2017-09-26 08:00:25 CEST
2017-09-26 08:00:25 CEST
REGULATED INFORMATION
Kotipizza Group Oyj - Half Year financial report
Kotipizza Group Oyj: STRONG FIRST HALF YEAR, GROUP UPGRADES ITS OUTLOOK FOR THE FINANCIAL YEAR
KOTIPIZZA GROUP OYJ HALF-YEAR FINANCIAL REPORT 1 FEBRUARY 2017-31 JULY 2017
STRONG FIRST HALF YEAR, GROUP UPGRADES ITS OUTLOOK FOR THE FINANCIAL YEAR
May-July 2017 (5-7/2016)
* Chain-based net sales grew 16.4% (14.2%).
* Comparable net sales were 20.1 MEUR (16.6). Growth was 21.1%.
* Comparable EBITDA was 2.52 MEUR (2.03). EBITDA growth was 24.3%.
* Net sales were 21.1 MEUR (16.9). Growth was 25%.
* EBIT was 2.06 MEUR (1.63). Growth was 26.3%.
February-July 2017 (2-7/2016)
* Chain-based net sales grew 17.4% (16.1%).
* Comparable net sales were 38.3 MEUR (31.9). Growth was 20.0%
* Comparable EBITDA was 4.17 MEUR (3.31). EBITDA growth was 26.0%
* Net sales were 40.3 MEUR (32.3). Growth was 25%.
* EBIT was 3.33 MEUR (2.68). Growth was 24.4%.
* Net gearing was 39.4 percent (31.7%).
* Equity ratio was 50.7 percent (50.4%).
KOTIPIZZA GROUP UPGRADES ITS OUTLOOK FOR THE FINANCIAL YEAR
New outlook for the financial year 2018
The Group estimates for the full financial year that the chain-based net sales
will grow by approximately fifteen (15) percent as compared to previous year and
that comparable EBITDA will increase as compared to previous year.
Previous outlook, released on 21 March 2017, upgraded on 6 June 2017 and
reiterated on 20 June 2017
The Group estimates for the full financial year that the chain-based net sales
will grow by over ten (10) percent as compared to previous year and that
comparable EBITDA will increase as compared to previous year.
KEY FIGURES, TEUR
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5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
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Comparable figures
Comparable net sales 20 053 16 559 38 335 31 947 66 580
Comparable EBITDA 2 519 2 027 4 173 3 313 6 726
Comparable EBITDA of
12.6 12.2 10.9 10.4 10.1
net sales, %
Comparable EBIT 2 145 1 775 3 503 2 820 5 747
Chain-based net sales 26 525 22 789 50 710 43 204 89 893
Reported figures
Reported net sales 21 123 16 904 40 348 32 291 68 737
Reported EBITDA 2 436 1 885 4 001 3 171 6 225
Reported EBITDA of
12.1 11.4 10.4 9.9 9.3
net sales, %
Reported EBIT 2 062 1 633 3 331 2 678 5 246
Earnings per share 0.23 0.18 0.36 0.28 0.55
Net cash flows from operating activities 588 3 117 5 278
Net cash used in investment activities -1 589 -56 -449
Net gearing, % 39.4 31.7 24
Equity ratio, % 50.7 50.4 52.1
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Tommi Tervanen, CEO of Kotipizza Group
"Kotipizza's chain-based net sales continued their strong growth in the second
quarter of the financial year. The chain's net sales presented excellent
development in terms of both same-store sales and the number of customers. In
brick-and-mortar restaurants, the number of customers increased by 15.5% and the
average purchase by 2.8%. We also continued to boost our online sales - during
the review period, orders made through the online store amounted to roughly a
tenth of the net sales in brick-and-mortar restaurants. The chain-based net
sales of Kotipizza restaurants grew by 16.4% in the second quarter, exceeding by
a significant margin the average growth of the Finnish fast food market. We
expect the chain-based net sales to continue to develop favourably. Achieving
similar relative growth figures will, however, become more challenging month by
month as we draw comparisons to months of very strong growth in the previous
year.
There are several factors behind the strong growth in the chain-based net sales.
One of the main reasons is Kotipizza's brand and concept reform that was
launched in earnest in the beginning of 2015 and has now been carried out in
full. The Group has consistently advanced the Kotipizza chain's operations in
the spirit of the fast casual phenomenon, emphasizing the freshness,
authenticity and sustainability of our food, as well as actively following the
developments in food trends and consumer preferences. The chain has invested in
offering vegetarian options, which has been appreciated by consumers and the
media.
During the review period, the Kotipizza chain and the Kotipizza Group continued
to gain positive visibility in both editorial and social media. After the review
period, the Kotipizza Group received a significant recognition when the company
was named one the finalists in the 'Star of 2017' category in the European Small
and Mid-Cap Awards 2017 for listed companies.
Comparable net sales of the Group grew 21% in the second quarter of the year and
were 20.1 MEUR (16.6). Comparable EBITDA was 2.52 MEUR (2.03) in the second
quarter, representing an increase of 24%. Our recent investments in future
growth in terms of e.g. research & development, concept and market studies
translated into increased fixed costs. For instance, we developed the new
Kotipizza Go pizza slice products that were launched after the review period and
are sold in Avecra's restaurant carriages on trains as well as at Neste K
service stations. However, we are still on pace with our strategic financial
goals, both in terms of the development of chain-based sales as well as that of
EBITDA. The Group had a solid financial standing at the end of the quarter with
net gearing at 39 percent and equity ratio of 51 percent. The Group distributed
MEUR 3.2 funds from fund for invested unrestricted equity to its shareholders
during the period.
There are no material changes in the market environment since the close of the
previous financial year in the end of January. According to the estimate of the
Finnish Hospitality Association MaRa, the growth of sales in the restaurant
sector will continue in 2017 at nearly the previous year's level, along with the
growth of the Finnish national economy and increased consumer confidence. The
development will be particularly positive in the fast food sector, as fast food
restaurants account for a considerable proportion of restaurant dining.
The growth of sales in the Kotipizza chain has continuously outperformed the
growth of the entire restaurant market and the fast food market. It can even be
estimated that the strong growth of the Kotipizza chain has contributed to the
more positive development of the fast food market compared with the rest of the
restaurant market. We believe that the financial development of the restaurant
business and consumer trends support Kotipizza Group's investment in the fast
casual concept, that is, restaurants that offer casual, fresh and responsibly
produced food in a restaurant environment.
We estimate that the group's chain-based net sales will, during the present
financial year, grow by approximately fifteen (15) percent as compared to the
previous financial year, and that the comparable gross margin / EBITDA will grow
as compared to the previous financial year."
GROUP NET SALES
May-July 2017
Chain-based net sales continued strong and grew 16.4% (14.2%) year on year in
the second quarter of the financial year and were 26.5 MEUR (22.8). Average
purchase grew 2.8% and the number of customers 15.5% compared to the same period
in the previous year. The strong performance in chain-based net sales results
from the concept and brand reform, successful marketing and efforts made to
develop our online store and digital presence. 3 brick-and-mortar restaurants
and 3 shop-in-shop restaurants were opened, and 3 shop-in-shop restaurants
closed, in May-July. Chain sales of the Pizzataxi chain, which was acquired in
February, are not included in chain-based net sales as none of the Pizzataxi
restaurants were converted into Kotipizza restaurants during the review period.
In the second quarter, we introduced on Facebook our own wheel of fortune, the
Pizza wheel, which turned out to be a success. It was spun half a million times
by 46 thousand unique users. We gained strong TV visibility for our vegetarian
pizzas, The Mozzarella and Goat Cheese Falafel, in May, which was reflected in
the 55% increase in their sales compared to the previous month. At the beginning
of June, a coupon campaign was launched, and after midsummer we began a TV
campaign for our own innovation, pizza dough made of rye. The campaign paved way
for the subsequent Kotzone campaign, which ran throughout July. Kotzone is
Kotipizza's way to eat salad and the sales for the whole product category
increased by 28% compared to the previous year. The campaign did not promote
discount prices - rather, we drove interest by emphasising the high-quality
ingredients and showing mouth-watering pictures. We also redesigned our posters.
Kotipizza had 121 (72) campaign days in the second quarter. As a change to
previous practice, we might now run multiple campaigns simultaneously.
Comparable net sales for the second quarter of the financial year were 20.1 MEUR
(16.6) and they grew 21.1% compared to same period in the previous year.
Reported net sales were 21.1 MEUR (16.9) and they grew 25.0% compared to same
period in the previous year. The reported sales included 1.1 MEUR items
affecting comparability related to advertising and marketing fund flows of
Kotipizza's Franchisee Co-operative, which pass through Kotipizza-division's P&L
without result effect. Comparable net sales growth was mainly based on
Foodstock's increased sales volume to Kotipizza underpinned by the good
restaurant chain sales development. Helsinki Foodstock's other third-party
customers also increased net sales. The net sales of Foodstock grew 22.7% year
on year in the second quarter of the financial year and were 16.1 MEUR (13.2).
The Kotipizza segment's net sales increased 37.6% compared to the previous year
and were 4.9 MEUR (3.5). The Chalupa segment's net sales in the second quarter
of the financial year were EUR 99 thousand (EUR 202 thousand).
February-July 2017
Chain-based net sales grew 17.4% (16.1%) year on year in February-July and were
50.7 MEUR (43.2). The chain-based net sales growth resulted from both the
increase in the average purchase and increase in the number of customers. The
comprehensive menu renewal started out in the summer of 2014, successful new
products together with targeted and influential marketing that highlights
sustainability have had a positive effect on consumers' brand experience of
Kotipizza. This has been seen as an increase in the number of customers. 8
brick-and-mortar restaurants and 5 shop-in-shop restaurants were opened, and 5
shop-in-shop restaurants closed, during February-July.
The chain-based net sales are the total combined net sales of the company's
franchisees, based on which the company's franchising fees are invoiced monthly.
It also includes sales of the restaurants owned directly by the group.
Group comparable net sales for February-July were 38.3 MEUR (31.9) and they grew
20.0% compared to same period in the previous year. Reported net sales were
40.3 MEUR (32.3). Sales growth was mainly based on Foodstock's increased sales
volume to Kotipizza, underpinned by the good chain-based sales development.
Foodstock's other, third-party customers also boosted net sales. The net sales
of Foodstock grew 22.0% year on year in the second quarter of the financial
year. The Kotipizza segment's net sales increased 40.7% compared to the previous
year and were 7.3 MEUR (6.3). The Chalupa segment's net sales in the February-
July were 175 thousand euros (382 thousand).
GROUP EBIT
May-July 2017
Comparable EBIT of the Group was 2.15 MEUR (1.78) in the second quarter of the
financial year. Reported EBIT was 2.06 MEUR (1.63). Reported EBIT included MEUR
0.08 of items affecting comparability (calculatory, non-cash), which were
related to the incentive plan introduced on 6 May 2016 and other incentive plans
within the group. The reported EBIT in the previous year included MEUR 0.14 of
items affecting comparability, which were related to the incentive plan
introduced on 6 May 2016 and other incentive plans in the group.
The EBIT improved mainly due to volume improvement, but sales margin also
improved slightly from the previous year.
February-July 2017
Comparable EBIT of the Group was 3.50 MEUR (2.82) in February-July. Reported
EBIT was 3.33 MEUR (2.68). Reported EBIT included MEUR 0.17 of items affecting
comparability (calculatory, non-cash), which were related to the incentive plan
introduced on 6 May 2016 and other incentive plans in the group. The reported
EBIT of the previous year included MEUR 0.14 of items affecting comparability
(calculatory, non-cash), which were related to the incentive plan introduced on
6 May 2016 and other incentive plans in the group.
The EBIT improved mainly due to volume improvement, but the sales margin also
improved slightly from the previous year. Also, the growth in fixed costs was
below the volume growth. Clearly higher depreciations compared to the previous
year (non-cash items) had a negative impact on the EBIT. The gross investments
for the period amounted to MEUR 1.59 (0.46).
SALES AND EBITDA OF THE SEGMENTS
KOTIPIZZA SEGMENT
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EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
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Comparable net sales 3 816 3 205 7 337 6 301 12 894
Net sales 4 885 3 549 9 350 6 645 15 051
Comparable gross margin / EBITDA 2 220 1 783 3 800 3 261 6 633
Depreciation and impairments -244 -145 -434 -292 -589
Comparable EBIT 1 976 1 639 3 365 2 970 6 044
Reported gross margin / EBITDA 2 220 1 755 3 800 3 233 6 517
Reported EBIT 1 976 1 610 3 365 2 942 5 929
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Markus Kaatranen, Deputy COO of Kotipizza
"Growth in the Kotipizza chain's sales has continued strong during the review
period. The brand and concept reform of the restaurant chain now finalized, also
the total number of restaurants has continued to rise. At the end of the review
period, the chain had 267 (255) restaurants in total. Most of the new
restaurants are brick-and-mortar restaurants that realise, on average,
significantly higher monthly sales than shop in shop restaurants. At the end of
the review period, the number of brick-and-mortar restaurants was 162 (152) and
that of shop-in-shop restaurants 105 (103).
Orders made through the online store amounted to roughly a tenth of the net
sales in brick-and-mortar restaurants during the period. Online sales were
particularly high in brick-and-mortar restaurants that provide a delivery
service. At the same time, the number of restaurants offering delivery services
has continued to increase, being 70 (64) at the end of the review period.
As part of the development of digital services and the online store, the
Kotibotti service was launched during the review period. Kotibotti makes it
possible for consumers to order and buy Kotipizza products through social media.
In February, Kotipizza acquired the Pizzataxi restaurant chain, which comprises
22 restaurants operating in the Helsinki region and Southern Finland, all of
which offer home delivery. During the review period, the number of Pizzataxi
restaurants converted into Kotipizza restaurants fell short of estimations."
May-July 2017
Comparable net sales of Kotipizza in the second quarter of the financial year
were 3.82 MEUR (3.21) and they increased 19.1% compared to same period in the
previous year. Net sales of Kotipizza in the second quarter of the financial
year were 4.89 MEUR (3.55) and they increased 37.6% compared to the same period
in the previous year. Franchising fees of the Pizzataxi chain acquired in
February were EUR 61 thousand in the review period. The reported sales included
MEUR 1.07 items affecting comparability related to advertising and marketing
fund flows of Kotipizza's Franchisee Co-operative, which pass through the
Kotipizza segment's P&L without result effect. The remaining sales increase was
based on growth in chain-based net sales and, consequently, all franchising
contract-based net sales increased.
Kotipizza's comparable EBITDA was 2.22 MEUR (1.78) in the second quarter of the
financial year and it grew 24.5% compared to the same period in the previous
year. Improvement in comparable EBITDA was mainly due to favourable development
of chain-based net sales in Kotipizza. Reported EBITDA was 2.22 MEUR (1.76) in
the second quarter of the financial year. Reported EBITDA did not include items
affecting comparability. The reported EBITDA of the previous year included EUR
28 thousand of items affecting comparability, which were related to the
incentive plan introduced on 6 May 2016 and other incentive plans within the
group.
February-July 2017
Comparable net sales of Kotipizza for February-July were 7.34 MEUR (6.30) and
they increased 16.4% compared to same period in the previous year. Net sales of
Kotipizza for February-July were 9.35 MEUR (6.65) and they increased 40.7%
compared to the same period in the previous year. Franchising fees of the
Pizzataxi chain, acquired in February, were EUR 131 thousand during the review
period. The reported sales included MEUR 2.01 of items affecting comparability
related to advertising and marketing fund flows of Kotipizza's Franchisee Co-
operative, which pass through the Kotipizza segment's P&L without result effect.
The remaining sales increase was based on growth in chain-based net sales and,
consequently, all franchising contract-based net sales increased.
Kotipizza's comparable EBITDA was 3.80 MEUR (3.26) in February-July and it grew
16.5% compared to same period in the previous year. Improvement in comparable
EBITDA was mainly due to restructuring measures implemented in the segment's
operations and favourable development in chain-based net sales of Kotipizza.
Reported EBITDA was 3.80 MEUR (3.23) in February-July. Reported EBITDA did not
include items affecting comparability. The reported EBITDA of the previous year
included EUR 28 thousand of items affecting comparability, which were related to
the incentive plan introduced on 6 May 2016 and other incentive plans within the
group.
FOODSTOCK SEGMENT
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EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
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Comparable net sales 16 139 13 152 30 823 25 264 53 198
Net sales 16 139 13 152 30 823 25 264 53 198
Comparable gross margin / EBITDA 620 535 988 869 1 596
Depreciation and impairments -50 -36 -84 -67 -143
Comparable EBIT 571 499 904 802 1 453
Reported gross margin / EBITDA 620 528 988 862 1 566
Reported EBIT 571 492 904 795 1 423
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Anssi Koivula, CEO of Foodstock
"The strong sales growth in the Kotipizza chain has also impacted on Foodstock's
operations during the review period. Despite strong growth, we have succeeded in
ensuring the reliability of our deliveries and the quality of our customer
service, thanks to which customer satisfaction has remained high within the
Kotipizza chain as well as among our other clients."
May-July 2017
Comparable net sales of Foodstock in the second quarter of the financial year
were 16.14 MEUR (13.15), equivalent to 22.7% compared to the same period in the
previous year. Reported net sales of Foodstock in the second quarter of the
financial year were 16.14 MEUR (13.15) and they grew 22.7% compared to same
period in the previous year. The growth in net sales was mainly due to
favourable development in Kotipizza's chain-based net sales, which gave a
positive boost to Foodstock's delivery volumes for the chain. A positive volume
effect of Foodstock's new customers gained in the previous year was also visible
in the reported numbers.
Foodstock's comparable EBITDA improved 15,9% from the previous year and was
0.62 MEUR (0.54) in the second quarter of the financial year. Improvement in the
comparable EBITDA was due to operational gearing related to increase in sales
volume and to favourable sales mix. Foodstock's reported EBITDA was 0.62 MEUR
(0.53) in the second quarter of the financial year. Reported EBITDA did not
include items affecting comparability. The reported EBITDA of the previous year
included EUR 9 thousand of items affecting comparability, which were related to
the incentive plan introduced on 6 May 2016 and other incentive plans in the
group.
February-July 2017
Net sales of Foodstock in the first half of the financial year were 30.82 MEUR
(25.26) and they grew 22.0% compared to same period in the previous year. The
growth in net sales was mainly due to favourable development in Kotipizza's
chain-based net sales, which gave a positive boost to Foodstock's delivery
volumes to the chain. A positive volume effect of Foodstock's new customers
gained in the previous year was also visible in the reported numbers.
Foodstock's comparable EBITDA was 0.99 MEUR (0.87) in February-July and it grew
13.7% compared to the same period in the previous year. Improvement in the
comparable EBITDA was due to operational gearing related to the increase in
sales volume. Foodstock's reported EBITDA was 0.99 MEUR (0.86) in the first half
of the financial year. Reported EBITDA did not include items affecting
comparability. The reported EBITDA of the previous year included EUR 9 thousand
of items affecting comparability, which were related to the incentive plan
introduced on 6 May 2016 and other incentive plans in the group.
CHALUPA SEGMENT
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EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
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Comparable net sales 99 202 175 382 487
Net sales 99 202 175 382 487
Comparable gross margin / EBITDA 1 -22 -3 -94 -161
Depreciation and impairments -2 -9 -3 -21 -27
Comparable EBIT -1 -31 -6 -115 -188
Reported gross margin / EBITDA 1 -24 -3 -96 -169
Reported EBIT -1 -33 -6 -117 -196
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Iman Gharagozlu, Creative Director of Chalupa
"During the review period, the Chalupa chain continued to grow and strengthen
its position relying upon the franchising concept. A new restaurant was opened
in Vantaa and, in the summer season, the chain's food truck toured various
events. At the end of the review period, Chalupa's brick-and-mortar restaurants
were operating in four locations in Helsinki, as well as in Vantaa, Kauniainen,
Lahti, Espoo, Tampere and Jyväskylä, one in each city. In addition, Chalupa
products were available in one Kotipizza lunch restaurant. After the review
period, another restaurant was opened in Helsinki."
May-July 2017
Chalupa's comparable net sales were EUR 99 thousand (EUR 202 thousand) in the
second quarter of the financial year and comparable EBITDA was EUR 1 thousand
(EUR -22 thousand). Chalupa's reported net sales were EUR 99 thousand (EUR 202
thousand) in the second quarter of the financial year and reported EBITDA was
EUR 1 thousand (EUR -24 thousand). Decline in net sales compared to the previous
year was due to all Chalupa restaurants having been owned by Chalupa franchisees
in the beginning of the review period. Chalupa's revenue recognition is now
reported in accordance with the reporting principles used in franchising.
Reported EBITDA did not include items affecting comparability. The reported
EBITDA of the previous year included EUR 2 thousand of items affecting
comparability, which were related to the incentive plan introduced on 6 May
2016 and other incentive plans within the group.
February-July 2017
Chalupa's net sales were EUR 175 thousand (382 thousand) in February-July and
comparable EBITDA was EUR -3 thousand (-94 thousand). Chalupa's reported net
sales were EUR 175 thousand (EUR 382 thousand) in the second quarter of the
financial year and reported EBITDA was EUR -22 thousand (EUR -96 thousand).
Reported EBITDA did not include items affecting comparability. The reported
EBITDA of the previous year included EUR 2 thousand of items affecting
comparability, which were related to the incentive plan introduced on 6 May
2016 and other incentive plans in the group.
OTHERS SEGMENT
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EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
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Comparable net sales 0 0 0 0 0
Net sales 0 0 0 0 0
Comparable gross margin / EBITDA -322 -270 -612 -724 -1 342
Depreciation and impairments -78 -63 -148 -114 -219
Comparable EBIT -401 -332 -760 -837 -1 561
Reported gross margin/ EBITDA -405 -374 -784 -828 -1 690
Reported EBIT -484 -437 -932 -942 -1 909
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The 'Others' segment includes mainly the operations at the Group headquarters.
May-July 2017
Comparable and reported net sales of the Others segment were 0.00 MEUR (0.00) in
the second quarter of the financial year. Comparable EBITDA was -0.32 MEUR (-
0.27). Reported EBITDA was
-0.41 MEUR (-0.37). Reported EBITDA included EUR 83 thousand of items affecting
comparability (calculatory, non-cash), which were related to the incentive plan
introduced on 6 May 2016 and other incentive plans within the group. The
reported EBITDA of the previous year included EUR 43 thousand of items affecting
comparability, which were related to the incentive plan introduced on 6 May
2016 and other incentive plans in the group.
February-July 2017
Net sales of the Others segment were 0.00 MEUR (0.00) in February-July.
Comparable EBITDA was
-0.61 MEUR (-0.72). Reported EBITDA was -0.78 MEUR (-0.83). Reported EBITDA
included EUR 172 thousand of items affecting comparability (calculatory, non-
cash), which were related to the incentive plan introduced on 6 May 2016 and
other incentive plans in the group. The reported EBITDA of the previous year
included EUR 104 thousand of items affecting comparability, which were related
to the incentive plan introduced on 6 May 2016 and other incentive plans within
the group.
FINANCIAL ITEMS AND RESULT
Finance costs in the second quarter of the year were MEUR 0.25 (0.19).
Group taxes were MEUR -0.39 (-0.32) in the second quarter.
The result of the period was MEUR 1.43 (1.13) in the second quarter.
Earnings per share were EUR 0.23 (0.18) in the second quarter.
THE GROUP'S FINANCIAL POSITION
Kotipizza Group's balance sheet total as of 31 July 2017 was MEUR 58.7 (57.1).
The Group's non-current assets as at 31 July 2017 amounted to MEUR 42.2 (40.2),
and current assets amounted to MEUR 16.4 (16.8).
The Group's net cash flow from operating activities in the second quarter was
MEUR 0.58 (3.11). Working capital was tied MEUR 2.59 (released 0.48).
The net cash flow from investment activities in the period was MEUR -1.59 (-
0.56). Kotipizza Oyj acquired all business operations of Helsinki Pizzapalvelu
Oy, operating 22 Pizzataxi restaurants in the Helsinki region and Southern
Finland during the review period. Investments in tangible and intangible assets
for the period amounted to MEUR 0.81 (0.37), and proceeds from sales of tangible
assets were MEUR 0.00 (0.40).
The net cash flow from financing activities was MEUR -3.87 (-2.70).
The Group's equity ratio was 50.7% (50.4%).
Interest-bearing debt amounted to MEUR 16.5 (17.6), of which current debt
accounted for MEUR 0.91 (0.60).
Further information on Kotipizza Group's financial risks is presented in the
financial statements released on 31 January 2017.
INVESTMENTS
The gross investments for the period amounted to MEUR 1.59 (0.46). The Company's
investments to fixed assets, related mainly to IT systems, amounted to MEUR
0.84 (0.46).
PERSONNEL
At the end of the review period, Kotipizza Group employed 49 people, all of whom
worked in Finland. At the end of the previous financial year on 31 January
2017, the Company employed 47 people, all of whom worked in Finland.
BUSINESS ARRANGEMENTS
During the review period, the Kotipizza Group acquired all business operations
of Helsinki Pizzapalvelu Oy that operated 22 Pizzataxi restaurants in the
Helsinki region and Southern Finland.
CHANGES IN THE MANAGEMENT
Group's Chief Operating Officer and member of the Management Board Olli
Väätäinen resigned from his position on 17 February 2017 and Heidi Stirkkinen
was appointed as his successor on 4 April 2017. Stirkkinen has previously worked
as Country Manager for Groupe SEB Finland that represents the brands OBH Nordica
and Tefal, as well as the Iittala Group's Retail Concept and Operative Director.
Stirkkinen started in her new position on 1 September 2017.
MANAGEMENT BOARD
Kotipizza Group's Management Board comprised four members at the end of the
review period: Tommi Tervanen (CEO), Timo Pirskanen (Deputy to the CEO, CFO),
Anssi Koivula (Chief Procurement Officer) and Antti Isokangas (Chief Corporate
Responsibility and Communications Officer). Chief Operative Officer Heidi
Stirkkinen joined the Management Board on 1 September 2017.
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 2017 the number of the shares was 6,351,201. At the end of the
period, the Company had 2398 (658) shareholders. The Company does not hold any
treasury shares.
The Board of Directors of Kotipizza Group Oyj resolved on 6 May 2016 upon a
long-term share-based incentive program intended for the executive board. The
program covers three three-year earning periods. Based on the plan, the company
may give performance shares in the earning period of 1 February 2016 - 31
January 2019. For the earning periods of 1 February 2017 - 31 January 2020 and
1 February 2018 - 31 January 2021, the company may give also discretionary
matching shares based on the key employees' shareholding in addition to the
performance shares. Based on the earning period of 1 February 2016 - 31 January
2019, at maximum 47 204 performance shares can be given as reward, which
includes a cash payment portion of the reward. Based on the earning period of 1
February 2017 - 31 January 2020, at maximum 30 742 performance shares can be
given as reward, which includes a cash payment portion of the reward. The
potential reward is to be paid as a combination of shares (50%) and cash payment
(50%). The cash payment portion is aimed to cover taxes and tax-like charges to
be paid by the key employee.
Information about the company's shareholder structure by sector and size of
holding, as well as the largest shareholders can be viewed on the company's
website at www.kotipizzagroup.com.
FLAGGING NOTICES
The Company received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act from Sentica Buyout III GP Oy and Sentica Buyout III Ky
on 9 February 2017. According to the notification, Sentica Buyout III Ky and
Sentica Buyout III Co-Investment Ky (together referred to as the "Funds") had
sold a total number of 4,020,618 shares. In connection with the completion of
the share sale, Sentica Buyout III Ky's direct ownership of the shares and
voting rights in Kotipizza fell below the 5 per cent threshold. According to the
notification, in the same connection Sentica Buyout III GP Oy's indirect
ownership through the Funds fell below the 5 per cent threshold of all the
shares and voting rights in Kotipizza. As a result of the share Sale, Sentica
Buyout III Ky and Sentica Buyout III Co-investment Ky no longer own any shares
or votes in Kotipizza.
The Company received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act from Elementa Management AB on 9 February 2017, per which
its holding in Kotipizza Group Oyj was above (5) percent (1/20) of the share
capital. Exact proportion of share capital and voting rights as of February
9, 2017: The shares managed by Elementa Management AB totaled 323.065 shares
representing 5.09% of total share capital and total voting rights.
The Company received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act from Evli Pankki Oyj on 10 February 2017, per which its
holding in Kotipizza Group Oyj was above (5) percent (1/20) of the share
capital. Exact proportion of share capital and voting rights as of February
10, 2017: The shares managed by Evli Pankki Oyj totaled 320.000 shares
representing 5.04% of total share capital and total voting rights.
The Company received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act from Danske Bank A/S on 10 February 2017, per which its
holding in Kotipizza Group Oyj was above (5) percent (1/20) of the share
capital. Exact proportion of share capital and voting rights as of February
10, 2017: The shares managed by Danske Bank A/S totaled 421.539 shares
representing 6.64% of total share capital and total voting rights.
The Company received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act from Keskinäinen Työeläkevakuutusyhtiö Elo on 10 February
2017, per which its holding in Kotipizza Group Oyj was above (5) percent (1/20)
of the share capital. Exact proportion of share capital and voting rights as of
February 10, 2017: The shares managed by Keskinäinen Työeläkevakuutusyhtiö Elo
totaled 513.200 shares representing 8.08% of total share capital and total
voting rights.
The Company received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act from Swedbank Robur AB totaled on 10 February 2017, per
which its holding in Kotipizza Group Oyj was above (5) percent (1/20) of the
share capital. Exact proportion of share capital and voting rights as of
February 10, 2017: The shares managed by Swedbank Robur AB totaled 488.974
shares representing 7.70% of total share capital and total voting rights.
The Company received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act from Financière de l'Echiquier on 10 February 2017, per
which its holding in Kotipizza Group Oyj was above (5) percent (1/20) of the
share capital. Exact proportion of share capital and voting rights as of
February 10, 2017: The shares managed by Financière de l'Echiquier totaled
346.041 shares representing 5.45% of total share capital and total voting
rights.
The Company received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act from Elementa Management AB on 16 May 2017, per which its
holding in Kotipizza Group Oyj had gone below the threshold of (5) percent
(1/20) of the share capital. Exact proportion of share capital and voting rights
as of 16 May 2017: The shares managed by Elementa Management AB totaled 265.406
shares representing 4.17% of total share capital and total voting rights.
RESOLUTIONS OF THE GENERAL MEETINGS
Kotipizza Group's Annual General Meeting held on 17 May 2017 resolved that no
dividend is paid for the financial period ending 31 January 2017, but EUR 0,50
per share was decided to be paid from the fund for invested unrestricted equity.
The AGM confirmed the financial statements for the financial year ending 31
January 2017 and discharged the members of the Board of Directors and CEO from
liability for the financial year ending 31 January 2017.
The AGM resolved the number of Board members to be six. The current members of
the Board of Directors Minna Nissinen, Petri Parvinen, Kim Hanslin and Kalle
Ruuskanen were re-elected as members of the Board of Directors, and Virpi
Holmqvist as well as Dan Castillo were elected as new members of the Board of
Directors for the term continuing until the end of the next Annual General
Meeting. Furthermore, the Board of Directors elected Kalle Ruuskanen as Chairman
of the Board of Directors.
The AGM resolved that the members of the Board will be paid as follows: Chairman
EUR 3 500 per month (EUR 42 000 per year) and members EUR 2 000 per month (EUR
24 000 per year). Separate meeting remuneration is not paid for meetings of the
Board of Directors, but EUR 400 is to be paid to each chairman of the committees
of the Board of Directors for each committee meeting and EUR 200 be paid to each
member of the committees of the Board of Directors for each committee meeting.
The AGM resolved that the remuneration for the auditor be paid according to
invoice approved by the company. The AGM resolved to re-elect audit firm Ernst &
Young Oy as the company's auditor for a term that ends at the closing of the
next AGM.
The AGM resolved to authorize the Board of Directors to decide on a share issue
on following terms:
1. The authorization may be used in full or in part by issuing shares in
Kotipizza Group Oyj in one or more issues so that the maximum number of shares
issued is 635 000 shares.
2. The Board of Directors may also decide on a directed share issue in deviation
from the shareholders' pre-emptive rights in case there is a weighty financial
reason to do so, such as in order to finance or carry out acquisitions or other
business transactions, develop the company's capital structure, or in order to
use the shares for an incentive scheme. The Board of Directors would be
authorized to decide to whom and in which order the shares will be issued. In
the share issues shares may be issued for subscription against payment or
without charge.
3. Based on the authorization, the Board of Directors is also authorized to
decide on a share issue without payment directed to the company itself, provided
that the number of shares held by the company after the issue would be a maximum
of 10 per cent of all shares in the company. This amount includes shares held by
the company and its subsidiaries in the manner provided for in Chapter 15,
section 11 (1) of the Companies Act.
4. This authorization includes the right for the Board of Directors to decide on
the terms and conditions of the share issues and measures related to the share
issues in accordance with the Companies Act, including the right to decide
whether the subscription price will be recognized in full or in part in the
invested unrestricted equity reserve or as an increase to the share capital.
5. The authorization is valid until 31 July 2018.
6. The authorization will supersede the authorization to decide upon share
issues given to the company's Board of Directors on 11 May 2016.
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 the company's franchising and
rent 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 under the Chalupa segment. Launching a new business concept has several
risks related e.g. anticipation of consumer needs, habits, taste and behaviour.
Additionally, it runs the risk of not reaching an established position at the
market and not having a well-established clientele. Potential failure in
launching a new concept generates costs to the company and has a significantly
adverse impact on the company's brand, financial position and financial result.
EVENTS AFTER THE REPORT PERIOD
No material events occurred after the report period.
OUTLOOK FOR THE FINANCIAL YEAR 2018
The Finnish Hospitality Association MaRa forecasts that the total sales of the
restaurant business in Finland will increase by 6-8 percent during the second
half of 2017.
The total value of the Finnish restaurant market is approximately five billion
euros. The most important factors influencing the development of the sector
include the general economic development, consumers' disposable income, taxation
and government regulation. Consumer preferences and, increasingly, food trends
influence financial development within the sector.
Finns are dining at restaurants more and more often, which is a key driver of
growth in the business. According to the trend survey published by MaRa in
December 2016, altogether 77 per cent of the respondents had dined at a
restaurant during the previous two weeks. The figure was 67 per cent in 2014 and
only about 40 per cent at the turn of the millennium.
The growth of sales in the Kotipizza chain has continuously outperformed the
growth of the entire restaurant market and the fast food market. It can even be
estimated that the strong growth of the Kotipizza chain has contributed to the
more positive development of the fast food market compared with the rest of the
restaurant market.
According to MaRa's estimate, the growth of sales in the restaurant sector will
continue in 2017 at nearly the previous year's level, along with the growth of
the Finnish national economy and the increased consumer confidence. The
development will be particularly positive in the fast food sector, as fast food
restaurants account for a considerable proportion of restaurant dining. In the
fast food sector, the influence of taxation and government regulation on
financial development is not as strong compared with the rest of the restaurant
business, particularly restaurants licensed to serve alcohol.
Finnish consumers are still spending a considerably smaller proportion of their
income on restaurant dining than consumers in most of the countries of
comparison. Thus, we have reason to believe that dining at restaurants will
increase in the next few years. MaRa has estimated that fast food restaurants
will be well-positioned for growth, particularly with regard to staff
restaurants, in which the growth of sales is forecast to slow down or even turn
negative.
According to MaRa's restaurant industry trend survey, rising phenomena in the
restaurant business include fast dining, leisure time dining, hamburgers and
pizza, as well as the increased importance of the quality of food. The survey
shows that hamburgers and pizza, previously classified as 'fast food', have an
increasingly important role also when it comes to both dinner and lunch-time
dining.
We believe that the financial development of the restaurant business and
consumer trends support Kotipizza Group's investment in the fast casual concept,
that is, restaurants that offer casual, fresh, and responsibly produced food in
a restaurant environment.
The Group estimates for the full financial year that the restaurant chain sales
will grow by approximately fifteen (15) 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
July 2017, including the audited comparison figures for the six-month period
ending 31 July 2016, have been prepared according to IAS 34. The same accounting
principles that were used in the previous audited full year financial statements
have been applied.
The Kotipizza Group has continued to evaluate the impact of implementing the
IFRS 15 standard in its reporting. The standard will be applied from 1 January
2018 onwards or in subsequent review periods. Introducing the new standard in
reporting is not expected to have any significant impact on the criteria for
sales recognition. The Kotipizza Group will continue to assess customer
contracts. The final outcome and possible quantitative effects on sales
recognition will be reported in the upcoming Q3/2017 interim report and in the
financial statements released on 31 January 2018.
SUMMARY OF THE FINANCIAL STATEMENT AND NOTES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
-----------------------------------------------
000 € 000 € 000 € 000 € 000 €
Net sales 21 123 16 904 40 348 32 291 68 737
Other income 32 -2 33 46 96
Change in inventory of raw
materials and finished goods
(+/-) 1 692 46 1 533 -449 -3
Raw materials and finished
goods (-) -17 753 -13 080 -32 290 -24 711 -52 872
Employee benefits/expenses
(-) -848 -810 -1 832 -1 638 -3 887
Depreciations (-) -374 -252 -670 -493 -978
Impairments (-) - - - - -
Other operating expenses (-) -1 809 -1 172 -3 790 -2 367 -5 846
-----------------------------------------------
Operating profit 2 062 1 633 3 331 2 678 5 246
Finance income 7 5 25 15 35
Finance costs -247 -191 -449 -391 -812
-----------------------------------------------
Loss / profit before taxes 1 822 1 447 2 908 2 302 4 469
Income taxes -392 -318 -639 -518 -1 005
-----------------------------------------------
Loss / profit for the period 1 430 1 129 2 268 1 784 3 464
-----------------------------------------------
Earnings per share, EUR:
Basic, profit for the period
attributable to ordinary
equity holders of the parent
(no dilutive instruments) 0.23 0.18 0.36 0.28 0.55
Basic, profit for the period
attributable to ordinary
equity holders of the parent 0.23 0.18 0.36 0.28 0.55
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
------------------------------------------
000 € 000 € 000 € 000 € 000 €
Profit (loss) for the period 1 430 1 129 2 268 1 784 3 464
Other comprehensive income:
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods:
Cash flow hedges 21 -57 36 -48 69
Taxes related to other comprehensive
income -4 11 -7 10 -14
Net other comprehensive income to be 17 -46 29 -38 56
reclassified to profit or loss in ------------------------------------------
subsequent periods
Other comprehensive income for the 17 -46 29 -38 56
period, net of tax ------------------------------------------
Total comprehensive income for the
period, net of tax 1 447 1 083 2 297 1 746 3 520
------------------------------------------
Attributable to:
Owners of the company 1 447 1 084 2 303 1 781 3 597
Non-controlling interest -1 -1 -6 -35 -77
------------------------------------------
1 447 1 083 2 297 1 746 3 520
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31.7.2017 31.7.2016 31.1.2017
Assets 000 € 000 € 000 €
Non-current assets
Property, plant and equipment 1 099 1 342 1 138
Goodwill 36 521 35 819 35 819
Intangible assets 3 194 2 229 2 321
Non-current financial assets 2 2 2
Non-current receivables 1 027 547 872
Deferred tax assets 401 305 488
------------------------------
42 245 40 243 40 641
Current assets
Inventories 5 227 3 093 3 087
Trade and other receivables 6 392 5 224 5 761
Current tax receivables 4 58 4
Cash and cash equivalents 4 774 8 463 9 650
------------------------------
16 397 16 838 18 502
Assets classified as held for sale 13 13 13
Total assets 58 656 57 095 59 156
------------------------------
31.7.2017 31.7.2016 31.1.2017
------------------------------
000 € 000 € 000 €
Equity and liabilities
Share capital 80 80 80
Fund for invested unrestricted equity 24 419 27 595 27 595
Retained earnings 5 323 1 165 2 989
------------------------------
Total equity attributable to equity holders of
the parent company 29 822 28 840 30 664
Non-controlling interests -97 -49 -91
------------------------------
Total equity 29 725 28 791 30 573
Non-current liabilities
Interest bearing loans and borrowings 15 587 16 979 15 829
Financial liabilities at fair value through
profit or loss 262 415 298
Other non-current liabilities 3 437 2 407 2 745
Deferred tax liabilities 73 55 66
------------------------------
19 359 19 856 18 938
Current liabilities
Interest bearing loans and borrowings 911 596 1 165
Trade and other payables 8 109 7 308 8 480
Provisions - 23 -
Current tax liabilities 552 520 -
------------------------------
9 572 8 448 9 645
Liabilities related to assets held for sale - - -
Total liabilities 28 931 28 304 28 583
------------------------------
Total shareholders' equity and liabilities 58 656 57 095 59 156
------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to owners of the company
-------------------------------------------------------------
Fund for Retai- Non-
invested ned control-
Share unrestricted earn- ling Total
EUR THOUSAND capital equity ings Total interest equity
1 February 2017 80 27 595 2 989 30 664 -91 30 573
Result for the - - 2 275 2 275 -6 2 268
period
Other
comprehensive - - 29 29 - 29
income
-------------------------------------------------------------
Total
incomprehensive - - 2 303 2 303 -6 2 297
income for the
period
Transactions with
owners
Management
incentive - - 31 31 - 31
scheme
Dividends - -3 176 - -3 176 - -3 176
-------------------------------------------------------------
Transactions with - -3 176 31 -3 145 -3 145
owners total
31 July 2017 80 24 419 5 323 29 822 -97 29 725
-------------------------------------------------------------
Equity attributable to owners of the company
-------------------------------------------------------------
Fund for Retai- Non-
invested ned control-
Share unrestricted earn- ling Total
EUR THOUSAND capital equity ings Total interest equity
1 February 2016 80 29 818 -624 29 274 -14 29 260
Result for the - - 1 781 1 781 -35 1 746
period
Other
comprehensive - - - - - -
income
-------------------------------------------------------------
Total
incomprehensive - - 1 781 1 781 -35 1 746
income for the
period
Transactions with
owners
Share issue - - 8 8 - 8
Dividends - -2 223 - -2 223 - -2 223
-------------------------------------------------------------
Transactions with -2 223 8 -2 215 - -2 215
owners total
31 July 2016 80 27 595 1 165 28 840 -49 28 791
-------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
2-7/17 2-7/16
Operating activities 000 € 000 €
Profit before tax 2 908 2 302
Loss for discontinued operations - -
Adjustments to reconcile profit before tax to net cash flows
Depreciation of property, plant and equipment 304 236
Depreciation and impairment of intangible assets 366 256
Gain on disposal of property, plant and equipment -47 -80
Finance income -25 -15
Finance costs 449 391
Change in working capital
Change in trade and other receivables (+/-) -631 -74
Change in inventories (+/-) -2 134 292
Change in trade and other payables (+/-) -175 266
Change in provisions (+/-) - -67
Interest paid (-) -451 -402
Interest received 25 15
Income tax paid (-) -1 -4
----------------
Net cash flows from operating activities 588 3 117
Investing activities
Acquisition of subsidiaries - -
Investments for tangible assets (-) -32 -89
Investments for non-tangible assets (-) -807 -367
Repayment for loan assets - -
Proceeds from sale of assets-held-for-sale - -
Acquisitions -750 -
Sale of property, plant and equipment - 400
----------------
Net cash flows used in investing activities -1 589 -56
Financing activities
Funds received from the share issue -3 176 -2 223
Loans withdrawal - -
Loans repayments (-) -575 -375
Finance lease payments (+/-) -124 -100
----------------
Net cash flow used in financing activities -3 874 -2 698
Net change in cash and cash equivalents -4 876 363
Cash and cash equivalents at 1 February 9 650 8 100
----------------
Cash and cash equivalents at 31 July 4 774 8 463
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1. SEGMENT INFORMATION
The segment information presented below is in accordance with the segment
information presented in the previous financial statements.
KOTIPIZZA SEGMENT
-----------------------------------------------------------------------
EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
-----------------------------------------------------------------------
Comparable net sales 3 816 3 205 7 337 6 301 12 894
Net sales 4 885 3 549 9 350 6 645 15 051
Comparable gross margin / EBITDA 2 220 1 783 3 800 3 261 6 633
Depreciation and impairments -244 -145 -434 -292 -589
Comparable EBIT 1 976 1 639 3 365 2 970 6 044
Reported gross margin / EBITDA 2 220 1 755 3 800 3 233 6 517
Reported EBIT 1 976 1 610 3 365 2 942 5 929
-----------------------------------------------------------------------
FOODSTOCK SEGMENT
-----------------------------------------------------------------------
EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
-----------------------------------------------------------------------
Comparable net sales 16 139 13 152 30 823 25 264 53 198
Net sales 16 139 13 152 30 823 25 264 53 198
Comparable gross margin / EBITDA 620 535 988 869 1 596
Depreciation and impairments -50 -36 -84 -67 -143
Comparable EBIT 571 499 904 802 1 453
Reported gross margin / EBITDA 620 528 988 862 1 566
Reported EBIT 571 492 904 795 1 423
-----------------------------------------------------------------------
CHALUPA SEGMENT
-----------------------------------------------------------------------
EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
-----------------------------------------------------------------------
Comparable net sales 99 202 175 382 487
Net sales 99 202 175 382 487
Comparable gross margin / EBITDA 1 -22 -3 -94 -161
Depreciation and impairments -2 -9 -3 -21 -27
Comparable EBIT -1 -31 -6 -115 -188
Reported gross margin / EBITDA 1 -24 -3 -96 -169
Reported EBIT -1 -33 -6 -117 -196
-----------------------------------------------------------------------
OTHERS SEGMENT
-----------------------------------------------------------------------
EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
-----------------------------------------------------------------------
Comparable net sales 0 0 0 0 0
Net sales 0 0 0 0 0
Comparable gross margin / EBITDA -322 -270 -612 -724 -1 342
Depreciation and impairments -78 -63 -148 -114 -219
Comparable EBIT -401 -332 -760 -837 -1 561
Reported gross margin / EBITDA -405 -374 -784 -828 -1 690
Reported EBIT -484 -437 -932 -942 -1 909
-----------------------------------------------------------------------
ALL SEGMENTS TOGETHER
-----------------------------------------------------------------------
EUR THOUSAND 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
-----------------------------------------------------------------------
Comparable net sales 20 053 16 559 38 335 31 947 66 580
Net sales 21 123 16 904 40 348 32 291 68 737
Comparable gross margin / EBITDA 2 519 2 027 4 173 3 313 6 726
Depreciation and impairments -374 -252 -670 -493 -978
Comparable EBIT 2 145 1 775 3 503 2 820 5 747
Reported gross margin / EBITDA 2 436 1 885 4 001 3 171 6 225
Reported EBIT 2 062 1 633 3 332 2 678 5 246
-----------------------------------------------------------------------
NOTE 2. NON-CURRENT ASSETS HELD FOR SALE, DISCONTINUED OPERATIONS AND ACQUIRED
OPERATIONS
On 1 February 2017, Kotipizza Group acquired all business operations of Helsinki
Pizzapalvelu Oy. Upfront acquisition price was MEUR 0.75 and the transaction
also included an earn-out element. The company operates the Pizzataxi restaurant
chain that comprises 22 restaurants operating in the Helsinki region and
Southern Finland. These restaurants will be merged into the Kotipizza chain's
operations. The transaction strengthens Kotipizza's home delivery service
offering in the capital region. The scope of the transaction included intangible
rights such as the ordering system, trademarks, domain names, company names,
auxiliary company names, client registers and separately defined franchise,
leasing and other contracts.
The transaction did not include any of the following items related to business
operations:
- financial assets
- trade payables or other other liabilities
- liabilities generated prior to transaction
- personnel.
The non-current assets held for sale were related to Kotipizza segment's
operations in Sweden. They did not have any effect on the profit and loss
account during the review period nor in the same period in the previous year.
The major classes of assets and liabilities related to
discontinued operations:
31/07/2017 31/07/2016
----------------------
Assets 000 € 000 €
Inventories - -
Trade receivable and other receivables 13 13
----------------------
Assets related to discontinued operations 13 13
Liabilities
Received collaterals - -
Other liabilities - -
Accrued expenses - -
Liabilities related to discontinued operations - -
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 presents 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.
Sales to Purchases Outstanding Outstanding
related from trade trade Paid
parties related payables receivables interests
parties
-------------------------------------------------------------
2/17-7/17 000 € 000 € 000 € 000 € 000 €
Key management of - - - - -
the group
Other related - - - - -
parties
Controlling - - - - -
entities
Companies
controlled by the - 90 10 - -
members of the
Board
2/16-7/16
Key management of 2 154 27 - -
the group
Other related - - - - -
parties
Controlling - - - - -
entities
Companies
controlled by the - 137 10 - -
members of the
Board
NOTE 4. EMPLOYEE BENEFITS EXPENSE
All employee benefits expenses are included in administrative (fixed) expenses.
2-7/17 2-7/16
--------------
000 € 000 €
Wages and salaries 1224 1 339
Social security costs 14 45
Pension costs (defined contribution plans) 248 255
--------------
Total employee benefits expense 1 486 1 638
--------------
NOTE 5. CONTINGENT LIABILITIES
Commitments 31/07/2017 31/07/2016
000 € 000 €
Leasing commitments 304 99
Secondary commitments - -
Rental guarantees 913 667
Bank guarantees 420 420
Rental commitments for premises 3 256 4 024
Loans from financial institutions 15 388 16 438
Guarantees for other than Group companies 3 410
Guarantees
Pledged deposits 146 146
Business mortgages 17 500 17 500
Guarantees 12 20
Pledged shares, book value 44 236 19 984
General guarantee for other Group companies unlimited unlimited
NOTE 6: ALTERNATIVE PERFORMANCE MEASURES (APMs)
The Kotipizza Group presents APMs to describe the underlying business
performance and to enhance comparability between financial periods. APMs should
not be considered as a substitute for measures of performance in accordance with
the IFRS. APMs used by the Kotipizza Group are listed and defined in this note.
CHAIN-BASED NET SALES
Chain-based net sales is the total combined net sales of the company's
franchisees, based on which the company's franchising fees are invoiced monthly.
COMPARABLE NET SALES:
Net sales items affecting comparability
EUR thousand 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
--------------------------------------------------------------------
Net sales 21 123 16 904 40 348 32 291 68 737
Items affecting comparability 1 069 345 2 013 344 2 157
--------------------------------------------------------------------
Comparable net sales 20 053 16 559 38 335 31 947 66 580
--------------------------------------------------------------------
Items affecting comparability in 5-7/17, 5-7/16, 2-7/17, 2-7/16 and 2/16-1/17
all related to advertising and marketing fund flows of Kotipizza's Franchisee
Co-operative, which pass through Kotipizza division's P&L without result effect.
COMPARABLE EBIT:
EBIT items affecting comparability
EUR thousand 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
--------------------------------------------------------------------
EBIT 2 062 1 633 3 332 2 678 5 246
Items affecting comparability 83 142 172 142 501
--------------------------------------------------------------------
Comparable EBIT 2 145 1 775 3 503 2 820 5 747
--------------------------------------------------------------------
Reported EBIT in 5-7/17, 5-7/16, 2-7/17, 2-7/16 and 2/16-1/17 included items
affecting comparability, which all were related to the incentive plan introduced
on 6 May 2016 and other incentive plans within the group.
Items affecting comparability are material items or transactions, which are
relevant for understanding the financial performance of the Kotipizza Group when
comparing profit of the current period with previous periods. These items can
include, but are not limited to, capital gains and losses, significant write-
downs, provisions for planned restructuring and other items that are not related
to normal business operations from the Kotipizza Group's management viewpoint.
Such items are always listed in euros in the Kotipizza Group's interim, half-
year and full-year financial reports for the whole Group and for the operating
segments.
EBITDA
EBIT, depreciation and impairments
EUR thousand 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
-------------------------------------------------------------------
EBIT 2 062 1 633 3 332 2 678 5 246
Depreciation and impairments 374 252 670 493 978
-------------------------------------------------------------------
EBITDA 2 436 1 885 4 001 3 171 6 225
-------------------------------------------------------------------
COMPARABLE EBITDA
EUR thousand 5-7/17 5-7/16 2-7/17 2-7/16 2/16-1/17
--------------------------------------------------------------------
EBIT 2 062 1 633 3 332 2 678 5 246
Depreciation and impairments 374 252 670 493 978
Items affecting comparability 83 142 172 142 501
--------------------------------------------------------------------
Comparable EBITDA 2 519 2 027 4 173 3 313 6 726
--------------------------------------------------------------------
Items affecting comparability have been detailed earlier in this Note in the
section COMPARABLE EBIT.
COMPARABLE EBITDA OF NET SALES, %
Comparable EBITDA
-------------------* 100
Net sales
NET DEBT
Long-term ja short-term interest bearing debt - cash and cash equivalents
EUR thousand 31.7.2017 31.7.2016 31.1.2017
---------------------------------------------------------------
Long term interest bearing debt 15 587 16 979 15 829
Short term interest bearing debt 911 596 1 165
Cash and cash equivalents -4 774 -8 463 -9 650
---------------------------------------------------------------
Net debt 11 723 9 113 7 344
---------------------------------------------------------------
NET GEARING, %
Net debt
--------------* 100
Total equity
EQUITY RATIO, %
Total equity
--------------* 100
Total assets
In Helsinki on 26 September 2017
Kotipizza Group Oyj's Board of Directors
Further information: CEO Tommi Tervanen, tel. +358 207 716, and CFO and Deputy
to the CEO Timo Pirskanen, tel. +358 207 716 747
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