Embed Size (px)
Citation preview
DOMINO’S PIZZA GROUP PLCPreliminary Results for the 52 weeks ended 27 December 2015
2
Double-digit like for like (LFL) sales growth for nine successive quarters in core UK business
Significant progress in digital initiatives– now 78% of delivered sales
Record 61 new UK stores opened in the year with best ever sales performance
Franchisees continuing to benefit from increased profitability
11.7%UK LFL SALES
61NEW UK STORES
HIGHLIGHTS OF 2015
3
£877.2mGROUP SYSTEM SALES
GROUP FINANCIAL SUMMARY
15.8%
65STORE OPENINGS1
£73.2m
UNDERLYING OPERATING PROFIT
16.6%
35.7p
UNDERLYINGBASIC EPS
19.4%
20.75pFULL-YEAR DIVIDEND
18.6%
£40.4mNET CASH
£29.4m
1 In the year five UK stores (of which four were non-traditional format) and one ROI store closed.Note: Figures above are continuing operations (Group excluding Germany).
stores
24
4
1 Excluding the currency impact, Germany YoY sales increased by 4.7%.2 2015 Germany exit costs shown post tax
STRONG GROUP TRADING RESULTS
52 weeks ended 27 December 2015
£m
52 weeks ended 28 December 2014
£m % change
Continuing operations (Group excluding Germany)
System sales 877.2 757.8 15.8%
Underlying operating profit 73.2 62.8 16.6%
Underlying profit before tax 73.2 62.1 17.9%
Discontinued operations (Germany)
System sales1 8.3 8.8 (5.9)%
Underlying operating loss (3.3) (7.3) 55.9%
Exit costs2/non-underlying expenses (6.3) (1.0)
5
CASH GENERATION REMAINS A KEY STRENGTH OF THE BUSINESS
11.0
40.4
79.9 (9.6)3.9
3.66.0 (12.0)
(11.4)
(31.0)
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2014 net cash EBITDAcontinuingoperations
Loss fromdiscontinuedoperations
Closure costprovision
movement
Shares issued Workingcapital
movement
Capex Tax paid Dividendspaid
2015 net cash
Cash generation (£m)
Capacity to resume share buy-back
6
UK & ROI INCOME STATEMENT
52 weeks ended 27 December 2015
£m
52 weeks ended 28 December 2014
£m % change
UK system sales 825.0 706.4 16.8%
UK LFL sales 11.7% 11.3%
ROI system sales1 45.3 41.8 8.6%
ROI LFL sales 8.6% 4.3%
Currency impact (ROI) (4.6)
System sales 865.6 748.2 15.7%
Underlying operating profit 74.5 63.8 16.8%
1 Converted to constant currency.
UK LFL increase driven by volume growth
Record new store performance and good immature stores performance
706.4
825.0
81.1
19.319.0 (0.8)
650
670
690
710
730
750
770
790
810
830
850
2014 MatureStores
ImmatureStores
NewStores
ClosedStores
2015
695.3
776.3
9.0%1.3%
1.8% (0.4)%
650
670
690
710
730
750
770
790
2014 Orders Items perorder
Price peritem
Productmix
2015
SOURCES OF SALES GROWTH MATURE STORES SALES BREAKDOWN
UK: SALES DRIVEN BY DOUBLE-DIGIT LFL SALES GROWTH AND NEW STORES
7
11.7%
£m
Focus on value through bundle offers for families61% of family feasters identify the Domino’s brand as being good value for moneyTop national deals: Winter Survival, Pick ‘n’ Mix, National Price Slice Weeks and Two for Tuesday
Desserts +16.4% YoY
sales
Beverages+25.2% YoY
sales
Pizzas +9.9% YoY sales
Sides+16.3% YoY
sales
Desserts Beverages Pizzas Sides
LFL BASKET COMPOSITION SALES
UK: BETTER VALUE FOR CUSTOMERS THROUGH BUNDLE DEALS
8
Product 2015 2014 %
Pizzas 75.5m 69.8m 8.1%
Sides 51.8m 46.2m 12.1%
Desserts 10.6m 9.2m 14.8%
Beverages 20.3m 15.3m 32.7%
LFL TOTAL VOLUME BY PRODUCT
9
DIGITAL NEW STORES FRANCHISEE PROFITABILITY
Investment in digital drives increased number of customer visits, improved conversion rates and higher value per order
Roll-out of new stores. Those added in 2015 show significant growth in average sales per address
DPG is committed to maintaining and improving franchisee profitability, incentivising them to expand
UK: KEY DRIVERS UNDERPIN GROWTH FOR THE FUTURE
The total online sales growth rate has increased to 30.8% (2014: 30.6%)
Online sales as a percentage of delivered sales is now 78% (2014: 71%) and is 67% of total sales (2014: 60%)
Continued mobile migration (app and mobile website) with orders up 48%, and 11.5m app downloads (2014: 8.2m)
UK: ONLINE SALES GROWTH CONTINUES
10
Note: Data in net sales and gross ticket charts refers to 2015 vs 2014 (mature stores).1 Excludes VAT.2 Includes VAT.
24.0
29.5
20
21
22
23
24
25
26
27
28
29
30
2014 2015
LFL online orders (m)
420.0
525.3
300
350
400
450
500
550
2014 2015
LFL online net sales¹ (£m)
20.97
21.32
20.7
20.8
20.9
21.0
21.1
21.2
21.3
21.4
2014 2015
LFL online gross ticket2 (£)
+23
.0%
+25
.1%
+1.
7%
11
Meet Dom, our new pizza tracker
Increased personalisation and personalityIntroduction of a new animated character, “Dom”Bespoke content for each stage
A uniform ‘look and feel’ across all platforms (web, iOS)
DELIVERED DIGITAL INNOVATION
Journey to “One Touch”: Easy Ordering
Prompt to registerSave payment cardsCreate favourite basket“Easy Ordering” and “One Touch” concept available via website, app and smartwatch
12
Sponsorship of the X Factor app continued our relationship with Saturday night
£2.3m media value2.4m downloads1.4m Domino’s games played
Media presence on key dates for customers (Valentine’s Day, April Fools’ Day)
“Beat Team Domino’s” FIFA campaign forXbox gamers and “Trymendous Ticket Giveaway” for the Rugby World Cup
Regular content created to support key passion points (football, gaming, movies and TV)
USING DIGITAL TO STAY ‘TOP OF MIND’
UK: SIGNIFICANTLY IMPROVED PERFORMANCE FROM IMMATURE AND NEW STORES
13
13,279
13,675
13,000
13,100
13,200
13,300
13,400
13,500
13,600
13,700
13,800
2014 2015
Immature average weekly unit sales
13,555
15,526
12,500
13,000
13,500
14,000
14,500
15,000
15,500
16,000
2014 2015
New store average weekly unit sales
0.52
0.78
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2014 2015
New store average weekly sales per address
A record 61 new UK stores opened in 2015 (2014: 40), of which 26 were splits (2014: 24)
Average number of addresses for new stores: 18,891 (2014: 23,879)
Note: Figures exclude university stores and mobile units. Average weekly unit sales for new stores excludes first two weeks of trading.
+3.
0%
+14
.5%
+50
.9%
UK: NEW STORE SUPPORT
14
From 2010, support has been offered to franchisees to encourage more store openings
The cash value of majority of support packages is c. £62k per store (P&L value¹ £77k-£85k)
2015 total P&L charge £1.7m
1 The support package comprises a fixed and a variable element. The fixed element is spread in the P&L over ten years. The variable element is taken to the P&L as cash is paid.
Supporting franchisees to drive: Aggressive expansion
Splitting territories
Opening stores in low address
count territories
Store EBITDA performance up from 13.6% to 15.5%
Improvement in EBITDA benefiting from increased sales and lower food prices secured by DPG
17,478
19,517
16,000
16,500
17,000
17,500
18,000
18,500
19,000
19,500
20,000
2014 2015
AVERAGE WEEKLY UNIT SALES
UK: IMPROVING PROFITABILITY FOR FRANCHISEES
15
+11
.7%
Note: Data in charts refers to 2015 vs 2014 (mature stores).
Aggressive purchasing based on volume growth
Falling commodity food costs in year with £11m of food cost savings passed onto franchisees
Transport efficiency savings, opened an out-base in Livingstone
Delivered on time to stores: 99.8%
UK: SUPPLY CHAIN PERFORMANCE
16
17
INCREASED TARGETED MEDIA INVESTMENT
82%Increase in spend on TV
and VOD advertising
41%Increase in content and partnership spend (e.g.
X Factor)
4,561Gross rating points,
up from 1,932 in 2014as a result of media strategy
Hollyoaks
Drove equivalent media value of £11.6min 2015
Helped drive our affinity score to 75% (2014: 67%) and improvement in brand regard amongst teens/families to 78% (2014: 69%)
18
Pizza Legends
Multi-channel launch now with 435k creations and counting
Users state a significantly higher regard for the brand than non-users
Campaign brought to life and leveraged social media: reached 1.2m people through vlogger activity
30 years of Greatness
Celebrated 30 years by demonstrating the transformational effect that Domino’s has on people’s lives over the years
Social activity reached 17.4m people
BUILDING THE BRAND IMAGE
19
New and improved brownies increased orders by 60%over 2014
PRODUCT DEVELOPMENT AND INNOVATION
Tikka Pizza Brownies Chick ‘n’ Mix Box Stuffed Crust
Year-on-year chicken sales are up 30%
Driving the basket mix, not just pizza
Domino’s Stuffed Crust sales upby 17%, driven by the return of the Hot Dog Stuffed Crust
Launch of the Tikka Pizza
INTERNATIONAL OPERATIONS
21
Strong LFL sales
Dublin 8.9%Provincial 4.8%Rural 10.0%
Online sales up 30.4% YoY, and now account for 51.7% of delivered sales (2014: 44.3%)
App penetration of online now at 60.2%(2014: 46.9%)
8.6%ROI LFL SALES
30%ONLINE SALES GROWTH
ROI: BUNDLE DEALS AND STRONG ONLINE PRESENCE DRIVING GROWTH
3.5%3.0%
5.6%4.9%
5.4%
7.7%
14.1%
7.6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Q1 Q2 Q3 Q4
ROI LFL by quarter
2014 2015
22
15 corporate stores
Three relocations, Onex, Plainpalais and Servette have led to sales increasing significantly
Opened four new storesAltstettenGlatt
Profitability has improved in mature stores by CHF 0.3m to CHF 0.5m
5.4%SWISS LFL SALES
18.4%SYSTEM SALES GROWTH1
SWITZERLAND: GOOD MATURE STORE PERFORMANCE WITH CONTINUED INVESTMENT
BernBasel
1 Converted to constant currency.
23
New joint venture between DPG and Domino’s Pizza Enterprises, one-third owned by DPG and two-thirds by DPE
Joint venture acquisition of Joey’s Pizza on1 February 2016
212 Joey’s stores and up to 13 ex-DPG stores
Joey’s stores expected to start converting in the second half of the year and conclude within12 months
STRATEGIC PARTNERSHIP IN GERMANY
Deal removes losses and provides future earnings growth potential
1 DPG’s share of the JV’s profit after tax 2016 expected to be minimal due to integration costs.
2 Post tax
£m 2015 2016
Operating losses1 (3.3) -
Exit costs2 (6.3) -
Share of JV profits1 - minimal
LOOKING FORWARD
25
UK MARKET OVERVIEW
A study on Domino’s position and performance in the eating out market was undertaken by Parthenon
Domino’s will continue to grow, supported by sustained market tailwinds driving the category and a variety of growth opportunities such as:
population growth and maturity of target audience;continued growth of the home delivery market;pizza delivery chains continuing to take share from independents;the move from full service to quick service;aggregators appearing market supportive; andconsumers are increasing their purchase frequency.
Success driven by a brand that is renownedfor delivery and being ahead of the digital sales curve
Pizza remains under penetrated in the UK compared to both the US and Australia/NZ
LOCATION URBAN POPULATION STORE COUNT URBAN POPULATION PER STORE
US 259.7m 5,112 50.8k
AUS/NZ 24.9m 681 36.5k
UK 53.1m 869 61.1k
ROI 2.9m 47 61.8k
26
Benign food cost and energy outlook for 2016
Increase in supply chain infrastructure planned to match store demand
SUPPLY CHAIN OUTLOOK
Location Open 2016 2017 Total
North West(new Supply Chain Centre)
2018 £12.9m £16.0m £28.9m
Ireland(relocation)
2018 £4.6m £4.2m £8.8m
South West(new Supply Chain Centre)
2017 £2.8m - £2.8m
Kingston(recommissioning)
2016 £0.3m - £0.3m
27
Increase media spend by over £4m:
continue sponsorship of Hollyoaks;increase gross rating points; andassociate Domino’s with the nation’s #1 passion – football.
FUTURE MARKETING TO BUILD BRAND IMAGE
Launch of carry-out promotion to drive incremental sales
Continue to provide value-for-money deals
A further 125 store re-images planned
28
We will continue to drive digital by:
being data led, focusing on trials and testing;
improving user experience/design;
ease of ordering;
FURTHER DEVELOPMENTS IN DIGITAL MARKETING
using CRM to be customer led and drive emotional engagement;
investing in software development; and
providing better value leading to increased spend
29
Hot Pepperoni Passion launched
Chicken Roulette Box launch
Extended trial of the new Italiano range
More Big Dips
New dessert launch
FUTURE PRODUCT INNOVATION
New box designs
30
2016 UPDATE
LOCATION 2016 first nine weeks LFL 2016 total YoY sales
UK 10.5% 16.1%ROI 13.7% 13.2%Switzerland 4.3% 21.1%
Note: YoY sales and LFL sales growth in country’s local currency.
First nine weeks of trading to 28 February 2016
New store guidance
65 stores in the UK
First openings in ROI for six years
Continued modest new store growth in Switzerland
Comparatives get tougher as the year progresses
31
Double-digit like for like (LFL) sales growth for nine successive quarters in core UK business
Significant progress in digital initiatives– now 78% of delivered sales
Record 61 new UK stores opened in the year with best ever sales performance
Franchisees continuing to benefit from increased profitability
Strong start to the year but tough comparatives ahead
11.7%UK LFL SALES
61NEW UK STORES
HIGHLIGHTS OF 2015
Q&ADavid Wild, CEO
Simon D’Cruz, Head of Financial Planning and Analysis
Barbara Gibbes, Group Financial Controller
33
APPENDIX 1
APPENDIX 2
APPENDIX 3
APPENDIX 4
APPENDIX 5
APPENDIX 6
APPENDIX 7
APPENDIX 8
APPENDIX 9
APPENDIX 10
APPENDIX 11
APPENDIX 12
Analysis of UK & ROI operating profit
Switzerland income statement
Group ten year history: store count, system sales and Group profit
UK & ROI system sales and PBT growth and UK LFL by quarter
Group full-year dividend increase by 18.6%
UK: continued migration to mobile
Using digital content to drive engagement
UK: re-images and relocations
Benefits of splitting stores
Domino’s performance vs key competitors’ performance
Future tangible fixed asset capital expenditure requirement
Forward-looking statements caution
Page 34
Page 35
Page 36
Page 37
Page 38
Page 39
Page 40-41
Page 42
Page 43
Page 44
Page 45
Page 46
APPENDICES
34
ANALYSIS OF UK & ROI OPERATING PROFIT
52 weeks ended 27 December 2015
£m
52 weeks ended 28 December 2014
£m % change
Net royalties 24.2 20.9 16.0%
Supply chain centre margin 71.3 60.8 17.3%
Net overheads including incentives and realty (17.2) (13.3) (29.6%)
Joint ventures and associates 1.7 1.0 65.4%
Depreciation (5.5) (5.6) 1.3%
Underlying operating profit 74.5 63.8 16.7%
35
SWITZERLAND INCOME STATEMENT
52 weeks ended 27 December 2015
m
52 weeks ended 28 December 2014
m % change
System sales (£)1 11.4 9.6 18.4%
Currency impact (£) 0.3
Total system sales (CHF) 17.0 14.4 18.4%
LFL sales 5.4% 4.7%
LFL mature store EBITDA (CHF)2 0.5 0.2
Operating profit (£) (1.3) (1.0) (27.9)%
Operating profit (CHF) (1.9) (1.5) (23.0)%
1 Converted to constant currency.2 2014 restated to reflect consistent store accounting.
36
GROUP TEN YEAR HISTORY: STORE COUNT, SYSTEM SALES AND GROUP PROFIT
451501
553608
665720
787835 872
931
200
400
600
800
1000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Store count (continuing operations)
240.1 296.3 350.8 406.9485.3 530.6
598.6668.8
766.6877.2
14.3 18.8 23.730.0
38.0 42.4 47.2 47.955.5
73.2
0
20
40
60
80
100
120
0
200
400
600
800
1000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
System sales & Group underlying operating profit (£m)
Group system sales Group underlying operating profit
Note: System sales and Group underlying operating profit includes German operations until 2014. 2015 excludes Germany. 53-week period in 2012 is unadjusted.
37
UK & ROI SYSTEM SALES AND PBT GROWTH AND UK LFL SALES GROWTH BY QUARTER
530.0 592.9 650.9748.2
865.6
43.7 50.0 55.663.8
74.7
0
20
40
60
80
100
120
0
200
400
600
800
1000
2011 2012 2013 2014 2015
UK & ROI system sales and PBT (£m)
System sales PBTNote: 53-week year in 2012, unadjusted.
10.8% 11.8% 12.9%9.9%10.3% 10.4%
14.9%
11.3%
0%
5%
10%
15%
20%
Q1 Q2 Q3 Q4
UK LFL sales growth by quarter
2014 2015
38
GROUP FULL-YEAR DIVIDEND INCREASED BY 18.6%
2015 2014 % change
Full year
Dividend per share (pence) 20.75 17.50 18.6%
Dividend cover1 1.72x 1.52x
Full-year key dates:Ex-dividend date: 10 March 2016Record date: 11 March 2016Payment date: 25 April 2016
1 2015 cover with reference to continuing operations (excludes Germany). 2014 cover with reference to total operations.
39
12.0
11.711.6
11.7
11.8
11.9
12.0
12.1
2014 2015
Website orders (m)
213.7
213.9
213.5
213.6
213.7
213.8
213.9
214.0
2014 2015
Website net sales¹ (£m)
21.38
21.84
21.0
21.2
21.4
21.6
21.8
22.0
2014 2015
Website gross ticket2 (£)
Note: “Website” refers to tablet and desktop. “Mobile” refers to app and mobile website.Data in charts refers to 2015 vs 2014 (mature stores).1 Excludes VAT.2 Includes VAT.
-2.0
%
+2.
2%
206.3
311.4
160
200
240
280
320
2014 2015
Mobile net sales¹ (£m)
20.56
20.98
20.2
20.4
20.6
20.8
21.0
21.2
2014 2015
Mobile gross ticket2 (£)
12.0
17.8
9.0
11.0
13.0
15.0
17.0
19.0
2014 2015
Mobile orders (m)
+48
.0%
+0.
1%+
51.0
%
+2.
0%
UK: CONTINUED MIGRATION TO MOBILE
40
995kFacebook likes
259kTwitter followers on
Domino’s Twitter feed
20.3mSwitcheroo “‘only a
Domino’s will do” content reach of 20.3m and viewed 3.8m times
886.5mEasy Order
campaign media reach
USING DIGITAL CONTENT TO DRIVE ENGAGEMENT
41
68kTummy Translator
standalone app downloads
207mTummy Translator
marketing reach with 14.3m social impressions
1.2mWorking with more vloggers to promote
campaigns and the Pizza Legends with 1.2m video
views
6kSnapchat “Dough to
Door” video watched by 6k on our new channel
Dominos_UK
USING DIGITAL CONTENT TO DRIVE ENGAGEMENT
42
UK: RE-IMAGES AND RELOCATIONS
The shopfront is a great marketing tool
90 refits in 2015, 40% of the estate now upgraded
Improving the in-store experience to drive carry-out sales
25 relocations have been identified bringing:better visibility;higher footfall, boosting carry-out; andimproved parking.
43
BENEFITS OF SPLITTING STORES
100% increase in sales over five years
Franchisee benefits:access to peripheral areas;defence against competitors;increasing penetration;larger take-out opportunity;lower delivery costs;marketing economies of scale; andgrowing cash profits.
Before split Year 1 Year 2 Year 3 Year 4 Year 5
Sales benefit of splitting stores
Existing weekly store sales New weekly store sales
+100%
44
DOMINO’S PERFORMANCE VS KEY COMPETITORS’ PERFORMANCE
8.4%
5.4%
5.1%
4.2%
4.1%
3.7%
2.9%
2.8%
2.8%
2.6%
1.5%
-0.8%
2.4%
1.5%
-1.8%
1.1%
1.8%
0.8%
2.3%
1.1%
0.8%
0.2%
0.9%
1.3%
Traffic
Spend
Total Spend
Quick service restaurant (‘QSR’)Components of total spend
Quick service major brands – YE Sep ‘15 vs year ago
Domino's Pizza
Costa Coffee
Burger King
Nando’s
Pret a Manger
Greggs
McDonald's
Pizza Hut Delivery
Caffé Nero
KFC
Starbucks
Subway
11.2%
7.0%
3.2%
5.4%
6.0%
4.4%
5.5%
4.0%
3.7%
2.8%
2.6%
0.6%
Source: the NPD Group/CREST UK.
45
FUTURE TANGIBLE FIXED ASSET CAPITAL EXPENDITURE REQUIREMENT
2014£m
2015£m
2016£m
2017£m
Maintenance 1.6 3.1 3.6 1.9
Expansionary
New supply chain centres 1.1 0.3 20.6 20.2
Website/app development 1.6 2.5 6.7 7.0
ERP 0.3 1.4 2.8 —
Switzerland 2.2 3.6 1.4 1.6
Germany 0.3 1.1 — —
Total capex 7.1 12.0 35.1 30.7
46
FORWARD-LOOKING STATEMENTS CAUTIONThese 2015 Annual Results, Annual Report and the Domino’s Pizza website may contain certain "forward-looking statements" with respect to Domino’s Pizza Group plc and the Group's financial condition, results of operations and business, and certain of Domino’s Pizza Group plc and the Group's plans, strategy, objectives, goals and expectations with respect to these items and the economies and markets in which Domino’s Pizza Group plc operates.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "anticipates", "aims", "due", "could", "may", "should", "expects", "believes", "intends", "plans", "targets", "goal" or "estimates". By their very nature, forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Many of these assumptions, risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely. There are a number of such factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: changes in the economies and markets in which the Group operates; changes in the legal, regulatory and competition frameworks in which the Group operates; changes in the markets from which the Group raises finance and changes in interest and exchange rates; the impact of legal or other proceedings against or which affect the Group; changes in accounting practices and interpretation of accounting standards under IFRS; and changes in our principal risks and uncertainties.
Any written or verbal forward-looking statements, made in these Annual Results, our Interim Results, Annual Report, or the Domino’s website or made subsequently, which are attributable to Domino’s Pizza Group plc or any other member of the Group or persons acting on their behalf, are expressly qualified in their entirety by the factors referred to above. Each forward-looking statement speaks only as of the date of these Annual Results, our Interim Results, Annual Report, or on the date the forward-looking statement is made. Domino’s Pizza Group plc does not intend to update any forward-looking statements.
