Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — H1 FY2008 Earnings Presentation
24 slides from Domino's Pizza Enterprises's earnings presentation, 2008
Slide 1: Domino's Pizza Enterprises Limited First Half Results to 30 December 2007
Domino’s Pizza Enterprises Limited First Half Results to 30 December 2007
Slide 2: Executive Team
EXECUTIVE TEAM Don Meij Chief Executive Officer/ Managing Director Andrew Rennie Chief Executive Officer France/Belgium Richard Coney Group Chief Financial Officer 2
Slide 3: Agenda
AGENDA 1. Executive Summary 2. Network Store & Sales Growth 3. Revenue & EBITDA Results • Results Australia, New Zealand & Europe • Results Corporate • Results Franchise • Results Corporate Development & Unallocated 4. Financial Detail • Profit & Loss • Cash Flow • Balance Sheet 5. Europe 6. Looking
Slide 4: Executive Summary
EXECUTIVE SUMMARY • Strong Network Sales growth +14.3% over H107 • Solid Group SSS growth +7.6% over H107 • Slight reduction in revenue as a result of Corporate store sell down • Significant improvements in EBITDA of +35.5%, NPBT+ 80.7% and NPAT of +75.8% over H107 • Europe Operating Profit of A$1.4
Slide 5: Executive Summary
Total Group-YTD SSS for First Half of Financial Year 7.64% EXECUTIVE SUMMARY 2007 2006 3.1% Significant Organic Store growth 2005 4.42% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% • Group +27 Stores • ANZ +6 Stores ANZ YTD SSS for First Half of Financial Year • Europe + 21 Stores 4.77% 200
Slide 6: Executive Summary
EXECUTIVE SUMMARY ANZ Innovation to 30 December 2007 • Brand campaign Domino’s Effect had a positive impact • On-line ordering now in 97% of Australian stores • NZ now on-line in 87% of stores • Strong promotional success in ANZ • Pulse rollout project is complete for ANZ 6
Slide 7: Network Store & Sales Growth
NETWORK STORE & SALES GROWTH 600 Network Sales 518.9 600 500 H2 Network Store Count 80.7 400 359.4 518.9 Actual Projection 306.1 $M 300 287.0 H2 at Dec 2007 to June 2008 500 252.9 187.2 H1 200 174.7 212.5 H2 H1 H2 182.8 65.1 85.1 H2 H1 80.7 Australia 407 140.6 157.5 H1 H1 201.9 H1 176.6 185.9 100 14
Slide 8: Network Store & Sales Growth
NETWORK STORE & SALES GROWTH H1 06 H2 06 F/Y 06 H1 07 H2 07 F/Y 07 H1 08 Network Sales ($ mil) 176.6 182.8 359.4 251.0 267.9 518.9 287.0 • Additional 27 new Number of Aus/NZ stores stores Franchised stores 289 301 301 313 343 343 365 Corporate stores 126 137 137 144 124 124 108 • 16 Corporate store’
Slide 9: Revenue & EBITDA Results
REVENUE & EBITDA RESULTS REVENUE EBITDA 24.7 22.0 230.1 H2 0.5 H2 28.3 17.8 172.9 13.0 13.4 H2 133.4 H2 H2 H1 12.5 83.7 115.8 11.3 11.9 1.4 109.7 H2 H1 H1 H1 H2 H1 H1 88.0 21.4 9.1 12.2 86.3 30.0 7.8 11.0 11.6 H2 H1 H1 70.4 H1 71.5 96.7 H1 86.6 8.7 85.8 H1 34.7 3.1 61.9 H1 (1.4) 2001 2002 2003 2004
Slide 10: Results – Australia, New Zealand & Europe
RESULTS – AUSTRALIA, NEW ZEALAND & EUROPE • Strong EBITDA growth in core earnings as highlighted in the next 3 slides • Sell down of Corporate stores improving EBITDA margins • Overhead reductions in ANZ • Europe achieved strong EBITDA growth, despite a step up in royalties and the seasonally softer
Slide 11: Results - Corporate
RESULTS - CORPORATE 2007/08 • EBITDA margins in line with expectations, affected by restructuring and reduction in Corporate store numbers Going Forward • This area expected to reduce in the quantum of dollars as Franchise increases in line with sell down of stores • Margin still effected for the mo
Slide 12: Results - Franchise
RESULTS - FRANCHISE 2007/08 • Significant Margin improvement when Distribution Revenue is removed as a historical comparison - record 43.9% (also benefiting from reduced store construction) Going Forward • Expecting the franchise segment to be the strongest growth segment of ANZ business • Benefitin
Slide 13: Results – Corporate Development & Unallocated
RESULTS – CORPORATE DEVELOPMENT & UNALLOCATED Corporate Development • As forecast, Corporate Development profit lower • Includes closure and write-off of a test concept Domino’s 2 Go – impact A$0.3m Other / Unallocated (G&A) • Overhead office costs and revenue maintained H1 06 H2 06 F/Y 06 H1 07 H2
Slide 14: Profit & Loss
PROFIT & LOSS • Financing costs down 9% to A$1.3m as a result of debt reduction • Tax result for H108 is 28.7% compared to H107 26.8% • Earnings per share (basic) 9.6 cents +68.4% • Interest cover improved to 7.5x H1 06 H2 06 F/Y 06 H1 07 H2 07 F/Y 07 H1 08 +/(-) H1 07 $ mil $ mil $ mil $ mil $ mil
Slide 15: Cash Flow
CASH FLOW H1 2007 H1 2008 Aust/NZ Europe Group Aust/NZ Europe Group $'000 $'000 $'000 $'000 $'000 $'000 Cash flows from operating activities Receipts from customers 106,814 22,082 128,896 95,640 32,015 127,655 • Cash from Operations Payments to suppliers and employees (100,239) (20,942) (121,181) (8
Slide 16: Balance Sheet
H2 2007 H1 2008 +/(-) H2 2007 BALANCE SHEET Current assets $ mil $ mil $ mil Cash assets 7.9 8.1 0.2 Trade & other receivables 25.8 28.1 2.4 • Increase in trade and other Inventories 5.0 4.7 (0.3) receivables, A$1.6m in trade Other current assets 4.1 6.4 2.3 Assets classified as held for sale 2.3 2.
Slide 17: Europe
EUROPE • Record number of organic stores in the first half • SSS strong +15.03% due to colder than normal summer • No. 1 pizza delivery brand in France and the Netherlands • Netherlands is now averaging 18% of its delivery orders online and growing Award winning TVC • Commenced the roll out of the N
Slide 18: Europe (Cont)
EUROPE (Cont) • First steps to integrate back office processes of Europe business with major IT investments in new systems: – Role out of new Enterprise Resource Planning platform (Microsoft Navision) for all countries – Investments in new POS, already operating in more than 45 stores – Implementati
Slide 19: Looking Forward – ANZ
LOOKING FORWARD – ANZ • Strong product pipeline with an increased focus back on pizza • Cash acceptance for online ordering rolling out and getting good traction. Aiming for double digit mix of sales from online ordering within 12 months. Ticket average still significantly higher online • New Zealan
Slide 20: Looking Forward – ANZ
LOOKING FORWARD – ANZ Management aware of: • Commodity prices still rolling through and too early to indicate if all Managements initiatives have negated the cost increases • Labour market for delivery drivers still challenging, and so a stronger focus on carry-out to continue 20
Slide 21: Looking Forward – Europe
LOOKING FORWARD – EUROPE • Very excited as the brand goes to TV in March 08 for the first time ever in France • Launch a new National four digit telephone number in France 3959 • Dutch TV presence expecting to continue to grow • Started planning for new 250 store Dutch commissary to open within 18 m
Slide 22: Looking Forward – Europe: Store Growth Plan
LOOKING FORWARD – EUROPE EUROPE STORE GROWTH PLAN • Working closer with franchisees 500 ANZ Stores 473 490 to move operations to the next level to manage expected sales 450 life, ie. training, more Operational 440 400 Audits, etc 390 Number of Stores 350 • Expecting strong SSS growth to 340 continue
Slide 23: Update Guidance for Full Year 2008
UPDATE GUIDANCE FOR FULL YEAR 2008 • Confirm Guidance at top end +30% on FY07 NPAT • Store growth +70 (more stores in Europe) • FY08 Net Debt levels further reduced to A$4m – A$8m 23
Slide 24: Conclusion
CONCLUSION • Increased return on capital by converting Corporate stores to Franchise • DPE building a strong Balance Sheet for continued growth • ANZ on track for targeted +600 stores • Maintaining active management of commodity prices • Europe is ahead of expectations in profit, sales and store gro
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