NOHO PARTNERS PLC INTERIM REPORT 1 January–31 December 2019: A record year – the Board of Directors proposes to the Annual General Meeting an additional dividend

NoHo Partners Plc

INTERIM REPORT 5 March 2020 at 8:15 a.m.

NOHO PARTNERS PLC INTERIM REPORT 1 January–31 December 2019

A record year – the Board of Directors proposes to the Annual General Meeting an additional dividend

The implementation of the strategy of profitable growth in the restaurant business of NoHo Partners is proceeding as planned. The targeted synergy benefits of the Royal Ravintolat integration were achieved in full and the short-term profitability programmes were successfully completed during 2019. The company has returned to the path of profitable growth: the profitability of the restaurant business hit record figures in the 2019 financial period. The company’s Board of Directors proposes to the AGM an additional dividend. The Group’s labour hire business ended on 23 August 2019, when the subsidiary Smile Henkilöstöpalvelut Oyj was merged with VMP Plc and the combined company Eezy Plc became an associated company of the Group.

TURNOVER AND INCOME

JANUARY–DECEMBER 2019 IN BRIEF

Group (continuing and discontinued operations):

• The turnover grew by 30.1 per cent to MEUR 272.8 (MEUR 209.6).
• EBIT grew by 95.1 per cent to MEUR 30.6 (MEUR 15.7).
• The EBIT percentage was 11.2 per cent (7.5 per cent, a growth of 49.9 per cent.
• The result of the discontinued operation was MEUR 23.8.
• The result of the financial period grew by 1,026.8 per cent to MEUR 47.7 (MEUR 4.2).
• Earnings per share grew by 823.1 per cent to EUR 2.36 (EUR 0.26).
• The gearing ratio excluding the impact of the IFRS 16 liabilities was 75.9 per cent. The interest-bearing net liabilities excluding the IFRS 16 effect were MEUR 105.4. The IFRS 16 liabilities amounted to MEUR 161.3. The gearing ratio including the impact of the IFRS 16 standard was 194.6 per cent.

Restaurant business (comparable continuing operations):

• Turnover grew by 30.1 per cent to MEUR 272.9 (MEUR 209.7).
• EBIT grew by 725.0 per cent to MEUR 18.4 (MEUR 2.2).
• The EBIT percentage was 6.7 per cent (1.1 per cent), a growth of 534.0 per cent.
• The review period’s EBIT includes the write-offs of the Danish business operations amounting to approximately MEUR 0.3.
• The result of the financial period grew by 3,616.5 per cent to MEUR 11.7 (MEUR 0.3).
• Earnings per share grew by 1,152.0 per cent to EUR 0.47 (EUR 0.04).
• The earnings per share for the review period include the MEUR 2.1 price adjustment in the Danish operations.
  

OCTOBER–DECEMBER 2019 IN BRIEF

Group (continuing and discontinued operations):

• Turnover grew by 11.2 per cent to MEUR 75.2 (MEUR 67.6).
• EBIT grew by 55.4 per cent to MEUR 7.0 (MEUR 4.5).
• The EBIT percentage was 9.3 per cent (6.7 per cent, a growth of 39.8 per cent.
• The result of the financial period grew by 90.4 per cent to MEUR 4.9 (MEUR 2.6).
• Earnings per share grew by 28.2 per cent to EUR 0.2 (EUR 0.16).

Restaurant business (comparable continuing operations):

• Turnover grew by 11.1 per cent to MEUR 75.2 (MEUR 67.6).
• EBIT grew by 466.6 per cent to MEUR 6.5 (MEUR 1.1).
• The EBIT percentage was 8.6 per cent (1.7 per cent), a growth of 409.9 per cent.
• The review period’s EBIT includes the write-offs of the Danish business operations amounting to approximately MEUR 0.3.
• The result of the financial period grew by 567.5 per cent to MEUR 4.3 (MEUR 0.7).
• Earnings per share grew by 235.3 per cent to EUR 0.17 (EUR 0.05).

SUMMARY

The factors influencing the Group’s earnings in January–December 2019 were the discontinuation of the labour hire business, the progress made in the restaurant portfolio reorganisation programme and completing the short-term profitability programmes, the opening of new restaurants, concept reinventions and investments in international business.

The adoption of the IFRS 16 Leases standard has a MEUR 1.8 negative effect on earnings for January–December 2019. The earnings per share in the review period are affected by the MEUR 2.1 purchase price adjustment applicable to the investment in The Bird restaurant at Copenhagen Airport. The profit of the review period was influenced by the write-down of approximately MEUR 0.3 resulting from the winding down of said restaurant.

The result of the restaurant operations in October–December 2019 was not altogether in line with the company’s targets. The restaurant Christmas sales did not start exactly as expected: October was slightly below the target level, and the sales in November–December were slightly back-end weighted. In the latter part of 2019, the sales organisation was reorganised, dynamic pricing was improved and the efficiency of the sales operations was increased.

The labour hire business is reported as a discontinued operation and it is included in the Group’s (continuing and discontinued operations) figures in the financial statement bulletin. The comparative information for 2018 has been adjusted in the income statement, calculated cash flow and key figures. Starting from September 2019, the Group has had one business segment: the restaurant business.

In the restaurant business, most of the profits are made during the second half of the year due to the seasonal nature of the business.

REVIEW BY THE CEO: AKU VIKSTRÖM

2019 was a successful year judging by many indicators. Wise strategic choices and – first and foremost – our staff’s hard work enabled us to turn the profitability of our operations to a good level.

Here at home, we implemented the integration of the Royal Ravintolat acquisition as well as the targeted synergies in full, trimmed our restaurant portfolio to a more sustainable shape and started to lay the foundations for our future growth. When it comes to our international operations, we sharpened our operations in Denmark, focusing on profitability instead of growth at the end of the year, and successfully opened a new market in Norway by an acquisition.

In the future, we will focus 100% on developing our core business and creating value. To make this possible, we gave up our labour hire business and, instead, started to create future owner-value for our company as the majority shareholder of Eezy Plc, the second largest company in the staffing service sector. At the end of 2019, our ownership Eezy constituted nearly MEUR 50.

The last quarter of our restaurant business was fairly good. Our operative operating model has introduced the desired cost flexibility to fluctuations in demand. However, in terms of sales, we have not yet been able to utilise our whole potential with regard to corporate customers and the scale of the Group. In the last quarter, we reorganised our sales and marketing organisations and invested heavily in new digital systems, which we are confident will produce organic growth in 2020.

Thanks to the Eezy M&A transaction, our improved profitability and our strong cash flow, we were able to refinance our operations in the second half of 2019 by means of more sustainable financial agreements, and in early 2020, we announced that we would redeem the hybrid loan taken out in spring 2019 ahead of schedule. Our net liabilities, minus the effect of the IFRS 16 Lease Agreement standard, were approximately MEUR 105 at the end of the 2019 financial period.

I look forward to 2020 full of confidence. At the offset, our prospects for the new year are materially stronger than a year ago. Our domestic restaurant business is already performing well, even though there is still a lot of potential for improvement, especially in the field of contemporary sales and marketing. Our committed employees have gone through a tough process of change, and this year, they will be better able to concentrate on the thing that matters – a quality customer experience. Globally, we have work to do in two different fields: to repeat in Denmark the change of direction implemented in Finland, and to speed up our profitable growth in Norway.

As an indication of our successful year and stronger financial position, our company’s Board of Directors proposes to the AGM the payment of an additional dividend in 2020. Even though the economic forecast and global phenomena bring uncertainty to the operating environment, the belief and confidence in the sustainable development of our operative operations is strong, and it is also reflected on the management’s updated guidelines regarding the 2020 statistics.

Aku Vikström, CEO

PROSPECTS FOR 2020

Profit guidance (as of 5 March 2020):

NoHo Partners estimates that, during the financial period 2020, the Group will achieve a total turnover of approximately MEUR 300 and an EBIT margin of approximately 9 per cent. The turnover of the restaurant business (comparable continuing operations) is estimated to be approximately MEUR 300 and the EBIT margin approximately 7.5 per cent.

In terms of the Group’s restaurant business, the goal is to achieve a turnover of approximately MEUR 350 and an EBIT margin of approximately 8 per cent by the end of 2021. The Group will update the estimate for the financial period on an annual basis in conjunction with the publication of the result for the fourth quarter.

DIVIDEND

NoHo Partners Plc’s distributable assets on 31 December 2019 were EUR 120,632,298.64, of which the share of the financial period’s result is EUR 52,890,302.63.

NoHo Partners Plc’s Board of Directors proposes to the Annual General Meeting convening on 22 April 2020 that, based on the adopted balance sheet of the financial period ending on 31 December 2019, a divided of EUR 0.4 (0.34) per share will be paid at the time of dividend payment on shares owned by external shareholders. The Board of Directors proposes that the dividend be paid in two (2) instalments, such that the first instalment of EUR 0.2 per share is paid on 7 May 2020 to shareholders who have been recorded in the company’s shareholder list maintained by Euroclear Finland Oy by the record date of 24 April 2020. The second instalment of EUR 0.2 per share is paid on 12 November 2020 to shareholders who have been recorded in the company’s shareholder list maintained by Euroclear Finland Oy by the record date of 2 November 2020. The Board of Directors proposes that it be authorised to decide, if necessary, a new dividend payment record date and payment date for the second instalment of the dividend payment, if the rules or regulations of the Finnish book-entry system change or otherwise require it.

NoHo Partners Plc’s Board of Directors proposes to the Annual General Meeting that, based on the adopted balance sheet of the financial period ending on 31 December 2019, an additional divided of EUR 0.15 per share will be paid at the time of dividend payment on shares owned by external shareholders. The board proposes that the additional dividend be paid on 7 May 2020 to shareholders who have been recorded in the company’s shareholder list maintained by Euroclear Finland Oy by the record date of 24 April 2020. 
The rest of the distributable assets shall remain in equity.

At the time of the financial statements on 31 December 2019, there were 19,008,690 externally owned shares. The total amount of the corresponding dividend and additional dividend is EUR 10,454,779.50.

CASH FLOW, INVESTMENTS AND FINANCING

The Group’s operating net cash flow in January–December 2019 was MEUR 57.3 (MEUR 18.7).

Growth investments during the review period included the opening of new restaurants in Finland, acquisitions in Finland and Norway as well as restaurant concept reinventions and changes.

The Group’s gearing ratio excluding the impact of the IFRS 16 liabilities was 75.9 per cent. The interest-bearing net liabilities excluding the IFRS 16 effect were MEUR 105.4. The IFRS 16 liabilities amounted to MEUR 161.3. The Group’s interest-bearing net liabilities (including the IFRS 16 liability) at the end of December 2019 were MEUR 266.7 (MEUR 138.5). The adjusted net finance costs in January–December 2019 were MEUR 7.2 (MEUR 2.5). The equity ratio was 29.1 per cent (24.6 per cent) and the gearing ratio was 194.6 per cent (184.3 per cent).

DESCRIPTION OF ACCOUNTING PRINCIPLES:

• In the interim report, the labour hire segment is treated as a discontinued operation and a separate item in the income statement. Comparative information has been adjusted accordingly. For more detailed information, see Note 3.
• Due to the labour hire business transaction, the Group is starting to present alternative performance measures that improve comparability. It is believed that these alternative performance measures improve the understanding prevailing on the market regarding the development and financial situation of the restaurant business. The most significant item added to the comparable result is the Group’s internal staffing service purchases that took place before the transaction. In the future, these will be presented as outsourced services. The calculation principles of the key figures that improve comparability are presented in more detail in Note 3.
• In the interim report, the Group’s continuing and discontinued operations as well as the comparable continuing operations of the restaurant business are presented separately.
• Starting from September 2019, the Group only has one segment: the restaurant business.
• NoHo Partners adopted the IFRS 16 Leases standard as of 1 January 2019. The figures of the reference period 2018 have not been adjusted. More information about the application of the IFRS 16 standard and other significant interim report accounting principles can be found in the notes to the interim report.
• Unless otherwise stated, figures in parentheses refer to the corresponding period last year.

NOHO PARTNERS PLC’S FINANCIAL REPORTING IN 2020

NoHo Partners Plc’s 2019 financial statements and annual report will be published during week 13. The financial reports for 2020 will be published as follows:

Interim report for January-March on Tuesday 12/05/2020 approximately at 8:15am
Half-year report for January-June on Tuesday 11/08/2020 approximately at 8:15am
Interim report for January-September on Tuesday 10/11/2020 approximately at 8:15am

NoHo Partners Plc’s Annual General Meeting will be held in Tampere on Wednesday 22/04/2020. The invitation to the Annual General Meeting will be published during week 13.

PRESS CONFERENCE FOR MEDIA, ANALYSTS AND INVESTORS AT 10:00 am

A press conference for media, analysts and investors will be held today Thursday 5 March 2019 starting 10:00am at Restaurant Salutorget at Pohjoisesplanadi 15, 00130 Helsinki. At the event, NoHo Partners CEO Aku Vikström will go through the key events, present the result for the year 2019, and discuss the company’s future outlook.

The event can be viewed in a live webcast at https://noho.videosync.fi/2019-q4-tulosinfo. The event will be held in Finnish. The presentation material and a recording of the event will become available on the company’s website later today.

The full NoHo Partners Interim Report for January-December 2019 is appended to this release in PDF format. The Interim Report is also available on the company's website at www.noho.fi.

Tampere, 5 March 2020

NOHO PARTNERS PLC

Board of Directors
                                                                                                            
More information available from:                                                                                                     
Aku Vikström, CEO, tel. +358 44 011 1989
Jarno Suominen, Deputy CEO, tel. +358 40 721 5655
                                                                                                            
NoHo Partners Plc
Hatanpään valtatie 1 B
FI-33100 Tampere, Finland

www.noho.fi

NoHo Partners Plc is a Finnish group established in 1996, specialising in restaurant services. The company, which was listed on NASDAQ Helsinki in 2013 and became the first Finnish listed restaurant company, has continued to grow strongly throughout its history. The Group companies include some 250 restaurants in Finland, Denmark and Norway. Well-known restaurant concepts of the company include Elite, Savoy, Teatteri, Yes Yes Yes, Stefan’s Steakhouse, Palace, Löyly, Hanko Sushi and Cock’s & Cows. In 2019, NoHo Partners Plc’s turnover was MEUR 272.8 and EBIT MEUR 30.6. Depending on the season, the Group employs approximately 2,100 people converted into full-time workers.

NoHo Partners corporate website: www.noho.fi
NoHo Partners consumer websites: www.ravintola.fi and www.royalravintolat.fi