NOHO PARTNERS PLC’S INTERIM REPORT 1 JANUARY –30 SEPTEMBER 2022: The restaurant summer of all time

NOHO PARTNERS PLC’S INTERIM REPORT 1 JANUARY –30 SEPTEMBER 2022: The restaurant summer of all time – profitability continued record high

NoHo Partners Plc

INTERIM REPORT 8 November 2022 at 8.15 EET

NOHO PARTNERS PLC’S INTERIM REPORT 1 JANUARY –30 SEPTEMBER 2022

The restaurant summer of all time – profitability continued record high

JULY–SEPTEMBER 2022 IN BRIEF

Turnover increased by 39.0% and was MEUR 86.0 (61.9).
EBIT increased by 112.2% and was MEUR 8.4 (3.9).
EBIT margin was 9.7% (6.4%)
The result for the period decreased by 309.0% and was MEUR -2.8 (1.3). The result adjusted by a fair value impairment of MEUR 6.7 due to the market value of Eezy Plc shares, classified as assets held for sale, was MEUR 3.9.
Earnings per share decreased by 574.9% and were EUR -0.19 (0.04). Earnings per share adjusted by entries related to Eezy Plc shares was EUR 0.14.
Operational EBITDA increased by 42.2% to MEUR 10.7 (7.5).

JANUARY–SEPTEMBER 2022 IN BRIEF

Turnover increased by 92.8% and was MEUR 224.7 (116.5).
EBIT increased by 404.9% and was MEUR 23.2 (-7.6).
EBIT margin was 10.3% (-6.5%)
The result for the period increased by 130.5% and was MEUR 4.2 (-13.7). The result adjusted by a fair value impairment of MEUR 7.5 due to the market value of Eezy Plc shares, classified as assets held for sale, was MEUR 11.6.
Earnings per share increased by 112.7% and were EUR 0.08 (-0.63). Earnings per share adjusted by entries related to Eezy Plc shares was EUR 0.43.
Operational EBITDA increased by 1881.4% to MEUR 30.1 (1.5).

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

KEY FIGURES

MEUR	Q3 2022	Q32021	Change,%	Q1–Q32022	Q1–Q32021	Change,%	Q1–Q42021
Turnover	86.0	61.9	39.0	224.7	116.5	92.8	186.1
Operational EBITDA	10.7	7.5	42.2	30.1	1.5	1,881.4	11.3
EBIT	8.4	3.9	112.2	23.2	-7.6	404.9	-0.9
EBIT, %	9.7	6.4		10.3	-6.5		-0.5
Result of the financial period	-2.8	1.3	-309.0	4.2	-13.7	130.5	-10.3
Earning per share for the review period attributable to the owners of the company, EUR	-0.19	0.04	-574.9	0.08	-0.63	112.7	-0.55
Interest-bearing net liabilities excluding IFRS 16 impact				127.4	159.2	-20.0	151.9
Gearing ratio excluding IFRS 16 impact, %				141.3	223.7		203.1
Adjusted equity ratio, %				29.1	22.5		24.0
Material margin, %	74.9	74.1		74.8	73.5		74.4
Personnel expenses, %	32.4	32.1		33.4	36.4		36.0

* The company has taken into use a new key figure, adjusted equity ratio. The calculation formulas for this and other key figures are presented on page 29 of the Interim Report.

FUTURE OUTLOOK

PROFIT GUIDANCE (3 OCTOBER 2022):

NoHo Partners estimates that, during the financial year 2022, it will achieve total turnover of over MEUR 300 and an EBIT margin of over 8,5% in the restaurant business.

The Group’s long-term guidance remains unchanged: The Group aims to achieve turnover of approximately MEUR 400 and an EBIT margin of approximately 10% during 2024. The company aims for the ratio of net debt to operational EBITDA, adjusted for IFRS 16 lease liability, to be under 3 and for dividends to be paid during the strategy period 2022–2024.

PREVIOUS PROFIT GUIDANCE (22 JUNE 2022):

NoHo Partners estimates that, during the financial period 2022, it will achieve total turnover of approximately MEUR 300 and an EBIT margin of over 8% in the restaurant business.

THE MARKET

The Covid-19 pandemic has had a significant impact on the company’s business operations, market and the restaurant industry as a whole. In the first quarter of 2022, the company operated in a highly restricted or closed business environment in all of its operating countries. Following the lifting of the restrictions, private consumption in restaurants recovered rapidly and demand has been strong as the market normalised. Corporate sales and event sales have been at a good level in the third quarter of 2022.

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’ 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 points, using centralised procurement agreements and engaging in regular dialogue with suppliers and other partners. Despite continued uncertainty in the market, customer demand is estimated to continue at a good level during the rest of the year.

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

Strong profit performance continued in the third quarter of the year with an EBIT margin of 9.7%. This is about two percentage points higher than in the pre-pandemic year of 2019. An EBIT margin continuing at its current level going into the traditionally best season of the year, proves that the strategic target of a profitability level of 10% is realistic.

Behind a profitability that is better than the industry average is the company’s business model. The model combines scale benefits gained from growth and size together with an entrepreneurial operational model and an up-to-date data-driven management approach. The profitability level correction is driven by changes implemented during the Covid-19 pandemic in the restaurant portfolio, which is in better shape than ever.

In addition to developing the restaurant portfolio, the company has learned from the international markets what type of business leads to better return on investment. The analysis of successful growth investments in the past years indicate that the company can reach a return on investment of over 20%. At its best, the return expectations when scaling brand concepts, such as Friends & Brgrs, Campingen and Hook, are over 20%. Creating new restaurant concepts, on the other hand, the risks are greater. As the cost of capital rises, lessons learned and careful deliberation will increasingly drive the focus areas of the growth strategy towards steady cash flow targets. An activated M&A market in the restaurant industry supports growth through acquisitions.

Profit performance helps strengthening the balance sheet to the levels targeted in the strategy. The target of the ratio of net debt to operational EBITDA, adjusted for IFRS 16 lease liability, being under three will, according to the company’s estimate, be reached already by the end of the year. Historically, excluding the Covid-19 years, the company has operated at this level, which it can manage with its current profitability and cash flow, even in a changing interest rate environment. As the balance sheet recovers and with a renewed financing agreement signed after the reporting period, the company’s financial position stabilised essentially to the state prior to the Covid-19 crisis. The renewed financing agreement enables growth investments during the strategy period.

The outlook for the rest of the year is good with a booking situation exceeding the 2019 level. The company is prepared for the traditionally quieter season in the beginning of the year by keeping its operations efficient and costs proportional to demand. Our competitive advantages are the diversity of our portfolio, the flexible operational model mastered during the pandemic and committed employees.

Aku VikströmCEO

IMPLEMENTATION OF THE STRATEGY

NoHo Partners aims to achieve turnover of approximately MEUR 400 and an EBIT margin of approximately 10% during 2024. The company aims for the ratio of net debt to operational EBITDA, adjusted for IFRS 16 lease liability, to be under three and for dividends to be paid during the strategy period 2022–2024.

The company’s strategy focuses on the following three key areas:

Profitable growth in the Norwegian restaurant market through acquisitions
Scaling up the Friends & Brgrs chain to a national level
Large and profitable urban projects

The company has continued implementing its strategy through acquisitions. In the third quarter, two transactions were completed in Norway and in Finland the Sea Horse restaurant was acquired. In Finland, the scaling up of the fast food -business continued, among others through new openings within the Friends & Burger and Hook restaurant chains. In addition, Pizzadog, the first restaurant concept operating only through home delivery by Wolt, was launched during the third quarter. Following a conceptual upgrade, a Hanko Sushi chain pilot restaurant opened its doors after the reporting period in November. The construction of Helsingin Kulttuurikasarmi, the main urban project currently ongoing, started in September. NoHo Partners’ offering in this recreational centre to be completed at the turn of year 2023-2024 includes several restaurants, bars and terrace areas.

TURNOVER AND INCOME

In July–September, turnover increased by 39.0% to MEUR 86.0 (61.9) supported by customer demand. Compared to the corresponding period in 2019 prior to the Covid-19 pandemic, the increase was of 12.1%. In January–September, turnover increased by 92.8% to MEUR 224.7 (116.5). Despite the restricted business environment due to the Covid-19 pandemic in the first months of 2022, turnover increased by 13.7%, compared to the corresponding period in 2019.

In July–September, operational EBITDA increased by 42.2% to MEUR 10.7 (7.5). In January–September, operational EBITDA increased by 1881.4% compared to the corresponding period in the previous year and was MEUR 30.1 (1.5).

In July–September, EBIT was MEUR 8.4 (3.9) with an EBIT margin of 9.7% (6.4). The result for July–September was MEUR -2.8 (1.3). In January–September, EBIT was MEUR 23.2 (-7.6) with an EBIT margin of 10.3 (-6.5). The result for the review period was MEUR 4.2 (-13.7), which was negatively affected by a fair value impairment of MEUR 7.5 recognised in financial items due to the market value of Eezy Plc shares, classified as held for sale, falling below the book value.

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 has not significantly affected the material margin for the time being. 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 good level.

BUSINESS SEGMENTS

As of 1 January 2022, NoHo Partners' business consists of two business segments, which are reported separately:

Finnish operations
International business

The business segments are further divided into business areas for which turnover is reported. The Finnish operations include three business areas: restaurants, entertainment venues and fast food restaurants. The international business includes two business areas: Norway and Denmark.

FINNISH OPERATIONS

MEUR	Q3 2022	Q32021	Q1–Q32022	Q1–Q32021	Q1–Q42021
Turnover	69.7	51.9	179.9	101.8	158.1
Operational EBITDA	9.1	6.4	24.2	2.2	9.3
EBIT	7.7	3.6	19.9	-4.2	1.0
EBIT, %	11.0	6.9	11.1	-4.1	0.6
Material margin, %	74.8	73.7	74.6	73.4	74.6
Personnel expenses, %	32.4	31.1	32.9	34.5	34.7

In July–September, the turnover of Finnish operations increased by 34.2% to MEUR 69.7 (51.9) compared to the previous year and by 8.7% compared to the corresponding period in 2019. In January–September, turnover increased by 76.7% to MEUR 179.9 (101.8) compared to the previous year. Compared to the corresponding period in 2019 turnover increased by 6.1%. In Finland, Covid-19 pandemic-related restrictions were lifted in March 2022. The strong turnover in the Finnish operations was due to good sales during the holiday season and the better-than-expected demand that has continued after the summer. Turnover from all three business areas grew.

EBIT in the Finnish operations in July–September was MEUR 7.7 (3.6) with an 11.0% (6.9) EBIT margin. In January–September, EBIT was MEUR 19.9 (-4.2) with a 11.1% (-4.1) EBIT margin. The Finnish operations reached the targeted level during the strategy period of an EBIT margin exceeding 10%. The strong EBIT was a consequence of successful development work of the restaurant portfolio and better relative profitability.

In Finnish operations, in a normal operating environment, most of the profits are made during the second half of the year due to the seasonal nature of the business.

Changes in the restaurant portfolio in July–September 2022

Friends & Brgrs, Itis shopping centre, Helsinki, Finland (new)
Pizzadog, Helsinki, Finland (new)
Sea Horse, Helsinki, Finland (new)
Bucket Bar, Tampere, Finland (concept change)
Lulu’s, Helsinki, Finland (concept change)
Taqueria El Rey Vuorimiehenkatu, Helsinki, Finland (closed)

INTERNATIONAL BUSINESS

MEUR	Q3 2022	Q32021	Q1–Q32022	Q1–Q32021	Q1–Q42021
Turnover	16.3	10.0	44.9	14.7	28.0
Operational EBITDA	1.6	1.1	5.9	-0.7	2.0
EBIT	0.7	0.4	3.3	-3.4	-1.9
EBIT, %	4.1	3.5	7.3	-23.0	-6.6
Material margin, %	75.4	76.7	75.5	74.6	73.4
Personnel expenses, %	32.4	37.4	35.4	49.1	43.7

In July–September, turnover in the international business increased by 64.0% from the previous year to MEUR 16.3 (10.0) and by 29.4% compared to the corresponding period in 2019. In January–September, turnover was MEUR 44.9 (14.7) and increased by 204.7% compared to the previous year and by 58.8% compared to the corresponding period in 2019. In Norway and Denmark, the restrictions related to the Covid-19 pandemic were lifted in February 2022, after which both demand and turnover have remained at a good level.

EBIT in the international business in July–September was MEUR 0.7 (0.4) with a 4.1% (3.5) EBIT margin. In January–September MEUR 3.3 EBIT was MEUR (-3.4) with a 7.3% (-23.0) EBIT margin. EBIT was slightly behind compared to the level in the second quarter due to lower turnover, which in Norway is seasonally weaker during the summer. In Denmark, profitability continued at a good level following the turnaround program.

Seasonal fluctuations in the international business are more even compared to the Finnish operations.

Changes in the restaurant portfolio in July–September 2022

Postkontoret, Oslo, Norway (new)
Laboratoriet Skøyen, Oslo, Norway (new)

TURNOVER BY BUSINESS AREA

In accordance with the reorganisation measures announced on 9 June 2022, the company now uses the term “fast food business” for the business that was previously referred to as the “fast casual” business. The allocation of units to the business area has been adjusted in accordance with the new structure, and this has also been taken into account in the comparison figures.

FINNISH OPERATIONS	Q3 2022	Q32021	Q1–Q32022	Q1–Q32021	Q1–Q42021
Restaurants
Turnover, MEUR	29.3	24.4	78.7	45.4	72.7
Share of total turnover, %	34.1	39.4	35.0	39.0	39.1
Change in turnover, %	20.2	-	73.2	-	-
Units at the end of period, number	91	85	91	85	96

Entertainment venues
Turnover, MEUR	29.5	18.1	70.8	31.0	50.6
Share of total turnover, %	34.3	29.3	31.5	26.6	27.2
Change in turnover, %	62.7	-	128.1	-	-
Units at the end of period, number	71	63	71	63	72

Fast food -restaurants
Turnover, MEUR	10.9	9.4	30.3	25.3	34.8
Share of total turnover, %	12.6	15.2	13.5	21.7	18.7
Change in turnover, %	15.5	-	19.7	-	-
Units at the end of period, number	50	43	50	43	45

Total, MEUR	69.7	51.9	179.9	101.8	158.1

INTERNATIONAL BUSINESS	Q3 2022	Q32021	Q1–Q32022	Q1–Q32021	Q1–Q42021
Norway
Turnover, MEUR	10.0	5.8	29.0	8.0	16.8
Share of total turnover, %	11.6	9.3	12.9	6.9	9.0
Change in turnover, %	73.6	-	261.1	-	-
Units at the end of period, number	23	21	23	21	21

Denmark
Turnover, MEUR	6.3	4.2	15.9	6.7	11.2
Share of total turnover, %	7.4	6.8	7.1	5.7	6.0
Change in turnover, %	50.8	-	137.2	-	-
Units at the end of period, number	19	18	19	18	19

Total, MEUR	16.3	10.0	44.9	14.7	28.0

THE IMPACT OF THE COVID-19 PANDEMIC ON THE GROUP’S BUSINESS

The Covid-19 pandemic has had a significant impact on the Group’s business since March 2020. The restrictions imposed on the restaurant industry by governments to mitigate the pandemic and the impacts on customer demand have had a highly negative effect on NoHo Partners’ business operations and financial results. The Group has taken determined action to reduce the pandemic’s impacts, uncertainties and risks and to secure the Group’s financial position and sufficient financing.

In Finland, strict restrictions on restaurants were in place in January and continued until 14 February 2022, after which alcohol service ended at 11 p.m. and opening hours ended at midnight for all restaurants. At the same time, restrictions on assembly were lifted. The restaurant restrictions in Finland were lifted completely on 1 March 2022.

In Denmark, restaurants had to close at 11 p.m. in January, with alcohol service ending at 10 p.m. Customer capacity was restricted to half of normal and nightclubs were closed. All restaurant restrictions were lifted on 1 February 2022.

In Norway, the ban on the sale of alcohol lasted one month and ended on 14 January 2022, after which all restaurants were allowed to serve alcohol until 11 p.m. and stay open until midnight. Customer capacity was restricted to half of normal and table service was required. The restaurant restrictions, with the exception of the prohibition of dancing and the requirement to maintain safe distances of one metre, were lifted on 1 February 2022, and the remaining restrictions were lifted on 12 February 2022.

A report on the impacts of the pandemic and changes in restaurant restrictions for the comparison period 2021 is presented in the Financial Statements Release 2021, Note 1. Accounting principles on page 25.

GOVERNMENT ASSISTANCE DURING THE STATE OF EMERGENCY

NoHo Partners received no support related to the Covid-19 pandemic during the third quarter of 2022. Government assistance received by the Group during the first half of 2022 totalled approximately MEUR 6.9.

A more detailed account of government assistance and the distribution thereof is presented on page 21.

CASH FLOW, INVESTMENTS AND FINANCING

The Group’s operating net cash flow in January–September was MEUR 46.9 (26.3). Cash flow before change in working capital was MEUR 56.7 and changes in working capital MEUR 0.6. Both receivables and payables included in the working capital have increased along with turnover but the total change in working capital during the review period is not material.

The investment net cash flow in January–September was MEUR -9.1 (-0.5) The investments in January-September in Finland included for example the opening of four new Friends & Brgrs restaurants, the acquisition of the restaurant Sea Horse and the business acquisition of restaurant Origo. In Norway the Group acquired businesses of Postkontoret and Laboratoriet Skøyen. The investment net cash flow includes also MEUR 4.2 of positive cash flow from the sale of Eezy Plc’s shares, which were classified as held for sale.

Financial net cash flow amounted to MEUR -39.8 (-18.1), including MEUR 15.0 in amortisation of financial institution loans. Financial cash flow also includes the repayment of a loan of MEUR 1.8 related to the Tesi arrangement.

The Group’s interest-bearing net liabilities excluding the impact of IFRS 16 liabilities decreased during the review period by MEUR 24.6 and amounted to MEUR 127.4. The decrease was attributable to the strong profit performance and the Tesi convertible loan arrangement carried out in May, which reduced net debt by over MEUR 10. The Group’s gearing ratio excluding the impact of IFRS 16 liabilities decreased from 203.1% at the beginning of the financial period to 141.3%.

Adjusted net finance costs in January–September were MEUR 16.7 (9.5), which included expense of 7.5 MEUR due to decrease of the market value of Eezy Plc shares classified as assets held for sale. IFRS 16 interest expenses in January-September were MEUR 5.5 (4.3).

EVENTS AFTER THE REPORTING PERIOD

THE COMPANY ISSUED A PROFIT WARNING

On 3 October 2022, NoHo Partners announced it increased its guidance concerning turnover and EBIT margin for the year 2022. The company estimates full-year turnover to be over MEUR 300 and EBIT margin for the restaurant business to be over 8.5% due to better-than-expected demand that has continued after the summer, the company’s own profitability development and good booking situation for the rest of the year. Despite continued uncertainty in the market, the company estimates customer demand to continue at a good level during the rest of the year.

NEW NOHO EVENTS BUSINESS UNIT AND CHANGES IN THE EXECUTIVE TEAM

On 13 October 2022, NoHo Partners announced it is establishing a new business unit focused on events and experiences, targeting a leading position in the Nordics. As of 1 November 2022, Maria Koivula was appointed Director of the new NoHo Events business and member of NoHo Partners Plc’s Executive Team in Finland.

RENEWED FINANCING AGREEMENT

On 4 November 2022, the company renewed its financing agreement, through which the company’s financial position essentially stabilised to the state prior to the Covid-19 crisis. The renewed financing agreement enables growth investments during the strategy period.

RESTAURANT OPENINGS

Café Savoy, Helsinki, Finland (new)
Friends & Brgrs, Kuopio, Finland (new)
Hook, Lahti, Finland (new)
Piste Ski lodge & Taproom, Ruka, Finland (concept change)

BRIEFING FOR THE MEDIA, ANALYSTS AND INVESTORS AT 10:00 A.M.

A briefing for the media, analysts and investors will be organised today, 8 November 2022 at 10:00 EET at Restaurant Teatteri’s Kello bar, Helsinki. 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 at https://noho.videosync.fi/2022-q3-results. 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, 8 November 2022

NOHO PARTNERS PLC

Board of Directors

For more information, please contact:

Aku Vikström, CEO, tel. +358 44 235 7817Jarno Suominen, Deputy CEO, tel. +358 40 721 5655Jarno 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 Sushi, Friends & Brgrs, Campingen and Cock’s & Cows. Depending on the season, the Group employs approximately 2,100 people converted into full-time employees. The Group aims to achieve turnover of EUR 400 million by the end of 2024. The company’s vision is to be the leading restaurant company in Northern Europe.

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