Retail Food Group Limited · ASX:RFG
Retail Food — FY2012 Earnings Presentation
31 slides from Retail Food's earnings presentation, Aug 27, 2012
Slide 1: Results Presentation - Financial Year 2012
RETAIL GROUP STRENGTH IN BRANDS 3260e@ RESULTS PRESENTATION - FINANCIAL YEAR 2012
Slide 2: Retail Food Group Limited
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: – Donut King – Michel’s Patisserie – Brumby’s Bakeries – bb’s café and Esquires Coffee Houses
Slide 3: FY12 Summary
FY12 Summary For personal use only Statutory Results Core Operations (1) FY07 FY08 FY09 FY10 FY11 FY12 PCP % FY11 FY12 PCP % Adjusted Revenue (2) $66.6m $77.8m $100.6m 29.3% Total Revenue (2) $23.6m $114.1m $130.5m $118.6m $110.0m $101.9m (7.4%) EBIT $12.2m $34.4m $40.3m $43.8m $45.1m $47.5m 5.3% $4
Slide 4: FY12 Headlines
FY12 Headlines For personal use only Financial Headlines: – Core NPAT: $30.3m (up 8.9% on pcp) – NPAT CAGR: 30% (since listing in 2006) – Core EPS: 28.0 cps (up 7.7% on pcp) – EPS CAGR: 20% (since listing in 2006) – Dividends: (1) 17.5 cps (up 20.7% on pcp) increasing dividend payout ratio to 66.3%
Slide 5: FY12 Highlights (1 of 3)
FY12 Highlights (1 of 3) For personal use only 5
Slide 6: Financial Highlights (2 of 3)
Financial Highlights (2 of 3) For personal use only Core EBIT (1) of $50.1 million represents 8.8% increase on pcp ($46m) comprising: – Positive EBIT contributions from FY12 acquisitions – Resilient franchise systems & coffee roasting activities – Notwithstanding: – Franchisee outlet closures and in
Slide 7: Financial Highlights (3 of 3)
Financial Highlights (3 of 3) For personal use only Adjusted Revenue (1) increase of 29.3% to $100.6m, attributable to: – 20.2% increase in franchise revenues – 31% increase in coffee revenues including ECR acquisition – Increased revenue contribution from managed corporate outlets Franchise Revenue
Slide 8: FY12 Operational Excellence
FY12 Operational Excellence For personal use only Operational Highlights: – Average weekly sales (AWS) and average transaction values (ATV) increases reported in each franchise system (1) – Organic outlet openings of 39 consistent with guidance – Continued strong organic growth by volume and revenue
Slide 9: FY12 Training Excellence
FY12 Training Excellence For personal use only Training Highlights: – 1st full 12 months operation of Southport based World class training academy – Continues be the corner-stone of RFG’s multi-system strategy – Drives superior franchisee outcomes – Record franchisee intake of 210 also delivering in
Slide 10: FY12 Marketing & Innovation Excellence
FY12 Marketing & Innovation Excellence For personal use only Brumby’s – Market leaders in bread innovation with the launch of “Pure Bake” and subsequent launch of Organics range. Delivering 4.5% in bread sales growth on pcp – Successfully trialled freshly made sandwiches and rolls to launch national
Slide 11: Esquires Revamp!
Esquires Revamp! For personal use only Esquires undergoes largest brand transformation in its history Conversion of bb’s outlets to Esquires set to be completed by FY15 Re-formulated brand built on leading trends, coffee excellence, technology and sustainability to have profound effect on market pos
Slide 12: FY12 Franchise System Metrics – KPIs (1 of 2)
FY12 Franchise System Metrics – KPIs (1 of 2) For personal use only System growth v prior period Average Weekly Sales (AWS) Growth Average Transaction Value (ATV) Growth (Australian stores only) FY12 FY11 FY12 FY11 Donut King 1.7% 1.2% 3.8% 2.4% bb's café/Esquires 0.3% 1.5% 3.4% 2.1% Brumby's Bakeri
Slide 13: FY12 Franchise System Metrics – KPIs (2 of 2)
FY12 Franchise System Metrics – KPIs (2 of 2) For personal use only NZ systems have experienced AWS declines in FY12 reflecting: – Tougher retail trading conditions than those being experienced in Australia – Ongoing business interruption to outlets located the greater Christchurch area – Cycling ve
Slide 14: FY12 Franchise System Metrics - Outlets
FY12 Franchise System Metrics - Outlets For personal use only Saudi System Australia NZ China PNG Singapore Indonesia Total Arabia Donut King 345 2 15 1 1 - - 364 Brumby's Bakeries 320 15 - 1 - - - 336 Michel's Patisserie 329 2 - - - - 1 332 bb’s café / Esquires 37 64 - - - - - 101 Pizza Capers 117
Slide 15: Acquisitions - Evolution Coffee Roasters Group (ECR)
FY 12 Acquisitions - Evolution Coffee Roasters Group (ECR) For personal use only ECR is a New Zealand based coffee roaster, merchandiser and beverage manufacturer Settlement affected on 1 September 2011 Acquisition investment circa NZD4.0m representing an EV/EBITDA multiple of 4 (on full integration
Slide 16: FY12 Acquisitions – Pizza Capers (PC)
FY12 Acquisitions – Pizza Capers (PC) For personal use only Acquisition completed 2 April 2012: – Consideration ($30m) based on pricing multiple of 7 times anticipated FY13 EBIT – EPS accretive upon completion Forecast CY organic new outlet openings on track (9 of 20 achieved) Outlet population: inc
Slide 17: FY13 Acquisitions – Crust Gourmet Pizza Bars (1 of 3)
FY13 Acquisitions – Crust Gourmet Pizza Bars (Crust) (1 of 3) For personal use only Background: – Joint market leader (with Pizza Capers) in the gourmet QSR pizza market – In gourmet segment: – Crust dominates Sydney and Melbourne markets – Pizza Capers Brisbane 150 117 114 94 100 PC 48 35 50 Crust
Slide 18: FY13 Acquisitions – Crust (2 of 3)
FY13 Acquisitions – Crust (2 of 3) For personal use only Metrics: – Price equivalent to 7 x Crust adjusted FY13 EBIT – Payable in two installments – At completion of SPA: – Cash $21 million; and – RFG ordinary shares to the value of $3 million – Approximately 12 months after: – 7 x Crust adjusted FY
Slide 19: FY13 Acquisitions – Crust (3 of 3)
FY13 Acquisitions – Crust (3 of 3) For personal use only Acquisition Rationale (cont.) – Further reduces RFG reliance on shopping centres for growth with circa 460 RFG Australian outlets (or 35%) located in external tenancies – Increases RFG exposure to QSR – Offers immediate segment scale and easte
Slide 20: Debt Structure & Covenants (Pre & Post Crust Acquisition)
Debt Structure & Covenants (Pre & Post Crust Acquisition) For personal use only RFG increased facility quantum and extended maturity date of the Company’s debt facilities with the National Australia Bank in April 2012 Increased facility sourced to support future acquisition activities including Pizz
Slide 21: Long-term multi-layered growth strategy
Long-term multi-layered growth strategy For personal use only • Significant brand re-invigoration to accelerate AWS growth • Accelerated site outlet penetration and models into non-traditional sites Organic • Further expansion of coffee into retail and wholesale channels • Stronger focus on internat
Slide 22: FY13 Initiatives (1 of 2)
FY13 Initiatives (1 of 2) For personal use only Evolution of all brands – Dedicated Marketing and Innovations Department commissioned to achieve: – ‘stores of the future’ to increase brand relevance and modernity – Significant AWS growth – Franchisee profitability increase – Sustainability both insi
Slide 23: A Sneak Peak into Project Evolution (2 of 2)
A Sneak Peak into “Project Evolution” (2 of 2) For personal use only Donut King – Fresh & Exciting New Look – Fun & Interactive experience centered around DK’s brand positioning “Excite Your Tastebuds” – Extensive menu extension including into the savoury category – Expansion into “greenfield sites”
Slide 24: FY13 Outlook
FY13 Outlook For personal use only Prevailing economic conditions, acceleration of structural change in retail and the unrealistic rental demands of major landlords culminate in a challenging and unpredictable FY13 Continued financial and resource assistance to those franchisees most impacted by the
Slide 25: Appendices
Appendices For personal use only Appendix 1 – Core Earnings Reconciliation Appendix 2 – Earnings Performance Appendix 3 – Cash flow Performance Appendix 4 – Financial Position 25
Slide 26: Appendix – Core Earnings Reconciliation
Appendix 1 – Core Earnings Reconciliation For personal use only Reconciliation of Statutory result to ‘Core Earnings’ FY12 FY11 $’m $’m Statutory EBIT 47.5 45.1 Supply chain initiatives (operation of Michel’s bakery 1.7 - suppliers in NSW, VIC and QLD) Corporate restructuring & redundancy costs 0.7
Slide 27: Appendix - Earnings Performance
Appendix 2 - Earnings Performance For personal use only FY12 FY11 $’m $’m Franchise, licensing & other fees up 20.2% to $64.4m, reflecting organic growth, acquisitions, and distribution margin increase attributable to Michel’s transition Revenue from franchising operations 78.9 69.3 Revenue from who
Slide 28: Appendix - Cash Flow Performance
Appendix 3 - Cash Flow Performance For personal use only FY12 FY11 $’m $’m Receipts from customers 120.6 136.8 Continuing strong cash flows – a feature of RFG’s Payments to suppliers and employees (77.4) (92.0) business model – supported by balanced investment Gross operating cash flows 43.2 44.8 an
Slide 29: Appendix - Financial Position
Appendix 4 - Financial Position For personal use only FY12 FY11 $’m $’m Significant cash holdings, notwithstanding FY12 Assets: voluntary debt reduction ($10m), cash funded Evolution Coffee Roasters Group acquisition Cash reserves 12.8 15.1 ($3.2m) and increase in dividend payout to $17.3m Trade rec
Slide 30: RFG Investment Credentials
RFG Investment Credentials For personal use only RFG was established in 1989 (listed in June 2006) and is a leading Australian retail food brand manager and franchising company with 1,251 franchised outlets in Australia, New Zealand, China, Papua New Guinea, Indonesia and Saudi Arabia (as at 30 June
Slide 31: 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, warranty or undertaking, express or implied, as to the adequacy,