Financial & Economic Interpretation and Communication Analysis Report

This report presents an analysis of Domino's recent annual report, focusing on financial and non-financial performance indicators that can impact the company. It examines revenue, expenses, cash flow, and working capital, alongside non-financial aspects like tax rates, brand preference, innovation, and customer experience. The report highlights the company's strong financial results, driven by factors such as product quality, supply chain efficiency, and technological innovation. It also addresses Domino's Corporate Social Responsibility (CSR) initiatives, including contributions to St. Jude Children’s Research Hospital and other charitable organizations. The report concludes by emphasizing the importance of these factors for stakeholders in making informed decisions. The report also explores the company's efforts in employee retention and details regarding dividend declarations.

Running head: FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
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1FINANCIAL & ECONOMIC INTERPRETATION AND COMMUNICATION
Executive Summary
This report is based on the analysis of the recent annual report of Dominos company. A
highlighting factor of this report is the indicators of financial and non-financial parameters which
can hamper the performance of any company. These indicators include the role of technology
and innovation which can bring about enormous change in the operation of the company. This
report also suggests how well the company has performed over its competitors which can also be
forecasted from the increase in the revenue.
Table of Content

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s
Introduction......................................................................................................................................3
Analysis...........................................................................................................................................3
Interpretation....................................................................................................................................4
Conclusion.......................................................................................................................................6
Reference.........................................................................................................................................8

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Introduction
Financial performance of the company represents how well the company has utilised its
asset and generated revenue. It is the records of the financial activities that have taken place
during a given period and reflects the position of the business. Corporate Social Responsibility
(CSR) defines the business about its responsibility towards the social environment surrounding
the company i.e. operating in such ways that it enhances the society and its environment by
contributing positively and being responsible to itself and its shareholders. In the given case, the
company Domino’s financial performance has been considered and focus has been done on how
well it has been able to meet the corporate social responsibility. The company has been listed in
Australia as DMP: ASX.
Analysis
The financial result of Dominos according to the recent reports, forecast that the company
has been earning net profits of $362millions. The franchise and corporate stores have generated
significant revenue in global retail sales (Annualreports.com, 2020). The expansion of the
company to approximately 15900 stores over 85 markets worldwide is one of the indicators for
such positive performance by the company. The competition of pizza globally is extreme among
the top companies and among the carryout segment (Taylor, 2016).
Corporate Social Responsibility is a business model that is regulated by the business
itself, and which helps the company to be socially accountable (Unit, 2015). Socially accountable
means that the company is aware of the kind of impact that the company is making in the society
that includes social, environmental and economical.

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Interpretation
The causes for such change in the company’s financial performance is because of the
quality of the products, its supply chain with the inclusion of third party suppliers, and its strong
brand equity. Production innovation and Technology innovation is also an important reason for
the success of the company (Conte and Vivarelli, 2014). The company is a market share leader
and lies in the top three chains in this delivery segment.
Financial performance indicators are (Chen, Feldmann and Tang, 2015):
 Revenue: The revenue of the company after provision for tax is $362 million. The store
sales of the company are increased by 6.6% in the U.S. store, while the sales of the
international store increased by 3.5%. The income from operation increased by 9.7%
while the net income increased by 30.3%. These figures are compared by 2017 annual
figure.
 Expense: The expenses include the cost of sales, general administrative fees, interest
expenses and other miscellaneous expenditure. The consolidated cost of sales in 2018 is
$2,130.2 million while the cost of sales in the U.S. is $398.2 million and the cost of the
supply chain is $1,732 million. A rise in the supply chain is primarily due to the higher
volume of orders from the increased stores. The general administrative expense increased
by 8% due to continuous investment in technology and other strategic areas.
 Cash Flow: The primary source of liquidity for the company is cash flow from operation.
With the issue of variable note funding the company can generate advances up to $175
million. The company also adopted the restricted cash method which requires the
company to restrict cash and cash equivalent. The cash from the operating activities

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increased primarily due to the increase in the net income. The cash outflow from asset
and liabilities were higher in 2018 as compared to the previous year.
 Working Capital: The trade receivable of the company insight between 35 to 45
inventory turns per year. There is no limit in the working capital requirement of the
company as the sales are not seasonal. The working capital as of 30th December 2018 is
$14.6 million, excluding cash and cash equivalent, advertisement fund assets and fund
liabilities which remains restricted.
Non-financial performance indicators are (Hřebíček et al., 2014):
 Tax Rate: The provision of income tax for the company decreased drastically by around
$55 million and came to $67 million, primarily because of lower effective tax rates
resulting from the lower federal statutory. The effective tax rate also remains a primary
cause for reduced income tax provision as it has drastically reduced to 15.6% from
30.6%.
 Brand Preference: The Domino’s is a highly recognised brand globally. The franchise on
an average sells for about 3 million pizzas. The company also earns revenues in the form
of royalties through the franchise. The company grants geographical rights to the master
franchise, operating in the international markets. The company has also faced stiff
competition from its rival brands like Pizza Hut, Papa John’s and Little Ceasars Pizza.
 Innovation: It includes innovation in food as well as in technology. Such innovation is
vital to the long-term success of the company. For an attractive delivery, the company
collaborated with the Ford Motor Company, for operating self-driving vehicles. In April,
the Dominos launched its own Delivery Hotspot, which featured delivery to a non-
delivered location like parks, beaches and other gathering spots. The company has made

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innovation in the product by bringing in new Handmade Pan Pizza, Bread Twist, Marbled
Cookie Brownie and various other new products.
 Customer Experience: The company has made various efforts for the satisfaction of the
customer. The company has modified and provided an easy way of ordering online
through technology platforms. The new products and product innovation have also
attracted the customer apart from quality products and timely delivery.
The success of the company depends on its ability to attract and retain its employees
(Cloutier et al., 2015). For this, the company provides all the employees to participate in this plan
if he has completed service of 1000 hours and has attained the age of 18. This retirement benefit
plan has cost the company approximately $7.3 million in 2018. However, the loss of key
employees and the lack of ability to recruit qualified employees has a enormous effect in the
operation of the company. Yet, concerning the dividend, the Board of Directors of Dominos has
decided to declare a dividend of $.65 per common share which is payable at the end of March,
2019. Moreover, the diluted earnings per share are $8.35 which has increased 43.2% this year.
The corporate responsibility of the company regarding the social environment is enormous.
The company has a national philanthropic partner, St. Jude Children’s Research Hospital, which
is recognized internationally for its instigation to work in curing and saving children who are
suffering from catastrophic diseases and cancer. It has contributed around $57.5 million, in
which $10.5 million was raised in 2018. The company also supports cancer trust for teenagers
located in the UK, while the colleagues, franchise and the team members actively support and
encourage the charities worldwide (Corporate.dominos.co.uk, 2020).

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Conclusion
The report is based on the latest annual report of Domino’s company. This report forecast
the core business areas and the geographical locations where the company operates. The report
highlights the financial and non-financial indicators of the performance of the company and
focus has been made on the changes that have taken place in the financial results. It also
highlights the corporate social responsibility of the company. Some details regarding the
methods of attracting and retaining employees have also been forecasted. This information will
provide the stakeholders to focus on material areas and take decisions accordingly.

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Reference
Annualreports.com.(2020).at:
http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_DPZ_2018.pdf.
Chen, L., Feldmann, A. and Tang, O., 2015. The relationship between disclosures of corporate
social performance and financial performance: Evidences from GRI reports in manufacturing
industry. International Journal of Production Economics, 170, pp.445-456.
Cloutier, O., Felusiak, L., Hill, C. and Pemberton-Jones, E.J., 2015. The Importance of
Developing Strategies for Employee Retention. Journal of Leadership, Accountability & Ethics,
12(2).
Conte, A. and Vivarelli, M., 2014. Succeeding in innovation: key insights on the role of R&D
and technological acquisition drawn from company data. Empirical Economics, 47(4), pp.1317-
1340.
Corporate.dominos.co.uk. (2020). Domino's. Available at:
https://corporate.dominos.co.uk/corporate-responsibility
Hřebíček, J., Soukopová, J., Štencl, M. and Trenz, O., 2014. Integration of economic,
environmental, social and corporate governance performance and reporting in enterprises. Acta
Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 59(7), pp.157-166.
Taylor, B., 2016. How Domino’s pizza reinvented itself. Harvard Business Review.
Unit, B., 2015. Corporate social responsibility.