Dominos 2013 Media Presentation

8/13/2019 Dominos 2013 Media Presentation

1/36

opso

ueoy


2/36

opso

ueoy


3/36

opso

ueoy


4/36

Return on Equity * 27.7%

$2.8m

Return on Capital Employed * 30.7%

Free Cash Flow ($m)

EPS * +11.5%

Europe Network Sales () SSS +3.1%

Dividend (cps) +14.0%

ANZ Network Sales ($) SSS +1.4%

EBITDA * +16.2%

NPAT * +13.0%

* Based on underlying results

opso

ueoy


5/36

* Transaction, acquisition and additional legal charges relating to acquisition activity and costs associated with ongoing legal claims in France

Underlying NPAT up 13.0%

Final dividend 15.4c (fully fryear dividend to 30.9c whichratio based on 15% NPAT g

guidance) SSS improved in H2, finishin

Underlying EBITDA growth

Underlying NPBT growth of

Effective tax rate 28.8% vs 2

Underlying EPS 43.4c, up 1

Two separate capital returnswere made in December 20

Total returns to shareholder73.7c per share

FY 11 FY 12

FY13

Statutory

Significant

Charges *

FY13

Underlying +/(-) FY 12

$ mil $ mil $ mil $ mil $ mil

Network Sales 746.4 805.3 848.6 848.6 5.4%

Same Store Sales % 11.0% 6.5% 2.0% 2.0%

Revenue 246.7 264.9 294.9 294.9 11.3%

EBITDA 39.1 48.1 54.0 2.0 55.9 16.2%

Depreciation & Amortisation (8.7) (10.0) (12.8) (12.8) 27.6%

EBIT 30.4 38.1 41.2 2.0 43.1 13.2%

Interest (0.7) (0.5) (0.4) (0.4) (10.2%)

NPBT 29.7 37.6 40.8 2.0 42.7 13.5%

Tax Expense (8.2) (10.7) (12.1) (0.2) (12.3) 14.8%

NPAT 21.4 26.9 28.7 1.8 30.4 13.0%

EPS (basic) 31.3 38.9 40.9 43.4 11.5%

Dividend per Share 21.9 27.1 30.9 30.9 14.0%

opso

ueoy


6/36

NPAT Impact

$'000

Domino's Japan Acquisition 1,354 Professional fees & other costs directly attributa

the Japanese acquisition

Knight Acquisition 73 Transactional costs incurred during the acquisit

Nick Knight's 15 stores

Speed Rabbit Pizza Litigation

Costs

153 Portion of costs (over those planned) associated

the ongoing legal claims brought against DPE b

Speed Rabbit Pizza France (total cost A$516k)

Europe Restructuring Costs 193 Abnormal restructuring costs relating to Europe

(new position) - refer to page 29 for further detai

TOTAL NPAT IMPACT 1,773

opso

ueoy


7/36

Measure as at Feb 2013 Actual Achieved

SSS% 2-3% 2.0%

New Store Openings 80+ 67

EBITDA Growth * in the region of 15% 16.2%

NPAT Growth * in the region of 15% 13.0%

Estimated Tax Rate * 29% 28.8%

Net Capex $30-35m $30.4m


opso

ueoy


8/36

DPE completed the appointment of Nick Knight as Head of Corporate Operations in April 2013. process we acquired 15 stores as well as adding his significant operational expertise to the busi

The upgrade of our online ordering website using HTML5 technology is now complete, greatly

enhancing the customer experience as well as generating substantial developmental efficiencie We had one of our most significant new product launches in March 2013 with the addition of the

Best range

We achieved record product and service scores across our ANZ network of stores

We now have over 1 million Facebook fans in Australia/NZ

opso

ueoy


9/36

We have opened a record 40 new organic stores during the year

Total network sales grew 12.8% (constant currency) on FY12

Andrew Megson has returned to Europe in the newly created role of European CEO. The rocloser alignment to many initiatives and opportunities across each of our European markets

page 29 for further details

We launched an iPhone app and mobile website in France in March 2013

The rollout of the global POS system (Pulse) continues in The Netherlands with more than 5stores already converted in the first 6 months

We have reached over 100,000 Facebook fans in The Netherlands and our fan count in Fra300,000

Achieved a 5 Star audit rating (highest operational award presented by Dominos Pizza Intl) Gorinchem and Vertou commissaries

opso

ueoy


10/36

opso

ueoy


11/36

ANZ SSS in H2 were substantially

better than the first half (2.6% vs0.4%)

New store rollout and same storesales continue to drive growth inEurope

Total Sales Sam

Australia/NZ 3.4%

Europe () 12.8%

H1185.9

H1201.9

H1210.8

H1229.8

H1245.9

H1273.4

H1279.0

H165.1

H185.1

H1117.8

H1123.7

H1118.6

H1127.7

H1132.8

H2187.2

H2198.2

H2213.8

H2218.6

H2253.0

H2270.7

H2283.8

H280.7

H2106.0

H2134.0

H2122.2

H2128.9

H2

133.5

H2153.0

518.9

591.2

676.4694.3

746.4

805.3

848.6

2007 2008 2009 2010 2011 2012 2013

Network Sales $m

Australia/NZ Europe

opso

ueoy


12/36

ANZ network sales growth was 4.9% in H2,an improvement over the 2.0% growth in H1

Sales growth was influenced by the launchof the Chefs Best range in March 2013

FY10 has been normalised to remove the effects of the 27 week half year

ANZ has been held in constant currency from FY07

In addition to the launch of the Chefs range,strong marketing support for online and valueoffers helped drive customer counts

These areas remain a key focus for the businessin H1 14

$186.4m

$199.1m

$215.6m$220.8m

$256.9m

$273.6m

$285.3m

2007 2008 2009 2010 2011 2012 2013

Australia/NZ H2 Network Sales A$

4.6%

1.8%

10.9%

15.1%

8.7%

4.5%

0.4%

H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13

ANZ SSS Growth

opso

ueoy


13/36

SSS in H2 was 2.3%, resulting in afull year SSS of 3.1%, rolling 6.3%last year

Network sales have grown 12.0% overH2 12

New store rollout has helped maintainconsistent sales growth despite adecrease in SSS

FY10 has been normalised to remove the effects of the 27 week half year

48.9m

64.1m71.6m

82.2m

94.8m

106.1m

118.8m

2007 2008 2009 2010 2011 2012 2013

European H2 Network Sales

(0.7%)

3.7%

4.7%

6.8%

7.5%

5.3%

H1 10 H2 10 H1 11 H2 11 H1 12 H2 12

European SSS Growth

opso

ueoy


14/36

We have added a record 67 addstores to the network during the Australia/NZ 27, Europe 40

This was lower than our guidancgiven in February 2013. Regulathave slowed our rollout progresscouncil, landlord and conversionbeen experienced in Australia

We expect that this will lead to aof openings in FY14

Five stores were closed during tin France, one in The NetherlanAustralia (all expected to reopenlocations in FY14)

FY 11 FY 12 FY13

Australia /NZ stores

Network Sales (A$ mil) 498.9 544.1 562.8

Franchised stores 454 476 501

Corporate stores 96 83 84

Aus/NZ Network Stores 550 559 585

Stadium outlets incl in above 33 29 29

Corporate store % 17% 15% 14%

Net Stores added in period 28 9 26

European stores

Network Sales (mil) 179.4 201.4 227.2



European Network Stores 316 349 385



Consolidated number of stores



Total Network Stores 866 908 970



Europe as % of Total Stores 36% 38% 40%

opso

ueoy


15/36

ANZ EBITDA up 17.5% due to

improved margins, economies

continued sell down of corpora

Expect the introduction of Nick

initiatives to deliver material im

corporate stores in FY14

Europe EBITDA up 10.7% on a

basis

The European business has ex

margin challenges due to spee

FY 11 FY 12 FY 13 * +/(-) FY 12

REVENUE $ mil $ mil $ mil %

Australia/NZ 161.1 168.5 174.2 3.4%

Europe 85.5 96.4 120.7 25.2%

Total Revenue 246.7 264.9 294.9 11.3%

EBITDA

Australia/NZ 35.4 41.8 49.2 17.5%

Europe 3.7 6.3 6.7 7.3%

Total EBITDA 39.1 48.1 55.9 16.2%

EBITDA MARGIN %

Australia/NZ 21.9% 24.8% 28.2%

Europe 4.4% 6.5% 5.6%

Total EBITDA Margin % 15.9% 18.2% 19.0%


opso

ueoy


16/36

There were several key factors that contributed to the lower profit result in Europe this year.

In an attempt to grow the European business at an accelerated rate, we have opened a significant

number of new corporate stores in the past 18 months, predominantly in The Netherlands, growing

from 19 to 55. Whilst we achieved healthy top line sales, the accelerated growth has stretched the

management team, thus resulting in sub-optimal food and labour management. As a result we are not

planning to grow the corporate store numbers this year

The French commissary operation has been impacted by labour and logistics costs, predominantly

due to capacity constraints at the Paris commissary (due to be relocated & upgraded over the coming

12 months)

One-off legal coststhe continuing costs of defending the legal claims brought against DPF by Speed

Rabbit Pizza (SRP) have been higher than expected

There have also been a range of costs associated with the restructure of the European management

teamrefer to page 29 for further detailsopso

ueoy


17/36

EBITDA ahead of FY13 guidanc

Depreciation & Amortisation up 2

a result of the accelerated corpo

rollout in Europe and digital inve

both Europe and ANZ

Effective tax rate 28.8%, slightly

than FY12

Earnings per Share up 11.5% (sl

diluted as a result of employee s

options being exercised)

FY 11 FY 12 FY 13 * +/(-) FY 12

$ mil $ mil $ mil %

Revenue 246.7 264.9 294.9 11.3%

EBITDA 39.1 48.1 55.9 16.2%

Depreciation & Amortisation (8.7) (10.0) (12.8) 27.6%

EBIT 30.4 38.1 43.1 13.2%

EBIT Margin 12.3% 14.4% 14.6%

Interest (0.7) (0.5) (0.4) (10.2%)

NPBT 29.7 37.6 42.7 13.5%

NPAT 21.4 26.9 30.4 13.0%

Performance Indicators

Interest Coverage (times) 41.4 84.5 106.5

EPS (basic) 31.3 38.9 43.4 11.5%

Average exchange rate for New Zealand 1.3050 1.2830 1.2497

Average exchange rate for Europe 0.7249 0.7708 0.7949


opso

ueoy


18/36

* FY13 additional EPS based on underlying results

H15.7

H19.6

H19.4

H112.8

H1

14.9

H1

18.2

H120.8

H29.1

H28.8

H213.2

H213.4

H216.4

H220.7

H220.1

2.5

14.8

18.4

22.6

26.2

31.3

38.9

43.4

FY07 FY08 FY09 FY10 FY11 FY12 FY13

opso

ueoy


19/36

Increase in working capital as a re

timing and additional stock & equ

relating to stores under constructio

Increase in Capex predominantly

Knight acquisition ($10m) and acc

rollout of Corporate stores in Euro

Completed payment of capital retu

in H2 totalling $30m in FY13

Increased borrowings required to

capital return and capital expendit

FY 12 FY 13

$ mil $ mil

Net Profit After Tax 26.9 28.7

Profit on Sale non-current assets (2.2) (3.0)

Depreciation & Amortisation 10.0 12.8

Change in Working Capital (0.6) (2.6)

Movement in current and deferred tax 1.9 (1.1)

Other 1.6 (1.6)

Operating Cash Flow 37.7 33.2

Capital Expenditure (37.0) (54.0)

Proceeds from Sale of PP&E & Intangibles 22.9 21.1

Loans repaid by Franchisees 2.1 2.5

Net cash investing activities (12.0) (30.4)

Free cash flow 25.7 2.8

Dividends Paid (17.0) (20.8)

Return of Share Capital 0.0 (30.0)

Debt Movement (0.0) 23.2

Proceeds from Shares Issued 5.3 1.0

Decrease in Cash & Equivalents Held 14.1 (23.8)

opso

ueoy


20/36

Capital return allowed surplus cash to b

shareholders

Increased trade receivables consistent

revenue and stronger Euro

Increased PPE and Goodwill due to the

acquisition, continued investment into d

and increased European corporate stor

The senior debt facility was drawn to fu

capital return and corporate stores

FY 12 FY 13 +/(-) FY 12

$ mil $ mil $ mil

Cash & equivalents 40.3 18.7 (21.6)

Trade & Other Receivables 21.0 26.4 5.4

Other Current Assets 12.6 15.3 2.6

Current Assets 74.0 60.4 (13.6)

Property, plant & equipment 35.0 49.7 14.7

Goodwill 46.9 57.1 10.2

Other Non-current Assets 19.4 22.6 3.2

Non-current Assets 101.3 129.4 28.0

Total Assets 175.3 189.8 14.4

Trade & Other Payables 34.2 38.1 3.9

Borrowings 11.5 7.1 (4.5)

Other Current Liabilities 5.9 6.2 0.3

Current Liabilities 51.6 51.3 (0.3)

Borrowings 2.5 32.6 30.1

Other Non-current Liabilities 4.2 3.3 (0.9)

Non-current Liabilities 6.7 35.9 29.2

Total Liabilities 58.3 87.2 28.9

Net Assets 117.0 102.6 (14.5)

Issued Capital & Reserves 61.2 38.9 (22.4)

Retained Earnings 55.8 63.7 7.9

Equity 117.0 102.6 (14.5)

opso

ueoy


21/36

Borrowings still very low in terms ofdebt capacity

Return on equity accelerated as aresult of capital return

FY12

Return on Capital

Employed

NB. Negative Net Debt equates to Cash Positive

31.2%

Net Debt to Equity (22.5%)

24.3%Return on Equity

$25.7m

$15.9m

$3.6m

($2.3m)

($12.5m)

($26.3m)

$21.0m

5.3x9.0x

14.1x

30.8x

41.4x

84.5x

106.5x

-110.0x

-60.0x

-10.0x

40.0x

90.0x

FY07 FY08 FY09 FY10 FY11 FY12 FY13 *

Net Debt & Interest Cover

Net Debt Interest Cover


opso

ueoy


22/36

opso

ueoy


23/36

The Chefs Best range was launched in March 2013 in responseto a survey of over 1,600 of our customers

The survey revealed that 80% of respondents want more toppingsand over 70% want more restaurant quality ingredients on their

pizza

The new range offers customers more of the quality toppings theywant, with premium taste in mind

The Chefs Best range offers these pizzas from as low as $8, aprice point that sits in the middle of our rangea level of valuethat has never been seen before in our industry

Our goal was to reposition value in the eye of the consumer withrestaurant-quality premium ingredients, quality packaging and

unique post-bake sauces

The positive feedback we received from consumers who tried theproduct has been reinforced through sales, with almost 1 in 5orders containing at least one pizza from the new range

We believe the industry will respond to this product launch and itwill change the pizza industry as we know it

opso

ueoy


24/36

The new Dominos websites in Australia and NewZealand were released in May 2013, greatly enhancingthe customer experience along with an improved

platform to showcase our product range, all usingHTML5 technology

The HTML5 ordering platform allows us to tailor theordering experience for the customer based on thedevice they are using

We launched the new iPad app in September 2012featuring Pizza Chef giving customers the uniqueability to create their own pizza and add it to their order

We topped the rankings of the top 20ASX-listedcompany-owned brands on Facebook by fan numbers *

Now creating custom online video for YouTube andsocial media sites

* Source: Australian Financial Review

opso

ueoy


25/36

Successful launch of the Artisan pizza rangthe emphasis on the quality of our ingredietoppings

The rollout of the global POS system (Puls

Netherlands is progressing well, with over 5stores already converted in the first 6 mont

The new store Entice image developed inbegun rollout into both France and The Net

Following the release of our iPhone app anwebsite, online has quickly reached 25% oFrance

The Gorinchem commissary received a mastar audit award for the 3 rdconsecutive yeawith a national Lean & Green Logistics Aw

opso

ueoy


26/36

opso

ueoy


27/36

The sell down of corporate stores will continue to be a key objective inFY14

We remain focussed on our more for less strategy, driving both sales

and customer count growth In line with our sell down of corporate stores we expect to predominantly

open franchise stores during FY14

Our digital business continues to set Dominos apart from our peers andwe will strive to grow this area even further in H1 14 through aggressiveonline, print, point of sale and our biggest television marketing campaignin two years

We will continue to leverage the benefits gained from new technology

such as HTML5 to drive sales and customer counts even further

Management aware of continuing margin pressures from risingcommodity prices, unfavourable FX movements and ongoing increases inlabour costs

Additional resources are being allocated to the training department tofurther drive operational standards

opso

ueoy


28/36

All stores in The Netherlands to be running the Pulse POS system by end ofOctober

The move to HTML5 technology will enable us to rollout the majority of the ANZdigital platforms to The Netherlands by December 2013. We expect this to deliver

a strong lift in sales In the coming year our new store growth will come predominantly from Franchise

store expansion, allowing the corporate management team to catch-up andoptimise operational performance

We are currently reviewing our arrangements with 3rdparty suppliers to ensurewe are able to maximise the efficiencies and economies we need in the Frenchcommissaries

It is expected that we will likely see another increase in the VAT rates in France

in 2014 (intermediate rate would rise from 7% to 10% or possibly 12%)

Legal issues - claims by Speed Rabbit Pizza in France are ongoing. DPFmaintains the view that these claims are tactical and unsubstantiatedo

pso

ueoy


29/36

As a result of the Dominos Japan acquisition, a number of management changes will taeffect

In order to align the structures across all three regions, Andrew Rennie will step into the

role of Australia/NZ CEO Andrew Megson has returned to Europe in the newly created role of European CEO. Th

role will bring closer alignment to many initiatives and opportunities across each of ourEuropean markets

The mandate of Melanie Gigon as CEO in France expired on August 1st, 2013. We arecurrently conducting a global search for a permanent appointment. In the interim, AndrewMegson will assume the role of France CEO

Scott Oelkers will remain Japan CEO

The following slide shows the new senior management structure for the DPE Group

opso

ueoy


30/36

Don Meij

Managing Director &CEO

(Dominos 26 years)

Andrew Rennie

CEO Australia/NZ

(Dominos 19 years)

Andrew Megson

CEO Europe

(Dominos - 26 years)

Scott Oelkers

CEO Japan

(Dominos - 25 years)

Richard Coney

Group Chief FinancialOfficer

(Dominos 19 years)

opso

ueoy


31/36

Measure FY13 Actual FY 14 Guidance

SSS% 2.0% 2-4%

New Store Openings 67 70-80

EBITDA Growth * 16.2% in the region of 15%

Net Capex $30.4m $20-25m


Refer to the Dominos Japan acquisition presentation for further group guidance

FY14 guidance is based on underlying results for FY13

DPE guidance is given before any one off costs and expenses which have or are to be incurred relatingto the acquisition of the interest in DPJ

opso

ueoy


32/36

Australia/NZ

750 Stores

incl 60 2Go outlets

DMP Europe

1,250 Stores

80% of Sales areDigital

At the end of FY11 we lifted our

expectations of store count for both Aand Europe

Corporate stores will still account for substantial portion of the store count,although not as high as current levels

Digital sales continue to grow each ye

opso

ueoy


33/36

15.0%

16.3%

22.9%

18.4%

Australia United Kingdom Canada USA

Pizza as % of Total Fast Food FY12

Source:Euromonitor International

Pizza accounts for only 15% of the total fastfood category in Australia compared to 18.4%in USA, 22.9% in Canada and 16.3% in the UK,giving plenty of room for growth

Even though Dominos share of the Pizzamarket is 21%, it only accounts for 3.1% of thefast food market in Australia

Domino's

3.1%

Other Pizza

11.9%

C

Hamburgers

25%Sandwiches

15%

Other

34%

DPE Share of Fast Food

Market in Australia FY12

SouTotal $15.4b

In a recent survey, Dominos ranked highly inthe QSR category in top of mind awareness,2ndonly to McDonalds *

In the same survey, 68% of respondents haveeaten Dominos in the past year, the highest inthe entire pizza category* Source: Pollinate Australia

opso

ueoy


34/36


35/36

In addition to our dividends, we have made a $30 million capital return to ourshareholders during FY13, bringing the total returns to shareholders in the year to73.7c per share with Return on Equity increasing from 23.0% to 29.7%*

We continued to produce a solid underlying profit growth across the business in

2013 We have delivered a record number of new organic stores in Europe during the

year

Our digital business will continue to set Dominos apart from our peers. We have asignificant number of new Digital projects being rolled out in the 2nd half of thisfinancial year. We will see an even bigger push towards digital with the recentupgrade to HTML5 technology in ANZ along with the rollout of the ANZ systemsinto our European business

We are expecting to set another new store build record in FY14

The plan for improved operational efficiencies in Europe, continued sell down ofcorporate stores in ANZ, along with a good pipeline of new store builds in allregions has led to continued optimism for FY14 with an EBITDA guidance in theregion of 15%


opso

ueoy


36/36

Dominos Pizza Enterprises Limited (Dominos) advises that the information in this presentationcontains forward looking statements which may be subject to significant uncertainties outside ofDominos control.

While due care has been taken in preparing these statements, no representation or warranty is mor given as to the accuracy, reliability or completeness of forecasts or the assumptions on which tare based.

Actual future events may vary from these forecasts and you are advised not to place undue relianon any forward looking statement.

A number of figures in the tables and charts in this presentation pack have been rounded to onedecimal place. Percentages (%) have been calculated on actual figures.

Statutory Profit and Underlying Profit

Statutory profit is prepared in accordance with the Corporations Act 2001 and Australian AccountingStandards, which comply with International Financial Reporting Standards (IFRS).

Underlying profit is the Statutory profit contained in Appendix 4E of the Dominos FY13 Annual Repoadjusted for significant items specific to the 2013 Financial Year as outlined on slide 6.

opso

ueoy

Documents

Dominos 2013 Media Presentation