Ladies and gentlemen, thank you for standing by. Welcome to the Yum China conference call. At this time, all participants are in the listen-only mode. There will be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you will need to press star one on your telephone. I must advise you that this conference is being recorded today, 24th of April 2017. I would now like to hand the conference over to Christie Ju, Yum China Vice President for Finance and Investor Relations. Thank you. Please go ahead.
Thank you, Sajid. Hi, everyone. Thanks for joining our call on short notice. As you know, we recently announced a CFO transition plan. We just filed an 8-K last Friday. Following the resignation of CFO Ted Stedem, we have appointed an interim CFO effective 1st of June, Jacky Lo. We have arranged this call to speak with you directly and address any questions you may have regarding this change. Joining me today are our CEO, Micky Pant, President and COO, Joey Wat, Ted Stedem, and Jacky Lo. We will start with some opening remarks. Then move on to Q&A. Please note this conference call contains forward-looking statements which are subject to future events and uncertainties. Our actual results may differ materially from these forward-looking statements. Please consider the statement in conjunction with the cautionary statement included in our filings with the SEC.
With that, let me turn it over the call to Mr. Micky Pant, CEO of Yum China.
Thank you, Christie. Thank you everyone for joining in today's conference call. As Christie mentioned, last Friday, April 21, we announced the CFO transition plan with the approval of our board of directors. As a result of this, I am pleased that Jacky Lo is going to be our interim CFO effective June one, replacing Ted Stedem, who is resigning from Yum China for personal reasons. In a moment, you will hear directly from Ted Stedem. You will also hear from Jacky Lo. I wish to state that I have the utmost confidence in Jacky, having worked closely with him over the past several months. I'm also delighted to be joined today by Joey Wat. As you know, since February, Joey has been the President and Chief Operating Officer of Yum China, with responsibility for both KFC and for Pizza Hut.
I do wish to clarify, however, that the primary purpose of today's call is to look at the CFO transition arrangements and to answer your questions in that regard. While Joey and I remain available for questions, I do wish to clarify that our comments regarding business, particularly the ongoing quarter or the rest of the year, will be limited strictly to the comments that we already made in our earnings call on April fifth, your time, April sixth our time. We will be pleased to take questions, the one thing I wish to reiterate as I hand over to Ted to make a comment is what I said at the Q1 earnings call, is that we are facing our future in Yum China with business with increasing confidence, especially with regards to developing new units and to our profit prospects for the year.
With that, I would like to thank Ted for great work done over the last several months in making our company public and would invite him to make a brief comment.
Great. Thanks, Micky. Good morning and good evening to all of you. I wanted to start by saying that I'm a huge believer in this company and in the opportunities that we have to grow our brands and to create value for our shareholders. We have a 30-year track record of success, I really believe that we have the best brands, the best people, and the best culture in the world's biggest growth market in our industry. To me, this is what makes Yum China not only a great company but also a great investment opportunity. As many of you know, I am an American, after considering several personal circumstances and family priorities, I decided to return home to the U.S. at the end of the school year.
I have the utmost confidence in Jacky Lo and in our entire finance team, I'll be working closely with them to ensure a seamless and smooth transition. Jacky and I are both committed to ensuring that all of the key projects that we're working on remain on track and are completed as planned. In closing, I'm extremely confident that under Micky and Joey's leadership, our company's future has never been brighter.
Thank you very much, Ted. I know you'll have questions, but I would like to take the opportunity to hear from Jacky Lo, who's taking over the role as interim CFO from June 1. Jacky, as you introduce your view of the role, could I request you to also make some comments regarding your background? With that, Jacky Lo.
Thank you, Micky. Let me quickly introduce myself. I'm currently the Principal Accounting Officer and Controller of Yum China, overseeing all accounting functions within the company. As Vice President in Finance, I also work closely with Ted on various finance functions, including our cash management plan. I joined Yum China in mid-August 2016 and went through the spin-off process. Prior to Yum China, I was an audit partner with Ernst & Young for five years and have a total of 17 years in the profession. 10 of those years were based in China, mainly in Shanghai and Shenzhen. I have extensive experience in working with U.S. listed companies and IPO candidates. The last two years with Ernst & Young, I was also the deputy leader of the capital market center in Asia Pacific, overseeing all client activities relating to U.S. GAAP, SEC reporting, and SOX compliance in the area.
My major client at EY was Baidu, which I served as the lead audit partner for five years. I truly appreciate the opportunity and trust from Micky and the board of directors for me to take on this new role. Ted has set up a world-class finance function, and we have many high-caliber finance executives on the team. I'll work closely with each of them to continue driving the quality of our finance function and the growth of Yum China. Over the next five weeks, I'll also work very closely with Ted to ensure a smooth transition.
Thank you very much, Christie. Can you coordinate the questions?
Sure. Thanks, Micky, and thanks Ted and Jacky. Now we will open the floor for questions. Would very much appreciate when you have a question, when you get in the queue, please limit to 2 questions, or one question and one follow-up. Cedric, please, can you start the Q&A session?
Certainly. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Your first question comes from the line of John Glass from Morgan Stanley. Please ask your question.
Hi. Thanks. Good evening. Can you just clarify, Micky or Jacky, is this a temporary, an interim position and you'll seek a new CFO? Jacky, do you have this job going forward after the transition? If you could also comment, if it is a transition to a permanent role, how long that takes to find a new CFO?
John, Ted made me aware of his intention to resign, and within a day of that, we called a board of director meeting and got their approval to appoint Jacky as the interim CFO. I think at this time, we retain all options as to who the final candidate for this role will be. It is our intention with the audit committee of our board of directors and with the full board to put up all options, both internal and external. We will let you know just as that progresses. What I wish to assure you, however, is that I see this as a very smooth transition. We're in no rush to take a decision, and that I see Jacky as being perfectly capable of executing the functions, especially as Ted is going to be with us for the first two.
Thank you. If I could just follow up, Micky, when you look at your senior management team and the tenure, one, do you expect other potential transitions like this? Particularly, I think there is some mix of Chinese nationals versus expatriates on the team. Do you see that risk going forward? Do you feel like right now you've got folks who are committed to remaining in the roles longer term?
John, I feel very satisfied with the capability of our senior management team. I do wish to reiterate, you know the company pretty well, but for those who don't, we have a tremendous depth of management. While we often talk about our senior team, I would like to reiterate that we have very high levels of tenure and stability at all levels of this company. Most importantly, in our store management, store staff above that, leading up to market managers that run several hundred stores each. I feel very confident in the stability of this company overall. Having said that, we don't so much care about ratios of expat or local management. We are always seeking for the best possible person to do a particular role.
At this time, as I stand, I feel very confident that this company will not suffer in any way due to instabilities. I feel that the depth of management and the ongoing arrangements that we have are perfectly satisfactory.
Great. Thank you.
Thanks, John.
Thank you.
Operator, can we take the next question, please?
Yes. Your next question comes from the line of Anne Ling from Deutsche Bank. Please ask your question.
Hi. Just want to check on both Jacky. Now that you're the interim CFO, would like to check, what is the current priority? Ted, first, all the best, and sad to see you leaving us. We would like to check with you mentioned about thinking about this cash management plan in second half of 2017. With your departure, will there be any delay in terms of the change of such plan? How Jacky will be able to help you in terms of going through this transition?
Hi, Anne. This is Jacky. I'll take your question.
Thanks.
Our top priority remains unchanged. We'll continue to grow our same-store sales by focusing on our core brand. We'll continue to invest in new restaurant development and remodel to enhance customer experience. We will continue to focus on digital and delivery, the growth engine. As VP Finance, I work very closely with Ted on our capital structures and cash management plan, and there will be no change in this area.
We should expect something to be announced regarding the cash management in second half 2017?
I think we've been consistent with that, Anne. We had said that given the size of our cash as well as the ongoing cash generation, we take that responsibility very seriously. This is shareholder cash, and we are working on a comprehensive plan which evaluates fully all available opportunities so that we can make any commitments that we can be sure to honor in the long term. We had signaled that this would be in the back half, we will continue to keep you posted as we go along. I would emphasize, however, what Jacky and Ted both said, that the process of this transition is very smooth, and this transition should have no impact on the timing of our decisions with regarding capital plans.
Okay. Thanks.
Thank you.
Thank you. Your next question , comes from the line of Christine Peng from UBS. Please ask your question.
Hi, management. I think my question is the same as what Anne just mentioned. I think from investors' point of view, the key focus is really about how you plan to allocate the cash. How you plan to improve the efficiency of your capital structure? To that, if management can add any colors, that will be very much appreciated.
Christine, I will hand over to Ted because he's been the closest to this entire functioning. I will, however, reiterate that had we not had this call, there would have been no change, and there will be no change as a result of this move. Our diligence towards working on a very comprehensive capital management plan continues. It's always been a priority. The only reason we've not shared details is that we want to make it right and to do it properly and take our board of directors through it. With that, I'll hand over to Ted.
Hi, Christine. I'd echo what Micky said, and what I said previously. It's definitely one of our top priorities, and it's one that we are taking very seriously, and we're doing very diligently. We have a whole team that's working on this project internally, and there's several different phases of it. One is the strategic review we talked about. This is an important project for our company and involves a lot of people. Jacky's been involved in that since day one. We're also working on the capital allocation plan, and there's a whole host of people in my finance team that have done it. Jacky has been involved, and we plan to continue to progress those. I think, Jackie and I are absolutely committed, and I'm personally committed to ensuring it's a smooth transition and that all of these projects stay on track.
These are really important projects for our company, and we're planning to keep them on track and on schedule.
I think just one follow-up comment from me. This is Micky once again. This refers to the questions that John Glass had raised, as was Anne, as well as yourself, Christine. Is that I and Joey Wat, we will closely work together on running the business, will be working extremely closely with Jacky in the future. I'm committed to Jacky's success, and Jacky brings tremendous expertise. The reason why we made this appointment was we considered very carefully since the crucial position, but I have a lot of confidence in Jacky's ability. I think we'll be working in concert because as you know, capital return is not just a financial matter, it's also closely connected with the brand power and how we strengthen our brands, how we invest behind the brands, and what cash the brands are capable of generating.
We take that very seriously, and I'm very excited with the opportunity of working with Jacky, who's got extensive experience outside of our company, and I see that as a strength. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Once again.
For those of you who are on the call or if you want to email a question to me, that's fine too. If you have a question, you can do star one, and we will wait to see if there are any additional questions.
Once again.
Okay, at this time.
If you have a question, please press star one on your telephone and wait for your name to be announced.
Okay. Well, I think that John, Anne, and Christine asked the key questions probably everybody had. At this time, since there are no further questions, I wish to once again thank you, Ted, for the great work that you've done. Wish you all the very best. Wish you the very best, Jacky, and thank you all very much for the interest you've taken in our company. As Christie mentioned, we continue to be open and available for your further questions. Look forward to interacting with you. With that, thank you very much, and goodbye.
Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.