Retail Food Group Limited · ASX:RFG
Retail Food — FY2013 Earnings Presentation
53 slides from Retail Food's earnings presentation, Aug 29, 2013
Slide 1: FY13 Results & FY14 Initiatives
For personal use only EXAMPLE
Slide 2: FY13 Summary
FY13 Summary For personal use only Statutory Results Core Operations (1) FY09 FY10 FY11 FY12 FY13 PCP % FY12 FY13 PCP % Total Revenue (2) $130.5m $118.6m $110.0m $101.9m $117.0m 14.8% EBIT $40.3m $43.8m $45.1m $47.5m $52.8m 11.3% $50.1m $55.9m 11.7% NPAT $23.5m $26.0m $27.2m $28.5m $32.0m 12.1% $30.
Slide 3: Retail Food Group Limited (ASX: RFG)
Retail Food Group Limited (ASX: RFG) For personal use only RFG designs, develops and manages retail franchise systems and is the intellectual property owner and licensor of the following Brand Systems: - Donut King - Crust Gourmet Pizza - Michel’s Patisserie - Pizza Capers - Brumby’s Bakery - The
Slide 4: Headlines
FY13 Headlines For personal use only Financial Headlines: - TSR: (1) (2) 59.7% (1 year) - Core NPAT: $34.3m (up 13.3% on PCP) - NPAT CAGR: 28.9% (since listing in 2006) - Dividends: (1) 19.75 cps (up 12.9% on PCP) maintaining dividend payout ratio on Core NPAT at circa 75% - Net debt: $94.3m with
Slide 5: Financial Highlights (1 of 3)
FY13 Financial Highlights (1 of 3) For personal use only 5
Slide 6: Financial Highlights (2 of 3)
FY13 Financial Highlights (2 of 3) For personal use only Core EBIT of $55.9m represents 11.7% increase on PCP ($50.1m) comprising: - Positive EBIT contributions from 1H13 acquisitions - Resilient Brand Systems & coffee roasting activities - Notwithstanding: · Significant expense due to operation o
Slide 7: Financial Highlights (3 of 3)
FY13 Financial Highlights (3 of 3) For personal use only Total Revenue increase of 14.8% to $117.0m, attributable to: - 12.7% increase in Franchise revenues - 7.2% increase in coffee revenues - 52% increase in revenue from managed corporate outlets Franchise revenue increase of $7.5m to $71.9m(3
Slide 8: Summary of Brand System Performance
FY13 Summary of Brand System Performance For personal use only Superior EBITDA contribution of QSR FY13 Donut Brumby's Michel's QSR Other testament to RFG’s resolve to enter the Summary King Bakery Patisserie gourmet pizza sector GFR ($m) (1) 84.1 18.4 17.7 27.2 14.1 6.7 FSF ($m) (1) 43.2 10.5 11.
Slide 9: Outlet Population
FY13 Outlet Population For personal use only Brand System Total Outlets Australia NZ Other Donut King 345 330 3 12 Esquires / bb’s Café 90 38 52 - Brumby’s 296 283 12 1 Michel’s 317 314 1 2 Pizza Capers 129 128 - 1 Crust 141 133 4 4 The Coffee Guy 56 1 55 - Total 1,374 1,227 127 20 FY13 net growth
Slide 10: Operational Achievements
FY13 Operational Achievements For personal use only Operational Activity: - Non QSR Weighted AWS & Weighted ATV growth of 1.3% and 4.2% respectively on PCP(1) - QSR Weighted Store Sales & Weighted ATV growth of 1.5% and 3.3% respectively on PCP(2) - New outlet commissionings: 73 - “Project EVO” si
Slide 11: Review: QSR (Pizza Capers & Crust Gourmet Pizza) (1 of 4)
FY13 Review: QSR (Pizza Capers & Crust Gourmet Pizza) (1 of 4) For personal use only FY13 - Key Metrics Network Sales $158.3m Weighted Store Sales Growth vs PCP 1.5% ATV Growth vs PCP 3.3% Gross Franchise Revenue $14.1m Franchise Service Fee Revenue $9.8m FY13 EBITDA Contribution $10.1m Contribution
Slide 12: Review: QSR (Pizza Capers & Crust Gourmet Pizza) (2 of 4)
FY13 Review: QSR (Pizza Capers & Crust Gourmet Pizza) (2 of 4) For personal use only Domestic category leader in gourmet pizza space International presence (USA, Singapore & NZ) Represents significant growth opportunity outside of shopping centres 156 additional outlets (acquisition: 119, or
Slide 13: Review: QSR (Crust) (3 of 4)
FY13 Review: QSR (Crust) (3 of 4) For personal use only Acquisition completed October 2012 - Acquisition price $41m - Performance payment potential: $4m Crust outlet population: - 30 June 2013: 141 - Net growth: 22 (8 months) Online sales growth: - Increased c.70% on PCP - Represent c.25% of F
Slide 14: Review: QSR (Pizza Capers) (4 of 4)
FY13 Review: QSR (Pizza Capers) (4 of 4) For personal use only Pizza Capers (Capers) outlet population: - 30 June 2013: 129 - Net growth: 11 Peter Jones appointed Capers Brand System Managing Director: - Extensive pizza experience (Domino’s Australia, NZ & Middle East) - Corporate store manageme
Slide 15: Review: Donut King (1 of 4)
FY13 Review: Donut King (1 of 4) For personal use only FY13 - Key Metrics Network Sales $166.3m AWS Growth vs PCP 4.4% ATV Growth vs PCP 6.5% Gross Franchise Revenue $18.4m Franchise Service Fee Revenue $10.5m FY13 EBITDA Contribution $12.7m Contribution to Group EBITDA 23.2% New Outlets Commissione
Slide 16: Review: Donut King (2 of 4)
FY13 Review: Donut King (2 of 4) For personal use only EVO initiatives influence market position relevance, outlet, AWS & ATV growth: - Fresh & exciting - New store design - Menu extension (incl. savoury category) - Fun & interactive experience via digital technology & brand communication - Menu b
Slide 17: From this…. (3 of 4)
For personal use only From this…. (3 of 4)
Slide 18: To this…. (4 of 4)
For personal use only To this…. (4 of 4)
Slide 19: Review: Michel's Patisserie (1 of 5)
FY13 Review: Michel’s Patisserie (1 of 5) For personal use only FY13 - Key Metrics Network Sales $170.4m AWS Growth vs PCP (2.2)% (1.3)% excluding Qld Network ATV Growth vs PCP 1.4% Gross Franchise Revenue $27.2m Franchise Service Fee Revenue $9.4m FY13 EBITDA Contribution $15.5m Contribution to Gro
Slide 20: Review: Michel's Patisserie (2 of 5)
FY13 Review: Michel’s Patisserie (2 of 5) For personal use only Steven Pagett appointed Brand System Managing Director: - Former Brumby’s Bakery Managing Director - Developed and executed enhanced Brumby’s franchisee re-engagement and alignment program - Experience & skillsets necessary to commiss
Slide 21: From this…. (3 of 5)
For personal use only From this…. (3 of 5)
Slide 22: To this…. (4 of 5)
To this…. (4 of 5) (Michel’s Lilydale) For personal use only
Slide 23: Review: Michel's National Bakery Solution (5 of 5)
FY13 Review: Michel’s National Bakery Solution (5 of 5) For personal use only Tullamarine, Victoria facility commissioned (December 2012): - Underpins Victorian National Bakery Solution - Includes and consolidates RFG Victorian State Offices - Incorporates freezer, cool room and finishing stations
Slide 24: Review: Brumby's Bakery (1 of 2)
FY13 Review: Brumby’s Bakery (1 of 2) For personal use only FY 13 - Key Metrics Network Sales $198.3m AWS Growth vs PCP 0.4% ATV Growth vs PCP 5.1% Gross Franchise Revenue $17.7m Franchise Service Fee Revenue $11.0m FY13 EBITDA Contribution $12.9m Contribution to Group EBITDA 27.7% New Outlets Commi
Slide 25: Review: Brumby's Bakery (2 of 2)
FY13 Review: Brumby’s Bakery (2 of 2) For personal use only Kevin Waite appointed Brand System Managing Director: - Seasoned QSR MD with extensive international multi-brand experience including; · New brand development · Brand transformation · Strategic brand growth Most successful GO! outlet op
Slide 26: Review: Esquires, The Coffee Guy, External Wholesale Coffee
FY13 Review: Esquires, The Coffee Guy, External Wholesale Coffee For personal use only FY13 - Key Metrics Network Sales (Esquires & The Coffee Guy) $43.3m AWS Growth vs PCP 0.2% ATV Growth vs PCP 2.1% Gross Franchise Revenue $6.7m Franchise Service Fee Revenue $2.5m New Outlets Commissioned – FY13 6
Slide 27: Review: Esquires Coffee (1 of 3)
FY13 Review: Esquires Coffee (1 of 3) For personal use only Project EVO platform for Australia and New Zealand finalised: - Re-formulated brand built on leading trends, coffee excellence, technology & sustainability: · Individual and unique store design with strong theming · Boutique café menu · E
Slide 28: From this….
From this…. For personal use only From this….
Slide 29: To this….
For personal use only To this….
Slide 30: Review: The Coffee Guy
FY13 Review: The Coffee Guy For personal use only Acquisition of New Zealand domiciled Brand System: - Completed in November 2012 (AUD $4.1m) - NZ market leader in mobile vans · 55 outlets · Low cost investment · Fixed weekly fee · Attractive to semi-retired and/or part-time franchisees - Potentia
Slide 31: Review: Wholesale Coffee
FY13 Review: Wholesale Coffee For personal use only Roasting facilities: - Evolution Coffee Roasters - NZ - Caffé Coffee – Australia - Facilities service: · RFG Brand Systems – 80% of roasted coffee · 3rd party wholesale supply – 20% of roasted coffee Green Bean purchases increased c.10% on PCP:
Slide 32: Review: Coffee Excellence
FY13 Review: Coffee Excellence For personal use only Excellence in coffee: - Franchise coffee sales continues to excel with · 7.4% increase in EBITDA contribution (to $11.4m) · 13% increase in net franchise margin contribution (to $12.56m) - Record 1,990 Coffee Makers/Baristas certified via RFG’s
Slide 33: RFG Coffee Awards
RFG Coffee Awards For personal use only Michel’s Patisserie won Roy Morgan “Coffee Shop of the Year” in 2012 for the second year running Donut King won Roy Morgan “Coffee Shop of the Month” 4 times in 2012 Golden Bean - Donut King – Bronze Medal - Chain Store/Coffee Franchise (Milk Based) Go
Slide 34: FY14 Growth Platform & Strategic Initiatives
For personal use only FY14 Growth Platform & Strategic Initiatives
Slide 35: QSR – Growth Platform
QSR – Growth Platform For personal use only Crust Brand System: “FY14 will witness sustained domestic growth for Crust, along with increased focus on our international markets. We will continue to focus on extracting enhanced online sales and execution of the brand’s largest marketing campaign to
Slide 36: QSR – Project QSR
QSR – Project QSR 400 For personal use only Targets accelerated QSR gourmet pizza outlet growth: - 340 outlets by 30 June 2014 - 400 outlets by 3Q15 100+ new territories identified: - 65 sites under active consideration of which · 13 are committed & 26 are subject to formal offer · 10 are under
Slide 37: Donut King – Project EVO & FY14
Donut King – Project EVO & FY14 For personal use only First ‘store of the future’ established Dec 12 EVO successfully incorporated into 5 outlets: - New outlet AWS >60% Brand System average - Refurbished outlet AWS growth trending at c.16% EVO concepts backfilled into network where appropriate
Slide 38: Michel's Patisserie – Project EVO & FY14
Michel’s Patisserie – Project EVO & FY14 For personal use only Launched ‘store of the future’ in July 2013 (Stockland Lilydale): - Culmination of 3 year investment - Showcases majority of EVO initiatives (incl. ‘frozen model’) - Initial trading exceptional: · >65% above national FY13 AWS · 85% abo
Slide 39: Brumby's Bakery – Project EVO & FY14
Brumby’s Bakery – Project EVO & FY14 For personal use only Initial EVO phases nearing completion: - Traditional concept ‘store of the future’ – due Dec 13 - GO! concept ‘store of the future’ – due June 14 EVO contemplates: - New store designs; - Revitalised brand “look & feel” - Extended menu -
Slide 40: Esquires – Project EVO & FY14
Esquires – Project EVO & FY14 For personal use only Project EVO initiatives have enjoyed success driving double digit growth in AWS Development program forecast: - 6 new outlets forecast for FY14 - 15 refurbishments Continued focus on: - Converting bb’s Café to Esquires - Increasing drive-thru
Slide 41: Project EVO Timeline
Project EVO Timeline For personal use only BRAND SYSTEM STRATEGY RESEARCH CONCEPT LAUNCH TRIAL / RE- BACK-FILL DEVELOPMENT DEVELOPMENT ARTICULATE Donut King DEC 12 FY14 Esquires DEC 12 FY14 Michel’s JULY 13 FY14 Patisserie Brumby’s 1H14 Bakery Brumby’s GO! 2H14 Pi
Slide 42: EVO Rollout – Franchisee Financial Accommodation
EVO Rollout – Franchisee Financial Accommodation For personal use only RFG motivated to accelerate: - EVO conversions; and - New outlet growth Financial accommodation will be afforded to franchisees, including: - Suspension of initial or other fees - Traditional funding & interest - Traditional
Slide 43: Coffee & Allied Beverages Strategy
Coffee & Allied Beverages Strategy For personal use only Notwithstanding strong historical growth, coffee opportunity remains untapped: - Segmentation strategy implemented incorporating · Boutique roasting blends · Convenience driven channels · Vertical integration of allied products · Expanded th
Slide 44: Acquisitive Activity
Acquisitive Activity For personal use only Board mandated conservative & measured approach; however - Acquisition opportunity remains significant growth platform - Historical performance a testament to ‘strength in brands’ strategy Plethora of acquisition opportunity exists within: - Franchise i
Slide 45: Property Portfolio Facilitating Growth
Property Portfolio Facilitating Growth For personal use only Commercial Drive, Ashmore: - Fitout completion scheduled Sept 13 - Accommodates present business and future acquisitive growth - Affords efficient relocation of personnel & support functions “Kensington on the Park”, Southport: - 4 apa
Slide 46: Capital Management & Outlook
Capital Management & Outlook For personal use only Capital Management: RFG has multiple capital management opportunities given: - Strong net free cash flow generation - Robust share price - Cash & Senior Debt Facility headroom of c.$40m - Strong banking relationships Absent significant acquisiti
Slide 47: Appendices
Appendices For personal use only Appendix 1 – Core Earnings Reconciliation Appendix 2 – Earnings Performance Appendix 3 – Cash flow Performance Appendix 4 – Financial Position Appendix 5 – Debt Structure Appendix 6 – Capital Management 47
Slide 48: Appendix – Core Earnings Reconciliation
Appendix 1 – Core Earnings Reconciliation For personal use only Reconciliation of Statutory result to ‘Core Earnings’ FY13 FY12 $’m $’m Statutory EBIT 52.8 47.5 Administration of failed Michel’s supplier operations (including direct financial assistance provided to 2.1 1.7 franchisees) Corporate res
Slide 49: Appendix – Earnings Performance
Appendix 2 – Earnings Performance For personal use only FY13 FY12 $’m $’m Franchise, licensing & other fees up 12.7% to $73.0m, 95.9 78.9 reflecting contributions from acquisitions 1H13 (Crust & Revenue from franchising operations The Coffee Guy), organic growth, and licence fee Revenue from whole
Slide 50: Appendix – Cash Flow Performance
Appendix 3 – Cash Flow Performance For personal use only FY13 FY12 $’m $’m Receipts from customers 150.3 120.6 Payments to suppliers and employees (98.4) (77.4) Gross operating cash flows 51.9 43.2 Continuing strong cash flows – a feature of RFG’s EBITDA 53.8 48.4 business model – supported by bal
Slide 51: Appendix – Financial Position
Appendix 4 – Financial Position For personal use only FY13 FY12 $’m $’m Assets: Significant cash holdings from superior operating cash 16.8 12.8 flows to EBITDA conversion rate, notwithstanding the Cash reserves increase in dividend payout to $22.2m Trade receivables 19.0 16.5 12.7 4.7 Working c
Slide 52: Appendix – Debt Structure
Appendix 5 – Debt Structure For personal use only Facility headroom (including cash) at 30 June 2013 of $40.7m ‘NAB’ Facility FY13 Net debt $94.3m Gross debt of $109m at 30 June 2013: - $50m of debt on fixed interest rate to June 2014 Interest expense $7.4m - $59m of debt subject to variable int
Slide 53: Appendix – Capital Management
Appendix 6 – Capital Management For personal use only Proceeds/Value Shares Price ($m) Shares on issue 1st July 2012 108,422,615 Institutional/Sophisticated Investor Placement 16,330,000 2.85 46.54 SPP 2,455,946 2.85 7.00 Crust acquisition – partial consideration 2,358,462 2.968 7.00 ESOP – exercise