Sphera Franchise Group Sa · BVB:SFG
Sphera Franchise Group Sa — Wood & Co Frontier Investor Days 2020
39 slides from Sphera Franchise Group Sa's conference presentation, Sep 3, 2020
Slide 1: SFG Investor Presentation
SFG Investor Presentation 03-04.09.2020 | Wood & Co Frontier Investor Days 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 H1 2020 Highlights 3 COVID-19 Response 4 Brand Performances 5 Key H1 2020 Financials 6 Q3 2020 Gradual Recovery 7 Q&A session For further details We invite you to read the Full Director’s report which includes analysis of financial results, details our r
Slide 4: 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 157 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 5: 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 6: 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 7: 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 8: 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 9: 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 10: 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 11: Profitable Business Model (pre-COVID)
Profitable Business Model (pre-COVID) Sales Restaurant Opex Structure (RONm) 955 771 619 514 Normalized EBITDA Net Profit 11 Note: 2019 result is excluding the impact of IFRS 16, unaudited.
Slide 12: 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 13: 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 • The scale of the business as well as agile adoption to realities have helped the group lower the expenses in H1 2020 thus lowering the negative impact of the pan
Slide 14: 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 15: 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. • 250 Possibility of postponing the 2020 targ
Slide 16: H1 2020 Highlights
(Np) 112020 Highlights
Slide 17: Sphera Franchise Group – H1 2020 Highlights
Sphera Franchise Group – H1 2020 Highlights Swift response helped close H1 2020 performance well-above the RO market average • In COVID-19 context, HoReCa industry was hit the hardest as it faced direct cease-of-operations order from authorities. • Romanian Hotels and Restaurant Association, HORA an
Slide 18: Sphera Franchise Group H1-2020 Performance
Sphera Franchise Group H1-2020 Performance RESTAURANT SALES EXPENSES NORMALIZED EBITDA RON m RON m, excluding IFRS 16 RON m, excluding IFRS 16 445.6 422.8 -23.7% 36.7 -31.6% -95.6% 322.4 216.8 304.6 -45.8% 230.8 21.2 -54.0% 117.5 106.3 Q2 -109.4% Q2 Q2 206.0 214.7 -0.6% 15.5 -7.6% 198.3 204.8 -77.4%
Slide 19: H1-2020 Sales performance per country
Sphera Franchise Group H1-2020 Sales performance per country 401.0m 39.2m -32.5% -21.9% 270.6m 30.6m 5.4m -38.9% 3.3 m Values in RON. H1 2019 values on top of the map, H1 2020 on the bottom. 19
Slide 20: COVID-19 Response
(Sp) covip-t9Response
Slide 21: Markets of Activity: COVID-19 Developments
Markets of Activity: COVID-19 Developments • State of Emergency: 18.03.2020 – 14.05.2020. • State of Alert: 15.05.2020 – today. • SFG restricted restaurant operations on 18.03.2020 until 15.05.2020. • 15.05.2020 – restaurants with outdoor seating reopened. • 15.06.2020 – shopping malls open but clos
Slide 22: Business Calibration: Measures in response to COVID-19
Business Calibration: Measures in response to COVID-19 Maximizing Revenues • Change in strategy: enhanced cooperation with local food aggregators: o Romania: FoodPanda, Glovo, Tazz (EuCeManac), TakeAway; o Italy: Glovo, Deliveroo, Just Eat, UberEats; o Moldova: Straus (iFood pending). • Marketing ca
Slide 23: Business Calibration: Measures in response to COVID-19
Business Calibration: Measures in response to COVID-19 Staff Romania: • Technical unemployment covering 75% of average national salary implemented. Depending on the location, employees were sent either fully or partially into technical unemployment. • HQ kept oversight over the activity in the resta
Slide 24: Business Calibration: Measures in response to COVID-19
Business Calibration: Measures in response to COVID-19 Rent • In March 2020, the Group notified all the lessors to renegotiate or temporarily suspend the rental contracts and entered a detailed and extensive process of renegotiating rental agreements. • As of 30.06.2020, the amount of fixed rent dis
Slide 25: Brand Performance
(Np) Brand Performance
Slide 26: Active Stores: Evolution in H1
Active Stores: Evolution in H1 Restaurant count as of 30.06.2020 81 2 16 23 21 10 153 Operational restaurants - 22-Mar 29 1 0 0 15 0 45 - 14-May 46 1 10 5 15 5 82 - 30-Jun 79 1 16 21 21 10 148 • The number of active stores dropped drastically mid-March following the introduction of State of Emergenc
Slide 27: Brand Evolution in H1 2020
Brand Evolution in H1 2020 % of pre- pandemic sales* - March 51% 53% 18% 35% 72% 43% 47% - April 25% 21% 10% 0% 63% 0% 22% - May 49% 42% 40% 9% 72% 46% 46% - June 68% 42% 80% 24% 70% 61% 65% • Hardest hit in April, with no sales for Pizza Hut (dine-in) and Taco Bell. Recovery trend starting May. Sal
Slide 28: Key H1 2020 Financials
(Sp) Key H1 2020 Financials
Slide 29: H1 2020 Result
H1 2020 Result Statement of Comprehensive Income (excluding IFRS 16) • Sales down 31.6% in H1 2020 compared to H1 2019; expenses down by 23.8%. • Restaurant operating profit of RON 6.7 million in H1 2020, 86.5% lower compared to H1 2019. • The 8.2% decrease in General & Administrative expenses, help
Slide 30: H1 2020 – Restaurant Expenses
H1 2020 – Restaurant Expenses Restaurant Expenses lower by 25% in H1 2020 vs H1 2019 (excluding IFRS 16) • Except for other operating expenses and depreciation and amortization, all the restaurant expenses have decreased significantly. • The rent costs (without IFRS 16) decreased by 7,4% compared to
Slide 31: H1 2020 – G&A Expenses
H1 2020 – G&A Expenses G&A Expenses lower by 8.2% (excluding IFRS 16) in H1 2020 vs H1 2019 Data in RON ‘000 Percentage of sales H1-20 H1-20 H1-19 H1-19 Change (%) H1-20 H1-20 H1-19 H1-19 2020/ 2020/ (1) (2) (1) (2) (1) (2) (2) (2) 2019 (1) 2019 (2) General and 23,915 24,447 26,410 26,632 -9.4% -8.2
Slide 32: H1 2020 – individual performance by companies from the group
H1 2020 – individual performance by companies from the group USFN (KFC) Romania and Moldova ended H1 2020 with a net profit (excluding IFRS 16) • USFN Romania and USFN Moldova closed H1 2020 on operating profit, corresponding to a net profit of RON 7.4 million. • The rest of the Group entities ended
Slide 33: Impact of IFRS 16 on H1 2020 Results
Impact of IFRS 16 on H1 2020 Results As a result of IFRS 16 adoption, normalized EBITDA increased to RON 29.3m in H1 2020 H1-20 H1-20 Including Excluding Impact of Data in RON’000 impact of impact of IFRS § Starting 1 January 2019, Sphera applies IFRS 16 that sets IFRS16 IFRS16 Adoption out the prin
Slide 34: Q3 2020 Gradual Recovery
(Np) 23 2020 Gradual Recovery
Slide 35: Key indicators of gradual recovery – Q2 & Q3 2020
Key indicators of gradual recovery – Q2 & Q3 2020 35
Slide 36: Key indicators of gradual recovery – March + Q2 + Q3
Key indicators of gradual recovery – March + Q2 + Q3 To support the Group’s confidence in the improving situation, we exceptionally provide estimates showcasing the increasing trend in sales as registered in July 2020 and August 2020 (estimated data as of August 26th, 2020). 90% • On the adjacent gr
Slide 37: Ongoing business evolution
Ongoing business evolution Further Support Measures in Romania • On 29.05.2020, the Emergency Ordinance no. 92/2020 on the application of support measures for the Romanian employees and employers in the context of SARS-CoV-2 coronavirus, as well for the amendment of legislation was published in the
Slide 38: Q&A session
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Slide 39: Thank you for your attention!
Thank you for your attention!
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