Restamax Plc
INTERIM REPORT 7 November 2017 at 8:00 a.m.
RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY-30 SEPTEMBER 2017
Turnover and profitability continued to increase in January-September 2017
TURNOVER AND INCOME
Group's result for July-September 2017
Entire Group:
The Group's turnover was MEUR 55.9 (MEUR 36.6), growth of 52.9 per cent. EBITDA was MEUR 7.5 (MEUR 6.4), growth of 16.8 per cent. Operating profit was MEUR 4.4 (MEUR 3.8), growth of 17.1 per cent.
Restaurant business:
The turnover of the restaurant business segment was MEUR 33.2 (MEUR 29.4), growth of 12.8 per cent. EBITDA was MEUR 4.9 (MEUR 5.5), decrease of 9.5 per cent. Operating profit was MEUR 2.6 (MEUR 3.1), decrease of 14.7 per cent.
Labour hire business:
The turnover of the labour hire business segment was MEUR 26.1 (MEUR 10.5), growth of 149.5 per cent. EBITDA was MEUR 2.7 (MEUR 1.1), growth of 148.5 per cent. Operating profit was MEUR 1.8 (MEUR 0.7), growth of 147.0 per cent.
Group's result for January-September 2017
Entire Group:
The Group's turnover was MEUR 131.5 (MEUR 95.7), growth of 37.3 per cent. EBITDA was MEUR 14.7 (MEUR 13.5), growth of 8.9 per cent. Operating profit was MEUR 6.4 (MEUR 5.5), growth of 17.5 per cent.
Restaurant business:
The turnover of the restaurant business segment was MEUR 87.8 (MEUR 79.1), growth of 11.0 per cent. EBITDA was MEUR 10.4 (MEUR 11.3), decrease of 8.3 per cent. Operating profit was MEUR 3.4 (MEUR 4.4), decrease of 23.7 per cent.
Labour hire business:
The turnover of the labour hire business segment was MEUR 52.2 (MEUR 25.5), growth of 104.7 per cent. EBITDA was MEUR 4.7 (MEUR 2.5), growth of 90.0 per cent. Operating profit was MEUR 3.0 (MEUR 1.1), growth of 189.2 per cent.
Figures in parentheses refer to the same period last year, unless otherwise stated.
Restamax Plc's income for January-September 2017 was good considering the circumstances. The turnover of the entire Group increased by 37.3 per cent from last year, EBITDA by 8.9 per cent and operating profit by 17.5 per cent.
Abnormally cold and rainy weather in July and August put a strain on the entire tourism and restaurant segment. It also had a negative impact on the Group's restaurant business and its relative profitability.
In labour hire business operations, January-September 2017 was a fairly successful period: the segment's turnover increased by 104.7, EBITDA by 90.0 per cent and operating profit by 189.2 per cent from the previous year.
Since the relative profitability of the labour hire business is lower than that of restaurant business due to the nature of the business, and because labour hire business is growing relatively faster than restaurant business, this naturally reduces the relative profitability of the entire Group.
Especially in the restaurant business, most of the profits are made at the end of the year due to the seasonal nature of the business.
PROSPECTS FOR 2017
Profit guidance (as of 8 August 2017):
Restamax expects the Group's turnover to increase by approximately 30 per cent from the previous year to approximately MEUR 170 in the 2017 financial period. Profitability is estimated to remain at a good level in 2017.
The Company's long-term strategic goal is to reach a turnover of MEUR 180 by the end of 2018. The Company will specify its target turnover and publish a new long-term target by the end of 2017.
KEY FIGURES
| Restamax Group in total | |||||
| (EUR thousand) | 7-9/2017 | 7-9/2016 | 1-9/2017 | 1-9/2016 | 1-12/16 |
| KEY FIGURES, entire Group | |||||
| Turnover | 55,909 | 36,559 | 131,466 | 95,717 | 130,072 |
| EBITDA | 7,482 | 6,405 | 14,656 | 13,458 | 19,399 |
| EBITDA, % | 13.4% | 17.5% | 11.1% | 14.1% | 14.9% |
| Operating profit | 4,448 | 3,798 | 6,432 | 5,476 | 8,998 |
| Operating profit, % | 8.0% | 10.4% | 4.9% | 5.7% | 6.9% |
| Review period result | 3,107 | 2,534 | 4,009 | 3,243 | 5,864 |
| To shareholders of the parent company | 2,633 | 2,378 | 3,425 | 3,123 | 5,608 |
| To minority shareholders | 474 | 156 | 584 | 120 | 256 |
| Earnings per share (euros) to the shareholders of the parent company | 0.16 | 0.15 | 0.21 | 0.19 | 0.35 |
| Interest-bearing net liabilities | 45,479 | 35,256 | 30,377 | ||
| Gearing ratio, % | 98.4% | 91.6% | 69.1% | ||
| Equity ratio, % | 35.6% | 41.2% | 45.2% | ||
| Return on investment, % (p.a.) | 9.9% | 9.7% | 11.9% | ||
| Net financial expenses | 838 | 630 | 953 | ||
| Restaurant business | |||||
| (EUR thousand) | 7-9/2017 | 7-9/2016 | 1-9/2017 | 1-9/2016 | 1-12/16 |
| Turnover | 33,187 | 29,423 | 87,796 | 79,070 | 107,544 |
| EBITDA | 4,944 | 5,464 | 10,407 | 11,344 | 16,475 |
| EBITDA, % | 14.9% | 18.6% | 11.9% | 14.3% | 15.3% |
| Operating profit | 2,610 | 3,059 | 3,372 | 4,421 | 7,401 |
| Operating profit, % | 7.9% | 10.4% | 3.8% | 5.6% | 6.9% |
| KEY FIGURES | |||||
| Material margin, % | 73.0% | 74.0% | 73.4% | 73.8% | 74.6% |
| Staff expenses, % | 26.2% | 25.8% | 28.1% | 28.2% | 28.1% |
| Labour hire business | |||||
| (EUR thousand) | 7-9/2017 | 7-9/2016 | 1-9/2017 | 1-9/2016 | 1-12/16 |
| Turnover | 26,108 | 10,465 | 52,228 | 25,516 | 34,129 |
| EBITDA | 2,684 | 1,080 | 4,662 | 2,454 | 3,441 |
| EBITDA, % | 10.3% | 10.3% | 8.9% | 9.6% | 10.1% |
| Operating profit | 1,826 | 739 | 3,049 | 1,054 | 1,597 |
| Operating profit, % | 7.0% | 7.1% | 5.8% | 4.1% | 4.7% |
| KEY FIGURES | |||||
| Staff expenses, % | 81.8% | 85.3% | 83.4% | 86.0% | 85.5% |
CEO JUHA HELMINEN
On the road of strong growth despite a challenging summer
Between January and September 2017, the turnover of the entire Group increased by 37.3 per cent, EBITDA by 8.9 per cent and operating profit by 17.5 per cent from last year. For our labour hire operations, the review period ended was a time of strong growth. The rainy and cold summer brought challenges for our restaurant operations and especially terrace and beverage sales in July and August. The share of seasonal restaurants in our restaurant portfolio has increased, which is why the lack of hot days had a major impact on our third quarter, reducing volume and EBITDA margin. In spite of this, we were able to keep the most important key figures for efficiency, such as material margin and personnel costs, at a good level. This year, our Group has in three quarters achieved the turnover level of the entire previous year. Similarly, our earnings per share are increasing: in the third quarter, growth was 10.5 per cent on the previous year.
Usually, the share of the last quarter of the year has been extremely important in our company's restaurant business operations, but also somewhat in the labour hire business operations, totalling up to 30 per cent of the Group's annual EBITDA. The labour hire business customer base, which has increased, and the good cumulative figures, as far as the material margin and personnel costs are concerned, of the restaurant business operations bring trust into our ability to make profit in the remaining part of the year.
Restaurant field troubled by unusual summer weather - outlook still positive
According to the Finnish Meteorological Institute, July was unusually chilly - there has only been one colder summer in the past 20 years, in 2004. Even though the average temperature in August was fairly normal throughout the country, there was twice as much rainfall. This weakened the EBITDA margin.
Although the poor summer weather troubled the entire restaurant field, the rising national economy and consumer confidence have helped the economic situation in the tourism and restaurant industry to recover, with high hopes for the near future. According to the Finnish Hospitality Association MaRa, the turnover of restaurants increased by 4.3 per cent in the third quarter of 2017. From the turn of 2015-2016 on, growth in the field has been at a better than average level. The growth in the gross national product is also a good sign for the increase in the use of restaurant services.
New experience-driven concepts for the market
Restamax is a very strong operator in its both business segments and can stand comparison both domestically and internationally. The foundation of our operations is at a good level - we plan to continue to grow in Finland as well as expand our restaurant business abroad in the near future. As in Finland, the restaurant field is also fragmented abroad, which creates growth opportunities for us beyond Finland.
Since I started as the company's CEO in September, one of the first observations I made was the strong entrepreneur-driven culture. We will also encourage our staff to think in an entrepreneur-driven fashion in future. This will result in us being able to offer our customers new restaurant experiences on a regular basis in the form of unique service and experience. Our choice as the restaurant services provider for the Central Deck and Arena planned for Tampere is yet another indication of our great expertise and a show of confidence in our operations.
In future even more than before, we will invest in local market knowledge and in being able to constantly enrich restaurant culture through high-quality concepts, services and experiences. We will bring to new cities our existing concepts and entirely new ones. In addition, I am of the opinion that my career in the brewery industry and my experience in international business and sales management enhance our chances to do well in competition in Finland and internationally.
The most important season of the year is about to start. Our strong portfolio of various restaurant concepts offers a range of possibilities to bring feast amidst everyday life. Our knowledgeable staff, increased service and sales orientation and our strong business knowhow all play a key role in making profit during a crucial season. Furthermore, we will once again create more growth; during the last quarter of the year, we will open over ten new restaurants. We will expand our markets to Vaasa and Rovaniemi, for example, as well as further strengthen our position in Tampere, Helsinki and the northern ski resorts. By the end of the year, we will have approximately 140 restaurants, in contrast to the figure of slightly over 100 at the end of 2016.
Strong growth quarter in labour hire
Our subsidiary Smile Henkilöstöpalvelut had a strong third quarter. Between January and September 2017, its turnover increased by over 100 per cent, EBITDA by 90 per cent and operating profit by almost 190 per cent. The growth was significantly stronger than the general development in the field, and the profitability was exceptional for the field (EBITDA in July-September was 10.3 per cent).
Smile's corporate acquisitions this year have begun to reflect positively on our business operations. We have achieved a new level as a labour hire service provider, and the entry of new companies has improved our position in industry, construction and logistics segments, in particular. In addition to the corporate acquisitions, organic growth has also been strong - the labour needs of our current customers are increasingly comprehensive, and we have been successful in acquiring new customers. We believe that the strong growth will accelerate further and, in the near future, Smile will rise to the ranks of the largest companies in the field.
The cornerstones of Smile's success are expertise of various fields and a diverse growth strategy. The geographical network of service locations of the labour hire segment already covers almost all of Finland, and we employ over 8,000 people per month in a responsible manner. Smile is developing the entire field and does its part to help solve the labour shortage and unemployment. A good example of this is Smile Education Oy, which was established in September. It provides joint and apprenticeship training and collaborates with several educational institutions. Smile Education brings together the needs of our customer companies, training programmes and job-seekers.
Positive winds of change are blowing in the labour hire segment, and the popularity of the field is strongly increasing. The rise of the Finnish economy also promotes the growth of the labour hire field, since labour availability is hard pressed. For example, the country's growth centres are full of large construction sites suffering from a major labour shortage. There is a clear cultural shift discernible in the job market as employees expect employers to be more flexible with their changing work needs. In this, we see a great opportunity for labour hire operators and even a responsibility to adjust to these needs.
Strong strategy creates a foundation for future growth
Now and in the future, we want to ensure controlled business growth and good profitability in Finland and in the international market. We will publish our new strategic long-term objectives before the end of the year.
Juha Helminen, CEO
The full Restamax interim report for January-September 2017 is appended to this release in PDF format. The interim report is also available on the company's website at www.restamax.fi.
RESTAMAX PLC
Board of Directors
APPENDIX: Restamax Plc Interim Report Q3/2017
Additional information:
Juha Helminen, CEO, Restamax Plc, tel. +358 40 535 5560
Jarno Suominen, CFO, Restamax Plc, tel. +358 40 721 5655
Distribution:
NASDAQ Helsinki
Major media
www.restamax.fi
Restamax Plc is a Finnish group established in 1996, specialising in restaurant services and labour hire. 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 more than 130 restaurants, nightclubs and entertainment centres all over Finland. Well-known restaurant concepts of the Group include Stefan's Steakhouse, Viihdemaailma Ilona, Classic American Diner and Colorado Bar & Grill. In 2016, Restamax Plc's turnover was MEUR 130.1 and EBITDA MEUR 19.4. Depending on the season, the Group employs some 2,000 persons, converted into full-time employees. Restamax subsidiary Smile Henkilöstöpalvelut Oy employs approximately 8,000 people on a monthly basis.
Restamax company website: www.restamax.fi, Restamax consumer website: www.ravintola.fi, Smile Henkilöstöpalvelut: www.smilepalvelut.fi
