Fourth Quarter and Fiscal Year 2020 Results
February 2021
Cautionary Statement on Forward-Looking Statements & Non-GAAP Measures
This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the future strategies, business plans, investment, dividend and share repurchase plans, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, the expected impact of the COVID-19 outbreak, the anticipated effects of our innovation, digital and delivery capabilities on growth and beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this presentation are only made as of the date of this presentation, and we disclaim any obligation to publicly update any forward- looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: whether we are able to achieve development goals at the times and in the amounts currently anticipated, if at all, the success of our marketing campaigns and product innovation, our ability to maintain food safety and quality control systems, the changes in public health conditions, including the COVID-19 outbreak, our ability to control costs and expenses, including tax costs, as well as changes in political, economic and regulatory conditions in China. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results. This presentation includes certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this presentation where indicated. You are urged to consider carefully the comparable GAAP measures and reconciliations.
2
Business Highlights
Appendix - Financial Results
Stores in Photos: KFC - Changsha Yanghushui street ;Pizza Hut - Beijing Jiuxianqiao
Proven Resilience and Strong Execution in 2020
Safety | Agility | Profitability |
Ensured safety of our | 300mn+ Members | $961 mn |
employees and | 80% Digital Order | Operating Profit |
customers | 50%+ Off-premise sales | $732 mn |
Adjusted OP1 | ||
Innovation | Store Growth | Portfolio Growth |
~500 | 1,165 New stores | |
New or upgraded | 10,506 Total stores | |
products | ||
1 See the appendix for a reconciliation to the non-GAAP adjusted measures | 4 |
Corporate Responsibility: Going the Extra Mile
Recognized
Commitment
Industry Leader for the Restaurant and Leisure Facilities industry of DJSI in 2020
Certified as Top Employer China for the third year in 2021
Bloomberg Gender Equality Index for the third year in 2021
Support our | Support our | • | Provided 170,000+ free | New Plastic | • | Target 30% reduction | |
meals to 1,450+ | Reduction | of non-degradable | |||||
Employees | Community | ||||||
hospitals and | Initiatives | plastic packaging | |||||
community health | |||||||
weight by 2025 | |||||||
centers during COVID- | |||||||
• Launched Family Care Program for | 19 outbreak | • All KFC & Pizza Hut | |||||
• | Provided modern | restaurants stopped | |||||
restaurant management team | using plastic straws | ||||||
kitchen equipment to | |||||||
• Set up fund for COVID affected | 70 schools in Hubei in | • | Replaced disposable | ||||
frontline employees and their families | 2020. 1,200 schools | plastic cutlery and | |||||
and ~400,000 students | plastic bags with eco- | ||||||
benefitted since 2008 | friendly options in most | ||||||
restaurants | |||||||
5 | |||||||
Resilience During Challenging Times
Resilient Performance in Q4 | Profitable Growth | Leading Digital Capabilities |
• Total revenue grew 11%1 | • Gross new stores: 1,165 FY | • Q4 Sales were |
• System sales grew 5%2 | • Total stores: 10,506 | Digital payment: 97% |
• Same-store sales: 96% of prior year2 | • New store cash payback periods3: | Digital order: ~83% |
• 15.1% restaurant margin | ~2 years | Delivery & takeaway: 50%+ |
• US$180 mn Operating Profit | ~3-4 years | From Members: ~59% |
(US$961 mn FY) | ||
• Members: 300+ mn | ||
Privileges sold: ~38 mn FY | ||
1 Stated in reported currency, includes the consolidation of Huang Ji Huang from April 2020 and Suzhou KFC from August 2020. | ||
2 Both stated in constant currency basis. System sales includes the consolidation of Huang Ji Huang from April 2020. | 6 | |
3 Refers to Average Pre-tax Cash Payback Period; Includes units opened from October 2018 to September 2019, after deduction of 3% license fee. |
Re-establishing Momentum
11%
Total revenue growth1 (%)
1%
-11%
-24%
Q1 Q2 Q3 Q4
Operating Profit (US$mn)
556 | ||
320 | 320 | |
97 98 | 128132 | 180 182 |
System sales growth2 (%)
1%
-4%
-20%
5%
Q1 | Q2 | Q3 | Q4 |
83% | 78%61% | ||
Same-store sales growth2 (%)
Q1 Q2 Q3 Q4
-6% | -4% | ||
-11% | |||
-15% | |||
Q1 | Q2 | Q3 | Q4 |
Operating Profit growth (%)
5% |
-66%-35%-33%-67%
Q1 Q2 Q3 Q4
Reported | Adjusted | |
1 Stated in reported currency, 2 Stated in constant currency basis. | 7 |
Note: Include the consolidation of Huang Ji Huang from April 2020 and Suzhou KFC from August 2020. Operating Profit included special item impact of -$1mn,-$4mn, $236mn and -$2mn in Q1 to Q4 respectively. |
Q4 Operating Profit Increased 90% YoY (78% ex FX)
Operating Profit (US$ mn) | 2019 | 2020 | ||||
Q4 | 180 | 182 | ||||
94 | 105 |
ReportedAdjusted
YoY | +90% | +72% | ||
YoY ex F/X | +78% | +61% | ||
Full Year | 961 | 912 | ||
901 | 732 | |||
Reported | Adjusted | |
YoY | +7% | -20% |
YoY ex F/X | +7% | -20% |
Key Factors for Q4 Year-Over-Year Growth
• Productivity improvement and other store cost savings
- Lower commodity prices
- New unit contribution
- Relief provided by landlords and government agencies
- Foreign exchange
- Operational deleverage from the same-store sales decline
- Wage inflation and increased rider cost associated with the rise in delivery volume
- Higher promotion costs
Note: See the appendix for a reconciliation to the non-GAAP adjusted measures | 8 |
Powerful Digital Ecosystem
- Improves engagement with customers
- Improves efficiency
Privilege | Mobile | Mobile | |
Super Apps | Tableside Order | ||
Program | Pre-order | ||
Online
MembershipQueuing
Program
K-Music
K-Run | Delivery | ||||||
YUMC | |||||||
Pay | |||||||
V-gold & | Smile to Pay | ||||||
E-Gifting | Book Kingdom | Operations | Marketing | ||||
Merchandise | Payment |
9
Membership Programs and Super Apps
Drive Frequency and Spend
275+ mm | ||
KFC Members1 | Memberships | |
~140 mm | ||
Downloads from | ||
iOS and Andriod 1 | ||
~89 mm | ||
MAU2 in Q4 2020 | ||
~60% | ||
KFC Sales3 |
~2x | >2x |
ARPU4of | Privilege |
Active Members | Frequency5 |
85+ mm
Pizza Hut Members1
~30 mm
Downloads from iOS and Andriod1
~13 mm
MAU2 in Q4 2020
~53%
Pizza Hut Sales3
~9mm in Q4
~38mm in 2020
Privilege Membership
Subscriptions Sold
1 | Accumulative up to December 31, 2020. 2 MAU refers to the monthly active users of the KFC Super App, Pizza Hut Super App, as well as the miniprograms embedded in third party applications. 3 Q4 2020. | 10 |
4 | Compare ARPU (annual spending per active member) in 2020 and 2016. 5 After subscription vs. before subscription for privilege members. |
Delivery and Takeaway are Key Growth Drivers
Delivery | + | Takeaway | = | Off-premise |
% of Company sales | % of Company sales | % of Company sales | ||
28% | |||
15% | 19% | ||
12% | |||
2017 | 2018 | 2019 | 2020 |
36% | |||
20% | 24% | 25% | |
2017 2018 2019 2020
~30% | |
25%+ | |
2019 | 2020 |
~9% | |
~5% | |
2019 | 2020 |
55%+
~40%
in Q4 2020
in Q4 2020
Note: % of Company sales include Wuxi KFC since 2018, and include Suzhou KFC since August 2020 | 11 |
New Store Growth with Attractive Paybacks
2018 | 2019 | 2020 | |
1,165 | |||
1,006 | |||
Gross | 819 | ||
505 | |||
new | |||
257 360 | |||
stores | |||
Q4 | Full Year | ||
10,506 | |||
9,200 | |||
Total | 8,484 | ||
stores | |||
18 YE | 19 YE | 20 YE |
Lower Tier Penetration | New Unit Payback1 | ||||||
2020 new stores | Tier 1-2 | Tier 3-6 | |||||
58% KFC | 42% | 51% | PH | 49% | Tier 1-2 | Tier 3-6 | ||||||
KFC | ~2-3 yrs | ~2 yrs | ||||||||||
Total stores | Tier 1-2 | Tier 3-6 | Pizza Hut | ~4-5 yrs | ~3-4 yrs | |||||||
56% | KFC 44% | 42% | PH | 58% | ||||||||
Note: Included Huang Ji Huang stores from April 2020 | 12 |
1 Refers to Average Pre-tax Cash Payback Period; Includes units opened from October 2018 to September 2019, after deduction of 3% license fee. |
Remodels Keep Our Brands Fresh
Remodeled stores
2018 | 2019 | 2020 | ||
931 972 939
416
232 297
Q4 | Full Year |
2020 YTD remodel
Others
, 2
Pizza
Hut,
375
KFC,
562
Always Something New
KFC
Pizza Hut
Stores in Photos: KFC - Hangzhou EFC shopping mall; Pizza Hut - Shanghai New World shopping mall and Beijing Jiuxianqiao | 13 |
KFC Remained Resilient
Q4 2020 Highlights
System sales +3%1 | Restaurant | 306 | |
Same-store sales -4%1 | margin | Gross new | Operating profit of |
stores | |||
16.8% | US$203 million2 | ||
Transactions -9% | |||
Average ticket +5% | +2.3 ppts y/y | 166 remodels | |
Holiday campaigns | ~85% Digital orders | |
+15ppts y/y | Members: 275+ million | |
Value promotions | ||
~27% Delivery sales | Member sales: ~60% | |
Menu innovation | ||
+7ppts y/y | ||
1 | Stated in constant currency basis. | 14 |
2 Segment Operating Profit before unallocated shared service costs and re-measurement gain from Suzhou KFC acquisition |
Attractive Campaigns and Abundant Value
National Day Celebration | Christmas / New Year | Member Campaign | Crazy Thursday |
Bucket with 17 items: | Christmas Giant Bucket at ¥129 | Members Only: Buy one get one free | Extended Crazy Thursday |
¥65 savings | to Wednesday and Friday | ||
15
Product Innovations Across Categories
Premium Burger | Breakfast | Drinks | Dessert |
Wagyu Beef Burger | Sweet pumpkin congee with longan, lotus | New Soymilk Tea | Hokkaido Caramel Cremia |
seeds and more | KFC dessert kiosks only | ||
16
Remarkable Progress in Pizza Hut
Q4 2020 Highlights | |||
System sales -3%1 | Restaurant margin | 96 Gross | Operating profit of |
new stores | |||
Same-store sales -5%1 | 10.4% | US$14 million2 | |
Transactions -2% | +3.7 ppts y/y | 130 remodels | |
Average ticket -3% | |||
Menu innovation | ~75% Digital orders | |
+40 ppts y/y | Members: 85+ million | |
Great value proposition | ~33% Delivery sales | Member sales: ~53% |
Enhanced privilege programs | ||
+6 ppts y/y | ||
1 | Stated in constant currency basis. | 17 |
2 Segment Operating Profit before unallocated shared service costs. |
Innovative Products for Dine-In and Off-Premise
Dine-In Campaigns | Delivery Campaigns |
Thick-cut fillet pizza | 4-person combo, save up to ¥300 | Crayfish with mozzarella cheese | Portuguese chicken curry |
18
Strong Digital and Membership Programs
Scream Wednesday | Delivery Member Acquisition | Super Privilege Plus | Online Campaign |
Extended Scream Wednesday | @¥158, members enjoy discounts and free | ||
Delivery new members only: ¥9.9 pizza | delivery at Pizza Hut for 1 year, and | Double 12: Buy one get one free | |
to Monday and Tuesday | |||
subscriptions on other platforms | 19 | ||
Driving Synergies between Huang Ji Huang and Little Sheep
Huang Ji Huang | Little Sheep | East Dawning | |||||
649 stores270 stores8 stores
Hot pot | |
Self-heating instant hot pot | soup base |
Salty duck | Steamed bun + Soy milk |
Stores in photos: Huang Ji Huang - Guangzhou New Park; Little Sheep - Lanzhou Wanda Plaza; East Dawning - Shanghai Guoquanlu | Store count as of December 31, 2020 | 20 |
Three Distinct Coffee Brands
Simply a good cup | Specialty | price | |||||||||
of coffee and great price | atmosphere | ||||||||||
coffee at affordable | Premium coffee & indulgent |
KFC stores | 42 stores | 4 stores |
Osmanthus coffee | Coffee capsules | Winter hot drinks | Pasta lunch set | Christmas dessert | Christmas drinks |
Stores in photos: KFC - Shanghai Jinqiao; COFFii&JOY - Ningbo Century Oriental Plaza; Lavazza - Shanghai Metro City | Store count as of December 31, 2020 | 21 |
Taco Bell Expanded to 12 Stores
Expanded to 4 new cities in 2020 | Localized Products at Great Value |
Beijing | Ningbo | |
Chengdu | Shenzhen | ||||
Mexican style spicy chicken | Christmas/New Year combo | ||||
rice bowl and wrap | for 2 person at 99 yuan | ||||
Stores in photos: Beijing - Hello Mart; Ningbo - The Mixc; Chengdu - The Mixc; Shenzhen - COCO Park | 22 |
Launched Ready Meals
KAIFENGCAI | Pizza Hut |
Cheese stuffed chicken breast / | "LuoSiFen" - Spicy noodle soup - a popular dish famous for its smell | |
Chicken soup | Ready-to-cook steak and pasta | |
Low fat chicken breast | ||
Fried rice in 3 different style | ||
23
2021 Outlook and Strategic Priorities
2021 FINANCIAL TARGETS
STRATEGIC PRIORITIES
- ~1,000 gross new stores
- ~$600 million Capex
- Top priority is to safeguard the health and safety of our employees and customers
- Stay agile and adapt to the fluid situations
- Grow our store footprint and develop emerging brands
- Step up investment in digitization and infrastructure to support expansion
- Manage cost with vigilance and drive efficiency improvement
24
Capital Allocation Powers Business Growth
Cash
US$4.3 bn cash and short term investment
- Strong operating cash flows
Free cash flow from operations1 (US$mn)
863
750 695
469
2017 2018 2019 2020
Capital Expenditure
- To accelerate store expansion and remodeling
- To develop our emerging brands
- To step up investment in digitalization, automation and logistics infrastructure
Capital expenditures (US$mn)
470 | ||
415 | 435 | 419 |
2017 2018 2019 2020
Shareholder Returns
US$1.2bn (since spin-off)
- Resumed cash dividends in 4Q'2020
- Expect steady returns to shareholders, in line with our profit growth
Cash dividends distributed and share repurchases (US$mn)
473 442
166
102
2017 2018 2019 2020
M&A and Investment
- To remain disciplined
- To explore opportunities:
- Brands with excellent growth potential synergy
- New capabilities and technologies
- Build and support our ecosystem
Past transactions
Restaurant | • | Huang Ji |
brands | Huang (2020) | |
Joint | • | Acquired 36% |
Ventures | of Wuxi KFC | |
(2018) | ||
• | Acquired 25% | |
of Suzhou KFC | ||
(2020) | ||
1 Refers to net cash from operating activities minus capital expenditure.
25
Business Highlights
Appendix - Financial Results
Stores in Photos: KFC - Changsha Yanghushui street ;Pizza Hut - Beijing Jiuxianqiao
Q4 Results Improved Sequentially
Sales Growth1 | Profit Margin | ||||||||||||||||||
System sales growth (%) | Restaurant Margin (%) | ||||||||||||||||||
6% | 8% | 9% | |||||||||||||||||
5% | |||||||||||||||||||
5% | 15.7%16.0% | ||||||||||||||||||
15.1% | |||||||||||||||||||
14.9% | |||||||||||||||||||
11.5%12.4% | |||||||||||||||||||
-5% | |||||||||||||||||||
Q4 | Full Year | ||||||||||||||||||
Q4 | Full Year | ||||||||||||||||||
Same-store sales growth (%) | Operating Profit (OP) (US$ mn) | ||||||||||||||||||
2% | 2% | 3% | |||||||||||||||||
1% | |||||||||||||||||||
941 | 961 | ||||||||||||||||||
901 | |||||||||||||||||||
-4% | 84 | 94 | 180 | ||||||||||||||||
-9% | |||||||||||||||||||
Q4 | Full Year | ||||||||||||||||||
Q4 | Full Year | ||||||||||||||||||
2018 | 2019 | 2020 | |||||||||||||||||
1Stated in constant currency basis.
Note: Include the consolidation of Huang Ji Huang from April 2020 and Suzhou KFC from August 2020.
Net Income & EPS
Net Income (NI) (US$ mn)
708 713 784
74 90 151
Q4 | Full Year |
Diluted EPS (US$)
1.79 1.84 1.95
0.19 0.23 0.35
Q4 | Full Year |
27
KFC Reported $801 million Operating Profit1 in 2020
Sales Growth2 (%) | Restaurant Margin (%) | Operating Profit1 (US$ mn) | ||||
System sales growth | 949 | |||||
17.9% | 895 | |||||
9% 10% | 11% | 17.8% | ||||
801 | ||||||
3% | 7% | 16.8% | ||||
16.3% | ||||||
-5% | 14.3%14.5% | |||||
Q4 | Full Year | |||||
Same-store sales growth
3% | 3% | 4% |
2% | ||
-4% |
136 161
203
-8% | Q4 | Full Year | |
Q4 | Full Year |
- Segment Operating Profit before unallocated shared service costs and re-measurement gain from Wuxi and Suzhou KFC acquisition
- Stated in constant currency basis.
Q4 | Full Year | ||||||
2018 | 2019 | 2020 | 28 | ||||
Pizza Hut Achieved Solid Margin and Profit
Sales Growth1 (%)
System sales growth
1%3%
-2%-3% -1%
-15% | |
Q4 | Full Year |
Same-store sales growth
0% | 1% | |||
-4% | -5% | -5% | ||
Q4 | -14% | |||
Full Year |
- Stated in constant currency basis.
- Segment Operating Profit before unallocated shared service costs.
Restaurant Margin (%)
11.1%
10.4% 10.3% 10.5%
6.7%
4.9%
Q4 | Full Year |
Operating Profit2 (US$ mn)
114
98
62
14
-9 | -3 | ||||||||
Q4 | Full Year | ||||||||
2018 | 2019 | 2020 | 29 | ||||||
Growing Popularity of Membership and Digital
Members (mn)
275+ | |||
215+ | |||
160+ | |||
110+ | |||
17 YE | 18 YE | 19 YE | 20 YE |
85+ |
70+ | |||
50+ | |||
35+ | |||
17 YE | 18 YE | 19 YE | 20 YE |
Member Sales1
54% | 62% | ||
44% | |||
32% | |||
17 FY | 18 FY | 19 FY | 20 FY |
46% | 52% | ||
44% | |||
18% |
17 FY 18 FY 19 FY 20 FY
Digital Order2
84% | |
63% | |
19 FY | 20 FY |
67% | |
31% | |
19 FY | 20 FY |
MAU3
89 mm
in Q4 2020
13 mm
in Q4 2020
- Member sales as % of system sales
- Digital order as % of Company sales
- MAU refers to the monthly active users of the KFC Super App, Pizza Hut Super App, as well as the mini programs embedded in third party applications.
30
Reconciliation of Reported Results to Non-GAAP Measures
Quarter Ended | Year to Date Ended |
12/31/2020 | 12/31/2019 | 12/31/2020 | 12/31/2019 |
Non-GAAP Reconciliations | ||||||||
Reconciliation of Operating Profit to Adjusted Operating Profit | ||||||||
Operating Profit | $ | 180 | $ | 94 | $ | 961 | $ | 901 |
Special Items, Operating Profit | (2) | (11) | 229 | (11) | ||||
Adjusted Operating Profit | $ | 182 | $ | 105 | $ | 732 | $ | 912 |
Reconciliation of Net Income to Adjusted Net Income | ||||||||
Net Income - Yum China Holdings, Inc. | $ | 151 | $ | 90 | $ | 784 | $ | 713 |
Special Items, Net Income -Yum China Holdings, Inc. | (2) | (8) | 169 | (16) | ||||
Adjusted Net Income - Yum China Holdings, Inc. | $ | 153 | $ | 98 | $ | 615 | $ | 729 |
Reconciliation of EPS to Adjusted EPS | ||||||||
Basic Earnings Per Common Share | $ | 0.36 | $ | 0.24 | $ | 2.01 | $ | 1.89 |
Special Items, Basic Earnings Per Common Share | (0.01) | (0.02) | 0.43 | (0.04) | ||||
Adjusted Basic Earnings Per Common Share | $ | 0.37 | $ | 0.26 | $ | 1.58 | $ | 1.93 |
Diluted Earnings Per Common Share | $ | 0.35 | $ | 0.23 | $ | 1.95 | $ | 1.84 |
Special Items, Diluted Earnings Per Common Share | - | (0.02) | 0.42 | (0.04) | ||||
Adjusted Diluted Earnings Per Common Share | $ | 0.35 | $ | 0.25 | $ | 1.53 | $ | 1.88 |
Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate | ||||||||
Effective tax rate | 28.0% | 26.8% | 26.6% | 25.9% | ||||
Impact on effective tax rate as a result of Special Items | 0.3% | 1.7% | (0.2)% | 1.0% | ||||
Adjusted effective tax rate | 27.7% | 25.1% | 26.8% | 24.9% |
Details of Special Items | ||||||||
Quarter Ended | Year to Date Ended | |||||||
Gain from re-measurement of equity interest upon acquisition(1) | 12/31/2020 | 12/31/2019 | 12/31/2020 | 12/31/2019 | ||||
$ | - | $ | - | $ | 239 | $ | - | |
Share-based compensation expense for Partner PSU awards(2) | (2) | - | (7) | - | ||||
Derecognition of indemnification assets related to Daojia(3) | - | - | (3) | - | ||||
Daojia impairment(4) | - | (11) | - | (11) | ||||
Special Items, Operating Profit | (2) | (11) | 229 | (11) | ||||
Tax effect on Special Items(5) | - | 1 | (60) | 1 | ||||
Impact from the Tax Act(6) | - | - | - | (8) | ||||
Special Items, net income - including noncontrolling interests | (2) | (10) | 169 | (18) | ||||
Special Items, net income - noncontrolling interests | - | (2) | - | (2) | ||||
Special Items, Net Income -Yum China Holdings, Inc. | $ | (2) | $ | (8) | $ | 169 | $ | (16) |
Weighted-average Diluted Shares Outstanding (in millions) | 433 | 387 | 402 | 388 | ||||
Special Items, Diluted Earnings Per Common Share | $ | - | $ | (0.02) | $ | 0.42 | $ | (0.04) |
1) As a result of the acquisition of Suzhou KFC in the third quarter of 2020, the Company recognized a gain of $239 million from the re-measurement of our previously held 47% equity interest at fair value, which was not allocated to any segment for performance reporting purposes.
- In February 2020, the Company granted Partner PSU Awards to select employees who were deemed critical to the Company's execution of its strategic operating plan. These PSU awards will only vest if threshold performance goals are achieved over a four-year performance period, with the payout ranging from 0% to 200% of the target number of shares subject to the PSU awards. Partner PSU Awards were granted to address increased competition for executive talent, motivate transformational performance and encourage management retention. Given the unique nature of these grants, the Compensation Committee does not intend to grant similar, special grants during the performance period. The impact from these special awards is excluded from metrics that management uses to assess the Company's performance. The Company recognized share-based compensation cost of $2 million and $7 million associated with the Partner PSU Awards for the quarter and year ended December 31, 2020, respectively.
3) In the quarter ended June 30, 2020, the Company derecognized a $3 million indemnification asset previously recorded for the Daojia acquisition as the indemnification right expired pursuant to the purchase agreement. The amount was included in Other income, net, but was not allocated to
any segment for performance reporting purposes. | ||
4) | During the year ended December 31, 2019, we recorded an impairment charge of $11 million on intangible assets and goodwill attributable to the Daojia business. It was included | in Closures and impairment expenses in our Condensed Consolidated Statement of Income, but was not |
allocated to any segment for performance reporting purposes. We recorded a tax benefit of $1 million associated with the impairment, and allocated $2 million of the after-tax impairment charge to noncontrolling interests. | ||
5) | The tax expense was determined based upon the nature, as well as the jurisdiction, of each Special Item at the applicable tax rate. | |
6) | We completed the evaluation of the impact on our transition tax computation based on the final regulations that were released by the U.S. Treasury Department and the U.S. Internal Revenue Service and became effective in the first quarter of 2019, and recorded an additional tax expense of | |
$8 million for the transition tax accordingly. | 31 |
Attachments
- Original document
- Permalink
Disclaimer
Yum China Holdings Inc. published this content on 03 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 February 2021 09:23:01 UTC.