Sphera Franchise S A : Rezultate financiare preliminare 2021

2 0 2 1 P R E L I F I N A N C I A L

M I N A R Y R E S U L T S

S P H E R A F R A N C H I S E G R O U P S A

TABLE OF CONTENTS

ISSUER INFORMATION __________________________________________ 3

FINANCIAL RESULTS HIGHLIGHTS _________________________________ 4

2021 RESULTS ANALYSIS ________________________________________ 5

MAIN FINANCIAL RATIOS _______________________________________ 11

SIGNIFICANT EVENTS IN Q4 2021 & AFTER CLOSING OF THE REPORTING PERIOD _____________________________________________________ 12

DECLARATION FROM THE MANAGEMENT ___________________________ 14

PRELIMINARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE TWELVE-MONTH PERIOD ENDED 31.12. 2021 (UNAUDITED) _ 15

The preliminary condensed consolidated financial statements presented on the following pages are prepared in accordance with International Financial Reporting Standards, as adopted by European Union ("IFRS").

The preliminary condensed consolidated financial statements as of December 31st, 2021 are unaudited.

The financial figures presented in the descriptive part of the report that are expressed in million RON are rounded off to the nearest integer. This may result in small reconciliation differences.

NOTE: As of January 1st, 2019, Sphera Franchise Group applies IFRS 16 "Leases" standard that sets out the principles for the recognition, measurement, presentation, and disclosure of leases. When analyzing the performance of the Group, the management's focus is on the financial results that exclude the impact of IFRS

16. Therefore, the basis for the financial analysis on the following pages are the results excluding IFRS 16. Nonetheless, for most of the tables in this report are providing financial results both including, as well as excluding the impact of IFRS 16. For more information on the impact of IFRS 16 Leases on the preliminary condensed consolidated financial statements of Sphera, please refer to the Preliminary Condensed Consolidated Financial Statements.

ISSUER INFORMATION

INFORMATION ABOUT THIS FINANCIAL REPORT

Type of report	Preliminary Financial Results
For financial period	01.01.2021 - 31.12.2021
Date of publishing	24.02.2022
ISSUER INFORMATION
Issuer's name	Sphera Franchise Group S.A.
Fiscal code	RO 37586457
Trade registry number	J40/7126/2017
Registered office	Calea Dorobanților nr. 239, 2nd floor, Bucharest sector 1
INFORMATION ABOUT FINANCIAL INSTRUMENTS
Subscribed and paid-up share capital	RON 581,990,100
Market on which the securities are traded	Bucharest Stock Exchange, Main Segment, Premium
Category
Total number of shares	38,799,340
Symbol	SFG
CONTACT DETAILS FOR INVESTORS
Phone / Fax	[phone] / [phone]
E-mail	[e-mail]
Website	www.spheragroup.com

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FINANCIAL RESULTS HIGHLIGHTS

Sales per geography

Sales per brand

RON 85.7 mn

Restaurant operating profit in 2021 vs RON 49.3 mn in 2020

67%		RON 27.4 mn
increase in normalized EBITDA		net profit in 2021 vs net loss of
in 2021 vs 2020, reaching RON
	RON 2.4 mn in 2020
73 mn

RON 285.4 mn	23%
In delivery sales in 2021, out of		Increase in like-for-like sales on
	all 3 markets in Q4 2021 vs Q4
which RON 82.3 mn just in Q4 2021
2020

170

KFC, Pizza Hut and Taco Bell restaurants on all 3 markets as of 31.12.2021, out of which 13 new restaurants opened in 2021

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2021 RESULTS ANALYSIS

Sphera Franchise Group generated RON 271.6 million consolidated sales in Q4 2021, a 30% increase compared to same quarter of 2020 however, due to restrictions caused by the introduction of the green pass in Romania, recorded a slight decline of 4% quarter-on-quarter. Sales generated by KFC, Pizza Hut and Taco Bell in Romania in the last quarter of 2021 contributed with RON 231.1 million, a 24% increase compared to same period of 2020, however declined 7% q-o-q. Sales in the Republic of Moldova reached historic heights of RON

3.6 million, a 22% increase compared to the same period of last year and a 13% increase q-o-q while performance in Italy improved significantly, reaching RON 36.9 million, an 88% increase compared to Q4 2020 and an 11% q-o-q increase.

In terms of split per brand, in Q4 2021, KFC brought revenues in the total amount of RON 234.1 million (28% increase compared to Q4 2020; 4% q-o-q decline), Pizza Hut - RON 24.7 million (55% increase compared to Q4 2020; 7% q-o-q decline) and Taco Bell - RON 12.7 million (44% increase compared to Q4 2020; 9% q-o- q decline). The results clearly show the effect of the restrictions on the movement for the persons not holding a COVID-19 certificate in Romania, who throughout almost the entire Q4 of 2021 were restricted from entering any closed spaces, including restaurants, and shopping malls, having only the option of buying for delivery or using drive-thru restaurants.

Restaurant expenses grew marginally faster than the sales in Q4 2021, reaching RON 259.3 million, a 33% increase compared to Q4 2020. The increase was primarily driven by the payroll and employee benefits, which increased 44% compared to same quarter of 2020, reaching RON 63.6 million, determined by the need for the recalibration of the workforce related to the sales level and by the limited technical unemployment measures in Q4 2021 compared to Q4 2020. The costs of food and material appreciated 35%, reaching RON

1. million. The pressure on costs was partially absorbed through sales price increases but due to the significant increase in the inflation at the end of 2021, it grew slightly faster than the sales. Rent increased 22%, reaching 18.8 million as the Group had limited opportunities to renegotiate the rent agreements as opposed to a year ago, as well as the Group operated a larger number of restaurants (13 new restaurants in 2021). Advertising expenses increased 83%, reaching RON 17.6 million due to Group's continuous focus on communication, product innovation and digitalization. Royalties, directly related to the topline, grew 37% reaching RON 16.3 million. Depreciation and amortization reached RON 9.2 million, an 11% decrease compared to Q4 2020 impacted by the closing of the 4 identified non-viable Pizza Hut and Pizza Hut Delivery locations in Q4 2020. Other operating expenses increased 19%, reaching RON 42.4 million, driven by a 60% increase in utilities (reaching RON 9.9 million), a 15% increase in third-party expenses (amounting to RON

1. million), and a 38% increase in maintenance and repairs (amounting to RON 4.4 million) compared to Q4 2020. The increase in the third-party expenses was mainly due to increase in the aggregators' volumes.

Restaurant operating profit in Q4 2021 amounted to RON 14.9 million, a 3% increase compared to Q4 2020. The G&A expenses decreased with 23%, reaching RON 12 million and thus the operating profit amounted to RON 2.9 million, versus a loss of RON 1.2 million in Q4 2020. Finance costs increased 119% due to negative foreign exchange impact and additional financing contracted in Q4 2021, reaching RON 2.8 million. The Group ended Q4 2021 with a gross profit of RON 70K and a negative bottom line of RON 0.7 million, a decline compared to a positive net result of RON 2.3 million registered in Q4 2020.

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