Contents
•
•
•
•
•
•
•
Key Points
Financial Outcomes
KFC
Pizza Hut
Starbucks Coffee
Strategic Imperatives
Outlook
Key Points
• NPAT (excluding non-trading items) $9.2 million (89.4%
up on prior year). Reported profit (including non-trading
items) $8.9 million (up 240%).
• Total revenues of $169.9 million 4.6% up on prior year.
Same store sales up 6.7%, still driven primarily by KFC.
• Non-trading items of $0.5 million, down from $3.2 million
in the prior year. The company has ceased taking any
impairment charge ($2.5 million last year) to the carrying
value of goodwill on the Pizza Hut business.
• Margins in both KFC and Pizza Hut businesses up $5
million and $1 million respectively - benefits of improving
sales and reduced input costs.
• Fully imputed interim dividend of 4.5 cents per ordinary
share payable on 20 November 2009 (up 50% on last
year).
s
e
m
o
c
t
u
O
l
a
i
c
n
Fina
g
in
d
lu
c
x
e
m
.2
9
$
f
o
T
A
P
N
d
Consolidate
ear
y
r
o
ri
p
n
o
%
.4
9
8
p
u
,
g
in
d
non-tra
Variance
($m)
1H2010
Revenue
Gross Margin
Distribution
Marketing
G&A
(2.1)
(8.6)
(7.0)
EBIT
1H2009
(Restated)
$
%
169.9
162.5
7.4
4.6
31.7
27.5
4.2
15.4
(18.2)
0.5
(2.6)
9.3
4.7
50.8
(17.7)
(2.4)
(10.2)
(5.6)
14.0
Non-trading
(0.5)
(3.2)
2.7
83.5
Interest
(0.8)
(2.5)
1.6
66.1
3.6
9.0
251.7
NPBT
12.6
Tax
(3.7)
(1.0)
(2.8) (282.9)
NPAT
8.9
2.6
6.3
240.0
NPAT (excl non-trading)
9.2
4.9
4.4
89.4
1H2009 restated for adoption of NZ IAS38 Intangible Assets
er
v
ri
d
e
u
n
e
v
re
e
m
ri
p
in
a
m
re
KFC sales
Hut
a
z
iz
P
d
e
u
n
ti
n
o
c
y
b
d
te
s
si
s
a
improvement
Sales $m
1H2010
1H2009
Total Sales
$Δ
%Δ
Same Store Sales
%Δ
118.2
110.4
7.8
7.1
8.8
Pizza Hut
35.4
34.6
0.8
2.4
5.2
Starbucks Coffee
16.1
17.3
(1.2)
(7.1)
(3.8)
169.7
162.3
7.4
4.6
6.7
KFC
TOTAL
nd
a
,
e
v
ro
p
im
to
e
u
n
ti
n
o
c
s
in
KFC marg
d
n
u
ro
a
rn
tu
d
li
o
s
a
n
e
e
s
s
a
Pizza Hut h
EBITDA $m
1H2010
1H2009
24.0
19.0
5.0
26.1
20.3
17.3
Pizza Hut
2.2
1.2
1.0
85.9
6.2
3.4
Starbucks Coffee
1.4
1.7
(0.4)
(20.6)
8.4
9.4
27.6
21.9
16.2
13.5
KFC
TOTAL
$Δ
5.6
%Δ
EBITDA % Sales
1H2010
1H2009
FC
Non-trading items mainly K
r
e
h
rt
fu
o
n
h
it
w
,
d
te
la
re
transformation
of
e
lu
a
v
g
in
y
rr
a
c
n
o
e
rg
a
h
c
t
impairmen
goodwill for Pizza Hut
Non-trading $m
1H2010
1H2009
Transformation w/offs
0.3
0.1
Store closures/relocations
0.2
0.6
-
2.5
0.5
3.2
PH impairment charges
TOTAL
or
ri
p
n
o
p
u
y
tl
n
a
ic
if
n
g
si
s
w
o
Free cash fl
r
e
h
rt
fu
g
n
li
b
a
n
e
,
x
e
p
a
c
r
a
year with simil
debt reduction
Cashflow $m
Operating Cashflow
Investing Cashflow
Free Cashflow
Bank Debt $m
1H2010
23.4
(4.5)
18.9
1H2009
10.5
(5.0)
5.5
1H2010
2H2009
1H2009
19.8
34.4
40.8
h
it
w
d
li
so
in
a
m
re
s
o
ti
ra
l
ia
c
Finan
y
it
il
c
fa
g
in
w
o
ll
a
n
o
ti
c
u
d
debt re
rationalisation
Bank Facility ($m)
Current
Previous
$45m
$55m
1H2010
1H2009
16.8
3.8
Net Debt: EBITA
1.3:1
4.1:1
Gearing (D:D+E)
32%
54%
Westpac
Interest Cover
ne
li
in
e
s
a
re
c
in
to
s
e
u
n
ti
n
o
c
Dividend
with underlying earnings
1H2010
1H2009
NPAT excl non-trading
cps
9.5
5.0
Interim dividend
dps
4.5
3.0
r
e
v
li
e
d
to
s
e
u
n
ti
n
o
c
n
o
ti
a
KFC transform
strongly improved results
Number of stores transformed
Total spend to date
Average Yr 1 sales increase
(Last 10 stores)
37
$41million
19.2%
n
o
ti
a
rm
o
sf
n
a
tr
f
o
ss
e
c
c
u
s
Confirmed
of
n
o
ti
ra
le
e
c
c
a
e
e
s
l
il
w
e
m
m
progra
rs
a
e
y
e
re
th
in
%
5
8
t
e
rg
ta
process –
2007
2008
2009
2010
Capex ($m)
14.6
11.2
4.1
6.5
Stores
transformed1
12
9
4
7
Sales ($m)
182.7
199.1
211.5
2202
EBITDA ($m)
31.2
36.6
38.0
412
1
2
Includes new stores
Average of analyst forecasts
Pizza Hut sales strategies are finally
delivering results
Quarterly Same Store Sales - Pizza Hut
10.0%
Same Store Sales %
5.0%
0.0%
Q1 2005/6 Q2 2005/6 Q3 2005/6 Q4 2005/6 Q1 2006/7 Q2 2006/7 Q3 2006/7 Q4 2006/7 Q1 2007/8 Q2 2007/8 Q3 2007/8 Q4 2007/8 Q1 2008/9 Q2 2008/9 Q3 2008/9 Q4 2008/9
Q1
2009/10
Q2
2009/10
-5.0%
-10.0%
-15.0%
-20.0%
• Yum marketing
• NPD (pasta, garlic bites, jumbo pizza)
• Consistency of product and service
Pizza Hut margin management has
assisted profit and leveraged on initial
sales growth
•
•
•
•
EBITDA
Systems enhancements
Loss prevention
Labour scheduling
Menu re-engineering
1H2010
$m
% Sales
2.2
6.2%
2H2009
$m
% Sales
1.6
5.3%
1H2009
$m % Sales
1.2
3.4%
Pizza Hut franchise renewals provide
future for the brand with some
flexibility for Restaurant Brands
•
•
•
•
Five to six stores sold by year end
Largely regional opportunities initially
No “fire sales”
Some closure options (but less likely with
more profitability
Starbucks Coffee has seen reduced
performance over the past six months
1H
2008
2009
2010
Sales ($m)
17.4
17.3
16.1
SSS%
2.5
4.4
(3.8)
Store Numbers
46
44
42
EBITDA ($m)
2.1
1.6
1.4
EBITDA (% of sales)
12.1
9.4
8.4
…but actions are under way to address
this shortfall
• Management change and support structure
rationalisation
• Review of sourcing arrangements
• Product rationalisation
• Store refurbishment
• Retraining
• Store rationalisation
s
e
v
i
t
a
r
e
p
m
I
c
i
g
e
t
Stra
t
n
e
rr
u
c
)
n
o
d
il
u
b
d
n
(a
in
ta
Main
KFC momentum
• Same store sales growth (NPD, Yum marketing)
• Store refurbishment (and new store development)
• Operational efficiencies (new systems, loss
prevention)
• Input cost reductions (supply agreements)
ry
e
v
o
c
re
d
le
sle
a
s
e
rc
fo
in
Re
• Same store sales growth (NPD, channel
development, Yum marketing)
• Store rationalisation (red roof closures, loss
making delco closures)
• Franchisee sales (possible new sites)
• Continued focus on operational efficiencies
(leverage sales growth)
ce
n
a
rm
o
rf
e
p
t
n
e
rr
u
c
d
n
u
ro
a
Turn
• Return to positive same store sales (LSM, “back to
(coffee) basics”, food programme)
• Some store rationalisation (lease ends)
• Store refurbishment
• Operational enhancements (building a “bottom
line” culture)
Outlook
Outlook
• Sales momentum continues for KFC and Pizza Hut, with
Starbucks starting to turn around.
• Margins in KFC and Pizza Hut maintained with benefit of
sales leverage (and improved for Starbucks with exchange
rate and operational focus).
• Significantly reduced interest expense offset by higher
G&A costs.
• Level of 1H profit improvement over prior year ($4.4m) will
not be sustained:
– 53 week year
– “One-off” IAS 38 adjustment to advertising
– Strong finish to 2H last year difficult to roll
• Forecast full year NPAT (excluding non-trading items) of
$15million.