Embed Size (px)
Citation preview
Preliminary Results for the 53 weeks
ended 30 December 2012
Lance Batchelor Chief Executive Officer
Lee Ginsberg Chief Financial Officer
The Team
2
UK LFLs up 5.0%
System sales up 12.8% to £598.6m
Record 69 new store openings
Online sales up 46.3% to £268.6m
PBT* up 14.2% to £49.7m
Diluted EPS* up 17.2% to 23.28p
Total dividends of 14.50p up 17.9%
Dividend cover of 1.51x
Adjusted net debt**/EBITDA of only 0.5:1
* Pre-exceptionals and excluding Germany and Switzerland
** Excludes non-recourse loans and Germany minority interest shareholder loan
Financial highlights for 2012
3
0.0%
5.0%
10.0%
15.0%
20.0%
UK LFL sales
growth
Group system sales
growth
PBT growth*
Diluted EPS growth*
Total dividend growth
5.0%
12.8%
14.2%
17.2%17.9%
UK LFL %
4
3.6%
8.1%
3.7%
5.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Q1 Q2 Q3 Q4
Sale
s YO
Y %
UK LFL % LFLs for full year
5.0%
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
Seven out of top 10 international stores and some of the highest in Domino’s
System worldwide
Solid growth in franchisee profitability
Group highlights for 2012
5
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)
Profit after tax 35,380 31,015 14.1
Dividends per share:
- Pence 14.50p 12.30p 17.9
- Cover 1.51x 1.56x
Earnings per share:
- Basic 22.17p 19.48p 13.8
- Diluted 21.95p 19.24p 14.1
SOLID GROWTH BUT SKEWED BY GERMANY & SWITZERLAND LOSSES
Profit and Loss (Pre-exceptionals)
6
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 17.2%
Profit and Loss (Pre-exceptionals, Germany and Switzerland)
7STRONG UNDERLYING OPERATIONAL GEARING* Operating profit/statutory revenue
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 ventures (620) -
- Restructuring and reorganisation costs (800) -
- Onerous lease provision (525) (938)
- Impairment costs (243) (837)
- Acquisition costs and one off costs relating to
Domino’s Pizza Germany - -
(4,553) (3,007)
Non-operating exceptionals
- Unwinding of discount – DP Leasing (286) (360)
- Profit on sale of subsidiary 507 -
221 (360)
Tax exceptional
- Reduction in deferred tax asset & impact of (741) (1,182)
exceptionals
Profit and Loss (Pre-exceptional Items)
8
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) 42,323before amortisation ofintangibles
Amortisation of intangibles (32) - (329) (39) (400) (52) - (233) (285)
Operating profit/(loss) 45,243 4,362 (2,559) (250) 46,796 39,118 4,261 (1,341) 42,038
RESILIENT UK & ROI MARKETS
Segmental Results *
9* Pre-exceptionals & net interest
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 181,776 153,418Prepaid lease
charges 217 165
Cash 21,975 24,427
69,326 54,345
Current Liabilities Current liabilities (52,424) (62,587)
Trade & other (41,683) (29,444)
Deferred income (162) (136) Non-current liabilities (59,024) (31,167)Fin. liabilities (3,741) (26,529)
Deferred Total Liabilities (111,448) (93,754)consideration (1,199) (2,164)
Tax liabilities (4,985) (4,248)
Provisions (654) (66) Net Assets 70,328 59,664
(52,424) (62,587)
Balance Sheet
10
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-current assets 12 -
Profit on disposal of subsidiary undertaking (507) -
Share option and LTIP charge 2,357 1,499
Other non-cash movements 39 -
Changes in working capital 4,291 (9,173)
Cash generated from operations 54,131 35,474
Cash Flow Statement
11
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 inflow before financing 17,228 14,544
Financing activities (19,536) (21,070)
Net (decrease)/increase in cash (2,308) (6,526)
Opening cash balance 24,427 31,128
Foreign exchange loss on cash and cash equivalents (144) (175)
Cash at end of year 21,975 24,427
Cash Flow Statement (cont)
12
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 0.5 0.4
* Excludes non-recourse loans, and Germany minority interest shareholder loan
Analysis of Borrowings
13
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 44.9 8.1
Cash and cash equivalents at 30 Dec 2012 22.0
Surplus available headroom at 30 Dec 2012 30.1
• Successfully re-financed 5 year facility
• From £25m to £30m in 2012
SIGNIFICANT FIRE POWER
Available Debt Facilities
14* LIBOR +135bpts** LIBOR + 50bpts
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 7.5HQ 0.4Naas 0.2Penrith 2.5DP Realty 0.8Website development 1.6Pulse development 0.2Germany 2.2 2.4 1.7 3.9 3.9Switzerland 0.4 2.8 3.2 1.7 2.0
Total Capex 8.9 8.4 10.4 16.1 16.4
Capital Expenditure 2012 - 2016
15
Store splits are good for the System
1619%
Household penetration over 210 days
21.3% 17.2%18.3%
1km 2km 3km
Impact of a store split
17
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 * AWUS – Average Weekly Unit Sales
Benefits to Franchisees and DPG from store splits
18
FRANCHISEE
Labour efficiency
Share/move labour between
stores
Delivery costs lower
Closer to households/golden mile
Marketing economies of scale
Wider reach for same cost
Growing profitability
More cash profits
Locks down areas
Keep competition out
Increases penetration to households
Late night licences
Now service both stores
DPG
Growth in system sales
Operational gearing in place
Delivers strong/increasing
returns
Distribution efficiency
Routing benefit
Close stores to deliver to
More profitable franchisees
Good for system growth
GOOD FOR SYSTEM OVERALL
Food Cost Summary - 2012
19
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
Food Cost - Wheat
20
OO O
Food Cost Outlook - 2013
21
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
Customers More people, more often, spending more...
- 4.6m households ordered (2011: 4.4m)
- Mature store penetration up to 19% (2011:18%)
- Avg. ticket up to £20.44 (2011: £19.47)
- Order frequency stable at 38 days (2011: 38 days)
- Based on 2009 Mature Store excluding carry out
£18.13
£18.51
£19.47
£20.44
£16.50
£17.00
£17.50
£18.00
£18.50
£19.00
£19.50
£20.00
£20.50
£21.00
2009 2010 2011 2012
Average Ticket (Gross)
3.4
4.14.4
4.6
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2009 2010 2011 2012
Total HH ordered in Year (Millions)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2009 2010 2011 2012
Penetration (% HHs purchased in 210 days)
13%
16%
18%19%
37.4
37.6
37.8
38
38.2
38.4
38.6
38.8
2009 2010 2011 2012
Re-order Frequency
37.8
38.6
38.5
38.3
Franchisees
23
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 franchisees (2011: 35)
Marketing in 2012
24
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 Image
- Increased focus behind digital marketing
- Tactical use of national price promotion
- Communication of value entry points like 24T,
Feed 4for£5 and £9.99 C/O
Digital Marketing
25
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: 330k)
- over 76k followers on Twitter (2011: 18k)
– 121 e mail programme driving a more direct
relationship with customers
- over 3.4m opted in to receive e mails
- over 56m e mails sent
- conversion and click through rate improving
– Digital marketing budget increasing
Product Innovation
26
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
– Development of sides and desserts has driven
items per order up by 6.8% year on year; Twisted
Dough Balls, Franks Wings, Cookies, BBQ Ribs
– Launch of new lunch product has allowed stores
to trade effectively at lunchtime; Wrapzz
Stores
27
Introduced an even better look from 2013
– Made pizza the star of the show
– Opened 57 UK/ROI stores, plus 12 in Germany
– Total 805 stores at year end (2011: 728)
– 163 stores had sales over £1m (2011: 132)
– Average household count per store now 28.8k
– Opened first mobile unit and first stadium
– Closed two stores- Both trials
5052
57
100
200
300
400
500
600
700
800
2008 2009 2010 2011 2012
UK & ROI
58
55
775
Num
ber
of
store
s at
year
end
553608
665720
5757
52
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 size and location of additional facilities
required
Next phase of study to be completed by end of H2
Future capex of c.£15m - within current forecasts
RESILIENCE
Milton Keynes back up production in place in Dec 2012
Provides resilience for production until new facility is operational
Commissary Update
28
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
New dough production facility planned for Q3 2013
Capex of c. £1.0m in 2013
Commissary Update (cont.)
29
Germany 2012
30
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 AWUS growth >20% in two mature Berlin stores
Relocated HQ to Dusseldorf
Dusseldorf & Hilden
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 German iPhone App
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 firstGerman franchisee
Corporate Mature Stores Cash Flow Positive
Investing in store management and training
ACCELERATING THE ROLL OUT
Longer term outlook (2020)
33
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
Trading update
34
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 identified
– Trading off to a good start
Set for another year of good growth
Q&A
35
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 A-6)
APPENDICES
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
The Franchisee Model
A-1
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 14,839 1,264 8.5
Computer sales 8,120 3,796 4,324 113.9
Other sales 2,931 3,388 (457) (13.5)
Inter-company sales (873) (1,112) 239 21.5
Total sales 240,524 209,863 30,661 14.6
Analysis of Group Turnover
A-2
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) (2,131) (14.0)
Associates 426 335 90 27.0
Net Interest (310) (159) (151) (98.0)
UK & Irl PBT 49,725 43,555 6,170 14.2
German Segment Results (2,770) (1,399) (1,371) (98.0)
Switzerland Segment Results (254) - (254) -
Group PBT 46,701 42,156 4,545 10.8
Analysis of Group Operating Profit*
A-3
* Pre-exceptionals
0123456789
101112131415161718192021222324
2008 2009 2010 2011 2012
Diluted earnings per share Linear (Diluted earnings per share)
Compound increase of 19.7%
over last five years
10.71
16.75
13.49
19.24
Pen
ceDiluted Earnings Per Share *
21.95
* Pre-exceptionals A-4
Dividends Per Share
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
2008 2009 2010 2011 2012
Dividends per share Linear (Dividends per share)
Compound increase of 25.2%
over last five years
5.907.75
10.20
12.30
Pen
ce
14.50
A-5
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 1,499
Exchange translation differences (154) (917)
Dividends (21,746) (18,025)
Disposal of shares in EBT 3,569 -
Vesting of LTIP grants (3,569) -
Contingent consideration - 3,432
70,508 57,731
Minorities (180) 1,933
70,328 59,664
Statement of Changes in Equity
A-6
