Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — FY2014 Earnings Presentation
48 slides from Domino's Pizza Enterprises's earnings presentation, Jun 29, 2014
Slide 1: Full Year Results
FULL YEAR RESULTS 29 JUNE 2014 ENTERPRISES LTD
Slide 2: Executive Team
EXECUTIVE TEAM Don Meij Group Chief Executive Officer / Managing Director Richard Coney Group Chief Financial Officer Andrew Rennie Chief Executive Officer Europe Scott Oelkers Chief Executive Officer Japan
Slide 3: The Highlights
*—~__Section1 ~ @eeccccescccccsccce i IGHLIGHTS —
Slide 4: Result Highlights
RESULT HIGHLIGHTS ANZ Network Sales ($) SSS +6.3% SSS +2.7% (2) Japan Network Sales (¥) SSS +10.7% EBITDA (1) +70.0% NPAT (3) +50.4% EPS (1) +31.6% Dividend (cps) +18.8% (4) Free Cash Flow ($m) $48.3m Return on Capital Employed (1) 18.7% (1) Return on Equity 19.8% These results include 10 months con
Slide 5: Group Highlights
GROUP HIGHLIGHTS FY 12 FY 13 FY 14 Significant FY 14 +/(-) FY 13 Underlying Underlying Statutory Charges (1) Underlying Underlying $ mil $ mil $ mil $ mil $ mil • Underlying NPAT up 50.4% to Network Sales 805.3 848.6 1,249.3 1,249.3 47.2% $45.8m Same Store Sales % 6.5% 2.0% 5.8% 5.8% • Final dividen
Slide 6: Significant Charges
SIGNIFICANT CHARGES NPAT Impact $'000 Domino's Japan Acquisition 2,271 Professional fees & other costs directly attributable to the Japanese acquisition Japan Market Research Costs 399 Post-acquisition research conducted by DPE in Japan as part of the integration process. Includes customer, branding
Slide 7: FY14 Guidance Assessment
FY14 GUIDANCE ASSESSMENT ANZ/Europe Japan (1) as at February 2014 Actual Achieved as at February 2014 Actual Achieved SSS% 2-4% 5.0% 5-7% 11.2% New Store Openings 70-80 71 >50 61 EBITDA Growth (2) in the region of 15% 21.0% in the region of 25% Net Capex $30-35m $23.8m ¥1.5 - 2.0Bn ¥1.7Bn (1) Guidan
Slide 8: Network Sales Growth
NETWORK SALES GROWTH Total Sales Same Store Sales Network Sales $m 1,249.3 Australia/NZ 11.5% 6.3% H2 158.4 H2 193.6 7.9% 2.7% 848.6 805.3 746.4 H2 694.3 H2 153.0 H2 676.4 133.5 321.1 H2 H2 128.9 591.2 H2 122.2 134.0 H2 Japan (¥) (1) na 10.7% 518.9 H2 H2 H1 106.0 283.8 H2 270.7 101.5 H2 H2 80.7 H2 2
Slide 9: Network Store Count
NETWORK STORE COUNT FY 12 FY 13 Japan FY 14 Australia/NZ stores Network Sales (A$ mil) 544.1 562.8 Acquisition 627.6 • New record of 125 new store openings for the Group (1) Franchised stores 476 501 551 Corporate stores 83 84 61 • Opened 44 new stores in ANZ during the year, also a Aus/NZ Network S
Slide 10: Financials
~ Section 2 ~ FINANCIALS
Slide 11: Profit & Loss
PROFIT & LOSS FY 12 FY 13 FY 14 +/(-) FY 13 Underlying Underlying Underlying Underlying • Strong trading results in ANZ and the $ mil $ mil $ mil acquisition of the Japan business has Revenue 264.9 294.9 588.7 99.6% seen EBITDA grow by 70.0% on an EBITDA 48.1 55.9 95.1 70.0% underlying basis Depreci
Slide 12: Geographic Summary
GEOGRAPHIC SUMMARY FY 12 FY 13 Underlying Underlying FY 14 Underlying +/(-) FY 13 Underlying • Revenues have almost doubled as a result of REVENUE $ mil $ mil $ mil % the Japan acquisition (80% Corporate stores) and double digit growth in ANZ & Europe Australia/NZ 168.5 174.2 203.3 16.7% • ANZ deliv
Slide 13: Earnings Per Share
EARNINGS PER SHARE 50.5 39.1 37.2 H2 29.1 30.0 H2 25.0 H2 19.2 19.8 21.6 H2 17.6 H2 15.7 14.1 H2 12.8 H2 12.6 H2 8.4 H1 H1 H1 21.4 8.7 H1 19.9 H1 17.4 H1 H1 12.2 14.2 H1 9.2 9.0 5.4 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 • EPS CAGR of 19.9% since listing • Statutory EPS up 29.2% • Underlying EPS fo
Slide 14: Cash Flow
CASH FLOW FY 13 FY 14 $ mil $ mil Net Profit After Tax before Minority Interest 28.7 45.3 Profit on Sale non-current assets (3.0) (3.6) • Operating Cash Flow up $57.5m Depreciation & Amortisation 12.8 21.7 Change in Working Capital (2.6) 26.1 supported by a $21.9m improvement Movement in current and
Slide 15: Balance Sheet
BALANCE SHEET FY 13 FY 14 +/(-) FY 13 $ mil $ mil $ mil Cash & equivalents 18.7 42.3 23.6 • Cash & equivalents up $23.6m Trade & Other Receivables 26.4 36.6 10.2 Other Current Assets 15.3 24.3 9.0 benefitting from timing of Japan creditor Current Assets 60.4 103.1 42.8 payments Property, plant & equ
Slide 16: Key Financial Ratios
KEY FINANCIAL RATIOS FY 13 FY 14 Underlying Underlying • Net debt and gearing increased as a result of Japan, still remains a Net Debt to Equity 20.5% 30.0% conservative balance sheet with relatively low gearing and interest coverage of +29.8 times Net Debt $21.0m $77.6m • Net Debt to Equity has imp
Slide 17: Australia/NZ
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Slide 18: Australia/NZ Highlights
AUSTRALIA/NZ HIGHLIGHTS • Our 600th ANZ store opened in November • Continued the momentum from the first half with our new store openings, reaching a total of 44 new stores for the year, setting a new record for organic new store growth • New Zealand has had a very strong year in terms of same store
Slide 19: Network Sales – Australia/NZ
NETWORK SALES – AUSTRALIA/NZ Australia/NZ H2 Network Sales A$ ANZ SSS Growth $318.0m 15.1% $285.3m $273.6m 10.9% $256.9m 8.7% $220.8m 6.9% $215.6m 5.6% $199.1m 4.6% 4.5% $186.4m 2.6% 1.8% 0.4% 2007 2008 2009 2010 2011 2012 2013 2014 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 • Stron
Slide 20: Product Innovation - ANZ
PRODUCT INNOVATION - ANZ • Launched the Summer Prawn Range Soy Prawn, BBQ Prawn and Prawn, Bacon & Feta • Enhanced our dessert range with the addition of premium Italian Desserts as well as Salted Caramel Chocolate Mousse • Continued to introduce new high quality ingredients including roast chicken
Slide 21: Digital Update
DIGITAL UPDATE • Launched our Offers App in March in ANZ which reached the #1 Free App position for the Food & Drink category as well as a top 10 position in the all Free App categories chart • Successfully integrated PayPal into our online ordering website in May this year • Our highly popular inte
Slide 22: The Theatre of Food Continues
THE THEATRE OF FOOD CONTINUES • We have commenced the rollout of our next generation of the Entice store design which has been enhanced with a range of design palettes to match each location • These designs have been created to incorporate the feedback we receive from our customers • They are authen
Slide 23: Looking Forward - Australia/NZ
LOOKING FORWARD - AUSTRALIA/NZ • Our digital advertising presence will continue to increase • Targeting record organic new store openings in FY15, with an expanded franchising team to help achieve our goal of 60+ stores in both metro and regional markets • Our next generation Entice store image is b
Slide 24: Looking Forward – Australia/NZ cont…
LOOKING FORWARD – AUSTRALIA/NZ cont… ~ 24 ~
Slide 25: Looking Forward – Australia/NZ cont… (Pizza Mogul)
LOOKING FORWARD – AUSTRALIA/NZ cont… • Pizza Mogul Launched We have developed a world-first in the next wave of social retailing Pizza Mogul Our Pizza Chef tool has been taken to a whole new level allowing you to create your own pizza; share it with your social networks; and then earn a cut from
Slide 26: Looking Forward – Australia/NZ cont… (Cheaper Everyday)
LOOKING FORWARD – AUSTRALIA/NZ cont… • Cheaper Everyday - $4.95 Throughout the second half we have trialled our $4.95 value promotion around the country This has proved very successful with our customers, as evidenced by feedback on social media platforms We have now taken this one step furthe
Slide 27: Looking Forward – Australia/NZ cont… (GPS Tracker)
LOOKING FORWARD – AUSTRALIA/NZ cont… • GPS Tracker For over 2 years we have been testing a GPS monitoring system that could provide a number of benefits to our stores (38 stores to date) including more efficient deliveries, reductions in vehicle maintenance costs and most importantly improve safet
Slide 28: Europe
~ Section 4 ~ EUROPE
Slide 29: Europe Highlights
EUROPE HIGHLIGHTS • We have successfully implemented the global point of sale and Online Ordering (OLO) systems in The Netherlands which is already delivering an additional material layer to our sales growth • We have also commenced the rollout of the Pulse/OLO systems in Belgium • Launched a concep
Slide 30: Network Sales – Europe
NETWORK SALES – EUROPE European H2 Network Sales European SSS Growth 129.3m 7.5% 6.8% 118.8m 106.1m 5.3% 94.8m 4.7% 4.6% 82.2m 4.0% 3.7% 71.6m 64.1m 2.3% 48.9m 0.7% (0.7%) 2007 2008 2009 2010 2011 2012 2013 2014 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 • Even with the head winds o
Slide 31: Europe Profitability
EUROPE PROFITABILITY FY13 FY14 +/(-) FY13 • Europe has made substantial € mil % improvements in the second half as Network Sales 227.2 245.1 7.9% new initiatives and structural changes begin to gain momentum, H2 14 up Revenue 95.9 97.8 2.0% 53.7% on pcp (constant currency, underlying basis) EBITDA (
Slide 32: European Achievements
EUROPEAN ACHIEVEMENTS • SSS in France has been trending upwards since we have increased our investment in national advertising along with the successful launch of the Mozza Crust • We have successfully introduced the Cheesy Crust pizza in The Netherlands • Achieved our 4th consecutive 5 Star audit r
Slide 33: Product Innovation – Europe
PRODUCT INNOVATION – EUROPE • New product launches during the year have included the Mozza Crust in France which has been strongly supported by advertising • The Cheesy Crust was also featured on television in The Netherlands along with special carry out offers such as our Hot & Spicy pizza • Anothe
Slide 34: Looking Forward - Europe
LOOKING FORWARD - EUROPE • A site for our new commissary has been located in northern Paris and designs are underway. This facility, expected to open in early 2016, is a key component of our growth strategy • Commenced the global OLO/Pulse point of sale system rollout in Belgium with an expected com
Slide 35: Japan
~ Section 5 ~ JAPAN
Slide 36: Japan Highlights
JAPAN HIGHLIGHTS • Achieved same store sales (SSS) of 10.7%(1) (11.2% for the full 12 months) • We had a record sales month of ¥3.6billion in December 2013, up from a previous record of ¥2.9billion • Introduced television campaigns in Tokyo and Osaka for the first time since 2006, which have been a
Slide 37: Network Sales – Japan
NETWORK SALES – JAPAN Network Sales SSS% • For the 10 month period Sep to Jun(1), DPJ has achieved a SSS% of 10.7% DPE ownership period (1) ¥24,265m 10.7% • Television advertising in the regions of Tokyo and Osaka were introduced for the first time Jul 2013 to Jun 2014 ¥29,032m 11.2% since 2006 and
Slide 38: Japan Profitability
JAPAN PROFITABILITY JGAAP IFRS Apr 12 - Mar 13 Sep 13 - Jun 14 12 months 10 months • DPJ generated ¥24,265m network ¥ mil ¥ mil sales for the 10 month to June 14 Network Sales 23,007 24,265 higher than the 12 month sales to March 13 Revenue 21,519 22,504 EBITDA 2,295 2,260 • We have also seen materi
Slide 39: Japanese Achievements
JAPANESE ACHIEVEMENTS • We opened our milestone 300th store in March and went on to finish the year at 320 stores • to provide support for high calibre internal team members take the next step into store ownership • Successful launch of the stuffed crust pizza • The relocation and building of new st
Slide 40: Japanese Achievements
JAPANESE ACHIEVEMENTS • We have launched the new Mugen store design • Our digital growth and innovation continues in Japan also, with significant upgrades to our electronic direct mail system and further participation in social media platforms • Rolled out a new make line monitor system in all store
Slide 41: Product Innovation – Japan
PRODUCT INNOVATION – JAPAN • A substantial amount of research was carried out in H1 14 which has resulted in the development and launch of the • Part of this range includes a new seafood pizza, the Quattro which has been extremely popular with customers during the summer months ~ 41 ~
Slide 42: Looking Forward - Japan
LOOKING FORWARD - JAPAN • Pleased to announce that we will launch our new HTML5 website in November • We will also convert our existing point of sale system across to the global POS system (Pulse) and expect this to be completed by the end of FY15 • Another 15 stores will be relocated to higher prof
Slide 43: Summary
~ Section 6 ~ SUMMARY
Slide 44: Future Outlook – Group Store Count
FUTURE OUTLOOK – GROUP STORE COUNT Australia/NZ Europe Japan 900 Stores 1,350 Stores 700 Stores incl 50 2Go outlets • We are upgrading our ANZ store count forecast from 800 to 900 stores. The remaining stores will come predominantly through territory optimisation (approx 200 stores) with the remaini
Slide 45: FY15 Group Guidance
FY15 GROUP GUIDANCE FY14 Actual FY15 Guidance SSS% 5.8% 4-6% New Store Openings 132 (125 - 10 mths DPE) 175-185 EBITDA Growth * 70.0% in the region of 20% NPAT Growth * 50.4% in the region of 20% Net Capex $42.4m $45-55m • Increased Capex to fund additional digital projects and new store growth in a
Slide 46: Trading Update
TRADING UPDATE Update through first 5 weeks of FY15 Australia/NZ Europe Japan SSS% 10.3% 14.8% 6.9% New Store Openings 1 5 8 • Australia/NZ sales momentum is continuing on from H2 with +10.3% SSS. The launch of our Cheaper Everyday $4.95 pricing and Pizza Mogul are also driving sales growth • SSS in
Slide 47: Conclusion
CONCLUSION • • Strong sales, store count growth, improved corporate store margins and a range of successful promotions in Australia/NZ have all contributed to a solid result • has had an immediate positive impact. SSS in H2 was 4.6%, the rollout of Pulse/OLO system in Belgium is underway, the new Fr
Slide 48: Disclaimer & Important Information
DISCLAIMER & IMPORTANT INFORMATION to either update this presentation or correct any inaccuracies. While due care has been taken in preparing these statements, no representation or warranty is made or given as to the accuracy, reliability or completeness of forecasts or the assumptions on which they
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