CKF AU Prospectus

COLLINS FOODS LIMITED ACN 151 420 781
prospectus
Initial Public Offering of Ordinary Shares
Joint Lead Managers
this prospectus
This Prospectus is dated 15 July 2011 and was lodged with the Australian Securities and Investments Commission (AsIc) on that date. Neither ASIC nor ASX takes any responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. Refer to section 6.9 for further information. This Prospectus is available to Australian and New Zealand investors in electronic form at www.collinsfg.com.au. The Offer constituted by this Prospectus in electronic form is available only to persons within Australia or New Zealand. It is not available to persons in other jurisdictions (including the United States or US Persons). Persons having received a copy of this Prospectus in its electronic form may, before the Closing Date of the Broker Firm Offer, obtain a paper copy of this Prospectus (free of charge) by telephoning the Collins Foods Offer Information Line on 1800 622 202. If you are eligible to participate in the Offer and are calling from outside Australia, you should call +61 2 8280 7694. Applications for Shares may only be made on an Application Form attached to or accompanying this Prospectus, or in its paper copy form which may be downloaded in its entirety from www.collinsfg.com.au. Refer to section 6.3.2 for further information.
offer offeror
The Offer contained in this Prospectus is an initial public offering by invitation of Collins Foods Limited of 80.7 million fully paid ordinary shares in Collins Foods Limited (shares) at $2.50 per Share. Refer to section 6 for further information. At the date of this Prospectus, Collins Foods Limited had issued three Shares for $1 and had not traded. On settlement of the Offer (referred to as Completion of the Offer), Collins Foods Limited will acquire, through a wholly owned subsidiary, Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd. Refer to section 6.1.3 for further information. Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd operate the Collins Foods businesses. These businesses, their management and keys risks are described in this Prospectus. References to Collins Foods in this Prospectus describe Collins Foods Limited and its subsidiaries following Completion of the Offer. Refer to sections 2-5 for further information.
restrictions on distribution Important Information for New Zealand Investors
This Prospectus does not constitute an offer of Shares or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. Refer to section 6.7. This offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 8 of the Corporations Act 2001 and Regulations. In New Zealand, this is Part 5 of the Securities Act 1978 and the Securities (Mutual Recognition of Securities Offerings-Australia) Regulations 2008. This offer and the content of the offer document are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act 2001 and Regulations (Australia) sets out how the offer must be made. There are differences in how securities are regulated under Australian law. For example, the disclosure of fees for collective investment schemes is different under the Australian regime. The rights, remedies and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies and compensation arrangements for New Zealand securities. Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to this offer. If you need to make a complaint about this offer, please contact the Financial Markets Authority, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle your complaint. The taxation treatment of Australian securities is not the same as for New Zealand securities. If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser. The offer may involve a currency exchange risk. The currency for the securities is not New Zealand dollars. The value of the securities will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant. If you expect the securities to pay any amounts in a currency that is not New Zealand dollars, you may incur significant fees in having the funds credited to a bank account in New Zealand in New Zealand dollars. If the securities are able to be traded on a securities market and you wish to trade the securities through that market, you will have to make arrangements for a participant in that market to sell the securities on your behalf. If the securities market does not operate in New Zealand, the way in which the market operates, the regulation of participants in that market, and the information available to you about the securities and trading may differ from securities markets that operate in New Zealand.
exposure period
The Corporations Act prohibits Collins Foods Limited from processing applications to subscribe for Shares under this Prospectus (Applications) in the seven day period after the date of lodgement of this Prospectus (exposure period). This period may be extended by ASIC by up to a further seven days. This period is an exposure period to enable this Prospectus to be examined by market participants prior to the raising of funds. The examination may result in the identification of certain deficiencies in this Prospectus in which case any Application may need to be dealt with in accordance with section 724 of the Corporations Act. Applications received during the Exposure Period will not be processed until after the expiry of that period. No preference will be conferred on Applications received during the Exposure Period. Section 3 sets out in detail the financial information referred to in this Prospectus. The basis of preparation of that information is set out in section 3.2. All financial amounts contained in this Prospectus are expressed in Australian currency and rounded to the nearest $0.1 million unless otherwise stated. Any discrepancies between totals and sums of components in tables contained in this Prospectus are due to rounding. This Prospectus contains forward looking statements which are identified by words such as may, could, believes, estimates, expects, intends and other similar words that involve risks and uncertainties. The Forecast Financial Information is an example of forward looking statements. Any forward looking statements are subject to various risk factors that could cause Collins Foods Limiteds actual results to differ materially from the results expressed or anticipated in these statements. Forward looking statements should be read in conjunction with risk factors as set out in section 4, specific assumptions as set out in section 3.8.1, general assumptions as set out in section 3.8.2, the sensitivities as set out in section 3.9, and other information in this Prospectus.
Financial information and forward looking statements
Defined terms and time Disclaimer
Certain terms and abbreviations used in this Prospectus have defined meanings which are explained in the Glossary in section 9 of this Prospectus. Unless otherwise stated or implied, references to times in this Prospectus are to Sydney time. No person is authorised to give any information or to make any representation in connection with the Offer described in this Prospectus which is not contained in this Prospectus. You should rely only on information in this Prospectus. Except as required by law, and only to the extent so required, neither Collins Foods Limited nor any other person warrants or guarantees the future performance of Collins Foods Limited, or any return on any investment made pursuant to this Prospectus.
Further queries
If you are considering applying for Shares under the Offer, this document is important and should be read in its entirety. If you have any questions in relation to the Offer, please call the Collins Foods Offer Information Line on 1800 622 202 within Australia. If you are eligible to participate in the Offer and are calling from outside Australia, you should call +61 2 8280 7694. The information in this Prospectus is not financial product advice and does not take into account your investment objectives, financial situation or particular needs. In particular, in considering Collins Foods prospects, you should consider the assumptions underlying the forecast financial information and the risk factors that could affect Collins Foods financial performance. You should carefully consider these factors in light of your personal circumstances (including financial and taxation issues). Refer to sections 3-4 for further information. If you do not understand any part of this Prospectus, or are in any doubt as to whether to invest in Shares or not, it is recommended that you seek professional guidance from your stockbroker, solicitor, accountant or other independent and qualified professional adviser before deciding whether to invest.
1 COLLINS FOODS LIMITED PROSPECTUS
coNteNts
Letter from the Chairman 1. Investment overview 2. Company overview 3. Financial information 4. Risks 5. Key people, interests and benefits 6. Details of the Offer 7. Investigating Accountants Report 8. Additional information 9. Glossary APPENDIX Key accounting policies Corporate directory 3 4 19 43 67 72 82 96 104 117 123
key DAtes
prospectus Date open of Broker Firm offer close of Broker Firm offer Allocation announcement (on or before) settlement Allotment of shares (completion of the offer) expected commencement of trading on AsX (on a deferred settlement basis) expected despatch of shareholder statements shares expected to begin trading on a normal settlement basis
Note:
Friday 15 July 2011 Monday 25 July 2011 tuesday 2 August 2011 Wednesday 3 August 2011 Wednesday 3 August 2011 thursday 4 August 2011 thursday 4 August 2011
Friday 5 August 2011 Monday 8 August 2011
This timetable is indicative only. The Existing Investors, Collins Foods Limited and the Joint Lead Managers reserve the right to vary the dates and times of the Offer, including to close the Offer early, extend the Offer or accept late Applications, either generally or in particular cases, without notification. Applicants are therefore encouraged to submit their Applications as early as possible.
letter FroM the chAIrMAN

15 July 2011 Dear investor, On behalf of the Directors, I am pleased to invite you to consider becoming a Shareholder of Collins Foods Limited (to operate from Completion of the Offer as Collins Foods). Collins Foods is a major restaurant operator in Australia. Its restaurant network comprises 119 KFC restaurants in Australia, and 85 Sizzler restaurants in Australia and Asia. The vast majority of Collins Foods company-owned KFC and Sizzler restaurants are based in Queensland, forecast to be Australias fastest growing state , while its franchised Sizzler operations are located in Asia. Collins Foods has a proud history, which dates back to 1969 when it opened its first KFC restaurant in Queensland. Today, Collins Foods is Australias largest KFC franchisee and employs a workforce of approximately 700 full time staff and 6,000 casual and part time staff across its businesses. Collins Foods has a highly experienced management team, with the top five executives having an average of 26 years experience with Collins Foods. The CEO, Kevin Perkins, has been with Collins Foods for more than 32 years, and is one of 13 franchisee presidents currently sitting on the KFC International Brand Council. The top five management will own 8.3% of Collins Foods on Completion of the Offer. Collins Foods has a strong financial track record and the Directors believe it is well positioned for future growth through new restaurant roll-outs and refurbishments, expansion of the product range and day parts as well as ongoing operating initiatives. The Offer provides an opportunity for you to share in our exciting future. The information in this Prospectus contains detailed information about the Offer and the financial and operating performance of Collins Foods. It also includes a description of the key risks associated with an investment in Collins Foods such as food safety and sanitation, security of supply chain and changes in regulation. I encourage you to read it carefully and in its entirety before making your investment decision. On behalf of the Board, I look forward to welcoming you as a Shareholder. Yours sincerely,
russell tate Chairman
1 INVestMeNt oVerVIeW
KFC Super Variety Bucket
topic A. INtroDuctIoN What is the nature of collins Foods business?
summary
For more information
Collins Foods is a major restaurant operator in Australia. It is the: Largest KFC franchisee in Australia by number of restaurants, operating 117 KFC restaurants in Queensland and two in New South Wales; Owner of Sizzler trademarks in Australia and more than 68 other countries 1; Operator of 26 Sizzler restaurants in Queensland, Western Australia and New South Wales; and Franchisor of 59 Sizzler restaurants in Asia, predominantly located in Thailand, Japan and China.
Section 2.1
What are the key strengths of collins Foods?
Collins Foods believes the key strengths and appeal of its business are:
Attractive market dynamics

The Australian chained quick service restaurant (Qsr) market is forecast to grow at a CAGR of 8.0% from 2011-2013 2.
Section 2 Section 3
Leading market position and scale in Queensland

A major restaurant operator in Australia, Australias largest KFC franchisee and the only KFC franchisee in Queensland.
Longstanding relationship with Yum!, one of the worlds largest restaurant companies
Access to the Yum! system including global brand and product development, operating systems, national advertising scale and frequency, and national procurement scale.
Proven and highly experienced management team

The top five management personnel have an average of 26 years experience with Collins Foods.
Strong financial track record

Achieved average annual same store sales growth of 5.9% and 6.3% for KFC and Sizzler respectively over the past 10 years; and Strong cash flow generation supporting an attractive dividend yield.
Established platform for future growth

Multiple levers for growth through the introduction of new products and day parts, operational initiatives, new restaurant roll-out and refurbishment and, subject to appropriate opportunities arising and Yum! approval, the acquisition of KFC restaurants in other Australian states. Further information about these strengths is included in the summary of Collins Foods business model in Part B of this Investment Overview. Investors should balance this information against the risks faced by Collins Foods.
1 2
Excluding the United States, Guatemala and Puerto Rico. Euromonitor International Ltd.: Passport data (May 2011) December Y/E. Information in the Prospectus attributed to Euromonitor has been prepared from independent market research carried out by it and includes forward looking statements. This information is not fact nor its outcomes guaranteed by any person. Investors are cautioned not to place undue reliance on forward looking statements.
topic What are key risks to collins Foods? summary Collins Foods believes the key risks to its business are: For more information Section 4
Food safety and sanitation

A serious food-poisoning incident could occur at a Collins Foods KFC or Sizzler restaurant.
Security of supply chain

The supply chain for one or more of Collins Foods restaurants could be materially disrupted, resulting in insufficient supplies being delivered.
Termination of franchise agreements for noncompliance

Yum! could terminate KFC franchise arrangements due to non-compliance by Collins Foods.
Change in regulation
Laws or regulations could be introduced that seek to reduce the advertising or consumption of foods sold by Collins Foods.
Brand and reputation calamity

An incident beyond the control of Collins Foods could occur and reduce consumer confidence in the KFC or Sizzler brands or products.
Failure to open a sufficient number of new restaurants

Collins Foods could be unable to open new KFC or Sizzler restaurants in accordance with its capital expenditure programme.
Failure to introduce sufficient new products or LTOs

Collins Foods could be unable to offer a sufficient number of successful new products or limited time offers (ltos) at its KFC and Sizzler restaurants.
Reduction in customer numbers

A deterioration in economic conditions or consumer sentiment that affects the markets in which Collins Foods operates could reduce customer numbers.
Insufficient supervision of operations by management

A failure by management to supervise closely the day to day operations of its restaurants may result in reduced revenues and increased costs. Further information about these risks is included in the summary of key risks in Part D of this Investment Overview.
topic
summary
For more information
B. key FeAtures oF collINs FooDs BusINess MoDel What markets does collins Foods compete in? Collins Foods KFC restaurants compete in the QSR subset of the Australian restaurant industry. The QSR market is comprised of both chained and non-chained restaurant operators. Chained QSR operators such as Collins Foods can benefit from well known branding and efficiencies associated with standardised restaurant formats, menus and centralised administration. In 2011, Euromonitor International forecast the Australian chained QSR market to generate total 2011 revenue of approximately $11.0 billion, and grow at a CAGR of 8.0% from 2011-2013 1. Collins Foods Sizzler restaurants compete in the casual dining market against a broad range of restaurants including licensed clubs, hotels and bars, pubs and cafs. What are the benefits of collins Foods scale and distribution? Collins Foods restaurants primarily operate in key population centres of Queensland. Queensland is projected to be Australias fastest growing state by population and gross State product 2. The scale and location of Collins Foods restaurants provides a number of benefits including: Limited reliance on the earnings of any particular restaurant; Close proximity to existing and potential customers; High brand exposure; Enhanced ability to secure new restaurant sites; Position as a significant and valuable franchisee to Yum!; Financial capacity to recruit and retain high quality management; Ability to relocate staff between restaurants to optimise staffing levels; and Economies of scale which facilitate the operation of a significant shared services platform. Section 2.2.2 Section 2.3.2 Section 2.2.1 Section 2.3.1
Euromonitor International Ltd.: Passport data (May 2011) December Y/E. Information in the Prospectus attributed to Euromonitor has been prepared from independent market research carried out by it and includes forward looking statements. This information is not fact nor its outcomes guaranteed by any person. Investors are cautioned not to place undue reliance on forward looking statements. Deloitte Access Economics Business Outlook (March quarter 2011) for the period 2011-2020.
topic how are collins Foods products and service models key to its businesses? summary Collins Foods believes its KFC product offering of chicken pieces, burgers, wraps and snacks provides the following competitive benefits: Product freshness and quality, with between four and seven deliveries of fresh products to each restaurant per week; Recognised flavour from KFCs secret blend of 11 herbs and spices; Sale of chicken on a per-piece basis enables application of marinade (giving KFC its flavour profile), and improves portability of the product. This enables a higher gross margin than if sold on a per-chicken basis; and Faster cooking time compared to barbecuing techniques enables Collins Foods to reduce wastage and to respond more quickly to changes in customer demand. Collins Foods has a track record of introducing new product initiatives and LTOs, including those targeted at the growing in-between meal snacking market. Collins Foods sets the prices of its products which enables it to adjust prices where appropriate to allow for regional variations and respond to changes in input costs. It also assists Collins Foods to keep prices competitive and offer customers value for money. Sizzlers primary product offering is its signature salad and beverage bar (which includes soups, salads, pasta and desserts). It also serves grilled items including chicken, red meat and seafood. Sizzler operates a pay first, unlimited self service model that allows customers to select, order and pay for their meals before being seated at a table. This model reduces costs by requiring fewer staff, and increases revenues through higher average table turns than if Sizzler operated as a traditional table service restaurant. It also assists Sizzler to offer customers value for money. What are the advertising and marketing arrangements? Both the KFC and Sizzler brands attract customers to Collins Foods restaurants. Collins Foods invests at least 6% of annual KFC revenue in advertising and promotion of the KFC brand: 5% of annual KFC revenue paid to ADCO which operates as a national KFC advertising body; and At least a further 1% of annual KFC revenue on local advertising and marketing. National KFC marketing provides a number of benefits to Collins Foods including: The development and maintenance of a strong and consistent brand throughout Australia; Participation in the sponsorship of high profile events and organisations that would be difficult or impossible to sponsor on an individual operator basis; Discounted rates from scale buying of media; and The development of quality marketing programmes through Yum! and Collins Foods sharing of costs and combined expertise in media production and buying. Collins Foods spends approximately 4%-5% of annual Sizzler revenue on Sizzler advertising and marketing including television, direct mail, print, radio and social media. Section 2.2.5 Section 2.3.5 For more information Section 2.2.4 Section 2.3.4
topic What are the key aspects of collins Foods supply arrangements?
summary Collins Foods maintains a number of suppliers for each of its key inputs in order to minimise its dependency on any one supplier. Collins Foods may purchase supplies for its KFC restaurants from Yum!s supply network. It also selects its own suppliers, provided in the case of its KFC restaurants they meet Yum!s specifications. Yum! is one of the worlds largest restaurant chains by number of system restaurants 1 and is the global owner and franchisor of the KFC brand. Collins Foods operates all its KFC restaurants under single-site franchise agreements and various ancillary agreements with Yum!. Collins Foods receives a number of benefits from its relationship with Yum!, including: Use of the KFC brand, and associated strong brand recognition; Access to products and marketing strategies developed by Yum!; Participation in national KFC advertising and marketing arrangements; Ongoing training and assistance; and Access to the Yum! supply chain and buying power, which can assist to reduce supply costs. Upon Completion of the Offer, new franchise arrangements with Yum! will commence for Collins Foods KFC restaurants. These will have an average term of approximately 10 years and Collins Foods will have the option to extend them for a further 10 years after expiry of the initial term.
For more information Section 2.2.6 Section 2.3.6 Section 2.2.7
What is the relationship with yum! (the owner of the kFc brand) and why does it matter?
What are collins Foods key strategies?
Collins Foods KFC strategy is to remain one of the pre-eminent QSR restaurant operators in Queensland and for its Australian Sizzler business to continue to offer customers value for money. Growth strategies across both these businesses focus on: Operational initiatives and innovations to drive same store sales growth; Refurbishing its existing restaurant network; and Establishing new restaurants. If appropriate opportunities to acquire KFC restaurants in other states arise, Collins Foods will consider these opportunities (subject to Yum! approval). Collins Foods Sizzler Asia strategy is to seek to grow restaurant numbers through new and existing franchisees.
Section 2.2.8 Section 2.3.7
how do collins Foods shared services functions contribute to its business?
Collins Foods performs a number of administrative and management functions using a shared services structure including property, human resources, insurance, supply and distribution, quality control, IT, finance and risk management. Collins Foods shared services functions assist to reduce and manage risks, including its exposure to food safety and sanitation risks, monitor company performance and implement new strategies as required.
Section 2.5.1 to Section 2.5.6
System restaurants comprise both owned, franchised and licensed restaurants.
topic how does collins Foods expect to fund its operations? summary On Completion of the Offer, Collins Foods will have total debt facilities of $145 million, which will be available for general corporate, working capital and capital expenditure purposes. Collins Foods will initially draw down $105 million of debt to repay a portion of its existing debt facilities. Collins Foods will fund its growth and maintenance capital expenditure in FY2012 through operating cash flows. c. key oFFer stAtIstIcs What are the key offer statistics? Section 6 Offer Price Total number of Shares offered under the Institutional Offer and Broker Firm Offer Total cash proceeds from the Institutional Offer and Broker Firm Offer 1 Total number of Shares on issue following the Offer 2 Indicative market capitalisation3 Pro forma net debt4 Enterprise value5 $2.50 For more information Section 3.4.3
80.7 million
$201.7 million 93.0 million $232.5 million $101.5 million $334.0 million
2 3 4 5
This is the amount of cash received by Collins Foods Limited under the Offer (before payment of any expenses) and is calculated by multiplying the Offer Price (of $2.50) by the number of Offer Shares offered under the Institutional Offer and Broker Firm Offer and excludes $30.8 million of Shares to be issued to certain Existing Investors pursuant to the Sale Deeds (refer to section 8.3 for more information). This comprises the Shares offered under the Institutional Offer, Broker Firm Offer and pursuant to the Sale Deeds as referred to above, and the three Shares on issue at the date of this Prospectus. Calculated by multiplying the Offer Price by the number of Shares on issue on Completion of the Offer. Pro forma net total indebtedness. Calculated as debt drawn of $105 million (see section 3.4.3) less pro forma cash and cash equivalents of $3.5 million (see section 3.4.2). Calculated by adding indicative market capitalisation and pro forma net debt.
topic What are the key investment metrics?
summary Enterprise value/pro forma FY2012 EBITDA Enterprise value/pro forma FY2012 EBIT Offer Price/pro forma FY2012 NPAT per Share Offer Price/pro forma FY2012 NPATA per Share
1
For more information 5.7x 7.7x 9.4x 9.0x 6.4% Section 3
FY2012 annualised dividend yield
pro Forma Forecast Forecast statutory pro Forma historical results results results $ million Revenue EBITDA EBIT NPAT NPATA Fy2009 405.9 54.2 39.3 21.3 22.6 Fy2010 402.9 51.7 36.1 20.6 21.9 Fy2011 410.8 55.9 40.8 22.8 24.1 Fy2012 430.3 59.0 43.4 24.7 25.9 Fy2012 429.7 60.8 41.5 16.0 19.8
Fy2012 Statutory revenue 410.6 Statutory NPAT (41.2) 400.5 17.5 408.2 1.4 26.6 17.3
Earnings per Share 3 (cents)
key ratios4 Net debt 5/EBITDA EBITDA/net interest expense EBIT/net interest expense Fixed charges cover 6 Current assets 5/Current liabilities 5 1.7x 7.3x 5.4x 2.6x 25.2%
1 2 3 4 5 6
Net profit after tax and before amortisation. Collins Foods expects to pay a dividend of 11.8 cents per Share in FY2013 with respect to earnings generated from Completion of the Offer to 29 April 2012. Refer to section 3.10. Based on the total number of Shares to be on issue following Completion of the Offer (as in, 93.0 million). Ratios calculated by reference to Forecast Statutory Results have not been included in this Prospectus as Collins Foods believes they do not provide meaningful information to investors about Collins Foods because of the change in capital structure that will occur on Completion of the Offer. Further, no forecast statutory balance sheet has been prepared. Pro forma as at 1 May 2011. EBITDA plus rental expense/(net interest expense plus rental expense).
topic D. key rIsks Food safety and sanitation There is a risk that a serious food-poisoning incident could occur at a Collins Foods KFC or Sizzler restaurant as a result of an operational lapse in food safety or sanitation procedures or malicious tampering. The occurrence of a serious food-poisoning incident at a KFC or Sizzler restaurant (including restaurants operated by others as discussed below under Brand and reputation calamity) is likely to have very significant consequences for Collins Foods like-branded restaurants. security of supply chain There is a risk that the supply chain for one or more of Collins Foods restaurants could be materially disrupted (for example, by the occurrence of a natural disaster or industry-wide event) with the result that sufficient quantities of supplies are not delivered on time. There is a risk that Yum! could terminate KFC franchise arrangements with Collins Foods as a result of a material breach by Collins Foods of its obligations to Yum! under those arrangements (including to refrain from damaging the KFC brand, a failure to upgrade its KFC restaurants to Yum!s brand standards, or if a person acquires control of Collins Foods without Yum!s prior consent). There is a possibility that this would result in Collins Foods being unable to conduct any business from the KFC restaurants sites, or unable to conduct a business that generates revenues equal to those currently being generated, or the cessation of business at all sites and the sale of the business assets to a third party or to Yum!. change in regulation There is a risk that laws or regulations could be introduced that seek to reduce the advertising or consumption of foods sold by QSRs generally which would affect Collins Foods KFC restaurants and potentially its Sizzler restaurants. Collins Foods is not aware of any specific proposals that are currently being considered in Australia (and it is therefore difficult to ascertain the likely consequences for Collins Foods of any such development); however, there is the potential for such measures to materially reduce revenues, increase its costs or cause both to arise. There is a risk that some incident beyond the control of Collins Foods could occur which would have the effect of reducing consumer confidence or preferences for the KFC or Sizzler brands or for any of the component products sold by those businesses, such as: The occurrence of a food safety incident at a KFC or Sizzler restaurant belonging to a separate franchisee elsewhere in Australia or overseas; A widespread loss of consumer confidence in one or more products; or A widespread loss of consumer confidence in the food safety procedures in the industry as a whole. The consequences of such an incident could be very significant for either or both of Collins Foods KFC and Sizzler restaurants. Section 4.1.4 Section 4.1.2 Section 4.1.1 summary For more information
relationship with yum! (termination for non-compliance)
Section 4.1.3
Brand and reputation calamity
Section 4.1.5
topic Failure of growth driver (open insufficient number of new restaurants) Failure of growth driver (insufficient successful new products and ltos) reduction in customer numbers
summary There is a risk that Collins Foods could be unable to open new KFC or Sizzler restaurants in accordance with its capital expenditure programme. The effect of this would be reduced or no growth for the relevant Collins Foods business. There is a risk that Collins Foods could be unable to offer a sufficient number of successful new products or limited time offers at its KFC and Sizzler restaurants, which could potentially result in reduced or negative organic growth. There is a risk that economic conditions in or consumer sentiment affecting the markets in which Collins Foods operate could deteriorate, with the potential result that customer numbers reduce leading to lower or negative organic growth. A failure by management to supervise closely the day to day operations of its restaurants and other aspects of the business of Collins Foods may result in reduced revenues and increased costs.
For more information Section 4.1.6
Section 4.1.7
Section 4.1.8
Insufficient supervision of operations by management
Section 4.1.9
topic summary For more information
e. key INForMAtIoN oN the eXperIeNce AND BAckgrouND oF the DIrectors AND key MANAgeMeNt Directors Who is in control of collins Foods and what is their expertise? Russell Tate (Non-executive Chairman) experience Russell was an Executive Director of ASX listed STW Communications Group Limited from its IPO (as John Singleton Advertising) in 1994 to 2008. He was Group Managing Director/CEO from 1997 until 2006. He was Executive Chairman from 2006 to 2008 and Deputy Chairman from 2008 to 2011. Russell was appointed Executive Chairman of ASX listed Macquarie Radio Network Limited in 2009, a position he still holds. He is also Chairman of Central Coast Stadium Limited. Kevin Perkins (Managing Director and CEO) Kevin is a highly experienced manager in the QSR and casual dining segments of the Australian restaurant industry. He has had more than 32 years experience with Collins Foods, having overseen its growth both domestically and overseas over that time. Kevin is one of 13 franchisee presidents currently on the KFC International Brand Council. Newman Manion (Non-executive Director) Newman has had over 30 years experience in the food franchise industry, including over 29 years since 1982 in various roles with Yum!. Previously Newman served as a board member for KFC Japan (from 2005 to 2008), general manager of KFC operations in Australia and New Zealand (from 1995 to 2004), development director of PepsiCo restaurants (including KFC) in Australia (from 1990 to 1995) and general manager of KFC New Zealand (from 1988 to 1990). Most recently Newman was Vice-President, Operations for Yum!s Asian franchise business (from 2004 until 2010). Bronwyn Morris (Non-executive Director) Bronwyn is a professional director with an executive career background in accounting and finance. She worked for KPMG for over 20 years, including seven years as partner. Bronwyns current roles include director of Spotless Group Limited, QIC Limited, Care Australia, The Royal Automobile Club of Queensland Limited and Gold Coast 2018 Commonwealth Games Bid Limited. Bronwyn is also currently a member of the Queensland Council of the Australian Institute of Company Directors. She is Chairman of the Audit, Finance and Risk Committee of Spotless Group Limited. Bronwyn is a former director of other companies including Stanwell Corporation Limited, Colorado Group Limited and Taylors Group Limited, and a former Councillor of Bond University. Section 5.1
Russell Tate, Newman Manion and Bronwyn Morris were appointed non-executive directors of Collins Foods Limited following its incorporation on 10 June 2011. Kevin Perkins was appointed executive director on 15 July 2011.
topic Who is in control of collins Foods and what is their expertise? (continued)
summary senior Management Kevin Perkins (Managing Director and CEO) Simon Perkins (CFO) experience See page 14
For more information Section 5.2
Simon joined Collins Foods in 1994, and has been CFO since 1995. Prior to Collins Foods he worked at accounting firms Deloitte, Haskins & Sells (1979 to 1986) and Coopers & Lybrand (1986 to 1989). Between 1989 and 1994, Simon held accounting related positions with Daikyo Australia, ARCO Coal and Biggs & Biggs Francis McGregor. Martin joined Collins Foods in 1980 and has worked as an Assistant Manager (1982 to 1984), restaurant general manager (1984 to 1988), area manager (1988 to 2006), Director of Operations (2006 to 2008) leading up to his current role overseeing Collins Foods KFC operations since 2009. James joined the Collins Foods business in 1983 and prior to his current position as Sizzler CEO, held positions including State Manager of Sizzler WA, Director of Group Services and as General Manager of Sizzler Australia/Asia. He is currently responsible for the strategic development of the Sizzler brand in Australia and Asia. John has been with Collins Foods for over 22 years. His role includes responsibility for purchasing, supply logistics and distribution, and information needs. Prior to joining Collins Foods, John spent 20 years in the Australian Defence Force, achieving the rank of Lieutenant Colonel. In addition to senior Management, Collins Foods KFC business has 40 divisional employees, over 440 restaurant managers and approximately 600 full time and 3,900 casual and part time staff. Collins Foods Sizzler Australia business has 22 divisional employees, over 130 restaurant managers and approximately 200 full time and 2,000 casual and part time staff.
Martin Clarke (CEO KFC)
James Ryan (CEO Sizzler Australia)
John Hands (CSO / CIO)
other employees
topic summary For more information
F. sIgNIFIcANt INterests oF key people AND relAteD pArty trANsActIoNs key people What significant benefits and interests are payable to Directors and other persons connected with the issuer or offer? Management (including Kevin Perkins) Funds advised by Pacific Equity Partners and other Existing Investors Non-executive Directors Advisers and other service providers existing Investors Who are the owners of collins at the date of this prospectus and are they retaining an interest? Interest or benefit Sale of interest in Collins Foods Remuneration Sale of interests in Collins Foods Section 6.1.6 Section 6.1.6 Section 5.3.1 Section 6.1.2
Directors fees Fees for services retained interest in collins Foods on completion of the offer 0.0% 7.5% 1.5% 4.2%
Funds advised by Pacific Equity Partners Kevin Perkins Other members of Management Other investors For more information, including the expected ownership structure of Collins Foods on Completion of the Offer, please refer to section 6.1.6
Section 6.1.6
g. proposeD use oF FuNDs AND key terMs AND coNDItIoNs oF the oFFer Who is the issuer of the prospectus? What is the offer? What is the purpose of the offer? Collins Foods Limited, a company incorporated in Victoria, Australia (ACN 151 420 781). The Offer is an initial public offering by invitation of Collins Foods Limited of 80.7 million Shares. The purpose of the Offer is to enable a wholly owned subsidiary of Collins Foods Limited to purchase Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd (the companies that own the Collins Foods businesses in Australia and Asia respectively) from the Existing Investors and to provide Collins Foods Limited with: Additional financial flexibility to pursue growth opportunities and improve access to capital markets as a result of its listing on ASX; Provide a liquid market for its Shares and an opportunity for others to invest in Shares in Collins Foods Limited; and Funds to pay in part existing debts of the Collins Foods businesses and Offer costs (as described further in section 6.1.2). The Offer also provides the Existing Investors with an opportunity to realise all or part of their investment in Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd. Section 6.1.3 Section 6.1 Section 6.1.1
topic Will the shares be listed?
summary Collins Foods Limited will apply to ASX for admission to the official list of ASX and quotation of Shares on ASX under the code CKF. Completion of the Offer is conditional on ASX approving this application. If approval is not given within three months after such application is made (or any longer period permitted by law), the Offer will be withdrawn and all Application Monies received will be refunded without interest as soon as practicable in accordance with the requirements of the Corporations Act. The Offer comprises: The Broker Firm Offer; and The Institutional Offer. Yes. The Offer is fully underwritten by the Joint Lead Managers. For Broker Firm Offer participants, it will be a matter for Brokers as to how they allocate Shares among their retail clients. No brokerage, commission or stamp duty is payable by Applicants on acquisition of Shares under the Offer. Shareholders will be subject to Australian tax on dividends. The tax consequences of any investment in the Shares will depend upon an investors particular circumstances, particularly for non-resident Shareholders. Applicants should obtain their own tax advice prior to deciding whether to invest. It is expected that initial holding statements will be despatched by standard post on or around 5 August 2011.
For more information Section 6.9
how is the offer structured?
Section 6.3 Section 6.4
Is the offer underwritten? What is the allocation policy? Is there any brokerage, commission or stamp duty payable by Applicants? What are the tax implications of investing in the shares?
Section 6.5 Section 8.2 Section 6.3.5 Section 6.2
Section 8.6
When will I receive confirmation that my Application has been successful? When will dividends on the shares be paid?
Section 6.3.6
Collins Foods expects to pay a fully franked dividend of 11.8 cents per Share in FY2013 with respect to earnings generated from Completion of the Offer to 29 April 2012, which represents an annualised dividend yield of 6.4%. No interim dividend will be paid for the half year period ending 16 October 2011. Thereafter Collins Foods is targeting a dividend payout ratio of at least 50% of statutory NPAT. Depending on available profits and the financial position of Collins Foods Limited, it is the current intention of the Board to pay an interim dividend each December and a final dividend each July. The Board of Directors can provide no guarantee as to the future dividend policy, the extent of future dividends or the level of franking or imputation credits applying to such dividends, as these will depend upon, among other things, the actual levels of profitability and the financial and taxation position of Collins Foods Limited at the time.
Section 3.10
how can I apply?
You may apply for Shares by completing a valid Application Form (attached to or accompanying this Prospectus). To the extent permitted by law, an Application by an Applicant under the Offer is irrevocable.
Section 6.3.2
topic Where can I find more information about this prospectus or the offer? summary Call the Collins Foods Offer Information Line on 1800 622 202 (toll free within Australia) or +61 2 8280 7694 (outside Australia) from 8.30am until 5.30pm (AEST) Monday to Friday. If you are unclear in relation to any matter or are uncertain as to whether Collins Foods Limited is a suitable investment for you, you should seek professional guidance from your solicitor, stockbroker, accountant or other independent and qualified professional adviser before deciding whether to invest. can the offer be withdrawn? Collins Foods Limited reserves the right not to proceed with the Offer at any time before the issue of Shares to successful Applicants. If the Offer does not proceed, Application Monies will be refunded. No interest will be paid on any Application Monies refunded as a result of the withdrawal of the Offer. Section 6.8 For more information Section 6
2 coMpANy oVerVIeW
Sizzler steak with salt and pepper calamari
2 coMpANy oVerVIeW
2.1

What is Collins Foods and its business?

Operator of 117 KFC restaurants in Queensland and two in New South Wales and is Australias largest KFC franchisee by number of restaurants; Operator of 26 Sizzler restaurants in Queensland, Western Australia and New South Wales; Owner of Sizzler trademarks in Australia and more than 68 other countries 1; and Franchisor of 59 Sizzler restaurants in Asia, predominantly located in Thailand, Japan and China.
Collins Foods is a major restaurant operator in Australia. It is the:
Collins Foods Australian operations date back to 1969 when Collins Foods opened the first KFC restaurant in Queensland. Collins Foods opened its first Australian Sizzler restaurant in 1985 in Brisbane (see timeline on page 21).
2.2
KFC
2.2.1 What is KFCs position in the Australian restaurant industry?

KFC restaurants operate in the quick service restaurant (QSR) market which is a segment of the Australian restaurant industry. Restaurants in the QSR market seek to differentiate themselves from other restaurant formats through a focus on convenience, consistency, speed of service and value for money. The QSR market comprises both chained and non-chained restaurant formats. KFC restaurants are part of the chained format, which is the faster growing component of the QSR market. Chained QSR restaurants can benefit from well known branding and efficiencies associated with standardised restaurant formats and menus, and centralised administration. In 2011, Euromonitor International forecast the chained QSR market to generate total revenue in Australia of approximately $11.0 billion, and grow at a CAGR of 8.0% from 2011-2013 2. the Australian Qsr market Australian QSR market(a)
Actual 2008-2010 CAGR Chained = 10.6% Non-chained = 3.4% Total = 8.1% Forecast 2011-2013 CAGR Chained = 8.0% Non-chained = 3.7% Total = 6.8% 16.7 4.8 17.8 5.0
Chained QSR participants by outlet numbers(b)

11.6% 4.6% 5.0% 5.2% 6.3% 12.8 6.7% 7.8% 11.1% Subway McDonalds KFC Dominos Red Rooster Hungry Jacks Eagle Boys Pizza Hut Nandos Others 14.7% 27.0%
20.0
Revenue $ billion
15.0 12.4 4.2 10.0 8.2 5.0
13.5 4.3
14.5 4.5
15.6 4.7
9.2
10.0
11.0
11.9
0.0 2008 2009 2010 2011 2012 2013
(a)
Based on nominal revenue. Non-chained comprises Independent 100% home delivery/takeaway and Independent Fast Food and Chained comprises Chained Fast Food and Chained 100% home delivery/ takeaway. Source: Euromonitor International Ltd.: Passport data (May 2011) December Y/E. Information in the Prospectus attributed to Euromonitor has been prepared from independent market research carried out by it and includes forward looking statements. This information is not fact nor its outcomes guaranteed by any person. Investors are cautioned not to place undue reliance on forward looking statements. 1 2
Based on major chain number of outlets in Australia. Source: BIS Shrapnel Pty Ltd Fast Food in Australia 2011.
(b)
Excluding the United States, Guatemala and Puerto Rico. Euromonitor International Ltd.: Passport data (May 2011) December Y/E. Information in the Prospectus attributed to Euromonitor has been prepared from independent market research carried out by it and includes forward looking statements. This information is not fact nor its outcomes guaranteed by any person. Investors are cautioned not to place undue reliance on forward looking statements.
collINs FooDs tIMelINe 1968

Collins Foods obtains KFC franchise in Queensland
1969
Collins Foods opens its first KFC restaurant in Kedron, Queensland
1979
Collins Foods introduces drivethrough format to Australia
1984
Original Fillet Burger introduced
1985
Collins Foods opens its first Sizzler restaurant in Australia Collins Foods opens 50th KFC restaurant
1989
Collins Foods introduces its first food court restaurant format for KFC
1992
1994
1997
Kevin Perkins appointed President and CEO of the business operating Collins Foods
2005
Management and funds advised by Pacific Equity Partners acquire Collins Foods Headquarters moved to Brisbane, Australia
2011
Collins Foods owns and operates 119 KFC and 26 Sizzler restaurants in Australia, and franchises 59 Sizzler restaurants in Asia
Collins Foods expands Kevin Perkins Sizzler into Asia appointed CEO of the NYSE-listed, former holding company of Collins Foods
Major competitors within the Australian QSR market include chained restaurant formats such as Red Rooster, Oporto and Nandos (chicken-based), McDonalds and Hungry Jacks (burger-based), Dominos Pizza, Pizza Hut and Eagle Boys (pizza-based) and Subway (sandwich-based). Other competitors include non-chained formats such as independent fast food and takeaway restaurants. Queensland is forecast to be Australias fastest growing state when measured by forecast growth in population and gross State product. Collins Foods expects this to support growth of the Queensland QSR market. As one of the largest QSR operators in Queensland by number of restaurants, Collins Foods is well positioned to benefit from this growth. Queensland market dynamics Forecast (2011-2020 CAGR) Population Forecast (2011-2020 CAGR) gross State product(a) Chained QSR participants by outlet numbers(b)
13.4% QLD WA NT VIC ACT NSW SA TAS 0.0% 0.7% 0.5% 0.5% 1.0% 1.5% 2.0% 1.9% 1.8% 1.6% 1.3% 1.2% 1.1% QLD NT WA VIC NSW ACT TAS SA 0.0% 4.9% 4.5% 3.7% 2.8% 2.7% 2.7% 2.4% 1.7% 2.0% 4.0% 6.0% Subway McDonalds Eagle Boys KFC 3.7% 4.7% 5.7% 8.6% 8.7% 8.7% Red Rooster Dominos Hungry Jacks Pizza Hut Nandos Others 10.2% 12.3% 24.1%
(a) Gross State product (constant prices). Source: Deloitte Access Economics Business Outlook (March quarter 2011).
Based on major chain number of outlets in Queensland. Source: BIS Shrapnel Pty Ltd Fast Food in Australia 2011.
(b)
2 coMpANy oVerVIeW
2.2.2 What is the scale of Collins Foods KFC business and where is it located?
Collins Foods 117 Queensland KFC restaurants are located in key population centres. Its restaurants are spread throughout Brisbane (53 restaurants) and regional centres and towns (64 restaurants). Collins Foods KFC locations Queensland(a) Collins Foods KFC locations Brisbane
Caboolture (3) Strathpine (2) Albany Creek Aspley Mareeba Atherton Mt Isa Cairns (5) Innisfail Ingham Townsville (6) Ayr Moranbah Emerald Mackay (2) North Ipswich Ipswich (3) Everton Park Grovely
Deception Bay Redcliffe North Lakes Kallangur Deagon
Chermside Kedron Clayfield Wynnum Kelvin Grove Morningside Cleveland BRISBANE (3) Capalaba (3) Kangaroo Pt Greenslopes Upper Mt Gravatt Indooroopilly (2) Annerley Carindale (2) Mt Ommaney Inala Acacia Ridge Springwood Sunnybank (2) Woodridge Loganholme (2) Beenleigh
QLD
Rockhampton (4) Gladstone (2)/Bundaberg (2)/ Biloela Hervey Bay/Maryborough/Gympie Kingaroy/Roma/ Sunshine Coast (4) Dalby/Nambour BRISBANE (53) Toowoomba (5) Gold Coast (17) Warwick Tweed Heads (2)
Springfield Browns Plains (2) Marsden
(a) Includes two restaurants located in Tweed Heads, NSW Locations have one restaurant unless otherwise indicated
Collins Foods believes that the scale and distribution of its KFC restaurant network provides a number of benefits including: Limited reliance on the earnings of any particular restaurant with no individual KFC restaurant contributing more than 3% to Collins Foods KFC EBITDA 1 in FY2011; Close proximity of its restaurants to existing and potential customers; High brand exposure, stemming from increased effectiveness of advertising campaigns; Enhanced ability to secure new sites (given its status as a large, established operator of restaurants); Position as a significant and valuable franchisee to Yum!; Ability to relocate staff between restaurants to optimise staffing levels; Economies of scale which facilitate a significant shared services platform (refer section 2.5); and The financial capacity to recruit and retain high quality staff and management.
Collins Foods believes that it would be difficult for a new QSR market entrant to establish a comparable network in Queensland for a reasonable economic cost given the capital outlay expected to be required to do so.
EBITDA before corporate costs.
2.2.3 What KFC restaurant formats does Collins Foods operate?

Collins Foods operates a variety of formats for its KFC restaurants. The formats are: Free standing drive through (FSDT) restaurants; Food court restaurants; and In-line restaurants.
This enables Collins Foods to position its KFC restaurants in more locations and service a greater cross section of customers. It also enables Collins Foods greater flexibility in establishing new restaurants, as it is able to select a restaurant format to target its specified geography and customer type. KFC restaurant formats FsDt 82 restaurants Stand-alone restaurants Dedicated internal and/or external seating Drive through and car park facilities Typically serve larger meal bundles (such as family meals), resulting in larger customer spend Food court 30 restaurants Restaurants located in shopping centres and food court areas Seating shared with other food operators Typically serve individual meal sizes and target lunchtime meals In-line 7 restaurants Restaurants located in shopping strips Street frontage in-line with other shops Dedicated internal seating Serve a combination of individual meal sizes and larger meal bundles
Deagon
Australia Fair, Gold Coast
Surfers Paradise, Gold Coast
2 coMpANy oVerVIeW
2.2.4 What are the KFC products and who are the customers?
KFC chicken offerings are sold in a variety of formats, including pieces, burgers and wraps. KFC restaurants also offer a variety of snacks to complement its main offerings, such as Crispy Strips, Popcorn Chicken and Krushers. Collins Foods believes its KFC product offering provides the following competitive benefits: Product freshness and quality (with between four and seven deliveries of fresh products into each restaurant per week); Recognised flavour from KFCs secret blend of 11 herbs and spices; Sale of chicken on a per-piece basis enables application of marinade (giving KFC its flavour profile), and improves portability of the product. This enables a higher gross margin than if sold on a per-chicken basis; and Faster cooking time compared to barbecuing techniques.
These benefits assist Collins Foods to provide a consistent product offering and convenient service to its customers. KFC products cater to different customer demands at various times throughout the day. The lunchtime (10am-3pm) and snacking (3pm-5pm) trade typically targets males in the 18-24 age demographic with individual meal offerings, whereas dinner (5pm onwards) primarily caters to the family market through full meal replacement bundles. In FY2011, individual and family meals represented approximately 96% of Collins Foods KFC sales. Collins Foods can vary the prices of its KFC products across its restaurants. This enables it to adjust prices to allow for regional variations; for example, higher delivery costs for restaurants in regional areas. Collins Foods offers new products and LTOs in its KFC restaurants to maintain and grow sales from existing restaurants, as well as sustain brand awareness among its customers, reach new consumer demographics and address different parts of the day. (Further details on the development of new products and LTOs are provided in section 2.2.8.) Since January 2006, Collins Foods has introduced 27 new KFC products to its KFC restaurants. Key examples of new products include the All Stars Box, Mega Bucket and Krushers. Individual meals 60% of FY2011 KFC revenue Family meals 36% of FY2011 KFC revenue snacks 4% of FY2011 KFC revenue
ltos Percentage of revenues included in individual meals and family meals above
2.2.5 What are the KFC advertising and marketing arrangements?

The KFC brand, one of the most recognised food brands in Australia, provides Collins Foods with a competitive advantage when advertising and marketing its products. Leading brand awareness in Australia
90 80 70 60 Unprompted 50 40 30 20 10 0 40 50 Oporto 60 Nandos Hungry Jacks Subway Red Rooster Pizza Hut Dominos Pizza Eagle Boys Pizza Muffin Break 70 Prompted Donut King 80 Gloria Jeans Wendys 90 100 McDonalds
Source: BIS Shrapnel Pty Ltd Fast Food in Australia 2011. Unprompted awareness: Respondents were asked which chains came to mind when thinking of fast food and snack food chains. Prompted awareness: Respondents were asked which chains they were aware of from a list of fast food and snack food chains.
To maintain and promote the awareness of the KFC brand, KFC franchisees in Australia typically invest at least 6% of annual revenue in advertising and promotion. This comprises 5% of annual revenue paid to ADCO which operates as a national KFC advertising body, and at least a further 1% of annual revenue spent on local advertising and marketing. Yum! also contributes funds to ADCO in respect of its own KFC restaurant network in Australia. There are four directors of ADCO nominated by Australian franchisees (including one director nominated by Collins Foods), and four directors nominated by Yum! (including currently the Chair who holds a casting vote). Examples of the national advertising and marketing operations of ADCO include: Advertising of the KFC brand and its products on television every week of the year. Typically, two LTO promotions run simultaneously, with one of these promotions aimed at the individual meal segment and the other aimed at the home meal replacement segment. KFC LTOs aim to promote product freshness and innovation, and provide a call to action to both potential and existing customers; and Sponsorship of a number of high profile events and organisations such as Cricket Australia (through events such as the KFC Twenty20 Big Bash) and World Hunger Relief. The development and maintenance of a strong and consistent brand throughout Australia; Participation in the sponsorship of prominent events and organisations that would be difficult or impossible to sponsor on an individual operator basis; and The production and execution of quality marketing programmes.
This national marketing provides a number of benefits to Collins Foods including:
2.2.6 What are the KFC supply arrangements?

Collins Foods can use the Yum! supply network, comprising suppliers that Yum! has sourced, or can select its own suppliers, provided that they meet standards mandated by Yum!. Yum! negotiates material supply contracts in consultation with the Yum! Supply Council, which comprises representatives from both Yum! and major franchisees. Collins Foods holds one of the six seats on this council. This allows Collins Foods to convey its views on the purchasing and other supply arrangements made available via the Yum! supply network. Collins Foods works to maintain strong, long-standing relationships with key suppliers (including suppliers of chicken and other key inputs) by undertaking periodic business reviews and joint efficiency initiatives. Collins Foods size assists it to secure required supply volumes at competitive prices. To the extent practicable, Collins Foods agrees pricing for key commodities in advance to assist it to forecast its forward cost structure. Pricing for over 90% of key commodities for its KFC restaurants is already contracted for FY2012.
2 coMpANy oVerVIeW
2.2.7 What is the relationship with Yum!, the owner of the KFC brand?
Yum! is one of the worlds largest restaurant chains in terms of system restaurants and is the global owner and franchisor of the KFC brand. Yum! operates in over 100 countries and territories with nearly 38,000 restaurants, including more than 15,000 owned or franchised KFC restaurants. Collins Foods receives a number of benefits from its relationship with Yum!, including: Use of the highly recognised KFC brand, and associated intellectual property; Access to products and marketing strategies developed by Yum!s investment in research and development; Participation in national KFC advertising and marketing arrangements; Ongoing training and assistance; and Access to the Yum! supply chain and buying power, which can assist to reduce supply costs.
Collins Foods operates all its KFC restaurants under single-site franchise agreements and various ancillary agreements (discussed further below) with Yum! as franchisor. Upon Completion of the Offer, Collins Foods will pay upfront franchise fees 1 and new franchise agreements with Yum! will commence for 116 Collins Foods KFC restaurants, with an average term of approximately 10 years 2. Upon expiry, Collins Foods also has the option to renew each of those franchise agreements for a further 10 years on payment of the required fee at the time of renewal 3. Under these franchise agreements, Collins Foods must pay a royalty fee of 6% of annual revenues of its KFC restaurants to Yum!. While currently the only KFC operator in Queensland, Collins Foods does not have exclusive rights to operate KFC restaurants in that state. Refer to section 8.1 for a summary of key terms and conditions of these arrangements. Franchise arrangements with Yum! are significant to Collins Foods KFC business. In addition to royalty and advertising arrangements, Collins Foods has a number of further obligations under the franchise agreements, including ensuring its KFC restaurants are upgraded to the brand standards mandated by Yum! (refer to sections 2.2.8 and 8.1.2). If Yum! terminated or refused to renew a franchise agreement for a particular site, Collins Foods could not continue to operate that site as a KFC restaurant (or certain other types of restaurant refer to sections 4.1.3 and 8.1.1). Collins Foods intends to continue to maintain a close working relationship with Yum! and adhere to Yum!s branding and refurbishment requirements. Collins Foods continues to work closely with Yum! through its membership of a number of KFC councils which oversee key areas of KFC operations in Australia. These include ADCO, the Supply Council, the Development Council and the Operations Council. As Australias largest KFC franchisee, Collins Foods is an active member of these councils.
2.2.8 What are the strategies for KFC?

Collins Foods KFC strategy is to remain one of the pre-eminent QSR restaurant operators in Queensland, with growth strategies focusing on: Expanding product range and day parts; Refurbishing its existing restaurant network; Establishing new restaurants; Ongoing operational excellence; and If appropriate acquisition opportunities arise, it will also consider expanding into other states of Australia (subject to Yum! approval).
Expanding product range and day parts The introduction of new products and the expansion of existing products to target new day parts is designed to increase the revenue and profitability of existing restaurants. Future initiatives for Collins Foods in this area may include: Extending opening hours to target different parts of the day: Late night trading hours have been trialled at 10 KFC restaurants on the Gold Coast and Brisbane in 2010, with further testing being considered by Collins Foods; and Evaluating the introduction of a breakfast menu. This is currently being trialled by Yum! at Sydney Airport.
1 2 3
The franchise fee is $43,800 (plus GST) per KFC restaurant, which will be paid out of available cash. Collins Foods has decided not to renew agreements for three of its restaurants as it plans to close these restaurants within the next five years. The renewal fee is 50% of this initial amount (refer to footnote 1 above), indexed by an agreed US consumer price index, per restaurant.
Regularly refreshing the existing product range and improving operations: Introducing new product initiatives and LTOs, including those targeted at the growing in-between meal snacking market; and Introducing new cooking procedures; for example, Collins Foods plans to roll-out the use of high oleic canola oil in its KFC restaurants to reduce the amount of saturated fat in products.
Day parts(a) 6am Breakfast 10am Lunch 3pm Snacking 5pm Dinner 10pm Late night 1am
(a)
Solid red (lunch and dinner) represents current core business and light red represents expansion opportunities.
Refurbishing existing KFC restaurants Collins Foods has an active programme to refurbish existing restaurants. Restaurant refurbishments aim to improve the appearance of the restaurant, increase seating capacity, increase speed of service and throughput and/or restructure behind-the-counter meal preparation areas. These refurbishments seek to improve revenue, labour efficiency and cost control. The table below describes the types of restaurant refurbishment and provides an indication of the historic per restaurant capital expenditure for each type of refurbishment. $ million refurbishment type Rebranding Description A rebrand ensures the restaurant remains at minimum Yum! brand standard Upgrades to the restaurant are focused on improving the appearance of the restaurant to customers (such as signage) Reimaging A restaurant reimage typically improves the facilities, seating, layout and back of house operations There is generally a higher capital expenditure for a reimage than a rebrand Relocation A relocation is the closure of a restaurant and reopening at another location This occurs when either an appropriate lease renewal cannot be renegotiated or the site no longer satisfies the demographic profile Rebuild
(a)
historic capital expenditure FsDt 0.1-0.5 In-line 0.2-0.3 Food court 0.1-0.3
0.8-1.0
n/a
n/a
0.7 (a)-3.0
n/a
0.6
A complete rebuild on an existing site location
0.7 (a)-3.0
n/a
0.6
Unique FSDT as part of a service centre.
2 coMpANy oVerVIeW
A range of factors affect the success of a restaurant refurbishment, including restaurant location, the extent and nature of the QSR competition the restaurant faces, the proximity of the restaurant to other existing KFC restaurants as well as the prevailing economic conditions at the time of refurbishment. Since September 2005, Collins Foods has refurbished 35 of its KFC restaurants. These refurbished restaurants generated an average weighted cash return on invested capital (ROIC) of 24% 1 in the year following completion of the refurbishment. $ million Refurbishment type Location Restaurant format Refurbishment date Capital expenditure (b) Sales pre refurbishment Year 1 sales (post refurbishment) EBITDA pre refurbishment Year 1 EBITDA (post refurbishment) EBITDA uplift (%) Year 1 ROIC
(a) (b) (c) (d) (e)
collins Foods: example kFc restaurant refurbishments(a) Rebrand Myer Centre Food court April 2008 0.3 2.4 2.8 0.5 0.5 17% 29% (c) Reimage Relocation/rebuild Greenslopes FSDT May 2006 0.8 1.8 2.6 0.4 0.6 66% 31% (c) Capalaba FSDT January 2009 2.2 n/a 3.6 n/a 0.6 n/a
(d) (d) (d)
Average since September 2005 November 2005September 2009 0.8 n/a (d) 2.5 n/a (d) 0.5 n/a (d) 24% (e)
28% (d)
Past performance of a particular location is not a reliable indicator of future performance at those or other locations. Collins Foods contribution to capital expenditure, excluding landlord contribution (if any). ROIC measured as (Year 1 EBITDA post refurbishment less EBITDA pre refurbishment)/capital expenditure. ROIC measured as Year 1 EBITDA/capital expenditure. Relocation and rebuild returns treated as new restaurants therefore do not have pre refurbishment sales or EBITDA. Average across all refurbishments since September 2005.
Collins Foods intends to refurbish 22 KFC restaurants in FY2012 and a further 62 restaurants over the following four years, which is consistent with Collins Foods obligations under its arrangements with Yum! to ensure that all of its restaurants satisfy Yum!s brand standards by that time. All of these restaurants have been identified by Collins Foods and approved for refurbishment by Yum! subject to Yum!s approval of specific refurbishment plans. Refer to sections 8.1.1 to 8.1.2 for further information on these arrangements with Yum!. Following this period, Collins Foods intends to maintain a regular refurbishment programme consistent with its ongoing business strategy and franchise obligations. The table below shows the incremental forecast FY2012 revenue and EBITDA impact of the restaurant refurbishment plan, as well as the estimated incremental annualised contribution. Incremental Fy2012 earnings from the restaurant refurbishment plan $ million Revenue EBITDA
(a) Annualised for 12 months contribution, indicative measure only.
Fy2012 0.9 0.2
estimated annualised contribution(a) 6.7 2.2
Eight of the 35 restaurants have been excluded from the historic ROIC calculations; seven as they have not traded for a full year, and an additional restaurant which experienced abnormal trading as part of an overall shopping centre redevelopment. Rebranding and reimaging ROIC measured as (Year 1 EBITDA post refurbishment less EBITDA pre refurbishment)/capital expenditure. Relocation and rebuild ROIC measured as Year 1 EBITDA/capital expenditure. Relocation and rebuild returns treated as new restaurants therefore do not have pre refurbishment sales or EBITDA.
Establishing new KFC restaurants Collins Foods has an active programme for the establishment of new restaurants. Further details on its processes for locating and developing sites are provided in section 2.5.1. In FY2012, Collins Foods plans to open six new KFC restaurants at sites which have already been identified. A further 19 geographic areas that Collins Foods believes could be suitable for new restaurant sites in the following four years have also been identified, and are currently being investigated. Yum! has agreed to the development of seven sites per year in Queensland for the next five years (subject to site availability and final Yum! approval). The table below shows the forecast FY2012 revenue and EBITDA impact of new restaurants, as well as the estimated annualised contribution. $ million Revenue EBITDA
Fy2012 3.6 0.4
Collins Foods has achieved strong average returns from the establishment of new restaurants. There have been 12 new KFC restaurants opened since September 2005, which have generated an average weighted cash ROIC of 38% 1 per restaurant in the year following opening. The majority of restaurants opened since September 2005 have been located in food courts, which incur a lower average build cost compared to the FSDT format. Collins Foods also assesses the closure of restaurants in appropriate circumstances. For example, it has closed restaurants if commercial renewal terms could not be reached with the lessor, or if management believed that the demographics or market conditions at a particular restaurant no longer supported the restaurant. Collins Foods has closed five restaurants in the last five years, and expects to close three restaurants within the next five years. $ million Location Restaurant format Opening date(s) Capital expenditure Year 1 sales Year 1 EBITDA Year 1 ROIC
(a) (b)
(b)
collins Foods: example kFc restaurant roll-outs(a) Riverlink Food court April 2007 0.5 1.6 0.3 52% Plainlands FSDT, service centre August 2009 0.8 2.2 0.3 38% Average since September 2005 October 2005August 2009 0.8 1.8 0.3 38%
Actual historical restaurant case studies. Note, past performance of a particular location is not a reliable indicator of future performance at those or other locations. ROIC measured as Year 1 EBITDA/capital expenditure.
Two of the 12 restaurants have been excluded from the historic ROIC calculations as they have not traded for a full year. Calculated as Year 1 EBITDA/capital expenditure (excluding landlord contribution, if any).
2 coMpANy oVerVIeW
Operational excellence
Collins Foods is continually focused on improving the KFC customer experience, the quality and skills of its workforce, and the speed of service. Improving these areas drives increased restaurant revenue, reduces costs and enhances profitability. Continuing to enrich the customer experience: Initiatives such as the CHAMPS mystery shopper programme (CHAMPS). Twice each month a mystery shopper employed by an external company assesses each KFC restaurant on a number of customer focused key performance indicators (cleanliness, hospitality, accuracy, maintenance, product quality and speed of service). Feedback is provided to Collins Foods to assist it to improve its operations and customer service. Employee skills training programmes aimed at improving customer service and nationally accredited retail and management traineeships Introducing self-ordering automated kiosks. This is currently being tested by Collins Foods at five restaurants, with further trials planned. To date, average customer spend at kiosks has been higher than at traditional front counters; The introduction of a tap and go contactless payment card system which will increase the speed of the customer order process; and Evaluating the introduction of an online ordering system, to drive revenue growth, assist in the optimisation of labour and service utilisation, reduce costs and increase profitability.
Staff training initiatives:
Automation and increasing speed of service:
Collins Foods annual KFC same store sales growth (SSSG) has averaged approximately 5.9% since FY2002. The expansion of KFCs product range and day parts, as well as initiatives of the nature referred to above, have also contributed to this growth. Collins Foods intends to pursue this strategy to drive KFCs SSSG in the future. SSSG FY2002-FY2012(a)
Actual 11.8 10.0 8.1 6.6 (%) 5.0 4.3 6.5 4.2 2.8 1.5 0.0 Average = 5.9% 9.5 9.9 Forecast
(5.0) FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 (b)
(3.7) FY2010 (b) FY2011 (b) FY2012 (c)
(a) (b) (c)
Past performance is not a reliable indicator of future performance. Refer to section 3.7 for management discussion and analysis. For more information, refer to section 3.8.
Collins Foods KFC restaurants recorded negative SSSG in FY2010, which Collins Foods believes was a result of weak economic conditions in Queensland attributable to the global financial crisis reducing consumer confidence and levels of activity in the tourism industry, competitors increasing the opening hours of their restaurants and lower than expected levels of sales of the Cayan Grill LTO. In the fourth quarter of FY2011, the rate of growth in total turnover was greater for the Queensland takeaway food services market than for the Australian takeaway food services market. Collins Foods KFC restaurants rate of SSSG was higher than the rate of growth in total turnover for the Queensland takeaway food services market in FY2011. Quarterly SSSG FY2010-FY2011 (%)(a)
20.0 15.0 10.0 5.0 0.0 (5.0) 0.7 1.3 6.0 2.5 %
KFC SSSG Queensland takeaway food services spend growth(b) National takeaway food services spend growth(c)
(3.3) (5.9) (5.3)
(3.7)
1QFY2010
2QFY2010
3QFY2010
4QFY2010
1QFY2011
2QFY2011
3QFY2011
4QFY2011
(a) Past performance is not a reliable indicator of future performance. (b) Turnover ($ million): Queensland takeaway food services, series ID A3349718A. (c) Turnover ($ million): Total (state) takeaway food services, series ID A3349388W. Source: Australian Bureau of Statistics, 8501.0 Retail Trade, Australia (April 2011): TABLE 11. Retail Turnover, State by Industry Subgroup, Original.
2 coMpANy oVerVIeW
Potential KFC consolidation opportunities There is a potential opportunity for Collins Foods to expand by acquiring KFC restaurants from smaller KFC franchisees in other Australian states, subject to approval from Yum!. Collins Foods has more than twice as many KFC restaurants in its network than the next largest franchisee in Australia. While Collins Foods is not currently involved in any such discussions, the ability to introduce Collins Foods systems, centralised shared service functions (discussed in section 2.5) and its scale advantages, may allow Collins Foods to generate performance improvements in acquired restaurants. Ownership of KFC restaurants in Australia
Number of restaurants by operator Collins Foods 119 Yum! owned and operated 160 Other 326 Total 605
5 0(e) 0
NT QLD(a)
119 1
45 2
WA
2 1(c) 40
SA NSW ACT
119 22(b) 82 8 0(d) 0 147 17 23
Number of franchised restaurants Number of franchisees Number of Yum! owned and operated restaurants
VIC
TAS
0 13
(a) (b) (c) (d) (e)
Including two restaurants in Tweed Heads, NSW, near the Queensland border. Three franchisees are also located in other states. One franchisee is also located in another state. One franchisee is also located in another state. Two franchisees are also located in other states.
2.3
Sizzler Australia
2.3.1 What is Sizzlers position in the Australian restaurant industry?

In Australia, Sizzler operates in the casual dining market, which is a segment of the Australian restaurant industry. Casual dining is characterised by a restaurant format that offers seated dining in a relaxed, informal atmosphere. Sizzler operates a pay first, unlimited self service model that allows customers to select, order and pay for their meals before being seated at a table. This model reduces costs by requiring fewer staff, and increases revenues through higher average table turns, than if Sizzler operated as a traditional table service restaurant. It also assists Collins Foods to offer customers value for money. In the casual dining segment, Sizzlers key competitors are: Licensed clubs including RSL, sports and surf lifesaving clubs; Pubs, hotels and bars; and Chained and non-chained cafs.
Key areas of competition among restaurants in the casual dining segment include location, food quality and innovation, value for money, child friendly atmosphere and speed of service. Collins Foods seeks to ensure that it offers its customers all of these factors across each of its Sizzler restaurants.
2.3.2 What is the scale of Collins Foods Sizzler business and where is it located?
Collins Foods owns and operates 26 Sizzler restaurants, primarily in Queensland, together with a presence in Western Australia and New South Wales. Sizzler Australia (number of owned and operated restaurants)
Cairns NT QLD WA Bundaberg Toowoomba SA NSW PERTH (5 restaurants) VIC ACT SYDNEY (3 restaurants) Townsville
Rockhampton Maroochydore BRISBANE (11 restaurants) Gold Coast
TAS
93% of people within reach of a Sizzler have visited at least once 65% of people within reach of a Sizzler have visited in the last 12 months 80% of customers have visited between once and three times a year, and 20% of customers have visited four or more times a year Over 80% of visits to a Sizzler are repeat visits
Being the owner of the Sizzler trademark in Australia and more than 68 other countries 1 has enabled Collins Foods to franchise 59 Sizzler restaurants in Asia, predominantly in Thailand, Japan and China. In FY2011, Sizzlers Australian restaurants contributed 98% of Sizzlers total revenue and are the focus of this section 2.3. Sizzlers Asian franchised restaurants contributed the balance (and are discussed further in section 2.4).
93% of people within reach 80% of customers have visited of a Sizzler have visited at between once and three times a Excluding the United States, Guatemala and Puerto Rico. least once year, and 20% of customers have 65% of people within reach of visited four or more times a year
2 coMpANy oVerVIeW
As with its KFC restaurants, the scale of Collins Foods Sizzler restaurant network provides a number of benefits including: Limited reliance on the earnings of particular restaurants, with no individual Sizzler restaurant contributing more than 10% to Collins Foods Sizzler EBITDA 1 in FY2011; Close proximity of its restaurants to existing and potential customers; High brand exposure and increased effectiveness and efficiency of advertising campaigns; Enhanced ability to secure new sites (given its status as a large, established operator of restaurants); and Economies of scale which facilitate a significant shared services platform (refer section 2.5) and ability to leverage the product sourcing scale of Collins Foods KFC business for common food inputs, such as chicken and beverages.
2.3.3 What Sizzler restaurant formats does Collins Foods operate?

Sizzler operates two restaurant formats, being free standing and shopping centre located restaurants. These formats enable Collins Foods to position its Sizzler restaurants in different locations and service a greater cross section of customers. Sizzler restaurant formats Free standing 18 restaurants Stand-alone restaurants Dedicated internal seating Dedicated car park facilities shopping centre 8 restaurants Restaurants located in major shopping strips Internal dedicated seating Typically located near the entertainment area of the shopping centre so as to capture the lunch and dinner trade
Redcliffe
Toowong
Sizzler restaurants are open to customers seven days a week for lunch and dinner, with the majority of restaurants opening for breakfast on Sundays.
2.3.4 What are the Sizzler products and service structures?

Sizzlers key product offering is its signature unlimited self service salad and beverage bar. The salad bar includes soups, salads, desserts and is the primary purchase for approximately 57% of customers. In addition, Sizzler offers various grilled items such as chicken, red meat and seafood. Menus and pricing structures vary during the day to meet changing customer demands. Collins Foods Sizzler restaurants promote quality, abundance, value, choice and convenience to their customers. All salads are produced fresh daily, which allows Collins Foods to maintain the quality of its core menu item. Sizzler has a dedicated food and menu development team whose role is to create new menu items to provide variety for customers. This is an important part of Collins Foods Sizzler strategy, as over 80% of visits to a Sizzler are repeat visits.
EBITDA before corporate costs.
Collins Foods sets the price of its salad bar and grill offerings after considering a range of factors including: minimum required margin levels, competitor pricing levels for equivalent offerings and overall customer sensitivity to certain price points. If required, Sizzler can vary the composition of the salad bar to adjust for changes in the availability and cost of ingredients in order to maintain its margins. salad bar grill items Fy2011 sizzler meal sales by menu item(a)
9% 7% 8%
8%
57% 11%
Salad bar Steak Seafood
Chicken Kids Others
(a)
By customer count. Excludes beverage bar as not classified as a meal, salad bar represents the percentage purchasing the salad bar only, dinner grill menus also include the salad bar.
Sizzler is targeted at families and women aged between 24 and 40 who Collins Foods understands seek consistent quality and convenient service that is family friendly and offers a variety of choice at reasonable prices.
2.3.5 What are the Sizzler advertising and marketing arrangements?

The Sizzler brand attracts customers to Collins Foods restaurants. To maintain and promote the awareness of the Sizzler brand, Collins Foods invests approximately 4%-5% of total Sizzler annual revenues on advertising and marketing. Collins Foods markets the Sizzler brand through television, direct mail, print, radio and social media. Three examples of Sizzlers advertising and marketing efforts include: Television advertising campaigns in Queensland and Western Australia to promote each seasonal menu; Sponsoring a 30 minute food-based radio programme in Queensland; and Sponsorship of various sporting teams including the Gold Coast Titans and the Oceans 38 Surf Life Saving competitions.
2.3.6 What are the Sizzler supply arrangements?

Collins Foods works to maintain strong relationships with existing suppliers, and seeks to leverage its KFC supply relationships where possible. Collins Foods Sizzler restaurants contract fewer inputs in advance of immediate requirements than its KFC restaurants given Sizzlers focus on seasonal produce, which assists in the regular variation of the composition of the salad bar.
2 coMpANy oVerVIeW
2.3.7 What are the strategies for Sizzler?
Collins Foods strategy for its Australian Sizzler business is to continue to offer customers value for money and variety of choice, underpinned by its signature salad bar. Collins Foods growth strategies for Sizzler Australia will focus on: Refurbishing existing restaurants; Opening new restaurants; and Operational initiatives and innovations to increase the efficiency, revenues and profitability of its existing restaurants.
Refurbishing existing Sizzler restaurants Collins Foods has an active programme to refurbish its existing restaurants. Through refurbishments, Sizzler seeks to increase in-restaurant seating capacity and modernise the overall restaurant layout with the goal of increasing customer numbers and restaurant profitability. Depending on the size and complexity, a refurbishment can cost between $0.2 million to $1.5 million. In FY2012, Collins Foods plans to refurbish four Sizzler restaurants. The table below shows the forecast FY2012 revenue and EBITDA impact of the restaurant refurbishment plan, as well as the estimated annualised contribution. $ million Revenue EBITDA
(a) (b)
Fy2012 (0.1) (b) (0.1) (b)
Annualised for 12 months contribution, indicative measure only. Negative contribution due to timing of restaurant closure and reopening late in FY2012.
Since 2007, Collins Foods has refurbished five of its Sizzler restaurants. These refurbished restaurants generated an average weighted cash ROIC of 18% 1 in the year following completion of the refurbishment. $ million Location Restaurant format Refurbishment date Capital expenditure (b) Sales pre refurbishments Year 1 sales (post refurbishments) EBITDA pre refurbishments Year 1 EBITDA (post refurbishments) EBITDA uplift (%) Year 1 ROIC (c)
(a) (b) (c)
collins Foods: example sizzler restaurant refurbishments(a) Toowong Shopping centre Dec 2007 1.1 2.7 3.8 0.2 0.4 109% 19% Maroochydore Free standing Aug 2008 0.7 4.0 4.6 0.6 0.7 23% 20% Redcliffe Free standing Nov 2008 1.1 2.8 3.6 0.3 0.5 71% 17% Average since 2007 1.0 3.2 4.0 0.4 0.5 51% 18%
Past performance of a particular location is not a reliable indicator of future performance at those or other locations. $ figures have been rounded to 1 decimal point. Collins Foods contribution to capital expenditure, excluding landlord contribution (if any). ROIC measured as (Year 1 EBITDA post refurbishment less EBITDA pre refurbishment)/capital expenditure.
Opening new Sizzler restaurants Collins Foods has an active programme to identify potential new Sizzler restaurant sites. In FY2012, it plans to open two new Sizzler restaurants and has fully agreed lease terms for one restaurant and identified the target geographical area for the second restaurant. It will cost approximately $3.0 million to build each of these new Sizzler restaurants. Collins Foods has also identified seven further geographical areas in Queensland, Western Australia and New South Wales that may be suitable for new Sizzler restaurants in the next four years.
Two of the five restaurants have been excluded from the historic ROIC calculations as they have not traded for a full year.
The table below shows the forecast FY2012 revenue and EBITDA impact of new restaurants, as well as the estimated annualised contribution. $ million Revenue EBITDA
Fy2012 2.6 0.3
Collins Foods is also investigating an alternative restaurant format, Sizzler Express which is a smaller footprint version of the current Sizzler restaurants. It is being assessed by Collins Foods for its potential to generate revenues in food court and kiosk locations where traditional Sizzler formats would not be suitable. Sizzler operational initiatives and innovations Operational initiatives and innovations have the potential to increase the efficiency, revenues and profitability of existing restaurants through: New menu items and improvements to its menu range. For example, recent changes to simplify Sizzlers menu had the effect of reducing order times and inventory levels and increasing the quality of the food served to customers; and Better labour and space utilisation in its restaurants.
Collins Foods annual Sizzler SSSG has averaged approximately 6.3% since FY2002. The implementation of operational initiatives and innovations have also contributed to this growth. Collins Foods intends to pursue this strategy to drive Sizzlers SSSG in the future. SSSG FY2002-FY2012(a)
Actual 8.4 7.5 7.7 7.1 6.7 7.6 7.0
9.0
Forecast
7.1 Average = 6.3%
(%)
5.0
2.5 1.1 0.0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 (b) FY2010 (b) FY2011 (b) FY2012 (c) 1.0 1.3
(a) (b) (c)
Past performance is not a reliable indicator of future performance. Refer to section 3.7 for management discussion and analysis. For more information, refer to section 3.8.
2 coMpANy oVerVIeW
2.4 Sizzler Asia
Collins Foods is the franchisor of 59 Sizzler restaurants in Asia, where its western style menu has an established track record and provides a platform for future growth. Its restaurants are located in Thailand, China, Singapore, Korea, Japan and the United Arab Emirates. In FY2011, system-wide sales generated by Collins Foods Sizzler franchisees in Asia were $98 million, of which the majority were in Thailand (57%) and Japan (24%). Sizzler Asias franchising model differs from Sizzler Australia (where Collins Foods owns and operates its own restaurants), and potentially enables Collins Foods to encourage the expansion of the Sizzler brand in Asia with lower capital requirements than under an owner/operator model. Another key difference is that Sizzler Asia offers a full service model given the relatively lower labour costs in Asia. Sizzler Asia(a) (number of franchised restaurants)
JAPAN (9) KOREA (2) CHINA (6)
THAILAND (39)
SINGAPORE (2)
(a)
One additional restaurant in the United Arab Emirates (not shown).
Under its franchise arrangements, Collins Foods has appointed a franchisee for each country (or in the case of China, a franchisee for each city) in which a Sizzler restaurant is to be established. Franchisees do not have exclusive rights to operate Sizzler in that country; however, the franchise arrangements are structured to encourage franchisees to grow restaurant numbers. Each franchised Sizzler restaurant in Asia is covered by a separate franchise agreement under which the franchisee must pay Collins Foods an initial franchise fee of between US$10,000 and US$50,000 and a royalty of between 2%-5% of revenue. Sizzler franchisees are required to comply with standards and procedural manuals supplied by Collins Foods. A typical franchise agreement provides for an initial 20 year term with a renewal option for an additional 20 years. Collins Foods Sizzler Asia strategy is to grow restaurant numbers (particularly with the existing partners in Thailand, Japan and China) and also expand into other South East Asian territories such as Vietnam, Cambodia and Laos through new and existing franchisees. Collins Foods believes its experience, established presence in Asia and current relationships with its larger franchisees is a solid platform from which to implement this strategy.
2.5
What are the shared services arrangements?
Collins Foods scale enables it to benefit from operating a shared services structure across its KFC and Sizzler restaurants. The key shared services are: property, human resources, quality control, IT and finance.
2.5.1 What are the centralised property services functions?

Dedicated team Collins Foods has a dedicated property services team that manages the site leases and renewal renegotiations for both its KFC and Sizzler branded restaurant sites. The team is also responsible for identifying potential sites for new KFC and Sizzler restaurants. This dedicated team assists Collins Foods to: Develop and maintain long-term relationships with landlords and property developers; Ensure it has access to a sufficient number of new sites and reduce the risk that Collins Foods could be unable to open new KFC or Sizzler restaurants in accordance with its capital expenditure programme; Reduce the risk that new restaurants are unprofitable because they are not supported by a sufficient catchment area or cannibalise revenue from existing restaurants; and Reduce the risk that the refurbishment of existing KFC and Sizzler restaurants is over-capitalised.
Management of existing leases Collins Foods attempts to stagger lease expiry dates over a number of years to minimise the number of leases that expire in any one single year, as well as to attempt to ensure the alignment of lease expiry dates with franchise renewal dates in the case of its KFC restaurants. Collins Foods has commenced a process to obtain consents from its landlords for the change of control arising from the Offer and does not expect any issues material to the business will arise in relation to the process. The chart below indicates the number of landlords across Collins Foods property portfolio (both KFC and Sizzler). Leases by landlord(a)
Leases held by multi-unit landlords (5-7 leases) Leases held by multi-unit landlords (3-4 leases) Leases held by multi-unit landlords (2 leases) Leases held by single-unit landlords
21%
5% 64% 10%
(a)
Excludes four restaurant sites owned by Collins Foods.
What are the existing KFC lease arrangements? All but one of the sites for Collins Foods 119 KFC restaurants are leased. This reduces the capital investment required to establish and maintain its restaurants. No single landlord leases more than seven KFC sites to Collins Foods. A profile of the lease expiry dates for the leases is provided below; the average remaining lease term for its KFC restaurants is approximately eight years, inclusive of renewal options. Collins Foods seeks to spread lease expiries to reduce the potential for non-renewals to disrupt its KFC business.
2 coMpANy oVerVIeW
KFC lease expiry profile (by term to expiry)(a)
11%
<5 years 5-10 years 10-15 years >15 years
18%
29%
42%
(a)
Excludes one restaurant site owned by Collins Foods. Assumes full exercise of all available options.
What are the existing Sizzler lease arrangements? Collins Foods leases 23 of its 26 Sizzler restaurant sites. This reduces the capital investment required to establish and maintain its restaurants. No single landlord leases more than two Sizzler sites to Collins Foods. A profile of the lease expiry dates for the leases is provided below with the average remaining lease term for its Sizzler restaurants being approximately seven years, inclusive of renewal options. Collins Foods seeks to spread lease expiries to reduce the potential for non-renewals to disrupt its Sizzler business. Sizzler lease expiry profile (by term to expiry)(a)
<5 years 5-10 years 10-15 years >15 years
52% 5% 4%
39%
(a)
Excludes three restaurant sites owned by Collins Foods. Assumes full exercise of all available options.
Identification and assessment of new sites Collins Foods reviews and assesses potential new sites using a range of factors such as demographics, population and population growth, actual and expected timeframes for receiving government planning approvals and actual and expected commercial activity. An evaluation is performed to compare the potential site to established benchmarks for profitability and return on capital employed and to ensure that any cannibalisation of existing restaurant profitability is identified and minimised. Collins Foods also periodically considers developments in conjunction with petrol station operators to co-locate on larger regional sites. This assists Collins Foods by reducing the overall site cost and allowing it to access sites that are otherwise not economically viable.
2.5.2 What are the centralised employee functions?

Collins Foods employs a workforce comprising approximately 700 full time staff and 6,000 casual and part time staff, and manages the payroll and associated human resources functions centrally from its head office. Centralisation of these functions assists Collins Foods to apply consistent human resources policies and achieve economies of scale, thereby reducing costs and increasing profitability. Collins Foods has implemented specific strategies to attract and retain senior management with extensive experience in the QSR market and to maintain an experienced employee base. These strategies include: The use of incentive-based remuneration structures that are linked to key performance indicators; The availability of work skills and training programmes; and Opportunities to study towards nationally recognised qualifications.
All of these initiatives seek to lower the level of employee turnover experienced by Collins Foods. The benefits of lower staff turnover are: Improved customer service levels; Lower operational costs and increased efficiencies, revenues and profitability; and Reduced risks, including all of the key risks identified in section 4.1.
Collins Foods has a strong track record in the QSR and casual dining markets of retaining full time employees, assisted by its preference to promote internal candidates over external hiring. More than 15% of Collins Foods full time KFC employees have more than 15 years service.
2.5.3 What are the centralised quality control functions?

Collins Foods has a variety of formalised quality control systems and procedures in place, including: Operational procedures and manuals (the majority of which are provided by Yum! in the case of KFC), which cover food handling procedures that have been the subject of in-house and third party testing as well as occupational health and safety (OH&S) procedures to minimise the number and extent of OH&S incidents; The preparation and delivery to senior management (including the CEO and CFO) of operational reports, detailing all health and food safety issues; In-house and third party audits of customer service standards and compliance with food safety standards; and The installation of closed-circuit television systems in the majority of restaurants. Increase customer frequency; Reduce the risk of an operational lapse in food safety or sanitation procedures or malicious tampering (refer section 4.1.1) resulting in the occurrence of a serious food-poisoning incident; Ensure compliance with food industry regulations; and Reduce its exposure to litigation (refer section 4.2.11).
This assists Collins Foods to:
2.5.4 What are Collins Foods crisis and related management functions?
Collins Foods has an active programme to ensure that it is able to respond to an operational crisis including a food safety or sanitation incident (refer section 4.1.1) and has prepared and maintains a crisis manual. Collins Foods has also implemented operational changes in seeking to reduce the risk of such an incident occurring, including the installation of closed-circuit television cameras at the majority of its restaurants and a policy that at least one staff member should monitor customer access to the Sizzler salad bar. Collins Foods also maintains insurance cover for such events.
2 coMpANy oVerVIeW
2.5.5 What are the centralised IT and finance functions?
Collins Foods has dedicated IT and finance teams. It uses a number of third party IT and finance systems for both its KFC and Sizzler restaurants. These systems assist senior management to track Collins Foods actively on a daily basis across a number of key performance indicators including daily sales performance, inventory and staffing levels. At the restaurant level, each restaurant has a number of IT systems designed to maximise throughput and ensure ordering and food preparation efficiency. Collins Foods conducts periodic reviews of its systems, with the aim of optimising work processes and identifying and assessing operating efficiencies for potential implementation. Other controls such as double-keyed safes, periodic skimming of registers, detailed point of sale transaction recording, and the installation of closed-circuit television cameras in the majority of restaurants have also been implemented to lower inventory shrinkage and ensure cash handling procedures are adhered to.
2.5.6 What community initiatives is Collins Foods involved in?

Collins Foods is committed to supporting the communities in which it operates. Collins Foods launched a workplace giving programme in 2008, which provides employees with the opportunity to donate to charities through a pre-tax payroll contribution. Collins Foods also matches staff donations (up to an annual cap of $0.1 million).
3 FINANcIAl INForMAtIoN
KFC Mega Bucket
3.1
Introduction
Historical financial information for Collins Foods being the: Pro forma consolidated historical income statements for FY2009, FY2010 and FY2011 (pro Forma historical results); Pro forma consolidated historical cash flow statements for FY2009, FY2010 and FY2011; and Pro forma consolidated historical balance sheet as at 1 May 2011,
The financial information for Collins Foods contained in section 3 has been prepared by the Directors and includes:
(together the historical Financial Information); and Forecast financial information for Collins Foods being the: Pro forma consolidated forecast income statement for FY2012 (pro Forma Forecast results); Forecast statutory consolidated income statement for FY2012 (Forecast statutory results); Pro forma consolidated forecast cash flow statement for FY2012; and Forecast statutory consolidated cash flow statement for FY2012,
(together the Forecast Financial Information). Historical Financial Information and Forecast Financial Information together forms the Financial Information. Below is a key to the Financial Information contained in section 3: section 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 heading Basis of preparation and presentation of the Financial Information Consolidated historical and forecast income statements Consolidated historical balance sheet Consolidated historical and forecast cash flows Segment information Management discussion and analysis of Historical Financial Information Pro Forma Forecast Financial Information Sensitivity analysis Dividend policy page 44 46 50 54 55 55 61 66 66
All amounts disclosed in the tables are presented in Australian dollars and, unless otherwise noted, are rounded to the nearest $0.1 million.
3.2
Basis of preparation and presentation of the Financial Information
Collins Foods Limited was incorporated on 10 June 2011, but it will not undertake any trading activities until Completion of the Offer, being the date that the Offer, and the acquisition of Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd by a wholly owned subsidiary of Collins Foods Limited completes (which is scheduled to occur on 4 August 2011). Collins Foods Holding Pty Limited, which will become a controlled entity of Collins Foods Limited on Completion of the Offer, owns the Collins Foods KFC and Sizzler Australia businesses. The FY2009, FY2010 and FY2011 financial statements of Collins Foods Holding Pty Limited have been audited by PwC, who have issued unqualified opinions in respect of all periods. SingCo Trading Pte Ltd, which will also become a controlled entity of Collins Foods Limited on Completion of the Offer, owns the Collins Foods Sizzler Asia business. Further information on the group structure is set out in section 6.1.3. The Historical Financial Information and the Forecast Financial Information has also been reviewed and reported on by PwCS, as set out in the Investigating Accountants Report in section 7. Investors should note the scope and limitations of the Investigating Accountants Report. The Financial Information has been prepared and presented in accordance with the recognition and measurement principles of Australian Accounting Standards, although it is presented in an abbreviated form insofar as it does not include all the disclosures, statements or comparative information as required by Australian Accounting Standards applicable to annual financial reports prepared in accordance with the Corporations Act.
Collins Foods key accounting policies are set out in the Appendix. Segmental disclosure of the Financial Information comprises the Collins Foods KFC business and the Collins Foods Sizzler business, as set out in section 3.6. These segments are based on Collins Foods management reporting system.
3.2.1 Preparation of Historical Financial Information

There are no actual historical consolidated results for Collins Foods Limited. The Historical Financial Information has been derived from the audited historical consolidated statutory financial statements of Collins Foods Holding Pty Limited for FY2009, FY2010 and FY2011 after adjusting for pro forma transactions and/or other adjustments to reflect Collins Foods operations following Completion of the Offer and to eliminate non-recurring items, as set out in section 3.3.2, section 3.4.1 and section 3.5.1. Collins Foods has determined that the acquisition of Collins Foods Holding Pty Limited by its wholly owned subsidiary on Completion of the Offer does not represent a business combination as outlined in Australian Accounting Standard AASB3 (AAsB3) for accounting purposes. The appropriate accounting treatment for recognising the new group structure is on the basis that the transaction is a form of capital reconstruction and group reorganisation. Therefore, the Financial Information included in this Prospectus has been prepared using the principles of a reverse acquisition by Collins Foods Holding Pty Limited of Collins Foods Limited. The Financial Information also reflects that a wholly owned subsidiary of Collins Foods Limited will acquire SingCo Trading Pte Ltd on Completion of the Offer. Collins Foods Limited has evaluated the substance of this transaction with reference to AASB3 and determined that the transaction represents a business combination as outlined in the standard. Accordingly, the Financial Information included in this Prospectus has been prepared using the principles of the acquisition method of accounting in respect of the acquisition of SingCo Trading Pte Ltd, as outlined in the Business combinations policy as set out in the Appendix. Investors should note that past results do not guarantee future performance.
3.2.2 Preparation of Forecast Financial Information

The pro forma consolidated forecast income and cash flow statements for FY2012 (pro Forma Forecast Financial Information) have been derived from the forecast statutory consolidated income and cash flow statements of Collins Foods Holding Pty Limited for FY2012 after adjusting for pro forma transactions and/or other adjustments to reflect Collins Foods operations following Completion of the Offer and to eliminate non-recurring items, as set out in section 3.3.2 and section 3.5.1. The Forecast Financial Information has been prepared by the Directors based on an assessment of present economic and operating conditions and on a number of best estimate assumptions regarding future events and actions as set out in section 3.8.1 and section 3.8.2. This information is intended to assist investors in assessing the reasonableness and likelihood of the assumptions occurring, and is not intended to be a representation that the assumptions will occur. The Forecast Financial Information presented in this Prospectus has been reviewed by PwCS but has not been audited. Directors believe the best estimate assumptions when taken as a whole to be reasonable at the time of preparing this Prospectus. However, this information is not fact and investors are cautioned not to place undue reliance on the Forecast Financial Information. Investors should be aware that the timing of actual events and the magnitude of their impact might differ from that assumed in preparing the Forecast Financial Information, and that this may have a material positive or material negative effect on Collins Foods actual financial performance or financial position. Accordingly, neither Collins Foods nor any other person can give investors any assurance that the outcomes discussed in the Forecast Financial Information will arise. The information in section 3 should be read in conjunction with the specific assumptions as set out in section 3.8.1, the general assumptions as set out in section 3.8.2, the sensitivities as set out in section 3.9, the risk factors as set out in section 4 and other information in this Prospectus. Collins Foods Limited has no intention to update or revise the Forecast Financial Information or other forward looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where required by law.
3.3 Consolidated historical and forecast income statements
The table below sets out the Pro Forma Historical Results, the Pro Forma Forecast Results and the Forecast Statutory Results. pro Forma Forecast results2 Fy2012 430.3 (200.2) 230.1 (23.4) (147.6) 59.0 (14.0) (1.6) 43.4 (8.0) 35.4 (10.6) 24.7 25.9 Forecast statutory results Fy2012 429.7 (200.2) 229.5 (23.4) (145.3) 60.8 (14.0) (5.3) 41.5 (24.0) 17.5 (1.4) 16.0 19.8
pro Forma historical results1 April y/e, $ million revenue Cost of sales Gross profit Rent Other operating costs eBItDA Depreciation Amortisation eBIt Net interest expense Profit before tax Income tax expense NpAt NpAtA
Notes: 1. 2.
Fy2009 405.9 (198.1) 207.8 (20.3) (133.3) 54.2 (12.9) (1.9) 39.3 (8.9) 30.4 (9.2) 21.3 22.6
Fy2010 402.9 (193.3) 209.5 (21.0) (136.9) 51.7 (13.6) (1.9) 36.1 (6.7) 29.5 (8.9) 20.6 21.9
Fy2011 410.8 (192.5) 218.3 (22.1) (140.3) 55.9 (13.2) (2.0) 40.8 (8.2) 32.6 (9.8) 22.8 24.1
The Pro Forma Historical Results are reconciled to the Historical Statutory Results in section 3.3.2. The Pro Forma Forecast Results are reconciled to the Forecast Statutory Results in section 3.3.2.
3.3.1 Key operating metrics

Set out below is a summary of the Collins Foods key historical operating metrics for FY2009, FY2010 and FY2011 derived from the Pro Forma Historical Results, and the forecast key operating metrics for FY2012 derived from the Pro Forma Forecast Results and the Forecast Statutory Results. pro Forma historical results1 pro Forma Forecast results2 Fy2012 145 153 4.7% 53.5% 5.6% 13.7% 6.5% 10.1% 8.6% 7.2% Forecast statutory results2 Fy2012 145 153 5.3% 53.4% 24.5% 14.1% 21.1% 9.7% nm 5 nm 5
April y/e Average restaurant numbers Ending restaurant numbers 3 Revenue growth Gross profit margin EBITDA growth EBITDA margin EBIT growth EBIT margin NPAT growth NPATA growth
Notes: 1. 2. 3. 4. 5.
3, 4
Fy2009 139 142 51.2% 13.3% 9.7%
Fy2010 143 143 (0.7%) 52.0% (4.6%) 12.8% (8.1%) 9.0% (3.1%) (2.9%)
Fy2011 144 145 2.0% 53.1% 8.2% 13.6% 12.8% 9.9% 10.6% 10.1%
The Pro Forma Historical Results are reconciled to the Historical Statutory Results (as defined in section 3.3.2). The Pro Forma Forecast Results are reconciled to the Forecast Statutory Results in section 3.3.2. FY2012 Forecast Statutory Results growth rates shown are relative to FY2011 Historical Statutory Results. This includes KFC and Sizzler Australia restaurants but does not include Sizzler Asia restaurants which are operated by franchisees and not Collins Foods. The average number of restaurants open during the year is a function of the number of new restaurants opened together with the impact of the temporary closure for, or reopening of existing restaurants from, refurbishment or relocation. The audited historical consolidated statutory NPAT and NPATA for FY2011 cannot be compared with the forecast statutory consolidated NPAT and NPATA for FY2012 to give meaningful growth percentages because of the change in capital structure that will occur on Completion of the Offer.
3.3.2 Pro forma adjustments to the statutory income statements
The table below sets out the adjustments to the audited historical consolidated statutory income statements of Collins Foods for FY2009, FY2010 and FY2011 (historical statutory results) and the Forecast Statutory Results to reflect the full year impact of the operating and capital structure that will be in place following Completion of the Offer and to eliminate non-recurring items. historical April y/e, $ million Statutory revenue Operational adjustments: 53rd trading week 1 IPO restructuring-related adjustments: Acquisition of SingCo Trading Pte Ltd 2 pro forma revenue statutory NpAt Operational adjustments: 53rd trading week 1 Net insurance recovery
3
Forecast Fy2011 408.2 Fy2012 429.7
Fy2009 410.6
Fy2010 400.5
(7.5) 2.8 405.9 (41.2)
0.0 2.4 402.9 17.5
0.0 2.6 410.8 1.4
0.0 0.6 430.3 16.0
(2.4) (0.9) 1.1 (2.2) (0.7) 11.3 (0.2) 1.2

9
0.0 (0.6) 0.9 (2.0) (0.8) 11.4 (0.0) 1.2 (3.4) 0.0 0.0 (3.6) 0.0 20.6
0.0 0.0 1.2 (2.0) (0.8) 21.8 0.3 1.6 4.7 1.6 0.0 (7.0) 0.0 22.8
0.0 0.0 0.2 (0.4) (0.2) 16.0 (0.4) 0.4 (10.7) 9.2 3.8 (6.4) (2.8) 24.7
IPO restructuring-related adjustments: Acquisition of SingCo Trading Pte Ltd 2 Royalty adjustment
4
Public company costs 5 Net interest expense adjustment 6 IPO other adjustments: Employee incentive scheme 7 Investment services fees 8 Related party transactions Costs of the Offer expensed 10 KFC franchise fee write-off
11
58.0 0.0 0.0 (2.6) 0.0 21.3
Tax impact of above adjustments 12 Tax impact of asset tax base reset 13 pro forma NpAt
Notes: 1. 2.
3. 4.
5. 6.
7. 8. 9.
10.
11. 12.
13.
FY2009 had 53 trading weeks. All other years presented include 52 weeks. The revenue and NPAT associated with the additional week of trading in the FY2009 Historical Statutory Results has been removed from the FY2009 Pro Forma Historical Results. SingCo Trading Pte Ltd is the parent entity of Collins Foods Sizzler Asia business and will be acquired by a wholly owned subsidiary of Collins Foods Limited on Completion of the Offer. The adjustments comprise the recognition (in Australian dollars) of pre acquisition amounts in respect of the revenue and NPAT of Sizzler Asia as though SingCo Trading Pte Ltd had formed part of the Collins Foods consolidated group at the beginning of FY2009. The financial statements for SingCo Trading Pte Ltd were prepared in Singaporean dollars and audited in accordance with Singaporean accounting standards. Because no audited accounts in Australian dollars are available for SingCo Trading Pte Ltd, these adjustments have been made on the basis of unaudited historical management accounts for SingCo Trading Pte Ltd. Sizzler Australia received compensation from insurers in FY2009 and FY2010 following events which occurred prior to the commencement of FY2009. The benefit of these payments in the Historical Statutory Results has been removed from the Pro Forma Historical Results. Royalties paid by Collins Foods in respect of its KFC restaurants to Yum! have historically varied between 5% and 6% of Collins Foods KFC annual sales revenue. Effective from Completion of the Offer, Collins Foods will operate under new KFC franchise arrangements with Yum! that will increase the royalties paid by Collins Foods to Yum! under these arrangements to 6% of KFC annual sales revenue. This additional royalty cost is not reflected in the Historical Statutory Results or the Forecast Statutory Results for the period prior to Completion of the Offer. The adjustments reflect the increase in royalty costs as though it had occurred at the beginning of FY2009. Incremental costs associated with being a public company are not reflected in the Historical Statutory Results or the Forecast Statutory Results for the period prior to Completion of the Offer, but are included in the Pro Forma Historical Results and Pro Forma Forecast Results. Prior to Completion of the Offer, Collins Foods Holding Pty Limited operated under a different capital structure to that proposed to apply from Completion of the Offer. Accordingly, the interest costs reflected in the Historical Statutory Results and the Forecast Statutory Results prior to Completion of the Offer differ from those expected to be incurred from Completion of the Offer. The net interest expense included in the Historical Statutory Results and the Forecast Statutory Results for the period prior to Completion of the Offer has been adjusted to reflect the net interest expense that would have been incurred if the New Banking Facilities detailed in section 3.4.3 had been in place for the period prior to Completion of the Offer, using the base interest rates that prevailed at the time (BBSY) and margins as set out in the New Banking Facilities. In addition, the Forecast Statutory Results include as part of the Pre IPO Restructuring the write-off of capitalised borrowing costs relating to the capital structure in place prior to Completion of the Offer ($11.2 million pre-tax). An employee incentive scheme will be terminated upon Completion of the Offer. This adjustment removes the revaluation adjustments that were recognised in the Historical Statutory Results and are expected to be recognised in the Forecast Statutory Results prior to Completion of the Offer (in relation to that scheme). Fees for services charged by PEP Advisory Pty Ltd will not be incurred following Completion of the Offer. This adjustment removes the fees incurred prior to Completion of the Offer which were expensed in the Historical Statutory Results and, to the extent relating to the period from 1 May 2011 until Completion of the Offer, will be expensed in the Forecast Statutory Results. A guarantee of liabilities (relating to an entity formerly owned by the Existing Investors) and receivables (relating to that entity, and SingCo Trading Pte Ltd) were impaired in FY2009 and remeasured and adjusted in FY2010 and FY2011. These revaluations were recognised in the Historical Statutory Results and have been removed from the Pro Forma Historical Results. Collins Foods has been released from, and has no further exposure to this guarantee of liabilities and it has no relevance to Collins Foods ongoing businesses. Accordingly a benefit of $10.7 million will be recognised and has been included in the Forecast Statutory Results. The adjustment removes this item from the Pro Forma Forecast Results. Following the acquisition of SingCo Trading Pte Ltd, receivables from SingCo Trading Pte Ltd will be eliminated on consolidation. Total costs of the Offer that were expensed in the Historical Statutory Results and will be expensed in the Forecast Statutory Results ($10.8 million before tax) have been removed from the Pro Forma Historical Results and the Pro Forma Forecast Results. The remaining $5.5 million of Offer costs (after tax) have been offset against equity raised in the Offer (reflected in the consolidated historical balance sheet provided in section 3.4). Effective on Completion of the Offer, Collins Foods will operate under new KFC franchise arrangements with Yum! resulting in a requirement to write-off previously capitalised KFC franchise fees. This write-off will be expensed in the Forecast Statutory Results and has been removed from the Pro Forma Forecast Results. Refer to section 3.5. Reflects the tax effect of adjustments 1-11 outlined above at the effective tax rate used by Collins Foods to prepare the Forecast Statutory Results and the Pro Forma Forecast Results (30.1%), adjusted for permanent differences arising in relation to recognition and subsequent revaluation and reversal of the guarantee of related party financial liabilities and the impairment of related party receivables (as outlined in adjustment 9 above) together with permanent differences of $2.6 million in relation to a proportion of the costs of the Offer which have been expensed. Reflects the tax effect of permanent differences which arise as a result of resetting the tax basis of depreciable assets upon Collins Foods Holding Pty Limited becoming a member of the Collins Foods Limited income tax consolidation group.
3.4 Consolidated historical balance sheet
The table below sets out the adjustments that have been made to the audited statutory consolidated balance sheet for Collins Foods Holding Pty Limited as at 1 May 2011 to prepare a pro forma consolidated historical balance sheet for Collins Foods. These adjustments reflect the impact of the operating and capital structure that will be in place following Completion of the Offer as if they had occurred or were in place as at 1 May 2011. Audited statutory Impact of the collins Foods offer and holding pty restructuring New Banking limited1 events Facilities 43.7 3.6 4.5 51.8 52.7 222.8 9.9 11.9 297.3 349.1 51.4 (0.6) 24.3 3.4 78.5 228.0 1.5 229.5 308.0 41.1 55.5 0 (14.4) 41.1 0.1 0.2 0 0.3 0 12.8 (2.0) (10.8) (0) 0.3 0.3 0 (10.7) 0 (10.4) 0 0 0 (10.4) 10.7 0 0 10.7 10.7 (40.3) 0 0 (40.3) 0 1.2 3.3 (0.5) 4.0 (36.3) (1.2) (6.6) (13.7) 0 (21.5) (123.7)
3 3 2
As at 1 May 2011, $ million Cash and cash equivalents Receivables Inventories total current assets Property, plant and equipment Intangible assets Deferred tax assets, net Other total non-current assets total assets Trade and other payables Current tax liabilities Borrowings Provisions total current liabilities Borrowings Provisions total non-current liabilities total liabilities Net assets Contributed equity Currency translation reserve Retained profits/(losses) 5 total equity
Notes: 1. 2.
pro forma 3.5 3.8 4.5 11.8 52.7 236.8 11.3 0.6 301.3 313.1 50.5 (7.1) 0 3.4 46.6 104.3 1.1 105.4 152.0 161.1
4
(0.4) (124.1) (145.6) 109.3 127.5 0 (18.2) 109.3
183.0 0 (21.9) 161.1
3.
4.
5.
The accounting policies relevant to this table are set out in the Appendix. Cash decreases by $40.3 million as a result of receipt of cash proceeds from the Institutional Offer and Broker Firm Offer ($201.7 million) and draw down of the New Banking Facilities ($105.0 million), offset by repayment of existing debt and certain other obligations ($260.4 million), payments to Existing Investors ($60.4 million) and payments for costs of the Offer and other obligations of Collins Foods to be paid on Completion of the Offer ($26.3 million). As a result of the impact of the New Banking Facilities, current borrowings decrease by $13.7 million through the repayment of existing current debt $18.6 million, offset by the write-off of unamortised capitalised borrowing costs ($4.9 million) and non-current borrowings decrease by $123.7 million through the repayment of non-current debt ($234.3 million) offset by the write-off of unamortised capitalised borrowing costs ($6.3 million), the drawdown of the new debt facilities ($105.0 million) and the associated increase in capitalised borrowing costs ($0.7 million). Contributed equity increases by $127.5 million as a result of the impact of the Offer through the issue of Shares to new Shareholders ($201.7 million) offset by cash paid to Existing Investors ($60.4 million), input tax credits received ($8.3 million) and costs of the Offer ($5.5 million). In addition Collins Foods will issue new equity of $30.8 million (12.3 million Shares at $2.50 per Share) as partial consideration for the acquisition of the Collins Foods business from the Existing Investors under the Sale Deeds (refer to section 8.3 for more information). Due to the principles of a reverse acquisition by Collins Foods Holding Pty Limited of Collins Foods Limited the Shares issued to Existing Investors will not affect contributed equity. The retained losses predominantly relate to the recognition of guarantees of liabilities (relating to an entity formerly owned by the Existing Investors) and receivables (relating to that entity, and SingCo Trading Pte Ltd) that were impaired in FY2009 and remeasured and adjusted in FY2010 and FY2011. Collins Foods has been released from and has no further exposure to, this guarantee of liabilities and it has no relevance to Collins Foods ongoing businesses. Following the acquisition of SingCo Trading Pte Ltd, receivables from SingCo Trading Pte Ltd will be eliminated on consolidation.
3.4.1 Pro forma adjustments to the statutory balance sheet

The pro forma consolidated adjustments made to the audited statutory balance sheet for Collins Foods Holding Pty Limited as at 1 May 2011 reflect the following events and assumptions: Restructuring events These adjustments relate to: The disposal prior to the date of this Prospectus of an interest in an entity formerly owned by the Existing Investors, and the concurrent release of a Collins Foods company from liability under an associated guarantee (referred to in note 9 of section 3.3.2); The acquisition on Completion of the Offer pursuant to the Sale Deeds by a wholly owned subsidiary of Collins Foods Limited of all of the shares issued in the capital of SingCo Trading Pte Ltd for cash. (SingCo Trading Pte Ltd accounts (in Singapore dollars) have been audited in accordance with Singapore accounting standards. There are no audited accounts for SingCo Trading Pte Ltd in Australian dollars.)
Impact of the Offer and New Banking Facilities In conjunction with the Offer, Collins Foods will issue new equity as partial consideration for the acquisition of the Collins Foods business from Existing Investors under the Sale Deeds (refer to section 8.3 for more information). In addition, Collins Foods will issue new equity and draw down on its New Banking Facilities (described in section 3.4.3). Proceeds from the foregoing, together with available cash, will be used to pay: Existing Investors for the cash portion of the consideration payable for the acquisition by a wholly owned subsidiary of Collins Foods Limited of all of the remaining interests in Collins Foods Holding Pty Limited; loan establishment costs; amounts owing by Collins Foods under syndicated finance debt facilities, finance leases and associated derivatives and certain other obligations of Collins Foods Holding Pty Limited and its subsidiaries; and costs of the Offer and other obligations of Collins Foods to be paid on Completion of the Offer.
For further information, refer to the notes to the table in section 3.4. Further information on the sources and uses of funds of the Offer is contained in section 6.1.2.
3.4.2 Capitalisation and indebtedness

The table below sets out the capitalisation and indebtedness of Collins Foods as at 1 May 2011, before and following the Completion of the Offer. Audited statutory collins Foods holding pty limited (before completion of the offer)1 43.7 24.3 228.0 208.7 55.5 (14.4) 41.1 249.8 pro forma (following completion of the offer) 3.5 105.0 2 101.5 183.0 3 (21.9) 161.1 262.6
As at 1 May 2011, $ million Cash and cash equivalents Current borrowings Non-current borrowings Net total indebtedness Contributed equity Retained profits/(losses)4 total equity total indebtedness and capitalisation
Notes: 1. 2. 3. 4.
Extracted from the audited statutory consolidated balance sheet of Collins Foods Holding Pty Limited as at 1 May 2011. The $105.0 million of drawn Facility A presented above, net of capitalised loan establishment costs of $0.7 million equals the $104.3 million balance recorded in the pro forma historical (following Completion of the Offer) balance sheet. Includes $5.5 million of Offer costs (after tax) which have been offset against equity raised (see section 3.4.1 for further details). The retained losses predominantly relate to the recognition of guarantees of liabilities (relating to an entity formerly owned by the Existing Investors) and receivables (relating to that entity and SingCo Trading Pte Ltd) that were impaired in FY2009 and remeasured and adjusted in FY2010 and FY2011. Collins Foods has been released from and has no further exposure to this guarantee of liabilities and it has no relevance to Collins Foods ongoing businesses. Following the acquisition of SingCo Trading Pte Ltd, receivables from SingCo Trading Pte Ltd will be eliminated on consolidation.
3.4.3 Description of the New Banking Facilities
Collins Foods Limited and CFG Finance Pty Limited have entered into facility agreements for the provision of three year revolving cash facilities and a working capital facility (New Banking Facilities). On Completion of the Offer, funding provided under the facility agreements (together with certain proceeds from the sale of New Shares under the Offer) will be utilised to repay existing syndicated finance debt facilities, finance leases and associated derivatives and certain other obligations of Collins Foods Holding Pty Limited and its subsidiaries. Upon repayment of existing syndicated finance debt facilities, associated guarantees and security will be discharged. The availability of funding under the facility agreements is conditional on listing on ASX as contemplated by this Offer and other conditions precedent which are within the control of Collins Foods Limited. Accordingly, on Completion of the Offer, Collins Foods Limited will have debt funding available to assist with the repayment of the existing syndicated finance debt of Collins Foods Holding Pty Limited and its subsidiaries and to provide for the debt funding needs after listing. The New Banking Facilities are based on signed facility agreements provided to Collins Foods Limited by a group of banking institutions and will comprise: $110 million three year Revolving Cash Advance Facility (Facility A); $25 million three year Revolving Cash Advance Facility (Facility B); and $10 million three year Working Capital Facility (Working capital Facility).
The table below sets out the New Banking Facilities. $ million Facility A Facility B Working Capital Facility total New Banking Facilities Net debt/FY2012 pro forma EBITDA2
Note: 1. 2.
Facility commitment 110.0 25.0 10.0 145.0 n/a
pro forma drawn at 1 May 2011 105.0 1 0.0 0.0 105.0 1.7x
The $105.0 million of drawn Facility A presented above, net of capitalised loan establishment costs of $0.7 million equals the $104.3 million balance recorded in the pro forma historical (following Completion of the Offer) balance sheet. Pro forma net debt equal to $101.5 million.
Pro forma consolidated forecast net interest expense in relation to the establishment fees and agency fees in the New Banking Facilities for FY2012 is $0.3 million. 3.4.3.1 Facility A Facility A is repayable in full at maturity, being three years from the date of the first drawdown under the New Bank Facilities. No interim scheduled principal repayments are required during the term of Facility A. Facility A has a variable interest rate, which is based on BBSY. Based on BBSY as at 25 May 2011 of 5.0683%, the average effective interest rate of Facility A would be 7.2%. Pro forma consolidated forecast interest expense in relation to Facility A for FY2012 is $7.5 million. This is based on pro forma historical (following Completion of the Offer) debt of $105.0 million. Facility A will attract commitment fees equal to 50% of the margin on the committed but undrawn funds under this facility. 3.4.3.2 Facility B Collins Foods Limited does not intend to draw Facility B on Completion of the Offer; however, Collins Foods Limited may choose to draw on these facilities at any time after the date of listing on ASX and before two years and eleven months from the date of the first drawdown under the New Bank Facilities. Drawn amounts will attract the same interest rate as the interest rate on Facility A. In addition, Facility B will attract the same commitment fees as Facility A. Facility B is repayable in full at maturity, being three years from the date of the first drawdown under the New Bank Facilities. No interim scheduled principal repayments are required during the term of Facility B. Pro forma consolidated forecast commitment fees and line fees for FY2012 in relation to Facility B are $0.2 million.
3.4.3.3 Working Capital Facility The Working Capital Facility will be available for general corporate, working capital and capital expenditure purposes. It will have the same tenor and will attract the same interest rate and commitment fees as Facility B. Pro forma consolidated forecast commitment fees and line fees for FY2012 in relation to the Working Capital Facility are $0.1 million. Pro forma consolidated forecast interest expense in relation to the Working Capital Facility for FY2012 is $0.1 million. This assumes an average draw of $1.0 million. 3.4.3.4 Financial undertakings The agreement under which the New Bank Facilities will be made available contains undertakings typical for facilities of this nature. The undertakings include financial undertakings which will be tested at financial year end and financial half-year end based on the preceding 13 accounting periods (approximately 12 months). Collins Foods Limited expects to remain in compliance with these undertakings. pro forma drawn at 1 May 2011 Net leverage ratio to be not greater than 2.75:11 Lease adjusted interest cover ratio to be equal to or greater than 1.75:1
Notes: 1. 2.
2
1.8 2.6
Pro forma debt to EBITDA for that period. Consolidated EBITDA plus rental expense for that period to net interest expense plus rental expense for that period.
3.4.3.5 Other financing considerations The agreement under which the New Banking Facilities are made available contains certain representations, undertakings, events of default and review events. Any material breach by Collins Foods Limited of the representations or undertakings given or made by it, or the occurrence of an event of default or a review event, may lead to the funds borrowed becoming due and the New Banking Facilities being cancelled.
3.4.4 Contractual obligations and commitments

The table below summarises Collins Foods Limited contractual obligations and commitments (following Completion of the Offer) under Facility A and operating leases: payments due by period As at 1 May 2011, $ million Facility A
1 2
pro forma total 105.0 97.4 202.4
< 1 year 0.0 22.1 22.1
1-5 years 105.0 60.8 165.8
> 5 years 0.0 14.5 14.5
Operating lease commitments total

Notes: 1. 2.
Facility A obligations are set out in section 3.4.3.1. Collins Foods operating lease commitments relate to land, buildings and equipment.
3.5 Consolidated historical and forecast Cash Flows
The table below sets out the pro forma consolidated historical operating free cash flows after capital expenditure of Collins Foods Limited for FY2009, FY2010 and FY2011; and the pro forma forecast and forecast statutory consolidated operating free cash flows after capital expenditure of Collins Foods for FY2012 (cash Flows). pro forma forecast cash Flows Fy2012 59.0 0.6 0.0 (7.3) (28.0) (13.3) (4.5) (10.2) (35.4) 24.3 Forecast statutory cash Flows Fy2012 60.8 0.6 (10.7)2 (7.3) (28.0) (13.3) (4.5) (10.2) (35.4) 15.4
pro forma historical cash Flows April y/e, $ million EBITDA

1
Fy2009 54.2 (1.1) 0.0 (4.8) (13.6) (4.2) (6.8) (2.7) (18.4) 34.7
Fy2010 51.7 0.3 0.0 (9.2) (1.8) (1.0) (0.1) (0.6) (11.0) 41.0
Fy2011 55.9 (0.3) 0.0 (7.9) (7.6) (0.9) (1.3) (5.4) (15.5) 40.1
Change in working capital Non cash movements in EBITDA Maintenance Capital Expenditure Growth Capital Expenditure: New restaurant capital expenditure Rebuild/relocation capital expenditure Refurbishment capital expenditure Capital expenditure operating free cash flow after capital expenditure
Notes: 1.
2.
EBITDA above has been adjusted to reflect the pro forma adjustments to the Historical Statutory Results and Forecast Statutory Results outlined in the table provided in section 3.3.2, with the exception of adjustments 6, 11, 12 and 13 relating to the pro forma interest expense, the write-off of capitalised franchise fees on Completion of the Offer, the tax effect of the pro forma adjustments and the resetting of tax bases respectively, none of which impact pro forma EBITDA. Reflects note 9 to the table of pro forma adjustments in section 3.3.2 in respect of the release of guarantee liabilities relating to an entity formerly owned by the Existing Investors. This adjustment is non-cash in nature, and therefore will not be reflected in the forecast statutory operating cash flows after capital expenditure. This amount has been excluded from the pro forma forecast EBITDA.
3.5.1 Pro forma adjustments to the statutory cash flow statement

The table below sets out the adjustments to the statutory consolidated forecast cash flow in FY2012 to reflect the full year impact of the operating and capital structure that will be in place following Completion of the Offer and to eliminate certain non-recurring items. April y/e, $ million EBITDA
1
statutory 60.8 0.6 (10.7) (7.3) (28.0) (13.3) (4.5) (10.2) (35.4) 15.4
Adjustments 1.7 0.0 (10.7)2 0.0 0.0 0.0 0.0 0.0 0.0 (8.9)
pro forma 59.0 0.6 0.0 (7.3) (28.0) (13.3) (4.5) (10.2) (35.4) 24.3
Change in working capital Non-cash movements in EBITDA Maintenance Capital Expenditure Growth Capital Expenditure: New restaurant capital expenditure Rebuild/relocation capital expenditure Refurbishment capital expenditure Capital expenditure operating cash flow after capital expenditure
Notes: 1.
2.
EBITDA in the pro forma forecast consolidated cash flow statement has been adjusted to reflect the pro forma adjustments to the Forecast Statutory Results in the table provided in section 3.3.2, with the exception of adjustments 6, 11, 12 and 13 relating to the pro forma interest expense, the write-off of capitalised franchise fees on Completion of the Offer, the tax effect of the pro forma adjustments and the resetting of tax bases respectively, none of which impact statutory or pro forma EBITDA. Reflects note 9 to the table of pro forma adjustments in section 3.3.2, in respect of the release of guarantee liabilities relating to an entity formerly owned by the Existing Investors. This adjustment is non-cash in nature, and therefore will not be reflected in the forecast statutory operating cash flows after capital expenditure.
3.6
Segment information
Collins Foods has two operating divisions and performs a number of administration functions using a shared services structure. The costs relating to the shared services administration functions are not allocated to a division and include head office salaries, travel, consultancy fees, bonuses and inter-divisional land and building rent. KFC Collins Foods is a franchisee of 119 KFC restaurants in Australia, comprised of 117 in Queensland and two in New South Wales. Sizzler Collins Foods operates 26 Sizzler restaurants in Australia, in Queensland, Western Australia and New South Wales. Collins Foods is the franchisor of 59 Sizzler restaurants in Asia, predominantly located in Thailand, Japan and China.
3.6.1 Summary financials

The table below sets out the summary financials for Collins Foods divisions as outlined above: pro Forma Forecast results Fy2012 318.0 112.3 430.3 53.0 13.0 (7.0) 59.0 16.7% 11.6% 13.7%
pro Forma historical results April y/e, $ million revenue KFC Sizzler total revenue eBItDA KFC Sizzler Shared services total eBItDA eBItDA margin KFC (pre shared service costs) Sizzler (pre shared service costs) total eBItDA margin 16.8% 10.1% 13.3% 15.6% 11.2% 12.8% 16.1% 11.9% 13.6% 50.4 10.6 (6.8) 54.2 46.3 11.9 (6.5) 51.7 49.0 12.8 (5.9) 55.9 300.7 105.2 405.9 296.4 106.5 402.9 303.3 107.5 410.8 Fy2009 Fy2010 Fy2011
3.7
Management discussion and analysis of Historical Financial Information
3.7.1 General factors affecting the operating results of Collins Foods

Below is a discussion of the main factors which affected Collins Foods operations and relative financial performance in FY2009, FY2010 and FY2011 and which the Directors expect may continue to affect it in the future. The discussion of those general factors is intended to provide a brief summary only and does not detail all factors that affected Collins Foods historical operating and financial performance, nor everything which may affect operations and financial performance in the future.
3.7.1.1 Revenue Sales revenue is generated by Collins Foods KFC and Sizzler Australia businesses. Franchise revenue is generated by Collins Foods as the franchisor of Sizzler restaurants in Asia, primarily in Thailand, China and Japan. Drivers of sales revenue in KFC and Sizzler are average number of restaurants open, customer volumes per restaurant, and average spend per customer (cheque average). The change in average number of restaurants open during the year is a function of the number of new restaurants opened (and when they are opened) together with the impact of the temporary closure for, or reopening of existing restaurants from, refurbishment or relocation. Collins Foods targets a cash return of at least 23% on capital expenditure for new restaurants and existing restaurants that are refurbished or relocated in the first full year. The capital expenditure required to open, refurbish, relocate or rebuild a restaurant varies depending on the nature and location of the restaurant and the nature of the refurbishment or relocation. Customer volumes are impacted by macroeconomic factors, the level of advertising, other promotional activity and seasonality. The proportion of sales generated in school holiday periods is higher than in the remainder of the year. There are also six accounting periods in the first half of the year and seven in the second half. Together, those factors historically result in first half results accounting for approximately 46% of full year revenue, while second half results account for 54% of full year revenue. Cheque average is driven by menu prices and varies with the mix of products sold, including the effect of promotional and discount offers made during the year. Historically, Collins Foods has averaged two to three price increases per year with an 80% pass through of price rises to customers. A price pass through percentage attempts to provide a measure of the effectiveness of a price increase by taking into account the variation by customers of their standard order as a result of the increase in the price (some customers will substitute a lower priced item in order to keep their standard total spend unchanged, whereas others will increase their total spend in line with the increased prices). To an extent, Collins Foods has the ability to impact both customer volumes and cheque average through marketing and promotional activity. These two drivers are actively managed to seek to maximise sales revenue and profit. An important indicator of revenue growth is SSSG, which provides a measure of the organic growth in the business over a particular period. It is calculated by analysing the sales growth from those restaurants in the group that were operating in the comparable period in the prior year. It excludes any new stores or refurbished stores for a 12 to 15 month period after opening or remodel to ensure the figures are not distorted by the impact of Growth Capital Expenditure. The level of franchise revenue in Sizzler is determined by the average number of franchise restaurants open, the royalties payable by franchisees (in US dollars) in respect of their local sales revenue and the average foreign exchange rates applicable. 3.7.1.2 Gross profit margin Cost of sales incorporates food costs, an allocation of labour incurred in the direct production of products, packaging and distribution costs. Margin is impacted by menu prices and changes in product costs and wages. Collins Foods manages its price points and cost structure to generate margins at targeted levels. 3.7.1.3 Other operating costs Other operating costs incorporate restaurant labour (excluding that allocated to cost of sales), advertising and royalties, rent, utilities, maintenance and corporate overheads. Collins Foods manages its cost structure to generate margins at targeted levels. 3.7.1.4 Working capital As customers of Collins Foods restaurants primarily pay in cash, Collins Foods has a negative working capital balance (reflected in the excess of trade payables over trade receivables on the balance sheet). This represents a form of funding for Collins Foods. Changes in working capital are essentially driven by movements in trade payables. Trade payable balances vary year on year depending upon the proximity of calendar month end payments to the end of a financial year.
3.7.2 Pro forma income statements: FY2010 compared to FY2009

pro Forma historical results1 April y/e, $ million Average number of restaurants KFC Sizzler Australia Revenue KFC Sizzler total revenue gross profit Gross profit margin Other operating costs eBItDA EBITDA margin eBIt EBIT margin
Note: 1. Explanations of pro forma adjustments to Historical Statutory Results are shown in section 3.3.2.
Fy2009 112.9 25.9 300.7 105.2 405.9 207.8 51.2% (153.6) 54.2 13.3% 39.3 9.7%
Fy2010 116.6 26.0 296.4 106.5 402.9 209.5 52.0% (157.9) 51.7 12.8% 36.1 9.0%
change 3.7 0.1 (1.4%) 1.2% (0.7%) 0.9% 2.8% (4.6%) (8.1%)
The commentary below highlights the key changes in Collins Foods business over the relevant period with reference to the drivers mentioned in section 3.7.1 as relevant. 3.7.2.1 KFC revenue The average number of restaurants increased by 3.7. This was a result of four new restaurants being added in the second half of FY2009 together with the addition of one new restaurant and five restaurants being refurbished during FY2010. Customer numbers reduced as a result of the flow on effects of the global financial crisis on the Queensland economy. Those effects included an increase in unemployment and a significant reduction in consumer confidence and expenditure. Cheque average increased primarily as a result of menu price increases and promotional activity. The combination of the above factors resulted in a SSSG decline of 3.7% and a decrease in revenue of 1.4%. 3.7.2.2 Sizzler revenue Restaurant numbers in Australia were effectively stable at 26. Customer frequency reduced as the macro economic conditions in Sizzlers market segment became increasingly challenging as customers traded down to restaurants with lower price point options. Despite this, cheque average increased, driven by the introduction of new menu items in conjunction with selected price increases. The combination of the above factors resulted in SSSG of 1.1% during FY2010. Sizzler Asia revenues declined due to difficult trading conditions throughout Asia in the wake of the global financial crisis, which was partially offset by the addition of three restaurants by the franchisee in Thailand. Overall, Sizzler revenue increased by 1.2% in FY2010. 3.7.2.3 Gross profit Gross profit margin increased to 52.0% of revenue (compared to 51.2% in FY2009). This increase in profit margin was due to menu price increases which outpaced the increases in the costs of most products sold. This was accentuated by a reduction in the cost of fresh chicken from the abnormally high prices from the previous year. Labour costs in KFC also increased due to the phasing in of the minimum rates of pay contained in the relevant modern labour award.
3.7.2.4 Other operating costs A shortage of restaurant management personnel in FY2009, particularly in KFC, was addressed in FY2010 when the availability of suitable candidates improved, resulting in increased restaurant management labour costs of 5.9%. Advertising expenditures in KFC and Sizzler as a percentage of revenue increased in FY2010 in response to challenging trading conditions. Royalties increased in line with KFC revenue growth. Rent was consistent as a percentage of sales compared with FY2009 since the majority of leases operate on a turnover rent basis. Utilities expenditure increased marginally as a percentage of revenue due to an increase in market determined electricity prices. Corporate expenses reduced as staff bonuses reduced in line with difficult trading conditions. 3.7.2.5 Depreciation and amortisation Depreciation and amortisation increased in FY2010. This was consistent with the new restaurant and remodel activity in KFC together with the refurbishment of the corporate support centre of Collins Foods.
3.7.3 Pro forma historical Cash Flows: FY2010 compared to FY2009

1
Fy2009 54.2 (1.1) (4.8) (13.6) (4.2) (6.8) (2.7) (18.4) 34.7
Fy2010 51.7 0.3 (9.2) (1.8) (1.0) (0.1) (0.6) (11.0) 41.0
change (4.6%) nm nm nm nm nm nm (40.4%)
Change in working capital Maintenance Capital Expenditure Growth Capital Expenditure: New restaurant capital expenditure Rebuild/relocation capital expenditure Refurbishment capital expenditure Capital expenditure operating cash flow after capital expenditure
Note: 1.
EBITDA in the pro forma historical consolidated cash flow statements has been adjusted to reflect the pro forma adjustments to the Historical Statutory Results in the table provided in section 3.3.2, with the exception of adjustments 6 and 12 relating to the pro forma interest expense and the tax effect of the pro forma adjustments respectively, none of which impact pro forma EBITDA in these years.
3.7.3.1 Change in working capital The amount of working capital has remained relatively stable. 3.7.3.2 Capital expenditure for Facility Actions Capital expenditure reduced which was directly attributable to the reduction in Facility Actions. There was one new KFC restaurant constructed compared to four in the prior year. Restaurant remodel activity also reduced with five KFC restaurant refurbishments in FY2010 compared to seven in the prior year. The increase in Maintenance Capital Expenditure primarily related to the investment in ovens required for a new product roll-out in Collins Foods KFC restaurants.
3.7.4 Pro forma income statements: FY2011 compared FY2010 pro Forma historical results1 April y/e, $ million Average number of restaurants KFC Sizzler Australia Revenue KFC Sizzler total revenue gross profit Gross profit margin Other operating costs eBItDA EBITDA margin eBIt EBIT margin
Note: 1. Explanations of pro forma adjustments to Historical Statutory Results are shown in section 3.3.2.
Fy2010 116.6 26.0 296.4 106.5 402.9 209.5 52.0% (157.9) 51.7 12.8% 36.1 9.0%
Fy2011 118.0 25.9 303.3 107.5 410.8 218.3 53.1% (162.4) 55.9 13.6% 40.8 9.9%
change 1.3 (0.1) 2.3% 1.0% 2.0% 4.2% 2.9% 8.2% 12.8%
The commentary below highlights the key changes in the business over the relevant period with reference to the drivers mentioned in section 3.7.1. 3.7.4.1 KFC revenue The average number of restaurants increased by 1.3. This was a result of two new restaurants being added during FY2011 together with seven restaurant refurbishments. Customer numbers declined, which was most evident in the first three quarters of FY2011, due to continued reduced activity levels in the Queensland economy. This included some temporary restaurant closures as a result of the Queensland floods. Customer numbers partially recovered in the fourth quarter of FY2011, despite the occurrence of Cyclone Yasi. Cheque average increased as a result of menu price increases and customer menu item selection. The combination of the above factors resulted in an increase in SSSG of 1.5% and revenue by 2.3% in FY2011. 3.7.4.2 Sizzler revenue Sizzler undertook two restaurant refurbishments during FY2011 which resulted in a slight reduction in average restaurant numbers in FY2011. Despite increases in advertising spend, customer numbers continued to decline due to ongoing challenging trading conditions being experienced by the retail sector. Cheque average, however, increased, driven by the introduction of new menu items in conjunction with selected price increases. The combination of the above factors resulted in SSSG of 1.0% for Sizzler Australia. Sizzler Asia revenues increased as a result of improving trading conditions in Asia, particularly in Thailand and China. This was achieved despite the continuing appreciation of the Australian dollar relative to the US dollar. Overall Sizzler revenue increased by 1.0% in FY2011. 3.7.4.3 Gross profit Gross profit margin increased to 53.1% of revenue (compared to 52.0% in FY2010). This increase in profit margin was due to menu price increases together with commodity price reductions in certain key commodities including fresh chicken, soft drinks and seafood. In addition, operational initiatives and menu simplification contributed to improved inventory control and reduced product wastage. Restaurant labour costs in KFC increased in FY2011. This was due primarily to a $26 per week increase in minimum adult wages awarded by Fair Work Australia during the year. Total labour costs in Sizzler were also impacted by the Fair Work Australia decision and organic growth in the business during the course of FY2011. A further contributor to the labour cost increase for KFC was the continuation of the phasing in of the minimum rates of pay contained in the relevant modern labour award.
3.7.4.4 Other operating costs Advertising expenditures in KFC and Sizzler as a percentage of revenue increased in FY2011 in continued response to the challenging trading conditions confronting both businesses. Royalties paid to Yum! increased in line with KFC revenue growth. Rent was consistent as a percentage of sales compared with FY2010, reflecting the fact that the majority of leases operate on a turnover rent basis. Utilities expenditure increased marginally as a percentage of revenue due to the increases in market determined electricity prices. Corporate expenses reduced due to reduced headcount. 3.7.4.5 Depreciation and amortisation While the level of depreciable assets increased, depreciation decreased in FY2011. This was due to the timing of the capital expenditure which was weighted to the back half of the financial year.
3.7.5 Pro forma historical Cash Flows: FY2011 compared to FY2010

pro forma historical cash Flows April y/e, $ million EBITDA 1 Change in working capital Maintenance Capital Expenditure Growth Capital Expenditure: New restaurant capital expenditure Rebuild/relocation capital expenditure Refurbishment capital expenditure Capital expenditure operating cash flow after capital expenditure
Note: 1.
Fy2010 51.7 0.3 (9.2) (1.8) (1.0) (0.1) (0.6) (11.0) 41.0
Fy2011 55.9 (0.3) (7.9) (7.6) (0.9) (1.3) (5.4) (15.5) 40.1
change 8.2% nm nm nm nm nm nm 41.8%
EBITDA in the pro forma historical consolidated cash flow statements has been adjusted to reflect the pro forma adjustments to the Historical Statutory Results in the table provided in section 3.3.2, with the exception of adjustments 6 and 12 relating to the pro forma interest expense and the tax effect of the pro forma adjustments respectively, none of which impact pro forma EBITDA in these years.
3.7.5.1 Change in working capital The amount of working capital remained relatively stable. 3.7.5.2 Capital expenditure for Facility Actions Capital expenditure increased in FY2011, which was directly attributable to the increase in Facility Actions. There were two new KFC restaurants constructed in FY2011 compared to one in the prior year. Restaurant remodel activity also increased with seven KFC and two Sizzler refurbishments in FY2011 compared to five KFC in the prior year. $1.7 million of Maintenance Capital Expenditure primarily related to the investment in equipment for new product roll-out (Krushers) in KFC.
3.8
Pro forma Forecast Financial Information
The pro forma Forecast Financial Information is based on various best estimate assumptions, including those set out below. In preparing the pro forma Forecast Financial Information, Collins Foods has undertaken an analysis of historical restaurant performance and applied assumptions where appropriate across each of the KFC and Sizzler segments (with adjustments for individual restaurants where considered relevant including as a result of Facility Actions). The assumptions set out below should be read in conjunction with the sensitivity analysis set out in section 3.9, the risk factors set out in section 4 and the Investigating Accountants Report on Forecast Financial Information set out in section 7. A reconciliation of the Pro Forma Forecast Results to the Forecast Statutory Results is set out in section 3.3.2.
3.8.1 Specific assumptions

3.8.1.1 KFC revenue FY2012 forecast revenue growth is based on key assumptions concerning Facility Actions, customer numbers and cheque averages as set out below. Facility Actions Fy2012 forecast revenue growth 3.6 0.8 0.9 2.0 Fy2012 forecast capital expenditure1 7.3 n/a 13.1 3 n/a estimated estimated annualised annualised revenue1,2,4 eBItDA1,2,4 14.5 n/a 6.7 n/a 2.0 n/a 2.2 n/a
$ million New restaurants FY2012 New restaurants FY2011 Refurbishments FY2012 Refurbishments FY2011
Notes: 1. 2. 3. 4.
restaurant numbers 6 2 22 7
Relevant to FY2012 new and refurbished restaurants only. Revenue and EBITDA annualised for 12 months contribution, indicative measure only. Based on FY2012 full year revenue for comparable restaurants. Additional capital expenditure of $1.6 million was incurred in FY2011 for restaurants completed in FY2012. As per page 28 relocation and rebuild returns are treated as new restaurants, therefore do not have pre refurbishment revenue or EBITDA. The relevant revenue and EBITDA figures for the table above, as if the relocation and rebuilds were treated as new restaurants, would be $14.6 million and $3.3 million respectively.
New restaurants The forecast FY2012 revenue contribution from new restaurants is based on an analysis of the sales history from comparable Collins Foods restaurants with similar demographics assuming similar results can be obtained for those new restaurants being opened as for those opened historically, taking into account assumed timing of restaurant openings. The associated capital expenditure is based on recent comparable restaurant spend, or where available tenders. This expenditure is planned to be funded out of free cash flow from operations. Collins Foods opened two new restaurants during FY2011. Collins Foods is forecasting it will generate an additional $0.8 million of revenue from those new restaurants in FY2012 compared to revenue generated in FY2011 (assumed for the period beginning 1 May 2011 to the first anniversary of the restaurant opening). Refurbished restaurants The forecast FY2012 revenue contribution from restaurants refurbished during FY2012 is based on an analysis of the historical results of comparable past remodels with similar demographics, assuming similar results can be obtained for those restaurants being remodelled as for those remodelled historically. It also takes into account revenue expected to be forgone while the restaurant is closed during construction and the expected timing of restaurant reopening. The associated capital expenditure is based on recent comparable restaurant spend or, where available, tenders. This expenditure is to be funded out of free cash flow from operations. Collins Foods forecasts it will generate an additional $2.0 million of revenue in FY2012 from the restaurants it refurbished in FY2011 (assumed for the period beginning 1 May 2011 to the first anniversary of the restaurant reopening).
Customer numbers and cheque average Collins Foods forecasts SSSG of 2.8% in FY2012, reflecting a combination of growth in customer numbers and cheque average as outlined below. Same store customer numbers are forecast to grow by 1.2%. This is based on an increase in customer numbers in Q4 FY2011 driven by promotional activity and an improvement in the Queensland economy resulting from a recovery in resource industries. Same store cheque average is forecast to grow by 1.7%, reflecting menu price increases and product mix changes in the forecast period. The assumed price increases are lower than those achieved in recent years in light of current market conditions. 3.8.1.2 Sizzler revenue FY2012 forecast revenue is based on key assumptions concerning Facility Actions, customer numbers and cheque averages as set out below. Facility Actions Fy2012 forecast revenue growth 2.6 n/a (0.1) 1.2 Fy2012 forecast capital expenditure1 6.0 n/a 1.6 n/a estimated estimated annualised annualised revenue1, 2 eBItDA1, 2 10.4 n/a 0.8 n/a 1.6 n/a 0.2 n/a
$ million New restaurants FY2012 New restaurants FY2011 Refurbishments FY2012 Refurbishments FY2011
Notes: 1. 2.
restaurant numbers 2 0 4 2
Relevant to FY2012 new and refurbished restaurants only. Annualised for 12 months contribution, indicative measure only. Based on FY2012 full year revenue for comparable restaurants.
New restaurants for Sizzler Australia The forecast FY2012 revenue contribution from new restaurants is based on the sales history from comparable Collins Foods restaurants with similar demographics assuming similar results can be obtained for those new restaurants being opened as for those opened historically taking into account assumed timing of restaurant openings. The associated capital expenditure is based on comparable store spend, adjusted for inflationary increases or, where available, tenders, and is expected to be funded out of free cash flow from operations. Refurbished restaurants for Sizzler Australia The forecast FY2012 revenue contribution from restaurants refurbished during FY2012 is based on the historical results of past remodels from comparable Collins Foods restaurants with similar demographics assuming similar results can be obtained for those restaurants being remodelled as for those remodelled historically. It also takes into account revenue forgone while the restaurant is closed during construction and the timing of the restaurant reopening. Collins Foods also forecasts to generate $1.2 million in revenue from restaurants refurbished in FY2011 (assumed for the period beginning 1 May 2011 to the first anniversary of the restaurant reopening). The associated capital expenditure is based on recent comparable restaurant spend or, where available, tenders. This expenditure is to be funded out of free cash flows. Customer numbers and cheque average for Sizzler Australia Collins Foods forecasts SSSG of 1.3% in FY2012, reflecting a combination of decline in customer numbers and growth in cheque average as outlined below. Same store customer numbers are forecast to decline by 1.6% in FY2012, reflecting a decline in Sizzler customer numbers observed by Collins Foods in Q4 FY2011 and which Collins Foods believes reflects consumer uncertainty impacting discretionary spend in the restaurant sector. Same store cheque average is forecast to grow by 2.9%, reflecting menu price increases and product mix changes. The assumed price increases are lower than those achieved in recent years in light of current market conditions. Sizzler Asia Revenue from Sizzler Asia is forecast to decrease by $0.1 million (to $2.5 million) as a result of restaurant closures in Taiwan in FY2011 and the expected closure of two restaurants in South Korea in FY2012.
3.8.1.3 Gross profit margin assumptions Gross profit margin is forecast to be 53.5% of revenue in FY2012. This represents a modest increase in gross margin percentage from FY2011 (53.1%) and is based on the assumption that menu price increases (as described above) will continue to slightly exceed the expected cost increases in most major input products, including fresh chicken, chips, soft drinks and packaging. Commodity price increases are based on contracted price increases, where relevant. Pricing for over 90% of key commodities for its KFC restaurants are already contracted for FY2012. Prices for approximately 23% of Sizzler Australias key commodities are contracted with suppliers. Non-contracted price increases have been forecast in line with inflation (assumed to be 3%), or above inflation where it is known or expected that prices in FY2012 will be higher than 3%. Direct labour costs are forecast to increase from FY2011 by 4.8%, based on average hourly rate or Fair Work Australia increases, plus additional headcount related to new restaurant openings. As a percentage of revenue, direct labour costs are consistent with recent Collins Foods experience. 3.8.1.4 Operating expenses assumptions Operating expenses (including rent) are forecast to be $171.0 million in FY2012. This reflects an increase of $8.6 million from FY2011, which is driven by an increase in the variable component of operating expenses and the following key assumptions. Indirect labour costs and administration costs are assumed to increase by 6.3% from FY2011, based primarily on an increase in the number of restaurants and a 4% salary increase (which is consistent with Collins Foods recent experience) to attract and retain quality restaurant management staff. Advertising is assumed to be 6.0% of KFC annual sales revenue, based on the revised agreements with Yum! (refer sections 2.2.7 and 8.1) and 5.0% of Sizzler sales revenue, based on historic levels of spend. Royalty expenses are assumed to represent 6.0% of KFC annual sales revenue based on the revised agreements with Yum! (refer sections 2.2.7 and 8.1). Rental expenses are assumed to be $23.4 million in FY2012, based on the terms of the relevant lease agreements for all restaurants, and expected costs associated with the new restaurant openings (based on agreed terms or comparable restaurant costs). The majority of lease agreements contain clauses providing that rental expense is to be determined as the higher of an amount calculated by reference to turnover and an amount calculated by reference to a base rental expense as increased by an inflationary, fixed increase or market rate escalation clause. Utilities expenditures are assumed to increase in FY2012 by 9.4% compared to FY2011, based on increases in market determined electricity prices and new restaurant openings. Approximately 28% of the utility costs are contracted with the remainder of costs mainly based on the Queensland Competition Authoritys electricity pricing. Other operating costs are assumed to increase in line with inflation at 3%. 3.8.1.5 Depreciation and amortisation assumptions Depreciation expense and amortisation is forecast to be $15.6 million in FY2012, compared to $15.2 million in FY2011. Depreciation for FY2012 is based on the useful lives and costs of the existing asset base, adjusted for the impact of additional capital expenditure from the date of commissioning of assets. FY2012 amortisation also includes the amortisation of fees associated with the new KFC franchising arrangements which will take effect on Completion of the Offer. 3.8.1.6 Net interest expense assumptions Net interest expense is forecast to be $8.0 million in FY2012, based on the revised capital structure (New Debt Facilities) as set out in section 3.4.3. The net interest expense forecast assumes $105.0 million of drawn facilities with the interest rate hedged for 50% of the drawn facilities. A $1.0 million average draw down on the Working Capital Facility in relation to timing of cash flows is also assumed. Net interest expense includes amortisation of borrowing costs $0.2 million and undrawn facility fees $0.3 million net of the forecast interest income. Based on BBSY as at 25 May 2011 of 5.0683%, the average effective interest rate of Facility A is assumed to be 7.2%. It is assumed there is no change to the capital structure from the consolidated pro forma post Offer balance sheet set out in section 3.4.
3.8.1.7 Income tax expense assumptions Income tax expense of $10.6 million has been forecast based on an effective tax rate of 30.1%, representing a blend of the current corporate income tax rate of 30% applicable in Australia for FY2012 and withholding tax in Asia for FY2012. Income tax expense has been adjusted to reflect the tax effect of differences relevant to the pro forma forecast information. These differences are outlined in Note 12 to the table in section 3.3.2. 3.8.1.8 Working capital assumptions The growth in working capital balances ($0.6 million) has been forecast in line with forecast revenue growth, assuming historical working capital trends are maintained during the forecast period. 3.8.1.9 Maintenance Capital Expenditure Maintenance Capital Expenditure is forecast to be $7.3 million, which is equivalent to 1.7% of revenue and which is consistent with normalised historical levels of expenditure, after adjusting for one off projects, such as the introduction of grill ovens in FY2010 ($3.0 million) and equipment associated with KFCs Krushers product in FY2011 ($1.7 million). No significant new equipment is forecast to be necessary to deliver the products forecast for FY2012. This expenditure is planned to be funded out of free cash flow from operations.
3.8.2 General assumptions

In preparing the Forecast Financial Information, the following general best estimate assumptions have been adopted: No material change in the competitive operating environment in which Collins Foods operates; No significant deviation from current market expectations of global or Australian economic conditions relevant to the food industry in Australia for the period; No material changes in Australian Commonwealth state or local government legislation, tax legislation, regulatory legislation, regulatory requirements or government policy that will have a material impact on the financial performance or cash flows, financial position, accounting policies, financial reporting or disclosure of Collins Foods during the forecast period; No material changes in key personnel; No material changes in applicable Australian Accounting Standards, other mandatory professional reporting requirements or the Corporations Act which have a material effect on Collins Foods financial performance, financial position, accounting policies, financial reporting or disclosure; No material industry strikes or other disturbances, environmental costs, contingent liabilities or legal claims will arise or be settled to the detriment of Collins Foods; No material cash flow or income statement or financial position impact in relation to litigation (existing or otherwise); No material acquisitions or disposals of businesses other than as set out in, or contemplated by, this Prospectus; No material changes to Collins Foods corporate and funding structure other than as set out in, or contemplated by, this Prospectus; No material disruptions to the continuity of operations of Collins Foods nor other material changes in its business; No material amendment to any material agreement or arrangement relating to Collins Foods business other than set out in, or contemplated by, this Prospectus; and None of the risks listed in section 4 have a material adverse impact on the operations of Collins Foods.
3.8.3 Pro forma income statements: FY2012 compared to FY2011

pro Forma historical results1 April y/e, $ million Average number of restaurants KFC Sizzler Australia Revenue KFC Sizzler total revenue gross profit Gross profit margin Other operating costs eBItDA EBITDA margin eBIt EBIT margin
Note: 1.
pro Forma Forecast results1 Fy2012 119.1 26.3 change 1.1 0.4
Fy2011 118.0 25.9
303.3 107.5 410.8 218.3 53.1% (162.4) 55.9 13.6% 40.8 9.9%
318.0 112.3 430.3 230.1 53.5% (171.0) 59.0 13.7% 43.4 10.1%
4.8% 4.4% 4.7% 5.4% 5.3% 5.6% 6.5%
Explanations of pro forma adjustments to Historical and Forecast Statutory Results are shown in section 3.3.2.
3.8.4 Pro forma Cash Flows: FY2012 compared to FY2011

1
pro forma forecast cash Flows Fy2012 59.0 0.6 (7.3) (28.0) (13.3) (4.5) (10.2) (35.4) 24.3 change 5.6% nm nm nm nm nm nm 127.6%
Fy2011 55.9 (0.3) (7.9) (7.6) (0.9) (1.3) (5.4) (15.5) 40.1
Change in working capital Maintenance Capital Expenditure Growth Capital Expenditure: New restaurant capital expenditure Rebuild/relocation capital expenditure Refurbishment capital expenditure Capital expenditure operating cash flow after capital expenditure
Note: 1.
EBITDA in the pro forma historical and forecast consolidated cash flow statements has been adjusted to reflect the pro forma adjustments to the Historical Statutory Results and Forecast Statutory Results in the table provided in section 3.3.2, with the exception of adjustments 6, 11, 12 and 13 in respect of the pro forma interest expense, the write-off of capitalised franchise fees on Completion of the Offer, the tax effect of the pro forma adjustments and the resetting of tax bases respectively, none of which impact pro forma EBITDA.
3.9 Sensitivity analysis
The Forecast Financial Information is based on a number of estimates and assumptions as described in section 3.8.1 and section 3.8.2. These estimates and assumptions are subject to business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Collins Foods, the Directors and Management. These estimates are also based on upon assumptions with respect to future business decisions, which are subject to change. Set out below is a summary of the sensitivity of the Pro Forma Forecast Results to changes in a number of key assumptions. The changes in the key assumptions set out in the sensitivity analysis are not intended to be indicative of the complete range of variations that may be experienced. For the purposes of this analysis, each sensitivity is presented in terms of the impact of each on FY2012 forecast pro forma NPAT of $24.7 million and is set out below. Fy2012 Increase/ pro forma (decrease)1 NpAt impact 1.0%/(1.0%) n/a 1.0%/(1.0%) 1.0%/(1.0%) 1.0%/(1.0%) 1.0/(1.0) (0.2) (1.4)/1.4 (1.0)/1.0 (0.4)/0.4
Assumption Sales 2 Delay of 12 weeks for all new restaurant openings 3 Cost of sales Other operating costs Interest 4
Notes: 1. 2. 3. 4.
These sensitivities are relative sensitivities. A +/ 1% variation is to be interpreted as resulting in the base assumption (revenue or cost) x 1.01 or 0.99 respectively. Based on a change in customer volumes and associated increases and decreases in variable operating costs. Represents the impact of delaying the specific NPAT contributions of the new restaurants for 12 weeks. Based on an absolute increase or decrease of 1% in BBSY. The net interest expense forecast assumes $105.0 million of drawn facilities with the interest rate hedged for 50% of the drawn facilities.
Care should be taken in interpreting each sensitivity. The estimated impact of changes in each of the assumptions has been calculated in isolation from changes in other assumptions, in order to illustrate the likely impact on the forecasts. In practice, changes in assumptions may offset each other or be additive, and it is likely that Management would respond to any adverse change in one item to seek to minimise the net effect on Collins Foods financial performance.
3.10 Dividend policy

Subject to the forecasts being achieved and other relevant factors, the Board expects to declare a final dividend in respect of FY2012 of 11.8 cents per Share which represents an annualised dividend yield of 6.4%1. It is expected that the dividend will be fully franked. Depending on available profits and the financial position of Collins Foods Limited, it is the current intention of the Board to pay an interim dividend each December and a final dividend each July. It is expected that all future dividends will be franked to the maximum extent possible. The Directors intend to target a payout ratio of at least 50% of statutory NPAT; however, the payment of a dividend by Collins Foods is at the discretion of the Directors and will be a function of a number of factors, including the general business environment, the operating results and the financial condition of Collins Foods, future funding requirements, capital management initiatives, potential strategic growth opportunities, taxation considerations (including the level of franking credits available), any contractual, legal or regulatory restrictions on the payment of dividends by Collins Foods (including the Yum! arrangements), and any other factors the Directors may consider relevant. Therefore, no assurances can be given by any person, including the Directors, about the payment of any dividend and the level of franking on any such dividend.
The FY2012 dividend of 11.8 cents per Share is based on the earnings generated during the period from the completion of the Offer and 29 April 2012. On an annualised basis this represents a dividend yield of 6.4%.
4 rIsks
KFC Chicken Salad
4 rIsks
An investment in Collins Foods will be exposed to a number of risks. Risks that the Directors believe are key risks are described in section 4.1 below. The key risks are the risks that senior Management and the Directors focus on when managing the business of Collins Foods and have the potential, if they occurred, to result in very significant consequences for Collins Foods and an investment in it. The balance of risks regarded by the Directors as potentially material are described in section 4.2. There are also risks that are common to all investments in shares and which are not specific to an investment in Collins Foods; for example, the general volatility of share prices including as a result of general economic conditions (including monetary and fiscal policy settings as well as exchange and interest rates) in Australia and overseas and other events outside the usual course of Collins Foods business such as acts of terrorism or war. Investors should note that the occurrence or consequences of some of the risks described in this section of the Prospectus are partially or completely outside the control of Collins Foods, its Directors and senior Management. Further, investors should note that this description focuses on the risks referred to above and does not purport to list every risk that Collins Foods may have now or in the future. It is also important to note that there can be no guarantee that Collins Foods will achieve its stated objectives or that any forward looking statements or forecasts contained in this Prospectus will be realised or otherwise eventuate. Investors should satisfy themselves that they have a sufficient understanding of these matters, including the risks described in this section of the Prospectus, and have regard to their own investment objectives, financial circumstances and taxation position before investing in Collins Foods. If you do not understand any part of this Prospectus, or are in any doubt as to whether to invest in Shares or not, it is recommended that you seek professional guidance from your stockbroker, solicitor, accountant or other independent and qualified professional adviser before deciding whether to invest.
4.1
Key risks
4.1.1 Food safety and sanitation

There is a risk that a serious food-poisoning incident could occur at a Collins Foods KFC or Sizzler restaurant as a result of an operational lapse in food safety or sanitation procedures or malicious tampering. The occurrence of a serious food-poisoning incident at a KFC or Sizzler restaurant (including restaurants operated by others as discussed in section 4.1.5 Brand and reputation calamity) is likely to have very significant consequences for Collins Foods same branded restaurants. It may involve: A loss of consumer trust in the relevant brand that results in reduced revenues; An increase in expenditure on advertising to seek to attempt to restore consumer trust in the relevant brand; Some or all restaurants for the relevant brand being partially or wholly closed while the relevant food safety authorities satisfy themselves that the underlying issue has been resolved satisfactorily. Revenues from these restaurants would be forgone as a result; and The payment to affected consumers (or their dependents) of some form of compensation and to the relevant food authorities of some form of penalty or fine (unless the incident results from malicious tampering).
See also the description of Collins Foods related exposure to brand and reputation calamity risk in section 4.1.5 below.
4.1.2 Security of supply chain

There is a risk that the supply chain for one or more of Collins Foods restaurants will be materially disrupted with the result that sufficient quantities of supplies are not delivered on time. This could result from the occurrence of a natural disaster that affects the delivery by suppliers of supplies to restaurants; for example, a flood, or alternatively some industry-wide phenomena affecting the availability of supplies to suppliers; for example, a widespread disease in chickens. It should be noted that the failure of any one supplier common to all restaurants, or the failure of all suppliers to a limited number of restaurants, is unlikely to result in material consequences for Collins Foods. The occurrence of such an event would potentially have significant consequences for all Collins Foods restaurants (as well as the QSR or casual dining industries more generally), including the inability to sell some or all products, with an associated loss of revenue and (potentially) brand damage, increased costs flowing from alternative delivery arrangements, or a combination of both.
4.1.3 Relationship with Yum! (termination for non-compliance)

There is a risk that Yum! could terminate KFC franchise arrangements with Collins Foods as a result of a material breach by Collins Foods of its obligations to Yum! under those arrangements (including to refrain from damaging the KFC brand, a failure by Collins Foods to upgrade its KFC restaurants to Yum! brand standards or if a person acquires control of Collins Foods without Yum!s prior consent). The termination of all of Collins Foods KFC franchise arrangements would result in: The imposition on Collins Foods of an obligation not to be engaged in or perform any services for any business involving the preparation, marketing or sale of products similar to the KFC products for a period of 12 months; and Collins Foods ceasing to trade as KFC through any of its restaurants, with an associated loss of revenue and cost to refurbish its restaurants (if an alternative use for them could be found).
There is a possibility that this would result in Collins Foods being unable to conduct any business from these sites, or be unable to conduct a business that generates revenues equal to those currently being generated, or the cessation of business at all sites and the sale of the assets to a third party or to Yum!.
4.1.4 Change in regulation

There is a risk that laws or regulations will be introduced that seek to reduce the advertising or consumption of foods sold by QSRs generally which would affect Collins Foods KFC restaurants and potentially its Sizzler restaurants, including by imposing restrictions on the location of restaurants, by the introduction of mandatory dietary content disclosures or by the introduction of taxation measures that reference food content. While the Directors do not believe any specific proposals are currently being considered in Queensland (and that it is therefore difficult to ascertain the likely consequences for Collins Foods of any such development), there is the potential for such measures to reduce materially revenues, increase its costs or cause both to arise.
4.1.5 Brand and reputation calamity

There is a risk that some incident beyond the control of Collins Foods could occur which would have the effect of reducing consumer confidence or preferences for the KFC or Sizzler brands or for any of the component menu items sold by those businesses, such as: The occurrence of a food safety incident at a KFC or Sizzler restaurant belonging to a separate franchisee elsewhere in Australia or overseas; A widespread loss of consumer confidence in one or more of the products sold by Collins Foods restaurants; and A widespread loss of consumer confidence in the food safety procedures in the industry as a whole.
The consequences of such an incident could be very significant for either or both of Collins Foods KFC and Sizzler restaurants, including reduced revenues, loss of consumer trust in the relevant brand or products, reduced desirability of restaurants for the relevant brand to landlords and reduced prominence of the relevant brand in customers minds.
4.1.6 Failure of growth driver (open insufficient number of new restaurants)

There is a risk that Collins Foods will be unable to open new KFC or Sizzler restaurants in accordance with its capital expenditure programme, including as a result of an inability to secure: Government development approvals in accordance with the capital expenditure timetable; Sufficient numbers of professional builders to construct the new restaurants; Suitable sites for new restaurants on acceptable terms or at all; Landlord approvals; and Yum! approval to open a new restaurant.
The effect of such a failure would be reduced or no growth for the relevant Collins Foods business.
4 rIsks
4.1.7 Failure of growth driver (insufficient successful new products and LTOs)
There is a risk that Collins Foods will be unable to offer a sufficient number of successful new products or limited time offers at its KFC and Sizzler restaurants, which could potentially result in reduced or negative organic growth.
4.1.8 Reduction in customer numbers

There is a risk that economic conditions in or consumer sentiment affecting the markets in which Collins Foods operates could deteriorate, with the potential result that customer numbers reduce leading to lower or negative organic growth.
4.1.9 Insufficient supervision of operations by management

Close attention by management to the day to day operations of its restaurants and other aspects of the business is critical to Collins Foods performance. A failure to do this would be likely to result in reduced revenues, increased costs, or a combination of both.
4.2
Other risks
4.2.1 Failure of growth driver (inability to refurbish existing restaurants)

There is a risk that Collins Foods will be unable to refurbish existing KFC and Sizzler restaurants in a particular year in accordance with its capital expenditure programme, including as a result of an inability to secure sufficient numbers of professional builders to refurbish existing restaurants in accordance with the refurbishment programme. The effect of such a failure would be reduced or negative growth and potentially reduced revenues, for the relevant Collins Foods businesses and potentially (in the case of its KFC restaurants) a breach of its obligations to Yum! to execute the capital expenditure programme (which could give lead to a termination of the KFC franchise arrangements with Yum!).
4.2.2 Inability to employ sufficient numbers of staff in required locations

There is a risk that Collins Foods will be unable to employ sufficient numbers of staff for its KFC and Sizzler restaurants, including in those regions experiencing strong economic growth as a result of the high levels of activity in the mining and resources industry. This would result in decreased operational efficiencies and increased costs for the affected restaurants, which, if affecting a substantial number of restaurants, could result in material reduction in profits for Collins Foods.
4.2.3 Competition (existing competitors)

There is a risk that the existing QSR competitors of Collins Foods KFC restaurants will develop strategies for the conduct and advertising of their businesses that result in sustained and material reductions in revenues for Collins Foods.
4.2.4 Lease renewal (inability to renew on acceptable terms)

There is a risk that Collins Foods will not be able to renew its site leases on acceptable terms or at all, which would result in the closure of the restaurants operated at the relevant sites and thereby an associated loss of the revenue previously generated by those restaurants. Given the scarcity of appropriate sites in some areas, it may also result in the inability to operate a restaurant within those areas at all.
4.2.5 Reduced or negative population growth

There is a risk that reduced or negative population growth will be experienced in Queensland. Were this to occur it is expected that it would result in reduced or negative growth in the size of the QSR and casual dining markets in the affected regions, and thereby reduced growth or reduction in revenues for the Collins Foods restaurants operating in those regions.
4.2.6 Failure of advertising programmes

There is a risk that the advertising programmes conducted by ADCO for KFC nationally and in Queensland, and by Collins Foods for KFC locally and for Sizzler in its markets, will be poorly constructed or executed with the result of reduced growth in or lower revenues for the relevant businesses.
4.2.7 New restaurants

There is a risk that new restaurants opened by Collins Foods will be unprofitable because they are not supported by a sufficient market or are not adequately staffed or managed. There is also a risk that new restaurants: Waste construction costs or incur construction costs earlier than necessary; and Cannibalise revenues of existing restaurants to a greater extent than predicted.
4.2.8 Failure of growth driver (refurbishments over-capitalised)

There is a risk that Collins Foods will over-capitalise the refurbishment of its existing KFC and Sizzler restaurants, resulting in material wasted costs being incurred.
4.2.9 Suppliers (change in pricing dynamics)

There is a risk that the supply chains for Collins Foods businesses (which include in material part the supply chains for Yum! nationally in respect of the KFC business) will develop in such a way that Collins Foods becomes exposed to material pricing risk; for example, by a reduction of competition for the supply of key product components. The Directors do not believe this is currently occurring in any material respect; however, if it occurred it could potentially result in a material increase in costs.
4.2.10 Reduced demand (material change in consumer dietary preferences)

There is a risk that consumer dietary preferences will develop in such a way that demand for Collins Foods products is reduced. The Directors do not believe this is currently occurring in any material respect; however, if this occurred it could potentially result in materially reduced revenues.
4.2.11 Litigation risk

Collins Foods is exposed to litigation risk principally relating to customer and employee personal injury claims. While the historical experience of the frequency and quantum of existing claims suggests that this is not currently a material issue, there is the potential for one or more claims that are material in cumulative quantum to occur with the result that costs are increased or the brand is damaged.
5 key people, INterests AND BeNeFIts
Sizzler honey BBQ pork ribs
Board of Directors
(From left to right: Russell Tate, Kevin Perkins, Newman Manion and Bronwyn Morris)
5.1
Board of Directors
The Directors of Collins Foods Limited bring to the Board relevant expertise and skills, including industry and business knowledge, financial management and corporate governance experience. Director russell tate position Chairman experience, qualifications and expertise Russell was an Executive Director of ASX listed STW Communications Group Limited from its IPO (as John Singleton Advertising) in 1994 to 2008. He was Group Managing Director / CEO from 1997 until 2006. He was Executive Chairman from 2006 to 2008 and Deputy Chairman from 2008 to 2011. Russell was appointed Executive Chairman of ASX listed Macquarie Radio Network Limited in 2009, a position he still holds. He is also Chairman of Central Coast Stadium Limited. kevin perkins Managing Director and CEO Kevin is a highly experienced manager in the QSR and casual dining segments of the Australian restaurant industry. He has had more than 32 years experience with Collins Foods, having overseen its growth both domestically and overseas over that time. Kevin is one of 13 franchisee presidents currently sitting on the KFC International Brand Council, an informal advisory group of Yum! franchisees. Newman Manion Non-executive Director Newman has had over 30 years experience in the food franchise industry, including over 29 years since 1982 in various roles with Yum!. Previously Newman served as a board member for KFC Japan (from 2005 to 2008), general manager of KFC operations in Australia and New Zealand (from 1995 to 2004), development director of PepsiCo restaurants (including KFC) in Australia (from 1990 to 1995) and general manager of KFC New Zealand (from 1988 to 1990). Most recently Newman was Vice-President, Operations for Yum!s Asian franchise business (from 2004 until 2010). Bronwyn Morris Non-executive Director Bronwyn is a professional director with an executive career background in accounting and finance. She worked for KPMG for over 20 years, including seven years as partner. Bronwyns current roles include director of Spotless Group Limited, QIC Limited, Care Australia, The Royal Automobile Club of Queensland Limited and Gold Coast 2018 Commonwealth Games Bid Limited. Bronwyn is also currently a member of the Queensland Council of the Australian Institute of Company Directors. She is Chairman of the Audit, Finance and Risk Committee of Spotless Group Limited. Bronwyn is a former director of other companies including Stanwell Corporation Limited, Colorado Group Limited and Taylors Group Limited, and a former Councillor of Bond University.

Russell Tate, Newman Manion and Bronwyn Morris were appointed non-executive directors of Collins Foods Limited following its incorporation on 10 June 2011. Kevin Perkins was appointed executive director on 15 July 2011. The composition of Collins Foods Limiteds board committees, and summary of its key corporate governance policies is set out in section 5.5.2. Each Director above has confirmed to Collins Foods Limited that he or she anticipates being available to perform their duties as a non-executive director or executive director (and employee) as the case may be of Collins Foods Limited without constraint from other commitments. The Board considers that each of Russell Tate, Newman Manion and Bronwyn Morris are free from any business or any other relationship that could materially interfere with, or reasonably be perceived to interfere with the independent exercise of the Directors judgement and is able to fulfil the role of an independent Director for the purposes of the ASX Corporate Governance Principles and Recommendations (second edition). Kevin Perkins is not currently considered by the Board to fulfil the role of independent director. He is the Chief Executive Officer of Collins Foods and expects to hold on Completion of the Offer approximately 7.5% of the Shares of Collins Foods Limited.
5.2
Management
senior Management
The below diagram shows the current senior Management structure of Collins Foods Limited.
Kevin Perkins Managing Director and CEO Simon Perkins CFO Global Martin Clarke CEO KFC James Ryan CEO Sizzler John Hands CSO/CIO
Name kevin perkins simon perkins
title Managing Director and CEO CFO Global
years with collins Foods Background 32 Refer to section 5.1
17
Simon joined the Collins Foods business in 1994 and has been CFO since 1995. Prior to Collins Foods, he held accounting or finance positions with Deloitte, Haskins & Sells (from 1979 to 1986) and Coopers & Lybrand (from 1986 to 1989). Following this, he held positions within Daikyo Australia (1989 to 1990), ARCO Coal (1990 to 1993) and as CFO with Biggs & Biggs Francis McGregor (1993 to 1994). Martin first joined the Collins Foods business as a food service team member in 1980. Since then he has gained extensive experience across a wide range of roles, including Assistant Manager (1982 to 1984), Restaurant General Manager (1984 to 1988), Area Manager (1988 to 2006), Director of Operations (2006 to 2008) leading up to his current role overseeing Collins Foods KFC operations since 2009. James joined the Collins Foods business in 1983. Since then he has held positions as State Manager of Sizzler WA (with responsibility for introducing the Sizzler brand to WA), Director of Group Services and as General Manager of Sizzler Australia/Asia, leading to his current role as CEO of Sizzler. He is currently responsible for the strategic development of the Sizzler brand in Australia and Asia. John has 22 years experience with the Collins Foods business. His role includes responsibility for purchasing, supply logistics and distribution, and information needs. Prior to joining Collins Foods, John spent 20 years in the Australian Defence Force in varying roles, achieving the rank of Lieutenant Colonel.
Martin clarke
CEO KFC
31
James ryan
CEO Sizzler
28
John hands
CSO/CIO
22
In addition to senior Management, Collins Foods KFC business has 40 divisional employees, over 440 restaurant managers and approximately 600 full time and 3,900 casual and part time staff. Collins Foods Sizzler Australia business has 22 divisional employees, over 130 restaurant managers and approximately 200 full time and 2,000 casual and part time staff.
5.3
Interests and benefits
This section sets out the nature and extent of the interests and fees of certain persons involved in the Offer. Other than as set out below or elsewhere in this Prospectus, no: Director or proposed Director of Collins Foods Limited; Person named in this Prospectus and who has performed a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus; Promoter of Collins Foods Limited; or Stockbroker to the Offer,
holds at the time of lodgement of this Prospectus with ASIC, or has held in the two years before lodgement of this Prospectus with ASIC, an interest in: The formation or promotion of Collins Foods Limited; Property acquired or proposed to be acquired by Collins Foods Limited in connection with its formation or promotion, or in connection with the Offer; or The Offer,
and no amount (whether in cash, Shares or otherwise) has been paid or agreed to be paid, nor has any benefit been given or agreed to be given to any such persons for services in connection with the formation or promotion of Collins Foods Limited or the Offer or to any Director or proposed Director to induce them to become, or qualify as, a Director of Collins Foods Limited.

5.3.1 Directors interests and remuneration
Executive Director Collins Foods Limited has entered into an employment contract with Kevin Perkins to govern Kevins employment with Collins Foods Limited. Kevin is Managing Director of Collins Foods Limited and is employed in the position of Chief Executive Officer. Kevin will receive an annual base salary of $746,750, and have the opportunity to receive 70% of his annual remuneration in the form of a short-term incentive, payable after the annual results of Collins Foods Limited have been published. The payment under this short-term incentive will be determined by the Board of Directors and vary depending on the amount by which Collins Foods EBITDA for FY2012 exceeds forecast EBITDA. No short-term incentive will be paid if forecast EBITDA is not achieved. The amount may be significantly increased if the targets are materially exceeded. Kevins employment contract has a term of three years commencing on Completion of the Offer. Collins Foods Limited or Kevin may terminate Kevins employment after the expiry of 30 months from Completion of the Offer, by providing at least six months notice in writing before the proposed date of termination, or in Collins Foods Limiteds case, payment in lieu of notice. Collins Foods Limited may terminate the employment of Kevin immediately and without payment in lieu of notice in certain circumstances including for any act of dishonesty, fraud, wilful disobedience, serious misconduct or serious breach of duty. Kevins employment contract also includes a restraint of trade period of 12 months. Enforceability of such restraint of trade is subject to all usual legal requirements. Director remuneration Under the Constitution, the Directors decide the total amount paid to all Directors as remuneration for their services as a Director to Collins Foods. However, under ASX Listing Rules, the total amount paid to all Directors for their services must not exceed in aggregate in any financial year the amount fixed by Collins Foods in general meeting. This amount has been fixed by Collins Foods at $700,000. For the remainder of the financial year ending 29 April 2012, it is expected that the fees payable to the current Directors will not exceed $275,000 in aggregate. Annual directors fees currently agreed to be paid by Collins Foods are $180,000 to the Chairman, Russell Tate, $95,000 to Newman Manion and $105,000 to Bronwyn Morris. The remuneration of Directors must not include a commission on, or a percentage of profits or operating revenue. Superannuation on these amounts will also be paid at 9% of the respective amounts. Deeds of access, indemnity and insurance for Directors Collins Foods Limited has entered into deeds of indemnity, insurance and access with each Director which confirm each persons right of access to certain books and records of Collins Foods Limited for a period of seven years after the Director ceases to hold office. This seven year period can be extended where certain proceedings or investigations commence before the seven years expires. The deed also requires Collins Foods Limited to provide an indemnity for liability incurred as an officer of Collins Foods Limited and its subsidiaries, to the maximum extent permitted by law. Indemnification: Pursuant to the Constitution, Collins Foods Limited is required to indemnify all Directors and employees, past and present, against all liabilities allowed under law. Collins Foods Limited has entered into an agreement with each Director to indemnify those parties against all liabilities to another person that may arise from their position as Director or other officer of Collins Foods Limited or its subsidiaries to the extent permitted by law. The deed stipulates that Collins Foods Limited will meet the full amount of any such liabilities, including reasonable legal costs and expenses. Insurance: Pursuant to the Constitution, Collins Foods Limited may arrange and maintain directors and officers insurance for its Directors to the extent permitted by law. Collins Foods Limited has entered into an agreement with each Director to obtain such insurance during each Directors period of office and for a period of seven years after a Director ceases to hold office. This seven year period can be extended where certain proceedings or investigations commence before the seven years expires. Other information Directors may also be reimbursed for travel and other expenses incurred in attending to Collins Foods Limiteds affairs. Non-executive directors may be paid such additional or special remuneration as the Directors decide is appropriate where a Director performs extra work or services which are not in the capacity as Director of Collins Foods Limited or a subsidiary. There are no retirement benefit schemes for Directors, other than statutory superannuation contributions.
Directors Shareholdings Directors are not required under the Constitution to hold any Shares in Collins Foods Limited. The Directors (and their associates) are entitled to apply for Shares in the Offer. All Directors will hold Shares on Completion of the Offer, as described in section 6.1.6). Kevin Perkins interests in Sizzler USA Acquisition, Inc Sizzler USA Acquisition, Inc operates or franchises Sizzler restaurants across the United States and Puerto Rico. Kevin Perkins is the Non-executive Chairman of Sizzler USA Acquisition, Inc. He holds approximately 55% of the common stock in Sizzler USA Acquisition, Inc (acquired for a nominal amount) and will invest approximately US$1.1 million to recapitalise that business in August 2011. The operations of Collins Foods and Sizzler USA Acquisition, Inc are separate. Mr Kevin Perkins has advised Collins Foods Limited that he expects his duties as Non-executive Chairman of Sizzler USA Acquisition, Inc will only involve approximately four days work per year.
5.3.2 Interests of professionals

Collins Foods Limited has engaged the following professional advisers: Deutsche Bank AG, Sydney Branch and UBS AG, Australia Branch have acted as Joint Lead Managers to the Offer, and the fees payable to each Joint Lead Manager are described in section 8.2. Each of the Joint Lead Managers or affiliates of them have interests as lenders in Collins Foods existing term debt facilities which will be repaid on Completion of the Offer; Clayton Utz has acted as Australian legal adviser to Collins Foods Limited in relation to the Offer. Collins Foods Limited has paid, or agreed to pay, approximately $1,075,000 (excluding disbursements and GST) for these services up until the date of this Prospectus. Further amounts may be paid to Clayton Utz in accordance with its normal time-based charges; PricewaterhouseCoopers Securities Limited has acted as Investigating Accountant and has prepared the Investigating Accountants Report and has performed work in relation to due diligence enquiries. Collins Foods Limited has paid, or agreed to pay, approximately $570,000 (excluding disbursements and GST) for the above services up until the date of this Prospectus; PricewaterhouseCoopers has acted as taxation adviser to Collins Foods Limited in relation to the Offer. Collins Foods Limited has paid or agreed to pay approximately $487,000 (excluding disbursements and GST) for these services. PricewaterhouseCoopers acts as auditor of Collins Foods Holding Pty Limited and Collins Foods Limited; and Bell Potter, Craigs Investment Partners, UBS Wealth Management and Wilson HTM have agreed to act as Co Managers to the Offer. Each will be paid fees up to 1.5% of the value of Shares allocated to clients of that Broker. All of the amounts payable to them are payable by the Joint Lead Managers out of the fees payable to the Joint Lead Managers under the Underwriting Agreement.
These amounts, and other expenses of the Offer, will be paid by Collins Foods Limited (or one of its subsidiaries) out of funds raised under the Offer or available cash. Further information on the use of proceeds and payment of expenses of the Offer is set out in section 6.1.2.
5.4
Employee incentive plans
Collins Foods Limited has established a short term incentive plan (stIp) to assist in the attraction, motivation and retention of senior executives and employees of the Group. Participants in the STIP have the opportunity to receive up to a specified percentage of their annual remuneration in the form of a cash bonus, payable after the annual results of Collins Foods Limited have been published. The amount of the payment (if any) under the STIP will be determined by the Board of Directors by reference to the amount by which actual EBITDA for the relevant year exceeds EBITDA budgets set by the Board of Directors for that year for Collins Foods or its relevant division. No bonus will be payable if the applicable targets are not met. The remuneration structure for restaurant managers and area managers also includes variable quarterly cash incentives, set by the CEO, based on key performance indicators and operational performance against established targets. Collins Foods has not established a long term incentive plan (ltIp). The Board intends to consider the introduction of an appropriate LTIP which may involve the granting of options, performance rights or shares to certain employees on terms and conditions, including as to vesting and exercise, determined by the Board. If any such plan is implemented by the Board, grants under it will not be made until after publication of Collins Foods Limiteds results in respect of FY2012. When considering whether to introduce an LTIP, the Board of Directors expects that it will seek advice from appropriately qualified remuneration consultants and take into account the nature of LTIPs utilised by comparable companies.

5.5 Corporate governance
This section explains how the Board will manage Collins Foods business. The Board is responsible for the overall corporate governance of Collins Foods. The Board monitors the operational and financial position and performance of Collins Foods and oversees its business strategy including approving the strategic goals of Collins Foods. The Board is committed to maximising performance, generating appropriate levels of Shareholder value and financial return, and sustaining the growth and success of Collins Foods. In conducting business with these objectives, the Board is concerned to ensure that Collins Foods is properly managed to protect and enhance Shareholder interests, and that Collins Foods, its Directors, officers and employees operate in an appropriate environment of corporate governance. Accordingly, the Board has created a framework for managing Collins Foods including adopting relevant internal controls, risk management processes and corporate governance policies and practices which it believes are appropriate for Collins Foods business and which are designed to promote the responsible management and conduct of Collins Foods. The main policies and practices adopted by Collins Foods, which will take effect from listing on ASX, are summarised below. In addition, many governance elements are contained in the constitution of Collins Foods Limited. The Collins Foods code of conduct outlines how Collins Foods expects Directors and employees to behave and conduct business in a range of circumstances. In particular, the code requires awareness of, and compliance with, laws and regulations relevant to Collins Foods operations, including OH&S, risk management, privacy and employment and diversity practices. Details of Collins Foods key policies and practices and the charters for the Board and each of its committees are available at www.collinsfg.com.au. Collins Foods Limited is seeking a listing on ASX. The ASX Corporate Governance Council has developed and released corporate governance recommendations for Australian listed entities in order to promote investor confidence and to assist companies to meet stakeholder expectations. The recommendations are not prescriptions, but guidelines. However, under ASX Listing Rules, Collins Foods Limited will be required to provide a statement in its annual report disclosing the extent to which it has followed the recommendations in the reporting period. Where Collins Foods Limited does not follow a recommendation, it must identify the recommendation that has not been followed and give reasons for not following it. The Board does not anticipate that it will depart from the recommendations of the ASX Corporate Governance Council; however, it may do so in the future if it considers that such departure would be reasonable.
5.5.1 Board Charter of Directors and its committees

The Board has adopted a written charter to provide a framework for the effective operation of the Board. The charter addresses the following matters and responsibilities of the Board: Enhancing Shareholder value; Oversight of Collins Foods, including its control and accountability systems; Appointing and removing the Managing Director (or equivalent) and the Chief Financial Officer; Ratifying the appointment, and where appropriate, the removal of the senior executives; Providing strategic direction for, and approval of, corporate strategy and performance objectives; Reviewing and ratifying systems of risk management, internal compliance and control, codes of conduct and legal compliance; Monitoring senior Managements performance, implementing strategy and seeking to ensure appropriate resources are available; Approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestitures; Approving budgets; Approving and monitoring operational and financial position and performance of Collins Foods and other reporting; Identifying the principal risks faced by Collins Foods and taking reasonable steps designed to ensure that appropriate internal controls and monitoring systems are in place to manage and, to the extent possible, reduce the impact of these risks; and Adopting appropriate procedures to ensure compliance with all laws, governmental regulations and accounting standards, including establishing procedures to ensure the financial results are appropriately and accurately reported on a timely basis in accordance with all legal and regulatory requirements.
The management function is conducted by, or under the supervision of, the chief executive officer as directed by the Board (and by officers to whom the management function is properly delegated by the chief executive officer). Management must supply the Board with information in a form, timeframe and quality that will enable the Board to discharge its duties effectively. Directors are entitled to access senior management and to request additional information at any time they consider it appropriate. The Board collectively, and individual directors, may seek independent professional advice at Collins Foods expense, subject to the approval of the Chairman or the Board as a whole.
5.5.2 Board committees

The Board may from time to time establish appropriate committees to assist in the discharge of its responsibilities. The Board has established the Audit and Risk Committee and the Remuneration and Nomination Committee. Other committees may be established by the Board as and when required. Membership of Board committees will be based on the needs of Collins Foods, relevant legislative and other requirements and the skills and experience of individual Directors. Under the Boards charter, Board committee performance evaluations will occur annually. Audit and Risk Committee Under its charter, this committee must have at least three members, a majority of whom must be independent and all of whom must be non-executive Directors. Currently, all the non-executive Directors are members of this committee. Bronwyn Morris will act as Chairman of the committee. In accordance with its charter, it is intended that all members of the committee should be financially literate and have familiarity with financial management and at least one member should have relevant qualifications and experience. The primary role of this committee includes: Overseeing the process of financial reporting, internal control, continuous disclosure, financial and non-financial risk management and compliance and external audit; Providing advice in relation to Collins Foods OH&S management and performance and auditing systems; Monitoring Collins Foods compliance with laws and regulations and Collins Foods own codes of conduct and ethics; Encouraging effective relationships with, and communication between, the Board, Management and Collins Foods external auditor; and Evaluating the adequacy of processes and controls established to identify and manage areas of potential risk and to seek to safeguard the assets of Collins Foods.
Under the charter it is the policy of Collins Foods that its external auditing firm must be independent of it. The committee will review and assess the independence of the external auditor on an annual basis. Remuneration and Nomination Committee Under its charter, this committee must have at least three members, a majority of whom (including the chairman) must be independent Directors. Currently, Russell Tate, Newman Manion and Kevin Perkins are members of this committee. Newman Manion will act as Chairman of the committee. The main functions of the committee are to assist the Board with a view to establishing a Board of effective composition, size, diversity, expertise and commitment to adequately discharge its responsibilities and duties, and assist the Board with a view to discharging its responsibilities to Shareholders and other stakeholders to seek to ensure that Collins Foods: Has coherent remuneration policies and practices which enable Collins Foods to attract and retain executives and Directors who will create value for Shareholders; Fairly and responsibly remunerates Directors and executives, having regard to the performance of Collins Foods, the performance of the executives and the general remuneration environment; Has policies to evaluate the performance of the Board, individual directors and executives on (at least) an annual basis; Has effective policies and procedures to attract, motivate and retain appropriately skilled and diverse persons to meet Collins Foods needs; and Will integrate human capital and organisational issues into the overall business strategy.

5.5.3 Risk management policy
The identification and proper management of Collins Foods risks are an important priority of the Board. Collins Foods has adopted a risk management policy appropriate for its business. This policy highlights the risks relevant to Collins Foods operations and Collins Foods commitment to designing and implementing systems and methods appropriate to minimise and control its risks. The Board is responsible for overseeing and approving risk management strategy and policies. The Board has delegated to the Audit and Risk Committee responsibility for identifying major risk areas and implementing risk management systems. The Audit and Risk Committee is responsible for monitoring risk management and establishing procedures which seek to provide assurance that major business risks are identified, consistently assessed and appropriately addressed. Collins Foods will regularly undertake reviews of its risk management procedures to ensure that it complies with its legal obligations, including to assist the chief executive officer or chief financial officer to provide its declaration under section 295A of the Corporations Act. Collins Foods has in place a system whereby management is required to report as to its adherence to policies and guidelines approved by the Board for the management of risks.
5.5.4 Diversity policy

Collins Foods values a strong and diverse workforce and is committed to developing measurable objectives to achieve gender diversity in its workplace. Collins Foods has implemented a diversity policy which is overseen by the Remuneration and Nomination Committee and which aligns Collins Foods management systems with the commitment to develop a culture and business model that values and achieves diversity in its workforce and on its Board. In its annual report, Collins Foods will disclose the measurable objectives for achieving gender diversity and progress towards achieving them, and will also disclose the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board.
5.5.5 Continuous disclosure policy

Once listed, Collins Foods will be required to comply with the continuous disclosure requirements of the ASX Listing Rules and the Corporations Act. Subject to the exceptions contained in the Listing Rules, Collins Foods will be required to disclose to the ASX any information concerning Collins Foods which is not generally available and which a reasonable person would expect to have a material effect on the price or value of the Shares. Collins Foods is committed to observing its disclosure obligations under ASX Listing Rules and the Corporations Act. Collins Foods has adopted a policy to take effect from listing on ASX which establishes procedures which are aimed at ensuring that Directors and Management are aware of and fulfil their obligations in relation to the timely disclosure of material price-sensitive information. 5.5.6 Securities trading policy Collins Foods has adopted a written policy to take effect from listing on ASX for dealing in securities which is intended to explain the prohibited type of conduct in relation to dealings in securities under the Corporations Act and to establish a best practice procedure in relation to Directors, managements and employees dealings in Shares in Collins Foods. Subject to the overriding restriction that persons may not deal in Shares while they are in possession of material price-sensitive information, Directors and management will only be permitted to deal in Shares during certain window periods, such as following the annual general meeting, the release of Collins Foods full and half year financial results or the release of a disclosure document offering shares in Collins Foods. Outside of these periods, Directors and management must receive clearance for any proposed dealing in Shares. In all instances, buying or selling shares is not permitted at any time by any person who possesses price-sensitive information.
5.5.7 Code of Conduct

The Board recognises the need to observe the highest standards of corporate practice and business conduct. Accordingly, the Board has adopted a formal code of conduct, to take effect from listing on ASX, to be followed by all employees and officers. The key aspects of this code are to: Act with honesty, integrity and fairness and in the best interest of Collins Foods and in the reasonable expectations of Collins Foods shareholders; Act in accordance with all applicable laws, regulations, policies and procedures; Have responsibility and accountability for individuals for reporting and investigating reports of unethical practices; and Use Collins Foods resources and property properly.
The code of conduct sets out Collins Foods policies on various matters including ethical conduct, business conduct, compliance, privacy, security of information, financial integrity, and conflicts of interest.
5.5.8 Communications with Shareholders

The Boards aim is to ensure that Shareholders are provided with sufficient information to assess the performance of Collins Foods and that they are informed of all major developments affecting the state of affairs of Collins Foods relevant to Shareholders in accordance with all applicable laws. Information will be communicated to Shareholders through the lodgement of all relevant financial and other information with ASX and publishing information on Collins Foods website, www.collinsfg.com.au. In particular, Collins Foods website will contain information about it, including media releases, key policies and the terms of reference of its Board committees. All relevant announcements made to the market and any other relevant information will be posted on Collins Foods website as soon as they have been released to ASX.
6 DetAIls oF the oFFer
KFC Twister
6.1
The Offer
The Offer includes the offer of 80.7 million Shares at an Offer Price of $2.50 per Share under the Broker Firm Offer and the Institutional Offer. Based on this Offer Price, the cash proceeds to be received by Collins Foods Limited from the Institutional Offer and Broker Firm Offer are expected to be $201.7 million (with an additional $30.8 million of Shares to be issued to Existing Investors as referred to below). The total number of Shares on issue at the completion of this Offer will be 93.0 million and all Shares will rank equally with each other. No general public offer will be made. The allocation of Shares between the Broker Firm Offer and the Institutional Offer was determined by the Joint Lead Managers in consultation with Collins Foods Limited, having regard to the allocation policy outlined in section 6.3.5 and section 6.4. The Offer has been fully underwritten by the Joint Lead Managers, Deutsche Bank AG, Sydney Branch and UBS AG, Australia Branch. Below is a key to the information on the Offer contained in section 6: section 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 heading The Offer (this section) Terms and conditions of the Offer Broker Firm Offer Institutional Offer Underwriting arrangements Escrow arrangements Restrictions on distribution Discretion regarding the Offer ASX listing, registers and holding statements, deferred settlement trading Description of Shares page 83 86 88 89 90 90 90 91 91 93
6.1.1 Purpose of the Offer

The purpose of the Offer is to enable a wholly owned subsidiary of Collins Foods Limited to purchase Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd (the companies that own the Collins Foods businesses in Australia and Asia respectively) from the Existing Investors and to provide Collins Foods Limited with: Additional financial flexibility to pursue growth opportunities and improve access to capital markets as a result of its listing on ASX; A liquid market for its Shares and an opportunity for others to invest in Shares in Collins Foods Limited; and Funds to pay in part existing debts of the Collins Foods businesses and Offer costs (as described further in section 6.1.2).
The Offer also provides the Existing Investors with an opportunity to realise all or part of their investment in Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd. The consideration payable for the acquisition of Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd from the Existing Investors will be reduced by the amount of payments for costs of the Offer and other obligations of Collins Foods to be paid on Completion of the Offer (net of tax refunds and deductions). This is described further in section 6.1.2.

6.1.2 Sources and uses of funds
sources of funds Cash and cash equivalents 1 May 2011 1 Cash proceeds received for Shares issued under the Institutional Offer and Broker Firm Offer Drawdown of New Banking Facilities 2 Cash acquired in SingCo Trading Pte Ltd total sources uses of funds Repayment of syndicated finance debt facilities, finance leases and associated derivatives and certain other obligations of Collins Foods Holding Pty Limited and its subsidiaries Payment to Existing Investors as part consideration for the acquisition of Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd Costs of the Offer Stamp duty and GST arising from the Offer and restructure Fees relating to new KFC franchise agreements Establishment costs in relation to New Banking Facilities Pro forma cash balance 1 total uses
Notes: 1 2 For more information, refer to section 3.4 For more information, refer to section 3.4.3
A$ million 43.7 201.7 105.0 0.1 350.5 A$ million 260.4 60.4 15.4 5.1 5.1 0.6 3.5 350.5
% 12.5% 57.5% 30.0% 0.0% 100.0% % 74.3% 17.2% 4.4% 1.5% 1.5% 0.1% 1.0% 100.0%
Sources of funds The amount of $201.7 million in respect of cash proceeds received for Shares issued under the Institutional Offer and Broker Firm Offer represents the cash that Collins Foods Limited expects to receive on Completion of the Offer (80.7 million Shares at the Offer Price of $2.50 per Share). (Collins Foods Limited will also issue $30.8 million of Shares on Completion of the Offer to Existing Investors who have chosen to receive part of the consideration for the sale of their shares in Collins Foods Holding Pty Limited in the form of Shares.) Collins Foods will draw $105.0 million under New Banking Facilities at Completion of the Offer (refer section 3.4.3). Collins Foods will acquire $0.1 million in cash and cash equivalents when it completes the acquisition of SingCo Trading Pte Ltd. Uses of funds Key payments to be made by Collins Foods on Completion of the Offer include: $260.4 million to discharge its obligations under existing syndicated finance debt facilities, finance leases and associated derivatives and certain other obligations of Collins Foods Holding Pty Limited and its subsidiaries; $60.4 million to Existing Investors as part consideration for the acquisition of Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd (with the remaining consideration of $30.8 million to be satisfied by the issue of the Shares to Existing Investors on Completion of the Offer under the Sale Deeds (refer to section 8.3)). This aggregate consideration of $91.2 million is calculated as $232.5 million (the Offer Price multiplied by the number of Shares in Collins Foods Limited following the Offer) less $115.0 million (the amount by which pro forma net debt in Collins Foods Holding Pty Limited and its subsidiaries is to be paid down on Completion of the Offer) and less $26.3 million (being the aggregate of the other payments under the heading Uses of funds referred to in the table above); and $15.4 million in respect of the costs of the Offer (comprising estimates of fees payable to legal, accounting and tax advisers and to the Joint Lead Managers under the Underwriting Agreement (in aggregate, $8.6 million refer to section 5.3.2), with the remaining ($6.8 million) being for other estimated costs of the Offer, including services from PEP Advisory Pty Ltd (including $3.4 million in respect of the transactions the subject of the Sale Deeds), prospectus design, advertising, marketing, listing and administrative fees, and Share Registry expenses.
The amounts referred to in the above table under the heading Uses of funds are estimates. The Sale Deeds provide that, to the extent that these amounts decrease, including after taking into account the effect of tax refunds, the consideration payable to the Existing Investors will increase. The final impact of any tax refunds in relation to these costs is expected to be known by June 2012 with any final adjustments to the consideration payable by Collins Foods to Existing Investors to be made as soon as practicable thereafter.
6.1.3 Formation of the group

Collins Foods Limited was incorporated in Victoria, Australia, on 10 June 2011 as a company limited by shares. At the date of this Prospectus, Collins Foods Limited has not traded. Collins Foods Limited has three Shares on issue (each fully paid to $1.00), with one Share held by each of the non-executive Directors. As referred to in section 6.1.2, on Completion of the Offer, Collins Foods Limited will acquire Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd (the companies that own the Collins Foods businesses in Australia and Asia respectively) through a wholly owned subsidiary from the Existing Investors, and will have a corporate structure as illustrated below:
Collins Foods Limited CFG Finance Pty Limited
SingCo Trading Pte Ltd Other subsidiaries
Collins Foods Holding Pty Limited Other subsidiaries
Collins Foods Limited will be taxed as an Australian tax resident public company in Australia for the purposes of Australian income tax law. It expects that it will submit an application to the Australian Taxation Office to change its financial year end from 30 June to 30 April, in order to synchronise with the financial year end date for all other Collins Foods companies, shortly following Completion of the Offer.
6.1.4 Pro forma balance sheet

Collins Foods Limiteds pro forma balance sheet following Completion of the Offer, including details of the pro forma adjustments, is set out in section 3.4.
6.1.5 Capital structure

Collins Foods Limiteds capitalisation and indebtedness as at 1 May 2011, before and following Completion of the Offer, is set out in section 3.4.2.
6.1.6 Shareholders
Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd own the existing Collins Foods businesses in Australia and Asia respectively. The ownership structure of those companies immediately before the Offer is set out below. On Completion of the Offer, Collins Foods Limited will acquire, through a wholly owned subsidiary, all of the shares in Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd from the Existing Investors. The consideration payable for the acquisition of those shares from the Existing Investors is described in section 6.1.2. The Sale Deeds which effect these sales are described in section 8.3.

The ownership structure of Existing Investors in Collins Foods Limited immediately following Completion of the Offer is set out below. prior to the offer (economic interest in collins Foods holding pty limited and singco trading pte ltd) % Funds advised by Pacific Equity Partners Kevin Perkins Other members of Management Other Existing Investors New Shareholders pursuant to the Offer total
(a) (b) Includes three existing Shares held by the Non-executive Directors Represents 82% of his pre Offer investment in Collins Foods
Following completion of the offer (ownership of collins Foods limited) shares 7.0 million 1.4 million 3.9 million (a) 80.7 million 93.0 million % 0.0% 7.5%(b) 1.5% 4.2% 86.8% 100%
52.0% 23.4% 11.2% 13.3% 100%
Information on the number of Shares to be held on Completion of the Offer that will be subject to escrow arrangements, and details of those escrow arrangements, is set out in section 6.6.
6.1.7 Control implications of the Offer

The Directors do not expect any Shareholder to control Collins Foods on Completion of the Offer.
6.1.8 Potential effect of the fundraising on the future of Collins Foods Limited
The Directors believe that on Completion of the Offer, Collins Foods Limited will have sufficient funds available from the cash proceeds of the Institutional Offer and Broker Firm Offer, its operations and the New Bank Facilities, to fulfil the purposes of the Offer and meet its stated business objectives including the forecast capital expenditure during FY2012.
6.2
topic
Terms and conditions of the Offer

summary Shares (being fully paid ordinary shares in Collins Foods Limited). A description of the Shares, including the rights and liabilities attaching to them, is set out in section 6.10 below. The Offer Price is $2.50 per Share.
What is the type of security being offered? What are the rights and liabilities attached to the security being offered? What is the consideration payable for each security being offered? What is the offer period?
The key dates, including details of the Offer period, are set out on page 2. No securities will be issued on the basis of this Prospectus later than the expiry date of 15 August 2012. $201.7 million will be raised under the Institutional Offer and Broker Firm Offer. The minimum Application under the Broker Firm Offer is $2,000, and in multiples of $500 thereafter, as directed by the Applicants Broker. The Joint Lead Managers, in consultation with Collins Foods Limited, reserve the right to reject any Application or to allocate a lesser number of Shares than that applied for. There is no maximum value of Shares that may be applied for under the Broker Firm Offer.
What are the cash proceeds to be raised? What is the minimum and maximum Application size under the Broker Firm offer?
topic What is the allocation policy?
summary The allocation of Shares between the Broker Firm Offer and the Institutional Offer was determined by the Joint Lead Managers in consultation with Collins Foods Limited, and Collins Foods Holding Pty Limited having regard to the allocation policy outlined in section 6.3.5 and section 6.4. For further information on the Broker Firm Offer, see section 6.3.5. For further information on the Institutional Offer, see section 6.4.
Will the securities be listed?
Collins Foods Limited will apply for admission to the official list of ASX and quotation of Shares on ASX under the code CKF. Completion of the Offer is conditional on ASX approving this application. If approval is not given within three months after such application is made (or any longer period permitted by law), the Offer will be withdrawn and all Application Monies received will be refunded without interest as soon as practicable in accordance with the requirements of the Corporations Act. It is expected that trading of the Shares on ASX will commence on or about 4 August 2011, initially on a deferred settlement basis. It is the responsibility of each Applicant to confirm its holding before trading in Shares. Applicants who sell Shares before they receive an initial statement of holding do so at their own risk. Collins Foods Limited and the Joint Lead Managers disclaim all liability, whether in negligence or otherwise, to persons who sell Shares before receiving their initial statement of holding, whether on the basis of a confirmation of allocation provided by any of them, by Collins Foods Offer Information Line, by a Broker or otherwise. Shares are expected to commence trading on ASX on a normal settlement basis on or about 8 August 2011.
When are the securities expected to commence trading?
Is the offer underwritten? Are there any escrow arrangements? has any AsIc relief or AsX waiver been obtained or been relied on? Are there any taxation considerations? Are there any brokerage, commission or stamp duty considerations? What should you do with any enquiries?
Yes. The Joint Lead Managers have fully underwritten the Offer. Details are provided in section 6.5. Yes. Details are provided in section 6.6. No. Refer to section 8.6. No brokerage, commission or stamp duty is payable by Applicants on acquisition of Shares under the Offer. See section 8.2 for details of various fees payable by Collins Foods Limited to the Joint Lead Managers and by the Joint Lead Managers to certain Brokers. All enquiries in relation to this Prospectus should be directed to Collins Foods Offer Information Line on 1800 622 202 (toll free within Australia) or +61 2 8280 7694 (outside Australia) from 8.30am until 5.30pm (AEST) Monday to Friday. If you are unclear in relation to any matter or are uncertain as to whether Collins Foods Limited is a suitable investment for you, you should seek professional guidance from your solicitor, stockbroker, accountant or other independent and qualified professional adviser before deciding whether to invest.

6.3 Broker Firm Offer
6.3.1 Who can apply in the Broker Firm Offer
The Broker Firm Offer is open to persons who have received a firm allocation from their Broker and who have a registered address in Australia or New Zealand. If you have been offered a firm allocation by a Broker, you will be treated as a Broker Firm Offer Applicant in respect of that allocation. You should contact your Broker to determine whether they may allocate Shares to you under the Broker Offer.
6.3.2 How to apply for Shares under the Broker Firm Offer
Broker Firm Offer Applications for Shares may only be made on an Application Form attached to or accompanying this Prospectus, or in its paper copy form which may be downloaded in its entirety from www.collinsfg.com.au. If you are an investor applying under the Broker Firm Offer, you should complete and lodge your Broker Firm Offer Application Form with the Broker from whom you received your firm allocation. Broker Firm Offer Application Forms must be completed in accordance with the instructions given to you by your Broker and the instructions set out on the reverse of the Application Form. By making an Application, you declare that you were given access to the Prospectus, together with an Application Form. the corporations Act prohibits any person from passing an Application Form to another person unless it is attached to, or accompanied by, a hard copy of this prospectus or the complete and unaltered electronic version of this prospectus. If you apply in the Broker Firm Offer, you must apply for a minimum value of $2,000 worth of Shares and in multiples of $500 thereafter. There is no maximum value of Shares that may be applied for under the Broker Firm Offer. However, Collins Foods Limited and the Joint Lead Managers reserve the right to reject or scale back any Applications in the Broker Firm Offer which are for more than $250,000. Collins Foods Limited and the Joint Lead Managers also reserve the right to aggregate any Applications which they believe may be multiple Applications from the same person. Collins Foods Limited may determine a person to be eligible to participate in the Broker Firm Offer, and may amend or waive the Broker Firm Offer application procedures or requirements, in its discretion in compliance with applicable laws. Broker Firm Offer Applicants must lodge their Application Form and Application Monies with the relevant Broker in accordance with the relevant Brokers directions in order to receive their firm allocation. Applicants under the Broker Firm Offer must not send their Application Forms to the Share Registry. The Broker Firm Offer opens at 9.00am (AEST) on 25 July 2011 and is expected to close at 5.00pm (AEST) on 2 August 2011. Collins Foods Limited and the Joint Lead Managers may elect to close the Offer or any part of it early, extend the Offer or any part of it, or accept late Applications either generally or in particular cases. The Offer or any part of it may be closed at any earlier date and time, without further notice. Your Broker may also impose an earlier closing date. Applicants are therefore encouraged to submit their Applications as early as possible. Please contact your Broker for instructions.
6.3.3 Application Monies

Applicants under the Broker Firm Offer whose Applications are not accepted, or who are allocated a lesser dollar amount of Shares than the amount applied for, will receive a refund of all or part of their Application Monies, as applicable. Interest will not be paid on any monies refunded. Applicants whose Applications are accepted in full will receive the whole number of Shares calculated by dividing the Application Amount by the Offer Price. Where the Offer Price does not divide evenly into the Application Amount, the number of Shares to be allocated will be determined by the Applicants Broker. Cheque(s) or bank draft(s) must be in Australian dollars and drawn on an Australian branch of an Australian bank, must be crossed Not Negotiable and must be made payable in accordance with the directions of the Broker from whom you received a firm allocation. You should ensure that sufficient funds are held in the relevant account(s) to cover the amount of the cheque(s) or bank draft(s). If the amount of your cheque(s) or bank draft(s) for Application Monies (or the amount for which those cheque(s) or bank draft(s) clear in time for allocation) is less than the amount specified on the Application Form, you may be taken to have applied for such lower dollar amount of Shares as for which your cleared Application Monies will pay (and to have specified that amount on your Application Form) or your Application may be rejected.
6.3.4 Acceptance of Applications

An Application in the Broker Firm Offer is an offer by the Applicant to Collins Foods Limited to subscribe for Shares for all or any of the Application Amount specified in and accompanying the Application Form at the Offer Price on the terms and conditions set out in this Prospectus including any supplementary or replacement prospectus and the Application Form (including the conditions regarding quotation on ASX in section 6.9.1). To the extent permitted by law, an Application by an Applicant under the Offer is irrevocable. An Application may be accepted by Collins Foods Limited and the Joint Lead Managers in respect of the full number of Shares specified in the Application Form or any of them, without further notice to the Applicant. Acceptance of an Application will give rise to a binding contract.
6.3.5 Allocation policy under the Broker Firm Offer

Broker Firm Offer Shares which have been allocated to Brokers for allocation to their Australian and New Zealand resident retail clients will be issued to the Applicants nominated by those Brokers (subject to the right of Collins Foods Limited and the Joint Lead Managers to reject or scale back Applications which are for more than $250,000). It will be a matter for the Brokers how they allocate firm stock among their retail clients, and they (and not Collins Foods Limited and the Joint Lead Managers) will be responsible for ensuring that retail clients who have received a firm allocation from them receive the relevant Shares. Collins Foods Limited intends to allocate approximately 310,000 Shares in aggregate to directors and officers of Collins Foods, advisers to the Offer, and friends and family of any of them. Collins Foods reserves the right to alter this number in its discretion. Such persons may participate in the Institutional Offer or receive firm allocations from Brokers under the Broker Firm Offer.
6.3.6 Announcement of final allocation policy in the Broker Firm Offer

Collins Foods Limited expects to announce the final allocation policy under the Broker Firm Offer on or about 3 August 2011. It is expected that this information will be advertised in The Sydney Morning Herald, The Melbourne Age, The Australian, The Australian Financial Review, and The Courier Mail as well as other major metropolitan newspapers on that same day. Applicants in the Broker Firm Offer will be able to call the Collins Foods Offer Information Line on 1800 622 202 (toll free within Australia) or +61 2 8280 7694 (outside Australia) from 8.30am until 5.30pm (AEST) Monday to Friday from 11 August 2011 to confirm their allocations. Applicants under the Broker Firm Offer will also be able to confirm their firm allocation through the Broker from whom they received their allocation. However, if you sell Shares before receiving a holding statement, you do so at your own risk, even if you obtained details of your holding from the Collins Foods Offer Information Line or confirmed your firm allocation through a Broker.
6.4
Institutional Offer
The Institutional Offer consists of an invitation to certain Institutional Investors in Australia and a number of other eligible jurisdictions to apply for Shares. The Joint Lead Managers have separately advised Institutional Investors of the Application procedures for the Institutional Offer. The allocation of Shares among Applicants in the Institutional Offer was determined by the Joint Lead Managers in consultation with Collins Foods Limited. The Joint Lead Managers, in consultation with Collins Foods Limited, will have absolute discretion regarding the basis of allocation of Shares among Institutional Investors, and there is no assurance that any Institutional Investor will be allocated any Shares, or the number of Shares for which it has bid. The allocation policy was influenced by the following factors: Number of Shares bid for by particular bidders; The timeliness of the bid by particular bidders; Collins Foods Limiteds desire for an informed and active trading market following listing on ASX; Collins Foods Limiteds desire to establish a wide spread of institutional shareholders; Overall level of demand under the Broker Firm Offer and Institutional Offer; The size and type of funds under management of particular bidders; The likelihood that particular bidders will be long-term shareholders; and Any other factors that Collins Foods Limited and the Joint Lead Managers considered appropriate.

6.5 Underwriting arrangements
The Offer is fully underwritten. The Joint Lead Managers and Collins Foods Limited have entered into an Underwriting Agreement under which the Joint Lead Managers have been appointed as arrangers and managers and underwriters of the Offer. The Joint Lead Managers agree, subject to certain conditions and termination events, to underwrite severally Applications for all Shares under the Offer in equal proportions. The Underwriting Agreement sets out a number of circumstances under which the Joint Lead Managers may terminate the agreement and the underwriting obligations. A summary of certain terms of the agreement and underwriting arrangements, including the termination provisions, is provided in section 8.2.
6.6
Escrow arrangements
The members of Management identified below have agreed to an escrow arrangement with Collins Foods Limited under which they will be restricted from dealing with any of the Shares issued to them under the Offer until three business days after the announcement of Collins Foods Limiteds audited financial results for FY2012. Kevin Perkins has agreed with Collins Foods Limited that this escrow arrangement will continue in respect of 50% of the Shares issued to him under the Offer until three business days after the announcement of Collins Foods Limiteds audited financial results for FY2013. Name of escrowed party Kevin Perkins (until FY2012 results) Kevin Perkins (until FY2013 results) Simon Perkins Martin Clarke James Ryan John Hands title Managing Director, CEO Managing Director, CEO CFO Global CEO KFC CEO Sizzler CSO/CIO Number of shares held in escrow 3.5 million 3.5 million 0.2 million 0.1 million 0.2 million 0.2 million percentage of shares on issue in escrow 3.8% 3.8% 0.2% 0.1% 0.2% 0.2%
An escrow is a restriction on sale, disposal, or encumbering of, or certain other dealings in respect of, the securities concerned for the period of the escrow, subject to any exceptions in the escrow arrangement concerned. There are limited circumstances in which the escrow may be released, namely: To allow the holder to accept a takeover bid for Collins Foods Limited in accordance with the Australian takeovers code provided that holders of not less than 50% of Shares not subject to escrow have then accepted the takeover bid; To allow the escrow Shares to be acquired under an amalgamation or scheme of arrangement or other reorganisation or acquisition of share capital under the Companies Act; and The death or incapacity of the holder of the Shares.
The escrow deeds prevent the escrowed party from giving security over their escrowed Shares. In aggregate, 7.7 million Shares will be the subject of these escrow arrangements. This will represent approximately 8.3% of all of the Shares. This is not expected to have a material effect on the liquidity of trading in Shares on ASX.
6.7
Restrictions on distribution
No action has been taken to register or qualify this Prospectus, the Shares or the Offer or otherwise to permit a public offering of the Shares in any jurisdiction outside Australia and New Zealand. Investors in New Zealand should refer to page 1 for further information. This Prospectus does not constitute an offer or invitation to subscribe for Shares in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation or issue under this Prospectus. This Prospectus may not be released or distributed by you in the United States or to or for the account or benefit of US Persons, and may only be distributed to persons to whom the Offer may lawfully be made in accordance with the laws of any applicable jurisdiction.
The Shares have not been, and will not be, registered under the US Securities Act 1933 and may not be offered or sold in the United States or to, or for the account or benefit of, US Persons except in accordance with an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act 1933 and any other applicable securities laws. Each Applicant in the Broker Firm Offer, and each person to whom the Institutional Offer is made under this Prospectus, will be taken to have represented, warranted and agreed as follows: It understands that the Shares have not been, and will not be, registered under the US Securities Act 1933 or the securities law of any state of the United States and may not be offered, sold or resold in the United States, or to or for the account or benefit of US Persons, except in a transaction exempt from, or not subject to, registration under the US Securities Act 1933 and any other applicable securities laws; It is not in the United States or a US Person, and is not acting for the account or benefit of a US Person; It has not and will not send the Prospectus or any other material relating to the Offer to any person in the United States or to any person that is, or is acting for the account or benefit of, a US Person; and It will not offer or sell the Shares in the United States or to, or for the account or benefit of, any US Person or in any other jurisdiction outside Australia except in transactions exempt from, or not subject to, registration under the US Securities Act 1933 and in compliance with all applicable laws in the jurisdiction in which Shares are offered and sold.
Any offer, sale or resale of the Shares in the United States by a dealer (whether or not participating in the Offer) may violate the registration requirements of the UIS Securities Act 1933 if made prior to 40 days after the date on which the Offer Price is determined and the Shares are allocated under the Offer or if such Shares were purchased by a dealer under the Offer. This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. Any securities described in this document have not been, and will not be, registered under the US Securities Act 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act 1933 and applicable US state securities laws. 6.8 Discretion regarding the Offer
Collins Foods Limited may withdraw the Offer at any time before the issue of Shares to successful Applicants or bidders in the Broker Firm Offer and Institutional Offer. If the Offer, or any part of it, does not proceed, all relevant Application Monies will be refunded (without interest). Collins Foods Limited and the Joint Lead Managers also reserve the right to close the Offer or any part of it early, extend the Offer or any part of it, accept late Applications or bids either generally or in particular cases, reject any Application or bid, or allocate to any Applicant or bidder fewer Shares than applied or bid for.
6.9
ASX listing, registers and holding statements, deferred settlement trading
6.9.1 Application to ASX for listing and quotation of Shares

Collins Foods Limited will apply for admission to the official list of ASX and quotation of the Shares on ASX. Collins Foods Limiteds expected ASX code will be CKF. ASX takes no responsibility for this Prospectus or the investment to which it relates. The fact that ASX may admit Collins Foods Limited to the official list is not to be taken as an indication of the merits of Collins Foods Limited or the Shares offered for subscription. If Collins Foods Limited does not make such an application within seven days after the date of this Prospectus, or if permission is not granted for the official quotation of the Shares on ASX within three months after the date of this Prospectus (or any later date permitted by law), all Application Monies received by Collins Foods Limited will be refunded without interest as soon as practicable in accordance with the requirements of the Corporations Act. Subject to certain conditions (including any waivers obtained by Collins Foods Limited from time to time), Collins Foods Limited will be required to comply with ASX Listing Rules.

6.9.2 CHESS and issuer sponsored holdings
Collins Foods Limited will apply to participate in ASXs Clearing House Electronic Sub-register System (CHESS) and will comply with ASX Listing Rules and the ASX Settlement Operating Rules. CHESS is an electronic transfer and settlement system for transactions in securities quoted on ASX under which transfers are effected in an electronic form. When the Shares become approved financial products (as defined in the ASX Settlement Operating Rules), holdings will be registered in one of two sub-registers, an electronic CHESS sub-register or an issuer sponsored sub-register. For all successful Applicants, the Shares of a Shareholder who is a participant in CHESS or a Shareholder sponsored by a participant in CHESS will be registered on the CHESS sub-register. All other Shares will be registered on the issuer sponsored sub-register. Following Completion of the Offer, Shareholders will be sent a holding statement that sets out the number of Shares that have been allocated to them. This statement will also provide details of a Shareholders Holder Identification Number (hIN) for CHESS holders or, where applicable, the Securityholder Reference Number (srN) of issuer sponsored holders. Shareholders will subsequently receive statements showing any changes to their Shareholding. Certificates will not be issued. Shareholders will receive subsequent statements during the first week of the following month if there has been a change to their holding on the register and as otherwise required under ASX Listing Rules and the Corporations Act. Additional statements may be requested at any other time either directly through the Shareholders sponsoring broker in the case of a holding on the CHESS sub-register or through the Share Registry in the case of a holding on the issuer sponsored sub-register. Collins Foods Limited and the Share Registry may charge a fee for these additional issuer sponsored statements.
6.9.3 Deferred settlement trading and selling shares on market

It is expected that trading of the Shares on ASX (on a deferred basis) will commence on or about 4 August 2011. It is the responsibility of each person who trades in Shares to confirm their holding before trading in Shares. If you sell Shares before receiving a holding statement, you do so at your own risk. Collins Foods Limited, the Share Registry, the Joint Lead Managers and the Existing Investors disclaim all liability, whether in negligence or otherwise, if you sell Shares before receiving your holding statement, even if you obtained details of your holding from the Collins Foods Offer Information Line or confirmed your firm allocation through a Broker. Shares are expected to commence trading on ASX on a normal settlement basis on or about 8 August 2011.
6.10 Description of Shares

Introduction The rights and liabilities attaching to ownership of Shares arise from a combination of the Constitution, statute, ASX Listing Rules and general law. A summary of the significant rights attaching to the Shares and a description of other material provisions of the Constitution is set out below. This summary is not exhaustive nor does it constitute a definitive statement of the rights and liabilities of Shareholders. The summary assumes that Collins Foods Limited is admitted to the Official List of ASX. Voting at a general meeting At a general meeting of Collins Foods Limited, every Shareholder present in person or by proxy, representative or attorney has one vote on a show of hands and, on a poll, one vote for each Share held. Meetings of members Each Shareholder is entitled to receive notice of, attend and vote at general meetings of Collins Foods Limited and to receive all notices, accounts and other documents required to be sent to Shareholders under the Constitution, the Corporations Act and ASX Listing Rules. Dividends The Board may from time to time resolve to pay dividends to Shareholders of Collins Foods Limited and fix the amount of the dividend, the time for determining entitlements to the dividend and the timing and method of payment. For further information in respect of Collins Foods Limiteds proposed dividend policy, see section 3.10. Transfer of Shares Subject to the Constitution, Shares may be transferred by a proper transfer effected in accordance with ASX Settlement Operating Rules, by a written instrument of transfer which complies with the Constitution or by any other method permitted by the Corporations Act, ASX Listing Rules or ASX Settlement Operating Rules. The Board may refuse to register a transfer of Shares where permitted to do so under the Corporations Act, ASX Listing Rules or ASX Settlement Operating Rules. The Board must refuse to register a transfer of Shares when required by the Corporations Act, ASX Listing Rules or ASX Settlement Operating Rules. Issue of further Shares Subject to the Corporations Act, ASX Listing Rules and ASX Settlement Operating Rules and any rights and restrictions attached to a class of shares, Collins Foods Limited may issue, or grant options in respect of further Shares on such terms and conditions as the Directors resolve. Winding up If Collins Foods Limited is wound up, then subject to any rights or restrictions attached to a class of shares, any surplus must be divided among Collins Foods Limiteds members in the proportions which the amount paid and payable (including amounts credited) on the Shares of a member is of the total amount paid and payable (including amounts credited) on the Shares of all members of Collins Foods Limited. Unmarketable parcels Subject to the Corporations Act, ASX Listing Rules and ASX Settlement Operating Rules, Collins Foods Limited may sell the Shares of a Shareholder who holds less than a marketable parcel of Shares. Share buy-backs Subject to the Corporations Act, ASX Listing Rules and ASX Settlement Operating Rules, Collins Foods Limited may buy back shares in itself on terms and at times determined by the Board. Proportional takeover provisions The Constitution contains provisions for Shareholder approval to be required in relation to any proportional takeover bid. These provisions will cease to apply unless renewed by special resolution of the Shareholders in general meeting by the third anniversary of the date of the Constitutions adoption.

Variation of class rights At present, Collins Foods Limiteds only class of shares on issue is ordinary shares. Subject to the Corporations Act and the terms of issue of a class of shares, the rights attaching to any class of shares may be varied or cancelled: With the consent in writing of the holders of three quarters of the issued shares included in that class; or By a special resolution passed at a separate meeting of the holders of those shares
In either case, the holders of not less than 10% of the votes in the class of shares, the rights of which have been varied or cancelled, may apply to a court of competent jurisdiction to exercise its discretion to set aside such a variation or cancellation. Dividend reinvestment plan, dividend selection plan and bonus share plan The Constitution authorises the Directors, on any terms and at their discretion, to establish a dividend reinvestment plan (under which any member may elect that the dividends payable by Collins Foods Limited be reinvested by a subscription for securities). Directors appointment and removal Under the Constitution, the minimum number of Directors that may comprise the Board is three and the maximum is fixed by the Directors but may not be more than 10 unless the Shareholders pass a resolution varying that number. Directors are elected at annual general meetings of Collins Foods Limited. Retirement will occur on a rotational basis so that any Director who has held office for three or more years or three or more annual general meetings (excluding any Managing Director) retires at each annual general meeting of Collins Foods Limited. The Directors may also appoint a Director to fill a casual vacancy on the Board or in addition to the Directors, who will then hold office until the next annual general meeting of Collins Foods Limited. Directors voting Questions arising at a meeting of the Board will be decided by a majority of votes of the Directors present at the meeting and entitled to vote on the matter. In the case of an equality of votes on a resolution, the chairperson of the meeting has a casting vote. Directors remuneration The Directors, other than any executive Director (of which there are none other than Mr Kevin Perkins as at the date of this Prospectus) shall be paid by way of fees for services up to the maximum aggregate sum per annum as may be approved from time to time by Collins Foods Limited in general meeting. The current maximum aggregate sum per annum is $700,000 with the initial remuneration of the Directors set out in section 5.3.1. Any change to that maximum aggregate sum needs to be approved by Shareholders. The Constitution also makes provision for Collins Foods Limited to pay all reasonable expenses of Directors in attending meetings and carrying out their duties. Indemnities Collins Foods Limited, to the extent permitted by law, indemnifies each Director against any liability incurred by that person as an officer of Collins Foods Limited or its subsidiaries, and legal costs incurred by that person in defending an action for a liability of that person. Collins Foods Limited, to the extent permitted by law, may make a payment (whether by way of advance, loan or otherwise) to a Director in respect of legal costs incurred by that person in defending an action for a liability of that person. Collins Foods Limited, to the extent permitted by law, may pay, or agree to pay, a premium for a contract insuring a Director against any liability incurred by that person as an officer of Collins Foods Limited or its subsidiaries and legal costs incurred by that person in defending an action for a liability of that person.
Collins Foods Limited, to the extent permitted by law, may enter into an agreement or deed with a Director or a person who is, or has been, an officer of Collins Foods Limited or its subsidiaries, under which Collins Foods Limited must do all of the following: Keep books of Collins Foods Limited and allow either or both that person and that persons advisers access to those books on the terms agreed; Indemnify that person against any liability incurred by that person as an officer of Collins Foods Limited or its subsidiaries and legal costs incurred by that person in defending an action for a liability of that person; Make a payment (whether by way of advance, loan or otherwise) to that person in respect of legal costs incurred by that person in defending an action for a liability of that person; and Keep that person insured in respect of any act or omission by that person while a Director or an officer of Collins Foods Limited or its subsidiaries, on the terms agreed (including as to payment of all or part of the premium for the contract for insurance).
Amendment The Constitution can only be amended by special resolution passed by at least three-quarters of Shareholders present (in person or by proxy) and entitled to vote on the resolution at a general meeting of Collins Foods Limited. Collins Foods Limited must give at least 28 days written notice of a general meeting of Collins Foods Limited.
7 INVestIgAtINg AccouNtANts report
Caption lorem ipsum ediscit et hos arto stipata theatro spectat Roma potens habet hos numeratque poetas. Meal KFC Ultimate Burger
The Directors Collins Foods Limited 16-20 Edmondstone Street Newmarket QLD 4051 15 July 2011 Subject: Investigating Accountants Report on Historical and Forecast Financial Information and Financial Services Guide We have prepared this report on certain historical and forecast financial information of Collins Foods Limited (Collins Foods) for inclusion in a prospectus dated on or about 15 July 2011 (the Prospectus) relating to the issue of shares in the proposed initial public offer and listing on the Australian Securities Exchange (the Offer). Expressions defined in the Prospectus have the same meaning in this report. The nature of this report is such that it should be given by an entity which holds an Australian financial services licence under the Corporations Act 2001. PricewaterhouseCoopers Securities Limited, which is wholly owned by PricewaterhouseCoopers, holds the appropriate Australian financial services licence. This report is both an Investigating Accountants Report, the scope of which is set out below, and a Financial Services Guide, as attached at Appendix A of this report. Scope Collins Foods Limited has requested PricewaterhouseCoopers Securities Limited to prepare this investigating accountants report (the Report) covering the following information: i) Pro Forma consolidated historical income statements for FY2009, FY2010 and FY2011 (Pro Forma Historical Results); Pro Forma consolidated historical cash flow statements for FY2009, FY2010 and FY2011; Pro Forma consolidated historical balance sheet as at 1 May 2011 (the Pro Forma Balance Sheet) which assumes completion of the proposed transactions disclosed in section 6.1.2 of the Prospectus (the Pro Forma Transactions), (collectively, the Historical Financial Information); iv) Pro Forma consolidated forecast income statement for FY2012 (Pro Forma Forecast Results);
ii)
iii)
PricewaterhouseCoopers Securities Limited ACN 003 311 617 ABN 54 003 311 617 Holder of Australian Financial Services Licence No: 244572 Riverside Centre, 123 Eagle Street, GPO BOX 150, Brisbane QLD 4000 DX 77, Brisbane, Australia T +61 7 3257 5000, F +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
v)
Forecast statutory consolidated income statement for FY2012 (Forecast Statutory Results); Pro Forma consolidated forecast cash flow statement for FY2012; and Forecast statutory consolidated cash flow statement for FY2012, (collectively, the Forecast Financial Information or the Forecasts)
vi) vii)
Together, the Historical Financial Information and the Forecast Financial Information are collectively referred to as the Financial Information. This Report has been prepared for inclusion in the Prospectus. We disclaim any assumption of responsibility for any reliance on this Report or on the Financial Information to which this Report relates for any purposes other than the purpose for which it was prepared. Scope of review of Historical Financial Information The Historical Financial Information set out in section 3 of the Prospectus has been extracted from the audited financial statements of Collins Foods Holding Pty Limited. The financial statements were audited by PricewaterhouseCoopers that issued an unqualified audit opinion on them. The Historical Financial Information incorporates such pro forma transactions and adjustments as is considered necessary to present the Historical Financial Information on a basis consistent with the Forecasts. The Directors are responsible for the preparation of the Historical Financial Information, including the determination of the Pro Forma Transactions and adjustments. We have conducted our review of the Historical Financial Information in accordance with Australian Auditing Standards applicable to review engagements. We made such inquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including: an analytical review of the audited financial performance of Collins Foods Holding Pty Limited for the relevant historical period; a review of work papers, accounting records and other documents; a review of the adjustments made to the Historical Financial Information; a review of the assumptions (which include the Pro Forma Transactions) used to compile the Pro Forma Balance Sheet; a comparison of consistency in application of the recognition and measurement principles under Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by Collins Foods Limited disclosed in the Appendix to the Prospectus; and enquiry of Directors, management and others
2 of 5
These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion on the Historical Financial Information. Review statement on Historical Financial Information
Based on our review, which is not an audit, nothing has come to our attention which causes us to believe that: the Pro Forma Balance Sheet has not been properly prepared on the basis of the Pro Forma Transactions; the Pro Forma Transactions do not form a reasonable basis for the Pro Forma Balance Sheet; the Historical Financial Information, as set out in Section 3 of the Prospectus does not present fairly: i) the Pro Forma consolidated historical income statements for FY2009, FY2010 and FY2011;
ii) the Pro Forma consolidated historical cash flow statements for FY2009, FY2010 and FY2011; and iii) the Pro Forma consolidated historical balance sheet as at 1 May 2011 which assumes completion of the Pro Forma Transactions in accordance with the recognition and measurement principles prescribed under Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by Collins Foods Limited disclosed in the Appendix to the Prospectus. Scope of review of Forecasts The Directors are responsible for the preparation and presentation of the Forecasts, including the best estimate assumptions (which include the Pro Forma Transactions) on which they are based. Our review of the best estimate assumptions underlying the Forecasts was conducted in accordance with Australian Auditing Standards applicable to review engagements. Our procedures consisted primarily of enquiry and comparison and other such analytical review procedures as we considered necessary to form an opinion as to whether anything has come to our attention which causes us to believe that: (a) the best estimate assumptions do not provide a reasonable basis for the Forecasts;
3 of 5
(b)
in all material respects, the Forecasts are not properly prepared on the basis of the best estimate assumptions and presented fairly in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies of Collins Foods Limited disclosed in the Appendix of the Prospectus; or the Forecasts are unreasonable
(c)
The Forecasts have been prepared by the Directors to provide investors with a guide to Collins Foods Limiteds potential future financial performance based upon the achievement of certain economic, operating, development and trading assumptions about future events and actions that have not yet occurred and may not necessarily occur. There is a considerable degree of subjective judgement involved in the preparation of the Forecasts. Actual results may vary materially from the Forecasts and the variation may be materially positive or negative. Accordingly, investors should have regard to the description of investment risks set out in section 4 of the Prospectus. Our review of the Forecasts and the best estimate assumptions upon which the Forecasts are based is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards. A review of this nature provides less assurance than an audit. We have not performed an audit and we do not express an audit opinion on the Forecasts included in the Prospectus. Review statement on the Forecasts Based on our review of the Forecasts, which is not an audit, and the reasonableness of the best estimate assumptions giving rise to the Forecasts, nothing has come to our attention which causes us to believe that: (a) (b) the best estimate assumptions set out in section 3.8 of the Prospectus do not provide a reasonable basis for the Forecasts; in all material respects, the Forecasts are not properly prepared on the basis of the best estimate assumptions and presented fairly in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies of Collins Foods Limited disclosed in the Appendix of the Prospectus; or the Forecasts are unreasonable
(c)
The best estimate assumptions set out in section 3.8 of the Prospectus are subject to significant uncertainties and contingencies often outside the control of Collins Foods Limited. If events do not occur as assumed, actual results and distributions achieved by Collins Foods Limited may vary significantly from the Forecasts. Accordingly, we do not confirm or guarantee the achievement of the Forecasts, as future events, by their very nature, are not capable of independent substantiation.
4 of 5
Subsequent events Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the best of our knowledge and belief no material transactions or events outside of the ordinary course of business of Collins Foods Limited have come to our attention that would require comment on, or adjustment to, the information referred to in our Report or that would cause such information to be misleading or deceptive. Independence or disclosure of interest PricewaterhouseCoopers Securities Limited does not have any interest in the outcome of the Offer other than the preparation of this Report and participation in due diligence procedures for which normal professional fees will be received. Liability PricewaterhouseCoopers Securities Limited has consented to the inclusion of this Report in the Prospectus in the form and context in which it is included. The liability of PricewaterhouseCoopers Securities Limited is limited to the inclusion of this Report in the Prospectus. PricewaterhouseCoopers Securities Limited makes no representation regarding, and has no liability for, any other statements or other material in, or any omissions from, the Prospectus. Financial Services Guide We have included our Financial Services Guide as Appendix A to our Report. The Financial Services Guide is designed to assist retail clients in their use of any general financial product advice in our Report. Yours faithfully
Wim Blom Authorised Representative PricewaterhouseCoopers Securities Limited
5 of 5
Appendix A Financial Services Guide PRICEWATERHOUSECOOPERS SECURITIES LIMITED FINANCIAL SERVICES GUIDE This Financial Services Guide is dated 15 July 2011 1. About us PricewaterhouseCoopers Securities Limited (ABN 54 003 311 617, Australian Financial Services Licence no 244572) (PwC Securities) has been engaged by Collins Foods Limited to provide a report in the form of an Investigating Accountants Report in relation to the to the issue of Shares in the proposed initial public offering and listing on the ASX (the Report) for inclusion in the Prospectus dated on or about 15 July 2011. You have not engaged us directly but have been provided with a copy of the Report as a retail client because of your connection to the matters set out in the Report. 2. This Financial Services Guide This Financial Services Guide (FSG) is designed to assist retail clients in their use of any general financial product advice contained in the Report. This FSG contains information about PwC Securities generally, the financial services we are licensed to provide, the remuneration we may receive in connection with the preparation of the Report, and how complaints against us will be dealt with. 3. Financial services we are licensed to provide Our Australian financial services licence allows us to provide a broad range of services, including providing financial product advice in relation to various financial products such as securities, interests in managed investment schemes, derivatives, superannuation products, foreign exchange contracts, insurance products, life products, managed investment schemes, government debentures, stocks or bonds, and deposit products. 4. General financial product advice The Report contains only general financial product advice. It was prepared without taking into account your personal objectives, financial situation or needs. You should consider your own objectives, financial situation and needs when assessing the suitability of the Report to your situation. You may wish to obtain personal financial product advice from the holder of an Australian Financial Services Licence to assist you in this assessment.
PricewaterhouseCoopers Securities Limited, ACN 003 311 617 ABN 54 003 311 617 Holder of Australian Financial Services Licence No: 244572 Riverside Centre, 123 Eagle Street, GPO BOX 150, Brisbane QLD 4000 DX 77, Brisbane, Australia T +61 7 3257 5000, F +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
5.
Fees, commissions and other benefits we may receive PwC Securities charges fees to produce reports, including this Report. These fees are negotiated and agreed with the entity who engages PwC Securities to provide a report. Fees are charged on an hourly basis or as a fixed amount depending on the terms of the agreement with the person who engages us. In the preparation of this Report the estimate of our fees is approximately $570,000 (exclusive of GST and out of pocket expenses) estimated as at 15 July 2011. Directors or employees of PwC Securities, PricewaterhouseCoopers, or other associated entities, may receive partnership distributions, salary or wages from PricewaterhouseCoopers.
6.
Associations with issuers of financial products PwC Securities and its authorised representatives, employees and associates may from time to time have relationships with the issuers of financial products. For example, PricewaterhouseCoopers may be the auditor of, or provide financial services to the issuer of a financial product and PwC Securities may provide financial services to the issuer of a financial product in the ordinary course of its business. PricewaterhouseCoopers was the auditor of Collins Foods Holding Pty Limited for the years ended 3 May 2009, 2 May 2010 and 1 May 2011. Complaints If you have a complaint, please raise it with us first, using the contact details listed below. We will endeavour to satisfactorily resolve your complaint in a timely manner. In addition, a copy of our internal complaints handling procedure is available upon request. If we are not able to resolve your complaint to your satisfaction within 45 days of your written notification, you are entitled to have your matter referred to the Financial Ombudsman Service (FOS), an external complaints resolution service. FOS can be contacted by calling 1300 780 808. You will not be charged for using the FOS service.
7.
Contact Details
PwC Securities can be contacted by sending a letter to the following address: Wim Blom Authorised Representative of PricewaterhouseCoopers Securities Limited Riverside Centre 123 Eagle Street BRISBANE QLD 4000 GPO Box 150 BRISBANE QLD 4001 DX 77 Brisbane
2 of 2
8 ADDItIoNAl INForMAtIoN
Sizzler garlic prawn caesar salad
8.1
Summary of agreements with Yum!
Collins Foods Limited and various Collins Foods companies (referred to as Collins Foods in this section 8.1) has entered into a series of agreements with subsidiaries of Yum! (referred to as Yum! in this section 8.1), pursuant to which it will operate its KFC restaurants with Yum! as franchisor from Completion of the Offer. Key terms of these arrangements are described in sections 8.1.1 to 8.1.5 below.
8.1.1 Master Franchising Deed

Under the Master Franchising Deed, Yum! agrees to enter into Individual Franchise Agreements with Collins Foods in respect of 116 Collins Foods KFC restaurants and transfer the existing franchise agreements in respect of three Collins Foods KFC restaurants. Collins Foods agrees to pay $5.1 million (exclusive of GST) in respect of the aggregate amount of the initial and transfer franchise fees payable under the Individual Franchise Agreements (refer below) to Yum! on or shortly after Completion of the Offer. Collins Foods will also pay a royalty fee of 6% of annual revenues of its KFC revenues to Yum!. While currently the only KFC operator in Queensland, Collins Foods does not have exclusive rights to operate KFC restaurants in that state. Collins Foods is restricted from holding any interests in or engaging in or performing any services for other food businesses without Yum!s prior approval, which may be withheld in Yum!s absolute discretion if more than 20% of the food products prepared, marketed or sold by that other food business consists of pizza, pizza and pasta collectively, ready-to-eat chicken, Mexican food, or beef burgers. Breach of this restriction by Collins Foods will entitle Yum! to terminate the Master Franchising Deed. There is a specific exemption from the restriction for Collins Foods Sizzler business. Collins Foods agrees to ensure that the ratio of total net debt 1 to EBITDA is less than 4.1 times, and the ratio of EBITDA to Debt Service Amount (being the aggregate of interest expenses and repayments of principal amounts under the finance debt and finance leases) is greater than 1.35 times. Collins Foods is restricted from declaring dividends if as a result of the payment of those dividends Collins Foods would be likely to breach those ratios. Collins Foods expects to remain in compliance with these ratios. A failure to comply with these ratios or the restrictions on the declaration of dividends will entitle Yum! to terminate the Master Franchising Deed (or to withdraw its consent to Collins Foods opening new restaurants as referred to in section 8.1.2). Collins Foods grants Yum! a first right of refusal in relation to any proposed sale of Collins Foods companies that are parties to the Master Franchising Deed and any proposed transfer or assignment of the Master Franchising Deed. Additionally, Collins Foods agrees that it must seek a consent from Yum! to continue operating each of its restaurants following the occurrence of a change in control of Collins Foods and must pay a transfer fee (currently $6,300 per restaurant) following the grant of such consent. A change in control of Collins Foods will occur if one or more persons individually or collectively acquires in any of the Collins Foods companies that are a party to the Master Franchising Deed a relevant interest (as defined in the Corporations Act) or economic interest in 50% or more of the companys ordinary shares, all or a material part of the assets, property or business of the company, or control (within the meaning of section 50AA of the Corporations Act) of the company, or merges with the company. Collins Foods will also agree to obtain Yum!s consent before granting any security to lenders that is superior to Yum!s interests under any agreements between Collins Foods and Yum!. A breach of any of these obligations will entitle Yum! to terminate the Master Franchising Deed. The Master Franchising Deed will expire when the last of the Individual Franchise Agreements expires. Collins Foods and Yum! may terminate the Master Franchising Deed for material breach or the insolvency of the other party. Yum! may also terminate the Master Franchising Deed if negative public perceptions associated with Collins Foods would have a continuing negative impact on its business.
8.1.2 Facility Actions Deed

The Facility Actions Deed sets out the requirements to upgrade, relocate or rebuild 108 of the 119 KFC (including 24 signage only upgrades) restaurants operated by Collins Foods during the five year period following Completion of the Offer. While Collins Foods is in substantial compliance with this obligation, Yum! grants Collins Foods (under the Master Franchising Deed) the right to open up to seven new KFC restaurants during each of those five years (subject to site availability and Yum! approval).
Calculated as the outstanding amounts owing by Collins Foods under all finance debt less cash or cash equivalents.
A failure by Collins Foods to comply with its obligations under the Facility Actions Deed will entitle Yum! under the Master Franchising Deed to require Collins Foods to pay specified monies to an escrow agent. Those monies will only be released from escrow to Collins Foods for the purpose of enabling Collins Foods to comply with its obligations under the Facility Actions Deed to make specified refurbishments to restaurants. A failure by Collins Foods to pay such monies would entitle Yum! to terminate the Master Franchising Deed. The Facility Actions Deed will expire five years after Completion of the Offer, after which time the parties have agreed to negotiate in good faith and use best endeavours to enter into further facilities action deeds with five year terms.
8.1.3 Individual Franchise Agreements

The Individual Franchise Agreements contain the substantive franchise rights and obligations, including the grant of a non-exclusive right to use the KFC trade marks, service marks and trade names and the KFC system for preparing, marketing and selling food in relation to a specified restaurant. Collins Foods is required to comply with various operational policies mandated by Yum!, which may be changed by Yum! from time to time, and may be required by Yum! to upgrade, modify or renovate the specified restaurant. In addition to the payment of initial and continuing fees (referred to in section 8.1.1 above) Collins Foods must also invest in advertising by paying an amount equal to 5% of its KFC revenues to ADCO, and a further 1% of its KFC revenues on local advertising approved by Yum!. A number of the obligations of the parties under the Master Franchising Deed are repeated in each Individual Franchising Agreement, including the non-compete and non-assignment obligations, the grant of a first right of refusal in favour of Yum!, and to take action if requested to upgrade the relevant restaurant. The terms of the Individual Franchise Agreements range from eight through to 12 years, with an average term of approximately 10 years. Each may be renewed upon expiry by Collins Foods for a further 10 years, conditional on the payment of the required fee at the time of renewal and satisfaction of agreed conditions. Yum! may terminate an Individual Franchise Agreement, including for material or repeat breach of the Individual Franchise Agreement or other agreements, misconduct, insolvency, damage to its trade marks or goodwill by Collins Foods, or if the restaurant ceases operations for more than three days without its approval.
8.1.4 Marketing Agreement

The Marketing Agreement sets out the terms under which Yum! will procure that ADCO provides marketing, technical and financial services associated with KFC marketing, media and promotional activities in Queensland to, and consults with, Collins Foods KFC restaurants. The Marketing Agreement will expire five years after Completion of the Offer, after which time Collins Foods may renew it for a further five year period.
8.1.5 Supply Agreement

The Supply Agreement sets out the terms under which Yum! sources and negotiates purchasing arrangements for food, packaging, consumables and equipment to all KFC restaurants in Australia. Collins Foods agrees to pay a supply chain contribution amount of up to 0.35% of annual revenues to Yum!. Collins Foods will be entitled to fully participate in and appoint one representative to the KFC Supply Chain Council established by Yum! to consult with and participate in discussions to agree strategies for the supply chain for KFC restaurants. Collins Foods will be entitled to conduct its own supply chain management for distributors, small-wares (eg utensils, cleaning products) and for any other suppliers approved by Yum!.
8.2
Summary of Underwriting Agreement
The Offer is being underwritten and managed by the Joint Lead Managers pursuant to an Underwriting Agreement, dated 15 July 2011, between the Joint Lead Managers, Collins Foods Limited and Collins Foods Holding Pty Limited (referred to as the Company and the Guarantor respectively, and as Collins Foods collectively in this section 8.2).
8.2.1 Commission, fees and expenses

Collins Foods must pay to the Joint Lead Managers, in equal proportions on Completion of the Offer an offer management fee equal to 0.5% in aggregate of the cash proceeds and an underwriting fee equal to 2.0% in aggregate of the cash proceeds. Collins Foods may also agree to pay to the Joint Lead Managers in equal proportions an offer incentive fee of up to 1.0% in aggregate of the cash proceeds on Completion of the Offer. Cash proceeds are expected to be $201.7 million (calculated at the Offer Price of $2.50 multiplied by the number of Offer Shares to be issued to investors under the Institutional Offer and Broker Firm Offer). These amounts are exclusive of GST. Collins Foods has also agreed to reimburse the Joint Lead Managers for certain agreed costs and expenses incurred by the Joint Lead Managers in relation to the Offer. The Joint Lead Managers must pay any broker firm fees due to Brokers appointed by them in relation to the Offer.
8.2.2 Warranties, undertakings and other terms

The Underwriting Agreement contains certain common representations, warranties and undertakings provided by Collins Foods to the Joint Lead Managers (as well as common conditions precedent, including the entry into voluntary escrow deeds, as described further at section 6.6). The warranties relate to matters such as the conduct of the parties, information provided to the Joint Lead Managers, financial information, material contracts, licences, insurance, information in this Prospectus and the conduct of the Offer. Collins Foods undertakings include that it will not, during the period following the date of the Underwriting Agreement until 180 days after Completion of the Offer, issue or agree to issue any Shares or other securities, or until 90 days after Completion of the Offer reduce, reorganise, or otherwise alter or restructure its capital structure, and agrees to carry on its business in the ordinary course during that period (subject to certain limited exceptions, and other than as disclosed in this Prospectus).
8.2.3 Indemnity
Subject to certain exclusions relating to, among other things, fraud, wilful misconduct, wilful default or negligence by an indemnified party, Collins Foods agrees to keep the Joint Lead Managers and certain affiliated parties indemnified from losses suffered in connection with the Offer.
8.2.4 Termination events

If any of the following events in Part 1 occurs at any time, then a Joint Lead Manager may at any time by notice to the Company and the other Joint Lead Manager, immediately without any cost or liability to the Joint Lead Manager, terminate its obligations under the Underwriting Agreement. If an event in Part 2 occurs, a Joint Lead Manager may not terminate its obligations under the Underwriting Agreement unless, in the reasonable opinion of that Joint Lead Manager, the event has had or is likely to have a material adverse effect on the ability of the Joint Lead Managers to market the Offer, or the outcome, success or settlement of the Offer; or has given or is likely to give rise to a contravention by that Joint Lead Manager of, or that Joint Lead Manager being involved in a contravention of, the Corporations Act or any other applicable law.
Part 1 (a) (supplementary prospectus) (1) the Company issues or, in a Joint Lead Managers reasonable opinion, becomes required to issue a supplementary prospectus because of a circumstance set out in section 719(1) of the Corporations Act; or (2) the Company lodges a supplementary prospectus with ASIC in a form that has not been approved by the Joint Lead Managers (acting reasonably); (b) (material adverse change) there is a material adverse change including any material adverse change in the assets, liabilities, financial position or performance, profits, losses, prospects or forecasts from those respectively disclosed in the Prospectus; (unable to allot and issue offer shares) the Company is prevented from allotting and issuing the Shares for at least two business days of the time required by the timetable, by the ASX Listing Rules, applicable laws, an order of a court of competent jurisdiction or a government agency; (market fall) the S&P/ASX 200 Index, at any time before settlement, is at a level that is 90% or less of the level of that index at market close on the business day immediately prior to the date of the agreement at the close of trading for two consecutive business days, or on the business day before the settlement date; (prosecution) any of the following occur: (1) a director of the Company or the Guarantor is charged with an indictable offence; (2) any government agency commences any public action against the Company or the Guarantor or any of their directors in their capacity as a director of that company, or announces that it intends to take such action; or (3) any director of the Company or the Guarantor is disqualified from managing a corporation under Part 2D.6; (insolvency) the Company, the Guarantor or a Group member is Insolvent or there is an act or omission which will result in the Company, the Guarantor or a Group member becoming insolvent; (AsX listing approvals) unconditional approval (or conditional approval subject only to customary conditions) is refused or not granted for: (1) the Companys admission to the official list of ASX; (2) the official quotation of all of the Shares on ASX; or (3) deferred settlement trading of the Shares on ASX, on or before the settlement date (other than in the case of paragraph (3), where approval must be obtained before the quotation date), or if granted, the approval is subsequently withdrawn, qualified (other than by customary condition) or withheld; or, at any time after the quotation date, there is a suspension or material limitation in trading in the Companys securities on ASX; (NZ notifications) any New Zealand regulatory body having jurisdiction in respect of the Offer issues an order suspending or cancelling the issue or use of the New Zealand Opt-in Notice or any advertisement, or preventing the Company or Guarantor from issuing the New Zealand Opt-in Notice or any advertisement or the New Zealand Securities Commission exercises any power under Part 3 of the Securities Act 1978 (NZ) in a manner which is materially adverse relation to the Offer; (consent) any person whose consent to the issue of the Prospectus is required by section 720 who has previously consented to the issue of the Prospectus withdraws such consent or any person otherwise named in the Prospectus with their consent (other than a Joint Lead Manager) withdraws such consent; (notifications) any of the following notifications are made, other than a notification that is not made public and is withdrawn by the earlier of 6.00pm on the second business day after it is made or 12.00 noon on the business day before the settlement date: (1) ASIC issues an order under section 739(1); (2) ASIC issues an order under section 739(3) or 739(4); (3) an application is made by ASIC for an order under Part 9.5 in relation to the Prospectus or ASIC commences any investigation or hearing under Part 3 of the ASIC Act in relation to the Prospectus; (4) any person gives a notice under section 733(3) or any person (other than the Joint Lead Manager seeking to terminate under this clause) who has previously consented to the inclusion of their name in the Prospectus or to be named in the Prospectus withdraws that consent; or (5) any person gives a notice under section 730 in relation to the Prospectus; (timetable) Any event specified in the timetable after the lodgement date but prior to and including the commencement of normal trading is delayed by two business days or more, without the prior written approval of the Joint Lead Managers;
(c)
(d)
(e)
(f) (g)
(h)
(i)
(j)
(k)
(l)
(material contracts) if any of the obligations of the relevant parties under any of the material contracts are not capable of being performed in accordance with their terms (in the reasonable opinion of the Joint Lead Managers) or if all or any part of any of the material contracts: (1) other than the new franchise agreements is amended or varied without the consent of the Joint Lead Managers (acting reasonably); (2) in the case of the new franchise agreements is amended or varied without the consent of the Joint Lead Managers (acting reasonably) and those amendments or variations, singly, or in aggregate, have a material adverse effect on the Offer or outcome of the Offer; (3) is terminated; (4) is breached in a respect that the Joint Lead Managers believe would be expected to have a material adverse effect on the Offer or outcome of the Offer; (5) ceases to have effect, otherwise than in accordance with its terms; or (6) is or becomes void, voidable, illegal, invalid or unenforceable (other than by reason only of a party waiving any of its rights) or capable of being terminated, rescinded or avoided or of limited force and effect, or its performance is or becomes illegal; (facility agreement) (1) a provider of debt or other financial accommodation to the Company pursuant to the facility agreement terminates or cancels its commitment to provide that financial accommodation, or declares an event of default or an acceleration of the obligation to repay that financial accommodation, or the availability period of that financial accommodation expiring without it being provided; or (2) a condition precedent to drawdown of any part of that financial accommodation pursuant to the facility agreement is not satisfied or not waived or becomes incapable of being satisfied, in each case by 12.00 noon on the business day prior to the settlement date; (restriction agreement) the restriction agreement entered into by Mr Kevin Perkins is terminated, rescinded, altered, amended, or breached or failed to be complied with, prior to the allotment date; (investigations) an application (other than an application that is not made public and is either withdrawn or terminated by the earlier of 6.00pm on the second business day after it is made or 12.00 noon on the business day before the settlement date) is made by any person for an order under Part 9.5, or to any government agency, in relation to the Prospectus or the Offer, ASIC, NZR, NZFMA or any other government agency commences, or gives notice of an intention to hold, any investigation, proceedings or hearing in relation to the Offer or any of the Prospectus or prosecutes or commences proceedings against or gives notice of an intention to prosecute or commence proceedings against the Company; (fraud) the Company, the Guarantor or any of their directors or officers (as those terms are defined in the Corporations Act) engage, or have engaged in any fraudulent conduct or fraudulent activity whether or not in connection with the Offer; (withdrawal) the Company or the Guarantor withdraws the Prospectus, the New Zealand Opt-in Notice, any invitations to apply for Shares under the offer documents or all or any part of the Offer; (charges) the Company, the Guarantor or other Group member charges, or agrees to charge, the whole or a substantial part of the business or property of the Group other than as disclosed in the Prospectus or as agreed with the Joint Lead Managers; or (illegality) there is an event or occurrence, including any statute, order, rule, regulation, directive or request (including one compliance with which is in accordance with the general practice of persons to whom the directive or request is addressed) of any governmental agency which makes it illegal for the Joint Lead Managers to satisfy an obligation under the agreement, or to market, promote or settle the Offer in accordance with the agreement.
(m)
(n) (o)
(p)
(q) (r)
(s)
Part 2 (a) (change to company) The Company: (1) alters the issued capital of the Company; or (2) disposes or attempts to dispose of a substantial part of the business or property of the Company or any other member of the Group, without the prior written consent of the Joint Lead Managers (such consent not to be unreasonably withheld or delayed); (b) (information supplied) any information supplied (including any information supplied prior to the date of this agreement) by or on behalf of the Company, each other member of the Group to the Joint Lead Managers in respect of the Offer, the Company, each other member of the Group is, or is found to be, false or misleading or deceptive, or likely to mislead or deceive; (offer documents to comply) an offer document, or any aspect of the Offer, does not comply with the Corporations Act, the NZ Acts, the ASX Listing Rules, or any other applicable law or regulation; (mutual recognition) the Company fails to comply with the requirements of the NZ Mutual Recognition Regulations to enable the Offer to proceed on the basis of the Prospectus, under those regulations;
(c) (d)
(e) (disclosures in an offer document) a statement contained in an offer document is or becomes misleading or deceptive (including, without limitation, misleading representations within the meaning of section 728(2)), or a matter is omitted from an offer document (having regard to the provisions of sections 710, 711 and 716 and the NZ Acts) or is likely to deceive, mislead, or confuse with regard to any particular that is material to the Offer of securities to which it relates under Section 38B of the Securities Act 1978 of New Zealand or a statement is untrue under Section 58 of the Securities Act 1978 of New Zealand; (new circumstance) there occurs a new circumstance that arises after the Prospectus is lodged with ASIC that would have been required to be included in the Prospectus if it had arisen before the lodgement; (breach) the Company or the Guarantor fails to perform or observe any of its obligations under the agreement, an obligation of the Company and/or the Guarantor becomes incapable of being performed or observed or unlikely to be performed or observed by the required time for observance or performance, or a representation or warranty made or given by the Company and/or the Guarantor under this agreement proves to be, or has been, or becomes, untrue or incorrect; (disclosures in due diligence report) the due diligence report or any other information supplied by or on behalf of the Company to the Joint Lead Managers in relation to the Company or the Guarantor or any of their Subsidiaries, or the Offer in final form, is untrue, incomplete, misleading or deceptive or proves to be or becomes untrue, incomplete, misleading or deceptive; (compliance with regulatory requirements) a contravention by any of the Company, the Guarantor or any Group Member, of the Corporations Act, the ASIC Act, the NZ Acts, its Constitution, or any of the ASX Listing Rules; (change in management) a change in the chief executive officer, chief financial officer or board of directors of the Company or of the Guarantor is announced or occurs (other than a change fairly disclosed in the Prospectus); (certificate content) a certificate which is required to be furnished by the Company and the Guarantor under the agreement is untrue, incorrect or misleading; (change of law) there is introduced, or there is a public announcement of a proposal to introduce, into the Parliament of Australia, any State of Australia or New Zealand, a new law, or a Government Agency, any Federal or State authority of Australia or New Zealand, adopts or announces a proposal to adopt a new policy (other than a law or policy which has been announced before the date of this agreement), any of which does or is likely to prohibit or regulate the Offer, capital issues or stock markets or affect the taxation treatment of the Shares; or (disruption in financial markets and hostilities) any of the following occurs: (1) a general moratorium on commercial banking activities in Australia, New Zealand, the United States of America or the United Kingdom is declared by the relevant central banking authority in any of those countries, or there is a material disruption in commercial banking or security settlement or clearance services in any of those countries; (2) a suspension or material limitation in trading in securities generally on ASX, the London Stock Exchange or the New York Stock Exchange; (3) the occurrence of any other adverse change or adverse disruption to the political or economic conditions or financial markets in Australia, New Zealand, Japan, Hong Kong, Singapore, the Peoples Republic of China, the United States of America or a member of the European Union or the international financial markets or any change or development involving a prospective adverse change in national or international political, economic or financial conditions; or (4) hostilities not existing at the date of this agreement commence (whether war has been declared or not) or an escalation in existing hostilities occurs (whether war has been declared or not) involving any one or more of Australia, New Zealand, the United States of America, the United Kingdom, Japan, Russia, a member of the European Union or the Peoples Republic of China, or a national emergency is declared by any of those countries, or a major terrorist act is perpetrated anywhere in the world.
(f) (g)
(h)
(i)
(j)
(k) (l)
(m)
8.3 Summary of Sale Deeds

Under the Sale Deeds, each of the Existing Investors has agreed to sell all of its shares and other interests in Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd (the companies that own the Collins Foods businesses in Australia and Asia respectively as at the date of this Prospectus) (the existing Interests) to CFG Finance Pty Limited ACN 151 677 351, a wholly owned subsidiary of Collins Foods Limited, free from encumbrances and third party rights, or otherwise acknowledge the satisfaction of obligations owed to it by Collins Foods Holding Pty Limited or SingCo Trading Pte Ltd, for an aggregate consideration of approximately $91.2 million. The consideration will be paid partly in cash ($60.4 million) and partly by way of the issue of Shares ($30.8 million). Completion of the sale of the Existing Interests under the Sale Deeds and Completion of the Offer (including the allotment of Shares to Shareholders) are inter-conditional. The aggregate consideration of $91.2 million is calculated as $232.5 million (the Offer Price multiplied by the number of Shares in Collins Foods Limited following the Offer) less $115.0 million (the amount by which pro forma net debt in Collins Foods Holding Pty Limited and its subsidiaries is to be paid down on Completion of the Offer) and less $26.3 million (being the aggregate of the other payments under the heading Uses of funds referred to in the table in section 6.1.2). The amounts referred to in that table under the heading Uses of funds are estimates. The Sale Deeds provide that, to the extent that the latter two of these amounts decrease, including after taking into account the effect of tax refunds, the consideration payable to the Existing Investors will increase. The final impact of any tax refunds in relation to these costs is expected to be known by June 2013 with any final adjustments to the consideration payable by Collins Foods to Existing Investors to be made as soon as practicable thereafter. The Existing Investors were entitled to receive the consideration for their Existing Interests in the form of cash, or a combination of cash and Shares . The Funds advised by Pacific Equity Partners have irrevocably elected to receive 0% of the consideration payable to them for their Existing Interests in the form of Shares. Kevin Perkins has irrevocably elected to receive 82.0% of the consideration payable to him for his Existing Interests in the form of Shares. These Shares will be subject to escrow arrangements as set out in section 6.6. Other members of the Management team have irrevocably elected to receive 30.9% of the consideration payable to them for their Existing Interests in the form of Shares. These Shares will be subject to escrow arrangements as set out in section 6.6. In total, $30.8 million of consideration will be satisfied by way of the issue of the Shares to Existing Investors. Shares offered to Existing Investors under the Sale Deeds are issued with disclosure under this Prospectus. The Sale Deeds oblige the Existing Investors to perform various actions contemporaneously with Completion of the Offer, including to procure that all of the directors appointed to the boards of Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd nominated by the Funds advised by Pacific Equity Partners resign with immediate effect upon Completion of the Offer. A failure to comply with any of these obligations will result in the Existing Investors being in default under the Sale Deed. CFG Finance Pty Limited has no material assets, liabilities or operations other than its interest in the Sale Deeds described above and in the New Banking Facilities described in section 3.4.3. The directors of CFG Finance Pty Limited are Russell Tate, Newman Manion and Bronwyn Morris and the sole shareholder of CFG Finance Pty Limited is Collins Foods Limited. CFG Finance Pty Limited will borrow from Collins Foods Limited, and draw down under the New Banking Facilities, all of the monies required to fund the acquisition of all of the issued share capital of Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd from the Existing Investors, and perform a number of other matters as part of Completion of the Offer.
8.4 Consents to be named and disclaimers of responsibility
Each of the parties referred to below (each a Consenting Party), to the maximum extent permitted by law, expressly disclaims all liabilities in respect of, makes no representations regarding and takes no responsibility for any statements in or omissions from this Prospectus, other than the reference to its name in the form and context in which it is named and a statement or report included in this Prospectus with its consent as specified below. Each of the Consenting Parties has given and has not, before the lodgement of this Prospectus with ASIC, withdrawn its written consent to be named in this Prospectus in the form and context in which it is named. None of the Consenting Parties referred to below has made any statement that is included in this Prospectus or any statement on which a statement made in this Prospectus is based, other than as specified below: Deutsche Bank AG, Sydney Branch; UBS AG, Australia Branch; Clayton Utz; PricewaterhouseCoopers Securities Limited; PricewaterhouseCoopers; Link Market Services Limited; Craigs Investment Partners Limited; Bell Potter Securities Limited; Wilson HTM Corporate Finance Ltd; UBS Wealth Management Australia Limited; BIS Shrapnel Pty Ltd; Euromonitor International Ltd.; and Deloitte Access Economics Pty Limited.
PricewaterhouseCoopers Securities Limited has given, and not withdrawn before lodgement of this Prospectus with ASIC, its written consent to the inclusion in this Prospectus of statements by it, including its Investigating Accountants Report in section 7 and the statements specifically attributed to it in the text of, or by a footnote in, this Prospectus, in the form and context in which they are included (and all other references to that report and those statements) in this Prospectus. PricewaterhouseCoopers has given, and not withdrawn before lodgement of this Prospectus with ASIC, its written consent to be named in this Prospectus as auditor and taxation adviser in the form and context it is so named. BIS Shrapnel Pty Ltd has given, and not withdrawn before lodgement of this Prospectus with ASIC, its written consent to the inclusion in this Prospectus of statements by it, including the statements specifically attributed to it in the text of, or by a footnote in, this Prospectus, in the form and context in which they are included (and all other references to those statements) in this Prospectus. Deloitte Access Economics Pty Limited has given, and not withdrawn before lodgement of this Prospectus with ASIC, its written consent to the inclusion in this Prospectus of statements by it, including the statements specifically attributed to it in the text of, or by a footnote in, this Prospectus, in the form and context in which they are included (and all other references to these statements) in this Prospectus. Euromonitor International Ltd has given, and not withdrawn before lodgement of this Prospectus with ASIC, its written consent to the inclusion in this Prospectus of statements by it, including the statements specifically attributed to it in the text of, or by a footnote in, this Prospectus, in the form and context in which they are included (and all other references to those statements) in this Prospectus.
8.5
Description of the syndicate
The Joint Lead Managers to the Offer are Deutsche Bank AG, Sydney Branch and UBS AG, Australia Branch. The co managers to the Offer are Bell Potter, Craigs Investment Partners, UBS Wealth Management and Wilson HTM.
8.6
Taxation considerations
The comments below provide a general outline of Australian tax issues for Australian tax resident Shareholders that hold Shares in Collins Foods Limited on capital account for Australian income tax purposes. The comments do not apply to Shareholders that hold the Shares on revenue account or as trading stock, or to non-Australian tax resident Shareholders. They also do not apply to Shareholders that are banks, insurance companies or taxpayers that carry on a business of trading in shares. The comments below are based on the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997, the A New Tax System (Goods and Services Tax) Act 1999, relevant stamp duty legislation, applicable case law and published Australian Taxation Office and State/Territory Revenue Authority rulings, determinations and statements of administrative practice at the date of this Prospectus. The tax consequences discussed below may alter if there is a change to the tax law after the date of this Prospectus. They do not take into account the tax law of countries other than Australia. The comments are general in nature and are not intended to be an authoritative or complete statement of the tax law applicable to the particular circumstances of every Shareholder. Therefore they should not be relied upon as tax advice. Shareholders are advised to seek independent professional advice regarding the Australian and, if applicable, foreign tax consequences arising in respect of holding and disposing of their Shares, taking into account their specific circumstances.
8.6.1 Income tax treatment of dividends received for Australian resident Shareholders
Dividends distributed by the company to a Shareholder will constitute assessable income of an Australian tax resident Shareholder. Shareholders should include in their assessable income the dividend received, together with any franking credit attached to that dividend. Where the franking credit is included in the Shareholders assessable income, the Shareholder will generally be entitled to a corresponding tax offset against tax payable by the Shareholder. To be eligible for the franking credit and tax offset, a Shareholder must satisfy the holding period rule and related payments rule. This requires that a Shareholder hold the Shares in Collins Foods Limited at risk for a specified period of not less than 45 days (not including the date of acquisition and the date of disposal). In addition, a Shareholder must not be obliged to make a related payment in respect of any dividend, unless they hold the Shares at risk for the required holding period around all dividend dates. Shareholders should seek professional advice to determine if these requirements, as they apply to them, have been satisfied. The holding period rules will not apply to a Shareholder who is an individual whose tax offset entitlement (for all franked distributions received in the income year) does not exceed A$5,000 for the income year in which the franked dividend is received. Where a Shareholder is an individual or a complying superannuation entity, the Shareholder will generally be entitled to a refund to the extent that the franking credits attached to that Shareholders dividends exceed that Shareholders income tax liability for the income year. Where a Shareholder is a company, the Shareholder will generally be entitled to claim a carry forward tax loss calculated by reference to any excess of the franking credit attached to the Shareholders dividends over the Shareholders tax liability for the income year. Shareholders that are companies should seek specific advice regarding the tax consequences of dividends received in respect of the Shares in Collins Foods Limited and the calculation of carry forward tax losses arising from excess tax offsets. Special rules apply to Shareholders that are trustees (other than trustees of complying superannuation entities) or partnerships. These Shareholders should seek specific advice regarding the tax consequences of dividends received in respect of the Shares in Collins Foods Limited. Where the Shareholder is a corporate shareholder, franked dividends received by the Shareholder will generally give rise to a franking credit in the Shareholders franking account (subject to the Shareholder satisfying the rules outlined above for claiming a tax offset).
8.6.2 Capital gains tax (CGT) implications for Australian resident Shareholders
Where a Shareholder holds their Shares in Collins Foods Limited on capital account, the disposal of the Shares will be taxed under the CGT rules. For CGT purposes, the Shareholder will make a capital gain where the capital proceeds received for their Shares exceeds the CGT cost base of their Shares. Similarly, the Shareholder will make a capital loss where the capital proceeds received for their shares are less than the reduced cost base of their Shares. Broadly, the cost base and reduced cost base of the Shares would usually be equal to the amount paid to acquire the Shares. (The cost base and reduced cost base of the Shares may be different if a CGT roll-over applied to the acquisition of the Shares.) Certain other costs associated with holding the Shares, such as incidental costs of acquisition and disposal, may be added to the cost base and reduced cost base. Generally, all capital gains and losses made by a Shareholder for an income year, plus any net capital loss carried forward from an earlier year, will need to be aggregated to determine whether the Shareholder has made a net capital gain or a net capital loss for the year. A net capital gain is included in the Shareholders assessable income whereas a net capital loss is carried forward and may be available to set off against capital gains of later years (subject to the satisfaction of the loss recoupment rules for companies). If a Shareholder is an individual, complying superannuation entity or trust, and has held the Shares for at least 12 months or more before disposal of the Shares, the Shareholder will prima facie be entitled to a CGT discount for any capital gain made on the disposal of the Shares. Capital gains may be discounted by half in the case of individuals and trusts, and by one-third in the case of complying superannuation entities. Shareholders that are companies are generally not entitled to a CGT discount. Where the Shareholder is a trustee of a trust that has held the Shares for at least 12 months or more before disposal, the CGT discount may flow through to the beneficiaries of that trust if those beneficiaries are not companies. Shareholders that are trustees should seek specific advice regarding the tax consequences of distributions to beneficiaries who may qualify for discounted capital gains.
8.6.3 Tax File Numbers (TFN)

A Shareholder is not required to quote their TFN to Collins Foods Limited. However, if a Shareholders TFN or exemption details are not provided, Australian tax may be required to be deducted by Collins Foods Limited from certain distributions (other than fully franked dividends) at the maximum marginal tax rate plus the Medicare levy. A Shareholder that holds shares as part of an enterprise may quote their Australian Business Number instead of their TFN.
8.6.4 Goods and Services Tax (GST) implications

No GST should be payable by Shareholders in respect of the acquisition or disposal of their Shares in Collins Foods Limited. The extent to which each Shareholder is entitled to recover any GST incurred on costs relating to the acquisition or disposal of Shares in Collins Foods Limited will depend on the individual circumstances of each Shareholder. No GST should be payable by Shareholders on receiving dividends distributed by Collins Foods Limited.
8.6.5 Stamp duty

No Australian stamp duty should be payable by Shareholders in respect of their acquisition or disposal of their Shares. Individual Shareholders should obtain their own independent advice depending on their individual circumstances.
8.7
Privacy
By making an Application for Shares, you are providing personal information to Collins Foods Limited through Collins Foods Limiteds service provider, the Share Registrar, which is contracted by Collins Foods Limited to manage Applications. Collins Foods Limited and the Share Registrar on its behalf, collect, hold and use that personal information to process your Application, service your needs as a Shareholder, provide facilities and services that you request and carry out appropriate administration. If you do not provide the information requested, Collins Foods Limited and the Share Registrar may not be able to process or accept your Application. By submitting an Application, each Applicant agrees that Collins Foods Limited and the Share Registry may use the information provided by an Applicant (including in an Application Form) for the purposes set out in this privacy disclosure statement and may disclose it in accordance with Collins Foods Limiteds privacy policy for those purposes to Collins Foods Limited and to Collins Foods Limiteds other related bodies corporate, the Lead Managers, agents, contractors and third party service providers, including mailing houses and professional advisers, and to ASX and other regulatory authorities. The types of agents and service providers that may be provided with your personal information and the circumstances in which your personal information may be shared are: The Share Registrar for ongoing administration of the Shareholder register; Printers and other companies for the purpose of preparation and distribution of statements and for handling mail; Market research companies for the purpose of analysing Collins Foods Limiteds Shareholder base and for product development and planning; and Legal and accounting firms, auditors, contractors, consultants and other advisers
for the purpose of administering, and advising on, the Shares and for associated actions. If an Applicant becomes a Shareholder, the Corporations Act requires Collins Foods Limited to include information about the Shareholder (including name, address and details of the Shares held) in its public register of members. The information contained in Collins Foods Limiteds register of members must remain there even if that person ceases to be a Shareholder. Information contained in Collins Foods Limiteds register of members is also used to facilitate dividend payments and corporate communications (including Collins Foods Limiteds financial results, annual reports and other information that Collins Foods Limited may wish to communicate to its Shareholders) and compliance by Collins Foods Limited with legal and regulatory requirements. An Applicant has a right to gain access to the information that Collins Foods Limited and the Share Registry hold about that person, subject to certain exemptions under law. A fee may be charged for access. Access requests must be made in writing or by telephone call to Collins Foods Limiteds registered office or the Share Registrys office, details of which are disclosed in the Corporate Directory. Applicants can obtain a copy of Collins Foods Limiteds privacy policy by visiting the Collins Foods Limited website (www.collinsfg.com.au).
8.8
Photographs and diagrams
The assets depicted in photographs in this Prospectus (other than intellectual property owned by Yum!, including the KFC brand, and some land and some buildings) are assets of Collins Foods unless otherwise stated. Diagrams appearing in this Prospectus are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the date of the Prospectus.
8.9
Market date, industry forecasts and projections
This Prospectus, including the industry overview, uses market data, industry forecasts and projections. Collins Foods has obtained significant portions of this information from market research prepared by BIS Shrapnel Pty Ltd, Deloitte Access Economics Pty Limited and Euromonitor International Ltd. There is no assurance that any of the forecasts contained in the reports, surveys and research referred to in this Prospectus will be achieved. Collins Foods has not independently verified this information. Estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed in the risk factors set out in section 4.
8.10 Governing law
This Prospectus and the contracts that arise from the acceptance of the Applications and bids under this Prospectus are governed by the laws applicable in Queensland and each Applicant for Shares under this Prospectus and each bidder submits to the exclusive jurisdiction of the courts of Queensland.
8.11 Statement of Directors

The Directors report that, after due enquiries by them, in their opinion, since 2 May 2010 there have not been any circumstances that have arisen or that have materially affected or will materially affect the assets and liabilities, financial position, profits or losses or prospects of Collins Foods Limited, other than as disclosed in this Prospectus. This Prospectus is authorised by each Director who consents to its lodgement with ASIC and its issue.
9 glossAry
Caption lorem ipsum ediscit et hos arto stipata theatro spectat Roma potensCornetto Chocolate KFC habet hos numeratque poetas. Krusher Classic
9 glossAry
term ADco Applicant Application Application Form Application Monies or Application Amount AsIc AsX settlement operating rules AsX AsX listing rules Australian Accounting standards KFC Adco Limited a person who submits an Application an application made to subscribe for Shares offered under this Prospectus the application form attached to or accompanying this Prospectus (including the electronic form provided by an online application facility) the amount accompanying an Application Form submitted by an Applicant Australian Securities and Investments Commission the rules of ASX Settlement and Transfer Corporation Pty Ltd Australian Securities Exchange the listing rules of ASX Australian Accounting Standards and other authoritative pronouncements issued by the Australian Accounting Standards Board and Urgent Issues Group Interpretations for a period, the average bid rate displayed at the agreed time on the first day of the relevant period on the Reuters screen BBSY Australian Bank Bill Swap Bid Rate page for a term equivalent to the relevant period (or in certain circumstances, the rate determined by the agent under the New Banking Facilities in accordance with those facilities) Bell Potter Securities Limited (ACN 006 390 772) the board of directors of Collins Foods Limited any ASX or NZX participating organisation selected by the Joint Lead Managers and Collins Foods to act as Broker to the Offer the Offer of Shares under this Prospectus to Australian or New Zealand resident retail clients of Brokers who have received a firm allocation from their Broker compound annual growth rate has the meaning given to that term in section 3.5 chief executive officer chief financial officer the KFC monthly mystery shopper evaluation programme (cleanliness, hospitality, accuracy, maintenance, product quality and speed of service) Clearing House Electronic Sub-register System, operated in accordance with the Corporations Act chief information officer the date by which Applications must be lodged for the Offer, being Tuesday, 2 August 2011 for the Broker Firm Offer unless varied
BBsy
Bell potter Board or Board of Directors Broker Broker Firm offer cAgr cash Flows ceo cFo chAMps chess cIo closing Date
term collins Foods the business that operates KFC restaurants in Queensland and Northern New South Wales, owns and operates Sizzler restaurants in Australia and franchises Sizzler restaurants in Asia, which is to be acquired by Collins Foods Limited on Completion of the Offer the holding company of the group which owns KFC restaurants in Queensland and Northern New South Wales, and which also owns and operates Sizzler restaurants in Australia Collins Foods Limited (ACN 151 420 781), the company which will issue Shares under the Offer through which the Shareholders will hold the operating subsidiaries of the Collins Foods business within Australia: 1800 622 202 outside Australia +61 2 8280 7694
collins Foods holding pty limited
collins Foods limited
collins Foods offer Information line companies Act completion of the offer constitution corporations Act craigs Investment partners cso Director eBIt eBItA eBItDA existing Interests
Companies Act 1993 (NZ)

completion in respect of the allotment of Shares of the Offer under the Underwriting Agreement the constitution of Collins Foods Limited
Corporations Act 2001 (Cth)

Craigs Investment Partners Limited (ARBN 143 656 437) chief supply officer a member of the Board earnings before interest and tax earnings before interest, tax and amortisation earnings before interest, tax, depreciation and amortisation Shares and other interests in Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd (the companies that own the Collins Foods businesses in Australia and Asia respectively as at the date of this Prospectus) held by Existing Investors immediately prior to Completion of the Offer the persons holding shares and other interests in Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd immediately prior to Completion of the Offer. Refer to section 6.1.6 for further information has the meaning given to that term in section 3.4.3 has the meaning given to that term in section 3.4.3 the construction of new restaurants as well as restaurant rebuilds, refurbishments and relocations the agreement between Collins Foods and Yum! that sets out the requirements to upgrade, relocate or rebuild certain KFC restaurants operated by Collins Foods during the five year period following Completion of the Offer. Refer to section 8.1.2 for further information
existing Investors
Facility A Facility B Facility Actions Facility Actions Deed
9 glossAry
term Financial Information Forecast Financial Information Forecast statutory results FsDt Funds advised by pacific equity partners has the meaning given to that term in section 3.1 has the meaning given to that term in section 3.1 has the meaning given to that term in section 3.1 free standing drive through Pacific Equity Partners Fund II L.P. (established in Jersey), Pacific Equity Partners Supplementary Fund II L.P. (established in Jersey), Pacific Equity Partners Fund II (NQP) L.P. (established in Jersey), Pacific Equity Partners Fund II (Australasia) Pty Limited ACN 106 318 370 as trustee for the Pacific Equity Partners Fund II (Australasia) Unit Trust (incorporated in Australia), Pacific Equity Partners Fund II (Australasia) Pty Limited ACN 106 318 370 as trustee for the Pacific Equity Partners Supplementary Fund II (Australasia) Unit Trust (incorporated in Australia), PEP Investment Pty Limited ACN 083 026 984 (incorporated in Australia), PEP Co-Investment Pty Limited ACN 083 026 859 (incorporated in Australia), being the funds, advised by Pacific Equity Partners Pty Limited (ACN 082 283 949), which are existing investors in Collins Foods Holding Pty Ltd and SingCo Trading Pte Limited financial year ended 3 May 2009 financial year ended 2 May 2010 financial year ended 1 May 2011 financial year ended 29 April 2012 financial year ended 28 April 2013 capital expenditure incurred to expand the assets of Collins Foods and to generate a return on investment Collins Foods Limited and its subsidiaries on Completion of the Offer goods and services or similar tax imposed in Australia has the meaning given to that term in section 3.1 has the meaning given to that term in section 3.3.2 the agreements between Collins Foods and Yum! containing the substantive franchise rights and obligations, including the grant of a non-exclusive right to use the KFC trade marks, service marks and trade names and the KFC system for preparing, marketing and selling food in a specified restaurant. Refer to section 8.1.3 for more information an investor to whom offers or invitations in respect of securities can be made without the need for a lodged prospectus (or other formality, other than a formality which Collins Foods Limited is willing to comply with), including in Australia persons to whom offers or invitations can be made without the need for a lodged prospectus under section 708 of the Corporations Act and in New Zealand, persons to whom offers and invitations can be made without the need for a registered prospectus under section 3(2)(a) of the Securities Act 1978 NZ
Fy2009 Fy2010 Fy2011 Fy2012 Fy2013 growth capital expenditure group gst historical Financial Information historical statutory results Individual Franchise Agreements
Institutional Investor
term Institutional offer Investigating Accountant Ipo Joint lead Managers lto Maintenance capital expenditure Management Marketing Agreement the invitation to Institutional Investors under this Prospectus to acquire Shares, as described in section 6.4 PricewaterhouseCoopers Securities Limited (ACN 003 311 617) initial public offering Deutsche Bank AG, Sydney Branch and UBS AG, Australia Branch limited time offer capital expenditure incurred to preserve the existing assets of Collins Foods the five executives of Collins Foods Limited identified in section 5.2 the agreement between Collins Foods and Yum! that sets out the terms under which Yum! will procure that ADCO provides marketing, technical and financial services associated with KFC marketing, media and promotional activities in Queensland to, and consults with, Collins Foods KFC restaurants. Refer to section 8.1.4 for more information the agreement between Collins Foods and Yum! under which Yum! agrees to enter into Individual Franchise Agreements with Collins Foods in respect of Collins Foods KFC restaurants. Refer to section 8.1.1 for more information has the meaning given to that term in section 3.4.3 net profit after tax net profit after tax and before amortisation not meaningful the offer under this Prospectus of Shares for issue by Collins Foods Limited $2.50 per Share occupational health and safety PEP Advisory Pty Limited ACN 086 327 522 has the meaning given to that term in section 3.2.2 has the meaning given to that term in section 3.1 has the meaning given to that term in section 3.1 this document (including the electronic form of this Prospectus) and any supplementary or replacement Prospectus in relation to this document the date on which a copy of this Prospectus is lodged with ASIC, being 15 July 2011 PricewaterhouseCoopers PricewaterhouseCoopers Securities Limited quick service restaurant return on invested capital
Master Franchising Deed
New Banking Facilities NpAt NpAtA nm offer offer price oh&s pep Advisory pty ltd pro Forma Forecast Financial Information pro Forma Forecast results pro Forma historical results prospectus prospectus Date pwc pwcs Qsr roIc
9 glossAry
term sale Deeds the deeds, acknowledgements and other agreements between CFG Finance Pty Limited, Collins Foods Holding Pty Limited, SingCo Trading Pte Ltd and the Existing Investors, which set out the terms and conditions of sale of Collins Foods Holding Pty Limited and SingCo Trading Pte Ltd from the Existing Investors to CFG Finance Pty Limited and the satisfaction of obligations owed to certain Existing Investors by Collins Foods Holding Pty Limited or SingCo Trading Pte Ltd. Refer to section 8.3 for further information a fully paid ordinary share in the capital of Collins Foods Limited a holder of Shares Link Market Services Limited (ABN 54 083 214 537) SingCo Trading Pte Ltd, the holding company of the Collins Foods Sizzler Asia business a division of Collins Foods which owns and operates Sizzler restaurants in Australia and franchises Sizzler restaurants in Asia same store sales growth. It is calculated by analysing the sales growth from those restaurants in the group that were operating in the comparable period. It excludes any new stores or refurbished stores for a 12 to 15 month period after opening or reopening respectively to ensure the figures are not distorted by the impact of Facility Actions the agreement between Collins Foods and Yum! that sets out the terms under which Yum! sources and negotiates purchasing arrangements for food, packaging, consumables and equipment to all KFC restaurants in Australia. Refer to section 8.1.5 for more information UBS Wealth Management Australia Limited (ACN 005 311 937) the agreement of that name between Deutsche Bank, UBS, Collins Foods Limited and Collins Foods Holding Pty Limited. Refer to section 8.2 for further information Wilson HTM Corporate Finance Ltd (ABN 65 057 547 323) has the meaning given to that term in section 3.4.3 year ending Yum! Brands, Inc. or its subsidiaries
share shareholder share registry singco sizzler sssg
supply Agreement
uBs Wealth Management underwriting Agreement
Wilson htM Working capital Facility y/e yum!
AppeNDIX key AccouNtINg polIcIes
Sizzler sizzling steak and Szechuan prawns

The principal accounting policies adopted in the preparation of the Financial Information are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated. Entities reporting The consolidated financial information for the Group is for the economic entity comprising Collins Foods Limited and its subsidiaries (group). On completion of the Offer, the Group consists of: Collins Foods Limited CFG Finance Pty Limited Collins Foods Holding Pty Limited Collins Foods Finance Pty. Limited Collins Foods Group Pty. Ltd. Collins Restaurants Queensland Pty. Ltd. Collins Restaurants NSW Pty. Ltd. Sizzler Restaurants Group Pty. Ltd. Collins Restaurants Management Pty. Ltd. Collins Property Development Pty. Ltd. Club Sizzler Pty. Ltd. Collins Foods Australia Pty. Ltd. Collins Finance and Management Pty. Ltd. Sizzler South Pacific Pty. Ltd. SingCo Trading Pte Ltd Sizzler International Marks, LLC Sizzler Asia Holdings, LLC Sizzler New Zealand, LLC Sizzler Restaurant Services, LLC Sizzler South East Asia, LLC Sizzler Steak Seafood Salad(s) Pte Ltd Sizzler China Pte Ltd Holding company 100% owned by Collins Foods Limited 100% owned by CFG Finance Pty Limited 100% owned by Collins Foods Holding Pty Limited 100% owned by Collins Foods Finance Pty. Limited 100% owned by Collins Foods Group Pty. Ltd. 100% owned by Collins Restaurants Queensland Pty. Ltd. 100% owned by Collins Foods Group Pty. Ltd. 100% owned by Collins Foods Group Pty. Ltd. 100% owned by Collins Foods Group Pty. Ltd. 100% owned by Collins Foods Group Pty. Ltd. 100% owned by Collins Foods Group Pty. Ltd. 100% owned by Collins Foods Australia Pty. Ltd. 100% owned by Collins Foods Group Pty. Ltd. 100% owned by CFG Finance Pty Limited 100% owned by SingCo Trading Pte Ltd 100% owned by Sizzler International Marks, LLC 100% owned by Sizzler Asia Holdings, LLC 100% owned by Sizzler Asia Holdings, LLC 100% owned by Sizzler Asia Holdings, LLC 50% owned by Sizzler Asia Holdings, LLC 50% owned by Sizzler Asia Holdings, LLC
Historical cost convention The Financial Information has also been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss. Subsidiaries The Financial Information comprises the financial information of the Group. All transactions and balances between companies in the Group are eliminated on consolidation. Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. Where an entity began to be controlled during a reporting period, the results are included only from the date control commenced. Where a subsidiary ceased to be controlled during a reporting period, the results are included only through to the date control ceased. Except as disclosed in section 3.2.1, in relation to the acquisition of Collins Foods Holding Pty Limited by CFG Finance Pty Limited, the acquisition method of accounting is used to account for the acquisition of subsidiaries by Collins Foods Limited. Consistent accounting policies are employed in the preparation and presentation of the Financial Information. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue from the sale of goods is recognised when the Group has passed control of the goods to the customer, interest income is recognised on a time proportion basis using the effective interest method and traineeship income is recognised as revenue when the right to receive payment is established. Revenue arising from the sale of property, plant and equipment is recognised when the risks and rewards have been transferred, which is considered to occur on settlement. Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors. Income tax The income tax expense or revenue for the period is the tax payable on the current periods taxable income based on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Collins Foods Limited and its wholly owned Australian controlled entities intend to implement the tax consolidation legislation. Collins Foods Limited, as the head entity in the tax consolidated group and its wholly owned Australian controlled entities continues to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right. In addition to its own current and deferred tax amounts, Collins Foods Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising under the tax funding agreement with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Foreign currency translation Items included in the Financial Information of each of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars, which is the functional and presentation currency of the Group. Transactions in foreign currencies are converted at the exchange rates in effect at the dates of each transaction. Amounts payable to or by the Group in foreign currencies have been translated into Australian currency at the exchange rates ruling on balance date. Gains and losses arising from fluctuations in exchange rates on monetary assets and liabilities are included in the income statement in the period in which the exchange rates change, except when deferred in equity as qualifying cash flow hedges. Employee entitlements Provision has been made in the accounts for benefits accruing to employees up to balance date, such as annual leave, long service leave and bonuses. No provision is made for non-vesting sick leave as the anticipated pattern of future sick leave taken indicates that accumulated non-vesting leave will never be paid. Annual leave provisions are measured at their nominal amounts using the remuneration rates expected to apply at the time of settlement and are classified in other payables. Long service leave provisions are measured as the present value of expected future payments to be made in respect of services provided by employees up to reporting date using the projected unit credit method. Expected future payments are discounted using market yields at reporting date on national government bonds with terms to maturity that match estimated future cash outflows. All on-costs, including superannuation, payroll tax, workers compensation premiums and fringe benefits tax are included in the determination of provisions. Cost of sales For the purposes of the Financial Information, cost of sales includes the carrying amount of inventories sold during the reporting period and an estimated allocation of overheads incurred in relation to those inventories. Cash and cash equivalents For the purposes of the Financial Information, cash includes cash on hand, at call deposits with banks or financial institutions, and other short-term, highly liquid investments in money market instruments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Borrowings Bank loans are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not incremental costs relating to the actual drawdown of the facility, are capitalised and amortised on a straight line basis over the term of the facility.
Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed. Receivables Trade and related party receivables are recognised initially at fair value and subsequently measured at amortised cost, less any provision for doubtful debts. Trade receivables are generally due for settlement no more than 30 days from the date of recognition. Collectability of trade and related party receivables are reviewed on an ongoing basis. Debts which are known to be uncollectable are written off. A provision for doubtful debts is raised when there is objective evidence that the Group will not be able to collect all amounts due. The amount of the impairment loss is recognised in the income statement within other expenses. When a receivable for which an impairment allowance has been recognised becomes uncollectable in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement. Inventories Inventories are valued at the lower of cost and net realisable value. Cost is assigned on a first-in first-out basis and includes expenditure incurred in acquiring the stock and bringing it to the existing condition and location. Business combinations Except as set out in section 3.2.1 in respect of the acquisition of Collins Foods Holding Pty Limited by CFG Finance Pty Limited, the acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange. Where equity instruments are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity. Transaction costs arising from business combinations are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Groups share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entitys incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

Property, plant and equipment All property, plant and equipment is recorded at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Property, plant and equipment, excluding freehold land, is depreciated at rates based upon the expected useful economic life as follows: Method Buildings Leasehold improvements Plant and equipment Equipment under finance lease Straight line Straight line Straight line Straight line life 20 years Primary term of the lease 8 years 4 to 8 years
Leasehold improvements are depreciated over the unexpired period of the primary lease or the estimated life of the improvement, whichever is the shorter. Finance leased assets are depreciated over the shorter of the assets estimated useful life and the lease term. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount. The gain or loss on disposal of all non-current assets is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds on disposal, and is included in the income statement of the Group in the year of disposal. Leases Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leases inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other long-term payables. Finance lease payments are allocated between interest expense and reduction of lease liability over the term of the lease. The interest expense is determined by applying the interest rate implicit in the lease to the outstanding lease liability at the beginning of each lease payment period. Finance leased assets are depreciated on a straight-line basis over the shorter of the assets estimated useful life and the lease term. Where the risks and rewards of ownership are retained by the lessor, leased assets are classified as operating leases and are not capitalised. Rental payments are charged to the income statement on a straight line basis over the period of the lease. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Groups share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Goodwill is allocated to cash generating units for the purpose of impairment testing. Deferred franchise rights Costs associated with franchise licences which provide a benefit for more than one financial year are deferred and amortised over the remaining term of the franchise licence. Capitalised costs associated with renewal options for franchise licences are deferred and amortised over the renewal option period. The unamortised balance is reviewed each balance date and charged to the income statement to the extent that future benefits are no longer probable.
Other intangibles Sizzler brand Sizzler brand intangibles which are owned and registered by the Group are considered to have a useful life of 20 years and are amortised accordingly. These intangibles will be tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Sizzler brand intangibles are carried at amortised cost less impairment losses. Derivatives Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either cash flow hedges or fair value hedges. The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair value or cash flows of hedged items. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Changes in fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the income statement. Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. Accounts payable These amounts represent liabilities for goods and services provided prior to the end of the reporting period and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Provisions Provisions for legal claims and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses. As the Group is required to restore the leased premises of certain retail stores to their original condition upon the exit, an annual review of leased sites is conducted to revise its estimate of the provision required. However, as leases are traditionally renewed, the Group only recognises a provision for those restaurants where an estimate of make good costs can be measured and will result in a probable outflow of funds. The provision recognised is the present value of the estimated expenditure required to remove any leasehold improvements and decommissioning costs. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (gst) except where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense. The net amount of GST payable to the taxation authority is included as part of trade and other payables. Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Non-current assets (or disposal groups) held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of sale of the non-current asset (or disposal group) is recognised at the date of derecognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the income statement. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the new share issue are shown in equity as a deduction, net of tax, from the proceeds. Dividends Provision is made for the amount of any dividend declared at or before the end of the financial year but not distributed at balance date. The dividend distribution to Shareholders is recognised as a liability in the Collins Foods Limiteds and Groups financial statements in the period in which the dividends are approved by the Board of Directors.
This page has been left blank intentionally.
This page has been left blank intentionally.
corporAte DIrectory
Collins Foods registered office
16-20 Edmondstone Street, Newmarket Brisbane Qld 4051 PO Box 286 Lutwyche Qld 4030
Legal adviser
Clayton Utz Level 15 1 Bligh Street Sydney NSW 2000
Joint Lead Managers

Deutsche Bank AG, Sydney Branch Deutsche Bank Place Level 16, Corner Hunter and Phillip Streets Sydney NSW 2000 UBS AG, Australia Branch Level 16, Chifley Tower 2 Chifley Square Sydney NSW 2000
Investigating Accountant
PricewaterhouseCoopers Securities Limited Riverside Centre 123 Eagle Street GPO Box 150 Brisbane Qld 4000
Taxation adviser
PricewaterhouseCoopers Riverside Centre 123 Eagle Street GPO Box 150 Brisbane Qld 4000
Co Managers
Bell Potter Securities Limited Level 33, Grosvenor Place 225 George Street Sydney NSW 2000 Craigs Investment Partners Limited Craigs Investment Partners House Corner Cameron Road and Spring Street Tauranga, New Zealand, 3110 PO Box 13-155 Tauranga Central, New Zealand 3141 UBS Wealth Management Australia Limited Level 16, Chifley Tower 2 Chifley Square Sydney NSW 2000 Wilson HTM Wilson HTM Investment Group Level 38 Riparian Plaza 71 Eagle Street Brisbane Qld 4000
Auditor
PricewaterhouseCoopers Riverside Centre 123 Eagle Street GPO Box 150 Brisbane Qld 4000
Share registry
Link Market Services Limited Level 12 680 George Street Sydney NSW 2000
Collins Foods Offer Information Line

Within Australia: 1800 622 202 Outside of Australia: +61 2 8280 7694 Hours of operation: 8.30am to 5.30pm (AEST) Monday to Friday
Collins Foods Offer website

www.collinsfg.com.au
precinct.com.au

CKF AU Prospectus

Diunggah oleh

Informasi Dokumen

Deskripsi Asli:

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

CKF AU Prospectus

Diunggah oleh

Hak Cipta:

Format Tersedia

COLLINS FOODS LIMITED ACN 151 420 781

Initial Public Offering of Ordinary Shares

Joint Lead Managers

restrictions on distribution Important Information for New Zealand Investors

Financial information and forward looking statements

Defined terms and time Disclaimer

1 COLLINS FOODS LIMITED PROSPECTUS

2 COLLINS FOODS LIMITED PROSPECTUS

Friday 5 August 2011 Monday 8 August 2011

3 COLLINS FOODS LIMITED PROSPECTUS

letter FroM the chAIrMAN

russell tate Chairman

4 COLLINS FOODS LIMITED PROSPECTUS

KFC Super Variety Bucket

5 COLLINS FOODS LIMITED PROSPECTUS

topic A. INtroDuctIoN What is the nature of collins Foods business?

For more information

What are the key strengths of collins Foods?

Attractive market dynamics

Leading market position and scale in Queensland

Proven and highly experienced management team

Strong financial track record

Established platform for future growth

6 COLLINS FOODS LIMITED PROSPECTUS

Food safety and sanitation

Security of supply chain

Termination of franchise agreements for noncompliance

Brand and reputation calamity

Failure to open a sufficient number of new restaurants

Failure to introduce sufficient new products or LTOs

Reduction in customer numbers

Insufficient supervision of operations by management

7 COLLINS FOODS LIMITED PROSPECTUS

For more information

8 COLLINS FOODS LIMITED PROSPECTUS

9 COLLINS FOODS LIMITED PROSPECTUS

For more information Section 2.2.6 Section 2.3.6 Section 2.2.7

What are collins Foods key strategies?

Section 2.2.8 Section 2.3.7

how do collins Foods shared services functions contribute to its business?

Section 2.5.1 to Section 2.5.6

System restaurants comprise both owned, franchised and licensed restaurants.

10 COLLINS FOODS LIMITED PROSPECTUS

11 COLLINS FOODS LIMITED PROSPECTUS

topic What are the key investment metrics?

For more information 5.7x 7.7x 9.4x 9.0x 6.4% Section 3

FY2012 annualised dividend yield

Earnings per Share 3 (cents)

12 COLLINS FOODS LIMITED PROSPECTUS

relationship with yum! (termination for non-compliance)

Brand and reputation calamity

13 COLLINS FOODS LIMITED PROSPECTUS

For more information Section 4.1.6

Insufficient supervision of operations by management

14 COLLINS FOODS LIMITED PROSPECTUS

15 COLLINS FOODS LIMITED PROSPECTUS

For more information Section 5.2

Martin Clarke (CEO KFC)

James Ryan (CEO Sizzler Australia)

John Hands (CSO / CIO)

16 COLLINS FOODS LIMITED PROSPECTUS

17 COLLINS FOODS LIMITED PROSPECTUS

topic Will the shares be listed?