Retail Food Group Limited · ASX:RFG
Retail Food — FY2018 Earnings Presentation
26 slides from Retail Food's earnings presentation, Aug 31, 2018
Slide 1: FY18 Results Presentation
For personal use only FY18 RESULTS PRESENTATION
Slide 2: Disclaimer
DISCLAIMER This Presentation contains summary information about the current activities of Retail Food Group Limited ACN 106 840 082 (RFG) and its subsidiaries as at the date of this Presentation, unless otherwise stated. For personal use only The information in this Presentation is of a general natu
Slide 3: FY18 Snapshot
FY18 SNAPSHOT For personal use only > Disappointing FY18 performance • Statutory net loss after tax of $306.7m, compared to statutory NPAT of $61.9m for PCP. • Underlying NPAT of $33.3m, down 56.1% on PCP, in line with guidance. • Non-cash impairments and write-downs, and provisioning recognised in
Slide 4: Performance Review
For personal use only FY18 PERFORMANCE REVIEW
Slide 5: FY18 Performance
FY18 PERFORMANCE FY18 GROUP For personal use only PERFORMANCE(1) FY18 FY17 % Change SUMMARY Revenue $374.0m $349.3m 7.1% > Revenue increase (+7.1%) reflects full period contribution of FY17 acquired assets (HPC/AFS), offsetting reduced EBITDA (underlying) $71.4m $123.5m (42.2%) performance amongst f
Slide 6: Reconciliation of Underlying to Statutory Results
RECONCILIATION OF UNDERLYING TO STATUTORY RESULTS FY18 Underlying Statutory For personal use only > Impairment and provisioning assessments for FY18 considered the 30 June 2018 RFG market capitalisation compared to the carrying value of assets, the EBITDA $m 71.4 (354.3) revised store closure assess
Slide 7: EBITDA Performance by Division
EBITDA PERFORMANCE BY DIVISION For personal use only UNDERLYING EBITDA FY18 FY17 % Change > Domestic Franchise operations EBITDA declines due to: • Cumulative trading revenue impact of FY17/FY18 domestic Bakery / Café Division(1) $24.4m $43.1m (43.5%) outlet closures. • Decline in revenues from new
Slide 8: Cash Flows
FY18 FY17 CASH FLOWS ($m) ($m) Receipts from Customers 565.7 456.0 > Cash receipts increases derived from full year contribution For personal use only Payments to Suppliers & Employees (535.2) (361.3) of Manufacturing & Distribution division (acquired FY17), offsetting reduced cash inflows from fran
Slide 9: Balance Sheet
Balance Sheet at 30 June FY18 FY17 ($m) ($m) BALANCE SHEET Assets For personal use only Cash Reserves 16.5 10.3 > Decreases in receivables, PP&E, intangible assets, and Trade Receivables 51.1 85.8 deferred tax balances, and increases in provisioning, primarily Financial Assets 24.0 23.7 attributable
Slide 10: Debt Structure
DEBT STRUCTURE Senior Debt Facilities FY18 FY17 For personal use only > The Group received a waiver from its senior debt lenders on 29 June 2018, for testing of financial covenants for the period ended 30 June Net Debt(1) $258.9m $247.1m 2018. > Agreement has been reached between the Company and its
Slide 11: Divisional Performance
For personal use only FY18 DIVISIONAL PERFORMANCE
Slide 12: Domestic Bakery / Café Division
DOMESTIC BAKERY / FY18 FY17 % Change CAFÉ DIVISION - New Outlets 2 33 For personal use only - Closures (131) (79) > $18.7m Divisional EBITDA decrease, impacted by: • Cumulative impact of FY17/FY18 domestic Outlets at 30 June(1) 638 767 (16.8%) outlet closures impacting NSW and trading revenues. Tran
Slide 13: Domestic Coffee Retail Division
DOMESTIC COFFEE FY18 FY17 % Change RETAIL DIVISION - New Outlets 5 27 For personal use only - Closures (47) (66) > Divisional EBITDA has decreased by $14.2m, impacted by: Coffee Outlets at 30 June(1) 287 316 (9.2%) • Cumulative impact of FY17/FY18 domestic outlet closures on NWS and trading revenues
Slide 14: Domestic QSR Division
DOMESTIC QSR DIVISION FY18 FY17 % Change For personal use only > Divisional EBITDA has decreased by $2.1m, - New Outlets 1 7 impacted by: - Closures (54) (24) • Sharp decline in domestic new franchise and renewal activity, influenced by negative franchising Outlets at 30 June 2018(1) 238 291 (18.2%)
Slide 15: International Franchising Division
INTERNATIONAL FY18 FY17 % Change FRANCHISING DIVISION For personal use only New Master Franchise Agreements 7 15 > Divisional FY18 EBITDA decreased 47.7% to $10.3m, influenced by: New Outlets 93 143 • Decline in new master franchise agreements partially influenced by Outlets at 30 June 2018 880 870
Slide 16: Di Bella Coffee
DI BELLA COFFEE (formerly Coffee & Allied Beverages Division) For personal use only > Divisional FY18 EBITDA decreased 43.2% to $8.1m, influenced by: FY18 FY17 % Change • Margin reduction in contract roasting sector on new customer Revenue $53.7m $63.7m (15.7%) acquisition. EBITDA(1) $8.1m $14.2m (4
Slide 17: Manufacturing and Distribution Division
MANUFACTURING AND DISTRIBUTION DIVISION FY18 FY17(1) % Change (formerly Commercial) For personal use only Revenue > Divisional FY18 EBITDA decreased 15.3% to $10.0m, Foodservice $82.7m $43.2m 91.6% attributable to: Dairy Country $68.3m $45.6m 49.7% • Costs associated with carrying additional sites t
Slide 18: Strategy and Outlook
For personal use only FY18 STRATEGY AND OUTLOOK
Slide 19: Situational Analysis – January 2018
SITUATIONAL ANALYSIS – JANUARY 2018 For personal use only Support of franchisees in rapidly changing retail environment reviewed • Group’s supply chain in supporting franchisees examined. • Effectiveness of execution of tactical initiatives considered. Market pressures impacting franchisees • Challe
Slide 20: 12-18 Month Turnaround Roadmap
12-18 MONTH TURNAROUND ROADMAP For personal use only Stabilise Optimise Re-invest Stabilise the business and return to Optimise operations and enhance profitability Re-invest to prudently grow a profitable platform and returns for RFG and franchisees Develop and implement additional revenue growth A
Slide 21: Simplifying RFG Operations
SIMPLIFYING RFG OPERATIONS For personal use only RFG Group’s businesses Realising enhanced profitability for customers through five propositions Franchise Di Bella Coffee 1 Sustainable competitive • A global retail franchising business • A global consumer product business products Delivered • Servic
Slide 22: Strong Franchisee Support for RFG's Future Direction
STRONG FRANCHISEE SUPPORT FOR RFG’S FUTURE DIRECTION For personal use only Increased support to franchisee network 3% • National roadshow across six cities incorporating face-to-face meetings with ~700 franchisees. • $1.5m (annualised) investment in additional field support – enhancing in-store serv
Slide 23: Outlook
OUTLOOK For personal use only > Given present challenges – unable to provide FY19 guidance. > Retail market conditions continue to be challenging but confident of strategies being pursued: • c.2,200+ operating outlets globally, across 11 franchise systems in Australia and 87 licensed international t
Slide 24: Appendices
For personal use only APPENDICES
Slide 25: Revised Banking Covenants
REVISED BANKING COVENANTS Financial covenants and Revised Previous For personal use only conditions 31 August 2018 covenants > Restructuring program subject to review with Covenant testing Quarterly Quarterly lenders after 31 December 2018. Operating Leverage ratio - 5.0x to December 2018 - 3.0x to
Slide 26: Definitions
DEFINITIONS For personal use only ATV Average Transaction Value BCD BAKERY/CAFÉ DIVISION: Donut King, Michel’s Patisserie, Brumby’s Bakery CRD COFFEE RETAIL DIVISION: Gloria Jean’s, Café2U, The Coffee Guy, It’s A Grind, bb’s Café, Esquires Coffee COGS Cost of Goods Sold Hudson Pacific Foodservice, A