Domino’s Pizza Group plc 53 Weeks Ended 31 December 2017
Highlights David Wild, CEO Financial performance Rachel Osborne, CFO Strategic and operational progress David Wild, CEO Q&A David Wild Rachel Osborne Simon Wallis, COO
£1,079m 4.8% £93.2m 95 9.2% 7.7% £1,156m £94.4m 15.7p £91.1m 15.1% 10.2% 13.9% Based on underlying performance at reported exchange rates on a 52 week basis, unless indicated otherwise. See definitions in Appendix 1. Investments for growth relate to capex (£46.6m) and M&A (£44.5m) 3
Rachel Osborne Chief Financial Officer
FY2017 FY 2017 FY 2016 £m % Growth 53 weeks 52 weeks 52 weeks System sales 1,179.6 1,155.7 1,004.2 15.1% Revenue 474.6 466.5 360.6 29.3% Underlying EBITDA 108.5 106.5 93.8 13.5% EBITDA (%) 9.2% 9.2% 9.3% (0.1)pt Depreciation and amortisation (12.6) (12.5) (7.6) 64.3% Operating profit 95.9 94.0 86.2 9.1% 5
FY2017 FY 2017 FY 2016 £m % Growth 53 weeks 52 weeks 52 weeks Interest 0.3 0.4 (0.5) Profit before tax 96.2 94.4 85.7 10.2% Tax (17.5) (17.2) (17.4) Profit after tax 78.7 77.1 68.3 13.0% Earnings per share (pence) 16.0 15.7 13.8 13.9% Non-underlying (15.0) (15.0) (3.1) Total profit after tax 66.8 65.3 65.2 0.2% 6
FY2017 £m 53 weeks • Recent decisions by the Supreme Court relating to Historic share schemes (11.0) certain historic share scheme structures • Gain on step acquisition in Nordics, offset by acquisition Other non-underlying - M&A 1 3.4 costs Other non-underlying – transformation 2 (7.4) • Mainly conversion costs in Norway and Germany Total (15.0) • c. £5m cash outflow across 2017 and 2018 1. Nordics accounting adjustments on step acquisition £5.8m, Nordics acquisition costs £(1.7)m, London acquisition costs £(0.3)m, foreign exchange £(0.4)m 2. Dolly Dimples and Norway conversions £(4.4)m, Germany conversion costs £(0.7)m, Switzerland impairment £(0.8)m, Dublin impairment £(1.2)m, London acquisition amortisation £(0.2)m 7
52 weeks 2017 52 weeks 2016 Reported Organic constant Location (£m) (£m) (%) currency (%) UK 1,019.3 938.7 8.6% - ROI 60.1 50.1 19.9% 11.3% Switzerland 19.1 15.4 24.1% 17.1% Nordics 57.2 1 - - - Group 1,155.7 1,004.2 15.1% 8.9% Note: organic shows FY 2017 to FY 2016 excluding M&A. Pro forma shows FY 2017 to FY 2016 on a comparable basis, irrespective of ownership 1. From consolidation in April/May 2017. Pro forma sales for the 52 week period were £80.8m 8
UK & ROI International Group 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks £m 2017 2016 % growth 2017 2016 % growth 2017 2016 % growth System sales 1,079.4 988.8 9.2% 76.3 15.4 n/m 1,155.7 1,004.2 15.1% Revenue Franchise revenue 387.5 345.1 12.3% 0.9 - - 388.4 345.1 12.5% Corporate revenue 5.9 - - 72.2 15.6 n/m 78.1 15.6 n/m Total revenue 393.4 345.1 14.0% 73.1 15.6 n/m 466.5 360.6 29.3% Operating profit 93.2 86.5 7.7% 0.8 (0.3) 94.0 86.2 9.1% Operating margin % 8.6% 8.7% (0.1)pt - - - 8.1% 8.6% (0.5)pt of system sales Operating margin % 23.7% 25.1% (1.4)pt - - - 20.2% 23.9% (3.7)pt of revenue 9
System sales margin Statutory revenue margin FY 2016 margin 8.7% 25.1% Cheese cash margin impact - (0.9)pt Net investment in customer value (0.1)pt (0.5)pt Overheads - 0.2pt Corporate stores (London) - (0.2)pt Total 8.6% 23.7% 10
Free cash flow walkthrough (£m) 12.6 17.5 104.5 (1.6) 95.9 88.2 (15.6) (19.9) (0.7) Underlying Depreciation Net capex Working Other Underlying Tax Interest Free cash operating and excluding capital operating flow profit amortisation Warrington cash flow 109% 92% operating cash free cash flow conversion conversion Free cash flow is defined as cash flow before major growth capex, M&A and dividends/share purchases 11
SHARE PURCHASES ORGANIC GROWTH ACQUISITIONS ORDINARY DIVIDENDS 13
£m FY 2017 Warrington 27 Corporate stores 7 Other property/SCC costs 7 IT – recoverable 6 • Warrington to commence production April 2018 – total UK capacity now 1,600 stores Total 47 • Continued investment in IT; increasing investment in corporate stores • Plan to add commissaries/increase SCC scale in international markets 14
Annual dividend – pence per share (adjusted for stock splits) 9.00 8.00 6.92 5.83 5.30 4.83 4.10 3.40 2.58 2.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Final dividend key dates: Ex-dividend date Record date Payment date 15 March 2018 16 March 2018 24 April 2018 15
Announced Completed Transaction Value Rationale 9/3/17 19/4/17 Increased stakes in Iceland, £16.1m Taking majority control in new Norway and Sweden to 51%, 72% markets offering attractive and 72% respectively growth 9/3/17 2/5/17 Acquired Dolly Dimple’s in £4.0m Gaining scale in new market Norway 11/8/17 6/10/17 Acquired 75% stake in biggest £24.4m Developing operational London franchisee expertise and accelerating growth in a key market 2017 cash flow £44.5m 19/10/17 8/1/18 JV acquired Hallo Pizza in £10.8m Gaining scale in an established Germany market 14/12/17 15/1/18 Increased stake in Iceland to 95% £26.8m Pre-empting put option and exercising increased control 16
Cash movement (£m) Investment in the business Returns to shareholders 108.1 (46.6) (44.5) (34.6) (40.4) 10.2 (4.8) (89.2) (36.6) (18.2) (37.6) (145.0) 2016 closing Free cash Total capex Acquisitions Dividends Share Acquisition Other/non 2017 closing 2018 buyback Jan 2018 M&A Pro forma net debt flow excluding purchases consolidation underlying net debt 2017 net debt capex Pro forma net Net debt/EBITDA debt/EBITDA 0.84x 1.36x 17
• 65-75 new stores in UK • Warrington opening P&L impact of £3m - opex and depreciation • Capital expenditure around £30m for 2018 • Warrington completion • International commissaries • IT assets • Corporate stores in UK and International • Medium-term net debt/EBITDA range of 1.75-2.5x • Share buybacks of up to £50m (subject to the needs of the business) – including £18m already completed 18
15% -0.1pt £88m System sales growth UK&I operating margin Free cash flow 95 1.36x 47% New UK stores Pro forma net ROCE debt/EBITDA 14% 12.5% Underlying EPS growth DPS growth 1.8x Dividend cover £45m £37m Invested in M&A Share purchases £47m Invested for organic growth 19
David Wild Chief Executive Officer
# of households Penetration of delivery Frequency of delivery Spend 21
22
SYSTEM ONLINE COLLECTION ORDER TICKET SALES GROWTH SALES GROWTH SALES GROWTH GROWTH GROWTH 8.6% 13.7% 12.6% 6.5% 1.9% 32.0 (£m) 1,019.3 32.0 21.4 38.0 938.7 FY 2016 LFL excluding splits New store growth Immature store Split territories FY 2017 (52 weeks) growth 23
1. ASPA stands for Average Sales Per Address per week 24
• Split in 2014 Split in 2015 Split in 2016 Donor stores recover sales quickly • 2015 splits already recovered • Benefits of improved service and spare +54% +42% +30% capacity • Territory sales and ASPA significantly +46% +37% +28% increased • Major efficiencies in labour and local 16,354 16,070 marketing 14,839 • New store typically costs £300,000 37,956 37,666 36,076 34,484 32,836 • Stores currently change hands on c.65x 31,951 AWUS • £300k investment delivers an average £1m Donor stores (£) increase in capital value in a split territory New stores (£) 2013 2017 2014 2017 2015 2017 25
• London remains significantly under Address count per store penetrated 27,807 23,433 • 14% of DPG system sales; 25% of UK delivered food market • 3 corporate stores planned for 2018 London Rest of UK • GPS, new promotions already trialled ASPA £0.85 £0.72 London Rest of UK 26
Somerset town Welsh UK town average Opened: Dec 2015 Sept 2014 AWUS (£) 15,464 23,197 20,626 • Smaller towns are characterised by: Address count 9,260 10,840 25,322 ASPA (£) 1.67 2.14 0.81 • High collection %, driving significant Collection % sales 43% 51% 21% labour efficiency Labour cost % sales 24.7% 22.1% 29.7% Nearby competition None McDs, KFC, Subway • Limited branded competition, driving higher market share Across mature stores (inc splits) ASPA rises as address counts fall • Address count reflects delivery Addresses per store Mature ASPA (£) catchment: collection business attracted 35,000 0.95 from a much wider area 25,000 0.70 • Part of a clear trend that lower address counts deliver higher ASPA 15,000 0.45 2011 2012 2013 2014 2015 2016 2017 27
% of customers scoring us 5/5 for value • New ‘Official Food of Everything’ campaign 45% landed strongly in H2: already at 3x recall of 40% previous campaigns 35% • Brand spontaneous awareness up to 84%; 30% 55% first mentions 25% 20% • Good recovery in value for money perception Week 1, Week 9, Week 17, Week 25, Week 33, Week 41, Week 49, Week 4, 2017 2017 2017 2017 2017 2017 2017 2018 after ‘Dine for £9.99’ and 2018 ‘Winter Survival Deal’ 28
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