Collins Foods Limited · ASX:CKF
Collins Foods — Merger or Acquisition (March 2017)
37 slides from Collins Foods's merger presentation, Mar 23, 2017
Slide 1: Acquisition of KFC Restaurants in the Netherlands from Yum! Brands
Not for release or distribution in the United States For personal use only COLLINS FOODS LIMITED ACQUISITION OF KFC RESTAURANTS IN THE NETHERLANDS FROM YUM! BRANDS March 23 2017 ACN 151 420 781
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only This presentation has been prepared by Collins Foods Limited ACN 151 420 781(“Collins Foods” or the “Company”) to provide summary information about Collins Foods and its associated entities and their activities current as at the date of this pres
Slide 3: Executive summary
Executive summary For personal use only Overview of the CFE Investments Ltd, a subsidiary of Collins Foods, has entered into a binding agreement with subsidiaries of acquisition Yum! Brands Inc ("Yum!") to acquire 16 KFC restaurants located in the Netherlands (the "Netherlands Acquisition") Purc
Slide 4: Acquisition overview
For personal use only Section 1 Acquisition overview
Slide 5: Acquisition overview
Acquisition overview For personal use only • CFE Investments Ltd, a wholly owned subsidiary of Collins Foods, has agreed to acquire a portfolio of 16 KFC restaurants in the Netherlands from subsidiaries of Yum! sale is part of Yum!'s announced strategy to move to a ≥ 98% franchised model globally
Slide 6: Compelling strategic rationale
Compelling strategic rationale For personal use only Leverages the core strength of Collins Foods in operating and growing KFC restaurants 1 Accelerates Collins Foods' European expansion, adding critical scale to the recently acquired 2 operations in the adjacent market of Germany 3 The Netherlands
Slide 7: Netherlands Acquisition portfolio
For personal use only Section 2 Netherlands Acquisition portfolio
Slide 8: Netherlands market opportunity
Netherlands market opportunity For personal use only • The Netherlands is the world’s 17th largest economy Competitor restaurants in the Netherlands forecast GDP per capita growth of 2.6% for CY2017 300 250 • Population of c.17 million 200 one of the most densely populated countries in Europe 15
Slide 9: Netherlands Acquisition portfolio
Netherlands Acquisition portfolio For personal use only Commentary Portfolio overview • Acquisition includes 16 restaurants across the Netherlands nine restaurants in Amsterdam, the Hague, Almere and seven in major southern cities all established restaurants with the exception of Almere Buiten w
Slide 10: Netherlands Acquisition portfolio (cont'd)
Netherlands Acquisition portfolio (cont'd) For personal use only Financial profile • For the year ending 30 September 2016, the Netherlands Acquisition generated revenue of €46.6 million and EBITDA of €7.3 million on a pro forma basis pro forma financials have been adjusted to reflect the material
Slide 11: Netherlands Acquisition portfolio (cont'd)
Netherlands Acquisition portfolio (cont'd) For personal use only Integration Restaurant remodels • The Collins Foods European business will operate independently • All restaurants are in good operating condition from the Collins Foods Australian business • Under the standard terms of the KFC franchi
Slide 12: Development Agreement
Development Agreement For personal use only • A subsidiary of Collins Foods, CFE Investments Ltd, and a subsidiary of Yum! have entered into a Development Agreement which will govern the roll-out of more than 20 new KFC restaurants in the Netherlands by Collins Foods by 31 December 2021 will more
Slide 13: Significantly enhanced scale in Europe
Significantly enhanced scale in Europe For personal use only • Acquisition accelerates Collins Foods' European expansion strategy, increasing the restaurant footprint from 12 to 28 N E THE R LANDS restaurants following the recent German acquisition • Allows increased economies of scale to be readily
Slide 14: Financial impact of the Acquisition
For personal use only Section 3 Financial impact of the Acquisition
Slide 15: Financial impact of the Acquisition
Financial impact of the Acquisition For personal use only • The Netherlands Acquisition and associated costs for the equity raising to be funded through a combination of: fully underwritten institutional placement to raise c.A$54 million extension of existing lending facilities via a EUR denomin
Slide 16: Pro forma balance sheet
Pro forma balance sheet For personal use only Impact to balance sheet1 Collins German Netherlands Foods as at acquisition Acquisition Funding has been structured to ensure a prudent A$m 16 Oct 16 adjustments2 adjustments3 Pro forma and conservative balance sheet is maintained Cash and equivalents
Slide 17: European management structure
For personal use only Section 4 European management structure
Slide 18: Strengthened European management structure
Strengthened European management structure For personal use only • Mark van 't Loo has joined Collins Foods in the newly created position of CEO, Europe Mark Van 't Loo CEO, Europe • A Dutch citizen, Mark has over 24 years' experience in the fast food industry including 17 years with KFC in various
Slide 19: Trading update
For personal use only Section 5 Trading update
Slide 20: Trading update — Collins Foods
Trading update — Collins Foods For personal use only (A$m) 20 weeks to 4 March 2016 20 weeks to 5 March 2017 Change Revenue 220.1 247.2 12.3% Underlying EBITDA1 29.1 30.7 5.4% Underlying EBITDA margin 13.2% 12.4% (0.8%) Statutory EBITDA 30.7 29.0 (5.5%) 1. Adjusted to exclude A$1.7 million profit fr
Slide 21: Trading update — KFC Australia
Trading update — KFC Australia For personal use only (A$m) 20 weeks to 4 March 2016 20 weeks to 5 March 2017 Change Restaurants 176 192 16 Revenue 192.6 214.2 11.2% Underlying EBITDA 30.9 33.6 8.9% Underlying EBITDA margin 16.0% 15.7% (0.3%) Revenue up 11.2% driven by: SSS growth of 1.6%, impact
Slide 22: Trading update — other divisions
Trading update — other divisions For personal use only Revenue Underlying EBITDA 20 weeks to 4 20 weeks to 5 20 weeks to 4 20 weeks to 5 (A$m) March 2016 March 2017 Change March 2016 March 2017 Change KFC Europe — 5.9 na — 0.4 na Sizzler 27.4 25.2 (8.0%) 2.2 1.5 (30.5%) Snag Stand — 1.9 na — (0.3) n
Slide 23: Outlook
Outlook For personal use only Expect Group underlying EBITDA growth on pcp for the last 8 weeks of FY2017 to remain broadly in line with that observed over the 20 weeks ending 5 March 2017; Expect to report additional one-off costs, including transaction costs in relation to the Netherlands Acqu
Slide 24: Equity offer structure
For personal use only Section 6 Equity offer structure
Slide 25: Equity raising details
Equity raising details For personal use only • Fully underwritten institutional placement of approximately 10.4 million shares to raise approximately A$54.5 million Offer size • Non-underwritten SPP to eligible shareholders in Australia and New Zealand, up to A$15,000 per shareholder • The SPP will
Slide 26: Equity raising timetable
Equity raising timetable1 For personal use only Wednesday 22 March 2017 • Record date for SPP (7pm Sydney time) Thursday 23 March 2017 • Trading halt • Bookbuild conducted for the Placement Friday 24 March 2017 • Announcement of completion of Placement • Trading halt lifted Tuesday 28 March 2017 • S
Slide 27: Key risks and selling jurisdictions
For personal use only Section 7 Key risks and selling jurisdictions
Slide 28: Key risks
Key risks This section outlines some of the key risks associated with an investment in Collins Foods shares, together with risks relating specifically to the Netherlands Acquisition For personal use only and participation in the Placement and SPP. This is not an exhaustive list of the relevant risks
Slide 29: Key risks: transaction specific risks
Key risks For personal use only Transaction specific risks Risk Explanation Concentration • Damrak is the largest restaurant in portfolio, representing c.22% of EBITDA for the 16 restaurants. Furthermore, the Netherlands Acquisition and integration contemplates the successful integration of the busi
Slide 30: Key risks: risks specific to Collins Foods
Key risks For personal use only Risks specific to Collins Foods Risk Explanation Acquisition • Collins Foods may pursue acquisitions to complement its organic growth. There are risks associated with an acquisition strategy, including that related risks Collins Foods is unable to identify suitable op
Slide 31: Key risks: risks specific to Collins Foods
Key risks For personal use only Risks specific to Collins Foods Risk Explanation Termination of • There is a risk that Yum! could terminate KFC franchise arrangements with Collins Foods as a result of a material breach by Collins Foods of its franchise obligations to Yum! under those arrangements (i
Slide 32: Key risks: risks specific to Collins Foods
Key risks For personal use only Risks specific to Collins Foods Risk Explanation Failure to continue • There is a risk that Collins Foods will be unable to open new restaurants in accordance with business plan and the recently signed to open sufficient Development Agreement, including as a result of
Slide 33: Key risks: general risks
Key risks For personal use only General risks Risk Explanation General market • There are general risks associated with any investment in the share market. The price of Collins Foods shares may increase or decrease due to and share price a number of factors. Those factors include fluctuations in dom
Slide 34: Foreign selling/offer jurisdictions
Foreign selling/offer jurisdictions For personal use only International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any per
Slide 35: Foreign selling/offer jurisdictions
Foreign selling/offer jurisdictions For personal use only New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Shares are not being offered or sold in New Zealand (or al
Slide 36: Foreign selling/offer jurisdictions
Foreign selling/offer jurisdictions For personal use only Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other do
Slide 37: Foreign selling/offer jurisdictions
Foreign selling/offer jurisdictions For personal use only United Kingdom Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85