Ibersol SGPS S A : Consolidated Report & Accounts 1st Half 2023

IBERSOL - SGPS, SA

Publicly Listed Company

Registered office: Praça do Bom Sucesso, 105/159, 9th floor, Porto

Share Capital Euros 42.359.577

Commercial Registry: Oporto under number 501669477

Fiscal number: 501669477

Consolidated Report & Accounts 1st Half 2023

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Continued Operations Turnover of 192.7 million Euros

Increase of 29.7% over 1H of 2022

Continued Operations EBITDA reached 30.2 million Euros

Ebitda increased 41.2% over 1H of 2022

Continued Operations net profit of 3.1 million Euros

Recovery of 2.2 million euros compared to the same period of 2022

Consolidated Management Report

Activity

Following the sale of the Burger King operations in Portugal and Spain at the end of November 2022, the activity of all Burger King restaurants in 2022 and the restaurants not yet sold in 2023 are reported as "Discontinued Operations" with regards to financial information reporting.

After starting the first half of the year, with robust growth in continuing operations, still due to the impact of the Omnicrom variant in the first quarter of 2022, in the second quarter of 2023, despite the demanding economic context, the group recorded a positive performance in most of the brand portfolio and geographies in which it operates, guaranteeing like for like growth in restaurants on Iberia of more than double digits.

The monthly evolution of performance in the different geographies reflects the comparability in the second quarter with more demanding periods without restrictions in 2022 and the impact of expansion, with the opening of new restaurants in Portugal and Spain, registering a gradual slowdown in the pace of growth.

In Angola, activity was marked by the sharp devaluation of the AKZ against the EUR, which reached (52%) in June, causing a reduction in activity in euros despite the good performance in local currency.

The pressure on consumption resulting from the high levels of inflation in parallel with the increase in interest rates meant continued efforts to absorb the impact on margins, in order to maintain volumes with occasional price increases. Together with investments in the opening of new restaurants, this ensured a growth in "Continuing Operations" of around 30%.

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The "Continued Operations" represent a total turnover in the first six months of 2023 of 192.7 million euros, which compares with 148.5 million euros in the same period of the previous year.

Despite the slowdown in the growth of the restaurant market in the geographies in which we operate, the group recorded a growth in all segments, particularly the "Counters" and "Concessions and Catering", with a relative performance of over than 30% compared to the same period in the previous year.

The "Concessions and Catering" segment, heavily penalized by the pandemic and after a faster than expected recovery in 2022, showed once again a sharp growth pace, directly related to the increase in traffic passengers at airports where the group operates restaurants.

In Spain, where the group operates restaurants in seven airports, the first half of the year has registered the recovery of the traffic passenger's levels seen in the same period of 2019, with the exception of Barcelona and Madrid airports, which were still 7% and 3% respectively short of reaching pre-pandemic levels.

In Portugal, traffic at airports was 16% higher than in 2019, with emphasis on Madeira and Lisbon, with traffic increases of 41% and 12%, respectively.

During the month of May, the operation of the nine concession restaurants at Madrid airport began on a provisional basis, until the conversion to restaurants in the definitive brands and formats are completed, which is expected to begin in the fourth quarter.

The resumption of traffic and recovery of consumption habits interrupted by the pandemic, led to a sharp growth of 39% in this first half, compared to the same period of 2022, eliminating the effect of Burger King restaurants located in concession areas.

However, there were signs of a slowdown in the pace of traffic recovery of 2019 at the end of the second quarter in most airports, which continued into the summer season, which could compromise the recovery of annual pre- pandemic traffic of 2019, particularly at airports from Barcelona and Madrid.

Counter segment of continued operations maintained its good performance, registering a sharp growth of 33% compared to the same period of 2022, to which the impact of the expansion, namely of the KFC and Taco Bell brands, which occurred at the end of 2022, contributed decisively.

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Restaurants, despite the sharper slowdown in the growth pace of higher ticket concepts and the internal delivery service component more exposed to greater competition from aggregators, registered a growth of 12% compared to the same period of 2022.

During the semester, 5 restaurants were definitively closed (4 of which were franchised), with the opening of ten restaurants in Spain (nine in a provisional format at Madrid airport and a new KFC restaurant) and 2 restaurants in Portugal, from Pans and Pizza Hut.

Additionally, the new concession contract at Lanzarote airport began, in which the group ensured the maintenance of the operation of the seven restaurants it already operated and an additional restaurant scheduled to open in the second half of the year.

At the end of the semester, the total number of restaurants was 494 (432 equity and 62 franchises), as shown below:

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Consolidated Financial Performance

Despite the challenging context, resulting from the impact of food inflation and increased consumer price sensitivity, the high growth in activity during the semester allowed to mitigate the pressure on the cost structure, particularly in terms of gross margin.

The continued operations operating income at the end of the first six months amounted to 7.9 million Euros, which compares with 4.5 million Euros in the same period of 2022.

Turnover amounted to 192.7 million Euros, 30% higher than the 148.5 million Euros in the same period of 2022, with more 9% directly operated restaurants.

Gross margin was 75.7% of turnover, 0.7 p.p. lower than in the first half of 2022, evidencing the increased pressure on raw material prices not directly translated into sales prices.

Still during the transition process of the operation of the Burger King restaurants, sold in November 2022, the group ensured the supply of raw materials until mid-January, with a penalty of 0.2 p.p. in the margin for the semester.

The recovery of activity, in parallel with strict management of worked hours, allowed to achieve productivity gains and incurring a 25% increase in Staff costs, with the weight of this cost representing now 31.2% of the turnover (1H22: 32.5%).

External Supplies and services costs increased 25%, representing 29.9% of turnover, which represents a reduction of

1.3 p.p. compared to the same period of 2022. The recovery in traffic and the consequent increase in rents at the concession airports in Spain contributed to this increase, which, with the exception of the airports in Menorca (having

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