Restaurant Brands NZ Limited Half Year Results Presentation. Restaurant Brands New Zealand Limited. Russel Creedy CEO Grant Ellis CFO

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1 Restaurant Brands NZ Limited 2017 Half Year Results Presentation Ted van Arkel Chairman Stephen Copulos Director Russel Creedy CEO Grant Ellis CFO Restaurant Brands New Zealand Limited 26 October 2016

2 PRESENTATION OUTLINE Highlights Results Overview KFC Pizza Hut Starbucks Coffee Carl s Jr. KFC Australia Outlook

3 Highlights Commentary* Group Sales up 22.0% on KFC Australia acquisition Reported NPAT up 0.7% NPAT (excluding non-trading) up 21.7% Brand EBITDA up 26% with KFC Australia contribution Fully imputed dividend declared up 1 cent per share 1H2015 1H2016 1H2017 $185.7m $210.0m $256.2m $11.5m $13.4m $13.5m $11.5m $13.1m $15.9m $31.6m $36.0m $45.3m 7.5cps 8.5cps 9.5cps * Changes are 1H2017 over 1H2016

4 RESULTS OVERVIEW

5 NPAT excluding non-trading was $15.9 million, up 21.7% on prior year $m 1H2015 1H2016 1H2017 Revenue Gross Margin Distribution (1.3) (1.3) (1.5) Marketing (9.4) (10.8) (14.7) G&A (7.8) (8.7) (10.9) EBIT Non-trading (0.2) 0.3 (2.4) Interest (0.4) (0.6) (1.4) NPBT Tax (4.2) (5.0) (6.0) NPAT NPAT (excl non-trading)

6 KFC and Carl s Jr. contributed to a 1.2% increase in total NZ sales, up to $213 million KFC Sales Pizza Hut Sales 8.0% 5.0% 2.0% -1.0% 8.8% 6.4% % 1H 15 1H 16 1H % 15.0% 11.0% 7.0% 3.0% -1.0% % % 4.8% 1H 15 1H 16 1H 17 Total Sales $m Same Store Sales % Total Sales $m Same Store Sales % 8.0% Starbucks Sales 7.6% Carl's Jr. Sales 4.0% 0.0% 5.1% % H 15 1H 16 1H 17 Total Sales $m Same Store Sales % % -8.4% -37% 1H 15 1H 16 1H 17 Total Sales $m Same Store Sales %

7 KFC continues to underpin margin growth in NZ KFC EBITDA Pizza Hut EBITDA 20.0% 20.1% 21.0% 16.0% 16.0% 19.1% % 12.3% 11.6% 11.0% % 1H 15 1H 16 1H % 1H 15 1H 16 1H 17 EBITDA $m EBITDA % of Sales EBITDA $m EBITDA % of Sales Starbucks EBITDA 6.0% Carl's Jr. EBITDA 20.0% 16.0% 12.0% 15.5% 15.8% 16.0% H 15 1H 16 1H % -2.0% 1.0% 0.5% 1.8% H 15 1H 16 1H 17 EBITDA $m EBITDA % of Sales EBITDA $m EBITDA % of Sales

8 Australian KFC acquisition (QSR) was a major contributor to sales and margin growth KFC Australia Sales Contribution ($NZm) KFC Australia EBITDA Contribution ($NZm) Australia, Australia, 7.2 New Zealand, New Zealand, New Zealand, 36.0 New Zealand, H 16 1H 17 1H 16 1H 17

9 G&A costs up with Australian investment but still on 4% target G&A % 4.1% 4.0% 4.1% 1H 14 1H 15 1H 16 1H 17 G&A $m NZ G&A $m Australia G&A % of Revenue

10 Non-trading items primarily comprised transaction costs of Australian acquisition B/(W) Gain on sale Pizza Hut stores (0.4) (0.3) (0.1) Goodwill write down on sale of Pizza Hut stores QSR transaction costs and stamp duty (2.3) QSR Franchise rights amortisation (0.2) PIR acquisition transaction costs (0.5) Gain on disposal S&L KFC - (0.4) 0.4 Other (0.1) (0.3) 2.4 (2.7)

11 Operating cash flows continue to grow strongly. Investing cash flow reflects lower capex Cash Flow $m 1H2015 1H2016 1H2017 Operating cash flow Investing cash flow (11.3) (5.5) (8.6) Free cash flow H2015 1H2016 1H2017 Investing cash outflow (14.7) (9.1) (12.1)* Investing cash inflow (11.3) (5.5) (8.6) * Excludes $63.9m for QSR purchase

12 Bank debt up on QSR acquisition, but ratios within covenants Bank Debt $m H 16 FY16 1H 17 Ratios 1H H2017 Interest Cover 30x 35x 22x Net Debt: EBIT 0.2:1 0.3:1 1.9:1 Gearing (D:D+E) 9% 13% 41.0%

13 Dividend continues to increase in line with profit up 1.0 cps (11.8%) 1H2015 1H2016 1H2017 Earnings per share (reported) cps Interim dividend (fully imputed) cps Payout ratio % 64% 62% 71%

15 KFC more measured sales growth. Margins strong KFC - Sales $157.4m KFC EBITDA 21.0% Same Store Sales % 9.8% 8.0% 3.7% 3.5% 1.4% 2.3% 19.1% 20.1% 17.7% H 14 1H 15 1H 16 1H 17 FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY17 Q1 FY17 Q2 EBITDA $m EBITDA % of Sales Record sales continue, driven by increased marketing activity, strong promotions and operational improvements EBITDA margin increases with sales leverage and stable input costs, off-setting labour increases

16 Scorecard - KFC strategies for FY17 Strategy Target/Outcome Score 1H2017 Outcome Maintain sales growth through continued smart marketing activity including media SSS >cpi SSS +1.9% Complete major store transformation, institutionalise programme of minor upgrades Entire network transformed Network transformed (less closures/relocates) Continued new store roll outs 1-2 new stores Rolleston open 2H Improve quality of staff and labour efficiency through enhanced recruiting process, improved training and improved scheduling practices Turnover <55% WIP recruitment up, increased training Bank margin gains with continued leverage and benefit of new chicken contracts EBITDA >19% of sales EBITDA 21% of sales

18 Pizza Hut RBD sales and profit growth levelling off but network continues to grow strongly Pizza Hut Total System Sales ($m) % % % Pizza Hut EBITDA % 12.3% % % H 14 1H 15 1H 16 1H 17 Sales ($m) RBD Owned Stores Sales ($m) IF Owned Stores 1H 14 1H 15 1H 16 1H 17 EBITDA $m EBITDA % of Sales Same store sales flattened off as brand rolls over 3 rd year of very strong growth Margins holding with input costs still benign Store Sales continue to independent franchisees (IFs)

19 Sales of stores to independent franchisees continues as does new store builds. RBD now on track to a concentrated core holding with continued store growth in Pizza Hut network H 14 1H 15 1H 16 1H 17 Target RBD Independents

20 Sales per store continues to improve with margins holding Pizza Hut Restaurant Average Weekly Sales & Margin 2,325 2,312 2,242 2,010 18,824 19,402 21,214 17,069 1H 14 1H 15 1H 16 1H 17 Weekly Sales average per store Weekly EBITDA average per store

21 Scorecard - Pizza Hut strategies for FY17 Strategy Target/Outcome Score 1H2017 Outcome Continue sell down of smaller and regional stores 5-6 stores sold 2 more stores sold Re-commence store builds for RBD ownership and/or sale to franchisees 2-3 stores Under way Continued systems enhancements (web ordering) to increase efficiencies and customer experience 40% of sales online New website launched Menu review to keep customers but recover costs EBITDA 10-12% EBITDA 11.0%

23 Starbucks Coffee still full of beans Starbucks- Sales $13.8m Starbucks EBITDA 15.5% 15.8% 16.0% Same Store Sales % 8.9% 6.7% 6.6% 5.5% 1.8% 4.0% 10.9% FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY17 Q1 FY17 Q2 1H 14 1H 15 1H 16 1H 17 EBITDA $m EBITDA % of Sales Fully rationalised network producing consistent same store sales growth Sales leverage and continued operating efficiencies, improved earnings

25 Carl s Jr. slower, quality expansion Carl's Jr. -Sales FY15 $19.3m Carl's Jr. EBITDA Sales $m % 0.5% % -2.6% FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY17 Q1 FY17 Q2-5.0% 1H 14 1H 15 1H 16 1H 17 EBITDA $m EBITDA % of Sales

26 Carl s Jr. strategies for FY17 Strategy Target/Outcome Score 1H2017 Outcome Recommence store builds with new branding 2-3 stores - Slow down pending new branding Evaluate impact of new branding and begin retrofitting 4-5 stores retrofitted - Still evaluating Christchurch trial, positive results to date Reassess performance of worst underperforming stores with a view to rationalisation 1-2 stores - Still under review Implement in-store retraining and stronger controls to improve prime costs COS/COL400bp Very positive results in labour efficiency and waste controls Increased and more-targeted marketing (including NPD) to deliver positive SSS SSS >cpi SSS still slightly negative, but heading in the right direction

27 Australia (QSR Pty Limited)

28 KFC Australia business off to a strong start Sales on Target ($A million) EBITDA ($A6.9m) margin up on target 16.6% Sales, % 1H 17 Target % Actual %

29 KFC Australia growth opportunities Strategy Build new stores Acquire smaller franchisees Re-investment/development of stores Acquire large block of stores Progress 2x New stores underway Discussion with smaller franchisees progressing

30 1H17 has seen a solid start to the year KFC will continue to underpin domestic earnings Complemented by continued improved performance from Carl s Jr. KFC Australia will see continued positive SSS growth with similar margin Contribution in last two months of the year from Hawaiian acquisition Net Profit after Tax (excluding non-trading items) is expected to be in range of $30-32 million

Restaurant Brands NZ Limited

New horizons, new growth. Restaurant Brands NZ Limited 2018 Full Year Results Presentation Russel Creedy - Group CEO Grant Ellis Group CFO Hamish Stevens - Director Restaurant Brands New Zealand Limited