Domino’s Pizza Enterprises Limited
1/485 Kingsford Smith Drive
Hamilton, QLD, Australia 4007
ACN: 010 489 326
www.dominos.com.au
23 August 2023
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 02 July 2023
Please find attached for immediate release to the market the following documents in respect of the
year ended 02 July 2023:
(a) Appendix 4E
(b) 2023 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:
Financial Year Ended 02 July 2023
Previous Corresponding Period:
Financial Year Ended 03 July 2022
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
PERCENTAGE
CHANGE
%
AMOUNT
$’MILLION
Up
Down
Down
Down
3.5%
60.5%
74.4%
74.4%
to
to
to
to
2,351.5
69.0
40.6
40.6
Dividends
Dividends
AMOUNT PER
SECURITY
(CENTS)
FRANKED
PERCENTAGE PER
SECURITY
Final dividend in respect of full year ended 02 July 2023 Payable 28 September 2023
42.6
Nil
Record date for determining entitlements to the final dividend:
29 August 2023
Interim dividend in respect of half-year ended 02 January 2023
67.4
60%
Net tangible assets per security
Net tangible assets per security
SECTION B: COMMENTARY ON RESULTS
02 JULY 2023
03 JULY 2022
(7.52)
(5.94)
Brief explanation of revenue, net profit and dividends (distributions)
For comments on trading performance during the year, refer to the media release.
The final unfranked dividend of 42.6 cents per share was approved by the Board of Directors on 23 August 2023. 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 2
3
2
0
DOMINO’S PIZZA ENTERPRISES LIMITED
Welcome
to the Domino’s Pizza Enterprises Ltd
Annual Report for 2022–23
We are an Australian-headquartered
company of pizza people. In 2022/23,
we owned the master franchise for Domino’s
in Australia, New Zealand, Belgium,
France, the Netherlands, Japan, Germany,
Luxembourg, Denmark, Cambodia, Taiwan,
Malaysia and Singapore.
We are Domino’s Pizza Enterprises Ltd
(DPE), and this is our story for the
2022–23 financial year.
ACKNOWLEDGEMENTS
EDITORIAL 2023
Annemieke de Bruijin (Netherlands)
Will Chiou (Taiwan)
Chrissie Robyn Chong (Malaysia)
Guillemette Le Goascoz (France)
Jacqueline Hanekom
Amanda Harper (ANZ)
Mila Hvilshøj (Denmark)
Charlotte Lee (Taiwan)
Koh Qing Ning (Cambodia)
Kathrin Rezac (Germany)
Manon Stoutjesdijk (Belgium & Luxembourg)
Shizue Suzuki (Japan)
Ida Azreena Binti Zainol (Singapore)
Designer
Jessie Sanders (Netherlands)
2
| DOMINO’S PIZZA ENTERPRISES LTD CONTENTS
01. Chairman’s message
02. Group CEO & MD update
03. Board of Directors
04. Our purpose
Growing our value tree
05. Science Based Targets
06. Our social and economic landscape
07. Our performance highlights
08. Club 1845
09. Our Global Award winners – Europe
10. Our Global Award winners – APAC
11. CEO’s report Europe
12. Year in Review Europe region
France
Belgium / Luxembourg
Netherlands
Denmark
Germany
13. CEO’S report APAC
14. South-East Asia Acquisitions
15. Australia & New Zealand Highlights
16. Year in Review APAC region
Australia
New Zealand
Japan
Taiwan
Malaysia
Singapore
Cambodia
04
06
10
14
17
18
20
22
24
27
30
32
40
48
64
66
76
78
80
84
96
110
124
132
138
142
3
ANNUAL REPORT 2023 |
“It has
been said
that, in life,
the only
constant is
change.“
It is the same in business,
particularly in a business with
the decades-long history of
Domino’s Pizza Enterprises Ltd.
In responding to change, our
decisions may not always get
the outcomes we anticipate.
By focusing on the long-term,
and acting according to our
values, we will ensure
the strongest possible
future.
CHAIRMAN
JACK COWIN
4
| DOMINO’S PIZZA ENTERPRISES LTD This Financial Year exemplified this approach for
Domino’s. In the earlier stages of the year we
announced the expansion of our business in Asia
with the acquisition of the markets of Malaysia,
Singapore and Cambodia, including 287
corporate‑owned stores. These three markets have
a long‑term potential of more than 600 stores.
At the end of the Financial Year we announced our
intention to exit the Danish market, a business we
had anticipated may grow to 150 stores. However,
despite world‑class operations we were unable to
overcome the legacy of the previous owners that left
the business in a brand‑damaged state.
The two decisions, book‑ending Financial Year 2023,
demonstrate the considered approach management
and the board take to investing shareholders’
capital to maximise our return on investment over
the long‑term. This year Domino’s delivered a return
on equity of 26.5%. While this was lower than the
prior year due to a sub‑optimal short‑term financial
performance, we are confident in the Company’s
ability to significantly improve this result in the
year ahead.
In responding to inflation, management worked to
ensure a positive outcome for customers and for
Franchisee Partners. Not all of the decisions delivered
the results expected, but a long‑term, values‑driven
approach ensured our Franchisee Partners were able
to weather the short‑term storm.
I have long advocated that building a successful
QSR brand is akin to building a 100 storey
skyscraper – a methodical approach that delivers
increasing returns with scale. As the business has
expanded in recent years, management and the
board have recognised the importance of delivering
on the benefits of Domino’s global reach and scale.
1: Annualised improvements of initiatives to be completed by end of FY25.
Accordingly, Domino’s announced in June a plan
to focus operations, targeting a $53–59 million1
improvement in annualised underlying performance.
In addition to exiting the Danish market, Domino’s
also announced the Company would optimise
the corporate store network – closing 65–70
underperforming stores and refranchising about
70–75 others, deliver on planned commissary
closures in South‑East Asia, and streamline
core operations.
Importantly, the Company will reinvest 1/3rd of
these improvements back into the franchisee network,
including additional marketing, to target improved
unit economics and growth.
Our Franchisee Partners are well positioned to
deliver on our mission of becoming the dominant,
sustainable delivery Quick Service Restaurant
(QSR) in every market by 2030. It is a mission that
carries through to all of our operations, including our
supply chain. Which is why we are working closely
with our partners to achieve our environmental and
sustainability goals. We look forward to sharing
more of this work in our next Sustainability Report, to
be published later this year.
With a strong brand, lower overheads, reinvestment
into our franchisee network, and streamlined core
operations, we enter Financial Year 2024 in a
strong position.
On behalf of the Board of Directors, I commend
this report to you as a testament to the talent and
experience of the people who will deliver on
our future.
5
ANNUAL REPORT 2023 | GROUP CEO & MANAGING
DIRECTOR UPDATE
“Where We
successfully
balanced
the ‘value
equation’.”
At the conclusion of the previous Financial
Year, Domino’s Pizza Enterprises Ltd was
exiting the COVID-19 pandemic and facing
the approaching storm of global inflation.
In my update to shareholders in these
pages, I wrote: “Domino’s is well positioned
to navigate the near-term uncertainty
of inflation; as we have always done,
we will offer customers choice and
exceptional value through our Product,
Service and Image.”
6
| DOMINO’S PIZZA ENTERPRISES LTD As we reflect on Domino’s performance throughout
Financial Year 2023, the heart of that statement
remains central to our results. Where we successfully
balanced the ‘value equation’ – by providing
exceptional product, service and image, at an
affordable price – we have offset inflation by
balancing price increases with customer growth.
Where we did not, we grew sales through increased
price alone, mirrored by a customer count decline
that reduced volumes (and therefore margins) for our
Franchisee Partners and Domino’s.
This is reflected in our financial performance.
In the Financial Year Domino’s Pizza Enterprises
Ltd delivered Network sales of $4.0 billion, growth
of 2.2% (vs FY22) with Same Store Sales of ‑0.2%.
Despite Network sales growth, the Company
delivered an underlying EBIT ‑23.3%
lower than prior year, at $201.7m1,
on revenue of $2,366.8m1
(+3.4% vs FY22). This reflected the
volume decline in stores flowing
through to our warehouse margins.
Domino’s margins were also
affected through our inability
to pass through ingredient
cost changes as we ordinarily
do, following some suppliers
declaring force majeure on
supply contracts at short notice,
largely due to regional impacts
of conflict in Europe, such as
spiking energy prices.
Protecting our
Franchisee Partners
While we anticipated the
increasing cost of doing
business for Domino’s
stores, through higher labour,
ingredients and energy, the scale
and pace of these increases meant
1: Including the underlying results of Denmark
Domino’s leadership needed to adjust our pricing
and cost base faster than in our history.
Without decisive action, we faced the prospect
of inflation eroding the entire profit pool for both
Domino’s and our Franchisee Partners. Domino’s
relies on our Franchisee Partners having profitable,
sustainable businesses that provide employment to
more than 100,000 team members, who serve local
communities across the globe.
In some cases the pricing increases we passed to our
customers, or the way in which we did so (such as
a delivery service fee in Australia/New Zealand),
did not resonate with more price conscious customers
who typically ordered delivery. These customers
reduced their frequency over multiple purchase
cycles, a delayed effect that we subsequently
identified and have been addressing over the second
half of the Financial Year.
While we did not always get our pricing right – our
decisive action ensured the sustainability of more
than 1,000 small business owners whose livelihoods
rely on the Domino’s brand.
Domino’s leadership in all markets understands
the decisions we took that did not resonate with
all customers, particularly in delivery, and are well
progressed in reversing their effect in a way that
provides value for customers and grows sales and
profits for Franchisee Partners. At the same time,
this period showed the resilience of our carry‑out
customers, where we offered incredible value and
choice compared to other meal choices, even after
offsetting inflation.
Delivering value for all customers, growing sales for
our Franchisee Partners, and ultimately providing
increasing returns for shareholders, remains the
central focus of Domino’s Pizza Enterprises Ltd.
7
ANNUAL REPORT 2023 | “Already we
are delivering
a stronger
business that
will be more
efficient and
sustainable
for the long-
term. ”
Reaching new customers through
network expansion
Our organic store growth is largely through
existing Franchisee Partners and Store Managers
reinvesting in their businesses by opening new stores.
The reduction in Franchisee Partner profitability
during the last 12 months ($93,521per store across
the Group, ‑22.9% on a constant currency basis)
temporarily delayed the expansion plans of some
Franchisee Partners. This means 205 stores opened in
FY23, +6.1% of the network; a significant expansion
but lower than our medium term expectations
of 8–10% organic new store openings. It is our
expectation Franchisee Partner expansion and new
store opening will increase in‑line with rebuilding
Franchisee Partner profitability, as a result of the
initiatives already in place.
Opening more stores, closer to customers, remains
key to Domino’s Pizza Enterprises Ltd’s strategy.
By being closer to our customers, we deliver a
hotter, fresher pizza by reaching our customers
faster. Not only does this deliver higher customer
satisfaction and sales, but also it reduces the cost
of delivery. This means the order is not only better
8
| DOMINO’S PIZZA ENTERPRISES LTD
for our customers, but also for our Franchisee
Partners. We will apply this approach through all
markets, including our newest acquisition of 287
stores in South‑East Asia: Malaysia, Singapore and
Cambodia, our largest store acquisition. In addition
to the net payment of $205.8 million1 for these
markets, Domino’s Pizza Enterprises Ltd also acquired
the remaining 1/3rd of the Domino’s Germany
business from our partners Domino’s Pizza Group
plc for approximately $123 million.2 In December,
Domino’s Pizza Enterprises Ltd conducted a capital
raising of $165 million, including a $150 million fully
underwritten placement, to fund the acquisition of
the remaining shares in Germany, with the surplus
towards debt retirement.
FY23 Free cashflow 3 was ‑$290.3m, largely due to
these acquisitions.
A foundation for future growth
Over the next decade, we intend to almost double
our store footprint to 7100 stores.
In planning for Domino’s expansion, management
has been carefully considering how best to structure
the business to build the strongest foundation for
future success. Any inefficiency is a burden on
the system as a whole, and we determined that
streamlining our business would allow our Franchisee
Partners to focus on delivering the best possible
customer experience, growing their sales and
profitability and expanding their business.
With our presence across Europe and the
Asia‑Pacific, Domino’s now has the opportunity
to leverage centres of expertise in core operations,
as well as shared services for some functions,
to deliver the most efficient results for our Franchisee
Partners and our business generally. At the same
time, we announced our intention to remove
underperforming stores from our business, through
the closure of some corporate stores and the
accelerated sell‑down of others to existing team
members and Franchisee Partners.
Additionally, we announced our intention to exit
the Danish market – a business we acquired from
receivership following a breach of trust by the
previous owners. Our team in Denmark performed
exceptionally, showcasing the best the Domino’s
brand has to offer. Unfortunately, it was insufficient
to grow the business to profitability.
We anticipate savings of $50–60 million during
FY24 from these decisions. As these initiatives are
completed and deliver savings, we intend to reinvest
approximately one third to benefit stores, as we
reinvest in the franchise network base.
Already we are delivering a stronger business
that will be more efficient and sustainable for the
long‑term.
Focused on delivering
The past 12 months have been challenging for our
team members, and our Franchisee Partners.
I am confident the decisions we have taken in FY23
will deliver a stronger business for our Franchisee
Partners and our shareholders, with significant growth
still ahead of us.
I am consistently impressed by the hard work and
entrepreneurial spirit of our team members and
Franchisee Partners across all of our markets,
and I look forward to working with them as we
deliver a significantly improved performance in the
Financial Year ahead.
DON MEIJ
GROUP CEO &
MANAGING DIRECTOR
1: Total consideration may include an earn‑out of up to approximately $142 million
2: A further payment (approximately $17 million) related to the repayment of shareholder loans provided by DPG.
3: Including net lease payments.
9
ANNUAL REPORT 2023 | BOARD OF DIRECTORS
Jack Cowin am
Chairman
Appointed: March 2014
Don Meij
Group CEO & Managing Director
Appointed: August 2001
BACKGROUND & EXPERIENCE
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.
Other boards: Competitive Foods Australia Pty Ltd,
v2 Foods, Apache Industrial Service (USA).
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.
BACKGROUND & EXPERIENCE
Professional Background: Award‑winning multi‑
unit Franchisee Partner 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
Partner, 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 2022, Don
celebrated 35 years with Domino’s.
Other boards: Not applicable.
10
| DOMINO’S PIZZA ENTERPRISES LTD Grant Bourke
Non-Executive Director
Appointed: August 2001
Doreen Huber
Non-Executive Director
Appointed: February 2020
BACKGROUND & EXPERIENCE
Member of the Audit and Risk Committee and
Nomination, Culture and Remuneration Committee.
BACKGROUND & EXPERIENCE
Member of the Nomination, Culture
and Remuneration Committee.
Professional Background: Experienced food
industry executive with extensive experience as an
award‑winning Domino’s Franchisee Partner and
executive. Prior to joining Domino’s Mr Bourke was
an international executive with Masterfoods (Mars
Inc.). He was awarded Domino’s Golden Franchisee
Partner award (1995), Franchisee Partner 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.
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: Non‑executive Director Ceconomy
AG, 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.
11
ANNUAL REPORT 2023 | Lynda O’Grady
Non-Executive Director
Appointed: April 2015
BACKGROUND & EXPERIENCE:
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: Director of Rubicon Water Limited, 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.
12
| DOMINO’S PIZZA ENTERPRISES LTD Uschi Schreiber am
Non-Executive Director
Appointed: November 2018
Tony Peake oam
Non-Executive Director
Appointed: May 2021
BACKGROUND & EXPERIENCE
Chair of the Nomination, Culture and Remuneration
Committee and Member of the Audit and Risk
Committee.
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 organisation. Former EY Chair, Global
Accounts Committee; Global Vice Chair Markets;
member of the EY Global Executive Management
Board 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.
BACKGROUND & EXPERIENCE
Chair of the Audit and Risk Committee and Member
of Nomination, Culture and Remuneration Committee.
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: Bakers Delight, Country Fire Authority,
Central Highlands Water, Scanlon Capital,
Museum of Australian Photography
Other boards: Global Chair, Health Care, APM,
an ASX listed global health and human services
organisation. Non‑executive Director and Board Chair
of Everyday Independence, a subsidiary of APM.
Former directorships: Melbourne Fashion Festival,
Methodist Ladies College and the University of
Melbourne
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.
Qualifications: Bachelor of Business (Distinction) –
RMIT, Fellow of Chartered Accountants Australia &
New Zealand, GAICD.
13
ANNUAL REPORT 2023 | OUR PURPOSE
We live in a world where 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.
We smash the prevailing wisdom which says you can’t
have quality, speed and low price. This puts the world’s
most delicious and versatile bonding food within reach
of every person.
We are a pizza company, which uses technology and
insights to break down barriers to serve our customers.
We have achieved industry firsts in drone delivery,
app ordering, store simulation for optimum design,
and on‑the‑go employee training.
We are committed to continually improving and
innovating our product and processes so our customers
receive a world‑class ordering experience, that satisfies
their individual food preferences, every time.
As a trusted, household name in fast, quality pizza,
we continue our pursuit of quality at a price that
enables more people to connect and enjoy a
‘slice of the pizza life’.
our pizza
brings
people
closer
14
| DOMINO’S PIZZA ENTERPRISES LTD LIVING DOMINO’S VALUES
BE GENEROUS AND PROVIDE JOYFUL EXPERIENCES
Fun is in our DNA. It makes our people happier. Helping them provide a joyful
customer experience. Our empathy, generosity and optimism are catching.
They spread outwards – starting with us. Crucial because we’re really selling
happiness and connection – that just happens to come in pizza form.
CRUSH CONVENTION
We think outside‑the‑box and deliver experiences that make our customers say,
“How did they do that!” We defy the convention which identifies three main
drivers: Fast, Affordable and Good Quality and believes you must settle for any
two. We’re unbeatable when we deliver all three seamlessly. Again. And again.
And again.
INVEST TO CREATE DEVOTION
We want customers for life. Our obsession is providing an outstanding Domino’s
experience. Set the bar high – to delight the most demanding people. That
guides everything we do – including the way we do innovation and efficiency
programs and the reason and way we use data.
HELP PEOPLE GROW AND PROSPER
We make people better off: team members, Franchisee Partners, our company,
and the communities in which we live. We have a strong entrepreneurial
spirit. Balanced with a determination to give our team rewarding experiences,
opportunities, and a great place to work.
DO THE RIGHT THING BECAUSE
IT’S THE RIGHT THING TO DO
We behave well, with a great sense of responsibility to our team, our customers,
communities, partners and investors. We hold ourselves to a high standard of
integrity – recognising how valuable, yet fragile, trust can be. We are confident
that our purpose and values lead to stronger teams, stronger outcomes, and a
stronger business.
15
ANNUAL REPORT 2023 | GROWING OUR VALUE TREE
It’s no secret that we are driven by value. Value is at
the core of everything we do, and the way we do it.
But value isn’t just about price.
From our passion to connect our customers with
faster, fresher quality food. To our commitment
to developing our employees professionally and
operationally with training and engagement
initiatives. To our support for Franchisee Partners with
exciting marketing materials and resources so they
can succeed and expand their business. We seek to
apply insights at every level of our business from the
ground up, as we grow our Value Tree to deliver for
our customers and our Franchisee Partners.
We invite you to read on to learn more about how
different DPE regions have delivered value over the
past financial year, through product, service and
image.
16
| DOMINO’S PIZZA ENTERPRISES LTD SCIENCE BASED TARGETS
Domino’s Pizza Enterprises Ltd is proud that its
work in FY23 saw the Company recently become
the first Quick Service restaurant chain to have its
science‑based environmental targets validated
based on the latest scientific guidance on Forest,
Land and Agriculture (FLAG).
To reach its long‑term targets, including Net Zero
emissions by 2050, Domino’s is expanding the use
of electric vehicles to deliver pizzas globally as
well as partnering with the dairy industry to reduce
one of the largest sources of emissions in pizza
production: cheese.
Domino’s Pizza Enterprises Ltd was selected as one
of the first 10 companies in the world to have their
FLAG targets validated.
emissions came from dairy and other animal‑based
proteins, largely from cheese.
To reach its ambitious goal, Domino’s is working with
business partners to identify ways to reduce dairy
emissions, without compromising on customers’ taste
preferences. The Domino’s Dairy Initiative intends to
reduce the environmental impact from dairy, in an
ethical and sustainable way.
Marika Stegmeijer, Chief Environment, Social and
Governance (ESG) Officer, said Domino’s worked
closely with international environmental experts to
establish and validate the Company’s targets and
pathway, reviewing the entire value chain, including
corporate operations, franchisees, and supply chain
partners.
The announcement means an independent
organisation, the Science Based Targets initiative,
has reviewed Domino’s targets and confirmed
the pathway to reach them meets internationally
recognised scientific standards.
“We’ve identified three areas in our business that
have the biggest impact on the environment: our
stores & operations, the food we serve, and how this
food is produced. For each we set specific targets we
aim to achieve by 2030.”
In addition to targeting Net Zero, Domino’s has also
committed to reduce greenhouse gas emissions by
65% per product sold by 2030 compared to 2020
emissions – including business growth – and to halt
deforestation in its supply chain by 2025.
Group CEO & Managing Director Don Meij said:
“By having our targets validated Domino’s Pizza
Enterprises Ltd demonstrates our dedication to
aligning our emissions reduction efforts with the latest
scientific research.”
Domino’s reviewed its emissions, and those in its
supply chain, prior to planning a roadmap to reduce
its carbon footprint and identified nearly 40% of its
Domino’s will publish its next Sustainability Report in
November.
We believe in a
better slice for everyone
We believe in our
people
We are serious about our
food
We cherish our
customers
We are mindful of the
environment
We take care of our
communities
17
ANNUAL REPORT 2023 | OUR SOCIAL AND
ECONOMIC LANDSCAPE
The 2022–23 financial year saw an extension of many of the social and economic
challenges, and associated risks, experienced during the previous years.
Information in respect to DPE’s assessment of the principal economic risks that
could have a material impact on the company, and the company’s mitigation
strategies for those risks is outlined below.
COMPETITION
DPE operates in a competitive market. DPE’s financial
performance or operating margin could be adversely
affected if the actions of competitors or potential
competitors become more effective, or if new competitors
enter the market. DPE addresses this risk by closely
monitoring the market in which it operates so that we can
respond quickly to new competitors entering the market.
REPUTATION AND BRAND
DPE’s performance is reliant on its reputation and
branding. Unforeseen issues or events which place
DPE’s reputation at risk may impact on its future growth
and profitability. DPE aims to mitigate this risk by
nurturing mutually‑beneficial relationships with key
stakeholders and continuing to support local and
regional community initiatives and fundraising events
that align to DPE’s values.
CONSUMER PREFERENCE AND
PERCEPTIONS
Like all food service businesses and quick service
restaurants, DPE needs to respond to changes in
customer tastes and preferences, and demographic
trends. There could be a material adverse effect on
DPE’s business and operating results if consumer
preferences change. DPE addresses this risk through
active customer engagement via social media, consumer
data and research, innovative product development
and updates to its menu offerings in each region.
ONLINE ORDERING PLATFORMS
Increasingly, the vast majority of DPE sales are
conducted through online ordering platforms.
DPE relies on third‑party data centres and expert
Information Technology teams for developing and
hosting these online platforms. Loss of platform
or application availability or integrity would result
in a short‑term impact on DPE’s growth and profitability,
including poor customer experience, revenue loss and
potentially negatively impacting Franchisee Partner
relationships. DPE mitigates this risk through controls
and processes designed to protect the availability and
functionality of these platforms – including data centre
replication and other redundancy methods.
CYBER SECURITY
The ongoing and growing risk of a sophisticated cyber‑
attack continues to threaten DPE’s operations. A cyber
incident, including ransomware or a data breach, could
negatively impact DPE by causing a disruption to operations,
a compromise or corruption of confidential information,
or damage to our employee and business relationships,
any of which could subject DPE to loss or damage to the
brand. DPE continues to invest in risk mitigation activities
designed to prevent and detect cyber events and respond
to and recover from any operational impacts.
SAFETY
DPE employs people to run and operate stores, in a
safe working environment, that provide food products
to the public. A health or safety incident as part of store
18
| DOMINO’S PIZZA ENTERPRISES LTD operations or a health incident of a supplier involving the
input of the products it uses, could impact DPE’s financial
results. DPE aims to address this risk through comprehensive
internal food safety and quality practices, occupational
health and safety practices, audit programs, customer
complaints responses and supplier selection protocols.
SUPPLY CHAIN
Disruption to DPE’s supply chain caused by an interruption
to the availability of key components and raw materials
or environmental and social wrongdoings is its supply
chain, may adversely affect sales and/or customer
relations, resulting in unexpected costs. DPE aims to
mitigate this risk by implementing a multi‑sourcing strategy
for the supply of raw materials, building long term relations
with its suppliers, conducting supplier due diligence and
risk management and entering into contacts that provide
for the regular and timely procurement of raw materials.
INFLATIONARY AND ECONOMIC
CONDITIONS
An economic environment characterised by high
unemployment, increasing labour costs, rising interest
rates, ongoing inflation, cautious consumer spending
or changes in consumer practices due to a possible
recession could impact the Group’s results.
Most of these factors are beyond the Group’s control;
however, the Group engages in a competitive bidding
process for its ingredients and utility services, where
possible, to reduce this risk over the medium‑term.
in certain circumstances, such as breach by DPE, its
insolvency and failure to achieve growth targets. If a MFA
in respect of a territory is terminated, DPE will lose the right
to operate Domino’s Pizza stores in that territory and this
will fundamentally impact on its business. DPE addresses
this risk by maintaining a close working relationship with its
Master Franchisor, and by actively monitoring compliance
with obligations and operational standards.
FRANCHISEE RISK
There is a risk of DPE’s franchisees not operating
their franchise in accordance with the terms and
conditions of their respective franchise agreements.
The consequences of non‑compliance may include
damage to the brand, fines or other sanctions from
regulators, and/or a reduction in franchise fees
received from the franchises. DPE mitigates this risk
by continually monitoring and evaluating the financial
and operating performance of each franchisee to actively
assess compliance with executed franchise agreements
and conducting random audits.
FINDING AND KEEPING GOOD STAFF
In every country, labour availability is challenged.
Domino’s stores need to rise to this challenge, to retain
and recruit team members. DPE has used locally‑relevant
approaches to attract people to the Domino’s family
who may not have previously considered Domino’s as
a job for them, or even a longer career. Using social
media, partnering with other companies, and making
the application process simpler, we targeted new groups
through our recruitment campaigns.
For customers, DPE has a range of pricing strategies that
balance the need to deliver sustainable unit economics for
our Franchisee Partners, while delivering fantastic value to
our customers. We are proud of our ability to learn from
what works and adapt quickly when it doesn’t.
Internally, we are focused on providing genuine
career‑building opportunities for our staff with
easy‑access training programs and professional
development workshops.
Our digital ordering solutions including app‑only deals,
extensive owned media channels, and community‑focused
marketing campaigns give us the opportunity to win new
customers and repeat orders from our existing fans.
FRANCHISE RISK
DPE’s right to operate Domino’s Pizza stores and grant
franchises in Australia, New Zealand, Europe, Japan
and Taiwan is conferred by separate Master Franchise
Agreements (MFAs). These MFAs may be terminated
19
ANNUAL REPORT 2023 | PERFORMANCE HIGHLIGHTS
STORES GLOBALLY
3,782
UNDERLYING EPS
139.4 CPS
UNDERLYING EBIT
$201.7M
NETWORK SALES
$4,005.6M
20
| DOMINO’S PIZZA ENTERPRISES LTD EUROPE
1,407 STORES
81.62M PIZZAS SOLD
ASIA/PACIFIC
2,375 STORES
175.32M PIZZAS SOLD
ONLINE SALES
$3,132.8M
21
ANNUAL REPORT 2023 | CLUB 1845 DELIVERS
FASTER, QUALITY MEALS
A commitment to value was the driving
force across Domino’s Pizza Enterprises Ltd
this year.
The Value Equation remained at the heart of our strategy
and operations, as we strive to continually deliver the
right product, service and image, at an affordable price.
Value became the strong platform we used to launch
Club 1845.
To join Club 1845, a store must maintain an Average
Delivery Time (ADT) of less than 18 minutes and
a Product Quality (PQ) score of at least 4.5 for
one whole quarter (three sequential months).
High quality, operational excellence – that’s how we
deliver value.
Why 1845?
At Domino’s, we know there is a direct correlation
between less than 18 minutes ADT and a 4.5
PQ scores.
The longer we take to deliver a pizza, the lower its
product quality will be. When we deliver well‑made
pizzas in an efficient, safe manner, our product
quality drastically improves.
It’s fast becoming apparent, that the real reward
for Franchisees and Store Managers in joining
Club 1845 is increased sales and profitability
in their stores.
22
| DOMINO’S PIZZA ENTERPRISES LTD High quality,
operational excellence —
that’s how we deliver value.
Lubbenau, Germany,
remained a Club 1845
store for six months
consecutively, an incredible
achievement. You can learn
more about this store here:
Watch the video
about Lubbenau,
Germany here!
https://investors.dominos.com.
au/videos/1845-lubbenau
Store name
Country name
Altona
Brussel Ixelles Chaussée
D'ixelles
Lübben
Lübbenau
Nakagosho
Ishioka Tokodai
Tomisato Hiyoshidai
Higashi Sonoda
Edogawa Matsushima
Kakogawa Isshiki
Kashima Kyuchu
Mizue
Schoonhoven
Australia
Belgium
Germany
Germany
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Netherlands
23
ANNUAL REPORT 2023 | FRANCE
Multi-Unit Franchisee Partner 2023
Alex Abdeddaïm
Single Unit Franchisee Partner 2023
Guillaume Tripoli
Best Opening Week 2023
Romain Drode
Big Record Sales 2023
Alex Abdeddaïm
Best NPS 2023
Guillaume Tripoli
Best EDT 2023
Gaëtan Lebreton
Best Sales Progression 2023
Xavier Moison
Domino’s For Good Award
Victor Gaugry
Rookie Manager of the Year
Arnaud Kouadio
Manager of the Year 2023
Hocine Kherbouche
Supervisor of the Year 2023
Nicolas Munsch
Food Safety Excellence 2023
Kamel and Salem Boulhadid and Ali Chbihi
Domino’s For Good Award
Victor Gaugry
Club 1845
Fabrice Dorie and Gaetan Lebreton
BELUX
Trends Gazelles Award
Franchisee Partner Fethi Tekin
Franchisee Partner of the Year – Belgium
Tarik and Hassan Boumadiani
Manager of the Year
Ihab Ballouk DP Tienen
Rookie Manager of the Year
Amin Moujahid DP Maaseik
Split Store Manager of the Year
Assia Boujar DP Brussel Centrum
OUR GLOBAL
AWARD
WINNERS
EUROPE
24
| DOMINO’S PIZZA ENTERPRISES LTD Domino’s For Good Award
Andres Voigt
German ATD Record
Hamburg Hafencity
Delivery Expert of the Year 2022
Nico Steinbach, Schleswig
Trainer of the Year 2022
Anna Wasilewski
Time is the Enemy of Food 2022
Lübbenau
Supervisor of the Year 2022
Karwan Amin
Domino’s for Good 2022
Andreas Voigt, Frankfurt/Oder
Support Team Member of the Year 2022
Lisa Metzger
Franchisee Partner of the Year 2022
Felix & Thomas Müller, Chemnitz
Store Manager of the Year – New Store 2022
Yusuf Metin, Berlin Buckow
Store Manager of the Year 2022
Stephan Grutke, Lübbenau
GERMANY
ProVeg Ranking 2023
3rd place, Most vegan‑friendly restaurant chains
Lieferando Awards
Winner, Best international restaurant chain category
Local Hero Cluster A 2022
Berlin Marzahn
Local Hero Cluster B 2022
Wismar Lübsche Burg
Local Hero Cluster C 2022
Lübben
NPS Hero 2022
Prenzlau
OER Hero 2022
Aschersleben
OER Streak
Lübbenau
German Record Week
Regensburg
Club 1845
• Stephan Grutke, Lübbenau
• Robert Huber, Lübben
• Franz Lohr, München Laim
• Sascha Körner, Bad Oldesloe
DENMARK
Domino’s Leadership Award
Head of Corporate Stores, Pauline Ramke,
recognised with a Leadership Eagle,
following 27‑year tenure at DPE.
25
ANNUAL REPORT 2023 | THE NETHERLANDS
DPE Franchisee Partner of the Year 2022–23
David Drees
DPE Global Store Manager of the Year 2022–23
Thijs Vosmeijer
DPE Global Leadership Award (Gold Eagle)
Maurice van Tienhoven
DPI International Rookie Manager of the Year
Robin Kamerbeek
DPI Regional Manager of the Year
Sjoerd Hendriks
Lunch Champion
Lelystad 30647
NPS
Zutphen 30750
Safe Delivery Time – New Store
Oude Wetering 30942
Safe Delivery Time
Made 30911
Customer Hero
Papendrecht 30639
Hygiene and Training Check (HTC) Award
Zeewolde 30854, Oosterwolde 30956, Zutphen
30750
OER Awards
Ulft 30927, Nijverdal 30732, Zutphen 30750,
Arnhem Schuytgraaf 30767,
Shift of the Year 2022 (cat 1)
Oude Wetering 30942
Shift of the Year 2022 (cat 2)
Ijsselstein 30780
Shift of the Year 2022 (cat 3)
Wolvega 30908
Shift of the Year 2022 (cat 4)
Zutphen 30750
Pizza Hero
Zutphen 30750
Best Opening Week Sales 2022
Zevenbergen 30938
AWUS Champion New Store 2022
Zevenbergen 30938
Best Shift of the Year 2022
Zutphen/Wolvega
Sales Champion 2022
Nieuwegein 30601
Order Champion 2022
Nieuwegein 30601
Multi-Unit Sales Champion 2022
Sjoerd van Seters
Domino’s For Good Award
Duco Jonckheer
Megs Valuable Player Award
Tim van Ast
Dominator Award
Thijs Vosmeijer, Zutphen 30750
Multi-Unit Franchisee Partner 2022
David Drees
Split Store Manager of the Year
Evan Visser, Zwijndrecht 30599
Rookie Manager of the Year
Erykah Mulder Dinxperlo
Manager of the Year
Thom Houwer, Wolvega
26
| DOMINO’S PIZZA ENTERPRISES LTD OUR GLOBAL
AWARD
WINNERS
APAC
JAPAN
Gold Franny Awards
• Kiyoshi Izumi
• Hikaru Oshima
Rolex Challenge
• Seigi Iwaguchi
• Keisuke Seki
• Futa Ohara
• Momoka Kominami
• Yuki Nakajima
• Kotaro Arai
Domino’s For Good Award
Takashi Akita
Eagle Leadership Award
• Team Store Development
• Shizue Suzuki
• Kazuya Fukumoto
• Akinobu Kinbara
DPE Global Support Team Member of
the Year for 2022
Ayumi Matsubara
MALAYSIA
2022 Asia Corporate Excellence &
Sustainability Awards (ACES)
Chief Executive Officer (CEO), Shamsul
Amree – Winner, Asia’s Most Inspiring
Executives
Putra Brand Awards 2022
Bronze – Restaurant & Fast Food category
Also known as the People’s Choice Awards,
voted by Malaysian consumers that money
cannot buy.
2022 Malaysian CMO Awards
• Gold Chief Marketing Officer (CMO)
Award, ‘Best Marketer in Retail and
Promotions Marketing’ category
• Group Chief Marketing Officer, Domino’s
Pizza Malaysia, Singapore & Cambodia,
Linda Hassan
2022 Graduates’ Choice Award (GCA)
Most Preferred Graduate Employers to Work
For
Dragons of Asia Awards 2022
• Gold – ‘Can’t Get Cheesier Than This’
Best Product Launch of Relaunch Campaign
• Silver – Best Product Launch of Relaunch
Campaign category
TAIWAN
Team Member of The Year Award
Training Manager, Ivy Huang
People Excellence Award
Partnership Manager, Leo Hsu
Marketing Director, Rebecca Chao
SINGAPORE
Singapore’s Best Employer Award 2023
42nd place – Domino’s Pizza Singapore
27
ANNUAL REPORT 2023 | AUSTRALIA AND NEW ZEALAND
$10 Million Dollar Club
• David Hutchinson & Chad Cable
• Greg & Sarah Tinson
• James & Astrid Acreman
• Raja & Payal Kataria
Best Opening Week Sales
Team South Hedland
Big Red
Mark Glynn
Domino’s For Good Award
Mitchell Amor
Car Park Hustle Champion
Team Wellington (NSW)
Charlie Reynolds Memorial Award – Franchise
Hands on Hero
Drue Tempest (Charlestown)
Corporate Services Team Member of the Year
Amanda Harper
Domino’s for Good Award
Team Ballina
EDT Champion
Team Chermside
Franchise Operations Team Member of the Year
Dion Standley
Give For Good – Most Passionate Round Up for
Charity Store
Team Campbelltown
Give For Good – Workplace Giving Award
Team Gympie
Global Sales Record
Darwin Jarrett
Highest Customer Growth – SSC% Basis
Team Queen Street (Qld)
Highest FSE Average
Team Kalamunda
Highest OER Average
Team Charlestown
Highest Sales
Team Kalgoorlie
Highest Sales Growth – SSS% Basis
Team Goonellabah
Home Grown – Franchisee Development Award
Greg Steenson & Nathan Carrington
Hunter MacKenzie Big Heart Big Fun
Team Coolum
Leadership Award
• Andrew Wood
• Chris & Brittany Ebert and Jonathan Ebert
• Dan Tan
• Daniel Murray
• Digvijay Lohia
• Harmanpreet Singh Rana (Lucky)
• Justin & Amber Munro
• Lindsay & Jason Tod
• Matthew Kershaw
28
| DOMINO’S PIZZA ENTERPRISES LTD • Nathan & Vanessa Quiring
• Ross Kruger
• Satinder Vir Singh
• Shri Krishan & Sanyogita Pandey
• Thomas Martyn
Manager of the Year
Lalit Sharma (Northam)
Most Profitable Store, EBITDA $
Team Kalgoorlie
Multi-Unit Franchisee of the Year
Mark Glynn
Operational Excellence – Customer’s
Champion Award (NPS)
Team Aldinga
Out the Door Champ
Team Chermside
Partners Foundation – Workplace Giving Award
Team Maroochydore
People Excellence Award – “Growth from within”
Raja & Payal Kataria
Rack Time Specialist
Team Kalamunda
Raymon Exposito Memorial Award – Team DPA
Regional Leader of the Year
Jack Hardcastle
Record Smasher – ANZ
Team St Kilda
Rookie Manager of the Year
Saadi Arshad (Collie)
Safest Store
Team Surfers Paradise
Team DPA Operations Manager of the Year
Wayne Mann
The Alvaro Del Busto Memorial Delivery
Expert of the Year
Daniel Steele
Time is the Enemy of Food Award (Fastest Safest
Store ANZ)
Team New Farm
Tom S Monaghan “Nobody Delivers Better” Award
Team Northam
29
ANNUAL REPORT 2023 | CEO’S REPORT EUROPE
“i am proud of
the resilience
and commitment
of our
european
teams.”
The past 12 months have been some of the
most challenging in recent memory, not
only for Domino’s operations in Europe,
but also for the communities in which
we operate.
Regional conflict, leading to rapid inflation
of energy costs, had a flow on effect to
customers, suppliers, team members and
to our Franchisee Partners. This inflation,
layered with the broader post-Pandemic
inflation experienced in other markets,
coupled with the government response
to increase minimum wages to provide
cost-of-living relief, delivered a perfect
storm for our operations.
30
| DOMINO’S PIZZA ENTERPRISES LTD In the face of these challenges, I give credit to our
Franchisee Partners and our team members, for
adopting a mission mentality and delivering for our
customers and our communities every day.
At the start of the Financial Year, some of Domino’s
longstanding partners were faced with no option
but to declare force majeure due to the unforeseen
increases in their input costs, and to increase the cost
of ingredients for Domino’s stores. This had a flow on
effect to Domino’s Europe, where we were not in a
position to pass on all of these costs to our Franchisee
Partners, which compressed our commissary margins.
Facing significant inflation at a store level, with
Germany facing more than 20% inflation through
energy, labour and input cost increases, Domino’s
worked to pass through these costs to
customers in a transparent manner. Raising
prices quickly, regardless of the size of
those increases, reduced weekly customer
orders in most markets. But the decision
was unavoidable in order to protect
Franchisee Partner profitability, and the
sustainability of these small to medium
enterprises.
This reduction in food volumes
through our commissaries and
warehouses reduced our margins,
with a flow‑on effect to earnings.
The net results were earnings
of $52.9m underlying EBIT 1,
‑33.0% vs FY22, network sales
of $1,594.9m (3.9% higher
sales than the prior year).
Despite this unexpected and
unprecedented turmoil – I am
pleased that our teams have
focused on rebuilding value
for our customers through
Product, Service and Image,
which positions us well for the
year ahead.
1: Including the underlying results
for Denmark
The past Financial Year was strong for new product
development, including the introduction of glazes
and frappes in France, and Doner pizzas in Germany
– all resonating with customers. Our new crispy
fries, launched first in the Netherlands, were our
most successful sides launch in the history of our
European business.
During these challenging times, our teams gave back
to the communities we serve in line with our values,
launching our Foundation Domino’s charity in France,
providing support to communities affected by the
Turkish earthquake through fundraising in Germany,
and by giving support to school breakfasts for those
less fortunate in Germany and the Netherlands.
Domino’s is the home of value, and fun. Nowhere
was this clearer in FY23 than through our
reintroduction of sharp marketing offers, used
successfully pre‑COVID to attract new customers,
such as the rejuvenated StuntWeek.
Our teams also took the opportunity to look at
new ways to do business, particularly in recruiting
and retaining new team members. They tried new
approaches to entice candidates, such as using
WhatsApp as part of our recruitment strategy.
I am proud of the resilience and commitment of our
European teams in the face of the challenges in our
market. Throughout, Domino’s has demonstrated the
value in collaboration and communication between
our corporate offices and our Franchisee Partners, to
help us navigate this period.
We close the Financial Year in an improved position
than we began and look forward to delivering an
improved financial performance in FY 2024 for our
Franchisee Partners and our shareholders.
ANDRE TEN WOLDE
EUROPE CEO
31
ANNUAL REPORT 2023 | YEAR IN
REVIEW
FRANCE
Despite a challenging year of business for Franchisee Partners, due
to rising inflation and competitive market forces, Domino’s France
remained focused and adaptable. We expanded our product range,
pushed highly visible marketing campaigns throughout the year and
strengthened our communication to support sales in our stores.
DOMINO’S FRIES
DOMINO’S FRIES
The classic and loaded fries quickly
became popular with customers
CHEEKY
CHEEKY
PIZZAS
PIZZAS
DOMINO’S
DOMINO’S
GLACÉS
GLACÉS
(ice cream)
DOMINO’S
DOMINO’S
FRAPPÉS
FRAPPÉS
(thick shakes)
KIOSKS
KIOSKS
We opened the first
distributor kiosks for quick
and easy ordering, making
our product available to
customers outside store
opening hours.
CHEDDAR
CHEDDAR
SAUCE
SAUCE
32
| DOMINO’S PIZZA ENTERPRISES LTD DRIVING OUR SUCCESS
The Megaweek held in May proved to be a huge
success for Domino’s France allowing us to reach
our National Record of the week. The success was
thanks to the energetic and colourful involvement
of Franchisee Partners and their teams in organising
promotions during the week.
The campaign helped set new records across the
country. The top 20 stores, ranked on total turnover
performance during the Megaweek, enjoyed a boost
in sales in their stores and highly engaged teams.
The results of the combined exceptional work
throughout the campaign also saw more than 50
stores beating their personal records during the
Megaweek – a result worthy of their efforts.
We also responded to market demand by adding
Crazy Saturdays to boost the sales from Crazy
Tuesdays and Thursdays and held Boost Week
promotions to draw new customers into our stores.
An important reason for the success this year was the
wide support from Franchisee Partners across France,
who saw these promotions as opportunities to win
new customers and grow sales volumes with existing
customers.
33
ANNUAL REPORT 2023 | YEAR IN REVIEW
STORE OPENINGS AND A RECORD
Over the past fiscal year, we have opened 30 new
stores in France.
Our prospects for the next year indicate we will
maintain a similar growth trend. With Domino’s in
France only covering 30 per cent of the population,
we have already identified locations for the next
30 new stores.
Congratulations to the team of the Noisy‑le‑Grand
(Paris area) store, who recorded the most orders per
month in France for the year with almost 11,000 orders
in March, and more than €220,000 in sales.
LIVING DOMINO’S VALUES
DOING THE RIGHT THING BECAUSE
IT’S THE RIGHT THING TO DO
This year we lived the Domino’s Purpose and
Values through our strong environmental focus.
We extended our Less is more project, where we
minimised cardboard in our supply chain and
implemented zero‑plastic initiatives.
Our ultimate aim is to completely eliminate
cardboard from the supply chain, and we are
working closely with all our suppliers to achieve
this goal.
At a logistics and store level, this considerably
reduced the amount of plastic packaging around
pallets when pizza boxes are delivered to our
warehouses – saving a massive 15 tonnes of plastic
over the year – and resulted in more than 700 tonnes
of recycled cardboard.
At Vertou, our logistics centre in Western France,
100 per cent of our vegetables now arrive in
reusable plastic crates instead of cardboard
packaging. Eliminating these cartons for vegetable
packaging represents a saving of around 4.5 tonnes
of cardboard per year. It’s also a more ergonomic
option for our teams, as it requires less handling.
HELPING PEOPLE GROW AND
PROSPER
Domino’s France is proud to be committed to
supporting people with disabilities
into working life. In November,
we launched our Handiwork
Recruitment program
in partnership with
HANDIWORK, Pôle
Emploi and Cap Emploi.
34
| DOMINO’S PIZZA ENTERPRISES LTD We have been delighted to welcome Elisée, Gabriel, Halima and
Marie‑Ketty to our Gennevilliers store for the start of their training as
Multi‑skilled Fast Food Workers.
The Handiwork Recruitment program provides includes nine weeks
of training and integration at Domino’s France headquarters. Since
completing their training, the four Handiwork participants have been
offered a full‑time job at Domino's.
We also launched the sneakers recruitment campaign to support
the stores in their recruitment efforts. The campaign is similar to one
implemented in the Netherlands, where we use non‑traditional
methods to attract candidates, including giving away a pair of Nike x
Domino's sneakers to new employees.
DOMINO’S FOUNDATION
Domino’s France’s vision extends beyond our store frontages and
includes a mission to support inclusive schools in France.
We created the Domino’s Foundation as an opportunity for our stores
and volunteers to actively help promote equal access to education
for children, teenagers and young adults, particularly those with
disabilities.
This year, our Domino’s Foundation supported two associations,
Des carrés dans des Ronds and Collège Arthur Rimbaud, who share
the vision of integrating children with disabilities into mainstream
schools and promoting the “universality” of education.
We collected funds for the Foundation through our Round Up for
Charity promotions and are proud of our contribution to support
social inclusion and personal development for many young people.
Funding from the Domino’s Foundation has already enabled the
purchase of a 3D printer, the development of a Disability Fablab,
and the recruitment of an occupational therapist to supervise
the lab. Through the Disability Fablab, students can gain more
autonomy to complete tasks that are normally difficult by ‘printing’
custom‑designed tools to meet their specific needs.
FRANCE
35
ANNUAL REPORT 2023 | FRANCE FRANCHISEE SPOTLIGHT
“Being seen as a
local player is key
as it creates solid
partnerships with the
local people, schools and
sporting associations.”
– GUILLAUME TRIPOLI
Guillaume Tripoli was on duty until
midnight the night before his store
buyout was finalised in 2021.
This provides insight into the professionalism and
commitment this Franchisee Partner brings to his
business every day, and going by the standards
delivered by his team, it seems it’s catching.
“I really enjoy working with the teams and seeing a
business grow and develop,” Guillaume said.
“Today, I’m extremely proud of Sophie, my Manager,
who I’ve worked with for 11 years.
“There’s Milan, the first employee hired at Le
Chesnay and now Assistant Manager in my store.
“Finally, Léo, who joined us at the age of 16, working
to pay for his studies, who decided to continue the
adventure with us. Today he’s 20 and has just bought
his own apartment.”
Although part of the larger Domino’s network,
Guillaume considers himself a local retailer.
“I want to be seen as a local player, because it
creates solid partnerships with the local people,
schools and sporting associations,” he reflected.
36
| DOMINO’S PIZZA ENTERPRISES LTD HIS STORE
1. Saint‑Germain‑en‑Laye
78100 (Yvelines, Paris area)
37
ANNUAL REPORT 2023 | This is no surprise, given Guillaume’s Domino’s
journey started back in 2012 when he was living in
an apartment above the Domino’s in Saint‑Germain‑
en‑Laye and applied for work.
“When we put on our Domino’s uniform, we set the
tone, we transmit a sense of belonging, and that’s
what I teach my teams.”
“I was seduced by the store’s atmosphere and in
particular the manager’s welcome,” he remembers
fondly.
Guillaume has a simple motto for maintaining that
positive atmosphere in his own store today.
“You have to put the customer first, and our
employees are our first customers,” he said.
“If I arrive smiling in the morning, then my teams will
be in a good mood too.
“If the working atmosphere is clean and pleasant,
then the service will be impeccable and pleasant.”
“We insist that our delivery drivers are well dressed,
take off their helmets in front of customers to introduce
themselves and convey respect to the customer.”
And communication is key.
“Communicating well with my teams is essential,
because business is done as a team,” he adds.
“Every evening, we share the store’s figures and a
few tips on store management and performance.
“My teams need all the data to know why they’re
working and what they’re getting out of it.”
Guillaume has plans for the future, yet remains
thoughtful about his approach.
Guillaume believes ongoing training is vital for teams
to become operationally efficient.
“I do this work with my guts, with my heart,” he said.
“I was proud to receive the Single Unit Franchisee
Partner of the Year Award at the French Rally, which
rewards not only my store’s performance figures, but
also my teams, who have done a fabulous job.”
“Today, my business is thriving, my teams are
top‑notch, we work well together, and my customers
are satisfied and loyal – that’s all I aspire to.”
“I’m young, but I’m demanding of my teams,
especially when it comes to instilling Domino’s values,
rules and standards,” he said.
“You have
to put the
customer
first, and our
employees
are our first
customers.”
38
| DOMINO’S PIZZA ENTERPRISES LTD GUILLAUME’S ACHIEVEMENTS
HIS PATH
2012
June | Commences with Domino’s as a multi‑skilled employee at the
age of 18, looking for a student job to pay for his driving license
2013
2014
2019
2020
April | After a year and a half, becomes Assistant Manager at the
Saint‑Germain‑en‑Laye store
September | Moves to the Le Chesnay store (Yvelines) as Manager,
where he remains for six years. Simultaneously offered a Supervisor
position at the Saint‑Germain‑en‑Laye store. Manages two stores
at the same time, coordinating the marketing strategy and team
management
November | Joins Emerging Leaders’ Class II a few months before
COVID‑19 pandemic
September | Returns full time to Saint‑Germain‑en‑Laye and the store
thrives, with the delivery‑side of the business kept busy through the
pandemic
2021 November | Purchases the Saint‑Germain‑en‑Laye store and
becomes a Franchisee Partner
HIS AWARD
2023 : Winner Single Unit
Franchisee Partner of the Year Award
at Domino’s France Rally
39
ANNUAL REPORT 2023 |
YEAR IN
REVIEW
BELGIUM &
LUXEMBOURG
In October, Ringo Joannes handed over the CEO reins to Anneke
de Groot, the first female CEO for this market.
Anneke enjoyed instant rapport with the DPE Belux team, due to her respected
leadership qualities and hands‑on experience. Anneke started at Domino’s as a
franchise recruiter in 2012 and has honed her skills across a range of Domino’s fields
over the past decade.
40
| DOMINO’S PIZZA ENTERPRISES LTD PUTTING A HOT AND FRESH TWIST
ON A NATIONAL DISH
A key milestone for Domino’s Belux was introducing
Crispy Oven Fries and Loaded Fries to our menu.
Taking a risk in a country where fries are considered
one of the national dishes paid off. Using a soft
campaign launch to gauge the market, we quickly
saw pleasing numbers in order count and food sales.
We were also happy to welcome a new type of
customer to our Domino’s stores, who were drawn by
the lure of Hot and Fresh fries.
At the same time, launching the Domino’s app
resulted in online sales though this platform more
than doubling.
We launched these new products
over the past year:
LOADED FRIES
CRISPY OVEN
FRIES
BURGER
PIZZAS
POPCORN CHICKEN
GARLIC
BREAD
FILLED
CHURROS
41
ANNUAL REPORT 2023 | YEAR IN REVIEW
STORE OPENINGS
We opened one store in Belgium this year, bringing
the total in the Belux region to137. The new store was
acquired by existing Franchisee Partners, looking to
extend their market presence.
Store expansion slowed this year in the face of
inflationary pressures. We are therefore proud
that six Domino’s Store Managers recognised the
business potential in Domino’s stores and progressed
to Franchisee Partners.
BACK TO BASICS
Our marketing strategy this year took us back to
basics. We asked ourselves what does a Franchisee
Partner need at a time when costs are rising?
We stuck to known, successful promotions such
as Stunt Week, Boost Week, Always on Deals and
Crazy Tuesday/Saturday.
Boost Week was our number one week this financial
year. We saw more than 20 per cent extra orders per
store, compared to standard weeks – including many
first‑time Domino’s customers.
It’s not surprising that order and sales figures peak
on Tuesday and Saturday, as we continue to run
the Crazy Tuesday/Saturday deals every week.
We extended the promotion by adding ‘Crazy
Thursday’ and were pleased with the significant lift
in pick‑up order counts on Thursdays.
These time‑tested campaigns worked alongside our
new Crispy Oven Fries and Loaded Fries products to
drive sales throughout the year.
42
LIVING DOMINO’S VALUES
Last year, Benelux donated more than 33,000 euros
to the refugee organisation UHNCR through the
'Round Up For Charity' initiative, where customers
have the option to round up their order total with a
donation.
We proudly continued our corporate partnership
with JINC. This foundation is committed to building a
society where your background does not determine
your future.
We organised tailored internships for students in our
stores and leadership team members provided job
interview training in schools.
We also supported Bednet, a foundation dedicated
to helping children who cannot attend school due
to illness. Colleagues in our headquarters raised
awareness of this foundation by working in pajamas
for a day.
| DOMINO’S PIZZA ENTERPRISES LTD
BELGIUM & LUXEMBOURG
1845 EXCELLENCE
Maaseik, Houthalen,
Frameries, Schaarbeek,
St. Gilles, Ixelles (Chaussée
d’Ixelles) and Deinze joined
Club 1845.
Average EDT
under 18 minutes
Product score of
4.5 or higher
HELPING OUR PEOPLE TO GROW AND PROSPER
We recognise the importance of retaining our
employees and have input significant effort into
building lasting connections and job satisfaction with
our staff.
It is always wonderful to see our people grow and
prosper this year. Eight Franchisee Partners continued
to increase their store numbers and six Store
Managers grew into Franchisee Partners, taking over
an existing store.
We expanded our training program, helping
Franchisee Partners and their staff get the best out
of their stores, and used internal events to provide
training and, of course, fun! Belgium hosted its
Fastest Pizza Maker Contest (FPMC), and the first
Managers’ Rally took place focusing on food safety
and quality. Both events enjoyed a high turnout and
immediately proved to be excellent engagement
activities with ongoing positive impacts seen in
our stores.
We believe today’s delivery drivers are tomorrow’s
Franchisee Partners. It’s our job to ensure they
are engaged and have access to development
opportunities to keep them on track. With this in
mind, we started implementing the Path to Excellence
program, to help both new and experienced
‘Dominoids’ develop new skills and deepen their
understanding of the Domino’s business.
LOOKING AHEAD
With our sights firmly ahead, we continue to focus on
service and the quality of our product.
We remain on our path of growth and continue
our search for future Franchisee Partners, with full
knowledge that, in the current economic climate,
investment is both an exciting and challenging
prospect for potential Franchisee Partners. For
existing Franchisee Partners, we are there every
step of the way, supporting them to succeed with
local recruitment and sales campaigns and ongoing
development opportunities.
43
ANNUAL REPORT 2023 | BELUX FRANCHISEE SPOTLIGHT
“If you value quality
and service as a team,
you can deliver on this
together.”
– HUSSEIN MAMLOUK
Hussein Mamlouk has carved an
impressive career within Domino’s.
Within 15 years at Domino’s, he
has moved from a pizza maker to a
Franchisee Partner with eight stores.
Besides hard work, teamwork is a key element of
Hussein’s approach. “It is important to recruit good
staff and be a good people manager,” he said.
“If you value quality and service as a team, you can
deliver on this together,” he adds.
This incredible achievement was borne from hard
work and a clear focus on providing excellent quality
and great service.
Hussein is most proud of the success he managed to
make of his first store, Gent Overpoort. “This was not
an easy store to take over and there were some big
challenges waiting for me,” he recalls.
Hussein persevered, and his disciplined approach
turned this store into a success story. With this solid
base, he was then able to expand his role as a
Franchisee Partner at Domino’s – and somehow
find the time to remain a devoted partner and father
of two young children.
Hussein has intentionally built a diverse team,
recruiting people from different backgrounds and
with different competencies, with whom he can work
on the success of the stores – from small operational
details to big future plans.
He sees himself as a coach for his teams. By helping
team members grow and prosper and putting
together work groups that function perfectly together,
Hussein can continue to provide quality service in his
stores.
“With multiple stores, it is important to be accessible
to employees and maintain contact and attention
with all stores and colleagues,” Hussein said.
44
| DOMINO’S PIZZA ENTERPRISES LTD HIS STORES
1. Ghent Overpoort
2. Ghent Sint‑Pieters
3. Harelbeke
4. Kortrijk Meensepoort
5. Menen
6. Ghent Rooigem
7. Dampoort
8. Wetteren
45
ANNUAL REPORT 2023 | The more stores, the more difficult this becomes.
Hussein stays involved with all his stores and knows
everyone who works for him. He closely follows
the numbers, productivity, marketing and events in
the region.
He hasn’t forgotten the craft of making pizza either,
and is often found standing at the dough table
making pizzas himself.
While experiencing positive growth, there have
been recent challenges for Franchisee Partners like
Hussein. “A key challenge in the past year was rising
energy costs and, of course, the pandemic,” he said.
In response, Hussein applied what he had learned
from previous experiences. For example, during
the COVID‑19 pandemic crisis, he learned a lot
about how to put contingencies in place and how to
proactively organise his business.
From that, he feels more prepared to deal with
unforeseen circumstances, like rising energy prices,
with confidence and professionalism. Hussein
takes nothing for granted and keeps a cool head –
fighting for his stores and making smart financial and
operational choices.
If there is one lesson he would like to pass along
to other (aspiring) Franchisee Partners around the
world, it is: “Believe in yourself and focus on the
positive aspects of your profession. Go for your
goals!” he adds.
“Once you’ve opened a store, make sure your team
has a stable and pleasant working environment, with
the right people in the right places.”
Sage advice from a successful Franchisee Partner.
“Once you’ve
opened a
store, make
sure your
team has a
stable and
pleasant
working
environment,
with the right
people in the
right places.”
46
| DOMINO’S PIZZA ENTERPRISES LTD HUSSEIN’S ACHIEVEMENTS
HIS PATH
2008
2010
Started at Domino's as a pizza maker, then became assistant manager
Store Manager Domino's Antwerp Kiel
2011
2013
2016
Store Manager Domino's Antwerp Kiel and Antwerp Center
Takes over franchise of his first store Domino's Ghent Overpoort
January | Takes over franchise of his second store Domino's
Kortrijk Waterpoort
June | Opens new store Domino's Ghent Sint‑Pieters,
his third franchise
2018 October | Opens fourth store, Domino's Harelbeke
November | Opens fifth store Domino's Kortrijk Meensepoort
2019
June | Opens sixth store Domino's Menen
December | Opens seventh store Domino's Ghent Rooigem
2021 Opens eighth store Domino's Ghent Dampoort
Sold Kortrijk Waterpoort store
2023
Takes over franchise of Domino's Wetteren.
He currently has eight stores.
HIS AWARDS
2015 : Club Million
2015 : Rolex Award
2015–2016: Growth Sales Award
2016 : Club Million
2017 : Rolex Award
2019 : Recognised for highest number
of online orders
2020 : Multi‑Franchisee Partner Award
2020 : Dominator Award
2020 : Club Million
47
ANNUAL REPORT 2023 |
YEAR IN
REVIEW
THE NETHERLANDS
By working closely with our Franchisee
Partners and anticipating their needs in
the market, we were able to focus on
franchise profitability this year.
our customers responded to this extension with
enthusiasm. As many as one in ten orders included
Crispy Oven Fries as a side dish after we launched
the new product.
We saw high participation rates in local campaigns
and were able to continue to grow in store numbers
– passing the magic ‘350’ milestone this year.
Domino’s in The Netherlands not only expanded our
store count, but also our menu, with the introduction
of Crispy Oven Fries and Loaded Fries. This was
an example of our value ‘Crush Convention’ and
During our Mega Week in March 2023, we reached
the double‑achievement of a national sales record,
and the highest Product Quality (PQ) and Net
Promoter Score (NPS) score ever. We are proud of
the collective efforts of our colleagues across the
country, who continued to attract new customers and
impress their existing ones, enabling Domino’s to
remain the dominant delivery expert in the market.
LAUNCHED
• Crispy Oven Fries and Loaded
Fries – increased gross margin and
product mix to 17 per cent
• New Domino’s website and
app with app-only promotions
– app sales more than doubled
• Flex Vouchers – attracted
customers through lower‑cost
entry‑point promotions
48
| DOMINO’S PIZZA ENTERPRISES LTD NEW HOT AND FRESH
OFFERINGS
Our diverse menu continues to offer a wide
range of choice for Domino’s customers.
Over the last financial year, we surprised
loyal customers by bringing back the
Cheeseburger pizza and the Double Dutch
pizza, and introducing a delicious range of
new products.
PROMO Q2
Six pizza varieties
with double toppings
Loaded Fries Chicken
Kebab
Loaded Fries Spicy
Chicken Kebab
Loaded Fries Pulled Pork
PROMO Q4
Pizza Spicy Bacon Cheeseburger
Pizza Veggi Chickenburger
PROMO Q3
Pizza Honey Mustard Pulled Pork
Pizza Sweet Smokey Chicken
Pizza Spicy BBQ Pulled Pork
Popcorn Chicken
Coco Churros
Thick Shake Cherry
PROMO Q1
Crispy Oven Fries
Pepperoni Cheese Pops
Ultra Cheese Pops
Spicy Cheese Pops
Pizza Frietzza
49
ANNUAL REPORT 2023 |
YEAR IN REVIEW
HIGHLIGHTS
Launched online training
platform DomiKnows
Headquarters staff can access free
learning modules and training.
Provided an annual
volunteer day to each
member of staff at
headquarters
Donate a day of their time to a
worthy cause in their community.
Held regional meetings for
our Domino’s Next Talent
Network (DNTN)
Engagement with store employees
about topics affecting their day‑to‑
day Domino’s life, such as work‑life
balance, diversity and team spirit.
50
| DOMINO’S PIZZA ENTERPRISES LTD THE NETHERLANDS
LIVING DOMINO’S VALUES
HELPING OUR PEOPLE TO GROW AND PROSPER
We’ve been able to contribute to local communities through a
partnership with volunteer organisation Boterhamsters. A sad
outcome of rising prices for families is that more children are
arriving at school without having eaten a substantial breakfast.
In March 2023, all stores in Rotterdam, working alongside
Boterhamsters, delivered breakfast to schools for a day.
They also donated a portion of sales to local schools.
Another collaboration this year was with JINC foundation,
whose mission is to create a society where every child
gets a fair chance. Together, we have worked for a
better future for many young people, with 325 young
people visiting our stores for one‑day internships. Domino’s
colleagues also provided job application training in schools,
reaching more than 100 students.
SUPPORTING OUR FRANCHISEE
PARTNERS TO GROW THEIR BUSINESS
We opened 16 stores in the Netherlands this year,
bringing our total to 362 stores. These stores were
opened by colleagues with extensive Domino’s
experience. Most satisfying was seeing our people
grow and prosper, with all the new stores opened
by Franchisee Partners who have grown into the role
from within the organisation’s ranks of pizza delivery
drivers and area managers.
To support the success of these new store openings,
we developed exciting marketing materials and sales
campaigns, featuring a new design to capture the
attention of local communities.
We also updated the pricing system using pricing
templates (low, medium, high), providing flexibility
to Franchisee Partners to tailor their pricing tiers to
balance reasonable profit margins with customer
retention and growth.
51
ANNUAL REPORT 2023 |
YEAR IN REVIEW
RECORD
BREAKERS
HIGHEST SALES (MONTH)
March 2023.
FASTEST DELIVERY
TIME (WEEK)
11–17 July 2022
21 minutes and 4 seconds
FASTEST DELIVERY
TIME (DAY)
13 July – Noordwijk
6 min. and 56 sec.
HIGHEST SALES
DAY RECORD
Enschede West
28 August
LARGEST ORDER
2500 pizzas
Leiden
52
| DOMINO’S PIZZA ENTERPRISES LTD RECRUIT AND RETAIN
THE NEW WAY
Cooperation and communication with our Franchisee
Partners are our most effective strategies for continuing to
succeed in this market. We are seeing high participation
and success rates with our LSM360 platform (Local Store
Marketing 360), which enables stores to run high‑impact
local marketing campaigns to support their store
openings and sales campaigns.
We responded to staff shortages with a focus on
recruitment and retention, using non‑traditional methods
to attract people to our Domino’s family. Through a
promotion we gave away a pair of customised sneakers
in Domino’s style to new employees. In a recruitment
drive via social media platform we introduced a new
way of applying for a role via WhatsApp, we saw a
50 per cent jump in application numbers, reaching an
impressive 15,000 website visitors in one week, and
receiving 2,565 new applicants over three weeks.
Significant effort was channeled into recruiting
delivery drivers and providing meaningful training and
development opportunities for all our Domino’s staff.
Planning is underway now to set up the online Path to
Excellence training.
We held another Supervisor
Bootcamp, an opportunity to discuss
key business themes important for
our team leaders, including work‑life
balance, providing and receiving
feedback, and local store marketing.
THE NETHERLANDS
53
ANNUAL REPORT 2023 | YEAR IN REVIEW
DOMINO’S FOR
GOOD ACROSS THE
NETHERLANDS
INVESTING IN
SUSTAINABILITY
Last year we worked hard on our Domino's for Good
program, which contributes to our goal of being the
most sustainable dominant QSR by 2030.
Domino’s has our eyes set firmly on a sustainable
future. In The Netherlands, we are proud that:
As part of the broader ‘Benelux’ region’s “Round
Up For Charity” work, our stores in The Netherlands
contributed to the donation of more than €33,000 to
the refugee organisation UHNCR.
• Last year, 5.8 million of our deliveries were made
via E‑bikes and E‑scooters
• More than 85 per cent of our vehicles are electric
• With Vehicle Selection technology, we can
optimise our delivery services
In February, we held a fundraiser for GIRO555,
raising money for the victims of the earthquakes in
Turkey and Syria.
STUNTWEEK
Investing extra attention in our
services, by conducting PQ
workshops in the stores
54
| DOMINO’S PIZZA ENTERPRISES LTD THE NETHERLANDS
PROJECT GOLF
Introducing new trays for
our dough, to maximise the
potential dough per delivery
55
ANNUAL REPORT 2023 | THE NETHERLANDS FRANCHISEE SPOTLIGHT
“We enjoy challenging
each other.
It should be fun to
work at Domino’s.”
– NATHAN OOSTERHOF
Nathan Oosterhof developed a passion
for Domino’s while working as a pizza
maker and Shift Runner during his study.
After graduating, he worked for a bank
for five years… but he couldn’t let go of
Domino’s and returned.
Nathan opened his first store as a Franchisee Partner
in 2020 and quickly experienced rapid growth.
Nathan says he was able to achieve this by working
extremely hard, but also by investing in his team.
“I find it important to be part of my team and to
discuss everything,” he said.
“By working well together, successes can be
achieved”.
Nathan informs his team in detail about why they
do what they do, making them aware of the value
of product quality and good delivery times.
“The team has the drive to complete everything they
take on to the best of their ability and they keep that
drive in their work.”
The bar is set high in Nathan’s stores.
“If we set the goal to achieve an EDT in under
18 minutes, then the team tries to stay under
16 minutes,” he said.
“By setting goals every day and trying to exceed
them, the team continually gets the best out of
their efforts”.
“There is also plenty of room for fun and, as
colleagues, we enjoy challenging each other.
It should be fun to work at Domino’s.”
The current managers in Nathan’s stores have all
worked with him and were trained by him in his first
store in Wolvega.
“There’s always room for a bit of healthy competition.”
“This makes it easy for all my Store Managers to
share knowledge and experiences with each other.”
56
| DOMINO’S PIZZA ENTERPRISES LTD HIS STORES
1. Wolvega
2. Oosterwolde
3. Burgum
4. Bolsward
57
ANNUAL REPORT 2023 | In addition, Nathan is still present in his stores to assist
and coach on site. “Even if things are going well,
there is always room for improvement,” he said.
To maintain the level of support required in all his
stores, Nathan ensures he stays in close contact with
his team members and is available remotely to his
team as much as possible.
Looking back on last year, Nathan is proud of the
growth he experienced with opening new stores, but
also that the service and product quality remained
excellent. This was reflected in the awards Nathan’s
stores won at the annual awards.
“It means
working hard,
but with a
good team
and the right
mindset,
anything is
achievable.”
One challenge that accompanied the addition of
stores for Nathan was ‘the art of letting go’.
“The more stores you open, the more you have to
divide your attention.”
“In the first few weeks after opening, I was almost
full‑time in the new store, which can be difficult for the
teams in other stores.”
“As a Franchisee Partner, it is important to always be
there for your people.”
Nathan is confident the upcoming year will be a
fun one with two new stores that have only recently
opened – these stores will be competing with each
other for a debut award.
“I am already looking forward to seeing the passion
of my teams as they work towards achieving this
award,” he said
“I’m here to keep our focus on steady growth –
supporting the teams, focus on personal growth, even
better quality, sales growth and order growth.”
Nathan had this advice for prospective Domino’s
Franchisee Partners: “If you are going for a future
Domino’s franchise, go for it 100 per cent.”
“If you know what you are doing it for, then you
are able to give 100 per cent – set good goals for
yourself and the team and give everything to achieve
them,” he added.
“It means working hard, but with a good team and
the right mindset, anything is achievable.”
58
| DOMINO’S PIZZA ENTERPRISES LTD NATHAN’S ACHIEVEMENTS
HIS PATH
2012
2012–2014 Worked in different stores as a Shift Runner
Started working as a Pizza Maker in Heerenveen
2014–2020 After his graduation, Nathan worked at a national
bank for five years
2019–2020 Returned to Domino’s, in a preparation process to start
franchising
2020
2022
2023
December | First store as Franchisee Partner, Domino’s Wolvega
June | Opened second store, Domino’s Oosterwolde
April | Opened third store, Domino’s Burgum
June | Opened fourth store, Domino’s Bolsward
HIS AWARDS
2020 : Record opening sales, Wolvega
2021 : Topshop debut –
Manager of the Year, Wolvega
2022 : Shift of the Year, Wolvega
2022 : Best Shift category 2, Wolvega
2022 : Topshop mature, Wolvega
2022 : 100% HTC, Oosterwolde
2022 : Topshop debut 2nd place,
Oosterwolde
59
ANNUAL REPORT 2023 |
THE NETHERLANDS FRANCHISEE SPOTLIGHT
“As an entrepreneur,
you really are part of
the local community,
and I feel it is important
to be approachable.”
– YOUS SYED
Yous began her career at Domino’s
as a pizza maker in one of the stores
in Rotterdam. There, she immediately
developed an enthusiasm for the brand,
the culture within the company, and the
product.
“I coached several teams in different stores and
learned to distribute my attention over several
locations and people.”
“Once I had mastered that, I knew I was ready for
my own store.”
‘’I expressed my ambition to become a Franchisee
Partner myself very early on,” Yous recalls.
According to Yous, one of the most important skills
you need as a Franchisee Partner is social skills.
“The Franchisee Partner I worked for saw how
entrepreneurial I was and helped me develop my
skills,” she said.
“At 18, I started a hospitality education and was
given the opportunity to start as a Store Manager
at Domino’s.”
‘’It is important that you are socially strong,”
Yous said.
“First of all, because you are going to manage a
team that is co‑responsible for the success of your
store – without your people, you are nowhere,”
she added.
“Together with my team, I achieved great results, but
I wanted to learn even more – that was possible in a
position as regional manager.”
“As an adult, you often work with young people and
have to be able to empathise with their circumstances
and needs.”
60
| DOMINO’S PIZZA ENTERPRISES LTD HER STORE
1. Schoonhoven
61
ANNUAL REPORT 2023 | “In the end, it’s
our customers
who determine
how successful
we are.”
“The team feeling is very important to me. I’m always
considering what gets them excited and what they
need help with.”
She achieves that focus on service and quality by
constantly thinking from the customer’s perspective.
“I encourage my team to always think like the
customer,” Yous said. “What does the store look like?
How is someone being spoken to? What’s the quality
of the product being delivered?”
“In the end, it’s our customers who determine how
successful we are,” she added.
“We have to do everything we can to give them the
best experience possible.”
And Yous’s approach if her store does receive
a complaint? “Then we should be glad that this
customer speaks up,” she asserts. “After all, that
complaint gives us a chance to improve ourselves.”
“Being an entrepreneur also means daring to be
critical of yourself.”
After being a Franchisee Partner for more than a year
now, Yous is already thinking about the future, as she
describes what it holds for her. “I would like to open
my second store in the near future,” she beams.
“Right now, I’m looking for a good Store Manager
for my current store, so I can focus on opening
a second.”
“Ultimately, I want to build my own Domino’s empire.”
“For that, I always go the extra mile.”
“I make it fun for my staff to achieve good results,
so they can win cool awards with achievements in
service and quality.”
Those same social skills also help Yous in her success
as a local entrepreneur.
‘’I’m based in Schoonhoven, a small town where a lot
of people know each other,” Yous explains.
“As an entrepreneur, you really are part of the
local community, and I feel it is important to be
approachable,” she said.
“For example, I get involved by sponsoring local
clubs and events. I also celebrated my birthday
with residents of Schoonhoven through a free pizza
hour – because when it’s your birthday, you have
to celebrate!”
Yous also remains committed to local marketing in
the region and is convinced the investment in local
visibility is something that will pay off in the long run.
By taking advantage of the marketing opportunities
offered by Domino’s, Yous has more time to focus on
coaching her team and providing excellent service
and quality for her customers.
62
| DOMINO’S PIZZA ENTERPRISES LTD YOUS’S ACHIEVEMENTS
HER PATH
2009 Started at Domino’s Rotterdam Zuid as a Pizza Maker
and quickly developed into a Shift Runner
2014 Started as a Store Manager at Domino’s Rotterdam
IJsselmonde
2015 Store manager at Domino’s Zwijndrecht and Domino’s
Hendrik Ido‑Ambacht
2020 Regional manager at Domino’s Sliedrecht, Papendrecht,
Alblasserdam and Ridderkerk
2022 Opened first store as a Franchisee Partner in Schoonhoven
HER AWARDS
2017 : Topshop Zwijndrecht –
April, May, June, August
2018 : Rolex challenge
2019 : Fastest Pizzamaker contest: 6th place
2019 : Topshop Hendrik Ido Ambacht: October
2019 : Shift of the Year
2019 : Hygiene and Training Check (HTC) Award
2020 : Topshop Hendrik Ido Ambacht –
January, February, March, June
2020 : 5‑star OER
2022 – 2023: Topshop Schoonhoven
(April 2022–April 2023)
63
ANNUAL REPORT 2023 |
YEAR IN
REVIEW
DENMARK
In June, Domino’s Pizza Enterprises Ltd
announced the Company intended to
exit the Danish market, which it acquired
in 2019 from receivership.
The previous owners breached public trust with
food safety violations, highlighted in national
media. With Domino’s Pizza Enterprises Ltd’s track
record, management had expected to repair the
reputational position.
In August 2022, Domino’s Denmark launched
our Clear the Slate campaign. This represented a
genuine apology to the Danish public, following
the food scandal attributed to the previous owners.
And it promoted Domino’s – showcasing the notable
advancements in operations since Domino’s Pizza
Enterprises Ltd (DPE) assumed brand rights.
64
| DOMINO’S PIZZA ENTERPRISES LTD The campaign’s central idea involved self‑rating
our past performance with a one‑star review on
Trustpilot. This campaign featured CEO Kellie Taylor,
who appeared in our debut television commercial –
openly sharing her honestly, humour and authenticity.
Within a three‑month period, Domino’s Denmark
experienced a remarkable six per cent improvement
in brand perception, and enjoyed valuable, positive
public relations coverage and high brand visibility.
The team in Domino’s Denmark made important
achievements for the Danish market in FY23.
PROUD OF OUR ACHIEVEMENTS
LAUNCHED
SUCCESSFUL
MOBILE APP
A first for the
Danish market
INCREASED
STAFFING
LEVELS
to accommodate higher
volumes, and adapted
staffing to ensure prompt
and reliable deliveries to
our customers.
100 PER CENT E-BIKE FLEET
Meeting the increasing demand for
fast delivery, and environmentally-
friendly solutions.
Europe CEO Andre ten Wolde paid tribute to the
efforts of Domino’s Denmark’s leadership and
team members.
“Our team in Denmark consistently delivered some of
the highest quality operations not just in Domino’s, but
in the QSR industry,” Mr ten Wolde said.
“Every store consistently had a ‘smiley’ (awarded
by local authorities for high quality food safety and
hygiene) and delivery times and product quality
were second‑to‑none,” he added.
“While our team’s efforts won back some customers,
and created loyal fans, the legacy of damage from
the previous ownership was ultimately too great for
us to overcome in the foreseeable future.”
“We are immensely proud of our team’s hard work,
and I am only disappointed that we will not be able
to share the joy of Domino’s experience, and the
opportunities that creates for team members.”
ANNUAL REPORT 2023 |
65
65
ANNUAL REPORT 2023 | YEAR IN
REVIEW
GERMANY
DELIVERING VALUE
At the beginning of this fiscal year, Germany faced
unprecedented challenges: food cost inflation driven
by the Ukranian conflict, labour cost inflation driven
by mandates from the new government, and energy
cost inflation that hasn’t been seen in a generation.
In this very difficult environment for our Franchisee
Partners, we were bold in our action, making
necessary price adjustments but also ensuring that we
maintained best‑in‑class value for our customers.
66
| DOMINO’S PIZZA ENTERPRISES LTD Some of the highlights over the past year, included
watching our talented young Store Managers
who have become Franchisee Partners and have
celebrated their first successful year in the business.
A slice of our year in Germany:
Winning the best
international restaurant
chain at the Lieferando
Awards
(for the second time)
Successful Veganuary campaign, and
increasing our ProVeg Ranking from sixth
to third place, for the most vegan‑friendly
restaurant chains (2023)
Launched on new marketplaces
Uber Eats, Wolt
NEW PRODUCT
Chicken Döner
Pizza
Extension of the
Domino’s DUO
NEW PRODUCT
Churros
Launch of new
Domino’s app
(July 22)
NEW PRODUCT
Calzini
Mix & Match
flex bundles
67
ANNUAL REPORT 2023 | YEAR IN REVIEW
DRIVING OUR SUCCESS IN GERMANY
Maintaining strong value through price increases
is difficult, but we succeeded by extending our
very popular Domino’s Duo deal from two to four
days per week, and we launched Mix & Match
bundle deals leveraging our new flex voucher
technology. We’ve also encouraged adoption of our
upgraded app.
Beyond this we continued to delight our customers
with excellent product, service and image,
maintaining the highest product and Net Promoter
Scores in Domino’s Pizza Enterprises Ltd.
STAYING AHEAD OF THE CURVE
Our stores are geared up to deliver exceptional
service and value now and into the future. We
are embracing new technology and improved
instore operations to reduce delivery times and
drive customer satisfaction through a high focus on
product quality.
Our stores
are geared
up to deliver
exceptional
service and
value now
and into the
future.
SOME OF OUR TECH
PROJECTS:
• Using TANDA helped us improve
rostering with increase SpmH1 in
average to 45€/h
• Revamped Domino’s App with
new functions and offers, as part
of broader DPE project
• First order kiosk and testing pizza
topping robots in partnership with
PICNIC in Berlin
68
| DOMINO’S PIZZA ENTERPRISES LTD GERMANY
STORE OPENINGS
This Financial Year we opened 25 stores.
We experienced a good mix of new Franchisee
Partners and existing Partners, including some
Franchisee Partners who have provided Store
Managers with the opportunity to develop into
Franchisee Partners. Multi‑unit owners (MUOs)
who have expanded their store portfolio and
single unit owners who have become MUO
through additional stores. We were also pleased
to welcome our first candidate into the High
Leadership Mentality Programme.
Following our grow from within approach, we have
strongly focused on motivating managers to
open their own locations. Through partnering
with potential Franchisee Partners from within our
business, we provide those with the experience of,
and passion for the brand to start their new store
adventure much easier.
Our partners are very satisfied with our marketing
activities and excited to reach more customers,
so much so that they overwhelmingly agreed
to increase their investment in the National
Advertising Fund.
We are particularly proud of the fact
that we scored above average in the global survey
compared to the franchising benchmark.
RECORD BREAKERS
Domino’s Germany is proud that every week,
between one and five of our stores are regularly
among the 25 fastest stores in the world. We’ve hit
some other great records too:
REGENSBURG STORE
1 JANUARY 2023 DAY RECORD
€14,912.34
AWUS2 RECORD
€66,065.37
2 APRIL 2023
EDT RECORD
HAMBURG HAFENCITY
8.02MIN
1) SpmH = Sales Per Man Hour (or SPMH or sales per labour hour)
2) Average Weekly Unit Sales
69
ANNUAL REPORT 2023 | YEAR IN REVIEW
LIVING OUR VALUES
Beyond the sales records, there were several other
initiatives we are proud to have made happen
this year.
Domino’s Pizza Germany felt a strong urge to use
our power as a global company to support our local
communities in need. Malnutrition is a common issue
among pupils in Germany, so we started an initiative
at a school near Berlin that provides breakfast once
a week. Our next goal is to expand the program,
and with the help of Domino’s Round‑Up‑For‑Charity
donations, we will be able to support additional
school classes in more communities.
Our pilot for school breakfasts was an important
initiative within Germany. Beyond our borders, we
sent donation support to the communities of Turkey
affected by the earthquake.
Do the right thing because it’s the right thing to
do is part of our Domino’s mentality, therefore we
were very pleased to receive our first Domino’s for
Good Award in recognition of the fundraising work.
Much focus has been on sustainability initiatives.
We are now using energy trackers to pinpoint exactly
where and how we can reduce energy consumption
in our stores. We have introduced a new oven
hood and exhaust system, designed to save energy
and recoup some spent energy with heat recovery.
We are also excited to start the testing phase of a
reusable pizza box using the sustainable packaging
system Vytal.
We continue to help our people grow
and prosper through employee
engagement activities that inspire
greatness and cohesion.
We live equality. The Domino’s
Germany team participated in
the CSD as part of our approach
to promoting diversity. CSD is a
day of celebration, commemoration,
and demonstration for the LGBTQIA+
community.
We also held successful Azubi days to share
the Domino’s vision with the next generation
of pizza people. More than 40 apprentices from
across the Domino’s Germany business gathered with
more experienced Dominoids to exchange ideas
about the future of Domino’s, and get inspired about
what you can achieve in a career at Domino’s.
70
| DOMINO’S PIZZA ENTERPRISES LTD GERMANY
RISING TO THE CHALLENGE WHEN
IT COMES TO NEW STORE BUILDS
Domino’s Germany faces the same challenges that are
impacting small businesses across the country. Rising inflation
and energy prices plus other escalating costs within the
construction industry all impact our development plans.
Additionally, the combination of rapidly increasing interest
rates and a minimum wage increases dampened – but did not
eliminate – the appetite of Franchisee Partners to expand.
48 per cent of Franchisee Partners want to invest in
new stores*.
Our approach during this time has been consistent
engagement with our Franchisee Partners and ongoing
negotiations with suppliers. We accept the challenge to find
innovative solutions to support Franchisee Partners to expand,
seeking alternative and effective materials for construction,
and working to limit cost increases wherever possible.
This is not the first time our business has faced challenges.
We are proud that we have risen to the challenge once again
and look forward to an even more exciting year ahead.
* (Source: Franchise Survey)
71
ANNUAL REPORT 2023 |
GERMANY FRANCHISEE SPOTLIGHT
“My daily highlight is
seeing my team grow and
that they are starting to
get as excited about the
business as I am.”
– FELIX BECK
Felix Beck started as a Domino’s delivery
driver while still at school. He quickly
progressed through every available
position and the Domino’s Academy
school.
Felix takes an active role in ensuring his team
continue to bring that passion and value through
product quality and delivery times.
“We are living the customer‑first approach.”
“Domino’s became my family and I started to grow
that family,” he said.
“We are part of the 25 Min EDT guarantee* to show
our customers how fast we are and that if we fail,
we make up for it.
“I opened my first own store in Neustadt an der
Weinstrasse in May 2022.”
Felix considers one of the highlights of his time as
a Franchisee Partner opening the 400th store in
Germany and to watch his team develop the same
passion for what they do.
“My daily highlight is seeing my team grow and that
they are starting to get as excited as I am,” he laughs.
“We’ve set ourselves high goals and complete little
challenges to achieve them,” he said.
“We do self OERs every week to see what needs to
be improved.”
“My experience is that it takes many small steps to
achieve great success.”
72
*The 25 Min EDT guarantee is a promotion that promises a
pizza to be safely delivered within 25 minutes.
| DOMINO’S PIZZA ENTERPRISES LTD HIS STORE
• Neustadt an
der Weinstraße
73
ANNUAL REPORT 2023 | “You should
always dream
big!”
“For us, that means constantly taking on new
challenges and getting even better in all areas.”
When talking about what moment Felix is most
proud of from his time as a Franchisee Partner, he
takes a breath and some time to gather his thoughts.
Evidently, there is quite a long list of such moments!
“Our amazing store opening, reducing our EDT from
25 Min to 17 Min while increasing all other KPIs, our
four 5 Star OERs, and the 1 Euro Party with a new
record of pizzas sold within three hours in Germany,”
he shares.
“The reason I won the pizza competition at the
rally was because I did a lot of training with our
staff to make them aware of the proper weight of
ingredients.”
“I’m proud of training a new team and to achieve
such a good result within one year is brilliant.”
Felix is not one to rest and already has plans for the
next year.
“We are going to try and set a new AWUS record
for Germany, and my personal goal for the next year
is to open a second store.”
“You should always dream big! My goal is to open
20 stores within the next 10 years.”
74
| DOMINO’S PIZZA ENTERPRISES LTD FELIX’S ACHIEVEMENTS
HIS PATH
2013
2016
Started in Domino’s as a Delivery Expert
Became Store Manager
2019
Became Area Manager
2022 Opened store in Neustadt an der Weinstrasse
to become a Franchisee Partner
2023
Set new German record of pizzas sold
in three hours
HIS AWARDS
2022 : 3rd Top Ace* in Germany
2023 : Winner Pizza Making Contest
at Domino’s Germany Rally
2023: Winner Top Ace challenge
for Las Vegas
*Top (Pizza) Hero: must achieve
level 3 in all three time disciplines
within 6 months.
75
ANNUAL REPORT 2023 |
CEO’S REPORT APAC
“rebalancing
the value
equation is not
Just about
price.”
The Value equation has been the key to
Domino’s success throughout our history,
and this Financial Year was no different.
Typically, Domino’s offsets inflationary
increases in the cost of goods through
enhancing our efficiency for delivery and
carry-out orders, as well as through small
menu price increases to avoid as much
as possible affecting our loyal customers.
76
| DOMINO’S PIZZA ENTERPRISES LTD However, as our Asia‑Pacific markets experienced
rapid and sizable increases in the cost of labour,
ingredients and packaging, we needed to pass
through price increases to our customers in a size
and speed that has not been our usual approach.
Where we successfully balanced the value equation,
by providing the best product, service and image,
at an affordable price, customers rewarded us with
their ordering frequency. Where we did not get
the balance right, we saw a decline in frequency
as customers chose other quick service restaurant
occasions. Some of the customer response only
became apparent over time, such as the deterioration
in ordering frequency by delivery customers in
response to the introduction of a Delivery Service Fee
in Australia.
This saw Same Store Sales growth (‑1.4%) that
was entirely through increasing ticket,
with lower order counts through stores
(and subsequently warehouses). As we
reported mid‑year, this affected the
earnings of both Franchisee Partners
and Domino’s Pizza Enterprises Ltd.
Our ability to identify these
missteps, and address them by
rebalancing the value equation,
saw positive signs of customer count
improvement towards the end of
the second half, albeit insufficient
to offset the earnings decline in the
first half. Domino’s APAC delivered
underlying EBIT of $172.6m,
which was 16.3% lower than the
prior year.
Rebalancing the value equation
is not just about price, but also
relies on improving the product,
service and image we present
to customers. I’m very pleased
with the work delivered in this
Financial Year to do so.
New product development was stronger compared
to the prior year, and continues to strengthen, with
launches including the Burger Pizza range (first in
Australia/New Zealand), one of our most successful
limited time offers in recent history. Our newest
product, the My Domino’s Box, first launched in
Japan, is designed to target the single customer
occasion, to give QSR customers more choice. But
in an exciting development, stores are increasingly
seeing customers choose this product (which includes
a mini pizza and two sides) as part of a family, or
office gathering, order.
Our teams always look to improve our world‑class
operations. This year we moved away from
pre‑folded boxes in Malaysia to adopt ‘flat boxing’
as used in other DPE markets – which saves labour
and storage. In Taiwan we closed our commissary
and moved to in‑store dough making – which
delivers savings for stores without compromising on
quality. We launched the OneDigital mobile app in
Singapore, which has increased sales conversions,
and will do the same in Malaysia next year. In Japan
we reviewed the business model to allow for stores
with a smaller footprint, without sacrificing efficiency,
and in Australia we launched the first Mobile Pizza
Kitchens – a full Domino’s store on wheels that allows
us to service communities where we may not be able
to access a traditional store.
I’m proud of the Domino’s team across the
Asia‑Pacific region, which now includes team
members from our newest markets; Malaysia,
Singapore and Cambodia. We speak a multitude
of different languages, but each of us is focused on
delivering great value, growing our order counts
through superior product, service and image, and
enhancing our performance for stores, Franchisee
Partners, and Domino’s Pizza Enterprises Ltd.
JOSH KILIMNIK
APAC CEO
77
ANNUAL REPORT 2023 | SOUTH-EAST ASIA
ACQUISITIONS
MALAYSIA, SINGAPORE, CAMBODIA
In August, Domino’s Pizza Enterprises Ltd announced one of the
largest expansions in the Company’s history, agreeing to acquire
Domino’s operations in the South-east Asian markets of Malaysia,
Singapore and Cambodia.
The three territories comprised 287 corporate-owned stores, with
240 stores in Malaysia, 38 stores in Singapore and 9 stores in
Cambodia.
On announcing the acquisition, Group
CEO & Managing Director Don Meij
said the acquisition demonstrated the
value of the Company’s twin‑region
focus, Europe and APAC, with the
Asia‑Pacific now serving a population
of more than 230 million people.
Mr Meij said Domino’s had carefully
reviewed the potential for new markets
and intended to apply proven expertise
from the company’s other markets to
accelerate performance.
While Domino’s was not the largest
pizza chain in any of the three markets,
this was consistent with Domino’s Pizza
Enterprises Ltd’s approach throughout its
history, eventually building to the market
leader in each of its established markets.
“By listening to our customers and
exceeding their expectations with
world‑class operations – built on safe,
fast, affordable delivery – we have
built a leadership position and provided
a pathway to success for Franchisee
Partners, team members and their
families.”
78
| DOMINO’S PIZZA ENTERPRISES LTD “We have built a
leadership position and
provided a pathway to
success for Franchisee
Partners, team members
and their families.”
Mr Meij said Domino’s intended to do the same in
these newest markets.
Ringo Joannes, previously CEO of the Company's
Belgium / Luxembourg business, was appointed
to lead the new markets in Malaysia, Singapore
and Cambodia, reporting through to Josh Kilimnik,
CEO APAC.
The acquisition agreement provided for an initial
acquisition price of 660 million Malaysian ringgit
(equivalent to A$214m), as well as an earn out
payment to be determined over the next two to
three years based on earnings – up to 440 million
Malaysian ringgit (equivalent to A$142m).
Domino’s sees the long‑term potential of these
markets as capable of expansion to more than
600 stores.
Mr Kilimnik said the company intended to use lessons
learned from Japan and Taiwan to target growth –
including leveraging the introduction of Domino’s
digital, operational, franchising and marketing
expertise to grow unit sales and unit economics,
and ultimately accelerate store expansion.
You can read more about the performance of these
newest markets from page 132.
79
ANNUAL REPORT 2023 | AUSTRALIA &
NEW ZEALAND
HIGHLIGHTS
PEOPLE HIGHLIGHTS FOR OUR AUSTRALIA AND NEW
ZEALAND TEAM
We recognise that Domino’s is only as strong as the people
who make it happen. That is why investing in the growth and
development of our people remains at the forefront of everything
we do.
This year, Domino’s Australia and New Zealand welcomed
several key appointments and continued our commitment to
helping our people grow and prosper.
ANZ APPOINTMENTS
• Kellie‑Anne Drever as Domino’s Head of Franchise
Operations for Australia
• Greg Steenson as Head of Corporate Operations for
Australia
• Rod Chapman as ANZ Chief Information Officer
(CIO) for the ANZ Business
• Daniel Hawkins as New Zealand General Manager
• Rhiannon Frater as Domino’s ANZ Chief
Communications and Corporate Affairs Officer
• Welcomed Allan Collins back to the Domino’s
business after a brief retirement as ANZ Chief
Marketing Officer (CMO)
Importantly, four of these senior appointments
were made internally, in line with Domino’s
value to help people grow and prosper
•
40%
WOMEN
LEADERSHIP TEAM
ON THE ANZ
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| DOMINO’S PIZZA ENTERPRISES LTD RECORD NUMBERS AT
ANZ RALLY 2023
In February/March, Domino’s ANZ held its annual
Rally event on the Gold Coast. With a record
attendance of more than 1,700 attendees from
across Australia and New Zealand for two days,
Domino’s welcomed Franchisee Partners and Store
Managers from both markets to come together to
be inspired, motivated, and prepared for the year
ahead.
CLUB 1845: OPERATIONAL
EXCELLENCE
Operational excellence was a key element of the
ANZ Rally with the launch of Club 1845.
To join Club 1845, a store must maintain an Average
Delivery Time (ADT) of <18 minutes and a Product
Quality (PQ) score of >4.5 for one whole quarter
(three sequential months).
Since launch, we already have
Australian store Altona led the way,
reaching Club 1845 status for four
months across Australia.
‘The Club 1845 Leaderboard’ was introduced after
the Rally to recognise the stores across Australia and
New Zealand that are well on their way to achieving
these key operational metrics and joining Club 1845.
81
ANNUAL REPORT 2023 | EDT RECORD BUSTER
Domino’s Australia multi‑unit Franchisee
Partner Daniel ‘Muzz’ Murray and the team at
Domino’s Chermside set their sights on a goal and
worked hard for over a year in preparation to
achieve it.
That goal was to crush convention and set a new
Australian and New Zealand EDT Record.
Muzz and his team achieved this goal over a
seven‑day period from Monday 26 June to
Sunday 2 July 2023 – safely delivering Hot and
Fresh pizzas to local customers within an average
time of 3 minutes and 42 seconds over an entire
week!
Considered an Australian and New Zealand
fast food delivery record, Daniel and his team
achieved this impressive feat by focusing on being
slow where it matters, and fast where it counts,
and utilising innovative, smart technology that can
predict a customer’s likelihood of purchasing when
they visit Domino’s online ordering website – with
up to 98 per cent accuracy.
DOMINO’S FOR GOOD
It’s been a rewarding year for Domino’s
registered charity Give for Good,
demonstrating time and again that when
we join forces, Domino’s people can make
wonderful things happen and bring more
than a piping hot pizza to local communities.
We held our second annual Domino’s for
Good Day for Domino’s registered charity,
Give for Good, which aired on national TV
for the first time, and saw us raise $157,000
across Australia and New Zealand.
82
| DOMINO’S PIZZA ENTERPRISES LTD STORE DONATIONS BOOST
FEED THE KNEAD
Domino’s stores across Australia and New
Zealand have also donated more than
100,000 pizzas to individuals, charities and
businesses in ‘knead’ through the Company’s
Feed the Knead program since its inception in
September 2020.
Feed the Knead allows individuals to
nominate someone they know who is
doing it tough via a form on the Domino’s
website. The local store will then assess this
application and provide support in the form
of free pizza.
Over the two‑and‑a‑half‑years since the
program’s launch, Domino’s stores across
Australia and New Zealand have donated
more than 100,000 Hot and Fresh pizzas –
an average of 117 pizzas a day.
CHALLENGE ACCEPTED
A key requirement for Domino’s expansion is people
– including having enough Franchisee Partners trained
and ready to expand in the face of a competitive
market, rising inflation and increasing cost of
living pressures.
We are focusing on the Manager to Franchisee Partner
Program to further refine and develop our pipeline
of internal candidates who will eventually develop into
Franchisee Partners and support the expansion of their
business and DPE.
The national launch of Domino’s world‑class training
platform Path to Excellence has provided more
than 20,000 team members across Australia and
New Zealand the opportunity to strengthen their
leadership and communications skills, while also
fine‑tuning their in‑store operations and business
management skills.
Officially available to all team members from March
2023, the Path to Excellence App is a practical
training tool to support our people to pursue, and
even accelerate, their professional development goals.
More than half of the Domino’s Pizza Enterprises Ltd
workforce in Australia are already achieving learning
goals through the Path to Excellence and we look
forward to more people extending their knowledge
and skills through the platform.
Path to Excellence supported our recruitment drive,
by adding authenticity to our announcement that
we were seeking 2,000 new team members to join
us and start their professional development journey
with Domino’s.
83
ANNUAL REPORT 2023 | YEAR IN
REVIEW
AUSTRALIA
Innovation was a key driving force behind Domino’s Australia, often working
with Domino’s New Zealand to create attractive campaigns and drive sales.
From introducing the new Domino’s App, to a plant-based menu, and a Mobile Pizza
Kitchen (MPK) tour travelling 1000kms, Domino’s Australia looked to new ideas and
solutions to engage with customers throughout the year.
84
| DOMINO’S PIZZA ENTERPRISES LTD THIS YEAR WE LAUNCHED:
PIZZA PASTA RANGE
April 2023 – combining iconic pizza flavours
such as pepperoni, beef, chicken and bacon,
with pasta to create six pasta products as an
additional choice for customers.
DOMINO’S BURGER JOINT RANGE
August 2022 – bringing together burgers and pizza
in one Hot and Fresh delivered meal. The launch
was supported by a Mobile Pizza Kitchen Tour that
travelled from Brisbane to Sydney handing out free
Burger Pizza samples. The tour concluded at the
finish line of the iconic City 2 Surf event.
NEW IMPOSSIBLE RANGE
October 2022 – a 100 per cent Plant‑Based
Beef for Domino’s new Flexitarian pizza
range. The launch was held in Sydney at the
Impossible Pizza Night Party.
NEW DOMINO’S APP
AND DOMINO’S WALLET
July 2022 – with opportunities for
customers to access exclusive deals
and free pizza.
85
ANNUAL REPORT 2023 | YEAR IN REVIEW
MEGA AUSSIE MILESTONES
We reached an impressive
100,000 Feed the Knead
donations
Across Australia and New Zealand,
including nearly 58,000 pizzas
donated in Australia over the past
financial year.
Opened Domino’s Pizza
Enterprise Ltd’s first
Innovation Concept Store
and Global Discovery
Centre – March 2023.
Introduced Jaw Droppers
A brand‑new Marketing campaign
that offers exceptional value to
customers and generates profitable
sales and customer growth for
Domino’s stores across Australia.
Jaw Dropper deals delivered a
ticket meaningfully higher than the
headline, as a result of customer
upgrading their choices.
86
| DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA
23 new Domino’s stores
opened across Australia in
FY23 – growing the Australian
store network
25 Store Managers
became first time
Primary Franchisee
Partners
5 Mobile Pizza Kitchens
operational in Australia and
New Zealand, since launching
in July 2022
STORE OPENINGS
A key factor that helped to accelerate the number
of store openings this year was the introduction
of Mobile Pizza Kitchens (MPKs) and Reduced
Model Store (RMS). MPKs have allowed Domino’s
to expand into more regional and remote areas
across Australia to open stores closer to customers.
These fully equipped Domino’s stores on wheels’
are proving a valuable, quality food service to pop
up at community events, festivals, and critically,
to support those in need during natural disasters.
CONCEPT STORE CRUSHING
CONVENTION
Domino’s Pizza Enterprises Ltd (DPE) was proud to
celebrate the opening of our innovation concept
store in March. This store – Domino’s Hamilton, in
Brisbane – is the first of its kind within the Domino’s
global network. It has been designed with precise
mathematical modeling and computer simulation to
optimise the operational process through store layout.
The store is already saving 20 seconds on production
for every order, bringing Hot and Fresh pizza to local
customers even faster. Importantly, the modelling
allows DPE to continue to test and optimise the layout
in other stores.
87
ANNUAL REPORT 2023 | YEAR IN REVIEW
BURGER JOINT QUICKLY BECOMES
AN AUSSIE FAVOURITE
Following its launch in August, Domino’s Burger
Joint Range swiftly rose in popularity in the
Australian market.
The launch was supported by a Mobile Pizza Kitchen
Tour that travelled from Brisbane to Sydney handing
out more than 10,000 free Burger Pizza samples
and ended at the finish line of the iconic City 2 Surf
event. This proved fantastic publicity, with more
than five million views from 47 individual pieces of
media coverage.
Promotion ran August
to October 2022
Stores sold through
seven weeks’ worth of
stock in the first week
More than half a million Burger Range
Pizzas sold during the promotion
Burger Joint
Cheeseburger was the
most popular
Same store sales were
double digit during the
promotion
88
| DOMINO’S PIZZA ENTERPRISES LTD MAKING THE IMPOSSIBLE,
POSSIBLE
Domino’s Australia recognises the
changing needs of our customers, and
the impact our products have on the
environment.
In recognition of the changing food
requirements of our customers,
Domino’s launched the Impossible
Pizza Night on 24 October
2022. The star of the evening was
Impossible™ Beef, the market‑leading
animal‑free product from California‑
based Impossible Foods.
This plant‑based sensation is now
available a range of popular
Domino’s pizzas, including Impossible
Supreme, Impossible Godfather,
Impossible Firebreather and Impossible
Cheeseburger. Each 113‑gram serving
of Impossible™ Beef is gluten free,
halal and kosher‑certified, and delivers
a satisfying 18.8 grams of protein.
AUSTRALIA
THE GREAT RECORD
BREAKER FROM THE WEST
Western Australia Franchisee
Partner Darwin Jarrett started as a
Delivery Expert in 2016 at Domino’s
Ellenbrook before being promoted
to a Store Manager later that same
year. He is known for his commitment
to driving sales and providing a
great customer experience through
regular Customer Appreciation Days
and Weeks. In 2018, just two years
after joining Domino’s, Darwin took
on Domino’s Kalamunda with fellow
Franchisee Partner Alex Mohibi, before
becoming the Franchisee Partner of
Domino’s Kalgoorlie that same year.
Having since introduced his
brother, Isaac, to the world of pizza
(with Isaac now the Franchisee Partner
of Domino’s Kalamunda), Darwin
is the sole owner and operator of
Domino’s Kalgoorlie and is producing
outstanding results.
The plant‑based offering quickly was
positively received by customers.
During the promotional period
(October to December), we sold more
than 160,000 pizzas featuring the
new Impossible™ Beef.
Darwin has achieved some of the
biggest results in Australia, including
a DPE World Record of $167,000 in
sales in one week in 2022, and raising
$30,000 for a community cause in
need, with one single Doughraiser.
We coupled this plant‑based product
launch with a partnership with
Wavemaker to carbon‑offset our
digital media buying, as part of our
ongoing commitment to consider
the environmental impact and
sustainability of all our operations.
For his achievement in breaking the
DPE World Sales Record, Darwin
was awarded a DPE Eagle Ring and
recognised as Global Record Breaker.
89
ANNUAL REPORT 2023 | YEAR IN REVIEW
LIVING DOMINO’S VALUES
We continue to be proud to live the Domino’s values
through community initiatives. Highlights throughout
the year included:
• More than 58,000 pizzas have been
donated across Australia through the Feed the
Knead program
• Give for Good awarded the Corporate
Volunteering Award 2023 by Volunteering
Queensland for Domino’s Corporate Volunteer
Program
• Domino’s stores across Australia came together
on World Pizza Day on 9 February.
This event saw Domino’s Australia stores donate
$1 per pizza to Give for Good, raising more
than $137,000 to support disaster‑affected
communities, disadvantaged youth, rural
communities, the development of future leaders
and mental health initiatives
• Awarded 2022 Corporate Philanthropist
of the Year. The award is sponsored by The
Public Trustee of Queensland and recognises
corporations with more than 200 employees
that have created a culture of philanthropy and
have demonstrated an outstanding commitment
to philanthropy through their financial support of
one or more non‑profit organisations.
• Domino’s was recognised for the Company’s
‘Round up for Charity’ initiative. This allows
customers to round up their pizza order to
the nearest dollar to support the Company’s
registered charity, Give for Good and its
partners. Additionally, Domino’s was recognised
for its Workplace Giving efforts across both
corporate and store employees, and the
additional donations that have been made to
Give for Good’s partners.
90
| DOMINO’S PIZZA ENTERPRISES LTD AUSTRALIA
91
ANNUAL REPORT 2023 | AUSTRALIA FRANCHISEE SPOTLIGHT
“I believe that the key
to great operations
is communication and
reflection.”
– JUSTIN ‘MUNNERS’ MUNRO
Justin ‘Munners’ Munro started his
Domino’s journey 25 years ago as a
Delivery Expert at Domino’s Toronto in
New South Wales.
“I operate my stores with the mindset that consistency
is everything when chasing sales and I believe that
the key to great operations is communication and
reflection.”
“In 2007, I took on my first store at Domino’s Waikiki.
Not to much longer after that, I expanded my store
network to a number of other stores
including Port Kennedy, Mandurah, Baldivis and
three stores in Darwin up in the Northern Territory,”
he shares.
Justin is now a multi‑award‑winning Franchisee
Partner, having been recognised with an Eagle
Award, a Regional Leadership Award, multiple
million‑dollar club awards and winning the
sought‑after Rolex Challenge Award four times.
“I am proud today to be the owner and operator of
Domino’s Baldivis, Byford and Armadale – that my
hard work has paid off,” he said.
“I am passionate about growing my people, having
developed three Franchisee Partners into the network,
and also achieving number one in sales across ANZ.
When considering the highlight of his time as a
Franchisee Partner, Justin said, “It is simple – it’s the
people.
“Whether it’s a customer, a team member, a fellow
Franchisee Partner, or a member of the community,
the number of inspirational people I’ve had the
opportunity to meet, work and network with in my 16
years as a Franchisee Partner has been a blessing.
“I truly believe you are the sum of the people you
surround yourself with and I have been fortunate to
have some wonderful help and guidance along the
way and for that I’m very grateful.”
Justin takes a back‑to‑basics approach to building
long‑term success and delivering value through his
stores.
“It’s been very much the same since day dot,“ he said.
92
| DOMINO’S PIZZA ENTERPRISES LTD HIS STORES
1. BALDIVIS
2. ARMADALE
3. BYFORD
WESTERN AUSTRALIA
93
ANNUAL REPORT 2023 | “I had great teachers early on and the overwhelming
theme in their messages was that operations are the
key to long term success and longevity.”
Justin believes that with consistency of product,
service and image (PSI) comes growth.
“We have worked hard to instill our ethos and have
seen improvements across the board, starting with
refurbishments to both stores, an increase in NPS and
product quality scores, a reduction in the average
delivery time and, currently, each store holds a FSE
score that I am extremely proud of.”
“For myself and my team, consistency is everything
and this conversation is one that is had on the daily:
“How do we mirror last week?”
“It was very exciting for us to bring on one of our
Store Managers, Adam Moore, as a business partner
in our Armadale store.
“To maintain that growth, you must have an
unrelenting focus and drive to remove any
obstacles,” he explains.
“To watch someone moving their way up from a
Delivery Expert to Franchisee Partner is truly the most
amazing part of our business.”
Justin’s dedication to helping people prosper and
grow isn’t limited to his Domino’s stores.
His volunteer work with ‘WA Special Needs
Christmas Party’ has led to Domino’s involvement
state‑wide in Western Australia. He is also working
to establish positivity and unity in the market through
his work as a member for Western Australia on the
Franchisee Partner Advisory Council (FAC).
Like all markets though, the conditions for small
business across Australia have been challenging over
the past few years.
“I believe what doesn’t kill you makes you stronger,”
Justin remarks.
“It has forced a lot of us to really look at ourselves
and how we run stores – to think outside the box and
keep moving forward, and even turn a negative into
a positive.
“My teams and I have pushed hard to ensure we
strive for best practice, and I feel the coming year
when things like inflation start to ease, we will be
well‑positioned to take advantage of market changes
and continue growing customer counts, sales and
expand our store network.”
“I have found that consultation with Store Managers
and assistants on what bottlenecks they are
experiencing in store, followed swiftly with them
seeing that I will do anything to remove those
bottlenecks, creates trust and an atmosphere of
hunger for growing customer counts and sales.”
It has been a big 12 months for Justin, with the
introduction of two more stores that, at the time he
purchased them, needed improving, in culture as
much as in image.
“To maintain
that growth,
you must
have an
unrelenting
focus and
drive to
remove any
obstacles.”
94
| DOMINO’S PIZZA ENTERPRISES LTD
JUSTIN’S ACHIEVEMENTS
HIS PATH
1998
Started at Domino’s Toronto
(New South Wales) as a Delivery Expert
1999
2007
Regional and Market Manager,
Western Australia (WA)
First store, Domino’s Waikiki (WA), then
quickly became Franchisee Partner of a
number of stores including Port Kennedy,
Mandurah, Baldivis and three stores in Darwin
(Northern Territory).
HIS AWARDS
2004: Regional Leadership Award
2021: Domino’s Leadership Eagle Award
2022: Domino’s Leadership Eagle Award
4x Rolex Challenge Award
Waikiki, Port Kennedy, Mandurah and
Baldivis stores
Million-dollar club awards
Multiple times
95
ANNUAL REPORT 2023 |
YEAR IN
REVIEW
NEW ZEALAND
It’s been a year of milestones and forward-thinking for Domino’s New Zealand,
despite the challenges of rising inflation and supply chain disruptions. The team
launched an impressive range of new products and initiatives to drive better value
and service for customers and maintain our position in the local market.
96
| DOMINO’S PIZZA ENTERPRISES LTD THIS YEAR, WE LAUNCHED:
DOMINO’S APP
July 2022 – with exclusive
customer deals and incentives
for users to receive free pizza
IMPOSSIBLE RANGE
October 2022 – this temporary range
included 100% Plant‑Based Beef for
Domino’s Vegan and Flexitarian range.
DOMINO’S BURGER JOINT RANGE
August 2022 – bringing together burgers and
pizza into one Hot and Fresh delivered meal
TASTE OF INDIA RANGE
in March 2023 – three new pizzas inspired
by the Indian takeaway experience that
Kiwis know and love
97
ANNUAL REPORT 2023 | YEAR IN REVIEW
10
10 new Domino’s stores across New
Zealand in FY23, growing the New
Zealand store network to 153
6
6 Store Managers became first-time
Primary Franchisee Partners
THE BIG 1-5-0
In August 2022, we welcomed Daniel
Hawkins as the General Manager of Domino’s
New Zealand.
Then, in December, Daniel participated in a
ribbon‑cutting ceremony alongside ANZ CEO
David Burness, to celebrate the opening of
New Zealand’s 150th store in Orewa.
The new store represented a positive
boost to Domino’s expansion plans and
provided an opportunity to reflect on DPE’s
first New Zealand store opening in Johnsonville
in 2003.
To mark the opening of the 150th store in
New Zealand, customers were invited to
enjoy free pizza and the chance to score one
of 150 prizes!
98
| DOMINO’S PIZZA ENTERPRISES LTD NEW-ZEALAND
Dan Tan
Harman ‘Lucky’ Singh
99
DAN TAN BREAKS SALES RECORDS
Domino’s New Zealand Franchisee Partner Dan
Tan hit a sales record, becoming the first store in
New Zealand to achieve more than $100,000
in sales in one week. Dan’s store, Domino’s
Gisborne recorded a massive $103,235 in sales
for the week between Christmas and New Year.
This was a strong year for New Zealand Franchisee
Partners. They were inspired to crush convention and
break records – with more than 20 Domino’s stores in
this market breaking their existing sales records.
Congratulations goes to Franchisee Partners Dan Tan
and Harman ‘Lucky’ Singh who were Leadership
Eagle recipients for FY22–23.
ANNUAL REPORT 2023 | YEAR IN REVIEW
100
PARTNERSHIPS WORTH CELEBRATING
Domino’s New Zealand was proud to reach a
significant milestone in the Feed the Knead initiative
– with our pizza donations topping 13,000 across
the country.
We launched a registered charity Give for Good in
August 2022, and quickly partnered with national
youth charity Youthline. As part of this partnership,
our second annual Domino’s for Good Day aired on
national TV for the first time and saw us raise a total
of $19,600 for the charity.
In September, Domino’s New Zealand held a
Youthline Doughraiser. During the campaign, our
eighth so far, $1 from every pizza sold between
4–9pm was donated directly to the youth charity
Youthline, raising a total donation of $37,637 in
just one day across all stores. These funds support
Youthline to deliver critical services and equate to
666 young people receiving 24 minutes of phone
support through the helpline, 8,000 text messages
sent through the Helpline, or the training of 53 new
Helpline counsellors.
In February 2023, another Doughraiser saw
Domino’s stores across New Zealand rally
together to support Whanau (extended community
members) impacted by the Auckland floods.
For this Doughraiser, $1 from each pizza sold on
22 February from 3–8pm was donated to Taskforce
Kiwi. With a dollar‑for‑dollar match from Give
for Good, this resulted in a donation of more than
$50,000 to help those who had lost their homes,
vehicles and personal belongings in the flood, as
well as helping with clear up and recovery efforts.
Give for Good made another one‑off donation of
$10,000 to Taskforce Kiwi to help even more.
In another first for Domino’s New Zealand, we
participated in Māori Language Week. We raised
awareness of Te Re Māori by developing a brand
new ‘Tino Kai’ (Kiwi Favourites) menu and introduced
Te Reo Māori pins and decals for stores so team
members could promote speaking in Te Reo to each
other and their customers.
| DOMINO’S PIZZA ENTERPRISES LTD NEW-ZEALAND
101
ANNUAL REPORT 2023 | YEAR IN REVIEW
LIVING DOMINO’S VALUES
HELPING PEOPLE GROW AND
PROSPER
In October 2022, Domino’s New Zealand
commenced our partnership with Talent RISE – a
charitable foundation that provides education and
training‑based opportunities to Māori and Pasifika
Youth people to gain meaningful employment. Based
in Wellington, Talent RISE was born out of the vision
to change the lives of young people. Domino’s values
are aligned with this effort, particularly given our role
as one of New Zealand’s largest current and future
employers of young people in the hospitality industry.
Since launching in October 2022 with support from
local Wellington Franchisee Partner Harman ‘Lucky’
Singh, Domino’s stores in Wellington have welcomed
more than a dozen Māori and Pasifika young people
to learn all about working for Domino’s. The sessions
included a meet and greet session with a Franchisee
Partner, followed by a two‑hour ‘pizza school’
session where students visited a store to learn how to
make a pizza, take a customer order, and prepare
fresh batches of dough.
This partnership work complemented our strategic
recruitment drive. In March, we launched the Path
to Excellence campaign and announced we were
looking for 2,000 new team members to join us.
102
| DOMINO’S PIZZA ENTERPRISES LTD CRUSHING CONVENTION INTO THE
FUTURE – HOT AND FRESH DRONE
DELIVERY
After making history with the world’s first pizza
delivery by drone from Domino’s Whangaparãoa in
Auckland in 2016, we were excited to again partner
with SkyDrop to test drone technology with more
Kiwi pizza lovers.
In November 2022, the Te Kaahu drone delivery
trials extended to Huntly, on the north island of
New Zealand. Eight orders were delivered to the
local Waikato Tanui Iwi and several customers
in Huntly.
The Waahi Paa named Domino’s and SkyDrop’s first
New Zealand based trial drone Te Kaahu – which
means ‘The Hawk’ their language. For the drone to
be recognised by the Waahi Paa is a great honour,
and we remain committed to seeing the Te Kaahu
me he kaahu I te rangi (fly safely like a hawk in
the sky).
Domino’s New Zealand will continue
testing drone deliveries with SkyDrop
throughout 2023–24. We believe
drone delivery will be an essential
component of pizza deliveries in
the future, providing convenient,
zero contact delivery while also
reducing traffic congestion and
greenhouse emissions.
NEW-ZEALAND
103
ANNUAL REPORT 2023 | YEAR IN REVIEW
FOOD INNOVATION
Domino’s New Zealand collaborated with Pure
NZ Ice Cream to create an exclusive dessert in
time for summer 2022–23 – Lamington Gelato.
The sweet treat boasts a classic lamington flavour
with coconut cream and raspberry gelato. It was
only available in Domino’s New Zealand stores.
More than 5,492 unique customers visited Domino’s
to try this product since we launched it in January,
and more than 6,722 tubs of Lamington gelato
were sold. The popularity of this product validated
our commitment to working with local businesses to
promote local ingredients, tastes and flavours unique
to the Kiwi palette!
In March 2023, Domino’s launched our Taste of
India range, featuring Indian inspired pizzas –
Chicken, Indi Chicken Tikka and Spicy Peppy Paneer.
Loaded with locally sourced vegetables, seasoned
chicken, creamy paneer cheese
and topped with Domino’s signature
Indian butter sauce, Domino’s was able
to turn up the ‘dhal’ on both value and
choice. The range also included Domino’s first ever
Cheesy Pizza Naan – a light and fluffy pizza dough
topped with mozzarella, lashings of garlic butter and
even more Indian butter sauce.
Domino’s New Zealand decided to launch this
exciting flavour range after consumer data revealed
the top takeaway dish in New Zealand for 2022
was a mild butter chicken curry and a side of garlic
naan. The research paid off. The top selling pizza in
the new Taste of India Range is the Butter Chicken
– selling more than 40,000 in just over a month.
The new range is helping to boost sales – resulting
in higher Same Store Sales and higher Same Store
Customer counts compared to prior to the launch.
104
| DOMINO’S PIZZA ENTERPRISES LTD JAW DROPPING VALUE
Domino’s New Zealand launched the Jaw Dropper
marketing campaign to the market, promoting
exceptional value and generating profitable sales
and customer growth.
The campaign works by offering customers an
irresistible deal, enticing them into the store, and
then allowing them to upgrade their pizza and side
offerings for a nominal fee (for example, upgrading
a pizza from Value to Traditional for $2 or adding
a side like Garlic Bread or Chicken for $3).
The Jaw Dropper results speak for themselves,
with improved margins on pizza
orders, more than 60 per cent higher
click‑through rates than the prior
deals, and more than 50 per cent
higher ticket than the headline price.
DIGI-TECH INNOVATION
With almost 70 per cent of
Domino’s New Zealand’s
customers placing their pizza
order online, it makes sense for us
to continually evolve our technology
to meet changing customer needs and
expectations. In July 2022, Domino’s New
Zealand encouraged customers to ‘get appy’
for free pizza by downloading the new Domino’s
app. Delivering a faster and easier ordering
experience for customers, the new app allowed
customers to access special offers, and scroll through
the menu much faster than the previous Domino’s
app.
We kept the momentum going in the digital space,
quickly following the launch of the Domino’s App
with the Domino’s Wallet. This is an online ‘club’
where customers are treated like members and can
instantly access great value promotions, including
many exclusive ‘Wallet‑only’ deals.
NEW-ZEALAND
FINDING THE RIGHT BALANCE
Inflation challenged Domino’s and our customers,
with Kiwis feeling the pinch of rising cost of living
expenses. Many customers are tightening their
household budgets and making careful choices about
their takeaway food.
We didn’t always get the balance quite right when
we increased product prices on delivery to counter
inflation, which contributed to a drop in same store
customer counts.
To counteract this, Domino’s New Zealand is ensuring
we deliver value for customers by extending our new
products, including introducing a range of Limited
Time Offer items and other value‑focused meals.
“The new app
allowed customers
to access special
offers, and scroll
through the menu
much faster than
the previous
Domino’s app.”
105
ANNUAL REPORT 2023 | NEW ZEALAND FRANCHISEE SPOTLIGHT
“In my store, we are
serious about service
times and the effect
they have on customer
satisfaction.”
– DAN TAN
Dan Tan’s Domino’s story started in
Hamilton City in 2006, when he moved
to Hamilton and worked as a Delivery
Expert during his first year of study at
Waikato University.
“Brandon Brooking (one of our NZ Franchisee
Partners) hired me – Brandon is a good teacher and
taught me all the old school ways,” he recalls.
Dan quickly worked up to Shift Runner, and then
became a Store Manager after he graduated
university.
“During those three years I worked across all four
stores in Hamilton (Hamilton City, Hillcrest, Nawton
and Rototuna) and helped my Franchisee Partner set
up both Nawton and Rototuna stores.”
Dan moved to Gisborne in 2010, soon becoming
Store Manager. He became the Franchisee Partner
four years later and has been growing it ever since.
“Currently, I have one store, in Gisborne, which is
located in the corner of our country, really in the
middle of nowhere,” he smiles.
The closest store or food distribution centre is three
hours’ drive from Dan’s Gisborne store.
“Because of my store’s location, I don’t have any
tourists or international students, so I rely on my local
community to build up sales and keep running my
business,” he said.
“I have a developed a good relationship with the
local council; they are one of my greatest supporters.”
Dan believes these relationships and the people he
encounters through this store are the highlight of his
time as a Franchisee Partner.
“As Group CEO and Managing Director Don Meij
once said: “We’re in the people business, not the
pizza business.”
“This resonates strongly with me because with great
people in our business, the pizza part is easy,”
Dan added.
106
| DOMINO’S PIZZA ENTERPRISES LTD HIS STORE
1. Gisborne
107
ANNUAL REPORT 2023 | “Domino’s
is not just
a part time
job for them,
it’s a part of
their life.”
“I have worked at Domino’s Gisborne for more than
10 years,” he said. “During this time, I have hired
many people, many of whom work with us for more
than three years.
“They are not only great team members to work with,
but also loyal customers.
“Domino’s is not just a part time job for them,
it’s a part of their life, and a wonderful working
experience.”
After finishing 2022 on a high, Dan’s attention
was unexpectedly diverted less than month later.
Four days of extreme flash flooding from 27 January
to 2 February 2023 swept through Auckland and
surrounding regions in Northland (the northern tip of
New Zealand), resulting in the tragic deaths of four
people. Soon after (12–16 February 2023), Cyclone
Gabrielle hit Auckland and the surrounding regions
in Northland and plunged the country into a national
state of emergency.
Schools, public transport, major roads and the
international and domestic airport were closed.
More than 50,000 homes lost power and 10,000
people were evacuated from their homes for fear of
safety. Several regional communities in the Hawkes
Bay area, south of Gisborne, were completely cut off
– no power, internet or mobile signal – and a further
six people lost their lives.
As the local Franchisee Partner in one of the most
impacted areas, Dan helped to assist with ‘Feed the
Knead’ donations of hot pizzas to evacuation
centres, government relief hubs and to the groups of
emergency responders including fire, police and the
State Emergency Service (SES). Dan’s team donated
more than 1,000 pizzas in one week.
When it comes to product quality and delivery times,
Dan believes that Domino’s knows time is the enemy
of food.
With the country now in recovery, Dan is optimistic
about the year ahead.
“In my store, we are serious about service times and
the effect they have on customer satisfaction.
“A late delivery not only fails to meet a customer’s
expectations but is also detrimental to our product
quality too.
“As one of the $60,000 AWUS stores, our goal is
$80,000 – that excites me!
“Thank you Domino’s for giving me a chance to be
part of this journey!”
“So we spend significant time training our Gisborne
team members to make fast, high quality, high‑value
food for our customers.”
Dan Tan – exemplifying the best of Domino’s
values by sharing his knowledge, commitment and
community spirit.
Dan recently hit a sales record for the market,
becoming the first store in New Zealand to crack the
$NZD 100,000 milestone – recording a massive
$103,235 in sales for the week between Christmas
and New Year 2022–23.
108
| DOMINO’S PIZZA ENTERPRISES LTD DAN’S ACHIEVEMENTS
HIS PATH
2006
2007–2009 Shift Runner and then Store Manager at various stores in
Delivery Expert, Domino’s Hamilton City
Hamilton (Hamilton City, Hillcrest, Nawton and Rototuna) after
graduating from university
2010
2014
Store Manager, Domino’s Gisborne
Franchisee Partner, Domino’s Gisborne
HIS AWARDS
2020 – Leadership Eagle Award and
2022 – Leadership Eagle Award
2022 – Broke Weekly Sales Record for
New Zealand $NZD103,000
109
ANNUAL REPORT 2023 | YEAR IN
REVIEW
JAPAN
Domino’s Japan had good reason to celebrate throughout the 2022–23 financial
year, with some significant achievements:
• Became largest pizza chain by store count in
27 prefectures (vs 22 in the previous year)
• Rolled out new Domino’s app, which accounted
for almost half of all orders within six months
• Held first Domino’s for Good Day in February
• Established Sanchoku Domino’s Fund® –
Domino’s round‑up for charity program
We also launched two new products:
MY DOMINO’S
MY DOMINO’S
perfect single portion meals
BIGBOX
BIGBOX
high‑impact combination box set
110
| DOMINO’S PIZZA ENTERPRISES LTD We hosted Go Gemba
Days in March and
June, providing
opportunities for
Store Support Office
members to visit
stores.
STORE STATISTICS
Stores achieving
Club 1845 status
58
Franchised stores
612
Female‑run Franchisee
Partners
3
Franchisee Partners
129
ANNUAL REPORT 2023 |
111
YEAR IN REVIEW
DRIVING OUR SUCCESS THIS YEAR
We know the key to growing customer counts is
increasing customer satisfaction. That’s why this
year we kept our focus on product quality and
delivery times, which directly increase customer
satisfaction scores.
• Product score achieved 4.3 point
• Almost 10 per cent improvement from FY22
• NPS increased almost 10 per cent compared to
the prior year
• Our highest quality operations were achieved in
the busy Christmas period
To further expand our small business presence,
Domino’s Japan established a new small area
business model, with 23 small area stores.
This change enabled more efficient store opening
by tailoring store facilities and hours of operation
to local requirements.
We believe that considered adjustments,
like reducing the minimum lot size to 70 square
metres (instead of 130) and making detailed
estimates about sales in smaller areas, will make
these smaller format stores more attractive to
potential Franchisee Partners – particularly in smaller,
suburban areas. It will also boost brand recognition
across more regions. Already, we have seen a
meaningful reduction in capital expenditure when
compared to standard store openings.
OUT OF THE BOX
In February, we launched My Domino’s,
a menu designed with portions for
individual diners. Each box contains a
main dish and two side dishes for
930 Yen. The product was well received
by many customers, and in just over a
month Domino’s Japan sold more than
500,000 of these exciting new products.
We then introduced BigBox in April.
This delicious combination box set
includes two small pizzas and four side
dishes packaged in a large 42 x 43 cm
pizza box. We believe this high‑impact
package deal is the first of its kind in
Japan’s major pizza delivery industry.
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| DOMINO’S PIZZA ENTERPRISES LTD JAPAN
LIVING DOMINO’S VALUES
DOING THE RIGHT THING BECAUSE IT’S
THE RIGHT THING TO DO
What’s in a name? For Domino’s Japan, how we
relate to each other and our connections between
the corporate staff and the Franchisee Partners,
Store Managers and crew members, was a key
focus for 2022–23. In April, we changed the
name of our corporate headquarters to ‘Store
Support Office’, making a clear statement about
the role of these staff to support store operations.
We hosted Go Gemba Days in March and June,
providing opportunities for Store Support Office
members to visit stores. The visits allowed them to
gain an understanding of day‑to‑day requirements
in the stores and show our support for team members
serving our customers.
HELP PEOPLE PROSPER AND GROW
Domino’s Japan is fortunate to have talented female
leaders within the company. International Women’s
Day (8 March) provided an opportunity to further
strengthen the diversity and support within our
working environment.
We invited Kyogen actor, Miyake Tokuro, to host a
workshop around the theme of “What we can do to
have all employees flourish in their individual way”.
We received positive feedback from employees
who took part in the International Women’s Day
workshop, and are already planning similar activities,
to support emerging and future female leaders to
pursue their careers with confidence.
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ANNUAL REPORT 2023 | YEAR IN REVIEW
BE GENEROUS AND PROVIDE JOYFUL
EXPERIENCES
Domino’s Japan held our inaugural Domino’s for
Good Charity Day in February, joining the program
already established in Australia and New Zealand,
and raising 536,660 Yen. This event was an
opportunity for Domino’s staff and customers to
support a worthy cause through sharing pizza.
As a member of the food industry, Domino’s Japan
wishes to contribute to the current success and
future development of Japanese primary producers
– the quality of our pizza product depends on
good produce.
In May, we launched the Sanchoku Domino’s Fund®,
a fractional donation program, where customers
can choose to donate fractions of less than 100 Yen
per order. Proceeds from these donations support
the producers in Japan, through projects aimed
to address social and environmental issues. In the
first two weeks since launch, more than 15,800
customers had donated 515,124 Yen.
Despite ongoing challenges associated with the
COVID‑19 pandemic, Domino’s Japan were
determined to celebrate Children’s Day. We held
the Domino’s Pizza Academy Children’s Day
Special over three days in May, with pizza‑making
workshops for children aged 3 to 12 years. More
than 6,000 people participated in the day, thanks to
the involvement of 970 Domino’s Pizza stores.
Between May 2022 and April 2023, we’ve seen
more than 40,556 personalised pizzas created by
Pizza Academy participants, learning alongside our
Domino’s professionals and sharing the joy of pizza
with more of our customers.
114
HIGHLIGHT ON SAFETY
The safety and wellbeing of our staff is paramount
and remained a focus over the 2023 financial
year. After identifying stores with a higher rate of
traffic accidents, we implemented targeted online
safety training. Across all stores, we conducted a
‘No Accident’ campaign to raise awareness of traffic
safety among our staff. Several Domino’s Japan
crew also participated in safe driving seminars with
motorcycle police officers. This concerted effort
resulted in a significant reduction – almost 60 per
cent – in the number of stores experiencing more
than three traffic incidents associated with deliveries
and other business operations over the year.
ECO-FRIENDLY DELIVERIES
Our efforts to reduce carbon dioxide emissions
have made further progress, with electronic vehicles
(e‑bikes or EAVs) now accounting for more than 61
per cent of all new vehicles purchased for Domino’s
Japan in Tokyo. E‑mobility ownership is now 31.4 per
cent in Japan and 61.4 per cent (7 per cent increase
VS last FY) in Tokyo as of March 2023.
Along with the expansion of e‑vehicles, we are
reducing our procurement of scooters and other
vehicles that emit carbon dioxide. This is already
down to 27 per cent of last year’s procurement
figures, when compared to the same period
(July to March).
| DOMINO’S PIZZA ENTERPRISES LTD JAPAN
JAPAN
NEW SPACE TO THRIVE
Our Store Support Office moved to Meguro in
August 2022. The design of the new space followed
a three‑pronged concept: grow with customers;
grow with employees; grow with society. The new
space includes displays from local stores to share
the latest initiatives and customer feedback, an
employee wellness room, and a café space with
reusable crockery and other environmentally‑friendly
paper‑free practices.
115
ANNUAL REPORT 2023 | JAPAN FRANCHISEE SPOTLIGHT
“Effective management
is not about determining
what can or cannot be
done, but rather about
our willingness to act.”
– AKINOBU KINBARA
Since he was assigned to Okinawa as a
supervisor in July 2018, Akinobu Kinbara
has believed in the potential of the business
and wanted to make a difference in his local
community.
His foresight helped him expand to seven stores in
17 months. “I have continued to aggressively try
to acquire sales, working closely with everyone
in the community,” he said. “Our whole team of
managers actively drives sales every day within their
communities.
“We conducted maximum menu distribution to
expand the marginal value of the trade area and,
compared to when I started as a supervisor back in
July 2018, we nearly tripled the menu distribution by
June 2022.”
Key to Akinobu’s success is his knowledge and
understanding of the needs of his local community.
The US military community based on the island
provides a unique sale opportunity. Akinobu’s team
work tirelessly to stand out against their competitors
and attract military customers. “We constantly
introduce special offers for miliary personnel,
coordinate sponsorships and actively engage with
the US military community,” he said.
Akinobu also explained that the Universities in
Okinawa have many students who have migrated
from other prefectures, which means many local
university students live alone. “We actively drive
sales within the university community, constantly
finding new ways to sell at a price point that students
can afford,” he said.
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| DOMINO’S PIZZA ENTERPRISES LTD HIS STORES
1. Chatan Kokutai Road
2. Nambuhara Town
3. Uruma Ishikawa
4. Nago Miyazato
5. Ginowan Oyana
6. Nagata 330
7. Noborikawa
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ANNUAL REPORT 2023 | “Taking a proactive approach with the university
students means we not only gain sales but also new
employees as students join us as crew members.”
Akinobu’s focus on his customers is reflected by his
team and rewarded through incentives.
“I always want my team members to be aware of the
Omotenashi Spirit,1” he said. “I strongly believe that
service is not just about speed of delivery, although
this is important – it’s also about the care, kindness
and friendliness our staff show to customers either
instore or at the door on delivery.”
Akinobu proudly believes he has the best
management team in the country. “I believe in
sharing in our successes together and incentivising
what is important. We run sales challenges and
bonus schemes to reward the team’s excellent work.”
“People are
key to our
business”
Akinobu has been busy putting in place several
measures at his stores to ensure freshly made hot
pizzas are delivered to customers as quickly as
possible. “We added four additional delivery bikes
per store – a total of 28 additional bikes at seven
stores – so we could best meet customers’ requests,
and it had the added benefit of creating more
employment in our stores.”
Akinobu’s management approach focuses on
adequate hiring and scheduling while creating an
environment where people love coming to work.
“People are key to our business,” he said. “We make
sure we have enough staffing to avoid any
operational disruptions. We accept all candidates
who express interest in working for Domino’s Japan.”
“From there, we provide appropriate training and
education, praise those who produce results, and
try to create a system that allows for future career
development.”
Reflecting on the challenges over the past year,
Akinobu agreed there was some apprehension
concerning a potential decline in sales as the
economic and social impacts of COVID‑19 became
the ‘new normal’.
“Effective management is not about determining
what can or cannot be done, but rather about our
willingness to act,” he said. “We took an assertive
approach to management and remained confident in
achieving more than 20 per cent growth in sales.”
“We regularly shared all relevant data with our team
and worked collaboratively to revise our strategies to
meet our objectives.”
Akinobu is optimistic about the ongoing potential
for growth in the Okinawa region. “My goal is to
continue to grow my business and expand by adding
three more stores in the next year,” he said.
“I am particularly enthusiastic about partnering
with Domino’s Japan to increase our sales and
boost growth, whilst also mentoring and being a
positive influence for the other Franchisee Partners
around me.”
Akinobu added that he gained a greater
understanding of the potential for increased sales
after attending the Domino’s Japan Franchisee
Partner and leadership retreat.
“It taught me that it’s important to act on your instincts
before analysing the reasons why you apparently
can’t [increase sales],” he said. “This mindset is
crucial for success and I’m feeling optimistic about
our future together.”
1: A Japanese expression that describes concepts of hospitality as well as mindfulness.
118
| DOMINO’S PIZZA ENTERPRISES LTD AKINOBU’S ACHIEVEMENTS
HIS PATH
1995
1997
Joined Domino’s Japan as a Delivery Expert
Became full‑time employee
2018
2019
2020
2022
2023
Assigned to Domino’s Okinawa as supervisor
Oversaw a material turnaround in the Okinawa market
as a Corporate Supervisor
Became a Franchisee Partner, Domino’s Okinawa
Became a Franchisee Partner of seventh store – opening the
Noborikawa store
Successful Franchisee Partner of seven stores
HIS AWARDS
2019: DPE Eagle Leadership Award
2022: DPE Eagle Leadership Award
119
ANNUAL REPORT 2023 |
JAPAN FRANCHISEE SPOTLIGHT
“Once staff members
complete their initial
training, they receive
personalised guidance
on customer service.”
– SAYAKA MIYAZAKI
Sayaka Miyazaki is one of three female
Franchisee Partners making successful
waves across the Domino’s Japan
network.
When she began her franchise business, Sayaka’s
primary goal was to attract more customers.
“To achieve this, I’ve set our focus on enhancing
our NPS,” Sayaka said.
“I am delighted to report that our efforts have paid
off, and our NPS has improved from an average
of 20.82 per cent between November 2021 and
November 2022 to an average of 48.98 per cent
from December 2022 to June 2023,” she added.
“Our customers have been returning to order from
us again, leading to a high rate of repeat customers
– this has also boosted staff motivation.” Although
Sayaka and her team have faced some difficult
financial situations over the past year, they have
been able to maintain positive sales by implementing
several High Volume Mentality (HVM) initiatives.
Firstly, Sayaka believes in greeting all staff on the
floor, and that all floor staff should always face the
customers. “This behavior change was initiated due
to a shift in focus from concentrating solely on work
tasks,” she said.
Providing an adequate training environment is
another element of Sayaka’s positive management
approach. “Once staff members complete their
initial training, they receive personalised guidance
on customer service, tailored to their specific needs
and tasks when working on‑site in an unfamiliar
environment,” she said.
Sayaka uses Goodays, the customer experience
management platform, to benefit her stores,
and ensures customers always receive a timely
response to their comments. “We have a 100 per
cent response rate to customers, with an average
response time of two hours and three minutes,”
she beams.
120
| DOMINO’S PIZZA ENTERPRISES LTD HER STORE
1.
IWATAIMANOURA
121
ANNUAL REPORT 2023 | “We share and
discuss all customer
comments that the
stores receive.”
“We are looking to maintain stable operations and
sales and have a goal and have a goal to open
an additional store in FY24,” she said. “To make
this happen, we’re focusing on improving human
resources at our current locations and ensuring they
meet all the requirements for operations, sales, OER,
and safety set by Domino’s Japan.”
“We share and discuss all customer comments
that the stores receive, with all the staff and crew
members, and promptly respond to any items or tasks
that need to be improved,” she said.
Finally, Sayaka implemented ongoing in‑store
training and cross‑skilling. “Rather than restricting
the duties of drivers and in‑store workers, all team
members were encouraged to take on any tasks
necessary,” she said.
“This approach promoted the autonomy and
motivation of all our team members.” Sayaka’s HVM
initiatives have certainly proven successful, and she
already has her priorities firmly in sight for next year.
122
| DOMINO’S PIZZA ENTERPRISES LTD SAYAKA’S ACHIEVEMENTS
HER PATH
1996
Joined Ebisu store. After a couple of years, Sayaka left
Domino’s to work for another company before returning
2004
Returned to Domino’s at the old Kashiwa store in Ayase and
Shin‑Kashiwa
2012
Joined as a full‑time employee
2017
2022
Became Store Manager
Became Franchisee Partner of one store, Domino’s Iwataimanour
123
ANNUAL REPORT 2023 |
YEAR IN
REVIEW
TAIWAN
A challenging trading environment
over the past year only served to push
the resilient Domino’s Taiwan team to
try innovative ways to unlock market
segments and reach new customers.
distribution and creative output. The team tested
different marketing channels through DPE’s CRM
(customer relationship management) platform, which
doubled the number of subscribers to our digital
marketing messages within two months.
By utlilising an aggregator channel, we boosted
our customer base by more than 40 per cent. We
redesigned printed marketing collateral and online
menu offerings, while also working to optimise
Another highlight was the Wobble Board competition
at the Min An West Road store which more than
doubled order count growth during the competition
period – that’s more than 2500 orders per week
throughout January 2023.
124
| DOMINO’S PIZZA ENTERPRISES LTD INNOVATIVE PRODUCT,
PRICES, AND PROMOTION
Behind the new customer drives was
the launch of strategic price points
and product promotions to deliver
value, choice and keep customers
coming back:
DELIVERY CORE OFFER
UPGRADE
“Buy large to get a free large”
providing better value for smaller
families
MYBOX STARTING FROM NT$129
For a personal pizza and two sides – great value,
which drove strong sales from a competitive market
segment, capturing new customers during lunch
time and weekdays
WORLD 10 CHEESE QUATTRO
Ten different premium gourmet cheeses from
across the globe, all on one pizza
NT$699 THREE LARGE PIZZA
DELIVERY DEAL
Representing greater value for larger
groups, and driving a margin of more than
NT$5,000 per store per week
NT$199 ONE LARGE PIZZA
TRIAL WEEKS
Drove significant order count growth
125
ANNUAL REPORT 2023 | YEAR IN REVIEW
STORE OPENINGS
Domino’s Taiwan opened
18 stores throughout the 2022–23
financial year. Eleven of these were
franchised stores, with experienced
Franchisee Partners expanding their
existing store networks.
LIVING DOMINO’S VALUES
INVESTING TO CREATE DEVOTION
Our corporate goal this year was to strengthen
the relationship between Domino’s Taiwan staff
and Franchisee Partners. We held a guided
workshop, bringing together the Leadership Team
and Franchisee Partners for a shared goal, and
a Company Day event, culminating in a gala
dinner to celebrate shared successes and recognise
outstanding individuals.
We extended our reach to our communities in the
past year. We celebrated our customers through a
Customer Appreciation Day, where we provided
great value offers to say thank you for our customers’
support. We also we rewarded excelling local
elementary school students by giving away a free
6 inch pizza to children who achieved 100 points
in any subject on their mid‑term semester exams.
RECORD BREAKERS
Highest sales in a week
by Funshan Fundin store
$577,212
Fastest Delivery
by Rende Chung Cheng Store
12:26MIN
Fastest growth pace in Domino’s
Taiwan’s 20-year history
18 STORES
OPENED
Double order count competition
KENNY, EDISON
AND CHUN CHI
From Domino’s Xinzhuang Min’an,
Zhonghe Jingxin, and Zhongli Longgang
stores won a trip to Australia to meet with
other experienced Domino’s people.
126
| DOMINO’S PIZZA ENTERPRISES LTD TAIWAN
LOOKING AHEAD
Domino’s Taiwan is determined to continue our
drive for performance success. We are focused
on addressing the challenges following the easing
of COVID‑19 restrictions, including changes in
consumer behaviour. How? Through value: continual
system process improvement and reinvesting
cost‑savings into our core menu offering.
127
ANNUAL REPORT 2023 | TAIWAN FRANCHISEE SPOTLIGHT
“At opening we held
two promotions, which
made us the Number 1
for sales in Taiwan.”
– CHEN WEN JI
As an astute businessman and quick
learner, Chen Wen Ji is always on
the lookout for new opportunities.
After learning all aspects of Domino’s
Store Manager operations, he swiftly
progressed from Store Manager to
Franchisee Partner.
“Many festival goers become our customers
throughout their attendance at the festival, placing
orders with us that we conveniently deliver back to
them at the festival.
“This targeted marketing activity significantly raises
our sales figures during that period.”
Chen is now the Franchisee Partner of two stores in
Taiwan – Domino’s Yi Lan Zhongshan and Domino’s
Luo Dong Xing Dong South Road.
When considering the highlights of his time as a
Franchisee Partner, Chen explains that he proactively
seeks out events to increase sales at his stores, and to
support his people to grow and prosper.
One such successful sales story arrived via a local
festival. “I discovered a sales lead through the
International Children’s Folklore and Folkgame
Festival in Yi Lan,” he explains.
“Every year now, in mid‑July and August, I distribute
leaflets at the festival’s entry.”
Chen also shares an initiative that bolstered his stores’
relationship with local charity organisations.
“Even before Domino’s Pizza Enterprises Ltd
entered the Taiwan market, we were fortunate to
have established and positive local partnerships,”
Chen said.
“I’m quite proud of our involvement with activities
hosted by the Yi Lan joint fundraising foundation,
“We participated in the redemption of charity
vouchers, which are distributed by social welfare
organisation groups to those in need,” he said.
“The more businesses that became involved in the
initiative, the more customers were motivated to
purchase charity vouchers.”
128
| DOMINO’S PIZZA ENTERPRISES LTD 129
ANNUAL REPORT 2023 | “This has continued to be a successful partnership
and although it wasn’t our initial intention, I am
delighted that we were recognised as a caring
business by the Yi Lan joint fundraising foundation.”
Chen’s store teams remain at the forefront of his
approach to Domino’s leadership. He is committed to
delivering value through quality products, customer
service and local interactions through his stores, and
also to developing his people.
Chen is especially willing to support motivated team
members who demonstrate through their work ethic
and team dedication that they could one day reach
their goals of becoming a Franchisee Partner of their
own store.
“I am currently involved in leading one of my
managers, Xie Zhi Yu, through the process to become
a Franchisee Partner,” Chen says proudly.
“I am working with Xie Zhi Yu to strengthen his
business skills and expose him to all the different
aspects of owning and running your own store.
“I have full faith in Xie Zhi Yu becoming a successful
Franchisee Partner.
Chen’s commitment to building up his teams is
experienced by his team members at every level
of the business. “Keeping my management team
up‑to‑date on the company’s goals helps improve
our ADT and product quality,” he said.
“I hold regular meetings with my managers to keep
them informed about the store’s status and I support
them to continually develop their store management
skills,” Chen explains.
“I conduct performance evaluation on a quarterly or
annual basis, recognise and promote the people with
consistently good performance to boost their sense of
accomplishment.”
During his time as a Franchisee Partner, Chen has
seen the reward that comes from building strong
relationships with his team. “The Luo Dong Xing
Dong South Road moved to its current location in
October 2022.
“At opening we held two promotions, which made us
the Number 1 for sales in Taiwan.
“We provided multiple choices for customers and
attracted some new customers as well.
“A wonderful aspect of the opening was that many
former employees supported us for the event, which
helped us all deliver smooth operations and achieve
a high sales outcome.
“Keeping my
management
team up-to-
date on the
company’s
goals helps
improve
our ADT
and product
quality.”
“I think that’s a very positive sign – that, by staying
in touch with former employees, when we were
understaffed, they were willing to step in and lend
a hand.”
130
| DOMINO’S PIZZA ENTERPRISES LTD “We make it easy for customers with a carefully
considered combination of pizza and sides.”
Looking to the future, Chen Wen Ji’s outlook is positive.
“I believe the group will lead the Taiwan market on
the right path, working together to drive Taiwan’s
sales,” he said.
Every market has its challenges, and Chen Wen Ji
explains that, in Taiwan’s pizza market, it’s about
customer tastes and traditions.
“In Taiwan, we can have rice every day, but not
pizza, at least in the short‑term.
“It takes product development to change customers’
preferences, so it’s important we work with the
supporting office to develop multiple strategies at the
same time.
“Our customers prefer a combo meal, especially on
holidays, so the local store marketing applied by
the two Yi Lan stores is mainly about our combos,”
he said.
CHEN’S ACHIEVEMENTS
HIS PATH
1997
Promoted to Store Manager
2003
2003
Became a Franchisee Partner
with Yi Lan Zhong Shan
Franchisee Partner
Expanded to multi‑unit Franchisee
Partner with second store Luo
Dong Xing Dong South Road
2010
Bought Keelung Yi store
(sold this store in 2015)
131
ANNUAL REPORT 2023 | YEAR IN
REVIEW
MALAYSIA
Domino’s Malaysia had several impressive achievements to acknowledge over the
last year.
• 13 new stores opened in 2022–23 (FY 2023)
• “Feel the more” brand launch – proactive
approach to improving customer perception of our
product quality
• Flatbox operations launched in new stores and
26 pilot (existing stores) – significant efficiency
and cost savings throughout store operations
• Domino’s x Genshin Impact x UniPin collaboration
• Domino’s Pizza Malaysia’s LinkedIn followers
– now reaching more than 47,400 followers
• Profitable Aggregator business – 30 per cent of
our business run on aggregator, which continues
to drive profitable lead generation model
They also launched three new products:
BULGOGI CHEESE
BULGOGI CHEESE
BAKED PASTA
BAKED PASTA
SSAMJEANG BEEF
SSAMJEANG BEEF
BULGOGI PIZZA
BULGOGI PIZZA
AYAM-HASEYO
AYAM-HASEYO
132
| DOMINO’S PIZZA ENTERPRISES LTD SUCCESS THROUGH PARTNERSHIP
AND COLLABORATION
Domino’s Malaysia took collaboration to the next level,
joining forces with the critically acclaimed open‑world
adventure role‑playing game Genshin Impact and the
leading digital entertainment enabler UniPin. The aim
of the collaboration was to provide customers and fans
with exciting, memorable experiences that bring pizza
and gaming together. With a tagline ‘Gaming Time is
Pizza Party Time’, fans of the online game were able to
purchase a combination set of exclusive merchandise at
all Domino’s outlets across the country.
PARTNERSHIP WITH LOCAL UNIVERSITY
TUN HUSSEIN ONN MALAYSIA
Domino’s Malaysia achieved another milestone with
the Jana Kerjaya‑Belajar Sambil Bekerja (BSB) project
(Learn while working). Working in collaboration with
the University Tun Hussein Onn Malaysia (UTHM),
this project aims to remove barriers, empower and
inspire Domino’s people to pursue their dreams.
The project is aligned with Malaysia’s Technical and
Vocational Education and Training (TVET) program
and supports the national drive towards a more
knowledge‑based, high‑technology and high‑value‑
added economy.
133
ANNUAL REPORT 2023 | YEAR IN REVIEW
134
DELIVERING VALUE THROUGH
FEEL THE MORE
In our pursuit of improved brand perception on
product quality, Domino’s Malaysia recognised
that we needed to evolve into the next stage
of our growth. Over two years of strategic
business planning, the team focused on new and
enhanced pizzas, consistency of product delivery
and better communication about the benefits of
our products.
The result was the “Feel the More” range,
showcasing Cheesier with More Cheese, and
Tastier with More Toppings:
• Loaded toppings for a mouthful ‘feel’ and
enhanced taste experience
• Four new flavours within the specialist cheese
range – Super Cheese, Tropical Chicken, Beef
Feast Pepperoni, and Chicken Feast Pepperoni.
• Additional cheese topping – or ‘cheese
netting’ – drizzled over pizza to treat our
cheese‑loving customers
• Eleven pizza flavours that were improved and
now come standard with loaded toppings.
Pizza categorisation restructure from “Price
Centric” – affordable, middle tier price, higher
tier selling price to Signature, Cheese Loaded
and Loaded Topping pizza.
We improved our product descriptions on the
menus, with bigger images of our pizza products,
and better explanations of the ingredients and
flavour profile.
BOXKU
Leveraging on single occasion with the new
BoxKu (meaning MyBox). BoxKu increased
personal pizza size from 6” to 7”, whereas the
order count increased by 38% and sales by 51%
in its 1st month of introduction
YEAR IN REVIEW| DOMINO’S PIZZA ENTERPRISES LTD IMPROVED SALES AND
PERFORMANCE WITH PARTNER
AGGREGATORS
Two key projects, powered by our partnerships with
aggregators, have supported our sales growth this
year.
Project Diamond 1 – margin improvement
• We adjusted prices on Aggregator platforms
with an increase on the delivery fee, resulting in
a 20 per cent margin improvement.
• Initial month upon roll out saw a significant drop in
Aggregator sales performance (June 2022 since
delivery fee had increased from RM5 to RM5.90).
Then, sales performance started to pick up after
two months, boosting more than 53 per cent in
sales from the third month onwards.
Project Diamond 2 – price increase
• We initiated a price increase on our products in
September 2022.
• In the first month, sales dropped by six per cent,
but turned around quickly, increasing by 15 per
cent by the second month. We attribute this to the
improved average ticket per month.
• Our strategy is to continuously drive attractive
bounce‑back offers to offset the impact of the
price increase for our customers.
MALAYSIA
135
ANNUAL REPORT 2023 | YEAR IN REVIEW
SAVINGS THROUGH EFFICIENT
OPERATIONS AND STRATEGIC
PRICING
The seemingly simple change to Flatbox
Operations significantly cut our clutter, storage
requirements and reduced waste. Through
streamlining the cut and box process, we saved
RM4,000/month (approximately $AU 1290)
in our 26 pilot stores (and we project future
savings of RM38,000/month (~$AU 12,200),
across the network based on 247 stores).
FINDING THE TROJAN HORSE
WITH VALUE OFFER OF 2
REGULAR FOR RM19
Limited time offers provided great deals for
customers and attracted more over‑the‑counter
sales. Our takeaway ‘2 regular for RM19’
boosted sales by 17 per cent from November
and the ‘2 regular for RM29’ delivery deal
increased delivery by 31 per cent following
introduction in January.
136
LIVING DOMINO’S VALUES
HELP PEOPLE TO GROW AND PROSPER
Our people are central to our operations and ongoing
growth. We were proud of our key engagement
and training initiatives during FY23 – including our
Domino’s War Cry and purpose statement, Badminton
Club and Life@Domino’s Facebook group (for
employees only). We have worked to ensure our
Domino’s team feel part of a community, involving our
staff at every new store opening, and providing free
meals for store employees during important community
events such as Ramadan and Hari Raya.
We implemented the Pride LMS (Learning
Management System) to help further develop our staff
in business strategy, customer services, and marketing
skills. This training platform tool enables our store
operations team to access relevant onboarding and
training modules including via a mobile device when
and where it suits them. It supports our management
teams to gain skills in putting marketing strategies into
practice for their stores.
We ran the Local Store Marketing (LSM) heroes
and Double Viking programs, to encourage store
operations teams to showcase the creative ways they
could attract customers and increase store sales.
Training our store operations teams in the 8FRAME
method, to reduce unnecessary movement and steps
throughout our pizza‑making process, also improved
efficiency.
| DOMINO’S PIZZA ENTERPRISES LTD MALAYSIA
137
ANNUAL REPORT 2023 | YEAR IN
REVIEW
SINGAPORE
Despite operating within a smaller
market, the Domino’s Singapore team
delivered outsized energy resulting
in some impressive initiatives over the
past year.
We attribute much of our success this year to enticing
new ‘limited time’ offers and flavours that continue
to keep our customers interested. This included
the successful Mentaiko (chicken/prawn) and
Cheeseburger (chicken/beef) pizzas.
This year the country store count increased to 42
stores. We launched exciting new pizza products and
launched a new website to provide a better ordering
experience for our customers. This was followed by
the Domino’s Singapore App launch in June.
Our ‘Inflation buster’ 50 per cent off campaign
helped us to provide greater flexibility for customers.
Customers could enjoy the discount whether or not
their order included an odd or even number of pizzas
– a change from previous campaigns which required
two pizzas (or multiples of two) for discounts,
such as a ‘buy one, get one free’.
138
| DOMINO’S PIZZA ENTERPRISES LTD Like all other markets, our team faced challenges over the last year, the most
significant being staff availability for stores. The Human Resources team
responded by improving existing referral programs and switching their focus
to hiring part‑time team members to sustainably manage peak hour business
demands. Their efforts were recognised with Domino’s Singapore being awarded
42nd in Singapore’s Best Employer Awards for 2023 (a significant improvement
from 152nd place in 2022).
NEW PRODUCT
Cheeseburger
pizza
STORES
OPENED
4
NEW PRODUCT
Mentaiko
LAUNCHED
new website and
mobile app
139
ANNUAL REPORT 2023 | LIVING DOMINO’S VALUES
BE GENEROUS AND PROVIDE
JOYFUL EXPERIENCES
The Domino’s Singapore team kept genuine
community engagement front of mind when
planning promotional experiences this year.
We brought joy to local customers by providing
150 personal pizzas for our Muslim customers
to enjoy when breaking their fast after
Ramadan.
YEAR IN REVIEW
140
| DOMINO’S PIZZA ENTERPRISES LTD SINGAPORE
141
ANNUAL REPORT 2023 | YEAR IN
REVIEW
CAMBODIA
This year, we were pleased to
welcome Domino’s Cambodia,
following acquisition in May 2023.
Although only recently joining the Domino’s
Pizza Enterprises Ltd family, Domino’s
Cambodia quickly confirmed our position as a
serious player in the local pizza market.
Thanks to the dedicated Cambodia team
and the operational and marketing expertise
introduced from our other APAC markets,
we are proving time and again what Domino’s
people can achieve when we work together.
Fastest
delivery
times across
Domino’s
globally
142
| DOMINO’S PIZZA ENTERPRISES LTD Already, Domino’s Cambodia is rated in
the Top 3 for fastest delivery times across
Domino’s globally.
Domino’s Cambodia took an aggressive
approach to Local Store Marketing (LSM),
including highly visible, on‑the‑ground
campaign activities. We took an analytical
approach to targeting customers, combining
critical data elements (CDE) with a USD1.99
promotion to great effect – increasing the order
count by 30 per cent.
We launched a restructured menu in August
and swiftly saw margin improvement by four
per cent. We followed this up by launching the
popular seafood range in December 2022.
We intend to serve our meals to even more
customers and were pleased to open our
newest store, PH Peng Huoth.
It remains early days yet for this newest member
of the Domino’s family. We will continue to
focus on establishing the Domino’s values within
this exciting new market and look forward to
sharing more of our performance achievements
over the coming year.
143
ANNUAL REPORT 2023 | 14 4 // 2023 A NN UA L REP ORT D O M INO ’S PIZZA ENTERPRISES LIMIT ED.DIRECTORS’REPORT
Group Highlights
CONTINUING OPERATIONS
Network Sales
Revenue
EBITDA
Depreciation & Amortisation
EBIT
EBIT Margin
Interest
NPBT
Tax Expense
NPAT before Minority Interest
Minority Interest
NPAT
PERFORMANCE INDICATORS
EPS (basic)
Dividend per share
Same Store Sales %
FY22
UNDERLYING
$ MIL
FY23
UNDERLYING
$ MIL
+/(-) FY22
UNDERLYING
%
FY23
STATUTORY
$ MIL
3,918.0
4,005.6
2,271.3
405.2
(130.4)
274.8
12.1%
(13.4)
261.4
(80.1)
181.3
(8.0)
173.3
2,351.5
355.2
(141.7)
213.5
9.1%
(22.4)
191.1
(58.3)
132.8
(2.0)
130.8
209.5 cps
150.9 cps
173.5
(0.3%)
135.5
(0.2%)
2.24%
3.53%
-12.34%
8.67%
-22.31%
67.16%
-26.89%
-27.22%
-26.75%
-75.00%
-24.52%
-28.0%
-21.90%
4,005.6
2,351.5
273.9
(150.9)
123.0
5.2%
(22.4)
100.6
(31.6)
69.0
(2.0)
67.0
76.1 cps
135.5
(0.2%)
DIRECTORS’REPORT
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 14 5
147
156
173
178
179
183
184
185
186
187
188
262
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 Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Additional Securities Exchange Information
146 // 2023 AN NUAL RE PORT D O MINO ’S PIZ ZA ENTERPRISES LIMITED.
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 02 July 2023. 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
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Don Meij
POSITION
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Appointed 20 March 2014
Appointed 24 August 2001
Appointed 16 April 2015
Independent Non-Executive Director
Appointed 30 November 2018
Independent Non-Executive Director
Appointed 21 February 2020
Independent Non-Executive Director
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 and was appointed a director of Rubicon Water
Limited which was admitted to the Official List of the ASX on 31 August 2021. Doreen Huber was appointed a non-executive director of Ceconomy AG on
09 February 2022. 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
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
1,628,344
2,600
3,000
1,450
4,000
–
–
–
–
–
–
1,667,969
316,320
–
–
–
–
–
–
–
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 pages 156 to 172.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 147
Directors’ Report
continued
INFORMATION ABOUT THE DIRECTORS AND SENIOR MANAGEMENT (continued)
SHARE OPTIONS GRANTED TO DIRECTORS AND SENIOR MANAGEMENT
During and since the end of the financial year, an aggregate 100,071 share options were granted to the following directors and senior management of the
Company as part of their remuneration.
DIRECTORS AND SENIOR
MANAGEMENT
NUMBER OF OPTIONS
GRANTED
ISSUING ENTITY
NUMBER OF ORDINARY SHARES
UNDER OPTION
60,451
9,453
10,545
9,337
10,285
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
316,320
83,514
107,222
80,180
86,644
Don Meij
Richard Coney
Josh Kilimnik
Andre ten Wolde
Michael Gillespie
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 24 years’ experience. Craig joined the Company as General Counsel on 08 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 9.
EXPLANATION OF STATUTORY PROFIT TO UNDERLYING PROFIT
Statutory profit after tax for continuing operations 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 for continuing operations of $69.0 million includes a loss of $63.7 million after tax treated as significant items. Excluding these items,
the Underlying Profit after tax from continuing operations was $132.7 million, 27% down on the prior corresponding period.
Underlying profit after tax from continuing operations 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 from continuing operations 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.
148 // 2023 AN NUAL RE PORT D O MINO ’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
REVIEW OF OPERATIONS (continued)
The below provides a reconciliation of Statutory Profit from continuing operations to Underlying Profit from continuing operations including earnings
before interest and tax from continuing operations (EBIT), and earnings before interest, tax, depreciation and amortisation (EBITDA) which adjusts for significant
items costs/(benefits):
FOR THE YEAR ENDED 02 JULY 2023
UNDERLYING
UNDERLYING
$’000
ANZ
$’000
EUROPE
$’000
ASIA
$’000
UNALLOCATED
$’000
SIGNIFICANT
ITEMS
$’000
–
2,351,486
800,654
735,709
815,123
–
81,234
355,165
149,970
103,470
122,295
(20,570)
STATUTORY
$’000
2,351,486
273,931
Revenue
EBITDA
Depreciation & amortisation
(150,923)
9,176
(141,747)
(37,561)
(38,904)
(62,081)
(3,201)
EBIT
Net finance costs
Net profit before tax
Income tax expense
Net Profit after tax
Profit attributable to:
Owners of the parent
Non-controlling interest
Revenue
EBITDA
123,008
(22,370)
100,638
(31,603)
69,035
67,009
2,026
69,035
STATUTORY
$’000
2,271,262
396,406
90,410
213,418
112,409
64,566
60,214
(23,771)
–
(22,370)
90,410
191,048
(26,698)
(58,301)
63,712
132,747
63,712
130,721
–
2,026
63,712
132,747
YEAR ENDED 03 JULY 2022
UNDERLYING
UNDERLYING
$’000
ANZ
$’000
EUROPE
$’000
ASIA
$’000
UNALLOCATED
$’000
SIGNIFICANT
ITEMS
$’000
–
2,271,262
782,469
686,157
802,636
–
8,803
405,209
156,594
128,882
140,483
(20,750)
Depreciation & amortisation
(130,430)
–
(130,430)
(35,403)
(38,154)
(55,507)
EBIT
Net finance costs
Net profit before tax
Income tax expense
Net Profit after tax
Profit attributable to:
Owners of the parent
Non-controlling interest
265,976
(13,377)
252,599
(77,587)
175,012
166,996
8,016
175,012
8,803
274,779
121,191
90,728
84,976
–
8,803
(2,544)
6,259
(13,377)
261,402
(80,131)
181,271
6,259
173,255
–
6,259
8,016
181,271
(1,366)
(22,116)
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 149
Directors’ Report
continued
REVIEW OF OPERATIONS (continued)
SIGNIFICANT ITEMS
On 13 June 2023, the Group announced initiatives to deliver material, near term, cost savings, improving efficiency and building a stronger foundation for
future growth.
The Group reduced the size of its corporate store network, closing underperforming stores, accelerating the refranchising of a number of corporate stores and
the closure of some operations. As a result, underperforming stores open for some time but not expected to reach sustainable levels of sales or profitability
were identified to be closed. Furthermore the Group will partner with experienced franchisees to franchise corporate stores. The costs recognised in this initiative
include the write down in the value of corporate property, plant and equipment, the write down of goodwill allocated to the corporate stores, the impairment
of right of use assets associated with the lease of the location of the store or operation, onerous contract obligations and employee terminations.
Significant items in the current and comparative periods include external legal costs that relates to discrete matters and cost relating to structural changes in the
business as outlined below.
Statutory profit before tax from continuing operations was $100.6 million, this included the following significant costs excluded from Underlying Profit after
tax as outlined below:
CURRENT PERIOD SIGNIFICANT ITEMS
ANZ
• External costs of $5.9 million pertaining to the Fast Food Industry Award class action.
• External costs of $3.6 million related to acquisition and integration costs incurred in relation to Domino’s Malaysia, Singapore and Cambodia.
• Impairments, write-downs and disposals of property, plant and equipment, goodwill, right of use assets and inventories in relation to corporate stores
and operations of $25.4 million.
• Accelerated amortisation of legacy intangible assets of $4.9 million.
EUROPE
• External costs of $3.6 million in relation to Pizza Sprint legal proceedings.
• Impairments, write-downs and disposals of property, plant and equipment, goodwill, right of use assets and inventories in relation to corporate stores
and operations of $31.8 million.
• Accelerated amortisation of legacy intangible assets of $1.7 million.
ASIA
• Impairments, write-downs and disposals of property, plant and equipment, goodwill, right of use assets and inventories in relation to corporate stores
and operations of $12.4 million.
• Accelerated amortisation of legacy intangible assets of $2.6 million.
• Other items including changes in the fair value of contingent consideration in relation to the acquisition of Domino’s Malaysia, Singapore and Cambodia
($1.5) million.
PRIOR PERIOD SIGNIFICANT ITEMS
• External costs of $3.5 million pertaining to the Fast Food Industry Award class action.
• External costs of $1.4 million incurred in relation to the acquisition of Domino’s Taiwan.
• External costs of $1.8 million incurred in relation to acquisition of Domino’s Pizza businesses in Malaysia, Singapore and Cambodia and other investigatory
diligence costs.
• External costs of $2.1 million related to litigation costs pertaining to Pizza Sprint and Speed Rabbit Pizza.
150 // 2023 AN NUAL REPO RT D O MINO ’S PIZZ A ENTERPRISES LIM ITED.
Directors’ Report
continued
REVIEW OF OPERATIONS (continued)
CHANGES IN STATE OF AFFAIRS
There have 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 32.
ENVIRONMENTAL AND SOCIAL SUSTAINABILITY RISKS
The Group is currently not subject to any significant environmental and/or social sustainability risks that have an 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. In response, the Group will release its third consecutive Annual Sustainability
Report this year, with the aim of communicating to shareholders in a transparent manner its activities to address its environmental, social and governance
efforts. This year’s Sustainability Report will build on from last year’s report, and report with reference to the Global Reporting Initiative (GRI) framework and
SASB (Sustainability Accounting Standards Board), which are broadly accepted existing global ESG frameworks. An ESG update has been provided in the
Annual Report and the 2023 Sustainability Report is anticipated to be released before the end of calendar year 2023.
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.
CORPORATE GOVERNANCE
A copy of Domino’s Pizza Enterprises full 2023 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 02 July 2023, an interim dividend of 67.4 cents per share franked to 60% at 30% corporate income tax rate was
paid to the holders of fully paid ordinary shares on 16 March 2023. On the 23 August 2023, the Company declared an unfranked final dividend for
FY23 of 42.6 cents per share. The dividend will have a record date of 29 August 2023 and a payment date of 28 September 2023. The Company reactivated
its Dividend Reinvestment Plan for eligible shareholders residing in Australia or New Zealand for the FY23 final dividend which will be fully underwritten
by Morgan Stanley.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PRISES LIMITED. // 151
Directors’ Report
continued
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
DPE Limited
DPE Limited
35
36
37
38
39
40
41
42
43
44
45
46
47
48
37,935
2,378
2,533
156,937
560,312
1,420
2,966
95,975
9,702
420,937
13,419
782
54,265
107,232
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
$50.25
Nil
Nil
$84.28
$84.28
Nil
Nil
$127.09
Nil
$69.58
Nil
Nil
Nil
Nil
01 Sep 23
20 Aug 29
18 Aug 30
01 Sep 24
01 Sep 24
07 Jun 31
28 May 31
31 Aug 25
31 Oct 31
31 Aug 25
23 Aug 32
21 Nov 32
30 Jun 25
30 Jun 25
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
CLASS OF SHARES
GRANT DATE
FAIR VALUE
AMOUNT UNPAID
ON SHARES
DPE Limited
DPE Limited
DPE Limited
DPE Limited
DPE Limited
32
35
37
43
45
33,250
7,970
505
2,293
360
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
3.98
11.79
81.37
135.75
67.51
$nil
$nil
$nil
$nil
$nil
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.
152 // 2023 AN NUAL RE PORT D O MINO ’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
INDEMNIFICATION OF OFFICERS AND AUDITORS (continued)
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, nine (9) Board meetings, four (4) Nomination,
Culture and Remuneration Committee meetings and four (4) 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
9
9
9
9
9
9
9
8
9
9
9
8
9
9
4
4
4
4
4
4
–
4
4
4
4
4
4
–
–
4
4
4
–
4
–
–
4
4
4
–
4
–
Jack Cowin
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 in those markets. DPE also has
more informal “Advisory Boards” for Australia/NZ, Benelux and France. At least two of the DPE directors sit on each of the five boards. The boards meet
on a quarterly basis. The meetings are mutually beneficial, providing DPE directors with a better understanding of local management and business issues,
while also allowing 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 two years so that:
(a) 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.
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 36 to 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 36 to the financial statements do not compromise the external auditor’s independence,
based on the advice received from the Audit and Risk 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 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 178 of the Annual Report.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 153
Directors’ Report
continued
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.
154 // 2023 ANNUAL REP ORT D O M INO ’S PIZZA ENTERPRIS ES LIM ITED.
Directors’ Report
continued
LETTER FROM THE CHAIR OF THE NOMINATION, CULTURE AND REMUNERATION COMMITTEE
Dear fellow Shareholders,
FY23 REMUNERATION OUTCOMES
On behalf of the Board, I am pleased to present the remuneration report
for FY23.
Our approach to remuneration is under review regularly to ensure it remains
fit for purpose in a changing and expanding organisation, an evolving
market context and in culturally diverse business environments.
The Board is deeply committed to ensuring the remuneration framework
developed for Key Management Personnel (KMP) remains relevant across
a growing range of markets; and the changing needs and expectations of
a long-standing executive group. Importantly it needs to be aligned with
shareholder value creation over the long-term.
At the last AGM we received shareholder approval for the renegotiated
contract of the Group CEO and Managing Director, commencing in FY23.
This was based on a Board review of Mr Meij’s remuneration, including
benchmarking against other ASX listed organisations of a similar size.
This review showed that Mr Meij was positioned below the market median,
which the Board felt was not reflective of his capability and performance.
Over the past five years the business has transformed under Mr Meij’s
leadership and today operates across twelve markets. His new remuneration
package is more reflective of Domino’s size and footprint, and his impact
on establishing and maintaining the brand globally.
The past 12 months have been challenging for both the business and the
communities in which we operate. The FY23 remuneration outcomes reflect
the overall performance of the business with low short-term incentive (STI)
vesting outcomes and no long-term incentive (LTI) vesting.
In FY23 fixed remuneration (FR) increases were based on a combination
of factors, including benchmarking data from the market and role changes.
STI results for our senior executive team averaged 17.4% with the Group
CEO receiving 0% of his bonus opportunity.
Details of the LTI outcomes are outlined on page 164 of the report.
For FY23 only a portion of the LTI Options (relating to FY21– FY23
performance period for ANZ and Japan Executives) vested. No LTI vested
for Group or European roles.
The Board has absolute discretion to adjust the STI and LTI outcomes,
and in FY23 decided not to make any changes.
We are pleased with the current steps being taken by Domino’s to streamline
core operations to leverage global reach and scale, laying a foundation for
future success that is sustainable for the long-term.
I would like to thank you for your support and interest in our Company,
and look forward to your attendance at our Annual General Meeting
currently planned to be held on 01 November 2023.
Uschi Schreiber
Chair, Nomination, Culture and Remuneration Committee
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 155
Directors’ Report
continued
REMUNERATION REPORT 2023
This Remuneration Report (Audited), which forms part of the Directors’ Report, sets out information about the remuneration of the Domino’s Key Management
Personnel (KMP) for the financial year ended 02 July 2023.
CONTENTS
1. FY23 Facts at a Glance
2. Key Management Personnel
3. Our Remuneration Process at a Glance
4. Changes We’ve Made in FY23
5. Our Remuneration Framework for Executive KMP
6. FY23 Performance and Remuneration Outcomes
7. Remuneration Governance
8. Our Non-Executive Director Fees
9. Statutory Tables
157
157
158
159
160
163
166
167
168
156 // 2023 AN NUAL REPO RT D O MINO ’S PIZZ A ENTERPRISES LIM ITED.
Directors’ Report
continued
Remuneration report (continued)
1
FY23 FACTS AT A GLANCE
In FY23, we made moderate increases to fixed remuneration, with the exception of the Group CEO and Managing Director where an adjustment was made
to close the benchmarking gap identified against other ASX and global listed organisations of a similar size.
The STI and LTI outcomes, as outlined below, reflect the overall performance of the business during the relevant performance periods.
DIRECTOR OR KMP
Don Meij
Richard Coney
Josh Kilimnik
Andre ten Wolde
Michael Gillespie
TOTAL FR (i)
$
1,681,743
624,167
728,112
683,598
637,048
TOTAL STI
AWARD (ii)
$
–
64,500
210,000
213,478
114,159
STI AWARDED
AS A PERCENTAGE
OF MAXIMUM
%
0%
10%
30%
30%
17%
TOTAL LTI
VESTED (iii)
$
–
–
247,440
–
–
LTI VESTED AS
A PERCENTAGE
OF MAXIMUM
%
0%
0%
70%
0%
0%
(i) Reflects salaries and superannuation.
(ii) The value earned cash during the year ended 02 July 2023 and paid in FY24, and the value earned deferred STI for rights of grants to be issued in FY24 which are both in
relation to the performance targets achieved for FY23.
(iii) LTI vested is determined based on amount vested during the year, valued 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.
2
KEY MANAGEMENT PERSONNEL
Our remuneration report sets out remuneration information for Domino’s KMP as set out in the table below.
P
M
K
E
V
I
T
U
C
E
X
E
-
N
O
N
P
M
K
E
V
I
T
U
C
E
X
E
NAME
Jack Cowin
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Don Meij
Richard Coney
Josh Kilimnik
Andre ten Wolde
Michael Gillespie
POSITION
Non-Executive Chairman
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Managing Director/Group Chief Executive Officer (Group CEO)
Group Chief Financial Officer (Group CFO)
Chief Executive Officer APAC
Chief Executive Officer Europe
Group Chief Digital and Experience Officer
TERM AS KMP
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
There have been no changes to KMP since the end of FY23 and the release of this Report.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 157
Directors’ Report
continued
Remuneration report (continued)
3
OUR REMUNERATION PROCESS AT A GLANCE
Our remuneration policy ensures executive remuneration is aligned to our values and purpose. Remuneration is designed to reflect individual duties,
accountabilities and level of performance; and to be market competitive in the relevant location to attract, retain and motivate people of the highest quality.
Outlined below are our values and purpose, and how they align to our remuneration principles and executive remuneration structure.
I
I
T
H
G
S
R
E
V
O
D
R
A
O
B
D
N
A
S
M
S
N
A
H
C
E
M
E
C
N
A
N
R
E
V
O
G
D
R
A
W
E
R
E
T
A
R
P
O
R
P
P
A
Y
B
D
E
T
R
O
P
P
U
S
I
LEAD BY
OUR VALUES
Crush convention
Be generous and
provide joyful
experiences
Invest to create
devotion
Do the right thing
because it’s the
right thing to do
Help people
grow and prosper
DRIVEN BY THE FACT
OUR PIZZA BRINGS PEOPLE CLOSER
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… enabling
us to put the world’s most delicious and versatile
bonding food within reach of every person
GUIDED BY
OUR EXECUTIVE REMUNERATION PRINCIPLES
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
Achieve an appropriate
balance between
fixed and variable
remuneration
Align to shareholder
interests through equity
components
OUR REMUNERATION STRUCTURE
CONSISTS OF
Local market competitive
fixed remuneration
Financially focused short-term
incentive and strategic initiatives
Shareholder aligned long-term
incentives
158 // 2023 AN NUAL REPO RT D O MINO ’S PIZZ A ENTERPRISES LIM ITED.
Directors’ Report
continued
Remuneration report (continued)
4
CHANGES WE’VE MADE IN FY23
In a rapidly evolving market, we review our approach to remuneration regularly. The Nomination, Culture and Remuneration Committee (NCRC) made changes
to executive remuneration for FY23 to better fit our increasingly global and mature organisation and simplify our approach.
ELEMENT OF REWARD
RATIONALE
Group CEO contract renewal
Fixed remuneration review
Updated approach to STI deferral
LTI vehicle replaced with performance rights
The Group CEO’s five-year contract expired in November 2022 and a new contract was negotiated.
The changes to the Group CEO remuneration arrangements were approved by shareholders at the 2022
Annual General Meeting which reflect the current size and shape of the organisation and recognise the
performance of the business achieved under his leadership.
The changes made to the Group CEO remuneration were:
• Re-weighting the remuneration mix to better reflect the maturing nature of the business and align with
ASX companies of a similar size;
• Increasing fixed remuneration to close the benchmarking gap identified against other ASX and global
listed organisations of a similar size; and
• Providing a temporary Special Acquisition Incentive Opportunity linked to the successful integration
of the Malaysian, Singaporean and Cambodian acquisitions.
Other select executives received fixed remuneration increases between 7.5% and 13% based on the
outcomes of remuneration benchmarking and the size of the role.
STI deferral removed for executives outside Australia and New Zealand in recognition of local market
practice, tax, and legal considerations.
Performance rights have been introduced to replace share options as the Board believes they better reflect
a vehicle that is common, can be easily understood across Domino’s operating geographies and on the
ASX, and embodies the current stage of business maturity.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 159
Directors’ Report
continued
Remuneration report (continued)
5
OUR REMUNERATION FRAMEWORK FOR EXECUTIVE KMP
Our performance depends upon the quality of our people. To prosper, we must attract, motivate and retain highly skilled executives and team members.
The Executive KMP remuneration structure is designed to strike an appropriate balance between fixed and variable pay, rewarding capability and experience
while providing recognition for smashing individual and Company goals.
ELEMENT OF REWARD
FIXED REMUNERATION (FR)
Base salary plus fringe benefits tax (FBT) charg-
es related to employee benefits plus superan-
nuation or pension equivalents.
SHORT-TERM INCENTIVE (STI)
Annual incentive based on Domino’s and
individual performance delivered as cash
and/or rights.
PURPOSE & PHILOSOPHY
· Set at a level to attract and retain experienced
people.
· Benchmarked against ASX listed companies,
with similar revenue and market capitalisation,
and Quick Service Restaurant (QSR) compar-
ators overseas and within Australia.
· Designed to recognise when we achieve
Board approved targets for the Group.
LONG-TERM INCENTIVE (LTI)
Three-year incentive linked to Group perfor-
mance delivered through performance rights.
· Reward executives for sustainable long-term
growth aligned to shareholder value creation.
LINK TO PERFORMANCE
· Considers performance in role, experience,
accountability, and Domino’s performance based
on market capitalisation and revenue.
· Payable subject to Key Performance Indicators
(KPIs) set each year by the Board. KPIs are reflec-
tive of Group and geographically relevant finan-
cial and individual performance targets aligned
to the Domino’s business strategy.
· Awards only vest on achievement of prede-
termined EPS and new store opening targets.
LTI related to the new store opening target only
vests if a positive total shareholder return (TSR) is
achieved over the term of the performance period.
PAY MIX (MAXIMUM OPPORTUNITY)
The pay mix at maximum is reviewed annually to ensure it remains competitive and promotes alignment to our shareholders.
CEO
26%
12.5%
12.5%
49%
Other Executive KMP
36%
19.5%
16%
28.5%
n FR n STI Cash n STI Equity n LTI Equity
FIXED REMUNERATION
Fixed remuneration consists of base remuneration which is calculated on a total cost basis and includes any FBT (charges related to employee benefits)
as well as employer contributions to superannuation or pension equivalent.
The NCRC undertakes extensive benchmarking of the Group CEO and executives to ensure remuneration packages attract the right people for Domino’s,
to ensure they are geographically appropriate, consider internal relativities and meet ASX market expectations. The benchmarking data used is a combination
of ASX listed remuneration data from similar sized companies (using revenue and market capitalisation), and data from Quick Service Restaurant (QSR)
comparator groups overseas and within Australia. This data feeds into a hybrid data set from which fixed remuneration, STI, LTI and total remuneration
packages are determined.
160 // 2023 ANNUA L REPO RT D O M INO ’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
Remuneration report (continued)
SHORT-TERM INCENTIVE
Our STI is ‘at risk’ and is provided only based on achievement of annual targets set by the Board in line with the Domino’s Group plan. The table below outlines
the key design features of the executive FY23 STI plan.
DESIGN FEATURE
APPROACH
STI OPPORTUNITY
The STI maximum opportunity awarded to each executive is outlined in the table below.
ROLE
Group CEO*
Other Executive KMP
FY23 MAXIMUM STI (% OF FR)
96%
100%
PERFORMANCE MEASURES
& ASSESSMENT
STI outcomes are assessed against a scorecard of our strategic priorities and focus on the financial performance across
our operating markets.
The relevant performance criteria and weightings for FY23 are outlined below.
KPI
Geographic EBIT
Individual strategic performance
objectives
GROUP
CEO
100%*
–
CFO
70%
30%
WEIGHTING
CEO
APAC
CEO
EUROPE
70%
30%
70%
30%
GROUP CHIEF
DIGITAL AND
EXPERIENCE OFFICER
60%
40%
*
For the Group CEO, FY23 STI scorecard reflects a combination of geographic EBIT outcomes across our operating markets.
DEFERRAL
For the Group CEO, 50% of the STI outcome is deferred in share rights for 12 months.
For other Executive KMP in Australia and New Zealand, 45% of the STI is deferred in rights for 12 months.
In recognition of local market norms and legal/tax implications executives outside Australia and New Zealand do not
participate in STI deferral.
The number of rights granted to participants is equal to the deferral opportunity divided by the volume weighted average
price (VWAP) of a share over ten trading days.
CESSATION OF
EMPLOYMENT
Where employment ceases as a “good leaver” (i.e., for reasons including redundancy, retirement, death or total permanent
disability or as otherwise agreed), rights will continue to be held on the same terms at the discretion of the Board.
If a participant ceases for any other reason, rights will immediately lapse. The Board retains discretion to determine a different
treatment of rights on cessation of employment.
SPECIAL ACQUISITION INCENTIVE
The Group CEO and the CEO APAC’s STI opportunities were temporarily increased to provide an additional award aligned to the successful integration
of our newly acquired businesses in Malaysia, Singapore and Cambodia. The Special Acquisition Incentive Opportunity reflects an important opportunity
for us to increase our footprint in Asia.
The award reflects a temporary additional opportunity for key roles involved in the initial integration for FY23, FY24 and FY25. The maximum opportunity
is $750,000 for the Group CEO and $400,000 for the CEO APAC. Performance is measured against calendar year 2023 and 2024 (given the timing
of the acquisition) and will be tested post the release of respective Half 1 results in each year.
Performance is assessed against EBITDA of the acquired organisations.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 161
Directors’ Report
continued
Remuneration report (continued)
LONG-TERM INCENTIVE
The NCRC considers this equity performance-linked remuneration structure to appropriately award our executive team for contributing to shareholder outcomes
over the longer term.
DESIGN FEATURE
APPROACH
LTI OPPORTUNITY
The LTI opportunity awarded to each executive is outlined in the table below.
ROLE
Group CEO
Other Executive KMP
FY23 MAXIMUM LTI (% OF FR)
186%
80%
PERFORMANCE PERIOD
Three-year performance period
PERFORMANCE MEASURES
& ASSESSMENT
The below measures have been chosen based on relevance to our business strategy and direct alignment to shareholder
return. The measures balance the backward looking performance indicator in basic EPS and the forward looking new store
growth, which is our primary indicator of future shareholder return.
Vesting of the LTI is subject to:
· 70% basic EPS growth: reflects the company’s net profit after tax divided by the total number of shares on issue. EPS is
calculated on a ‘constant currency’ basis; and
· 30% organic new store openings: reflects the number of new stores opened across the Group, excluding those acquired
as a result of transaction activity.
· TSR gateway: No performance rights subject to the organic new store openings measure will vest under the new store
growth portion unless a positive TSR gateway is achieved.
These performance conditions will vest in accordance with the schedule shown in the tables below:
EPS COMPOUND ANNUAL GROWTH RATE
PORTION VESTING
Less than 8%
At 8%
Between 8% and 15%
At or above 15%
0%
30%
Straight line vesting
100%
NEW STORE ANNUAL GROWTH RATE
PORTION VESTING
Less than 7%
At 7%
Between 7% and 10%
At or above 10%
0%
25%
Straight line vesting
100%
Vesting of performance rights under the new store growth hurdle are subject to meeting a positive TSR gateway over the
performance period.
INSTRUMENT
Each performance right is an entitlement to receive one share (or a cash payment of equivalent value at the
Board’s discretion).
A participant will be allocated a number of shares calculated by reference to their LTI opportunity divided by VWAP of a
share over ten trading days.
162 // 2023 ANNUA L REPO RT D O M INO ’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
Remuneration report (continued)
DESIGN FEATURE
APPROACH
CESSATION OF
EMPLOYMENT
Where employment ceases for a “good leaver” reason, all vested and unvested performance rights will continue on the
same terms. For unvested performance rights, the number of performance rights that vest will be pro-rated to reflect the
period of time that has elapsed from the grant date to the date of cessation.
At the Board’s discretion, if a participant ceases for any other reason, performance rights will immediately lapse, and any
shares held subject to a trading restriction will immediately be forfeited.
6
FY23 PERFORMANCE AND REMUNERATION OUTCOMES
The Managing Director/Group CEO and other Executive KMP received fixed remuneration increases averaging 15.30% during FY23. A number of executives
received increases in FY23 that reflected a change in role or increase in responsibility. Where an executive was significantly outside the market competitive
ranges, the NCRC determined that it would be appropriate to transition those executives to the new remuneration levels over a number of years.
The performance across the Group during FY23 reflects decisions made to deliver a stronger long-term business while balancing short-term inflationary pressures.
This is reflected in our financial performance including Network Sales of $4 billion, growth of +2.2% (vs FY22) and network expansion of +395 stores (+11.7%).
Accordingly, STI and LTI achievements were lower than the prior corresponding year.
The results of the STI reflected the overall performance of the business in each market and the individual strategic performance objectives of KMP.
The options granted under our FY20 LTI plan were eligible to vest during FY22.
LINK BETWEEN PAY AND PERFORMANCE
The remuneration outcomes for our KMP are aligned to our short and long-term performance outcomes.
The tables below set out summary information about the Group’s earnings and movements in shareholder wealth for the five years to 02 July 2023:
Group continuing operations EBIT
Basic earnings per share (cents) from continuing operations (iii)
Organic new store openings
Annual total shareholder return (%)
Total annual dividend per share (cents)
CEO STI outcome as % of max
CEO LTI outcome as % of max
02 JULY
2023
$’000
03 JULY
2022 (i)
$’000
123,008
265,976
139.4
205
(31)%
101.0
0.0%
0.0%
190.6
294
(41)%
156.5
23.2%
0.0%
27 JUNE
2021 (ii)
$’000
287,378
218.1
285
77%
173.5
96.6%
0.0%
28 JUNE
2020
$’000
217,940
169.1
163
83%
119.3
15.0%
0.0%
30 JUNE
2019
$’000
173,417
165.0
179
(26)%
115.5
15.0%
100%
(i) Results for the year ending 03 July 2022 have been restated to reflect continuing operations, with the operations of Denmark Market being classified as a discontinued
operation.
(ii) Results for the year ending 27 June 2021 have been restated to reflect the implementation of an IFRIC agenda decision clarifying the accounting treatment of SaaS
arrangements.
(iii) Performance is measured on underlying earnings per share.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 16 3
Directors’ Report
continued
Remuneration report (continued)
FY23 STI OUTCOMES
The following table outlines performance against the STI scorecard for the Group CEO in FY23.
KEY PERFORMANCE INDICATOR
WEIGHTING
PERFORMANCE OUTCOME
ANZ EBIT
Japan & Taiwan EBIT
Germany & Denmark EBIT
France EBIT
Benelux EBIT
25%
25%
20%
15%
15%
Below threshold
Below threshold
Below threshold
Below threshold
Below threshold
FY23 RESULT
Target not achieved
Target not achieved
Target not achieved
Target not achieved
Target not achieved
Remuneration outcomes for FY23 reflect the financial performance of the business with only project outcomes achieved by KMP.
The table below shows the STI outcomes for each executive as approved by the Board based on a recommendation by the NCRC. The Board believes the
outcomes for each executive fairly reflects their contribution to our organisation and appropriate alignment with our key stakeholders.
DIRECTOR OR KMP
Don Meij
Richard Coney
Josh Kilimnik
Andre ten Wolde
Michael Gillespie
TOTAL STI
AWARD
$
CASH
COMPONENT
$
DEFERRED
COMPONENT
$
MAXIMUM STI
$
–
64,500
210,000
213,478
114,159
–
35,475
115,500
117,413
62,788
–
1,650,000
29,025
94,500
96,065
51,371
645,000
700,000
711,592
676,500
STI AWARDED
AS A PERCENTAGE
OF MAXIMUM
%
STI FOREFEITED
IN YEAR
AS A PERCENTAGE
OF MAXIMUM
%
0%
10%
30%
30%
17%
100%
90%
70%
70%
83%
FY23 LTI VESTING OUTCOMES
The options granted under our FY20 LTI plan were eligible to vest during FY23. The following performance measures were applied for each Executive KMP:
PERFORMANCE MEASURE
RESULT
PROPORTION OF
OPTIONS VESTING
CAN BE EXERCISED
UNTIL
Group EPS percentage growth over the relevant performance period
< 6% EPS growth
0%
ANZ EBIT
Europe EBIT
Japan EBIT
> 90% and < 105%
Straight line vesting
< 90% of target
> 105% of target
0%
100%
N/A
N/A
N/A
01 Sep 23
164 // 2023 ANNUA L REPO RT D O M INO ’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
Remuneration report (continued)
GROUP CEO 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 five years, the Group CEO’s STI and LTI outcomes
have varied significantly based on what we have achieved as a team. The following chart shows the outcomes of the Group CEO’s STI and LTI plans in the
year ended 02 July 2023, and the four prior financial years.
)
%
(
D
R
A
W
A
D
E
T
S
E
V
100%
100%
96.6%
75%
50%
25%
0%
15%
15%
23.2%
0%
0%
0%
0%
0%
FY19
FY20
FY21
FY22
FY23
FINANCIAL YEAR
■ STI ■ LTI — EPS
300
200
100
0
)
S
T
N
E
C
(
S
P
E
FY23 REALISED REMUNERATION
2023 executive remuneration outcomes for our executives are aligned to short and long-term performance outcomes.
EXECUTIVE KMP
Group CEO
Group Chief Financial Officer
Chief Executive Officer APAC
Chief Executive Officer Europe
Group Chief Digital and Experience Officer
(i) Reflects salaries and superannuation.
FIXED
REMUNERATION (i)
$
CASH STI (ii)
$
DEFERRED STI (iii)
$
LTI VESTED (iv)
$
1,681,743
624,167
728,112
683,598
637,048
–
35,475
115,500
117,413
62,788
417,617
47,460
70,818
14,650
74,734
–
–
247,440
–
–
TOTAL
2,099,360
707,102
1,161,870
815,661
774,570
(ii) The value earned cash during the year ended 02 July 2023 and paid in FY24 which is in relation to the performance targets achieved for FY23.
(iii) The value of deferred STI is determined based on the number of rights granted during the year ended 02 July 2023, for performance targets achieved for FY22, multiplied
by the share price at the date of grant.
(iv) LTI vested is determined based on amount vested during the year, valued 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.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 165
Directors’ Report
continued
Remuneration report (continued)
7
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:
NOMINATIONS, CULTURE AND REMUNERATION
COMMITTEE
Responsible for:
• Making recommendations to the Board on remuneration
policies and packages applicable to the Board members
and Group CEO.
• Review and approve remuneration packages applicable
to other KMPs of the Company.
BOARD
Responsible for:
• Approving Domino’s remuneration strategy.
• Approving 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.
MANAGEMENT
Responsible for:
• Preparing recommendations on
remuneration packages to other KMP.
• Obtains remuneration information
from external advisors/independent
consultants to assist the NCRC.
AUDIT AND RISK COMMITTEE
• Supports the NCRC by reviewing
figures which form the basis for
incentive awards.
REMUNERATION CONSULTANTS
• Provide independent advice,
information and if requested,
recommendations relevant to
remuneration decisions.
SHAREHOLDERS AND ADVISORY BODIES
• Includes consultation, engagement
at the Annual General Meeting and
investor meetings.
COMPONENT
APPROACH
BOARD DISCRETION
MALUS AND CLAWBACK
CHANGE OF CONTROL
Our Board retains the discretion to alter the treatment of awards to ensure there is appropriate alignment between
executive pay outcomes and Company performance.
Our Board has the ability to apply malus and/or clawback, lapse awards and forfeit shares subject to a trading
restriction in certain circumstances, including fraud, gross misconduct and material reputational damage to the
Company.
Our 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.
USE OF INDEPENDENT
CONSULTANTS
During the year an independent remuneration consultant was engaged by the NCRC to provide advice and guidance
in relation to market practice and Domino’s remuneration matters. No remuneration recommendation was sought
from or provided by the remuneration consultant.
166 // 2023 ANNUA L REPO RT D O M INO ’S PIZ ZA ENTERPRISES LIMITED.
Directors’ Report
continued
Remuneration report (continued)
OUR EXECUTIVE SERVICE AGREEMENTS
The table below set out the main terms and conditions of the employment contracts of executive.
NAME
Don Meij
Richard Coney
Josh Kilimnik
Andre ten Wolde
Michael Gillespie
TERM OF CONTRACT
CONTRACT
COMMENCEMENT
NOTICE TERMINATION
– BY COMPANY
NOTICE TERMINATION
– BY EXECUTIVE
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
02 November 2022
12 months
16 May 2005
06 December 2021
27 June 2020
15 September 2017
6 months
6 months
12 months
3 months
12 months
6 months
6 months
6 months
3 months
8
OUR NON-EXECUTIVE DIRECTOR FEES
Non-executive directors are remunerated by way of cash fees and superannuation. The level of directors’ fees reflects their time commitment and responsibilities
in accordance with market standards. Non-executive directors did not receive any performance-based remuneration or equity-based remuneration and are
not entitled to any termination payments on ceasing to be a director.
The maximum aggregate non-executive directors’ fee pool as approved by shareholders is $1,800,000 per annum.
Details of the fees associated for the non-executive director roles are set out in the following table and include superannuation.
BOARD AND COMMITTEE
Board
Audit and Risk Committee
Nomination, Culture and Remuneration Committee
CHAIR FEES
MEMBER FEES
$313,947
$30,000
$30,000
$150,000
$15,000
$15,000
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 167
1
6
8
/
/
2
0
2
3
A
N
N
U
A
L
R
E
P
O
R
T
D
O
M
I
N
O
’
S
P
I
Z
Z
A
E
N
T
E
R
P
R
I
S
E
S
L
I
M
I
T
E
D
.
Remuneration report (continued)
9
STATUTORY TABLES
The table below sets out the remuneration of Domino’s executives and the amounts represent payments relating to the period individuals were KMP.
SHORT-TERM BENEFITS
LONG-TERM
BENEFITS
POST-
EMPLOYMENT
BENEFITS
SHARE BASED-PAYMENTS
BASE SALARY
$
CASH
INCENTIVE
$
OTHER
SHORT-TERM (i)
$
LONG SERVICE
LEAVE (ii)
$
SUPER-
ANNUATION
$
DEFERRED STI
COMPONENT
$
OPTIONS
(LTI)
$
TOTAL
$
PERFORMANCE
RELATED
%
c
o
n
t
i
n
u
e
d
D
i
r
e
c
t
o
r
s
’
R
e
p
o
r
t
EXECUTIVE DIRECTOR
Don Meij
EXECUTIVE OFFICERS
Richard Coney
Josh Kilimnik
Andre ten Wolde
Michael Gillespie
FORMER EXECUTIVE OFFICERS
Nick Knight
Total
–
–
–
–
2023
2022
1,656,410
1,286,919
–
–
2023
2022
2023
2022
2023
2022
2023
2022
598,776
568,342
35,475
96,480
702,779
115,500
102,102
672,605
137,440
164,395
635,585
596,948
611,756
589,714
117,413
31,996
62,788
151,583
41,311
40,758
–
–
64,019
23,135
18,677
20,669
–
–
–
–
24,315
12,415
25,333
24,054
25,391
24,054
25,333
52,429
48,013
31,384
25,292
24,054
297,119
(966,112)
1,076,769
262,863
(33,458)
1,563,513
(62.1)%
14.7%
90,469
(130,224)
638,564
104,630
(153,515)
660,660
97,009
(1,795)
1,040,928
118,410
115,304
1,260,583
50,448
(93,522)
799,248
67,178
(105,968)
662,296
255,925
(136,842)
843,234
251,868
(96,369)
933,265
(0.7)%
7.2%
20.2%
29.4%
9.3%
(1.0)%
21.6%
32.9%
2022 (iii)
306,159
2023
4,205,306
2022
4,020,687
–
125,308
(156,686)
5,439
40,847
(152,031)
169,036
(65.8)%
331,176
417,499
143,413
107,011
330,461
(100,467)
149,362
161,414
790,970
(1,328,495)
4,398,743
845,796
(426,037)
5,249,353
(4.7)%
15.9%
(i) Amounts relate to expatriate allowances including but not limited to housing, schooling and healthcare.
(ii) Long service leave includes the movement in the leave balance during the year.
(iii) On 28 September 2021, Nick Knight retired as ANZ CEO and received termination benefits of $125,308.
Directors’ Report
continued
Remuneration report (continued)
NON-EXECUTIVE DIRECTOR REMUNERATION FOR FY23
The table below sets out the remuneration of Domino’s non-executive directors, amounts represent payments relating to the period individuals were KMP.
SHORT-TERM
BENEFITS – FEES
$
POST-EMPLOYMENT
BENEFITS –
SUPERANNUATION
$
NON-EXECUTIVE DIRECTORS
Jack Cowin
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
FORMER NON-EXECUTIVE DIRECTORS
Ross Adler
Total
(i) On 03 November 2021, Ross Adler retired from Board.
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2022 (i)
2023
2022
288,614
287,824
165,322
167,467
179,657
162,579
176,456
168,752
165,000
159,519
173,949
154,181
57,165
1,148,998
1,157,487
25,333
24,054
17,260
16,500
343
7,258
18,545
16,892
–
–
18,282
15,434
5,717
79,763
85,855
TOTAL
$
313,947
311,878
182,582
183,967
180,000
169,837
195,001
185,644
165,000
159,519
192,231
169,615
62,882
1,228,761
1,243,342
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 169
Directors’ Report
continued
Remuneration report (continued)
EXECUTIVE SHARE AND OPTION PLAN (ESOP) MOVEMENTS
Equity based remuneration on-foot during the financial year are outlined in the table below.
NAME
GRANT TYPE
GRANT DATE
BALANCE AT
START OF YEAR
(NO.)
GRANTED DURING
THE YEAR
(NUMBER)
FAIR VALUE
AT GRANT
($)
FORFEITED
(NO.)
VESTED
(NO.)
EXERCISED
(NO.)
BALANCE AT
END OF THE YEAR
(NO.)
Don Meij
Series 33
26/11/2019
297,000
Series 38
4/11/2020
156,937
Series 42
3/11/2021
95,975
Series 43
1/10/2021
2,957
–
–
–
–
16.72
32.30
135.75
11.79
(297,000)
Series 45
23/08/2022
Series 47
20/12/2022
–
–
6,186
67.51
54,265
58.97
9.84
(39,804)
Richard Coney
Series 34
26/11/2019
39,804
Series 36
20/08/2019
1,581
Series 37
18/08/2020
312
Series 39
25/11/2020
39,215
Series 43
1/10/2021
953
Series 44
19/05/2022
32,000
Series 45
23/08/2022
Series 48
20/12/2022
–
–
Josh Kilimnik
Series 32
25/05/2019
28,000
Series 35
26/11/2019
31,421
Series 39
25/11/2020
40,605
Series 43
1/10/2021
1,011
Series 44
19/05/2022
33,066
–
–
–
–
–
–
–
–
–
–
–
703
42.41
81.37
10.92
135.75
15.00
67.51
3.98
10.92
135.75
15.00
8,750
58.97
11.79
(9,426)
21,995
Series 45
23/08/2022
Series 48
20/12/2022
–
–
1,049
67.51
9,496
58.97
Andre ten Wolde
Series 35
26/11/2019
19,081
Series 39
25/11/2020
40,249
Series 43
1/10/2021
1,025
Series 44
19/08/2022
30,811
Series 45
23/08/2022
Series 48
20/12/2022
–
–
Michael Gillespie Series 34
26/11/2019
29,034
Series 37
18/08/2020
508
Series 39
25/11/2020
41,208
Series 41
28/05/2021
2,966
Series 43
1/10/2021
927
Series 44
19/05/2022
30,750
–
–
–
–
217
9,120
–
–
–
–
–
–
11.79
(19,081)
10.92
135.75
15.00
67.51
58.97
–
–
–
–
–
9.84
(29,034)
81.37
10.92
84.28
135.75
15.00
Series 45
23/08/2022
Series 48
20/12/2022
–
–
1,107
67.51
9,178
58.97
170 // 2023 A NN UA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMIT ED.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(28,000)
–
–
–
–
–
–
–
–
(1,025)
–
(217)
–
–
–
–
–
–
–
–
–
–
156,937
95,975
2,957
6,186
54,265
–
1,581
312
39,215
953
32,000
703
8,750
–
21,995
40,605
1,011
33,066
1,049
9,496
–
40,249
–
30,811
–
9,120
–
508
41,208
2,966
927
30,750
1,107
9,178
Directors’ Report
continued
Remuneration report (continued)
FULLY PAID ORDINARY SHARES OF DOMINO’S PIZZA ENTERPRISES LIMITED
The numbers of Company shares held by KMP during the financial year, including their personally related parties, are set out below.
BALANCE AT
BEGINNING OF
FINANCIAL YEAR
NO.
23,066,390
1,628,344
2,000
1,500
1,450
1,400
1,800,001
18,219
12,925
–
430
Jack Cowin
Grant Bourke
Lynda O’Grady
Ursula Schreiber
Doreen Huber
Tony Peake
Don Meij
Richard Coney
Josh Kilimnik
Andre ten Wole
Michael Gillespie
GRANTED AS
COMPENSATION
NO.
RECEIVED ON
EXERCISE OF
OPTIONS
NO.
NET OTHER CHANGE
NO.
600
1,500
2,600
(132,032)
(28,000)
(539)
28,000
1,242
BALANCE AT
THE END OF THE
FINANCIAL YEAR
NO.
23,066,390
1,628,344
2,600
3,000
1,450
4,000
1,667,969
18,219
12,925
703
430
HISTORIC LONG-TERM INCENTIVE (EXECUTIVE SHARE AND OPTION PLAN)
The LTI for the Group CEO approved by shareholders at the 2017 and 2021 AGMs have resulted in the granting of options over three-year performance
periods. The options were granted under the terms and conditions of the Company’s Executive Share and Option Plan.
Options are subject to performance conditions, including continuous employment, which must be achieved, and have an exercise price set at grant.
The value the Group CEO derives is subject to achievement of performance conditions, as well as share price following vesting.
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 one year from the first exercise date, after which any options not exercised will lapse.
SERIES
Series 33
Series 38
Series 42
Series 47
NUMBER
GRANTED
297,000
156,937
95,975
54,265
EXERCISE
PRICE
$50.25
$84.28
$127.09
Nil
OTHER TRANSACTIONS WITH DIRECTORS OF THE GROUP
FAIR
VALUE
$11.79
$16.72
$32.30
$58.97
GRANT
DATE
FIRST EXERCISE
DATE
26 Nov 2019
4 Nov 2020
3 Nov 2021
20 Dec 2022
1 Sep 2022
1 Sep 2023
1 Sep 2024
30 Jun 2025
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.
Services rendered were based on market rates for such services and were due and payable under normal payment terms. A total of $55,255 was paid
or payable to Mr Michael Cowin during the year ended 02 July 2023.
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL OF DOMINO’S PIZZA ENTERPRISES LIMITED
Comgroup Supplies Pty Ltd, Comgroup NZ Limited T/A Franklin Foods, Markwell Pacific Marketing Pty Ltd and Shore Mariner Ltd are entities associated
with Mr Jack Cowin, which supply food products to the Group on commercial arm’s length terms. The entities were selected as the preferred suppliers after
competitive tender processes in which Mr Cowin had no involvement.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 171
Directors’ Report
continued
Remuneration report (continued)
During the year the Group made purchases and had outstanding balances as at 02 July 2023 as follows:
ENTITY
PURCHASES
(EXCLUDING GST)
OUTSTANDING
BALANCE
ComGroup Supplies Pty Ltd and ComGroup NZ Limited (T/A Franklin Foods)
$27,051,267
$7,320,806
Markwell Pacific Marketing Pty Ltd
Shore Mariner Ltd
$0
$237,860
$0
$55,034
In addition, the Group received a sponsorship contribution at the Company’s annual franchising rally to the value of $50,000 from ComGroup Supplies Pty
Ltd (excluding GST). The Group did not recognise any bad or doubtful debts associated with the above purchases and sponsorship contributions.
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.
Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the directors
Jack Cowin
Non-Executive Chairman
23 August 2023
Don Meij
Managing Director/Group Chief Executive Officer
23 August 2023
172 // 2023 AN NUAL REPO RT D O MINO ’S PIZZA ENTERPRIS ES LIM ITED.
Independent Auditor’s Report
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LI MITED. // 173
Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. 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 RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt 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 02 July 2023, 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 Entity’s and Group’s financial position as at 02 July 2023 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 Company, 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. Independent Auditor’s Report
continued
174 // 2023 ANNUA L REPO RT D O MINO ’S PIZZ A ENTERPRISES LIM ITED.
KKeeyy AAuuddiitt MMaatttteerr HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr Acquisition accounting for Domino’s Malaysia, Singapore and Cambodia As disclosed in note 9, on 30 November 2022, the Group acquired 100% of the issued share capital of Dommal Food Services Sdn. Bhd ("Domino's Malaysia") and Domino's Pizza Singapore Pte. Ltd ("Domino's Singapore"). On 02 May 2023, the Group acquired 100% of the issued share capital of D. Pizza Co., Ltd ("Domino's Cambodia"). In undertaking the acquisition accounting and determining the fair value of the identifiable net assets, significant judgement is exercised in: • Estimating the contingent consideration which is based on future EBITDA and also the discount rate utilised. • Determining the fair value of the assets acquired and liabilities assumed. In conjunction with our internal valuation specialists, our procedures included: • Assessing the competency, qualifications and objectivity of management’s external valuation experts and performing a detailed review of their valuation report to understand the scope of their work and any limitations in the report. • Evaluating the purchase price consideration, including challenging management on the basis for the cash flows and discount rate used to determine the fair value of contingent consideration. • Challenging management as to whether information obtained during the measurement period reflected the facts and circumstances that existed at acquisition date. • Evaluating management’s determination of the fair value of assets acquired and liabilities assumed, including: o Understanding and challenging the methodologies adopted o Reconciling the cashflows used to determine the value of the intangible master franchise network asset to management’s acquisition bid model o Assessing the mathematical accuracy of significant calculations o Challenging key inputs such as discount rates and long-term growth rates. • Assessing the adequacy of the disclosures setting out the nature and basis of the business combination accounting and the assumptions applied by management in accounting for the acquisition in note 9. Accounting for corporate store optimisation including impairment of assets and related provisions. On 13 June 2023, the Group announced its intention to reduce the size of its corporate store network, through store closures and sales and exit the Danish market. Following this announcement, management has impaired assets including, plant and equipment, goodwill, other intangible assets, right of use assets, and inventory totalling $60.6m. In addition, expenses totalling $9.2m relating to onerous contracts, make good obligations and termination costs, have Our procedures included, but were not limited to: • Obtaining an understanding of management’s process for identifying assets impacted by the announcement and determining associated store closure costs. • Evaluating the completeness of store closure costs identified by management including the assets identified for impairment. • Obtaining and evaluating evidence to support estimated store recoverable values, including term sheets, correspondence with franchisees and sales multiple calculations. • Recalculating the carrying value of store assets, including an allocation of goodwill attributable to the store. Independent Auditor’s Report
continued
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PRISES LI MITED. // 175
been recorded (see note 6). An impairment loss and associated closure costs of $24.1m in respect of Denmark have been included in discontinued operations (see note 10). Management is required to exercise judgement in determining the recoverable value of non-current assets that have not been sold at year end and the expected costs of store closures including restructuring and termination costs, make good costs and minimum lease terms. • Assessing the reasonableness of make good provisions by reference to previous store closure costs. • Assessing the reasonableness of the remaining lease liabilities by comparing these to minimum lease payments outlined in lease agreements. • Assessing whether restructuring and termination costs were eligible for recognition in line with Australian Accounting Standards. Assessing the adequacy of management’s related disclosures in notes 6 and 10. Carrying Value of Goodwill and other Intangible Assets in the German and France/Belgium Cash Generating Units (CGUs). As discussed in note 13, as of 02 July 2023, the carrying value of the of the German CGU included goodwill of $88.0 million and indefinite life intangible assets of $190.2 million. The carrying value of the France/Belgium CGU included goodwill of $37.1 million and indefinite life intangible assets of $50.0 million. Management is required to exercise significant judgement in estimating future cash flows, forecast growth rates and discount rates, which are used to determine the recoverable amount of the CGUs. In conjunction with our internal valuation specialists, our procedures included, but were not limited to: • Understanding management’s process for determining the recoverable value of the CGUs. • 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 challenging the growth rates by comparing them to historical performance and publicly available information with respect to the countries of operation. • Testing the mathematical accuracy of the impairment models used to calculate recoverable amount. • Performing sensitivity analysis on the recoverable amount of the CGUs in relation to the assumed growth rates during the forecast period, terminal growth rates and discount rates. • We assessed the adequacy of the disclosures included in Note 13 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 02 July 2023 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. Independent Auditor’s Report
continued
176 // 2023 ANNUA L REP ORT D O M INO ’S PIZ ZA ENTERPRIS ES LIM ITED.
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. Responsibilities of the Directors for the Financial Report The directors of the Company 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 scepticism 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. Independent Auditor’s Report
continued
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 177
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. RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 156 to 172 of the Directors’ Report for the year ended 02 July 2023. In our opinion, the Remuneration Report of Domino’s Pizza Enterprises Limited, for the year ended 02 July 2023, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company 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, 23 August 2023 Auditor’s Independence Declaration
178 // 2023 AN NUAL REPO RT D O MINO ’S PIZZA ENTERPRIS ES LIM ITED.
Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. 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 23 August 2023 The Directors Domino’s Pizza Enterprises Limited Level 1, KSD1 485 Kingsford Smith Drive HAMILTON QLD 4007 Dear Directors AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo DDoommiinnoo’’ss PPiizzzzaa EEnntteerrpprriisseess LLiimmiitteedd 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 report of Domino’s Pizza Enterprises Limited for the year ended 02 July 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of: • The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and • Any applicable code of professional conduct in relation to the audit. Yours faithfully DELOITTE TOUCHE TOHMATSU MMaatttthheeww DDoonnaallddssoonn Partner Chartered Accountants 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
Jack Cowin
Non-Executive Chairman
23 August 2023
Don Meij
Managing Director/Group Chief Executive Officer
23 August 2023
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 179
FINANCIAL
REPORT2023
180 // 2023 ANNUA L REPO RT D O M INO ’S PIZ ZA ENTERPRISES LIMITED.
2023
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 181
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 the Financial Statements
Additional Securities Exchange Information
183
184
185
186
187
188
262
182 // 2023 ANNUA L REPO RT D O M INO ’S PIZ ZA ENTERPRISES LIMITED.
Consolidated Statement of Profit or Loss
For the year ended 02 July 2023
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
Closure costs associated with corporate stores and operations
Acquisition, integration and legal settlement costs
Other expenses
Profit before tax
Income tax expense
Profit from continuing operations
Discontinued operations
Loss from discontinued operations after tax
Profit for the period from 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)
Earnings per share
Basic (cents per share)
Diluted (cents per share)
NOTE
2023
$’000
2022 (i)
$’000
2
3
4
5
5
5
5
5
6
8
10
21
21
21
21
2,351,486
2,271,262
17,875
5,840
32,149
5,420
(1,044,608)
(987,730)
(415,297)
(382,098)
(31,569)
(33,965)
(150,923)
(130,430)
(7,817)
(28,210)
(222,193)
(107,289)
(39,741)
(39,421)
(69,759)
(11,475)
(5,551)
(18,797)
(222,570)
(101,785)
(30,019)
(34,329)
–
(8,803)
(106,261)
(100,155)
100,638
(31,603)
69,035
(26,439)
42,596
40,570
2,026
42,596
252,599
(77,587)
175,012
(8,280)
166,732
158,716
8,016
166,732
CENTS
CENTS
76.1
76.1
46.1
46.0
193.0
192.6
183.4
183.0
(i) The comparative has been restated to reflect the classification of the operations of the Denmark Market as a discontinued operation. Refer to note 10 for details.
The above Statement should be read in conjunction with the accompanying notes.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 183
Consolidated Statement of Other Comprehensive Income
For the year ended 02 July 2023
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
2023
$’000
42,596
2022
$’000
166,732
(11,221)
18,361
(5,702)
5,184
6,622
49,218
(364)
134
(230)
6,392
48,988
45,451
3,537
48,988
4,258
(28,725)
10,376
(4,844)
(18,935)
147,797
532
(185)
347
(18,588)
148,144
144,807
3,337
148,144
184 // 2023 ANNUAL REPO RT D O MINO ’S PIZZA ENTERPRIS ES LIM ITED.
Consolidated Statement of Financial Position
As at 02 July 2023
NOTE
2023
$’000
2022
$’000
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
7
14
24
17
8
14
12
24
29
11
8
13
13
12
12
15
2
12
23
25
16
8
23
2
12
25
16
8
18
18
18
159,891
176,208
36,642
43,120
43,370
52,640
78,179
590,050
108,934
1,742
324,658
498
551,644
638,911
297,077
365,934
76,877
163,591
20,892
30,861
1,234
45,760
72,063
411,278
119,869
1,709
273,471
–
485,707
450,352
306,845
382,493
2,289,398
2,879,448
2,020,446
2,431,724
378,992
3,518
141,408
–
14,503
31,444
24,241
594,106
978,591
12,416
619,937
18,327
16,759
118,795
1,764,825
2,358,931
520,517
430,476
(126,109)
216,150
520,517
303,976
3,134
122,304
32,035
140,003
21,559
17,571
640,582
612,066
15,775
646,714
511
8,870
85,249
1,369,185
2,009,767
421,957
264,212
(136,848)
294,593
421,957
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 185
1
8
6
/
/
2
0
2
3
A
N
N
U
A
L
R
E
P
O
R
T
D
O
M
I
N
O
’
S
P
I
Z
Z
A
E
N
T
E
R
P
R
I
S
E
S
L
I
M
I
T
E
D
.
Balance at 28 June 2021
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Share options trust
Transactions with non-controlling interest
Dividends provided for or paid
Employee share scheme
Non-controlling interest put option
Recognition of share-based payments
ISSUED
CAPITAL
$’000
259,500
–
–
–
–
–
–
4,712
–
–
HEDGING
RESERVE
$’000
(1,364)
–
9,790
9,790
–
–
–
–
–
–
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$’000
7,754
–
(26,386)
(26,386)
–
–
–
–
–
–
OTHER
RESERVE
$’000
(156,777)
–
347
347
(4,515)
–
–
–
38,080
(3,777)
286,024
158,716
–
158,716
–
–
(150,147)
–
–
–
Balance at 03 July 2022
264,212
8,426
(18,632)
(126,642)
294,593
RETAINED
EARNINGS
$’000
NON-
CONTROLLING
INTERESTS
$’000
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$’000
OTHER
RESERVE
$’000
RETAINED
EARNINGS
$’000
NON-
CONTROLLING
INTEREST
$’000
Balance at 03 July 2022
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Share options trust
Dividends provided for or paid
Contributions of equity, net of transaction costs
and tax
Share issue costs
Employee share scheme
Non-controlling interest put option
Recognition of share-based payments
ISSUED
CAPITAL
$’000
264,212
–
–
–
–
–
164,999
(1,821)
3,086
–
–
HEDGING
RESERVE
$’000
8,426
–
(11,739)
(11,739)
–
–
–
–
–
–
–
(18,632)
(126,642)
–
16,850
16,850
–
–
–
–
–
–
–
–
(230)
(230)
293
–
–
–
–
6,593
(1,028)
294,593
40,570
–
40,570
–
(119,013)
–
–
–
–
–
Balance at 02 July 2023
430,476
(3,313)
(1,782)
(121,014)
216,150
–
8,016
(2,339)
5,677
–
(699)
–
–
(4,978)
–
–
–
2,026
1,511
3,537
–
–
–
–
–
(3,537)
–
–
F
o
r
t
h
e
y
e
a
r
e
n
d
e
d
0
2
J
u
l
y
2
0
2
3
C
o
n
s
o
l
i
d
a
t
e
d
S
t
a
t
e
m
e
n
t
o
f
C
h
a
n
g
e
s
i
n
E
q
u
i
t
y
TOTAL
$’000
395,137
166,732
(18,588)
148,144
(4,515)
(699)
(150,147)
4,712
33,102
(3,777)
421,957
TOTAL
$’000
421,957
42,596
6,392
48,988
293
(119,013)
164,999
(1,821)
3,086
3,056
(1,028)
520,517
Consolidated Statement of Cash Flows
For the year ended 02 July 2023
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
7
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
Acquisition of non-controlling interest
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
Share issue costs
Receipts from subleases
Lease principal payments
Dividends paid
Net cash generated from (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
7
The above Statement should be read in conjunction with the accompany notes.
NOTE
2023
$’000
2022
$’000
2,569,180
2,509,130
(2,238,103)
(2,238,924)
12,624
(26,780)
(56,128)
260,793
25,574
(49,469)
(108,195)
21,207
(48,143)
(205,768)
(123,116)
(27)
10,152
(17,026)
(73,213)
190,119
37,487
(71,355)
(120,713)
35,541
(35,105)
(79,736)
–
601
(487,937)
(233,280)
167,105
768,172
(434,958)
(2,245)
(1,821)
74,944
(138,064)
(119,013)
314,120
86,976
76,877
(3,962)
159,891
1,286
875,307
(712,215)
(4,165)
–
63,317
(123,331)
(150,147)
(49,948)
(93,109)
174,689
(4,703)
76,877
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 187
Notes to the Financial Statements
BASIS OF PREPARATION
189
FINANCIAL MANAGEMENT
23 BORROWINGS
24
FINANCIAL ASSETS
25
FINANCIAL LIABILITIES
26
FINANCIAL RISK MANAGEMENT
GROUP STRUCTURE
27 SUBSIDIARIES
28 PARENT ENTITY INFORMATION
29
INVESTMENT IN JOINT VENTURE
UNRECOGNISED ITEMS
30 COMMITMENTS
31 CONTINGENT LIABILITIES
32 SUBSEQUENT EVENTS
OTHER INFORMATION
33 RETIREMENT BENEFIT PLANS
34 KEY MANAGEMENT PERSONNEL COMPENSATION
35 RELATED PARTY TRANSACTIONS
36 REMUNERATION OF AUDITORS
37 OTHER ITEMS
KEY NUMBERS
1
2
SEGMENT INFORMATION
REVENUE
3 OTHER GAINS AND LOSSES
4
5
6
7
8
9
FINANCE INCOME
EXPENSES
CLOSURE COSTS ASSOCIATED WITH
CORPORATE STORES AND OPERATIONS
CASH AND CASH EQUIVALENTS
TAX
ACQUISITION OF BUSINESSES
10 DISCONTINUED OPERATION
11
PROPERTY, PLANT AND EQUIPMENT
12
LEASES
13 GOODWILL AND OTHER INTANGIBLES
14
TRADE, OTHER RECEIVABLES AND OTHER ASSETS
15
TRADE AND OTHER PAYABLES
16
PROVISIONS
17
INVENTORY
CAPITAL
18
EQUITY
19 NON-CONTROLLING INTERESTS
20 DIVIDENDS
21
EARNINGS PER SHARE
22 SHARE-BASED PAYMENTS
191
191
193
195
195
195
197
197
199
203
208
209
211
214
219
220
221
222
223
223
225
226
227
228
231
231
232
234
236
248
249
250
251
252
252
252
254
255
255
257
257
259
259
188 // 2023 ANNUA L REPO RT D O M INO ’S PIZ ZA ENTERPRISES LIMITED.
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 Exchange 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 period ended 02 July 2023 comprised a 52-week period, where as the comparative
year ended 03 July 2022 comprised a 53-week period. The financial report was authorised for issue in accordance with a resolution of the directors
on 23 August 2023. 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 26) and
equity-settled share-based payments (refer to note 22). 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 03 July 2022 as listed in note 37; and
• does not early adopt Accounting Standards and Interpretations that have been issued or amended but are not yet effective.
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 $4.1 million at 02 July 2023 (03 July 2022: net current liability position $229.3 million).
As at 02 July 2023, the Group had unrestricted cash and cash equivalents of $159.9 million. The Group’s capital structure is sustainable with sufficient liquidity,
including undrawn committed facilities of $257.3 million. The Directors have concluded that there are reasonable grounds to believe that the going concern
basis is appropriate, and that assets are likely to be realised, and liabilities are likely to be discharged, at the amounts recognised in the financial statements
in the ordinary course of business.
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Group. A list of controlled entities (subsidiaries) at year-end is contained in note 27.
Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group using the acquisition method of accounting described in note 9. They are deconsolidated from the
date that control ceases.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
In preparing the consolidated financial statements all inter-company balances and transactions, income and expenses and profits and losses resulting from
intra-Group transactions have been eliminated.
FOREIGN CURRENCY
The functional currency of Domino’s Pizza Enterprises Limited is Australian Dollar (‘$’), the functional currencies of overseas subsidiaries are listed in note 27.
As at the reporting date, the assets and liabilities of overseas subsidiaries are translated into Australian Dollar 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
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 189
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 13
Note 13
Note 13
Note 31
KEY JUDGEMENTS AND ESTIMATES
Master Franchise Rights & Franchise Network Assets
Useful Lives of Other Intangible Assets
Recoverable Amount of Cash Generating Units
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.
19 0 // 2023 AN NUAL RE PORT D O MINO ’S PIZZ A ENTERPRIS ES LIM ITED.
continuedNotes to the Financial Statements Notes to the Financial Statements
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
• Asia
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.
Changes to the Group’s operating segments during the year, are as follows:
1. On 13 June 2023, the Group publicly announced the decision of its Board of Directors to exit the Danish market, by ceasing operations and closing
all stores. All stores in Denmark, were closed by 02 July 2023. At 02 July 2023, the operations of the Danish Market was classified as a discontinued
operation. The Danish Market was previously represented in the Europe operating segment. With the Danish operations being classified as a discontinued
operation, its results were no longer presented in the segment. Refer to note 10 for the financial performance and cashflows of the discontinued operation.
2. On 30 November 2022, the Group completed the acquisitions of Dommal Foods Services Sdn. Bhd (Domino’s Malaysia) and Domino’s Pizza Singapore
Pte. Ltd (Domino’s Singapore) and on 02 May 2023, the Group completed the acquisition of D. Pizza Co., Ltd (Domino’s Cambodia). The aggregate
financial results of Domino’s Malaysia, Domino’s Singapore and Domino’s Cambodia, have been reported in the “Asia” segment.
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 one customer.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 191
continued 1
SEGMENT INFORMATION (continued)
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
ANZ
$’000
800,654
115,018
(42,505)
72,513
EUROPE
$’000
735,709
68,050
(40,567)
27,483
YEAR ENDED 02 JULY 2023
ASIA
$’000
UNALLOCATED
$’000
TOTAL
$’000
815,123
111,433
(64,650)
46,783
–
(20,570)
(3,201)
(23,771)
2,351,486
273,931
(150,923)
123,008
(22,370)
100,638
YEAR ENDED 03 JULY 2022
ANZ
$’000
EUROPE (i)
$’000
ASIA
$’000
UNALLOCATED
$’000
TOTAL
$’000
782,469
149,950
(35,403)
114,547
686,157
126,811
(38,154)
88,657
802,636
140,395
(55,507)
84,888
–
(20,750)
(1,366)
(22,116)
2,271,262
396,406
(130,430)
265,976
(13,377)
252,599
(i) Excludes the operating results of the Danish market.
Revenue reported above represents revenue generated from external customers and franchisees. There were no inter-segment sales during the period (2022: 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.
192 // 2023 ANNUAL REPO RT D O MINO ’S PIZ ZA ENTERPRISES LI MITED.
continuedNotes to the Financial Statements 1
SEGMENT INFORMATION (continued)
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.
2023
Continuing operations
ASSETS
$’000
LIABILITIES
$’000
2022
ASSETS
$’000
LIABILITIES
$’000
Continuing operations
Australia/New Zealand
645,584
(1,006,352)
Australia/New Zealand
592,959
(848,620)
Europe
Asia
893,157
(377,786)
1,320,775
(971,491)
Europe
Asia
849,978
(531,582)
976,759
(626,562)
Total segment assets/(liabilities)
2,859,516
(2,355,629)
Total segment assets/(liabilities)
2,419,696
(2,006,764)
Unallocated
19,932
(3,302)
Unallocated
12,028
(3,003)
Consolidated assets/(liabilities)
2,879,448
(2,358,931)
Consolidated assets/(liabilities)
2,431,724
(2,009,767)
OTHER SEGMENT INFORMATION
The non-current assets by geographical location are detailed below.
Australia/New Zealand
Europe
Asia
Unallocated
DEPRECIATION AND
AMORTISATION
ADDITIONS TO
NON-CURRENT ASSETS
NON-CURRENT
ASSETS
2023
$’000
42,505
40,567
64,650
3,201
2022 (i)
$’000
35,403
38,154
55,507
1,366
150,923
130,430
2023
$’000
87,626
70,420
386,264
11,105
555,415
2022
$’000
58,441
76,594
196,443
12,658
344,136
2023
$’000
1,052,873
306,759
909,834
19,932
2022
$’000
898,413
453,664
656,341
12,028
2,289,398
2,020,446
(i) Excludes the operating results of the Danish market.
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 one performance obligation, being the franchise right.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 193
continuedNotes to the Financial Statements 2
REVENUE (continued)
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 franchise and rendering of services
Interest income
Total
Timing of revenue recognition
At a point in time
Over time
Total
Revenue type
Revenue from sale of goods
Revenue from franchise and rendering of services
Interest income
Total
Timing of revenue recognition
At a point in time
Over time
Total
(i) Excludes the operating results of the Danish market.
CONTRACT LIABILITIES
YEAR ENDED 02 JULY 2023
ANZ
$’000
EUROPE
$’000
ASIA
$’000
TOTAL
$’000
569,715
227,991
2,948
535,771
199,733
205
699,653
1,805,139
111,839
3,631
539,563
6,784
800,654
735,709
815,123
2,351,486
590,006
210,648
800,654
554,426
181,283
735,709
709,423
1,853,855
105,700
497,631
815,123
2,351,486
YEAR ENDED 03 JULY 2022
ANZ
$’000
EUROPE (i)
$’000
ASIA
$’000
TOTAL
$’000
558,409
221,621
2,439
782,469
579,246
203,223
782,469
490,878
195,013
266
690,498
1,739,785
110,111
2,027
526,745
4,732
686,157
802,636
2,271,262
506,947
179,210
686,157
700,126
102,510
1,786,319
484,943
802,636
2,271,262
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 over time on a straight-line basis which is determined
with reference to the franchisee’s right to use and access and benefit from the intellectual property.
194 // 2023 ANNUAL REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIM ITED.
continuedNotes to the Financial Statements 2
REVENUE (continued)
The Group has recognised the following deferred franchise fees:
Contract liabilities
Within one year
More than one year
Total
2023
$’000
3,518
12,416
15,934
2022
$’000
3,134
15,775
18,909
Contract liabilities at the beginning of the period was $18.9 million (2022: $19.2 million). The Group recognised $6.0 million (2022: $4.3 million) of revenue
related to contract liabilities. Management expects to recognise $3.5 million (2022: $3.1 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.
3
OTHER GAINS AND LOSSES
Net gain on disposal of property, plant & equipment, goodwill and other non-current assets
Net gain on disposal of leases
Other
Total other gains and losses
2023
$’000
17,464
159
252
17,875
2022
$’000
28,142
3,506
501
32,149
No other gains or losses have been recognised in respect of loans and receivables other than as disclosed in note 2, impairment losses recognised/reversed
in respect of trade and other receivables (see note 14) and accelerating the refranchising of corporate stores (see note 6).
4
FINANCE INCOME
Finance income
Total finance income
Finance income relates to interest income on investment in lease assets. Refer to note 12.
2023
$’000
5,840
5,840
2022
$’000
5,420
5,420
5
EXPENSES
RECOGNITION AND MEASUREMENT
EMPLOYEE BENEFITS
The Group’s accounting policy for liabilities associated with employee benefits is set out in note 16. The policy relating to share-based payments is set out
in note 22.
The majority of employees 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.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 195
continuedNotes to the Financial Statements 5
EXPENSES (continued)
DEPRECIATION AND AMORTISATION
Refer to notes 11, 12 and 13 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.
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
Accelerated amortisation (i)
Amortisation of other assets
NOTE
33
2023
$’000
397,053
17,138
1,176
(70)
2022
$’000
369,327
12,051
1,071
(351)
415,297
382,098
27,711
3,858
31,569
50,207
61,037
30,113
9,176
390
29,295
4,670
33,965
48,428
57,747
23,894
–
361
Depreciation and amortisation expense
150,923
130,430
Non-lease component occupancy expenses
Occupancy expenses
Interest on commercial bills and loans
Amortisation of borrowing costs
Interest expense on lease liabilities
Finance costs
7,817
7,817
16,672
1,463
10,075
28,210
5,551
5,551
8,332
1,505
8,960
18,797
(i) An assessment of the useful lives of intangible assets was undertaken. This resulted in the reduction of the estimated useful lives of a number of intangible assets and additional
amortisation costs being recognised during the year.
196 // 2023 ANNUAL REPO RT D O MINO ’S PIZ ZA ENTERPRISES LI MITED.
continuedNotes to the Financial Statements 6
CLOSURE COSTS ASSOCIATED WITH CORPORATE STORES AND OPERATIONS
On 13 June 2023, the Group announced initiatives to deliver material, near term, cost savings, improving efficiency and building a stronger foundation for
future growth.
The Group reduced the size of its corporate store network, closing underperforming stores, accelerating the refranchising of a number of corporate stores and
the closure of some operations. As a result, underperforming stores open for some time but not expected to reach sustainable levels of sales or profitability,
in the near term, were identified to be closed. Furthermore the Group will partner with experienced franchisees to franchise corporate stores. The costs recognised
in this initiative include the write down in the value of corporate property, plant and equipment, the write down of goodwill allocated to the corporate stores,
the impairment of right of use assets associated with the lease of the location of the store or operation, onerous contract obligations and employee terminations.
Write down of corporate stores property plant and equipment
Write down of goodwill associated with corporate stores
Write down of other intangible assets associated with corporate stores
Impairment of right of use assets associated with corporate stores
Onerous contract provisions and make good provisions
Employee termination costs
Inventory write downs
Corporate store closure costs
2023
$’000
23,160
28,001
1,129
8,268
7,728
437
1,036
69,759
2022
$’000
–
–
–
–
–
–
–
–
The write downs and associated closure costs associated with the closure of the Danish Market are recognised in discontinued operations as disclosed in note 10.
7
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 three 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:
Cash and cash equivalents
2023
$’000
159,891
159,891
2022
$’000
76,877
76,877
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LI MITED. // 197
continuedNotes to the Financial Statements 7
CASH AND CASH EQUIVALENTS (continued)
RECONCILIATION OF PROFIT FOR THE PERIOD TO NET CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) for the period from continuing operations
Profit/(loss) from discontinued operations
Profit on sale of non-current assets
Equity settled share-based payments
Depreciation and amortisation
Asset impairments, write downs and fair value adjustments
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
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 one year
Borrowings – repayable after one year
Net debt
Cash and cash equivalents
Gross debt – fixed interest rates
Gross debt – variable interest rates
Net debt
198 // 2023 ANNUAL REPO RT D O MINO ’S PIZ ZA ENTERPRISES LI MITED.
2023
$’000
69,035
(26,439)
(19,000)
(70)
154,641
68,464
593
1,463
5,403
254,090
(7,288)
(4,655)
(2,660)
51,089
14,854
(34,220)
(10,417)
260,793
2023
$’000
159,891
–
(983,090)
(823,199)
159,891
2022
$’000
175,012
(8,280)
(32,408)
(351)
133,632
–
86
1,505
(8,011)
261,185
(15,990)
(3,708)
(13,793)
(44,004)
1,128
(11,710)
17,011
190,119
2022
$’000
76,877
(32,035)
(615,823)
(570,981)
76,877
(328,004)
(236,239)
(655,086)
(411,619)
(823,199)
(570,981)
continuedNotes to the Financial Statements 7
CASH AND CASH EQUIVALENTS (continued)
Balances as at 28 June 2021
Cash flows
Finance lease additions
Foreign exchange adjustments
Balances as at 03 July 2022
Balances as at 03 July 2022
Cash flows
Lease liabilities additions
CASH
$’000
174,689
(93,109)
–
(4,703)
76,877
CASH
$’000
76,877
86,976
–
Foreign exchange adjustments
(3,962)
LEASE LIABILITIES
DUE WITHIN
1 YEAR
$’000
LEASE LIABILITIES
DUE AFTER
1 YEAR
$’000
BORROWINGS
DUE WITHIN
YEAR 1
$’000
BORROWINGS
DUE AFTER
1 YEAR
$’000
TOTAL
$’000
(109,433)
–
(17,945)
5,074
(122,304)
(651,492)
123,331
(148,757)
30,204
(646,714)
–
(508,485)
(1,094,721)
(32,035)
(131,057)
(132,870)
–
–
–
(166,702)
23,718
54,293
(32,035)
(615,824)
(1,340,000)
LEASE LIABILITIES
DUE WITHIN
1 YEAR
$’000
LEASES LIABILITIES
DUE AFTER
1 YEAR
$’000
BORROWINGS
DUE WITHIN
1 YEAR
$’000
BORROWINGS
DUE AFTER
1 YEAR
$’000
TOTAL
$’000
(122,304)
–
(18,619)
(485)
(646,714)
136,717
(107,373)
(2,567)
(619,937)
(32,035)
(615,824)
(1,340,000)
32,035
(365,249)
(109,521)
–
–
–
–
(125,992)
(2,017)
(9,031)
(983,090)
(1,584,544)
Balances as at 02 July 2023
159,891
(141,408)
8
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.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 199
continuedNotes to the Financial Statements 8
TAX (continued)
PILLAR TWO TOP-UP TAX
The Group is expected to be within the scope of Pillar Two top-up tax being implemented in Australia (as it will apply to entities with revenues exceeding
EURO750 million and the Group’s revenues exceed this threshold). The Group has applied the mandatory exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes.
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 $155,582 thousand (2022: $112,796 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.
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 change in tax rate in other jurisdictions
Total tax expense
Income tax expense/(benefit) is attributable to:
Profit from continuing operations
(Loss) from discontinued operations
RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX RATE
Profit before tax from continuing operations
Profit from discontinued operation before income tax expense
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
200 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
2023
$’000
30,883
(6,217)
24,666
(3,735)
(910)
20,021
31,603
(11,582)
20,021
2023
$’000
100,638
(38,021)
62,617
18,785
5,844
(171)
(6,154)
2,430
197
(910)
20,021
2022
$’000
62,479
3,857
66,336
8,367
(811)
73,892
77,587
(3,695)
73,892
2022
$’000
252,599
(11,975)
240,624
72,187
454
(201)
4,077
(2,832)
1,018
(811)
73,892
continuedNotes to the Financial Statements 8
TAX (continued)
The tax rate used for the 2023 and 2022 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
CURRENT TAX ASSETS AND LIABILITIES
Current tax assets
Income tax refund receivable
Current tax liabilities
Income tax payable
2023
$’000
5,184
134
293
5,611
2023
$’000
43,370
43,370
(24,241)
(24,241)
2022
$’000
(4,844)
(185)
(4,515)
(9,544)
2022
$’000
1,234
1,234
(17,571)
(17,571)
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 201
continuedNotes to the Financial Statements 8
TAX (continued)
DEFERRED TAX BALANCES
2023
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
2022
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
OPENING
BALANCE
$’000
ACQUISITION
$’000
CHARGED
TO P&L
$’000
CHARGED
TO EQUITY
$’000
EXCHANGE
DIFFERENCE
$’000
CLOSING
BALANCE
$’000
(1,412)
(95,137)
8,340
857
(4,007)
217
3,225
2,395
(3,189)
(37,631)
–
–
–
–
–
210
(85,522)
(40,610)
273
–
(85,249)
(40,610)
1,004
456
802
589
442
42
(74)
1,660
4,921
(276)
4,645
–
–
134
–
5,184
293
–
–
(120)
(3,717)
(2,652)
(134,964)
(177)
(28)
202
–
(16)
93
9,099
1,418
1,821
552
3,135
4,358
5,611
(2,698)
(118,298)
–
5,611
4
1
(2,694)
(118,297)
498
(118,795)
(118,297)
OPENING
BALANCE
$’000
ACQUISITIONS
$’000
CHARGED
TO P&L
$’000
CHARGED
TO EQUITY
$’000
EXCHANGE
DIFFERENCE
$’000
CLOSING
BALANCE
$’000
(2,806)
(83,256)
8,929
604
4,334
4,924
4,671
3,002
–
(10,872)
31
–
–
–
49
21
(59,598)
(10,771)
1,070
(3,357)
47
306
(3,515)
(192)
(1,478)
(528)
(7,647)
–
–
(185)
–
(4,844)
(4,515)
–
–
(9,544)
324
2,348
(482)
(53)
18
–
(17)
(100)
2,038
(3)
2,035
(1,412)
(95,137)
8,340
857
(4,007)
217
3,225
2,395
(85,522)
273
(85,249)
–
(85,249)
(85,249)
Tax losses
88
–
188
–
(59,510)
(10,771)
(7,459)
(9,544)
Deferred tax asset
Deferred tax liability
202 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements 9
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 one year from the acquisition date) about facts and circumstances
that existed at the acquisition date.
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 one year.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 203
continuedNotes to the Financial Statements 9
ACQUISITION OF BUSINESSES (continued)
CURRENT YEAR ACQUISITIONS
ACQUISITION OF DOMINO’S PIZZA MALAYSIA, SINGAPORE AND CAMBODIA
Dommal Food Services Sdn.Bhd (Domino’s Malaysia), Domino’s Pizza Singapore Pte. (Domino’s Singapore) and D. Pizza Co., Ltd (Domino’s Pizza Cambodia)
On 30 November 2022, the Group acquired through its 100% controlled subsidiary Domino’s Pizza Japan, Inc., 100% of the issued share capital of Dommal
Food Services Sdn. Bhd (“Domino’s Malaysia”) and Domino’s Pizza Singapore Pte. Ltd (“Domino’s Singapore”). On 02 May 2023, the Group acquired
through its 100% subsidiary Domino’s Pizza Japan, Inc., 100% of the issued share capital of D. Pizza Co., Ltd (“Domino’s Cambodia”). Domino’s Malaysia,
Domino’s Singapore and Domino’s Cambodia hold the franchise rights of Domino’s in Malaysia, Singapore and Cambodia and also operates corporate
stores. The acquisition is expected to expand the Group’s markets across Asia. The acquisition in these regions was funded through debt raising.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below.
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Current tax assets
Property, plant and equipment
Other intangible assets
Right-of-use assets
Total identifiable assets
Liabilities
Trade and other payables
Lease liabilities
Provisions
Deferred tax liabilities
Total identifiable liabilities
Total identifiable net assets at fair value
Consideration paid or payable
Contingent Consideration
Total Consideration
Less identifiable net assets at fair value
Goodwill
Net Cash outflow arising on acquisition
Consideration paid
Less Cash and cash equivalents
204 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
FAIR VALUE
$’000
19,484
3,752
6,899
4,251
1,877
42,719
172,256
28,809
280,047
(21,522)
(28,809)
(2,091)
(40,610)
(93,032)
187,015
228,711
26,932
255,643
(187,015)
68,628
225,252
(19,484)
205,768
continuedNotes to the Financial Statements 9
ACQUISITION OF BUSINESSES (continued)
Goodwill arose on acquisition because the cost of the combination included a control premium. In addition, the consideration paid for the combination
effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce.
These benefits are not recognised separately from goodwill because they do not meet the recognition criteria of identifiable intangible assets.
In determining the fair value of assets arising from the acquisition, judgements and estimates are required to be applied.
Acquisition related costs of $4.3 million have been included as an expense in the consolidated statement of profit and loss. The revenue and results from
continuing operations have been included in the Asia segment in note 1.
During the measurement period several fair value adjustments have been made the assets acquired and the liabilities assumed including the fair value
of the contingent consideration which is the result of additional information obtained during the period about facts and circumstances that existed at the
acquisition dates.
The initial accounting for the acquisition has only been provisionally determined at the end of the reporting period. At the date of the finalisation of the
consolidated financial statement, the necessary market valuations and other calculations had not been finalised (as well as associated tax impacts) and have
therefore only been provisionally determined based on the directors’ best estimate of the likely fair value.
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:
2023
Number of stores acquired
Fair value on acquisition
Inventories
Property, plant & equipment
Total identifiable net assets
Cash consideration
Less fair value of net identifiable assets
Goodwill
ANZ
69
ANZ
$’000
503
5,548
6,051
40,523
(6,051)
34,472
EUROPE
12
EUROPE
$’000
–
1,437
1,437
4,597
(1,437)
3,160
ASIA
15
ASIA
$’000
–
2,407
2,407
3,023
(2,407)
616
TOTAL
96
TOTAL
$’000
503
9,392
9,895
48,143
(9,895)
38,248
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 and do not meet the recognition criteria of identifiable intangible assets.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 205
continuedNotes to the Financial Statements 9
ACQUISITION OF BUSINESSES (continued)
PRIOR YEAR ACQUISITIONS
ACQUISITION OF DOMINO’S PIZZA TAIWAN
PizzaVest Company Limited (Domino’s Taiwan)
On 31 August 2021, the Group acquired through its 100% controlled subsidiary Taiwan Domino’s Pizza Co., Ltd, 100% of the issued share capital of PizzaVest
Company Limited (“PizzaVest”). PizzaVest holds the franchise rights of Domino’s in Taiwan and also operates corporate stores in Taiwan. The acquisition
is expected to expand the Group’s markets across Asia. The acquisition was funded through debt raising.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below.
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Property, plant and equipment
Other intangible assets
Right-of-use assets
Total identifiable assets
Liabilities
Trade and other payables
Current tax liabilities
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Total identifiable liabilities
Total identifiable net assets at fair value
Total consideration
Less identifiable net assets at fair value
Goodwill
Net cash outflow arising on acquisition
Total consideration – cash
Less Cash and cash equivalents
20 6 // 2023 ANNUAL REP ORT D O MINO ’S PIZZ A ENTERPRISES LIMI TED.
FAIR VALUE
$’000
6,188
7,035
2,101
661
1,867
54,589
3,509
75,950
12,799
1,074
10
3,627
308
10,771
28,589
47,361
85,630
(47,361)
38,269
85,630
(6,188)
79,442
continuedNotes to the Financial Statements 9
ACQUISITION OF BUSINESSES (continued)
During the prior period, the Group finalised its acquisition of PizzaVest, with no revisions to the provisional acquisition accounting.
Goodwill arose on acquisition because the cost of the combination included a control premium. In addition, the consideration paid for the combination effectively
included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of PizzaVest.
These benefits are not recognised separately from goodwill because they do not meet the recognition criteria of identifiable intangible assets.
In determining the fair value of assets arising from the acquisition of PizzaVest, judgements and estimates are required to be applied.
Acquisition related costs of $1.4 million were included as an expense in the consolidated statement of profit and loss in prior period. The revenue and results
from continuing operations have been included in the Asia segment in note 1.
In addition to the above, the Group paid $294 thousand relating to deferred consideration for a minor business acquisition which occurred in a prior period.
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:
2022
Number of stores acquired
Fair value on acquisition
Inventories
Property, plant & equipment
Total identifiable net assets
Cash consideration
Less fair value of net identifiable assets
Goodwill
ANZ
37
ANZ
$’000
262
4,043
4,305
22,985
(4,305)
18,680
EUROPE
23
EUROPE
$’000
–
2,912
2,912
11,531
(2,912)
8,619
ASIA
1
JAPAN
$’000
–
255
255
255
(255)
–
TOTAL
61
TOTAL
$’000
262
7,210
7,472
34,771
(7,472)
27,299
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 207
continuedNotes to the Financial Statements 10 DISCONTINUED OPERATION
EXITING THE DANISH MARKET
On 13 June 2023, the Group announced the exit of the Danish market. By 02 July 2023 all stores were closed and all operations ceased; therefore the
operations of the Danish market has been classified as a discontinued operation. The Danish market was previously included in the Europe operating segment.
With the Danish operations being classified as a discontinued operation, its results were no longer presented in the segment note.
FINANCIAL PERFORMANCE AND CASH FLOW INFORMATION
The financial performance and cash flow information for the year end 02 July 2023 are presented below.
Revenues
Expenses (i)
Finance costs
Depreciation and amortisation expense
Loss before income tax
Impairment loss recognised and associated closure cost provisions
Income tax benefit/(expense)
Loss from discontinued operation
Net Cash Flows
Net cash outflow from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Net decrease in cash generated by the Danish Market
(i)
Includes $2.1 million of marketing costs related to the brand re-launch.
Earnings per share
Basic, profit/(loss) for the year from discontinued operations
Diluted, profit/(loss) for the year from discontinued operations
2023
$’000
15,280
2022
$’000
18,006
(25,405)
(26,688)
(113)
(3,718)
(13,956)
(24,065)
11,582
(26,439)
(12,024)
(3,452)
(1,609)
(17,085)
2023
CENTS
(30.0)
(30.0)
(92)
(3,201)
(11,975)
–
3,695
(8,280)
(12,259)
(3,642)
(1,416)
(17,317)
2022
CENTS
(9.6)
(9.5)
As a result of the stores closing and operations ceasing, an impairment cost of $17.2 million was recognised, pertaining to the write down of non-current assets.
This was recognised in discontinued operations in the consolidated statement of profit or loss.
208 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements 11 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.
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.
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.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 209
continuedNotes to the Financial Statements 11 PROPERTY, PLANT AND EQUIPMENT (continued)
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.
PLANT &
EQUIPMENT
AT COST
$’000
FREEHOLD
LAND AND
BUILDINGS
$’000
TOTAL
$’000
512,875
(188,217)
324,658
273,471
108,195
9,392
42,719
(25,282)
(33,303)
(51,956)
1,422
19,380
(754)
18,626
–
–
–
19,801
–
–
(754)
(421)
18,626
324,658
–
–
–
–
–
–
–
–
–
–
–
447,153
(173,682)
273,471
274,130
120,713
7,210
1,867
(68,258)
(49,930)
(12,261)
273,471
Year ended 02 July 2023
Cost or fair value
Accumulated depreciation
Net carrying amount
Movement
Opening net book amount
Additions
Acquisitions of Domino’s Pizza stores and other businesses
Acquisition of subsidiary – refer to note 9
Disposals and write-offs
Impairment loss
Depreciation charge
Other including foreign exchange movements
Net carrying amount at the end of the year
Year ended 03 July 2022
Cost or fair value
Accumulated depreciation
Net carrying amount
Movement
Opening net book amount
Additions
Acquisitions of Domino’s Pizza stores and other businesses
Acquisition of subsidiary – refer to note 9
Disposals and write-offs
Depreciation charge
Other including foreign exchange movements
Net carrying amount at the end of the year
493,495
(187,463)
306,032
273,471
108,195
9,392
22,918
(25,282)
(33,303)
(51,202)
1,843
306,032
447,153
(173,682)
273,471
274,130
120,713
7,210
1,867
(68,258)
(49,930)
(12,261)
273,471
There was no depreciation during the period that was capitalised as part of the cost of other assets.
210 // 2023 ANNUA L REPO RT D O M INO ’S PIZ ZA ENTERPRISES LIMITED.
continuedNotes to the Financial Statements 12
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 1 and 21 years, while operating equipment generally have lease terms between 1 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 commitment 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 11 which outlines the Group’s accounting policy in regard to impairment assessment.
Set out below are the carrying amounts of the right-of-use assets recognised and movements during the year:
As at 03 July 2022
Acquisition of subsidiary – refer to note 9
Net additions (i)
Impairment loss
Depreciation expense
Other including foreign exchange movement
As at 02 July 2023
As at 28 June 2021
Acquisition of subsidiary – refer to note 9
Net additions (i)
Depreciation expense
Other including foreign exchange movement
As at 03 July 2022
PROPERTIES
$’000
EQUIPMENT
$’000
TOTAL
$’000
282,485
28,809
32,353
(12,320)
(56,944)
(656)
273,727
317,830
3,509
28,191
(49,302)
(17,743)
282,485
24,360
306,845
–
5,346
–
(5,712)
(644)
23,350
27,081
–
8,914
(9,846)
(1,789)
24,360
28,809
37,699
(12,320)
(62,656)
(1,300)
297,077
344,911
3,509
37,105
(59,148)
(19,532)
306,845
(i) 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.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 211
continuedNotes to the Financial Statements 12
LEASES (continued)
Set out below are the carrying amounts of lease liabilities and the movements during the period:
2023
$’000
As at 03 July 2022
(769,018)
As at 28 June 2021
Acquisition of subsidiary – refer to note 9
(28,809)
Acquisition of subsidiary – refer to note 9
Additions
Accretion of interest
Payments
Other including foreign exchange movement
(97,183)
(10,075)
146,792
(3,052)
Additions
Accretion of interest
Payments
Other including foreign exchange movement
As at 02 July 2023
(761,345)
As at 03 July 2022
Current
Non-current
(141,408)
Current
(619,937)
Non-current
Total lease liabilities
(761,345)
Total lease liabilities
The maturity analysis of lease liabilities is disclosed in note 26.
The amounts recognised in the profit or 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 30.
The average effective interest rate contracted is approximately 1.33% (2022: 1.18%) per annum.
The Group has not recognised any variable payments in its finance lease arrangements.
2022
$’000
(760,925)
(3,627)
(163,075)
(9,036)
132,367
35,278
(769,018)
(122,304)
(646,714)
(769,018)
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.
GROUP AS A LESSOR
The Group has a portfolio of long-term (greater than one 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.
212 // 2023 ANNUA L REPO RT D O MINO ’S PIZZ A ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements 12
LEASES (continued)
Set out below are the carrying amounts of investment in lease assets and the movements during the period:
As at 03 July 2022
Net additions
Accretion of interest
Receipts
2023
$’000
454,556
As at 28 June 2021
59,156
5,840
Net additions
Accretion of interest
(80,784)
Receipts
Other including foreign exchange movement
As at 02 July 2023
Current
Non-current
5,345
444,113
78,179
Other including foreign exchange movement
Total as at 03 July 2022
Current
365,934
Non-current
Total investment in lease assets
444,113
Total investment in lease assets
Future minimum rentals receivable under non-cancellable operating leases as at the 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
EXTENSION AND TERMINATION OPTIONS
2023
$’000
84,386
77,856
70,780
63,577
54,694
116,580
467,873
(23,760)
444,113
78,179
365,934
444,113
2022
$’000
407,797
125,646
5,420
(68,737)
(15,570)
454,556
72,063
382,493
454,556
2022
$’000
76,327
75,687
69,670
62,569
55,426
136,275
475,954
(21,398)
454,556
72,063
382,493
454,556
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.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 213
continuedNotes to the Financial Statements 13 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 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.
214 // 2023 ANN UA L REPO RT D O M INO ’S PIZ ZA ENTERPRIS ES LIM ITED.
continuedNotes to the Financial Statements
13 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 (2023: $42.0m, 2022: $43.1m).
In addition, the same treatment has been applied to the MFA and associated franchise agreements recognised on the acquisition of Domino’s Pizza Japan
(2023: $36.2m, 2022: $37.7m), Domino’s Pizza Taiwan (2023: $53.5m, 2022: $54.1m) and Domino’s Pizza Malaysia, Singapore and Cambodia (2023:
$168.9 million).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.
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.
GOODWILL
$’000
Year ended 02 July 2023
Cost
Year ended 03 July 2022
551,644
Cost
Accumulated amortisation and impairment
–
Accumulated amortisation and impairment
Net carrying amount
Movement
551,644
Net carrying amount
Movement
GOODWILL
$’000
485,707
–
485,707
Net carrying amount at the beginning of the year
485,707
Net carrying amount at the beginning of the year
456,091
Acquisitions of Domino’s Pizza stores and other businesses
38,248
Acquisitions of Domino’s Pizza stores and other businesses
27,299
Acquisitions through business combinations – refer to note 9
68,628
Acquisitions through business combinations – refer to note 9
38,269
Disposals and write offs
Impairment charge – refer to note 6
(12,507)
(28,001)
Disposals and write offs
Other including foreign exchange movement
Other including foreign exchange movement
(431)
Net carrying amount at the end of the year
(10,736)
(25,216)
485,707
Net carrying amount at the end of the year
551,644
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PRISES LIMITED. // 215
continuedNotes to the Financial Statements 13 GOODWILL AND OTHER INTANGIBLES (continued)
Year ended 02 July 2023
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
267,639
67,891
247,394
251,658
834,582
Accumulated amortisation and impairment
(159,550)
(36,121)
–
–
(195,671)
Net carrying amount
108,089
31,770
247,394
251,658
638,911
Movement
Net carrying amount at the beginning of the year
102,429
28,233
80,962
238,728
450,352
Additions
Acquisitions through business combinations – refer to note 9
Disposals and write offs
Impairment charge – refer to note 6
Amortisation for the year
37,767
11,702
360
(395)
(2,455)
–
(467)
–
(31,645)
(7,994)
–
171,896
–
(3,267)
–
–
–
–
–
–
49,469
172,256
(862)
(5,722)
(39,639)
Other including foreign exchange movement
2,028
296
(2,197)
12,930
13,057
Net carrying amount at the end of the year
108,089
31,770
247,394
251,658
638,911
Year ended 03 July 2022
Cost
229,493
60,025
80,962
238,728
609,208
Accumulated amortisation and impairment
(127,064)
(31,792)
–
–
(158,856)
Net carrying amount
102,429
28,233
80,962
238,728
450,352
Movement
Net carrying amount at the beginning of the year
Additions
Acquisitions through business combinations – refer to note 9
Remeasurement
Disposals and write offs
Amortisation for the year
Other including foreign exchange movement
Net carrying amount at the end of the year
86,935
37,139
231
–
(432)
(20,287)
(1,157)
102,429
15,650
18,303
–
–
–
(3,906)
(1,814)
28,233
87,627
189,832
380,044
–
–
–
54,358
(2,190)
–
–
–
–
–
55,442
54,589
(2,190)
(432)
(24,193)
(4,475)
(5,462)
(12,908)
80,962
238,728
450,352
Included within the carrying of other indefinite life intangible assets are assets recognised in relation to master franchise rights.
216 // 2023 ANNUAL REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIM ITED.
continuedNotes to the Financial Statements 13 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 (NL)
France & Belgium (FR) & (BE)
- Germany (DE)
• Asia market, which comprises:
-
-
Japan (JP)
Taiwan (TW)
- Malaysia, Singapore and Cambodia (MSK)
The carrying amount of goodwill and other indefinite life intangible assets is allocated to the following CGUs:
ANZ
FR & BE
NL
DE
JP
TW
MSK
Total
GOODWILL
GOODWILL IMPAIRMENT (i)
2023
$’000
92,479
37,083
15,016
88,035
213,822
37,648
67,561
2022
$’000
80,209
53,739
10,683
80,274
222,730
38,072
–
2023
$’000
(11,650)
(13,533)
(541)
(1,926)
(351)
–
–
551,644
485,707
(28,001)
2022
$’000
–
–
–
–
–
–
–
–
(i) The impairment of goodwill relates to the closure of corporate stores or where the corporate store’s carrying value exceeds the recoverable amount. Refer to note 6.
ANZ
FR & BE
NL
DE
JP
TW
MSK
Total
INDEFINITE LIFE
INTANGIBLE ASSETS
INDEFINITE LIFE
INTANGIBLE ASSETS
IMPAIRMENT
2023
$’000
226
49,964
–
190,184
36,207
53,477
168,994
499,052
2022
$’000
226
46,681
3,219
177,816
37,669
54,079
–
2023
$’000
–
–
(3,267)
–
–
–
–
319,690
(3,267)
2022
$’000
–
–
–
–
–
–
–
–
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 217
continuedNotes to the Financial Statements 13 GOODWILL AND OTHER INTANGIBLES (continued)
ESTIMATES AND JUDGEMENTS IN DETERMINING THE RECOVERABLE AMOUNT OF THE CASH GENERATING UNITS
Key assumptions used in determining the recoverable amount of assets include future cash flows, long-term growth rates and discount rates.
In assessing VIU, estimated cash flows are based on the Group’s most recent Board approved business plan covering three year period. In forecasting the future
cash flows changes in the macro-economic environment have been considered; including but not limited to the invasion of Ukraine by Russia, inflation and
wage increases which have impacted on the Group’s trading performance.
Long-term growth rates are based on past experience, expectations of external market operating conditions, and other assumptions which take account
of the specific features of each business unit.
The recoverable amount has been determined using a VIU discounted cash flow model. In assessing VIU, the estimated future pre-tax cash flows are
discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and risk specific to the
asset. Pre-tax discount rates used vary depending on country of operation.
As the Taiwan and MSK CGUs were recently acquired, the carrying amount approximates the recoverable amount. Any reasonably possible change in key
assumptions, including the realisation of future forecast growth, may lead to a future impairment of the related goodwill.
The rates used in determining the recoverable amount are set out below:
ANZ
FR & BE
NL
DE
JP
TW
MSK
Discount rate (post-tax)
2023
2022
Nominal terminal growth rates
2023
2022
8.3%
10.4%
2.5%
2.5%
11.7%
9.8%
2.0%
1.7%
10.6%
9.0%
2.0%
1.6%
8.8%
8.9%
2.0%
1.2%
7.8%
8.5%
1.0%
0.2%
11.9%
NA
2.0%
NA
14.4%
NA
2.0%
NA
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 judgements and estimates used in assessing impairment are best estimates based on current and forecast market conditions and are subject to change
in the event of shifting economic and operational conditions. Actual cash flows may therefore differ from forecasts.
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.
218 // 2023 ANNUAL REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIM ITED.
continuedNotes to the Financial Statements 13 GOODWILL AND OTHER INTANGIBLES (continued)
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.
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 2023 financial year (2022: nil), relating to impairment testing at a CGU level.
14
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 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.
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.
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.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 219
continuedNotes to the Financial Statements 14
TRADE, OTHER RECEIVABLES AND OTHER ASSETS (continued)
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
2023
$’000
186,010
(12,132)
2,330
176,208
2023
$’000
24,474
1,317
26,849
52,640
2023
$’000
7,489
8,016
(3,047)
(737)
411
12,132
2022
$’000
170,956
(7,489)
124
163,591
2022
$’000
23,091
2,408
20,261
45,760
2022
$’000
5,756
6,330
(317)
(4,009)
(271)
7,489
Included in the Group’s trade receivables balance are debtors with a carrying amount of $5,023 thousand (2022: $4,188 thousand), which are past due
at the reporting date.
15
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
2023
$’000
2022
$’000
260,203
7,686
111,103
378,992
195,934
5,813
102,228
303,975
220 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements 16 PROVISIONS
RECOGNITION AND MEASUREMENT
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
The Group is required to restore the leased premises of certain stores and buildings to their original condition when the premises are vacated. However, as leases
are traditionally renewed or the make good obligation is waived, the Group recognises a provision for the leased premises where make good costs will result
in a probable outflow of funds. Each reporting period a review of leased sites is conducted to determine the present value of the estimated expenditure required
to return the leased premise to its original condition.
LEGAL PROVISION
Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events it is probable that an outflow
of resources will be required to settle the obligation and the amount can be reliably estimated.
The provision for legal claims relates to claims that have been brought against the Group by a number of former Pizza Sprint franchisees, refer to Note 31 for
further details of this matter.
OTHER PROVISIONS
Other provisions relate to provision raised in relation to onerous contracts as a result of the Group’s closure of Corporate stores. Refer to note 6.
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.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 221
continuedNotes to the Financial Statements 16 PROVISIONS (continued)
Employee benefits
Defined benefit plan
Make good
Legal Provisions
Other Provisions
Total provisions
Current
Non-current
Total provisions
Movements in each class of provision during the financial year are set out below:
Balance at 28 June 2021
Provision recognised on acquisition of subsidiary
Recognised in profit or loss
Reductions arising from payments
Movements resulting from remeasurement
Balance at 03 July 2022
Provision recognised on acquisition of subsidiary
Recognised in profit or loss
Reductions arising from payments
Movements resulting from remeasurement
Balance at 02 July 2023
NOTE
33
2023
$’000
21,088
8,063
11,700
–
7,352
48,203
31,444
16,759
48,203
MAKE GOOD
$’000
LEGAL
PROVISIONS
$’000
1,646
1,811
78
346
–
(160)
1,910
2,091
5,811
–
1,888
11,700
–
–
(105)
(102)
1,604
–
–
(1,627)
23
–
2022
$’000
19,634
7,281
1,910
1,604
–
30,429
21,559
8,870
30,429
OTHER
$’000
–
–
–
–
–
–
–
7,147
–
205
7,352
The make good provision has increased in the year to take account of planned store closures (see note 6) and the acquisition of Domino’s Pizza Malaysia,
Singapore and Cambodia (see note 9) which considers the commercial lease arrangements. In addition, and in line with the Group’s accounting policy,
the Group has remeasured the make good provision following a review of all leased sites taking account of events in the year including store closures.
17
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
222 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
2023
$’000
13,590
29,530
43,120
2022
$’000
12,335
18,526
30,861
continuedNotes to the Financial Statements 17
INVENTORY (continued)
There are no inventories (2022: $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 corporate store inventory to net realisable value of $1,036 thousand, which was
recognised in Closure costs associated with corporate stores and operations. Refer to note 6.
CAPITAL
Capital provides information about the capital management practices of the Group.
18
EQUITY
ISSUED CAPITAL
89,090,402 fully paid ordinary shares (03 July 2022: 86,553,914)
2023
$’000
2022
$’000
430,476
264,212
Changes to the Corporations Law abolished the authorised capital and par value concept in relation to share capital from 01 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:
Issue of shares under executive share option plan
Contributions of equity
Share issue transaction costs
Balance at end of financial year
2023
2022
NUMBER
OF SHARES
‘000
86,554
44
2,492
–
89,090
SHARE
CAPITAL
$’000
264,212
3,086
164,999
(1,821)
430,476
NUMBER
OF SHARES
‘000
SHARE
CAPITAL
$’000
86,523
259,500
31
–
–
4,712
–
–
86,554
264,212
Fully paid ordinary shares carry one 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 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 one ordinary share.
Refer to note 22.
PLACEMENT AND SHARE PURCHASE PLAN
On 02 December 2022, the company completed its $150 million share placement plan with institutional investors. The placement offer price was determined
via a bookbuild process and priced at $66.38 per new share, the closing price on Wednesday, 30 November 2022. The placement was fully subscribed.
On 30 December 2022, the Company completed its $15 million share purchase plan with eligible shareholders with a registered address in Australia and
New Zealand. The issue price was $65.54, being a 2% discount to the last closing price of the Company’s share on the 22 December 2022. The placement
was fully subscribed.
Funds raised under the Placement and Share Purchase Plan were used to fund the option exercise price for the acquisition of all the shares held by Domino’s
Pizza Group plc in the German joint venture any surplus was applied towards debt repayment.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LI MITED. // 223
continuedNotes to the Financial Statements 18
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 44,378 options were exercised (2022: 30,549). A total of $3,086,628 was received as consideration for 44,378 fully paid ordinary shares
of Domino’s Pizza Enterprises Limited on exercise of the options in the current financial year (2022: $4,711,872).
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. On 18 August 2009, the Board resolved to suspend the DRP until further notice.
On 23 August 2023, the Board resolved to reactive the DRP and amend the terms of the DRP. Eligible Shareholders with registered addresses in Australia and
New Zealand can elect to participate in the DRP and reinvest all or part of their cash dividends in additional shares in the capital of the Company.
The DRP will apply to the FY23 final dividend for Eligible Shareholders that elect to participate by 30 August 2023. Previous elections under the former DRP
will not count.
The Company has entered into an underwriting agreement with Morgan Stanley to fully underwrite the FY23 final dividend. Therefore, the FY23 dividend will
be fully subscribed to shares.
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.
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.
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 22 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 19 to
the financial statements.
224 // 2023 A NN UA L REP ORT D O MINO ’S PIZZ A ENTERPRIS ES LIMIT ED.
continuedNotes to the Financial Statements 18
EQUITY (continued)
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
RETAINED EARNINGS
RETAINED EARNINGS
Balance at beginning of year
Net profit attributable to members of the Company
Payment of dividends
Balance at the end of the year
19 NON-CONTROLLING INTERESTS
RECOGNITION AND MEASUREMENT
2023
$’000
(1,782)
(3,313)
(121,014)
(126,109)
(18,632)
16,850
(1,782)
8,426
(11,221)
(5,702)
5,184
(3,313)
2022
$’000
(18,632)
8,426
(126,642)
(136,848)
7,754
(26,386)
(18,632)
(1,364)
4,258
10,376
(4,844)
8,426
(126,642)
(156,777)
(1,028)
6,593
293
(230)
(3,777)
38,080
(4,515)
347
(121,014)
(126,642)
NOTE
20
2023
$’000
294,593
40,570
(119,013)
216,150
2022
$’000
286,024
158,716
(150,147)
294,593
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.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 225
continuedNotes to the Financial Statements 19 NON-CONTROLLING INTERESTS (continued)
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.
The non-controlling interest related to a 33.3% interest in the Group’s operations in Germany.
On 10 November 2022, the Group received an option exercise notice from Domino’s Pizza Group plc (“DPG”) which required the purchase of all of DPG’s
shares in its joint venture with the Group in Germany. On 05 June 2023 the Group completed the payment to DPG, with a cash payment of EURO 79.2 million
($AUD 123.1 million), with a further EURO 10.8 million ($AUD 17.2 million) relating to payment of shareholder loans provided by DPG.
The Group had operational control of the joint venture since inception in December 2015, and there has been no change to operational management arising
from the acquisition.
Balance at beginning of 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
20 DIVIDENDS
Recognised amounts
Fully paid ordinary shares
Interim dividend for half year ended (i)
Dividend for full year ended (ii)
Unrecognised amounts
Fully paid ordinary shares
Dividend for full year ended (iii)
NOTE
2023
$’000
–
–
2,026
1,511
(3,537)
–
2022
$’000
–
(699)
8,016
(2,339)
(4,978)
–
2023
2022
CENTS
PER SHARE
TOTAL
$’000
CENTS
PER SHARE
TOTAL
$’000
67.4
68.1
135.5
60,047
58,966
119,013
88.4
85.1
173.5
76,514
73,633
150,147
42.6
37,953
68.1
58,943
(i) The interim dividend for half year ended was franked at 60% (2022: 70%)
(ii) The dividend for full year ended was franked at 70% (2022: 70%)
(iii) The declared dividend was unfranked (2022: 70%)
On 23 August 2023, the Company declared an unfranked final dividend for FY23 of 42.6 cents per share.
The dividend will have a record date of 29 August 2023 and a payment date of 28 September 2023. The Company reactivated its Dividend Reinvestment
Plan for eligible shareholders residing in Australia or New Zealand for the FY23 final dividend which will be fully underwritten by Morgan Stanley.
226 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements 20 DIVIDENDS (continued)
FRANKED DIVIDENDS
The franked portions of the final dividends determined after 02 July 2023 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 02 July 2023.
Franking credits available for subsequent financial years based on a tax rate of 30%
2023
$’000
1,993
2022
$’000
222
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 for income tax and dividends after the end of the year.
21
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.
Earnings per share from continuing operations attributable to shareholders
Earnings per share from operations attributable to shareholders
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);
2023
CENTS
76.1
46.1
2022
CENTS
193.0
183.4
• 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.
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 per share from operations attributable to shareholders
EARNINGS USED IN CALCULATING EARNINGS PER SHARE
Profit from continuing operations
(Loss) from discontinued operation
Profit attributable to the ordinary equity shareholders of the Company used in calculating basic and
diluted earnings per share
2023
CENTS
76.1
46.0
2023
$’000
67,009
(26,439)
40,570
2022
CENTS
192.6
183.0
2022
$’000
166,996
(8,280)
158,716
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 227
continuedNotes to the Financial Statements 21
EARNINGS PER SHARE (continued)
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
2023
NO.’000
87,996
110
88,106
2022
NO.’000
86,548
165
86,713
22
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 one share plan and one share and option plan available for employees and 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.
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 one 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 2023 and 2022 financial years under the incentive plans:
228 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements (32)
(33)
(34)
(35)
(36)
(37)
(38)
(39)
(40)
(41)
(42)
(43)
(44)
(45)
(46)
(47)
(48)
TOTAL
2022
22
SHARE-BASED PAYMENTS (continued)
2023
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
25 May 19
31 Aug 22
26 Nov 19
1 Sep 23
26 Nov 19
26 Nov 23
26 Nov 19
1 Sep 23
20 Aug 19
20 Aug 29
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 Nov 21
31 Aug 25
1 Oct 21
31 Oct 31
33,250
297,000
145,878
265,345
2,378
3,038
156,937
590,496
1,420
2,966
95,975
12,056
19 May 22
31 Aug 25
454,780
–
–
–
–
–
–
–
–
–
–
–
–
–
(33,250)
–
–
(7,970)
–
(505)
–
–
–
–
–
(2,293)
–
23 Aug 22
23 Aug 32
21 Nov 22
21 Nov 32
20 Dec 22
30 Jun 25
20 Dec 22
30 Jun 25
–
–
–
–
13,779
(360)
782
54,265
111,071
–
–
–
–
(297,000)
(145,878)
–
–
–
(219,440)
37,935
–
–
–
2,378
2,533
156,937
(30,184)
560,312
–
–
–
(61)
1,420
2,966
95,975
9,702
(33,843)
420,937
–
–
–
13,419
782
54,265
(3,839)
107,232
–
–
–
37,935
2,378
2,533
–
–
1,420
2,966
–
9,702
–
13,419
782
–
–
2,061,519
179,897
(44,378)
(730,245)
1,466,793
71,135
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
OPTION
SERIES
ISSUE &
GRANT DATE
EXPIRY DATE
(29)
(31)
(32)
(33)
(34)
(35)
(36)
(37)
(38)
(39)
(40)
(41)
(42)
(43)
(44)
19 Apr 18
31 Aug 21
23 Jan 19
31 Aug 22
25 May 19
31 Aug 22
26 Nov 19
1 Sep 23
26 Nov 19
26 Nov 23
26 Nov 19
1 Sep 23
20 Aug 19
20 Aug 29
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 Nov 21
31 Aug 25
1 Oct 21
31 Oct 31
19 May 22
31 May 25
10,325
220,000
462,500
297,000
183,225
288,779
6,250
3,640
156,937
614,305
1,420
2,966
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
95,975
12,056
454,780
(10,325)
–
–
(220,000)
–
–
–
–
(15,750)
(413,500)
33,250
33,250
–
–
–
(3,872)
(602)
–
–
–
–
–
–
–
–
297,000
(37,347)
145,878
(23,434)
265,345
–
–
–
2,378
3,038
156,937
(23,809)
590,496
–
–
–
–
–
1,420
2,966
95,975
12,056
454,780
–
–
–
2,378
3,038
–
–
–
2,966
–
12,056
–
TOTAL
2,247,347
562,811
(30,549)
(718,090)
2,061,519
53,688
The weighted average exercise price at the date of the exercise of options during the 2023 financial year was $69.55. (2022: $154.24).
The weighted average remaining contractual life of options outstanding at the end of the 2023 financial year was 1.6 years (2022: 2.14 years)
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 229
continuedNotes to the Financial Statements 22
SHARE-BASED PAYMENTS (continued)
FAIR VALUE OF SHARE OPTIONS GRANTED IN THE YEAR
The weighted average fair value of the options granted during the 2023 year is $59.65 (2022: $20.54). 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.
Series 45,46,47 and 48 are zero exercise price options, therefore the options share price at date of grant approximates the options fair value.
The model inputs for rights granted during 2022 financial year include:
PERFORMANCE CONDITIONS
Grant date share price
Exercise price
Expected volatility
Option life years
Dividend yield
Risk-free interest rate
SERIES 42
SERIES 44
$142.30
$127.09
35%
3.32
1.74%
0.89%
$69.58
$69.58
40%
2.29
2.90%
2.26%
Series 43 are zero exercise price options, therefore the options share price at date of grant approximates the options fair value.
SHARE OPTIONS EXERCISED DURING THE YEAR
The following share options granted under the ESOP were exercised during the year:
2023 OPTION SERIES
(32) Issued 25 May 2019
(35) Issued 26 November 2019
(35) Issued 26 November 2019
(37) Issued 18 August 2020
(37) Issued 18 August 2020
(43) Issued 01 October 2021
(43) Issued 01 October 2021
(43) Issued 01 October 2021
(43) Issued 01 October 2021
(43) Issued 01 October 2021
(43) Issued 01 October 2021
(45) Issued 23 August 2022
2022 OPTION SERIES
(36) Issued 20 August 2019
(29) Issued 19 April 2018
(36) Issued 20 August 2019
(37) Issued 18 August 2020
(32) Issued 25 May 2019
(36) Issued 20 August 2019
NUMBER
EXERCISED
33,250
3,985
3,985
245
260
58
35
586
115
1,259
240
360
NUMBER
EXERCISED
1,888
10,325
700
602
15,750
1,284
EXERCISE DATE
25 August 2022
24 November 2022
20 September 2022
30 August 2022
27 September 2022
14 December 2022
05 October 2022
31 August 2022
20 September 2022
23 November 2022
27 February 2023
23 November 2022
EXERCISE DATE
25 August 2021
26 August 2021
31 August 2021
31 August 2021
06 September 2021
14 September 2021
SHARE PRICE AT
EXERCISE DATE ($)
$72.15
$64.71
$58.63
$64.99
$53.88
$66.45
$53.67
$62.58
$58.63
$64.40
$53.29
$64.40
SHARE PRICE AT
EXERCISE DATE ($)
$145.65
$148.50
$156.74
$156.74
$157.95
$164.98
230 // 2023 ANNUAL REP ORT D O M INO ’S PIZ ZA ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements 22
SHARE-BASED PAYMENTS (continued)
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.
23 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 entities (ii)
Total from other entities
Uncommitted
Bank loans
Total uncommitted borrowings
Committed
Bank loans (i)
Total committed borrowings
Current
Non-current
Total borrowings
2023
$’000
–
–
–
–
978,591
978,591
–
978,591
978,591
2022
$’000
16,851
16,851
15,184
15,184
612,066
612,066
32,035
612,066
644,101
SUMMARY OF BORROWING ARRANGEMENTS:
(i) The Group’s borrowings are unsecured.
(ii) Related to loans from Domino’s Pizza Group plc relating to the German joint venture. This was repaid in the current year.
The unused facilities available on the Group’s bank overdraft are $5,756 thousand (2022: $5,717 thousand). For further information in respect of the Group’s
borrowings, refer to note 26.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 231
continuedNotes to the Financial Statements 24
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.
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.
232 // 2023 ANNUA L REPO RT D O M INO ’S PIZZA ENTERPRIS ES LI MITED.
continuedNotes to the Financial Statements 24
FINANCIAL ASSETS (continued)
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.
NON-CASH FINANCING AND INVESTING ACTIVITIES
Included in the movement of other financial assets are non-cash transactions of $36.5 million (2022: $74.0 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 14). 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
Interest rate swaps
Other
Long-term store rental security deposits
Total non-current financial assets
Current
Non-current
Total financial assets
IMPAIRMENT
2023
$’000
2022
$’000
31,708
4,934
36,642
77,937
(525)
912
761
29,849
108,934
36,642
108,934
145,576
10,793
10,099
20,892
89,919
(490)
1,319
654
28,467
119,869
20,892
119,869
140,761
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 was
6.4% (2022: 6.1%) in Australia and New Zealand, the average interest charged in France is 6.0% (2022: 6.0%), in the Netherlands is 7.0% (2022: 5.0%),
in Germany is 5.0% (2022: 5.0%) and the average interest charged in Japan is 5.0% (2022: 5.0%).
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LI MITED. // 233
continuedNotes to the Financial Statements 24
FINANCIAL ASSETS (continued)
The Group applies the ‘general approach’ to measuring expected credit losses which uses a lifetime expected loss allowance if there has been no significant
change in credit risk for franchisee loans where there has been a significant increase in credit risk. Otherwise it uses the 12-month expected credit loss.
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.
2023
$’000
109,645
(525)
109,120
2023
$’000
109,120
109,120
2023
$’000
490
–
–
35
525
2022
$’000
100,712
(490)
100,222
2022
$’000
100,222
100,222
2022
$’000
62
862
(426)
(8)
490
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
Effect of foreign currency
Balance at the end of the year
25
FINANCIAL LIABILITIES
RECOGNITION AND MEASUREMENT
FINANCIAL LIABILITY AND EQUITY INSTRUMENTS
CLASSIFICATION AS DEBT AND EQUITY
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.
234 // 2023 ANNUA L REPO RT D O M INO ’S PIZZA ENTERPRIS ES LI MITED.
continuedNotes to the Financial Statements 25
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 one 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 was associated with Domino’s Pizza Germany (DPG) and was 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 was 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 were not observable the liability was considered Level 3
in the fair value hierarchy.
FINANCIAL LIABILITIES
Current
Interest rate swaps
Security deposits
Put/call minority interest liability (i)
Other
Total current financial liabilities
2023
$’000
943
13,243
–
317
2022
$’000
220
12,428
127,355
–
14,503
140,003
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LI MITED. // 235
continuedNotes to the Financial Statements 25
FINANCIAL LIABILITIES (continued)
FINANCIAL LIABILITIES
Non-current
Contingent consideration (ii)
Other
Total non-current financial liabilities
Current
Non-current
Total financial liabilities
2023
$’000
17,336
991
18,327
14,503
18,327
32,830
2022
$’000
–
511
511
140,003
511
140,514
(i) Put/call option liability was in respect of the minority interest in Domino’s Germany, this was settled in the current year.
(ii) Contingent consideration has arisen upon the acquisition of Domino’s Pizza Malaysia, Singapore and Cambodia, refer to note 9. Under the sale and purchase agreements,
additional consideration is payable to the previous owners, which is contingent on the achievement of an adjusted multiple of average EBITDA for the calendar years 2023
and 2024 or 2024 and 2025. Movements in the liability relate to the unwinding of the discount and changes to the estimated contingent consideration payable, which is
highly sensitive to changes in forecasted EBITDA. Whilst management’s medium and long-term EBITDA expectations for the acquired business have not changed, the earnings
growth profile has been updated.
FAIR VALUE OF DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
As described in note 26, 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 26.
26
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.
236 // 2023 ANNUAL REP ORT D O M INO ’S PIZ ZA ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
GEARING RATIO
The gearing ratio at the end of the reporting period was as follows:
Debt (i)
Cash and cash equivalent
Net debt
Equity (ii)
Net debt to equity ratio
2023
$’000
983,090
(159,891)
823,199
520,517
158.2%
2022
$’000
647,858
(76,877)
570,981
421,957
135.3%
(i) Debt is defined as long-term and short-term borrowings, excluding capitalised borrowing costs, as detailed in note 23.
(ii) 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
Trade and other receivables
Amortised cost
Loans receivable
Other financial assets
Deposits
Investment in lease assets
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Interest rate swaps
Derivative financial instrument
Forward exchange contracts
Derivative financial instrument
14
24
24
24
12
24
24
FINANCIAL LIABILITIES
CLASSIFICATION
NOTE
Trade and other payables
Other financial liabilities
Bank loans
Loans from other entities
Lease liabilities
Put option liability
Contingent consideration
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
FVOCI
FVPL
Interest rates swaps
Derivative financial instrument
(i)
Interest rates represent the weighted average effective interest rate.
15
25
23
23
12
25
25
25
2023
2022
INTEREST
RATE % (i)
$’000
INTEREST
RATE % (i)
$’000
–
176,208
–
163,591
5.98
109,120
6.18
100,222
–
–
761
29,849
–
–
2,468
28,467
1.30
444,113
1.26
454,556
–
–
912
4,934
–
–
1,319
10,099
2023
2022
INTEREST
RATE % (i)
–
–
$’000
378,992
14,551
2.08
983,090
–
–
1.30
761,345
–
–
–
–
17,336
943
INTEREST
RATE % (i)
–
–
1.30
2.70
1.18
–
–
–
$’000
303,976
12,939
627,250
16,851
769,018
127,355
–
220
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 237
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
FINANCIAL RISK MANAGEMENT
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.
FINANCING FACILITIES
Unsecured bank overdraft, reviewed annually and payable at call:
Amount used
Amount unused
Total
Committed commercial bill facilities:
Amount used
Amount unused
Total
Uncommitted facilities, at call:
Amount used
Amount unused
Total
Commercial bill facilities:
Floating rate borrowings
Fixed rate borrowings
Total
2023
$’000
–
5,756
5,756
983,090
257,287
1,240,377
–
23,836
23,836
655,086
328,004
983,090
2022
$’000
–
5,717
5,717
632,674
230,312
862,986
15,184
35,859
51,043
411,619
236,239
647,858
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.
238 // 2023 ANNUAL REP ORT D O M INO ’S PIZ ZA ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
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.
02 JULY 2023
Financial assets
Trade and other receivables
Interest rate swap
Loans receivable
Cash and cash equivalents
Other financial assets
Investment in lease assets
Foreign exchange contracts
Deposits
Financial liabilities
Trade and other payables
Derivative instruments in designated hedge accounting relationships
Bank loans
Lease liabilities
Contingent consideration
Other financial liabilities
03 JULY 2022
Financial assets
Trade and other receivables
Interest rate swap
Loans receivable
Cash and cash equivalents
Other financial assets
Investment in lease assets
Deposits
Forward exchange contracts
Financial liabilities
Trade and other payables
Derivative instruments in designated hedge accounting relationships
Bank loans
Loans from other entities
Lease liability
Put option liability
Other financial liabilities
LESS THAN
1 YEAR
$’000
1–5 YEARS
$’000
MORE THAN
5 YEARS
$’000
176,208
–
31,708
159,891
–
84,386
4,934
–
912
77,412
–
761
–
–
–
–
–
266,906
116,581
–
–
29,849
(378,992)
(943)
–
–
–
(983,090)
–
–
–
–
–
(146,530)
(438,163)
(196,716)
–
(317)
(23,324)
(14,234)
–
–
LESS THAN
1 YEAR
$’000
1–5 YEARS
$’000
MORE THAN
5 YEARS
$’000
163,591
–
10,793
76,877
–
72,063
–
10,099
(303,976)
(220)
(15,184)
(16,851)
–
1,319
89,429
–
2,468
250,699
28,467
–
–
–
(612,066)
–
–
–
–
–
–
131,794
–
–
–
–
–
–
(122,304)
(424,452)
(222,262)
(127,355)
–
–
(12,939)
–
–
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LI MITED. // 239
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
The following table details the Group’s liquidity analysis for its 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.
2023
Net Settled
Interest rate swaps
Gross Settled
Forward foreign exchange contracts – Inflow
Forward foreign exchange contracts – Outflow
2022
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
–
(32)
(911)
912
13,670
(13,076)
594
27,836
(26,533)
1,303
78,312
(75,019)
3,293
–
–
–
LESS THAN
1 MONTH
$’000
1–3 MONTHS
$’000
3 MONTHS TO
1 YEAR
$’000
1–5 YEARS
$’000
–
(220)
–
1,319
10,172
(9,033)
1,139
23,739
(21,245)
2,494
86,142
(79,957)
6,185
–
–
–
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, Europe, Taiwan, Malaysia, Singapore and Cambodia, which exposes the Group’s investments to movements in the
AUD/NZD, AUD/JPY, AUD/EUR, AUD/TWD, AUD/SGD, AUD/MYR and AUD/USD exchange rates. The Group mitigates and manages the effect of its
translational currency exposure by borrowing in NZ Dollar, Japanese Yen, Euro and Taiwanese Dollar.
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 swaps to mitigate rising interest rates and foreign exchange fluctuations
• Debt to manage currency risk
• Forward foreign exchange contracts to hedge the exchange rate risk of purchases
240 // 2023 A NN UA L REP ORT D O MINO ’S PIZZ A ENTERPRIS ES LIMIT ED.
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
EXPOSURE
The Group’s exposure, before hedging arrangements, to the NZ Dollar, Euro, Japanese Yen, Taiwanese Dollar, Malaysian Ringgit, Singaporean Dollar and
US Dollar, at the balance sheet date were as follows:
New Zealand Dollar
Euro
Japanese Yen
Taiwan Dollar
Malaysian Ringgit
Singapore Dollar
United States Dollar
ASSETS
LIABILITIES
2023
$’000
24,380
100,909
166,012
11,352
24,676
3,885
67
2022
$’000
20,418
75,774
129,059
18,237
–
–
–
2023
$’000
(33,461)
(63,904)
2022
$’000
(15,784)
(457,774)
(523,198)
(279,698)
(9,645)
(20,187)
(8,258)
(2,861)
(102,680)
–
–
–
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 five-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 2023
+ 10%
– 10%
Actual 2022
+ 10%
– 10%
EURO
0.61
0.67
0.55
0.65
0.72
0.59
JPY
95.92
105.51
86.33
92.2
101.42
82.98
NZD
1.09
1.20
0.98
1.10
1.21
0.99
TWD
20.63
22.69
18.57
20.40
22.44
18.36
SGD
3.10
3.41
2.79
–
–
–
MYR
0.90
0.99
0.81
–
–
–
USD
0.66
0.73
0.60
–
–
–
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, Euro, Malaysian Ringgit, Singapore Dollar
and United States Dollar 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 three 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, Euro, Malaysian
Ringgit, Singapore Dollar and United States Dollar with all other variables held constant.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LI MITED. // 241
continuedNotes to the Financial Statements 26
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 in exchange rates 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 in exchange rates with all other variables held constant
TOTAL IMPACT
2023
$’000
2022
$’000
–
–
–
–
29,975
(38,846)
16,960
(20,729)
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.
NATURE OF INTEREST RATE RISK
INTEREST RATE RISK MANAGEMENT
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 one 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
242 // 2023 A NN UA L REP ORT D O MINO ’S PIZZ A ENTERPRIS ES LIMIT ED.
IMPACT ON PROFIT
BEFORE TAX
2023
$’000
(5,834)
5,051
2022
$’000
(3,630)
474
continuedNotes to the Financial Statements 26
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 one 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.
The following table presents the Group’s assets and liabilities measured and recognised at fair value at the reporting date.
02 JULY 2023
Recurring fair value measurements
Financial assets
Foreign exchange contracts
Interest rate swaps
Total financial assets
Financial liabilities
Contingent consideration payable
Interest rate swaps
Total financial liabilities
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
–
–
–
–
–
–
4,934
912
5,846
–
943
943
–
–
–
17,336
–
17,336
4,934
912
5,846
17,336
943
18,279
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 24 3
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
03 JULY 2022
Recurring fair value measurements
Financial assets
Interest rate swaps
Foreign exchange contracts
Total financial assets
Financial liabilities
Put option over non controlling interest
Interest rate swaps
Total financial liabilities
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
–
–
–
–
–
–
1,319
10,099
11,418
–
220
220
–
–
–
127,355
–
127,355
1,319
10,099
11,418
127,355
220
127,575
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 contingent consideration for acquisition for
Domino’s Malaysia, Singapore and Cambodia. 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 $127.4 million and closing balance is $nil, due to payment made during the current period. 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.
Specific valuation techniques used to value level 3 financial instruments include:
PUT OPTION OVER NON-CONTROLLING INTEREST
The valuation technique used was the unlevered price/earnings multiple which requires future earnings to be estimated. The significant unobservable inputs
include adjusted unlevered price/earnings and the put option was exercisable on or after 01 January 2021, and was exercised on 10 November 2022.
The earnings and margins were 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.
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.
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.
24 4 // 2023 ANNUA L REPO RT D O MINO ’S PIZ ZA ENTERPRISES LIM ITED.
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
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 adjusts 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
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 02 July 2023, the Group have interest rate swap agreements in place with a notional amount of ¥12 billion, whereby the Group receives a variable rate
of interest of TIBOR and pays interest at a rate equal to 0.24% on the notional amount, with an expiration date of 24 August 2023. The swap is being used
to hedge the exposure to changes in the fair value of its fixed rate secured loans.
During the year the Group has executed an additional interest rate swap agreement which commenced on 09 December 2022 for the notional amount
of ¥11 billion whereby the Group receives a variable rate of interest of TIBOR +0% and pay interest at a rate equal to 0.526% on the notional amount.
In prior year, the Group has executed additional interest rate swap agreements which commenced on 24 August 2023 for the notional amount of ¥10 billion
whereby the Group receives a variable rate of interest of TIBOR + 0% and pays interest at a rate equal to 0.17% on the notional amount.
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.
The impact of the hedging instruments on the statement of financial position as at 02 July 2023 is, as follows:
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 24 5
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
Interest Rate Swap
Notional Amount (i)
Notional Amount (ii)
Notional Amount (iii)
Change in intrinsic value of outstanding hedging instrument since 03 July 2022 (AUD)
Change in value of hedged item used to determine hedge effectiveness (AUD)
(i)
Interest rate swap has an expiration date of 24 August 2023
(ii)
Interest rate swap has an expiration date of 24 August 2028
(iii) Interest rate swap has an expiration date of 25 November 2027
2023
2022
AUD
$’000
JPY
¥’000
AUD
$’000
JPY
¥’000
125,104
12,000,000
130,152
12,000,000
104,254
10,000,000
108,460
10,000,000
114,679
11,000,000
(64)
(30)
–
–
–
756
(1,099)
–
–
–
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 02 July 2023 is borrowings of $296,551 thousand, which has been designated as hedge of the net investments in the Group’s
European subsidiaries and $44,110 thousand, which has been designated as a hedge of the net investments in the Group’s Taiwanese 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 and Taiwanese Dollar 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 03 July 2022 (AUD)
Change in value of hedged item used to determine hedge effectiveness (AUD)
Notional amount (TWD)
Carrying amount (AUD)
Change in value of hedged item used to determine hedge effectiveness (AUD)
246 // 2023 A NN UA L REP ORT D O MINO ’S PIZZ A ENTERPRIS ES LIMIT ED.
2023
$’000
2022
$’000
180,867
296,551
(10,724)
10,724
910,000
44,111
(497)
92,667
141,953
3,750
(3,750)
910,000
44,608
509
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
HEDGING RESERVES
The Group’s hedging reserves are disclosed in note 18.
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 has been assessed as high based on information on counterparty and historical counter party default.
The carrying value of the Group’s trade, other receivables and loans are denominated in Australian Dollars, NZ Dollars, Japanese Yen, Euro, Taiwanese Dollar,
Malaysian Ringgit, Singaporean Dollar and the United States Dollar.
EXPOSURE
The Group’s maximum credit exposure to current receivables, finance advances and loans are shown below:
ANZ
Europe
Japan
Taiwan
Malaysia
Singapore
Cambodia
Total
2023
$’000
112,914
58,016
106,062
3,510
2,361
772
8
2022
$’000
109,006
53,740
93,102
6,332
–
–
–
283,643
262,180
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 31. There are no significant concentrations of credit risk within the Group.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 247
continuedNotes to the Financial Statements 26
FINANCIAL RISK MANAGEMENT (continued)
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 24 and 25 represent the derivative financial assets and liabilities of the Group, that are subject to the above arrangements and
are presented on a gross basis.
GROUP STRUCTURE
Group structure explains aspects of the Group structure and how changes have affected the financial position and performance of the Group.
248 // 2023 A NN UA L REP ORT D O MINO ’S PIZZ A ENTERPRIS ES LIMIT ED.
continuedNotes to the Financial Statements 27
SUBSIDIARIES
Details of the Company’s subsidiaries at 02 July 2023 are as follows:
NAME OF ENTITY
Domino’s Development Fund Pty Ltd (i)
Hot Cell Pty Ltd (i)
Silvio’s Dial-a-Pizza Pty Ltd (i)
Impressu Print Group Pty Ltd (i) (ii)
Catering Service & Supply Pty Ltd (i)
Domino’s Pizza Enterprises Ltd Employee Share Trust
Construction, Supply & Service Pty Ltd (i)
Ride Sports ANZ Pty Ltd (i)
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.
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 GmbH
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
PizzaVest Co., Ltd
Dommal Food Services Sdn Bhd
Domino’s Singapore Pte Ltd
D.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
Belgium
UK
UK
UK
Denmark
Germany
Germany
Germany
France
France
France
France
France
France
France
France
France
France
France
Taiwan
Taiwan
Malaysia
Singapore
Cambodia
PROPORTION OF
OWNERSHIP AND
VOTING POWER HELD
FUNCTIONAL
CURRENCY
2023
%
2022
%
AUD
AUD
AUD
AUD
AUD
AUD
AUD
AUD
NZD
NZD
JPY
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
TWD
MYR
SGD
USD
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
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
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
–
–
–
(i) 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.
(ii) Formally known as IPG Marketing Solutions Pty Ltd
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 249
continuedNotes to the Financial Statements 28 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
Cashflow hedge reserve
Total equity
FINANCIAL PERFORMANCE
Profit for the year
Other comprehensive income
Total comprehensive income
TAX CONSOLIDATED GROUP
2023
$’000
2022
$’000
178,869
1,022,769
157,950
870,945
1,201,638
1,028,895
195,293
726,233
921,526
430,476
(69,014)
(81,918)
568
280,112
13,068
(2,904)
10,164
149,671
656,526
806,197
264,212
36,932
(81,279)
2,833
222,698
129,857
4,315
134,172
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 01 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 27.
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 31 for further information regarding the contingent
liabilities of the parent entity.
250 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements 29
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. The joint venture terminated in December 2020. On 30 March 2015, the Group acquired 50% equity of a joint venture
called Triumphant Pizza Pty Ltd/Hot Cell Partnership. The joint venture was terminated 04 October 2022.
On 04 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 03 February 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 three corporate stores previously owned by Domino’s and two stores owned by the franchisee were
transferred to the legal entity.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 251
continuedNotes to the Financial Statements 29
INVESTMENT IN JOINT VENTURE (continued)
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.
30 COMMITMENTS
The Group has various lease contracts that have not yet commenced as at 02 July 2023. The future lease payments for these non-cancellable lease contracts
are $351 thousands within one year, $1,289 thousands within five years and $685 thousands thereafter.
CAPITAL EXPENDITURE COMMITMENTS
Plant and equipment
Total
31
CONTINGENT LIABILITIES
RECOGNITION AND MEASUREMENT
2023
$’000
3,269
3,269
2022
$’000
7,851
7,851
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
2023
$’000
8,172
8,172
2022
$’000
8,848
8,848
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 $3,560 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 07 July 2014, the Court at first instance handed down its decision in the main claim,
as well as in five 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 five 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.
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 €236 million. The referring appeal was heard on 05 January 2022. On 18 May 2022,
the Court of Appeal issued a decision making no findings on the allegations and appointing an independent expert whose mission is to provide a report to
252 // 2023 A NN UA L REP ORT D O MINO ’S PIZZ A ENTERPRIS ES LIMIT ED.
continuedNotes to the Financial Statements 31
CONTINGENT LIABILITIES (continued)
inform the Court on the allegations. A first meeting with the expert took place on 12 July 2022 and a second on 12 May 2023. The expert is currently working
on the report, with no known due date for the report.
In the two local claims appealed to the Cour de Cassation, judgements were handed down on 07 July 2020 and 30 September 2020 which found errors
of law and cancelled the Court of Appeal decisions. SRP initiated the referring appeals of these two local cases in April 2022 before the Court of Appeal
of Paris and filed its briefs in June 2022. DPF filed its briefs by mid-August 2022 and the hearings were held on 14 September 2022. On 23 November 2022,
the Court of Appeal appointed an independent expert whose mission is to provide a report to inform the Court on the allegations. Two meetings took place
on 13 February 2023 and 20 July 2023 with the expert. There is no known due date for the reports.
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 two 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 was heard by the Commercial Court of Versailles on 09 December 2022. On 03 February 2023, the Court issued a decision
ordering DPF to disclose documents and appointing an independent expert whose mission is to provide a report to inform the Court on the allegations.
A first meeting took place on 19 June 2023 with the expert. Her report is due on 22 March 2024.
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 02 July 2023.
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 has been heard on 15 September 2021 and the Appeal court handed
down its decision on 05 January 2022. Fra-Ma Pizz, Pizza Center France and Domino’s Pizza France were ordered to pay a €500k fine to the French Ministry
for the Economy and Finance, €60k to six former Sprint franchisees and €20k in procedural costs. On 10 January 2022, Fra-Ma Pizz, Pizza Center France
and Domino’s Pizza France filed an appeal to the Cour de Cassation (French Supreme Court). On 24 June 2022, the Ministry filed a motion to dismiss Fra-Ma
Pizz, Pizza Center France and Domino’s Pizza France application alleging that the decision of the Appeal court had not been executed. The motion was
rejected on 12 January 2023, meaning that the procedure on the merits has resumed; the date on which the decision will be handed down is not known yet.
Five decisions in the Franchisees’ Proceedings were handed down on 03 December 2019 and the remaining four 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 one hand, and separately by some of the Relevant Pizza Sprint Franchisees, on the other, with the Paris
Court of Appeal. The appeals were heard on 23 November 2022.
On 08 February 2023, the Paris Court of Appeal issued decisions ordering the DPF Companies to pay a total amount of approximately €2.1 million
to certain Relevant Pizza Sprint Franchisees, which has reduced the legal provision to nil and the remaining amount recognised in the profit and loss statement.
The DPF Companies filed an appeal to the Cour de Cassation (French Supreme Court).
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 253
continuedNotes to the Financial Statements 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 its 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.
The Company rejects the allegations; it has defended the action vigorously and denies having any liability. Further, the Company does not believe it has a present
obligation in respect of the class action. A defence denying the allegations was filed and an application to have the statement of claim (or parts thereof) struck
out was heard on 09 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 amended their pleadings which were filed in August and
September 2021. The parties exchanged lay evidence between February and May 2022. Two separate mediations occurred in June and October 2022
respectively, without resolution of the proceeding.
The trial of Gall’s claim was held before Justice Murphy in Melbourne over 12 days in November 2022. Judgment is currently reserved and is not expected
to be delivered before late 2023 (calendar year).
The statement of claim does not quantify any loss by Gall or the alleged group. The expert evidence at trial concerned the quantum of Gall’s claim and no other
group members. As a result, 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 by group members in the proceeding. The total alleged group member loss will be dealt with
by the Court at a later hearing if Gall is successful at trial and on any final appeal.
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 02 July 2023 and unless specific provisions have
been made are of the opinion that no material contingent liability for such claims of litigation exist.
32
SUBSEQUENT EVENTS
OTHER EVENTS
On 23 August 2023 the directors declared a final dividend for the financial year ended 02 July 2023 as set out in note 20.
Other than the above, there has been no further matters or circumstances 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.
254 // 2023 ANNUAL REP ORT D O MINO ’S PIZZ A ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements OTHER INFORMATION
33 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 two 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
The Group operates an unfunded retirement benefit plans where a lump-sum amount is paid out to eligible full-time employees of Domino’s Pizza Japan and
Domino’s Pizza Taiwan with more than three 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 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 were carried out at 02 July 2023
by Mr. K. Taniguchi, Certified Pension Actuary.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 255
continuedNotes to the Financial Statements 33 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 loss/(gain) recognised in the period
Components of defined benefit costs recognised in other comprehensive income
Total
2023
0.53%
1.57%
666
4.8 yrs
6.4 yrs
2023
$’000
1,138
38
1,176
364
364
1,540
Of the expense for the year, an amount of $1.2 million has been included in profit or loss as administration expenses. (2022: $1.0 million).
Movements in the present value of the defined benefit obligation in the current year were as follows:
Opening defined benefit obligation
Acquisition of subsidiary
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
2023
$’000
7,281
–
1,138
38
364
(565)
(193)
8,063
The Group expects to make a contribution of $1.3 million (2022: $1.4 million) to the defined benefit plans during the next financial year.
2022
0.68%
1.95%
743
4.9 yrs
7.15 yrs
2022
$’000
1,062
9
1,071
(532)
(532)
539
2022
$’000
7,759
146
1,062
9
(532)
(461)
(702)
7,281
256 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements 34 KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Other long-term employee benefits
Equity settled share-based payments
Total
2023
$
2022
$
5,828,893
5,926,134
229,125
107,011
247,269
(100,467)
(537,525)
419,759
5,627,504
6,492,695
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 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. No remuneration recommendation was sought from or provided by the
remuneration consultant.
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.
35 RELATED PARTY TRANSACTIONS
EQUITY INTEREST IN SUBSIDIARIES
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 27 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 34 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 one 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 22 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 $55,255 was paid
or payable to Mr Michael Cowin during the year ended 02 July 2023.
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL OF DOMINO’S PIZZA ENTERPRISES LIMITED
Comgroup Supplies Pty Ltd, Comgroup NZ Limited T/A Franklin Foods, Markwell Pacific Marketing Pty Ltd, PMFresh Pty Ltd and Shore Mariner Ltd are entities
associated with Mr Jack Cowin, supplies food products to the Group on commercial arm’s length terms. The entities were selected as the preferred suppliers
after competitive tender processes in which Mr Cowin had no involvement.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRI SES LIMIT ED . // 257
continuedNotes to the Financial Statements 35 RELATED PARTY TRANSACTIONS (continued)
During the year the Group made purchases and had outstanding balances as at 02 July 2023 as follows:.
ENTITY
ComGroup Supplies Pty Ltd and ComGroup NZ Limited (T/A Franklin
Foods)
Markwell Pacific Marketing Pty Ltd
PMFresh Pty Ltd (i)
Shore Mariner Ltd
PURCHASES
(EXCLUDING
GST)
2023
PURCHASES
(EXCLUDING
GST)
2022
OUTSTANDING
BALANCE
2023
OUTSTANDING
BALANCE
2022
$27,051,267
$22,813,184
$7,320,806
$4,343,934
–
–
$501,716
$1,356,936
–
–
–
–
$237,860
$795,995
$55,034
$37,807
(i) PM Fresh Pty Ltd ceased to be a related party on 01 April 2022 but was a supplier to DPE for the full financial year. The amounts in the table represent the purchases up to
and including 31 March 2022.
In addition, the Group received sponsorship contributions for the Company’s annual franchising rally to the value of $50,000 (2022: $55,000) from ComGroup
Supplies Pty Ltd (excluding GST). There were no contributions in current period from PMFresh Pty Ltd (2022:$132,231) or Markwell Pacific Marketing Pty Ltd
(2022:$500). The Group did not recognise any bad or doubtful debts associated with the above purchases and sponsorship contributions.
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 01 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 27 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 02 July 2023 is $6.5 million and interest is charged based on commercial rates and terms.
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.
258 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements 36 REMUNERATION OF AUDITORS
The auditor of Domino’s Pizza Enterprises Limited is Deloitte Touche Tohmatsu.
GROUP AUDITOR (i)
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 agreements (ii)
Total assurance services
Tax consulting services (iii)
Due diligence services
Other advisory services
Total other services
2023
$
2022
$
626,200
1,160,290
563,500
879,376
1,786,490
1,442,876
–
–
74,438
–
26,154
100,592
71,392
71,392
116,400
20,000
24,890
161,290
Total Group auditor’s remuneration
1,887,082
1,675,558
(i) 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.
(ii) Other assurance services relate principally to the Domino’s Franchisee monitoring and whistleblower services payable to the parent company auditor.
(iii) Taxation services relate to tax compliance services and tax advisory services paid to related overseas practices of the parent company auditor.
37 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 03 July 2022 and therefore relevant
for the current year end.
STANDARDS AFFECTING PRESENTATION AND DISCLOSURE
AASB 2023-2 Amendments to AASs – International Tax Reform Pillar Two Model Rules
Effective for annual reporting periods beginning on or after 01 January 2023
In response to the Pillar Two Global anti-Base Erosion rules (GloBE Rules)3, amendments to AASB 112 introduce:
• A mandatory temporary exception in AASB 112 from recognising and disclosing deferred tax assets and liabilities related to Pillar Two income taxes
• Disclosure requirements for affected entities for the periods before and when the legislation is effective
The amendments are intended to provide temporary relief, avoid diverse interpretations of AASB 12 developing in practice and improve the information
provided to users of financial statements before and after Pillar Two legislation comes into effect.
The amendments do not clarify whether a Pillar Two top-up tax is considered to be an income tax in the scope of AASB 12, nor do they require all top-up taxes
to be treated as income taxes. Judgement must be applied in determining which top-up taxes are considered to be income taxes.
Earlier application of the amendments is permitted.
The Group is expected to be within the scope of Pillar Two top-up tax being implemented, (as it will apply to entities with revenues exceeding Euro 750 million,
and the Group’s revenue exceeds this threshold). The Group has applied the mandatory exception to recognising and disclosing information about deferred
tax assets and liabilities related to Pillar Two income taxes.
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.
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 259
continuedNotes to the Financial Statements 37 OTHER ITEMS (continued)
AASB 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 01 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 did not have a material impact on the Group.
AASB 2020-3 Amendments to AASB 137 – Onerous Contracts – Cost of Fulfilling a Contract
AASB 137 Provisions, Contingent Liabilities and Contingent Assets defines an onerous contract as one in which the unavoidable costs of meeting the obligations
under the contract exceed the economic benefits expected to be received under it. Unavoidable cost is the lower of the cost of fulfilling the contract and any
compensation or penalties arising from failure to fulfil it.
AASB 137 does not specify which costs to include in determining the cost of fulfilling a contract. Consequently, AASB 137 was amended to clarify that when
assessing whether a contract is onerous, the cost of fulfilling the contract comprises all costs that relate directly to the contract, which includes both the:
• Incremental costs of fulfilling that contract (e.g., materials and labour).
• An allocation of other costs that relate directly to fulfilling contracts (e.g., depreciation of property, plant and equipment)
An entity shall 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 (the date of initial application). Comparative information is not restated. Instead, the cumulative effect of initially applying the
amendments is recognised as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the date of initial
application.
The amendments are not expected to have a material impact on the Group.
NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 02 July 2023 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.
AASB 2014-10 Amendments to AASs – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments to AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures clarify that a full gain or loss
is recognised when a transfer to an associate or joint venture involves a business as defined in AASB 3 Business Combinations. Any gain or loss resulting from
the sale or contribution of assets that does not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the associate
or joint venture. These amendments are applied prospectively.
Effective for annual reporting periods beginning on or after 01 January 2025.
The amendments are not expected to have a material impact on the Group.
AASB 2021-5 Amendments to AASs – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
AASB 112 Income Taxes requires entities to account for income tax consequences when economic transactions take place, rather than when income tax payments
or recoveries are made. Accounting for such tax consequences, means entities need to consider the differences between tax rules and accounting standards.
Effective for annual reporting periods beginning on or after 01 January 2024.
The amendments are not expected to have a material impact on the Group.
260 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements 37 OTHER ITEMS (continued)
AASB 2021-2 Amendments to AASB 108 – Definition of Accounting Estimates
The amendments to AASB 108 clarify the definition of an accounting estimate, making it easier to differentiate it from an accounting policy. The distinction is
necessary as their treatment and disclosure requirements are different. Critically, a change in an accounting estimate is applied prospectively whereas a change
in an accounting policy is generally applied retrospectively.
The new definition provides that ‘Accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty.’
The amendments explain that a change in an input or a measurement technique used to develop an accounting estimate is considered a change in an accounting
estimate unless it is correcting a prior period error.
Effective for annual reporting periods beginning on or after 01 January 2023.
The amendments are not expected to have a material impact on the Group.
AASB 2022-6 Amendments to AASs – Non-current Liabilities with Covenant
A liability is classified as current if the entity has no right at the end of the reporting period to defer settlement for at least 12 months after the reporting period.
The AASB issued AASB 2020-1 Amendments to AASs – Classification of Liabilities as Current or Non-current to clarify the requirements for classifying liabilities
as current or non-current specifically:
• The amendments specify that the conditions which exist at the end of the reporting period are those which will be used to determine if a right to defer
settlement of a liability exists.
• Management intention or expectation does not affect the classification of liabilities.
• In cases where an instrument with a conversion option is classified as a liability, the transfer of equity instruments would constitute settlement of the liability
for the purpose of classifying it as current or non-current.
A consequence of the first amendment is that a liability would be classified as current if its repayment conditions failed their test at reporting date, despite those
conditions only becoming effective in the 12 months after the end of the reporting period.
In response to this possible outcome, in December 2022 the AASB issued AASB 2022-6 Amendments to AASs – Non-current Liabilities with Covenants:
• Clarifying that only covenants with which an entity must comply on or before the reporting date will affect a liability’s classification as current or non-current.
Adding presentation and disclosure requirements for non-current liabilities subject to compliance with future covenants within the next 12 months.
• Clarifying specific situations in which an entity does not have a right to defer settlement for at least 12 months after the reporting date.
These amendments are applied retrospectively.
Effective for annual reporting periods beginning on or after 01 January 2023
The amendments are not expected to have a material impact on the Group.
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 261
continuedNotes to the Financial Statements ADDITIONAL SECURITIES EXCHANGE INFORMATION
NUMBER OF HOLDERS OF EQUITY SECURITIES AS AT 04 AUGUST 2023
ORDINARY SHARE CAPITAL
• 89,091,519 fully paid ordinary shares are held by 22,300 individual shareholders.
• All issued ordinary shares carry one vote per share, however partly paid shares do not carry the rights to dividends.
OPTIONS
• 1,466,793 options are held by 98 individual option holders.
• Options do not carry a right to vote.
Distribution of holders of equity securities
100,001 and over
10,001–100,000
5,001–10,000
1,001–5,000
1–1000
NUMBER OF
SHAREHOLDERS
% OF
SHAREHOLDERS
NUMBER OF
SHARES HELD
% OF ISSUED
SHARES
NUMBER
OF OPTION
HOLDERS
% OF ISSUED
OPTIONS
29
59
94
1,195
20,918
22,295
0.13%
0.26%
0.42%
5.36%
93.83%
100.00
80,666,185
90.54%
1,612,306
678,596
2,358,490
3,775,942
89,091,519
1.81%
0.76%
2.65%
4.24%
100%
9
46
27
2
14
98
0.39%
8.53%
54.99%
28.88%
7.21%
100%
SUBSTANTIAL SHAREHOLDERS
ORDINARY SHAREHOLDERS
SOMAD HOLDINGS PTY LTD
HYPERION ASSET MANAGEMENT LIMITED
CAPITAL RESEARCH GLOBAL INVESTORS
FIL INVESTMENT MANAGEMENT (AUSTRALIA) LIMITED
FULLY PAID
PARTLY PAID
NUMBER HELD
PERCENTAGE
NUMBER HELD
PERCENTAGE
23,066,390
25.89%
7,103,148
5,764,166
5,395,202
7.97%
6.47%
6.06%
41,328,906
46.39%
–
–
–
–
–
–%
–%
–%
–%
–%
262 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
continuedNotes to the Financial Statements FULLY PAID
PARTLY PAID
NUMBER
PERCENTAGE
NUMBER
PERCENTAGE
Additional Securities Exchange Information
Number of Holders of Equity Securities as at 08 August 2022
TWENTY LARGEST HOLDERS OF QUOTED EQUITY SECURITIES
ORDINARY SHAREHOLDERS
SOMAD HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
MRS ESME FRANCESCA MEIJ
MR GRANT BRYCE BOURKE & MRS SANDRA EILEEN BOURKE
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
MR DONALD JEFFREY MEIJ
INVIA CUSTODIAN PTY LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
MR GRANT BRYCE BOURKE
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
BNP PARIBAS NOMS(NZ) LTD
NETWEALTH INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
MIRRABOOKA INVESTMENTS LIMITED
CITICORP NOMINEES PTY LIMITED
23,050,966
19,689,170
12,196,915
10,701,327
3,992,737
3,629,079
955,614
700,000
698,516
653,180
550,000
486,087
440,000
394,828
382,942
255,179
224,969
210,999
172,000
167,756
25.87%
22.10%
13.69%
12.01%
4.48%
4.07%
1.07%
0.79%
0.78%
0.73%
0.62%
0.55%
0.49%
0.44%
0.43%
0.29%
0.25%
0.24%
0.19%
0.19%
UNMARKETABLE PARCELS
There were 1,283 members holding less than a marketable parcel of shares in the Company.
79,552,264
89.28%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
2023 ANNUAL REP ORT DO MI NO ’S PIZ ZA E N TE RPRISES LIMI TED. // 26 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 23 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.
Domino’s Pizza Stores means Corporate Stores and Franchised Stores.
DPE Limited means Domino’s Pizza Enterprises Limited
(ACN 010 489 326)
Earnings Per Share or EPS means NPAT divided by the total number
of Shares on issue.
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.
Share means any fully paid ordinary share in the capital of the
Company.
Underlying EBITDA and Underlying NPAT excludes significant
integration and legal dispute costs.
264 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.
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
2023 ANNUAL REP ORT DO MIN O ’S PI ZZA E NTE R PR ISES LIMITED. // 265
266 // 2023 ANNUA L REP ORT D O MINO ’S PIZZA ENTERPRIS ES LIMITED.