We built a good foundation for the future
The operating environment remained out of the ordinary in 2022, which impacted the profitability of many of our segments. That said, we managed to lay a foundation for the future during the financial period: the first year of our updated strategy involved us actively continuing the development of our portfolio of companies and creating new operating methods focused on responsibility.Read more
CEO Tapio Tommila:
We built a good foundation for the future
The operating environment remained out of the ordinary in 2022. Even though recovery from the coronavirus pandemic improved demand and supported the positive development of net sales, new changes, such as Russia’s invasion of Ukraine, the energy crisis and high inflation, imposed direct and indirect challenges and cut into the profitability of many of our segments.
The price inflation of materials was evident particularly at Grano, which is one of our top profit generators. Internal measures were insufficient to compensate for the impacts of inflation sufficiently during the financial period, but the efforts have progressed well and will continue. Overall, the net sales of our segments increased significantly in 2022, but the profitability development fell short of our targets.
The portfolio updates continue
One of the biggest successes of the year was the sale of Grano’s SokoPro business, which generated substantial added value. Last year, we took the time to update our portfolio through several business divestments. Now, we have continued to build a foundation for new investments: by virtue of the new strategy, we began to concentrate on companies in the software and service sectors. This turned out to be the right choice: these fields have sizeable markets and many interesting companies, with which we had discussion over the course of the year. Hopefully, these efforts will bear fruit in 2023.
The response to our updated strategy has been very positive in other ways as well, and our potential investment targets have viewed the focus as a strength. We have gained plenty of added value from our new AdNet advisor network with which we are cooperating closely, especially with regard to new investment targets. At the same time, we have been able to bolster our own competence with versatile experts.
Taking responsible steps forward
In accordance with our strategy, we have also determined our methods of managing responsibility and built new operating methods and tools for this purpose. Responsibility has always been an important focus for many of our portfolio companies, good examples of which are Grano’s new production facility in Vantaa, which significantly improves energy and material efficiency, and Gugguu’s new sales service for recyclable clothing. At the end of the financial year, we also committed to the Principles for Responsible Investment (PRI), which are supported by the UN. In the new financial period, we will continue our responsibility efforts with added strength derived from the solid foundation built this year.
For 2023, one of our core goals is to include new value-adding companies to our portfolio and boost the growth and profitability of the current companies. Our existing segments still have plenty of untapped value creation potential. The year 2023 will surely be challenging: the general economic development is deteriorating, the geopolitical climate is uncertain and the post-COVID uptick in demand is winding down. Even so, I believe that we are prepared for all of this – perhaps the year will even bring about new opportunities.
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
Panostaja is an investment company developing Finnish companies in the service and software sectors as an active shareholder. Panostaja provides investors with a unique channel for investing in Finnish growth companies with high expected yields through a balanced diversified portfolio. 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 strives to increase shareholder value and create Finnish success stories.
Panostaja’s strategy involves three main goals:
- securing the top expertise in the capital investment field and building an adviser network for the selected service and software sectors in Finland,
- creating a balanced investment portfolio whose total value creation is also supported by the competence synergies between the segments, and
- cementing responsibility as a key element in value creation and investment activities.
Potential investment targets that match Panostaja’s investment criteria are Finnish service and software companies with net sales in the range of MEUR 5–50. The investment targets boast significant growth potential, a positive cash flow forecast, competent management and a responsible business model. To realize the value creation potential, we choose the moment of divestment independently with our owner partners.
Why invest in Panostaja?
- Competitive advantage through sector-specific focus
- Unlisted growth companies have high profit potential
- Diverse and balanced investment portfolio supported by growth trends
- Active value creation
Read more: Panostaja as an investment target
2022 and outlook for 2023
Overall, the net sales of Panostaja’s segments increased significantly in 2022, but the profitability development fell short of our targets. This was due to the persistently unusual operating environment resulting from the energy crisis and inflation, for example. The Group’s net sales for the financial year totaled MEUR 137.9. During the financial year, Panostaja’s operations focused on the updated strategy, which was leveraged to create a strong foundation for growing the investment portfolio.
2022 financial period in brief
In the November 1, 2021–October 31, 2022 financial period, Panostaja continued its active efforts to update its investment portfolio. In 2021, the company already made preparations for a new kind of portfolio by selling many of its businesses. The year 2022 began with a large divestment as Grano sold its SokoPro business to the Swedish iBinder company. The trade generated substantial value, and the sale price of the divested shares was approximately MEUR 45.5.
In February 2022, Panostaja released its updated strategy for 2022–2024. By virtue of the strategy, the company will be focusing its investments on businesses in the software and service sectors. Over the course of the past year, this clear focus has garnered positive feedback and has been seen as a strength especially by potential acquisition targets. For Panostaja, the clear focus has also increased the efficiency of working with new segments.
Overall, the net sales of Panostaja’s current segments increased significantly after the decline caused by the coronavirus pandemic. That being said, new crises, such as the war in Ukraine, the energy crisis and inflation, had an indirect impact on profitability, which was lower than targeted. The Group’s net sales were MEUR 137.9. One of 2022’s special successes was starting the Advisory Network (AdNet). The network has involved six professionals from different fields cooperating closely since spring, providing new kinds of support and competence networks to assist Panostaja’s operations and segments.
During the financial period, Panostaja also took clearer steps in terms of developing responsibility. As a result of the new strategy, the company has focused on creating a new operating model for building a responsible strategy. Panostaja’s portfolio companies will gain the model as support for management team and board work. The model centers around long-term sustainable growth and profitability, which are secured by ensuring the company’s ability to generate value to interest groups also in terms of the extent of social and environmental impacts. Late in the year, Panostaja signed an agreement to commit to the Principles for Responsible Investment supported by the UN.
Focuses for the 2023 financial period
Over the course of the financial period, Panostaja has built a strong foundation for the future. Even though the operating environment was challenging due to COVID-19 and the global situation, the updated strategy and other development efforts have pushed things forward significantly. There were numerous discussions with potential companies during the year, and it is our goal to reap the fruits of this labor in the coming financial period.
As such, Panostaja’s most important goal for 2023 is to gain new segments into its portfolio from the software and service sectors. The growth and profitability of current companies will also be strengthened. For example, Gugguu and Hygga will be placing more focus abroad, and CoreHW will aim for significant progress in commercializing its proprietary product business, particularly in the North American market.
In 2023, Panostaja’s responsibility model will be more visibly apparent in the operations of the portfolio companies. The updated strategy and sector focus will be even more evident than before in the activities. Even though the first year of the strategy is now behind us, the journey is just beginning.
A total of more than 1,200 experts work at Panostaja and its investment sites. The turnover of Panostaja’s investment properties increased clearly in 2022 as a whole, but the profitability development was weaker than targeted. One of our biggest successes of the year was the sale of Grano’s SokoPro business, where a very significant value creation was realized.
Profit/loss for the financial period
Profit before taxes
Profit/loss from continuing operations
Profit/loss from sold or discontinued operations
Earnings per share, undiluted
Equity per share
Our Investment Companies
Panostaja’s investment companies are growing and unlisted Finnish SMEs. Continuous development is something shared by each one of our companies. This is why our segments are companies that are genuinely appealing investments.
Updated strategy supports growth
Oscar’s most important themes of the year revolved around strategic efforts, reorganizing operations and fixing up processes. The software company, which gained a new CEO in the spring, is now operating at an excellent pace. In terms of technology, Oscar took substantial strides toward becoming an SaaS provider according to its plans. Even so, the period was financially challenging.
The revitalization of the software sector’s labor market after the coronavirus pandemic caused some changes in personnel. The departure of some experienced professionals had a negative impact on the company’s result, even though the company was successful in recruiting new experts. The changes in personnel had an inevitable impact on Oscar’s bottom line, which fell short of the target. The uncertain global situation and the war in Ukraine were also mirrored by customer activities, and more thought was put into new investments. On the other hand, the possible return of some industrial operators to Finland will provide new growth opportunities for the company.
Praise for the strategic efforts
Oscar’s updated strategy has been well received by the personnel. An even more transparent organizational model, which defines responsibilities very clearly, has also been drawn up to support it. The sales processes were fixed up during the year, and attention has been paid to sales management to ensure a sufficiently broad clientele. The efforts to improve processes on many fronts will also boost the company’s profitability.
In addition to active board work, Panostaja’s support has been evident in the updates to Oscar’s financial reporting, for example. The sparring support for HR management has also been very helpful. Panostaja’s strategy emphasizes responsibility, which shows in Oscar’s operations. Software solutions are being developed for automating processes and eliminating wastage, which results in decreased environmental impacts. For a software company, it is also important to consider responsibility with regard to personnel, which is why plenty of attention is paid to the capacity of employees, for example.
Lofty goals for 2023
Oscar has lofty goals for the 2023 financial period, which are supported by the updated strategy and organization model. The company is well-positioned, as it currently has the best understanding on the market of the needs of industrial operators. The development of SaaS expertise provides a lot of new opportunities. The outlook is extremely positive, provided that there are no substantial changes in the operating environment.
In the past financial period, Oscar invested in focusing its strategy, updated its organization and streamlined its processes, aiming for improved customer satisfaction. The financial period was financially challenging, since the uncertain global situation and personnel changes impacted the net sales. The development of SaaS expertise provides the company a good starting point for the future.
Year of investment
Year of strong growth
CoreHW had a good year for both design services and the component business. In terms of design services, the financial situation recovered to the 2020 level after the COVID-19 years. The number of automotive customers increased the most thanks to the company’s investments in 2020–2021 – at the time, capacity was freed up from customer projects. The development of automotive customers is seeing strong global growth due to technological trends and challenges with the availability of semiconductors, so the outlook for 2023 and 2024 is very positive.
In the component business, the year 2022 was a significant turning point: demand turned to a substantial climb especially in the American and Japanese markets. This was thanks to CoreHW’s unique indoor positioning technology. Based on customer feedback, the Bluetooth positioning technology is the most precise and reliable in the world – so good that customers now have the confidence to develop their own devices and systems with CoreHW technology. The company has significant customer accounts and future potential, especially in the US.
Panostaja provides support for financial challenges
Even though the past year was good, the losses of 2021 continued to impact cash management. As a result, CoreHW received substantial assistance from Panostaja to overcome temporary financial challenges. Over the past five years, Panostaja has helped the company in many ways to grow from a small company to the next level, particularly with regard to the activities of the Board of Directors and management teams. Panostaja has also provided CoreHW with the training it was looking for on project management, for example.
In 2023, CoreHW will continue implementing its long-term strategy. At the moment it seems clear that indoor positioning technology is taking over the world. It is difficult to predict the time frame for the new technology, but positive development will be seen in the coming years. Many customer companies will still be developing their own products in 2023, but it is to be expected that the technology will be widely adopted in the following year.
2022 was a good year for CoreHW. As a result of the current technological trend, automotive customers were the most substantial source of growth in design services. Demand has improved in the component business as well, mostly due to the positive development of indoor positioning technology in the American and Japanese markets. The past financial period was still spent recovering from the losses of 2021, but the company has a firm belief that indoor positioning technologies will take off substantially in the 2024 financial period at the latest.
Year of investment
International markets open for the Hygga Flow operating model after the coronavirus pandemic
The long period of coronavirus restrictions has delayed the establishment of new customer relationships in the software business. The easing of the COVID-19 pandemic in the fall of 2022 has opened up the software business markets. Two new clinics in Sweden and one in the Netherlands began using the Hygga Flow operating model in the fall. Next year, the operating model will be deployed at two additional clinics in Sweden.
The pilot of the Hygga Flow model in the municipality of Lindesberg in Örebro County, Sweden, was successful, and the collaboration was expanded to cover new clinics in the fall of 2022. The Hygga Flow operating model managed to eliminate the waits for oral health care almost entirely. Before the model, customers were at times forced to wait for appointments for more than two years. Other benefits gained by Lindesberg included not needing to cancel appointments due to the absences of clinical workers, as patients could now be assigned to other professionals very easily.
In Finland, the coordination of the wellbeing services counties delayed the establishment of new customer relationships. The cooperation with the City of Porvoo will continue in basic health care, and the operations will be expanded to the Wellbeing Services County of East Uusimaa. The Wellbeing Services County of Ostrobothnia also kicked off an oral health care pilot project in the autumn.
The clinic business is recovering
As regards the clinic business, the development of net sales and profitability in 2022 was encumbered by resource challenges related to the outsourcing services agreed with the City of Helsinki, the majority of which resulted from the extraordinarily high number of absences due to the coronavirus pandemic. In addition to this, the profitability of the outsourcing business has been weakened by the increased costs. Fortunately, the impact has been successfully transferred to prices starting from the end of 2022, as a result of the contractual price adjustment. Otherwise, the company’s clinic business saw positive development and grew substantially compared to the previous financial period. Over the course of the period, the operations recovered close to pre-COVID levels and the development has continued on an upward trend. In addition to this, efforts were made in the latter half of 2022 to increase Hygga’s visibility in Finland and the international markets through participation in significant events in the field.
Panostaja supports growth and responsibility
The dialogue with Panostaja remained excellent during the past financial period. For example, the Management Forum organized in the fall, the active board work and support for the operations management have been valuable forms of cooperation. Panostaja has strongly supported the expansion of Hygga’s software business. This year, special attention has also been paid to responsibility with regard to the staff and the environment. The Hygga Flow operating model reduces travel needs among patients and the use of disposable materials. In Örebro County, Sweden, the municipality of Lindesberg won an environmental award, in large part thanks to Hygga Flow.
The coming year is very promising
The year 2023 looks extremely good for Hygga, and the growth of the software business is supported by the new customer relationships gained at the end of 2022 as well as those acquired through existing contracts. Multiple new projects are about to begin, as the Hygga Flow model will be deployed at the AZ Delta hospital in Belgium for specialized medical care and new oral health care agreements are being forged in the Netherlands. In Finland, the opening of the wellbeing services counties will provide new opportunities. The growth of the clinic business is expected to continue in the year following the economic downturn.
Hygga prepared for the opening of the international markets after a long period of coronavirus restrictions. The Hygga Flow operating model is being deployed at an increasing pace in oral health care and basic health care both in Finland and abroad. The outlook for 2023 is bright for the Hygga Flow operating model.
Year of investment
A varying year for Grano
The sale of the SokoPro business operations to the Swedish iBinder company in February enabled Grano to focus on developing added-value services for marketing communications in accordance with its strategy, thanks to a stronger financial position. The sale price of the divested shares was approximately MEUR 45.5. Still, the company’s profitability for the financial period fell short of the target. At the beginning of 2022, Kimmo Kolari was appointed as the CEO of the company. He had already served as the acting CEO for the preceding fall season.
One of the highlights of the financial period was the opening of a 15,000 square-meter factory in the Koivuhaka district of Vantaa. The factory combines state-of-the-art technology, traditional craftsmanship and a strong belief in Finnish work. The coronavirus pandemic impacted Grano’s business operations for the early part of the financial period. The demand recovery was also slowed down by the war in Ukraine, which broke out in the spring. Despite the difficulties, the market recovered in April, and demand normalized during the summer and early fall. That said, Grano’s profitability fell short of the target level due to increased material costs and the decline in demand early in the year.
Specified strategy brings focus
Grano’s strategy emphasizes a customer-oriented approach and value creation. The company wants to continue providing comprehensive marketing communications solutions from content production and translation services to turnkey deliveries. Panostaja has supported Grano with strategic efforts as well as market and competitor analysis, for example. The cooperation has also been close with regard to board work and sparring related to financial and HR matters.
Leader in its field in responsibility
Grano wants to be a trailblazer in its field in terms of responsibility, which is why it prepared a responsibility strategy in 2022 and is measuring its implementation regularly. One of the goals is to ensure that Grano uses only renewable sources for electricity and heating by 2025. The responsibility efforts take a wide variety of matters into account, and they cover business profitability in addition to environmental factors and social responsibility.
Winds of change persist
At the beginning of the new financial period, Grano will be updating its organizational structure. The new organization will expedite decision-making and the deployment of practical measures. It will also support the implementing of the updated strategy. Grano now has an excellent foundation for success, but the uncertainties of the operating environment may impact its result. The company is developing its own operations and wants to shape the entire field at the same time. The bar has now been set higher than ever before, and the operations are being modelled after the best operators in Europe and North America, in particular.
Grano’s year was distinctly twofold: The sale of the SokoPro business operations was an important step for Grano, but the company’s profitability fell short of the budget, due to increased material costs and the declined demand early in the year. Grano’s strategy was updated, and the company is working to make its operations even more customer-oriented than before.
Year of investment
Substantial strides in responsibility
The year for children’s clothing brand Gugguu included many successes: after a two-year break due to the coronavirus pandemic, the company was able to organize its pop-up tour, which set up stores in four cities a total of eight times. The events were successful in terms of sales and the feedback from the customers was overwhelmingly positive. During the year, Gugguu also took substantial strides with regard to the efficiency of its product development, for example.
In the fall, the now 10-year-old Gugguu launched an online store for secondhand clothing, which has been built on the company’s most important value: responsibility. The online store is aimed from consumers to consumers: it enables customers to sell quality children’s clothes that they no longer use to those who need them. Gugguu provides a platform that ensures safe sales and affordable shipping. The service has an incredible amount of potential and, sure enough, the online store is off to a strong start. All aspects of responsibility form the core of Gugguu’s business operations: all significant decisions, such as material procurements, start with responsible choices and the company’s entire production network is situated in Europe.
Despite the successes, 2022 was also one of the most challenging in Gugguu’s history. The war in Europe caused uncertainty and resulted in considerable issues with material availability and increased prices. This also protracted production times. Over the course of the year, Gugguu was forced to increase the prices of some of its products, which naturally impacted consumers.
Important support and stability from Panostaja
Panostaja has been an important partner and solid support for Gugguu, particularly in the context of significant strategic matters. The partnership has now lasted four years, and Gugguu has retained its place in Panostaja’s portfolio, even with the updated strategy. Gugguu has received help from Panostaja for board and management team efforts, along with a stronger structure around business operations to enable positive growth. The networking events with other portfolio companies have also been important for Gugguu.
The year 2023 will be both interesting and challenging for the company. The energy crisis and inflation may cause unexpected changes in consumer behavior, which makes the business operations more uncertain. At the same time, however, Gugguu has expanded its aims geographically and is taking massive leaps toward international markets: growth is being sought particularly in Sweden and Norway. The company intends to continue viewing challenges as opportunities: being sometimes forced to view things from new perspectives serves to develop the business operations.
* In contrast to Panostaja, Gugguu’s financial period is April 1–March 31
The now 10-year-old Gugguu launched a new concept for an online store for secondhand clothing this year. The store and revitalized pop-up tour were successes in terms of sales and garnered plenty of positive feedback from customers. The year also involved challenges with regard to the availability of materials, for example. Next year, Gugguu will be aiming for new international markets.