SHAKEYS PIZZA ASIA VENTURES, INC. (PSE: PIZZA) FULL YEAR 2018 - PowerPoint PPT Presentation

SHAKEY’S PIZZA ASIA VENTURES, INC. (PSE: PIZZA) FULL YEAR 2018 RESULTS PRESENTATION APRIL 2019

INVESTMENT HIGHLIGHTS

Summary of Investment Highlights • Dominates the full-service pizza chain market with 65%* market share Market 1 • 26%* market share in the full-service (pizza and non-pizza) category - #1 in Leadership that space as well • Well-loved brand with more than 40 years of history in the Philippines Brand Strength 2 • Iconic products served in a distinct store environment & Ownership • No royalty payments, plus additional revenues from franchisings • Multiple sales channels and store formats; simple operations Scalable 3 • Low upfront cost and strong cash generation lead to shorter store-level Business Model payback periods compared to the industry • Extensive track records in food and restaurant operations Experienced 4 • Entry of Century Pacific Group as strong and committed shareholders Management provides synergies with other food businesses • Superior profitability and margins versus peers Industry-Leading 5 • Gearing levels improved post-prepayment of debt care of IPO proceeds Financials • Cash generative with a negative cash conversion cycle *Source: Euromonitor, 2017 3

FY 2018 FINANCIAL HIGLIGHTS

Financial Results Highlights +7% +18% +2% +10% 4Q +4% +12% +7% +10% FY 5

FY 2018 Summarized P&L In PHP Mill FY 2017 FY 2018 Change YoY System-wide Sales 8,346 9,357 12% Sustained DOUBLE-DIGIT Total Revenue 7,004 7,579 8% • SYSTEM-WIDE SALES GROWTH Cost of Sales (4,938) (5,399) 9% of +12% on the back of SSSG OF Gross Profit 2,066 2,179 5% 4% and net new store opening of Operating Expenses (905) (973) 7% 20 DOMESTIC STORES AND 1 EBITDA 1,407 1,500 7% INTERNATIONAL STORE EBIT 1,161 1,206 4% Financing Cost - Net (177) (189) 6% Higher costs, weaker currency, • Other Income 39 65 66% sales-supporting initiatives partially offset by SOFTENING CHEESE Income before Tax 1,022 1,082 6% PRICES and OPERATING Income Tax (260) (241) -7% LEVERAGE towards year-end Net Income 762 841 10% Earnings per Share 0.50 0.55 10% STABLE FINANCING COSTS , • Margins HIGHER OTHER INCOME , and Gross Profit 29.5% 28.8% -0.7 pps PRUDENT TAX MANAGEMENT EBITDA 20.1% 19.8% -0.3 pps support net income growth of +10% EBIT 16.6% 15.9% -0.7 pps Net Income 10.9% 11.1% +0.2 pps 6

On Track to Doubling Business Over 5 Years System-wide Sales 12% 11% STORE NETWORK 8-10% CAGR 10% 9% GROWTH* 3-5% CAGR 5% 4% 4% 4% SAME-STORE SALES GROWTH 9.4 8.3 7.3 6.4 SYSTEM-WIDE SALES +1 +12% +14% +14% In PHP Bill FY15 FY16 FY17 FY18 FY19F FY20F 1.6X TO 2.0X CURRENT PERFORMANCE –––-––-–––––– OR ––––––––––– VERSUS TARGET 10 TO 15% CAGR 2015 TO 2020 TARGET CONSECUTIVE DOUBLE-DIGIT GROWTH in system-wide sales driven by: • 1. Consistent positive SSSG 2. Continued store network expansion *Average of beginning and ending full-year 7 figures were used

Store Expansion Strategy Skews Overall Top Line Mix Revenues SYSTEM-WIDE SALES Majority of new • 12% 2.5 In PHP Bill 2.4 store openings 2.3 2.2 2.2 2.0 2.1 2.0 outside Metro YoY Growth Manila brings in FY18 sales trend in favor 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 of FRANCHISED REVENUES STORES , resulting 8% In PHP Bill in more modest 2.0 2.0 1.9 1.7 1.6 1.8 1.8 1.7 growth in YoY Growth revenues in FY18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 +44 NEW STORE OPENINGS Franchised 8 net new stores since Store YoY 6 6 18% 5 5 5 5 end 2016 3 Growth in 4 3 2 5 3 FY18* 4 4 5 4 3 3 2 23% 1 77% 1 Company- 1 7% Owned Store 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 NCR YoY Growth Ex-NCR in FY18* Company-Owned Franchised *Average of beginning and ending full-year 8 figures were used

More Challenging 2H18; Softer SSSG in Q4 with Shift in Strategy SSSG CONSISTENTLY • MAINTAINED POSITIVE SSSG , notwithstanding external pressures Remained top of • mind in 3Q18 with more VALUE 12% 9% PROMOTIONS 8% 8% Slower but still • 5% 5% 4% 3% positive 4Q18 6% 2% SSSG given RE- 4% 4% 4% 1% 2% 2% FOCUS TO 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 PREMIUMIZING PRODUCTS SSSG Inflation of Food & Non-Alcoholic Beverages* * Source: Philippine 9 Statistics Authority

Q4 Gross Margin Improves Sequentially and Year-on-Year Gross Profit Margins -110 bps -160 bps -200 bps +1 +150 bps bps YoY YoY YoY Yo YoY 31.4% 30.3% 29.9% 29.9% 28.8% 28.6% 27.8% 25.8% 12% 9% 5% 4% 2% 2% 2% 1% 2.0 2.0 1.9 1.7 1.8 1.8 1.6 1.7 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Revenues SSSG Gross Profit Margin REVERSE IN GROSS MARGIN TREND IN Q4 due to: • 1. More judicious spend on value-for-money promotions 2. Softer cheese prices 3. Operating leverage due to seasonality 10 10

OpEx Growth Year-on-Year In Line with Increase in Revenues OpEx Cash OpEx In PHP Mill In PHP Mill 16.4% 15.4% 12.8% 12.9% 12.6% 12.3% 973 985 956 905 925 862 -8% +7% -7% +11% +1 FY16 FY17 FY18 FY16 FY17 FY18 OpEx as % of Sales Cash OpEx as % of Sales HIGHER CASH OPEX GROWTH driven by: • 1. Marketing and other sales-sustaining initiatives 2. Continued investments in IT and other back-office systems 3. Overall impact of inflationary pressures 11 11

Maintained Net Margins Despite 2018 Headwinds Gross Profit EBITDA Net Income +5 +560 bps bps +820 820 bps bps +6 +690 bps bps 28.8% 28.6% 25.8% 31.4% 23.7% 19.5% 19.8% 14.6% 15.5% 10.4% 11.1% 7.7% 1Q18 2Q18 3Q18 4Q18 1Q18 2Q18 3Q18 4Q18 1Q18 2Q18 3Q18 4Q18 29.5% 28.8% 20.1% 19.8% 11.1% 10.9% -70 -30 30 +2 +20 bps bps bps bps bps bps FY17 FY18 FY17 FY18 FY17 FY18 GROSS MARGIN COMPRESSION YEAR-ON-YEAR resulting from overall inflationary • environment, higher cheese prices, weakened peso, and sales-generating promotional activities NET INCOME MARGIN RELATIVELY UNCHANGED • 12 12

Challenging Yet Achievable Targets for FY 2019 Low double-digit growth Low double-digit growth • • Subdued outlook on inflation Superior execution in dine-in • • and delivery segments Stable cheese prices • Increasing presence beyond • Steady peso relative to dollar • typical urban areas Continued initiatives on • 20 net new stores locally • efficiency and cost control 3-5% SSSG • 13 13

“Peri-Peri” “Peri-Peri” came from the Afric Af ican n Bir Bird’s s Ey Eye Chili hili “Pir Piri Pir Piri” ” that was discovered by the Portuguese who sailed in search of the famed spice route. It releases a fiery spice, igniting a wealth of flavors on every taste bud. 15 15

“Peri-Peri “Charcoal Chicken Pasta Peri-Peri Chicken Platters Pizza Food & Sauces Sauces 16 16

“Peri-Peri “Charcoal Chicken Ch Chicken en (M (Main in Pla Plate tes) s) Others 44% 44% 42% Group Meals 14% • Mai Main P Plat ates es make up close to half of Sales Mix sales 17 17

“Peri-Peri “Charcoal Chicken • Average spend per head ranges from PHP HP250 to PHP HP350 , comparable to that of Shakey’s Menu of Key Items 18 18

“Peri-Peri “Charcoal Chicken Similar to Shakey’s, the expected market is A, A, B, B, and u an d upper C ( pper C (C1 C1 ) – the growing middle class. Philippines’ Philippine s’ % S % Share are % Share % S are Annual Annua l Inc Income SE Cla SE lasse sses of Families of Families of Income of Income in PHP HP AB 1 9 1,857,000 C 9 26 603,000 D 60 56 191,000 E 30 9 62,000 Total 100 100 206,000 Market Source: BPI Securities, Social Weather System Survey 2016 19 19

“Peri-Peri “Charcoal Chicken • Also provides an aspirational full- service dining experience at an Ambiance affordabl affordable pri e price ce 20 20

“Peri-Peri “Charcoal Chicken 1 “There’s a special taste exuded because of the process; the chicken taste is unique.” - Regular User of Peri-Peri 2 “Lots of options - choose sides; • Esta there’s tortilla, there’s Establishe lished follo llowing wing hummus, salsa. You feel like and str strong ng brand nd you can personalize your meal recall from different recal without going out of your types of visitors budget.” - Non-Regular User of Peri-Peri “It’s like you’re in the Pirates of the Caribbean. I like how the 3 bottles have lots of different colors - something different, colorful, vibrant/good vibes and fun, fresh.” - Regular User of Peri-Peri FGD Feedback Source: Kantar Millward Brown, February 2019 22 22

“Store Network 4% • Opport Opportunity t y to s o scal cale e 1 store in NCR first, then Luzon outside where there Ex-NCR 87% is severe 9% 20 stores underpenetration 2 stores NCR Visayas Store Breakdown by Ownership Company-Owned Franchised 35% 65% *Map colors show % population of the country by region. The darker the color, the higher the % population. 22 22 Source: Philippine Statistics Authority 2015

Why Peri-Peri Charcoal Chicken?