Annual results presentation for the year ended 28 February 2017

Transcription

1 Annual results presentation for the year ended 28 February 2017

2 Forward looking statements This Presentation includes statements about Taste and/or the Taste Group that are, or may be deemed to be forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. These forward-looking statements are not based on historical facts, but rather reflect current expectations concerning future results and events and generally may be identified by the use of forwardlooking words such as believe, aim, expect, project, anticipate, intend, foresee, forecast, likely, should, planned, may, will, estimated, potential or similar words and phrases. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Taste cautions that forward-looking statements are not guarantees of future performance. Actual results, financial and operating conditions, liquidity and the developments within the industry in which Taste operates may differ materially from those made in, or suggested by, the forward-looking statements contained in this Presentation. All these forward-looking statements are based on estimates and assumptions made by Taste, as communicated in publicly available documents by Taste, all of which estimates and assumptions, although Taste believes them to be reasonable, are inherently uncertain. Such estimates, assumptions or statements may not eventuate. Factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in those statements or assumptions include other matters not yet known to Taste or not currently considered material by Taste. Shareholders should keep in mind that any forward-looking statement made in this Presentation or elsewhere is applicable only at the date on which such forward-looking statement is made. New factors that could cause the business of Taste not to develop as expected may emerge from time to time and it is not possible to predict all of them. Further, the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement are not known. Taste has no duty to, and does not intend to, update or revise the forward-looking statements contained in this Presentation after the date of this Presentation, except as may be required by law.

3 01 Divisional performance 02 Financial review 03 Outlook MALL OF AFRICA Midrand

4 Luxury goods division

5 Increased market share Invested in inventory +R54m (PY: +R36m) Invested in Capex R16m (PY: R12m) Total inventory +21% (R305) 1.5x stock turn 4 Remodel 4 New 4 Acquisitions Outlets 83 (PY: 86)

6 Same-store sales +5.4% (PY: +15%) Revenue +9% R622m (PY: R570m) +5 corp stores +Same-store EBITDA -12% R61.1m (PY: R69.6m) EBITDA % 12.20% Prior year GP Margin -1.60% Sales mix Cost Margin* -0.80% EBITDA % 9.80% This year * Once off costs of IFRS2 & insurance

7 Food division

8 LEAD WITH COFFEE 3 Reserve Coffee stores 5 speciality brewing methods 12 new coffees last year Nespresso compatible pods MILLENNIALS Underserved Social media - 33k Instagram Cold coffee among the highest in region 9 flavours 3 rd Place resonates HIGHLIGHTS Partner engagement Improvement in waste and margin Partner turnover Product launches METRICS Transaction > investment case Ave. ticket > investment case Labour turnover FTE <30% Reserve coffee sales increasing DIGITAL FLYWHEEL Free wi-fi 150GB/day/store Starbucks Rewards 9% + Opportunity to change behaviour OPPORTUNITIES Supply chain to many OOS Improve food offering - range Merchandise range & pricing Sales drivers Labour flex MALL OF AFRICA Midrand

9 STORE EXPANSIon Current network 4 stores Pta x 2, Midrand, Rosebank Feb 2018? Durban Cape Town Corporate format Drive thru? Dependencies A grade locations IRR/ROI Partners Supply chain We don t know what we don t know Go slow to go fast Business will increase four fold in 12 months Continue to be conservative with new stores MENLYN MAINE Pretoria

10 LoL +5.8% YoY average sales +27% 164 outlets Remodelled stores ave. +33% LoL -14% SWS +9% 69 outlets Improved GP% LoL -0.5% 41 Outlets CHALLENGES New site growth Funding + locations Lower income consumer is weak OPPORTUNITIES Contemporary store design Lowest capex in segments Value positioning Grilled fish

11 CONSOLIDATION Improve consistency Partner turnover: 76% (127%) Margin +2% Capex R2.4m R1.8m Focussed on online RESULTS Sentiment improved materially Delivery increased 42% (36%) 85% orders <30min Ave del time 24min (21min) Same store: +8% and +13% DIGITAL FLYWHEEL Online >30% (target 25%) 24months: majority of our orders NETWORK 88 stores at YE Owned 49 at YE (now 57) Target Feb owned, rest franchised FOCUS Consistency Making it easier to order Digital platform Experience = efficiency New store growth

12 01 Divisional performance 02 Financial review 03 Outlook MALL OF AFRICA Midrand

13 Income statement Audited IFRS earnings Core earnings 28-Feb 29-Feb 28-Feb 29-Feb IFRS Core % change R'000 R'000 % change R'000 R'000 Revenue 3% % Food (net of eliminations) -3% % Luxury Goods 9% % EBITDA -51% % Food -31% % Luxury Goods 1% % Corporate services 9% % Comprehensive (loss)/income -33% % (Loss)/earnings per share cents -11% % Headline (loss)/earnings per share -30% %

14 Core revenue luxury goods

15 Core revenue - food Rm 1. Corporate store supply- chain purchases and royalties are eliminated 2. Development revenue: new franchised stores are invoiced at full value of the set-up cost to the franchisee

16 Operating costs three perspectives IFRS costs include conservative R36m (pre-tax) present value adjustment to Domino s marketing fund IFRS earnings 28-Feb 29-Feb % change R'000 R'000 Revenue 3% Operating costs -10% ( ) ( ) Comprehensive loss -33% ( ) (75 806) Present value discount adjustment included in costs Adjusted comprehensive loss -2% (74 544) (75 806)

17 Operating costs three perspectives Luxury goods normalised costs largely unchanged Corporate services costs unchanged Luxury goods Costs % revenue Costs % IFRS2 + Insurance 0.7% Normalised costs % Costs % Composition of core costs in the food division Core costs ex depreciation & amortisation 28-Feb 29-Feb % change R'000 R'000 Operating costs 24% Luxury goods 12% Food 37% Corporate services 1% Escalations Occupancy 7%-9% People +/-CPI Other +/-CPI

18 Core adjustment Core adjustment 28-Feb 29-Feb R'000 R'000 Domino's Pizza Starbucks Other Total Adjustment is in line with guidance given last year 2. Included in Domino s this year is R36.4m relating to the present value discount adjustment. Excluding this the adjustment would have been R6.8m (PY: R63m) 3. Future core adjustments will be limited to pre-opening expenses for corporate owned stores; material once-off costs or revenues, and non-cash lease smoothing and IFRS2 charges.

19 Taxation Core tax rate reconciliation Core effective tax rate 17.2% Non-taxable income and disallowable expenses 7.9% Prior year underprovision 2.9% Standard tax rate 28.0% Medium term tax guidance Continuing disallowable expenditure R6m - R9m IFRS2 charge (% of revenue) 1% - 1.5% Deferred tax asset as at 28 Feb 2017 that is available for use against future taxable income R63 million

20 Interest paid Rm 12m average senior debt (Rm) 12m FY m FY17 244

21 Working capital Net working capital funding at 28 February 2017 Group Luxury Food R'000 R'000 R'000 Trade payables Trade recievables (70 138) (24 454) (45 684) Inventory ( ) ( ) (35 724) Over/(under) funded at year end ( ) ( ) 832 Changes in working capital per cash flow Group Luxury Food R'000 R'000 R'000 Change in working capital FY17 (41 979) (52 260) Change in working capital FY16 (64 841) (45 386) (19 455)

22 Capital expenditure Rm 2017 Food Luxury Group Total New Stores IT Revamps Other Total Rm 2016 Food Luxury Group Total New Stores IT Revamps Other Total Feb 2018 Guidance Rm Food 81 Luxury 11 Total 92 * 8-10 Starbucks * 8-10 Domino's * 2-4 NWJ stores

23 01 Divisional performance 02 Financial review 03 Outlook MALL OF AFRICA Midrand

24 The decision to sell Luxury Goods Business has changed Food is a start-up equity Working capital requirements diverse Opportunities in food abound Risk to grow into profit No debt + focus mitigates risk Focussed Ungeared Profitable units Installed infrastructure Improving pipeline

25 Underlying business models + m/t guidance New store Starbucks 8-10 Domino's corporate 8-10 Domino's franchised 8-10 Local franchised NWJ corp/franch 2-4

26 Near term outlook Strong new store pipeline Good traction in Domino s Low food inflation good for margin Weak economy and consumer sentiment malls in particular Luxury is cyclical strong brands gain market share Transition brings uncertainty

27 TO INSPIRE AND NURTURE THE HUMAN SPIRIT ONE PERSON, ONE CUP AND ONE NEIGHBOURHOOD AT A TIME