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Cairo, 14 March 2022

Edita Food Industries Reports FY2021 Earnings

Edita recorded strong full year results with revenues reaching EGP 5.3 billion, up 30.6% y-o-y with enhanced bottom-line profitability which grew by a strong 54.7% y-o-y to EGP 471.9 million. Full-year results were supported by Edita's successful repricing strategies and resilient volumes in 4Q

Highlights of FY2021 (unaudited IFRS)

Summary Income Statement (EGP mn)

The figures displayed are based on unaudited results drawn from management accounts and finance department numbers (IFRS).

The discussion and analysis in this report are based on the IFRS statements. For comparison of the results to Egyptian Accounting Standards, please refer to the section "Egyptian Accounting Standards Reconciliation to IFRS."

Results in a Nutshell

Edita Food Industries S.A.E. (EFID.CA on the Egyptian Exchange & EFID.L on the London Stock Exchange), a leader in the Egyptian packaged snack food market, announced today its results for the year ended 31 December 2021, recording revenues of EGP 5,251.2 million, a 30.6% y-o-y increase. Net profit recorded EGP 471.9 million in FY2021, up an impressive 54.7% compared to last year, with a net profit margin of 9.0%.

Edita's full-year results were supported by an especially strong performance in the last quarter of year. In 4Q2021, Edita recorded revenues of EGP 1,538.7 million, up 25.2% y-o-y, demonstrating a strong recovery from the challenges presented by Covid-19. Net profit for the quarter grew by a strong 51.5% y-o-y to EGP 194.2 million, with an associated net profit margin expansion to 12.6% compared to 10.4% in the fourth quarter of the previous year.

Edita's FY2021 revenues crossed the EGP 5 billion mark driven by both volumes and prices, which shows the company's resilience and agility in adapting its business model to face the challenges posed by Covid-19, supply chain disruptions and global inflationary pressures on raw material prices. The company's top-line was supported by a 12.1% increase in average price per pack to EGP 1.81 for FY2021 driven by portfolio optimization, direct and indirect price increases across all segments and higher price-point introductions to ease the pressure on profitability margins. Despite the accelerated migration to higher price-points, volumes rebounded to pre-devaluation levels demonstrating strong demand inelasticity accentuated by Edita's leading market position. In FY2021, total packs sold increased by 16.6% y-o-y to 2,897.3 million, with cakes, bakery and wafers being the biggest contributing segments. In 4Q2021, volumes were up 12.8% compared to last year's figure with particular increases across the rusks, cakes and wafers segments, which grew 65.3% and 22% y-o-y, respectively during the quarter. Average price per pack in the fourth quarter reached EGP 1.91, up 11.2%  y-o-y, driven by aggressive price increases during 4Q2021 mainly on bakery and cake products.

In FY2021, Edita's gross profit recorded EGP 1,673.4 million, up 20.5% y-o-y, with a gross profit margin of 31.9% versus the 34.5% recorded last year. Edita was able to sustain its gross profitability despite the 44.6% y-o-y increase in direct material costs brought about by surges in raw material costs and supply chain disruptions that are driving global commodity prices to record highs. While Edita was successful in passing on a portion of these increases to consumers through direct and indirect price increases, the company also offset the increase by managing its manufacturing overheads (MOH) for the year, which declined to 11.8% as a percentage of sales compared to 14.1% in the previous year. In 4Q2021, strong top-line results supported a 16.6% y-o-y increase in gross profit to EGP 520.9 million, with a recovered gross profit margin of 33.9% supported by aggressive price increases.

Total SG&A for FY2021 was EGP 989.1 million, a 9.3% y-o-y increase; however, Edita's SG&A as a percentage of sales declined to 18.8% compared to 22.5% in the previous year. The decrease as a percentage of sales was achieved despite an increase in advertising and marketing expenses, which grew 22.2% y-o-y. In 4Q2021, SG&A stood at EGP 267.8 million, up 3.0% compared to 4Q2020. Edita's SG&A as a percentage of sales was 17.4%, driven by the strong top-line results in 4Q2021.

EBITDA for the year stood at EGP 841.3 million, up 28.1% y-o-y, with a sustained EBITDA margin of 16.0% compared to 16.3% in FY2020. In 4Q2021, EBITDA recorded EGP 288.2 million, up 25.5% from last year's figure, with an EBITDA margin of 18.7%, largely flat relative to 4Q2020. Improved EBITDA was supported by SG&A efficiency and a high operating leverage.

In FY2021, Edita recorded gross export sales of EGP 309.9 million, up by a strong 23.4% y-o-y and contributing 5.9% to total revenues during the year compared to 6.2% in FY2020. In 4Q2021, gross export sales stood at EGP 115.3 million, which accounted for 7.4% of total gross sales compared to 5.5% in 4Q2020.

Net profit for the year increased an impressive 54.7% y-o-y to EGP 471.9 million, with a net profit margin of 9.0% versus 7.6% for FY2020, primarily driven by increased revenues. In FY2021, Edita also realized a EGP 17.8 million gain on the sale of fixed assets, a EGP 7.1 million FX gain as well as decreases in interest expenses and provisions. In 4Q2021, net profit grew 51.5% y-o-y to EGP 194.2 million with a net profit margin of 12.6% compared to 10.4% in the previous year.

Operational Developments

Throughout the year, Edita continued to expand and diversify its portfolio by incorporating multiple new and upsized SKUs, which appeal to consumer evolving tastes while enabling the company to deliver on its portfolio optimization strategy. In January, Edita capitalized on the growing popularity of its Molto Magnum line with the rollout of a new Molto Mini Magnum. The new product is available in chocolate, hazelnut cream and strawberry cheesecake flavours and is retailing at EGP 5.0 per pack. In February, the company rolled out its new Freska Block, a wafer bar with a double-layer chocolate coating available in three flavours and selling for EGP 3.0 per pack. During the same month, the company launched HOHOs Extreme, an upsized variation of Edita's traditional HOHOs Cream, retailing at EGP 3.0 per pack. In October, Edita rebranded its Twinkies line of filled cakes and launched upsized Twinkies Cream, Twinkies Flavors (strawberry and chocolate) and Twinkies Icing (chocolate and vanilla), priced at EGP 3.0 per pack. The rebranding campaign aims to enhance Twinkies' packaging and stimulate demand across its existing segments. In the first weeks of 2022, Edita launched its latest wafer product, Freska Choco Sticks, a rolled wafer with chocolate coating and chocolate hazelnut filling, retailing at EGP 3.0 per pack under the Freska brand. This was later followed by the launches of Oniro LAVA, a new biscuit filled with cocoa hazelnut cream sold under the biscuit segment, and Molto Fino, a filled sandwich product that expands the company's portfolio in the savoury subsegment of Egypt's bakery market.

All new product launches were supported by dedicated marketing and advertisement campaigns featuring top-class celebrities and were very successful in driving demand for the new products. Towards the end of the year, Edita's marketing initiatives saw the launch of a campaign in partnership with telecoms provider Orange to celebrate the 25th anniversary of its Molto brand. Edita also obtained approval from the Egyptian National Food Safety Authority (NFSA) to label all Molto products as free of hydrogenated fats and will now include a clear label reading, 'Made Without Hydrogenated Fats'. The approval falls under the Company's sustainability compliance framework as it aims to focus on consumer wellbeing by improving the choice of raw materials and ingredients used in its products.

The company successfully pursued several initiatives throughout the year to mitigate the impacts of global inflationary pressures and persistently rising commodity prices. Edita introduced indirect price increases across the company's core product range during the year to alleviate the pressure imposed on profitability margins. Meanwhile, Edita's long-standing relationships with global and local suppliers have allowed the company to maintain a highly favourable supply position despite the global headwinds. In 4Q2021, prices across Edita's flagship Molto range of baked goods were raised from EGP 2.0 per pack to EGP 3.0 and from EGP 3.0 per pack to EGP 4.0, while products priced at EGP 5.0 remained unchanged. The company also introduced the EGP 3.0 price-point to its HOHOs and Twinkies product range. Increasing price-points will help Edita improve profitability in the face of global logistical disruptions which have caused global shortages in raw materials and reduced the availability of freight services. Edita is continuously monitoring prices and stock levels across its markets with the goal to secure its requirements at the best cost attainable.

Concurrently, Edita continued to invest in its production capabilities, with the installation of a new wafer production line at its E08 facility, which was completed in February 2021. The new line is utilized to produce the company's latest launch in the coated wafer category, Freska Block. In June 2021, Edita announced the purchase of a new bakery production line which should be operational by March 2022. The new production line is set to increase the Company's bakery capacity by 20%.

September 2021 saw Edita complete the refurbishment of its upgraded invoicing infrastructure, putting the Company in full compliance with the government of Egypt's recently imposed regulations on electronic invoicing. Edita worked closely in 2021 with the Egyptian Tax Authority as well as multiple other local and international entities to efficiently complete the necessary adjustments, making Edita one of the first companies to complete the transition within the prescribed timeframe. Adopting the new electronic invoicing frameworks is expected to generate significant operational advantages for the company moving forward.

On the regional front, Edita completed construction work at its first overseas production facility in Morocco earlier in the year, a major milestone in the company's regional expansion strategy. The facility marks the company's first greenfield investment outside of Egypt and enables Edita to strengthen its presence in the attractive Moroccan market which boasts a dynamic economy and population of 37 million consumers but more importantly sets the foundations from which to further grow across the MENA region. In December 2021 operations had begun at the facility's first production line, which started producing Edita's flagship cake brand HOHOs. The cakes production line has a total capacity of 2.7 thousand tons per annum and the facility can accommodate three distinct production lines.

On the financing front, in March 2021 Edita successfully secured a new EGP 90 million medium term loan with the National Bank of Kuwait (NBK) to finance its capital expenditure plans in Egypt. Meanwhile, in September 2021, the company secured an EGP 150 million medium term loan from Credit Agricole Egypt, with the funds earmarked to finance an additional Molto production line. Both of the loans secured by Edita in 2021 are part of the Central Bank of Egypt's (CBE) initiative program to support Egyptian businesses with low-interest loans during the ongoing pandemic.

Strategy Insights

As Edita enters into the new year, its strategic priorities are pivoting from a focus on recovery and resilience to expansion mode. The company continues working to deliver sustainable and diversified growth, in keeping with its long-term targets.

Edita's immediate priority is to drive volume growth across its segments while further optimising its product portfolio to diversify revenue streams. On this front, the company will actively expand its production capacity to drive growth and roll out new, higher-value propositions, while shifting consumers increasingly towards higher price points. Edita will also look to leverage its strengthened distribution and sales function and its enhanced production capabilities to capture a growing share of the market across its various segments. Edita will also work to extract higher value from its newly inaugurated Morocco facility, which marks a key milestone in Edita's regional expansion goals as it looks forward to more regional expansions. Meanwhile, on the cost side, the company will expand while remaining cost conscious and identifying efficiencies that support profitability. Edita will also continue to focus on mitigating the impact from rising raw material costs by maintaining a tight rein on overheads and SG&A expenses, which has already allowed the company to protect profitability despite a challenging global macro environment.

Overview of Segment Performance

On a segment basis, Edita's consolidated top-line growth was driven by strong performances in cakes, bakery and wafers. The company's cakes segment accounted for the largest contribution to consolidated revenue growth during the year, recording revenues of EGP 2,239.5 million in FY2021, up a substantial 30.9% versus the previous year. Growth in the cakes segment was supported by both an increase of 17.2% y-o-y in packs sold and a 12.0% y-o-y increase in the average price per pack. The ability to drive both volume and price growth attests to the brand's resilience and the company's ability to pass on higher price-points. At the bakery segment, revenue grew by 28.0% y-o-y in FY2021 to EGP 1,928.8 million on the back of a 9.0% increase in packs sold and a 17.4% y-o-y increase in the average price per pack. The fastest-growing segment for year was wafers, which saw its top-line expand by 81.6% y-o-y, reflecting a 64.6% increase in packs sold and a 10.3% increase in the average price per pack in FY2021. The significant increase in volumes was driven by coated wafers, Freska Bar and Freska Block, which have become market leaders in the sub-segment. Revenue from the rusks segment initially lagged but started improving by year-end to record a 5.1% y-o-y increase in FY2021 primarily as a result of a 4.4% y-o-y rise in the average price per pack while the volume of packs sold reported a marginal 0.7% y-o-y increase. Meanwhile, revenue in the candy segment fell 3.8% y-o-y in FY2021 as a 20.2% y-o-y contraction in volumes offset the 20.6% y-o-y increase in the average price per pack. Finally, at the company's biscuits segment, revenue declined by 19.4% y-o-y in FY2021 as a 22.9% decrease in volumes outweighed the 4.6% y-o-y rise in average price per pack.

In 4Q2021, consolidated revenues were supported by the cakes, bakery, wafers and rusks segments. The cake segment's revenues increased 31.0% y-o-y, while the bakery segment's revenues recorded a 13.8% y-o-y increase, the wafers segment's revenues rose 69.2% y-o-y and finally the previously lagging rusks segment's top-line turned a corner to expand 26.1% y-o-y.

Edita's consolidated gross profit rose by 20.5% y-o-y during FY2021 to reach EGP 1,673.4 million with strong performances recorded across all segments despite higher costs of raw materials and ongoing supply chain disruptions. The wafers segment posted the highest rate of gross profit growth during the year, recording a 100.2% y-o-y increase to EGP 170.5 million for FY2021. The segment recorded a healthy gross profit margin expansion to 27.9% in FY2021 against the 25.3% recorded one year earlier. The company's cakes segment recorded a year-on-year gross profit growth of 16.5% in FY2021 with a gross profit of EGP 781.1 million and a GPM of 34.9%. At the bakery segment, gross profit recorded EGP 611.4 million with GPM standing at 31.7%, while the rusks segment recorded EGP 87.1 million in gross profit and a GPM of 28.8% for FY2021. Finally, the candy segment saw its gross profit decline by 37.3% y-o-y, yielding a GPM of 14.4% for FY2021.

Revenue and Gross Profitability by Segment

The figures displayed are based on unaudited results drawn from management accounts and finance department numbers (IFRS).

*Includes contributions from Edita's imports segment

Segment Volumes and Prices

The figures displayed are based on unaudited results drawn from management accounts and finance department numbers (IFRS).

*Includes contributions from Edita's imports segment

Balance Sheet

Edita's total CAPEX for the year ended 31 December 2021 was EGP 226.8 million, including investment in a new wafer line, enhancements in existing production lines, the Morocco production facility and IT expenditures.

Edita recorded total loans and borrowings of EGP 1,320.1 million as at 31 December 2021, up from EGP 1,031.6 million as at year-end 2020. The company reported total bank overdrafts of EGP 400.7 million as at 31 December 2021 against EGP 80.4 million at year-end 2020. Net debt registered EGP 294.1 million as at 31 December 2021, a reduction to the EGP 314.0 million recorded at year-end 2020. In FY2021, Edita maintained a strong financial position with healthy leverage with a net debt to equity ratio of 0.14 and a net debt to EBITDA ratio of 0.35, down from 0.48 in the previous year.

The company reported inventories of EGP 533.7 million as at 31 December 2021, up from EGP 315.3 million as at 31 December 2020, demonstrating the Edita's ability to secure supplies and mitigate supply chain risks. Meanwhile, trade receivables reached EGP 32.7 million as at 31 December 2021 against EGP 34.1 million as at year-end 2020, reflecting Edita's cash policy for over 95% of its sales. Net working capital was EGP 464.2 million as at 31 December 2021 versus EGP 226.2 million in the previous year and the company maintained a healthy working capital ratio of 1.35.

Egyptian Accounting Standards Reconciliation to IFRS

Edita's EAS and IFRS financial statements differ in the treatment of employees' profit share, which is expensed under the IFRS, while the EAS accounts for them as a distribution and are thus not included on the income statement. Also, EAS and IFRS differ in the calculation of EBITDA. In FY2021, EGP 7.1 million in FX gain and EGP 17.8 million related to gains on the sale of fixed assets was deducted from EBITDA. Moreover, a profit share deduction of EGP 54.3 million was made, bringing total EAS to IFRS adjustments on EBITDA to EGP 84.0 million. A reconciliation between Edita's financial statements in EAS with the IFRS-based financial statements for FY2021 is provided in the table below.

The figures displayed are based on unaudited results drawn from management accounts and finance department numbers (IFRS).

*Figures are based on management accounts for better disclosure on expenses breakdown

-Ends-

About Edita Food Industries

Edita, founded in 1996 and headquartered in Egypt, is a leader in the growing Egyptian packaged snack food market. The Company manufactures, markets and distributes a range of branded baked snack products including packaged cakes, bakery, rusks (baked wheat), wafers and biscuits as well as selected confectionary/candy products. The Company's local brand portfolio includes household names such as Todo, Molto, Bake Rolz, Bake Stix, Freska, Oniro and MiMix. The Company also has the exclusive ownership of the international HTT brands Twinkies, Hoho's and Tiger Tail in Egypt, Libya, Jordan, Palestine, Morocco, Algeria, Tunisia, Syria, Lebanon, Iraq, Bahrain, Oman, the UAE, Kuwait, Qatar and Saudi Arabia; and is party to a technical assistance and know-how agreement to manufacture 11 additional HTT brands across its territories. The Company holds strong number-one market positions in its core cake and bakery segments as well as in candy, a number-two market position in rusks and a growing market position in the wafers segment. In FY2021, the Company derived 94.1% of its revenue from Egypt and 5.9% from regional export markets. Learn more at ir.edita.com.eg

Contacts

Ms. Menna Shams El Din

Head of Investor Relations

T: +202 3851-6464 | menna.shamseldin@edita.com.eg

Ms. Alia Balbaa

Investor Relations Manager

T: +202 3851-6464 | alia.balbaa@edita.com.eg

Forward Looking Statements

This communication contains certain forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events, and can be identified by the use of such words and phrases as "according to estimates", "aims", "anticipates", "assumes", "believes", "could", "estimates", "expects", "forecasts", "intends", "is of the opinion", "may", "plans", "potential", "predicts", "projects", "should", "to the knowledge of", "will", "would" or, in each case their negatives or other similar expressions, which are intended to identify a statement as forward-looking. This applies, in particular, to statements containing information on future financial results, plans, or expectations regarding business and management, future growth or profitability and general economic and regulatory conditions and other matters affecting the Company.

Forward-looking statements reflect the current views of the Company's management ("Management") on future events, which are based on the assumptions of the Management and involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. The occurrence or non-occurrence of an assumption could cause the Company's actual financial condition and results of operations to differ materially from, or fail to meet expectations expressed or implied by, such forward-looking statements.

The Company's business is subject to a number of risks and uncertainties that could also cause a forward-looking statement, estimate or prediction to differ materially from those expressed or implied by the forward-looking statements contained in this prospectus. The information, opinions and forward-looking statements contained in this communication speak only as at its date and are subject to change without notice. The Company does not undertake any obligation to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this communication.