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2020-08-11

NOHO PARTNERS PLC HALF-YEAR REPORT 1 JAN–30 JUN 2020: The second quarter was dominated by the coronavirus pandemic: the exceptional situation was brought under control through strong measures – demand has recovered better than anticipated

NoHo Partners Plc

HALF-YEAR REPORT 11 August 2020 at 8:15 a.m.

NOHO PARTNERS PLC HALF-YEAR REPORT 1 JANUARY–30 JUNE 2020

The second quarter was dominated by the coronavirus pandemic: the exceptional situation was brought under control through strong measures – demand has recovered better than anticipated following the lifting of restrictions

As expected, the Group’s result for the second quarter of 2020 was negative due to the impacts of the coronavirus pandemic. Approximately 90% of the Group’s restaurants were closed in April–May. The business losses were minimised by quick and determined adjustment measures as well as government compensation. Starting from June 2020, the company focused on the gradual resumption of its business in a restricted operating environment and financing operations through cash flow. Business resumed better than expected thanks to active customer demand and controlled reopenings. Turnover in June was about MEUR 14 (approximately 55% of the turnover for the corresponding period last year) and turnover in July was about MEUR 20 (approximately 75% of the turnover for the corresponding period last year) while operating cash flow was positive in both months.

TURNOVER AND INCOME

JANUARY–JUNE 2020 IN BRIEF

Group (continuing and discontinued operations):

  • Turnover declined by 42.8% to MEUR 69.1 (MEUR 120.9).
  • EBIT fell by 211.9% to MEUR -15.0 (MEUR 13.4).
  • The EBIT percentage was -21.8% (11.1%), a decrease of 295.7%.
  • The result for the financial period was MEUR -18.0 (MEUR 7.6), a decrease of 337.0%.
  • Earnings per share were EUR -0.91 (EUR 0.69), a decrease of 231.6%.
  • The gearing ratio excluding the impact of IFRS 16 liabilities was 158.5%. Interest-bearing net liabilities excluding the IFRS 16 effect amounted to MEUR 149.5. IFRS 16 liabilities totalled MEUR 154.6. The gearing ratio including the effect of IFRS 16 was 326.3%.

Restaurant business (comparable continuing operations):

  • Turnover declined by 42.9% to MEUR 69.1 (MEUR 121.0).
  • EBIT fell by 360.6% to MEUR -14.8 (MEUR 5.7).
  • The EBIT percentage was -21.4% (4.7%), a decrease of 556.2%.
  • Result of the review period attributable to the parent company’s shareholders was MEUR -17.4 (MEUR 5.4), a decrease of 423.6%.
  • Earnings per share were EUR -0.95 (EUR 0.28), a decrease of 432.5%.
  • Operating cash flow fell by 129.5% to MEUR -3.5 (MEUR 11.8).
  • The result for the financial period was affected by write-offs of approximately MEUR 4.6 allocated to discontinued units and units whose revenue generating capacity is estimated to decline in the future. The result for the financial period was also affected by MEUR 0.8 in costs associated with the closure and reopening of restaurants.
  • Government support in January–June 2020 totalled approximately MEUR 8.4.
  • Reductions in rent amounted to approximately MEUR 3.5 in April–May 2020, representing some 70% of the Group’s leases in Finland.

APRIL–JUNE 2020 IN BRIEF

Group (continuing and discontinued operations):

  • Turnover declined by 71.9% to MEUR 19.0 (MEUR 67.7).
  • EBIT fell by 200.6% to MEUR -8.4 (MEUR 8.4).
  • The EBIT percentage was -44.3% (12.4%), a decrease of 457.7%.
  • The result for the financial period was MEUR -9.2 (MEUR 4.8), a decrease of 291.8%.
  • Earnings per share were EUR -0.46 (EUR 0.41), a decrease of 214.1%.

Restaurant business (comparable continuing operations):

  • Turnover declined by 71.9% to MEUR 19.0 (MEUR 67.7).
  • EBIT fell by 308.1% to MEUR -8.1 (MEUR 3.9).
  • The EBIT percentage was -42.7% (5.8%), a decrease of 840.0%.
  • Result of the review period attributable to the parent company’s shareholders was MEUR -8.5 (MEUR 3.2), a decrease of 366.6%.
  • Earnings per share were EUR -0.45 (EUR 0.17), a decrease of 364.4%.
  • Operating cash flow fell by 103.0% to MEUR -0.2 (MEUR 6.4).
  • The result for the financial period was affected by write-offs of approximately MEUR 4.6 allocated to discontinued units and units whose revenue generating capacity is estimated to decline in the future. The result for the financial period was also affected by MEUR 0.8 in costs associated with the closure and reopening of restaurants.
  • Government support in April–June 2020 totalled approximately MEUR 7.4.
  • Reductions in rent amounted to approximately MEUR 3.5 in April–May 2020, representing some 70% of the Group’s leases in Finland.

Significant events in the review period:

  • The Group acquired a majority stake in the hit chain Friends & Brgrs Ab Oy on 3 April 2020. A special share issue was carried out as part of the acquisition and the newly issued shares in the company were registered in the Trade Register on 8 April 2020.
  • The national authorities ordered the closure of restaurants from 4 April to 31 May 2020 in Finland.
  • In April, the company reached an agreement on a MEUR 34 financing package for the period of business disruptions caused by the coronavirus pandemic. As the final part of the financing package, the company agreed in May on a debt of EUR 10 million with a right to conversion with Finnish Industry Investment Ltd (Tesi).
  • As restrictions on restaurants were partially lifted, the Group gradually resumed its business operations in a restricted operating environment in Finland starting from 1 June 2020. In Denmark and Norway, restaurant operations were resumed on a restricted basis in May.
  • Alcohol serving hours in restaurants were extended from 10 p.m. to 1 a.m. starting from 22 June 2020 and buffet tables were allowed again. The permitted customer volume was increased from 50% to 75% of normal capacity.
  • The Group’s turnover in June was approximately MEUR 14, which is about 55% of the turnover for the corresponding period last year.
  • Approximately 30% of the Group’s restaurants were closed at the end of June.
  • Approximately 75% of the Group’s entire personnel had returned to work either full-time or part-time by the end of June.

Significant events after the review period:

  • The restrictions on opening hours, alcohol serving hours and customer volume were lifted starting from 13 July 2020 In Finland. Indoor and outdoor events attended by more than 500 people will be permitted starting from 1 August 2020.
  • The Group’s turnover in July was approximately MEUR 20, which is about 75% of the turnover for the corresponding period last year.
  • Approximately 15% of the Group’s restaurants remained closed at the end of July.
  • Approximately 95% of the Group’s entire personnel had returned to work either full-time or part-time by the end of July.

SUMMARY

The sudden market changes caused by the coronavirus pandemic had a significant impact on the Group’s result in January–June 2020.

Due to the coronavirus pandemic and the subsequent orders issued by the authorities, the Group’s business was brought to an almost complete halt from April until the end of May, which resulted in nearly MEUR 60 in lost turnover in the second quarter of 2020. The restaurant business was resumed gradually in Denmark and Norway in May and in Finland at the beginning of June in a restricted operating environment. Following the reopening of restaurants, sales have developed favourably in all of the Group’s business areas.

The Group’s turnover in June 2020 was approximately MEUR 14, which is roughly 55 per cent of the turnover in the corresponding period last year. In July 2020, the Group’s turnover was approximately MEUR 20, or about 75 per cent of the turnover in the corresponding period last year. Thanks to the recovery of customer demand, the lifting of restrictions and operational efficiency, the Group’s operating cash flow was positive in June and July.

The result for April–June 2020 was affected by write-offs of approximately MEUR 4.6, with approximately half being allocated to discontinued units and half to about 10 units whose revenue generating capacity is estimated to decline in the future. The write-offs will reduce depreciation by approximately MEUR 1.0 per year for the next four years. The result for the second quarter of 2020 was also affected by non-recurring expenses of approximately MEUR 0.8 arising from the closure and resumption of business.

The Group has recognised approximately MEUR 8.4 in financial support from the Finnish, Danish and Norwegian governments for the period 1 January–30 June 2020. Reductions in rent totalled about MEUR 3.5 in January–June 2020, representing approximately 70 per cent of the Group’s leases.

In a normal operating environment 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

The second quarter of 2020 was dominated by the coronavirus pandemic. Due to the orders issued by the authorities and the general circumstances, we closed approximately 90 per cent of our more than 230 restaurants in three countries and lost nearly MEUR 60 in turnover during the second quarter. Our EBIT was MEUR 8.4 in the negative due to the lockdown in April–May. Considering the highly exceptional business environment, the result for the review period is better than we expected. When our business gradually resumed in June, customer demand exceeded our expectations.

The loss for the review period consisted of MEUR 3.8 in business losses (restaurant business MEUR -3.5 and the profit effect of Eezy Plc MEUR -0.3) and write-offs of approximately MEUR 4.6. The losses from business operations were successfully minimised through quick decision-making, strong responses and government compensation.

In response to the coronavirus pandemic and the changed market environment, we have assessed the assets on our balance sheet and recognised write-offs of approximately MEUR 4.6. Approximately half of the write-offs are allocated to discontinued units and half to about 10 units whose revenue generating capacity is estimated to decline in the future. Following these write-offs, our depreciation will be reduced by approximately MEUR 1 per year for the next four years.

When the coronavirus pandemic hit, we shifted from profit-oriented decision-making to cash flow-oriented decision-making. Our quick and determined adjustment measures enabled us to keep our operating cash flow at our target level for the duration of the lockdown. In June, our business resumed in a restricted operating environment significantly better than expected. Higher-than-anticipated consumer demand combined with the controlled reopening of restaurants generated positive operative cash flow in June. Our turnover for June totalled approximately MEUR 14, exceeding the estimate we issued at the beginning of June by about 75 per cent. At the end of June, 30 per cent of our restaurants remained closed.

During the review period, we successfully stabilised the Group’s financing structure and secured our liquidity for the duration of the exceptional circumstances. Our net debt stood at MEUR 149.5 at the midpoint of the year (excluding the IFRS 16 effect), which is in line with the forecast we issued in our Q1/2020 report. In spite of the coronavirus situation, o...

Författare NoHo Partners Oyj

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