ACQUISITION OF DOMINO’S PIZZA JAPAN AND
ENTITLEMENT OFFER
13 August 2013
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
IMPORTANT NOTICE AND DISCLAIMER
Disclaimer
This investor presentation (“Presentation”) has been prepared by Domino’s Pizza Enterprises Limited (ABN 16 010 489 326) (“DPE”). This Presentation has been prepared
in relation to a pro-rata renounceable entitlement offer of new DPE ordinary shares (“New Shares”) to be made to: eligible institutional shareholders of DPE (“Institutional
Entitlement Offer”) and eligible retail shareholders of DPE (“Retail Entitlement Offer”), under section 708AA of the Corporations Act 2001 (Cth) (“Corporations Act”) as
modified by ASIC Class Order 08/35 and other relief obtained in relation to the entitlement offer (together, the “Entitlement Offer”).
Summary Information
This Presentation contains summary information about the current activities of DPE and its subsidiaries as at the date of this Presentation. The information in this
Presentation is of a general nature and does not purport to be complete. This Presentation does not purport to contain all the information that an investor should consider
when making an investment decision nor does it contain all the information which would be required in a disclosure document or prospectus prepared in accordance with the
requirements of the Corporations Act. It should be read in conjunction with DPE’s other periodic and continuous disclosure announcements lodged with the Australian
Securities Exchange, which are available at www.asx.com.au. No member of DPE gives any warranties in relation to the statements and information in this Presentation.
Not an offer
This Presentation is for information purposes only and is not a prospectus, disclosure document, product disclosure statement or other offering document under Australian
law or any other law (and will not be lodged with the Australian Securities and Investments Commission (“ASIC”)). The Presentation is not and should not be considered an
offer or an invitation to acquire entitlements or New Shares or any other financial products.
This Presentation may not be released or distributed in the United States. This Presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities
in the United States or in any other jurisdiction in which such an offer would be illegal. The New Shares have not been, and will not be, registered under the U.S. Securities
Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state or other jurisdiction of the United States. Accordingly, the New Shares may not be
offered or sold, directly or indirectly, in the United States, unless they have been registered under the U.S. Securities Act (which DPE has no obligation to do or procure), or
are offered and sold in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and any other applicable state securities laws.
This presentation may not be distributed and the New Shares may not be offered or sold, directly or indirectly, in Canada or to or for the benefit of any resident of Canada,
except to an “accredited investor” or “permitted client”, as the case may be, as defined under applicable law, in the Province of Ontario or Québec.
The distribution of this Presentation in other jurisdictions outside Australia may also be restricted by law and any such restrictions should be observed. Any failure to comply
with such restrictions may constitute a violation of applicable securities laws.
Not Financial Product Advice
This Presentation does not constitute financial product or investment advice (nor tax, accounting or legal advice) nor is it a recommendation to acquire entitlements or New
Shares and does not and will not form any part of any contract for the acquisition of entitlements or New Shares. This Presentation has been prepared without taking into
account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the
information having regard to their own objectives, financial situation and needs and seek appropriate advice, including financial, legal and taxation advice appropriate to their
jurisdiction. DPE is not licensed to provide financial product advice in respect of DPE shares. Cooling off rights do not apply to the acquisition of New Shares.
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
2
IMPORTANT NOTICE AND DISCLAIMER
Financial Data
All dollar values are in Australian dollars (“A$”) and financial data is presented as at 30 June 2013 unless otherwise stated.
Investors should note that this Presentation contains pro-forma financial information. In particular, pro-forma historical combined balance sheet data has been prepared
based on the balance sheet for DPE as at 30 June 2013 and the balance sheet for Domino’s Pizza Japan (“DPJ”) as at 31 March 2013. DPJ’s balance sheet has been
converted to A$ assuming an AUD:JPY exchange rate of 1:88.7. Adjustments have been made to reflect the acquisition price to be paid for DPJ, the acquisition debt and
equity funding to be raised by DPE, transaction costs incurred by DPE, and repayment of existing DPE debt. Pro-forma historical combined income statement data has also
been prepared based on DPE’s underlying income statement for the year ended 30 June 2013 (adjusted for significant charges) and DPJ’s income statement for the year
ended 31 March 2013. DPJ’s income statement has been converted to A$ assuming the average AUD:JPY exchange rate over the 12 months ended 31 March 2013 of
1:85.6. Adjustments made to DPJ’s financials include removal of the historical Bain Capital Partners (“Bain Capital”) management fee, inclusion of additional ongoing DPJ
costs resulting from the acquisition of DPJ by DPE and estimated interest expense on new debt to fund the acquisition. DPJ’s financials have been converted from JGAAP
to AIFRS for the purposes of the pro-forma historical combined balance sheet and income statement. Investors should also note that this Presentation does not include
financial statements of DPJ. The pro-forma historical financial information has been prepared by DPE in accordance with the measurement and recognition requirements,
but not the disclosure requirements, of applicable accounting standards and accounting interpretations. Investors should also note that the pro-forma historical financial
information does not purport to be in compliance with Article 11 of Regulation S-X of the Rules of the U.S. Securities and Exchange Commission.
This presentation includes pro-forma historical financial information for DPJ. The financial information has been derived from the audited financial statements of DPJ for the
years ended 31 March 2013 and 31 March 2011, as well as the unaudited financial information for the year ended 31 March 2012. The financial information has been
prepared in accordance with the measurement and recognition requirements prescribed by Japanese Accounting Standards (“JGAAP”).
There are differences between Australian Accounting Standards and JGAAP that may be material to such financial information and financial statements. Key differences
relevant to financial information disclosed in this presentation include, but are not limited to: recognition and subsequent measurement of: goodwill, finance leases, asset
retirement obligations and actuarial gains/losses on the defined benefit pension fund obligations. Adjustments have been reflected for these differences on the 31 March
2013 financial information of DPJ included in the pro-forma historical combined income statement and the pro-forma historical combined balance sheet, to reflect conformity
with Australian Accounting Standards. These adjustments are detailed on slides 38 and 42 of this presentation. Investors should also note that the pro-forma financial
information for DPJ does not purport to be in compliance with Article 11 of Regulation S-X of the Rules of the U.S. Securities and Exchange Commission.
This presentation includes certain financial measures that are “non-GAAP financial measures” under Regulation G of the U.S. Securities Exchange Act of 1934. These
measures include same store sales (“SSS”) growth, underlying EBITDA, underlying EBIT, underlying NPAT, EBITDA, EBIT, network sales, net debt and leverage. The
disclosure of such non-GAAP financial measures in the manner included in the Presentation may not be permissible in a registration statement under the U.S. Securities
Act.
This presentation includes certain financial measures that are “non-IFRS financial information”. These measures include: underlying EBITDA, underlying EBIT, underlying
NPAT, EBITDA, EBIT, SSS and network sales. This financial information is unaudited.
Effect of Rounding
A number of figures, amounts, percentages, estimates, calculations of value and fractions in this Presentation are subject to the effect of rounding. Accordingly, the actual
calculation of these figures may differ from the figures set out in this Presentation.
Investment Risk
An investment in DPE shares is subject to investment and other known and unknown risks, some of which are beyond the control of DPE including possible loss of income
and principal invested. DPE does not guarantee any particular rate of return or the performance of DPE, nor does it guarantee the repayment of capital from DPE or any
particular tax treatment. In considering an investment in DPE shares, investors should have regard to (amongst other things) the risks outlined in this Presentation.
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
3
IMPORTANT NOTICE AND DISCLAIMER
Future Performance
This Presentation contains certain “forward-looking statements”. The words “forecast”, “estimate”, “likely”, “anticipate”, “believe”, “expect’, “project”, “opinion”, “predict”,
“outlook”, “guidance”, “intend”, “should”, “could”, “may”, “target”, “plan”, “project”, “consider”, “foresee”, “aim”, “will” and other similar expressions are intended to identify
forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements, and include
statements in this Presentation regarding the conduct and outcome of the Entitlement Offer, the use of proceeds, and DPE’s outstanding debt. You are cautioned not to
place undue reliance on forward looking statements. While due care and attention has been used in the preparation of forward-looking statements, forward-looking
statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are
statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, guidance
on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance and may involve
known and unknown risks, uncertainties and other factors, many of which are outside the control of DPE. Actual results, performance or achievements may vary materially
from any forward-looking statements and the assumptions on which statements are based. DPE disclaims any intent or obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or results or otherwise.
Past Performance
Past performance and pro-forma historical information in this Presentation is given for illustrative purposes only and should not be relied upon (and is not) an indication of
future performance including future share price information. Historical information in this Presentation relating to DPE is information that has been released to the market.
For further information, please see past announcements released to ASX.
Disclaimer
None of the underwriter, nor any of its advisers, nor the advisers to DPE, have authorised, permitted or caused the issue, lodgement, submission, dispatch or provision of
this Presentation and, except to the extent referred to in this Presentation, do not make or purport to make any statement in this Presentation and there is no statement in
this Presentation which is based on any statement by any of those parties.
DPE, the underwriter and their respective affiliates, officers, employees, agents and advisers, to the maximum extent permitted by law, expressly disclaim all liabilities,
including, without limitation, liability for negligence in respect of, make no representations regarding, and take no responsibility for, any part of this Presentation and make
no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of information in this Presentation.
Statements made in this Presentation are made only as at the date of this Presentation. The information in this Presentation remains subject to change without notice. DPE
reserves the right to withdraw or vary the timetable for the Retail Entitlement Offer and/or Institutional Entitlement Offer without notice.
Not for distribution or release in the United States or in Canada except to residents of the Province of Ontario or Québec which are “accredited investors” or “permitted
clients”, as the case may be.
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
4
CONTENTS
1
Transaction Overview
2
Overview of Domino’s Pizza Japan
3
Strategic Rationale
4
Transaction Impact
5
DPE Full Year Results and Outlook
6
Acquisition Funding
7
Appendices
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
5
1
TRANSACTION OVERVIEW
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
KEY HIGHLIGHTS OF TRANSACTION
Acquisition of a 75% interest in Domino’s Pizza Japan (“DPJ”), which holds the Master
Franchise rights for Domino’s Pizza in Japan with a near 30 year operating history
259 stores (216 corporate owned, 43 franchised), as at 30 June 2013
Third largest pizza chain in Japan based on number of stores
Substantial opportunity for store growth in Japan given large population
DPE able to bring its intellectual property and expertise to benefit the Japanese consumer
Experienced DPJ leadership team retained
Partnership with current shareholder, Bain Capital, which will retain a 25% interest for at least 3
years
Expected new pillar of growth and geographic diversification of DPE’s earnings
Approximately 9% EPS accretive to DPE shareholders on FY2013 underlying pro-forma
earnings (excluding transaction costs)
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7
TRANSACTION OVERVIEW
DPE is to acquire a 75% interest in Domino’s Pizza Japan, a leading Domino’s Master Franchise in a
developed market with the potential for store growth
•
Acquisition
of Domino’s
Pizza Japan
Domino’s
Pizza Japan
Overview
DPE has entered into a binding agreement with Bain Capital for the acquisition of a 75% interest
in Domino’s Pizza Japan
–
DPE equity investment of ¥12 billion (A$135 million(1)) and provision of ¥9 billion
(A$101 million(1)) of debt
–
Implies enterprise value for the entire business of ¥25 billion (A$282 million(1))
•
Acquisition represents a strategic expansion into a developed market that delivers further
geographic diversification, with the potential for growth in number of stores
•
Partnership with Bain Capital, which will retain a 25% interest in DPJ for at least three years,
and will have up to 2 representatives on a joint advisory board of DPJ (with up to 7 board
members appointed by DPE)
•
Completion is expected to occur in September 2013
•
Domino’s Pizza commenced operations in Japan in 1985 and has grown to become the
country’s third largest pizza chain by number of stores
•
DPJ comprises a store network of 259 stores
•
̶
216 corporate owned stores (83% of total stores)
̶
43 franchise stores (17% of total stores)
DPJ is operated under a 30-year Master Franchise Agreement with Domino’s Pizza, Inc.
̶
•
Agreement has a 20-year term expiring on 31 March 2031 with an option to extend for
10 years at DPJ’s election
DPJ generated pro-forma revenue of A$252m and pro-forma EBITDA of A$28m in the year
ended March 2013(2)
Note: (1) Purchase price and acquisition funding converted to A$ assuming an AUD:JPY exchange rate of 1:88.7 (2) DPJ financials for the year ended 31 March 2013 converted from JGAAP to AIFRS. DPJ financials
converted to A$ based on an average AUD:JPY exchange rate over the 12 months ended 31 March 2013 of 1:85.6. Pro-forma adjustments to DPJ financials under DPE ownership include removal of the historical Bain
Capital management fee and inclusion of additional ongoing DPJ costs resulting from the acquisition of DPJ by DPE
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8
TRANSACTION OVERVIEW
Compelling
Strategic
Rationale
Strategic
Partnership
•
•
•
•
An established Domino’s Master Franchise complementary to current portfolio of territories
Expected new pillar of growth with opportunity to increase store numbers
DPE is able to bring its intellectual property and expertise to benefit the Japanese consumer
Highly regarded DPJ CEO and management team to remain with the business
•
•
DPE is partnering with Bain Capital, which will retain a 25% interest in DPJ
Bain Capital has local expertise in the Japanese fast food and restaurant sector, with a long
history of involvement in the Domino’s global network (previous majority owner of Domino’s
Pizza, Inc. in the US)
Exit mechanism provides potential path to full ownership for DPE with Bain Capital able to
exercise its put option after a minimum of 3 years and DPE able to exercise its call option after a
minimum of 5 years
•
•
•
Funding
Expected
Financial
Impact
•
•
•
Acquisition to be funded with an A$156m accelerated renounceable entitlement offer
underwritten except for the portion to be taken up by Somad Holdings
DPE has arranged new debt facilities from relationship banks in Australia to enable DPE to onlend approximately ¥9 billion (A$101m(1)) of debt to DPJ
̶
The facilities provided are denominated in Australian dollars (which will be swapped into
Japanese yen) and Japanese yen, have a five year term, and have foreign currency and
interest rate exposures that will be managed pursuant to hedging arrangements with one
or more of the lenders
EPS accretion of approximately 9% in FY2013 on a full year underlying pro-forma basis(2)(3)
DPE intends to maintain a conservative capital structure, with pro-forma net debt / EBITDA of
approximately 1.4x following the acquisition(4)
DPJ will be consolidated into DPE accounts for accounting and reporting purposes
Note: (1) Acquisition debt funding converted to A$ assuming an AUD:JPY exchange rate of 1:88.7 (2) DPE financials based on underlying earnings to 30 June 2013. DPJ unaudited financials for the 12 months ended
30 June 2013 converted from JGAAP to AIFRS. DPJ financials converted to A$ based on an average AUD:JPY exchange rate over the 12 months ended 30 June 2013 of 1:89.9. Pro-forma adjustments to DPJ financials
under DPE ownership include removal of the historical Bain Capital management fee and inclusion of additional ongoing DPJ costs resulting from the acquisition of DPJ by DPE (3) EPS accretion is based on underlying
NPAT of DPE and excludes expensing of transaction costs and amortisation of identifiable intangibles acquired. Standalone EPS used in EPS accretion calculation incorporates an adjustment factor to account for the
bonus element in the Entitlement Offer (4) Pro-forma net debt / EBITDA based on DPE’s balance sheet and income statement as at 30 June 2013 and DPJ’s balance sheet and income statement as at 31 March 2013.
DPJ balance sheet converted to A$ assuming an AUD:JPY exchange rate of 1:88.7. DPJ income statement converted to A$ assuming an AUD:JPY exchange rate of 1:85.6
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9
ALIGNMENT WITH DPE’S STRATEGIC GROWTH PLAN
DPE has assessed this transaction against six key criteria
1•
Expansion within the Domino’s brand
2•
Profitable and cash generative business that is EPS accretive to DPE shareholders
on FY2013 underlying pro-forma earnings
3•
Opportunity to bring DPE’s existing knowledge, people and core competencies to
benefit the Japanese consumer
4•
Significant opportunity to increase store numbers
5•
Retention of existing DPJ management team that will continue to drive the business
6•
Partnership with Bain Capital, which has local expertise and will retain part ownership
for a minimum of 3 years
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10
EXPANDED DPE FOLLOWING ACQUISITION OF DPJ
1,229 stores across 6 countries(1)
Domino’s Pizza
Enterprises
Australia / New Zealand(1)(2)
Stores: 1,229(1)
Pro-Forma (“PF”) Network Sales: A$1,117m(2)
PF Revenue: A$546m(2)
PF Underlying EBITDA: A$84m(2)
Europe(1)(2)
Japan(1)(2)
Corporate Stores
84
Corporate Stores
55
Corporate Stores
216
Franchise Stores
501
Franchise Stores
330
Franchise Stores
43
Total Stores
585
Total Stores
385
Total Stores
259
Store Target
750(3)
Store Target
1,250(3)
Store Target
600(3)
FY2013 Network Sales
A$563m
FY2013 Network Sales
A$286m
Mar-13 LTM PF Network Sales
A$269m
FY2013 Revenue
A$174m
FY2013 Revenue
A$121m
Mar-13 LTM PF Revenue
A$252m
Mar-13 LTM PF EBITDA
A$28m
FY2013 Underlying EBITDA
A$49m
FY2013 Underlying EBITDA
A$7m
Note: (1) DPE and DPJ store numbers as at 30 June 2013 (2) DPE underlying financials for the year ended 30 June 2013. DPE financials based on underlying financials adjusted to exclude transaction,
acquisition and additional legal charges relating to acquisition activity and costs associated with ongoing legal claims in France. DPJ financials for the year ended 31 March 2013 converted from JGAAP to AIFRS.
DPJ financials converted to A$ based on an average AUD:JPY exchange rate over the 12 months ended 31 March 2013 of 1:85.6. Pro-forma adjustments to DPJ financials under DPE ownership include removal
of the historical Bain Capital management fee and inclusion of additional ongoing DPJ costs resulting from the acquisition of DPJ by DPE (3) Store targets based on DPE management estimate
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11
2
OVERVIEW OF
DOMINO’S PIZZA JAPAN
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12
OVERVIEW OF DOMINO’S PIZZA JAPAN
DPJ is the third largest pizza chain in Japan by number of stores with a primary focus on the Tokyo and
Osaka regions and potential for expansion in new regions
• Domino’s Pizza commenced operations in
Japan in 1985 and has grown to become the
country’s third largest pizza chain by number of
stores behind Pizza-La Japan and Pizza Hut
Japan
• Store network has grown to 259 stores as at 30
June 2013, comprising 216 corporate owned
stores and 43 franchisee stores
̶
Store Locations as at 30 June 2013
Kansai
Chugoku
Kyushu
̶
Agreement has a 20-year term expiring
on 31 March 2031 with an option to
extend for 10 years at DPJ’s election
Kanto
7
Osaka
Shikoku
Franchise operations commenced in
2004
• Business is operated under a 30-year Master
Franchise Agreement with Domino’s Pizza, Inc.
53
1
Tokyo
Chubu
2
181
15
Store Mix as at 30 June 2013
43 Franchise
Stores
(17%)
• Head office and support staff of approximately
100, with approximately 4,600 store managers,
supervisors and other store employees as of 31
March 2013
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216 Corporate
Stores
(83%)
13
HISTORY OF DOMINO’S PIZZA JAPAN
Domino’s Pizza has a near 30 year operating history in Japan
1985: DPJ
opens first store
in Ebisu, Tokyo
1980’s
1988: Osaka
office is
established,
paving way for
business in the
Kansai region
1993: 100th
store of DPJ
opens
1997: DPJ’s
first store in
Kyushu region
opens in
Takeshita
2000: Head
office moves
from Kamiyacho to
Iwamoto-cho,
Tokyo
1990’s
1995: DPJ’s first
store in Chukyo
region opens in
Mizuho
1998: DPJ’s first
store in Tohoku
region opens in
Miyagino
2013: DPJ
opens 250th
store
2000’s
2004:
Franchise
business
begins
2010: Bain
Capital acquires
DPJ
The 200th store in
Japan opens in
Tanashi, Tokyo
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14
#3 POSITION IN JAPANESE PIZZA MARKET
• There are approximately 2,150 chain pizza outlets in Japan(1), with the three main players representing
approximately 1,160 stores(2)(3)
• Pizza-La, Pizza Hut and Domino’s Pizza lead the market in Tokyo and Osaka by number of stores
• High level of population density in metropolitan centres represents a significant opportunity for the delivery
business
• DPE believes the market is suited to significant chain store rollout as demonstrated by McDonald’s Japan
expansion (3,268 stores(4))
Number of Chain Stores
Country Comparison
(2)
536
Australia
France
Japan
22.8m(5)
65.8m(6)
127.3m(7)
US$67,036
US$39,772
US$46,720
2,073
1,645
2,151
(2)
365
(3)
Population
259
GDP / Capita(8)
Pizza-La Japan
Pizza Hut Japan
DPJ
Estimated
Chain Pizza
Stores(1)
Note: (1) Number of pizza outlets based on Euromonitor data (September 2012) (2) DPE estimates based on company websites (3) DPJ number of stores as at 30 June 2013 (4) As reported by McDonald’s
Corporation as at 31 March 2013 (5) Australian population estimate based on ABS data (September 2012) (6) France population estimate based on INSEE data (January 2013) (7) Japan population estimate based on
Japan Ministry of Internal Affairs and Communications data (April 2013) (8) GDP per capita data based on World Bank estimates (2012)
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15
DIVERSE PRODUCT OFFERING
• DPJ has a diverse menu offering with more than 280 items at a premium price point
–
Quattro-style pizzas are the key category, comprising 46% of total sales
–
Medium-sized quattro pizza priced between approximately A$25 and A$35
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16
STRONG STORE ECONOMICS
• Profitable store model
– Average DPJ store size of between 80 – 120m2
– Average DPJ store average weekly unit sales
(“AWUS”) of ¥1.9 million (A$22,483(1))
• Strong operating systems
– DPJ’s operational excellence statistics are amongst
the highest across Domino’s worldwide
– Strong store operations team, with many having a
lengthy tenure with DPJ
Average Weekly Unit Sales
A$
22,483
20,190
15,239
Europe (2)
ANZ (2)
Japan (1)
Note: (1) Based on total DPJ system sales for the year ended 31 March 2013 of ¥23.0 billion divided by average stores over the year of 230. DPJ system sales converted to A$ based on an average AUD:JPY
exchange rate over the 12 months ended 31 March 2013 of 1:85.6 (2) Europe and ANZ AWUS based on DPE financial year to 30 June 2013
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17
SIGNIFICANT EXPANSION TO STORE NETWORK
# of DPJ Network Stores
Network Rollout Opportunity
251
209
185
42
259
43
–
28
21
209
164
Mar-11
216
181
Mar-12
Corporate Stores
• DPJ increased its store network by 74 stores
between March 2011 and June 2013
Mar-13
Jun-13
Number of franchise stores more than
doubled over this period, rising to 17% of
total network stores by June 2013
• New store locations have been selected to drive
increases in carry-out sales, with relocations
providing an opportunity to increase carry-out
sales further
• Opportunity for growth in existing and new
regions, with potential long term network store
target of ~600 stores comprising 30% or more
franchise stores
Franchise Stores
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18
DOMINO’S PIZZA JAPAN HISTORICAL FINANCIAL PERFORMANCE
Revenue(1)
EBITDA(1)(2)
JPY Billion
JPY Billion
2.3
2.3
FY12A
FY13A
21.5
19.2
16.7
FY11A
1.6
FY12A
FY13A
FY11A
• Revenue increased by a CAGR of 13% between
FY11A and FY13A
• EBITDA increased by a CAGR of 20% between FY11A
and FY13A
• Revenue growth driven by a significant expansion in
DPJ’s store network (+66 stores), relocations and
other initiatives
• Addition of 28 corporate stores across the DPJ network
reduced EBITDA in FY13A with fixed costs and start-up
costs exceeding new store contributions for the first
year of operation along with various other items such as
expansion in head office, adjustments to payroll tax and
unprofitable promotional activities
Note: (1) DPJ financials for the year ended 31 March in JGAAP. There are differences between Australian Accounting Standards and JGAAP that may be material to such financial information and financial statements.
DPJ financial information has been derived from the audited financial statements of DPJ for the years ended 31 March 2013 and 31 March 2011, as well as the unaudited financial information for the year ended 31
March 2012. DPJ financials have been rounded to billions (2) Historical EBITDA excludes historical management fee paid to Bain Capital
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19
STRATEGIC PLAN FOR GROWTH
Key Initiatives for DPJ
• Franchise system opportunity
– Potential to move to a 30% franchise model, and potentially a
greater mix as DPJ targets 600 stores
– Potential to leverage operational depth by offering franchise funding
to high performing store managers
• New store openings
– Plan to rollout 40 – 50 new stores per year in near term
• Planned store relocations
– Higher profile / traffic locations
• Metro vs. regional opportunity
– Plan to expand platform outside current metropolitan focused
regions of operation
• In-fill stores in current regions
– Opportunity to increase metro store base in current regions of
operation and leverage significant population density
• Carry out
– Opportunity to expand carry out purchases through store relocations
• Leverage DPE’s digital expertise
– Investment in online ordering platform, applications and improved
internal systems
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20
SHIFT TO HIGH TRAFFIC LOCATIONS
The relocation of back street stores with low visual impact to high street locations is expected to be one
driver of same store sales growth. There is an ability to employ DPE’s “Entice” store format for future
DPJ stores
• Improves store based marketing and brand profile
• Increases carry-out options for customers
– Improves accessibility for customers
– Selection of better value products to take home
– Complementary to premium delivery business
• Increasing availability of Domino’s store format locations (80 - 120m2) as the general trend for convenience
store retailers to relocate to larger floor space locations (>200m2) continues
• DPJ has undertaken 9 relocations since April 2012, with an opportunity for more than a quarter of the existing
DPJ network to be relocated to improved locations(1)
DPJ Back Street Store Format
DPJ High Street Store Format
DPE “Entice” Store Format
“The Past”
“In Transition”
“The Future”
Note: (1) Based on DPE management estimate
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21
EXPERIENCED LEADERSHIP TEAM
• Existing top 5 DPJ executives have been responsible for delivering significant earnings growth,
network expansion and operational improvements over the last 5 years
• Scott Oelkers, President & CEO of DPJ, is a 25 year Domino’s veteran
• All have committed to continue with DPJ post acquisition by DPE
Senior DPJ Management Team
Scott Oelkers
President & CEO
Hiroshi
Kakiuchi
Head of Store
Operations
Kenji Imada
Head of
Development
and Franchise
Operations
Masahiro
Shimizu
CFO
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
Kenji Ikeda
Chief Marketing
Officer
22
3
STRATEGIC RATIONALE
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
STRATEGIC RATIONALE
The acquisition of DPJ is strategically compelling and aligned with DPE’s growth strategy
An Established
and Profitable
Domino’s Master
Franchise
A Significant
Potential Growth
Opportunity
•
•
•
•
•
•
Opportunity to
Leverage DPE’s
IP and KnowHow
•
•
Expansion and
Diversification of
Earnings
Financially
Compelling
Acquisition
•
•
Domino’s has been in operation in Japan since 1985 and is now the third largest
pizza chain by number of stores with a network of 259 stores
A profitable business that generated pro-forma EBITDA of A$28m(1) in FY2013
Provides DPE with a third major growth platform
DPJ has a strong existing market position with potential to drive significant further
growth through increased store penetration
Opportunity exists to increase DPJ’s store network to 600 stores long term(2)
Potential to leverage DPE’s expertise in marketing, internet and mobile strategy,
extensive team resources and talent, and track record in building a strong
franchisee network
DPE’s business know-how enhanced with a strategic partner who shares DPE’s
“Domino’s DNA” and has a long history with the Domino’s business
Pro-forma DPE store count will increase 27% to 1,229 and pro-forma revenue will
increase 85% to A$546m as a result of the acquisition(1)(3)
Japan to comprise 33% of DPE pro-forma EBITDA; ANZ to comprise 59% of proforma EBITDA, and Europe to comprise 8% of pro-forma EBITDA(1)(3)
Acquisition expected to deliver DPE material EPS and cash flow accretion while
maintaining conservative leverage
Note: (1) DPJ financials for the year ended 31 March 2013 converted from JGAAP to AIFRS. DPJ financials converted to A$ based on an average AUD:JPY exchange rate over the 12 months ended 31 March 2013 of
1:85.6. Pro-forma adjustments to DPJ financials under DPE ownership include removal of the historical Bain Capital management fee and inclusion of additional ongoing DPJ costs resulting from the acquisition of DPJ
by DPE (2) DPE management estimate (3) DPE underlying financials for the year ended 30 June 2013
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
24
BENEFITS OF DPE OWNERSHIP FOR DPJ
A number of strategic initiatives are expected to be rolled out for DPJ
Leverage DPE’s
Digital Expertise
Leverage DPE’s
Product
Development
Sophisticated
Marketing
Strategy
Leverage Global
Procurement
Leverage DPE‘s
Franchising
Expertise
•
•
Leverage DPE’s IT capability over the next 3 – 5 years
Investment in online ordering platform, applications and improved internal systems
•
Potential to improve menu development and assessment of customer tastes and
preferences
•
•
Increased offer-based and value-driven messages through both online and
television marketing platforms
Leverage DPE’s strength in social networking and online media
•
Economies of scale in purchasing pizza ingredients and other items
•
Opportunity to move from approximately 17% franchise/management contracts to
30% or more – less reliant on corporate model
Potential to release capital to fund future growth and enhance profitability
•
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
25
A STRATEGIC PARTNERSHIP WITH BAIN CAPITAL
Experienced
Partner with
“Domino’s DNA”
•
•
•
Bain Capital shares DPE’s “Domino’s DNA”
Bain Capital has previously been a majority owner of Domino’s Pizza, Inc. (US)
DPE worked with Bain Capital to undertake detailed financial, legal and operational
due diligence on DPJ
•
Bain Capital intimately understands the DPJ business and has a long history
operating similar businesses in Japan
–
Opportunity to leverage DPE’s expertise in building a larger franchisee
platform, marketing, and internet strategy
–
Potential to utilise DPE resources and talent
–
DPJ Board will have up to seven directors (including the Chair) appointed
by DPE, and up to two directors appointed by Bain Capital
•
Future exit rights of Bain Capital are clearly defined and both parties are motivated
to create value
–
Put option held by Bain Capital exercisable any time after the date which is
3 years from completion of the acquisition
–
Call option held by DPE exercisable any time after the date which is 5
years from completion of the acquisition
–
Exit pricing based on pre-determined pricing formula broadly based on a
17.5x unlevered price/earnings multiple with pre-agreed adjustments to
earnings, as well as certain other adjustments
Aligned
Strategic
Objective
Future Exit
Rights
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
26
4
TRANSACTION IMPACT
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
EXPECTED FINANCIAL IMPACT
• EPS accretion of approximately 9% in FY2013 on a full year pro-forma adjusted basis(1)(2)
̶
Before amortisation of identifiable acquired intangibles and expensing of transaction
costs
̶
No revenue and/or cost synergies have been assumed
• DPE will continue to maintain a conservative capital structure with access to low cost, fixed
rate Japanese debt funding
̶
Pro-forma historical net debt / EBITDA of approximately 1.4x(3)
• DPE intends to maintain its current dividend payout ratio of 70% of NPAT
̶
As DPE’s offshore earnings grow, DPE expects dividends to become partly franked
̶
This would be the case irrespective of the DPJ acquisition, which is expected to
contribute further offshore earnings
Note: (1) DPE financials based on underlying earnings to 30 June 2013. DPJ unaudited financials for the 12 months ended 30 June 2013 converted from JGAAP to AIFRS. DPJ financials converted to A$ based on an
average AUD:JPY exchange rate over the 12 months ended 30 June 2013 of 1:89.9. Pro-forma adjustments to DPJ financials under DPE ownership include removal of the historical Bain Capital management fee and
inclusion of additional ongoing DPJ costs resulting from the acquisition of DPJ by DPE (2) EPS accretion is based on underlying NPAT of DPE excluding expensing of transaction costs and amortisation of identifiable
intangibles acquired. DPE management have determined that identifiable intangible assets relating to the DPJ MFA and other franchise agreements have an indefinite useful life and therefore no amortisation has been
recorded. Standalone EPS used in EPS accretion calculation incorporates an adjustment factor to account for the bonus element in the Entitlement Offer (3) Pro-forma net debt / EBITDA based on DPE’s balance sheet
and underlying income statement as at 30 June 2013 and DPJ’s balance sheet and income statement as at 31 March 2013. DPJ balance sheet converted to A$ assuming an AUD:JPY exchange rate of 1:88.7. DPJ
income statement converted to A$ assuming an AUD:JPY exchange rate of 1:85.6
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
28
EXPANDED STORE NUMBERS AND REVENUE
The acquisition of DPJ geographically diversifies earnings and complements Europe as a new
pillar of growth for DPE
Stores by
Geography(1)
DPE Standalone(1)
Pro-Forma DPE(1)(2)
970 Stores as at
30 June 2013
1,229 Stores as at
30 June 2013
Europe
(385 stores)
40%
Japan
(259 stores)
21%
Europe
(385 stores)
31%
ANZ
(585 stores)
60%
ANZ
(585 stores)
48%
A$295m Revenue
A$546m Revenue
Europe
(A$121m)
22%
Pro-Forma
Revenue(2)
Japan
(A$252m )
46%
Europe
(A$121m)
41%
ANZ
(A$174m)
59%
ANZ
(A$174m)
32%
Note: (1) DPE and DPJ store numbers as at 30 June 2013 (2) DPE underlying financials for the year ended 30 June 2013. DPJ financials for the year ended 31 March 2013 converted from JGAAP to AIFRS. DPJ
financials converted to A$ based on an average AUD:JPY exchange rate over the 12 months ended 31 March 2013 of 1:85.6. Pro-forma adjustments to DPJ financials under DPE ownership include removal of the
historical Bain Capital management fee and inclusion of additional ongoing DPJ costs resulting from the acquisition of DPJ by DPE
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
29
GEOGRAPHIC DIVERSIFICATION OF EARNINGS
Pro-Forma
Underlying
EBITDA(1)
DPE Standalone(1)
Pro-Forma DPE(1)
A$56m EBITDA
A$84m EBITDA
Europe
(A$7m)
8%
Europe
(A$7m)
12%
ANZ
(A$49m)
88%
Japan
(A$28m )
33%
ANZ
(A$49m)
59%
A$43m EBIT
A$64m EBIT
Europe
(A$2m)
4%
Europe
(A$2m)
3%
Pro-Forma
Underlying
EBIT(1)
ANZ
(A$41m)
96%
Japan
(A$21m )
33%
ANZ
(A$41m)
64%
Note: (1) DPE underlying financials for the year ended 30 June 2013. DPE financials based on underlying financials adjusted to exclude transaction, acquisition and additional legal charges relating to acquisition
activity and costs associated with ongoing legal claims in France. DPJ financials for the year ended 31 March 2013 converted from JGAAP to AIFRS. DPJ financials converted to A$ based on an average AUD:JPY
exchange rate over the 12 months ended 31 March 2013 of 1:85.6. Pro-forma adjustments to DPJ financials under DPE ownership include removal of the historical Bain Capital management fee and inclusion of
additional ongoing DPJ costs resulting from the acquisition of DPJ by DPE
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
30
EXPANDED GROUP STRUCTURE
• DPJ will continue to operate as a stand alone operating entity reporting to the newly formed board of DPJ
with oversight from a senior leadership team from DPE
̶
New DPJ Board with up to 9 members – Up to 7 from DPE and up to 2 from Bain Capital
Expanded DPE Group Structure
Domino’s Pizza Enterprises
Bain Capital
DPE Board
Up to 7 DPJ Board
Representatives
Don Meij
Group CEO and Managing
Director
Up to 2 DPJ Board
Representatives
Domino’s Japan
Global Finance, Procurement
and IT
DPJ Board
Domino’s ANZ
25%
Interest
Domino’s Europe
Australia and New Zealand
Operational
Management
France, Netherlands and
Belgium Operational
Management
DPJ
Management
100% Controlled
100% Controlled
75% Interest
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
31
5
DPE FULL YEAR RESULTS AND OUTLOOK
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
32
DPE RESULTS HIGHLIGHTS
FY13
Significant
FY13
Statutory Charges(1) Underlying +/(-) FY12
A$m
A$m
A$m
FY11
A$m
FY12
A$m
Network Sales
746.4
805.3
848.6
848.6
Same Store
Sales %
11.0%
6.5%
2.0%
2.0%
Revenue
246.7
264.9
294.9
EBITDA
39.1
48.1
54.0
Depreciation &
Amortisation
(8.7)
(10.0)
(12.8)
EBIT
30.4
38.1
41.2
Interest
(0.7)
(0.5)
(0.4)
NPBT
29.7
37.6
40.8
Tax Expense
(8.2)
(10.7)
NPAT
21.4
EPS (basic)
Dividend per
Share
5.4%
• Underlying NPAT up 13.0% to $30.4m
• Final dividend 15.4c (fully franked), bringing
full year dividend to 30.9c which reflects a
70% payout ratio based on 15% NPAT growth
(per FY13 guidance)
• SSS improved in H2, finishing the full year at
2.0%
294.9
11.3%
55.9
16.2%
(12.8)
27.6%
• Underlying EBITDA growth of 16.2% to
$55.9m
43.1
13.2%
• Underlying NPBT growth of 13.5% to $42.7m
(0.4)
(10.2%)
2.0
42.7
13.5%
(12.1)
(0.2)
(12.3)
14.8%
26.9
28.7
1.8
30.4
13.0%
31.3
38.9
40.9
43.4
11.5%
21.9
27.1
30.9
30.9
14.0%
2.0
2.0
• Effective tax rate 28.8% vs 28.4% in FY12
• Underlying EPS 43.4c, up 11.5%
• Two separate capital returns of 21.4c per
share were made in December 2012 and June
2013
• Total returns to shareholders in the year
amount to 73.7c per share
Note: (1) Transaction, acquisition and additional legal charges relating to acquisition activity and costs associated with ongoing legal claims in France
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
33
DPE TRADING UPDATE
• The momentum that we have seen in the latter part of FY13 has continued into the start of FY14. ANZ SSS are
currently +4.7% in the first 5 weeks of the year, rolling a 2 year cumulative growth of 15.6% (same period FY12 +
same period FY13)
• Europe sales are being impacted by the timing of Ramadan this year, being 10 days earlier than 2012 and the
current heatwave. Currently SSS for the first 5 weeks are -5.0%, rolling a 2 year cumulative growth of 11.8% (same
period FY12 + same period FY13)
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
34
FY14 GUIDANCE(1)
• FY2014 guidance has been provided separately for ANZ and Europe, and Japan
• Japan guidance has been provided on a constant currency, full year pro-forma basis after adjusting for AIFRS(2)(3)
• DPE will provide consolidated guidance for FY2014 in due course
Measure
SSS%
New Store Openings
EBITDA Growth
Net Capex
FY13 Actual
ANZ and Europe
FY14 Guidance
Japan
FY14 Guidance(2)(3)
2.0%
2 – 4%
1 – 2%
67
70 – 80
40 – 50
16.2%
in the region of 15%
in the region of 15%
A$30.4m
A$20 – 25m
¥1.2 – 1.7Bn
Note: (1) FY2014 guidance based on underlying results for FY2013 and FY2014. FY2014 guidance excludes the impact of any one off transaction related expenses (2) Japan FY2014 guidance based on DPJ
financials under AIFRS and on a constant currency basis (3) Pro-forma adjustments to DPJ financials under DPE ownership include removal of the historical Bain Capital management fee and inclusion of additional
ongoing DPJ costs resulting from the acquisition of DPJ by DPE
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
35
6
ACQUISITION FUNDING
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
ACQUISITION FUNDING
The balanced funding structure maintains DPE’s capital structure flexibility and current dividend policy(1)
•
Entitlement
Offer
•
•
Debt
•
•
•
5 for 23 underwritten pro-rata accelerated renounceable Entitlement Offer to raise gross proceeds of
A$156m
– ~A$125m Institutional Entitlement Offer
– ~A$31m Retail Entitlement Offer
Issue price of A$10.20 per share, representing a 10.6% discount to the dividend adjusted theoretical
ex-rights price (“TERP”) of A$11.40(2)
DPE has arranged new debt facilities from relationship banks in Australia to enable DPE to on-lend
approximately ¥9 billion (A$101m(3)) of debt to DPJ.
– The facilities provided are denominated in Australian dollars (which will be swapped into
Japanese yen) and Japanese yen, have a five year term, and have foreign currency and interest
rate exposures that will be managed pursuant to hedging arrangements with one or more of the
lenders
DPE will continue to maintain a conservative capital structure with access to low cost, fixed rate
Japanese debt funding
Existing DPE term debt facilities remain in place
Proceeds from Entitlement Offer will be used to repay approximately A$14.3m of existing DPE debt
Sources
A$m
Uses
A$m
Entitlement Offer
155.6
Acquisition of DPJ(4)
281.8
Acquisition Debt
101.5
Repayment of Existing DPE Debt
14.3
Bain Capital Equity Interest
45.1
Transaction Costs(5)
6.1
Total
302.2
Total
302.2
Note: (1) DPE dividend policy is to pay out 70% of net profit after tax (2) The theoretical ex-rights price (“TERP”) is the theoretical price at which DPE shares should trade at immediately after the ex-date for the Entitlement Offer.
The TERP is a theoretical calculation only and the actual price at which DPE shares trade immediately after the ex-date for the Entitlement Offer will depend on many factors and may not equal the TERP. TERP is calculated by
reference to DPE’s closing price of A$11.82 on 12 August 2013 and by deducting the FY2013 final dividend of A$0.154 to reflect that the New Shares will not be entitled to receive this dividend payment (3) Acquisition debt funding
converted to A$ assuming an AUD:JPY exchange rate of 1:88.7 (4) Acquisition of 100% of DPJ for ¥25.0 billion (A$281.8m) on a cash and debt free basis. Does not include completion adjustments based on DPJ’s balance sheet at
completion. Acquisition price converted to A$ assuming an AUD:JPY exchange rate of 1:88.7 (5) Transaction costs include transaction costs relating to the Entitlement Offer, transaction costs relating to the new debt facilities, and
transaction costs relating to the acquisition of DPJ
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
37
PRO-FORMA HISTORICAL COMBINED BALANCE SHEET
• Pro-forma balance sheet presented on a historical basis
A$m
DPE
30 June 2013(1)
DPJ
31 March 2013(2)
Adjustments for
Acquisition(5)
Adjustments for
Acquisition Funding
Pro-Forma Balance
Sheet
Cash
18.7
-
(238.2)
238.2
18.7
Receivables
26.4
4.9
-
-
31.3
Inventories
6.7
2.2
-
-
8.9
Intangibles
17.4
-
33.7
-
51.1
Goodwill
57.1
-
244.3
-
301.4
PP&E and Other Assets
63.4
44.8
-
0.1
108.3
Total Assets
189.8
51.9
39.8
238.3
519.7
Trade and Other Payables
38.1
27.7
-
(0.7)
65.1
39.7
5.7(3)
-
87.2
132.5
-
69.2
Borrowings
Other Liabilities
9.4
14.6
45.1(4)
Total Liabilities
87.2
48.0
45.1
86.5
266.8
Equity Attributable to
Owners of DPE
102.6
3.9
(5.3)
151.8
252.9
-
-
-
-
-
102.6
3.9
(5.3)
151.8
252.9
Non-Controlling Interests(6)
Total Equity
Note: (1) DPE balance sheet as at 30 June 2013 (2) DPJ balance sheet as at 31 March 2013, converted to A$ assuming an AUD:JPY exchange rate of 1:88.7. DPJ balance sheet converted from JGAAP to AIFRS with key
adjustments including additional depreciation for PP&E, reversal of amortisation of goodwill, recognition of finance leases, and recognition of actuarial gains and losses for pension fund liabilities. DPJ balance sheet presented
on a cash and debt free basis and with goodwill and intangibles removed as they have been reflected in the adjustments for acquisition (3) Lease liability resulting from conversion of DPJ balance sheet from JGAAP to AIFRS
(4) DPE has recorded a liability relating to its obligation under the put option granted to Bain Capital, the payment of which would result in DPE becoming the sole owner of DPJ. DPE will finalise its acquisition accounting
within a 12 month period of acquisition completion (5) The acquisition adjustments have been determined on a provisional basis based on financial information available at this time. DPE will undertake a formal exercise to
finalise the acquisition adjustments within a 12 month period of acquisition completion (6) Due to the put option DPE has derecognised the non-controlling interest in equity over the non-controlling interest share, and has
recognised a put option liability as discussed under footnote 4 above
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
38
ENTITLEMENT OFFER DETAILS(1)
Offer Size
•
5 for 23 pro-rata accelerated renounceable Entitlement Offer to raise gross proceeds of up to
A$156m
•
A$10.20 per New Share representing
̶
10.6% discount to the dividend adjusted TERP of A$11.40 on 12 August 2013(2)
̶
12.6% discount to the dividend adjusted last closing price of A$11.67 on 12 August 2013(3)
•
•
~A$125m Institutional Entitlement Offer to existing institutional shareholders
New Shares equivalent to the number of New Shares not taken up and those that would have been
offered to ineligible shareholders will be placed into an institutional shortfall bookbuild
~A$31m Retail Entitlement Offer to existing retail shareholders
New Shares equivalent to the number of New Shares not taken up and those that would have been
offered to ineligible shareholders will be placed into a retail shortfall bookbuild
If the amount per New Share realised in the bookbuilds exceeds the Offer Price of A$10.20 per New
Share, the excess will be paid to shareholders who did not accept their Entitlement in full (with
respect to that part of the Entitlement they did not accept only) and to ineligible shareholders
Offer Price
Offer Structure
•
•
•
Existing Option
Holders
•
•
Existing option holders will not be entitled to participate in the Entitlement Offer in respect of their
options
The terms of the existing options will be varied as permitted by the ASX Listing Rules
Shareholder
and Director
Commitments
•
Record Date
•
Record date is 7:00 pm (Sydney time) on Friday, 16 August 2013
Ranking of
New Shares
•
New Shares will not be eligible for the FY2013 final dividend, but will otherwise rank equally with
existing DPE Shares
•
DPE’s largest shareholder, Somad Holdings (representing approximately 27% of DPE’s current
issued capital), has given an irrevocable undertaking to take up its pro-rata entitlement
DPE directors have stated that they intend to participate in the Entitlement Offer for some or all of
their respective pro-rata entitlements to the extent that their financial circumstances permit
Note: (1) Dates and times are indicative only and are subject to change (2) The theoretical ex-rights price (“TERP”) is the theoretical price at which DPE shares should trade at immediately after the ex-date for the
Entitlement Offer. The TERP is a theoretical calculation only and the actual price at which DPE shares trade immediately after the ex-date for the Entitlement Offer will depend on many factors and may not equal the
TERP. TERP is calculated by reference to DPE’s closing price of A$11.82 on 12 August 2013 and by deducting the FY2013 final dividend of A$0.154 to reflect that the New Shares will not be entitled to receive this
dividend payment (3) Based on the closing price of A$11.82 on 12 August 2013 and after deducting the FY2013 final dividend of A$0.154 to reflect that the New Shares will not be entitled to receive this dividend payment
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
39
ENTITLEMENT OFFER TIMETABLE(1)
Event
Date
Announcement of Acquisition and Entitlement Offer
Tuesday, 13 August 2013
Institutional Entitlement Offer opens
Tuesday, 13 August 2013
Institutional Entitlement Offer closes
Wednesday, 14 August 2013
Institutional Shortfall Bookbuild
Thursday, 15 August 2013
Record date under the Entitlement Offer
Friday, 16 August 2013
Retail Entitlement Offer opens
Tuesday, 20 August 2013
Despatch of Retail Offer booklet and Entitlement and Acceptance Form
Tuesday, 20 August 2013
Settlement of the Institutional Entitlement Offer and Institutional Shortfall Bookbuild
Tuesday, 27 August 2013
Allotment of New Shares issued under the Institutional Entitlement Offer and Institutional Shortfall Bookbuild and
commencement of trading on ASX
Despatch of payments (if any) in respect of Entitlements not accepted under the Institutional Entitlement Offer
Retail Entitlement Offer closes
Wednesday, 28 August 2013
Friday, 30 August 2013
Friday, 6 September 2013
Retail Shortfall Bookbuild
Wednesday, 11 September 2013
Settlement of the Retail Entitlement Offer and Retail Shortfall Bookbuild
New Shares allotted under the Retail Entitlement Offer and Retail Shortfall Bookbuild
New Shares issued under the Retail Entitlement Offer and Retail Shortfall Bookbuild commence trading on the ASX
Tuesday, 17 September 2013
Wednesday, 18 September 2013
Thursday, 19 September 2013
Despatch of Holding Statements
Friday, 20 September 2013
Despatch of payments (if any) in respect of Entitlements not accepted under the Retail Entitlement Offer
Friday, 20 September 2013
Note: (1) Dates and times are indicative only and are subject to change
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
40
7
APPENDICES
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
41
PRO-FORMA HISTORICAL COMBINED INCOME STATEMENT
A$m
DPE
30 June 2013
Statutory
Sales
294.9
EBITDA
54.0
EBIT
Significant
Charges(1)
DPE
30 June 2013
Underlying
DPJ
Pro-Forma
31 March 2013(2) Adjustments(3)
Pro-Forma for
Acquisition
294.9
251.5
-
546.4
2.0
55.9
27.6
0.1
83.7
41.2
2.0
43.1
21.1
-
64.2
NBPT
40.8
2.0
42.7
21.0
(1.9)
61.9
NPAT
28.7
1.8
30.4
13.0
(1.3)
42.2
NPAT Attributable to
Non-Controlling Interests
2.7
NPAT Attributable to
Owners of DPE
39.5
Note: (1) Significant charges include transaction, acquisition and legal charges relating to acquisition activity and costs associated with ongoing legal claims in France (2) DPJ financials for the year ended 31 March 2013
converted from JGAAP to AIFRS with key adjustments including additional depreciation for property, plant and equipment, reversal of amortisation of goodwill, recognition of finance leases, and recognition of actuarial gains
and losses for pension fund liabilities. In addition, interest expense has been removed to present DPJ’s financials on a cash and debt free basis. DPJ financials converted to A$ based on the average AUD:JPY exchange rate
over the 12 months ended 31 March 2013 of 1:85.6 (3) Pro-forma adjustments to DPJ financials under DPE ownership include removal of the historical Bain Capital management fee, inclusion of additional ongoing DPJ costs
resulting from the acquisition of DPJ by DPE and estimated interest expense on new debt to fund the acquisition. DPE has determined that identifiable intangible assets relating to the MFA and other franchise agreements have
an indefinite useful life and therefore no amortisation has been recorded
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
42
RISKS
Key Risks
There are a number of factors, specific to DPE, specific to the acquisition of DPJ and of a general nature, which may affect the future
operating and financial performance of DPE, DPJ and the industry in which they operate and the outcome of an investment in DPE.
This section describes some, but not all, of the key risks associated with an investment in DPE which potential investors should consider
together with publicly available information (including this Presentation) concerning DPE before making an investment decision.
Operational Risks
Competition
DPE operates in a competitive market. DPE’s financial performance or operating margins could be adversely affected if the actions of
competitors or potential competitors become more effective, or if new competitors enter the market, and DPE is unable to counter these
actions.
Consumer Preferences and Perceptions
Food service businesses are affected by changes in consumer tastes, national, regional and local economic conditions, and demographic
trends. For instance, there could be a materially adverse effect on DPE’s business and operating results if prevailing health or dietary
preferences cause consumers to avoid pizza and other products which DPE offers in favour of foods that are perceived as more healthy.
Moreover, because DPE is primarily dependent on a single product, if consumers’ demand for pizza should decrease, DPE’s business
would be impacted more than if it had a more diversified menu, as some other food service businesses do.
Sustainability of Growth
The continued strong growth in sales and profitability of DPE is dependent upon a number of factors, including DPE’s ability to refurbish
existing stores and open new stores and sell any selected existing stores on a profitable basis, maturation of new stores and meeting
customers' changing taste preferences.
Franchise Risk
DPE's right to operate Domino's Pizza Stores and grant franchises in Australia, New Zealand and Europe is conferred by separate Master
Franchise Agreements. The Master Franchise Agreements can be terminated in certain circumstances, such as breach by DPE, its
insolvency and failure to achieve agreed growth targets. If a Master Franchise Agreement in respect of a territory is terminated, DPE will
lose the right to operate Domino's Pizza Stores in that territory and this will fundamentally impact on its business. DPE's future growth
also depends on its ability to identify, attract and retain suitably qualified and motivated franchisees. An inability to do so, or poor
performance by the network of Domino's franchised stores, may have a materially adverse impact on the financial performance of DPE
and could cause harm to the reputation of the Domino's brand.
Managing Growth
As DPE and its operations expand, DPE will be required to continue to improve, and where appropriate, upscale its operational and
financial systems, procedures and controls and expand, retain, manage and train its employees. There is a risk of a material adverse
impact on DPE if it is not able to manage its expansion and growth efficiently and effectively.
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RISKS
Operational Risks (cont’d)
Operating Costs
DPE’s ability to consistently offer low prices and operate profitably is dependent on a combination of the scaleability of its operations
and the costs of its operating structure. DPE’s ability to maintain a relatively low cost operating structure is not guaranteed and there
is no assurance that these low operating costs can be maintained.
Property Leases
DPE has a large number of leased premises which are used principally for its Corporate Stores. The growth prospects of DPE are
likely to result from increased contribution from existing stores and DPE’s ability to continue to open and operate new stores on a
profitable basis. Accordingly, there may be a material adverse impact on DPE’s business and profitability if DPE is unable to
renegotiate acceptable lease terms for existing stores when leases are due to expire and to identify suitable sites and negotiate
suitable leasing terms for new stores.
Information Technology
DPE relies heavily on management information, point-of-sales systems and other information technology systems designed to
maximise the efficiency of DPE’s stores. Should these systems not be adequately maintained, secured or updated, or DPE’s
disaster recovery processes not be adequate, system failures may negatively impact on DPE’s performance.
Preserving DPE's Culture
DPE attributes much of its success to its employees and franchisees and the culture that binds them at all levels in the network of
Domino's stores. DPE's future success is reliant on DPE being able to preserve its existing culture as its growth continues and its
operations become more geographically widespread.
Reliance on Key Personnel
DPE is committed to providing an attractive employment environment, conditions and prospects to assist in retaining its key senior
management personnel. However, there can be no assurance that DPE will be able to retain these key personnel. Don Meij has
been instrumental in managing the growth of DPE. The loss of Don Meij could have a material adverse impact on the business of
DPE.
Maintenance of Reputation and Brand Name
The success of DPE is heavily reliant on its reputation and branding. Unforeseen issues or events which place DPE’s reputation at
risk may impact on its future growth and profitability. Any factors that diminish DPE’s reputation or branding could impede its ability
to compete successfully and adversely affect its future business plans. There can be no guarantees that unforeseen issues, events
or factors that negatively affect Domino’s Pizza, Inc. or Domino’s master franchisees in other countries or territories, will not damage
the local Domino’s brand or diminish future sales, profitability and growth.
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RISKS
Operational Risks (cont’d)
Relationship with Suppliers
DPE relies on numerous key suppliers in Australia, New Zealand, France, Belgium and The Netherlands. Any loss of these key
suppliers may have an adverse effect on DPE’s sales and/or terms of trade. In addition, any change in DPE’s relationship with its
suppliers, or in terms of trade, could have an adverse impact on DPE’s prospects. Material increases in suppliers’ production costs
could lead to higher costs and therefore impact DPE’s margins, or require DPE to source products from other locations. In this
event, existing gross margins may not be able to be maintained. In addition, any delays in lead times on orders from suppliers could
impact DPE’s sales.
Supply Chain Management
DPE’s supply chain is outsourced and managed by third parties. Any adverse changes to the supply chain (such as increased freight
costs due to increasing geographical diversity and increasing number of stores) could have a material adverse impact on DPE’s
gross margins and prospects.
Current and Future Funding Requirements
DPE’s ability to service its existing and new debt, and refinance expiring debt on acceptable terms, will depend on its future
performance and cash flows, which in turn will be affected by various factors, some of which are outside of DPE’s control (such as
changes in interest and foreign exchange rates, and general economic conditions). Any inability to secure sufficient debt funding
(including to refinance on acceptable terms) from time to time or to service its existing and new debt may have a material adverse
effect on DPE’s financial performance and prospects. In particular, to the extent that additional equity or debt funding is not available
from time to time on acceptable terms, or at all, DPE may not be able to take advantage of acquisition and other growth
opportunities, develop new ideas or respond to competitive pressures.
Acquisition Risks
Completion Risk
Completion of the acquisition is conditional on the debt providers not defaulting on their obligations to provide loans under the facility
agreements and on the underwriting agreement not being terminated by the Underwriter on or before 28 August 2013 either
unlawfully or due to customary market fall, hostility and market failure underwriting termination events. If the institutional offer does
not raise sufficient funds by the closing date and DPE is unable to negotiate an extension of the closing date or terminate the
acquisition agreement in reliance on the funding condition precedent, DPE would be required to seek alternative funding under a
different funding structure. Whilst DPE believes that this would be possible, there is no guarantee that alternative funding could be
sourced either at all or on satisfactory terms and conditions.
Completion is also subject to other customary conditions precedent including compliance with the terms of the acquisition
agreement, no intervening illegality, no breach of representations and warranties and no material adverse change relating to DPJ.
The acquisition may not complete if any of these conditions are not satisfied or waived.
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RISKS
Acquisition Risks (cont’d)
Change of Control
The acquisition of DPJ may trigger change of control clauses in some material contracts to which DPJ are a party. Where triggered,
the change of control clauses will in most cases require counterparty consent. If any of the material contracts containing a change of
control clause are terminated or renegotiated on less favourable terms, it may have an adverse impact on DPE's financial
performance and prospects.
Reliance on Information Provided
DPE undertook a due diligence process in respect of DPJ, which relied in part on the review of financial and other information
provided by the vendor of DPJ. Despite taking reasonable efforts, DPE has not been able to verify the accuracy, reliability or
completeness of all the information which was provided to it against independent data. Similarly, DPE has prepared (and made
assumptions in the preparation of) the financial information relating to DPJ on a stand-alone basis and also to DPE post-acquisition
of DPJ (“Combined Group”) included in this Presentation in reliance on limited financial information and other information provided
by the vendor of DPJ. DPE is unable to verify the accuracy or completeness of all of that information. If any of the data or
information provided to and relied upon by DPE in its due diligence process and its preparation of this Presentation proves to be
incomplete, incorrect, inaccurate or misleading, there is a risk that the actual financial position and performance of DPJ and the
Combined Group may be materially different to the financial position and performance expected by DPE and reflected in this
Presentation. Investors should also note that there is no assurance that the due diligence conducted was conclusive and that all
material issues and risks in respect of the acquisition have been identified. Therefore, there is a risk that unforeseen issues and risks
may arise, which may also have a material impact on DPE.
Analysis of Acquisition Opportunity
DPE has undertaken financial, business and other analyses of DPJ in order to determine its attractiveness to DPE and whether to
pursue the acquisition. It is possible that such analyses, and the best estimate assumptions made by DPE, draws conclusions and
forecasts that are inaccurate or which are not realised in due course. To the extent that the actual results achieved by DPJ are
different than those indicated by DPE’s analysis, there is a risk that the profitability and future earnings of the operations of the
Combined Group may be materially different from the profitability and earnings expected as reflected in this Presentation.
Integration Risk
The acquisition involves the integration of the DPJ business, which has previously operated independently to DPE. As a result, there
is a risk that the integration of DPE may be more complex than currently anticipated, encounter unexpected challenges or issues
and takes longer than expected, diverts management attention or does not deliver the expected benefits and this may affect DPE’s
operating and financial performance. Further, the integration of DPJ’s accounting functions may lead to revisions, which may impact
on the Combined Group’s reported financial results. In addition, there may be risks associated with the effectiveness and efficiency
of communication given DPJ operates in a Japanese language environment. This may also impact the ability of DPE to integrate its
systems and practices into DPJ.
Historical Liability
If the acquisition of DPJ completes, DPE may become directly or indirectly liable for any liabilities that DPJ has incurred in the past,
which were not identified during its due diligence or which are greater than expected, and for which the market standard protection
(in the form of insurance, representations and warranties and indemnities) negotiated by DPE prior to its agreement to acquire DPJ
turns out to be inadequate in the circumstances. Such liability may adversely affect the financial performance or position of DPE
post-acquisition.
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RISKS
Acquisition Risks (cont’d)
Acquisition Accounting
In accounting for the acquisition in the pro-forma historical combined balance sheet, DPE has performed a preliminary fair value
assessment of all of the assets, liabilities and contingent liabilities of DPJ. DPE will undertake a formal fair value assessment of all of
the assets, liabilities and contingent liabilities of DPJ post-acquisition, which may give rise to a materially different fair value
allocation to that used for purposes of the pro-forma financial information set out in this Presentation. Such a scenario will result in a
reallocation of the fair value of assets and liabilities acquired to or from goodwill and also an increase or decrease in depreciation
and amortisation charges in the Combined Group’s income statement (and a respective increase or decrease in net profit after tax).
Accounting Treatment of Put Option Obligation
AASB 10 Consolidated Financial Statements (“AASB 10”) regards the non-controlling interest as equity in the combined financial
statements. Under current IFRS guidance, the put option granted to the non-controlling interest gives rise to a financial liability
measured at fair value. DPE will account for the put option obligation as a liability. The fair value of the liability must be measured at
each reporting period until such time as the put (or call) option is exercised, in accordance with the requirements of AASB 139
Financial Instruments: Recognition and Measurement (“AASB 139”). DPE expects to record the gross movements in this liability and
the non-controlling interest through adjustments to equity, as per guidance in AASB 10. The accounting standards relating to
treatment of this put option obligation are currently under consideration by the International Accounting Standards Board (“IASB”)
and IFRS Interpretations Committee. There is a risk that should the accounting standards be amended by the IASB and AASB,
movements in the fair value of the put option liability may be treated as a non-cash charge to income. Such a change in the required
accounting treatment would impact the reported statutory net profit after tax, even though the underlying trading performance of DPE
and DPJ will be unchanged.
Loss of DPJ Personnel
As the case with DPE’s operations in all jurisdictions, DPE is committed to providing a continued attractive employment
environment, conditions and prospects to assist in the retention of DPJ’s key management personnel throughout the acquisition
process. However, there can be no assurance that there will be no unintended loss of key staff leading up to and following the
acquisition by DPE of DPJ.
Pro-Forma Adjustments
The pro-forma historical financial information includes DPJ financial information converted from JGAAP to AIFRS to present the proforma historical combined balance sheet and income statement in conformity with Australian Accounting Standards. The key
adjustments include: additional depreciation of property plant and equipment, reversal of goodwill amortisation, recognition of
finance leases, employee provisions and the recognition of actuarial gains and losses for pension fund liabilities. Post-acquisition, a
complete JGAAP to AIFRS conversion process may identify other residual differences which may impact on charges in the
combined Group’s income statement (and result in a respective increase or decrease in net profit after tax).
Commodity Exposure in USD
DPJ purchases a significant amount of pizza ingredients with indirect exposure to movements in the United States dollar exchange
rate. Movements in United States dollar exchange rates may adversely impact the cost of goods sold.
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RISKS
Acquisition Risks (cont’d)
DPJ’s Future Earnings
DPE has undertaken financial and business analyses of DPJ in order to determine its attractiveness to DPE and whether to pursue
the Acquisition. To the extent that the actual results achieved by DPJ are weaker than those indicated by DPE’s analysis, there is a
risk that the profitability and future earnings of the operations of the Combined Group may differ (including in a materially adverse
way) from the current performance as reflected in this presentation.
General Risks
Market
The market price of DPE shares will fluctuate due to various factors, many of which are non-specific to DPE, including
recommendations by brokers and analysts, Australian and international general economic conditions, inflation rates, interest rates,
changes in government, fiscal, monetary and regulatory policies, global geo-political events and hostilities and acts of terrorism, and
investor perceptions. In the future, these factors may cause DPE shares to trade at a lower price.
Commodity Exposure
DPE and DPJ have significant exposure to commodity prices (e.g. cheese, wheat). Movements in commodity prices may impact the
cost of goods sold and the future performance of DPE.
Exchange Rates
DPE is exposed to movements in exchange rates. DPE’s financial statements are expressed and maintained in Australian dollars.
However, a portion of DPE’s income is earned in New Zealand dollars and Euros and a material portion will be earned in Japanese
Yen post-acquisition. A material portion of DPE and DPJ’s cost of goods sold have FX exposure. Exchange rate movements
affecting these currencies may impact the profit and loss account or assets and liabilities of DPE and DPJ, to the extent the foreign
exchange rate risk is not hedged or not appropriately hedged.
Interest Rates
While DPE takes reasonable steps to protect itself through the use of hedges, rising interest rates may nonetheless adversely
impact DPE’s interest payments on its floating rate borrowings and inflation in underlying input costs may also adversely impact the
performance of DPE’s business.
Domestic and Global Economic Conditions
The Australian and global economies, including Japan, continue to experience challenging economic conditions. Any further
deterioration in the domestic and global economy may have a material adverse effect on the performance of DPE’s business.
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RISKS
General Risks (cont’d)
Asset Impairment
As a consequence of the global financial crisis, ASIC has specifically identified impairment of assets as an issue for Australian
companies. The DPE board regularly monitors impairment risk. Consistent with accounting standards, DPE is periodically required
to assess the carrying values of its assets. Where the value of an asset (including an asset owned by DPJ post-acquisition) is to be
less than its carrying value, DPE is obliged to recognise an impairment change in its profit and loss account. Impairment charges
can be significant and operate to reduce the level of a company’s profits. Impairment charges are a non-cash item.
Changes in Accounting Policy
Accounting standards may change. This may affect the reported earnings of DPE and its financial position from time to time.
Taxation
Future changes in taxation law, including changes in interpretation or application of the law by the courts or taxation authorities, may
affect taxation treatment of an investment in DPE shares or the holding and disposal of those shares. Further, changes in tax law, or
changes in the way tax law is expected to be interpreted, in the various jurisdictions in which DPE operates, may impact the future
tax liabilities of DPE.
Litigation
DPE is subject to the usual business risk that disputes or litigation may arise from time to time in the course of its business activities.
DPE is exposed to various separate French legal proceedings by a competitor, Speed Rabbit Pizza (“SRP”) and its franchisees
against DPE’s subsidiary, Domino's Pizza France (“DPF”) and its franchisees. The allegations are that DPF and its franchisees
breached French laws governing payment time limitations and lending, thereby giving DPF franchisees an unfair competitive
advantage. SRP claims significant damages for impediment of the development of its franchise network, lost royalty income from
SRP franchisees and harm to SRP's image. DPF has denied liability and is vigorously defending the claims. At this stage DPE does
not believe its exposure is capable of reliable measurement. There is a risk however, that if a claim is determined against DPF, it
could have an adverse effect on the financial performance and position of DPE.
Dividends
The payment of dividends on DPE’s shares is dependent on a range of factors including the profitability of its group, the availability
of cash, capital requirements of the business and obligations under debt instruments. Any future dividend levels will be determined
by the DPE board having regard to its operating results and financial position at the relevant time. That said, there is no guarantee
that any dividend will be paid by DPE or, if paid, that they will be paid or franked at previous levels.
Legislative and Regulatory Changes
Legislative or regulatory changes, including property or environmental regulations or regulatory changes in relation to products sold
by DPE, could have an adverse impact on DPE. Regulatory and policy changes in Japan, including a proposed increase in the rate
of consumption tax by April 2014, is expected to impact the commercial environment in which DPJ operates.
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RISKS
Risks Associated with not taking up New Shares under the Entitlement Offer
Entitlements cannot be traded on ASX or privately transferred. However, New Shares equivalent to the number of New Shares not
taken up will be offered for subscription in either the institutional shortfall bookbuild or the retail shortfall bookbuild, as applicable.
If you are a shareholder and you do not take up New Shares under the Entitlement Offer, there is no guarantee that any value will be
received by you through the bookbuild process.
The ability to sell New Shares under the institutional shortfall bookbuild or the retail shortfall bookbuild and the ability to obtain any
premium to the offer price will be dependent upon various factors, including market conditions.
Further, the institutional shortfall bookbuild price and/or the retail shortfall bookbuild price may not be the highest prices available,
but will be determined having regard to a number of factors, including having binding and bona fide offers which, in the reasonable
opinion of the underwriter will, if accepted, result in otherwise acceptable allocations to clear the entire book. If the institutional
shortfall bookbuild realizes a premium to the offer price this is not any guarantee that the retail shortfall bookbuild price will realize
the same premium or any premium at all.
To the maximum extent permitted by law, DPE, the underwriter and any of their respective related bodies corporate, affiliates,
officers, employers or advisers will not be liable, including for negligence, for any failure to procure applications for New Shares
under the institutional shortfall bookbuild and/or the retail shortfall bookbuild at prices in excess of the offer price.
You should also note that if you sell, or do not take up, all or part of your entitlement, then your percentage shareholding in DPE will
be diluted by not participating to the full extent in the Entitlement Offer.
Before deciding whether to take up New Shares under the Entitlement Offer, you should seek independent tax advice.
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Underwriting agreement
DPE has entered into an underwriting agreement with Morgan Stanley Australia Securities Limited ("Underwriter") who has agreed
to fully underwrite the Entitlement Offer (excluding the portion taken up by Somad Holdings Pty Limited).
The obligations of the Underwriter are subject to the satisfaction of certain conditions precedent. Further the Underwriter may
terminate the underwriting agreement and be released from its obligations under it if certain events occur, including (but not limited
to) if:
•
the acquisition agreement or new acquisition facility agreements are terminated, rescinded or varied without the prior
written consent of the Underwriter.
•
a condition precedent to the acquisition agreement or new acquisition facility agreements is not satisfied (or becomes
incapable of being satisfied) by the cut-off date specified in the acquisition agreement or facility agreements (other than
in circumstances where that condition precedent has been waived).
•
DPE ceases to be admitted to the official list of ASX or its shares are suspended from trading on ASX or ASX refuses
to grant quotation to the new shares.
•
the S&P/ASX 200 Index closes on any 2 consecutive trading during the period to the Retail Settlement Date at a level
that is 12.5% or more below the level of the S&P/ASX 200 Index as at the close of trading on Monday 12 August 2013.
•
DPE withdraws an offer document, the Entitlement Offer or any part of the Entitlement Offer.
•
DPE is prevented from allotting and issuing the new shares under the ASX Listing Rules, any applicable law, an order
of a court of competent jurisdiction or by a government authority.
•
a director of DPE is charged with a criminal offence or disqualified from managing a corporation.
•
the cleansing statement is defective or a corrective statement is issued or required to be issued under the Corporations
Act or any of the offer documents is false or misleading or deceptive in a manner that is materially adverse from the
perspective of investors.
•
there are any delays in the timetable (except where such delay is solely due to the fault of the Underwriter).
•
ASIC takes any action in relation to the offer documents.
•
DPE or any of its subsidiaries becomes insolvent.
The Underwriter will receive a fee for acting in this capacity.
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INTERNATIONAL OFFER RESTRICTIONS
This document does not constitute an offer of entitlements ("Entitlements") or new ordinary shares of DPE ("New Shares") in any
jurisdiction in which it would be unlawful. Entitlements and New Shares may not be offered or sold in any country outside Australia
except to the extent permitted below.
Canada
The Entitlements and the New Shares in the Entitlement Offer are not being offered in Canada to residents of Canada. The New
Shares may however be offered to “accredited investors” or “permitted clients” (as defined under applicable laws) resident in the
Province of Ontario and Québec and this document may only be distributed to such persons.
China
The information in this document does not constitute a public offer of the Entitlements or the New Shares, whether by way of sale or
subscription, in the People's Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative
Region, Macau Special Administrative Region and Taiwan). The Entitlements and the New Shares may not be offered or sold
directly or indirectly in the PRC to legal or natural persons other than directly to "qualified domestic institutional investors".
European Economic Area – Belgium, Denmark, Germany, Luxembourg and Netherlands
The information in this document has been prepared on the basis that all offers of Entitlements and New Shares will be made
pursuant to an exemption under the Directive 2003/71/EC ("Prospectus Directive"), as amended and implemented in Member States
of the European Economic Area (each, a "Relevant Member State"), from the requirement to produce a prospectus for offers of
securities.
An offer to the public of Entitlements and New Shares has not been made, and may not be made, in a Relevant Member State
except pursuant to one of the following exemptions under the Prospectus Directive as implemented in that Relevant Member State:
•
to any legal entity that is authorized or regulated to operate in the financial markets or whose main business is to invest
in financial instruments;
•
to any legal entity that satisfies two of the following three criteria: (i) balance sheet total of at least €20,000,000; (ii)
annual net turnover of at least €40,000,000 and (iii) own funds of at least €2,000,000 (as shown on its last annual
unconsolidated or consolidated financial statements);
•
to any person or entity who has requested to be treated as a professional client in accordance with the EU Markets in
Financial Instruments Directive (Directive 2004/39/EC, "MiFID"); or
•
to any person or entity who is recognised as an eligible counterparty in accordance with Article 24 of the MiFID.
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INTERNATIONAL OFFER RESTRICTIONS
France
This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in
France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Articles
211-1 et seq. of the General Regulation of the French Autorité des marchés financiers ("AMF"). The Entitlements and the New
Shares have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.
This document and any other offering material relating to the Entitlements and the New Shares have not been, and will not be,
submitted to the AMF for approval in France and, accordingly, may not be distributed (directly or indirectly) to the public in France.
Such offers, sales and distributions have been and shall only be made in France to qualified investors (investisseurs qualifiés) acting
for their own account, as defined in and in accordance with Articles L.411-2-II-2, D.411-1, L.533-16, L.533-20, D.533-11, D.533-13,
D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation.
Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the Entitlements and the New
Shares cannot be distributed (directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1,
L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial Code.
Hong Kong
WARNING: This document has not been, and will not be, registered as a prospectus under the Companies Ordinance (Cap. 32) of
Hong Kong (the "Companies Ordinance"), nor has it been authorised by the Securities and Futures Commission in Hong Kong
pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the "SFO"). No action has been taken in
Hong Kong to authorise or register this document or to permit the distribution of this document or any documents issued in
connection with it. Accordingly, the Entitlements and the New Shares have not been and will not be offered or sold in Hong Kong
other than to "professional investors" (as defined in the SFO).
No advertisement, invitation or document relating to the Entitlements and the New Shares has been or will be issued, or has been or
will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of
which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong
Kong) other than with respect to Entitlements and the New Shares that are or are intended to be disposed of only to persons outside
Hong Kong or only to professional investors (as defined in the SFO and any rules made under that ordinance). No person allotted
Entitlements or New Shares may sell, or offer to sell, such securities in circumstances that amount to an offer to the public in Hong
Kong within six months following the date of issue of such securities.
The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution
in relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional advice.
Ireland
The information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not
been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public
offering of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005, as amended
(the "Prospectus Regulations"). The Entitlements and the New Shares have not been offered or sold, and will not be offered, sold or
delivered directly or indirectly in Ireland by way of a public offering, except to "qualified investors" as defined in Regulation 2(l) of the
Prospectus Regulations.
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INTERNATIONAL OFFER RESTRICTIONS
Japan
The Entitlements and the New Shares have not been and will not be registered under Article 4, paragraph 1 of the Financial
Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the "FIEL") pursuant to an exemption from the
registration requirements applicable to a private placement of securities to Qualified Institutional Investors (as defined in and in
accordance with Article 2, paragraph 3 of the FIEL and the regulations promulgated thereunder). Accordingly, the Entitlements and
the New Shares may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan other than
Qualified Institutional Investors. Any Qualified Institutional Investor who acquires Entitlements or New Shares may not resell them to
any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of Entitlements or New Shares
is conditional upon the execution of an agreement to that effect.
New Zealand
The Entitlements and the New Shares in the entitlement offer are not being offered to the public in New Zealand other than to
existing shareholders of DPE with registered addresses in New Zealand to whom the offer is being made in reliance on the
Securities Act (Overseas Companies) Exemption Notice 2013 (New Zealand). The offer of New Shares is renounceable in favour of
members of the public.
This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act
1978 (New Zealand). This document is not an investment statement or prospectus under New Zealand law and is not required to,
and may not, contain all the information that an investment statement or prospectus under New Zealand law is required to contain.
Norway
This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities
Trading Act of 29 June 2007. Accordingly, this document shall not be deemed to constitute an offer to the public in Norway within the
meaning of the Norwegian Securities Trading Act of 2007.
The Entitlements and the New Shares may not be offered or sold, directly or indirectly, in Norway except to "professional clients" (as
defined in Norwegian Securities Regulation of 29 June 2007 no. 876 and including non-professional clients having met the criteria
for being deemed to be professional and for which an investment firm has waived the protection as non-professional in accordance
with the procedures in this regulation).
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INTERNATIONAL OFFER RESTRICTIONS
Singapore
This document and any other materials relating to the Entitlements and the New Shares have not been, and will not be, lodged or
registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other
document or materials in connection with the offer or sale, or invitation for subscription or purchase, of Entitlements and New
Shares, may not be issued, circulated or distributed, nor may the Entitlements and New Shares be offered or sold, or be made the
subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in
accordance with exemptions in Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (the
"SFA"), or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA.
This document has been given to you on the basis that you are (i) an existing holder of DPE’s shares, (ii) an "institutional investor"
(as defined in the SFA) or (iii) a "relevant person" (as defined in section 275(2) of the SFA). In the event that you are not an investor
falling within any of the categories set out above, please return this document immediately. You may not forward or circulate this
document to any other person in Singapore.
Any offer is not made to you with a view to the Entitlements or the New Shares being subsequently offered for sale to any other
party. There are on-sale restrictions in Singapore that may be applicable to investors who acquire Entitlements or New Shares. As
such, investors are advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply
accordingly.
Switzerland
The Entitlements and the New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange
("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard
to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the
disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange
or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the
Entitlements and the New Shares may be publicly distributed or otherwise made publicly available in Switzerland. These securities
will only be offered to regulated financial intermediaries such as banks, securities dealers, insurance institutions and fund
management companies as well as institutional investors with professional treasury operations.
Neither this document nor any other offering or marketing material relating to the Entitlements and the New Shares have been or will
be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of
Entitlements and New Shares will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA).
This document is personal to the recipient only and not for general circulation in Switzerland.
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
55
INTERNATIONAL OFFER RESTRICTIONS
United Arab Emirates
Neither this document nor the Entitlements and the New Shares have been approved, disapproved or passed on in any way by the
Central Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or any other governmental authority
in the United Arab Emirates, nor has DPE received authorization or licensing from the Central Bank of the United Arab Emirates, the
Emirates Securities and Commodities Authority or any other governmental authority in the United Arab Emirates to market or sell the
Entitlements or the New Shares within the United Arab Emirates. No marketing of any financial products or services may be made
from within the United Arab Emirates and no subscription to any financial products or services may be consummated within the
United Arab Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. No services
relating to the Entitlements or the New Shares, including the receipt of applications and/or the allotment or redemption of such
securities, may be rendered within the United Arab Emirates by DPE.
No offer or invitation to subscribe for Entitlements or New Shares is valid in, or permitted from any person in, the Dubai International
Financial Centre.
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
56
INTERNATIONAL OFFER RESTRICTIONS
United Kingdom
Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial
Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets
Act 2000, as amended ("FSMA")) has been published or is intended to be published in respect of the Entitlements or the New
Shares. This document is issued on a confidential basis to "qualified investors" (within the meaning of section 86(7) of FSMA) in the
United Kingdom, and these securities may not be offered or sold in the United Kingdom by means of this document, any
accompanying letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant
to section 86(1) FSMA. This document should not be distributed, published or reproduced, in whole or in part, nor may its contents
be disclosed by recipients to any other person in the United Kingdom.
Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with
the issue or sale of the Entitlements or the New Shares has only been communicated or caused to be communicated and will only
be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not
apply to DPE.
In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in
matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000
(Financial Promotions) Order 2005 ("FPO"), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net
worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together
"relevant persons"). The investments to which this document relates are available only to, and any invitation, offer or agreement to
purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this
document or any of its contents.
United States
This Presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or in any other
jurisdiction in which such an offer would be illegal. The New Shares have not been, and will not be, registered under the U.S.
Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state or other jurisdiction of the United
States. Accordingly, the New Shares may not be offered or sold, directly or indirectly, in the United States, unless they have been
registered under the U.S. Securities Act (which DPE has no obligation to do or procure), or are offered and sold in a transaction
exempt from, or not subject to, the registration requirements of the U.S. Securities Act and any other applicable state securities laws.
This Presentation may not be released or distributed in the United States.
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES
57