RESTAMAX PLC INTERIM REPORT BETWEEN 1 JANUARY AND 31 MARCH 2015: The Group's strong growth continued and profitability improved

Restamax Plc

INTERIM REPORT 8 May 2015 at 10:00 am

RESTAMAX PLC INTERIM REPORT BETWEEN 1 JANUARY AND 31 MARCH 2015

The Group's strong growth continued and profitability improved in January-March 2015

TURNOVER AND INCOME

The Group's income for the first quarter of 2015

Entire Group:
The Group's turnover was MEUR 24.5 (MEUR 15.9), growth of 53.6 per cent. EBITDA was MEUR 2.9 (MEUR 1.4), growth of 104.6 per cent. Operating profit was MEUR 0.8 (MEUR 0.1), growth of 802.4 per cent.

Restaurant business:
The turnover of the restaurant business segment was MEUR 22.4 (MEUR 15.9), growth of 41.0 per cent. EBITDA was MEUR 2.6 (MEUR 1.4), growth of 81.0 per cent. Operating profit was MEUR 0.7 (MEUR 0.1), growth of 649.1 per cent.

Labour hire business:
The turnover of the labour hire business segment was MEUR 4.3. EBITDA was MEUR 0.4. Operating profit was MEUR 0.1. (New business segment, no comparison figures.)

Restamax Group's result for the first quarter of the year is significantly better than that of the previous year. Considerable growth was achieved during the review period; the turnover increased by over 53 per cent, EBITDA by over 100 per cent, and operating profit by over 800 per cent from the corresponding period in the previous year. The increase in turnover was fuelled by the investments made and corporate acquisitions completed in 2014, which have been fully available to the company since the beginning of 2015, helping create a strong growth platform for the future.

Due to the seasonal nature of both the restaurant and labour hire businesses, most of the profits are made at the end of the year.

PROSPECTS FOR 2015

Result management (as of 20 February 2015):

Restamax estimates that the Group will reach a turnover of over MEUR 100 during the 2015 financial period, and that the EBITDA and operating profit will increase proportionally compared to the previous financial period.

CEO MARKKU VIRTANEN:

Strong start for 2015

We successfully implemented several large growth investments in 2014. The acquisition of Rengasravintolat in March 2014, adding the labour hire segment to our business in August and expanding to northern tourist resorts with the Tunturimax corporate acquisition in October created a strong growth platform for the future. We added 32 restaurants to our restaurant portfolio in 2014. The business acquisitions were completed during the 2014 financial period, so the acquired business operations have been fully available to us in early 2015.

During the first quarter of 2015, our turnover increased by 53 per cent from the previous year. Our EBITDA increased by over 104 per cent, and our operating profit increased more than eightfold from the previous year.

Despite the challenging market situation, we reached a relatively good result in the first quarter, considering the circumstances. The winter season of our fell restaurants in Pyhä and Ruka was fairly successful in terms of sales. 2015 also started very favourably in labour hire operations.

I am extremely pleased with the flexible and efficient work of our personnel under these financially challenging times. Our staff expense percentage has remained fairly efficient, largely thanks to our management and personnel. Our organisation received a good grade in the occupational satisfaction survey that was conducted late last year. We will continue on our tried and tested course and use the feedback received to develop our operations further.

At the beginning March 2015, Vice CEO Harri Niskanen joined us in developing our activities. His valuable professional expertise strengthens the leadership of our Group. The importance of our partners for our operations has also increased further. We have expanded our partner network and boosted the cooperation with our contract suppliers. As a listed, strongly growing and financially sound company we are an even better partner than before for lessors and our other stakeholders.

Exceptional profit development despite the field's downturn
 
In Finland, the total value of the restaurant market is currently approximately EUR 5 billion. In 2014 (January-December), the turnover of restaurants licensed to serve alcohol increased by 1.2 per cent, whereas the turnover increase in the industry in 2013 was 1.6 per cent. Based on preliminary information, the sales of restaurants licensed to serve alcohol decreased by 3.0 per cent in 2014, alcohol sales decreased by approximately 5 per cent, and food sales also decreased (January-September 2014).

Although 2014 was in a slight downturn for the industry, the tourism and catering industry is considered a growing industry segment in the long term. The key reasons why the restaurant market is growing slightly more strongly than the GDP include increased domestic travel and tourism, urbanisation, increased number of single-person households and changes in consumer habits.

According to the 2014 restaurant trend survey commissioned from TNS Gallup by the Finnish Hospitality Association MaRa, Finns eat out at restaurants significantly more often than ten years ago. The number of people who eat at restaurants has increased steadily to this day, although the development has slowed down slightly in the past few years.

Despite the challenges, the recovery of the industry is in sight. The economy in general is estimated to experience slow growth due to increased export at the end of 2015. Another turn for the positive can be seen in the partial reinstitution of deductible representation expenses that allows companies to deduct 50 per cent of their representation expenses in their income taxation starting from the beginning of 2015. The decision supports the demand for tourism and restaurant services, increases employment and brings tax revenues to the State.

The tourism and restaurant sector creates a substantial number of jobs and brings the State in excess of EUR 5 billion in tax revenues each year. I hope that the new Finnish Government and decision-makers acknowledge the importance of this industry segment and make good decisions concerning the value added tax and alcohol taxation in order to ensure the prerequisites for growth.

Labour hire segment - a strong future industry segment

The labour hire segment became part of our operations in the 2014 financial period. Our subsidiary Smile Henkilöstöpalvelut Oy helps us ensure the sufficient availability of personnel in the future and support the growth of our company. During 2014, we made a significant number of changes, investments and corporate arrangements in order to integrate the new segment into our activities. This business segment has not yet been fully integrated into our Group, however, and the business is in an early phase, but I see great growth potential in labour hiring.

According to national statistics, the turnover of labour hire services is growing constantly, and the industry segment has favourable growth prospects. The sector offers today's employers and employees flexible opportunities. The new generations are open to working flexibly in different companies and sectors. According to national temporary hired labour surveys in 2014, hired labour work is considered sensible, and up to 86 per cent of temporary hired workers would recommend it to someone they know. The labour hire segment plays a significant role in our society, especially in increasing youth employment.

100 restaurants around Finland

Although there is uncertainty in the demand for restaurant services, and the competition is tough, we have successfully increased our business and also maintained good profitability at a level that is clearly above the average profitability in the industry segment. One of the essential key elements to our success is the large number of unique restaurant concepts that can be customised for different locations to serve the needs and wishes of different target groups.

Today, our Group comprises some 100 restaurants in different parts of Finland. At the beginning of 2015, we added three new nightclubs into our portfolio. The purchase of the Apollo and Tivoli nightclubs expanded our operations into Oulu, a new market area; in Pori, we strengthened our current market position by purchasing the Cabaret nightclub. We also opened the Belgian bistro Rikhard von Trappe in Helsinki in co-operation with Hans Välimäki, and the Boho & Keittiö restaurant in Jyväskylä with our subsidiary Priima-Ravintolat Oy.

The first quarter of the year gives a strong indication that we will achieve the targets that we have set for this year.

Markku Virtanen,
CEO

The full Restamax interim report for January-March 2015 is appended to this release in PDF format. The interim report is also available on the company's website at www.restamax.fi.

RESTAMAX PLC

Board of Directors

Markku Virtanen, CEO

APPENDIX: Restamax Plc Interim Financial Report Q1/2015

More information:
 
Markku Virtanen, CEO, Restamax Plc, tel. +358 400 836 477
Jarno Suominen, CFO, Restamax Plc, tel. +358 40 721 5655

Distribution:

NASDAQ OMX Helsinki
Major media
www.restamax.fi

Restamax Plc is a Finnish restaurant business group established in 1996 that also offers labour hire services. The company, which listed at NASDAQ OMX Helsinki Oy in 2013 and became the first Finnish listed restaurant company, has continued to grow steadily throughout its history. The Group companies include approximately 100 restaurants, cafés, pubs and nightclubs all over Finland. The Group's well-known restaurant concepts include, among others, the von Trappe restaurants, Bodega Salud, Viihdemaailma Ilona, American Diner, Daddy's Diner, Stefan's Steakhouse, and the Galaxie and Space Bowling & Billiards entertainment centres. Restamax Plc employs between 900 and 1,100 people depending on the season. The turnover for 2014 was MEUR 86.7 and EBITDA MEUR 12.0.

Restamax company website: www.restamax.fi, Restamax consumer website: www.ravintola.fi