Retail Food Group Limited · ASX:RFG
Retail Food — FY2017 Earnings Presentation
27 slides from Retail Food's earnings presentation, February 2018
Slide 1: Retail Food Group Results - Strength in Brands
RETAIL GROUP RESULTS STRENGTH IN BRANDS
Slide 2: RFG is a global food & beverage company headquartered in Queensland
RFG is a global food & beverage company headquartered in Queensland. It is Australia’s largest multi-brand retail food franchise owner, developer & manager, with a network of >2500 outlets across 12 Brand Systems spanning 81 international territories. RFG is also a roaster & supplier of high quality
Slide 3: A diverse portfolio of market leading Brand Systems
A diverse portfolio of market leading A “world of opportunity” – State-of-the-art infrastructure, Provides access to multiple 15+ strategic acquisitions since Brand Systems across bakery, café, expanding RFG’s global footprint & significant expertise & growing opportunities whilst laying the Listing
Slide 4: FY17 Financial Results Summary
RFG FY16 FY17 % Change • Revenue growth up +27% (to $349.3m) Revenue $275.1m $349.3m 27.0% • EBITDA (+12.1%) & NPAT (+14%) growth across Group EBITDA $110.2m $123.5m 12.1% • Product of increasingly diversified earnings base NPAT $66.4m $75.7m 14.0% • Translated to underlying EPS growth of 7.9% EPS 4
Slide 5: Divisional EBITDA Contribution
Divisional EBITDA Contribution(1) FY16 FY17 % Change Divisional EBITDA Breakdown(1) FY16 FY17 % Change Domestic Franchise Operations $54.1m $53.7m (0.8%) Brand Systems (Domestic) $78.0m $78.1m 0.1% Domestic Coffee Contribution(2) $23.9m $24.4m 2.1% International Franchise Operations $14.1m $15.3m 8.
Slide 6: Balance Sheet
• Increases in Working Capital, PP&E & Intangible assets primarily attributable to the acquisitons of Hudson Pacific Corporation & • Borrowing increase of $44.1m primarily to fund FY17 acquisitions Associated Foodservice in the year • Share capital increase of $78.4m reflecting equity issues for Hud
Slide 7: Cash Flow
FY16(1) ($m) FY17($m) • Cash conversion to EBITDA ratio of 88.9% reflects increased working capital commitments of acquired businesses, offset by $5.2m non-cash asset impairment charges Receipts from customers 332.8 456.0 • Gross operating cash flows includes c.$11.2m cash outflows arising from acqu
Slide 8: Divisional Overview
DIVISIONAL OVERVIEW — FRANCHISE INTERNATIONAL — COFFEE & ALLIED BEVERAGE — COMMERCIAL
Slide 9: Franchise Division: Global Domestic Performance
GLOBAL DOMESTIC (1) (2) NEW OUTLET TOTAL EBITDA CONTRIBUTION TO GROSS FRANCHISE CPO ($’000) NETWORK DIVISION PCP (%) PCP (%) SSS ATV PCP (%) PCP (%) COMMISSIONINGS OUTLETS ($m) FY17 GROUP EBITDA % REVENUE ($m) FY17 SALES ($m) BCD 41 819 43.7 (0.5%) 35.4% 55.3 (6.0%) 1.7% 1.7% 54.1 5.7% 433.9 (6.9%)
Slide 10: Product developments, digital solutions and brand initiatives
Innovative product developments, cutting-edge digital solutions & first-to-market brand initiatives accelerate customer engagement & bolster Franchise Partner profitability 10
Slide 11: Current Global Footprint
CURRENT GLOBAL FOOTPRINT 15. NEWLICENSES GRANTED ACROSS 5 BRAND SYSTEMS 81 TERRITORIES ACROSS Glo Sean. ee ee 10 BRAND SYSTEMS co vw ee saisse wa wu (+17% ON FY16) me enctranese ROASTING HUBS IN AUSTRALIA, NEW ZEALAND & USA MIDDLE EAST HUB FACILITY TO BE COMMISSIONED 2H18 IE AFG ExsTING TERAITORIES
Slide 12: Sets foundation for enhanced medium to long-term growth
SETS FOUNDATION FOR ENHANCED MEDIUM TO LONG-TERM GROWTH ————— BUILDING REVENUE STREAMS ————— SHORT TERM: INITIAL LICENSE & TRAINING FEES LONG TERM: GROWING RECURRENT REVENUE STREAMS ROYALTIES, NEW OUTLET/RENEWAL/TRANSFER FEES, PRODUCT SUPPLY
Slide 13: Middle East Hub Joint Ventures
• Represents important breakthrough in Hub strategy • Fast tracks Brand System licensing & Coffee & Allied Beverage growth • 50% interest in JVs established with leading UAE-based businesses Al Hathboor Group & HKO Group • Facilitates establishment of world class coffee enterprise • Roast & distribu
Slide 14: Coffee & Allied Beverage Division
FY16 FY17 CHANGE% • Decline in revenue of 13.2% impacted by $10m of external revenues associated with FY16 next GLOBAL THROUGHPUT c.6.2m kg c.6.2m kg – generation capsule machine launch into supermarket channel, not recurring in FY17 REVENUE(1) $73.4m $63.7m (13.2)% • Coffee wholesale EBITDA grew 0.
Slide 15: Commercial Division
FY17(1) REVENUE $100.6m EBITDA $11.8m MARGIN 11.7% • Dedicated Commercial Division established to extract substantial opportunity arising from FY17 M&A activity • Represents long-term national growth platform • Synergy extraction aligned with expiry of existing contractual obligations • Wholesale co
Slide 16: Outlook
OUTLOOK
Slide 17: Outlook and FY18 Guidance
• Leveraging diversified platform to drive long-term sustainability • RFG optimistic regarding future performance • Global platform extension leveraging Hub strategy • Organic growth across all Divisions • Creating new markets & tapping greenfield opportunity • Principally driven by International, C
Slide 18: Appendices
APPENDICES RESTATEMENT OF PRIOR YEARS’ ACCOUNTS TRADING SUMMARY DEBT STRUCTURE CAPITAL MANAGEMENT BRAND SYSTEM SUMMARY DEFINITIONS DISCLAIMER Nop Pe Pp = 18
Slide 19: Restatement of financial information for FY15 and FY16
Review of accounting treatment of certain items & restatement of financial information for FY15 & FY16 The Group conducted a detailed review of its accounting policies, & having regard to new guidance being released during the year on application of certain accounting standards. Accounting policies
Slide 20: Appendix - Restatement of Prior Years' Accounts
APPENDIX 1 — RESTATEMENT OF PRIOR YEARS’ ACCOUNTS Imertoes 20501 a se) a) 204s Owerimesisnes se 2 akon wean “tase eens ie 2 loss cass seo uote aes sets : = 05) ta979 ange ee sissy) soars adss) 958) ee Tota ses seuss —T3u96— 794] [2965] 162] sn — as ee tines = goare (reo ; 7 Foo 11390 one seo ans 2 M
Slide 21: Appendix - Restatement of Prior Years' Accounts
APPENDIX 1 — RESTATEMENT OF PRIOR YEARS’ ACCOUNTS onsring operations Revere fom sl of goods - - ~ 29) retro onto ster - - = 860s p775) ther revenue - - ~ poass) 110257 ‘Other gonad loses a) 2 as 9 Martting expanse - : = aes 2755) CCccpancy expenses - - =e 2595) ‘Amiitatin expenses - - ~ 95 poss Othe
Slide 22: EBITDA Adjustments
FY17 UNDERLYING REPORTED EBITDA $m 123.5 106.5 NPAT $m 75.7 61.9 EPS cps 43.7 35.7 EBITDA ADJUSTMENTS $m REPORTED EBITDA 106.5 M&A COSTS: • ACQUISITION 3.3 • INTEGRATION 6.5 • RESTRUCTURING 2.0 ASSET IMPAIRMENT 5.2 UNDERLYING EBITDA 123.5 22
Slide 23: Senior Debt Facility
• Facility headroom (including cash) at 30 June 2017 of $96.9m SENIOR DEBT FACILITY FY16 FY17 • Weighted Average Interest Rate at 30 June 2017 of 3.73% • Gross debt of $257.3m(2) at 30 June 2017 Net Debt (1) $191.8m $247.1 • Total debt subject to fixed interest rates now $150m or c.61% of gross debt
Slide 24: Capital Management: Share Issues
SHARES PRICE ($) PROCEEDS/VALUE ($m) Shares on issue 1 July 2017 164,968,083 Dividend Reinvestment Plan (Final FY16 Dividend) 509,210 6.71 3.4 Dividend Reinvestment Plan Shortfall Placement (inc. oversubscriptions) 5,197,044 6.85 35.6 (2) Issue of ordinary shares – Acquisition of Hudson Pacific Corp
Slide 25: Brand System Summary
GLOBAL DOMESTIC NEW OUTLET TOTAL CONTRIBUTION TO NETWORK DIVISION SSS ATV PCP (%) COMMISSIONINGS OUTLETS GROUP EBITDA %(1) SALES ($m) 19 333 14.1% 4.7% 2.7% 160.4 (1.4%) 20 246 8.6% 1.3% 1.6% 153.3 (4.7%) 2 240 12.7% (2.0%) 0.6% 120.2 (15.7%) BAKERY/CAFE 41 819 35.4% 1.7% 1.7% 433.9 (6.9%) CRD 159 1
Slide 26: Definitions
NWS Network Sales GFR Gross Franchise Revenue SSS Same Store Sales ATV Average Transaction Value PCP Previous Corresponding Period CPO Contribution Per Outlet (EBITDA) QSR Pizza Capers & Crust Gourmet Pizza MENA Middle East North Africa COFFEE RETAIL DIVISION (CRD) Gloria Jean’s Coffees, Café2U, The
Slide 27: No responsibility for contents of presentation
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 & representatives: • Make no representation, warranty or undertaking, & accept no responsibility or liability, express or implied, as to the