2017-12-20 08:00:00 CET
2017-12-20 08:00:31 CET
REGULATED INFORMATION
Kotipizza Group Oyj - Interim report (Q1 and Q3)
Kotipizza Group Oyj: COMPARABLE NET SALES GROWTH OF 21% AND 30% COMPARABLE EBITDA GROWTH IN THE THIRD QUARTER OF THE FINANCIAL YEAR
KOTIPIZZA GROUP OYJ INTERIM REPORT 1 FEBRUARY 2017 - 31 OCTOBER 2017
COMPARABLE NET SALES GROWTH OF 21% AND 30% COMPARABLE EBITDA GROWTH IN THE THIRD
QUARTER OF THE FINANCIAL YEAR
August-October 2017 (8-10/2016)
* Chain-based net sales grew 20.6% (16.4%).
* Comparable net sales were 20.7 MEUR (17.1). Growth was 20.6%.
* Comparable EBITDA was 2.44 MEUR (1.88). Growth was 29.5%.
* Net sales were 21.8 MEUR (18.0). Growth was 21.1%.
* EBIT was 1.69 MEUR (1.47). Growth was 14.7%.
February-October 2017 (2-10/2016)
* Chain-based net sales grew 18.5% (16.2%).
* Comparable net sales were 58.9 MEUR (49.1). Growth was 19.9%
* Comparable EBITDA was 6.47 MEUR (5.20). Growth was 24.5%
* Net sales were 62.2 MEUR (50.3). Growth was 23.6%.
* EBIT was 5.02 MEUR (4.15). Growth was 21.0%.
* Net gearing was 30.2 percent (27.3%).
* Equity ratio was 51.2 percent (51.8%).
KOTIPIZZA GROUP UPGRADES ITS OUTLOOK FOR THE FINANCIAL YEAR
New outlook for the financial year
The Group estimates for the full financial year that the chain-based net sales
will grow by significantly over fifteen (15) percent as compared to previous
year and that comparable EBITDA will increase significantly as compared to
previous year.
Previous outlook released on 26 September 2017
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.
KEY FIGURES, TEUR
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8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
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Comparable figures
Comparable net sales 20 666 17 132 58 853 49 079 66 580
Comparable EBITDA 2 438 1 883 6 468 5 196 6 726
Comparable EBITDA of
11.8 11.0 11.0 10.6 10.1
net sales, %
Comparable EBIT 2 090 1 638 5 450 4 458 5 747
Chain-based net sales 27 564 22 852 78 274 66 056 89 893
Reported figures
Reported net sales 21 846 18 038 62 194 50 329 68 737
Reported EBIT 1 686 1 470 5 018 4 148 5 246
Earnings per share 0.20 0.16 0.56 0.44 0.55
Net cash flows from operating 3 050 4 190 5 278
activities
Net cash used in investment -1 818 -179 -449
activities
Net gearing, % 30.2 27.3 24.0
Equity ratio, % 51.2 51.8 52.1
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Tommi Tervanen, CEO of Kotipizza Group
"Kotipizza's chain-based net sales continued their strong growth in the third
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 12.6% and the
average purchase by 5.9%. We also continued to boost our online sales - during
the review period, orders made through the online store amounted to roughly a
tenth of net sales in brick-and-mortar restaurants. The chain-based net sales of
Kotipizza restaurants grew by 20.6% in the third 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.
During the review period, the Kotipizza Group has invested in future growth by
developing new fast casual concepts in line with the Group's growth strategy.
This work has mainly focused on the development of No Pizza, a restaurant
concept aimed at international markets. The launch of No Pizza was announced
after the review period. We believe that the concept differs from other
restaurant chains operating, for instance, in the Nordics in terms of its
distinct brand, products and customer experience, and that it has the potential
to succeed when built on the master franchising collaboration model. After the
review period, the Kotipizza Group acquired the majority of shares in Day After
Day Oy, the company operating the Social Food Street Burgerjoint restaurant. Our
goal is to build Social Burger into a nationwide burger chain.
During the review period, the Kotipizza chain and the Kotipizza Group continued
to gain positive visibility in both editorial and social media. Furthermore,
after the review period the Group received two significant recognitions. The
company's international profile rose to a new level in November when the company
won first place in the category 'Star of 2017' for small and mid-sized listed
companies that have invested in corporate responsibility in the European Small
and Midcap Awards, held in Brussels, for listed companies. A week later, the
Kotipizza Group was once again named the most attractive small listed company in
the Private investor's choice competition.
Comparable net sales of the Group grew 21% in the third quarter of the year and
were 20.1 MEUR (17.1). Comparable EBITDA was 2.25 MEUR (1.72) in the third
quarter, representing an increase of 31%. After the review period, we announced
the launch of a new concept, No Pizza, aimed at international markets, as well
as the acquisition of Social Burger. During the current financial year, the
Group invests approximately one million euros in the acquisition of Social
Burger and the development of new concepts. In the upcoming financial year
starting on 1 February 2018, the Group will invest approximately one million
euros in the development of new concepts.
We are still on pace with our strategic financial goals, both in terms of the
development of chain-based sales and that of EBITDA. The Kotipizza Group's mid-
term financial goals include annual chain sales growth exceeding 5 percent and
annual comparable EBITDA growth of 15-20 percent. The Group had a solid
financial standing at the end of the quarter with net gearing at 30 percent and
equity ratio of 51 percent.
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 for the full financial year that the chain-based net sales will grow
by significantly over fifteen (15) percent as compared to previous year and that
comparable EBITDA will increase significantly as compared to previous year."
GROUP NET SALES
August-October 2017
Chain-based net sales continued strong and grew 20.6% (16.4%) year on year in
the third quarter of the financial year and were 27.6 MEUR (22.9). Average
purchase grew 5.9% and the number of customers 12.6% compared to the same period
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.
One brick-and-mortar restaurant was opened, and 7 shop-in-shop restaurants
closed, in August-October. 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. The number of restaurants in the Pizzataxi chain - operating 22
restaurants in the Helsinki region and Southern Finland - converted into
Kotipizza restaurants fell short of estimations. The first Pizzataxi restaurant
is planned to be converted into a Kotipizza restaurant in January 2018.
The third quarter of the financial year kicked off with an ad campaign in August
promoting Special Opera, pizza that includes MSC-certified tuna. The campaign
ran mainly on TV. As a forerunner in digital services, Kotipizza also launched
in August the Kotibotti chatbot, used on Facebook Messenger. With the
application, customers can order and buy Kotipizza products on-the-go across the
country. In the beginning of September, Kotipizza celebrated Finnish
entrepreneurs to mark Entrepreneur Day. We shared the stories of a number of
Kotipizza franchisees on online TV. Towards the end of September, we advertised
on TV Monster pizzas that came with an additional complimentary dip sauce.
During the campaign, the sales of Monster pizzas increased by 24%. To highlight
corporate responsibility, we talked about the employment effect of the
production of Kotipizza's pizza cheese. In October, we reminded consumers of
vegetarian pizzas around the Meat-free October theme. We continued to run
franchisees' stories on online TV, which generated a significant amount of
traffic in our online store. Record online sales were reached in several months.
To celebrate Kotipizza's 30th anniversary, we organised in October a surprise
concert at the Olympic Stadium in collaboration with Radio Suomipop for the
winner of Kotipizza's competition and their entourage. During a four-week radio
campaign, the marketing stunt reached 1.8 million Finns. In the third quarter of
the financial year, there were 92 campaign days compared to the 50 in the
previous year. Unlike previously, we ran multiple campaigns at the same time
whilst emphasizing actions and content that support our branding.
Comparable net sales for the third quarter of the financial year were 20.1 MEUR
(17.1) and they grew 20.6% compared to same period in the previous year.
Reported net sales were 21.9 MEUR (18.0) and they grew 21.1% compared to same
period in the previous year. The reported sales included 1.2 MEUR 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. 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 22.3% year
on year in the third quarter of the financial year and were 16.8 MEUR (13.8).
The Kotipizza segment's net sales increased 17.1% compared to the previous year
and were 4.9 MEUR (4.2). The Chalupa segment's net sales in the third quarter of
the financial year were EUR 84 thousand (EUR 65 thousand).
February-October 2017
Chain-based net sales grew 18.5% (16.2%) year on year in February-October and
were 78.3 MEUR (66.1). Average purchase grew 3.0% and the number of customers
14.3% compared to the same period in the previous year. Eleven brick-and-mortar
restaurants and 5 shop-in-shop restaurants were opened, and 1 brick-and-mortar
restaurant together with 12 shop-in-shop restaurants closed, during February-
October.
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-October were 58.9 MEUR (49.1) and they
grew 19.9% compared to same period in the previous year. Reported net sales were
62.2 MEUR (50.3). 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 22.1% year on year in the third quarter of the financial year.
The Kotipizza segment's net sales increased 31.5% compared to the previous year
and were 14.3 MEUR (10.9). The Chalupa segment's net sales in the February-
October were 260 thousand euros (487 thousand).
GROUP EBIT
August-October 2017
Comparable EBIT of the Group was 2.09 MEUR (1.88) in the third quarter of the
financial year. Reported EBIT was 1.69 MEUR (1.47). Reported EBIT included MEUR
0.40 of items affecting comparability. Development costs of a new concept aimed
at international markets, No Pizza, have been treated as items affecting
comparability as they have been booked as costs. Also, costs from Kotipizza's
Autumn Seminar event have been treated as items affecting comparability, because
the annual event was held in the last quarter of the year in the previous year.
These cash costs affecting comparability totalled MEUR 0.22. In addition,
calculational (non-cash) items related to the incentive plan introduced on 6 May
2016 have been treated as items affecting comparability.
The EBIT improved mainly due to volume improvement.
February-October 2017
Comparable EBIT of the Group was 5.45 MEUR (4.46) in February-October. Reported
EBIT was 5.02 MEUR (4.15). Reported EBIT included MEUR 0.43 of items affecting
comparability. Development costs of a new concept aimed at international
markets, No Pizza, have been treated as items affecting comparability as they
have been booked as costs. Also, costs from Kotipizza's Autumn Seminar event
have been treated as items affecting comparability, because the annual event was
held in the last quarter of the year in the previous year. These cash costs
affecting comparability totalled MEUR 0.22. In addition, calculational (non-
cash) items related to the incentive plan introduced on 6 May 2016 have been
treated as items affecting comparability.
The EBIT improved mainly due to volume improvement, and also the sales margin
improved slightly from the previous year. 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 1.83 (0.58).
SALES AND EBITDA OF THE SEGMENTS
KOTIPIZZA SEGMENT
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EUR THOUSAND 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
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Comparable net sales 3 742 3 298 10 931 9 598 12 894
Net sales 4 922 4 204 14 272 10 849 15 051
Comparable gross margin / EBITDA 2 218 1 819 6 017 5 081 6 633
Depreciation and impairments -224 -150 -658 -441 -589
Comparable EBIT 1 994 1 671 5 359 4 640 6 044
Reported gross margin / EBITDA 1 948 1 785 5 747 5 018 6 517
Reported EBIT 1 724 1 635 5 089 4 577 5 929
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Heidi Stirkkinen, COO of Kotipizza Group
"Growth in the Kotipizza chain's sales has continued strong during the review
period. At the end of the review period, the chain had 259 (255) restaurants in
total. The proportional number of brick-and-mortar restaurants has continued to
increase as there were 162 (151) brick-and-mortar restaurants and 97 (104) shop-
in-shop restaurants at the end of the review period. During the review period,
1 new brick-and-mortar restaurant was opened and 7 shop-in-shop restaurants, as
well as 1 brick-and-mortar restaurant, were closed.
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 71 (64) at the end of the review period.
During the review period, the Kotipizza chain conducted the annual franchisee
satisfaction survey. The results showed that Kotipizza's franchisees are
increasingly satisfied with their position in almost all areas studied. A
particularly significant finding was that 77 percent of franchisees who
responded to the survey stated that they would recommend becoming a Kotipizza
franchisee to an interested individual. This the highest rating for this metric
in the history of the survey. Moreover, we have continued to develop the
communication between franchisees and the chain management. During the review
period, a completely modernised internal communications channel Pizzanetti was
launched. It has been received well by the franchisees.
In February, Kotipizza acquired the Pizzataxi restaurant chain that operates 22
restaurants in the Helsinki region and Southern Finland, all offering home
delivery. During the review period, the number of Pizzataxi restaurants
converted into Kotipizza restaurants fell however short of estimations. The
first Pizzataxi restaurant is planned to be converted into a Kotipizza
restaurant in January 2018."
August-October 2017
Comparable net sales of Kotipizza in the third quarter of the financial year
were 3.74 MEUR (3.30) and they increased 13.5% compared to same period in the
previous year. Net sales of Kotipizza in the third quarter of the financial year
were 4.92 MEUR (4.20) and they increased 17.1% compared to the same period in
the previous year. Franchising fees of the Pizzataxi chain, acquired in
February, were EUR 58 thousand in the review period. The reported sales included
MEUR 1.18 items affecting comparability related to advertising and marketing
fund flows of Kotipizza's Franchisee Co-operative, which pass through the 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 (1.82) in the third quarter of the
financial year and it grew 21.9% 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 1.95 MEUR (1.79) in
the third quarter of the financial year. Reported EBITDA included MEUR 0.27 of
items affecting comparability. Development costs of a new concept aimed at
international markets, No Pizza, have been treated as items affecting
comparability as they have been booked as costs. Also, costs from Kotipizza's
Autumn Seminar event have been treated as items affecting comparability, because
the annual event was held in the last quarter of the year in the previous year.
These cash costs affecting comparability totalled MEUR 0.19. In addition,
calculational (non-cash) items related to the incentive plan introduced on 6 May
2016 have been treated as items affecting comparability.
February-October 2017
Comparable net sales of Kotipizza for February-October were 10.93 MEUR (9.60)
and they increased 13.9% compared to same period in the previous year. Net sales
of Kotipizza for February-October were 14.27 MEUR (10.85) and they increased
31.5% compared to the same period in the previous year. Franchising fees of the
Pizzataxi chain, acquired in February, were EUR 170 thousand during the review
period. The reported sales included MEUR 3.34 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 5.94 MEUR (5.02) in February-October and it
grew 18.3% compared to same period in the previous year. Improvement in
comparable EBITDA was mainly due favourable development in chain-based net sales
of Kotipizza. Reported EBITDA was 5.75 MEUR (5.02) in February-October. Reported
EBITDA included MEUR 0.27 of items affecting comparability. Development costs of
a new concept aimed at international markets, No Pizza, have been treated as
items affecting comparability as they have been booked as costs. Also, costs
from Kotipizza's Autumn Seminar event have been treated as items affecting
comparability, because the annual event was held in the last quarter of the year
in the previous year. These cash costs affecting comparability totalled MEUR
0.19. In addition, calculational (non-cash) items related to the incentive plan
introduced on 6 May 2016 have been treated as items affecting comparability.
FOODSTOCK SEGMENT
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EUR THOUSAND 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
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Comparable net sales 16 840 13 770 47 663 39 034 53 198
Net sales 16 840 13 770 47 663 39 034 53 198
Comparable gross margin / EBITDA 567 475 1 555 1 344 1 596
Depreciation and impairments -47 -38 -132 -105 -143
Comparable EBIT 520 437 1 424 1 239 1 453
Reported gross margin / EBITDA 534 466 1 523 1 328 1 566
Reported EBIT 487 428 1 391 1 223 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."
August-October 2017
Comparable net sales of Foodstock in the third quarter of the financial year
were 16.84 MEUR (13.77), equivalent to 22.3% compared to the same period in the
previous year. Reported net sales of Foodstock in the third quarter of the
financial year were 16.84 MEUR (13.77) and they grew 22.3% 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. Also, sales to the
other customers of Foodstock developed favourably.
Foodstock's comparable EBITDA improved 19.4% from the previous year and was
0.57 MEUR (0.48) in the third 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 0.53 MEUR
(0.47) in the third quarter of the financial year. Reported EBITDA included EUR
32 thousand of items affecting comparability. Calculational (non-cash) items
related to the incentive plan introduced on 6 May 2016 have been treated as
items affecting comparability.
February-October 2017
Net sales of Foodstock in February-October were 47.66 MEUR (39.03) and they grew
22.1% compared to same period in the previous year. The growth in net sales was
mainly due to favourable development of Kotipizza's chain-based net sales, which
gave a positive boost to Foodstock's delivery volumes to the chain. Also, sales
to the other customers of Foodstock developed favourably.
Foodstock's comparable EBITDA was 1.56 MEUR (1.34) in February-October and it
grew 15.7% 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 1.52 MEUR (1.33) in February-
October. Reported EBITDA included EUR 32 thousand of items affecting
comparability. Calculational (non-cash) items related to the incentive plan
introduced on 6 May 2016 have been treated as items affecting comparability.
CHALUPA SEGMENT
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EUR THOUSAND 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
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Comparable net sales 84 65 260 447 487
Net sales 84 65 260 447 487
Comparable gross margin / EBITDA -20 -54 -23 -148 -161
Depreciation and impairments -2 -5 -5 -26 -27
Comparable EBIT -22 -59 -28 -174 -188
Reported gross margin / EBITDA -26 -56 -29 -152 -169
Reported EBIT -28 -61 -34 -178 -196
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Iman Gharagozlu, Creative Director of Chalupa
"During the review period, the Chalupa chain has grown and developed relying
upon the franchising concept. Two new restaurants were opened in Helsinki. At
the end of the review period, Chalupa's brick-and-mortar restaurants were
operating in six 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."
August-October 2017
Chalupa's comparable net sales were EUR 84 thousand (EUR 65 thousand) in the
third quarter of the financial year and comparable EBITDA was EUR -20 thousand
(EUR -54 thousand). Chalupa's reported net sales were EUR 84 thousand (EUR 65
thousand) in the third quarter of the financial year and reported EBITDA was EUR
-26 thousand (EUR -56 thousand). Increase in net sales compared to the previous
year was due to opening new restaurants to the chain. Reported EBITDA included
EUR 6 thousand of items affecting comparability. Calculational (non-cash) items
related to the incentive plan introduced on 6 May 2016 have been treated as
items affecting comparability.
February-October 2017
Chalupa's net sales were EUR 260 thousand (447 thousand) in February-October and
comparable EBITDA was EUR -23 thousand (-148 thousand). Chalupa's reported net
sales were EUR 260 thousand (EUR 447 thousand) in February-October and reported
EBITDA was EUR -29 thousand (EUR -152 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 included EUR 6 thousand of items affecting
comparability. Calculational (non-cash) items related to the incentive plan
introduced on 6 May 2016 have been treated as items affecting comparability.
OTHERS SEGMENT
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EUR THOUSAND 8-10/17 8-10/16 2-10/17 2-10/16 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 -326 -357 -1 082 -1 081 -1 342
Depreciation and impairments -75 -53 -223 -166 -219
Comparable EBIT -401 -410 -1 305 -1 247 -1 561
Reported gross margin / EBITDA -422 -479 -1 206 -1 307 -1 690
Reported EBIT -497 -532 -1 429 -1 473 -1 909
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The 'Others' segment includes mainly the operations at Group headquarters.
August-October 2017
Comparable and reported net sales of the Others segment were 0.00 MEUR (0.00) in
the third quarter of the financial year. Comparable EBITDA was -0.33 MEUR (-
0.36). Reported EBITDA was
-0.42 MEUR (-0.48). Reported EBITDA included MEUR 0.10 of items affecting
comparability. Developing costs of a new concept aimed at international markets,
No Pizza, have been treated as items affecting comparability as they have been
booked as costs. Also, costs from Kotipizza's Autumn Seminar event have been
treated as items affecting comparability, because the annual event was held in
the last quarter of the year in the previous year. These cash costs affecting
comparability totalled EUR 26 thousand. In addition, calculational (non-cash)
ifitems related to the incentive plan introduced on 6 May 2016 have been treated
as items affecting comparability.
February-October 2017
Net sales of the Others segment were 0.00 MEUR (0.00) in February-October.
Comparable EBITDA was -1.08 MEUR (-1.08). Reported EBITDA was -1.21 MEUR (-
1.31). Reported EBITDA included MEUR 0.12 of items affecting comparability.
Development costs of a new concept aimed at international markets, No Pizza,
have been treated as items affecting comparability as they have been booked as
costs. Also, costs from Kotipizza's Autumn Seminar event have been treated as
items affecting comparability, because the annual event was held in the last
quarter of the year in the previous year. These cash costs affecting
comparability totalled EUR 54 thousand. In addition, calculational (non-cash)
items related to the incentive plan introduced on 6 May 2016 have been treated
as items affecting comparability.
FINANCIAL ITEMS AND RESULT
Finance costs in the third quarter of the year were MEUR 0.20 (0.22).
Group taxes were MEUR -0.23 (-0.25) in the third quarter.
The result of the period was MEUR 1.27 (1.01) in the third quarter.
Earnings per share were EUR 0.20 (0.16) in the third quarter.
THE GROUP'S FINANCIAL POSITION
Kotipizza Group's balance sheet total as of 31 October 2017 was MEUR 60.6
(57.7). The Group's non-current assets as of 31 October 2017 amounted to MEUR
42.3 (40.2), and current assets amounted to MEUR 18.2 (17.5).
The Group's net cash flow from operating activities in the third quarter was
MEUR 3.05 (4.19). Working capital was tied MEUR 2.29 (released 0.53).
The net cash flow from investment activities in the period was MEUR -1.82 (-
0.18). 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 1.08 (0.58), and proceeds from sales of tangible
assets were MEUR 0.00 (0.40).
The net cash flow from financing activities was MEUR -4.28 (-2.94).
The Group's equity ratio was 51.2% (51.8%).
Interest-bearing debt amounted to MEUR 16.1 (17.3), of which current debt
accounted for MEUR 0.57 (0.35).
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 1.83 (0.58). Kotipizza
Group acquired all business operations of Helsinki Pizzapalvelu Oy that operates
22 Pizzataxi restaurants in the Helsinki region and Southern Finland. The
Company's investments to fixed assets, related mainly to IT systems, amounted to
MEUR 1.08 (0.58).
Kotipizza Group announced on 30 November 2017 to have acquired a 51 per cent
stake in Day After Day Oy. The company operates the Social Food Street
Burgerjoint restaurant in the Sörnäinen district of Helsinki and a food truck
operating under the name Social Food.
PERSONNEL
At the end of the review period, Kotipizza Group employed 48 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 five members at the end of the
review period: Tommi Tervanen (CEO), Timo Pirskanen (Deputy to the CEO, CFO),
Heidi Stirkkinen (Chief Operative Officer), Anssi Koivula (Chief Procurement
Officer) and Antti Isokangas (Chief Communications and Corporate Responsibility
Officer).
SHARES AND SHARE CAPITAL
Kotipizza Group Oyj's share capital was at the end of the review period EUR
80,000.00 and it comprised 6,351,201 shares. At the beginning of the review
period 1 February 2017, the number of shares was 6,351,201. At the end of the
period, the Company had 2733 (902) 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 new restaurant concepts, both under the
reported Chalupa segment and in the form of the Group's new fast casual chains.
After the review period, the Kotipizza Group acquired the majority of shares in
Day After Day Oy that operates the Social Food Street Burgerjoint restaurant and
the Social Food food truck with the aim of building Social Burger into a
nationwide burger restaurant chain. After the review period, the Group also
launched No Pizza, a pizza restaurant concept aimed at international markets.
The first No Pizza restaurant is planned to open in the Nordics during the year
2018. The chain will first expand its business in the Nordic countries and then
to other international markets based on the master franchising business model.
Launching new business concepts has several risks related e.g. anticipation of
consumer needs, habits, taste and behaviour in target markets. Additionally,
there is the risk of not reaching an established position in the market and not
gaining a well-established clientele. Potential failure in launching new
concepts 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
Kotipizza Group announced on 13 December 2017 the launch of a new pizza
restaurant concept aimed at international markets, No Pizza. The first No Pizza
restaurant is planned to open in the Nordics during the year 2018. The chain
will first expand its business in the Nordic countries and then to other
international markets based on the master franchising business model.
Kotipizza Group announced on 30 November 2017 to have acquired a 51 per cent
stake in Day After Day Oy. The company operates the Social Food Street
Burgerjoint restaurant in the Sörnäinen district of Helsinki and a food truck
operating under the name Social Food.
Kotipizza Group announced on 29 November 2017 that it has been elected as the
most attractive company in the small cap series in the Private investor's choice
competition. Private investors name Finland's most reliable and attractive
listed companies in the competition.
Kotipizza Group announced on 23 November 2017 that it has won the Star of 2017
title in the European Small and Mid-Cap Awards, a competition for listed
companies. In the category, companies that have reached exceptional financial
performance in their industry, shown strong potential for growth and operated
responsibly, are awarded.
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 chain-based net sales
will grow by significantly over fifteen (15) percent as compared to previous
year and that comparable EBITDA will increase significantly as compared to
previous year.
ACCOUNTING POLICIES
Kotipizza Group's unaudited interim report for the nine-month period ending 31
October 2017, including the audited comparison figures for the nine-month period
ending 31 October 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 Q4/2017 interim report and in the
financial statements per 31 January 2018.
SUMMARY OF THE FINANCIAL STATEMENT AND NOTES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
-----------------------------------------------
000 € 000 € 000 € 000 € 000 €
Net sales 21 846 18 038 62 194 50 329 68 737
Other income 50 2 82 48 96
Change in inventory of raw
materials and finished goods
(+/-) 128 10 1 661 -439 -3
Raw materials and finished
goods (-) -16 905 -13 639 -49 196 -38 351 -52 872
Employee benefits/expenses
(-) -1 213 -1 110 -3 045 -2 749 -3 887
Depreciations (-) -348 -245 -1 018 -738 -978
Impairments (-) - - - - -
Other operating expenses (-) -1 873 -1 585 -5 662 -3 952 -5 846
-----------------------------------------------
Operating profit 1 686 1 470 5 018 4 148 5 246
Finance income 10 8 35 23 35
Finance costs -204 -216 -652 -607 -812
-----------------------------------------------
Loss / profit before taxes 1 492 1 262 4 400 3 565 4 469
Income taxes -225 -248 -864 -766 -1 005
-----------------------------------------------
Loss / profit for the period 1 267 1 014 3 536 2 798 3 464
-----------------------------------------------
Earnings per share, EUR:
Basic profit for the period
attributable to ordinary
equity holders of the parent
(no dilutive instruments) 0,20 0,16 0,56 0,44 0,55
Basic profit for the period
attributable to ordinary
equity holders of the parent 0,20 0,16 0,56 0,44 0,55
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
------------------------------------------
000 € 000 € 000 € 000 € 000 €
Profit (loss) for the period 1 267 1 014 3 536 2 798 3 464
Other comprehensive income:
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods:
Cash flow hedges -4 61 32 13 69
Taxes related to other comprehensive
income 1 -12 -6 -2 -14
Net other comprehensive income to be -3 49 25 11 56
reclassified to profit or loss in ------------------------------------------
subsequent periods
Other comprehensive income for the -3 49 25 11 56
period, net of tax ------------------------------------------
Total comprehensive income for the
period, net of tax 1 264 1 063 3 561 2 809 3 520
------------------------------------------
Attributable to:
Owners of the company 1 273 1 086 3 576 2 867 3 597
Non-controlling interest -9 -23 -15 -58 -77
------------------------------------------
1 264 1 063 3 561 2 809 3 520
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31.10.2017 31.10.2016 31.1.2017
Assets 000 € 000 € 000 €
Non-current assets
Property, plant and equipment 951 1 265 1 138
Goodwill 36 521 35 819 35 819
Intangible assets 3 220 2 182 2 321
Non-current financial assets 2 2 2
Non-current receivables 1 198 606 872
Deferred tax assets 450 284 488
--------------------------------
42 342 40 159 40 641
Current assets
Inventories 5 105 3 103 3 087
Trade and other receivables 6 376 5 153 5 761
Current tax receivables 4 58 4
Cash and cash equivalents 6 714 9 170 9 650
--------------------------------
18 198 17 484 18 502
Assets classified as held for sale 13 13 13
Total assets 60 554 57 657 59 156
--------------------------------
31.10.2017 31.10.2016 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 6 597 2 258 2 989
--------------------------------
Total equity attributable to equity holders
of the parent company 31 096 29 933 30 664
Non-controlling interests -106 -72 -91
--------------------------------
Total equity 30 989 29 861 30 573
Non-current liabilities
Interest bearing loans and borrowings 15 514 16 979 15 829
Financial liabilities at fair value through
profit or loss 266 354 298
Other non-current liabilities 3 530 2 454 2 745
Deferred tax liabilities 77 56 66
--------------------------------
19 386 19 843 18 938
Current liabilities
Interest bearing loans and borrowings 567 354 1 165
Trade and other payables 8 790 6 833 8 480
Provisions - 9 -
Current tax liabilities 821 757 -
--------------------------------
10 178 7 953 9 645
Liabilities related to assets held for sale - - -
Total liabilities 29 565 27 796 28 583
--------------------------------
Total shareholders' equity and liabilities 60 554 57 657 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
80 27 595 2 989 30 664 -91 30 573
1 February 2017
Result for the - - 3 551 3 551 -15 3 536
period
Other
comprehensive - - 25 25 - 25
income
-------------------------------------------------------------
Total
incomprehensive - - 3 576 3 576 -15 3 561
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 October 2017 80 24 419 6 596 31 095 -106 30 989
-------------------------------------------------------------
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
80 29 818 -624 29 274 -14 29 260
1 February 2016
Result for the - - 2 856 2 856 -58 2 798
period
Other
comprehensive - - 11 11 - 11
income
-------------------------------------------------------------
Total
incomprehensive - - 2 867 2 867 -58 2 809
income for the
period
Transactions with
owners
Share issue - - 15 15 - 15
Dividends - -2 223 - -2 223 - -2 223
-------------------------------------------------------------
Transactions with -2 223 15 -2 208 - -2 208
owners total
31 October 2016 80 27 595 2 258 29 933 -72 29 861
-------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
2-10/17 2-10/16
Operating activities 000 € 000 €
Profit before tax 4 400 3 565
Loss for discontinued operations - -
Adjustments to reconcile profit before tax to net cash flows
Depreciation of property, plant and equipment 344 347
Depreciation and impairment of intangible assets 563 391
Other non-cash adjustments 47 -
Gain on disposal of property, plant and equipment -8 -80
Finance income -35 -23
Finance costs 652 607
Change in working capital
Change in trade and other receivables (+/-) -614 -3
Change in inventories (+/-) -2 012 283
Change in trade and other payables (+/-) 335 -226
Change in provisions (+/-) - -81
Interest paid (-) -657 -607
Interest received 35 23
Income tax paid (-) -1 -6
----------------
Net cash flows from operating activities 3 050 4 190
Investing activities
Acquisition of subsidiaries - -
Investments for tangible assets (-) -33 -124
Investments for non-tangible assets (-) -1 044 -455
Repayment for loan assets - -
Proceeds from sale of assets-held-for-sale - -
Acquisitions -750 -
Sale of property, plant and equipment 8 400
----------------
Net cash flows used in investing activities -1 818 -179
Financing activities
Dividends -3 176 -2 223
Loans withdrawal - -
Loans repayments (-) -863 -563
Finance lease payments (+/-) -239 -155
----------------
Net cash flow used in financing activities -4 277 -2 940
Net change in cash and cash equivalents -2 936 1 071
Cash and cash equivalents at 1 February 9 650 8 100
----------------
Cash and cash equivalents at 31 October 2017 6 714 9 170
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 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
---------------------------------------------------------------------------
Comparable net sales 3 742 3 298 10 931 9 598 12 894
Net sales 4 922 4 204 14 272 10 849 15 051
Comparable gross margin / EBITDA 2 218 1 819 6 017 5 081 6 633
Depreciation and impairments -224 -150 -658 -441 -589
Comparable EBIT 1 994 1 671 5 359 4 640 6 044
Reported gross margin / EBITDA 1 948 1 785 5 747 5 018 6 517
Reported EBIT 1 724 1 635 5 089 4 577 5 929
---------------------------------------------------------------------------
FOODSTOCK SEGMENT
---------------------------------------------------------------------------
EUR THOUSAND 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
---------------------------------------------------------------------------
Comparable net sales 16 840 13 770 47 663 39 034 53 198
Net sales 16 840 13 770 47 663 39 034 53 198
Comparable gross margin / EBITDA 567 475 1 555 1 344 1 596
Depreciation and impairments -47 -38 -132 -105 -143
Comparable EBIT 520 437 1 424 1 239 1 453
Reported gross margin / EBITDA 534 466 1 523 1 328 1 566
Reported EBIT 487 428 1 391 1 223 1 423
---------------------------------------------------------------------------
CHALUPA SEGMENT
---------------------------------------------------------------------------
EUR THOUSAND 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
---------------------------------------------------------------------------
Comparable net sales 84 65 260 447 487
Net sales 84 65 260 447 487
Comparable gross margin / EBITDA -20 -54 -23 -148 -161
Depreciation and impairments -2 -5 -5 -26 -27
Comparable EBIT -22 -59 -28 -174 -188
Reported gross margin / EBITDA -26 -56 -29 -152 -169
Reported EBIT -28 -61 -34 -178 -196
---------------------------------------------------------------------------
OTHERS SEGMENT
---------------------------------------------------------------------------
EUR THOUSAND 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
---------------------------------------------------------------------------
Comparable net sales 0 0 0 0 0
Net sales 0 0 0 0 0
Comparable gross margin / EBITDA -326 -357 -1 082 -1 081 -1 342
Depreciation and impairments -75 -53 -223 -166 -219
Comparable EBIT -401 -410 -1 305 -1 247 -1 561
Reported gross margin / EBITDA -422 -479 -1 206 -1 307 -1 690
Reported EBIT -497 -532 -1 429 -1 473 -1 909
---------------------------------------------------------------------------
ALL SEGMENTS TOGETHER
---------------------------------------------------------------------------
EUR THOUSAND 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
---------------------------------------------------------------------------
Comparable net sales 20 666 17 132 58 853 49 079 66 580
Net sales 21 846 18 038 62 194 50 329 68 737
Comparable gross margin / EBITDA 2 438 1 883 6 468 5 196 6 726
Depreciation and impairments -348 -245 -1 018 -738 -978
Comparable EBIT 2 090 1 638 5 450 4 458 5 747
Reported gross margin / EBITDA 2 034 1 715 6 035 4 886 6 225
Reported EBIT 1 686 1 470 5 018 4 148 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 the 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:
31/10/2017 31/10/2016
----------------------
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
-------------------------------------------------------------
2/17-10/17 000 € 000 € 000 € 000 € 000 €
Key management of - - - - -
the group
Other related - - - - -
parties
Controlling - - - - -
entities
Companies
controlled by the - 122 0 - -
members of the
Board
2/16-10/16
Key management of 2 248 35 - -
the group
Other related - - - - -
parties
Controlling - - - - -
entities
Companies
controlled by the - 167 10 - -
members of the
Board
NOTE 4. EMPLOYEE BENEFITS EXPENSE
All employee benefits expenses are included in administrative (fixed) expenses.
2-10/17 2-10/16
----------------
000 € 000 €
Wages and salaries 2 367 2 223
Social security costs 67 100
Pension costs (defined contribution plans) 423 426
----------------
Total employee benefits expense 2 857 2 749
----------------
NOTE 5. CONTINGENT LIABILITIES
Commitments 31/10/2017 31/10/2016
000 € 000 €
Leasing commitments 207 89
Secondary commitments 0 0
Rental guarantees 977 685
Bank guarantees 420 420
Rental commitments for premises 3 332 3 871
Loans from financial institutions 15 100 16 250
Guarantees for other than Group companies 3 6
Guarantees
Pledged deposits 146 146
Business mortgages 17 500 17 500
Guarantees 12 32
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 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
------------------------------------------------------------------------
Net sales 21 846 18 038 62 194 50 329 68 738
Items affecting comparability 1 180 906 3 341 1 251 2 157
------------------------------------------------------------------------
Comparable net sales 20 666 17 132 58 853 49 079 66 581
------------------------------------------------------------------------
Items affecting comparability in 8-10/17,8-10/16, 2-10/17, 2-10/16 and
2/16-1/17 all 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.
COMPARABLE EBIT:
EBIT items affecting comparability:
EUR thousand 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
------------------------------------------------------------------------
EBIT 1 686 1 470 5 018 4 148 5 245
Items affecting comparability 404 168 432 310 501
------------------------------------------------------------------------
Comparable EBIT 2 090 1 638 5 450 4 458 5 746
------------------------------------------------------------------------
Development costs of a new concept aimed at international markets, No Pizza,
have been treated in 8-10/17, 8-10/16, 2-10/17, 2-10/16 and 2/16-1/17 as items
affecting comparability as they have been booked as costs. Also, costs from
Kotipizza's Autumn Seminar event have been treated as items affecting
comparability, because the annual event was held in the last quarter of the year
in the previous year. These cash costs affecting comparability totalled MEUR
0.22. In addition, calculational (non-cash) items related to the incentive plan
introduced on 6 May 2016 have been treated as items affecting comparability.
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 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
-----------------------------------------------------------------------
EBIT 1 686 1 470 5 018 4 148 5 245
Depreciation and impairments 348 245 1 018 738 978
-----------------------------------------------------------------------
EBITDA 2 034 1 715 6 035 4 886 6 224
-----------------------------------------------------------------------
COMPARABLE EBITDA
EUR thousand 8-10/17 8-10/16 2-10/17 2-10/16 2/16-1/17
------------------------------------------------------------------------
EBIT 1 686 1 470 5 018 4 148 5 245
Depreciation and impairments 348 245 1 018 738 978
Items affecting comparability 404 168 432 310 501
------------------------------------------------------------------------
Comparable EBITDA 2 438 1 883 6 468 5 196 6 725
------------------------------------------------------------------------
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 31.10.2017 31.10.2016 31.1.2017
-----------------------------------------------------------------
Long term interest bearing debt 15 514 16 979 15 829
Short term interest bearing debt 567 354 1 165
Cash and cash equivalents -6 714 -9 170 -9 650
-----------------------------------------------------------------
Net debt 9 366 8 163 7 344
-----------------------------------------------------------------
NET GEARING, %
Net debt
--------------* 100
Total equity
EQUITY RATIO, %
Total equity
--------------* 100
Total assets
In Helsinki on 20 December 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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