Retail Food Group Limited · ASX:RFG
Retail Food — H1 2018 Earnings Presentation
32 slides from Retail Food's earnings presentation, Mar 2, 2018
Slide 1: 1H18 Results Presentation & Business-Wide Review Update
For personal use only 1H18 RESULTS PRESENTATION & BUSINESS-WIDE REVIEW UPDATE
Slide 2: RFG company overview, board and executive
For personal use only (ASX:RFG) RFG is a global food and beverage company headquartered in Queensland. It is Australia’s largest multi-brand retail food franchise owner, a roaster and supplier of high quality coffee products and an emerging leader in the foodservice, dairy processing and wholesale b
Slide 3: Strategic Growth Drivers
For personal use only STRATEGIC GROWTH DRIVERS FRANCHISE INTERNATIONAL COFFEE & ALLIED COMMERCIAL BEVERAGE A diverse portfolio of Expanding global Growing global Supports diversification market leading brands footprint provides a demand underpins and vertical integration across bakery, café, sustain
Slide 4: 1H18: Snapshot
1H18: SNAPSHOT For personal use only > Disappointing 1H18 performance > Significant items recognised 1H18: • Underlying NPAT of $24.7m, down 31.8% on PCP • Non-cash impairments, write-downs and provisioning • Impacted by persistent challenging trading conditions totalling $138.0m pre-tax included in
Slide 5: 1H18 Performance Review
For personal use only 1H18 PERFORMANCE REVIEW
Slide 6: 1H18 Underlying Performance
1H18 1H18 UNDERLYING PERFORMANCE (1) GROUP PERFORMANCE(1) 1H17 1H18 % Change SUMMARY For personal use only Revenue $161.9m $195.5m 20.8% > Revenue increase (+20.8%) reflects full period contribution of FY17 acquired assets (HPC/AFS) EBITDA $60.5m $45.7m (24.5%) > 1H18 EBITDA/NPAT performance influen
Slide 7: Reconciliation of Underlying to Statutory Results
RECONCILIATION OF UNDERLYING TO 1H18 Underlying Statutory STATUTORY RESULTS EBITDA $m 45.7 (100.8) For personal use only > Recent operating performance, re-assessment of near NPAT $m 24.7 (87.8) term prospects, and decision to implement initial EPS cps 13.8 (49.0) recommendations from business-wide
Slide 8: EBITDA by Division
(1) EBITDA BY DIVISION 1H17 EBITDA $60.5m 1H18 EBITDA $45.7m For personal use only Commercial Commercial 6.1% Domestic Domestic Franchise International Franchise 15.8% Franchise 14.4% International Franchise 9.8% 36.6% 44.0% 20.5% Brand System 25.8% Coffee Contribution 15.0% 12.0% Brand System Coffe
Slide 9: Cash Flow Statement
1H17 (1) 1H18 CASH FLOW STATEMENT ($m) ($m) Receipts from Customers 212.3 260.7 Payments to Suppliers & Employees (163.1) (242.5) For personal use only > Cash conversion ratio is below trend in the half due Gross Operating Cash Flows 49.2 18.2 to inventory increases in commercial business STATUTORY
Slide 10: Balance Sheet
Sara Bradford 22/02/2018 FY17 1H18 RIBUTOR TO DELTA RFG Consolidated Group ($m) ($m) BALANCE SHEET Assets: Cash Reserves 10.3 7.9 > Decreases in receivables, PP&E, intangible assets, and For personal use only Trade Receivables 85.8 75.9 Financial Assets 23.7 19.7 tax balances, and increases in provi
Slide 11: Debt Structure
Sara Bradford 22/02/2018 RIBUTOR TO DELTA DEBT STRUCTURE For personal use only > Gross debt of $267.6m(2) SENIOR DEBT FACILITIES FY17 1H18 > Compliance with all lending covenants at 31 December 2017 Net debt(1) $247.1m $259.7m > Three year debt facilities of $150m extended: • $100m extended to facil
Slide 12: 1H18 Divisional Performance
For personal use only 1H18 DIVISIONAL PERFORMANCE FRANCHISE | INTERNATIONAL | COFFEE & ALLIED BEVERAGE | COMMERCIAL
Slide 13: 1H18 Franchise Summary
1H18 FRANCHISE SUMMARY For personal use only GLOBAL(1) DOMESTIC DOMESTIC NEW OUTLET EBITDA GROSS NEW TOTAL CPO(2) (3) 1H18 EBITDA PCP (%) TOTAL 1H18 EBITDA SSS ATV NETWORK PCP% PCP% DIVISION COMMISSIO 1H18 PCP (%) FRANCHISE PCP (%) OUTLETS OUTLETS ($’000) CONT’N OUTLETS CONT’N (%) SALES NINGS ($m) (
Slide 14: 1H18 Bakery Cafe Division Performance
1H18 BAKERY CAFE 1H17 1H18 PCP DIVISION CONTRIBUTIONTO GROUP EBITDA (1) PERFORMANCE For personal use only BCD 36.0% 34.6% Donut King 13.7% 15.4% Brumby’s 8.9% 9.0% > $5.9m Divisional EBITDA decrease, and CPO Michel‘s Patisserie 13.5% 10.2% reductions, impacted by: EBITDA (1) ($m) ($m) • Cumulative i
Slide 15: 1H18 Coffee Retail Division Performance
1H18 COFFEE RETAIL DIVISION 1H17 1H18 PCP PERFORMANCE For personal use only CONTRIBUTIONTO GROUP EBITDA (1) Coffee Retail 30.9% 24.3% • Divisional EBITDA has decreased by $7.6m Gloria Jean’s 27.9% 21.6% impacted by: Mobile 3.0% 2.7% EBITDA (1) ($m) ($m) • Challenging retail conditions, especially in
Slide 16: 1H18 QSR Division Performance
1H18 QSR DIVISION PERFORMANCE For personal use only > Divisional EBITDA has decreased by $1.2m impacted by challenged Pizza Capers Brand System: • Geographic repositioning and rationalisation of corporate outlets led 1H17 1H18 % Change to network contraction • Focus on operational excellence, menu C
Slide 17: International Highlights
INTERNATIONAL HIGHLIGHTS • International EBITDA has decreased by $3.8m impacted by: For personal use only • Reduced margin reflecting investment in divisional capability and resourcing to service expanding network and realise growth opportunities • Brief timing delay regarding conclusion of new inte
Slide 18: 1H18 Coffee & Allied Beverage Performance
1H18 COFFEE & ALLIED BEVERAGE PERFORMANCE For personal use only Wholesale Coffee > Divisional EBITDA decreased by $3.6m, influenced by: • Loss of margin in contract roasting sector on new customer 1H17 1H18 % Change acquisition • Lower volumes on existing customer base impacted by Revenue $31.6m $32
Slide 19: Commercial Division Performance
1H17(2) 1H18 % Change Revenue COMMERCIAL Foodservice $13.9m $42.2m 204.2% DIVISION PERFORMANCE For personal use only Dairy Country $16.1m $30.4m 88.3% Bakery Fresh $4.0m $8.1m 101.8% > Divisional EBITDA performance reflects a full 6 TOTAL $34.0m $80.7m 137.1% months contribution from both the HPC an
Slide 20: Strategic Reset
For personal use only STRATEGIC RESET
Slide 21: Challenges Resulted in Strategic Review
CHALLENGES RESULTED IN STRATEGIC REVIEW For personal use only Macro retail Internal RFG’s three phase response: challenges environment Assist, Integrate, Optimise > Challenging retail conditions > Rapid growth via acquisition led to: > Surveyed franchise network - consistent • Domestic retail expend
Slide 22: Assist
ASSIST For personal use only > Underlying franchise model sound, albeit subject to challenges > Delivering increased value to franchisees: • Targeted initiatives to improve franchisee sustainability 1 ASSIST: • Driving revenue and reducing COGs • Enhanced Field Service support model • c.$1.5m invest
Slide 23: Mapping Network Sustainability: Approach and Findings
MAPPING NETWORK SUSTAINABILITY: APPROACH AND FINDINGS For personal use only Quantitative assessment of Qualitative assessment Findings from network review sustainability undertaken > Revenue and Average Weekly Sales – to > Operational performance and > Review determined c.160-200 domestic determine
Slide 24: Franchisee Fees & Costs vs Industry
FRANCHISEE FEES & COSTS vs INDUSTRY For personal use only > Driving initiatives which > Refurbishments subject to individual site > Average FY17 refurbishment costs c.$69K(1) lower store establishment, circumstances refurbishment and upgrade costs RFGvs RFG vsIndustry Industry** INDUSTRY INDUSTRY RF
Slide 25: Integrate
INTEGRATE For personal use only > Enhancing integration of head office and support structures • Improved alignment with core revenue drivers 2 ENHANCED • c.$10m annualised operational savings targeted • • c.$4.8m realised to date (full impact FY19) Further efficiencies programed 2H18 > Enhancing wag
Slide 26: Optimise
OPTIMISE For personal use only 3 SIMPLIFIED > Reducing complexity within existing business model • Enhancing integration amongst key business drivers, including procurement and supply-chain • Extracting process and procedural efficiencies • Removing ineffective or non-core overheads and investment •
Slide 27: Wage Compliance and Monitoring
WAGE COMPLIANCE AND MONITORING For personal use only HISTORICAL CURRENT & FUTURE STATE > Strong advocates of training and educational support > Further refinement and enhancement of wage entitlement • Partnership with National Retail Association (NRA) compliance framework • Launched RFG/NRA Foundati
Slide 28: Outlook
Outlook For personal use only > RFG remains confident in the strength of its underlying business operations and ability to support brand systems and franchisees > Expediting business-wide review and fast-tracking outcomes • Includes broader brand strategy and portfolio review • Ongoing structural im
Slide 29: Appendices
For personal use only APPENDICES
Slide 30: Capital Management
CAPITAL MANAGEMENT For personal use only Shares Price Proceeds/Value ($m) Shares on Issue 1 July 2017 176,736,066 Dividend Reinvestment Plan 1,015,648 $4.47 $4.5m Dividend Reinvestment Plan Shortfall Placement 4,993,796 $4.40 $22.0m Shares on issue 31 December 2017 182,745,510 Share value (1) $26.5m
Slide 31: Definitions
DEFINITIONS For personal use only ATV Average Transaction Value BCD BAKERY/CAFÉ DIVISION: Donut King, Michel’s Patisserie, Brumby’s Bakery COFFEE & ALLIED BEVERAGE: Franchise supply; specialty roasting; in-home/grocery; C&AB contract roasting COFFEE RETAIL DIVISION: Gloria Jean’s, Café2U, The Coffee
Slide 32: 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. The information in this Presentation is of a general nature and does not purpor