Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — FY2007 Earnings Presentation
25 slides from Domino's Pizza Enterprises's earnings presentation, Aug 23, 2007
Slide 1: Full Year Results to 1 July 2007
Domino’s Pizza Enterprises Limited Full Year Results to 1 July 2007
Slide 2: Executive Team
EXECUTIVE TEAM Don Meij Chief Executive Officer/ Managing Director Grant Bourke European 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 Details Profit & Loss Cash Flow Balance Sheet 5. Europe 6. Lookin
Slide 4: Executive Summary
EXECUTIVE SUMMARY • Network sales +44.4% and revenue +33.1% largely off European addition • Group SSS growth +3.0% • Significant improvement in EBITDA of +29.2% in second half over first half (+60% NPAT), bringing full year ahead of guidance given at the half year • NZ strong result +80% EBITDA over
Slide 5: Executive Summary
EXECUTIVE SUMMARY Total Group-YTD SSS for First 7 Weeks of Financial Year 2007 8.69% Significant Store Expansion 2006 1.47 • 225 stores added for FY made up of 155 Europe on acquisition, plus 41 more in 2005 6.41% Europe and 29 added in ANZ 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00%
Slide 6: Executive Summary
EXECUTIVE SUMMARY DPE Innovation to 1 July 2007 • Pulse now in 431 (93%) of ANZ stores • Internet ordering now in 341 (73.5%) of ANZ stores and continues to grow week on week • Rolled out internal “Store Wars” • Successful innovative promotions since first half of Meat Pie Pizza, Jumbo Chicken Wings
Slide 7: Network Store & Sales Growth
NETWORK STORE & SALES GROWTH • Store count as at 1 July 2007 Network Sales – Australia - 402 550 – New Zealand - 65 145.8 – France/Belgium - 121 450 – Netherlands - 75 % 359.4 350 4.3 373.1 663 2 G R: 306.1 CA 252.9 $M 250 212.5 174.7 140.6 150 • Store count projection June 2008 50 – Australia/NZ -
Slide 8: Network Store & Sales Growth
NETWORK STORE & SALES GROWTH F/Y 05 F/Y 06 F/Y 07 Network Sales ($ mil) 306.1 359.4 518.9 • Added 225 stores to system this year which is a 51% Number of Aus/NZ stores increase over prior year Franchised stores 272 301 343 Corporate stores 115 137 124 Aus/NZ network stores 387 438 467 • In line with
Slide 9: Revenue & EBITDA Results
REVENUE & EBITDA RESULTS REVENUE EBITDA 35 250 230.1 30 24.7 22.0 200 % 7.1 172.9 25 % 3 8.6 17.8 R: 3 G 20 R: CA 150 133.4 G CA A$m 13.4 109.7 A$m 15 11.3 100 88.0 7.8 70.4 10 50 3.1 34.7 5 0 0 2001 2002 2003 2004 2005 2006 2007 (5) 2001 2002 2003 2004 2005 2006 2007 Corporate Stores Franchise Stor
Slide 10: Results – Australia, New Zealand & Europe
RESULTS – AUSTRALIA, NEW ZEALAND & EUROPE F/Y 05 * F/Y 06 F/Y 07 +/(-) F/Y 06 Australia margins impacted by $ mil $ mil $ mil % REVENUE the following: Australia 127.1 163.7 169.5 3.5% New Zealand* 6.3 9.2 10.9 18.5% Europe 0 0 49.7 NA • Less mature DPE store portfolio in Total Revenue 133.4 172.9 23
Slide 11: Results - Corporate
RESULTS - CORPORATE 2006/07 • Corporate store results largely impacted by softer sales • Still trading with greater weight of immature stores in Victoria • Corporate store restructure resulted in lower productivity • Shortage of team members, particularly drivers in WA, ACT and North QLD due to curr
Slide 12: Results - Franchise
RESULTS - FRANCHISE 2006/07 • Europe positive second half • Europe FY loss of only $900k, versus guidance of $2.3m loss • Second half margins for Aus/NZ in line with historical at 35.5% Going Forward • Larger weight of franchise business expecting margins to improve above historical 2005/06 results
Slide 13: Results – Corporate Development & Unallocated
RESULTS – CORPORATE DEVELOPMENT & UNALLOCATED Corporate Development • Corporate development profits $2.5m in second half • Unusually high as a result of corporate store sell down • Expect 2008 to be below 2007 Other / Unallocated (G&A) • Head Office efficiency and revenue generation continued F/Y 05
Slide 14: Profit & Loss
PROFIT & LOSS • Interest costs up $1.3m, 86% on last year as a result of European investment • Tax rate for 2007 26% compared to 2006 24% • Interest cover improved to 5.3x compared to H1 of 4.3x F/Y 05 * F/Y 06 F/Y 07 +/(-) F/Y 06 $ mil $ mil $ mil % Revenue 133.4 172.9 230.1 33.1% EBITDA 17.8 24.7
Slide 15: Cash Flow
CASH FLOW F/Y 2006 F/Y 2007 Europe • ANZ positive free Aus/NZ Aus/NZ Purchase Europe Group cash $9.97m Cash flows from operating activities Receipts from customers 190,300 199,786 47,712 247,498 (166,579) (181,016) (51,291) (232,307) Payments to suppliers and employees Interest received 970 496 78 5
Slide 16: Cash Flow - Detail Operating Profit
CASH FLOW - Detail Operating Profit F/Y 2006 F/Y 2007 • Trade debtors +$2.7m Europe Aus/NZ Aus/NZ Purchase Europe Group in Australia - DS&S Operating profit after tax 13,044 10,665 (1,536) 9,129 $0.9m Add/(less) items classified as investing activities - (Profit)/loss on sale of non-current assets (
Slide 17: Balance Sheet
F/Y 06 F/Y 07 +/(-) F/Y 06 $ mil $ mil $ mil Current assets BALANCE SHEET Cash and cash equivalents 19.3 7.9 -11.4 Trade & other receivables 5.3 24.8 19.5 Other financial assets 0.0 0.4 0.4 Inventories 1.4 5.0 3.6 Current tax asset 0.0 0.4 0.4 • Decrease in cash – $14.6m Assets held for sale 0.0 2.3
Slide 18: Europe
EUROPE Europe now $145.8m of $518.9m Group Network Sales 13.98% SSS growth for 2006/07 year • Very pleased as rolled over World Cup 10.5% SSS Q4 LY • High Volume Mentality (HVM) learning in action – Better operations, equipment, people and training (Pizza College) – Improved presence and advertising
Slide 19: Europe
EUROPE Positive EBITDA in second half • Leverage administration overhead, as revenue rises • Leverage distribution system as revenue rises • H2 seasonally strongest • Corporate stores now profitable, but small part of business • Includes non-recurring costs of $830k – Full year total of $1.3m 19
Slide 20: Looking Forward – Major Activities ANZ
LOOKING FORWARD – MAJOR ACTIVITIES ANZ SSS Outlook • Delivery sales being affected by shortage of drivers. Current sales being compensated with strong pick-up sales • Product Development pipeline looking strong • Online ordering continues to grow with strong momentum. New upgrades planned throughout
Slide 21: Looking Forward – Major Activities ANZ
LOOKING FORWARD – MAJOR ACTIVITIES ANZ Management aware of: • Most commodity prices are locked until December 2007 • Cheese prices are likely to rise in calendar year 2008. Too early to speculate on how much • Improving drought conditions and stronger $AUD are likely to aid purchasing in 2008 • Labo
Slide 22: Looking Forward – Major Activities Europe
LOOKING FORWARD – MAJOR ACTIVITIES EUROPE Strong sales to open year New brand commercial - Netherlands • Wetter cooler summer this year vs hot summer last year • Benefits of 12 months’ experience • Franchisees investing as profits grow • TV advertising a major milestone Netherlands 3 times a year, F
Slide 23: Looking Forward – Major Activities Europe
LOOKING FORWARD – MAJOR ACTIVITIES EUROPE Europe profitable in FY 2008 • Modest profit budgeted • Savings from start up costs balanced by increased royalties to Domino’s Inc. • Supported by IT investments as both new POS and ERP systems implemented • Second French distribution centre to open in Nant
Slide 24: New Guidance for Full Year 2007/08
NEW GUIDANCE FOR FULL YEAR 2007/08 • NPAT to be approximately 25% to 30% up on FY07 • Additional 60 store growth; split 35 Europe, 25 ANZ • Expect dividend payout ratio in future to be 50 - 60% in line with policy (IPO guidance) • Expect FY08 year end net debt levels down to $12-17m in the absence o
Slide 25: Conclusion
CONCLUSION • A variety of challenges in Australia in 2007. However, management have made a number of initiatives which should see core fundamental profit earnings improve materially in 2008 • New Zealand & Europe both strong performers in 2007 and looking for continued growth in 2008 • DPE requiring
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