for steering the company. Our journey together with Carrot has been challenging, and the company will now head toward new opportunities under the management of private shareholders.
All of the completed divestments support Panostaja’s strategy and the goal of actively developing our portfolio. We are heading into the new financial period to build an even more focused portfolio. There is currently a lot of money and competition for investments on the corporate acquisitions market, but, despite the busy market situation, I believe that we will be able to find good investment opportunities.
Predictability remains a challenge
The year 2021 brought about challenges, but there were also signs of a wider revitalization of demand at the end of the financial period as the coronavirus crisis loosened its grip. In the first half of the year, however, the demand for almost all of our segments was substantially weaker than normal and, even from an overall perspective, the net sales and profitability development in the financial year fell short of the targets. Despite the fact that the impacts of the coronavirus crisis were not quite as far-reaching as in the previous financial period, predictability remained more challenging than normal during the past financial period. The actual monthly net sales levels were more defined by the severity of the COVID-19 waves than factors such as the normal seasonal nature of business operations. Furthermore, the international travel restrictions that continued late into the financial period slowed down new projects for CoreHW and Hygga, in particular.
Face-to-face meetings, too
This year, too, day-to-day activities were characterized by remote work arrangements for Panostaja and its segments. Still, this has helped to increase work efficiency and add flexibility to fitting work and free time together. On the other hand, the prolonged period of remote work, without meeting anyone face to face, has also introduced a variety of stress factors. Even though we at Panostaja will continue the hybrid work arrangements, it has been wonderful to meet colleagues regularly to exchange ideas in person once the restrictions were pared back. Hopefully we can continue to do so in the coming financial period.
We invest in growing SMEs
We want to help businesses reach their full potential and work with them to build success stories. We are an investment company that owns and develops unique SMEs in the service and software sectors. Investing in growing and unlisted Finnish SMEs is appealing to many, and we can offer a good channel for this through our segments and operating model.
We are actively looking for companies that have the enthusiasm and drive for continuous development and growing their business operations. When a company has the finances and growth potential, Panostaja can help it climb to the top of its field. At Panostaja, the identification of growth potential and the facilitation of growth, as well as ownership, are responsible and long-term efforts toward success. Our basic mission is always to generate value as a responsible owner-partner, accelerating growth and the implementation of changes.
“We invest in growing Finnish companies that have already demonstrated the feasibility of their operating model.”
Our operating method
Why invest in Panostaja?
We increase shareholder value by developing and supporting the growth of our segments. Our aim is for the company’s value to have clearly increased once we divest it. We base our operations on continuously increasing shareholder and market value. We have succeeded when the overall yield of a share exceeds the average long-term yield of the Nasdaq OMX Helsinki Small Cap Index.
Earnings potential of unlisted companies
- Unique liquid channel for investing in growing Finnish SMEs
- SMEs have high earnings expectations
Decentralized and balanced investment portfolio of growing SMEs
- Ownership is distributed to several companies in different fields of operation and different stages of growth
- Fluctuations in demand in companies’ fields of operation partly balance one another
Active value creation
- Evidence of value creation in the SME sector as an active owner
- Tested operation model. Over 30 years of experience in SME development
- Management systems, development processes and tools that support value creation
The development of Panostaja’s segments in 2021 was still encumbered by the detrimental effects of the coronavirus pandemic that gripped the markets, which is why the Group’s net sales remained at the level of the previous financial year at MEUR 133. Panostaja Group’s EBIT weakened, but the largest segment Grano was able to improve its profitability despite the poor demand.
There are still uncertainties connected to the demand for Panostaja’s segments due to the possible escalation of the COVID-19 pandemic.
2021 financial period in brief
In the financial period November 1, 2020–October 31, 2021 Panostaja held to its strategy to update the investment portfolio and create opportunities for targeted investments in new select fields over the course of 2022.
The development of Panostaja’s segments in 2021 was still encumbered by the detrimental effects of the coronavirus pandemic that gripped the markets, which is why the Group’s net sales remained at the level of the previous financial year at MEUR 133. Net sales increased in two of four segments. Panostaja Group’s EBIT weakened, but the largest segment Grano was able to improve its profitability despite the poor demand. EBIT increased in two of four segments.
In February 2021, Panostaja sold its entire share capital in Helakeskus Oy to HTF Group Oy and divested its business specializing in the import of fittings and the provision of related services. In June 2021, Panostaja sold the fully-owned Heatmasters Oy and Heatmasters Poland Sp. z o.o. to a group of investors and divested the heat treatment segment. In July 2021, Panostaja sold its associated company Spectra Yhtiöt Oy, which specializes in providing maintenance and support services for trade, to Lassila & Tikanoja. After the end of the financial period in November 2021, Panostaja reported selling its shares in Carrot Palvelut Group Oy to shareholders of the company who are actual persons. The trade will decrease Panostaja’s shareholding in Carrot to less than 20% and, in the same context, Panostaja will relinquish the entire Carrot segment and the responsibility of running the company.
Outlook for the 2022 financial period
As regards the demand of Panostaja’s segments, there are uncertainties relating to the possible escalation of the COVID-19 pandemic. Especially the weakening of the pandemic situation may impact the business operations of Grano and Hygga.
The demand for Oscar Software will remain good. The company operates in a market that is expected to see positive development.
The demand for Grano, Hygga and CoreHW will remain satisfactory. The development of Grano’s operating environment is partially dependent on the development of the pandemic, especially in terms of the recovery of event and trade fair activity. Hygga’s demand is supported by the service production for the outsourced services agreement made with the City of Helsinki. CoreHW operates in a market that is expected to develop in a positive way, but there are uncertainties connected to the commencement of customer projects.
The demand for Gugguu is good. Gugguu is aiming for growth particularly through the internationalization of online trade.
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. In the financial period November 1, 2021–October 31, 2022, Panostaja will strive to further its strategic efforts to focus the investment portfolio even more on fields in which the value creation opportunities are supported by increasing customer needs, efforts to build Panostaja’s field-specific expertise, and competence synergies between segments. In this financial period, the focus of our investment activities will be on software and service business even more than before, which will also be evident in the strategies of our current segments.
Panostaja and its segments employ more than 1,200 professionals in total. Panostaja Group’s net sales remained at the level of the previous financial year in the persistently challenging operating environment, but EBIT weakened. However, our largest segment Grano succeeded in improving its profitability despite the difficulties with demand.
(2020 132.9 M€)
Profit/loss for the financial period
(2020 -3.4 M€)
Profit before taxes
(2020 1.8 M€)
(2020 4.1 M€)
(2020 37.2 M€)
Profit/loss from continuing operations
(2020 0.5 M€)
Profit/loss from sold or discontinued operations
(2020 -4.0 M€)
Earnings per share, undiluted
(2020 -0.08 €)
Equity per share
(2020 0.82 €)
Our Business Segments
Panostaja’s segments are growing and unlisted Finnish SMEs. Continuous development is something shared by each one of our segments. This is why our segments are companies that are genuinely appealing investments.
Internal development for the benefit of the customer
For Oscar, the year 2021 was a time of development and acceleration. The software company updated its internal structures and modified its operations heavily. The changes stemmed from a desire for increased customer orientation in terms of products and services. In practice, this has meant process development, new recruitments and the training of current personnel. As regards net sales, Oscar’s financial year was like the previous one. The many recruitments were mainly conducted early on and late in the financial year.
New products and services centered around high-level expertise
The development efforts also generated new products and services, such as web-based working hour monitoring and entirely new technological solutions for the warehouse in the form of portable terminal interfaces. The first customer relationships for the OscarAPI layer were also formed during the financial period. Due to changes in the customer base of the financial administration services, services requiring deeper and more expansive accounting expertise were created for the corporate restructuring and tax planning segments, for example.
Panostaja provides support for staff development
Each individual always adapts to change differently, which is why Panostaja has supported Oscar first and foremost in matters related to staff development, in addition to efficient board work.
In 2022, Oscar will continue its internal development, seeking substantial growth. The efforts conducted in the previous financial period are beginning to bear fruit and, in the coming financial period, Oscar will focus even more on the customer interface.
In 2021, Oscar continued to reinvent itself and reform its internal structures and operating models to benefit its customers. The company developed new products and services centered around high-level expertise. Net sales remained at the level of the previous year, but plenty of new people were recruited.
Year of investment
The company’s first own patent is the highlight of the year
CoreHW’s year was overshadowed by two global challenges: the coronavirus and the capacity issues of semiconductor manufacturers. The coronavirus restrictions put foreign travel and international trade fairs on hold far into the fall, which made CoreHW’s sales even more difficult. Availability issues with semiconductors, on the other hand, resulted in the product manufacturing plans of customers’ projects having to be postponed. For these reasons, CoreHW’s net sales dropped by 24% compared to 2020.
There were also successes with new deals being closed remotely and CoreHW’s productivity remaining solid despite the need for remote work arrangements. However, the most important success of the year was the first patent granted to a CoreHW product. In product business, two new product prototypes were tested with excellent results. In 2021, CoreHW also completed a minor organizational update, which increased the emphasis on the components business. In addition to this, some recruitment took place over the course of the year, but the number of employees did not increase as much as in the previous year.
Trade fairs and travel resume
In the fall, the incremental lifting of the coronavirus restrictions manifested itself at CoreHW as resumed customer meetings and a general opening up of opportunities: plans for trade fairs and travel could finally be made. The year 2022 seems partially uncertain, especially due to the capacity shortage of semiconductors, as mentioned above. On the other hand, this can open up new opportunities for a technology company. Another positive sign is that the demand for design services looks to recover to a good level in 2022.
The coronavirus crisis and supply issues with semiconductors presented challenges for CoreHW. Still, new deals were closed remotely, and once the restrictions were lifted, customers were also met face-to-face. In 2021, CoreHW also secured its first own product patent, and two new product prototypes were tested in product business with excellent results.
Year of investment
Growth and international opportunities
This year, Hygga’s service solutions sparked interest in the international markets. Hygga Flow garnered praise in Sweden, where Hygga’s pilot project in the municipality of Lindesberg managed to shorten the two-year patient queues to three months. In the spring of 2021, Hygga hired a representative for Sweden to support market growth in the country.
Increasing the efficiency of dental care is a topic that interests people across Europe, and not just in Sweden.
Next year, business opportunities in both oral and basic health care are expected in the Netherlands and Belgium, among other locations. The coming year looks very promising for Hygga.
This year, the COVID-19 pandemic continued to affect Hygga’s operations but strong signs of recovery are in the air. The outsourcing services initiated in Helsinki in November 2020 doubled Hygga’s net sales compared to last year. In the previous financial period, the net sales of Hygga’s clinic and licensing business stood at MEUR 4.1, and now they are MEUR 8.1.
The rapid development has provided new opportunities but also caused some growing pains, which is understandable. Increasing patient numbers led to a resource deficit and necessitated the growth of the clinical organization – a challenge that has been met with new recruitments.
On a mission to extend the operating model’s reach to cover the entire health care sector
This year, Hygga’s licensing business has focused on basic health care. For example, public health service providers in Porvoo utilize the Hygga Flow operating model. The model enables reacting to changes in the operating environment quickly, providing an efficient solution for working through long waiting lists and managing customer flows in health care in a comprehensive manner. The company’s mission is to make the solution the operating model of the future throughout the entire health care sector.
As regards the Aster project which was reported on earlier, however, Hygga will not be continuing the development efforts, as the entire project fell apart after the Central Finland Health Care District decided against it. Within the scope of the project, Hygga was responsible for providing a patient information system for oral health care and supplying the Hygga Flow ERP system.
Panostaja once again provides support and vision
This year, Panostaja has had a key role in Hygga’s Board of Directors. During this period of remote contact, the connection has remained strong and matters at hand have been tackled systematically through digital channels. In addition to board work, Panostaja has been an active sparring partner and opened up new cooperation networks.
This year, Hygga doubled its net sales from MEUR 4.1 to MEUR 8.1. This means that Hygga is heading into the next financial period from a promising position. As the impacts of the COVID-19 pandemic have eased up somewhat, internationalization, above all, has emerged as an opportune goal. There is interest in Hygga’s solutions throughout Europe, and new opportunities are now being expected in the Netherlands and Belgium in particular. Excellent project results have already been secured in Sweden, where Hygga hired a representative this year to support market growth.
Year of investment
Toward a comprehensive range of services
Grano’s net sales fell short of the target levels but reached MEUR 107.9. Despite the digitalization of the field, print-related products still yield the majority of the net sales. The translation business grew by 25% during the year, as the public administration’s translation needs increased due to the increased communications necessitated by the coronavirus crisis. Alongside its printing business, Grano has become a prominent producer of digital content in Finland.
In November 2021, Grano’s Senior Vice President Kimmo Kolari assumed the position of acting CEO as Pekka Mettälä stepped down from his management duties. The aim is to continue mobilizing the strategy prepared in 2019 and steering current product lineups toward more comprehensive services. Sales are being developed and customer understanding is being improved to ensure that Grano can provide its customers with the full range of content production assistance as effortlessly as possible.
Responsibility is at the core of Grano’s operations. In the past financial period, the company’s carbon footprint decreased by 10%; Grano is aiming for full carbon neutrality by 2030.
Grano predicts growth for 2022
In January 2021, the second wave of the coronavirus pandemic swept through Finland and deteriorated demand across the subsidiaries Grano Oy, Grano Digital Oy and Grano Diesel Oy. Due to the strain imposed by the challenging extraordinary circumstances, occupational well-being was chosen as a major strategic theme for 2022. Particularly sizeable investments are now being made in the coping and motivation of employees.
The coronavirus crisis has also resulted in uncertainty and unpredictability in the operating environment. That said, the field is beginning to show positive signs. For example, events and trade fairs are in the process of recovery. As such, Grano is expecting growth in 2022, provided that the company does not need to pump the brakes due to the coronavirus situation.
Panostaja continued its active role
This year, Grano has been particularly grateful for Panostaja’s active role in sparring the management. Panostaja’s support has made it easier to develop Grano’s internal operations and drive the organization forward. Panostaja has also provided much-needed vision and assistance for the development of financial systems and for management team efforts. Over the course of the past financial year, Grano worked with Panostaja to focus on risk management, data security and data protection. The assistance gained from sparring with Panostaja’s portfolio companies has also been rewarding.
The financial period of Grano, which specializes in communications, was successful under the circumstances. The content and translation needs of public administration, in particular, impacted the profit/loss for the year. The printing business yields the majority of the company’s net sales, but Grano’s role as a digital content producer is growing constantly. Grano is aiming for growth in the coming year.
Year of investment
Trailblazer in children’s clothing invests in digital marketing
Gugguu’s year has been out of the ordinary but successful. The net sales of the company known for high-quality and responsible children’s clothing have increased by 20% midway through the financial period*. The growth has mostly taken place in online trade, which is an extremely important element in Gugguu’s business operations. At the moment, the company gets 80% of its net sales from online trade. There have also been plenty of visitors at the Gugguu store in the Helsinki Outlet shopping village.
Gugguu’s digital marketing took strides in 2021. During the coronavirus pandemic, the company has invested strongly in developing its digital capabilities and tested new kinds of marketing methods bravely, since families with children is a target group that requires keeping abreast with current developments. Even though customer events ceased during the COVID-19 period, the company finds that it has been spared the biggest challenges of the crisis. For example, the pandemic had almost no effect at all on production.
Responsibility is at the core of Gugguu’s operations, and in the fall of 2021 the company released its second responsibility report. It indicates that plenty of measures have once again been taken to benefit the environment. For example, Gugguu began using a new tricot fabric, which is made of GOTS-certified organic cotton. At the same time, the company replaced the polyester fabric it was using with a recycled grade compliant with the GRS standard.
Gugguu aims for international markets
Internationalization has been Gugguu’s most important mission for a few years now. There have been successes, but much remains to be done. The competition abroad is fierce and requires a company to make sizeable marketing investments, among other things.
During the year, Gugguu has advanced the internationalization process organically online. To support the achievement of its goal, the company has received support and conducted marketing research and a variety of tests, for example. As such, Gugguu is heading into 2022 with a strong focus on internationalization.
Panostaja has become an important partner and provider of constructive feedback
This year too, Panostaja’s influence was evident in Gugguu’s operations. Particularly the internationalization support over the course of the year has been important – the company has not needed to make big decisions alone. With Panostaja’s help, Gugguu has also succeeded in building a substantial network, which it could not have done on its own. Additionally, the company has gained concrete tools for day-to-day board work as well as supervisor and mentor programs.
* In contrast to Panostaja, Gugguu’s financial period is April 1–March 31
Gugguu’s third year in Panostaja’s portfolio has been a period of strong growth in online trade. The year has entailed a great deal of developing new digital marketing solutions and testing new channels and methods. Over the course of the year, the company has focused particularly on internationalization, which will remain an important theme in 2022.