DFI Retail Group Holdings (D01) Investor update summary

Transaction Overview and Strategic Rationale

• DFI will transfer its 50% stake in Maxim's to Hongkong Caterers in exchange for full ownership of the Starbucks licensed business (over 1,100 coffeehouses in seven Asian markets) and $340 million in cash, with completion targeted by Q1 2027.

• The move completes DFI's transition from a portfolio to an operating company with full control over all business aspects.

• The Starbucks business covers seven Asian markets, with potential for further franchise rights and expansion.

• Strategic partnership and collaboration with Hongkong Caterers and Jardine Matheson will continue in procurement, supply chain, property, and digital initiatives.

• Day-to-day operations for both Starbucks and Maxim's Caterers businesses will remain unchanged post-reorganisation.

Growth Strategy and Market Positioning

• Starbucks business is expected to generate $746 million in revenue in 2025, with a 3.5% CAGR from 2023-2025 and a 7% operating margin.

• Focused expansion in high-growth Southeast Asian markets, especially Thailand and Vietnam, with a target of 250 new coffee houses by 2029.

• The business holds a 16% market share in a $3.8 billion market, with significant room for growth in underpenetrated regions.

• Plans to leverage synergies in procurement, supply chain, property, and loyalty programs to drive growth and efficiency.

• Innovation in food and beverage offerings, including localizing menus and cross-brand collaborations, aims to make Starbucks an all-day destination.

Financial Impact and Guidance

• Full consolidation of the Starbucks business will add $600-$650 million in revenue in 2027 and about $900 million in 2028.

• Operating margin from Starbucks is over 7%, with identified synergies expected to improve margins by 1%-2% over the next few years.

• Revenue growth for Starbucks is guided at 6%-7% CAGR, aiming for a billion-dollar business within three years and over 1,350 stores by 2029.

• Initial EPS dilution is expected due to loss of Maxim's profit, but $340 million cash consideration and business upsides are expected to offset this over time.

• Dividend payout ratio will increase from 70% to 80% in 2027, with potential for special dividends if no suitable reinvestment opportunities arise.