RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY AND 30 JUNE 2015: The Group's growth continued and earnings per share improved

Restamax Plc

INTERIM REPORT 7 AUGUST 2015 at 10:00 am

RESTAMAX PLC INTERIM REPORT FOR 1 JANUARY AND 30 JUNE 2015

The Group's growth continued and earnings per share improved in January-June 2015

TURNOVER AND INCOME

The Group's income for April-June 2015

Entire Group:
The Group's turnover was MEUR 26.4 (MEUR 20.5), growth of 28.7 per cent. EBITDA was MEUR 2.7 (MEUR 2.1), growth of 30.5 per cent. Operating profit was MEUR 0.5 (MEUR 0.5), growth of 6.1 per cent.

Restaurant business:
The turnover of the restaurant business segment was MEUR 23.7 (MEUR 20.5), growth of 15.5 per cent. EBITDA was MEUR 2.3 (MEUR 2.1), growth of 8.7 per cent. Operating profit was MEUR 0.3 (MEUR 0.5), decrease of 31.2 per cent.

Labour hire business:
The turnover of the labour hire business segment was MEUR 5.4. EBITDA was MEUR 0.6. Operating profit was MEUR 0.2. (New business segment, no comparison figures.)

The Group's income for January-June 2015

Entire Group:
The Group's turnover was MEUR 50.9 (MEUR 36.4), growth of 39.6 per cent. EBITDA was MEUR 5.6 (MEUR 3.5), growth of 60.3 per cent. Operating profit was MEUR 1.3 (MEUR 0.6), growth of 128.9 per cent.

Restaurant business:
The turnover of the restaurant business segment was MEUR 46.2 (MEUR 36.4), growth of 26.6 per cent. EBITDA was MEUR 4.8 (MEUR 3.5), growth of 37.9 per cent. Operating profit was MEUR 1.0 (MEUR 0.6), growth of 73.8 per cent.

Labour hire business:
The turnover of the labour hire business segment was MEUR 9.7. EBITDA was MEUR 1.0. Operating profit was MEUR 0.3. (New business segment, no comparison figures.)

Restamax Group's result for the first half of the year is significantly better than that of the previous year. The growth achieved during the review period was nearly at the expected level: the turnover of the entire Group increased almost 40 per cent from the previous year, EBITDA over 60 per cent and operating profit almost 130 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.

The exceptionally poor weather has had a significant impact on Group's result for April-June, which did not entirely meet expectations. In addition to this, the result for the review period was influenced by the depreciable amount, which increased slightly more than expected due to corporate acquisitions.

Material costs, service costs and staff expenses are not comparable with the same period of the preceding year, since the labour hire purchasing costs that were previously listed under purchases have now been recorded under staff expenses as a result of the labour hire operations purchased in August 2014

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

Result management (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.

CEO MARKKU VIRTANEN:

Moderately good result for the second quarter of 2015

In January-June 2015, the turnover of our Group increased almost 40 per cent from the previous year, EBITDA over 60 per cent and operating profit almost 130 per cent.

Our result for the period under review was clearly growth-oriented. However, the result for the April-June period was not entirely as expected. The exceptionally poor weather in early summer posed many challenges for our summer restaurants. The weather has affected our result in terms of both the restaurant business and labour hire business. A busy schedule of summer events has provided an increasing amount of employment opportunities in the labour hire segment, but there has been little demand for extra workers.

Due to investments and corporate acquisitions carried out during the review period, the depreciable amount has increased slightly more than expected. Although our operations have been faced with many challenges due to the weather and the general market situation, we achieved a fairly good result in January-June.

Numerous updates and new restaurants for the summer season

During the second quarter of 2015, we implemented numerous investments, restaurant openings, revamps of restaurant concepts and renovations. In April, we purchased the pub and restaurant company Italpal Oy, whose restaurant concepts are highly functional in this market situation. In May, we strengthened our position in Lappeenranta by opening the restaurants Daddy's Diner and The Grill in the new Iso Kristiina shopping centre At the Mustalahti marina in Tampere, we opened the remodelled restaurant Kaisla in early May and the new Café & Pizzeria Ankkuri, which serves high-quality café products and Italian-style pizzas, in June.

In addition to this, we invested in opening several seasonal restaurants and summer terraces, and expanded our operations to Hanko by purchasing the business operations of two restaurants. We gained possession of Restaurant HSF, which has been in operation for over 75 years, and the southernmost restaurant in Finland, Hangon Portti. Currently, our range of more than 100 restaurants spans from Hanko all the way to Pyhätunturi. Our seasonal restaurants in the northern travel centres and in the south complement each other extremely well. They provide our customers with new experiences and our staff with new ways of working.

We updated several concepts to better meet the varying needs in different municipalities. For example, the Daddy's Diner restaurants operating at the Koskikeskus Shopping Centre in Tampere and in Seinäjoki were transformed into American Diner restaurants in May. Our desire was to strengthen the American Diner brand by expanding the concept to new areas and business locations. We believe that the clear business idea that draws from American cuisine has plenty of capacity for success in the above-mentioned locations and also nationwide.

Our Ravintola.fi loyal customer system includes dozens of restaurants throughout Finland. Through the system, we aim to increase our customers' commitment to us and create diverse restaurant experiences. By virtue of the updated and newly-opened restaurants we can provide our loyal customers with a wider selection of services and added opportunities for utilising benefits in more locations than before. Our loyal customer system is under constant development and we believe its role as a marketing channel will continue to increase.

Beginning of the year slightly better than expected in the field

The tourism and restaurant industry is going through its fourth difficult year. The sale of alcohol is on the decline, and the increase in the sale of food has slowed down. Still, the early part of 2015 has been slightly better than expected for companies in the field. The sales of restaurants licensed to serve alcohol are estimated to have increased by 1.5 per cent during the first quarter of the year. According to the current estimation, the sale of food has increased while the sale of alcohol has declined further. In 2014, the turnover of restaurants licensed to serve alcohol increased by 1.2 per cent, whereas the turnover increase in 2013 was 1.6 per cent.

According to the trend survey conducted by the Finnish Hospitality Association MaRa in May, the turnover of restaurants is expected to remain at the level of the previous year during the summer and early autumn, despite the promising early part of the year. Even though the consumer's confidence in economic growth is at its highest in four years, private consumption is expected to increase at a historically slow rate in the coming years. The field's expectations regarding economic trends have improved slightly but remain cautious. Export is expected to pick up slightly over the course of 2015, which is anticipated to boost domestic demand later in the year.

Labour hire operations strengthening their position

Labour hire became part of our operations in the 2014 financial period. Although the process of incorporating the labour hire segment into our Group is still underway and the business operations are still in the early stage, we have seen plenty of evidence of the segment's potential for growth during the early part of the year.

The Restamax subsidiary Smile Henkilöstöpalvelut Oy expanded its heavily restaurant-oriented operations to medical and health care services. Established at the beginning of April, Smile Doctors Oy focuses on supplying and hiring out doctors. The wide and growing health care market creates good growth opportunities for a company specialising in supplying doctors. 

During the period under review, Smile Henkilöstöpalvelut also signed important partnership agreements. One of the most important ones is the service agreement made with the leading timeshare company in Europe, Holiday Club Resorts Oy. The agreement strengthens Smile Henkilöstöpalvelut Oy's position in its current market areas and opens up growth opportunities in brand new areas. The value of the agreement is estimated to amount to approximately MEUR 20 in total over the next 5-7 years.

According to statistics, the demand for temporary employees and the turnover of labour hire activities is increasing constantly. The sector offers both employers and employees flexible opportunities. The new generations are open and willing to working flexibly in different companies and sectors. As a result, a new way of working has emerged alongside long and permanent work careers: working for short periods in the employ of different companies.

According to Sitra's estimate, these atypical employment relationships already constitute 35 per cent of employment relationships and provide work for approximately 800,000 Finns. This number includes part-time and fixed-term workers, private entrepreneurs, temporary and contract workers hired out by labour hire companies, and hourly workers who are called to work as needed. According to the Private Employment Agencies' Association HPL, the number of part-time employment relationships has increased dramatically in Finland over the past two decades, and in 2014 one in seven employees worked part-time.

Positive growth prospects

Despite the fact that the demand for restaurant services remains uncertain, poor weather conditions have had a significant impact on our operations and competition in the field is fierce, we have been able to expand our business operations. At the same time, we have been able to maintain good profitability, which is clearly above the average profitability within the industry.

Based on the first half of the year, it seems highly likely that we will achieve the goals set for this year and a turnover of over MEUR 100.

Markku Virtanen, CEO


APPENDIX: Restamax Plc Interim Report Q2/2015

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 at 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, cafés, pubs and nightclubs all over Finland. The Group's well-known restaurant concepts include, among others, 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 EBITDA MEUR 12.0.

Restamax company website: www.restamax.fi, Restamax consumer website: www.ravintola.fi