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Domino’s Pizza UK & IRL plc Preliminary Results for the 52 weeks ended 1 January 2006
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Domino’s Pizza UK & IRL plc The Team
Stephen Hemsley, Chief Executive
Chris Moore, Chief Operating Officer
Lee Ginsberg, Finance Director
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Domino’s Pizza UK & IRL plc
Financial Highlights
• System sales up by 15.1% to £200.7m (2004: £174.3m*)
• Profit before tax increased by 26.6% to £11.2m (2004: £8.8m)
• Earnings per share:- Basic EPS up 22.8% to 16.25 pence (2004: 13.23 pence)- Diluted EPS up 22.1% to 15.47 pence (2004: 12.67 pence)
• Total dividend up 38.1% to 7.25 pence for the year (2004: 5.25 pence)
• 50 new delivery stores opened (2004: 40)
* NOTE: 53 week period in 2004
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Domino’s Pizza UK & IRL plc Financial Highlights contd.
• Like-for-like sales in 317 mature stores up 7.1% (2004: 6.6%)
• 407 stores at the end of the period (2004: 357 stores)
• E-Commerce sales up 69.5% to £13.9m (2004: £8.2m), representing 10.4% of UK delivered pizza sales
• Strong cash generation with cash at hand of £5.9m (2004: £4.8m)
• £8.2m cash returned to shareholders from share buybacks during the year (2004: £1.6m)
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Domino’s Pizza UK & IRL plc System sales
0
50
100
150
200
250
2001 2002 2003 2004 2005
+29%+21%
+20%
+23%
+15%
+17% on comparable 52 weeks
£m
£98.4m
£118.9m
£142.3m
£174.3m
£200.7m
5
(53 weeks)
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Domino’s Pizza UK & IRL plc Like-for-like sales growth
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005
0
50
100
150
200
250
300
350
4.8%
21.4%
11.2%
7.4% 6.6%
LFL store population
% G
row
th
LF
L s
tore
po
pu
lati
on
Solid growth from a larger group of stores
6
7.1%
Average mature store now takes £180,000 p.a. more than in 2000
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Domino’s Pizza UK & IRL plc Store count
0
50
100
150
200
250
300
350
400
2001 2002 2003 2004 2005
Store Population
237269
318
357407
nu
mb
er o
f st
ore
s at
yea
r e
nd
7
Potential for 800 – 1,000 stores
34
50
24
50
40
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Domino’s Pizza UK & IRL plc Profit and Loss
2005 2004 %
£’000 £’000 IncreaseSystem sales 200,678 174,292 15.1
Operating profit * 11,004 9,138 20.4
Profit/(loss) on sale of stores 876 (47) -
Accelerated LTIP charge (626) - -____
Profit before interest and tax 11,254 9,091 23.8
Net interest payable (85) (270) -____
Profit before tax 11,169 8,821 26.6
Taxation (2,922) (2,058) (42.0)
Profit after tax 8,247 6,763 21.9
Dividends - pence 7.25p 5.25p 38.1
- cover 2.2 x 2.5 x -
Earnings per share
- basic 16.25p 13.23p 22.8
- diluted 15.47p 12.67p 22.1
* Before exceptionals
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Domino’s Pizza UK & IRL plc Balance Sheet
2005 2004
£’000 £’000
(Restated)
Fixed assets 15,370 16,498
Current assets 20,992 20,980
Creditors due within (13,742) (13,590)
one year
Net current assets 7,250 7,390
Creditors due after (9,085) (8,102)
more than one year
Deferred tax and provisions (1,447) (857)
NET ASSETS 12,088 14,929
Fixed Assets: At 01 Jan 06 At 02 Jan 05
£’000 £’000
Intangible 1,326 1,520 Tangible 13,593 14,595 Investment 451 383
in JV’s 15,370 16,498
Current Assets:
Stock 2,186 2,700 Debtors 12,921 13,456 Cash 5,885 4,824
20,992 20,980
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Domino’s Pizza UK & IRL plc Analysis of Shareholder Funds
2005 2004
£’000 £’000 (Restated)
At beginning of year 14,847 11,763
Share issues in year 472 1,071
Share buyback in year (8,222) (1,610)
Increase in EBT shares (1,140) (1,200)
Attributable profit for year 8,255 6,731
LTIP charge (Including 06/07 acceleration) 963 332
Dividends (3,169) (2,240)
12,006 14,847
Minorities 82 82
12,088 14,929
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Domino’s Pizza UK & IRL plc Analysis of Borrowings
2005 2004
£’000 £’000Cash at bank 5,885 4,824
DP Capital (2,500) (2,640)
EBT loans (7,500) (6,360)
Other (26) (42)
Net debt (4,141) (4,218)
Shareholders funds 12,006 14,847
Gearing % 34.5% 28.4%
Interest cover 122 times 33.7 times
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Domino’s Pizza UK & IRL plc Net Cash Inflow From Operating Activities
2005 2004
£’000 £’000
Operating profit 10,214 * 9,033
Depreciation 1,508 1,386
Amortisation 131 133
LTIP charge 963 333
Decrease/(increase) in stocks 489 (857)
Decrease/(increase) in debtors 337 (1,505)
(Decrease)/increase in creditors (968) 1,420
12,674 9,943
* After £626k LTIP acceleration
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Domino’s Pizza UK & IRL plc Cash Flow Statement
2005 2004
£’000 £’000
Net cash inflow from operating activities 12,674 9,943
Servicing of finance + returns on investment (38) (215)
Taxation paid (1,549) (2,021)
Capital expenditure + financial investment (1,999) (3,428)
Disposals/acquisitions 3,048 (280)
Dividends paid (3,169) (2,235)
Net cash inflow before financing 8,967 1,764
Financing (7,906) (661)
INCREASE IN CASH 1,061 1,103
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Domino’s Pizza UK & IRL plc Cash returned to shareholders
2 year
£’000 2005 2004 Total
PBT 11,169 8,821 19,990
Share Buybacks 8,222 1,610 9,832
Dividends 3,169 2,240 5,409
11,391 3,850 15,241
Cash at year end 5,885 4,824 -
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Domino’s Pizza UK & IRL plc
Basic Earnings Per Share Growth
15
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
2001 2002 2003 2004 2005
Basic EPS Linear (Basic EPS)
4.00
5.60
9.02
13.23
16.25
Pen
ce
Compound increase of 42%
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Domino’s Pizza UK & IRL plc Dividends Per Share Growth
16
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
2001 2002 2003 2004 2005
Dividends per Share Linear (Dividends per Share)
Pen
ce
1.332.00
3.50
5.25
Compound increase of 53%
7.25
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Domino’s Pizza UK & IRL plc The future for pizza delivery
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Convenience & Takeaway Market £7.2 billion
Convenience & Takeaway Market £12.3 billion
2005 2015
Predicted growth in total convenience & takeaway market: 70%
Predicted growth in pizza delivery market: 91%
Source: Convenience Food Sector 2015 – Future Foundation* Excludes carry-out sales
pizza delivery* £578 million
pizza delivery £1.1 billion
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Domino’s Pizza UK & IRL plc
Right place, right time, right brand
Cash-rich, time-poor society
Ideal environment for the
convenience of pizza delivery
70% of families feel time pressured...
…..ordering 25% more takeaway meals
Homes are fast becoming
leisure destinations
Our Point-of-Sale
In-home leisure spend £63b (from £39b in 1999)
Growth outstripping out-of-home leisure spend
Mostly on new technologies (and new sales channels; PC, iTV, convergence)
Source; Future Foundation, Convenience Food 2015
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Domino’s Pizza UK & IRL plc Right place, right time, right brand
Increased informality in eating habits
50% of meals eaten in front of the TV
Average time spent preparing food now only 13 minutes per day
But customers are looking for choice, novelty and fresh ingredients
Demographic shift in our favour
Pizza no longer stops at 55
At least once a month, 33% of over 55s ordered takeaways in 2003 (vs. 24% in 2000)
Growth in single person households; high PDI and spend on socialising
Source; Future Foundation, Convenience Food 2015
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Domino’s Pizza UK & IRL plc
Right place, right time, right brand
Focus on the detail; delivering a great pizza in under 30 minutesthe core challenge; a third of the business comes in just 8 hours of the week 11+million deliveries, 90% on timeMore product training & field supportIn-store speed and product quality are key areas of focus for stores going forward (2000+ audits in 2006)
Increased support behind new product strategy4% National Ad FundStrong campaign formula boosts overall salesTV, Direct Mail, LSM, PRE-commerce capitalising on growth in broadband (38% of UK adults have bought online in last six months)Expected to grow to 68% by 2015Greater potential for ‘lock-in’
Source; Future Foundation, Convenience Food 2015
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4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100 103 106 109
weekly e-commerce as a percentage of delivery sales from 2004 to date
Domino’s Pizza UK & IRL plc
Right place, right time, right brand e-commerce net sales of £13.9 million, 69.5% up on 2004 10.4% of UK delivery sales in 2005 Future Foundation; 35% of pizza delivery sales by 2015
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New website launch July 04
20052004
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Domino’s Pizza UK & IRL plc The competition
Strengthened our lead in pizza delivery segment 2005
Stores Openings Sales
- Domino’s 407 50 £200m- Pizza Hut Delivery* 232 30 £110m- Perfect Pizza * 112 (7) £ 23m - Papa Johns * 80 7 £ 17m
- Others * 2,000 n/a £340m
Highest sales per store in industry
* estimates
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6%
23%
56%66%
100%
0%
20%
40%
60%
80%
100%
23Coverage of approx. 47% of UK & IRL households
Source; Mintel Home Delivery Report, 2004
Domino’s Pizza UK & IRL plc The size of the opportunity
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6%
23%
56%66%
100%
50%
75%
0%
20%
40%
60%
80%
100%
Domino’s Pizza UK & IRL plc The size of the opportunity
24Coverage of approx. 47% of UK & IRL households
Source; Mintel Home Delivery Report, 2004Source: Ipsos-UK US market study, Feb 2006
U.S
.mar
ket
U.S
.ma
rke
t
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Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2004 2005
Domino’s Pizza UK & IRL plc Sales performance2005 Average Mature Store Sales Per Period
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New Simpsons licensing deal
Introducing the “Ay Carumba Fajita Pizza” (TV ad)
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Domino’s Pizza UK & IRL plc
The year ahead
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Domino’s Pizza UK & IRL plc
The year ahead ‘Football Fanatics’ and the
World Cup
More investment in e-commerce channel
new customer acquisition drive
WAP ordering launch in Q2
Second Simpsons menu addition in H2
Tough comparables in Q4
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Domino’s Pizza UK & IRL plc Board Management Team
• Strengthening of Board• Appointment of Michael Shallow, Non-Executive Director• Appointment of Dianne Thompson, Non-Executive Director
• Board now comprises:• Chairman
• Colin Halpern• Three Executive Directors• Four Non-Executive Directors
• Nigel Wray• Michael Shallow• Dianne Thompson• John Hodson
• Management Focus• Appointment of Operations Director• Appointment of IT Director
STRONGER TEAM IN PLACE TO SUPPORT GROWTH
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Domino’s Pizza UK & IRL plc Continuing strategy
• Focus on roll out of Domino’s system in UK and Ireland
• Maintain consistent new store opening programme
• Build infrastructure for 1000 stores
• Drive like-for-like sales growth
• Manage number of franchisees
• Operational leverage to drive net margin
• Resulting cash generated to be returned to shareholders
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Domino’s Pizza UK & IRL plc Current trading & prospects
• Store openings on track for our target of 50 stores
• Like-for-like sales up 10.3% (2004: 6.6%) for the first six weeks of 2006
• E-commerce up 59.5% (2004: 49%) now 11.8% of delivered pizza sales in UK.
• Strong cash generation set to continue
30
Well placed for another year of strong growth