Post on 20-May-2020
1
Company presentation – Dec-2019
Sphera Franchise Group
2
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 this presentation nor anything in it shall form the basis of any contract or commitment. This presentation is not intended to be relied upon as
advice or recommendation to investors or potential investors and does not take into account the investment objectives, financial situation or needs of
any investor.
All investors should consider this presentation in consultation with a professional advisor of their choosing when deciding if an investment is
appropriate.
Sphera has prepared this presentation based on information available to it, including in-formation derived from public sources that have not been
independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness
or reliability of the information, opinions or conclusions ex-pressed herein.
This presentation should not be considered a comprehensive representation of Sphera's business, financial performance or results.
This presentation may contain forward-looking statements. These statements reflect Sphera’s current knowledge and its expectations and projections
about future events and may be identified by the context of such statements or words such as “anticipate,” “believe”, “estimate”, “expect”, “intend”,
“plan”, “project”, “target”, “may”, “will”, “would”, “could” or “should” or similar terminology.
Sphera undertakes no obligation to update or revise these forward–looking statements to reflect events or circumstances that arise after the date made
or to reflect the occurrence of unanticipated events. Inevitably, some assumptions may not materialize, and un-anticipated events and circumstances
may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant
business, economic and competitive risks.
Therefore, the final results achieved may vary significantly from the forecasts, and the variations may be material.
3
Sphera Franchise Group At a Glance
Leading Food Service Operator in Romania
0.7%
Normalized
EBITDA
growth(2)
1st
Full Service
Restaurant
Operator
150
Restaurants(1)
Track Record of
Rapid and
Profitable
Growth
RON 24.3m
Net profit
-25% yoy
12.0%
LfL(3) restaurant
sales growth
17.1%
Increase in no.
of restaurants
2018 pro forma results 3-year CAGR
RON 771m
Restaurant sales
+24.6% yoy
24.0%
Restaurant sales
growth
RON 72.4m
Normalized
EBITDA(2)
+4.5% yoy
9.4%
Normalized
EBITDA
margin(2)
25 Years of
Operation
Source: Pro-forma IFRS financial information
Notes: (1) As of 30-Nov-2019 ; (2) After excluding certain one-off expenses; (3) LfL performance for the reporting year is calculated by taking into account all the restaurants that have been in uninterrupted operation
from the beginning of the preceding year to the end of the reporting year
2nd
Quick Service
Restaurants
Operator
4
61
21
15
Number of Locations (split per brand / restaurant format)2
Sphera at a glance
❑ Sphera is one of the leading food operators in Romania(1), operating also
through its subsidiaries in Moldova and in Italy
❑ Sphera was incorporated in May 2017 to consolidate all brands operated by
the Group, namely KFC, Pizza Hut Dine-In and Pizza Hut Delivery under one
company
❑ In 2017, Sphera secured the franchise for operation of Taco Bell restaurants
in Romania
❑ In 2017, Sphera opened its first two KFC restaurants in Italy and is already the
largest KFC operator in Italy
❑ KFC Romania, KFC Italy, Pizza Hut, Pizza Hut Delivery Romania and Taco
Bell Romania operate under the Yum International Franchise Agreement
Introduction to Sphera Franchise Group Geographical Footprint
Notes: (1) first in FSR and second in QSR, in terms of sales, (2) As of 30-Nov-2019
Bucharest
2
133
29
11
15
KFC
PH
Pizza Hut
Delivery
Source: Company Inforrmation
Food Court In Line Drive-through KFC restaurants
PH and PH Delivery restaurants
Taco Bell restaurants
4 Taco Bell
7
1
20
3
9
13
59 Total
15
5
❑ holds the franchise
rights to operate KFC-
branded restaurants in
Moldova
❑ holds the franchise
rights to operate KFC-
branded restaurants in
certain regions of Italy
❑ holds the franchise
rights to operate Taco
Bell-branded
restaurants in Romania
❑ holds the franchise
rights to operate Pizza
Hut-branded restaurants
in Romania (Pizza Hut
Dine-In and Pizza Hut
Delivery)
❑ holds sub-franchise
rights
❑ holds the franchise
rights to operate KFC-
branded restaurants in
Romania
Sphera at a glance
US Food Network S.A.American Restaurant
System S.A.
California Fresh Flavors
S.R.L.
US Food Network S.R.L.
- Italy
US Food Network
S.R.L. - Moldova
99.9% 99.9% 99.9% 100% 80%
Corporate structure
6
Key Investment Highlights
1 2
3
4
56
7
8
Logo/Text
Leading food service
group operating a
portfolio of internationally
recognized brands
Operational
excellence proven by
consistent top ranked
among YUM
franchisees in Europe
Significant further growth
potential in Romania and
massive white space
opportunity in Italy
Enhanced marketing
capabilities investing
directly into notable
successful marketing
campaigns
Solid macroeconomic
environment in
Romania and favorable
trends in the restaurant
sector
Proven network roll-
out capabilities with
long track record of
successful growth
Highly profitable
business model with
strong cash generation
Scalable platform
with fully fledged
process in place
allowing efficient
roll-out
7
Leading Foodservice Group in Romania
#2
#1
#2
QSR
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)
✓ 83% spontaneous brand awareness among Romanian
customers (YE 2018)
✓ customer base consists mainly of young and
middle-aged people (78%), mostly educated
(at least 35% high school), with an average
household income
✓ 80 restaurants in Romania
as of 30-Nov-2019
player on the FSR segment
(nearly 3% market share)
#3 player on the overall chained
foodservice market (7% market share)
✓ C. 60% spontaneous brand awareness among
Romanian customers
✓ customer base consists mainly of young and middle-
aged people (78%), mostly educated (at least 41% high
school & 32% university), with a focus on families with
an average to medium-high household income
✓ 23 restaurants as of 30-Nov-2019
player on the Home delivery segment (nearly 21%
market share)
✓ Order accessibility: classic call center lines,
dedicated website platform, mobile
application
✓ 22 restaurants as of
30-Nov-2019
✓ C .35% electronic orders
Source: Company information; Euromonitor, Consumer Foodservice in Romania, May 2017; Deloitte Analysis
✓ First Taco Bell was opened in
Oct-2017 in Bucharest
✓ 8 restaurants as of 30-
Nov-2019
Sphera in the Romanian Foodservice Market
8
Leading Foodservice Group in Romania
Market Structure and Competitive Overview
Source: Euromonitor, Consumer Foodservice in Romania, 2018.
KFC: no. 2 but growing faster
FSR: Pizza Hut Dine-in no. 1 and increasing distance vs no. 2 Delivery: Pizza Hut Delivery no. 1
36%
33%
16%
12%
3%
Full-Service Restaurants
Cafés/Bars
Limited-Service Restaurants
Street Stalls/Kiosks
Self-Service Cafeterias
18%
82%
Chained Independent
RON22.0b sales
970m transactions
Source: Euromonitor, Consumer Foodservice in Romania, 2018. Source: Euromonitor, Consumer Foodservice in Romania, 2018.
Source: Euromonitor, Consumer Foodservice in Romania, 2018.
# Brand Product offering 2018 Mk share ‘13-’18 var. +pp.
1Burgers, Chicken,
Salads, Desserts22.6% -4.0%
2Chicken, Burgers,
Salads, Desserts16.1% +3.2%
3 Greek food 3.3% +2.8%
4 Salads 2.8% +2.0%
5 Turkey kebabs 2.5% +1.5%
Top 5 47.5% 5.5%
# Brand Product offering 2018 Mk share ‘13-’18 var. +pp.
1 Pizza, Pasta, Burgers 2.7% +0.4%
2Pizza, Pasta,
traditional Italian food0.5% -0.1%
3 Pizza, Pasta, Burgers 0.5% +0.5%
4Traditional Serbian
food0.4% 0.0%
5Grill, Romanian and
Moldavian cuisine0.4% +0.4%
Top 5 4.8%
# Brand Product offering 2018 Mk share ‘13-’18 var. +pp.
1 Pizza 2.0% +0.9%
2 Pizza 1.5% 0.0%
3 Pizza 1.4% +0.9%
4 Pizza 1.1% +0.6%
5 Pizza 0.8% -0.1%
Top 5 69.8%
Chained players generates below 20% of sector sales
9
330413
503635
76
97
112
1233
12
0
100
200
300
400
500
600
700
800
900
2015 2016 2017 2018
KFC Pizza Hut Taco Bell
Successful Track Record of Growth
Sustained Growth Across All Brands
Coupled with Strong and Resilient LfL Growth
KFC remaining the key contributor at ca. 82% of revenues
Source: Company information, Consolidated Pro Forma Financial Statements.
CAGR 2015-2018 24.0%
Note: (1) Includes KFC restaurants in Romania, Moldova and Italy. (2) As of 30-Nov-2018.
1 1 1 1 2 3 5 7 1118 23
32 37 40 4349 52 53
5965
72
88
1 1 1 1 3 3 3 3 3 3 44
5
11
1313
1313
15 14 14
18
21
22
23
1
34
78
10 9 9
9
12
17
22
2
5
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
KFC Pizza Hut Dine-In Pizza Hut Delivery Taco Bell
Long Track Record of Successful Network Development
First KFC
in Romania
First KFC
outside
Bucharest
First Drive
Thru KFC
(Sibiu)
First Pizza
Hut
Delivery in
Romania
First Pizza
Hut outside
Bucharest
First Pizza
Hut Delivery
outside
Bucharest
First Pizza
Hut in
Romania
First KFC
in Rep.
Moldova
1 1 1 2 4 4 4 5 6 8
1115
23
35
48
54
6064
74 75 76
86
98
113
(1)
Initial Phase
Acceleration Phase
Transformation Phase
Development Phases
Sphera
holding
company
created
First KFC
in Italy
First Taco
Bell in
Romania
138
19.0%
17.0%
12.5%11.0%
10.0%
13.0%
3.1%
0.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2015 2016 2017 2018
KFC Pizza Hut
10
80.2% 82.1% 84.1% 86.7%
0.0%
50.0%
100.0%
406
514
619
771
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
2015 2016 2017 2018
Profitable Business Model
Sales Restaurant Opex Structure
(RONm)Change
‘18 vs ‘15
6.5%
(% of sales)
Source: Company information, Consolidated Pro Forma Financial Statements
Note: (1) After excluding certain one-off expenses;
+0.5%
+5.0%
(0.1)%
0.0%
0.0%
+0.9%
+0.1%
67.9 73.5 69.3 72.4
16.7%
14.3%
11.2%9.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2015 2016 2017 2018
Normalized EBITDA(1)
(RONm) Margin (%)
47.351.6
32.624.3
11.7%
10.0%
5.3%
3.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
2015 2016 2017 2018
Net profit
(RONm) Margin (%)
35.2% 35.6% 35.4% 35.7%
16.0% 17.9% 19.7% 21.0%
7.2%6.9% 7.4% 7.1%5.9%5.9%
5.9% 5.9%5.2%5.2%
5.3% 5.3%8.1%8.2%
7.9% 9.0%2.6%2.4%
2.5%2.7%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2015 2016 2017 2018
Food and material expenses Payroll and employee benefits
Rent Royalties
Advertising Other operating expenses, net
Depreciation and amortisation
11
Identify locations around
Residential
areas
Traffic
Scalable Platform Allowing Efficient Roll-out
New Restaurant Opening ProcessRestaurant / Unit Selection Criteria
Market Analysis
Identify Best Locations
Traffic & Market Research
Project Management
Architects & Designers
Contractors & Vendors
Generators
(leisure – e.g. shopping
centres, cinemas or retail –
e.g. DIY, hypermarkets,
furniture stores etc)
Construction
Grand Opening
12
Operational Excellence as Top Ranked YUM Operator
Constant top ranker in YUM’s
European Franchisee Business
Units (EFBU) tables
✓ First place in CEE Guest Experience Survey (GES),
Leader out of 17 KFC markets
✓ 4 restaurants in Top 10 GES – Overall Satisfaction, out of
a total of 472 restaurants
#1
2016
2015
2014
2013
✓ Transition to GES; third place in CEE out of 15 KFC Markets
✓ 51 restaurants in Target – Overall Satisfaction
✓ First place in EFBU out of 11 KFC Markets
✓ 10 restaurants with maximum score
✓ First place in EFBU out of 12 KFC Markets
✓ 7 restaurants with maximum score
…due to excellent operational results
enabling a successful growth strategy!
KFC: most
loved QSR
brand in
Romania (1)
significantly closed the gap on McDonalds over last five
years: closest penetration levels to McDonalds in the region &
one of few markets in CEE successfully opening restaurants in
cities <100k inhabitants
# of total restaurants at year end in Romania
63 68
57 67
52 67
51 65
vs.
➔
developed successful
model for PH Dine-In
and Pizza Hut
Delivery enabling
expansion outside
capital city; resumed
expansion (for PH in
2015 and for Pizza Hut
Delivery in 2016)
+25 in 5Y +14 in 5Y
Note: (1) Sphera market surveys, Brand Image Tracker (YUM)
2017 68 71
✓ Third place in CEE Guest Experience Survey (GES) out
of 16 KFC markets
2018 76 79
✓ Fourth place in CEE Guest Experience Survey (GES)
out of 17 KFC markets (Moldova – 3rd place)
13
Enhanced Marketing Capabilities
Key Objectives
▪ Enhancement of marketing expenditure across
all brands results in increased brand awareness
and customer loyalty
▪ Working with award-winning partners for both
advertising and public relations
▪ Increased technology and digital focus across all
brands with online ordering topping 25% of Pizza
Hut Delivery sales, significantly above competition
▪ Optimised channel-mix and focus on the right mix
of objectives delivers business results
Marketing Strategy Highlights
Source: Company information and Deloitte Analysis
Contractual
obligation YUM to
invest at least 5% of
sales in marketing
Increase customer’s awareness of the
Company’s brands and loyalty to its product offering
Attract new customers in markets where Sphera
is present
Encourage existing customers to visit Sphera’s
restaurants more frequently
➢ Advertising produced in Romania with local
consumer insights to drive core messages
➢ KFC now has 48 weeks a year on TV, with PH
also on TV with 5 campaigns on average each
year
✓ KFC - the most loved brand in the sector
ahead of McDonald’s (one of the few countries
globally achieving this position)
✓ Pizza Hut benefits from the highest
awareness among key chains
14
Significant Further Growth Opportunities
Note: Size of segments do not constitute indication to their contribution to the overall growth.
Text
Long-term growth strategy based on four key pillars
Maintain Strong LFL Sales Growth
Continue Organic Network Roll-out
Develop a Significant KFC Business in Italy
Expand Brand Portfolio – Taco Bell
15
Significant Further Growth Opportunities
Key drivers:
➢ Macroeconomic backdrop to
remain highly supportive
➢ Continue to deliver strong
marketing
➢ Product innovation
➢ Price campaigns
❑ LfL performance for the reporting year is calculated by taking into account all the restaurants that have
been in uninterrupted operation from the beginning of the preceding year to the end of the reporting year
Maintain strong like-for-like growth on a supportive macroeconomic environment
19.0%
17.0%
12.5%
11.0%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2015 2016 2017 2018
10.0%
13.0%
3.1%
0.4%
0%
2%
4%
6%
8%
10%
12%
14%
2015 2016 2017 2018
16
2017 2018 2019 2020 2021 2022 Total
KFC RomaniaCommitment 4 6 7 8 9 9 43
Target 7 7 7 10 10 10 51
Significant Further Growth Opportunities
❑ Estimated market potential of ca. 30 restaurants
❑ Expand Pizza Hut Dine-in networks outside
Bucharest targeting major cities with a population
of below 200k
❑ Test latest YUM latest design and décor elements
in refurbishment of Flagship restaurant in
Bucharest (Sep 2017)
❑ Aim to cascade key elements to all new or
refurbished restaurants
KFC Network
❑ Continue development of KFC network to capture
market estimated potential of ca. 120 restaurants
over the next 5 years
❑ Future development with focus on Drive Thru (“DT”)
format in both Bucharest and outside the capital city
❑ Viability of DT format proven by McDonalds
expansion
❑ Smaller Drive Thru restaurant format in order to
enter smaller cities
❑ Estimated market potential of ca. 40 restaurants
❑ Growth aimed at targeting cities with population of below
150k
❑ Additional growth boost via sub-franchised locations –
with focus on smaller cities
Pizza Hut Dine-In Pizza Hut Delivery
Network roll-out plans (number of restaurants)
Continue organic network roll-out in Romania via distinct directions to capture
still existing market development potential
Pizza Hut
(Dine-in & Delivery)
Commitment 5 5 7 8 9 - 34
Target 6 7 7 8 8 8 44
17
1) Identify and develop restaurant locations within the areas
of operation that Sphera’s has already secured by the end
of 2022
2) Develop a sizeable KFC network in North East Italy and
Piemonte, and also secure further geographic
opportunities in the North of the country as they come
available
3) Build a diversified portfolio of restaurants, including initially
Food Courts, but further on Drive Thrus, as well as Flag
Ship / In Line restaurants, when the opportunity arises
4) Hire and retain a dedicated management team
headquartered in Milan to drive business and network
expansion in the country
Significant Further Growth Opportunities
Opportunity for Italian Market
❑ 3rd largest national economy in the Eurozone and the world’s 8th largest economy
❑ Top tourist destination in Europe and the world: 51 m. tourists/year, ranking 5th in the
world in terms of tourist incomings per year and 7th in terms of value (tourism receipts)
❑ Northern part of the country is most developed (highly industrialized, lower
unemployment rate and higher per capita income)
❑ Foodservice industry dominated by independent operators, but during the economic
crisis, the number of independent food service operators declined, while chain restaurants
increased their revenues
❑ Franchise chains benefits from brand awareness, marketing, activities and technical
and management support
❑ Growth in QSR is a feature of eating out market representing an opportunity for a brand like
KFC to gain market share from full service restaurants
❑ Italians are changing their food consumption behavior, with food habits switching from
“traditional home country” leading to market opportunities for KFC and QSR players
❑ Proof of concept, American branded chains have strongly penetrated the Italian market
(e.g. McDonalds with over 550 restaurants, and Burger King with over 140 restaurants)
Sphera’s Strategy for Italy
Network Roll-out Plans (number of restaurants)
2017 2018 2019 2020 2021 2022 Total
KFC North East Italy
and Piemonte
Commitment 3 6 8 7 7 1 32
Target 3 6 8 8 7 2 34
Develop a significant KFC business in Italy to become the largest KFC operator in
the country
18
5543 35 32 26 25 22 13 8
-4 -3 -3 -4 -6 -9 -9 -17 -16-20
-3
14
31
48
65
Romanian Italian Greek French Turkish Mexican American Chinese Lebanese
I would definetly try it I would definetly not try it
Attitude to a new QSR chain by type of cuisine, Nov 2015, %, N=1,500
Good Perception of Mexican Food by the Romania consumer
Taco Bell
❑ Develop Taco Bell as the contemporary, dynamic Californian brand,
opening 14 restaurants in the initial 3 and thereafter growing the brand
steadily across the country
❑ Focus initial development in Bucharest and the more affluent cities over
200k population
❑ Planned restaurants will be located at malls, other types of restaurants
(In Line, drive through) will be considered in the future
Developing Taco Bell
Significant Further Growth Opportunities
2017 2018 2019 2020 2021 2022 Total
Commitment 2 3 5 - - - 10
Target 2 3 5 2 2 - 14
Network Roll-out Plan (number of restaurants)❑ Romanians are in general willing to try Mexican food and would like to see
more variety in foodservice offering – e.g. more than American
High market potential as QSR brand with scalability
Taco Bell most profitable QSR brand in the US
Spicy food meets Romanian taste preferences
Restaurant profile / customer profile similar to KFC
Brand focuses on young consumers / social media
Expand brand portfolio through the launch of Taco Bell in Romania
19
Significant Further Growth Opportunities
KFC RomaniaCommitment 4 6 7 8 9 9 43
Target 7 7 7 10 10 10 51
Taco Bell RomaniaCommitment 2 3 5 - - - 10
Target 2 3 5 2 2 - 14
KFC Italy (North-East
& Piemonte)
Commitment 3 6 8 7 7 1 32
Target 3 6 8 8 7 2 34
Restaurants roll-out plan by brands
TOTAL OPENINGSCommitment 14 20 27 23 25 10 129
Target 18 23 27 28 27 20 143
2017 2018 2019 2020 2021 2022 Total
Pizza Hut
(Dine-in & Delivery)
Commitment 5 5 7 8 9 - 34
Target 6 7 7 8 8 8 44
20
Significant Further Growth Opportunities
Total Restaurants at year-end
5360 65
7279
8696
106116
3
9
17
25
32
34
23
27
33
39
46
53
61
69
77
2
5
10
12
14
14
0
50
100
150
200
250
2014 2015 2016 2017 2018 2019 2020 2021 2022
KFC KFC Italy Pizza Hut Taco Bell
Notes: (1) Includes KFC Romania and KFC Moldova
(1)
76
87
98
116
139
166
194
221
241
113
138
Full-year results: 2018
22
Sphera – 2018 key events
▪ Consolidated financial results Full-year 2018
RONm Y/Y* Margin
▪ Sales 717.2 +34.5%
▪ Restaurant profit 103.2 +11.5% 13.4%
▪ Normalized EBITDA 72.4 +10.3% 9.4%
▪ EBITDA 51.6 +0.4% 6.7%
▪ Net Profit 24.0 (22.8)% 3.1%
All-store sales up 34.5% with same-store sales growth of 9.0%
▪ continued strong growth from KFC, increasing contributions from KFC Italy and Taco Bell
Total store openings: 25 (8x KFC Romania, 8x KFC Italy, 1x PH, 5x PHD, 3x TB) ➔ Network size: 138 @ 31-Dec-2018
▪ 2018 store opening target missed by 1 store; 2 Stores planned for December postponed due to mall opening delay
KFC and Pizza Hut continue to lead top of mind awareness in Romania; strong operational performance with all brands
performing well in league tables measuring operational metrics and customer feedback
KFC delivery services significantly extended in Bucharest and introduced in other cities; now operating 16 stores in Bucharest
(covering 70% of the city) and a further 5 stores outside Bucharest (3 in Cluj & 2 in Oradea) with growing contribution to sales
Pizza Hut Dine-In new menu rolled out in all restaurants, supported by strong marketing campaign with TV coverage resulting in
significant bounce back of sales by high single-digit growth. Pizza Hut Delivery experienced slow down in H2 due to aggressive
growth of aggregators
Italy ahead of growth plan with 10 stores open by 2018 YE with strong pipeline for 2019, including a contract signed with Grandi
Stazioni to provide accelerated development plan in Italy, over and above current geographies
Significant subsequent event: New CEO and CFO to assume roles starting May-2019
Taco Bell development target fully reached, including the first store opened outside Bucharest (Cluj, Q4 2018)
23
▪ Unemployment rate fell below 4% in Q4-2018
▪ Average salary increased 9.7% in 2018 and 42% since
2015, with 2019 growth expected at around 8-10%
Macro environment has become more challenging
Significant pick-up in CPI, strong salary growth and record low unemployment
▪ CPI has fallen 2pp since June peak to below 3.5% but
expected to resume growth on energy and salary spikes
▪ Retail sales volume Y/Y growth remained stable at around
5% in Q4-2018, with full-year average at around 6%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Jan-15 Jan-16 Jan-17 Jan-18
Annualized CPI
0%
1%
2%
3%
4%
5%
6%
7%
8%
Jan-15 Jan-16 Jan-17 Jan-18
Unemployment rate
0%
5%
10%
15%
20%
25%
30%
Jan-15 Jan-16 Jan-17 Jan-18
Annualized average and minimum gross salaries (Y/Y% growth rates)
Average gross salary
Minimum gross salary
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Jan-15 Jan-16 Jan-17 Jan-18
Retail sales (mainly food & drinks) - Y/Y%
0%
20%
40%
60%
80%
100%
0
1,000
2,000
3,000
4,000
5,000
6,000
Jan-15 Jan-16 Jan-17 Jan-18
Salaries
Average gross salary (Y/Y% change) - rhs
Average gross salary
Minimum salary
(RON) (Y/Y%)
Sales performance by brands
25
Brand performance: KFC Romania
Sales growth analysis
Same-store
performance
All-store
performance
▪ All-store sales growth of 21.5% Y/Y in FY-2018
supported mainly by same-store growth of 11.0%;
▪ The 13 net openings (since Jan-2017) contributed
11.5pp to the Y/Y growth in FY-2018, with six of
these openings being in new cities.
▪ Same-store sales growth of 11.0% Y/Y in FY-2018
on the back of continued strong performance from
the Drive-Thru format, as well as a better
performance of the restaurants located outside
Bucharest;
▪ Delivery launched in 21 stores during 2018 with
increasing impact on sales growth;
▪ Average ticket was up 11.0% and transactions
were flat in FY-2018 vs FY-2017.
17.0%
12.5%
11.0% 10.7%
15.6%
14.0%
9.9%
11.8%
8.5%
11.4%12.3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2016 2017 2018 Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
26.4%
17.7%
21.5%
18.0%
20.6%18.8%
14.0%
19.6%20.1%20.4%
23.2%
0%
5%
10%
15%
20%
25%
30%
2016 2017 2018 Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
26
Brand performance: Pizza Hut
Sales growth analysis
Same-store
performance
All-store
performance
▪ All-store sales growth of 9.5% Y/Y in FY-2018,
with virtually all growth being contributed by the 12
stores opened starting Jan-2017 (of which 7 in
existing cities);
▪ Same-store sales grew 0.4% Y/Y in FY-2018, with
an improving performance from the Dine-In format
(supported by a dedicated advertising campaign
for the promotion of the new product menu) being
offset by weaker Delivery sales (due to both new
store sales cannibalization and the increasing
presence of food aggregators);
▪ Average ticket was up 9.6% and transactions were
down 8.4% in FY-2018 vs FY-2017.
13.0%
3.1%
0.4%1.4%
5.6% 5.4%
0.6%1.6%
-2.0%
1.1% 0.7%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
2016 2017 2018 Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
28.0%
15.5%
9.5%
16.8%16.6%14.9%
14.1%
9.8%8.4%
11.4%
8.5%
0%
5%
10%
15%
20%
25%
30%
2016 2017 2018 Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Development
28
Development
Restaurant openings in 2018
Openings
2018
8
5
3
1
25
Total stores
end-2018
78
22
5
23
138
2018 Initial
Plan (2)
9(1)
26
3
2
5
(1) Of which 2x KFC Romania and 1x KFC Italy were part of the 2017 plan.
Total stores
BoY
70
17
2
22
113
Difference vs
plan
(1)
0
0
(1)
(1)
8 10 7(1)2 1
29
KFC Bucharest Sun Plaza (DT)
30
KFC Italy – Venice Santa Lucia
31
Pizza Hut Dine-in Craiova
32
Pizza Hut Delivery Brasov
33
TB Bucharest Park Lake
Brand news
35
Brand news
2018 highlights
▪ KFC’s marketing strategy continued to blend value-oriented campaigns (such as Smart Menu and Ceva/Something) with
innovations (Teriyaki product platform, BoxMaster), sharing offers (Christmas buckets) and new consumption occasions, leading to
another year of double digit same-store sales growth;
▪ Activities to build KFC as a digital brand have been significantly enhanced by making the brand more relevant for the millennials
(Studycoins, online “smart job” platform, Social Me and FriendZone social entertainment channels, ;
▪ Delivery services expanded to 16 stores in Bucharest (covering 70% of the city) and introduced in Cluj and Oradea as well,
generating incremental sales;
▪ Roll-out of kiosks completed in 6 stores and digital menu-boards completed in 24 stores;
▪ New menu (designed in cooperation with chef Nico Lontras) rolled out in all dine-in restaurants by the end of Q2, being later
supported by strong marketing campaign with TV coverage resulting in significant bounce back of sales by high single-digit growth.
▪ Pizza Hut Delivery experienced slow down in H2 due to aggressive growth of aggregators; overall online orders stabilizing at
around 35% of delivery sales;
▪ Taco Bell continued to build brand equity and top line by opening three new stores in 2018, including the first one outside Bucharest
(in Cluj);
▪ Launch of the online platform “Proud supporters of beginners” as a brand manifesto for the Live Mas philosophy, while being
relevant and insightful for the Romanian consumers;
▪ Exceeded the development commitment in Italy by reaching 10 stores at the end of 2018
▪ Further development outside current geographies already achieved, following the signing of a contract with Grandi Stazioni and
opening of a store near Florence (Il Gigli, one of the busiest commercial centers in Italy)Italy
Pro forma financials
Note:
FY-2018 pro forma results are identical to consolidated results
FY-2017 pro forma results include ARS performance for the full period
FY-2017 consolidated results do not include ARS performance for Jan-May period
38
Financial performance: FY-2018 (Consolidated) vs FY-2017 (Pro-forma)
Statement of comprehensive income
▪ Pro forma sales up 24.6% Y/Y on strong performance from KFC Romania/Moldova (+21.5% Y/Y) and Pizza Hut (+9.7% Y/Y) and increasing contributions
from the new businesses (KFC Italy and Taco Bell);
▪ Restaurant operating profit up 4.5% Y/Y, with margin down 2.6pp, especially on cost of food and other operating expenses (mainly, new openings and new
areas of business)
▪ excluding KFC Italy and Taco Bell, restaurant operating profit margin would have higher by 1.2pp to 14.6%;
▪ G&A expenses up 21.1% Y/Y, reaching 9.5% of sales; normalized G&A expenses up 13.5% Y/Y, reaching 6.8% of sales;
▪ Normalized EBITDA* up 4.5% Y/Y and normalized EBITDA margin contracted 1.8pp to 9.4% of sales, virtually due to higher restaurant expenses;
▪ excluding KFC Italy and Taco Bell, normalized EBITDA margin would have higher by 1.6pp Y/Y to 11.0%;
▪ EBITDA fell 6.2% Y/Y and EBITDA margin contracted 2.2pp to 6.7% of sales;
▪ Net profit was down 25.5% Y/Y and net profit margin fell by 2.1pp to 3.1% of sales.
Y/Y% % of Sales
Data in RON'000 Dec-18 Dec-17 2018/2017 Dec-18 Dec-17 Δ%
Restaurant sales 771,197 618,804 24.6%
Restaurant expenses 668,018 520,031 28.5% 86.6% 84.0% 2.6%
Food and material 275,497 219,232 25.7% 35.7% 35.4% 0.3%
Payroll and employee benefits 161,874 121,623 33.1% 21.0% 19.7% 1.3%
Rent 54,372 45,512 19.5% 7.1% 7.4% -0.3%
Royalties 45,532 36,567 24.5% 5.9% 5.9% 0.0%
Advertising 41,059 32,727 25.5% 5.3% 5.3% 0.0%
Other operating expenses, net 69,227 48,720 42.1% 9.0% 7.9% 1.1%
Depreciation and amortization 20,458 15,650 30.7% 2.7% 2.5% 0.1%
Restaurant operating profit 103,179 98,773 4.5% 13.4% 16.0% -2.6%
General and administration expenses, net 73,048 60,297 21.1% 9.5% 9.7% -0.3%
Operating profit 30,131 38,476 -21.7% 3.9% 6.2% -2.3%
Finance costs 3,102 2,306 34.5% 0.4% 0.4% 0.0%
Finance income 106 172 -38.1% 0.0% 0.0% 0.0%
Profit before tax 27,135 36,342 -25.3% 3.5% 5.9% -2.4%
Income tax expense 2,874 3,786 -24.1% 0.4% 0.6% -0.2%
Profit for the period 24,262 32,556 -25.5% 3.1% 5.3% -2.1%
EBITDA 51,638 55,065 -6.2% 6.7% 8.9% -2.2%
Normalised EBITDA* 72,360 69,267 4.5% 9.4% 11.2% -1.8%
*) Excluding non-recurring expenses of RON 20.7m in 2018 and RON 14.2m in 2017.
39
Financial performance: FY-2018 (Consolidated) vs FY-2017 (Pro-forma)
Breakdown of 2018 results by Group companies
Y/Y Sales growth by companies Contribution to Sales growth by companies Contribution to EBITDA by companies
24.6%21.5%
15.0%
212%
9.7%
318% 227%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Sph
era
US
FN
(R
O)
US
FN
(M
D)
US
FN
(IT
)
AR
S
CF
F
Oth
er
24.6%
16.8%
0.2%
4.2%
1.7% 1.5%0.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Sph
era
US
FN
(R
O)
US
FN
(M
D)
US
FN
(IT
)
AR
S
CF
F
Oth
er
Data in RON'000 USFN (RO) ARS USFN (MD) USFN (IT) CFF SFG Cons.Adj SFG Cons.
Restaurant sales 586,460 122,820 9,764 38,613 12,033 26,514 (25,007) 771,197
Restaurant expenses 491,278 116,150 8,105 40,540 12,075 0 (130) 668,018
Food and material 221,240 33,201 4,060 12,332 4,663 0 (0) 275,497
Payroll and employee benefits 108,857 36,302 1,464 12,043 3,208 0 0 161,874
Rent 39,200 10,347 763 2,933 1,132 0 (2) 54,372
Royalties 35,166 7,188 586 2,317 275 0 0 45,532
Advertising 29,010 8,338 307 2,616 864 0 (76) 41,059
Other operating expenses, net 44,860 15,990 623 6,400 1,405 0 (51) 69,227
Depreciation and amortization 12,946 4,784 302 1,898 528 0 0 20,458
Restaurant operating profit 95,182 6,670 1,659 (1,927) (42) 88,312 (86,675) 103,179
General and administration expenses, net 42,127 11,521 362 4,543 2,657 48,207 (36,369) 73,048
Operating profit 53,055 (4,850) 1,296 (6,470) (2,698) 40,105 (50,306) 30,131
Finance costs 1,613 949 61 1,253 521 1,268 (2,562) 3,102
Finance income 1,672 7 0 24 0 965 (2,562) 106
Profit before tax 53,115 (5,793) 1,235 (7,699) (3,219) 39,802 (50,306) 27,135
Income tax expense 2,626 1,448 211 (1,783) 108 264 0 2,874
Profit for the period 50,489 (7,241) 1,025 (5,916) (3,327) 39,538 (50,306) 24,262
EBITDA 66,359 124 1,652 (4,561) (2,099) 40,468 (50,306) 51,638
Normalised EBITDA* 78,769 124 1,652 (4,561) (2,099) 60,272 (61,798) 72,360
40
Financial performance: FY-2018 (Consolidated) vs FY-2017 (Pro-forma)
Restaurant operating expenses and margin
▪ Operational expenses increased 28.5% Y/Y to RON 668.0m in FY-2018;
▪ As percentage of sales, operational expenses increased by 2.6pp Y/Y to 86.6% in FY-2018, of which:
▪ +1.3pp from payroll expenses
▪ +1.1pp from other operating expenses
▪ +0.3pp from cost of food and materials
▪ excluding KFC Italy and Taco Bell, restaurant operating profit margin would have higher by 1.2pp to 14.6%;
Contribution to change in restaurant opex ratio
Contribution to change in restaurant profit
Y/Y% % of Sales
Data in RON'000 Dec-18 Dec-17 2018/2017 Dec-18 Dec-17 Δ%
Restaurant expenses 668,018 520,031 28.5% 86.6% 84.0% 2.6%
Food and material 275,497 219,232 25.7% 35.7% 35.4% 0.3%
Payroll and employee benefits 161,874 121,623 33.1% 21.0% 19.7% 1.3%
Rent 54,372 45,512 19.5% 7.1% 7.4% -0.3%
Royalties 45,532 36,567 24.5% 5.9% 5.9% 0.0%
Advertising 41,059 32,727 25.5% 5.3% 5.3% 0.0%
Other operating expenses, net 69,227 48,720 42.1% 9.0% 7.9% 1.1%
Depreciation and amortization 20,458 15,650 30.7% 2.7% 2.5% 0.1%
Restaurant operating profit 103,179 98,773 4.5% 13.4% 16.0% -2.6%
41
Financial performance: FY-2018 (Consolidated) vs FY-2017 (Pro-forma)
G&A expenses
▪ In FY-2018, G&A ratio improved 0.2pp Y/Y to 9.5% of sales (RON 73.0m):
▪ Normalized G&A fell 0.7pp Y/Y to 6.8% of sales;
▪ Note: Other expenses include non-recurring expenses worth RON 20.7m, of which:
▪ RON 11.5m - provision for potential liabilities (VAT and late penalties) that the Sphera estimates to
pay as result of the tax audit performed at USFN RO by the fiscal authorities for the periods 2013 -
2017 (VAT) and 2012-2016 (income tax).
▪ RON 8.3m - impairment loss in relation with the goodwill recorded on the acquisition of ARS,
▪ RON 0.95m - compensations claimed in court and paid to a former employee who has suffered
injuries in a work accident,
▪ Note on Sphera stand-alone results:
▪ G&A expenses include an impairment loss of investment in ARS in amount of RON 19.8m; this
impairment loss may be reversed in the future financial years, subject to improving performance of
ARS.
Contribution to growth in G&A expenseY/Y% % of Sales
Data in RON'000 Dec-18 Dec-17 2018/2017 Dec-18 Dec-17
General and administration
expenses (net), of which: 73,048 60,296 21.1% 9.5% 9.7%
Employee benefits 30,563 34,695 -11.9%
Third-party expenses 7,890 13,605 -42.0%
Depreciation 1,049 939 11.7%
Rent 3,478 2,372 46.6%
Banking charges 2,921 1,921 52.1%
Transport 3,063 2,599 17.8%
Other expenses 24,083 4,165 478.3%
Consolidated financials
43*) Excluding non-recurring expenses of RON 20.7m in 2018 and RON 14.2m in 2017.
Sphera – Consolidated financial performance
Statement of comprehensive income
▪ Consolidated sales up 34.5% Y/Y on strong performance from KFC Romania (+21.5% Y/Y), while the consolidation of ARS (Pizza Hut restaurants), starting with
June 2017, contributed 9.8pp in the consolidated sales growth rate;
▪ Restaurant operating profit up 11.5% Y/Y, with margin down 2.8pp, especially on salary costs and impact from new openings and new areas of business;
▪ G&A expenses up 30.6% Y/Y, down 0.3pp to 9.5% of sales, mainly due to the new businesses and non-recurring expenses;
▪ Normalized G&A* expenses up 25.4% Y/Y, down 0.5pp to 6.8% of sales, with large part of the growth being accounted for by KFC Italy and Taco Bell operations;
▪ EBITDA grew 0.4%% Y/Y and EBITDA margin contracted 2.3pp to 6.7%, mainly driven by lower restaurant operating margin;
▪ Normalized EBITDA* rose 10.3% Y/Y and normalized EBITDA margin contracted 2.1pp to 9.4%, mainly due to higher restaurant expenses;
▪ Net profit decreased 22.8% Y/Y and net profit margin fell by 2.3pp to 3.1%.
Y/Y% % of Sales
Data in RON'000 Dec-18 Dec-17 2018/2017 Dec-18 Dec-17 Δ%
Restaurant sales 771,197 573,175 34.5%
Dividend revenue 0 0
Restaurant expenses 668,018 480,647 39.0% 86.6% 83.9% 2.8%
Food and material 275,497 206,704 33.3% 35.7% 36.1% -0.3%
Payroll and employee benefits 161,874 109,858 47.3% 21.0% 19.2% 1.8%
Rent 54,372 41,615 30.7% 7.1% 7.3% -0.2%
Royalties 45,532 33,885 34.4% 5.9% 5.9% 0.0%
Advertising 41,059 30,231 35.8% 5.3% 5.3% 0.0%
Other operating expenses, net 69,227 44,412 55.9% 9.0% 7.7% 1.2%
Depreciation and amortization 20,458 13,942 46.7% 2.7% 2.4% 0.2%
Restaurant operating profit 103,179 92,528 11.5% 13.4% 16.1% -2.8%
General and administration expenses, net 73,048 55,925 30.6% 9.5% 9.8% -0.3%
Operating profit 30,131 36,603 -17.7% 3.9% 6.4% -2.5%
Finance costs 3,102 2,108 47.2% 0.4% 0.4% 0.0%
Finance income 106 166 -35.9% 0.0% 0.0% 0.0%
Profit before tax 27,135 34,661 -21.7% 3.5% 6.0% -2.5%
Income tax expense 2,874 3,233 -11.1% 0.4% 0.6% -0.2%
Profit for the period 24,262 31,428 -22.8% 3.1% 5.5% -2.3%
EBITDA 51,638 51,424 0.4% 6.7% 9.0% -2.3%
Normalised EBITDA* 72,360 65,626 10.3% 9.4% 11.4% -2.1%
44
Sphera – Consolidated financial performance
Statement of financial position
Data in RON'000 31-Dec-18 31-Dec-17 Change
Assets
Non-current assets 229,173 176,123 53,050
Property, plant and equipment 158,122 105,220 52,902
Intangible assets 62,150 67,471 (5,321)
Deposits for rent guarantee 5,219 1,288 3,931
Deferred tax assets 3,682 2,144 1,538
Current assets 122,979 73,291 49,688
Inventories 10,564 8,509 2,055
Trade and other receivables 16,444 8,454 7,990
Prepayments 5,306 3,673 1,633
Cash and short-term deposits 90,665 52,655 38,010
Assets held for sale - 195 (195)
Total assets 352,152 249,609 102,543
Equity and liabilities
Total equity 128,825 104,544 24,281
Equity attributable to equity holders of the parent 128,679 104,525 24,154
Issued capital 581,990 581,990 -
Share premium (520,578) (520,578) -
Retained earnings 67,247 43,191 24,056
Foreign currency translation reserve 20 (78) 98
Non-controlling interests 146 19 127
Non-current liabilities 91,536 42,191 49,345
Interest-bearing loans and borrowings 86,787 39,520 47,267
Trade and other payables 4,749 2,671 2,078
Current liabilities 131,790 102,874 28,916
Trade and other payables 82,658 77,682 4,976
Interest-bearing loans and borrowings 37,669 25,192 12,477
Provisions 11,463 11,463
Total liabilities 223,327 145,065 78,262
Total equity and liabilities 352,152 249,609 102,543
▪ Total assets increased by 41% in 2018 to RON
352.2m, principally on the back of the continued
expansion of the group’s operations through the
opening of new units, which were mainly financed by
bank loans.
▪ Non-current assets increased 30% in 2018 to RON
229.2m, representing 65% of total assets;
▪ Current assets increased 68% to RON 123.0m,
representing 35% of total assets; the majority of
current assets are represented by cash and short-
term deposits, which reached 90.6m at the end of
2018;
▪ Total equity increased 23% to RON 128.8m, due to
the incorporation of net profits;
▪ Total interest-bearing loans and borrowings
increased 92% to RON 124.4m, mainly as a result of
new bank loans aimed at financing the network
expansion.
45
Sphera – Stand-alone financial performance
Statement of comprehensive income
Data in RON'000 2018 2017
Revenues
Dividend revenues 61,798 -
Revenue from service contracts 26,514 12,420
Total revenues 88,312 12,420
Expenses
Payroll and employee benefits 21,598 21,101
Impairment loss of investments in subsidiaries 19,804 -
Other expenses 6,805 2,424
Total expenses 48,207 23,525
Operating profit/(loss) 40,105 (11,105)
Finance costs 1,268 141
Finance income 965 31
Profit/(Loss) before tax 39,802 (11,215)
Income tax expense/(credit) 264 (1,600)
Profit/(Loss) for the period 39,538 (9,615)
Total comprehensive income for the period, net of tax 39,538 (9,615)
Interim results: Jan-Sep 2019
47
Sphera – 9-mth 2019 key events
All-store sales up 25.9% with same-store sales growth of 8.2%
▪ Q3 overall sales growth of 23.5%, same-store sales growth of 6.8%
Total store openings: 1 in Q3; network size 146 @ 30 September 2019
KFC sales remained strong, with another double-digit quarterly growth, as delivery operations gain momentum
Pizza Hut sales recover on stronger Delivery activity, pushing 9-month EBITDA in positive territory
KFC Italy and Taco Bell displayed another quarter of significant same-store sales and margin performance, sending 9-month
EBITDA above breakeven level
▪ Interim results* Jan-Sep 2019 Q3-2019
RONm Y/Y* Margin RONm Y/Y Margin
▪ Sales 694.3 +25.9% 248.7 +23.5%
▪ Restaurant profit 88.2 +18.3% 12.7% 38.8 +38.5% 15.6%
▪ Normalized EBITDA 67.2 +26.0% 9.7% 30.5 +45.1% 12.3%
▪ Net Profit 38.2 17.9% 5.5% 20.1 +47.4% 8.1%
*) excluding the impact from the adoption of IFRS 16.
48
▪ Unemployment rate remains stable at c. 4.0% in Q3-2019
▪ Average salary up 12.4% in Q3-2019 and 13.6% in 9-mth
2019
Macro environment
CPI stabilizes as labour market remains tight
▪ CPI edges lower to 3.5% in Sep-2019
▪ Retail sales Y/Y growth reaches 5.9% in Q3-2019 and 5.1%
in 9-mth 2019
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Jan-16 Jan-17 Jan-18 Jan-19
Retail sales (mostly food & drinks)
0%
10%
20%
30%
40%
50%
60%
0
1,000
2,000
3,000
4,000
5,000
6,000
Jan-16 Jan-17 Jan-18 Jan-19
Salaries
Average gross salary (Y/Y% change) - rhs
Average gross salary
Minimum salary
(RON) (Y/Y%)
0%
1%
2%
3%
4%
5%
6%
7%
8%
Jan-16 Jan-17 Jan-18 Jan-19
Unemployment rate
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Jan-16 Jan-17 Jan-18 Jan-19
Annualized CPI
Sales performance by brands
50
Brand performance: KFC Romania
Sales growth analysis
Same-store
performance
All-store
performance
▪ All-store sales growth of 17.1% Y/Y in Q3-2019
with same-store growth reaching 7.7%;
▪ The 9 net openings (since Jan-2018) contributed
c. 9.5pp to the Y/Y growth in Q3-2019.
▪ Same-store sales growth of 7.7% Y/Y in Q3-2019
lower than in the previous two quarters as the
growth rates of a number of stores cooled down
from high double-digit levels;
▪ Average ticket was up 12.6% and transactions fell
1.9% in 9-mth 2019 vs 9-mth 2018.
26.4%
17.7%
21.5%
19.6%20.1%20.4%
23.2%
19.5%18.9%17.1%
0%
5%
10%
15%
20%
25%
30%
2016 2017 2018 Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
Q42019
17.0%
12.5%
11.0% 10.7%
15.6%
14.0%
9.9%10.9%
13.0%
7.7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2016 2017 2018 Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
Q42019
51
Brand performance: Pizza Hut
Sales growth analysis
Same-store
performance
All-store
performance
▪ All-store sales growth of 7.1% Y/Y in Q3-2019,
with majority of growth coming from the 6 stores
opened starting Jan-2018;
▪ Same-store sales advanced 1.0% Y/Y in Q3-2019,
with the improving performance compared to Q2-
2019 being helped by a strong recovery in
Delivery sales;
▪ Average ticket was up 5.0% and transactions were
down 5.3% in 9-mth 2019 vs 9-mth 2018.
28.0%
15.5%
9.5% 9.8%8.4%
11.4%
8.5%7.3% 7.4% 7.1%
0%
5%
10%
15%
20%
25%
30%
2016 2017 2018 Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
Q42019
13.0%
3.1%
0.4%
1.6%
-2.0%
1.1% 0.7%
-2.0%
-0.5%
1.0%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
2016 2017 2018 Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
Q42019
Development
53
Development
Restaurant openings in 2019
Openings
Q1-2019
0
0
0
0
0
Total stores
end Q3-2019
2019 Opening
Plan
8
24
5
0
1
Total stores
BoY
0 10
79
22
7
23
146
15
78
22
5
23
138
10
Openings
Q2-2019
1
0
2
0
7
4
Openings
Q3-2019
0
0
0
0
1
1
Brand news
55
Brand news
Q3-2019 highlights
▪ Already a summer tradition in KFC, this year innovation platform featured 3 limited-time offer products
(Holiday Burger, Summer Twister and Crispy Box) aiming at increasing frequency of visits;
▪ For the back-to-school calendar window, KFC launched a new format product (Crispy Hot Dog),
building on entry level value with the objective of maximizing transactions, as well as an abundant
meal for one (The Box), with medium-term role of increasing average spend;
• KFC Haunted Camping – Untold: the first partnership of KFC with a music festival in Romania was an
activation dedicated to the popular Garlic Sauce; the brand challenged the consumers to enter a
competition to win tickets for the festival and accommodation in the KFC camp located in the most
haunted forest in the world (Hoia-Baciu Forest) with the garlic sauce serving as protection.
Self-ordering
kiosks & digital
menu boards
▪ Roll-out of
kiosks
completed in 24
stores
▪ Roll-out of digital
menu-boards
completed in 58
stores
KFC Arena
▪ KFC and gaming are a natural
match that the brand
approached this year for the
first time by launching a
CS:GO tournament for non-pro
teams in partnerships with one
of the biggest gaming events
in Romania, Bucharest
Gaming Week
▪ Over 1.000 unique gamers
registered for the online
qualifiers, and over 200.000
people watched the live
streaming
56
Brand news
Q3-2019 highlights
▪ To unlock new pizza territories and stay relevant to our clients, Pizza Hut introduced a new pizza
innovation (San Francisco Dough) over the summer, made with Sourdough for more artisanal
taste, with the aim of attracting new users.
▪ Targeting improving transaction levels, the brand communicated “All you can eat Pizza”, the most
iconic offer in Pizza Hut, by promoting our hero product (Pan Pizza) into our most valuable offer;
the campaign was communicated through an anniversary price (25 Lei);
▪ Pizza Hut Delivery launched for a second year Couple Combo, one of our best abundant value
offers (2 medium pizza plus 2 bottles of soda for a special price), with very good results in terms of
both sales and transactions;
▪ Overall online orders approaching 50% of delivery sales, of which over 20% coming through
aggregator platforms.
▪ Communication focused on innovation by launching new products, with the aim of creating
favorability & differentiation from local competitors and build deeper connection with consumers to
grow the brand cult by communicating the core products as being our unique, creative, innovative
& iconic
• Silver Drum for Untold Haunted Camping - Protected by KFC Garlic Sauce
Silver Drum for KFC Social Entertainment Channel at Golden Drum 2019th edition
• Webstock 2019:
1st place – KFC Best Brand on YouTube
1st place – KFC Best Online Video Show (Random)
1st place – Best Experiential Campaigns for Untold Haunted Camping by KFC Garlic Sauce
2nd place – KFC Best Online Video Shows (Friendzone)
3rd place – KFC Best Digital Innovation (Smartchat)
57
Marketing
Q3-2019 campaigns
Financials
59
Financial performance: 9-mth 2019
Statement of comprehensive income
▪ Sales up 25.9% Y/Y on strong performance from KFC Romania/Moldova (+18.1% Y/Y, 13.5pp contribution), with increasing contribution from KFC Italy (8.6pp)
and Taco Bell (2.7pp);
▪ Restaurant operating profit up 20.0% Y/Y, with margin down 0.6pp, especially on labour (+2.2pp) and other operating expenses (+1.0pp), while cost of food
improved (-1.8pp);
▪ G&A expenses up 12.3% Y/Y, reaching 6.1% of sales (down 0.7pp Y/Y);
▪ Normalized EBITDA up 92.1% Y/Y, with EBITDA margin up 5.1pp to 14.8% of sales, mainly due to adoption of IFRS 16 as well as to lower G&A expenses;
▪ excluding KFC Italy and Taco Bell, EBITDA margin would have been 5.1pp higher Y/Y at 15.9% of sales;
▪ Net profit down 1.8% Y/Y, with net profit margin down 1.3pp to 4.6% of sales, due to the incremental finance cost (especially forex depreciation) as a result of
IFRS 16 adoption.
*) Excluding a non-recurring expense for litigation worth RON 0.95m recorded in Jan-Sep 2018.
Y/Y% % of Sales
Data in RON'000 Sep-19 Sep-18 2019/2018 Sep-19 Sep-18 Δ%
Restaurant sales 694,317 551,562 25.9%
Restaurant expenses 604,825 476,993 26.8% 87.1% 86.5% 0.6%
Food and material 235,421 197,211 19.4% 33.9% 35.8% -1.8%
Payroll and employee benefits 158,397 113,731 39.3% 22.8% 20.6% 2.2%
Rent 16,063 40,014 -59.9% 2.3% 7.3% -4.9%
Royalties 40,780 32,497 25.5% 5.9% 5.9% 0.0%
Advertising 34,230 30,421 12.5% 4.9% 5.5% -0.6%
Other operating expenses, net 67,871 48,378 40.3% 9.8% 8.8% 1.0%
Depreciation and amortization 52,062 14,742 253.2% 7.5% 2.7% 4.8%
Restaurant operating profit 89,492 74,568 20.0% 12.9% 13.5% -0.6%
General and administration expenses, net 42,285 37,661 12.3% 6.1% 6.8% -0.7%
Operating profit 47,207 36,907 27.9% 6.8% 6.7% 0.1%
Finance costs 12,926 2,071 524.3% 1.9% 0.4% 1.5%
Finance income 121 118 2.0% 0.0% 0.0% 0.0%
Profit before tax 34,402 34,955 -1.6% 5.0% 6.3% -1.4%
Income tax expense 2,570 2,549 0.9% 0.4% 0.5% -0.1%
Profit for the period 31,831 32,406 -1.8% 4.6% 5.9% -1.3%
EBITDA 102,468 52,394 95.6% 14.8% 9.5% 5.3%
Normalised EBITDA* 102,468 53,340 92.1% 14.8% 9.7% 5.1%
60
Financial performance: 9-mth 2019
Impact of IFRS 16 - Leases on 9-mth 2019 results
▪ Starting 1 January 2019, Sphera applied IFRS 16 that sets out the principles for the recognition, measurement, presentation and disclosure of leases. Sphera
uses the modified retrospective approach for this transition, thus not restating comparative amounts for the comparative periods presented;
▪ At the commencement date of a lease, a lessee recognizes a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use
the underlying asset during the lease term (i.e., the right-of-use asset). Lessees are required to separately recognize the interest expense on the lease liability
and the depreciation expense on the right-of-use asset;
▪ In 9-mth 2019, following the adoption of IFRS 16, Sphera recognized additional depreciation expense of RON 31.5m (4.5% of sales) and finance cost of RON
8.1m (1.2% of sales) – of which RON 2.7m in forex expenses related to the revaluation of FCY-denominated lease liability (c. EUR 47m); concomitantly, rent
expenses were reduced by RON 33.1m (4.8% of sales);
▪ As a result, EBITDA margin was increased by 5.1pp to 14.8%, while net profit was reduced by 0.9pp to 4.6%.
% of Sales
Including Excluding Impact of Including Excluding Impact of
Data in RON'000 impact of impact of IFRS 16 impact of impact of IFRS 16
IFRS 16 IFRS 16 adoption IFRS 16 IFRS 16 adoption
Restaurant sales 694,317 694,317 0 100.0% 100.0%
Restaurant expenses 604,825 606,107 -1,282 87.1% 87.3% -0.2%
Food and material 235,421 235,421 0 33.9% 33.9%
Payroll and employee benefits 158,397 158,397 0 22.8% 22.8%
Rent 16,063 49,123 -33,060 2.3% 7.1% -4.8%
Royalties 40,780 40,780 0 5.9% 5.9%
Advertising 34,230 34,230 0 4.9% 4.9%
Other operating expenses, net 67,871 67,625 246 9.8% 9.7%
Depreciation and amortization 52,062 20,530 31,532 7.5% 3.0% 4.5%
Restaurant operating profit 89,492 88,210 1,282 12.9% 12.7% 0.2%
General and administration expenses, net 42,285 42,644 -359 6.1% 6.1% -0.1%
Operating profit 47,207 45,566 1,642 6.8% 6.6% 0.2%
Finance costs 12,926 4,822 8,104 1.9% 0.7% 1.2%
Finance income 121 121 0 0.0% 0.0%
Profit before tax 34,402 40,864 -6,463 5.0% 5.9% -0.9%
Income tax expense 2,570 2,650 -80 0.4% 0.4%
Profit for the period 31,831 38,214 -6,383 4.6% 5.5% -0.9%
EBITDA 102,468 67,223 35,245 14.8% 9.7% 5.1%
61
Financial performance: 9-mth 2019
Statement of comprehensive income (excluding impact of IFRS 16 adoption)
▪ Sales up 25.9% Y/Y on strong performance from KFC Romania/Moldova (+18.1% Y/Y, 13.5pp contribution), with increasing contribution from KFC Italy (8.6pp)
and Taco Bell (2.7pp);
▪ Restaurant operating profit up 18.3% Y/Y, with margin down 0.8pp, especially on labour (+2.2pp) and other operating expenses (+1.0pp), while cost of food
improved (-1.8pp);
▪ G&A expenses up 13.2% Y/Y, reaching 6.1% of sales (down 0.7pp Y/Y);
▪ Normalized EBITDA up 26.0% Y/Y, with EBITDA margin unchanged at 9.7% of sales, helped by lower G&A expenses;
▪ excluding KFC Italy and Taco Bell, EBITDA margin would have been 0.2pp higher Y/Y at 11.1% of sales;
▪ Net profit up 17.9% Y/Y, with net profit margin down 0.4pp to 5.5% of sales.
*) Excluding a non-recurring expense for litigation worth RON 0.95m recorded in Jan-Sep 2018.
Y/Y% % of Sales
Data in RON'000 Sep-19 Sep-18 2019/2018 Sep-19 Sep-18 Δ%
Restaurant sales 694,317 551,562 25.9%
Restaurant expenses 606,107 476,993 27.1% 87.3% 86.5% 0.8%
Food and material 235,421 197,211 19.4% 33.9% 35.8% -1.8%
Payroll and employee benefits 158,397 113,731 39.3% 22.8% 20.6% 2.2%
Rent 49,123 40,014 22.8% 7.1% 7.3% -0.2%
Royalties 40,780 32,497 25.5% 5.9% 5.9% 0.0%
Advertising 34,230 30,421 12.5% 4.9% 5.5% -0.6%
Other operating expenses, net 67,625 48,378 39.8% 9.7% 8.8% 1.0%
Depreciation and amortization 20,530 14,742 39.3% 3.0% 2.7% 0.3%
Restaurant operating profit 88,210 74,568 18.3% 12.7% 13.5% -0.8%
General and administration expenses, net 42,644 37,661 13.2% 6.1% 6.8% -0.7%
Operating profit 45,566 36,907 23.5% 6.6% 6.7% -0.1%
Finance costs 4,822 2,071 132.9% 0.7% 0.4% 0.3%
Finance income 121 118 2.0% 0.0% 0.0% 0.0%
Profit before tax 40,864 34,955 16.9% 5.9% 6.3% -0.5%
Income tax expense 2,650 2,549 4.0% 0.4% 0.5% -0.1%
Profit for the period 38,214 32,406 17.9% 5.5% 5.9% -0.4%
EBITDA 67,223 52,394 28.3% 9.7% 9.5% 0.2%
Normalised EBITDA* 67,223 53,340 26.0% 9.7% 9.7% 0.0%
62
Financial performance: Q3-2019
Statement of comprehensive income (excluding impact of IFRS 16 adoption)
▪ Sales up 23.5% Y/Y on strong performance from KFC Romania/Moldova (+13.6% Y/Y, 10.5pp contribution), with significant contribution from KFC Italy (9.2pp) and
Taco Bell (2.7pp);
▪ Restaurant operating profit up 38.5% Y/Y, with margin up 1.7pp, as lower cost of food (-3.2pp) and advertising (-0.5pp) were partly offset by higher labour (+0.6pp)
and other operating expense (+1.1pp);
▪ G&A expenses up 28.9% Y/Y, reaching 6.4% of sales (up 0.3pp Y/Y);
▪ Normalized EBITDA up 45.1% Y/Y, with EBITDA margin improving 1.8pp to 12.3% of sales, helped by higher restaurant margin;
▪ excluding KFC Italy and Taco Bell, EBITDA margin would have been 1.4pp higher Y/Y at 13.4% of sales;
▪ Net profit up 47.4% Y/Y, with net profit margin up 1.3pp to 8.1% of sales.
*) Excluding a non-recurring provision for litigation worth RON 0.93m recorded in Q3-2018.
Y/Y% % of Sales
Data in RON'000 Q3-2019 Q3-2018 2019/2018 Q3-2019 Q3-2018 Δ%
Restaurant sales 248,749 201,493 23.5%
Restaurant expenses 209,969 173,490 21.0% 84.4% 86.1% -1.7%
Food and material 80,722 71,829 12.4% 32.5% 35.6% -3.2%
Payroll and employee benefits 52,077 40,981 27.1% 20.9% 20.3% 0.6%
Rent 17,481 14,453 21.0% 7.0% 7.2% -0.1%
Royalties 14,705 11,846 24.1% 5.9% 5.9% 0.0%
Advertising 13,843 12,235 13.1% 5.6% 6.1% -0.5%
Other operating expenses, net 23,741 16,981 39.8% 9.5% 8.4% 1.1%
Depreciation and amortization 7,400 5,166 43.3% 3.0% 2.6% 0.4%
Restaurant operating profit 38,781 28,003 38.5% 15.6% 13.9% 1.7%
General and administration expenses, net 16,012 12,424 28.9% 6.4% 6.2% 0.3%
Operating profit 22,768 15,579 46.1% 9.2% 7.7% 1.4%
Finance costs 1,355 911 48.7% 0.5% 0.5% 0.1%
Finance income 58 (30) 293.7% 0.0% 0.0% 0.0%
Profit before tax 21,471 14,638 46.7% 8.6% 7.3% 1.4%
Income tax expense 1,354 989 36.9% 0.5% 0.5% 0.1%
Profit for the period 20,118 13,649 47.4% 8.1% 6.8% 1.3%
EBITDA 30,512 21,011 45.2% 12.3% 10.4% 1.8%
Normalised EBITDA* 30,512 21,026 45.1% 12.3% 10.4% 1.8%
63
Financial performance: Margin trend (Quarterly and YTD)
(excluding impact of IFRS 16 adoption)2
2.5
%
20
.8%
26
.6%
27
.8%
26
.1%
28
.4%
23
.5%
22
.5%
21
.6%
23
.4%
24
.6%
22
.5%
27
.3%
25
.9%
28
.8%
201
8-Q
1
Q2
Q3
Q4
201
9-Q
1
Q2
Q3
201
8-Q
1
Q2
Q3
Q4
201
9-Q
1
Q2
Q3
FY
Quarter YTD 2019Budget
Restaurant sales - Y/Y% growth
15
.3%
11
.4%
13
.9%
13
.0%
10
.2%
12
.0%
15
.6%
15
.3%
13
.3%
13
.5%
13
.4%
15
.3%
11
.1%
12
.7%
12
.0%
201
8-Q
1
Q2
Q3
Q4
201
9-Q
1
Q2
Q3
201
8-Q
1
Q2
Q3
Q4
201
9-Q
1
Q2
Q3
FY
Quarter YTD 2019Budget
Restaurant operating profit margin
7.3
%
6.6
%
6.2
%
7.1
%
6.1
%
5.9
%
6.4
%
7.3
%
6.9
%
6.7
%
6.8
%
7.3
%
6.0
%
6.1
%
6.0
%
201
8-Q
1
Q2
Q3
Q4
201
9-Q
1
Q2
Q3
201
8-Q
1
Q2
Q3
Q4
201
9-Q
1
Q2
Q3
FY
Quarter YTD 2019Budget
Normalized G&A ratio
11
.1%
7.5
%
10
.4%
8.7
%
7.2
%
9.2
%
12
.3%
11
.1%
9.2
%
9.7
%
9.4
%
11
.1%
8.2
%
9.7
%
9.7
%
201
8-Q
1
Q2
Q3
Q4
201
9-Q
1
Q2
Q3
201
8-Q
1
Q2
Q3
Q4
201
9-Q
1
Q2
Q3
FY
Quarter YTD 2019Budget
Normalised EBITDA margin
64
Financial performance: 9-mth 2019
Breakdown of results by Group companies
Y/Y Sales growth by companies Contribution to Sales growth by companies Contribution to EBITDA by companies
Data in RON'000 USFN (RO) ARS USFN (MD) USFN (IT) CFF SFG Cons.Adj SFG Cons.
Restaurant sales 497,837 95,584 8,214 68,968 22,844 22,370 (21,500) 694,317
Dividend revenue 0 0 0 0 0 51,239 (51,239) 0
Restaurant expenses 417,582 91,657 6,800 69,631 21,044 0 (1,889) 604,825
Food and material 178,022 25,221 3,234 20,988 7,955 0 0 235,421
Payroll and employee benefits 101,777 30,144 1,339 19,513 5,624 0 0 158,397
Rent 14,305 546 57 909 246 0 0 16,063
Royalties 29,916 5,587 494 4,144 639 0 0 40,780
Advertising 24,464 5,640 319 4,393 1,299 0 (1,886) 34,230
Other operating expenses, net 40,516 13,004 651 11,009 2,695 0 (4) 67,871
Depreciation and amortization 28,581 11,514 705 8,676 2,586 0 0 52,062
Restaurant operating profit 80,255 3,926 1,414 (664) 1,800 73,610 (70,849) 89,492
General and administration expenses, net 22,950 6,714 214 3,951 2,076 25,908 (19,528) 42,285
Operating profit 57,305 (2,787) 1,200 (4,614) (276) 47,701 (51,321) 47,207
Finance costs 7,941 2,408 185 3,136 1,187 1,418 (3,348) 12,926
Finance income 2,063 7 0 16 0 1,383 (3,348) 121
Profit before tax 51,427 (5,188) 1,015 (7,734) (1,462) 47,666 (51,321) 34,402
Income tax expense 2,551 1,180 166 (1,444) 213 (95) 0 2,570
Profit for the period 48,876 (6,368) 849 (6,290) (1,675) 47,761 (51,321) 31,831
EBITDA 87,551 8,867 1,932 4,078 2,371 48,991 (51,321) 102,468
25.9%
17.1%20.0%
222%
7.1%
184%
-21%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Sph
era
US
FN
(R
O)
US
FN
(M
D)
US
FN
(IT
)
AR
S
CF
F
Oth
er
25.9%
13.2%
0.2%
8.6%
1.2%2.7%
0.0%-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Sph
era
US
FN
(R
O)
US
FN
(M
D)
US
FN
(IT
)
AR
S
CF
F
Oth
er
65
Financial performance: 9-mth 2019
Breakdown of results by Group companies (excluding impact of IFRS 16 adoption)
Y/Y Sales growth by companies Contribution to Sales growth by companies Contribution to EBITDA by companies
25.9%
17.1%20.0%
222%
7.1%
184%
-21%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Sph
era
US
FN
(R
O)
US
FN
(M
D)
US
FN
(IT
)
AR
S
CF
F
Oth
er
25.9%
13.2%
0.2%
8.6%
1.2%2.7%
0.0%-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Sph
era
US
FN
(R
O)
US
FN
(M
D)
US
FN
(IT
)
AR
S
CF
F
Oth
er
Data in RON'000 USFN (RO) ARS USFN (MD) USFN (IT) CFF SFG Cons.Adj SFG Cons.
Restaurant sales 497,837 95,584 8,214 68,968 22,844 22,370 (21,500) 694,317
Dividend revenue 0 0 0 0 0 51,239 (51,239) 0
Restaurant expenses 418,864 91,763 6,836 69,399 21,133 0 (1,889) 606,107
Food and material 178,022 25,221 3,234 20,988 7,955 0 0 235,421
Payroll and employee benefits 101,777 30,144 1,339 19,513 5,624 0 0 158,397
Rent 33,417 8,179 581 4,943 2,003 0 0 49,123
Royalties 29,916 5,587 494 4,144 639 0 0 40,780
Advertising 24,464 5,640 319 4,393 1,299 0 (1,886) 34,230
Other operating expenses, net 40,269 13,004 651 11,009 2,695 0 (4) 67,625
Depreciation and amortization 10,998 3,986 217 4,410 918 0 0 20,530
Restaurant operating profit 78,972 3,821 1,378 (432) 1,711 73,610 (70,849) 88,210
General and administration expenses, net 23,049 6,817 214 3,981 2,091 26,020 (19,528) 42,644
Operating profit 55,923 (2,996) 1,163 (4,413) (381) 47,590 (51,321) 45,566
Finance costs 2,785 1,352 82 1,929 899 1,124 (3,348) 4,822
Finance income 2,063 7 0 16 0 1,383 (3,348) 121
Profit before tax 55,201 (4,341) 1,081 (6,325) (1,279) 47,849 (51,321) 40,864
Income tax expense 2,551 1,180 146 (1,344) 213 (95) 0 2,650
Profit for the period 52,650 (5,520) 936 (4,981) (1,493) 47,944 (51,321) 38,214
EBITDA 67,318 1,131 1,409 14 597 48,076 (51,321) 67,223
66
Financial performance: 9-mth 2019
Restaurant operating expenses and margin
▪ Excluding the impact of IFRS adoption, operational expenses increased 30.5% Y/Y to RON 396.1m in 9-
mth 2019;
▪ As percentage of sales, operational expenses increased by 2.2pp Y/Y to 88.9% in 9-mth 2019, of which:
▪ +3.1pp from payroll expenses
▪ +0.9pp from other operating expenses
▪ -1.1pp from cost of food and materials
Contribution to change in restaurant opex ratio*
Contribution to change in restaurant profit*
Excluding the impact of IFRS 16 adoption
Including the impact of IFRS 16 adoption
*) Excluding the impact of IFRS 16 adoption
Y/Y% % of Sales
Data in RON'000 Sep-19 Sep-18 2019/2018 Sep-19 Sep-18 Δ%
Restaurant expenses 604,825 476,993 26.8% 87.1% 86.5% 0.6%
Food and material 235,421 197,211 19.4% 33.9% 35.8% -1.8%
Payroll and employee benefits 158,397 113,731 39.3% 22.8% 20.6% 2.2%
Rent 16,063 40,014 -59.9% 2.3% 7.3% -4.9%
Royalties 40,780 32,497 25.5% 5.9% 5.9% 0.0%
Advertising 34,230 30,421 12.5% 4.9% 5.5% -0.6%
Other operating expenses, net 67,871 48,378 40.3% 9.8% 8.8% 1.0%
Depreciation and amortization 52,062 14,742 253.2% 7.5% 2.7% 4.8%
Restaurant operating profit 89,492 74,568 20.0% 12.9% 13.5% -0.6%
Y/Y% % of Sales
Data in RON'000 Sep-19 Sep-18 2019/2018 Sep-19 Sep-18 Δ%
Restaurant expenses 606,107 476,993 27.1% 87.3% 86.5% 0.8%
Food and material 235,421 197,211 19.4% 33.9% 35.8% -1.8%
Payroll and employee benefits 158,397 113,731 39.3% 22.8% 20.6% 2.2%
Rent 49,123 40,014 22.8% 7.1% 7.3% -0.2%
Royalties 40,780 32,497 25.5% 5.9% 5.9% 0.0%
Advertising 34,230 30,421 12.5% 4.9% 5.5% -0.6%
Other operating expenses, net 67,625 48,378 39.8% 9.7% 8.8% 1.0%
Depreciation and amortization 20,530 14,742 39.3% 3.0% 2.7% 0.3%
Restaurant operating profit 88,210 74,568 18.3% 12.7% 13.5% -0.8%
67
Financial performance: Q3-2019
Restaurant operating expenses and margin
▪ Excluding the impact of IFRS adoption, operational expenses increased 27.5% Y/Y to RON 203.2m in
Q3-2019;
▪ As percentage of sales, operational expenses decreased by 0.6pp Y/Y to 88.0% in Q3-2019, of which:
▪ -1.7pp from cost of food and materials
▪ -1.4pp from advertising expenses
▪ +2.7pp from payroll expenses
Contribution to change in restaurant opex ratio*
Contribution to change in restaurant profit*
Excluding the impact of IFRS 16 adoption
Including the impact of IFRS 16 adoption
*) Excluding the impact of IFRS 16 adoption
Y/Y% % of Sales
Data in RON'000 Q2-2019 Q2-2018 2019/2018 Q2-2019 Q2-2018 Δ%
Restaurant expenses 210,104 173,490 21.1% 84.5% 86.1% -1.6%
Food and material 80,722 71,829 12.4% 32.5% 35.6% -3.2%
Payroll and employee benefits 52,077 40,981 27.1% 20.9% 20.3% 0.6%
Rent 6,351 14,453 -56.1% 2.6% 7.2% -4.6%
Royalties 14,705 11,846 24.1% 5.9% 5.9% 0.0%
Advertising 13,843 12,235 13.1% 5.6% 6.1% -0.5%
Other operating expenses, net 23,810 16,981 40.2% 9.6% 8.4% 1.1%
Depreciation and amortization 18,598 5,166 260.0% 7.5% 2.6% 4.9%
Restaurant operating profit 38,645 28,003 38.0% 15.5% 13.9% 1.6%
Y/Y% % of Sales
Data in RON'000 Q3-2019 Q3-2018 2019/2018 Q3-2019 Q3-2018 Δ%
Restaurant expenses 209,969 173,490 21.0% 84.4% 86.1% -1.7%
Food and material 80,722 71,829 12.4% 32.5% 35.6% -3.2%
Payroll and employee benefits 52,077 40,981 27.1% 20.9% 20.3% 0.6%
Rent 17,481 14,453 21.0% 7.0% 7.2% -0.1%
Royalties 14,705 11,846 24.1% 5.9% 5.9% 0.0%
Advertising 13,843 12,235 13.1% 5.6% 6.1% -0.5%
Other operating expenses, net 23,741 16,981 39.8% 9.5% 8.4% 1.1%
Depreciation and amortization 7,400 5,166 43.3% 3.0% 2.6% 0.4%
Restaurant operating profit 38,781 28,003 38.5% 15.6% 13.9% 1.7%
68
Financial performance: 9-mth 2019
G&A expenses
▪ Excluding the impact of IFRS adoption, G&A ratio improved 0.7pp Y/Y to 6.1% of sales (RON 42.6 million),
mainly on slower growth in payroll expenses;
Contribution to growth in G&A expense*
Excluding the impact of IFRS 16 adoption
Including the impact of IFRS 16 adoption
*) Excluding the impact of IFRS 16 adoption
Y/Y% % of Sales
Data in RON'000 Sep-19 Sep-18 2019/2018 Sep-19 Sep-18
General and administration
expenses (net), of which: 42,644 37,661 13.2% 6.1% 6.8%
Employee benefits 25,727 21,496 19.7%
Third-party expenses 7,043 5,200 35.4%
Depreciation 1,128 745 51.4%
Rent 2,693 2,566 4.9%
Banking charges 2,276 2,004 13.6%
Transport 1,891 1,985 -4.8%
Other expenses 1,886 3,664 -48.5%
Y/Y% % of Sales
Data in RON'000 Sep-19 Sep-18 2019/2018 Sep-19 Sep-18
General and administration
expenses (net), of which: 42,285 37,661 12.3% 6.1% 6.8%
Employee benefits 25,727 21,496 19.7%
Third-party expenses 7,043 5,200 35.4%
Depreciation 3,199 745 329.4%
Rent 262 2,566 -89.8%
Banking charges 2,276 2,004 13.6%
Transport 1,891 1,985 -4.8%
Other expenses 1,886 3,664 -48.5%
69
Sphera – Consolidated financial performance
Statement of financial position
Excluding
impact of
IFRS 16
adoption
Impact of
IFRS 16
adoption
Data in RON'000 30-Sep-19 31-Dec-18 Change 30-Sep-19
Assets
Non-current assets 486,396 229,173 257,223 270,405 215,991
Property, plant and equipment 188,104 158,122 29,982 190,025 (1,921)
Right-of-use assets 217,832 217,832 - 217,832
Intangible assets 64,646 62,150 2,496 64,646 -
Deposits for rent guarantee 10,304 5,219 5,085 10,304 -
Deferred tax assets 5,509 3,682 1,827 5,429 80
Current assets 119,079 122,979 (3,900) 121,892 (2,814)
Inventories 9,780 10,564 (783) 9,780 -
Trade and other receivables 28,396 16,444 11,952 28,396 -
Prepayments 2,743 5,306 (2,563) 5,556 (2,814)
Cash and short-term deposits 78,160 90,665 (12,505) 78,160 -
Assets held for sale - - - - -
Total assets 605,475 352,152 253,323 392,297 213,178
Equity and liabilities
Total equity 149,886 128,825 21,061 153,032 (3,146)
Equity attributable to equity holders of the parent 149,738 128,679 21,059 152,914 (3,176)
Issued capital 581,990 581,990 - 581,990 -
Share premium (519,998) (520,578) 580 (519,998) -
Retained earnings 87,837 67,247 20,590 91,023 (3,186)
Foreign currency translation reserve (90) 20 (110) (100) 10
Non-controlling interests 148 146 2 118 30
Non-current liabilities 259,118 91,536 167,581 79,415 179,703
Interest-bearing loans and borrowings 78,695 86,787 (8,093) 78,695 -
Finance lease liabilities 180,423 180,423 427 179,996
Trade and other payables 4,749 (4,749) 293 (293)
Current liabilities 196,471 131,790 64,681 159,850 36,621
Trade and other payables 102,572 82,658 19,913 107,054 (4,482)
Interest-bearing loans and borrowings 40,941 37,669 3,272 40,941 -
Finance lease liabilities 41,495 41,495 392 41,103
Provisions 11,463 11,463 - 11,463 -
Total liabilities 455,589 223,327 232,262 239,265 216,324
Total equity and liabilities 605,475 352,152 253,323 392,297 213,178