Shakey’s Pizza Asia Ventures, Inc.(PSE: PIZZA)
COMPANY PRESENTATION:
April 2017
The Prieto
family
became
the master
franchisor
in the
Philippines
Acquired
Shakey’s
trademark
for the
Philippines
in
perpetuity
Established
commissary
Acquired
Shakey’s
trademark
for Middle
East, Asia
(ex Japan,
Malaysia)
including
China ,
Australia
and New
Zealand in
perpetuity
1975 2016 20172006
System-
wide
stores
reached
100
184 system-
wide stores
(end-2016)
Estimated 204
stores by
end-2017
1987
First store
in the
Philippines
1999 2009 2014
Century
Pacific Group
(CPGI) and
Arran (GIC)
acquired
control
Brief HistoryShakey’s established operations span more than 40 years…
2
Summary of Investment Highlights
Market Leadership*
Scalable Business
Model
Experienced
Management
• Dominates the full service pizza chain market with 58% market share
• 27% market share in the full service (pizza and non-pizza) category -
#1 in that space as well
• Multiple sales channels and store formats; Simple operations
• Low upfront cost and strong cash generation lead to shorter store-
level payback periods compared to industry
• Extensive track records in food and restaurant operations
• Entry of Century Pacific Group as strong and committed shareholders;
Provides synergies with other branded food businesses
Brand Strength &
Ownership
• Well-loved brand with more than 40 years of history in the Philippines
• Iconic products served in a distinct store environment
• No royalty payments, plus additional revenues from franchising
1
2
3
4
Industry Leading
Financials
• Superior profitability and margins versus peers
• Gearing levels improved post prepayment of debt c/o IPO proceeds
• Cash generative with a negative cash conversion cycle5
*Euromonitor 20153
Investment Highlights
Pizza Hut, 16.0%
Max's, 11.8%
Pancake House, 6.0%
Gerry's Grill, 5.0%
Kenny Rogers,
4.8%
Others, 29.6%
Pizza Hut, 34.6%
California Pizza
Kitchen, 2.7%
Papa John's, 2.4%
Others, 2.6%
#1 Pizza Chain and #1 Full Service Restaurant in the PH
Shakey’s dominates the
full service pizza chain
market by value since
2011 until present.
1
Full Service Pizza Chain
A 2015 market study
showed that close to 50%
of the total full service
restaurant market by value
is dominated by pizza
players.
Chained Full Service Restaurant
The full service pizza chain market is dominated by Shakey’s.
Source: Euromonitor
Pizza Chain
Greenwich, 24.3%
Pizza Hut,
23.0%
Yellow Cab, 7.6%
Lots' a Pizza, 4.4%
Sbarro, 3.7% Others,
8.5%
Domino's Pizza, 1.3%
27.2%
Shakey’s is the leading
pizza chain in the
Philippines by value with
27.2% market share,
trumping Greenwich and
Pizza Hut.
26.7%57.7%
5
Pizza
World famous thin crust and hand tossed
pizzas with many different choices
Wholesome combos
Combination of different signature
products offered by Shakey’s
Chicken and Mojos
Signature dish - fried chicken paired with
Shakey’s famous mojos(a)
Family meals
Value for money combination of pizza,
chicken, mojos and beverage
Pasta
Hearty pasta with a wide range of sauces
and toppings paired with garlic bread
Desserts
Wide range of after-meal desserts
Starters
Ranging from fries, mojos, squid rings,
chips and chicken
Soup and Salad
Extensive choice of soup and salad for
health-conscious customers
Bundled offerings catering to families and groups
Differentiated menu with iconic products
Strong and well established brand2
Shakey’s offers a differentiated menu with iconic and well-loved products.
(a) thinly-sliced potatoes coated with Shakey’s breading and fried to a golden brown perfection6
• No royalty payments, leading to shorter payback period and sustainably higher margins vs peers
• Revenue from licensing fees and royalties from franchisees
• Freedom to execute and react faster to market changes
• Opportunity for expansion into international markets
Strong and well established brand2
Beautiful and distinct store environment is Shakey’s offering to every customer;
Shakey’s has full control and ownership of its brand.
Brand ownership means: 2016 Philippine Top Brands:
Restaurant
Category: Brand:
2
Source: Asia’s Top 1000 Brands Survey by Campaign Asia, in partnership with Nielsen Company 77
Dine-in
• Most popular sales channel due to unique family
and friends experience
• Aim to “WOW the guest”
Delivery
• Delivery available nationwide
• Single delivery hotline number (77-777) for Metro
Manila and adjacent areas; can be used
nationwide by 2H 2017
Carryout
• Convenient and fast method of sales
Functions
• Legacy and free standing stores have function
rooms for events such as parties and company
gatherings
Online sales
• Active online and mobile presence with own
website and mobile app
• http://www.shakeyspizza.ph
Supercards
• A very popular paid loyalty card
• PHP 499 – annual fee
(a) Includes carryout, catering and functions
Delivery, 27.40%
Others, 18.60%
Dine-in, 54.00%
Supercards benefits include:
• A birthday pizza treat
• Buy 1 Take 1 pizza promotion for delivery
• 10% off on dine-in or carryout purchases
• SuperPoints (1 point for every Php100
spent) for dine-in or carryout purchases
Sales split by channel (FY 2016)
(a)
Proven and scalable business model Strong and well established brand3
Multiple sales channels provide convenience and accessibility to Shakey’s customers.
8
9
Legacy storesFree standing
stores
Strip mall
storesMall stores Others
Typical store
footprint
(sqm)400 300 - 350 200 - 250 120 - 250 120 - 180
# of system-wide
stores as of
end-20169 63 28 73 11
% to total
system-wide
stores5% 34% 15% 40% 6%
Proven and scalable business model3
Shakey’s multiple store formats allows for market and expansion flexibility.
9
Proven and scalable business model3
• Firmly positioned in the fast casual segment (A, B and upper C market) that delivers high margins, good volumes, and scale
• Benefitting from key consumer trends – eating out more and upgrading from fast food to casual dining
Brand positioning
• Own commissary for proprietary raw materials protects key supply chain and maintains consistency and control over quality
• Economies of scale and purchasing synergy
Vertical integration
• Long-term leases for store locations at attractive rentals
• Presence of standalone stores (i.e. those outside malls) lead to low rent-to-sales ratio
Asset light approach
• Business model and strong discipline leads to typical payback period of 3-4 years
• Low upfront cost and strong cash generation per store
Short payback period
Proven and scalable business model3
Shakey’s is a well-established brand, while operating on an asset light model.
1010
Vicente L. Gregorio, President & Chief Executive Officer (Age: 51)
• Over 30 years of successful experience in the food business
• Started career in the first ever Shakey’s branch in the Philippines
• Key driver of Shakey’s brand strategy, organisation culture, core values and mission since 2003
• Proven management and leadership track record in foodservice retail set-up, expansion and turnaround management
Manuel Del Barrio, Vice-President & Chief Financial Officer (Age: 53)
• Previously the Assistant Vice-President for Finance of Century Pacific Food Inc. (CNPF) and Pacific Meat, Inc.
• Worked in accounting positions at several leading companies
Jorge Ma. Q. Concepcion, General Manager (Shakey’s Philippines) (Age: 61)
• Over 30 years of experience in consumer related business
• Significant experience in the US foodservice industry for about 10 years in numerous managerial positions
Alois Brielbeck, General Manager (Commissary) (Age: 56)
• Over 30 years of experience in the foodservice business
• Moved to Asia in 1986, taking up positions in pastry kitchens in Hong Kong and Tokyo
• Moved to the Philippines in 2000 as Chief Operating Officer for Culinary Systems Specialists Incorporated
• Appointed as Bakemasters General Manager in 2005
Joseph A. Remsa, Consultant – International Development
• Previously the President & CEO of Shakey’s USA
• Leading the development and operations of the Shakey’s brands in Asia, Middle East, Australia and New Zealand
• Over 25 years of experience leading operations and franchising in top chained restaurants
3 Experienced Management Team4
VISION: to be the LEADING and PREFERRED full service pizza chain restaurant
1111
FY 2016 Financial Results
3.9%Same Store
Sales Growth
15%Revenue Growth
320bps
Expansion
EBITDA Margin
200bps
Expansion Net
Income Margin
39%Net Income
Growth
₱669Million in Net
Income
*figures based on recurring financials13
Adjusted for One-Offs
EBITDA 864 1,186 37%
Net Income 480 669 39%
EBITDA Margin 16.5% 19.7% +3.2 pps
Net Margin 9.1% 11.1% +2.0 pps
In PHP Mns FY2015
Audited
Financials
FY2016
Consolidated*
Change
YoY
Total Revenue 5,244 6,014 15%
Cost of sales (4,048) (4,165) 3%
Gross Profit 1,196 1,850 55%
EBITDA 864 1,256 45%
Net Income 480 785 64%
Margins
Gross profit 22.8% 30.8% +8.0 pps
EBITDA 16.5% 20.9% +4.4 pps
Net income 9.1% 13.1% +4.0 pps
FY 2016 Financial Performance
Driven by same store
sales growth of 3.9%
and increased
contribution of new
stores
Favourable commodity
prices and purchasing
synergies post
consolidation into the
Century Pacific Group
Adjusted for ₱222.5 Mn
in extra-ordinary
income and ₱106.4 Mn
in tax adjusted
acquisition & IPO
expenses totalling
₱151.9 Mn
*had acquistions of subsidiares actually taken place on January 1 2016
14
Restaurant Net Sales
95%
Franchise & Royalty fees
4%
Commissary1%
Revenue Breakdown
19%
27%
54% Dine-In
Delivery
Others
• Unique family and friends
experience that aims to
“WOW the guest”
• Available nationwide with
single delivery hotline
number for Metro Manila
and adjacent areas
• Active online and mobile
presence with own website
and mobile app
• Carryout and Functions
• Legacy and free standing
stores have function rooms
for parties
Sales and Revenue Breakdown
Systemwide
Sales ₱7.3bn 14% Same Store
Sales Growth 3.9%
• A diversified revenue base owing to (a) ownership of brand
which generates franchise fees and (b) ownership of a
commissary which services third party customers as well
15
6,014
5,244
662
38 69
FY 2015 NetRestaurant
Sales
Royalty &Franchise
Fees
Commissary FY 2016ProForma
15%
Sustained Double Digit Increases
• Predominantly sales from
Company-owned
restaurants in the
Philippines, with emerging
categories – delivery and
commissary – beginning to
contribute
Revenue Bridge
13%
1%1%
In P
hp
Mnl
Segment Growth
Net
Restaurant
Sales
23%
13%
Royalty &
Franchise
Fees
*figures based on recurring financials 16
₱480
₱669
9 110
10
20
30
40
50
-
300
600
900
1,200
1,500
2015 2016*
Gross ProfitNet Income
₱864₱1,186
17 20
0
10
20
30
40
50
60
70
-
500
1,000
1,500
2,000
2,500
3,000
2015 2016*
Gross ProfitEBITDA
₱ Mns %
₱1,196
₱1,850
23
31
0
10
20
30
40
50
60
70
-
500
1,000
1,500
2,000
2,500
3,000
2015 2016*
Gross ProfitGross Income
₱ Mns %
Improved Profitability Metrics
55% 37%
39%
₱
Mns%
• Favourable commodity prices and
lower input costs
• Purchasing synergies with the
Century Pacific Group
• Alignment of depreciation policy with
industry standards
*figures based on recurring financials 17
Balance Sheet Highlights
• Temporary money market funds
invested primarily in short term time
deposits, eventually used to prepay debt
• Increase in PPE due to CAPEX for new
stores
• Acquisition of in-house commissary and
trademark companies that hold the rights
to Shakey’s brand for half the globe
• ₱ 5.0 Bn in acquisition financing as a
result of a change in ownership
• Notice to prepay ₱ 1.0 Bn - the same
subsequently prepaid in January 2017
• Increase in capital stock and paid-in
capital as a result of the corporate
restructuring and subsequent IPO
In PHP Mns 2015 2016
Cash 389 329
AFS investments (current) - 1,125
Total current assets 1,241 2,144
Property, plant, equipment 577 999
AFS investments (noncurrent) 683 -
Intangibles and goodwill - 6,066
Other long-term assets 163 175
TOTAL ASSETS 2,664 9,384
2015 2016
Trade and other payables 908 864
Current portion of loan
payable - 1,048
Total current liabilities 966 1,977
Loan payable (net) - 3,933
Long-term liabilities 120 4,048
TOTAL LIABILITIES 1,086 6,025
TOTAL EQUITY 1,578 3,359
18
34% 27%
2015 2016
Key Balance Sheet Metrics
0.45
1.70
2015 2016
*Net debt to equity ratio = (total liabilities – cash) / total equity
**Net gearing ratio = (interest-bearing liabilities – cash) / total equity
-1.38
2015 2016
Return on Equity
Current Ratio (x)
Net Debt to Equity (x)*
Net Gearing (x)**
• Above industry ROE despite
Increase in equity base due to
corporate restructuring and
initial public offering
• Temporary increase in Current
Liabilities due to notice to
prepay ₱ 1.0 Bn of
acquisition leverage
• Only interest bearing debt is
acquisition leverage used in
the change of majority
shareholders last year
• Assuming ₱ 1.0 Bn prepayment
made before end 2016, gearing
ratios come down :
• Net Debt to Equity = 1.4x
• Net Gearing = 1.1x
using average equity
1.20
1.08
2015 2016
19
Redemption of cash and
investments by
previous owners, prior
to the change in majority
shareholder
Cash Flow Highlights
Corporate restructuring
which involved the
acquisition of the in-
house commissary &
trademark entities
IPO proceeds
temporarily invested in
money market funds,
which were
subsequently used to
prepay a portion of
the outstanding loan
In PHP Mns
FY 2015
Audited
Financials
FY 2016
Consolidated
Reported EBITDA 864 1,199
Write off of advances from
previous owners- (223)
Changes in working capital (225) 114
Net operating cash flow 462 934
Acquisition of subsidiaries - (6,011)
Acquisition of AFS investments (470) (1,125)
CAPEX additions (350) (418)
Disposal of AFS investments 477 681
Net investing cash flow (329) (6,869)
Proceeds from loan - 4,975
Capital stock and APIC - 2,116
Dividends payment (150) (1,102)
Interest payment - (115)
Net financing cash flow (150) 5,874
20
Working Capital
Payables*Accounts Receivables*Inventory*
₱247 ₱248
22 22
-
30
60
90
0
200
400
600
800
1000
1200
1400
2015 2016
days₱ Mns
Cash conversion cycle for the year 2016 was
negative 26 days, a decrease of 6 days compared
to 2015
Decrease in payables days
primarily due to streamlining of
payment processes
₱973₱886
88
78
-
30
60
90
0
200
400
600
800
1000
1200
1400
2015 2016
days₱ Mns
₱472 ₱482
33 30
-
30
60
90
0
200
400
600
800
1000
1200
1400
2015 2016
*average figures were used to compute for the working capital components
days₱ Mns
21
New stores, 80%
Corporate office, 11%
Others, 9%
CAPEX Update
New Commissary Plant
• A total of ₱ 418 Mn in CAPEX was spent in 2016 for new
store openings, a new corporate support office, a new
commissary with increased capacity, and various IT system
improvements
• Lease of old office and commissary coming to an end and
was not renewed by the lessor
• New commissary will have double the capacity of the old
plant
New Shakey’s Corporate Office
22
Our Store Network
17New Stores in
FY 2016
10%Increase in
Store Network
184Store Network
as of end 2016
5New Stores in
Q1 2017
20Target # of New
Stores in 2017
204Target Store
Count end 2017
24
78 81 80 89 97 111
55 55 6064
7073133 136 140
153167
184
2011 2012 2013 2014 2015 2016
Company-owned Franchise
Historical Growth in Store Network
Franchised40%Company-
owned60%
• 17 new stores in 2016, the most ever opened in a
single year
• Mostly company-owned stores as pockets of
opportunity remain in Metro Manila/closer proximity
areas
• Target of 20 new stores in 2017 will increase network
by another 11%
10%
25
FY 2016 Geographic Breakdown
National Capital
Region (NCR)
48%
Luzon, ex-NCR
39%
Visayas
9%
Mindanao
4%
Concentration of stores still
in Metro Manila, where per
capita incomes are higher
Opportunity to grow outside
the usual urban centres
benefitting from key
consumer trends –
affordable premiumization,
eating out more often,
upgrading from fast food to
fast casual
No international presence
yet despite ownership of the
trademark for the rest of Asia
(ex Japan, Malaysia), Middle
East, Australia, & OceaniaInternational
0%
26
Solenad
December 2016
Flexibility in Formats
Multiple store formats allow for flexibility in expanding
and targeting different markets
• Standalone stores are larger
and also serve as ‘billboards’
for the brand
• Other formats include small
size outlets for newer markets
and delco’s for added delivery
capacity
6%
39%
55% Mall
Standalone
Others
Store Breakdown by Format
SM East Ortigas
December 2016
27
Select 2016 New Stores
Tuguegarao
August 2016
Sta Cruz
August 2016
Commonwealth
August 2016
SM Lipa
December 2016
28
Stock Price Performance
As of 03/24/2017
Current Price PHP 13.74
Initial Listing Price PHP 11.26
Range since listing date
(12/15/16 – 03/24/17)
PHP 10.90 – 14.80
Current Market
Capitalization
PHP 21.04 Billion
USD 419.6 Million
Shareholding Structure Century Pacific Group, Inc. (CPG): 52.0%
Arran Investments Private, Ltd.
(Arran)/GIC Private Equity: 18.5%
Prieto family: 6.5%
Number of
Issued Common Shares
1,531,321,053
Number of
Listed Common Shares
1,531,321,053
Free Float (%) 23.0%
Absolute Performance
(12/15/16 – 03/24/17)
+22.0%
Relative to Index
(12/15/16 – 03/24/17)
+11%
Average Value Turnover
(12/23/16 – 03/24/17)
PHP 52.64 Million
USD 1.050 Million
Stock Price Performance (Bloomberg Ticker: PIZZA PM)
29
Annex: Financial Statements
SPAVI and Subsidiaries FY 2016 Financial Results
Statements of Comprehensive Income
in PHP mns FY2015 Audited
Standalone
FY2016 Audited
Consolidated*
Net sales 5,076 5,738
Royalty and franchise fees 168 207
Third-party/commissary sales - 69
Total revenues 5,244 6,014
Cost of sales (4,048) (4,165)
Gross profit 1,196 1,850
Operating expenses (583) (985)
Operating income 613 865
EBITDA 864 1,256
EBITDA adjusted for one-off items - 1,186
Net income before tax 659 974
Provision for income tax (179) (189)
Net income after tax 480 785
Net income adjusted for one-off items - 669
Margins
Gross profit 22.8% 30.8%
Operating income 11.7% 14.4%
EBITDA 16.5% 20.9%
Adjusted EBITDA - 19.7%
Net income 9.2% 13.1%
Adjusted Net income - 11.1%
Effective tax rate 27.2% 19.4%
*had the acquisitions taken place on January 1, 201631
SPAVI and Subsidiaries FY 2016 Financial Results
Statements of Financial Position
in PHP mns FY2015 Audited
Standalone
FY2016 Audited
Consolidated
Cash and cash equivalents 389 329
Financial assets at FVPL 36 -
AFS investments - 1,125
Trade and other receivables 543 421
Current portion of loan to a related party 24 -
Inventories 239 256
Prepaid expenses and other current assets 11 13
Total current assets 1,241 2,144
Loan to related parties (net of current) 8
AFS investments 683 -
Property and equipment 577 999
Goodwill - 1,079
Trademarks - 4,987
Deferred tax assets 34 30
Deferred input value-added tax 32 40
Rental and other noncurrent assets 90 105
Total non-current assets 1,423 7,240
TOTAL ASSETS 2,664 9,384
in PHP mns FY2015 Audited
Standalone
FY2016 Audited
Consolidated
Accounts payable and other current liabilities 908 864
Loan payable - current portion - 1,048
Income tax payable 58 64
Total current liabilities 966 1,977
Loans payable (net of current) - 3,933
Accrued pension costs 37 34
Accrued rent 42 64
Dealers' deposits and other noncurrent liabilities 41 17
Total non-current liabilities 120 4,048
TOTAL LIABILITIES 1,086 6,025
Capital stock 769 1,531
Additional paid in capital - 1,354
Other components of equity (20) (13)
Retained earnings 829 487
Total equity 1,578 3,359
TOTAL LIABILITIES and EQUITY 2,664 9,384
32
SPAVI and Subsidiaries FY 2016 Financial Results
Statements of Cash Flows
33
in PHP mns FY2015 Audited
Standalone
FY2016 Audited
Consolidated
Income before income tax 659 936
Adjustments for:
Gain in reversal of advances - (223)
Depreciation and amortization 210 137
Interest expense - 128
Others (14) 16
Working capital changes (225) 114
Income taxes paid (172) (178)
Interest received 4 3
CASH FLOWS FROM OPERATING ACTIVITIES 462 934
Acquisition of subsidiaries - (6,011)
Acquisition of AFS investments - current (470) (1,125)
CAPEX (350) (418)
Acquisition of financial assets at FVPL (7) -
Disposal of AFS investments - noncurrent 477 681
Sale of financial assets at FVPL - 36 Increase (decrease) in dealer's deposits and
other noncurrent liabilities 9 (26)
Increase in deferred input VAT (6) (8)
increase in rental and other deposits (12) (6)
proceeds from disposal of PPE 3 5
Dividends received 1 -
Collection of intercompany loans 24 -
CASH FLOWS FROM INVESTING ACTIVITIES (329) (6,869)
in PHP mns FY2015 Audited
Standalone
FY2016 Audited
Consolidated
Proceeds from the availment of loan - 4,975 Issuance of capital stock and additional paid-in
capital - 2,116
Loan repayment -
Dividends payment (150) (1,102)
Interest payment - (115)
CASH FLOWS FROM FINANCING ACTIVITIES (150) 5,874
Effect of exchange rate changes -
NET INCREASE (DECREASE) IN CASH (17) (60)
Cash and cash equivalents, BEGINNING 406 389
Cash and cash equivalents, ENDING 389 329
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The statements contained in this document speak only as of the date which they are made, and the Company expressly disclaims any obligation or
undertaking to supplement, amend or disseminate any updates or revisions to any statements contained herein to reflect any change in events, conditions
or circumstances on which any such statements are based. By preparing this presentation, none of the Company, its management, and their respective
advisers undertakes any obligation to provide the recipient with access to any additional information or to update this presentation or any additional
information or to correct any inaccuracies in any such information which may become apparent.
This presentation contains statements, including forward-looking statements, based on the currently held beliefs and assumptions of the management of
the Company, which are expressed in good faith and, in their opinion, reasonable. Forward-looking statements in particular involve known and unknown
risks, uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of the Company or industry
results, to differ materially from the results, financial condition, performance or achievements expressed or implied by such forward-looking statements.
Given these risks, uncertainties and other factors, recipients of this document are cautioned not to place undue reliance on these forward-looking
statements.
Any reference herein to "the Company" shall mean, collectively, Shakey’s Pizza Asia Ventures Inc. and its subsidiaries.
SHAKEY’S PIZZA ASIA VENTURES INC.
www.shakeyspizza.ph
http://edge.pse.com.ph/companyInformation/form.do?cmpy_id=664
+632-839-0156
Taguig City, Philippines
34