Domino Pizza Enterprises : German Joint Venture and Acquisition of Joey's Pizza Market Presentation

Slide 1

GERMAN JOINT VENTURE AND ACQUISITION OF JOEY'S PIZZA

16 December 2015

DOMINO'S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM

TRANSACTION HIGHLIGHTS

DOMINO'S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM

ENTRY INTO GERMAN MARKET 3

DPE has entered into inter-conditional agreements to:

	DPE-controlled Joint Venture	Form a two-thirds owned, DPE-controlled German joint venture ("JV") with UK-listed Domino's Pizza Group plc ("DPG"), the existing holder of the Domino's Pizza Master Franchise Agreement ("MFA") for Germany
	JV acquisition of Joey's Pizza	Acquire Joey's Pizza, the largest pizza delivery chain in Germany by network sales and number of stores, for up to €79 million
	JV acquisition of certain DPG stores in Germany	Also acquire approximately 10-15 stores in Germany which DPG already operates under the Domino's Pizza brand for approximately €2-3 million

Germany is a strategic and synergistic market for DPE which provides another region for long term growth

DOMINO'S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM

KEY HIGHLIGHTS 4

	#1 market position, with immediate scale	Joey's Pizza is the largest pizza delivery chain in Germany by network sales and number of stores
	Long term growth market for DPE	Germany is the fourth largest pizza market in the world, yet chain pizza is underpenetrated comprising only c. 20% of stores, providing DPE with substantial store rollout potential
	EPS accretive	4-5% EPS accretive on a FY15 underlying pro-forma basis, which excludes transaction and conversion costs
	Key risks managed	Deferred purchase price manages key investment risks, further enhanced via joint venture structure and management retention
	Continues DPE's global transformation	DPE's total store count rises to c. 1,870 and is expected to open 480 to 500 stores in FY16 alone (inclusive of Pizza Sprint and Joey's Pizza acquisitions, with the long term store count target rising by 1,000 to 4,250
	Pathway to 100% ownership	Although DPE will initially own two-thirds of the JV and control its operations, it will hold call option rights that it can exercise from January 2022 onwards to acquire full ownership

DOMINO'S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM

PROPELS DPE'S VISION IN EUROPE 5

Today	Store count
France (incl. Sprint)	348
Netherlands	172
Belgium	31
Total	551
Germany (incl. Joey's Pizza)	222
Total	773

Netherlands

Belgium

Future	Potential store count
France	1,000
Netherlands	300
Belgium	200
Germany	1,000
Total	2,500

Germany

France

Acquisitions during FY16 have reinforced Europe as a major growth region for DPE, with a potential store count growth (inclusive of Germany) of more than 1,700

DOMINO'S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM

STRONG GLOBAL PORTFOLIO 6

DPI developed markets(1)	Last disclosed store count	Potential store count	DPI emerging markets	Last disclosed store count	Potential store count
United Kingdom	834	1,200	India	950	1,800
Australia/NZ	670	900	Mexico	610	700
South Korea	415	500	Turkey	457	700
Japan	384	850	Saudi Arabia	154	250
Canada	384	650	Malaysia	142	300
France	348	1000	Brazil	129	500
Germany(2)	220	1,000	Total	2,442	4,250
Netherlands	172	300
Spain	153	300
Taiwan	130	150
Total	3,710	6,850

DPE

markets

DPE will hold MFA rights for the Domino's Pizza brands in five of its top 10 developed

markets, following its entry into the German market

(1) DPI published its top developed and emerging markets in its investor presentation on 3 November 2015. DPE has updated the France and Netherland store count and the France potential store count to current as a more recent disclosure than that of DPI. Japan not updated. Australian/NZ updated to the most recent public disclosure; (2) DPE has included Germany in the table based on these transactions occurring and assuming brand conversion is

completed

DOMINO'S PIZZA ENTERPRISES LTD AUSTRALIA | NEW ZEALAND | JAPAN | FRANCE | THE NETHERLANDS | BELGIUM

JOEY'S PIZZA

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GERMAN PIZZA MARKET 8

• The German fresh cooked pizza market consists of approximately 4,800(1) stores

  • ~800 operated by pizza chains

  • ~4,000 operated by independents

  • Chain stores relatively underpenetrated when compared to other markets

• Joey's Pizza is the clear market leader with approximately 25% of chain store locations

• Pizza industry sales growth is well supported by an increasing number of "cash-rich time-poor" consumers and an increasing popularity of "eating out at home"

  
  

  Number of pizza delivery stores(2)

  Country comparison

  
  

  Australia	France	Japan	Germany
  Population	23.1m	66.0m	127.3m	80.6m
  GDP / Capita(3)	US$67,458	US$42,503	US$38,634	US$46,269
  Estimated chain pizza stores(1,4)	2,100	1,700	2,350	800

  212

  170

  
  

  100

  58

  38

  
  

  
  

  Joey's Pizza Hallo Pizza Call a Pizza Smiley's Pizza Pizza Max

  
  

  Note: (1) Number of pizza outlets based on Euromonitor data (September 2014); (2) DPE estimates based on company websites; Joey's Pizza stores as at December 2015; (3) World Bank estimates; (4) DPE research

  
  

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  JOEY'S PIZZA BUSINESS 9

• Joey's Pizza was founded in 1988, and has grown to become the #1 pizza delivery business in Germany by both store count and network sales

  
  

  Schleswig-Holstein

  
  

  10 13

  
  

• Store network of 212 stores, comprising 209 franchise stores and 3 corporate owned stores

  
  

  Bremen

  4

  Hamburg

  25

  Mecklenburg-Vorpommern

  
  

  2

  Brandenburg

  • Comprehensive national network, represented across 103 cities in Germany

    Niedersachsen

    28

    
    

    Berlin

    6

    
    

    Berlin

    18

    
    

  • Store network is operated by 132 franchisees of

  
  

  Nordrhein-Westfalen

  15

  Sachsen-Anhalt

  which 46 are multi-unit owners

  
  

• Stores are generally of a small format, catering for delivery or pickup

  
  

• Business has approximately 100 employees

  
  

  10

  Rheinland-Pfalz

  
  

  3

  Saarland

  
  

  Hessen

  14

  Frankfurt

  
  

  Heidelberg

  
  

  19

  10

  Thüringen

  
  

  Bayern

  
  

  27

  Sachsen

  8

  Baden-Württemberg

  
  

  München

  
  

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  HISTORICAL STORE COUNT 10

  
  

• Store count has been flat in recent years under prior ownership

• Many franchisees have built strong balance sheets on the back of profits over the past few years and have

  expressed appetite for new stores

• JV will focus on collaborating with franchisees to enhance systems in early years, during the brand conversion phase, and will pursue meaningful store rollout thereafter to capture what is seen to be a large market opportunity

Number of stores

210 209 212

FY13A FY14A FY15F

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HISTORICAL SALES 11

Network sales (€m)

128135

143

FY13A FY14A FY15F

• Revenue expected to increase by a CAGR of c. 6% between FY13A and FY15F

  
  

• Revenue growth driven by changes in mix, product changes and price points of some menu items

  
  

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  HISTORICAL EARNINGS 12

  Pro forma underlying EBITDA(1) (€m)

  6.0

  5.0

  7.0

  
  

  FY13A FY14A FY15F

  
  

• EBITDA growth primarily driven by increased network sales and higher food margins

  
  

• Results shown include DPE's assessment of normalisation adjustments

Note: (1) Pro forma, underlying adjustments include the removal of expenses relating to vendor salaries and other general and administrative costs which are non-recurring in nature and other items which differ under the future ownership structure. Total normalisation adjustments determined in conjunction with EY and comprise approximately €3.2 million in the 2015 calendar year, €3.0 million in 2014 and €2.3 million in 2013

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