Domino's Pizza Group Plc · LSE:DOM

Domino's Pizza — Domino's Pizza UK & IRL — Scottish Investor Conference, Edinburgh 2006

28 slides from Domino's Pizza's conference presentation, Jun 22, 2006

  1. Slide 1: Presentation to Scottish Investor Conference, Edinburgh

    Domino’s Pizza UK & IRL plc PRESENTATION TO SCOTTISH INVESTOR CONFERENCE EDINBURGH 22 JUNE 2006

  2. Slide 2: The team

    Domino’s Pizza UK & IRL plc The team Stephen Hemsley, Chief Executive Lee Ginsberg, Finance Director 2

  3. Slide 3: The business

    Domino’s Pizza UK & IRL plc The business • Leading company in home delivery pizza in UK and Ireland • Master Franchise Agreement (“MFA”) • Exclusive rights to Domino’s brand in UK and Republic of Ireland • Opened first store in UK in 1985 • At 27 April 2006 (AGM) • 419 stores in UK and Ireland • 339

  4. Slide 4: The business (contd…)

    Domino’s Pizza UK & IRL plc The business (contd…) • 157 franchisees in system • Average 2.7 stores each • Three commissaries supplying franchisees’ food, equipment and supplies • 8 out of top 10 international stores • Dublin store highest sales worldwide 4

  5. Slide 5: The business (contd….)

    Domino’s Pizza UK & IRL plc The business (contd….) • Circa 12,000 people in Domino’s system • Only 300 employed by us: • Head office 130 • Commissary 170 • Significant operational gearing • Infrastructure largely in place to manage 1,000 stores • Only 2 more commissaries needed • Estimate - need 500

  6. Slide 6: Historical five year growth story

    Domino’s Pizza UK & IRL plc The historical five year growth story 225 12 200 10 175 System Sales £’m 150 8 200.7 125 174.3 6 PBT - £’m 100 142.3 75 4 118.9 50 98.4 2 25 76.1 0 0 2000 2001 2002 2003 2004 2005 21% CAGR in System Sales 40% CAGR in PBT 6

  7. Slide 7: Store count

    Domino’s Pizza UK & IRL plc Store count Store Population 457 450 407 400 357 350 number of stores at year end 318 300 269 50 237 50 250 40 200 50 150 34 24 100 50 0 2001 2002 2003 2004 2005 2006 Forecast Potential for 800 – 1,000 stores 7

  8. Slide 8: Like-for-like sales growth

    Domino’s Pizza UK & IRL plc Like-for-like sales growth 25 20 15 % Growth 10 21.4% 5 11.2% 7.4% 6.6% 7.1% 8.8% 4.8% 0 2000 2001 2002 2003 2004 2005 27-Apr-06 Solid growth from a larger group of stores Average mature store now takes £180,000 p.a. more than in 2000 8

  9. Slide 9: Basic Earnings Per Share Growth

    Domino’s Pizza UK & IRL plc Basic Earnings Per Share Growth 18.00 Compound increase of 39% 16.00 14.00 12.00 16.25 10.00 Pence 13.23 8.00 6.00 9.02 4.00 5.60 2.00 4.00 3.21 0.00 2000 2001 2002 2003 2004 2005 Basic EPS Linear (Basic EPS) 9

  10. Slide 10: Dividends Per Share Growth

    Domino’s Pizza UK & IRL plc Dividends Per Share Growth 8.00 7.00 Compound increase of 55% 6.00 5.00 7.25 Pence 4.00 3.00 5.25 2.00 3.50 1.00 2.00 0.8 1.33 0.00 2000 2001 2002 2003 2004 2005 Dividends per Share Linear (Dividends per Share) 10

  11. Slide 11: Cash returned to shareholders

    Domino’s Pizza UK & IRL plc Cash returned to shareholders 2 year £’000 2005 2004 Total PBT 11,169 8,821 19,990 Share Buybacks 8,222 1,610 9,832 Dividends 3,169 2,240 5,409 11,391 3,850 15,241 Cash at year end 5,885 4,824 - 11

  12. Slide 12: The market drivers

    Domino’s Pizza UK & IRL plc The market drivers The future for pizza delivery 2005 2015 pizza delivery £1.1 billion pizza delivery* £578 million Convenience & Takeaway Market Convenience & £12.3 billion Takeaway Market £7.2 billion Predicted growth in total convenience & takeaway market: 70% Predicte

  13. Slide 13: The size of the opportunity

    Domino’s Pizza UK & IRL plc The size of the opportunity 100% 100% 80% 66% 60% 56% 40% 23% 20% 6% 0% y y y + er s er er 15 ar liv liv liv ye de ts de de ul 55 e Ad e e m m m er ho ho ho l nd Al a U d s zz ha o' pi in er om d Ev ha D er d ha Ev er Source; Mintel Home Delivery Report, 2004 Ev Coverage

  14. Slide 14: The size of the opportunity: U.S. market

    Domino’s Pizza UK & IRL plc The size of the opportunity 100% 100% 80% 75% 66% 56% U.S.market 60% 50% U.S.market 40% 23% 20% 6% 0% y y y + er s er er 15 ar liv liv liv ye de ts de de ul 55 e Ad e e m m m er ho ho ho l nd Al a U d s zz ha o' pi in er om d Ev ha D er d ha Ev er Source; Mintel Home Deli

  15. Slide 15: The sales momentum

    Domino’s Pizza UK & IRL plc The sales momentum • New product launches • 6 “tier 1“ in 2006 (2005: 2) • First half of 2006: • 555 deal + BOGOF • Ay Carumba • Football Fanatic • Second half of 2006: • Love Football/Hate Football • Second Simpsons’ menu addition • In development for last quarter • Supp

  16. Slide 16: The sales momentum (contd…)

    Domino’s Pizza UK & IRL plc The sales momentum (contd…) AY CARUMBA FAJITA PIZZA FOOTBALL FANATIC 16

  17. Slide 17: The sales momentum (contd…): Football Fanatic ad

    Domino’s Pizza UK & IRL plc The sales momentum (contd…) FOOTBALL FANATIC AD 17

  18. Slide 18: The sales momentum – E-commerce YTD

    Domino’s Pizza UK & IRL plc The sales momentum – E-commerce YTD £450,000 £400,000 £350,000 2005 £300,000 2006 £250,000 £200,000 £150,000 1 3 5 7 9 11 13 15 17 19 + 40% Year-on-Year + £100k per night at peak times 18

  19. Slide 19: The sales momentum – E-commerce projections

    Domino’s Pizza UK & IRL plc The sales momentum – E-commerce projections 16.00% 15.00% 14.00% 13.00% 12.00% 11.00% 10.00% 9.00% weeks 10 13 16 19 1 4 7 End of 2006 projection of 15%+ of delivered sales 19

  20. Slide 20: The sales momentum (contd…): Technological innovation

    Domino’s Pizza UK & IRL plc The sales momentum (contd…) • Technological innovation • E-commerce • Now up to 13% of all UK delivered sales • Projected at 35% by 2015 * • ROI platform • Launch in second half • Average ticket on E-commerce 25% higher • Ordering by mobile phones • First pizza company in

  21. Slide 21: The sales momentum (contd…): Focus on operations

    Domino’s Pizza UK & IRL plc The sales momentum (contd…) • Focus on operations • Fanatical attention to detail: • OER • Product quality • Quality of ingredients • Franchisee profitability • Outrageous service • Out the door times • Average in system of 17 minutes • Goal to reduce to 14 minutes • Corr

  22. Slide 22: The franchisee model

    Domino’s Pizza UK & IRL plc The franchisee model ƒ Average Store System sales £600,000 ƒ Average EBITDA after: £ 90,000 ƒ Food costs 26% ƒ Labour 25% ƒ Royalty & NAF 10.5% ƒ Cash payback on investment 2.1 years (range: 1.6 – 2.7) FRANCHISEE PROFITABILITY KEY 22

  23. Slide 23: The franchisee model (contd…)

    Domino’s Pizza UK & IRL plc The franchisee model (contd…) For 2005 the average store cost to an existing franchisee was: £ Store construction costs 152,000 (range £122k to £201k) Acquisition and legal costs 15,000 (range £6k to £21k) 167,000 Franchisee fee 13,000 (range £3,750 to £15k) Project Manag

  24. Slide 24: Board Management Team

    Domino’s Pizza UK & IRL plc Board Management Team • Strengthening of Board • Appointment of Michael Shallow, Non-Executive Director • Appointment of Dianne Thompson, Non-Executive Director • Board now comprises: • Chairman • Colin Halpern • Three Executive Directors • Four Non-Executive Directors •

  25. Slide 25: The financial model at build out

    Domino’s Pizza UK & IRL plc The financial model at build out At build out * 2005 (circa 2017) No. of stores 407 1,000 - 50 openings p.a. AWUS growth at 3% p.a. ** 10,700 15,000 System sales 200m 780m Profit before tax 11.2m 70.2m PBT/System sales 5.6% 9.0% ƒ Stores double – profits grow six-fold ƒ 1

  26. Slide 26: The financial model at build out (contd..)

    Domino’s Pizza UK & IRL plc The financial model at build out (contd..) At build out * 2005 (circa 2017) ƒ PBT 11.2m 70.2m ƒ Dividend – Cover 2.3x 2.0x - Pence 7.3p 53.0p ƒ Share buybacks * ƒ Average no. of shares 50.8m 40.0m in issue ƒ EPS - pence 16.2p 106.0p COMPELLING 10 YEARS OF CASH GENERATIVE

  27. Slide 27: Current trading & prospects

    Domino’s Pizza UK & IRL plc Current trading & prospects • Store openings on track for our target of 50 stores • Like-for-like sales up 8.8% (2005: 7.9%) for the first sixteen weeks of 2006 • Tough hurdle to beat in second half • E-commerce up 51.5% (2005: 59.1%) now 12.1% of delivered pizza sales in

  28. Slide 28: The Domino's model + continuing strategy

    Domino’s Pizza UK & IRL plc The Domino’s model + continuing strategy • Focus on roll out of Domino’s system in UK and Ireland • Maintain consistent new store opening programme • Build infrastructure for 1000 stores • Drive like-for-like sales growth • Manage number of franchisees • Operational lever

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