Retail Food Group Limited · ASX:RFG
Retail Food — FY2011 Earnings Presentation
32 slides from Retail Food's earnings presentation, Aug 16, 2011
Slide 1: Results Presentation - Financial Year 2011
RETAIL=OODGROUP STRENGTH IN BRANDS MBA (ONES ta60L RESULTS PRESENTATION - FINANCIAL YEAR 2011
Slide 2: 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 franchise systems: – D Donut t King Ki – Michel’s Patisserie – Brumby’s Bakeries (including Big Dad’s Pies and
Slide 3: FY11 Summary
FY11 Summary For personal use only Statutory Results Core Operations (1) FY06 FY07 FY08 FY09 FY10 FY11 PCP % FY10 FY11 PCP % Franchise Network Sales (2) $143.1m $158.2m $592.0m $632.0m $640.6m $651.1m 1.6% Total Revenue (3) $20.5m $23.6m $114.1m $130.5m $118.6m $110.0m (7. 3%) Adjusted Revenue (4) $
Slide 4: Resilient Business Model (1 of 3)
Resilient Business Model (1 of 3) Continued growth despite sustained lethargy in retail trading conditions and stagnant shopping centre development: For personal use only Core NPAT: $27.9m (up 5.7% on pcp) NPAT CAGR: 35 8% (6 years) 35.8% Core EPS: 26.0 cps (up 1.6% on pcp) EPS CAGR: 24.2%
Slide 5: Resilient Business Model (2 of 3)
Resilient Business Model (2 of 3) For personal use only 2H11 Initiatives – Commissioned independent market research and developed medium and long term marketing strategies on all y franchise systems – Development of new products and menu innovations for FY12 launch – Enhancement of franchise syste
Slide 6: Resilient Business Model (3 of 3)
Resilient Business Model (3 of 3) For personal use only Robust FY11 franchisee outlet trading performance, notwithstanding: – Significant impact of Qld/Nthn NSW, NT and NZ natural disasters: 180 Australian outlets impacted, 6 remain closed 13 NZ outlets impacted, 4 remain closed – Depressed re
Slide 7: Financial Highlights (1 of 2)
Financial Highlights (1 of 2) EBIT Core EBIT For personal use only Core EBIT of $46 million represents a 3.8% increase on pcp ($44.3m) 50 CAGR 36% notwithstanding: 40 – adverse impact of natural disasters (circa $2.9m) 30 – abnormal franchisee outlet closures in poor performing 20 shopping centres
Slide 8: Financial Highlights (2 of 2)
Financial Highlights (2 of 2) For personal use only Adjusted Revenue increase of 16.8% to $77.8m Revenue Adj.Revenue ¯ Excludes the impact of sales revenue derived from the wholesale b k bakery supply l tot Michel’s Mi h l’ outlets tl t which hi h are transitioning t iti i f from a 140 wholesale s
Slide 9: Operational Highlights
Operational Highlights For personal use only Resilient franchise systems in challenging retail environment: – Network sales up $10.5m to $651.1m – Strong performance against peers FY11 organic outlet growth of 40 consistent with guidance, and reflective of climatic events, continued depressed sh
Slide 10: Debt Structure & Covenants
Debt Structure & Covenants For personal use only Senior debt facility of $85.0m refinanced with National Australia Bank (NAB) in August 2010: – 3 year term – Structure allows for voluntary repayment of debt (repayments of $9.0m and $10.0m made in July 2010 and July 2011 respectively) – Covenants l
Slide 11: FY11 Franchise System Metrics – KPIs (1 of 2)
FY11 Franchise System Metrics – KPIs (1 of 2) For personal use only System Average Weekly Sales (AWS) Average Transaction Values (ATV) (Australian stores only) FY11 FY10 FY11 FY10 Donut King 9,469 9,357 5.23 5.11 Growth v prior period 1.2% 1.1% 2.4% 3.7% bb's café 11,499 11,329 7.57 7.41 Growth v pr
Slide 12: FY11 Franchise System Metrics – KPIs (2 of 2)
FY11 Franchise System Metrics – KPIs (2 of 2) For personal use only AWS increase in all four systems – Brumby s minimal AWS increase on pcp direct result of circa 50 North Queensland outlets not performing to pre Brumby’s natural disaster retail revenue levels – Michel’s AWS lower due to 56% of ou
Slide 13: FY11 Franchise System Metrics - Outlets
FY11 Franchise System Metrics ‐ Outlets For personal use only Saudi System QLD NSW VIC TAS SA WA NT Aust NZ China PNG Total Arabia Donut King 97 145 70 8 10 15 3 348 1 14 1 1 365 Brumby's Bakeries 156 32 67 1 19 48 9 332 16 - 1 - 349 Michel'ss Patisserie Michel 54 180 60 - 23 11 - 328 4 - - - 332 bb
Slide 14: FY11 Acquisitions
FY11 Acquisitions For personal use only Esquires Coffee Houses (ECH) – ECH franchise system acquired 7 February 2011 – Acquisition consisted of two components: – New Zealand master franchise business consisting of 46 outlets – Intellectual Property for the territories of New Zealand and Australia
Slide 15: FY12 Acquisitions
FY 12 Acquisitions For personal use only Evolution Coffee Roasters Group (ECR) – Agreement to acquire NZ domiciled ECR announced 28 July 2011, with settlement scheduled on or before 1 September 2011 – Acquisition investment circa NZD4.0m representing an EV/EBITDA multiple of 4 (on full integration
Slide 16: FY12 Initiatives (1 of 2)
FY12 Initiatives (1 of 2) For personal use only Positioning, Design and Relevance – Execute on augmentation strategies evolved from market research – Focus attention on enhancing customer service and experience – Giving Every Customer A Reason to Return – Introduction of Digital Loyalty Program –
Slide 17: FY12 Initiatives (2 of 2)
FY12 Initiatives (2 of 2) For personal use only – Brumby’s Bakeries – Standardised national savoury offer – Stronger focus on regional & segmentation marketing – Focus on quality bread and new product development to further differentiate the business – Active proliferation of the Brumby’s Go model –
Slide 18: FY12 Outlook
FY12 Outlook For personal use only Prevailing economic and retail conditions together with changing socio-economic attitudes and geographical redistribution of wealth will ensure a challenging and unpredictable FY12 For many retail lessors and branded retailers it will be a year of business mode
Slide 19: Appendices
Appendices For personal use only Appendix 1 – FY11 Performance Appendix 2 – Earnings Performance Appendix 3 – Cashflow Performance Appendix 4 – Financial Position Appendix 5 – Franchise Systems – Donut King – bb’s café – Brumby’s Bakeries, including - Brumby’s GO! Concept - Big Dad’s Pies Concept –
Slide 20: Appendix – FY11 Performance
Appendix 1 – FY11 Performance For personal use only 20 Retail Food Group Limited - FY11 Results Presentation
Slide 21: Appendix - Earnings Performance
Appendix 2 ‐ Earnings Performance For personal use only Key earnings highlights: FY11 FY10 $’m $’m Core NPAT of $27.9m $27 9m (5.7% (5 7% increase on FY10) after Revenue from franchising operations 69.3 61.3 adjusting for impacts of derivative financial instruments Revenue from wholesale / retail
Slide 22: Appendix - Cash Flow Performance
Appendix 3 ‐ Cash Flow Performance For personal use only Key cash flow highlights: FY11 FY10 $’m $’m Continuing strong cash flows – a feature of RFG RFG’ss Receipts from customers 136.8 147.7 business model – supported by balanced investment and financing activities Payments to suppliers and emplo
Slide 23: Appendix - Financial Position
Appendix 4 ‐ Financial Position For personal use only FY11 FY10 Key balance sheet highlights: $’000 $’000 Increase in cash reserves, reserves decrease in trade receivables Assets: and trade payables indicative of a robust well managed business model Cash reserves 15.1 13.1 Trade receivables 12.1 1
Slide 24: Appendix – Franchise Systems (Donut King)
Appendix 5 – Franchise Systems For personal use only Australia’s largest specialty donut and coffee chain – Serves 30 million donuts to Australians every year – Operates within the ‘impulse impulse buy buy’, ‘reward’ reward and ‘treat’ treat segments of the food retailing sector Network Sales: $
Slide 25: Appendix – Franchise Systems (Brumby's)
Appendix 5 – Franchise Systems For personal use only Australia’s largest “specialty bread and savoury” retail franchise chain – Incorporates Big Dad’s Pies, Brumby’s Go and Brumby’s Express outlet configurations – Operates within the “baked baked fresh fresh” and “convenient” convenient bakery seg
Slide 26: Appendix – Franchise System sub-brands
Appendix 5 – Franchise System sub sub‐brands brands For personal use only Brumby’s GO! offers quality fresh sandwiches, snacks and savouries – Operates within the “pre-made”, “snack "and “convenience” segments – Concept developed to meet market for fresh, healthy and ready-made bakery products – 1
Slide 27: Appendix – Franchise Systems (Michel's)
Appendix 5 – Franchise Systems For personal use only Australia’s largest specialty coffee and cake retailer – Rated the “Best Tasting Coffee Franchise“ by Choice Magazine (July 2010) – Operates within the “treat”, “take a break” and “special occasions” segment Network Sales: $216.2m Total Outl
Slide 28: Appendix – Franchise Systems (bb's café)
Appendix 5 – Franchise Systems For personal use only Café franchise with 36 outlets in Australia and 19 outlets in New Zealand – Operates within the ‘time out’, ‘relaxation’ and ‘meeting place’ segment of the food g and q retailing qualityy coffee sector – Successful launch of ‘My Local Café’ sub-
Slide 29: Appendix – Franchise Systems (Esquires)
Appendix 5 – Franchise Systems For personal use only Founded in 1993 in Vancouver, Esquires Coffee Houses has grown internationally with outlets in New Zealand, Fiji, Ireland and North America. – First New Zealand store opened in 2002 – Fastest growing coffee house franchise in New Zealand Acqui
Slide 30: Appendix – Oaks Hotels and Resorts Limited
Appendix 6 – Oaks Hotels and Resorts Limited (ASX: OAK) For personal use only Offer commercially prudent and strategy sound – Underlying business model (notwithstanding different industry) akin to company store and franchise model – difference being RFG operates under a franchise model (no company
Slide 31: RFG Investment Credentials
RFG Investment Credentials RFG was established in 1989 and is a leading Australian retail food brand manager and franchising company For personal use only with 1,148 franchised outlets in Australia, New Zealand, China, Papua New Guinea and Saudi Arabia (as at 30 Leading retail food brand June 2011
Slide 32: Disclaimer
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 and representatives: make no representation, representation warranty or undertaking, undertaking express or