TIDMDOM
RNS Number : 5275U
Domino's Pizza Group PLC
02 August 2022
2 August 2022
LEI: 213800Q6ZKHAOV48JL75
DOMINO'S PIZZA GROUP PLC
Half Year results for the 26 weeks ended 26 June 2022
Continuing to gain market share in challenging conditions; well
placed in this environment with clear value proposition and strong
operating model.
Guidance for the year is unchanged.
26 weeks 26 weeks % change
ended 26 ended 27
June 2022 June 2021
System sales(1) GBP710.5m GBP752.3m (5.6)%
----------- ----------- ---------
Like-for-Like system sales growth
(exc.splits)(2) (6.4)% +19.3% -
----------- ----------- ---------
Like-for-Like system sales growth
(exc.splits & VAT)(3) +2.4% +5.5% -
----------- ----------- ---------
Group revenue GBP278.3m GBP277.8m 0.2%
----------- ----------- ---------
Underlying EBITDA(4) GBP63.5m GBP71.7m (11.4)%
----------- ----------- ---------
Underlying EBIT(4) GBP54.8m GBP63.9m (14.2)%
----------- ----------- ---------
Underlying profit before tax(4) GBP50.9m GBP60.8m (16.3)%
----------- ----------- ---------
Underlying basic EPS(4) 9.5p 10.7p (11.2)%
----------- ----------- ---------
Net debt(5) GBP236.4m GBP177.6m 33.1%
----------- ----------- ---------
Statutory profit after tax GBP42.1m GBP41.3m 1.9%
----------- ----------- ---------
Statutory basic EPS 9.5p 8.9p 6.7%
----------- ----------- ---------
Interim dividend per share 3.2p 3.0p 6.7%
----------- ----------- ---------
All commentary below is on an underlying basis unless otherwise
stated
Financial highlights
-- Like-for-like system sales (excluding the change in the VAT
rate)(3) grew by 2.4%, driven by order count which increased by
2.1%
o Reported system sales of GBP710.5m, down 5.6% due to the
change in the VAT rate
o Like-for-like system sales, excluding splits, down 6.4% (down
7.5% including splits) due to the change in the VAT rate
o Group revenue, which is not significantly impacted by the
change in the VAT rate, was up 0.2%
-- Profitability is expected to be second half weighted. During
the first half, underlying profit before tax was GBP50.9m, down
GBP9.9m. As is standard practice, we pass through food cost
inflation to our franchisees on a lagged basis. We began passing on
these increases during the first half of the year, but will not see
the full impact until the second half
-- H2 marketing spend expected to be significantly higher than
H1. In 2021 marketing spend was focused on the Q2 yodeling
campaign, this year's focus will be on accelerating spend in Q3 and
into Q4 campaigns
-- Statutory profit after tax of GBP42.1m, up GBP0.8m as a
result of international losses and non-underlying items incurred in
the prior year offsetting inflation and costs incurred in H1 22
-- Free cash flow of GBP36.8m (2021: GBP51.3m), lower than prior
year largely due to a working capital outflow in the period related
to the unwind of timing of cash receipts and payments for online
sales in the final week of the 2021 year, and a change in the
timing of creditor payments in support of our suppliers
-- Net debt of GBP236.4m resulting in a net debt / underlying
EBITDA leverage ratio of 1.95x, within our target leverage range of
1.5x - 2.5x
-- GBP72.5m returned to shareholders in H1 22 through dividends and share buybacks
-- Interim dividend for H1 22 of 3.2p per share
-- New GBP20m share buyback programme, effective immediately, in
line with capital allocation framework and commitment to distribute
surplus capital to shareholders
-- Successfully refinanced existing bank debt facilities with
new GBP200m revolving credit facility and GBP200m private placement
facility
Operational and strategic highlights
-- Strong gain in UK takeaway market share, up from 6.0% in Q2 21 to 6.6% in Q2 22
-- Continued growth in total orders, up 2.1% in the first half
-- Delivery orders 8.3% lower than the Covid-impacted prior half
year, Q2 declined 12.1% due to softness in the wider delivery
market, a tough comparator in the prior and introduction of
delivery charge nationally
-- Collections recovery continued, with 39.6% growth and
collections were above 2019 levels in Q2 2022
-- As a result of the franchisee resolution, the business is on
track to open at least 45 new stores in FY22 and had opened 17 new
stores as at 1 August 2022 by 10 different franchisees
-- Launched trial with Just Eat in 136 stores to assess whether
we can reach an incremental customer base with attractive economics
for our business. Early results have been encouraging so trial is
now being extended to nearly one third of the store estate and
should represent a tailwind to growth going forward
-- Total active customer base up 2%, including a 5% increase in active app customers
-- Over 90% of sales now digital, app now accounts for 43.9% of
system sales (+3.1pts vs. H1 21)
-- First national price campaign for several years launched in
January with a strong value message and excellent traction in
evolving consumer demand environment
-- Excellent service standards with value for money scores +4pts
vs. H1 21 and average delivery times of around 25 minutes
-- Outstanding performance from our supply chain with 99.9% accuracy and 99.8% availability
-- Investment in Naas facility in Dublin and cross dock facility in the South-West of England
-- Strengthened franchisee engagement, with first UK rally since
2018 achieving record attendance by over 1,400 franchisee employees
and colleagues
-- CEO, Dominic Paul announced his decision to leave the company
to take up the role of CEO of Whitbread PLC. He will leave the
business in December 2022, and a search for his replacement is
underway
-- Leadership Team continues to be strengthened with new People
Director in March. New Chief Financial Officer joining from Just
Eat Takeaway Plc, starts in October 2022
Commenting on the results, Dominic Paul, Chief Executive Officer
said:
"I'm proud that in the first half Domino's grew order count,
attracted more customers, and increased underlying sales despite
unusually challenging market conditions. This is testament to the
hard work of our world-class franchisees and all our colleagues
across the system, and I'd like to thank them all.
"The system is now fully aligned following the franchisee
resolution in December. This enabled us to restart national price
campaigns offering customers compelling value and to accelerate
market share growth. We have worked really constructively with our
franchisees to learn from the first half campaigns. We will be
increasing our media spend in the second half compared to the first
half, amplifying our value message to customers as we head into key
events such as the men's football World Cup. We are also continuing
to acquire new customers by expanding our trial with Just Eat
following positive initial results.
" Domino's scale and integrated supply chain are always key to
our success. As inflation accelerates and consumer budgets tighten,
these differentiators are more important than ever. Domino's is an
asset-light, cash-generative, resilient business that is
well-placed to navigate the current conditions, which is why we are
able to maintain our existing guidance. Historically, Domino's has
performed well in challenging environments, which demonstrates the
resilience of our business. We remain focused on working with our
franchisees to accelerate the sustainable growth of the system and
delivering an improved second half profit performance."
Current trading, outlook and guidance
In the first half of the year, we increased our market share,
order count was positive, collections grew past 2019 levels and we
attracted more customers despite challenging market conditions. As
we move into the second half of the year, we expect to continue
this momentum and grow our market share given our strong value
message, planned second-half marketing activity, the men's football
World Cup and our dynamic national price campaigns. As during prior
periods and in line with our agreement, we pass through food cost
inflation to our franchisees on a lagged basis. Due to the rapidly
changing inflationary environment this year, we began passing
through these increases during the first half of the year but will
not recognise the full benefit until the second half .
Profitability this year is therefore expected to be weighted
towards the second half.
Despite the challenges in the market and the investments we are
making this year related to the franchisee resolution, we remain
confident in our prior guidance for underlying EBITDA and EPS,
which we expect to be in line with current market expectations.
W ith the scale of our platform and the strength of our brand we
have confidence in our asset-light, cash-generative business model
and our value proposition underpins our strong positioning in the
current environment.
FY 22 Guidance
For the current financial year:
-- We remain confident in our previously communicated guidance
for underlying EBITDA and EPS, which we expect to be in-line with
current market expectations
-- Underlying depreciation & amortisation of between GBP18m to GBP20m
-- Underlying interest (excluding foreign exchange movements) in the range of GBP9m to GBP11m
-- Estimated underlying effective tax rate of c.17% for the full year
-- Capital investment of c. GBP24m
-- Net Debt at year-end around GBP235m
Notes
(1) System sales represent the sum of all sales made by both
franchised and corporate stores to consumers in UK & Ireland.
These are excluding VAT.
(2) Like-for-like excluding splits system sales performance is
calculated for UK & Ireland against a comparable 26-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 27th December 2020.
(3) An adjustment for the change in VAT rates described for
system sales relates to the impact of changes in the VAT applied on
hot takeaway food where the VAT inclusive price to customers did
not change. The VAT rate in the UK decreased from 20% to 5% on 15
July 2020, increased to 12.5% on 1 October 2021 and reverted back
to 20% on 1 April 2022. System sales are consistently reported on
an exclusive of VAT basis. However, where the inclusive of VAT
price of an order remained the same on a total basis to the
customer, over the reduced VAT period the exclusive of VAT price
reported in system sales increased. This leads to an increase in
system sales from 15 July 2020 through to 31 September 2021 when
the VAT rate reduced from 20% to 5%. From 1 October 2021, the rate
increased from 5% to 12.5%. Where the inclusive of VAT price of an
order remained the same on a total basis, this leads to a decrease
in system sales compared to the period from 15 July 2020 and an
increase in system sales compared to the period before 15 July
2020. With the increase in VAT from 1 April 2022 back up to 20%,
where the inclusive of VAT price remained the same to the consumer,
there has been a negative impact on system sales compared to the
period from 15 July 2020 - 31 September 2021 and 1 October 21 - 31
March 2022, as the exclusive of VAT price of an order
decreased.
As an example, for an order where the inclusive of VAT price is
GBP27:
-- From 15 July 2020 to 31 September 2021, during the period
where VAT was 5%, the reported system sale would be GBP25.71
-- From 1 October 2021 to 31 March 2022, during the period where
VAT was 12.5%, the reported system sale would be GBP24.00
-- From 1 April 2022 onwards, where the VAT rate is 20%, the
reported system sale would be GBP22.50
In Ireland, the VAT rate for hot takeaway food reduced from
13.5% to 9% on 1 November 2020 and remains in place. The system
sales figures adjusted for VAT removes the impact on system sales
of the lower VAT rates in the comparative periods to provide
comparability. This is performed through adjusting the comparative
figures over the reduced VAT period back to an equivalent system
sales amount based on a 20% VAT rate where applicable. Group
revenue is not significantly impacted by the change in the VAT rate
as the aforementioned benefit only arose on hot takeaway food, and
therefore only impacts the sales on the corporate stores revenue
within overall Group revenue.
(4) Underlying is defined as statutory performance excluding
discontinued operations, and items classified as non-underlying
which includes significant non-recurring items or items directly
related to merger and acquisition activity and related instruments
as set out in note 5 to the financial information.
(5) 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.
Contacts
For Domino's Pizza Group plc:
Investor Relations
Will MacLaren, Head of Investor Relations +44 (0) 7443 192
118
Media:
Tim Danaher, Samantha Chiene - Brunswick +44 (0) 207 404
5959
For photography, please visit the media centre at
corporate.dominos.co.uk, contact the Domino's Press Office on +44
(0)1908 580757, or call Brunswick on +44 (0)207 404 5959
A results webcast and Q&A for investors and analysts will be
held at 10:00 BST today. The webcast and presentation can be
accessed through this link click here and will also be available on
the Results, Reports and Presentations page of our corporate
website.
Financial calendar
Domino's Pizza Group plc will publish a Q3 trading update in
October 2022.
Cautionary statement
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
assumptions and are subject to a number of risks and uncertainties
that could cause actual events or results to differ materially from
any expected future events or results expressed or implied in these
forward-looking statements. Persons receiving this announcement
should not place undue reliance on forward-looking statements.
Unless otherwise required by applicable law, regulation or
accounting standard, Domino's does not undertake to update or
revise any forward-looking statements, whether as a result of new
information, future developments or otherwise.
About Domino's Pizza Group
Domino's Pizza Group plc is the UK's leading pizza brand and a
major player in the Irish market. We hold the master franchise
agreement to own, operate and franchise Domino's stores in the UK
and the Republic of Ireland, and have associate investments in
Germany and Luxembourg. As of 1 August 2022, we had 1,243 stores in
the UK and Ireland.
Strategic and operational review
Performance summary
Group revenue for the half was up 0.2% to GBP278.3m driven by
increased supply chain revenue. However underlying profit before
tax declined GBP9.9m to GBP50.9m from the prior half year. This
decrease was largely driven by the timing lag in passing through
higher costs to our franchisees. This timing lag is typical in our
business and a function of our franchisee agreements.
Product quality, service standards and customer satisfaction
remain high as we are focused on being the UK & Ireland's
favourite food delivery and collection brand with pizza at our
heart. Despite the challenging environment, we increased our market
share in the UK takeaway market in Q2 from 6.0% to 6.6% compared to
the same period last year. This is testament to the strength of the
Domino's brand and the alignment we now have with our world-class
franchisees.
Underlying EBITDA in H1 22 was GBP63.5m, down GBP8.2m compared
to the same period last year. This was largely driven by the timing
lag described above, as well as a lower contribution from JVs and
associates.
Statutory profit after tax in the first half was GBP42.1m, up
GBP0.8m on last year as a result of reduced costs and charges from
our discontinued international operations offsetting the reduction
in underlying profitability.
Free cash flow generated by the business was GBP36.8m, a
decrease from GBP51.3m last year largely reflecting a working
capital outflow in the half. This was primarily driven by the
timing of cash receipts and payments for online sales following the
strong trading performance in the final week of last year and a
change in the timing of creditor payments in support of our
suppliers.
Net Debt increased by GBP36.7m from GBP199.7m at the start of
the year to GBP236.4m with Net Debt/EBITDA leverage increasing from
1.54x at the start of the year to 1.95x (excluding IFRS 16). The
increase was driven by the payment of the FY21 final dividend and
the share buyback programme.
The asset-light, cash-generative nature of the business means
that in line with our capital allocation framework we are
announcing an incremental GBP20m share buyback which is in addition
to the previously announced share buyback programme of GBP46m which
was completed on 1 July 2022. In addition, we have announced an
interim dividend of 3.2p (GBP13.9m).
Strategic delivery
We launched our new strategy in March 2021 with a vision to be
the favourite food delivery and collection brand, with pizza at its
heart. The Domino's brand is loved by customers and pizza is the
perfect delivery and collection food. Our ambition is to deliver
medium-term total system sales of at least GBP1.9bn with a strategy
centred on five growth pillars:
1. Nobody delivers like Domino's
Delivery is at the heart of our business and is what we are best
known for - we have built a considerable following, with a brand
that people love, enabling us to maintain a leading position in the
UK delivery market. Whilst delivery sales were lower compared to
the prior year we maintained excellent service standards with
average delivery times of around 25 minutes.
Domino's is a digital business and we continued to demonstrate
our digital-first approach in the period. Over 90% of system sales
are through digital channels and the app now accounts for 43.9% of
system sales, an increase of 3.1ppts compared to the same period
last year. We now have 5.3m active app customers, an increase of 5%
over the last 6 months. App customers have a higher lifetime value
than other customers, primarily due to higher levels of ordering
frequency.
In March 2022 we introduced a delivery charge. This allows our
franchisees to offset some of the food and labour cost inflation
which they are experiencing, and it is at the sole discretion of
the franchisee whether they choose to use it. The delivery charge
ranges between 99p and GBP2.50 and each franchisee decides which
pricing level to use. The benefit flows through to our franchisees
as it represents an increase in system sales, DPG enjoys a small
benefit as the delivery charge incurs the standard royalty fee.
Take-up has been widespread and in Q2, 90% of delivered orders
incurred a delivery charge.
In May 2022 we began a trial with Just Eat to see whether this
channel can attract incremental customers to Domino's. We started
the trial with 136 Domino's stores across the UK and Ireland and
following early encouraging results we are extending the trial to
approximately one third of the store estate.
Following the integration of the CRM platform 'Braze' into our
data warehouse, we have accelerated initiatives designed to improve
our customer churn rate. Where we have started implementing
personalisation into customer communications, such as 'Meat' vs.
'Vegetarian' preference we are seeing significantly higher customer
engagement rates.
Our enhanced GPS solution, 2.0, has now been rolled out to 728
stores and we are targeting completing the roll out by the end of
the year. This will help store managers manage labour through more
efficient driver route planning and better integration with the
store as well as allowing drivers to use their own device.
2. Turbo-charge our collection business
Collection represents the most efficient labour channel, with
delivery effectively outsourced to the customer. This is
particularly important in an environment where there are pressures
on labour availability and wage inflation. The various lockdown
restrictions in 2020 and 2021 dampened the collection market
significantly but collection volumes have recovered well. In Q1
volumes were 95% of 2019 levels and we are very pleased that in Q2
they were at 102% of 2019 levels.
Another lever to drive incremental sales is 'In Car Collection'
a service we launched in 2021, this has been rolled out to 444
stores by the end of the period (FY21: 422 stores). We are aiming
to roll it out to c.500 stores by the end of 2022. Customer
feedback has been excellent, and we will continue to promote
awareness of this new channel.
3. Amplify our product quality and value
Our customers love our product, and we have re-ignited product
innovation over the last year. Our 'Value for money' scores
continued to improve this year, demonstrating our focus on customer
value. Following the introduction of a Vegan pizza, 'The Chick
Ain't' in 2021, this year we have launched 'Vegan PepperoNAY' and a
new 'Grilled Vegi Pesto' pizza. Both of these have received
positive customer feedback. Other examples of innovation delivered
so far this year include Pesto Doughballs, twisted Doughballs and
the return of 'Half & Half'. As we enter the important second
half of the year with events such as Freshers Week and the men's
football World Cup we expect to introduce further innovation to
delight our customers.
Following resolution with our franchisees we were able to launch
our first national price campaign in January and amplify our value
message to the whole country, with a 50% discount for spending more
than GBP30 on pizza. Alignment with our franchisees has also
enabled us to market collection promotions which contributed to the
strong Collection performance in Q2. We also undertook tactical
events around Valentine's Day, Mother's Day, Easter and the Jubilee
celebrations as well as specific App-only deals to target customers
with a higher lifetime value. We are learning, alongside our
franchisees, how to optimise our approach to national campaigns and
we will apply these learnings to our campaigns in the second half
of the year as we increase our media spend around key events such
as the men's football World Cup to amplify our important value
message to customers.
4. Uphold our industry-leading scale economics for both the Group and our franchisees
Our vertically integrated supply chain is a key differentiator
in the market and brings us significant competitive advantages. We
can leverage our scale to realise operational and procurement-led
efficiencies to help mitigate inflationary pressures in the market.
We continue to collaborate closely with key suppliers to ensure we
have optimal stock cover and to minimise cost inflation where
possible. We have expanded our number of suppliers to ensure we
secure best value for money for our system, along with providing
resilience across our supplier base.
We remain pleased with the operational performance of our
world-class supply chain, which maintained 99.9.% availability and
99.8% accuracy in a period of challenging market conditions. We
continue to invest in our supply chain to enhance capacity and
drive efficiency. A new 'cross-dock' facility was leased in
Avonmouth which allows us to warehouse product there for more
efficient distribution across the South-West. This will be
particularly important to maintain our availability for Q4. We also
commenced re-development of our Naas supply chain centre in the
Republic of Ireland.
In our commitment to health and safety within our supply chain
operations, we have now rolled out Cages and Dollies to 85% of
stores and with full roll-out expected to be complete by the end of
2022.
5. Model excellence as a franchisor
Our franchisees continue to work tremendously hard in
challenging market conditions and their trading performance has
been impressive. Based on the unaudited data submitted to us by
franchisees, average store EBITDA for all UK stores for the year
was approximately GBP94k, equivalent to a 16% EBITDA margin. This
compares to GBP154k or 25% EBITDA margin achieved in H1 21. The
reduction reflects the net benefit of VAT in the prior half year as
well as the impact of higher food and labour costs in 2022.
Following the introduction of the new store incentive scheme
last year, we have made good progress with our new store openings
with 17 to 1 August 2022 compared to 14 in the comparable period
last year. We continue to expect at least 45 new stores by the end
of the year.
We have supported our franchisees throughout the period with an
enhanced food rebate mechanism and the national roll out of the
delivery charge and we were delighted to organise our first rally
since 2018 in Harrogate for our franchisees and colleagues, of
which over 1,400 joined.
Following resolution with our franchisees last year we have
rolled out a new Operations forum and launched the Franchisee
Performance Management framework. This framework is designed to
assess store performance across the system and identify areas for
improvement. In H1 22 half we rolled out the Domino's Training
Academy which provides management training to team members using a
balance of e-learning and classroom exercises. We also rolled out a
new inventory android app to all stores which is now being widely
used within stores for their counts on a day-to-day basis.
Capital allocation
We have a highly cash-generative, asset-light business model and
in March 2021 we launched a clear capital allocation framework. Our
first priority is to invest in the business to drive long-term
organic growth. We will continue to maximise shareholder returns
through a sustainable and progressive dividend policy and to
operate a disciplined approach to assessing additional growth
opportunities. Finally, operating within a target leverage range of
1.5x - 2.5x net debt to Underlying EBITDA, we aim to maximise
returns with an annual allocation of surplus cash to
shareholders.
In the first half of the year, we have generated GBP36.8m of
free cash flow. We received GBP9.4m in relation to our investment
in the German associate, GBP0.6m in relation to previous disposals,
and have made a GBP7.5m capital investment in our core business to
further enhance our supply chain and digital infrastructure leaving
GBP39.3m of cash generated in the period before distributions. We
have announced an interim dividend of 3.2p, which amounts to
GBP13.9m, set at approximately one-third of the value of the prior
year total dividend. In addition, following completion of the
GBP46m share buyback announced in March, we are announcing an
incremental GBP20m share buyback which will be returned to
shareholders over the coming months.
As at 26 June 2022 the Net Debt/EBITDA ratio from continuing
operations excluding IFRS 16 was 1.95x, within our target leverage
range.
Delivering our sustainable future
Our business is guided by our ambition to deliver a better
future through food people love. This ambition means our focus is
not just on financial performance but on doing the right thing by
bringing people together around the food they love and, by doing
so, having a positive impact on everyone who interacts with us: our
customers, colleagues, franchisees, investors, and the communities
we serve.
Alongside our strategic plan, we have developed a comprehensive
sustainability strategy which underpins our purpose and is based
around our five core sustainability pillars: Our customer; Our
environment; Our people; Our communities; and Responsible
sourcing.
Our UK Leadership Team is supporting the delivery of our
strategy with some members serving as executive sponsors for
relevant areas. Additionally, part of the UK Leadership Team's 2022
bonus is now dependent on the delivery of certain sustainability
targets by the end of 2022.
Colleagues and franchisee partners have been updated, and we
have also recently communicated our sustainability ambitions to all
our major food and non-food suppliers along with details of how
they can support our work to achieve our targets.
While we are still in the early stages of implementing our
refreshed approach to sustainability, we are making good progress
in many areas, for example our decarbonisation targets were
recently approved by the Science Based Targets Initiative (SBTI).
We recognise we have more work to do in some areas, have
established teams focused on ensuring we achieve all our 2022
sustainability targets, and anticipate providing an update on our
progress in the 2022 Annual Report.
Operational review
Reported revenue
H1 22 H1 21 % change
GBPm
Supply chain revenue 190.7 183.1 4.2%
-------- -------- -----------
Royalty, rental & other
revenue 38.1 40.8 (6.7)%
-------- -------- -----------
Corporate stores revenue 17.6 17.7 (0.6)%
-------- -------- -----------
NAF & eCommerce 31.9 36.2 (11.9)%
-------- -------- -----------
Reported revenue 278.3 277.8 0.2%
-------- -------- -----------
Revenues from sales to external customers included within our
income statement are summarised above. The most significant element
of our revenue is derived from products sold through our supply
chain to our franchisees which has grown by 4.2% in the first half
of the year driven by increased food costs, which are passed
through to franchisees.
Royalty, rental and other revenue is primarily the royalty
revenue we receive from our franchised stores based upon a
percentage of their system sales. This declined in the first half
as a result of lower system sales. Corporate stores revenue is the
sales made by the stores we directly operate and was broadly flat
year-on-year.
Revenue relating to the National Advertising Fund ("NAF") and
eCommerce funds is recognised based on costs incurred, and has
decreased by 11.9% due to lower marketing and IT spend in the
period.
System sales performance
System sales represent all sales made by both franchised and
corporate stores to consumers. Like-for-like system sales across UK
& Ireland declined by 6.4%, excluding split stores, or by 7.5%
including splits. The increase in the VAT rate in the period
compared to the same period last year drove this decline.
Like-for-like system sales excluding split stores increased by 2.4%
or by 1.2% including splits excluding the change in the VAT
rate.
The quarterly analysis of this performance as well as the VAT
rate for each period is in the table below. This shows that the
strong like-for-like growth in the first half of 2021 was primarily
driven by the reduction in the rate of VAT from 20% to 5% which was
in effect from 15 July 2020 in the UK and continued to apply
throughout the first half of 2021. The rate of VAT increased from
5% to 12.5% on 1 October 2021 and returned to 20% on 1 April
2022.
Q1 Q2 H1 Q1 Q2 H1
UK & ROI 2022 2022 2022 2021 2021 2021
LFL inc. splits (3.6)% (11.4)% (7.5)% 17.7% 19.2% 18.4%
------- -------- -------- ------- ------- --------
LFL exc. splits (2.4)% (10.4)% (6.4)% 18.5% 20.0% 19.3%
------- -------- -------- ------- ------- --------
VAT rate 12.5% 20% - 5% 5% -
------- -------- -------- ------- ------- --------
LFL inc. splits
and exc. VAT 2.6% (0.2)% 1.2% 4.0% 5.4% 4.7%
------- -------- -------- ------- ------- --------
LFL exc. splits
and exc. VAT 3.9% 0.9% 2.4% 4.9% 6.4% 5.5%
------- -------- -------- ------- ------- --------
The VAT rate reduction was on hot takeaway food and therefore
applicable to the system sales made by stores to consumers. If the
sales price to the consumer was unchanged, then the VAT rate
reduction effectively delivers an increased system sales value,
which flows through to like-for-like system sales growth. The
benefit of the VAT rate reduction therefore primarily accrued to
our franchisees, helping them to continue to trade throughout the
pandemic period and to drive growth and increase the level of
discounts they offered to consumers.
The sales and order count performance for the first half is
illustrated below. Like-for-like sales declined in the first half
by 7.5% with volumes down 3.6% and price declining by 3.9%. Total
order count grew in the first half by 2.1% largely driven by the
continued recovery in collections.
In the first quarter, total order count grew 5.5% in the quarter
despite a strong comparative quarter last year when there were
strict lockdown restrictions in the UK. Collections continued their
recovery and grew 45.4% in the quarter. As expected, given the
lockdown comparator, delivery orders were 4.5% lower than the prior
year.
In the second quarter, total order count declined 1.3%. Delivery
orders declined 12.1% in the quarter due to softness in the wider
delivery market and a tough comparative quarter last year which had
3 different lockdown restrictions. In March 2022, in line with
market norms, we launched the delivery charge nationally. Together
with our franchisees we have learnt that now we have a delivery
charge in place we need to give our customers compelling value. The
34.7% growth in collections was not able to fully offset the
decline in delivery orders.
UK & ROI LFL inc. splits (YOY Growth) Total (All Stores)
Sales Volume Price Orders (m) YOY Order
Growth
---------- ---------- --------- ----------- ----------
Total
---------- ---------- --------- ----------- ----------
Q1 (3.6)% (1.4)% (2.2)% 17.5 5.5%
---------- ---------- --------- ----------- ----------
Q2 (11.4)% (5.8)% (5.6)% 16.9 (1.3)%
---------- ---------- --------- ----------- ----------
HY (7.5)% (3.6)% (3.9)% 34.4 2.1%
---------- ---------- --------- ----------- ----------
Delivery only
---------- ---------- --------- ----------- ----------
Q1 (8.4)% (7.5)% (0.9)% 12.7 (4.4)%
---------- ---------- --------- ----------- ----------
Q2 (16.0)% (12.4)% (3.6)% 11.6 (12.1)%
---------- ---------- --------- ----------- ----------
HY (12.2)% (10.0)% (2.3)% 24.3 (8.3)%
---------- ---------- --------- ----------- ----------
Collection only
---------- ---------- --------- ----------- ----------
Q1 25.3% 30.5% (5.2)% 4.8 45.4%
---------- ---------- --------- ----------- ----------
Q2 12.4% 22.8% (10.4)% 5.3 34.7%
---------- ---------- --------- ----------- ----------
HY 18.4% 26.3% (8.0)% 10.2 39.6%
---------- ---------- --------- ----------- ----------
Data & Insights
The Data & Insights team aims to ensure all business
decisions are being led by the rich customer data Domino's holds.
In the last 6 months, the team has been actively involved in the
evaluation process for menu innovation, putting consumers at the
heart of the process to ensure that we only launch the best
products to market. The team has also worked with Kantar to give us
a deeper understanding of the UK takeaway market, evolving market
dynamics and how we can continue to gain market share. It has
proved crucial in the 'cost of living' crisis to analyse how
consumer spending is changing and how Domino's responds to the
increased need for value. Currently the team is involved in
supporting the Just Eat trial, to ensure it delivers incremental
sales, orders and crucially franchisee profitability.
Corporate stores
We directly operate 35 stores in the London area. Corporate
store revenue decreased by 0.6% to GBP17.6m compared to the prior
year. The EBITDA of corporate stores was GBP1.1m, compared to
GBP2.1m in H1 21. EBITDA, adjusted for the change in the VAT rate,
was broadly in-line with expectations and declined from GBP1.2m to
GBP0.9m as an improved underlying trading performance was not
enough to offset food and labour inflation.
German associate
Our share of post-tax underlying profits from our German
associate was GBP1.8m (H1 21: GBP2.2m). Our investment in the
German associate is held on our balance sheet at an aggregate value
of GBP30.8m. We have a put option exercisable from 1 January 2021
to 31 December 2023. As the exercise price of the option is at fair
value, there is no value of the put option recorded on our balance
sheet, in accordance with the requirements of IFRS. In total, we
believe that exercising our put option and disposing of our
interest in the associate could yield total cash receipts of GBP70m
- GBP80m depending on EBITDA performance of the associate and the
timing of exercise, which will generate profit of between GBP40m -
GBP50m. The majority shareholders, Domino's Pizza Enterprises
Limited, have a call option exercisable from 1 January 2023 on the
same valuation basis.
Financial review
The results for the Group are summarised below
26 weeks 26 weeks 52 weeks
ending ending ending
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
Group revenue 278.3 277.8 560.8
Underlying EBIT before contribution
of investments 49.7 56.3 106.8
Contribution of investments 3.3 5.4 8.1
-------------------------------------------- --------- --------- -------------
UK & Ireland underlying EBIT 53.0 61.7 114.9
German associate contribution 1.8 2.2 5.0
-------------------------------------------- --------- --------- -------------
Underlying EBIT 54.8 63.9 119.9
Underlying interest (3.9) (3.1) (6.0)
-------------------------------------------- --------- --------- -------------
Underlying profit before tax 50.9 60.8 113.9
Underlying tax charge (8.8) (11.0) (20.5)
-------------------------------------------- --------- --------- -------------
Underlying profit after tax 42.1 49.8 93.4
Non-underlying items - (0.9) (2.7)
-------------------------------------------- --------- --------- -------------
Profit after tax from continued operations 42.1 48.9 90.7
Loss from discontinued operations - (7.6) (12.4)
-------------------------------------------- --------- --------- -------------
Statutory profit after tax 42.1 41.3 78.3
-------------------------------------------- --------- --------- -------------
Underlying performance
Group revenue increased by 0.2% to GBP278.3m driven by growth in
supply chain revenue from product sales to franchisees, offset by
lower royalty income and decreased revenue recognised related to
marketing expenditure incurred on behalf of franchisees, as
discussed in the performance review section above.
UK and Ireland underlying EBIT was GBP53.0m, a decrease of 14.1%
from the prior year. The main drivers were inflationary pressures
on supply chain and distribution costs of GBP3.7m and GBP2.3m
investment associated with the franchisee resolution. Contributions
from investments have decreased by GBP2.1m, due to a lower
revaluation increase recognised on the Shorecal investment of
GBP1.0m (H1 21: GBP2.1m), and GBP1.1m lower contributions from
associates and joint ventures largely due to the trading impact of
the change in the VAT rate.
Our associate investment in Germany contributed GBP1.8m (H1 21:
GBP2.2m), which leads to an overall Group underlying EBIT of
GBP54.8m, a decrease of 14.2%.
Net underlying finance costs in the period were GBP3.9m, an
increase from GBP3.1m in H1 21 as a result of an increase in
average Net Debt during the period as well as increased base
interest rates. Overall underlying profit before tax was GBP50.9m,
a decrease from GBP60.8m in the prior period.
The underlying effective tax rate for H1 22 was 17.3% (H1 21:
18.1%), which is lower than the UK statutory rate mainly due the
contribution of the joint ventures. This has decreased largely due
to the prior period impact on the deferred tax charge of the rate
change from 19% to 25% announced in H1 21.
Underlying profit after tax was GBP42.1m (H1 21: GBP49.8m). As
disclosed in the 2021 annual report and accounts the Group no
longer classifies items as non-underlying. Following the final
completion of the disposals of international operations in 2021 no
loss from discontinued operations has been recognised.
In H1 21, non-underlying items totaling a loss of GBP0.9m were
recognised. These items largely related to GBP1.1m of professional
fees associated with the establishment of our long-term strategy in
the early part of the year and further marketing costs related to
the disposal of our international operations. A loss from
discontinued operations of GBP7.6m was recognised in H1 21, which
consisted of a trading loss of GBP0.6m and loss on disposals of
GBP7.0m.
Statutory profit after tax was GBP42.1m (H1 21: GBP41.3m).
Earnings per share
Underlying basic EPS decreased to 9.5p from 10.7p as a result of
the decreased underlying profit performance. Statutory EPS
increased to 9.5p from 8.9p, largely due to a reduced loss from
discontinued operations.
Free cash flow and Net Debt
26 weeks 26 weeks
ended ended
26 June 27 June
2022 2021
GBPm GBPm
----------------------------------------- --- --------- ---------
Underlying EBITDA 63.5 71.7
Discontinued operations EBITDA - 0.2
Add back non-cash items
* Contribution from investments (5.1) (7.6)
1.0 0.5
* Other non-cash items
Working capital (11.2) 3.5
IFRS 16 - net lease payments (3.8) (5.0)
Dividends received 3.9 2.6
Net interest (2.2) (2.2)
Corporation tax (9.3) (10.2)
Free cash flow before non-underlying
cash items 36.8 53.5
Non-underlying cash - (2.2)
---------------------------------------------- --------- ---------
Free cash flow 36.8 51.3
---------------------------------------------- --------- ---------
Capex (7.5) (7.8)
Funding from German associate 0.8 2.8
Receipt of Market Access Fee 8.6 6.4
Disposals 0.6 11.6
Dividends (30.0) (42.3)
Share buyback (42.5) (28.4)
Share transactions - EBT (3.3) (2.9)
---------------------------------------------- --------- ---------
Movement in Net Debt (36.5) (9.3)
---------------------------------------------- --------- ---------
Opening Net Debt (199.7) (171.8)
Forex on RCF (0.2) 3.5
---------------------------------------------- --------- ---------
Closing Net Debt (236.4) (177.6)
Last 12 months Net Debt/EBITDA
ratio from continuing operations
(excl IFRS 16) 1.95x 1.36x
---------------------------------------------- --------- ---------
Last 12 months Net Debt/EBITDA
ratio from continuing and discontinued
operations (excl IFRS 16) 1.99x 1.39x
---------------------------------------------- --------- ---------
Net debt increased by GBP36.5m during the period, as free cash
inflow of GBP36.8m was offset by increased returns to investors
through dividend payments of GBP30.0m together with GBP42.5m of the
GBP46m share buyback programme announced in March 2022.
Free cash flow is an inflow of GBP36.8m, a decrease of GBP14.5m
from H1 21. Underlying EBITDA decreased by GBP8.2m to GBP63.5m for
the reasons outlined above. The working capital outflow of GBP11.2m
(H1 21: inflow of GBP3.5m) was largely as a result of the unwind of
timing of cash receipts and payments for online sales following the
strong trading performance in the final week of the 2021 year of
GBP6.0m, and a change in the timing of creditor payments in support
of our suppliers of GBP5.0m.
Net IFRS 16 lease payments decreased in the period from GBP5.0m
to GBP3.8m largely due to the international lease payments included
in the comparative year.
Dividends received increased to GBP3.9m from GBP2.6m,
benefitting from a dividend received from our investment in
Shorecal of GBP2.2m and GBP1.7m from our investments in associates
and joint ventures.
Net interest payments of GBP2.2m in line with H1 21, despite
higher finance costs, as a result of the timing of interest
payments under the RCF.
In H1 21 non-underlying cash outflows related to the
international disposal costs and the payment of costs associated
with the establishment of the long-term growth strategy during the
first half H1 21.
Capital expenditure in H1 22 was GBP7.5m, which is broadly in
line with the GBP7.4m spend in H1 21 relating to the UK &
Ireland business (H1 21: disposed international business capex
spend GBP0.4m).
In March 2022, the Group received the final instalment of the
Market Access Fee of GBP8.6m, relating to the performance of the
German associate in the 2021 calendar year.
Disposals cash inflows of GBP0.6m relates to GBP1.8m receipt of
deferred consideration for the disposal of the DP Shayban Limited
joint venture in 2018, offset by the final payments on the
disposals of international operations of GBP1.2m.
The share buyback cash outflow of GBP42.5m represents the
settled amount of the GBP46.0m of the share buyback programme
announced in March 2022. The remaining obligation has been
satisfied in July 2022.
Capital employed and balance sheet
At 26 At 26 December
June 2022 2021
GBPm GBPm
-------------------------------------------- ------------ -----------------
Intangible assets 34.5 32.1
Property, plant and equipment 90.4 90.3
Investments, associates and joint ventures 66.7 64.8
Market Access Fee - 8.7
Deferred consideration 1.5 3.3
Right-of-use assets 20.9 19.4
Net lease liabilities (23.2) (21.4)
Provisions (15.1) (16.3)
Working capital (28.4) (37.1)
Net Debt (continuing operations) (236.4) (199.7)
Share buyback obligation (3.7) -
Tax (2.8) (2.7)
Net liabilities (95.6) (58.6)
-------------------------------------------- ------------ -----------------
Intangible assets have increased by GBP2.4m as a result of
increased spend on IT software relating to the eCommerce platform.
Property, plant and equipment is in line with prior year.
Investments, associates and joint ventures represents our
investment in the German associate and our investments in Full
House, West Country and the Northern Ireland JV in the UK, which
are treated as associates and joint ventures, as well as our
investment in Shorecal. This has increased by GBP1.9m during the
year, due to the trading performance of the associates and joint
ventures in excess of dividends received, and includes an increase
in the Shorecal investment of GBP1.0m net of dividend received of
GBP2.2m. During the period the Market Access Fee was settled.
Right of use assets of GBP20.9m represents the lease assets for
our corporate stores, warehouses and equipment leases recognised
under IFRS 16 in the current period. The net lease liability is
GBP23.2m (26 December 2021: GBP21.4m). There have been no
significant changes in the lease portfolio during the period.
The net working capital liability has decreased from GBP37.1m to
GBP28.4m as a result of the factors outlined in the cash flow
section above.
The share buyback obligation of GBP3.7m represents the remaining
amounts committed under the GBP46m share buyback programme
announced in March 2022.
Total equity has decreased by GBP37.0m, to a net liability
position of GBP95.6m, largely due to the dividend payments and
share buybacks in excess of the profit generated in the year. There
are sufficient distributable reserves in the standalone accounts of
Domino's Pizza Group plc for the proposed dividend payment and
announced share buyback.
Treasury management
At 26 June 2022, the Group held an unsecured multi-currency
revolving credit facility of GBP350m to December 2023. The total
undrawn facility at 26 June 2022 was GBP73.2m.
The Group successfully refinanced the existing revolving credit
facility in July 2022, and entered into a new unsecured
multi-currency revolving credit facility of GBP200m, expiring in
July 2027, together with the issuance of sterling-denominated
private placement loan notes of GBP200m, with a due date for
repayment in July 2027.
The new 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 private placement loan notes incur interest at a fixed rate
at 4.26%.
The financial covenants under both new 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.
We ended the period with Net Debt of GBP236.4m, and last 12
months Net Debt/EBITDA ratio on a continuing basis excluding the
impact of IFRS 16 increased to 1.95x from 1.36x, as a result of
decreased EBITDA performance in the year and a higher Net Debt
level.
Group income statement
26 weeks ended 26 June 2022
Notes 52 weeks ended 26 December 2021
26 weeks ended 26 June 2022 26 weeks ended 27 June 2021 GBPm
GBPm GBPm
---------------- ------ --------------------------------------- --------------------------------------- -----------------------------------------
Underlying Non-underlying* Total Underlying Non-underlying* Total Underlying Non-underlying* Total
---------------- ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Revenue 3 278.3 - 278.3 277.8 - 277.8 560.8 - 560.8
Cost of sales (151.6) - (151.6) (143.2) - (143.2) (292.2) - (292.2)
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Gross profit 126.7 - 126.7 134.6 - 134.6 268.6 - 268.6
Distribution
costs (18.5) - (18.5) (15.6) - (15.6) (36.4) - (36.4)
Administrative
costs (58.5) - (58.5) (62.7) (1.6) (64.3) (125.4) (4.5) (129.9)
Other expenses - - - - - - - (0.3) (0.3)
Share of post-tax
profits of
associates and
joint ventures 4.1 - 4.1 5.5 - 5.5 11.0 - 11.0
Other income 1.0 - 1.0 2.1 - 2.1 2.1 - 2.1
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Profit/(loss)
before interest
and taxation 54.8 - 54.8 63.9 (1.6) 62.3 119.9 (4.8) 115.1
Finance income 6 6.4 - 6.4 7.2 - 7.2 13.1 1.0 14.1
Finance costs 7 (10.3) - (10.3) (10.3) 0.2 (10.1) (19.1) (0.4) (19.5)
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Profit/(loss)
before taxation 50.9 - 50.9 60.8 (1.4) 59.4 113.9 (4.2) 109.7
Taxation 8 (8.8) - (8.8) (11.0) 0.5 (10.5) (20.5) 1.5 (19.0)
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Profit/(loss) for
the period from
continuing
operations 42.1 - 42.1 49.8 (0.9) 48.9 93.4 (2.7) 90.7
Loss from
discontinued
operations 4 - - - - (7.6) (7.6) - (12.4) (12.4)
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ----------------
Profit/(loss) for
the period 42.1 - 42.1 49.8 (8.5) 41.3 93.4 (15.1) 78.3
*Non-underlying items are disclosed in
note 5.
Earnings per
share
From continuing
operations
----------------- ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
- Basic (pence) 9 9.5 9.5 10.7 10.5 20.3 19.8
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
- Diluted (pence) 9 9.5 9.5 10.7 10.5 20.2 19.6
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
From continuing
and discontinued
operations
(statutory)
----------------- ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
- Basic (pence) 9 9.5 8.9 17.1
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
- Diluted (pence) 9 9.5 8.8 17.0
------------------ ------ ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Group statement of comprehensive income
26 weeks ended 26 June 2022
26 weeks 26 weeks 52 weeks
ended ended ended
26 June 27 June 26 December
Note 2022 2021 2021
GBPm GBPm GBPm
---------------------------------------------- ------ -------- ---------- ------------
Profit for the period 42.1 41.3 78.3
---------------------------------------------- ------ -------- ---------- ------------
Other comprehensive income:
Items that may be subsequently reclassified
to profit or loss:
- Exchange gain on retranslation of foreign
operations 0.2 2.8 0.8
- Transferred to income statement on disposal 14 - 6.6 7.9
Other comprehensive income for the period,
net of tax 0.2 9.4 8.7
---------------------------------------------- ------ -------- ---------- ------------
Total comprehensive income for the period 42.3 50.7 87.0
---------------------------------------------- ------ -------- ---------- ------------
Group balance sheet
At 26 June 2022
At 26 June At 27 June At 26 December
2022 2021 2021
Notes GBPm GBPm GBPm
--------------------------------------------- ----- ---------- ---------- --------------
Non-current assets
Intangible assets 11 34.5 32.2 32.1
Property, plant and equipment 11 90.4 90.7 90.3
Right-of-use assets 12 20.9 21.5 19.4
Lease receivables 12 184.6 188.2 187.5
Trade and other receivables 13.4 17.2 14.0
Other financial asset 16 - 7.7 6.8
Investments 16 11.0 12.3 12.1
Investments in associates and joint ventures 13 55.7 43.8 52.7
Deferred consideration receivable - 1.5 -
410.5 415.1 414.9
--------------------------------------------- ----- ---------- ---------- --------------
Current assets
Lease receivables 12 13.6 13.2 13.7
Inventories 8.5 12.7 10.9
Assets held for sale - 8.7 -
Trade and other receivables 37.4 36.8 34.3
Other financial asset 16 - 1.0 1.9
Deferred consideration receivable 1.5 3.6 3.3
Current tax assets - 1.9 0.2
Cash and cash equivalents 20 40.0 36.8 42.8
101.0 114.7 107.1
--------------------------------------------- ----- ---------- ---------- --------------
Total assets 511.5 529.8 522.0
--------------------------------------------- ----- ---------- ---------- --------------
Current liabilities
Lease liabilities 12 (19.1) (20.2) (19.3)
Trade and other payables (87.4) (93.8) (96.1)
Liabilities held for sale - (7.7) -
Financial liabilities 15 (3.7) (16.7) -
Deferred and contingent consideration - (0.4) -
Current tax liabilities (1.3) - -
Deferred tax liabilities - - (0.4)
Provisions (0.3) (0.2) (2.0)
--------------------------------------------- ----- ----------
(111.8) (139.0) (117.8)
--------------------------------------------- ----- ---------- ---------- --------------
Non-current liabilities
Lease liabilities 12 (202.3) (204.5) (203.3)
Trade and other payables (0.3) (0.3) (0.2)
Financial liabilities 15 (276.4) (217.4) (242.5)
Deferred tax liabilities (1.5) (2.9) (2.5)
Provisions (14.8) (13.2) (14.3)
--------------------------------------------- ----- ---------- ---------- --------------
(495.3) (438.3) (462.8)
--------------------------------------------- ----- ---------- ---------- --------------
Total liabilities (607.1) (577.3) (580.6)
--------------------------------------------- ----- ---------- ---------- --------------
Net liabilities (95.6) (47.5) (58.6)
--------------------------------------------- ----- ---------- ---------- --------------
Shareholders' equity
Called up share capital 2.2 2.4 2.3
Share premium account 49.6 49.6 49.6
Capital redemption reserve 0.5 0.5 0.5
Capital reserve - own shares (6.9) (6.3) (4.6)
Currency translation reserve (0.8) (0.3) (1.0)
Accumulated losses (140.2) (93.4) (105.4)
--------------------------------------------- ----- ---------- ---------- --------------
Total equity (95.6) (47.5) (58.6)
--------------------------------------------- ----- ---------- ---------- --------------
Group statement of changes in equity
26 weeks ended 26 June 2022
Capital
Share Capital Reserve Currency
Share premium redemption - own translation Accumulated Total shareholders'
capital account reserve shares reserve losses equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ---- -------- -------- ----------- -------- ------------ ----------- -------------------
At 27 December 2020 2.4 49.6 0.5 (3.4) (9.7) (48.2) (8.8)
Profit for the period - - - - - 41.3 41.3
Other comprehensive
income
- exchange
differences - - - - 9.4 - 9.4
--------------------- ---- -------- -------- ----------- -------- ------------ ----------- -------------------
Total comprehensive
income for the
period - - - - 9.4 41.3 50.7
Impairment of share
issues - - - 0.1 - - 0.1
Share buybacks - - - (3.0) - (28.3) (31.3)
Share buyback
obligation
outstanding - - - - - (16.7) (16.7)
Share options and
LTIP charge - - - - - 0.7 0.7
Tax on employee share
options - - - - - 0.1 0.1
Equity dividends paid 10 - - - - - (42.3) (42.3)
At 27 June 2021 2.4 49.6 0.5 (6.3) (0.3) (93.4) (47.5)
Profit for the period - - - - - 37.0 37.0
Other comprehensive
income
- exchange
differences - - - - (0.7) - (0.7)
--------------------- ---- -------- -------- ----------- -------- ------------ ----------- -------------------
Total comprehensive
income for the
period - - - - (0.7) 37.0 36.3
Proceeds from share
issues - - - 0.4 - - 0.4
Impairment of share
issues - - - 1.3 - (1.3) -
Share buybacks (0.1) - - - - (35.4) (35.5)
Share options and
LTIP charge - - - - - 1.0 1.0
Tax on employee share
options - - - - - 0.4 0.4
Equity dividends paid 10 - - - - - (13.7) (13.7)
--------------------- ---- -------- -------- ----------- -------- ------------ ----------- -------------------
At 26 December 2021 2.3 49.6 0.5 (4.6) (1.0) (105.4) (58.6)
Profit for the period - - - - - 42.1 42.1
Other comprehensive
income
- exchange
differences - - - - 0.2 - 0.2
--------------------- ---- -------- -------- ----------- -------- ------------ ----------- -------------------
Total comprehensive
income for the
period - - - - 0.2 42.1 42.3
Proceeds from share
issues - - - 1.4 - - 1.4
Impairment of share
issues - - - 1.0 - (1.0) -
Share buybacks (0.1) - - (4.7) - (42.6) (47.4)
Share buyback
obligation
outstanding - - - - - (3.7) (3.7)
Share options and
LTIP charge - - - - - 1.0 1.0
Tax on employee share
options - - - - - (0.6) (0.6)
Equity dividends paid 10 - - - - - (30.0) (30.0)
--------------------- ---- -------- -------- ----------- -------- ------------ ----------- -------------------
At 26 June 2022 2.2 49.6 0.5 (6.9) (0.8) (140.2) (95.6)
--------------------- ---- -------- -------- ----------- -------- ------------ ----------- -------------------
Group cash flow statement
26 weeks ended 26 June 2022
26 weeks
26 weeks ended 52 weeks
ended 27 June ended
26 June 2021 26 December
2022 Restated* 2021
Notes GBPm GBPm GBPm
------------------------------------------------- ----- -------- ---------- ------------
Cash flows from operating activities
Profit/(loss) before interest and taxation
* from continuing operations 54.8 62.3 115.1
* from discontinued operations - (7.6) (11.3)
Amortisation and depreciation 8.7 8.3 17.4
Impairment - 0.8 1.0
Share of post-tax profits of associates and
joint ventures (4.1) (5.5) (11.0)
Loss on disposal of subsidiary - 6.2 8.4
Net gain on financial instruments at fair value
through profit or loss (1.0) (2.1) (1.8)
Share option and LTIP charge 1.0 0.8 1.7
(Decrease)/increase in provisions (0.1) (0.3) 1.0
Decrease/(increase) in inventories 2.5 (1.6) 0.3
(Increase)/decrease in receivables (3.8) 2.4 6.7
(Decrease)/increase in payables (9.5) 2.6 4.4
Cash generated from operations 48.5 66.3 131.9
Corporation tax paid (9.3) (10.2) (18.0)
Net cash generated from operating activities 39.2 56.1 113.9
------------------------------------------------- ----- -------- ---------- ------------
Cash flows from investing activities
Purchase of property, plant and equipment (2.5) (3.5) (5.8)
Purchase of intangible assets (5.0) (4.3) (8.5)
Net consideration (paid)/received on disposal
of subsidiary 14 (1.2) 11.1 10.2
Consideration received on disposal of joint
ventures 13 1.8 0.6 2.4
Investment in associates - (0.2) (6.6)
Receipt from other financial assets 16 8.6 6.4 6.4
Receipt on lease receivables 13.2 13.0 25.7
Interest received - 0.1 0.3
Other 20 4.7 5.6 8.7
Net cash generated from investing activities 19.6 28.8 32.8
------------------------------------------------- ----- -------- ---------- ------------
Cash inflow before financing 58.8 84.9 146.7
Cash flows from financing activities
Interest paid (2.2) (2.3) (4.3)
Share transactions 20 (45.8) (31.3) (83.0)
New bank loans and facilities drawn down 60.0 85.0 150.0
Repayment of borrowings (26.7) (107.4) (147.3)
Repayment of lease liabilities (17.0) (17.9) (34.1)
Equity dividends paid (30.0) (42.3) (56.0)
Net cash used by financing activities (61.7) (116.2) (174.7)
------------------------------------------------- ----- -------- ---------- ------------
Net decrease in cash and cash equivalents (2.9) (31.3) (28.0)
Cash and cash equivalents at beginning of period 42.8 71.8 71.8
Foreign exchange gain/(loss) on cash and cash
equivalents 0.1 (0.7) (1.0)
------------------------------------------------- ----- -------- ---------- ------------
Cash and cash equivalents at end of period 20 40.0 39.8 42.8
------------------------------------------------- ----- -------- ---------- ------------
*The Group cash flow statement for the 26 weeks ended 27 June
2021 has been restated to reclassify receipts on lease receivables
from financing activities to investing activities, as set out in
note 2.
Notes to the interim financial statements
26 weeks ended 26 June 2022
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 26 June 2022 and the
comparatives to 27 June 2021 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 52 weeks ended 26 December
2021 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
(GBP0.1m), 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 8). 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 the 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 for the purposes of going
concern in light of the current environment. The overall Group has
continued to trade strongly throughout the period in the UK and
Ireland, and sales levels has been strong, despite the current
pressures in the market, and inflation and labour pressures on the
supply chain.
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, further supply chain disruptions,
general economic uncertainty and other risks, in line with the
analysis performed for the viability statement as outlined in the
Directors' report. 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 a GBP350.0m
multicurrency syndicated revolving credit facility which matures in
December 2023, of which GBP73.2m was undrawn as at 26 June 2022,
and had cash funds of GBP40.0m as at 26 June 2022. The Group
replaced this facility with a new GBP200m multicurrency revolving
credit facility entered into on 26th July 2022 and GBP200m private
placement loan notes entered into on 27th July 2022, which expire
in 2027.
The scenarios modelled are based on our current forecast
projections out to the end of 2023 and have taken account of 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 labour
shortages; the impact of a temporary loss of availability of our
eCommerce platform during peak trading periods; the impact of
potential future ingredient pricing volatility as a result of
indirect international supply chain pressures arising from global
events; and a significant unexpected increase in the impact of
climate change on costs related to our supply chain. 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 of distributions to shareholders 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.
Restatement of comparatives in the Group Cash Flow Statement
Following a review of the Group's 2020 Annual Report by the
Directors, subsequent to the receipt of a letter from the Financial
Reporting Council ('FRC'), the Group has changed the classification
of receipts on lease receivables in the Group cash flow statement
from financing activities to investing activities. The Group holds
both a head lease with the landlord, and a sub-lease with a
franchisee in a 'back-to-back' arrangement for the majority of
Domino's sites in the UK & Ireland. The Group accounts for the
head-lease and sub-lease separately as two separate contracts.
The Group previously presented both the lease payments on the
head lease and the lease receipts on the sub-lease on a gross basis
within financing activities, as this was considered to best reflect
the substance of the back-to-back nature of the lease cash receipts
and payments. Following the review performed, the Group have
reconsidered the treatment and consider that the lease receipts
should be classified as investing activities in accordance with IAS
7 as, whilst lease receipts largely mirror the payments on the head
lease, they do not meet the definition of a financing activity,
which are "activities that result in changes in the size and
contribution of the contributed equity and borrowings of the
entity". The figures for the 52 weeks ended 26 December 2021
include the correct classification.
The figures for the 26 weeks ended 27 June 2021 have been
restated which increases net cash generated from investing
activities from GBP15.8m to GBP28.8m, and increases net cash used
by financing activities from GBP103.2m to GBP116.2m.
As previously Reclassification of receipts on lease
stated receivables Restated
GBPm GBPm GBPm
Net cash generated from investing
activities 15.8 13.0 28.8
Net cash used by financing activities (103.2) (13.0) (116.2)
-------------------------------------------- -------------- ----------------------------------------- ---------
Accounting policies and new standards
The consolidated accounts for the 26 weeks ended 26 June 2022
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 52 weeks ended 26
December 2021, 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 is organised into two
geographical 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 operate
predominantly as corporate stores. The International segment
includes the German associate, legacy Germany and Switzerland
holding companies; as well as Iceland, Sweden and Switzerland
operational entities up to their disposal date in 2021. 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.
The International operations in Sweden, Switzerland, and Iceland
which were held as discontinued under IFRS 5: Non-current assets
held for sale and discontinued operations, were presented as a
separate segment up to disposal date in 2021. During 2021, the
Board continued to monitor the trading performance of the
businesses and therefore were still considered an operating
segment. The results of the German associate remain in continuing
results and therefore are presented separately.
Unallocated assets include cash and cash equivalents and
taxation assets. Unallocated liabilities include the bank revolving
facility and taxation liabilities.
At At At
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
-------------------------- -------- -------- ------------
Current tax assets - 1.9 0.2
Cash and cash equivalents 40.0 39.8 42.8
-------------------------- -------- -------- ------------
Unallocated assets 40.0 41.7 43.0
-------------------------- -------- -------- ------------
Current tax liabilities 1.3 - -
Deferred tax liabilities 1.5 2.9 2.9
Bank revolving facility 276.4 217.4 242.5
Unallocated liabilities 279.2 220.3 245.4
-------------------------- -------- -------- ------------
Segment assets and liabilities
26 weeks ended 26 26 weeks ended 27 June 52 weeks ended 26 December
June 2022 2021 2021
-------------------------------------------- -------------------------------------------- ----------------------------------------------
UK International
& International International UK & International International UK & International -
Ireland -continuing -discontinued Total Ireland -continuing -discontinued Total Ireland -continuing discontinued Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Segment
assets
Segment
current
assets 61.0 - - 61.0 67.3 - 5.7 73.0 64.1 - - 64.1
Segment
non-current
assets 343.8 - - 343.8 359.0 - - 359.0 350.1 - - 350.1
Investment
in
associates
and
joint
ventures 24.9 30.8 - 55.7 16.2 27.6 - 43.8 23.8 28.9 - 52.7
Investments 11.0 - - 11.0 12.3 - - 12.3 12.1 - - 12.1
Unallocated
assets 40.0 41.7 43.0
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Total assets 511.5 529.8 522.0
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Segment
liabilities
Liabilities 327.1 - 0.8 327.9 348.4 - 8.6 357.0 333.9 - 1.3 335.2
Unallocated
liabilities 279.2 220.3 245.4
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Total
liabilities 607.1 577.3 580.6
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Segmental performance for the 26 weeks 26 June 2022
Total
International including
UK & International Total Total - discontinued
Ireland - continuing underlying Non-underlying reported discontinued operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Revenue
Sales to
external
customers 278.3 - 278.3 - 278.3 - 278.3
---------------- ----------- ----------
Segment revenue 278.3 - 278.3 - 278.3 - 278.3
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Results
Underlying
segment result
before
associates and
joint ventures 49.7 - 49.7 - 49.7 - 49.7
Share of profit
of associates
and joint
ventures 2.3 1.8 4.1 - 4.1 - 4.1
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Segment result 52.0 1.8 53.8 - 53.8 - 53.8
Other - - - - - - -
non-underlying
items
Other income 1.0 - 1.0 - 1.0 - 1.0
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit before
interest
and taxation 53.0 1.8 54.8 - 54.8 - 54.8
Net finance
costs (3.9) - (3.9) - (3.9) - (3.9)
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit before
taxation 49.1 1.8 50.9 - 50.9 - 50.9
Taxation (8.8) - (8.8) - (8.8) - (8.8)
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit for the
year 40.3 1.8 42.1 - 42.1 - 42.1
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Effective tax
rate 17.9% - 17.3% - 17.3% - 17.3%
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Other segment
information
Depreciation -
Property,
plant and
equipment 2.5 - 2.5 - 2.5 - 2.5
Depreciation -
Right-of-use
assets 3.1 - 3.1 - 3.1 - 3.1
Amortisation 3.1 - 3.1 - 3.1 - 3.1
Total
depreciation
and
amortisation 8.7 - 8.7 - 8.7 - 8.7
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
EBITDA 61.7 1.8 63.5 - 63.5 - 63.5
Underlying
EBITDA 61.7 1.8 63.5 - 63.5 - 63.5
Capital
expenditure 7.5 - 7.5 - 7.5 - 7.5
Share-based
payment charge 1.0 - 1.0 - 1.0 - 1.0
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Revenue
disclosures
Royalties,
franchise
fees and
change of
hands
fees 37.8 - 37.8 - 37.8 - 37.8
Sales to
franchisees 190.7 - 190.7 - 190.7 - 190.7
Corporate store
income 17.6 - 17.6 - 17.6 - 17.6
Rental income
on leasehold
and freehold
property 0.3 - 0.3 - 0.3 - 0.3
National
Advertising
and eCommerce
income 31.9 - 31.9 - 31.9 - 31.9
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Total segment
revenue 278.3 - 278.3 - 278.3 - 278.3
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Segmental performance for the 26 weeks ended 27 June 2021
Total
International including
UK & International Total Total - discontinued
Ireland - continuing underlying Non-underlying reported discontinued operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Revenue
Sales to
external
customers 277.8 - 277.8 - 277.8 28.8 306.6
---------------- ----------- ----------
Segment revenue 277.8 - 277.8 - 277.8 28.8 306.6
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Results
Underlying
segment result
before
associates and
joint ventures 56.3 - 56.3 - 56.3 (0.6) 55.7
Share of profit
of associates
and joint
ventures 3.3 2.2 5.5 - 5.5 - 5.5
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Segment result 59.6 2.2 61.8 - 61.8 (0.6) 61.2
Other
non-underlying
items - - - (1.6) (1.6) (7.0) (8.6)
Other income 2.1 - 2.1 - 2.1 - 2.1
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit/(loss)
before
interest and
taxation 61.7 2.2 63.9 (1.6) 62.3 (7.6) 54.7
Net finance
costs (3.1) - (3.1) 0.2 (2.9) (0.5) (3.4)
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit before
taxation 58.6 2.2 60.8 (1.4) 59.4 (8.1) 51.3
Taxation (11.0) - (11.0) 0.5 (10.5) 0.5 (10.0)
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit/(loss)
for the
year 47.6 2.2 49.8 (0.9) 48.9 (7.6) 41.3
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Effective tax
rate 18.8% - 18.1% 35.7% 17.7% 6.2% 19.5%
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Other segment
information
Depreciation -
Property,
plant and
equipment 2.5 - 2.5 - 2.5 - 2.5
Depreciation -
Right-of-use
assets 3.1 - 3.1 - 3.1 - 3.1
Amortisation 2.2 - 2.2 0.5 2.7 - 2.7
Impairment - - - - - 0.8 0.8
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Total
depreciation,
amortisation
and impairment 7.8 - 7.8 0.5 8.3 0.8 9.1
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
EBITDA 69.5 2.2 71.7 (1.1) 70.6 (6.8) 63.8
Underlying
EBITDA 69.5 2.2 71.7 - 71.7 0.2 71.9
Capital
expenditure 7.4 - 7.4 - 7.4 0.4 7.8
Share-based
payment charge 0.7 - 0.7 - 0.7 - 0.7
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Revenue
disclosures
Royalties,
franchise
fees and
change of
hands
fees 40.4 - 40.4 - 40.4 - 40.4
Sales to
franchisees 183.1 - 183.1 - 183.1 - 183.1
Corporate store
income 17.7 - 17.7 - 17.7 28.8 46.5
Rental income
on leasehold
and freehold
property 0.4 - 0.4 - 0.4 - 0.4
National
Advertising
and eCommerce
income 36.2 - 36.2 - 36.2 - 36.2
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Total segment
revenue 277.8 - 277.8 - 277.8 28.8 306.6
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Segmental performance for the 52 weeks ended 26 December
2021
Total
International including
UK & International Total Total - discontinued
Ireland - continuing underlying Non-underlying reported discontinued operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Revenue
Sales to
external
customers 560.8 - 560.8 - 560.8 32.4 593.2
---------------- ----------- ----------
Segment revenue 560.8 - 560.8 - 560.8 32.4 593.2
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Results
Underlying
segment result
before
associates and
joint ventures 106.8 - 106.8 - 106.8 (1.5) 105.3
Share of profit
of associates
and joint
ventures 6.0 5.0 11.0 - 11.0 - 11.0
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Segment result 112.8 5.0 117.8 - 117.8 (1.5) 116.3
Other
non-underlying
items - - - (4.8) (4.8) (9.8) (14.6)
Other income 2.1 - 2.1 - 2.1 - 2.1
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit/(loss)
before
interest and
taxation 114.9 5.0 119.9 (4.8) 115.1 (11.3) 103.8
Net finance
costs (6.0) - (6.0) 0.6 (5.4) (0.5) (5.9)
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit before
taxation 108.9 5.0 113.9 (4.2) 109.7 (11.8) 97.9
Taxation (20.5) - (20.5) 1.5 (19.0) (0.6) (19.6)
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Profit/(loss)
for the
year 88.4 5.0 93.4 (2.7) 90.7 (12.4) 78.3
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Effective tax
rate 18.8% - 18.0% 35.7% 17.3% 5.1% 20.0%
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Other segment
information
Depreciation -
Property,
plant and
equipment 5.0 - 5.0 - 5.0 - 5.0
Depreciation -
Right-of-use
assets 6.5 - 6.5 - 6.5 - 6.5
Amortisation 4.8 - 4.8 1.1 5.9 - 5.9
Impairment 0.2 - 0.2 - 0.2 0.8 1.0
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Total
depreciation,
amortisation
and impairment 16.5 - 16.5 1.1 17.6 0.8 18.4
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
EBITDA 131.4 5.0 136.4 (3.7) 132.7 (10.5) 122.2
Underlying
EBITDA 131.4 5.0 136.4 - 136.4 (0.7) 135.7
Capital
expenditure 13.6 - 13.6 - 13.6 0.7 14.3
Share-based
payment charge 1.7 - 1.7 - 1.7 - 1.7
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Revenue
disclosures
Royalties,
franchise
fees and
change of
hands
fees 79.4 - 79.4 - 79.4 - 79.4
Sales to
franchisees 374.9 - 374.9 - 374.9 - 374.9
Corporate store
income 35.6 - 35.6 - 35.6 32.4 68
Rental income
on leasehold
and freehold
property 0.6 - 0.6 - 0.6 - 0.6
National
Advertising
and eCommerce
income 70.3 - 70.3 - 70.3 - 70.3
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
Total segment
revenue 560.8 - 560.8 - 560.8 32.4 593.2
---------------- ----------- -------------- ----------- --------------- ---------- -------------- -------------
4. Discontinued Operations
Discontinued operations consist of the legacy Germany and
Switzerland holding companies and also consisted of the
International business disposal groups up to the date of disposal
in 2021.
The disposal groups represented the operations in Sweden,
Iceland and Switzerland. These operations were disposed of in 2021,
see note 14. These entities were included in the Group result for
the prior period up to disposal date. The operations met the
criteria in IFRS 5: Non-current assets held for sale and
discontinued operations to be classified as assets held-for-sale.
The operations additionally met the criteria for discontinued
operations under the standard. They were classified as
held-for-sale and represented a separate major line of business and
part of a single co-ordinated plan to dispose.
International central costs were included in the discontinued
operations and relate to the costs incurred by the Group in
management activities and other services for the discontinued
operations, which are not considered to be continuing costs for the
Group.
The result of the disposal groups classified as discontinued
operations are as follows :
26 weeks ended 26 weeks ended 52 weeks ended
26 June 2022 27 June 2021 26 December 2021
------------------------------------------------------------- ---------------------------------------- ------------------------- -------------
Total result Total result Total result
Total from Total from Total from
trading Non-underlying discontinued trading Non-underlying discontinued trading Non-underlying discontinued
result costs operations result costs operations result costs operations
----------------- --------- ---------------- -------------- -------- --------------- ------------- -------- --------------- -------------
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue - - - 28.8 - 28.8 32.4 - 32.4
Cost of sales - - - (21.7) - (21.7) (24.4) - (24.4)
----------------- --------- ---------------- -------------- -------- --------------- ------------- -------- --------------- -------------
Gross profit - - - 7.1 - 7.1 8.0 - 8.0
Distribution
costs - - - (0.5) - (0.5) (0.5) - (0.5)
Administrative
costs - - - (7.2) - (7.2) (9.0) (1.4) (10.4)
Loss on
disposals
before
professional
fees - - - - (7.0) (7.0) - (8.4) (8.4)
Loss before
interest and
taxation - - - (0.6) (7.0) (7.6) (1.5) (9.8) (11.3)
Finance costs - - - (0.5) - (0.5) (0.5) - (0.5)
Loss before
taxation - - - (1.1) (7.0) (8.1) (2.0) (9.8) (11.8)
Taxation - - - 0.5 - 0.5 (0.6) - (0.6)
----------------- --------- ---------------- -------------- -------- --------------- ------------- -------- --------------- -------------
Loss for the
period - - - (0.6) (7.0) (7.6) (2.6) (9.8) (12.4)
----------------- --------- ---------------- -------------- -------- --------------- ------------- -------- --------------- -------------
Segmental result by country
Profit/(loss) before
interest and tax Iceland Switzerland Sweden International central costs Total trading result
GBPm GBPm GBPm GBPm GBPm
26 weeks ended 26 June 2022 - - - - -
----------------------------- -------- ------------ ------- ---------------------------- ---------------------
26 weeks ended 27 June 2021 0.6 0.5 (0.9) (0.8) (0.6)
------------------------------ -------- ------------ ------- ---------------------------- ---------------------
52 weeks ended 26 December
2021 0.7 0.1 (0.9) (1.4) (1.5)
------------------------------ -------- ------------ ------- ---------------------------- ---------------------
Non-underlying costs presented in discontinued operations
The non-underlying costs presented in discontinued operations
for 2021 related to the disposal of Sweden, Iceland and
Switzerland. For Sweden there was GBP0.4m (H1 21: GBP0.4m) loss on
disposal, after accounting for the net assets disposed and foreign
exchange recycled, and consideration paid. This primarily consisted
of professional fees associated with the disposal. For Iceland this
consisted of GBP7.3m (H1 21: GBP6.6m) loss on disposal, after
accounting for the net assets disposed and foreign exchange
recycled, and consideration received. The loss on Iceland includes
GBP0.5m (H1 21: GBP0.4m) of professional fees associated with the
disposal. For Switzerland this consisted of GBP2.1m (H1 21: GBPnil)
loss on disposal, after accounting for the net assets disposed and
foreign exchange recycled, and consideration paid. The loss on
Switzerland includes GBP0.5m (H1 21: GBPnil) of professional fees
associated with the disposal. Details relating to the disposals are
set out in Note 14.
Earnings per share
The discontinued operations contributed a basic loss per share
of nil (H1 21: 1.6p; FY 21: 2.7p) and a diluted loss per share of
nil (H1 21: 1.7p; FY 21: 2.6p).
Cash flows used in discontinued operations
The cash flows from discontinued operations have been presented
combined with the cash flows from continuing operations on the
Group cash flow statement. The cash flows related to discontinued
operations are as follows:
26 weeks ended 26 weeks ended 52 weeks ended
26 June 2022 27 June 2021 26 December 2021
GBPm GBPm GBPm
Net cash from operating activities (0.2) 2.4 1.2
Net cash from investing activities (0.5) (1.2) (2.0)
Net cash from financing activities - (6.1) (5.8)
-------------------------------------- --------------- ----------------- ------------------
Net cash flows for the year (0.7) (4.9) (6.6)
-------------------------------------- --------------- ----------------- ------------------
The cash flows in the current period relate to legacy
obligations in discontinued operations, which have been settled
during the current period.
Disposal groups held for sale
The International operations represented disposal groups held
for sale as at 27 June 2021 and were classified accordingly in the
Group balance sheet, with a single line representing the assets of
the disposal group held for sale and a single line representing the
liabilities of the disposal groups held for sale. Included in these
amounts are the following:
52 weeks ended
26 weeks ended 26 June 2022 26 weeks ended 27 June 2021 26 December 2021
GBPm GBPm GBPm
Property, plant and equipment - 0.2 -
Right-of-use asset - 4.5 -
Trade and other receivables - 0.2 -
Inventories - 0.8 -
Cash and cash equivalents - 3.0 -
------------------------------ ---------------------------- ---------------------------- ------------------
Assets held for sale - 8.7 -
------------------------------ ---------------------------- ---------------------------- ------------------
Lease liabilities - 4.5 -
Trade and other payables - 3.2 -
Liabilities held for sale - 7.7 -
------------------------------ ---------------------------- ---------------------------- ------------------
5. Reconciliation of non-GAAP measures
From 2022 onwards, the Group decided to no longer classify items
as non-underlying, subject to any material provision reversals or
changes which are considered significant enough to consider
separate disclosure, such as material profit or loss from business
acquisitions or disposals, or material impacts from changes to
interpretation of accounting guidelines. Items which were
previously included in non-underlying are now included in the
underlying result.
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
----------------------------------- -------------- -------------- --------------
Underlying profit for the period 42.1 49.8 93.4
Non-underlying loss for the period - (0.9) (2.7)
Loss from discontinued operations - (7.6) (12.4)
------------------------------------ -------------- -------------- --------------
Profit for the period 42.1 41.3 78.3
------------------------------------ -------------- -------------- --------------
Non-underlying items included in financial statements
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
Note GBPm GBPm GBPm
------------------------------------------------------------- ----- -------------- -------------- --------------
Included in administrative costs:
Legal and professional fees (a) - (1.1) (1.2)
Amortisation of London corporate stores (b) - (0.5) (1.1)
Reversionary share scheme (c) - - (2.2)
- (1.6) (4.5)
Included in other expenses:
Market Access Fee (d) - - (0.3)
- - (0.3)
Included in profit before interest and taxation - (1.6) (4.8)
Included within net finance cost
Market Access Fee (d) - 0.2 0.6
Included in profit before taxation - (1.4) (4.2)
Taxation (e) - 0.5 1.5
Included in profit for the period from continuing operations - (0.9) (2.7)
-------------------------------------------------------------------- -------------- -------------- --------------
Loss for the year from discontinued operations (f) - (7.6) (12.4)
------------------------------------------------------------- ----- -------------- -------------- --------------
Included in profit/(loss) for the year - (8.5) (15.1)
-------------------------------------------------------------------- -------------- -------------- --------------
a) Legal and professional fees
For the 52 weeks ended 26 December 2021, legal and professional
fees of GBP1.2m (H1 21: GBP1.1m) were incurred of which GBP0.9m (H1
21: GBP0.9m) related to the establishment of our long-term
strategic plan in H1 21 which was announced in March 2021. An
additional GBP0.3m (H1 21: GBP0.2m) related to the disposal of the
International operations. The costs recognised in relation to the
disposal of international operations related to professional fees
for the marketing of the operations up to the point at which an
agreement was reached, at which point remaining costs with the
disposal were recognised as part of the loss on disposal in
discontinued operations.
b) Amortisation of London corporate stores
Following the decision made regarding classification items as
non-underlying, the amortisation of acquired intangibles in H1 22
of GBP0.6m are presented in the underlying result for the current
period. For the 52 weeks ended 26 December 2021, amortisation of
acquired intangibles of GBP1.1m (H1 21: GBP0.5m) were incurred in
relation to the SFA recognised on the acquisition of the London
corporate stores and Have More Fun (London) Limited. This was
considered to be non-underlying as the Group has a policy of
franchise agreements having an indefinite life, however the SFA is
deemed to be a re-acquired right under IFRS 3 which requires such
rights to be amortised.
c) Reversionary share scheme
No further costs relating to the reversionary share scheme have
been incurred in H1 22. For the 52 weeks ended 26 December 2021, a
cost of GBP2.2m (H1 21: GBPnil) was recorded in relation to the
reversionary share scheme. Of this amount, GBP2.0m related to an
increase in the provision previously recorded in 2017, and GBP0.2m
related to professional fees. The provision increased as a result
of potential exposures around the tax treatment of employee options
which vested during 2013 following continued correspondence with
HMRC around the treatment of the historical awards.
d) Market Access Fee
The Market Access Fee was fully settled during the current
period. For the 52 weeks ended 26 December 2021, a loss of GBP0.3m
was recorded following changes in fair valuation of the Market
Access Fee relating to the German associate (H1 21: GBPnil). The
decrease in valuation is following the trading performance in 2021,
which determines the level of income received under the
instrument.
For the 52 weeks ended 26 December 2021, t he amount recorded in
net finance costs of GBP0.6m (H1 21: GBP0.2m) represents the unwind
of the discount of the fair value and foreign exchange movements.
The impact of revaluation of the Market Access Fee was not
considered to be ordinary trading for the Group. In the event that
we received any material capital sum for deferred consideration on
any business, it would equally be treated as non-underlying.
e) Taxation
For the 52 weeks ended 26 December 2021, t he tax credit of
GBP1.5m (H1 21: GBP0.5m) related to the non-underlying net loss
before taxation of GBP4.2m (H1 21: GBP1.4m) and the effective tax
rate of 35.7% (H1 21: 35.7%) is higher than the statutory rate of
19.0% (H1 21: 19.0%). The effective tax rate may differ from the
statutory tax rate due to the tax treatment of certain fair value
gains and the treatment of disallowed items. Taxation on the items
considered to be non-underlying is also treated as non-underlying
where it can be identified in order to ensure consistency of
treatment with the item to which it relates. The creation and
revaluation of deferred tax assets are treated consistently with
the treatment adopted when the asset was created.
f) Loss on discontinued operations
For the 52 weeks ended 26 December 2021, t he loss of GBP12.4m
(H1 21: GBP7.6m) represented the post-tax result of the
International operations of Switzerland, Sweden and Iceland,
consisting of a trading loss of GBP1.5m (H1 21: GBP0.6m), interest
costs of GBP0.5m (H1 21: GBP0.5m), loss on disposal of
international operations, primarily consisting of foreign exchange
losses recycled and professional fees of GBP9.8m (H1 21: GBP7.0m
loss on disposal and impairments) and a tax charge of GBP0.6m (H1
21: credit of GBP0.5m). The detail of the disposals is set out in
note 14.
6. Finance income
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
--------------------------------------------------- -------------- -------------- --------------
Other interest receivable - 0.1 0.1
Interest on loans to associates and joint ventures 0.2 0.2 0.4
Discount unwind - 0.6 1.0
Interest receivable on leases 6.2 6.3 12.6
Total finance income 6.4 7.2 14.1
--------------------------------------------------- -------------- -------------- --------------
7. Finance costs
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
------------------------------------------------ -------------- -------------- --------------
Bank revolving credit facility interest payable 3.3 2.4 4.8
Discount unwind - - 0.1
Interest payable on leases 7.0 7.2 13.9
Foreign exchange - 0.5 0.7
Total finance costs 10.3 10.1 19.5
------------------------------------------------ -------------- -------------- --------------
8. Taxation
Tax on profit from continuing activities
26 weeks ended 26 weeks ended 52 weeks ended
26 June 2022 27 June 2021 26 December 2021
GBPm GBPm GBPm
-------------------------------------------------------------- -------------- -------------- -----------------
Tax charged in the income statement
Current income tax:
UK corporation tax:
- current period 10.3 10.8 18.6
- adjustment in respect of prior periods 0.1 (0.1) -
--------------------------------------------------------------- -------------- -------------- -----------------
10.4 10.7 18.6
Income tax on overseas operations 0.4 0.1 0.7
--------------------------------------------------------------- -------------- -------------- -----------------
Total current income tax charge 10.8 10.8 19.3
--------------------------------------------------------------- -------------- -------------- -----------------
Deferred tax:
Origination and reversal of temporary differences (2.0) (0.9) (0.9)
Effect of change in tax rate - 0.6 0.8
Adjustment in respect of prior periods - - (0.2)
--------------------------------------------------------------- -------------- -------------- -----------------
Total deferred tax credit (2.0) (0.3) (0.3)
--------------------------------------------------------------- -------------- -------------- -----------------
Tax charge in the income statement 8.8 10.5 19.0
--------------------------------------------------------------- -------------- -------------- -----------------
The tax charge in the income statement is disclosed as
follows:
Income tax charge 8.8 10.5 19.0
--------------------------------------------------------------- -------------- -------------- -----------------
Tax relating to items (charged)/credited to equity
Reduction in current tax liability as a result of the exercise
of share options (0.1) - 0.2
Rate change differences in relation to deferred tax on
unexercised share options - 0.1 0.1
Origination and reversal of temporary differences in relation
to unexercised share options (0.5) - 0.2
--------------------------------------------------------------- -------------- -------------- -----------------
Tax (charge)/credit in the Group statement of changes in equity (0.6) 0.1 0.5
--------------------------------------------------------------- -------------- -------------- -----------------
There is no tax impact in relation to the foreign exchange
differences in the statement of comprehensive income. The total
effective tax rate is 17.3% (H1 21: 17.7%; FY 21: 17.3%)
Tax charged for the 26 weeks ended 26 June 2022 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 25 December 2022 using rates substantively
enacted by 26 June 2022 as required by IAS 34 'Interim Financial
Reporting'. Items of an exceptional nature have been assessed
independently.
9. 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 26 weeks ended 52 weeks ended
26 June 2022 27 June 2021 26 December 2021
GBPm GBPm GBPm
---------------------------------------------------------- -------------- -------------- -----------------
Profit after tax for the period:
Continuing and discontinuing operations 42.1 41.3 78.3
Less: Discontinued operations - 7.6 12.4
---------------------------------------------------------- -------------- -------------- -----------------
Continuing operations 42.1 48.9 90.7
---------------------------------------------------------- -------------- -------------- -----------------
Adjustments for underlying earnings per share:
Continuing operations 42.1 48.9 90.7
Included in profit after tax - Other non-underlying items - 0.9 2.7
---------------------------------------------------------- -------------- -------------- -----------------
Underlying profit after tax 42.1 49.8 93.4
---------------------------------------------------------- -------------- -------------- -----------------
Weighted average number of shares
At 26 June At 27 June At 26 December
2022 2021 2021
Number Number Number
-------------------------------------------------------------------- ----------- ----------- --------------
Basic weighted average number of shares (excluding treasury shares) 441,981,300 464,841,300 459,234,086
Dilutive effect of share options and awards 2,481,473 2,323,012 2,434,861
-------------------------------------------------------------------- ----------- ----------- --------------
Diluted weighted average number of shares 444,462,773 467,164,312 461,668,947
-------------------------------------------------------------------- ----------- ----------- --------------
The performance conditions relating to share options granted
over 1,455,554 shares (H1 21: 2,457,788; FY 21: 1,486,022) 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 are no share options excluded from the diluted earnings
per share calculation because they would be antidilutive (2021:
nil).
Earnings per share
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
--------------------------------------- -------------- -------------- --------------
Continuing operations
Basic earnings per share 9.5p 10.5p 19.8p
--------------------------------------- -------------- -------------- --------------
Diluted earnings per share 9.5p 10.5p 19.6p
--------------------------------------- -------------- -------------- --------------
Underlying earnings per share
Basic earnings per share 9.5p 10.7p 20.3p
--------------------------------------- -------------- -------------- --------------
Diluted earnings per share 9.5p 10.7p 20.2p
--------------------------------------- -------------- -------------- --------------
Continuing and discontinued operations
Basic earnings per share 9.5p 8.9p 17.1p
--------------------------------------- -------------- -------------- --------------
Diluted earnings per share 9.5p 8.8p 17.0p
--------------------------------------- -------------- -------------- --------------
10. Dividends
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
------------------------------------------- -------------- -------------- --------------
Declared and paid during the period:
Final dividend for 2021: 6.8p (2020: 9.1p) 30.0 42.3 42.3
Interim dividend for 2021: 3.0p - - 13.7
Dividends declared and paid 30.0 42.3 56.0
------------------------------------------- -------------- -------------- --------------
The Directors have declared an interim dividend of 3.2p per
share. This dividend will be paid on 21 September 2022 to those
members on the register at the close of business on 12 August
2022.
11. Intangible assets and property, plant and equipment
During the 26 weeks ended 26 June 2022, the Group acquired
assets with a cost of GBP7.4m (cash outflow of GBP7.5m). There were
no material disposals in the period.
During the 26 weeks ended 27 June 2021, the Group acquired
assets with a cost of GBP7.8m (cash outflow of GBP7.8m), of which
GBP7.4m related to UK and Ireland and GBP0.4m related to
International. There were no material disposals in the period.
12. Right-of-use assets, lease receivables and lease
liabilities
Right-of-use assets
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
---------- -------------- -------------- --------------
Property 11.1 12.2 11.8
Equipment 9.8 9.3 7.6
---------- -------------- -------------- --------------
20.9 21.5 19.4
---------- -------------- -------------- --------------
Amounts recognised in the income statement
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
------------------------- -------------- -------------- --------------
Depreciation - Property 0.5 0.5 1.1
Depreciation - Equipment 2.6 2.6 5.4
------------------------- -------------- -------------- --------------
Lease receivables
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
--------- -------------- -------------- --------------
Property 198.2 201.4 201.2
198.2 201.4 201.2
--------- -------------- -------------- --------------
Lease liabilities
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
---------- -------------- -------------- --------------
Property 211.4 215.6 215.2
Equipment 10.0 9.1 7.4
---------- -------------- -------------- --------------
221.4 224.7 222.6
---------- -------------- -------------- --------------
13. Investment in associates and joint ventures
26 weeks ended 26 weeks ended 52 weeks ended
26 June 27 June 26 December
2022 2021 2021
GBPm GBPm GBPm
--------------------------------------------------- -------------- -------------- --------------
Investments in associates 51.0 39.1 48.0
Investments in joint ventures 4.7 4.7 4.7
--------------------------------------------------- -------------- -------------- --------------
Total investments in associates and joint ventures 55.7 43.8 52.7
--------------------------------------------------- -------------- -------------- --------------
During the period, the German associate contributed profits of
EUR2.1m (GBP1.8m). Full House Restaurants, contributed profits of
GBP1.8m, along with paying a dividend of GBP1.2m, whilst the
Northern Ireland JV contributed profits of GBP0.6m.
14. Business combinations and disposals
On 2 May 2021, the Group disposed of its 100% interest in PPS
Foods AB, the business in Sweden, with net consideration paid to
the buyers of GBP2.8m. The loss on disposal of the Group's interest
in Sweden was GBP0.4m.
On 31 May 2021, the Group disposed of its 100% interest in Pizza
Pizza EHF, the business in Iceland, with net consideration received
of GBP13.5m. The final working capital adjustment was finalised
during the period, and an additional GBP0.7m was paid to the
purchaser. The loss on disposal of the Group's interest in Iceland
was GBP7.3m.
On 31 August 2021, the Group disposed of its 100% interest in
Dominos Pizza GmbH, the business in Switzerland, with net
consideration paid of GBP0.5m. The final working capital adjustment
was finalised during the period, and an additional GBP0.5m was paid
to the purchaser, and GBP0.3m worth of provisions are held in
respect of indemnities under the agreement. The loss on disposal of
the Group's interest in Switzerland was GBP2.1m.
PPS Foods AB Pizza Pizza EHF Dominos Pizza GmbH
Sweden Iceland Switzerland
GBPm GBPm GBPm
----------------------------------------------------------------- ------------ --------------- ------------------
Cash (paid)/received on disposal (2.7) 14.1 0.5
Cash disposed (0.1) (0.6) (1.0)
----------------------------------------------------------------- ------------ --------------- ------------------
Net cash (paid)/received on disposal (2.8) 13.5 (0.5)
Consideration payable post disposal - (0.6) (0.8)
Net liabilities/(assets) disposed excluding cash (see below) 3.3 (13.6) 1.0
Currency translation losses transferred from translation reserve (0.5) (6.1) (1.3)
----------------------------------------------------------------- ------------ --------------- ------------------
Loss on disposal before professional fees - (6.8) (1.6)
Non-underlying professional fees related to the disposal (0.4) (0.5) (0.5)
----------------------------------------------------------------- ------------ --------------- ------------------
Total costs of disposal (0.4) (7.3) (2.1)
----------------------------------------------------------------- ------------ --------------- ------------------
Property, plant and equipment - 16.8 0.4
Inventories, trade and other payables (0.9) (0.6) (1.4)
Right-of-use assets - 3.3 4.5
Lease liabilities (2.4) (3.4) (4.5)
Deferred tax liabilities - (2.5) -
----------------------------------------------------------------- ------------ --------------- ------------------
Net (liabilities)/assets disposed excluding cash (3.3) 13.6 (1.0)
----------------------------------------------------------------- ------------ --------------- ------------------
Currency translation losses transferred from translation reserve
represent the historical gains and losses built up on retranslation
of the assets and liabilities of the foreign operation on
consolidation from local currency to pounds sterling, which were
recognised within the currency translation reserve and presented in
other comprehensive income. On disposal, these amounts are recycled
from the currency translation reserve to the income statement and
presented as part of the loss on disposal.
15. Financial liabilities
Banking facilities
As at 26 June 2022 the Group had a total of GBP350.0m (26
December 2021: GBP350.0m) of banking facilities, of which GBP73.2m
(H1 21: GBP131.5m; FY 21: GBP106.7m) was undrawn.
Bank revolving facility
As at the 26 June 2022, the Group had a GBP350.0m multicurrency
syndicated revolving credit facility with an original term of five
years to 13 December 2022 which following a one-year extension
arranged in November 2018 was extended to 12 December 2023. The
revolving credit facility was amended and restated on 2 December
2021, to amend the GBP interest base rate from LIBOR to SONIA.
Fees of GBP0.5m were paid for the extension. Arrangement fees of
GBP0.4m (H1 21: GBP1.2m; FY 21: GBP0.8m) directly incurred in
relation to the facility were included in the carrying values of
the facility and were being amortised over the extended term of the
facility.
As at 26 June 2022, an ancillary overdraft and pooling
arrangement was in place with Barclays Bank Plc for GBP10.0m
covering the Companies; Domino's Pizza UK and Ireland Limited, DPG
Holdings Limited, DP Realty Limited, and DP Pizza Limited. An
ancillary overdraft was in place with Barclays Bank Plc for EUR5.0m
for Domino's Pizza UK and Ireland Limited. Interest was charged for
both overdrafts at the same margin as applicable to the revolving
credit facility above SONIA (or equivalent).
New Debt Financing
The GBP350.0m revolving credit facility was replaced by a
GBP200.0m multicurrency revolving credit facility, entered into on
26th July 2022, and GBP200.0m private placement loan notes entered
into on 27th July 2022, which expire in 2027.
Interest charged on the new private placement loan notes is at
4.26% per annum.
Interest charged on the new 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 new facility 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 and
Sheermans Limited.
As at 1 August 2022, an ancillary overdraft and pooling
arrangement was in place with Barclays Bank Plc for GBP20.0m
covering the Companies; 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. Interest is charged for the
overdraft at the same margin as applicable to the revolving credit
facility above SONIA (or equivalent).
Share buyback obligation
On 8 March 2022, the Group entered into an irrevocable
non-discretionary programme with Numis Securities Limited to
purchase up to a maximum of GBP46.0m of shares from 9 March 2022.
During the period 12,583,665 shares were purchased for
consideration of GBP43.7m (GBP42.5m cash paid), which includes
costs of GBP0.2m. The remaining share buybacks outstanding as at 26
June 2022 is recognised as a financial liability of GBP3.7m, which
includes GBP1.2m payable at the end of the period.
On 9 March 2021, the Group entered into an irrevocable
non-discretionary programme with Numis Securities Limited to
purchase up to a maximum of GBP45.0m of shares from 12 March 2021.
For the 26 weeks ended 27 June 2021 7,825,174 shares were purchased
for a consideration of GBP28.8m (GBP28.0m cash paid). The remaining
share buybacks outstanding as at 27 June 2021 was recognised as a
financial liability of GBP16.7m, which included GBP0.6m payable at
the end of the period.
16. Financial instruments
Other financial asset
Other financial asset relates to a contingent consideration
(referred to as the 'Market Access Fee') payable by Domino's Pizza
Enterprises Limited to the Group for divesting of its interests in
operating Domino's Pizza stores in Germany and its exclusive access
to the German market. This Market Access Fee was payable in
instalments from 2017, the payment of each instalment being
contingent on the divested German business achieving defined levels
of EBITDA in the calendar years 2020 and 2021.
For the 52 weeks ended 26 December 2021, the Group recognised a
Market Access Fee of GBP8.7m. During the current period an amount
of EUR10.3m (GBP8.6m) was received in early settlement of the
Market Access Fee with foreign exchange loss of GBP0.1m. There were
no fair value movements during the period.
Investments
In November 2018, the Group acquired 15% of the issued share
capital of Shorecal Limited, a private company registered in the
Republic of Ireland that operates Domino's franchise stores in
Ireland. The Group's shareholding in Shorecal Limited is in
preference shares, acquired for an original cost of investment of
EUR12.2m (GBP11.0m). As a preference shareholder, the Group has
enhanced rights to dividend distributions and enhanced rights over
Shorecal Limited's equity value in the event of a liquidation or
onward share sale. The Group also has 'drag and tag' rights to
participate in an onward share sale arranged by Shorecal Limited's
other shareholders.
The investment in Shorecal Limited has been designated as a fair
value through profit and loss equity instrument, whereby dividends
received by the Group are recorded against the investment with any
fair value gains recognised in other income or losses recognised in
other expenses. The fair value of the investment is calculated by
discounting the future shareholder returns the Group expects to
receive from the investment, being proceeds from a liquidation or
onward share sale and dividends received up to that point. A
probability weighted expected return method has been applied in
performing this fair value calculation, whereby multiple future
outcomes for Shorecal Limited are simulated with a probability
assigned to each scenario.
The investment in Shorecal Limited is at Level 3 of the fair
value hierarchy because determining its fair value requires a
probability weighted estimate of future shareholder returns, which
is an unobservable fair value input.
During the period, we received dividends of EUR2.6m (GBP2.2m)
which have been credited to the investment value, and the
investment fair value has subsequently increased by EUR1.2m
(GBP1.0m) (H1 21: EUR2.4m (GBP2.1m); FY 21: EUR2.4m (GBP2.1m)),
which is recognised as a credit in the income statement, bringing
the total valuation to EUR12.8m (GBP11.0m). The fair valuation has
been performed based on current and expected forecast performance
of the investment on a probability weighted expected return
approach. This considers the potential future performance and
potential dividend returns together with assessments of likelihood
of various exit arrangements as structured under the shareholder
agreement. The movement in the period is as a result of strong
performance during 2022 and increased expected future performance
of the Company over the medium term.
The key assumptions in the model are the scenario probabilities
applied, the year 1 budget EBITDA and the discount rate applied.
The post-tax discount rate applied is 5.04%. Sensitivity analysis
has been performed to highlight the impact of movements within the
key judgemental areas:
-- A 10% decrease in Year 1 EBITDA would lead to a EUR3.4m
(GBP2.9m) reduction in the valuation.
-- A 10% increase in Year 1 EBITDA would lead to a EUR2.1m
(GBP1.8m) increase in the valuation.
-- A 100bps increase in the discount rate would lead to a
EUR1.3m (GBP1.1m) decrease in the valuation.
-- A 100bps decrease in the discount rate would lead to a
EUR3.2m (GBP2.8m) increase in the valuation.
17. Share-based payments
The expense recognised for share-based payments in respect of
employee services received during the 26 weeks ended 26 June 2022
was GBP1.0m (H1 21: GBP0.7m; FY 21: GBP1.7m). This all arises on
equity-settled share-based payment transactions.
18. 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 26 weeks 52 weeks
ended ended ended 26
26 June 27 June December
2022 2021 2022
GBPm GBPm GBPm
--------------------------------- --------- --------- ----------
Associates and Joint ventures
Sales to related parties 16.8 13.8 30.0
Amounts owed by related parties 1.3 0.6 1.7
Loans owed by related parties 10.1 13.3 10.8
19. Analysis of Net Debt
At As at
At 27 June 26 December
26 June 2022 2021 2021
GBPm GBPm GBPm
Cash and cash equivalents 40.0 39.8 42.8
Bank revolving facility (276.4) (217.4) (242.5)
Net Debt (236.4) (177.6) (199.7)
Of which:
Continuing operations (237.1) (180.6) (201.1)
Discontinued operations 0.7 3.0 1.4
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.
20. Additional cash flow information
Other Cash flows from investing activities
26 weeks ended 26 weeks ended 52 weeks ended
26 June 2022 27 June 2021 26 December 2021
GBPm GBPm GBPm
Dividends received from associates and joint ventures 1.7 1.0 2.2
Dividends received from investments 2.2 1.6 1.6
Decrease in loans to associates and joint ventures 0.8 3.0 4.9
4.7 5.6 8.7
Share transactions in cash flows from financing activities
26 weeks ended 26 weeks ended 52 weeks ended
26 June 2022 27 June 2021 26 December 2021
GBPm GBPm GBPm
Purchase of own shares - share buyback (42.5) (28.4) (80.5)
Purchase of own shares - employee benefit trust (4.7) (2.9) (2.9)
Consideration received on exercise of share options -
employee benefit trust 1.4 - 0.4
(45.8) (31.3) (83.0)
Reconciliation of free cash flow
26 weeks ended 26 weeks ended 52 weeks ended
26 June 2022 27 June 2021 26 December 2021
GBPm GBPm GBPm
Cash generated from operating activities 39.2 56.1 113.9
Net interest paid (2.2) (2.2) (4.0)
Receipts on lease receivables 13.2 13.0 25.7
Repayment of lease liabilities (17.0) (17.9) (34.1)
Dividends received 3.8 2.6 3.8
Other (0.2) (0.3) (0.7)
36.8 51.3 104.6
Cash and cash equivalents
26 weeks ended 26 weeks ended 52 weeks ended
26 June 2022 27 June 2021 26 December 2021
GBPm GBPm GBPm
Cash at bank and in hand 40.0 36.8 42.8
Cash at bank and in hand included in disposal groups held for sale - 3.0 -
Total cash at bank and in hand 40.0 39.8 42.8
Reconciliation of financing activities
At At
26 December Exchange Non-cash 26 June
2021 Cash flow differences movements 2022
GBPm GBPm GBPm GBPm GBPm
Bank revolving facility (242.5) (33.3) (0.2) (0.4) (276.4)
Lease liabilities (222.6) 17.0 (0.2) (15.6) (221.4)
(465.1) (16.3) (0.4) (16.0) (497.8)
At At
27 December Exchange Non-cash 27 June
2020 Disposal of international Cash flow differences movements 2021
GBPm GBPm GBPm GBPm GBPm GBPm
Bank revolving facility (243.6) - 22.5 4.1 (0.4) (217.4)
Lease liabilities (236.9) 5.8 17.9 0.8 (16.9) (229.3)
(480.5) 5.8 40.4 4.9 (17.3) (446.7)
At At
27 December Exchange Non-cash 26 December
2020 Disposal of international Cash flow differences movements 2021
GBPm GBPm GBPm GBPm GBPm GBPm
Bank revolving facility (243.6) - (2.7) 4.5 (0.7) (242.5)
Lease liabilities (236.9) 10.3 34.1 0.9 (31.0) (222.6)
(480.5) 10.3 31.4 5.4 (31.7) (465.1)
21. Post balance sheet events
The GBP350.0m revolving credit facility was replaced by a
GBP200.0m multicurrency revolving credit facility, entered into on
26th July 2022, and GBP200.0m private placement loan notes entered
into on 27th July 2022, which expire in 2027. For more details see
note 15.
22. Principal risks and uncertainties
We continue to operate an effective risk monitoring process
conducted via the Executive Risk Committee, which reports to the
Audit Committee on a quarterly basis. 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 58 to 68 of the Domino's Pizza Group plc Annual Report
and Accounts 2021. The Directors believe that the principal risks
being faced over the remainder of the financial year, summarised as
follows, are not substantially different to those disclosed in the
2021 Annual Report: competitive pressures; franchisee
relationships; supply chain disruption; food safety; eCommerce and
mobile platform; loss of personal and corporate data; climate
change; public health debate; and people-related risks.
We noted three main challenges for the business in our 2021
Annual report risk disclosures: food supply chain uncertainties
arising from the conflict in Ukraine; general food commodity price
inflation; and the effect of cost-of-living increases on consumer
behaviour. These will continue to be a focus for the business over
the next six months and are being addressed and mitigated in
several ways.
With the exception of cheese, we have agreed prices in advance
with suppliers of all our key ingredients, covering the remainder
of 2022. We have also tactically agreed advanced pricing into 2023
for certain ingredients which we expect to remain volatile in the
short term. As a result of these measures, and our resilient
long-standing relationships with our main suppliers, we have
suffered no material shortage of key ingredients and continue to
supply franchisee stores to our world-class standards of
availability. Franchisees can therefore expect some price certainty
throughout 2022, which allows greater confidence in menu pricing
and short-term margin forecasting. Where it meets our purchasing
objectives, we continue to explore opportunities to diversify our
supplier-base and manage the risk of single-source supply.
Cost-of-living challenges have intensified, with the price of
motor fuel, energy, and food reaching generational highs. Our focus
remains on amplifying our value message through local deals,
national campaigns, and menu innovation.
We continue to experience challenges in a constrained labour
market with difficulty in recruiting colleagues across our SCCs,
and for certain hard-to-fill roles in our Support Office. Our
Franchisees report difficulty in attracting sufficient delivery
drivers in periods of high demand. In mitigation, we are ensuring
our fleet mix is flexible in response to driver availability,
including using smaller vehicles where practical. We are also at
the early stage of putting in place a "warehouse-to-wheels"
initiative which provides opportunity, support, and training for
SCC colleagues wishing to pursue a career as a qualified large
goods vehicle driver. In support of peak trading around the World
Cup we are launching a national recruitment campaign to attract
delivery drivers and riders, introducing these applicants to
relevant opportunities with our franchisees. We remain confident
that Domino's is seen as a high-profile brand and attractive
employer of choice.
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 5.
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:
Location
of reconciliation
Item Definition to GAAP measure
Overall terminology
Non-underlying Items that are material in size, unusual or Group income
items infrequent in nature or discontinued operations statement,
and are disclosed separately as non-underlying note 5
items in the notes to the accounts.
Profit measures
Group operating Group operating profit before tax excluding Group income
profit before non-underlying items statement,
tax excluding note 3
non-underlying
items
Net interest Group finance costs excluding non-underlying Group income
before non-underlying items statement,
items note 3
Underlying profit Group profit before tax excluding non-underlying Group income
before taxation items statement,
note 3
Underlying profit Group profit after taxation excluding non-underlying Group income
for the period items statement
Earnings before EBIT is directly comparable to underlying operating Not applicable
Interest and profit
Tax (EBIT)
Non-underlying Items that are material in size, unusual or Group income
items infrequent in nature, and are disclosed separately statement,
as non-underlying items in the notes to the note 5
accounts.
Underlying basic Group EPS excluding non-underlying items Note 9
EPS
Last 12 months LTM EBITDA for the period from 29 June 2020 Not applicable
(LTM) EBITDA to 27 June 2021 based on underlying activities
including share of profits from associates and
joint ventures.
Revenue measures
System sales System sales represent the sum of all sales Not applicable
made by both franchised and corporate stores
to consumers.
Like-for-like LFL sales performance is calculated against Not applicable
(LFL) sales growth a comparable 26 week period in the prior year
excluding splits 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 27(th)
December 2020.
Like-for-like LFL sales including splits performance is calculated Not applicable
(LFL) sales growth based on mature store growth and includes the
including splits impact in like for like results of those stores
which have been impacted by donating territory
to a new store.
Like-for-Like Like-for-like excluding splits and VAT system Not applicable
(LFL) system sales performance also includes the impact of
sales growth changes in the VAT applied on hot takeaway food
(excluding splits where the VAT inclusive price to customers did
& VAT) not change. The VAT rate in the UK decreased
from 20% to 5% on 15 July 2020, increased to
12.5% on 1 October 2021 and reverted back to
20% on 1 April 2022. System sales are consistently
reported on an exclusive of VAT basis. However,
where the inclusive of VAT price of an order
remained the same on a total basis to the customer,
over the reduced VAT period the exclusive of
VAT price reported in system sales increased.
This leads to an increase in system sales from
15 July 2020 through to 31 September 2021 when
the VAT rate reduced from 20% to 5%. From 1
October 2021, the rate increased from 5% to
12.5%. Where the inclusive of VAT price of an
order remained the same on a total basis, this
leads to a decrease in system sales compared
to the period from 15 July 2020 and an increase
in system sales compared to the period before
15 July 2020. With the increase in VAT from
1 April 2022 back up to 20%, where the inclusive
of VAT price remained the same to the consumer,
there has been a negative impact on system sales
compared to the period from 15 July 2020 - 31
September 2021 and 1 October 21 - 31 March 2022,
as the exclusive of VAT price of an order decreased.
As an example, for an order where the inclusive
of VAT price is GBP27:
* From 15 July 2020 to 31 September 2021, during the
period where VAT was 5%, the reported system sale
would be GBP25.71
* From 1 October 2021 to 31 March 2022, during the
period where VAT was 12.5%, the reported system sale
would be GBP24.00
* From 1 April 2022 onwards, where the VAT rate is 20%,
the reported system sale would be GBP22.50
In Ireland, the VAT rate for hot takeaway food
reduced from 13.5% to 9% on 1 November 2020
and remains in place.
The system sales figures adjusted for VAT removes
the impact on system sales of the lower VAT
rates in the comparative periods to provide
comparability. This is performed through adjusting
the comparative figures over the reduced VAT
period back to an equivalent system sales amount
based on a 20% VAT rate where applicable. Group
revenue is not significantly impacted by the
change in the VAT rate as the aforementioned
benefit only arose on hot takeaway food, and
therefore only impacts the sales on the corporate
stores revenue within overall Group revenue.
Cash flow measures
Net Debt Group cash less bank revolving credit facility Note 19
and other
Free cash flow Free cash flow comprises cash generated from Not applicable
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.
Other non-financial definitions
Item Definition
AWUS Average Weekly Unit Sales
ASPA Average Sales Per Address
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)
HFSS High fat, salt, or sugar
International Represents our former businesses in Norway, Sweden, Iceland,
and Switzerland as well as our share of the German associate.
London corporate Relates to the corporate stores held following the acquisition
stores of Sell More Pizza Limited and Have More Fun (London)
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 15% interest in the trading operations
of Shorecal Limited, a franchisee group 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 IAS 34, 'Interim Financial Reporting' as adopted by
the UK and that the interim management report herein includes a
fair review of the information required by the Disclosure and
Transparency Rules (DTR"), namely:
-- DTR 4.2.7 (R): an indication of important events that have
occurred during the 26 week period ended 26 June 2022 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 26 June 2022 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
Dominic Paul, Chief Executive Officer
Natalia Barsegiyan*
Tracy Corrigan*
Stella David*
Lynn Fordham*
Usman Nabi*
Elias Dias Sese*
*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 1 August 2022 and is signed on its behalf by Dominic
Paul, Chief Executive Officer.
By order of the Board
Dominic Paul
Chief Executive Officer
1 August 2022
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 26 June 2022 (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 26 June 2022;
-- 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. 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 this ISRE.
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
Watford
1 August 2022
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IR BIGDIGGGDGDB
(END) Dow Jones Newswires
August 02, 2022 02:00 ET (06:00 GMT)
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