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Domino’s Pizza Group deliver resilient performance in H1

Domino’s Pizza Group plc (LON:DOM) has announced its first half results for the 26 weeks ended 28 June 2020.

 26 wks ending 
28 June 20207
(re-presented)
26 wks ending 30th June 19
(re-presented)
Change
UK & Ireland System Sales1£628.9m£596.0m5.50%
UK Like-for-Like2 System Sales1 growth exc. splits54.80%3.90% 
Underlying EBIT3, 7£51.4m£52.8m-2.70%
Underlying3, 7 Profit Before tax£47.6m£49.9m-4.60%
Underlying3, 7 Basic EPS8.7p8.8p-1.10%
    
Net Debt6£202.1m£238.8m-15.40%
STATUTORY REPORTING   
Statutory Profit Before Tax from continuing operations£45.8m£40.3m13.60%
Loss from discontinued International operations£(19.3)m£(9.9)m95.00%
Statutory profit, continuing and discontinued operations£19.0m£22.4m-15.20%
Statutory Basic EPS, continuing and discontinued operations4.4p5.3p-17.00%

All commentary below is on an underlying basis unless otherwise stated

Financial highlights:

·      Resilient UK & Ireland performance:

o  UK like-for-like sales excluding splits up 4.8% (3.7% including splits)Ireland like-for-like sales excluding splits down 3.6% (-4.9% including splits), against a strong comparative

o  Switched off collection throughout Covid-19 lockdown period, resulting in Q2 collection orders down 87%. Q2 delivery orders increased by 22%  

·      Underlying UK & Ireland EBIT of £49.5m, down £2.1m or 4.1%, including £6.2m of Covid-19 related costs

·      Statutory profit, including loss from discontinued International operations, £19.0m (H1 2019: £22.4m)

·      Net Debt down to £202.1m, 1.75x Net Debt/EBITDA on a continuing basis and 2.03x including EBITDA from discontinued operations

·      Deferred FY19 dividend of 5.56p per share, amounting to £26m in total, will now be paid on 18 September 2020 to all shareholders on the register as at 21 August 2020. The Board will review the appropriate total dividend in respect of FY20 along with our preliminary results in March 2021

Strategic highlights:

·      New management team focused on providing leadership through the Covid-19 lockdown period, establishing relationships with franchisees, and commencing work on the creation of long-term strategic plan

·      Throughout the period the management team did everything it could to ensure the safety of our people, franchisees and customers, by adapting our operating procedures and customer offering

·      Pleased to play a small part in recognising the dedication of key workers throughout the country by funding a key worker pizza giveaway

·      Worked closely with our suppliers and maintained 99.9% availability and accuracy in our supply chain operations

·      Our actions have been well received and resulted in customer satisfaction reaching an all-time high

·      Accelerated our evolution to a digital business, with UK online sales up 15% and App sales up 19%. UK online sales now account for 93% of delivery sales

·      Disposal of our Norwegian business successfully completed on 22 May; an important milestone in our ongoing International disposal process

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

“I am pleased to report a resilient first half performance. Throughout these unprecedented times we have focused on doing the right thing for our customers, colleagues, franchisees and communities. We view it as a privilege to have been able to stay open throughout the period. I have been hugely impressed by the hard work, dedication and agility of our colleagues and our franchisee partners to keep Domino’s delivering, and I would like to say a big thank you to the entire team.

“We have an amazing brand, an exceptional supply chain, highly experienced franchisee partners and a dynamic and responsive model.  The relationship with our franchisees is challenging and this situation dates back several years. Although I expect this to take some time to resolve, our performance during the period is a great demonstration of what we can achieve when we work together. Fundamentally our interests are aligned and I am hopeful that the long-term strategic plan we are currently working on will pave the way forward for a more constructive working relationship to the benefit of all parties.

“The macroeconomic, consumer and competitive backdrop for the second half of the year contain considerable uncertainties. Our system demonstrated responsiveness and agility in meeting the challenges presented through the lockdown period, although that did come at some inevitable and, in certain areas considerable, incremental costs. While trading in the first few weeks of the second half has been encouraging, it is too early to conclude on how consumer behaviour will evolve. We look forward to the remainder of the financial year, and to the long-term future of the business, with confidence in the strength of the brand and our operations.”  

1 System sales represent the sum of all sales made by both franchised and corporate stores to consumers

2 Like-for-like sales performance is calculated against a comparable 52-week period in the prior year for stores that have not donated addresses to new stores within the previous 24 months

3 Underlying is defined as statutory performance excluding discontinued operations, and items classified as non-underlying which includes significant non-recurring items or items directly related to merger and acquisition activity and related instruments

4 Results for H1 2019 have been re-presented to exclude International operations of Norway, Sweden, Iceland and Switzerland which are treated as ‘discontinued operations’

5 Excluding splits excludes the impact of split stores, by removing donor stores from the like-for-like calculation

6 Net Debt is defined as the bank revolving facilities, cash and cash equivalents and other loans, including balances held in disposal groups held for sale

7 Results for H1 2020 include the impact of IFRS 16. Comparatives have not been restated

Results webcast

Dominic Paul, Domino’s Pizza Group CEO, and Neil Smith, Interim CFO will be presenting the results and hosting a Q&A session. This will be webcast live at 9.30am, with an on-demand playback available soon afterwards.

To join the full webcast (live and on demand) of the presentation please register at: 

https://www.investis-live.com/dominos/5f1ef3ac503c070c0010fd2c/dasd

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