Preliminary Results for the 52 weeks ended 27 December 2020

09 Mar 2021

Strong trading through Covid-19; growth in system sales, profit and cash

Launch of new strategic plan to deliver £1.6bn to £1.9bn of system sales

 

52 wks ending            27 Dec 2020

52 wks ending
29 Dec 2019 5

System sales1

£1,348.4m

£1,210.9m

Like-for-Like system sales growth (exc.splits)2

10.3%

3.7%

Underlying EBIT3

£109.0m

£105.3m

Underlying3 profit before tax

£101.2m

£98.8m

Underlying3 basic EPS

18.2p

17.6p

Net debt4

£171.8m

£232.6m

Statutory profit after tax

£39.7m

£2.8m

Statutory basic EPS

8.9p

2.8p

All commentary below is on an underlying basis unless otherwise stated

Financial highlights

  • Strong UK & Ireland performance, with system sales of £1,348.4m, up 11.4% with like-for-like system sales, excluding splits, up 10.3% (9.3% including splits)
  • Underlying profit before tax of £101.2m, up £2.4m, with Covid-19 costs incurred of £9.0m to support franchisees to trade safely
  • Statutory profit after tax of £39.7m, up from £2.8m, with non-underlying charges reduced to £2.1m (2019: £21.8m) and loss on discontinued international operations reduced to £42.5m (2019: £56.5m), including £22.6m (2019: £35.2m) of impairments of international operations
  • Free cash flow increased by 73% to £99.0m (2019: £57.1m)
  • Disciplined cash management leading to net debt reduced by 26% to £171.8m, driven by trading performance and actions taken to preserve headroom
  • £45m share buyback programme, effective imminently, in line with new capital allocation philosophy and commitment to distribute surplus capital to shareholders
  • Total dividend for FY20 of 9.1p per share proposed as a final dividend to be paid on 4 May 2021

Operational highlights

  • Transformed Board and Executive Leadership teams have focused on leading the business through the challenges resulting from Covid-19
  • Remained open throughout the year with strong growth in delivery offsetting significant Covid-19 impact on collection business
  • Digital transformation of the business accelerated through the year, UK online sales up 23.9% and App sales up 26.2%. Online sales now account for 94.3% of delivery sales in UK
  • Maintained constructive engagement with our franchisees and have made an attractive offer to the Domino’s franchisees in an attempt to reset relationship
  • Disposal of discontinued International operations progressing – Norway disposal completed in May 2020, contract exchanged on disposal of Sweden, completion expected in May 2021, with Iceland and Switzerland disposal processes ongoing

Delivering the future – multi-year strategic plan to drive growth

  • Our vision is to be the favourite food delivery and collection brand, with pizza at our heart
  • Expected to deliver our medium-term ambition of total system sales of £1.6bn to £1.9bn
  • New strategy for the business centred on growth:
    • Accelerating growth of delivery business, opening an additional 200 stores
    • Turbo-charging our collection business, doubling market share
    • Amplify our product quality and value
    • Uphold our industry-leading economics for both the Group and our franchisees
    • Enhance our digital, technological and brand marketing capabilities in order to excel as a franchisor and generate market leading returns for the entire system

Current trading and outlook

Trading in the current financial year has started strongly with exceptional trading over the new year period as we recorded our highest ever sales week. Our delivery business continues to perform very well, and collection remains at around 60% of 2019 levels.

We have demonstrated we have a flexible and robust business model that has been able to adapt to the uncertain and changing market conditions throughout 2020. The current trends and demand expectations, in addition to the investment in capabilities we have and are making, gives us confidence in delivering further operational and financial progress in the coming year.

Commenting on the results, Dominic Paul, Chief Executive Officer said:

“I am pleased with the performance we’ve delivered this year, and grateful to everyone across the system for their commitment during this extraordinary period. We’ve worked successfully in partnership with our franchisees to continue to operate safely through the various lockdowns and play our part in feeding the nation during the pandemic, while supporting our colleagues and key workers. We have continued to invest and innovate across the business, launching exciting new products such as our vegan pizza and investing in technology, with our new App, in the supply chain and in marketing to further strengthen the brand.

“At the same time, we have been looking to the future, and today we are announcing a multi-year strategic plan which will drive growth across the business and deliver an exciting and profitable future for both our shareholders and our franchisees. In my first year with Domino’s, it has been clear to me that we have a great platform to build from - a uniquely powerful brand, high digital participation and outstanding people and franchisees. Our new strategy will enable us to build upon our strengths in both delivery and collection and provide our customers even better quality and value, which will drive continued strong performance. We have maintained an open dialogue with our franchisees throughout the development of this plan and, while we do not have an agreement yet, we have made an attractive offer to them which we believe will deliver powerful benefits to both them and the Group.

“As the economy begins to reopen, we have invested in our capabilities to enable us to capitalise on the substantial opportunities ahead. I am confident that we can achieve our vision of being the UK and Ireland’s favourite food delivery and collection brand, and deliver great results for our colleagues, our customers, our shareholders and our franchisees.”

Notes
1 System sales represent the sum of all sales made by both franchised and corporate stores to consumers in UK & Ireland
2 LFL excluding splits system sales performance is calculated for UK & Ireland against a comparable 52 week period in the prior year for mature stores which were not in territories split in the year or comparable period. Mature stores are defined as those opened prior to 30th December 2018.
3 Underlying is defined as statutory performance excluding discontinued operations, and items classified as non-underlying which includes significant non-recurring items or items directly related to merger and acquisition activity and related instruments
4 Net debt is defined as the bank revolving facilities, cash and cash equivalents and other loans, including balances held in disposal groups held for sale
5 Results for 2020 include the impact of IFRS 16. Comparatives have not been restated. The adoption of IFRS 16 has increased underlying EBIT by £2.2m, and underlying profit before tax by £0.7m in 2020.

LEI: 213800Q6ZKHAOV48JL75

Contacts

For Domino’s Pizza Group plc:
Investor Relations

Geoff Callow, Fiona O’Nolan – Equitory
+44 (0) 7710 440158

Media:
Tim Danaher, Samantha Chiene – Brunswick
+44 (0) 207 404 5959

For photography, please visit the media centre at corporate.dominos.co.uk, contact the Domino’s Press Office on +44 (0)1908 580757, or call Brunswick on +44 (0)207 404 5959

Results webcast

A results webcast and Q&A for investors and analysts will be held at 9:30 am today. The webcast and presentation can be accessed at: https://www.investis-live.com/dominos/60096d7a9a1388100055e26f/ragd  and will also be available on the Results, Reports and Presentations page of our corporate website.

Financial calendar

Domino’s Pizza Group plc will hold its 2021 AGM and issue a Q1 trading update on 22 April 2021. It will publish its half year results on 3 August 2021, followed by a Q3 trading update in October 2021.

Cautionary statement

Certain statements made in this announcement are forward‐looking statements. Such statements are based on current expectations and assumptions and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results expressed or implied in these forward‐looking statements. Persons receiving this announcement should not place undue reliance on forward‐looking statements. Unless otherwise required by applicable law, regulation or accounting standard, Domino’s does not undertake to update or revise any forward‐looking statements, whether as a result of new information, future developments or otherwise.

About Domino’s Pizza Group

Domino's Pizza Group plc is the UK’s leading pizza brand and a major player in the Irish market. We hold the master franchise agreement to own, operate and franchise Domino’s stores in the UK, the Republic of Ireland, Switzerland, Sweden and Iceland, and have associate investments in Germany and Luxembourg. As at 27 December 2020, we had 1,201 stores in the UK and Ireland.

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