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 13 October 2020 at 19:49.

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

ANSWER: The coronavirus 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 company’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 MEUR 15 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).

We estimate that this financing package, together with other financing arrangements, is sufficient to ensure the company’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 company 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 (approximately 75% of the turnover for the corresponding period last year) while operating cash flow was about MEUR 2.4. Turnover in September 2020 was approximately MEUR 15 (approximately 70 % of the turnover in 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.

Turnover for July–September 2020 was more than MEUR 56, which is almost 75 % of the turnover in the corresponding period last year, and operating cash flow was approximately MEUR 5.5.

On 29 September 2020, we announced, that we are commencing negotiations in accordance with the Act on Co-operation within Undertakings in order to adapt our operations to the strict restrictions on the restaurant industry put in place by the Finnish Government. Due to the restrictions on restaurants, we estimate that we will transit to conduct our business according to the low scenario, in which sales are at approximately 50 per cent of the previous year’s level.

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 provided 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. We will further 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.

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.

Due to the restrictions on restaurants, we estimate that we will transit to conduct our business according to the low scenario, in which sales are at approximately 50 per cent of the previous year’s level. Even in the worst scenario, we are operationally and cash-wise prepared for the possible second wave of the pandemic.

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 steering to cash flow steering. On July 2020, our turnover was approximately MEUR 14, which is 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 is roughly 75 per cent of the turnover in the corresponding period last year. At this level of turnover, our operating cash flow in July was approximately MEUR 3. In August, our turnover was approximately MEUR 20.6, which is roughly 75 per cent of the turnover in the corresponding period last year, and our operating cash flow was approximately MEUR 2.4.

In September, out turnover was approximately MEUR 15, which is 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 more than MEUR 56, which is almost 75 per cent of the turnover in the corresponding period last year, and operating cash flow was approximately MEUR 5.5.

We estimate that we will transit to conduct our business according to the low scenario, in which sales are at approximately 50 per cent of the previous year’s level.

In line with the growth plan announced in February 2020 (media release 12 Feb 2020 in Finnish), we will open six new Friends & Brgrs restaurants in 2020. The burger chain, of which we own approximately 70%, aims to expand to a set of 30-50 restaurants within three years. See the press release published on 15 Sep 2020 here (in Finnish).

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 June 2020 will amount to approximately MEUR 8.4. The amount of support for the entire 2020 financial period is estimated to be approximately MEUR 9.6.

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, nightclubs are still closed. Bar and restaurant opening hour restrictions will be tightened on 18 September after which they must close at 22.00. The restriction is valid until 4 October 2020. In addition, staff is required to wear face masks, as well as customers when moving around the restaurant. Seating capacity is reduced to approximately 50% of the maximum capacity, and events for more than 50 people are not allowed.

Compensation paid by the Danish state will continue until 31 October 2020 with regard to nightclubs and bars whose operations have been substantially restricted. The subsidy is tied to turnover, and it is a maximum of 100% of fixed expenses if the restaurant (nightclub) is closed. The company’s Danish cocktail bars opened on 1 September 2020. If their sales are 50% of the previous year’s level, for example, the state’s compensation is 50% of fixed expenses.

In Norway, the normal opening hours of restaurants were in force from 15 June to 8 August 2020. After this, the restrictions on opening hours were tightened, and the order to close at midnight imposed on 8 August 2020 will continue. The indoor seating capacity of restaurants is restricted in Norway, table service is in effect, a one metre safety distance must be guaranteed and dancing is prohibited. Compensation by the Norwegian state ended on 31 August 2020, and the state will soon provide information on the possible continuation of compensation while the restrictions remain in force.

The compensation received by NoHo Partners from the Danish and Norwegian states for 1 January–30 June 2020 amounted to approximately EUR 4.1 million. The estimated compensation for July–September 2020 is approximately EUR 0.6 million. The turnover of our international business, which covers the Danish and Norwegian businesses, for the period from January 1 to June 30, 2020 were approximately MEUR 13.3, which corresponds to approximately 19% of the company’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 company’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 company’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 company 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.

Our restaurants also have a self-monitoring guide based on general industry guidance to help restaurants operate safely in the exceptional situation caused by coronavirus 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 coronavirus pandemic became apparent.

We announced negotiations in accordance with the Act on Cooperation 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 coronavirus pandemic and the recommendations and orders issued by the authorities and the Finnish Government, the company had made a decision concerning layoffs without prior cooperation 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 company 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 cooperation 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 tightening restrictions on the restaurant industry. On the same day we announced commencing negotiations in accordance with the Act on Co-operation within Undertakings in order to adapt our operations to the restrictions on the restaurant industry. The co-operation negotiations concern all of 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. In Denmark and Norway, approximately 80 per cent of the lease expenses and other fixed expenses were covered by the state during the crisis. The Danish state covered 80 per cent of wage expenses until 8 July 2020. Compensation paid by the Danish state will continue until 31 October 2020 with regard to nightclubs and bars whose operations have been substantially restricted. The subsidy is tied to turnover, and it is a maximum of 100% of fixed expenses if the restaurant is closed.

QUESTION: Has NoHo Partners reassessed its strategy?

ANSWER: Since early June, the company has focused on the gradual resumption of its business in a restricted operating environment and financing operations through cash flow. The time for reassessing the company’s strategy will come once the COVID-19 pandemic has been survived and business has resumed.

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.

We estimate that this financing package, together with other financing arrangements, is sufficient to ensure the company’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.

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. At the end of July, we had approximately MEUR 22 in cash and cash equivalents along with MEUR 16 in unwithdrawn limits. Our position in terms of liquid assets means that we are prepared for potential new changes in the market. We have successfully carried out cash flow positive business operations in spite of the restrictions on restaurants and prepared for the continuation of our operations in a restricted operating environment as well as the reintroduction of stricter restrictions.

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 the coronavirus cannot currently be fully estimated 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.

On July 2020, our turnover was approximately MEUR 14, which is 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 is roughly 75 per cent of the turnover in the corresponding period last yearl, and our operating cash flow in July was approximately MEUR 3. In August, our turnover was approximately MEUR 20.6, which is roughly 75 per cent of the turnover in the corresponding period last year, and our operating cash flow was approximately MEUR 2.4.

In September, our turnover was approximately MEUR 15, which is 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 more than MEUR 56, which is almost 75 per cent of the turnover in the corresponding period last year, and operating cash flow was approximately MEUR 5.5.

We estimate that we will transit to conduct our business according to the low scenario, in which sales are at approximately 50 per cent of the previous year’s level.

The Group will report October developments in turnover in its January–September 2020 interim report on 10 November 2020.

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 financial statements release for 2019, published on 5 March 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 coronavirus epidemic. In its report on the second quarter of 2020, published on 11 August 2020, the company announced that the coronavirus pandemic has affected its business negatively. During the second quarter, the COVID-19 pandemic had the most pronounced negative impact in the HoReCa sector and importing labour. In industry, construction and logistics, the impact has varied regionally and on a per-company basis.

Eezy Plc cancelled its profit guidance for the year 2020 given on 5 March 2020. At this point, the company will not issue a new guidance for the year 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, Half-year report Q2/2020, is available here and Financial Statements 2019 here.