Investor Q&A

The coronavirus pandemic (COVID-19) has had a significant impact on the business operations of NoHo Partners. We have provided answers to some of the most frequently asked questions on this page. We will update it as the situation progresses.

Published on 3 April 2020. Last updated 22 January 2021 at 12:25.

QUESTION: How has the coronavirus pandemic affected the business operations of NoHo Partners? 

ANSWER: The COVID-19 pandemic has had a serious impact on the market and the restaurant industry. The sudden change in the market has also considerably affected the operations of NoHo Partners. We announced on 3 April 2020 that the negotiations with the Group’s current financers in all of its market areas in Finland, Denmark and Norway had been concluded and an agreement was reached regarding a financing package of MEUR 34. The interest on the bridge financing is under 4 per cent, including Finnvera’s guarantee commission for EUR 15 million of the financing.

On 29 May 2020, we announced the finalisation of a refinancing programme for our maturing debt as part of an overall financing package. As the final part of the financing package, we agreed on a debt of MEUR 10 with a right to conversion with the Finnish Industry Investment Ltd (Tesi).

At the time of withdrawing the loan, we estimate that this financing package, together with other financing arrangements, is sufficient to ensure the Group’s working capital for the next 12 months in spite of the potential prolongation of the uncertain market situation caused by the COVID-19 pandemic.

As expected, the Group’s result for the second quarter of 2020 was negative due to the impact of the COVID-19 pandemic. Approximately 90% of the Group’s restaurants were closed in April–May. The business losses were minimised by quick and purposeful adjustment measures as well as government compensation. Restaurant operations resumed in Denmark and Norway in May subject to country-specific restrictions. The gradual resumption of business operations in Finland began on 1 June 2020. Starting from June, the Group focused on the gradual resumption of its business in a restricted operating environment and financing operations through cash flow.

Business resumed better than expected thanks to active customer demand and the controlled reopening of restaurants. Turnover in June was about MEUR 14 (approximately 55% of the turnover for the corresponding period last year) and the turnover in July was about MEUR 20 (approximately 75% of the turnover for the corresponding period last year) while operating cash flow was positive in both months. Turnover in August was about MEUR 20.6 (approx. 75% of the turnover for the corresponding period last year) and operating cash flow was approximately MEUR 2.4. Turnover for September 2020 was approximately MEUR 15 (approx. 70% of the turnover for the corresponding period last year). The turnover of the Finnish restaurant business was more than 70% and the turnover of the international business was more than 50% of the turnover in the corresponding period last year. Operating cash flow was neutral with a turnover of approximately MEUR 15, which is a good indication of the flexibility of our cost structure in our group of 250 restaurants.

Our turnover in July–September 2020 was MEUR 56, which is 73% of the turnover in the corresponding period last year, and operating cash flow was approximately MEUR 5.5.

On 29 September 2020, we announced we are commencing negotiations in accordance with the Act on Co-operation within Undertakings to adapt our operations to the stricter restrictions on the restaurant industry put in place by the Finnish Government on the same day. Following the restaurant restrictions imposed by the state authorities in Finland, we estimated that we will start applying our previously published low scenario in our business.

Turnover for October 2020 was approximately MEUR 12, which is roughly 56 per cent of the turnover in the corresponding period last year, and the operating cash flow was approximately MEUR -2. Turnover for November 2020 was approximately MEUR 10, which is roughly 37 per cent of the turnover in the corresponding period last year, and the operating cash flow was approximately MEUR -2.

On 13 October 2020, we issued a written petition to the Parliamentary Ombudsman to call for an investigation into the legality of the actions of the Ministry of Social Affairs and Health in the drafting of the Government proposal for an act temporarily amending the Communicable Diseases Act concerning restaurant industry and the related Government decree, and called upon the Parliamentary Ombudsman to subsequently take action as necessary based on the investigation. The press release available here.

QUESTION: How do you expect business operations to resume?

ANSWER: We have prepared a three-stage action plan for managing the impact of the coronavirus pandemic. Please find further information regarding the below stages from the stock exchange release published on 5 May 2020.

We are currently operating in a restricted operating environment.

  • Stage 1:The operating environment during the state of emergency (lockdown)
    At the beginning of the first stage, the company focused on quickly reducing expenses, laying off personnel and balancing its finances while restrictions on its business were in place.
  • Stage 2: Restricted operating environment
    The company will resume its business operations in a managed and gradual manner over a period of 6–12 months. Decisions on the resumption of business will be made on a weekly basis and separately for each business location. The aim of the company is to ensure a positive operating cash flow, even in the restricted operating environment, as the restaurant industry gradually recovers.
  • Stage 3: Strengthening competitiveness
    In the third stage of the plan, the focus is shifted to strengthening the company’s competitiveness in the post-pandemic restaurant market as well as strengthening the capital structure.

QUESTION: What does the future look like? Are you planning your operations based on the scenarios?

ANSWER: We cancelled the previously issued profit guidance for 2020 on 13 March 2020. At this point, we are not specifying our turnover and profitability forecast for this year in more detail due to the uncertain market situation. On 9 June 2020, in conjunction with the publication of our result, we cancelled our financial targets previously set for 2021.

At this time, the Group 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.

We will provide monthly reports on the development of our business during these exceptional circumstances.

The orders issued by the authorities and consumer psychology have a significant impact on the company’s future outlook. We are prepared for three different scenarios that were published on 9 June 2020 in connection with the Q1/2020 interim report:

Basic scenario: sales will be approximately 70–85% of the normal level and the operating cash flow will be positive for the rest of the year.

Low scenario: sales will be approximately 50% of the normal level, the operating cash flow will be neutral and investments are mainly frozen.

High scenario: sales recover to the normal level during the fourth quarter of 2020 and the operating cash flow will be strongly positive.

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% of the previous year’s level. Group turnover in October was approximately 56% of the previous year’s level and operating cash flow was negative. The demand outlook for November was 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% of the previous year’s level and operating cash flow will be negative.

Turnover for November 2020 was approximately MEUR 10, which is roughly 37 per cent of the turnover in the corresponding period last year. The turnover of the Finnish restaurant business was approximately 43 per cent and the turnover of the international business was approximately 18 per cent of the turnover in the corresponding period last year. The company’s operating cash flow in November was approximately MEUR -2.

QUESTION: What can we expect from the rest of 2020 in regards to profit and operating cash flow? 

ANSWER: While our business operations collapsed, we have concentrated on minimising our so-called burn rate and shifted from income statement based management to cash flow based management. Our turnover for June 2020 was approximately MEUR 14, which was roughly 55 per cent of the turnover in the corresponding period last year. The operating cash flow of the business was positive in June and we were able to focus on the controlled resumption of our business and employing personnel. In July, our turnover was approximately MEUR 20, which was roughly 75 per cent of the turnover in the corresponding period last year, while operating cash flow in July was approximately MEUR 3. In August, our turnover was approximately MEUR 20.6, which was roughly 75 per cent of the turnover in the corresponding period last year, while operating cash flow was approximately MEUR 2.4.

In September 2020, our turnover was approximately MEUR 15, which was roughly 70 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 with a turnover of approximately MEUR 15, which is a good indication of the flexibility of our cost structure in our group of 250 restaurants.

Our turnover for July–September 2020 was MEUR 56, which is 73 per cent of the turnover in the corresponding period last year, and operating cash flow was approximately MEUR 5.5.

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% of the previous year’s level. Group turnover in October was approximately 56% of the previous year’s level and operating cash flow was negative. The demand outlook for November was 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% of the previous year’s level and operating cash flow will be negative.

Due to the rapid acceleration of the pandemic situation, the tightening of restrictions in all of the company’s market areas, such as increased restrictions in the Finnish regions and the ban on serving alcohol in restaurants in Norway, as well as the changed consumer behaviour, the company’s turnover was less than 40 per cent of the level reported in November last year.

Turnover for November 2020 was approximately MEUR 10, which is roughly 37 per cent of the turnover in the corresponding period last year. The turnover of the Finnish restaurant business was approximately 43 per cent and the turnover of the international business was approximately 18 per cent of the turnover in the corresponding period last year. The company’s operating cash flow in November was approximately MEUR -2.

No rise in the level of turnover is expected in December when considering the development of the epidemic in major cities in Finland and the lockdown of restaurants entering into force in Denmark today which will last until 3 January 2021. We believe that the losses in December can be reduced compared to the November figures with additional savings, lease agreement negotiations and operations management while the operating cash flow of the business, however, will remain negative. We believe that the market will start recovering after the launch of the vaccine distribution during the first half of 2021.

QUESTION: How do you benefit from the Government compensation?

ANSWER: 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.The amount of support for the entire 2020 financial period is estimated to be approximately MEUR 10.9.

QUESTION: What are the restrictions in the company’s international markets in Denmark and Norway, and what is their impact on the company’s operations?

ANSWER: In Denmark, 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. Restrictions were tightened from 9 December 2020 after which in Denmark restaurants were closed and only take-away sales are allowed until 8 February 2021.

The compensation schemes by the Danish state will remain in effect followed by the tightening of restrictions. The rate of turnover-based government support for fixed expenses was increased from 80 per cent to 90 per cent. In addition to fixed costs, the state also reimburses 80 per cent of salaries.

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 restaurants in Norway were prohibited to serve alcohol as of 9 November 2020. The alcohol serving restriction was lifted regionally in the third week of January, but the restriction will continue in Oslo, for example, until at least February 8, 2021.

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. The restrictions were tightened again on November, and the government support for fixed expenses is 85 per cent in November–December 2020 and 70 per cent in January–February 2021.

The compensation we received from the Danish and Norwegian states for 1 January–30 September 2020 amounted to approximately MEUR 5.1. The estimated compensation for October–December 2020 is approximately MEUR 0.7. During the period 1 January–30 September 2020, the turnover of our international business, which consists of our operations in Denmark and Norway, was approximately MEUR 20.3, representing about 16.2% of the Group’s total turnover.

QUESTION: Which measures has NoHo Partners taken to secure the safety of the personnel and the company’s ability to operate during the pandemic?

ANSWER: In accordance with the recommendations issued by the Finnish Government on 12 March 2020, we immediately cancelled all public events of more than 500 people until the end of May 2020. In addition, we followed elevated hygiene measures in our restaurants. We closed our nightclubs and restaurants in accordance with the recommendations of the authorities before the official order of the Finnish Government to close down all restaurants.

Once the impact of the COVID-19 pandemic became apparent, we reacted immediately by starting determined adjustment measures and preparing for the changed market conditions. At the same time, we started funding negotiations with the current funders for the duration of the state of emergency.

We announced on 3 April 2020 that the negotiations with the Group’s current financers in all of its market areas in Finland, Denmark and Norway had been concluded and an agreement was reached regarding a financing package of MEUR 34. In 29 May 2020, we announced the finalisation of a refinancing programme for our maturing debt as part of an overall financing package and agreed on a debt of MEUR 10 with a right to conversion with the Finnish Industry Investment Ltd (Tesi). We estimate that this financing package, together with other financing arrangements, is sufficient to ensure the Group’s working capital for the next 12 months in spite of the potential prolongation of the uncertain market situation caused by the COVID-19 pandemic.

After business operations started in different areas in May-June, the Group prepared for the reopening of restaurants by drafting special safety and hygiene instructions aimed at protecting the personnel and customers in accordance with the national recommendations and guidelines. The reopening of restaurants was conducted without disturbances, with the safety of all customers and personnel being appropriately ensured.

We also use self-monitoring guidelines based on the industry’s general guidelines to help restaurants operate safely during the exceptional circumstances caused by the COVID-19 pandemic.

QUESTION: Which measures have you taken to adjust costs and how quickly will these have an impact on your costs? Which measures have you taken with regard to your fixed costs?

ANSWER: Staff expenses and rents are our biggest fixed costs. We began determined adjustment measures regarding them immediately once the impact of the COVID-19 pandemic became apparent.

We announced negotiations in accordance with the Act on Co-operation within Undertakings on 13 March 2020. We reported on the rapid progress of the negotiations on 18 March 2020, and announced that, due to the sudden change in the circumstances of the COVID-19 pandemic and the recommendations and orders issued by the authorities and the Finnish Government, the Group had made a decision concerning layoffs without prior co-operation negotiations. The layoffs are temporary, with a duration of no longer than 90 days, and they concern all of the Group’s personnel in Finland, totalling approximately 1,300 employees. Starting on 1 April 2020, the Group has temporarily laid off seven of the eleven members of NoHo Partners’ Executive Team and 1,030 of its regular employees. Persons on family and study leave or other long leave are not included in the scope of the layoffs. We announced on 15 May 2020 that we would begin co-operation negotiations on continuing temporary layoffs due to the uncertain market situation. On 15 June 2020, we announced that the temporary part-time or full-time layoffs would concern approximately 550 employees. The final number of laid-off employees and the duration of the layoffs will be specified further at a later time if the market situation changes.

On 29 September 2020, the Finnish Government announced stricter restrictions on restaurants. That same day, we announced we are commencing negotiations in accordance with the Act on Co-operation within Undertakings to adapt our operations to the restrictions on the restaurant industry. The co-operation negotiations concern all the Group’s employees, totalling approximately 1,300 employees in Finland.

The Group negotiated a two-month rent exemption for April–May for 70 per cent of its leases in Finland. Reductions in rent totalled approximately MEUR 3.5 in May–June 2020.

The Danish state covered 80 per cent of wage expenses until 8 July 2020. In connection 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. The subsidy is in effect for the period 1 November 2020–2 January 2021.

When the restrictions were loosened, the support 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.

QUESTION: Has NoHo Partners reassessed its strategy?

ANSWER: Since early June, we have focused on the gradual resumption of our business in a restricted operating environment and financing operations through cash flow. 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.

QUESTION: What is the liquidity situation of NoHo Partners?

ANSWER: We announced the completion of the funding negotiations for the duration of the state of emergency and agreement on a funding package of MEUR 34 on 3 April 2020. On 29 May 2020, we announced a debt of MEUR 10 with a right to conversion with the Finnish Industry Investment Ltd (Tesi). The overall funding negotiations for the exceptional situation caused by the COVID-19 pandemic have been concluded and the funding package will ensure the sufficiency of our cash reserve during this period. Since early June, we have focused on the resumption of our business and financing operations through cash flow.

At the time of withdrawing the loan, we estimate that this financing package, together with other financing arrangements, is sufficient to ensure the Group’s working capital for the next 12 months in spite of the potential prolongation of the uncertain market situation caused by the COVID-19 pandemic.

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.

We have prepared for quick changes in demand during the remainder of the year and we are maintaining our cash and cash equivalents at a substantially higher level than usual. 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.

QUESTION: When will NoHo Partners provide more information about its financial position and plans? 

ANSWER: As a listed company, we will provide information about essential changes by way of stock exchange releases. As we announced on 13 March 2020, we have cancelled the profit guidance for 2020 issued on 5 March 2020. At this point, we are not specifying our turnover and profitability forecast for this year in more detail due to the uncertain market situation. The financial impact of COVID-19 cannot be fully estimated at present because it depends on the duration and length of the measures implemented to mitigate the spread of the virus as well as on the markets’ speed of recovery.

We announced on 9 June 2020, in conjunction with the publication of the result for the first quarter of 2020, that we will cancel our financial targets which were previously set for 2021 and that we will specify them and our profit guidance for 2020 later this year. We will also provide monthly reports on the development of our business during these exceptional circumstances. We will update information about our situation from time to time also via this Q&A page.

Our turnover for June 2020 was approximately MEUR 14, which was roughly 55 per cent of the turnover in the corresponding period last year. The operating cash flow of the business was positive in June and we were able to focus on the controlled resumption of our business and employing personnel. In July 2020, our turnover was approximately MEUR 20, which was roughly 75 per cent of the turnover in the corresponding period last year, while operating cash flow in July was approximately MEUR 3. Turnover in August was about MEUR 20.6 and operating cash flow was approximately MEUR 2.4.

Our turnover for July–September 2020 was MEUR 56, which is 73 per cent of the turnover in the corresponding period last year, and operating cash flow was approximately MEUR 5.5.

Turnover for October 2020 was approximately MEUR 12, which is roughly 56 per cent of the turnover in the corresponding period last year, and the operating cash flow was approximately MEUR -2. The demand outlook for November was 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% of the previous year’s level and operating cash flow will be negative.

Turnover for November 2020 was approximately MEUR 10, which is roughly 37 per cent of the turnover in the corresponding period last year. The turnover of the Finnish restaurant business was approximately 43 per cent and the turnover of the international business was approximately 18 per cent of the turnover in the corresponding period last year. The company’s operating cash flow in November was approximately MEUR -2.

At this time, the Group 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 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.

The company will report the business development in December and in the entire financial period 2020 in connection with the publication of the financial statements release for 2020 on 18 February 2021.

QUESTION: How have you communicated your business risks to investors previously?

ANSWER: We have regularly communicated about our risks in conjunction with financial statements, annual reports and quarterly financial reviews. Most recently, we communicated about the risks and uncertainty factors in conjunction with the January–September 2020 interim report, published on 10 November 2020 and in the financial statements published on 26 May 2020. In addition, we have engaged in continuous active dialogue concerning the risks with our analysts.

QUESTION: You are a major shareholder of Eezy Plc. How has the crisis affected the business operations of Eezy?  

ANSWER: In its company press release published on 20 March 2020, Eezy Plc announced that its business environment has been significantly affected by the global COVID-19 epidemic. In its Q3/2020 report published on 10 November 2020, the company stated that the COVID-19 pandemic has affected its business negatively, but the company has thus far managed the COVID-19 crisis without major adverse impacts. The most pronounced impacts of the pandemic were seen in the HoReCa sector and importing foreign labour. In industry, construction and logistics, the impact has varied regionally and on a per-company basis. However, in the retail sector, development has been primarily positive.

Eezy Plc withdrew its previously published profit forecast on 20 March 2020 and has not issued a new profit forecast for 2020.

According to the company’s report on the second quarter of 2020, a new guidance will be issued when the duration and scope of the impact of the COVID-19 pandemic can be assessed better.

QUESTION: Why did NoHo Partners postpone the publication of its financial statements and annual report for 2019?

ANSWER: We updated the notes to the financial statements and annual report for 2019 to correspond with the situation on the date of signing with regard to events after the close of the financial period, risks, future outlook and financial situation. On 24 April 2020, we announced that the financial statements and annual report for 2019 were to be published on 26 May 2020. The financial statements are available here.

QUESTION: How does the share issue related to the acquisition of Friends & Brgrs affect the shareholding of the current owners? When will this change happen?

ANSWER: The newly issued shares constitute 0.8 per cent of the company’s overall shares after the share issue. The share issue will dilute the shareholding of current owners in the company. The change happened when the new shares were registered on 8 April 2020.

Our most recent financial report, Interim report Q3/2020, is available here and Financial Statements 2019 here.