Domino's Pizza Enterprises Limited · ASX:DMP

Domino's Pizza Enterprises — FY2016 Earnings Presentation

51 slides from Domino's Pizza Enterprises's earnings presentation, Aug 16, 2016

1. Slide 1: Full Year Results

   FULL YEAR RESULTS a Year Ending 3rd July 2016 & 2 — sLow , <a ~ » « SL JW y WHERE IT MATTERS FAST WHERE IT COUNTS ! 1h AUSTRALIA Aa, E

2. Slide 2: Presenters

   PRESENTERS a F ~~ DonMel Group CEO & Managing Director Richard Coney Group CFO Nick Knight Australia & New Zealand CEO Andrew Rennie Europe CEO Scott Oelkers Japan CEO

3. Slide 3: Group key results

   GROUP SSS% +10.9% For personal use only ANZ SSS% +14.8% EUROPE SSS%(1) +8.2% JAPAN SSS% -2.1% EBITDA(1) +40.9% NPAT(1) +43.6% EPS(1) +41.9% DIVIDEND (CPS) +41.9% FREE CASH FLOW ($m)(2) $21.6m RETURN ON CAPITAL EMPLOYED 21.6% RETURN ON EQUITY 25.2% (1) FY16 Underlying comparison to FY15 Statutory, in

4. Slide 4: Group financial highlights

   For personal use only  Network sales up 32.7%, +$484.3m, to $1,964.1m  Revenue up 32.4%, +$227.8m, to $930.2m  Underlying EBITDA up 40.9%, +$52.2m, to $180.0m  Underlying NPAT (after Minority Interest) up 43.6%, +$28.0m, to $92.0m  Underlying EPS 105.4c, up 41.9% (statutory EPS up 27.2%)  Fina

5. Slide 5: For personal use only

   For personal use only (1) FY16 Underlying comparison to FY15 Statutory, including acquisitions from the date of DPE ownership (2) Includes accelerated Earnout payment to Joey’s vendors of $33.7m, due to faster conversions than planned. Payment forecast in FY17, but now paid in FY16. (3) Excludes sha

6. Slide 6: Group network sales

   1,964 For personal use only 1,480 1,249 1,045 920 849 746 805 764 673 715 576 365 382 401 404 412 437 H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY 2011 2012 2013 2014 2015 2016  Strong Group SSS: 10.9%, outstanding ANZ SSS growth: 14.8% and strong EU SSS: 8.2%  Japan SSS were -2.1%, in a

7. Slide 7: Stores added to the network

   For personal use only  484 stores added to the network, a DPE record:  49 new stores opened in ANZ(1)  366 stores added in Europe(2): • 64 organic new stores • 12 Domino’s Germany stores acquired • 290 Joey’s Pizza and Pizza Sprint stores acquired, of which 41 were converted to Domino’s in FY16 

8. Slide 8: For personal use only

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9. Slide 9: EBITDA growth by segment

   For personal use only  The Group achieved another excellent underlying EBITDA growth year of 40.9%, exceeding our guidance of in the region of 35%  ANZ again achieved outstanding annual EBITDA growth of 28.0%. With an EBITDA margin rising to 34.2%, we are on track to achieve 38% in less than three

10. Slide 10: Significant charges

    For personal use only  Transaction costs including advisory and accounting fees  Conversion and integration fees including restructuring and rebranding Joey’s and Sprint stores to Domino’s  French Commissary relocation, primarily relating to redundancy costs as a result of relocating the Paris Co

11. Slide 11: Underlying EPS

    94.4 For personal use only  Underlying EPS 105.4c, +41.9% on FY15 (Statutory +27.2%) 141.4% growth FY13 - FY16 74.2  Underlying EPS CAGR +25.0% over the last 9 years, 44.6 with 3 year CAGR +36.5% 40.4 50.5 39.1 37.2 29.1 30.0 19.2 25.0 19.8 49.8 21.6 15.7 17.6 12.8 14.1 33.8 12.6 8.4 8.7 19.9 21.4

12. Slide 12: Cash flow

    For personal use only  Continuing strong operating cash flows, despite the non- recurring impact of European acquisition costs of $14.4 million and timing of supplier payments, particularly in Japan  Net capex & investments grew ahead of guidance predominantly due to early payment of German Earnou

13. Slide 13: Balance sheet

     Trade & Other Receivables increased due to organic growth in all markets and the European acquisitions For personal use only  Other Current Assets increased mainly due to acquisitions & additional short term financing to franchisees in Japan  PPE increased mainly due to accelerated store roll ou

14. Slide 14: Gearing and returns

    For personal use only  Gearing has increased as a result of Pizza Sprint and German acquisitions  Interest Coverage and Return on Capital Employed have still increased as a result of very strong underlying profits  Return on Equity has increased at a greater rate due to the European acquisitions

15. Slide 15: Australia and New Zealand

    For person@s lee Only. komen a, AUSTRALIA AND NEW ZEALAND

16. Slide 16: ANZ highlights

    For personal use only  Franchisee same store profitability at record levels  Rolled out “Slow Where it Matters, Fast Where it Counts” philosophy through project 3-10. The aim is to have a pick-up order complete in 5 minutes and a delivery in under 10 minutes  Opened 49 new Domino’s stores and ach

17. Slide 17: ANZ technology and marketing initiatives

    For personal use only  Launched DPE’s first ever technology series “Abacus” to showcase our digital development and first-to-market technology  Continued investment and rollout of our revolutionary new e-Bikes across the network  Successfully rolled out our “More Than Just Pizza” campaign across

18. Slide 18: ANZ sales and same store sales

    For personal use only 15.9% $449.3m 13.8% 11.8% 10.6% $376.7m 8.7% 6.9% $321.1m 5.6% $283.8m 4.5% $270.7m 2.6% 0.4% 2012 2013 2014 2015 2016 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 H2 16  ANZ continued exceptional double-digit growth for 2 consecutive years, with NZ in its 3rd year of

19. Slide 19: ANZ outlook

     Continuing to work on project 3-10, with safer, more efficient deliveries, whilst investing For personal use only in world class ordering platforms and new payment methods. We will have 150+ enabled stores by H1 17 and 300+ by FY17  Biggest menu launch since 2008 to be unveiled in FY17  Introduc

20. Slide 20: Europe

    For personal use only

21. Slide 21: Europe highlights

     Successfully completed acquisitions of Pizza Sprint in France, Joey’s Pizza For personal use only and Domino’s Germany  366 stores added in Europe, including a record 64 organic new store openings in France, the Netherlands & Belgium and 41 successful conversions  Record EBITDA growth of 122.8%

22. Slide 22: Europe operations highlights

    For personal use only  Domino’s France has increased its brand penetration by securing sponsorship agreement with French Football League 2, which is followed by 58% of the population  “Les Signatures” range launched in France, appealing to the 35+ demographic and lifting quality perception  Opene

23. Slide 23: Europe sales and same store sales

    For personal use only €249.8m 8.0% 7.5% 7.5% 7.5% 5.3% 4.9% €146.1m 4.6% €129.3m 4.0% €118.8m €106.1m 2.3% 0.7% 2012 2013 2014 2015 2016 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 H2 16  H2 16 Sales up 71.0%, +$103.7m, as a result of strong SSS growth, record organic store openings and a

24. Slide 24: Europe outlook

     EBITDA margin growth continues to accelerate and on track to pass For personal use only 20% in the next 2 years  Expecting record organic new store growth in FY17  Store milestones: • France passed 300 stores in July • The Netherlands will exceed 200 stores in September • Belgium will pass 50 st

25. Slide 25: New French commissary

    For personal use only  Opening and fully operational in October  Most automated Domino’s commissary in the world  Robotic dough placement system, a world first  Robotic tray stacking, a world first  Automated tray washing  “Pick to light” system which gives 80% efficiency gains  Similar techn

26. Slide 26: Europe acquisitions

    = EUROPE ACQUISITIONS

27. Slide 27: Europe acquisitions update

    For personal use only  The acquisition of Pizza Sprint in France is highly complementary to our existing store network, accelerating entry into regions where DPE is less penetrated  Converted stores are trading well above expectations with the best up 70% year-on-year. Online Order (OLO) % post co

28. Slide 28: Japan

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29. Slide 29: Japan highlights

    For personal use only  Constructed a record of 69 new stores in 12 months  Rolled out GPS Driver Tracker across our Japan network  We now have 38 stores in our Can Do! Partners franchising program  Franchised stores now comprise 29% of the network, growing to a total of 133 stores  Opened store

30. Slide 30: Japan operations highlights

    For personal use only  Highest carry-out sales percentage in DPJ history: 45% in FY16  Prior to our 30th anniversary DPJ opened its 400th store, finishing the year at 453 stores  Launched the new Mugen 3.0 store design in H1 16, featuring a face-to-face transparent makeline. 73 stores converted s

31. Slide 31: Japan sales and same store sales

    For personal use only 14.4% ¥17,541.4m ¥16,889.7m 7.8% ¥14,840.5m 2.2% 1.3% -1.2% -3.0% 2014 (1) 2015 2016 (2) H1 14 H2 14 H1 15 H2 15 (3) H1 16 H2 16  Sales up 3.9%, +¥651.7m during the second half of the year  Japan had best in class unit economics, expanding with more scale, driving us to conti

32. Slide 32: Japan outlook

     DPJ to open its 500th store in FY17 For personal use only  Pulse POS rollout to be completed throughout the system in August, ending the fastest rollout of Pulse in any country worldwide  We will complete the installation of a new telephone system designed to maximise phone call answering effica

33. Slide 33: Digital innovation

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34. Slide 34: Digital innovation ANZ

    For personal use only  Year-on-year online sales growth of 33% in ANZ  Local Australian Development Digital team drove over 80 digital projects across the Group  15/20 Minute Service Guarantees – utilising new technology and algorithms to offer customers faster and safer deliveries  “On-Time Coo

35. Slide 35: Digital innovation Netherlands and Belgium

    For personal use only  Year-on-year online sales growth of 44% in the Netherlands, with year-on- year online sales growth of 125% Belgium  Started online tactical promotions and online only Mega Weeks, leading to record digital sales  Increased presence in the wearable technology space with the i

36. Slide 36: Digital innovation France

    For personal use only  Year-on-year online sales growth of 69% in France  Best in class stores on Pulse Point of Sale and OneDigital in France achieving over 70% of sales online  Continuing to roll out OneDigital, improving convenience and usability  OneDigital is helping to drive online sales i

37. Slide 37: Digital innovation Japan

    For personal use only  Year-on-year digital growth of 31% in Japan  Work is close to completion on delivering OneDigital to the Japan market  GPS Driver Tracker is live and running in Japan stores, offering customers transparency over their delivery  Launched a more convenient ordering process w

38. Slide 38: Digital outlook

     We will continue to take on Drive-Thru sales from other categories with project 3-10: faster, safer delivery and world class ordering platforms For personal use only  Another huge year of projects, with first to market innovations and the completion of all DPE markets to OneDigital by the end of

39. Slide 39: Food innovation

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40. Slide 40: Food innovation ANZ

    For personal use only  Launched the new Melbourne pizza range: 4 new pizzas that reflect the different tastes and unique flavours of Melbourne  Expanded our popular chicken range by adding succulent new products: Chicken Lollipop and Chipotle Chicken Kickers  Added a decadent new White Chocolate

41. Slide 41: Food innovation Europe

    For personal use only  Due to popular demand, Cheeseburger pizza will remain on the menu after its successful launch in Belgium and the Netherlands  Seasonal introduction of local specialties such as bitterballen and beignets  Successful addition of impulse buy products to the menu, such as choco

42. Slide 42: Food innovation Japan

    For personal use only  Japan saw the first ever upgrade to our hand-tossed dough, launched in the summer and designed specifically to cater for Japanese consumers’ taste  Pan Pizza launched in October and the campaign product “Quattro Rich Winter”, featuring the new dough, hit the highest sales on

43. Slide 43: Outlook

    gogo" © 00 oe m os a aaa sett tocs 2 cunet $33 aiidsis °° Netherlafids:.. . a OUTLOOK Avistraiia NZ JUNE 2016 JUNE 2025 1,983 STORES 4,550 STORES

44. Slide 44: Store potential to 2025

    For personal use only POTENTIAL TO 2025 1,200 2,500 850 +300 UPGRADED FROM 900 FY16 STORE COUNT 714 Stores 816 Stores 453 Stores  ANZ future outlook has been upgraded by 300 stores, to 1,200, with Group store potential increased to 4,550 stores by 2025  DPE continues to look at ways to accelerate

45. Slide 45: ANZ store outlook upgrade

    For personal use only  DPE is already very strong in the Pizza space, with the highest market share(1)  As we see the store network reaching capacity, due to strong sales performance, we are upgrading our future store outlook  We have used sophisticated predictive analytics and data tools to map

46. Slide 46: FY17 guidance

    For personal use only (1) FY16 includes 302 stores acquired from Pizza Sprint, Domino’s Pizza and Domino’s Germany (2) FY16 Underlying comparison to FY15 Statutory, including acquisitions from the date of DPE ownership (3) FY16 Includes CAPEX of $113.9m relating to acquisitions of Pizza Sprint, Joey

47. Slide 47: Current trading update

    For personal use only  Our strongest start to the year for Group SSS and new store openings in ANZ and Europe  Europe and ANZ SSS momentum continues in all countries  The Joeys and Pizza Sprint conversions continue to progress ahead of plan with an additional 48 stores converted during the first

48. Slide 48: Summary

    For personal use only

49. Slide 49: Summary

    For personal use only  Due to record store openings, strong SSS and efficiencies derived from our digital expansion, we have exceeded Group guidance with underlying EBITDA +40.9% and NPAT +43.6%  Our success has been shared with our Franchisees, with ANZ and Europe Franchisee profitability at reco

50. Slide 50: Summary and outlook

    For personal use only  We expect 10-12 minute delivery and 5-6 minute carryout to be a significant driver of sales over the next 3-5 years. 10 minute delivery set to target Drive-Thru customers from our largest QSR competitors  Ahead of schedule to deliver customers a menu that’s better for them,

51. Slide 51: Disclaimer

    For personal use only  Domino’s Pizza Enterprises Limited (Domino’s) advises that the information in this presentation contains forward looking statements which may be subject to significant uncertainties outside of Domino’s control.  Domino’s does not undertake any obligation to provide recipient

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