NoHo Partners Plc

Interim Report 7 November 2023 at 8.00 EET

Noho Partners Plc's interim report 1 January-30 September 2023: Profitable growth continues, now also in Switzerland

•   Turnover was MEUR 96.0 (86.0) and increased by 11.6%.

•   Operational EBITDA was MEUR 10.6 (10.7) and decreased by 1.3%. Operational EBITDA adjusted by BBS transaction costs was MEUR 12.1*.

•   EBIT was MEUR 8.7 (8.4) and increased by 4.1%. EBIT adjusted by BBS transaction costs was MEUR 10.2*.

•   EBIT margin was 9.1% (9.7%). EBIT margin adjusted by BBS transaction costs was 10.6%*.

•   The result for the period was MEUR -0.2 (-2.8) and increased by 92.9%. The result adjusted by entries related to Eezy Plc shares and BBS transaction costs was MEUR 4.9 (3.9)*.

•   Earnings per share were EUR -0.03 (-0.19) and increased by 84.9%. Earnings per share adjusted by entries related to Eezy Plc shares and BBS transaction costs were EUR 0.18 (0.14)*. 

•   Turnover was MEUR 265.2 (224.7) and increased by 18.0%.

•   Operational EBITDA was MEUR 31.3 (30.1) and increased by 3.9%. Operational EBITDA adjusted by BBS transaction costs was MEUR 32.8*.

•   EBIT was MEUR 25.4 (23.2) and increased by 9.5%. EBIT adjusted by BBS transaction costs was MEUR 26.9*.

•   EBIT margin was 9.6% (10.3%). EBIT margin adjusted by BBS transaction costs was 10.1%*.

•   The result for the period was MEUR 6.4 (4.2) and increased by 52.6%. The result adjusted by entries related to Eezy Plc shares and BBS transaction costs was MEUR 12.6 (11.2)*.

•   Earnings per share were EUR 0.23 (0.08) and increased by 184.3%. Earnings per share adjusted by entries related to Eezy Plc shares and BBS transaction costs were EUR 0.49 (0.43)*.

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

* BBS transaction costs refer to Better Burger Society transaction related MEUR 2.5 expert service costs, financial costs and transfer taxes. MEUR 1.5 transaction costs were recognised as other operating expenses in income statement and MEUR 1.0 financing related costs were periodised to the maturity of the loans. Later in the report, BBS refers to Better Burger Society subgroup.

KEY FIGURES

MEUR Q3 Q3 Change, Q1-Q3 Q1-Q3 Change, Q1-Q4

2023 2022 % 2023 2022 % 2022
Turnover 96.0 86.0 11.6 265.2 224.7 18.0 312.8
Operational EBITDA 10.6 10.7 -1.3 31.3 30.1 3.9 41.6
EBIT 8.7 8.4 4.1 25.4 23.2 9.5 31.6
EBIT, % 9.1 9.7 9.6 10.3 10.1
Result of the -0.2 -2.8 92.9 6.4 4.2 52.6 4.9
financial period
Earnings per share -0.03 -0.19 84.9 0.23 0.08 184.3 0.07
for the review period
attributable to the
owners of the
company,
EUR
Earnings per share 0.14 0.14 1.6 0.45 0.43 5.8 0.56
adjusted by entries
related to Eezy Plc
shares, EUR
Interest-bearing net 140.1 127.4 10.0 121.0
liabilities excluding
IFRS 16 impact
Gearing ratio 124.3 141.3 135.1
excluding IFRS 16
impact, %
Ratio of net debt to 3.3 3.2 2.9
operational EBITDA
excluding IFRS 16
impact
Adjusted equity 29.1 29.1 29.1
ratio, %
Material margin, % 75.0 74.9 75.2 74.8 75.3
Personnel expenses, % 31.4 32.4 32.4 33.4 33.2

FUTURE OUTLOOK

FUTURE OUTLOOK PROFIT GUIDANCE AS OF 6 JULY 2023

NoHo Partners estimates that, during the financial year 2023, it will achieve total turnover of approximately MEUR 380 and EBIT margin of approximately 9% in the restaurant business.

Previous profit guidance (as of 16 February 2023):

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

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.

The company will reach the targets set for the strategy cycle ending in 2024 ahead of time. The company will update its long-term strategic and financial targets for the next strategy cycle 2024-2026 and publish them during the first half of 2024.

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 and interest rates. The group 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.

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 group's size and large portfolio protect it from the strongest fluctuations.

CEO REVIEW

Profitable business growth continued in the third quarter, marked by the company's new growth projects in Finland, Norway and Switzerland. The 16 Holy Cow! restaurants acquired in Switzerland were consolidated as of the beginning of September, and non-recurring transaction costs of approximately EUR 2.5 million associated with the acquisition were recognised in the review period. Adjusted by the transaction costs, the EBIT margin exceeded the target level of 10% both for the review period and the year-to-date. I consider this to be an excellent achievement in the inflationary pressure of the first months of the year and the current interest environment.

The demand for our restaurant services has remained stable, even though the record rainy weather late in the summer affected sales during the high season of terrace sales. Entertainment venues, which include our biggest units Löyly and Allas, in particular suffered due to terrace sales lost due to the bad weather. The demand for food restaurants has remained stable throughout the year, as the Finnish culinary culture has become more European. Growth in fast food is supported by eating out increasing its popularity among adolescents and young adults.
In international business, the integration of Holy Cow! is progressing excellently, and business KPIs have developed even better than we expected. In Norway, profitable growth was accelerated by the acquisition of five new units during the review period.

Customer satisfaction has remained at a good level throughout the year. NPS that measures customer satisfaction in food restaurants is currently 70,4. We have carried out several key recruitments and investments to focus on our customers and quality control. We will continue the systematic monitoring and development of these areas in the future as well. Another important indicator for us is personnel satisfaction and the most recent survey of it indicates that NoHo employees are committed and, on average, satisfied with their workplace.

We are currently updating the objectives for the next strategy period 2024-2026. The objectives will be published during the first half of the year 2024. The principal pillars of business - good customer experience, high personnel satisfaction and the industry's leading profitability - are a good foundation on which to build the objectives. We are now focusing on successfully finishing this year, supported by the good booking situation.

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.

•           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)

The core of the company's strategy continues to be on profitable growth, which sets a clear framework on the acquisition targets. Profitability will not be sacrificed for excessively aggressive growth.

During the review period, the company operated at the heart of its strategy in all three areas. In Norway, the company returned to acquisition-driven growth by acquiring five profitable and proven units, while strengthening the local management with an experienced professional in the restaurant and event industry. The acquired total turnover is estimated to be approximately MEUR 10.

During the review period, Friends & Brgrs became part of the Better Burger Society joint venture established with the private equity investor Intera Partners. It aims for a leading position in the growing European premium burger market. The first acquisition of Better Burger Society was the Swiss burger chain Holy Cow!. With the chain brand business centralised in a single separate company, NoHo Partners can more efficiently expand its premium burger business into the large European market. The figures of Holy Cow! were consolidated into the company's international business segment as of 1 September 2023.

The last phase of large profitable urban projects was realised during the review period, as the restaurant operations of the Helsinki Expo and Convention Centre were taken over by NoHo Partners as of 1 July 2023. The fully upgraded Helsinki Expo and Convention Centre restaurants opened their doors to the public in mid-September. In addition, the design and construction of the cultural centre Helsingin Kulttuurikasarmi, to be opened in November, was in full swing during the review period.
 

TURNOVER AND INCOMETURNOVER AND INCOMETURNOVER AND INCOME

TURNOVER AND INCOME In July-September 2023, the Group's turnover increased by 11.6% to MEUR 96.0 (86.0). Operational EBITDA was MEUR 10.6 (10.7) and decreased by 1.3%. EBIT was MEUR 8.7 (8.4) with an EBIT margin of 9.1% (9.7%). The result for July-September was MEUR -0.2

(-2.8). BBS transaction cost adjusted operational EBITDA was MEUR 12.1, EBIT was MEUR 10.2 and EBIT margin was 10.6%. The result adjusted by entries related to Eezy Plc shares and BBS transaction costs was MEUR 4.9 (3.9).

In January-September 2023, the Group's turnover increased by 18.0% to MEUR 265.2 (224.7). Operational EBITDA increased by 3.9% compared to the corresponding period in the previous year and was MEUR 31.3 (30.1). EBIT was MEUR 25.4 (23.2) with an EBIT margin of 9.6% (10.3%). The result for the period was MEUR 6.4 (4.2). BBS transaction cost adjusted operational EBITDA was MEUR 32.8, EBIT MEUR 26.9 and EBIT margin 10.1%. The result adjusted by entries related to Eezy Plc shares and BBS transaction costs was MEUR 12.6 (11.2).

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 recruitmentand resource allocation, and the growth in turnover as well as operational efficiency has kept personnel expenses at a competitive level.

FINNISH OPERATIONS

MEUR Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4

2023 2022 2023 2022 2022
Turnover 75.5 69.7 214.4 179.9 251.2
Operational EBITDA 8.9 9.1 26.2 24.2 34.8
EBIT 7.8 7.7 22.4 19.9 28.2
EBIT, % 10.3 11.0 10.5 11.1 11.2
Material margin, % 75.1 74.8 75.1 74.6 75.3
Personnel expenses, % 31.5 32.4 32.3 32.9 32.8

In July-September 2023, the turnover increased by 8.4% to MEUR 75.5 (69.7) compared to the previous year. Operational EBITDA was MEUR 8.9(9.1). EBIT in July-September was MEUR 7.8 (7.7) with an 10.3% (11.0%) EBIT margin. In July-September 2023, BBS transaction cost adjusted operational EBITDA was MEUR 9.8, EBIT was MEUR 8.7 with an 11.5% EBIT margin.

In January-September 2023, the turnover increased by 19.2% to MEUR 214.4 (179.9) compared to the previous year. Operational EBITDA was MEUR 26.2(24.2). EBIT was MEUR 22.4 (19.9) with an 10.5% (11.1%) EBIT margin. In January-September 2023, BBS transaction cost adjusted operational EBITDA was MEUR 27.1 and EBIT was MEUR 23.3 with an 10.8% EBIT margin.
 

•        Sushibar + Wine -chain, Helsinki, 4 restaurants (new)

•        Helsinki Expo and Convention Centre, Helsinki, 15 restaurants (new)

•        Hook, Rauma (concept change)

•        Hanko AasiaKluuvi and Forum, Helsinki (concept change)

•        Hanko Sushi Ruka and Citykäytävä Helsinki (closed)

•        Pizzadog, Helsinki (closed)

•        Pyynikin Taproom, Helsinki (closed)

•        Friends & Brgrs, Lappeenranta (closed)

INTERNATIONAL BUSINESS

MEUR Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4

2023 2022 2023 2022 2022
Turnover 20.5 16.3 50.8 44.9 61.6
Operational EBITDA 1.7 1.6 5.1 5.9 6.8
EBIT 0.9 0.7 3.0 3.3 3.4
EBIT, % 4.5 4.1 5.8 7.3 5.5
Material margin, % 74.6 75.4 75.6 75.5 75.3
Personnel expenses, % 31.3 32.4 32.7 35.4 35.1

In July-September 2023, turnover increased by 25.3% from the previous year to MEUR 20.5 (16.3). Operational EBITDA was MEUR 1.7(1.6). EBIT was MEUR 0.9 (0.7) with an 4.5% (4.1%) EBIT margin. In  In July-September BBS transaction costs adjusted operational EBITDA was MEUR 2.3 and EBIT was MEUR 1.6 with an 7.7% EBIT margin.

In January-September 2023, turnover increased by 13.3% from the previous year to MEUR 50.8 (44.9) Operational EBITDA was MEUR 5.1(5.9). EBIT was MEUR 3.0 (3.3) with an 5.8% (7.3%) EBIT margin. In January-September 2023, BBS transaction costs adjusted operational EBITDA was MEUR 5.8 and EBIT was MEUR 3.7 with an 7.2% EBIT margin.

•           Holy Cow! -chain, 16 restaurants, Switzerland (new)

•           Countryfestivalen, Oslo (new)

•           The Wild Rover, Oslo (new)

•           Pokalen Bar and Scene at Vulkan, Oslo (new)

•           Raadhuset Bar, Oslo (new)

TURNOVER BY BUSINESS AREA

FINNISH OPERATIONS Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4

2023 2022 2023 2022 2022
Restaurants
Turnover, MEUR 33.4 29.3 95.7 78.7 112.2
  Share of total turnover, % 34.8 34.1 36.1 35.0 35.9
  Change in turnover, % 14.0 - 21.6 - 54.4
Units at the end of period, number 106 91 106 91 93

Entertainment venues
Turnover, MEUR 29.4 29.5 81.8 70.8 97.2
  Share of total turnover, % 30.7 34.3 30.8 31.5 31.1
  Change in turnover, % -0.2 - 15.5 - 91.9
Units at the end of period, number 75 71 75 71 71

Fast food -restaurants
Turnover, MEUR 12.6 10.9 36.9 30.3 41.9
  Share of total turnover, % 13.2 12.6 13.9 13.5 13.4
  Change in turnover, % 16.2 - 21.8 - 20.6
Units at the end of period, number 54 50 54 50 52

Total turnover, MEUR 75.5 69.7 214.4 179.9 251.2
Units total, number 235 212 235 212 216

INTERNATIONAL BUSINESS Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4

2023 2022 2023 2022 2022
Norway
Turnover, MEUR 10.6 10.0 29.2 29.0 39.7
  Share of total turnover, % 11.0 11.6 11.0 12.9 12.7
  Change in turnover, % 5.6 - 0.8 - 136.1
Units at the end of period, number 24 23 24 23 21

Denmark
Turnover, MEUR 6.4 6.3 18.1 15.9 21.9
  Share of total turnover, % 6.7 7.4 6.8 7.1 7.0
  Change in turnover, % 1.1 - 14.1 - 95.3
Units at the end of period, number 18 19 18 19 19

Switzerland
Turnover, MEUR 3.5 - 3.5 - -
  Share of total turnover, % 3.7 - 1.3 - -
  Change in turnover, % - - - - -
Units at the end of period, number 16 - 16 - -

Total turnover, MEUR 20.5 16.3 50.8 44.9 61.6
Units total, number 58 42 58 42 40

CASH FLOW, INVESTMENTS AND FINANCING

CASH FLOW, INVESTMENTS AND FINANCING The Group's operating net cash flow in January-September was MEUR 46.3 (46.4). Cash flow before change in working capital was MEUR 62.2 and changes in working capital MEUR -0.3.

The investment net cash flow in January-September was MEUR -22.6 (-8.6) Acquisition of tangible and intangible assets in January-September included, for example investments in Helsinki Expo and Convention Centre, the opening of five new Friends & Brgrs restaurants and eleven concept changes from Hanko Sushi restaurant to Hanko Aasia restaurant. Acquisitions of subsidiaries with time-of-acquisition liquid assets deducted included acquisitions of announced Swiss Holy Cow!, Norwegian Scene og Pubdrift AS:n and Klingenberg Bardrift AS and Lumo Laukontori Oy (Saunaravintola Kuuma). Investing activities in January-June 2022 included a MEUR 4.2 sale of Eezy Plc's shares, classified as assets held for sale.

Financial net cash flow amounted to MEUR -21.1 (-39.8), including MEUR 25.4 of IFRS 16 lease liability payments, MEUR 5.8 of dividend payments and MEUR 9.7 of amortisation of financial institution loans. New loans have been proceeded MEUR 21.5, from which MEUR 16.5 relates to BBS arrangement.

The Group's interest-bearing net liabilities excluding the impact of IFRS 16 liabilities increased during January-September by MEUR 19.1 and amounted to MEUR 140.1 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 124.3%.

Adjusted net finance costs in January-September excluding the expense due to the decrease of the market value of Eezy Plc shares classified as assets held for sale were MEUR 11.8 (9.2). IFRS 16 interest expenses included in adjusted net finance costs in January-September were MEUR 6.2 (5.5).

EVENTS AFTER THE REPORTING PERIOD  EVENTS AFTER THE REPORTING PERIOD 

EVENTS AFTER THE REPORTING PERIOD Record date and payment date of NoHo Partners' second dividend instalment of EUR 0.20

On 4 October 2023, NoHo Partners announced the record date and payment date of NoHo Partner's second dividend instalment of EUR 0.20. The Board of Directors of NoHo Partners Plc decided on the payment of the second dividend instalment of EUR 0.20 per share for the financial year 2022, based on the authorization of the Annual General Meeting held on 19 April 2023.

The dividend was paid to shareholders who were registered in the shareholders' register maintained by Euroclear Finland Ltd on the record date 13 October 2023. The dividend payment date was 20 October 2023. The first dividend instalment of EUR 0.20 per share was paid on 24 May 2023.

In October 2023, Group turnover was approximately MEUR 31.7

NoHo Partners' turnover in October 2023 was approximately MEUR 31.7 (26.7) and increased by 19% compared to the same period in the previous year.

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.

FINANCIAL REPORTING AND ANNUAL GENERAL MEETING 2024

•           Interim report for January-March on Tuesday 7 May 2024

•           Half-year report for January-June on Tuesday 6 August 2024

•           Interim report for January-September on Tuesday 5 November 2024

NoHo Partners Plc's Annual General Meeting is planned to be held on 10 April 2024.

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

A briefing for the media, analysts and investors will be organised today, 7 November 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-September 2023 is attached to this release and available at www.noho.fi/en.
Tampere, 7 November 2023

NOHO PARTNERS PLC
Board of Directors

For more information, please contact:

Aku Vikström, CEO, contact through tel. +358 50 413 8158
Jarno Suominen, Deputy CEO, tel. +358 40 721 5655
Jarno Vilponen, CFO, tel. +358 40721 9376

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