Domino's Pizza Group Plc · LSE:DOM
Domino's Pizza — H1 2013 Earnings Presentation
39 slides from Domino's Pizza's earnings presentation, July 2013
Slide 1: Interim Results for the 26 weeks ended 30 June 2013
Interim Results for the 26 weeks ended 30 June 2013
Slide 2: The Team
The Team Lance Batchelor Chief Executive Officer Lee Ginsberg Chief Financial Officer 2
Slide 3: H1 2013 Financial Highlights
H1 2013 Financial Highlights A robust set of results From core UK & ROI market 20% 15% +12.8% +11.2% +10.3% 10% +6.4% 5% 0% UK LFL sales growth System sales Profit before tax * Diluted EPS * * Pre-exceptionals, Germany and Switzerland 3
Slide 4: H1 2013 System Sales and PBT Growth
H1 2013 System Sales and PBT* Growth UK LFL sales up 6.4%, profits up 10.3% £350 System Sales (£M) PBT * (£M) £25.7m £27.5 £23.3m £25.0 £300 £20.2m £22.5 £250 £20.0 Sales £m £17.5m PBT £m £200 £17.5 £150 £13.6m £15.0 £12.5 £100 £10.0 £50 £7.5 £196.4m £237.1m £258.3m £285.9m £317.9m £0 £5.0 2009 H1 2
Slide 5: H1 2013 Mature Store Sales Growth
H1 2013 Mature Store Sales Growth Strong UK LFL sales performance 16.0% 800 13.7% 718 14.0% 700 662 12.0% 607 600 553 UK LFL Store Population 10.0% 501 500 Mature Stores LFL Sales Growth 8.0% 400 7.1% 6.4% 6.0% 5.7% 300 4.0% 200 2.4% 2.0% 100 0.0% 0 2009 H1 2010 H1 2011 H1 2012 H1 2013 H1 Mature Sto
Slide 6: H1 2013 Profit and Loss
H1 2013 Profit and Loss * 26 weeks to 26 weeks to % 53 weeks ended 30 June 2013 24 June 2012 increase 30 December 2012 £’000 £’000 £’000 System sales 326,498 286,869 13.8 598,608 Profit before tax pre-Germany & pre-Switzerland 25,705 23,302 10.3 49,573 Germany losses (3,193) (1,243) (156.9) (2,618)
Slide 7: H1 2013 Profit and Loss: Health of core business
H1 2013 Profit and Loss * Health of core business 26 weeks to 26 weeks to % 30 June 2013 24 June 2012 change LFLs – UK/ROI 6.4%/6.5% 5.7%/2.9% - System sales - £’000 317,888 285,894 11.2% Profit before tax - £’000 25,705 23,302 10.3% Diluted EPS 12.05p 10.68p 12.8% STRONG UNDERLYING OPERATIONAL GEAR
Slide 8: Profit and Loss – Exceptional Items
Profit and Loss – Exceptional Items 26 weeks to 26 weeks to 53 weeks ended 30 June 2013 24 June 2012 30 December 2012 £’000 £’000 £’000 Operating exceptionals (12,314) (405) (4,553) - Acquisition and restructuring costs relating to - - (2,365) Dominos Pizza Switzerland - Restructuring and reorgani
Slide 9: H1 2013 Segmental Results
H1 2013 Segmental Results * 26 weeks ended 30 June 2013 26 weeks ended 24 June 2012 All £’000 Switzerland Germany Ireland UK Total Germany Ireland UK Total Operating profit/(loss) (213) (3,005) 2,266 23,255 22,303 (1,032) 2,053 21,186 22,207 Amortisation of intangibles (51) (163) - - (214) (173) - -
Slide 10: Balance Sheet
Balance Sheet At 30 Jun 13 At 24 Jun 12 At 30 Jun 13 At 24 Jun 12 At 30 Dec 12 £’000 £’000 £’000 £’000 £’000 Current assets: Inventories 7,328 3,823 Trade & other 38,269 29,928 Non-current assets 103,880 96,328 112,450 receivables Net investment in 3,573 3,878 finance leases Current assets 71,978 61
Slide 11: Cash Flow Statement
Cash Flow Statement 26 weeks to 26 weeks to 53 weeks ended 30 June 2013 24 June 2012 30 December 2012 £’000 £’000 £’000 Profit before taxation 11,556 21,504 42,369 Net finance costs 307 248 807 Share of post tax profits of associates & joint (343) (123) (198) ventures Impairment of German MFA and st
Slide 12: Cash Flow Statement (cont.)
Cash Flow Statement (cont.) 26 weeks to 26 weeks to 53 weeks ended 30 June 2013 24 June 2012 30 December 2012 £’000 £’000 £’000 Cash generated from operations 19,112 21,572 54,131 Taxation paid (3,630) ( 2,813) (6,633) Net cash generated by operating activities 15,482 18,759 47,498 Net cash used by
Slide 13: Analysis of Borrowings
Analysis of Borrowings* At 30 Jun 13 At 24 Jun 12 At 30 Dec 12 £’000 £’000 £’000 Cash at bank 22,551 23,625 21,975 Term debt (29,789) (25,000) (29,737) Net cash (7,238) (1,375) (7,762) DP Capital (2,796) (2,922) (2,939) EBT loan (13,000) (12,035) (12,035) Finance leases (221) - (228) Adjusted net de
Slide 14: Capital Expenditure 2013 - 2016
Capital Expenditure 2013 - 2016 2013 2014 2015 2016 £’m Forecast H1 H2 Total Maintenance 3.4 0.1 4.5 3.5 3.0 3.0 Expansionary 3.4 1.9 4.3 6.2 11.7 18.3 MK disaster recovery 0.2 - 0.2 - - - New UK commissary 0.3 - 0.3 - 10.0 10.0 Penrith - - - 2.5 - - DP Germany 2.8 - 1.8 - - 3.2 Switzerland 0.1 1.9
Slide 15: Food Cost Outlook for remainder of 2013
Food Cost Outlook for remainder of 2013 • Benefits of strategy to lock into longer term contracts • Price stability by avoiding fluctuations in core commodities e.g. wheat • 2013 food basket to end July • 1.6% increase in average franchisee food and packaging basket • Increases in cheese, pork and p
Slide 16: Food Cost Outlook - Early Indications for 2014
Food Cost Outlook - Early Indications for 2014 • Opportunities • Continued growth in our volumes • Improved global wheat and grain harvest • Risks • Sterling vs. Dollar and Euro weakness • Milk price/cheese increase GRAPH • Unstable outlook for chicken from Thailand – failure of largest producer imp
Slide 17: Food Cost Outlook (cont.)
Food Cost Outlook (cont.) Back Average Market Mozzarella Ribbon Price Market Ribbon Price of block Mozzarella is 34% more expensive in July 2013 than it was in July 2012. Market Ribbon Price 17
Slide 18: Key Drivers of Like-for-Like Growth
2011 Constant UK Mature Store Population Key Drivers of Like-for-Like Growth 6.00 £18.00 £17.85 27.0% 5.34 26.5% 5.13 26.5% 5.02 5.00 £17.50 26.0% 25.8% £17.13 25.5% 4.00 £17.00 25.0% 3.00 £16.50 24.5% 24.2% £16.18 24.0% 2.00 £16.00 23.5% 1.00 £15.50 23.0% 2011 2012 2013 0.00 £15.00 2011 2012 2013 P
Slide 19: H1 UK & ROI Store Growth
H1 UK & ROI Store Growth 15 new stores opened in first half (2012: 19) 790 stores at half year (2012: 738 stores) Average of 6.6 stores per franchisee No closures New impactful store design - Four refits H1 2013 19
Slide 20: Strong Product Pipeline
Strong Product Pipeline Giving customers new reasons to re-order Domino’s Stuffed Crust range – Original/BBQ/Hot Dog US Legends range – New York Deli/The Carolina • Continuous pipeline of Domino’s Stuffed Crust innovation • Relaunch Gourmet - Saucy BBQ - Four Seasons - Mexicano Expanded desserts - M
Slide 21: UK E-commerce goes from Strength to Strength
UK E-commerce goes from Strength to Strength Biggest week: 69.5% of UK delivered sales £ Net sales % UK delivered sales £180 63.3% 70.0% £160 60.0% 52.4% £140 £156.7 50.0% £120 41.9% £m £121.2 £100 32.7% 40.0% £80 26.2% £85.0 30.0% £60 £56.9 20.0% £40 £35.2 10.0% £20 £0 0.0% 2009 H1 2010 H1 2011 H1
Slide 22: Mobile Sales Splits 2010-2012
Mobile Sales Splits 2010-2012 Mobile devices now account for 30% of e-commerce sales % e-commerce sales placed on a mobile 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 2010 2011 2012 2013 22
Slide 23: Supply Chain Centres (SCC) update
Supply Chain Centres (SCC) update WEST ASHLAND Continue to realise the operating benefits envisaged Continue to review operations and efficiencies Producing for 500+ stores at present – Capacity of c.700/750 stores LONG TERM SCC STRATEGY Size and location of additional facilities identified
Slide 24: Supply Chain Centres update (cont.)
Supply Chain Centres update (cont.) GERMANY BERLIN SCC New Berlin facility operational for dough production Q1 2013 Capacity for dough production of 100+ stores Warehouse and distribution for 50 stores Reviewing options for SCC strategy in the West – complete late 2013 SWITZERLAND Supply c
Slide 25: Switzerland
It’s what we do... & Domino's
Slide 26: Summary
Summary PEOPLE Number of stores: 10 Commence new store openings in next six months AWUS growth up 7.8% Menu refreshed Team retrained and energised Pulse EPOS system installed Commenced store refurbishment On track for 2014 profit 26
Slide 27: Germany
Germany Status Developments Next steps Vision 2020 27
Slide 28: Germany – H1 status
Germany – H1 status Opened seven stores (H1 2012: four) Reached 25 store milestone with the opening of Checkpoint Charlie 15 corporate, 10 franchisee New €21k AWUS record 23.8% increase in LFL in mature stores Added one new UK franchisee Approved 2nd German franchisee Total of five U
Slide 29: Germany – next steps
Germany – next steps Grow at a steady, careful pace Franchisee driven stores Ensure strong store-level economics Introduce more franchisees Accelerate when ready 29
Slide 30: Germany – The Vision (2020)
Germany – The Vision (2020) C.200 stores Run rate 50 stores per year by 2020 25 franchisees Supply Chain centres in Berlin and the West 30
Slide 31: UK & Ireland - Historic PBT vs store count
UK & Ireland - Historic PBT vs store count PBT vs. store count 900 £60.0m 800 £50.0m 700 600 £40.0m 500 £30.0m 400 300 £20.0m 200 £10.0m 100 0 £.0m 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 PBT # stores 31
Slide 32: Appendices
APPENDICES APPENDIX 1 Analysis of Group turnover (Page A-1) APPENDIX 2 Analysis of Group operating profit (Page A-2) (Pre-exceptionals) APPENDIX 3 Earnings per share reconciliation (Page A-3) APPENDIX 4 Statement of changes in equity (Pages A-4) APPENDIX 5 Cash returned to shareholders (Page A-5) AP
Slide 33: Analysis of Group Turnover
Analysis of Group Turnover 26 weeks to 26 weeks to 30 June 2013 24 June 2012 Variance Variance £’000 £’000 £’000 % Royalties 17,977 15,811 2,166 13.7 Store sales 6,788 1,361 5,427 398.6 Franchise/TST/FDP fees 217 189 28 14.8 Commissary sales 94,628 82,873 11,755 14.2 Property sales 8,358 7,415 943 1
Slide 34: Analysis of Group Operating Profit
Analysis of Group Operating Profit * 26 weeks to 26 weeks to 30 June 2013 24 June 2012 Variance Variance £’000 £’000 £’000 % Net royalty 8,897 7,978 919 11.5 Commissary margin 24,691 23,075 1,616 7.0 Realty (217) 279 (496) (177.8) Subsidiaries 420 227 193 85.0 Net overheads (8,271) (8,320) 49 (0.6)
Slide 35: Earnings Per Share Reconciliation
Earnings Per Share Reconciliation 26 weeks ended 26 weeks ended 30 June 2013 24 June 2012 £’000 £’000 Profit attributable to shareholders – post exceptionals 7,747 15,634 Profit attributable to shareholders – pre-exceptionals 17,654 16,647 Basic weighted average number of shares - ’000s 163,498 161,
Slide 36: Statement of Changes in Equity
Statement of Changes in Equity At 30 Jun 13 At 24 Jun 12 At 25 Dec 11 £’000 £’000 £’000 At beginning of year 70,328 59,664 59,664 Proceeds from share issue 2,108 1,713 2,594 Share buybacks - (3,260) (3,260) Profit for year 6,726 15,374 30,307 Tax on employee share options 882 790 793 Share options a
Slide 37: Cash Returned to Shareholders
Cash Returned to Shareholders 26 weeks 2008 2009 2010 2011 2012 30 Jun 13 Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 Profit after tax * 15,664 21,574 27,129 31,015 35,380 16,633 147,396 Share buybacks 3,783 7,623 4,715 2,219 3,260 - 21,647 Dividends 8,035 10,466 13,632 18,025 21,746 12,936 84,8
Slide 38: Diluted Earnings Per Share Growth
Diluted Earnings Per Share Growth * 12 Compound increase of 15.9% since 2008 10 10.71 8 10.16 6 9.11 Pence 7.89 4 6.21 2 5.12 0 2008 H1 2009 H1 2010 H1 2011 H1 2012 H1 2013 H1 A-6 * Pre-exceptional items
Slide 39: Dividends Per Share Growth
Dividends Per Share Growth Compound increase of 21.3% 8 since 2008 7 6 7.10 6.60 Pence 5 4 5.50 4.50 3 2 3.50 2.70 1 0 2008 H1 2009 H1 2020 H1 2011 H1 2012 H1 2013 H1 A-7