Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — Merger or Acquisition (December 2015)
27 slides from Domino's Pizza Enterprises's merger presentation, Dec 16, 2015
Slide 1: German Joint Venture and Acquisition of Joey's Pizza
For personal use only GERMAN JOINT VENTURE AND ACQUISITION OF JOEY’S PIZZA 16 December 2015 DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM
Slide 2: Transaction Highlights
For personal use only TRANSACTION HIGHLIGHTS DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM
Slide 3: Entry into German Market
ENTRY INTO GERMAN MARKET 3 For personal use only DPE has entered into inter-conditional agreements to: Form a two-thirds owned, DPE-controlled German joint venture DPE-controlled Joint Venture (“JV”) with UK-listed Domino’s Pizza Group plc (“DPG”), the existing holder of the Domino’s Pizza Master
Slide 4: Key Highlights
KEY HIGHLIGHTS 4 For personal use only #1 market position, with Joey’s Pizza is the largest pizza delivery chain in Germany by immediate scale network sales and number of stores Germany is the fourth largest pizza market in the world, yet chain Long term growth market for DPE pizza is underpenet
Slide 5: Propels DPE's Vision in Europe
PROPELS DPE’S VISION IN EUROPE 5 For personal use only Potential Future store count Today Store count Netherlands France 1,000 France (incl. Sprint) 348 Netherlands 300 Netherlands 172 Belgium Germany Belgium 200 Belgium 31 Germany 1,000 Total 551 Total 2,500 France Germany (incl. Joey’s Pizza) 222
Slide 6: Strong Global Portfolio
STRONG GLOBAL PORTFOLIO 6 For personal use only Last disclosed Potential Last disclosed Potential DPI developed markets(1) store count store count DPI emerging markets store count store count United Kingdom 834 1,200 India 950 1,800 Australia/NZ 670 900 Mexico 610 700 South Korea 415 500 Turkey 457
Slide 7: Joey's Pizza
For personal use only JOEY’S PIZZA DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM
Slide 8: German Pizza Market
GERMAN PIZZA MARKET 8 For personal use only • The German fresh cooked pizza market consists of approximately 4,800(1) stores • ~800 operated by pizza chains • ~4,000 operated by independents • Chain stores relatively underpenetrated when compared to other markets • Joey’s Pizza is the clear market l
Slide 9: Joey's Pizza Business
JOEY’S PIZZA BUSINESS 9 For personal use only • Joey’s Pizza was founded in 1988, and has grown to become the #1 pizza delivery business in Germany by both store count and network sales Schleswig-Holstein 10 13 Hamburg Mecklenburg-Vorpommern • Store network of 212 stores, comprising 209 Bremen 25 fr
Slide 10: Historical Store Count
HISTORICAL STORE COUNT 10 For personal use only • Store count has been flat in recent years under prior ownership • Many franchisees have built strong balance sheets on the back of profits over the past few years and have expressed appetite for new stores • JV will focus on collaborating with franch
Slide 11: Historical Sales
HISTORICAL SALES 11 For personal use only Network sales (€m) 143 135 128 FY13A FY14A FY15F • Revenue expected to increase by a CAGR of c. 6% between FY13A and FY15F • Revenue growth driven by changes in mix, product changes and price points of some menu items DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA
Slide 12: Historical Earnings
HISTORICAL EARNINGS 12 For personal use only Pro forma underlying EBITDA(1) (€m) 7.0 6.0 5.0 FY13A FY14A FY15F • EBITDA growth primarily driven by increased network sales and higher food margins • Results shown include DPE’s assessment of normalisation adjustments Note: (1) Pro forma, underlying adj
Slide 13: Management of JV and Joey's Pizza
MANAGEMENT OF JV AND JOEY’S PIZZA 13 For personal use only • JV will be controlled by DPE under the terms of the JV agreement with DPG • The existing joint CEOs of Joey’s Pizza, Karsten Freigang and Friedrich Niemax, have been retained by the JV under contracts until at least the end of calendar 201
Slide 14: Strategic Plan for Growth
STRATEGIC PLAN FOR GROWTH 14 For personal use only Our strategic plan is methodical across three distinct phases Conversion phase • Focus on the brand conversion exercise to transition (0-2 years) franchisees, contractual arrangements and infrastructure to the Domino’s Pizza brand • DPE recognises
Slide 15: Benefits for Franchisees
BENEFITS FOR FRANCHISEES 15 For personal use only • Introduction of PULSE and Global OLO to provide a competitive Drive a digital advantage advantage in terms of digital sophistication • Opportunity to increase proportion of online orders (37% via company website and a further 11% via aggregator w
Slide 16: Joint Venture
For personal use only JOINT VENTURE DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM
Slide 17: Formation of Joint Venture
FORMATION OF JOINT VENTURE 17 For personal use only DPE and DPG • Subject to regulatory and other approvals, DPE and DPG have agreed to form a JV to to form JV acquire Joey’s Pizza and certain of DPG’s existing stores in Germany Majority DPE • DPE will own two-thirds of the equity in the JV and will
Slide 18: Inter-Conditional Transactions
INTER-CONDITIONAL TRANSACTIONS 18 • JV to acquire DPG’s existing rights to operate the Domino’s Pizza brand in Germany For personal use only German Market Access • DPG will be entitled to receive future capital payments from DPE of up to €25 million Payment over six years, based on the incremental p
Slide 19: Impact on DPE
For personal use only IMPACT ON DPE DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM
Slide 20: DPI Approval and Extension of MFAs
DPI APPROVAL AND EXTENSION OF MFAs 20 For personal use only • Domino’s Pizza, Inc. (DPI), is fully supportive of the transaction • Domino’s Pizza International Franchising Inc., a wholly-owned subsidiary of DPI, has provided the necessary consents and also agreed to extend the terms of the MFAs of D
Slide 21: JV Acquisition Funding
JV ACQUISITION FUNDING 21 For personal use only € million € million € million € million Uses by JV (initial) (total) Sources by JV (initial) (total) % JP acquisition cost(1) 45 79 DPE funding 39 61 67% Of which: Cash 40 74 Of which: New debt / c/flow 34 56 DPE shares(2) 5 5 DPE shares 5 5 Estimated
Slide 22: Other DPE Payments
OTHER DPE PAYMENTS 22 For personal use only Cost components for German transactions € million Sources of DPE funding DPE transaction costs 1.3 - 2 Existing cash reserves German Market Access over 6 years Up to 25 New debt facilities and cash flow Put / call option liability Present value to be estim
Slide 23: Pro Forma FY15 Transaction Impacts
PRO FORMA FY15 TRANSACTION IMPACTS 23 For personal use only DPE Group Joey’s Pizza + DPG 30 June 2015 stores to Pro-forma FY15 for Change (%) Underlying (post 30 December 2015 acquisitions A$m Sprint) normalised(1,3) Stores 1,595 222 1,817 + 14% Network sales 1,528 219 1,747 +14% EBITDA 133 10 143 +
Slide 24: Expected Impact on FY16
EXPECTED IMPACT ON FY16 24 For personal use only Pizza Sprint € million Germany € million Underlying FY15 EBITDA 3.5 Underlying FY15 EBITDA 7.0 Expected completion date Jan 2016 Expected completion date 1Q CY16 Ownership interest 100% Ownership interest 67% One-off costs in the year 2-3 One-off cost
Slide 25: Outlook
For personal use only OUTLOOK DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM
Slide 26: Upgraded Guidance
UPGRADED GUIDANCE 26 For personal use only Revised guidance Current guidance Original FY16 Guidance per 4 Nov 2015 as at 16 Dec 2015 per 11 Aug 2015 (incl. Sprint) (incl. Germany) SSS % 6 - 8% 9 – 11% 9 – 11% - ANZ 4 – 6% 6 – 8% 6 – 8% - Europe 1 – 2% 1 – 2% 1 – 2% - Japan New store openings 180 - 2
Slide 27: Upgraded Store Target
UPGRADED STORE TARGET 27 For personal use only Australia / NZ Europe Japan 900 stores New: 2,500 stores 850 stores Prior: 1,500 stores • Europe store count target upgraded from 1,500 to 2,500 stores, inclusive of Germany • The updated Group plan now reaches 4,250 stores by 2025 DOMINO’S PIZZA ENTERP
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