Domino's Pizza Group Plc · LSE:DOM
Domino's Pizza — FY2012 Earnings Presentation
42 slides from Domino's Pizza's earnings presentation, February 2013
Slide 1: Preliminary Results for the 53 weeks ended 30 December 2012
Preliminary Results for the 53 weeks ended 30 December 2012
Slide 2: The Team
The Team Lance Batchelor Chief Executive Officer Lee Ginsberg Chief Financial Officer 2
Slide 3: Financial highlights for 2012
Financial highlights for 2012 UK LFLs up 5.0% 20.0% System sales up 12.8% to £598.6m Record 69 new store openings 15.0% 17.9% Online sales up 46.3% to £268.6m 17.2% PBT* up 14.2% to £49.7m 14.2% 10.0% Diluted EPS* up 17.2% to 23.28p 12.8% Total dividends of 14.50p up 17.9% 5.0% Dividend cover of 1.5
Slide 4: Sales YOY % / UK LFL %
UK LFL % 9.0% 8.1% 8.0% 7.0% 6.0% Sales YOY % 5.0% 5.0% 5.0% 4.0% 3.6% 3.7% 3.0% 2.0% 1.0% 0.0% Q1 Q2 Q3 Q4 UK LFL % LFLs for full year 4
Slide 5: Group highlights for 2012
Group highlights for 2012 Core UK market robust Buoyant online sales – now truly a digital business Encouraging progress in Germany Two Berlin mature stores in LFL double digit growth Exciting new stores’ sales in west of country Acquisition of Domino’s Switzerland Senior management teams in place S
Slide 6: Profit and Loss (Pre-exceptionals)
Profit and Loss (Pre-exceptionals) 53 weeks ended 52 weeks ended % increase 30 December 2012 25 December 2011 £’000 £’000 System sales 598,608 530,636 12.8 Operating profit 47,222 42,373 11.4 Net interest (521) (217) (140.1) Profit before tax 46,701 42,156 10.8 Taxation (11,321) (11,141) (1.6) Profi
Slide 7: Profit and Loss (Pre-exceptionals, Germany and Switzerland)
Profit and Loss (Pre-exceptionals, Germany and Switzerland) HEALTH OF THE UK & ROI CORE BUSINESS 53 weeks ended 52 weeks ended 30 December 2012 25 December 2011 % change £’m £’m System Sales 592.9 530.0 11.9% Operating Profit 50.0 43.7 14.5% Operating Profit % * 21.4% 20.9% Diluted EPS 23.28p 19.86p
Slide 8: Profit and Loss (Pre-exceptional Items)
Profit and Loss (Pre-exceptional Items) 53 weeks ended 52 weeks ended 30 December 2012 25 December 2011 £’000 £’000 Operating exceptionals - Acquisition costs and restructuring costs relating to (2,365) - Domino’s Pizza Switzerland - Acquisition costs and one-off costs relating to new UK joint ventu
Slide 9: Segmental Results
Segmental Results * 53 weeks ended 52 weeks ended 30 December 2012 25 December 2011 All £’000 UK Ireland Germany Switzerland Total UK Ireland Germany Total Operating profit/(loss) 45,275 4,362 (2,230) (211) 47,196 39,170 4,261 (1,108) 42,323 before amortisation of intangibles Amortisation of intangi
Slide 10: Balance Sheet
Balance Sheet At 30 December 2012 At 25 December 2011 Current Assets: £’000 £’000 At 30 Dec At 25 Dec 2012 2011 Non-current assets 112,450 99,043 £’000 £’000 Inventories 7,329 3,878 Current assets 69,326 54,345 Receivables 36,147 24,343 Investment in finance leases 3,658 1,532 Total assets 181,776 1
Slide 11: Cash Flow Statement
Cash Flow Statement 53 weeks ended 52 weeks ended 30 December 2012 25 December 2011 £’000 £’000 Profit before taxation 42,369 38,789 Impairment 243 837 Net finance costs 807 577 Share of post tax profits of associates (198) (335) Amortisation and depreciation 4,718 3,280 Loss on disposal of non-curr
Slide 12: Cash Flow Statement (cont)
Cash Flow Statement (cont) 53 weeks ended 52 weeks ended 30 December 2012 25 December 2011 £’000 £’000 Cash generated from operations 54,131 35,474 Taxation paid (6,633) (3,992) Net cash generated by operating activities 47,498 31,482 Net cash used by investing activities (30,270) (16,938) Cash infl
Slide 13: Analysis of Borrowings
Analysis of Borrowings At 30 Dec 2012 At 25 Dec 2011 £’000 £’000 Cash at Bank 21,975 24,427 Revolving Credit Facilities (29,737) (25,000) Net Cash (7,762) (573) DP Capital (2,939) (2,689) EBT loan (12,035) (12,035) Finance leases (228) - Adjusted Net Debt* (22,964) (15,297) Adjusted Net Debt*/EBITDA
Slide 14: Available Debt Facilities
Available Debt Facilities Expiry Utilised at Undrawn at Facility Date 30 Dec 2012 30 Dec 2012 Term Purpose £’m £’m £’m 30.0* 01 Aug 2017 30.0 - 5 years RCF Multi-purpose 5.0 On demand 0.0 5.0 On demand Overdraft 5.0 31 Dec 2016 2.9 2.1 5 years DP Capital 13.0 ** 31 Jan 2014 12.0 1.0 7 years EBT 53.0
Slide 15: Capital Expenditure 2012 - 2016
Capital Expenditure 2012 - 2016 2012 2013 2014 2015 2016 £’m Actual Forecast Maintenance 3.1 3.2 3.0 3.0 3.0 Expansionary 5.8 5.2 7.4 13.1 13.4 New UK commissary 7.5 7.5 HQ 0.4 Naas 0.2 Penrith 2.5 DP Realty 0.8 Website development 1.6 Pulse development 0.2 Germany 2.2 2.4 1.7 3.9 3.9 Switzerland 0.
Slide 16: Store splits are good for the System
Store splits are good for the System 21.3% 18.3% 17.2% 1km 2km 3km 19% 16 Household penetration over 210 days
Slide 17: Impact of a store split
Impact of a store split Illustration: AWUS Before split Split – Yr1 Split – Yr2 Existing store 17,000 13,000 16,000 New store - 11,000 14,000 Total AWUS 17,000 24,000 30,000 STORE SPLITS GROW SALES AND PENETRATION 17 * AWUS – Average Weekly Unit Sales
Slide 18: Benefits to Franchisees and DPG from store splits
Benefits to Franchisees and DPG from store splits FRANCHISEE DPG Labour efficiency Growth in system sales Share/move labour between stores Operational gearing in place Delivery costs lower Delivers strong/increasing Closer to households/golden mile returns Marketing economies of scale Wider reach fo
Slide 19: Food Cost Summary - 2012
Food Cost Summary - 2012 Strategy of locking into longer term contracts Created more price stability 2012 aggregate basket only saw a 2% price increase Cheese and meats Almost entire remaining basket flat Other strategies eg: Forward buying of chicken FAIRLY STABLE OUTCOME IN 2012 19
Slide 20: Food Cost - Wheat
Food Cost - Wheat Datagain Information Service GBP/MT 16/1/2013: 209.5 220 7 1ayo1 Wheat all types ave UK 2004 1807 1607 1407 1207 1007 80: 20 [18/02/2013 10:26:17 © Mintec Ltd 2008. e-mail: support @mintec.Itd.uk tel: +44 (0)1628 851313 It’s what we do... 6 Domino's
Slide 21: Food Cost Outlook - 2013
Food Cost Outlook - 2013 74% of basket for H1 fixed Similar prices to 2012 Except for cheese 2012 increase impacts 67% of 2013 full year fixed Similar prices to 2012 Cheese unknown but stable in Q1 Meat contract renewal in H2 Pressure on pork prices ANTICIPATE 2% - 3% INCREASE OVERALL 21
Slide 22: Customers
Customers 5.0 4.6 20% 19% 4.4 18% 4.5 18% More people, more often, spending more... 4.0 4.1 16% 16% 3.4 3.5 14% - 4.6m households ordered 3.0 12% 13% (2011: 4.4m) 2.5 10% 2.0 - Mature store penetration up to 19% 1.5 8% (2011:18%) 1.0 6% 4% 0.5 - Avg. ticket up to £20.44 0.0 2% (2011: £19.47) 2009 20
Slide 23: Franchisees
Franchisees Our superb franchisees are the engine of our growth – Eight new franchisees accepted into network – c. £14.25m spent on opening new stores – £374k average resale value of a store – Average 6.25 stores each (2011: 5.7) – 57% of stores owned by franchisees with 10+ stores – 34 single store
Slide 24: Marketing in 2012
Marketing in 2012 Strengthening our value equation even further... – Great Product - Superb product pipeline – Great Service - Development of e commerce and m commerce channels - Launch of Domino’s Pizza Box Office - Opening up Late Night occasion (+35% year on year) - £17k AWUS per store – Great Im
Slide 25: Digital Marketing
Digital Marketing Innovation in digital marketing to extend our intellectual and technical advantage : – E commerce now at 55% of delivered sales – Mobile now 20% of e commerce sales – iPhone App now downloaded over 2m – Social media community growing and engaged - over 747k fans on Facebook (2011:
Slide 26: Product Innovation
Product Innovation Revitalised product pipeline drove 14% of sales from new product development – Pizza news to drive interest in the brand; Mexicana/Gourmet 4 Seasons/Meltdown – Continuous pipeline of Domino’s Stuffed Crust innovation to drive increased incidence; BBQ/Mexicana/Ring of Fire – Develo
Slide 27: Number of stores at year end
UK & ROI Stores 775 Introduced an even better look from 2013 800 720 700 665 Number of stores at year end – Made pizza the star of the show 600 608 553 – Opened 57 UK/ROI stores, plus 12 in Germany 500 58 57 57 – Total 805 stores at year end (2011: 728) 400 57 300 5552 – 163 stores had sales over £1
Slide 28: Commissary Update
Commissary Update WEST ASHLAND Realising the operating benefits envisaged Continue to review operations and efficiencies Producing for 500+ stores at present Capacity of c. 700/750 stores LONG TERM COMMISSARY STRATEGY Initial production capacity study completed by end 2012 Next stage is to identify
Slide 29: Commissary Update (cont.)
Commissary Update (cont.) GERMANY New Berlin commissary to be operational Q1 2013 Capacity for dough production of 100+ stores Warehouse and distribution for 50 stores New commissary in the West planned to be operational Q4 2013 Capex of c. £1.25m in 2013 SWITZERLAND Reviewing supply chain Q1 2013 N
Slide 30: Germany 2012
Germany 2012 Dusseldorf & Hilden 12 new stores (200% unit growth) – 10 corporate / eight franchise – Three new (UK) franchisees added to Network – Flagship corporate store opened in Dusseldorf – Continuing strong sales trend – Flagship franchise store opened in Munster – Consistently high AWUS LFL A
Slide 31: Germany - 2012
Germany - 2012 Strengthened Management Team – Managing Director – Kory Spiroff – Marketing Director – Jan Hertzberg – HR Director – Steffen Alfes – Commissary Director – Tom Korver Launched New Global Store Design – Adopted New Global Logo Design New 50 store Production Facility in Berlin Launched G
Slide 32: Outlook for Germany - 2013
Outlook for Germany - 2013 18 New Stores (100% unit growth) – 14 in MFA – Five Corporate / 13 Franchise New 200 – 250 Store Production Facility in West Three new franchisees including our first German franchisee Corporate Mature Stores Cash Flow Positive Investing in store management and training AC
Slide 33: Longer term outlook (2020)
Longer term outlook (2020) UK/ROI : 1200+ stores Germany: 400+ stores Switzerland: 50+ stores Further potential opportunities in Austria, Lichtenstein and Luxembourg Become an online business with 80% delivered sales and marketing online 33
Slide 34: Trading update
Trading update Solid start to 2013: First seven weeks LFLs in UK up 1.6% – 498 stores closed due to snow – Excluding above – underlying LFL run rate c. 2.6% – ROI LFLs up 3.9% Germany – New stores continue to trade strongly – Accelerating roll out Switzerland – Refits and relocations being identifie
Slide 35: Q&A
Q&A 35 It’s what we do... 6 Domino's
Slide 36: APPENDICES
APPENDICES APPENDIX 1 The Franchisee Model (Pages A-1) APPENDIX 2 Analysis of Group Turnover (Page A-2) APPENDIX 3 Analysis of Group Operating Profit (Page A-3) APPENDIX 4 Diluted Earnings Per Share (Page A-4) APPENDIX 5 Dividends Per Share (Page A-5) APPENDIX 6 Statement of Changes in Equity (Page
Slide 37: The Franchisee Model
The Franchisee Model 53 weeks ended 52 weeks ended 30 December 2012 25 December 2011 % increase £’000 £’000 Average sales (AWUS) £ 15,732 £ 14,976 5.0 System sales £833,797 £793,728 5.0 EBITDA % 13.1% 12.5% EBITDA £108,907 £ 99,019 10.0 £ 9,888 A-1
Slide 38: Analysis of Group Turnover
Analysis of Group Turnover 53 wks ended 52 wks ended 30 Dec 2012 25 Dec 2011 Variance Variance £’000 £’000 £’000 % Royalties 32,871 29,238 3,633 12.4 Store sales 5,853 1,670 4,183 250.5 Franchise/TST/FDP fees 683 980 (297) (30.3) Commissary sales 174,836 157,064 17,772 11.3 Property sales 16,103 14,
Slide 39: Analysis of Group Operating Profit
Analysis of Group Operating Profit* 53 weeks ended 52 weeks ended 30 Dec 2012 25 Dec 2011 Variance Variance £’000 £’000 £’000 % Net Royalty 16,537 14,846 1,691 11.4 Commissary Margin 49,125 42,619 6,506 15.3 Realty 981 787 194 24.7 Subsidiaries 362 391 (29) (7.4) Net Overheads (17,394) (15,264) (2,1
Slide 40: Diluted Earnings Per Share
Diluted Earnings Per Share * Compound increase of 19.7% over last five years 24 23 22 21 20 19 18 17 21.95 16 15 14 13 12 19.24 11 10 9 16.75 8 Pence 7 6 13.49 5 4 10.71 3 2 1 0 2008 2009 2010 2011 2012 Diluted earnings per share Linear (Diluted earnings per share) * Pre-exceptionals A-4
Slide 41: Dividends Per Share
Dividends Per Share Compound increase of 25.2% 15 over last five years 14 13 12 11 14.50 10 9 8 12.30 7 6 10.20 5 Pence 4 3 7.75 2 5.90 1 0 2008 2009 2010 2011 2012 Dividends per share Linear (Dividends per share) A-5
Slide 42: Statement of Changes in Equity
Statement of Changes in Equity At 30 December At 25 December 2012 2011 £’000 £’000 At beginning of year 59,664 41,662 Proceeds from share issue 2,594 5,792 Share buybacks (3,307) (2,219) Profit for year 30,307 26,466 Tax credit on employee share options 793 41 Share options and LTIP charge 2,357 1,4