Domino's Pizza Group Plc · LSE:DOM
Domino's Pizza — H1 2016 Earnings Presentation
39 slides from Domino's Pizza's earnings presentation, July 2016
Slide 1: Domino's Pizza Group Plc Interim Results for the 26 weeks ended 26 June 2016
DOMINO’S PIZZA GROUP PLC Interim Results for the 26 weeks ended 26 June 2016
Slide 2: Group Financial Summary
GROUP GROUP FINANCIAL SUMMARY £494.5m £40.9m 31 417.0% 4 20.6% a] 19.9p 10.50p £(10.9)m 4 22.8% 4 16.7% vy £51.3m? Note: Figures above are for continuing operations excluding Germany but including the share of profits from the German joint venture. The Nordic joint ventures did not have an impact in
Slide 3: Highlights of H1 2016
GROUP HIGHLIGHTS OF H1 2016 10.9% UK LFL SALES GROWTH NEW UK STORES -+ Double-digit like-for-like (‘LFL) sales growth for eleven successive quarters in the UK -+ Record 30 new UK stores opened in the year so far with a full year expectation of 70 ++ Online now 81% of delivered sales ~+ Franchisees c
Slide 4: Strong Group Trading Results
GROUP STRONG GROUP TRADING RESULTS 26 weeks ended 26 weeks ended 26 June 2016 28 June 2015 % change Continuing Operations! (Group including German JV) System sales b . 17.0% Underlying operating profit 6 : 20.6% Underlying profit before tax : < 20.9% Discontinued Operations (Germany) Underlying oper
Slide 5: Strong Cash Generated and Reinvested in Acquisitions and Share Buy-backs
STRONG CASH GENERATED AND REINVESTED IN ACQUISITIONS AND SHARE BUY-BACKS Investments consist £23.1m Germany JV and £23.4m Nordics £15.3m of share buy-backs ey ra ey ra Cash movement (£m) E (7.4) |_| (6.2) 2 | (19.5) (10.9) (20.0) Closing 2015 EBITDA Discontinued Investments Share buy- Shares issued
Slide 6: New Revolving Credit Facility
GROUP NEW REVOLVING CREDIT FACILITY -+ New £175m five-year fully revolving credit facility with Barclays, HSBC and RBS -+ margin of 75-150 bps above LIBOR -+ utilisation fee of 0%-30% of margin -++£75m accordion and two-year extension option - Facility and cash generated will be used to: -+ fund the
Slide 7: UK & ROI Income Statement
UK & ROI INCOME STATEMENT 26 weeks ended 26 weeks ended 26 June 2016 28 June 2015 % change UK system sales ‘ ; 16.9% UK LFL sales ROI system sales! ; E 12.2% ROI LFL sales Currency impact (ROI) System sales Underlying operating profit 1 At constant currency. UK& ROI DOMINO'S PIZZA GROUP PLC 7
Slide 8: UK: Sales Driven by Double-Digit LFL Sales Growth and New Stores
UK: SALES DRIVEN BY DOUBLE-DIGIT LFL SALES GROWTH AND NEW STORES UK LFL increase driven by volume growth and pricing Impact of Euro 2016 is 0.7% on LFL sales in Q2 Record new store performance and good immature store performance SOURCES OF SALES GROWTH MATURE STORES SALES BREAKDOWN 600 490 ie 500 47
Slide 9: UK: Better Value for Customers Through Bundle Deals
UK: BETTER VALUE FOR CUSTOMERS THROUGH BUNDLE DEALS UK& ROI ++ Focus on value through bundle offers for families + Penetration of orders bought on discount has increased to 86.1% (2015: 85.3%) + Top national deals: Winter Survival, Pick ‘n’ Mix and Big Game Banquet H1 LFL BASKET COMPOSITION SALES =
Slide 10: Be the #1 Pizza Company in the World in Every Neighbourhood
= =Roll-out of new stores. Those Investment in digital drives DPG is committed to maintaining 4 added in 2016 show significant increased number of customer and improving franchisee eal growth in average sales per visits, improved conversion rates _ profitability, incentivising them k address and hig
Slide 11: UK: Significantly Improved Performance from Immature and New Stores
UK: SIGNIFICANTLY IMPROVED PERFORMANCE FROM IMMATURE AND NEW STORES Immature average weekly unit sales have increased by 11.2% from £13,265 to £14,746 A record 30 new UK stores opened in 2016 (2015: 21), of which 18 were splits (2015: 10) New stores are operating in lower address count areas with a
Slide 12: UK: Online Sales Growth Continues
UK: ONLINE SALES GROWTH CONTINUES ~+ The total online sales growth rate is 24.7% (2015: 29.7%) + Online sales as a percentage of delivered sales is now 81% (2015: 77%) and is 71% of total sales (2015: 67%) ~+ Continued mobile migration (app and mobile website) with orders up 25% in H1, and 13.2m app
Slide 13: Delivered Digital Engagement and Performance
DELIVERED DIGITAL ENGAGEMENT AND PERFORMANCE GIPHY and emojis -+ Launch of our very own GIPHY channel ++ 54m views and counting, 18.6m views of the “heart hugging pizza” GIF UK& ROI DIGITAL Snapchat -+ Launch of Domino’s own “mouth-boggling” filter -+ Users could record and share their videos 1lm+ u
Slide 14: Franchisee Profitability
: Y UK& ROI : 4 Store EBITDA performance up from 15.1% to 15.4% ts Improvement in EBITDA benefiting from increased sales and lower food prices secured by DPG partially offset by investment in labour FRANCHISEE PROFITABILITY AVERAGE WEEKLY UNIT SALES 21,000 20,500 20,000 +10.9% 19,500 19,000 18,500 1
Slide 15: Franchisee Profitability: Food Cost Savings
UK& ROI ae Aggressive purchasing based on volume growth Falling commodity food costs in year with £4m of food cost savings for the franchisees in H1 FRANCHISEE PROFITABILITY Delivered on time to stores: 99.8% DOMINO'S PIZZA GROUP PLC 15
Slide 16: Euro LADbible Activity
Euro LADbible activity eo . TV spot commercial Pre-game ad break for all post 5pm fixtures Premier League/Capital One/Scottish Premier League/Champions League/Europa League/ FA Cup 8% shift in spontaneous awareness for our association with football Local activation for football Over 30 local team sp
Slide 17: Building the Brand Image
BUILDING THE BRAND IMAGE & Domino's spoxsors nouroaxs UK& ROI Hollyoaks ++ Delivered over £20m media value ++ Very high levels of recall at 93% -+ Reached 75% of 16-34 year old adults ++ Continuous year-round TV presence Collection Perfection -+ Launched in April, medium pizzas are £5.99 and large p
Slide 18: New Products: Hot Pepperoni Passion, Chicken Boxes, Big Dips
UK& ROI 4 Hot Pepperoni Passion Chicken Boxes Big Dips e e Launch of the Hot Pepperoni Launched Sriracha Wings Following success of Garlic & Herb we es Passion, a new twist on a and Chicken Roulette Box Big Dip, extended the range to , =| customer favourite Renewed focus for include BBQ and Frank’s
Slide 19: ROI: Bundle Deals and Strong Online Presence Driving Growth
ROI: BUNDLE DEALS AND STRONG ONLINE PRESENCE DRIVING GROWTH UK& ROI 1 2.1% 26% ROI LFL growth by quarter ROI LFL SALES GROWTH ONLINE SALES GROWTH ++ Strong LFL sales + Dublin 12.4% -+ Provincial 11.4% + 14.1% -? Online sales up 25.8% YoY and now account for 56.1% of delivered sales (2015: 51.0%) = 2
Slide 20: International Operations
Slide 21: Switzerland: Good Mature Store Performance with Continued Investment
SWITZERLAND: GOOD MATURE STORE PERFORMANCE WITH CONTINUED INVESTMENT 11.7% || 27% = SWISS LFL SALES SYSTEM SALES GROWTH? GROWTH! -+ 16 corporate stores -+ Opened one new store in Winterthur -+ EBITDA in H1 has improved in mature stores to CHF 0.6m (2015: CHF 0.1m) -+ Good progress in new/immature st
Slide 22: Germany Joint Venture with Domino's Pizza Enterprises
4 Joint venture between DPG and Domino's Pizza c ’ Enterprises, one-third owned by DPG and & two-thirds by DPE >? < ‘ in Joint venture acquisition of Joey’s Pizza a = on 1 February 2016 e 212 Joey's stores and 13 ex-DPG stores Conversion going well with all stores having signed up for conversion Bus
Slide 23: Nordics: Iceland, Norway and Sweden
NORDICS: ICELAND, NORWAY AND SWEDEN = -? Strategic investment to hold 49% in Domino's Iceland, effective 45% holding in each of Domino’s Norway and Sweden -+ Deal completed on 8 June 2016 for £24.0m total consideration -+ Nordic management team runs the business: DPG Board representation Too -? 19 s
Slide 24: Looking Forward
Slide 25: Further Developments in Digital and Marketing
FURTHER DEVELOPMENTS IN DIGITAL AND MARKETING Facebook Messenger ordering platform -+ Launch of the Facebook Messenger ordering platform — order can be placed in Messenger with no need to download another app oe ARE YOU SURE? POKNMJTE.-25% off when you spend £0 ontine ‘Sony, tis voucher carne be use
Slide 26: Increase in Supply Chain Infrastructure Planned
Increase in supply chain infrastructure planned to match store demand +> LOOKING FORWARD New third party distribution centre planned in the South West to gain transport efficiency bad savings al el = Pe sani Capital investment in the following locations: | B21 North West oe (new Supply Chain 2018 £1
Slide 27: Outlook
OUTLOOK Brexit -+ No short-term impact on sales Z -+ Food prices agreed until end of 2016, with the exception of dairy = LOOKING FORWARD + Working hard to minimise 2017 currency impact on food Trading -+ New store guidance raised to 70 outlets this year - Tough sales comparators in H2, especially Q3
Slide 28: Summary: UK LFL Sales Growth
10.9% 30 UK LFL SALES GROWTH NEW UK STORES Strong like-for-like (‘LFL’) sales growth in core UK business though tough comparators lie ahead Record 30 new UK stores opened in the year so far with a full year expectation of 70 Online now 81% of delivered sales Franchisees continuing to benefit from in
Slide 29: Presenters and Questions
a David Wild, CEO Simon Wallis, COO Simon D’Cruz, Head of Financial Planning and Analysis Barbara Gibbes, Group Financial Controller
Slide 30: Appendices
APPENDICES APPENDIX 1 Analysis of UK & ROI operating profit APPENDIX 2 Group ten-year history: store count, system sales and Group profit APPENDIX 3 UK & ROI system sales and PBT growth and UK LFL sales growth by quarter APPENDIX 4 Group interim dividend APPENDIX 5 UK: continued migration to mobile
Slide 31: Analysis of UK & ROI Operating Profit
ANALYSIS OF UK & ROI OPERATING PROFIT 26 weeks ended 26 weeks ended 26 June 2016 28 June 2015 £m % change Net royalties : 11.7 16.6% Supply chain centre margin : 33.9 19.5% [RS Net overheads, realty and incentives 2 (9.2) (15.3)% UK joint ventures and associates : 0.9 0.7% Depreciation : (2.6) (8.8)
Slide 32: Group Ten-Year History: Store Count, System Sales and Group Profit
GROUP TEN-YEAR HISTORY: STORE COUNT, SYSTEM SALES AND GROUP PROFIT Store count (continuing operations) 872 e. 787 835 i ' L [ L : 2009 2010 2011 2012 2013 2014 H1 2016 Annual system sales and Group underlying operating profit (£m) 877.2 508.6 668.8 530.6 = : i | : I ; 2007 2008 2009 2010 2011 2012 2
Slide 33: UK & ROI System Sales and PBT Growth and UK LFL Sales Growth by Quarter
UK & ROI SYSTEM SALES AND PBT GROWTH AND UK LFL SALES GROWTH BY QUARTER UK & ROI system sales and PBT (£m) iN} 748.2 530.0 592.9 : a a a a 2011 2012 2013 Note: 53-week period in 2012 is unadjusted. mmmSystem sales —~PBT UK LFL sales growth by quarter 20% 14.9% 15% ¢ 10.3% 10.5% 10.4% 113% 10% = a a
Slide 34: Group Interim Dividend Increased by 16.7%
GROUP INTERIM DIVIDEND INCREASED BY 16.7% Interim key dates: Ex-dividend date: 4 August 2016 Record date: 5 August 2016 Payment date: 2 September 2016 26 weeks ended 26 June 2016 26 weeks ended 28 June 2015 APPENDICES % change Interim Dividend per share (pence)! 10.50 Dividend cover2 1.9x 9.00 1.8x
Slide 35: UK: Continued Migration to Mobile
UK: CONTINUED MIGRATION TO MOBILE Website orders (m) Website net sales! (£m) Website gross ticket? (£) APPENDICES H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 Mobile orders (m) Mobile net sales! (£m) Mobile gross ticket? (£) H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 Note: “Website” refers t
Slide 36: Switzerland Income Statement
SWITZERLAND INCOME STATEMENT 26 weeks ended 26 June 2016 m 26 weeks ended 28 June 2015 m % change System sales (£)! ah Currency impact (£) 0.1 Total system sales (CHF) 10.2 LFL sales 11.7% LFL mature store EBITDA (CHF)? 0.6 Operating profit (£) (0.6) Operating profit (CHF) (0.9) 5.6 8.0 2.8% 0.1 (0.
Slide 37: Future Tangible Fixed Asset Capital Expenditure Requirement
FUTURE TANGIBLE FIXED ASSET CAPITAL EXPENDITURE REQUIREMENT Maintenance Expansionary APPENDICES New supply chain centres Property — store freehold purchases Website/app development Ene Switzerland Germany Total capex DOMINO'S PIZZA GROUP PLC 37
Slide 38: Our Performance vs Key Competitors' Performance
OUR PERFORMANCE VS KEY COMPETITORS’ PERFORMANCE Quick service restaurant (‘QSR’) Components of total spend Quick service major brands — YE March ‘16 vs year ago Domino's Pizza McDonald’s % 3.0% APPENDICES Caffé Nero Pret a Manger Costa Coffee Nando’s Greggs Pizza Hut Delivery Starbucks Burger King S
Slide 39: Forward-Looking Statements Caution
FORWARD-LOOKING STATEMENTS CAUTION These 2016 Interim Results, our Annual Results, our Annual Report and the Domino's Pizza website may contain certain "forward-looking statements" with respect to Domino's Pizza Group plc and the Group's financial condition, results of operations and business, and c