Retail Food Group Limited · ASX:RFG
Retail Food — FY2017 Earnings Presentation
27 slides from Retail Food's earnings presentation, Aug 29, 2017
Slide 1: Retail Food Group: Strength in Brands
RETAIL: GROUP STRENGTH IN BRANDS
Slide 2: RFG company overview
RFG is a global food & beverage company headquartered in Queensland. It is Australia’s largest multi-brand retail food franchise owner, developer & manager, with a network of >2500 outlets across 12 Brand For personal use only Systems spanning 81 international territories. RFG is also a roaster & su
Slide 3: Investment highlights
For personal use only A diverse portfolio of market leading A “world of opportunity” – State-of-the-art infrastructure, Provides access to multiple 15+ strategic acquisitions since Brand Systems across bakery, café, expanding RFG’s global footprint & significant expertise & growing opportunities whi
Slide 4: FY17 financial results summary
For personal use only RFG FY16 FY17 % Change • Revenue growth up +27% (to $349.3m) Revenue $275.1m $349.3m 27.0% • EBITDA (+12.1%) & NPAT (+14%) growth across Group EBITDA $110.2m $123.5m 12.1% • Product of increasingly diversified earnings base NPAT $66.4m $75.7m 14.0% • Translated to underlying EP
Slide 5: Divisional EBITDA contribution
For personal use only Divisional EBITDA Contribution(1) FY16 FY17 % Change Divisional EBITDA Breakdown(1) FY16 FY17 % Change Domestic Franchise Operations $54.1m $53.7m (0.8%) Brand Systems (Domestic) $78.0m $78.1m 0.1% Domestic Coffee Contribution(2) $23.9m $24.4m 2.1% International Franchise Opera
Slide 6: Balance sheet
• Increases in Working Capital, PP&E & Intangible assets primarily attributable to the acquisitons of Hudson Pacific Corporation & • Borrowing increase of $44.1m primarily to fund FY17 acquisitions For personal use only Associated Foodservice in the year • Share capital increase of $78.4m reflecting
Slide 7: Cash flow
FY16(1) ($m) FY17($m) • Cash conversion to EBITDA ratio of 88.9% reflects increased working capital commitments of For personal use only acquired businesses, offset by $5.2m non-cash asset impairment charges Receipts from customers 332.8 456.0 • Gross operating cash flows includes c.$11.2m cash outf
Slide 8: For personal use only
For personal use only 8
Slide 9: Brand System performance
For personal use only GLOBAL DOMESTIC (1) (2) NEW OUTLET TOTAL EBITDA CONTRIBUTION TO GROSS FRANCHISE CPO ($’000) NETWORK DIVISION PCP (%) PCP (%) SSS ATV PCP (%) PCP (%) COMMISSIONINGS OUTLETS ($m) FY17 GROUP EBITDA % REVENUE ($m) FY17 SALES ($m) BCD 41 819 43.7 (0.5%) 35.4% 55.3 (6.0%) 1.7% 1.7% 5
Slide 10: Product and digital innovation
Innovative product developments, cutting-edge digital solutions & first-to-market brand initiatives accelerate customer engagement & bolster Franchise Partner profitability For personal use only 10
Slide 11: Global footprint and new licenses
CURRENT GLOBAL FOOTPRINT — 15 NEW LICENSES GRANTED ACROSS 5 BRAND SYSTEMS 81 TERRITORIES ACROSS stor Sears ee en ee 10 BRAND SYSTEMS wean va had sumone va (+17% ON FY16) ne eins INDONESIA AIRPORTS MYANMAR AIRPORTS m Af ROASTING HUBS IN AUSTRALIA, NEW ZEALAND & USA MIDDLE EAST HUB FACILITY TO BE COMM
Slide 12: Building international revenue streams
SETS FOUNDATION FOR ENHANCED MEDIUM TO LONG-TERM GROWTH ————— BUILDING REVENUE STREAMS ————— SHORT TERM: INITIAL LICENSE & TRAINING FEES LONG TERM: GROWING RECURRENT REVENUE STREAMS ROYALTIES, NEW OUTLET/RENEWAL/TRANSFER FEES, PRODUCT SUPPLY
Slide 13: Middle East hub joint ventures
For personal use only • Represents important breakthrough in Hub strategy • Fast tracks Brand System licensing & Coffee & Allied Beverage growth • 50% interest in JVs established with leading UAE-based businesses Al Hathboor Group & HKO Group • Facilitates establishment of world class coffee enterpr
Slide 14: Coffee wholesale results
FY16 FY17 CHANGE% • Decline in revenue of 13.2% impacted by $10m of external revenues associated with FY16 next For personal use only GLOBAL THROUGHPUT c.6.2m kg c.6.2m kg – generation capsule machine launch into supermarket channel, not recurring in FY17 REVENUE(1) $73.4m $63.7m (13.2)% • Coffee wh
Slide 15: Commercial Division
For personal use only FY17(1) REVENUE $100.6m EBITDA $11.8m MARGIN 11.7% • Dedicated Commercial Division established to extract substantial opportunity arising from FY17 M&A activity • Represents long-term national growth platform • Synergy extraction aligned with expiry of existing contractual obli
Slide 16: For personal use only
For personal use only 16
Slide 17: Strategy and FY18 outlook
For personal use only • Leveraging diversified platform to drive long-term sustainability • RFG optimistic regarding future performance • Global platform extension leveraging Hub strategy • Organic growth across all Divisions • Creating new markets & tapping greenfield opportunity • Principally driv
Slide 18: Appendices
APPENDICES NOOO a RESTATEMENT OF PRIOR YEARS’ ACCOUNTS TRADING SUMMARY DEBT STRUCTURE CAPITAL MANAGEMENT BRAND SYSTEM SUMMARY DEFINITIONS DISCLAIMER 18
Slide 19: Restatement of prior years' accounts
For personal use only Review of accounting treatment of certain items & restatement of financial information for FY15 & FY16 The Group conducted a detailed review of its accounting policies, & having regard to new guidance being released during the year on application of certain accounting standards
Slide 20: Appendix: restatement of prior years' accounts
APPENDIX 1 — RESTATEMENT OF PRIOR YEARS’ ACCOUNTS For personal use only Inverts 20901 - - - ie) (446) ‘otherfnancalasets 29506 . - = paras) 22738) Carnent tax acet 11595 : : = "4955 g9ss Defered tax assets 864 = (885) : (885) Intangie asete 31297710876 (aea9) (2965) ante Tota assets eoo0s8 130576 (4
Slide 21: Appendix: restatement of prior years' accounts
APPENDIX 1 — RESTATEMENT OF PRIOR YEARS’ ACCOUNTS For personal use only onsring operations Revere fom sl of goods - - ~ 29) retro onto ster - - = 860s p775) ther revenue - - ~ poass) 110257 ‘Other gonad loses a) 2 as 9 Martting expanse - : = aes 2755) CCccpancy expenses - - =e 2595) ‘Amiitatin expen
Slide 22: Underlying to reported reconciliation
For personal use only FY17 UNDERLYING REPORTED EBITDA $m 123.5 106.5 NPAT $m 75.7 61.9 EPS cps 43.7 35.7 EBITDA ADJUSTMENTS $m REPORTED EBITDA 106.5 M&A COSTS: • ACQUISITION 3.3 • INTEGRATION 6.5 • RESTRUCTURING 2.0 ASSET IMPAIRMENT 5.2 UNDERLYING EBITDA 123.5 22
Slide 23: Debt structure
• For personal use only Facility headroom (including cash) at 30 June 2017 of $96.9m SENIOR DEBT FACILITY FY16 FY17 • Weighted Average Interest Rate at 30 June 2017 of 3.73% • Gross debt of $257.3m(2) at 30 June 2017 Net Debt (1) $191.8m $247.1 • Total debt subject to fixed interest rates now $150m
Slide 24: Capital management
For personal use only SHARES PRICE ($) PROCEEDS/VALUE ($m) Shares on issue 1 July 2017 164,968,083 Dividend Reinvestment Plan (Final FY16 Dividend) 509,210 6.71 3.4 Dividend Reinvestment Plan Shortfall Placement (inc. oversubscriptions) 5,197,044 6.85 35.6 (2) Issue of ordinary shares – Acquisition
Slide 25: Brand System summary
GLOBAL DOMESTIC For personal use only NEW OUTLET TOTAL CONTRIBUTION TO NETWORK DIVISION SSS ATV PCP (%) COMMISSIONINGS OUTLETS GROUP EBITDA %(1) SALES ($m) 19 333 14.1% 4.7% 2.7% 160.4 (1.4%) 20 246 8.6% 1.3% 1.6% 153.3 (4.7%) 2 240 12.7% (2.0%) 0.6% 120.2 (15.7%) BAKERY/CAFE 41 819 35.4% 1.7% 1.7%
Slide 26: Definitions
For personal use only NWS Network Sales GFR Gross Franchise Revenue SSS Same Store Sales ATV Average Transaction Value PCP Previous Corresponding Period CPO Contribution Per Outlet (EBITDA) QSR Pizza Capers & Crust Gourmet Pizza MENA Middle East North Africa COFFEE RETAIL DIVISION (CRD) Gloria Jean’
Slide 27: Disclaimer
For personal use only NO RESPONSIBILITY FOR CONTENTS OF PRESENTATION: To the maximum extent permitted by law, Retail Food Group Limited (ABN 31 106 840 082), its officers, advisers & representatives: • Make no representation, warranty or undertaking, & accept no responsibility or liability, express