Retail Food Group Limited · ASX:RFG
Retail Food — H1 2017 Earnings Presentation
30 slides from Retail Food's earnings presentation, Feb 23, 2017
Slide 1: Retail Food Group: Strength in Brands
RETAIL OOD GROUP crust ROASTING xz bbs tat STRENGTH IN BRANDS
Slide 2: Retail Food Group (ASX:RFG)
RETAIL FOOD GROUP (ASX:RFG) 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 2,550+ outlets across For personal use only 12 Brand Systems spanning 78 licensed international t
Slide 3: Dynamic Pillars Underpin Growth
DYNAMIC PILLARS UNDERPIN GROWTH For personal use only EACH OF THE COMPANY’S GROWTH PILLARS REPRESENT FUNDAMENTAL & COMPLEMENTARY COGS IN A HIGH PERFORMANCE ENGINE VISION: CREATING COMPELLING OPPORTUNITIES FOR GLOBAL SUCCESS COFFEE & FRANCHISE INTERNATIONAL ALLIED BEVERAGE COMMERCIAL M&A A diverse po
Slide 4: 1H17 Performance Summary
1H17 PERFORMANCE SUMMARY MULTIPLE EARNINGS LEVERS DRIVING SUSTAINABLE GROWTH For personal use only 1H17 PERFORMANCE – GROUP GROUP HIGHLIGHTS (1) RFG 1H16 1H17 % Change • EBITDA (+13.0% on PCP) & NPAT (+12.7% on PCP) Revenue (2) $148.3m $161.9m 9.2% translated to healthy shareholder outcomes: EBITDA
Slide 5: Global Business Model Driving Enhanced Revenue Diversification
GLOBAL BUSINESS MODEL DRIVING ENHANCED REVENUE DIVERSIFICATION EBITDA DIVERSIFICATION INVESTING IN LONG-TERM GROWTH DRIVERS OFFERS MULTIPLE GROWTH PLATFORMS 1H16 EBITDA ($53.5m) 1H17 EBITDA ($60.5m) For personal use only • Formal entry into warehouse, distribution & food manufacturing via Hudson Pac
Slide 6: 1H17 Group Highlights
For personal use only 1H17 GROUP HIGHLIGHTS 6
Slide 7: Group Highlights
GROUP HIGHLIGHTS FRANCHISE For personal use only COMMERCIAL DIVISION • Leveraging unique partnerships including • The Franchise Show • HPC acquisition ‘step changed’ commercial pursuits • BP partnership • Broadens non-franchise revenue base • 2016 RFG Connect Global Conference • Dedicated Commercial
Slide 8: Franchise Summary
FRANCHISE SUMMARY only (3) GLOBAL DOMESTIC EBITDA (1) (2) 1H17 HIGHLIGHTS NEW TOTAL CPO ($,000) DIVISION OUTLETS OUTLETS ($m) PCP (%) SSS ATV 1H17 PCP (%) 1H17 • Disciplined pricing policies sustain SSS/ATV, COFFEE RETAIL BAKERY/CAFE use protecting Franchise Partner margins • EBITDA growth achieved
Slide 9: International Extending Global Reach
INTERNATIONAL EXTENDING GLOBAL REACH REPLICATING COMPELLING OPPORTUNITIES FOR SUCCESS For personal use only ACROSS AN INCREASINGLY GLOBAL NETWORK 1 NZ 2 UK 3 USA 4 UAE 5 TURKEY 6 MALAYSIA 7 CHINA 8 PAKISTAN 9 MEXICO 10 STH KOREA LEGEND RFG EXISTING TERRITORIES RFG ROASTING FACILITIES 9
Slide 10: Coffee & Allied Beverage
COFFEE & ALLIED BEVERAGE STATE-OF-THE-ART INFRASTRUCTURE, SIGNIFICANT EXPERTISE & EXTENSIVE RELATIONSHIPS WITHIN THE COFFEE For personal use only INDUSTRY OFFER UNPARALLELED OPPORTUNITY TO GROW COFFEE & ALLIED BEVERAGE EARNINGS PLATFORM FOR GROWTH • Total coffee contribution to 1H17 Group EBITDA of
Slide 11: HPC Acquisition Drives Commercial Evolution
HPC ACQUISITION DRIVES COMMERCIAL EVOLUTION WHOLE OF BUSINESS TRANSFORMATION DRIVING OPPORTUNITIES & BENEFITS FOR RFG, ITS FRANCHISE COMMUNITY & WHOLESALE CUSTOMERS only KEY OPPORTUNITY PROFILE FRANCHISE ALE use • Leverage new procurement, manufacturing & distribution capabilities to sustain Franchi
Slide 12: Franchise Performance
For personal use only FRANCHISE PERFORMANCE 12
Slide 13: Bakery/Café Division
BAKERY/CAFE DIVISION CONTRIBUTION TO GROUP EBITDA % 1H16 1H17 Bakery/Café 40.6% 36.0% Donut King 14.6% 13.7% DIVISIONAL PERFORMANCE Brumby’s Bakery 9.9% 8.9% For personal use only Michel’s Patisserie 16.1% 13.5% • Reduced reliance demonstrates growing diversification of Group earnings base • Contrib
Slide 14: Coffee Retail Division
DIVISIONAL PERFORMANCE COFFEE RETAIL DIVISION • Divisional EBITDA increased 12.2% to $18.7m supported by • +13.1% growth in non-mobile Brand System EBITDA • Cost efficiencies delivered by Divisional management structure CONTRIBUTION TO GROUP EBITDA % 1H16 1H17 For personal use only • Comparative 1H1
Slide 15: QSR Division Highlights
DIVISIONAL HIGHLIGHTS • Divisional EBITDA +4.3% on PCP (to $7.2m) on consistent GFR QSR DIVISION • Network Sales impacted by • Rationalisation of trading corporate outlets • Geographic repositioning of Pizza Capers Brand System For personal use only HIGHLIGHTS 1H16 1H17 PCP • Associated cost reducti
Slide 16: Franchise Industry Leaders
FRANCHISE INDUSTRY LEADERS DRIVING LEADERSHIP WITHIN THE FRANCHISING INDUSTRY THROUGH UNIQUE PARTNERSHIPS & EVENTS THE FRANCHISE SHOW For personal use only • Pioneering industry support via innovative partnership with national ‘franchising’ TV program • Unique opportunity to showcase RFG’s entire Br
Slide 17: Leaders in Innovation: Digital Centre and Product Lab
LEADERS IN INNOVATION FORTIFYING KEY BUSINESS DRIVERS TO ATTAIN LASTING POSITIVE CHANGE For personal use only DIGITAL CENTRE OF EXCELLENCE PRODUCT INNOVATION LAB • Establishment of centralised Digital Centre of Excellence • Driving category leading pipeline of new product development across • Empowe
Slide 18: Leaders in Innovation: Strategic Collaborations
LEADERS IN INNOVATION STRATEGIC COLLABORATIONS & NEW STORE CONCEPTS SUPPORTING For personal use only NETWORK GROWTH & ESTABLISHING NEW CHANNELS TO MARKET BP PARTNERSHIP • Novel alignment to drive fresh food & coffee choices for BP customers • One of Australia’s largest fuel suppliers (approximately
Slide 19: Leaders in Innovation: In-Store Customisation
LEADERS IN INNOVATION LEVERAGING WORLD FIRST TECHNOLOGY TO CREATE A SCALABLE & UNIQUE POINT OF For personal use only DIFFERENCE WHICH REVOLUTIONISES THE CELEBRATION & BROADER CAKE CATEGORY MICHEL’S PATISSERIE IN-STORE CUSTOMISATION • Launch of market disruptive in-store customisation special order t
Slide 20: Outlook
For personal use only OUTLOOK 20
Slide 21: Growth & Outlook
GROWTH & OUTLOOK For personal use only PRUDENT & MEASURED M&A PROGRAM OUTLOOK & GUIDANCE • Business model continues to support & benefit from acquisitive growth • Positive outlook affirmed • RFG an acquirer of choice • Diverse global business model offers plethora of opportunity • Plethora of opport
Slide 22: Appendices
For personal use only APPENDICES 22
Slide 23: Trading Summary
APPENDIX 1 TRADING SUMMARY 1H17 ($m) For personal use only UNDERLYING REPORTED EBITDA 60.5 56.6 NPAT 36.2 33.5 EPS 21.2 19.6 EBITDA ADJUSTMENTS REPORTED EBITDA 56.6 M&A COSTS: • ACQUISITION 1.4 • INTEGRATION 0.9 • RESTRUCTURING 1.6 UNDERLYING EBITDA 60.5 23
Slide 24: Definitions
APPENDIX 2 DEFINITIONS For personal use only NWS Network Sales: inc. network sales from stores in non-licensed territories GFR Gross Franchise Revenue FSF Franchise Service Fee SSS Same Store Sales ATV Average Transaction Value PCP Previous Corresponding Period CPO Contribution per Outlet (EBITDA) Q
Slide 25: Cash Flow Statement
APPENDIX 3 1H16 ($m) 1H17 ($m) CASH FLOW STATEMENT Receipts from customers 179.3 180.0 Payments to suppliers & employees (135.3) (129.6) For personal use only Gross operating cash flows 44.0 50.4 • 14.7% increase in gross operating cash flow to $50.4m (PCP: $44.0m(1)) EBITDA 48.9 56.6 • Conversion t
Slide 26: Financial Position
APPENDIX 4 FY16 ($m) 1H17 ($m) FINANCIAL POSITION ASSETS: Cash reserves 17.4 15.4 For personal use only • Increases in working capital balances, PP&E & intangible assets primarily Trade receivables 48.6 84.5 attributable to acquisition of Hudson Pacific Corporation Financial assets 42.3 45.4 • Other
Slide 27: Debt Structure
APPENDIX 5 DEBT STRUCTURE For personal use only • Facility headroom (including cash) at 31 December 2016 of $80.4m SENIOR DEBT FACILITY 1H16 1H17 • Weighted Average Interest Rate at 31 December 2016 of 3.52% • Comfortable compliance with all lending covenants as at 31 December Net debt(1) $197.2m $2
Slide 28: Capital Management
APPENDIX 6 CAPITAL MANAGEMENT For personal use only SHARES PRICE ($) PROCEEDS/VALUE ($m) Shares on issue 1 July 2016 164,968,083 Dividend Reinvestment Plan (Final FY16 Dividend) 509,210 6.7 3.4 Dividend Reinvestment Plan Shortfall Placement (inc. oversubscriptions) 5,197,044 6.9 35.6 Issue of ordina
Slide 29: Brand System Summary
APPENDIX 7 GLOBAL DOMESTIC BRAND SYSTEM SUMMARY DIVISION NEW TOTAL (1) EBITDA ($m) PCP (%) SSS ATV CPO ($’000) PCP (%) OUTLETS OUTLETS 1H17 1H17 For personal use only 12 337 8.3 5.8% 5.3% 4.2% 24.8 7.7% BAKERY/CAFE 15 262 5.4 0.5% 1.4% 2.9% 20.9 1.0% 2 260 8.1 5.3% (0.7%) (1.0%) 30.4 1.8% BAKERY/CAF
Slide 30: Disclaimer
DISCLAIMER NO RESPONSIBILITY FOR CONTENTS OF PRESENTATION: For personal use only 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 liabilit