ACCELERATING
GROWTH
Annual Report & Accounts 2023
We are Domino’s
We are part of the global Domino’s system, the biggest
pizza delivery operator in the world. We hold the
exclusive master franchise rights in the UK & Ireland
under long-term agreements with Domino’s Pizza
International Franchising Inc., the international arm
of Domino’s Pizza Inc. which is listed on the New York
Stock Exchange and which owns the Domino’s brand
across the globe. Our core business is in the UK &
Ireland, where we have a clear number one market share.
What we do
Why we do it
We have a clear purpose to deliver a better future
through food people love. The values we all share
at Domino’s drive our passion to deliver excellence
every day across the business, so we continue to be
a favourite brand of a growing number of customers.
P28
Progress WITH
oursustainability
strategy
P24
Engaging with
ourstakeholders
IN THIS REPORT
Strategic report
Financial and non-financial highlights 1
Purpose, vision and values 2
Our investment proposition 4
Chair’s review 6
CEO statement 8
Market review 16
Our business model 18
Our strategy 20
Key performance indicators 22
Engaging with our stakeholders
and workforce 24
Section 172 26
Sustainability 28
Gender diversity 38
Non-financial and sustainability
information statement 39
Financial review 40
Risk management 46
Viability statement 52
Governance
Board of Directors 54
Chair’s introduction to Corporate
Governance 56
Corporate Governance 58
Nomination & Governance
Committee report 66
Sustainability Committee report 69
Audit Committee report 71
Directors’ remuneration report 78
Directors’ report 109
Statement of Directors’ responsibilities 113
Financial statements
Independent Auditor’s report 114
Group income statement 121
Group statement of
comprehensive income 122
Group balance sheet 123
Group statement of changes in equity 125
Group cash flow statement 126
Notes to the Group financial statements 128
Company balance sheet 177
Company statement of changes in equity 178
Notes to the Company
financial statements 179
Five-year financial summary 186
Shareholder information 187
Domino’s Pizza Group plc Annual Report & Accounts 2023
System sales
1, 2
(£m)
£1,540.5m
1,540.5
1,456.4
1,499.1
2021
2
022
2
023
Underlying earnings per share
2,6
(p)
18.0p
18.0
18.8
20.3
2
021
2
022
2
023
Dividends per share
(p)
10.5p
10.5
10.0
9.8
2021
2
022
2
023
Share buybacks announced
(£m)
£90m
90
86
80
2021
2
022
2023
New store openings
61
61
35
31
2021
2
022
2023
Statutory profit for the year
4
(£m)
£115.0m
115.0
81.6
78.3
2
021
2
022
2
023
Free cash flow
4
(£m)
£97.0m
97.0
79.0
104.6
2021
2
022
2023
Like-for-like system sales growth
ex VAT and ex splits (%)
5,6
+5.7%
5.7
5.3
5.5
2021
2
022
2
023
Reported revenue
2, 3
(£m)
£667.0m
667.0
600.3
560.8
2021
2
022
2
023
App orders as a percentage
of online orders (%)
2023
2022
2021
4
6
.
2
%
5
2
.
2
%
7
3
.
8
%
App sales as a percentage
of system sales (%)
2023
2022
2021
4
0
.
0
%
4
5
.
0
%
6
3
.
2
%
Underlying EBITDA
4,7
(£m)
£138.1m
138.1
130.1
136.4
2021
2
022
2
023
1. System sales represent the sum of all sales made by both franchised and corporate stores to consumers in UK & Ireland. These are excluding VAT and are unaudited.
2. Shown on a 52-week basis for purposes of comparability.
3. 53-week reported revenue £679.8m.
4. 2023 was a 53 week year, statutory numbers are shown on a 53-week basis. Underlying EBITDA shown on a 53-week basis to align with Company guidance of FY23 Underlying EBITDA
of £132m-£138m. All 2022 and 2021 numbers are shown on a 52-week basis.
5. Q1 22 had a lower rate of VAT which is therefore included in the FY comparator. An adjustment for the change in VAT rates described for system sales relates to the impact of changes in
the VAT applied on hot takeaway food where the VAT inclusive price to customers did not change. The VAT rate in the UK decreased from 20% to 5% on 15 July 2020, increased to 12.5%
on 1 October 2021 and reverted back to 20% on 1 April 2022. System sales are consistently reported on an exclusive of VAT basis. However, where the inclusive of VAT price of an order
remained the same on a total basis to the customer, over the period of reduced VAT the exclusive of VAT price reported in system sales increased. This leads to an increase in system sales
from 15 July 2020 through to 30 September 2021 when the VAT rate was reduced from 20% to 5%. From 1 October 2021, the rate increased from 5% to 12.5%. Where the inclusive of VAT
price of an order remained the same on a total basis, this leads to a decrease in system sales compared to the period from 15 July 2020 and an increase in system sales compared to the
period before 15 July 2020. With the increase in VAT from 1 April 2022 back up to 20%, where the inclusive of VAT price remained the same to the consumer, there has been a negative
impact on system sales compared to the periods from 15 July 2020 to 30 September 2021 and 1 October 21 to 31 March 2022, as the exclusive of VAT price of an order decreased.
As an example, for an order where the inclusive of VAT price is £27:
– From 15 July 2020 to 31 September 2021, during the period where VAT was 5%, the reported system sale would be £25.71
– From 1 October 2021 to 31 March 2022, during the period where VAT was 12.5%, the reported system sale would be £24.00
– From 1 April 2022 onwards, where the VAT rate is 20%, the reported system sale would be £22.50
In Ireland, the VAT rate for hot takeaway food reduced from 13.5% to 9% on 1 November 2020 and reverted to 13.5% on 1 September 2023.
6. Like-for-like (excluding splits) system sales performance is calculated for UK & Ireland against a comparable 52-week period in the prior period for mature stores which were not in
territories split in the current period or comparable period. Mature stores are defined as those opened prior to 26th December 2021
7. Underlying is defined as statutory performance excluding discontinued operations, and items classified as non-underlying which includes significant non-recurring items or items
directly related to merger and acquisition activity and related instruments as set out in note 6 to the financial information.
Financial highlights
Non-financial highlights
Strategic report Governance Financial statements
1
Domino’s Pizza Group plc Annual Report & Accounts 2023
PURPOSE, VISION AND VALUES
OUR
PURPOSE
To be the favourite
food delivery and
collection brand with
pizza at our heart
Delivering a better
future through food
people love
OUR
VISION
GUIDED BY
OURVALUES
Our values guide what we do, the decisions
we make and the way we respond to
opportunities and challenges. When we
bring them to life, every day, we grow our
winning culture and deliver our purpose.
We do the right thing
We care about our impact on our brand,
our colleagues, our communities and the
wider world. So we’re proud to do the right
thing and keep our promises.
We are one team
We respect and celebrate the whole team
for who we are and the value we each bring.
We grab the amazing opportunities to grow,
succeed and live our best work-life.
We love customers
Every decision and action we take has
customers at the heart. We listen to customers
and create great experiences to delight them
and keep them coming back for more.
We are bold
It takes courage and determination to lead
the field. Dominoids are bold, entrepreneurial,
we aren’t afraid to innovate and learn fast to
become better every day.
We grow and win together
No one can beat us when we’re working
hard and playing hard together. We share
big ambitions, have a growth mindset and
enjoy success as one Domino’s.
Our ambition is to bring people together around food
they love and, by doing so, have a positive impact on
everyone who interacts with us: our customers,
colleagues, franchisees, investors, and the communities
we serve.
Our purpose is underpinned by a sustainability strategy
which ensures a better future; one where, among other
things, our environmental impact is minimised, our
workplaces are inclusive, and our products are
responsibly sourced.
Domino’s is one of the best-loved brands in the world
with a reputation for taste, quality, speed and service.
While we are focused on delivering long-term sustainable
growth, our corporate purpose ensures that we achieve
this responsibly and in a way that truly delivers a better
future for all our key stakeholders.
2
Domino’s Pizza Group plc Annual Report & Accounts 2023
IMPLEMENTING
OURPURPOSE
Our corporate purpose is the guiding star for our business
Our colleagues understand the importance of our corporate purpose, and how
they can contribute towards it. In 2023, colleagues from different departments
across the business were part of sustainability working groups dedicated to
each of our focus areas. These cross-functional groups are key to delivering
sustainability initiatives such as the creation and deployment of a new training
webinar on People for our franchise partners.
UK & IRELAND STORES
Total
1,319
stores
england
1,051
stores
republic
ofireland
61
stores
scotland
103
stores
northern
ireland
37
stores
At Domino’s we are committed to delivering
a better future through food people love.
That means that we are focused on growing
our business but doing so responsibly.
Our sustainability strategy underpins our
ambition to deliver a better future and is
based around five key areas:
Our customers
Customers are at the heart of our business.
We are committed to helping customers make
informed choices about our products, and to
offering an increasing range of products to
suit all dietary requirements and preferences.
Our people
People make pizzas. Ensuring all ‘Dominoids’
are able to challenge themselves, and build
a career in a safe, diverse and inclusive
environment is a key ingredient to continuing
to grow our business.
Our environment
Reducing society’s impact on the environment
is the key challenge of our time. We understand
we have a part to play, and from our use of
natural resources to targeting Net Zero for
carbon, we are doing our bit to reduce our
impact on the environment.
Our communities
We aim to have a positive impact on every
community we are proud to serve. Our stores
support local causes and charities, whilst
ensuring they are a good neighbour by
operating considerately.
Our sourcing
A reliable, responsible supply chain is key to our
business. We work with our suppliers to ensure
that our high compliance standards for topics
such as animal welfare and the treatment of
workers are strictly adhered to.
Wales
67
stores
Strategic report Governance Financial statements
3
Domino’s Pizza Group plc Annual Report & Accounts 2023
OUR INVESTMENT PROPOSITION
Reasons
toinvest
We are transforming the Group into
a high-growth, high-quality, world-class
franchisor – we have a strong investment
case, building on our core strengths:
World
class
brand
We strive to be the
favourite food delivery
and collection brand
in the UK & Ireland.
– Driven by investment in our national
value and social media campaigns,
to drive sales, brand awareness and
customer engagement.
– Significant customer base with c.13.5m
active customers in the UK & Ireland.
– We are the leading pizza takeaway
brand in the UK.
#1
market share
of the UK pizza
takeaway market
See our market context on page 16
Experienced
franchise
partners
Our network of franchise
partners have exceptionally
strong operational expertise
and experience, and are
passionate about our brand.
– The system is aligned and together,
we are focused on accelerating the
growth of the system.
– Our world-class franchise partners
have driven an acceleration in
new stores openings, rolled out on
Just Eat and adopted GPS to boost
customer service.
61
new stores in 2023
See our s172 statement on page 26
Dynamic,
digital
business
We operate a digitally
driven and responsive
business model.
– We have accelerated our evolution
to a truly digital business, with our
app driving growth, reflecting the
rapid change in consumer preference
and engagement across the market.
– Our model is unique in that we offer
delivery to our customers and are
also focused on continuing to grow
our collection business.
90%
of system sales
aredigital
See our CEO STATEMENT on page 8
4
Domino’s Pizza Group plc Annual Report & Accounts 2023
Exceptional
supply
chain
Our world-class supply
chain is the backbone
of the business.
– From four supply chain centres,
supplying fresh pizza dough and
ingredients to all our stores, with
our purchasing scale and expertise
benefiting franchisees.
– We are making further investment
in our supply and production facilities
to support our system sales growth,
with a relentless focus on product
availability, quality and value.
100%
Food availability in 2023
See our CFO review on page 40
Asset light
andhighly cash
generative
We are a highly cash
generative business.
– We prioritise re-investment of
this cash into the core business
to enhance returns and drive
future growth.
– We have embedded a cash-focused
framework throughout the Group,
with a rigorous focus on improving
our cash conversion and capital
allocation to return surplus cash
to shareholders.
£427m
ANNOUNCED returns
toshareholders
sinceMarch 2021
See our CFO review on page 40
Strategic report Governance Financial statements
5
Domino’s Pizza Group plc Annual Report & Accounts 2023
Chair’s Review
Chair
Matt
Shattock
“I would like to
thank all our
colleagues and
franchise partners
for their hard
work in delivering
strong results
in2023.”
Overview of the year
Domino’s made strong strategic progress
in 2023 and delivered a robust financial
performance, despite a challenging macro-
economic environment. Once again, the
manner in which the Domino’s team and
our world-class franchisees tackled the
challenges presented by global inflation
and an uncertain consumer environment
continues to be a great example of what
can be achieved when the Domino’s system
works together.
In 2023, we saw the benefits of Domino’s
flexible, asset-light business model and our
value proposition. We are able to adapt
rapidly to external market conditions,
delivering strategic progress with profitable
growth and strong cash generation.
Domino’s is one of the world’s leading
consumer brands, and there remains a
significant opportunity to build on the
strengths of the system to deliver sustainable
long-term value for all of our stakeholders.
As a Board, we continue to do everything
we can to act in the interests of all of our
stakeholders – taking care of our people,
supporting our franchisee partners to
grow their businesses, collaborating closely
with our suppliers, giving back to our
communities and acting in our shareholders’
long-term interests.
Leadership changes
During the year we appointed Andrew Rennie
as Chief Executive Officer. Andrew has an
extensive career in the Domino’s global
system, a deep knowledge of the brand,
vast experience of working with franchisees,
and was himself a very successful multi-unit
franchisee for a decade.
He understands the power and potential of
the Domino’s brand as well as anyone in the
business globally. He is an energetic and
entrepreneurial leader with an incredible
track record of delivering growth in Domino’s
businesses around the world. In December
2023, Andrew set out his initial thoughts
on the long-term growth opportunity for
Domino’s, with a focus on the core UK &
Ireland markets and accelerating growth
through additional opportunities.
I would like to thank Elias Diaz Sese for
his extraordinary commitment in his time
as Interim Chief Executive Officer and the
positive impact he made on the entire
system in that time. His drive and passion
for the business and its people ensured that
Domino’s accelerated the implementation of
our strategy and created a stronger platform
upon which to drive our growth. I am very
grateful he remains on the Board in a
non-executive capacity.
6
Domino’s Pizza Group plc Annual Report & Accounts 2023
Thank you
to our
DIRECTORS
who left
inthe year
Strategic progress and capital
allocation discipline
Delivering a better future through food
people love is our purpose, with a vision to
be the favourite food delivery and collection
brand with pizza at our heart. This has been
highlighted by the manner in which our
colleagues and franchisees have worked
collaboratively to provide excellent service and
compelling value to our customers. Our purpose
guides everything we do as a Company in
the interests of all of our stakeholders.
The business performed well through
the year, as the team were focused on
our key strategic priorities. We delivered
improvements in our customer service,
continued to attract more customers to our
app and meaningfully accelerated our store
openings. You can read more on how we
operated and traded through the year and
the strategic progress we have delivered
in Andrew’s report on page 8.
Our capital allocation framework seeks to
amplify shareholder returns by our effective
and disciplined use of capital. This is a
highly cash generative business, and our
first priority is to re-invest back into the
core business to enhance returns and enable
future growth. Total capital investment
in the business this year was £20.8m.
The second pillar of our capital allocation
framework is a sustainable and progressive
dividend with earnings-per-share cover. As a
result, we are recommending a final dividend
for the year of 7.2p which, combined with
the interim dividend of 3.3p, gives a 10.5p
full-year dividend, an increase of 5.0%
compared to the prior year. In addition, as
part of our framework to return surplus cash
to our shareholders, we announced share
buyback programmes of £90m in the year,
which included a £70m buyback programme
as a result of the disposal of our
German investment.
We will continue to invest in the growth of
the business, and as outlined in the Andrew’s
report, the Board sees an opportunity to
grow the business both through continuing to
invest in the core business, but also through
additional growth opportunities. We believe
this will support our growth potential and
maximise long-term returns for shareholders.
Sustainability
In 2023, we were pleased to publish our
new ‘Connect the Dots’ sustainability
strategy, which focuses on five pillars:
customers, people, environment, sourcing
and communities. We have been making
good progress in these areas, including the
opening of our first lower carbon store in
Hammersmith, the installation of solar panels
at three of our supply chain centres and
the ongoing trial of our 650-calorie pizzas.
We also began developing our first carbon
reduction roadmap and a new strategy for
offering a wider choice of menu options.
We are providing a detailed update on our
progress and targets in our inaugural 2023
sustainability report, and further information
about sustainability is set out in this Annual
Report on pages 28 to 37.
The year ahead
Our asset-light and cash generative business
model means we are well placed to accelerate
our growth and in Andrew’s report we lay out
our new targets of 1,600 UK & Ireland stores
delivering £2.0 billion of system sales by
2028 and 2,000 stores delivering £2.5 billion
of system sales by 2033. We look forward to
the year ahead and beyond with confidence
Finally, I would like to offer once again
express my immense gratitude to all our
colleagues, our franchisees, our suppliers,
our customers and our shareholders,
for your support throughout the year.
Matt Shattock
Chair
11 March 2024
Stella David stepped down as a director
on 31 December 2023 as a result of her
appointment as Interim Chief Executive
Officer of Entain plc, which meant that
she no longer has sufficient time to fulfil
her commitments to Domino’s. On behalf
of the Board, I would like to thank Stella
for her contribution to Domino’s. She was
an outstanding Board director and we
were sorry to see her leave the Board.
Usman Nabi stepped down as a director
on 14 August 2023. Usman joined the
Board of DPG in November 2019 and
played in important role in supporting
the transformation of the business. In
particular, Usman played an instrumental
role in the search for a new CEO,
culminating in the recent appointment
of Andrew Rennie. Usman is Founder
and Managing Partner of Browning
West, which continues to be a significant
shareholder in DPG. On behalf of the
Board, I’d like to thank Usman for his
contribution, which has been vital during
a period of great change in the business.
We look forward to continuing to engage
with Usman as a major shareholder in
the business.
Strategic report Governance Financial statements
7
Domino’s Pizza Group plc Annual Report & Accounts 2023
CEO Statement
Chief
executive
officer
Andrew
Rennie
“i’d like to thank all
our colleagues and
franchise partners
for working
fantastically
wellto deliver
another strong
year ofprogress.”
FY23 performance summary
We delivered a strong full-year performance
in a continued uncertain consumer
environment. Successful execution of our
strategy and alignment with our world-class
franchise partners resulted in increased order
count and robust sales growth. In FY23 we
were resolutely focused on our five focus
areas, and this resulted in our market share of
the UK takeaway market increasing from 7.1%
in FY22 to 7.2% in FY23 in a growing market.
Like-for-like system sales, excluding splits
and the impact of VAT, were up 5.7% (on a
52-week basis), an increase from +5.3% in
FY22. This is due to working collaboratively
with our franchise partners and giving our
customers great service and value.
Underlying EBITDA was up 3.6% compared
to FY22 (53-week basis: +6.1%), driven
by an increase in system sales volume,
material acceleration of store openings
and the pass-through of food costs to
our franchise partners.
Statutory profit after tax was up 40.9% on
FY22 as a result of profit from the disposal of
the German associate, generating a profit of
£40.6m recorded in non-underlying results.
Free cash flow generated by the business
was £97.0m, an increase from £79.0m in
FY22 driven by increased EBITDA and
working capital management.
Net debt decreased by £20.5m from the start
of FY23 to £232.8m with Net debt/EBITDA
leverage decreasing to 1.77x (excluding
IFRS 16) within our target Net debt/EBITDA
leverage range of 1.5x–2.5x. The receipt
of £79.9m from the disposal of our German
associate in June 2023 and good cash
generation was offset by £93.3m of
share buybacks.
The continued strong performance of the
business means that, in line with our capital
allocation framework, we have proposed
a final dividend of 7.2p per share, giving a
full year dividend of 10.5p per share, a 5.0%
increase compared to the prior year.
Accelerating growth
Our priority is to leverage the existing
platform to accelerate growth in the core
UK & Ireland business and drive earnings.
Following a thorough and detailed review,
we see a significant opportunity to accelerate
new store openings. Using updated analysis,
we have identified opportunities across new
territories as well as fortressing existing
geographies. More importantly, we have a
franchisee base who are hungry for growth
and have exceptional second-generation
talent who want to grow their businesses.
In March 2021, we put in place a target to
open 200 new stores in the medium term.
Since that target was put in place, we have
opened 133 stores and, with in excess of 70
stores expected to be opened in 2024, we are
now in a position to upgrade our store target.
We have strong alignment with our
franchisees, and we now expect to have
in excess of 1,600 stores in the UK & Ireland
by the end of 2028 with the potential for
this to be in excess of 2,000 stores in 2033.
8
Domino’s Pizza Group plc Annual Report & Accounts 2023
As a result of our store growth and continued
focus on our core capabilities of giving our
customers compelling value, great service, and
an enhanced digital experience, we are now
able to upgrade our £1.6bn-£1.9bn system
sales target put in place in March 2021.
We now expect to deliver £2.0bn system
sales in the UK & Ireland by the end of 2028,
and we see potential for this to be in excess
of £2.5bn system sales in the UK & Ireland
in 2033.
Since March 2021, we have built a disciplined
track record, announcing £427m of
shareholder returns, whilst also continuing to
invest in the business. DPG is a highly cash
generative, asset light business. We are
rigorously focused on accelerating organic
growth and pursuing value enhancing
inorganic growth opportunities to build a
larger and more cash generative business.
We are confident that this strategy will deliver
meaningful free cash flow growth over the
medium-to-long term and remain committed
to returning surplus cash to shareholders.
Alongside investment in the core business,
which remains our top priority, we will
continue to focus on reallocation of capital
within the corporate estate and joint ventures
to improve returns and will assess additional
growth opportunities, where we have a
growing pipeline. We are committed to an
asset-light business model and our strategy
will centre on acquiring, strengthening and
then ultimately redistributing stores in
the estate.
Core UK & Ireland business
In FY24, we plan to further sharpen our
execution across all areas of the business to
give our customers better service and better
value. We will continue with the same core
priorities which drove our performance in
FY23. We have narrowed our focus to four
areas as the technology platform projects
which we were focused on in FY23 are now
largely complete.
1. Franchisee profitability
and supply chain
Our franchisees have navigated the
challenging conditions faced by everyone in
the industry in the last few years supremely
well and are now primed for the next stage
of growth. The operations of our franchisees
are strong, but we can always be better.
Together, we worked to materially improve
our customer service in FY23, but we
are both focused on driving continued
improvement. In FY24, we intend to leverage
investments we have made in areas such as
GPS technology to improve performance
and give our customers better service.
Our supply chain is the backbone of our
business, and it is the foundation for us to
unlock growth. In the last few years, our
supply chain has maintained an outstanding
level of accuracy and availability which has
enabled our franchisees to consistently give
our customers what they want and when
they want it. We are resolutely focused on
maintaining these exceptional levels of service.
Within our supply chain we are always looking
for ways of operating in a more efficient
manner and have made great strides over
the last few years. In areas such as transport
efficiency, removing packaging from the
system and the roll out of cages and dollies,
we have delivered efficiencies. Our new
ERP system will enable us to deliver process
efficiencies across the system. Our team will
continue to search for efficiencies as well as
looking at introducing more automation into
certain parts of the supply chain.
2. Value for Money
Customers will always be our number one
priority. Maintaining compelling value is
essential, and we will continue to do this
for our customers. As part of our continued
drive to give our customers more choice,
our research has shown that many of our
customers would like to see a lighter, cheaper
Domino’s offer for lunch. Our stores are
open, but our share of lunch is small, so this
is a growth opportunity for us. As a result,
we have developed a new lunch menu,
including wraps, which meets consumer
needs for a taste of Domino’s, which is easier
to eat on the go and at lower price points
than their weekend favourites. We will
be launching a new £4 lunch offer in April,
supported by an integrated national
media campaign.
The performance of the collections channel
in the last few quarters has been pleasing,
and collections have continued to demonstrate
strong growth. However, we do still remain
under-penetrated in collections compared
to other Domino’s systems around the world,
so as we accelerate our store openings,
we see a significant opportunity to increase
our collection orders.
Delivery is core to our business, and nobody
delivers like Domino’s. Having navigated the
introduction of a delivery charge, which is
now a market norm, we are focused on
returning deliveries to growth and this goes
hand in hand with our enhanced focus on
customer service. Along with our franchise
partners we are focused on improving
average delivery times and eliminating
deliveries which are late to our customers.
Offering new products to our customers is
essential and we will continue to innovate.
Our innovation pipeline continues to build
under our outstanding innovation team, and
our trials performed well in FY23. As we look
ahead, our pipeline is exciting and we look
forward to bringing these great products to
our customers.
3. Digital acceleration
Over 70% of our digital orders are now
on the app, and we have a significant
opportunity to use this platform to drive
growth. The primary opportunity here is
increasing our customers’ average order
frequency over time. Currently, our
customers order on average less than five
times a year. We have attracted a significant
amount of our active customer base onto the
app, with numbers growing materially during
FY23. In FY24, we are focused on leveraging
this customer base and combined with
advancements in our technology platform,
we are now able to interact with our
customers and tailor offers in a far more
appropriate and compelling way than we
were previously able to.
Strategic report Governance Financial statements
9
Domino’s Pizza Group plc Annual Report & Accounts 2023
CEO Statement continued
We are now in a position to introduce a
loyalty programme, but it is important that
we do this in a disciplined, structured, and
profitable way. We will not rush into this with
an active customer base of c.13.5 million.
We will take a three-stage approach to this.
We will begin with a simple test in Q1 24 to
assess how offering a free incentive impacts
customer order behaviour. Subject to this
test, a second stage, larger scale test would
be launched by Q3 24. Pending the success
of this test, we will assess the optimal
structure for a loyalty programme for
a potential 2025 launch.
The development of our new ecommerce
platform is now complete, which will enable
us to be more agile with our marketing
and promotions. To help drive frequency,
we are now in a position to work with our
franchisees to give our customers more
choice such as premium toppings and more
flexible meal deals.
4. Convenience – accelerate
store openings
New store openings will always be a core
driver of growth. The pipeline is strong for
FY24, and we are confident that we will open
in excess of 70 stores this year. There is a
significant opportunity for growth, and we
are clearly under-penetrated compared to
competitors in the UK and also other
Domino’s systems.
We will continue to open stores in new
virgin territories, continue to focus on
splits where appropriate but also there is a
heightened focus on smaller address count
territories. These have limited competition,
and our strong national brand is a significant
competitive advantage. Some of the recent
openings in smaller address count areas have
produced strong levels of sales.
Capital allocation framework
As we accelerate our growth, we will
continue with our four-point approach,
introduced in March 2021, to deploy the cash
generated by the business. Investment to
drive core growth in the business will remain
our number one priority. We have announced
the distribution of £171m in dividends to our
shareholders since March 2021, and we will
maintain our progressive and sustainable
dividend policy.
The third pillar of our capital allocation
framework is investing in additional growth
opportunities. Since March 2021, activity
in this area has been limited and we see
significant opportunities to drive growth
in this area.
Finally, operating within a normalised
leverage range of 1.5x – 2.5x net debt to
Underlying EBITDA, we remain committed
to returning any surplus cash to shareholders
and have returned £256m through share
buybacks since March 2021.
Additional long-term growth
opportunities
We will continue to assess value enhancing
opportunities to build a larger and more
cash generative business and we have a
growing pipeline of opportunities. These
opportunities will be evaluated and executed
selectively over time in a disciplined manner
and will never come at the expense of the
core business.
The first area is our approach to the capital
we have invested in our corporate stores and
investments. We currently have 31 corporate
stores in the London area, but we also have
joint ventures, associates, and investments
over a further c.130 stores across the UK &
Ireland. A core part of our capital allocation
framework is the efficient deployment of
capital and we are actively assessing our
corporate store estate and joint ventures at
pace to drive shareholder value. In February
2024, an experienced Domino’s operator,
Stoffel Thijs, joined DPG as the new Director
of Joint Ventures and Corporate Estates to
drive performance in this area.
Another area where we see an opportunity
to drive growth in the UK & Ireland is adding
a second brand. We have world class
franchisees who are hungry for growth, a
significant customer base, an outstanding
national supply chain and the necessary
digital, IT & marketing capability. We also see
an opportunity to create value by investing
in other international Domino’s markets.
We now have deep experience, with
enhanced capability both within the team and
at the Board level, of operating and delivering
profitable, international growth. The addition
of a second brand or investment in other
international Domino’s markets would only
happen if a rigorous and disciplined set of
guardrails were met, and we were certain that
we could create long-term shareholder value.
Acquisition of Shorecal Limited
On 11 March 2024, in line with the growth
framework we laid out in December 2023, we
announced the acquisition of the outstanding
shares in Shorecal Limited which Domino’s
Pizza Group does not own for c.£62m.
The acquisition is at an attractive multiple
of 8x EBITDA and is expected to be earnings
accretive in the first full year of ownership
and significantly accretive in the long-term.
The acquisition will allow us to take control
of a significant opportunity to materially
increase the store count in the Republic of
Ireland and Northern Ireland.
Shorecal’s existing Irish management will
remain in role to accelerate the growth,
supported by the experienced, and recently
expanded, Domino’s Pizza Group team.
We are committed to an asset-light business
model and our strategy will centre on
acquiring, strengthening and then ultimately
redistributing stores to world-class franchisees.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
FY23 trading review
System sales represent all sales made by both franchised and corporate stores to consumers.
Total system sales were £1,541m, up 5.8% on FY22 on a 52-week basis. Like-for-like system
sales across UK & Ireland increased by 4.1%, excluding split stores, or by 2.9% including splits.
Like-for-like system sales, excluding splits and the different VAT rate in Q1 22, increased by 5.7%.
UK & Ireland on a 52-week basis Q1 23 Q2 23 H1 23 Q3 23 Q4 23 H2 23 FY23
LFL inc. splits +3.5% +7.3% +5.3% +2.4% (1.2)% +0.5% +2.9%
LFL exc. splits +4.4% +8.4% +6.3% +3.7% +0.2% +1.8% +4.1%
2023 VAT rate 20% 20% 20% 20%
2022 VAT rate 12.5% 20% 20% 20%
LFL inc. splits and ex VAT +9.8% +7.5% +8.6% +2.5% (1.0)% +0.6% +4.5%
LFL exc. splits and ex VAT +10.7% +8.6% +9.7% +3.7% +0.4%* +2.0%* +5.7%
* In Ireland, the VAT rate for hot takeaway food reduced from 13.5% to 9% on 1 November 2020
and reverted to 13.5% on 1 September 2023.
The quarterly analysis of this performance, as well as the UK VAT rate for each period,
is in the table above.
Our trading in FY23 was driven by our key areas of focus: giving customers’ value for money
through compelling national value campaigns and our franchise partners’ focus on service;
our digital acceleration; the continued incremental benefit of being on the Just Eat platform
and the acceleration in new store openings.
UK & Ireland
on a 52-week basis
LFL inc. splits (year-on-year growth) Total (All Stores)
Sales Volume Price Orders (m) YOY Order Growth
Total
Q1 3.5% (7.2)% 10.7% 18.0m 2.8%
Q2 7.3% (6.0)% 13.2% 17.4m 2.8%
H1 5.3% (6.6)% 11.9% 35.4m 2.8%
Q3 2.4% (7.5)% 9.9% 16.7m (1.2)%
Q4 (1.2)% (5.8)% 4.6% 18.4m (0.3)%
H2 0.5% (6.6)% 7.1% 35.1m (0.7)%
FY 2.9% (6.6)% 9.4% 70.5m 1.0%
Delivery only
Q1 (0.9)% (12.3)% 11.4% 12.1m (4.9)%
Q2 2.9% (9.8)% 12.7% 11.1m (3.9)%
H1 0.9% (11.1)% 12.0% 23.2m (4.4)%
Q3 (1.1)% (10.3)% 9.2% 10.3m (6.3)%
Q4 (3.2)% (7.5)% 4.2% 11.7m (4.1)%
H2 (2.2)% (8.8)% 6.6% 22.0m (5.1)%
FY (0.7)% (9.9)% 9.2% 45.2m (4.8)%
Collection only
Q1 22.5% 12.4% 10.1% 5.9m 23.0%
Q2 24.0% 6.6% 17.4% 6.3m 17.3%
H1 23.3% 9.4% 13.9% 12.2m 20.0%
Q3 14.3% 0.4% 13.8% 6.3m 8.4%
Q4 5.8% (1.0)% 6.9% 6.8m 7.0%
H2 9.8% (0.3)% 10.1% 13.1m 7.6%
FY 15.9% 4.2% 11.7% 25.3m 13.3%
customer
service
We are passionate about giving our
customers outstanding service. In 2023,
alongside our franchise partners we
ensured that our service improved.
Our average delivery times improved
from 26.3 minutes in 2022 to
25.0 minutes in 2023. Alongside that the
percentage of orders delivered on time
increased from 74.8% in 2022 to 78.8%
in 2023, and the number of late
deliveries decreased significantly.
We were able to achieve this with a
concerted effort from our operations
team and franchise partners. Multiple
roadshows were held across the UK and
Ireland, sharing best practice in how to
deliver outstanding customer service.
Whilst we made great strides in 2023
we are determined to give our customers
even better service in 2024 and our
operations team have an exciting
programme of initiatives to deliver
further improvements.
Strategic report Governance Financial statements
11
Domino’s Pizza Group plc Annual Report & Accounts 2023
CEO Statement continued
Total orders in the year grew by 1.0%. This was
driven by a 13.3% growth in collection orders,
offset by a 4.8% decline in delivery orders.
Collections continued to show strong growth
throughout the year. Collection represents
the most efficient labour channel, with
delivery effectively outsourced to the
customer. Delivery orders remained under
pressure in FY23, and we are focused on
returning them to growth in FY24.
Corporate stores
We directly operate 31 stores in the London
area. In FY23, corporate stores’ revenue
decreased by £3.7m to £32.5m (53 weeks:
£33.1m), primarily as a result of a smaller
number of stores following the sale of five
corporate stores in Q4 22. Corporate stores’
EBITDA was £0.9m, £3.1m lower than FY22,
largely due to the comparator period having
a VAT benefit in Q1 22 and a £2.1m gain in
FY22 from the disposal of five stores.
German associate
Completion of the disposal of our German
associate occurred on 5 June 2023. £79.9m
of proceeds were received, comprising a
put option exercise price of £70.6m and the
repayment of a £9.3m loan. Following the
exercise of the put option on 10 November
2022, there was no contribution from the
German associate in FY23 (FY22: £2.6m).
Capital allocation
In FY23, we generated £97.0m of free cash.
We invested £20.8m in capital investment in
our core business and have proposed a final
dividend of 7.2p, which combined with the
interim dividend of 3.3p represents a 5.0%
increase compared to FY22. We announced
a £20m share buyback in May 2023 which
completed in August 2023. In August 2023,
we also announced a £70m buyback following
the disposal of the German associate, and this
completed in January 2024.
Progress against our focus areas
in FY23
We are pleased with the strategic progress
we made in 2023 and are resolutely focused
on accelerating the execution of our strategy.
As we have previously outlined, we had
five key areas of focus for 2023 to drive
this acceleration.
Franchise partner
profitability/organisation
We were clear at the start of FY23 that
our priority this year was to work with our
franchise partners to help improve their
store profitability, despite significant
inflationary pressures.
Our franchise partners, once again, delivered
an outstanding performance in uncertain
market conditions, and we all benefited from a
system which is aligned. In FY23, our franchise
partners delivered great value to customers
through successful national campaigns,
benefited from the roll out on Just Eat,
delivered material improvements in service,
and accelerated our new store openings.
Despite the significant inflationary pressures,
particularly in labour and food costs, our
franchise partners were able to broadly
maintain their EBITDA margins. Based on the
unaudited data submitted to us by franchise
partners, average store EBITDA for all UK
stores in FY23 was approximately £158k,
equivalent to a 13% EBITDA margin. This
compares to £166k or 14% EBITDA margin
achieved in FY22, when adjusted for VAT,
and £182k or 16% EBITDA margin in FY22
unadjusted for VAT.
In FY23, we continued to invest in growth,
in line with the framework we agreed with
our franchise partners in December 2021
and working with our suppliers to look for
efficiencies and driving operational
efficiencies. We have continued to support
our franchise partners with incentives to
accelerate new store rollouts, the food cost
rebate mechanism and a dedicated
programme of national roadshows focused
on improving service and quality of product.
We have worked closely with key suppliers
to ensure we have optimal stock cover and
to minimise cost inflation where possible
for our franchise partners. Our world-class
supply chain continues to deliver outstanding
performance. We maintained 100%
availability and 99.9% accuracy in a period
of challenging market conditions.
We reshaped our Executive leadership team
to ensure that we are leaner and can make
faster decisions. We also undertook a wider
review and restructure of our organisation
to focus on increasing agility, focus and
profitability. As part of the review of the
organisation we prioritised talent
development to nurture and develop future
leaders of the business. Together with our
franchisee partners, we are now able to act
more quickly in response to the changes in
the market that we are seeing.
Value for Money
Alignment with our franchise partners allowed
us to offer our customers compelling value in
FY23. We define ‘value’ as the quality of the
product, combined with the service and image
divided by price. Our strong value message
continued to resonate with consumers, and
our focus on value for money is essential in
the current environment. We started FY23
with a strong value offer with our successful
‘Price Slice’ deal in the UK which had £8, £10
and £12 price points for small, medium, and
large pizzas. In Q2 23, we launched a 50% off
app-only deal which gave customers great
value and drove more customers to our app.
In Q3 23, we maintained our 50% off app deal
which also contributed to the growth in app
customers, and in Q4 23 we continued to
offer customers compelling value.
Customer service performance, including
average delivery times and percentage of
deliveries on time, improved significantly
in FY23 relative to FY22. Average delivery
times were 25 minutes in FY23 compared to
over 26 minutes in FY22. We also completed
the full roll out of our enhanced GPS solution
to all stores in FY23. This will help stores
manage labour through more efficient driver
route planning and better co-ordination with
the store, as well as allowing drivers to use
their own device. It also enables customers to
see exactly where their order is and provides
an accurate delivery time.
We aim to attract and retain new customers
through a strong pipeline of new pizzas, sides,
and desserts, and to increase order frequency
through innovation of our core menu. In FY23,
we launched Vegan American Hot, to offer
further choice to our vegan and flexitarian
customers. This was followed by the launch
of the Ultimate Chicken Mexicana, which was
our best-selling innovation in the last five
years. We launched a number of new trials
aimed at increasing the menu choice available
to customers at different parts of the day to
drive incremental sales. These included fries,
loaded fries and wraps, and these have
performed ahead of expectations.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Digital
The Domino’s app is the key driver of
our digital growth strategy because app
customers yield higher sales and have a
higher average order frequency than those
who only use the website.
Orders placed on our app, as a percentage
of total online orders, were 73.8% in FY23,
an increase of 21.6ppts vs. FY22. App
downloads were 63% higher vs. FY22, and
the number of active app customers reached
9.0m, an increase of 48% compared to FY22.
The app is expected to be a material
contributor to future system sales growth,
and driving more orders through the app
will be a key focus in 2024.
Convenience
Alongside our franchisees, we achieved
a material acceleration in our new store
openings in FY23 . We opened 61 new
stores with 23 different franchise partners
compared to 35 stores in FY22 from 22
different franchise partners. This acceleration
was a result of rebuilding our store-opening
pipeline with our franchise partners and the
continued opportunity we see for growing
the store estate in the UK & Ireland. The new
stores are all in quality locations and are
trading ahead of expectations, with particular
strength in new territories with smaller
address counts, giving an opportunity to
accelerate our growth.
FY23 was the first full year of Domino’s being
available to order on the Just Eat platform,
and this was a driver of sales growth, bringing
in incremental customers and orders
throughout the year. Following Domino’s Pizza
Inc.’s global agreement with Uber Eats, in
January 2024 DPG started a trial which is now
live in c.630 stores across the UK & Ireland.
The data-led trial will enable some customers
to order Domino’s Pizza via the Uber Eats
platform, but the pizzas will be delivered by
our own Domino’s delivery drivers, which is
the same approach as in our relationship with
Just Eat. The trial aims to complement our
existing partnership with Just Eat and will
enable us to fully understand if there are
benefits for our customers, our franchise
partners, and our business in partnering with
two platforms in the UK & Ireland.
Technology platform projects
In FY23, we focused on two important
technology projects. First, at the end of FY21
we began work on a new ecommerce platform
to create significant capabilities for our digital
channels, remove constraints for our franchise
partners, and ultimately provide an enhanced
experience for our customers. Development
of the ecommerce platform has now been
completed on time and on budget, and cutover
of the various channels is in progress. The new
platform will enable us to accelerate delivery
and innovation through highly automated
processes that are significantly more cost
efficient than our current system. Importantly,
it also results in a more secure and resilient
platform to seamlessly scale for our next stage
of growth.
Secondly, we continued the work which
started in FY22 on a new ERP system which
will enable us to improve processes across
our business and generate efficiencies in our
supply chain. The ERP build is progressing well
and completion remains on track in FY24.
Operating expenditure in FY23 was elevated
by £8.9m of one-time spend related to the
implementation of these projects, with the
remaining ERP implementation expenditure
expected to be in the low single-digit millions
in FY24 as previously guided.
Delivering our sustainable future
Our corporate purpose is to Deliver a
Better Future Through Food People Love.
This ambition is underpinned by our new
sustainability strategy called, ‘Connect the
Dots’ which we published in H1 23. Our
Connect the Dots strategy guides our efforts
to deliver on our corporate purpose and
achieve a range of sustainability goals across
five core themes: our customers, our people,
our environment, our sourcing, and our
communities. We are making good progress
against our targets.
In H1 23, we continued the ongoing trial of our
650 calorie Cheeky Little Pizzas and opened
our first lower carbon store in Hammersmith
to support our environmental efforts. In H2
23, we implemented further changes across
our business including preparing our first
carbon reduction roadmap, and a new strategy
for offering a wider choice of healthier menu
options. We look forward to updating on
these and our other key focus areas in the
Group’s first sustainability report which will
be published in H1 24.
Andrew Rennie
Chief executive officer
11 March 2024
new store
openings
2023 was our best year of store
openings for five years. We see an
opportunity to continue this pace of
store openings in 2024 and beyond.
Our team has worked seamlessly with
our franchisees to identify the right sites
in the right areas to drive this success.
The pipeline continues to build which
gives us the confidence to upgrade our
medium and long-term store targets.
There is a significant amount of ‘white
space’ for us to open stores and we
will continue to bring Domino’s to new
territories. We also continue to see
opportunities to split territories to
deliver service improvements to our
customers, reach new customers
for delivery and increase collection
potential. These splits also benefit our
franchisees with labour efficiency and
system sales growth.
In the UK & Ireland, we now expect to
have in excess of 1,600 stores by the
end of 2028 with the potential for this
to be in excess of 2,000 by 2033.
Strategic report Governance Financial statements
13
Domino’s Pizza Group plc Annual Report & Accounts 2023
Q&A
WITH
Andrew
Rennie
Q
You’ve worked within the
Domino’s brand for many
years now – how has that
shaped your life and your
leadership style?
I kicked off my Domino’s journey
when I was 26, fresh out of the military.
I bought my first Domino’s store and
became a franchisee. I started with one
store in Darwin, and before I knew it
I had 13 stores under my belt. Domino’s
then bought out my stores and made
me a shareholder. From there, I took
on various roles across Australia,
New Zealand, and Europe, wearing
the CEO hat for France, Belgium, and
the Australia/New Zealand region.
What I love about Domino’s is the chance
it gives you to start from the ground
up. I went from being a single store
franchisee to CEO, and that’s not a rare
story. Heaps of our franchisees started
out making pizzas in stores or delivering
orders to customers.
It’s a real testament to Domino’s ethos
of opportunity and growth, and it’s
shaped the way I lead – always looking
for ways to grow and grab hold of
opportunities and help those around
me to progress too.
Q
What are you and the team
really focused on?
We are determined to deliver value,
and that means value to our customers,
that means value to our franchisee
partners, which ultimately means
value to our shareholders.
Q
What do you stand for?
I really take a customer-first approach,
and it probably goes back to my very first
store in Darwin, Australia, 30 years ago.
We only had 3,000 addresses which is
roughly 6,000 customers compared to
an average store which has about 40,000
addresses. I couldn’t afford to lose a
single customer.
So, I’ve always had that mentality
around keeping customers loyal to you.
Coincidentally, that’s the founder of
Domino’s, Tom Monaghan’s mantra: if
you never lose a customer, your sales
can only go up.
Q
What have you spent your first
months in the new role
doing?
I’ve spent my time travelling around the
UK and Ireland visiting our franchisees,
suppliers and our DPG colleagues.
They have many things in common
but the big one is the shared passion for
our brand which makes me even more
excited about the opportunities ahead
for Domino’s and our outstanding
franchisees. Our franchisees are
performing well in an uncertain market,
and we are all benefiting from an aligned
system. We remain focused on giving
our customers great tasting food,
exceptional service and great value,
every single time.
14
Domino’s Pizza Group plc Annual Report & Accounts 2023
By continuously looking at our menu
offerings, food quality, delivery
efficiency, and pricing, we ensure
that we deliver unparalleled value
to our customers. We have some
of the best data I’ve ever seen which
means that we have deep insights into
customer preferences and behaviour,
enabling us to maintain our position
as industry leaders.
Q
How important is
sustainability to you?
We’re driven by our core purpose at
Domino’s, which is to Deliver a Better
Future Through Food People Love. This
purpose guides everything we do as a
Company and we have a responsibility
to lead the field as the leading pizza
brand in the UK & Ireland, which means
doing business in the right way,
operating sustainably, and building a
better future for generations to come.
Last year we published our Connect the
Dots strategy, laying out our five areas
of priority: our customers, our people,
our environment, our sourcing, our
communities. This year we will take
another step forward and publish
our first ever Sustainability Report.
more information online
www.corporate.dominos.co.uk
Q
How will you accelerate
growth for Domino’s?
First and foremost, we are focused
on accelerating growth in our core UK
& Ireland business. I still see a huge
opportunity to grow the business
through focusing on our customers,
maximising our supply chain, driving
digital sales and, of course, benefiting
from the hunger and ability of our
world-class franchisees. But we will
also look to drive growth through our
corporate stores and joint ventures,
looking at adding a second brand and
other Domino’s territories.
Q
How do you plan to continue
fostering innovation and stay
ahead of the competition?
To maintain our edge in the market,
we consistently evaluate each stage
of our product and customer journey.
“i’d like to thank all
our colleagues for
their outstanding
work in 2023.
having spent time with
our franchisees and
colleagues, i know we
can take the business
to new heights and
deliver long-term
sustainable growth”
Q
What are your long-term
growth ambitions?
In December I set out a framework
for accelerating sustainable, long-term
growth. Following a great year for store
openings in 2023 we are accelerating
our growth and expect to have 1,600 UK
& Ireland stores delivering £2.0 billion of
system sales by 2028 and 2,000 stores
by 2033 delivering £2.5 billion of system
sales. Crucially, we have alignment with
our franchisees and there is a strong,
motivated second generation talent
coming through the franchisee ranks
to help drive this growth.
Strategic report Governance Financial statements
15
Domino’s Pizza Group plc Annual Report & Accounts 2023
Changing
market
dynamics
Industry trends
– The total GB takeaway market was
worth £14.4bn in 2023, growing
by 6.4% year-on-year.
– Domino’s market share of the GB
takeaway market in 2023
1
was 7.2%,
an increase of 0.1ppts vs. 2022.
Opportunities for Domino’s
– We have a clear strategy in both delivery
and collection to accelerate our growth
and increase our market share.
– We will also focus on broadening our
offer to different parts of the day.
£14.4bn
The total GB takeaway
market in2023
7.2%
DOMINO’s market share
+0.1ppts vs. 2022
Sustainability
Industry trends
– Customers want to be able to make
healthier choices, while government
policy is focused on reducing obesity.
– There’s been an increase in allergies in
the last decade. High-profile tragedies
have focused the UK Government on
the issue.
– All businesses have a role to play in
addressing global climate change, by
reducing emissions and driving more
sustainable energy use.
– Diversity, equity & inclusion are essential
for a thriving workplace. Companies are
increasingly expected to show they
embrace a diverse workplace.
Opportunities for Domino’s
– We have developed a new healthier menu
strategy, to provide customers with more
choices. We’re also focused on providing
transparent nutritional information.
– We engage with the UK Government
to provide our views on national debates
regarding obesity.
– Robust allergen management is
integrated within our Food Safety
Management system. We also partner
with organisations such as the Natasha
Allergy Research Foundation.
– We’ve committed to achieving Net Zero
carbon emissions by 2050, a target that
has been validated by the Science Based
Targets initiative (SBTi).
– We continue to build a culture designed
to attract and retain people with a
range of backgrounds, identities and
perspectives across our business.
2023 MARKET REVIEW
Domino’s has a business model which can respond to the market backdrop and pivot to what
customers expect, offering both delivery and collection. Below we discuss the longer-term
trends in the market, and how we are responding to them to drive sustainable growth.
1. Kantar Worldwide Panel, bespoke market definition for 52 weeks ended 24 December 2023
16
Domino’s Pizza Group plc Annual Report & Accounts 2023
Evolving
consumer
behaviour
Industry trends
– Consumers increasingly order
through digital channels.
– Customers are increasingly using
apps to order and expect a more
sophisticated digital customer journey.
Opportunities for Domino’s
– The Domino’s app is central to our digital
strategy and we already have a clear
strategy to invest in our digital offering.
– We have invested in building our digital
capabilities and have built a new team with
deep experience from other industries
such as online gambling and online retail.
– Our work in this area has been successful
with digital orders now accounting for
90% of our business and 73.8% of digital
orders are now placed on our app.
– We will continue to invest in our digital
offering and drive more customers to use
our app.
90%
of orders are digital
73.8%
of digital orders
are now placed
on our app
Geopolitical
andinflationary
environment
Industry trends
– Inflation impacts both our business model
and our franchise partners as we pass
through food costs. The majority of
colleagues in the Domino’s system are
employed by our franchise partners.
– Food costs can be negatively impacted
by general cost price inflation,
foreign exchange movements and
other market pressures such as
conflict and poor harvests.
– The increase in demand for delivery
drivers and the increases in the National
Living Wage all continue to cause labour
cost inflation and challenges around
labour availability.
Opportunities for Domino’s
– We have significant scale and buying
power and work closely with our supplier
base to ensure food price increases
are mitigated wherever possible. For the
majority of our products we buy, we have
dual suppliers.
– Despite global cost inflation and supply
chain constraints, our supply chain centre
maintained outstanding availability
in FY23.
– Our focus on the collection market as a
growth opportunity for the system also
improves labour efficiency, as collection
does not require a delivery driver to take
the order to a customer’s house.
– Our store economics
are better than most
operators in the
QSR sector, with low
opening costs, high
sales, flexibility in
labour costs and
low rents.
Strategic report Governance Financial statements
17
Domino’s Pizza Group plc Annual Report & Accounts 2023
OUR CUSTOMERS OUR PEOPLE
Our Business Model
Creating long-term sustainable value with our asset-light business model
Deliver
piping-hot food with
an average delivery time
of 25.0 minutes in 2023,
more than one minute
faster than in 2022
Market
through national value and
brand-building initiatives.
These are complemented
with local and tactical
initiatives, and we are #1
for pizza brand awareness
in the UK
Collect
from one of our 1,319
stores. Collection orders
grew 13% in 2023
Source
high-quality, fresh
ingredients, spending
£276m per year with
our trusted suppliers
Cook
an increasingly wide range
of freshly made food from
high-quality ingredients
Make
47m kilos of fresh dough
in our UK & Ireland supply
chain centres, and supply
33m food and non-food
items to our franchised and
corporate stores through
our in-house logistics fleet
Sell
to customers with 90%
of system sales through
digital channels
Innovate
to keep our menus exciting,
we regularly launch new
products, including loaded
fries, wraps and Italianos
Price
set locally by our franchise
partners and with a wide
range of pricing strategies.
We are also able to offer
national value campaigns
to our customers
Grow
through our digital
initiatives and a 74%
increase in new store
openings in 2023
1,319
Stores (UK & Ireland)
What we do
Key stakeholder groups
Our corporate purpose is the
guiding star for our business
In 2023 we continued to put our purpose front and centre
for our colleagues, who understand the importance of it
and their role in bringing it to life. Our focus this year was
to strengthen our partnerships with our charities and
increase colleague participation in fundraising initiatives.
We also prioritised better communication across Domino’s
to ensure our purpose continues to guide us every day.
COLLEAGUES
Create pride in working for an inspiring,
supportive, progressive employer, that
cares about its colleagues’ wellbeing and
development, and attracts and retains
the best talent
CUSTOMERS
Show how we are doing the right things
and so are a brand they should spend
their money with
FRANCHISE PARTNERS
Ensure understanding that our purpose and
business strategy are key to the long-term
success of the entire Domino’s system
Investors
Demonstrate we are evolving into a more
forward-thinking, purpose-led business that
can continue generating sustainable returns
suppliers
An efficient supply chain is integral to the
Group’s business model, and the relationship
with our suppliers is a key element in
achieving our operational goals
Our approach to Connecting the Dots
When it comes to sustainability we’re taking action
in a number of areas we felt were important.
When connected together, they have huge potential
to deliver a better future.
18
Domino’s Pizza Group plc Annual Report & Accounts 2023
OUR ENVIRONMENT OUR SOURCING OUR COMMUNITIES
Deliver
piping-hot food with
an average delivery time
of 25.0 minutes in 2023,
more than one minute
faster than in 2022
Market
through national value and
brand-building initiatives.
These are complemented
with local and tactical
initiatives, and we are #1
for pizza brand awareness
in the UK
Collect
from one of our 1,319
stores. Collection orders
grew 13% in 2023
Source
high-quality, fresh
ingredients, spending
£276m per year with
our trusted suppliers
Cook
an increasingly wide range
of freshly made food from
high-quality ingredients
Make
47m kilos of fresh dough
in our UK & Ireland supply
chain centres, and supply
33m food and non-food
items to our franchised and
corporate stores through
our in-house logistics fleet
Sell
to customers with 90%
of system sales through
digital channels
Innovate
to keep our menus exciting,
we regularly launch new
products, including loaded
fries, wraps and Italianos
Price
set locally by our franchise
partners and with a wide
range of pricing strategies.
We are also able to offer
national value campaigns
to our customers
Grow
through our digital
initiatives and a 74%
increase in new store
openings in 2023
1,319
Stores (UK & Ireland)
The value we create
Customer satisfaction
customers’ overall satisfaction,
up 1 ppt year-on-year
64%
+1ppt
Profitable franchise partners
average 2023 UK franchise partner store
EBITDA (adjusted for VAT)
£158k
+9% vs. 2019
Rewarded investors
dividend per share, up 5.0% year-on-year
and £90m share buyback announced in 2023
10.5p
+5.0%
Gave to charity
charitable donations
£986K
+17%
Remunerated master franchisee
of system sales paid to DPI in royalties
2.7%
Strategic report Governance Financial statements
19
Domino’s Pizza Group plc Annual Report & Accounts 2023
Our Strategy
OUR FOCUS AREAS
FOR DELIVERING
THE FUTURE
In 2023 we were focused
on five key areas to drive
sustainable growth. Below we
provide an update on progress
made in the year and where
our focus will be in 2024.
Franchise partner
profitability
andOrganisation
The opportunity
– Accelerate growth alongside
our franchise partners
– Leverage the world-class
acumen of our franchisees
– Seek to broaden our franchise
partner base with Home
Grown Hero programme
– Drive organisational change
to improve decision-making
2023 progress
– EBITDA store margin broadly
maintained in FY23 (13% vs. 14%
in FY22) with store EBITDA 9%
up vs. 2019
– Participated in full roll out of
Just Eat and GPS technology
– Organisational changes made
to reshape DPG leadership team
2024 focus
– Focus on improving
franchisee profitability
– Uber Eats trial
The opportunity
– Giving customers compelling value is
essential in the current environment
– Our Value for Money equation is great
product and service, divided by price,
gives Value for Money
2023 progress
– Strong national value campaigns,
including Price Slice at the start
of the year
– Material improvement in service
with average delivery times more
than 1 minute better than in FY22
– Strong new product launches,
including fries and wraps
2024 focus
– Maintain compelling value
– Continue to improve customer
service standards
– Strong pipeline of new concepts
in trial
Value
for
money
20
Domino’s Pizza Group plc Annual Report & Accounts 2023
The opportunity
– Drive customers to our app
– App customers have higher order
frequency and yield higher basket
sizes than web-only customers
2023 progress
– 50% off app deals contributed to
a 63% increase in app downloads
– 9m app customers, an increase of 48%
on FY22
– 73.8% of digital orders are now placed
on the app
2024 focus
– Focus on driving increased frequency
from large customer base
– Begin loyalty trial
– Increase personalisation
The opportunity
– Make our great product even more
accessible to our customers
– We do this through opening new
stores which open new markets and
bring customers closer to a store
– We also drive incremental new
orders through new channels
2023 progress
– 61 new stores, best year of store
openings since 2017
– First full year of being rolled out
on the Just Eat platform
2024 focus
– Targeting in excess of
70 new stores in FY24
– Uber Eats trial started
in January 2024
The opportunity
– New ecommerce platform will
deliver significant benefits to our
franchise partners and ultimately
provide an enhanced experience
for our customers
– New ERP programme which will
enable us to improve processes
and efficiencies across our business,
including generating efficiencies
in our supply chain
2023 progress
– Development of the ecommerce
platform completed on time
and ahead of budget
– ERP programme on track for
deployment in 2024
2024 focus
– Embed and start utilising
new ecommerce platform
– Complete the build of
the new ERP system
Digital
Convenience
Technology
platform
projects
Strategic report Governance Financial statements
21
Domino’s Pizza Group plc Annual Report & Accounts 2023
KEY PERFORMANCE INDICATORS
In order to continue to implement, develop and measure the Group’s strategic performance,
we monitor 10 financial and non-financial key performance indicators (‘KPIs’).
UK & Ireland
system sales
(£m)
1,541
1,456
1,499
2021
2
022
2023
Description
System sales represents
the most useful indicator
of the overall strength
of the Domino’s brand.
This metric measures the
total sales of the Group’s
franchisee and corporate
store system in the UK &
Ireland. System sales do
not represent revenue
attributable to Domino’s
as it is derived mainly
from stores owned by
franchisees.
Performance in 2023
System sales grew
5.8% in 2023 on a
52-week basis.
This was driven by
working collaboratively
with our franchise
partners, focusing on
our five key priorities
for the year and giving
our customers great
service and value in
a challenging market.
Link to Strategy
App orders as
apercentage of
online orders (%)
73.8
52.2
46.2
2021
2
022
2023
Description
Our app is a key driver
of our digital strategy.
The number of customers
using our app has
significantly increased
over the last two years,
and we are focused on
moving more customers
to the app as they have
a
higher customer
lifetime value.
Performance in 2023
We saw a material
increase in the amount
of online orders placed
on the Domino’s app
in 2023.
App orders as a
percentage of online
orders were 73.8%,
an increase of 21.6 ppts
over 2022.
Continuing to attract
more customers to the
app and more orders via
digital channels is a key
focus in 2024.
Link to Strategy
New store
openings
61
35
31
2021
2
022
2023
Description
New stores are a driver
of growth. They increase
the scale of the system,
raising the profile of
the brand and increasing
value for all franchisees.
In addition, they are a
signal of good financial
returns for franchisees.
Performance in 2023
We opened 61 new
stores in 2023, a material
increase compared
to 2022.
These stores were opened
by 23 different franchise
partners and we were
delighted that three new
‘Home Grown Heroes’
opened stores in the year.
Link to Strategy
Underlying
EBITDA (£m)
138.1
130.1
136.4
2021
2
022
2023
Description
Underlying EBITDA
is a key profitability
metric and gives an
indication of the
underlying performance
of
the business.
Performance in 2023
Underlying EBITDA
was £138.1m, on a
53-week basis, up £8.0m
compared to last year,
compared to guidance
of
£132m-£138m.
This was driven by an
increase in system sales,
continued store growth
and strong supply chain
performance. This also
included £8.9m of
one-time costs associated
with our technology
platform projects.
Link to Strategy
Delivered
on time (%)
78.8
74.8
76.5
2021
2
022
2023
Description
Customer service is key
to the long-term success
of Domino’s, and one
of the most important
aspects is speed of
delivery. The quicker our
customers receive their
order, the better tasting
the pizza and the more
likely they are to order
again. We aim to deliver
pizzas to customers
within 30 minutes of
being
ordered. The metric
represents the proportion
of orders that meet
this target.
Performance in 2023
Service improved
materially in 2023 as
a result of a dedicated
focus from DPG and
our franchise partners.
The number of orders
delivered on time
improved by 4 ppts
to 78.8%.
We are all focused on
continuing to improve
this key metric for
our
customers.
Link to Strategy
22
Domino’s Pizza Group plc Annual Report & Accounts 2023
Net debt
(£m)
232.8
253.3
199.7
2021
2
022
2023
Description
Group net debt is a
liquidity metric and is
calculated by subtracting
the cash and cash
equivalents from our
total debt. As discussed
in the Chair’s statement
on page 7, our capital
allocation framework aims
for normalised Net Debt
to Underlying EBITDA
leverage of 1.5x–2.5x.
Performance in 2023
In line with guidance, net
debt decreased by £20.5m
during the year, with free
cash flow generated
offset with returns to
shareholders through
increased dividend
payments and £90m of
share buyback programmes
announced in the year.
Link to Strategy
Free cash
flow (£m)
97.0
79.0
104.6
2021
2
022
2023
Description
Free cash flow is our main
cash performance metric
and gives an indication of
the cash generated from
our trading activities.
Performance in 2023
Free cash flow increased
by £18.0m to £97.0m,
primarily driven by an
increase in Underlying
EBITDA and a £10.2m
working capital inflow.
Link to Strategy
Underlying
earnings per
share (p)
18.0
18.8
20.3
2021
2
022
2023
Description
Underlying earnings per
share (“EPS”) represents
the net profit attributable
to each share, after taking
into account tax and net
finance costs, and the
change in the number of
shares from year to year.
It excludes one-off or
non-recurring items.
Performance in 2023
Underlying basic EPS
decreased to 18.0p on a
52-week basis, which is
due to a decrease in
underlying profit after tax,
driven by higher interest
costs and an increase in
tax. This was partially
offset with a lower number
of weighted average shares
due to the share buyback
programmes.
Link to Strategy
Share
buybacks
announced (£m)
90
86
80
2021
2
022
2023
Description
Our asset-light business
is highly cash generative
and we use a capital
allocation framework to
maximise shareholder
returns. In line with
the capital allocation
framework, after investing
in the core business,
paying a sustainable and
progressive dividend and
evaluating additional
growth opportunities,
we will return surplus
cash to shareholders.
Performance in 2023
£20m programme
announced in May
and £70m in August.
The £70m programme
was following the
receipt of proceeds
from the disposal of
the German associate.
Link to Strategy
Dividend per
share (p)
10.5
10.0
9.8
2021
2
022
2023
Description
Our asset-light business
is highly cash generative,
and we use a capital
allocation framework
to maximise shareholder
returns. In line with the
capital allocation
framework we have a
sustainable and progressive
dividend policy.
Performance in 2023
Full-year dividend
proposed of 10.5p
per share, representing
a 5.0% increase
compared to 2022.
Link to Strategy
Strategy key
Discover more on p20-21
Franchise Partner
profitability and
organisation
Value for
Money
Digital Convenience Technology
Platform Projects
Strategic report Governance Financial statements
23
Domino’s Pizza Group plc Annual Report & Accounts 2023
ENGAGING WITH OUR STAKEHOLDERS AND WORKFORCE
Our stakeholders are integral to the long-term success of the business.
We are committed to a process of continual improvement of our engagement processes.
Why they matter
We recognise that we have a responsibility
to ensure we’re a force for good within
the neighbourhoods that we operate in,
by supporting local initiatives, being a good
neighbour and providing employment.
How we engage
– Local and national charity fundraising
and community initiatives.
– Local council engagement.
– Food bank donations.
– Digital platforms and social media used
to share information.
– Supporting our franchisees with community
initiatives within their operational territories.
Issues raised
Local communities expect the Company
to operate safely and sustainably. We are
approached about a range of operational
matters regarding our supply chain centres
and at store level. We receive queries on
our approach to maintaining animal welfare
standards and tackling food poverty.
How we responded
We continue to engaged directly with members
of the public, MPs and local authorities.
Our management of environmental, social and
governance (‘ESG’) and sustainability includes
addressing the issues of climate change,
maintaining high animal welfare standards and
partnering with Fareshare to help tackle food
poverty. In April 2023 the Company announced
a new partnership with The Natasha Allergy
Research Foundation. The Company has
pledged a funding commitment of £120,000
over a three-year period to support the charity
in its work to make the world a safer place for
people living with food allergies. We work
closely with our franchisee partners to provide
employment opportunities in communities
across the UK & Ireland.
Why they matter
With increasing numbers of competitors and
changing consumer tastes, understanding the
needs of our customers allows us to continually
improve our service, products and experience.
How we engage
We obtain customer feedback through a variety
of channels to ensure we keep improving the
customer experience and stay abreast of their
expectations. Our Feed Us Back programme,
in which customers who provide us with a valid
email address are invited to complete a survey,
remains our biggest customer satisfaction
programme. The questionnaire focuses on six
key measures and metrics, relating to overall
satisfaction, value, timeliness, taste, accuracy
and appearance of food. We also engage
through consumer taste panels, bespoke
surveys and research panels.
Issues raised
Customers regularly raised queries on our
plans to extend the product range and show
an increasing interest in vegan-friendly options.
We receive comments and feedback on the
performance of our app and web-based
platforms in terms of customer journey and
operational performance. Customers have
raised issues around product pricing,
particularly in the recent inflationary
environment. Customers are keen to hear
of new store openings, which increase reach
to serve customers wherever they are in
the most convenient way possible.
How we responded
The Company invested in new product
development and continued to expanded
its product range of vegan-friendly options.
Working in collaboration with our franchisee
partners, we have introduced a range of pricing
promotions offering increased value to our
customers. Our app and web-based platforms
undergo regular updating and customer
feedback on their performance enables us to
optimise their functionality and enhance the
customer journey.
Why they matter
Our dedicated and experienced colleagues
are a key asset of our business. We recognise
the importance of creating and maintaining a
positive working environment and providing
opportunities for individuals to fulfil
their potential.
How we engage
Our colleague engagement mechanisms
comprise various communication channels
including annual engagement surveys,
All Colleague Meetings held quarterly, and
the ‘Share a Voice’ colleague forums. Further
details on the forums can be found in the
workforce engagement section on page 65.
Issues raised
In 2023 the topics particular interest to our
colleagues related to reward mechanisms,
recognition, and personal development.
How we responded
We launched a review of the group’s approach
to reward structures which included a job
evaluation exercise across the group, and a
review of the competitiveness of employment
benefits. In January 2024 we launched a new
long service recognition programme which
includes additional leave entitlement depending
on length of service. Each year we hold a ‘Domi
Awards’ event at which we celebrate those that
go the extra mile, live our values and provide
service excellence. The structure of our awards
event is being revised so that colleagues’
achievements can be recognised across the
whole year rather than just at a single event.
COMMUNITIES CUSTOMERS EMPLOYEES
24
Domino’s Pizza Group plc Annual Report & Accounts 2023
Why they matter
Our franchise partners play a critical role in the
long-term success of the business, by providing
outstanding customer service day-in, day-out.
Franchisees are the custodians of the Domino’s
brand at store level and it is the Company’s role
to provide franchisees with the support they need
to operate efficient and profitable businesses
and to maintain the highest brand standards.
How we engage
Engagement with our franchisee community is
integral to our business model. There is regular
contact with franchisees by the Chief Executive
Officer and the Executive Leadership team,
both formal and informal, and through dedicated
business partners. The Company and franchisees
operate a number of established forums to
collaborate on marketing activity, technical
matters and operations issues. The Company
hosts a two-day Rally every two years which
is typically attended by franchisees, and by
approximately 1,000 of their senior colleagues.
The next Really will be held in summer 2024.
Franchisees are invited to participate in a
Satisfaction Survey to obtain opinions and views
on a range of matter in a structured format.
Issues raised
As in previous years, many of the issues
raised by franchisees is focused on store level
profitability and the support provided by the
Company, particularly during periods of high
food cost and labour cost inflation. Franchisees
have raised queries on the how the Company
will use its expertise and resources to help
franchisees to open new stores, grow the
business in their existing estate, and optimise
store level profitability.
How we responded
The Company has continued to work closely with
suppliers to minimise cost increases to franchisees
wherever possible, while maintaining consistency
of product ingredients and a high level of product
availability. We have worked closely with
franchisees to assist with their recruitment
requirements and providing tools to increase
labour scheduling efficiency. During the year,
the Company and franchisees held Economic
Forums at which the Company outlined its support
activities to develop the franchisee system
including the increased focus on digital marketing.
Why they matter
Our shareholders have invested in the
Company’s shares and expect to see a return
on their investment. Shareholders play an
important role in the oversight of the
Group’s governance.
How we engage
We maintain a constructive dialogue with
shareholders. We engage with them regularly,
both proactively and reactively, to understand
their perspectives and ensure these are
considered in our decision-making. The principal
points of contact (either in person or via video
calls) are through the Chief Executive Officer,
Chief Financial Officer and Head of Investor
Relations and are through a combination of
meetings with specific investors, roadshows,
investor conferences and at the Annual General
Meeting. The Board Chair or chairs of the Board
Committees have meetings with shareholders
as required.
Issues raised
During the year shareholders’ raised questions
over the Board’s plans to recruit a permanent
Chief Executive Officer; proposals for changes
to the Directors’ Remuneration Policy; the
application of the Board’s capital allocation
policy, particularly in respect of the proceeds
from the disposal of the Group’s interest in the
German associate; future growth opportunities
available to the business; and questions on a
variety of operational matters.
How we responded
In July 2023 we announced that Andrew Rennie
had been appointed as Chief Executive Officer
commencing in August 2023. There had been
an extensive consultation exercise with
shareholders on changes to the Directors’
Remuneration Policy leading to the policy
changes being approved at a General Meeting
held on 30 June 2023. Further details are
included in the Directors’ Remuneration Report
on pages 78 to 108. In August 2023 the Board
announced a share buyback programme of
£70 million following receipt of the proceed
from the disposal of the Group’s German
associate. An Investor event was held on
11 December 2023 at which the market
received an update on the Group’s new
growth framework.
Why they matter
An efficient supply chain is integral to the
Group’s business model, and the relationship
with our suppliers is a key element in achieving
our operational goals.
How we engage
Engagement with our suppliers remains
through a combination of organised events
(e.g. annual supplier conference), periodic
performance/commercial reviews conducted by
our procurement teams and supplier assurance
function. Given the importance of the
Company’s relationship with its suppliers chain,
the Chief Executive Officer has held a series
of meetings with the Group’s top suppliers.
As indicated in last year’s annual report,
a formal supplier engagement survey was
launched in 2023.
Issues raised
The relationship with our suppliers
is commercially focused and yet very
collaborative. We work closely with our
suppliers to maintain 100% availability of the
products supplied to stores and to contain
price inflation to the greatest extent possible.
Suppliers have also requested greater insights
into strategic developments, product
innovation and ways to improve information
flows with suppliers through integrated
eCommerce platforms.
How we responded
In 2024 we plan to increase the frequency of
meetings between our Procurement Director
and our major suppliers to provide updates on
strategic developments and ensure alignment
on the Group’s purpose and values. Our
business review process for suppliers will be
enhanced to ensure consistency, balance and
rigour. We will continue to review opportunities
to improve eCommerce capability between
the Company and it supplier base.
FRANCHISEES SHAREHOLDERS SUPPLIERS
For further details on our Colleague Forums,
see page 65 on workforce engagement.
For more information on how we consider stakeholder views at Board level to promote
thelong-term success of our business, see our Section 172 Statement on page 26.
Strategic report Governance Financial statements
25
Domino’s Pizza Group plc Annual Report & Accounts 2023
Section 172 statement
The Board continues to maintain high governance standards and make
long-term decisions for the benefit of the Company and its stakeholders.
The likely consequences of any decision
in the long term
The interests of the Company’s employees
The need to foster business relationships
with suppliers, customers and others
The impact of the Company’s operations
on the community and the environment
The desirability of the Company
maintaining a regulation for high
standards of business conduct
The need to act fairly as between
members of the Company
S172 FACTOR
Section 172 of the UK’s
Companies Act
Section 172 Companies Act 2006 requires
that all Directors act in good faith to promote
the success of the Company for the benefit
of its shareholders as a whole. In doing this,
Directors must have regard to factors set out
in the Act.
The following is an overview of how the
Board has performed its duties during
the year.
The Chair, Chief Executive Officer,
Chief Financial Officer and Senior
Independent Director (and the Chairs
of the principal Board Committees
where required) have regular contact
with major shareholders. The Board
receives regular updates on the views
of shareholders, which are taken
into account when the Board
makes decisions.
Examples of relevant decisions taken
include: application of the Board’s capital
allocation framework in returning cash to
shareholders through a combination of
dividends and share buybacks, including
the £70 million share buyback announced
in August 2023 following the receipt of
proceeds from the disposal of the Group’s
disposal of its interest in the Daytona JV;
succession planning and appointments
to the Board, including the appointment of
Andrew Rennie as Chief Executive Officer
who joined the Board in August 2023;
changes to the Directors’ Remuneration
Policy to facilitate the introduction of
Premium Priced Option awards.
Shareholders
26
Domino’s Pizza Group plc Annual Report & Accounts 2023
The likely consequences of any decision
in the long term
The interests of the Company’s employees
The need to foster business relationships
with suppliers, customers and others
The impact of the Company’s operations
on the community and the environment
The desirability of the Company
maintaining a regulation for high
standards of business conduct
The need to act fairly as between
members of the Company
S172 FACTOR
Stella David was, throughout 2023, the
designated Non-executive Director for
the purposes of workforce engagement.
Details of the Board workforce
engagement programme are shown on
page 65. The Board receives regular
updates on matters relating to its
workforce including feedback from
engagement surveys, regular updates
on health and safety matters, and other
reports on a variety of workforce
engagement mechanisms.
These views have been taken into account
when the Board (or its Committees)
considered: development of the Group’s
strategy and the relationship with the
Group’s franchisees; updates on Company
culture and the Group’s purpose and
values; decisions relating to talent
development and succession planning;
and remuneration and reward including
the structure of incentive arrangements.
The Group’s customer base primarily
comprises its franchisees and
consumers. The Chief Executive Officer,
Chief Financial Officer and other
members of the Executive leadership
team have regular contact with
franchisees as this relationship is
fundamental to our business model.
The Board receives updates on feedback
from franchisees at every Board
meeting. Feedback is taken into account
in Board decisions which have included
the investment in and development
of e-commerce and information
technology; incentives available
for franchisees that open new stores;
and decisions on raw material pricing
for franchisees during a period of high
food price inflation and its impact on
franchisee store level profitability.
As a consumer brand we welcome
and reflect on the views of our end
customers. The Group undertakes
regular surveys to establish consumer
views on brand perception, marketing
campaigns, product development,
product quality, service levels and
perception of value for money. These
views are reflected in decisions on the
Group’s strategy, the introduction of
new product ranges and operational
matters, which included the decision to
launch a trial on the Uber Eats platform.
We recognise that the business has a
role in contributing to wider society.
The Board encourages the fundraising
efforts of the Group and franchisee
community for Teenage Cancer Trust,
Barretstown and the many other
local initiatives supported by the
Group. Through Domino’s Partners
Foundation (a registered charity),
we support colleagues across our
operations in the UK & Ireland who
find themselves in particular hardship.
The Board’s Sustainability Committee
has oversight of all aspects
of sustainability, including climate
change and environmental matters.
Employees Customers
Community and
environment
Strategic report Governance Financial statements
27
Domino’s Pizza Group plc Annual Report & Accounts 2023
Sustainability
The five material issues shown below are far
from our only responsible business priorities.
However, they are consistently seen as the
most important topics when we engage with
both internal and external stakeholders. As
such, they form the foundation of our Group
“Connect the Dots” sustainability programme.
Our business model relies on long-term, trusted partnerships
with franchisees, business partners and suppliers. This makes
the management of sustainability performance more complex
than in many comparable organisations. Where we exercise partial
or indirect control, for example with franchisees, we encourage
sustainable behaviour by setting and promoting policies that create
a strong foundation for action. These frameworks are implemented
across our corporate stores and supply chain centres (‘SCC’),
as well as by our franchisees and supply chain partners.
Our material sustainability issues
Our customers
Our Commitment
We give our customers
more choice, so they can meet
their dietary requirements,
and are empowered to make
informed decisions
Our PEOPLE
Our Commitment
We’re working to attract
and retain colleagues with
a range of backgrounds,
identities and perspectives
Our Sourcing
Our Commitment
We’re committed to ensuring
all animals in our supply chain
are well treated
28
Domino’s Pizza Group plc Annual Report & Accounts 2023
THE D TS
CONNECT
OUR
SUSTAINABILITY
PROGRAMME
Domino’s UK & Ireland
Sustainability Programme
Domino’s Pizza Group plc
You can read more about our sustainability
journey, as well as our progress to date in our
first annual Sustainability Report https://
corporate.dominos.co.uk/Corporate-responsibility
Our Environment
Our Commitment
We’re committed to reducing
our carbon emissions to
achieving Net Zero emissions
by 2050, through energy
efficient production and
transport innovation
Our Commitment
We want to reduce our
impact on the environment
by recycling more, wasting
less, and using more
sustainable materials
Our Communities
Our Commitment
We continue to rally behind
our charity partners to help
raise funds for those in need
Our Commitment
Our Partners Foundation
will continue to support
Domino’s team members
experiencing financial hardship
Strategic report Governance Financial statements
29
Domino’s Pizza Group plc Annual Report & Accounts 2023
Sustainability
TCFD STATEMENT
The nature and scope of these disclosures were supplemented by
the Climate-related Financial Disclosure Regulations 2022 (CFD),
which are similarly based on TCFD but which include an absolute
requirement to report.
Domino’s was required to implement the reporting recommendations
of TCFD applied to the 2022 financial year, although we chose to
report on the majority of the TCFD reporting obligations in the 2021
Annual Report. The following disclosure is consistent with the TCFD
recommended disclosures and the reporting obligations of the Listing
Rules and the CFD. We are currently in the process of developing a
robust methodology to quantify the financial impact of the various
risks and opportunities outlined below. We will provide information
on progress and the results in our next Annual Report.
Our understanding of climate-related risks and opportunities
continues to evolve as does our disclosure under the TCFD reporting
framework. The following disclosure sets out the Company’s approach
to governance, risk management, strategy, and metrics and targets.
Governance
a) Describe the Board’s
oversight of climate-related
risks and opportunities.
The Board retains overall responsibility on assessing risks
and opportunities related to climate change assisted by
the Board’s Committees. In 2021, the Board established
a Sustainability Committee, which has oversight of the
development of strategies, policies and performance in
relation to environmental, social and governance (‘ESG’)
matters, including climate change. The committee is
chaired by Tracy Corrigan and the other members are two
non-executive directors. The Committee meets at least
three times a year.
The Audit Committee reviews the Group’s public disclosures
and reporting on climate-related issues, including the
reporting of greenhouse gas emissions and related third-party
assurance. The Remuneration Committee has oversight of the
remuneration of Executive Directors and senior management
and considers how best to align incentives with performance
on ESG matters.
The Company’s approach to climate change and other
environmental issues is articulated in our group
Environmental Policy.
b) Describe management’s
role in assessing and
managing climate-related
risks and opportunities.
Notwithstanding changes in the senior leadership team over
the past 12-18 months (see page 66), ESG issues have remained
a priority. Day-to-day responsibility for running the business,
including ESG matters and climate change issues, rests with the
Chief Executive Officer. The Chief Executive Officer chairs the
Group’s Sustainability Steering Committee which comprises of
Executives across the Group with responsibility for managing
the Group’s sustainability initiatives. The Steering Group has
an explicit focus on climate-related initiatives and performance.
The Supply Chain Director has responsibility for operational
delivery of climate change initiatives, as the supply chain has
the most significant environmental impacts, e.g. production,
logistics, energy procurement and supplier engagement.
The Chief Marketing Officer is responsible for communication
on these issues, and has overall responsibility for corporate
communication and reputational management. Both of these
positions report to the Chief Executive. The Company
Secretary briefs the Board and its Committees on
climate-related issues, and any issues raised are monitored
via our risk assessment process.
In late 2020, the Financial Conduct
Authority issued a policy statement
requiring all UK premium listed companies
to include a statement in their annual
report that complies with the reporting
recommendations of the Task-Force on
Climate-related Financial Disclosure (TCFD)
(as set out in Listing Rule LR 9.8.6R).
30
Domino’s Pizza Group plc Annual Report & Accounts 2023
Strategy
a) Describe the
climate-related risks
and opportunities
the organisation has
identified over the short,
medium, and long term.
The Board monitors the impact of climate change risk and
opportunities on the Group’s strategy and business model.
Given the nature of climate change and its associated
timescales, it considers the impact over the short (1-3 years),
medium (4–10 years) and long (10 years plus) term. Following
completion of the first scenario analysis exercise that was
undertaken in 2022, the Board has identified various
climate-related risks and opportunities, details of which are
set out on page 33. As noted below, the scenario modelling
conducted to date has been restricted to a qualitative analysis.
Based on our initial analysis, none of the risks identified are
likely to have a material financial impact on the business over
the next three years.
In selecting the various scenarios, we followed the disclosure
requirements by including at least one scenario that included
a temperature increase of 2ºC. When selecting the scenarios,
we discounted any that could be regarded as overly optimistic
– i.e. no change or less than a 1.5ºC temperature rise – because
of the latest climate science, the pace of change in terms of
government policy and progress towards emissions reductions
to date. Likewise, we excluded doomsday (more than 3ºC
increase) scenarios on the basis of the scientific consensus
about what is likely to happen.
b) Describe the impact
of climate-related risks
and opportunities on
the organisation’s
businesses, strategy,
and financial planning.
The Company has identified various climate-related risks
and opportunities, following the scenario analysis exercise
that was completed in 2022. The scenarios were based on
a range of credible sources, including the Intergovernmental
Panel on Climate Change’s (IPCC) Representative
Concentration Pathways (RCPs) and Shared Socioeconomic
Pathways (SSPs); International Energy Agency (IEA) scenarios;
and the Principles for Responsible Investment’s (PRI)
Inevitable Policy Response (IPR).
At this stage, the scenario modelling has been restricted to
a qualitative analysis and further work is required to quantify
the risks and opportunities. Details of the scenario analysis
exercise and risks and opportunities are shown on pages 34
and 35. In summary, the most significant risks the Company
faces relate to:
1. tension between franchisees and investor demands
to transition to net zero business models (in the event
of a temperature increase of 1.5°C or more);
2. increased costs and/or shortage of key ingredients
(2°C increase or more); and
3. a decline in employee satisfaction arising from challenging
working conditions (3°C increase).
The Company’s initial analysis suggests that the first and
second risks may begin to have an impact over the medium
to long term while the impact of the third risk will only begin
to manifest in the long term. To address the first and third risks,
the Company has developed its Store of the Future concept,
which will harness the latest technology. The store concept is
helping to develop a business case for investment in equipment
that reduces carbon emissions cost effectively while also
enhancing working conditions. The first store to incorporate
these improvements opened in March 2023 in Hammersmith
and will act as a blueprint for future stores. The eco-friendly
design will cut carbon use by more than a third.
With regard to the second risk, the Company has begun
discussions with some of its key ingredient suppliers to better
understand their efforts to meet the challenges posed by
climate change. A number of these suppliers are already
well-advanced in developing their own strategies and initiatives
to facilitate the transition to a low-carbon economy.
In addition, and recognising both the role reducing emissions
arising from our transport operations will play in helping the
Company achieve its science-based target and the importance
of making our distribution network resilient to disruption
caused by climate change, we are assessing the feasibility of
switching to more eco-efficient vehicles and re-modelling our
overall logistics strategy.
c) Describe the resilience of
the organisation’s strategy,
taking into consideration
different climate-related
scenarios, including a 2°C
or lower scenario.
While the scenario process did identify some potential
opportunities – principally relating to changing product
offerings and brand positioning – they are unlikely to have any
discernible impact on the business strategy in the short term.
The Company will continue to undertake regular surveys of its
customer base, engage with other stakeholders and respond
appropriately to changing demand and expectations. We will
undertake a further scenario analysis utilising the latest climate
science before the end of 2024 and use the results to refine
our strategy. A summary of the results will be provided in next
year’s Annual Report.
Strategic report Governance Financial statements
31
Domino’s Pizza Group plc Annual Report & Accounts 2023
Sustainability
Risk Management
a) Describe the organisation’s
processes for identifying and
assessing climate-related risks.
Risks and opportunities are reviewed on a quarterly basis as part
of an extensive and well-established risk/opportunity management
process. The results are reported to the Executive leadership team
for review and action.
We are currently in the process of developing a
methodology for assessing the scale of the risks and
opportunities posed by climate change. As part of this
process we will establish parameters to categorise both
the magnitude and likelihood of these challenges.
b) Describe the organisation’s
processes for managing
climate-related risks.
The Board is responsible for identifying the Group’s principal risks
and how they are being managed or mitigated. All risks are assessed
using our bespoke 5 x 5 risk assessment matrix, which takes into
account probability and likelihood and level of operational control.
We have linked the risks to the pillars of our strategic
plan and manage an active risk register. The risk register
forms part of our overall Risk Management Framework,
reviewed by the Audit Committee on behalf of the Board,
which retains overall responsibility for risk management.
c) Describe how processes
for identifying, assessing,
and managing climate-related
risks are integrated into
the organisation’s overall
risk management.
Climate change forms part of one of our principal risks and at a
Company level, management considers the risks of climate change as
they apply to the Group’s stated strategy. This includes the potential
costs and benefits of using lower carbon resources whether for
buildings, transport or otherwise.
At an asset level, each building owned, including the
commissaries and the transportation method, is reviewed
and considered in light of risks, including potential future
regulatory risks. Opportunities for adopting best practice
and the appropriateness for the business going forwards
are also reviewed in order for the Company to be
considered as leaders in the marketplace.
Metrics & Targets
a) Disclose the metrics used by
the organisation to assess climate-
related risks and opportunities
in line with its strategy and
risk management process.
In 2022 the Group started the process of assessing climate-related risks and opportunities through development of climate
scenarios. A summary of the initial output is shown on pages 34 and 35.
The Group will continue to refine its methodologies and approach to climate scenarios, and to develop quantification
of potential risks and opportunities. A further scenario analysis will be undertaken in 2024.
b) Disclose Scope 1, Scope 2,
and, if appropriate, Scope 3
greenhouse gas (GHG) emissions,
and the related risks.
The Group manages and monitors its Scope 1, Scope 2 and Scope 3 GHG emissions and reports on these annually through
the Streamlined Energy and Carbon Reporting (‘SECR’) requirements which are shown on page 36.
c) Describe the targets used
by the organisation to manage
climate-related risks and
opportunities and performance
against targets.
In 2021, we made public commitments to set a science-based emissions reduction target and to be net zero by 2050, and submitted
our proposed targets to SBTi for validation. In 2022, SBTi validated the Group’s targets to reduce Scope 1 and Scope 2 emissions by
42% and Scope 3 emissions by 25% by 2031, and our commitment to achieve net zero by 2050. The former is defined by SBTi as a
short-term target. However, as explained above, the Company regards this commitment as falling within its medium-term risk timeframe.
Progress towards achieving these targets has already begun. The Company has switched to green electricity for its offices,
distribution centres and corporate stores. In addition, and as described above, roll-out of our Store of the Future programme
has begun, which will deliver reductions in emissions.
Over 75% of the Company’s emissions relate to Scope 3, with the overwhelming majority deriving from ingredients used to make
our products and energy consumption within our franchised stores. With regard to the former, we have begun discussions with
some of our largest suppliers which account for a major share of our Scope 3 emissions to understand how they are planning to
reduce their own emissions and provide us with products than are less carbon intensive. We are also exploring with them
opportunities for collaborating on joint initiatives to reduce emissions.
We are currently developing plans to reduce emissions in our corporate stores through the use of more eco-efficient technology
and streamlined operational processes. Once these improvements are implemented, we will encourage franchisees to witness these
improvements first hand and encourage them to adopt similar technology and processes within their own stores.
The Company will shortly begin to develop a suite of metrics that align its business performance with the risks and opportunities
arising from climate change. Specifically, we will seek to incorporate these factors into the decision-making process around capital
expenditure, selection of suppliers, and development of new products.
TCFD STATEMENT continued
32
Domino’s Pizza Group plc Annual Report & Accounts 2023
scenarios; and the Principles for Responsible Investment’s (PRI)
Inevitable Policy Response (IPR) scenarios. We recognise that such
a modelling exercise cannot provide precise predictions of future
events and will have to be revisited periodically and adapted to
current data and scientific developments. During 2023, we began
to refine the outputs from this process and incorporate them into a
robust methodology that will quantify in financial terms the impact
of the various risks and opportunities that have been identified on
the Company’s strategy, operations and infrastructure. This process
will continue in 2024 and we aim to report on progress next year.
We will undertake a further scenario analysis exercise in 2024
and the results will be summarised in the Annual Report for 2024.
Scenario analysis and climate-related risks
and opportunities
In 2022, the Company conducted its first scenario analysis to identify
the resilience of the Group’s strategy under three different possible
climate scenarios. The methodology for the scenarios analysis was
developed by external advisers and a cross-functional team was
engaged, through a series of workshops, to develop the scenario
modelling exercise and articulate the potential risks and opportunities
from the perspectives of differing stakeholder groups: customers,
colleagues, franchisees, suppliers and investors.
The scenarios used are summarised below and include a 2°C
scenario as suggested by the TCFD reporting recommendations.
They draw on the Intergovernmental Panel on Climate Change’s
(IPCC) Representative Concentration Pathways (RCPs) and Shared
Socioeconomic Pathways (SSPs); International Energy Agency (IEA)
1.5°C
temperature rise above
pre-industrial levels
A Better World
Action taken has achieved the aims set out in the 2015 Paris Agreement to limit climate change
to below 1.5°C of pre–industrial levels, but with significant shifts in policy, cost increases and
consumer behaviour change.
2.0°C
temperature rise above
pre-industrial levels
An Uncertain and Volatile World
Not much has changed from today. Some action has been taken, but it’s very much business
as usual. Uncertainty increases and the impacts of a changing climate manifest themselves
in vulnerable parts of the world.
3.0°C
temperature rise above
pre-industrial levels
An Irreversible Change
Economies around the world have continued to be powered by fossil fuels. As a result, the planet
is in crisis and well past the point of no return by 2030. Global warming has accelerated and
changes in climate are all around, tangible and, in some cases, catastrophic.
Strategic report Governance Financial statements
33
Domino’s Pizza Group plc Annual Report & Accounts 2023
Sustainability
TCFD STATEMENT continued
S M L
Short Medium Long
Physical and transitional risks
Risk/opportunity Risk Risk Risk Risk Risk Risk Risk
Physical | transitional
physical physical transitional transitional physical physical
transitional
physical
transitional
Description Increased cost and supply chain
disruption of key raw ingredients.
Global crop yield loss from
increasing temperatures and
extreme weather events drives
up cost of raw ingredients.
Decline in employee job satisfaction
at stores. Increase in health and
safety issues working in a hot
environment with staff availability,
scheduling of breaks and recruitment/
retention issues. Satisfaction is
further eroded by complaints from
unhappy customers.
Tension between franchisees reluctant
to shift to net zero model versus
investors (and other stakeholders)
urging faster transition.
Increased cost of doing business
for stores. Costs of doing business
will increase due to changes in
policy (i.e. carbon tax) and societal
pressure as companies reduce their
carbon footprint is exacerbated by
shifts in product supply and demand
reducing margins, together with
lower levels of customer disposable
income potentially reducing size
and frequency of food orders.
Extreme weather events in UK/
Ireland disrupt store operations.
Heatwaves cause problems for
labour availability and stock
scheduling (as customers switch
preferences), dough-proofing
issues and potential suspension
of customer deliveries.
Decline in customer satisfaction,
leading to reduced sales. Extreme
weather events lead to gaps in
menu choices, leading to increased
complaints and reduced brand
loyalty as customers switch to
brands with better availability and
consistent product quality. Customer
preferences shift away from DPG
core menu range, i.e. foods with
high carbon footprint per meal
(e.g. meat and cheese).
Decrease in access to finance
from investors, particularly true
for businesses regarded as having
an unsustainable business model
either from failure to commit to
the net zero pathway or significant
operational disruption from
extreme weather events.
Time frame (term)
M L M L M L M L L L M L
Applicable scenario(s)
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
Materiality
Not material
Material
Material
Not material
Not material
Material
material
material
Material
material
material
Material
Not material
Material
Material
Not material
Material
Material
Not material
Material
Material
34
Domino’s Pizza Group plc Annual Report & Accounts 2023
Physical and transitional risks
Risk/opportunity Risk Risk Risk Risk Risk Risk Risk
Physical | transitional
physical physical transitional transitional physical physical
transitional
physical
transitional
Description Increased cost and supply chain
disruption of key raw ingredients.
Global crop yield loss from
increasing temperatures and
extreme weather events drives
up cost of raw ingredients.
Decline in employee job satisfaction
at stores. Increase in health and
safety issues working in a hot
environment with staff availability,
scheduling of breaks and recruitment/
retention issues. Satisfaction is
further eroded by complaints from
unhappy customers.
Tension between franchisees reluctant
to shift to net zero model versus
investors (and other stakeholders)
urging faster transition.
Increased cost of doing business
for stores. Costs of doing business
will increase due to changes in
policy (i.e. carbon tax) and societal
pressure as companies reduce their
carbon footprint is exacerbated by
shifts in product supply and demand
reducing margins, together with
lower levels of customer disposable
income potentially reducing size
and frequency of food orders.
Extreme weather events in UK/
Ireland disrupt store operations.
Heatwaves cause problems for
labour availability and stock
scheduling (as customers switch
preferences), dough-proofing
issues and potential suspension
of customer deliveries.
Decline in customer satisfaction,
leading to reduced sales. Extreme
weather events lead to gaps in
menu choices, leading to increased
complaints and reduced brand
loyalty as customers switch to
brands with better availability and
consistent product quality. Customer
preferences shift away from DPG
core menu range, i.e. foods with
high carbon footprint per meal
(e.g. meat and cheese).
Decrease in access to finance
from investors, particularly true
for businesses regarded as having
an unsustainable business model
either from failure to commit to
the net zero pathway or significant
operational disruption from
extreme weather events.
Time frame (term)
M L M L M L M L L L M L
Applicable scenario(s)
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
1.5°
2.0°
3.0°
Materiality
Not material
Material
Material
Not material
Not material
Material
material
material
Material
material
material
Material
Not material
Material
Material
Not material
Material
Material
Not material
Material
Material
Strategic report Governance Financial statements
35
Domino’s Pizza Group plc Annual Report & Accounts 2023
Sustainability
Streamlined energy and carbon reporting
In 2023, we continue to report on our Greenhouse Gas (‘GHG’)
emissions and strive to collect more actual data than ever before
to better track and understand our emissions, as well as analysing
the data to identify where we can make improvements.
In addition to our own internal processes and governance, Domino’s
Pizza Group has commissioned independent limited assurance
on selected metrics. PricewaterhouseCoopers LLP (‘PwC’) carried out
a limited assurance engagement on selected GHG emissions data for
the year ending 31 December 2023 in accordance with International
Standard on Assurance Engagements 3000 (revised) and 3410, issued
by the International Auditing and Assurance Standards Board.
A copy of PwC’s report and our Methodology Document is on our
website (https://investors.dominos.co.uk/investors/shareholder-
information/independent-limited-assurance). The figures that have
been covered by this assurance process are indicated in the table
below by the following symbol:
Domino’s Pizza Group has estimated its Scope 3 in accordance with
the Greenhouse Gas Protocol Corporate Standard using a screening
methodology. The screening methodology has reviewed all 15
potential categories as defined in Greenhouse Gas Protocol and has
modelled seven categories (including category 1 – Purchased Goods
& Services; and category 12 – End-of-Life Treatment of Sold Products)
which are deemed to be the most material to the Group’s operations.
For 2023, the estimated Scope 3 emissions for all operations
amounted to 456,972 tCO
2
e.
Greenhouse gas emissions summary for 2023
Our reporting period for GHG emissions is from 1st January to 31st December.
Tonnes of CO
2
e – All operations Tonnes of CO
2
e – UK only
2023 2022 2023 2022
Total tCO
2
e emissions (market-based) 14,439 14,295 12,273 12,389
Total tCO
2
e emissions (location-based) 16,750 16,426 14,865 14,800
Scope 1 greenhouse gas emissions tCO
2
e 12,758 12,858 11,524 11,665
Scope 2 (location-based) greenhouse gas emissions tCO
2
e 3,992 3,568 3,341 3,136
Scope 2 (market-based) greenhouse gas emissions tCO
2
e 1,681 1,437 749 725
tCO
2
e per tonnes of dough produced (location based) 0.35 0.33 0.34 0.34
Total Energy Consumption (MWh) 71,562 71,786 64,671 66,175
Scope 3 greenhouse gas emissions tCO
2
e 456,972 505,504 N/A N/A
Domino’s has committed to the following climate-based targets
which have been validated by SBTi:
Reduce greenhouse gas emissions from direct operations (supply
chain, support offices and corporate stores) (Scope 1 and Scope 2
– market based) by 42% by 2031.
Reduce greenhouse gas emissions from franchise stores and
suppliers (scope 3) by 25% by 2031.
Reach net zero by 2050.
36
Domino’s Pizza Group plc Annual Report & Accounts 2023
Methodology
We have adopted the operational control approach to calculating our
emissions and have used a combination of Defra and SEA of Ireland
emission factors to calculate our carbon emissions across our
footprint. For specific details on how we report our GHG emissions,
please refer to our Methodology Document on the Domino’s website
(https://investors.dominos.co.uk/sites/default/files/attachments/pdf/
methodology-statement.pdf).
Emissions for sites within the Group’s operational control have been
disclosed, including our offices, corporate stores, and supply chain
centres (supplying both corporate stores and franchises).
Emissions Intensity: We have chosen to report our emissions in
relation to tonnes of dough produced, as this figure reflects activity
at our SCCs which supply dough to our own corporate stores and
our network of franchises across the UK and ROI.
Exclusions: There are no material exclusions.
Starting in 2023, Scope 1 emissions include F-gases, which account
for less than 3% of our Scope 1 & 2 emissions (calculated on either a
location-based or market-based basis). The 2022 Scope 1 figure has
not been adjusted in respect of F-gases, as the amount falls below
our restatement threshold. Details of this threshold, along with our
methodology for accounting these emissions, can be found in our
Methodology Document.
Energy efficiency activities: The activities undertaken in 2023 were
mostly focused on our fleet of vehicles. All our corporate stores are
using electric or low emissions vehicles, with the delivery fleet owned
by DPG across our 31 corporate stores consisting of 100% electric
mopeds (e-peds). Also, all of the new corporate leases for cars our
employees drive are electric or low emissions vehicles with high
road efficiency.
Towards the end of the year, Domino’s Pizza Group started sourcing
renewable electricity for our largest Supply Chain Centres. This
should lead to a reduction in our Scope 2 (market-based) emissions
in 2024.
Trend narrative
Overall, emissions have increased by 1.0% (Market-based) and 2.0%
(Location-based) from last year. This is due to increased consumption
of electricity in our SCC in ROI.
a) Scope 1 emissions have slightly decreased (by 0.8%) compared to last
year. This is mostly due to emissions reduction in our own fleet for
pizza deliveries, which is now 100% composed of e-bikes and e-peds.
Similarly our non-delivery fleet has reduced emissions by achieving
efficiencies. However, these gains were offset by the inclusion of
F-gas emissions for the first time this year, which account for around
400 tonnes of CO
2
e.
b) Scope 2 emissions have increased by 17.0% (market-based) and
11.9% (location-based). We achieved a reduction of a significant
portion of Scope 2 market-based emissions last year, by sourcing
renewable energy for our three largest UK Supply Chain Centres.
Our Supply Chain Centre in ROI has continued ramping up its
operations this year, explaining the increase of emissions for Scope
2 through the consumption of more electricity (non-renewable).
CDP Score
Domino’s has responded to CDP’s annual climate change
questionnaire since 2010 and completed the forest
questionnaire for the first time in 2022. CDP disclosure allows
Domino’s to assess our strategies and progress in managing
climate change-related risks, reducing emissions, and
combatting deforestation across our value chain. Responding
to CDP is one way that Domino’s exhibits our commitment
to emissions reduction and ensuring a sustainable future.
To ensure transparency and as requested by investors and
other financial stakeholders, DPG responded to both CDP
Climate Change and Forest Questionnaires in 2023. We
retained our score of B for our work in mitigating our effects
on Climate Change. The B score indicates we continue to
address the environmental impacts of our business and ensure
good environmental management. In addition, we completed
the CDP Forest Questionnaire and retained our C score,
indicating our performance at the ’Awareness’ level. We will
continue to work to improve our scores and build our plan for
addressing key areas.
SCAN THE QR CODE TO LEARN MORE ONLINE
https://corporate.dominos.co.uk/
Corporate-responsibility
Strategic report Governance Financial statements
37
Domino’s Pizza Group plc Annual Report & Accounts 2023
All employees 2023
(UK & Ireland)
Senior Leadership
Team 2023
(UK & Ireland)
Group plc Directors 2023
(UK & Ireland)
Female
394/
1,630
24%
76%
Male
1,236/
1,630
Female
14/45
31%
69%
Male
31/45
Female
4/9
56%
Male
5/9
44%
Gender Diversity
By embracing diversity, equity and inclusion,
we aim to support our colleagues to achieve
their full potential at Domino’s. We continued
to invest in our people in 2023 including
through further improvements to our maternity
and paternity policies.
In addition, while ethnicity pay gap reporting is not yet a regulatory
requirement, we completed an internal assessment to identify any
potential improvements we could make in this area. Recommendations
regarding both gender and ethnic pay were presented to our Board
for discussion during 2023.
The key takeaway was that, even with over 85% of our colleagues
opting to disclose their ethnicities, the colleague groups are still
quite small, so it’s not straight forward to establish any trends.
We will continue to monitor this data internally, and to drive equal
opportunities for all our team members.
More information about Our People, including our plans
to complete a maturity assessment of the business in 2024,
will be available in our 2023 Sustainability Report.
38
Domino’s Pizza Group plc Annual Report & Accounts 2023
In line with our commitment to upholding high standards of conduct and compliance, we align
our reporting to the Non-Financial and Sustainability Reporting requirements of sections 414CA
and 414CB set out in the Companies Act 2006.
Required information Policies and due-diligence Coverage
Environmental matters Environmental policy See page 29
Employees Diversity Policy
CEO Pay Ratio Reporting
See pages 68 and 105
Social matters Charity See page 24
Respect for human rights Data Protection Policy
Human Rights Policy
See page 50
Anti-corruption
and bribery matters
Anti-Bribery and Corruption Policy
Risk Management Policy
Criminal Finances Act Policy
Whistleblowing Policy
See page 111
Description of
the business model
See page 18
Principal risks and impact
of business activity
See pages 46 to 51
Non-financial
key performance indicators
See page 22
NON-FINANCIAL and sustainability INFORMATION STATEMENT
Strategic report Governance Financial statements
39
Domino’s Pizza Group plc Annual Report & Accounts 2023
FINANCIAL HIGHLIGHTS
– The 2023 year comprised 53 weeks
whereas the 2022 year comprised
52 weeks. In this section, all figures
are based on a 52 week versus 52 week
basis unless otherwise stated.
– Underlying EBIT of £113.2m (53 weeks:
£116.2m), an increase of £3.4m vs. FY22
as a result of higher trading and supply
chain profit despite increases of £3.2m in
technology platform costs.
– Statutory profit after tax of £115.0m
on a 53-week basis, up from £81.6m
primarily as a result of the disposal of
the investment in the German associate
which generated a non-underlying profit
on disposal of £40.6m.
– Underlying free cash flow increased
by £18.0m to an inflow of £97.0m, due to
increased EBITDA and working capital,
which benefited from the reversal of
outflows incurred in FY22.
– Overall net debt decreased by £20.5m
largely as a result of the £79.9m cash
received on the disposal of the
investment in the German associate
which was offset by dividends, share
buybacks and capital expenditure.
– Total dividend for FY23 of 10.5p per
share, with final dividend of 7.2p
proposed to be paid on 9 May 2024.
£99.0m
Underlying profit
before tax
Financial review
Chief
Financial
Officer
Edward
Jamieson
“Strong trading
has delivered
revenue growth
and underlying
EBITDA of £138.1m.
statutory profit
was significantly
ahead of the prior
year following
the disposal of
ourinvestment
inGermany.”
40
Domino’s Pizza Group plc Annual Report & Accounts 2023
2023 Results
53 weeks ended
31 December
2023
£m
Reported
52 weeks ended
24 December
2023
£m
(Unaudited)
52 weeks ended
25 December
2022
£m
Reported
Group Revenue 679.8 667.0 600.3
Underlying EBIT
before contribution
of investments 114.2 111.2 102.2
Contribution
of investments 2.0 2.0 5.0
German associate
contribution – – 2.6
Underlying EBIT 116.2 113.2 109.8
Underlying net
finance costs (14.5) (14.2) (10.9)
Underlying profit
before tax 101.7 99.0 98.9
Underlying tax charge (26.0) (25.3) (17.3)
Underlying profit
after tax 75.7 73.7 81.6
Non-underlying items 39.3 39.3 –
Statutory profit
after tax 115.0 113.0 81.6
EBITDA reconciliation
Underlying EBITDA 138.1 134.8 130.1
Depreciation,
amortisation
and impairment (21.9) (21.6) (20.3)
Underlying EBIT 116.2 113.2 109.8
We are pleased to have delivered strong financial performance in the
year, despite the £10.8m costs incurred investing in our technology
platform projects. Underlying EBIT increased by £3.4m to £113.2m
(53 weeks: £116.2m) due to higher supply chain profit driven by
annualisation on price increases from the prior year. Statutory profit
after tax increased to £115.0m from £81.6m, primarily due to the
profit on disposal of the investment in the German associate which
is treated as a non-underlying item.
Revenue
Our key metric for measuring the revenue performance of the Group
is system sales, rather than our Group revenue. System sales are the
total sales to end customers through our network of stores, for both
franchise partners and corporate stores. Our Group revenue consists
of food and non-food sales to franchise partners, royalties paid by
franchise partners, contributions into the National Advertising Fund
(‘NAF’) and ecommerce funds, rental income and end-customer sales
in our corporate stores.
Within our Group revenue, the volatility of food wholesale prices,
together with the combination of different revenue items, means that
analysis of margin generated by the Group is less comparable than an
analysis based on system sales. We consider that system sales provide
a useful alternative analysis over time of the health and growth of
the business.
Reported system sales in the period were £1,540.5m (53 weeks:
£1,571.7m), up 5.8% due to growth in order count alongside
ticket increases.
Reported Revenue
53 weeks ended
31 December
2023
£m
Reported
52 weeks ended
24 December
2023
£m
(Unaudited)
52 weeks ended
25 December
2022
£m
Reported
Supply chain revenue 479.1 470.7 411.4
Royalty, rental &
other revenue 85.6 83.5 80.5
Corporate stores revenue 33.1 32.5 36.2
NAF & ecommerce 82.0 80.3 72.2
Total 679.8 667.0 600.3
Reported revenue increased by £66.7m to £667.0m (53 weeks:
£679.8m), an increase of 11.1%, primarily driven by increases in supply
chain revenue. This was principally as a result of increased food costs,
which are passed through to our franchise partners.
Royalty, rental and other revenues primarily relate to the royalty
revenue we receive from our franchise partners based on a
percentage of system sales and rental income. This increased by
£3.0m (53 weeks: £5.1m) mainly due to higher system sales.
Revenue for our directly operated corporate stores in London
decreased by £3.7m (53 weeks: £3.1m) due to a lower number of
stores as a result of the disposal of five stores at the end of 2022.
NAF and ecommerce revenue was up £8.1m (53 weeks: £9.8m)
due to increased spend in the period, as revenue is recognised based
on costs incurred at nil profit.
Strategic report Governance Financial statements
41
Domino’s Pizza Group plc Annual Report & Accounts 2023
Financial review continued
Underlying earnings before interest and taxation
Underlying EBIT increased by £3.4m (53 weeks: £6.4m) to £113.2m
(53 weeks: £116.2m). This is driven by a £12.8m increase (53 weeks:
£15.8m) in underlying trading, which includes a £1.7m lower
contribution from the NI JV, and a benefit of £2.3m relating to the
sale of freehold property. This was offset with a £3.7m increase in
technology platform costs, £2.6m lower contributions from the
German associate following the disposal, £1.3m increase in
depreciation and amortisation and a £1.0m lower EBITDA from
corporate stores. This is further offset with prior period benefits
including a £2.1m benefit from the sale of corporate stores and a
£1.0m uplift in the investment in Shorecal.
The Group’s continuing investment in two technology platform
projects, the ecommerce platform replacement and the new ERP
system, resulted in a total cost of £10.8m recognised within EBIT.
These costs are explained further below.
As a result of the Group exercising the option to sell our investment
in the German associate, we ceased accounting for our share of
profits from the exercise date, 10 November 2022. This resulted in
no contributions being accounted for in the period, which is a £2.6m
decrease on the prior year.
Technology platform costs
FY23
EBITDA
£m
Amortisation
and
impairment
£m
Profit
before
tax
£m
Capital
expenditure
£m
ERP (6.4) (1.4) (7.8) —
ecommerce platform (2.5) (0.5) (3.0) (5.7)
Total (8.9) (1.9) (10.8) (5.7)
FY22
EBITDA
£m
Amortisation
and
impairment
£m
Profit
before
tax
£m
Capital
expenditure
£m
ERP (2.7) (0.8) (3.5) —
ecommerce platform (2.5) (1.6) (4.1) (1.9)
Total (5.2) (2.4) (7.6) (1.9)
During the year, we continued to develop and implement two new
cloud-based IT systems, an ecommerce platform and an ERP system.
These projects will enable us to capture growth in the future and
drive further efficiencies. The ecommerce platform costs are part of
the growth investment framework agreed with our franchise partners
in December 2021.
The total costs recognised in underlying profit before tax relating
to these projects were £10.8m.
Within EBITDA, costs of £8.9m have been recognised, of which £6.4m
relates to the ERP, and £2.5m relates to the ecommerce platform.
These represent costs spent on development of these assets, which
are expensed through the income statement rather than capitalised
as intangible assets, as they relate to cloud platforms. For the ERP,
this represents the full spend on the project in the year.
For the ecommerce platform, this relates to the percentage spent on
the cloud-based element of the project. An additional £5.7 has been
recorded in capital expenditure relating to the ecommerce platform.
Within amortisation, a total cost of £1.9m is recognised. This consists
of £1.4m relating to the ERP for accelerated depreciation of the
current platform, and £0.5m relating to the ecommerce platform.
The ecommerce platform is largely developed with ongoing
expenditure expected to complete at the end of Q1 24. The ERP
system is on track for completion in 2024.
“our business model and free
cash flow generation means
that we can continue to invest
in the business to drive long-
term growth whilst delivering
shareholder returns.”
42
Domino’s Pizza Group plc Annual Report & Accounts 2023
Interest
Net underlying finance costs in the period were £14.2m (53 weeks:
£14.5m), an increase of £3.3m (53 weeks: £3.6m). In July 2022, the
Group successfully refinanced the existing revolving credit facility
with a facility limit of £200m and issued £200m Private Placement
Loan Notes at a fixed rate of 4.26%. The increase in variable rates
under the revolving credit facility and the impact of the refinancing
in 2022, largely contributed to the increase in net finance costs.
Taxation
The underlying effective tax rate for 2023 was 25.6% (2022:17.5%).
An additional tax charge of £1.5m has been recorded relating to
transfer pricing between our UK and Irish subsidiaries relating to
historical periods. This impacts the effective tax rate by 1.5%.
Excluding this, the underlying effective tax rate would be 24.1% which
is lower than the UK statutory rate of 25% effective April 2023, due
to the contribution of joint ventures, associates, and investments.
Profit after tax and non-underlying items
Underlying profit after tax was £73.7m (53 weeks: £75.7m), a
decrease from £81.6m in 2022 mainly due to an £8.0m increase in
taxation (53 weeks: £8.7m) and £3.3m increase in net finance costs
(53 weeks: £3.6m) discussed above.
Statutory profit after tax was £115.0m, an increase of £33.4m, which
includes £40.6m profit on disposal of the investment in the German
associate which has been classified under non-underlying during the
period. Proceeds of £70.6m were received for the investment with
a book value of £32.4m, which together with a currency translation
gain of £2.5m and professional fees of £0.1m resulted in the profit
on disposal of £40.6m.
Earnings per share
Underlying basic EPS decreased to 18.4p on a 53-week basis, which
is due to a decrease in underlying profit after tax. This was partially
offset with a lower number of weighted average shares due to the
share buyback programmes. Statutory EPS increased to 28.0p from
18.8p, largely due to the profit on disposal of the investment in the
German associate.
Free cash flow and net debt
53 weeks ended
31 December
2023
£m
Reported
52 weeks ended
25 December
2022
£m
Reported
Underlying EBITDA 138.1 130.1
Add back non-cash items
– Contribution of investments (2.0) (7.6)
– Other non-cash items 1.9 (1.3)
Working capital 10.2 (17.5)
IFRS 16 – net lease payments (6.3) (6.3)
Dividends received 3.0 5.1
Net interest (13.1) (4.8)
Corporation tax (22.9) (18.7)
Free cash flow before non-underlying
cash items 108.9 79.0
Non-underlying cash (11.9) —
Free cash flow 97.0 79.0
Capex (20.8) (19.7)
Repayment from German associate 9.3 1.7
Market access fee proceeds — 8.6
Disposals 70.6 7.0
Disposal of property, plant and equipment 4.4 —
Dividends (41.9) (43.8)
Share transactions – Buybacks (93.3) (77.5)
Share transactions – EBT share purchase (4.5) (7.4)
Movement in net debt 20.8 (52.1)
Opening net debt (253.3) (199.7)
Movement in capitalised facility
arrangement fee (0.6) (1.1)
Forex on net debt 0.3 (0.4)
Closing net debt (232.8) (253.3)
Last 12 months net debt/Underlying
EBITDA ratio (excl. IFRS 16) 1.77x 2.06x
Strategic report Governance Financial statements
43
Domino’s Pizza Group plc Annual Report & Accounts 2023
Financial review continued
Net debt decreased by £20.5m during the period to £232.8m, with
a free cash flow generated of £97.0m and £79.9m received from the
disposal of the investment in the German associate, of which £9.3m
related to the loan repayment. This was offset with capital
expenditure of £20.8m and returns to shareholders through dividends
of £41.9m and share buybacks of £93.3m.
Free cash flow was £97.0m, an increase of £18.0m on the previous
year. Underlying EBITDA was £138.1m, an increase of £8.0m due to
higher supply chain profit driven by annualisation on price increases
from the prior year.
There was a working capital inflow of £10.2m (2022: outflow of
£17.5m). This predominantly relates to a £1.3m decrease in debtors, a
£5.6m inflow relating to the timing of creditor payments at year end,
and an inflow of £9.6m due to higher accruals balances. This was
offset with an outflow of £4.5m due to the unwind of the timing of
cash receipts and payments for online sales following the strong
performance in the final week of FY22 as well as an outflow of £3.1m
due to a decrease in the NAF creditor. These movements largely
offset the working capital outflow reported in 2022.
Net IFRS 16 lease payments remained constant with the prior year
at £6.3m. Dividends received of £3.0m include £2.2m from our
associates and joint ventures and £0.8m from our investment
in Shorecal.
Net interest payments of £13.1m increased from £4.8m as a result
of increased interest charges on the new debt facilities put in place
in July 2022 and timing of the six-monthly interest payments on the
private placement loans, the first two payments of which were paid
in January 2023 and July 2023.
A non-underlying payment of £11.9m was made during the year which
relates to historical share-based compensation arrangement with
grant dates dating from 2003-2010.
Capital expenditure increased to £20.8m from £19.7m. Of this amount
£9.6m relates to total investment in ecommerce, £3.7m relates to
development and expansion of our supply chain centre in Ireland
and £1.8m relates to the installation of solar panels at our supply
chain centres.
In June 2023, the Group received £79.9m for the disposal of
the German associate, of which £70.6m relates to the disposal
of the investment and £9.3m relates to the repayment of a loan.
Disposal of property, plant and equipment of £4.4m relates to
the disposal of freehold property in March 2023.
Of the £41.9m dividends paid in the year, £28.3m relates to the final
FY22 dividend paid in May 2023, and £13.6m relates to the FY23
interim dividend paid in September 2023.
The share buyback cash outflow of £93.3m includes the remaining
£8.9m of the £20.0m share buyback programme announced in
November 2022, £20.0m of the May 2023 programme and £63.9m of
the £70.0m buyback announced in August 2023 together with £0.5m
of stamp duty. The remaining £6.1m outstanding balance of the August
2023 programme was subsequently completed in January 2024.
Capital employed and balance sheet
At 31 December
2023
£m
At 25 December
2022
£m
Intangible assets 28.8 30.0
Property, plant and equipment 97.6 96.5
Investments, associates and joint ventures 35.5 36.7
Deferred consideration 0.3 0.3
Right-of-use assets 19.3 21.3
Net lease liabilities (21.6) (23.4)
Provisions (3.8) (15.3)
Working capital (44.9) (27.9)
Net debt (232.8) (253.3)
Tax (6.3) (1.7)
Share buyback obligations (6.1) (8.9)
Held within assets and liabilities
held for sale — 32.9
Net liabilities (134.0) (112.8)
44
Domino’s Pizza Group plc Annual Report & Accounts 2023
Intangible assets decreased by £1.2m to £28.8m, as additions of
£9.2m on software assets were offset with amortisation of £10.7m.
Property, plant and equipment increased by £1.1m to £97.6m due to
additions of £9.0m largely for our supply chain centre in Ireland and
the installation of solar panels across our supply chain centres. This
spend was offset against depreciation of £5.9m and the disposal of
freehold property with a net book value of £1.9m during the period.
Investments, associates and joint ventures decreased by £1.2m due
to lower contributions from the NI JV offset with dividends received.
Right-of-use assets of £19.3m represent the lease assets for our
corporate stores, warehouses and equipment leases recognised
under IFRS 16 in the current period. The net lease liability is £21.6m
(2022: £23.4m). There have been no significant changes in the lease
portfolio during the period.
Working capital increased by £17.0m to a net working capital
liability of £44.9m. The decrease is greater than the movement in
free cash flow as a result of the loan to the German associate being
settled during the period which is shown in the other line on the
cash flow statement.
Net debt decreased to £232.8m for the reasons set out in the free
cash flow section above.
A share buyback obligation of £6.1m relates to the remaining amount
committed under the £70m share buyback programme announced
in August 2023.
During current period the German associate was sold for a consideration
of £70.6m, this was treated as an asset held for sale in 2022.
Total equity has decreased by £21.2m, to a net liability position of
£134.0m, largely due to the profit on disposal of the German associate
offset with dividend payments and share buybacks. There are
sufficient distributable reserves in the standalone accounts of
Domino’s Pizza Group plc for the proposed dividend payment.
Treasury management
The Group holds £400m in debt facilities of which £200m relates to
an unsecured multi-currency revolving credit facility, expiring in July
2027, and £200m sterling-denominated US Private Placement loan
notes that mature in July 2027.
The unsecured multi-currency revolving credit facility incurs interest
at a margin over SONIA of between 185bps and 285bps depending
on leverage, plus a utilisation fee of between 0bps and 30bps of the
aggregate amount of the outstanding loans. The total undrawn facility
as at 31 December 2023 was £112.9m.
The private placement loan notes incur interest at a fixed rate at 4.26%.
Interest is paid every six months.
The financial covenants under both financing agreements are
consistent. These covenants relate to measurement of adjusted
EBITDAR against consolidated net finance charges (interest cover)
and adjusted EBITDA to net debt (leverage ratio) measured
semi-annually on a trailing 12-month basis at half year and year end.
The interest cover covenant under the terms of both agreements
cannot be less than 1.5:1, and leverage ratio cannot be more than 3:1.
Figures used in the calculation of both covenants exclude the impact
of IFRS 16.
We ended the year with Net debt of £232.8m, and the last 12 months
Net debt/EBITDA ratio excluding the impact of IFRS 16 decreased to
1.77x from 2.06x, as a result of increased EBITDA performance in the
year and a lower Net debt level.
Underpinning treasury management is a robust Treasury Policy
and Strategy that aims to minimise financial risk. Foreign exchange
movement arising from transactional activity is reduced by either
agreeing fixed currency rates with suppliers or pre-purchasing the
currency spend.
Strategic report Governance Financial statements
45
Domino’s Pizza Group plc Annual Report & Accounts 2023
RISK MANAGEMENT
The Group continues to improve the approach
taken to the identification, evaluation and
monitoring of the material risks it faces and
the action it takes in response.
In the second half of 2023, we conducted a comprehensive review
of the key risks which could prevent the Group from achieving
its long-term strategic objectives, whether strategic, financial,
operational or compliance in nature (now identified as ‘Key Group
Risks’). Following this review we have: increased focus on certain
areas; introduced new assessment techniques; and increased both
visibility and accountability for effective Enterprise Risk Management.
The Risk Management Framework, enhanced during the year,
consists of the following key elements:
emerging risks
supporting risk registers
executive risk committee
group risk dashboards
principal risks
Shareholders
Board
Audit Committee
UK Leadership
Team (UKLT)
UKLT/Risk
Liaisons
Risk Liaisons
emerging risks
assurance
Responsibility
Each Key Group Risk has a designated Risk Liaison, all of whom
are members of the Group’s senior management and oversee the
management of the risk day-to-day; and is owned by one of the UK
Leadership Team, who review and approve each of the Group Risk
Dashboards. Risk Liaisons are also expected to identify any emerging
risks relevant to their specialist area.
The Board is ultimately responsible for the Group’s identification,
assessment and management of risk; ensuring strategic decision-
making is aligned to the Group’s risk appetite; and the review of
both the principal and any emerging risks, at least twice annually.
The Audit Committee is responsible for scrutinising the effectiveness of
management’s internal control and risk management systems, on behalf
of the Board. This includes an assessment of the assurance provided
by Internal Audit and other sources of assurance to the Group.
Group Risk Dashboards
Group Risk Dashboards have been completed for each Key Group
Risk and: identify the key sources of exposure to the risk manifesting;
assess the residual risk position, following consideration of the
mitigating activities in place; consider what metrics and assurance
exist over the mitigation; and, with reference to the Group’s risk
appetite for that category of risk, document what further measures
are required, along with the associated accountability. Certain
dashboards, for example those risks relating to Information Security
or Health & Safety, are also underpinned by supporting risk registers.
Group Risk Dashboards are reviewed and updated every six months;
and are presented to the Executive Risk Committee (ERC).
Executive Risk Committee
The ERC comprises all of the UK Leadership Team and meets
quarterly. The role of the ERC is to: collectively challenge the
management of risk, with reference to the Risk Dashboards; and agree
any incremental action needed. The ERC also considers any emerging
risks not currently represented by dashboards and provides a report
of its activities, through the Audit Committee, to the Board.
Principal risks
Each of the principal risks identified on the following pages represents
an aggregation of the Key Group Risks, with a focus on those risks
most material to the achievement of the Group’s long-term strategic
objectives.
Emerging risks
Our view of emerging risks and opportunities is updated via the ERC.
When considering emerging threats, we look for factors not currently
reflected in existing Key Group Risks and those that: could impact the
Group in the medium term; have the potential to increase rapidly in
severity; or demonstrate an interconnectivity which, in combination
with actively controlled risks, may amplify existing conditions.
Typically, such emerging risks focus on legislative/regulatory matters,
especially consultations and policy reviews concerning public health;
technological change; competitor and market activity; and environmental
change. Our latest horizon scanning has identified no further strategic
uncertainties that are not already included within the principal risks.
Risk appetite
Risk appetite is defined against each category of risk. For example,
we aim to tolerate no preventable risk with regard to customer and
colleague safety; very low levels of risk over regulatory compliance;
but accept some moderate risk relating to our commercial activities,
consistent with our entrepreneurial values. This considered attitude
to risk helps us to evaluate strategic initiatives and guides business
decision-making.
The environment in which we operate continues to evolve:
new risks may arise; the potential impact of known risks may increase
or decrease; and/or our assessment of these risks may change.
The risks below therefore represent a snapshot of what the Board
believes are the principal risks and are not an exhaustive list of all
risks the Group faces.
46
Domino’s Pizza Group plc Annual Report & Accounts 2023
key focus areas
Franchise partner
profitability and
organisation
Value for
Money
Digital Convenience Technology
platform projects
COMPETITIVE PRESSURES FRANCHISEE RELATIONSHIPS/OPERATIONS
Description of the risk
Maintaining our edge in the market requires us to manage the risks that
we fail to retain existing customers, attract new ones, or drive higher
order frequency/baskets; or that we do not offer the range of quality
products with the great value that our consumers expect.
There are also risks that we deliver a poor customer service, including the
failure to deliver the correct orders, on time; or through the interaction
we and our franchise partners have with our customers online, in store,
by phone and at our customers’ doors.
Failure to manage these risks will lead to a loss of customer and franchisee
confidence; loss of market share; and has the potential to compromise
our future performance. In an extreme scenario, these risks could even
threaten the business model itself.
How we are mitigating
We have a strong pipeline of new pizzas, sides, and desserts; and a
clear stage and gate process for development and alignment with our
franchisee partners, including store trials, supplemented by feedback
from consumers and competitor analysis.
Stores within the Domino’s Pizza system contribute to the National
Advertising and eCommerce funds which enable consistent investment
in national value campaigns and in our leading digital marketing, CRM and
loyalty capability to keep Domino’s sufficiently at the front of consumers’
minds. Our expanded partnership with aggregators, through Just Eat and
our trial with Uber Eats, also aims to bring new, incremental, customers to
the Domino’s system. Overall, in 2023 we increased our share of the UK
takeaway market to 7.2%, up from 7.1% in 2022.
The delivery of a high level of customer service is subject to continual
training and is monitored by both our enhanced GPS solution and our
programme of Operational Excellence Reviews, whereby each store
is audited, against clearly communicated standards, at least three times
per year.
Risk owner
Chief Marketing Officer
Link to key focus areas
Residual risk
H
M
L
Risk direction
–
No change
Description of the risk
Maintaining a strong relationship with our franchisees is fundamental
to our continued performance and growth.
There are risks however, that our franchisees do not share our vision
of the direction of the Domino’s brand in the UK & Ireland; that they
do not believe that the National Advertising and eCommerce funds are
being used effectively; or that the franchise economics fails to remain
sufficiently attractive for them to invest in our collective growth,
for example through the opening of new stores.
We are also exposed to threats to the continuity of our franchisee’s
operations, including from cyber attacks.
Loss of support from our franchisees undermines our ability to adapt
to the necessary changes in our business environment and to grow.
How we are mitigating
Alongside the contractual agreements we have in place for each store,
the 2021 resolution with our franchise partners underpins our relationship
with them, supplemented by formal governance forums, such as the
Domino’s Franchisee Association and the Marketing Advisory Councils.
Our CEO, Andrew Rennie, devoted a large proportion of his time in 2023
to understand the perspectives of each of the franchise partners; and
day-to-day support is provided by our dedicated Franchise Operations
team and various operations forums, as well as actions taken on the
results of the annual engagement survey undertaken with franchisees.
In 2023 we opened 61 new stores, up from 35 in 2022. We have a
strong pipeline of new stores and are expecting to open in excess of
70 with our franchise partners in 2024, supported by a dedicated and
experienced store development team and a package of new store
incentives, including the Home Grown Heroes initiative. We were also
able to broadly maintain the EBITDA store margin, despite a challenging
trading environment.
Risk owner
Chief Executive Officer
Link to key focus areas
Residual risk
H
M
L
Risk direction
–
No change
Strategic report Governance Financial statements
47
Domino’s Pizza Group plc Annual Report & Accounts 2023
RISK MANAGEMENT CONTINUED
FAILURE OF KEY SUPPLIER SCC MATERIALLY FAILs TO DELIVER DEMAND
Description of the risk
The business relies on a number of third-party suppliers, with a small
amount representing the sole source of an ingredient. The Group would
be vulnerable if a supplier decided to cease trading; suffered a major
cyber security incident; had a major interruption or food safety incident;
or was responsible for an ethical or compliance breach of such severity
that the Group would no longer trade with it.
There is also a risk that we fail to accurately forecast, such that
there is insufficient inventory of raw materials to meet demand.
This risk may have an acute impact for a limited time.
How we are mitigating
The majority of our key ingredients are dual sourced and/or can be
sourced from multiple production sites, which should help enable
uninterrupted supply. In addition, suppliers should hold minimum levels
of finished goods stock at all times; and the Group also holds stock at
third-party sites during peak trading. There are plans to further increase
the coverage of dual suppliers, and to monitor stock coverage and
suppliers’ business continuity plans during 2024.
Quarterly financial health checks are designed to provide an early warning
of the risk that suppliers cease trading, and security impact assessments
and scorecards help ensure we only take on suppliers with an acceptable
level of risk.
Forecast accuracy was very high during 2023 and should be maintained
or even improved further during 2024, using the capability of the new
ERP system.
Risk owner
Supply Chain Director (raw
material/equipment supply)/
UK Leadership Team
(other suppliers)
Link to key focus areas
Residual risk
H
M
L
Risk direction
Description of the risk
We distribute both the fresh dough we manufacture ourselves and
third-party pizza sauce, cheese, toppings, sides and boxes to our stores,
as well as other equipment and supplies. A loss of more than one
dough production line or total loss of an SCC through property damage,
major manufacturing breakdown, or a health & safety, cyber security,
or major IT/Operational Technology incident, would require urgent
contingency arrangements to be executed wherever possible.
These risks, if prolonged, could have a potentially significant impact
on financial performance and a loss of market share, where a sufficient
supply of Domino’s products is not available to meet consumer demand.
How we are mitigating
We delivered an exceptional 100% food availability for our stores
during 2023, demonstrating strong resilience despite challenging
marketing conditions.
Against the threat of a loss of one or more production lines, as a result
of a major health & safety incident, fire, adverse weather, or mechanical
failure, we have strong mitigation in place to reduce the likelihood,
including health & safety management systems; fire prevention, detection
and suppression; preventative maintenance; and stock of critical
equipment spares.
In the very short term, there would be some spare capacity amongst
the remaining SCCs (including the recent expansion to our Naas site);
and beyond this we would work with other Domino’s businesses outside
of the UK & Ireland to meet the shortfall. We are also looking to build
further resilience into our own estate as we build further capacity to
meet our growth ambitions.
Risk owner
Supply Chain Director
Link to key focus areas
Residual risk
H
M
L
Risk direction
key focus areas
Franchise partner
profitability and
organisation
Value for
Money
Digital Convenience Technology
platform projects
48
Domino’s Pizza Group plc Annual Report & Accounts 2023
FOOD SAFETY LOSS OF BUSINESS CRITICAL SYSTEMS
Description of the risk
Following the consumption of any of the products produced in our
SCCs and prepared in our 1,319 stores, there is a risk that our customers’
health is adversely affected, arising from either contamination, or failure
to meet the customers’ requirements with respect to allergens.
Any serious incident could have a short-term impact on our ability
to produce/trade and undermine the confidence in the quality and safety
of our products, leading to longer-term damage to our reputation;
and loss of sales in the short, medium and longer term.
How we are mitigating
The business maintains a rigorous regime of standards and food safety
checks for both our suppliers and the SCCs. Each of the SCCs are
accredited to the internationally recognised food safety standard
FSSC 22000; and are audited by our technical team, Domino’s Pizza
International and other regulatory bodies.
Outside of food production, meeting our customers’ allergen
requirements is reliant on ensuring customer awareness and training
for store staff.
Early warning systems are in place across the supply chain to log,
review, investigate and act upon issues which may impact food safety
or quality. Stores operate to clearly defined standards and policies,
which are periodically verified by operational and third-party food safety
evaluations, covering areas such as food storage and handling, product
quality, safety and store condition. Franchisees are also financially
incentivised to maintain sufficiently high scores on evaluations.
Risk owner
Supply Chain Director
(supply chain), Chief
Operating Officer (stores)
Link to key focus areas
Residual risk
H
M
L
Risk direction
–
No change
Description of the risk
As 90% of our system sales are through digital channels, there is a risk
that significant trade is prevented in the event of a loss of systems that
support our e-commerce and mobile platform availability. Sources for
such a system loss could include third-party software, hardware or utility
failure; physical property damage from a natural disaster, external or
internal party; or a cyber attack.
Loss of platform or application availability or integrity would result in
a short-term impact on commercial performance, including potential loss
of customer confidence in the platform and/or mobile app. This loss of
customer goodwill and revenue could have longer-term consequences for
customer confidence in the Domino’s brand. It may also negatively impact
franchisee relationships if they lose confidence in the resilience and
security of the platform.
How we are mitigating
Whilst we are not complacent about the exposure to a loss of business
critical systems, the 100% availability of our e-commerce sales channels
has been maintained throughout 2023. We continue to use our strategic,
risk-based security management framework to target investment in
preventative, detective and responsive controls, particularly, in respect
of cyber attacks; and progress and performance is subject to regular
review by the Board and Audit Committee.
As we move more towards the use of cloud-based solutions, we are
building in greater resilience; and are enhancing our responsiveness
to events threatening the continuity of our business, including,
but not exclusively relating to a loss of business critical systems.
Risk owner
Chief Information Technology
Officer
Link to key focus areas
Residual risk
H
M
L
Risk direction
–
No change
Strategic report Governance Financial statements
49
Domino’s Pizza Group plc Annual Report & Accounts 2023
RISK MANAGEMENT CONTINUED
LOSS OF PERSONAL/CORPORATE DATA
FAILURE TO DELIVER ON ESG COMMITMENTS
Description of the risk
For ease of use, our online ordering systems hold some customer data, the
loss of which (whether accidental or as a result of unauthorised intrusion)
would cause disruption and cost to the Group. In addition, the Group’s
own data on employees, partners and suppliers; and commercially
sensitive information, is also exposed to the same risks of loss.
We note the continuing enforcement action taken by supervisory
authorities against organisations failing to meet their information rights
obligations. The risk of financial penalty for a data breach in our sector
remains significant, whether imposed by the regulator or awarded by
the courts.
These risks have the potential to compromise our future performance.
In an extreme scenario, the reputational damage could possibly threaten
the business model if we suffered a total loss of consumer confidence.
How we are mitigating
Much of the mitigation activity relevant to the risk of loss of business
critical systems, and particularly the exposure to a cyber attack, also
mitigates against loss of personal/corporate data. The risk of data
loss could manifest from inside the organisation (either deliberate or
inadvertent), rather than from an external infiltration, and for this we
have clearly communicated policies and training on data classification,
storage and retention, as well as restricted access to sensitive data
and encryption. We are also investing in data loss prevention tools.
Risk owner
Chief Finance Officer
Link to key focus areas
Residual risk
H
M
L
Risk direction
–
No change
Description of the risk
The values that we all share at Domino’s include that ‘We do the right
thing’ with regards to the impact on our brand, our colleagues, our
communities and the wider world. There is a risk, however, that we fail
to deliver on the commitments we’ve made relating to environmental,
social or governance (ESG) matters, such as those relating to the reduction
of greenhouse gas emissions; diversity, equity and inclusion; or what
we source.
As a result of failing to meet our commitments, some customers may
choose to not to buy our products, or certain key talent may become
disaffected and leave the organisation. Ultimately, our reputation may
suffer, affecting our performance in the future; and in an extreme
scenario, could threaten the business model itself.
How we are mitigating
We refreshed our sustainability strategy in 2022 and at the same time
established a new Sustainability Committee and Sustainability Steering
Group. These forums specifically focus on the delivery of specific targets/
commitments in respect of the five key pillars which are critical to our
business: Customers, People, Environment, Sourcing and Communities.
In addition, 10% of the UK Leadership Team’s bonus is linked to the
delivery of key sustainability targets.
Working to tackle climate change forms a significant element of our
commitments, and we have made SBTi-validated commitments to
materially reduce Scope 1 and Scope 2 emissions by 2031, and to achieve
Net Zero by 2050. Decarbonisation working groups continue to identify
and realise ways of delivering against these targets. Further information
can be found in the Sustainability section of this report (on pages 28-39).
Risk owner
Chief Marketing Officer
Link to key focus areas
Residual risk
H
M
L
Risk direction
–
No change
key focus areas
Franchise partner
profitability and
organisation
Value for
Money
Digital Convenience Technology
platform projects
50
Domino’s Pizza Group plc Annual Report & Accounts 2023
FAILURE TO MEET public health EXPECTATIONS
PEOPLE-RELATED RISKS
Description of the risk
Society’s expectations, governmental response to public health concerns
and the associated demand for healthier food continue to evolve; and
failure to adapt to the changing expectations and requirements represents
a key risk to the Group. In particular, the Health and Care Act 2022,
due to be implemented in October 2025, will restrict advertising of foods
high in fat, salt and sugar via paid-for online channels and on TV before
a 9pm watershed. Conversely, there is also a risk of insufficient demand
for products specifically designed to respond to these expectations.
This risk has the potential to compromise our future performance or,
in an extreme scenario, even threaten the business model itself.
How we are mitigating
We are committed to offering an increasing range of products to suit all
dietary requirements and preferences and our consumer-centric insight
programme allows us to track habits and attitudes and adapt our menus
in response. Whilst we are working towards reductions in saturated fat,
salt and sugar across our menus, our robust development process, with
multiple stages of expert and consumer taste panels, also ensures that
the product experience meets consistently high standards.
Regarding the changing legislative environment, we participate in industry
efforts to ensure that our views are understood by policymakers, yet
we remain confident that we will be able to effectively market Domino’s
brands and products whilst maintaining compliance with the provisions
of the Health and Care Act 2022.
Risk owner
Chief Marketing Officer
Link to key focus areas
Residual risk
H
M
L
Risk direction
–
No change
Description of the risk
The business continues to be dependent on key individuals either
at Executive level or in relation to specialist skills or volume of roles
required. Yet there is a risk of insufficient awareness of Domino’s as
an employer in the UK & Ireland; or the provision of a sufficiently
competitive offering in terms of reward, fulfilment and development
to attract new, or retain existing talent.
There are also risks to the health & safety of our employees and third
parties from the production and distribution of fresh dough and other
items from our supply chain centres; the preparation of food in store;
and delivery to our customers.
These risks could have some impact on future performance,
for a limited time.
How we are mitigating
At a store level, awareness of the opportunities has increased, supported
by national digital recruitment campaigns and greater visibility/alignment
to best practice in reward across our franchisees.
At DPG, competitive benefits packages are in place, which are regularly
benchmarked using industry-specific data sets/tools, but work is under
way in 2024 to improve awareness of DPG as an employer and further
enhance our competitiveness.
We remain committed to ensuring the health & safety of our employees,
through our rigorous Health & Safety Management System and training
thereon, which is subject to both internal and external assurance and
helps continually improve our loss-time incident performance.
Risk owner
People Director
Link to key focus areas
Residual risk
H
M
L
Risk direction
–
No change
Strategic report Governance Financial statements
51
Domino’s Pizza Group plc Annual Report & Accounts 2023
Viability statement
The group’s current position
The Group’s core UK & Ireland business model has been shown to
be solid since it was formed. We operate under what is effectively
a perpetual Master Franchise Agreement (‘MFA’), so the business
model is long term. The Group’s strategy and business model, which
is explained on pages 18 to 21, is well established and we have a
market-leading position in the UK & Ireland, having successfully
exploited the emergence of eCommerce as a sales channel.
We continue to open new stores in the UK & Ireland and have
demonstrated good growth in system sales, like-for-like sales and
profitability in our core business over many years, with high rates
of converting operating profit to cash.
At 31 December 2023, the Group has net debt of £232.8m and has
committed debt facilities of £400m which include Sterling denominated
private placement loan notes of £200m, expiring in July 2027 and an
unsecured multi-currency revolving credit facility of £200m, which
expires in July 2027 of which £112.9m was undrawn, and has cash
funds of £52.1m.
Our strategic planning process
The CEO, supported by the Executive Leadership team, is responsible
for the Group’s strategic planning process. This starts with an annual
strategy review, which is informed by both in-house monitoring of
market trends and developments, and external market research.
Following this review, an initial strategic plan is drafted, including a
detailed financial model. The Board reviews and challenges the draft
plan, utilising their experience, market insight and knowledge of the
financial, technical and human resources available to the Group.
Long-term viability statement
In accordance with the UK Corporate Governance Code, the Directors
have assessed the long-term viability of the Group over the period to
December 2026. The strategic plan is prepared on a five-year basis,
but both management and the Board are conscious that the Group
operates in a fast-moving environment. The viability assessment is
performed over a three year period as there is greater certainty of
cash flows associated with the Group’s performance-related revenue.
The assessment has been based on the Group’s strategic plan, balance
sheet position, agreed financing and financial modelling of the
strategic, operational and emerging risks discussed in the Risk
Management section of the strategic report. The cash flows in the
strategic plan are based on the forecast performance of the current
business, with any acquisitions or disposals only included where there
is certainty over the related cash inflows or outflows. The Directors
of the Group have considered the future position based on current
trading and a number of potential downside scenarios which may
occur, either through further supply chain related impacts, general
economic uncertainty or other risks. This assessment has considered
the overall level of Group borrowings and covenant requirements,
the flexibility of the Group to react to changing market conditions
and the ability to appropriately manage any business risks, as has
been demonstrated by the Group’s reaction to emerging supply
chain-related risks over the period.
In stress testing the Group’s viability, the Directors have assessed the
impact of events occurring in isolation and in combination, as may
occur in certain scenarios. The Directors have also considered what
mitigating capital management actions could be taken in response.
The following risks were modelled as part of the stress testing
performed:
– a downside impact of economic uncertainty and other sales related
risks over the forecast period, reflected in sales performance, with
a c.5% reduction in LFL sales compared to budget and the impact
of a reduction of new store openings to half of their forecast levels.
These impacts link to the risks highlighted on competitive pressures,
Food safety and Franchisee relationships;
– a further reduction in sales of c.2.5%-3% from 2024 to account for
the potential impact of the risks related to the public health debate;
– future potential disruptions to the supply chain of the Group,
including IT and supply disruptions within our SCCs impacting our
ability to supply stores or for our stores to trade at normal levels,
as highlighted in the supply chain disruption and eCommerce and
mobile platform risks;
– additional costs as a result of increases in utility costs; and
– a significant unexpected increase in the impact of climate change
on delivery costs.
Further scenario modelling was performed by considering the
following additional ‘severe but plausible’ risks:
– a disruption to one of our key suppliers impacting our supply chain
over a period of four weeks whilst alternative sourcing is secured; and
– the impact of a potential data breach in 2025.
52
Domino’s Pizza Group plc Annual Report & Accounts 2023
Conclusion
In each of the scenarios modelled, there remains significant cash
headroom on the debt facilities. Under a scenario where all the risks,
including the ‘severe but plausible’ risks, were to occur simultaneously,
the Group would breach its leverage covenants. The Board has a
mitigation action available in the form of a reduction of dividends
to shareholders and share buybacks which would prevent a breach.
Reverse stress testing has also been performed, which is a materially
worse scenario than the combinations described in the scenarios above,
which concluded that the Group’s currently agreed financing could only
be breached if a highly unlikely combination of scenarios resulted in a
material annual reduction in system sales greater than 24%, assuming
no fixed cost reduction. We do not consider this plausible.
The Group’s compliance with the terms of its UK & Ireland MFA is
of fundamental importance to its business model and viability. MFA
targets have been agreed for a 10 year period starting in 2016 and the
Group is currently on track with those targets. It is considered highly
improbable that the Group’s MFA would be terminated in the period
under review.
Following their assessment, the Directors have a reasonable
expectation that the Group will be able to continue to operate and
meet its liabilities as they fall due over the period to December 2026.
The Directors also consider it appropriate to prepare the financial
statements on the going concern basis as explained in the basis of
preparation paragraph in note 2 to the financial statements.
Strategic report
Signed on behalf of the Board
Andrew Rennie
Chief Executive Officer
11 March 2024
Strategic report Governance Financial statements
53
Domino’s Pizza Group plc Annual Report & Accounts 2023
BOARD OF DIRECTORS
Andrew Rennie
Chief Executive Officer
Andrew joined the Board
on 1 August 2023 and
was appointed as Chief
Executive Officer on
8 August 2023.
Nationality: Australian
Experience: Andrew has
an extensive career in the
Domino’s global system,
a deep knowledge of the
brand, vast experience of
working with franchisees,
and was himself a very
successful multi-unit
franchisee for a decade.
Andrew spent over two
decades with Sydney-listed
Domino’s Pizza Enterprises
(DPE), in roles including:
CEO of France and Belgium
from 2006 to 2010,
COO and then CEO of its
Australia and New Zealand
business from 2010 to
2013, and CEO of its
European business from
2014 to 2020, which
includes the Master
Franchise Agreements for
France, Germany, Belgium
and the Netherlands.
Other appointments:
Andrew is Chair of The
Cheesecake Shop, a
business operating in
Australia and New Zealand.
Edward Jamieson
Chief Financial Officer
Edward joined the Board
as Chief Financial Officer
in October 2022.
Nationality: British
Experience: Prior to joining
Domino’s, Edward served
as Regional Finance
Director UK & Ireland
at Just Eat Takeaway plc
(Just Eat), successfully
leading the business
through substantial growth
and transformational
change since 2018. Prior
to Just Eat, Edward held a
range of senior finance roles
at Aggreko plc, Amazon Inc,
and Diageo plc. He is a
Chartered Accountant.
Other appointments:
None
The Board of
Directors are
responsible for
determining the
overall strategy
of the Group.
The structure of
the Board and the
integrity of the
individual Directors
ensures that no
single individual
or group dominates
the decision-
making process.
Matt Shattock
chair
Matt was appointed
to the Board as Chair
on 16 March 2020.
Nationality: American
Experience: Matt joined
Beam, the world’s
third-largest premium
spirits company, in March
2009 as President and CEO,
and led the company’s
successful growth-strategy
transformation and
subsequent transition to
become a standalone public
company in 2011. He then
led the integration of the
Beam and Suntory spirits
businesses following Beam’s
acquisition by Suntory
in 2014. Matt served as
Non-executive Chairman
of Beam Suntory Inc. until
December 2020. Prior to
joining Beam, he spent six
years at Cadbury plc, where
he led its businesses in
The Americas and then
in the Europe, Middle East
and Africa region. Prior to
Cadbury, he spent 16 years
at Unilever in various
leadership roles,
culminating in his role as
Chief Operating Officer
of Unilever Best Foods
North America. Matt is an
experienced Chairman and
has a demonstrable track
record of strong leadership
and of driving sustained
value creation through
building innovative brands
and operational excellence.
Other appointments:
Matt is currently the Lead
Independent Director of
The Clorox Company and
a Non-executive Director
of VF Corporation.
N R
Ian Bull
Senior Independent
Director
Ian joined the Board in
April 2019, was appointed
as the Senior Independent
Director on 9 September
2019 and became the
designated Director for
Workforce Engagement
on 4 January 2024.
Nationality: British
Experience: Ian is a Fellow
of the Chartered Institute of
Management Accountants
and has over 30 years’
financial experience with a
variety of businesses across
a range of sectors. He was
previously Group Finance
Director of Greene King plc,
Chief Financial Officer at
Ladbrokes plc, and was
most recently Chief
Financial Officer of
Parkdean Resorts Group.
His finance career included
the Walt Disney Company,
Whitbread plc and BT
Group. Ian was formerly
a Non-executive Director
of Paypoint Ltd, Chair of
Lookers plc and Senior
Independent Director and
Audit Committee Chair of
St. Modwen Properties plc.
Other appointments:
Ian is currently a Non-
executive Director and
Audit Committee Chair
of Dunelm Group plc.
A N R
Membership key
c
Committee Chair
A
Audit Committee
N
Nomination
& Governance
Committee
R
Remuneration
Committee
S
Sustainability
Committee
Not a current
Director
54
Domino’s Pizza Group plc Annual Report & Accounts 2023
Stella David
Non-executive Director
Stella held the position of
Non-executive Director
from 23 February 2021.
Stella was subsequently
appointed as Chair of the
Remuneration Committee
on 2 August 2021 and
became the designated
Director for Workforce
Engagement
on 30 November 2021.
Stella resigned from
Domino’s and left
the Company on
31 December 2023.
Elias Diaz Sese
Non-executive Director
Elias was appointed to
the Board in October 2019
and was appointed as
Chief Executive Officer
on an interim basis from
10 October 2022 to
7 August 2023.
Nationality: Spanish
Experience: Elias has over
20 years’ experience of
leading developing global
consumer foods brands
and teams all over the world
(Europe, Middle East, Asia
Pacific and North America).
He led the Kraft Heinz
turnaround in UK, Ireland
& Nordics as President for
Northern Europe. Prior to
that he spent 15 years
with Restaurant Brands
International in various
roles, which included
Global CEO of Tim Hortons,
President Asia Pacific
for Burger King and SVP
Franchise & Emerging
Markets Europe, Middle
East & Africa also for
Burger King.
Most recently, Elias
co-founded Popeyes in
the UK as well as invested
in Restaurant Brands Iberia
(Burger King, Popeyes
and Tim Hortons in Spain
and Portugal).
Other appointments:
None
N S
Natalia Barsegiyan
Non-executive Director
Natalia joined the Board
in September 2020,
she was Chair of the
Sustainability Committee
from 30 November 2021
to 4 January 2024, and was
appointed as Chair of the
Remuneration Committee
on 4 January 2024.
Nationality: French
Experience: Prior to joining
Domino’s, Natalia spent
14 years at Yum! Brands,
Inc. where she held various
senior positions, including
Chief Financial Officer at
Taco Bell, Chief Commercial
Officer of Yum! Brands and
General Manager of Pizza
Hut Europe. Natalia was
born in Ukraine and has
worked in a wide range
of countries. She started
her career at SFAT
Transportation Services
before progressing to roles
at Unertek Engineering,
Ford Motor Company
and Rosinter Restaurants
Holding. Natalia is an
Adviser for Kharis Capital
and was previously a
Non-executive Director of
Mediclinic International plc.
Other appointments:
None
A RN S
Tracy Corrigan
Non-executive Director
Tracy joined the Board
in May 2022 and was
appointed as Chair of the
Sustainability Committee
on 4 January 2024.
Nationality: British
Experience: Tracy was
Chief Strategy Officer of
Dow Jones from 2014 until
2020 and previously held
senior positions at the
Wall Street Journal,
including Editor in Chief,
Europe. She has headed
news websites, WSJ.com
and FT.com. Among other
roles in journalism, she was
the Editor of the Financial
Times’ Lex Column and
a columnist at the
Daily Telegraph.
Other appointments:
Tracy is currently a
Non-executive Director
of Barclays Bank UK and
Direct Line Group. She also
sits on the Board of The
Scott Trust, which owns
Guardian Media Group,
and she chairs Scott Trust
Endowment Ltd.
A N S
Lynn Fordham
Non-executive Director
Lynn was appointed to
the Board in September
2020. Lynn was
appointed as Chair of
the Audit Committee
on 30 November 2021.
Nationality: British
Experience: Lynn was
most recently Managing
Partner of private capital
firm Larchpoint Capital LLP,
a position she held between
June 2017 and February
2021. Prior to joining
Larchpoint, Lynn was CEO
of SVG Capital plc for nine
years and before that held
senior finance, risk and
strategy positions at Barratt
Developments plc, BAA plc,
Boots plc, ED&F Man plc,
BAT plc and Mobil Oil.
Lynn spent seven years on
the Board of brewer and
pub operator Fuller, Smith
& Turner plc where she also
chaired the Audit Committee
and was a member of
the Remuneration and
Nominations Committees.
As a non-executive, she
was a Supervisory Board
Member of Varo Energy
BV and is currently Chair
of RMA – The Royal
Marines Charity.
Other appointments:
Lynn is currently a
Non-executive Director
and Chair of the Audit
and Risk Committees at
Caledonia Investments plc,
Enfinium Group plc and
NCC Group plc.
A N R
Strategic report Governance Financial statements
55
Domino’s Pizza Group plc Annual Report & Accounts 2023
CHAIR’S INTRODUCTION TO CORPORATE GOVERNANCE
Chair
Matt
Shattock
I am pleased to present my
Corporate Governance review
for the Group.
One of the key tasks for the Board coming
into 2023 was to secure a world-class
Chief Executive Officer with a proven track
record who would, together with the senior
management team, drive a significant increase
in shareholder value. The market for high
calibre executive talent is highly competitive,
and the talent pool extends beyond our
home market. I was delighted that we were
able to secure Andrew Rennie as the Group’s
permanent Chief Executive Officer. The
Board and its Committees worked diligently
to secure Andrew, who is the right person
to take the business to the next level.
Our governance structure provides a
framework to support the development
and operation of business, adapting to the
changes in the business environment and
the challenges that the business and our
stakeholders have faced, and continue to
face, in a challenging economic environment
coupled with geopolitical instability.
Our corporate governance arrangements are
critical in ensuring that the Board is able to:
– direct and control the Group;
– provide strategic leadership and
effective oversight;
– promote a culture that supports the
long-term success of the Company and
its stakeholders; and
– maintain a framework within which the
Executive leadership team can conduct
its day-to-day operational management
of the business.
The work of the Board is supported by its
four standing Committees. You will find
details of the activities of the Nomination
& Governance Committee on pages 66 to 68.
Tracy Corrigan assumed the role of the Chair
of the Sustainability Committee in January
2024, taking over from Natalia Barsegiyan.
The report on the Sustainability Committee
is shown on pages 69 to 70. Lynn Fordham
chairs the Board’s Audit Committee and you
can find the report of that Committee on
pages 71 to 77. Natalia Barsegiyan now chairs
the Remuneration Committee having taken
over from Stella David. The Remuneration
Committee played an important role in the
CEO recruitment process in 2023, and
secured shareholder approval for important
revisions to the Directors’ Remuneration
Policy which facilitated the recruitment
process. The Directors remuneration report
is set out on pages 78 to 108.
Details of engagement with our principal
stakeholders are set out on pages 24 and 25,
and the Board’s report on how stakeholders’
views are taken into account when decisions
are made is set out on pages 26 and 27.
We have a clearly defined purpose and values
which underpin and promote our culture to
deliver our strategic objectives and the
long-term success of the business for the
benefit of all our stakeholders. We recognise
that the Board has a crucial role in
establishing and maintaining the right culture
and continue to work with the Executive
leadership team to promote the Group’s
values and to monitor attitudes and
behaviours to ensure that they are consistent
with our culture. This is achieved in a variety
of ways, which include reviewing the results
of colleague engagement surveys and
responding to feedback; dialogue and
interaction with senior management and the
workforce generally; reviewing reports raised
through the Group’s confidential Speak Up
arrangements; receiving regular reports
on training programme completion rates;
interaction between management and
the Internal Audit function; reports and
presentations on health & safety management.
Examples of how our purpose and values
have been rolled out into the business are
shown on page 2.
The remainder of this report sets out how
the Board has applied the principles of good
governance set out in the Financial Reporting
Council’s (‘FRC’) 2018 version of the
Corporate Governance Code (the ‘Code’).
The Group’s governance arrangements will
be reviewed and revised to take account of
changes required by the most recent version
of the Code published on by the FRC on
22 January 2024.
This has been another year of solid progress
and I would like to thank my Board colleagues
for their continued high level of engagement
with the Executive leadership team, providing
support, guidance and constructive dialogue
to help navigate a challenging business
environment.
Matt Shattock
Chair
11 March 2024
56
Domino’s Pizza Group plc Annual Report & Accounts 2023
“I was delighted that we were
able to secure Andrew Rennie
as the Group’s permanent
Chief Executive Officer…”
OUR
VISION
To be the favourite
food delivery and collection
brand with pizza at our heart
OUR
purpose
Delivering a better future
through food people love
OUR VALUES
We do the right thing
We care about our impact on our brand,
our colleagues, our communities and the
wider world. So we’re proud to do the right
thing and keep our promises.
We are one team
We respect and celebrate the whole team
for who we are and the value we each bring.
We grab the amazing opportunities to grow,
succeed and live our best work-life.
We love customers
Every decision and action we take has
customers at the heart. We listen to
customers and create great experiences
to delight them and keep them coming
back for more.
We are bold
It takes courage and determination
to lead the field. Dominoids are bold,
entrepreneurial, we aren’t afraid to innovate
and learn fast to become better every day.
We grow and win together
No one can beat us when we’re working
hard and playing hard together. We share
big ambitions, have a growth mindset
and enjoy success as one Domino’s.
Board leadership and Company purpose
see pages
A. Effective and entrepreneurial Board to promote the long-term sustainable
success of the Company, generating value for shareholders and contributing
to wider society
B. Purpose, values and strategy with alignment to culture
C. Resources for the Company to meet its objectives and measure
performance. Controls framework for management and assessments of risk
D. Effective engagement with shareholders and stakeholders
E. Consistency of workforce policies and practices to support long-term
sustainable success
Strategic report 1 – 53
Board engagement with key stakeholders 24 – 25
Shareholder engagement 59
Audit Committee report 71 – 77
Division of responsibilities
see pages
F. Leadership of Board by Chair
G. Board composition and responsibilities
H. Role of Non-executive Directors
I. Company secretary, policies, progress, processes, information,
time and resources
Board composition 63
Key roles and responsibilities 60 – 61
Information and training 64
Composition, succession and evaluation
see pages
J. Board appointments and succession plans for Board and senior
management, and promotion of diversity
K. Skills, experience and knowledge of Board and length of service of Board
as a whole
L. Annual evaluation of Board and Directors and demonstration of whether
each Director continues to contribute effectively
Board composition 63
Board, Committee and Director performance evaluation 64 – 65
Nomination and Governance Committee report 66 – 68
Audit, risk and internal control
see pages
M. Independence and effectiveness of internal and external audit functions,
and integrity of financial and narrative statements
N. Fair, balanced and understandable assessment of the Company’s position
and prospects
O. Risk management and internal control framework and principal risks the
Company is willing to take to achieve its long-term objectives
Audit Committee report 71 – 77
Strategic report 1 – 53
Fair, balanced and understandable Annual Report 77
Going concern basis of accounting 77
Viability statement
52
Remuneration
see pages
P. Remuneration policies and practices to support strategy and promote
long-term sustainable success, with executive remuneration aligned to
Company purpose and values
Q. Procedure for Executive, Director and senior management remuneration
R. Authorisation of remuneration outcomes
Remuneration Committee report 78 – 108
Strategic report Governance Financial statements
57
Domino’s Pizza Group plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE
Board leadership and
company purpose
The Company is led by the Board, whose
members are collectively responsible for the
long-term success of the Company. Day-to-
day management of the business is delegated
to management, led by the Chief Executive
Officer. The role of the Board can be
summarised as follows:
Decide on the longer-term aims
– Agree the Company’s business model
– Agree an appetite for risk
– Set values and standards for the Company
– Provide entrepreneurial leadership
– Appoint the Executive Directors
Decide on the short-term goals
– Review and approve the strategy, providing
constructive challenge as necessary
– Ensure the necessary financial and human
resources are in place
– Agree business plans and budgets
– Review the risk management process
and internal control environment
Monitor and manage performance
– Monitor management’s performance
in delivering the strategy, and challenge
or support as necessary
– Approve major expenditure and other
commitments
– Monitor the risk environment in which the
Company operates and review internal
controls
– Determine the remuneration of Executive
Directors and senior management
– Oversee the governance of the Company
and Group to ensure shareholders’
interests are protected
Report to, and engage with,
stakeholders
– Monitor the integrity of financial
information and the reporting of
performance generally
– Report to shareholders on business
performance
– Ensure other external obligations are met,
including reporting to other stakeholders
– Understand stakeholders’ views and act
as necessary
Meetings of Non-executive Directors
– The Non-executive Directors, led by
the Chair, meet without the Executive
Directors being present. In addition, the
Independent Non-executive Directors, led
by the Senior Independent Director (‘SID’),
meet during the year as needed, including
to review the performance of the Chair.
Compliance with the UK Corporate Governance Code
Domino’s Pizza Group plc (the ‘Company’)
is incorporated and has a premium listing in
the UK. As a result, it is required to report
on its compliance with the UK Corporate
Governance Code (the ‘Code’) or explain
why it has chosen not to comply. For the
year ended 31 December 2023, it was
subject to the edition of the Code published
by the FRC in July 2018, which is available
from www.frc.org.uk. The Company
complied with the Code throughout
the year.
The Code’s main principles and provisions
set out the key elements of effective Board
practice. We explain in this report how
we have applied these during the year.
Where appropriate, some explanations are
contained in the Nomination & Governance
Committee report, the Audit Committee
report, the Directors’ remuneration report
and the Directors’ report.
Within our delegation framework, the
Board retains certain key decision-making
responsibilities:
– Setting the Group’s purpose and its values
– Setting and approving overall
Group strategy
– Setting and approving the Group’s capital
structure and funding arrangements
– Setting a risk appetite, within which
management is required to operate
– Reviewing and approving business plans
and budgets
– Reviewing and approving major
business decisions
– Reviewing major risks and the
implementation of mitigation strategies
– Reviewing the functioning of the internal
control environment
– Monitoring operational and trading
results against previously approved plans
– Reviewing and approving significant
contractual and other commitments,
including capital expenditure
– Reviewing corporate governance
arrangements
– Reviewing succession plans for the
Board and Executive Directors
– Exercising its control by an annual
review of ‘matters reserved’ for the
Board’s decision
As noted above, the Board is responsible
for determining the nature and extent of
the principal risks it is willing to take in
achieving its strategic objectives. It also
retains oversight of the risk management
and internal control systems with the
aim that these are sound and protect
stakeholders’ interests.
58
Domino’s Pizza Group plc Annual Report & Accounts 2023
The Board is supported in its work by four Committees:
Terms of reference for these Committees, which are regularly reviewed by the Board, are available on the Company’s investor relations website
(https://investors.dominos.co.uk) as is the formal schedule of matters reserved for the Board’s decision.
Relations with shareholders
and other stakeholders
We maintain an active dialogue with our
shareholders and potential investors,
which we intend to be based on a mutual
understanding of objectives. The Group’s
Investor Relations function, together with the
Executive Directors, routinely engage with
analysts, institutional and retail shareholders
and potential investors, through results
presentations, roadshows and one-off
meetings and calls. The Chair and SID are
available for meetings with shareholders
on request.
In years in which there is a significant
change to the Executive remuneration policy
or there is a binding vote on remuneration
at the Annual General Meeting, the Chair,
the Chair of the Remuneration Committee
and the Company Secretary meet with major
shareholders to discuss remuneration and
any other governance issues.
Our aim is to ensure we build and maintain
strong relationships, and that we communicate
our strategy, and performance against it, in a
clear and consistent way. In turn, we seek to
understand the views of our investors through
regular dialogue, and feedback is provided
to the Board as a whole to give additional
context for strategic decision-making and
capital allocation.
The regular finance report to the Board
includes a detailed update on all investor
relations matters, including movements
in the share register, recent meetings with
investors, summaries of analysts’ reports
and key discussion topics. In addition, our
brokers provide an independent view on
matters of strategic importance such as
potential acquisitions, disposals and capital
allocation philosophy.
A summary of the Board’s stakeholder
engagement, and compliance with its duties
under Section 172 of the Companies Act
2006, can be found on pages 26 to 27.
2023 Investor Relations
Key investor relations activities in 2023:
– Maintained regular reporting to keep
investors informed and updated.
– Introduced the new CEO to the market.
– Continued to engage actively with
institutional investors through:
– roadshows in the UK and North America
– meetings and calls, both physical
and virtual
– investor conferences
– site visits
– Engagement with equity analysts, including
sales team presentations.
THE BOARD
audit committee
The Audit Committee assists
the Board in discharging its
responsibilities for the
integrity of the financial
statements, reviewing the
internal control environment
and risk management
systems, overseeing the
activities of the Group’s
Internal Audit function,
managing the relationship
with the External Auditors
and monitoring the
effectiveness and objectivity
of the External Auditors.
NOMINATION &
GOVERNANCE COMMITTEE
The Nomination &
Governance Committee
oversees the recruitment
of the Directors and advises
on matters relating to the
Board’s membership and
Committee appointments,
including diversity, inclusion
and reviewing succession
plans. The Nomination &
Governance Committee
also regularly reviews and
monitors the overall skills
and experience of the Board,
diversity and inclusion within
the wider Group, and senior
management succession and
development plans.
REMUNERATION
COMMITTEE
The Remuneration Committee
determines the terms and
conditions of employment,
remuneration and rewards
of the Executive Directors,
the Chair and the Executive
Leadership teams. In addition,
the Remuneration Committee
reviews workforce
remuneration and related
policies. The Remuneration
Committee aims to offer an
appropriate balance of fixed
and performance-related,
immediate and deferred
remuneration, but without
overpaying or creating the
risk of rewards for failure.
SUSTAINABILITY
COMMITTEE
The Sustainability Committee
has oversight of the Group’s
progress on sustainability-
related matters; agreeing
targets and associated KPIs;
and ensuring effective
communications with
stakeholder groups. It oversees
external reporting against
relevant reporting standards
and makes recommendations
to the Board on sustainability
matters relevant to the Group.
Strategic report Governance Financial statements
59
Domino’s Pizza Group plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE continued
Key topics discussed with shareholders
in 2023:
– The competitive environment in the UK
and the impact of the cost-of-living crisis.
– The improved value perception of
Domino’s Pizza.
– Food cost and labour inflation.
– Franchise partner relations and the
franchisee resolution.
– Management changes.
– The benefits of the Just Eat trial and
subsequent roll out.
– Strategic progress on digital.
– Capital allocation and shareholder returns.
The Annual General Meeting (‘AGM’)
The AGM is treated as an opportunity to
communicate with all of our shareholders,
and their participation is encouraged. The
Chairs of all Board Committees attend the
AGM and are available to answer questions.
An explanatory circular containing the notice
of meeting is sent to shareholders at least
20 working days beforehand, with separate
votes being offered on each substantive
issue. All proxy votes received are counted,
with the votes for, against and withheld
announced at the meeting and subsequently
published on the Company’s investor
relations website. This website, https://
investors.dominos.co.uk, also contains a host
of up-to-date information on the Group.
The 2024 AGM is scheduled to be held on
1 May 2024. Full details of the meeting venue
will be included in the 2024 AGM circular
and will be available on our website https://
investors.dominos.co.uk.
Division of responsibilities
Board roles and responsibilities
There is a clear separation between the roles
of the Chair and the Chief Executive Officer,
which is recorded in a document approved
by the Board and summarised below. In
essence, the Chair manages the Board and
the Chief Executive Officer manages the
business. Importantly, no one individual has
unfettered powers of decision. All Directors
have access to the advice of the Company
Secretary on governance matters.
The Chair and Chief Executive Officer have
regular meetings to discuss matters relating
to strategic development, stakeholder views,
operational matters and business performance.
The Chair also has separate discussions with
the Non-executive Directors.
Diversity
The Board’s policy on diversity is explained
in the Nomination & Governance Committee
report on pages 66 to 67.
Board membership
The Board currently comprises the Chair,
Chief Executive Officer, Chief Financial
Officer, four independent Non-executive
Directors and one Non-executive Director.
The names and biographical details of the
serving Directors, and the offices held by
them, can be found on pages 54 and 55.
The composition of the Board is of a
sufficient size and calibre to match the
growth aspirations and requirements of
the business, ensuring good governance is
achieved and normal succession challenges
are managed, but is not so large as to
be unwieldy.
The current Non-executive Directors’
tenure reflects the refreshing of the Board
in recent years.
chair
The role of the Chair is:
– providing leadership to and ensuring the
effectiveness of the Board in directing
the Company;
– demonstrating objective judgement
at all times;
– ensuring that the Board agendas
emphasise strategic, rather than
routine, issues;
– ensuring that the Directors receive
accurate and clear information well
ahead of the time when a decision
is required;
– promoting a culture of openness and
constructive debate, and facilitating
an effective contribution by the
Non-executive Directors;
– arranging informal meetings of the
Directors, including meetings of the
Non-executive Directors without the
Executive Directors being present;
– ensuring effective communication
by the Group with its shareholders;
– seeking regular engagements with major
shareholders in order to understand
their views on governance and
performance against the strategy;
– ensuring the Board as a whole has
a clear understanding of the views
of shareholders;
– arranging for the Chairs of the
Committees to be available to answer
questions at the AGM and for all
Directors to attend;
– taking the lead in providing a properly
constructed, full, formal and tailored
induction programme and ongoing
development for new Directors; and
– acting on the results of Board
evaluations by recognising the strengths
and addressing any weaknesses of
the Board.
60
Domino’s Pizza Group plc Annual Report & Accounts 2023
CHIEF EXECUTIVE OFFICER
The role of the Chief Executive Officer is:
– leading and managing the development
of the Group’s strategic direction and
objectives;
– identifying and executing acquisitions
and disposals, and leading geographic
diversification initiatives;
– reviewing the Group’s organisational
structure and recommending changes
as appropriate;
– identifying and executing new business
opportunities;
– overseeing risk management and
internal control;
– managing the Group’s risk profile,
including the health & safety
performance of the Group;
– implementing the decisions of the Board
and its Committees;
– building and maintaining an effective
Group leadership team;
– reporting to the Board on operating
performance;
– encouraging the implementation of
culture throughout the business;
– maintaining communication with key
external stakeholders and maintaining
relationships with the government and
trade bodies; and
– ensuring the Chair and the Board
are alerted to forthcoming complex,
contentious or sensitive issues affecting
the Group.
The SID focuses on:
– meeting regularly with the independent
Non-executive Directors without the
Chair present;
– holding annual meetings with
Non-executive Directors without
the Chair present to appraise the
Chair’s performance and other
appropriate matters;
– providing a sounding board for the
Chair and acting as an intermediary
for other Directors;
– chairing the Nomination & Governance
Committee when it is considering
succession to the role of the Chair
of the Board;
– being available to shareholders if they
have concerns which contact through
the normal channels of Chair or Chief
Executive Officer has failed to address
or would be inappropriate; and
– meeting with major shareholders
regularly enough to gain a balanced
view of their issues and concerns.
The role of a Non-executive Director is:
– providing creative contribution to the
Board by way of constructive criticism;
– bringing independence, impartiality,
experience, specialist knowledge and
a different perspective to the Board;
– providing guidance on matters of
concern and strategy;
– overseeing risk management and
internal control;
– protecting shareholder and stakeholder
interests;
– constructively challenging the Executive
Directors and monitoring Executive
performance;
– supporting the Executive team in
shaping and delivering the strategic
goals of the business;
– optimising shareholder return and
protection of shareholder assets; and
– ensuring the Board is able to work
together effectively and make maximum
use of its time.
Each Non-executive Director has
committed to the Company that they
are able to allocate sufficient time to the
Company to discharge their responsibilities
effectively. Any additional appointments
they are contemplating taking on are
discussed with the Chair in advance,
including the likely time commitment and
whether these could in any way constitute
a conflict of interest. These matters are
formally reviewed by the Board on an
annual basis.
SENIOR INDEPENDENT DIRECTOR (‘SID’)
NON-EXECUTIVE DIRECTOR
Strategic report Governance Financial statements
61
Domino’s Pizza Group plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE continued
Independence
The Board reviews the independence
of its Non-executive Directors annually.
In assessing the independence of each
Director, the Board considers whether each
is independent in character and judgement,
and whether there are relationships or
circumstances which are likely to affect,
or could appear to affect, the
Director’s judgement.
The Board has considered the independence
of the current Non-executive Directors, other
than the Chair. It does not consider Elias Diaz
Sese to be independent due to his recent role
as Interim Chief Executive Officer.
Board Committees
Membership of the four Board Committees
during the year ended 31 December 2023
is summarised on the right of this page.
Attendance at Board and
Committee meetings
The Board is scheduled to meet eight times
in each year. Additional meetings are arranged
as necessary which do not necessarily
require the full participation of all Directors.
Committees meet as necessary to discharge
their duties. Attendance of individual
Directors at meetings of the Board and its
Committees (including additional meetings)
during the year ended 31 December 2023
is summarised on the right of this page:
Chair member
Committee membership
Audit
Committee
Nomination &
Governance
Committee
Remuneration
Committee
Sustainability
Committee
2
Matt Shattock
Ian Bull
Natalia Barsegiyan
4
Tracy Corrigan
1
Stella David⁴
Lynn Fordham
Usman Nabi
Dominic Paul
2
Elias Diaz Sese
3
1. Tracy Corrigan joined the Board on 5 May 2022 and subsequently joined the Audit Committee
on 10 February 2023.
2. Dominic Paul resigned as a Director with effect from 30 December 2022.
3. Elias Diaz Sese served as a member of the Sustainability Committee throughout the year and
re-joined the Nomination & Governance Committee on 8 August 2023.
4. Stella David stepped down from the Board on 31 December 2023. Natalia Barsegiyan became the
Chair of the Remuneration Committee on 3 January 2024 and Tracy Corrigan became the Chair
of the Sustainability Committee on 3 January 2024.
Attendance at Board and Committee meetings
Board
1
Audit
Committee
Nomination &
Governance
Committee
Remuneration
Committee
Sustainability
Committee
Matt Shattock 19 of 19 5 of 5 8 of 8
Andrew Rennie
2
8 of 8
Edward Jamieson 19 of 19
Ian Bull 18 of 19 4 of 4 5 of 5 8 of 8
Natalia Barsegiyan 18 of 19 4 of 4 5 of 5 8 of 8 4 of 4
Tracy Corrigan 17 of 19 3 of 4 5 of 5 3 of 4
Stella David
2
18 of 19 4 of 5 8 of 8 4 of 4
Lynn Fordham 19 of 19 4 of 4 5 of 5 8 of 8
Usman Nabi
2
12 of 12 0 of 1
Elias Diaz Sese 15 of 19 2 of 4 4 of 4
1. All Directors attended the scheduled Board meetings. The Board had a total of 12 additional
unscheduled meetings during the year, some of which were short calls to update the Board
on a range of issues, and for the Board to provide support and guidance during the transition
from Interim Chief Executive Officer to the permanent Chief Executive Officer.
2. Usman Nabi stepped down from the Board on 14 August 2023 and Stella David stepped down
from the Board on 31 December 2023. Andrew Rennie joined the Board on 1 August 2023.
62
Domino’s Pizza Group plc Annual Report & Accounts 2023
Board balance
The Board composition creates a majority of independent Non-executive Directors
(excluding the Chair), with the current position being:
Board composition
The members of the Board as at 11 March 2024 were drawn from a range of
backgrounds and gained their experience in a range of relevant industry sectors:
non-independent
directors
Independent
Non-executive
Directors
chair
gender balance
professional skills
2
Retail
management
3
General
management
3
Finance/
accounting
1 3 4
Primary experience
1
Investment
management
2
Consumer
retail
5
Food
retail
Ethnic diversity
8
Non-ethnic
minority
0
Ethnic
minority
Female
male
3
5
Composition, succession
and evaluation
Board composition
In terms of composition, the Board is
cognisant of its diversity policy and aims to
make appointments in line with that policy.
Our preferred Board structure is to be led by
a Non-executive Chair, to have high-calibre
Executive Directors to drive the performance
of the business under the leadership of a
Chief Executive Officer, and to have a
number of Non-executive Directors drawn
from a range of backgrounds, whose role is
to provide constructive challenge, provide
guidance in developing strategy, offer advice
relating to their areas of specialism and,
ultimately, to hold management to account.
Our aim is that the Independent Non-
executive Directors always constitute at
least half of the Board. This structure and the
integrity of the individual Directors should
ensure that no single individual or group
dominates the decision-making process.
There is a common purpose of promoting the
overall success of the Group with a unified
vision of the definition of success, the core
strategic principles, and the understanding,
alignment and mitigation of risk.
Non-executive Directors are appointed
for three-year terms (subject to annual
re-election by shareholders) and the offer
of any further term of appointment after
year six would be weighed carefully by
the Nomination & Governance Committee,
which keeps the need for progressive
refreshing of the Board (particularly to
maintain an appropriate balance of skills
and experience) and orderly succession to
key appointments under continual review.
Strategic report Governance Financial statements
63
Domino’s Pizza Group plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE continued
Board effectiveness
We believe that there are five key steps in creating an effective Board:
1. Recruit the right people
3. Identify and manage any conflicts of interest
2. Make sure Directors have the right tools
4. Formally check on effectiveness
We have a formal, rigorous and transparent
procedure for the appointment of new Directors
to the Board, overseen by the Nomination &
Governance Committee. For each appointment,
we develop an objective brief summarising the
role and the skills and experience required, and
use an appropriate head-hunting firm with proven
expertise in the relevant field. As noted above,
we take care to ensure that we recruit on merit,
from the widest possible range of backgrounds,
recognising the benefits of diversity, and the
search firms we use are signatories to the Code
of Conduct for executive search firms. Before
confirming an appointment, we check whether
the preferred individual can commit to the time
expected including, in the case of an appointment
to the Chairship, the need to be available in the
event of a crisis.
Directors have a statutory duty to avoid actual
or potential conflicts of interest. However, the
Company’s Articles of Association allow the
Board to ‘authorise’ conflicts, where this is felt
appropriate. Any Director who becomes aware
that they are in a situation which does or could
create a conflict of interest, or has an interest
in an existing or proposed transaction in which
the Company also has an interest, is required to
notify the Board in writing as soon as possible.
The interests of new Directors are reviewed
during the recruitment process and authorised
(if appropriate) by the Board at the time of
their appointment.
Executive Directors are permitted, and where
appropriate even encouraged, to hold Non-
executive Directorships outside the Group.
However, the Board would not agree to a
full-time Executive Director taking on more
than one Non-executive Directorship in, nor
the role of the chair of, a FTSE 350 company.
All Directors go through a tailored, formal induction
process on joining the Board, including the
opportunity to meet major shareholders. The aim of
this is to ensure that they understand the Company
and its business model, our strategy, the drivers
of value in the business and the key risks we face,
and that they understand the legal and regulatory
environment in which we operate and their own
personal obligations. Directors are expected to
update and refresh their skills and knowledge on
an ongoing basis, and to continue to build their
familiarity with the Company and its business
throughout their tenure. The Company will provide
the necessary resources for developing and
updating its Directors’ knowledge and capabilities,
including access to our operations, staff
and franchisees.
All Directors have access to the services of the
Company Secretary, and the opportunity to seek
independent professional advice at the Company’s
expense where they judge it necessary to discharge
their responsibilities as Directors or as members
of Board Committees. If Directors have concerns
which cannot be resolved about the running of the
Company or a proposed action, they can request
that their concerns are recorded in the Board
minutes, or provide a written statement to the
Chair, for circulation to the Board.
The Board is supplied with information in a
form and of a quality appropriate to enable it to
discharge its duties effectively. This is provided
in good time ahead of all meetings and decisions,
and Non-executive Directors are encouraged
to seek clarification from management whenever
they feel it is appropriate.
The Board undertakes a formal and rigorous annual
review of its own performance each year. It also
reviews the performance of the Board Committees,
and the Nomination & Governance Committee
reviews the performance of individual Directors.
Board and Committee evaluation considers the
balance of skills, experience (including familiarity
with the Company and its business) and
independence of the Group taken as a whole, and
also the diversity, including gender and ethnicity,
of the Directors. The process also examines how
the Directors work together as a unit, and explores
other factors relevant to effectiveness. The Chair
acts on the results of the performance evaluations
as necessary including, where appropriate,
proposing new members be appointed to the
Board or seeking the resignation of Directors.
Individual evaluation aims to determine whether
each Director continues to contribute effectively
and to demonstrate commitment to the role
(including commitment of time for Board and
Committee meetings and any other duties).
The performance evaluation of the Chair was
led by the Senior Independent Director.
Process
Our Board evaluation in 2023 was undertaken
in-house and facilitated by the Company Secretary
in conjunction with the Chair. The evaluation was
conducted using an online questionnaire and a
report compiled for discussion by the Board.
The evaluation addressed core aspects of the Board’s
performance and focused on the following areas:
– the effectiveness of the Board’s arrangements
for engaging with stakeholder groups and
monitoring culture;
– strategic oversight;
– oversight of risk management and internal control;
– Board dynamics and development;
– meeting management and the Board’s agenda;
– Board support; and
– succession planning and talent development.
The performance of the Chair and the Committees
of the Board were also evaluated.
The anonymity of all responses was guaranteed
throughout the process to promote open and
honest feedback. The Company Secretary
subsequently analysed the survey results and
delivered detailed reports on the performance
of the Board, its Committees and the Chair.
The Board has reviewed the reports and agreed
detailed priority actions which include:
– focus on results delivery, and applying the capital
allocation policy so that it maximizes corporate
development potential;
– strategy will be refined to focus on both organic
and inorganic growth;
– continued focus on enhancing leadership
bench-strength, and on embedding and
monitoring culture; and
– continued improvement in the enterprise risk
management system with a particular focus on
cyber security.
64
Domino’s Pizza Group plc Annual Report & Accounts 2023
Audit, risk and internal control
The Board has established formal and
transparent arrangements for considering
how they apply the principles of sound
corporate reporting, risk management and
internal control, and how the Company and
Board maintain an appropriate relationship
with the Company’s Auditors. These
responsibilities are overseen by the Audit
Committee and are explained in its report
from pages 71 to 77.
The Board considers that the 2023 Annual
Report and Accounts, taken as a whole, is fair,
balanced and understandable, and provides
the information necessary for shareholders
to assess the Company’s position and
performance, business model and strategy.
Details of how we do this are also explained
in the Audit Committee’s report.
Remuneration
There are formal and transparent procedures
for developing policy on Executive
remuneration and for fixing the remuneration
packages of individual Directors, which
are overseen by the Remuneration
Committee and are explained in its report
from pages 78 to 108. This report explains
how Executive Directors’ remuneration is
designed to promote the long-term success
of the Company, taking into account views
of shareholders, and shows how the
performance-related elements are
transparent, stretching and rigorously applied.
5. Ask shareholders to confirm appointments
Ultimately, the Directors’ main responsibility is to
promote the long-term success of the Company,
acting in shareholders’ best interests. All of our
Directors submit themselves for re-election at
each AGM and we provide shareholders with
sufficient information in the meeting papers for
them to decide whether their commitment and
performance warrant a further year in office.
Functional meetings/huddles
Locally organised by teams, normally as part of weekly or monthly functional meetings.
Attended by all relevant team members, and led by senior member of local management team.
The Board’s chosen method of engaging with colleagues, as set out in Provision 5 of the UK
Corporate Governance Code, continues to be through a designated Non-executive Director.
Stella David was the Board’s designated Non-executive Director from 30 November 2021 until
31 December 2023. Ian Bull has taken the role of Chair of the UK & Ireland Colleague Forum from
January 2024. The mechanism for workforce engagement in the business has been reviewed during
the year and the Board considers that it remains to be effective.
There were three meetings of the Colleague Forum during the year with Stella David in attendance
at each meeting. Part of each meeting was held without any senior management in attendance for
representatives to discuss issues privately. Stella David reported to the Board after each of the
Colleague Forum meetings and provided an update on matters discussed and issues raised.
During 2023, the forum was updated on the organisational change project, executive remuneration
and progress within the business. The forum members had an opportunity to meet with our new
CEO, Andrew Rennie, to ask questions and discuss his growth plans for the business. Throughout
2023, the forum has been engaged in discussions and fed back on Company recognition and
long-service awards which will be implemented in 2024.
SCC Representatives
(1 from each SCC)
SCC Representatives
5
8
Support Office
Representative
1
Senior Leadership
TeamRepresentative
1
Corporate store
Representatives
2
Chair: Designated Non-executive Director | People Director
Chair: Director of Supply Chain Operations | HR Representative
Chair: Functional Leader | HR Representative
Nominated Colleague Representatives:
Nominated Colleague Representatives:
Elected Colleague
Representatives SCC:
Support Office: Corporate Stores:
Currently implementing
acolleague forum
framework to
enableengagement
withcolleagues
SCC Representatives,
forums taking
place over 4 sites
(1 per function
across each site)
Representatives
from all functions
of the support office
23
10
WORKFORCE ENGAGEMENT
Colleague Forums
Since the introduction of Colleague Forums within our Supply Chain Centres (SCCs) in 2018,
and within our support office and corporate stores since 2020, we have continued to develop
the framework and embed it as part of our overall cadence of dialogue with our colleagues.
These forums meet regularly face-to-face and afford our colleague representatives an opportunity
to see parts of the business they would otherwise not; for example, our corporate stores colleagues
can visit our production facilities.
TRIANNUAL (3 TIMES PER YEAR) COLLEAGUE FORUMS
UK&I forum
Bi-Monthly BUSINESS AREA FORUMS
SCC UK&I Forum
Strategic report Governance Financial statements
65
Domino’s Pizza Group plc Annual Report & Accounts 2023
NOMINATION & GOVERNANCE COMMITTEE REPORT
Overview
I’m pleased to report on the Committee’s
work in 2023.
Last year we reported that Heidrick &
Struggles had been appointed to lead the
search for a new Chief Executive Officer
following the resignation of Dominic Paul.
The Board had appointed Elias Diaz Sese
as Interim Chief Executive Officer until
a permanent Chief Executive Officer
was recruited.
On 13 July 2023, we were delighted to
announce the appointment of Andrew Rennie
as our Chief Executive Officer. Andrew joined
the Board on 1 August 2023 and became
Chief Executive Officer on 8 August 2023.
Elias Diaz Sese returned to his role as a
Non-executive Director having performed
an outstanding role as our Interim Chief
Executive Officer.
In August 2023 Usman Nabi announced
his intention to step down from the Board,
and in December 2023 Stella David advised
that she would step down with effect from
31 December 2023 due to her work
commitments as Interim Chief Executive
Officer of Entain plc. Both Usman and Stella
made a significant contribution to the work of
the Board during their tenure, and they leave
us with our thanks and gratitude. Usman’s
departure meant that the Board ceased to
have one individual on the Board from a
minority ethnic background. Similarly, while
the Board composition was 44% female as at
31 December 2023, with Stella’s resignation
it has meant that our target of 40% female
Directors has not been met since the start of
the year. We have now commenced a search
for an additional Independent Non-executive
Director to join the Board. The Committee
is mindful of its diversity policy and targets
and has a clear intention that the progress
we have made over the past few years
is maintained.
The Committee is also aware that the Listing
Rules require listed companies to set as a
target that one of the top four senior positions
should be held by a female. The Company does
not currently meet this target, but aims to
achieve this objective as soon as practicable.
There has been a significant change in the
Board’s membership over recent years,
and the average tenure is relatively short.
5
Meetings
in 2023
Matt Shattock
Chair
Committee Members
Ian Bull
Natalia
Barsegiyan
Tracy
Corrigan
Lynn
Fordham
Elias
Diaz Sese
Committee
member
Member
since
Meetings
attended
Matt Shattock 2020
Ian Bull 2019
Natalia Barsegiyan 2020
Tracy Corrigan 2022
Stella David* 2021
Lynn Fordham 2020
Elias Diaz Sese* 2023
Usman Nabi* 2019
* Usman Nabi resigned from the Board on 14 August
2023. Elias Diaz Sese re-joined the Committee on
8 August 2023 once his period as Interim Chief
Executive Officer had ended. Stella David resigned
from the Board on 31 December 2023.
For full biographies of the Committee members
see pages 54 and 55.
66
Domino’s Pizza Group plc Annual Report & Accounts 2023
The Committee’s view is that it is preferable
to maintain the current Board composition
and roles, and look to achieve this target
when there are changes to the Board
membership which would naturally facilitate
an appointment of a female candidate to one
of the senior roles.
Board evaluation 2023
Details of the Board evaluation process
for 2023 are set out on pages 64 and 65.
Part of the evaluation process considers
the diversity of the Board and senior
management, and the effectiveness of talent
management programmes and succession
planning. A summary of progress against our
diversity objectives is set out on page 68.
Purpose
The Nomination & Governance Committee
has five principal duties:
– to ensure that plans are in place for orderly
succession for appointments to senior
management and to the Board, taking
account of the findings of the Board
evaluation, so as to maintain an appropriate
balance of skills and experience within
the Company and to ensure progressive
refreshing of the Board;
– to lead the process for Board and
Committee appointments and make
recommendations to the Board;
– where external recruitment is required,
to evaluate the balance of skills, experience,
independence and knowledge on the Board
and, in light of this evaluation, prepare a
description of the role and capabilities
required for a particular appointment.
The Nomination & Governance Committee
would then oversee the selection process
with the aim of ensuring that this results
in an appointment made on merit, against
objective criteria and with due regard
for the benefits of diversity on the Board,
including gender and ethnicity;
– to undertake formal performance
evaluation of Non-executive Directors
who are standing for annual re-election
and to ascertain whether the individual’s
performance continues to be effective and
they demonstrate sufficient commitment
to the role; and
– to review the Group’s corporate
governance arrangements, including
ensuring appropriate policies and
procedures are in place for key compliance
areas and that the Board and subsidiaries
process are consistent with best practice.
The Terms of Reference of the Nomination
& Governance Committee were reviewed
by the Committee on 7 November 2023
and a copy is available on the Company’s
investor relations website (https://investors.
dominos.co.uk).
How the Committee operates
The principal objectives of the Nomination
& Governance Committee are:
– to ensure that the Company has the right
leadership, both on the Board and amongst
senior management. This is a combination
of continual review and monitoring of,
and also responding to, specific situations
as needed; and
– to keep the Board’s corporate governance
arrangements under review and to ensure
that both the Company and the Board
operate in a manner consistent with
corporate governance best practice.
The Company Secretary attends meetings in
his capacity as Secretary of the Nomination
& Governance Committee, and the Chief
Executive Officer and People Director are
expected to attend whenever necessary.
The Committee’s membership is comprised
of Non-executive Directors, the majority
of whom are independent.
While the Chair of the Board chairs the
Nomination & Governance Committee in
normal circumstances, he would abstain in
matters relating to the appointment of a
successor to the Chair of the Board.
The number of meetings held in the year
and attendance at those meetings is shown
on page 62.
Activities in 2023
During the year, the Committee met to
consider the following key matters:
– recommending to the Board that Tracy
Corrigan be appointed to serve on the
Audit Committee;
– reviewing the performance of all the
Non-executive Directors seeking
re-election at the 2023 AGM;
– recommending to the Board that Andrew
Rennie be appointed Chief Executive
Officer;
– recommending to the Board that Elias Diaz
Sese re-join the Nominations and
Governance Committee;
– reviewing the Company’s compliance with
the UK Corporate Governance Code and
developments in best practice;
– receiving reports from management on
plans to improve diversity and inclusion
within the Group;
– receiving reports from management on
talent management within the Group;
– reviewing progress against the Board’s
policy on diversity and inclusion;
– reviewing the Committee’s Terms of
Reference; and
– reviewing the composition of the Board’s
Committees.
Policy on diversity
The policy of the Board on recruitment is
always to seek to appoint the best candidate
to each role.
We acknowledge the importance and benefit
of having Directors with the appropriate
balance of skills, experience, independence
and knowledge of the Company to enable
them to discharge their respective duties
and responsibilities effectively.
They play a key governance role in protecting
stakeholders’ interests by ensuring that
the Board and management are challenged,
constructively and effectively, and it is
important that they do so from a range
of perspectives.
Strategic report Governance Financial statements
67
Domino’s Pizza Group plc Annual Report & Accounts 2023
NOMINATION & GOVERNANCE COMMITTEE REPORT continued
Policy objectives Implementation
Progress against
objectives
Board
To achieve 33% female Board
representation by 2021
During 2020 and 2021 the Board appointed three
female Independent Non-executive Directors taking
the proportion of female directors on the Board to
33% by the end of 2021.
Achieved
To achieve female
representation on the Board
to 40% by end of 2025
During 2022 the Board appointed Tracy Corrigan as
an additional Independent Non-executive Director.
At the 2023 year-end the proportion of female
Directors on the Board was 44%. Following Stella
David’s decision to step down from the Board, the
percentage of females on the Board has fallen slightly
to 38.5%. The Nomination & Governance Committee
remains committed to achieving its policy objective.
In progress
To maintain at least one Board
member from a non-white
ethnic minority background
From November 2019 until August 2023, the Board
included one Board member from a non-white
ethnic minority background. The Nomination &
Governance Committee will aim to achieve the
Parker Review targets by December 2024.
In progress
Senior management
To achieve female
representation of senior
management to 45% by 2025
Since this target was set, the number of female
representatives in the senior management cohort
has increased and, as a result, the percentage has
increased to 35.6%. However, this is below our
target for 2025 and so is an area we will continue
to focus on in 2024.
In progress
To achieve 10% representation
of senior management from a
non-white ethnic minority
background by 2025
Since this target was set, the number of
representatives in the senior management cohort
from an ethnic minority background has increased,
and the percentage has increased to 6.7%. While we
are pleased with this progress, it is still below our
2025 target and is an area we continue to focus on
in 2024.
In progress
As required by Listing Rule LR 9.8.6R (10), data on gender and ethnicity at Board and Executive
level is provided below, as at 31 December 2023.
Gender
Number
of Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
Executive
management
Percentage
of Executive
management
Men 5 56% 4 3 50%
Women 4 44% – 3 50%
Not specified/prefer not to say – – – – –
Ethnicity
Number
of Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
Executive
management
Percentage
of Executive
management
White British or other white
(including minority-white groups)
9 100% 4 5 83%
Mixed/multiple ethnic groups – – – – –
Asian/Asian British – – – 1 17%
Black/African/Caribbean/
Black British
– – – – –
Other ethnic group, including Arab – – – – –
Not specified/prefer not to say – – – – –
A key factor in achieving this effectiveness
is drawing members from a range of
backgrounds, which has been shown to help
avoid ‘group think’. We value diversity in our
business and we recruit and develop people
regardless of their gender, race or any other
characteristic. It is in the long-term interests
of the Company and its stakeholders to
recruit and develop the very best people,
drawn from the widest pool of talent.
A summary of the Board’s diversity targets,
and our progress against them, is shown on
the right of this page.
Board Diversity Policy – objectives
and progress against targets
When recruiting new Board members or
making appointments to Board Committees,
the Committee ensures that the recruitment
or selection processes are in line with our
policy to include diverse candidates from a
wide variety of backgrounds and those with
non-listed company experience for the
Committee to consider.
A copy of the Board’s Diversity Policy
Statement is available on the Company’s
investor relations website: https://investors.
dominos.co.uk. Details of the Group-wide
diversity data are shown on page 38.
Matt Shattock
Chair
11 March 2024
68
Domino’s Pizza Group plc Annual Report & Accounts 2023
SUSTAINABILITY COMMITTEE REPORT
Overview
I’m pleased to present my first report as
Chair of the Committee. I assumed the role
of Committee Chair on 3 January 2024, and
have been a member of the Committee since
November 2021. Natalia Barsegiyan chaired
the Committee throughout 2023. I’d like to
thank Natalia for her commitment to the
work of the Committee since its inception,
and for establishing solid governance
foundations to support the Committee’s
work programme into the future.
The Committee plays a key role in ensuring
that appropriate governance structures are
in place to:
– provide robust oversight of sustainability
activities throughout the business;
– drive progress on the Company’s various
sustainability programmes and initiatives;
and
– ensure that the Group’s corporate purpose
of delivering a better future through food
people love is underpinned by a robust
sustainability strategy.
The Committee provides support and
guidance through sharing best practice,
based on the Committee members’ collective
experience augmented by third-party
professional advice.
Throughout the year, the Committee
received presentations on a wide range of
topics and focus areas. The Company has
continued to invest in resources to support
our Sustainability agenda and drive forward
its initiative both internally and with key
stakeholders.
Continued progress has been made during
the year to drive forward the Group’s
sustainability agenda. Further details are
included in the sustainability report and the
Group’s first standalone sustainability report
which can be viewed on our website: https://
corporate.dominos.co.uk/Corporate-
responsibility.
4
Meetings
in 2023
Tracy Corrigan
Chair
Committee Members
Natalia
Barsegiyan
Elias
Diaz Sese
Committee
member
Member
since
Meetings
attended
Natalia Barsegiyan 2021
Tracy Corrigan 2022
Stella David* 2021
Dominic Paul* 2021
Elias Diaz Sese 2021
* Dominic Paul ceased to be a member of the
Committee when he stepped down from the Board
on 30 December 2022, and Stella David stepped
down from the Board on 31 December 2023.
For full biographies of the Committee members
see pages 54 and 55.
Strategic report Governance Financial statements
69
Domino’s Pizza Group plc Annual Report & Accounts 2023
SUSTAINABILITY COMMITTEE REPORT continued
Committee structure
and operation
The Committee’s membership is comprised
of three Non-executive Directors.
The Company Secretary attends meetings in
his capacity as Secretary of the Sustainability
Committee. The Head of Communications &
Sustainability is invited to every Committee
meeting, and other senior executives are
invited to attend as necessary to discuss
topics relevant to their operational areas.
Purpose
The Sustainability Committee has three
principal duties:
– overseeing the development of the
Company’s sustainability strategy and
associated targets; monitoring progress
against relevant KPI targets and ensuring
effective communications are taking place
for stakeholders;
– overseeing external reporting on
sustainability matters; and
– monitoring developments on sustainability
matters relevant to the Group, and having
due regard to strategic issues, regulatory
reporting requirements and stakeholder
sentiment.
The Terms of Reference of the Sustainability
Committee were reviewed by the Committee
during the year. A copy of the Committee’s
Terms of Reference is available on the
Company’s investor relations website
(https://investors.dominos.co.uk).
Activities in 2023
During the year, the Committee met to
consider the following key matters:
– reviewing the Group’s sustainability
strategy, objectives and KPIs for 2023 and
liaising with the Remuneration Committee
on the appropriate linkage into Executive
remuneration;
– reviewing and approving the sustainability
report included in the 2022 Annual Report;
– approving the Company’s disclosure in
2023 against the SASB framework;
– receiving an update on carbon emissions
reductions in 2022;
– agreeing management’s proposed timetable
for SBTi recalibration to take account of
guidance on Forest, Land and Agriculture;
– reviewing the Group’s gender pay gap
reporting;
– reviewing progress against the Group’s
diversity & inclusion targets;
– approving, on behalf of the Board, the
Company’s Modern Slavery statement
for 2022 and reviewing activities of
the Supplier Assurance team as part
of the Company’s responsible sourcing
work programme;
– receiving updates on external reporting
trends on sustainability and details of
assessments from third-party rating
agencies on the Company’s sustainability
performance;
– reviewing the Group’s health & safety
compliance programmes, performance
and initiatives;
– receiving updates from operational
management on the Company’s initiatives
on animal welfare and on allergens
management;
– agreeing the Committee’s work plan
for 2024; and
– reviewing the Committee’s Terms
of Reference.
Tracy Corrigan
Chair
11 March 2024
“The Company has
continued to
invest in resources
to support our
Sustainability
agenda and
drive forward
its initiative
both internally
and with key
stakeholders.”
70
Domino’s Pizza Group plc Annual Report & Accounts 2023
Audit committee REPORT
Dear shareholder
I am pleased to present the Audit Committee
report for the 53 weeks ended 31 December
2023 to explain how we have discharged our
responsibilities, with an overview of our
principal activities and their outcome.
Meetings of the Audit Committee have been
attended by the Chair of the Board, the Chief
Executive Officer, the Chief Financial Officer,
the external Auditors, the Company Secretary
(as Secretary to the Audit Committee), the
Chief Information Security Officer and other
Directors and members of management
by invitation.
We had four scheduled meetings in the
year and attendance at those meetings is
shown below. In addition to the scheduled
Committee meetings, I have, together with
other Audit Committee members, met
regularly with the Finance team and other
members of the Executive leadership team,
Internal Audit and with PwC as external
Auditors to discuss their reports and any
issues highlighted.
We continue to regularly meet with PwC
and the Internal Audit team as part of our
ongoing review of the business and their
effectiveness. During the year, Tracy
Corrigan joined the Committee.
With the move to a primarily digital
business there has been increased focus
on information and data security, including
regular meetings and discussions with the
Chief Information Security Officer.
As has been discussed in previous years,
the Group’s internal control environment
has historically been informal and often
undocumented. Significant progress has been
made over the last four years in improving
the control environment and governance,
with the establishment of a separate Internal
Audit function.
4
Meetings
in 2023
Lynn Fordham
Chair
Committee Members
Natalia
Barsegiyan
Ian
Bull
Tracy
Corrigan
Committee
member
Member
since
Meetings
attended
Lynn Fordham 2020
Ian Bull 2019
Natalia Barsegiyan 2020
Tracy Corrigan* 2023
* Tracy Corrigan joined the Committee on 10 February
2023.
For full biographies of the Committee members
see pages 54 and 55.
Strategic report Governance Financial statements
71
Domino’s Pizza Group plc Annual Report & Accounts 2023
Audit committee REPORT
There is further work to do in building out
the function and developing the control
environment within the business. Internal
Audit have continued through the year to
report with regularity on control maturity.
There have also been significant
enhancements to the overall Enterprise Risk
Framework, being significantly developed
in the year with regular reporting now
received from the Head of Internal Audit,
Risk & Control.
Within the business, there has been
continued improvement in the control
environment which is developed alongside
the implementation of the new Enterprise
Resource Planning (‘ERP’) platform. This is
due to go live in 2024 and will enable a
significant step change in controls around
financial reporting.
The ERP replacement programme remains
a key deliverable for enhancing the control
environment, and delivery of the programme
is critical to the business. During the year we
continued to monitor the delivery progress
of the project closely, including key design
decisions, and will continue to monitor as the
programme completes in 2024.
The Committee focuses on those matters it
considers to be important by nature of their
size, complexity, level of judgement required
or impact on the financial statements,
including the technology platform
investments explained above, impairment
reviews performed over assets, the fair
valuations over the investments held
in Shorecal, provisions related to legal,
regulatory and tax matters, and the
appropriateness of costs relating to the
NAF and e-commerce funds.
The 2022 year-end process with PwC was
reviewed and actions implemented and
noted. The Audit Committee, PwC and
management are committed to ensuring that
audit quality is delivered, and the Committee
reviewed presentations from the external
Auditors, assessed the overall scope and risk
focus of the work performed, and ensured
that their audit plan continues to reflect the
risks faced by the business. In relation to
Audit Quality, the Audit Committee has:
– observed an in-depth audit with deep
questioning and appropriate scepticism,
including the use of subject matter experts
where required;
– received an explanation of areas where
management and judgements have been
robustly challenged along with the
outcomes of those challenges; and
– ensured that audit independence is
maintained through review of additional
services provided and consideration of
any conflicts of interest.
At the end of FY22, the lead PwC
engagement partner, Owen Mackney,
retired and Sarah Phillips was appointed
as engagement partner for the FY23 audit.
I would like to thank Owen for his time
on the engagement.
In addition we continued to monitor audit
quality review metrics for the external audit
which were implemented in 2022 and have
used them to assess the performance of
the external Auditors. We will continue to
develop this formal oversight going forwards.
The effectiveness of internal audit is
considered throughout the year, including the
further development of the in-house Internal
Audit team.
The Audit Committee has direct access to
members of management and the external
and internal auditor. It can seek further
professional advice at the Company’s cost if
deemed necessary, however no such needs
have arisen in the year.
The Committee has continued to closely
follow developments in expectations of good
corporate governance and regulatory change,
including those relating to internal controls;
and to ensure corresponding changes in the
Group’s practice. Following the publication
of the UK Corporate Governance Code 2024
and the associated guidance, the Committee
has engaged with management on developing
plans to enable sufficient preparedness
before the application of the new
requirements in 2025 and 2026.
The Audit Committee has agreed a clear
set of objectives for the next three years
covering the responsibilities and reviews
outlined above, and has agreed a clear
forward agenda for consideration of all
of the responsibilities covered below.
I hope that the report provides a useful
overview to the activities of the Committee
during the year. I will be available at the AGM
or any other time to answer any questions
relating to the work of the Committee.
Activities in 2023
– Assessment of the Group’s accounting
policies and applications to developments
in the year, including impairment reviews
over the Group’s cash generating units
including the London corporate stores;
impairment reviews over associate and
other investments, tax risks identified
including transfer pricing and the
settlement of the historical share-based
payment scheme, and the ongoing
accounting treatment of technology
platform investments.
– Reviewing the implementation and status
of the Group’s ERP replacement programme
and e-commerce platform, including
consideration of the governance, internal
control improvements and assessment
of progress against the project plan.
– Consideration of the progress made on
implementing improved internal controls
across the Group, and the implementation
of controls as a result of the findings from
internal audit.
– Considering the Group’s focus on controls
and response to cyber security and
information security risks, both currently
and going forward.
– Monitoring and evaluating the Group’s
information security controls in conjunction
with the Board as part of the overall risk
assessment framework.
– A review of the Group risk profile and new
Enterprise Risk Management assessment
to ensure this reflects key strategic
developments of the Group and wider
environment.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Committee membership,
attendees, access and objectives
Lynn Fordham is a qualified accountant with
extensive experience across several sectors,
and the Board has determined that she has
recent and relevant financial experience
which qualifies her to chair the Audit
Committee. She is a member of the Institute
of Chartered Accountants of Scotland. Ian
Bull is a chartered accountant with significant
experience across a variety of sectors.
Natalia Barsegiyan has significant finance
experience, including across the QSR sector.
Tracy Corrigan, who joined the Committee
in February 2023, has significant experience
in digital strategy and financial journalism.
All members are non-executive and are
considered independent under the UK
Corporate Governance Code. The Board is
satisfied that the Committee has competence
relevant to the sector in which it operates.
Principal duties delegated
to the Audit Committee
Financial reporting – Monitoring the integrity
of the financial statements of the Group,
including its annual and half-yearly reports,
and any other formal announcement relating
to its financial performance; reviewing and
reporting to the Board on significant financial
reporting issues and judgements which they
contain having regard to matters
communicated to it by the auditor.
Narrative reporting – The Committee
reviews the content of the Annual Report and
Accounts and advises the Board on whether,
taken as a whole, it is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Group’s performance, business model and
strategy, and recommends to the Board for
approval accordingly.
TCFD and sustainability – The Committee
monitors the TCFD disclosures in the Annual
Report, and receives regular updates on
sustainability assurance and reporting
including comparisons to peer groups.
Internal controls and risk management
systems – Review and, where necessary,
challenge management’s reports on the
adequacy and effectiveness of the Group’s
internal financial controls and internal control
and risk management systems, and review
and approve the statements to be included
in the Annual Report concerning internal
controls and risk management.
Compliance, whistleblowing and fraud
– Review the adequacy and security of the
Group’s arrangements for its employees and
contractors to raise concerns, in confidence,
about possible wrongdoing in financial
reporting or other matters. The Committee
seeks to ensure that these arrangements
allow proportionate and independent
investigation of such matters and appropriate
follow-up action. Review of the Company’s
procedures for detecting fraud; review the
Group’s systems and controls for the
prevention of bribery; and receive reports
on non-compliance.
Information security and Cyber risks
– Review the adequacy and implementation
of the Group’s controls around information
security and cyber risks, including receiving
reports on emerging cyber threats and
control maturity.
Internal audit –Assessing the remit of the
Internal Audit function, setting the internal
audit plan and monitoring the responsiveness
and appropriateness of management to
findings and recommendations.
External audit – Overseeing the relationship
with the external auditor, reviewing the result
of quality reviews and effectiveness of the
external audit, and assessing its independence
and objectivity.
Terms of Reference
The Terms of Reference for the Audit
Committee were reviewed and revised in
November 2023. The Committee’s Terms of
Reference are available on the Company’s
investor relations website.
Focus of the Committee
The focus of the Committee during the year
was primarily devoted to accounting issues
and the ongoing work to upgrade the overall
financial control environment, including
the implementation of the Group’s ERP
replacement programme. These are discussed
in more detail below.
Strategic report Governance Financial statements
73
Domino’s Pizza Group plc Annual Report & Accounts 2023
Audit committee REPORT
Accounting matters considered
The Audit Committee’s reviews of the half and full-year financial statements focused on the following areas of significance:
Accounting matters considered Work undertaken by and conclusion of the Audit Committee
Accounting for technology platform costs
Management continued with the two significant
technology platform projects in the year relating
to the ERP replacement and new e-commerce
platform, with a total of £10.8m of costs recorded
in profit before tax and £9.6m recorded as
capital expenditure.
Following the determination of the accounting treatment in 2022, the Committee continued to review
reports from management outlining the application of the policy to the two projects, covering the
treatment of the costs incurred and the accelerated depreciation and impairment relating to the
programmes. The Committee considered the costs incurred in development and whether these
represented an intangible asset under IAS 38, including consideration of the costs incurred in configuring
cloud-based computing platforms. The Committee considered the supporting evidence around the
separation of costs relating to cloud-based platforms and those eligible for capitalisation under the policy.
The Committee challenged the assessments reached by management and the judgements around the
nature of the costs incurred, and was comfortable that the appropriate judgements have been made.
Impairment reviews of corporate stores
Management performed an impairment review
over the goodwill recorded on the acquisition
of the London corporate stores. No further
impairments have been recorded in the
current year.
The Committee received reports from management covering the key judgements, forecasts and valuation
metrics supporting the impairment reviews of goodwill associated with the corporate stores business.
The Committee concurred with management’s conclusion that no impairment should be recorded. The
Committee challenged the forecasts used, the discount rate and other key assumptions including any
comparable precedent transactions and was comfortable that this represented an appropriate valuation,
and that sufficient headroom remained. The Committee also considered evidence around the fair value of
the stores following the disposal of five stores at the end of 2022, and agreed that this further supported
the position.
Valuation of the Shorecal investment
No fair value movement has been recorded over
the 15% investment in Shorecal Ltd, a franchisee
group based in Ireland.
The Committee challenged the fair valuation model inputs and the basis of the resulting valuation for
which no fair valuation movement was recorded. The Committee considered the inputs into the valuation
including judgemental areas around future growth. The Committee concurred with the valuation determined.
Accounting treatment for the sale
of the German associate
The Committee reviewed the calculation of the sale on disposal of the German associate in June 2023,
following the exercise of the put option in 2022. The Committee considered the treatment of the gain on
disposal as a non-underlying item, and concurred with management’s treatment.
Tax provision in relation to transfer pricing The Committee reviewed management’s presentation and the £2.2m charge recognised in relation to the
transfer pricing risk for transactions between the Group’s UK and Republic of Ireland subsidiaries. The
Committee reviewed the rationale for the potential risk, the outcome of reports from third-party experts
and the disclosures to tax authorities. The Committee reviewed the basis of valuation of the uncertain tax
position recorded, and concur with managements assessment of the valuation of the provision.
Tax liability in respect of employee
share schemes
The Committee reviewed the developments during the year as the tax liability in respect of employee
share schemes was finalised. The provision levels held at the end of 2022 were materially in line with
the tax payment of the ‘pre-2011’ awards, and the remaining provision for the post-2011 awards is in line
with the expected payment to HMRC. The Committee considered whether any assets were able to be
recognised relating to expected repayment under the indemnities with former employees, and concurred
with the treatment adopted by management that these remain unrecognised until certainty of
recoverability is evidenced.
Distributable reserves The Committee considered the level of distributable reserves at the Domino’s Pizza Group plc level
throughout the year in order to confirm management’s assessment that appropriate reserves were in
place to facilitate distributions to shareholders. The Committee reviewed the assessment of the amounts
considered as qualifying consideration in order to support the adequacy of distributable reserves when
distributions to shareholders are declared.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Risk management and
internal controls
The main features of the Group’s internal
control and risk management systems,
including in relation to the financial reporting
process, are:
– A clear delegation framework, including
decision-making retained by the Board
(as set out on page 58) and those delegated
to Executive management.
– A comprehensive set of policies and
procedures that employees are required
to follow and complete training thereon,
with oversight from the relevant Board
Committees.
– A risk management framework, including
a specific Executive Risk Committee
(described on page 46).
– A dedicated Internal Audit function
(described on page 77).
– A whistleblowing mechanism for employees
and contractors to raise concerns about
possible wrongdoing (further described on
page 111).
– Annual budgets and forecasts go through
detailed reviews by management and
approval by the Board.
– All external financial reporting is subject
to significant review across management
and executive, and detailed review by
the Board and approval through the
Disclosure Committee.
The Board is ultimately responsible for risk
management and internal controls and, on
behalf of the Board, the Audit Committee
is responsible for reviewing the Group’s risk
management and internal control systems.
The Committee reviewed management’s
assessment of risk and internal control,
results of work performed by Internal Audit,
and the results and controls observations
arising from the annual audit and interim
review procedures performed by the external
auditor. The Committee also ensured that all
topics were appropriately covered, as defined
by its Terms of Reference. In doing so, the
Committee considered:
– the Group’s principal risks (including any
emerging risks) and related assurance over
risk areas;
– Internal Audit reports on key audit areas
and any significant deficiencies in the
control environment;
– management reports on the systems of
internal controls and the progress made
on control-related projects;
– external audit reports from PwC during the
year which included details of their audit
risk assessment processes;
– actual and potential legal claims against
the Group; and
– the Group’s approach to IT and information
and data security.
As reported in previous years, the Group’s
internal control environment has historically
been informal and often undocumented.
During 2023, a new Head of Internal Audit,
Risk & Control conducted a comprehensive
review and refresh of the Group’s risk
universe and corresponding control
environment, which has enabled increased
visibility and accountability for effective
Enterprise Risk Management. This review
also considered the composition and
operation of the existing Executive Risk
Committee (‘ERC’), which now comprises all
of the UK leadership team, who collectively
challenge the management of risk, with
reference to the updated risk universe.
The work of the ERC is reported to the
Board, through the Audit Committee and
helps enable the Board to discharge its
responsibilities, including in respect of
the disclosure on risk management.
Developments have been made by the
Finance team and wider management on
addressing control issues identified, and
progress towards delivery of the expected
control improvements arising from the
ongoing upgrade from the current ERP
system (including comprehensive control
documentation, enhanced security and
access, and a greater reliance on automated
system controls) has been specifically
monitored during the year.
Strategic report Governance Financial statements
75
Domino’s Pizza Group plc Annual Report & Accounts 2023
Audit committee REPORT
Specific matters around risk assessment and the internal control environment considered by the Committee, and the work undertaken
by the Committee, are as follows:
Risk management and internal control Work undertaken by and conclusion of the Audit Committee
IT and cyber security The Group’s system sales and operations are highly dependent on its e-commerce IT systems and there
can be no guarantee as to the resilience of the Group’s systems to outside attack. The Committee has
therefore received updates each quarter from the Chief Information Officer and Chief Information
Security Officer and challenged management on the specific progress made on improving the control
environment, with specific focus on cyber security risks and business critical systems.
Risk assessment The Committee reviewed the risk profile of the Group as agreed by the Board and the principal risks as
set out on pages 46 to 51 and challenged the nature, impact and appetite towards the Group’s principal
risks. During the year, there have been further developments in the risk profile of the Group and the
Committee has reviewed any changes to principal risks, together with the underlying process of business
risk assessment on which these are derived. The ERC (enhanced during 2023) has continued to re-assess
the key risks which could prevent the Group from achieving its long-term strategic objectives with input
from each risk-owner across the business and the outcome of this review has been reflected in
management’s reported assessment.
Whistleblowing The Committee received updates from management of any whistleblowing cases identified and reviewed
the operation and appropriateness of reporting procedures, including the annual refresh process in order
to increase awareness. No significant items were reported.
Fraud, anti-bribery and corruption The Committee reviewed the policy and training programme in place around anti-bribery and corruption.
Taxation The Committee received reports from management around the tax position of the Group and was
updated on emerging direct and indirect tax risks, including the transfer pricing charge recognised as
outlined above.
External Auditors
PwC were appointed external Auditors
in 2019. The Committee has engaged with
PwC in reviewing the audit plan for 2023,
scope of the audit and risks identified, and
has regularly met with the lead engagement
partner, Sarah Phillips. Sarah replaced the
previous engagement partner, Owen
Mackney, during the year, following his
retirement. Sarah has been able to rapidly
develop a good understanding of the
business and risk areas having previously
been an engagement team member.
The Audit Committee also held meetings with
the external Auditors without management
present at each Audit Committee meeting,
and the Audit Committee Chair has a regular
and frequent dialogue with the lead
engagement partner and the wider team.
The Audit Committee has reviewed the
independence, objectivity and effectiveness
of the external Auditors, PwC, and has
concluded that PwC continues to possess
the skills and experience to fulfil its duties
effectively and efficiently.
PwC has confirmed that in its professional
opinion it is independent within the meaning
of regulatory and professional requirements
and the objectivity of the audit engagement
partner and audit staff are not impaired.
This is now the fifth year of PwC’s
engagement. The Committee remains
satisfied as a result of the discussions and
interactions with PwC, together with reviews
of audit quality reports and engagement
specific audit quality indicators, that no
significant issues were raised in relation
to audit quality.
The Audit Committee agreed the fees for
the external Auditors and has strict policies
regarding the provision of non-audit services
by the external Auditors which can be found
on the Company’s website. These include
specific pre-approvals for proposed work
and fees, a prohibition on certain services
and a restriction on total non-audit fees as
a percentage of the total audit and audit-
related services, except in exceptional
circumstances. PwC also have a clear
internal policy on non-audit services.
The only significant non-audit fees charged
in the period were in relation to the interim
review and additional assurance work over
ESG metrics. The assurance over ESG metrics
work is consistent with the previous year,
for a total fee of £58,500. The interim review
performed at half year was £68,300. The
Committee considered the appropriateness of
re-appointing PwC in light of independence
requirements and considered the work
performed to be in line with both our internal
and PwC’s policies, and ethical guidance. The
level of non-audit fees to audit fees is 12%.
The level of fees payable to PwC for 2023
are as set out below:
£m
Total audit and audit-related fees 0.9
Non-audit fees 0.1
Total audit and non-audit services 1.0
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Domino’s Pizza Group plc Annual Report & Accounts 2023
The Company has complied throughout the
year with the Statutory Order 2014 issued
by the Competition and Markets Authority.
After assessing the level of non-audit fees,
the review of effectiveness and relevant
audit quality reports, the Committee has no
concerns over the objectivity, independence
or effectiveness of the external Auditors.
Internal Audit
The Internal Audit plan is created from
review of risk registers, strategic priorities
and assurance mapping, aimed at providing
ongoing assurance coverage over the Group’s
principal risks. Individual internal audit
reviews are designed to provide assurance
over the processes and controls in place to
manage the risks to the achievement of the
Group’s strategic objectives.
Internal audit activity conducted by the Head
of Internal Audit, Risk & Control during the
year included reviews of the Group’s business
continuity arrangements and governance
over the e-commerce fund. KPMG conducted
reviews of ESG and metrics, and further
programme assurance over the implementation
of the new e-commerce platform. BDO
continued to provide independent programme
assurance over the ERP deployment.
Recommendations arising from audits are
followed up routinely to ensure management
commitments are enacted on a timely basis
and control improvements delivered. The
Committee is satisfied that there is a clear
improvement plan in place for internal controls.
The Internal Audit team has input into
ensuring that adequate resources are made
available and that the necessary support is
provided by the business to accomplish the
agreed work programme. The Committee
Chair meets with the Head of Internal Audit,
Risk & Control regularly to discuss activities
and the nature of any significant issues which
may have arisen.
A review of the effectiveness of the Internal
Audit function takes place on a regular basis,
including input from the Committee members
and management involved in the internal
audit process. Objectives for the department
are established at the start of each year with
progress against their achievement reviewed
at each Audit Committee meeting.
The Committee also receive reports on the
results of the Information Security workplan,
including the results of penetration testing.
The work of Internal Audit is a regular agenda
item at Committee meetings. Reports from
the Internal Audit team routinely include
updates on audit and assurance activities,
progress on the Group’s Internal Audit plan,
and commentary and tracking of the
implementation of recommendations by
management. All audit reports are made
available to the PwC external audit team
and, here relevant and beneficial, detailed
findings are shared between teams.
Going concern and viability
Net debt has reduced during the year to
£232.8m, as a result of the free cash flow and
disposal income generated by the Group in
excess of capital expenditure and shareholder
returns. Throughout the year, the Group has
maintained comfortable headroom within its
facility and comfortably met banking
covenant compliance.
On behalf of the Board, the Audit Committee
reviewed the Group’s projected cash flows,
facilities and covenants as well as reviewing
the assumptions underlying the viability
statement (see pages 52 and 53).
Having reviewed these projections, and the
potential scenarios consisting of the Base
Case, a sensitised scenario and a further
stress test, which have been set out in more
detail on pages 52 and 53, and the ability of
the Group to stop discretionary payments,
the Audit Committee has concluded that it
would recommend to the Board that it should
be able to make the relevant statements.
The principal sensitivity would be a
significant fall in underlying profitability or
a severe impact in the supply chain, which
could impact on the debt covenants, together
with any significant one-off impacts from
supplier disruption or data breaches.
Mitigations remain in the form of delaying
or suspending capital distributions through
dividends and share buybacks.
We note the ongoing improvements in
management’s risk assessment process, the
impacts of which are covered above. Going
forward, additional impacts around emerging
risks will be added, together with further
focus on cyber risks, which will be in place
for 2024.
Fair, balanced and
understandable
The Audit Committee has provided advice
to the Board on whether the Annual Report
and Accounts, taken as a whole, are fair,
balanced and understandable and provide
the information necessary for shareholders
to assess the Group’s financial position and
performance, business model and strategy.
Each Director was also asked to provide this
confirmation. When doing so, both the Audit
Committee and the individual Directors
were provided by management with a formal
assessment of the key messages included
in the Annual Report and Accounts. This
assessment was designed to test the quality
of reporting and to enable the Directors to
satisfy themselves that the levels of
disclosure were appropriate.
The Committee gave due consideration to
the integrity of information provided in the
Annual Report to ensure that this explains
the Group’s position and performance
effectively. The Committee reviewed the
use of alternative performance measures,
including the use of non-underlying
measures, in light of the guidelines issued
by the European Securities and Markets
Authority (‘ESMA’).
The Committee recommended to the Board
that the disclosures in the Annual Report,
taken as a whole, are fair, balanced and
understandable, and provided the information
necessary for our shareholders to assess the
Company’s position, performance, business
model and strategy.
Lynn Fordham
Chair of the Audit Committee
11 March 2024
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77
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT
Chair’s summary statement
Dear shareholder
This is my first report as Chair of the
Committee. I have been a member of the
Committee since 2020, and was appointed
Committee Chair on 3 January 2024,
replacing Stella David who stepped down
from the Board on 31 December 2023.
In this report, we review the Group’s
performance in the year and explain
the remuneration which resulted for
the Directors. I also explain how our
remuneration policy will be implemented
in 2024.
New Directors’ Remuneration Policy
and amendments to the 2022 LTIP
As outlined in the notice of General Meeting
on 30 June 2023, the Board determined
that changes to the policy approved
by shareholders at the 2022 AGM
(and to the 2022 LTIP to enable the changes
to be implemented) were required to
allow appropriate incentives to support
an acceleration in the Company’s
growth strategy.
Whilst the Company continued to Execute
its strategy at pace, the Board believed
a change in its approach to Executive
remuneration was required to attract
and retain a proven world-class talent
as permanent Chief Executive Officer who
the Board believed could, together with the
senior management team, drive a significant
increase in shareholder value.
In a globally competitive market for Executive
talent, the Company was not alone among
UK companies in finding the ability to recruit
world-class senior talent challenging, owing
to historical differences in the remuneration
environment between the UK and other
major international markets, especially the
US. The Board further considered that the
historically low retention rate for the
Executive team hampered the delivery of the
Company’s growth strategy. In this context,
the Board believed that the proposed
changes to the Policy would be a key factor in
securing the right talent, whilst ensuring that
a large part of the remuneration package for
a permanent CEO is not materially different
to that of previous permanent CEOs.
8
Meetings
in 2023
Natalia Barsegiyan
Chair
Committee Members
Matt
Shattock
Ian
Bull
Lynn
Fordham
Stella
David
(Chair and
Committee
member until
31 December
2023)
Committee
member
Member
since
Meetings
attended
Matt Shattock 2020
Ian Bull 2019
Natalia Barsegiyan 2020
Stella David 2021
Lynn Fordham 2020
For full biographies of the Committee
members see pages 54 and 55.
78
Domino’s Pizza Group plc Annual Report & Accounts 2023
Having assessed the previous policy with
its independent remuneration advisers, the
Board believed that it was appropriate to
amend the previous policy to allow for the
ability to make one-off awards of premium
priced options in addition to the current
normal remuneration arrangements for the
senior team in order to be able to:
– recruit, and then retain, a permanent
world-class CEO to lead the business;
– incentivise and retain the current senior
management team; and
– further align incentives through increased
sharing of any material increase in the
Company’s market value with premium
priced options participants.
Following a consultation exercise with
holders of over 70% of our shares, the new
policy (which is set out on pages 81 to 94)
and amendments to the 2022 LTIP were
approved by 76.7% and 77.05% of the
votes cast at the General Meeting held
on 30 June 2023.
Changes to the Board
Since 10 October 2022, Elias Diaz Sese was
Interim CEO. Andrew Rennie was appointed
to the Board on 1 August 2023 and was
appointed CEO on 8 August 2023. Elias stood
down as Interim CEO on 7 August 2023 but
continued as a Non-executive Director.
The remuneration arrangements in relation to
Elias ceasing to be Interim CEO and Andrew’s
new appointment were all determined in
accordance with our Directors’ Remuneration
Policy. The full details of these remuneration
arrangements can be found on pages 96
and 97.
Usman Nabi stepped down from the
Board on 14 August 2023. As noted above,
Stella David stepped down from the Board
on 31 December 2023.
Performance and remuneration
for 2023
In 2023, the Group delivered a strong
performance in a continued uncertain market.
Like-for-like system sales increased by 5.7%,
and underlying EBITDA increased by 3.6%
driven by an increase in system sales volume,
material acceleration of store openings, and
the pass-through of food costs to our franchise
partners. We have continued to work closely
with our franchise partners to navigate the
challenging trading conditions faced by
the sector. Our franchisees have a strong
operational base and are focused on continual
improvement of customer service, and
delivering compelling value to our customers.
The business has delivered robust financial
performance for the year, with the Group’s
underlying profit before tax (‘PBT’) for the
year above the threshold target level for
profit-related annual bonuses to be paid to
the Executive Directors. Details of the annual
bonus outcomes are shown on pages 98
to 99.
The Committee is satisfied that the
remuneration outcomes and payments for the
2023 financial year are fair and reasonable,
in light of the business performance during
the year, and are in the best interests of the
Company and shareholders.
LTIP granted during the year
The Interim CEO, Elias Diaz Sese, and the CFO,
Edward Jamieson, both received an award
under the 2022 LTIP of 200% and 175%
respectively of base salary on 16 March 2023.
In addition, our new CEO, Andrew Rennie,
received an award under the 2022 LTIP of
200% of base salary on 9 August 2023. 70%
of the awards are subject to performance
conditions based on earnings per share (‘EPS’)
targets for the 2025 financial year and 30%
are based on relative total shareholder return
(‘TSR’) measured over the three-year period
starting 26 December 2022. A two-year
post-vesting holding period applies. Detailed
performance targets for LTIP awards made in
2023 are shown on page 100 and are in line
with those disclosed in the last Directors’
remuneration report.
On 9 August 2023, awards of premium priced
options (structured as share settled SARs)
were made to Andrew Rennie and Edward
Jamieson under the 2022 LTIP with a fair
value of 300% and 150% respectively of
base salary. Smaller awards were made on
the same basis to another 15 executives.
Base salaries for 2024
As the CEO was recently appointed, his salary
will remain unchanged at £775,000 for 2024.
The salary of our CFO will be increased to
£385,000 per annum in April 2024.
Pension arrangements
Both the CEO and the CFO were appointed
with a pension allowance of 3% of base salary,
which is aligned with the wider workforce.
Shareholders’ views
The Committee continues to take an
active interest in shareholders’ views and
looks forward to maintaining an open
and transparent dialogue in the future.
As outlined above, we had an extensive
consultation with shareholders prior to the
introduction of our new policy, and were
aware that a small number of shareholders
were not supportive of proposals to
introduce awards of Premium Priced Options
under the rules of the amended Plan, as the
detailed proposals were not within their
voting guidelines. As a result of receiving
slightly less than 80% support for both the
policy and the amendments to the LTIP we
wrote to the six largest shareholders that
voted against the proposals to seek further
feedback, but we did not receive any.
We would like to thank you for your support
in previous years, and we look forward to
your support at the 2024 AGM.
Natalia Barsegiyan
Chair of the Remuneration Committee
11 March 2024
For the introduction to Governance,
see page56.
“The Committee
is satisfied that
the remuneration
outcomes and
payments for
2023 are fair
andreasonable.”
Strategic report Governance Financial statements
79
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Remuneration at a glance
Chief Executive Officer
£0
£400,000
£800,000
£1,200,000
£1,600,000
£2,000,000
Salary Benefits Pension Bonus
2022
actual
2022
maximum
2023
actual
2023
maximum
92.88%
53.32%
Chief Financial Officer
£0
£200,000
£400,000
£600,000
£800,000
£1,000,000
Salary Benefits Pension Bonus
2022
actual
2022
maximum
2023
actual
2023
maximum
92.88%
46.32%
NOTES:
Elias Diaz Sese was appointed the CEO on an interim basis on 10 October 2022. Dominic Paul ceased to be CEO on the same day. Elias resumed his role as a
Non-executive Director on 8 August 2023. Andrew Rennie joined the Board on 1 August 2023 and assumed the role of CEO on 8 August 2023. The chart for the
CEO shows the aggregated remuneration received each year by both individuals during the year in respect of the role of CEO. Andrew Rennie’s buyout award is
excluded from the chart above, as it is intended to show annual comparison with ongoing elements of remuneration.
The CFO joined the Company in October 2022. His actual remuneration figures for 2022 have been annualised for this analysis.
The percentages shown are the bonus payable as a percentage of maximum. Bonus figures have been annualised for illustrative purposes. Actual bonuses payable
for 2023 are shown on page 99.
No LTIP awards were due to vest for Executive Directors for the performance periods ending in 2022 and 2023; therefore, LTIP is not included in the charts above.
Alignment of performance and remuneration 2023
Annual bonus
Incentivise annual delivery of financial and operational goals
linked to the Company’s strategy
PBT
Linked to financial KPI
Personal Objectives
Linked to business strategic plan
ESG
Linked to Sustainability Strategy
LTIP
Aligned to main strategic objectives of delivering sustained
profitable growth
EPS growth
Linked to financial KPI
Relative TSR
Linked to financial KPI
PBT growth
Personal
Objectives
65%
ESG
10%
25%
EPS growth
Relative
TSR
70%
30%
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Directors’ Remuneration Policy
The current Directors’ Remuneration Policy
(the ‘Policy’) was approved by shareholders
at the General Meeting on 30 June 2023.
The Policy as approved by shareholders is
available on our website https://investors.
dominos.co.uk/investors/shareholder-
information. We have included a version of
the Policy below which has been updated
where appropriate to reflect the passage
of time.
This is the Policy for the Company,
as required under the provisions of the
Companies Act 2006 and Schedule 8 of the
Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations
2008 as amended (the ‘Regulations’).
The Policy took effect from 30 June 2023
for a three-year period. The previous Policy
was approved by shareholders at the 2022
AGM on 5 May 2022.
The Policy is the same as that previously
approved other than it has been amended to
allow for the one-off grant of premium priced
options (structured as share settled stock
appreciation rights) to Executive Directors in
permanent roles which will be granted under
the Company’s existing 2022 LTIP (for which
shareholder approval was obtained on
30 June 2023) and a few minor textual
changes for the purpose of clarity.
Objectives of the Policy
The Policy has been developed and designed
to meet the following objectives:
– clarity: maintain transparency, clear
alignment with shareholder value and
promotion of long-term, sustained
performance;
– predictability: ensure that performance
targets for variable pay are stretching but
achievable, specific and measurable, the
quantum of reward reflects both Company
and individual performance, and there are
appropriate award caps and Committee
discretions in place;
– support for the Company’s business
strategy by aligning the Executive
Directors’ incentives with the Company’s
growth objectives;
– simplicity: ensure that the remuneration
structures avoid unnecessary complexity
and are easy to understand for participants;
– risk is appropriately managed: variable
pay should drive performance within the
Company’s risk appetite and encourage
a prudent and balanced approach to
the business;
– alignment to culture: the remuneration
arrangements encourage the behaviour
from the Executive Directors that the
Committee expects to see throughout
the business; and
– proportionality: the link between individual
awards, the delivery of strategy and
long-term performance of the Company
is clear.
In setting the Policy for the Executive
Directors, the Committee also takes into
account a number of different factors:
– The Committee applies the principles set
out in the UK Corporate Governance Code
and also takes into account best practice
guidance issued by the major UK
institutional investor bodies and other
relevant organisations.
– When the Committee determines and
reviews the Policy for the Executive
Directors, it considers and compares it
against the pay, policy and employment
conditions of our employees to ensure
that there is appropriate alignment
between the two.
– The Committee conducts periodic external
comparisons to examine current market
trends and practices and equivalent roles in
similar companies, taking into account their
size, business complexity, international
scope and relative performance to inform
its decisions. However, the Committee
recognises that such data and information
should be used as a guide only and that
there may be a need to phase in changes
over a period of time.
Strategic report Governance Financial statements
81
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Executive Directors’ Remuneration Policy table
Purpose and link to strategy Operation Maximum Performance targets
Base salary – Reflects the
responsibility level and
complexity of the role
– Reflects skills and
experience over time
– Provides an
appropriate level of
basic fixed income to
avoid excessive risk
arising from over-
reliance on variable
income
– Salaries will typically be reviewed
annually
– Set in the context of pay and
employment conditions in the Group
and internal relativities
– Salary levels take periodic account
of pay levels in companies with
similar characteristics and sector
comparators
– Salaries will typically be eligible for
increases on an annual basis with
the rate of increase (in percentage
terms) typically linked to those of
the wider workforce
– If there are significant changes in
responsibility, a change of scope in
a role, a material sustained change
in the size and/or complexity of the
Company or very strong
performance, these may merit base
salary increases beyond those of the
wider workforce
– If pay is set at a discount to the
Company’s normal policy on
appointment, it may be appropriate
to phase an individual towards an
appropriate rate using increases
above those of the wider workforce
based on performance and
experience
n/a
Pension – Provides market-
competitive, yet
cost-effective
retirement benefits
– Opportunity for
Executives to
contribute to their
own retirement plan
– Defined contribution or cash
supplement
– HMRC-approved salary sacrifice
arrangement (salary sacrifice for
employee contribution)
– Employer contribution to a pension
arrangement or payment of a cash
allowance in lieu of a pension up to
3% of basic salary
n/a
Other
benefits
– Provides cost-effective
insured benefits to
support the individual
and their family
– Access to company
car to facilitate
effective travel
– Benefits are provided through
third-party providers and include
family-level private medical and
up to four times salary life
insurance cover
– Company cars or cash
equivalents provided
– Participation in an HMRC-registered
savings-related share option scheme
on the same terms as other
UK-based employees
– The Committee may offer Executive
Directors other benefits from time
to time on broadly the same terms
as provided to the wider workforce
or, as appropriate, to enable them
to effectively fulfil their duties.
Relocation benefits may be offered
if considered appropriate and
reasonable
– Any business-related expenses
(including tax thereon) may be
reimbursed
– There is no maximum limit specified
but the Committee reviews the
overall cost of the benefits on a
periodic basis. The value of insured
benefits will vary from year to year,
based on the cost from third-party
providers
n/a
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Purpose and link to strategy Operation Maximum Performance targets
Annual
performance
bonus
– Incentivise annual
delivery of financial
and operational goals
linked to the
Company’s strategy
– Up to two-thirds of the annual
bonus is paid in cash and one-third
is deferred into shares that will vest
after three years and are subject to
risk of forfeiture
– Dividend equivalents which accrue
on vested shares may be payable
– Clawback and malus
provisions apply
– Stretching targets drive operational
efficiency and influence the level
of returns that should ultimately be
delivered to shareholders through
share price and dividends
– The maximum bonus opportunity
is 150% of salary for the CEO and
125% of salary for the CFO and
other Executive Directors
– Bonuses will be subject to a
combination of financial and
non-financial targets that are
set by the Committee on an
annual basis
– The majority of the bonus will be
measured against financial metrics
(e.g. underlying PBT) with a
graduated scale set around
the target
– A minority of the bonus may be
set based on non-financial targets
which are aligned to the key
business objectives from year to
year (which can include targets
relating to ESG/Sustainability)
– A minority of each element will
be payable for achieving the
threshold performance level.
In relation to financial targets,
20% of this part of the bonus
becomes payable for achieving
the threshold performance target.
In relation to any non-financial
measures used, it is not always
practicable to set a sliding scale
for each objective. Where it is,
a similar proportion of the bonus
becomes payable for achieving
the threshold performance level
as for financial targets
– Details of the bonus measures and
targets operated each year will be
included in the relevant Directors’
remuneration report
2022 Long
Term
Incentive
Plan (‘2022
LTIP ’)
– Aligned to main
strategic objectives of
delivering sustained
profitable growth
– Aids retention of
senior management
– Creates alignment
with shareholders
and provides focus
on increasing the
Company’s share price
over the medium term
– Annual grant of performance shares
which may be structured as
conditional awards or nil cost
options
– Subject to performance conditions
measured over three years. An
additional two-year post-vesting
holding period applies to awards
granted to the Executive Directors
– Clawback and malus provisions
apply
– Dividend equivalents which accrue
during the vesting period and, where
applicable, post-vesting holding
period may be paid
– Maximum annual opportunity of
200% of salary for the CEO and
175% for the CFO and other
Executive Directors
– Long-term incentive awards vest
based on three-year performance
against one or more challenging
financial targets and relative TSR
performance set and assessed by
the Committee at its discretion
– Different measures may be set for
future awards but financial targets
will determine vesting in relation
to at least 50% of an award
– A maximum of 15% of any award
vests for achieving the threshold
performance level, with 100% of
the awards being earned for
maximum performance
Strategic report Governance Financial statements
83
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Purpose and link to strategy Operation Maximum Performance targets
Premium
priced
options
under the
2022 LTIP
– To attract and retain
Executive Directors
of the right quality
to drive share price
growth/shareholder
value generation
– Awards can be granted on a one-off
basis to Executive Directors in
permanent roles
– Awards of premium priced options
at a strike price of the greater of £4
and a 33% premium to the market
value of a share, normally averaged
over five Stock Exchange dealing
days before the grant date
– Awards vest in three equal tranches
after three, four and five years from
date of grant; the first two tranches
are subject to a post-vesting holding
period until the fifth anniversary
of grant
– At exercise, the number of shares
equal to the value of the option gain
(i.e., value growth in excess of the
strike price) will be transferred to
the Executive Directors
– The exercise period for all tranches
expires six months after the fifth
anniversary of the grant date
– Malus and clawback provisions
apply
– No dividend equivalent will accrue
– The maximum percentage of the
issued share capital over which
premium priced options may be
granted is limited to 1.5% of the
issued share capital at date of grant
At grant:
– The CEO will receive options with
fair value of no more than 300%
of salary
– Other Executive Directors will
receive options with fair value
of no more than 150% of salary
– The fair value will be calculated
in accordance with IFRS 2
– The minimum share price that will
be used to determine the size of
grant is £2.50
At vesting:
– The maximum share price that can
be used to determine the number
of shares to be transferred to the
Executive Directors is capped at
3 times the share price at grant
– If the share price at vesting exceeds
3 times the share price at grant,
the maximum monetary value that
can be delivered to the Executive
Directors will be capped based on
a share price of 4.5 times the share
price at grant
– An EPS underpin will apply such
that the Company’s fully diluted
EPS must achieve a compound
annual growth rate of at least 3%
per annum before the awards
can vest
– The Committee has discretion
to reduce the level of vesting in
exceptional circumstances to
reflect the underlying business
performance
In-
employment
share
ownership
requirement
– To provide alignment
between Executives
and shareholders
– To encourage a focus
on sustainable
long-term performance
– Executives are required to retain
shares from the vesting of options
and awards (on an after-tax basis)
to build and maintain a shareholding
equivalent to the required multiple
of salary within five years of joining
– 50% of any shares received on
vesting/exercise of awards under
the Company’s LTIPs and Deferred
Share Bonus Plan (net of tax),
granted in respect of performance
periods starting in 2019 onwards,
will be placed into a nominee
account until the required share
ownership requirement has
been met
– At least 200% of salary holding
for Executive Directors whilst
in employment
n/a
Post-
employment
share
ownership
requirement
– To further strengthen
the alignment between
Executives and
shareholders
– Upon cessation of employment,
Executives are required to maintain
a shareholding for two years
thereafter
– A level equal to the lower of the
in-employment requirement and the
number of shares beneficially held
at cessation
n/a
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Non-executive Directors’ Remuneration Policy table
Purpose and link to strategy Operation Maximum Performance targets
Non-
executive
Director fees
– Reflects the value of
the individual’s skills
and experience
– Recognises expected
time commitments
and responsibilities
– Chair’s fees are set by the
Remuneration Committee.
Non-executive Directors’ fees
are set by the Board
– Fees are reviewed periodically
– Takes into account periodic external
reviews against companies with
similar characteristics and sector
comparators
– Set in the context of time
commitments and responsibilities
– A base fee is provided to all
Non-executive Directors with
supplemental fees payable for
chairing the sub-Committees, for
holding the Senior Independent
Director position or to reflect any
additional responsibilities or
duties they are required by
the Board to undertake
– Non-executive Directors do not
participate in any annual bonus,
share incentive plans or pension
arrangements
– Non-executive Directors shall be
reimbursed for any expenses (on a
gross of tax basis) incurred in the
course of carrying out their role
which are deemed to be taxable
by HMRC (or equivalent body)
– The fee levels are reviewed on a
periodic basis, with reference to
the time commitment of the role
and market levels in companies of
comparable size and complexity
– The fee levels will be eligible for
increases from the effective date
of the three-year period that the
remuneration policy operates to
ensure they appropriately recognise
the time commitment of the role,
increases to fee levels for
Non-executive Directors in general
and fee levels in companies of a
similar size and complexity
– Flexibility is retained to go over
the above fee levels, if necessary
to do so, to appoint a new Chair
or Non-executive Director of an
appropriate calibre
n/a
Shareholding
guideline
– To provide alignment
between Non-
executive Directors
and shareholders
– Non-executive Directors are
encouraged, but not required,
to own shares in the Company
– To facilitate this, Non-executive
Directors can enter into
arrangements under which a
percentage of their after-tax fees
can be applied to purchase shares
n/a n/a
Strategic report Governance Financial statements
85
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Operation of the annual bonus
plan, the deferred share bonus
plan and LTIP policy
The Committee will operate the annual bonus
plan, the Deferred Share Bonus Plan (‘DSBP’),
the 2012 LTIP and the 2022 LTIP scheme in
accordance with their respective rules and in
accordance with the Listing Rules and HMRC
requirements where relevant.
Within these rules, the Remuneration
Committee is required to retain a number of
discretions to ensure an effective operation
and administration of these plans. These
discretions are consistent with standard
market practice and include (but are not
limited to):
– who participates in the plans;
– when awards are granted and/or paid;
– the size of an award and/or a payment
(subject to the limits stated in the policy
table above);
– how to determine the level of vesting;
– how to deal with a change of control
or restructuring of the Group;
– how to determine a good/bad leaver
for incentive plan purposes;
– how to determine any adjustments required
in certain circumstances (e.g. rights issues,
corporate restructuring, events and special
dividends); and
– reviewing the performance conditions
(range of targets, measures and weightings)
for the annual bonus plan and LTIP from
year to year.
If certain events occur, such as a material
acquisition or the divestment of a Group
business, the original performance conditions
may no longer be appropriate. Therefore,
the Remuneration Committee retains the
discretion to make adjustments to the targets
and/or set different measures and alter
weightings as they deem necessary to ensure
the conditions achieve their original purpose,
are appropriate in the revised circumstances
and, in any event, are not materially less
difficult to satisfy.
Any use of the above discretions would,
where relevant, be explained in the
Directors’ remuneration report and may,
where appropriate, be the subject of
prior consultation with the Company’s
major shareholders.
To comply with the UK Corporate
Governance Code published in 2018,
for awards granted in 2019 and beyond,
irrespective of whether any performance
condition has been achieved, the Committee
will have discretion under the annual bonus
plan, the 2012 LTIP and 2022 LTIP to scale
back the level of pay-out or vesting that
would otherwise result by reference to the
formulaic outcome alone. Such discretion
would only be used in exceptional
circumstances and may be applied to
take into account corporate and/or
personal performance.
Share-settled incentive awards and any
arrangements agreed prior to the effective
date of this policy will remain eligible to
vest or pay out based on their original award
terms. This includes any awards granted
under the DSBP, the 2012 LTIP scheme
or the 2016 LTIP scheme.
In addition, all arrangements previously
disclosed in prior years’ Directors’
remuneration reports will remain eligible
to vest or become payable on their
original terms.
Clawback and malus provisions
The Company has the right to reduce the
number of shares over which an award was
granted under the DSBP or LTIP where it is
discovered that the award was granted over
too many shares as a result of a material
misstatement in the Company’s accounts,
when there has been an error or reliance on
misleading information when assessing the
size of the award that was granted, and/or
it is discovered that the participant could
reasonably have been dismissed as a result of
his/her misconduct. For performance periods
beginning on or after 31 December 2018,
the Company may also scale back an award
where the Company suffers a material
downturn in its operational or financial
performance which is at least partly
attributable to management failure; where
the Company has suffered an instance of
corporate failure; and/or where this is a
material failure of risk management and/or
regulatory non-compliance. For performance
periods beginning on or after 31 December
2021, the Company may also scale back
an award where the Company suffers a
serious reputational damage as a result of
management failure and/or where there is
unreasonable failure to protect the interests
of employees and customers.
The Company may also claw back cash bonus
awards or previously vested DSBP and LTIP
awards in accordance with the principles set
out above to ensure that the full value of any
overpayment is recouped.
In these circumstances, the Committee may
apply clawback within two years of the
payment of the cash bonus or date of grant
of a DSBP award or within three years of the
vesting of an LTIP award.
Balance between fixed
and variable pay
The performance-related elements of
remuneration are dependent upon the
achievement of outcomes that are important
drivers of sustainable growth for the
business and therefore the creation of
value for shareholders.
Choice of performance metrics
The Company is a growth business, and
our investments in supply chain, digital
innovation and the customer experience are
all designed to improve the profitability of
the overall system, reach new customers
and drive repeat business from existing
customers. However, neither system sales
nor statutory revenue are appropriate
performance measures, because the former
is significantly influenced by franchisees, and
the latter is affected by the volatility of food
costs. As a result, underlying profit before tax
is used as the main performance metric in the
annual bonus plan, as this captures both the
growth and the efficiency of the business.
Part of the annual bonus is also subject to
strategic objectives.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
A combination of relative TSR and growth
in underlying EPS have been used for LTIP
awards in previous years. The underlying
EPS measures the Company’s success in
delivering long-term profit growth, a key
contributor to the Company’s valuation,
and was considered by the Committee to be
the most appropriate measure of long-term
financial performance. It is also used by the
Board to determine success in executing
our strategy and our dividend policy.
Relative TSR helped align management’s and
shareholders’ interests, since the Executives
would only be rewarded to the extent that the
Company delivered a return to shareholders
above that of the median company of
comparable size, with full vesting on this
measure requiring top quartile performance.
All incentives are capped, other than
for the impact of share price, in order
that inappropriate risk-taking is neither
encouraged nor rewarded. For financial
targets, a sliding scale is applied, with a
very modest amount being payable for
threshold levels of performance.
A number of the Company’s non-financial
strategic objectives have been incorporated
into the annual bonus for Executive Directors
and will be applied on an individual basis for
a minority of the overall bonus opportunity.
These objectives will also be measured on a
sliding scale of performance where possible.
The Committee will review the continued
appropriateness of the annual bonus
(and, if applicable, awards granted under the
LTIP in the 2023 financial year) performance
conditions on an annual basis to ensure that
they remain aligned to the Company’s strategy.
The Committee will make necessary changes
to the weightings of measures and/or
introduce new measures which they believe
would provide a closer link to the business
strategy within the confines of the policy
detailed above. Shareholder dialogue would
take place, as appropriate, should there be
any material change of emphasis in relation
to current practices. In particular, with the
introduction of the premium priced options,
the Committee intends to review whether
it should retain relative TSR in the normal
LTIP awards or whether it would be more
appropriate to replace this with another
internal financial metric.
How employees’ pay is taken
into account
Pay and conditions elsewhere in the Group
were considered when finalising the current
policy for the Executive Directors. In particular,
the Committee is updated on salary increases
for the general employee population,
Company-wide benefit provisions, level of
annual bonuses and staff participation in
long-term incentive schemes, so it is aware of
how the total remuneration of the Executive
Directors compares with the average total
remuneration of employees generally.
The Committee does not formally or directly
consult with employees on Executive pay
but does receive periodic updates from the
Group’s People Director. The Committee
is also informed of the results of colleague
engagement surveys, which do not contain
any specific questions related to Executive
Director remuneration. The most recent
survey continues to show high levels of
colleague engagement, with reward
continuing to be an important attribute of
their job. As previously reported, the Board
decided that engagement with the workforce
for the purposes of Principle 5 of the UK
Corporate Governance Code is best achieved
through a designated Non-executive
Director. Executive remuneration has been
discussed at workforce forum meetings held
in 2023.
How the Executive Directors’
Remuneration Policy relates
to the Group
The remuneration policy described above
provides an overview of the structure that
operates for the most Senior Executives
in the Group, with a significant element of
remuneration dependent on Company and
individual performance.
A lower aggregate level of incentive payment
applies below Executive Director level, driven
by market comparatives, internal relativities
and the potential impact of the role. The vast
majority of the Group’s employees participate
in an annual bonus plan, with the limits and
performance conditions varying according to
job grade.
The Committee believes that broad-based
employee share ownership provides a key
element in retention and motivation in the
wider workforce. Long-term incentives are
provided through the Group’s discretionary
share schemes to selected Executives
and managers.
The Company also offers an HMRC-
registered savings-related share option
scheme for all UK-based employees with
more than three months’ service, including
Executive Directors.
All newly appointed employees, including
Executive Directors, are eligible to join a
defined contribution pension plan. In other
territories, pension provision varies and
can be contributions to state schemes,
occupational plans or personal pension
arrangements in which the employing
company makes contributions.
Strategic report Governance Financial statements
87
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
How is risk managed in relation
to short and long-term
incentives?
The Committee believes that the
consideration and management of risk
is important when formulating and then
operating appropriate remuneration
structures (notably the performance criteria)
for senior management. The majority of the
members of the Committee are also members
of the Audit Committee, whose Chair is also
a member of the Remuneration Committee.
The Remuneration Committee has a good
understanding of the key risks facing the
business and the relevance of these to the
remuneration strategy, most particularly when
setting targets for performance-related pay.
In line with the Investment Association’s
Guidelines on Responsible Investment
Disclosure, the Remuneration Committee
ensures that the incentive structure for
Executive Directors and senior management
will not raise ESG risks by inadvertently
motivating irresponsible behaviour, and
remuneration design can be flexed to address
ESG issues when appropriate.
The Committee has due regard to issues
of general operational risk when
structuring incentives.
The clawback provisions (see page 86) in
respect of annual bonuses and long-term
share plans also provide the Committee with
a mechanism to recover monies in certain
circumstances.
Share ownership requirements and the
design of the 2012 LTIP and 2022 LTIP
help to ensure that the Executive Directors
have a strong personal focus on long-term
sustainable performance, heavily driven by
the relative and absolute returns delivered
to shareholders.
How shareholders’ views
are taken into account
The Committee considers shareholder
feedback received around the AGM and
analyses the votes cast on the relevant
items of business. This feedback, plus views
received during meetings with institutional
shareholders and their representative bodies,
is considered as part of the Company’s annual
review of remuneration policy.
The Committee also consults with its
key shareholders whenever appropriate.
A consultation process was undertaken
during 2021 and early 2022 with
shareholders’ views being reflected in the
previous policy, which was approved by
shareholders at the 2022 AGM.
The Committee has consulted with its key
shareholders on the proposed policy and on
the changes to the LTIP to allow for the grant
of premium priced options and reflected
shareholders’ views in the vesting conditions
applicable to premium priced options,
including a request for an EPS underpin.
The Committee values feedback from its
shareholders and seeks to maintain a
continued open dialogue. Details on
shareholder voting at the 2023 Annual
General Meeting and General Meeting are
shown on page 94.
Investors who wish to discuss remuneration
issues should contact the Company Secretary.
Service contracts and policy
on exit
The Committee reviews the contractual
terms for new Executive Directors to ensure
that these reflect best practice.
Service contracts are normally entered into
on a rolling basis, with notice periods given
by the employing company normally limited
to six months or less. The Committee has
discretion to determine a longer notice
period (up to 12 months) for new Executive
Directors, which will be reduced to six
months by no later than the end of the
second year after joining. Should notice be
served by either party, the Executive can
continue to receive basic salary, benefits
and pension for the duration of their notice
period, during which time the relevant Group
company may require the individual to
continue to fulfil their current duties or may
assign a period of garden leave. An Executive
Director’s service contract may be
terminated without notice and without any
further payment or compensation, save for
sums accrued up to the date of termination,
on the occurrence of certain events of gross
misconduct. If the Company terminates the
employment of an Executive Director in
breach of contract, compensation is limited
to salary due for any unexpired notice period
and any amount assessed by the Committee
as representing the value of other contractual
benefits which would have been received
during the unexpired notice period.
Andrew Rennie has a six months’ notice
period from either party.
Edward Jamieson has a 12 months’ notice
period from either party. From 17 October
2024, the second anniversary of his date
of appointment, the notice period will be
reduced to six months’ from either party.
Payments in lieu of notice are not
pensionable. In the event of a change
of control of the Group, there is no
enhancement to contractual terms.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
In summary, the contractual provisions for any new Executive Directors are as follows:
Provision Detailed terms
Notice period Normally six months or less. Subject to Committee discretion, up to 12 months may be offered initially but will
be reduced to six months no later than the end of the second year after joining.
Maximum termination payment Base salary plus benefits and pension, subject to mitigation for new Directors.
Remuneration entitlements A pro-rata bonus may also become payable for the period of active service along with vesting for outstanding
share awards (in certain circumstances – see table below).
In all cases performance targets would apply.
Change of control As on termination.
Any share-based entitlements granted to an Executive Director under the Company’s LTIP schemes or bonus entitlement under the annual
performance bonus will be determined based on the relevant plan rules.
With regard to the circumstances under which the Executive Directors might leave service, these are described below with a description
of the anticipated payments:
Remuneration element
‘Bad’ leaver
(e.g. resignation and dismiss for cause)
‘Good’ leaver
(e.g. death, ill health, retirement, redundancy and any other reason if the Committee
so decides)
Salary in lieu of notice period Salary for proportion of notice
period served.
Up to a maximum of 100% of salary.
Pension and benefits Provided for proportion of notice
period served.
Up to one year’s worth of pension and benefits (e.g. redundancy).
Possible payment of pension and insured benefits triggered by the leaver
event (this would be governed by the terms of the benefits provided).
Where appropriate, medical coverage may continue for a period post-cessation.
Bonus (in year) Immediately forfeited on the date
of cessation.
Normally reduced pro rata to reflect proportion of performance period elapsed
(provided performance conditions are met), unless the Committee decides that
no reduction (or a smaller reduction) is appropriate in any particular case.
Bonus (deferred shares) Immediately lapse on the date
of cessation.
Awards shall vest on the normal vesting date, unless the Committee otherwise
determines that the award shall vest on the date of cessation (or such later
date as the Committee specifies), and in either case to such extent as the
Committee determines.
Long-term incentive entitlements
(2012 LTIP and 2022 LTIP) other than
premium priced options
Immediately lapse on the date
of cessation.
Awards will ordinarily vest on the normal vesting date based on performance
tested over the full performance period and time pro rata based on the period
of time after the grant date and ending on the date of cessation, unless the
Committee determines otherwise (i.e. early vesting on cessation, and/or such
other later date as the Committee specifies, or the Committee decides time
proration is inappropriate in any particular case and shall increase the number
of vested shares).
Premium priced options under
the 2022 LTIP
Immediately lapse on the date
of cessation.
There are no automatic ‘good’ leavers with the Committee having discretion
in all circumstances to treat a participant as a ‘good’ leaver which will normally
be limited to death, ill health and disability.
Awards will ordinarily vest subject to meeting the EPS underpin on the normal
vesting dates on a pro-rata basis reflecting the period of time worked between
the grant date and the date of cessation, unless the Committee determines
otherwise (i.e. early vesting on cessation and/or the Committee determines
that time proration is inappropriate in any particular case and shall increase
the number of vested shares).
Other payments None. The Committee may pay reasonable outplacement and legal fees where
considered appropriate. The Committee may also pay any statutory entitlements
or settle or compromise claims in connection with a termination of employment,
where considered in the best interests of the Company.
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Non-executive Director remuneration
The Non-executive Directors are not employed under service contracts and have contracts for services with a notice period of three months.
Non-executive Directors do not receive compensation for loss of office. Each of the Non-executive Directors is appointed for a fixed term
of three years, renewable for a further three-year term if agreed and subject to annual re-election by shareholders.
The following table shows details of the terms of appointment for the Non-executive Directors:
Appointment date Date most recent term commenced Expected date of expiry of current term
Ian Bull 19 April 2019 19 April 2022 19 April 2025
Usman Nabi 11 November 2019 11 November 2019 See note 1
Matt Shattock 16 March 2020 16 March 2023 16 March 2026
Natalia Barsegiyan 16 September 2020 16 September 2023 16 September 2026
Lynn Fordham 16 September 2020 16 September 2023 16 September 2026
Stella David 23 February 2021 23 February 2021 See note 2
Tracy Corrigan 5 May 2022 5 May 2022 5 May 2025
1. Usman Nabi stood down as a Non-executive Director with effect from 14 August 2023. He was an appointee of Browning West LP. His term in office
was governed by a relationship agreement between the Company and Browning West.
2. Stella David stepped down as an Independent Non-executive Director on 31 December 2023.
Recruitment and promotion policy
When facilitating an external recruitment or an internal promotion, the Committee would apply the following principles:
Remuneration element Policy
Base salary Salary levels will be set based on the experience, knowledge and skills of the individual and in the context
of market rates for equivalent roles in companies of a similar size and complexity. The Committee would
also consider Group relativities when setting base salary levels.
The Committee may set initial base salaries below the perceived market rate with the aim to make multi-
year staged increases to achieve the desired market position over time. Where necessary these increases
may be above those of the wider workforce, but would be subject to continued development in the role.
Benefits and pension Would be as provided to current Executive Directors.
The Committee would consider meeting the cost of certain reasonable relocation expenses and legal fees
as necessary.
Annual bonus The annual bonus would be operated in line with that set out in the policy table for current
Executive Directors.
For a new joiner, the bonus would be pro-rated for the period of service during the financial year
of their appointment.
Due to the timing or nature of the appointment, the Committee may determine it necessary to set different
or modified performance conditions for the first year of appointment.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Long-term incentives Participation would be in accordance with the information set out in the policy table.
Awards may be made on or shortly after an appointment, subject to prohibited periods. Different performance
conditions may be set as appropriate.
Any new appointment would be eligible to participate in the all-employee share option arrangements
on the same terms as all other employees.
For internal promotions, existing awards would continue over their original vesting period and will remain
subject to their terms as at the date of grant.
Additional incentives
on appointment
The Committee would assess whether it is necessary to buy out remuneration which would be forfeited
from a previous role on termination.
The Committee would, where possible, seek to offer a replacement award taking into account the structure,
quantum, time horizons and relevant performance conditions which would impact on the expected value
of the remuneration to be forfeited.
The Committee would use the existing remuneration plans where possible, although it may be necessary
to grant outside of these schemes using exemptions permitted under the Listing Rules.
External appointments
The Committee recognises that Executive Directors may be invited to become Non-executive Directors in other companies and that these
appointments can enhance their knowledge and experience to the benefit of the Company. Subject to pre-agreed conditions, and with prior
approval of the Board, each Executive Director is permitted to accept one appointment as a Non-executive Director in another listed company.
The Executive Director is permitted to retain any fees paid for such service.
Illustration of remuneration scenarios
The charts below illustrates the total remuneration for the Chief Executive Officer and Chief Financial Officer based on the policy under
four different scenarios – minimum, target, maximum and maximum with a 50% share price growth.
Chief Executive Officer
£5,000,000
£4,000,000
£3,000,000
£2,000,000
£1,000,000
£0
Fixed Pay Annual Bonus Long Term Incentives
Minimum Target Maximum
Maximum
with 50%
share price
growth
100%
36%
44%
54%
27%
33% 27%
37% 23% 19%
£811
£2,168
£3,524
£4,299
Remuneration (£’000s)
Chief Financial Officer
£2,000,000
£1,600,000
£1,200,000
£800,000
£400,000
£0
Remuneration (£’000s)
Fixed Pay Annual Bonus Long Term Incentives
Minimum Target Maximum
Maximum
with 50%
share price
growth
100%
34%
43%
53%
24%
31% 25%
42% 26% 22%
£389
£936
£1,484
£1,803
Assumptions:
Minimum – comprises fixed pay being the
value of 2024 base salary (as at the beginning
of the year), 2023 benefits (annualised for
the CEO) and a 3% pension allowance.
Target – minimum plus a bonus pay-out and
LTIP vesting, both at 50% of the maximum.
Maximum – minimum plus max bonus and
max LTIP.
Maximum with 50% share price growth
– maximum with the normal annual LTIP
element being 1.5 times max LTIP.
No account has been taken of any prospective
dividend equivalents to be paid on vested
share awards.
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Implementation of
remuneration policy
Role and membership
The Committee is responsible for the Chair’s
and the Executive Directors’ remuneration,
and also oversees the remuneration packages
of other Senior Executives. The remuneration
and terms of appointment of the
Non-executive Directors are determined
by the Board as a whole.
The Chair and the Chief Executive Officer
are consulted on proposals relating to the
remuneration of relevant Senior Executives
and, when appropriate, are invited by
the Remuneration Committee to attend
meetings but are not present when their
own remuneration is considered. Other
Non-executive Directors may also attend
meetings by invitation.
The Company Secretary acts as Secretary
to the Remuneration Committee.
The role of the Remuneration Committee is
set out in its Terms of Reference, which are
reviewed annually and can be found on the
Group’s website, https://investors.dominos.
co.uk. The Remuneration Committee
normally meets up to four times in each year
and additionally as circumstances dictate.
During the year, the members of the Remuneration Committee and their attendance at the meetings were:
Name Member since Attendance
Stella David (Chair) 23 February 2021 8 of 8
Matt Shattock 16 March 2020 8 of 8
Ian Bull 19 April 2019 8 of 8
Natalia Barsegiyan 16 September 2020 8 of 8
Lynn Fordham 16 September 2020 8 of 8
External adviser
Advice on Executive remuneration and share
schemes is received from the executive
compensation practice of Alvarez & Marsal
(‘A&M’) who were appointed by the
Committee based on their experience and
expertise. A&M is a member of the
Remuneration Consultants’ Group and is a
signatory to its Code of Conduct, requiring
the advice it provides to be objective and
impartial. During the year, A&M did not
provide any other services to the Company
except in relation to senior management
remuneration matters and therefore the
Committee is comfortable that the advice
provided was independent. Fees charged by
A&M for advice provided to the Committee
during the year amounted to £288,000
(excluding VAT) (2022: £78,682) charged
predominantly on a time and materials basis.
What has the Remuneration
Committee done during the year?
The Remuneration Committee met eight
times during the year to consider and, where
appropriate, approve key remuneration items
including the following:
A) Management of individual remuneration
– reviewed and approved Executive
Directors’ and senior management base
salaries and benefits;
– reviewed year-end business performance
and performance-linked rewards in order
to determine annual bonus pay-outs and
vesting of long-term incentives;
– approved long-term incentive awards
made in 2023 under the 2022 LTIP;
– approved the performance conditions for
the LTIP awards in 2023 and to be made
in 2024; and
– approved the termination arrangements for
Elias Diaz Sese and joining arrangements
for Andrew Rennie, including performance
conditions for his 2023 annual bonus;
– approved the awards of premium priced
options made in 2023 under the 2022 LTIP.
B) Governance of the remuneration
programme
– monitored guidance from institutional
shareholder bodies on Executive pay and
considered the application of the revised
UK Corporate Governance Code;
– reviewed and approved the Directors’
remuneration report;
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Domino’s Pizza Group plc Annual Report & Accounts 2023
– reviewed and approved changes to, and
consulted with shareholders on, the
Directors’ Remuneration Policy and the
2022 LTIP to allow for the grant of
premium priced options;
– received presentations from management
on gender pay reporting;
– received presentations from management
on pay and benefits of the wider workforce.
Implementation of remuneration
policy for 2024
Base salary
The base salaries of the CEO will not be
increased in April 2024 as he only joined the
Board on 1 August 2023. The base salary
of the CFO is to be increased by 5.5% with
effect from 1 April 2024 to £385,000
per annum.
Benefits and pension
Benefits in kind provided for Executive
Directors are principally a company car
provision or an allowance in lieu of company
car, mobile telephone, life insurance cover
and private health cover for Executive
Directors and their families. Executive
Directors will receive cash in lieu of pension
allowance of 3% of base salary.
Annual Performance Bonus (‘APB’)
The maximum bonus opportunity for the
CEO and CFO for 2024 will be 150% and
125% of salary, respectively.
The APB provides a focus on the delivery
of the stretching targets that are set by the
Committee following consideration of the
Company’s annual operating plan by the
Board each year and there is a threshold
level of performance below which no award
is paid.
The performance conditions for the APB for
the 2024 financial year will be based both
on achieving and exceeding the Group’s
underlying PBT growth targets set by the
Board (65% of bonus for the CEO and CFO)
and on achieving individual business
objectives (35% of bonus for the CEO and
CFO) which support the business plan.
Included within the 35% of bonus attributed
to business objectives, 10% is allocated
to ESG/sustainability targets.
The underlying PBT measure is based on
internally set targets and pays out 20% at
threshold (95% of target) rising on a pro-rata
basis to 50% pay-out at target with full
payment only due if we achieve 105%
of target.
For 2024, strategic objectives will be set
by the Committee linked to the Company’s
strategic goals. Where appropriate, individual
objectives are also set on a sliding scale
based around a target.
The Committee considers that the
performance targets in relation to the APB
are commercially sensitive and therefore will
not be disclosed on a prospective basis, but
intends that the targets and outcomes are
disclosed in the Directors’ remuneration
report once they are no longer considered
sensitive, as has been its practice in
recent years.
Two-thirds of any bonus payments will
be made in cash, with the remaining third
deferred into Company shares which will
vest after three years, during which time
they remain subject to risk of forfeiture.
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Long-Term Incentive Plan (‘LTIP’)
It is intended that the CEO and CFO will receive an LTIP award in 2024 with a face value of 200% and 175% of base salary, respectively.
Awards will vest after three years, subject to two independent performance metrics.
70%: EPS growth
EPS Targets (pence per share
for the 2026 financial year)
Vesting (% of EPS part
of award)
Threshold 24.47 10%
Target 25.76 50%
Stretch 28.98 100%
Straight-line vesting in between the performance points above.
30%: Relative TSR performance
The remaining 30% of the award will vest in accordance with the following vesting schedule based on the Company’s TSR performance against
the constituents of the FTSE 250 Index, excluding investment trusts, over three financial years.
Ranking of the Company’s TSR
Vesting (% of TSR part
of award)
Below median 0%
Median 15%
Upper quartile or higher 100%
Straight-line vesting in between the performance points above.
Non-executive Directors’ fees
Non-executive Directors’ fees are reviewed
annually. They were reviewed and revised in
May 2023 with increases applied with effect
from January 2023, or the date of
appointment if later.
The Chair’s fee was reviewed by the
Committee and the Non-executive Directors’
fees were reviewed by the Board in January
2024 and the following fee structure for the
Chair and other Non-executive Directors
for 2024 was agreed as follows:
– Chair – £504,000 p.a.
– Non-executive Director base fee –
£72,000 p.a.
– Audit Committee Chair fee – £20,000 p.a.
– Remuneration Committee Chair fee –
£20,000 p.a.
– Nomination & Governance Committee
Chair fee – £nil
– Sustainability Committee Chair fee –
£16,000 p.a.
– Senior Independent Director fee –
£20,000 p.a.
– Workforce nominated NED fee –
£13,000 p.a.
Non-executive Directors’ fees reflect the
level of experience and time commitment
required for their roles.
Statement of shareholder voting at AGM
The voting results for the last vote on the Annual Report on Remuneration (at the 2023 AGM) and Directors’ remuneration policy
(at the General Meeting held on 30 June 2023 (‘2023 GM’) were as follows:
Annual Report on Remuneration (2023
AGM)
Remuneration policy
(2023 GM)
Ranking of the Company’s TSR
Total number
of votes % of votes cast
Total number
of votes % of votes cast
For 359,817,606 98.78% 246,079,757 76.70%
Against 4,458,725 1.22% 74,762,707 23.30%
Total votes cast (for and against) 364,276,331 100% 320,842,464 100%
Votes withheld
1
945,952 – 44,109,026 –
Total votes cast (including withheld votes) 365,222,283 – 364,951,490 –
1. A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast ‘For’ and ‘Against’ a resolution.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Audited information
The information presented from this section up until the unaudited information heading on page 104 represents the audited section
of this report.
Single total remuneration figure for each Executive Director
53 weeks ended 31 December 2023 (and 52 weeks ended 25 December 2022)
£000 Salary
Benefits
5
and
supplements Bonus Pension Other
Total
remuneration
Total
fixed
Total
variable
Current
Andrew Rennie
1
2023 325 5 243 10 195 778 535 243
2022 – – – – – – – –
Edward Jamieson
2
2023 372 13 211 13 – 609 398 211
2022 63 3 81 2 519 668 68 600
Former
Elias Diaz Sese
3
2023 484 8 524 16 – 1,032 508 524
2022 147 3 225 3 – 378 153 225
Dominic Paul
4
2023 15 1 – 1 – 17 17 –
2022 746 13 – 23 – 782 782 –
1. Andrew Rennie joined the Company and the Board on 1 August 2023 and was appointed as CEO on 7 August 2023. The figures above reflect the remuneration
he received in respect of the period from 1 August 2023 to 31 December 2023 as well as the buyout award he received which replaced the option he forfeited
on ceasing to be a Director of DP Poland plc. The buyout award was a cash amount of £194,932 paid in November 2023. Full details of this award can be found
on page 97.
2. Edward Jamieson joined the Company and the Board as the Chief Financial Officer on 17 October 2022. The figures for 2022 above reflect the remuneration he
received in respect of the period from 17 October 2022 to 25 December 2022 as well as the buyout awards he received on joining which replaced the awards he
forfeited on leaving the previous employment. The buyout awards included a cash bonus of £57,000 payable in March 2023, RSU awards with a total face value
of £461,636 vesting in 2022, 2023 and 2024, all subject to continued employment and clawback provisions. The timing of payment/vesting of these awards is on
a similar basis as those for the awards he forfeited on leaving the previous employment.
3. Elias Diaz Sese was Interim Chief Executive Officer until 7 August 2023. Following that, he served as a Non-executive Director. The figures above reflect the
remuneration he received as Interim Chief Executive Officer including a payment of £10,298 in lieu of holiday pay. He received a lump sum payment of £443,049
on termination of his Executive contract. Full details are shown on page 97.
4. Dominic Paul stood down as a Director on 30 December 2022. The figures above for 2023 reflect the remuneration he received in respect of the period from
26 December 2022 to 30 December 2022. Salary and benefits shown in the table have been rounded up to the nearest £1,000.
5. The value of benefits relates primarily to the provision of a company car allowance and, if applicable, health cover. Where relevant, they also include the fair
value of share awards made under the Savings Related Share Option Plan.
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Single total remuneration figure for each Non-executive Director
53 weeks ended 31 December 2023 (and 52 weeks ended 25 December 2022)
£000 Fees
Benefits and
supplements
Total
remuneration
Current
Matt Shattock 2023 482 – 482
2022 480 – 480
Natalia Barsegiyan 2023 81 – 81
2022 77 – 77
Ian Bull 2023 87 – 87
2022 80 – 80
Tracy Corrigan
1
2023 69 – 69
2022 41 – 41
Stella David 2023 100 – 100
2022 90 – 90
Elias Diaz Sese
2
2023 27 – 27
2022 53 – 53
Lynn Fordham 2023 87 – 87
2022 80 – 80
Former
Usman Nabi
3
2023 – – –
2022 – – –
Colin Halpern
4
2023 – – –
2022 65 10 75
1. Tracy Corrigan joined the Board on 5 May 2022.
2. Elias Diaz Sese was appointed the Interim Chief Executive Officer on 10 October 2022. Prior to that, he served as a Non-executive Director and a member
of the Remuneration Committee. Since 8 August 2023, he has continued to serve on the Board as a Non-executive Director. The figures above reflect the
remuneration he received as a Non-executive Director.
3. Usman Nabi waived his fees in accordance with the terms of his appointment letter and stepped down from the Board on 14 August 2023.
4. Colin Halpern stepped down from the Board on 5 May 2022. Colin Halpern received a fee of £15,000 from the Company and the additional remuneration for
the 2022 financial year of £50,000 (2021: £140,000) was paid to HS Real Company LLC in respect of his services. A further benefit of £10,000 (2021: £31,000)
relating to life insurance premiums was also paid to HS Real Company LLC during the year.
Defined contribution pensions
Executive Directors receive pension contributions to a personal pension fund or in cash. In the year ended 31 December 2023, Andrew Rennie,
Elias Diaz Sese, Edward Jamieson and Dominic Paul each received a pension allowance of 3% of salary which totalled £9,747, £15,977, £13,266
and £441 respectively.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Changes to the Board (including
payments to past directors and
compensation for loss of office)
Leaving arrangements for Dominic Paul
On 29 June 2022, we announced the former
CEO Dominic Paul’s decision to resign from
the Company. He subsequently stepped
down as the CEO on 10 October 2022 and
remained on the Board to facilitate a smooth
transition until the end of his six months’
notice period on 30 December 2022.
In line with the policy for Executive
Directors, Dominic continued to receive
salary, pension and benefits for the period
from 26 December 2022 to 30 December
2022 with a total value of £15,414.
As a result of his resignation, Dominic was
not eligible for annual bonus in respect of
the 2022 or 2023 financial years. He did not
receive an LTIP grant in 2022 or 2023. All of
his outstanding LTIP and DSBP awards lapsed
on cessation.
Dominic did not receive any other
compensation in relation to the termination
of his employment, any payments for loss of
office or any payments after he ceased to be
a director.
Remuneration arrangements
for Elias Diaz Sese
Elias Diaz Sese stepped down from the
role of Interim Chief Executive Officer on
7 August 2023 (the ‘Termination Date’).
He remained an employee of the Company
until the Termination Date and received
his salary and normal benefits until the
Termination Date, but thereafter ceased.
He was paid a lump sum of £443,049 as
pay in lieu of notice, less any necessary
withholdings for income tax or National
Insurance contributions, inclusive of salary,
benefits and pension entitlements during
his notice period. Elias was paid for £10,298
for holiday entitlement accrued but untaken
as at the Termination Date.
Elias was treated as a good leaver under
the rules of the Domino’s Pizza Group plc
2022 Share Plan (‘LTIP’) meaning that his
outstanding LTIP awards did not lapse on the
Termination Date, and will instead continue
subject to the LTIP rules and will vest on the
normal vesting dates as detailed below.
The LTIP awards will be subject to
assessment of the applicable performance
conditions determined by the Remuneration
Committee at the normal vesting date.
The Remuneration Committee exercised its
discretion to reflect the terms of his contract
as a result of which any LTIP awards that
vest will be pro-rated to 7 November 2023.
Details of outstanding share awards are set
out on page 102.
In accordance with the LTIP rules, the
Remuneration Committee has exercised its
discretion to accelerate the two-year post
vesting holding period applicable to the
outstanding LTIP awards, and the post-
vesting holding period will therefore expire
on the relevant normal vesting date. He was
treated as a good leaver under the rules of
the LTIP meaning that his outstanding
deferred bonus award did not lapse on the
Termination Date, and instead vested on the
Termination Date without time pro-rating.
The outstanding deferred bonus award will
remain exercisable for a period of 12 months
following the Termination Date.
Elias was treated as a good leaver under the
rules of the Company’s Annual Bonus Plan
(‘ABP’) meaning that he remained eligible
to receive a bonus in respect of the 2023
financial year, subject to performance
conditions. His bonus was pro-rated for
the financial year up to 7 November 2023
(in accordance with his contract) and paid
two-thirds in cash on the normal bonus
payment date and one-third in the form of
a deferred bonus award to be granted under
the Domino’s Pizza Group plc Deferred Share
Bonus Plan (the ‘DSBP’). The Remuneration
Committee exercised its discretion in
accordance with the rules of the DSBP to
accelerate the vesting of his outstanding
DSBP awards to the Termination Date and
such awards would remain exercisable for
a period of twelve months following the
Termination Date.
LTIP and ABP awards remain subject to the
scheme rules, including malus and clawback
provisions and change of control.
Elias received a contribution of £5,577
plus VAT towards legal fees incurred in
connection with his departure as Interim
Chief Executive Officer.
Following the Termination Date, he resumed
his role as a Non-executive Director, a role he
had held since joining the Board in 2019 until
he became Interim CEO on 10 October 2022.
Joining arrangements for Andrew Rennie
Andrew Rennie joined as a Director on 1 August
2023 and was appointed the CEO on 7 August
2023. His remuneration arrangements for the
role of CEO were determined in accordance
with the policy for the Executive Directors.
His annual salary on appointment was
£775,000.
He is entitled to receive benefits and pension
allowance of 3% of base salary, aligned with the
wider workforce.
His maximum annual bonus opportunity is
150% of base salary. For 2023, this was
pro-rated based on time worked during the
year. Further details of his 2023 annual bonus
metrics, targets and outcome can be found on
page 98.
His maximum normal LTIP opportunity is 200%
of base salary. He received an LTIP grant on
9 August 2023 of 200% of salary, which will
vest three years after the date of grant, subject
to performance conditions, followed by a
two-year post-vesting holding period. Details of
the performance conditions for the 2023 LTIP
award can be found on page 100.
In addition, he received a grant of premium
priced options (structured as share settled
SARs) on 9 August 2023 with a fair value
of 300% of base salary.
Finally, in November 2023 he received a cash
payment of £194,932 (less any necessary
withholdings for income tax or National
Insurance contributions) to compensate him for
the loss of share options in DP Poland plc which
lapsed when he stood down as a Non-executive
Director with effect from 1 October 2023. The
amount paid to him was equal to an estimate
of the fair value of his options at the date they
lapsed taking into account the exercise price,
the vesting and lapse dates and assuming a
50% probability of the performance-based
options (amounting to nearly half of the
options) vesting. The payment will be forfeited
if Andrew were to leave the Company (other
than in the case of death, injury or disability or
following a change of control of the Company)
prior to 1 August 2026.
Strategic report Governance Financial statements
97
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Details of variable pay earned in the year
Annual bonus plan
Dominic Paul was not eligible to receive a bonus for the 2023 financial year following his resignation in June 2022.
Andrew Rennie (CEO) and Elias Diaz Sese (Interim CEO) both had a bonus opportunity of 150% and Edward Jamieson (CFO) had a bonus
opportunity of 125% of salary, prorated based on the time worked during the 2023 financial year where required.
Assessment of financial metrics
Performance hurdle
Targets set for year
(underlying PBT)
1
Actual performance
achieved
Resulting
bonus out-turn
Growth in underlying profit before tax of between 95% of target (20% pay-out)
and 110% or more (full pay-out). Graduated scale operates between
performance points.
Threshold: £100.04m
Target: £105.3m
Maximum: £115.83m
Actual underlying PBT
was £101.7m
28.18% of maximum
financial element
Assessment of non-financial targets
Elias Diaz Sese and Andrew Rennie
The CEO and Interim CEO were set combined objectives for 2023 which are summarised below:
Criteria Weighting Key metrics/targets Performance commentary Year-end assessment
Digital
8% – Growth of online orders
via the App to over 70%
Overall rating: Fully achieved
Online Orders delivered via the App increased to 73.8%
8%
Development
8% – infrastructure in place to over
accomplish budget of >60
openings in 2023 and strong
pipeline for 2024
Overall rating: Fully achieved
Development team infrastructure reorganised during the
year. 61 new stores opened in 2023 and a strong pipeline in
place to deliver against the 2024 new store opening target
8%
Franchise Profitability
9% – Successful management of two
Franchise Economic Forum
meetings during the year
– Create foundation for positive
renewal of franchisee agreement
Overall rating: Fully achieved
Three Economic Forums held during the year.
Solid foundations in place for future negotiations
with the Franchisee Community
9%
Total
25% 25%
Edward Jamieson
Criteria Weighting Key metrics/targets Performance commentary Year-end assessment
Financial discipline
& performance
6% – Build accurate budgets and
forecasts and ensure early and
accurate reporting on any expected
variances.
Overall rating: Fully achieved
Good progress made on implementing
improvements to the financial reporting
and forecasting processes.
6%
Control & Risk
6% – Ensure that all controls for new/
modified systems and processes
e.g., ERP and E-commerce system
are in place and operating
effectively prior to go-live.
– Improve Enterprise Risk
Management to review, assess and
report on the level of residual risk
accepted by the business.
Overall rating: Partially achieved
Good progress on implementing the ERP but not
live as at year-end 2023, however implementation
was delayed because of design issues in
functionality that were not entirely in the
Company’s control.
Good progress made in what will be a multiyear
journey to an improved Enterprise Risk
Management process. Risks mapped, assessed
and responsibility for key risks allocated to relevant
leadership team member.
4%
People
7% – Identify and retain key personnel
in Finance team and look at ways
to improve capability
Overall rating: Materially achieved
Good progress made on retaining key Finance
team members and recruiting for key positions.
5%
Investor Relations
6% – Broaden shareholder base and
increase engagement with current
shareholders
Overall rating: Partially achieved
Long-list of target investor agreed and some
new investors brought onto the register.
First US investor roadshow held since 2019.
3%
Total
25% 18%
98
Domino’s Pizza Group plc Annual Report & Accounts 2023
ESG
The Executive directors had shared ESG objectives which accounted for 10% of the total 35% of bonus attached to non-financial objectives.
Details are set out below:
Criteria Weighting Key metrics/targets Performance commentary Year-end assessment
ESG
10% Overall rating: Fully achieved
– Develop a detailed roadmap for
how all functions will contribute to
Domino’s Pizza hitting its publicly
stated 2031 carbon reduction
targets for scopes 1, 2 and 3
Roadmap developed and approved
by the Sustainability Committee
2.0%
– Install solar panels at West Ashland
and Warrington SCC
Solar panels installed during 2023 1.5%
– Set out targets for the reduction
of salt, fat and calories across
our portfolio
Targets and KPIs established 2%
– Quantify the use of single use
plastic by our Supply Chain Centres
and our Support Office, and
develop a roadmap for removing
all single use plastics from our
operations by 2025
Quantification process completed,
and road map developed
1.5%
– Develop an all-colleague e-learning
module on modern slavery to be
completed on an annual basis.
Module to be ready to roll out
in 2024
E-learning module was developed and was ready
for roll out in 2023
1.5%
– Commission gap analysis and
use output to develop a roadmap
to maintain or improve our
BBFAW status
Gap analysis completed during 2023 1.5%
Total
10%
Annual bonus plan – summary
£000
Financial
target bonus
Non-financial
objective bonus
Total
2023
Percentage of
maximum bonus
Andrew Rennie
1
£83,573 £159,679 £243,252 53.32%
Elias Diaz Sese
1
£180,060 £344,033 £524,093 53.32%
Edward Jamieson £83,578 £127,750 £211,328 46.32%
Dominic Paul n/a n/a n/a n/a
1. Adjusted on a pro-rata basis for time served during the year.
In line with the policy, two-thirds of the bonus will be payable in cash and one-third will be deferred into shares that vest after three years.
LTIP awards vested during the year
No LTIP awards vested during the year.
Strategic report Governance Financial statements
99
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Normal LTIP awards granted during the year
Details of the normal performance-based grants made under the 2022 LTIP during the year to Andrew Rennie, Elias Diaz Sese and Edward
Jamieson are summarised below:
Executive Date of grant Type of award
Basis of determining award
size (as a % of salary)
Total number of
shares subject to
awards
Face value
of award
Vesting %
at threshold
Andrew Rennie 9 August 2023 Performance based structured
as conditional share award
Face value of 200% 381,585 £1,550,000
1
10-15%
Elias Diaz Sese 16 March 2023 Performance based structured
as conditional share award
Face value of 200% 582,502 £1,530,000
2
10-15%
Edward Jamieson 16 March 2023 Performance based structured
as conditional share award
Face value of 175% 243,185 £638,750
2
10-15%
1. Based on the average of the mid-market price of the Company’s shares on the five business days prior to the grant date being 406p.
2. Based on the average of the mid-market price of the Company’s shares on the five business days prior to the grant date being 262.66p.
The conditional share awards are subject to the following performance conditions:
70%: EPS growth
EPS Targets (pence per share
for the 2026 financial year)
Vesting (% of EPS part
of award)
Threshold 24.38 10%
Target 25.00 50%
Stretch 28.75 100%
Straight-line vesting in between the performance points above.
30%: relative TSR performance
The remaining 30% of the award will vest in accordance with the following vesting schedule based on the Company’s TSR performance against
the constituents of the FTSE 250 Index over the three-year period starting 26 December 2022, excluding investment trusts, over three
financial years.
Ranking of the Company’s TSR
Vesting (% of TSR part
of award)
1
Below median 0%
Median 15%
Upper quartile or higher 100%
1. Straight-line vesting in between the performance points above.
In choosing underlying EPS and TSR as the metrics, the Committee has sought to provide a balance between incentivising delivery against our
key measure of success in delivering profitable growth (underlying EPS) and aligning the Executive Directors and senior management with
shareholders through a TSR measure.
100
Domino’s Pizza Group plc Annual Report & Accounts 2023
DSBP awards granted during the year
Details of the DSBP grants made under the DSBP during the year to Elias Diaz Sese and Edward Jamieson are summarised below:
Executive Date of grant Type of award
Basis of determining award size
(as a proportion of annual bonus)
Total number of shares
subject to awards Face value of award
Elias Diaz Sese 16 March 2023 Deferred share bonus
award structured as a nil
cost option
One-third of annual bonus 28,612 £75,152
1
Edward Jamieson 16 March 2023 Deferred share bonus
award structured as a nil
cost option
One-third of annual bonus 10,342 £27,164
1
1. Based on the average of the mid-market price of the Company’s shares on the five days prior to the grant date being 262.66p.
Premium priced option awards granted during the year
Details of the premium priced option grants made under the 2022 LTIP during the year to Andrew Rennie and Edward Jamieson are
summarised below:
The premium priced option awards are structured as share settled SARs (such that the ‘gain’ on the premium priced option at exercise is settled
with an issue of transfer of shares equal to that value) and are subject to the following conditions:
– They vest in three equal tranches on the third, fourth and fifth anniversaries of grant subject to meeting an EPS underpin of 20.4p for
exercises from the third anniversary, 21.0p for exercises from the fourth anniversary and 21.7p for exercises from the fifth anniversary
of grant.
– A strike price of £5.41 being a 1/3rd premium to the average of the mid-market price of the Company’s shares on the five business days prior
to the grant date.
– A ‘soft’ cap which limits the maximum number of shares that can be acquired to the number of shares that would be delivered which is
calculated as the number of shares that would be delivered if the share price on exercise was 300% of the share price used to set the number
of shares (i.e. £12.18).
– A ‘hard cap’ which limits the maximum value that can be delivered which is calculated as being the value that would be delivered if the share
price at exercise was 450% of the share price used to set the number of shares (i.e. £18.27).
Executive Date of grant Type of award
Basis of determining award
size
1
(as a % of salary)
Total number of
shares subject to
awards
2
Fair value of award
3
Maximum number
of shares that can
be acquired
3
Andrew Rennie 9 August 2023 Premium priced option granted
as share settled SAR
Fair value of 300% 2,993,518 £2,325,000 1,663,884
Edward Jamieson 9 August 2023 Premium priced option granted
as share settled SAR
Fair value of 150% 704,925 £547, 500 391,817
1. Based on the average of the mid-market price of the Company’s shares on the five business days prior to the grant date being 406p.
2. This is the number of shares by reference to which the gain on exercise of the share settled SAR is calculated.
3. The regulations require the face value of the award to be disclosed being the maximum number of shares that would vest multiplied by the share price used
to determine the grant level however with a premium priced option, these figures are considered to be relatively meaningless – for Andrew it would be approx.
£12.15m and for Edward it would be approx. £2.86m. Instead, the fair value of the awards and the maximum number of shares that can be acquired (once the
soft cap applies) have been included in the table.
Strategic report Governance Financial statements
101
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Awards held in the year
Details of options and conditional awards over shares held by Directors, and their connected persons, who served during the year are as follows:
Plan
Outstanding
shares at
26 December
2022
Granted/
awarded
in 2023
(number)
Exercised/
vested
(number)
Lapsed
(number)
Outstanding
shares at
31 December
2023
Exercise price
(pence) Date of grant
Date from
which
exercisable/
capable of
vesting
Andrew Rennie
2022 LTIP (Premium priced option) – 2,993,518 – – 2,993,518 £5.41 09/08/2023
09/08/2026
to
09/08/2028
2022 LTIP (Conditional shares) – 381,585 – – 381,585 n/a 09/08/2023 09/08/2026
Elias Diaz Sese
2022 LTIP (Conditional shares) 582,502 – – 412,979 169,523 n/a 16/03/2023 16/03/2026
2022 LTIP (Conditional shares) – 678,191 – 432,999 245,192 n/a 10/10/2022 10/10/2025
2022 DSBP – 28,612 28,612 – – n/a 16/03/2023 07/08/2023
Edward Jamieson
2022 LTIP (Premium priced option) – 704,925 – – 704,925 £5.41 09/08/2023
09/08/2026
to
09/08/2028
2022 LTIP (Conditional shares) – 243,185 – – 243,185 n/a 16/03/2023 16/03/2026
2022 LTIP (Conditional shares) 205,676 – – – 205,676 n/a 24/10/2022 24/10/2025
Buyout RSU awards 57,229 – 57,229 – – n/a 16/11/2022 19/02/2023
Buyout RSU awards 12,044 – 12,044 – – n/a 16/11/2022 30/04/2023
Buyout RSU awards 29,848 – 29,848 – – n/a 16/11/2022 31/10/2023
Buyout RSU awards 12,091 – – – 12,091 n/a 16/11/2022 30/04/2024
Buyout RSU awards 29,866 – – – 29,866 n/a 16/11/2022 31/10/2024
2022 DSBP – 10,342 – – 10,342 n/a 16/03/2023 16/03/2026
Dominic Paul
1
2020 LTIP 434,191 – – 434,191 – n/a 09/09/2020 09/09/2023
2021 LTIP 368,912 – – 368,912 – n/a 09/09/2021 09/09/2024
2020 DSBP 55,901 – – 55,901 – n/a 23/03/2021 23/03/2023
2021 DSBP 58,146 – – 58,146 – n/a 15/03/2022 15/03/2025
1. All share awards for Dominic Paul lapsed on 30 December 2022.
Vesting of LTIP (Conditional share) awards is subject to the achievement of performance conditions and the rules of the relevant plans.
Vesting of the premium priced options is subject to the achievement of the EPS underpin and the rules of the relevant plan. DSBP and
Sharesave awards vest subject to continued employment only.
102
Domino’s Pizza Group plc Annual Report & Accounts 2023
Directors’ shareholdings
To reinforce the linkage between Senior
Executives and shareholders, the Company
has adopted a shareholding policy that
applies to Executive Directors under its
long-term incentive arrangements. The
Executive Directors are required to retain
sufficient shares from the vesting of awards
to build up and retain a personal shareholding
worth an equivalent of a minimum of 200%
of base salary. It is expected that the required
shareholding will be built up over a maximum
of five years. The Committee has discretion
to waive the shareholding requirement in
exceptional circumstances. Once attained,
a subsequent fall below the required level
may be taken into account by the Committee
when determining the grant of future awards.
The Committee has decided that vested
but unexercised LTIP awards and awards
made under the DSBP shall count (assuming
the sale of sufficient shares to fund the
employee’s tax and NI obligations) towards
this target.
Plan
Legally owned shares at
31 December 2023
(or earlier date
of cessation)
Legally owned shares at
25 December 2022
(or earlier date
of cessation)
Shares subject to
performance conditions
(Conditional shares
and premium
priced options)
1
Share awards not or no
longer subject to
performance conditions
Market value of
shareholding as
a % of salary
2
Executive Directors
Andrew Rennie
4
15,000 – 3,375,103 – 7.29%
Edward Jamieson 68,197 15,783 1,153,786 52,299 76.06%
Dominic Paul
3
78,000 78,000 – – n/a
Non-executive Directors
Matt Shattock 500,000 500,000 – – n/a
Natalia Barsegiyan 20,000 20,000 – – n/a
Ian Bull 62,000 62,000 – – n/a
Tracy Corrigan – – – – n/a
Stella David 30,003 30,003 – – n/a
Elias Diaz Sese
5
706,130 691,000 414,715 – n/a
Lynn Fordham 60,000 60,000 – – n/a
Usman Nabi
6
45,687,059 45,687,059 – – n/a
1. This includes the total number of shares subject to premium priced options (being 2,993,518 for Andrew Rennie and 704,925 for Edward Jamieson) in addition
to the maximum number of shares that can potentially be acquired under the normal LTIP awards.
2. Based on a share price of 376.8p prevailing at the end of the financial year and the number of shares in which the Director has a beneficial interest, and
calculated on the annual salary for the year. Shares held in the Deferred Share Bonus Plan are accounted for net of tax and National Insurance contributions.
3. Dominic Paul left the Board on 30 December 2022.
4. Andrew Rennie joined the Board on 1 August 2023.
5. Elias Diaz Sese was Interim CEO at the beginning of the year before returning to be a Non-executive Director on 7 August 2023. His conditional share awards
included above were granted to him whilst he was Interim CEO.
6. Usman Nabi left the Board on 14 August 2023 and is deemed to be interested in shares held by the Browning West Group LP.
There were no changes in the Directors’ shareholdings between 31 December 2023 and 11 March 2024.
Strategic report Governance Financial statements
103
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Unaudited information
Dilution limits
The Company operates within best practice
guidelines published by the Investment
Association. These broadly provide that
where new issue shares are used to satisfy
awards made under employee share schemes,
the aggregate number of shares placed under
award (disregarding any awards which have
lapsed) across all such schemes operated
by the Company should not exceed 10%
of the Company’s issued share capital in
any ten-year rolling period. The Company
currently satisfies vesting share awards by
using market purchased shares, and there is
no current intention to issue shares to satisfy
future awards. The 2022 LTIP, which was
approved by shareholders at the AGM on
5 May 2022 and amended at a General
Meeting held on 30 June 2023, provides
that discretionary shares awards shall not
exceed 5% of issued share capital over a
ten-year period.
CEO remuneration
Year ended Chief Executive Officer
Total remuneration
£000
Annual bonus
(% of max)
LTIP vesting
(% of max)
31 December 2023 Andrew Rennie 778 53.32% –
31 December 2023 Elias Diaz Sese 1,032 53.32% –
25 December 2022
1
Elias Diaz Sese 378 92.88% –
25 December 2022
2
Dominic Paul 782 0% –
26 December 2021 Dominic Paul 1,440 56.81% –
27 December 2020
3
Dominic Paul 1,081 73.4% –
27 December 2020
3
David Wild 450 80.1% 11.55%
29 December 2019 David Wild 694 0% –
30 December 2018 David Wild 699 0% 10.21%
31 December 2017 David Wild 1,394 50.91% 90.95%
25 December 2016
4
David Wild 4,482 81% 100%
27 December 2015 David Wild 1,243 87.5% –
28 December 2014 David Wild 864 58.6% –
1. Elias Diaz Sese was the interim Chief Executive Officer until 7 August 2023 when he was succeeded by Andrew Rennie.
2. Dominic Paul was the Chief Executive Officer until 10 October 2022 when he was succeeded by Elias Diaz Sese.
3. David Wild was the Chief Executive Officer for the first four months of 2020 and was succeeded by Dominic Paul on 1 May 2020.
4. The first LTIP awards granted to David Wild that become capable of vesting based on performance ending in FY16 were in 2014 and these have been included
in the above table.
104
Domino’s Pizza Group plc Annual Report & Accounts 2023
CEO pay ratio
In the UK & Ireland, we are the clear
number-one pizza delivery business,
delivering pizzas to customers through our
stores, which are almost entirely operated
through our franchisee partners (90%).
Our UK & Ireland workforce is made up
of our 529 colleagues in our SCCs, where
we manufacture dough and act as a scale
and expert wholesaler of other food and
non-food supplies to our franchisees;
our 348 colleagues in our support office
functions and 708 customer-facing
colleagues in 31 wholly owned stores.
We apply the same reward principles for
all – that overall remuneration should be
competitive when compared to similar roles
in other companies from where we recruit.
For customer-facing roles, we benchmark
with other quick service retailers and the
wider retail market, and for colleagues in
our SCCs and support office, we benchmark
against the applicable market for that role.
For our CEO, we benchmark against other
FTSE 250 companies, taking into account
their size, business complexity, scope and
relative performance.
Employee involvement in the Group’s
performance is encouraged, with colleagues
participating in discretionary bonus schemes
relevant for their role; a Save-As-You-Earn
scheme is in operation for all UK-based
employees with more than three months’
service and long-term incentives are provided
through the Group’s discretionary share
schemes to selected Executives and managers.
Given our workforce profile, all three of the
CEO pay ratio reference points compare our
CEO’s remuneration with that of colleagues
in either store or SCC roles. Additionally,
we know that year-to-year movements in the
pay ratio will be driven largely by our CEO’s
variable pay outcomes. These movements
will significantly outweigh any other changes
in pay within the Company. Whatever the
CEO pay ratio, we will continue to invest in
competitive pay for all colleagues. The
Committee believes that the median pay ratio
is consistent with the Group’s pay philosophy
and progression policies.
We have chosen to use Option C to calculate
the CEO pay ratio. This utilises data required
for the gender pay gap reporting, which has
been extended to include all UK colleagues in
all our wholly owned stores; with colleagues
at the three quartiles identified from this
work and their respective single figure
values calculated as at 31 December 2023.
This methodology was chosen given the
complexity of obtaining information from
multiple payrolls and with the variation in
working hours and pay and benefit rules. We
have used additional pay data and calculation
methodologies to minimise the differences
in pay definitions between the CEO single
total remuneration figure and gender pay
reporting data, and agreed these with Alvarez
& Marsal, who have been assisting with this
work. To ensure the data accurately reflects
individuals at the relevant quartiles, we have
checked the colleagues immediately above
and below.
To calculate the CEO single figure
remuneration for 2023 for the purpose of
the pay ratio analysis, we have used the
aggregated remuneration for the new Chief
Executive Officer and the Interim Chief
Executive Officer in respective of the periods
they worked as the Chief Executive Officer
during the year. This includes the aggregated
salary, benefits and pension paid to the two
individuals for the respective periods and the
annual bonus payable to the Interim Chief
Executive Officer for the period from
December 2022 to November 2023, as set
out on page 95. The total pay and benefits
of UK colleagues at the 25th, 50th and 75th
percentile and the ratios between the Chief
Executive Officer and these colleagues are
as follows:
Year Method
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
2023 Option C 75:1 55:1 33:1
2022 Option C 51:1 38:1 19:1
2021 Option C 80:1 44:1 26:1
2020 Option C 72:1 42:1 28:1
2019 Option C 43:1 23:1 15:1
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
Total pay and benefits (FTE) £21,612 £29,327 £48,941
Total salary (FTE) £21,164 £26,470 £43,088
Strategic report Governance Financial statements
105
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Total Shareholder Return
The graph below illustrates the Company’s
TSR performance over the 10 financial years
to 31 December 2023, plotted against the
TSR performance of the FTSE 250 Index
(excluding investment trusts) over the
same period.
TSR reflects movements in the share price,
adjusted for capital events and assuming all
dividends are re-invested on the ex-dividend
date. The FTSE 250 Index (excluding
investment trusts) has been selected for this
comparison because i) this is the index in
which the Company’s shares have been
quoted since admission to the Official List
and ii) it forms the comparator group for the
TSR performance condition used in the
Group’s 2012 LTIP, 2016 LTIP and 2022 LTIP.
Decembe
r
2023
December
2014
December
2015
December
2016
December
2017
December
2018
December
2019
December
2020
December
2021
December
2022
December
2013
Domino’s Pizza Group plc
FTSE 250 (excl. investment trusts)
400
300
350
250
150
50
Value (£) (rebased)
200
100
0
This graph shows the value, by 31 December 2023, of £100 invested in Domino’s Pizza Group plc on 29 December 2013, compared with the
value of £100 invested in the FTSE 250 (excl. investment trusts) Index on the same date. The other points plotted are the values at intervening
financial year ends. As 31 December 2023 was a non-trading day, data is shown as at close on 29 December 2023.
106
Domino’s Pizza Group plc Annual Report & Accounts 2023
Percentage change in the remuneration of the Board Directors
2022/2023 2021/2022 2020/2021 2019/2020
Salary/fees
Taxable
benefits
Annual
bonus Salary/fees
Taxable
benefits
Annual
bonus Salary/fees
Taxable
benefits
Annual
bonus Salary/fees
Taxable
benefits
Annual
bonus
Executive Directors
Andrew Rennie
1
n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Elias Diaz Sese
2
229% 166% 133% n/a n/a n/a n/a n/a n/a n/a n/a n/a
Edward Jamieson
3
490% 333% 160% n/a n/a n/a n/a n/a n/a n/a n/a n/a
Non-executive Directors
Matt Shattock 0% n/a n/a 0% n/a n/a 0% n/a n/a n/a n/a n/a
Natalia Barsegiyan 5% n/a n/a 0% n/a n/a 1.5% n/a n/a n/a n/a n/a
Ian Bull 8.8% n/a n/a 0% n/a n/a (24.2%) n/a n/a 45.8% n/a n/a
Tracy Corrigan
4
68% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Stella David 11.1% n/a n/a 45.1% n/a n/a n/a n/a n/a n/a n/a n/a
Elias Diaz Sese
5
(49%) n/a n/a (18.5%) n/a n/a 0% n/a n/a 30% n/a n/a
Lynn Fordham 8.8% n/a n/a 0% n/a n/a 1.5% n/a n/a n/a n/a n/a
Usman Nabi
6
n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Group employees average 8.3% 8.45% 35.9% 5.11% (3.64%) (16.97%) 5.9% (1.6%) 4.9% 6.1% 4.1% 119.7%
1. Andrew Rennie was appointed to the Board on 1 August 2023 and was appointed as Chief Executive Officer on 8 August 2023.
2. Elias Diaz Sese was appointed the Interim Chief Executive Officer on 10 October 2022 and ceased to be Interim Chief Executive Officer on 7 August 2023.
His 2023 percentage changes are calculated using the 2023 remuneration received as Interim Chief Executive Officer to 7 August 2023, compared with his
2022 remuneration received as Interim Chief Executive Officer from 10 October 2022.
3. Edward Jamieson joined the Board as Chief Financial Officer on 17 October 2022.
4. Tracy Corrigan was appointed to the Board on 5 May 2022.
5. Elias Diaz Sese was an NED until he was appointed the Interim Chief Executive Officer on 10 October 2022. He then became an NED again when he ceased
to be Interim Chief Executive Officer on 7 August 2023. His 2023 fees figure was the aggregate amount of NED fees received from 7 August 2023 compared
with his 2022 NED fees.
6. Usman Nabi stepped down from the Board on 14 August 2023 but did not receive a Director’s fee.
The table above shows the percentage change in salary, benefits and annual bonus for each of the Board Directors who worked part or all of
2023. These are compared with the equivalent year-on-year changes averaged across Group employees and expressed on a per capita basis.
As the parent company does not have any employees other than directors, it is not possible to provide a percentage change in their pay and
therefore the comparison is to the Group as a whole.
Strategic report Governance Financial statements
107
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT continued
Relative importance of spend on pay
2023 2022 % change
Staff costs (£m) 76.9 73.0 5.3%
of which Directors’ pay (£m) 3.3 2.4 37.5%
Dividends and share buybacks* (£m) 135.2 121.3 11.5%
Underlying PBT (£m) 101.7 98.9 2.8%
* Dividends and share buybacks are included on a cash basis.
Underlying PBT was chosen as a comparator as it reflects the profit generated by the Group’s continuing operations, virtually the whole of
which leads to cash generation. This therefore creates the opportunity for the Board to re-invest in the Group’s business, or make distributions
to shareholders, or both. It is the same comparator as used in prior years’ remuneration reports.
On behalf of the Board
Natalia Barsegiyan
Chair of the Remuneration Committee
11 March 2024
108
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REPORT
The Directors have pleasure
in presenting the statutory
financial statements for
the Group for the 53 weeks
ended 31 December 2023.
The Company has chosen in accordance
with section 414C(11) of the Companies
Act 2006 to include the disclosure of likely
future developments in the strategic report
(on pages 1 to 53), which includes
the following:
– Chief Executive Officer’s review on pages 8
to 13
– Purpose, vision and values on pages 2 and 3
– Business model on pages 18 and 19
– Strategy on pages 20 to 21
– Market context on pages 16 and 17
– Key performance indicators on pages 22
and 23
– Description of how we engage with our
stakeholders and workforce on pages 24
and 25
– Section 172 statement on pages 26 and 27
– Sustainability report (including streamlined
energy and carbon reporting) on pages 28
to 37
– Financial review on pages 40 to 45
– Risk management, principal risks and
uncertainties and viability statement
on pages 46 to 53
Together, this information is intended to
provide a fair, balanced and understandable
analysis of the development and performance
of the Group’s business during the year, and
its position at the end of the year, its strategy,
likely developments and any principal risks
and uncertainties associated with the
Group’s business.
The sections of the Annual Report dealing
with corporate governance, the reports of
the Nomination & Governance Committee,
Audit Committee, and Sustainability
Committee, and the Directors’ remuneration
report set out on pages 56 to 108 inclusive
are hereby incorporated by reference into
this Directors’ report.
For the purposes of compliance with
DTR 4.1.5R(2) and DTR 4.1.8R, the required
content of the management report can be
found in the strategic report and Directors’
report including the sections of the Annual
Report and Accounts incorporated
by reference.
Group results
The Group’s statutory profit for the period
was £115.0m (2022: £81.6m). This is after
a taxation charge of £27.3m (2022: £17.3m).
The financial statements setting out the
results of the Group for the 53 weeks ended
31 December 2023 are shown on pages 121
to 185.
Dividends
The Directors recommend the payment of
a final dividend of 7.2p per Ordinary share,
to be paid on 9 May 2024 to members on the
register at the close of business on 5 April
2024 (ex-dividend date 4 April 2024), subject
to shareholder approval. The total dividend in
respect of the period will be 10.5p compared
with 10.0p for the previous year, an increase
of 5%.
Share capital
As at 31 December 2023, there were
396,404,901 Ordinary shares in issue.
All issued Ordinary shares are fully paid-up.
The Ordinary shares are listed on the
London Stock Exchange and can be held
in certificated or uncertificated form.
Holders of Ordinary shares are entitled to
attend and speak at general meetings of the
Company, to appoint one or more proxies
and, if they are corporations, corporate
representatives who are entitled to attend
general meetings and to exercise voting rights.
On a show of hands at a general meeting
of the Company, every holder of Ordinary
shares present in person or by proxy and
entitled to vote shall have one vote, unless
the proxy is appointed by more than one
shareholder and has been instructed by
one or more shareholders to vote for the
resolution and by one or more shareholders
to vote against the resolution, in which case
the proxy has one vote for and one vote
against. This reflects the position in the
Shareholders’ Rights Regulations 2009
which amended the Companies Act 2006.
On a poll, every member present in person or
by proxy and entitled to vote shall have one
vote for every Ordinary share held. None of
the Ordinary shares carry any special voting
rights with regard to control of the Company.
The Articles specify deadlines for exercising
voting rights and appointing a proxy or
proxies to vote in relation to resolutions to be
passed at the AGM. The relevant proxy votes
are counted and the number for, against or
withheld in relation to each resolution are
announced at the AGM and published on the
Company’s website after the meeting.
There are no restrictions on the transfer of
Ordinary shares in the Company other than
certain restrictions that may be imposed from
time to time by the Articles, law or regulation
and pursuant to the Listing Rules whereby
certain Directors, officers and employees
require approval to deal in Ordinary shares of
the Company. The Group is not aware of any
agreements between holders of securities
that may result in restrictions on the transfer
of Ordinary shares.
Shares held by employee share trusts
The Group has had an Employee Benefit
Trust (‘EBT’) for a number of years, the
trustee of which is Intertrust Fiduciary
Services (Jersey) Limited. As at 31 December
2024, the EBT held 3,938,276 shares, which
are used to satisfy awards under employee
share schemes. The voting rights in relation
to these shares are exercisable by the
trustee; however, in accordance with best
practice guidance, the trustee abstains
from voting.
Dividend waivers
A dividend waiver is in force in relation
to shares in the Company held by the EBT
(see previous paragraph), which relates to
a total of 3,938,276 shares.
Strategic report Governance Financial statements
109
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REPORT continued
Purchase of own shares
At the 2023 AGM, a special resolution was
passed to authorise the Company to make
purchases on the London Stock Exchange
of up to 10% of its Ordinary shares for
the year under review. The Company may
engage in share buybacks to create value for
shareholders when cash flows permit and
there is no immediate alternative investment
use for the funds. Shareholders will be
requested to renew this authority at the
forthcoming AGM, to be held on 1 May 2024.
During the year, the Company made
purchases of 26,214,554 Ordinary shares
with a nominal value of £136,534.
Directors and their interests
The Directors in service at 31 December
2023 were Matt Shattock, Andrew Rennie,
Ian Bull, Elias Diaz Sese, Edward Jamieson,
Natalia Barsegiyan, Tracy Corrigan, Stella
David and Lynn Fordham. Usman Nabi
served as a Director until 14 August 2023.
The biographical details of the present
Directors are set out on pages 54 and 55
of this Annual Report.
The appointment and replacement of Directors
is governed by the Articles of the Company,
the UK Corporate Governance Code, the
Companies Act 2006 and related legislation.
Subject to the Articles of Association, the
Companies Act 2006 and any directions
given by special resolution, the business of
the Company is managed by the Board, which
may exercise all the powers of the Company.
The interests of Directors and their
immediate families in the shares of the
Company, along with details of options and
awards held by Executive Directors, are
contained in the Directors’ remuneration
report set out on pages 78 to 108. Should
any Ordinary shares be required to satisfy
awards over shares, these may be provided
by the EBT.
There have not been any changes in the
interests of the Directors, including share
options and awards, in the share capital
of the Company between the year end
and 11 March 2024. None of the Directors
have a beneficial interest in the shares
of any subsidiary.
In line with the Companies Act 2006,
the Board has clear procedures for Directors
to formally disclose any actual or potential
conflicts to the whole Board for authorisation
as necessary. All new conflicts are required
to be disclosed as and when they arise.
Substantial shareholdings
As at 11 March 2024, the Company had been notified, in accordance with the FCA’s Disclosure, Guidance and Transparency Rules (DTR 5.3.1R(1)),
of the following holdings of voting rights attaching to the Company’s shares:
1
Number of shares
% of total voting
rights as at
31 December
2023
% of total voting
rights as at
11 March 2024
The Capital Group Companies, Inc 56,966,241 14.37% 14.43%
Liontrust Investment Partners LLP 42,218,302 10.65% 10.70%
Browning West LP
2
45,687,059 11.53% 9.45%
Troy Asset Management Limited 20,441,877 5.16% 5.18%
Southeastern Asset Management 22,962,642 5.79% 5.82%
Abrams Capital Management LP 21,067,912 5.31% 5.34%
Fundsmith LLP 20,891,932 5.27% 5.29%
1. % of total voting rights have been calculated using the current issued share capital of 396,404,901 at 31 December 2023 and 394,742,427 at 11 March 2024.
2. On 26 February 2024, Browning West, LP advised that its interest in the Company’s shares had reduced to 37,312,987 shares.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
There is an annual review of conflicts
disclosed and authorisations given.
The register of Directors’ conflicts is
maintained by the Company Secretary.
Directors’ indemnities
The Directors have the benefit of an
indemnity provision contained in the
Articles of Association and a Deed of
Indemnity entered into on 5 May 2022 (the
‘Indemnities’). The Indemnities are qualifying
third-party Indemnities (as defined by section
234 of the Companies Act 2006), and were
in force during the year ended 31 December
2023 and remain in force and relate to certain
losses and liabilities which the Directors may
incur to third parties in the course of acting
as Directors or employees of the Company.
The Group maintained a Directors’ and
Officers’ liability insurance policy throughout
the financial year, although no cover exists
in the event that Directors or officers
are found to have acted fraudulently or
dishonestly. No indemnity is provided for
the Group’s Auditors.
Employees
The Group employed 1,630 people
as at 31 December 2023 (2022: 1,710).
Employment policies
The Group is committed to the principle
of equal opportunity in employment.
The Group recruits and selects applicants
for employment based solely on a person’s
qualifications and suitability for the position,
whilst bearing in mind equality and diversity.
It is the Group’s policy to recruit the most
capable person available for each position.
The Group recognises the need to treat all
employees honestly and fairly.
The Group is committed to ensuring that its
employees feel respected and valued and are
able to fulfil their potential, and recognises
that the success of the business relies on
their skill and dedication.
The Group gives full and fair consideration
to applications for employment from disabled
persons, with regard to their particular
aptitudes and abilities. Efforts are made
to continue the employment of those who
become disabled during their employment.
For more information on the Company’s
employment practices, please see page 28.
Anti-corruption and
bribery matters
Anti-bribery and corruption
Our Anti-Bribery and Corruption Policy
is shared with all new suppliers and those
undergoing a contract review. If any supplier
were to act in contravention of the standards
of this policy, their contracts with Domino’s
could be terminated immediately. We also
have a separate Due Diligence Policy within
the Anti-Bribery and Corruption Policy
that we use to assess the potential risk of
bribery in a new supplier, and the level of
due diligence required as a result. We have
mandatory training on compliance with our
Anti-Bribery and Corruption Policy.
Speak Up
Our Speak Up Policy encourages colleagues
and third parties to report any genuine
concerns regarding ethical misconduct
and malpractice. It also emphasises the
Company’s zero-tolerance approach to
detrimental treatment against anyone who
does raise concerns. We remain committed
to conducting business in an environment
of openness and transparency with integrity
engrained in everything we do. No reports
relevant to the Speak Up Policy were
received in 2023.
We continue to provide access to an
independent, confidential reporting hotline
available 24 hours, 7 days a week to ensure
that any matters of ethical concern receive
an independent investigation and appropriate
follow-up action.
General information
Annual General Meeting
The notice convening the AGM is contained
in a separate shareholder circular. The 2024
AGM is scheduled to be held at 10:00 am
on 1 May 2024 at etc. venues St. Pauls, 200
Aldersgate, London, EC1A 4HD. Full details
of the meeting venue will be included in the
2024 AGM circular and will be available on
our website https://investors.dominos.co.uk.
Any updates to the position will be
communicated via a regulatory news service
and published on the Company’s website.
Full details of all resolutions to be proposed
are provided in that document. The Directors
consider that all of the resolutions set out in
the Notice of AGM are in the best interests
of the Company and its shareholders as a
whole. The Directors will be voting in favour
of them and unanimously recommend that
shareholders vote in favour of each of them.
Strategic report Governance Financial statements
111
Domino’s Pizza Group plc Annual Report & Accounts 2023
DIRECTORS’ REPORT continued
Significant agreements and
change of control provisions
The Group judges that the only significant
agreements in relation to its business are the
UK & Ireland Master Franchise Agreement,
the Know How Licence pursuant to which
certain of the Group’s companies are granted
the right to franchise stores and operate
commissaries in the territories by Domino’s
Pizza International Franchising Inc (‘DPI’).
The Group does not have agreements
with any Director or employee that would
provide compensation for loss of office or
employment resulting from a takeover except
that provisions of the Group’s employee
share schemes may cause options and awards
granted to employees, including Directors,
to vest on a change of control. The Group’s
banking arrangements do contain change
of control provisions which, if triggered,
could limit future utilisations, require the
repayment of existing utilisations or lead
to a renegotiation of terms.
Articles of Association
No changes to the Company’s Articles of
Association have been made since 5 April
2021 where a special resolution was passed
to allow for online voting at general meetings.
The Company’s Articles of Association may
only be amended by a special resolution of
the shareholders in a general meeting.
Political donations
The Company made no political donations
in the year (2022: £nil).
Key performance indicators (‘KPIs’)
Details of the Group’s KPIs can be found
on pages 22 and 23.
Auditors
PwC has signified its willingness to continue
in office as Auditors to the Company. The
Group is satisfied that PwC is independent
and there are adequate safeguards in place
to protect its objectivity. A resolution to
reappoint PwC as the Company’s Auditors
will be proposed at the 2024 AGM.
Directors’ statement of disclosure
of information to Auditors
Having made the requisite enquiries,
the Directors in office at the date of this
Annual Report and Accounts have each
confirmed that, so far as they are aware,
there is no relevant audit information of
which the Group’s Auditors is unaware and
each Director has taken all the steps they
ought to have taken as a Director to make
themselves aware of any relevant audit
information and to establish that the Group’s
Auditors is aware of that information.
Going concern
The Company’s business activities, together
with the factors likely to affect its future
development, performance and position,
are set out in the strategic report on pages
1 to 53. The financial position of the
Company, its cash flows, liquidity position
and borrowing facilities are described in
the Financial review on pages 40 to 45.
In addition, notes 24 and 25 to the Group
financial statements include the Company’s
objectives, policies and processes for
managing its capital, its financial risk
management objectives, details of its financial
instruments and hedging activities, and its
exposures to credit risk and liquidity risk.
The Directors have a reasonable expectation
that the Company has adequate resources
to continue in operational existence for
the foreseeable future and have therefore
continued to adopt the going concern
basis in preparing the financial statements.
Details of this assessment can be found
in note 2 of the financial statements.
Cautionary statement
This Annual Report and Accounts contains
forward-looking statements. These forward-
looking statements are not guarantees of
future performance; rather, they are based
on current views and assumptions as at the
date of this Annual Report and Accounts and
are made by the Directors in good faith based
on the information available to them at the
time of their approval of this report.
These statements should be treated
with caution due to the inherent risks
and uncertainties underlying any such
forward-looking information. The Group
undertakes no obligation to update these
forward-looking statements.
By order of the Board
Adrian Bushnell
Company Secretary
11 March 2024
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Domino’s Pizza Group plc Annual Report & Accounts 2023
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Statement of Directors’
responsibilities in respect
of the financial statements
The Directors are responsible for preparing
the Annual Report and Accounts and the
financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law, the Directors
have prepared the Group financial
statements in accordance with UK-adopted
international accounting standards and the
Company financial statements in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101
‘Reduced Disclosure Framework’,
and applicable law).
Under company law, Directors must not
approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and Company and of the profit or loss of
the Group for that period. In preparing the
financial statements, the Directors are
required to:
– select suitable accounting policies and
then apply them consistently;
– state whether applicable UK-adopted
international accounting standards have
been followed for the Group financial
statements and United Kingdom Accounting
Standards, comprising FRS 101, have
been followed for the Company financial
statements, subject to any material
departures disclosed and explained in
the financial statements;
– make judgements and accounting estimates
that are reasonable and prudent; and
– prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the Group
and Company will continue in business.
The Directors are responsible for
safeguarding the assets of the Group and
Company, and hence for taking reasonable
steps for the prevention and detection
of fraud and other irregularities.
The Directors are also responsible for
keeping adequate accounting records
that are sufficient to show and explain the
Group’s and Company’s transactions, and
disclose with reasonable accuracy at any
time the financial position of the Group and
Company, and enable them to ensure that
the financial statements and the Directors’
remuneration report comply with the
Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual
Report and Accounts, taken as a whole,
is fair, balanced and understandable, and
provides the information necessary for
shareholders to assess the Group’s and
Company’s position and performance,
business model and strategy.
Each of the Directors, whose names and
functions are listed on page 116 confirm
that, to the best of their knowledge:
– the Group financial statements, which
have been prepared in accordance with
UK-adopted international accounting
standards, give a true and fair view of the
assets, liabilities, financial position and
profit of the Group;
– the Company financial statements, which
have been prepared in accordance with
United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair
view of the assets, liabilities and financial
position of the Company; and
– the Strategic report includes a fair review
of the development and performance of
the business and the position of the Group
and Company, together with a description
of the principal risks and uncertainties that
it faces.
In the case of each Director in office at the
date the Directors’ Report is approved:
– so far as the Director is aware, there is
no relevant audit information of which
the Group’s and Company’s auditors are
unaware; and
– they have taken all the steps that they
ought to have taken as a Director in order
to make themselves aware of any relevant
audit information and to establish that the
Group’s and Company’s auditors are aware
of that information.
Signed on behalf of the Board
Andrew Rennie
Chief Executive Officer
11 March 2024
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
INDEPENDENT AUDITORS’ REPORT TO
THE MEMBERS OF DOMINO’S PIZZA GROUP PLC
Report on the audit of
the financial statements
Opinion
In our opinion:
– Domino’s Pizza Group plc’s group financial
statements and company financial
statements (the “financial statements”)
give a true and fair view of the state of the
group’s and of the company’s affairs as at
31 December 2023 and of the group’s
profit and the group’s cash flows for the
53 week period then ended;
– the group financial statements have been
properly prepared in accordance with
UK-adopted international accounting
standards as applied in accordance with
the provisions of the Companies Act 2006;
– the company financial statements have
been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, including FRS 101
“Reduced Disclosure Framework”, and
applicable law); and
– the financial statements have been
prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements,
included within the Annual Report and
Accounts (the “Annual Report”), which
comprise: the Group and Company balance
sheets as at 31 December 2023; the Group
income statement, the Group statement of
comprehensive income, the Group cash flow
statement and the Group and Company
statements of changes in equity for the period
then ended; and the notes to the financial
statements, which include a description of
the significant accounting policies.
Our opinion is consistent with our reporting
to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK)
(“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities for
the audit of the financial statements section
of our report. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in
accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, which includes the
FRC’s Ethical Standard, as applicable to listed
public interest entities, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we
declare that non-audit services prohibited by
the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 5,
we have provided no non-audit services to
the company or its controlled undertakings
in the period under audit.
Our audit approach
Context
There were no significant changes to the
Group’s underlying operations during the
year, except for the disposal of the Group’s
investment in Daytona JV Limited (‘Daytona’),
which generated a profit on disposal of
£40.6m. The business has been impacted
in the current year by the high inflationary
environment and the associated impact on
consumer spending but continues to be
cash generative. Application of the Group’s
capital allocation framework has resulted in
distributions to shareholders in the form of
dividends and share buybacks increasing the
overall gearing of the Group. There are no
changes to our key audit matters this year.
Overview
Audit scope
– Audit of the complete financial information
of two components, and specified
procedures over five components that form
the operations of the Group. This work was
conducted by the PwC Group team.
– In addition to the work performed over the
components outlined above, the PwC Group
team also performed audit procedures for
transactions and balances that arose as part
of the Group’s consolidation process.
This included the profit on disposal of
the Daytona investment, the investments
in joint ventures and associates,
the impairment review of goodwill and
intangible assets, IFRS 16 accounting,
taxation and the Group’s elimination and
consolidation entries.
– Audit coverage from full scope audits was
obtained over 79% of Group revenue.
Key audit matters
– Risk of impairment of goodwill of the
UK corporate stores CGU (group)
– Risk of impairment of intercompany
receivables (company)
Materiality
– Overall group materiality: £5.1m
(2022: £4.9m) based on 5% of underlying
profit before tax.
– Overall company materiality: £9.2m
(2022: £4.6m) based on 1% of total assets.
– Performance materiality: £3.8m
(2022: £3.7m) (group) and £6.9m
(2022: £3.5m) (company).
The scope of our audit
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in
the auditors’ professional judgement, were of
most significance in the audit of the financial
statements of the current period and include
the most significant assessed risks of material
misstatement (whether or not due to fraud)
identified by the auditors, including those
which had the greatest effect on: the overall
audit strategy; the allocation of resources
in the audit; and directing the efforts of the
engagement team. These matters, and any
comments we make on the results of our
procedures thereon, were addressed in
the context of our audit of the financial
statements as a whole, and in forming our
opinion thereon, and we do not provide
a separate opinion on these matters.
This is not a complete list of all risks
identified by our audit.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
The key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Risk of impairment of goodwill of the UK corporate stores CGU (group)
Refer to the Accounting
policies set out in note 2
and note 13 of the Group
financial statements.
Goodwill relating to the
UK corporate store estate
has a carrying value of £11.7m
as at 31 December 2023. In line
with IAS 36 ‘Impairment of
Assets’ management is required
to assess the goodwill balance
annually for impairment.
Management prepared a value
in use discounted cash flow
model to assess the risk of
impairment and concluded
that no impairment is required.
The key assumptions are the
discount rate, long term
growth rate, revenue growth,
food and labour costs.
We focused on this area,
as the estimation of future
discounted cash flows is
inherently subjective and
involves judgement, including
the assessment of the
potential impact of climate
change. As a result, this
assessment is also susceptible
to management bias.
As part of our audit of management’s impairment assessment and underlying discounted cash flow model:
– we assessed the control procedures that relate to the preparation, review and approval of the
impairment assessment;
– we challenged management on their determination of cash generating units (CGUs) and concurred that
this is the level at which goodwill is monitored;
– we obtained the impairment analysis prepared by management and tested the technical and arithmetic
accuracy to ensure that it had been prepared in line with the guidance provided in IAS 36;
– we used internal valuation experts to determine whether management’s discount rate was appropriate
and we concluded it was within an acceptable range;
– we used internal valuation experts to determine if the long-term growth rate was appropriate and
concluded this was reasonable;
– we challenged the basis for the short-term forecasts used in the model. This included, but was not limited to:
– agreeing that corporate store forecasts have been accurately extracted from the Board approved plans;
– validating the revenue growth rates with reference to the historical growth rate of corporate stores,
and third party evidence of expected growth in the fast food restaurant industry;
– challenging management on the food and labour cost inflation assumption, which we validated against
external data sources;
– assessing the food inflation assumption that these increased costs would be passed through via menu
pricing by assessing historical outcomes;
– agreeing central cost allocations to prior year actuals and understanding the rationale for any changes;
– challenging management on capital expenditure assumptions over the next 5 years and into perpetuity;
– reviewing management’s historical accuracy of forecasting; and
– obtaining management’s paper on the assessment of climate change risk impacting the corporate
stores and the potential cost impact. Management’s paper identified potential costs that have not
been factored into the model that represent their view of the worst case scenario impact to costs.
Management demonstrated that these would have an immaterial impact to the headroom if they
were included. We obtained supporting evidence on the estimation of these costs and concluded
that inclusion of these would not significantly alter the cash flows. We validated the sensitivity of
the model, by including these costs and confirming they did not have a material impact to headroom.
We challenged the completeness of these costs from our wider knowledge of the operations and
expectations for a business in this industry, confirming no other significant areas of exposure.
– we reperformed management’s sensitivities to verify the disclosure is accurate and we performed
additional sensitivity analysis, including reducing cash inflows, to understand the impact that reasonably
possible changes could have;
– we compared the recoverable amount to other recent transactions to assess the extent to which any
contradictory evidence existed;
– we assessed the adequacy of the disclosures made in the financial statements.
After our challenges were addressed we concurred with management’s assessment that no impairment
was required. We ensured that appropriate disclosures on the key assumptions, and their sensitivities,
have been provided as is required under IAS 36.
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
INDEPENDENT AUDITORS’ REPORT TO
THE MEMBERS OF DOMINO’S PIZZA GROUP PLC continued
Key audit matter How our audit addressed the key audit matter
Risk of impairment of intercompany receivables (company)
Refer to notes 2 and 4 of the
Company financial statements.
In the period ended
27 December 2020 a £1,100m
dividend was received by
the Company from its direct
subsidiary, DPG Holdings
Limited with a corresponding
increase to the loan receivable
balance. The receivable
balance continues to be repaid
gradually by the subsidiary
and remains the largest single
balance in the Company’s
accounts and so has been the
principal focus of our audit
effort in the current year.
Any potential impairment
expected credit loss on the loan
receivable could be material to
the Company. This assessment
is based on estimated future
cash flows which are uncertain
and are susceptible to
management bias.
In order to address the identified risk;
– we obtained management’s expected credit loss
assessment which considered the accounting for the
loan, the market value of the Group and the forecast
cash flows (based on the Board approved plan);
– we compared the cash flows in the paper to those
audited as part of the going concern and viability
assessment and confirmed they were aligned;
– we audited the recoverability of the balance under
IFRS 9 impairment requirements for inter-company
loans. We looked at the recovery strategy indicated
in management’s paper confirming that the Company
would fully recover the outstanding balance of the loan.
We have considered the strategies available to the
Company to receive payment and agree there is no
impairment loss to recognise;
– we assessed the adequacy of the disclosures made
in the financial statements.
We found no exceptions as a result of our testing and the
balances recognised are considered materially appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure
that we performed enough work to be able to
give an opinion on the financial statements as
a whole, taking into account the structure of
the group and the company, the accounting
processes and controls, and the industry in
which they operate.
The Group is structured according to the
legal entity structure which is broadly
reflective of the nature of business activity,
for example franchisor activities, corporate
stores, property and centralised functions.
In establishing the overall approach to the
Group audit, we determined the type of
work that needed to be performed for each
reporting component. We determined that
there was one financially significant
component: Domino’s Pizza UK & Ireland
Limited. Accordingly, we determined that this
component, as well as Domino’s Pizza Group
plc parent company, required a full audit of
their complete financial information in order
to ensure that sufficient appropriate audit
evidence was obtained. We also identified
certain large or material balances in other
components where specified audit
procedures were performed. These included:
revenues recorded in Sheermans Limited,
revenues and expenses relating to the
National Advertising Fund and other balance
sheet line items in DPG Holdings Limited,
DP Pizza Limited, DP Realty Limited and
National Advertising Fund.
All audit work was performed by the
Group audit team. The Group consolidation,
financial statement disclosures and a number
of centralised functions were audited by the
Group audit team. These included, but were
not limited to, central procedures over
corporate taxation, IFRS 16 accounting,
investment disposals, goodwill and intangible
asset impairment assessments, and the
additions to intangible software assets.
We also performed Group level analytical
procedures on all of the remaining out of
scope reporting components to identify
whether any further audit evidence was
needed, which resulted in no extra testing.
Our audit work resulted in coverage over
95% of Group revenues.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
The impact of climate risk on our audit
Climate change risk is expected to have an
impact on the food industry. As explained
in the Sustainability section of the Strategic
report, the Group is mindful of its impact
on the environment and focussed on ways
to reduce climate related impacts as they
continue to develop their plans towards their
Net Zero pathway to 2050. In planning and
executing our audit we considered the
Group’s climate risk assessment process.
The key financial statement line items and
estimates which are more likely to be
materially impacted by climate risks are those
associated with future cash flows, given the
more notable impacts of climate change on
the business are expected to arise in the
medium to long term. The Board monitors
the impact of climate change risk and
opportunities on the Group’s strategy and
business model. It considers the impact over
the short term (1-3 years), medium term
(4–10 years) and long term (10 years plus).
This includes the impairment assessment of
goodwill for Corporate Stores and our related
key audit matter further explains how we
assessed the impact of climate change.
Whilst the Group is targeting net zero carbon
emissions by 2050, they are continuing to
work on their pathway towards this and set
targets to reduce their scope 1, scope 2 and
scope 3 emissions. The Group continues to
undertake scenario analysis in the current
period under three different possible climate
scenarios, being temperature rises above
pre-industrial levels of 1.5°C, 2°C and 3°C.
We discussed with management and the
Audit Committee that the estimated financial
impacts of climate change will need to be
frequently reassessed. The current scenario
analysis is qualitative in nature and our
expectation is that the climate change
disclosures will continue to evolve as a
greater understanding of the actual and
potential financial impacts on the Group’s
future operations are obtained. Our
procedures did not identify any material
impact as a result of climate risk on the
Group’s and Company’s financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain
quantitative thresholds for materiality. These, together with qualitative considerations, helped
us to determine the scope of our audit and the nature, timing and extent of our audit procedures
on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements
as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £5.1m (2022: £4.9m). £9.2m (2022: £4.6m).
How we determined it 5% of underlying profit before tax 1% of total assets
Rationale for benchmark
applied
Underlying profit before tax is a
key measure used by stakeholders
in assessing the performance of the
Group, and is a generally accepted
auditing benchmark.
Total assets is an appropriate
benchmark for a non-trading
company.
For each component in the scope of our group
audit, we allocated a materiality that is less
than our overall group materiality. The range
of materiality allocated across components
was between £0.8m and £4.5m. Certain
components were audited to a local statutory
audit materiality that was also less than our
overall group materiality.
We use performance materiality to reduce to
an appropriately low level the probability that
the aggregate of uncorrected and undetected
misstatements exceeds overall materiality.
Specifically, we use performance materiality
in determining the scope of our audit and the
nature and extent of our testing of account
balances, classes of transactions and
disclosures, for example in determining sample
sizes. Our performance materiality was 75%
(2022: 75%) of overall materiality, amounting
to £3.8m (2022: £3.7m) for the group
financial statements and £6.9m (2022: £3.5m)
for the company financial statements.
As a full scope component for the group
financial statements, certain balances and
disclosures in the Company financial
statements have been audited to the lower
group allocated overall materiality of £4.5m.
The comparative company overall materiality
of £4.6m reflects the group allocated
materiality in the prior period.
In determining the performance materiality,
we considered a number of factors –
the history of misstatements, risk assessment
and aggregation risk and the effectiveness of
controls – and concluded that an amount at the
upper end of our normal range was appropriate.
We agreed with the Audit Committee that
we would report to them misstatements
identified during our audit above £0.25m
(group audit) (2022: £0.25) and £0.46m
(company audit) (2022: £0.23m) as well
as misstatements below those amounts
that, in our view, warranted reporting for
qualitative reasons.
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
INDEPENDENT AUDITORS’ REPORT TO
THE MEMBERS OF DOMINO’S PIZZA GROUP PLC continued
Conclusions relating to
going concern
Our evaluation of the directors’ assessment
of the group’s and the company’s ability to
continue to adopt the going concern basis
of accounting included:
– We obtained management’s paper that
supports the Board’s assessment and
conclusions with respect to the disclosures
provided around going concern;
– We discussed with management the
assumptions applied in the going concern
assessment so we could understand and
challenge the rationale for those assumptions,
using our knowledge of the business;
– We reviewed post year end trading results
to February 2024, and compared to
management’s budget, and considered
the impact of these actual results on the
future forecasts;
– We reviewed management’s sensitivity
scenarios including their severe but
plausible downside. This includes
potential mitigating actions available to
the Group that are achievable and within
management’s control. We have assessed
additional downside sensitivities and
considered the impact on covenants and
liquidity headroom;
– We confirmed the levels of liquidity
available to the Group and assessed this
under the different scenarios and the
associated covenant tests applicable; and
– We have assessed the disclosures and
consider them appropriate.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or conditions
that, individually or collectively, may cast
significant doubt on the group’s and the
company’s ability to continue as a going
concern for a period of at least twelve
months from when the financial statements
are authorised for issue.
In auditing the financial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate.
However, because not all future events
or conditions can be predicted, this
conclusion is not a guarantee as to the
group’s and the company’s ability to continue
as a going concern.
In relation to the directors’ reporting on
how they have applied the UK Corporate
Governance Code, we have nothing material
to add or draw attention to in relation to
the directors’ statement in the financial
statements about whether the directors
considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of
the directors with respect to going concern are
described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the
information in the Annual Report other than
the financial statements and our auditors’
report thereon. The directors are responsible
for the other information. Our opinion on the
financial statements does not cover the other
information and, accordingly, we do not
express an audit opinion or, except to the
extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial
statements, our responsibility is to read the
other information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements
or our knowledge obtained in the audit,
or otherwise appears to be materially
misstated. If we identify an apparent material
inconsistency or material misstatement,
we are required to perform procedures
to conclude whether there is a material
misstatement of the financial statements
or a material misstatement of the other
information. 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 based on
these responsibilities.
With respect to the Strategic report and
Directors’ report, we also considered
whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course
of the audit, the Companies Act 2006
requires us also to report certain opinions
and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken
in the course of the audit, the information
given in the Strategic report and Directors’
report for the period ended 31 December
2023 is consistent with the financial
statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding
of the group and company and their
environment obtained in the course of the
audit, we did not identify any material
misstatements in the Strategic report and
Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the
directors’ statements in relation to going
concern, longer-term viability and that part of
the corporate governance statement relating
to the company’s compliance with the
provisions of the UK Corporate Governance
Code specified for our review. Our additional
responsibilities with respect to the corporate
governance statement as other information
are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of
our audit, we have concluded that each of
the following elements of the corporate
governance statement is materially consistent
with the financial statements and our
knowledge obtained during the audit,
and we have nothing material to add or
draw attention to in relation to:
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Domino’s Pizza Group plc Annual Report & Accounts 2023
– The directors’ confirmation that they have
carried out a robust assessment of the
emerging and principal risks;
– The disclosures in the Annual Report that
describe those principal risks, what
procedures are in place to identify
emerging risks and an explanation of how
these are being managed or mitigated;
– The directors’ statement in the financial
statements about whether they considered
it appropriate to adopt the going concern
basis of accounting in preparing them,
and their identification of any material
uncertainties to the group’s and company’s
ability to continue to do so over a period
of at least twelve months from the date
of approval of the financial statements;
– The directors’ explanation as to their
assessment of the group’s and company’s
prospects, the period this assessment covers
and why the period is appropriate; and
– The directors’ statement as to whether
they have a reasonable expectation that
the company will be able to continue in
operation and meet its liabilities as they
fall due over the period of its assessment,
including any related disclosures drawing
attention to any necessary qualifications
or assumptions.
Our review of the directors’ statement
regarding the longer-term viability of the
group and company was substantially less
in scope than an audit and only consisted
of making inquiries and considering the
directors’ process supporting their statement;
checking that the statement is in alignment
with the relevant provisions of the UK
Corporate Governance Code; and considering
whether the statement is consistent with the
financial statements and our knowledge and
understanding of the group and company
and their environment obtained in the course
of the audit.
In addition, based on the work undertaken
as part of our audit, we have concluded
that each of the following elements of the
corporate governance statement is materially
consistent with the financial statements and
our knowledge obtained during the audit:
– The directors’ statement that they consider
the Annual Report, taken as a whole, is fair,
balanced and understandable, and provides
the information necessary for the members
to assess the group’s and company’s
position, performance, business model
and strategy;
– The section of the Annual Report that
describes the review of effectiveness of
risk management and internal control
systems; and
– The section of the Annual Report describing
the work of the Audit Committee.
We have nothing to report in respect of our
responsibility to report when the directors’
statement relating to the company’s
compliance with the Code does not properly
disclose a departure from a relevant provision
of the Code specified under the Listing Rules
for review by the auditors.
Responsibilities for the financial
statements and the audit
Responsibilities of the directors
for the financial statements
As explained more fully in the Statement
of Directors’ responsibilities in respect of
the financial statements, the directors are
responsible for the preparation of the
financial statements in accordance with
the applicable framework and for being
satisfied that they give a true and fair view.
The directors are also responsible for such
internal control as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
group’s and the company’s ability to continue
as a going concern, disclosing, as applicable,
matters related to going concern and using
the going concern basis of accounting unless
the directors either intend to liquidate the
group or the company or to cease operations,
or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditors’ 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 ISAs
(UK) 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 these financial statements.
Irregularities, including fraud, are instances
of non-compliance with laws and regulations.
We design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent
to which our procedures are capable of
detecting irregularities, including fraud,
is detailed below.
Based on our understanding of the group
and industry, we identified that the principal
risks of non-compliance with laws and
regulations related to food safety regulations,
and we considered the extent to which
non-compliance might have a material
effect on the financial statements. We also
considered those laws and regulations that
have a direct impact on the financial
statements such as the Listing Rules, the
Companies Act 2006 and tax legislation.
We evaluated management’s incentives and
opportunities for fraudulent manipulation of
the financial statements (including the risk of
override of controls), and determined that the
principal risks were related to inappropriate
journal entries, either in the underlying books
and records or as part of the consolidation
process, and management bias in accounting
estimates. Audit procedures performed by
the engagement team included:
Strategic report Governance Financial statements
119
Domino’s Pizza Group plc Annual Report & Accounts 2023
INDEPENDENT AUDITORS’ REPORT TO
THE MEMBERS OF DOMINO’S PIZZA GROUP PLC continued
– Discussions with the directors, internal
audit and the Group’s legal team, including
consideration of known or suspected
instances of non-compliance with laws
and regulations and fraud;
– Challenging assumptions and judgements
made by management in its significant
accounting estimates that involved making
assumptions and considering future events
that are inherently uncertain. We focused
on the risk of impairment of goodwill of the
corporate stores CGU (see related key audit
matter above);
– We also specifically assessed the provisions
held in respect of reversionary shares,
valuation of intercompany receivable in the
Company, the valuation of the Shorecal
investment, the valuation assessment of
goodwill for UK corporate stores, the
accounting for costs incurred on significant
IT projects and recoverability of the group’s
investment in the associate Victa DP
Limited. As part of these assessments we
considered the existence of management
bias and performed look back assessments
of the accuracy of prior year estimates;
– Consideration of recent correspondence
with the tax authorities;
– Identifying and testing journal entries,
in particular any journal entries posted
with unusual account combinations; and
– Testing all material consolidation
adjustments to ensure these were
appropriate in nature and magnitude.
There are inherent limitations in the audit
procedures described above. We are less
likely to become aware of instances of
non-compliance with laws and regulations
that are not closely related to events and
transactions reflected in the financial
statements. Also, the risk of not detecting
a material misstatement due to fraud is
higher than the risk of not detecting one
resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing
complete populations of certain transactions
and balances, possibly using data auditing
techniques. However, it typically involves
selecting a limited number of items for
testing, rather than testing complete
populations. We will often seek to target
particular items for testing based on their
size or risk characteristics. In other cases,
we will use audit sampling to enable us
to draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities
for the audit of the financial statements
is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been
prepared for and only for the company’s
members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and
for no other purpose. We do not, in giving
these opinions, accept or assume responsibility
for any other purpose or to any other person
to whom this report is shown or into whose
hands it may come save where expressly
agreed by our prior consent in writing.
Other required reporting
Companies Act 2006
exception reporting
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
– we have not obtained all the information
and explanations we require for our
audit; or
– adequate accounting records have not been
kept by the company, or returns adequate
for our audit have not been received from
branches not visited by us; or
– certain disclosures of directors’ remuneration
specified by law are not made; or
– the company financial statements and the
part of the Directors’ remuneration report
to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from
this responsibility.
Appointment
Following the recommendation of the Audit
Committee, we were appointed by the
members on 18 April 2019 to audit the financial
statements for the year ended 29 December
2019 and subsequent financial periods.
The period of total uninterrupted engagement
is five years, covering the years ended
29 December 2019 to 31 December 2023.
Other matter
In due course, as required by the Financial
Conduct Authority Disclosure Guidance
and Transparency Rule 4.1.14R, these
financial statements will form part of the
ESEF-prepared annual financial report filed
on the National Storage Mechanism of the
Financial Conduct Authority in accordance
with the ESEF Regulatory Technical Standard
(‘ESEF RTS’). This auditors’ report provides no
assurance over whether the annual financial
report will be prepared using the single
electronic format specified in the ESEF RTS.
Sarah Phillips
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
Birmingham
11 March 2024
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Domino’s Pizza Group plc Annual Report & Accounts 2023
GROUP INCOME STATEMENT
53 WEEKS ENDED 31 DECEMBER 2023
53 weeks ended 31 December 2023 £m | 52 weeks ended 25 December 2022 £m | ||||||
| Non- | Non- | ||||||
Note | Underlying | underlying* | Total | Underlying | underlying* | Total | |
Revenue | 3 | ||||||
Cost of sales | ( | ( | ( | ( | |||
Gross profit | |||||||
Distribution costs | ( | ( | ( | ( | |||
Administrative costs | ( | ( | ( | ( | |||
Share of post-tax profit of associates and joint ventures | 17 | ||||||
Other income | |||||||
Profit before interest and taxation | 4 | ||||||
Finance income | 8 | ||||||
Finance costs | 9 | ( | ( | ( | ( | ||
Profit before taxation | |||||||
Taxation | 10 | ( | ( | ( | ( | ( | |
Profit for the period | |||||||
| Earnings per share | |||||||
– Basic (pence) | 11 | ||||||
– Diluted (pence) | 11 |
* Non-underlying items are disclosed in note 6.
The notes on pages 128 to 176 are an integral part of these consolidated financial statements.
Strategic report Governance Financial statements
121
Domino’s Pizza Group plc Annual Report & Accounts 2023
GROUP STATEMENT OF COMPREHENSIVE INCOME
53 WEEKS ENDED 31 DECEMBER 2023
| 53 weeks ended | 52 weeks ended | ||
| 31 December 2023 | 25 December 2022 | ||
| Note | £m | £m | |
Profit for the period | |||
| Other comprehensive (expense)/income: | |||
| Items that may be subsequently reclassified to profit or loss: | |||
– Exchange (loss)/gain on retranslation of foreign operations | ( | ||
– Transferred to income statement on disposal | 27 | ( | |
Other comprehensive (expense)/income for the period, net of tax | ( | ||
Total comprehensive income for the period |
The notes on pages 128 to 176 are an integral part of these consolidated financial statements.
122
Domino’s Pizza Group plc Annual Report & Accounts 2023
GROUP BALANCE SHEET
AT 31 DECEMBER 2023
| At | At | ||
| 31 December 2023 | 25 December 2022 | ||
| Note | £m | £m | |
| Non-current assets | |||
Intangible assets | 13 | ||
Property, plant and equipment | 14 | ||
Right-of-use assets | 15 | ||
Lease receivables | 15 | ||
Trade and other receivables | 16 | ||
Investments | 25 | ||
Investments in associates and joint ventures | 17 | ||
| Current assets | |||
Lease receivables | 15 | ||
Inventories | 18 | ||
Trade and other receivables | 16 | ||
Deferred consideration receivable | 22 | ||
Current tax assets | |||
Cash and cash equivalents | 19 | ||
Assets held for sale | 28 | ||
Total assets | |||
| Current liabilities | |||
Lease liabilities | 15 | ( | ( |
Trade and other payables | 20 | ( | ( |
Current tax liabilities | ( | ||
Provisions | 23 | ( | ( |
Financial liabilities – share buyback obligation | 21 | ( | ( |
( | ( | ||
| Non-current liabilities | |||
Lease liabilities | 15 | ( | ( |
Trade and other payables | 20 | ( | ( |
Financial liabilities | 21 | ( | ( |
Deferred tax liabilities | 10 | ( | ( |
Provisions | 23 | ( | ( |
( | ( | ||
Total liabilities | ( | ( | |
Net liabilities | ( | ( |
Strategic report Governance Financial statements
123
Domino’s Pizza Group plc Annual Report & Accounts 2023
GROUP BALANCE SHEET
AT 31 DECEMBER 2023 continued
| At | At | ||
| 31 December 2023 | 25 December 2022 | ||
| Note | £m | £m | |
| Shareholders’ equity | |||
Called up share capital | 26 | ||
Share premium account | |||
Capital redemption reserve | |||
Capital reserve – own shares | ( | ( | |
Currency translation reserve | ( | ||
Accumulated losses | ( | ( | |
Total equity | ( | ( |
Registered number: 03853545
124
Domino’s Pizza Group plc Annual Report & Accounts 2023
GROUP STATEMENT OF CHANGES IN EQUITY
53 WEEKS ENDED 31 DECEMBER 2023
| Share | Capital | Currency | Total | ||||
| Share | premium | redemption | Capital reserve | translation | Accumulated | shareholders’ | |
| capital | account | reserve | – own shares | reserve | losses | equity | |
| £m | £m | £m | £m | £m | £m | £m | |
At 26 December 2021 | ( | ( | ( | ( | |||
Profit for the period | |||||||
Other comprehensive income – exchange differences | |||||||
Total comprehensive income for the period | |||||||
Proceeds from share issues | |||||||
| Impairment of share issues | ( | ||||||
Share buybacks | ( | ( | ( | ( | |||
Share buyback obligations outstanding | ( | ( | |||||
Share options and LTIP charge | |||||||
Tax on employee share options | ( | ( | |||||
Equity dividends paid | ( | ( | |||||
At 25 December 2022 | ( | ( | ( | ||||
Profit for the period | |||||||
Other comprehensive expense – exchange differences | ( | ( | |||||
Transferred to income statement on disposal | ( | ( | |||||
Total comprehensive income for the period | ( | ||||||
Proceeds from share issues | |||||||
| Impairment of share issues | ( | ||||||
Share buybacks | ( | ( | ( | ( | |||
Share buyback obligations satisfied | |||||||
Share buyback obligations outstanding | ( | ( | |||||
Share options and LTIP charge | |||||||
Tax on employee share options | |||||||
Equity dividends paid | ( | ( | |||||
At 31 December 2023 | ( | ( | ( | ( |
1
1
1 Impairment of share issues represents the difference between share allotments made pursuant to the Sharesave schemes and the Long Term Incentive Plan
(note 29), and the original cost at which the shares were acquired as treasury shares into Capital reserve – own shares.
The notes on pages 128 to 176 are an integral part of these consolidated financial statements.
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GROUP CASH FLOW STATEMENT
53 WEEKS ENDED 31 DECEMBER 2023
| 53 weeks ended | 52 weeks ended | ||
| 31 December 2023 | 25 December 2022* | ||
| Note | £m | £m | |
| Cash flows from operating activities | |||
Profit before interest and taxation | 3 | ||
Amortisation and depreciation | 4 | ||
Impairment | 4 | ||
Profit on disposal of PPE | 14 | ( | |
Share of post-tax profits of associates and joint ventures | 17 | ( | ( |
Profit on disposal of subsidiary | 27 | ( | |
Profit on disposal of associate investment | 27 | ( | |
Net gain on financial instruments at fair value through profit or loss | ( | ||
Decrease in provisions | ( | ( | |
Share option and LTIP charge | 29 | ||
Decrease/(increase) in inventories | ( | ||
Increase in receivables | ( | ( | |
Increase/(decrease) in payables | ( | ||
Cash generated from operations | |||
Corporation tax paid | ( | ( | |
Net cash generated by operating activities | |||
| Cash flows from investing activities | |||
Purchase of property, plant and equipment | ( | ( | |
Purchase of intangible assets | ( | ( | |
Proceeds from sale of PPE | |||
Net consideration received on disposal of subsidiaries | |||
Consideration received on disposal of associate investment | 27 | ||
Consideration received on disposal of joint ventures | |||
Receipt from other financial assets | |||
Receipt of principal element on lease receivables | 15 | ||
Receipt of interest element on lease receivables | 15 | ||
Interest received | |||
Other | 30 | ||
Net cash generated by investing activities | |||
Cash inflow before financing | |||
| Cash flows from financing activities | |||
Interest paid | ( | ( | |
Share purchases | 30 | ( | ( |
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| 53 weeks ended | 52 weeks ended | ||
| 31 December 2023 | 25 December 2022* | ||
| Note | £m | £m | |
Consideration received on exercise of share options – employee benefit trust | |||
New bank loans and facilities draw down | |||
Facility arrangement fees | ( | ||
Repayment of borrowings | ( | ( | |
Repayment of principal element on lease liabilities | 15 | ( | ( |
Repayment of interest element on lease liabilities | 15 | ( | ( |
Equity dividends paid | 12 | ( | ( |
Net cash used by financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at beginning of period | |||
Foreign exchange (loss)/gain on cash and cash equivalents | |||
Cash and cash equivalents at end of period |
The cash flow statement has been prepared on a consolidated basis. The notes on pages 128 to 176 are an integral part of these consolidated
financial statements.
* For the 52 weeks ended 25 December 2022, the disclosure of the repayment on lease liabilities and receipts on lease receivables has been re-presented
to reflect separately the principal and interest elements.
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023
128
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Strategic report Governance Financial statements
129
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
2. Accountingpoliciescontinued
130
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Strategic report Governance Financial statements
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
2. Accountingpoliciescontinued
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
2. Accountingpoliciescontinued
134
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Strategic report Governance Financial statements
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
2. Accountingpoliciescontinued
136
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
2. Accountingpoliciescontinued
138
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| Effective | |
| for periods | |
| beginning | |
| on or after: | |
| International Accounting Standards (‘IAS’) | |
IFRS 17 Insurance Contracts | 1 January 2023 |
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 | 1 January 2023 |
Definition of Accounting Estimates – Amendments to IAS 8 | 1 January 2023 |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 | 1 January 2023 |
OECD Pillar Two Rules | 1 January 2023 |
Classification of Liabilities as Current or Non-current – Amendments to IAS 1 | 1 January 2024 |
Non-current Liabilities with Covenants – Amendments to IAS 1 | 1 January 2024 |
Lease Liability in a Sale and Leaseback – Amendments to IFRS 16 | 1 January 2024 |
Supplier finance arrangements – Amendments to IAS 7 and IFRS 7 | 1 January 2024 |
Strategic report Governance Financial statements
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Current tax assets | 3.5 | 1.7 |
Cash and cash equivalents | 52.1 | 30.4 |
Unallocated assets | 55.6 | 32.1 |
Current tax liabilities | 2.8 | – |
Deferred tax liabilities | 7.0 | 3.4 |
Debt facilities | 284.9 | 283.7 |
Unallocated liabilities | 294.7 | 287.1 |
At 31 December 2023 | At 25 December 2022 | |||||
| UK & Ireland | International | Total | UK & Ireland | International | Total | |
| £m | £m | £m | £m | £m | £m | |
| Segment assets | ||||||
Segment current assets | 79.1 | – | 79.1 | 82.2 | 32.9 | 115.1 |
Segment non-current assets | 342.3 | – | 342.3 | 336.8 | – | 336.8 |
Investment in associates and joint ventures | 25.2 | – | 25.2 | 25.4 | – | 25.4 |
Investments | 10.3 | – | 10.3 | 11.3 | – | 11.3 |
Unallocated assets | 55.6 | 32.1 | ||||
Total assets | 512.5 | 520.7 | ||||
| Segment liabilities | ||||||
Liabilities | 351.8 | – | 351.8 | 346.4 | – | 346.4 |
Unallocated liabilities | 294.7 | 287.1 | ||||
Total liabilities | 646.5 | 633.5 |
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| Total | Non- | Total | |||
| UK & Ireland | International | underlying | underlying | reported | |
| £m | £m | £m | £m | £m | |
| Revenue | |||||
Sales to external customers | 679.8 | – | 679.8 | – | 679.8 |
Segment revenue | 679.8 | – | 679.8 | – | 679.8 |
| Results | |||||
Underlying result before associates and joint ventures | 111.9 | – | 111.9 | – | 111.9 |
Share of profit of associates and joint ventures | 2.0 | – | 2.0 | – | 2.0 |
Other income | 2.3 | – | 2.3 | 40.6 | 42.9 |
Profit before interest and taxation | 116.2 | – | 116.2 | 40.6 | 156.8 |
Net finance costs | (14.5) | – | (14.5) | – | (14.5) |
Profit before taxation | 101.7 | – | 101.7 | 40.6 | 142.3 |
Taxation | (26.0) | – | (26.0) | (1.3) | (27.3) |
Profit for the period | 75.7 | – | 75.7 | 39.3 | 115.0 |
Effective tax rate | 25.6% | – | 25.6% | 19.2% | |
| Other segment information | |||||
– Depreciation | 11.2 | – | 11.2 | – | 11.2 |
– Amortisation | 10.7 | – | 10.7 | – | 10.7 |
Total depreciation and amortisation | 21.9 | – | 21.9 | – | 21.9 |
EBITDA | 138.1 | – | 138.1 | 40.6 | 178.7 |
Underlying EBITDA | 138.1 | – | 138.1 | – | 138.1 |
Capital expenditure | 20.8 | – | 20.8 | – | 20.8 |
Share-based payment charge | 3.8 | – | 3.8 | – | 3.8 |
| Revenue disclosures | |||||
Royalties, franchise fees and change of hands fees | 83.4 | – | 83.4 | – | 83.4 |
Sales to franchisees | 479.1 | – | 479.1 | – | 479.1 |
Corporate store income | 33.1 | – | 33.1 | – | 33.1 |
Property income on leasehold and freehold property | 2.2 | – | 2.2 | – | 2.2 |
National Advertising and eCommerce income | 82.0 | – | 82.0 | – | 82.0 |
Total segment revenue | 679.8 | – | 679.8 | – | 679.8 |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
3. Segmentalinformationcontinued
| Total | Non- | Total | |||
| UK & Ireland | International | underlying | underlying | reported | |
| £m | £m | £m | £m | £m | |
| Revenue | |||||
Sales to external customers | 600.3 | – | 600.3 | – | 600.3 |
Segment revenue | 600.3 | – | 600.3 | – | 600.3 |
| Results | |||||
Underlying result before associates and joint ventures | 102.2 | – | 102.2 | – | 102.2 |
Revaluation of investment | 1.0 | – | 1.0 | – | 1.0 |
Share of profit of associates and joint ventures | 4.0 | 2.6 | 6.6 | – | 6.6 |
Profit before interest and taxation | 107.2 | 2.6 | 109.8 | – | 109.8 |
Net finance costs | (10.9) | – | (10.9) | – | (10.9) |
Profit before taxation | 96.3 | 2.6 | 98.9 | – | 98.9 |
Taxation | (17.3) | – | (17.3) | – | (17.3) |
Profit for the period | 79.0 | 2.6 | 81.6 | – | 81.6 |
Effective tax rate | 18.0% | – | 17.5% | – | 17.5% |
| Other segment information | |||||
– Depreciation | 10.9 | – | 10.9 | – | 10.9 |
– Amortisation | 7.8 | – | 7.8 | – | 7.8 |
– Impairment | 1.6 | – | 1.6 | – | 1.6 |
Total depreciation, amortisation and impairment | 20.3 | – | 20.3 | – | 20.3 |
EBITDA | 127.5 | 2.6 | 130.1 | – | 130.1 |
Underlying EBITDA | 127.5 | 2.6 | 130.1 | – | 130.1 |
Capital expenditure | 19.7 | – | 19.7 | – | 19.7 |
Share-based payment charge | 1.2 | – | 1.2 | – | 1.2 |
| Revenue disclosures | |||||
Royalties, franchise fees and change of hands fees | 78.9 | – | 78.9 | – | 78.9 |
Sales to franchisees | 411.4 | – | 411.4 | – | 411.4 |
Corporate store income | 36.2 | – | 36.2 | – | 36.2 |
Property income on leasehold and freehold property | 1.6 | – | 1.6 | – | 1.6 |
National Advertising and eCommerce income | 72.2 | – | 72.2 | – | 72.2 |
Total segment revenue | 600.3 | – | 600.3 | – | 600.3 |
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| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Depreciation of property, plant and equipment | 5.9 | 5.0 |
Amortisation of intangible assets | 10.7 | 7.8 |
Depreciation on right-of-use assets | 5.3 | 5.9 |
Total depreciation and amortisation expense | 21.9 | 18.7 |
Impairment loss recognised on property, plant and equipment | – | 0.1 |
Impairment loss recognised on intangible assets | – | 1.5 |
Total impairment loss recognised | – | 1.6 |
Net foreign currency gain | – | (0.1) |
Cost of inventories recognised as an expense | 273.4 | 240.2 |
Profit on disposal of subsidiaries | – | (2.1) |
Profit on disposal of associate investment | (40.6) | – |
Gain on changes in fair value of financial instruments | – | (1.0) |
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Fees payable to the Group’s auditors for the audit of the Group and Company annual accounts* | 0.6 | 0.6 |
| Fees payable to the Company’s auditors and its associates for other services: | ||
Audit of the accounts of subsidiaries | 0.3 | 0.3 |
Total audit fees | 0.9 | 0.9 |
Other services | 0.1 | 0.1 |
Total audit and non-audit fees | 1.0 | 1.0 |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
6. Reconciliation of non-GAAP measures
In 2022, the Group decided to no longer classify items as non-underlying, subject to any material provision reversals or changes which are
considered significant enough to consider separate disclosure, such as material profit or loss from business acquisitions or disposals, or material
impacts from changes to interpretation of accounting guidelines.
See below for details of non-underlying items that occurred during the year.
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Underlying profit for the period | 75.7 | 81.6 |
Non-underlying profit for the period | 39.3 | – |
Profit for the period | 115.0 | 81.6 |
Non-underlying items
| 53 weeks ended | 52 weeks ended | ||
| 31 December 2023 | 25 December 2022 | ||
| £m | £m | ||
| Included in other income | |||
Profit on disposal of German associate | a) | 40.6 | – |
| Taxation | |||
Reversionary share tax charge | b) | (1.3) | – |
Profit for the period | 39.3 | – |
a) Profit on disposal of German associate
In June 2023, the Group disposed of its 33.3% interest in Daytona JV Limited. Proceeds of £79.9m were received of which £70.6m related
to the investment in Daytona JV Limited and £9.3m related to the repayment of the loan. This generated a profit on disposal of £40.6m.
For further details refer to note 27. The profits arising from the disposal have been treated as non-taxable on the basis the disposal falls under
the Substantial Shareholding Exemption.
b) Reversionary share tax change
The tax charge primarily relates to the historical share based compensation schemes following the £11.9m settlement made during the year,
refer to note 23 for further details.
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| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Wages and salaries | 70.2 | 65.3 |
Social security costs | 7.0 | 6.2 |
Other pension costs | 1.6 | 1.5 |
Share-based payment charge | 3.8 | 1.2 |
Total | 82.6 | 74.2 |
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
Administration | 392 | 377 |
Production and distribution | 567 | 569 |
Corporate stores | 570 | 661 |
Total | 1,529 | 1,607 |
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Directors’ remuneration | 3.3 | 2.4 |
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Other interest receivable | 0.8 | 0.1 |
Interest on loans to associates and joint ventures | 0.1 | 0.3 |
Interest receivable on leases | 12.7 | 12.4 |
Discount unwind | 0.1 | – |
Foreign exchange | – | 0.3 |
Total finance income | 13.7 | 13.1 |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Debt facilities interest payable | 14.4 | 10.3 |
Interest payable on leases | 13.8 | 13.7 |
Total finance costs | 28.2 | 24.0 |
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
| Tax charged/(credited) in the income statement | ||
| Current income tax: | ||
| UK corporation tax: | ||
– current period | 21.6 | 16.6 |
– adjustment in respect of prior periods | 4.6 | (0.1) |
26.2 | 16.5 | |
Income tax on overseas operations | (2.5) | 0.9 |
Total current income tax charge | 23.7 | 17.4 |
| Deferred tax: | ||
Origination and reversal of temporary differences | 2.6 | (0.3) |
Effect of change in tax rate | 0.2 | – |
Adjustment in respect of prior periods | 0.8 | 0.2 |
Total deferred tax | 3.6 | (0.1) |
Tax charge in the income statement | 27.3 | 17.3 |
| The tax charge in the income statement is disclosed as follows: | ||
Income tax charge | 27.3 | 17.3 |
| Tax relating to items credited/(charged) to equity | ||
Reduction in current tax liability as a result of the exercise of share options | – | 0.1 |
Origination and reversal of temporary differences in relation to unexercised share options | – | (0.9) |
Tax charge in the Group statement of changes in equity | – | (0.8) |
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| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Profit before taxation | 142.3 | 98.9 |
Accounting profit before taxation multiplied by the UK statutory rate of corporation tax of 23.52% (2022: 19.0%) | 33.5 | 18.8 |
Expenses not deductible for tax purposes | 1.2 | – |
Income not taxable | (9.6) | 0.1 |
Share of joint venture and associates’ results not taxable | (0.5) | (1.3) |
Accounting depreciation not eligible for tax purposes | 0.8 | 0.4 |
Adjustment in respect of prior periods | 1.2 | 0.2 |
Tax rate differences | (0.8) | (0.5) |
Transfer pricing adjustment – current year | 0.7 | – |
Movement in uncertain tax position – transfer pricing | 1.5 | – |
Other | (0.7) | (0.4) |
Total tax charge reported in the income statement | 27.3 | 17.3 |
Effective tax rate (%) | 19.2% | 17.5% |
Underlying effective tax rate (%) | 25.6% | 17.5% |
c) Temporary differences associated with Group investments
At 31 December 2023, there was no recognised deferred tax liability (2022: £nil) for taxes that would be payable on the unremitted earnings
of the Group’s subsidiaries, or its associates, as there are no corporation tax consequences of the Group’s UK, Irish or overseas subsidiaries
or associates paying dividends to their parent companies. There are also no income tax consequences for the Group attaching to the payment
of dividends by the Group to its shareholders.
d) OECD Pillar 2
On 11 July 2023, Finance (No.2) Act 2023 was enacted in the UK, introducing a Pillar Two global minimum effective tax rate of 15%.
The legislation implements a domestic top-up tax and a multinational top-up tax which would be payable by a multinational enterprise falling
within the scope of the Pillar Two rules. The legislation seeks to ensure that UK headquartered multinational enterprises pay a minimum tax rate
of 15% on UK and overseas profits. The first accounting period for which the legislation is effective for the Group is 1 January 2024.
Based on the assessment performed by Management, the Group does not fall within the scope of the Pillar Two rules for FY24 as it does not
meet the €750m consolidated revenue test for two of the four preceding fiscal years. Management will continue to monitor and assess the
impact in future periods.
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
10. Taxationcontinued
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Deferred tax arising in the UK on non-capital items | (7.0) | (3.2) |
Deferred tax arising on business combinations and acquired assets | – | (0.2) |
Deferred tax as analysed in the statement of financial position | (7.0) | (3.4) |
Deferred tax liabilities | (7.0) | (3.4) |
(7.0) | (3.4) | |
| 2023 | 2022 | |
| £m | £m | |
| Movement in the deferred income tax account | ||
Opening balance | (3.4) | (2.9) |
Tax charge to equity | – | (0.8) |
Income statement charge | (3.6) | (0.1) |
Entity disposal | – | 0.4 |
Closing balance | (7.0) | (3.4) |
| Accelerated | |||||
| Share-based | capital | Reversionary | |||
| payments | allowances | Provisions | interests | Total | |
| £m | £m | £m | £m | £m | |
At 26 December 2021 | 2.0 | (6.8) | (0.7) | 3.3 | (2.2) |
Charge to equity | (0.9) | – | – | – | (0.9) |
(Charge)/credit to income | (0.1) | (1.6) | 1.6 | – | (0.1) |
At 25 December 2022 | 1.0 | (8.4) | 0.9 | 3.3 | (3.2) |
Credit to equity | – | – | – | – | – |
Credit/(charge) to income | 0.3 | (1.0) | – | (3.1) | (3.8) |
At 31 December 2023 | 1.3 | (9.4) | 0.9 | 0.2 | (7.0) |
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11. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Parent by the
weighted average number of Ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Parent by the weighted average
number of Ordinary shares outstanding during the year plus the weighted average number of Ordinary shares that would have been issued
on the conversion of all dilutive potential Ordinary shares into Ordinary shares.
Earnings
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Profit after tax: | 115.0 | 81.6 |
Non-underlying items | (39.3) | – |
Underlying profit after tax | 75.7 | 81.6 |
Weighted average number of shares
| 2023 | 2022 | |
| Number | Number | |
Basic weighted average number of shares (excluding treasury shares) | 410,406,240 | 434,211,333 |
Dilutive effect of share options and awards | 1,915,682 | 1,826,246 |
Diluted weighted average number of shares | 412,321,922 | 436,037,579 |
The performance conditions relating to share options granted over 5,131,078 shares (2022: 1,040,013) have not been met in the current
financial year and therefore the dilutive effect of the number of shares which would have been issued at the period end has not been included
in the diluted earnings per share calculation.
There were 1,791,468 share options excluded from the diluted earnings per share calculation because they would be anti-dilutive (2022: nil).
See note 2 for further information on reversionary interests and share options.
Earnings per share
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| Statutory earnings per share | ||
Basic earnings per share | 28.0p | 18.8p |
Diluted earnings per share | 27.9p | 18.7p |
| Underlying earnings per share | ||
Basic earnings per share | 18.4p | 18.8p |
Diluted earnings per share | 18.4p | 18.7p |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
| Declared and paid during the period: | ||
| Equity dividends on Ordinary shares: | ||
Final dividend for 2022: 6.8p (2021: | 28.3 | 30.0 |
Interim dividend for 2023: | 13.6 | 13.8 |
Dividends paid | 41.9 | 43.8 |
| Proposed for approval by shareholders at the AGM (not recognised as a liability at 31 December 2023 | ||
| or 25 December 2022) | ||
Final dividend for 2023: 7.2p (2022: | 28.4 | 28.6 |
| Goodwill | Franchise fees | Software | Other | Total | |
| £m | £m | £m | £m | £m | |
| Cost or valuation | |||||
At 26 December 2021 | 31.9 | 8.3 | 59.2 | 0.8 | 100.2 |
Additions | – | – | 10.3 | – | 10.3 |
Disposals | (3.8) | (2.8) | – | – | (6.6) |
At 25 December 2022 | 28.1 | 5.5 | 69.5 | 0.8 | 103.9 |
Additions | – | – | 9.2 | 0.3 | 9.5 |
At 31 December 2023 | 28.1 | 5.5 | 78.7 | 1.1 | 113.4 |
| Accumulated amortisation and impairment | |||||
At 26 December 2021 | 18.6 | 5.4 | 43.7 | 0.4 | 68.1 |
Provided during the year | – | 1.1 | 6.7 | – | 7.8 |
Impairment | – | – | 1.5 | – | 1.5 |
Disposals | (2.2) | (1.3) | – | – | (3.5) |
At 25 December 2022 | 16.4 | 5.2 | 51.9 | 0.4 | 73.9 |
Provided during the year | – | 0.2 | 10.5 | – | 10.7 |
At 31 December 2023 | 16.4 | 5.4 | 62.4 | 0.4 | 84.6 |
Net book value At 31 December 2023 | 11.7 | 0.1 | 16.3 | 0.7 | 28.8 |
Net book value at 25 December 2022 | 11.7 | 0.3 | 17.6 | 0.4 | 30.0 |
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| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
| Goodwill | ||
UK corporate stores | 11.7 | 11.7 |
11.7 | 11.7 |
Long-term growth rate | Discount rate | |||
2023 | 2022 | 2023 | 2022 | |
UK Corporate Stores | 2.0% | 2.0% | 11.3% | 12.7% |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
13. Intangibleassetscontinued
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14. Property, plant and equipment
| Freehold | Supply | ||||||
| land and | Assets under | Leasehold | Fixtures and | chain centre | Store | ||
| buildings | construction | improvements | fittings | equipment | equipment | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
| Cost or valuation | |||||||
At 26 December 2021 | 64.6 | 3.4 | 0.7 | 6.1 | 51.0 | 6.4 | 132.2 |
Additions | – | 9.3 | – | 0.6 | 1.1 | 0.4 | 11.4 |
Disposals | (0.9) | – | – | – | – | (2.9) | (3.8) |
Foreign exchange on translation | – | 0.1 | – | – | – | – | 0.1 |
Transfer between classes of asset | 0.4 | (2.7) | – | – | 2.3 | – | – |
At 25 December 2022 | 64.1 | 10.1 | 0.7 | 6.7 | 54.4 | 3.9 | 139.9 |
Additions | – | 6.2 | – | 0.4 | 1.6 | 0.8 | 9.0 |
Disposals | (1.9) | – | (0.1) | – | (1.9) | – | (3.9) |
Foreign exchange on translation | (0.1) | – | – | – | – | – | (0.1) |
Transfer between classes of asset | 7.5 | (10.7) | – | 0.1 | 3.0 | 0.1 | – |
At 31 December 2023 | 69.6 | 5.6 | 0.6 | 7.2 | 57.1 | 4.8 | 144.9 |
| Depreciation and impairment | |||||||
At 26 December 2021 | 12.0 | – | 0.3 | 3.6 | 21.8 | 4.2 | 41.9 |
Provided during the year | 1.0 | – | 0.1 | 0.9 | 2.5 | 0.5 | 5.0 |
Impairment | – | – | – | 0.1 | – | – | 0.1 |
Disposals | (0.8) | – | – | – | – | (2.8) | (3.6) |
At 25 December 2022 | 12.2 | – | 0.4 | 4.6 | 24.3 | 1.9 | 43.4 |
Provided during the year | 1.2 | – | 0.1 | 1.1 | 2.9 | 0.6 | 5.9 |
Impairment | – | – | – | – | – | – | – |
Disposals | (0.1) | – | (0.1) | – | (1.8) | – | (2.0) |
At 31 December 2023 | 13.3 | – | 0.4 | 5.7 | 25.4 | 2.5 | 47.3 |
Net book value At 31 December 2023 | 56.3 | 5.6 | 0.2 | 1.5 | 31.7 | 2.3 | 97.6 |
Net book value at 25 December 2022 | 51.9 | 10.1 | 0.3 | 2.1 | 30.1 | 2.0 | 96.5 |
During the current period, freehold property with a carrying value of £1.9m was disposed of for £4.4m, resulting in a profit on disposal of £2.3m
which included disposal costs of £0.2m.
Assets under construction of £5.6m (2022: £10.1m) relate to the expansion of the Naas commissary and supply chain equipment.
Freehold land and buildings
Included within freehold land and buildings is an amount of £5.0m (2022: £6.0m) in respect of land which is not depreciated.
Capitalised financing costs
There were no borrowing costs capitalised during the period (2022: £nil).
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
15. Right-of-use assets, lease receivables and lease liabilities
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Property | 9.7 | 10.1 |
Equipment | 9.6 | 11.2 |
19.3 | 21.3 |
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Property | 0.9 | 1.0 |
Equipment | 4.4 | 4.9 |
5.3 | 5.9 |
| At 31 December 2023 | At 25 December 2022 | |
| Undiscounted amounts due under finance leases: | £m | £m |
Year 1 | 28.3 | 26.8 |
Year 2 | 27.7 | 26.1 |
Year 3 | 26.9 | 25.5 |
Year 4 | 25.7 | 24.5 |
Year 5 | 24.5 | 23.4 |
Onwards | 168.4 | 163.4 |
Total undiscounted lease receivables | 301.5 | 289.7 |
Less present value discount | (92.8) | (89.7) |
Lease receivables included in the balance sheet | 208.7 | 200.0 |
| Presented as: | ||
Current | 15.8 | 14.4 |
Non-current | 192.9 | 185.6 |
208.7 | 200.0 |
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Lease liabilities
The below table shows the maturity analysis of lease liabilities on an undiscounted basis, and the impact of discounting:
| At 31 December 2023 | At 25 December 2022 | |
| Undiscounted amounts due under finance leases: | £m | £m |
Year 1 | 35.1 | 32.6 |
Year 2 | 33.4 | 30.9 |
Year 3 | 30.8 | 29.1 |
Year 4 | 29.0 | 26.7 |
Year 5 | 27.6 | 25.2 |
Onwards | 211.2 | 173.7 |
Total undiscounted lease liabilities | 367.1 | 318.2 |
Less present value discount | (136.8) | (94.8) |
Lease liabilities included in the balance sheet | 230.3 | 223.4 |
| Presented as: | ||
Current | 21.1 | 20.0 |
Non-current | 209.2 | 203.4 |
230.3 | 223.4 |
The lease liability has increased from £223.4m to £230.3m due to additions of £26.2m, modifications of £0.9m and interest charges of £13.8m,
offset with repayments of £33.9m and foreign exchange gain of £0.1m. The overall net lease liability has decreased from £23.4m to £21.6m,
as the level of repayments of lease liabilities and receipts on lease receivables for our back-to-back property leases has remained consistent,
and lease payments on our properties and equipment leases were offset with additions and interest charges.
Amounts recognised in the income statement
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Interest income on lease receivables | 12.7 | 12.4 |
Interest expense on lease liabilities | (13.8) | (13.7) |
Income relating to short-term leases | 1.1 | 0.7 |
Expenses relating to short-term leases – property | (0.9) | (0.5) |
Expenses relating to short-term leases – equipment | (3.5) | (3.0) |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Loans to franchisees* | 2.9 | 2.4 |
Other receivables* | 0.8 | 1.0 |
3.7 | 3.4 |
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Trade receivables* | 14.7 | 17.2 |
Amounts owed by associates and joint ventures* | 3.1 | 11.3 |
Loans to franchisees* | 0.7 | 0.7 |
Other receivables* | 2.6 | 1.3 |
Prepayments | 5.6 | 5.8 |
Accrued income* | 24.9 | 19.6 |
51.6 | 55.9 |
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Sterling | 14.0 | 16.0 |
Euro | 0.7 | 1.2 |
14.7 | 17.2 |
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| Past due | ||||
| Total | Not past due | <30 days | >30 days | |
| £m | £m | £m | £m | |
At 31 December 2023 | 14.7 | 14.6 | 0.1 | – |
At 25 December 2022 | 17.2 | 17.0 | 0.1 | 0.1 |
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Amounts owed by associates | 1.4 | 10.9 |
Amounts owed by joint ventures | 1.7 | 0.4 |
3.1 | 11.3 |
| Trading balance | Loan balance | Total | |
| £m | £m | £m | |
At 26 December 2021 | 1.7 | 10.8 | 12.5 |
Movement in trading balance | 0.1 | – | 0.1 |
Movement in loan balance | – | (1.3) | (1.3) |
At 25 December 2022 | 1.8 | 9.5 | 11.3 |
Movement in trading balance | 1.3 | – | 1.3 |
Movement in loan balance | – | (9.5) | (9.5) |
At 31 December 2023 | 3.1 | – | 3.1 |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
| Joint ventures | Associates | |
| £m | £m | |
Balance at 26 December 2021 | 4.7 | 48.0 |
Underlying profit for the period | 0.1 | 6.5 |
Dividends received | (0.2) | (2.2) |
Transfer to assets held for sale | – | (32.9) |
Foreign exchange movement | – | 1.4 |
Balance at 25 December 2022 | 4.6 | 20.8 |
Underlying profit for the period | 0.1 | 1.9 |
Dividends received | (0.3) | (1.9) |
Balance at 31 December 2023 | 4.4 | 20.8 |
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
| Share of post-tax profits/(losses) of associates | ||
Full House Restaurants Holdings Limited | 2.8 | 3.1 |
Daytona JV Limited | – | 2.6 |
Northern Ireland JV | (0.9) | 0.8 |
1.9 | 6.5 | |
| Share of post-tax profits of joint ventures | ||
Domino’s Pizza West Country Limited | 0.1 | 0.1 |
2.0 | 6.6 |
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Full House | Daytona | Victa | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Non-current assets | 33.6 | 25.7 | – | – | 46.1 | 47.7 |
Current assets | 13.8 | 15.8 | – | – | 3.2 | 2.7 |
Current liabilities | (7.7) | (7.0) | – | – | (29.1) | (4.4) |
Non-current liabilities | (15.1) | (11.9) | – | – | (6.0) | (29.8) |
Net assets | 24.6 | 22.6 | – | – | 14.2 | 16.2 |
The Group’s share of interest in associate undertaking’s net assets | 12.0 | 11.1 | – | – | 6.5 | 7.4 |
Goodwill and transaction costs | 2.3 | 2.3 | – | – | – | – |
Group’s carrying amount of the investment | 14.3 | 13.4 | – | – | 6.5 | 7.4 |
Revenue | 73.5 | 62.9 | – | – | 32.3 | 30.3 |
Profit/loss for the period | 5.7 | 6.3 | – | – | (2.0) | 1.7 |
Total comprehensive income/(expense) for the year | 5.7 | 6.3 | – | – | (2.0) | 1.7 |
Group’s share of profit/(loss) for the period | 2.8 | 3.1 | – | 2.6 | (0.9) | 0.8 |
Dividends received | 1.9 | 2.2 | – | – | – | – |
At 31 December 2023 | At 25 December 2022 | |
| West Country | West Country | |
| £m | £m | |
| Summary of joint venture’s balance sheets | ||
Current assets | 6.3 | 6.3 |
Non-current assets | 5.0 | 5.2 |
Current liabilities | (2.0) | (1.9) |
Non-current liabilities | (1.3) | (1.2) |
Net assets | 8.0 | 8.4 |
Group’s share of interest in joint venture’s net assets | 4.0 | 4.2 |
Goodwill and transaction costs | 0.4 | 0.4 |
Group’s carrying amount of the investment | 4.4 | 4.6 |
| Within joint venture’s balance sheets: | ||
Cash and cash equivalents | 5.5 | 5.6 |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
17.Investmentsinassociatesandjointventurescontinued
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| West Country | West Country | |
| £m | £m | |
| Summary of joint venture’s income statement | ||
Revenue | 15.6 | 14.9 |
Profit after tax for the year | 0.2 | 0.2 |
Total comprehensive income for the year | 0.2 | 0.2 |
Group’s share of profit for the year | 0.1 | 0.1 |
Dividends received | 0.3 | 0.2 |
| Profit after tax for the year includes: | ||
Depreciation and amortisation | 0.5 | 0.5 |
Income tax expense | 0.1 | 0.1 |
18. Inventories
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Raw materials | 0.7 | 0.8 |
Finished goods and goods for sale | 10.7 | 10.8 |
Total inventories at lower of cost or estimated net realisable value | 11.4 | 11.6 |
Provisions against inventories were £1.9m (2022: £0.9m) and amounts were written off against cost of sales of £nil (2022: £0.2m).
19. Cash and cash equivalents
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Cash at bank and in hand | 52.1 | 30.4 |
Total cash at bank and in hand | 52.1 | 30.4 |
Cash is denominated in the following currencies:
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Sterling | 40.4 | 22.2 |
Euro | 11.0 | 7.5 |
US Dollar | 0.1 | 0.1 |
Swiss Franc | 0.6 | 0.6 |
52.1 | 30.4 |
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| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
| Included in current liabilities: | ||
Trade payables* | 16.4 | 15.2 |
Other taxes and social security costs | 5.8 | 6.2 |
Other payables* | 33.6 | 31.9 |
Accruals* | 55.1 | 41.6 |
NAF and eCommerce creditor* | – | 3.2 |
Deferred income | 0.5 | 0.5 |
111.4 | 98.6 | |
| Included in non-current liabilities: | ||
Deferred income | 0.2 | 0.2 |
0.2 | 0.2 |
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
NAF surplus | 29.8 | 26.0 |
eCommerce fund deficit | (29.8) | (22.8) |
Net NAF and eCommerce creditor | – | 3.2 |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
| Current | ||
Share buyback obligations | 6.1 | 8.9 |
6.1 | 8.9 | |
| Non-current | ||
Bank revolving facility | 85.8 | 84.9 |
Private Placement Loan Notes | 199.1 | 198.8 |
284.9 | 283.7 |
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| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Current | 0.3 | 0.3 |
0.3 | 0.3 |
| Reversionary | ||||
| share plan | Dilapidations | Other | ||
| provisions | provisions | provisions | Total | |
| £m | £m | £m | £m | |
At 26 December 2021 | 13.0 | 1.0 | 2.3 | 16.3 |
Arising during the period | – | – | 0.2 | 0.2 |
Utilised during the period | – | – | (1.2) | (1.2) |
At 25 December 2022 | 13.0 | 1.0 | 1.3 | 15.3 |
Arising during the period | – | 0.4 | – | 0.4 |
Utilised during the period | (11.9) | – | – | (11.9) |
At 31 December 2023 | 1.1 | 1.4 | 1.3 | 3.8 |
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Current | 2.0 | 1.0 |
Non-current | 1.8 | 14.3 |
3.8 | 15.3 |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
24. Financial risk management objectives and policies
The Group’s financial risk management objectives consist of identifying and monitoring risks which might have an adverse impact on the
value of the Group’s financial assets and liabilities, reported profitability or cash flows.
The main risks are foreign currency risk, credit risk, liquidity risk and interest rate risk. The Board reviews and agrees policies for managing
each of these risks, which are summarised below.
The Group has various financial assets such as trade receivables and cash, which arise directly from its operations. The Group’s principal
financial liabilities comprise bank revolving facilities, US Private Placement Notes, other loans and finance leases.
The Group’s treasury policy allows it to trade in derivatives to manage interest rate, commodity and foreign exchange risk.
| Effect on profit | Effect on | ||
| Change in GBP/ | before tax | pre-tax equity | |
| EUR rate | £m | £m | |
2023 | +25% | (1.3) | (3.0) |
-25% | 2.1 | 4.9 | |
2022 | +25% | (2.6) | (6.6) |
-25% | 4.3 | 11.0 |
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| Less than | 3 to 12 | 1 to 5 | More than | |||
| On demand | 3 months | months | years | 5 years | Total | |
| £m | £m | £m | £m | £m | £m | |
| At 31 December 2023 | ||||||
| Fixed rate borrowings | ||||||
Lease liabilities | – | 8.8 | 26.3 | 120.8 | 211.2 | 367.1 |
Private Placement Loan Notes | – | 4.3 | 4.3 | 225.6 | – | 234.2 |
| Floating rate borrowings | ||||||
Bank revolving facility | – | 1.8 | 5.3 | 105.2 | – | 112.3 |
| Non-interest bearing | ||||||
Trade and other payables | 0.2 | 104.0 | 0.1 | 0.6 | – | 104.9 |
Share buyback obligation | – | 6.1 | – | – | – | 6.1 |
0.2 | 125.0 | 36.0 | 452.2 | 211.2 | 824.6 |
| Less than | 3 to 12 | 1 to 5 | More than | |||
| On demand | 3 months | months | years | 5 years | Total | |
| £m | £m | £m | £m | £m | £m | |
| At 25 December 2022 | ||||||
| Fixed rate borrowings | ||||||
Lease liabilities | – | 8.3 | 24.3 | 111.9 | 173.7 | 318.2 |
Private Placement Loan Notes* | – | 4.3 | 4.3 | 234.1 | – | 242.7 |
| Floating rate borrowings | ||||||
Bank revolving facility* | – | 1.4 | 4.2 | 106.5 | – | 112.1 |
| Non-interest bearing | ||||||
Trade and other payables | 0.2 | 88.2 | 3.2 | 0.4 | – | 92.0 |
Share buyback obligation | – | 8.9 | – | – | – | 8.9 |
0.2 | 111.1 | 36.0 | 452.9 | 173.7 | 773.9 |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
24.Financialriskmanagementobjectivesandpoliciescontinued
| At 31 December 2023 | At 25 December 2022 | |
| £m | £m | |
Debt facilities | 284.9 | 283.7 |
Less: cash and cash equivalents | (52.1) | (30.4) |
Net debt | 232.8 | 253.3 |
Underlying EBIT | 116.2 | 109.8 |
Underlying depreciation, amortisation and impairment | 21.9 | 20.3 |
Underlying EBITDA | 138.1 | 130.1 |
Adjusted gearing ratio | 1.69 | 1.95 |
Underlying EBITDA | 138.1 | 130.1 |
Less EBITDA impact of IFRS 16 | (6.4) | (7.1) |
Adjusted underlying EBITDA | 131.7 | 123.0 |
Adjusted gearing ratio (excluding IFRS 16) | 1.77 | 2.06 |
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25. Financial instruments
Set out below is a comparison by classification of all the Group’s financial instruments at the end of the period:
| Fair value | Amortised cost | Carrying value | Fair value | Amortised cost | Carrying value | |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
| Financial assets | ||||||
Trade receivables | – | 14.7 | 14.7 | – | 17.2 | 17.2 |
Other receivables | – | 3.4 | 3.4 | – | 2.3 | 2.3 |
Accrued income | – | 24.9 | 24.9 | – | 19.6 | 19.6 |
Loans to franchisees | – | 3.6 | 3.6 | – | 3.1 | 3.1 |
Cash and cash equivalents | – | 52.1 | 52.1 | – | 30.4 | 30.4 |
Lease receivables | – | 208.7 | 208.7 | – | 200.0 | 200.0 |
Deferred consideration receivable | – | 0.3 | 0.3 | – | 0.3 | 0.3 |
Amounts owed by associates and joint ventures | – | 3.1 | 3.1 | – | 11.3 | 11.3 |
Investments | 10.3 | – | 10.3 | 11.3 | – | 11.3 |
| Financial liabilities | ||||||
Trade payables | – | 16.4 | 16.4 | – | 15.2 | 15.2 |
Other payables | – | 33.6 | 33.6 | – | 31.9 | 31.9 |
Accruals | – | 55.1 | 55.1 | – | 41.6 | 41.6 |
NAF and eCommerce | – | – | – | – | 3.2 | 3.2 |
Bank revolving facility | – | 85.8 | 85.8 | – | 84.9 | 84.9 |
Private placement loan notes | – | 199.1 | 199.1 | – | 198.8 | 198.8 |
Lease liabilities | – | 230.3 | 230.3 | – | 223.4 | 223.4 |
Prepayments, deferred income and other tax and social security payables are not financial assets or liabilities and are therefore excluded from
the above analysis.
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
25.Financialinstrumentscontinued
26. Share capital and reserves
| 53 weeks ended | 52 weeks ended | |||
| 31 December 2023 | 25 December 2022 | |||
Number | £ | Number | £ | |
At 26 December 2022 and 27 December 2021 | 422,619,455 | 2,201,144 | 448,023,791 | 2,333,458 |
Share buybacks | (26,214,554) | (136,534) | (25,404,336) | (132,314) |
At 31 December 2023 and 25 December 2022 | 396,404,901 | 2,064,610 | 422,619,455 | 2,201,144 |
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27. Disposals
Investment in Daytona JV Limited
In June 2023, the Group disposed of its 33.3% interest in Daytona JV Limited. The Group received £79.9m, of which £70.6m related to the
investment in Daytona JV limited and £9.3m related to the repayment of the loan. Included in the cash received on disposal is a £1.8m gain
on a forward foreign currency contract that was entered into to provide certainty to the Group over cash flows received on disposal.
The profit on disposal is analysed as follows:
| Daytona JV | |
| Limited | |
| £m | |
Cash received on disposal | 70.6 |
Carrying amount of investment disposed | (32.4) |
Currency translation gain transferred from translation reserve | 2.5 |
Profit on disposal before professional fees | 40.7 |
Professional fees relating to the disposal | (0.1) |
Total profit on disposal of investment | 40.6 |
The profits arising from the disposal have been treated as non-taxable on the basis the disposal falls under the Substantial Shareholding Exemption.
Corporate stores – Have More Fun (London) Limited
On 30 November 2022, the Group disposed of its 100% interest in Have More Fun (London) Limited, which operated in England, with net
consideration received from the buyers of £4.9m. The final working capital adjustment is being finalised, and an additional £0.3m is receivable
from the purchaser. The profit on disposal of the Group’s interest in Have More Fun (London) Limited is analysed as follows:
| £m | |
Cash received on disposal | 5.2 |
Cash disposed | (0.3) |
Net cash received on disposal | 4.9 |
Consideration receivable post disposal | 0.3 |
Net assets disposed excluding cash (see below) | (2.8) |
Profit on disposal before professional fees | 2.4 |
Cost associated with disposal | (0.3) |
Total profit on disposal | 2.1 |
Property, plant and equipment | 0.2 |
Intangible assets | 3.1 |
Right-of-use assets | 1.6 |
Inventories, trade receivables and trade and other payables | (0.2) |
Lease liabilities | (1.5) |
Deferred tax liabilities | (0.4) |
Net assets disposed excluding cash | 2.8 |
| At 31 December 2023 | At 25 December 2022 |
| £m | £m |
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NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
Assets held for sale | – | 32.9 |
29. Share-based payments
The expense recognised for share-based payments in respect of employee services received during the 53 weeks ended 31 December 2023
was £3.8m (2022: £1.2m).
2012 Long Term Incentive Plan (‘2012 LTIP’)
At the 2012 AGM, shareholders approved the adoption of LTIP rules which allow for either the grant of market value options or performance
shares. Awards are approved and granted at the discretion of the Remuneration Committee to Senior Executives and other employees.
All awards are capable of vesting within a three-year period should certain performance targets be achieved by the Group. For certain Senior
Executives, awards that vest are subject to a further two-year holding period. 148,948 shares were exercised during the period (2022: 534,059).
The weighted average share price for options exercised during 2023 was 394p (2022: 231p).
2016 Long Term Incentive Plan (‘2016 LTIP’)
At the 2016 AGM, shareholders approved the adoption of new LTIP rules which allow for either the grant of market value options or performance
shares. Awards are approved and granted at the discretion of the Remuneration Committee to Senior Executives and other employees.
All awards are capable of vesting within a three to five-year period should certain performance targets be achieved by the Group. For certain
Senior Executives, awards that vest are subject to a further two-year holding period. No shares exercised during the period (2022: 7,585).
2022 Long Term Incentive Plan (‘2022 LTIP’)
At the 2022 AGM, shareholders approved the adoption of LTIP rules which allow for either the grant of market value options or performance
shares. Awards are approved and granted at the discretion of the Remuneration Committee to Senior Executives and other employees.
All awards are capable of vesting within a three-year period should certain performance targets be achieved by the Group. For certain Senior
Executives, awards that vest are subject to a further two-year holding period. 128,969 shares were exercised during the period (2022: nil).
The weighted average share price for options exercised during 2023 was 310p (2022: nil).
During the year, the Group granted 6,865,923 awards by way of a Share Appreciation Rights scheme. The strike price for these shares are 541p.
These shares will vest over a period of 5 years, with a third of the shares vesting in 2026, a third vesting in 2027 and the remaining shares
vesting in 2028.
Restricted Share Unit Plan (‘2021 RSU’)
During 2021, the Group established a Restricted Share Unit Plan. Employees are eligible for grants at the discretion of the Remuneration
committee, who also determine the conditions attached to the grants. 27,739 shares were exercised during the period (2022: nil). The weighted
average share price for options exercised during 2023 was 268p (2022: nil).
Deferred Share Bonus Plan (‘DSBP’)
Under the terms of annual bonus arrangements with Senior Executives, bonus payments can be settled partially in cash and partially in shares
of the Company, with the shares element typically deferred for a two or three-year period and lapsing in certain circumstances connected with
leaving the Company. 47,835 shares were exercised during the period (2022: nil) The weighted average share price for options exercised during
2023 was 329p.
All of the Company’s DSBP, 2012 LTIP and 2016 LTIP awards are accounted for as equity settled. A small number of the LTIP and all of the DSBP
awards include entitlement to the equivalent dividends that would have been paid on vested shares in the period between grant date and the
dividend equivalent end date. These dividend entitlements, referred to as dividend equivalent awards, can be equity settled or cash settled at
the discretion of the Remuneration Committee. Equity settled accounting treatment was elected at the point of granting all dividend equivalent
awards. Where dividend equivalent awards are subsequently settled in cash, the settling cash payment is accounted for as a repurchase of an
equity interest.
Further information on the DSBP, the 2012 LTIP the 2016 LTIP and the 2022 LTIP awards is given in the Executive Director policy table
on pages 94 to 102 of the Directors’ remuneration report. There were no cash payments (2022: £nil) made during the 53 weeks ended
31 December 2023 settling dividend equivalent awards, recorded as a repurchase of equity as shown in the statement of changes in equity.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Company Share Option Plan (‘CSOP’)
In May 2009, the Group established a CSOP, with approved and unapproved sections. Employees are eligible for grants at the discretion of the
Remuneration Committee. All awards are capable of vesting within a three-year period should certain performance targets be achieved and are
equity settled. The options lapse after 10 years or in certain other circumstances connected with leaving the Company. The weighted average
share price for options exercised during the prior period was 384p.
Sharesave Scheme
During 2009, the Group introduced a Sharesave scheme giving employees the option to acquire shares in the Company at a 20% discount.
Employees have the option to save an amount per month up to a maximum of £500 and, at the end of three years, they have the option
to purchase shares in the Company or to take their savings in cash. The contractual life of the scheme is three years. The weighted average
share price for options exercised during the period was 349p (2022: 317p).
Estimating fair value
The fair value of awards granted is estimated at the date of grant using Stochastic and Black-Scholes models, taking into account the terms and
conditions upon which they were granted. Total Shareholder Return (‘TSR’) is generated for the Company and the comparator group at the end
of the three-year performance period. The expected volatility reflects the assumption that the historical volatility over a period similar to the
life of the options is indicative of future trends, which may not necessarily be the actual outcome. The following table summarises the inputs
used in the fair value models for grants made in the period ended 31 December 2023, together with the fair values calculated by those models:
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
Weighted average fair value | 120.58p | 195.94p |
Weighted average share price at grant | 391.32p | 265.58p |
Weighted average exercise price | 27.09p | 64.71p |
Weighted average expected term | 3 years | 3 years |
Expected dividend yield | 2.72% | 2.81% |
Risk-free rates | 4.28% | 3.35% |
Expected volatility | 31.45% | 31.60% |
Strategic report Governance Financial statements
171
Domino’s Pizza Group plc Annual Report & Accounts 2023
NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
29.Share-basedpaymentscontinued
Share options and awards outstanding
As At 31 December 2023, the following share options and awards were outstanding:
| Outstanding at | Exercised | Outstanding at | Weighted | Exercisable at | |||||
| 26 December | Granted during | during the | Forfeited during | 31 December | average | 31 December | |||
| 2022 | the period | period | the period | 2023 | remaining life | 2023 | |||
Scheme | Exercise price | Number | Number | Number | Number | Number | Years | Number | |
2012 | LTIP | – | 1,405,817 | – | (148,948) | (708,940) | 547,929 | 0.68 | – |
2016 | LTIP | – | 68,653 | – | – | – | 68,653 | – | – |
2022 | LTIP | 0p to 541p | 2,034,368 | 8,649,965 | (128,969) | (1,052,197) | 9,503,167 | 3.12 | – |
2021 | RSU | – | 83,236 | – | (27,739) | – | 55,497 | 0.21 | – |
DSBP | – | 19,223 | 38,954 | (47,835) | – | 10,342 | 2.17 | – | |
Sharesave Scheme | 193p to 305p | 1,059,268 | 1,232,980 | (196,787) | (634,211) | 1,461,250 | 2.06 | 33,740 | |
4,670,565 | 9,921,899 | (550,278) | (2,395,348) | 11,646,838 | 33,740 | ||||
Weighted average exercise price | 65.71p | 27.09p | 95.08p | 75.28p | 29.45p | – |
As at 25 December 2022, the following share options and awards were outstanding:
| Outstanding at | Outstanding at | Weighted | Exercisable at | ||||||
| 27 December | Granted during | Exercised during | Forfeited during | 25 December | average | 25 December | |||
| 2021 | the period | the period | the period | 2022 | remaining life | 2022 | |||
Scheme | Exercise price | Number | Number | Number | Number | Number | Years | Number | |
2012 | LTIP | – | 3,515,707 | 39,482 | (534,059) | (1,615,313) | 1,405,817 | 1.18 | 288 |
2016 | LTIP | – | 76,238 | – | (7,585) | – | 68,653 | – | – |
2022 | LTIP | – | – | 2,063,047 | – | (28,679) | 2,034,368 | 2.61 | – |
2021 | RSU | – | – | 83,236 | – | – | 83,236 | 1.23 | – |
DSBP | – | 75,124 | 58,146 | – | (114,047) | 19,223 | 1.24 | – | |
CSOP (Unapproved) | 143.87p | 12,570 | – | (12,570) | – | – | – | – | |
CSOP (Approved) | 143.87p | 7,845 | – | (7,845) | – | – | – | – | |
Sharesave Scheme | 193p to 305p | 1,556,132 | 604,228 | (819,699) | (281,393) | 1,059,268 | 1.70 | 29,041 | |
5,243,616 | 2,848,139 | (1,381,758) | (2,039,432) | 4,670,565 | 29,329 | ||||
Weighted average exercise price | 69.35p | 64.71p | 117.33p | 38.69p | 65.71p | – |
30. Additional cash flow information
Other cash flows from investing activities
| 53 weeks ended | 52 weeks ended | ||
| 31 December 2023 | 25 December 2022 | ||
| Notes | £m | £m | |
| Cash flows from investing activities | |||
Dividends received from investments | 25 | 0.8 | 2.2 |
Dividends received from associates and joint ventures | 17 | 2.2 | 2.9 |
Decrease in loans to associates and joint ventures | 16 | 9.3 | 1.7 |
12.3 | 6.8 |
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Reconciliation of financing activities
| At 26 December | Exchange | Non-cash | At 31 December | ||
| 2022 | Cash flow | differences | movements | 2023 | |
| £m | £m | £m | £m | £m | |
Debt facilities | (283.7) | (0.8) | 0.2 | (0.6) | (284.9) |
Lease liabilities | (223.4) | 33.9 | 0.1 | (40.9) | (230.3) |
(507.1) | 33.1 | 0.3 | (41.5) | (515.2) |
| At 27 December | Exchange | Non-cash | At 25 December | ||
| 2021 | Cash flow | differences | movements | 2022 | |
| £m | £m | £m | £m | £m | |
Debt facilities | (242.5) | (39.3) | (0.8) | (1.1) | (283.7) |
Lease liabilities | (222.6) | 33.0 | (0.5) | (33.3) | (223.4) |
(465.1) | (6.3) | (1.3) | (34.4) | (507.1) |
The non-cash movements in lease liabilities primarily relate to additions and interest charges as set out in note 15.
Share purchases in cash flows from financing activities
| 53 weeks ended | 52 weeks ended | ||
| 31 December 2023 | 25 December 2022 | ||
| Note | £m | £m | |
Purchase of own shares – share buyback | 26 | (93.3) | (77.5) |
Purchase of own shares – employee benefit trust | 26 | (5.0) | (9.0) |
(98.3) | (86.5) |
Reconciliation to free cash flow
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022* | |
| £m | £m | |
Cash generated from operating activities | 113.5 | 85.1 |
Net interest paid | (13.1) | (4.8) |
Receipt of principal element on lease receivables | 15.0 | 14.3 |
Receipt of interest element on lease receivables | 12.6 | 12.4 |
Repayment of principal element on lease liabilities | (20.1) | (19.3) |
Repayment of interest element on lease liabilities | (13.8) | (13.7) |
Dividends | 3.0 | 5.1 |
Other | (0.1) | (0.1) |
97.0 | 79.0 |
* For the 52 weeks ended 25 December 2022, the disclosure of the repayment on lease liabilities and receipts on lease receivables has been re-presented
to reflect separately the principal and interest elements.
Strategic report Governance Financial statements
173
Domino’s Pizza Group plc Annual Report & Accounts 2023
NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
| Country of | Proportion of voting | ||
| Name of Company | incorporation | rights and share capital | Registered office |
| Directly held subsidiary undertakings | |||
DP Capital Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
DP Cyco Limited | Cyprus | 100% Ordinary | Rigas, 4, Omega Court, Floor 1, Limassol, 3095, Cyprus |
DP Cyco Switzerland Limited | Cyprus | 100% Ordinary | Rigas, 4, Omega Court, Floor 1, Limassol, 3095, Cyprus |
DP Group Developments Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
DP Realty Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
DPG Holdings Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
| Indirectly held subsidiary undertakings | |||
D.P. Estates Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
Domino’s Pizza (Isle of Man) Limited | Isle of Man | 100% Ordinary | First Floor, Jubilee Buildings, Victoria Street, Douglas, IM1 2SH, Isle of Man |
Domino’s Pizza Germany (Holdings) Limited England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom | |
Domino’s Pizza Germany Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
DP Pizza Limited | Republic of Ireland 100% Ordinary | Unit 1B Toughers Business Park, Newhall, Naas Co. Kildare, Ireland | |
Domino’s Pizza UK & Ireland Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
Sell More Pizza Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
Sheermans Harrow Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
Sheermans Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
Sheermans SS Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
WAP Partners Limited | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
| Zeus 11 Limited (previously ‘Domino’s | England | 100% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
| Leasing Limited’) | |||
| Indirectly held associate undertakings | |||
Full House Restaurants Holdings Limited | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
Victa DP Limited | England | 46% Ordinary | Unit 10, Evolution Wynyard Business Park, Wynyard, TS22 5TB, United Kingdom |
| Indirectly held subsidiaries of associate undertakings | |||
ABD Pizzas Limited | Northern Ireland | 46% Ordinary | Office At Unit E6 Ronan Valley Business Park, 58/60 Ballyronan Road, |
| Magherafelt, Derry, BT45 6EW, Northern Ireland | |||
Borealis DP Limited | England | 46% Ordinary | Unit 10, Evolution Wynyard Business Park, Wynyard, TS22 5TB, United Kingdom |
Classic Crust Limited | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
DP Dungannon Limited | Northern Ireland | 46% Ordinary | Office At Unit E6 Ronan Valley Business Park, 58/60 Ballyronan Road, |
| Magherafelt, Derry, BT45 6EW, Northern Ireland | |||
DPNI Limited | England | 46% Ordinary | Unit 10, Evolution Wynyard Business Park, Wynyard, TS22 5TB, United Kingdom |
Elite Pizzas Limited | Northern Ireland | 46% Ordinary | Office At Unit E6 Ronan Valley Business Park, 58/60 Ballyronan Road, |
| Magherafelt, Derry, BT45 6EW, Northern Ireland | |||
Full House Restaurants Limited | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
House Special Limited | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
JJE Enterprises Limited | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
Karshan Limited | Republic of Ireland 15% Ordinary | 19 Rathborne Drive, Ashtown, Dublin 15, Ireland | |
Karshan (Letterkenny) Limited | Republic of Ireland 7.5% Ordinary | 19 Rathborne Drive, Ashtown, Dublin 15, Ireland | |
Karshan (Midlands) Limited | Republic of Ireland | 15% Ordinary | 19 Rathborne Drive, Ashtown, Dublin 15, Ireland |
Karshan (Naas) Limited | Republic of Ireland | 15% Ordinary | 19 Rathborne Drive, Ashtown, Dublin 15, Ireland |
K&M Pizzas Limited | Republic of Ireland 15% Ordinary | 19 Rathborne Drive, Ashtown, Dublin 15, Ireland | |
Pressgate Limited | Republic of Ireland | 15% Ordinary | 19 Rathborne Drive, Ashtown, Dublin 15, Ireland |
Remo Foods Limited | Republic of Ireland 15% Ordinary | 19 Rathborne Drive, Ashtown, Dublin 15, Ireland | |
Sarcon (No. 214) Limited | Northern Ireland | 15% Ordinary | 7 Seven Houses, Upper English Street, Armagh, BT61 7LA, Northern Ireland |
Sarcon (No. 341) Limited | Northern Ireland | 15% Ordinary | 7 Seven Houses, Upper English Street, Armagh, BT61 7LA, Northern Ireland |
174
Domino’s Pizza Group plc Annual Report & Accounts 2023
| Country of | Proportion of voting | ||
| Name of Company | incorporation | rights and share capital | Registered office |
Sherston Limited | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
Shorecal Limited | Republic of Ireland | 15% Ordinary | 4 Haddington Terrace, Dun Laoghaire, Co. Dublin, Ireland |
Sunmead Limited | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
Surrey Pizzas Limited | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
The Woodpecker Inn Ltd | England | 49% Ordinary | Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF, United Kingdom |
| Direct Joint venture undertakings | |||
Domino’s Pizza West Country Limited | England | 50% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
| Indirectly held subsidiaries of joint venture undertakings | |||
DA Hall Trading Limited | England | 50% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
DAHT Limited | England | 50% Ordinary | 1 Thornbury, West Ashland, Milton Keynes, MK6 4BB, United Kingdom |
MLS Limited | England | 50% Ordinary | Aldreth, Pearcroft Road, Stonehouse, Gloucestershire GL10 2JY, United Kingdom |
| Sales to | Amounts owed | |
| related party | by related party | |
| Related party | £m | £m |
| Associates and joint ventures | ||
31 December 2023 | 54.3 | 3.1 |
25 December 2022 | 36.5 | 1.8 |
| 53 weeks ended | 52 weeks ended | |
| 31 December 2023 | 25 December 2022 | |
| £m | £m | |
Short-term employee benefits | 5.7 | 6.3 |
Post-employment benefits | 0.1 | 0.2 |
Termination benefits | 1.2 | – |
Share-based payment | 0.7 | 0.4 |
7.7 | 6.9 |
Strategic report Governance Financial statements
175
Domino’s Pizza Group plc Annual Report & Accounts 2023
NOTES TO THE GROUP FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
33. Post balance sheet events
On 11 March 2024, the Group entered into a binding Sale and Purchase Agreement for the purchase of the remaining 85% of Shorecal Ltd,
a company registered in Ireland. The consideration for the acquisition is expected to be €73m (£62m) subject to completion adjustments,
and the Group will repay existing debt of €19.9m (£17.3m). At completion, 61% of the Consideration will be payable to the Sellers in cash,
with the remaining 39% to be satisfied by an issuance of shares in the Company (the “Consideration Shares”) to the Sellers. The number of
Consideration Shares to be issued will be based on the VWAP of the Company’s shares for the trailing 3-month period. A subsidiary of the
Company already owns a 15% shareholding in Shorecal, and therefore, the Transaction will result in DPG acquiring a 100% shareholding in
Shorecal. The transaction is subject to competition approval in Ireland and is expected to complete by 31 May 2024.
176
Domino’s Pizza Group plc Annual Report & Accounts 2023
Company BALANCE SHEET
AT 31 DECEMBER 2023
Note
At 31 December 2023
£m
At 25 December 2022*
£m
Fixed assets
Investment in subsidiary undertakings 3 10.0 10.0
Investment in associates and joint ventures 3 3.0 3.0
13.0 13.0
Current assets
Other receivables: falling due after one year 4 770.6 876.5
Other receivables: falling due within one year* 4 130.3 111.4
Cash and cash equivalents 1.4 2.9
Deferred tax asset 7 0.2 3.2
Assets held for sale 10 – 20.3
902.5 1,014.3
Total assets 915.5 1,027.3
Liabilities: amounts falling due within one year
Other payables* 5 (14.5) (21.2)
Financial liabilities – Share buyback obligation 6 (6.1) (8.9)
Provisions 8 (1.3) (0.2)
(21.9) (30.3)
Liabilities: amounts falling due after one year
Provisions 8 – (13.0)
Total liabilities (21.9) (43.3)
Net assets 893.6 984.0
Shareholders’ equity
Called up share capital 9 2.1 2.2
Share premium account 49.6 49.6
Capital redemption reserve 0.5 0.5
Capital reserve – own shares (12.5) (9.0)
Retained earnings 853.9 940.7
Total shareholders’ funds 893.6 984.0
* The Company Balance Sheet as at 25 December 2022 has been restated to reclassify amounts owed by Group undertakings and amounts owed to Group undertakings.
The profit for the 53-week period ended 31 December 2023 of the Company is £42.7m (2022: £3.0m loss). The notes on pages 179 to 185
are an integral part of these Company financial statements. The financial statements on pages 177 to 185 were approved by the Directors
on 11 March 2024 and signed on their behalf by:
Andrew Rennie
Director
11 March 2024
Registered number: 03853545
Strategic report Governance Financial statements
177
Domino’s Pizza Group plc Annual Report & Accounts 2023
Company STATEMENT OF CHANGES IN EQUITY
53 WEEKS ENDED 31 DECEMBER 2023
Note
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Capital reserve
– own shares
£m
Retained
Earnings
£m
Equity
shareholders’
funds
£m
At 26 December 2021 2.3 49.6 0.5 (4.6) 1,075.7 1,123.5
Loss for the period – – – – (3.0) (3.0)
Proceeds from share issues – – – 1.6 – 1.6
Impairment of share issues – – – 3.0 (3.0) –
Share buybacks 9 (0.1) – – (9.0) (77.5) (86.6)
Share buyback obligation – – – – (8.9) (8.9)
Share options and LTIP charge 11 – – – – 1.2 1.2
Equity dividends paid 12 – – – – (43.8) (43.8)
At 25 December 2022 2.2 49.6 0.5 (9.0) 940.7 984.0
Profit for the period – – – – 42.7 42.7
Proceeds from share issues – – – 0.5 – 0.5
Impairment of share issues – – – 1.0 (1.0) –
Share buybacks (0.1) – – (5.0) (93.2) (98.3)
Share buyback obligation – – – – (6.1) (6.1)
Share buyback obligation satisfied – – – – 8.9 8.9
Share options and LTIP charge – – – – 3.8 3.8
Equity dividends paid – – – – (41.9) (41.9)
At 31 December 2023 2.1 49.6 0.5 (12.5) 853.9 893.6
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Domino’s Pizza Group plc Annual Report & Accounts 2023
NOTES TO THE Company FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023
1. Accounting policies
General information
incorporated and domiciled in the United Kingdom. The address
of its registered office and principal place of business is disclosed
in the Directors’ report.
The Company’s financial statements are presented in Pounds Sterling
(£), which is also the Company’s functional currency.
The Company’s financial statements are individual entity financial
statements.
When referring to the 53 weeks ended 31 December 2023, ‘year’
and ‘period’ are used interchangeably.
As permitted by section 408 of the Companies Act 2006, the
income statement and the statement of comprehensive income of
the Parent Company have not been separately presented in these
financial statements.
Basis of preparation
These financial statements were prepared in accordance with FRS 101
Reduced Disclosure Framework and the Companies Act 2006.
The financial statements are prepared on a going concern basis under
the historical cost convention. Refer to note 2 of the Group financial
statements for disclosures related to going concern assessment.
The accounting policies which follow set out those policies which
apply in preparing the financial statements for the 53 weeks ended
31 December 2023 and have been applied consistently to all
years presented.
The Company has taken advantage of the following disclosure
exemptions under FRS 101 in respect of:
a) the requirements of IFRS 2: Share Based Payments;
b) the requirements of IFRS 7: Financial Instruments: Disclosures;
c) the requirements of IFRS 13: Fair Value Measurement;
d) the requirement IAS 1: Presentation of Financial Statements
to present certain comparative information and objectives,
policies and processes for managing capital;
e) the requirements of IAS 7: Statement of Cash Flows;
f) the requirements of IAS 8: Accounting Policies, Changes in
Accounting Estimates and Errors to disclose IFRSs issued but
not effective;
g) the requirements of IAS 24: Related Party Disclosures to present
key management personnel compensation and intra-group
transactions including wholly owned subsidiaries; and
h) the requirements in IAS 24: Related Party Disclosures to disclose
related party transactions entered into between two or more
members of a group, provided that any subsidiary which is a party
to the transaction is wholly owned by such a member.
The basis for all of the above exemptions is because equivalent
disclosures are included in the consolidated financial statements
of the Group in which the entity is consolidated.
Investments
Investments held in subsidiaries are stated at cost less provision
for impairment.
The Company assesses these investments for impairment wherever
events or changes in circumstances indicate that the carrying value
of an investment may not be recoverable. If any such indication of
impairment exists, the Company makes an estimate of the recoverable
amount. If the recoverable amount is less than the value of the
investment, the investment is considered to be impaired and is written
down to its recoverable amount. An impairment loss is recognised
immediately in the income statement.
Interests in associates and joint ventures
Investments in associates and joint ventures are stated at cost less
provision for impairment.
Capital reserve – own shares
Treasury shares held by the Employee Benefit Trust are classified in
capital and reserves as ‘Capital reserve – own shares’ and recognised
at cost. No gain or loss is recognised on the purchase or sale of
such shares.
Share-based payment transactions
Directors of the Company receive an element of remuneration in
the form of share-based payment transactions, whereby employees
render services as consideration for equity instruments.
The awards vest when certain performance and/or service conditions
are met; see the Directors’ remuneration report for the individual
vesting conditions for the various schemes.
The cost of equity-settled transactions with employees is measured
by reference to the fair value at the date at which they are granted
and is recognised as an expense over the vesting period, which ends
on the date on which the relevant employees become fully entitled
to the award. Fair value is determined by an external value using
an appropriate pricing model. In valuing equity-settled transactions,
no account is taken of any vesting conditions, other than conditions
linked to the price of the shares of the Company (market conditions).
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition, which are treated as vesting irrespective of whether the
market condition is satisfied, provided that all other performance
conditions are satisfied.
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Interest bearing loans and borrowings
Obligations for loans and borrowings are recognised when the
Company becomes party to the related contracts and are measured
initially at fair value less directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest
method. Gains and losses arising on the repurchase, settlement or
otherwise cancellation of liabilities are recognised respectively in
finance revenue and finance cost.
2. Profit attributable to members of the
parent company
The profit for the 53-week period ended 31 December 2023
of the Company is £42.7m (2022: £3.0m loss).
In previous years, the Company received a dividend of £1.1bn from
DPG Holdings Limited. The dividend was received following a capital
reduction performed in DPG Holdings. The amount received has been
held as an amount due from Group undertakings, and repayments
over this amount have been received during the year. The amount
considered recoverable in one year at 31 December 2023 is £39.7m,
which is redeemable on demand or before 31 August 2024, and the
remaining £769.3m remains due after more than one year.
Andrew Rennie (appointed 7 August 2023) and Edward Jamieson
are the only Executive Directors employed by the Company as at
31 December 2023. They are the only employees of the Company.
Elias Diaz Sese (resigned 7 August 2023) and Dominic Paul (resigned
30 December 2022) were also employees during the period and are
included in the below.
The total amount of remuneration paid to the Directors for the
53-week period ended 31 December 2023 was £3.2m (2022: £1.8m).
£1.5m of this was attributed to the highest paid Director
(2022: £0.8m). Pension contributions were also paid to four directors
(2022: three), which totalled £0.1 (2022: £0.1m). One director
exercised share options during the year (2022: one). No directors
received vested shares under share schemes (2022: none). Social
security costs for the Directors were £0.3m (2022: £0.1m).
Information regarding Directors’ remuneration is included in the
Directors’ remuneration report on pages 78 to 108.
For details of audit fees, see note 5 of the Group financial statements.
At each balance sheet date before vesting, the cumulative expense
is calculated, representing the extent to which the vesting period has
expired, management’s best estimate of the achievement or otherwise
of non-market conditions and the number of equity instruments that
will ultimately vest or, in the case of an instrument subject to a market
condition, be treated as vesting as described above. The movement in the
cumulative expense since the previous balance sheet date is recognised
in the income statement, with a corresponding entry into equity.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the cost
based on the original award terms continues to be recognised over the
original vesting period. In addition, an expense is recognised over the
remainder of the new vesting period for the incremental fair value of
any modification, based on the difference between the fair value of
the original award and the fair value of the modified award, both as
measured on the date of the modification. No reduction is recognised
if this difference is negative.
Where an equity-settled award is cancelled, it is treated as if it had
vested on the date of cancellation, and any cost not yet recognised
in the income statement for the award is expensed immediately. Any
compensation paid up to the fair value of the award at the cancellation
or settlement date is deducted from equity, with any excess over fair
value being treated as an expense in the income statement.
The Company recharges the cost of equity-settled transactions to
the respective employing entity, with a corresponding increase in
equity and investment in subsidiary undertakings booked with
Domino’s Pizza Group plc.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash
at bank and on hand and short-term deposits with a maturity of three
months or less, which are subject to an insignificant risk of changes
in value.
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents consist of cash as defined above.
Provisions for liabilities
A provision is recognised where the Company has a legal or
constructive obligation as a result of a past event and it is probable
that an outflow of economic benefits will be required to settle
the obligation.
Reversionary share plan
In the prior years a provision was recorded relating to the employment
tax treatment for certain of the Group’s historical share-based
compensation arrangements with grant dates dating from 2003 to
2010 as well as options with vesting dates from 2012 through 2014.
Refer to note 2 of the Group financial statements for more details.
NOTES TO THE Company FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
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Domino’s Pizza Group plc Annual Report & Accounts 2023
3. Investments
Subsidiary
undertakings
£m
Associates and
joint
ventures
£m
Total
£m
Cost or valuation
At 26 December 2021 10.0 23.3 33.3
Transfer to assets held for sale – (20.3) (20.3)
At 25 December 2022 10.0 3.0 13.0
At 31 December 2023 10.0 3.0 13.0
Details of the investments in which the Company holds 20% or more of the nominal value of any class of share capital are detailed in note 32
of the Group financial statements.
Transfer to assets held for sale related to the Company’s 33.3% investment in Daytona JV Limited, a UK incorporated company which owned
the MFA for Domino’s Germany. The investment was sold during the period. Refer to note 10.
4. Other receivables
Falling due after one year
At 31 December 2023
£m
At 25 December 2022*
£m
Amounts owed by Group undertakings 769.3 874.6
Amounts owed by associates and joint ventures – 0.2
Other asset 1.3 1.7
770.6 876.5
Falling due within one year
At 31 December 2023
£m
At 25 December 2022
£m
Amounts owed by Group undertakings* 130.0 101.8
Amounts owed by associates and joint ventures 0.2 9.6
Other receivables 0.1 –
130.3 111.4
* Amounts owed by Group undertakings as at 25 December 2022 have been restated to reclassify amounts owed to Group Undertakings in note 5.
Amounts owed by associates included a loan owed by Daytona JV Limited. During the period the loan was repaid with £9.3m cash received
and the remaining movement resulting from foreign exchange.
Amounts owed by Group undertakings are repayable on demand. This receivable is classified as non-current as the Parent has no intention
to call on repayment in the next 12 months.
The other asset of £1.3m (2022: £1.7m) relates to bank facility fees paid which will be recovered through recharging to subsidiary companies
based on usage of the facility.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
NOTES TO THE Company FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
5. Other payables
At 31 December 2023
£m
At 25 December 2022*
£m
Amounts owed to Group undertakings* 13.9 20.8
Other creditors 0.5 0.3
Accruals and deferred income 0.1 0.1
14.5 21.2
* Amounts owed to Group undertakings as at 25 December 2022 have been restated to reclassify amounts owed by Group Undertakings in note 4.
6. Financial liabilities
Share buyback obligation
The Group entered into an irrevocable non-discretionary programme with Numis Securities Limited to purchase up to a maximum of £70.0m
(2022: £20.0m) of shares from 29 August 2023. Since this programme commenced, 17,152,705 (2022: 4,020,084) shares for consideration of
£63.9m (2022: £11.6m) were purchased. The remaining share buybacks and unpaid amounts outstanding at 31 December 2023 are recognised
as a financial liability of £6.1m (2022: £8.9m).
Debt facilities
At 31 December 2023, the Group had a total of £400m (2022: £400m) of debt facilities, of which £112.9m (2022: £113.4m) was undrawn.
The facilities include a £200m multi-currency revolving credit facility (RCF) and £200m of US private placement loan notes (USPP).
Arrangement fees of £1.9m and £1.3m were incurred on the RCF and USPP respectively.
Private placement loan notes
The Private Placement notes mature on 27th July 2027 and arrangement fees of £0.9m (2022: £1.2m) directly incurred in relation to the USPP
are included in the carrying values of the facility and are being amortised over the term of the notes.
Interest charged on the US Private Placement notes is at 4.26% per annum.
Bank revolving facility
The revolving credit facility expires on 27 July 2027. Arrangement fees of £1.3m (2022: £1.7m) directly incurred in relation to the RCF are
included in the carrying values of the facility and are being amortised over the extended term of the facility.
Interest charged on the revolving credit facility ranges from 1.85% per annum above SONIA (or equivalent) when the Group’s leverage is less
than 1:1 up to 2.85% per annum above SONIA for leverage above 2.5:1. A further utilisation fee is charged if over one-third is utilised at 0.15%,
which rises to 0.30% of the outstanding loans if over two-thirds is drawn. In addition, a commitment fee is calculated on undrawn amounts
based on 35% of the current applicable margin.
The RCF is secured by an unlimited cross guarantee between Domino’s Pizza Group plc, DPG Holdings Limited, Domino’s Pizza UK & Ireland
Limited, DP Realty Limited, DP Pizza Limited, Sell More Pizza Limited, Sheermans SS Limited and Sheermans Limited.
An ancillary overdraft and pooling arrangement was in place with Barclays Bank Plc for £20.0m covering the Companies, Domino’s Pizza
Group plc, DPG Holdings Limited, Domino’s Pizza UK & Ireland Limited, DP Realty Limited, DP Pizza Limited, Sell More Pizza Limited,
Sheermans SS Limited and Sheermans Limited. Interest is charged for the overdraft at the same margin as applicable to the revolving credit
facility above SONIA.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
7. Deferred tax asset
At 31 December 2023
£m
At 25 December 2022
£m
Deferred tax asset 0.2 3.2
0.2 3.2
The deferred tax asset of £0.2m (2022: £3.2m) relates to the reversionary share plan referred to in note 2 of the Group financial statements.
8. Provisions
Reversionary
share plan
provisions
£m
Other
£m
Total
£m
At 26 December 2022 13.0 0.2 13.2
Utilised (11.9) – (11.9)
At 31 December 2023 1.1 0.2 1.3
Reversionary share plan provisions
As discussed more fully in note 2 of the Group financial statements, the employment tax provision relates to certain of the Group’s historical
share-based compensation arrangements with grant dates dating from 2003 to 2010 as well as options with vesting dates from 2012
through 2014.
During the current period £11.9m was paid in relation to the provision made for the compensation arrangements with grant dates dating
from 2003-2010.
Other provisions
Other provisions of £0.2m (2022: £0.2m) relates to liabilities resulting from the disposal of subsidiaries.
9. Authorised and issued share capital
Allotted, called up and fully paid share capital of 25/48p per share
53 weeks ended
31 December 2023
52 weeks ended
25 December 2022
Number £ Number £
At 26 December 2022 and 27 December 2021 422,619,455 2,201,144 448,023,791 2,333,458
Share buybacks (26,214,554) (136,534) (25,404,336) (132,314)
At 31 December 2023 and 25 December 2022 396,404,901 2,064,610 422,619,455 2,201,144
During the period, the Company bought back a total of 26,214,554 Ordinary shares of 25/48p each for a total of £93.3m (2022: £77.5m)
including costs of £0.5m (2022: £0.5m). The average price paid for these repurchased shares was 351.84p (2022: 305.64p). These repurchased
shares were then cancelled in the same period.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
NOTES TO THE Company FINANCIAL STATEMENTS
53 WEEKS ENDED 31 DECEMBER 2023 continued
10. Assets held for sale
At 31 December 2023
£m
At 25 December 2022
£m
Assets held for sale – 20.3
– 20.3
Assets held for sale included the Group’s 33.3% investment in Daytona JV Limited, a UK incorporated company which owns the MFA for
Domino’s Germany. The investment was sold during the period with proceeds of £70.6m being received. This generated a profit on disposal
of £50.1m for the Company. Refer to note 27 in the Group financial statements for further details.
11. Share-based payments
The total charge recognised for share-based payments in respect of employee services received during the 53 weeks ended 31 December 2023
was £3.8m (2022: £1.2m). This arises solely on equity-settled share-based payment transactions. Of this total, a charge of £1.7m (2022: £0.1m)
relates to employees of the Company and a charge of £2.1m (2022: £1.1m) relates to share options granted to employees of subsidiaries. For full
disclosures relating to the total charge for the period including grants to both employees of the Company and its subsidiaries, please refer to
note 29 of the Group financial statements.
12. Reconciliation of shareholders’ funds and movements on reserves
2023
On 11 May 2023, a final 2022 dividend of £28.3m was paid to shareholders.
On 20 September 2023, an interim 2023 dividend of £13.6m was paid to shareholders.
2022
On 10 May 2022, a final 2021 dividend of £30.0m was paid to shareholders.
On 21 September 2022, an interim 2022 dividend of £13.8m was paid to shareholders.
Prior to announcing any dividend or other distribution, the Board determines the amount of Realised Profits by reference to relevant accounts,
as required by the Companies Act 2006. Where the amount of Realised Profits by reference to Annual Accounts were insufficient to justify
declaration of a dividend or other distribution, Interim Accounts would be prepared and filed with the Registrar of Companies, and used as the
based for assessing Realised Profits available for distribution. The Board is satisfied that its assessment of Realised Profits by reference to the
Annual Accounts for 2022 determined that the Company had sufficient Realised Profits to satisfy dividends and share buyback programmes
declared in 2023.
Capital reserve – own shares
This reserve relates to shares in the Company held by an independently managed EBT and shares in the Company held by the Company
as treasury shares.
All shares in the Company purchased by the Company as treasury shares in the current and prior period were done so as part of announced
buyback programmes, and were then cancelled in the same year. There were no shares held in treasury at the end of the current or prior period.
Shares in the Company held by the EBT are purchased in order to satisfy employee shares options and potential awards under employee share
incentive schemes. During the period, the EBT purchased 1,540,088 shares at a cost of £5.0m (2022: 2,809,912 at a cost of £9.0m) in the
Company and disposed of 506,740 shares in the Company (2022: 1,422,852). The EBT held 3,938,276 shares (2022: 2,904,928) at the end
of the period, which have a historic cost of £12.4m (2022: £9.3m). The EBT waived its entitlement to dividends in the current and prior period.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
13. Contingent liabilities
Pursuant to the relevant regulation of the European Communities (Companies: Group Accounts) Regulations 1992, the Company
has guaranteed the liabilities of the Irish subsidiary, DP Pizza Limited. The liabilities of DP Pizza Limited were £4.5m (2022: £3.8m)
at 31 December 2023.
14. Post balance sheet events
For details of post balance sheet events, refer to note 33 in the Group financial statements.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
FIVE-YEAR FINANCIAL SUMMARY
31 December
2023
1
25 December
2022
1
26 December
2021
1
27 December
2020
1
29 December
2019
1
Trading weeks 53 52 52 52 52
System sales (£m) 1,571.7 1,456.4 1,499.1 1,348.4 1,210.9
Group revenue (£m) 679.8 600.3 560.8 505.1 508.3
Underlying profit before tax (£m) 101.7 98.9 113.9 101.2 98.8
Statutory profit before tax (£m) 142.3 98.9 109.7 98.9 75.1
Basic earnings per share (pence)
– Statutory 28.0 18.8 17.1 8.9 2.8
– Underlying 18.4 18.8 20.3 18.2 17.6
Diluted earnings per share (pence)
– Statutory 27.9 18.7 17.0 8.8 2.8
– Underlying 18.4 18.7 20.2 18.1 17.5
Dividends per share (pence) 10.5 10.0 9.80 9.10 9.76
2
Underlying earnings before interest, taxation, depreciation and amortisation (£m) 138.1 130.1 136.4 125.5 117.0
Net debt (£m) (232.8) (253.3) (199.7) (171.8) (232.6)
Adjusted gearing ratio 1.77 1.95 1.46 1.37 1.99
Stores at start of year 1,261 1,227 1,258 1,298 1,261
Stores opened 61 35 31 22 43
Stores closed (3) (1) (5) (6) (6)
Stores disposed³ – – (57) (56) –
Stores at year end 1,319 1,261 1,227 1,258 1,298
Corporate stores at year end 31 31 35 94 129
UK like-for-like sales growth (%) 4.1%
4
(4.2)% 11.2% 10.9% 3.7%
1. Excludes discontinued operations, now refers to UK & Ireland. Store totals are presented on a Group basis including International operations.
2. The final dividend for 2019 was suspended and not tabled at the AGM. A dividend of an equivalent amount was paid as an interim dividend in 2020,
and the table above remains consistent with that presented in the 2019 Annual Report.
3. Stores disposed of relate to the disposal of the operations in Sweden, Switzerland and Iceland in 2021 and in Norway in 2020.
4. Calculated on a 52 week basis to reflect growth on a comparable period.
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Shareholder information
Advisers and principal service providers
Registered office
1 Thornbury
West Ashland
Milton Keynes
MK6 4BB
01908 580000
Investor website:
investors.dominos.co.uk
Auditors
PricewaterhouseCoopers LLP
One Chamberlain Square
Birmingham
B3 3AX
Broker and corporate finance advisers
Numis Securities Limited
45 Gresham Street
London
EC2V 7BF
Goldman Sachs
Plumtree Court
25 Shoe Lane
London
EC4A 4AU
Solicitors
Slaughter and May
1 Bunhill Row
London
EC1Y 8YY
Bankers
Barclays Bank plc
1 Churchill Place
London
E14 5HP
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Strategic report Governance Financial statements
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Shareholder information CONTINUED
If you hold your shares direct and not through a Savings Scheme or
ISA and have queries relating to your shareholding, please contact
the registrars on 0371 384 2895
Lines are open from 8.30a.m. to 5.30p.m. Monday to Friday
(excluding UK bank holidays).
Shareholders can also access details of their holding and other
information on the registrars’ website, www.shareview.co.uk.
The registrars provide an online share dealing service for those
who are not seeking advice on buying or selling, available at
www.selftrade.co.uk.
The registrars also offer a range of other dealing and investment
services, which are explained on their website,
www.shareview.co.uk
Handle with care…
Shareholders tell us that they sometimes receive unsolicited
approaches, normally by telephone, inviting them to undertake
a transaction in shares they own.
If you do not know the source of the call, check the details against
the FCA website below and, if you have any specific information,
report it to the FCA using the Consumer Helpline or the Online
Reporting Form.
If you have any concerns whatsoever, do not take any action
and do not part with any money without being certain that:
– you fully understand the transaction;
– you know who you are dealing with and that they are registered
with and authorised by the FCA; and
– you have consulted a financial adviser if you have any doubts.
Remember, if it sounds too good to be true, it almost certainly is.
You run the risk of losing any money you part with.
If you are worried that you may already have been a victim of fraud,
report the facts immediately using the Action Fraud Helpline.
Should you want any more information about ‘boiler room’ and
other investment-based fraud, this can be found on two websites:
Action Fraud Helpline
0300 123 2040
Action Fraud Website
www.actionfraud.police.uk
FCA Consumer Helpline
0800 111 6768
FCA ScamSmart Website
www.fca.org.uk/scamsmart
The Group’s commitment to environmental issues is reflected in
this Annual Report which has been printed on Symbol freelife satin
which is made from a FSC
®
certified and PCF (Process Chlorine
Free) material. Printed in the UK by Pureprint Group using their
environmental printing technology, and vegetable inks were used
throughout. Pureprint Group is a CarbonNeutral
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Company.
Both manufacturing mill and the printer are registered to the
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Stewardship Council
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(FSC) chain-of-custody certified.
Domino’s Pizza Group plc
1 Thornbury, West Ashland, Milton Keynes MK6 4BB
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Domino’s Pizza Group plc Annual Report & Accounts 2023
Consultancy, design and production
www.luminous.co.uk
Domino’s Pizza Group plc
1 Thornbury, West Ashland,
Milton Keynes MK6 4BB
https://corporate.dominos.co.uk