Announcement PDF • • 4 • o o o • • o o o • o • • o o • • o o 5 • • • • o • • • • o o o o o o • • • o o o 6        • o o o • o • • 7 • • o o o o o o o • o o o • o o • o • o o o 9 • o o o • o o o 10 • • o o o o o o o o • o o • o o • o o o o • o o o 11 • • o • o o • • o • • • • • • o • o o o • • o • • 12 13 FY16 & Beyond The Global Opportunity FY15 acquisition activity positions RFG as a genuine global franchisor, coffee roaster & allied beverage wholesaler 2 A Company (Still) in Growth Sustained & sustainable outcomes demonstrate a company in growth Historical Performance(1) Strong Growth Story • EBITDA CAGR since Listing: 27.6% • Continues to deliver positive outcomes whilst reinvesting in long term acquisitive & organic growth platforms o EBITDA CAGR (FY12-FY15): 20.4% • NPAT CAGR since Listing: 28.2% o NPAT CAGR (FY12-FY15): 24.6% • EPS CAGR since Listing: 17.1% o EPS CAGR (FY12-FY15): 10.5% • Dividend CAGR since Listing: 19.1% o Dividend CAGR (FY12-FY15): 10.0% • Total Shareholder Return (TSR) CAGR since Listing: 30.3%(2) o TSR CAGR (FY12-FY15): 32.9%(2) (1) (2) (3) (4) Underlying Results Includes pre-tax dividends Includes coffee EBITDA from franchise & wholesale 1H15 + FY15 final dividend • Maiden FY07 dividends of 6.25cps increased c.370% to 23.25cps(4) • Outlet population increased from c.330 to c.2,450 since Listing • Established inaugural coffee roasting facility in 2008, with total Coffee & Allied Beverage operations now contributing 31.1% to FY15 Group EBITDA(3) • Core of Executive Management Team has presided over entirety of growth since Listing 3 Strategic Ambitions Franchise Coffee & Allied Beverage International M&A Leverage Project EVO to sustain growth in AWS, ATV & customer count Establish further offshore roasting capacity to efficiently service all existing markets Consolidate RFG’s position as a genuine global franchisor & leading coffee enterprise Leverage increased acquisitive growth platforms resulting from FY15 acquisitions Increase Brand Systems under RFG stewardship Penetrate new markets & increase international specialty coffee presence (esp. Di Bella Coffee) Expand Brand Systems into new territories & markets via licencing & JV platforms Seek out international growth where compelling to do so Leverage the Gloria Jean’s Coffees China Joint Venture to accelerate Asian presence Maintain prudent & disciplined approach to acquisition opportunities Increase penetration of product supply into all licensed territories Balance M&A activity with substantially increased organic growth opportunity Majority of organic outlet growth to be achieved internationally Leverage >$50m (book) financial services opportunity available to the Group Strengthen supply side relationships benefitting RFG & franchisee community Drive vertical integration opportunities in domestic & international markets (powders/syrups/allied products) 40% of Group EBITDA by FY18 25% of Group EBITDA by FY18 Grow total network footprint to >3,500 franchised outlets 4 Growth Opportunities FY15 acquisition activity & resultant reprioritisation of revenue drivers has established long term growth opportunities, domestically & internationally RFG now possesses expanded management skills & global reach, presenting a plethora of new opportunities for organic & acquisitive growth Consolidation & Growth Leveraging Opportunities for Additional Revenue • Continuation of key internal consolidation & synergistic projects in FY15 • Expansion of international roasting facilities • Green bean origin & purchasing platform • Further technological & equipment enhancement at principle roasting facility Castle Hill (NSW) to drive margin & efficiencies • Regional international distribution hubs (Project Link) • Decommissioning of excess roasters for deployment internationally • Focus on growing Di Bella Coffee domestic market share • Growing ‘in-home’ & institution capsule category penetration • Dedicated International Division to drive growth, new master franchise/licence relationships & opportunities • Resources prioritised to highest growth opportunities • Low risk high margin expansion into overseas markets through Master Franchise & JV arrangements • Expand coffee products internationally • Emerging financial services business & income stream providing franchisee funding solutions • Expansion of wholesale/contract roasting business • Specialty wholesale & ecommerce re-launch into international territories including Di Bella Coffee & Café Palazzo via regional distribution agreements • Sustainable franchise revenue streams augmented by further brand acquisition • Migrating single or ‘one off’ revenue streams into annuity arrangements 5 Outlook Established Platform for Growth $m Net Profit After Tax(1) • RFG enthusiastic regarding FY16 & longer term performance 70 o Proven business model 60 o Solid platform laid for enhanced performance, including 50 o Full year contributions from FY15 acquisitions 40 o Experienced management team driving outcomes 30 o Multiple levers available for driving future earnings growth 20 o Organic domestic opportunity 10 o Brand Systems 0 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Achieved (1) Underlying Guidance o Coffee & Allied Beverage o Significant international opportunity 6 Appendix: FY15 Results Highlights (1) (1) For detailed discussion of FY15 performance refer ASX announcements 27/08/15: • FY15 Full Year Statutory Accounts; and • FY15 Results Presentation FY15 Continued Record Outcomes Unique growth platform & business model delivering record performance FY15 Performance(1) Remarkable Outcomes FY14 FY15 Change Revenue(2) $128.8m $210.4m 63.4% EBITDA $59.1m $88.8m 50.2% NPAT $36.9m $55.1m 49.3% Basic EPS 26.5cps 35.6cps 34.3% Dividend (Full Year) 22.0cps 23.25cps 5.7% Dividend Payout Ratio 75.9% 65.3% Franchised Outlets 1,434 2,446 1,012 9 58 49 Net Debt $57.4m $192.2m Gearing Ratio 16.6% 33.1% Interest Cover 12.3x 11.1x International Territories • Transformed into genuine global enterprise with significant international footprint • Record: o EBITDA (up 50.2% to $88.8m) o NPAT ($55.1m) consistent with guidance o EPS of 35.6cps (34.3% increase on PCP) o Final dividend of 11.75 cps (PCP: 11.25cps) o Annualised coffee & allied beverage throughput c.6m kg • 35% increase in Total Shareholder Return(3) • 73% increase in network population (+1,012 outlets) to c.2,450 driven by acquisitions & organic new outlet commissionings • Completion of Company defining acquisitions o Café2U (September 2014) o Gloria Jean’s Coffees Group (December 2014) o Di Bella Coffee (February 2015) (1) (2) (3) Underlying Reported revenue less revenue associated with marketing pursuits Share price change over FY15 + pre-tax dividends paid 8 FY15 Earnings Reconciliation FY14 EBITDA NPAT PCP% (1) (2) (3) Reported EBITDA $59.4m $29.4m $86.5m $59.4m Acquisition, Integration & Restructuring Costs(1) 50.2% 46.4% 0.5% Underlying EBITDA $88.8m $55.1m $53.5m $34.2m China JV Licence Fee(2) ($5.7m) 49.3% 45.0% (7.2%) $3.4m 35.6cps 34.5cps 22.1cps Accounting Policy Adoption(3) 34.3% 30.4% (16.6%) Underlying $59.1m $88.8m $36.9m PCP% EPS Reported Reported ($m) PCP% $26.5m EBITDA Adjustments FY15 LFL Like for Like (LFL) EBITDA ($2.3m) $86.5m Refer Market Presentation 2 June 2015 China JV Licence Fee net EBITDA contribution of the fee received in respect of GJC International Licence granted per Market Announcement of 21/01/15 Accounting Policy Adoption in recognition of the increasing contribution to EBITDA of initial fees received for Brand System access, RFG has resolved to recognise same over the respective agreement term as opposed to the financial year of agreement 9 Shareholder Outcomes Aligned with Performance 40 100 90 80 70 60 50 40 30 20 10 0 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 35 Cents per Share $ Millions Rewarding shareholders with record earnings & dividends 30 25 20 15 10 5 0 FY09 FY10 FY11 FY12 EBITDA FY13 FY14 FY15 NPAT FY09 FY10 Dividend FY11 FY12 EPS FY13 FY15 Dividend Payout Ratio (RHS) EBITDA & NPAT(1) Dividends & EPS(1) • EBITDA up 50.2% on PCP to $88.8m driven by contributions from strategic acquisitions • EPS up 34.3% on PCP to 35.6cps(2) o EBITDA CAGR 20.4% (FY12-FY15) FY14 • FY15 dividends increased 5.7% to 23.25cps • NPAT up 49.3% on PCP to $55.1m • 9th consecutive annual dividend increase representing an annual dividend increase every year since Listing o NPAT CAGR 24.6% (FY12-FY15) • Dividend payout ratio moderated to 65.3% (PCP: 75.9%) • FY15 EBITDA conversion to cash flow ratio of 109.6%(3) (PCP: 85.8%) o Continues to reward shareholders; whilst o Supporting acquisitive & organic growth initiatives o Cash flow conversion a continuing strength of Group’s business model (1) (2) (3) Underlying Basic EPS 92.5% excluding impairment & provisioning charges 10 FY15 Acquisition Scoreboard A ‘glorious’ result Acquisition Total: FY15 EBITDA Contribution(1) FY15 EBITDA Guidance Achieved Initial Integration Completion Full Synergy & Leverage Extraction Development Potential Priority Return on Capital(3) $1.6m
100% 75%  15.1% $15.3m(2) +9.3% 75% 50%  16.1% $2.9m +7.4% 65% 40%  21.6% $19.8m +8.2% Acquisitive Strategy Validated Integration KPIs Met or Exceeded • Synergy leverage & development o Opportunities identified during due diligence confirmed o Additional untapped opportunities to be liberated o Extraction on track to be realised over three years • Endorses resolve to: o Implement accelerated growth platform o Rationalise subscale business pursuits(4) • Acquisition activity has driven positive outcomes across the entire business platform • Acquisition EBITDA in respect of FY16 affirmed at c.$35m(5) • Existing growth platform & drivers would not exist but for Group’s pursuit of acquisition strategy • All FY15 acquisitions met or exceeded acquisition KPIs o EBITDA performance exceeded EBITDA KPI by $1.5m (or 8.2%) o Combined acquisition EBITDA ($19.8m) represents 22.3% of FY15 Group EBITDA o c.1,000 outlets added to franchise networks (including c.500 international outlets) o Coffee business annualised throughput increased by 4.32m kgs (1) (2) (3) Underlying Excludes China Joint Venture EBITDA of $5.7m Annualised FY15 EBITDA contribution over initial acquisition cost (4) (5) Refer Market Update 2 June 2015 Excluding acquisition & integration costs 11 FY15 Brand System Results Summary - Financial Traditional Division Total: Network Sales ($m) Gross Franchise Revenue Franchise Revenue ($m) Net Coffee Contribution ($m) International Contribution ($m) Total ($m) FY15 PCP FY15 PCP FY15 PCP FY15 PCP FY15 PCP FY15 PCP 160.5 (1.1)% 15.9 1.9% 3.4 13.3% 0.1 - 19.4 3.7% 14.8 11.3% 164.4 (11.7)% 14.2 (18.4)% 0.2 100% 0.3 - 14.7 (17.4)% 10.8 (12.9)% 161.0 (7.3)% 18.0 (8.6)% 7.1 (1.4)% 0.0 - 25.1 (6.7)% 17.5 1.2% 485.9 (6.9)% 48.1 (8.7)% 10.7 3.9% 0.4 - 59.2 (6.6)% 43.1 0.2% 46.1 6.8% Coffee 241.5 582% 12.7 647% 12.2 917% 12.0 650% 36.9 720% 23.5 968% QSR Like for Like(1) 205.1 2.5% 19.8 (3.4)% - - - - 19.8 (3.4)% 12.9 (4.4)% 13.3 (0.9)% Mobile Like for Like(2) Not Applicable Group Total (1) (2) EBITDA ($m) 23% 2.1 2,000% 1.3 117% 1.0 150% 4.4 300% 2.2 267% 82.7 10.3% 24.2 100% 13.4 458% 120.3 34.4% 81.7 37.8% Includes $3m impact of new accounting policy relating to allocation of network access fees over contract life rather than FY of receipt Includes $0.4m impact of new accounting policy relating to allocation of network access fees over contract life rather than FY of receipt 12 SSS (%) ATV (%) New Outlets (Organic) Total Outlets EVO Traction (% of network) 3.9% 3.7% 20 341 34% 1.9% 2.8% 10 250 13% 1.1% 2.3% 16 294 32% 2.4% 2.9% 46 885 27% Coffee 5.5% 3.1% 80 887(1) Not Applicable QSR FY15 Brand System Results Summary - Operational 1.3% 5.4% 32 333 Not Applicable 42 341(2) Not Applicable 200 2,446 Traditional Division Mobile Total: Not Applicable Group Total (1) (2) Includes 780 outlets on acquisition of Gloria Jean’s Coffees & It’s A Grind Includes 236 outlets on acquisition of Café2U 2.9% 3.4% 13 FY15 Brand System Highlights Healthy Franchise Network SSS Growth 5.5 6 % 5 4 3.5 3.9 2.7 3 2 1.9 2.2 1.9 1.3 1.1 1 0 -1 -2 -1.0 Donut King Brumby's Bakery Michel's Patisserie FY14 QSR Coffee Retail FY15 Outlet Commissionings by Brand 90 80 70 60 50 40 30 20 10 0 85 42 32 22 20 18 6 Donut King 10 Brumby's Bakery Weighted average 18 16 1 Michel's Patisserie FY14 (1) 80 • Positive SSS/ATV growth(1) o Group SSS growth: 2.9% o Group ATV growth: 3.4% • Results driven by o Ongoing Project EVO traction (27% penetration across Traditional Brand Systems) o Strong Gloria Jean’s Coffees SSS post acquisition bolstered Coffee Retail Division results • Rollout of National Bakery Solution (NBS) underpinning Michel’s SSS turnaround (from -1.0% to +1.1%) o NBS first applied to QLD network: SSS growth of c.5% o June 15 rollout in NSW: delivering positive SSS results o NBS completion scheduled 1H16 • Transactional approvals up 25% to c.400 demonstrates continuing Brand System relevance & outlet performance QSR FY15 Coffee Retail Mobile Organic Growth • Record 200 new outlets commissioned (exceeding guidance by 50) including 81 new international outlets o Reflects strong new franchisee pipeline & diverse franchise offer o Outlet growth from international licensees reinvigorated subsequent to Gloria Jean’s Coffees acquisition 14 Cash Flow & Financial Position Receipts from customers FY14 $’m 175.5 FY15 $’m 263.6 Payments to suppliers & employees (124.9) (198.5) Gross operating cash flows 50.6 65.1 EBITDA 59.1 59.4 Ratio of gross operating cash flows to EBITDA 85.8% 109.6% Interest & other costs of finance paid Income tax paid (5.4) (15.3) (7.2) (23.2) Net operating cash inflows 29.9 34.7 Dividends paid (25.3) (24.1) Net Debt reduction (40.0) 137.0 Acquisitions of business & intangibles (3.7) (194.7) Acquisition of property, plant & equipment (15.4) (6.6) Net capital raising 56.7 66.6 Funding Marketing Fund R&D initiatives (7.8) (10.1) Other cash activities 0.3 - (35.2) 31.9 Net (decrease) / increase in cash reserves (5.3) 2.8 Cash reserves at year end 11.6 14.4 Cash Flow Financial Position Assets: Cash reserves Trade receivables Financial assets Inventories Plant & equipment Intangibles Tax receivable Other Liabilities: Trade payables Provisions Tax payable Borrowings Other (including contingent earnout consideration) Equity: Share capital Reserves Retained earnings FY14 $’m FY15 $’m 11.6 23.7 23.9 10.1 27.7 299.1 2.0 398.1 17.1 43.9 29.6 20.9 42.9 513.0 1.6 11.0 680.0 8.3 2.0 5.0 68.9 29.8 5.8 206.6 3.9 34.0 88.1 276.2 221.7 0.3 88.0 310.0 315.0 1.3 87.5 403.8 15 Capital Management Issued Share Reconciliation Shares Price ($) Proceeds/Value ($m) Shares on issue 1 July 2014 144,868,508 Dividend Reinvestment Plan (Final FY14 Dividend) 1,168,051 4.66 5.44 Institutional/Sophisticated Investor Placement 8,333,334 4.80 40.00 Gloria Jean’s Coffees Group Acquisition 2,371,414 5.48 13.00 Di Bella Coffee Acquisition 446,575 5.82 2.60 SPP 3,124,021 4.80 15.00 Dividend Reinvestment Plan (Interim Dividend) 734,063 7.05 5.17 Dividend Reinvestment Plan Shortfall Placement 1,881,518 7.05 13.26 ESOP – exercise of options 10,000 1.32 0.01 Shares 30 June 2015 162,937,484 Share Value(1) $94.48m Debt Facility (1) (2) FY15 Net debt(2) $200.3m Interest expense(2) $7.3m Interest cover (times) (2) 11.1x Gearing ratio (net debt / (net debt + equity) (2) 33.1% Total Facility $278.0m Before share issue costs & associated expenses of $1.2m Calculated in accordance with Senior Debt Facility Agreement 16 Disclaimer 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, and accept no responsibility or liability, express or implied, as to the adequacy, accuracy, completeness or reasonableness of this Presentation or any other written or verbal communication transmitted or made available to any recipient • make no representation, warranty or undertaking, express or implied, in connection with the existing or potential turnover or financial viability of any particular existing or potential Donut King, Michel’s Patisserie, Brumby’s Bakery, bb’s café, Esquires Coffee, Gloria Jean’s Coffee, It’s A Grind, Café2U, The Coffee Guy, Pizza Capers Gourmet Kitchen or Crust Gourmet Pizza Bar outlet. Franchisees and potential franchisees must make their own investigations and satisfy themselves as to the existing or potential turnover or financial viability of any existing or potential outlet as aforesaid (as the case may be) on the basis of their own investigations and independent legal, financial and commercial advice; and • accept no responsibility for any errors in, or omissions from, this Presentation whether arising out of negligence or otherwise The information in this Presentation is for use by recipients who are Australian Financial Services Licensees or persons to whom an offer of securities does not require disclosure under Part 6D.2 of the Corporations Act only Accuracy of projections and forecasts This Presentation includes certain statements, opinions, estimates, projections and forward looking statements with respect to the expected future performance of Retail Food Group Limited. These statements are based on, and are made subject to, certain assumptions which may not prove to be correct or appropriate. Actual results may be materially affected by changes in economic and other circumstances which may be beyond the control of Retail Food Group Limited. Except to the extent implied by law, no representations or warranties are made by Retail Food Group Limited, its officers, advisers or representatives as to the validity, certainty or completeness of any of the assumptions or the accuracy or completeness of the forward looking statements or that any such statement should or will be achieved. The forward looking statements should not be relied on as an indication of future value or for any other purpose No offer to sell or invitation to buy This Presentation does not, and should not be considered to, constitute or form part of any offer to sell, or solicitation of an offer to buy, any shares in Retail Food Group Limited, and no part of this Presentation forms the basis of any contract or commitment whatsoever with any person. This Presentation does not constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is not permitted under applicable law. Distribution of this Presentation in or from certain jurisdictions may be restricted or prohibited by law. Recipients must inform themselves of and comply with all restrictions or prohibitions in such jurisdictions. Neither Retail Food Group Limited, its officers, advisors or representatives accept any liability to any person in relation to the distribution or possession of this Presentation from or in any jurisdiction Any advice in this Presentation is general advice only. This advice has been prepared without taking into account the objectives, financial situation and needs of the recipients of this Presentation. For that reason, recipients should consider the appropriateness of the advice having regard to their own objectives, financial situation and needs, and seek appropriate independent legal, financial and other professional advice 17