Restaurant Brands Half Year Financial Results 2022

Restaurant Brands New Zealand Limited
Results announcement to the Market



Results for announcement to the market
Name of issuer Restaurant Brands New Zealand Limited
Reporting Period Six months ended 30 June 2022
Previous Reporting Period Six months ended 30 June 2021
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$611,899 8.6%
Total Revenue $611,899 8.6%
Net profit/(loss) from
continuing operations
$15,281 -55.7%
Total net profit/(loss) $15,281 -55.7%
Interim/Final Dividend
Amount per Quoted Equity
Security
n/a
Imputed amount per Quoted
Equity Security
n/a
Record Date n/a
Dividend Payment Date n/a
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
($0.13) ($0.12)
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer announcement for Restaurant Brands released to the
market on 29 August 2022
Authority for this announcement
Name of person

authorised
to make this announcement
Grant Ellis
Contact person for this
announcement
Grant Ellis
Contact phone number +64 9 525 8710
Contact email address Grant.ellis@rbd.co.nz
Date of release through MAP

29/8/2022

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

---

Restaurant Brands New Zealand Limited
Consolidated financial statements
For the six months ended 30 June 2022

Interim report
Restaurant Brands New Zealand Limited

Page | 1

Consolidated statement of comprehensive income
for the six months ended 30 June 2022

$NZ000’s

Note
30 June 2022
unaudited
30 June 2021
unaudited
31 December 2021
audited
Store sales revenue 584,890 540,641 1,068,246
Other revenue 27,009 23,012 46,195
Total operating revenue 611,899 563,653 1,114,441
Cost of goods sold (506,797) (454,800) (912,359)
Gross profit 105,102 108,853 202,082
Distribution expenses (3,748) (4,191) (8,555)
Marketing expenses (30,951) (29,297) (55,841)
General and administration expenses
(27,452) (24,312) (49,974)
Government
grants - - 7,165
Loan forgiveness 3 - 11,407 11,419
Other income 3 850 945 945
Other expenses 3
(3,500) (1,858) (5,164)
Operating profit 40,301 61,547 102,077
Finance expenses (19,762) (17,601) (36,284)
Profit before taxation 20,539 43,946 65,793
Taxation expense (5,258) (9,440) (13,912)
Profit after taxation attributable to
shareholders
15,281 34,506 51,881
Other comprehensive income:
Exchange differences on translating foreign
operations
15,845 4,944 6,558
Derivative hedging reserve 971 898 1,820
Income tax relating to components of other
comprehensive income
(272) (186) (370)
Other comprehensive income net of tax 16,544 5,656 8,008
Total comprehensive income attributable to
shareholders
31,825 40,162 59,889
Basic and diluted earnings per share (cents) 4 12.25 27.66 41.58

For and on behalf of the Board:






José Parés Emilio Fullaondo
Chairman Director
29 August 2022 29 August 2022

Interim report
Restaurant Brands New Zealand Limited

Page | 2

Consolidated statement of changes in equity
for the six months ended 30 June 2022


$NZ000’s

Share
capital
Foreign
currency
translation
reserve

Derivative
hedging
reserve

Retained
earnings


Total
For the period ended 31 December 2021



Balance at the beginning of the period

154,565

(8,038)

(2,322)

85,643

229,848

Comprehensive income

Profit after taxation attributable to shareholders - - - 34,506 34,506

Other comprehensive income

Movement in foreign currency translation reserve - 4,944 - - 4,944
Movement in derivative hed
ging reserve - - 712 - 712
Total other comprehensive income - 4,944 712 - 5,656

Total comprehensive income

-

4,944

712

34,506

40,162

Unaudited balance as at 30 June 2021 154,565 (3,094) (1,610) 120,149 270,010

Comprehensive income

Profit after taxation attributable to shareholders - - - 17,375 17,375

Other comprehensive income

Movement in forei
gn currency translation reserve - 1,614 - - 1,614
Movement in derivative hed
ging reserve - - 738 - 738
Total other comprehensive income - 1,614 738 - 2,352

Total comprehensive income

-

1,614

738

17,375

19,727
Audited balance as at 31 December 2021 154,565 (1,480) (872) 137,524 289,737

For the six month period ended 30 June 2022


Comprehensive income

Profit after taxation attributable to shareholders - - - 15,281 15,281

Other comprehensive income

Movement in foreign currency translation reserve - 15,845 - - 15,845
Movement in derivative hedging reserve - - 699 - 699
Total other comprehensive income - 15,845 699 - 16,544

Total comprehensive income - 15,845 699 15,281 31,825

Transactions with owners

Net dividends distributed - - - (39,923) (39,923)
Total transactions with owners - - - (39,923) (39,923)

Unaudited balance as at 30 June 2022 154,565 14,365 (173) 112,882 281,639

Interim report
Restaurant Brands New Zealand Limited

Page | 3

Consolidated statement of financial position
as at 30 June 2022


$NZ000’s


Note
As at
30 June 2022
unaudited
As at
30 June 2021
unaudited
As at
31 December 2021
audited
Non-current assets
Property, plant and equipment
5 301,463 242,931 276,748
Right of use assets 6 623,834 548,052 576,527
Sub-leases receivable 927 1,062 993
Other receivables - 763 765
Intangible assets 370,457 345,785 348,216
Deferred tax asset 43,070 37,746 38,711
Land held for development 8 7,084 - -
Total non-current assets 1,346,835 1,176,339 1,241,960
Current assets
Inventories 20,253 16,811 22,261
Trade and other receivables 17,720 9,170 11,012
Income tax receivable 9,142 6,422 9,452
Cash and cash equivalents 33,151 27,155 45,155
Held for sale – assets for store developed for sale 9 - 1,096 -
Total current assets 80,266 60,654 87,880
Total assets 1,427,101 1,236,993 1,329,840
Equity attributable to shareholders
Share capital 154,565 154,565 154,565
Reserves 14,192 (4,704) (2,352)
Retained earnings 112,882 120,149 137,524
Total equity attributable to shareholders 281,639 270,010 289,737
Non-current liabilities
Provisions 4,688 4,086 4,479
Deferred income 21 212 173
Loans 94,378 222,252 246,887
Lease liabilities 696,338 609,011 643,072
Deferred tax liabilities 586 - 1,136
Derivative financial instruments - 1,839 -
Total non-current liabilities 796,011 837,400 895,747
Current liabilities
Loans 196,239 - -
Income tax payable 1,168 3,854 5,280
Trade and other payables 119,927 96,997 110,476
Provisions 1,306 1,416 1,304
Lease liabilities 28,889 24,982 25,609
Deferred income 1,822 1,641 770
Derivative financial instruments 100 - -
Held for sale – liabilities - - 917
Held for sale – liabilities for stores developed for
sale
9 - 693 -
Total current liabilities 349,451 129,583 144,356
Total liabilities 1,145,462 967,011 1,040,103
Total equity and liabilities 1,427,101 1,236,993 1,329,840

Interim report
Restaurant Brands New Zealand Limited

Page | 4

Consolidated statement of cash flows
for the six months ended 30 June 2022


$NZ000’s


Note

30 June 2022
unaudited

30 June 2021
unaudited

31 December 2021
audited
Cash flow from operating activities
Cash was provided by/(applied to):

Receipts from customers 609,201 564,221 1,114,474
Receipts from Government grants 3 - - 7,165
Payments to suppliers and employees (528,054) (471,847) (940,494)
Interest paid (3,665) (3,414) (6,701)
Interest paid on leases (16,018) (14,241) (29,450)
Payment of income tax (13,087) (12,353) (18,619)
Net cash from operating activities 48,377 62,366 126,375
Cash flow from investing activities
Cash was (applied to)/provided by:
Acquisition of business (1,021) (25,277) (27,992)
Payment for intangibles (1,198) (1,613) (2,889)
Purchase of property, plant and equipment (31,984) (28,966) (82,564)
Proceeds from the disposal of property, plant and equipment 166 2,649 2,620
Landlord contributions received - - 1,257
Net cash used in investing activities (34,037) (53,207) (109,568)
Cash flow from financing activities
Cash was provided by/(applied to):
Proceeds from loans 49,986 178,081 370,529
Repayment of loans (24,663) (185,720) (356,046)
Dividend paid to shareholders (39,923) - -
Payment for lease principal (13,275) (12,024) (24,543)
Net cash used in financing activities (27,875) (19,663) (10,060)

Net (decrease) / increase in cash and cash
equivalents
(13,535) (10,504) 6,747

Cash and cash equivalents at beginning of the period

45,155

35,666

35,666
Opening cash balances acquired on acquisition - 1,264 1,264
Foreign exchange movements 1,531 729 1,478
Cash and cash equivalents at the end of the period 33,151 27,155 45,155

Cash and cash equivalents comprise:

Cash on hand 679 632 640
Cash at bank 32,472 26,523 44,515
33,151 27,155 45,155

Interim report
Restaurant Brands New Zealand Limited

Page | 5

Consolidated statement of cash flows (continued)
For the six months ended 30 June 2022

Reconciliation of profit after taxation with net cash from operating activities:


$NZ000’s

Note

30 June 2022
unaudited

30 June 2021
unaudited

31 December 2021
audited
Total profit after taxation attributable to
shareholders
15,281 34,506 51,881

Add/(less) items classified as investing activities:

Gain on acquisition (850) - -
Loss on disposal of property, plant and equipment 526 371 2,673
(324) 371 2,673

Add/(less) non-cash items:

Depreciation 40,965 36,313 75,931
Loan forgiveness 3 - (11,407) (11,419)
Lease termination - (61) (233)
(Decrease)/increase in provisions 211 (240) (145)
Amortization of intangible assets 5,051 4,461 9,231
Net decrease/(increase) in deferred tax asset (4,785) 1,062 536
41,442 30,128 73,901

Add/(less) movement in working capital:

(Increase)/decrease in inventory 2,264 (101) (5,526)
Decrease/(increase) in trade and other receivables (3,465) 3,303 1,094
(Decrease)/increase in trade creditors and other payables (3,777) (2,055) 7,597
(Decrease)/increase in income tax payable (3,044) (3,786) (5,245)
(8,022) (2,639) (2,080)
Net cash from operating activities 48,377 62,366 126,375


Reconciliation of movement in term loans

Opening balance 246,887 235,639 235,639
Net cash flow movement 25,323 (7,639) 14,483
Decrease/(increase) in prepaid facility costs 114 122 256
Loan forgiveness - (11,407) (11,419)
Foreign exchange movement 18,293 5,537 7,928
Closing balance 290,617 222,252 246,887

Interim report
Restaurant Brands New Zealand Limited

Page | 6

Notes to and forming part of the consolidated financial statements
for the six months ended 30 June 2022

1. General information
The reporting entity is the consolidated group (the “Group”) comprising the parent entity Restaurant Brands New Zealand Limited
(the “Company”) and its subsidiaries. Restaurant Brands New Zealand is a limited liability company incorporated and domiciled in
New Zealand. The principal activity of the Group is the operation of quick service and takeaway restaurant concepts in New Zealand,
Australia, USA,
Saipan and Guam.
The Company is listed on the New Zealand Stock Exchange (“NZX”) and the Australian Securities Exchange (“ASX”) and is an FMC
reporting entity and subject to the Financial Markets Conduct Act 2013
legislative provisions. The Group is designated as a for-profit
entity for financial reporting purposes.

Statutory base
The Company is registered under the Companies Act 1993 and is an FMC reporting entity under Part 7 of the Financial Markets
conduct Act 2013.

Reporting framework
These financial statements for the six months ended 30 June 2022 have been prepared in accordance with NZ IAS 34, Interim
Financial Reporting and should be read in conjunction with the
financial statements published in the Annual Report year ended 31
December 2021. The accounting policies have been applied on a basis consistent with those used and described in the audited
consolidated financial statements for the year ended 31 December 2021.

The unaudited interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting
Practice (“NZ GAAP”).

The Group has a negative working capital balance of $269.2 million due to loans that are maturing within the next 12 months being
classified as current. Other than the debt becoming current, it is normal for the Group to be in a negative working capital position, as
the nature of the business results in most sales being conducted on a cash basis. At 30 June 2022 the Group has bank facilities
totalling $381.8 million including $90.8 million undrawn at balance date and therefore the Company has the ability to fully pay debts as
they fall due. Of the $381.8 million facilities $257.5 million expires on 1 May 2023. The Group has begun the process of negotiating
with the banks new facility agreements
which are expected to be in place by 31 December 2022. There are no expected breaches
of bank covenants.

Restatement of prior period balances
To ensure consistency and comparability with the current period and the last annual financial statements, comparative figures have been
reclassified where appropriate. These changes are detailed below:

 The consolidated statement of financial position at 30 June 2021 included $0.8 million of prepaid facility fees in current trade
and other receivables rather than non-current trade and other receivables. This has been corrected in the June 2021
comparative figures.

 The consolidated statement of financial position at 30 June 2021 excluded lease modifications of $7.0 million and lease
additions of $3.2 million in error from both lease liabilities and right of use assets.
New standards and amendments

There are various standards, amendments and interpretations which were assessed as having an immaterial impact on the Group.
There are no NZ IFRS, NZ IFRIC interpretations or other applicable IFRS that are effective for the first time for the financial year
beginning on or after 1 January 2022 that had a material impact on the financial statements.

Interim report
Restaurant Brands New Zealand Limited

Page | 7

Notes to and forming part of the consolidated financial statements (continued)
for the six months ended 30 June 2022

2. Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The Group
is split into four geographically distinct operating divisions; New Zealand, Australia, Hawaii and California. The chief operating decision makers,
responsible for allocating resources and assessing performance of the operating segments, have been identified as the Group Chief Executive
Officer (Group CEO) and Group Chief Financial Officer (Group CFO). The chief operating decision makers consider the performance of the
business from a geographic perspective, being New Zealand, Australia, Hawaii (including Guam and Saipan) and California while the
performance of the corporate support function is assessed separately.
The Group is therefore organised into four operating segments, depicting the four geographic regions the Group operates in and the corporate
support function located in New Zealand. All segments operate quick service and takeaway restaurant concepts. All operating revenue is from
external customers.
The Group evaluates performance and allocates resources to its operating segments on the basis of segment assets, segment revenues,
EBITDA before general and administration expenses and operating profit before NZ IFRS 16. EBITDA refers to earnings before interest,
taxation, depreciation and amortisation. Operating profit refers to earnings before interest and taxation.
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 NZ IFRS. The non-GAAP measures presented do not have a standardised meaning
prescribed b
y GAAP and therefore may not be comparable to similar financial information presented by other entities.


30 June 2022
$NZ000’s


New Zealand


Australia


Hawaii


California
Corporate
support
function
Consolidated
half year
unaudited
Business segment
Store sales revenue 251,816 133,473 115,139 84,462 - 584,890
Other revenue 25,798 331 880 - - 27,009
Total operating revenue 277,614 133,804 116,019 84,462 - 611,899

EBITDA before general and
administration expenses, NZ IFRS
16 and other items


43,198


13,653


20,246


8,304


-


85,401

General and administrative expenses
(9,747) (5,643) (4,627) (3,924) (1,260) (25,201)
33,451 8,010 15,619 4,380 (1,260) 60,200
Other expenses - - - 850 (3,500) (2,650)
Depreciation (9,766) (5,943) (3,797) (2,030) (12) (21,548)
Amortisation (980) (649) (662) (2,760) - (5,051)
Operating profit before NZ IFRS 16 22,705 1,418 11,160 440 (4,772) 30,951

Adjustment for NZ IFRS 16

4,677

2,570

1,129

974

-

9,350
Operating profit 27,382 3,988 12,289 1,414 (4,772) 40,301


Current assets


31,947


15,326


17,905


15,087


-


80,265
Non-current assets 164,722 226,839 201,013 129,500 - 722,074
Non-current lease assets (excluding
deferred tax
)
188,061 157,725 93,685 185,291 - 624,762
Total assets 384,730 399,890 312,603 329,878 - 1,427,101

Interim report
Restaurant Brands New Zealand Limited

Page | 8

Notes to and forming part of the consolidated financial statements (continued)
for the six months ended 30 June 2022


30 June 2021
$NZ000’s


New Zealand


Australia


Hawaii


California
Corporate
support
function
Consolidated
half year
unaudited
Business segment
Store sales revenue 239,274 123,027 101,024 77,316 - 540,641
Other revenue 23,012 - - - - 23,012
Total operating revenue 262,286 123,027 101,024 77,316 - 563,653

EBITDA before general and
administration expenses, NZ IFRS
16 and other items


44,926


16,322


15,950


12,746


-


89,944

General and administrative expenses
(7,024) (4,995) (3,915) (3,585) (2,760) (22,279)
37,902 11,327 12,035 9,161 (2,760) 67,665
Loan forgiveness - - 11,407 - - 11,407
Other expenses
(10) (358) - (686) (804) (1,858)
Depreciation
(8,309) (4,922) (3,484) (2,055) (8) (18,778)
Amortisation (900) (489) (620) (2,450) - (4,459)
Operating profit before NZ IFRS 16 28,683 5,558 19,338 3,970 (3,572) 53,977

Adjustment for NZ IFRS 16

3,977

2,039

819

735

-

7,570
Operating profit 32,660 7,597 20,157 4,705 (3,572) 61,547


Current assets


28,582


11,639


12,779


7,654


-


60,654
Non-current assets 323,177 110,198 83,750 110,100 - 627,225
Non-current lease assets (excluding
deferred tax)

178,499

144,617

69,905

156,093

-

549,114
Total assets 530,258 266,454 166,434 273,847 - 1,236,993


2.1 Reconciliation between operating profit and net profit after taxation excluding NZ IFRS 16


$NZ000’s
30 June 2022
unaudited
30 June 2021
unaudited
31 December 2021
audited
Operating profit 40,301 61,547 102,077
Financing expenses (19,762) (17,601) (36,284)
Net profit before taxation 20,539 43,946 65,793
Taxation expense (5,258) (9,440) (13,912)
Net profit after taxation 15,281 34,506 51,881
Add back net financial impact of NZ IFRS 16 6,668 6,184 13,586
Less taxation expense of NZ IFRS 16 (1,840) (1,724) (3,985)
Net profit after taxation excluding NZ IFRS 16 20,109 38,966 61,482

Interim report
Restaurant Brands New Zealand Limited

Page | 9

Notes to and forming part of the consolidated financial statements (continued)
for the six months ended 30 June 2022

3. Profit before taxation

$NZ000’s
30 June 2022
unaudited
30 June 2021
unaudited
31 December 2021
audited
Profit before taxation
The profit before taxation is calculated after
charging / (crediting) the following items:



Royalties 34,297 31,683 62,533
Lease expense 3,592 4,460 5,222
New Zealand Government wage subsidy - - (7,165)
Loan for
giveness - (11,407) (11,419)
Rent relief
(165) - (500)
Net
gain on sale of stores - (945) (945)
Gain on acquisition (850) - -
Other expenses 3,500 1,858 5,164

Lease expenses
This relates to short term and variable lease costs included in the consolidated statement of comprehensive income not included in NZ IFRS
16 costs.

New Zealand Government wage subsidy

During 2021 as part of the New Zealand Government’s response to COVID-19 the Group received a Government wage subsidy of $7.2
million due to Alert Level 4 Lockdown initiated in August 2021. This amount is shown as a separate line item in the consolidated statement of
comprehensive income due to its material nature. The amount received was also included in the consolidated statement of cash flows as part
of receipts from Government grants.

Loan forgiveness
In June 2021 the Hawaii PPP loan was forgiven by the US Small Business Association. This $11.4 million is shown as a separate line item in
the consolidated statement of comprehensive income due to its material nature. The loan forgiveness has been shown as a non-cash item in
the cash flow reconciliation of profit after taxation with net cash from operating activities.
Rent relief
During 2022 the Group received rent relief of $0.2 million. (June 2021: nil). This has been included as a negative variable rent within the
consolidated statement of comprehensive income. Contracts with abatement clauses total $0.1 million (June 2021: nil) whilst those without
abatement clauses total $0.1 million. (June 2021: nil).

Net gain on sales of stores
During 2021 the Group sold five Pizza Hut stores to independent franchisees resulting in a net gain of $0.9 million.

Gain on acquisition
This is the result of the net assets included in an acquisition of a store in California being higher than the net consideration paid.

Other expenses

$NZ000’s
30 June 2022
unaudited
30 June 2021
unaudited
31 December 2021
audited
Non-recurring:
Acquisition costs 65 650 715
ERP implementation 3,435 1,208 4,189
Unused franchise rights - - 260
Total other expenses 3,500 1,858 5,164

Interim report
Restaurant Brands New Zealand Limited

Page | 10

Notes to and forming part of the consolidated financial statements (continued)
for the six months ended 30 June 2022

4. Earnings per share
30 June 2022
unaudited
30 June 2021
unaudited
31 December 2021
audited
Basic and diluted earnings per share
Profit after taxation attributable to the shareholder ($NZ000’s) 15,281 34,506 51,881
Weighted average number of shares on issue (000’s) 124,759 124,759 124,759
Basic and diluted earnings per share (cents) 12.25 27.66 41.58

Shares on issue
As at 30 June 2022, the total number of ordinary shares on issue was 124,758,523 (June 2021: 124,758,523).

5. Property, plant and equipment
Additions and disposals
During the six months ended 30 June 2022, the Group acquired assets with a total cost of $31.3 million (June 2021: $28.3 million) and
disposed of assets with a total cost of $0.8 million (June 2021: $3.4 million).

6. Right of use assets
Additions and modifications
During the six months ended 30 June 2022, the Group had lease additions and modifications of $39.1 million (June 2021: $37.4 million).

7. Related party transactions
Transactions with key management or entities related to them
During the period the Group received internal audit services from Finaccess Servicios Corporativos SA DE CV a subsidiary of Grupo
Finaccess S.A.P.I de C.V the ultimate parent company of the Group. Acquired services totalling $30,000 have been included in the
consolidated statement of comprehensive income of which $30,000 remains owing at balance date. These transactions were at arm’s length
and performed on normal commercial terms.
Apart from directors’ fees and key management remuneration, there were no other related party transactions with key management or any
Directors or entities associated with them.

8. Land held for development
There was $7.1 million at June 2022 relating to land that has been purchased for use in developing new stores in the future. Included in this
balance is $2.1 million of land acquired prior to 30 June 2022 with final settled and formal title transferred on 1 July 2022. Land held for
development is measured at cost.

9. New stores developed for sale
This relates to new Pizza Hut stores developed for sale in New Zealand which are being actively marketed for sale and were expected to be
sold within 12 months. Included in June 2021 held for sales – assets for store development for sale of $1.1 million was $0.7 million of lease
liabilities and $0.7 million of right of use assets associated with these stores.

10. Capital commitments
The Group has capital commitments totalling $26.5 million (June 2021: $19.2 million) which are not provided for in these financial statements.

Interim report
Restaurant Brands New Zealand Limited

Page | 11

Notes to and forming part of the consolidated financial statements (continued)
for the six months ended 30 June 2022

11. Contingent liabilities
There are no contingent liabilities that the directors consider will have a significant impact on the financial position of the Group (June 2021:
nil).

12. Fair value measurements of financial instruments
Exposure to credit, interest rate and foreign currency risks arises in the normal course of the Group’s business. Derivative financial
instruments may be used to hedge exposure to fluctuations in foreign currency exchange rates and interest rates. There have been no
changes in the risk management policies or nature of the derivative financial instruments since year end. Consistent with the prior year, the
derivatives have been determined to be within level 2 (for the purposes of NZ IFRS 13 Fair Value Measurement) of the fair value hierarchy as
all significant inputs required to ascertain the fair values are observable. There were also no changes in valuation techniques during the
period.

13. Deed of Cross Guarantee
Pursuant to the Australian Securities and Investment Commission (ASIC) Class Order 98/1418, the wholly owned subsidiary, QSR
Pty Limited (QSR), is relieved from the Corporations Act 2001 requirement for the preparation, audit and lodgement of financial
reports.
It is a condition of that class order that Restaurant Brands New Zealand Limited (RBNZ) and QSR enter into a Deed of Cross Guarantee
(Deed). On 9 February 2017 a Deed was executed between RBNZ, QSR, Restaurant Brands Australia Pty Limited and Restaurant Brands
Australia Holdings Pty Limited under which each company guarantees the debts of the others.

14. Impairment considerations
The financial performance of the Group for the six months ended 30 June 2022 was lower than the last half year’s reported results. The Group
continued to face challenges from COVID-19 resulting in staff shortages impacting operations across all divisions and forcing many stores to
reduce operating hours during the period. In addition, the Group also faced cost inflation pressures across all markets which was partially
mitigated by implementing price increases where possible.
The Group has considered these factors in reviewing its non-financial assets for indicators of impairment at 30 June 2022. In respect of goodwill,
an impairment indicator was identified for the California cash-generating unit (CGU). A detailed impairment assessment was performed to
determine the recoverable amount of this CGU using a value in use methodology, which resulted in headroom versus the carrying value of the
CGU’s assets, however this has significantly reduced since the prior year. Management concluded that no impairment is required, however an
increase in the weighted average post-tax cost of capital of 8% to 8.1% would cause the carrying amount to equal its recoverable amount.
A detailed review of property, plant and equipment and ROU assets of stores at period end resulted in a small number of stores with impairment
indicators, however based on further analysis, no impairment is required.

15. Subsequent events

There are no other subsequent events that would have a material effect on these financial statements.

PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, www.pwc.co.nz
Independent auditor’s review report
To the shareholders of Restaurant Brands New Zealand Limited

Report on the interim financial statements

Our conclusion
We have reviewed the consolidated financial statements of Restaurant Brands New Zealand Limited
(the Company) and its subsidiaries (the Group), which comprise the consolidated statement of
financial position as at 30 June 2022, and the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
period ended on that date, and significant accounting policies and other explanatory information.
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying consolidated financial statements of the Group do not present fairly, in all material
respects, the financial position of the Group as at 30 June 2022, and its financial performance and
cash flows for the six month period then ended, in accordance with International Accounting Standard
34 Interim Financial Reporting (IAS 34) and New Zealand Equivalent to International Accounting
Standard 34 Interim Financial Reporting (NZ IAS 34).
Basis for conclusion
We conducted our review in accordance with the New Zealand Standard on Review Engagements
2410 (Revised) Review of Financial Statements Performed by the Independent Auditor of the Entity
(NZ SRE 2410 (Revised)). Our responsibilities are further described in the Auditor’s responsibilities for
the review of the financial statements section of our report.
We are independent of the Group in accordance with the relevant ethical requirements in New
Zealand relating to the audit of the annual financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these ethical requirements. Our firm carries out other services for
the Group in the areas of specified procedures on landlord certificates and review of the Yum!
Advertising co-operative report. In addition, certain partners and employees of our firm may deal with
the Group on normal terms within the ordinary course of trading activities of the Group. These
relationships and provision of other services has not impaired our independence as auditor of the
Group.
Auditor’s responsibilities for the review of the financial statements
Our responsibility is to express a conclusion on the consolidated financial statements based on our
review. NZ SRE 2410 (Revised) requires us to conclude whether anything has come to our attention
that causes us to believe that the consolidated financial statements, taken as a whole, are not
prepared in all material respects, in accordance with IAS 34 and NZ IAS 34.
A review of consolidated financial statements in accordance with NZ SRE 2410 (Revised) is a limited
assurance engagement. We perform procedures, primarily consisting of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review
procedures. The procedures performed in a review are substantially less than those performed in an
audit conducted in accordance with International Standards on Auditing and International Standards
on Auditing (New Zealand) and consequently does not enable us to obtain assurance that we might
identify in an audit. Accordingly, we do not express an audit opinion on these consolidated financial
statements.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our review work has been
undertaken so that we might state those matters which we are required to state to them in our review
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume

PwC 2
responsibility to anyone other than the shareholders, as a body, for our review procedures, for this
report, or for the conclusion we have formed.

The engagement partner on the review resulting in this independent auditor’s review report is Philippa
(Pip) Cameron.

For and on behalf of:





Chartered Accountants Auckland
29 August 2022

---

Directors’ Report to Shareholders
For the six months ended 30 June 2022
(1H 2022)


Key Highlights

($NZm) 1H 2022 1H 2021 Change ($) Change
(%)
Total Group sales 584.9 540.6 +44.3 +8.2
Group NPAT (reported) 15.3 34.5 -19.2 -55.7


 Total Group sales for the six months to 30 June 2022 (1H 2022) were $584.9 million, up
$44.3 million on the previous half year (1H 2021). Total sales growth was assisted by the inclusion of
17 additional stores and a stronger US dollar.

 Net Profit after Tax for 1H 2022 was $15.3 million (12.25 cents per share), down $19.2 million on
1H 2021. Worldwide inflationary pressures resulted in significant cost increases across all regions.
Also, the prior period result included recognition of $11.4 million of loan forgiveness under the US
Paycheck Protection Program (PPP).

 Brand EBITDA before G&A was down $3.7 million to $84.3 million. This is a reflection of the
significant inflationary pressures facing the company in all markets. This was partially offset by the
strong sales and, in particular, a very good overall result for the Hawaii division.


Group Operating Results

Restaurant Brands New Zealand Limited (RBD) has earned a Group Net Profit after Tax (NPAT) of
$15.3 million for the six months ended 30 June 2022 (1H 2022). This is down $19.2 million on the last half-
year’s reported result. The company continues to face cost inflation pressures across all markets but is
mitigating the impact of these by implementing cost savings and taking price increases where possible.
However the extent of cost inflation has meant that the opportunity to pass input costs on in the short term
has been limited, with consequent short term adverse profit impacts.

RBD continues to face challenges from COVID-19 with resultant staff shortages hampering operations
across all divisions and in some cases forcing reduced operating hours during the period.

Comparisons at a reported profit level are distorted by the recognition of $11.4 million ($US8.1 million) in the
PPP loan that was forgiven during 1H 2021. After adjusting for the PPP loan, the underlying NPAT for
1H 2021 would be $23.1 million. This underlying decrease for 1H 2022 of $7.8 million reflects the effect of
inflation as well as continued trading disruptions relating to COVID-19.

Total store sales hit a new high of $584.9 million, up $44.3 million or 8.2% on 1H 2021. Sales across all
regions were up on 1H 2021 due to 17 additional stores and the strengthened US dollar.

Combined brand EBITDA at $84.3 million was down $3.7 million (4.2%) on 1H 2021, with the impact of cost
inflation pressures only being partially off-set by strong sales growth over the current period.

Restaurant Brands’ store numbers now total 367, up 17 from 1H 2021. This is primarily driven by new store
builds, including 11 new Taco Bell stores across NZ and Australia. There are now 138 RBD-owned stores in
New Zealand, 81 stores in Australia, 74 in Hawaii, and 74 in California.


New Zealand Operations

New Zealand store sales were $251.8 million, up $12.5 million or 5.2% on 1H 2021. KFC sales remain
strong and Taco Bell sales have grown $6.9 million from 1H 2021. Whilst down from historic highs of
RESTAURANT BRANDS NEW ZEALAND LIMITED

1H 2021, same store sales were up 1.4% for 1H 2022, despite the adverse impact of COVID-19 related staff
shortages which required many stores to reduce operating hours and/or operate with reduced capacity. The
second quarter of 1H 2022 saw same store sales increase by 3.2%.

EBITDA was $40.6 million, a $2.5 million or 5.7% decrease on 1H 2021 with significant cost pressures,
partially off-set by the strong store sales performance. EBITDA margin at 16.1% was down on prior year
reflecting the effect of the cost pressures and the mix of less profitable Taco Bell brand sales as this
business continues to build.

1H2022 1H2021 Chan
ge ($) Change (%)
Store sales ($NZm) 251.8 239.3 +12.5 +5.2
EBITDA ($NZm) 40.6 43.1 -2.5 -5.7
EBITDA as a % of Sales 16.1 18.0
Store Numbers 138 132

1H 2022 saw the successful introduction of a number of new products into the market, with Hot & Crispy
Boneless Chicken (KFC) and Detroit Pizza (Pizza Hut) delivering sales growth. Carl’s Jr. continues to
perform well. An e-commerce web site has been launched for Taco Bell as the focus on building a digital
offering and improving delivery service continues.

The Pizza Hut business in New Zealand continues to grow strongly, not only from RBD’s own stores, but
also from the 101 stores operated by independent franchisees under a Master Franchise Agreement with the
company. Two new stores were opened in the first half with a similar number anticipated by the end of the
year.

Operating profit for the NZ division (excluding the effect of NZ IFRS 16) was $22.7 million (down 20.8%).
Inflation has had a significant impact on ingredient and input costs and continues to do so. In addition,
labour shortages relating to the COVID-19 pandemic have significantly impacted the hospitality industry in
New Zealand. This has disrupted the ability to operate at full trading hours across all stores and channels.
The situation was particularly challenging during the first quarter of 2022 and, despite improvement during
the second quarter, staff shortages remain an ongoing issue with high numbers of unfilled vacancies.

Whilst restricted availability of building materials and store equipment have slowed store development, new
store builds continued with one KFC outlet in Whangarei and one Taco Bell outlet at Cuba Mall, Wellington
opened during 1H 2022. Despite continued development challenges an additional three Taco Bell stores and
two KFC stores are expected to open before the end of the year.


Australia Operations

In $A terms total sales in Australia were $A122.8 million, up $A8.0 million (or 7.0%) on last year, primarily
due to the full effect of five additional KFC stores purchased during 1H 2021, the effect of additional store
openings, and solid same store sales growth (up 3.4% for the half year).

In $NZ terms the Australian business contributed total sales of $NZ133.5 million (up 8.5%), a store EBITDA
of $NZ14.2 million (down 13.3%) and operating profit (excluding the effect of NZ IFRS 16) of $NZ1.4 million
(down 74.5%).

1H2022 1H2021 Chan
ge ($) Change (%)
Sales ($Am) 122.8 114.8 +8.0 +7.0
Store EBITDA ($Am) 13.0 15.2 -2.2 -14.5
EBITDA as a % of Sales 10.6 13.3
Store Numbers 81 76

Sales results in the second quarter have continued to see year on year improvement, with strongest
recovery in both the CBD and mall stores. These had experienced the greatest adverse impact from
COVID-19 in 2020 and 2021. The launch of Uber Eats delivery service throughout the KFC network in June
is expected to contribute to further sales growth into 2H 2022.

Store EBITDA margins of $A13.0 million (10.6% of sales) were down $A2.2 million or 14.5% on last year.
The Australian business was negatively impacted during the early stages of the year with the escalation of
COVID-19 cases impacting both restaurant staff availability and all major chicken suppliers. This contributed
to reduced operating hours and store closures due to lack of staff availability and temporary chicken supply
shortages.

The business continues to experience major cost pressures with escalating inflation levels driven by ongoing
supply chain disruptions and increased freight and other input costs. The floods in northern and some
western parts of New South Wales resulted in the temporary closure of a number of stores and has
significantly impacted the agricultural sector further impacting supply availability.

The Australian business has continued to invest in the growth of Taco Bell, with the opening of two new
stores in 1H 2022.


Hawaii Operations

Total sales in Hawaii for the period were $US76.0 million with store level EBITDA of $US13.7 million (18.0%
of sales).

In $NZ terms the Hawaiian operations contributed $NZ115.1 million in revenues, $NZ20.8 million in EBITDA
and an operating profit (excluding the effect of NZ IFRS 16) of $NZ11.2 million for the period, down
$8.2 million on 1H 2021.

However the 1H 2021 result included other revenue of $11.4 million ($US8.1 million) in relation to the PPP
loan drawn down at the onset of the COVID-19 pandemic in 2020, that was forgiven in June 2021. When
normalised for the PPP loan forgiveness, operating profit (excluding the effect of NZ IFRS 16) for 1H 2022
was $3.3 million up on 1H 2021.

1H2022 1H2021 Chan
ge ($) Change (%)
Sales ($USm) 76.0 72.7 +3.3 +4.5
Store EBITDA ($USm) 13.7 11.6 +2.1 +17.6
EBITDA as a % of Sales 18.0 15.8
Store Numbers 74 73

Reported sales are up $US3.3 million with same store sales up 2.9%. Taco Bell sales increased significantly
over 1H 2021 as the brand returned to pre-COVID-19 trading levels.

The Taco Bell Mexican Pizza was so successful that ingredients ran out across the US and required the
promotion to finish ahead of schedule. It will be repeated during 2H 2022 and is expected to again drive
strong sales for Taco Bell. Pizza Hut is also looking to roll out a new “Melts” product range which is expected
to have a positive impact on the lunch time sales segment.

EBITDA margin as a % of sales is up from 15.8% to 18.0% (largely as a result of increased levels of Taco
Bell sales in the overall sales mix) Store staffing challenges arising from COVID-19 continue to impact the
business with stores having to operate to reduced trading hours on some occasions. The division also
continues to face significant cost pressures, including a further increase in the minimum wage to take effect
from October 2022.

Overall store numbers in Hawaii are up by one from 1H 2021 with the opening of one new Taco Bell store in
April 2022 which is performing above expectations. A further Taco Bell store is expected to open in January
2023.


California Operations

Total sales in California were $US55.8million, up $US0.6m on last year off the back of three new store
openings and the acquisition of three additional KFC stores, offset by a same store sales decrease of 3.0%.

In $NZ terms the Californian operations contributed $NZ84.5 million in revenues, $NZ8.8 million in EBITDA
and an operating profit (excluding the effect of NZ IFRS 16) of $NZ0.4 million for the period.

1H2022 1H2021 Chan
ge ($) Change (%)
Sales ($USm) 55.8 55.2 +0.6 +1.0
Store EBITDA ($USm) 5.8 9.1 -3.3 -36.3
EBITDA as a % of Sales 10.4 16.5
Store Numbers 74 69

The division rolled over high sales in 2021, driven by strong Government stimulus payments. Consequently
same store sales fell by 3.0%. A steep rise in the cost of ingredients has affected the business and price
increases have been implemented in response. However, as with all divisions these need to be balanced
against competitive pressures and the contraction of consumer purchasing power. Additionally, the cost of
labour increased during 1H 2022 with staff shortages and increased overtime as teams stretched to cover
COVID-19 related absences.

As a result, store EBITDA of $US5.8 million was down $US3.3 million on last year with EBITDA as % of
sales of 10.4% vs 16.5% in 2021.

California store numbers grew by five through new builds and acquisition to 74 total stores, up from 69 stores
in 1H 2021. Three new KFC stores were opened in 2022 over the span of six weeks in San Bernardino,
Perris and Barstow. The opening day at KFC Barstow was one of the largest opening days for a KFC outlet
in the United States. Perris and Barstow were among the first innovative ‘Next Generation’ KFC stores to
open in the US market. The three new stores mark the first new store openings for the California division
post-acquisition with more new stores scheduled to open later this year. One acquisition was completed in
Desert Hot Springs consolidating our strong presence in the greater Palm Springs area.


Corporate & Other

General and administration (G&A) costs were $27.5 million, an increase of $3.1 million on 1H 2021. G&A as
a % of total revenue was 4.5%, slightly up on 1H 2021 (4.3%). As with much of the business, this was
primarily driven by cost inflation over the period along with the filling of vacancies that had remained open
during the COVID-19 pandemic.

Depreciation charges of $21.5 million for the half year were $2.8 million higher than the prior year.
The increase is due to the continued high level of new store builds and store refurbishments. Depreciation of
leased assets is also up $1.2 million to $19.9 million with new leases increasing the associated right of use
asset depreciation.

Financing costs of $19.8 million were up $2.2 million on prior year primarily due to an increase in lease
interest of $1.8 million due to both new leases and existing leases being extended. Bank interest costs were
$3.7 million, $0.3 million higher than prior year due to increased debt levels.

Tax expense was $5.3 million, down $4.2 million due to the lower earnings. The effective tax rate is 25.6%,
up from 21.5% last year due to the higher relative level of assessable income in the Hawaii division.


Other Income / Expenses

Other income / expenses for the half year totalled $2.7 million, an increase of $0.8 million versus 1H 2021.
This year’s costs included the initial one-off costs associated with the implementation of new company-wide
financial systems ($3.4 million), partially off-set by an acquisition gain of $0.9 million. This gain is as a result
of the net assets included in the acquisition of a California store being higher than the net consideration paid.


NZ IFRS 16

The impact of NZ IFRS 16 on the Group accounts for the half year is a reduction of $4.8 million on after-tax
operating earnings (1H 2021 impact: $4.5 million).

The Consolidated Statement of Financial Position has right of use lease assets of $623.8 million, up $47.3 million
since December 2021 due to the inclusion of the newly acquired store in California, various other new stores being
opened and lease renewals. Lease liabilities of $725.3 million are also up by $56.5 million reflecting the increase in
future lease commitments.


Statements of Cash Flow and Financial Position

Bank debt at the end of the half year was $290.6 million compared to $246.9 million at the previous year
end. As at 30 June 2022, the Group had bank debt facilities totalling $NZ381.8 million available. Cash and
cash equivalents decreased by $12.0 million during the period with net debt increasing by $55.7 million to

$257.5 million over the half year. This is due to continued commitment to a strong capital investment
programme and the payment of a $39.9 million dividend.

The company remains comfortably within all banking covenants with a Net Debt:EBITDA ratio of 2.1:1.

Operating cash flows were $48.4 million, down $14.0 million on 1H 2021. This is a direct reflection of the
inflationary impact on trading margins combined with $2.0 million additional interest paid versus the prior half
year.

Net investing cash outflows at $34.0 million, were $19.2 million lower than the $53.2 million in 1H 2021.
1H 2021 included the acquisition of stores in Australia for $25.3 million. The underlying spend on new stores
as well as refurbishing stores throughout the network was up by $6.1 million.

A dividend of $39.9 million (32 cents per share) was paid to shareholders in April.


Outlook

Store numbers are expected to continue to grow in the second half despite continued building constraints.
New store roll outs for both the KFC and Taco Bell brands will continue in New Zealand and Australia. The
Hawaiian market will see another new Taco Bell completed in early 2023. The new store development
programme is well under way in California, with up to three new KFC stores targeted for opening before year
end.

The overall business continues to remain solid across all geographic markets as reflected in the strong sales
performance, which is expected to carry over into the second half of the year. Trading results in recent
months have also improved due to various actions taken to lessen the inflationary effect on the business.
The current results have been adversely affected by worldwide inflationary and COVID-19 pressures, the
company continues work to mitigate their impact and improve profitability over 2H 2022. It is expected that
cost inflation and margins will stabilise over the second half – however, it is not anticipated that the impact of
a challenging 1H 2022 will be fully reversed by year end.

The continued impact of inflation as well as the rolling issues with COVID-19 makes it difficult to provide firm
profit guidance; however the reported net profit after taxation for the 2022 year is expected to be in the range
of $32-37 million.




Authorised by:

Russel Creed
y Grant Ellis
CEO CFO
Phone: 525 8710 Phone: 525 8710

ENDS

Consolidated Income Statement
For the six months ended 30 June 2022
30 June 2022vs Prior30 June 2021
$NZ000'sunaudited%unaudited
Sales
New Zealand
251,816 5.2239,274
Aus tralia
133,473 8.5123,027
Hawaii
115,139 14.0101,024
California
84,462 9.277,316
Total s ale s584,890
8.2
540,641
Other revenue27,009 17.423,012
Total operating revenue611,899
8.6
563,653
Cost of goods sold(506,797)(11.4)(454,800)
Gross margin105,102
(3.4)
108,853
Distribution expenses (3,748)10.6(4,191)
Marketing expenses(30,951)(5.6)(29,297)
General and administration expenses(27,452)(12.9)(24,312)
Loan forgiven- n/a11,407
Other income850 n/a945
Other expenses(3,500)(88.4)(1,858)
Operating profit 40,301
(34.5)
61,547
Financing expenses(19,762)(12.3)(17,601)
Net profit before taxation20,538
(53.3)
43,946
Taxation expense (5,258)44.3(9,440)
Total profit after taxation (NPAT)15,281
(55.7)
34,506
% sales% sales
Concept EBITDA before G&A including Government grants
New Zealand
40,608 16.1(5.7)43,050 18.0
Aus tralia
14,156 10.6(13.3)16,322 13.3
Hawaii
20,750 18.030.115,950 15.8
California
8,815 10.4(30.8)12,746 16.5
Total concept EBITDA before G&A84,330
14.4(4.2)
88,068
16.3
Ratios
Ne t tangible asse ts pe r s e curity (ne t tangible asse ts divide d by
number of shares) in cents
(13.5)(11.8)
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 order centre, advertising and local store marketing expenses.
General and administration expenses (G&A) are non-store related overheads.
Sales and concept EBITDA for each of the concepts may not aggregate to the total due to rounding.

N on-GAAP Financial M e as ure s
For the six months ended 30 June 2022
The Group results are prepared in accordance with New Zealand Generally Accepted Accounting Practice (“NZ GAAP”) and comply
with New Zealand International Financial Reporting Standards (“NZ IFRS”). These financial statements include non- NZ GAAP
financial measures that are not prepared in accordance with NZ IFRS. The non-NZ GAAP financial measures used in this presentatio n
are as follows:
1.
EBITDA including Government grants, G&A and other items
. The Group calculates Earnings Before Interest, Tax, Depreciation
and Amortisation (“EBITDA”) before G&A (general and administration expenses) and other items by taking net profit before taxation
and adding back (or deducting) financing expenses, other items, depreciation, amortisation and G&A. The Group also refers to this
measure as
Store EB ITD A be fore G&A and othe r ite ms
. This measure provides the results of the Group’s core operating business
and excludes those costs not directly attributable to stores. This is believed to be a useful measure to assist in the understanding of the
financial performance of the Group.
The term
Store
refers to the Group’s 10 operating divisions comprising the New Zealand brands (KFC, Pizza Hut, Taco Bell and
Carl’s Jr.), the two Australia brands (KFC and Taco Bell), the two Hawaii brands (Taco Bell and Pizza Hut), and the two California
brands (KFC and Taco Bell). The term
G&A
represents non-store related overheads.
2.
Total NPAT excluding the impact of NZ IFRS 16
. Total Net Profit After Taxation (“NPAT”) excluding the impact of NZ IFRS
16 is calculated by taking profit after taxation attributable to shareholders and adding back (or deducting) lease items whilst also
allowing for any tax impact of those items. This measure reflects the performance of the business, excluding costs associated with the
adoption of NZ IFRS 16 and is considered a useful measure to assist with understanding the financial performance of the Group.
The Group believes that these non-NZ 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 fo r
measures reported in accordance with IFRS. Non-NZ 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-NZ GAAP measures and net profit after taxation:
$NZ000's
Note*
EBITDA including Government grants, before G&A and other items185,401 89,944
Depreciation(21,022)(17,618)
Net loss on sale of property, plant and equipment (included in depreciation)(526)(1,160)
Lease depreciation(19,943)(18,695)
Lease costs29,293 26,265
Amortisation (included in cost of sales)(5,051)(4,459)
General and administration costs - area managers, general managers and support centre(25,201)(23,224)
Loan forgiven850 11,407
Other items(3,500)(913)
Operating profit40,301 61,547
Financing expenses(19,762)(17,601)
Net profit before taxation 20,538 43,946
Taxation expense (5,258)(9,440)
Net profit after taxation15,281 34,506
Add back NZ IFRS 16 impact6,668 6,184
Income tax on NZ IFRS 16 impact(1,840)(1,724)
Total NPAT excluding the impact of NZ IFRS 16
220,109 38,966
* Refers to the list of non-NZ GAAP measures as listed above.
30 June 2022
unaudite d
30 June 2021
unaudite d