Sphera Franchise Group Sa · BVB:SFG
Sphera Franchise Group Sa — FY2017 Earnings Presentation
34 slides from Sphera Franchise Group Sa's earnings presentation, Dec 15, 2017
Slide 1: Sphera Franchise Group Preliminary results: Year 2017
Sphera Franchise Group Preliminary results: Year 2017 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: Sphera – 2017 key events
Sphera – 2017 key events ▪ Strong sales & operational performance ▪ Double-digit same-store sales growth for the full-year ▪ Q4 same-store sales performance eased on cannibalisation impact, with some softening in customer spend facing leaping inflation ▪ Total net store openings: 15 (3 below plan on
Slide 4: Sphera at a glance: The Company's Value Proposition
Sphera at a glance The Company’s Value Proposition Marketing Locations Product Brands ▪ Careful selection of ▪ Cooperation with the ▪ Offering products ▪ Operating brands with a restaurants' location best specialists to popular among local successful market maximize the results of clientele recognit
Slide 5: Long-term growth strategy based on four key pillars
Sphera at a glance Long-term growth strategy based on four key pillars Text Maintain Strong Continue Organic Develop a Significant Expand Brand LFL Sales Growth Network Roll-out KFC Business in Italy Portfolio – Taco Bell Note: Size of segments do not constitute indication to their contribution to t
Slide 6: Sales performance by brands
(Np) Sales performance by brands
Slide 7: Brand performance: KFC Romania
Brand performance: KFC Romania Sales growth analysis 30% ▪ All-store sales growth of 17.7% Y/Y supported 26.4% mainly by same-store performance (11.9% 25% contribution); 20.6% ▪ The 11 net openings contributed 5.8% to the Y/Y 20% 18.0% 18.8% 17.7% All-store growth, with all but one in cities with ex
Slide 8: Brand performance: Pizza Hut
Brand performance: Pizza Hut Sales growth analysis ▪ All-store sales growth of 15.5% Y/Y, with a relatively uniform performance across quarters, of which 13.4pp was the contribution of the net 12 stores opened starting Jan-2016 (+44% network growth) All-store performance ▪ Same-store sales growth of
Slide 9: Development
(Np) Development
Slide 10: Restaurant openings in 2017
Development Restaurant openings in 2017 Total stores BoY Openings Plan Total stores EoY New store locations 65 8 10* 72 ▪ Romania: Bucharest (1x DT, 1x IL), Oradea (1x DT, 1x FC), Arad (1x FC), Valcea (1x FC) ▪ Italy: 2x FC -1 ▪ Closed stores: Romania (Oradea: 1x FC) 21 1 1 22 ▪ Galati (1x FC) 12 5
Slide 11: Significant Further Growth Opportunities: Total Restaurants at year-end
Significant Further Growth Opportunities Total Restaurants at year-end 241 250 221 14 14 194 200 12 77 166 69 10 150 139 61 113 5 34 116 53 32 2 46 98 25 100 87 39 17 76 33 9 27 3 23 116 50 106 96 86 79 72 60 65 53 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 (1) KFC KFC Italy Pizza Hut Taco Bell
Slide 12: Restaurants roll-out plan by brands
Significant Further Growth Opportunities Restaurants roll-out plan by brands 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 6 7 7 8 8 8 44 Delivery Target 5 5 5 6 6 6 33 Dine in Target 1 2 2 2 2 2 11 Commitment 2 3 5 - - - 10
Slide 13: Marketing/CSR
(Np) Marketing/CSR
Slide 14: Continuous activities to promote our brands
Marketing Continuous activities to promote our brands January February March April May June July August September October November December Note: (1) size of campaigns’ pictures are not an indication of exact duration of the respective campaign 14
Slide 15: Marketing Q4-2017 highlights
Marketing Q4-2017 highlights ▪ Christmas campaign focused on buckets with the aim to drive top line in Q4 whilst building on the freshness pillar and enjoyed higher sales mix Y/Y ▪ launched digital menu boards in the first two stores with the aim to continue roll-out throughout 2018. ▪ new brand web
Slide 16: Corporate Social Responsibility: Ongoing CSR campaigns & programs
Corporate Social Responsibility Ongoing CSR campaigns & programs ‘I want to go to high-school’ (with World Vision Romania) ‘Physics (taught) differently’ (with CEAE) EUR 140k raised in 2017, to finance school for 200 children “SOS Children’s Villages Bucharest” ‘Hospice, House of Hope’ 16
Slide 17: Corporate Social Responsibility: Replate Waste
Corporate Social Responsibility Replate Waste (partnership with Shutterstock US) We take all the food that’s left on the plates when people leave our restaurant and, with the help of a food stylist and photographer, we create new, stunning plates. Then, we take photos, we upload them on Shutterstock
Slide 18: Financials
Financials
Slide 19: Sphera – Financial reports in brief
Sphera – Financial reports in brief Consolidation perimeter 2016 2017 Expected impact on Sphera P&L Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Consolidated Pro forma J F M A M J J A S O N D J F M A M J J A S O N D Sphera - Consolidated financials ▪ Sales KFC Romania ▪ Restaurant expense KFC Moldova ▪ COGS KFC Italy ▪
Slide 20: Pro forma financials
(Rp) Proforma financials
Slide 21: Financial performance: Pro-forma Statement of comprehensive income
Financial performance: Pro-forma Statement of comprehensive income ▪ Pro forma sales up 20.3% Y/Y on strong performance from KFC Romania/Moldova and Pizza Hut and increasing contributions from t he new businesses (KFC Italy and Taco Bell); ▪ Restaurant operating profit up 7.0% Y/Y, with margin down
Slide 22: Breakdown of results by Group companies – year 2017
Financial performance: Pro-forma Breakdown of results by Group companies – year 2017 Data in RON'000 USFN (RO) ARS USFN (MD) USFN (IT) CFF SFG Cons.Adj ICO ellim . PPA Adj. SFG Cons. Restaurant sales 482,587 112,011 8,492 12,377 2,876 12,420 (11,958) (1) 618,804 Restaurant expenses 397,194 99,520 7,
Slide 23: Pro-forma Restaurant operating expenses
Financial performance: Pro-forma Restaurant operating expenses Change Percentage of sales Contribution to change in restaurant opex margin Data in RON thousand 2017 2016 2017/2016 2017 2016 Restaurant expenses 520,031 422,204 23.2% 84.0% 82.1% Food and material 219,232 183,409 19.5% 35.4% 35.6% Payr
Slide 24: Pro-forma G&A expenses
Financial performance: Pro-forma G&A expenses Change Percentage of sales Contribution to growth in G&A expense Data in RON thousand 2017 2016 2017/2016 2017 2016 General and administration 60,297 31,988 88.5% 9.7% 6.2% expenses (net), of which: Payroll and employee benefits 34,695 13,564 155.8% Thir
Slide 25: Overall guidance for 2018
Financial performance: Pro-forma Overall guidance for 2018 ▪ Sales ▪ Same-store sales: +6-8% ▪ All-store sales: 20-25% ▪ Restaurant operating margin ▪ Same-store margin: +0.5pp to 18.5% ▪ All-store margin: -1.0pp to 15.0%, of which impact from Depreciation: -0.8pp (3.3% of sales) ▪ G&A expenses ▪ 7.
Slide 26: Consolidated financials
(Wp) Consolidated financials
Slide 27: Sphera – Consolidated financial performance
Sphera – Consolidated financial performance Statement of comprehensive income ▪ Consolidated sales up 37.3% Y/Y on strong performance from KFC Romania (+17.7% Y/Y), while the consolidation of ARS (Pizza Hu t restaurants), starting with June 2017, contributed 15.9pp in the consolidated sales growth r
Slide 28: Consolidated financial performance: Statement of financial position
Sphera – Consolidated financial performance Statement of financial position All data in RON'000 31-Dec-17 31-Dec-16 All data in RON'000 31-Dec-17 31-Dec-16 Assets Equity and liabilities Non-current assets 176,123 54,246 Total equity 104,544 58,253 Property, plant and equipment 105,220 47,551 Equity
Slide 29: Appendix
(Np) Appendix
Slide 30: Sphera at a glance: Corporate structure
Sphera 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 holds the franchise holds the franchise holds the franchise holds the franchi
Slide 31: Leading restaurant group in Romania by sales, network and sector coverage
Sphera at a glance Leading restaurant group in Romania by sales, network and sector coverage 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) ✓ 80% spontaneous brand awareness among Romanian custo
Slide 32: 32
32
Slide 33: 33
33
Slide 34: 34
34
Sphera Franchise Group — FY2017 Earnings Presentation on 6ix