NOHO PARTNERS PLC FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020

The year of COVID-19 caused an operating loss of MEUR 24 – following structural changes and a new financing agreement, the company prepares for a rebuilding phase

NoHo Partners Plc

FINANCIAL STATEMENTS RELEASE 18 February 2021 at 8:15 a.m.

NOHO PARTNERS PLC FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020

The year of COVID-19 caused an operating loss of MEUR 24 – following structural changes and a new financing agreement, the company prepares for a rebuilding phase

NoHo Partners operated in a restricted operating environment in all of the countries in which it operates during the last quarter of 2020. As a result of the acceleration of the pandemic, tightening restrictions on restaurants, weakened customer demand, complete halt of international business operations and lack of corporate sales during the pre-Christmas season, the Group’s turnover for October–December remained at approximately 42 per cent of the previous year, and operating cash flow was MEUR 7.2 negative. The full-year turnover for 2020 decreased to 57.5 per cent of the previous year. With rapid and determined reaction, increased efficiency of operational activities and cost-savings, the company succeeded in limiting the negative impact of the exceptional circumstances on its operating cash flow, which was only MEUR 5.1 negative for the financial period 2020.

In January 2021, the Group’s turnover was at a level of 53 per cent of the turnover in the corresponding period last year. February 2021, the company negotiated a financing agreement with its main financiers, which secures the company’s long-term financing position and enables the reconstruction programme after the exceptional circumstances. The company believes that the market will begin to recover and operating cash flow will begin to come back to positive figures during the second quarter of 2021.

OCTOBER–DECEMBER 2020 IN BRIEF

Group (continuing and discontinued operations):

• Turnover declined by 57.9% to MEUR 31.6 (MEUR 75.2).
• EBIT fell by 267.7% to MEUR -11.8 (MEUR 7.0).
• The EBIT percentage was -37.2% (9.3%), a decrease of 498.8%.
• The result for the financial period was MEUR -11.9 (MEUR 4.9), a decrease of 342.9%.
• Earnings per share were EUR -0.53 (EUR 0.20), a decrease of 367.7%.

Restaurant business (comparable continuing operations):

• Turnover declined by 57.9% to MEUR 31.6 (MEUR 75.2).
• EBIT fell by 284.2% to MEUR -11.9 (MEUR 6.5).
• The EBIT percentage was -37.7% (8.6%), a decrease of 538.1%.
• The result for the financial period was MEUR -12.0 (MEUR 4.3), a decrease of 377.0%.
• Earnings per share were EUR -0.53 (EUR 0.17), a decrease of 414.1%.
• Operating cash flow fell by 175.3% to MEUR -7.2 (MEUR 9.5).
• The operating cash flow includes approximately MEUR 1.1 of non-recurring items comprised of salary expenses from redundancies resulting from the co-operation negotiations, expenses relating to expiring leases and credit losses.
• The result for the financial period includes approximately MEUR 1.9 of depreciation and amortisation from the IFRS 16 impact of expiring leases and write-offs.

JANUARY–DECEMBER 2020 IN BRIEF

Group (continuing and discontinued operations):

• Turnover declined by 42.5% to MEUR 156.8 (MEUR 272.8).
• EBIT fell by 178.2% to MEUR -23.9 (MEUR 30.6).
• The EBIT percentage was -15.2% (11.2%), a decrease of 236.0%.
• The result for the financial period was MEUR -29.5 (MEUR 47.7), a decrease of 161.8%.
• Earnings per share were EUR -1.44 (EUR 2.36), a decrease of 160.9%.
• The gearing ratio excluding the impact of IFRS 16 liabilities was 192.0%. Interest-bearing net liabilities excluding the impact of IFRS 16 amounted to MEUR 163.4. IFRS 16 liabilities totalled MEUR 153.2. The gearing ratio including the impact of IFRS 16 was 391.0%.

Restaurant business (comparable continuing operations):

• Turnover declined by 42.6% to MEUR 156.8 (MEUR 272.9).
• EBIT fell by 233.2% to MEUR -24.5 (MEUR 18.4).
• The EBIT percentage was -15.6% (6.7%), a decrease of 331.8%.
• The result for the financial period was MEUR -30.1 (MEUR 11.7), a decrease of 356.4%.
• Earnings per share were EUR -1.44 (EUR 0.47), a decrease of 408.6%.
• Operating cash flow fell by 116.9% to MEUR -5.1 (MEUR 30.4).
• The operating cash flow includes approximately MEUR 1.6 of non-recurring items comprised of salary expenses from redundancies resulting from the cooperation negotiations, expenses relating to expiring leases and credit losses recognised during the financial period 2020. In addition, the operating cash flow includes more than MEUR 1 of costs associated with the closure and reopening of business functions.
• The result for the review period includes approximately MEUR 6.5 of one-off depreciation and amortisation and impairment comprised of discontinued units and units whose revenue generating capacity is estimated to decline in the future as well as IFRS 16 impacts of expiring leases.
• Government grants across all of the countries in which the company operates totalled approximately MEUR 12.5 for January–December 2020.

SIGNIFICANT EVENTS IN THE FOURTH QUARTER

• The Finnish Government tightened the restrictions on restaurant opening hours, alcohol serving hours and customer volume nationwide starting from October 2020 and subject to a one-week transition period. 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 commenced co-operation negotiations concerning all of the personnel in Finland on 5 October 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.
• A Government Decree laid down new restrictions on restaurants in Finland starting from 1 November 2020, and the majority of regions were included in the scope of tighter restrictions for areas in the acceleration and community transmission stages of the pandemic. The new Government Decree on restrictions on restaurants entered into force on 12 December 2020 and will remain in force until 28 February 2021.
• A ban on selling alcohol in restaurants in Norway entered into force on 9 November 2020, and it remains in force until further notice in Oslo, for example.
• Restaurants were completely closed in Denmark on 9 December 2020, and only take-away sales are allowed until 28 February 2021.
• At the end of December, the company’s international restaurants, event venues and nightclubs were closed, and other business areas were subject to strict restrictions.

SIGNIFICANT EVENTS AFTER THE REVIEW PERIOD

• CBO and Executive Team member Eemeli Nurminen left his post on 1 January 2021.
• On 4 January 2021, the company announced that Perttu Pesonen, Development Director and Executive Team member, is leaving his post on 1 February 2021.
• The company announced on 5 January 2021 that its co-operation negotiations resulted in changes in the organisational structure, reduction of 55 jobs and 15 jobs being made part-time in the Group Executive Team, management and administrative specialist positions, as well as part-time and full-time temporary lay-offs concerning approximately 600 at the time.
• The Group’s turnover for January 2021 was approximately MEUR 7.8, which is about 53% of the turnover for the corresponding period the previous year. Operating cash flow was approximately MEUR -1.8.
• On 29 January 2021, the company announced that it had acquired Allas Sea Pool’s restaurant business. NoHo Partners became a lessee of the sea spa as of 1 February 2021.
• The Finnish government issued a bill to the Parliament on 4 February 2021 on temporarily amending the Communicable Diseases Act, whereby the validity of the legislation on restrictions of restaurant operations would be extended until the end of June 2021.
• The company announced on 15 February 2021 that it had completed negotiations on a long-term financing agreement with its main financiers to secure its financial position and enable the reconstruction programme.

SUMMARY

The sudden market changes caused by the COVID-19 pandemic had a significant impact on the Group’s result for the fourth quarter of 2020 and financial period 2020 on the whole. In October–December, the most profitable quarter in the restaurant business under normal conditions, the company operated in a very restricted operating environment, with the nightclub business, event venue business and international operations at a standstill. On October, following the restrictions on restaurants put in place by the Finnish Government, the company 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. The general pandemic situation, restrictions on restaurants tightened in November and cancellations of corporate events impaired the demand further towards the end of the year.

The Group’s turnover for October–December 2020 was approximately MEUR 31.6, which is roughly 42 per cent of the turnover for the corresponding period the previous year. The Group’s EBIT for October–December was about MEUR 11.9 negative and operating cash flow was approximately MEUR 7.2 negative.

The full-year turnover for 2020 was MEUR 156.8, which is approximately 57.5 per cent of the turnover for the previous year. The loss of turnover caused by the COVID-19 pandemic financial for the financial period 2020 was estimated to be nearly MEUR 145. The EBIT for the financial period was MEUR 23.9 negative. With rapid reaction, increased efficiency of operational activities and cost-savings, the company succeeded in limiting the negative impact of the exceptional circumstances on its operating cash flow, which was only MEUR 5.1 negative for the full financial period.

The operating cash flow for January–December 2020 includes approximately MEUR 1.6 of non-recurring items comprising salary expenses from redundancies resulting from the cooperation negotiations, expenses relating to expiring leases and credit losses recognised during the financial period 2020. In addition, the operating cash flow includes more than MEUR 1.0 EUR million in costs associated with the closure and reopening of business functions. The result for the review period includes approximately MEUR 6.5 of one-off depreciation and amortisation and impairment comprised of discontinued units and units whose revenue generating capacity is estimated to decline in the future, as well as IFRS 16 impacts of expiring leases.

The turnover for October 2020 was approximately MEUR 12.3, which is roughly 57 per cent of the turnover for the corresponding period the previous year. Operating cash flow was approximately MEUR -1.9.

The turnover for November 2020 was MEUR 10.1, which is approximately 37 per cent of the turnover for the corresponding period the previous year. Operating cash flow was approximately MEUR -2.0.

The turnover for December 2020 was MEUR 9.2, which is approximately 35 per cent of the turnover for the corresponding period the previous year. Operating cash flow was approximately MEUR -3.2. The operating cash flow for December includes approximately MEUR 0.9 of non-recurring items comprised of salary expenses from redundancies resulting from the co-operation negotiations, expenses relating to expiring leases and credit losses.

The turnover for January 2021 was approximately MEUR 7.8, which is roughly 53 per cent of the turnover for the corresponding period the previous year. The turnover was generated by restaurant operations in Finland, with the international business operations being at a complete standstill. Operating cash flow was approximately MEUR -1.8 in January.

The Group recognised approximately MEUR 12.5 in financial support from the Finnish, Danish and Norwegian governments for the period 1 January–31 December 2020. Reductions in rent totalled approximately MEUR 3.5 in January–December 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

For NoHo Partners, the year 2020 was ravaged by the COVID-19-pandemic. The year had a record-hitting start, but the momentum came to a halt when the pandemic came into full force, and after the official restrictions came into force, consumer demand collapsed. Apart from a momentary phase of recovery in the summer, the year was spent adapting operations, looking after the safety of the staff and customers, and safeguarding cash flow. The exacerbation of the epidemic in Finland, Norway and Denmark towards the end of the year led to a complete freezing of the biggest season of the year.

Amidst the COVID-19 crisis, the company has focused on safeguarding its future by seeing to its personnel and negotiating sustainable financing solutions, allowing it to secure its competitiveness once the market recovers. The new five-year financing programme that will secure the company’s liquidity and rebuilding programme for 2021 can be considered to be a significant achievement from the point of view of the company’s future. Together with financial institutions, the company is committed to a repayment programme that makes it possible to implement the company’s growth plan and lightening its debt burden in a balanced manner. The aim is for the radio of net debt to operating cash flow, adjusted for IFRS 16 debt, to be under 3 by the end of 2023.

The outlook for 2021 remains uncertain. According to our current estimate, market restrictions will be relaxed and demand will begin to recover during the summer. Following the recovery, we will begin to implement our rebuilding programme with determination. As the summer of 2020 showed, customer demand returns quickly when the market normalises and terraces open. We have prepared for recovery from the COVID-19 shock thoroughly by trimming costs and polishing our operational activities under difficult conditions. This, and the company’s restaurant portfolio which was enhanced even further during the crisis and the balance lightened by the complete depreciation programme, will guarantee a solid foundation for improving the company’s structural profitability.

In spite of the extremely difficult year, my faith in the ability of our team to survive this crisis is unwavering. The months ahead are still challenging and will also require patience from our stakeholders. Nevertheless, we are looking into the future with confident minds and will publish our new strategy and its goals during the first half of 2021. Our company’s aim is to be the leading restaurant company in the Nordic countries, and its strategy will be profitable growth in increasingly select markets and customer segments.

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 in early 2021.

Profit guidance

At this time, the company will not provide 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 2021 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 restrictions 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 early 2021.

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

Financial targets

The Group will specify the long-term financial targets for the strategy period 2021–2023 during the first half of 2021.

KEY FIGURES
NoHo Partners Group, total
(EUR 1,000)	1 Oct.–31 Dec. 2020	1 Oct.–31 Dec. 2019	1 Jan.–31 Dec. 2020	1 Jan.–31 Dec. 2019
KEY FIGURES, ENTIRE GROUP (Continuing and discontinued operations)
Turnover	31,615	75,179	156,771	272,820
EBIT	-11,772	7,019	-23,880	30,551
EBIT, %	-37.2%	9.3%	-15.2%	11.2%
Result of the financial period	-11,887	4,893	-29,469	47,674
Continuing operations’ earnings per share (euros) for the financial period attributable to the owners of the Company	-0.53	0.20	-1.44	1.10
Earnings per share (EUR) for the financial period attributable to the owners of the Company	-0.53	0.20	-1.44	2.36
Operating cash flow	-7,161	9,504	-5,124	30,409
Interest-bearing net liabilities excluding 16 impact, EUR			163,431	105,391
Gearing ratio excluding IFRS 16 impact, %			192.0%	75.9%
Interest-bearing net liabilities, EUR			316,621	266,691
Gearing ratio, %			391.0%	194.6%
Equity ratio, %			18.1%	29.1%
Return on investment, % (p.a.)			-5.9%	8.4%
Adjusted net finance costs	2,727	1,980	10,788	7,166
Material margin, %	68.9%	75.6%	72.0%	74.3%
Personnel expenses, %	41.5%	32.8%	38.0%	32.6%

 

RESTAURANT BUSINESS (Comparable continuing operations)
(EUR 1,000)	1 Oct.–31 Dec. 2020	1 Oct.–31 Dec. 2019	1 Jan.–31 Dec. 2020	1 Jan.–31 Dec. 2019
Turnover	31,615	75,179	156,771	272,912
EBIT	-11,921	6,470	-24,488	18,389
EBIT, %	-37.7%	8.6%	-15.6%	6.7%
Result of the financial period	-12,037	4,345	-30,077	11,730

 

TURNOVER IN THE BUSINESS AREAS OF THE RESTAURANT BUSINESS	1 Oct.–31 Dec. 2020	1 Oct.–31 Dec. 2019	1 Jan.–31 Dec. 2020	1 Jan.–31 Dec. 2019
Restaurants
Turnover (MEUR)	13.7	28.3	58.0	107.5
Percentage of the total turnover	43.3%	37.6%	37.0%	39.4%
Change in turnover	-51.6%		-24.3%
Units, number	77	72	77	75
Turnover/unit (MEUR)	0.18	0.39	0.75	1.43
Entertainment venues
Turnover (MEUR)	5.7	23.4	43.9	88.5
Percentage of the total turnover	17.9%	31.1%	28.0%	32.4%
Change in turnover	-75.8%		-35.2%
Units, number	67	67	67	65
Turnover/unit (MEUR)	0.08	0.35	0.66	1.36
Fast casual restaurants
Turnover (MEUR)	8.9	8.3	31.2	33.6
Percentage of the total turnover	28.2%	11.1%	19.9%	12.3%
Change in turnover	6.8%		24.7%
Units, number	53	47	53	48
Turnover/unit (MEUR)	0.17	0.18	0.59	0.70
International restaurants
Turnover (MEUR)	3.3	15.1	23.6	43.3
Percentage of the total turnover	10.6%	20.1%	15.1%	15.9%
Change in turnover	-77.9%		-16.5%
Units, number	40	37	40	37
Turnover/unit (MEUR)	0.08	0.41	0.59	1.17

DIVIDEND

NoHo Partners Plc’s distributable assets on 31 December 2020 were EUR 104,820,924.23, of which the share of the financial period’s result is EUR -16,186,005.86.

NoHo Partners Plc’s Board of Directors proposes to the Annual General Meeting convening on 21 April 2021 that, based on the confirmed balance sheet for the financial period that ended on 31 December 2020, no dividend be distributed.

On the financial statements date, 31 December 2020, there were 19,222,270 shares in the company.

CASH FLOW, INVESTMENTS AND FINANCING

The Group’s operating net cash flow for January–December 2020 was MEUR 8.4 (MEUR 57.3).

Growth investments made in the fourth quarter of 2020 consisted of the planned opening of Friends & Brgrs restaurants in Espoo, Helsinki and Rovaniemi and the opening of the Space Bowling & Billiards venue arena in Lappeenranta.

The Group’s gearing ratio excluding the impact of IFRS 16 liabilities was 192,0%. Interest-bearing net liabilities excluding the impact of IFRS 16 amounted to MEUR 163.4. IFRS 16 liabilities totalled MEUR 153.2. The Group’s interest-bearing net liabilities (including the IFRS 16 liability) at the end of December 2020 were MEUR 316.6 (MEUR 266.7). The adjusted net finance costs for January–December 2020 were MEUR 10.8 (MEUR 7.2). The equity ratio was 18.1% (29.1%) and the gearing ratio was 391.0% (194.6%).

The finance costs for January–December 2020 include an exchange rate difference item of approximately MEUR 0.6 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 April, the Group negotiated a financing package of MEUR 34 with its funding partners in Finland, Denmark and Norway, of which Finnvera guaranteed MEUR 15. 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 MEUR 10 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.

Cooperation 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. The negotiations were aimed at minimising the financial impacts caused by COVID-19 and adjusting the Group’s costs to correspond with the decline in volume due to the restrictions on restaurants. The co-operation negotiations concerned all 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. On 5 January 2021, the company announced that the negotiations had been completed. The negotiations resulted in changes in the organisational structure, reduction of 55 jobs and 15 jobs being made part-time in the Group Executive Team, management and administrative specialist positions, as well as part-time and full-time temporary lay-offs concerning approximately 600 at the time.

Following tightened restrictions on restaurants, the Group estimated in October that 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. The further tightening of regulations in November impaired the outlook for the rest of the year further. Turnover for November and December remained at below 40 per cent compared to the corresponding period the previous year. At the end of December 2020, the company’s pre-order restaurants, event venues and nightclubs and the restaurants in Denmark and Norway were closed.

In February 2021, the company succeeded in negotiating a financing agreement with its main financers, which secures the company’s long-term financial position and enables reconstruction measures.

Restrictions on restaurants

Finland

After the lock-down of April–May, 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 were in the acceleration phase of the COVID-19 epidemic, 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. 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 community transmission stage, restaurants that primarily serve food must close at 11 p.m. The new Government Decree entered into force on 12 December 2020, stipulating that the decree on restaurant restrictions will remain in force until 28 February 2021.

The restrictions had 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 and community transmission stages of the pandemic in October–December and where the restrictions are stricter than in regions that are in the basic stage. The company’s nightclubs were closed in October following the tightened restrictions, and the event arenas remained closed for the time being.

With the government bill issued to the Parliament on 4 February 2021, the validity of the legislation on restrictions of restaurant operations will be extended until the end of June 2021.

Denmark and Norway

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 both countries, the Group has had to adjust its cost structure through temporary layoffs and redundancies and determined measures to increase administrational efficiency.

In Denmark, restaurants were closed in mid-March and 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, requiring restaurants to close at 10 p.m., customer volumes were reduced to approximately 50 per cent of the maximum capacity, and gatherings of more than 50 people were not allowed. Due to the acceleration of the COVID-19 pandemic, restaurants were closed across the country on 9 December 2020, and only take-away sales are allowed until 28 February 2021.

In Denmark, the state has supported companies in the restaurant industry during the crisis by covering 80 per cent of their fixed expenses, relative to the decline in turnover. In addition to fixed expenses, the Danish state also covered 80 per cent of wage expenses until 8 July 2020. Following stricter restrictions, the subsidy for fixed expenses was increased to 90 per cent at the beginning of November 2020, in addition to which the state compensates for 80 per cent of wage expenses. The compensation schemes by the Danish state will remain in effect for the time begin as the restriction measures continue.

In Norway, alcohol licences were reactivated for food-serving restaurants in Oslo on 6 May 2020 after the restaurant closure in starting from mid-March, 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 could operate at 50% customer capacity, table service was mandatory and a safe distance of one metre was to be maintained. Gatherings of more than 200 people are cancelled until further notice. The restrictions in Oslo were tightened on 27 October 2020: restaurants were prohibited from allowing new customers in after 10 p.m. and had to stop serving food and beverages at midnight. The restrictions were tightened further on 9 November 2020, after which restaurants were no longer allowed to serve alcohol at all. The company’s restaurants in Norway are primarily entertainment venues, and they were closed. The restriction on serving alcohol was cancelled regionally in the third week of January 2021, but in Oslo, for example, the ban on serving alcohol will continue for the time being.

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 again subsequently increased to 60 per cent in October. Once the restrictions were tightened further in November, the subsidy was again increased, amounting to 85 per cent in November–December 2020 and 70 per cent in January–February 2021.

Government assistance during the state of emergency

The compensation received by the Group from the Finnish state totalled approximately MEUR 5.1 in January–December 2020. Also in January–December, the Group received support amounting to approximately MEUR 4.5 from the Danish state and MEUR 2.8 from the Norwegian state. The financial support received by the Group from the Finnish, Danish and Norwegian governments for the period 1 January–31 December 2020 totalled approximately MEUR 12.5. A more detailed account of government assistance and the distribution thereof is presented in Note 5 Government grants in the financial statements release.

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 financial statements release’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 financial statements release, 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 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, Thurdsay 18 February 2021 at 10:00 a.m. at Allas Sea Pool restaurant, Katajanokanlaituri 2 a, 00160 Helsinki. In the briefing, NoHo Partners CEO Aku Vikström will review NoHo Partners Plc's 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-q4-tulos. During the briefing, there will be an opportunity to ask questions online. The briefing will be held in Finnish. The presentation materials and a recording of the briefing will be available on the company’s website later today.

NoHo Partners’ full financial statements release for January–December 2020 is attached to this release as a PDF file. The financial statements release is also available at www.noho.fi.

Tampere, 18 February 2021

NOHO PARTNERS PLC

Board of Directors

ATTACHMENT: NoHo Partners Plc Financial Statements Release 2020

More information available from:
Aku Vikström, CEO, tel. [phone]
Jarno Suominen, Deputy CEO, tel. [phone]

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. Depending on the season, the Group employs approximately 2,100 people converted into full-time workers. The company’s vision is to be the most significant restaurant company in the Nordic countries. www.noho.fi

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• NoHo_Partners_Plc_Financial_Statements_Release_2020