Domino’s Pizza Enterprises Limited
1/485 Kingsford Smith Drive
Hamilton, QLD, Australia 4007
ACN: 010 489 326
www.dominos.com.au
18 August 2021
The Manager
Market Announcements Office
Australian Securities Exchange
4th Floor, 20 Bridge Street
SYDNEY NSW 2000
Dear Sir
Appendix 4E and financial statements for the year ended 27 June 2021
Please find attached for immediate release to the market the following documents in respect of the
year ended 27 June 2021:
(a) Appendix 4E
(b) 2021 Annual Report
For further information, contact Nathan Scholz, Head of Investor Relations at
investor.relations@dominos.com.au or on +61-419-243-517.
Authorised for lodgement by the Board.
Craig Ryan
Company Secretary
END
Appendix 4E
DOMINO’S PIZZA ENTERPRISES LIMITED
Current Reporting Period:
Previous Corresponding Period:
Financial Year Ended 27 June 2021
Financial Year Ended 28 June 2020
SECTION A: RESULTS FOR ANNOUNCEMENT TO THE MARKET
Revenue and net profit
Revenue from ordinary activities
Profit from ordinary activities after tax from continuing operations
Profit from ordinary activities after tax attributable to members
Net profit attributable to members
Dividends
Dividends
PERCENTAGE
CHANGE %
AMOUNT
$’MILLION
Up
Up
Up
Up
15.4%
35.1%
32.9%
32.9%
to
to
to
to
2,199.1
193.1
184.0
184.0
AMOUNT PER
SECURITY
(CENTS)
FRANKED
PERCENTAGE
PER SECURITY
Final dividend in respect of full year ended 27 June 2021 – Payable 9 September 2021
Record date for determining entitlements to the final dividend: – 25 August 2021
Interim dividend in respect of half-year ended 27 December 2020
85.1
88.4
70%
50%
Net tangible assets per security
Net tangible assets per security
27 JUNE 2021
28 JUNE 2020
(5.12)
(5.63)
SECTION B: COMMENTARY ON RESULTS
Brief explanation of revenue, net profit and dividends (distributions)
For comments on trading performance during the year, refer to the media release.
The final 70% franked dividend of 85.1 cents per share was approved by the Board of Directors on 17 August 2021. In complying with accounting
standards, as the dividend was not approved prior to period end, no provision has been taken up for this dividend in the full year financial
statements.
ADDITIONAL INFORMATION
This report is based on accounts which have been audited. The audit report, which was unqualified, is included within the Annual Financial
Report which accompanies this Appendix 4E. Additional Appendix 4E disclosure requirements can be found in the Annual Financial Report.
ANNUAL REPORT 2021
DOMINO’S PIZZA ENTERPRISES LIMITED
OUR
PIZZA
BRINGS
PEOPLE
Acknowledgements
EDITORIAL
Rhiannon Frater (Australia)
Jana Gröling (Germany)
Sophie Keates (France)
Marianne Kemps (Benelux)
Guillemette Le Goascoz (France)
Nathan Scholz (Investor Relations)
Shizue Suzuki (Japan)
Yvonne Thynne (New Zealand)
DESIGNERS
Jessica Carwardine
Benedict Fahs
Dieter Fisch
Dave Tiedemann
CONTENTS
Chairman’s Message
5
CEO’s Report
Board Of Directors
Our Purpose
Our Values
Domino’s Pizza Enterprises Ltd
Award Winners
Hall Of Fame
Global Award Winners
Country Award Winners
3Ten
Taiwan
Living With Covid 19
Strategy & Insights
Europe
6
8
12
15
16
18
20
22
28
30
32
34
36
Top Highlights & Achievements 37
France
Benelux
Germany
Denmark
Mahazo Andrianivosoa
Sjoerd Van Seters
Islam Yassine
Ramon Möhle
Japan
38
39
40
41
48
51
52
55
57
Top Highlights &Achievements 58
Year in Review
Eiichi Tanizawa
Australia & New Zealand
60
62
65
Top Highlights & Achievements 67
Mark Johnson
Amandeep Singh
Director’s Report 2021
70
73
74
Financial Report 2021
114
ANNUAL
REPORT
2021
4
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW CHAIRMAN’S
MESSAGE
Domino’s Pizza Enterprises Ltd is a
business focused on the long-term –
this reflects not only a long-term
track record of achievement, but a
continued outlook to the long-term
growth ahead.
This past financial year again
demonstrated the value of this
long-term focus, with successes
achieved throughout the business
by management, team members and
franchisees alike.
Across nine markets, Domino’s Pizza
Enterprises Ltd and our franchisees
opened 285 new stores – each
providing new opportunities to reach
more customers, to employ more
team members and to give more to
local communities.
The foundation for this growth,
across Asia, Australia/New Zealand,
and Europe, will continue to be our
high-quality franchisees.
The Board is proud of the
achievements of these
entrepreneurs across our business
who, as this report attests, have
demonstrated their ingenuity,
resilience and customer focus
throughout challenging conditions.
Domino’s will continue to invest in
their future growth and also in the
next generation of franchisees who
are currently working in our stores as
managers or delivery experts. This
year 93.6% of new franchised stores
were opened by existing franchisees
or store managers.
Our long-term commitment to the
franchising model has benefited all in
our business.
It has also rewarded our
shareholders; this year the Company
delivered an underlying return
on equity of 49.0 per cent, and
a three-year average return on
equity of 44.0%. t also allowed
Domino’s to increase our dividend
to shareholders by 45.4% to 173.5¢
per share. Total shareholder returns
this year were 76.75%, this placed
Domino’s Pizza Enterprises Ltd in
the top 20% of ASX200 companies.
With total shareholder returns
since listing of more than 8,200%*;
Domino’s Pizza Enterprises Ltd
has outperformed not only most
companies in Australia but also
some of the world’s best-known
technology companies listed on Wall
Street. A long-term success story on
the global stage.
Our long-term approach has
delivered results in each of our nine
markets and the Board has the same
confidence it will continue to deliver
results in our 10th market – Taiwan.
With a population of more than
23.5 million people, the addition of
Domino’s Taiwan to the Company’s
portfolio will expand our addressable
Asian market by more than 18 per
cent, to almost 150 million people.
The track record of success
Domino’s has in Japan, and the
expansion into Taiwan, firmly
establishes a centre of excellence
for the Company in Asia, and a
platform for future success.
Throughout our history Domino’s
has consistently worked to apply the
highest standards of governance. In
recent years we have undertaken
a program of Board renewal. In
doing so we have reached our
2030 goal of gender diversity (40%)
among Non-Executive Directors,
retaining significant depth in
industry and company experience,
while diversifying our skills,
backgrounds, and geographies.
Our company has also strived to
ensure we reduced our impact
on the environment. Using
electric bicycles for delivery
and reducing energy
usage, as just two of many
examples, makes Domino’s
a better neighbour and
reduces our footprint, while
also reducing the costs to
our stores. I am pleased
this year to include our
* Source: Nasdaq
first Sustainability Report outlining
the progress we have made in this
important area.
The Board and management
remain committed to the long-
term opportunities of Domino’s.
Our Annual Report demonstrates
Domino’s Pizza Enterprises Ltd
can do good, and do well, and I
commend this report to you.
JACK COWIN
CHAIRMAN
5
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW CEO’S REPORT
When asked to summarise how Domino’s Pizza
Enterprises Ltd has continued to navigate through the
most uncertain times in our Company’s history, I return to
a simple ideal: Focus.
Rather than needing to split our attention between
different business types or food concepts, our
management team, franchisees and team members have
continued an absolute focus on their core business.
Of course, as this annual report demonstrates, the areas
on which our people have focused have differed from
one team to the next. Some have focused on developing
talent within their businesses, others on local store
marketing, on reducing delivery times, on setting records,
or on fortressing their delivery territories. The benefits
of this focus, both for our stores and for Domino’s Pizza
Enterprises Ltd, is clear.
This year Domino’s Pizza Enterprises Ltd grew our store
network by more than 10 per cent, opened 285 stores,
delivered network sales of $3.74 billion (+14.6%) and
online sales of $2.92 billion (+21.5%). This delivered
an underlying EBIT of $293.0 million (+27.2%).
Underlying those numbers, our business has provided
hot, fresh meals to our communities, kept families
safely at home, and created new jobs in nine markets.
Pleasingly, the performance of our business this year has
provided opportunities for existing franchisees to expand
their business, and for team members (overwhelmingly
drawn from the ranks of store managers) to become
franchisees for the first time.
Focus has allowed management to make decisions by
assessing our options against our Purpose and Values. It
was this values-driven approach that saw our charitable
giving expanded in more markets and decided Domino’s
would return JobKeeper support in Australia. These were
the right things to do.
How the world changes in a ‘post-COVID’ world, or
whether ‘living with COVID’ is the new normal – is still
unknown. What we do know is a continued focus on
what we do best, meeting the needs of our customers,
will be central to our future.
This means setting the highest standards for Product,
Service and Image to deliver Value for our customers.
6
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW It means we will help our franchisees maximise their
potential, safely reduce delivery times in pursuit of our
goal of 3TEN and invest more into strategy and insights
to help stores become more efficient and improve
customers’ ordering experiences. And it means we
will simultaneously work to reach our potential while
reducing our environmental footprint, investing in our
people giving back to our communities.
By delivering on these promises in all our markets,
soon to include Taiwan, we intend to demonstrate on
a global platform the true meaning of our Purpose:
Our Pizza Brings People Closer.
Because ultimately it is the efforts of Domino’s
people, more than 88,000 around the world, that
have made this year not just possible, but record-
setting.
From young team members making their very first
batch of dough, through to experienced veterans
with decades of experience who this year we
inducted into our Hall of Fame. I am proud to be
included in the same annual report alongside
them.
DON MEIJ
GROUP CEO &
MANAGING
DIRECTOR
7
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW DOMINO’S PIZZA ENTERPRISES LIMITED
BOARD OF DIRECTORS
Jack Cowin
Chairman Appointed: March 2014
Professional Background: More than five decades
experience in the quick service restaurant industry.
Founder and Executive Chairman of Competitive
Foods Australia Pty Ltd, the owner and operator of
more than 350 Hungry Jack’s restaurants in Australia
and several food manufacturing plants.
Former directorships: Fairfax Media Limited, Ten Network
Holdings, Chandler Macleod Group.
Qualifications: Bachelor of Arts – University of Western
Ontario, Canada; Doctor of Laws, honoris causa –
University of Western Ontario, Canada.
Other boards: Competitive Foods Australia Pty Ltd,
v2 Foods, Apache Industrial Service (USA).
Don Meij
Group CEO & Managing Director Appointed: August 2001
BACKGROUND & EXPERIENCE:
Professional Background: Award-winning multi-unit
franchisee and internationally recognised pizza executive.
Mr Meij started as a delivery driver in 1987 and held
various management positions with Silvio’s Dial-a-Pizza
and Domino’s Pizza until 1996. Mr Meij then became a
Domino’s Pizza franchisee, owning and operating 17 stores
before selling them to Domino’s Pizza in 2001. Multiple-
award winner, including Chairman’s Award
for outstanding leadership and Ernst & Young Australian
Young Entrepreneur of the Year. In 2018, under Don’s
leadership, Domino’s was inducted into Queensland
Business Leaders Hall of Fame. Group CEO & Managing
Director since 2002, leading the Company to become
Australia’s first publicly-listed pizza chain on the ASX
(2005). In 2017, Don celebrated 30 years with Domino’s.
Other boards: Not applicable.
Ross Adler AC
Non-Executive Director, Deputy Chairman, (Former Chairman)
Appointed: March 2005
BACKGROUND & EXPERIENCE:
FY20: Chair of the Audit Committee, Member
of the Nomination, Culture and Remuneration Committee.
Other boards: Executive Chairman of Amtrade
International Pty Ltd.
FY21: Member of the Audit and Risk Committee,
formerly Audit Committee, and Nomination, Culture and
Remuneration Committee.
Professional Background: Extensive experience as an
executive and board member, recognised for his significant
contribution to education and the arts. Previously the
CEO of oil and gas producer Santos Ltd (1984-2000)
and Chairman of the Australian Trade and Investment
Commission (Austrade) (2001-2006). Recipient of the
Centenary Medal (2001) for outstanding service to
Australia’s international trade.
Former directorships: Santos Ltd, Commonwealth
Bank of Australia Ltd, Telstra Ltd, Port Adelaide Maritime
Corporation, Adelaide Festival, The Art Gallery of South
Australia, State Theatre Company, Grand Prix Corporation,
Deputy Chancellor of the University of Adelaide.
Qualifications: Bachelor of Commerce – Melbourne
University; MBA – Columbia University, United States of
America.
Grant Bourke
Non-Executive Director Appointed: August 2001
BACKGROUND & EXPERIENCE:
FY20: Chair of the Nomination, Culture and Remuneration
Committee, Member of the Audit Committee.
FY21: Chair of the Audit and Risk Committee and Member
of the Nomination, Culture and Remuneration Committee.
Professional Background: Experienced food industry
executive with extensive experience as an award-winning
Domino’s franchisee and executive. Prior to joining Domino’s
Mr Bourke was an international executive with Masterfoods
(Mars Inc.). He was awarded Domino’s Golden Franchisee
award (1995), Franchisee of the Year (1997 and 1998), Golden
Eagle winner (1999) for his contribution to the Company
and global Chairman’s Award winner for outstanding leadership.
Former Director of Corporate Store Operations, Managing
Director Europe, and Non-Executive Director since 2007.
Other boards: Not applicable.
Former directorships: Pacific Smiles Group Ltd.
Qualifications: Bachelor of Science (Food Technology) –
University of New South Wales; MBA – the University of
Newcastle.
8
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Lynda O’Grady
Non-Executive Director Appointed: April 2015
BACKGROUND & EXPERIENCE:
FY20: Member of the Nomination, Culture and
Remuneration Committee.
FY21: Member of the Audit and Risk Committee and
Nomination, Culture and Remuneration Committee.
Professional Background: Extensive career with senior
executive experience in IT, telecommunications and
media organisations. Former Executive Director and Chief
of Product of Telstra, Commercial Director of Australian
Consolidated Press, the publishing division of Publishing
and Broadcasting Limited, and General Manager of Alcatel
Australia.
Other boards: Non-Executive Director AVANT Mutual Ltd,
Non-Executive Director Wagner Holdings Ltd, Member of
the Advisory Board of Jamieson Coote Bonds, and Council
of Southern Cross University and Director of Musica Viva.
Former directorships: Council of Bond University, Boards
of the Aged Care Financing Authority (Chair), National
Electronic Health Transition Authority (NEHTA), Screen
Queensland and TAB Queensland, and the IT&T Board of
Advisors to the New South Wales Treasurer.
Qualifications: Bachelor of Commerce (Hons) – University
of Queensland, Fellow of the Australian Institute of
Company Directors.
Uschi Schreiber AM
Non-Executive Director Appointed: November 2018
BACKGROUND & EXPERIENCE:
FY20: Member of the Audit Committee and Nomination,
Culture and Remuneration Committee.
FY21: Chair of the Nomination, Culture and Remuneration
Committee and Member of the Audit and Risk Committee.
and EY Fellow, Digital Society and Innovation. Former
Director-General, Queensland Health; Deputy Director
General, Department of the Premier and Cabinet and
Cabinet Secretary, Queensland Government. Consultant,
executive coach and diversity advocate.
Professional Background: Experienced global strategy
and operations executive in the private and public sectors,
including in countries in which the company is expanding
its operations. Chair, Health Care, APM, a leading global
health and human services organization. Former EY Chair,
Global Accounts Committee; Global Vice Chair Markets;
member of the EY Global Executive Management Board
Qualifications: Master of Arts – Griffith University;
Australia, Graduate Certificate in Management – University
of Western Sydney, Australia; Bachelor of Social Work
and Special Education – University of Braunschweig/
Wolfenbüttel, Germany.
Doreen Huber
Non-Executive Director Appointed: February 2020
Professional Background: Respected business
entrepreneur and food technology expert. Founder and
former CEO of business catering aggregator Lemoncat
(acquired by B2B Food Group). Former Chief Operations
Officer and part of the founding team of Delivery Hero,
the largest global food ordering aggregator (outside of
China). Experienced angel investor, and former partner and
investor in Springstar, which supported US-based internet
furnishing platform Houzz, which are both multi-billion
dollar companies.
Other boards: Bundesverband Deutsche Startups (German
Start-ups Association).
Former directorships: Lemoncat (Germany), Delivery Hero.
Qualifications: Magister Artium / Master of Arts (Literature,
Art and Media) – Humboldt University of Berlin, Germany.
Tony Peake
Non-Executive Director Appointed: May 2021
BACKGROUND & EXPERIENCE:
Member of the Audit and Risk Comittee.
Professional Background: Chartered Accountant with
more than two decades’ of board-level experience across
the public, commercial and not-for-profit sectors.
Former Senior Partner at PwC, serving as an Audit and
Consulting Partner, Chief Operating Officer, and Executive
Director, with particular experience in Retail & Consumer,
Education, and Government.
Was the lead audit partner at PwC for major international
brands, and led financial due diligence for large scale,
multi-national client acquisitions.
Other boards: Scanlon Capital and Melbourne Fashion Festival.
Former directorships: Methodist Ladies College and The
University of Melbourne.
Qualifications: Bachelor of Business (Distinction) – RMIT, Fellow
of Chartered Accountants Australia & New Zealand, GAICD.
9
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW EUROPE
1,286 72.8M
STORES
PIZZAS SOLD
JAPAN
800 39.8M
STORES
PIZZAS SOLD
PERFORMANCE HIGHLIGHTS
2,949
STORES GLOBALLY
$3,744.4M
NETWORK SALES
10
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW
AUSTRALIA & NEW ZEALAND
863
STORES
107.6M
PIZZAS SOLD
PERFORMANCE HIGHLIGHTS
$2,929.8M
ONLINE SALES
$293.0M
UNDERLYING EBIT
217.6 CPS
UNDERLYING EPS
11
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW
OUR
PURPOSE
WHY DO WE EXIST?
THE HARD-WIRED
HUMAN NEED FOR SOCIAL
CONNECTION, SEEMINGLY
BETTER ENABLED THAN
EVER BEFORE, IS
BREAKING DOWN
PEOPLE CRAVE
BELONGING, WHILE
THEY ASSERT THEIR
RIGHT TO BE DIFFERENT
AT OUR BEST
WE SMASH THE
PREVAILING WISDOM
WHICH SAYS YOU CAN’T
HAVE QUALITY, SPEED
AND LOW PRICE...
THUS PUTTING THE
WORLDS MOST DELICIOUS
AND VERSATILE BONDING
FOOD WITHIN REACH OF
EVERY PERSON
OUR PIZZA BRINGS
PEOPLE CLOSER
12
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW OUR PURPOSE
PIZZA BRINGS PEOPLE CLOSER
ONE TEAM,
ONE GOAL
13
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 14
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW OUR VALUES
Crush
Convention
Do The Right
Thing Because
It’s The Right
Thing To Do
Be Generous &
Provide Joyful
Experiences
Invest to Create
Devotion
Help People
Grow & Prosper
15
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW DOMINO’S PIZZA
ENTERPRISES LTD
AWARD WINNERS
Each year Domino’s Pizza Enterprises Ltd recognises in
each of our markets the team members and franchisees
who display the very best Domino’s can offer; true
Dominoids who have pizza sauce running through their
veins and count slices of pepperoni in their sleep. Our
award winners are included on the following pages –
their efforts stood out against thousands of other stores
and tens of thousands of franchisees and team members.
16
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW We congratulate them and are proud to
recognise them in this Annual Report.
17
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW HALL OF FAME
Domino’s Pizza Enterprises Ltd has a proud history
and has celebrated thousands of team members over
our decades of operation. In 2020, Domino’s Pizza
Enterprises Ltd formed the Hall of Fame, to recognise
those leaders whose contributions have made a
significant contribution to our company over a number of
years. It is not expected that new inductees will be made
to the Hall of Fame each year, but this year Domino’s
Pizza Enterprises Ltd is proud to welcome three more of
our team to this exclusive club.
Andrew Bradley
Andrew started in Domino’s in 2003,
bringing more than two decades of
multi-national experience working in
marketing and management.
As a Domino’s franchisee in France,
Andrew opened his first store in
2004 in Lyon, before joining the
French Head office as Operations
Director between 2008 and 2010.
From 2010, Andrew returned to
franchising, building a successful
network of eight stores, before his
appointment as President and CEO
in 2018.
Andrew is a dual UK/French citizen
with an extensive knowledge of
managing large organisations and
a deep understanding of small
business and franchise operations.
With his experience as a multi-unit
franchisee, Andrew has built a
strong relationship with franchisees,
bringing his deep empathy for
their experiences to build the most
competitive quick service restaurant
business in the country. This
franchisee-focused approach has
delivered a record number of new
stores in France this financial year.
Group CEO Don Meij said: “I was
thrilled to induct Andrew into the
Domino’s Pizza Enterprises Ltd Hall
of Fame. The brand simply would
not be where it is today without his
outstanding contributions as both a
franchisee and leader of this market.”
18
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Shin Sasaki
Sasaki-san joined Domino’s Pizza
Japan in 1988, where he worked as a
Store Manager, Area Supervisor, and
Regional Director.
Sasaki-san has excelled in every
role in his Domino’s career – as a
store manager and supervisor in
the 1990s, to roles in franchise and
system development, corporate
planning, procurement, physical
logistics and store development.
He was appointed as Executive Vice
President in 2017, and is responsible
for Store Development, Procurement,
Quality Control, Safety Control Office
and the Audit Office.
In this Financial Year, Domino’s Pizza
Japan set a new record for store
openings by one DPE market in a
single year – 126 stores.
Sasaki-san’s contribution to this
record was crucial.
Domino’s Pizza Japan CEO &
President Josh Kilimnik said Sasaki-
san is known for his positive, can-do
attitude, delivering new stores of
exceptional quality and efficiency.
“Nothing is impossible for Sasaki-san
nor - due to his leadership - his team.
He has played a key role in Domino’s
Pizza Japan’s growth through major
milestones, including when Domino’s
became the largest pizza chain in
Japan by store count, as well as
the recent, rapid expansion in the
market.”
Hiroshi Kakiuchi
Kakiuchi-san started work for
Domino’s Pizza Japan in 1988,
and built a deep understanding of
operations by working in stores.
He has applied this experience
over more than 30 years, helping
the Japan corporate store network
deliver some of the best operations
in the Domino’s world.
Kakiuchi-san embraced 3TEN, with
corporate stores showing Domino’s
stores throughout the world what
is possible when safely delivering
pizzas in record times. This included
setting the current world record, in
November 2018, with the Yotsuya (a
week of orders averaging 2 minutes
and 38 seconds). In this financial
year Domino’s corporate stores set a
record for their system of 13 minutes
31 seconds for an entire week.
Kakiuchi-san’s selfless leadership
has inspired countless Can-Do
partners; corporate managers
who have progressed to become
extraordinary multi-unit franchisees.
Many owe their success to Kakiuchi-
san’s leadership and inspirational
lessons.
He sets high standards and his
teams understand he genuinely
cares about their success,
demonstrating a passion for
everything he does each day.
Colleagues recall he was excited
when he was appointed Deputy
Division VP of Corporate Store
Operations in 2002, an excitement
that has continued to this day.
Previous Hall of Fame inductees 2020: Andrew Rennie and Andrew Megson
19
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW GLOBAL AWARD WINNERS – 2020
Announced 2021 Financial Year
GLOBAL LEADERSHIP
AWARD
(GOLD EAGLE):
GLOBAL STORE
MANAGER
OF THE YEAR:
GLOBAL FRANCHISEE
OF THE YEAR:
Mark Johnson, ANZ
(nominated by ANZ CEO Nick Knight)
Mark is a multi-unit franchisee with
10 stores in Tasmania. He believes
execution is the key to success and
smaller, more efficient delivery areas
means better service for customers.
Through uncertain times, Mark
has demonstrated his faith in the
Domino’s brand and the abilities of
his team and, since being awarded
the Gold Eagle in March, has
fortressed his operations with an
additional two stores.
With a goal of owning 100 stores
in 20 years Mark has learned the
value of investing in his people.
He supported more than 60 team
members to undertake “Run to the
Roar” leadership classes with coach
Bernie Kelly, with his goal to be “the
number one team in the Domino’s
universe at training our people to
train our people”.
Domino’s ANZ CEO Nick Knight
said Mark had shown leadership in
regional franchisee meetings, even
as they moved online. “He has been
very positive through these meetings
and has pushed franchisees to be
better by offering advice in areas his
stores are excelling in. Mark has also
been involved in presenting to other
markets in person and over Zoom.”
“Mark has also initiated a ranking
system that included his own stores
and stores of other franchisees that
have come from within his business
so they could benchmark their
performance. He has a big bold
vision for the future and has built a
great team in Tasmania to allow
him to start executing his vision.”
Sjoerd van Seters, Netherlands
(nominated by Netherlands
Franchise Operations Director, Martin
Steenks)
Sjoerd has been a franchisee in the
Netherlands for more than 10 years,
consistently winning awards for his
market-leading operations. Sjoerd
takes a leading role in growing
sales for his store network, including
fortressing his business with new
stores in existing delivery territories.
This has allowed him to reach more
carry-out customers and reduce the
average time from the pizza oven to
customers’ doors.
Sjoerd knows that a talented and
motivated team are crucial to
success, and has implemented a
profit-sharing program with store
managers, allowing him to develop
new talent and future franchisees
within his business, all aligned with
the same goal, to sell more pizzas
and have more fun.
Martin Steenks, Netherlands
Franchise Operations Director, said
Sjoerd is competitive in everything
he approaches, aiming to be the
dominant #1 in every challenge he
sets himself.
“Sjoerd sets big hairy audacious
goals (a long-term goal that everyone
in the company can understand
and rally behind) becoming the
first franchisee whose fleet is 100%
electric.
“Sjoerd is passionate about the
environment, not only is his 60
vehicle fleet electric, but he has
implemented a recycling program to
reduce wastage from his stores.
“His commitment to the business
and to the environment are why I
believe he is the DPE Franchisee of
the Year.”
Minori Yanamoto, Japan
(nominated by Japan President and
CEO Josh Kilimnik, and Executive
VP, Corporate Operations, Hiroshi
Kakiuchi)
Minori Yanamoto joined Domino’s
as a casual pizza maker when she
was 16 years’ old and in her first
year in High School. Yanamoto-san
progressed to become an assistant
manager in training after high school
but – enchanted by the business
of Domino’s – decided to leave
university to join Domino’s full-time.
Yanamoto-san worked at the Gamo
Yonchome store as the opening
manager, before becoming the store
manager 18 months ago. She has
excelled in this role, with her store
earning a 5-star result in its OER
audit for four consecutive quarters,
including scoring 100% mark on
the most recent. As store manager,
Yanamoto-san has demonstrated
her expertise extends across store
operations, growing annual sales 148
per cent, and reducing delivery times
to an average of 16 minutes across
an entire year.
Yanamoto-san is also lightning fast
on the make bench: winning the
2020 Domino’s Fastest Pizza Maker
Competition (Asia) and coming 7th
in the World Fastest Pizza Maker
Competition. She has twice been
asked to represent Domino’s Japan
on television, building a loyal fan
base of customers who visit the
store.
Executive VP, Corporate
Operations, Hiroshi Kakiuchi
said Yanamoto-san: “is a
walking standard of store
operations and a talented
coach. Her strength is teaching
people with a motto of ‘teaching
people in a loving way’. As a result,
she has trained and developed
numerous store managers and
managers-in-training in the West
Japan Operations Division.
Yanamoto-san is a worthy recipient
of this award.”
20
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW GLOBAL AWARD WINNERS – 2020
Announced 2021 Financial Year
GOLDEN FRANNY:
(AWARDED BY
DOMINO’S PIZZA INC.)
Individuals
♦ Antonio Cabanillas &
Marco Wrobel (Germany)
♦ Ali Chbihi (France)
♦ Chris Donnelly (New Zealand)
♦ Sebastian Dornbrack &
Michael Dornbrack (Germany)
♦ Eiichi Tanizawa (Japan)
Countries
♦ Australia
♦ Belgium
♦ France
♦ Germany
♦ Japan
♦ Netherlands
GLOBAL SUPPORT TEAM MEMBER OF THE YEAR:
(JOINT WINNERS)
Philip Espersen, Denmark
(nominated by Denmark Country
Manager Kellie Taylor)
Denmark General Manager
Kellie Taylor summed up Philip’s
nomination simply: “It’s not normal
that your IT Manager would also look
after store development but that’s
how Philip rolls.”
In the 2020 calendar year Domino’s
Denmark increased the total
store count from five stores to
15. At the same time, local stores
moved across from a legacy online
ordering system in place when
the business was acquired, to
the OneDigital Online Ordering
platform. OneDigital is designed to
give customers a more rewarding
ordering experience, and provides
for operational and marketing
enhancements, including the
ability to offer bundled discounts
for customers who subscribe to
Domino’s marketing channels.
Philip was at the centre of these
significant projects.
“That’s an incredible amount of work
for one person to manage, and it’s
just the tip of the iceberg of work
that Philip does for our team and our
market.
“It’s not just the volume of work that
is impressive, it’s also the quality of
the work and Philip’s attention to
detail.
“I honestly don’t know how we would
get anything done without Philip on
the team.”
Francesco Romano, Japan
(nominated by Japan President and
CEO Josh Kilimnik, Executive VP,
Franchise, Benjamin Oborne,
Chief Marketing Officer Todd Reilly)
In 2020 Francesco demonstrated
his incredible ability to identify
digital opportunities not only for
the marketing team, but also for
improving the overall customer
experience.
He lead the implementation of
countless new digital service
initiatives that were first-to-market,
including initiatives that were crucial
during COVID: Zero Contact Delivery
and Carry Out, Drop & Go Delivery
and Smart Drive Through.
Many of these were a first for
Domino’s Japan, but were then
rolled out in other Domino’s markets.
Josh Kilimnik, President and CEO
Domino’s Japan said: “Francesco
worked closely with the Corporate
and Franchise Operations teams
to ensure the perfect execution of
these initiatives, continually providing
integral feedback to finesse the
operational elements of them after
launch.
“He provided on the ground
leadership for the Domino’s Japan
marketing team during many critical
months as we navigated the new
normal under COVID and played
a critical role in the rollout of new
aggregator partners as well as the
ramp up of activities with existing
partners.
“All of this work helped deliver
record online sales.”
21
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW COUNTRY AWARD
WINNERS
Australia/New Zealand
Time is the Enemy of Food Award
Team Torquay VIC
The Alvaro Del Busto Memorial Delivery Expert of the
Year
Harshit Sangwan
Multi-Unit Franchisee of the Year
Astrid Acreman & James Acreman
Corporate Services Team Member of the Year
Lauren Vromans
Charlie Reynolds Memorial Award - Franchise Hands
on Hero
Amandeep Malhi
Big Red
Mark Glynn
$10 Million Dollar Club
♦ Mark Coyle
♦ Leroy Day
♦ James Dooley
People Excellence Award - “Growth from within”
Noni Knight
Raymon Exposito Memorial Award
Team DPE Regional Leader of the Year - Pankaj Kumar
State Operations Manager of the Year
Tommy Foster
Franchise Operations Team Member of the Year
Aaron Righetti
Team DPE Rookie Manager of the Year
Maddie Davies
Rookie Manager of the Year
Lalit Sharma
Team DPE Manager of the Year
Jack Hardcastle
Manager of the Year
Gus Roughley
Leadership Awards
♦ Mitchell Amor
♦ Vanessa Quiring & Nathan Quiring
♦ Sovit Nakarmi & Subash Kc
♦ Susan So & Stefan So
♦ Chris Donnelly
♦ Amandeep Singh
♦ Dan Tan & Zinnia Lai
♦ Melissa Burness & David Burness
♦ James Dooley
♦ Steven Gilbert
♦ Carl Sheppard
♦ Mark Johnson
♦ Lindsay Tod & Jason Tod
♦ TJ Gurm & Dilpreet Gurm
Global Leadership Award
Mark Johnson
Hunter Mackenzie Big Heart, Big Fun Award
Rishi Sharma
IDC Digital Transformation Awards –
Special Award for Resiliency (Shortlisted):
Domino’s Digital Team for Zero Contact Delivery
Mumbrella CommsCon Awards 2021 –
Best COVID-19 Response (Shortlisted):
Domino’s Communications Team
22
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Japan
DPZ Regional Manager of the year
Emika Kobayashi
2020 Pacific Regional Manager of the Year
Takeshi Kuji
2020 Pacific Regional Supervisor of the Year
Shogo Suzuki
2020 Pacific Regional Delivery Expert of the Year
Takayuki Hoshino
Cornerstone Award
Yusuke Hayasaka
Corporate Supervisor of the Year
Akinobu Kimbara
Awareness Challenge
Kazuyuki Dairaku
Staff of the Year
Masato Nakanishi
ENTREPRENEUR AWARD
♦ Ryota Horie
♦ Yoshihiko Tani
♦ Yamato Harima
♦ Kazuki Anju
♦ Naoto Senoo
♦ Yoshihiko Endo
♦ Yusuke Hayasaka
♦ Teppei Masumoto
♦ Takuya Ono
♦ Yuichi Kitagami
♦ Yoshinori Yamabe
Profit Improvement Manager of the Year
♦ Makoto Uezono
♦ Yusuke Matsui
♦ Emiri Higa
Field Consultant of the Year
Masahiro Nagaoka
Franchisee of the Year
Teppei Masumoto
Corporate Manager of the Year/ Manger of the Year
Yudai Hirano
Franchise Manager of the Year
Teppei Ozawa
23
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Europe
France
Team Commissary DPF Most Valuable Person
Hugo Ruiz
New franchisees Award
♦ David Charrier (Narbonne)
♦ Mohamed MHade (Nogent sur Oise)
♦ Sébastien Di Ruocco (Poissy)
♦ Sébastien Gaborit (Cavaillon)
♦ Mamadou Bidanessy (Mantes la Jolie)
Single-Unit Franchisee of the Year
Sébastien Tronchet (Saint Denis)
Multi-Unit Franchisee of the Year
Marc Antoine Perray (La Roche sur Yon, Parthenay, Les
Herbiers, La Rochelle Centre, La Rochelle les Minimes, La
Rochelle Port Neuf, Rochefort)
Rookie Manager of the Year
Sophie Torres (Bordeaux Bègles)
Best EDT Award
Team Paris 13 BNF store (DPF)
Best sales growth Award (1st place)
Team Gennevilliers (DPF)
Best sales growth Award (2nd place)
Team Montfort sur Meu store (franchisee Gaëtan
Lebreton)
Best sales growth Award (3rd place)
Team Pavillons sous Bois store (franchisee Franck
Bigeon)
One Million Euro Club
♦ Team Cherbourg Octeville (franchisee Ali Chbihi)
♦ Rolex Challenge
♦ La Roche sur Yon (franchisee Marc Antoine Perray)
♦ Lyon 5 (corporate store)
♦ Cesson (franchisee Tahar Chelli)
♦ Rennes Centre (franchisee Tahar Chelli)
♦ Toulouse Narbonne (franchisee Vincent Piron)
♦ Annecy Centre (franchisee Sabrina Benkhiat)
Manager of the Year
Michael Bigeon (Les Pavillons sous Bois)
Supervisor of the Year
Grégory Rigault (Cholet, Saint Nazaire, Saint Nazaire
Ouest, Lorient, Bressuire, Lanester, Ancenis)
Team Corporate Rookie Manager of the Year
Omar Ouachour (Paris 13 BNF)
Team Corporate Manager of the Year
Steve Holowaty (Lille Gambetta)
Exceptional number of openings Award
Fabrice Dorie
Best opening week Award
Team Alençon (franchisee Gaëtan Lebreton)
Big Sales Record Award
Team Saint Herblain Dervallières store (franchisee
Fabrice Dorie)
Best NPS Award
Team Saint Brieuc Beaufeuillage store (franchisee Ali
Chbihi)
24
♦ Hésingue (franchisee Kamel Boulhadid)
♦ Illkirch (franchisee Kamel Boulhadid)
♦ Saint Brieuc Beaufeuillage (franchisee Ali Chbihi)
♦ Vannes la Paix (franchisee Abdelkader El Assri)
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Germany
Time is the Enemy of Food Award
Team Lübbenau (Franchisee Michael Dornbrack)
German record week (AWUS)
Team Regensburg (Franchisee Rafael Czinczoll)
Local Hero – Cluster A:
Team Koblenz (Franchisee Pawel Chomyszyn)
Local Hero – Cluster B:
Team Wismar Ost (Franchisee Anja Handrich)
Local Hero – Cluster C:
Team Lübben (Franchisee Michael Dornbrack)
German ATD Record:
♦ Team Hamburg Hafencity (Franchisee Kerami &
Selami Özcelik)
♦ Team Lübbenau (Franchisee Michael Dornbrack)
NPS Hero:
Team Hoyerswerda (Franchisee Silvio Flemming)
OER Hero:
Team Magdeburg Altstadt (Franchisee Kay Kladroba)
Store Manager of the Year – New Store (Rookie):
Adam Zandecki – Koblenz
Store Manager of the Year:
Patrick Tillack - Magdeburg Altstadt
Supervisor of the Year:
Engin Doksöz - Hannover Bemerode/ Hannover Misburg/
Oldenburg
Driver of the Year:
Srinivas Nareshkuma - Aachen Zentrum
Multi-Unit Franchisee of the Year
Rüdiger Semat & Knut Langkabel
Support Team Member of the Year
Stephan Schrut
Leadership Awards/Golden Eagle
♦ Sandra & Arno Blöcker
♦ Marcus Osterland
Rolex Challenge:
♦ Kiel Tonberg
(franchisee Sandra Blöcker & Arno Blöcker)
♦ Frankfurt Oder (franchisee Andreas Voigt)
♦ Ingolstadt (franchisee Stefan Horn)
♦ Chemnitz Markersdorf
(franchisee Carolin Gaudl & Rocco Gaudl)
♦ Berlin Hellersdorf (franchisee Marcus Osterland)
♦ Berlin Wittenau-Tegel (franchisee Tim Viets)
♦ Itzehoe (franchisee Sascha Dethlefsen)
♦ Saarbrücken (franchisee Basri Berisha)
♦ Konstanz (franchisee Ibraim Alim)
♦ Dresden Friedrichstadt
(franchisee Carola Zöbisch & Peter Weißenborn)
♦ Koblenz (franchisee Pawel Chomyszyn)
♦ Magdeburg Süd (franchisee Kay Kladroba)
♦ Chemnitz Schlosschemnitz
(franchisee Felix Müller & Thomas Müller)
♦ Hannover Bothfeld (franchisee Muhbettin Kilic)
♦ Schwerin Dreesch
(franchisee Rüdiger Semat & Knut Langkabel)
♦ Schwerin Nord
(franchisee Rüdiger Semat & Knut Langkabel)
♦ Paderborn (franchisee Matthias Struck)
♦ Düren (franchisee Gerda Warnke & Thomas Warnke)
25
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW The Netherlands
Lunch champion:
Team Emmeloord
Best NPS score:
Team Zutphen
Product Quality Award:
Team Zutphen
Sales champion opening week:
Team Wolvega
AWUS champion new store:
Team Bladel
Sales champion:
Team Hoofddorp
Order champion:
Team Groningen Paddenpoel
Multi-unit sales champion:
Sjoerd van Seters
Shift of the year 2020, cat 1 < €10,000:
Team Enschede Wesselenering
Shift of the year 2020. cat 2 €10,000 - €12,000:
Team Rotterdam Schiebroek
Shift of the year 2020, cat 3 €12,000 - €15,000:
Team Zutphen
Shift of the year 2020, cat 4 > €15,000:
Team Vlaardingen
Overall Shift of the year 2020:
Team Zutphen
26
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Belgium
Highest opening week:
Team Deinze
Rookie store/Highest AWUS:
Team Tessenderlo
Highest afternoon sales:
Team Beringen
Multi-Unit Franchisee Highest AWUS:
Hussein Mamlouk
Million Dollar club:
Team Beringen & Team Tournai
Highest OLO sales:
Team Heist
Highest NPS:
Team St Gilles
Service N° 1 Award:
Team St Gilles
Multi-unit Franchisee Service N° 1 Award:
Yassine Norezzine
OER Award:
Team Namur
HTC Award:
♦ Team Liège Lambert
♦ Team Marche en Famenne
♦ Team Dendermonde
♦ Team Court Saint Ettiene
Dominator Award:
Patryk Pelc
Development Awards:
Halit Ak & Burak Ak
Multi-unit Franchisee:
Yassine Norezzine
Split store Manager:
Kevin Decottignies
Manager of The Year:
Lorry Debois
27
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW TEN
3
In 2016, Domino’s Pizza Enterprises announced Project
3TEN – a goal to have a freshly made pizza ready for
carry-out in three minutes or delivered to a customer’s
door in 10 minutes.
The reason was straightforward – time is the enemy of food.
As the time it takes a meal to travel from the oven
to a customer increases, the quality decreases.
Our customers in each of our markets share a passion
for hot, fresh pizza and, as delivery times come down,
customers rate their order more highly for product quality
and service. Faster meals, delivered safely, contribute
to more profitable Domino’s stores: higher customer
ratings are directly linked to increased sales and
improved unit economics.
We have made important strides in this effort since
launching Project 3TEN and learnt important lessons.
For example, faster ovens, while important, are one of
the last changes we make to a store to reduce delivery
times. Technology such as predictive ordering, and even
attitude changes such as a commitment to improvement,
can make a meaningful difference to store operations.
Most importantly, safe, fast food delivery relies on the
‘last mile’ and reducing the distance from the oven
to the customer. This means opening more stores,
closer to customers is key for improved customer
satisfaction and the future of our business.
We have made more substantial progress on the delivery
front but there is more to do, and the goal of Project
3TEN remains the same. No longer is this a ‘project’ but
a core part of our business in all markets: Accordingly,
Project 3TEN is now 3TEN.
Competition for the fastest delivery store in the world
is fierce, and this year Domino’s Pizza Enterprises Ltd
stores delivered some of the best results in the Domino’s
world.
Rank
Store and Country
Average delivery time (year)
1
Japan - HIGASHI-KOGANEI
MIDORICHO
10 minutes 22 seconds
2 Japan - OIMACHI
10 minutes 55 seconds
3 Japan - SHIN EGOTA
11 minutes 29 seconds
4 France - Paris 13 BNF
12 minutes 7 seconds
5 Japan – TENJINBASHI
12 minutes 23 seconds
At a market-wide level, operations teams have set new
challenges to set new records again this year.
28
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW It is so clear to us that
chasing big records really
changes the perception
of what is possible
“3TEN has been a huge part of the
culture in DPJ for a long time, but the
key to the incredible performance
was to have every single DPJ team
member aligned on our goal, aware
of the huge part they all had to play
and what this would mean for DPJ
and the customer. Ensuring that we
coached everyone on best practices
like using predictive ordering,
Dispatch Runners, scheduling for
success and a fixation on single
deliveries was absolutely integral.
“It really was an All Hands effort
– we achieved an EDT of 16 minutes
and 10 seconds across 790 stores
– compared to the previous record
of 19 minutes and 58 seconds.
“After our record week our stores
have reflected on everything
they learnt when they challenged
themselves to achieve such an
incredible result and we have seen a
remarkable reduction in our monthly
delivery time since.
“It is so clear to us that chasing
big records really changes the
perception of what is possible. 20
minutes now feels slow!”
BENJAMIN OBORNE –
EXECUTIVE VICE PRESIDENT
– FRANCHISE, JAPAN
Netherlands
“Domino’s has always been the
delivery expert. We broke records
like no other and are the number
one delivery company. However,
an average delivery time of 20
minutes is not competitive enough.
There are more and more suppliers
who deliver fast. We want to lower
the benchmark and stay ahead of
the competition.
“So we organised a week in which
we planned to break our delivery
record. But to do this, you have to
look beyond delivery times. For five
months of preparation, one theme
was central each month. From
hospitality, to supporting hero month
in February, to keeping delivery
people motivated during the winter
months. Tips and tricks were shared
on product quality and where time
could be saved. Two weeks before
the record week, a dress rehearsal
took place.
“The real Domino’s spirit emerged:
‘One team, one goal’. The stores
gave each other tips and tricks and
so we were ready. We achieved an
estimated delivery time of 17 minutes
19 seconds. The previous record
stood at 19 minutes 23 seconds,
a gain of more than two minutes.
“What made the difference? It’s
about creating the right mindset.
Believing together that we can break
records. We were focused and
helped each other and then
you make the impossible possible.
We have seen that organising
a service week brings a lot.
Even after the record week, the
average delivery time remained low,
it created internal pride and, above
all, many satisfied customers.
“We plan to focus on delivering two
of these ‘service weeks’ each year
and, together with Marketing, we will
also publicise this nationally.”
MARTIN STEENKS –
FRANCHISE OPERATIONS
DIRECTOR, NETHERLANDS
Japan
In Financial Year 2018 Domino’s
Japan (DPJ) launched ’20 Minute
Mission’, to differentiate Domino’s
from competitors. The market holds
the record for the fastest Domino’s
in the world, the Yotsuya store,
at 2 minutes and 38 seconds.
“We want to provide world class
service to our customers, stretch
the boundaries of what is possible
and to embody our core Values of
“Be generous and provide joyful
experience”, “Invest to create
devotion” and “Crush convention”;
all with a Hungry to Be Better attitude.
“We increased focus on
communication and training sessions
leading in to Q4 with a focus on
intensive training for our lower
performers and on best practice
sharing across our whole network.
“We set 3 separate challenges/
contests around Delivery Times
throughout Q4, the final being
around our world record attempt.
♦ Challenge 1: “DPJ All Store
Estimated Delivery Time
(EDT) contest” for bottom-up
improvement for 13 weeks where
we grouped our stores in terms
of their recent performance and
challenged them to make the
greatest improvement compared
to their peers. Our aim was to
achieve 18 minutes across Japan
for the quarter
♦ Challenge 2: One week contest
“Golden Week Challenge” in early
May, where we held a contest
around the greatest improvement
in Delivery Times during our
busiest week of the year
♦ Challenge 3: One week contest
“National Week Challenge” we
challenged every store, manager
and Franchisee to break their
existing record with a goal of
achieving 15 minutes across
Japan and setting a new world
record as a market.
29
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW TAIWAN
In June, Domino’s Pizza Enterprises Ltd
announced the Company had entered into a
binding agreement to acquire its 10th market,
Domino’s Taiwan.
Domino’s Taiwan is currently the second
largest pizza chain in the market, operating
157 corporate and franchised stores. In
announcing the acquisition, Group CEO and
Managing Director Don Meij said the long-term
potential for Taiwan was more than 400 stores.
“We have never entered a market as the
number one pizza operator but have grown
to that position in all markets,” Mr Meij said.
“We have built centres of excellence in
Australia/New Zealand, Europe and Asia,
allowing us to complement local expertise in
menu development and taste preferences with
proven experience in technology, marketing,
operations, and strategy and insights.
“Just as our High Volume Mentality approach
has worked in Australia/New Zealand, Europe
and more recently in Japan, we intend to apply
the same lessons in Taiwan.
“Equally we expect to identify and promote
high quality management and multi-unit
franchisees within Domino’s Taiwan, whose
lessons we can apply in other markets.”
With a population of more than 23.5
million people, Taiwan expands DPE’s total
addressable market in Asia by more than
18 per cent, to almost 150 million people.
Mr Meij welcomed the franchisees and
team members in Taiwan to the DPE family.
“We may speak different languages across
10 markets, but we all speak the language
of pizza and customer service,” Mr Meij said.
“We believe Domino’s Taiwan will be another
example of our purpose: Our Pizza Brings
People Closer.
“We are excited about the potential in the
Taiwan market and the Taiwan team – and we
look forward to investing in the future of our
people to help them grow and prosper.”
Domino’s Taiwan delivered network sales of
approximately NT$1.6 billion (A$73 million) and
earnings before interest, tax, depreciation and
amortisation (EBITDA) of approximately NT$103
million (A$4.8 million) for FY20 under its most
recent ownership.
The acquisition, of approximately NT$1.7 billion
(A$79 million) on a cash and debt free basis,
will be funded from cash and debt facilities.
The acquisition is expected to be completed
by the end of 2021, subject to satisfaction of
local regulatory approvals.
30
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Domino’s Pizza Enterprises Ltd to enter 10th Market
31
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW LIVING WITH
COVID 19
Like the communities in which we live, Domino’s team
members have adapted to the new reality of “Living with
COVID-19”, the practicalities of which vary from market to
market.
New Zealand has been fortunate to have been relatively
unaffected by COVID-19 this Financial Year, operating
largely in a ‘business as usual’ environment. Similar to
most markets, government ‘QR codes’ are required for
all businesses to facilitate contact tracing if required,
with ‘outbreaks’ relatively minor. During these times
Domino’s stores need to follow stricter rules including
mandatory mask wearing (not needed during other
times), and turning on Zero Contact Delivery and Carry-
out. Fortunately these instances have been few and far
between.
Australia has adopted a similar approach to New
Zealand, albeit with more lockdowns, with State-by-State
government responses complicating Domino’s store
responses. For example, one region may implement a
short-term ‘lockdown’, in which people are not allowed
to leave their homes unless for essential purposes and
masks are required outside at all times, while in another
city, or adjacent state, life continues unaffected.
In Japan, mass vaccination centres started to open for
people younger than 65 in mid-June, with a plan to
vaccinate all willing residents by the end of November.
Restrictions vary by prefectures. Japan extended the
‘state of emergency’ in Tokyo and adjacent prefectures
in June, conducting the Olympics without fans in sports
arenas. The number of COVID-19 cases continues to be
at ‘Stage 4’ (the upper end of the Government’s scale
and in restrictions on businesses, including early closures
for dining-in, remain in place in many prefectures.
In Europe, most markets have seen the worst of
COVID-19 conditions pass, although case loads continue
to be significant each day, when compared to Australia/
New Zealand.
In France night-time curfews have been in place, which
had prevented carry-out orders from most Domino’s
stores during dinner periods, requiring stores to rapidly
adjust to almost 100% delivered meals during these times.
Towards the latter stages of FY21, improvements in local
conditions allowed the lifting of curfews and loosening
of other restrictive measures, including the end of mask
mandates (with some exceptions). Onsite catering has
started to reopen for restaurants and outdoor terraces,
although social distancing measures remain.
In Germany, COVID-19 cases have rapidly reduced
in recent months, but masks are still required in retail
environments and on public transport. Employers
are still required to offer rapid COVID-19 tests to
most employees, but the use of QR codes (though
still widespread) is reducing. Vaccination certificates
are required to visit many public spaces, including
restaurants and tourist attractions such as museums.
In the Benelux, the number of cases has fallen sharply,
with governments announcing further lifting of restrictions
at the end of the Financial Year. Restaurants and bars are
reopening in time for summer and masks mandates have
been reduced (with a few exceptions). Working from
home, previously mandated, is no longer an obligation,
meaning colleagues are slowly returning to offices.
Widespread vaccination is in place, meaning travel to
neighbouring countries is now permitted but, as in other
markets, proof of vaccination is required for major events
such as festivals.
In Denmark lockdown measures introduced at the end of
2020 were scaled back in the later stages of FY21. This
allowed the country to reopen indoor service in many
hospitality venues. Domino’s, like many employers, has
used rapid COVID tests for team members, with rapid
testing more commonly used with young people instead
of stay-at-home orders. The use of a ‘corona passport’ –
required to access many public events and gatherings –
has been key to allowing society to begin opening up.
Domino’s Pizza Enterprises Ltd’s principles of responding
to the COVID-19 pandemic remain unchanged: putting
people first, and following the advice of health experts in
every market. While responding to COVID-19 remains the
natural state of business for all markets, team members
continue to monitor and rapidly respond to changing
conditions and are now well practised in all markets in
implementing operational changes at short notice.
The following snapshot of just three days in Australia is
instructive of this rapid response.
Domino’s Pizza Enterprises Ltd makes extensive use of
technology to keep team members connected and allow
for distributed decision making regardless of operating
hours.
This includes the use of Workplace – a corporate platform
by Facebook. In Australia/New Zealand communication
groups are well established to allow for updates to be
sent to franchisees, store managers and team members
(or a subset of these groups) for an entire market, or a
smaller geographic area (such as a state or city).
Additionally, ‘chat’ groups are in place to connect the
COVID-19 steering group, which includes representatives
from across the business, including store operations,
marketing, safety, communications, and IT. These groups,
which complement regular video conferences of key
decision makers, are available on desktop and mobile
phone.
The team monitor government updates, including
providing live summaries of press conferences, to allow
the fastest possible response by the business.
25 June, Friday: The New South Wales Government
implemented their first stay-at-home orders in 2021 for
four local government areas, announced shortly before
11:30am to start at midnight. Less than five minutes later
a proposed course of action had been agreed, including
32
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW affecting the broader response effort. This included
reviewing CCTV of the affected store, and providing state
government contact tracers with roster and customer
information to allow them to contact any staff members
and customers present at the time – and require them to
immediately self-isolate until testing could be undertaken.
Shortly before 6pm, the government of the Australian
Capital Territory also implemented mandatory face
masks, to commence at midnight. Accordingly the team
immediately moved to mandate masks and Zero Contact
delivery throughout the Territory, and adjusted associated
marketing.
Every team member, whether in stores, head offices,
commissaries or distribution centres have made
extraordinary efforts responding to changing COVID-19
circumstances, to keep their colleagues safe, to deliver
safe meals to customers, and to support their community
through generous giving campaigns.
The Board and Management of Domino’s Pizza
Enterprises Ltd thanks every team member involved, for
all of their efforts.
extending existing mask mandates and Zero Contact
Delivery in affected areas and closing Dine-In operations.
Adjustments to planned marketing for the affected
areas, including reducing materials referring to carry-out
marketing and increasing the focus on delivered offerings,
were determined, and two hours after the initial report a
full update was sent to franchisees and team members.
26 June, Saturday: The New South Wales Government
held a press conference on local COVID-19 conditions.
Two minutes later the group was informed this included
an announcement the Greater Sydney region would
move into a lockdown (stay-at-home order) four hours
later. The Communications team moved immediately
to start updating franchisees and team members and
less than one hour after the new announcement an
updated marketing approach was determined. The team
determined a mask mandate, and Zero Contact Delivery,
would be implemented statewide.
Because the relevant team members were all able to
respond live, this was swiftly communicated to all stores
throughout New South Wales, and the IT team moved
to ensure online ordering systems were updated – all
completed before the lockdown came into effect.
27 June, Sunday: The team provided live updates on
government announcements across multiple states on
the latest status changes; multiple states closed their
borders to interstate travel or urged their local residents
to reconsider their travel to areas experiencing increased
case numbers. These notices were then immediately
communicated to relevant team members.
Shortly after noon, the Northern Territory Government
announced they would implement stay-at home-orders
for three regions, affecting six stores. The same team
members moved immediately to implement Zero Contact
Delivery, changes to marketing and safety updates for
team members (including mandatory mask wearing) and
able to immediately confirm these were in place, and
communicated to stores, approximately one hour later.
Shortly after 1pm another state government, Western
Australia, announced restrictions relating to a COVID-19
transmission from New South Wales, including mandatory
mask wearing and the closure of dine-in eating. These
restrictions were to take effect in two regions 40 minutes
after their announcement. This was communicated
immediately to affected stores, which had all been
automatically despatched an appropriate supply of masks
to protect every team member on shift, protecting their
health and allowing uninterrupted trade.
In Queensland, one store was required to close for deep
cleaning after being confirmed as having been visited by
a customer with COVID-19. A separate online group was
immediately established, to allow representatives from
the health team, communications and local operational
managers to work through required steps without
33
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW STRATEGY
& INSIGHTS
Domino’s Pizza Enterprises Ltd’s Strategy & Insights
function uses data to identify actionable insights that
help stores become more efficient, improve customers’
ordering experiences, and support Domino’s and our
franchisees in maximising their potential.
The function brings together experts in Business
Intelligence, Analytics, and Data Science, with
a mission to Enable, Enhance, and Empower
data-driven decision making.
As Group Head of Strategy & Insights Pat Nestor
explained: “Our objective is: to ensure that our
colleagues have the data and insights they need,
formatted in the right way, in an easy-to-use manner,
at the right time to make the right decisions.”
This year, Domino’s has made significant investments
to meet that mission and to maximise the benefits of
the tens of billions of data points collected through every
aspect of the business each year.
“FY21 has seen us lay a significant foundation with
respect to data and analytics, that we will leverage
and build on in FY22 and beyond to propel our business
forward. In particular, evolving from the descriptive to the
predictive; and leaning into a KPI-first mentality. But this
starts with enterprise-wide data access enablement.
“To enable our team members, we have been working
to better ingest, store, and manage our data. It enables
our people to make data-driven decisions, for an analyst
to find answers to key questions, and for our business
partners (particularly franchisees) to have access to the
data they need.
“That means taking steps to ensure each market is
talking about data and measuring data in the same way,
so that Key Performance Indicators are measured and
reported consistently. As an example, we have moved to
a single global customer feedback platform, which allows
us to compare NPS, customer service scores,
and product quality scores across markets.
34
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW “The Analytics and Data Science team enhances our use
of data, through building advanced analytical models
and leveraging machine learning capabilities that
unlock meaningful insights for our teams. For example,
measuring the impact of marketing campaigns, so we
can continuously improve our marketing calendar.
“And finally, Empowerment is a concept we’re passionate
about: ‘data democratisation’ – how do we ensure that
the right person, no matter their role, has and can use
the data they need. For example, how do we ensure that
a store manager, in any market, at any time, can access
their store’s data from a mobile device, and take real-
time action to address any concerns.
“Data democratisation isn’t going away – the benefits are
so significant we want to ensure more people throughout
our business have more data and
actionable insights than ever before.
“This year the team have been able to correlate
and quantify how saving one labour minute per order
translates to increased profitability for the store each
month – and the benefit is substantial. That provides
managers and franchisees the evidence to ensure this
is a key focus for their operations, searching for and
implementing efficiencies that will make a real difference
to their unit economics.”
Data is critical to the future performance of Domino’s
Pizza Enterprises Ltd, and the Company will continue
to invest to reflect that importance.
“The next step allows us to use customer analytics
to better understand what our customers want, to use
predictive modelling to ensure we retain customers
with the best possible Domino’s experience, and to
Invest to Create Devotion: driving customer lifetime value
by providing a rewarding customer experience
in each and every touchpoint
“Ultimately, while our field is still developing, it continues
in the long tradition of Domino’s, which is about putting
the needs and expectations of our customers first.”
35
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW I am pleased that the efforts of our
teams have been recognised by
Domino’s Pizza Inc. with their top
honour for a franchisee – the Golden
Franny. The Netherlands, Belgium,
France and Germany were all
awarded, a great great recognition
of the fantastic work done by the
teams.
Most importantly, their efforts have
been recognised by our customers,
who have put their trust in Domino’s
Europe. We won’t let them down.
EUROPE
sales in all markets (+23.0%), while
reducing delivery times. This has
heightened customer satisfaction
and lifted the efficiency of our
delivery experts – flowing through
to increased franchisee profitability.
As a result, our franchisees have
been eager to open new stores
across our markets, 129 this Financial
Year. Europe passed the 1,250 store
milestone in May, and we will open
our 1,300th store in the first half of
the next Financial Year.
The ongoing enhancements in
everything we do have been
impressive this Financial Year and
have made a meaningful difference
for our business. But we won’t
be stopping there. We need to
continuously improve our customers’
experience every time they order
from Domino’s, which means we
cannot lose focus on continuous
innovation: for our menu, our
technology, and our operations.
I have been fortunate to work in
the Domino’s brand for more than
15 years, and I consider myself
privileged to call myself a colleague
of the many talented Dominoids in
Europe, from young team members
to experienced franchisees to a
professional support team in our
head offices.
The following pages in this report
demonstrate why; despite our
European operations continuing to
face some of the most challenging
COVID-19 conditions we have
experienced so far in this pandemic,
our business has continued to
grow. Why? Because of a single-
minded focus on what is important;
our people, our customers, our
communities, our environment and
our meals.
Domino’s European operations
have been able to meet increasing
demand for hot, fresh meals,
delivered safely to our customers.
Where competitors have started to
build a delivery option, Domino’s
deep experience in delivery
execution, with 3TEN at the heart of
our operations, has been alone in
consistently meeting and exceeding
customers’ expectations.
Putting customers’ expectations front
and centre has allowed us to grow
ANDRE TEN WOLDE
CEO EUROPE
36
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW TOP HIGHLIGHTS
ACHIEVEMENTS
&
Domino’s deep experience
in delivery execution has
been alone in consistently
meeting and exceeding
customers’ expectations.
1,250TH store opened
Launched Domino‘s
Crunchy Chicken
Record store openings
France and Germany
New world record for an
entire Domino’s market
(NL), averaging 17 minutes
and 19 seconds for a week
37
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW In the prior Financial Year we reported the need to
close our stores in France after our national government
declared we would go to war with COVID-19. That ‘war’ is
ongoing, but I am pleased to report the tide is turning.
Our biggest challenge has been to find solutions to the
difficulties we faced and to continue to do business
within the constraints of the pandemic while preserving
the safety of our teams and our customers.
We put extensive effort into working methods that
would allow Domino’s France to operate safely. Those
methods, which we implemented with our franchisees,
have allowed us to continue operating throughout
this Financial Year, despite changing local conditions
and significant changes in our customers ordering
behaviours.
The most significant change in our market is a move by
customers to delivered food. Leading into the pandemic
Domino’s France was a market where carry out and
delivery were of roughly equal importance. In our prior
report we outlined Project Reset, designed to showcase
what is possible in a delivery-focused store committed to
the best practices of 3TEN. This meant we were already
building momentum of a stronger delivery business
when COVID-19 and strict curfews (preventing customers
visiting stores at night) brought forward our future.
Without a strong delivery option Domino’s France and
our franchisees would have faced significant challenges.
Instead, we have outpaced our competition and shown
that we can handle high delivery volumes well.
REGIONAL OVERVIEW
FRANCE
449th
STORE
OPENED
We opened 38 new stores this Financial Year, bringing our total store count
to 449. Pleasingly, there is strong appetite for new stores not only from our
existing franchisee base, but from the next generation of franchisees – our
store managers and supervisors. I am convinced the success of this year has
been made possible because of the strength of a franchised system and a
strong DPF team working together towards the same objectives.
Rather than giving up, we reinvented ourselves and together we took on the
challenges for the benefit of the network.
We will
continue
to do so.
38
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 448th
STORE
OPENED
REGIONAL OVERVIEW
BENELUX
First of all, I am grateful and proud of the efforts and
achievements of all our franchisees, distribution
colleagues and head office colleagues over the past
year. The past year was remarkable in every way.
The second lock-down from December until March
impacted us all: schools were closed and many Domino’s
team members (like those in our community) balanced
working and home schooling at the same time, while
missing the personal contacts with colleagues and the
business.
Domino’s Netherlands and Belgium were not immune
to the challenges of COVID-19 and the lockdown:
because schools were closed and more families were
working from home, lunch time sales decreased. This
was one of the many changes we have continued to
see over the past year. Prior to COVID-19 a significant
layer of our sales – almost half – came from carry-out
customers. With lunch and other carry-out occasions
affected, an increasing proportion of sales came from
deliveries. Heightened delivery orders brings challenges
and opportunities. For franchisees this requires efficient
operations and a larger number of team members to
resource the demand, but it also can bring a higher
average ticket and the potential for high performing
franchisees to build their profits. The Benelux is a system
built from high-performing operators, and our franchisees
were able to navigate these challenges to grow sales, lift
customer satisfaction and expand their profits.
We are living in ‘the age of delivery’: the demand for
meal delivery was already growing before COVID-19, but
in the past year this demand has grown exponentially.
There are more meal providers than ever and consumers
have many options to choose from. The BENELUX team
were ready to respond to this competition and I’m proud
that in doing so, we welcomed 12 new franchisees and
hired more than 2,000 new colleagues.
It is clear that customers value convenience, speed and
variation in the menu we offer. We successfully launched
an entirely new chicken meal, Domino’s Crunchy
Chicken, to great success, and we will continue to
develop more product innovations in the next year.
Our challenge in a ‘living with COVID’ environment is to
keep our new customers, and our talented new team
members. I believe we are up to that challenge.
39
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW REGIONAL OVERVIEW
GERMANY
Our main focus continues to be keeping our customers
and employees safe. Due to COVID-19 all stores were
closed for dine-in, and only able to provide pick-up and
delivery. Curfews in some of our stores have been a
challenge, meaning customers could not pick up from
our stores after 9 or 10 pm.
The tremendous sales and profit growth, which
started pre-covid in FY20 and continued in FY21,
made franchisees hungry and willing to expand their
businesses by opening new stores. The COVID-19
lockdown has been a tailwind to our German business.
We`ve seen food delivery in general grow but we
have been able to outgrow the competition by better
execution and a more appealing offer.
Our marketing spend is a function of the number of
stores we have, and the total sales for each store.
Because our franchisees have adopted the principles
of High Volume Mentality (HVM), sales have significantly
grown and we can now advertise more than half the
year on national television.
HVM has driven the sales growth and we’ve continued
for the second year our successful Domino’s Duo
marketing layer, which increases new customers and
adds frequency. We have optimised our digital marketing;
with this we have been able to reach our (potential)
customers in an effective way.
We are still executing our original conversion strategy
outlined when we entered the German Market: i)
physical conversion of stores to the Domino’s brand, ii)
implementation of HVM, and iii) organic store growth.
I’m pleased that Domino’s Germany has clearly entered
phase three of this plan.
In FY20, Domino’s Germany opened 13 stores. This was
a record, but it did not reflect the true potential for this
market. This year I’m proud to report we have opened 40
new stores – and we’re just getting fired up.
370th
STORE
OPENED
40
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW REGIONAL OVERVIEW
DENMARK
19th
STORE
OPENED
In May, we set
a new record for
sales for
the market.
This Financial Year marked another important milestone
for Domino’s Denmark.
When Domino’s Pizza Enterprises Ltd acquired the
rights to Denmark in 2019, previously operated stores
had closed due to food safety issues. Under our
management, presented to customers as ‘the Real
Domino’s’, our operations have been rebuilding our
brand and reputation, as we have rebuilt the network.
With the opening of six stores this year, all 17 locations
previously operated under the former owner are now
open for business – refreshed and with world-class
operations demonstrating the difference Domino’s Pizza
Enterprises Ltd can make for customers. Additionally, two
of the stores opened this Financial Year were opened in
new territories, the first outside of Copenhagen, to serve
customers who have never previously experienced what
Domino’s has to offer.
The results have been very positive. While we continue
to invest in rebuilding our business, the newest stores
in greenfield sites opened very strongly, and all stores
earned higher customer satisfaction and product quality
scores, as assessed by our customers. In May, we set a
new record for sales for the market.
Our focus in Denmark continues to be regaining the
trust of Danish consumers with strong food safety and
consistently fast delivery times. This year, we were proud
to have ranked fifth among all Domino’s stores worldwide
in independent NSF food safety audits.
With the launch of Domino’s Pizza Enterprises Ltd’s
OneDigital platform, we are now positioned to implement
new technology innovations for customers and team
members. While we haven’t had those in place to date,
we have pressed ahead with operations efficiencies,
with the Søborg store setting a new record for fast, safe
deliveries.
Opening stores remains a challenge during the
pandemic, with building permits and recruitment a
short-term headwind – but we remain positive about the
medium-term outlook and the long-term potential for this
important part of the European business.
41
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW The Netherlands, which previously developed and
launched the first loyalty program for Domino’s Pizza
Enterprises Ltd, has continued to enhance the loyalty
offering. This year the team added a new feature “Try
our new dip for free” (November) a special offer visible
only for loyalty customers. In December, the program
launched a ‘’Double Dice’’ online feature, in which
customers roll the dice to win, giving customers a holiday
win, as well as donating to charity.
Online platforms are an important channel to reach
new customers, and to retain existing customers.
Domino’s France built on the previous success of its
high profile sponsorship of the the Domino’s Ligue 2
football competition, and official licensee of the Ligue 1
Conforama, by investing in a new audience – esports.
This year Domino’s collaborated with one of the most
played games in the world: League of Legends, with a
full promotional package including; a special menu on
match days targeted at delivery customers, an online
community manager “Pizza Yolo” who provided discount
voucher codes during the match’s live stream, and by
sponsoring weekly online show Popcorn.
Sometimes, things don’t quite go the way we intend
– but Domino’s has always been known for our 100%
Customer Satisfaction Guarantee. When things go wrong,
our goal is to fix them as quickly as possible, making it
up to our valued customers and ensuring they continue
to return to enjoy their favourite meals. This year we
Digital innovation
Across Europe, as in all markets, our focus is on digital
innovation centres, on enhancing the Domino’s ordering
experience for our customers, and a more efficient and
productive experience for our team members.
To enhance our customers’ ordering experience, our
digital innovation teams focus on making online ordering
faster, more user friendly, more visually appealing, and
more rewarding – this year they delivered meaningful
improvements to each.
In Germany, the team launched a new front-end
redesign of dominos.de (August), with a modern and
bright look to position the Domino’s brand. The new
design was then implemented 360 degrees, carrying
through to all customer touchpoints, such as menus.
In France, the team evolved the online ordering site
(October) on desktop and mobile applications. The
evolved site has a clearer background, reflecting a more
modern design trend and aligning more closely with
the dominos.fr showcase website. In Denmark the team
implemented Domino’s Pizza Enterprises Ltd’s OneDigital
platform, the heart of online ordering in all of our other
markets. OneDigital has replaced the market’s legacy
website, and provides a platform for future technology
development.
Our purpose is To Bring People Closer, because pizza
is the world’s best bonding food. This year we launched
new initiatives to bring our customers closer, breaking
down barriers between them and the food they love to
share.
The Netherlands launched “Group Ordering”
(September), a digital tool that makes life easier for
those who order with a large group. It allows everyone
to pick menu items from their own devices, which is
then forwarded to the ‘group leader’. The promotion of
this new initiative will be launched once local COVID-19
conditions allow larger gatherings in homes and
workplaces. In France we launched a new service to
allow sharing the bill with Paypal (August). This service
(available on desktop and mobile) makes easier to pay
for orders with several people, connecting friends,
colleagues and loved ones. The service, in partnership
with PayPal, will only be offered at Domino’s Pizza for
the near future; a true “Only@Domino’s” service. The
Netherlands also launched B2B Giftcards (April), a more
customer-friendly way for businesses to buy giftcards to
give to their employees.
Our customers drive everything we do and Domino’s
consistently looks for ways to reward our customers
for their loyalty. This year we launched new loyalty
programs in multiple markets. In Germany we piloted
“Domino’s Club” (September) in about 30 stores. This
has generated incremental revenue, and demonstrated
loyalty by both Domino’s and our customers. France
also launched a new loyalty program (September), which
offers customers a medium pizza after every six orders.
The take-up from customers has been overwhelmingly
positive, with more than 350,000 members in just three
months, accounting for 35 per cent of online sales. As
part of their loyalty program, France launched their ‘Secret
Menu’ – a selection of products available online, for a short
period of time, only to members of the loyalty program.
42
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW launched Critizr, in multiple markets (including in ANZ).
Critizr is an online feedback management tool, which
makes it easier and more manageable for customers
to provide their feedback in the forum and way they
prefer. Critizr allows store managers, franchisees and our
head offices to track and analyse customer feedback
in a standardised and reportable way, with the goal of
retaining customers by providing quick, friendly, and
helpful feedback, with the support of efficient technology.
By collaborating on a single platform across all markets,
the ultimate goal is to provide consistent benchmarking
of all aspects of the Domino’s experience, including
Product, Service, Image and Value.
We want our customers to consistently have the best
experience and the confidence to trial new products.
In February, the Netherlands launched a new ‘DCC
Cashback Campaign’ to coincide with the launch of
the new Domino’s Crunchy Chicken. This reinforced
Domino’s satisfaction guarantee, reminding customers
we guarantee the quality of this newest, exciting product,
and providing customers with a free pizza if they’re not
100% satisfied.
Our digital innovation is also designed to make working
at Domino’s a more efficient and productive experience
for our team members. We focus on fast orders, but
not speeding, because our team members know ‘the
rush is on your feet, and not on the street’. One way of
reducing delivery times is to ensure customers are ready
when their hot, fresh meal arrives at their home. Through
record setting attempts in Australia, Domino’s identified
phoning customers immediately before the delivery
expert arrived could reduce delivery times and increase
satisfaction – because their meal is in their hands
even faster. This ‘Call on Arrival’ service has now been
automated. Another innovation rolled out in previous
years has been predictive ordering – which allows team
members to start freshly making customer’s orders
even before the order has been placed, saving team
members and customers vital time – Belgium will soon
start implementing Call on Arrival and predictive ordering
is now available in 40 stores.
In Germany, the team have started to implement digital
temperature monitoring (February), which increases
food safety, because any potential issue with rising
food temperatures can be addressed early, and manual
documentation errors are avoided. Not only does this
make our food safer, but it also saves time and money for
stores by reducing manual temperature measurements
and documentation. The system is currently used by 45
stores. Germany has also increased the usage of online
rostering tool TANDA: more than 66 per cent of all stores
are now using TANDA and have offered introductory
and advanced training sessions every fortnight. TANDA
is delivering better rostering, which makes stores more
profitable without compromising on service.
DOMINO’S PURPOSE IS TO BRING
PEOPLE CLOSER, BECAUSE PIZZA IS
THE WORLD’S BEST BONDING FOOD.
43
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 44
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW A Domino’s pizza can be
personalised by every
customer in billions of ways
In October, Domino’s launched
the ‘Made in France’ campaign, to
honour French ingredients on the
successful and much appreciated
winter pizzas, including raclette
cheese. This also allowed Domino’s
to highlight and promote other high
quality local ingredients, including
Emmental cheese, honey, apples
and wheat. These ingredients
were heroed on the menu with
L’Authentique Raclette pizza, La
Fondue, L’Avalance and a new
recipe, Chèvre-Miel, featuring French
light cream, mozzarella, goat cheese
and French honey.
A Domino’s pizza can be
personalised by every customer in
billions of ways, and by adding new
ingredients to our stores, Domino’s
can also meet specific cuisine
preferences. With research showing
80 per cent of customers aged 15-
35 eat Asian cuisine once a month,
our team in France launched a new
“Teriyaki Sauce” base, which will
be the centrepiece of new recipes
targeting this occasion, including the
Beef Teriyaki and the Poulet Teriyaki.
Pizza is not all Domino’s serves.
From decadent desserts to savoury
treats, right through to menu
offerings designed to meet a new
meal occasion, including for the
single person order. To meet this
need, Domino’s Germany expanded
their oven baked sandwich range
this year, while Domino’s France
added new offerings of its highly
popular Cal’z (calzone) including
Beef Terriyaki.
Food innovation
Customers all over the world
appreciate meals made using high
quality ingredients, safely delivered
hot and fresh, at an affordable
price. But tastes vary widely across
regions, countries, and even within
friend and family groups.
Our talented chefs in development
kitchens in Europe work hard to
develop delicious new meals and
side items and to improve existing
favourites. As just one example,
Domino’s Benelux this year found
the perfect way to help customers
enjoy their leftover pizza crusts,
launching the “After Dinner Dip” – a
garlic and herb dip for customers to
enjoy every morsel of their meal.
A Domino’s pizza starts with
our high-quality dough, and this
year Denmark developed and
implemented Back of House dough.
This means our dough is made fresh
in store (similar to Australia/New
Zealand) allowing lower freight costs
without sacrificing taste or freshness.
One of pizza’s unique attributes
that make it perfect for sharing
is its ability to meet the needs of
every person in a household. It’s
particularly important where, when
selecting a shared meal, one friend
or family member has specific
dietary requirements that could
otherwise mean a preferred brand
or cuisine type is off the menu for
the entire group. But from vegans
to vegetarians, flexitarians to the
curious, a Domino’s meal has got you
covered. As a perfect example, in
France (January) Domino’s launched
the Basilica pizza in three recipes
to cater for all preferences; the
Poulet, the Veggie, and the Vegan.
In Germany, Domino’s launched
three vegan pizzas, a vegan range of
dips, sauces, dressings as well as a
vegan cookie, to cater for increasing
demand from our customers. The
Vegan BBQ Pizza was awarded by
PETA. The “Cheese Love” Pizza,
launched in October 20 as part of
the Promo “We love Pizza” was the
most successful promo pizza ever in
Germany.
One of the most successful product
developments in recent Domino’s
history was in the Benelux, with
the launch of Domino’s Crunchy
Chicken. This delicious, new, oven-
baked offering has been more than
three years in the making. Starting
with Domino’s innovation chefs
and senior leadership team touring
multiple international markets,
including the United States, through
to sensory testing of different flavour
and texture combinations, multiple
product formulations in partnership
with our suppliers, then market
research in Australia, through to an
eventual launch in Europe. The wait
was worth it, with Domino’s Crunchy
Chicken not only rapidly offering
a popular new item on the menu,
but also attracting new customers
to try Domino’s for the first time.
While some customers are enjoying
Domino’s Crunchy Chicken as a new
side item, others are enjoying it as
the central part of a meal. The launch
was helped by an innovative new
television and marketing campaign
offering customers ‘The Box and
the Bucket’ – that is, you’ve already
ordered a pizza in a box, now you
can add a bucket of Domino’s
Crunchy Chicken. Local management
is confident of the potential to serve
more customers with Domino’s
Crunchy Chicken in the years ahead.
We never take things too seriously
however, and this year Domino’s
France and Benelux teams launched
an extreme promotion with ‘spicy
roulette’ – a Halloween limited
time offer in which one of the slices
comes with an extra spicy pepper.
One change that didn’t make it to
the menu however – the removal of
pineapple. This topping is both loved
and controversial for pizza fans in
many countries and for April Fools’
Day Domino’s Netherlands pranked
the public by offering to remove this
important ingredient. The result was
more than 60 million reach in media
attention, and an outpouring of love
for pineapple – it’s here to stay.
45
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Operational Excellence
Across Europe, team members have excelled over the
past year, delivering more meals in faster times than ever
before.
The driving force behind ongoing improvements has
been a focus on team member development, and
continuing innovations that help make our people and
our stores more productive.
In France, operational teams have continued to roll out
Project Reset – a program launched in FY20 designed
to showcase best practice operations to the rest of
the store’s network. Project Reset operates at several
corporate stores in Paris, leading by example showing
the achievements stores can make with Domino’s
technology and High Volume Mentality approach. It is
increasingly being embraced by franchisees.
This year, as part of Project Reset, the French operations
team continued to roll-out flat boxing to stores. Flat
boxing sees cooked pizzas, fresh from the oven, placed
directly onto a flat box, which is then folded around the
meal – with the pizza untouched by team members’
hands. The result is less operational complexity, and
faster execution. Project Reset is also leading the way
with converting to ‘Fast Bake’ ovens – now being
installed in all new stores. Fast Bake ovens will drive
continued reductions in delivery times, already we
are seeing improvements in delivery times across
the country.. Faster deliveries are not only about new
technology; the operations team have started to train
stores on using a team member as a ‘runner’, a team
member who can help co-ordinate delivery drivers on
busier shifts.
Project Reset has demonstrated what is possible, with
the Paris 13 BNF store again one of the fastest stores
in the world, for the second year running. This year the
team achieved an average delivery time of 12 minutes
and 7 seconds for an entire year.
In Germany, our delivery experts have accelerated
average delivery times despite double-digit growth in
delivery volumes in the past year. Hosted webinars have
guided team members through the background and
purpose of 3TEN, and providing solutions to operations-
related challenges that otherwise would be barriers to
fast delivery. The training and mindset shift has been
making a difference – national estimated delivery
times reduced by 1.5 minutes this year, and the Berlin
Charlottenburg Nord corporate store set a new national
record for fast delivery: all orders delivered in an average
of 9 minutes 27 seconds (April).
The Netherlands achieved a new world record for an
entire Domino’s market, with all orders for an entire week
delivered in an average of 17 minutes and 19 seconds,
which followed extensive planning and preparation as
part of Domino’s internal ‘olympics’. Fast, safe deliveries
matter to our customers – the Netherlands effort
resonated with customers, lifting sales and delivering
higher customer satisfaction scores. The team in Belgium
has focused on reducing delivery times and has made
a significant impact. As delivery volumes increased
during COVID by almost 20 per cent, the team set a new
market record of 20 minutes and 38 seconds, almost
three minutes less than the average for the year. As in
France, Belgium has been adopting the lessons of using
flat boxing, with half of the market using the process and
reaping the rewards of faster delivery.
Denmark has focused on execution throughout the
market’s operations, including safe, fast deliveries. The
Søborg store set a new record for the market of 13
minutes and 54 secords – without the benefit of fast
ovens or technology such as predictive ordering. This
compares to a national average of about 21 minutes, and
compared to major competitors at 45 minutes.
A Domino’s Value is to help people grow and prosper
– and this year we invested in our team members’
roles, and their future, with more training and additional
technology.
In France, we launched the Domino’s Academy as a
mobile application on both Apple and Android, which
allows team members to progress their training in
understanding all aspects of a Domino’s store at their
own pace. We have also launched a series of Webinars
focusing on different operational subjects.
In the Benelux, Domino’s has started a monthly webinar
series for operational excellence in stores, focused
on everything from dough proofing, and pizza making
through to growing sales. By using a QR code to sign up,
46
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW every team member can access the training, reaching
broadly throughout the network. The success has been
clear, particularly in expanding newer franchisees store
level profitability, with average EBITDA growing/of more
than 19 per cent.
In Germany, operations staff in the field quickly
adapted to COVID by offering video-calls for franchisee
business consulting as well as training on Domino’s
Operational Evaluation Report (OER) system – designed
to benchmark every store in the world on a consistent
basis. This not only was demonstrated to be time
saving, but also effective for attendees. Similar to the
Netherlands, Germany has also launched a webinar
of the month series, covering topics from reporting,
customer feedback management and online payment
procedures. Operations team members continue to
envelop franchisees into the Domino’s Pizza Enterprises
Ltd culture (with many having started in the pizza
businesses in the subsequently acquired Joeys Pizza
and Hallo Pizza chains). Domino’s Germany has launched
three culture classes; new employee orientation,
Excellence is Expected (EiE), and High Volume Mentality
(HVM). German CEO Stoffel Thijs co-hosts both the EiE
and the HVM classes, showing our dedication to training.
Operations staff have also been training franchisees
and team members on HVM through webinars and
in-store training. HVM is about removing barriers in our
stores that would otherwise limit team members’ ability
to effectively service a growing number of customers.
As one example, an ongoing menu optimisation test in
German stores is delivering customers increased choice,
without overcomplicating the menu or store processes.
The German store network has rapidly adopted HVM,
with franchisees now investing in equipment to handle
increased store sales: more than 33 per cent of stores
have bought new, larger capacity ovens in the past 12
months.
With new efficiencies, growing profitability and increased
cultural alignment across the country, Domino’s
Germany has now launched the Top Shop program, a
leaderboard system where stores recording the best Key
Performance Indicators (including average delivery times,
e-learning performance and OER scores) are rewarded.
47
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW MAHAZO ANDRIANIVOSOA
FRANCHISEE
LE MANS CHASSE ROYALE, LE MANS
JEAN JAURÈS, LE MANS MAILLETS
Local marketing
2008
Store manager
of his franchisee’s
second store
2015
Supervisor of
multiple stores
2019
Becomes franchisee
of the three stores in
Le Mans
2003
started as a delivery
expert with his
franchisee’s first store
2016
Awarded supervisor
of the year
2018
Joins inaugural class
of Emerging Leader
program
Mahazo’s Story
When Mahazo took the important step from employee, to
employer, he had big plans for his business and this year
he set an even bigger goal.
“I wanted to grow the turnover of my three stores in Le
Mans to €2 million. This was a significant step up from
when I bought the three stores, when the cumulative
turnover was €1.45 million.
“There was no question in my mind that our stores were
not reaching their full potential. I had seen the capacity
of other stores, in Le Mans and in other areas of France,
and determined I would be able to similarly deliver high
volume mentality in my stores.”
To reach his goal, Mahazo focused on investing more
in local store marketing to attract new customers to the
brand, and to improve the service from his stores, to
keep those customers and to build ordering frequency of
his existing customers.
“This year we implemented a consistent local store
marketing plan in collaboration with the operational team.
We targeted off-peak periods, for example the third week
of each month, sending targeted SMS deals to customers
with an attractive offer.
“There are three main radio stations in Le Mans, so we
undertook three radio appearances, with a special ‘Bon
appétit with Domino’s Pizza’ offer running for six months.
I also partnered with local hotel chains in Le Mans,
making sure their guests know we are an affordable
meal, delivered fast, when they need a break while on
holidays.
“And then we highlighted all of our actions and offers on
social networks.
“As a result of this focus, we’ve easily met and beaten our
goal – now we’re setting higher goals, and I’m confident
we can achieve them.”
48
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW MAHAZO ANDRIANIVOSOA
49
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 50
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW SJOERD VAN SETERS
FRANCHISEE
ZWIJNDRECHT,
HENDRIK IDO AMBACHT,
BARENDRECHT,
VLAARDINGEN 1,
VLAARDINGEN 2
Growth – customers and employees
2006
Expanded to become
a multi-unit franchisee
1994
Joined Domino’s as
a delivery expert,
progressed through
other store roles
including supervisor
2005
Became a franchisee
Sjoerd’s Story
People come first. That is the simple mantra that drives
franchisee, Sjoerd van Seters. His human-centred
approach has helped him achieve a major milestone in
the past year with four of his five stores reaching above
€20,000 average weekly unit sales.
The incredible result was achieved through a focus on
growth: customers and employees.
Sjoerd developed a customer growth plan that was
underpinned by a simple philosophy of doing the little
things well. The areas of attention centred on efficient
delivery times of under 20 minutes, a high score on
product quality, fair product pricing and keeping all stores
maintained and in good condition.
For employee growth, Sjoerd has heavily invested in his
staff, creating a positive work environment that has seen
some stay for more than 10 years.
“I believe that taking good care of your people leads to
success. We have a very loyal and hard-working team,
which was achieved through investing and supporting
them.”
He has established initiatives to aid staff in their career
pathways, including financial support for managers
undertaking studies and personal development. Such
is the importance of the well-being of all employees, a
‘Happiness Coach’ was brought onboard to ensure a
positive, vibrant workplace.
Sjoerd recognises there is hidden potential within the
team. To develop future leaders, management is always
on the lookout for career progression. Field trainers are
available to mentor and upskill those showing potential
to give them the confidence to pursue new opportunities.
The focus on growth this year has been a constant
reminder to Sjoerd that, at the end of the day, we are in
more than just the pizza business: we are in the people
business.
51
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW ISLAM YASSINE
FRANCHISEE
LEUVEN, LEUVEN OUDE
MARKT, SINT-KATELIJNE
WAVER, MECHELEN,
LEUVEN NAAMSEVEST,
TIENEN
Fortressing the local store network.
2008
Started with Domino’s
as a pizza chef, before
being promoted to
store manager
2015
Became a multi-unit
franchisee with the
opening of the Leuven
Oude Markt store
2006
Moved to Belgium
from Lebanon, after
originally training
as a nurse
2012
Became a franchisee,
opening the Leuven
store
Islams’s Story
Domino’s is already one of the largest fast-food delivery
chains in the Leuven region. But multi-unit franchisee
Islam Yassine understands that the key to his future
success is opening more stores, closer to his customers.
The secret to our growth is because we don’t ever want
to lose a customer – that requires the best service and
operational execution. Because the speed of our delivery
is so important, the only way to safely do this was for us
to open another store in our existing delivery territory.
“By having two stores now cover the same delivery area,
we are closer to the customer and can deliver to them
faster,” Islam said.
“We have also benefitted from servicing more carry-out
customers from the city, because we are more visible,
with more marketing and more delivery vehicles putting
our professionalism on display.”
“Just because we are the number one pizza chain in our
city, does not mean that we can rest easy – we put in
place a local store marketing program to maximise our
presence for customers.”
Islam’s store undertook their own local leaflet distribution
into customers mailboxes, which delivered a very strong
result, activated Facebook advertising and conducted
other targeted marketing initiatives.
“The most important thing we can do to market to our
customers is delivering the best possible service to our
existing customers, and I’m very proud of the operational
focus of our team that has ensured both stores are
delivering in reduced times, so our customers receive
the hottest, freshest pizza possible.”
“With these initiatives lifting our sales in the city, we now
have even more capacity to fund additional marketing
and customer targeting initiatives and if we continue to
deliver the service of which we are capable, the future is
very bright for our business.”
52
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Fortressing the local store network.
53
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 54
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW RAMON MÖHLE
FRANCHISEE
GÖTTINGEN NORD, GÖTTINGEN
SÜD, GÖTTINGEN WEST, HANNOVER
HERRENHAUSEN, HANNOVER LIST,
HAMELN, GOSLAR
Efficiency in all operations
2016
Domino’s Pizza
Enterprises Ltd
acquired Joey’s Pizza,
joined with 4 stores
2005
Joined Joey’s Pizza
as a delivery driver
2017
Awarded first
Domino’s Rolex for
increased weekly
sales in Göttingen
Nord
2018
After running the
stores and being a
shareholder since
2015 in the business
together with Golden
Franny Award
winners Antonio
Cabanillas and Marco
Wrobel, Ramon
became a franchisee
himself in 2018
Ramon’s Story
Ramon Möhle credits two international trips to his
success; in 2016 to participate in his first Domino’s
Worldwide Rally, and in 2018 to Australia, to meet with
experienced Domino’s franchisees.
“The insights I have gained from meeting other Domino’s
franchisees have left me with lasting impressions of the
world of Domino’s Pizza Enterprises Ltd and helped me
to improve my business,” Ramon said.
The experienced franchisee has been relentlessly
focused on efficiency as a key to performance in his
business; increasing the number of online orders,
investing in training to have the most efficient and
engaged team members, and improving communications
to ensure everyone contributes to success.
“All of this combines in ensuring a hungry customer gets
their food quicker, which means their pizza will be hotter
and fresher. It’s a winning customer experience, which
means they come back again sooner, and the increased
number of online orders starts the entire cycle again.”
Underpinning Ramon’s success is a drive to measure
each aspect of his business to ensure every part is
contributing to increased efficiency and greater success.
“We measure how many customers are ordering online
and actively work to have customers use this channel as
it’s easier for them and they can achieve more savings.
Increased online sales benefits our stores as well –
we’ve been able to increase our sales per hour for each
team member on shift by 13 per cent in the past 1.5 years.
“We analyse our vehicle fleet for efficiencies, optimising
and seeking efficiencies in the type of vehicles we’re
using, and the processes and times our drivers use in the
store. This has reduced our delivery times by 25 per cent
over the same time.”
Ramon’s focus is delivering ongoing success, and
developing a new generation of committed team
members who also want to grow – their next opportunity
will be in Ramon’s newest store in Göttingen in Financial
Year 2022.
55
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 56
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW JAPAN
The 23rd of June marked a major
milestone day for Domino’s Japan
– our team opened 10 new stores
(seven franchised), including our
800th for the market.
This was a highlight for our team
but was just one of many highlights
in an extraordinary year. Each
was the direct result of strong
leadership across all levels of
the business, focused on the
execution of our strategy.
Previously our dough production
(the heart of a high
quality Domino’s
meal) and
our freight
distribution model prevented us from
accessing some regions of Japan.
No more: with strategic changes,
including the ability to now make
dough fresh in store, we have
opened up new markets
– accessing seven new
prefectures, including Hokkaido.
A focus on franchise activation and
leadership delivered strong direct
sales generation and more efficient
operations. This flowed through to
record store level profitability and
significant franchisee store growth:
from 44 per cent of our system
this time last year to 50.75
per cent of the system
this year, a growth
in the number of
franchised stores
of 32.25 per cent.
We opened 126 new stores and
significantly increased our television
advertising across all prefectures.
We launched three significant layers:
Half Price carry-out, No Minimum
Delivery, and Large + Medium Buy
One Get One delivery. Each allows
us to reach new customers while
protecting our special occasion
segment.
We challenged our operations this
year to shift our mindset on delivery
though 3TEN and achieve a world
record – a week of deliveries, for the
entire market, of less than 17 minutes
– which we achieved. This reduced
our average delivery time 33 per
cent for the year, versus three
years ago.
We are passionate in Japan about
doing the right thing, because
it’s the right thing to do. This year
we donated more than 400,000
pizzas through our Feed the Need
program. This program has helped
demonstrate Domino’s Japan is a
values-driven company. We have
also made significant strides in our
efforts to reduce our carbon footprint
with 45 per cent of Tokyo deliveries
now completed on an ebike
or electric assisted vehicle. This
represents a 30 per cent nationwide
usage of bicycles for delivery,
up from 14 per cent in 2018.
Our results were because of our
people, and this year it has been
our privilege to employ 7,000 team
members, building a strong pipeline
of store managers. They are the key
to future expansion and success
and we look forward to updating
you on our progress.
JOSH KILIMNIK
CEO & PRESIDENT
JAPAN
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DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW TOP HIGHLIGHTS
ACHIEVEMENTS
&
Most organic new stores opened
in DPE’s history – passed 700th
and 800th store milestones
50 stores opened by franchisees
– a record – and more than the
past four years combined
Surpassed 400 franchised stores
(50% of the system)
Record Franchise EBITDA
Reached an average
of three stores/franchisee
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DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 59
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW A YEAR IN REVIEW
JAPAN
Digital Innovation
Japan’s digital team has developed a reputation for
delivering innovative projects that are considered market
leading, not only for Domino’s Pizza Enterprises, but for
the Quick Service Restaurant industry. This year was
no different.
The team rolled out new innovations to enhance the
customer experience when ordering Domino’s, to help
team members become more efficient, and to allow
Domino’s Japan to provide the optimal online
experience to increasingly digital-focused customers.
We provided new connections to allow customers to
order however they choose, whether through Domino’s
own platforms or via third-party aggregators. This year we
connected two new aggregators, Uber Eats and a pilot
of Food Panda, to allow more customers to order from
more stores.
On our own platforms Augmented Reality (AR) was a key
tool in customer-facing digital initiatives including the
development of an AR app for the World 10 Cheese Quattro
pizza, an AR social video game app for the Cheese Fondue
pizza and an AR Pizza Size smartphone tool to coincide with
the launch of the Ultra Jumbo 46cm Pizza Size.
Customer-facing initiatives were not only about providing
more fun, but more peace of mind, including the launch
of “Smart Drive Through Carry Out” service (Zero Contact),
enabling an extra layer of customer comfort during the
COVID-19 pandemic.
In October we migrated Japan onto a new cloud marketing
automation platform, to better personalise our email
marketing to customers. This has allowed us to make
convenient, personalised notifications, for example letting
them know when their saved Domino’s vouchers will expire.
Central to our customer initiatives was the launch of
Domino’s Japan’s Customer Lifetime Value program,
with optimised offerings and simplified user experiences
across all channels, to provide a more tailored
experience and better serve customers based
on their ordering history.
We invest to help our people grow and prosper,
relaunching our education management system using
new technology, to provide a more enjoyable user
experience to team members undertaking training,
and added games to better simulate better crew trainings.
The team also launched new operational enhancements
behind the scenes, including new reporting functionality
for store managers, as well as head office, and a new
store inventory tool connected to our Point of Sale
system Pulse, delivering productivity gains.
This work was supported by infrastructure enhancements
and security upgrades, removing legacy systems and
strengthening the OneDigital Online ordering platform
to resource record numbers of online customers.
These investments delivered for customers and for
Domino’s Japan, with online sales reaching a record
77.8 per cent, up from 73.6 per cent in the prior year.
WE PROVIDED NEW
CONNECTIONS TO ALLOW
CUSTOMERS TO ORDER
HOWEVER THEY CHOOSE
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DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Food Innovation
We were excited this year to again
bring a number of premium products
to customers developed in Japan
by our local development kitchen.
The Japanese menu is renowned
for differences, promoting some
of the most premium ingredients
in the Domino’s world, as well as
the unique fact that the most popular
pizza sold is a ‘Quattro’. A Quattro
offers four different flavours on the
one base, providing a similar meal
experience to a bento box, with
difference flavours and textures.
This year’s menu innovation was
no different, from launching the
World 10 Cheese Quattro pizza
in August – with premium flavours
including Beemster Cheese
(warranted by the Royal Court of
the Netherlands), French Mimolette
Cheese and Shrimp, and English
cheddar cheese and ham.
The team also launched a Star Chef
Quattro in time for Christmas, with
each of the four flavours curated
by a Michelin starred chef, as well
as celebrating local flavours with the
Quattro Nippon in May – featuring
Mayo Mochi, Hokkaido 3 Cheese,
Charcoal Grilled Chiki-Teri, and
Charcoal Grilled Beef.
May also saw the launch of an
entirely new product category,
the Pizza Rice Bowl. This innovative
product followed customer feedback,
particularly from parents, they
were eager to include rice in a family
Domino’s meal – and the Pizza Rice
Bowl features tasty butter rice topped
with sauce, cheese and toppings just
like a pizza. The Pizza Rice Bowls are
available in seven flavours.
Continuous improvement in
a franchisee system relies on
continuous improvement for all
franchisees, and this year Domino’s
Japan introduced the Franchise
Business Review Program. The
program sees business consultants
from within Domino’s Japan work with
all franchisees in a quarterly review,
which examines all key performance
indicators and store financials. The
franchisee and consultant work
together to develop a timeline
focused on short-, mid- and long-
term planning around operations,
development, people and marketing.
This year the Franchise Business
Review Program was complemented
by the launch of the Franchise Kaizen
Operations 360 Bootcamp.
This bootcamp is an intensive
program focused on building
the skillsets and implementing a
turnaround plan for our franchisees
who are not currently meeting
the expectations they share with
Domino’s Japan.
Domino’s is committed to
transparency with customers, and
one of its newest stores has taken
this to a new level. The ‘transparent
store’ in Odaiba, uses glass as
much as possible, not only from
the front counter but right through
to the refrigerator and walk-in
cooler. The transparent store
demonstrates Domino’s Japan’s high
quality practices (including freshly
made dough), automated change
dispensers for cash, and even pizza
making live streamed to the internet.
You can watch the
transparent store in action
dominos.jp/en/topics/anshin-oishi
Domino’s Japan launched new,
ultra-premium offerings this year,
but local customers (as in all markets)
also appreciate high quality ingredients
delivered at an affordable price. The
local team were proud to announce
this year they have removed all
artificial preservatives, flavours and
colours from all pizzas and sides by
May 19th. This is a first for the local
industry and demonstrates Domino’s
Japan is committed to leading the
way when it comes to delivering high
quality meals for local customers.
Operational Excellence
Domino’s Japan is determined to
set the standard for 3TEN, and has
challenged every team member and
franchisee to commit to continued
improvement in delivering meals
safely and fast. This year this included
a challenge to all store operations,
to set a new world record of less than
17 minutes for the average delivery
(from customers placing an order to
it being delivered piping hot to their
door). The challenge was for the
entire market to achieve this goal
and they surpassed it, with an
average delivery time for the entire
week across Japan of just 16 minutes
and 21 seconds. Over the past three
years Domino’s Japan has lowered
the average delivery time by
33 per cent, despite sales increasing
by 30.9 per cent. The ability to serve
record sales this year, while also
safely delivering meals in record
beating times (page 28) was a tribute
to extensive planning and training
across the Domino’s Japan business.
Domino’s invests to create devotion,
in our customers and in our team
members, and Domino’s Japan this
year launched the Franchise Business
School – a training program focused
on setting up store managers for
success as they become Franchisees
for the first time.
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DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW EIICHI TANIZAWA
FRANCHISEE
FUTAWA MISAKI, KATSUTADAI,
MAGOMEZAWA, SHIN KAMAGAYA,
TAKATSUKA SHINDEN, YACHIYO
MIDORIGAOKA, FUNABASHI
TAKANEDAI, EDOGAWA MATSUSHIMA,
SHINOZAKI, KENKYU GAKUEN
Leadership development
2008
Became a store
manager, promoted
to supervisor in 2011
2003
Started as a
delivery expert
2015
Became franchisee
of the Shin-Kamagaya
store
2020
Awarded Domino’s
Japan President’s
Award for outstanding
achievement.
Awarded Golden
Franny for leadership
by Domino’s Pizza Inc.
2017
Awarded Domino’s
Japan Cornerstone
Award for the
Franchisee with
the highest yearly
sales growth
Tanizawa’s Story
Tanizawa-san has a laser-like focus on leadership
development within his ten store franchise network,
across Chiba, Ibaraki and Tokyo.
Having grown up in the business, with experience
as a delivery expert, store manager and supervisor,
Tanizawa-san understands that a high-performing store
relies on a high-performing team.
Because of the growing size of his multi-unit franchise,
this means exceptional store managers are key, and
Tanizawa-san is focused on training, coaching and
development of his management teams to create
strong leadership across his organisation.
This has included a consistent training program that
extends beyond the classroom. Tanizawa-san takes
managers on tours of other stores in his business,
as well as visiting high-performing corporate stores
and those being operated by other successful
franchisees, to learn from the best and identify
practices they can apply in their own operations.
To ensure every team member’s focus is aligned,
Tanizawa-san has developed an incentives scheme
to reward performance. “These efforts have created a
group of brilliant leaders who are all extremely focused
around complete operational excellence,” he said.
The results of this focus have been clear across his
store network. This year Tanizawa-san’s stores achieved
an average of 4 stars on Operations Evaluation Report
inspections, an average delivery time of 18 minutes
and 57 seconds, and 18.18% same store sales growth.
For Tanizawa-san’s leadership, he was awarded a
Golden Franny for his leadership by Domino’s Pizza Inc.
Tanizawa-san has set ambitious goals for his stores’
future performance, including an average delivery
time under 10 minutes, 5 star OER across all stores,
1,000 weekly customers across all stores and increasing
the number of stores in his business. Most importantly,
his goal includes having one of his store managers be
recognised as Japan’s Store Manager of the Year.
He believes with continued focus on leadership
development, these goals are within reach.
62
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 63
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 64
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW AUSTRALIA
NEW ZEALAND
In a year characterised by an
uncontrollable and dynamic
external environment, our
busines’s strengths continued
to shine through. These strengths
included our franchisees working
in collaboration across Australia
and New Zealand, a strong
leadership team committed to
making big and bold decisions,
and our ingrained focus on
continuous innovation.
We were proud to show leadership
in the way we deployed technology
to adapt to changing conditions
and customer expectations, with
the Australian-first pilot and broader
launch of Domino’s Car Park
Delivery. The offering
is a first for the
Quick Service
Restaurant
(QSR)
industry in Australia. Our DOM
Pizza Checker also received added
functionality, with the introduction
of the ‘cleanliness feature’, helping
our team members uphold our
high standard of hygiene in
stores. Our new ‘Call on Arrival’
offering is also a perfect example
of our technology, enhancing our
customers’ experience to ensure
they receive the hottest, freshest
products possible at their doors. The
success of 3TEN and the Operations
360 program has also led to these
initiatives becoming an integral and
ongoing part of our strategy.
Even when faced with a pandemic
and uncertainty, I am proud of the
hard work and commitment that all
of our franchisees and team
members have shown,
reinforcing our desire to
continue to innovate,
invest and lead
with courage for
the benefit of our
business, team
and customers.
We understand that the future of our
industry is delivered food, and the
cost of the last mile of delivery will
increasingly be the deciding factor in
which businesses survive, and which
thrive. Fortressing our market, and
reaching our long-term store target
of 1,200 stores for Australia and New
Zealand, is a vital part of embracing
our future. Accordingly, one of our
most significant decisions this year
was the announcement of ‘Project
Ignite’, a four-year stimulus package
commencing from 1 July 2021.
The package is designed to Ignite
franchisee payback (the number
of years required for a new store
to recoup its investment) and the
initial feedback from our franchisees
eager to grow their businesses
has been positive. Project Ignite
solidifies Domino’s Australia and
New Zealand’s commitment towards
driving growth and ensuring both the
business, and our franchisees, are
well-positioned for future success.
Nick Knight
CEO ANZ
65
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Developed a ‘cleanliness feature’ for DOM Pizza
Checker, alerting a store when the cut bench
needs cleaning and ensuring a consistently clean
and safe work environment.
66
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW TOP HIGHLIGHTS
ACHIEVEMENTS
&
Domino‘s Northam fastest pizza store in
Australia and 2nd fastest in the world:
average 12 minutes and 20 seconds over an
entire year
Rolled out Domino‘s Car Park Delivery,
Launched Super Premium (AU)
and Super Gourmet (NZ) ranges
Launched new Everyday Value range
67
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Food Innovation
In a year that saw a growing customer demand to buy
local, we responded by sourcing quality, farm-fresh
ingredients to inspire our new items and limited edition
offerings. These menu innovations not only delivered
mouth-watering flavours, but doubly satisfied by
supporting local businesses and farms across
Australia and New Zealand.
Our new Super Premium (AU) and Super Gourmet
(NZ) ranges launched in April 2021, featuring the finest
Australian and New Zealand duck, beef, salmon and
farm-fresh rocket, cheeses, pumpkin and broccoli.
Some of the mouth-watering combinations included the
Smoked Brisket Cheese Steak, the Crispy BBQ Peking
Duck and the Smoky Beef Brisket & Prawn. Popular
demand for these gourmet flavours at affordable prices
saw a second phase launched in June, adding Salmon
& Prawn Supreme, Smoked Salmon, Parmesan & Rocket,
Roasted Vegetable Deluxe and Crispy BBQ Peking Duck
& Bacon to the menu.
Domino’s also launched five new chicken products
for summer 2020, featuring 100% Australian and New
Zealand chicken. Chicken Supreme, Buffalo Chicken
and Chicken Fresco were added to our pizza menu,
while Boneless Chicken Tenders and Seasoned
Chicken wings launched alongside sauces,
including the infamous Franks Red Hot sauce.
In Australia, a limited-edition innovation was the
‘quintessentially Aussie’ Sausage Sizzle pizza. With
the authentic taste of BBQ beef sausage, grilled onion,
stretchy mozzarella, tomato sauce and mustard on a
classic pizza base, the flavours combined to bring back
fond memories of this Aussie classic.
In New Zealand, a collaboration with PURE New Zealand
Ice Cream allowed us to add its award-winning ice cream
to our menu and work together to launch an exclusive
‘choc orange’ flavour. This successful partnership was
made even sweeter because PURE’s business had
been significantly impacted by reduced tourist numbers,
making this collaboration significant to the company’s
continuing success.
On top of providing our customers with innovative
products, we continued to strive to deliver the
exceptional value they know and love. This was
highlighted with the launch of our New Everyday Value
Range, with mini, large or extra-large value range pizza
at unbelievable prices of only AUD/NZ $3/$3.99,
$5 and $7/$8 each, respectively.
Finally, an overwhelming customer response saw
the return of a crowd favourite and highlighted the
importance of the work we do around customer
engagement. We asked our social media followers
whether or not the Puff Pastry Crust should make a
comeback, with an overwhelming response seeing
the popular crust reinstated on our menu for a limited
time.
68
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW Despite the challenges, we have continued
to see the resilience and perseverance of our
team to push through and deliver exceptional
products and service to our customers.
For example, Domino’s Northam
was recognised as the fastest pizza
store in Australia and New Zealand
and the second-fastest in the world,
with an average home delivery time
of 12 minutes and 20 seconds over
an entire year. In Queensland, the
entire market attempted to achieve
a sub-20-minute estimated delivery
time record and just missed out by
three minutes and six seconds. It’s
only a matter of time before this
record is achieved.
The Operations 360 program
continued to enhance the quality
of our store network by providing
data that allows franchisees, store
managers and team members to
benchmark against other stores.
The program has also helped
with the upcoming opening of the
landmark container store in Tawa,
New Zealand, which is the first
owned and operated Domino’s
Pizza Enterprises Ltd store of its kind.
In April, we mobilised a national
recruitment drive to employ an
additional 2,500 team members
across Australia, with an
overwhelming response. The current
climate has seen the need for more
delivery experts and team members
across the QSR industry because of
the shift towards delivery for many
businesses.
To round off an action-packed
year, it was important to pause to
celebrate the amazing work of our
franchisees. In May, we held our first
inaugural Franchisee Appreciation
Day, recognising the efforts of the
hard-working franchisees who make
our business so great.
Digital Innovation
The ongoing changes in customer
behaviours and expectations as a
result of COVID-19 sparked many
of our digital innovations this year.
Our company’s history of adaptation
gave us the confidence to pivot in
this continually changing world.
As a response to ongoing
lockdowns in 2020, we successfully
trialled Domino’s Car Park Delivery
in July in Victoria before rolling this
option out across Australia and
New Zealand. The service provides
zero-contact pick-up, allowing
customers to collect their favourite
pizzas from the comfort and safety
of their vehicles. Best of all,
the service does not cost extra,
making it a first of its kind for the
QSR industry in Australia and
New Zealand.
We know that every minute counts
when delivering safe, piping hot
pizza. In September, Domino’s
Australia and New Zealand launched
‘Call On Arrival’ technology that
ensures customers are ready to
receive their pizzas moments
before they arrive. This drastically
reduces the amount of time it takes
customers to accept their order by
triggering an automated voice call
to the customer approximately two
minutes before their delivery expert
is expected at the door.
In stores, DOM Pizza Checker
also added functionality with the
introduction of a ‘cleanliness
feature’. This feature ensures
Domino’s stores across Australia
and New Zealand stay on top of
cleaning and sanitising at a time
where this has never been more
important. The app alerts a store
when the cut bench (where pizzas
are cut and boxed) needs cleaning,
resulting in cleanliness being top
of mind even during busy periods.
Similar to Europe, ANZ also launched
a modern and simplified online
ordering site design in July, which
followed extensive customer testing
and research, and added a range of
user-experience improvements. We
know some customers like to order
through other platforms,
so in September we integrated
UberEats, making these orders
connect more seamlessly with our
systems, and saving time for our
in-store team members.
We also know customers want to
use their preferred payment method.
In September we successfully
migrated Australia to our new global
payments technology partner,
Adyen. With all markets now using
the same payment technology,
we can offer customers a range
of new payment methods in the
future and an enhanced seamless
payment experience.
Our year was topped off with
the Domino’s Digital Team being
shortlisted in the IDC Digital
Transformation Awards. The
outstanding work recognised the
team for developing Zero Contact
Delivery through the ‘Special Award
for Resiliency’ category.
Operational Excellence
Support for our franchisees and
team members has continued to
be at the forefront of our minds
during a challenging year with a
global pandemic and rising food
and labour costs. Despite the
challenges, we have continued to
see the resilience and perseverance
of our team to push through and
deliver exceptional products and
service to our customers.
To combat some of these
challenges, Domino’s Australia and
New Zealand announced ‘Project
Ignite’, a stimulus package created
to drive store growth. The package
will be rolled out over four years,
commencing from 1 July 2021.
The impact will be felt through
improved store profitability and will
help to stimulate growth well into
the future.
The success of the 3TEN, which is
our goal to have hot, freshly made
pizza ready for carry-out within
three minutes and delivered within
ten, has led to this now becoming
a permanent part of our DNA.
This was demonstrated through
outstanding individual store results.
69
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW MARK JOHNSON
FRANCHISEE
BRIDGEWATER, DEVONPORT,
GLENORCHY, HOBART, KINGS
MEADOWS, KINGSTON, LAUNCESTON,
MOWBRAY, ROKEBY AND ROSNY
Training and Development
2009
Moved to Tasmania
to purchase
Domino’s Sorell
2003
Started as delivery
expert in New
South Wales
2012
Purchased
Domino’s
Launceston, Kings
Meadows, Mowbray
and Devonport
2020
Awarded the DPE
Global Leadership
Eagle Award for
his exceptional
leadership,
operational
excellence and
value of investing
in his people
2018
Bought out
business partner
to bring his store
network up to 10
Mark‘s Story
Mark’s goal is to be the “number one team in the
Domino’s universe at training our people, to train
our people” and he is obsessed with training and
development in all areas of the business.
As he has successfully grown his store network to more
than 10 stores with more than 280 employees, Mark’s
focus has been to invest heavily in his people and
training programs.
“Well-trained team members mean we can deliver
better products and service for our customers.”
Dedicated to implementing unique training programs,
identifying skills sets, and empowering and trusting
his Store Managers to lead, Mark believes a focus
on training is the best investment you can make
as a franchisee.
“Training is not just showing someone how to do
something – it’s about teaching them and giving them
the right tools for them to learn, and then the confidence
to try and succeed on their own.
“By training our people to train our people, we are one
step closer to achieving our vision of owning 100 stores in
the next 20 years. Because having the right systems and
people in place means we can jump on any expansion
opportunity that comes our way, at any time.
“With people who are expertly trained in all areas of
the Domino’s business, we can expand and move into
new markets with little to no disruptions to existing store
operations – maintaining high standards of customer
service and product quality.”
In 2020, Mark received a DPE Global Leadership
Eagle Award for demonstrating exceptional leadership,
operational excellence, and focus on people
development. This award is only given to one person
each year across all of DPE’s nine markets and is the
highest honour you can achieve at Domino’s.
70
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 71
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW 72
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW AMANDEEP SINGH
FRANCHISEE
PT CHEVALIER, AUCKLAND CITY,
QUAY STREET, SHORTLAND STREET,
MASTERTON
Fleet management
2021
Awarded
Leadership Eagle
2014
Managed corporate
store Mt Eden
for eight months
before promoted
to regional
management,
supervising
Auckland
corporate stores
2017
Purchased first
store: with no
cars, only delivery
scooters
2011
Started with
Dominos as a
delivery expert:
six hours a day,
three days a week.
Promioted to shift
runner and then
store manager
Amandeep’s Story
Amandeep Singh (Aman) is a fleet enthusiast. He knows
first-hand the savings that can be made by dedicating
time to running your own fleet, specifically electric
vehicles. Not only does this deliver lower costs, but
also frequently means faster delivery times and more
productive team members.
Aman first became convinced of his approach when
visiting stores in Sydney Australia, and decided to
invest in five ebikes.
“The real test was getting my team members to use
them for deliveries. I started with one dedicated ebike
rider and soon discovered that I needed to hire team
members specifically to ride the bikes, people who
were passionate about bicycle delivery.”
“Ebikes offer a low barrier of entry for new team
members as they don’t need to have their own vehicle
and only need to have a learner’s license in order to
ride the bikes.
“For 90% of new team members it’s their first job and
they love it, because we hire team members specifically
to ride ebikes, train them well, and invest in the proper
equipment for them, including wet weather gear.”
The focus of the government and local councils on cycle
lanes in cities and towns around the country have aided
in the adoption of ebikes. Aman finds using ebikes for
delivery is just as safe for his team members, if not safer,
than other forms of delivery vehicle and it’s helping those
staff keep fit and healthy as well.
Although Aman still has some team members using their
own vehicles for delivery his goal for this coming year is
to have all of his stores using his fleet exclusively, with a
big focus on e-fleet. The savings and efficiencies have
been significant and, because of their quiet operation
and reduced emissions, they’re also benefitting the
environment and the community.
73
DOMINO‘S PIZZA ENTERPRISES LTD | ANNUAL REPORT 2021 | YEAR IN REVIEW DIRECTORS’
REPORT
2021
74 // 2021 ANNUA L RE PO RT DO MI N O’S PIZ ZA ENTERPRISES LIMITED.
Group Highlights
FY20
UNDERLYING
$ MIL
FY21
UNDERLYING1
$ MIL
+/(-) FY20
UNDERLYING
%
Network Sales
3,267.9
3,744.4
FY21
STATUTORY
$ MIL
3,744.4
2,199.1
14.6%
15.4%
Revenue
EBITDA
Depreciation &
Amortisation
EBIT
EBIT Margin
Interest
NPBT
Tax Expense
NPAT before
Minority Interest
Minority Interest
NPAT attributable to
DMP shareholders
DIRECTORS’
PERFORMANCE
INDICATORS
Earnings per Share
(basic)
Dividend per Share
Same Store Sales %
1,905.3
2,199.1
355.9
424.9
19.4%
418.6
(125.5)
(131.8)
(5.1%)
(131.8)
230.4
293.0
27.2%
286.7
12.1%
(14.5)
13.3%
(13.8)
13.0%
(13.8)
5.1%
215.9
279.2
29.4%
272.9
(64.2)
151.6
6.0
(81.6)
(27.1%)
(79.8)
197.6
30.3%
193.1
9.5
56.8%
9.1
145.6
188.2
29.2%
184.0
169.1 cps
217.6 cps
28.7%
212.8 cps
119.3 cps
173.5 cps
45.4%
173.5 cps
5.8%
9.3%
9.3%
1 Underlying excludes significant Acquisition, integration, conversion, legal settlement and inventory write
downs costs.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 7 5
REPORT
2021
Contents
Directors’ Report
Remuneration Report
Independent Auditor’s Report
Auditor’s Independence Declaration
Directors’ Declaration
Consolidated Statement of Profit Or Loss
Consolidated Statement of Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Change In Equity
Consolidated Statement of Cash Flow
Notes to the Financial Statements
Additional Securities Exchange Information
Glossary
Corporate directory
74
85
108
112
113
117
118
119
120
121
122
192
194
195
76 // 2021 ANNUA L RE PO RT DO MI NO’S PIZZA EN TERPRISES LIMIT ED.
Directors’ Report
The directors of Domino’s Pizza Enterprises Limited (“DPE Limited”, or the “Company”) submit herewith the annual financial report of the
Company and its controlled entities (“the Group”) for the financial year ended 27 June 2021. In order to comply with the provisions of the
Corporations Act 2001, the Directors’ Report as follows:
INFORMATION ABOUT THE DIRECTORS AND SENIOR MANAGEMENT
The names and particulars of the directors of the Company during or since the end of the financial year are:
NAME
Jack Cowin
Ross Adler
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Don Meij
POSITION
Non-Executive Chairman
Non-Executive Deputy Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Appointed 20 March 2014
Appointed 23 March 2005
Appointed 24 August 2001
Appointed 16 April 2015
Appointed 30 November 2018
Appointed 21 February 2020
Appointed 14 May 2021
Managing Director/Group Chief Executive Officer
Appointed 24 August 2001
DIRECTORSHIPS OF OTHER LISTED COMPANIES
Lynda O’Grady was appointed a director of Wagners Holding Company Limited on 08 November 2017. There were no other directorships
of other listed companies held by directors in the 3 years immediately before the end of the financial year.
DIRECTORS’ SHAREHOLDINGS
The following table sets out each director’s relevant interest in shares, debentures, and rights or options in shares or debentures of the
Company as at the date of this report.
DIRECTORS
Jack Cowin
Ross Adler
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Don Meij
DOMINO’S PIZZA ENTERPRISES LIMITED
FULLY PAID ORDINARY
SHARES NUMBER
SHARE OPTIONS
NUMBER
CONVERTIBLE NOTES
NUMBER
23,066,390
200,000
1,628,344
2,000
1,200
1,100
–
–
–
–
–
–
–
–
1,800,001
673,937
–
–
–
–
–
–
–
–
REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
Information about the remuneration of directors and senior management is set out in the Remuneration Report of this Directors’ Report
on page 84 to 107.
SHARE OPTIONS GRANTED TO DIRECTORS AND SENIOR MANAGEMENT
During and since the end of the financial year, an aggregate 365,908 share options were granted to the following directors and senior
management of the Company as part of their remuneration.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 77
Directors’ Report
continued
INFORMATION ABOUT THE DIRECTORS AND SENIOR MANAGEMENT (continued)
DIRECTORS AND SENIOR
MANAGEMENT
NUMBER OF
OPTIONS GRANTED
ISSUING ENTITY
NUMBER OF ORDINARY
SHARES UNDER OPTION
Don Meij
Richard Coney
Josh Kilimnik
Nick Knight
Andre Ten Wolde
Michael Gillespie
156,937
39,527
40,605
43,908
40,249
44,682
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
673,937
106,912
122,351
118,486
84,330
92,971
COMPANY SECRETARY
Craig Ryan:
General Counsel & Company Secretary
Craig is a solicitor of the Supreme Court of Queensland, Australian Capital Territory and New South Wales and a Solicitor of the High Court of
Australia with over 23 years’ experience. Craig joined the Company as General Counsel on 8 August 2006 and was appointed to the position
of Company Secretary on 18 September 2006. Craig holds a Bachelor of Arts and a Bachelor of Laws from the University of Queensland and
a Masters of Laws from the University of New South Wales. Craig is also a Chartered Secretary with the Governance Institute of Australia.
PRINCIPAL ACTIVITIES
The Group’s principal activities in the course of the financial year were the operation of retail food outlets and the operation of franchise
services. During the financial year there were no significant changes in the nature of those activities.
REVIEW OF OPERATIONS
The activities and financial performance of the Group and each of its operating segments for the financial year are set out on pages 6 to 7.
EXPLANATION OF STATUTORY PROFIT TO UNDERLYING PROFIT
Statutory profit after tax is prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS).
Statutory profit after tax of $193.1 million includes a loss of $4.5 million after tax treated as significant items. Excluding these items, the Underlying
Profit after tax was $197.6 million, 30.3% up on the prior corresponding period.
Underlying profit after tax is reported to give information to shareholders that provides a greater understanding of the performance of the
Company’s operations. DPE believes Underlying Profit after tax is useful as it removes significant items thereby facilitating a more representative
comparison of financial performance between financial periods. Underlying Profit is a non-IFRS measure which is not subject to audit or review.
78 // 2021 ANN UA L RE PO RT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
Directors’ Report
continued
REVIEW OF OPERATIONS (continued)
The below provides a reconciliation of Statutory Profit to Underlying Profit including earnings before interest and tax (EBIT), and earnings
before interest, tax, depreciation and amortisation (EBITDA):
Revenue
EBITDA
STATUTORY
$’000
2,199,106
418,555
FOR THE YEAR ENDED 27 JUNE 2021
SIGNIFICANT
ITEMS
$’000
UNDERLYING
$’000
ANZ
$’000
EUROPE
$’000
JAPAN
$’000
UNALLOCATED
$’000
–
2,199,106
756,581
665,125
777,400
(6,307)
424,862
156,064
127,672
163,814
–
(22,688)
(581)
Depreciation & amortisation
(131,849)
–
(131,849)
(39,250)
(39,503)
(52,515)
EBIT
Net finance costs
Net profit before tax
Income tax expense
Net Profit after tax
Profit attributed to:
Owners of the parent
Non-contolling interest
286,706
(13,769)
272,937
(79,794)
193,143
184,011
9,132
(6,307)
293,013
116,814
88,169
111,299
(23,269)
–
(13,769)
(6,307)
279,244
1,837
(4,470)
(4,141)
(329)
(81,631)
197,613
188,152
9,461
193,143
(4,470)
197,613
Revenue
EBITDA
STATUTORY
$’000
1,905,261
343,438
YEAR ENDED 28 JUNE 2020
SIGNIFICANT
ITEMS
$’000
UNDERLYING
$’000
ANZ
$’000
EUROPE
$’000
JAPAN
$’000
UNALLOCATED
$’000
–
1,905,261
693,382
560,117
651,762
(12,417)
355,855
140,246
94,914
133,830
–
(13,135)
–
(13,135)
Depreciation & amortisation
(125,498)
–
(125,498)
(37,851)
(33,586)
(54,061)
EBIT
Net finance costs
Net profit before tax
Income tax expense
Net Profit after tax
Profit attributable to:
Owners of the parent
Non-contolling interest
217,940
(14,504)
203,436
(60,515)
142,921
138,483
4,438
142,921
(12,417)
230,357
102,395
61,328
79,769
–
(12,417)
3,722
(8,695)
(7,100)
(1,595)
(8,695)
(14,504)
215,853
(64,237)
151,616
145,583
6,033
151,616
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 7 9
Directors’ Report
continued
REVIEW OF OPERATIONS (continued)
SIGNIFICANT ITEMS
Significant items in the current and comparative periods include external legal costs that relate to discrete matters and costs relating to
structural changes in the business.
Statutory profit after tax was $193.1 million, this included the following significant costs excluded from Underlying Profit after tax as
outlined below:
CURRENT PERIOD
ANZ
• External costs of $1.2 million pertaining to the Fast Food Industry Award class action.
• External costs of $0.5 million incurred in relation to the acquisition of Domino’s Taiwan.
EUROPE
• Write-down of inventories relating to personal protective equipment to net realisable value of $2.1 million.
•
Integration and establishment costs of $0.7 million relating to Denmark.
PRIOR PERIOD
ANZ
• External legal costs of $1.4 million pertaining to the Fast Food Industry Award class action.
EUROPE
• Conversion and integration costs of $4.8 million relating to the acquisition of Hallo Pizza in Germany.
•
Integration and establishment costs of $1.2 million relating to Denmark.
• Relocation costs of $0.8 million relating to The Netherlands Commissary relocation.
• Conversion, integration and external legal costs of $0.5 million relating to conversion of Pizza Sprint stores and legal dispute and resolution
costs in France.
CHANGES IN STATE OF AFFAIRS
There has been no significant changes in the state of affairs of the Group that occurred during the financial year.
SUBSEQUENT EVENTS
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years
other than the matters disclosed in note 30.
ENVIRONMENTAL AND SOCIAL SUSTAINABILITY RISKS
The Group is currently not subject to any significant environmental or social sustainability risk that have a immediate impact on its operations.
However, the directors understand the Group operates in a rapidly changing global landscape with increasing demands from its stakeholders
regarding environmental and social responsibility, risk management and associated reporting. Equally, the Group continues to recognise the
importance of its social and ethical responsibilities to communities in which it operates. Accordingly, this financial year the Group undertook
meaningful actions in this regard as demonstrated by the Group’s first sustainability report and the appointment of a Global Chief Environment,
Social and Governance Officer.
The sustainability report assists the Group with communicating to shareholders its environment, social and governance (ESG) efforts in a
transparent manner.
To the best of the directors’ knowledge the Group complies with its current obligations under environmental regulations and holds all licenses
required to undertake its business activities.
80 // 2021 ANNUA L R E PORT D OM IN O’S PIZZA ENTERPRISES LIMITED.
Directors’ Report
continued
REVIEW OF OPERATIONS (continued)
CORPORATE GOVERNANCE
A copy of Domino’s Pizza Enterprises full 2021 Corporate Governance Statement, which provides detailed information about governance,
and a copy of Domino’s Pizza Enterprises’ Appendix 4G which sets out the Group’s compliance with the recommendations in the third edition
of the ASX Corporate Governance Council’s Principles and Recommendations (ASX Principles) is available on the corporate governance
section of the Group’s website at https://investors.dominos.com.au/corporate-governance.
DIVIDENDS
In respect of the financial year ended 27 June 2021, an interim dividend of 88.4 cents per share franked to 50% at 30% corporate income
tax rate was paid to the holders of fully paid ordinary shares on 11 March 2021. The Company will be paying a final dividend of 85.1 cents per
share franked to 70% at 30% corporate income tax rate to the holders of fully paid ordinary shares on 9 September 2021.
SHARES UNDER OPTION OR ISSUED ON EXERCISE OF OPTIONS
Details of unissued shares or interests under option as at the date of this report are:
ISSUING ENTITY
SERIES
NUMBER OF SHARES
UNDER OPTION
CLASS OF
SHARES
EXERCISE PRICE
OF OPTIONS
EXPIRY DATE
OF OPTIONS
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
29
31
32
33
34
35
36
37
38
39
40
41
10,325
220,000
462,500
297,000
183,225
288,779
6,250
3,640
156,937
614,305
1,420
2,966
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
$45.25
$51.96
$51.96
$50.25
$50.25
$50.25
Nil
Nil
$84.28
$84.28
Nil
Nil
31 Aug 21
31 Aug 22
31 Aug 22
01 Sep 23
26 Nov 23
01 Sep 23
20 Aug 29
18 Aug 30
01 Sep 24
01 Sep 24
07 Jun 31
28 May 31
The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the Company
or of any other body corporate or registered scheme. Details of shares or interests issued during or since the end of the financial year as a
result of exercise of an option are:
ISSUING ENTITY
SERIES
NUMBER OF SHARES
UNDER OPTION
DPE Limited
DPE Limited
DPE Limited
26
27
29
200,000
59,000
26,075
CLASS OF
SHARES
Ordinary
Ordinary
Ordinary
AMOUNT
PER SHARE
AMOUNT UNPAID
ON SHARES
$16.50
$16.80
$5.88
$nil
$nil
$nil
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RP RISES LIMITED. // 81
Directors’ Report
continued
REVIEW OF OPERATIONS (continued)
INDEMNIFICATION OF OFFICERS AND AUDITORS
The Company has entered into deeds of indemnity, insurance and access with each director. To the extent permitted by law and subject to
the restrictions in s.199A of the Corporations Act 2001, the Company must continuously indemnify each director against liability (including
liability for costs and expenses) for an act or omission in the capacity of director. However, this does not apply in respect of any of the following:
• a liability to the Company or a related body corporate;
• a liability to some other person that arises from conduct involving a lack of good faith;
• a liability for costs and expenses incurred by the director in defending civil or criminal proceedings in which judgement is given against
the officer or in which the officer is not acquitted; or
• a liability for costs and expenses incurred by the director regarding an unsuccessful application for relief under the Corporations Act 2001
in connection with the proceedings referred to above.
The Company has also agreed to provide the directors with access to Board documents circulated during the directors’ term in office.
During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company, the Company Secretary
and all senior management of the Company and of any related body corporate against a liability incurred as such a director, secretary or
senior management to the extent permitted by the Corporations Act 2001.
The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company
or of any related body corporate against a liability incurred as such an officer or auditor. The directors have not included details of the nature
of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability and legal expenses insurance
contract as such disclosure is prohibited under the terms of the contract.
DIRECTORS’ MEETINGS
The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the financial year
and the number of meetings attended by each director (while they were a director or committee member). During the financial year, twelve (12)
Board meetings, five (5) Nomination, Culture and Remuneration Committee meetings and five (5) Audit and Risk Committee meetings were held.
BOARD OF
DIRECTORS
NOMINATION, CULTURE AND
REMUNERATION COMMITTEE
AUDIT AND RISK
COMMITTEE
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
12
12
12
12
12
12
2
12
12
12
12
12
12
12
2
12
–
5
5
5
5
–
–
–
–
5
5
5
5
–
–
–
–
5
5
5
5
–
1
–
–
5
5
5
5
–
1
–
Jack Cowin
Ross Adler
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Don Meij
DPE directors have been on the boards of Domino’s Pizza Japan and Domino’s Pizza Germany since DPE started operating those markets.
In FY21, DPE also established informal “advisory boards” for Australia/NZ, Benelux/Denmark and France. At least 2 of the DPE directors sit
on each of the 5 boards. The boards meet on a quarterly basis. The meetings are mutually beneficial, providing the DPE directors a better
understanding of the local management and businesses, and also allowing the DPE directors the opportunity to provide guidance to local
management more directly.
It is proposed to rotate the DPE directors onto different advisory boards every 2 years so that:
(a) the DPE directors receive in-depth exposure to different parts of the group over time, and;
(b) local management receive the benefit of engagement with different DPE Board Members over time.
82 // 2021 ANN UA L RE PORT DO MIN O’S PIZZA ENTERPRISES LIM ITED.
Directors’ Report
continued
REVIEW OF OPERATIONS (continued)
NON-AUDIT SERVICES
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 34 of the
financial statements. The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person
or firm on the auditor’s behalf) is compatible with the general standard of independence of auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 34 to the financial statements do not compromise the external auditor’s
independence, based on the advice received from the Audit Committee, for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, and
• none of the services undermine the general principles relating to auditor independence as set out in the Code of Conduct APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing
the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or
jointly sharing economic risks and rewards.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 112 of the Annual Report.
ROUNDING OF AMOUNTS
The Company is a company of the kind referred to in ASIC Corporations Legislative Instrument 2016/191 (Rounding in Financial/Directors’
Report), dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the financial report are rounded off to the
nearest thousand dollars, unless otherwise indicated.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 83
Directors’ Report
continued
LETTER FROM THE CHAIR OF THE NOMINATION, CULTURE AND REMUNERATION
COMMITTEE
Dear fellow Shareholders,
On behalf of the Nomination, Culture and Remuneration Committee (NCRC) and Board, I am pleased to present the remuneration report for
FY21.
Domino’s Pizza Enterprises Limited (DPE) is a geographically diverse business with a long history of innovation and growth. The Board
remains committed to ensuring the remuneration frameworks developed for Key Management Personnel (KMP) are focused and aligned with
shareholder value creation over the long term.
FY21 REMUNERATION OUTCOMES
In FY20 we undertook a significant review of the remuneration framework and progressively introduced this in FY21, including moving all our
Executive KMP onto a short-term incentive with a cash and equity component (with a 2 year escrow period on the equity). We made changes
to the long-term incentive program with a move to net-settled options. The use of net-settled options is simpler for participants and doesn’t
require a cash outlay in order to exercise the options. We met with a number of investors during FY21 in a series of investor briefings in order
to obtain feedback on the company as a whole as well as the remuneration framework. This is a continuation of briefings conducted in prior
years where we actively listened to feedback and made changes to our framework as well as our level of disclosure in the remuneration
report. We find direct shareholder input extremely helpful and will continue this engagement in FY22 and beyond.
Fixed remuneration increases averaged 2.5% for a majority of the executives including the Group CEO/Managing Director to align with our
objective of rewarding for capability, experience and performance, and to ensure we continue to meet the market on executive remuneration.
Two executives, Michael Gillespie (Group Chief Digital and Experience Officer) and Josh Kilimnik (CEO Japan) had their roles re-evaluated
based on performance and scope and therefore received larger increases than the average awarded.
Short-term incentive results for FY21 averaged at 88.9% of bonus opportunity, with the Group CEO/Managing Director receiving 96.6% of his
bonus opportunity. Long-term incentive outcomes are detailed in the report.
APPLICATION OF DISCRETION DURING THE COVID-19 PANDEMIC
We continued to see the impact of COVID-19 on our business in FY21, and as in the prior year the Board undertook a comprehensive review
of the impact of COVID-19 on the remuneration structures. The Board introduced broader ranges for the short-term incentive targets to take
into account the unpredictable business environment faced by the Company. This resulted in lowering the threshold targets and increasing
the strong performance targets. The Board also conducted a formal review of the STI targets following the release of the FY21 H1 results and
decided to keep the targets as previously determined based on the ongoing uncertainty in the operating environment.
FY22 REMUNERATION & FOCUS
The Nomination, Culture and Remuneration Committee (NCRC) continuously reviews the company’s remuneration practices to ensure that
they are contemporary and fit for purpose. We are currently reviewing the remuneration structure for the Group CEO/Managing Director with
a view of increasing the ratio of equity to cash for his remuneration package. The package will be taken to the Annual General Meeting in
November for shareholder approval.
The Committee also undertook a thorough review of its Charter in April and made several changes to the Charter to ensure that it was relevant
and focused. The Committee has long had a strong focus on the culture of the organisation as well as driving diversity and inclusion. From
FY22 the Committee has been renamed the Nomination, Culture and Remuneration Committee (NC&RC) to make more explicit its focus on
culture within its remit.
This year we have continued to improve the level of detail in our remuneration report to address feedback from our Shareholders, and trust
that the link between pay and performance is apparent.
We thank you for your support and interest in our Company, and I look forward to your attendance at our Annual General Meeting currently
planned to be held in November 2021.
Uschi Schreiber
Chair, Nomination, Culture and Remuneration Committee
84 // 2021 ANNUA L REPO RT DO MI NO’S PIZZA ENTERPRISES LIMIT ED.
Directors’ Report
continued
REMUNERATION REPORT
This Remuneration Report (Audited), which forms part of the Directors’ Report, sets out information about the remuneration of the Company’s
KMP including directors for the financial year ended 27 June 2021.
The prescribed details for each person covered by this report are detailed below under the following headings:
• KEY MANAGEMENT PERSONNEL (KMP) INCLUDED IN THIS REPORT
• REMUNERATION AT DOMINO’S AT A GLANCE
• REMUNERATION GOVERNANCE
• EXECUTIVE REMUNERATION POLICY AND STRUCTURE
• OVERVIEW OF MANAGING DIRECTOR/GROUP CHIEF EXECUTIVE (GROUP CEO) REMUNERATION STRUCTURE FOR FY21
• OVERVIEW OF EXECUTIVE KMP REMUNERATION FRAMEWORK FOR FY21
• LINK BETWEEN PAY AND PERFORMANCE
• REMUNERATION OF EXECUTIVE KMP
• CONTRACTS FOR SERVICES OF KMP
• NON-EXECUTIVE DIRECTOR REMUNERATION
KMP MANAGEMENT PERSONNEL (KMP) INCLUDED IN THIS REPORT
The following persons acted as directors of the Company during or since the end of the financial year:
NAME
Jack Cowin
Ross Adler
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Don Meij
POSITION
Non-Executive Chairman
Non-Executive Deputy Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed 14 May 2021)
Managing Director/Group Chief Executive Officer (Group CEO)
The term Executive KMP is used in this report to refer to the following persons, who were considered to be KMP for part or all of the
financial year:
NAME
Don Meij
Richard Coney
Josh Kilimnik
Nick Knight
Andre Ten Wolde
Michael Gillespie
POSITION
Managing Director/Group Chief Executive Officer (Group CEO)
Group Chief Financial Officer
President and Chief Executive Officer of Japan
Chief Executive Officer ANZ
Chief Executive Officer Europe
Group Chief Digital and Experience Officer (formally, Group Chief Digital and Technology Officer)
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 85
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION AT DOMINO’S AT A GLANCE
EXECUTIVE REMUNERATION OBJECTIVES
Our executive remuneration structures are designed to support the following objectives:
Attract, motivate and retain
highly skilled executives across
diverse geographies
Reward capability and
experience and provide
recognition for the contribution
to the Company’s overall
objectives
An appropriate balance
between fixed and variable
remuneration
Align to shareholder interests
through equity components
OVERVIEW OF EXECUTIVE REMUNERATION FRAMEWORK
Our remuneration framework is designed to attract suitably qualified executives, reward them for the achievement of strategic objectives,
and achieve the broader outcome of value creation for shareholders.
ELEMENT OF REWARD
PURPOSE & PHILOSOPHY
LINK TO PERFORMANCE
PERFORMANCE MEASURES
Fixed remuneration
Base remuneration which
is calculated on a total cost
basis and includes any fringe
benefits tax (“FBT” charges
related to employee benefits
including motor vehicles) as
well as employer contributions
to superannuation funds or
equivalents
Short-term Incentive (STI)
Annual incentive opportunity
delivered as a combination of
cash and rights (depending
on role) that are deferred for
2 years.
• Set with reference
to relevant market
remuneration data
• Set at a level to attract
and retain experienced
executives in the
geographies in which
Domino’s operates
• Designed to achieve Board
approved targets, reflective
of the Group plan
• Considers performance
in the role and Domino’s
performance based on
market capitalisation and
revenue
• Reflects accountability,
performance, experience
and geographic location
• Key Performance Indicators
(KPIs) are set each year by
the Board reflective of the
Group or Geographically
relevant segment and
include financial and
individual performance
targets relevant to the
specific position
• Financial measures include
EBIT in local currencies,
Same Store Sales, Franchise
operations EBITDA, and
Franchisee profitability
compared to budget and last
year.
• Non-financial measures
such as Group organic new
store openings and delivery
of key strategic projects
(e.g. opening a new market
in Hokkaido, Japan)
• LTI targets are linked to
either EPS growth, or a
combination of EPS growth
and EBIT over 3 years
depending on whether the
role has Group or segment
responsibility
Long-term Incentive (LTI)
Three year incentive
opportunity delivered through
options which vest subject to
service and performance
• Reward executives for
• Awards only vest
sustainable long-term growth
aligned to shareholder value
creation
on achievement of
predetermined targets
• Options only provide value
to executives where the
share price has increased
86 // 2021 ANN UA L RE PORT D OM IN O’S PIZZA ENTERPRISES LIMITED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION AT DOMINO’S AT A GLANCE (continued)
FY21 PERFORMANCE AND REMUNERATION OUTCOMES
The Managing Director/Group CEO and other Executive KMP received fixed remuneration increases averaging 2.50% during FY21, with the
exception of 2 executives, Michael Gillespie (Chief Experience Officer) and Josh Kilimnik (CEO Japan) whose roles were revaluated based
on performance and change of scope.
Our business has performed well during the unprecedented impacts of COVID-19 and continued to safely prepare and deliver meals for our
customers. Our executives and staff have mobilised quickly to respond to the rapidly changing environment, including implementing new
operational measures to increase delivery capacity and move to zero contact carry-out and delivery and contactless payments where possible.
Despite the uncertainty surrounding COVID-19, the Group results were positive with record sales and year on year earnings growth.
STI achievement was strong in FY21 reflecting the hard work of the Executive Team in delivering strong results.
The options granted under our FY18 LTI plan were eligible to vest during FY21. The following vesting applied for each Executive KMP:
PROPORTION OF
OPTIONS VESTING
CAN BE EXERCISED
UNTIL
EXECUTIVE KMP
PERFORMANCE MEASURE
RESULT
Managing Director/
Group CEO
Group EPS percentage growth over
the relevant performance period
< 12% EPS Growth
Group EPS percentage growth over
the relevant performance period
< 12% EPS Growth
ANZ Executives
ANZ EBIT Performance
< 93% of target
0%
0%
Group EPS percentage growth over
the relevant performance period
< 12% EPS Growth
0%
Europe Executives
Europe EBIT Performance
< 93% of target
N/A
N/A
N/A
Group EPS percentage growth over
the relevant performance period
< 12% EPS Growth
70%
31 August 2021
Japan Executives
Japan EBIT Performance
> 103% of target
The following table outlines actual remuneration received in the year ended 27 June 2021. This table is not the statutory remuneration table
(please see section REMUNERATION OF EXECUTIVE KMP):
EXECUTIVE KMP
FIXED
REMUNERATION1
$
STI2
$
DEFERRED
STI3
$
LTI
VESTED4
$
TOTAL
REMUNERATION
$
Managing Director/Group CEO
1,223,461
153,600
Group Chief Financial Officer
President and Chief Executive Officer of Japan
Chief Executive Officer ANZ
Chief Executive Officer Europe
534,579
767,973
525,702
541,884
50,918
312,571
88,747
–
Group Chief Digital and Experience Officer5
626,522
96,594
291,310
–
25,387
–
–
–
733,075
44,347
–
–
–
–
1,377,061
610,884
1,813,619
658,796
541,884
1,014,426
Reflects salaries and superannuation.
1
2 The value of STI paid in cash during the year ended 27 June 2021, which is in relation to the performance targets achieved for FY20.
3 The value of deferred STI is determined based on the number of rights granted during the year ended 27 June 2021, for performance targets achieved
for FY20, multiplied by the share price at the date of grant.
4 LTI vested is determined based on the LTI vested during the year ended 27 June 2021 and is valued based on the intrinsic value being the share price at
the first exercise date less the exercise price, then multiplied by the number of options vested.
5 Michael Gillespie received a discretionary incentive, in recognition of his significant contribution to the company in the form of a zero price option with a
value of $249,974.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES L IMITED. // 87
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION AT DOMINO’S AT A GLANCE (continued)
STRUCTURAL CHANGES MADE IN FY21
During FY21 we undertook a comprehensive review of our executive remuneration framework to ensure that it is contemporary, remains fit
for purpose, and delivers on our objectives. We have also sought to respond to the uncertainty inherent in the COVID-19 pandemic period
in the year ahead.
As a result of this review, we have made the following changes for FY21:
• Recognising the difficulty in determining robust performance ranges during this uncertain time, we have introduced wider target and
payout ranges for our STI plan, with a commitment from the Board to review the targets at the six month period and adjust if required.
• Extended our STI deferral (33% of any STI earned) to all Executive KMP, including the Managing Director/Group CEO.
• Moved our LTI options to net-settled options, where only the value above the exercise price is provided to participants in the form of
shares. The same economic value as options and cost to the company, but simpler for participants and doesn’t require a cash outlay.
REMUNERATION GOVERNANCE
ROLE OF THE NOMINATION, CULTURE AND REMUNERATION COMMITTEE
The following chart outlines the key stakeholders in the governance of remuneration at Domino’s:
Shareholders and
advisory bodies
•
Includes
consultation,
engagement at
the Annual General
Meeting and
investor meetings.
Board
The Board is responsible for:
• Approving Domino’s remuneration strategy.
• Approving the performance objectives and measures for
the Group CEO and providing input into the evaluation of
performance against them.
The Board has overarching discretion with respect to any awards
made under the Company’s incentive plans.
Nomination, Culture and Remuneration Committee
The NCRC is responsible for:
• Making recommendations to the Board on remuneration
policies and packages applicable to the Board members and
the Group CEO.
• Review and approve remuneration packages applicable to
other KMPs of the Company.
Remuneration
consultants
• Provide
independent advice,
information and
recommendations
relevant to
remuneration
decisions.
Audit and Risk
Committee
• Supports the NCRC
by reviewing figures
which form the basis
for incentive awards.
Management
Management are responsible for:
• Preparing recommendations on remuneration packages applicable to the other KMPs of the Company.
• Obtaining remuneration information from external advisors / independent consultants to assist the NCRC.
88 // 2021 ANNUA L R E PORT D OM IN O ’S PIZZA ENTERPRISES LIMIT ED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION GOVERNANCE (continued)
USE OF INDEPENDENT REMUNERATION CONSULTANTS
During the year an independent remuneration consultant was engaged by the Nomination, Culture and Remuneration Committee to provide
advice and guidance in relation to market practice and Domino’s remuneration matters. The Company made payments totalling $102,330
(2020: $154,535) to the remuneration consultant in relation to the remuneration advice and guidance provided. The Committee considers
the advice and forms its own views on all remuneration matters. No remuneration recommendation was sought from or provided by the
remuneration consultant. The remuneration consultant is engaged directly to the Committee and is free of any undue influence by Executive
KMP/management.
OVERARCHING BOARD DISCRETION
The Board retains the discretion to alter the treatment of awards to ensure there is appropriate alignment between executive pay outcomes
and the performance of the company. That discretionary assessment (and exercise where required) is conducted at the conclusion of each
year when incentive outcomes are determined.
For example, where an acquisition is anticipated to have a meaningful effect on EPS growth, the board may increase LTI targets accordingly,
to ensure these reflect the prudent use of capital.
For financial year 2021, the Board considered the impact of the COVID-19 pandemic on the company and its shareholders to determine
whether discretion should be exercised in relation to STI outcomes for the year. Having considered all the impacts, the Board determined
that the outcomes are a fair reflection of the year as a whole, and have elected not to exercise discretion to adjust STI outcomes.
MALUS AND CLAWBACK
The Board retains the discretion to lapse any unvested (or vested but not yet exercised) STI or LTI equity awards if, at the discretion of the Board,
a trigger event has occurred (for example, fraud or dishonesty, breach of contractual obligations, serious misconduct or gross negligence,
or material reputational damage to the company).
The Board also retains the discretion, in the same circumstances outlined above, to clawback equity awards that have been exercised but
are held in escrow.
CHANGE OF CONTROL EVENTS
The Board retains the discretion to determine the treatment of awards in the event of a change of control. A change in control occurs when
any shareholder (either alone or together with its associates) having a relevant interest in less than 50% of the issued shares in the Company
acquires a relevant interest in 50% or more of the shares on issue at any time.
EXECUTIVE REMUNERATION POLICY AND STRUCTURE
The performance of the Company depends upon the quality of its Executive KMP including directors and their support teams. To prosper, the
Company must attract, motivate and retain highly skilled directors and other Executive KMP. The remuneration structure is designed to strike
an appropriate balance between fixed and variable pay, rewarding capability and experience and providing recognition for contribution to
the Company’s overall goals and objectives.
The Board Remuneration Policy is to ensure that Executive KMP remuneration packages properly reflect the individual’s duties and
accountabilities and level of performance; and that remuneration is market competitive in order to attract, retain and motivate people of the
highest quality. This Policy can be described in four key remuneration objectives outlined in the table below:
EXECUTIVE REMUNERATION OBJECTIVES
Attract, motivate and retain
highly skilled executives across
diverse geographies
Reward capability and
experience and provide
recognition for the contribution
to the Company’s overall
objectives
An appropriate balance
between fixed and variable
remuneration
Alignment to shareholder
interests through equity
components
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 89
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF MANAGING DIRECTOR/GROUP CHIEF EXECUTIVE (GROUP CEO) REMUNERATION
STRUCTURE FOR FY21
The following remuneration structure applied to the Managing Director/Group CEO for the year ended 27 June 2021. The table also shows
the changes for the Managing Director/Group CEO’s remuneration structure in FY21:
PERFORMANCE-LINKED REMUNERATION
FIXED REMUNERATION
SHORT-TERM INCENTIVE
LONG-TERM INCENTIVE
$1,259,520 per annum,
inclusive of base salary
and superannuation
contributions.
STI is awarded up to a maximum
of $1,259,520, subject to the
achievement of KPIs set annually, and
approved by the Board.
Options approved by shareholders at the 2020 AGM worth
$2,623,987 in total were granted during FY21 (the number of
options granted was determined using a Black Scholes option
pricing model).
This is an increase of 23% from FY20,
based on benchmarking data from our
third party providers and balancing of
the total remuneration package.
Paid as 67% cash and 33% equity (held
in escrow for 2 years).
The Options vest from 2023 subject to achievement of
cumulative annual growth in Earnings Per Share hurdles,
measured over rolling 3 year performance periods. Value is only
delivered to the Group CEO where the Domino’s share price
increases from grant (the exercise price) in addition to achieving
the performance condition.
This represents an
increase of 2.5%
from FY20, and was
applied after the Board
undertook a review
in accordance with its
annual processes.
SHORT-TERM INCENTIVE
The Board set the KPIs for the Managing Director/Group CEO during the financial year ended 27 June 2021 to be in line with the plan for the
Group. The first and largest consideration was the financial performance of the Group. This accounts for 80% of the total weighting for the
short-term incentive bonus, based on year on year EBIT performance in Group and individual markets. The Board listened to feedback from
shareholders requesting a greater focus on organic new store openings and adjusted the weighting of this KPI from 5% in FY20 to 20% in
FY21. The specific measures for each KPI include a threshold, target and strong performance levels. These levels are not disclosed because
they are commercially sensitive in nature.
KPI
WEIGHTING
MEASURES
Financial Performance
New Store Growth
80%
20%
• Group EBIT ($)
• Europe EBIT (€)
• Australia and New Zealand EBIT ($)
• Japan EBIT (¥)
• Group organic new store openings
90 // 2021 ANNUA L R E PORT D OM IN O’S PIZZA ENTERPRISES LIMIT ED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF MANAGING DIRECTOR/GROUP CHIEF EXECUTIVE (GROUP CEO) REMUNERATION
STRUCTURE FOR FY21 (continued)
FY20 SHORT-TERM INCENTIVE – ACHIEVEMENT – TARGETS VS ACTUAL
We have taken on board feedback from investors and included an analysis of the FY20 short term incentive plan targets vs actual. The table
below outlines this information.
BELOW
THRESHOLD
THRESHOLD
TARGET
STRONG
PERFORMANCE
SCORECARD
RESULT
ACTUAL
ACHIEVEMENT
0% Payout
33% Payout
66% Payout
100% Payout
Group EBIT A$(1)
50%
<6% Growth
Achieve
6% Growth
Achieve 8%
Growth
Achieve 12%
Growth
Group Organic
New Store Openings
5%
Achieve <177
organic new store
openings
177 organic new
store openings
202 organic
new store
openings
227 organic new
store openings
ANZ + Global
EBIT A$(1)
EU EBIT €(1)
Japan EBIT ¥(1)
15%
15%
15%
2.10% worse than
budget or more
<2.10% worse
than budget
2.10% worse than
budget or more
<2.10% worse
than budget
2.10% worse than
budget or more
<2.10% worse
than budget
Achieve
budget
Achieve
budget
Achieve
budget
>2.10% better
than budget
>2.10% better
than budget
>2.10% better
than budget
Below Threshold
$228.7m
Below Threshold
168 Stores
Below Threshold
$88.6M
Below Threshold
€36.6M
Strong
Performance
¥5,78B
(1) Adjusted to exclude management bonuses
LONG-TERM INCENTIVE (EXECUTIVE SHARE AND OPTION PLAN)
MANAGING DIRECTOR/GROUP CEO LTI AWARDS ON-FOOT
The long-term incentive approved by shareholder resolution on the 4 November 2020 resulted in the granting of options over a 3 year period.
The options were granted under the terms and conditions of the Company’s Executive Share and Option Plan. The plan rules are available
for inspection on the ASX’s announcements platform.
The Options are subject to a performance condition, including continuous employment, that must be achieved, and have an exercise price
set at grant. The value that the Managing Director/Group CEO derives from the LTI plan is subject to the partial or whole achievement of the
performance condition, as well as the share price following vesting. Over the exercise period, if the share price does not exceed the exercise
price (set at grant), then the Options are “underwater” and no value is delivered to the Managing Director/Group CEO.
The number of Options granted and on-foot under each Tranche, and the relevant exercise prices, are outlined in the table below. The first
exercise date is shown, and the exercise period is 1 year from the first exercise date, after which any options not exercised will lapse.
SERIES
NUMBER GRANTED
EXERCISE PRICE
FAIR VALUE
GRANT DATE
FIRST EXERCISE DATE
Series 31
Series 33
Series 38
220,000
297,000
156,937
$51.96
$50.25
$84.28
$7.27
$11.79
$16.72
23 Jan 2019
26 Nov 2019
4 Nov 2020
1 Sept 2021
1 Sept 2022
1 Sept 2023
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 91
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF MANAGING DIRECTOR/GROUP CHIEF EXECUTIVE (GROUP CEO) REMUNERATION
STRUCTURE FOR FY21 (continued)
PERFORMANCE CONDITION FOR ON-FOOT LTI AWARDS
The options approved by shareholders at the 2017 AGM vest if the Company’s cumulative annual compound earnings per share (EPS)
growth over the relevant performance period, as determined by the Board acting reasonably based on the audited financial statements of
the Company, is at least 12% in Series 31 and 33 as shown in the table below.
ANNUAL COMPOUND EPS GROWTH
DURING THE PERFORMANCE PERIOD
CUMULATIVE EPS TARGET
(SERIES 31)
CUMULATIVE EPS TARGET
(SERIES 33)
PROPORTION OF
OPTIONS WHICH VEST
Less than 12%
less than 5.775
less than 6.235
12% up to less than 13%
5.775 up to less than 5.882
6.235 up to less than 6.351
13% up to less than 14%
5.882 up to less than 5.992
6.351 up to less than 6.469
14% up to less than 15%
5.992 up to less than 6.102
6.469 up to less than 6.588
15% up to less than 16%
6.102 up to less than 6.214
6.588 up to less than 6.708
16% up to less than 17%
6.214 up to less than 6.327
6.708 up to less than 6.831
17% up to less than 18%
6.327 up to less than 6.441
6.831 up to less than 6.954
18% up to less than 19%
6.441 up to less than 6.557
6.954 up to less than 7.079
19% up to less than 20%
6.557 up to less than 6.674
7.079 up to less than 7.206
20% or over
6.674 or over
7.206 or over
0%
20%
30%
40%
50%
60%
70%
80%
90%
100%
The options approved by shareholders on the 4 November 2020 vest if the Company’s cumulative annual compound earnings per share
(EPS) growth over the relevant performance period, as determined by the Board acting reasonably based on the audited financial statements
of the Company, is at least 6%, as shown in the table below.
CUMULATIVE EPS TARGET
Base EPS – FY20 Underlying
$1.694
$1.694
Performance Period
at 6% compound growth rate
at 15% compound growth rate
FY21
FY22
FY23
Cumulative EPS Target for the Performance Period,
subject to adjustment
ANALYSIS OF PAY OUTCOMES
$1.796
$1.903
$2.018
$5.717
$1.948
$2.240
$2.576
$6.765
For the year ended 27 June 2021, the following outcomes were applied to the Managing Director/Group CEO in respect of his STI and LTI.
STI OUTCOMES FOR FY21
In FY21, the Managing Director/Group CEO achieved 96.6% of his short-term incentive opportunity (15% in FY20). See section LINK BETWEEN
PAY AND PERFORMANCE for more detail.
LTI OUTCOMES FOR FY21
The following table outlines the vesting outcome for the LTI award made to the Managing Director/Group CEO in 2017:
SERIES
NUMBER
GRANTED
EXERCISE
PRICE
FIRST EXERCISE
DATE
PERFORMANCE
CONDITION
PROPORTION
VESTING
Series 28 (granted 8 Nov 17)
220,000
$46.63
1 Sept 2020
Not met
0%
92 // 2021 ANNUA L RE PORT D O MIN O’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF MANAGING DIRECTOR/GROUP CHIEF EXECUTIVE (GROUP CEO) REMUNERATION
STRUCTURE FOR FY21 (continued)
INCENTIVE OUTCOMES OVER TIME
The board considers both STI and LTI to be true ‘at risk’ elements of the executive’s remuneration. Over the past 3 years, the Managing
Director/Group CEO’s STI and LTI payouts and vesting have varied significantly. The following chart shows the outcomes of the Group CEO’s
STI and LTI plans in the year ended 27 June 2021, and the 2 prior financial years. The Group CEO’s LTI did not vest in FY21.
120%
100%
)
i
(
l
a
i
t
n
e
t
o
p
f
o
%
80%
60%
40%
20%
0%
100%
96.6%
15%
STI
LTI
15%
STI
0%
LTI
FY19
FY20
0%
LTI
STI
FY21
(1) STI reflects that which was earned and paid in relation to each financial year, and LTI reflects that which vested and became exercisable
in each financial year (in relation to the grant made 3 years prior).
The following table outlines actual remuneration received by the Managing Director/Group CEO in the year ended 27 June 2021 and the 2
prior financial years. This table is not the statutory remuneration table (please see section REMUNERATION OF EXECUTIVE KMP):
ELEMENT OF REWARD
Total fixed remuneration4
Short-term incentive5
% Earned
Total Earned
Cash
Equity
Value of prior long-term incentive vested in financial year7
TOTAL REMUNERATION EARNED IN THE YEAR
FY191
FY202
FY213
$1,200,000
$1,228,800
$1,259,520
15%
$150,000
$150,000
–
$3,957,000
$5,307,000
15%
$153,600
$153,000
–
$0
96.6%
$1,216,697
$815,187
$401,5106
$0
$1,382,400
$2,476,217
The value of LTI that vested in FY19, in relation to Series 23 and the performance period from 2015 to 2018.
1
2 The FY17 grant performance condition was not met, and no LTI has subsequently vested in FY20.
3 The FY19 grant performance conditions was not met, and no LTI has subsequently vested in FY21.
4 Reflects salary and superannuation.
5 The value of STI earned during the relevant financial year, relates to the achievement of performance targets in the relevant financial year based on
an accrual basis of accounting. FY21 will be combination of cash and equity.
6 The equity component of the FY21 Short-term incentive will be delivered in the form of 1 zero exercise priced option to subscribe for Shares at the underlying
market price around the time of release of the FY21 annual results. The exercise period is 10 years from the date of grant. Shares allocated on exercise of
the STI Option will be escrowed for 2 years from the date of grant of the STI Option.
7 The value of the LTI is determined based on the share price at the first exercise date less the exercise price, then multiplied by the number of options vested.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 9 3
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF MANAGING DIRECTOR/GROUP CHIEF EXECUTIVE (GROUP CEO) REMUNERATION
STRUCTURE FOR FY21 (continued)
The following chart shows the performance and exercise/escrow periods for all LTI awards since FY16, as well as the change in the Domino’s
share price since the start of FY16. As the chart demonstrates, significant shareholder wealth has been generated through this time period.
The Managing Director/Group CEO’s LTI did not vest in FY21 as the performance conditions were not met.
SERIES
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
% vested
23
25
28
31
33
Performance period
Performance period
Performance period
Performance period
Performance period
100%
0%
0%
TBC
TBC
Share price percentage change from FY16
)
%
(
e
g
n
a
h
c
e
c
i
r
p
e
r
a
h
S
250%
200%
150%
100%
50%
0%
Performance period completed
Performance period on-foot
Exercise and escrow period
Vesting date
FY16
FY17
FY18
FY19
FY20
FY21
The table below outlines the timeline and terms for each LTI Options series awarded to the Managing Director/Group CEO since FY16.
Please note, the FY16 award that vested in full was exercised and paid in FY20, while the FY17 award did not vest in FY20:
GRANT
YEAR
SERIES
NO.
GRANT
DATE
FIRST
EXERCISE
DATE
LAST
EXERCISE
DATE
HOLDING
STOCK
EXERCISE
PRICE VESTING
SHARE
PRICE
AT VEST
VALUE
AT VEST1
EXERCISE
DATE
FY16
FY17
FY18
FY19
FY20
FY21
23
25
28
31
33
38
300,000
03/09/2015 01/09/2018
28/10/2020 28/10/2020
$40.95
100%
$54.14 $3,957,000
12/11/2019
400,000
01/09/2016
01/09/2019
28/10/2020 28/10/2020
$76.23
220,000
08/11/2017
01/09/2020 31/08/2021
31/08/2021
$46.63
220,000
23/01/2019
01/09/2021
31/08/2022
31/08/2022
$51.96
297,000
26/11/2019
01/09/2022 31/08/2023
31/08/2023
$50.25
156,937
4/11/2020
01/09/2023
31/08/2024
31/08/2023
$84.28
0%
0%
TBC
TBC
TBC
–
–
TBC
TBC
TBC
–
–
TBC
TBC
TBC
–
–
TBC
TBC
TBC
1
The value at vesting is determined based on the share price at the first exercise date less the exercise price, then multiplied by the number of options vested.
94 // 2021 ANNUA L RE PO RT DO MI NO’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF EXECUTIVE KMP REMUNERATION FRAMEWORK FOR FY21
The remuneration structures explained below are designed to attract suitably qualified candidates, reward them for the achievement of
strategic objectives, and achieve the broader outcome of value creation for shareholders. The remuneration framework takes into account:
•
•
•
the capability and experience of the Executive KMP;
the Executive KMPs ability to control the relevant segments’ performance;
the Group’s performance including:
-
-
-
the Group’s earnings;
growth in earnings per share;
return on shareholders’ investment
PAY MIX
Remuneration packages include a mix of fixed, short-term and long-term performance-based incentives. The mix of these components is
based on the role the individual performs.
SUMMARY OF REMUNERATION ELEMENTS
The framework is illustrated in the following table:
FIXED REMUNERATION
SHORT-TERM INCENTIVE (STI)
LONG-TERM INCENTIVE (LTI)
Strategic
intent
Domino’s
approach
Delivery
Fixed remuneration will take into
account the relevant market data,
provided by an independent
remuneration consultant, or other
independent data (e.g. Mercer),
considering the individual’s expertise
and performance in the role.
Fixed remuneration is set relative to
the market, reflecting the Executive
KMPs accountability, performance,
experience, and geographic location.
Base remuneration which is
calculated on a total cost basis and
includes any fringe benefits tax
(“FBT” charges related to employee
benefits including motor vehicles)
as well as employer contributions to
superannuation funds or equivalents.
Short-term Incentives are paid
for achieving Board approved
targets, reflective of the Group
plan.
Long-term incentives are intended to
reward Executives for sustainable long-
term growth aligned to shareholder
value creation.
Key Performance Indicators
(KPIs) are set each year by the
Board reflective of the Group
or Geographically relevant
segment and include financial and
individual performance targets
relevant to the specific position.
Provided as cash only, or a
combination of cash and Rights
which are deferred and if
exercised, are held in escrow for a
period of 2 years from grant.
LTI targets are linked to EPS growth, or
EPS and EBIT depending on whether
the role has Group or segment
responsibility.
Equity in options. All equity is held
subject to service and performance
for a minimum of 3 years from grant
date. The equity is at risk until vesting.
Performance is tested once at the
vesting date. Executives have 12 months
after the vesting date to exercise the
options. Shares received on exercise
of the options are held in escrow for a
further 2 years from the date of vest.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 95
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF EXECUTIVE KMP REMUNERATION FRAMEWORK FOR FY21 (continued)
FIXED REMUNERATION
Remuneration levels are reviewed annually by the Nomination, Culture and Remuneration Committee and Managing Director/Group CEO
through a process that considers individual, segment and overall performance of the Group. In addition, external consultants provide analysis
and advice to ensure the directors and Executive KMP remuneration is competitive in the marketplace.
Remuneration levels are reviewed each year to take into account cost-of-living changes, any change in the scope of the role performed by the
Executive KMP and any changes required to meet the principles of the Remuneration Policy. All roles are benchmarked against comparable
market data. An Executive KMPs remuneration is also reviewed on promotion.
Fixed pay increases of 2.50% on average were applied in FY21 for executives to align with our objective of rewarding for capability, experience,
and performance, and to ensure we continue to meet the market on executive remuneration. Two executives, Michael Gillespie (Group Chief
Digital and Experience Officer) and Josh Kilimnik (CEO Japan) received increases above 2.50% as a result of changes in the role scope and
performance.
PERFORMANCE-LINKED REMUNERATION
Performance-linked remuneration includes both short-term and long-term incentives and is designed to reward Executive KMP for meeting
or exceeding their financial and personal objectives. The short-term incentive (“STI”) is an ‘at risk’ bonus provided in the form of cash or a
combination of cash and a deferred component (equity or cash settled), while the long-term incentive (“LTI”) is provided as options over
ordinary shares of the Company under the rules of the employee share options plan (“ESOP”).
SHORT-TERM INCENTIVE
Each year the Nomination, Culture and Remuneration Committee sets the key performance indicators (“KPI’s”) for the Group CEO and the
Managing Director/Group CEO proposes the KPI’s for the other Executive KMP. The KPI’s generally include measures relating to the Group,
the relevant segment, and the individual, and include financial, operational and strategic measures. The measures chosen directly align the
individual’s reward to the KPI’s of the Group and to its strategy and performance.
The Company undertakes a rigorous and detailed annual forecasting and budget process. The Board believes achievement of the annual
forecast and budget is the most relevant short-term performance condition, and for each KPI sets a range that reflects:
• A threshold level of performance, below which no payment is made
• A target level of performance that meets the annual forecast and budget, and
• A strong level of performance for exceeding the challenging KPIs.
The financial performance objectives include but are not limited to:
• Earnings before Interest and Tax (“EBIT”) in local currencies
• Same Store Sales
• Franchisee profitability (EBITDA) compared to budget and last year.
The specific targets are not detailed in this report due to their commercial sensitivity but will be discussed retrospectively in future
remuneration reports.
STI OPPORTUNITY
The table below expresses the annual standard STI opportunity for each Executive KMP during FY21:
EXECUTIVE KMP
Group Chief Financial Officer
President and Chief Executive Officer of Japan
Chief Executive Officer ANZ
Chief Executive Officer Europe
Group Chief Digital and Experience Officer1
STI OPPORTUNITY (% OF FIXED REMUNERATION)
80%
80%
80%
80%
75%
1 The Group Chief Digital and Experience Officer was awarded performance rights, to the value of $249,974 during the period, which has
been included as STI for the period.
96 // 2021 ANN UA L RE PORT D OM IN O’S PIZZA ENTERPRISES LIMIT ED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF EXECUTIVE KMP REMUNERATION FRAMEWORK FOR FY21 (continued)
DELIVERY
In the year ended 27 June 2021, delivery was in the form of cash and equity split 67% and 33% respectively, with the equity deferred for a
minimum of 2 years.
The equity is in the form of Rights. The Rights can be exercised by the participant at any time up to ten years from the date of grant (subject to
local tax laws). If the Rights are exercised within the period 2 years from the date of grant, they remain under escrow until the 2 year deferral
period has concluded. Dividends are earned from the time at which the Right is exercised into a fully paid ordinary share.
LONG-TERM INCENTIVE
The Company established the Employee Share Option Plan (ESOP) to assist in the recruitment, reward, retention and motivation of the
company’s Executive KMP (“the participants”). In accordance with the provisions of the scheme, Executive KMP are granted options for no
consideration to purchase parcels of shares at various exercise prices, subject to the meeting of performance conditions, including Annual
Compound Earnings Per Share (EPS) Growth for the Managing Director/Group CEO and Group or a combination of EPS Growth and Earnings
Before Interest and Tax (EBIT) for regional roles.
The value an Executive KMP member derives from the LTI plan is subject to the partial or whole achievement of the performance condition,
as well as the share price following vesting. If the share price does not exceed the exercise price (as set at grant), then the Options are
“underwater” and no value is delivered to the Executive KMP member. Dividends are only payable once the options have vested and been
exercised into an ordinary share.
The Nomination, Culture and Remuneration Committee considers this equity performance-linked remuneration structure to be appropriate
as Executive KMP only receive a benefit where there is a corresponding direct benefit to shareholders.
LTI OPPORTUNITY
The LTI opportunity, as a percentage of fixed remuneration, awarded to each Executive KMP is outlined in the table below (excludes the
Managing Director for whom the LTI award was approved at the 2020 AGM). The number of options awarded is determined by dividing the
LTI dollar opportunity by the fair value of the relevant option series:
EXECUTIVE KMP
Group Chief Financial Officer
President and Chief Executive Officer of Japan
Chief Executive Officer ANZ
Chief Executive Officer Europe
Group Chief Digital and Experience Officer
LTI OPPORTUNITY (% OF FIXED REMUNERATION)
80%
80%
80%
80%
75%
VESTING CONDITIONS FOR OPTIONS ISSUED DURING FY21
Options awarded during the year ended 27 June 2021 vest subject to the achievement of performance conditions set at the time of grant.
These performance conditions are based on a sliding scale of the Company’s cumulative annual compound earnings per share (EPS) growth
for Group based roles, or a combination of the Company’s cumulative annual compound EPS 30% of LTI and the cumulative regional EBIT
target 70% of LTI over the performance period for regional specific relevant roles.
Please see section OVERVIEW OF MANAGING DIRECTOR/GROUP CHIEF EXECUTIVE (GROUP CEO) REMUNERATION STRUCTURE FOR
FY21 for details of the LTI award for the Managing Director/Group CEO.
The EPS Growth performance condition applicable to 100% of the FY21 LTI grant for the Group Chief Financial Officer and Group Chief Digital
and Experience Officer vest in accordance with the schedule shown in the tables below:
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 97
Directors’ Report
continued
REMUNERATION REPORT (continued)
OVERVIEW OF EXECUTIVE KMP REMUNERATION FRAMEWORK FOR FY21 (continued)
GROUP CHIEF FINANCIAL OFFICER AND GROUP CHIEF DIGITAL AND EXPERIENCE OFFICER (100% OF THE LTI AWARD)
ANNUAL COMPOUND EPS GROWTH DURING THE PERFORMANCE PERIOD
PROPORTION OF OPTIONS WHICH VEST
Less than 6%
At 6%
Above 6% and up to less than 15%
15% or over
0%
20%
Straight line vesting
100%
The EPS Growth performance condition applicable to 70% of the FY21 LTI grant and cumulative regional EBIT performance condition applicable
to 30% of the FY21 LTI grant for the Chief Executive Officer ANZ vest in accordance with the schedule shown in the tables below:
CEO ANZ (70% OF THE LTI AWARDS)
CEO ANZ (30% OF THE LTI AWARDS)
ANNUAL COMPOUND EPS
GROWTH DURING THE
PERFORMANCE PERIOD
PROPORTION OF
OPTIONS WHICH
VEST
PERCENTAGE OF CUMULATIVE
EBIT TARGET (IN ANZ)
Less than 6%
At 6%
0%
20%
Less than 90%
At 90%
PROPORTION OF
OPTIONS WHICH
VEST
0%
40%
Above 6% and up to less than 15%
Straight line vesting
Above 90% and up to less than 105%
Straight line vesting
15% or over
100%
105% or over
100%
The EPS Growth performance condition applicable to 70% of the FY21 LTI grant and cumulative regional EBIT performance condition applicable
to 30% of the FY21 LTI grant for the Chief Executive Officer Europe, and President and Chief Executive Officer of Japan vest in accordance
with the schedule shown in the tables below:
CEO EUROPE AND PRESIDENT AND CEO OF JAPAN
(70% OF THE LTI AWARD)
CEO EUROPE AND PRESIDENT AND CEO OF JAPAN
(30% OF THE LTI AWARD)
ANNUAL COMPOUND EPS
GROWTH DURING THE
PERFORMANCE PERIOD
PROPORTION OF
OPTIONS WHICH
VEST
PERCENTAGE OF CUMULATIVE
EBIT TARGET (IN EUROPE
AND JAPAN RESPECTIVELY)
PROPORTION OF
OPTIONS WHICH
VEST
Less than 6%
At 6%
0%
20%
Less than 90%
At 90%
0%
40%
Above 6% and up to less than 15%
Straight line vesting
Above 90% and up to less than 105%
Straight line vesting
15% or over
100%
105% or over
100%
Participants are not permitted, without the prior written consent of the Chairman, to enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic risk of participating in the scheme. Participants have 12 months after the vesting date in which
to exercise their options. Any shares received on exercise are subject to a 2-year holding lock from the vesting date (i.e. 5 years from grant).
98 // 2021 ANN UA L RE PORT D OM IN O’S PIZZA ENTERPRISES LIMITED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
LINK BETWEEN PAY AND PERFORMANCE
BUSINESS OUTCOMES FOR FY21
The following table outlines performance against each of the Key Performance Indicators that have been used across our Executive KMP
group for STI purposes in FY21:
KEY PERFORMANCE INDICATOR
EBITDA – Group
EBIT:
Group
ANZ
Europe
Japan
Same Store Sales – Group
NPAT attributable to shareholder
PERFORMANCE1
$369.5m + 21.9% growth YoY
$290.3m + 26.9% growth YoY
$115.2m + 13.2% growth YoY
$87.6m + 45.3% growth YoY
$110.7m + 38.9% growth YoY
+9.3%
$188.4m + 29.2% growth YoY
1
The performance measure is on an underlying basis which excludes significant non-recurring costs as well as the impact from adoptions of AASB 16 Leases.
HISTORICAL COMPANY PERFORMANCE
The tables below set out summary information about the Group’s earnings and movements in shareholder wealth for the 5 years to
27 June 2021:
Revenue
Net profit before tax
Net profit after tax
27 JUNE 2021
$’000
28 JUNE 2020
$’000
30 JUNE 2019
$’000
01 JULY 2018
$’000
02 JULY 2017
$’000
2,199,106
1,905,261
1,435,410
1,153,952
272,937
193,143
203,436
142,921
159,413
114,379
174,476
121,693
1,073,125
150,680
105,804
27 JUNE 2021
28 JUNE 2020
30 JUNE 2019
01 JULY 2018
02 JULY 2017
Share price at the start of the year ($)
Share price at the end of the year ($)
Interim dividend per share (cents)1
Final dividend per share (cents)1,2
Basic earnings per share (cents)
Diluted earnings per share (cents)
67.79
118.00
88.4
85.1
212.8
211.9
37.64
67.79
66.7
52.6
160.9
160.8
52.22
37.64
62.7
52.8
135.5
135.4
52.08
52.22
58.1
49.7
139.4
139.0
68.82
52.08
48.4
44.9
116.0
114.7
1
The final dividend for the year ended 27 June 2021 is to be franked at 70%. The interim dividend for the year ended 27 June 2021 was franked at 50%.
The interim and final dividends for the year ended 28 June 2020 are franked at 100%. The interim and final dividends for the year ended 30 June 2019
are franked at 75% and 100%, respectively. Interim and final dividends for the year ended 01 July 2018 are franked to 40% and 75%, respectively. For the
year ended 02 July 2017 interim and final dividends are franked to 50%. The Company’s tax rate has remained at 30% for franking purposes over this
5 year period.
2 The final dividend for the financial year ended 27 June 2021 was declared after the end of the reporting period and is not reflected in the financial statements.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 99
Directors’ Report
continued
REMUNERATION REPORT (continued)
LINK BETWEEN PAY AND PERFORMANCE (continued)
SHORT-TERM INCENTIVE
On 17 August 2021, Don Meij, Richard Coney, Andre Ten Wolde, Josh Kilimnik, Nick Knight, and Michael Gillespie were granted a combination
of cash and a deferred component incentive for their performance during the year ended 27 June 2021. The incentive conditions were agreed
by the Board during the year. The amounts were determined and approved by the Board based on a recommendation by the Nomination,
Culture and Remuneration Committee and are outlined in the table below:
DIRECTOR OR KMP
Don Meij
Richard Coney
Josh Kilimnik
Nick Knight
Andre Ten Wolde
Michael Gillespie4
CASH
COMPONENT
$1
DEFERRED
COMPONENT
$
AMOUNT
FORFEITED IN YEAR
$
PERCENTAGE
AWARDED IN YEAR
%2
PERCENTAGE
FORFEITED IN YEAR
%3
815,187
262,818
279,670
134,599
279,547
255,672
401,510
129,447
137,748
66,295
137,687
125,928
42,823
35,972
–
218,946
10,698
68,400
96.6%
91.6%
100%
47.9%
97.5%
84.8%
3.4%
8.4%
0%
52.1%
2.5%
15.2%
1 Amounts included in compensation represent the amount that was awarded based on the achievement of specified performance criteria for the financial
year ending 27 June 2021.
2 Percentage awarded in the year is inclusive of full fair value of the deferred STI payable as equity or cash, of the short-term incentive awarded for the year
ended 27 June 2021.
3 The amounts forfeited are due to the performance or service criteria not being met in relation to the financial year ended 27 June 2021.
4 During the period, Performance Rights were granted to Michael Gillespie to the value of $249,974 and subject to a 3 year escrow period, which is recognised
in deferred component. This related to a considerable change in role in FY21.
No other incentives were granted during the financial year ended 27 June 2021.
LONG-TERM INCENTIVE OUTCOMES
The table below outlines the options series for which the performance period concluded in FY21, including the vesting result and the relevant
proportion of options that vested:
OPTION SERIES
28 (Don Meij)
PERFORMANCE MEASURE
RESULT
PROPORTION
OF OPTIONS
VESTING
CAN BE
EXERCISED
UNTIL
Group EPS percentage growth over the
relevant performance period
< 12% EPS Growth
0%
29 (ANZ Employees –
Richard Coney, Michael Gillespie)
Group EPS percentage growth over the
relevant performance period
< 12% EPS Growth
0%
29 (ANZ Employees – Nick Knight)
29 (Europe Employees)
29 (Japan Employees)
Group EPS percentage growth over the
relevant performance period
< 12% EPS Growth
0%
ANZ EBIT Performance
Group EPS percentage growth over the
relevant performance period
< 93% of target
< 12% EPS Growth
Europe EBIT performance
< 93% of target
Group EPS percentage growth over the
relevant performance period
< 12% EPS Growth
0%
0%
0%
0%
Japan EBIT performance
> 103% of target
70%
31 August 2021
100 // 2021 ANNUA L R EPO RT D OMI NO’S PIZZA ENTERPRISES LIMITED.
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Directors’ Report
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20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 1 01
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION OF EXECUTIVE KMP (continued)
EXECUTIVE SHARE AND OPTION PLAN (ESOP)
During the prior and current financial year, the following share-based payment arrangements were in existence.
For terms, including vesting conditions, of prior year grants, please see relevant year remuneration reports. See section OVERVIEW OF
MANAGING DIRECTOR/GROUP CHIEF EXECUTIVE (GROUP CEO) REMUNERATION STRUCTURE FOR FY21 for terms relating to option
awards made in the year ended 27 June 2021:
OPTIONS
SERIES
ISSUE &
GRANT DATE
GRANTED TO
03 Sep 2015
Don Meij1
03 Sep 2015
Andrew Rennie1
01 Sep 2016
Don Meij1
01 Sep 2016
Andrew Rennie1
EXPIRY DATE
28 Oct 2020
31 Aug 2020
31 Aug 2020
31 Aug 2020
01 Sep 2016
ANZ Employees
31 Aug 2020
01 Sep 2016
Europe Employees
31 Aug 2020
01 Sep 2016
Japan Employees
31 Aug 2020
08 Nov 2017
Don Meij
19 Apr 2018
ANZ Employees
31 Aug 2021
31 Aug 2021
19 Apr 2018
Europe Employees
31 Aug 2021
19 Apr 2018
Japan Employees
31 Aug 2021
14 Aug 2018
Andrew Rennie
31 Aug 2021
23 Jan 2019
Don Meij
31 Aug 2022
25 May 2019
ANZ Employees
31 Aug 2022
25 May 2019
Europe Employees
31 Aug 2022
25 May 2019
Japan Employees
01 Sep 2022
26 Nov 2019
Don Meij
01 Sep 2023
26 Nov 2019
ANZ Employees
26 Nov 2023
26 Nov 2019
ANZ Employees
01 Sep 2023
26 Nov 2019
Europe Employees
01 Sep 2023
26 Nov 2019
Japan Employees
01 Sep 2023
20 Aug 2019
ANZ Employees
20 Aug 2029
18 Aug 2020
ANZ Employees
18 Aug 2030
04 Nov 2020
Don Meij
01 Sep 2024
25 Nov 2020
Europe Employees
01 Sep 2024
25 Nov 2020
Japan Employee
01 Sep 2024
25 Nov 2020
ANZ Employees
01 Sep 2024
07 Jun 2021
ANZ Employees
07 June 2031
28 May 2021
ANZ Employees
28 May 2031
(23)
(24)
(25)
(26)
(27)
(27)
(27)
(28)
(29)
(29)
(29)
(30)
(31)
(32)
(32)
(32)
(33)
(34)
(35)
(35)
(35)
(36)
(37)
(38)
(39)
(39)
(39)
(40)
(41)
GRANT DATE
FAIR VALUE
EXERCISE
PRICE
VESTING
DATE
$8.20
$8.57
$17.00
$16.50
$16.80
$16.80
$16.80
$11.22
$5.88
$5.88
$5.88
$9.58
$7.27
$3.98
$3.98
$3.98
$11.79
$9.84
$11.79
$11.79
$11.79
$42.41
$81.37
$16.72
$10.92
$10.92
$10.92
$105.63
$84.28
$40.95
$40.95
$76.23
$76.23
$76.23
$76.23
$76.23
$46.63
$45.25
$45.25
$45.25
$45.25
$51.96
$51.96
$51.96
$51.96
$50.25
$50.25
$50.25
$50.25
$50.25
Nil
Nil
$84.28
$84.28
$84.28
$84.28
Nil
Nil
01 Sep 2018
01 Sep 2018
01 Sep 2019
01 Sep 2019
01 Sep 2019
01 Sep 2019
01 Sep 2019
01 Sep 2020
01 Sep 2020
01 Sep 2020
01 Sep 2020
01 Sep 2020
01 Sep 2021
01 Sep 2021
01 Sep 2021
01 Sep 2021
01 Sep 2022
21 Aug 2022
01 Sep 2022
01 Sep 2022
01 Sep 2022
21 Aug 2019
19 Aug 2021
01 Sep 2023
01 Sep 2023
01 Sep 2023
01 Sep 2023
07 Jun 2023
28 May 2021
1 Options and shares issued on the exercise of options to Don Meij and Andrew Rennie are subject to an escrow. Don Meij’s escrow period commencing
on the date of issue and ending on 28 October 2019. Andrew Rennie’s escrow period commencing on the date of issue and ending on 01 January 2019.
102 // 2021 ANNUAL REPO RT DO MI NO’S PIZZA EN TERPRISES LIMIT ED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION OF EXECUTIVE KMP (continued)
EXERCISED OPTIONS
During the year, the following KMP exercised options that were granted to them as part of their remuneration. Each option converts into 1
ordinary share of DPE Limited.
DIRECTORS AND
SENIOR MANAGEMENT
NO. OF OPTIONS
EXERCISED
NO. OF ORDINARY SHARES OF
DPE LIMITED ISSUED
AMOUNT
PAID
AMOUNT
UNPAID
Don Meij
Richard Coney
Josh Kilimnik
Nick Knight
Andre Ten Wolde
Michael Gillespie
–
–
10,325
–
15,000
–
–
–
–
–
10,325
$467,206
–
–
15,000
$1,143,450
–
–
$nil
$nil
$nil
$nil
$nil
$nil
The following table summarises the value of options exercised or lapsed during the financial year to directors and senior management:
DIRECTORS AND
SENIOR MANAGEMENT
VALUE OF OPTIONS GRANTED
AT THE GRANT DATE1
$
VALUE OF OPTIONS EXERCISED
AT THE EXERCISE DATE2
$
VALUE OF OPTIONS LAPSED
AT THE DATE OF LAPSE3
$
Don Meij
Richard Coney
Josh Kilimnik
Nick Knight4
Andre Ten Wolde
Michael Gillespie
–
–
60,711
–
252,000
–
–
–
373,042
–
140,250
–
2,468,400
305,760
52,038
329,280
147,000
205,800
1
The value of options granted during the period is recognised in remuneration over the vesting period of the grant, in accordance with Australian accounting
standards.
2 Determined at the time of exercise at the intrinsic value, being the share price at the date of exercise less the exercise price, then multiplied by the number
of shares exercised.
3 The value of options lapsing during the period due to the failure to satisfy a vesting condition is determined assuming the vesting condition had been
satisfied. This is determined based on the fair value of the options at the date of grant multiplied by the number of lapsed options.
Includes options granted to a related party.
4
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 103
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION OF EXECUTIVE KMP (continued)
FULLY PAID ORDINARY SHARES OF DOMINO’S PIZZA ENTERPRISES LIMITED
The numbers of shares in the Company held during the financial year by each director of Domino’s Pizza Enterprises Limited and other key
management personnel of the Group, including their personally related parties, are set out below. There were no shares granted during the
reporting period as compensation.
BALANCE AT
BEGINNING OF
FINANCIAL YEAR
NO.
GRANTED AS
COMPENSATION
NO.
RECEIVED ON
EXERCISE OF
OPTIONS
NO.
NET OTHER
CHANGE
NO.
BALANCE AT
THE END OF THE
FINANCIAL YEAR
NO.
BALANCE HELD
NOMINALLY
NO.
15,424
23,066,390
10,325
(12,125)
–
3,018
15,000
(15,000)
23,050,966
23,050,966
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
200
1,100
–
–
–
–
–
–
–
1,000
–
300,000
(343,343)
24,000
(23,735)
150,000
(347,000)
–
–
48,500
(45,500)
–
–
–
–
–
3,000
200,000
1,628,344
2,000
1,200
1,100
–
1,800,001
25,719
800
3,402
3,000
–
200,000
1,628,344
2,000
1,000
–
1,800,001
25,719
503,225
2,600
3,384
–
192
3,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2021
Jack Cowin
23,050,966
Ross Adler
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Don Meij
Richard Coney
Josh Kilimnik
Nick Knight1
Andre Ten Wolde
Michael Gillespie
2020
Jack Cowin
Ross Adler
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Don Meij
Richard Coney
Andrew Rennie
Josh Kilimnik
Nick Knight1
Michael Gillespie
Allan Collins
Andre Ten Wolde
200,000
1,628,344
2,000
1,000
–
–
1,800,001
25,719
2,600
384
3,000
–
–
200,000
1,628,344
2,000
–
–
1,843,344
25,454
700,225
2,600
384
–
192
–
1
Includes shares held during the period by a related party.
104 // 2021 ANNUA L RE PORT DO MIN O’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION OF EXECUTIVE KMP (continued)
EXECUTIVE SHARE OPTIONS OF DOMINO’S PIZZA ENTERPRISES LIMITED
BALANCE AT
BEGINNING OF
FINANCIAL YEAR
NO.
GRANTED AS
COMPENSATION
NO.
EXERCISED
NO.
NET OTHER
CHANGE
NO.
BALANCE AT
THE END OF
FINANCIAL YEAR
NO.
OPTIONS
VESTED DURING
THE YEAR
NO.
2021
Don Meij
Richard Coney
Josh Kilimnik
Nick Knight1
Andre Ten Wolde
Michael Gillespie
2020
Don Meij
Richard Coney
Andrew Rennie
Josh Kilimnik
Nick Knight1
Michael Gillespie
Allan Collins
Andre Ten Wolde
737,000
119,385
100,921
130,578
84,081
82,234
1,140,000
156,000
644,000
69,500
184,000
83,000
106,000
65,000
1
Includes options relating to a related party.
CONTRACTS FOR SERVICES OF KMP
156,937
39,527
40,605
43,908
40,249
44,682
–
–
(220,000)
(52,000)
(10,325)
(8,850)
–
(56,000)
(15,000)
(25,000)
–
(33,945)
297,000
(300,000)
(400,000)
41,385
(24,000)
(54,000)
–
(150,000)
–
–
–
31,421
43,578
29,734
39,102
19,081
(48,500)
(48,500)
–
–
–
(30,500)
(38,500)
–
673,937
106,912
122,351
118,486
84,330
92,971
737,000
119,385
–
–
20,650
–
–
–
–
–
494,000
200,000
100,921
130,578
82,234
106,602
84,081
–
–
–
–
15,000
NAME
Don Meij
TERM OF
CONTRACT
CONTRACT
COMMENCEMENT
NOTICE TERMINATION
– BY COMPANY
NOTICE TERMINATION
– BY EXECUTIVE
TERMINATION PAYMENT
– AMOUNT EQUAL TO
5 years
8 November 2017
12 months
Richard Coney
Ongoing
16 May 2005
6 months
12 months
6 months
Josh Kilimnik
4 Years
1 January 2021
12 months (year 1)
6 months (years 2-4)
12 months (year 1)
6 months (years 2-4)
Nick Knight
Ongoing
1 October 2012
3 months
Andre Ten Wolde Ongoing
27 June 2020
12 months
Michael Gillespie
Ongoing
15 September 2017
3 months
3 months
6 months
3 months
12 months remuneration
6 months remuneration
12/6 months remuneration
3 months remuneration
12/6 months remuneration
3 months remuneration
The directors believe that the remuneration for each of the Executive KMP is appropriate given their allocated accountabilities, the scale of
the Company’s business and the industry in which the Company operates. The service contracts outline the components of remuneration
paid to the executive directors and Executive KMP but do not prescribe how the remuneration levels are modified year to year.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 105
Directors’ Report
continued
REMUNERATION REPORT (continued)
REMUNERATION OF EXECUTIVE KMP (continued)
TERMS RELATED TO THE MANAGING DIRECTOR/GROUP CEO’S CONTRACT:
• Don Meij, Managing Director/Group CEO, has a contract of employment with Domino’s Pizza Enterprises Limited dated 8 November 2017.
• His contract provides that he may terminate the agreement by giving 12 months written notice.
• He may also resign on 1 month notice if there is a change in control of the Company, and he forms the reasonable opinion that there
have been material changes to the policies, strategies or future plans of the Board and, as a result, he will not be able to implement his
strategy or plans for the development of the Company or its projects.
•
If Don Meij resigns for this reason, then in recognition of his past service to the Company, on the date of termination, in addition to any
payment made to him during the notice period or by the Company in lieu of notice, the Company must pay him an amount equal to the
salary component and superannuation that would have been paid to him in the 12 months after the date of termination.
• A change in control occurs when any shareholder (either alone or together with its associates) having a relevant interest in less than
50% of the issued shares in the Company acquires a relevant interest in 50% or more of the shares on issue at any time in the capital of
the Company or the composition of a majority of the Board changes for a reason other than retirement in the normal course of business
or death.
NON-EXECUTIVE DIRECTOR REMUNERATION
Non-executive directors are remunerated by way of cash fees and superannuation contributions in accordance with the Superannuation
Guarantee legislation. The level of directors’ fees reflects their time commitment and responsibilities in accordance with market standards.
During the reporting period, non-executive directors did not receive any performance-based remuneration or equity-based remuneration.
Non-executive directors are not entitled to receive any termination payments on ceasing to be a director.
Non-executive directors are entitled to be reimbursed for their reasonable expenses incurred in connection with the affairs of the Company.
A non-executive director may also be compensated as determined by the directors if that director performs additional or special duties for
the Company.
The maximum aggregate amount of directors’ fees (which does not include remuneration of executive directors and other non-director services
provided by directors) is $1,400,000 per annum.
Details of the fees associated for the Non-executive Directors roles are set out in the following table.
ROLE
Chairman
Non-executive Director
Audit and Risk Committee
Deputy Chairman
Chairman of the Audit and Risk Committee
Nomination, Culture and Remuneration Committee
Director/Chairman of the NCRC
Non-executive Director
FY21 FEES
$290,531
$175,000
$161,900
$156,425
$140,000
106 // 2021 ANNUA L RE PORT D O MIN O’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
REMUNERATION REPORT (continued)
NON-EXECUTIVE DIRECTOR REMUNERATION (continued)
NON-EXECUTIVE DIRECTOR REMUNERATION FOR FY21
Details of the audited remuneration for FY21 for each Non-executive Director of the Company are set out in the following table:
NON-EXECUTIVE DIRECTORS
Jack Cowin
Ross Adler
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
20211
2021
2020
SHORT-TERM BENEFITS
FEES – DOMINO’S PIZZA
ENTERPRISES LIMITED
FEES
$
268,837
269,528
159,895
170,000
147,854
135,000
127,854
127,854
142,739
127,854
140,000
49,000
15,244
1,002,423
879,236
POST- EMPLOYMENT
BENEFITS
SUPERANNUATION
$
21,694
21,003
15,190
16,150
14,046
12,825
12,146
12,146
13,560
12,146
–
–
1,448
78,084
74,270
1 On 14 May 2021, Tony Peake was appointed to the board.
Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001.
TOTAL
$
290,531
290,531
175,085
186,150
161,900
147,825
140,000
140,000
156,299
140,000
140,000
49,000
16,692
1,080,507
953,506
On behalf of the directors
Jack Cowin
Non-Executive Chairman
17 August 2021
Don Meij
Managing Director/Group Chief Executive Officer
17 August 2021
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 107
Independent Auditor’s Report
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Level 23, Riverside Centre
123 Eagle Street
Brisbane, QLD, 4000
Australia
Phone: +61 7 3308 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of
Domino’s Pizza Enterprises Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Domino’s Pizza Enterprises Limited (the “Entity”) and its
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 27
June 2021, the consolidated statement of profit or loss, the consolidated statement of other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
• Giving a true and fair view of the Group’s financial position as at 27 June 2021 and of their
financial performance for the year then ended; and
• Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Entity, would be in the same terms if given to the directors as at
the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
108 // 2021 ANN UA L RE PO RT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
Independent Auditor’s Report
continued
Key Audit Matter
Carrying Value of Goodwill and
Indefinite Life Intangible Assets in the
German and France/Belgium Cash
Generating Units (CGUs).
As at 27 June 2021, the carrying
value of the of the German CGU
included goodwill of $82.4 million and
indefinite life intangible assets of
$184.8 million. The carrying value of
the France/Belgium CGU included
goodwill of $47.7 million and
indefinite life intangible assets of
$47.9 million, as disclosed in Note
11.
Management is required to exercise
significant judgement in estimating
future cash flows, market growth rates
and discount rates, which are used to
determine the recoverable amount of
the CGUs.
How the scope of our audit responded to the Key Audit
Matter
In conjunction with our valuation experts, our procedures
included, but were not limited to:
• Evaluating the Group’s identification of CGUs
and the allocation of goodwill to the carrying
value of CGUs based on our understanding of
the Group’s business;
• Evaluating the appropriateness of the
methodology applied by management in
calculating the recoverable amounts of the
CGUs;
• Challenging the assumptions used to calculate
the discount rates and recalculating these rates;
• Agreeing the projected cash flows to Board
approved budgets and assessing the cash flows,
expected growth rates and terminal growth
rates against historical performance and
published industry economic data;
•
•
Testing the mathematical accuracy of the
impairment models used to calculate
recoverable amount. We also assessed whether
the impairment models appropriately reflected
the impact of AASB 16 Leases; and
Performing sensitivity analysis on the
recoverable amount of the CGU’s in relation to
the assumed growth rates during the 3 year
budget period, terminal growth rates and
discount rates. Our analysis also included
consideration of the potential impacts of COVID-
19.
We also assessed the appropriateness of the disclosures
included in Note 11 to the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 27 June 2021 but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RP RISES LIMITED. // 1 09
Independent Auditor’s Report
continued
Responsibilities of the Directors for the Financial Report
The directors of the Entity are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
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 has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
110 // 2021 ANNUA L R E PORT D OMI N O’S PIZZA EN TERPRISES LIMIT ED.
Independent Auditor’s Report
continued
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 85 to 107 of the Directors’ Report for
the year ended 27 June 2021.
In our opinion, the Remuneration Report of Domino’s Pizza Enterprises Limited, for the year ended
27 June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Entity are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Matthew Donaldson
Partner
Chartered Accountants
Brisbane, 17 August 2021
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 111
Auditor’s Independence Declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Level 23, Riverside Centre
123 Eagle Street
Brisbane, QLD, 4000
Australia
Phone: +61 7 3308 7000
www.deloitte.com.au
17 August 2021
The Directors
Domino’s Pizza Enterprises Limited
Level 1, KSD1
485 Kingsford Smith Drive
HAMILTON QLD 4007
Dear Directors
Auditor’s Independence Declaration to Domino’s Pizza Enterprises Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Domino’s Pizza Enterprises Limited.
As lead audit partner for the audit of the financial statements of Domino’s Pizza Enterprises Limited for
the financial year ended 27 June 2021, I declare that to the best of my knowledge and belief, there
have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Matthew Donaldson
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
112 // 2021 ANN UA L RE PORT D O MIN O’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Declaration
The directors declare that:
(a)
(b)
(c)
in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
in the directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards, as stated
in the basis of preparation note to the financial statements;
in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including
compliance with accounting standards and giving a true and fair view of the financial position and performance of the Group; and
(d)
the directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the directors
Don Meij
Managing Director/Group Chief Executive Officer
17 August 2021
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 1 13
FINANCIAL
REPORT
2021
FINANCIAL
REPORT
2021
FINANCIAL MANAGEMENT
21 BORROWINGS
22 FINANCIAL ASSETS
23 FINANCIAL LIABILITIES
24 FINANCIAL RISK MANAGEMENT
GROUP STRUCTURE
25 SUBSIDIARIES
26 PARENT ENTITY INFORMATION
27
INVESTMENT IN JOINT VENTURE
UNRECOGNISED ITEMS
28 COMMITMENTS
29 CONTINGENT LIABILITIES
30 SUBSEQUENT EVENTS
OTHER INFORMATION
31 RETIREMENT BENEFIT PLANS
32 KEY MANAGEMENT PERSONNEL COMPENSATION
33 RELATED PARTY TRANSACTIONS
34 REMUNERATION OF AUDITORS
35 OTHER ITEMS
Additional Securities Exchange Information
Glossary
Corporate Directory
160
160
160
163
166
179
179
180
181
182
182
182
184
185
185
187
187
189
189
192
194
195
Financial Report
Consolidated Statement of Profit or Loss
Consolidated Statement of Other Comprehensive Income
Consolidated statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Financial Statements
BASIS OF PREPARATION
KEY NUMBERS
1
2
SEGMENT INFORMATION
REVENUE
3 OTHER GAINS AND LOSSES
4
5
6
7
8
9
FINANCE INCOME
EXPENSES
CASH AND CASH EQUIVALENTS
TAX
ACQUISITION OF BUSINESSES
PROPERTY, PLANT AND EQUIPMENT
10
LEASES
11 GOODWILL AND OTHER INTANGIBLES
12 TRADE, OTHER RECEIVABLES AND OTHER ASSETS
13 TRADE AND OTHER PAYABLES
14 PROVISIONS
15
INVENTORY
CAPITAL
16 EQUITY
17 NON-CONTROLLING INTERESTS
18 DIVIDENDS
19 EARNINGS PER SHARE
20 SHARE-BASED PAYMENTS
117
118
119
120
121
122
122
124
124
126
128
128
128
130
132
135
137
139
142
147
149
149
151
151
151
154
155
155
156
116 // 2021 ANN UA L REPO RT D OMI NO ’S PIZZA ENTERPRISES LIMIT ED.
Consolidated Statement of Profit or Loss
For the year ended 27 June 2021
Continuing operations
Revenue
Other gains and losses
Finance income
Food, equipment and packaging expenses
Employee benefits expense
Plant and equipment costs
Depreciation and amortisation expense
Occupancy expenses
Finance costs
Marketing expenses
Royalties expense
Store related expenses
Communication expenses
Acquisition, integration, conversion, legal settlement and inventory write downs
Other expenses
Profit before tax
Income tax expense
Profit for the period from continuing operations
Profit is attributable to:
Owners of the parent
Non-controlling interests
Total profit for the period
Earnings per share from continuing operations
Basic (cents per share)
Diluted (cents per share)
NOTE
2021
$’000
2020
$’000
2
3
4
5
5
5
5
5
7
19
19
2,199,106
1,905,261
23,372
4,824
(913,085)
(398,317)
(22,405)
(131,849)
(5,446)
(18,593)
21,174
4,777
(772,254)
(356,988)
(23,850)
(125,498)
(4,931)
(19,281)
(210,610)
(179,520)
(93,279)
(28,205)
(32,831)
(6,307)
(93,438)
272,937
(79,794)
193,143
184,011
9,132
193,143
Cents
212.8
211.9
(79,551)
(27,931)
(30,002)
(12,417)
(95,553)
203,436
(60,515)
142,921
138,483
4,438
142,921
Cents
160.9
160.8
The above Statement should be read in conjunction with the accompanying notes.
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 11 7
Consolidated Statement of Other Comprehensive Income
For the year ended 27 June 2021
Profit for the period
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Gain/(loss) on net investment hedge taken to equity
Exchange differences arising on translation of foreign operations
Gain/(loss) on cash flow hedges taken to equity
Income tax relating to components of other comprehensive income
Other comprehensive gain/(loss) for the period, net of tax
Total comprehensive income for the period
Items not to be reclassified to profit or loss
Remeasurement of defined benefit obligation
Income tax relating to components of other comprehensive income
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods
for the period
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the period is attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive income for the year
2021
$’000
193,143
2020
$’000
142,921
5,270
(44,836)
1,791
(2,201)
(39,976)
153,167
(853)
295
(558)
(40,534)
152,609
146,327
6,282
152,609
(1,145)
6,720
1,877
(242)
7,210
150,131
(109)
38
(71)
7,139
150,060
145,781
4,279
150,060
The above Statement should be read in conjunction with the accompanying notes.
118 // 2021 ANN UA L RE PORT D OM IN O’S PIZZA ENTERPRISES LIM ITED.
Consolidated Statement of Financial Position
As at 27 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Current tax assets
Other assets
Investment in lease assets
Total current assets
Non-current assets
Other financial assets
Investment in joint venture
Property, plant and equipment
Deferred tax assets
Goodwill
Intangible assets
Right-of-use assets
Investment in lease assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Borrowings
Other financial liabilities
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Borrowings
Contract liabilities
Lease liabilities
Other financial liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
NOTE
2021
$’000
2020
$’000
6
12
22
15
7
12
10
22
27
9
7
11
11
10
10
13
2
10
21
23
14
7
21
2
10
23
14
7
16
16
16
174,689
145,751
14,391
25,955
1,285
35,142
57,541
245,678
146,462
14,404
27,912
774
38,612
48,557
454,754
522,399
82,476
1,937
274,130
7,818
456,091
385,797
344,911
350,256
1,903,416
2,358,170
353,511
3,105
109,433
-
29,697
14,088
28,988
75,582
2,201
272,837
6,005
492,549
386,705
378,993
333,834
1,948,706
2,471,105
323,618
2,985
105,203
50,195
21,650
12,887
19,121
538,822
535,659
507,375
16,066
651,492
167,089
9,108
69,051
1,420,181
1,959,003
399,167
259,500
(150,329)
289,996
399,167
657,241
14,787
663,049
131,486
10,488
65,022
1,542,073
2,077,732
393,373
235,420
(70,016)
227,969
393,373
The above Statement should be read in conjunction with the accompanying notes.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 119
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120 // 2021 ANNUAL REPO RT DO MI NO’S PIZZA EN TERPRISES LIMIT ED.
Consolidated Statement of Cash Flows
For the year ended 27 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other finance costs
Income taxes paid
Net cash generated from operating activities
6
Cash flows from investing activities
Proceeds from franchisee loans
Payments for intangible assets
Payments for property, plant and equipment
Proceeds from sale of non-current assets
Acquisition of stores net of cash
Acquisition of subsidiaries
Net cash inflow/(outflow) on investment in joint ventures
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issues of equity securities
Proceeds from borrowings
Repayment of borrowings
Payments for establishment of borrowings
Lease principal payments
Receipts from subleases
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on the balance of cash held in foreign currencies
Cash and cash equivalents at the end of the period
6
NOTE
2021
$’000
2020
$’000
2,412,797
2,008,011
(1,974,645)
(1,627,988)
9,451
(17,420)
(55,773)
374,410
39,294
(45,431)
(98,473)
29,688
(23,824)
(1,218)
1,349
9,074
(18,244)
(59,443)
311,410
38,294
(29,404)
(95,878)
13,731
(24,269)
(1,500)
150
(98,615)
(98,876)
20,923
176,207
24,744
261,959
(345,236)
(195,646)
(217)
(112,489)
52,892
(121,984)
(329,904)
(54,109)
245,678
(16,880)
174,689
(30)
(103,863)
45,499
(102,806)
(70,143)
142,391
101,404
1,883
245,678
The above Statement should be read in conjunction with the accompanying notes.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES L IMITED. // 121
Notes to the Financial Statements
BASIS OF PREPARATION
Domino’s Pizza Enterprises Limited (Domino’s) is a for-profit public company limited by shares incorporated and domiciled in Australia whose
shares are publicly traded on the Australian Securities Exchanges and trading under the symbol ‘DMP’. The nature of the operations and
principal activities of Domino’s and its subsidiaries (the Group) are described in the segment information.
The consolidated general purpose financial report of the Group for the year ended 27 June 2021 was authorised for issue in accordance with
a resolution of the directors on 17 August 2021. The directors have the power to amend and reissue the financial report.
The financial report is a general purpose financial report which:
• has been prepared on a going concern basis in accordance with the requirements of the Corporations Act 2001, Australian Accounting
Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and also complies with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);
• has been prepared on a historical cost basis, except for certain financial instruments which have been measured at fair value (refer to
note 24) and equity-settled share-based payments (refer to note 20). The carrying values of recognised assets and liabilities that are the
hedged items in fair value hedge relationships, which are otherwise carried at amortised costs, are adjusted to record changes in the fair
values attributable to the risks that are being hedged;
•
is presented in Australian dollars with all values rounded to the nearest thousand dollars ($’000) unless otherwise stated which is in
accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191;
• presents reclassified comparative information where required for consistency with the current year’s presentation;
• adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the Group and effective
for reporting periods beginning on or before 29 June 2020 as listed in note 35;
• does not early adopt Accounting Standards and Interpretations that have been issued or amended but are not yet effective; and
• accounts for associates and joint ventures using the equity method as listed in note 27.
GOING CONCERN
The financial statements have been prepared on the basis that the Group will continue as a going concern. The Group has a net current
liability position of $84.1 million at 27 June 2021 (28 June 2020: net current liability position $13.3 million).
As at 27 June 2021, the Group had unrestricted cash and cash equivalents of $174.7 million and generated cash flows, excluding the net
repayment of borrowings, of $114.9 million, (2020: $76.1 million). The Group’s capital structure is sustainable with sufficient liquidity, including
undrawn committed facilities of $243.2 million. The Directors have concluded that there are reasonable grounds to believe that the going
concern basis is appropriate, and that assets are likely to be realised, and liabilities are likely to be discharged, at the amounts recognised in
the financials statements in the ordinary course of business.
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Group. A list of controlled entities (subsidiaries) at year-end
is contained in note 25.
Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Group using the acquisition method of accounting described in
note 8. They are deconsolidated from the date that control ceases.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting
policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.
In preparing the consolidated financial statements all inter-company balances and transactions, income and expenses and profits and losses
resulting from intra-Group transactions have been eliminated.
122 // 2021 ANNUA L REPO RT D OMI NO’S PIZZA ENTERPRISES LIMIT ED.
Notes to the Financial Statements
FOREIGN CURRENCY
The functional currency of Domino’s Pizza Enterprises Limited is Australian dollars (‘$’), the functional currencies of overseas subsidiaries are
listed in note 25. As at the reporting date, the assets and liabilities of overseas subsidiaries are translated into Australian dollars at the rate of
exchange ruling at the balance sheet date and the income statements are translated at the average exchange rates for the year. The exchange
differences arising on the retranslation of overseas subsidiaries are taken directly to a separate component of equity.
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when
the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising from the application of these procedures are taken to the income statement, with the exception of differences
on foreign currency borrowings that provide a hedge against a net investment in a foreign entity, which are taken directly to equity until the
disposal of the net investment and are then recognised in the income statement. Tax charges and credits attributable to exchange differences
on those borrowings are also recognised in equity.
GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except:
i.
where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an
asset or as part of an item of expense; or
ii.
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing
activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows.
COMPARATIVE INFORMATION
Comparative amounts have, where necessary and immaterial, been reclassified or adjusted so as to be consistent with current year disclosures.
OTHER ACCOUNTING POLICIES
Significant and other accounting policies that summarise the measurement basis used and are relevant to the understanding of the financial
statements are provided throughout the notes to the financial statements.
KEY JUDGEMENTS AND ESTIMATES
In applying the Group’s accounting policies, the directors are required to make estimates, judgements and assumptions that affect amounts
reported in this Financial Report. The estimates, judgements and assumptions are based on historical experience, adjusted for current market
conditions and other factors that are believed to be reasonable under the circumstances and are reviewed on a regular basis. Actual results
may differ from these estimates.
The estimates and judgements which involve a higher degree of complexity or that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next period are included in the following notes:
NOTE
Note 11
Note 11
Note 11
Note 23
Note 29
KEY JUDGEMENTS AND ESTIMATES
Master Franchise Rights & Franchise Network Assets
Useful Lives of Other Intangible Assets
Recoverable Amount of Cash Generating Units
Germany Put Option Liability
Legal and Regulatory Matters
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; or in
the period and future periods if the revision affects both current and future periods.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 1 23
continued KEY NUMBERS
Key numbers provides a breakdown of individual line items in the financial statements that the directors consider most relevant and summarises
the accounting policies, judgements and estimates relevant to understanding these items.
1
SEGMENT INFORMATION
RECOGNITION AND MEASUREMENT
The consolidated entity has identified its operating segments on the basis of internal reports about components of the consolidated entity that
are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.
Information reported to the consolidated entity’s Chief Executive Officer for the purpose of resource allocation and assessment of performance
is specifically focused on the geographical location the consolidated entity operates in. The consolidated entity’s reportable segments under
AASB 8 are therefore as follows:
• Australia/New Zealand (“ANZ”)
• Europe
•
Japan
The Unallocated segment represents corporate costs associated with the management and oversight of global functions which are shared
by all jurisdictions in which the Group operates.
The Group provides services to and derives revenue from a number of customers. The Group does not derive more than 10% of the total
consolidated revenue from any 1 customer.
UNDERSTANDING THE SEGMENT RESULT
SEGMENT REVENUES AND RESULTS
The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment.
Continuing operations
Revenue
EBITDA
Depreciation & amortisation
EBIT
Net finance costs
Net profit before tax
Continuing operations
Revenue
EBITDA
Depreciation & amortisation
EBIT
Net finance costs
Net profit before tax
YEAR ENDED 27 JUNE 2021
ANZ
$’000
EUROPE
$’000
JAPAN
$’000
UNALLOCATED
$’000
TOTAL
$’000
756,581
153,665
(39,250)
114,415
665,125
123,764
(39,503)
84,261
777,400
163,814
(52,515)
111,299
–
(22,688)
(581)
(23,269)
2,199,106
418,555
(131,849)
286,706
(13,769)
272,937
YEAR ENDED 28 JUNE 2020
ANZ
$’000
EUROPE
$’000
JAPAN
$’000
UNALLOCATED
$’000
TOTAL
$’000
693,382
138,308
(37,851)
100,457
560,117
84,435
(33,586)
50,849
651,762
133,830
(54,061)
79,769
–
(13,135)
–
(13,135)
1,905,261
343,438
(125,498)
217,940
(14,504)
203,436
124 // 2021 ANNUA L R EPO RT D OMI N O’S PIZZA ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements 1
SEGMENT INFORMATION (continued)
Revenue reported above represents revenue generated from external customers and franchisees. There were no inter-segment sales during
the period (2020: Nil).
The accounting policies of the reportable segments are the same as the Group’s policies described throughout the financial report.
Segment net profit before tax represents the profit earned by each segment using the measure reported to the chief operating decision
maker for the purpose of resource allocation and assessment of segment performance.
SEGMENT ASSETS AND LIABILITIES FROM CONTINUING OPERATIONS
The amounts provided to the chief operating decision-makers in respect of total assets and liabilities are measured in a manner consistent
with that of the financial statements.
2021
Continuing operations
ASSETS
$’000
LIABILITIES
$’000
2020
ASSETS
$’000
LIABILITIES
$’000
Continuing operations
Australia/New Zealand
593,402
(760,785)
Australia/New Zealand
653,292
(870,281)
Europe
Japan
844,344
(565,703)
919,688
(630,373)
Europe
Japan
879,657
(561,831)
938,156
(645,620)
Total segment assets/(liabilities)
2,357,434
(1,956,861)
Total segment assets/(liabilities)
2,471,105
(2,077,732)
Unallocated
736
(2,142)
Unallocated
–
–
Consolidated assets/(liabilities)
2,358,170
(1,959,003)
Consolidated assets/(liabilities)
2,471,105
(2,077,732)
OTHER SEGMENT INFORMATION
The non-current assets by geographical location are detailed below;
DEPRECIATION AND
AMORTISATION
ADDITIONS TO
NON-CURRENT ASSETS
NON-CURRENT
ASSETS
2021
$’000
39,250
39,503
52,515
581
131,849
2020
$’000
37,851
33,586
54,061
–
125,498
2021
$’000
51,245
58,156
101,387
-
2020
$’000
43,903
106,408
95,263
–
2021
$’000
443,819
716,283
742,578
736
2020
$’000
467,512
724,470
756,724
–
210,788
245,574
1,903,416
1,948,706
Australia/New Zealand
Europe
Japan
Global
TOTAL
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES L IMITED. // 125
continuedNotes to the Financial Statements 2 REVENUE
RECOGNITION AND MEASUREMENT
Revenue is recognised when or as the performance obligation under the relevant customer contract is completed. Performance obligations
may be completed at a point in time or over time.
SALE OF GOODS
The revenue from the sale of food and beverages is recognised when the performance obligation has been satisfied. The performance
obligation is assessed to be satisfied when control of the goods is passed to the customer (at a point in time).
FRANCHISE REVENUE
Initial fees are recognised as revenue on a straight-line basis over the term of the respective franchise agreement. This is on the basis that
the Group has determined that the services provided in exchange for the initial fees are highly interrelated with the franchise right and are
not individually distinct from the ongoing services provided to the franchisees.
Revenue associated with continuing sales-based royalties and marketing fund royalties is recognised when the related franchisee sale occurs.
The Group considers there to be 1 performance obligation, being the franchise right.
SERVICE REVENUE
The Group provides services to franchisees and other third parties which are carried out in accordance with the contract. Service revenue
is recognised on satisfaction of the performance obligation which is when the services are rendered.
INTEREST INCOME ON FRANCHISEE LOANS AND CASH AND CASH EQUIVALENTS
Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured
reliably. Interest is determined using the effective interest rate method, which accrues interest on a time basis, with reference to the principal
outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount on initial recognition.
Revenue type
Revenue from sale of goods
Revenue from rendering of services
Interest income
Total
Timing of revenue recognition
At a point in time
Over time
Total
YEAR ENDED 27 JUNE 2021
ANZ
$’000
EUROPE
$’000
JAPAN
$’000
TOTAL
$’000
540,815
213,032
2,734
472,236
192,673
216
682,559
1,695,610
93,164
1,677
498,869
4,627
756,581
665,125
777,400
2,199,106
565,442
191,139
756,581
487,096
178,029
665,125
688,998
1,741,536
88,402
457,570
777,400
2,199,106
126 // 2021 ANNUA L RE PO RT DO MI NO’S PIZZA EN TERPRISES LIMIT ED.
continuedNotes to the Financial Statements 2 REVENUE (continued)
Revenue type
Revenue from sale of goods
Revenue from rendering of services
Interest income
Total
Timing of revenue recognition
At a point in time
Over time
Total
CONTRACT LIABILITIES
YEAR ENDED 28 JUNE 2020
ANZ
$’000
EUROPE
$’000
JAPAN
$’000
TOTAL
$’000
479,968
210,721
2,693
693,382
513,298
180,084
693,382
403,334
156,491
292
560,117
413,487
146,630
560,117
581,603
1,464,905
68,847
1,312
436,059
4,297
651,762
1,905,261
590,862
60,900
651,762
1,517,647
387,614
1,905,261
Contract liabilities consist of deferred franchise fees. The Group’s franchise agreements typically require certain one-off fees. These fees include
initial fees paid upon executing a franchise agreement, renewal of the franchise right and fees paid in the event the franchise agreement is
transferred to another franchisee (collectively termed initial fees). The Group has determined that the initial fees are highly interrelated with the
franchise right and are not individually distinct from the ongoing services provided to the franchisees. As a result, initial fees are recognised
as revenue over the term of each respective franchise agreement; which generally ranges from a 5 to 10 year period. Revenue from these
initial franchise fees are recognised overtime on straight-line basis which is determined with reference to the franchisee’s right to use and
access and benefit from the intellectual property.
The Group has recognised the following deferred franchise fees:
Contract liabilities
Within 1 year
More than 1 year
Total
2021
$’000
3,105
16,066
19,171
2020
$’000
2,985
14,787
17,772
Contract liabilities at the beginning of the period was $17.8 million (2020: $18.7 million). The Group recognised $3.7 million (2020: $3.8 million)
of revenue related to contract liabilities. Management expects to recognise $3.1 million (2020: $3.0 million) related to deferred franchise fees
during the next financial year.
The Group has applied the sales-based royalty exemption which permits exclusion of variable consideration in the form of sales-based royalties
from the disclosure of remaining performance obligations.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 127
continuedNotes to the Financial Statements 3 OTHER GAINS AND LOSSES
Net gain on disposal of property, plant & equipment, goodwill and other non-current assets
Total other gains and losses
2021
$’000
23,372
23,372
2020
$’000
21,174
21,174
No other gains or losses have been recognised in respect of loans and receivables other than as disclosed in note 2 and impairment losses
recognised/reversed in respect of trade and other receivables (see note 12).
4 FINANCE INCOME
Finance income
Total finance income
2021
$’000
4,824
4,824
2020
$’000
4,777
4,777
Finance income relates to interest income on investment in lease assets. Refer to note 10.
5 EXPENSES
RECOGNITION AND MEASUREMENT
EMPLOYEE BENEFITS
The Group’s accounting policy for liabilities associated with employee benefits is set out in note 14. The policy relating to share-based
payments is set out in note 20.
The majority of employees in Australia and New Zealand are party to defined contribution schemes and fixed contributions from Group
companies and the Group’s legal or constructive obligation is limited to these contributions. Contributions to defined contribution funds are
recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a
reduction in the future payment is available.
OCCUPANCY EXPENSES
Occupancy expenses relate to non-lease components of lease contracts and are recognised as an expense when they are incurred.
DEPRECIATION AND AMORTISATION
Refer to notes 9, 10 and 11 for details on depreciation and amortisation.
FINANCE COSTS
Finance costs are recognised as an expense when they are incurred, except for interest charges attributable to major projects with substantial
development and construction phases that are capitalised.
Provisions and other payables are discounted to their present value when the effect of the time value of money is significant. The impact of
the unwinding of these discounts and any changes to the discounting is shown as a discount rate adjustment in finance costs.
128 // 2 021 ANNUA L RE PO RT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 5 EXPENSES (continued)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS
Profit for the year from continuing operations was arrived at after charging (crediting):
Remuneration, bonuses and on-costs
Defined contribution plans
Defined benefit plans
Share-based payments expense
Employee benefits expenses
Equipment operating costs
Expenses relating to leases of low value assets
Plant and equipment costs
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Amortisation of other assets
Depreciation and amortisation expense
Non-lease component occupancy expenses
Occupancy expenses
Interest on commercial bills and loans
Amortisation of borrowing costs
Interest expense on lease liabilities
Finance costs
NOTE
31
2021
$’000
378,858
13,848
1,217
4,394
2020
$’000
341,307
13,085
1,051
1,545
398,317
356,988
19,347
3,058
22,405
46,762
58,732
25,923
432
131,849
5,446
5,446
9,509
937
8,147
18,593
20,891
2,959
23,850
44,441
57,373
23,122
562
125,498
4,931
4,931
11,231
1,077
6,973
19,281
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 129
continuedNotes to the Financial Statements 6 CASH AND CASH EQUIVALENTS
RECOGNITION AND MEASUREMENT
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible
to known amounts of cash, which are subject to an insignificant risk of changes in value and have a maturity of 3 months or less from date of
inception. Bank overdrafts are shown within borrowings in current liabilities in the consolidated statement of financial position.
For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and in banks net of outstanding bank
overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the
related items in the statement of financial position as follows:
2021
$’000
174,689
174,689
2020
$’000
245,678
245,678
2021
$’000
193,143
(22,999)
4,394
131,849
(24)
937
8,811
316,111
817
(2,446)
(41)
43,753
712
10,848
4,656
374,410
2020
$’000
142,921
(21,270)
1,545
125,498
378
1,077
(1,559)
248,590
(51,896)
(5,632)
(12,875)
134,052
2,018
(6,041)
3,194
311,410
Cash and cash equivalents
RECONCILIATION OF PROFIT FOR THE PERIOD TO NET CASH FLOWS
FROM OPERATING ACTIVITIES
Profit for the period
Profit on sale of non-current assets
Equity settled share-based payments
Depreciation and amortisation
Share of joint venture entities net (profit)/loss
Amortisation of loan establishment costs
Other
Movement in working capital
(Increase)/decrease in assets:
Trade and other receivables
Inventory
Other current assets
Increase/(decrease) in liabilities:
Trade and other payables
Provisions
Current tax assets and liabilities
Deferred tax balances
Net cash generated from operating activities
130 // 2021 ANNUA L RE PO RT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 6 CASH AND CASH EQUIVALENTS (continued)
NET DEBT RECONCILIATION
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
Cash and cash equivalents
Borrowings – repayable within 1 year
Borrowings – repayable after 1 year
Net debt
Cash and cash equivalents
Gross debt–fixed interest rates
Gross debt–variable interest rates
Net debt
2021
$’000
2020
$’000
174,689
245,678
–
(50,195)
(508,485)
(659,057)
(333,796)
(463,574)
174,689
245,678
(373,243)
(428,982)
(135,242)
(280,270)
(333,796)
(463,574)
Balances as at 1 July 2019
Changes in accounting standards
Cash flows
Finance lease additions
Foreign exchange adjustments
FINANCE
LEASES DUE
WITHIN 1 YEAR
$’000
FINANCE
LEASES DUE
AFTER 1 YEAR
$’000
BORROWINGS
DUE WITHIN
1 YEAR
$’000
BORROWINGS
DUE AFTER
1 YEAR
$’000
TOTAL
$’000
(5,373)
(97,838)
–
(1,099)
(893)
(11,259)
(616,630)
103,863
(133,587)
(5,436)
–
–
(637,681)
(552,909)
–
(714,468)
(50,195)
(16,118)
179,941
–
–
–
(134,686)
(5,258)
(9,704)
CASH
$’000
101,404
–
142,391
–
1,883
Balances as at 28 June 2020
245,678
(105,203)
(663,049)
(50,195)
(659,057)
(1,231,826)
LEASE
LIABILITIES
DUE WITHIN
1 YEAR
$’000
LEASES
LIABILITIES
DUE AFTER
1 YEAR
$’000
CASH
$’000
BORROWINGS
DUE WITHIN
1 YEAR
$’000
BORROWINGS
DUE AFTER
1 YEAR
$’000
TOTAL
$’000
Balances as at 28 June 2020
245,678
(105,203)
(663,049)
(50,195)
(659,057)
(1,231,826)
Cash flows
(54,109)
–
112,489
50,195
118,834
227,409
Lease liabilities additions
–
(10,526)
(140,615)
Foreign exchange adjustments
(16,880)
6,296
39,683
Balances as at 27 June 2021
174,689
(109,433)
(651,492)
–
–
–
–
(151,141)
31,738
60,837
(508,485)
(1,094,721)
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 1 31
continuedNotes to the Financial Statements 7 TAX
RECOGNITION AND MEASUREMENT
Income tax expense represents the sum of the tax currently payable and deferred tax.
CURRENT TAXES
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities at the tax rates
and tax laws enacted or substantively enacted by the balance sheet date in respective jurisdictions.
DEFERRED TAXES
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary
differences, carried forward unused tax assets and unused tax losses, to the extent that it is probable that taxable profits will be available to
utilise them.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the
asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided on temporary differences at balance sheet date between accounting carrying amounts and the tax bases
of assets and liabilities, other than for the following:
• where they arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
• where taxable temporary differences relate to investments in subsidiaries, associates and interests in joint ventures:
Deferred tax liabilities are not recognised if the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are not recognised if it is not probable that the temporary differences will reverse in the foreseeable future and taxable
profit will not be available to utilise the temporary differences.
Deferred tax liabilities are not recognised on the recognition of goodwill.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
OFFSETTING DEFERRED TAX BALANCES
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
UNRECOGNISED TAXABLE TEMPORARY DIFFERENCES ASSOCIATED WITH INVESTMENTS AND INTERESTS
At the end of the financial year, an aggregate deferred tax liability of $99,264 thousand (2020: $98,721 thousand) was not recognised in
relation to investments in subsidiaries as the parent Company is able to control the timing of the reversal of the temporary differences and it
is not probable that the temporary difference will reverse in the foreseeable future.
132 // 2021 ANNUA L R EP ORT D OM IN O’S PIZZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 7 TAX (continued)
INCOME TAX RECOGNISED IN THE PROFIT OR LOSS
Tax expense comprises:
Current tax expense in respect of the current year
Adjustments recognised in the current year in relation to the current tax of prior years
Deferred tax expense/(income) relating to the origination and reversal of temporary differences
Deferred tax expense/(income) relating to the origination in relation to change in tax rate in other jurisdiction
Total tax expense relating to continuing operations
RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX RATE:
Profit before tax from continuing operations
Income tax expense calculated at 30%
Non-assessable/(non-deductible) amounts
Effect of tax concessions (research and development and other allowances)
Adjustments recognised in the current year in relation to the current tax of prior year
Adjustments recognised in the current year in relation to the deferred tax of prior year
Effect of different tax rates of subsidiaries operating in other jurisdictions
Effect of change in tax rate in other jurisdictions
Income tax expense recognised in profit or loss
2021
$’000
2020
$’000
73,725
39
73,764
8,400
(2,370)
79,794
55,351
817
56,168
4,930
(583)
60,515
2021
$’000
2020
$’000
272,937
203,436
81,881
1,238
(2,843)
(210)
66
2,032
(2,370)
79,794
61,031
537
(2,587)
707
(345)
1,755
(583)
60,515
The tax rate used for the 2021 and 2020 reconciliation above is the corporate tax rate of 30% payable by Australian corporate entities on
taxable profits under Australian tax law.
INCOME TAX RECOGNISED IN EQUITY
Arising on income and expenses in other comprehensive income:
(Gain)/Loss on hedges taken to equity
(Gain)/Loss on defined benefit plan taken to equity
Share option trust
Total
2021
$’000
2020
$’000
(2,201)
295
3,353
1,447
(242)
38
1,282
1,078
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 133
continuedNotes to the Financial Statements 2021
$’000
1,285
1,285
(28,988)
(28,988)
2020
$’000
774
774
(19,121)
(19,121)
OPENING
BALANCE
$’000
CHARGED
TO P&L
$’000
CHARGED TO
EQUITY
$’000
EXCHANGE
DIFFERENCE
$’000
CLOSING
BALANCE
$’000
205
(3,288)
(89,590)
10,483
667
5,959
619
3,761
2,678
(65,218)
6,201
(59,017)
1,027
(885)
(11)
631
952
1,003
535
(36)
-
-
295
-
(2,201)
3,353
-
-
277
3,584
(964)
(52)
(55)
–
(93)
(211)
(2,806)
(84,979)
8,929
604
4,334
4,924
4,671
3,002
1,447
2,486
(61,321)
(5,994)
(6,030)
-
1,447
(119)
2,367
88
(61,233)
7,818
(69,051)
(61,233)
7 TAX (continued)
CURRENT TAX ASSETS AND LIABILITIES
Current tax assets
Income tax refund receivable
Current tax liabilities
Income tax payable
DEFERRED TAX BALANCES
2021
Temporary differences
Property, plant & equipment
Intangible assets
Provision for employee entitlements
Doubtful debts
Other financial liabilities
Options reserve
Unearned income
Other
Unused tax losses and credits
Tax losses
Deferred tax asset
Deferred tax liability
134 // 2021 ANNUA L R E PORT D O MIN O ’S PIZZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 7 TAX (continued)
2020
Temporary differences
OPENING
BALANCE
$’000
RESTATED
OPENING
BALANCE1
$’000
CHARGED
TO P&L
$’000
CHARGED TO
EQUITY
$’000
EXCHANGE
DIFFERENCE
$’000
CLOSING
BALANCE
$’000
Property, plant & equipment
396
396
Intangible assets
(88,023)
(88,023)
Provision for employee entitlements
Doubtful debts
Other financial liabilities
Options reserve
Unearned income
Other
Unused tax losses and credits
Tax losses
Deferred tax asset
Deferred tax liability
7,259
848
3,146
–
4,829
2,859
7,259
848
5,522
–
4,829
2,504
(68,686)
(66,665)
11,216
(57,470)
11,216
(55,449)
(168)
(982)
3,115
(199)
637
(663)
(1,086)
140
794
(5,139)
(4,345)
–
–
38
–
(242)
1,282
–
–
(23)
(585)
205
(89,590)
71
18
42
–
18
34
10,483
667
5,959
619
3,761
2,678
1,078
(425)
(65,218)
–
1,078
124
(301)
6,201
(59,017)
6,005
(65,022)
(59,017)
1
The Group adopted the modified retrospective approach to the implementation of AASB 16. A transition adjustment has been recognised on transition at
01 July 2019, without adjustment of the comparative. The Group has recognised a deferred tax asset of $2,021 thousand as at 01 July 2019 relating to the
adoption of AASB 16.
8 ACQUISITION OF BUSINESSES
RECOGNITION AND MEASUREMENT
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured
at the aggregate of the fair values (at the date of exchange) of assets acquired, liabilities incurred or assumed, and equity instruments issued
by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree,
and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable
assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or
loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in
the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised
amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types
of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another Standard.
Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent
consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the
contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against
goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’
(which cannot exceed 1 year from the acquisition date) about facts and circumstances that existed at the acquisition date.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 1 35
continuedNotes to the Financial Statements 8 ACQUISITION OF BUSINESSES (continued)
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments
depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at
subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset
or liability is remeasured at subsequent reporting dates in accordance with AASB 9, with the corresponding gain or loss being recognised
in the statement of profit or loss.
Where a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to its acquisition
date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment
would be appropriate if that interest were disposed of.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in
accordance with AASB 112 Income Taxes and AASB 119 Employee Benefits respectively;
•
liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in
accordance with AASB 2 Share-based Payment; and
• assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued
Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during
the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and
circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
circumstances that existed as of the acquisition date and is subject to a maximum of 1 year.
CURRENT YEAR ACQUISITIONS
ACQUISITION OF DOMINO’S PIZZA TAIWAN
On 11 June 2021, the Company announced that it has entered into a binding agreement for the acquisition of PizzaVest Company Limited
(“Domino’s Taiwan”).
The purchase price of Domino’s Taiwan was for NT$1.7 billion (c. A$79 million) on a cash and debt free basis. The acquisition did not complete
as at 17 August 2021; therefore no amounts have been recognised in relation to identifiable assets acquired and liabilities assumed in the
transactions described.
ACQUISITION OF DOMINO’S PIZZA STORES AND OTHER BUSINESSES
During the year the Group acquired a number of Domino’s Pizza branded stores from former and current franchisees. The below provides a
summary of these acquisitions during the year by segment:
2021
Number of stores acquired
Fair value on acquisition
Inventories
Property, plant & equipment
Other intangible assets
Total identifiable net assets
Cash consideration
Less fair value of net identifiable assets
Goodwill
136 // 2021 ANNUA L RE PO RT DO MI N O’S PIZ ZA ENTERPRISES LIMITED.
ANZ
32
EUROPE
JAPAN
10
4
ANZ
$’000
EUROPE
$’000
JAPAN
$’000
253
4,207
–
4,460
19,879
(4,460)
15,419
–
1,282
11
1,293
2,644
(1,293)
1,351
–
364
–
364
364
(364)
–
TOTAL
46
TOTAL
$’000
253
5,853
11
6,117
22,887
(6,117)
16,770
continuedNotes to the Financial Statements 8 ACQUISITION OF BUSINESSES (continued)
Goodwill arising on acquisition of stores in Europe is expected to be deductible for tax purposes. For the other jurisdictions, Goodwill arising
on acquisitions is not deductible for tax purposes.
The cost of acquisitions comprise cash for all of the acquisitions. In each acquisition, the Group has paid a premium for the acquiree as it
believes the acquisitions will introduce additional synergies to its existing operations.
Goodwill arose in the business combination as the consideration paid included a premium. In addition, the consideration paid for the stores
effectively included amounts in relation to benefits from expected synergies, revenue growth and future market development. These benefits
are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured.
PRIOR YEAR ACQUISITIONS
ACQUISITION OF DOMINO’S PIZZA STORES AND OTHER BUSINESSES
During the prior year the Group acquired a number of Domino’s Pizza branded stores from former and current franchisees. The below provides
a summary of these acquisitions during the prior year by segment:
2020
Number of stores acquired
Fair value on acquisition
Inventories
Property, plant & equipment
Other intangible assets
Total identifiable net assets
Cash consideration
Less fair value of net identifiable assets
Goodwill
ANZ
14
EUROPE
JAPAN
33
9
ANZ
$’000
EUROPE
$’000
JAPAN
$’000
68
1,643
–
1,711
7,493
(1,711)
5,782
–
5,191
1,655
6,846
15,911
(6,846)
9,065
–
865
–
865
865
(865)
–
TOTAL
56
TOTAL
$’000
68
7,699
1,655
9,422
24,269
(9,422)
14,847
9 PROPERTY, PLANT AND EQUIPMENT
RECOGNITION AND MEASUREMENT
The carrying value of property plant and equipment is stated at cost less accumulated depreciation and impairment. Cost includes expenditure
that is directly attributable to the acquisition of an item.
DEPRECIATION AND AMORTISATION
Items of property, plant and equipment are depreciated on a straight-line basis over their useful lives. The estimated useful life of plant and
equipment is between 1 and 10 years and equipment under finance lease is between 3 and 10 years.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, with the effect
of any changes recognised on a prospective basis. Assets held under finance leases are depreciated over their expected useful lives on the
same basis as owned assets or, where shorter, the term of the relevant lease.
DERECOGNITION
An item of property, plant and equipment is derecognised when it is sold or otherwise disposed of, or when its use is expected to bring no
future economic benefits. Any gain or loss from derecognising the asset, being the difference between the proceeds of disposal and the
carrying amount of the asset, is included in the income statement in the period the item is derecognised.
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 1 37
continuedNotes to the Financial Statements 9 PROPERTY, PLANT AND EQUIPMENT (continued)
IMPAIRMENT
At the end of each reporting period, the Group reviews the carrying amounts of its property plant and equipment assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable
and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they
are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the
asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the
relevant asset is carried at the revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing the value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is
treated as a revaluation increase.
Year ended 27 June 2021
Cost or fair value
Accumulated depreciation
Net carrying amount
Movement
Opening net book amount
Additions
Acquisitions of Domino’s Pizza stores and other businesses
Disposals and write-offs
Depreciation charge
Other including foreign exchange movements
Net carrying amount at the end of the year
PLANT & EQUIPMENT
AT COST
$’000
EQUIPMENT UNDER
FINANCE LEASE
AT COST1
$’000
432,304
(158,174)
274,130
272,837
98,473
5,853
(37,010)
(46,762)
(19,261)
274,130
–
–
–
–
–
–
–
–
–
–
TOTAL
$’000
432,304
(158,174)
274,130
272,837
98,473
5,853
(37,010)
(46,762)
(19,261)
274,130
138 // 2021 ANNUA L RE PO RT DO MI NO’S PIZZA EN TERPRISES LIMIT ED.
continuedNotes to the Financial Statements 9 PROPERTY, PLANT AND EQUIPMENT (continued)
Year ended 28 June 2020
Cost or fair value
Accumulated depreciation
Net carrying amount
Movement
Opening net book amount
Change in accounting policy
Additions
Acquisitions of Domino’s Pizza stores and other businesses
Disposals and write-offs
Depreciation charge
Other including foreign exchange movements
Net carrying amount at the end of the year
PLANT & EQUIPMENT
AT COST
$’000
EQUIPMENT UNDER
FINANCE LEASE
AT COST1
$’000
410,526
(137,689)
272,837
236,481
–
95,878
7,699
(25,037)
(44,441)
2,257
272,837
–
–
–
16,655
(16,655)
–
–
–
–
–
–
TOTAL
$’000
410,526
(137,689)
272,837
253,136
(16,655)
95,878
7,699
(25,037)
(44,441)
2,257
272,837
1 Due to adoption of AASB 16 Leases in prior period, on adoption, Equipment under Finance Lease at Cost was reclassified to Right of Use Asset. Refer to
note 10.
There was no depreciation during the period that was capitalised as part of the cost of other assets.
10 LEASES
GROUP AS A LESSEE
The Group has lease contracts for various properties and equipment; including trucks and car equipment which is utilised in its operations.
Leases of properties generally have lease terms of between 2 and 21 years, while operating equipment generally have lease terms between
2 and 7 years. The Group’s obligations under its leases are secured by the lessor’s title to the lease assets. The lease contracts include
extension and termination options, which are further discussed below.
For these properties, a right of use asset and associated liability is recognised. Leased trucks and cars are primarily Group branded vehicles
utilised by Domino’s branded stores. The financial liability is measured at the net present value of future payments under the lease, including
optional renewal periods, where the Group has assessed that the probability of exercising the renewal is reasonably certain.
The right of use asset has been measured, at either (a) the value of lease liability adjusted for any prepaid or accrued lease payments; or
(b) present value of committed lease payment since commencement of the lease term (this approach resulted in an adjustment to opening
retained earnings).
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group’s incremental
borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value in
a similar economic environment with similar terms and conditions.
The right of use assets are depreciated on a straight-line basis over the lease term; which is inclusive of extension option periods where the
Group is reasonably certain the lease term will be extended. The lease terms range from 1 to 7 years for equipment (trucks and cars) leases
and 2 to 21 years for property leases.
The Group also has certain leases of equipment with lease terms of 12 months or less and leases of office equipment with low value. The Group
applies the ‘short-term lease’ and ‘lease of low value assets’ recognition exemptions for these leases. The costs associated with the lease
exemption is disclosed in Note 5.
At the end of each reporting period, the Group reviews the carrying amount of its right of use assets to determine whether there is any
indication that those assets have suffered an impairment loss. Refer to Note 9 which outlines Group’s accounting policy in regard to
impairment assessment.
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 139
continuedNotes to the Financial Statements 10 LEASES (continued)
Set out below are the carrying amounts of the right-of-use assets recognised and movements during the year:
As at 29 June 2020
Net additions(1)
Depreciation expense
Other including foreign exchange movement
As at 27 June 2021
As at 01 July 2019
Net additions
Depreciation expense
Other including foreign exchange movement
As at 28 June 2020
PROPERTIES
$’000
EQUIPMENT
$’000
TOTAL
$’000
349,949
48,948
(52,361)
(28,706)
317,830
311,473
85,021
(47,706)
1,161
29,044
378,993
7,607
(6,371)
(3,199)
27,081
25,980
12,346
(9,667)
385
56,555
(58,732)
(31,905)
344,911
337,453
97,367
(57,373)
1,546
349,949
29,044
378,993
(1) Additions include net movement between right-of-use assets and investment in lease assets which arises due to the Company’s occupied-operated
properties becoming franchised.
Set out below are the carrying amounts of lease liabilities and the movements during the period:
As at 28 June 2020
Additions
Accretion of interest
Payments
2021
$’000
768,252
As at 01 July 2019
151,141
8,147
Additions
Accretion of interest
(120,636)
Payments
Other including foreign exchange movement
As at 27 June 2021
Current
Non-current
Total lease liabilities
(45,979)
760,925
109,433
651,492
760,925
Other including foreign exchange movement
As at 28 June 2020
Current
Non-current
Total lease liabilities
2020
$’000
731,099
134,686
6,973
(110,836)
6,330
768,252
105,203
663,049
768,252
The maturity analysis of lease liabilities is disclosed in note 24.
The amounts recognised in the profit and loss for the year are disclosed in note 4 and note 5.
The future cash outflows relating to leases that have not yet commenced are disclosed in note 28.
The average effective interest rate contracted is approximately 1.07% (2020: 0.94%) per annum.
The Group has not recognised any variable payments in its finance lease arrangements.
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide
flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Management exercises significant judgement in
determining whether these extension and termination options are reasonably certain to be exercised.
140 // 2021 ANNUA L RE PORT DO MIN O’S PIZ ZA ENTERPRISES LIMITED.
continuedNotes to the Financial Statements 10 LEASES (continued)
GROUP AS A LESSOR
The Group has a portfolio of long-term (greater than 1 year) ‘back-to-back’ property leases which secure competitive store locations on behalf
of franchisees. Cash flows under these arrangements substantially offset each other.
These leases have terms of between 2 and 21 years. Leases include a clause to enable upward revision of the rental charge on an annual
basis according to prevailing market conditions.
For back-to-back leases, a financial asset and financial liability is recognised, representing the present value of future cash flows receivable
on the subleases and payable on the head lease respectively. Both categories of financial instruments generate interest income and expense,
which materially offset within the income statement.
The financial assets recognised in relation to back-to-back leases have been recognised as “Investment in lease assets” in the Statement
of Financial Position. The receipts from these back-to-back leases are included in “Receipts from subleases” in the Statement of Cash Flows
within the financing activities.
Set out below are the carrying amounts of investment in lease assets and the movements during the period:
As at 28 June 2020
Net additions
Accretion of interest
Receipts
Other including foreign exchange movement
Total
Current
Non-current
Total investment in lease assets
2021
$’000
382,391
92,896
4,824
(57,716)
(14,598)
407,797
57,541
350,256
407,797
As at 01 July 2019
Net additions
Accretion of interest
Receipts
Other including foreign exchange movement
Total
Current
Non-current
Total investment in lease assets
Future minimum rentals receivable under non-cancellable operating leases as at end of the year are as follows:
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards
Undiscounted lease payments
Less: unearned finance income
Net investment in leases
Current
Non-Current
2021
$’000
63,353
62,574
61,759
56,420
50,312
135,090
429,508
(21,711)
407,797
57,541
350,256
407,797
2020
$’000
385,679
40,393
4,777
(50,276)
1,818
382,391
48,557
333,834
382,391
2020
$’000
53,426
53,394
52,715
51,964
49,127
145,189
405,815
(23,424)
382,391
48,557
333,834
382,391
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 141
continuedNotes to the Financial Statements 10 LEASES (continued)
EXTENSION AND TERMINATION OPTIONS
Extension and termination options are included in a number of property and equipment lease agreements across the Group. These options
provide operational flexibility in managing the lease portfolio.
The Group applies criteria to assess whether the exercise of extension options within lease contracts is reasonably certain, including
consideration of tenure at existing location, the remaining useful life of the store, plant and equipment, remaining term of sub-franchise
agreements (where applicable) and alignment to the assumptions used in the Group’s short to mid-term planning process. Future cash outflows
in respect of leases may differ from leases liabilities recognised due to future decisions that may be taken by the Group that will determine
whether the options are exercised in respect of the use of leased assets. There is no exposure to these potential additional payments in
excess of the recognised lease liabilities until these decisions have been taken by the Group.
The majority of the Group’s property leases have option periods or are able to be extended beyond the initial lease term which is at the
Group’s (lessee) discretion. Lease option periods are typically for fixed terms of between 1 to 10 years.
11 GOODWILL AND OTHER INTANGIBLES
RECOGNITION AND MEASUREMENT
GOODWILL
Goodwill acquired in a business combination is initially measured at cost. Cost is measured as the cost of the business combination minus
the net fair value of the acquired and identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured
at cost less any accumulated impairment losses.
INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is their fair value at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less amortisation and any impairment losses. Intangible assets with finite lives
are amortised on a straight-line basis over their useful lives and tested for impairment whenever there is an indication that they may be impaired.
Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are
reviewed at the end of each annual reporting period, with the effect of any changes in estimates being accounted for on a prospective basis.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if,
and only if, all of the following have been demonstrated:
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
•
•
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when
the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised,
development expenditure is recognised in profit or loss in the period in which it is incurred.
The following useful lives are used in the calculation of amortisation:
• Capitalised development intangibles
2–10 years
• Licenses and other
2–10 years
Intangible assets with indefinite lives or not yet available for use are tested for impairment. Assets with an assumed indefinite useful life
are reviewed at each reporting period to determine whether this assumption continues to be appropriate. If not, it is changed to a finite life
intangible asset and amortised over its remaining useful life.
142 // 2021 ANNUA L R E PORT D O MIN O’S PIZ ZA ENTERPRISES LIMITED.
continuedNotes to the Financial Statements 11 GOODWILL AND OTHER INTANGIBLES (continued)
IMPAIRMENT
The Group tests intangibles and goodwill for impairment:
• at least annually for indefinite life intangibles and not yet ready for use and goodwill; and
• where there is an indication that the asset may be impaired, which is assessed at least each reporting period; or
• where there is an indication that previously recognised impairment, on assets other than goodwill, may have changed.
If the asset does not generate independent cash inflows and its value in use cannot be estimated to be close to its fair value, the asset is
tested for impairment as part of the cash generating unit (CGU) to which it belongs.
Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or CGU is determined as
the higher of its fair value less costs of disposal (FVLCOD) or value in use (VIU). An impairment loss recognised for goodwill is not reversed
in subsequent periods.
IMPAIRMENT CALCULATIONS
In assessing VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or CGU. In determining FVLCOD, a discounted cash flow
model is used based on a methodology consistent with that applied by the Group in determining the value of potential acquisition targets,
maximising the use of market observed inputs. These calculations, classified as Level 3 on the fair value hierarchy, are compared to valuation
multiples or other fair value indicators where available to ensure reasonableness.
INPUTS TO IMPAIRMENT CALCULATIONS
For VIU calculations, cash flow projections are based on corporate plans and business forecasts prepared by management and approved
by the Board. The corporate plans are developed annually with a 3-year outlook.
On determining FVLCOD, the valuation model incorporates the cash flows projected over the duration of the current corporate plan period.
These projections are discounted using a risk adjusted discount rate commensurate with a typical market participant’s assessment of the risk
associated with the projected cash flows.
For both the VIU and FVLCOD models, cash flows beyond the corporate plan period are extrapolated using estimated growth rates,
which are based on Group estimates, taking into consideration historical performance as well as expected long-term operating conditions.
Growth rates do not exceed the consensus forecasts of the long-term average rate for the industry in which the CGU operates.
Discount rates used in both calculations are based on the weighted average cost of capital determined by prevailing or benchmarked market
inputs, risk adjusted where necessary. Other assumptions are determined with reference to external sources of information and use consistent,
reasonable estimates for variables such as terminal cash flow multiples. Increases in discount rates or changes in other key assumptions,
such as operating conditions or financial performance, may cause the recoverable amounts to reduce.
RECOGNISED IMPAIRMENT
There was no impairment recognised during the 2021 financial year (2020: nil).
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 1 43
continuedNotes to the Financial Statements 11 GOODWILL AND OTHER INTANGIBLES (continued)
ESTIMATES AND JUDGEMENTS – OTHER INTANGIBLES
MASTER FRANCHISE RIGHTS & FRANCHISE NETWORK ASSETS
Management has determined that the Master Franchise Rights (‘MFA’) relating to Domino’s Pizza Germany and the Franchise Network Assets
(‘FNAs’) arising on the acquisition of Hallo Pizza, Joey’s Pizza and Pizza Sprint are to be treated as indefinite life intangible assets (2021: $44.4m,
2020: $31.7m). In addition, the same treatment has been applied to the MFA and associated franchise agreements recognised on the acquisition
of Domino’s Pizza Japan (2021: $41.3m, 2020: $47.1m). This judgement is based on the sufficiency of available evidence supporting the ability
of the Group to renew the underlying agreements beyond their initial terms without incurring significant cost.
The liability associated with the Franchise Network Assets for Germany is valued using a multi-period excess earnings method income
approach taking into account forecast revenue and EBITDA margin with a discount rate applied. These inputs are not observable therefore
the liability is considered a Level 3 in the hierarchy of fair value as disclosed in note 24.
USEFUL LIVES OF OTHER INTANGIBLES
Management uses their judgement to assess the useful lives of capitalised development intangibles and licenses. This is based on the
estimated life of the asset and future economic benefits of the asset. The majority of these assets have a life of between 2–10 years.
Year ended 27 June 2021
Cost
Accumulated amortisation and impairment
Net carrying amount
Movement
Net carrying amount at the beginning of the year
Acquisitions of Domino’s Pizza stores and other businesses
Disposals
Other including foreign exchange movement
Net carrying amount at the end of the year
Year ended 28 June 2020
Cost
Accumulated amortisation and impairment
Net carrying amount
Movement
Net carrying amount at the beginning of the year
Acquisitions of Domino’s Pizza stores and other businesses
Disposals
Other including foreign exchange movement
Net carrying amount at the end of the year
144 // 2021 ANNUA L REPO RT D OM IN O’S PIZZA ENTERPRISES LIMIT ED.
GOODWILL
$’000
456,091
–
456,091
492,549
16,770
(13,344)
(39,884)
456,091
492,549
–
492,549
475,005
14,847
(4,304)
7,001
492,549
continuedNotes to the Financial Statements 11 GOODWILL AND OTHER INTANGIBLES (continued)
Year ended 27 June 2021
Cost
FINITE LIFE
INDEFINITE LIFE
CAPITALISED
DEVELOPMENT
$’000
LICENSES
AND OTHER
$’000
OTHER
INDEFINITE
LIFE
INTANGIBLES
$’000
FRANCHISE
NETWORK
ASSET
$’000
OTHER
INTANGIBLE
ASSETS
TOTAL
$’000
201,462
50,243
87,627
189,832
529,164
Accumulated amortisation and impairment
(111,475)
(31,892)
–
–
(143,367)
Net carrying amount
Movement
89,987
18,351
87,627
189,832
385,797
Net carrying amount at the beginning of the year
89,156
15,968
86,228
195,353
386,705
Additions
25,279
7,847
11
–
(515)
(22,209)
(1,735)
89,987
–
–
(383)
(3,714)
(1,367)
18,351
–
–
8,474
–
–
–
–
–
–
–
33,126
11
8,474
(898)
(25,923)
(7,075)
(5,521)
(15,698)
87,627
189,832
385,797
Acquisitions of Domino’s Pizza stores and other businesses
Remeasurement
Disposals
Amortisation for the year
Other including foreign exchange movement
Net carrying amount at the end of the year
Year ended 28 June 2020
Cost
Net carrying amount
Movement
Net carrying amount at the beginning of the year
Additions
Acquisitions of Domino’s Pizza stores and other businesses
Remeasurement
Disposals
Accumulated amortisation and impairment
(90,251)
(30,496)
–
–
(120,747)
179,407
46,464
86,228
195,353
507,452
89,156
15,968
86,228
195,353
386,705
80,842
26,071
1,655
–
(196)
15,785
3,712
–
–
(162)
77,781
194,389
368,797
–
–
7,166
–
–
–
–
–
–
–
29,783
1,655
7,166
(358)
(23,122)
Amortisation for the year
(19,647)
(3,475)
Other including foreign exchange movement
431
108
1,281
964
2,784
Net carrying amount at the end of the year
89,156
15,968
86,228
195,353
386,705
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 145
continuedNotes to the Financial Statements 11 GOODWILL AND OTHER INTANGIBLES (continued)
ALLOCATION OF GOODWILL AND INDEFINITE LIFE INTANGIBLE ASSETS TO CGUS
Goodwill and indefinite life intangible assets have been allocated for impairment testing purposes to the following CGUs:
• Australia and New Zealand markets
• Europe market, which comprises:
-
-
The Netherlands and Belgium stores located in the region of Antwerp and Denmark
France & the rest of Belgium (FR) & (BE)
- Germany (DE)
•
Japan market
The carrying amount of goodwill and other indefinite life intangible assets is allocated to the following CGUs:
Goodwill
2021
2020
ANZ
$’000
FR & BE
$’000
NL
$’000
DE
$’000
JAPAN
$’000
TOTAL
$’000
71,178
66,031
47,720
50,339
10,968
11,328
82,414
86,803
243,811
456,091
278,048
492,549
Goodwill impairment
2021
2020
Indefinite life intangible assets
2021
2020
Indefinite life intangible assets impairment
2021
2020
–
–
226
226
–
–
–
–
–
–
–
–
–
–
–
–
47,888
49,646
3,304
1,785
184,778
182,822
41,263
277,459
47,102
281,581
–
–
–
–
–
–
–
–
–
–
ESTIMATES AND JUDGEMENTS IN DETERMINING THE RECOVERABLE AMOUNT OF THE CASH
GENERATING UNITS
In assessing the recoverable amount of CGUs, the calculations necessarily require estimates and assumptions around future cashflows, growth
rates and discount rates. The resulting recoverable amount can be sensitive to these outputs. Key assumptions used are detailed further below.
All CGUs have adopted the VIU valuation methodology to determine the recoverable amount. EBIT growth over the forecast period is based
on past experience and expectations of average sale percentages growth rates. The post-tax discount rates incorporate a risk-adjustment
relative to the risks associated with the net post-tax cash flows being achieved, whilst the terminal growth rates are based on market estimates
of the long-term average industry growth rate.
146 // 2021 ANNUA L R EPO RT D OMI N O’S PIZZA EN TERPRISES LIMIT ED.
continuedNotes to the Financial Statements 11 GOODWILL AND OTHER INTANGIBLES (continued)
Discount rate (post-tax)
2021
2020
Compound annual growth rate for corporate plan1
2021
2020
Nominal terminal growth rates
2021
2020
ANZ
FR & BE
NL
DE
JAPAN
8.3%
7.7%
6.7%
8.9%
0.8%
1.0%
8.6%
9.0%
18.8%
36.3%
0.5%
0.5%
7.7%
8.0%
6.6%
6.2%
0.5%
0.5%
7.8%
8.0%
14.0%
14.3%
0.5%
0.5%
8.5%
9.2%
15.5%
7.4%
0.2%
0.2%
1 Compound annual growth rate (CAGR) for the corporate plan period has been calculated based on the compound EBITDA growth, which has been adjusted
for the impact of AASB16, over the forecast period adjusted for any non-recurring costs.
In general, COVID-19 has not had a significant adverse impact on the operations of Group. Sales have generally remained strong, with an increase in
delivery sales largely offsetting a decrease in store pick-up sales. Certain jurisdictions, notably Japan and Germany, have seen an increase in sales during
COVID-19. In other jurisdictions, including Australia and the BENELUX, store pick-up sales were initially impacted more than delivery sales growth, however
have subsequently continued to improve.
The impact and responses to the global outbreak of COVID-19 continue to evolve and there are difficulties in projecting the impact and duration of the
pandemic on the Group’s business. In setting its assumptions, the Group has considered its demonstrated capacity to respond to the impacts of COVID-19
on the operational and financial performance of the business, including through government regulation (such as lock-downs and financial support initiatives)
and changing customer requirements.
The Group has reviewed sensitivity on the key assumptions on which the recoverable amounts are based and believes that any reasonable
change would not cause the cash-generating units’ carrying amount to exceed its recoverable amount. The sensitivity tests applied were to
reduce the forecasted EBITDA growth rates by 2% and an increase to the post-tax discount rates by 1% for each cash-generating unit, which
did not result in the cash-generating units carrying amounts exceeding the recoverable amounts.
12 TRADE, OTHER RECEIVABLES AND OTHER ASSETS
RECOGNITION AND MEASUREMENT
TRADE RECEIVABLES
At initial recognition, trade receivables and other debtors that do not have a significant financing component are recognised at their
transaction price.
Trade receivables generally have terms of up 30 days. They are recognised initially at fair value and subsequently at amortised cost using the
effective interest method, less an allowance for impairment. Allowance for impairment is determined using an expected credit loss approach.
Before accepting any new franchisees and business partners, the Group uses extensive credit verification procedures. Receivable balances
are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant. With respect to trade receivables that are neither
impaired nor past due, there are no indications as of the reporting date that the debtors will not meet their payment obligations.
INTEREST RATE RISK
Trade receivables are non-interest bearing and are therefore not subject to interest rate risk.
FAIR VALUE
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 1 47
continuedNotes to the Financial Statements
12 TRADE, OTHER RECEIVABLES AND OTHER ASSETS (continued)
CREDIT RISK
Credit risk arises from exposure to retail customers and franchisees, including outstanding receivables and committed transactions.
Collectability and impairment are assessed on an ongoing basis at a regional level. Impairment is recognised in the income statement when
there is objective evidence that the Group will not be able to collect the receivables.
The Group applies the ‘simplified approach’ to measuring expected credit losses (“ECL”) which uses a lifetime expected loss allowance for
all trade receivables. The ECL is estimated using a provision matrix based on the Group’s historical credit loss experiences.
The Group writes off trade receivables when there is information indicating the debtor is in severe financial difficulty and there is no realistic
prospect of recovery, e.g. when the debtor has been placed in liquidation or has entered bankruptcy proceedings. Trade receivables
written off may still be subject to enforcement activities under the Group’s recovery processes, considering legal advice where appropriate.
Any recoveries made are recognised in profit and loss.
Trade receivables
Allowance for expected credit loss
Other receivables
Total trade and other receivables
Prepayments
Work in progress–store builds
Other–current
Total other assets
Movement in allowance for expected credit loss
Balance at the beginning of the year
Provision for expected credit loss
Amounts written off as uncollectible
Amounts recovered during the year
Effect of foreign currency
Balance at the end of the year
2021
$’000
145,532
(5,756)
5,975
145,751
2021
$’000
18,524
1,067
15,551
35,142
2021
$’000
7,184
1,739
(1,021)
(1,770)
(376)
5,756
2020
$’000
147,249
(7,184)
6,397
146,462
2020
$’000
19,894
2,945
15,773
38,612
2020
$’000
6,990
3,029
(2,675)
(272)
112
7,184
Included in the Group’s trade receivables balance are debtors with a carrying amount of $2,090 thousand (2020: $3,370 thousand),
which are past due at the reporting date.
148 // 2021 ANNUA L R EPO RT D OM IN O’S PIZZA ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements 13 TRADE AND OTHER PAYABLES
RECOGNITION AND MEASUREMENT
These amounts represent liabilities for goods and services provided to the Group prior to the balance sheet date which are unpaid.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date.
Current
Trade payables
Goods and services tax (GST)/Value added tax (VAT) payable
Other creditors and accruals
Total trade and other payables
14 PROVISIONS
RECOGNITION AND MEASUREMENT
2021
$’000
2020
$’000
242,849
223,202
13,929
96,733
353,511
11,974
88,442
323,618
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the
Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
EMPLOYEE BENEFITS
The provision for employee benefits represents annual leave, long service leave entitlements and incentives accrued by employees.
WAGES AND SALARIES
Liabilities for wages and salaries including non-monetary benefits expected to be settled within 12 months of the reporting date are recognised
in provisions and other payables in respect of employees’ services up to the balance sheet date. They are measured at the amounts expected
to be paid when the liabilities are settled.
ANNUAL AND LONG SERVICE LEAVE
The liability for annual leave and long service leave is recognised in the provision for employee benefits. It is measured as the present value
of expected future payments for the services provided by employees up to the reporting date. Expected future payments are discounted
using market yields at the balance sheet date on terms to maturity and currencies that match as closely as possible to the estimated future
cash outflows.
MAKE GOOD OBLIGATIONS
A provision is recognised for the make good obligations in respect of restoring sites to their original condition when the premises are vacated.
Management has estimated the provision recognised on leases, based on historical data in relation to store closure numbers and costs,
as well as future trends that could differ from historical amounts.
LEGAL PROVISION
The provision for legal costs relates to claims that have been brought against the company by a number of former and current
Pizza Sprint franchisees.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 149
continuedNotes to the Financial Statements 14 PROVISIONS (continued)
ESTIMATES AND JUDGEMENTS
Management judgement is applied in determining the following key assumptions used in the calculation of long service leave and annual
leave at balance date:
•
•
future increases in wages and salaries;
future on-cost rates; and
• experience of employee departures and period of service.
Employee benefits
Defined benefit plan
Other provisions
Total provisions
Current
Non-current
Total provisions
OTHER PROVISIONS
Balance at 01 July 2019
Change in accounting standard
Recognised in profit or loss
Reductions arising from payments
Movements resulting from remeasurement
Balance at 28 June 2020
Recognised in profit or loss
Reductions arising from payments
Movements resulting from remeasurement
Balance at 27 June 2021
NOTE
31
2021
$’000
11,980
7,759
3,457
23,196
14,088
9,108
23,196
MAKE GOOD
$’000
STRAIGHT-
LINE LEASING
$’000
LEGAL
PROVISIONS
$’000
1,936
–
323
–
38
2,297
–
(407)
(244)
1,646
126
(126)
–
–
–
–
–
–
–
–
2,708
–
–
(253)
18
2,473
–
(585)
(77)
1,811
2020
$’000
10,895
7,710
4,770
23,375
12,887
10,488
23,375
TOTAL
$’000
4,770
(126)
323
(253)
56
4,770
–
(992)
(321)
3,457
150 // 2021 ANNUA L REPO RT D OMI N O’S PIZ ZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 15 INVENTORY
RECOGNITION AND MEASUREMENT
Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead
expenses, are assigned to inventories by the method most appropriate to each particular class of inventory, with the majority being valued
on a first in first out basis. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs to sell.
Raw materials
Finished goods
Total inventory
2021
$’000
9,004
16,951
25,955
2020
$’000
6,825
21,087
27,912
There are no inventories (2020: $nil) expected to be recovered after more than 12 months. Expenses relating to inventories are recorded under
Food, equipment and packaging expenses. During the year, there has been a write-down of personal protective equipment to net realisable
value of $3,059 thousand, which has been recognised in Acquisition, integration, conversion, legal settlement and inventory write downs.
CAPITAL
Capital provides information about the capital management practices of the Group.
16 EQUITY
ISSUED CAPITAL
86,523,365 fully paid ordinary shares (28 June 2020: 86,238,290)
2021
$’000
2020
$’000
259,500
235,420
Changes to the Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore,
the Company does not have a limited amount of authorised capital and issued shares do not have a par value.
FULLY PAID ORDINARY SHARES
Balance at beginning of financial period
Shares issued:
2021
2020
NUMBER
OF SHARES
’000
SHARE
CAPITAL
$’000
86,238
235,420
NUMBER
OF SHARES
’000
85,634
SHARE
CAPITAL
$’000
206,218
Issue of shares under executive share option plan
Balance at end of financial year
285
24,080
86,523
259,500
604
86,238
29,202
235,420
Fully paid ordinary shares carry 1 vote per share and carry the right to dividends.
OPTIONS
The Company approved the establishment of the Executive Share and Option Plan (“ESOP”) to assist in the recruitment, reward and retention
of its directors and executives. The Company will not apply for quotation of the options on the ASX.
Subject to any adjustment in the event of a bonus issue, rights issue or reconstruction of capital, each option is convertible into 1 ordinary
share. Refer to note 20.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES L IMITED. // 151
continuedNotes to the Financial Statements 16 EQUITY (continued)
TERMS AND CONDITIONS OF THE ESOP
The Company must not issue any shares or grant any option under this plan if, immediately after the issue or grant, the sum of the total
number of unissued shares over which options, rights or other options (which remain outstanding) have been granted under this plan and
any other Group employee incentive scheme would exceed 7.5% of the total number of shares on issue on a fully diluted basis at the time
of the proposed issue or grant.
Fully diluted basis means the number of shares which would be on issue if all those securities of the Company which are capable of being
converted into shares, were converted into shares. If the number of shares into which the securities are capable of being converted cannot
be calculated at the relevant time, those shares will be disregarded.
During the year 285,075 options were exercised (2020: 604,250). A total of $24,080,211 was received as consideration for 285,075 fully paid
ordinary shares of Domino’s Pizza Enterprises Limited on exercise of the options in the current financial year (2020: $29,201,780).
DIVIDEND REINVESTMENT PLAN
On listing, the Board adopted but did not commence operation of a Dividend Reinvestment Plan (“DRP”). The DRP provides shareholders the
choice of reinvesting some or all of their dividends in shares rather than receiving those dividends in cash.
The Board of Directors resolved to activate the DRP on 17 August 2006 with a commencement date of 21 August 2006. Shareholders with
registered addresses in Australia or New Zealand are eligible to participate in the DRP. Shareholders outside Australia and New Zealand are
not able to participate due to legal requirements applicable in their place of residence.
Shares allocated under the DRP rank equally with existing shares. Shares will be issued under the DRP at a price equal to the average of the
daily volume weighted average market price of the Company’s shares (rounded to the nearest cent) traded on the ASX during a period of ten
trading days commencing on the second business day following the relevant record date, discounted by an amount determined by the Board.
Domino’s Pizza Enterprises Limited entered into an underwriting agreement with Goldman Sachs JBWere for its first four dividend payments
commencing with the final dividend for the year ended 2 July 2006. The Board decided to continue the DRP underwriting and entered
into a renewed agreement with Goldman Sachs JBWere for the next four dividends commencing with the final dividend for the year ended
29 June 2008.
On 18 August 2009, the Board resolved to suspend the DRP until further notice. Therefore, the final dividend for the year ended 27 June
2021 will be paid in cash only.
RESERVES
FOREIGN CURRENCY TRANSLATION
Exchange differences relating to the translation of the net assets of the Group’s foreign operations from their functional currencies to the
Group’s presentation currency, Australian dollars, are recognised directly in other comprehensive income and accumulated in the foreign
currency translation reserve.
HEDGING RESERVE
The hedging reserve represents hedging gains and losses recognised on the effective portion of net investment and cash flow hedges.
152 // 2021 ANNUA L RE PORT D O MIN O ’S PIZZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 16 EQUITY (continued)
OTHER RESERVES
Executive Share and Option Plan
The equity settled share-based benefits reserve arises on the grant of share options to executives under the Executive Share and Option
Plan (ESOP). Further information about ESOP is made in note 20 to the financial statements. The Group settled the Domino’s Pizza Enterprises
Limited Employee Share Trust to manage the share option plan.
Non-controlling Interests
A component of the put option liability and non-controlling interest is recognised in Other Reserves. This is due to the Group’s adoption of the
partial recognition of the non-controlling interest method of accounting for the put option liability and non-controlling interest. This accounting
policy is disclosed in Note 17 to the financial statements.
Foreign currency translation
Hedging
Other
Balance at the end of the year
Foreign currency translation reserve
Balance at beginning of financial year
Translation of foreign operations
Balance at the end of the year
Hedging reserve
Balance at beginning of financial year
Net investment hedge
Cash flow hedge
Income tax related to gain/(loss) on hedging items
Balance at the end of the year
Other Reserves
Balance at beginning of financial year
Share-based payment
Movement in put option liability and non-controlling interest
Share option trust
Remeasurement of defined benefit plan
Balance at the end of the year
2021
$’000
7,754
(1,364)
(156,719)
(150,329)
49,740
(41,986)
7,754
(6,224)
5,270
1,791
(2,201)
(1,364)
(113,532)
1,237
(47,219)
3,353
(558)
2020
$’000
49,740
(6,224)
(113,532)
(70,016)
42,861
6,879
49,740
(6,714)
(1,145)
1,877
(242)
(6,224)
(93,418)
(2,915)
(18,410)
1,282
(71)
(156,719)
(113,532)
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES LIMITED. // 1 53
continuedNotes to the Financial Statements 16 EQUITY (continued)
RETAINED EARNINGS
Balance at beginning of year
Change in accounting policies
Restated retained earnings
Net profit attributable to members of the Company
Payment of dividends
Balance at the end of the year
17 NON-CONTROLLING INTERESTS
RECOGNITION AND MEASUREMENT
NOTE
18
2021
$’000
227,969
–
227,969
184,011
(121,984)
289,996
2020
$’000
197,060
(4,768)
192,292
138,483
(102,806)
227,969
Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss and
other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive
income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling
interests having a deficit balance. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted
and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
We have applied the partial recognition of the non-controlling interest method (equity method) when accounting for the put option liability and
non-controlling interest. This approach is appropriate given the Company has no present ownership of the minority interest shares. While the
non-controlling interest remains, the accounting treatment is as follows:
(a) The amount that would have been recognised for the non-controlling interest, including an update to reflect allocations of profit or
loss, allocations of changes in other comprehensive income and dividends declared for the reporting period, as required by AASB 10;
(b) The non-controlling interest is derecognised as if it was acquired at that date;
(c) A financial liability at the present value of the amount payable on exercise of the non-controlling put in accordance with AASB 9.
There is no impact on the profit or loss from the unwinding of the discount due to the passage of time; and
(d) The difference between (b) and (c) as an equity transaction in other reserves.
If the non-controlling interest put or call is exercised, the same treatment is applied up to the date of exercise. The amount recognised as the
financial liability at that date is extinguished by the payment of the exercise price.
The non-controlling interest relates to a 33.3% interest in the Group’s operations in Germany.
Balance at beginning of year
Change in accounting policies
Restated equity at the end of the year
Non-controlling interest contributions during the period
Share of profit/(loss)
Foreign currency translation
Non-controlling interest put option adjustment
Balance at the end of the year
154 // 2021 ANNUAL RE PORT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
NOTE
35
2021
$’000
–
–
–
3,293
9,132
(2,850)
(9,575)
–
2020
$’000
–
(18)
(18)
2,100
4,438
(159)
(6,361)
–
continuedNotes to the Financial Statements 18 DIVIDENDS
Recognised amounts
Fully paid ordinary shares
Interim dividend for half-year ended1
Dividend for full year ended2
Unrecognised amounts
Fully paid ordinary shares
2021
2020
CENTS PER
SHARE
TOTAL
$’000
CENTS PER
SHARE
TOTAL
$’000
88.4
52.6
141.0
76,487
45,497
121,984
66.7
52.8
119.5
57,521
45,285
102,806
Partially franked dividend for full year ended
85.1
73,631
52.6
45,361
The interim dividend for half year ended was franked at 50% (2020: 100%).
1
2 The dividend for full year ended was franked at 70% (2020: 100%).
On 17 August 2021, the directors declared a final dividend of 85.1 cents per share to the holders of fully paid ordinary shares in respect of the
financial year ended 27 June 2021, to be paid to shareholders on 9 September 2021. The dividend will be paid to all shareholders on the
Register of Members on 25 August 2021. The total estimated dividend to be paid is $73,631 thousand.
FRANKED DIVIDENDS
The franked portions of the final dividends determined after 27 June 2021 will be franked out of existing franking credits or out of franking
credits arising from the payment of income tax in the financial year ended 27 June 2021.
Franking credits available for subsequent financial years based on a tax rate of 30.0%
2021
$’000
12,710
2020
$’000
7,545
The above amounts are calculated from the balance of the franking account as at the end of the reporting period, adjusted for franking credits
and debits that will arise from the settlement of liabilities or receivables for income tax and dividends after the end of the year.
19 EARNINGS PER SHARE
BASIC EARNINGS PER SHARE
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity
(other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.
From continuing operations attributable to the ordinary equity holders of the Company
2021
CENTS
212.8
2020
CENTS
160.9
DILUTED EARNINGS PER SHARE
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends);
•
the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the year that would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES L IMITED. // 155
continuedNotes to the Financial Statements 19 EARNINGS PER SHARE (CONTINUED)
The diluted earnings per share calculation takes into account all options issued under the ESOP, as in accordance with AASB 133 Earnings
per Share, the average market price of ordinary shares during the period exceeds the exercise price of the options or warrants.
From continuing operations attributable to the ordinary equity holders of the Company
EARNINGS USED IN CALCULATING EARNINGS PER SHARE
Profit from continuing operations
Profit attributable to the ordinary equity shareholders of the Company used in calculating basic and
diluted earnings per share
WEIGHTED AVERAGE NUMBER OF SHARES USED AS DENOMINATOR
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
Adjustments for calculation of diluted earnings per share:
Options on issue
Weighted average number of ordinary and potential ordinary shares used as the denominator
in calculating diluted earnings per share
2021
CENTS
211.9
2020
CENTS
160.8
2021
$’000
184,011
184,011
2020
$’000
138,483
138,483
2021
NO.’000
86,481
2020
NO.’000
86,049
343
86,824
61
86,110
20 SHARE-BASED PAYMENTS
RECOGNITION AND MEASUREMENT
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instrument
at the grant date. The fair value is measured by use of a Black Scholes model. The expected life used in the model has been adjusted, based
on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group’s estimate of equity instruments that will eventually vest. At each reporting period, the Group revises its estimate
of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss
over the remaining vesting period, with corresponding adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received,
except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the counterparty renders the service.
EQUITY-SETTLED SHARE-BASED BENEFITS
The Company has 1 share plan and 1 share and option plan available for employees, directors and executives of the Company: the Domino’s
Pizza Exempt Employee Share Plan (“Plan”) and the Domino’s Pizza Executive Share and Option Plan (ESOP). Both plans were approved by
a resolution of the Board of Directors on 11 April 2005. Fully paid ordinary shares issued under these plans rank equally with all other existing
fully paid ordinary shares, in respect of voting and dividend rights and future bonus and rights issues.
156 // 2021 ANNUAL REPO RT D OMI NO ’S PIZZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 20 SHARE-BASED PAYMENTS (continued)
EXECUTIVE SHARE AND OPTION PLAN
The Company established the ESOP to assist in the recruitment, reward, retention and motivation of directors and executives of the Company
(“the participants”).
In accordance with the provisions of the scheme, executives within the Company, to be determined by the Board, are granted options
to purchase parcels of shares at various exercise prices. Each option confers an entitlement to subscribe for and be issued 1 share,
credited as fully paid, at the exercise price.
Options issued under the ESOP may not be transferred unless the Board determines otherwise. The Company has no obligation to apply
for quotation of the options on the ASX. However, the Company must apply to the ASX for official quotation of shares issued on the exercise
of the options.
The Company must not issue any shares or grant any option under this plan if, immediately after the issue or grant, the sum of the total
number of unissued shares over which options, rights or other options (which remain outstanding) have been granted under this plan and
any other Group employee incentive scheme would exceed 7.5% of the total number of shares on issue on a fully diluted basis at the time
of the proposed issue or grant.
Fully diluted basis means the number of shares which would be on issue if all those securities of the Company which are capable of being
converted into shares, were converted into shares. If the number of shares into which the securities are capable of being converted cannot
be calculated at the relevant time, those shares will be disregarded.
The following share-based payment arrangements were in existence during the current and comparative reporting period:
OPTIONS GRANTED UNDER THE INCENTIVE PLANS
Set out below are summaries of the performance options and rights granted in respect of the 2021 and 2020 financial years under the
incentive plans:
2021
OPTION
SERIES
ISSUE &
GRANT
DATE
EXPIRY
DATE
BALANCE AT
START OF
THE YEAR
NUMBER
GRANTED DURING
AND IN RESPECT
OF THE YEAR
NUMBER
EXERCISED
DURING THE
YEAR
NUMBER
LAPSED/FORFEITED
DURING THE YEAR
NUMBER
BALANCE
AT END OF
THE YEAR
NUMBER
EXERCISABLE
AT END OF
THE YEAR
NUMBER
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)
(37)
(38)
(39)
(40)
(41)
1 Sep 16
31 Aug 20
200,000
1 Sep 16
31 Aug 20
64,500
8 Sep 17
31 Aug 21
220,000
19 Apr 18
31 Aug 21
541,750
14 Aug 18
31 Aug 21
147,000
23 Jan 19
31 Aug 22
220,000
25 May 19 31 Aug 22
626,000
26 Nov 19 1 Sep 23
297,000
26 Nov 19 26 Nov 23
183,225
26 Nov 19 1 Sep 23
294,092
20 Aug 19 20 Aug 29
6,250
–
–
–
–
–
–
–
–
–
–
–
18 Aug 20 18 Aug 30
4 Nov 20
1 Sep 24
25 Nov 20 1 Sep 24
7 Jun 21
7 Jun 31
28 May 21 28 May 31
–
–
–
–
–
3,640
156,937
614,305
1,420
2,966
(200,000)
(59,000)
–
(5,500)
–
(220,000)
–
–
–
–
–
–
(26,075)
(505,350)
10,325
10,325
–
–
–
–
–
–
–
–
–
–
–
–
(147,000)
–
–
220,000
(163,500)
462,500
–
–
297,000
183,225
(5,313)
288,779
–
–
–
–
–
–
6,250
3,640
156,937
614,305
1,420
2,966
–
–
–
–
–
–
–
–
–
–
–
–
TOTAL
2,799,817
779,268
(285,075)
(1,046,663)
2,247,347
10,325
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 157
continuedNotes to the Financial Statements 20 SHARE-BASED PAYMENTS (continued)
2020
OPTION
SERIES
ISSUE &
GRANT
DATE
EXPIRY
DATE
BALANCE AT
START OF
THE YEAR
NUMBER
GRANTED DURING
AND IN RESPECT
OF THE YEAR
NUMBER
EXERCISED
DURING THE
YEAR
NUMBER
LAPSED/FORFEITED
DURING THE YEAR
NUMBER
BALANCE
AT END OF
THE YEAR
NUMBER
EXERCISABLE
AT END OF
THE YEAR
NUMBER
(23)
(24)
(24)
(25)
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)
3 Sep 15
28 Oct 20
300,000
3 Sep 15
31 Aug 19
192,250
3 Sep 15
31 Aug 20
150,000
1 Sep 16
28 Oct 20
400,000
1 Sep 16
31 Aug 20
200,000
1 Sep 16
31 Aug 20
410,500
8 Nov 17
31 Aug 21
220,000
19 Apr 18
31 Aug 21
578,250
14 Aug 18
31 Aug 21
147,000
23 Jan 19
31 Aug 22
220,000
25 May 19
31 Aug 22
653,750
–
–
–
–
–
–
–
–
–
–
–
26 Nov 19
1 Sep 23
26 Nov 19
26 Nov 23
26 Nov 19
1 Sep 23
20 Aug 19
20 Aug 29
–
–
–
–
297,000
183,225
294,092
6,250
(300,000)
(154,250)
(150,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
(38,000)
–
(400,000)
–
–
–
–
–
–
–
–
–
200,000
200,000
(346,000)
64,500
64,500
–
220,000
(36,500)
541,750
–
–
147,000
220,000
(27,750)
626,000
–
–
–
–
297,000
183,225
294,092
6,250
–
–
–
–
–
–
–
–
–
TOTAL
3,471,750
780,567
(604,250)
(848,250)
2,799,817
264,500
The weighted average exercise price at the date of the exercise of options during the 2021 financial year was $84.47 (2020: $48.33).
The weighted average remaining contractual life of options outstanding at the end of the 2021 financial year was 2.27 years (2020: 1.97 years)
FAIR VALUE OF SHARE OPTIONS GRANTED IN THE YEAR
The weighted average fair value of the options granted during the 2021 year is $12.87 (2020: $11.58). Options were valued using a Black
Scholes option pricing model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate
for the effects of non-transferability, exercise restrictions and behavioural conditions.
The model inputs for rights granted during 2021 financial year include:
PERFORMANCE CONDITIONS
Grant date share price
Exercise price
Expected volatility
Option life years
Dividend yield
Risk-free interest rate
SERIES 38
SERIES 39
$86.99
$84.28
35.3%
3.32
1.97%
0.12%
$74.04
$84.28
35.5%
3.77
1.97%
0.12%
Series 37, Series 40 and Series 41 are zero exercise price options, therefore the options share price at date of grant approximates the options
fair value.
158 // 2021 ANN UA L REPO RT D OMI N O’S PIZZA EN TERPRISES LIMIT ED.
continuedNotes to the Financial Statements 20 SHARE-BASED PAYMENTS (continued)
The model inputs for rights granted during 2020 financial year include:
PERFORMANCE CONDITIONS
Grant date share price
Exercise price
Expected volatility
Option life years
Dividend yield
Risk-free interest rate
SERIES 33
SERIES 34
SERIES 35
$52.95
$50.25
34.6%
3.77
2.18%
0.76%
$52.95
$50.25
32.5%
4.00
2.70%
0.70%
$52.95
$50.25
34.6%
3.77
2.18%
0.76%
Series 36 is a zero exercise price option, therefore the options share price at date of grant approximates the options fair value.
SHARE OPTIONS EXERCISED DURING THE YEAR
The following share options granted under the ESOP were exercised during the year:
2021 OPTION SERIES
(26) Issued 1 September 2016
(27) Issued 1 September 2016
(26) Issued 1 September 2016
(27) Issued 1 September 2016
(27) Issued 1 September 2016
(27) Issued 1 September 2016
(29) Issued 19 April 2018
(29) Issued 19 April 2018
2020 OPTION SERIES
(24) Issued 3 September 2015
(24) Issued 3 September 2015
(24) Issued 3 September 2015
(24) Issued 3 September 2015
(24) Issued 3 September 2015
(24) Issued 3 September 2015
(24) Issued 3 September 2015
(24) Issued 3 September 2015
(23) Issued 3 September 2015
NUMBER
EXERCISED
100,000
6,500
100,000
30,000
17,500
5,000
15,750
10,325
NUMBER
EXERCISED
11,250
54,000
30,000
26,500
12,000
13,000
7,500
150,000
300,000
EXERCISE DATE
20 August 2020
20 August 2020
21 August 2020
21 August 2020
25 August 2020
26 August 2020
1 September 2020
16 September 2020
EXERCISE DATE
22 August 2019
23 August 2019
26 August 2019
27 August 2019
28 August 2019
29 August 2019
30 August 2019
07 November 2019
12 November 2019
SHARE PRICE AT
EXERCISE DATE ($)
$83.70
$83.70
$85.58
$85.58
$85.70
$85.79
$80.75
$81.38
SHARE PRICE AT
EXERCISE DATE ($)
$42.28
$42.77
$42.85
$42.75
$43.00
$42.80
$43.37
$50.03
$50.32
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 159
continuedNotes to the Financial Statements FINANCIAL MANAGEMENT
Financial management provides information about the debt management practices of the Group as well as the Group’s exposure to various
financial risks, how these affect the Group’s financial position and performance and what the Group does to manage these risks.
21 BORROWINGS
RECOGNITION AND MEASUREMENT
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of
the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of
the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a
prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take
a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings, pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Loans from other entities
Loans from other entities1
Total from other entities
Uncommitted
Bank loans
Total uncommitted borrowings
Committed
Bank loans2
Total committed borrowings
Current
Non-current
Total borrowings
2021
$’000
24,371
24,371
–
–
483,004
483,004
–
507,375
507,375
2020
$’000
35,978
35,978
50,195
50,195
621,263
621,263
50,195
657,241
707,436
SUMMARY OF BORROWING ARRANGEMENTS
1
Relates to loans from Domino’s Pizza Group plc relating to the German joint venture.
2 Loans to meet the cost of DPE’s acquisitions in Germany are secured by way of a mortgage over shares DPE holds in the joint venture entity that owns
the German territory assets. DPE’s borrowings are otherwise unsecured.
The unused facilities available on the Group’s bank overdraft are $5,795 thousand (2020: $5,807 thousand). For further information in respect
of the Group’s borrowings, refer to note 24.
22 FINANCIAL ASSETS
RECOGNITION AND MEASUREMENT
All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose
terms require delivery of the financial asset within the time frame established by the market concerned, and are initially measured at fair value,
plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVPL) or through
other comprehensive income (FVOCI) and those held at amortised cost.
160 // 2021 ANNUA L RE PORT D O MIN O’S PIZ ZA ENTERPRISES LIMITED.
continuedNotes to the Financial Statements 22 FINANCIAL ASSETS (continued)
RECOGNITION AND MEASUREMENT (continued)
Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows. Management
determines the classification of financial assets at initial recognition. Generally, the Group does not acquire financial assets for the purpose
of selling in the short-term. When the Group enters into derivative contracts, these transactions are designed to reduce exposures relating
to assets and liabilities, firm commitments or anticipated transactions.
FINANCIAL ASSETS HELD AT AMORTISED COST
This classification applies to debt instruments which are held under a hold to collect business model and which have cash flows that meet
the ‘Solely payment of principal and interest’ (SPPI) criteria.
Other financial assets are initially recognised at fair value plus related transaction costs; they are subsequently measured at amortised cost
using the effective interest method. Any gain or loss on derecognition or modification of a financial asset held at amortised cost is recognised
in the income statement.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected
life of the debt instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest rate basis for financial assets held at amortised cost.
FINANCIAL ASSETS HELD AT FVOCI
This classification applies to the following financial assets:
• Debt instruments that are held under a business model where they are held for the collection of contractual cash flows and also for sale
(‘collect and sell’) and which have cash flows that meet the SPPI criteria.
All movements in the fair value of these financial assets are taken through other comprehensive income, except for the recognition
of impairment gains or losses, interest revenue (including transaction costs by applying the effective interest method), gains or losses
arising on derecognition and foreign exchange gains and losses which are recognised in the income statement. When the financial
assets are derecognised, the cumulative fair value gain or loss previously recognised in other comprehensive income is reclassified to
the income statement.
• Equity investment where the Group has irrevocably elected to present fair value gains and losses on revaluation in other comprehensive
income. The election can be made for each individual investment however it is not applicable to equity investments held for trading.
Fair value gains or losses on revaluation of such equity investments, including any foreign exchange components, are recognised in other
comprehensive income. When the equity investment is derecognised, there is no reclassification of fair value gains or losses previously
recognised in other comprehensive income to the income statement. Dividends are recognised in the income statement when the right
to receive payment is established.
FINANCIAL ASSETS AT FVPL
This classification applies to the following financial assets, and in all cases, transaction costs are immediately expensed to the income statement:
• Debt instruments that do not meet the criteria of amortised cost or fair value through other comprehensive income. Subsequent fair value
gains or losses are taken to the income statement.
• Equity investments which are held for trading or where the FVOCI election has not been applied. All fair value gains or losses are related
dividend income are recognised in the income statement.
• Derivatives which are not designated as a hedging instrument. All subsequent fair value gains or losses are recognised in the income
statement.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group enters into derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to
their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative
is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of
the hedge relationship.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 161
continuedNotes to the Financial Statements 22 FINANCIAL ASSETS (continued)
NON-CASH FINANCING AND INVESTING ACTIVITIES
Included in the movement of other financial assets are non-cash transactions of $44.9 million (2020: $35.7 million) for loans to Franchisees.
IMPAIRMENT OF FINANCIAL ASSETS
A forward looking ECL review is required for: debt instruments measured at amortised cost or held at fair value through other comprehensive
income, loan commitments and financial guarantees not measured at fair value through profit or loss; lease receivables and trade receivables
that give rise to an unconditional right to consideration.
As permitted by AASB 9, the Group applies the ‘simplified approach’ to trade receivable balances and the ‘general approach’ to all other
financial assets (refer to note 12). The general approach incorporates a review for any significant increase in counterparty credit risk since
inception. The ECL reviews include assumptions about the risk of default and expected loss rates.
DERECOGNITION OF FINANCIAL ASSETS
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial
asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially
all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial Assets
Current
Loans to franchisees
Foreign exchange forward contracts
Total current financial assets
Non-current
Loans to franchisees
Allowance for doubtful loans
Financial guarantee receivable
Long-term store rental security deposits
Total non-current financial assets
Current
Non-current
Total financial assets
IMPAIRMENT
2021
$’000
2020
$’000
12,234
2,157
14,391
54,192
(62)
2,217
26,129
82,476
14,391
82,476
96,867
14,350
54
14,404
49,100
(182)
1,024
25,640
75,582
14,404
75,582
89,986
Before providing any new loans to franchisees, the Group reviews the potential franchisee’s credit quality, which is determined by reviewing a
business plan and the projected future cash flows for that store, to ensure the franchisee is able to meet its interest repayments on the loan. On
average, the interest charged is 6.7% (2020: 5.8%) in Australia and New Zealand, the average interest charged in France is 6.0% (2020: 5.91%),
in the Netherlands is 7.0% (2020: 7.09%), in Germany is 5.0% (2020: 4.96%) and the average interest charged in Japan is 5.0% (2020: 5.0%).
The Group applies the ‘general approach’ to measuring expected credit losses which uses a lifetime expected loss allowance for franchisee
loans. The general approach incorporates a review for any significant increase in counterparty credit risk since inception. The ECL review
includes assumptions about the risk of default and expected credit loss rates.
162 // 2021 ANNUA L RE PO RT DO MI NO’S PIZZA EN TERPRISES LIMIT ED.
continuedNotes to the Financial Statements 22 FINANCIAL ASSETS (continued)
Franchisee loans
Allowance for doubtful loans
Ageing of Franchisee Loans
Amounts not yet due
Movement in loss allowance
Balance at the beginning of the year
Impairment losses recognised on loans
Amounts written off as uncollectible
Unused amounts reversed
Effect of foreign currency
Balance at the end of the year
23 FINANCIAL LIABILITIES
RECOGNITION AND MEASUREMENT
FINANCIAL LIABILITY AND EQUITY INSTRUMENTS
CLASSIFICATION AS DEBT AND EQUITY
2021
$’000
66,426
(62)
66,364
2021
$’000
66,364
66,364
2021
$’000
182
–
(63)
(54)
(3)
62
2020
$’000
63,450
(182)
63,268
2020
$’000
63,268
63,268
2020
$’000
1,141
90
(1,066)
–
17
182
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.
EQUITY INSTRUMENTS
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Consolidated entity are recorded at the proceeds received, net of direct issue costs.
FINANCIAL GUARANTEES AND CONTRACT LIABILITIES
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs
because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contract liabilities are measured initially at their fair values and, if not designated as at FVPL, are subsequently at the
higher of:
•
•
the amount of the obligation under the contract, as determined in accordance with AASB 137 ‘Provisions, Contingent Liabilities and
Contingent Assets’; and
the amount initially recognised less, where appropriate, cumulative amortisation in accordance with the revenue recognition policies set
out in Note 2.
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 16 3
continuedNotes to the Financial Statements 23 FINANCIAL LIABILITIES (continued)
FINANCIAL LIABILITIES
Financial liabilities are classified as either financial liabilities ‘at FVPL’ or ‘other financial liabilities’.
FINANCIAL LIABILITIES AT FVPL
Financial liabilities are classified as at FVPL when the financial liability is either held for trading or it is designated as at FVPL.
A financial liability is classified as held for trading if:
•
it has been acquired principally for the purpose of repurchasing in the near term; or
• on initial recognition it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual
pattern of short-term profit-taking; or
•
it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading is designated as at FVPL upon initial recognition if:
•
•
•
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance evaluated
on a fair value basis, in accordance with the Consolidated entity’s documented risk management or investment strategy, and information
about the grouping is provided internally on that basis; or
it forms part of a contract containing 1 or more embedded derivatives, and AASB 9 ‘Financial Instruments’ permits the entire combined
contract (asset or liability) to be designated as at FVPL.
Financial liabilities at FVPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net
gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other gains and losses’
line item in the statement of comprehensive income.
FINANCIAL BORROWINGS
Borrowing and other financial liabilities (including trade payables but excluding derivative liabilities) are recognised initially at fair value, net
of transaction costs incurred, and are subsequently measured at amortised cost.
DERECOGNITION OF FINANCIAL LIABILITIES
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in
profit or loss.
ESTIMATES AND JUDGEMENTS
GERMANY PUT OPTION LIABILITY
The put option associated with Domino’s Pizza Germany (DPG) is valued by management by taking into account adjusted unlevered
price/earnings multiple rates and estimate of the timing of the exercise of the put. This is based on management’s experience and knowledge
of market conditions of the German Pizza industry and dealings with the sellers of Joey’s Pizza and Hallo Pizza. As the inputs are not observable
the liability is considered Level 3 in the fair value hierarchy.
164 // 2021 ANNUA L R EPO RT D OMI N O’S PIZZA EN TERPRISES LIMIT ED.
continuedNotes to the Financial Statements 23 FINANCIAL LIABILITIES (continued)
FINANCIAL LIABILITIES
Current
Interest rate swaps
Foreign exchange contracts
Security deposits
Market access right1
Contingent consideration
Deferred consideration
Other
2021
$’000
2020
$’000
251
723
10,502
17,594
293
–
334
472
–
9,416
9,173
47
1,253
1,289
Total current financial liabilities
29,697
21,650
Non-current
Interest rate swaps
Market access right1
Contingent consideration
Put/call minority interest liability2
Other
Total non-current financial liabilities
Current
Non-current
Total financial liabilities
704
–
–
164,444
1,941
167,089
29,697
167,089
196,786
839
15,517
586
112,980
1,564
131,486
21,650
131,486
153,136
1 Market access right arising in respect of the Group’s contractual arrangements with DPG.
2 Put/call option liability arises in respect of the minority interest in Domino’s Pizza Germany.
FAIR VALUE OF DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
As described in note 24, management uses their judgement in selecting an appropriate valuation technique for financial instruments not
quoted in an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments,
assumptions are made based on quoted market rates adjusted for specific features of the instrument. Other financial instruments are valued
using a discounted cash flow analysis based on assumptions supported, where possible, by observable market prices or rates. Details of
assumptions are provided in note 24.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 165
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT
CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that it will be able to continue as a going concern, while maximising the return to stakeholders
through optimisation of the debt and equity balances.
The capital structure of the Group consists of net debt, which includes borrowings, cash and cash equivalents and equity attributable to equity
holders of the parent, comprising issued capital, reserves, retained earnings and non-controlling interest.
The Group operates globally, primarily through subsidiary companies established in the markets in which the Group trades, these companies
are not subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand the Groups’ assets, as well as to make routine outflows of tax, dividends and repayment
of maturing debt. The Group policy is to control borrowing centrally; using a variety of capital market issues and borrowing facilities, to meet
anticipated funding requirements.
The Group’s management and board of directors review the capital structure formally on an annual basis. The board of directors consider
the cost of capital and associated risk. Based on recommendations from management and the board of directors, the Group will balance its
overall capital structure through payment of dividends, new share issues and issue or redemption of debt.
GEARING RATIO
The gearing ratio at the end of the reporting period was as follows:
Debt1
Cash and cash equivalent
Net debt
Equity2
Net debt to equity ratio
2021
$’000
507,375
(174,689)
332,686
399,167
83.3%
2020
$’000
707,436
(245,678)
461,758
393,373
117.4%
Net debt to equity ratio
1 Debt is defined as long-term and short-term borrowings, excluding capitalised borrowing costs, as detailed in note 21.
2 Equity includes all capital and reserves that are managed as capital.
The categories of financial assets and liabilities are outlined below:
FINANCIAL ASSETS
CLASSIFICATION
NOTE
2021
2020
INTEREST
RATE %1
$’000
INTEREST
RATE %1
Trade and other receivables
Amortised cost
Loans receivable
Amortised cost
Financial guarantee contracts
Amortised cost
Deposits
Amortised cost
Investment in lease assets
Amortised cost
Forward exchange contracts
FVOCI
12
22
22
22
10
22
–
145,751
3.59
6.10
–
66,364
2,217
26,129
1.22
407,797
–
2,157
–
3.61
6.10
–
1.24
–
$’000
146,462
63,268
1,024
25,640
382,391
54
1
Interest rates represent the weighted average effective interest rate.
166 // 2021 ANNUA L R E PORT D OM IN O’S PIZZA ENTERPRISES LIMITED.
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
FINANCIAL LIABILITIES
CLASSIFICATION
NOTE
Trade and other payables
Amortised cost
Other financial liabilities
Amortised cost
Rent incentive liability
Amortised cost
Bank loans
Other bank loans
Amortised cost
Amortised cost
Loans from other entities
Amortised cost
Lease liabilities
Amortised cost
Market access right
Put-option liability
Contingent consideration
Deferred consideration
FVOCI
FVOCI
FVPL
FVPL
Interest rates swaps
Derivative financial instrument
Foreign exchange contracts
Derivative financial instrument
1
Interest rates represent the weighted average effective interest rate.
FINANCIAL RISK MANAGEMENT
13
23
23
21
21
21
10
23
23
23
23
23
23
2021
2020
INTEREST
RATE %1
–
–
–
$’000
353,511
12,777
–
1.65
483,004
–
–
2.70
24,371
0.93
760,925
–
–
–
–
–
–
17,594
164,444
293
–
955
723
INTEREST
RATE %1
–
–
–
1.81
0.77
2.70
0.94
–
–
–
–
–
–
$’000
323,618
12,269
–
621,263
50,195
35,978
768,252
24,690
112,980
633
1,253
1,311
–
Group treasury co-ordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Group in
line with its policies. These risks include;
• Liquidity risk;
• Market risk, including foreign currency, interest rate and commodity price risk; and
• Credit risk.
The Group seeks to manage and minimise its exposure to these financial risks by using derivative financial instruments to hedge the risk,
governed by the approved Group policies, which provides written principles on foreign exchange risk, interest rate risk, credit risk and the
use of derivatives and investment of excess liquidity. Compliance with policies and exposure limits are reviewed by the board of directors.
The Group does not enter into or trade financial instruments, including derivative instruments, for speculative purposes.
LIQUIDITY RISK
NATURE OF THE RISK
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, continuously monitoring
forecast and actual cash flows, and matching the maturity profiles of financial assets and liabilities. Ultimate responsibility for liquidity risk
management rests with the board of directors, which has established an appropriate liquidity management framework for the management
of the Group’s short, medium and long-term funding and liquidity management requirements.
20 21 AN N UAL R E PORT D OMI NO ’S PI Z ZA E NTE RPRISES L IMITED. // 167
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
FINANCING FACILITIES
Unsecured bank overdraft, reviewed annually and payable at call:
Amount used
Amount unused
Total
Committed commercial bill facility, reviewed annually:
Amount used
Amount unused
Total
Uncommitted facilities, at call:
Amount used
Amount unused
Total
2021
$’000
–
5,795
5,795
508,485
243,198
751,683
–
55,385
55,385
2020
$’000
–
5,807
5,807
675,350
137,914
813,264
33,903
8,146
42,049
MATURITY OF FINANCIAL ASSETS AND LIABILITIES
The following tables analyse the Group’s financial assets and liabilities, including net and gross settled financial instruments, into relevant
maturity periods based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are
contractual undiscounted cash flows and hence will not necessarily reconcile with the amounts disclosed in the balance sheet.
Expected future interest payments on loans and borrowings exclude accruals already recognised in trade and other payables.
For foreign exchange derivatives and cross-currency interest rate swaps, the amounts disclosed are the gross contractual cash flows to be paid.
For interest rate swaps, the cash flows are the net amounts to be paid at each quarter, excluding accruals included in trade and other payables,
and have been estimated using forward interest rates applicable at the reporting date.
27 JUNE 2021
Financial assets
Trade and other receivables
Loans receivable
Cash and cash equivalents
Financial guarantee contracts
Investment in lease assets
Deposits
Forward exchange contracts
LESS THAN
1 YEAR
$’000
1–5 YEARS
$’000
MORE THAN
5 YEARS
$’000
145,751
12,234
174,689
–
–
54,130
–
2,217
–
–
–
–
57,541
219,595
130,661
–
–
26,129
2,157
–
–
168 // 2021 ANNUAL RE PORT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
27 JUNE 2021
Financial liabilities
Trade and other payables
Derivative instruments in designated hedge accounting relationships
Bank loans
Loans from other entities
Lease liabilities
Market access right
Put option liability
Contingent consideration
Other financial liabilities
Forward exchange contracts
28 JUNE 2020
Financial assets
Trade and other receivables
Loans receivable
Cash and cash equivalents
Financial guarantee contracts
Forward exchange contracts
Investment in lease assets
Deposits
Financial liabilities
Trade and other payables
Derivative instruments in designated hedge accounting relationships
Bank loans
Other bank loans
Loans from other entities
Finance lease liability
Market access right
Put option liability
Contingent consideration
Deferred consideration
Other financial liabilities
LESS THAN
1 YEAR
$’000
1–5 YEARS
$’000
MORE THAN
5 YEARS
$’000
(353,511)
(251)
–
(704)
–
–
(483,004)
(24,371)
–
–
–
–
(109,433)
(410,068)
(241,424)
(17,594)
–
–
(164,444)
35,473
13,445
(293)
(334)
(723)
146,462
14,350
245,678
–
54
48,557
–
(323,618)
(472)
–
(50,195)
–
(12,443)
–
–
–
1,024
–
195,696
25,640
–
(839)
(621,263)
–
–
–
–
–
–
–
–
–
–
138,138
–
–
–
–
–
–
–
(35,978)
(105,203)
(399,438)
(263,611)
(9,173)
–
(47)
(1,253)
(10,705)
(15,517)
(112,980)
(586)
–
(1,564)
–
–
–
–
–
The following table details the Group’s liquidity analysis for is derivative financial instruments. The table has been drawn up based on the
undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows
and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed
has been determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 169
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
2021
Net Settled
Interest rate swaps
Gross Settled
Forward foreign exchange contracts – Inflow
Forward foreign exchange contracts – (Outflow)
2020
Net Settled
Interest rate swaps
Gross Settled
Forward foreign exchange contracts – Inflow
Forward foreign exchange contracts – (Outflow)
MARKET RISK
NATURE OF FOREIGN CURRENCY RISK
LESS THAN
1 MONTH
$’000
1–3 MONTHS
$’000
3 MONTHS
TO 1 YEAR
$’000
1–5 YEARS
$’000
–
–
(251)
(704)
12,427
20,952
(12,278)
(25,889)
149
(4,937)
74,736
(68,514)
6,222
–
–
–
–
–
(472)
(839)
5,685
(5,676)
9
11,951
(11,932)
19
15,940
(15,914)
26
–
–
–
The Group’s activities expose it primarily to the Euro and Japanese Yen currencies and to interest rate risk through its borrowings.
The Group’s foreign operations are carried out in New Zealand, Japan and Europe, which exposes the Group’s investments to movements
in the AUD/NZD, AUD/JPY and AUD/EUR exchange rates. The Group mitigates and manages the effect of its translational currency exposure
by borrowing in NZ dollars, Japanese Yen and Euro.
The Group enters into a variety of derivative and non-derivative financial instruments to manage its exposure to interest rate and foreign
currency risk, including;
•
Interest rate swaps to mitigate risk of rising interest rates
• Cross currency interest rate swap to mitigate rising interest rates and foreign exchange fluctuation
• Debt to manage currency risk
• Forward foreign exchange contracts to hedge the exchange rate risk of purchases
EXPOSURE
The Group’s exposure, before hedging arrangements, to the NZ dollar, Euro and Japanese Yen at the balance sheet date were as follows:
New Zealand Dollar
Euro
Japanese Yen
ASSETS
LIABILITIES
2021
$’000
18,741
102,532
164,596
2020
$’000
10,507
110,586
2021
$’000
(18,599)
(541,411)
2020
$’000
(4,375)
(521,785)
203,620
(283,431)
(332,492)
170 // 2021 ANNUAL R E PORT D OMI NO ’S PIZZA ENTERPRISES LIM IT ED.
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
FOREIGN CURRENCY RISK MANAGEMENT
The hedging function of the Group is to address foreign currency risk and is managed centrally. The Group requires all subsidiaries to hedge
foreign exchange exposures for firm commitments relating to sale or purchases or when highly probable forecast transactions have been
identified. Before hedging, the subsidiaries are also required to take into account their competitive position. The hedging instrument must
be in the same currency as the hedged item.
The objective of the Group’s policy on foreign exchange hedging is to protect the Group from adverse currency fluctuations.
SENSITIVITY TO FOREIGN EXCHANGE MOVEMENTS
The sensitivity analysis below shows the impact that a reasonable possible change in foreign exchange rates over a financial year would have
on profit after tax and equity, based solely on the Group’s foreign exchange rate exposure existing at the balance sheet date. The Group has
used the observed range of actual historical rates for the preceding 5-year period, with a heavier weighting placed on recently observed
market data, in determining reasonable possible exchange movements to be used for the current year’s sensitivity analysis. Past movements
are not necessarily indicative of future movements.
The following exchange rates have been used in performing the sensitivity analysis:
Actual 2021
+ 10%
– 10%
Actual 2020
+ 10%
– 10%
EURO
0.64
0.70
0.57
0.61
0.68
0.55
JPY
84.17
92.59
75.75
73.74
81.11
66.37
NZD
1.07
1.18
0.97
1.07
1.18
0.96
The Group’s exposure to changes in market interest rates relates primarily to the Group’s debt obligations that have floating interest rates.
The impact on profit and equity is estimated by relating the hypothetical changes in the NZ Dollar, Japanese Yen and Euro exchange rate to
the balance of financial instruments at the reporting date. Foreign currency risks, as defined by AASB 7 Financial Instruments: Disclosure, arise
on account of the financial instruments being denominated in a currency that is not the functional currency in which the financial instruments
are measured.
Differences from the translation of the financial statements into the Group’s presentation currency are not taken into consideration in the
sensitivity analysis. The results of the foreign exchange rate sensitivity analysis are driven by 3 main factors, as outlined below:
• The impact of applying the above foreign exchange movements to financial instruments that are not in hedge relationships will be
recognised directly in profit or loss;
• To the extent that the foreign currency denominated derivatives on balance sheet form part of an effective cash flow hedge relationship, any
fair value movements caused by applying the above sensitivity movements will be deferred in equity and will not affect profit or loss; and
• Movements in financial instruments forming part of an effective fair value hedge relationship will be recognised in profit or loss. However,
as a corresponding entry will be recognised for the hedged item, the net effect on profit or loss will be nil.
The below table details the impact of the Group’s profit after tax and other equity had there been a movement in the NZ Dollar, Japanese
Yen and Euro with all other variables held constant.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 17 1
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
Profit or (loss)
If there was a 10% increase in exchange rates with all other variables held constant
If there was a 10% decrease with all other variables held constant
Other equity
If there was a 10% increase in exchange rates with all other variables held constant
If there was a 10% decrease with all other variables held constant
NATURE OF INTEREST RATE RISK
INTEREST RATE RISK MANAGEMENT
TOTAL IMPACT
2021
$’000
2020
$’000
–
–
13,246
(16,189)
–
–
4,428
(6,718)
The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate
swaps. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective
hedging strategies are applied.
From a Group perspective, any internal contracts are eliminated as part of the consolidation process, leaving only external contracts.
EXPOSURE
As at the balance sheet date, the Group had financial assets and liabilities with exposure to interest rate risk. Interest on financial instruments
classified as floating rate is repriced at intervals of less than 1 year. Interest on financial instruments, classified as fixed rate, is fixed until maturity
of the instrument. The classification between fixed and floating interest takes into account applicable hedge instruments. Other financial
instruments of the Group that are not included in the following table are non-interest bearing and are therefore not subject to interest rate risk.
SENSITIVITY TO INTEREST RATE MOVEMENTS
The following sensitivity analysis shows the impact that a reasonable possible change in interest rates would have on Group profit after tax
and equity. The impact is determined by assessing the effect that such a reasonable possible change in interest rates would have had on the
interest income/(expense) and the impact on financial instrument fair values. This sensitivity is based on reasonable possible changes over
a financial year, determined using observed historical interest rate movements of the preceding five-year period, with a heavier weighting
given to more recent market data.
If interest rates had moved by 100 basis points and with all other variables held constant, profit before tax and equity would be affected
as follows:
Interest rates – increase by 100 basis points
Interest rates – decrease by 100 basis points
IMPACT ON PROFIT
BEFORE TAX
2021
$’000
(1,824)
102
2020
$’000
(2,378)
1,154
172 // 2021 ANNUA L R E PORT D OM IN O’S PIZZA ENTERPRISES LIMITED.
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of all Group’s financial instruments recognised in the financial statements are materially
the same.
The methods and assumptions used to estimate the fair value of financial instruments are as follows:
CASH
The carrying amount is the fair value due to the asset’s liquid nature.
RECEIVABLES/PAYABLES
Due to the short-term nature of these financial rights and obligations, carrying amounts represent the fair values.
OTHER FINANCIAL ASSETS/LIABILITIES
Loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘Other financial
Assets’. Loans are measured at amortised cost using the effective interest method less impairment. Interest income is recognised by applying
the effective interest rate.
DERIVATIVES
The Group enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit
ratings. Foreign exchange forward contracts, interest rate swap contracts and cross-currency interest rate swaps are all valued using forward
pricing techniques. This includes the use of market observable inputs, such as foreign exchange spot and forward rates, yield curves of the
respective currencies, interest rate curves and forward rate curves of the underlying commodity. Accordingly, these derivatives are classified
as Level 2.
INTEREST BEARING LOANS AND BORROWINGS
Quoted market prices or dealer quotes for similar instruments are used to value long-term (greater than 1 year) debt instruments.
VALUATION OF FINANCIAL INSTRUMENTS
For all fair value measurements and disclosures, the Group uses the following to categorise the method used:
• Level 1: the fair value is calculated using quoted prices in active markets.
• Level 2: the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices).
• Level 3: the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 17 3
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
The following table presents the Group’s assets and liabilities measured and recognised at fair value at the reporting date.
27 JUNE 2021
Recurring fair value measurements
Financial assets
Foreign exchange contracts
Total financial assets
Financial liabilities
Interest rate swaps
Foreign exchange contracts
Put option over non-controlling interest
Market access right
Contingent consideration
Total financial liabilities
28 JUNE 2020
Recurring fair value measurements
Financial assets
Foreign exchange contracts
Total financial assets
Financial liabilities
Interest rate swaps
Put option over non-controlling interest
Market access right
Contingent consideration
Total financial liabilities
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,157
2,157
955
723
–
–
–
–
–
–
–
2,157
2,157
955
723
164,444
164,444
17,594
293
17,594
293
1,678
182,331
184,009
54
54
1,311
–
–
–
–
–
–
112,980
24,690
633
1,311
138,303
54
54
1,311
112,980
24,690
633
139,614
There have been no transfers between Level 1 and Level 2.
The only financial liabilities subsequently measured at fair value on Level 3 fair value measurement represent the fair value of the put option
and market access right relating to the acquisition of Domino’s Pizza Germany and contingent consideration for previous acquisitions. No gain
or loss for the year relating to these liabilities has been recognised in profit or loss.
The opening balance for the put option liabilities was $113.0 million and has a closing balance at year end of $164.4 million. The movement
of the put liability is recorded in reserves.
No gain or loss relating to level 3 liabilities has been recognised in profit or loss.
VALUATION TECHNIQUES USED TO DERIVE LEVEL 2 AND 3 FAIR VALUES
The fair values of the financial assets and financial liabilities included in the level 2 and 3 categories above have been determined in
accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the
discount rate that reflects the credit risk of counterparties and long-term revenue and profit growth rates.
The level 2 financial instruments have been valued using the discounted cash flow technique. Future cash flows are estimated based on
forward interest rates (from observable yield curves at the end of the reporting period) and contract interest rates, discounted at a rate that
reflects the credit risk of various counterparties.
174 // 2021 ANNUA L REPO RT D OMI N O’S PIZZA EN TERPRISES LIMIT ED.
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
Specific valuation techniques used to value level 3 financial instruments include:
PUT OPTION OVER NON-CONTROLLING INTEREST
The valuation technique used is the unlevered price/earnings multiple which requires future earnings to be estimated. The significant
unobservable inputs include adjusted unlevered price/earnings multiple and the put option is exercisable 4 years (January 2020) from date
of the joint venture agreement (December 2015). The call option is exercisable 6 years (January 2023) from the date of the joint venture
agreement. The earnings and margins are based on management’s experience and knowledge of the market conditions of the industry, with
the higher earnings resulting in a higher fair value and the shorter the time period resulting in a lower fair value.
MARKET ACCESS RIGHT
The valuation technique used is the income approach. In this approach, the discounted cash flows are used to capture the future cost of
the asset. The significant unobservable inputs include adjusted unlevered price/earnings multiples. The earnings and margins are based on
management’s experience and knowledge of the market conditions of the industry, with the higher earnings resulting in a higher fair value.
CONTINGENT CONSIDERATION IN A BUSINESS COMBINATION
The discounted cash flow method was used to calculate the present value of the expected future economic benefits that will flow out of
the Group arising from the contingent consideration. The significant unobservable inputs include the projected gross margin based on
management’s experience and knowledge of market and industry conditions. Significant increase/(decrease) in the gross profit would result
in a higher/(lower) fair value of the contingent consideration liability.
OFFSETTING FINANCIAL INSTRUMENTS
The Group presents its derivative assets and liabilities on a gross basis. Derivative financial instruments entered into by the Group are subject
to enforceable master netting arrangements, such as International Swaps and Derivatives Association (ISDA) master netting agreements.
In certain circumstances, for example, when a credit event such as a default occurs, all outstanding transactions under ISDA agreements are
terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions.
The amounts set out in note 22 and 23 represent the derivative financial assets and liabilities of the Group that are subject to the above
arrangements and are presented on a gross basis.
HEDGING
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk and interest rate risk in fair value hedges,
cash flow hedges, or hedges of net investment in foreign operations as appropriate. Hedges of foreign exchange risk on firm commitments
are accounted for as cash flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the
hedge and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in fair values or
cash flows of the hedged item attributable to the hedged risk, which is when the hedge relationship meet all of the hedge effectiveness
requirements prescribed in AASB 9.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective
for that designated hedging relationship remains the same, the Group adjust the hedge ratio for the hedging relationship (i.e. rebalances the
hedge) so that it meets the qualifying criteria again.
The Group holds the following hedging instruments:
FORWARD EXCHANGE CONTRACTS
Contracts denominated in US Dollar to hedge highly probable sale and purchase transactions (cash flow hedges).
INTEREST RATE SWAPS
To optimise the Group’s exposure to fixed and floating interest rates arising from borrowings. These hedges incorporate cash hedges, which
fix future interest payments, and fair value hedges, which reduce the Group’s exposure to changes in the value of its assets and liabilities
arising from interest rate movements.
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 17 5
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
CROSS-CURRENCY INTEREST RATE SWAPS
To either reduce the Group’s exposure to exchange rate variability in its interest repayments of foreign currency denominated debt
(cash flow hedges) or to hedge against movements in the fair value of those liabilities due to exchange and interest rate movements
(fair value hedges). The borrowing margin on the Group’s cross-currency interest rate swap has been treated as a cost of hedging and deferred
into equity. These costs are then amortised to the profit and loss as a finance cost over the remaining life of the borrowing.
CASH FLOW HEDGES
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify
as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve,
limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective
portion is recognised immediately in the profit or loss.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria.
This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for
prospectively. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur
the gain or loss accumulated in equity is recognised immediately in profit or loss.
The Group uses cash flow hedges to mitigate the risk of variability of future cash flows attributable to foreign currency fluctuations over the
hedging period associated with foreign currency borrowings and ongoing business activities, predominantly where there are highly probable
purchases or settlement commitments in foreign currencies. The Group also uses cash flow hedges to hedge variability in cash flows due to
interest rates associated with borrowings.
At 27 June 2021, the Group have interest rate swap agreements in place with a notional amount of €131 million and ¥12 billion, whereby the
Group receives a fixed rate of interest of EURIBOR (floored at 0%) and TIBOR +0% and pays interest at rate equal to 0.168% and 0.242% on
the notional amount. The swap is being used to hedge the exposure to changes in the fair value of its fixed rate secured loans.
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated
on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued
fixed rate debt held and the cash flow exposures on the issued variable rate debt held. The fair value of interest rate swaps at the reporting
date is determined by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract, and
is disclosed below. The average interest rate is based on the outstanding balances at the end of the financial year.
As the critical terms of the interest rate swap contracts and their corresponding hedged items are the same, the Group performs a qualitative
assessment of effectiveness and it is expected that the value of the interest rate swap contracts and the value of the corresponding hedged
items will systematically change in opposite direction in response to movements in the underlying interest rates. The main source of hedge
ineffectiveness in these hedge relationships is the effect of the counterparty and the Group’s own credit risk on the fair value of the interest
rate swap contracts, which is not reflected in the fair value of the hedged item attributable to the change in interest rates. No other sources
of ineffectiveness emerged from these hedging relationships.
176 // 2021 ANNUA L REPO RT D OMI N O’S PIZZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
The impact of the hedging instruments on the statement of financial position as at 27 June 2021 is, as follows:
Interest Rate Swap
Notional Amount (Euro)
Carrying Amount (AUD)
Change in intrinsic value of outstanding hedging instrument since 29 June 2020 (AUD)
Change in value of hedged item used to determine hedge effectiveness (AUD)
Notional Amount (JPY)
Carrying Amount (AUD)
Change in intrinsic value of outstanding hedging instrument since 29 June 2020 (AUD)
Change in value of hedged item used to determine hedge effectiveness (AUD)
2021
’000
2020
’000
131,000
205,975
(10)
10
131,000
213,425
(369)
370
12,000,000
12,000,000
142,569
162,734
(945)
945
(941)
941
The line item in the statement of financial position which is impacted by the hedging instrument is current financial liabilities.
Amounts recognised in equity are transferred to income statement when the hedged transaction affects profit or loss, such as when hedged
income or expenses are recognised or when a forecast sale occurs or the asset is consumed. When the hedged item is the cost of a
non-financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to the income statement.
If the hedging instrument expires or is sold, terminated or exercised without replacement or roll over, or if its designation as a hedge is revoked,
amounts previously recognised in equity remain in equity until the forecast transaction occurs.
HEDGES OF NET INVESTMENT IN FOREIGN OPERATIONS
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument
relating to the effective portion of the hedge is recognised in Other Comprehensive Income and accumulated under the heading of foreign
currency transaction reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
Gains and losses on the hedging instrument relating to the effective portion of the hedge accumulated in the foreign currency translation
reserve are reclassified to profit or loss on the disposal or partial disposal of the foreign operations.
Included in borrowings at 27 June 2021 is borrowings of $145,702 thousand, which has been designated as hedge of the net investments in
the Group’s European subsidiaries. These borrowings are being used to hedge the Group’s exposure to the foreign exchange risk on these
investments.
There are economic relationships between the hedged items and the hedging instruments as the net investment creates a transaction risk
that will match the foreign exchange risk on the Euro borrowings. The Group has established a hedge ratio of 1:1 as the underlying risk of the
hedging instruments are identical to the hedged risk component. The hedge ineffectiveness will arise when the amount of the investment in
the foreign subsidiary become lower than the amount of the fixed rate borrowing.
The impact of the hedging instruments on the statement of financial position is, as follows:
Hedge of Net Investment in Foreign Operations
Notional amount (EURO)
Carrying amount (AUD)
Change in intrinsic value of outstanding hedging instrument since 29 June 2020 (AUD)
Change in value of hedged item used to determine hedge effectiveness (AUD)
2021
’000
2020
’000
92,667
145,702
(5,270)
5,270
92,667
150,972
1,145
(1,145)
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 177
continuedNotes to the Financial Statements 24 FINANCIAL RISK MANAGEMENT (continued)
HEDGING RESERVES
The Group’s hedging reserves are disclosed in note 16.
CREDIT RISK
NATURE OF CREDIT RISK
Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument or customer contract that will result
in a financial loss to the Group. The Group is exposed to credit risk from its operating activities (primarily from customer receivables and from
its financing activities, including deposits with financial institutions, foreign exchange transactions and other financial instruments).
CREDIT RISK MANAGEMENT: RECEIVABLES & LOANS
Customer credit risk is managed by each division subject to established policies, procedures and controls relating to customer credit risk
management. The Group trades with recognised well-established franchisees. Depending on the division, credit terms for receivables are
generally up to 30 days from date of invoice. Loans payments are received weekly in advance. The Group’s exposure to bad debts is not
significant and default rates have historically been very low on both receivables and loans.
Franchisee’s and customers who trade on credit terms are subject to credit verification procedures, including an assessment of financial
position, past experience and industry reputation. In addition, receivable balances are monitored on an ongoing basis with the result that the
Group’s exposure to bad debts is not significant. In the event that a loan defaults, the Group’s policy is to purchase and operate the store as
a corporate store.
The credit quality of trade receivables and loans neither past due nor impaired has been assessed as high based on information on
counterparty and historical counter party default. The carrying value of the Groups’ trade, other receivables and loans are denominated in
Australian Dollars, NZ Dollars, Japanese Yen and Euros.
EXPOSURE
The Group’s maximum credit exposure to current receivables, finance advances and loans are shown below:
ANZ
Europe
Japan
Total
2021
$’000
97,758
55,133
60,254
213,145
2020
$’000
110,832
51,940
47,141
209,913
CREDIT RISK MANAGEMENT: FINANCIAL INSTRUMENTS AND CASH DEPOSITS
Credit risk from balances with banks and financial institutions is managed by the Group in accordance with the Board-approved policy.
Investments of surplus funds are made only with approved counterparties.
The carrying amount of financial assets represents the maximum credit exposure. There is also exposure to credit risk when the Group
provides a guarantee to another party. Details of contingent liabilities are disclosed in note 29. There are no significant concentrations of
credit risk within the Group.
178 // 2021 ANNUA L REPO RT D OMI NO ’S PIZZA ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements GROUP STRUCTURE
Group structure explains aspects of the Group structure and how changes have affected the financial position and performance of the Group.
25 SUBSIDIARIES
Details of the Company’s subsidiaries at 27 June 2021 are as follows:
NAME OF ENTITY
Domino’s Development Fund Pty Ltd1
Hot Cell Pty Ltd1
Silvio’s Dial-a-Pizza Pty Ltd1
IPG Marketing Solutions Pty Ltd1
Catering Service & Supply Pty Ltd1
Domino’s Pizza Enterprises Ltd Employee Share Trust
Construction, Supply & Service Pty Ltd1
Ride Sports ANZ Pty Ltd1
Domino’s Pizza New Zealand Limited
DPH NZ Holdings Limited
Domino’s Pizza Japan, Inc.
Domino’s Pizza Europe B.V.
Domino’s Pizza Netherlands B.V.
DOPI Vastgoed B.V.
Domino’s Pizza Geo B.V.
Domino’s Pizza WOW Group B.V
N4N B.V.
Domino’s Pizza Belgium S.P.R.L
Daytona Holdco Limited (UK)
Daytona JV Limited (UK)
Ausmark Holdco Limited
Ausmark ApS
Daytona Germany HRB
Domino’s Pizza Deutschland GmbH
Hallo Pizza GmbH
DPEU Holdings S.A.S.
Domino’s Pizza France S.A.S.
HVM Pizza S.A.R.L.
Fra-Ma-Pizz S.A.S.
Pizza Centre France S.A.S.
Groupe AVB S.A.S.
AVB2 S.A.R.L.
AVB Services S.A.R.L.
AVB3 S.A.R.L.
AVB4 S.A.R.L.
AVB5 S.A.R.L.
Taiwan Domino’s Pizza Co., Ltd
PLACE OF
INCORPORATION
AND OPERATION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Japan
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
Belgium
UK
UK
UK
Denmark
Germany
Germany
Germany
France
France
France
France
France
France
France
France
France
France
France
Taiwan
PROPORTION OF
OWNERSHIP AND
VOTING POWER HELD
FUNCTIONAL
CURRENCY
2021
%
2020
%
AUD
AUD
AUD
AUD
AUD
AUD
AUD
AUD
NZD
NZD
JPY
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
DKK
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
TWD
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
67
100
100
67
67
67
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
67
100
100
67
67
67
100
100
100
100
100
100
100
100
100
100
100
–
1
This entity is a member of the tax-consolidated group where Domino’s Pizza Enterprises Limited is the head entity within the tax-consolidated group.
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 17 9
continuedNotes to the Financial Statements 26 PARENT ENTITY INFORMATION
PARENT ENTITIES
The parent entity and the ultimate parent entity in the Consolidated entity is Domino’s Pizza Enterprises Limited.
FINANCIAL POSITION
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Reserves
Equity-settled share-based benefits
Hedging
Total equity
FINANCIAL PERFORMANCE
Profit for the year
Other comprehensive income
Total comprehensive income
TAX CONSOLIDATED GROUP
2021
$’000
2020
$’000
124,448
839,555
964,003
172,590
550,060
722,650
259,500
59,579
(76,244)
(1,482)
241,353
148,060
405
148,465
167,973
855,993
1,023,966
140,060
694,292
834,352
235,420
33,504
(77,423)
(1,887)
189,614
80,821
556
81,377
The Company and all its wholly-owned Australian resident entities are part of a tax consolidated group under Australian taxation law. Domino’s
Pizza Enterprises Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets
arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of
the members of the tax-consolidated group using the ‘separate taxpayer within group approach’ by reference to the carrying amounts in
the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and
deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group are recognised by
the Company (as head entity in the tax-consolidated group).
The entities in the tax-consolidated group have not entered into a tax sharing agreement or tax funding agreement. Income tax liabilities
payable to the tax authorities in respect of the tax-consolidated group are recognised in the financial statements of the parent entity.
A tax-consolidated group was formed with effect from 1 July 2003 and is therefore taxed as a single entity from that date. The head entity
within the tax-consolidated group is Domino’s Pizza Enterprises Limited. The members of the tax-consolidated group are identified at note 25.
CONTINGENT LIABILITIES OF THE PARENT ENTITY
Guarantees are provided to third party financial institutions in relation to franchisee loans. The amount disclosed as a contingent liability
represents the amounts guaranteed in respect of franchisees that would not, without the guarantee, have been granted the loans. The directors
believe that if the guarantees are ever called on, the Company will be able to recover the amounts paid upon disposal of the stores.
Refer to note 29 for further information regarding the contingent liabilities of the parent entity.
180 // 2021 ANNUA L RE PO RT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 27 INVESTMENT IN JOINT VENTURE
RECOGNITION AND MEASUREMENT
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint
arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties sharing control.
The results, assets and liabilities of the joint ventures are incorporated in these consolidated financial statements using the equity method
of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance
with AASB 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in a joint venture is
initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the
profit or loss and other comprehensive income of the joint venture. When the Group’s share of losses of a joint venture exceeds the Group’s
interest in that joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint
venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group
has incurred legal or constructive obligations or made payments on behalf of the joint venture.
An investment in a joint venture is accounted for using the equity method from the date on which the investee becomes a joint venture.
On acquisition of the investment in a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the
identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment.
Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment,
is recognised immediately in profit or loss in the period in which the investment is acquired.
The requirements of AASB 9 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s
investment in a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in
accordance with AASB 136 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with
its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss
is recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment ceases to be a joint venture, or when the investment
is classified as held for sale. When the Group retains an interest in the former joint venture and the retained interest is a financial asset,
the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in
accordance with AASB 9. The difference between the carrying amount of the joint venture at the date the equity method was discontinued, and
the fair value of any retained interest and any proceeds from disposing of a part interest in the joint venture is included in the determination of
the gain or loss on disposal of the joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive
income in relation to that joint venture on the same basis as would be required if that joint venture had directly disposed of the related assets or
liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that joint venture would be reclassified to profit
or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification
adjustment) when the equity method is discontinued.
The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment
in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.
When the Group reduces its ownership interest in a joint venture but the Group continues to use the equity method, the Group reclassifies to
profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction
in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a Group transacts with a joint venture of the Group, profits and losses resulting from the transactions with the joint venture are recognised
in the Group’s consolidated financial statements only to the extent of interests in the joint venture that are not related to the Group.
On 24 November 2014, the Group acquired 50% equity of a joint venture called Stuart Preston Pty Ltd as Trustee for the Preston Holdings
Family Trust/Hot Cell Pty Ltd Partnership. On 30 March 2015, the Group acquired 50% equity of a joint venture called Triumphant Pizza Pty
Ltd/Hot Cell Partnership.
On 4 April 2016, the Group acquired 50% equity of a joint venture called Northern Beaches Enterprises Pty Ltd as trustee for the Northern
Beaches Trust/Hot Cell Pty Ltd Partnership.
As per February 3, 2017 Domino’s Pizza Netherlands B.V. entered into a joint venture named Domino’s Pizza GEO B.V. with a franchisee,
Mr. Steenks (50% each). Upon establishing this joint venture a total of 3 corporate stores previously owned by Domino’s and 2 stores owned
by the franchisee were transferred to the legal entity.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 181
continuedNotes to the Financial Statements UNRECOGNISED ITEMS
Unrecognised items provides information about items that are not recognised in the financial statements but could potentially have a significant
impact on the Group’s financial position and performance.
28 COMMITMENTS
The Group has various lease contracts that have not yet commenced as at 27 June 2021. The future lease payments for these non-cancellable
lease contracts are $770 thousand within 1 year, $2,754 thousand within 5 years and $1,105 thousand thereafter.
CAPITAL EXPENDITURE COMMITMENTS
Plant and equipment
Total
29 CONTINGENT LIABILITIES
RECOGNITION AND MEASUREMENT
2021
$’000
7,722
7,722
2020
$’000
3,893
3,893
Contingent liabilities acquired in a business combination are initially measured at fair value at the date of acquisition. At subsequent reporting
periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with AASB 137 ‘Provisions,
Contingent Liabilities and Contingent Assets’ and the amount initially recognised less cumulative amortisation.
Guarantees – franchisee loans and leases
Total
2021
$’000
9,434
9,434
2020
$’000
12,374
12,374
Included above are guarantees provided to third party financial institutions in relation to franchisee loans. This is a contingent liability
representing the amounts guaranteed in respect of franchisees that would not, without the guarantee, have been granted the loans. The
directors believe that if the guarantees are ever called on, the Company will be able to recover the amounts paid upon disposal of the stores.
Included in the above are contingent liabilities of the parent entity of $3,188 thousand.
ESTIMATES AND JUDGEMENTS
LEGAL AND REGULATORY MATTERS
The Group operates in a number of jurisdictions with different regulatory and legal requirements. Given this complexity, management is at
times required to exercise judgement in evaluating compliance with relevant laws and regulations.
SPEED RABBIT PIZZA
There are various separate French legal proceedings by a competitor, Speed Rabbit Pizza (SRP) against subsidiary, Domino’s Pizza France
(DPF) (the main claim) and seven SRP franchisees against DPF and the relevant DPF franchisees (the local claims). The allegations are that
DPF and its franchisees breached French laws governing payment time limitations and lending, thereby giving DPF and its franchisees an
unfair competitive advantage. SRP claimed significant damages for impediment of the development of its franchise network, lost royalty
income from SRP franchisees and harm to SRP’s image. DPF and its franchisees have denied liability and are vigorously defending the claims.
On 7 July 2014, the Court at first instance handed down its decision in the main claim, as well as in 5 of the local claims. All of the claims of
SRP and the relevant SRP franchisees were dismissed. SRP filed an appeal to these decisions in the Court of Appeal, which dismissed SRP’s
appeal in the main claim on 25 October 2017 and the appeal of SRP and/or SRP franchisees in 5 local claims on 12 December 2018. SRP then
filed an appeal from the decision in the main claim and in 2 local claims to the Cour de Cassation i.e. France’s highest court.
182 // 2021 ANNUA L RE PO RT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 29 CONTINGENT LIABILITIES (continued)
In the main claim, the Cour de Cassation handed down its judgement on 15 January 2020 which found errors of law in the Court of Appeal
decision and set aside parts of the Court of Appeal’s decision. On 20 December 2020, SRP filed a fresh appeal in the Court of Appeal and
on 22 January 2021 provided DPF with a brief of evidence including new claims for compensation of €232 million. DPF filed its new appeal
brief including a new economic report on 19 March 2021.
In the 2 local claims appealed to the Cour de Cassation, judgements were handed down on 7 July 2020 and 30 September 2020 which
found errors of law and cancelled the Court of Appeal decisions. The current status of these 2 claims ruled on by the Cour de Cassation is
that the first instance decisions in favour of DPF stand and SRP is entitled to file a fresh appeal of those 2 decisions to the Court of Appeal.
SRP has not yet filed such appeals.
For the sixth local claim, the Court found in favour of DPF at first instance on 27 September 2016, and SRP filed an appeal from this decision
to the Court of Appeal. On 30 January 2018, the Court of Appeal dismissed SRP’s appeal. The 2 SRP franchisees then appealed to the Cour
de Cassation which dismissed their appeal on 29 January 2020.
The seventh local claim was heard by the Commercial Court of Nanterre at first instance on 15 January 2021. On 12 April 2021, the First
President of the Court of Appeal of Versailles handed down a decision transferring the case to the Commercial Court of Versailles, on the
request of the President of the Commercial Court of Nanterre. The case will have to be heard again at first instance before the Commercial
Court of Versailles.
DPE denies all claims made and is vigorously defending the proceedings brought against it. DPE is confident of its legal position. Accordingly,
no provision has been recognised as at 27 June 2021.
PIZZA SPRINT
In May 2016, proceedings were brought against Fra-Ma Pizz SAS and Pizza Center France SAS, the Pizza Sprint entities, by a number of
former and current franchisees (Relevant Pizza Sprint Franchisees) whom allege a significant imbalance in the rights and obligations by the
franchisor (Franchisees’ Proceedings). The alleged practices predated the acquisition of Pizza Sprint by the company, accordingly during the
re-measurement period the company has adjusted the purchase price accounting to recognise a contingent liability and asset in relation to
the above matter. A number of the claims by the Relevant Pizza Sprint Franchisees have been settled on a commercial basis.
The French Ministry for the Economy and Finance (Ministry) also brought proceedings (Ministry Proceedings) involving the same facts against
Fra-Ma Pizz SAS, Pizza Center France SAS and Domino’s Pizza France SAS (collectively, DPF Companies). The Ministry Proceedings are
being defended by the DPF Companies. The Relevant Pizza Sprint Franchisees sought to join the Franchisees’ Proceedings to the Ministry
Proceedings. The request was rejected by the court on 15 February 2018.
On 24 June 2019 the Franchisees’ Proceedings and Ministry Proceedings were heard separately. On 22 October 2019, a decision was made
in relation to the Ministry Proceedings which did not result in any fine or financial charges against any of the DPF Companies. The Ministry
has appealed the decision and the Relevant Pizza Sprint Franchisees have also filed an appeal in support. The appeal will be heard on
15 September 2021.
Five decisions in the Franchisees’ Proceedings were handed down on 3 December 2019 and the remaining decisions were handed down
on 31 January 2020. Fra-Ma Pizz SAS and Domino’s Pizza France SAS were ordered to pay a total amount of €3 million to certain Relevant
Pizza Sprint Franchisees. Various appeals have been filed by the DPF Companies, on the 1 hand, and separately by some of the Relevant
Pizza Sprint Franchisees, on the other, with the Paris Court of Appeal. The need to make the payment in each case has been suspended
pending the outcome of the appeals. Pleadings are scheduled for 19 January 2022.
CLASS ACTION
On 24 June 2019, Riley Gall, as the lead applicant, commenced a representative proceeding (class action) against the Company in the Federal
Court of Australia on behalf of an alleged group comprising some Australian franchisee employees who were employed as delivery drivers
or in-store workers between 24 June 2013 and 23 January 2018.
The statement of claim alleges that the Company misled certain franchisees who, in reliance on the Company’s representations and
conduct, paid their delivery drivers and in-store workers in accordance with a number of industrial instruments rather than under the
Fast Food Industry Award 2010.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 183
continuedNotes to the Financial Statements 29 CONTINGENT LIABILITIES (continued)
The Company rejects the allegations and has been defending the action vigorously. A defence denying the allegations was filed and an
application to have the statement of claim (or parts thereof) struck out was heard on 9 June 2020. On 13 April 2021, the Federal Court dismissed
that application, and at that time the parties were engaged in a referral before a Registrar of the Federal Court regarding discovery. As a result
of that referral process the parties are amending their pleadings and further interlocutory applications will be listed for hearing after August
2021. The matter has not been listed for trial.
The statement of claim does not quantify any loss by the lead applicant or the alleged group and, to date, the applicant’s solicitors have not
indicated how many members form part of the alleged group. Accordingly, at this stage of the proceeding it is not possible for the Company to
determine with accuracy or reliability any potential obligation or financial impact arising from the alleged damages claimed in the proceeding.
GENERAL CONTINGENCIES
As a global business, from time to time DPE is also subject to various claims and litigation from third parties during the ordinary course of its
business. The directors of DPE have considered such matters which are or may be subject to claims or litigation at 27 June 2021 and unless
specific provisions have been made are of the opinion that no material contingent liability for such claims of litigation exist.
30 SUBSEQUENT EVENTS
REFINANCING OF BORROWINGS
During the period between year-end and the date of authorisation of the financial statements, the Group has executed several bilateral facility
agreements with new and existing lenders. The bilateral agreements provide the Group with an increase in its committed debt facilities from
$751.6 million to circa $900.0 million and a new funding term that is weighted, on average, to 5 years.
OTHER EVENTS
On 17 August 2021, the directors declared a final dividend for the financial year ended 27 June 2021 as set out in note 18.
Other than the above, there has been no further matters or circumstance occurring subsequent to the end of the financial year that has
significantly affected the operations of the Group, the results of those operations, or the state of affairs.
184 // 2021 ANNUA L R EPO RT D OM IN O’S PIZZA ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements OTHER INFORMATION
31 RETIREMENT BENEFIT PLANS
RECOGNITION AND MEASUREMENT
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling
them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial
valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect
of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement
of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement
recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past
service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the
beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorised as follows:
• Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
• Net interest expense or income; and
• Re-measurement
The Group presents the first 2 components of defined benefit costs in profit or loss in the line item employee benefits expense. Curtailment
gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the consolidated statement of financial position represents the actual deficit or surplus in the
Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available.
ESTIMATES AND JUDGEMENTS
DISCOUNT RATE USED TO DETERMINE THE CARRYING AMOUNT OF THE GROUP’S DEFINED BENEFIT OBLIGATION
The Group’s defined benefit obligation is discounted at a rate set by reference to market yields at the end of the reporting period on high
quality corporate bonds. Significant judgement is required when setting the criteria for bonds to be included in the population from which
the yield curve is derived. The most significant criteria considered for the selection of bonds include the issue size of the corporate bonds,
quality of the bonds and the identification of outliers which are excluded.
DEFINED BENEFIT PLANS – DOMINO’S PIZZA JAPAN, INC.
The Group operates an unfunded retirement benefit plan where a lump-sum amount is paid out to eligible full-time employees of Domino’s
Pizza Japan with more than 3 years of service as of retirement.
The lump-sum amount is calculated as monthly salary as of retirement multiplied by a multiple. The multiple is based on years of service up
to a maximum of 41 years and whether retirement is voluntary or involuntary.
The plan typically exposes the Group to actuarial risks such as: interest rate risk, retention risk and salary risk which impacts the plan as follows:
•
Interest rate risk: A decrease in the bond interest rate in Japan will increase the plan liability by reducing the discount rate;
• Retention risk: The present value of the defined benefit plan liability is calculated by reference to the expected length of service of full-time
staff. As such, an increase in the length of service above the expected length will increase the plan’s liability; and
• Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants.
As such, an increase in the salary of the plan participants will increase the plan’s liability.
The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation was carried out at 27 June 2021
by Mr. K. Taniguchi, Certified Pension Actuary.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 185
continuedNotes to the Financial Statements 31 RETIREMENT BENEFIT PLANS (continued)
The principal assumptions used for the purposes of the actuarial valuations were as follows:
Discount rate
Expected rate of salary increase
Number of employees
Average service years
Expected service years
Amounts recognised in other comprehensive income in respect of these defined benefit plans are as follows:
Service cost:
Current service cost
Net interest expense
Components of defined benefit costs recognised in profit or loss
Remeasurement of the net defined benefit liability:
Actuarial gain recognised in the period
Components of defined benefit costs recognised in other comprehensive income
Total
2021
0.07%
1.93%
649
4.2 yrs
5.2 yrs
2021
$’000
1,210
7
1,217
853
853
2,070
2020
0.10%
1.93%
584
4.4 yrs
5.2 yrs
2020
$’000
1,059
(8)
1,051
109
109
1,160
Of the expense for the year, an amount of $1.2 million has been included in profit or loss as administration expenses. (2020: $1.1 million).
Movements in the present value of the defined benefit obligation in the current year were as follows:
Opening defined benefit obligation
Current service cost
Net interest expense
Remeasurements (gains)/losses:
Actuarial gains and losses arising from changes in financial assumptions
Benefits paid
Exchange differences of foreign plans
Closing defined benefit obligation
2021
$’000
7,710
1,210
7
853
(797)
(1,224)
7,759
2020
$’000
7,467
1,059
(8)
109
(919)
2
7,710
The Group expects to make a contribution of $1.3 million (2020: $1.3 million) to the defined benefit plans during the next financial year.
186 // 2021 ANNUAL RE PORT DO MI NO’S PIZ ZA ENTERPRISES LIMIT ED.
continuedNotes to the Financial Statements 32 KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Other long-term employee benefits
Equity settled share-based payments
Total
2021
$
2020
$
7,373,428
6,092,385
208,624
77,848
2,376,928
10,036,828
226,060
(192,059)
674,930
6,801,316
The remuneration of directors and key executives is determined by the Nomination, Culture and Remuneration Committee having regard to
the performance of individuals and market trends.
During the year, independent remuneration consultants were engaged by the Nomination, Culture and Remuneration Committee to ensure
that the reward practices and levels of remuneration for KMPs are consistent with market practice. A statement of recommendation from
the remuneration consultants has been received for the 2021 financial year. Payment of $102,330 (2020: $154,535) has been made to the
remuneration consultant for the remuneration advisory services provided on the remuneration recommendation. No other advice has been
provided by the remuneration consultant for the financial year.
In order to ensure that the remuneration recommendation would be free from undue influence by members of the key management personnel
to whom the recommendation relates to, the board has ensured that the remuneration consultant is not a related party to any member of the
key management personnel. As such, the Board is satisfied that the remuneration recommendation was made free from undue influence by
the member or members of the key management personnel to whom the recommendation relates.
33 RELATED PARTY TRANSACTIONS
EQUITY INTEREST IN SUBSIDIARIES
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 25 to the financial statements.
EQUITY INTERESTS IN OTHER RELATED PARTIES
There are no equity interests in other related parties.
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
KEY MANAGEMENT PERSONNEL COMPENSATION
Details of key management personnel compensation are disclosed in note 32 to the financial statements.
LOANS TO KEY MANAGEMENT PERSONNEL
There were no loans outstanding at any time during the financial year to key management personnel or to their related parties.
All executive share options issued to the directors and key management personnel were made in accordance with the provisions of the
ESOP. Each share option converts on exercise to 1 ordinary share of Domino’s Pizza Enterprises Limited. No amounts are paid or payable
by the recipient on receipt of the option.
Further details of the ESOP are contained in note 20 to the financial statements.
OTHER TRANSACTIONS WITH DIRECTORS OF THE GROUP
During the year the Group engaged the services of Mr Michael Cowin, a related party of Mr Jack Cowin, as a Board Member of DPE Japan
Co. Ltd. The services rendered were based on market rates for such services and were due and payable under normal payment terms.
A total of $54,750 (2020: $54,750) was paid or payable to Mr Michael Cowin during the year ended 27 June 2021.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 187
continuedNotes to the Financial Statements 33 RELATED PARTY TRANSACTIONS (continued)
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL OF DOMINO’S PIZZA ENTERPRISES LIMITED
Comgroup Supplies Pty Ltd and Comgroup NZ Limited T/A Franklin Foods, are entities associated with Mr Jack Cowin, supplies food products
to the Group on commercial arm’s length terms. The entities were selected as a preferred suppliers after competitive tender processes in
which Mr Cowin had no involvement. During the year the Group made purchases totalling $16,170,049 excluding GST. As at 27 June 2021,
$2,833,688 (2020: $2,007,578) was outstanding and there were no bad or doubtful debts. In addition, the Group received sponsorship
contributions from Comgroup Supplier Pty Ltd in relation to the Company’s annual franchising rally to the value of $119,323, excluding GST.
The Group and Competitive Foods Australia Pty Ltd (CFAL), an entity associated with Mr Jack Cowin, acquire television media services from
unrelated third party service providers under a joint venture arrangement and receive volume pricing benefits. The Group does not receive
or provide any other benefits to CFAL under the joint venture.
During the financial year, key management personnel and their related parties purchased goods, which were domestic or trivial in nature,
from the Company on the same terms and conditions available to employees and customers.
TRANSACTIONS WITH OTHER RELATED PARTIES
Other related parties include:
• associates;
• directors of related parties and their director-related entities; and
• other related parties.
TRANSACTIONS WITHIN THE GROUP
The Group includes the ultimate parent entity of the Group and its controlled entities.
The wholly-owned Australian entities within the Group are taxed as a single entity effective from 1 July 2003. The entities in the tax-consolidated
group have not entered into a tax sharing agreement or tax funding agreement. Income tax liabilities payable to the taxation authorities
in respect of the tax-consolidated group are recognised in the financial statements of the parent entity. Refer to note 25 to the financial
statements for members of the tax-consolidated group.
The Company provided accounting, marketing, legal and administration services to entities in the wholly-owned group during the financial
year. The Company also paid costs on behalf of entities in the wholly-owned group and subsequently on-charged these amounts to them.
During the year the Company extended or had in place loans to Joint Venture partnerships of which the Group has a 50% interest. The balance
of these loans as at 27 June 2021 is $9,723,433 and interest is charged based on commercial rates and terms.
During the financial year, Domino’s Pizza New Zealand Limited provided management, franchisee and store development services to the
Company. Domino’s Pizza New Zealand Limited also collected debtor receipts on behalf of the Company.
During the financial year, services were provided between entities in the group in accordance with the relevant Service Agreements.
All transaction were at arm’s length.
188 // 2 021 ANNUA L RE PO RT DO MI N O’S PIZ ZA ENTERPRISES LIMITED.
continuedNotes to the Financial Statements 34 REMUNERATION OF AUDITORS
The auditor of Domino’s Pizza Enterprises Limited is Deloitte Touche Tohmatsu.
GROUP AUDITOR1
Audit or review of financial reports:
Audit of the parent company
Audit of subsidiaries and other entities
Total audit services
Other assurance and agreed-upon procedures under other legislation or contractual agreements2
Total assurance services
Tax consulting services3
Due diligence services
Digital advisory services4
Other advisory services
Total other services
Total Group auditor’s remuneration
2021
$
2020
$
538,959
862,498
1,401,457
63,175
63,175
153,583
137,500
37,718
37,420
366,221
1,830,853
482,349
828,606
1,310,955
106,506
106,506
138,090
–
148,710
–
286,800
1,704,261
1 All amounts were paid to Deloitte Touche Tohmatsu by the Company and its subsidiaries. Fees are billed in local currencies and converted into AUD at
average rates. The auditor of the parent entity is Deloitte Touche Tohmatsu Australia.
2 Other assurance services relate principally to the Domino’s Franchisee monitoring and whistleblower services payable to the parent company auditor.
3 Taxation services relate to tax compliance services and tax advisory services paid to related overseas practices of the parent company auditor.
4 Principally relate to digital advisory services payable to the parent company auditor.
35 OTHER ITEMS
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
In the current year, the Group has applied a number of amendments to Australian accounting standards and new interpretations issued by
the Australian Accounting Standards Board (‘AASB’) that are mandatorily effective for an accounting period that begins on or after 29 June
2020 and therefore relevant for the current year end.
STANDARDS AFFECTING PRESENTATION AND DISCLOSURE
AMENDMENTS TO IFRS 3: DEFINITION OF A BUSINESS
The amendment to IFRS 3 Business Combinations clarifies that to be considered a business, an integrated set of activities and assets must
include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create output. Furthermore,
it clarifies that a business can exist without including all of the inputs and processes needed to create outputs. These amendments
had no impact on the consolidated financial statements of the Group, but may impact future periods should the Group enter into any
business combinations.
AMENDMENTS TO IAS 1 AND IAS 8 DEFINITION OF MATERIAL
The amendments provide a new definition of material that states, “information is material if omitting, misstating or obscuring it could reasonably
be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial
statements, which provide financial information about a specific reporting entity.” The amendments clarify that materiality will depend on the
nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements.
A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users.
These amendments had no impact on the consolidated financial statements of, nor is there expected to be any future impact to the Group.
20 21 ANN UAL REPO RT DO MI NO ’S P I ZZA E NT ERPRISES LIMITED. // 189
continuedNotes to the Financial Statements 35 OTHER ITEMS (continued)
Amendments to IFRS 16 Covid-19 Related Rent Concessions
On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions – amendment to IFRS 16 Leases. The amendments provide relief
to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the
Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related rent concession from a lessor
is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the Covid-19 related
rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification. The amendment
applies to annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted.
This amendment had no impact on the consolidated financial statements of the Group.
The adoption of these amendments did not have any impact on the amounts recognised in prior periods. The Group is unable to assess what
impact these amendments (if any) will have on future reporting periods.
NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 27 June 2021 reporting periods and
have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below.
Software as a Service
In April 2021 IFRIC published its decision clarifying how an entity should account for configuration and customisation costs incurred in
implementing a specific part of cloud technology, Software as a Service (SaaS). IFRIC concluded that these costs should be expensed, unless
the criteria for recognising a separate asset are met.
In response to the IFRIC’s agenda decision, the Group is in the process of assessing the treatment of configuration and customisation costs
incurred in implementing SaaS arrangements. This assessment requires an extensive review of the Group’s finite life development costs and
licence assets included in intangible assets (carrying amount of $108.33 million at 27 June 2021) including reviewing contractual agreements
relating to development costs and licenses to assess the architecture of the cloud technology. At the date of this report intangible assets with
a carrying value of $6.62 million require further assessment to ascertain if the assets are attributable to SaaS arrangements.
Intangible assets with a total carrying amount of $3.01 million as at 27 June 2021 have been identified relating to capitalised costs associated
with SaaS arrangements. However, due to the complexity of these historical SaaS projects, the Group is still in the process of obtaining the
required information to assess if the capitalised costs relate to customisation and configuration works. Therefore, as at the date of this report
the amount proposed to be derecognised when the Group adopts its revised accounting policy is yet to be determined. The Group expects
that the analysis will be completed and the adoption of the revised accounting policy, and the resulting adjustment, will be presented in the
half-year financial report for the period ending 2 January 2022.
REFERENCE TO THE CONCEPTUAL FRAMEWORK – AMENDMENTS TO IFRS 3
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations – Reference to the Conceptual Framework. The amendments
are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989,
with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements.
The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses arising for
liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 Levies, if incurred separately.
At the same time, the Board decided to clarify existing guidance on IFRS 3 for contingent assets that would not be affected by replacing the
reference to the Framework for the Preparation and Presentation of Financial Statements.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and apply prospectively.
190 // 2021 ANNUA L RE PORT D O MIN O’S PIZ ZA ENTERPRISES LIMITED.
continuedNotes to the Financial Statements 35 OTHER ITEMS (continued)
PROPERTY, PLANT AND EQUIPMENT: PROCEEDS BEFORE INTENDED USE – AMENDMENTS TO IAS 16
In May 2020, the IASB issued Property, Plant and Equipment – Proceeds before Intended Use, which prohibits entities deducting from the
cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and
condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds
from selling such items, and the costs of producing those items, in profit or loss.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 and must be applied retrospectively to items
of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies
the amendment.
The amendments are not expected to have a material impact on the Group.
ONEROUS CONTRACTS – COSTS OF FULFILLING A CONTRACT – AMENDMENTS TO IAS 37
In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract
is onerous or loss-making.
The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services include
both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly
to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022. The Group will apply these amendments
to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies
the amendments.
IFRS 9 FINANCIAL INSTRUMENTS – FEES IN THE ’10 PER CENT’ TEST FOR DERECOGNITION OF FINANCIAL LIABILITIES
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IFRS 9. The amendment clarifies
the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the
terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid
or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified
or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted. The Group
will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in
which the entity first applies the amendment.
The amendments are not expected to have a material impact on the Group.
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 191
continuedNotes to the Financial Statements Additional Securities Exchange Information
Number of Holders of Equity Securities as at 04 August 2021
ORDINARY SHARE CAPITAL
• 86,523,365 fully paid ordinary shares are held by 8,907 individual shareholders.
• All issued ordinary shares carry 1 vote per share, however partly paid shares do not carry the rights to dividends.
OPTIONS
• 2,247,347 options are held by 110 individual option holders.
• Options do not carry a right to vote.
DISTRIBUTION OF HOLDERS OF EQUITY SECURITIES
FULLY PAID
ORDINARY
SHARES
PARTLY PAID
ORDINARY
SHARES
CONVERTING
CUMULATIVE
PREFERENCE
SHARES
REDEEMABLE
PREFERENCE
SHARES
CONVERTING
NON-PARTICIPATING
PREFERENCE
SHARES
CONVERTIBLE
NOTES
OPTIONS
100,001 and over
10,001 – 100,000
5,001 – 10,000
1,001 – 5,000
1 – 1000
25
56
60
643
8,123
8,907
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4
37
23
43
3
110
SUBSTANTIAL SHAREHOLDERS
FULLY PAID
PARTLY PAID
ORDINARY SHAREHOLDERS
NUMBER HELD
PERCENTAGE
NUMBER HELD
PERCENTAGE
SOMAD HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
23,050,966
18,919,089
13,112,682
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
12,259,237
26.64%
21.87%
15.16%
14.17%
67,341,974
77.84%
–
–
–
–
–
–%
–%
–%
–%
–%
192 // 2021 ANNUA L RE PO RT DO MI NO’S PIZZA EN TERPRISES LIMIT ED.
Additional Securities Exchange Information
continued
TWENTY LARGEST HOLDERS OF QUOTED EQUITY SECURITIES
FULLY PAID
PARTLY PAID
NUMBER
PERCENTAGE
NUMBER
PERCENTAGE
ORDINARY SHAREHOLDERS
SOMAD HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MR DONALD JEFFREY MEIJ
MRS ESME FRANCESCA MEIJ
MR GRANT BRYCE BOURKE & MRS SANDRA EILEEN BOURKE
MR GRANT BRYCE BOURKE
INVIA CUSTODIAN PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR DONALD JEFFREY MEIJ
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
23,050,966
18,919,089
13,112,682
12,259,237
2,714,273
2,471,622
1,894,325
1,348,969
753,194
700,000
698,516
544,828
486,087
465,912
369,868
341,093
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
254,000
SUCCESS PIZZAS PTY LTD
BNP PARIBAS NOMS(NZ) LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
240,149
168,524
166,655
80,959,989
93.58%
UNMARKETABLE PARCELS
There were 190 members holding less than a marketable parcel of shares in the Company.
26.64%
21.87%
15.16%
14.17%
3.14%
2.86%
2.19%
1.56%
.87%
.81%
.81%
.63%
.56%
.54%
.43%
.39%
.29%
.28%
.19%
.19%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
20 21 ANN UAL REPO RT D OM I NO ’S PI Z ZA E N TE RPRISES LIMITED. // 19 3
Glossary
ASIC means the Australian Securities & Investments Commission.
EBIT means earnings before interest expense and tax.
ASX means Australian Securities Exchange Limited
(ABN 98 008 624 691).
EBITDA means earnings before interest expense, tax,
depreciation and amortisation.
Australian Store Network means the network of Corporate
Stores and Franchised Stores located in Australia.
Board or Board of Directors or Directors means the Board of
Directors of the Company.
CAGR means Compound Annual Growth Rate.
Capital Reduction means the selective reduction of capital
described in Section 11.4 of the prospectus.
Company or Consolidated entity means Domino’s Pizza
Enterprises Limited (ACN 010 489 326).
Corporate Store means a Domino’s Pizza store owned and
operated by the Company.
Corporate Store Network means the network of Corporate
Stores.
Corporations Act means the Corporations Act 2001 (Clth).
Directors means the Directors of the Company from time to time.
Director and Executive Share and Option Plan or ESOP means
the Domino’s Pizza Director and Executive Share and Option Plan
summarised in note 20 to the financial statements.
Domino’s means the Domino’s Pizza brand and network, owned
by Domino’s Pizza, Inc.
Domino’s Pizza means the Company and each of its subsidiaries.
Franchised Store means a pizza store owned and operated
by a Franchisee and Franchise Network means the network of
Franchised Stores.
Franchisees means persons and entities who hold a franchise
from the Company to operate a pizza store under the terms of a
sub-franchise agreement.
Listing Rules means the Listing Rules of the ASX.
Network or Domino’s Pizza Network or Network Stores means
the network of Corporate Stores and Franchised Stores.
Network Sales means the total sales generated by the Network.
New Zealand Network means the network of Corporate Stores
and Franchised Stores located in New Zealand.
NPAT means net profit after tax.
Related Bodies Corporate has the meaning given to it by
section 50 of the Corporations Act.
Registry means Link Market Services Pty Limited.
Same Store Sales Growth means comparable growth in sales
across Domino’s stores that were in operation for at least 24
months prior to the date of the reporting period. Non-Domino’s
stores that have been acquired (e.g. Joey’s, Pizza Sprint and
Hallo) are included in the Same Store Sales Growth calculation
upon conversion to Domino’s for at least 12 months.
Domino’s Pizza Stores means Corporate Stores and Franchised
Stores.
Share means any fully paid ordinary share in the capital of the
Company.
DPE Limited means Domino’s Pizza Enterprises Limited
(ACN 010 489 326)
Underlying EBITDA and Underlying NPAT excludes significant
integration and legal dispute costs.
Earnings Per Share or EPS means NPAT divided by the total
number of Shares on issue.
194 // 2021 ANNUA L R EPO RT D OMI N O’S PIZZA EN TERPRISES LIMIT ED.
Corporate Directory
REGISTERED OFFICE & PRINCIPAL
ADMINISTRATION OFFICE
Domino’s Pizza Enterprises Ltd
ABN: 16 010 489 326
KSD1, L1
485 Kingsford Smith Drive
Hamilton
Brisbane QLD 4007
Telephone: +61 (7) 3633 3333
WEBSITE ADDRESS
dominos.com.au
AUDITORS
Deloitte Touche Tohmatsu
Level 23, Riverside Centre
123 Eagle Street
Brisbane QLD 4000
SECURITIES EXCHANGE
Domino’s Pizza Enterprises Limited shares are listed in the
Australian Securities Exchange under ASX code DMP
SHARE REGISTRY
Link Market Services Limited
Level 21
10 Eagle Street
Brisbane QLD 4000
Tel: 1300 554 474 (AUS)
Tel +61 (0) 2 8280 7111 (OS)
SECRETARY
Craig A Ryan BA LLB LLM AGIS
SOLICITORS
Thomson Geer Lawyers
Level 28, Waterfront Place
1 Eagle Street
Brisbane QLD 4000
DLA Piper
Level 9,
480 Queen Street
Brisbane QLD 4000
20 21 AN N UAL R E PORT D OM IN O’S PI ZZA E N TE RPRISES LIMITED. // 195