DOMINO’S PIZZA GROUP PLC Preliminary Results for the 52 weeks ended 27 December 2015
HIGHLIGHTS OF 2015 61 11.7% UK LFL SALES NEW UK STORES 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 2
GROUP FINANCIAL SUMMARY UNDERLYING GROUP SYSTEM SALES STORE OPENINGS 1 OPERATING PROFIT 65 £73.2m £877.2m stores 24 15.8% 16.6% UNDERLYING FULL-YEAR DIVIDEND NET CASH BASIC EPS £40.4m 35.7p 20.75p 19.4% 18.6% £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). 3
STRONG GROUP TRADING RESULTS 52 weeks ended 52 weeks ended 27 December 2015 28 December 2014 £m £m % change Continuing operations (Group excluding Germany) 877.2 System sales 757.8 15.8% 73.2 Underlying operating profit 62.8 16.6% 73.2 Underlying profit before tax 62.1 17.9% Discontinued operations (Germany) System sales 1 8.3 8.8 (5.9)% Underlying operating loss (3.3) (7.3) 55.9% Exit costs 2 /non-underlying expenses (6.3) (1.0) 1 Excluding the currency impact, Germany YoY sales increased by 4.7%. 2 2015 Germany exit costs shown post tax 4
CASH GENERATION REMAINS A KEY STRENGTH OF THE BUSINESS Capacity to resume share buy-back Cash generation (£m) 120.0 6.0 100.0 (12.0) (9.6) 79.9 3.6 3.9 (11.4) 80.0 (31.0) 60.0 40.0 40.4 20.0 11.0 0.0 2014 net cash EBITDA Loss from Closure cost Shares issued Working Capex Tax paid Dividends 2015 net cash continuing discontinued provision capital paid operations operations movement movement 5
UK & ROI INCOME STATEMENT 52 weeks ended 52 weeks ended 27 December 2015 28 December 2014 £m £m % change UK system sales 825.0 706.4 16.8% UK LFL sales 11.7% 11.3% ROI system sales 1 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. 6
UK: SALES DRIVEN BY DOUBLE-DIGIT LFL SALES GROWTH AND NEW STORES UK LFL increase driven by volume growth Record new store performance and good immature stores performance MATURE STORES SALES BREAKDOWN SOURCES OF SALES GROWTH 850 790 (0.4)% 1.8% 776.3 825.0 (0.8) 19.0 830 1.3% 770 19.3 810 9.0% 81.1 790 750 770 £m 730 750 730 710 695.3 706.4 710 690 690 11.7% 670 670 650 650 2014 Mature Immature New Closed 2015 Stores Stores Stores Stores 2014 Orders Items per Price per Product 2015 order item mix 7
UK: BETTER VALUE FOR CUSTOMERS THROUGH BUNDLE DEALS Focus on value through bundle offers for families 61% of family feasters identify the Domino’s brand as being good value for money Top national deals: Winter Survival, Pick ‘n’ Mix, National Price Slice Weeks and Two for Tuesday LFL BASKET COMPOSITION SALES LFL TOTAL VOLUME BY PRODUCT Desserts Product 2015 2014 % Beverages +16.4% YoY +25.2% YoY sales Pizzas 75.5m 69.8m 8.1% sales Sides 51.8m 46.2m 12.1% Sides Desserts 10.6m 9.2m 14.8% +16.3% YoY sales Beverages 20.3m 15.3m 32.7% Pizzas +9.9% YoY sales Desserts Beverages Pizzas Sides 8
UK: KEY DRIVERS UNDERPIN GROWTH FOR THE FUTURE DIGITAL NEW STORES FRANCHISEE PROFITABILITY DPG is committed to maintaining Investment in digital drives Roll-out of new stores. Those and improving franchisee increased number of customer added in 2015 show significant profitability, incentivising them to visits, improved conversion rates growth in average sales per expand and higher value per order address 9
UK: ONLINE SALES GROWTH CONTINUES 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) LFL online gross ticket 2 (£) LFL online orders (m) LFL online net sales¹ (£m) 30 550 21.4 29 21.3 28 500 +25.1% +23.0% 21.2 27 +1.7% 26 450 21.1 25 29.5 525.3 21.32 21.0 24 400 23 20.9 420.0 22 350 24.0 20.97 20.8 21 20 300 20.7 2014 2015 2014 2015 2014 2015 Note: Data in net sales and gross ticket charts refers to 2015 vs 2014 (mature stores). 1 Excludes VAT. 2 Includes VAT. 10
DELIVERED DIGITAL INNOVATION Meet Dom, our new pizza tracker Increased personalisation and personality Introduction of a new animated character, “Dom” Bespoke content for each stage A uniform ‘look and feel’ across all platforms (web, iOS) Journey to “One Touch”: Easy Ordering Prompt to register Save payment cards Create favourite basket “Easy Ordering” and “One Touch” concept available via website, app and smartwatch 11
USING DIGITAL TO STAY ‘TOP OF MIND’ Sponsorship of the X Factor app continued our relationship with Saturday night £2.3m media value 2.4m downloads 1.4m Domino’s games played Media presence on key dates for customers (Valentine’s Day, April Fools’ Day) “Beat Team Domino’s” FIFA campaign for Xbox gamers and “ Trymendous Ticket Giveaway” for the Rugby World Cup Regular content created to support key passion points (football, gaming, movies and TV) 12
UK: SIGNIFICANTLY IMPROVED PERFORMANCE FROM IMMATURE AND NEW STORES 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) Immature average weekly unit New store average weekly unit New store average weekly sales sales sales per address 13,800 16,000 0.9 15,526 13,675 13,700 15,500 0.78 0.8 13,600 15,000 0.7 +14.5% +50.9% +3.0% 13,500 14,500 13,400 0.6 14,000 0.52 13,279 13,300 13,555 0.5 13,500 13,200 0.4 13,000 13,100 13,000 12,500 0.3 2014 2015 2014 2015 2014 2015 Note: Figures exclude university stores and mobile units. Average weekly unit sales for new stores excludes first two weeks of trading. 13
UK: NEW STORE SUPPORT From 2010, support has been offered to Supporting franchisees to drive: franchisees to encourage more store openings Aggressive expansion The cash value of majority of support packages is Splitting territories c. £62k per store (P&L value¹ £77k-£85k) Opening stores in low address count territories 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. 14
UK: IMPROVING PROFITABILITY FOR FRANCHISEES Store EBITDA performance up from 13.6% to 15.5% Improvement in EBITDA benefiting from increased sales and lower food prices secured by DPG AVERAGE WEEKLY UNIT SALES 20,000 19,517 19,500 19,000 +11.7% 18,500 18,000 17,478 17,500 17,000 16,500 16,000 2014 2015 Note: Data in charts refers to 2015 vs 2014 (mature stores). 15
UK: SUPPLY CHAIN PERFORMANCE 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% 16
INCREASED TARGETED MEDIA INVESTMENT 82% 41% Increase in spend on TV Increase in content and and VOD advertising partnership spend (e.g. X Factor) Hollyoaks 4,561 Drove equivalent media value of £11.6m in 2015 Helped drive our affinity score to 75% Gross rating points , (2014: 67%) and improvement in brand up from 1,932 in 2014 regard amongst teens/families to 78% as a result of media strategy (2014: 69%) 17
BUILDING THE BRAND IMAGE 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 18
PRODUCT DEVELOPMENT AND INNOVATION Tikka Pizza Brownies Chick ‘n’ Mix Box Stuffed Crust Year-on-year chicken Launch of the Tikka New and improved Domino’s Stuffed sales are up 30% Pizza brownies increased Crust sales up orders by 60% by 17%, driven by the Driving the basket mix, over 2014 return of the Hot Dog not just pizza Stuffed Crust 19
INTERNATIONAL OPERATIONS
ROI: BUNDLE DEALS AND STRONG ONLINE PRESENCE DRIVING GROWTH 30% 8.6% ROI LFL by quarter 16% 14.1% ROI LFL SALES ONLINE SALES GROWTH 14% 12% 10% Strong LFL sales 7.7% 7.6% 8% Dublin 8.9% 5.6% 5.4% 6% 4.9% Provincial 4.8% 3.5% 4% 3.0% Rural 10.0% 2% Online sales up 30.4% YoY, and now account 0% for 51.7% of delivered sales (2014: 44.3%) Q1 Q2 Q3 Q4 2014 2015 App penetration of online now at 60.2% (2014: 46.9%) 21
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