Restaurant Brands Half Year Results Announcement

Directors’ Report to Shareholders
For the 28 Weeks ended 11 September 2017
(1H 2018)


Key Points

1H 2018 1H 2017 Change ($) Change (%)
Total Group Sales ($m) 386.1 256.2 +129.9 +50.7
Group NPAT (reported) ($m) 19.1 13.5 +5.6 +41.3
Group NPAT (excl. non-trading) ($m) 20.2 15.9 +4.2 +26.5
Dividend (cps) 10.0 9.5 +0.5 +5.3

 Net Profit after Tax for the 28 weeks ended 11 September 2017 (1H 2018) was $19.1 million (15.5
cents per share), up $5.6 million or +41.3% on the prior period (1H 2017).

 Net Profit (excluding non-trading items) was $20.2 million (16.4 cents per share), up $4.2 million or
+26.5% on the prior period.

 Total Group Sales were $386.1 million, up 50.7% on the previous half year, with the bulk of the
increase attributable to the Pacific Island Restaurants Inc. (PIR) acquisition in Hawaii and the full
impact of the Australian operations which were acquired part way through 1H 2017.

 Combined brand EBITDA was up $17.7 million to $63.0 million with $12.7 million of the increase
resulting from the PIR acquisition, the Australian KFC business accounting for a further $3.4 million
and the New Zealand businesses driving the remaining $1.6 million.

 Directors have declared an interim dividend of NZ10.0 cents per ordinary share, up NZ0.5 cents on
last year. The dividend is fully imputed and payable on 30 November 2017.

Group Operating Results

Directors are pleased to report that Restaurant Brands New Zealand Limited (RBD) has produced a first half
unaudited net profit after tax for the 28 weeks ended 11 September 2017 (1H 2018) of $19.1 million (15.5
cents per share). This compares with a reported NPAT of $13.5 million (13.3 cents per share) for the prior
half year.

After allowing for the impact of non-trading items the underlying NPAT was $20.2 million (16.4 cents per
share), up $4.2 million or +26.5% on prior year.

Total brand sales for the Group were $386.1 million, up $129.9 million or +50.7% on 1H 2017 with the benefit
of $88.9 million in sales from the recent Hawaiian acquisition (of PIR) effective from 7 March 2017, and
strong performance in the KFC operations in Australia and New Zealand which delivered increased sales of
$28.3 million and $12.8 million, respectively. Total operating revenue was $399.9 million, up $133.1 million
on prior year.

Combined brand EBITDA at $63.0 million was $17.7 million (+39.1%) up on prior year, largely because of a
$12.7 million contribution from the newly acquired Hawaiian operations.

The Board is pleased with the progress and integration of the three business units for the first six months of
this new financial year, following completion of the Hawaiian business purchase in March 2017.

Restaurant Brands’ store numbers at balance date totalled 297, comprising 168 in New Zealand, 82 in
Hawaii and 47stores in Australia.
RESTAURANT BRANDS NEW ZEALAND LIMITED

New Zealand Operations

New Zealand operating revenue was $239.1 million, up $15.8 million or +7.1% on 1H 2017.

Total store sales were $225.4 million, an increase of $12.8 million or +6.0% on last year, delivering EBITDA
of $39.7 million (17.6% of sales); a $1.6 million or +4.3% improvement on 1H 2017 driven mainly by the
continued strong performance of the KFC business.

New Zealand operations produced an EBIT (before non-trading items) of $22.2 million, up 14.2% on the prior
year.

KFC New Zealand

1H 2018 1H 2017 Change ($) Change (%)
Network Sales ($m) 180.8 167.1 +13.7 +8.2
Network Store Numbers 98 97

RBD Sales ($m) 170.3 157.4 +12.9 +8.2
RBD Store Numbers 92 91

RBD EBITDA ($m) 35.0 33.1 +1.9 +5.7
EBITDA as a % of Sales 20.5 21.0
- -

Restaurant Brands’ KFC New Zealand sales were $170.3 million, up 8.2% or $12.9 million on prior year with
same store sales up 7.0%. Successful product promotions and the introduction of a delivery service in
selected stores contributed to a strong first half sales performance.

Margins remained strong, albeit slightly down in percentage terms on the equivalent period last year, with an
EBITDA margin of 20.5% of sales being delivered in the period. In dollar terms EBITDA totalled $35.0
million, up $1.9 million (+5.7%) on last year’s result.

Both company-owned and total network store numbers increased by one to a total of 92 and 98 respectively
with the opening of a new store in Rolleston in 2H 2017. Immediately after balance date, KFC opened a new
format store in Fort Street Auckland. Especially customised for a central city environment with no drive-
through facility, this store has significantly outperformed expectations and is expected to be the prototype for
a number of similar central city stores.

Pizza Hut New Zealand

1H 2018 1H 2017 Change ($) Change (%)
Network Sales ($m) 54.9 48.9 +6.0 +12.3
Network Store Numbers 94 90

RBD Sales ($m) 22.9 22.0 +0.9 +3.8
RBD Store Numbers 34 37

RBD EBITDA ($m) 2.0 2.4 -0.4 -18.4
EBITDA as a % of Sales 8.6 11.0
- -

Restaurant Brands’ Pizza Hut store sales were up $0.9 million to $22.9 million, despite a reduction in the
store network to 34 stores from further sales to independent franchisees. Same store sales from Restaurant
Brands’ stores were up 10.6%.

Restaurant Brands’ Pizza Hut store earnings were $2.0 million (8.6% of sales), down $0.4 million or 18.4%
on the equivalent period last year reflecting the cost pressures encountered in the first half of the year,
particularly in relation to increased labour rates and ingredient costs.

Total Pizza Hut network sales climbed to $54.9 million for the half year, up $6.0 million (+12.3%) on prior
year. Company owned store numbers reduced by one to 34 during the period. The number of independent
franchisees has increased to 60, bringing the total network at balance date to 94 stores.

Negotiations with the franchisor, Yum! Restaurants International, on the establishment of a master franchise
agreement for the New Zealand market are well advanced and expected to be concluded shortly.

Starbucks Coffee New Zealand

1H 2018 1H 2017 Change ($) Change (%)
Sales ($m) 13.4 13.8 -0.4 -2.6
EBITDA ($m) 2.2 2.2 +0.0 +0.4
EBITDA as a % of Sales 16.5 16.0
- -
Store Numbers 23 25
Note: all Starbucks Coffee stores are RBD owned

Starbucks Coffee saw same store sales growth over the period of +6.5%.

Total sales were down marginally on 1H 2017 by $0.4 million (-2.6%) to $13.4 million, reflecting the reduced
store network to 23 stores, following the closure of the Aotea Square and Botany stores in Auckland.

Margins improved slightly with continuing sales leverage and store efficiencies. The brand achieved an
EBITDA of $2.2 million (16.5% of sales), up slightly on 1H 2017.

Discussions between the company and franchisor concerning renewal options for the Starbucks Coffee
franchise are currently in process.

Carl’s Jr. New Zealand

1H 2018 1H 2017 Change ($) Change (%)
Sales ($m) 18.8 19.3 -0.5 -2.8
EBITDA ($m) 0.6 0.4 +0.2 +58.2
EBITDA as a % of Sales 3.0 1.8
- -
Store Numbers 19 20
Note: all Carls’ Jr. stores are RBD owned

Progress continues to be made in building Carl’s Jr. into a profitable, sustainable brand in New Zealand.
Although sales were down 2.8% (-2.3% on a same store basis), this is a reflection of rolling over the new
opening volumes for two stores opened in Christchurch last year, and strong sales driven by a higher level of
promotional activity in the equivalent period last year. In contrast, the focus in the first half of 2018 has been
on generating more profitable sales rather than driving sales through discounting and promotional activity.
Accordingly EBITDA was $0.6 million (3.0% of sales), an increase of $0.2 million or +58.2% on last year.

Store numbers now total 19 following the closure of the Otahuhu store in 2H 2017.

Australia Operations

In NZ$ terms the Australian business (operating the KFC brand) contributed total sales of $NZ71.9 million,
EBITDA (after G&A expenses) of $NZ7.9 million and EBIT of $NZ4.5 million. These results are all
significantly up on prior year, primarily because the acquisition of this business took place part way through
1H 2017.

KFC Australia

1H 2018 1H 2017 Change ($) Change (%)
Sales ($Am) 66.7 41.4 +25.3 +61.1
Store EBITDA ($Am) 9.8 6.9 +2.9 +43.2
EBITDA as a % of Sales 14.7 16.6
- -
Store Numbers 47 42

In A$ terms total sales of the KFC business in Australia were $A66.7 million, up $A25.3 million (or +61.1%)
on last year, reflecting both increased store numbers following the acquisition of the business assets of five
stores at the start of this financial year, and the full impact of the acquisition of QSR Pty Limited which only
became effective part way through 1H 2017. Same store sales are +5.8%.

Store EBITDA margins of $A9.8 million (14.7% of sales) are up A$2.9 million or +43.2% on last year.

As part of the Australian market expansion strategy, the company has negotiated the purchase of the
business assets of a further 13 KFC stores in New South Wales, Australia at a total price of $A38.2 million.
Of these seven have settled since balance date with a further six expected to settle in the third quarter. The
purchases have been funded through bank debt facilities. With the successful completion of these
transactions, together with the opening of a further new store early in the third quarter, the company-owned
KFC store network in Australia will total 61 stores.

Hawaii Operations

Restaurant Brands acquired PIR in Hawaii with effect from 7 March 2017 and the reported trading results are
from that date. The Hawaiian business operates 82 stores under the Taco Bell and Pizza Hut brands.

Total sales in Hawaii in the period since acquisition were $US63.9 million with store level EBITDA of $US9.1
million generated equating to 14.3% of sales; in line with expectations at the time of purchase.

In NZ$ terms the newly-acquired Hawaiian operations contributed $NZ89.0 million in revenues, $NZ8.5
million in EBITDA (after G&A expenses) and an EBIT of $NZ5.4 million since acquisition.

Taco Bell Hawaii

1H 2018 1H 2017 Change ($) Change (%)
Sales ($USm) 36.6 - +36.6 n/a
Store EBITDA ($USm) 7.2 - +7.2 n/a
EBITDA as a % of Sales 19.6 -
- -
Store Numbers 37 -

Taco Bell is a new brand for the Restaurant Brands Group and is performing well with total sales to date of
$US36.6 million and store-level EBITDA of $US7.2 million (19.6% of sales). A strong promotional pipeline
has helped drive solid sales.

The company has embarked on a store rebuild and refurbishment strategy for these stores in the same vein
as was undertaken for the KFC business in New Zealand. The one store that has been significantly
transformed to date is currently delivering same store sales growth of +60%.

Pizza Hut Hawaii

1H 2018 1H 2017 Change ($) Change (%)
Sales ($USm) 27.3 - +27.3 n/a
Store EBITDA ($USm) 1.9 - +1.9 n/a
EBITDA as a % of Sales 7.1 -
- -
Store Numbers 45 -

The Pizza Hut business in Hawaii has integrated well into the Group’s operations. There has been some
margin pressure from participating in value-led marketing promotions together with some higher commodity
costs and rising direct labour expense.

Total sales were $US27.3 million with store-level EBITDA of $US1.9 million.

As with Taco Bell, the company is embarked on an asset refurbishment strategy that will see a move away
from the larger restaurants into smaller, more cost-effective delivery and carry out (delco) units.

Corporate & Other

General and administration (G&A) costs were $18.5 million. The increase in the G&A cost base resulted from
the Hawaiian acquisition ($4.0 million), the full impact of Australian operations which was purchased part
way through 1H17 ($1.0 million), and the new corporate structure established during the period to meet the
demands arising from the changes in size and geography of the Group’s operations. G&A as a % of total
revenue was 4.6%.

Depreciation charges of $15.5 million for the half year were $4.0 million higher than the prior year, of which
the Hawaiian business accounted for $3.1 million.

Financing costs of $2.7 million were up $1.3 million on prior year reflecting the higher borrowings required to
fund the PIR acquisition.

Tax expense was $8.3 million, up $2.3 million on the prior year with higher reported profit levels. The
effective tax rate of 30.2% reflects the increased proportion of profits that are generated off-shore, and the
(one off) impact of non-trading items, with the rate on earnings excluding non-trading items at 29.8%.

Non-Trading Items

Non-trading expenditure for the half was $1.3 million, a reduction of $1.1 million on prior year. This year’s
amount included transaction costs on the PIR acquisition and listing fees and legal costs relating to the dual
listing of the company on the Australian Securities Exchange (ASX). These costs were partially offset by a
realised FX gain arising from the forward contracts used in the PIR acquisition.

Cash Flow & Balance Sheet

The composition of the Group’s balance sheet has been impacted by the acquisition of Pacific Island
Restaurants Inc. on 7 March 2017. This transaction, which was for a total purchase price of $NZ149.9 million
(after settlement adjustments), was funded through cash raised from the issue of shares by a renounceable
entitlement offer and private placement carried out in the previous financial year, together with additional
debt facilities.

Bank debt at the end of the half year was consequently up to $133.1 million compared to $46.5 million at the
previous year end. As at balance date, the Group had available bank debt facilities totalling $209.0 million in
place. A further $A50 million facility with Bank of Tokyo-Mitsubishi for the purpose of funding the KFC
acquisitions in Australia was finalised after balance date.

Operating cash flows were up $6.9 million to $37.6 million reflecting the Group’s increased profitability.

Net investing cash outflows at $115.4 million (versus $72.5 million last year) primarily reflect the impact of
the PIR acquisition with a cash impact of $96.4 million (net of bank loans assumed as part of the
transaction). Cash inflows for the period saw $0.4 million received from the sale of one Pizza Hut store.

Dividend

Directors have declared a fully imputed interim dividend of NZ10.0 cents per ordinary share (prior year NZ9.5
cents), payable on 30 November to all shareholders on the register on 10 November 2017. A supplementary
dividend of NZ1.7648 cents per share will be paid to all overseas shareholders at the same time.

Directors have also approved the application of the recently constituted dividend reinvestment plan to this dividend.
For those participating in the plan, shares will be issued in lieu of dividend at a discount of 1.5% to the pre-closing
seven trading days NZX volume-weighted-average price (VWAP).

Outlook

The current strategies across all geographic markets are delivering positive results.

The acquisition of the Taco Bell and Pizza Hut brands in Hawaii has made a pleasing contribution in the first
period of ownership, with the strong performance of the KFC brand in Australia and New Zealand expected
to continue in the second half.

Directors believe that, absent any major changes to economic or market conditions, the Group will deliver a
Net Profit after Tax (excluding non-trading items) for the FY18 year of around $40 million.




For further information, please contact:

Russel Creedy Grant Ellis
CEO CFO/Company Secretary
Phone: 525 8700 Phone: 525 8700

ENDS

Consolidated Income Statement
For the 28 week period ended 11 September 2017
(28 weeks)(28 weeks)
UnauditedUnaudited
1st Half 2018vs Prior1st Half 2017
Group11 September 2017%12 September 2016
$NZ000's
Sales
KFC170,3078.2157,417
Pizza Hut22,8623.822,023
Starbucks Coffee13,425(2.6)13,784
Carl's Jr.18,803(2.8)19,338
Total New Zealand sales225,3976.0212,562
KFC71,86464.843,596
Total Australia Sales71,86464.843,596
Taco Bell50,950100.0-
Pizza Hut37,919100.0-
Total Hawaii Sales88,869100.0-
Total Sales386,13050.7256,158
Other revenue13,80429.010,703
Total operating revenue399,93449.9266,861
Cost of goods sold(327,387)(51.2)(216,559)
Gross margin72,54744.250,302
Distribution expenses (1,713)(13.4)(1,510)
Marketing expenses(20,909)(42.5)(14,678)
General and administration expenses(18,537)(70.3)(10,885)
EBIT before non-trading31,38835.123,229
Non-trading(1,338)43.8(2,379)
EBIT30,05044.120,850
Net financing expenses(2,687)(95.3)(1,376)
Net profit before taxation27,36340.519,474
Taxation expense (8,277)(38.7)(5,967)
Total profit after taxation (NPAT)19,08641.313,507
Total NPAT excluding non-trading20,15726.515,935
% sales% sales
EBITDA before G&A
KFC34,99120.55.733,11721.0
Pizza Hut1,9708.6(18.4)2,41311.0
Starbucks Coffee2,21816.50.42,20916.0
Carl's Jr.5573.058.23521.8
Total New Zealand39,73617.64.338,09117.9
KFC10,59214.746.57,230 16.6
Total Australia10,59214.746.57,23016.6
Taco Bell10,01619.7100.0- -
Pizza Hut2,7047.1100.0- -
Total Hawaii 12,72014.3100.0- -
Total 63,04816.339.145,32117.7
Ratios
Net tangible assets per security (net tangible assets divided by number of
shares) in cents
(22.2)c14.1c
Cost of goods sold are direct costs of operating stores: food, paper, freight, labour and store overheads.
Distribution expenses are costs of distributing product from store.
Marketing expenses are advertising and local store marketing expenses.
General and administration expenses (G&A) are non-store related overheads.
RESTAURANT BRANDS GROUP

Restaurant Brands Group
Non-GAAP Financial Measures
For the 28 week period ended 11 September 2017 (2018 Half Year)

The Group results are prepared in accordance with New Zealand Generally Accepted Accounting Practice (“GAAP”)
and comply with International Financial Reporting Standards (“IFRS”). These financial statements include non-GAAP
financial measures that are not prepared in accordance with IFRS. The non-GAAP financial measures used in this
presentation are as follows:

1. EBITDA before G&A. The Group calculates Earnings Before Interest, Tax, Depreciation and Amortisation
(“EBITDA”) before G&A (general and administration expenses) by taking net profit before taxation and adding
back (or deducting) net financing expenses, non-trading items, depreciation, amortisation and G&A. The Group
also refers to this measure as Concept EBITDA before G&A.

The term Concept refers to the Group’s stable of brands within the New Zealand (KFC, Pizza Hut, Starbucks
Coffee and Carl’s Jr.), Hawaii (Taco Bell, Pizza Hut) and Australia (KFC) geographic segments. The term
G&A represents non-store related overheads.

2. EBIT before non-trading. Earnings before interest and taxation (“EBIT”) before non-trading is calculated by
taking net profit before taxation and adding back (or deducting) net financing expenses and non-trading items.

3. Non-trading items. Non-trading items represent amounts the Group considers unrelated to the day to day
operational performance of the Group. Excluding non-trading items enables the Group to measure underlying
trends of the business and monitor performance on a consistent basis.

4. EBIT after non-trading items. The Group calculates EBIT after non-trading items by taking net profit before
taxation and adding back net financing expenses.

5. Total NPAT excluding non-trading. Total Net Profit After Taxation (“NPAT”) excluding non-trading items is
calculated by taking profit after taxation attributable to shareholders and adding back (or deducting) non-trading
items whilst also allowing for any tax impact of those items.

The Group believes that these non-GAAP measures provide useful information to readers to assist in the understanding
of the financial performance and position of the Group but that they should not be viewed in isolation, nor considered as
a substitute for measures reported in accordance with IFRS. Non-GAAP measures as reported by the Group may not be
comparable to similarly titled amounts reported by other companies.

The following is a reconciliation between these non-GAAP measures and net profit after taxation:

Note*2018 Half Year2017 Half Year
$NZ000's
EBITDA before G&A163,04845,321
Depreciation(15,490)(11,470)
Loss on sale of property, plant and equipment (included in depreciation)-(38)
Amortisation (included in cost of sales)(1,304)(1,392)
General and administration - area managers, general managers and support centre(14,866)(9,192)
EBIT before non-trading231,38823,229
Non-trading items **3(1,338)(2,379)
EBIT after non-trading items430,05020,850
Net financing costs(2,687)(1,376)
Net profit before taxation 27,36319,474
Income tax expense(8,277)(5,967)
Net profit after taxation19,08613,507
Add back non-trading items1,3382,379
Income tax on non-trading items(267)49
Net profit after taxation excluding non-trading items520,15715,935
* Refers to the list of non-GAAP measures as listed above.
** Refer to Note 3 of the interim financial statements for an
analysis of non-trading items

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Ex Date:
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10 November 201730 November 2017
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$$0.006944$0.038889
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Ordinary SharesNZRBDE0001S1
EMAIL: announce@nzx.com
Notice of event affecting securities
1
Restaurant Brands New Zealand Limited
G R EllisDirector's Resolution
09 525 872309 525 871119102017

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Restaurant Brands New Zealand Limited
Results for announcement to the market

Reporting Period 28 week period ended 11 September 2017
Previous Reporting Period 28 week period ended 12 September 2016

Amount (000s) Percentage change
Revenue from ordinary
activities
NZ$399,934 49.9%
Profit from ordinary
activities after tax
attributable to security
holder.
NZ$19,086 41.3%
Net profit attributable to
security holders.
NZ$19,086 41.3%

Interim/Final Dividend Amount per share Imputed amount per share
Interim NZ 10.0 cents NZ 3.9 cents

Record Date 10 November 2017
Dividend Payment Date 30 November 2017

Comments: A brief Refer to attached report


This report is based on accounts which have not been audited. The report is provided
with the accounts which accompany this announcement.