Interim Results
Domino's Pizza UK & IRL PLC
27 July 2004
For Immediate Release 27 July 2004
DOMINO'S PIZZA UK & IRL plc
INTERIM RESULTS
FOR THE TWENTY-SIX WEEKS ENDED 27 JUNE 2004
Domino's Pizza UK & IRL plc ('Domino's Pizza' or 'the Company', symbol: DOM)
announces its interim results for the twenty-six weeks ended 27 June 2004.
Highlights
• Profit before tax increased 41.5% to £4.10m. (2003: £2.90m)
• Earnings per share:
- Basic earnings per share up 55.9% to 5.77p. (2003: 3.70p)
- Diluted earnings per share up 57.9% to 5.48p. (2003: 3.47p)
• Interim dividend increased 66.7% to 2.20p per share. (2003: 1.32p)
• System sales increased 18.8% to £81.5m. (2003: £68.6m)
• Like for like sales up 4.9%.
• 19 new stores opened in the period (2003: 21 stores) resulting in a
total of 337 stores at the period end (Interim 2003: 290 stores).
Stephen Hemsley, Chief Executive of Domino's Pizza, commented:
'Your Company has continued to make good progress in the first twenty-six weeks
of 2004 with record system sales and strong store growth. Record profits have
resulted in strong cash generation, which has allowed us to return cash to
shareholders by both a share buy-in and record dividends.
'Your Board continues to believe that cashflow not required for the growth and
expansion of the business should be returned to shareholders in the form of
increased dividends and share buy-ins. We are therefore pleased to declare an
increase of 66.7% in the interim dividend to 2.20 pence per share (2003: 1.32
pence per share).'
Contact:
Domino's Pizza 01908 580693 / 07909 928016
Stephen Hemsley / Bernadette Eddisford
Buchanan Communications 020 7466 5000
Richard Oldworth / Catherine Miles
Notes to editors:
Domino's Pizza Group Limited is a wholly owned subsidiary of Domino's Pizza UK &
IRL plc, the shares of which are traded on the Alternative Investment Market of
the London Stock Exchange (symbol: DOM). Domino's Pizza Group Limited is the
UK's leading pizza delivery company and holds the master franchise to own,
operate and franchise Domino's Pizza stores in the UK and Ireland. The first UK
store opened in 1985 and the first Irish store opened in 1991. As at 27 June
2004, there were 337 stores in the UK and Ireland.
Domino's Pizza is the world leader in pizza delivery and was founded in the
United States in 1960. There are currently more than 7,000 stores open across
more than 50 international markets, employing over a quarter of a million
people.
CHIEF EXECUTIVE'S STATEMENT
Introduction
Your Company has continued to make good progress in the first twenty-six weeks
of 2004 with record system sales and strong store growth. Record profits have
resulted in strong cash generation, which has allowed us to return cash to
shareholders by both a share buy-in and record dividends.
At the risk of repeating the same message from my previous statements, this has
been achieved by sticking to the basic principles of the Domino's Pizza brand:
to deliver a high quality pizza in the promised time from great-looking,
efficient stores that are staffed by dedicated, customer-focused people. In this
way, we intend to deliver quality growth for many years to come.
Sales
System sales, which are the sales of all stores in the Domino's system in the UK
and Republic of Ireland, rose by 18.8% to £81.5m (2003: £68.6m) in the
twenty-six weeks ended 27 June 2004. Like-for-like sales in the 268 stores open
for fifty-two weeks or more in both periods grew by 4.9% (2003:6.9%). These
results further extend our leadership of the home delivery pizza category both
in terms of sales and number of stores.
Our e-commerce sales also continue to grow very strongly, up 40% over the
previous year. This channel now generates 5.3% of total system sales.
Trading Results
Group turnover, which includes the sales generated from royalties, fees, food
sales and rental income as well as the turnover of corporately-owned and
operated stores, grew by 14.3% to £34.7m from £30.4m. The slower rate of
increase reflects the reduction in the number of corporate stores from 26 to 19
at the respective half years.
Group operating profit was up 60.9% to £4.2m from £2.6m on system sales 18.8%
ahead. Excluding the exceptional costs incurred in 2003, the increase in
underlying operating profit was 44.6%. We continue to gain significant
advantage from the high operational leverage of the business. It continues to
be the view of your Board that the current Group infrastructure is sufficient to
support a system of around 500 stores, although we are constantly analysing the
trade-off between the fixed costs of opening further commissaries against the
variable costs of vehicles. Whilst the current disposition of stores means that
the most cost effective solution is to run out of three commissaries, as we grow
towards the anticipated build-out target of 800 stores, further location(s) will
be added. We anticipate that this incremental investment can be comfortably
funded from cash flow.
Profit before tax was up 41.5% to £4.10m (2003: £2.90m). The tax charge has
reduced to 28.5% from 35.0% as a result of the tax relief now available on the
exercise of share options. As a result, profit after tax was up 55.6% to £2.94m
(2003: £1.89m).
Earnings per share and dividend
Basic earnings per share were up 55.9% to 5.77 pence (2003: 3.70 pence).
Diluted earnings per share increased by 57.9% to 5.48 pence from 3.47 pence for
the same period in 2003.
Your Board continues to believe that cashflow not required for the growth and
expansion of the business should be returned to shareholders in the form of
increased dividends and share buy-ins. We are therefore pleased to declare an
increase of 66.7% in the interim dividend to 2.20 pence per share (2003: 1.32
pence per share). The interim dividend is covered 2.53 times by profit after
tax (2003: 2.80 times), which is approximately the same level of cover
established for the previous full year. This dividend will be paid on 26 August
2004 to shareholders on the register on 6 August 2004.
Cash Flow & Balance Sheet
Operating activities generated net cash of £3.4m (2003: £3.1m). During the
period, we purchased the long leasehold interest in our commissary in Naas,
Ireland for €1.6m. We now own the freeholds or long leaseholds of all of our
commissary and head office buildings.
In the first twenty-six weeks of the year options over 872,000 shares have been
exercised generating a cash inflow of £0.4m. The Company has also completed the
first small buy-in of shares with 100,000 shares being purchased on 9 June at a
price of £2.00 per share. These shares have been cancelled. Further buy-ins
are planned when cash-flow permits and your directors consider it prudent.
The Group continues to provide support to franchisees in the form of leasing new
equipment and refits through its wholly owned subsidiary DP Capital Limited.
Funding to support these transactions is provided on a very limited recourse
basis and is consolidated into the Group balance sheet. In the first twenty-six
weeks of the year, new advances of £0.5m were made which were matched by similar
repayments resulting in period-end borrowings of £2.7m (2003:£2.7m)
At 27 June 2004, the Group had cash-in-hand of £2.9m (2003: £3.7m), which taken
together with the borrowings noted above and the EBT loan of £5.2m, gave
consolidated net borrowings of £5.0m (2003: £4.2m). After the deduction of the
cost of the shares held in the EBT, shareholders funds were £12.7m (2003:
£10.7m), resulting in a capital-gearing ratio of 39.4% (2003: 40.9%).
System Expansion & Re-Imaging
During the first twenty-six weeks of 2004, 19 new stores were opened (Interim
2003: 21 stores). There were no store closures in either period. As a result,
the total store count at 27 June 2004 was 337 (Interim 2003: 290 stores).
Obtaining property has always been a constraint on growth but has been made more
difficult in the current year by the changes in the planning uses categories.
This has resulted in delays in acquiring property in locations required by
franchisees. We currently anticipate opening between 40 and 50 new stores in the
current year.
The re-imaging programme we embarked upon almost four years ago is now complete,
save for a few stores, which we plan to relocate in the near future. This
programme has given us a consistent image throughout the system, which is so
important when promoting a brand. This is an ongoing process and we plan to
open the first store with the latest exciting new design in the Autumn of this
year. This new design will become the standard for all new stores and the next
round of refits of existing stores.
Board Composition
We were sorry to report the resignation of Yoav Gottesman as a director of the
Company on 21 May 2004. Yoav had been a director since our IPO in November 1999
and had provided us with excellent guidance during the period. We thank him for
his contribution to the success of the Group.
Outlook
The outlook for the remainder of the year is positive. Current trading is
strong with like-for-like sales growth exceeding that experienced in the first
twenty-six weeks of the year. We are therefore confident of a successful
outcome for the year.
STEPHEN HEMSLEY
Chief Executive
GROUP PROFIT AND LOSS ACCOUNT
(Unaudited) (Unaudited)
26 weeks to 26 weeks to Year ended
27 June 29 June 28 December
2004 2003 2003
Notes £000 £000 £000
TURNOVER
Turnover: group and share of joint
venture's turnover 36,214 31,665 64,369
Less: share of joint venture's turnover (1,478) (1,274) (2,812)
GROUP TURNOVER 34,736 30,391 61,557
Cost of sales (20,386) (16,758) (34,101)
GROSS PROFIT 14,350 13,633 27,456
Distribution costs (3,760) (4,098) (7,805)
Administration expenses - normal (6,383) (6,626) (13,253)
Administration expenses - exceptional - (295) (532)
4,207 2,614 5,866
GROUP OPERATING PROFIT 4,207 2,614 5,866
Share of operating profit in joint venture 55 47 105
Amortisation of goodwill on joint venture (3) (3) (5)
52 44 100
TOTAL OPERATING PROFIT: GROUP AND
SHARE OF JOINT VENTURE 4,259 2,658 5,966
(Loss)/Profit on disposal of fixed assets (45) 333 775
4,214 2,991 6,741
PROFIT ON ORDINARY ACTIVITIES BEFORE
INTEREST AND TAX
Net interest payable and similar charges (109) (89) (204)
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION 4,105 2,902 6,537
Tax on profit on ordinary activities 2 (1,170) (1,016) (1,958)
PROFIT ON ORDINARY ACTIVITIES AFTER 2,935 1,886 4,579
TAXATION
Minority interests (18) - (20)
PROFIT FOR THE FINANCIAL
YEAR ATTRIBUTABLE TO MEMBERS OF
THE PARENT COMPANY 2,917 1,886 4,559
Dividends on equity shares (1,158) (674) (1,757)
RETAINED PROFIT FOR THE PERIOD 1,759 1,212 2,802
Earnings per share - basic 3 5.77p 3.70p 9.02p
- diluted 5.48p 3.47p 8.39p
There are no recognised gains or losses other than those included in the Profit
and Loss Account.
GROUP BALANCE SHEET
(Unaudited) (Unaudited)
27 June 29 June 28 December
2004 2003 2003
Notes £000 £000 £000
FIXED ASSETS
Intangible assets 1,604 1,790 1,430
Tangible assets 13,879 12,781 12,293
Investment in joint venture 372 288 339
15,855 14,859 14,062
CURRENT ASSETS
Stocks 2,172 1,731 1,843
Debtors 4 13,780 12,576 12,233
Cash at bank and in hand 2,914 1,607 3,721
18,866 15,914 17,797
CREDITORS: amounts falling due within
one year 5 (14,353) (12,318) (13,380)
NET CURRENT ASSETS 4,513 3,596 4,417
TOTAL ASSETS LESS CURRENT LIABILITIES 20,368 18,455 18,479
CREDITORS: amounts falling due after more than one
year 6 (7,032) (4,855) (7,119)
PROVISION FOR LIABILITIES AND CHARGES
- DEFERRED TAXATION (630) (604) (630)
12,706 12,996 10,730
CAPITAL AND RESERVES
Called up share capital 2,699 2,556 2660
Share premium account 3,601 2,468 3,290
Own shares held by Employee Benefit Trust (5,160) - (5,160)
Capital Redemption Reserve 5
Profit and loss account 11,493 7,972 9,890
Equity shareholders' funds 12,638 12,996 10,680
Minority interest 68 - 50
12,706 12,996 10,730
GROUP STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited)
26 weeks to 26 weeks to
27 June 29 June 28 December
2004 2003 2003
Notes £000 £000 £000
NET CASH INFLOW FROM OPERATING ACTIVITIES 7 3,392 3,061 8,010
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 70 46 81
Interest paid (91) (70) (183)
Interest element of finance lease rental payments (4) (5) (8)
(25) (29) (110)
TAXATION
Corporation tax paid (1,028) (598) (1,407)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire intangible fixed assets (85) (178) (239)
Payments to acquire tangible fixed assets (2,468) (932) (1,783)
Receipts from sales of tangible and intangible fixed 463 1,482 4,075
assets
Receipts for repayment of joint venture loan 44 34 78
Payment to acquire finance lease assets and advance of
franchise loans (367) (1,561) (2,030)
Receipts from repayment of finance lease and
franchise loans 495 697 936
(1,918) (458) 1,037
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertaking and unassociated
business (280) - 30
EQUITY DIVIDEND PAID (1,112) (622) (1,297)
NET CASH INFLOW BEFORE FINANCING (971) 1,354 6,263
FINANCING
Issue of shares 399 83 1,009
New long-term loans 1,538 740 6,757
Repayments of long-term loans (1,547) (4,427) (8,984)
Repayment of capital element of finance leases
and hire purchase contracts (25) (27) (49)
Purchase of shares of Employee Benefit Trust - - (5,160)
Purchase of own shares (201) - -
164 (3,631) (6,427)
DECREASE IN CASH (807) (2,277) (164)
NOTES TO THE INTERIM REPORT
1. BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION
The interim financial information has been prepared on the basis of the
accounting policies set out in the statutory accounts for the fifty-two weeks
ended 28 December 2003. The taxation charge is calculated by applying the
directors' best estimate of the annual tax rate to the profit for the period.
All other accounting polices set out in the statutory accounts for the fifty-two
weeks ended 28 December 2003 were applied for the purposes of this statement.
Basis of consolidation
The group accounts consolidate the accounts of Domino's Pizza UK & IRL plc and
all its subsidiary undertakings drawn up to the nearest Sunday of the month end.
2. TAXATION
The taxation charge is made up as follows:
(Unaudited) (Unaudited)
27 June 29 June 28 December
2004 2003 2003
£000 £000 £000
UK & overseas corporation tax:
Profit for the period 1163 986 1,778
Share of joint venture tax 7 30 15
Adjustment in respect of the previous period - - 139
Total current tax 1,170 1,016 1,932
UK deferred tax
Origination and the reverse of timing
differences in respect of:
Profit in the period - - 26
Total deferred tax - - 26
Tax on profit on ordinary activities 1,170 1,016 1,958
3. EARNINGS PER SHARE
The calculation of basic earnings per ordinary share is based on earnings of
£2,917,000 (2003: £1,886,000) and on 50,587,803 (2003: 50,991,137) ordinary
shares.
The diluted earnings per share is based on 53,252,178 (2003: 54,302,965)
ordinary shares which takes into account theoretical ordinary shares that would
have been issued, based on average market value if all outstanding options were
exercised.
4. DEBTORS
(Unaudited) (Unaudited)
27 June 29June 28 December
2004 2003 2003
£000 £000 £000
Trade debtors 2,709 2,726 2,540
Amounts owed by joint venture 578 665 627
Other debtors 5,081 4,196 3,809
Prepayments and accrued income 2,452 2,552 2,165
Net investment in finance lease 2,960 2,437 3,092
13,780 12,576 12,233
Included within debtors is £2,836,000 (2003: £2,651,000) due after more than one
year.
5. CREDITORS: amounts falling due within one year
(Unaudited) (Unaudited)
27 June 29 June 28 December
2004 2003 2003
£000 £000 £000
Bank loans - 900 -
Other loans 884 684 811
Finance lease creditors 13 39 34
Trade creditors 4,197 3,451 3,461
Corporation tax 1,183 919 1,041
Other taxes and social security costs 1,003 612 1,498
Other creditors 973 1,087 823
Accruals and deferred income 4,970 3,950 4,628
Proposed dividend 1,130 676 1,084
14,353 12,318 13,380
6. CREDITORS: amounts falling due after more than one year
(Unaudited) (Unaudited)
27 June 29 June 28 December
2004 2003 2003
£000 £000 £000
Bank loans 1,098 3,325 1,098
Finance lease creditors 26 - 31
Other loans 5,908 1,530 5,990
7,032 4,855 7,119
7. NOTES TO THE STATEMENT OF CASHFLOWS
Reconciliation of Group operating profit to net cash flows from operating
activities
(Unaudited) (Unaudited)
27 June 29 June 28 December
2004 2003 2003
£000 £000 £000
Operating profit 4,207 2,967 5,866
Depreciation Charge 644 577 1,210
Amortisation Charge 71 117 180
Administration expenditure - - 328
Other operating income/(expenditure) - (283) -
Increase in debtors (1,877) (307) (707)
Increase in stocks (329) (320) (433)
Increase in creditors 676 310 1,566
3,392 3,061 8,010
8. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this statement does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985.
The financial information for the full preceding year is based on the
statutory accounts for the fifty-two weeks ended 28 December 2003. Those
accounts, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
9. This report is being sent to all registered shareholders. Copies can also be
obtained from the Registered Office of the Company at Domino's House,
Lasborough Road, Kingston, Milton Keynes MK10 OAB.
INDEPENDENT REVIEW REPORT TO DOMINO'S PIZZA UK & IRL PLC
Introduction
We have been instructed by the Company to review the financial information for
the twenty-six weeks ended 27 June 2004 which comprises the Consolidated Profit
and Loss Account, the Consolidated Balance Sheet, the Consolidated Cash Flow
Statement and the related notes 1 to 9. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the Company having regard to guidance contained in
Bulletin 1999/4 'Review of interim financial information' issued by the Auditing
Practices Board. To the fullest extent permitted by the law, we do not accept or
assume responsibility to anyone other than the company, for our work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors of the Company.
The directors of the Company are responsible for preparing the interim report as
required by the AIM Rules issued by the London Stock Exchange.
Review work performed
We conducted our review having regard to the guidance contained in Bulletin 2004
/1 'Review of interim financial information' issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data, and based thereon, assessing whether
the accounting policies and presentation have been consistently applied, unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the twenty-six
weeks ended 27 June 2004.
Ernst & Young LLP
Luton
26 July 2004
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
COMPANIES COVERED:
Latest directors dealings
- 3 hours ago Aquila Energy Efficiency Trust (EUR)
- 3 hours ago Boohoo Group
- 3 hours ago Tritax Big Box Reit
- 4 hours ago Standard Chartered
- 4 hours ago Coca-Cola HBC AG (CDI)