Good afternoon and welcome to Sphera Franchise Group Preliminary 2024 Results Call. My name is Zuzanna Kurek, and I am Investor Relations Officer at Sphera Franchise Group, and I will moderate today's call. Today morning, we have published our preliminary 2024 pesults, which you can find on our website and Investor Relations section, as well as on BVB's website, Sphera Franchise Group Investor profile. Before we begin, I would like to mention that this call is being recorded and that the recording of this call will be uploaded on our website by Monday the latest. As stated in the call invite, by joining the video conference, you automatically and implicitly consented to being recorded. If you do not consent to being recorded, please leave the call. In terms of organizational aspects, we will follow a standard call setup, which means the management will deliver a presentation outlining the preliminary 2024 results, and later we will have a Q&A session. Please note that today's presentation is focusing only on the preliminary 2024 results, and therefore we will not be answering any questions related to our 2025 budget, annual targets, or dividend proposals. Consequently, we kindly ask you to refrain from putting such questions during this call's Q&A. Sphera Franchise Group 2025 budget will be published via current report later in March, around March 28th, ahead of our general meeting of shareholders scheduled for April 29th, 2025. Please note that all the participants are put on mute. If you would like to ask a question, please type it in the chat box. Feel free to do it during the call, and we'll answer all the questions in chronological order as soon as the presentation of the management is over. Last but not least, even though I just mentioned we will not be commenting on the budget, I nonetheless would like to mention that we might be making forward-looking statements today during this call regarding the future performance of Sphera Franchise Group and that actual results may differ materially. We encourage you to review the disclaimer that we have included in the presentation, which is now available on the screen, as well as you can find it on our website, Investor Relations section. We have uploaded the slides from today. This disclaimer applies equally to all the statements made in today's call. Now, let's kick off the call. I would like to introduce the management that is here with me today and will present our preliminary 2024 results. I am joined today by Călin Ionescu, Chief Executive Officer, and Valentin Budeș, Chief Financial Officer. I will now pass the floor to our CEO, Mr. Călin Ionescu, who will share with you insights about our performance in 2024. Călin, please. Thank you. Good afternoon, everyone. Thank you for joining our meeting today. We ended 2024 with good results, although we once again had a year that tested our resilience, adaptability, and professionalism. I was recently asked by a journalist what characterized best 2024, and I answered without hesitation, elections. From the decisions taken by the politicians, many of them populist, such as increasing pensions, higher taxes on dividends, and new taxes on turnover from some large companies, which were reflected in inflation, to the absence of the necessary measures to reduce the budget deficit. This context has created a climate of uncertainty in which companies have been forced to make decisions often without clear directions. On top of this, the rounds of elections, these question marks that persist. However, we ended the best year in history in terms of sales, EBITDA, and net profit. In 2024, we exceeded the RON 1.5 billion threshold in sales for the first time. EBITDA increased by almost 20% in normalized terms, and consolidated net profit is 22% higher compared to the previous year. We managed to closely follow our strategy and achieve results despite the heavy context of 2024. We continued to open with a sustained pace, focusing mainly on drive-thru units out of the seven new restaurants forward of this time. We took a concrete step in Sphera's expansion by adding Cioccolatitaliani brand to our portfolio. It is an important milestone. We are expanding our reach beyond the QSR segment and broadening our customer base, attracting a new audience. We are diversifying, which strengthens the group's resilience. It consolidates our position in the Italian market. It's a profitable brand with expansion horizon in multiple markets, which fuels Sphera's long-term growth potential. Last but not least, it supports our leading position in the Romanian restaurant industry and the vision of becoming a major player at the European level. As I mentioned, we achieved all this in a difficult climate, which emphasized the systemic problems [Kurek] faces: inflation, with the impact of operational costs and labor shortages. Although inflation was lower than 2023, it still did not fit into the forecast from the beginning of the year. Consumer purchasing power continued to erode, and we had to find the balance between maintaining competitive prices and covering increasing costs from raw materials and utilities. I admit that we directed a lot of resources and energy into cost management, ensuring that product prices remain as affordable as possible for customers while protecting our margin. This delicate balance requires careful attention, as any misstep in either direction can affect the well-being of the business. We continue to negotiate, keep contracts firmly but fairly, optimize operations, and focus on more profitable sales channels, such as our own, thus reducing the impact of third-party commissions. At the same time, we invest in people to keep our teams stable and motivated. We are cautious about the final price for customers, being aware of the budgetary pressure they also face. Looking towards 2025, we know that the challenges are not going away. The extension of the election period has led to the postponement of some fiscal measures, which determined the entire business environment and even customers to be cautious and prepare for multiple scenarios. Inflation has not yet declined to a healthy level, but its downward trend makes us optimistic about the evolution of costs. Last but not least, the geopolitical context remains extremely fragile, and we may be going through a moment of historical inflection. We remain cautious, on guard, following our strategy, but ready to adapt. Our supply chain strategy is based on strong partnerships with the key local suppliers, allowing us to effectively manage cost pressures as well as contingency plans. We continue to improve operational efficiency across all brands through restaurant optimization, efficient process, and leveraging technology. We monitor customer behavior through data analytics to ensure that our products and offerings are aligned with market demands. We start 2025 prepared for another difficult year, but with confidence in our solid fundamentals, in our team that has proven through results throughout the year, and in the strategy that has delivered so far. Thank you. I invite Valentin to present to you in detail the financial performance of 2025. Thank you very much, Călin. Good afternoon, everyone, and thank you for joining today's call. You have just heard from our CEO about the broader picture, a year marked by both challenges and milestone achievements. I would like to dive deeper now into the financial metrics that underscore our success. Before that, let me begin with a short personal note. I've often been asked what keeps me enthusiastic in a business climate that is, frankly, never short on surprises: election years, persistent inflation, labor shortages, rising costs. Despite all that, I find a deep satisfaction in seeing our strategy come to fruition and witnessing the steady drive of our teams. It's a powerful reminder that even in a high-pressure environment, collaboration, discipline, and the willingness to adapt can carry us forward. I'm delighted to report that 2024 was the best year in our history in terms of sales, normalized EBITDA, and net profit. We surpassed the notable threshold of RON 1.5 billion in restaurant sales for the first time. In parallel, we continue to reinforce our cost control measures and to develop the network, and these remain key drivers of our profitability, allowing us to achieve consistent double-digit growth in our operating profit and net results. Let me now walk you through some of the key numbers. As mentioned, the total restaurant sales reached just above RON 1.5 billion, up roughly 5.6% year-on-year, an increase consistent with the consolidation phase of our group. This stems from stable overall demand, strong brand equity in Romania, double-digit growth rates in Moldova, and the moderate expansion in Italy. KFC remains the lion's share of group sales, driven mainly by the strong evolution in Romania and boosted by the new restaurant openings, particularly drive-thrus, which continue to be strong revenue channels. Taco Bell continues to grow at a healthy pace year-on-year, supported by both new product launches and targeted marketing campaigns. Pizza Hut sales faced mild contraction due to the store closures, but by Q4, we saw clear momentum building up from the smaller but healthier network. Our restaurant expenses increased at a slower pace rate if we are looking in comparison with the sales, one of our core objectives, and I will get back later with details on how different cost categories evolved. Restaurant operating profit rose at a double-digit pace by 22%, fueled primarily by the strong performance of KFC Romania and the mild but meaningful improvement in Pizza Hut results. EBITDA saw robust growth across the group by 20% year-over-year, reflecting not just higher sales, but also our disciplined approach to controlling overheads. In Q4 2024, we again surpassed the RON 400 million mark that was important for our quarterly sales, a testament to the network expansion and enduring customer demand. However, restaurant expenses rose by 5.3% year-on-year, largely reflecting higher payroll costs, up 10.3% year-on-year, amid industry-wide wage adjustments. This cost pressure, coupled with almost doubled income tax following KFC Romania becoming an income taxpayer, led to a 10.5% year-on-year decrease in the restaurant operating profit and a 28.7% year-on-year drop in net profit. Nonetheless, the quarter still stands out for topping the RON 400 million threshold for the second time in a single year, underscoring that demand for our brand remains strong even as we navigated higher costs. Looking at the 2024 overall picture, it shows healthy growth with double-digit increase for main profitability indicators and a very low increase in restaurant expenses of only 3.5%. Last year, we managed to keep the food and material costs under control, which increased by only 0.9% compared with 2023, thanks to consistent negotiation strategy with suppliers and an improved supply chain structure. As a result, this category weight in total sales decreased by 1.4 percentage points, down to 31.2%. In a time where inflation, although on the declining curve, was still relatively high, holding this cost in check represents a real accomplishment. This focus on cost control measures, as well as labor management, is crucial to navigate this period and being successful with all these persistent challenges of a competitive job market. That said, we remain mindful about offering a motivating environment for our teams, retaining talent while keeping wage expenses at a sustainable level in a tough balancing act. We achieved mild single-digit growth in payroll and benefit, a figure that remained below overall labor market inflation. The group concluded 2024 with a consolidated net profit of around 35% higher year-over-year and 22% on a normalized basis. This level of growth underscored that the structure we put in place, optimizing both top and bottom lines, works. We effectively balanced investment in expansions with delivering profitability. It is worth noting also the fact that the net debt-to-EBITDA ratio reached the lowest level in history for the year end, i.e., 0.25. Now, please allow me to walk you briefly through the business updates, as Călin has already covered them in detail. We have opened seven new restaurants, out of which four of them were drive-thrus, KFC in Romania. Just a reminder that drive-thru remains a cornerstone of our expansion strategy, offering higher volume and strong brand visibility. Perhaps the most exciting development is adding Cioccolatitaliani to our portfolio in Italy. The plan is to open the first unit in the first half of 2025. If all goes well, we might even see an opening in Romania down the line, which could diversify our revenue streams and strengthen the group's resilience. In 2024, our share price continued to massively surpass the BET index, 56.8% versus 8.8%. The trading liquidity almost tripled, reflecting strong investors' interest and validating our decision to add a second market maker. We rewarded shareholders with a supplementary dividend of RON 1.05 per share, which was paid in November. In 2024, total dividend of RON 2.1 per share has been distributed to our investor, the total dividend yield for 2024 being around 5.6%. Overall, this reflects the investors' confidence in our strategic direction and in our financial performance. While I've touched on the headlines, let me now add a bit more granularity. The marketing campaigns for KFC Romania focus in Q4 on building on the value-for-money perception, and you see here some examples of the campaigns during Q4 2024. Overall, KFC Romania continues to be our high performer, generating over 2/3 of our total group turnover. It delivered an outstanding net profit of around RON 100 million, up more than 15% year-on-year. It remains a reliable engine for the group, showing a very healthy EBITDA margin of 13.3%, partially thanks to a balanced approach to pricing, disciplined negotiation with suppliers, and capitalizing on the strong brand recognition in our market. In Q4 2024, same-store sales registered a slight decrease on the back of strong comparison base from Q4 2023 and consumer prudence fueled by uncertainty in the electoral context in both Romania and the Republic of Moldova, and nevertheless, the broader inflationary pressure. However, the overall evolution for KFC Moldova can be resumed by small footprint but big growth. We saw double-digit expansion in sales and net profit with a consistently strong EBITDA margin of 17.6%. Encouraged by these results, we added a new restaurant in Chișinău, laying the groundwork for future growth. For KFC Italy, sales growth was positive, albeit more subdued, which we anticipated in a more mature and competitive QSR market there. Net profit, while still in the black, did not expand as strongly as we wished, reflecting a tougher environment, but also a very strong comparison base in 2023. We remain confident in Italy's potential, especially given the upcoming expansion of Cioccolatitaliani in that market, but we'll keep a measured pace. Meanwhile, Pizza Hut continues its turnaround process. Campaigns revolve around value-for-money, but also iconic products as ticket protector. We streamlined the network in 2023 and last year as well, and the brand is back on a more positive trajectory, registering profit at restaurant operating level. This decision was hard in the short term, but the brand is now on a better profitability track, posting almost RON 1 million in restaurant operating profit and reducing net loss by around 30%. The difference from a year ago is quite encouraging, and though there is still progress to be made, the consistent improvement underlines that our reorganization strategy was on point. The next phase is focusing on refreshing the menu, optimizing the service lines, and a refined marketing approach to attract more customers for dining as well as delivery. Taco Bell's capacity to resonate with younger customers while steadily reaching a broader audience validates the strategic bet we have taken over the past years. The brand shines with outstanding topline growth and an impressive improvement in both normalized EBITDA that jumped by almost 60% and net profit growing sixfold. We are particularly proud of how we improved Taco Bell's margin, heading into double digits. In Q4 2024, delivery sales increased by 1 percentage point compared to Q3 2024 and remained at the same level as in Q4 2023, accounting for 18% of the group sales. Our focus on more profitable owned delivery channels is visible as their contribution during Q4 2024 to 9.9% of total delivery sales, from 8.3% in Q4 2023. In summary, 2024 was a milestone year for Sphera Franchise Group. We hit record sales, recorded an impressive improvement in operating margins, and made significant progress in brand development. KFC Romania leadership, Taco Bell's star-like growth, and Pizza Hut's encouraging turnaround are all reflections of our adaptability and consistent application of cost control measures. Despite this year's success, we remain clear-eyed that 2025 poses its own hurdles. Nevertheless, we are tackling 2025 with a balanced mix of caution and optimism. We plan to further expand the network, focusing on high-return formats and geographies without overextending our capital budgets. Efficiency in the back-of-house operations and supply chain also remains a huge priority going into 2025. Last, the cost control measures remain central. We will continue refining the cost structures, ensuring we stay flexible and prudent with each investment. We believe the fundamental strength that carried us through a politically and economically cloudy 2024, robust brand power, continuous operational improvements, and a dedicated workforce will be our advantage in 2025 too. Thank you very much for your attention and for continued trust in Sphera Franchise Group. I am very happy to take your questions now. Thank you very much, Valentin. I see we do not have yet any questions, so we will take a few minutes so you have time. Just a few organizational aspects. If you would like to ask a question, please type it in the chat box. We will then read it out loud and address it in chronological order. Once again, as a kind reminder, we will not be answering any questions related to our 2025 budget, annual targets for 2025, or dividend proposals. Consequently, we kindly ask you to refrain from putting such questions forward during this call. Thank you. Thank you so much for the questions. We will now start the Q&A session. In the meantime, as usual, please type your questions as we respond. The first question is the following. Congratulations for the results. Can you comment on KFC's negative same-store sales in Q4 2024? How do you see same-store sales in the coming quarters? Can you increase pricing, volumes, et cetera? I will invite Călin to address this question. Thank you. Regarding our plans for growth and the network, we plan to open another five KFC restaurants in Romania, another one or two Taco Bell in Romania, three or four Cioccolatitaliani in Italy, and probably another one or two KFC in Italy. The next point in this question is how much is the delivery in the sales and what are your plans. The delivery in the mix of sales is 18% in this moment, and probably the trend is negative, probably decreasing in the next years. On the cost optimization, I will invite Valentin to speak. Sure, sure. First of all, I will tackle the beginning of the question coming from Kristi, and I will touch a little bit on the subject of same-store sales in Q4. Doing this, I will start with a reminder that I also mentioned that the same-store sales will reach a moment in which they will not be so powerful. We always have until now a base effect, and once the network increases, the same-store will be tempered. From an initial few years ago, double-digit increase, we always mentioned that it will go towards one single low-digit increase. This correction of the Q4, in the context of huge uncertainty in Romania and Moldova, where we can see this decrease due to the political context and due to the elections, fueled as well by the inflation and caution from our consumers, put us in the position to record this performance. We expect to speak about the curve here, even though we may see similar situations in the upcoming months due to different other factors. With all the plans that I mentioned, with the value-for-money, with the huge value proposition, we are fighting with this negative trend in transactions. Now, continuing with where we remained, we remain to remind me of the cost. Still optimization. Any room to optimize costs? Yes. So the cost optimization, it is always on our table. Basically, this is part of our DNA already. Once we finish one category, definitely pops opportunities in other categories. We will remain focused. We have internal targets to be able to accomplish all of these, and we expect to see benefits in 2025 as well. There are sensitive categories, as we mentioned in our speech, related to the cost of labor. It is the pressure coming in the cost of goods category that, at the end of Q3, you remember that we mentioned that we benefit in the beginning of the year of a timing effect of all this pressure, and sooner or later, this will be translated in the cost. We saw this already in Q4, but with hard negotiation, we are optimistic to keep it under control and in 2025 to still see benefits on different cost lines. Thank you, Valentin. Thank you, Calin. We hope this answers your questions. If you'd like any follow-ups, feel free to type them. We now continue to the next question. Can you elaborate more on the changes in taxation that drove effective tax rate increase in Q4 2024? I will invite Valentin to address this question. Sure. I will start with a little bit of history to be clear for everybody. In Romania, the income tax applicable for our industry was different than the normal fiscality. It was a specific tax, which it was changed. It was canceled, but it was still an opportunity for our industry to apply for micro-income tax, which is different than the normal income tax, i.e., it was 1% of the turnover. For KFC, from where it comes, the big impact that we are all discussing now, we opted for this 1% income tax, the micro tax, which later, i.e., in 2024, was canceled. It was only the 3% or the normal income tax. Because it was more advantageous for our group, we did not switch to the 3%, which was generating a bigger negative impact. We went for KFC to the normal income taxes for the other companies in our group. This switch from the 1% income tax on turnover to the normal income tax in Romania, 16% on profit, we can see these variance if we are comparing with the corresponding base of the previous year. On top of this, in Q4, a negative effect specifically for Q4, but diluted on a yearly basis, is the calculation of the deferred tax in Italy, which has an impact in Q4. All of them create these variance if we are comparing with the history, even with the previous quarters during the year or with the previous year where it was different taxation. Thank you, Valentin. We move to the next set of questions. The first one is, can we expect Pizza Hut to turn profitable on the net income level in Q1 2025? Again, I will give this question back to Valentin. Yes, I will start saying some words here. First of all, again, the trajectory is visible. We are proud with the progress, even though we always expect more. In the same time, we remain optimistic with what will happen in the future. Our internal goal is to have 2025 breaking even from an operational point of view, i.e., EBITDA perspective. This will be the prerequisite of future profitability on an overall approach. Once the budget will be published and finalized, then we'll all be able to have more color on what does it mean from a Pizza Hut point of view for 2025. Thank you. We now go to the second one from this set. Given the higher taxation for USFN Romania, can we expect higher pressure on bottom line in Q1 2025? Do you see profitability at the same level as Q1 2024? Actually, let me skip because I didn't respect the chronological order of the questions. We will come back to this, Adrian. We will go now to the questions on, can you please elaborate on your pricing policy? When, how will you increase prices to customers? Please detail policy directed at keeping personnel, wage policy, etc. I'll take this one, Zuzanna. Our pricing policy, it's a fluid approach. We know that we have exercised pricing in the past, and we are confident that we still have pricing power. Though this, it's always implemented after very strong internal analysis. We will evaluate the progress during 2025. Based on the criteria that we are analyzing, we will decide when and how much we will exercise this option. However, we are very focused on being competitive in the market, securing transactions, and being able to deliver value for money in our marketing propositions. In conclusion, there is not a fixed and rigid approach from a pricing point of view. It is either a management decision based on performance, market conditions, and strategy. Plus, to be very frank, it is the last thing that we want to do, yeah, to increase the pricing. In the same time, as I mentioned in my speech, we want to, in the same time, we want to protect the margin of the company. Thank you. The next question is, could you please elaborate more on the negative same-store sales trend in KFC and Pizza Hut versus positive trends in Taco Bell? I understand the indication of consumer prudence due to political situation, but this should have affected Taco Bell as well. Likewise, the base period trend was strong in Taco Bell. True. It's a very correct approach. Taco Bell, it's a different story. It's a different footprint. It's a different brand. It's a different niche. All of these ingredients likely put us in a position to have more fuel for this business line. I'm sure that you understand that you cannot compare a base of more than 100 restaurants with a base of less than 20 restaurants. We cannot compare the products. We cannot compare the locations. We cannot compare the magnitude of the effect. That's why we are in this situation, and we are working hard to balance the difference between the two businesses. Thank you, Valentin. Did you front-load wage increases in Q4, and we will not see the minimum wage increase [induced] jump in Q1 2025? Yes, it was already an adjustment, an adjustment from this point of view. I will go again to the roots of this aspect because the impact of the minimum wage is not directly transferred to our business. We are not a business that is fully operating under the minimum wage. However, all the minimum wage implications create a cascade on all the salary layers. There are some adjustments directly related to these modifications, but mainly we speak about adjustments rather to calibrate the layers with the market as a cascade effect of the impact of the minimum wages. That is why there is a timing effect with which we can play around, or we can do it in more steps to calibrate or to ensure the competitiveness of our salary proposition in the labor market. Thank you, Valentin. The next question is, which was the impact of applying income tax instead of profit tax? Basically, here we are speaking mainly about the variance that you can see in the income tax line in our financial statements. Because, as I told you, we are speaking about 2024 with a different fiscal structure and 2023 with the income on the turnover. The variance between these two periods creates the impact from switching to the normal Romanian fiscal percentage. Thank you. The next question is, given the higher taxation for US FN Romania, can we expect higher pressure on bottom line in Q1 2025? Do you see profitability at the same level as Q1 2024? This is already normalized. We have a comparable base. We have a comparable trajectory in 2025. There will be no hikes due to this aspect. From now on, we will continue with this approach, and it will be linear, of course, depending on the level of the profitability of the company once we are progressing in the future. Thank you, Valentin. The next question, you have not answered about the personal policy. If you could please comment. I will read the question. Please detail policy directed at keeping personnel, wage policy, et cetera. I will invite Călin to address this. Employees are the most important assets for the company. We are concerned about their well-being, and we have a performance-based salary system and benefits. We always consider the difference between the minimum wage and the salary we offer in our companies. We periodically study the market, where is the right level to stay with the salary in the company. I do not know what to say more. Otherwise, it will give you a salary. Thank you. Could you please discuss CapEx for newly opened restaurants? For this, Valentin will answer. Sure. Sure. Again, a little bit of context. Our CapEx, it's always dependent on the format of the locations. Since I'm continuously saying that our focus, our strategy, it's more towards the drive-thru, I consider it relevant to touch base on this format, where we speak of around EUR 1.1 million per restaurant. Of course, there is the Cioccolatitaliani, which is a new format, and you may be interested in the magnitude of the investment in this type of restaurant as well. Here, we are planning a CapEx of EUR 0.5 million per format. Have it in mind that this is related to Italy cost structure. It is the investment for Italy. May I add something here? We are very cautious about this CapEx and us with you on the cost of goods or other cost line. Also, we manage very well this line. And our CapEx, comparing with what's happening in the region, it's the lower per unit. Thank you very much, Călin. We have run out of questions. We are going to hold the line one more minute. If you have any remaining questions or follow-ups on what was discussed during this Q&A session, please type it right now. Thank you. Thank you all. I see we do not have any other questions. We would like to thank you all for joining us. As always, our results are available on our website. Next time we are going to hear each other is going to be after we publish the Q1 2025 results, which is going to be on 15th of May. We're going to hold the conference on the same day. Other than that, we are going to hold the general meeting of shareholders on April 29th. As always, the documentation related to this GSM is going to be available minimum 30 days beforehand on our website. We will also, as I mentioned earlier, publish the budget via a current report on the Bucharest Stock Exchange. You will be able to track all the important updates related to the GSM. Thank you all, and we look forward to hearing you again in May.