6
August 2024
LEI: 213800Q6ZKHAOV48JL75
Domino's Pizza Group Plc -
Half year results for the 26 weeks ended 30 June
2024
Positive trading momentum in
Q2
London corporate stores disposal complete and new £20m share
buyback
|
|
H1
241
|
H1
231
|
% change
|
|
System sales2
|
£767.7m
|
£766.4m
|
+0.2%
|
|
Total orders
|
35.1m
|
35.4m
|
(0.9)%
|
|
Group revenue
|
£326.8m
|
£332.9m
|
(1.8)%
|
|
Underlying*,3
EBITDA
|
£69.0m
|
£68.7m
|
+0.4%
|
|
Underlying*,3 profit
before tax
|
£51.3m
|
£50.9m
|
+0.8%
|
|
Statutory profit before
tax
|
£59.4m
|
£91.5m
|
(35.2)%
|
|
Underlying*,3 basic
EPS
|
9.8p
|
9.5p
|
+3.2%
|
|
Statutory basic EPS
|
10.7p
|
19.3p
|
(44.6)%
|
|
Interim dividend per
share
|
3.5p
|
3.3p
|
+6.1%
|
*
Underlying excludes a profit of £40.6m in H1 23 from the disposal
of the German associate and a £11.2m profit on disposal of
corporate stores, Shorecal acquisition costs of £2.2m and
amortisation of intangible assets of £1.0m in H1 24. For EPS, this
also excludes the non-underlying tax charge of £4.5m.
Commenting on the results, Andrew Rennie, CEO
said:
"Following a slow start to the year, we now have good
momentum in the business with our strategic initiatives gaining
traction and our trading performance accelerating steadily against
strong comparatives from last year. In Q2 we grew orders, with a
notable improvement from the middle of May and importantly have
halted the trend of declining delivery orders. These are now
returning to growth and this momentum has continued through June
and July, helped by a good performance through the Men's Euro
Football tournament."
"We're executing well in an uncertain market thanks to our
unrelenting focus on brilliant value, quality and service for our
customers. Our average delivery time is now 24 minutes, which
creates even better value for our customers. We have continued to
support the growth of the system through passing on food cost
deflation to our franchise partners."
"In our core UK & Ireland business, we see significant
opportunity for further growth through opening new stores, an
exciting new loyalty trial to drive frequency and a focus on value
and service, especially in the delivery channel. There is alignment
with our franchise partners and tangible energy across the system
to capitalise on this opportunity."
"We continue to operate a capital light business and are
moving towards our goal of building a larger and more profitable
business for our shareholders, franchise partners and
colleagues."
Financial highlights
·
Group revenue down 1.8% with lower supply chain
revenue offset by increased corporate store revenue following the
acquisition of Shorecal
·
Underlying EBITDA up 0.4% at £69.0m. Excluding
the £2.3m gain on sale of freehold property in H1 23, Underlying
EBITDA is up 3.9%
·
Underlying profit before tax up 0.8% to £51.3m,
with higher interest costs offset by lower amortisation
·
Statutory profit before tax of £59.4m after
including £8.1m of non-underlying items
·
Interim dividend of 3.5p per share, up
6.1%
·
Net Debt4 of £285.4m and a leverage
ratio of 2.16x, within our target Net Debt / EBITDA leverage range
of 1.5x - 2.5x
·
Issuance of new £100m 5.97% USPP notes due in
2034. Supports reduced utilisation of RCF, which has a higher
interest rate, and extends the debt maturity profile
·
New £20m buyback programme reflecting confidence
in future prospects
·
In line with strategy to recycle capital,
disposal of London corporate store estate now complete.
305 stores sold to five different franchise partners for
a total consideration of £35.1m, of which £17.3m was received by 30
June 2024
Operational and strategic highlights
·
H1 24 total orders of 35.1m, down 0.9% vs. H1 23,
with collection orders up 2.4% and delivery orders down 2.6%. On a
comparable basis6, total orders were down
0.1%
·
Improved trading momentum in Q2 24, highlighting
the growing traction of our strategic initiatives
o On a comparable basis6 Q2 24 total orders up 0.6%
and up 0.1% on a reported basis
o On a comparable basis6 Q2 24 delivery orders up
1.1% after ten consecutive quarters of declining volumes. Delivery
orders flat on a reported basis in Q2 24
·
Sustainable growth in H1 24 franchisee EBITDA per
store, £81k, +6.6% vs. H1 23, despite impact of large minimum wage
increase
·
22 new store openings vs. 29 in H1 23.
Acceleration in H2 24 openings with 4 so far vs. 1 in the same
period last year, pipeline remains strong, with 38 stores in
construction or planning approved. In a slower planning
environment, we are still expecting to exceed FY23 store openings
with a target of 70 new stores in FY24
·
Outstanding service improvements with Q2 24
average delivery times of 24 minutes, a one-minute improvement on
Q1 24, as a result of intense operational focus from our franchise
partners
·
Continued digital progress with growth in app
customers and orders
o 9.5m active app customers, up 17% vs H1 23 with app orders as
a percentage of online orders at 77.6% (+2.4ppts vs.Q2
23)
o Following encouraging results in first loyalty test phase,
now moving to second phase of loyalty trial with c.630k
customers
·
Decision taken to permanently roll out on the
Uber Eats platform following extensive data-led trial which
attracted incremental customers and orders
Current trading, outlook and guidance
The growing traction of our
strategic initiatives drove improved trading momentum from the
middle of May, through June and July. Q2 orders were back in growth
and also benefitted from the return to growth in delivery orders
following ten consecutive quarters of decline. Total orders in July
were up 5.8%6 on a comparable basis, with a good
contribution from the Euros.
In March 2024 we guided that FY24
Underlying EBITDA would be in line with market expectations, and
that we did not expect Shorecal to make a significant contribution
to FY24's performance. As announced, the Shorecal acquisition
completed sooner than originally anticipated and investment costs
are lower than planned. Consequently, we now expect Shorecal to
contribute c.£5m to FY24 Underlying EBITDA.
Whilst we anticipated some food cost
deflation in FY24, we are now planning to pass on a greater level
in H2 to our franchise partners as we continue to deliver value
offers for customers, underpin the strength of the system and drive
long-term growth. We expect our recent momentum to continue.
However, given the slower start to H1 and the greater pass-through
of food costs to franchise partners, we now expect FY24 Underlying
EBITDA, including the contribution from Shorecal, to be towards the
lower end of the current range of market
expectations7.
Despite the uncertain market, we are
confident we will maintain our trading momentum into H2 24 as we
continue to execute on our strategic initiatives and expect to
deliver growth in both order count and like-for-like sales in
FY24.
Our technical guidance for FY24 is
as follows:
·
No benefit to underlying profit from the sale of
property (£2.3m benefit in H1 23)
·
Shorecal expected to contribute c.£5m to
Underlying EBITDA
·
Underlying depreciation & amortisation of
between £18m to £20m
·
Underlying interest costs (excluding foreign
exchange movements) in the range of £17m to £20m
·
Estimated underlying effective tax rate of
c.24.5% for the full year
·
Capital investment of c.£20m
·
Net Debt at year-end between £250m and
£270m
Contacts
For
Domino's Pizza Group plc:
Investor Relations
Will MacLaren, Head of Investor
Relations +44 (0) 7443 192 118
Media:
Tim Danaher, Abbie Sampson -
Brunswick +44 (0) 207 404 5959
Results meeting
A results meeting and Q&A for
investors and analysts will be held at 09:30 BST today. The webcast
and presentation can be accessed by
here and will also be available on the
Results, Reports and Presentations page of our corporate
website.
In addition, we will replay the
webcast and Q&A at 16:00 BST today for North American based
investors not able to join the live presentation at 09:30 BST this
morning. Please click
here to register.
About Domino's Pizza Group ("DPG")
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 and the Republic of Ireland. As of 5
August 2024, we had 1,344 stores in the UK and Ireland.
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.
Notes
1.
H1 24 is 26 weeks ended 30 June 2024. H1 23 is 26 weeks ended 25
June 2023.
2.
System sales represent the sum of all sales made by both franchised
and corporate stores to consumers in UK & Ireland. These are
excluding VAT.
3.
Underlying is defined as statutory performance excluding
discontinued operations, and items classified as non-underlying
which includes significant irregular costs, significant impairments
of assets, together with fair value movements and other costs
associated with acquisitions and disposals as set out in note 4 to
the financial information. Underlying excludes a profit of £40.6m
in H1 23 from the disposal of the German associate and a £11.2m
profit on disposal of corporate stores, Shorecal acquisition costs
of £2.2m and amortisation of intangible assets of £1.0m in H1 24.
For EPS, this also excludes the non-underlying tax charge of
£4.5m.
4.
Net Debt is defined as the bank revolving facilities, private
placement facilities, cash and cash equivalents and other loans,
including balances held in disposal groups held for
sale.
5.
30 London corporate stores sold to five different franchise
partners. One London corporate store was closed due to a compulsory
purchase order issued by the local council.
6.
FY23 was a 53-week year, so the comparator weeks between H1 23 and
H1 24 are different. H1 23 included Boxing Day and New Year's Eve,
whereas these two important trading days did not fall into H1 24.
The comparable basis adjusts for this difference, by comparing week
1-13 in Q1 24 with weeks 2-14 in Q1 23, and weeks 14-26 in Q2 24
with weeks 15-27 in Q2 23.
7.
Current mean of FY24 Underlying EBITDA expectations: range of
£144.3m - £149.2m, with a mean of £147.1m. Based on 8 analysts'
forecasts.
Performance summary
H1 24 system sales were up 0.2% to
£767.7m and on a comparable basis, H1 24 like-for-like sales,
excluding splits and VAT, were down 0.5% against tough comparators
in the prior year. As previously reported, Q1 24 and April were
challenging driven by a slower delivery market and by the tactical
holdback of marketing spend, particularly in January. Q2 orders
were back in growth highlighting the growing traction of our
strategic initiatives.
H1 24 Underlying EBITDA was £69.0m,
up 0.4% compared to H1 23, with lower supply chain EBITDA, due to
the pass-through of food costs, more than offset by the
contribution from Shorecal and lower technology platform
costs.
Underlying profit before tax was
£51.3m, up 0.8% compared to H1 23 as lower amortisation charge of
£1.3m was largely offset by increased finance costs.
Statutory profit before tax was
£59.4m after £8.1m of non-underlying items, of which £11.2m relates
to the profit on disposal of corporate stores offset by £2.2m of
acquisition costs and £1.0m amortisation of acquired intangible
assets.
Free cash flow generated by the
business was £30.5m in H1 24, a decrease from £56.2m in H1 23
driven by a working capital outflow, which is mostly expected to
reverse in H2 24, and increased taxation.
Net Debt increased by £52.6m from
the start of FY24 to £285.4m due to the acquisition of Shorecal and
the investment in DP Poland Plc with Net Debt/EBITDA leverage of
2.16x (excluding IFRS 16) within our target Net Debt / EBITDA
leverage range of 1.5x - 2.5x.
The performance of the business
means that, in line with our capital allocation framework, we will
pay an interim dividend of 3.5p, a 6.1% increase compared to the
prior year.
As a result of our confidence in
future prospects, a new £20m share buyback programme will commence
with immediate effect.
Good strategic progress in the core UK & Ireland
business
In March 2024, we outlined our goal
to further sharpen our execution across all areas of the business
to give our customers better service and better value. We laid out
four strategic priorities to achieve this and are pleased that we
have made progress against each one.
1. Franchisee
profitability
We were clear at the start of FY24
that a priority this year was to work with our franchise partners
to help improve their store profitability. Despite some
inflationary pressures, particularly in labour costs, our franchise
partners were able to further increase their profitability in H1
24. Based on the unaudited data submitted to us by our franchise
partners, average store EBITDA for all UK stores in H1 24 was
approximately £81k, equivalent to a 14% EBITDA margin. This is a
6.6% increase on H1 23 when average store EBITDA was £76k with a
13% EBITDA margin and a 15.7% increase on H1 19.
Since reaching our resolution with
our franchise partners in December 2021, when we set out how we
would work together with aligned objectives, we have both made
material progress. DPG has invested over £20m in upgrading the
technology infrastructure as well as providing new store incentives
and drive the growth of the system. We have fully rolled out on
Just Eat and Uber Eats, service has materially improved and great
value has been delivered to customers through successful national
value campaigns to drive our sales growth. This alignment and
momentum has also driven improved franchise partner and DPG
profitability.
As we approach the end of the
three-year memorandum of understanding we are more aligned than
ever with our franchise partners and are working constructively
with them to put in place a new long-term agreement. We look
forward to providing an update in due course.
2. Value for
money
Offering customers value for money
is essential in the current environment. We define 'value' as the
quality of the product, combined with the service and image,
divided by price. In H1 24 we partnered with our franchise partners
to offer a range of compelling offers across the period with a
combination of £8 / £10 / £12 deals for small, medium and large
pizzas as well as 50% off the app and 40% off the web deals. In
April 2024 we launched our £4 lunch offer providing an incremental
opportunity to target different parts of the day. Early results
have been encouraging.
Our customer service stepped up
again in H1 24 with continued improvements through the period.
Average delivery times in Q2 24 reduced by one minute from Q1 24 to
24 minutes and the percentage of deliveries on time improved
relative to H1 23. Our franchise partners are benefiting from the
full roll out of our enhanced GPS solution to all stores in FY23 as
well as extensive national training programmes. GPS helps stores
manage labour through more efficient driver route planning and
better co-ordination with the store. It also enables customers to
see exactly where their order is and provides an accurate delivery
time.
Offering new products to our
customers is essential and we made excellent progress with
innovation in H1 24. The highlight of the period was our Domino's
cookie with Cadbury's Crème egg which sold out within two weeks of
launch, but we were able to bring it back by popular demand for
Easter, generating high incremental sales of desserts. Our £4 lunch
range now includes pizzas, wraps, fries and smaller portions of
chicken or cookies. We have designed our 'Cheeky Little Pizzas' to
be under 600 calories and wraps to be under 450 calories, meeting
consumer needs for lighter options at lunch. We also launched our
Ultimate Carbonara and Ultimate Lasagne pizzas which contributed to
sales in February and March, as well as our Ultimate Cheesy Garlic
bread which was so well received it is now permanently on the menu.
Our innovation pipeline continues to build under our outstanding
innovation team and we look forward to bringing these great
products to our customers.
3.
Digital
The Domino's app continues to be the
key driver of our digital growth strategy because app customers
yield higher sales and have a higher average order frequency than
those who only use the website. The app is expected to be a
material contributor to future system sales growth, and driving
more orders through the app is a key focus in FY24. Orders placed
on our app, as a percentage of total online orders, were 77.6% in
H1 24, an increase of 2.4ppts vs. Q2 23 and the number of active
app customers was 9.5m, an increase of 17% compared to H1
23.
The primary opportunity for DPG is
increasing our customers' average order frequency over time.
Currently, our customers order on average 4.3 times a year. We are
focused on leveraging our c.13.5m customer base and combined with
advancements in our technology platform, we are now able to
interact with our customers and tailor offers in a far more
targeted and compelling way.
We have made good progress in our
approach to introducing a loyalty programme. With an active
customer base of c.13.5m customers it is important that this is
executed in a disciplined, structured, and profitable way. As
previously communicated, we undertook the first phase of our
testing in Q1 24 with a small set of customers. Following
encouraging results, we are now moving to the second, more
advanced, trial stage with c.630k customers. Pending the success of
this stage, we will assess the optimal structure for a loyalty
programme for a potential 2025 launch.
4.
Convenience
New store openings are a core driver
of growth and we are clearly under-penetrated compared to
competitors in the UK and also other Domino's systems. At the start
of the year, we undertook a detailed review of the growth potential
in the UK and Ireland. Using this updated analysis, we have
identified opportunities across new territories as well as
splitting existing geographies. More importantly, our franchise
partners are hungry for growth and have exceptional
second-generation talent who want to grow their businesses. There
is a significant opportunity to build our scale further and we have
targets to have in excess of 1,600 stores by 2028 and 2,000 stores
by 2033 in the UK and Ireland.
In H1 24 we opened 22 new stores
with 15 different franchise partners. We will continue to open
stores in virgin territories and to focus on splits where
appropriate but there is also a heightened focus on smaller address
count territories. These have limited competition, and our strong
national brand is a significant competitive advantage. In H1 24, 11
of the new store openings were in virgin territories and are
trading ahead of expectations. The overall pipeline is strong for
FY24 with a further 38 stores in construction or planning approved.
In a slower planning environment, we are still expecting to exceed
FY23 store openings with a target of 70 new stores this
year.
In January 2024 DPG started a trial
on Uber Eats across UK and Ireland. The data-led trial enabled
customers to order Domino's Pizza via the Uber Eats platform, but
the pizzas are delivered by our own Domino's delivery drivers.
Following the successful trial which delivered incremental
customers and orders, we have decided to roll out on Uber Eats on a
permanent basis across UK & Ireland. Presence on Uber Eats
complements our existing partnership with Just Eat. Presence on
both platforms is additive with Uber performing well in London, the
South and major city centre locations.
Additional growth opportunities
Alongside investment in the core UK
& Ireland business, which remains our top priority, we have
continued to focus on reallocation of capital within the corporate
estate and joint ventures to improve returns and also to assess
additional growth opportunities.
We have now completed the disposal
of our corporate stores in London to a select number of new and
existing franchise partners for a total consideration of £35.1m. We
also acquired full control of Shorecal on 10 April 2024 which will
unlock a significant opportunity for us in Ireland and we are now
in an even stronger position to accelerate our growth, open new
stores, and provide great service and great tasting products to our
customers. Finally, in April 2024, we completed a £11m investment
in DP Poland plc ("DPP") and as a result, DPG owns approximately
12.1% of DPP's issued share capital. This represented a unique
opportunity to re-enter international markets in a disciplined,
capital-light manner with a high-performing business, operated by
an experienced management team.
We will continue to assess
value-enhancing opportunities to drive earnings growth and build a
larger and more cash-generative business. We have a strong pipeline
of opportunities which we are evaluating in a disciplined way at
pace.
Capital allocation
As we accelerate our growth, we have
continued to apply our four-point capital allocation framework,
introduced in March 2021, to deploy the cash generated by the
business. Investment to drive core growth in the business remains
our number one priority and we invested £7.1m in H1 24. This
included the development of our supply chain centre in Ireland and
investment in our digital and technology infrastructure.
In line with our commitment to pay a
sustainable and progressive dividend, we have declared an interim
dividend of 3.5p per share, an increase of 6.1% on the prior
year.
The third pillar of our capital
allocation framework is investing in additional growth
opportunities, as outlined above.
Finally, operating within a
normalised leverage range of 1.5x - 2.5x net debt to Underlying
EBITDA, we remain committed to returning any surplus cash to
shareholders. As a result of confidence in future prospects, we
have announced a new £20m buyback, effective immediately. Since
March 2021, we have announced £461m of shareholder returns
comprising £185m in dividends and £276m in share
buybacks.
Delivering our sustainable future
In the first half of 2024, we made
significant strides in our sustainability journey at Domino's,
achieving several firsts for the Group. We published our inaugural
sustainability report outlining our short to mid-term ambitions and
our 2023 progress. Our first nutrition policy was developed,
underpinning our efforts to offer a more balanced range of choices
and provide clear nutritional information to customers. We also
began executing our first Carbon Reduction glide path, addressing
scopes one, two, and three emissions. Renewable energy played a key
role in our progress, as we went live with newly installed solar
panels across three supply chain centres.
In another milestone, we celebrated
our first female Home-Grown Hero, Lucy Harman, a former store
manager, who opened her own store in Hayling Island. These
accomplishments represent important steps forward in our ongoing
commitment to sustainability and achieving our corporate purpose of
delivering a better future through food people love.
H1
24 trading review
System sales represent all sales
made by both franchised and corporate stores to consumers. Total
system sales were £767.7m, up 0.2% on H1 23. On a comparable basis,
like-for-like system sales across UK & Ireland were down 0.5%,
excluding split stores and the different VAT rate in Ireland. The
quarterly analysis of this performance is in the table
below.
|
UK &
ROI
|
Q1
2024
|
Q2
2024
|
H1
2024
|
Q1
2023
|
Q2
2023
|
H1
2023
|
|
Reported LFL exc.
splits1 and exc. VAT2
|
(2.1)%
|
(0.8)%
|
(1.5)%
|
10.7%
|
8.6%
|
9.7%
|
|
LFL exc. splits1 and
exc. VAT2 on a comparable basis3
|
(0.5)%
|
(0.5)%
|
(0.5)%
|
-
|
-
|
-
|
1.
Like-for-like (excluding splits) system sales performance is
calculated for UK & Ireland against a comparable 52-week period
in the prior period for mature stores which were not in territories
split in the current period or comparable period. Mature stores are
defined as those opened prior to 26th December 2022.
2.
In Ireland, the VAT rate for hot takeaway food reduced from 13.5%
to 9% on 1 November 2020 and reverted to 13.5% on 1 September
2023.
3.
FY23 was a 53-week year, so the comparator weeks between H1 23 and
H1 24 are different. H1 23 included Boxing Day and New Year's Eve,
whereas these two important trading days did not fall into H1 24.
The comparable basis adjusts for this difference, by comparing week
1-13 in Q1 24 with weeks 2-14 in Q1 23, and weeks 14-26 in Q2 24
with weeks 15-27 in Q2 23.
Total orders in H1 24 declined by
0.9%. This was driven by a 2.4% growth in collection orders, offset
by a 2.6% decline in delivery orders. Importantly, we saw a
meaningful improvement in delivery orders in Q2 24, where orders
returned to growth on a comparable basis after ten consecutive
quarters of decline. This was driven by close collaboration with
our franchise partners to drive greater value in the channel and by
offering customers even better service. Collections continued to
show growth throughout H1 24. Collection represents the most
efficient labour channel, with delivery effectively outsourced to
the customer.
|
UK &
ROI
|
Total4
|
Total (All Stores)
|
|
System
sales
|
Volume
|
Price
|
Orders (m)
|
YOY Order Growth on a reported basis
|
YOY Order Growth on a comparable basis
|
|
Total
|
|
|
|
|
|
|
|
Q1
|
(0.4)%
|
(3.1)%
|
2.7%
|
17.7m
|
(1.8)%
|
(0.8)%
|
|
Q2
|
0.7%
|
(1.9)%
|
2.6%
|
17.4m
|
+0.1%
|
+0.6%
|
|
H1
|
0.2%
|
(2.5)%
|
2.7%
|
35.1m
|
(0.9)%
|
(0.1)%
|
|
|
|
|
|
|
|
|
|
Delivery only
|
|
|
|
|
|
|
|
Q1
|
(1.8)%
|
(4.3)%
|
2.5%
|
11.5m
|
(5.0)%
|
(3.9)%
|
|
Q2
|
0.9%
|
(1.6)%
|
2.5%
|
11.1m
|
0.0%
|
+1.1%
|
|
H1
|
(0.5)%
|
(3.0)%
|
2.5%
|
22.6m
|
(2.6)%
|
(1.5)%
|
|
|
|
|
|
|
|
|
|
Collection only
|
|
|
|
|
|
|
|
Q1
|
4.5%
|
0.8%
|
3.7%
|
6.2m
|
+4.7%
|
+5.5%
|
|
Q2
|
0.2%
|
(2.6)%
|
2.8%
|
6.3m
|
+0.2%
|
(0.3)%
|
|
H1
|
2.3%
|
(0.9)%
|
3.2%
|
12.5m
|
+2.4%
|
+2.5%
|
4.
Total system sales, volume and price shown on a reported basis. In
prior years, this table has been shown on a LFL basis. Going
forwards this will now be shown a on total sales and orders
basis.
Financial review
·
Underlying EBIT of £60.1m, an increase of £1.6m
vs. H1 23, predominantly driven by £1.3m of lower amortisation
costs.
·
Statutory profit after tax of £42.3m, down from
£80.2m in H1 23 largely due to the prior period including a £40.6m
gain on disposal of the German associate in non-underlying
results
·
Underlying free cash flow decreased by £25.7m to
an inflow of £30.5m, due to a decrease in working capital of £10.7m
and higher corporation tax payments of £15.2m.
·
Overall net debt increased by £52.6m as a result
of the £48.7m acquisition of Shorecal and the £11.4m investment in
DP Poland, partially offset by the £17.3m proceeds from the
disposal of 14 London corporate stores.
·
Interim dividend of 3.5p per share to be paid on
27 September 2024 to shareholders on the register as at 16 August
2024.
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
|
Group Revenue
|
326.8
|
332.9
|
|
Underlying EBIT before contribution of
investments
|
58.9
|
56.8
|
|
Contribution of
investments
|
1.2
|
1.7
|
|
Underlying EBIT
|
60.1
|
58.5
|
|
Underlying net finance
costs
|
(8.8)
|
(7.6)
|
|
Underlying profit before tax
|
51.3
|
50.9
|
|
Underlying tax charge
|
(12.6)
|
(11.3)
|
|
Underlying profit after tax
|
38.7
|
39.6
|
|
Non-underlying items
|
3.6
|
40.6
|
|
Statutory profit after tax
|
42.3
|
80.2
|
|
|
|
|
|
EBITDA reconciliation
|
|
|
|
Underlying EBITDA
|
69.0
|
68.7
|
|
Depreciation, amortisation and
impairment
|
(8.9)
|
(10.2)
|
|
Underlying EBIT
|
60.1
|
58.5
|
Underlying EBITDA increased by £0.3m
to £69.0m. Depreciation and amortisation reduced by £1.3m, which
led to an overall increase in Underlying EBIT of £1.6m, from £58.5m
to £60.1m. Statutory profit after tax decreased to £42.3m from
£80.2m, primarily due to the profit on disposal of the investment
in the German associate which was treated as a non-underlying item
in FY23.
Reported Revenue
Our key metric for measuring the
revenue performance of the Group is system sales, rather than our
Group revenue. System sales are the total sales to end customers
through our network of stores, for both franchise partners and
corporate stores. Our Group revenue consists of food and non-food
sales to franchise partners, royalties paid by franchise partners,
contributions into the National Advertising Fund ('NAF') and
ecommerce funds, rental income and end-customer sales in our
corporate stores.
Within our Group revenue, the
volatility of food wholesale prices, together with the combination
of different revenue items, means that analysis of margin generated
by the Group is less comparable than an analysis based on system
sales. We consider that system sales provide a useful alternative
analysis over time of the health and growth of the
business.
Reported system sales in the period
were £767.7m, up 0.2% from H1 23.
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
|
Supply chain revenue
|
217.6
|
235.7
|
|
Royalty, rental & other
revenue
|
40.6
|
41.9
|
|
Corporate stores
revenue
|
26.2
|
16.4
|
|
NAF & ecommerce
|
42.4
|
38.9
|
|
Total
|
326.8
|
332.9
|
Reported revenue decreased by £6.1m
to £326.8m, primarily driven by a decrease in supply chain revenue
as a result of reduction in food costs, which are passed through to
our franchise partners.
Royalty, rental and other revenues
primarily relate to the royalty revenue we receive from our
franchise partners based on a percentage of system sales and rental
income. This decreased by £1.3m driven by rental and other
revenues.
Revenue for our directly operated
corporate stores increased by £9.8m due to the acquisition of
Shorecal on 10 April 2024. NAF and ecommerce revenue was up £3.5m
due to increased spend in the period, as revenue is recognised
based on costs incurred at nil profit.
Underlying earnings before interest and
taxation
Underlying EBITDA remained broadly
flat, increasing by £0.3m to £69.0m, as the benefit from the
acquisition of Shorecal of £2.1m and reduced technology costs of
£1.8m were offset with reduced profit from trading of £1.5m,
largely as a result of food price decreases, and due to a profit of
£2.3m recognised in H1 23 relating to a sale of freehold
property.
Underlying EBIT increased by £1.6m
to £60.1m, as a result of decreased amortisation relating to the
old eCommerce platform.
Technology platform costs
|
H1 FY24
|
EBITDA
£m
|
Amortisation and impairment
£m
|
Profit
before
tax
£m
|
Capital expenditure £m
|
|
ERP
|
(3.5)
|
-
|
(3.5)
|
-
|
|
eCommerce platform
|
-
|
(0.7)
|
(0.7)
|
-
|
|
Total
|
(3.5)
|
(0.7)
|
(4.2)
|
-
|
|
H1 FY23
|
EBITDA
£m
|
Amortisation and impairment
£m
|
Profit
before
tax
£m
|
Capital expenditure £m
|
|
ERP
|
(3.7)
|
(0.7)
|
(4.4)
|
-
|
|
eCommerce platform
|
(1.6)
|
(0.3)
|
(1.9)
|
(2.9)
|
|
Total
|
(5.3)
|
(1.0)
|
(6.3)
|
(2.9)
|
During the half, we continued to
develop and implement two new cloud-based IT systems, an ecommerce
platform and an ERP system.
These projects will enable us to
capture growth in the future and drive further efficiencies. The
ecommerce platform costs are part of the growth investment
framework agreed with our franchise partners in December
2021.
The total costs recognised in
underlying profit before tax relating to these projects was
£4.2m.
Within EBITDA, costs of £3.5m have
been recognised which relate to the ERP. These represent costs
spent on development of these assets, which are expensed through
the income statement rather than capitalised as intangible assets,
as they relate to cloud platforms. This represents the full spend
on the project in the year to date.
Within amortisation, a total cost of
£0.7m which relates to the ecommerce platform.
The deployment of ERP will now run
until FY25 as we will pause the roll-out towards the end of FY24
during our peak trading season.
Interest
Net underlying finance costs in the
period were £8.8m, an increase of £1.2m. The increase in finance
costs is as a result of increased net debt which is outlined
further below. During the period the Group increased its debt
facilities with an additional £100m in Private Placement Loan Notes
due in 2034 at a fixed rate of 5.97%. The Group now has combined
debt facilities available of £500m (H1 23: £400m).
Taxation
The underlying effective tax rate
for 2024 was 24.6% (H1 23: 22.2%) The increase in the effective tax
rate is due to an increased tax charge relating to transfer pricing
between our UK and Irish subsidiaries, together with the prior year
reflecting a lower rate of UK corporation tax which increased to
25% effective April 2023.
Profit after tax and non-underlying items
Underlying profit after tax was
£38.7m, a decrease from £39.6m in H1 23 mainly due to a £1.2m
increase in net finance costs and a £1.3m increase in taxation as
outlined above.
Statutory profit after tax was
£42.3m, a decrease of £37.9m. In H1 24, a non-underlying profit
after tax of £3.6m has been recognised. This includes a £11.2m
profit on disposal of the corporate stores offset with Shorecal
acquisition costs of £2.2m, amortisation on reacquired rights of
£1.0m and taxation of £4.5m.
In H1 23, the Group incurred a
£40.6m profit on disposal of the investment in the German associate
which was classified under non-underlying.
Earnings per share
Underlying basic EPS increased to
9.8p as a result of the lower number of weighted average shares due
to the share buyback programme. Statutory EPS decreased to 10.7p
from 19.3p, largely due to the profit on disposal of the German
associate in H1 23.
Free cash flow and Net debt
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
|
Underlying EBITDA
|
69.0
|
68.7
|
|
Add back non-cash items
|
|
|
|
- Contribution of
investments
|
(1.2)
|
(1.7)
|
|
- Other non-cash items
|
0.7
|
(1.0)
|
|
Working capital
|
(10.7)
|
10.2
|
|
IFRS 16 - net lease
payments
|
(3.3)
|
(3.1)
|
|
Dividends received
|
1.2
|
1.8
|
|
Net interest
|
(7.8)
|
(7.1)
|
|
Corporation tax
|
(15.2)
|
(11.6)
|
|
Free cash flow before non-underlying cash
items
|
32.7
|
56.2
|
|
Non-underlying cash
|
(2.2)
|
-
|
|
Free cash flow
|
30.5
|
56.2
|
|
Capex
|
(7.1)
|
(11.3)
|
|
Repayment from German
associate
|
-
|
9.3
|
|
Acquisitions and
disposals
|
(42.5)
|
70.6
|
|
Disposal of property, plant and
equipment
|
-
|
4.4
|
|
Dividends
|
(28.1)
|
(28.3)
|
|
Share transactions -
Buybacks
|
(6.2)
|
(17.1)
|
|
Share transactions - EBT share
purchase
|
0.3
|
(1.9)
|
|
Movement in net debt
|
(53.1)
|
81.9
|
|
Opening net debt
|
(232.8)
|
(253.3)
|
|
Movement in capitalised facility
arrangement fee
|
0.4
|
(0.3)
|
|
Forex on net debt
|
0.1
|
0.3
|
|
Closing net debt
|
(285.4)
|
(171.4)
|
|
Last 12 months net debt/Underlying EBITDA ratio (excl. IFRS
16)
|
2.16x
|
1.33x
|
Net debt increased by £52.6m during
the period to £285.4m, with free cash flow generated of £30.5m and
£17.3m received from the disposal of 14 London corporate stores.
This was offset with £48.7m cash paid on the acquisition of
Shorecal and £11.4m on the Investment in DP Poland. Capital
expenditure of £7.1m was incurred and returns to shareholders
through dividends of £28.1m and share buybacks of £6.2m.
Free cash flow of £30.5m is a
decrease of £25.7m on H1 23. Underlying EBITDA was £69.0m, an
increase of £0.3m as outlined above.
There was a working capital outflow
of £10.7m (H1 23: inflow of £10.2m). This predominantly relates to
decreases in overall accruals and accrued income of £8.3m, an
increase in the NAF debtor of £2.6m, an outflow of £0.8m relating
to Shorecal and an outflow of £2.6m relating to timing of payroll
taxes and corporate stores payroll. This was offset by decreases in
inventory of £3.0m due to seasonal levels from year end. These
movements largely offset the working capital outflow reported in
FY23 and are expected to mostly reverse in H2 24.
Net IFRS 16 lease payments increased
by £0.2m to £3.3m. Dividends received of £1.2m include £1.0m from
our associates and joint ventures and £0.2m from our investment in
Shorecal prior to acquisition.
Net interest payments of £7.8m
increased from £7.1m as a result of increased net debt due to the
reasons outlined above.
Non-underlying payments of £2.2m
were made during the year, which predominately relate to
transaction costs on the acquisition of Shorecal.
Capital expenditure decreased to
£7.1m. Of this amount, £1.2m relates to development and expansion
of our supply chain centre in Ireland and £2.7m relates to total
investment in digital and ecommerce development.
Acquisitions and disposals of £42.5m
includes £48.7m on the acquisition of Shorecal, of which £16.3m
relates to the repayment of debt on acquisition. The Group invested
£11.4m for a 12% investment in DP Poland plc. This is offset by the
£17.3m in proceeds received on the disposal of 14 London corporate
stores. In H1 23, the Group received £79.9m for the disposal
of the German associate, of which £70.6m related to the disposal of
the investment and £9.3m related to the repayment of a
loan.
Dividends paid of £28.1m relates to
the final FY23 dividend paid in May 2024. In addition, the
remaining £6.2m outstanding balance of the £70m share buyback
programme announced in August 2023 was completed in H1
24.
Capital employed and balance sheet
|
|
At 30 June
2024
£m
|
At 31 December 2023
£m
|
|
Intangible assets
|
103.3
|
28.8
|
|
Property, plant and
equipment
|
99.2
|
97.6
|
|
Investments, associates and joint
ventures
|
37.3
|
35.5
|
|
Deferred consideration
|
-
|
0.3
|
|
Right-of-use assets
|
20.6
|
19.3
|
|
Net lease liabilities
|
(22.4)
|
(21.6)
|
|
Provisions
|
(4.7)
|
(3.8)
|
|
Working capital
|
(38.0)
|
(44.9)
|
|
Net debt
|
(285.4)
|
(232.8)
|
|
Tax
|
(12.1)
|
(6.3)
|
|
Share buyback
obligations
|
-
|
(6.1)
|
|
Held within assets and liabilities
held for sale
|
6.9
|
-
|
|
Net liabilities
|
(95.3)
|
(134.0)
|
Intangible assets increased by
£74.5m to £103.3m, which includes additions of £86.3m relating to
the acquisition of Shorecal of which £63.9m relates to Goodwill and
£22.4m in reacquired rights. Goodwill of £5.9m was disposed of as
part of the London Corporate stores disposal with an additional
£5.8m reclassified as assets held for sale.
Property, plant and equipment
increased by £1.6m to £99.2m of which £2.9m was acquired on the
acquisition of Shorecal. Property, plant and equipment with a
carrying value of £0.8m were disposed of as part of the London
Corporate stores disposal with an additional £1.5m reclassified as
held for sale. Other additions of £4.3m were largely offset with
depreciation of £3.0m incurred during the period.
Investments, associates and joint
ventures increased by £1.8m, as the acquisition of the 12% share in
DP Poland of £11.9m was largely offset with the derecognition of
the Shorecal investment of £10.0m, with £0.4m increases in other JV
and associate balances. The investment in DP Poland is treated as a
fair value through other comprehensive income investment, and the
initial cost of £11.4m was revalued upwards by £0.5m in the period,
with the movement recognised in reserves.
Right-of-use assets of £20.6m
represent the lease assets for our corporate stores both in the UK
and Ireland, warehouses and equipment leases recognised under IFRS
16 in the current period. The net lease liability is £22.4m. The
lease portfolio has increased as a result of the acquisition of
Shorecal which has been partially offset by the disposal of the
London Corporate stores.
The net working capital liability
has decreased from £44.9m to £38.0m as a result of the factors
outlined in the cash flow section above.
Assets and liabilities held for sale
of £6.9m relate to the remaining corporate stores which have been
sold in July 2024. This is expected to generate an additional
profit on disposal before tax, net of closure costs, of
£8m-£10m.
Total equity has increased by
£38.7m, to a net liability position of £95.3m, largely due to the
profit after tax generated of £42.3m, the share premium recognised
on the Shorecal acquisition share issue of £22.3m, offset with
dividend payments.
Treasury management
The Group holds £500m in debt
facilities, of which £200m relates to an unsecured multi-currency
revolving credit facility and £300m relates to US Private placement
loan notes. The revolving credit facility expires in July 2027, and
of the US Private Placement loan notes, £200m mature in July 2027
and £100m matures in June 2034.
During the current year the Group
entered into new £100m sterling-denominated US Private Placement
Loan notes that mature on 20 June 2034. The loans notes incur
interest at a fixed rate of 5.97% which is payable every 6 months.
The financial covenants under the new arrangement are in line with
the current debt facilities as shown below.
The £200m private placement loan
notes incur interest at a fixed rate at 4.26%. Interest is paid
every six months.
The unsecured multi-currency
revolving credit facility incurs interest at a margin over SONIA of
between 185bps and 285bps depending on leverage, plus a utilisation
fee of between 0bps and 30bps of the aggregate amount of the
outstanding loans. The total undrawn facility as at 30 June 2024
was £186.0m.
The financial covenants under all
financing agreements are consistent. These covenants relate to
measurement of adjusted EBITDAR against consolidated net finance
charges (interest cover) and adjusted EBITDA to net debt (leverage
ratio) measured semi-annually on a trailing 12-month basis at half
year and year end. The interest cover covenant under the terms of
both agreements cannot be less than 1.5:1, and leverage ratio
cannot be more than 3:1. Figures used in the calculation of both
covenants exclude the impact of IFRS 16.
As at 30 June 2024 the Group has Net
debt of £285.4m, and the last 12 months Net debt/EBITDA ratio
excluding the impact of IFRS 16 increase to 2.16x from 1.77x,
largely as a result of the initial cash outflow on the acquisition
of Shorecal.
Underpinning treasury management is
a robust Treasury Policy and Strategy that aims to minimise
financial risk. Foreign exchange movement arising from
transactional activity is reduced by either agreeing fixed currency
rates with suppliers or pre-purchasing the currency
spend.
Group income statement
26
weeks ended 30 June 2024
|
|
Note
|
26 weeks ended 30 June 2024
£m
|
26 weeks ended 25 June 2023
£m
|
53 weeks ended 31 December
2023
£m
|
|
|
|
|
Underlying
|
Non-underlying*
|
Total
|
Underlying
|
Non-underlying*
|
Total
|
Underlying
|
Non-underlying*
|
Total
|
|
|
Revenue
|
3
|
326.8
|
-
|
326.8
|
332.9
|
-
|
332.9
|
679.8
|
-
|
679.8
|
|
|
Cost of sales
|
|
(169.9)
|
-
|
(169.9)
|
(179.7)
|
-
|
(179.7)
|
(363.6)
|
-
|
(363.6)
|
|
|
Gross profit
|
|
156.9
|
-
|
156.9
|
153.2
|
-
|
153.2
|
316.2
|
-
|
316.2
|
|
|
Distribution costs
|
|
(20.6)
|
-
|
(20.6)
|
(19.0)
|
-
|
(19.0)
|
(42.6)
|
-
|
(42.6)
|
|
|
Administrative costs
|
4
|
(77.4)
|
(3.1)
|
(80.5)
|
(79.7)
|
-
|
(79.7)
|
(161.7)
|
-
|
(161.7)
|
|
|
Share of post-tax profits of
associates and joint ventures
|
|
1.2
|
-
|
1.2
|
1.7
|
-
|
1.7
|
2.0
|
-
|
2.0
|
|
|
Other income
|
4
|
-
|
11.2
|
11.2
|
2.3
|
40.6
|
42.9
|
2.3
|
40.6
|
42.9
|
|
|
Profit before interest and taxation
|
|
60.1
|
8.1
|
68.2
|
58.5
|
40.6
|
99.1
|
116.2
|
40.6
|
156.8
|
|
|
Finance income
|
5
|
7.1
|
-
|
7.1
|
6.6
|
-
|
6.6
|
13.7
|
-
|
13.7
|
|
|
Finance costs
|
6
|
(15.9)
|
-
|
(15.9)
|
(14.2)
|
-
|
(14.2)
|
(28.2)
|
-
|
(28.2)
|
|
|
Profit before taxation
|
|
51.3
|
8.1
|
59.4
|
50.9
|
40.6
|
91.5
|
101.7
|
40.6
|
142.3
|
|
|
Taxation
|
7
|
(12.6)
|
(4.5)
|
(17.1)
|
(11.3)
|
-
|
(11.3)
|
(26.0)
|
(1.3)
|
(27.3)
|
|
|
Profit for the period
|
|
38.7
|
3.6
|
42.3
|
39.6
|
40.6
|
80.2
|
75.7
|
39.3
|
115.0
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic (pence)
|
8
|
9.8
|
|
10.7
|
9.5
|
|
19.3
|
18.4
|
|
28.0
|
|
|
- Diluted (pence)
|
8
|
9.7
|
|
10.6
|
9.5
|
|
19.2
|
18.4
|
|
27.9
|
|
|
*Non-underlying items are disclosed in note
4.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Group statement of comprehensive income
26
weeks ended 30 June 2024
|
|
Note
|
26 weeks ended
30 June
2024
£m
|
26 weeks ended
25 June
2023
£m
|
53 weeks ended
31 December
2023
£m
|
|
Profit for the period
|
|
42.3
|
80.2
|
115.0
|
|
Other comprehensive (expense)/income:
|
|
|
|
|
|
Items that will not
subsequently be reclassified to profit or loss
|
|
|
|
|
|
- Gain on investment held through
other comprehensive income
|
17
|
0.5
|
-
|
-
|
|
- Taxation on investment held
through other comprehensive income
|
|
(0.1)
|
-
|
-
|
|
Items that may be
subsequently reclassified to profit or loss
|
|
|
|
|
|
- Exchange loss on retranslation
of foreign operations
|
|
(0.4)
|
(0.7)
|
(0.6)
|
|
- Transferred to income statement
on disposal
|
14
|
-
|
(2.5)
|
(2.5)
|
|
Other comprehensive expense for the period, net of
tax
|
|
-
|
(3.2)
|
(3.1)
|
|
Total comprehensive income for the period
|
|
42.3
|
77.0
|
111.9
|
Group balance sheet
At
30 June 2024
|
|
Note
|
26 weeks ended
30 June
2024
£m
|
26 weeks ended
25 June
2023
£m
|
53 weeks ended
31 December
2023
£m
|
|
Non-current assets
|
|
|
|
|
|
Intangible assets
|
10
|
103.3
|
29.7
|
28.8
|
|
Property, plant and
equipment
|
10
|
99.2
|
96.8
|
97.6
|
|
Right-of-use assets
|
11
|
20.6
|
19.1
|
19.3
|
|
Lease receivables
|
11
|
186.2
|
187.6
|
192.9
|
|
Trade and other
receivables
|
|
4.9
|
3.5
|
3.7
|
|
Investments
|
17
|
11.9
|
10.2
|
10.3
|
|
Investments in associates and
joint ventures
|
12
|
25.4
|
26.1
|
25.2
|
|
|
|
451.5
|
373.0
|
377.8
|
|
Current assets
|
|
|
|
|
|
Lease receivables
|
11
|
16.0
|
15.3
|
15.8
|
|
Inventories
|
|
8.4
|
8.0
|
11.4
|
|
Trade and other
receivables
|
|
53.4
|
42.4
|
51.6
|
|
Deferred consideration
receivable
|
|
-
|
0.3
|
0.3
|
|
Current tax assets
|
|
3.4
|
2.3
|
3.5
|
|
Cash and cash
equivalents
|
21
|
25.9
|
37.0
|
52.1
|
|
Assets held for sale
|
15
|
11.9
|
-
|
-
|
|
|
|
119.0
|
105.3
|
134.7
|
|
Total assets
|
|
570.5
|
478.3
|
512.5
|
|
Current liabilities
|
|
|
|
|
|
Lease liabilities
|
11
|
(22.1)
|
(20.4)
|
(21.1)
|
|
Trade and other
payables
|
|
(104.6)
|
(99.2)
|
(111.4)
|
|
Current tax liabilities
|
|
(4.4)
|
-
|
(2.8)
|
|
Provisions
|
|
(2.3)
|
(14.0)
|
(2.0)
|
|
Financial liabilities - share
buyback obligation
|
|
-
|
(11.9)
|
(6.1)
|
|
Liabilities held for
sale
|
15
|
(5.0)
|
-
|
-
|
|
|
|
(138.4)
|
(145.5)
|
(143.4)
|
|
Non-current liabilities
|
|
|
|
|
|
Lease liabilities
|
11
|
(202.5)
|
(203.8)
|
(209.2)
|
|
Trade and other
payables
|
|
(0.1)
|
(0.2)
|
(0.2)
|
|
Financial liabilities
|
16
|
(311.3)
|
(208.4)
|
(284.9)
|
|
Deferred tax
liabilities
|
|
(11.1)
|
(4.1)
|
(7.0)
|
|
Provisions
|
|
(2.4)
|
(1.3)
|
(1.8)
|
|
|
|
(527.4)
|
(417.8)
|
(503.1)
|
|
Total liabilities
|
|
(665.8)
|
(563.3)
|
(646.5)
|
|
Net liabilities
|
|
(95.3)
|
(85.0)
|
(134.0)
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
Called up share capital
|
|
2.1
|
2.2
|
2.1
|
|
Share premium account
|
|
71.9
|
49.6
|
49.6
|
|
Capital redemption
reserve
|
|
0.5
|
0.5
|
0.5
|
|
Capital reserve - own
shares
|
|
(11.9)
|
(10.5)
|
(12.5)
|
|
Currency translation
reserve
|
|
(3.0)
|
(2.7)
|
(2.6)
|
|
Other reserve
|
|
0.4
|
-
|
-
|
|
Accumulated losses
|
|
(155.3)
|
(124.1)
|
(171.1)
|
|
Total equity
|
|
(95.3)
|
(85.0)
|
(134.0)
|
Group statement of changes in equity
26
weeks ended 30 June 2024
|
|
Note
|
Share
capital
£m
|
Share
premium
account
£m
|
Capital
redemption
reserve
£m
|
Capital
Reserve
- own
shares
£m
|
Currency
translation
reserve
£m
|
Other reserve
£m
|
Accumulated
losses
£m
|
Total
shareholders'
equity
£m
|
|
At 25 December 2022
|
|
2.2
|
49.6
|
0.5
|
(9.0)
|
0.5
|
-
|
(156.6)
|
(112.8)
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
80.2
|
80.2
|
|
Other comprehensive
expense
|
|
|
|
|
|
|
|
|
|
|
- exchange differences
|
|
-
|
-
|
-
|
-
|
(0.7)
|
-
|
-
|
(0.7)
|
|
- transferred to income statement
on Disposal
|
|
-
|
-
|
-
|
-
|
(2.5)
|
-
|
-
|
(2.5)
|
|
Total comprehensive income/(expense) for the
period
|
|
-
|
-
|
-
|
-
|
(3.2)
|
-
|
80.2
|
77.0
|
|
Proceeds from share
issues
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Impairment of share
issues
|
|
-
|
-
|
-
|
0.4
|
-
|
-
|
(0.4)
|
-
|
|
Share buybacks
|
|
-
|
-
|
-
|
(1.9)
|
-
|
-
|
(17.1)
|
(19.0)
|
|
Share buyback obligation
satisfied
|
|
-
|
-
|
-
|
-
|
-
|
-
|
8.9
|
8.9
|
|
Share buyback obligation
outstanding
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(11.9)
|
(11.9)
|
|
Share options and LTIP
charge
|
18
|
-
|
-
|
-
|
-
|
-
|
-
|
1.4
|
1.4
|
|
Tax on employee share
options
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.3)
|
(0.3)
|
|
Equity dividends paid
|
9
|
-
|
-
|
-
|
-
|
-
|
-
|
(28.3)
|
(28.3)
|
|
At 25 June 2023
|
|
2.2
|
49.6
|
0.5
|
(10.5)
|
(2.7)
|
-
|
(124.1)
|
(85.0)
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
34.8
|
34.8
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
- exchange differences
|
|
-
|
-
|
-
|
-
|
0.1
|
-
|
-
|
0.1
|
|
Total comprehensive income for the period
|
|
-
|
-
|
-
|
-
|
0.1
|
-
|
34.8
|
34.9
|
|
Proceeds from share
issues
|
|
-
|
-
|
-
|
0.5
|
-
|
-
|
-
|
0.5
|
|
Impairment of share
issues
|
|
-
|
-
|
-
|
0.6
|
-
|
-
|
(0.6)
|
-
|
|
Share buybacks
|
|
(0.1)
|
-
|
-
|
(3.1)
|
-
|
-
|
(76.1)
|
(79.3)
|
|
Share buyback obligation
satisfied
|
|
-
|
-
|
-
|
-
|
-
|
-
|
11.9
|
11.9
|
|
Share buyback obligations
outstanding
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(6.1)
|
(6.1)
|
|
Share options and LTIP
charge
|
18
|
-
|
-
|
-
|
-
|
-
|
-
|
2.4
|
2.4
|
|
Tax on employee share
options
|
|
-
|
-
|
-
|
-
|
-
|
-
|
0.3
|
0.3
|
|
Equity dividends paid
|
9
|
-
|
-
|
-
|
-
|
-
|
-
|
(13.6)
|
(13.6)
|
|
At 31 December 2023
|
|
2.1
|
49.6
|
0.5
|
(12.5)
|
(2.6)
|
-
|
(171.1)
|
(134.0)
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
42.3
|
42.3
|
|
Other comprehensive
income/(expense)
|
|
|
|
|
|
|
|
|
|
|
- exchange differences
|
|
-
|
-
|
-
|
-
|
(0.4)
|
-
|
-
|
(0.4)
|
|
- gain on investment held through
other
comprehensive
income
|
17
|
-
|
-
|
-
|
-
|
-
|
0.5
|
-
|
0.5
|
|
- taxation on investment held
through other
comprehensive
income
|
7
|
-
|
-
|
-
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
|
Total comprehensive income/(expense) for the
period
|
|
-
|
-
|
-
|
-
|
(0.4)
|
0.4
|
42.3
|
42.3
|
|
Proceeds from share
issues
|
|
-
|
-
|
-
|
0.3
|
-
|
-
|
-
|
0.3
|
|
Share issued on acquisition of
subsidiaries
|
13
|
-
|
22.3
|
-
|
-
|
-
|
-
|
-
|
22.3
|
|
Impairment of share
issues
|
|
-
|
-
|
-
|
0.3
|
-
|
-
|
(0.3)
|
-
|
|
Share buybacks
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(6.2)
|
(6.2)
|
|
Share buyback obligation
satisfied
|
|
-
|
-
|
-
|
-
|
-
|
-
|
6.1
|
6.1
|
|
Share options and LTIP
charge
|
18
|
-
|
-
|
-
|
-
|
-
|
-
|
2.0
|
2.0
|
|
Tax on employee share
options
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Equity dividends paid
|
9
|
-
|
-
|
-
|
-
|
-
|
-
|
(28.1)
|
(28.1)
|
|
At 30 June 2024
|
|
2.1
|
71.9
|
0.5
|
(11.9)
|
(3.0)
|
0.4
|
(155.3)
|
(95.3)
|
Group cash flow statement
26
weeks ended 30 June 2024
|
|
Note
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Cash flows from operating activities
|
|
|
|
|
|
Profit before interest and taxation
|
|
68.2
|
99.1
|
156.8
|
|
Amortisation and
depreciation
|
3
|
9.9
|
10.2
|
21.9
|
|
Share of post-tax profits of
associates and joint ventures
|
12
|
(1.2)
|
(1.7)
|
(2.0)
|
|
Profit on disposal of property,
plant and equipment
|
|
-
|
(2.3)
|
(2.3)
|
|
Profit on disposal of trade and
assets
|
14
|
(11.6)
|
-
|
-
|
|
Profit on disposal of associate
investment
|
14
|
-
|
(40.6)
|
(40.6)
|
|
Share option and LTIP
charge
|
18
|
2.0
|
1.4
|
3.8
|
|
Decrease in provisions
|
|
(1.3)
|
(0.1)
|
(11.4)
|
|
Decrease in inventories
|
|
3.0
|
3.6
|
0.2
|
|
(Increase)/decrease in
receivables
|
|
(1.0)
|
3.9
|
(5.2)
|
|
(Decrease)/increase in
payables
|
|
(12.5)
|
2.7
|
15.2
|
|
Cash generated from operations
|
|
55.5
|
76.2
|
136.4
|
|
Corporation tax paid
|
|
(15.2)
|
(11.6)
|
(22.9)
|
|
Net cash generated by operating activities
|
|
40.3
|
64.6
|
113.5
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
10
|
(4.1)
|
(6.0)
|
(9.8)
|
|
Purchase of intangible
assets
|
10
|
(3.0)
|
(5.3)
|
(11.0)
|
|
Proceeds from sale of property,
plant and equipment
|
|
-
|
4.4
|
4.4
|
|
Proceeds from sale of trade and
assets
|
14
|
17.3
|
-
|
-
|
|
Acquisition of subsidiaries, net
of cash received
|
13
|
(32.5)
|
-
|
-
|
|
Consideration received on disposal
of associate investment
|
14
|
-
|
70.6
|
70.6
|
|
Receipt of principal element on
lease receivables
|
|
8.2
|
7.5
|
15.0
|
|
Receipt of interest element on
lease receivables
|
|
6.6
|
6.1
|
12.6
|
|
Interest received
|
|
0.5
|
0.2
|
0.6
|
|
Purchase of investments
|
17
|
(11.4)
|
-
|
-
|
|
Other
|
21
|
1.4
|
11.1
|
12.3
|
|
Net cash (used)/generated by investing
activities
|
|
(17.0)
|
88.6
|
94.7
|
|
Cash inflow before financing
|
|
23.3
|
153.2
|
208.2
|
|
Cash flows from financing activities
|
|
|
|
|
|
Interest paid
|
|
(8.3)
|
(7.3)
|
(13.7)
|
|
Share purchases
|
21
|
(6.2)
|
(19.0)
|
(98.3)
|
|
Consideration received on exercise
of share options - employee benefit trust
|
|
0.3
|
-
|
0.5
|
|
New bank loans and facilities
drawn down
|
|
278.1
|
28.0
|
113.0
|
|
Repayment of borrowings
|
|
(267.2)
|
(103.2)
|
(112.2)
|
|
Repayment of principal element on
lease liabilities
|
|
(11.0)
|
(10.0)
|
(20.1)
|
|
Repayment of interest element on
lease liabilities
|
|
(7.1)
|
(6.7)
|
(13.8)
|
|
Equity dividends paid
|
9
|
(28.1)
|
(28.3)
|
(41.9)
|
|
Net cash used by financing activities
|
|
(49.5)
|
(146.5)
|
(186.5)
|
|
Net (decrease)/increase in cash and cash
equivalents
|
|
(26.2)
|
6.7
|
21.7
|
|
Cash and cash equivalents at
beginning of period
|
|
52.1
|
30.4
|
30.4
|
|
Foreign exchange loss on cash and
cash equivalents
|
|
-
|
(0.1)
|
-
|
|
Cash and cash equivalents at end of period
|
21
|
25.9
|
37.0
|
52.1
|
Notes to the interim financial statements
26
weeks ended 30 June 2024
1.
General information
Domino's Pizza Group plc ('the
Company') is a public limited company incorporated in the United
Kingdom under the Companies Act 2006 (registration number
03853545). The Company is domiciled in the United Kingdom and its
registered address is 1 Thornbury, West Ashland, Milton Keynes, MK6
4BB. The Company's ordinary shares are listed on the Official List
of the FCA and traded on the Main Market of the London Stock
Exchange. Further copies of the interim report and Annual Report
and Accounts may be obtained from the address above.
2.
Basis of preparation
The condensed consolidated interim
financial statements (the 'interim financial statements') have been
prepared in accordance with the UK-adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. The financial information contained in
this interim report does not constitute statutory accounts within
the meaning of Section 434 of the Companies Act 2006.
The interim results for the 26 weeks
ended 30 June 2024 and the comparatives to 25 June 2023 are
unaudited but have been reviewed by the auditors. A copy of their
review report has been included at the end of this
report.
The financial information for the 53
weeks ended 31 December 2023 has been extracted from the Group
financial statements for that period. These published financial
statements were reported on by the auditors without qualification
or an emphasis of matter reference and did not include a statement
under section 498(2) or (3) of the Companies Act 2006 and have been
delivered to the Registrar of Companies.
The interim financial information is
presented in sterling and all values are rounded to the nearest
tenth of million pounds (£0.1m), except when otherwise indicated.
The accounting policies are consistent with those of the previous
financial year and corresponding interim reporting period, except
for the estimation of income tax (see note 7). The financial
statements are prepared using the historical cost basis with the
exception of the derivative financial assets and contingent
consideration which are measured at fair value in accordance with
IFRS 13 Fair Value Measurement.
Going concern
The interim financial information
has been prepared on a going concern basis. This is considered
appropriate, given the financial resources of the Group including
the current position of banking facilities, together with long-term
contracts with its master franchisor, its franchisees and its key
suppliers.
The Directors of the Group have
performed an assessment of the overall position and future
forecasts (including the 12 month period from the date of this
report) for the purpose of going concern. The overall Group has
seen steady performance in the first half of 2024.
The Directors of the Group have
considered the future position based on current trading and a
number of potential downside scenarios which may occur, either
through reduced consumer spending, reduced store growth, supply
chain disruptions, general economic uncertainty and other risks.
This assessment has considered the overall level of Group
borrowings and covenant requirements, the flexibility of the Group
to react to changing market conditions and ability to appropriately
manage any business risks. The Group has £500m of banking
facilities and a net debt position of £285.4m. The facilities have
leverage and interest cover covenants, with which the Group have
complied.
The scenarios modelled are based on
our current forecast projections out to the end of 2025 and have
taken into account the following risks: a downside impact of
economic uncertainty and other sales risks over the forecast
period, reflected in sales performance, with a c.5% reduction in
LFL sales compared to budget; the impact of a reduction of new
store openings to half of their forecast level; a further reduction
of between 2.5%-3.0% in sales to account for the potential impact
of the public health debate; future potential disruptions to supply
chain through loss of one of our supply chain centres impacting our
ability to supply stores for a period of two weeks; additional
costs as a result of increase in utility costs; the impact of a
temporary loss of availability of our eCommerce platform during
peak trading periods; and a significant unexpected increase in the
impact of climate change on our delivery costs. We have also
considered a second 'severe but plausible' scenario, which in
addition to the above-mentioned risks, also includes the risks of:
a disruption to one of our key suppliers impacting our supply chain
over a period of four weeks whilst alternate sourcing is secured;
and the impact of fines from a potential wider data
breach.
In each of the scenarios modelled,
there remains significant headroom available on net debt. Under the
first scenario there remains sufficient headroom under the covenant
requirements of the facilities.
If all the risks under the first
scenario were to occur simultaneously with the additional risks in
the second scenario, before any mitigating actions, the Group would
breach its leverage covenants. The Board has a mitigating action
available in the form of delays in dividends to shareholders and
share buybacks which would prevent a breach of leverage covenants.
Based on this assessment, the Directors have formed a judgement
that there is a reasonable expectation the Group will have adequate
resources to continue in operational existence for the foreseeable
future.
Accounting policies and new standards
The consolidated accounts for the 26
weeks ended 30 June 2024 were prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. The
accounting policies applied by the Group are consistent with those
disclosed in the Group's Annual Report and Accounts for the 53
weeks ended 31 December 2023, except for the estimation of income
tax. There were no new standards and interpretations effective for
the first time for the reporting period that have a material impact
on the Group financial statements.
3.
Segmental information
For management purposes, the Group
has been organised into two geographic business units based on the
operating models of the regions; the UK & Ireland operating
more mature markets with a franchise model, limited corporate
stores and investments held in our franchisees, compared to
International which operated predominantly as corporate stores. The
International segment included the German associate, legacy Germany
and Switzerland holding companies.
These are considered the Group's
operating segments as the information provided to the Executive
Directors of the Board, who are considered to be the chief
operating decision makers, is based on these territories. The chief
operating decision makers review the segmental underlying EBIT and
EBITDA results and the non-underlying items separately. Revenue
included in each segment includes all sales made to franchise
stores (royalties, sales to franchisees and rental income) and by
corporate stores located in that segment.
Unallocated assets include cash and
cash equivalents and taxation assets. Unallocated liabilities
include the bank revolving facility and taxation
liabilities.
The above operating segments
represent the information currently provided to the Executive
Directors. Following the announcement of the growth framework in
December 2023, the operating segments will be assessed in the
second half of FY24 to reflect any changes in the structure of
information provided to the Executive Directors as a result of
potential further growth opportunities.
Segment assets and
liabilities
|
|
|
At 30 June 2024
£m
|
At 25 June 2023
£m
|
At 31 December 2023
£m
|
|
|
|
Current tax assets
|
3.4
|
2.3
|
3.5
|
|
|
|
Cash and cash
equivalents
|
25.9
|
37.0
|
52.1
|
|
|
|
Unallocated assets
|
29.3
|
39.3
|
55.6
|
|
|
|
Current tax liabilities
|
4.4
|
-
|
2.8
|
|
|
|
Deferred tax
liabilities
|
11.1
|
4.1
|
7.0
|
|
|
|
Debt facilities
|
311.3
|
208.4
|
284.9
|
|
|
|
Unallocated liabilities
|
326.8
|
212.5
|
294.7
|
|
|
|
|
|
|
|
|
26 weeks ended 30 June 2024
|
26 weeks ended 25 June
2023
|
53 weeks ended 31 December
2023
|
|
|
UK & Ireland
£m
|
International
£m
|
Total
£m
|
UK & Ireland
£m
|
International
£m
|
Total
£m
|
UK & Ireland
£m
|
International
£m
|
Total
£m
|
|
Segment assets
|
|
|
|
|
|
|
|
|
|
|
Segment current assets
|
89.7
|
-
|
89.7
|
66.0
|
-
|
66.0
|
79.1
|
-
|
79.1
|
|
Segment non-current
assets
|
414.2
|
-
|
414.2
|
336.7
|
-
|
336.7
|
342.3
|
-
|
342.3
|
|
Investment in associates and joint
ventures
|
25.4
|
-
|
25.4
|
26.1
|
-
|
26.1
|
25.2
|
-
|
25.2
|
|
Investments
|
11.9
|
-
|
11.9
|
10.2
|
-
|
10.2
|
10.3
|
-
|
10.3
|
|
Unallocated assets
|
|
|
29.3
|
|
|
39.3
|
|
|
55.6
|
|
Total assets
|
|
|
570.5
|
|
|
478.3
|
|
|
512.5
|
|
Segment liabilities
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
339.0
|
-
|
339.0
|
350.1
|
0.7
|
350.8
|
351.8
|
-
|
351.8
|
|
Unallocated liabilities
|
|
|
326.8
|
|
|
212.5
|
|
|
294.7
|
|
Total liabilities
|
|
|
665.8
|
|
|
563.3
|
|
|
646.5
|
|
|
|
|
|
|
|
|
|
|
|
| |
Segmental performance for
the 26 weeks 30 June 2024
|
|
UK & Ireland
£m
|
International
£m
|
Total underlying
£m
|
Non-underlying
£m
|
Total reported
£m
|
|
Revenue
|
|
|
|
|
|
|
Sales to external
customers
|
326.8
|
-
|
326.8
|
-
|
326.8
|
|
Segment revenue
|
326.8
|
-
|
326.8
|
-
|
326.8
|
|
Results
|
|
|
|
|
|
|
Underlying result before
associates and joint ventures
|
58.9
|
-
|
58.9
|
(3.1)
|
55.8
|
|
Share of profit of associates and
joint ventures
|
1.2
|
-
|
1.2
|
-
|
1.2
|
|
Other income
|
-
|
-
|
-
|
11.2
|
11.2
|
|
Profit before interest and taxation
|
60.1
|
-
|
60.1
|
8.1
|
68.2
|
|
Net finance costs
|
(8.8)
|
-
|
(8.8)
|
-
|
(8.8)
|
|
Profit before taxation
|
51.3
|
-
|
51.3
|
8.1
|
59.4
|
|
Taxation
|
(12.6)
|
-
|
(12.6)
|
(4.5)
|
(17.1)
|
|
Profit for the year
|
38.7
|
-
|
38.7
|
3.6
|
42.3
|
|
Effective tax rate
|
24.6%
|
-
|
24.6%
|
-
|
28.8%
|
|
|
|
|
|
|
|
|
Other segment information
|
|
|
|
|
|
|
Depreciation
|
5.6
|
-
|
5.6
|
-
|
5.6
|
|
Amortisation
|
3.3
|
-
|
3.3
|
1.0
|
4.3
|
|
Total depreciation and amortisation
|
8.9
|
-
|
8.9
|
1.0
|
9.9
|
|
EBITDA
|
69.0
|
-
|
69.0
|
9.1
|
78.1
|
|
Underlying EBITDA
|
69.0
|
-
|
69.0
|
-
|
69.0
|
|
Capital expenditure
|
7.1
|
-
|
7.1
|
-
|
7.1
|
|
Share-based payment
charge
|
2.0
|
-
|
2.0
|
-
|
2.0
|
|
Revenue disclosures
|
|
|
|
|
|
|
Royalties, franchise fees and
change of hands fees
|
39.8
|
-
|
39.8
|
-
|
39.8
|
|
Sales to franchisees
|
217.6
|
-
|
217.6
|
-
|
217.6
|
|
Corporate store income
|
26.2
|
-
|
26.2
|
-
|
26.2
|
|
Rental income on leasehold and
freehold property
|
0.8
|
-
|
0.8
|
-
|
0.8
|
|
National Advertising and eCommerce
income
|
42.4
|
-
|
42.4
|
-
|
42.4
|
|
Total segment revenue
|
326.8
|
-
|
326.8
|
-
|
326.8
|
Segmental performance for
the 26 weeks ended 25 June 2023
|
|
UK & Ireland
£m
|
International
£m
|
Total underlying
£m
|
Non-underlying
£m
|
Total reported
£m
|
|
Revenue
|
|
|
|
|
|
|
Sales to external
customers
|
332.9
|
-
|
332.9
|
-
|
332.9
|
|
Segment revenue
|
332.9
|
-
|
332.9
|
-
|
332.9
|
|
Results
|
|
|
|
|
|
|
Underlying result before
associates and joint ventures
|
56.8
|
-
|
56.8
|
-
|
56.8
|
|
Share of profit of associates and
joint ventures
|
1.7
|
-
|
1.7
|
-
|
1.7
|
|
Other income
|
-
|
-
|
-
|
40.6
|
40.6
|
|
Profit before interest and taxation
|
58.5
|
-
|
58.5
|
40.6
|
99.1
|
|
Net finance costs
|
(7.6)
|
-
|
(7.6)
|
-
|
(7.6)
|
|
Profit before taxation
|
50.9
|
-
|
50.9
|
40.6
|
91.5
|
|
Taxation
|
(11.3)
|
-
|
(11.3)
|
-
|
(11.3)
|
|
Profit for the year
|
39.6
|
-
|
39.6
|
40.6
|
80.2
|
|
Effective tax rate
|
22.2%
|
-
|
22.2%
|
-
|
12.3%
|
|
Other segment information
|
|
|
|
|
|
|
Depreciation
|
5.1
|
-
|
5.1
|
-
|
5.1
|
|
Amortisation
|
5.1
|
-
|
5.1
|
-
|
5.1
|
|
Total depreciation and amortisation
|
10.2
|
-
|
10.2
|
-
|
10.2
|
|
EBITDA
|
68.7
|
-
|
68.7
|
40.6
|
109.3
|
|
Underlying EBITDA
|
68.7
|
-
|
68.7
|
-
|
68.7
|
|
Capital expenditure
|
11.3
|
-
|
11.3
|
-
|
11.3
|
|
Share-based payment
charge
|
1.4
|
-
|
1.4
|
-
|
1.4
|
|
Revenue disclosures
|
|
|
|
|
|
|
Royalties, franchise fees and
change of hands fees
|
40.8
|
-
|
40.8
|
-
|
40.8
|
|
Sales to franchisees
|
235.7
|
-
|
235.7
|
-
|
235.7
|
|
Corporate store income
|
16.4
|
-
|
16.4
|
-
|
16.4
|
|
Rental income on leasehold and
freehold property
|
1.1
|
-
|
1.1
|
-
|
1.1
|
|
National Advertising and eCommerce
income
|
38.9
|
-
|
38.9
|
-
|
38.9
|
|
Total segment revenue
|
332.9
|
-
|
332.9
|
-
|
332.9
|
Segmental performance for
the 53 weeks ended 31 December 2023
|
|
UK & Ireland
£m
|
International
£m
|
Total underlying
£m
|
Non-underlying
£m
|
Total reported
£m
|
|
Revenue
|
|
|
|
|
|
|
Sales to external
customers
|
679.8
|
-
|
679.8
|
-
|
679.8
|
|
Segment revenue
|
679.8
|
-
|
679.8
|
-
|
679.8
|
|
Results
|
|
|
|
|
|
|
Underlying result before
associates and joint ventures
|
111.9
|
-
|
111.9
|
-
|
111.9
|
|
Share of profit of associates and
joint ventures
|
2.0
|
-
|
2.0
|
-
|
2.0
|
|
Other income
|
2.3
|
-
|
2.3
|
40.6
|
42.9
|
|
Profit before interest and taxation
|
116.2
|
-
|
116.2
|
40.6
|
156.8
|
|
Net finance costs
|
(14.5)
|
-
|
(14.5)
|
-
|
(14.5)
|
|
Profit before taxation
|
101.7
|
-
|
101.7
|
40.6
|
142.3
|
|
Taxation
|
(26.0)
|
-
|
(26.0)
|
(1.3)
|
(27.3)
|
|
Profit for the year
|
75.7
|
-
|
75.7
|
39.3
|
115.0
|
|
Effective tax rate
|
25.6%
|
-
|
25.6%
|
-
|
19.2%
|
|
Other segment information
|
|
|
|
|
|
|
Depreciation
|
11.2
|
-
|
11.2
|
-
|
11.2
|
|
Amortisation
|
10.7
|
-
|
10.7
|
-
|
10.7
|
|
Total depreciation and amortisation
|
21.9
|
-
|
21.9
|
-
|
21.9
|
|
EBITDA
|
138.1
|
-
|
138.1
|
40.6
|
178.7
|
|
Underlying EBITDA
|
138.1
|
-
|
138.1
|
-
|
138.1
|
|
Capital expenditure
|
20.8
|
-
|
20.8
|
-
|
20.8
|
|
Share-based payment
charge
|
3.8
|
-
|
3.8
|
-
|
3.8
|
|
Revenue disclosures
|
|
|
|
|
|
|
Royalties, franchise fees and
change of hands fees
|
83.4
|
-
|
83.4
|
-
|
83.4
|
|
Sales to franchisees
|
479.1
|
-
|
479.1
|
-
|
479.1
|
|
Corporate store income
|
33.1
|
-
|
33.1
|
-
|
33.1
|
|
Rental income on leasehold and
freehold property
|
2.2
|
-
|
2.2
|
-
|
2.2
|
|
National Advertising and eCommerce
income
|
82.0
|
-
|
82.0
|
-
|
82.0
|
|
Total segment revenue
|
679.8
|
-
|
679.8
|
-
|
679.8
|
4.
Reconciliation of non-GAAP measures
Non-underlying items
included in the financial statements
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Underlying profit for the
period
|
38.7
|
39.6
|
75.7
|
|
Non-underlying profit for the
period
|
3.6
|
40.6
|
39.3
|
|
Profit for the period
|
42.3
|
80.2
|
115.0
|
Non-underlying items
|
|
|
Note
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Included in administrative costs
|
|
|
|
|
|
- Reversionary scheme, net of
costs
|
a)
|
0.1
|
-
|
-
|
|
- Shorecal acquisition
costs
|
b)
|
(2.2)
|
-
|
-
|
|
- Reacquired rights
amortisation
|
c)
|
(1.0)
|
-
|
-
|
|
|
|
(3.1)
|
-
|
-
|
|
Included in other income
|
|
|
|
|
|
- Disposal of corporate
stores
|
d)
|
11.2
|
-
|
-
|
|
- Profit on disposal of German
associate
|
e)
|
-
|
40.6
|
40.6
|
|
|
|
11.2
|
40.6
|
40.6
|
|
Included in profit before taxation
|
|
8.1
|
40.6
|
40.6
|
|
- Taxation
|
f)
|
(4.5)
|
-
|
(1.3)
|
|
Included in profit for the year
|
|
3.6
|
40.6
|
39.3
|
|
|
|
|
|
| |
a)
Reversionary share scheme
The Group received £0.2m in relation
to the historical share-based payment compensation arrangements.
Costs of £0.1m were incurred during the period. These receipts from
participants and related legal and professional costs are
recognised in non-underlying results, consistent with the treatment
of reversionary scheme costs and provisions recognised in previous
years.
b) Shorecal
Limited acquisition costs
The Group incurred costs of £2.2m
associated with the acquisition of Shorecal Limited. For further
details on the acquisition refer to note 13. These costs are
recognised in non-underlying as they relate directly to the
acquisition and are significant enough to distort the underlying
performance of the Group.
c) Reacquired
rights amortisation
The Group incurred a charge of £1.0m
in relation to the amortisation of reacquired rights recognised
upon the acquisition of Shorecal Limited. This relates to the
valuation of the Standard Franchise Agreements which were in place
before the acquisition, previously issued by the Group to Shorecal
Limited when this was an independently controlled franchisee. These
are amortised over the remaining life of the franchise agreements,
which is on average 5 years.
The amortisation is recognised in
non-underlying results as we consider the recognition of the asset
and amortisation period does not represent the substance of the
agreements. As these are reacquired rights, under the accounting
standard these must be amortised over the remaining period of the
agreement considering renewal options, which is not consistent with
the substance of the asset. The Group recognised no significant
profit on initial issuance of the franchise agreements before
acquisition and will not incur any cost to renew at the end of the
term.
We therefore consider the
amortisation and reduction in value of this asset does not
represent the underlying value of the agreements. For this reason,
the amortisation is recognised in non-underlying results as would
materially distort the performance of the acquired subsidiary and
the Group's underlying trading performance.
d) Disposal
of corporate stores
The Group disposed of 14 of its
London corporate stores during the period, generating a profit on
disposal of £11.2m, which includes £0.4m in transactions costs. For
further details refer to note 14. This is treated as a
non-underlying profit as is consistent with the treatment of the
previous impairment to the Corporate Stores recognised in FY
2019.
e) Profit on
disposal of German associate
In the prior year, the Group
disposed of its 33.3% interest in Daytona JV Limited. Proceeds of
£79.9m were received, of which £70.6m related to the investment in
Daytona JV Limited and £9.3m related to the repayment of the loan.
This generated a profit on disposal of £40.6m. The profits arising
from the disposal were treated as non-taxable on the basis the
disposal fell under the Substantial Shareholding
Exemption
f)
Taxation
During the current period, the group
incurred a £4.5m tax charge which primarily relates to the disposal
of the London corporate stores detailed in note d above. During the
prior period, the group incurred a tax charge of £1.3m primarily
relating to the historical share-based compensation schemes
following the £11.9m settlement made during the prior
year.
5.
Finance income
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Other interest
receivable
|
0.4
|
0.4
|
0.8
|
|
Interest on loans to associates
and joint ventures
|
-
|
0.1
|
0.1
|
|
Interest receivable on
leases
|
6.6
|
6.1
|
12.7
|
|
Discount unwind
|
0.1
|
-
|
0.1
|
|
Total finance income
|
7.1
|
6.6
|
13.7
|
6.
Finance costs
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Debt facilities interest
payable
|
8.5
|
7.4
|
14.4
|
|
Other interest payable
|
0.1
|
-
|
-
|
|
Interest payable on
leases
|
7.1
|
6.7
|
13.8
|
|
Foreign exchange
|
0.2
|
0.1
|
-
|
|
Total finance costs
|
15.9
|
14.2
|
28.2
|
7.
Taxation
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Tax charged in the income statement
|
|
|
|
|
Current income
tax
|
|
|
|
|
UK corporation tax:
|
|
|
|
|
- current period
|
16.5
|
10.5
|
21.6
|
|
- adjustment in respect of prior
periods
|
(0.1)
|
(0.3)
|
4.6
|
|
|
16.4
|
10.2
|
26.2
|
|
Income tax on overseas
operations
|
0.2
|
0.6
|
(2.5)
|
|
Total current income tax
charge
|
16.6
|
10.8
|
23.7
|
|
Deferred
tax
|
|
|
|
|
Origination and reversal of
temporary differences
|
0.5
|
0.4
|
2.6
|
|
Effect of change in tax
rate
|
-
|
-
|
0.2
|
|
Adjustment in respect of prior
periods
|
-
|
0.1
|
0.8
|
|
Total deferred tax
|
0.5
|
0.5
|
3.6
|
|
Tax charge in the income statement
|
17.1
|
11.3
|
27.3
|
|
The tax charge in the income
statement is disclosed as follows:
|
|
|
|
|
Taxation
|
17.1
|
11.3
|
27.3
|
|
|
|
|
|
|
Tax charged in the statement of other comprehensive
income
|
|
|
|
|
Deferred tax:
|
|
|
|
|
- Origination and reversal of
temporary differences
|
0.1
|
-
|
-
|
|
Tax charge in the statement of other comprehensive
income
|
0.1
|
-
|
-
|
|
The tax charge in the statement of
other comprehensive income is disclosed as follows:
|
|
|
|
|
- Taxation on investment held
through other comprehensive income
|
0.1
|
-
|
-
|
|
|
|
|
|
|
Tax relating to items charged to equity
|
|
|
|
|
Reduction in current tax liability
as a result of the exercise
of share options
|
-
|
(0.1)
|
-
|
|
Origination and reversal of
temporary differences in relation
to unexercised share options
|
-
|
(0.2)
|
-
|
|
Tax charge in the Group statement of changes in
equity
|
-
|
(0.3)
|
-
|
The total effective tax rate is
28.8% (H1 23: 12.3%; FY 23: 19.2%).
Tax charged for the 26 weeks ended
30 June 2024 has been calculated by applying the effective rate of
tax per jurisdiction to the underlying profit which is expected to
apply to the Group for the period ending 29 December 2024 using
rates substantively enacted by 30 June 2024 as required by IAS 34
'Interim Financial Reporting'. Items of an exceptional nature have
been assessed independently.
8.
Earnings per share
Basic earnings per share amounts are
calculated by dividing profit for the year attributable to ordinary
equity holders of the parent by the weighted average number of
Ordinary shares outstanding during the year.
Diluted earnings per share is
calculated by dividing the profit attributable to ordinary equity
holders of the parent by the weighted average number of Ordinary
shares outstanding during the year plus the weighted average number
of Ordinary shares that would have been issued on the conversion of
all dilutive potential Ordinary shares into Ordinary
shares.
Earnings
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Profit after tax for the period
|
42.3
|
80.2
|
115.0
|
|
Non-underlying items
|
(3.6)
|
(40.6)
|
(39.3)
|
|
Underlying profit after tax
|
38.7
|
39.6
|
75.7
|
|
|
At
30 June 2024
Number
|
At
25 June 2023
Number
|
At
31 December 2023
Number
|
|
Basic weighted average number of
shares (excluding treasury shares)
|
395,803,838
|
414,902,310
|
410,406,240
|
|
Dilutive effect of share options
and awards
|
2,644,857
|
2,526,493
|
1,915,682
|
|
Diluted weighted average number of shares
|
398,448,695
|
417,428,803
|
412,321,922
|
The performance conditions relating
to share options granted over 5,897,866 shares (H1 23: 278,427; FY
23: 5,131,078) have not been met in the current financial period
and therefore the dilutive effect of the number of shares which
would have been issued at the period end has not been included in
the diluted earnings per share calculation.
There were 1,750,708 share options
excluded from the diluted earnings per share calculation because
they would be antidilutive (H1 23: nil; FY 23:
1,791,468).
|
|
26 weeks ended
30 June 2024
|
26 weeks ended
25 June 2023
|
53 weeks ended
31 December 2023
|
|
Earnings per share
|
|
|
|
|
Basic earnings per
share
|
10.7p
|
19.3p
|
28.0p
|
|
Diluted earnings per
share
|
10.6p
|
19.2p
|
27.9p
|
|
Underlying earnings per share
|
|
|
|
|
Basic earnings per
share
|
9.8p
|
9.5p
|
18.4p
|
|
Diluted earnings per
share
|
9.7p
|
9.5p
|
18.4p
|
9.
Dividends
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Declared and paid during the
period:
|
|
|
|
|
Final dividend for 2023: 7.2p
(2022: 6.8p)
|
28.1
|
28.3
|
28.3
|
|
Interim dividend for 2023:
3.3p
|
-
|
-
|
13.6
|
|
Dividends declared and paid
|
28.1
|
28.3
|
41.9
|
|
|
|
|
|
The Directors have declared an
interim dividend of 3.5p per share. This dividend will be paid on
27 September 2024 to those members on the register at the close of
business on 16 August 2024.
10.
Intangible assets and property, plant and
equipment
During the 26 weeks ended 30 June
2024, the Group acquired assets with a cost of £8.7m (cash outflow
of £7.1m).
The Group disposed of 14 London
corporate stores which included intangible assets of £5.9m and
property, plant and equipment of £0.8m. Assets with a carrying
value of £7.5m have been transferred to assets held for sale. Refer
to notes 14 and 15 for more details.
Through the acquisition of Shorecal,
the Group acquired provisional property, plant and equipment of
£2.9m. The Group also acquired provisional intangible assets of
£86.3m of which £63.9m relates to Goodwill and £22.4m relates to
reacquired rights in respect of franchise agreements.
The reacquired rights of £22.4m
represent the value of the Standard Franchise Agreements previously
issued by the Group and reacquired on acquisition. The valuation of
these reacquired rights is an accounting estimate which was
provisionally valued using multiple period excess earnings method
over the remaining contractual term of the franchise agreements.
These assets will be amortised over the period of the franchise
agreements, which is on average 5 years, with amortisation
recognised in non-underlying results.
Refer to note 13 for additional
information.
As at 30 June 2024, amounts
contracted for but not provided for in the financial statements for
the acquisition of property, plant and equipment amounted to £0.5m
(2023: £0.2m) and for intangible assets amount to £0.8m (2023:
£1.1m) for the Group.
11.
Right-of-use assets, lease receivables and lease
liabilities
Right-of-use assets
|
|
At
30 June 2024
£m
|
At
25 June 2023
£m
|
At
31 December 2023
£m
|
|
Property
|
12.7
|
9.7
|
9.7
|
|
Equipment
|
7.9
|
9.4
|
9.6
|
|
|
20.6
|
19.1
|
19.3
|
Amounts recognised in the
income statement
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Depreciation - Property
|
0.4
|
0.4
|
0.9
|
|
Depreciation -
Equipment
|
2.2
|
2.3
|
4.4
|
|
|
2.6
|
2.7
|
5.3
|
Lease receivables
|
|
At
30 June 2024
£m
|
At
25 June 2023
£m
|
At
31 December 2023
£m
|
|
Property
|
202.2
|
202.9
|
208.7
|
|
|
202.2
|
202.9
|
208.7
|
Lease liabilities
|
|
At
30 June 2024
£m
|
At
25 June 2023
£m
|
At
31 December 2023
£m
|
|
Property
|
216.2
|
214.3
|
220.5
|
|
Equipment
|
8.4
|
9.9
|
10.1
|
|
|
224.6
|
224.2
|
230.6
|
12
Investment in associates and joint ventures
|
|
At
30 June 2024
£m
|
At
25 June 2023
£m
|
At
31 December 2023
£m
|
|
Investments in
associates
|
20.9
|
21.5
|
20.8
|
|
Investments in joint
ventures
|
4.5
|
4.6
|
4.4
|
|
Total investments in associates and joint
ventures
|
25.4
|
26.1
|
25.2
|
During the period, our Investment in
Full House Restaurant Holdings, contributed profits of £1.3m, along
with paying a dividend of £1.0m, and our investment in Domino's
Pizza West Country contributed profits of £0.1m. The Northern
Ireland JV contributed losses of £0.2m.
13.
Business combinations
On the 10th of April 2024, the Group
acquired the remaining 85% share capital of Shorecal Limited, a
private company registered in the Republic of Ireland that operates
Domino's franchise stores in Ireland, taking its ownership to 100%.
A total consideration of £54.8m was transferred which includes net
cash consideration of £32.5m and share consideration of £22.3m
which relates to a share issue of 6,700,909 shares in the
Company.
The acquisition enables the Group to
accelerate Shorecal's growth across ROI and Northern Ireland,
materially increasing the store count and leverage capacity in the
Irish supply chain centre.
The provisional acquisition balance
sheet was adjusted to reflect the fair value of the assets and
liabilities. Adjustments to the balance sheet primarily relate to
recognition of intangible assets for the reacquired rights relating
to the franchise agreements, remeasurement of right of use assets
and lease liabilities, and contingent liabilities and
provisions.
The reacquired rights of £22.4m were
valued using multiple period excess earnings method over the
remaining contractual term of the franchise agreements. These
assets will be amortised over the period of the franchise
agreements, with amortisation recognised in non-underlying
results.
Contingent liabilities of £1.7m have
been recognised in relation to historical tax exposures of the
Shorecal group, including litigation with Revenue Ireland which has
yet to be settled. Progress towards a settlement is being made,
however there remains uncertainty over the settlement amount and
therefore cannot be reliably measured. Provisions recognised of
£1.6m relate to dilapidations provisions for the acquired
leases.
Financial liabilities of £16.3m,
representing external debt held pre-acquisition, were settled by
the Group subsequent to the acquisition date.
The resulting goodwill of £63.9m
recognised represents intangible assets that do not qualify for
separate recognition, such as the extensive assembled workforce,
and synergies resulting from the Group's purchase of this
franchisee group, and the future growth potential of the
Group.
Immediately prior to the
acquisition, the Group held a 15% interest in Shorecal with a fair
value of £10.0m on the acquisition date.
Since the acquisition, Shorecal has
contributed £10.3m of Group revenue and profit before tax of £0.7m.
Had the acquisition taken place at the start of the reporting
period, the Group would have had revenue of £337.3m and profit
before tax of £60.0m. Since acquisition, an exchange rate loss of
£0.9m arose on Goodwill.
|
|
|
|
£m
|
|
Cash paid on
acquisition
|
|
|
37.3
|
|
Cash acquired
|
|
|
(4.8)
|
|
Net cash consideration
|
|
|
32.5
|
|
Non-cash consideration - Share
issue
|
|
|
22.3
|
|
Total consideration transferred
|
|
|
54.8
|
|
|
|
|
|
|
Fair value of net assets acquired
|
|
|
|
|
Property, plant and
equipment
|
|
|
2.9
|
|
Intangible assets
|
|
|
22.4
|
|
Right-of-use-assets
|
|
|
6.3
|
|
Deferred tax assets
|
|
|
0.5
|
|
Trade and other
receivables
|
|
|
2.0
|
|
Inventories
|
|
|
0.2
|
|
Total assets acquired
|
|
|
34.3
|
|
Current tax liabilities
|
|
|
(0.3)
|
|
Deferred tax
liabilities
|
|
|
(3.7)
|
|
Financial liabilities
|
|
|
(16.3)
|
|
Provisions
|
|
|
(1.6)
|
|
Lease liabilities
|
|
|
(6.3)
|
|
Contingent liabilities
|
|
|
(1.7)
|
|
Trade and other
payables
|
|
|
(3.5)
|
|
Total liabilities acquired
|
|
|
33.4
|
|
Net identifiable assets acquired at fair
value
|
|
|
0.9
|
|
Goodwill arising on acquisition
|
|
|
|
|
Consideration
transferred
|
|
|
54.8
|
|
Previously held investment in
Shorecal
|
|
|
10.0
|
|
Non-controlling
interest
|
|
|
-
|
|
Fair value of net assets
acquired
|
|
|
(0.9)
|
|
Goodwill
|
|
|
63.9
|
14.
Disposals
Sale of corporate stores
During the period, the Group
disposed of 14 of its London corporate stores, generating a profit
on disposal of £11.2m. The remaining stores have been recognized as
assets and liabilities held for sale. Refer to note 15 for further
details.
|
|
|
|
£m
|
|
Cash received on
disposal
|
|
|
17.3
|
|
Net assets disposed (see
below)
|
|
|
(5.7)
|
|
Profit on disposal before transaction costs
|
|
|
11.6
|
|
Costs associated with
disposal
|
|
|
(0.4)
|
|
Total profit on disposal
|
|
|
11.2
|
|
|
|
|
|
|
Goodwill
|
|
|
5.9
|
|
Property, plant and
equipment
|
|
|
0.8
|
|
Inventories
|
|
|
0.1
|
|
Right-of-use assets
|
|
|
2.7
|
|
Deferred tax assets
|
|
|
0.1
|
|
Lease liabilities
|
|
|
(3.4)
|
|
Provisions
|
|
|
(0.5)
|
|
Net assets disposed
|
|
|
5.7
|
Investment in Daytona JV Limited
In the prior year, the Group
disposed of its 33.3% interest in Daytona JV Limited. The Group
received £79.9m, of which £70.6m related to the investment in
Daytona JV limited and £9.3m related to the repayment of the loan.
Included in the cash received on disposal was a £1.8m gain on a
forward foreign currency contract that was entered into to provide
certainty to the Group over cash flows received on disposal. The
profit on disposal is analysed as follows:
|
|
|
|
Daytona JV
Limited
£m
|
|
Cash received on
disposal
|
|
|
70.6
|
|
Carrying amount of investment
disposed
|
|
|
(32.4)
|
|
Currency translation gain
transferred from translation reserve
|
|
|
2.5
|
|
Profit on disposal before professional fees
|
|
|
40.7
|
|
Professional fees relating to the
disposal
|
|
|
(0.1)
|
|
Total profit on disposal of investment
|
|
|
40.6
|
The profits arising from the
disposal were treated as non-taxable on the basis the disposal fell
under the Substantial Shareholding Exemption.
15.
Assets and liabilities held for sale
During the period, the Group
proceeded with the sale of its 31 London corporate stores, of which
14 were sold by 30 June 2024. The table below comprises the assets
and liabilities of the stores that had not been sold as at 30 June
2024. The assets and liabilities held for sale are included in the
'UK & Ireland' operating segment. The sale of these stores
completed in July 2024. Refer to note 22 for details.
|
|
|
|
£m
|
|
Goodwill
|
|
|
5.8
|
|
Intangible assets
|
|
|
0.2
|
|
Property, plant and
equipment
|
|
|
1.5
|
|
Right-of-use assets
|
|
|
4.2
|
|
Deferred tax assets
|
|
|
0.2
|
|
Lease liabilities
|
|
|
(4.3)
|
|
Provisions
|
|
|
(0.7)
|
|
Net assets disposed
|
|
|
6.9
|
16.
Financial liabilities
Debt
facilities
As at 30 June 2024 the Group had a
total of £500m (H1 23: £400m; FY 23: £400m) of banking facilities,
of which £186.0m (H1 23: £189.1m; FY 23: £112.9m) was undrawn. The
£500m of banking facilities is made up of a £200m revolving credit
facility and £300m of USPP loan notes.
Bank revolving
facility
The £200m revolving credit facility
expires on 27 July 2027. Arrangement fees of £1.1m (H1 23: £1.5m;
FY 23: £1.3m) directly incurred in relation to the RCF are included
in the carrying values of the facility and are being amortised over
the extended term of the facility.
Interest charged on the revolving
credit facility ranges from 1.85% per annum above SONIA (or
equivalent) when the Group's leverage is less than 1:1 up to 2.85%
per annum above SONIA for leverage above 2.5:1. A further
utilisation fee is charged if over one-third is utilised at 0.15%
which rises to 0.30% of the outstanding loans if over two-thirds is
drawn. In addition, a commitment fee is calculated on undrawn
amounts based on 35% of the current applicable margin.
The RCF is secured by an unlimited
cross guarantee between Domino's Pizza Group plc, DPG Holdings
Limited, Domino's Pizza UK & Ireland Limited, DP Realty
Limited, DP Pizza Limited, Sell More Pizza Limited, Sheermans SS
Limited, Sheermans Limited, Shorecal Limited, Karshan Limited,
K&M Pizzas Limited and Sarcon No 214 Limited.
An ancillary overdraft and pooling
arrangement was in place with Barclays Bank Plc for £20.0m
covering, Domino's Pizza Group plc, DPG Holdings Limited, Domino's
Pizza UK & Ireland Limited, DP Realty Limited, DP Pizza
Limited, Sell More Pizza Limited, Sheermans SS Limited and
Sheermans Limited. The overdraft facility amount is included and
part of the £200m revolving credit facility. Interest is charged
for the overdraft at the same margin as applicable to the revolving
credit facility above SONIA.
Private placement loan
notes
The USPP loan notes issued in 2022
mature on 27th July 2027 and arrangement fees of £0.8m (FY 23:
£1.1m) directly incurred in relation to the USPP are included in
the carrying values of the facility and are being amortised over
the term of the notes. Interest is charged at 4.26% per
annum.
On 20 June 2024, the Group issued an
additional £100m of US Private Placement (USPP) loan notes,
incurring arrangement fees of £0.7m.
The USPP loan notes issued in June
2024 mature on 20th June 2034 and arrangement fees of
£0.7m directly incurred in relation to the issuance are included in
the carrying values of the facility and are being amortised over
the term on the notes. Interest is charged at 5.97% per
annum.
Both USPP loan notes are secured by
an unlimited cross guarantee between the same legal entities that
are guaranteeing the revolving credit facility.
17.
Financial instruments
Investments
In April 2024, the Group acquired
12.1% of the issued ordinary share capital of DP Poland plc, an
AIM-listed company based in the UK, for a cost of £11.4m, which
includes transaction costs of £0.4m. An election has been made for
the equity instrument to be designated as fair value through other
comprehensive income. The inputs used to calculate the fair value
of the investment fall within Level 1 of the IFRS 13 hierarchy.
Level 1 fair value measurements use quoted prices in active
markets, being the share price of DP Poland plc. The fair value of
the investment at 30 June 2024 is £11.9m resulting in a fair value
gain of £0.5m which has been recognised in other comprehensive
income.
The Group also entered an option
agreement to purchase additional shares in DP Poland plc at a
future date from another shareholder up to a maximum total position
of 29.99% of the investment. This option is not recognised on the
balance sheet as currently has no fair value. The Directors have
considered the option in reaching the assessment that our 12.1%
investment does not represent significant influence over DP Poland
plc, and do not consider this provides substantive rights or
benefits that would lead to treatment of the investment as an
associate.
During the period, the Group
acquired the remaining 85% of Shorecal Limited, bringing its total
ownership to 100%. As such, the 15% investment in Shorecal that was
previously recognised as an investment has been derecognised at its
fair value.
18.
Share-based payments
The expense recognised for
share-based payments in respect of employee services received
during the 26 weeks ended 30 June 2024 was £2.0m (H1 23: £1.4m; FY
23: £3.8m). This all arises on equity-settled share-based payment
transactions.
19.
Related party transactions
During the period the Group entered
into transactions, in the ordinary course of business, with related
parties. Transactions entered into, and trading balances
outstanding with related parties, are as follows:
|
|
26 weeks ended
30 June 2024
|
26 weeks ended
25 June 2023
|
53 weeks ended
31 December 2023
|
|
|
£m
|
£m
|
£m
|
|
Associates and Joint ventures
|
|
|
|
|
Sales to related
parties
|
25.4
|
26.1
|
54.3
|
|
Amounts owed by related
parties
|
3.6
|
2.4
|
3.1
|
20.
Analysis of Net Debt
|
|
At
30 June 2024
|
At
25 June 2023
|
At
31 December 2023
|
|
|
£m
|
£m
|
£m
|
|
Cash and cash
equivalents
|
25.9
|
37.0
|
52.1
|
|
Debt facilities
|
(314.0)
|
(210.9)
|
(287.1)
|
|
Capitalised facility arrangement
fees
|
2.7
|
2.5
|
2.2
|
|
Net Debt
|
(285.4)
|
(171.4)
|
(232.8)
|
The Group's lease liabilities are
not included in the Group's definition of Net Debt. Lease
liabilities are measured at the present value of future lease
payments, including variable lease payments and the exercise price
of purchase options where it is reasonably certain that the option
will be exercised, discounted using the interest rate implicit in
the lease, if readily determinable, or alternatively the Group's
incremental borrowing rate as a lessee.
21.
Additional cash flow information
Other cash flows from investing activities
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2022
£m
|
|
Dividends received from associates
and joint ventures
|
1.0
|
1.0
|
2.2
|
|
Dividends received from
investments
|
0.2
|
0.8
|
0.8
|
|
Deferred consideration received
from subsidiary disposal
|
0.2
|
-
|
-
|
|
Decrease in loans to associates
and joint ventures
|
-
|
9.3
|
9.3
|
|
|
1.4
|
11.1
|
12.3
|
|
|
|
|
|
Share transactions in cash flows from financing
activities
|
|
26 weeks ended
30 June 2024
|
26 weeks ended
25 June 2023
|
53 weeks ended
31 December 2023
|
|
|
£m
|
£m
|
£m
|
|
Purchase of own shares - share
buyback
|
(6.2)
|
(17.1)
|
(93.3)
|
|
Purchase of own shares - employee
benefit trust
|
-
|
(1.9)
|
(5.0)
|
|
Consideration received on exercise
of share options -
employee benefit trust
|
0.3
|
-
|
0.5
|
|
|
(5.9)
|
(19.0)
|
(97.8)
|
Reconciliation of free cash flow
|
|
26 weeks ended
30 June 2024
|
26 weeks ended
25 June 2023
|
53 weeks ended
31 December 2023
|
|
|
£m
|
£m
|
£m
|
|
Cash generated from operating
activities
|
40.3
|
64.6
|
113.5
|
|
Net interest paid
|
(7.8)
|
(7.1)
|
(13.1)
|
|
Receipt of principal element on
lease receivables
|
8.2
|
7.5
|
15.0
|
|
Receipt of interest element on
lease receivables
|
6.6
|
6.1
|
12.6
|
|
Repayment of principal element on
lease liabilities
|
(11.0)
|
(10.0)
|
(20.1)
|
|
Repayment of interest element on
lease liabilities
|
(7.1)
|
(6.7)
|
(13.8)
|
|
Dividends received
|
1.2
|
1.8
|
3.0
|
|
Other
|
0.1
|
-
|
(0.1)
|
|
|
30.5
|
56.2
|
97.0
|
Cash and cash equivalents
|
|
26 weeks ended
30 June 2024
£m
|
26 weeks ended
25 June 2023
£m
|
53 weeks ended
31 December 2023
£m
|
|
Cash at bank and in
hand
|
25.9
|
37.0
|
52.1
|
|
Total cash at bank and in hand
|
25.9
|
37.0
|
52.1
|
Reconciliation of financing activities
|
|
At
01 January 2024
£m
|
Net cash flow
£m
|
Exchange
differences
£m
|
Non-cash
movements
£m
|
At
30 June 2024
£m
|
|
Debt facilities
|
(284.9)
|
(27.2)
|
0.4
|
0.4
|
(311.3)
|
|
Lease liabilities
|
(230.3)
|
18.1
|
0.4
|
(12.8)
|
(224.6)
|
|
|
(515.2)
|
(9.1)
|
0.8
|
(12.4)
|
(535.9)
|
|
|
At
26 December 2022
£m
|
Net cash flow
£m
|
Exchange
differences
£m
|
Non-cash
movements
£m
|
At
25 June 2023
£m
|
|
Debt facilities
|
(283.7)
|
75.2
|
0.4
|
(0.3)
|
(208.4)
|
|
Lease liabilities
|
(223.4)
|
16.7
|
(0.4)
|
(17.1)
|
(224.2)
|
|
|
(507.1)
|
91.9
|
-
|
(17.4)
|
(432.6)
|
|
|
At
26 December 2022
£m
|
Net cash flow
£m
|
Exchange
differences
£m
|
Non-cash
movements
£m
|
At
31 December 2023
£m
|
|
Debt facilities
|
(283.7)
|
(0.8)
|
0.2
|
(0.6)
|
(284.9)
|
|
Lease liabilities
|
(223.4)
|
33.9
|
0.1
|
(40.9)
|
(230.3)
|
|
|
(507.1)
|
33.1
|
0.3
|
(41.5)
|
(515.2)
|
22.
Post balance sheet events
In July 2024 the Group disposed of
the remaining London corporate stores receiving cash consideration
of £15.8m, with an additional £2.0m deferred consideration payable
in 2026. This is expected to generate an additional profit on
disposal before tax, net of closure costs, of £8m-£10m.
23.
Principal risks and uncertainties
Details of the principal risks and
uncertainties facing the Group, with the potential to materially
impact the successful delivery of our strategy, were set out on
pages 46 to 51 of the Domino's Pizza Group plc Annual Report and
Accounts 2023. These risks are summarised as follows: competitive
pressures; franchisee relationships / operations; supply chain
disruption (to either a key supplier or at one of our SCCs); food
safety; loss of business critical systems; loss of personal /
corporate data; failure to deliver on our ESG commitments; failure
to meet public health expectations; and people-related risks. The
Executive Risk Committee, which has been enhanced in 2024, has
continued to support an effective risk monitoring process and has
considered both the principal and any emerging risks and
uncertainties during the first 26 weeks of 2024.
The Directors believe that the
principal risks being faced over the remainder of the financial
year are not substantially different to those disclosed in the 2023
Annual Report.
In particular, in the period, we
have seen continued pressure on the cost-of-living for our
consumer. As a result we are focusing more on providing value in
our delivery channel; and the testing of our new loyalty programme
should also help us ultimately improve the order frequency from
those who love our products.
Maintaining a strong relationship
with our franchisees is fundamental to our continued performance
and growth and we are working constructively with our franchisees
on the growth framework for the future; and to meet our new store
opening plans for 2024 and beyond.
We will also continue to monitor any
impacts from the change in government on our business
model.
Further information on the
improvements made in mitigating our principal risks and
uncertainties will be provided in our next Annual
Report.
Alternative Performance Measures and
Glossary
The performance of the Group is
assessed using a number of Alternative Performance Measures
('APMs'). The Group's results are presented both before and after
non-underlying items. Underlying profitability measures are
presented excluding non-underlying items as we believe this
provides both management and investors with useful additional
information about the Group's performance and aids a more effective
comparison of the Group's trading performance from one period to
the next and with similar businesses. Underlying profitability
measures are reconciled to unadjusted IFRS results on the face of
the income statement with details of non-underlying items provided
in note 4.
In addition, the Group's results are
described using certain other measures that are not defined under
IFRS and are therefore considered to be APMs. These measures are
used by management to monitor on-going business performance against
both shorter term budgets and forecast but also against the Group's
longer term strategic plans. The definition of each APM presented
in this report and, also, where a reconciliation to the nearest
measure prepared in accordance with IFRS can be found is shown
below:
|
Item
|
Definition
|
Location of reconciliation to GAAP measure
|
|
Overall terminology
|
|
Non-underlying items
|
Non-underlying items relate to
significant irregular costs, significant impairments of assets,
together with fair value movements and other costs associated with
acquisitions or disposals.
|
Group income statement, note
4
|
|
Profit measures
|
|
Group operating profit before tax
excluding non-underlying items
|
Group operating profit before tax
excluding non-underlying items
|
Group income statement, note
3
|
|
Net interest before non-underlying
items
|
Group finance costs excluding
non-underlying items
|
Group income statement, note
3
|
|
Underlying profit before
taxation
|
Group profit before tax excluding
non-underlying items
|
Group income statement, note
3
|
|
Underlying profit for the
period
|
Group profit after taxation
excluding non-underlying items
|
Group income statement
|
|
Earnings before Interest and Tax
(EBIT)
|
EBIT is directly comparable to
underlying operating profit
|
Not applicable
|
|
Underlying basic EPS
|
Group EPS excluding non-underlying
items
|
Note 8
|
|
Last 12 months (LTM)
EBITDA
|
LTM EBITDA for the period from 26
June 2023 to 30 June 2024 based on underlying activities including
share of profits from associates and joint ventures.
|
Not applicable
|
|
Revenue measures
|
|
System sales
|
System sales represent the sum of
all sales made by both franchised and corporate stores to
consumers.
|
Not applicable
|
|
Like-for-like (LFL) sales growth
excluding splits
|
LFL sales performance is
calculated against a comparable 26 week period in the prior year
for mature stores opened which were not in territories split in the
year or comparable period. Mature stores are defined as those open
prior to 26th December 2022.
|
Not applicable
|
|
Cash flow measures
|
|
Net Debt
|
Group cash less bank revolving
credit facility and other
|
Note 20
|
|
Free cash flow
|
Free cash flow comprises cash
generated from operations less dividends received, net interest
cash flows and corporation tax. Free cash flow before
non-underlying cash items represents the free cash flow before the
inclusion of the cash impact of items recognised as
non-underlying.
|
Not applicable
|
Other non-financial definitions
|
Item
|
Definition
|
|
eCommerce fund
|
The fund used to recharge costs
for the development and maintenance of our eCommerce platform with
franchisees
|
|
German associate
|
Represents our 33% associate
investment in the trading operations of Domino's Pizza Germany
(also referred to as Daytona JV) that was disposed of in the
period.
|
|
International
|
Represents our former businesses
and investments in Norway, Sweden, Iceland, Germany and Switzerland
.
|
|
London corporate stores
|
Relates to the London based
corporate stores held following the acquisition of Sell More Pizza
Limited and subsequent corporate store openings and
closures
|
|
NAF
|
National Advertising
Fund
|
|
NI JV
|
Represents our 46% associate
investment in the trading of operations of Victa DP Ltd (also
referred to as Northern Ireland JV).
|
|
Shorecal
|
Represents our 100% interest in
the trading operations of Shorecal Limited, which operates stores
in the Republic of Ireland and Northern Ireland.
|
Responsibility statement
Each of the Directors, whose names
and functions appear below, confirm to the best of their knowledge
that the condensed consolidated interim financial statements have
been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and that the interim
management report includes a fair review of the information
required namely:
·
DTR 4.2.7 (R): an indication of important events
that have occurred during the 26 week period ended 30 June 2024 and
their impact on the condensed consolidated interim financial
statements; and a description of the principal risks and
uncertainties for the remaining 26 weeks of the financial year;
and
·
DTR 4.2.8 (R): any related party transactions
that have taken place in the 26 week period ended 30 June 2024 that
have materially affected the financial position or performance of
the enterprise during that period; and any changes in the related
party transactions described in the last Annual Report that could
do so.
The Directors of Domino's Pizza
Group plc as at the date of this announcement are as set out
below:
Matthew Shattock*,
Chairman
Ian Bull*, Senior Independent
Director
Andrew Rennie, Chief Executive
Officer
Edward Jamieson, Chief Financial
Officer
Natalia Barsegiyan*
Tracy Corrigan*
Elias Diaz Sese*
Lynn Fordham*
Mitesh Patel*
*Non-executive
Directors
A list of the current Directors is
maintained on the Domino's Pizza Group plc website at:
corporate.dominos.co.uk.
The Directors are responsible for
the maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of
financial information differs from the legislation in other
jurisdictions.
This responsibility statement was
approved by the Board of Directors on 5 August 2024 and is signed
on its behalf by Andrew Rennie, Chief Executive Officer.
By order of the Board
Andrew Rennie
Chief Executive Officer
5 August 2024
Independent review report to Domino's Pizza Group
plc
Report on the condensed consolidated interim financial
statements
Our
conclusion
We have reviewed Domino's Pizza
Group plc's condensed consolidated interim financial statements
(the "interim financial statements") in the interim report of
Domino's Pizza Group plc for the 26 week period ended
30 June 2024 (the "period").
Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The interim financial statements
comprise:
·
the group balance sheet as at
30 June 2024;
·
the group income statement and group statement of
comprehensive income for the period then ended;
·
the group cash flow statement for the period then
ended;
·
the group statement of changes in equity for the
period then ended; and
·
the explanatory notes to the interim financial
statements.
The interim financial statements
included in the interim report of Domino's Pizza Group plc have
been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the Financial
Reporting Council for use in the United Kingdom ("ISRE (UK) 2410").
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing (UK) and, consequently, does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information
contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties
relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the group to cease to continue as a going
concern.
Responsibilities for the interim financial statements and the
review
Our
responsibilities and those of the directors
The interim report, including the
interim financial statements, is the responsibility of, and has
been approved by the directors. The directors are responsible for
preparing the interim report in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the interim report,
including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do
so.
Our responsibility is to express a
conclusion on the interim financial statements in the interim
report based on our review. Our conclusion, including our
Conclusions relating to going concern, is based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers
LLP
Chartered Accountants
Birmingham
5 August 2024
