Sphera Franchise Group Company presentation – May 2018 1
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. 2
Sphera Franchise Group At a Glance Leading Food Service Operator in Romania 2 nd 1 st Track Record of Quick Service Full Service 24 Years of 120 Rapid and Restaurants (1) Restaurants Restaurant Operation Profitable Growth Operator Operator 24.0% 14.7% 14.1% 13.6% RON 619m RON 69.3m 11.2% RON 32.6m LfL (3) restaurant Restaurant sales Increase in no. Normalized Restaurant sales Normalized Normalized Net profit growth sales growth of restaurants EBITDA EBITDA (2) EBITDA +20.3% yoy -39% yoy growth (2) margin (2) -5.8% yoy 3-year CAGR 2017 pro forma results Source: Pro-forma IFRS financial information Notes: (1 ) As of 15-May-2018 ; (2) After excluding certain one-off expenses related to the reorganization of Sphera and the IPO process; (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 3
Sphera at a glance Introduction to Sphera Franchise Group Geographical Footprint ❑ 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 2 company 4 114 ❑ In 2017, Sphera secured the franchise for operation of Taco Bell restaurants in Romania (two stores opened by 1-Dec-2017) ❑ In 2017, Sphera opened its first two KFC restaurants in Italy and is set to become 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 Number of Locations (split per brand / restaurant format) 2 3 12 Bucharest 29 KFC 2 11 PH 19 15 Pizza Hut 15 Delivery 2 Taco Bell 51 8 10 Drive-through Food Court In Line KFC restaurants PH and PH Delivery restaurants Notes: (1) first in FSR and second in QSR, in terms of sales, (2) As of 15-May-2018 4 Taco Bell restaurants Source: Company Inforrmation
Sphera at a glance Corporate structure 99.9% 99.9% 99.9% 80% 100% 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 franchise holds the franchise rights to operate KFC- rights to operate Pizza rights to operate Taco rights to operate KFC- rights to operate KFC- branded restaurants in Hut-branded restaurants Bell-branded branded restaurants in branded restaurants in Romania in Romania (Pizza Hut restaurants in Romania certain regions of Italy Moldova Dine-In and Pizza Hut Delivery) ❑ holds sub-franchise rights 5
Key Investment Highlights 2 1 Solid macroeconomic Leading food service environment in group operating a Romania and favorable portfolio of internationally trends in the restaurant recognized brands sector 3 8 Significant further growth Proven network roll- potential in Romania and out capabilities with massive white space long track record of opportunity in Italy successful growth Logo/Text 7 Enhanced marketing 4 Highly profitable capabilities investing business model with directly into notable strong cash generation successful marketing and 100% dividend campaigns payout ratio 6 5 Operational Scalable platform excellence proven by with fully fledged consistent top ranked process in place among YUM allowing efficient franchisees in Europe roll-out 6
Leading Foodservice Group in Romania Sphera in the Romanian Foodservice Market QSR player on the QSR segment (18% market share) #2 and #1 on the chicken segment #2 player on the overall chained foodservice market (15% market share) ✓ c. 80% spontaneous brand awareness among Romanian customers (YE 2017) ✓ customer base consists mainly of young and middle aged people (78%), mostly educated ✓ (at least 35% high school), with an average First Taco Bell was opened on household income 12-Oct-2017 in Bucharest ✓ 72 restaurants in Romania ✓ Second opened on 30- as of 15 May 2018 Nov-2017, also in Bucharest player on the Home delivery segment (nearly 21% #2 market share) ✓ Order accessibility: classic call center lines, player on the FSR segment #1 dedicated website platform, mobile (nearly 3% market share) application player on the overall chained #3 ✓ foodservice market (7% market share) As of June 2017: 28% electronic ✓ orders 49% spontaneous brand awareness among ✓ 18 restaurants as of Romanian customers ✓ 15 May 2018 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 ✓ 22 restaurants as of 15 May 2018 7 Source: Company information; Euromonitor, Consumer Foodservice in Romania, May 2017; Deloitte Analysis
Leading Foodservice Group in Romania Market Structure and Competitive Overview KFC still no. 2 but growing faster (2016 data) Chained players generated only 15% of sales (2016 data) 3% ‘13 - ’16 var. +pp. # Brand Product offering 2016 Mk share Full-Service Restaurants/FSR 12% Burgers, Chicken, Cafes/bars 1 29.2% +0.2% 15% Salads, Desserts Street stalls/Kiosks 38% Chicken, Burgers, 2 18.0% +3.3% Fast Food/QSR Salads, Desserts RON 17.8 bn 14% Self-Service Cafeterias 778 mn transactions Sandwiches/tortillas, 3 3.2% +1.3% Salads 100% Home Delivery/Takeaway 4 Salads 2.9% +2.0% 86% Bakery products, Chained Independent 5 2.3% -0.7% Sandwiches, Deserts 31% Top 5 55.6% Source: Euromonitor, Consumer Foodservice in Romania, May 2017 Source: Euromonitor, Consumer Foodservice in Romania, May 2017 FSR: Sphera no. 1 and increasing distance vs no. 2 (2016 data) Delivery: Sphera no. 2 (2016 data) ‘13 - ’16 var. +pp. ‘13 - ’16 var. +pp. # Brand Product offering 2016 Mk share # Brand Product offering 2016 Mk share 1 Pizza, Pasta, Burgers 2.8% +0.7% 1 Pizza 22.3% +3.4% Pizza, Pasta, 2 0.6% 0.0% 2 Pizza 20.6% +2.1% traditional Italian food Traditional Serbian 3 0.5% +0.1% 3 Pizza 13.6% +7.2% food Romanian cuisine, 4 0.5% 0.0% 4 Pizza 10.5% -0.9% Grill Grill, Romanian and 5 0.4% +0.4% 5 Chinese Food 2.8% -0.7% Moldavian cuisine Top 5 4.8% Top 5 69.8% Source: Euromonitor, Consumer Foodservice in Romania, May 2017 Source: Euromonitor, Consumer Foodservice in Romania, May 2017 8
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