Sphera Franchise Group Sa · BVB:SFG
Sphera Franchise Group Sa — Wood's Winter Wonderland 2020
41 slides from Sphera Franchise Group Sa's conference presentation, Dec 2, 2020
Slide 1: SFG Investor Presentation
SFG Investor Presentation 02.12.2020 | Wood’s Winter Wonderland 1
Slide 2: Disclaimer
Disclaimer This presentation is not, and nothing in it should be construed as, an offer, invitation or recommendation in respect of shares issued by Sphera Franchise Group SA ("Sphera"), or an offer, invitation or recommendation to sell, or a solicitation of an offer to buy shares in Sphera. Neither
Slide 3: Agenda
Agenda 1 Sphera Franchise Group at a glance 2 9M 2020 Highlights 3 COVID-19 Adaptation in Q3 2020 4 Brand Performance 5 Key Q3 & 9M 2020 Financials 6 Forecasted 2020 R&E Budget 7 Q&A session For further details We invite you to read our latest Director’s Report which includes analysis of financial r
Slide 4: Sphera Franchise Group at a Glance
Sphera Franchise Group at a Glance 4
Slide 5: Sphera Franchise Group at a Glance
Sphera Franchise Group at a Glance Track record and 2nd Quick 1st Full-Service above-market Service 25 Years of 161 Restaurants Restaurant average Restaurants Operation in 3 countries1 Operator performance Operator even in crisis2 Pre-Crisis Performance (2017 - 2019) 23% 9.2% 16% 9.3% Restaurant sal
Slide 6: Sphera Franchise Group at a Glance
Sphera Franchise Group at a Glance Introduction to Sphera Franchise Group Geographical footprint • Sphera is one of the leading food operators in Romania1, operating also through its subsidiaries in Moldova and in Italy • Sphera was incorporated in May 2017 to consolidate all brands operated by the
Slide 7: Sphera Franchise Group at a Glance: Corporate Structure
Sphera Franchise Group at a Glance: Corporate Structure 99.9% 99.9% 99.9% 100% 80% American Restaurant California Fresh Flavors US Food Network S.R.L. US Food Network US Food Network S.A. System S.A. S.R.L. - Italy S.R.L. - Moldova q holds the franchise q holds the franchise q holds the franchise q
Slide 8: Key Investment Highlights
Key Investment Highlights 1 2 Leading food service Even in challenging group operating a environment, portfolio of internationally significantly above- recognized brands average performance1 8 3 Significant further growth Proven network roll- potential in Romania and out capabilities with massive wh
Slide 9: Leading Foodservice Group in Romania
Leading Foodservice Group in Romania QSR #2 player on the QSR segment (18% market share) and #1 on the chicken segment #2 player on the overall chained foodservice market (15% market share) ü 83% spontaneous brand awareness among Romanian customers (YE 2018) ü customer base consists mainly of young
Slide 10: Foodservice Market Structure & Competitive Overview
Foodservice Market Structure & Comepetitive Overview Chained players generates below 20% of sector sales KFC: no. 2 but growing faster 3% # Brand Product offering 2018 Mk share ‘13-’18 var. +pp. 12% Full-Service Restaurants Cafés/Bars Burgers, Chicken, 18% 1 22.6% -4.0% Salads, Desserts 36% Limited-
Slide 11: Successful Track Record of Growth
Successful Track Record of Growth Long Track Record of Successful Network Development Sustained Growth Across All Brands (1) KFC Pizza Hut Dine-In Pizza Hut Delivery Taco Bell Transformation Phase KFC remaining the key contributor at ca. 83% of revenues 1200 154 Acceleration Phase 138 10 1000 CAGR 2
Slide 12: Profitable Business Model (pre-COVID)
Profitable Business Model (pre-COVID) Sales Restaurant Opex Structure (RONm) 955 771 619 514 Normalized EBITDA Net Profit 12 Note: 2019 result is excluding the impact of IFRS 16, unaudited.
Slide 13: Scalable Platform Allowing Efficient Roll-out
Scalable Platform Allowing Efficient Roll-out Restaurant / Unit Selection Criteria New Restaurant Opening Process Market Analysis Identify Best Locations Generators (leisure – e.g. shopping centres, cinemas or retail – Traffic Traffic & Market Research e.g. DIY, hypermarkets, furniture stores etc) P
Slide 14: Growth Opportunities: strategy based on four key pillars
Growth Opportunities: strategy based on four key pillars COVID-19 Adjustment • Postponement, not the abandonment of the development plan; renegotiations with YUM! • The scale of the business as well as agile adoption to realities have helped the group lower the expenses at 9M 2020 thus lowering the
Slide 15: Restaurant roll-out plan by brand: pre-pandemic estimates
Restaurant roll-out plan by brand: pre-pandemic estimates 2017 2018 2019 2020 2021 2022 Total Commitment 4 6 7 8 9 9 43 KFC Romania Target 7 7 7 10 10 10 51 Pizza Hut Commitment 5 5 7 8 9 - 34 (Dine-in & Delivery) Target 6 7 7 8 8 8 44 Commitment 2 3 5 - - - 10 Taco Bell Romania Target 2 3 5 2 2 - 1
Slide 16: Number of restaurants at year-end: pre-pandemic estimates
Number of restaurants at year-end: pre-pandemic estimates • Given the rapidly developing situation related to the COVID-19 pandemic as well as global uncertainty related to the second half of the year, the Group has not yet revised the development plans. • Possibility of postponing the 2020 targets
Slide 17: 9M 2020 Highlights
(Np) 9M 2020 Highlights
Slide 18: Sphera Franchise Group – 3Q 2020 Highlights
Sphera Franchise Group – 3Q 2020 Highlights Encouraging results in Q3 2020 • Q3 showed signs of gradual recovery from the onset of the COVID-19 pandemic as the consolidated sales grew with RON 91.6 million (+86.2%) compared to Q2 2020. • In September 2020, following the reopening of the Romanian eco
Slide 19: Sphera Franchise Group 9M-2020 Performance
Sphera Franchise Group 9M-2020 Performance RESTAURANT SALES EXPENSES (Restaurant + G&A) NORMALIZED EBITDA RON m RON m, excluding IFRS 16 RON m, excluding IFRS 16 648.8 -22.5% 694.3 -27.6% 67.2 502.9 -57.6% -20.1% 248.7 -20.5% 502.4 Q3 226.0 Q3 Q3 180.5 30.5 197.9 216.8 -45.8% 230.8 -54.0% Q2 -11.8%
Slide 20: Sales performance per country
Sphera Franchise Group 9M & Q3 20 Sales performance per country 9M 9M 69.0m 617.1m 3Q -17.5% -28.7% 216.2m -21.7% 65.9m 439.8m 3Q 169.3m 29.8m -11.9% 26.2m 9M 8.2m 3Q -30.3% 2.8m 5.7 m -15.4% 2.4m Values in RON. 2019 values on top of the map, 2020 on the bottom. 20
Slide 21: COVID-19 Adaptation in Q3 2020
COVID-19 Adaptation in Q3 2020 21
Slide 22: Q3 2020 Significant events: COVID-19 adaptation
Q3 2020 Significant events: COVID-19 adaptation MAXIMIZING REVENUES • Expansion of delivery services: in September KFC Romania launched a dedicated online ordering platform. • Continued enhanced cooperation with local food aggregators: o Romania: FoodPanda, Glovo, Tazz (EuCeManac), TakeAway; o Italy
Slide 23: Business Calibration: COVID-19 adaptation
Business Calibration: COVID-19 adaptation STAFF & STATE AID RELATED TO STAFF COSTS • As of 30.06.2020, estimated 22% of the restaurant employees in Romania were still in technical unemployment, which covered the expenses of 75% of the average national salary. As of 1.09, all the restaurant employees
Slide 24: Business Calibration: COVID-19 adaptation
Business Calibration: COVID-19 adaptation Financial • All the financing facilities accessed in H1 2020 to ensure working capital were still applicable throughout Q3 2020. • Group secured a new short-term working capital line of RON 9.6 million, which has not been activated to date, • Group continued
Slide 25: Brand Performance
(Np) Brand Performance
Slide 26: Active Stores: Evolution in Q3
Active Stores: Evolution in Q3 Restaurant count as of 30.09.2020 85 2 17 23 21 10 158 Operational restaurants - June ‘20 80 1 16 20 21 10 148 - September ’20 84 2 17 23 21 10 157 - October ‘20 85 2 17 23 21 10 158 • In Q3 2020, Group inaugurated 4 KFC stores – 3 in Romania and 1 in Italy. • So far i
Slide 27: Brand performance: KFC Romania
Brand performance: KFC Romania All-Store Performance KFC Romania • All-store sales dipped 9.9% Y/Y in Q1 2020, followed by 19.5% 18.9% 15.9% a steep decline of 51.6% Y/Y in Q2 2020, and partial 13.5% 12.6% recovery in Q3 2020 when it reached -17.1% Y/Y. Q1’20 Q2’20 Q3’20 9M’20 • Worst performance in
Slide 28: Brand performance: KFC Italy & Republic of Moldova
Brand performance: KFC Italy & Republic of Moldova All-Store Performance 11.4% Q2’20 Q3’20 9M’20 All-Store Performance KFC Italy Q1’20 • KFC Italy grew All-Store performance in Q1 2020 -11.7% -17.6% thanks to the opening of new locations between Q2 and Q4 2019. Same-store performance dropped -17.6%
Slide 29: Brand performance: Pizza Hut & Taco Bell
Brand performance: Pizza Hut & Taco Bell All-Store Performance Pizza Hut • All-store performance same with same-store performance 7.3% 7.3% 7.4% 7.5% 6.7% • All-store sales declined in Q1 2020 with -15.8%, Q1’20 Q2’20 Q3’20 9M’20 followed by steep plunge of -68.8% caused by the 2019 Q1’19 Q2’19 Q3’1
Slide 30: Key Q3 & 9M 2020 Financials
(Np) Key @3 & 9M 2020 Financials
Slide 31: 9M 2020 Result
9M 2020 Result Statement of Comprehensive Income at 9M (excluding IFRS 16 impact) • Restaurant sales down 27.6% in 9M 2020 compared to 9M 2019; expenses down by 22.8%. • Restaurant operating profit of RON 34.8 million in 9M 2020, 60.5% lower compared to 9M 2019. • 17.4% decrease in General & Adminis
Slide 32: Q3 2020 Result
Q3 2020 Result Statement of Comprehensive Income for Q3 (excluding IFRS 16 impact) • Q3 showed signs of gradual recovery from the onset of the COVID-19 pandemic as the consolidated sales grew with RON 91.6 million (+86.2%) compared to Q2 2020. • Restaurant sales down 20.5% in Q3 2020 compared to Q3
Slide 33: 9M 2020 – Restaurant Expenses
9M 2020 – Restaurant Expenses Restaurant Expenses lower by 27.6% in 9M 2020 vs 9M 2019 (excluding IFRS 16) • Restaurant expenses in 9M 2020 decreased by 22.8% due to: lower cost of food & material by RON 70.9 million (-30.1% compared to 9M 2019 – mainly volume related), payroll expenses by RON 52.4
Slide 34: 3Q 2020 – Restaurant Expenses
3Q 2020 – Restaurant Expenses Restaurant Expenses lower by 20.5% in Q3 2020 vs Q3 2019 (excluding IFRS 16) • In Q3 2020, the Group continued to implement significant cost-saving measures both at the restaurant level as well as at the level of G&A expenses. • Throughout Q3 2020, the Group benefitted
Slide 35: 9M 2020 – individual performance by companies from the group
9M 2020 – individual performance by companies from the group KFC Romania and Moldova ended Q3 2020 with a net profit (excluding IFRS 16 impact) • USFN Romania (KFC Romania), USFN Moldova (KFC Moldova) and CFF (Taco Bell) ended 9M 2020 with a positive normalized EBITDA. • USFN Romania and USFN Moldov
Slide 36: 9M 2020 – G&A Expenses
9M 2020 – G&A Expenses G&A Expenses lower by 17.4% (excluding IFRS 16) in 9M 2020 vs. 9M 2019 • In 9M 2020, G&A expenses of the Group decreased by 17.4% compared to 9M 2020. • Significant cost-saving measures taken in Q3 2020 alone as the Group lowered G&A costs by 32.6% compared to Q3 2019. • Bigge
Slide 37: Impact of IFRS 16 on 9M 2020 Results
Impact of IFRS 16 on 9M 2020 Results As a result of IFRS 16 adoption, normalized EBITDA increased to RON 29.3m in H1 2020 § Starting 1 January 2019, Sphera applies IFRS 16 that sets out the principles for the recognition, measurement, presentation and disclosure of leases. § At the commencement date
Slide 38: Forecasted 2020 R&E Budget
Forecasted 2020 R&E Budget 38
Slide 39: Forecasted 2020 Performance
Forecasted 2020 Performance • On 22.10.2020 the Group informed the market about the update to the forecasted budget for 2020. The new reflects the positive evolution of the Company since the lifting of the state of emergency in Romania, the primary market of the activity of Sphera Franchise Group, a
Slide 40: Q&A
Q&A
Slide 41: Thank you for your attention!
Thank you for your attention!
Sphera Franchise Group — Wood's Winter Wonderland 2020 on 6ix