DOMINOS PIZZA GROUP PLC Preliminary Results for the 52 weeks ended - - PowerPoint PPT Presentation
DOMINOS PIZZA GROUP PLC Preliminary Results for the 52 weeks ended 27 December 2015 HIGHLIG IGHT HTS S OF 2015 61 61 11.7% .7% UK LFL SALES NEW UK STORES Double-digit like for like (LFL) sales growth for nine successive quarters in
DOMINO’S PIZZA GROUP PLC
Preliminary Results for the 52 weeks ended 27 December 2015
2
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
UK LFL SALES
NEW UK STORES
HIGHLIG IGHT HTS S OF 2015
3
GROUP ROUP SYSTE TEM SALES LES
GROUP FINAN ANCI CIAL AL SUMMAR ARY 15. 5.8% 8%
STORE E OPENI ENINGS GS1
UNDERL DERLYING YING OPERA ERATIN ING G PROF ROFIT IT
16. 6.6% 6%
UNDERL DERLYING YING BASIC SIC EPS
19.4%
FULL LL-YEA YEAR DIVID VIDEN END
18.6%
NET T CASH
£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).
stores
24 24
4
1 Excluding the currency impact, Germany YoY sales increased by 4.7%. 2 2015 Germany exit costs shown post tax
STRONG GROUP TRADIN ING G RESULTS
52 weeks ended 27 December 2015 £m 52 weeks ended 28 December 2014 £m % change
Continuing operations (Group excluding Germany) System sales 877.2 757.8 15.8% Underlying operating profit 73.2 62.8 16.6% Underlying profit before tax 73.2 62.1 17.9% Discontinued operations (Germany) System sales1 8.3 8.8 (5.9)% Underlying operating loss (3.3) (7.3) 55.9% Exit costs2/non-underlying expenses (6.3) (1.0)
5
CASH GENERATIO TION N REMAI AINS S A KEY STRENG NGTH TH OF THE BUSINESS ESS
11.0 40.4 79.9 (9.6) 3.9 3.6 6.0 (12.0) (11.4) (31.0)
0.0 20.0 40.0 60.0 80.0 100.0 120.0 2014 net cash EBITDA continuing
Loss from discontinued
Closure cost provision movement Shares issued Working capital movement Capex Tax paid Dividends paid 2015 net cash
Cash generation (£m) Capacity to resume share buy-back
6
UK & ROI INCOME E STATEME TEMENT
52 weeks ended 27 December 2015 £m 52 weeks ended 28 December 2014 £m % change
UK system sales 825.0 706.4 16.8% UK LFL sales 11.7% 11.3% ROI system sales1 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.
UK LFL increase driven by volume growth Record new store performance and good immature stores performance
706.4 825.0 81.1 19.3 19.0 (0.8) 650 670 690 710 730 750 770 790 810 830 850
2014 Mature Stores Immature Stores New Stores Closed Stores 2015
695.3 776.3 9.0% 1.3% 1.8% (0.4)% 650 670 690 710 730 750 770 790
2014 Orders Items per
Price per item Product mix 2015
SOURCES CES OF F SALE LES GROW OWTH TH MATU TURE RE STORES ES SALES BREAKDO DOWN
UK UK: SALES S DRIVE VEN BY BY DOUBLE-DIG DIGIT IT LFL SALES ES GROW OWTH AND NEW STORES ES
7
11.7%
£m
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
Desserts +16.4% YoY sales Beverages +25.2% YoY sales Pizzas +9.9% YoY sales Sides +16.3% YoY sales Desserts Beverages Pizzas Sides
LFL LFL BASKET T COMPOSITION OSITION SALE LES
UK UK: BETTER ER VALUE UE FOR CUSTOME OMERS S THROU ROUGH BUNDLE E DEALS
8
Product 2015 2014 % Pizzas 75.5m 69.8m 8.1% Sides 51.8m 46.2m 12.1% Desserts 10.6m 9.2m 14.8% Beverages 20.3m 15.3m 32.7%
LF LFL L TOTAL L VOLU LUME ME BY P BY PRODUCT UCT
9
DIGITAL AL NEW STORES ES FRANCHISEE PROFITABILITY
Investment in digital drives increased number of customer visits, improved conversion rates and higher value per
Roll-out of new stores. Those added in 2015 show significant growth in average sales per address DPG is committed to maintaining and improving franchisee profitability, incentivising them to expand
UK: KEY DRIVER ERS S UNDERPIN IN GROW OWTH FOR THE FUTURE RE
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)
UK: ONLINE SALES S GROW OWTH CONTINUES ES
10
Note: Data in net sales and gross ticket charts refers to 2015 vs 2014 (mature stores). 1 Excludes VAT. 2 Includes VAT.
24.0 29.5
20 21 22 23 24 25 26 27 28 29 30 2014 2015
LFL online orders (m)
420.0 525.3
300 350 400 450 500 550 2014 2015
LFL online net sales¹ (£m)
20.97 21.32
20.7 20.8 20.9 21.0 21.1 21.2 21.3 21.4 2014 2015
LFL online gross ticket2 (£) +23.0% +25.1% +1.7%
11
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)
DELIVE VERED RED DIGITAL AL INNOV OVATIO TION
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
12
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)
USING DIGITAL TO STAY ‘TOP OF MIND’
UK: SIGNIFI FICANT ANTLY Y IMPROVED OVED PERFOR FORMAN MANCE E FROM IMMA MATU TURE RE AND NEW STORES RES
13
13,279 13,675
13,000 13,100 13,200 13,300 13,400 13,500 13,600 13,700 13,800 2014 2015
Immature average weekly unit sales
13,555 15,526
12,500 13,000 13,500 14,000 14,500 15,000 15,500 16,000 2014 2015
New store average weekly unit sales
0.52 0.78
0.3 0.4 0.5 0.6 0.7 0.8 0.9 2014 2015
New store average weekly sales per address
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)
Note: Figures exclude university stores and mobile units. Average weekly unit sales for new stores excludes first two weeks of trading.
+3.0% +14.5% +50.9%
UK: NEW STORE E SUPPOR ORT
14
From 2010, support has been offered to franchisees to encourage more store openings The cash value of majority of support packages is c. £62k per store (P&L value¹ £77k-£85k) 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.
Supporting franchisees to drive: Aggressive expansion Splitting territories Opening stores in low address count territories
Store EBITDA performance up from 13.6% to 15.5% Improvement in EBITDA benefiting from increased sales and lower food prices secured by DPG
17,478 19,517
16,000 16,500 17,000 17,500 18,000 18,500 19,000 19,500 20,000 2014 2015
AVERAGE GE WEEKLY Y UNIT IT SALE LES
UK: IMPROVI VING PROFIT ITABILIT BILITY Y FOR FRANCH CHISEE ISEES
15
+11.7%
Note: Data in charts refers to 2015 vs 2014 (mature stores).
Aggressive purchasing based on volume growth Falling commodity food costs in year with £11m
Transport efficiency savings, opened an
Delivered on time to stores: 99.8%
UK: SUPPLY Y CHAIN N PERFO FORMA RMANCE CE
16
17
INCREAS EASED ED TARGETE ETED MEDIA IA INVES ESTMEN TMENT
Increase in spend on TV and VOD advertising
Increase in content and partnership spend (e.g. X Factor)
Gross rating points, up from 1,932 in 2014 as a result of media strategy
Hollyoaks Drove equivalent media value of £11.6m in 2015 Helped drive our affinity score to 75% (2014: 67%) and improvement in brand regard amongst teens/families to 78% (2014: 69%)
18
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
BUILDIN ING THE BRAND IMAGE
19
New and improved brownies increased
PRODUCT T DEVELOPM ELOPMEN ENT T AND INNOV OVATION TION
Tikka Pizza Brownies Chick ‘n’ Mix Box Stuffed Crust Year-on-year chicken sales are up 30% Driving the basket mix, not just pizza Domino’s Stuffed Crust sales up by 17%, driven by the return of the Hot Dog Stuffed Crust Launch of the Tikka Pizza
21
Strong LFL sales Dublin 8.9% Provincial 4.8% Rural 10.0% Online sales up 30.4% YoY, and now account for 51.7% of delivered sales (2014: 44.3%) App penetration of online now at 60.2% (2014: 46.9%)
ROI LFL SALES
ONLINE SALES GROWTH
ROI: BUNDLE DEALS S AND STRONG ONLINE PRESEN ENCE CE DRIVIN ING GROW OWTH
3.5% 3.0% 5.6% 4.9% 5.4% 7.7% 14.1% 7.6% 0% 2% 4% 6% 8% 10% 12% 14% 16% Q1 Q2 Q3 Q4
ROI LFL by quarter
2014 2015
22
15 corporate stores Three relocations, Onex, Plainpalais and Servette have led to sales increasing significantly Opened four new stores Altstetten Glatt Profitability has improved in mature stores by CHF 0.3m to CHF 0.5m
SWISS LFL SALES
SYSTEM SALES GROWTH1
SWITZE ZERLA RLAND ND: : GOOD MATUR URE E STORE E PERFO FORMA RMANCE CE WITH CONTINUED UED INVESTMEN TMENT
Bern Basel
1 Converted to constant currency.
23
New joint venture between DPG and Domino’s Pizza Enterprises, one-third owned by DPG and two-thirds by DPE Joint venture acquisition of Joey’s Pizza on 1 February 2016 212 Joey’s stores and up to 13 ex-DPG stores Joey’s stores expected to start converting in the second half of the year and conclude within 12 months
STRATEG TEGIC IC PARTN TNERSH ERSHIP IP IN GERMAN ANY
Deal removes losses and provides future earnings growth potential
1 DPG’s share of the JV’s profit after tax 2016 expected to be minimal due to integration costs. 2 Post tax
£m 2015 2016 Operating losses1 (3.3)
(6.3)
25
UK MARKET ET OV OVERVI RVIEW EW
A study on Domino’s position and performance in the eating out market was undertaken by Parthenon Domino’s will continue to grow, supported by sustained market tailwinds driving the category and a variety of growth opportunities such as: population growth and maturity of target audience; continued growth of the home delivery market; pizza delivery chains continuing to take share from independents; the move from full service to quick service; aggregators appearing market supportive; and consumers are increasing their purchase frequency. Success driven by a brand that is renowned for delivery and being ahead of the digital sales curve Pizza remains under penetrated in the UK compared to both the US and Australia/NZ
LOCATIO TION URBAN POPULATIO TION STORE E COUNT URBAN POPULATIO TION PER STORE RE
US 259.7m 5,112 50.8k AUS/NZ 24.9m 681 36.5k UK 53.1m 869 61.1k ROI 2.9m 47 61.8k
26
Benign food cost and energy outlook for 2016 Increase in supply chain infrastructure planned to match store demand
SUPPLY CHAIN OUTLO LOOK
Location Open 2016 2017 Total North West
(new Supply Chain Centre)
2018 £12.9m £16.0m £28.9m Ireland
(relocation)
2018 £4.6m £4.2m £8.8m South West
(new Supply Chain Centre)
2017 £2.8m
Kingston
(recommissioning)
2016 £0.3m
27
Increase media spend by over £4m: continue sponsorship of Hollyoaks; increase gross rating points; and associate Domino’s with the nation’s #1 passion – football.
FUTURE RE MARKETIN KETING TO BUILD BRAND IMAGE
Launch of carry-out promotion to drive incremental sales Continue to provide value-for-money deals A further 125 store re-images planned
28
We will continue to drive digital by: being data led, focusing on trials and testing; improving user experience/design; ease of ordering;
FURTH THER ER DEVELOPM ELOPMEN ENTS S IN DIGITAL AL MARKETI ETING NG
using CRM to be customer led and drive emotional engagement; investing in software development; and providing better value leading to increased spend
29
Hot Pepperoni Passion launched Chicken Roulette Box launch Extended trial of the new Italiano range More Big Dips New dessert launch
FUTURE RE PRODUCT T INNOV OVATIO TION
New box designs
30
2016 UPDATE TE
LOCA CATIO TION 2016 first nine weeks ks LFL 2016 total l YoY sales es
Note: YoY sales and LFL sales growth in country’s local currency.
First nine weeks of trading to 28 February 2016 New store guidance 65 stores in the UK First openings in ROI for six years Continued modest new store growth in Switzerland Comparatives get tougher as the year progresses
31
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 Strong start to the year but tough comparatives ahead
UK LFL SALES
NEW UK STORES
HIGHLIG IGHT HTS S OF 2015
David Wild, CEO Simon D’Cruz, Head of Financial Planning and Analysis Barbara Gibbes, Group Financial Controller
33
APPENDIX 1 APPENDIX 2 APPENDIX 3 APPENDIX 4 APPENDIX 5 APPENDIX 6 APPENDIX 7 APPENDIX 8 APPENDIX 9 APPENDIX 10 APPENDIX 11 APPENDIX 12 Analysis of UK & ROI operating profit Switzerland income statement Group ten year history: store count, system sales and Group profit UK & ROI system sales and PBT growth and UK LFL by quarter Group full-year dividend increase by 18.6% UK: continued migration to mobile Using digital content to drive engagement UK: re-images and relocations Benefits of splitting stores Domino’s performance vs key competitors’ performance Future tangible fixed asset capital expenditure requirement Forward-looking statements caution Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40-41 Page 42 Page 43 Page 44 Page 45 Page 46
APPEN ENDIC ICES ES
34
ANALYSIS YSIS OF UK & ROI OPERATIN TING G PROFIT IT
52 weeks ended 27 December 2015 £m 52 weeks ended 28 December 2014 £m % change
Net royalties 24.2 20.9 16.0% Supply chain centre margin 71.3 60.8 17.3% Net overheads including incentives and realty (17.2) (13.3) (29.6%) Joint ventures and associates 1.7 1.0 65.4% Depreciation (5.5) (5.6) 1.3% Underlying operating profit 74.5 63.8 16.7%
35
SWITZE ZERLA RLAND ND INCOME ME STATEME TEMENT NT
52 weeks ended 27 December 2015 m 52 weeks ended 28 December 2014 m % change
System sales (£)1 11.4 9.6 18.4% Currency impact (£) 0.3 Total system sales (CHF) 17.0 14.4 18.4% LFL sales 5.4% 4.7% LFL mature store EBITDA (CHF)2 0.5 0.2 Operating profit (£) (1.3) (1.0) (27.9)% Operating profit (CHF) (1.9) (1.5) (23.0)%
1 Converted to constant currency. 2 2014 restated to reflect consistent store accounting.
36
GROUP TEN YEAR HISTORY RY: : STORE E COUNT, SYSTEM EM SALES S AND GROUP PROFIT IT
451 501 553 608 665 720 787 835 872 931 200 400 600 800 1000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Store count (continuing operations)
240.1 296.3 350.8 406.9 485.3 530.6 598.6 668.8 766.6 877.2
14.3 18.8 23.7 30.0 38.0 42.4 47.2 47.9 55.5 73.2 20 40 60 80 100 120 200 400 600 800 1000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
System sales & Group underlying operating profit (£m)
Group system sales Group underlying operating profit Note: System sales and Group underlying operating profit includes German operations until 2014. 2015 excludes Germany. 53-week period in 2012 is unadjusted.
37
UK & ROI SYSTEM EM SALES S AND PBT GROW OWTH AND UK LFL SALES S GROW OWTH BY BY QUA UARTER TER
530.0 592.9 650.9 748.2 865.6
43.7 50.0 55.6 63.8 74.7 20 40 60 80 100 120
200 400 600 800 1000 2011 2012 2013 2014 2015
UK & ROI system sales and PBT (£m)
System sales PBT Note: 53-week year in 2012, unadjusted.
10.8% 11.8% 12.9% 9.9% 10.3% 10.4% 14.9% 11.3% 0% 5% 10% 15% 20%
Q1 Q2 Q3 Q4
UK LFL sales growth by quarter
2014 2015
38
GROUP FULL-YEA YEAR R DIVID IDEND END INCREASED EASED BY 1 BY 18.6%
2015 2014 % change
Full year Dividend per share (pence) 20.75 17.50 18.6% Dividend cover1 1.72x 1.52x Full-year key dates: Ex-dividend date: 10 March 2016 Record date: 11 March 2016 Payment date: 25 April 2016
1 2015 cover with reference to continuing operations (excludes Germany). 2014 cover with reference to total operations.
39
12.0 11.7
11.6 11.7 11.8 11.9 12.0 12.1 2014 2015
Website orders (m)
213.7 213.9
213.5 213.6 213.7 213.8 213.9 214.0 2014 2015
Website net sales¹ (£m)
21.38 21.84
21.0 21.2 21.4 21.6 21.8 22.0 2014 2015
Website gross ticket2 (£)
Note: “Website” refers to tablet and desktop. “Mobile” refers to app and mobile website. Data in charts refers to 2015 vs 2014 (mature stores). 1 Excludes VAT. 2 Includes VAT.
+2.2%
206.3 311.4
160 200 240 280 320 2014 2015
Mobile net sales¹ (£m)
20.56 20.98
20.2 20.4 20.6 20.8 21.0 21.2 2014 2015
Mobile gross ticket2 (£)
12.0 17.8
9.0 11.0 13.0 15.0 17.0 19.0 2014 2015
Mobile orders (m) +48.0% +0.1% +51.0% +2.0%
UK: CONTINUED UED MIGRA RATION ION TO MOBILE LE
40
Facebook likes
Twitter followers on Domino’s Twitter feed
Switcheroo “‘only a Domino’s will do” content reach of 20.3m and viewed 3.8m times
Easy Order campaign media reach
USING DIGITAL L CONTEN ENT T TO DRIVE E ENGAGEME EMENT
41
Tummy Translator standalone app downloads
Tummy Translator marketing reach with 14.3m social impressions
Working with more vloggers to promote campaigns and the Pizza Legends with 1.2m video views
Snapchat “Dough to Door” video watched by 6k on our new channel Dominos_UK
USING DIGITAL L CONTEN ENT T TO DRIVE E ENGAGEME EMENT
42
UK: RE-IMA MAGES GES AND RELO LOCATIO TIONS
The shopfront is a great marketing tool 90 refits in 2015, 40% of the estate now upgraded Improving the in-store experience to drive carry-out sales 25 relocations have been identified bringing: better visibility; higher footfall, boosting carry-out; and improved parking.
43
BENEF EFIT ITS S OF SPLITTIN TTING STORES ES
100% increase in sales over five years Franchisee benefits: access to peripheral areas; defence against competitors; increasing penetration; larger take-out opportunity; lower delivery costs; marketing economies of scale; and growing cash profits.
Before split Year 1 Year 2 Year 3 Year 4 Year 5
Sales benefit of splitting stores
Existing weekly store sales New weekly store sales
+100%
44
DOMINO’S PERFORMANCE VS KEY COMPETITORS’ PERFORMANCE
8.4% 5.4% 5.1% 4.2% 4.1% 3.7% 2.9% 2.8% 2.8% 2.6% 1.5%
2.4% 1.5%
1.1% 1.8% 0.8% 2.3% 1.1% 0.8% 0.2% 0.9% 1.3%
Traffic Spend
Total Spend
Quick service restaurant (‘QSR’) Components of total spend Quick service major brands – YE Sep ‘15 vs year ago
Domino's Pizza Costa Coffee Burger King Nando’s Pret a Manger Greggs McDonald's Pizza Hut Delivery Caffé Nero KFC Starbucks Subway 11.2% 7.0% 3.2% 5.4% 6.0% 4.4% 5.5% 4.0% 3.7% 2.8% 2.6% 0.6% Source: the NPD Group/CREST UK.
45
FUTURE RE TANGIB IBLE LE FIXED ED ASSET T CAPITAL AL EXPEN ENDITU ITURE RE REQUIREM REMEN ENT
2014 £m 2015 £m 2016 £m 2017 £m
Maintenance 1.6 3.1 3.6 1.9 Expansionary New supply chain centres 1.1 0.3 20.6 20.2 Website/app development 1.6 2.5 6.7 7.0 ERP 0.3 1.4 2.8 — Switzerland 2.2 3.6 1.4 1.6 Germany 0.3 1.1 — — Total capex 7.1 12.0 35.1 30.7
46
FORWAR ARD-LOOKIN KING G STATEME TEMENTS S CAUTION ION
These 2015 Annual Results, Annual Report and the Domino’s Pizza website may contain certain "forward-looking statements" with respect to Domino’s Pizza Group plc and the Group's financial condition, results of operations and business, and certain of Domino’s Pizza Group plc and the Group's plans, strategy, objectives, goals and expectations with respect to these items and the economies and markets in which Domino’s Pizza Group plc operates. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "anticipates", "aims", "due", "could", "may", "should", "expects", "believes", "intends", "plans", "targets", "goal" or "estimates". By their very nature, forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Many of these assumptions, risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely. There are a number of such factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: changes in the economies and markets in which the Group operates; changes in the legal, regulatory and competition frameworks in which the Group operates; changes in the markets from which the Group raises finance and changes in interest and exchange rates; the impact of legal or other proceedings against or which affect the Group; changes in accounting practices and interpretation of accounting standards under IFRS; and changes in our principal risks and uncertainties. Any written or verbal forward-looking statements, made in these Annual Results, our Interim Results, Annual Report, or the Domino’s website or made subsequently, which are attributable to Domino’s Pizza Group plc or any other member of the Group or persons acting on their behalf, are expressly qualified in their entirety by the factors referred to above. Each forward-looking statement speaks only as of the date of these Annual Results, our Interim Results, Annual Report, or on the date the forward-looking statement is made. Domino’s Pizza Group plc does not intend to update any forward-looking statements.