UK Markets open in 3 hrs 58 mins

NOHO PARTNERS INTERIM REPORT 1 JANUARY–30 SEPTEMBER 2020: Quick recovery of demand and profitability measures generated operating cash flow of MEUR 5.5 – restrictions weaken the outlook for the remainder of the year

NoHo Partners Oyj
·32-min read

NoHo Partners Plc

INTERIM REPORT 10 November 2020 at 8:15 a.m.

NOHO PARTNERS INTERIM REPORT 1 JANUARY–30 SEPTEMBER 2020

Quick recovery of demand and profitability measures generated operating cash flow of MEUR 5.5 – restrictions weaken the outlook for the remainder of the year

NoHo Partners operated in a restricted business environment in July–September 2020. Thanks to its efficient operating model, cost savings and the recovery of demand, the Group was able to generate operating cash flow of MEUR 5.5 in spite of the reduced volume and restore profitability to a good level. Turnover in July–September was 73 per cent of the previous year’s level and the EBIT margin was 5.2%. In July–September, the Group conducted its business according to the basic scenario, in which turnover is approximately 70–85 per cent of the previous year’s level.

When the restrictions on restaurants in Finland were tightened in October, the Group transitioned to conducting its business according to the low scenario, in which sales are at approximately 50 per cent of the previous year’s level. Group turnover in October was approximately 56 per cent of the previous year’s level and operating cash flow was negative. The demand outlook for November is weakened by the general pandemic situation, the restrictions that came into effect in November and cancellations of corporate events. The Group estimates that turnover in November will be less than 50 per cent of the previous year’s level and operating cash flow will be negative.

JULY–SEPTEMBER 2020 IN BRIEF

Group (continuing and discontinued operations):

  • Turnover declined by 27.0% to MEUR 56.0 (MEUR 76.7).

  • EBIT fell by 71.0% to MEUR 2.9 (MEUR 10.1).

  • The EBIT percentage was 5.2% (12.8%), a decrease of 59.2%.

  • The result for the financial period was MEUR 0.4 (MEUR 37.4), a decrease of 98.8%.

  • Earnings per share were EUR 0.01 (EUR 1.92), a decrease of 99.5%.

Restaurant business (comparable continuing operations):

  • Turnover declined by 27.0% to MEUR 56.0 (MEUR 76.7).

  • EBIT fell by 64.4% to MEUR 2.2 (MEUR 6.2).

  • The EBIT percentage was 4.0% (8.1%), a decrease of 51.3%.

  • The result for the financial period was MEUR -0.3 (MEUR 3.9), a decrease of 106.6%.

  • Earnings per share were EUR -0.03 (EUR 0.15), a decrease of 118.3%.

  • Operating cash flow fell by 39.6% to MEUR 5.5 (MEUR 9.1).

  • Government support in July–September 2020 totalled approximately MEUR 1.7.

JANUARY–SEPTEMBER 2020 IN BRIEF

Group (continuing and discontinued operations):

  • Turnover declined by 36.7% to MEUR 125.2 (MEUR 197.6).

  • EBIT fell by 151.5% to MEUR -12.1 (MEUR 23.5).

  • The EBIT percentage was -9.7% (11.8%), a decrease of 182%.

  • The result for the financial period was MEUR -17.6 (MEUR 42.8), a decrease of 141.1%.

  • Earnings per share were EUR -0.90 (EUR 2.16), a decrease of 141.8%.

  • The gearing ratio excluding the impact of IFRS 16 liabilities was 156.6%. Interest-bearing net liabilities excluding the IFRS 16 effect amounted to MEUR 148.6. IFRS 16 liabilities totalled MEUR 147.9. The gearing ratio including the effect of IFRS 16 was 317.5%.

Restaurant business (comparable continuing operations):

  • Turnover declined by 36.7% to MEUR 125.2 (MEUR 197.7).

  • EBIT fell by 205.4% to MEUR -12.6 (MEUR 11.9).

  • The EBIT percentage was -10.0% (6.0%), a decrease of 266.6%.

  • The result for the financial period was MEUR -18.0 (MEUR 7.4), a decrease of 344.3%.

  • Earnings per share were EUR -0.93 (EUR 0.29), a decrease of 414.5%.

  • Operating cash flow fell by 90.3% to MEUR 2 (MEUR 20.9).

  • Government support in January–September 2020 totalled approximately MEUR 10.1.

SIGNIFICANT EVENTS IN THE REVIEW PERIOD

  • The restrictions on restaurant opening hours, alcohol serving hours and customer volume were lifted on 13 July 2020 in Finland. Indoor and outdoor events attended by more than 500 people were permitted effective from 1 August 2020.

  • In Norway, restaurants were ordered to close at midnight effective from 8 August 2020.

  • In Denmark, cocktail bars were allowed to reopen on 1 September 2020. Restaurants were ordered to close at 10 p.m. effective from 18 September 2020.

  • On 15 September 2020, the burger chain Friends & Brgrs announced it will open six new restaurants before the end of 2020.

  • Approximately 15% of the Group’s restaurants were closed at the end of September.

  • In Finland, approximately 400 employees were temporarily laid off either part-time or full-time as of the end of September.

SIGNIFICANT EVENTS AFTER THE REVIEW PERIOD

  • The Finnish Government tightened the restrictions on restaurant opening hours, alcohol serving hours and customer volume nationwide from 8 October to 31 October. Alcohol serving hours were restricted to midnight and opening hours to 1 a.m. In regions where the pandemic is in the acceleration stage, alcohol serving hours were restricted to 10 p.m. and opening hours to 11 p.m. Customer capacity was limited to half of the normal capacity.

  • The company began co-operation negotiations concerning all personnel in Finland on October 5, 2020.

  • On 15 October 2020, the Constitutional Law Committee of the Finnish Parliament issued a statement on the Government’s proposal on restaurant restrictions, finding that the proposal partly violates the Constitution of Finland.

  • In Finland, new restaurant restrictions were regulated by a Government decree for the period 1 November to 15 December 2020.

  • The Group’s turnover in October was approximately MEUR 12, which is about 56% of the turnover for the corresponding period last year. Operating cash flow was approximately EUR -2 million.

  • Approximately 20% of the Group’s restaurants were closed at the end of October.

  • In Finland, almost all employees were concerned by temporarily laid offs either part-time or full-time as of the end of October.

  • The Group announced that CBO and Executive Team member Eemeli Nurminen will leave NoHo Partners effective from 1 January 2021.

SUMMARY

The sudden market changes caused by the COVID-19 pandemic had a significant impact on the Group’s result in the third quarter of 2020. The Group continued to operate in a restricted operating environment in July–September. Nevertheless, the third quarter provided good evidence that the market and customer demand recover quickly when restaurant restrictions are loosened. Due to the recovery of customer demand following the lifting of restrictions an efficient operating model and cost savings, the Group was able to generate operating cash flow of MEUR 5.5 in spite of volumes being approximately a quarter below the previous year’s level. The loss of turnover caused by the COVID-19 pandemic in January–September is estimated to be nearly MEUR 100.

Until September, the company’s business operated according to the basic scenario in which sales are approximately 70–85 per cent of the previous year’s level. Turnover in the third quarter was approximately MEUR 56.0, which is roughly 73 per cent of the turnover in the corresponding period last year. In the international business, which was subject to strict restrictions, turnover was approximately 56 per cent of the previous year’s level. EBIT in July–September was approximately MEUR 2.9 and the EBIT margin was 5.2 per cent.

In July 2020, turnover exceeded MEUR 20, which is roughly 75 per cent of the turnover in the corresponding period last year. Operating cash flow was approximately MEUR 3 in July. In August 2020, turnover was nearly MEUR 21, which is roughly 75 per cent of the turnover in the corresponding period last year. Operating cash flow in August was approximately MEUR 2.4.

Turnover for September 2020 was approximately MEUR 15, which is roughly 67 per cent of the turnover in the corresponding period last year. The turnover of the Finnish restaurant business was more than 70 per cent and the turnover of the international business was more than 50 per cent of the turnover in the corresponding period last year. Operating cash flow was neutral in September.

On 29 September 2020, the Group announced that, due to the restrictions on restaurants put in place by the Finnish Government, the company estimates it will transition to conducting its business according to the low scenario, in which sales are at approximately 50 per cent of the previous year’s level. In October, turnover was approximately MEUR 12, which is roughly 56 per cent of the turnover in the corresponding period last year. October is one of the quietest months of the year and business was further dampened by the strict restrictions on restaurants, which led to operating cash flow being approximately MEUR -2.

The demand outlook for November is weakened by the general pandemic situation, the restrictions that came into effect in November and cancellations of corporate events. The Group estimates that turnover in November will be less than 50 per cent of the previous year’s level and operating cash flow will be negative.

The Group has recognised approximately MEUR 10.1 in financial support from the Finnish, Danish and Norwegian governments for the period 1 January–30 September 2020. Reductions in rent totalled approximately MEUR 3.5 in January–September 2020, with most of this total falling in April–May 2020.

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.

REVIEW BY THE CEO: AKU VIKSTRÖM

The restaurant market continued its quick recovery in the third quarter following the lifting of restrictions in Finland effective from 13 July. Consumer demand returned to a good level during the review period, especially in Finland, where our turnover for the period was 76 per cent of the previous year’s level. Sales in Finland were particularly boosted by Finns travelling domestically instead of internationally and the good sales of terrace restaurants. The lack of large events and concerts was reflected especially in the event business, which is reported under the restaurant business. The Group’s international business operations have been subject to strict restrictions, with turnover in the third quarter being 56 per cent of the previous year’s level. However, the Danish and Norwegian governments have supported the restaurant industry with direct compensation, which has made the negative operating cash flow of the international business manageable. In Norway, demand recovered during the review period faster than in the more strictly restricted Denmark, where our business is focused on the tourism-dependent city of Copenhagen. On the whole, our turnover developed in accordance with our basic scenario (more than 70% of the level reported in 2019).

We continued to manage our business with a focus on cash flow. The operating cash flow of MEUR 5.5 achieved during the review period provides us with more of a buffer for the COVID-19 battle that will continue through the winter. During the crisis, we have been able to sharpen our operational activities and achieve additional cost savings. This was reflected in the good profitability of our Finnish operations during the review period (EBIT 7.3%).

The current market environment and uncertainty regarding the Finnish Government’s restrictions on business activities require flexibility and patience from our organisation and stakeholders. Nevertheless, we have been able to develop our operational activities throughout the crisis, achieved new flexibility in our cost structure and found new savings in fixed expenses. At the same time, we have enhanced our restaurant portfolio and eliminated certain previous investments in full. We have striven to keep our operations agile and efficient, which will enable us to again elevate our relative profitability to a new level in the future rebuilding phase.

In the short term, the progress of the pandemic and the resulting restrictions will have a significant impact on our business. After the review period, in October, our turnover was approximately MEUR 12 (56% of the previous year’s level), with operating cash flow being about MEUR 2 in the negative. The demand outlook for November is weakened by the restrictions on restaurants that came into effect at the beginning of the month, the general pandemic situation and the resulting cancellations of corporate events. Under the current regional restrictions and private consumption being mainly focused on the weekends, we estimate that turnover in November will be less than 50 per cent of the previous year’s volume and operating cash flow will be negative.

Our cash position is strong at present. Cash and cash equivalents totalled approximately MEUR 28 at the end of the third quarter. During the review period, we repaid MEUR 8 of our commercial paper programme. The cumulative cash flow of operations as well as existing liquid assets and available limits cover working capital required by the Group. The Group has initiated repayment negotiations with financing providers regarding financial liabilities totalling MEUR 43 that will fall due in April 2021. The Group’s management estimates that the current negotiations will be finalised in January 2021, securing financing for the Group at least until the end of 2021.

In our basic scenario, we estimate that demand in the early part of the next year will still be weaker, which will be particularly reflected in corporate sales. We assume that the market will recover and get closer to normal in the second half of 2021. We have initiated our 2023 strategy process. The financial targets and strategic plan will be published in the first half of 2021 when market visibility improves. We have practically lost one year, but we have grown as an organisation and been forced to make our operations even more profitable than before. Our employees have been the hardest hit by the crisis, and developing their wellbeing and work environment will be one of the cornerstones of our rebuilding phase.

Aku Vikström, CEO

OUTLOOK

The market

The COVID-19 pandemic has had a serious impact on the company’s market and the restaurant industry as a whole, and the sudden change in the market has considerably affected the company’s operations starting from March 2020. Due to the acceleration of the pandemic and the resulting restrictions on restaurants, the Group will continue to operate in a restricted business environment for the remainder of 2020.

Profit guidance

On 13 March 2020, NoHo Partners cancelled its previously issued profit guidance for 2020 due to the impact of the COVID-19 pandemic. At this time, the company will not specify its turnover and profitability forecast for 2021 due to the uncertain market situation. The financial impact of the pandemic on the Group’s business and outlook cannot be fully determined at present.

The profit guidance for next year will be updated when visibility is improved and the overall impact of the COVID-19 pandemic on the operating environment and the Group’s business can be assessed more accurately. The restriction on business activities, potential changes to the restrictions and the global economic uncertainty will have a significant impact on the Group’s turnover and financial result for the remainder of the year 2020.

The company will provide monthly reports on the development of its business during these exceptional circumstances.

Financial targets

The Group cancelled the long-term financial targets previously set for 2021 on 9 June 2020. The Group will specify the targets for the strategy period 2021–2023 during the first half of 2021.

KEY FIGURES

NoHo Partners Group, total

(EUR 1,000)

1 July–30 Sep. 2020

1 July-30 Sep. 2019

1 Jan.–30 Sep. 2020

1 Jan.–30 Sep. 2019

1 Jan.–31. Dec. 2019

KEY FIGURES,
ENTIRE GROUP
(Continuing and discontinued operations)

Turnover

56,024

76,720

125,156

197,641

272,820

EBIT

2,928

10,094

-12,108

23,532

30,551

EBIT, %

5.2%

12.8%

-9.7%

11.8%

11.2%

Result of the financial period

448

37,419

-17,582

42,781

47,674

Continuing operations’ earnings per share (euros) for the financial period attributable to the owners of the company

0.01

0.35

-0.90

0.90

1.10

Earnings per share (EUR) for the financial period attributable to the owners of the Company

0.01

1.92

-0.90

2.16

2.36

Operating cash flow

5,512

9,122

2,037

20,905

30,409

Interest-bearing net liabilities excluding the IFRS 16 effect, EUR

148,570

101,516

105,391

Gearing ratio excluding the IFRS 16 effect, %

156.6%

76.3%

75.9%

Interest-bearing net liabilities, EUR

296,464

270,369

266,691

Gearing ratio, %

317.5%

205.1%

194.6%

Equity ratio, %

20.5%

28.0%

29.1%

Return on investment, % (p.a.)

-4.0%

8.1%

8.4%

Adjusted net finance costs

2,653

949

8,062

5,186

7,166

Material margin, %

73.3%

73.8%

72.8%

73.8%

74.3%

Staff expenses, %

32.5%

30.2%

37.1%

32.5%

32.6%


RESTAURANT BUSINESS
(Comparable continuing operations)

(EUR 1,000)

1 July–30 Sep. 2020

1 July–30 Sep. 2019

1 Jan.–30 Sep. 2020

1 Jan.–30 Sep. 2019

1 Jan.–31 Dec. 2019

Turnover

56,054

76,733

125,156

197,733

272,912

EBIT

2,221

6,245

-12,567

11,919

18,389

EBIT, %

4.0%

8.1%

-10.0%

6.0%

6.7%

Result of the financial period

-259

3,897

-18,040

7,385

11,730


TURNOVER IN THE BUSINESS AREAS OF THE RESTAURANT BUSINESS



1 July–30 Sep. 2020



1July–30 Sep. 2019



1 Jan.–30 Sep. 2020

1 Jan.–30 Sep. 2019

1 Jan.–31 Dec. 2019

Restaurants

Turnover (MEUR)

20.0

29.7

44.3

76.7

107.5

Percentage of the total turnover

35.7%

38.8%

35.4%

38.7%

39.4%

Change in turnover

-32.8%

-42.2%

24.0%

Units, number

75

72

75

72

75

Turnover/unit (MEUR)

0.27

0.41

0.59

1.06

1.43

Entertainment venues

Turnover (MEUR)

19.1

25.5

38.2

67.8

88.5

Percentage of the total turnover

34.1%

33.2%

30.6%

34.3%

32.4%

Change in turnover

-25.1%

-43.6%

5.6%

Units, number

63

67

63

67

65

Turnover/unit (MEUR)

0.30

0.38

0.61

1.01

1.36

Fast casual restaurants

Turnover (MEUR)

9.9

8.9

22.3

25.0

33.6

Percentage of the total turnover

17.7%

11.6%

17.8%

12.7%

12.3%

Change in turnover

10.9%

-10.8%

25.6%

Units, number

54

47

54

47

48

Turnover/unit (MEUR)

0.18

0.19

0.41

0.53

0.70

International restaurants

Turnover (MEUR)

7.0

12.6

20.3

28.3

43.3

Percentage of the total turnover

12.5%

16.4%

16.2%

14.3%

15.9%

Change in turnover

-44.1%

-28.3%

248.3%

Units, number

40

37

40

37

37

Turnover/unit (MEUR)

0.18

0.34

0.51

0.76

1.17

CASH FLOW, INVESTMENTS AND FINANCING

The Group’s operating net cash flow in January–September 2020 was MEUR 12.9 (MEUR 36.0).

Growth investments made in the third quarter of 2020 consisted of the opening of a Friends & Brgrs restaurant in the Sokkari department store in Jyväskylä and the opening of Karaoke Bar Wallis in the Armada shopping centre in Lappeenranta.

The Group’s gearing ratio excluding the impact of IFRS 16 liabilities was 156.6%. Interest-bearing net liabilities excluding the IFRS 16 effect amounted to MEUR 148.6. IFRS 16 liabilities totalled MEUR 147.9. The Group’s interest-bearing net liabilities (including IFRS 16 liabilities) at the end of September 2020 were MEUR 296.5 (MEUR 270.4). Adjusted net finance costs in January–September 2020 were MEUR 8.1 (MEUR 5.2). The equity ratio was 20.5% (28.0%) and the gearing ratio was 317.5% (205.1%).

The finance costs for January–September 2020 include an exchange rate difference item of approximately MEUR 1.1 recognised due to a change in the rate of the Norwegian krone.

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 spread of the pandemic, the restrictions imposed by the Finnish Government on the restaurant industry to mitigate it and the impacts of the pandemic on customer demand have had a highly negative effect on NoHo Partners’ business operations and financial results. As the ultimate duration and overall impacts of the pandemic are difficult to predict, its effects on NoHo Partners’ future turnover, result, cash flow and financial position may deviate from the current estimates and assumptions of the management. The Group has taken action to reduce the pandemic’s impacts, uncertainties and risks and to secure the Group’s financial position and sufficient financing.

Once the business impacts of the COVID-19 pandemic became apparent in March, the Group reacted immediately by initiating purposeful adjustment measures and preparing for the changed market conditions. The Group reacted to the change by quickly driving down costs, temporarily laying off personnel and balancing its finances. On 13 March 2020, the Group cancelled the profit guidance for 2020 it had issued earlier in March due to the uncertain market situation and initiated negotiations pursuant to the Act on Co-operation within Undertakings on fixed-term part-time or full-time layoffs of 90 days at most, concerning all of the Group’s personnel in Finland, or approximately 1,300 people.

The Finnish Government ordered the closure of restaurants throughout the country starting from 4 April 2020, until the end of May, to prevent the spread of the COVID-19 pandemic. The Group closed its nightclubs and a number of other restaurants in accordance with the recommendations of the authorities before the official order of the Finnish Government to close down all restaurants was issued. In Denmark and Norway, restaurants were closed in compliance with the orders issued by the authorities on 12–13 March 2020. In accordance with the recommendations issued by the Finnish Government, the Group cancelled all public events of more than 500 people from March until the end of July.

The Group’s largest fixed costs are staff expenses and business premises expenses. The Group negotiated a two-month rent exemption for April–May for 70 per cent of its leases in Finland.

In Denmark and Norway, the restrictions have been stricter than in Finland throughout the COVID-19 pandemic but, at the same time, the governments have supported the restaurant sector financially with direct subsidies. In Denmark and Norway, approximately 80 per cent of the lease expenses and other fixed expenses were covered by the state during the COVID-19 pandemic. In Denmark, the state supports companies in the restaurant industry by covering up to 90 per cent of their fixed expenses, relative to the decline in turnover, from November until 2 January 2021. The Danish state also covered 80 per cent of wage expenses until 8 July 2020. In Norway, the state covers up to 60 per cent of fixed expenses relative to the decline in turnover from November until the end of 2020. In both countries, the Group has had to adjust its cost structure through temporary layoffs and redundancies and by reducing administrative costs.

In April, the Group negotiated a financing package of EUR 34 million with its funding partners in Finland, Denmark and Norway, of which Finnvera guaranteed EUR 15 million. In late May, the company finalised a refinancing programme for its maturing debt as part of its overall financing package. As the final part of the financing package, the company agreed on a debt of EUR 10 million with a right to conversion with the Finnish Industry Investment Ltd (Tesi). The financing is for stabilisation provided by Tesi in the COVID-19 situation. At the time of withdrawing the loan, the Group’s management estimated that the financing package is sufficient to ensure the company’s working capital until the end of 2020 in spite of the potential prolongation of the uncertain market situation caused by the COVID-19 pandemic.

Co-operation negotiations were continued in May due to the uncertain market situation. As a result of the two-week negotiations, the continuation of the layoffs, either full-time or part-time, concerned approximately 550 employees in Finland.

Restaurant operations resumed in Denmark and Norway in May subject to country-specific restrictions. Once the gradual resumption of business operations in Finland began on 1 June 2020 in a restricted operating environment, the company has focused on the gradual resumption of its operations and financing its operations through cash flow.

Starting from the beginning of June, restaurants, entertainment venues and fast casual restaurants were reopened gradually and in a controlled manner. Nightclubs were reopened gradually starting from 26 June 2020 as the restrictions were relaxed and more extensively starting from 13 July 2020 as the restrictions on opening hours and alcohol serving hours were lifted. Staff restaurants were reopened in August. The lack of business travellers and tourists as well as the remote work recommendations in effect have had a significant impact on lunch sales and the weekday sales of restaurants.

At the end of September, the Finnish Government announced it would tighten the restrictions on restaurant opening hours, alcohol serving hours and customer volume due to the acceleration of the pandemic. The Group took immediate action in response to the stricter restaurant restrictions that followed the second wave of the COVID-19 epidemic. On 29 September 2020, the Group announced it is commencing negotiations pursuant to the Act on Co-operation within Undertakings in order to adapt its Finnish operations to the strict restrictions imposed by the Finnish Government on the restaurant industry. Estimated to last six weeks, the negotiations are aimed at minimising the financial impacts caused by COVID-19 and adjusting the Group’s costs to correspond to the decline in volume due to the restrictions on restaurants. The co-operation negotiations concern all of the Group’s employees, totalling approximately 1,300 employees in Finland. The restrictions on restaurants also indirectly impact the approximately 2,000 people working for the Group as leased staff. The negotiations may cause changes in the organisational structure, part-time or full-time temporary layoffs, changing full-time employment relationships to part-time relationships or redundancies. The potential redundancies discussed in the negotiations primarily concern administrative tasks at different levels of the organisation.

At the same time, the Group also announced that, due to the restrictions on restaurants, it estimates it will transition to conducting its business according to the low scenario, in which sales are at approximately 50 per cent of the previous year’s level.

Approximately 15 per cent of the Group’s restaurants were closed at the end of September. In Finland, about 400 of the Group’s employees were temporarily laid off, either full-time or part-time, as of the end of September. Following the introduction of the stricter restrictions on restaurants, approximately 20 per cent of the Group’s restaurants were closed at the end of October, with pre-order restaurants, event venues and most nightclubs being closed. In Finland, almost all employees were concerned by temporarily laid offs either part-time or full-time as of the end of October.

Restrictions on restaurants*

Finland

Restaurants in Finland were reopened at the beginning of June subject to restrictions on opening hours, alcohol serving hours and customer volumes. Starting from 22 June 2020, alcohol serving hours were extended from 10 p.m. to 1 a.m. and the permitted customer volume was increased from 50 per cent to 75 per cent of normal capacity. The restriction of the number of customers did not apply to terraces and outdoor premises, but the safety of customers had to be ensured in these premises as well. The restrictions on restaurant opening hours, alcohol serving hours and permitted customer volumes were lifted on 13 July 2020. From that date on, restaurants have been required to provide a seat for each customer. Restaurants are also still required to provide customers with instructions on the prevention of infectious diseases, such as hand washing and maintaining safe distances. Outdoor events attended by more than 500 people were permitted in July subject to special restrictions. Indoor events attended by more than 500 people were also permitted starting from the beginning of August.

As the COVID-19 situation developed into a second wave, the opening hours and alcohol serving hours of restaurants were again restricted effective from the beginning of October and subject to a one-week transition period. Alcohol service was ordered to end at midnight nationwide and restaurants could stay open until 1 a.m. In regions that are in the acceleration phase of the COVID-19 pandemic (in October: the hospital districts of Helsinki and Uusimaa, Pirkanmaa, Kanta-Häme, Southwest Finland and South Ostrobothnia), restaurants were ordered to close at 11 p.m., with alcohol service ending at 10 p.m., and the permitted number of customers was half of the maximum capacity.

On 15 October 2020, the Constitutional Law Committee of the Finnish Parliament issued a statement on the Government’s proposal on restaurant restrictions, finding that the proposal partly violates the Constitution of Finland. The Social Affairs and Health Committee of the Finnish Parliament published its report on the new restaurant restrictions on 20 October 2020. More specific provisions regarding the restrictions on customer capacity and their regional applicability were introduced in a Government Decree. The proposed legislative amendments entered into force at the beginning of November 2020 and will remain in effect until 15 December 2020.

According to the legislative amendments, alcohol service was ordered to end at midnight nationwide and restaurants could stay open until 1 a.m. In the regions were the pandemic is in the acceleration stage, alcohol service is permitted until 10 p.m. and restaurants that primarily serve alcohol can stay open until 11 p.m. In nightclubs, bars and pubs, the customer capacity is restricted to half of the normal capacity. In restaurants that primarily serve food, the permitted customer capacity is 75 per cent and they can stay open until midnight. In regions where the pandemic is in the spreading stage, restaurants that primarily serve food must close at 11 p.m.

The restrictions will have a significant impact on the Group’s business in the fourth quarter. The majority of the Group’s restaurants operate in regions that were categorised as being in the acceleration stage of the pandemic in October and where the restrictions are stricter than in regions that are in the basic stage.

Denmark

In Denmark, restaurants serving food were allowed to reopen in early May. During the summer months in Denmark, the number of customers in the indoor areas of restaurants was restricted and restaurants had to close at midnight. Gatherings of more than 500 people were cancelled until the end of August 2020. Nightclubs and cocktail bars were closed until the end of August and cocktail bars were reopened on 1 September 2020. Stricter restrictions on the opening hours of bars and restaurants were introduced effective from 18 September 2020, with restaurants required to close at 10 p.m. thereafter. Everyone is required to wear a face mask when moving around restaurants. Customer volumes are currently reduced to approximately 50 per cent of the maximum capacity, and gatherings of more than 50 people are not allowed. Nightclubs remain closed, but bars are allowed to be open subject to the current restrictions on business hours.

The compensation schemes by the Danish state will remain in effect until 2 January 2021. In conjunction with the introduction of the stricter restrictions, the rate of turnover-based government support for fixed expenses was increased from 80 per cent to 90 per cent.

Norway

In Norway, alcohol licences were reactivated for food-serving restaurants in Oslo on 6 May 2020 and the alcohol licences of other restaurants were reactivated at the beginning of June. The number of customers in the indoor areas of restaurants was restricted during the summer months and food and beverages had to be served at tables. In Norway, the normal opening hours of restaurants were in force from 15 June to 8 August 2020. The restrictions on opening hours were tightened thereafter, and the order to close at midnight was introduced on 8 August 2020. In Norway, restrictions on opening hours were lifted on 12 October 2020 except in Oslo. Restaurants can operate at 50% customer capacity, table service is mandatory and a safe distance of one metre must be maintained. Gatherings of more than 200 people are cancelled until further notice.

The restrictions in Oslo were tightened on 27 October 2020: restaurants are prohibited from allowing new customers in after 10 p.m. and must stop serving food and beverages at midnight. The restrictions are in effect until further notice, but until 30 November 2020 at the latest. When the restrictions were loosened, the compensation provided by the Norwegian state to cover fixed expenses was reduced from 80 per cent to 50 per cent in early August 2020 and subsequently increased to 60 per cent in October when the restrictions were again tightened. The compensation will remain in effect until 31 December 2020.

Government assistance during the state of emergency

The compensation received by the Group from the Finnish state totalled approximately MEUR 5.0 in January–September 2020. Also in January–September, the Group received support amounting to approximately MEUR 3.6 from the Danish state and MEUR 1.5 from the Norwegian state. The financial support received by the Group from the Finnish, Danish and Norwegian governments for the period 1 January–30 September 2020 totalled approximately MEUR 10.1.

A more detailed account of government assistance, the distribution thereof and an estimate for the remainder of 2020 is presented in Note 5 Government grants in the interim report.

* The status of restrictions on restaurants on 6 November 2020.

DESCRIPTION OF ACCOUNTING PRINCIPLES

  • NoHo Partners divested its labour hire business in August 2019. Starting from September 2019, the Group only has one segment: the restaurant business.

  • Due to the divestment of the labour hire business, the Group has started to present alternative performance measures that improve comparability. These alternative performance measures are intended to improve the market’s understanding of the development and financial situation of the restaurant business. The most significant item added to the comparable result is the Group’s internal staffing service purchases that took place before the transaction. In the future, these will be presented as outsourced services. The calculation principles of the key figures that improve comparability are presented in more detail in Note 2 in the interim report.

  • In the interim report’s comparison figures, the labour hire segment is treated as a discontinued operation and a separate item in the income statement. The comparison figures have been adjusted accordingly. For more information, see Note 2.

  • In the interim report, the Group’s continuing and discontinued operations as well as the comparable continuing operations of the restaurant business are presented separately.

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

  • The Group adopted operating cash flow as a new performance measure effective from 1 April 2020. (Calculation formula: EBIT + depreciation and impairment – share of associated company’s result – adjustment of IFRS 16 lease expenses to cash flow based) This performance measure presents the cash flow generated by the company before investments, taxes and finance costs. It is intended to illustrate the cash flow generated by the restaurant business.

FINANCIAL REPORTING IN 2021

NoHo Partners’ financial reporting schedule in 2021 is as follows:

  • Financial statements release for 2020 on Thursday, 18 February 2021

  • Financial statements and annual report for 2020 during week 11

  • Interim report for January–March 2021 on Tuesday, 11 May 2021

  • Half-year report for January–June 2021 on Tuesday, 10 August 2021

  • Interim report for January–September 2021 on Tuesday, 9 November 2021

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

A briefing for the media, analysts and investors will be organised today, Tuesday 10 November 2020 at 10:00 a.m. In the briefing, NoHo Partners CEO Aku Vikström will review NoHo Partners Plc's Q3/2020 financial performance, key events, the current state of business and the market outlook.

The briefing is available as a live webcast at https://noho.videosync.fi/2020-q3-tulosinfo. The briefing will be held in Finnish. During the briefing, there will be an opportunity to ask questions online. 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–September 2020 is attached to this release as a PDF file. The interim report is also available at www.noho.fi.

Tampere, 10 November 2020

NOHO PARTNERS PLC

Board of Directors

More information available from:
Aku Vikström, CEO, tel. +358 44 011 1989
Jarno Suominen, Deputy CEO, tel. +358 40 721 5655

NoHo Partners Plc
Hatanpään valtatie 1 B
FI-33100 Tampere

www.noho.fi

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, Yes Yes Yes, Stefan’s Steakhouse, Palace, Löyly, Hanko Sushi, Friends & Brgrs and Cock’s & Cows. In 2019, NoHo Partners Plc’s turnover was MEUR 272.8 and EBIT MEUR 30.6. Depending on the season, the Group employs approximately 2,100 people converted into full-time workers.

NoHo Partners corporate website: www.noho.f/en
NoHo Partners consumer website: www.ravintola.fi/en

Attachment