Preliminary Results for the 53 weeks ended 31 December 2017

08 Mar 2018

Continued UK growth; building an international platform with attractive long-term potential

  53 weeks to 31 December 2017 52 weeks to 24 December 2017 (unaudited) 52 weeks to 25 December 2016 Change % 52 weeks vs 52 weeks
Group system sales1 £1,179.6m £1,155.7m £1,004.2m 15.1%
UK & ROI system sales1 £1,101.5m £1,079.4m £988.8m 9.2%
UK like-for-like system sales1,2 growth (excluding splits)   4.8% 9.8%  
Underlying3 profit before tax £96.2m £94.4m £85.7m 10.2%
Underlying3 basic EPS 16.0p 15.7p 13.8p 13.9%
Net debt £89.2m - £34.6m  
Recommended total dividend per share 9.00p - 8.00p 12.5%
Total revenue £474.6m £466.5m £360.6m 29.3%
Total profit after tax – continuing operations £66.8m £65.3m £65.2m 0.2%
Basic EPS – continuing operations 13.8p 13.5p 13.1p 3.1%

David Wild, Chief Executive Officer, said:

“2017 has been a year of significant progress for Domino’s, despite the weaker consumer demand and cost inflation affecting the sector. Given this backdrop, I am particularly pleased with our performance. In the UK, system sales broke through £1 billion for the first time, helped by a record 95 new store openings. We also took action to improve value for customers, and this led to improved growth in H2, benefiting shareholders and franchisees alike. Our international operations are becoming a more material part of the Group. In Ireland and Switzerland, system sales growth accelerated, supported by very strong digital performance. In the Nordics, the move to majority control and the acquisition in Norway demonstrate our increasing confidence in the opportunity.

“We continue to take a rigorous approach to capital allocation, balancing the long-term needs of the business with more immediate returns of value to shareholders through the ordinary dividend and share buybacks. The market continues to be competitive but the strength of our brand and scale, combined with the expertise of our franchisees, are important competitive advantages in delivering quality, convenience and value to customers. We continue to take share in the pizza delivery market, and the investment in our new supply chain centre in Warrington will leave us well placed to meet our ambition to get to at least 1,600 sites. I remain confident in the long term growth potential of the business.”

Financial highlights

  • Total revenue of £474.6m, up 29.3% on a 52 week basis
  • Group system sales of £1,179.6m, up 15.1% on a 52 week basis
    • UK&I system sales up 9.2%
    • UK system sales up 8.6%: 95 new stores, 4.8% like-for-like growth
    • Strong local currency growth system sales in ROI up 11.3% and Switzerland up 17.1%
  • 52 week Underlying PBT up 10.2% and Underlying Basic EPS up 13.9%
  • Strong operating cash flow £104.2m and continued excellent cash conversion;
  • Net debt increased by £54.6m to £89.2m
    • Record capex of £46.6m invested in future growth platforms
    • £44.5m M&A investments in areas of strategic focus
    • £36.6m of share buybacks
  • Recommended final dividend up 16.7% to 5.25p; giving full year dividend of 9.00p
  • Total profit after tax from continuing operations is £66.8m after non-underlying4 items of £15.0m less a tax credit of £3.1m. This includes a pre-tax provision of £11.0m for potential employment tax liabilities relating to historic share scheme. Please refer to notes 1 and 3 for further detail.

Strategic highlights

  • Record investment into UK to support long term growth potential
    • Warrington facility to open in Spring 2018
    • Ongoing programme of digital investment GPS now in 471 stores, online orders at 75% of sales
    • Acquisition of majority stake in leading London franchisee, to increase local market share and develop operational expertise
  • Franchisee profitability maintained at 2016 levels
    • Market-leading store economics support a record 95 new UK store openings;
  • £20.1m invested in international growth opportunities
    • Majority-owned Domino’s businesses in Iceland, Norway and Sweden providing long term growth potential in attractive markets

Outlook

  • UK system sales in the first eight weeks of 2018 up 10.9%, or 7.1% like-for-like
  • 65-75 UK store openings expected in 2018
  • Capex for 2018 of around £30m, reflecting completion of Warrington, corporate store roll-out and supply chain centre investments in international markets
  • Share buybacks of £50m planned for 2018, including the £18m already completed

Note: 2017 is a 53 week reporting period to 31 December 2017. For the purposes of comparability, all growth rates in this release are given on a 52 week basis.

1 System sales represent the sum of all sales made by both franchised and corporate stores in the United Kingdom, Republic of Ireland, Switzerland, Sweden, Norway and Iceland to consumers.
2 Like-for-like sales system sales are defined as system sales from stores that were opened before 27 December 2015 and have not been impacted by donating territory to a new store (‘Split’), compared to the corresponding 52-week period in the prior year.
3 Underlying performance measures are defined as statutory performance measures excluding amounts relating to and discontinued operations and non – underlying items.
4 Non-underlying items are defined as being items that are material in size, unusual or infrequent in nature, and are disclosed separately as non-underlying items in the notes to the accounts.

For further information, please contact:

For Domino’s Pizza Group plc:
Peregrine Riviere
07909 907193

Maitland:
Clinton Manning
020 7395 0473 or 07711 972662
Sam Cartwright
020 7395 0415 or 07827 254561

A presentation for analysts and investors will be held at 9.00am this morning at the offices of Maitland, 13 King’s Boulevard, London N1C 4BU. A webcast of the presentation will also be available at http://www.investis-live.com/dominos/5a8ed0d2f10c5e0d0045ef20/okuj.

Alternatively, a listen-only call facility is available as follows:

Participant dial-in numbers

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                                   020 3936 2999

All other locations

                             + 44 20 3936 2999

 

Participant Access Code
688671

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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, Luxembourg and Liechtenstein. In addition, we have a controlling stake in the holders of the Domino’s master franchise agreements in Iceland, Norway and Sweden, as well as an associate investment in Germany. As at 31 December 2017, we had 1,192 stores across six markets, including 1,045 stores in the UK.

For photography, please visit the media centre at corporate.dominos.co.uk, contact the Domino’s press office on +44 (0)1908 580654, or call Maitland on +44 (0)20 7379 5151.

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