RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY-31 MARCH 2017: Turnover increased by 17.5 per cent and operating profit by more than 266 per cent

RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY-31 MARCH 2017: Turnover increased by 17.5 per cent and operating profit by more than 266 per cent

Restamax Plc

INTERIM REPORT 9 May 2017 at 8.00

RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY-31 MARCH 2017

Turnover increased by 17.5 per cent and operating profit by more than 266 per cent in January-March 2017

TURNOVER AND INCOME

Group's result for January-March 2017

Entire Group:
The Group's turnover was MEUR 32.0 (MEUR 27.2), growth of 17.5 per cent. EBITDA was MEUR 3.3 (MEUR 2.8), growth of 17.8 per cent. Operating profit was MEUR 0.7 (MEUR 0.2), growth of 266.6 per cent.

Restaurant business:
The turnover of the restaurant business segment was MEUR 25.6 (MEUR 23.1), growth of 10.5 per cent. EBITDA was MEUR 2.6 (MEUR 2.3), growth of 13.7 per cent. Operating profit was MEUR 0.4 (MEUR 0.0), growth of 1552.4 per cent.

Labour hire business:
The turnover of the labour hire business segment was MEUR 8.7 (MEUR 6.5), growth of 32.7 per cent. EBITDA was MEUR 0.8 (MEUR 0.6), growth of 36.4 per cent. Operating profit was MEUR 0.4 (MEUR 0.2), growth of 110.1 per cent.

Figures in parentheses refer to the same period last year, unless otherwise stated.

As expected, Restamax's result for the first quarter of 2017 was good. The turnover of the entire Group increased by 17.5 per cent from the previous year, EBITDA by 17.8 per cent and operating profit by 266.6 per cent. The strong development of the operating profit is based on the relative stabilisation of the depreciation level. In the restaurant business segment, the operating profit increased by 1,552.4 per cent from the previous year, and in the labour hire business segment, by 110.1 per cent.

The increase of the turnover in the first quarter was also affected by the corporate acquisition of seven restaurants with Unioninkadun keidas Oy in late 2016. The acquired restaurant units in Levi, Ruka, Pyhä and Helsinki have been fully available to the company since the beginning of the year, and the restaurants' winter season and the integration into the business of Restamax were successful.

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 2017

Results management (as of 21/02/2017):

Restamax expects the Group's turnover to increase and profitability to remain on a good level in the 2017 financial year.

The Company's goal is to reach a turnover of MEUR 180 by the end of 2018.

CEO MARKKU VIRTANEN

The first quarter of 2017 was successful

Between January and March 2017, the turnover of the entire Group increased by 17.5 per cent, EBITDA by almost 18 per cent and operating profit by over 266 per cent from last year.

In the first quarter of 2017, we achieved a rather good result compared to the previous year. Our EBITDA is strong - our profitability is among the best in the restaurant industry as measured by EBITDA. Our previously high depreciation level has relatively stabilised, which is beginning to show in our operating profit level. In the restaurant business segment, the operating profit increased by more than 1,550 per cent from the previous year, and in the labour hire business segment, by more than 110 per cent.

We increased our market share according to plan late last year, especially in Northern Finland. The integration of the new Northern units, i.e. three Colorado Bar & Grill restaurants and the Kuura, Pizza Block and Mura Sushi restaurants, into our operations has been successful, which had a positive impact on our result in the first quarter of 2017.

In the first quarter of the year, we also strengthened our positions in Pirkanmaa, our main market area. In January 2017, together with Koskiravintolat Oy, a veteran company in the restaurant business, we established a new limited company, Rivermax Oy. As a result of this, our restaurant portfolio now includes the Tampere restaurants Poro (former Hullu Poro), Jackie Brown and Jackie Brown Gold, von Nottbeck in Näsilinna, the summer restaurant Laituri and, in Pori, the Kirjuri summer restaurant. Our collaboration aims at providing new kinds of restaurant experiences in both Pirkanmaa and Satakunta that are even higher-quality and more memorable than before.

The popular Thai Papaya restaurants in the Helsinki area became part of our portfolio at the turn of the year, and we opened a new restaurant based on this concept at Ideapark in Lempäälä in March. We also renovated the Foodpark restaurant area at Ideapark in Lempäälä, opened a BeefKing restaurant in Lielahti in Tampere and expanded our operations into the escape room game business by opening the Run Out escape rooms in Tampere. In addition, we bought the popular event restaurant Yo-talo in Tampere and, together with Rivermax, the Tillikka restaurant complex.

In Helsinki, we increased our ownership of Hernesaaren Ranta, diversified the services of the area and acquired the business of the Vespa restaurant, on the premises of which we will open a new restaurant during the spring. At the end of March, we also opened the Skohan nightclub in the Helsinki city centre in collaboration with rap artist Jare "Cheek" Tiihonen and event producer Kalle Kallonen. In Joensuu, the Gloria nightclub was taken over by our subsidiary Northmax Oy.

Our subsidiary Smile Henkilöstöpalvelut Oy expanded its operations to a new field and now also supplies ICT and office professionals. Smile Industries, which started its operations in late 2016 and supplies labour for industry, construction and logistics, has strengthened its market position in early 2017. The growth of the labour hire business has been even faster than the restaurant business, and labour hire has become an increasingly important part of the operations of the Group.

Demand for restaurant services on the increase

The increased tourism in Lapland increases the demand for restaurant services and creates new jobs in the field. Thanks to clean nature, cultural experiences, internationally awarded chefs and safety, Finland has become an attractive travel destination worldwide. Especially the number of Chinese, Russian, Swedish, German and British tourists has increased in the last few years.

The economic situation in the tourism and restaurant industry has improved significantly after many weak years, although it is still below average. The companies in the field expect growth to be slightly faster in the spring and profitability to remain the same. According to the turnover forecast by the Finnish Hospitality Association (MaRa), in the first quarter of 2017 the turnover of restaurants increased by 6.5 per cent and the turnover of the whole tourism and restaurant sector by 6.9 per cent. In the corresponding period last year, the growth of turnover in the field was approximately four per cent.

The biggest reasons for the poor profitability of the restaurant sector are high taxes and high add-on costs of salaries. Our concept-based business model and our subsidiary Smile Henkilöstöpalvelut enable effective and quick reactions to customer demand, market changes and changing needs of different seasons.

During the review period, the collective agreements of employees and managers concerning tourism, restaurant and leisure services were revised for 1 February 2017-31 January 2018 in accordance with the Competitiveness Pact made by central organisations. The concrete effects of the Competitiveness Pact on the operations of our company can probably not be observed until after the present year.

Growth of labour hire accelerating

Labour hire is a field of future growth full of potential - it combines the flexible needs of employees and employers in constantly changing working life. In addition, the demand in the sector has been found to have increased, amongst other things, because of globalisation and technical development.

Up to 80 per cent of the turnover of staffing services is made up of labour hire services. The turnover of labour hire services for January 2017 was MEUR 69.9 in Finland, an increase of 23 per cent over the previous year.

The development of Smile Henkilöstöpalvelut reflects the positive prospects and growth estimates of the sector, although the growth has been substantially stronger than the average development of the sector. After the review period, Smile Henkilöstöpalvelut bought the entire shareholding of Pasianssi Oy (Banssi Henkilöstöpalvelut) in April and took a big step towards the top of the sector: Banssi operates in 14 cities and has some 2,000 employees in its staff bank. In addition to organic growth, we also intend to map new targets for corporate acquisitions this year. In the middle of growth, we want profitability to remain on a good level.

During the early part of the year, Smile Henkilöstöpalvelut renewed its brand to better correspond with the procedures and views of the company. In accordance with the company's present slogan, Smile wants to bring joy and positivity to Finnish working life.

Growth story of the Group continues

In January we announced that I will leave the post of CEO in June 2017, at which point I will have headed our company for 12 years. I greatly value the people with whom I have had the pleasure of working during these years. Together we made Restamax an incredible growth story. For this I want to thank the whole personnel, our partners and our customers.

I believe that in the coming years, the Group will continue its growth that is stronger than the general market development. This is signalled, for example, by the fact that after the publication of the 2016 financial statements, our share price has increased at a record rate. The highest share price was reached after the review period, on 6 April 2017, when the price for our share rose to EUR 7.54.

The first quarter of the year is always the weakest period in our business, because in both business segments, the generation of profit is focused on the end of the year. The first quarter of 2017 is a strong indication that this year will once again be successful.

Markku Virtanen, CEO

The full Restamax interim report for January-March 2017 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

APPENDIX: Restamax Plc Interim Report Q1/2017

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

Distribution:
NASDAQ OMX Helsinki
Major media
www.restamax.fi

Restamax Oyj is a Finnish group established in 1996, specialising in restaurant services and labour hire. The company, which listed on NASDAQ OMX Helsinki in 2013 and became the first Finnish listed restaurant company, has continued to grow strongly throughout its history. The Group companies include some 120 restaurants, nightclubs and entertainment centres all over Finland. Well-known restaurant concepts of the Group include Stefan's Steakhouse, Viihdemaailma Ilona, Classic American Diner and Colorado Bar & Grill. In 2016, Restamax Plc's turnover was MEUR 130.1 and EBITDA MEUR 19.4. Depending on the season, some 1,100 persons converted into full-time employees work at the Group. The workforce of Restamax subsidiary Smile Henkilöstöpalvelut Oy is about 4,500.

Restamax company website: www.restamax.fi, Restamax consumer website: www.ravintola.fi, Smile Henkilöstöpalvelut: www.smilepalvelut.fi