2015-12-18 08:00:43 CET
2015-12-18 08:00:43 CET
REGULATED INFORMATION
Kotipizza Group Oyj - Interim report (Q1 and Q3)
Kotipizza Group Oyj: A STRONG THIRD QUARTER FOR KOTIPIZZA GROUP, 25.1% GROWTH IN COMPARABLE EBITDA ON THE PREVIOUS YEAR
KOTIPIZZA GROUP OYJ INTERIM REPORT 1 FEBRUARY - 31 OCTOBER 2015
A STRONG THIRD QUARTER FOR KOTIPIZZA GROUP, 25.1% GROWTH IN COMPARABLE EBITDA ON
THE PREVIOUS YEAR
August-October 2015 (August-October 2014)
* Chain-based net sales of continuing operations grew 7.3% (3.9%)
* Comparable net sales were 14.4 MEUR (13.7). Growth was 5.3%
* Comparable EBITDA was 1.53 MEUR (1.23). EBITDA growth was 25.1%
* Comparable EBIT was 1.38 MEUR (1.11)
February-October 2015 (February-October 2014)
* Chain-based net sales of continuing operations grew 7.8 % (0.5%)
* Comparable net sales 41.8 MEUR (39.3). Growth was 6.2%
* Comparable EBITDA was 3.86 MEUR (3.25). Growth was 19%
* Comparable EBIT was 3.43 MEUR (2.93)
* Net gearing was 37.0 percent (576.3%)
* Equity ratio was 52.4 percent (11.0%)
Guidance of the financial year 2016 has been reviewed
New estimation: The Group estimates for the full financial year that the chain-
based net sales from the continuing operations will grow by over 5 percent as
compared to the previous financial year and that comparable EBITDA will grow
significantly as compared to the previous year.
Old estimation: The Group estimates for the full financial year that the chain-
based net sales from the continuing operations will grow by over 5 percent as
compared to the previous financial year and that comparable EBITDA will grow as
compared to the previous year.
KEY FIGURES, EUR THOUSAND
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8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
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Comparable figures
Comparable net sales 14 409 13 685 41 765 39 327 52 226
Comparable EBITDA 1 533 1 225 3 861 3 245 4 197
Comparable EBITDA of
10.6% 9.0% 9.2% 8.3% 8.0%
net sales, %
Comparable EBIT 1 376 1 112 3 428 2 929 3 719
Comparable EBIT of net sales, % 9.5% 8.1% 8.2% 7.4% 7.1%
Reported figures
Chain-based net sales of continuing 19 617 18 280 56 792 52 707 70 459
operations
Reported net sales 14 409 13 685 41 765 39 327 52 226
Reported EBITDA 1 503 1 241 3 022 3 450 4 272
Reported EBITDA of
10.4% 9.1% 7.2% 8.8% 8.2%
net sales, %
Reported EBIT 1 346 1 128 2 589 3 134 3 794
Reported EBIT of net sales, % 9.3% 8.2% 6.2% 8.0% 7.3%
Earnings per share 0.12 0.18 -0.17 0.29 -0.43
Net cash flows from operating -2 905 1 531 2 933
activities
Net cash used in investment -773 -938 -1 084
activities
Net gearing, % 37.0 576.3 634.0
Equity ratio, % 52.4 11.0 9.3
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Tommi Tervanen, CEO of Kotipizza Group
The third quarter of the financial year was the first that Kotipizza Group spent
entirely as a public company listed on the Nasdaq OMX Helsinki stock exchange.
Although the floating of the stock has not affected the day-to-day operations at
Kotipizza restaurants, on the group level we have noticed an increased interest
in our actions, not only from investors and analysts but also from the media and
the general public.
The sales in the Kotipizza chain also continued on a good level in the third
quarter of the financial year, both in terms of comparable net sales and
customer volumes. The chain-based net sales growth of continuing operations in
Kotipizza restaurants was 7.3 percent in August-October, being clearly above the
average growth in the Finnish fast food market.
The number of Kotipizza restaurants was 264 (262) at the end of the review
period. We have for a long time constantly worked towards closing restaurants
directly owned by the Group and at the end of July, all Kotipizza restaurants
were owned by franchisees apart from one restaurant used as a product
development and training unit of the chain.
One of the most important developments during the review period was the opening
of the first brick-and-mortar restaurant of the Mexican-style Chalupa chain on
8 September. At the end of the review period, three Chalupa restaurants were
already operating in Helsinki. Chalupa is a testament to Kotipizza Group's faith
in fast casual concepts, that is, reasonably priced restaurant emphasizing
freshness, authenticity, and sustainability in their food. Fast casual has
already led to major shifts in the U.S. restaurant market, and all signs point
to it becoming a significant phenomenon in Finland as well.
Group net sales grew 5.3% in August-October and were 14.4 MEUR (13.7). The
cumulative chain-based sales of continuing operations have increased 7.8% since
the beginning of the financial year. Comparable EBITDA was 1.53 MEUR (1.22) in
August-October, a growth of 25%. Comparable EBITDA has now grown 19% since the
beginning of the financial year as compared to the corresponding period in the
previous year. That means we are on pace to reach our medium-term financial
goals, both in terms of the development of chain-based sales as well as that of
EBITDA. We also paid off in full our three-year unsecured bond with a nominal
value 30 MEUR on 11 August. Our net debt-to-equity ratio stands at 37% and
equity ratio at 52% at the end of the review period which was visible as lower
financing costs at the third quarter. The new balance-sheet position which has
been improved by the public offering perfectly supports both our growth strategy
and our commitment to sustainability and transparency.
Considering the figures reported today and management's view of the market
development for the remaining of the financial year we reviewed our previous
guidance. For the full financial year, we estimate the group's chain-based net
sales from the continuing operations will during the present financial year grow
by over 5% as compared to the previous financial year, and the comparable gross
margin/EBITDA will grow significantly as compared to the previous financial
year.
GROUP NET SALES
August-October 2015
Chain-based net sales of the continuing operations grew 7.3% (3.9%) year on year
in the third quarter of the financial year and were 19.6 MEUR (18.3). The chain-
based net sales of the continuing operations are the total combined net sales of
the company's franchisees, based on which the company's franchising fees are
invoiced monthly. They also include sales of the restaurants owned directly by
the Group. The chain-based net sales of the continuing operations in the
financial year ending 31 January 2015 do not include the chain-based net sales
of the 55 Burger, Cola, Fries segment divested during the financial year.
Group comparable net sales for the third quarter of the financial year were
14.4 MEUR (13.7) and they grew 5.3% compared to same period in the previous
year. Reported net sales were 14.4 MEUR (13.7). Sales growth was mainly based on
Foodstock's increased sales volume to Kotipizza chain. The net sales of
Foodstock grew 4.3% year on year in the third quarter of the financial year. The
Kotipizza segment's net sales grew 0.9% compared to the previous year and were
3.0 MEUR (3.0). The Chalupa segment's net sales in the third quarter of the
financial year were 0.32 MEUR (0.00).
The net sales of the discontinued operations were 0.01 MEUR in the third quarter
and they declined 0.19 MEUR as compared to the net sales of 0.20 MEUR for the
three-month period ending 31 October 2014.
February-October 2015
Chain-based net sales of the continuing operations grew 7.8% (0.5%) year on year
in February-October and were 56.8 MEUR (52.7).
Group comparable net sales for February-October were 41.7 MEUR (39.3) and they
grew 6.2% compared to same period in the previous year. Reported net sales were
41.7 MEUR (39.3). The sales growth was mainly based on Foodstock's increased
sales volume to the Kotipizza chain. The net sales of Foodstock grew 8.4% year
on year in the third quarter of the financial year. The Kotipizza segment's net
sales were down 4.4% compared to the previous year and were 8.8 MEUR (9.2). The
decline in net sales was mainly due to the smaller number of restaurants
directly owned by the Group. The restaurants directly owned by the segment are
consolidated in full, and due to this, their number may have a material effect
on the consolidated figures. During the third quarter of the year, the number of
directly owned restaurants averaged one (1) and it averaged eight (8) during the
same period in the previous year. The Chalupa segment's net sales in the
February-October were 0.28 MEUR (0.00).
The net sales of the discontinued operations were 0.03 MEUR in the third quarter
and they declined 0.64 MEUR as compared to the net sales of 0.67 MEUR for the
nine months' period ending 31 October 2014.
GROUP EBIT
August-October 2015
Comparable EBIT of the Group was 1.38 MEUR (1.11) in the third quarter of the
financial year. Reported EBIT was 1.35 MEUR (1.13). Reported EBIT includes 0.03
MEUR of items affecting comparability. Items affecting comparability were
nonrecurring costs related to the initial public offering of company's shares on
the Nasdaq OMX Helsinki stock exchange. All items affecting comparability were
cash based. Operational gearing based on increased sales volumes together with
the smaller number of loss-making Kotipizza segment's directly owned restaurants
had a positive impact on EBIT. Increased amount of depreciation (calculational,
non-cash) had a negative impact on EBIT.
February-October 2015
Comparable EBIT of the Group was 3.43 MEUR (2.93) in February-October. Reported
EBIT was 2.59 MEUR (3.13). Reported EBIT includes 0.84 MEUR of items affecting
comparability. Out of items affecting comparability 0.23 MEUR were due to
nonrecurring costs related to initial public offering of company's shares on the
Nasdaq OMX Helsinki stock exchange and 0.50 MEUR due to closing permanently down
Kotipizza Oyj's previous headquarters in Vaasa. These items affecting
comparability were cash based. In addition, the reported EBIT includes 0.12 MEUR
non-cash deferral error related to Foodstock's inventory as an item affecting
comparability. Operational gearing based on increased sales volumes had a
positive impact on EBIT. Increased amount of depreciation (calculational, non-
cash) had a negative impact on the EBIT. The company closed down its previous
headquarter in Vaasa on 31 May 2015, which is estimated to result in cost
savings of approximately EUR 50 thousand per month.
SALES AND EBITDA OF THE SEGMENTS
KOTIPIZZA SEGMENT
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EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
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Net sales 2 997 2 970 8 749 9 155 12 251
Comparable gross margin/EBITDA 1 607 1 009 4 086 2 910 4 169
Internal eliminations related to
discontinued operations 0 11 0 94 95
Depreciation and impairments -111 -84 -315 -234 -340
Comparable EBIT 1 496 925 3 771 2 676 3 829
Reported gross margin/EBITDA 1 607 1 020 3 817 3 004 4 152
Reported EBIT 1 496 936 3 502 2 770 3 812
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August-October 2015
Net sales of Kotipizza for the third quarter of the financial year were 3.00
MEUR (2.97) and they increased 0.9% compared to same period in the previous
year. The increase in net sales was based on growth in chain-based net sales.
Kotipizza's comparable EBITDA was 1.61 MEUR (1.01) in the third quarter of the
financial year and it grew 59.3% compared to same period in the previous year.
The improvement in comparable EBITDA was mainly due to reduced number of
directly owned loss-making restaurants, restructuring measures implemented in
the segment's operations and favourable development of chain-based net sales in
Kotipizza. The restaurants directly owned by the segment are consolidated in
full, and due to this, their number may have a material effect on the
consolidated figures. During the third quarter of the year, the number of
directly owned restaurants averaged one (1) and it averaged six (6) during the
same period in the previous year. Reported EBITDA was 1.61 MEUR (1.02) in the
third quarter of the financial year. Reported EBITDA in Kotipizza did not
include items affecting comparability in the third quarter. Internal
eliminations related to the sold Francount business operations have been
returned to the comparable EBITDA as an item affecting comparability for the
previous year. Equivalent costs related to financial management are the
segment's direct costs in the current corporate structure.
February-October 2015
Net sales of Kotipizza for February-October were 8.75 MEUR (9.16) and they
declined 4.4% compared to same period in the previous year. The decline in net
sales was mainly due to the smaller number of restaurants directly owned by the
segment. The restaurants directly owned by the segment are consolidated in full,
and due to this, their number may have a material effect on the consolidated
figures. During the third quarter of the year, the number of directly owned
restaurants averaged one (1) and it averaged eight (8) during the same period in
the previous year.
Kotipizza's comparable EBITDA of was 4.09 MEUR (2.91) in February-October and it
grew 40.4% compared to same period in the previous year. The improvement in
comparable EBITDA was mainly due to reduced number of directly owned loss-making
restaurants, restructuring measures implemented in the segment's operations and
favourable development of chain-based net sales in Kotipizza. On the other hand,
comparable EBITDA was burdened by double administration costs during the first
four months of the review period. Kotipizza's reported EBITDA was 3.82 MEUR
(3.00) in February-October and it grew 27.1% compared to the previous year.
Reported EBIT includes 0.27 MEUR of items affecting comparability. Items
affecting comparability were cash based, nonrecurring costs related to closing
down company's old headquarters in Vaasa. Internal eliminations related to sold
Francount business operations have been returned to the comparable EBITDA as an
item affecting comparability for the previous year. Equivalent costs related to
financial management are the segment's direct costs in the current corporate
structure.
FOODSTOCK SEGMENT
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EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
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Net sales 11 169 10 710 32 700 30 160 39 954
Comparable gross margin/EBITDA 261 366 746 801 668
Internal eliminations related to
discontinued operations 0 22 0 128 125
Depreciation and impairments -28 -23 -85 -64 -114
Comparable EBIT 233 343 661 737 554
Reported gross margin/EBITDA 261 388 631 929 793
Reported EBIT 233 365 546 865 679
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August-October 2015
Net sales of Foodstock for the third quarter of the financial year were 11.17
MEUR (10.71) and they grew 4.3% compared to same period in the previous year.
The growth in net sales was mainly due to favourable development of Kotipizza
chain-based net sales, which had a positive boost to Foodstock's delivery
volumes for the chain. Net sales to the Rolls burger chain also increased as
compared to the previous year.
Foodstock's comparable EBITDA was 0.26 MEUR (0.36) in the third quarter of the
financial year. Foodstock's reported EBITDA was 0.26 MEUR (0.39) in the third
quarter of the financial year and it declined 32.7% compared to the previous
year. Reported EBITDA did not include items affecting comparability in the third
quarter of the current financial year. Internal eliminations related to sold
Francount business operations have been returned to the comparable EBITDA as an
item affecting comparability for the previous year. Equivalent costs related to
financial management are the segment's direct costs in the current corporate
structure.
February-October 2015
Net sales of Foodstock for February-October were 32.70 MEUR (30.16) and they
grew 8.4% compared to same period in the previous year. The growth in net sales
was mainly due to increased sales volume to the Kotipizza chain. Net sales to
the Rolls burger chain also increased compared to the previous year.
Foodstock's comparable EBITDA was 0.75 MEUR (0.80) in the February-October and
declined 6.9% compared to the same period in the previous year. The increase in
net sales did not have a positive impact on comparable EBITDA mainly due to a
material increase in market prices of certain delivered raw materials and a
change towards more expensive delivery mix. Foodstock was not able to fully
compensate these increased costs in its selling prices during the period, which
had a negative impact on sales margin and thus to comparable EBITDA. Foodstock's
reported EBITDA was 0.63 MEUR (0.93) in the February-October and it declined
32.1% from the previous year. Reported EBIT includes a 0.12 MEUR non-cash
deferral error related to Foodstock's inventory as an item affecting
comparability. Internal eliminations related to sold Francount business
operations have been returned to the comparable EBITDA as an item affecting
comparability for the previous year. Equivalent costs related to financial
management are the segment's direct costs in the current corporate structure.
CHALUPA SEGMENT
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EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
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Net sales 231 0 278 0 0
Comparable gross margin/EBITDA 3 0 -67 0 0
Internal eliminations related to
discontinued operations 0 0 0 0 0
Depreciation and impairments -6 0 -9 0 0
Comparable EBIT -3 0 -76 0 0
Reported gross margin/EBITDA 3 0 -67 0 0
Reported EBIT -3 0 -76 0 0
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August-October 2015
Chalupa's net sales were 0.23 MEUR (0.00) in the third quarter of the financial
year and comparable EBITDA together with reported EBITDA was 0.00 MEUR (0.00).
Chalupa opened three restaurants in August-October and costs related to openings
had a negative impact to EBITDA.
February-October 2015
Chalupa commenced its true business operations during the third quarter of the
financial year due to delay in building permit process for the first restaurant.
OTHERS SEGMENT
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EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
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Net sales 12 5 38 12 21
Comparable gross margin/EBITDA -338 -150 -904 -466 -640
Internal eliminations related to
discontinued operations 0 -17 0 -17 -33
Depreciation and impairments -12 -6 -24 -18 -24
Comparable EBIT -350 -156 -928 -484 -664
Reported gross margin/EBITDA -368 -167 -1 359 -483 -673
Reported EBIT -380 -173 -1 383 -501 -697
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Others segment includes mainly operations of the group headquarters.
August-October 2015
Net sales of the Others segment were 0.01 MEUR (0.01) in the third quarter of
the financial year. Comparable EBITDA was -0.34 MEUR (-0.15). Reported EBITDA
was -0.37 MEUR (-0.17). Reported EBITDA includes 0.03 MEUR of items affecting
comparability. Items affecting comparability were cash based nonrecurring costs
related to listing of company's shares on the Nasdaq OMX Helsinki stock
exchange. Internal eliminations related to sold Francount business operations
have been returned to the comparable EBITDA as an item affecting comparability
for the previous year. Equivalent costs related to financial management are the
segment's direct costs in the current corporate structure.
February-October 2015
Net sales of the Others segment were 0.04 MEUR (0.01) in the February-October.
Comparable EBITDA was -0.90 MEUR (-0.47). Comparable EBITDA was still burdened
by double administration costs. Kotipizza's old headquarters in Vaasa was closed
down on 31 May 2015. Reported EBITDA was
-1.36 MEUR (-0.48). Reported EBITDA includes 0.46 MEUR of items affecting
comparability. Out of items affecting comparability 0.23 MEUR was related to
nonrecurring costs related to listing of company's shares on the Nasdaq OMX
Helsinki stock exchange and 0.23 MEUR nonrecurring costs related to closing down
Kotipizza's Vaasa office. All items affecting comparability were on cash basis.
Internal eliminations related to sold Francount business operations have been
returned to the comparable EBITDA as an item affecting comparability for the
previous year. Equivalent costs related to financial management are the
segment's direct costs in the current corporate structure.
FINANCIAL ITEMS AND RESULT
Finance costs of the Group were 2.82 MEUR (2.44). In addition to the normal
finance costs, a 0.90 MEUR nonrecurring cost related to the early redemption of
the company's 30 MEUR unsecured bond on 11 August 2015 has been booked to the
finance costs.
Group taxes were -0.27 MEUR (-0.18) in February-October.
The result of the period was -0.48 MEUR (0.55) in February-October.
Earnings per share were -0.17 EUR (0.29) in February-October.
THE GROUP'S FINANCIAL POSITION
Kotipizza Group's balance sheet total as of 31 October 2015 was 54.4 MEUR
(52.4). The Group's non-current assets as of 31 October 2015 amounted to 38.9
MEUR (38.9), and current assets amounted to 15.4 MEUR (13.6).
The Group's net cash flow from operating activities for the six-month period
ending 31 October 2015 was -2.9 MEUR (1.5). Working capital was tied up in the
amount of EUR 0.9 MEUR (released 1.0). Cash tying up in working capital was due
to the temporary financing of expanding restaurant network. Labour and equipment
costs related to building new restaurants are booked into current assets before
opening the restaurant. These costs are billed from the franchisee after the
opening.
The net cash flow from investment activities for the period was -0.8 MEUR (-
0.9). Investments in tangible and intangible assets for the period amounted to
-0.8 MEUR (-0.9), and proceeds from sales of tangible assets were 0.02 MEUR
(0.10).
The net cash flow from financing activities was 5.1 MEUR (0.06).
The Group's equity ratio was 52.4% (11.0%). The increase in equity ratio was due
to the share issue implemented and transferring company's shareholder loan and
interest related to the shareholder loan into equity in accordance with the
initial public offering. Initial public offering costs related to old shares of
the company amounting 0.23 MEUR are booked to P&L having an income effect and
costs related to issued shares adjusted with calculated taxes a total of 1.04
MEUR is booked into equity.
Interest-bearing debt without contingent considerations measured at fair value
amounted to 19.7 MEUR (39.7), of which current debt accounted for 0.8 MEUR
(0.06). Kotipizza Group Oyj redeem in full its three-year unsecured bond with a
nominal value 30 MEUR on 11 August 2015 with the proceeds from the 4 June 2015
announced and 6 October 2015 implemented Initial Public Offering and the new
17.0 MEUR term loans withdrawn on 7 August 2015. New term loans have covenants.
Further information on Kotipizza Group's financial risks is presented in the
financial statements for the year 2015 and in the company's prospectus released
on 4 June 2015.
INVESTMENTS
The gross investments for the period amounted to -0.8 MEUR (-0.9). The Company's
investments to fixed assets, related mainly to IT systems, amounted to -0.8 MEUR
(-1.1). Gross investments related to acquisitions of subsidiaries amounted to
0.02 MEUR (0.00).
PERSONNEL
On 31 October 2015, Kotipizza Group employed 35 people, all of whom worked in
Finland. At the end of the previous financial year, on 31 January 2015, the
Company employed 33 people, all of whom worked in Finland. At the end of the
financial year ending 31 January 2014, the number of personnel was 53 employees,
and a year earlier it was 52 employees.
BUSINESS ARRANGEMENTS
The Group expanded during the review period by establishing a new joint venture.
Kotipizza Group, Chalupa Oy and Think Drinks Oy signed a shareholder agreement
concerning Chalupa Oy on 13 March 2015. Kotipizza Group owns 60 percent of the
joint venture and Think Drinks Oy owns the remaining 40 percent.
CHANGES IN THE MANAGEMENT
There were no changes in Kotipizza Group's operative management, Board of
Directors or Management Board during the period.
MANAGEMENT BOARD
Kotipizza Group's Management Board comprises five members: Tommi Tervanen (CEO),
Timo Pirskanen (CFO), Olli Väätäinen (Chief Operating Officer), Anssi Koivula
(Chief Procurement Officer) and Antti Isokangas (Chief Communications Officer).
SHARES AND SHARE CAPITAL
Kotipizza Group Oyj's share capital at the end of the review period was EUR
80,000.00 and it comprised 6,351,201 shares. At the beginning of the review
period 1 February 2015, the number of the shares was 544,275,188. Extraordinary
general meeting of Kotipizza Group Oyj decided on combining shares in accordance
with the Finnish companies act 15 chapter 9 §, after which the number of shares
decreased to 1,251,201. In accordance with the Initial Public Offering on 6 July
2015 altogether 5,100,000 shares were issued. The Company has one share class
and each share entitles to one vote in the Company's general meeting. All shares
carry equal rights to dividends and other distribution of assets by the Company.
At the end of the period, the Company had 486 (9) shareholders. The Company does
not hold any treasury shares.
Information about the company's shareholder structure by sector and size of
holding, the largest shareholders and Board of Director and Corporate Management
Board interests can be viewed on the company's website at
www.kotipizzagroup.com.
RESOLUTIONS OF THE GENERAL MEETINGS
Kotipizza Group's extraordinary general meeting held on 2 March 2015 resolved to
change the name of the Company from Frankis Group Oyj to Kotipizza Group Oyj.
Kotipizza Group's extraordinary general meeting held on 28 May 2015 resolved to
change certain sections, such as the redemption clause and the consent clause,
in the articles of association, adding company's shares into the book-entry
system and authorizing the Board of directors to decide on share issue in
accordance with the potential Initial Public Offering. New articles of
association were registered to the trade register.
Company's annual general meeting held on 29 May 2015 discussed the Company's
financial statements for the period ending 31 January 2015 and verified its P&L
and balance sheet, resolved on distribution of profits, granted discharge from
liability to CEO and the Board of directors, confirmed fees for the members of
the Board of directors and chose auditors. Johan Wentzel, Mikael Autio, Kim
Hanslin, Minna Nissinen, Petri Parvinen and Kalle Ruuskanen were chosen to
continue as members of the Board of directors. Authorised public accountants
firm Ernst & Young Oy with public accountant Mikko Järventausta were elected as
auditors.
Company's extraordinary general meeting held on 3 June 2015 discussed the
Company's corrected financial statements for the period ending 31 January 2015
and verified its P&L and balance sheet, resolved on the distribution of profits,
granted discharge to the CEO and the Board of directors, confirmed fees for the
members of the Board and chose auditors. Johan Wentzel, Mikael Autio, Kim
Hanslin, Minna Nissinen, Petri Parvinen and Kalle Ruuskanen were chosen to
continue as members of the Board. Authorised public accountants firm Ernst &
Young Oy with public accountant Mikko Järventausta were elected as auditors.
During the review period public accountant Antti Suominen was elected as chief
auditor.
RISKS AND UNCERTAINTIES
In the long term, Kotipizza Group's operative risks and uncertainties relate to
a possible failure in predicting consumer preferences and in creating attractive
new concepts, as well as to new business risks related to possible expansion to
new cities and abroad. The competitive situation is expected to remain harsh in
the fast food industry. Company's management cannot affect the general market
development and consumer behaviour with its actions.
Restaurant openings also have a material impact on company's franchising, rent,
entry, building, operating system, training and other income, income received
from selling raw materials and supplies and transport and flow of goods related
income and thus to the company's financial result.
Kotipizza Group is currently launching a new fast casual concept, which is
reported as the Chalupa segment. Launching a new business concept has several
risks related e.g. anticipation of consumer needs, habits, taste and behaviour.
Launching a new concept has a risk of not reaching an established position at
the market and not building a well-established customer base. Failure in
launching a new concept causes costs to the company and has a material adverse
impact on the Company's brand, financial position, and financial result.
Further information on Kotipizza Group's risks and risk management is presented
in the financial statements for the year 2015.
EVENTS AFTER THE REPORT PERIOD
Helsinki Foodstock Oy, a sourcing and logistics operator wholly owned by
Kotipizza Group Oyj received a letter of intent from EIPC Limited, a non-profit
making organization owned by SUBWAY Franchisees in Europe, confirming the
intention to extend Helsinki Foodstock's current contract to provide
distribution services to the Subway restaurants in Finland on 4 December 2015.
Helsinki Foodstock will continue to be responsible for managing the supply chain
from suppliers to restaurants. The final agreement is not estimated to have a
material effect on Kotipizza Group's earnings in 2015.
On 16 December, Helsinki Foodstock Oy signed an agreement with Fafa's Plats Oy
making it responsible
for supply chain management from suppliers to restaurants for the Fafa's chain
of restaurants. The agreement is estimated not to have a significant effect on
Kotipizza Group's earnings in 2015.
OUTLOOK FOR THE FINANCIAL YEAR 2016 HAS BEEN REVIEWED
New estimation: The Group estimates for the full financial year that the chain-
based net sales from the continuing operations will grow by over 5 percent as
compared to the previous financial year and that comparable EBITDA will grow
significantly as compared to the previous year.
Old estimation: The Group estimates for the full financial year that the chain-
based net sales from the continuing operations will grow by over 5 percent as
compared to the previous financial year and that comparable EBITDA will grow as
compared to the previous year.
ACCOUNTING POLICIES
Kotipizza Group's unaudited interim report for the six-month period ending 31
October 2015, including the unaudited comparison figures for the six-month
period ending 31 October 2014, have been prepared according to IAS 34 and
applying the same accounting principles that were used in the previous audited
full-year financial statements.
SUMMARY OF THE FINANCIAL STATEMENT AND NOTES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
-------------------------------------------
000 € 000 € 000 € 000 € 000 €
Continuing operations
Net sales 14 409 13 685 41 765 39 327 52 226
Other income 22 13 68 45 65
Change in inventory of raw
materials and finished goods
(+/-) -792 -755 743 -51 -239
Raw materials and finished goods
(-) -10 585 -9 893 -33 814 -30 581 -40 670
Employee benefits/expenses (-) -810 -716 -2 766 -1 969 -2 787
Depreciations (-) -157 -113 -433 -316 -463
Impairments (-) 0 0 0 0 -15
Goodwill impairment (-) 0 0 0 0 0
Contingent consideration (-) 0 0 0 0 0
Other operating expenses (-) -741 -1 093 -2 974 -3 321 -4 323
-------------------------------------------
Operating profit 1 346 1 128 2 589 3 134 3 794
Finance income 5 2 19 25 35
Finance costs -283 -809 -2 820 -2 435 -3 265
-------------------------------------------
Loss / profit before taxes from
continuing operations 1 068 321 -212 724 564
Income taxes -257 -75 -269 -175 -181
-------------------------------------------
Loss / profit for the period
from continuing operations 811 246 -481 549 383
-------------------------------------------
Discontinued operations
Loss after tax for the period
from discontinued operations -54 -24 -113 -184 -918
-------------------------------------------
Loss / profit for the period 757 222 -594 365 -535
-------------------------------------------
Earnings per share, EUR:
Basic, profit for the period
attributable to ordinary equity
holders of the parent (no
dilutive instruments) 0.12 0.18 -0.17 0.29 -0.43
Earnings per share for
continuing operations, EUR:
Basic, profit for the period
attributable to ordinary equity
holders of the parent (no
dilutive instruments) 0.13 0.20 -0.14 0.44 0.31
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
------------------------------------------
000 € 000 € 000 €
Profit (loss) for the period) 757 222 -594 365 -535
Other comprehensive income:
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods:
Exchange differences on translation
of foreign operations 0 -1 0 -10 -9
Net other comprehensive income to be -296 -1 -296 -10 -9
reclassified to profit or loss in ------------------------------------------
subsequent periods
Other comprehensive income for the -237 -1 -237 -10 -9
period, net of tax ------------------------------------------
Total comprehensive income for the
period, net of tax 520 221 -831 355 -544
------------------------------------------
Attributable to:
Owners of the company 521 221 -801 355 -544
Non-controlling interest -1 0 -30 0 0
------------------------------------------
520 221 -831 355 -544
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31. 10. 2015 31.10.2014 31.1.2015
Assets 000 € 000 € 000 €
Non-current assets
Property, plant and equipment 806 727 808
Goodwill 35 819 36 240 35 819
Intangible assets 1 632 1 360 1 229
Non-current financial assets 2 2 2
Non-current receivables 516 403 574
Deferred tax assets 128 114 90
----------------------------------
38 903 38 846 38 522
Current assets
Inventories 3 381 3 181 2 938
Trade and other receivables 5 063 6 236 5 449
Current tax receivables 270 271 230
Prepayments 0 0 0
Cash and cash equivalents 6 711 3 907 5 201
----------------------------------
15 425 13 595 13 818
Assets classified as held for sale 28 0 82
Total Assets 54 356 52 441 52 422
----------------------------------
31. 10. 2015 31.10.2014 31.1.2015
----------------------------------
000 € 000 € 000 €
Equity and liabilities
Share capital 80 80 80
Translation differences 0 0 0
Fund for invested unrestricted equity 29 818 5 362 5 362
Retained earnings -1 380 321 -579
Non-controlling interests -10 0 0
----------------------------------
Total equity 28 508 5 763 4 863
Non-current liabilities
Interest bearing loans and borrowings 16 442 37 058 35 860
Financial liabilities at fair value through
profit or loss 296 205 179
Other non-current liabilities 2 477 2 587 3 850
Deferred tax liabilities 44 66 85
----------------------------------
19 259 39 916 39 974
Non-current liabilities
Interest bearing loans and borrowings 813 62 183
Trade and other payables 5 755 6 678 7 307
Provisions 0 0 0
Current tax liabilities 10 22 10
----------------------------------
6 578 6 762 7 500
11 0 85
Liabilities related to assets held for sale
Total liabilities 25 848 46 678 47 559
----------------------------------
Total shareholders' equity and liabilities 54 356 52 441 52 422
----------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to owners of the company
-------------------------------------------------------------
Fund for Retai- Trans-
invested ned lation Non-
Share unrestricted earn- differ- controlling Total
EUR THOUSAND capital equity ings rences interest equity
1 February 2015 80 5 362 -579 0 0 4 863
Result for the
period 0 0 -564 0 -30 -594
Other
comprehensive
income 0 0 -237 0 0 -237
-------------------------------------------------------------
Total
incomprehensive
income for the
period 0 0 -801 0 -30 -831
Share issue 0 25 501 0 0 20 25 521
Initial public
offering costs -1 045 0 0 0 -1 045
Other change 0 0 0 0 0 0
Dividends 0 0 0 0 0 0
31 October 2015 80 29 818 -1 380 0 -10 28 508
-------------------------------------------------------------
Equity attributable to owners of the company
-------------------------------------------------------------
Fund for Retai- Trans-
invested ned lation Non-
Share unrestricted earn- differ- controlling Total
EUR THOUSAND capital equity ings rences interest equity
1 February 2015 80 5 362 -55 16 0 5 403
Result for the
period 0 0 365 0 0 -107
Other
comprehensive
income 0 0 0 -10 0 0
-------------------------------------------------------------
Total
incomprehensive
income for the
period 0 0 365 -10 0 355
Dividends 0 0 0 0 0 0
Other change 0 0 11 -6 0 10
31October 2014 80 5 362 321 0 0 5 763
-------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
2-10/2015 2-10/2014
Operating activities 000 € 000 €
Profit before tax -212 724
Loss for discontinued operations -140 -226
Adjustments to reconcile profit before tax to net cash
flows
Depreciation of property, plant and equipment 170 146
Depreciation and impairment of intangible assets 263 170
Depreciation and write-downs of discontinued operations 0 34
Contingent considerations 0 0
Gain on disposal of property, plant and equipment -20 10
Finance income -19 -25
Finance costs 2820 2435
Change in working capital
Change in trade and other receivables (+/-) 656 330
Change in inventories (+/-) -431 101
Change in trade and other payables (+/-) -1092 589
Change in provisions (+/-) 0 -31
Interest paid (-) -4 879 -2574
Interest received 19 25
Income tax paid (-) -40 -177
--------------------
Net cash flows from operating activities -2905 1531
Investing activities
Acquisition of subsidiaries 20 0
Investments for tangible assets (-) -184 -391
Investments for non-tangible assets (-) -629 -658
Repayment for loan assets 0 0
Proceeds from sale of assets-held-for-sale 0 0
Sale of property, plant and equipment 20 111
--------------------
Net cash flows used in investing activities -773 -938
Financing activities
Funds received from the share issue 24194
Loans withdrawal 17000 0
Loans repayments (-) -35886 0
Finance lease payments (+/-) -120 59
Net cash flow used in financing activities 5188 59
Net change in cash and cash equivalents 1510 652
Cash and cash equivalents at 1 February 5201 3255
--------------------
Cash and cash equivalents at 31 October 6711 3907
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1. SEGMENT INFORMATION
Reported segment information of the Group has been changed due to the
establishment of the new Chalupa segment. The Franchising and Kotipizza segments
in the previous audited financial statements have been combined to the Kotipizza
segment and the Wholesale segment is now reported as the Foodstock segment. In
addition to these operational segments, a new operational Chalupa segment has
been established. Business administration segment in the previous audited
financial statements is now reported as the Others segment.
KOTIPIZZA SEGMENT
-------------------------------------------------------------------------------
EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
-------------------------------------------------------------------------------
Net sales 2 997 2 970 8 749 9 155 12 251
Comparable gross margin/EBITDA 1 607 1 009 4 086 2 910 4 169
Internal eliminations related to
discontinued operations 0 11 0 94 95
Depreciation and impairments -111 -84 -315 -234 -340
Comparable EBIT 1 496 925 3 771 2 676 3 829
Reported gross margin/EBITDA 1 607 1 020 3 817 3 004 4 152
Reported EBIT 1 496 936 3 502 2 770 3 812
-------------------------------------------------------------------------------
FOODSTOCK SEGMENT
-------------------------------------------------------------------------------
EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
-------------------------------------------------------------------------------
Net sales 11 169 10 710 32 700 30 160 39 954
Comparable gross margin/EBITDA 261 366 746 801 668
Internal eliminations related to
discontinued operations 0 22 0 128 125
Depreciation and impairments -28 -23 -85 -64 -114
Comparable EBIT 233 343 661 737 554
Reported gross margin/EBITDA 261 388 631 929 793
Reported EBIT 233 365 546 865 679
-------------------------------------------------------------------------------
CHALUPA SEGMENT
-------------------------------------------------------------------------------
EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
-------------------------------------------------------------------------------
Net sales 231 0 278 0 0
Comparable gross margin/EBITDA 3 0 -67 0 0
Internal eliminations related to
discontinued operations 0 0 0 0 0
Depreciation and impairments -6 0 -9 0 0
Comparable EBIT -3 0 -76 0 0
Reported gross margin/EBITDA 3 0 -67 0 0
Reported EBIT -3 0 -76 0 0
-------------------------------------------------------------------------------
OTHERS SEGMENT
-------------------------------------------------------------------------------
EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
-------------------------------------------------------------------------------
Net sales 12 5 38 12 21
Comparable gross margin/EBITDA -338 -150 -904 -466 -640
Internal eliminations related to
discontinued operations 0 -17 0 -17 -33
Depreciation and impairments -12 -6 -24 -18 -24
Comparable EBIT -350 -156 -928 -484 -664
Reported gross margin/EBITDA -368 -167 -1 359 -483 -673
Reported EBIT -380 -173 -1 383 -501 -697
-------------------------------------------------------------------------------
ALL SEGMENTS TOGETHER
-------------------------------------------------------------------------------
EUR THOUSAND 8-10/15 8-10/14 2-10/15 2-10/14 2/14-1/15
-------------------------------------------------------------------------------
Net sales 14 409 13 685 41 765 39 327 52 226
Comparable gross margin/EBITDA 1 533 1 225 3 861 3 245 4 197
Internal eliminations related to
discontinued operations 0 16 0 205 187
Depreciation and impairments -157 -113 -433 -316 -478
Comparable EBIT 1 376 1 112 3 428 2 929 3 719
Reported gross margin/EBITDA 1 503 1 241 3 022 3 450 4 272
Reported EBIT 1 346 1 128 2 589 3 134 3 794
-------------------------------------------------------------------------------
NOTE 2. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
The non-current assets held for sale and discontinued operations relate to
Kotipizza Segment's Russian operations, Domi-pizzapalat, the sale of Franchising
segment's 55 Burger, Cola, Fries concept and divestment of the Financial
management services segment. The selling price of the both divested businesses,
Financial management services and 55 Burger, Cola, Fries concept, was 1 euro.
Liquidation of the Russian company was completed on 29 October 2014.
31/10/15 31/10/14
2016 2015
------------------
000 € 000 €
Net sales 32 674
Other operating income 0 16
Depreciation 0 -34
Expenses -144 -879
Operating loss (EBIT) -112 -223
Finance costs 0 -3
Capital loss related to discontinued operations -28 0
------------------
Loss for the period from a discontinued operation before tax -140 -226
Tax impact 27 42
------------------
Loss for the period from the discontinued operations -113 -184
Earnings per share for discontinued operations, EUR:
Basic, profit for the period attributable to ordinary equity
holders of the parent
(no dilutive instruments) -0,0178 -0,1471
The major classes of assets and liabilities related to
discontinued operations: 31/10/15 31/10/14
2016 2015
------------------
Assets 000 € 000 €
Inventories 6 0
Trade receivable and other receivables 21 0
------------------
Assets related to discontinued operations 27 0
Liabilities
Received collaterals 0 0
Other liabilities 11 0
Accrued expenses 0 0
Liabilities related to discontinued operations 11 0
Cash flows related to discontinued operations are not
reported separately, and due to this, the information cannot
be accurately reported.
NOTE 3. RELATED PARTY TRANSACTIONS
Parties are considered to be related when a party has control or significant
influence over the other party relating to decision-making in connection to its
finances and business. The Group's related parties include the parent company,
subsidiaries, members of the board of directors and management board, managing
director and their family members. The key management comprises the members of
the management board. The table below sets forth the total amounts of related
party transactions carried out during the period. The terms and conditions of
the related party transactions correspond to the terms and conditions applied to
transactions between independent parties.
Amounts Purchases
owed to from Outstanding Sales to Outstanding
Interest related related trade related trade
paid parties parties payables parties receivables
-----------------------------------------------------------------
000 € 000 € 000 € 000 € 000 € 000 €
Key
management of
the group
2-10/15 84 3
2-10/14 27 0
Other related
parties
2-10/15 0 542 12 205 148
2-10/14 120 211 51 165 58
Controlling
entities
2-10/15 156
2-10/14 181
Companies
controlled by
the members
of the Board
2-10/15 3 0
2-10/14 85 8
2-10/15 2-10/14
Salaries Pension expenses Salaries Pension expenses
----------------------------------------------------
000 € 000 € 000 € 000 €
Management and key
personnel of the Group: 535 96 772 134
The salaries of the Group's management and key personnel include car and
telephone benefits, and there are no other benefits. No benefits are applied
after service, and the Group has not paid any share-based payments. Key
management personnel have not been granted a loan, and the Group has not
guaranteed loans to the management personnel.
2-10/15 2-10/14
Managing director and
board members: Salaries Pension expenses Salaries Pension expenses
----------------------------------------------------
000 € 000 € 000 € 000 €
Tommi Tervanen, CEO 165 30 156 28
Johan Wentzel, Chairman of
the Board 5 0 5 0
Rabbe Grönblom, Board
member until 10 September
2014 0 0 4 0
Kim Hanslin, Board member 18 0 5 0
Olli Väätäinen, Board
member until 23 January
2015 0 0 5 0
Minna Nissinen, Board
member from 1 January 2015 18 0 0 0
Petri Parvinen, Board
member from 1 January 2015 18 0 0 0
Kalle Ruuskanen, Board
member from 1 January 2015 18 0 0 0
Mikael Autio, Board member
from 1 February 2015 5 0 0 0
NOTE 4. EMPLOYEE BENEFITS EXPENSE
All employee benefits expenses are included in administrative (fixed) expenses.
2-10/15 2-10/14
----------------
000 € 000 €
Wages and salaries 2 308 1 596
Social security costs 56 55
Pension costs (defined contribution plans) 402 318
----------------
Total employee benefits expense 2 766 1 969
NOTE 5. CONTINGENT LIABILITIES
Commitments 31/10/15 31/10/14
000 € 000 €
Leasing commitments 353 42
Secondary commitments 6 54
Rental guarantees 604 552
Bank guarantees 800 920
Rental commitments for premises 3236 3054
Loans from financial institutions 17000 0
Guarantees
Pledged deposits 352 392
Business mortgages 18500 2500
Guarantees 520 620
Guarantees for other than Group companies 432 701
Pledged shares, book value 25391 0
In Helsinki on 18 December 2015
Kotipizza Group Oyj's Board of Directors
Further information: CEO Tommi Tervanen, tel. +358 207 716, and CFO Timo
Pirskanen, tel. +358 207 716 747
CALCULATION OF KEY FIGURES
Adjusted operating profit Operating profit adjusted with non-recurring sales
profit and loss and with expenses from
restructuring of the Company's operations and
personnel reductions
Adjusted operating profit % Adjusted operating profit / Net sales * 100
Reported operating profit from the continuing
Operating profit operations
Operating profit, % Operating profit / Net sales * 100
Return on equity Net result / Equity * 100
Equity ratio Equity / Total assets * 100
Earning per share Loss / profit for the period / Number of shares
(Interest-bearing debt - liquid assets) / Own
Net gearing assets * 100
where Own assets = Equity in the balance sheet +
Voluntary provisions + Equity's subordinated loans
EBITDA adjusted with non-recurring sales profit
and loss and with expenses from restructuring of
Adjusted EBITDA the Company's operations and personnel reductions
Adjusted EBITDA % Adjusted EBITDA / Net sales * 100
Net sales + Other income +/- Change in inventory
of raw materials and finished goods - Raw
materials and finished goods - Employee
benefits/expenses - Other operating expenses
EBITDA
EBITDA % EBITDA / Net sales * 1000
[HUG#1974638]
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