Ibersol SGPS S A : Annual Report and Consolidated Accounts 2023

Publicly Listed Company

Head Office: Edifício Península, Praça do Bom Sucesso, n.º 105 a 159 - 9 º andar, 4150

• 146 Porto

Share Capital: 42,359,577 €

Registered at the Porto Commercial Registry Office under registration and tax

identification number 501669477

2023 INTEGRATED MANAGEMENT REPORT

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Integrated Management Report

CONTENTS

1. INTRODUCTION

1. Message from the Chairman of the Board
2. About this report
3. Main events
4. Main indicators (infographic)

2. STRATEGIC FRAMEWORK

1. Economic, sectorial, and regulatory context
2. Description of the Ibersol Group
3. Business model and value creation
4. SDGs and sustainability vectors
5. Stakeholder involvement
6. Materiality assessment
7. Risk assessment and management
8. Sustainability strategy

1. BUSINESS YEAR ACTIVITY
2. CONSOLIDATED FINANCIAL PERFORMANCE 4.1 Consolidated financial performance
   4.2 Financial results
   4.3 Consolidated net results
   4.4 Financial situation Financial Position
   4.5 Individual Net Result and Proposed Application of Results
   4.6 Information on treasury stock transactions.
   4.7 Subsequent events
   4.8 Outlook
3. COMPANY GOVERNANCE

1. Shareholder structure
2. Governance and operational structure
3. Governing bodies
4. Certified management systems

1. ENVIRONMENT AND CLIMATE ACTION

1. Framework
2. Packaging and Waste
3. Energy and other resources

1. PEOPLE AND COMMUNITY

1. Framework
2. Staff
3. Staff development
4. Health and safety
5. Well-being
6. Community outreach

1. ACKNOWLEDGEMENTS
2. APPENDICES TO THE MANAGEMENT REPORT
3. COMPANY GOVERNANCE REPORT
4. CONSOLIDATED FINANCIAL RESULTS
5. INDIVIDUAL FINANCIAL RESULTS

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1. INTRODUCTION

1.1 Message from the Chairman of the Board

The Ibersol Group continues to be a model of modern catering management, respected by partners and stakeholders in the markets where it operates. That's why, even in a year marked by negative challenges, such as continued global geopolitical tension and inflation, we continued with our expansion and remodelling plans at our Pizza Hut, KFC, Pans and Taco Bell brand restaurants, to which we added the high dynamics of our Travel business unit in the Spanish market.

In order to fulfil this goal of growth and sustainability, we have been very attentive to, and focused on, our customers, responding to their expectations and keeping up with market trends through relevant value propositions for each segment, in the knowledge that a relevant value proposition in itself determines a number of very sensitive variables that require the high level of know-how we possess.

In this sense, we had to continue to find balances in the Group's structure so that the pressure from the price increases in raw materials would not be a factor in reducing our results, and these efforts have been driving growth in our volume of transactions and increasing market share in the locations where we operate, whether on the high street, in the shopping centre or through home delivery.

We continue with the great challenge of training and retaining our employees, as they are a key factor in our business. Our employees have been catalysts for positive experiences and excellence at all levels: in care, service, product, operations, attention and availability.

And we have done all this in line with our values, which we renewed at the end of 2023, and which are now represented by the acronym SPICE, bringing together the five major dimensions of our values: Sustainability, People, Innovation, Customers and Excellence. These values strengthen our DNA and reaffirm our principles and ambition for the future.

We expect 2024 to be another year of major challenges and continued high levels of uncertainty. In this context, now as in the past, we are a leading modern catering group that has demonstrated its solidity and unique character.

We have overcome a pandemic and portfolio acquisitions, we have grown our brands and won concessions, we have increased sales in a highly volatile scenario and all of this has only been possible due to our resilience, mobilisation capacity and recognised leadership in the segment.

In this journey, it is important to emphasise the support of all those who have shown their recognition and preference for our Group, namely stakeholders, customers, employees, partners, suppliers, investors and civil society.

A new financial year is approaching, and it brings new challenges, for which we are prepared and mobilised.

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1.2 About this report

This report represents another exercise in integrated disclosure of the Ibersol Group's financial and non-financial performance, consolidating the format adopted in recent years and preparing for a series of changes that will take place within the scope of the European Union's new sustainability reporting requirements.

The report complies with the principles and requirements of the International Financial Reporting Standards (IFRS) and the European Non-Financial Reporting Directive (NFRD) in its transposition into national law through Decree-Law 89/2017, as well as the European Union's Green Taxonomy regulations (Regulation (EU) 2020/852 of the European Parliament and subsequent delegated regulations).

The document also uses the generic principles and specifications of the GRI (Global Reporting Initiative) standards as a reference, particularly with regard to materiality and sustainability issues.

In terms of structure, the "strategic framework" section has been revised in order to clearly and succinctly highlight some of the aspects related to the impacts, risks and opportunities associated with issues considered emerging and material within the scope of the current sustainability strategy. This approach paves the way for the "sustainability demonstration" to be carried out in the next financial year, in light of the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS), in which, through the dual materiality assessment, we will carry out a more exhaustive and systematic revision of all the topics considered relevant to the strategic definition of sustainability.

This document also highlights the Ibersol Group's high level of commitment to the United Nations Global Compact, the formal endorsement of which was finalised during the 2023 financial year, as well as to the United Nations 2030 Agenda and the Sustainable Development Goals (SDGs).

The scope of the report is the activity of the Ibersol SGPS SA Group throughout the 2023 financial year. Any gaps in non-financial information which, due to the natural and cyclical complexity of the Group's operations cannot yet be reported, are duly noted throughout the document, and are being progressively remedied.

1.3 Main events

2023 was a very complex and challenging year, with various factors disrupting the economy and consumers in the markets in which the Ibersol Group operates.

Firstly, the ongoing war in Ukraine and its impacts, which continued to create major problems in the logistics supply chain, but also continuing high fuel costs, which led to an increase in the cost of products from suppliers and services.

On the other hand, inflation remained high, putting pressure on families' economic capacity, coupled with rising interest rates, particularly on mortgage loans, further exacerbating this pressure on families' disposable income.

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Despite this scenario, the Ibersol Group continued with its investment plan, opening and remodelling restaurants under its main brands.

We also launched the Pret A Manger brand, a famous British chain of organic sandwiches and coffees, founded over 30 years ago in London, which joined our portfolio of brands with the opening of two restaurants in Spain. The first unit opened in Barcelona's Josep Tarradella Airport - El Prat and the second in the Sky Centre, in the Airside area of Terminal 1 of the same airport.

These first Pret A Manger openings mark the beginning of the undertaking of new projects in the travel segment, with special attention to concessions in major transport hubs with airports in Spain. Proof of this are the important concessions that the Group has won in Madrid, Malaga, and Tenerife.

The year was also marked by a dynamic of openings of the Pizza Hut brand with new restaurants in Beja, Guarda and Torres Novas. This translated into dozens of new jobs, and new spaces for our customers to enjoy the most delicious pizzas on the market.

In 2023, KFC added ten new restaurants to its portfolio, nine in Portugal - Santa Iria da Azóia, Beja, Carregado, Viseu, Feijó, Abrantes, Loures, Madeira, and Algés - and one in Spain, which also contributed to job creation.

In the last quarter of the year, Taco Bell opened five new restaurants in Lisbon, Montijo, Sintra, Albufeira and the centre of Porto, bringing the total to 21 restaurants in just four years.

Accompanying the social dynamics of major events, and in addition to these important openings, several Ibersol Group brands, namely KFC, Pans & Company, Pizza Hut, Taco Bell and Travel segment units, took part in the major event that was World Youth Day, thanks to the Ibersol Group's partnership with the World Youth Day Foundation.

Looking at our Staff, in Portugal we launched an innovative Health Insurance scheme for employees with more than one year seniority and a permanent contract, with a wide range of advantages, thus extending this benefit to a large number of employees.

The year was also marked by the renewal of the Ibersol Values, which consisted of the internalisation of a very strong employer branding philosophy and which are reflected in the new values presented through a vast internal communication campaign with employees and which it is important to mention at this point: We Exist for the Customer; We Are Sustainable and Inclusive; We Value Our People; We Like to Undertake and Innovate; We are creative and Promote Excellence; We always do Better.

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1.4 Main indicators
The following indicators stand out in regard to 2023.
Activity indicators (CG)
Turnover from continuing operations	418,2M€ (vs. 355,6M€ in 2022)
EBITDA from continuing operations	73,7M€ (vs. 61,2M€ in 2022)
Consolidated Net Result from continuing operations	14,6€ (vs. 16,7M€ in 2022)
Number of Restaurants (as of 31-12-23)	TOTAL: 502
		·	Portugal: 314
		·	Spain: 178
		·	Angola: 10

Social Indicators

Number of Staff (in 31-12-23)	TOTAL:	7623
	·	Portugal: 5165
	·	Spain: 2279
	·	Angola: 326
Gender Diversity	TOTAL: F 55% | M 45%
	·	Portugal: F 53% | M 47%
	·	Spain: F 61% | M 39%
	·	Angola: F 45% | M 55%
Nationality Diversity	+ 36 Nationalities throughout the Group
Hours of Training	569.431 hours in Portugal F 57% | M
	43%
Food and Meal Donation	~39.000 meals (13,6 tons of food) in the
	catering activity
Value of Donations	~ 56.000€

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	Environmental Indicators
	100% Selective separation of waste	~ 475 tonnes of used cooking oil sent for biodiesel
	materials and cooking oil
		Portugal: 34.542 MWh
	Electricity Consumption	Spain: 11.688 MWh
		Solar Panel Production: 11,5 MWh
		Gas (energetic equiv.)
	Natural Resources Consumption	·		Portugal): 6.308 MWh
	·		Spain: 1.781 MWh
		Water (Portugal): 150.500 m3
	Indirect CO2 Emissions	Portugal: 9.050 ton
	(linked to electrical energy consumption)	Spain: 2.197 ton
	Direct CO2 Emissions	Portugal: 1.167 ton
	(linked to gas consumption)	Spain: 324 ton
	Avoided CO2 Emissions	Total: 3,0 ton
	(Solar panel production)
	Proportion of packaging materials in Kg	Plastic: 14%
	Paper/Cardboard: 83%
	(Source: SPV, Portugal)
	Others: 3%
	Product Quality and Innovation Indicators
			TOTAL: 2 6 6
	Number of Lab Controls		·	Portugal: 1 449
		·	Spain: 1 027
			·	Angola: 200
			TOTAL: 1 288
	Number of external Food Safety audits		·	Portugal: 884
		·	Spain: 364
			·	Angola: 40
	Number of Food Safety Complaints per		Portugal: 0,25

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	100,000 transactions		Spain: 0,04
			Angola: 0
	Guest Experience Survey		Over 143,000 customers surveyed
	Brands/businesses with a range of products
	aimed at vegetarian and/or vegan diets

2. STRATEGIC FRAMEWORK

2.1 Economic, sectorial, and regulatory context

Economic and Sectorial Framework

Global situation

The European Central Bank's macroeconomic projections indicate that the world economy grew by 3.3% in 2023, in a context of strong private consumption and resilient labour markets, with growth expected to slow to 3.1% in 2024.

In 2023, world economic activity was sustained by the emerging economies, including China, and, among the advanced economies, by the United States.

Economic growth in the United States has been more resilient than previously forecast and is expected to fall slightly in the short term. Real GDP in the third quarter of 2023 grew by 1.3% in quarter-on-quarter terms, as a result of the dynamism of private consumption, recovery in private investment and an increase in public spending. The available indicators suggest a slowdown in consumer spending in the fourth quarter. Economic growth is expected to intensify as of the second half of 2024.

In 2023, average economic growth in the Euro Area stood at around 0.6% and is expected to remain weak in the short term (0.8% in 2024 and 1.5% in 2025 and 2026). Restrictive financing conditions are curbing demand, helping to reduce inflation which, in average annual terms, should fall from 5.4% in 2023 to 2.7% cent in 2024, 2.1% in 2025 and 1.9% in 2026. Available indicators suggest that growth should strengthen in 2024, as real disposable income rises - supported by falling inflation, wage growth and resilient employment - and export growth keeps pace with improving external demand.

In China, recent data points to a stabilisation of economic activity, despite the fragility of the real estate sector. In the third quarter of 2023, real GDP growth recovered to 1.3% in quarter-on-quarter terms, mainly due to the increase in consumer spending, while the contraction in property investment continued to deepen. The monthly indicators for industrial production and retail sales

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consolidated their recovery in October. Overall inflation as measured by the CPI fell 0.2% year-on- year.

Situation in Portugal

Recent data from the Bank of Portugal indicates that the Portuguese economy grew by 2.1% in 2023, with forecasts pointing to a slowing to 1.2% in 2024 and a recovery in growth in the following years (2.2% in 2025 and 2.0% in 2026).

Despite exceeding initial forecasts of 1.5% growth in 2023, the economy stagnated in the second and third quarters and grew little in the fourth quarter, reflecting the weakness of external demand, the loss of purchasing power caused by inflation and the financing difficulties induced by the ECB's restrictive monetary policy.

Quarterly growth is expected to gradually recover throughout 2024, benefiting from the foreseeable improvement in the external economic environment, the rise in real incomes - with families benefiting from the fall in inflation and increased wages - and an improvement in the implementation of European funds. The Portuguese economy should continue to grow above the euro area, by an average of 0.5 pp between 2024 and 2026, based on the dynamism of investment and exports.

In 2023, employment grew by 0.8%, with some slowdown in the second half of the year, and growth is expected to slow to 0.1% in 2024 and 0.3% in 2025. The unemployment rate is expected to rise slightly from 6.5% in 2023 to an average of 7.2% in 2024-26.

On a downward path, inflation reached 2.6% in the last quarter of 2023 and is expected to rise throughout 2024 due to the temporary increase in the price of energy and foodstuffs. In annual average terms, the annual change in the HICP should fall from 5.3% in 2023 to 2.9% in 2024, converging to 2% in 2025, the ECB's medium-term objective.

The main risks to maintaining the growth of economic activity in Portugal are associated with external factors: the possible worsening of international geopolitical tensions (with an impact on the price of raw materials, the confidence of economic agents and world trade) and the maintenance of high interest rates by the ECB if inflation remains high.

Situation in Spain

The Bank of Spain's macroeconomic projections indicate that GDP growth was 2.4% in 2023, with a slowdown expected in the following years: 1.6% in 2024, 1.9% in 2025 and 1.7% in 2026. The inflation rate fell from 8.3% in 2022 to 3.4% in 2023, and is expected to continue its downward trend in the following years: 3.3% in 2024, 2% in 2025 and 1.9% in 2026.

In a context of fragility in the external environment and gradual transmission of restrictive monetary policy measures to economic activity, the Spanish economy grew in the first and second quarters of 2023, slowing in the last two quarters of the year, while maintaining a growth rate above that of the Euro Area.

Growth in economic activity in 2024 is expected to stabilise at levels slightly higher than those seen in the last six months. The high dynamism that economic activity showed in the final stretch of 2022 and early 2023 suggests that, in terms of average annual rates, GDP growth will slow down between 2023 and 2024 - from 2.4% to 1.6% - before accelerating slightly in the 2025-2026 period.

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This development results of the implementation of the NGEU programme funds and the gradual recovery of the European economy, as well as the moderation of inflation, with the consequent recovery of real incomes for economic agents. The fact that the negative impact of restrictive monetary policies will peak in 2024 will also contribute to the acceleration of the GDP growth rate in the 2025-2026 biennium.

Employment growth will moderate its momentum, in line with the expected evolution of activity. The pace of productivity growth is expected to normalise over the 2023-2026 period, above the growth seen in recent years, but in line with that seen before the pandemic. The unemployment rate was 12.1% in 2023 and is expected to fall progressively until it reaches 11.3% in 2026, which, if it does, would be below the historical average seen over the last four decades (16.8%), but above the historic low reached in 2007 (8.2%).

Situation in Angola

Recent IMF data indicates that in 2023 Angola's economic recovery took a heavy hit from a double shock in the first half of the year, as the oil sector weakened and the debt moratorium ended.

GDP growth is estimated to have fallen from 3% in 2022 to 0.5% in 2023, with a 6.1% contraction in the oil sector and growth in the non-oil sector slowing to 2.9%. Overall inflation rose significantly in 2023, to 20% year-on-year at the end of December (13.8% in 2022) driven by the depreciation of the Kwanza and the cut in fuel subsidies in mid-2023.

In response to the shock, the authorities tightened fiscal policy in the second half of 2023, cutting capital expenditure and related goods and services, and implementing the first phase of the fuel subsidy reform.

The Public Debt/GDP ratio is expected to have risen by 19 p.p. to around 84% of GDP in 2023, driven by a significantly weaker exchange rate. The depreciation of the Kwanza in June 2023 helped the economy adjust to the reduction in oil exports and preserve international reserves, which remained at around 7 months of import cover.

Economic growth is expected to recover in the short term, supported by improved oil production and the recovery of the non-oil sector. Inflation is expected to remain temporarily high in 2024 and gradually decline as the effects of subsidy removal and the pass-through of exchange rate depreciation fade.

The main short-term risks include the fall in the price of oil on the international markets, a decrease in domestic oil production, as well as a possible delay in the implementation of the fuel subsidy reform.

The IMF emphasises the need to implement the National Development Plan (NDP) 2023-2027 in order to achieve sustained and resilient growth. Priorities should centre on economic diversification; improving human capital, particularly by reducing disparities between men and women, supported by social measures and public investment spending; improving the business environment and access to finance; and strengthening adaptation to climate change. The IMF emphasises that efforts on all these fronts are critical for Angola's development.

Final Note

With disinflation underway and growth stabilising, the likelihood of a hard landing in the world economy is decreasing and the risks to growth are broadly balanced. A faster disinflation process could lead to a greater easing of financial conditions. Further increases in commodity prices due to geopolitical shocks - including continued attacks in the Red Sea - and disruptions in supply or more

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