RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY-31 DECEMBER 2015: Turnover increased by over 31 per cent and profitability improved

Restamax Plc

INTERIM REPORT 23/02/2016 at 08:00 am

RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY-31 DECEMBER 2015: 
Turnover increased by over 31 per cent and profitability improved

TURNOVER AND RESULT

Group's result for October-December 2015

Entire Group:
The Group's turnover was MEUR 31.5 (MEUR 26.4), growth of 19.4 per cent. EBITDA was MEUR 5.5 (MEUR 4.5), growth of 22.8 per cent. Operating profit was MEUR 3.0 (MEUR 2.3), growth of 28.9 per cent.

Restaurant business:
The turnover of the restaurant business segment was MEUR 27.5 (MEUR 24.6), growth of 12.0 per cent. EBITDA was MEUR 5.3 (MEUR 4.1), growth of 28.8 per cent. Operating profit was MEUR 3.0 (MEUR 2.2), growth of 37.6 per cent.

Labour hire business:
The turnover of the labour hire business was MEUR 6.6 (MEUR 4.2), growth of 58.3 per cent. EBITDA was MEUR 0.3 (MEUR 0.5), decrease 35.5 per cent. Operating profit was MEUR 0.0 (MEUR 0.2), decrease 91.1 per cent.

Labour hire became part of the Group on 1 August 2014.

In the labour hire business segment, the development of turnover was affected by the bankruptcy of a customer company of our labour hire subsidiary Smile Henkilöstöpalvelut Oy, as a result of which our company suffered a write-off totalling €700,000.

Group's result for January-December 2015

Entire Group:
The Group's turnover was MEUR 113.6 (MEUR 86.7), growth of 31.1 per cent. EBITDA was MEUR 16.5 (MEUR 12.0), growth of 37.7 per cent. Operating profit was MEUR 7.3 (MEUR 5.3), growth of 38.0 per cent.

Restaurant business:
The turnover of the restaurant business segment was MEUR 100.3 (MEUR 83.7), growth of 19.9 per cent. EBITDA was MEUR 14.8 (MEUR 11.4), growth of 29.3 per cent. Operating profit was MEUR 6.5 (MEUR 5.0), growth of 31.0 per cent.

Labour hire business:
The turnover of the labour hire business was MEUR 24.2 (MEUR 6.8), growth of 253.4 per cent. EBITDA was MEUR 2.2 (MEUR 0.7), growth of 210.4 per cent. Operating profit was MEUR 0.8 (MEUR 0.3), growth of 151.4 per cent.

Labour hire became part of the Group on 1 August 2014.

Restamax Group's result for 2015 is significantly better than that of the previous year. The turnover of the entire Group increased by over 31 per cent from the previous year, EBITDA by nearly 38 per cent and operating profit by 38 per cent. The increase in turnover was fuelled by the investments made and corporate acquisitions completed in 2014, which have been fully available to the company in 2015. The development of operating profit was hindered by a write-off of €700,000 caused by the bankruptcy of a customer company of our subsidiary engaged in the labour hire business.

Prospects for 2016

Result management (as of 23 February 2016):

Restamax expects the Group's turnover to increase and profitability to remain on a good level in the 2016 financial year.

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

CEO MARKKU VIRTANEN

2015 went as planned

In January-December 2015, the turnover of our Group increased by more than 31 per cent, EBITDA by nearly 38 per cent and operating profit by 38 per cent in comparison with the previous financial period.

The last quarter of 2015 positively exceeded our expectations. In November we specified our profit forecast and increased our turnover estimate from MEUR 100 to some MEUR 110. Our expectations were fulfilled and our turnover for the 2015 financial year was MEUR 113.6. We also forecast that EBITDA and operating profit would improve relatively in comparison to the previous financial period. Our profitability improved significantly, which is evident in the EBITDA, and there was also improvement in operating profit.

In the restaurant business segment, the pre-Christmas party season was rather successful and the consumption of our company's restaurant services was creditable at the end of the year. The good result was made possible by our wide and diverse restaurant portfolio, which offered customers plenty of choice from food restaurants to game and entertainment centres.

In October-December, we opened the Hollywood Bowling & Billiards entertainment centre in Jyväskylä, as well as the Academy 32 nightclub targeted at young adults. We strengthened our position in Tampere by acquiring a majority shareholding in the popular restaurant Hook. In Oulu, we opened the Viihdemaailma Ilona nightclub and the Sticky Wingers chicken wings restaurant, and in Ruka the Alpine-spirited Les Alpes restaurant. We also bought a majority shareholding in Hernesaarenranta Oy, which engages in the restaurant business at Hernesaari in Helsinki, and we acquired a minority shareholding in SuperPark Oy, which operates indoor activity parks.

In the labour hire business segment, the result of a successful pre-Christmas party season was affected by the bankruptcy of a customer company of our labour hire subsidiary Smile Henkilöstöpalvelut Oy, as a result of which our company suffered a write-off totalling €700,000 in the review period. In spite of this write-off, we were able to stick to the statement we had given, even though the write-down hindered the development of our operating profit.

New strategic goals guiding operations

During the past financial period, we achieved a turnover of MEUR 100, which our Board of Directors had set as our long-term target in 2013.

In December 2015, we published the new long-term financial targets set by our company's Board for the strategy period 2016-2018. It is our intention to expand our restaurant business abroad, both through company acquisitions and organically. At the same time, we will also continue our profitable growth in Finland in the restaurant and labour hire businesses. Our turnover target for 2018 is MEUR 180. EBITDA and operating profit are expected to remain on a good level.

Many of our restaurant concepts are exportable and can be established abroad. We are actively studying different markets in order to integrate ourselves into new markets abroad, while continuing our strong growth in Finland in both business segments.

Swimming against the current in a general economic downturn

The tourism and restaurant industry has gone through its fourth difficult year. 2015, however, was slightly better than expected for companies in the sector. An economic review compiled by the Finnish Hospitality Association (MaRa) based on an economic barometer published in January 2016 by the Confederation of Finnish Industries EK says, however, that companies in the sector will continue to experience an economic situation that is weaker than average. Economic prospects have brightened a little, but remain very modest. In the coming months, however, sales figures are expected to show small growth. According to an estimate by MaRa, during the next five years investments in the tourism and restaurant business will reach one billion euros, which indicates confidence in the recovery of the sector.

In recent years, the average growth in turnover for the tourism and restaurant industry has been about one percentage point and the annual change in GDP volume has even been negative.

In spite of the poor economic situation, we have increased our turnover and improved our result considerably more strongly than the general market trend. At the time of our stock exchange listing in 2013, our turnover was MEUR 65. Two years on, it is more than MEUR 113, representing growth of nearly 75 per cent. We have therefore almost doubled our turnover during our time as a listed company, and at the same time we have been able to maintain good profitability.

Our success is based not only on our competent and committed staff, but also on our dozens of different restaurant concepts, which can be tailored to suit different locations. We listen to consumers and the market and are constantly developing our business. In that way, we can keep our restaurant portfolio interesting. The market clearly exists and, through our efficient operating models, we have achieved exceptionally strong market profitability and growth over a long period of time.

The efficient operations of the restaurant business are indicated by, for example, our staff expense percentage of 28.5, which is excellent. This enables efficient operating models for our subsidiary Smile Henkilöstöpalvelut Oy, for example.

A significant youth employer in society

With its turnover of over MEUR 24 in the last financial year, the labour hire business has grown rapidly into an increasingly important part of our Group, and a basis for comparison for its development has gradually formed.

According to the Private Employment Agencies' Association HPL, the overall turnover of the employment agencies' sector, which is developing rapidly, is constantly growing. The demand for labour hire and the volume of part-time employment are growing strongly. From the point of view of youth employment in particular, the role of the labour hire sector in our society is significant.

The share of people under the age of 26 working in the tourism and restaurant industry is as much is 30 per cent. The workforce of our subsidiary Smile Henkilöstöpalvelut Oy, one of the major operators in the labour hire sector, numbers more than 3,200 people, 59 per cent of whom are under the age of 26. Because of this, we are a significant youth employer in Finland.

The business of Smile Henkilöstöpalvelut has been dominated by the restaurant sector, but growth opportunities are seen in many other sectors too, such as healthcare and trade. In the near future, we will particularly be seeking strong growth in labour hire in the retail sector. The liberalisation of retail opening hours can be seen as a positive opportunity in this sector.

Future brighter than the general market trend

In the near future, we expect a reform of the Alcohol Act. The Government's so far unimplemented plans to cut Sunday and overtime pay would also have been positive news for our industry. In the future, we hope for good decisions from the government to boost employment in the sector. Through the legislative reforms, Finnish drinking and restaurant culture will have better conditions to develop and diversify.

In spite of the challenges set by the general economic situation and legislation, every year we have succeeded in growing our business. At the same time, we have been able to maintain good profitability, which is clearly above the average profitability within the industry. Strong development in our earnings per share has also taken place.

We believe that our profitable business and growth will continue despite the prevailing market situation. The targets set for 2015 have been achieved, and we strongly believe that we will also reach the long-term targets in the coming strategy period.

Markku Virtanen, CEO

DIVIDEND

Restamax Plc's distributable funds on 31 December 2015 were EUR 47,931,699.32, of which the share of the profit of the financial period is EUR 5,233,008.84. There have been no significant changes to the company's financial situation since the end of the financial period.

Restamax Plc's Board of Directors proposes to the Annual General Meeting to be held on 27 April 2016 that EUR 0.27 (0.22) per share, a total of EUR 4,422,497.40 (16,379,620 shares), be paid as dividend for the financial period ended on 31 December 2015 based on the adopted balance sheet.

CASH FLOW, INVESTMENTS AND FINANCING

The Group's operating net cash flow in 2015 was MEUR 12.4 (MEUR 8.2).

Corporate acquisitions and growth investments made during the current review period include the acquisition of a majority shareholding in Hernesaarenranta Oy and Suomen Siipiravintolat Oy, the acquisition of a minority shareholding in SuperPark Oy, the openings of the Hollywood Bowling & Billiards entertainment centre and the Academy 32 nightclub in Jyväskylä, the opening of the Viihdemaailma Ilona nightclub and Sticky Wingers restaurant in Oulu, and the opening of the Les Alpes restaurant in Ruka.

The Group's interest-bearing net liabilities at the end of December were MEUR 29.3 (MEUR 18.9). The net financial expenses in January-December were EUR 1.2 (EUR 548,400). Equity ratio was 44.4 per cent (47.2 per cent) and gearing ratio was 73.2 per cent (48.1 per cent).

RESTAMAX PLC'S FINANCIAL REPORTING 2016

Restamax Group's 2015 annual report will be published during week 14. The interim reports for 2016 will be published as follows:

January-March 10 May 2016
January-June 9 August 2016
January-September 8 November 2016

Restamax Oyj's Annual General Meeting will be held in Tampere on Wednesday 27 April 2016. The invitation to the AGM will be published during week 14.

The full Restamax interim report for January-December 2015 is appended to this release in PDF format. The interim report is also available on the company's website at www.restamax.fi.

APPENDIX: Restamax Plc Interim Report 2015

Tampere, 23 February 2016

RESTAMAX PLC

Board of Directors

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

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

Restamax Plc is a Finnish restaurant business and labour hire services group established in 1996. 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 approximately 100 restaurants, nightclubs and entertainment centres all over Finland. Well-known restaurant concepts of the group include Stefan's Steakhouse, Viihdemaailma Ilona and Classic American Diner. In 2015, Restamax Plc's turnover was MEUR 113.6 and EBITDA MEUR 16.5. Depending on the season, some 1,000 persons work at the Group. The workforce of Restamax subsidiary Smile Henkilöstöpalvelut Oy is over 3,000.

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