NOHO PARTNERS PLC’S INTERIM REPORT 1 JANUARY–31 MARCH 2023: Strong start to the year – the record streak continues

NoHo Partners Oyj

NoHo Partners Plc

INTERIM REPORT 9 May 2023 at 8.00 EET

NOHO PARTNERS PLC’S INTERIM REPORT 1 JANUARY–31 MARCH 2023: Strong Q1 2023 – the record streak continues

JANUARY–MARCH 2023 IN BRIEF

• Turnover increased by 56.5% and was MEUR 75.9 (48.5).

• EBIT increased by 554.6% and was MEUR 5.9 (-1.3).

• EBIT margin was 7.8% (-2.7%)

• The result for the period increased by 168.7% and was MEUR 2.4 (-3.6). The result adjusted by the change in Eezy Plc share price was MEUR 1.8.

• Earnings per share increased by 150.8% and were EUR 0.09 (-0.18). Earnings per share adjusted by entries related to Eezy Plc shares was EUR 0.06.

• Operational EBITDA increased by 654.7% to MEUR 8.1 (1.1).

Unless otherwise stated, figures in parentheses refer to the corresponding period last year.

KEY FIGURES

MEUR	Q1 2023	Q1 2022	Change, %	Q1–Q4 2022
Turnover	75.9	48.5	56.5	312.8
Operational EBITDA	8.1	1.1	654.7	41.6
EBIT	5.9	-1.3	554.6	31.6
EBIT, %	7.8	-2.7		10.1
Result of the financial period	2.4	-3.6	168.7	4.9
Earnings per share for the review period attributable to the owners of the company, EUR	0.09	-0.18	150.8	0.07
Earnings per share adjusted by entries related to Eezy Plc shares, EUR	0.06	-0.20		0.56
Interest-bearing net liabilities excluding IFRS 16 impact	117.6	148.7	-20.9	121.0
Gearing ratio excluding IFRS 16 impact, %	131.4	208.0		135.1
Adjusted equity ratio, %	29.5	23.1		29.1
Material margin, %	75.1	74.1		75.3
Personnel expenses, %	33.2	37.8		33.2

FUTURE OUTLOOK

PROFIT GUIDANCE AS OF 16 FEBRUARY 2023

NoHo Partners estimates that, during the financial year 2023, it will achieve total turnover of over MEUR 350 and EBIT margin of approximately 9% in the restaurant business.

FINANCIAL TARGETS FOR THE STRATEGY PERIOD 2022-2024

The company’s long-term guidance is as follows:

The Group aims to achieve turnover of approximately MEUR 400 and an EBIT margin of approximately 10% during 2024. In the long-term, the company aims to keep the ratio of net debt to operational EBITDA, adjusted for IFRS 16 lease liability, under 3 and distribute annually increasing dividend.

MARKET ENVIRONMENT

The business outlook for the tourism and restaurant sector has improved from recent years to a pre-pandemic level, but the outlook and consumer confidence continue to be weakened by the uncertain geopolitical climate, consumers’ reduced purchasing power and the general rise in costs. The company continues to take active measures to prepare for potentially rapid changes in the market situation by actively monitoring operational efficiency and pricing, using centralised procurement agreements and engaging in regular dialogue with suppliers and other partners. Customer demand is estimated to continue at a good level during 2023.

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. The demand for restaurant services is usually less susceptible to cyclical fluctuations compared to other service and retail industries. The company’s size and large portfolio protect it from the strongest fluctuations.

CEO REVIEW

The year started strong as an excellent EBIT margin of 7.8% was reached in the seasonally weakest quarter. This is the highest profitability level in the history of the company for this quarter. At the same time, it is the fourth consecutive quarter of improving profitability in both absolute and relative terms. The positive profitability development is due to three main factors, the most important one being the structural changes in our portfolio. The other two factors include the company’s flexible business model, which enables adjusting to a rapidly changing market environment, and the significant scale benefits from central purchases.

Supported by the good profitability development and strong cash flow, we have continued to pay off the debt, and the targeted level of net debt ratio to operational EBITDA was achieved, which is now under 2.5. With a solid cash flow and the excellent result from last year, we also return to paying dividends. Dividends shall be paid in two instalments this year. The target is to continue paying increasing dividends.

The profitable growth strategy, which is based on good return on equity and acquisitions-powered growth, has proven its effectiveness. The market environment is continuously evolving, and the impacts to decision-making are constantly evaluated and reviewed. The higher cost of money sets tougher requirements for the return on equity but, at the same time, the availability of acquisition targets has improved and valuations have decreased to some extent. This enables moving into the next phase of fully implementing growth driven by acquisitions. The higher risk factor, which is always connected to strong growth, can be managed by specifically acquiring companies with strong cash flows in all markets and by being increasingly selective when creating new concepts.

Market demand has remained at a good level. At NoHo Partners, we believe that the cultural transformation in the restaurant market continues and compensates for the pressured purchasing power. The demand in the second quarter is essentially impacted by the weather in spring and early summer. For the remaining part of the year, the outlook is cautiously optimistic. The order book for corporate events looks good for the autumn and the restaurant operations at the Helsinki Expo and Convention Centre will give a significant growth boost in the second half of the year. The fundaments of the company’s balance sheet and performance are solid and we are getting ready to define the targets for the next strategy cycle and continue evaluating growth opportunities in domestic and international markets.

Aku Vikström
CEO

IMPLEMENTATION OF THE STRATEGY 

The Group aims to achieve turnover of approximately MEUR 400 and an EBIT margin of approximately 10% during 2024. In the long-term, the company aims to keep the ratio of net debt to operational EBITDA, adjusted for IFRS 16 lease liability, under 3 and distribute annually increasing dividend.

NoHo Partners’ growth strategy focuses on the following three key areas:

• Profitable growth in the Norwegian restaurant market through acquisitions (50 million growth target)

• Scaling up the Friends & Brgrs chain in Finland (30 million growth target)

• Large and profitable urban projects (30 million growth target)

In Norway, after a strong growth period, the company has focused on optimising its restaurant portfolio by combing out non-profitable units and strengthening the organisation in preparation for the next growth phase. When it comes to growth in Norway, the focus is on acquisitions and particularly on pubs and restaurants with proven concepts and stable cash flows.

The expansion of the Friends & Brgrs chain is progressing as planned. The concept has been finetuned to enable increasingly better scalability, the operational process taking place in the restaurants has been streamlined and the design of the restaurants has been unified. During the quarter, two new Friends & Brgrs restaurants were opened. One of the two openings was the chain’s first ever drive-in restaurant, which is a strategic growth channel in the future.

The MEUR 30 million growth target set for the strategy cycle concerning large urban projects was achieved as the multiyear partnership agreement with the Helsinki Expo and Convention Centre was signed in January. The restaurant operations at the Helsinki Expo and Convention Centre are estimated to contribute approximately MEUR 15 in annual turnover. The company will take over responsibility for the restaurant operations at the Helsinki Expo and Convention Centre as of 1 July 2023.

TURNOVER AND INCOME

In January–March 2023, the Group’s turnover increased by 56.5% to MEUR 75.9 (48.5). Compared to the corresponding period in 2019 prior to the Covid-19 pandemic, turnover increased by 42.5%. Operational EBITDA increased by 654.7% compared to the corresponding period in the previous year and was MEUR 8.1 (1.1). EBIT was MEUR 5.9 (-1.3) with an EBIT margin of 7.8 (-2.7). The result for the period was MEUR 2.4 (-3.6). The result adjusted by the MEUR 0.6 income resulting from the cancellation of fair value impairment, following the increase in market value of Eezy Plc shares, classified as assets held for sale, was MEUR 1.8.

The company was able to balance the effects of inflation on its business through centralised purchasing agreements and price increases, and the general rise in prices did not significantly affect the material margin. In spite of the labour shortages in the industry, the company also performed well in recruitment and resource allocation, and the growth in turnover as well as operational efficiency has kept personnel expenses at a competitive level.

FINNISH OPERATIONS 

MEUR	Q1 2023	Q1 2022	Q1–Q4 2022
Turnover	61.5	37.3	251.2
Operational EBITDA	6.5	-0.8	34.8
EBIT	5.1	-2.4	28.2
EBIT, %	8.3	-6.3	11.2
Material margin, %	74.7	73.5	75.3
Personnel expenses, %	33.1	36.3	32.8

In January–March 2023, the turnover of Finnish operations increased by 56.5% to MEUR 61.5 (37.3) compared to the previous year. Compared to the corresponding period in 2019 turnover increased by 26.4%. In Finland, Covid-19 pandemic-related restrictions were lifted in March 2022. Operational EBITDA was MEUR 6.5 (-0.8). EBIT was MEUR 5.1 (-2.4) with a 8.3% (-6.3) EBIT margin.

Changes in the restaurant portfolio in January–March 2023

• Friends & Brgrs, Kokkola and Raisio (new)

• Pub-restaurant Ruma, Tampere (concept change)

• Hanko Aasia Lauttasaari, Tripla, Kaari, Sello, Jumbo, Tampere city centre, Ratina, Raisio (concept change)

• American Diner Jyväskylä (closed)

• Hanko Sushi, Kuopio (closed)

• Sandro Ratina, Tampere (closed)

INTERNATIONAL BUSINESS 

MEUR	Q1 2023	Q1 2022	Q1–Q4 2022
Turnover	14.4	11.2	61.6
Operational EBITDA	1.6	1.9	6.8
EBIT	0.8	1.1	3.4
EBIT, %	5.6	9.4	5.5
Material margin, %	76.5	76.3	75.3
Personnel expenses, %	33.8	42.5	35.1

In January–March 2023, turnover in the international business increased by 64.9% from the previous year to MEUR 14.4 (11.2) and by 211.5% compared to the corresponding period in 2019. In Norway and Denmark, the restrictions related to the Covid-19 pandemic were lifted in February 2022. Operational EBITDA was MEUR 1.6 (1.9). EBIT was MEUR 0.8 EBIT (1.1) with a 5.6% (9.4) EBIT margin.

There were no changes in the restaurant portfolio in January–March 2023.

TURNOVER BY BUSINESS AREA 

FINNISH OPERATIONS	Q1 2023	Q1 2022	Q1–Q4 2022
Restaurants
Turnover, MEUR	28.5	17.2	112.2
Share of total turnover, %	37.6	35.4	35.9
Change in turnover, %	66.0	-	54.4
Units at the end of period, number	90.0	94.0	93.0
Entertainment venues
Turnover, MEUR	21.0	11.4	97.2
Share of total turnover, %	27.7	23.6	31.1
Change in turnover, %	83.5	-	91.9
Units at the end of period, number	71.0	72.0	71.0
Fast food -restaurants
Turnover, MEUR	12.0	8.7	41.9
Share of total turnover, %	15.7	17.9	13.4
Change in turnover, %	38.0	-	20.6
Units at the end of period, number	53	46	52
Total, MEUR	61.5	37.3	251.2

INTERNATIONAL BUSINESS	Q1 2023	Q1 2022	Q1–Q4 2022
Norway
Turnover, MEUR	9.0	7.9	39.7
Share of total turnover, %	11.9	16.2	12.7
Change in turnover, %	14.3	-	136.1
Units at the end of period, number	21	20	21
Denmark
Turnover, MEUR	5.4	3.3	21.9
Share of total turnover, %	7.2	6.9	7.0
Change in turnover, %	62.8	-	95.3
Units at the end of period, number	19	18	19
Total, MEUR	14.4	11.2	61.6

CASH FLOW, INVESTMENTS AND FINANCING

The Group’s operating net cash flow in January–March was MEUR 16.3 (8.7). Cash flow before change in working capital was MEUR 18.2 and changes in working capital MEUR 1.7.

The investment net cash flow in January–March was MEUR -2.1 (1.8) The investments in January–March in Finland included, for example, the opening of two new Friends & Brgrs restaurants and eight concept changes from Hanko Sushi restaurant to Hanko Aasia restaurant. The positive net cash from investing activities in Q1 2022 included MEUR 4.2 sale of Eezy Plc’s shares, classified as assets held for sale.

Financial net cash flow amounted to MEUR -13.4 (-14.8), including MEUR 8.0 of IFRS 16 lease liability payments and MEUR 3.0 in amortisation of financial institution loans. Financial cash flow also includes a repayment of MEUR 2.0 related to the Group’s commercial paper programme.

The Group’s interest-bearing net liabilities excluding the impact of IFRS 16 liabilities decreased during January–March by MEUR 3.4 and amounted to MEUR 117.6 at the end of the review period. The Group’s gearing ratio excluding the impact of IFRS 16 liabilities decreased from 135.1% at the beginning of the financial period to 131.4%.

Adjusted net finance costs in January–March were MEUR 3.5 (3.4), which included income of MEUR 0.6 due to increase of the market value of Eezy Plc shares classified as assets held for sale. IFRS 16 interest expenses in January–March were MEUR 1.9 (1.8).

EVENTS AFTER THE REPORTING PERIOD 

In January 2023, Group turnover in line with expectations at increased to approximately MEUR 29.1

NoHo Partners’ turnover in January 2023 was in line with expectations at previous year’s level at approximately MEUR 29.1 (28.9).

NoHo Partners publishes in the interim reports the Group turnover for the first month of the commencing quarter. The target is to provide better service to investors through timely and transparent investor communications.

Decisions by NoHo Partners Plc's Annual General Meeting

The Annual General Meeting of NoHo Partners Plc was held on 19 April 2023. The AGM approved all of the proposals submitted to the AGM and approved the Remuneration Report. The AGM adopted the financial statements for 2022 and discharged the company’s management from liability for the financial period 1 January 2022–31 December 2022. The decisions of the Annual General Meeting were disclosed with a stock exchange release and are available at the company’s website at https://www.noho.fi/en/investors/.

NoHo Partners acquires the popular Sauna Restaurant Kuuma in Tampere, Finland

On 27 April 2023, NoHo Partners Plc announced that the company has acquired Sauna Restaurant Kuuma located in Tampere in central Finland. 100% of the shares of the company to be acquired, Lumo Laukontori Oy, transfer into NoHo Partners’ ownership as of 1.6.2023.

The Board of Directors of NoHo Partners Oyj has resolved on a directed share issue without payment to the company’s key employees based on the share-based incentive plan

On 3 May 2023, NoHo Partners Plc announced that the Board of Directors of the company resolved on a directed share issue without payment to the key employees of the company in order to pay the reward for the third earning period of the long-term share-based incentive plan from 1 December 2021 to 31 March 2023. The share issue resolution is based on the authorization given by the Annual General Meeting on 19 April 2023. A total of 106 877 new shares were issued without payment in the share issue to eight key employees participating in the share-based incentive plan. As a result of the share issue the total number of shares in NoHo Partners Oyj will be 20,806,678. The new shares were registered with the Trade Register on 8 May 2023. The new shares were admitted to trading on the official list of Nasdaq Helsinki Ltd. on 9 May 2023.

BRIEFING FOR THE MEDIA, ANALYSTS AND INVESTORS AT 10:00 EET

A briefing for the media, analysts and investors will be organised today, 9 May 2023. In the briefing, NoHo Partners CEO Aku Vikström will review NoHo Partners Plc's financial performance, key events, the current state of business and the outlook.

The briefing is available as a live webcast. The briefing will be held in Finnish. The presentation materials and a recording of the briefing will be available on the company’s website later today.

NoHo Partners’ full Interim Report for January–June 2022 is attached to this release and available at www.noho.fi/en.

Tampere, 9 May 2023

NOHO PARTNERS PLC 
Board of Directors

For more information, please contact:

Aku Vikström, CEO, contact through tel. +358 10 229 3068
Jarno Suominen, Deputy CEO, tel. +358 40 721 5655
Jarno Vilponen, CFO, tel. +358 40 721 9376

NoHo Partners Plc 
Hatanpään valtatie 1 B 
FI-33100 Tampere, Finland

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. The well-known restaurant concepts of the company include Elite, Savoy, Teatteri, Sea Horse, Stefan’s Steakhouse, Palace, Löyly, Hanko Aasia, Friends & Brgrs, Campingen and Cock’s & Cows. Depending on the season, the Group employs approximately 2,300 people converted into full-time employees. The Group aims to achieve a turnover of EUR 400 million by the end of 2024. The company’s vision is to be the leading restaurant company in Northern Europe.

Attachment

• NOHO PARTNERS Q1 2023 (EN)