Restamax Plc
INTERIM REPORT 6 NOVEMBER 2015 at 10:00 am
RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY-30 SEPTEMBER 2015
Strong growth for turnover and profitability - company specifies its profit guidance
TURNOVER AND INCOME
The Group's income for July-September 2015
Entire Group:
The Group's turnover was MEUR 31.3 (MEUR 23.9), growth of 31.1 per cent. EBITDA was MEUR 5.4 (MEUR 4.0), growth of 34.7 per cent. Operating profit was MEUR 3.0 (MEUR 2.4), growth of 25.3 per cent.
Restaurant business:
The turnover of the restaurant business segment was MEUR 26.6 (MEUR 22.7), growth of 17.6 per cent. EBITDA was MEUR 4.7 (MEUR 3.8), growth of 22.0 per cent. Operating profit was MEUR 2.5 (MEUR 2.2), growth of 13.8 per cent.
Labour hire business:
The turnover of the labour hire business was MEUR 7.8 (MEUR 2.6), growth of 195.2 per cent. EBITDA was MEUR 0.8 (MEUR 0.2), growth of 395.5 per cent. Operating profit was MEUR 0.4 (MEUR 0.2), growth of 196.9 per cent. Labour hire became part of the Group on 01/08/2014.
The Group's income for January-September 2015
Entire Group:
The Group's turnover was MEUR 82.1 (MEUR 60.3), growth of 36.2 per cent. EBITDA was MEUR 11.0 (MEUR 7.5), growth of 46.7 per cent. Operating profit was MEUR 4.3 (MEUR 3.0), growth of 45.2 per cent.
Restaurant business:
The turnover of the restaurant business segment was MEUR 72.8 (MEUR 59.1), growth of 23.2 per cent. EBITDA was MEUR 9.5 (MEUR 7.3), growth of 29.6 per cent. Operating profit was MEUR 3.5 (MEUR 2.8), growth of 25.9 per cent.
Labour hire business:
The turnover of the labour hire business was MEUR 17.5 (MEUR 2.6), growth of 564.6 per cent. EBITDA was MEUR 1.8 (MEUR 0.2), growth of 995.8 per cent. Operating profit was MEUR 0.8 (MEUR 0.2), growth of 403.9 per cent. Labour hire became part of the Group on 01/08/2014.
Restamax Group's result for the January-September 2015 period is significantly better than that of the previous year. The turnover of the entire Group increased over 36 per cent from the previous year, EBITDA by almost 47 per cent and operating profit by over 45 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 since the beginning of 2015.
Due to the seasonal nature of both the restaurant and labour hire businesses, most of the profits are made at the end of the year.
Prospects for 2015
Restamax specified its profit guidance on 6 November 2015.
Profit guidance (as of 6 November 2015):
Restamax estimates that the Group will reach a turnover of some MEUR 110 during the 2015 financial period, and that the EBITDA and operating profit will increase proportionally compared to the previous financial period.
The previous profit guidance (as of 20 February 2015):
Restamax estimates that the Group will reach a turnover of over MEUR 100 during the 2015 financial period, and that the EBITDA and operating profit will increase proportionally compared to the previous financial period.
| KEY FIGURES | |||||
| Restamax Group in total | |||||
| (EUR thousand) | 7-9/2015 | 7-9/2014 | 1-9/2015 | 1-9/2014 | 1-12/2014 |
| SIGNIFICANT FIGURES, entire Group | |||||
| Turnover | 31,279 | 23,853 | 82,148 | 60,295 | 86,653 |
| EBITDA | 5,360 | 3,979 | 10,988 | 7,489 | 12,008 |
| EBITDA, % | 17.1% | 16.7% | 13.4% | 12.4% | 13.9% |
| Operating profit | 2,995 | 2,390 | 4,292 | 2,956 | 5,265 |
| Operating profit, % | 9.6% | 10.0% | 5.2% | 4.9% | 6.1% |
| Review period result | 2,204 | 1,509 | 2,760 | 1,780 | 3,334 |
| To shareholders of the parent company | 2,178 | 1,537 | 3,031 | 1,952 | 3,451 |
| To minority shareholders | 26 | -28 | -271 | -172 | -117 |
| Earnings per share (euros) to the shareholders of the parent company | 0.13 | 0.09 | 0.19 | 0.12 | 0.22 |
| Interest-bearing net liabilities | 26,869 | 18,452 | 18,944 | ||
| Gearing ratio, % | 71.3% | 49.0% | 48.1% | ||
| Equity ratio, % | 43.9% | 49.8% | 47.2% | ||
| Return on investment, % (p.a.) | 8.8% | 6.8% | 10.5% | ||
| Net financial expenses | 860 | 317 | 548 |
| Restaurant business | |||||
| (EUR thousand) | 7-9/2015 | 7-9/2014 | 1-9/2015 | 1-9/2014 | 1-12/2014 |
| Turnover | 26,648 | 22,659 | 72,799 | 59,101 | 83,666 |
| EBITDA | 4,651 | 3,813 | 9,490 | 7,322 | 11,444 |
| EBITDA, % | 17.5% | 16.8% | 13.0% | 12.4% | 13.7% |
| Operating profit | 2,547 | 2,239 | 3,531 | 2,805 | 4,957 |
| Operating profit, % | 9.6% | 9.9% | 4.9% | 4.7% | 5.9% |
| KEY FIGURES | |||||
| Material margin, % | 73.3% | 73.6% | 73.6% | 73.8% | 74.0% |
| Staff expenses, % | 27.5% | 28.5% | 29.2% | 29.7% | 29.6% |
| Labour hire business | |||||
| (EUR thousand) | 7-9/2015 | 7-9/2014 | 1-9/2015 | 1-9/2014 | 1-12/2014 |
| Turnover | 7,775 | 2,634 | 17,504 | 2,634 | 6,833 |
| EBITDA | 822 | 166 | 1,819 | 166 | 696 |
| EBITDA, % | 10.6% | 6.3% | 10.4% | 6.3% | 10.2% |
| Operating profit | 448 | 151 | 761 | 151 | 308 |
| Operating profit, % | 5.8% | 5.7% | 4.3% | 5.7% | 4.5% |
| KEY FIGURES | |||||
| Staff expenses, % | 83.9% | 83.7% | 84.9% | 83.5% | 84.0% |
CEO MARKKU VIRTANEN
A strong result for January-September
In comparison to the January-September period the previous year, the turnover of our Group increased by more than 36 per cent, EBITDA by almost 47 per cent and operating profit by over 45 per cent. Our EBITDA percentage and level of turnover have clearly improved in relation to the corresponding period last year. Our result in the third quarter of 2015 indicates strong and powerful growth.
We are especially satisfied with our result in July. In spite of challenging weather conditions, July showed that brisk domestic tourism and plenty of summer events got Finns using restaurant services to a creditable degree, which had a positive effect on our result. Our company's broad and diverse restaurant portfolio from summer restaurants to gaming and entertainment centres supported our operations in the late summer, offering consumers a wide choice. Events also significantly employed our workers on the labour hire side.
Openings, revamps and active loyal-customer marketing
During the period under review, we opened the new Escape nightclub in Jyväskylä, the brand new kind of amusement centre Crazy Golf in Tampere and revamped some existing restaurant concepts.
By virtue of the updated and newly-opened restaurants, we want to provide our loyal customers with a wide selection of services and added opportunities for utilising benefits in many locations. Through our loyal customer system, we are not only creating a diverse range of restaurant experiences for our customers but are also aiming to commit them to us. Our Ravintola.fi loyal customer system contains dozens of restaurants all over Finland, and our growing group of loyal customers already has more than 100,000 members. The loyal customer system is being constantly developed and, during the review period, it was updated with a new mobile application. We believe that the system's strong role as a marketing channel will strengthen even more in the future.
Growth and profitability despite a weak market situation
The current year is the fourth consecutive challenging one for the tourism and restaurant sector. The beginning of 2015, however, was slightly better than expected for companies in the sector. According to Statistics Finland, the turnover for the whole tourism and restaurant industry increased in the January-July period 2015 by 2.2 per cent in comparison with the previous year. The turnover of restaurants in particular would seem to be rising slightly with growth of 2.6 per cent. Although the sector's expectations regarding economic trends have improved slightly, they still remain very cautious.
According to an economic barometer published at the beginning of November 2015 by the Confederation of Finnish Industries (EK), the economic situation for the hospitality industry remains weaker than average, despite the positive early part of the year. In the first part of the year, consumer confidence in economic growth was at its highest for four years, but since then expectations have taken a downward turn. During the autumn, sales in the sector are expected to decline slightly, and forecasts are not expected to change during the rest of the year. Private consumption is expected to increase historically slowly in the coming years.
According to forecasts by the Finnish Hospitality Association MaRa, the increase in turnover in 2015 for restaurants licensed to serve alcohol will be about 1.4 per cent. In 2014, the turnover of restaurants licensed to serve alcohol increased by 1.2 per cent, and in 2013 by 1.6 per cent. 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 strong confidence in the recovery of the sector. Export is also expected to pick up slightly over the course of 2015, which is anticipated to boost domestic demand at the end of the year.
In spite of recession and the poor market situation in the industry, we have increased our turnover and improved our result clearly more strongly than the sector's average level of development.
Legislative changes have a significant impact on our operations
Social discussion and issues raised in the media have indicated that the Alcohol Act will be amended in the near future. As a result of the reform, the prerequisites for Finnish drink and restaurant culture to become more European will be created. This would be a significant step both for the restaurant business and for the entire society.
The Government's abandonment of its plans to cut Sunday and overtime pay is bad news for our industry. If the Government had stuck to its plans, that would have increased employment in the sector and would have given the Finnish restaurant culture better opportunities to develop and diversify.
A base for comparison for labour hire
The labour hire segment that was integrated into our Group in the 2014 financial year is gradually beginning to become established as part of our operations, and a base for comparison is beginning to form for its development and growth. Labour hire is quickly becoming an increasingly significant part of our Group's operations.
As a result of the acquisition of new customers and the conclusion of new contracts, the number of staff in the segment is increasing. Through this growth, the organisation and its management is being revamped and reinforced. The business of the labour hire segment has been dominated by the restaurant sector, but in the near future growth possibilities will be seen in many other sectors too.
The labour hire sector is strongly developing, and it offers both employers and employees new kinds of opportunities for operating. According to the Private Employment Agencies' Association HPL, the overall turnover of the employment agencies' sector is growing strongly. The demand for hired labour is increasing and the volume of part-time employment in Finland has grown significantly during the last decades.
The new generations are open to working flexibly in different companies, units and sectors. Work done over short periods in different companies springing up alongside long and permanent working careers has become an everyday thing. Sitra estimates that these kind of 'atypical employment relationships' are already employing 800,000 Finns, which is about 35 per cent of the national work force.
Expectations favourable for the rest of the year
Although the general economic and social situations are setting many challenges for our business, we have succeeded in growing. At the same time, we have been able to maintain good profitability, which is clearly above the average profitability within the industry. Our earnings per share have also clearly improved.
In both the restaurant and labour hire businesses, profit is focused on the end of the year, so our expectations until then are favourable.
Markku Virtanen, CEO
APPENDIX: Restamax Plc Interim Report Q3/2015
More information:
Markku Virtanen, CEO, Restamax Plc, tel. +358 400 836 477
Jarno Suominen, CFO, Restamax Plc, tel. +358 40 721 5655
Distribution:
NASDAQ OMX Helsinki
Major media
www.restamax.fi
Restamax Plc is a Finnish restaurant business group established in 1996 that also offers labour hire services. The company, which listed on NASDAQ OMX Helsinki Oy in 2013 and became the first Finnish listed restaurant company, has continued to grow steadily throughout its history. The Group companies include approximately 100 restaurants, cafes, pubs and nightclubs throughout Finland. The Group's well-known restaurant concepts include the von Trappe restaurants, Bodega Salud, Viihdemaailma Ilona, American Diner, Daddy's Diner, Stefan's Steakhouse, and the Galaxie and Space Bowling & Billiards entertainment centres. Restamax Plc employs between 900 and 1,100 people depending on the season. The turnover for 2014 was MEUR 86.7 and the EBITDA was MEUR 12.0.
Restamax company website: www.restamax.fi, Restamax consumer website: www.ravintola.fi
