Results worth Celebrating - ShareClarity

Domino’s Pizza Australia New Zealand Limited. Annual Report. ACN 010 489 326

Results worth Celebrating

Annual Report 2004-05

Dom

ino’s Pizza Australia New

Zealand Limited Annual Report 2004-05

N E T W O R K S A L E S

$306.1m +21%

EBITDA $19.2m +43.3%

T O T A L R E V E N U E

$151.1m +37.7%

Numbers worth celebrating

97

Additional Company Information

COMPANY SECRETARYKen Lewis

REGISTERED OFFICELevel 8, TAB Building240 Sandgate RoadAlbion QLD 4010Tel: (07) 3633 3333

SHARE REGISTRYComputershare Investor Services Pty LimitedGPO Box 523Brisbane QLD 4001Tel: 1300 552 270 (within Australia)Tel: 61 3 9615 5970 (outside Australia)

PRINCIPAL ADMINISTRATION OFFICELevel 8, TAB Building240 Sandgate RoadAlbion QLD 4010Tel: (07) 3633 3333

N E T P R O F I T ( P R E S H A R E I S S U E C O S T S )

$7.6m +52%

SAME STORE SALES

+4%S T O R E N U M B E R S

387 +93

Vs 1.1% Prospectus Forecast

* Performance as measured against 2004 financial year

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Numbers Worth Celebrating 4Chairman’s Letter 6Key Financial Indicators 7Powerful Brand Presence 9CEO’s/Managing Director’s Report 10Senior Management Team 14Board of Directors 15Glossary 16Financial Report 17Additional Stock Exchange Information 95Additional Company Information 97

Key Dates Listed on the Australian Stock Exchange 16 May 2005Financial year end 3 July 2005Dividend record date 4 October 2005Dividend payment date 10 October 2005Annual General Meeting 7 November 2005

The Annual General Meeting will be held as follows: DATE: Monday 7 November 2005VENUE: ASX BrisbaneTIME: 2.30pm

Domino’s Pizza Australia New Zealand Limited ABN 16 010 489 326

Table of Contents

Cover Photography: Outdoor Landmark Billboard, Cnr Bourke & Swanston St, Melbourne CBD, April 2005. Photography by Shannon Morris, Shannon Morris Photography.

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Note – Although the above network sales figures differ from those in the Company’s prospectus, the differences are immaterial and do not change the reported historical financial performance of the Company or the Company’s 2006 forecast.

Network Sales

Solid Continuous Growth

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Total Revenue

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Corporate Development

Franchise Stores

Corporate Stores

2006F20052004200320022001YEAR

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EBITDA Composition (Pre share Issue Costs)

400th Store Opening, Aspley, QLD

Domino’s Pizza CEO Don Meij (left) and Domino’s Pizza, Inc CEO David Brandon toast the 400th store opening

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Net Profit After Tax (Pre share Issue Costs)

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Dear Fellow Shareholders,

On behalf of the Directors, I am delighted to present our shareholders with the fi rst annual report from Domino’s Pizza Australia New Zealand Ltd (“Domino’s Pizza”).

The fi nancial year ended 3 July 2005 heralded a new era for Domino’s Pizza after becoming the country’s fi rst pizza chain to be listed on the Australian Stock Exchange on 16 May 2005.

Domino’s Pizza generated a Net Profi t after Tax (pre share issue costs) of $7.6 million, well above our prospectus forecast profi t and up 52 per cent on the previous corresponding period. The profi t was generated from total network sales of $306.1 million, up 21 per cent on last year’s fi gure and revenue of $151.1 million, up 37.7 per cent on last year.

The Company has declared a fully franked dividend of 0.7 cents per share based on its six weeks of trading post listing in accordance with the prospectus forecast.

The Company exceeded its store number prospectus forecast by 11 stores, having a total of 387 stores as at 3 July 2005. The Company added a total of 93 stores to the Network in the 2005 fi nancial year. The Company’s 400th store was offi cially opened on 25 August 2005 at Aspley, Queensland.

The cornerstone of the Company’s success is its ability to leverage a network of both corporate and franchised stores, backed by strong store-level economic fundamentals, and the power and proprietary systems of a global brand.

This growth will continue with new store openings, same store sales growth and innovation through new store and menu formats.

Domino’s Pizza has a strong, operationally-focused Senior Management Team, with over 100 years’ collective experience in the Domino’s Pizza network, either within the Company or as Franchisees. The Directors and I are delighted with Management’s ability to deliver these excellent results and are confi dent in their ability to execute the Company’s expansion plans and continue to deliver strong, profi table growth.

On behalf of the Directors, thank you for your outstanding response to our initial public offering and ongoing support. Your investment and trust has enabled the Company to celebrate a strong maiden profi t.

It is with great pleasure that I deliver the Company’s inaugural annual report.

Ross Adler

CHAIRMAN

Chairman’s Letter

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2001 2002 2003 2004 2005

Network Sales† 140.6 174.7 212.5 252.9 306.1

Revenue 34.7 70.4 88.0 109.7 151.1

EBITDA 3.1 7.8 11.3 13.4 19.2

Depreciation (1.3) (2.9) (3.1) (4.0)* (5.2)

EBITA 1.8 4.9 8.2 9.4* 14.0

Amortisation (0.1) (0.5) (0.4) (1.0)* (1.0)

EBIT 1.7 4.4 7.8 8.4* 13.0

Net Interest Expense (1.5) (2.1)

Income Tax (1.9) (3.3)

Pro Forma NPAT (pre share issue costs) 5.0 7.6

After Tax Share Issue Costs 0.0 (0.8)

NPAT 5.0 6.8

Key Operating Data

Network Sales Growth % NA 24.3% 21.6% 19.0% 21.0%

Revenue Growth % NA 102.9% 25.0% 24.7% 37.7%

EBITDA Growth % NA 151.6% 44.9% 18.6%* 43.3%

EBITDA Margin % 8.9% 11.1% 12.8% 12.2%* 12.7%

EBIT Margin % 4.9% 6.3% 8.9% 7.7%* 8.6%

Franchised Stores 128 149 175 206 272

Corporate Stores 50 53 70 88 115

Total Network Stores 178 202 245 294 387

Corporate Store % 28.1% 26.2% 28.6% 29.9% 29.7%

Key Financial Indicators

† Although the network sales figures differ from those in the Company’s prospectus, the differences are immaterial and do not change the reported historical financial performance of the Company or the Company’s 2006 forecast. * The 2004 figures differ to the prospectus due to proforma

adjustments.

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Domino’s Pizza is Australia’s dominant pizza advertiser, with the memorable national telephone number 131 888 and highly recognised slogan ‘I’ve Got The Hots For What’s In The Box With The Dots’.

New Products

Marketing

New Pizza Menu

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Powerful Brand PresenceDomino’s Pizza serves upwards of 800,000 pizzas every week to the equivalent of over 5% of Australian homes. In the 2005 financial year Domino’s Pizza made more than 40 million pizzas.

Domino’s Pizza continually strives to enhance the pizza ordering experience through implementing customer friendly technology.

MOBILE PHONE ACCESSPrompted by the surge in Australian mobile phone ownership, customers can now dial Domino’s Pizza’s 131 888 number on their mobile phone and be connected to a nearby Domino’s Pizza store after completing a number of automated voice prompts.

This new technology expands the Company’s reach into the market and gives customers easier access.

DOMINO’S PULSE™ POS SYSTEMDomino’s Pizza’s proprietary point of sale (POS) system improves operating efficiencies, provides management with timely access to financial and marketing data and reduces administration time and expense. Progressively being rolled out across the network, the new system offers the potential to expand into online ordering in the future.

INTERNET ORDERING/WEBSITEDomino’s Pizza is presently developing on-line ordering to enable customers to order pizza via the internet.

Relaunched earlier this year, www.dominos.com.au and www.dominospizza.co.nz provides customers with pizza menus, store locations and detailed information about the Company in a vibrant, easy to use interface.

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Chief Executive Officer/ Managing Director’s Report

Domino’s Pizza is Australia’s largest pizza chain, making more than 40 million pizzas each year. We at Domino’s Pizza are known as the Pizza Delivery Experts. We also strive to be the delivery experts in providing shareholder value.

The year has been highlighted by Domino’s Pizza’s delivery of:

• A strong maiden result which exceeded our prospectus forecasts;

• An additional 93 stores to the network;

• Successful new products;

• Increased brand recognition and innovation.

DELIVERING RESULTSIn the 2005 financial year, Domino’s Pizza achieved a Net Profit after Tax (pre share issue costs) of $7.6 million.

This result is up 52 per cent on the previous year’s net profit of $5 million and up 15.2 per cent on the prospectus 2005 forecast of $6.6 million. The strength of the fundamental business is evidenced by cash from operations doubling from last year to $11.5m.

The net profit growth reflects increased sales, revenue and scalability during the past 12 months as the Company added more stores to the network in new and existing markets across Australia and New Zealand.

Network Sales grew 21 per cent to $306.1 million. Domino’s Pizza revenue for 2004/05 was $151.1 million, up 37.7 per cent on the corresponding period. This is an increase of 8.1 per cent on the prospectus forecast of $139.8 million.

Same Store Sales grew 4 per cent in 2004/05 which is an outstanding result in the Australian retail industry. This growth was driven by the introduction of successful new products and ongoing operational focus to improve customer service.

Importantly, profitability margins continue to grow as the Company derives greater benefit from its economies of scale. In 2004/05, EDITDA (pre share issue costs) was $19.2 million, while EBIT was $13 million. These results compare against prospectus forecasts of $18.1 million and $12 million.

The scalability of the Company is evidenced by both EBITDA and NPAT growing faster than revenue during the year.

The EBITDA margin in corporate stores has increased to 10.1 per cent which is ahead of the prospectus forecast of 9.7 per cent.

DELIVERING EXPANSIONIn the 2005 financial year, Domino’s Pizza added 93 stores to its network and had a total of 387 stores at financial year end.

The Company added 11 more stores to the network during the year than forecast in the prospectus. This included the addition of 54 stores in the second half of the year. On 25 August 2005 the 400th Domino’s Pizza store was officially opened at Aspley, Queensland by the international CEO and Chairman, Mr Dave Brandon.Domino’s Pizza is now the second largest inter-national franchisee in the Domino’s system which spans 55 countries and has more than 7500 Domino’s stores.

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Expansion by regionDomino’s Pizza is the leading pizza chain operator in New South Wales, Queensland, Western Australia, ACT, Northern Territory and Tasmania.

In 2004/05 Domino’s Pizza’s expansion has been through organic growth and acquisitions in new and existing territories.

Domino’s Pizza only entered the New Zealand market in 2003 and now has 48 stores there, aided by the acquisition of Pizza Haven New Zealand, and the conversion of the Mad Dog Pizza chain in Christchurch in the first half of 2005. As a result of the Pizza Haven acquisition and the one-off integration costs, earnings were negative and below our forecast projections, however we expect earnings to turn around in 2006 with a projected operating profit of $0.8m, in line with the prospectus forecast.

Domino’s Pizza entered the Melbourne market in mid 2004 and now operates 42 stores as at 25 August 2005. This includes the acquisition of the Big Daddy’s chain in Melbourne, Victoria.

The progress in the Victorian and New Zealand markets has been strong.

Management of growthDomino’s Pizza has effectively delivered and managed growth in store numbers over the past 12 months. The Company and its Franchisees now employ more than 11,000 people, on a full-time or part-time basis, across the network.

The recent expansion, coupled with the outstanding result for the year, demonstrates the strength of the Company’s business model and depth of expertise in Senior Management to manage the growth while maintaining a strong focus on profitability and performance.

DELIVERING PIZZAIn 2004/05, Domino’s Pizza continued to develop new and exciting menus to retain existing customers and attract new customers.

Domino’s Pizza has developed a strong and loyal customer base by delivering great tasting products to suit all taste buds. In 2004/05, Domino’s Pizza launched 16 new product campaigns, including Double Decadence, BBQ and Cheese Burst, and The Edge. Some of these are now permanent fixtures on the menu.

The Domino’s Pizza Luv Lab is a purpose-built research kitchen through which new pizza concepts are regularly tested and evaluated for potential release to the market.

Our mission is to “Sell more pizza, have more fun”.

DELIVERING A POWERFUL BRANDIn 2004/05, Domino’s Pizza continued its evolution as a valuable and powerful brand, driven by innovation.

Domino’s Pizza has a solid strategy in place to further develop and strengthen the Domino’s Pizza brand in all markets in which the Company operates. This strategy focuses on innovation.

Distinctive TV advertisingEnsuring that when people think of pizza, they think of Domino’s Pizza.

With the Company’s easily-recalled Australian telephone number 131 888 and its TV slogan, ‘I’ve got the hots for what’s in the box with the dots’, Domino’s Pizza is now one of Australia’s most highly-recognised food brands.

35 stores

13 stores

QLD95 stores

WA37 stores

NSW122 stores

VIC49 stores

ACT10 stores

TAS10 stores

NT6 stores

SA23 stores

Network store numbers as at 25 August 2005

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In just 12 months Domino’s Pizza in Melbourne has already become one of the most visible and recognised pizza brands on television. As the cover of the report shows the brand is also very visible on the streets of Melbourne.

Mobile phone orderingMaking it easier for customers to buy from us.

Domino’s Pizza, in conjunction with Telstra, recently launched mobile phone ordering, with the rollout completed in September 2005.

Prompted by the surge in Australian mobile phone ownership, customers can dial Domino’s Pizza’s 131 888 number on their mobile phone and be connected to a nearby Domino’s Pizza store after completing a number of automated voice prompts.

National print and direct mail programmesKeeping local stores at the forefront of customers’ minds.

Domino’s Pizza owns and operates Domino’s Direct, a custom-built direct mail centre, providing the Company with a competitive edge in its marketing activities by producing high volumes of printed marketing material at short notice and low cost, which is tailored to a store’s individual promotional needs.

Rollout of PULSE™, our state-of-the-art point-of-sale systemUsing technology to make it easier to give our customers the best service.

Domino’s Pizza’s computerised management information system is designed to improve ordering efficiencies, provide a customer relationship management tool, allow management to access timely financial and marketing data and reduce administrative time and expense.

DELIVERING FUTURE RESULTSIn 2005/06, Domino’s Pizza expects to meet its prospectus forecasts with store growth, proactive management, product development, new store formats, innovation and passionate, dedicated staff.

Store GrowthThe Company remains on track to meet its prospectus forecast to open at least 42 stores in 2005/06 taking the network total to 429. Unlike 2005, this year we expect all of our growth to be organic as there are no acquisitions presently being considered. The 2005/06 year has got off to a good start with the 400th store already open, however we do not expect any stores to be constructed during the the Christmas/New Year period due to the construction industry holiday period.

The Company’s current expansion strategy supports the belief that the Australian and New Zealand market can sustain at least 550 traditional Domino’s Pizza stores. This is achievable and manageable in both our existing key markets and those in which Domino’s Pizza is under-represented. For example, the New South Wales store network of 122 stores compares to Queensland’s 95 stores despite a significantly higher population in New South Wales. In the medium term we envisage growing the Melbourne network from the current 42 stores to at least 83. In New Zealand we expect the store network to increase from 48 stores to 75-90.

Senior Management continues to review a number of business development opportunities, including other time segments and new store layouts and locations.

Proactive ManagementThe pizza industry is very competitive and competitors can always respond. We monitor the actions of our competitors and continue to distinguish ourself through:

• The corporate/franchise hybrid model – corporate stores drive operational standards while franchise stores provide both entrepreneurial drive and the ability to expand the distribution base with minimal incremental capital expenditure

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• Strong systems and technology and a focus on efficient production and delivery to take-away pizza;

• Strong economics at store level – 33.4%* average EBITDA return encourages franchisees to grow the business;

• Low staff turnover – ensures industry knowledge stays within the Domino’s Pizza network;

• Branding – highly visible image;• Low cost of production from size of network;• Competing not only on price (which is

generally limited and targeted) but on other grounds such as product quality, innovation and service; and

• Strong and very experienced Senior Management Team.

*In the year to June 2004, the average return at store level

was 33.4% across the Australian Store Network.

The Company is always monitoring our costs, including labour, food, fuel and freight.

In particular we are aware of the price pressure on cheese as a result of changes in the dairy industry. We have worked with suppliers to develop a solution to this and minimise the impact to the network.

Product Development The new product pipeline plays a significant part in driving network sales but the success of new products is never guaranteed. We continue to utilise the Domino’s Pizza Luv Lab to develop and test new products. We undertake internal and external sensory tests to try and best understand the desires of our customers before introducing new products.

Innovation Innovation is a key driver to increasing sales and ensuring that our service standards remain at the highest possible level. The feedback from our mobile phone ordering and Pulse rollout show that not only have we increased sales and service but given management timely access to financial and marketing data and reduced administrative time and expense. Pulse also provides Domino’s Pizza with the technical

platform for e-procurement with our suppliers’ warehouses.

Pulse has the added capability to support on-line ordering and the Company is investigating this option. Internet ordering will offer our customers a fast and accurate process by which they can place their orders. Our research shows that 65% of frequent pizza consumers use broadband three times per week or more. The major advantage is that orders bypass the front counter and go straight to the pizza make line. We do not expect the development and trial of internet ordering to have any impact on the Company’s performance in this financial year.

New Store Format The Company is developing and testing a new small store format. If successful this will allow the Company to expand into smaller regional towns and satellite cities. The success of this concept will ensure that the rate of return for the Company and its franchisees will be sustainable in these markets.

PeopleOur people are our greatest asset and we now have a very large number of passionate and dedicated employees across the network. We strive to be an employer of choice where people choose to work for their first job or for their entire career. Our objective is to provide our employees with constant and focused training. Commencing September 2005 we launched two day intensive training retreats throughout Australia and New Zealand. These were aimed at Franchisees and store managers to refresh and update their skills to the highest possible standards.

As you can see it’s been an exciting 12 months for Domino’s Pizza. My enthusiasm for the business and its prospects for next year and the years ahead remain at an all-time high and I look forward to keeping you informed of our progress.

Don Meij

Chief Executive Officer/Managing Director

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Senior Management Team Jon SaundersGeneral Manager Supply Chain (Age 42) Years with Domino’s: 8 yearsJon has been with Domino’s Pizza since 1997 and has 15 years’ experience in purchasing.Jon has held various roles throughout his career, including Purchasing Manager for the Collins Food Group, National Purchasing Manager for Austotel Hotel Group and a company buyer for Queensland Liquor Distributors.

Andrew RennieNational Operations Manager – Corporate (Age 37) Years with Domino’s: 11 yearsAndrew joined Domino’s Pizza in 1994 and has held a number of roles within Domino’s Pizza, including that of Franchisee. After being involved in operating Domino’s Pizza Stores between 1994 and 2004, Andrew sold his nine Franchised Stores to Domino’s Pizza in 2004 and joined Domino’s Pizza as National Operations Manager (Corporate) in 2004. Andrew has won a number of Domino’s Pizza awards, including the International Silver Franny Award in 2001. Prior to joining Domino’s Pizza, Andrew was an Avionics Technician in the RAAF for 10 years. Andrew holds a Bachelor of Teaching from the University of Technology, Sydney.

Michael LockeChief Marketing Offi cer (Age 52) Years with Domino’s: 6 yearsMichael joined Domino’s Pizza as Marketing Offi cer in 1999, and has over 30 years of experience in consumer and retail marketing.Michael has held previous positions as Director of Marketing of Conrad Jupiters and Marketing Director for Australia for Boots Pharmaceuticals. Michael holds a Bachelor of Commerce (Marketing) from the University of NSW. He has also taught university under-graduate and post-graduate programs.

Patrick McMichaelNew Concept Development Manager (Age 36) Years with Domino’s: 15 yearsPat has over 15 years’ experience in the Australian pizza industry, nine of which were spent as a Domino’s Pizza Franchisee. Pat joined Domino’s Pizza in 1990 in Sydney as a trainee manager and won Rookie Manager of the Year in 1991. Between 1991 and 1994, Pat held Area Manager positions, and was National Property Manager between 1994 to 1995. Pat was a Domino’s Pizza Franchisee between 1995 and 2004, owning a total of 10 stores during this period. Pat won Franchisee of the Year in 1998 (Regional) and 1999. Pat was appointed as New Concept Development Manager in 2004.

Ken LewisGeneral Counsel and Company Secretary (Age 36) Years with Domino’s: 8 monthsKen is a solicitor of the Supreme Court of Queensland and High Court of Australia with over 11 years’ experience. Ken joined Domino’s Pizza as General Counsel in 2005. Prior to this he was the principal of his own law fi rm where he acted for a large number of Domino’s Pizza Franchisees throughout Australia. Prior to establishing his own fi rm, Ken was a partner with a mid-sized Brisbane law fi rm, Cranston McEachern Lawyers. Ken holds a Bachelor of Laws from the Queensland University of Technology.

Don MeijChief Executive Offi cer/Managing Director (Age 36) Years with Domino’s: 18 yearsDon’s details are set out in Board of Directors page 15.

Richard ConeyChief Financial Offi cer (Age 40) Years with Domino’s: 10 yearsRichard is a Chartered Accountant with over 17 years of experience. Richard is responsible for the Company’s fi nancial accounting, planning & reporting, treasury, tax, internal audit and has overall responsibility for information technology. Prior to joining Domino’s Pizza in 1994, Richard spent four years in the UK, predominantly working for BET Plc as a Treasury/Group Accountant. Prior to this, Richard worked for Deloitte Touche Tohmatsu in their Audit Division. Richard holds a Bachelor of Management Studies and is a Chartered Accountant for the Institute of Chartered Accountants of New Zealand.

Peter JonesGeneral Manager New Zealand (Age 42) Years with Domino’s: 4 yearsPeter has been with Domino’s Pizza for four years, and has spent a total of 11 years in the QSR industry. Peter joined Domino’s Pizza as a Franchise Trainer in 2001. Since this time, Peter has held a number of positions, including acting as a Franchise Consultant in Sydney and Wollongong, and Corporate Operations Director in New Zealand. Peter was appointed to his current role of General Manager New Zealand, in 2005. Peter is responsible for overseeing Domino’s Pizza New Zealand’s current expansion. Prior to joining Domino’s Pizza, Peter spent seven years with Tricon.

Andy MasoodChief Development Offi cer – Property (Age 45) Years with Domino’s: 13 yearsSince joining Domino’s Pizza in 1992, Andy has held various roles, including Store Manager, National Purchasing & Logistics Manager and National Operational Manager for Franchisees. Andy has been the Chief Development Offi cer – Property for Domino’s Pizza since 2000. Andy holds a

Masters in Industrial Economics from the University of Bucharest.

Andrew MegsonNational Operations Manager – Franchise (Age 40) Years with Domino’s: 19 yearsAndrew joined Domino’s Pizza as a store manager in 1985, before going on to own his own Franchise. Andrew was a franchise consultant between 1996 and 2000. In 2000, Andrew was promoted to his present position of National Operations Manager for the Franchise Network.

Pat has over 15 years’ experience in the Australian pizza

1991 and 1994, Pat held Area Manager positions, and was National Property Manager between 1994 to 1995. Pat was a Domino’s Pizza Franchisee between 1995 and 2004, owning a total of 10 stores during this period. Pat won Franchisee of the Year in 1998 (Regional) and 1999. Pat was appointed as New Concept Development Manager

Andy MasoodChief Development Offi cer – Property (Age 45)Years with Domino’s: 13 yearsSince joining Domino’s Pizza in 1992, Andy has held various roles, including Store Manager, National Purchasing & Logistics Manager and National Operational Manager for Franchisees. Andy has been the Chief Development Offi cer – Property for Domino’s Pizza since 2000. Andy holds a

Masters in Industrial Economics from the University of Bucharest.

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Barry AltyNon-Executive Director(Age 60)Barry has had a retail career spanning 40 years with leading retailers including Woolworths and Foodland.Barry spent the fi rst 16 years of his career with Woolworths (New Zealand), culminating in his appointment as National Merchandise Controller.Barry began employment with Foodland in March 1993 as General Manager – Western Australian Operations. He was appointed Chief Executive Offi cer in September 1994 and Managing Director in November of the same year, serving until 2000.Barry was appointed General Manager of Queensland Independent Wholesalers in 1987, and held various industry consulting appointments in Queensland and Papua New Guinea.Barry is a Member of the Australian Institute of Company Directors.

Don MeijChief Executive Offi cer/ Managing Director(Age 36)Don commenced his career as a delivery driver for Silvio’sDial-a-Pizza in 1987 and became a store manager in 1989. Don became Director of National Operations between 1991 and 1993 for Silvio’s Dial-a-Pizza. In 1993, when Silvio’s Dial-a-Pizza acquired Domino’s Pizza in Australia, Don became General Manager of Domino’s Pizza. In 1996 Don became a Franchisee and built a network of 17 stores, before vending his stores into Domino’s Pizza in 2001. Don became Chief Operating Offi cer of Domino’s Pizza in 2001 and Chief Executive Offi cer in 2002.Don has won a number of international Domino’s Pizza awards, notably, 1996 International Manager of the Year and in 2004 the Chairman’s Award, for outstanding leadership in Domino’s Pizza in the worldwide network. Don’s industry awards also include the 2002 Qld Retail Franchise Australian Institute of Management (AIM) Professional Manager of the Year 2004, and The Ernst & Young Australian Young Entrepreneur of the Year in 2004.

Grant BourkeNon-Executive Director(Age 40)Grant has been a part of Domino’s Pizza for 12 years since he became a Franchisee in 1993.In 2001 Grant vended his eight-store franchise network into Domino’s Pizza’s Corporate Network. Between 2001 and 2004 Grant was a Director of Corporate Store Operations for Domino’s Pizza.Prior to joining Domino’s Pizza, Grant spent six years with Masterfoods (Mars Inc) working in various technical, sales and marketing roles for the company throughout South East Asia, New Zealand and Australia.Grant has won many awards within Domino’s Pizza, including National Sales Champion in 1995, Golden Franchisee award in 1995, Franchisee of the year 1997 and 1998, and the Golden Eagle in 1999 for his contribution to Domino’s Pizza. Most notably Grant won the Chairman’s Award, for outstanding leadership in Domino’s Pizza in the worldwide network.Grant holds a Bachelor of Science (Food Technology) from the University of NSW.

Paul CaveNon-Executive Director(Age 59)Paul is the founder and Chairman of BridgeClimb.Paul founded BridgeClimb in 1998, following nine years of development, planning and construction. Paul, along with the BridgeClimb business, has been highly rewarded by the tourism and business community in Australia.Paul was awarded the National Entrepreneur of the Year (Business) in 2001, and the Australian Export Heroes Award in 2002/03.Paul’s career included marketing and general management roles for B&D Roll-A-Door, before founding the Amber Group in 1974. In 1996, Paul sold his interest in the Amber Group to management.Paul is a director and founding shareholder of InterRisk Australia Pty Ltd.Paul holds a Bachelor of Commerce from the University of NSW.

Ross AdlerNon-Executive Chairman (Age 60)Ross was a Non-Executive Director of the Commonwealth Bank of Australia from 1991 to September 2004, and was a Director of Telstra between 1995 and 2001. Ross is also Chairman of AUSTRADE and Executive Chairman of Amtrade International Pty Ltd.Ross was Chief Executive Offi cer of Santos Ltd from 1984 to 2000. Previously he was Deputy Managing Director of Australian Paper Manufacturers (now AMCOR) and Managing Director of Brown & Dureau.Ross has been an adviser to Domino’s Pizza for three years.Ross holds a Bachelor of Commerce from Melbourne University and an MBA from Columbia University.

Board of Directors

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ASIC means the Australian Securities & Investments Commission.ASX means Australian Stock Exchange Limited (ABN 98 008 624 691).Australian Store Network means the network of Corporate Stores and Franchised Stores located in Australia.Board or Board of Directors or Directors means the board of directors of the Company.CAGR means Compound Annual Growth RateCapital Reduction means the selective reduction of capital described in note 26 to the Financial Statements.Company means Domino’s Pizza Australia New Zealand Limited (ACN 010 489 326).Corporate Store means a Domino’s pizza store owned and operated by the CompanyCorporate Store Network means the network of Corporate Stores.Corporations Act means the Corporations Act 2001 (Cth).Directors means the directors of the Company from time to time. Domino’s means the Domino’s Pizza brand and network, owned by Domino’s Pizza, Inc.Domino’s Pizza means the Company and each of its subsidiaries.Domino’s Pizza Stores means Corporate Stores and Franchised Stores.Earnings Per Share or EPS means NPAT divided by the total number of Shares on issue.EBIT means earnings before interest and tax.EBITA means earnings before interest, tax and amortisation.EBITDA means earnings before interest, tax, depreciation and amortisation.Executive Share and Option Plan or ESOP means the Domino’s Pizza Executive Share and Option Plan summarised in note 25 to the Financial Statements.Existing Store Sales Growth means sales growth of stores that have been trading for 54 weeks or more.

Forecast Period means the period from 4 July 2005 until 2 July 2006.Franchised Store means a pizza store owned and operated by a Franchisee (including stores trading as Pizza Haven NZ). Franchise Network means the network of Franchised Stores.Franchisees means persons and entities who hold a franchise from the Company to operate a pizza store under the terms of a sub-franchise agreement.Listing Rules means the Listing Rules of ASX.Network or Domino’s Pizza Network or Network Stores means the network of Corporate Stores and Franchised Stores.Network Sales means the total sales generated by the Network.New Zealand Network means the network of Corporate Stores and Franchised Stores located in New Zealand.Non-Executive Directors mean Ross Adler (non-executive Chairman), Grant Bourke, Barry Alty and Paul Cave.NPAT means net profit after tax.QSR means quick service restaurant, and refers to major chains in the fast food sector.Related Bodies Corporate has the meaning given to it by section 50 of the Corporations Act.Registry means Computershare Investor Services Pty Limited.Same Store Sales Growth means comparable growth in sales across those stores that were in operation at least 12 months prior to the date of the reported period.Senior Management Team or Senior Management means the management team outlined in page 14 herein.Share means any fully paid ordinary share in the capital of the Company.Specified Executives or Executive means the top five highest remunerated Senior Management Team members.$ means Australian Dollars unless specified otherwise.

Glossary

MESSAGE FROM DAVE BRANDON It was a remarkable year for Domino’s Pizza Australia New Zealand Limited. The Company listed on the Australian Stock Exchange, continued its strong growth record and has delivered outstanding financial results. We applaud their commitment, experience and passion for our brand. We are very pleased and proud of the Company’s continued success in Australia and New Zealand.

I recently attended the opening of the Company’s 400th network store in Australia and New Zealand. I was impressed with the energy, attitude and quality of the Domino’s Pizza team. They are providing great products, wonderful service and tremendous value to their customers. I am confident Domino’s Pizza will continue its growth of stores, sales, and market share. You can count on Domino’s Pizza to offer new and exciting products while also providing prompt, accurate delivery service throughout Australia and New Zealand.

David A. BrandonChairman and Chief Executive OfficerDomino’s Pizza, Inc.

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FinancialResults

18

Corporate Governance Statement 19

Directors’ Report 24

Auditor’s Independence Declaration 40

Independent Audit Report 41

Directors’ Declaration 43

Statement of Financial Performance 44

Statement of Financial Position 45

Statement of Cash Flows 46

Notes to the Financial Statements 47

Additional Stock Exchange Information 95

Additional Company Information 97

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OVERVIEWCorporate Governance is core to ensuring theprotection and enhancement of shareholdervalue. The Board ensures that Domino’s PizzaAustralia New Zealand’s (the “Company”)management maintains the highest level ofcorporate ethics. The Board comprises a majorityof independent Non-Executive Directors who,together with the Managing Director/ChiefExecutive Officer, have extensive commercialexperience and bring independence,accountability and judgement to the Board’sdeliberations to ensure maximum benefit toshareholders and employees.

The Company’s Board endorses the AustralianStock Exchange (“ASX”) Corporate GovernanceCouncil’s Principles of Good CorporateGovernance and Best Practice Recommendations(“ASX Principles”).

The Board has adopted a Corporate GovernanceCharter, Code of Conduct and a comprehensiveset of Board policies regarding Independence andConflicts of Interest, Risk Management, BoardPerformance Evaluation, CEO PerformanceEvaluation, Continuous Disclosure, SecuritiesTrading and an Audit Committee Charter toassist in the discharge of its CorporateGovernance responsibilities. Copies are availablefrom the Company’s registered office.

THE BOARD LAYS SOLID FOUNDATIONSFOR MANAGEMENT AND OVERSIGHTThe Board of the Company is responsible forensuring the existence of an effective CorporateGovernance environment to safeguard theinterests of the Company, its shareholders, andother stakeholders.

The Board is responsible for:

• ensuring compliance with laws, regulations,appropriate accounting standards and corporatepolicies (including the Code of Conduct);

• formulating strategic direction and approvingthe annual operating budget;

• approving and monitoring major capitalexpenditure programs;

• overseeing the Company, including its controland accountability systems;

• monitoring the operating and financialperformance of the Company;

• appointment and removal of the ManagingDirector/Chief Executive Officer;

• monitoring performance of the ManagingDirector/Chief Executive Officer and Executives;

• ensuring a clear relationship betweenperformance and Executive Directors’ andExecutives’ remuneration;

• monitoring risk management;

• ensuring that the market and shareholders arefully informed of material developments; and

• recognising the legitimate interests ofstakeholders.

Directors receive formal letters of appointmentsetting out the key terms, conditions andexpectations of their appointment.

The Board has delegated responsibility foroperation of the Company to the ManagingDirector/Chief Executive Officer.

Candidates initially appointed by the Board muststand for election at the next general meeting ofshareholders.

Board MeetingsThe Board held nine formal meetings during theyear. Additional meetings are held as required.

Details of the Directors, their qualifications, skillsand experience are on page 15 of the annualreport. Attendance at the 2005 Board andCommittee meetings is detailed on page 25 ofthe financial statements.

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THE BOARD IS STRUCTURED TOADD VALUEThe Company has five Directors. Three Directorsare Independent Non-Executive Directors(including the Chairman). These are:

Director Year of appointment

Ross Adler (Chairman) 2005Barry Alty 2005Paul Cave 2005

IndependenceIndependence is about whether a Director isindependent of management and free of outsideinfluence which could materially interfere withthe independent and objective judgement of theDirector. Directors are asked to declare anypotential conflicts prior to the commencementof a formal meeting.

The Board has adopted the independencedefinition suggested by the ASX CorporatePrinciples and as such the three abovementionedNon-Executive Directors are considered to beindependent by reference to that definition.

Nomination and RemunerationCommitteeThe Board has established the Nomination andRemuneration Committee which undertakes theresponsibilities of the Nomination Committeeand Remuneration Committee referred to in theASX Principles.

The Nomination and Remuneration Committee:

• comprises the entire Board and is responsiblefor determining remuneration packagesapplicable to the Board members andManaging Director/Chief Executive Officer;

• is responsible for Board appointments andperformance;

• reviews the composition, including appropriatemix of skills, experience and independence ofthe Board;

• develops Board succession plans; and

• identifies and selects nominees forappointment to the Board.

The Company’s remuneration policy links thenature and amount of Executive Directors’ andofficers’ emoluments to the Company’s financialand operational performance.

The experience/qualifications of members of theNomination and Remuneration Committee areset out on page 15 of the annual report.Membership of and attendance at 2005Committee meetings are detailed on page 25 ofthe financial statements.

THE BOARD REMUNERATES FAIRLY ANDRESPONSIBLYThe Company’s Remuneration Report is set out inthe Directors’ Report (see pages 29 to 38).

The Nomination and Remuneration Committeeis responsible for developing and recommendingto the Board:

• remuneration policies for Non-ExecutiveDirectors;

• remuneration policies for the ManagingDirector/Chief Executive Officer;

• the award of any executive options and sharegrants; and

• Senior Management succession planning,appointments and terminations.

The remuneration of the Specified Directorsand Specified Executives is disclosed on pages34 and 35.

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THE BOARD PROMOTES ETHICAL ANDRESPONSIBLE DECISION-MAKINGThe Board has a formal Directors’ Code ofConduct which sets the standards to which eachDirector will adhere whilst conducting theirduties. The Code requires a Director, amongstother things, to:

• act honestly, in good faith and in the bestinterests of the Company as a whole;

• perform the functions of office and exercisethe powers attached to that office with adegree of care and diligence that a reasonableperson would exercise if they were a Directorin the same circumstances; and

• consider matters before the Board havingregard to any possible personal interests, theamount of information appropriate toproperly consider the subject matter andwhat is in the best interests of the Company.

Securities Trading PolicyThe Company has adopted a policy that imposescertain restrictions on officers, employees andfranchisees trading in the securities of theCompany. The restrictions have been imposed toprevent inadvertent contraventions of the insidertrading provisions of the Corporations Act 2001.

The key aspects of the policy are:

• trading whilst in the possession of materialprice sensitive information is prohibited;

• trading is permitted without approval in thesix week period after the release to ASX of thehalf-yearly and annual results, the end of theAGM or at any time the Company has aprospectus open, but only if they have noinside information and the trading is not forshort term or speculative gain; and

• trading in other circumstances is onlypermitted if the person is personally satisfiedthat they are not in possession of insideinformation and they have obtained approval.Permission will be given for such trading onlyif the approving person is satisfied that thetransaction would not be contrary to law, forspeculative gain or to take advantage ofinside information.

THE BOARD SAFEGUARDS THEINTEGRITY OF FINANCIAL REPORTINGThe Managing Director/Chief Executive Officerand Chief Financial Officer are required to declarewhether, in their respective opinions, theCompany’s financial records have been properlymaintained and whether the financial statementspresent a true and fair view of the Company’sfinancial position and performance, and are inaccordance with relevant accounting standards.

Audit CommitteeThe Board has an Audit Committee which:

• has three members, all of which areIndependent Non-Executive Directors;

• is chaired by Barry Alty, an IndependentNon-Executive Director;

• has a formal written Charter;

• includes members who are all financiallyliterate; and

• is responsible for and will:

– be the focal point of the communicationbetween the Board, management and theexternal auditor;

– recommend and supervise theengagement of the external auditors andmonitor auditor performance;

– review the effectiveness of managementinformation and other systems of internalcontrol;

– review all areas of significant financial riskand arrangements in place to containthose to acceptable levels;

– review significant transactions thatare not a normal part of the Company’sbusiness;

– review the year end and interim financialinformation and ASX reporting statements;

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– monitor the internal controls and accountingcompliance with the Corporations Act, ASXListing Rules, review external audit reportsand ensure prompt remedial action; and

– review the Company’s financial statements(including interim reports) and accountingprocedures.

The experience/qualifications of members of theAudit Committee are set out on page 15.Membership of and attendance at 2005Committee meetings are detailed on page 25.

The Board and Audit Committee closely monitorthe independence of the external auditor.

The Company requires the rotation of the leadaudit partner every five years.

Policies are in place to restrict the type ofnon-audit services which can be provided by theexternal auditor.

THE BOARD MAKES TIMELY ANDBALANCED DISCLOSUREThe Company has adopted a continuousdisclosure policy so as to comply with itscontinuous disclosure obligations. The aims ofthis policy are to:

• assess new information and co-ordinate anydisclosure or releases to the ASX, or any advicerequired in relation to that information, in atimely manner;

• provide an audit trail of the decisionsregarding disclosure to substantiatecompliance with the Company’s continuousdisclosure obligations;

• report to the Board on continuous disclosurematters; and

• ensure that employees, consultants,associated entities and advisers of theCompany understand the obligations to bringmaterial information to the attention of theCompany Secretary.

The Company Secretary is responsible forcommunications with the ASX includingresponsibility for ensuring compliance with thecontinuous disclosure requirements in ASX ListingRules and overseeing information going to theASX, shareholders and other interested parties.

The Company includes commentary on itsfinancial results in its annual report.

THE BOARD RESPECTS THE RIGHTS OFSHAREHOLDERSThe Company has an effective externalcommunications policy which promotes effectivecommunication with shareholders and encourageseffective participation at general meetings.

Information on major developments affecting theCompany is communicated to shareholdersthrough the Annual and Half-Yearly Reports,GeneralMeetings and notices of the General Meetings, andby general correspondence from the Board.

The Company places all relevant marketannouncements on its websitewww.dominos.com.au.

Auditor at Annual General MeetingThe external auditor will attend the AnnualGeneral Meeting.

THE BOARD RECOGNISES ANDMANAGES RISKThe Board adopts an active approach to riskmanagement which recognises that the Companyis engaged in activities, which necessarily demandthat the Company take certain usual business,entrepreneurial and operational risks. Accordingly,and in the interests of the enhanced performanceof the Company, the Board embraces a responsibleapproach to risk management, as a risk-awareCompany, and not a risk-adverse one.

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THE BOARD ENCOURAGES ENHANCEDPERFORMANCEThe Nomination and Remuneration Committee isresponsible for evaluating the Board’sperformance.

A formal review of Board and Committeeperformance is undertaken annually.

The Directors have open access to all relevantinformation. Directors may meet independentlywith management at any time to discuss areas ofinterest or concern.

THE COMPANY RECOGNISES THELEGITIMATE INTERESTS OFSTAKEHOLDERSAll Directors and all officers of the Company must,as far as possible, act with the utmost integrityand objectivity, striving at all times to enhance thereputation and performance of the Company, andwhere possible, to act in accordance with theinterests of the shareholders, staff, clients and allother stakeholders in the Company.

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Details of Directors, their experience and anyspecial responsibilities are set out on page 15 ofthe annual report.

Principal activitiesThe principal activities of the Company in thecourse of the financial year were the operation ofretail food outlets and the operation of franchiseservices. During the year there was no significantchanges in the nature of those activities.

Review of operationsA review of operations of the Company and theresults of those operations for the financial yearunder review are contained in the Chairman’sand Managing Director’s Reports.

DividendsA final dividend of 0.7 cents per share fullyfranked at 30% corporate income tax rate will bepaid on 10 October 2005 (in respect of the 2005financial year) to the holders of fully paidordinary shares on 4 October 2005.

Changes in state of affairsSignificant changes in the state of affairs of theCompany during the financial year were asfollows:

Initial Public Offering (“IPO”) – the Company listedon the ASX on 16 May 2005.18,046,000 new shareswere issued at $2.20 per share, raising proceeds of$39,701,200 in capital for the Company. Refer tonote 26 of the financial statements.

The Directors present their report together with the financial statements of Domino’s Pizza AustraliaNew Zealand Limited (the “Company”), being the Company and its controlled entities, for the yearended 3 July 2005 and the auditor’s report thereon. The Company, until 4 April 2005, was formerlyreporting under the name Domino’s Pizza Australia Pty Ltd.

The names and particulars of the Directors of the Company during or since the end of the financialyear are:

Name Position

Ross Adler Non-Executive Chairman Appointed 23 March 2005Appointed Chairman 30 March 2005

Don Meij Managing Director/ Appointed 24 August 2001 Chief Executive Officer (previously a Director of Domino’s Pizza Australia

Pty Ltd)Barry Alty Non-Executive Director Appointed 23 March 2005Grant Bourke Non-Executive Director Appointed 24 August 2001

(previously a Director of Domino’s Pizza AustraliaPty Ltd)

Paul Cave Non-Executive Director Appointed 23 March 2005Richard Coney Chief Financial Officer Appointed 12 August 1999 as Director of

Domino’s Pizza Australia Pty Ltd and resigned on31 March 2005

Andrew Rennie National Operations Appointed 22 December 2004 as Director of Manager – Corporate Domino’s Pizza Australia Pty Ltd and resigned on

31 March 2005

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Share buy-back and selective capital reduction –the Company completed a buy-back on 11 April2005 of 6,682,364 ordinary shares, representing13.74% of ordinary shares on issue on that date. Inaccordance with the Resolution of Shareholdersdated 11 April 2005, a capital reduction waseffected on that date by the cancellation of eachof the shares bought back. Refer to note 26 of thefinancial statements.

Events subsequent to balance dateOn 21 August 2005, the Directors declared a finaldividend for the financial year ended 3 July 2005,as set out in the Dividends section of this report.Refer to note 30 of the financial statements.There has not arisen in the interval between theend of the financial year and the date of thisreport any item, transaction or event of amaterial and unusual nature likely, in the opinionof the Directors of the Company, to affectsignificantly the operations of the Company, theresults of those operations or the state of affairsof the Company, in future financial years.

Likely developmentsPages 10 to 13 of this annual report includesinformation on developments likely to affect theoperations of the Company.

Further disclosure of information regarding likelydevelopments in the operations of the Companyand the expected results of those operations hasnot been included in this Directors’ Reportbecause disclosure of the information could beunreasonably prejudicial to the Company.

Impact of legislation and otherexternal requirementsFrom 1 July 2005 the Company is required tocomply with Australian equivalents toInternational Financial Reporting Standards(“A-IFRS”) issued by the Australian AccountingStandards Board. The expected impact of theresulting changes in accounting policies aredisclosed in note 41 of the financial statements.

Environmental regulationsThe Company is not involved in any activities thathave a marked influence on the environmentwithin its area of operation. As such, the Directorsare not aware of any material issues affecting theCompany or its compliance with the relevantenvironmental agencies or regulatoryauthorities.

Directors’ meetingsThe following table sets out the number ofDirectors’meetings held during the financial yearand the number of meetings attended by eachDirector (while they were a Director). During thefinancial year, nine Board meetings, noNomination and Remuneration Committeemeetings and no Audit Committee meetingswere held.

Nomination andBoard of Remuneration

Directors Directors Committee Audit CommitteeEligible to Eligible to Eligible to

Attend Attended Attend Attended Attend Attended

Ross Adler(ii)(iii) 7 7 – – – –Don Meij(ii) 9 9 – – – –Barry Alty(ii)(iii) 7 6 – – – –Grant Bourke(ii) 9 9 – – – –Paul Cave(ii)(iii) 7 7 – – – –Richard Coney(i) 2 2 – – – –Andrew Rennie(i) 2 1 – – – –(i) Resigned as Director of Domino’s Pizza Australia Pty Ltd on 31 March 2005.(ii) Member of Nomination and Remuneration Committee.(iii) Member of Audit Committee.

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Directorships of other listed companiesDirectorships of other listed companies held by Directors in the three years immediately before theend of the financial year are as follows:

Name Company Period of Directorship

Ross Adler Commonwealth Bank of Australia 1991 – September 2004Refer to page 15 of this Annual Report for details of each Director’s qualifications and experience.

Company Secretary’s qualifications and experienceKen Lewis Ken is a solicitor of the Supreme Court of QueenslandGeneral Counsel and Company Secretary and High Court of Australia with over 11 years’

experience. Ken joined the Company as GeneralCounsel in 2005 and was appointed to the position ofCompany Secretary on 7 March 2005. Ken holds aBachelor of Laws from the Queensland University ofTechnology.

Directors’ shareholdingsParticulars of Directors’ interests in shares and options over such instruments issued by the Company,as notified by the Directors to the ASX under s.205G(1) of the Corporations Act 2001, at the date of thisreport are as follows:

Directors Fully paid Options over ordinary shares ordinary shares

Ross Adler(i) 169,091 50,000Don Meij(i) 4,151,232 1,380,000Barry Alty(i) 50,000 50,000Grant Bourke(i) 3,397,032 50,000Paul Cave(i) 682,000 50,000(i) Includes shares held by personally-related entities.

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Share options granted to Directors and ExecutivesDuring the financial year an aggregate of 2,750,000 share options were granted by the Company tothe following Directors and Executives of the Company:

Number of options Class of

granted shares

Specified DirectorsRoss Adler(i) 50,000 OrdinaryDon Meij 1,380,000 OrdinaryBarry Alty(i) 50,000 OrdinaryGrant Bourke(i) 50,000 OrdinaryPaul Cave(i) 50,000 OrdinaryRichard Coney 210,000 OrdinaryAndrew Rennie 450,000 Ordinary

Specified ExecutivesMichael Locke 105,000 OrdinaryAndy Masood 90,000 OrdinaryAndrew Megson 150,000 OrdinaryJon Saunders 105,000 OrdinaryPatrick McMichael 60,000 Ordinary

All options issued were granted during the financial year. No options have been granted since the endof the financial year. All options expire on the earlier of their expiry date or termination of theemployee’s employment. In addition, the ability to exercise the options is conditional upon theCompany achieving targeted growth in earnings per share. Further option details are included in theRemuneration Report on page 29 to 38 and note 37 of the financial statements.(i) These options do not carry any exercise conditions.

Unissued shares under optionAt the date of this report unissued ordinary shares of the Company under option are:

Number Exercise Issuing entity of shares price Expiry date

Domino’s Pizza Australia New Zealand Limited 200,000 $2.20 16/05/2007Domino’s Pizza Australia New Zealand Limited 457,500 $2.20 31/05/2007Domino’s Pizza Australia New Zealand Limited 847,501 $2.20 31/08/2008Domino’s Pizza Australia New Zealand Limited 847,501 $2.20 31/08/2009Domino’s Pizza Australia New Zealand Limited 847,501 $2.20 31/08/2010

Shares issued on exercise of optionsDomino’s Pizza Australia New Zealand Limited Nil N/A N/A

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Indemnification of officers andauditorsThe Company has entered into deeds of indemnity,insurance and access with each Director. To theextent permitted by law and subject to therestrictions in section 199A of the Corporations Act,the Company must continuously indemnify eachDirector against liability (including liability forcosts and expenses) for an act or omission in thecapacity of Director.However this does not apply inrespect of any of the following:

• a liability to the Company or a related bodycorporate;

• a liability to some other person that arisesfrom conduct involving a lack of good faith;

• a liability for costs and expenses incurred bythe Director in defending civil or criminalproceedings in which judgment is givenagainst the officer or in which the officer isnot acquitted; or

• a liability for costs and expenses incurred bythe Director in connection with anunsuccessful application for relief under theCorporations Act in connection with theproceedings referred to above.

The Company has also agreed to provide theDirectors with access to board documentscirculated during the Director’s term in office.

During the financial year, the Company paid apremium in respect of a contract insuring theDirectors of the Company, the CompanySecretary and all Senior Management of theCompany and of any related body corporateagainst a liability incurred as such a Director,Secretary or Senior Management to the extentpermitted by the Corporations Act 2001.

The Company has not otherwise, during or sincethe financial year, indemnified or agreed toindemnify an officer or auditor of the Companyor of any related body corporate against a liabilityincurred as such an officer or auditor.

The Directors have not included details of thenature of the liabilities covered or the amount ofthe premium paid in respect of the Directors’ andofficers’ liability and legal expenses’ insurancecontracts; as such disclosure is prohibited underthe terms of the contract.

Non-audit servicesDuring the year Deloitte Touche Tohmatsu, theCompany’s auditor, has performed certain otherservices in addition to their statutory audit.

The Board has considered the non-audit servicesprovided during the year by the auditor, and issatisfied that the provision of those non-auditservices during the year by the auditor (or byanother person or firm on the auditor’s behalf) iscompatible with, and did not compromise, theauditor independence requirements of theCorporations Act 2001 for the following reason:

• the non-audit services provided do notundermine the general principles relating toauditor independence as set out in ProfessionalStatement F1 “Professional independence”, asthey did not involve reviewing or auditing theauditor’s own work,acting in a management ordecision-making capacity for the Company,acting as an advocate for the Company orjointly sharing risks and rewards.

Details of amounts paid or payable to the auditorfor non-audit services provided during the yearby the auditor are outlined in note 5 of thefinancial statements.

Auditor’s independence declarationThe auditor’s independence declaration isincluded on page 40 of the financial statements.

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Remuneration ReportThe Nomination and Remuneration Committeeis responsible for making recommendations tothe Board on remuneration policies and packagesapplicable to the Board members and theManaging Director/Chief Executive Officer isresponsible for making recommendations onremuneration packages applicable to theExecutives of the Company. Where appropriate,the Nomination and Remuneration Committeemay receive expert independent advice regardingremuneration levels required to attract andcompensate Directors and Executives, given thenature of their work and responsibilities.

The broad Remuneration Policy is to ensure theremuneration package properly reflects theperson’s duties and responsibilities and level ofperformance; and that remuneration iscompetitive in attracting, retaining andmotivating people of the highest quality.Executive Directors and Executives may receivebonuses on the achievement of specific goalsrelated to the performance of the Company(including operational results).

Superannuation contributions are made by theCompany on behalf of Barry Alty, Paul Cave andDon Meij in line with legislative requirements.Some Non-Executive Directors, as a result of theirpersonal superannuation circumstances, havenotified the Company that they would prefer toremain separate from the Company’s payrollsystem, thereby rendering them ineligible toreceive superannuation benefits.

Remuneration for the 2005 financial year for theNon-Executive Directors was $45,000 per annum(2004: nil) and for the Chairman was $75,000 perannum (2004: nil).

Director detailsThe Non-Executive Directors of Domino’s PizzaAustralia New Zealand Limited during the yearwere:

• Ross Adler Non-Executive Chairman,Audit Committee,Nomination andRemuneration Committee

• Barry Alty Non-Executive Director,Audit Committee,Nomination andRemuneration Committee

• Grant Bourke(i) Non-Executive Director,Audit Committee,Nomination andRemuneration Committee

• Paul Cave Non-Executive Director,Audit Committee,Nomination andRemuneration Committee

(i) Until December 2004, Grant Bourke held the position of Headof Corporate Store Operations, and from January 2005 to May2005 he held the position of Director of Special Projects.

The Executive Directors of Domino’s Pizza AustraliaNew Zealand Limited during the year were:

• Don Meij Managing Director/ChiefExecutive Officer,Nomination andRemuneration Committee

• Richard Coney Chief Financial Officer,resigned as Director ofDomino’s Pizza Australia PtyLtd on 31 March 2005

• Andrew Rennie National OperationsManager – Corporate,resigned as Director ofDomino’s Pizza Australia PtyLtd on 31 March 2005

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Specified Executives(other than Directors)The following persons were identified as theSpecified Executives based on their remunerationpackages and level of authority for the 2005financial year:

• Michael Locke Chief Marketing Officer

• Andy Masood Chief Development Officer– Property

• Andrew Megson National OperationsManager – Franchise

• Jon Saunders General Manager –Supply Chain

• Patrick McMichael New ConceptDevelopment Manager

Elements of Director and SpecifiedExecutivesThe remuneration structures explained below aredesigned to attract suitably qualified candidates,reward the achievement of strategic objectives,and achieve the broader outcome of creation ofvalue for shareholders.

The remuneration structures take into account:

• the capability and experience of the Directorsand Executives;

• the Director’s and Executive’s ability to controlthe relevant segment/s’ performance;

• the Company’s performance including:

– the Company’s earnings;

– the growth in earnings per share andreturn on shareholder wealth; and

• the amount of incentives within eachDirector’s and Executive’s remuneration.

Remuneration packages include a mix of fixedand variable remuneration and short and longterm performance-based incentives.

Fixed remunerationFixed remuneration consists of baseremuneration (which is calculated on a total costbasis and includes any fringe benefits tax (“FBT”)charges related to employee benefits includingmotor vehicles), as well as employercontributions to superannuation funds.

Remuneration levels are reviewed annually bythe Nomination and Remuneration Committeeand Managing Director/Chief Executive Officerthrough a process that considers individual,segment and overall performance of theCompany. In addition, external consultantsprovide analysis and advice to ensure theDirectors’ and Executives’ remuneration iscompetitive in the marketplace.

Performance-based remunerationPerformance-based remuneration includes bothshort term and long term incentives and isdesigned to reward Executive Directors andExecutives for meeting or exceeding theirfinancial and personal targets. The short termincentive is an “at risk” bonus provided in theform of cash, while the long term incentive isprovided as options over ordinary shares of theCompany under the rules of the Domino’s PizzaExecutive Share and Option Plan (“ESOP”).

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Short term incentive bonusEach year the Nomination and RemunerationCommittee sets the Key Performance Indicators(“KPIs”) for the Executive Directors and theManaging Director/Chief Executive Officer setsthe KPIs for Executives. The KPIs generally includemeasures relating to the Company, the relevantsegment, and the individual, and include financial,people, customer, strategy and risk measures. Themeasures are chosen as they directly align theindividual’s reward to the KPIs of the Companyand to its strategy and performance. TheCompany undertakes a rigorous and detailedannual forecasting and budget process.The Boardbelieves achievement of the annual forecast andbudget is therefore the most relevant short termperformance condition.

The financial performance objectives include“Earnings before Interest, Tax, Depreciation andAmortisation” (“EBITDA”) and “Network Sales”compared to budget and forecast amounts. Thenon-financial objectives vary with position andresponsibility and include measures such asachieving strategic outcomes, percentagesavings, customer satisfaction and staffdevelopment.

At the end of the financial year the Nominationand Remuneration Committee and ManagingDirector/Chief Executive Officer assess the actualperformance of the Company, the relevantsegment and individual against the KPIs set atthe beginning of the financial year. No bonus isawarded where performance targets are notachieved.

The Managing Director/Chief Executive Officerrecommends to the Nomination andRemuneration Committee the performancebonus amounts of individuals. The method ofassessment was chosen as it provides theCommittee with an objective assessment of theindividual’s performance.

Long term incentiveThe Company was listed on the ASX on 16 May2005. Prior to listing, no options were granted. Aformalised remuneration policy, effective for theyear ending 2 July 2006, was developed prior tolisting, in accordance with the ASX Principles.

Options are issued under the ESOP (made inaccordance with thresholds set in plans approvedby the Board on 11 April 2005), provides forExecutive Directors and Executives to receive anumber of options, as determined by the Board,over ordinary shares. The ability to exercise theoptions is conditional on the Company achievingcertain exercise conditions. Refer to note 37 of thefinancial statements.

The Nomination and Remuneration Committeeconsiders this equity performance-basedremuneration structure to be appropriate asExecutive Directors and Executives only receive abenefit where there is a corresponding directbenefit to shareholders.

In considering the Company’s performance andbenefits for shareholders’ wealth, theNomination and Remuneration Committee andManaging Director/Chief Executive Officer hadregard to EBITDA of $19.2 million and NetworkSales of $306.1 million for the 2005 financial year.

Other benefitsDirectors and Executives can receive additionalbenefits as non-cash benefits, as part of theterms and conditions of their appointment. Themajority of non-cash benefits relate to theprovision of motor vehicles for which theCompany pays FBT.

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Service agreementsEvery Specified Executive (including Don Meij asManaging Director/Chief Executive Officer) hasentered into an Executive service contract withthe Company on substantially similar terms.

Each agreement is for a term of three years andcontinues until terminated in accordance withthe agreement. Either the Company or theExecutive may terminate the agreement at anytime by giving six months’ notice (in the case ofDon Meij, 12 months’ notice) and in the case ofthe Company, by paying to the Executive sixmonths’ (in the case of Don Meij, 12 months’)remuneration. In addition the Company mayterminate the Executive’s employment at anytime for misconduct or non-performance.

The Directors believe that the remuneration ofeach Executive is appropriate for the dutiesallocated to them, the size of the Company’sbusiness and the industry in which the Companyoperates. The service contracts outline thecomponents of remuneration paid to theExecutive Directors and Executives but do notprescribe how remuneration levels are modifiedyear to year. Remuneration levels are reviewedeach year to take into account cost-of-livingchanges, any change in the scope of the roleperformed by the Executives and any changesrequired to meet the principles of theremuneration policy.

Each Executive has agreed that during theiremployment and for a period of up to six monthsafterwards, they will not compete with theCompany, canvass, solicit, induce or encourage anyperson who is or was an employee of the Companyat any time during the employment period toleave the Company or interfere in any way with therelationship between the Company and its clients,customers, employees, consultants or suppliers.

Don Meij, Managing Director/Chief ExecutiveOfficer, has a contract of employment withDomino’s Pizza Australia New Zealand Limiteddated 11 April 2005. The contract specifies theduties and obligations to be fulfilled by theManaging Director/Chief Executive Officer andprovides that the Board and ManagingDirector/Chief Executive Officer will, early in eachfinancial year, consult and agree objectives forachievements during that year. Except in the caseof default by the Company or a change of Boarddirection, Don Meij is not entitled to terminatewithin the first 12 months after listing. After thattime, he may resign by giving not less than12 months’ notice to the Company.

Don Meij’s contract provides that he mayterminate the agreement by giving threemonths’ written notice if for any reason,including a change in control of the Companyand he forms the reasonable opinion that therehas been material changes to the policies,strategies or future plans of the Board and, as aresult, he will not be able to implement hisstrategy or plans for the development of theCompany. If Don Meij terminates the agreementfor this reason, then in recognition of his pastservice to the Company, on the date oftermination, in addition to any payment made tohim during the notice period or by the Companyin lieu of notice, the Company must pay him anamount equal to the salary component andsuperannuation that would have been paid tohim in the 12 months after the date oftermination.

33

A change in control occurs when any shareholder(either alone or together with its associates)having a relevant interest in less than 50% of theissued shares in the Company acquires a relevantinterest in 50% of the shares on issue at any timein the capital of the Company or the compositionof a majority of the Board changes for a reasonother than retirement in the normal course ofbusiness or death.

Non-Executive DirectorsThe Constitution of the Company provides thatNon-Executive Directors are entitled to receiveremuneration for their services as determined bythe Company in a general meeting. The Companyhas resolved that the maximum aggregateamount of Directors’ fees (which does not includeremuneration of Executive Directors and othernon-Director services provided by Directors) is$400,000 per annum. The Non-ExecutiveDirectors may divide that remuneration amongthemselves as they decide. Non-ExecutiveDirectors are entitled to be reimbursed for theirreasonable expenses incurred in connection withthe affairs of the Company. A Non-ExecutiveDirector may also be remunerated as determinedby the Directors if that Director performsadditional or special duties for the Company.A former Director may also receive a retirementbenefit of an amount determined by the Directorsin recognition of past services, subject to the ASXListing Rules and the Corporations Act 2001.

Non-Executive Directors do not receiveperformance-based remuneration. Directors’ feescover all main Board activities.

Directors’ and Executives’RemunerationRemuneration packages contain the followingkey elements:

(a) primary benefits – salary/fees, bonuses andnon-cash benefits including the provision ofmotor vehicles;

(b) post-employment benefits – includingsuperannuation;

(c) equity – share options granted under theESOP; and

(d) other benefits.

34

The following table discloses the remuneration of the Specified Directors of the Company for thefinancial year ended 3 July 2005:

Post-employ-

Primary ment EquityOptions

Execu- as a % Base Non- Super tive of total

emol- cash contrib- Incentive Other remun-ument Bonus(i) benefits(iii) utions Plan(v) Options(ii) benefits(iv) Total eration

$ $ $ $ $ $ $ $ %

Specified DirectorsNon-Executive DirectorsRoss Adler 20,548 – 1,272 – – 10,500 – 32,320 32.49Barry Alty 11,769 – 1,272 1,059 – 10,500 – 24,600 42.68Grant Bourke 194,076 23,678 62,365 11,585 162,227 10,500 – 464,431 2.26Paul Cave 11,769 – 1,272 1,059 – 10,500 – 24,600 42.68

Executive DirectorsDon Meij 283,856 53,500 71,472 11,585 202,784 93,411 – 716,608 13.04Andrew Rennie(vii) 142,203 10,000 1,272 8,689 – 30,460 10,461 203,085 15.00Richard Coney(vi) 161,257 57,178 33,097 11,585 141,949 4,253 – 409,319 1.04

Total Specified Directors 825,478 144,356 172,022 45,562 506,960 170,124 10,461 1,874,963Notes in relation to the table of Directors’ remuneration(i) The short term cash incentive bonus is for performance during the year ended 3 July 2005. The amount was determined after performance

reviews were completed and approved by the Managing Director/Chief Executive Officer and the Nomination and Remuneration Committee.The bonuses include $76,723 relating to the prior year, paid in the current year, but exclude $131,039 relating to the current year, determinedand paid post 3 July 2005.

(ii) The fair value of the options was calculated at the grant date using the Binomial Option Pricing Method and allocated to each reporting periodevenly over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the options allocated to thisreporting period. In valuing the options, market conditions have been taken into account. Comparative information is not presented given thatDomino’s Pizza Australia New Zealand Limited became a public Company, listed on the ASX on 16 May 2005 and nil options were issued in priorperiods. The total value of options included in remuneration for the year is calculated in accordance with Accounting Standard AASB 1046“Director and Executive Disclosures by Disclosing Entities” as amended by Accounting Standard AASB 1046A. Where the options immediatelyvest the full value of the option is recognised in remuneration in the current financial year.

(iii) The Company pays insurance premiums that cover Directors and Senior Management. The premium is split between the Company Directorsand other Senior Management only. The average premium per person has been included in remuneration as part of the non-cash benefitscomponent. In addition, non-cash benefits include the provision of motor vehicle expenses (including FBT).

(iv) Other benefits include amounts relating to the payout of annual leave entitlements, back pay and travel expenses.(v) As noted in the Prospectus dated 15 April 2005, a one-off Executive Incentive Plan payment was made to Executives prior to listing.(vi) 75% of total remuneration (excluding options) relates to the period in which he was a Director.(vii) 50% of total remuneration (excluding options) relates to the period in which he was a Director.

35

The following table discloses the remuneration of the Specified Executives of the Company for thefinancial year ended 3 July 2005:

Post-employ-

Primary ment EquityOptions

Execu- as a % Base Non- Super tive of total

emol- cash contrib- Incentive Other remun-ument Bonus(i) benefits(iii) utions Plan(v) Options(ii) benefits(iv) Total eration

$ $ $ $ $ $ $ $ %

Specified ExecutivesAndrew Megson 135,370 18,077 1,272 11,585 141,949 3,038 41,090 352,381 0.86Michael Locke 115,542 48,773 13,846 11,585 101,392 2,126 14,322 307,586 0.69Andy Masood 136,884 31,400 21,663 11,585 101,392 1,823 10,308 315,055 0.58Jon Saunders 133,150 65,246 25,354 11,585 121,670 2,126 – 359,131 0.59Patrick McMichael 104,278 47,000 1,272 11,009 – 2,515 15,785 181,859 1.38

Total Specified Executives 625,224 210,496 63,407 57,349 466,403 11,628 81,505 1,516,012Notes in relation to the table of Executives’ remuneration(i) The short term cash incentive bonus is for performance during the year ended 3 July 2005. The amount was determined after performance

reviews were completed and approved by the Managing Director/Chief Executive Officer and the Nomination and Remuneration Committee.The bonuses include $76,723 relating to the prior year, paid in the current year, but exclude $131,039 relating to the current year, determinedand paid post 3 July 2005.

(ii) The fair value of the options was calculated at the grant date using the Binomial Option Pricing Method and allocated to each reporting periodevenly over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the options allocated to thisreporting period. In valuing the options, market conditions have been taken into account. Comparative information is not presented given thatDomino’s Pizza Australia New Zealand Limited became a public Company, listed on the ASX on 16 May 2005 and nil options were issued in priorperiods. The total value of options included in remuneration for the year is calculated in accordance with Accounting Standard AASB 1046“Director and Executive Disclosures by Disclosing Entities” as amended by Accounting Standard AASB 1046A. Where the options immediatelyvest the full value of the option is recognised in remuneration in the current financial year.

(iii) The Company pays insurance premiums that cover Directors and Senior Management. The premium is split between the Company Directorsand other Senior Management only. The average premium per person has been included in remuneration as part of the non-cash benefitscomponent. In addition, non-cash benefits include the provision of motor vehicle expenses (including FBT).

(iv) Other benefits include amounts relating to the payout of annual leave entitlements, back pay and travel expenses.(v) As noted in the Prospectus dated 15 April 2005, a one-off Executive Incentive Plan payment was made to Executives prior to listing.

36

The following factors and assumptions were used in determining the fair value of options on grant date:

Fair Price ofvalue shares Risk free

per Exercise on grant Estimated interest Dividend Grant date Expiry date option price date volatility rate yield

10 May 2005 16 May 2007 $0.21 $2.20 $2.20 23.48% 5.60% 4.20%15 May 2005 31 May 2007 $0.21 $2.20 $2.20 23.48% 5.60% 4.20%15 May 2005 31 August 2008 $0.22 $2.20 $2.20 23.91% 5.60% 4.20%15 May 2005 31 August 2009 $0.35 $2.20 $2.20 28.18% 5.58% 4.20%15 May 2005 31 August 2010 $0.43 $2.20 $2.20 29.43% 5.58% 4.20%

Analysis of bonuses included in remunerationDetails of the vesting profile of the short term incentive cash bonuses awarded as remuneration toeach Director and Executive of the Company are detailed below:

As a %% of 2005 of total

% of 2005 bonus remunerationRole bonus paid forfeited(i) for the year(i)

Specified DirectorsDon Meij Managing Director/

Chief Executive Officer 100 – 7.5Grant Bourke(iii) Non-Executive Director 77.6 22.4 5.1Andrew Rennie National Operations Manager – Corporate 94.4 5.6 4.9Richard Coney Chief Financial Officer 97.2 2.8 14.0

Specified ExecutivesMichael Locke Chief Marketing Officer 91.2 8.8 15.9Andrew Megson National Operations Manager –

Franchise 54.1 45.9 5.1Andy Masood Chief Development Officer – Property 83.2 16.8 10.0Jon Saunders General Manager – Supply Chain 100 – 18.2Patrick McMichael New Concept Development Manager 100 – 25.8(i) The amounts forfeited are due to performance or service criteria not being met in relation to the current financial year.(ii) Amounts included in remuneration for the financial year represent the amounts that vested in the financial year based on achievement of

personal goals and satisfaction of specified performance criteria. No amounts vest in future financial years in respect of the short termincentive bonus schemes.

(iii) Until December 2004, Grant Bourke held the position of Head of Corporate Store Operations, and from January 2005 to May 2005 he held theposition of Director of Special Projects.

37

Analysis of share-based payments granted as remunerationDetails of the vesting profile of the options granted as remuneration to each Director and Executive ofthe Company is detailed below:

Options granted Value yet to vestFinancial

years in % vested which

Number Date in year Options vest Min(i) Max(ii)

Specified DirectorsRoss Adler(iii) 50,000 10 May 2005 100 31 May 2005 $nil $nilBarry Alty(iii) 50,000 10 May 2005 100 31 May 2005 $nil $nilGrant Bourke(iii) 50,000 10 May 2005 100 31 May 2005 $nil $nilPaul Cave(iii) 50,000 10 May 2005 100 31 May 2005 $nil $nilDon Meij 345,000 15 May 2005 100 31 May 2005 $nil $nil

345,000 15 May 2005 – 31 August 2006 $nil 68,037345,000 15 May 2005 – 31 August 2007 $nil 113,689345,000 15 May 2005 – 31 August 2008 $nil 142,313

Andrew Rennie 112,500 15 May 2005 100 31 May 2005 $nil $nil112,500 15 May 2005 – 31 August 2006 $nil 22,186112,500 15 May 2005 – 31 August 2007 $nil 37,073112,500 15 May 2005 – 31 August 2008 $nil 46,406

Richard Coney 70,000 15 May 2005 – 31 August 2006 $nil 13,80570,000 15 May 2005 – 31 August 2007 $nil 23,06770,000 15 May 2005 – 31 August 2008 $nil 28,875

Specified ExecutivesAndy Masood 30,000 15 May 2005 – 31 August 2006 $nil 5,916

30,000 15 May 2005 – 31 August 2007 $nil 9,88630,000 15 May 2005 – 31 August 2008 $nil 12,375

Andrew Megson 50,000 15 May 2005 – 31 August 2006 $nil 9,86050,000 15 May 2005 – 31 August 2007 $nil 16,47750,000 15 May 2005 – 31 August 2008 $nil 20,625

Michael Locke 35,000 15 May 2005 – 31 August 2006 $nil 6,90235,000 15 May 2005 – 31 August 2007 $nil 11,53435,000 15 May 2005 – 31 August 2008 $nil 14,438

Jon Saunders 35,000 15 May 2005 – 31 August 2006 $nil 6,90235,000 15 May 2005 – 31 August 2007 $nil 11,53435,000 15 May 2005 – 31 August 2008 $nil 14,438

Patrick McMichael 20,000 15 May 2005 – 31 August 2006 $nil 3,94420,000 15 May 2005 – 31 August 2007 $nil 6,59120,000 15 May 2005 – 31 August 2008 $nil 8,250

No options were forfeited during the year.(i) The minimum value of options to vest is $nil as the performance criteria may not be met and consequently the option may not vest.(ii) The maximum value has been determined using the fair value of the options at grant date, calculated using the Binomial Option

Pricing Method.(iii) These options did not carry any performance-based exercise conditions.

38

Analysis of movements in optionsThe movement during the reporting period, by value, of options over ordinary shares in the Companyby each Director and Executive is detailed below:

Value of OptionsTotal

optionGranted Exercised Forfeited value

in year in year in year in year$(i) $(ii) $(iii) $

Specified DirectorsRoss Adler 10,500 – – 10,500Barry Alty 10,500 – – 10,500Grant Bourke 10,500 – – 10,500Paul Cave 10,500 – – 10,500Don Meij 417,450 – – 417,450Andrew Rennie 136,125 – – 136,125Richard Coney 70,000 – – 70,000

Total 665,575 – – 665,575

Specified ExecutivesAndy Masood 30,000 – – 30,000Andrew Megson 50,000 – – 50,000Michael Locke 35,000 – – 35,000Jon Saunders 35,000 – – 35,000Patrick McMichael 20,000 – – 20,000

Total 170,000 – – 170,000(i) The value of options granted in the year is the fair value of the options calculated at grant date using the Binomial Option Pricing Method.

The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period.(ii) The value of options exercised during the year is calculated as the market price of shares of the Company on the ASX as at close of trading on

the date the options were exercised after deducting the price paid to exercise the option.(iii) The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date the option lapsed using a

Binomial Option Pricing Method with no adjustments for whether the performance criteria have or have not been achieved.

39

Rounding off of amountsThe Company is of a kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordancewith that Class Order amounts in the financial report are rounded off to the nearest thousand dollars,unless otherwise indicated.

Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the CorporationsAct 2001.

Ross Adler Don MeijChairman Managing Director/Chief Executive Officer

Brisbane, 26 September 2005

40

Deloitte Touche TohmatsuA.B.N. 74 490 121 060Riverside CentreLevel 26 123 Eagle StreetBrisbane QLD 4000GPO Box 1463Brisbane QLD 4001 AustraliaDX 115Tel: +61 (0) 7 3308 7000Fax: +61 (0) 7 3308 7001www.deloitte.com.au

The Board of DirectorsDomino’s Pizza Australia New Zealand LimitedLevel 8, TAB Building240 Sandgate RoadALBION QLD 4010

26 September 2005

Dear Board Members

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the followingdeclaration of independence to the directors of Domino’s Pizza Australia New Zealand Limited.

As lead audit partner for the audit of the financial statements of Domino’s Pizza Australia NewZealand Limited for the financial year ended 3 July 2005, I declare that to the best of my knowledgeand belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

M G SheerinPartnerChartered Accountants

Liability limited by the Accountant’s Scheme approved under the Professional Standards Act 1994 (NSW) © Deloitte Touche Tohmatsu, September 2005.

41

SCOPE

The financial report, remuneration disclosures and directors’ responsibilityThe financial report comprises the statement of financial performance, statement of financialposition, statement of cash flows, accompanying notes to the financial statements, and the directors’declaration for both Domino’s Pizza Australia New Zealand Limited (the “Company”) and theconsolidated entity, for the financial year ended 3 July 2005 as set out on pages 43 to 94. Theconsolidated entity comprises the Company and the entities it controlled at year end or from time totime during the financial year.

The consolidated entity has disclosed information about the remuneration of Directors and Executives(“remuneration disclosures”), as required by Accounting Standard AASB 1046 “Director and ExecutiveDisclosures by Disclosing Entities” (AASB 1046) under the heading “Remuneration Report” on pages 29to 38 of the Directors’ Report, as permitted by the Corporations Regulations 2001.

The Directors of the Company are responsible for the preparation and true and fair presentation of thefinancial report in accordance with the Corporations Act 2001. This includes responsibility for themaintenance of adequate accounting records and internal controls that are designed to prevent and detectfraud and error, and for the accounting policies and accounting estimates inherent in the financial report.The Directors are also responsible for the remuneration disclosures contained in the Directors’Report.

Audit approachWe have conducted an independent audit of the financial report and the remuneration disclosures inorder to express an opinion on them to the members of the Company. Our audit has been conductedin accordance with Australian Auditing Standards to provide reasonable assurance whether thefinancial report is free of material misstatement and the remuneration disclosures comply withAASB 1046 and the Corporations Regulations 2001.The nature of an audit is influenced by factors suchas the use of professional judgement, selective testing, the inherent limitations of internal controls,and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannotguarantee that all material misstatements have been detected.

We performed procedures to form an opinion whether, in all material respects, the financial report ispresented fairly in accordance with the Corporations Act 2001 and Accounting Standards and othermandatory professional reporting requirements in Australia so as to present a view which is consistentwith our understanding of the Company’s and the consolidated entity’s financial position, andperformance as represented by the results of their operations and their cash flows and whether theremuneration disclosures comply with AASB 1046 and the Corporations Regulations 2001.

Our procedures included examination, on a test basis, of evidence supporting the amounts and otherdisclosures in the financial report and the remuneration disclosures, and the evaluation of accountingpolicies and significant accounting estimates made by the Directors.

While we considered the effectiveness of management’s internal controls over financial reportingwhen determining the nature and extent of our procedures, our audit was not designed to provideassurance on internal controls.

The audit opinion expressed in this report has been formed on the above basis.


42

AUDIT OPINIONIn our opinion:

(1) the financial report of Domino’s Pizza Australia New Zealand Limited is in accordance with:

(a) the Corporations Act 2001, including:

(i) giving a true and fair view of the Company’s and consolidated entity’s financial position asat 3 July 2005 and of their performance for the year ended on that date; and

(ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001;and

(b) other mandatory professional reporting requirements in Australia.

(2) the remuneration disclosures that are contained on pages 29 to 38 of the Directors’ Report complywith Accounting Standard AASB 1046 “Director and Executive Disclosures by Disclosing Entities”and the Corporations Regulations 2001.

DELOITTE TOUCHE TOHMATSU

M G SheerinPartnerChartered Accountants



43

The Directors declare that:

(a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able topay its debts as and when they become due and payable;

(b) in the Directors’ opinion, the attached financial statements and notes thereto are in accordancewith the Corporations Act 2001, including compliance with accounting standards and giving a trueand fair view of the financial position and performance of the Company; and

(c) the Directors have been given the declarations required by s.295A of the Corporations Act 2001.

The Company, until 4 April 2005, was formerly reporting under the name Domino’s Pizza AustraliaPty Ltd.

Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the CorporationsAct 2001.

On behalf of the Directors

Don MeijManaging Director/Chief Executive Officer


44

Consolidated Company2005 2004 2005 2004

Note $’000 $’000 $’000 $’000

Revenue from ordinary activities 150,090 109,031 141,862 105,837Other revenue from ordinary activities 1,047 573 921 572Share of net profits of joint ventures accounted for using the equity method 6 46 6 46Food and paper expenses (31,508) (25,305) (29,904) (25,245)Employee benefits expenses (39,303) (30,485) (37,604) (28,893)Plant and equipment costs (24,103) (10,793) (21,337) (10,101)Occupancy expenses (3,849) (3,190) (3,587) (2,916)Borrowing costs 2(c) (2,078) (1,503) (1,884) (1,343)Marketing expenses (12,558) (9,957) (12,830) (10,470)Store related expenses (11,789) (7,855) (10,034) (7,179)Communication expenses (3,973) (3,788) (3,727) (3,519)Other expenses from ordinary activities (12,254) (9,855) (11,906) (9,890)

Profit from ordinary activities before income tax expense 9,728 6,919 9,976 6,899Income tax expense relating to ordinary activities 4 (2,971) (1,924) (2,837) (1,924)

Net profit from ordinary activities after related income tax expense 6,757 4,995 7,139 4,975Increase/(decrease) in foreign currency translation reserve arising on translation of self-sustaining foreign operations 16 (30) – –

Total changes in equity other than those resulting from transactions with owners as owners 6,773 4,965 7,139 4,975

Earnings per share: 29Basic (cents per share) 13.8 cents 10.6 centsDiluted (cents per share) 13.8 cents 10.6 centsNotes to the financial statements are included on pages 48 to 94.

45


Note $’000 $’000 $’000 $’000

Current assetsCash assets 6 2,737 4,655 2,668 4,323Receivables 7 4,949 4,461 4,238 4,420Inventories 8 1,143 640 985 531Other 9 6,113 3,913 5,297 3,710

Total current assets 14,942 13,669 13,188 12,984

Non-current assetsReceivables 10 – 53 8,982 1,167Investments in controlled entities 34 – – 5,918 4,416Investments accounted for using the equity method 34 20 93 20 93Other financial assets 11 4,894 3,655 4,117 3,656Property, plant and equipment 12 31,442 28,336 27,140 24,263Intangibles 13 26,719 10,558 16,142 7,954Deferred tax assets 14 500 249 493 248

Total non-current assets 63,575 42,944 62,812 41,797

Total assets 78,517 56,613 76,000 54,781

Current liabilitiesPayables 16 11,150 7,976 11,900 9,147Interest-bearing liabilities 17 948 1,584 842 1,529Current tax liabilities 18 1,749 765 1,646 829Provisions 19 1,777 966 1,232 930Other 20 1,624 2,825 1,578 2,755

Total current liabilities 17,248 14,116 17,198 15,190

Non-current liabilitiesInterest-bearing liabilities 21 13,849 23,067 11,043 20,234Deferred tax liabilities 22 987 1,071 1,011 1,050Provisions 23 286 202 286 202Other 24 – 3,400 – 3,399

Total non-current liabilities 15,122 27,740 12,340 24,885

Total liabilities 32,370 41,856 29,538 40,075

Net assets 46,147 14,757 46,462 14,706

EquityContributed equity 26 39,360 152 39,360 152Retained profits 28 6,801 14,635 7,102 14,554Reserves 27 (14) (30) – –

Total equity 46,147 14,757 46,462 14,706Notes to the financial statements are included on pages 48 to 94.

46


Note $’000 $’000 $’000 $’000

Cash flows from operating activitiesReceipts from customers 149,710 120,991 126,576 115,779Payments to suppliers and employees (133,804) (111,613) (110,487) (107,437)Interest received 640 561 577 526Interest and other costs of finance paid (2,077) (1,503) (1,884) (1,342)Income taxes paid (2,338) (2,802) (2,304) (2,719)

Net cash provided by operating activities 39(c) 12,131 5,634 12,478 4,807

Cash flows from investing activitiesPayment for investment and business operations (2,320) (40) – (2,482)Loans repaid from/(to) related parties,third parties and franchisees (1,343) 4,013 (7,434) 5,671Payment for intangibles (15,297) (2,768) (14,113) (2,768)Payment for property, plant and equipment (17,563) (15,396) (16,633) (11,303)Proceeds from sale of property, plant and equipment and intangibles 17,724 5,073 15,627 5,073

Net cash used in investing activities (18,799) (9,118) (22,553) (5,809)

Cash flows from financing activitiesProceeds from borrowing 5,000 5,752 5,000 2,816Repayment of borrowings (21, 965) – (18,197) –Payment for share buy-back and cancellation (14,701) – (14,701) –Net proceeds from issues of equity securities 36,416 – 36,318 –

Net cash provided by financing activities 4,750 5,752 8,420 2,816

Net (decrease)/increase in cash held (1,918) 2,268 (1,655) 1,814Cash at the beginning of the financial year 4,655 2,420 4,323 2,509Effects of exchange rate changes on the balance of cash held in foreign currencies – (33) – –

Cash at the end of the financial year 6 2,737 4,655 2,668 4,323Notes to the financial statements are included on pages 48 to 94.

47

Note Contents

1 Summary of accounting policies2 Profit from ordinary activities3 Sales of assets4 Income tax5 Remuneration of auditors6 Cash assets7 Current receivables8 Current inventories9 Other current assets10 Non-current receivables11 Other non-current financial assets12 Property, plant and equipment13 Intangibles14 Deferred tax assets15 Assets pledged as security16 Current payables17 Current interest-bearing liabilities18 Current tax liabilities19 Current provisions20 Other current liabilities21 Non-current interest-bearing liabilities22 Deferred tax liabilities23 Non-current provisions24 Other non-current liabilities25 Employee benefits26 Contributed equity27 Reserves28 Retained profits29 Earnings per share

Note Contents

30 Dividends31 Commitments for expenditure32 Contingent liabilities and contingent

assets33 Leases34 Controlled entities35 Acquisition of businesses36 Segment information37 Related party and Specified Executives’

disclosures38 Subsequent events39 Notes to the statement of cash flows40 Financial instruments41 Impact of adoption of Australian

equivalents to International FinancialReporting Standards

48

1. SUMMARY OF ACCOUNTING POLICIES

Basis of preparationThe financial report of Domino’s Pizza AustraliaNew Zealand Limited (formerly Domino’s PizzaAustralia Pty Ltd) is a general purpose financialreport which has been prepared in accordancewith Accounting Standards, Urgent Issues GroupConsensus Views, other authoritativepronouncements of the Australian AccountingStandards Board and the Corporations Act 2001.

The financial report has been prepared on the basisof historical cost and,except where stated,does nottake into account changing money values or fairvalues of assets. Cost is based on the fair values ofthe consideration given in exchange for assets.

These accounting policies have been consistentlyapplied by each entity in the Company andare consistent with those of the previousfinancial year.

Significant accounting policiesAccounting policies are selected and applied in amanner which ensures that the resultingfinancial information satisfies the concepts ofrelevance and reliability, thereby ensuring thatthe substance of the underlying transactions orother events is reported.

The following significant accounting policieshave been adopted in the preparation andpresentation of the financial report.

(a) Date of incorporationThe Company was incorporated as a proprietarycompany on 30 December 1983. On 1 April 2005,the Company converted to a public company andon 4 April 2005 adopted its present name.

(b) Accounts payableTrade creditors and other creditors are recognisedwhen the Company becomes obliged to makefuture payments resulting from the purchase ofgoods and services. Trade creditors are normallysettled within 60 days.

(c) Acquisition of assetsAssets acquired are recorded at the cost ofacquisition, being the purchase considerationdetermined as at the date of acquisition pluscosts incidental to the acquisition.

In the event that settlement of all or part of thecash consideration given in the acquisition of anasset is deferred, the fair value of the purchaseconsideration is determined by discounting theamounts payable in the future to their presentvalue as at the date of acquisition.

Where settlement of any part of cash considerationis deferred, the amounts payable are recorded attheir present value,discounted at the rate applicableto the Company if a similar borrowing wereobtained from an independent financier undercomparable terms and conditions.The unwinding ofthe discount is treated as interest expense.

All assets acquired, including property, plant andequipment and intangibles, other than goodwill,are initially recorded at their cost of acquisition atthe date of acquisition, being the fair value of theconsideration provided plus incidental costsdirectly attributable to the acquisition.

When equity instruments are issued asconsideration, their market price at the date ofacquisition is used as fair value, except where thenotional price at which they could be placed in themarket is a better indication of fair value.Transactioncosts arising on the issue of equity instruments arerecognised directly in equity subject to the extent ofproceeds received, otherwise expensed.

49

(d) Subsequent additional costsCosts incurred on assets subsequent to initialacquisition are capitalised when it is probablethat future economic benefits in excess of theoriginally assessed performance of the asset willflow to the Company in future years. Otherwise,the costs are expensed as incurred.

(e) Capitalisation of borrowing costsBorrowing costs include interest, amortisation ofdiscounts or premiums relating to borrowings,amortisation of ancillary costs incurred inconnection with arrangement of borrowings,finance charges in respect of finance leases andforeign exchange differences net of the effect ofhedges of borrowings.

Interest payments in respect of financialinstruments classified as liabilities are includedin borrowing costs.

Ancillary costs incurred in connection with thearrangement of borrowings are netted against therelevant borrowings and amortised over their life.

(f) DepreciationAll assets, including intangibles, have limiteduseful lives and are depreciated/amortised usingthe straight line method over their estimateduseful lives, taking into account estimatedresidual values, with the exception of financelease assets which are amortised over the term ofthe relevant lease, or where it is likely theCompany will obtain ownership of the asset, thelife of the asset.

Assets are depreciated or amortised from thedate of acquisition or, in respect of internallyconstructed assets, from the time an asset iscompleted and held ready for use.

Depreciation and amortisation rates and methodsare reviewed annually for appropriateness. Whenchanges are made, adjustments are reflectedprospectively in current and future financialperiods only. Depreciation and amortisation areexpensed, except to the extent that they areincluded in the carrying amount of another assetas an allocation of production overheads.

The useful lives used for each class of asset are asfollows:

2005 2004

• Plant and equipment 1 – 15 years 1 – 15 years

• Equipment under finance lease 3 – 10 years 3 – 10 years

(g) Derivative financial instrumentsThe Company enters into a variety of derivativefinancial instruments to manage its exposure tointerest rate fluctuations including forward foreignexchange contracts and interest rate swaps.

Further details of derivative financialinstruments are disclosed in note 40 of thefinancial statements.

Exchange differences on forward foreign exchangecontracts to hedge the purchase or sale of specificgoods and services are deferred and included inthe measurement of the purchase or sale.

In the event of the early termination of a foreigncurrency hedge of an anticipated purchase or saleof goods and services, the deferred gains andlosses that arose on the foreign exchangecontract prior to its termination are:

• deferred and included in the measurement ofthe purchase or sale when it takes place,where the anticipated transaction is stillexpected to occur; or

• recognised in net profit or loss at the date oftermination, if the anticipated transaction isno longer expected to occur.

Gains and losses on interest rate swaps areincluded in the determination of interest expense.

50


(h) Employee benefits

Liabilities for employee benefits for wages,salaries, annual leave and sick leave representpresent obligations resulting from employees’services provided to reporting date, calculated atundiscounted amounts based on remunerationwage and salary rates that the Company expectsto pay as at reporting date including relatedon-costs, such as, workers compensationinsurance and payroll tax.

Non-accumulating non-monetary benefits, suchas interest free loans, are expensed based on thenet marginal cost to the Company as the benefitsare taken by the employees.

The provision for employee benefits to longservice leave represents the present value of theestimated future cash outflows to be maderesulting from employees’ services provided toreporting date.

The provision is calculated using expected futureincreases in wage and salary rates includingrelated on-costs and expected settlement datesbased on turnover history and is discountedusing the rates attaching to national governmentbonds at reporting date which most closelymatch the terms of maturity of the relatedliabilities. The unwinding of the discount istreated as long service leave expense.

A liability for employee benefits in the form ofprofit sharing and bonus plans is recognised inother creditors when there is no realisticalternative but to settle the liability and at leastone of the following conditions is met:

• there are formal terms in the plan fordetermining the amount of the benefit;

• the amounts to be paid are determinedbefore the time of completion of the financialstatements; or

• past practice gives clear evidence of theamount of the obligation.

Equity-based compensation benefits areprovided to employees via the Exempt EmployeeShare Plan (“Plan”) and Executive Share andOption Plan. Information relating to theseschemes is set out in note 25 of the financialstatements.

No accounting entries are made in relation to theExecutive Share and Option Plan until options areexercised, at which time the amounts receivablefrom employees are recognised in the Statementof Financial Position as share capital. Theamounts disclosed for remuneration of Directorsand Executives in the Directors’ Report on pages34 and 35 include the assessed fair values ofoptions at the date they were granted.

(i) Financial instruments issued by the Company

Debt and equity instruments are classified aseither liabilities or as equity in accordance withthe substance of the contractual arrangement.

Transaction costs arising on the issue of equityinstruments are recognised directly in equity as areduction of the proceeds of the equityinstruments to which the costs relate.Transactioncosts are the costs that are incurred directly inconnection with the issue of those equityinstruments and which would not have beenincurred had those instruments not been issued.

51

Interest and dividends are classified as expensesor as distributions of profit consistent with thestatement of financial position classification ofthe related debt or equity instruments orcomponent parts of compound instruments.

( j) Foreign currency

Foreign currency transactions are translated toAustralian dollars at the rates of exchange rulingat the dates of the transactions. Amountsreceivable and payable in foreign currencies atreporting date are translated at the rates ofexchange ruling on that date.

Any costs or gains arising at the inception of ahedge are accounted for separately from theexchange differences on the hedgingtransactions. The costs or gains are deferred andrecognised as assets or liabilities on entering thehedging transactions and amortised as expensesor revenues in net profit or loss over the lives ofthe hedging transactions.

In relation to transactions intended to hedgespecific purchases or sales:

I. costs or gains arising at the time of enteringinto the transactions; and

II. exchange differences, to the extent that theyarise up to the dates of purchase or sale, aredeferred and included in the measurement ofthe purchase or sale.

Exchange differences relating to foreign currencymonetary items forming part of the netinvestment in a self-sustaining foreign operationare transferred on consolidation to the foreigncurrency translation reserve.

Financial statements of self-sustaining foreigncontrolled entities are translated at reportingdate using the current rate method andexchange differences are taken directly to theforeign currency translation reserve.

(k) Goods and services taxRevenues, expenses and assets are recognisednet of the amount of goods and services tax(“GST”), except where the amount of GSTincurred is not recoverable from the taxationauthority. In these circumstances, the GST isrecognised as part of the cost of acquisition ofthe asset or as part of the expense.

Receivables and payables are stated with theamount of GST included.

The net amount of GST recoverable from, orpayable to, the taxation authority is included aspart of receivables or payables.

Cash flows are included in the statement of cashflows on a gross basis. The GST component ofcash flows arising from investing and financingactivities which is recoverable from, or payable to,the taxation authority is classified as operatingcash flows.

(l) GoodwillGoodwill represents the excess of the purchaseconsideration plus incidental costs over the fairvalue of the identifiable net assets acquired andis amortised on a straight line basis over a periodof 20 years.

52


(m) Income taxThe Company adopts the liability method oftax-effect accounting.

Tax-effect accounting principles are adoptedwhereby income tax expense is calculated onpre-tax accounting profits after adjustment forpermanent differences. The tax-effect of timingdifferences, which occur when items are includedor allowed for income tax purposes in a perioddifferent to that for accounting, is shown atcurrent taxation rates as a future income taxbenefit or as a provision for deferred income taxas applicable. The net future income tax benefitrelating to tax losses and timing differences isnot carried forward as an asset unless the benefitis virtually certain of being realised.

During the financial year, the Directors electedthat the Company and all its wholly-ownedAustralian resident entities would join a taxconsolidated group effective 1 July 2003. TheCompany is the head entity of the taxconsolidated group. Refer note 4 of the financialstatements. The entities in the tax consolidatedgroup have not entered into a tax sharingagreement or tax funding agreement, and as aresult, all income tax expenses, revenues, assetsand liabilities of the members of the taxconsolidated group are recognised in thefinancial statements of the parent entity.

(n) Interest-bearing liabilitiesBills of exchange are recorded at an amountequal to the net proceeds received, with thepremium or discount amortised over the perioduntil maturity. Interest expense is recognised onan effective yield basis.

Debentures, bank loans and other loans arerecorded at an amount equal to the net proceedsreceived. Interest expense is recognised on anaccrual basis.

(o) InvestmentsInvestments in controlled entities are recorded atcost or at a valuation based on the net tangibleassets and the net present value of futureoperating cash flows of the controlled entity.

Investments in joint venture entities which arepartnerships are accounted for under the equitymethod.

(p) Leased assetsLeases under which the Company assumessubstantially all the risks and benefits ofownership are classified as finance leases and arerecognised as assets. The amount initiallybrought to account is the present value ofminimum lease payments.

Other leases are classified as operating leases.

Finance leased assets are amortised on a straightline basis over the estimated useful life of the asset.

Finance lease payments are allocated betweeninterest expense and reduction of lease liabilityover the term of the lease.The interest expense isdetermined by applying the interest rate implicitin the lease to the outstanding lease liability atthe beginning of each lease payment period.

53

Payments made under operating leases areexpensed on a straight line basis over the term ofthe lease, except where an alternative basis ismore representative of the pattern of benefits tobe derived from the leased property.

Lease incentives are recognised as liabilities. Leaserental payments are allocated between rentalexpense and reduction of the liability, on astraight line basis over the period of the incentive.

In the event that premises leased by theCompany pursuant to a non-cancellableoperating lease are identified as surplus to theneeds of the Company, a liability and expense arerecognised equal to the present value of the totalexpected outlay relating to the surplus space asspecified under the lease agreement.

In the event that lease incentives are received toenter into non-cancellable operating leases, suchincentives are recognised as a liability. Leasepayments are allocated between rental expenses,reduction of the liability and, where appropriate,interest expense over the term of the lease.

(q) Principles of consolidationThe consolidated financial statements areprepared by combining the financial statementsof all the entities that comprise the consolidatedentity, being the Company (the parent entity) andits controlled entities as defined in AccountingStandard AASB 1024 “Consolidated Accounts”.A list of controlled entities appears in note 34of the financial statements. Consistentaccounting policies are employed in thepreparation and presentation of the consolidatedfinancial statements.

The consolidated financial statements includethe information and results of each controlledentity from the date on which the Companyobtains control and until such time as theCompany ceases to control the entity.

In preparing the consolidated financial statements,all intercompany balances and transactions, andunrealised profits arising within the consolidatedentity are eliminated in full.

A joint venture is either an operation or entity thatis jointly controlled by the Company.

The Company does not have any interest in jointventure operations.

Interests in joint venture entities that arepartnerships are accounted for under the equitymethod in the Company and consolidatedfinancial statements.

(r) ProvisionsA provision is recognised when there is a legal,equitable or constructive obligation as a result ofa past event and it is probable that a futuresacrifice of economic benefits will be required tosettle the obligation, the timing or amount ofwhich is uncertain.

The amount recognised as a provision is the bestestimate of the consideration required to settlethe present obligation at reporting date, takinginto account the risks and uncertaintiessurrounding the obligation. Where a provision ismeasured using the cash flows estimated tosettle the present obligation, its carrying amountis the present value of those cash flows.

If the effect is material, a provision is determinedby discounting the expected future cash flows(adjusted for expected future risks) required tosettle the obligation at a pre-tax rate that reflectscurrent market assessments of the time value ofmoney and the risks specific to the liability mostclosely matching the expected future payments.The unwinding of the discount is treated as partof the expense related to the particular provision.

54


When some or all of the economic benefitsrequired to settle a provision are expected to berecovered from a third party, the recoveryreceivable is recognised as an asset when it isprobable that that the recovery will be receivedand the recovery is measured on a basis consistentwith the measurement of the related provision.

In the statement of financial performance, theexpense recognised in respect of a provision ispresented net of the recovery. In the statement offinancial position, the provision is recognised netof the recovery receivable only when the entity:

• has a legally recognised right to set-off therecovery receivable and the provision; and

• intends to settle on a net basis, or to realisethe asset and settle the provisionsimultaneously.

A provision is recognised for dividends when theyhave been declared, determined or publiclyrecommended by the Directors on or before thereporting date.

A provision for onerous contracts is recognisedafter impairment losses on assets dedicated tothe contract have been recognised and whenthe expected benefits are less than theunavoidable costs of meeting the contractualobligations. A provision is recognised to theextent that the contractual obligations exceedunrecognised assets.

A provision for restructuring, related to anacquired entity or operation, is recognised at thedate of acquisition where:

• the main features of the restructuring wereannounced, implementation of therestructuring commenced, or contracts wereentered by the date of acquisition; and

• a detailed formal plan is developed by theearlier of three months after the date of theacquisition and the completion of thisfinancial report.

The provision only relates to costs associatedwith the acquired entity, and is included in thedetermination of the fair value of the net assetsacquired. Other provisions for restructuring areonly recognised when a detailed plan has beenapproved and the restructuring has eithercommenced or been publicly announced, or firmcontracts related to the restructuring have beenentered into. Costs related to ongoing activitiesare not provided for.

(s) ReceivablesTrade receivables and other receivables are to besettled within 60 days and are carried atamounts due. The collectibility of debts isassessed at reporting date and a specificprovision is made for any doubtful accounts.

(t) Recoverable amount of non-current assetsThe carrying amounts of non-current assetsvalued on the cost basis, other than marketestablishment expenditure carried forward, arereviewed to determine whether they are inexcess of their recoverable amount at reportingdate. If the carrying amount of a non-currentasset exceeds its recoverable amount, the asset iswritten down to the lower amount. Thewrite-down amount is expensed in the reportingperiod in which it occurs.

55

Where a group of assets working togethersupports the generation of cash inflows,recoverable amount is assessed in relation to thatgroup of assets. In assessing recoverable amountsof non-current assets, the relevant cash flowshave been discounted to their present value.

(u) Revenue recognitionRevenues are recognised at fair value of theconsideration received net of the amount of GSTpayable to the taxation authority. Exchanges ofgoods or services of the same nature and valuewithout any cash consideration are notrecognised as revenues.

Revenue from the sale of goods and disposal ofother assets is recognised when the Companyhas passed control of the goods or other assets tothe buyer.

Service revenue relates primarily to store buildingservices and is recognised upon completion ofrelated store builds.

Royalty revenue is recognised on an accrual basisin accordance with the substance of the relevantagreement.

Revenue arising from the contribution of assets isrecognised when the Company gains control ofthe contribution or the right to receive thecontribution.

The gross amount of a liability forgiven by acredit provider is recognised as revenue.

Interest revenue is recognised as it accrues,taking into account the effective yield on thefinancial asset.

The gross proceeds of non-current asset sales arerecognised as revenue at the date control of theasset passes to the buyer, usually when anunconditional contract of sale is signed.

The gain or loss on disposal is calculated as thedifference between the carrying amount of theasset at the time of disposal and the netproceeds on disposal (including incidental costs).

Revenue from distributions from controlledentities is recognised by the parent entity whenthey are declared by the controlled entities.

Revenue from dividends from associates andother investments is recognised when dividendsare received.

Dividends received out of pre-acquisition reservesare eliminated against the carrying amount of theinvestment and not recognised in revenue.

(v) Earnings per shareBasic earnings per share (“EPS”) is calculated bydividing the net profit attributable to membersof the parent entity for the reporting period, afterexcluding any costs of servicing equity (otherthan ordinary shares and converting preferenceshares classified as ordinary shares for EPScalculation purposes), by the weighted averagenumber of ordinary shares of the Company,adjusted for any bonus issue.

Diluted EPS is calculated by dividing the basic EPSearnings, adjusted by the after tax effect offinancing costs associated with dilutive potentialordinary shares and the effect on revenues andexpenses of conversion to ordinary sharesassociated with dilutive potential ordinaryshares, by the weighted average number ofordinary shares and dilutive potential ordinaryshares adjusted for any bonus issue.

56


(w) Use and revision of accounting estimatesThe preparation of the financial report requiresthe making of estimations and assumptions thataffect the recognised amounts of assets,liabilities, revenues and expenses and thedisclosure of contingent liabilities. The estimatesand associated assumptions are based onhistorical experience and various other factorsthat are believed to be reasonable under thecircumstances, the results of which form thebasis of making the judgements about carryingvalues of assets and liabilities that are not readilyapparent from other sources. Actual results maydiffer from these estimates.

The estimates and underlying assumptions arereviewed on an ongoing basis. Revisions toaccounting estimates are recognised in theperiod in which the estimate is revised if therevision affects only that period or in the periodof the revision and future periods if the revisionaffects both current and future periods.

(x) InventoriesRaw materials and stores, work in progress andfinished goods are carried at the lower of costallocated and net realisable value. Costs areassigned to inventory on hand by the methodmost appropriate to each particular class ofinventory, with the majority being valued on afirst-in-first-out or average cost basis.

Net realisable value is determined on the basis ofeach inventory line’s normal selling pattern.

(y) Franchise distribution networkThe capitalised cost of the franchise distributionnetwork is being amortised over 50 years.

(z) Deferred formation expenditureExpenditure has been incurred and capitalised asdeferred formation expenses with respect tocosts associated with the formation/purchase ofnew stores. These costs are being amortised over10 years being the period in which the benefitsare expected to arise.

57


$’000 $’000 $’000 $’000

2. PROFIT FROM ORDINARY ACTIVITIESProfit from ordinary activities before income tax includes the following items of revenue and expense:

(a) Operating revenueSale of goods 98,893 78,926 94,661 76,046Rendering of services:– Controlled entity – – 90 135– Other entities 1,463 721 1,297 661

100,356 79,647 96,048 76,842

Store asset rental revenue 364 232 356 232Gross proceeds from sale of non-current assets 407 45 344 45Interest revenue:– Franchisees 507 500 444 465– Other 134 61 133 61

641 561 577 526

Sale of store builds 7,591 4,591 6,063 4,204Royalties:– Controlled entity – – 84 89– Other entities 13,932 10,917 13,687 10,917Other 10,535 8,584 10,347 8,527

133,826 104,577 127,506 101,382

(b) Non-operating revenueProceeds from the sale of business:Non-current property, plant and equipmentand intangibles 17,317 5,073 15,283 5,073

151,143 109,650 142,789 106,455

58


$’000 $’000 $’000 $’000

2. PROFIT FROM ORDINARY ACTIVITIES

(c) ExpensesCost of sales 57,289 37,164 52,144 35,064Borrowing costs:Interest:– Leases 88 206 88 203– Other entities 1,224 1,286 1,036 1,128– Other borrowing costs 766 11 760 12

2,078 1,503 1,884 1,343Net bad and doubtful debts arising from other entities 51 65 42 65Equipment write-offs 23 192 23 192Depreciation of non-current assets 4,991 3,963 4,367 3,391Amortisation of non-current assets– Leased assets 225 494 182 460– Goodwill 944 539 633 477– Franchise distribution network 8 9 8 9

1,177 1,042 823 946Operating lease rental expense 4,154 3,384 3,887 3,137

3. SALES OF ASSETSSales of stores in the ordinary course of business have given rise to the following profits:Property, plant and equipment and intangibles 1,299 934 1,197 934

59


$’000 $’000 $’000 $’000

4. INCOME TAXThe prima facie income tax expense on pre-tax accounting profit reconciles to the income tax expense in the financial statements as follows:Profit from ordinary activities 9,728 6,919 9,976 6,899

Income tax expense calculated at 30% (2004: 30%) 2,918 2,076 2,993 2,070

Permanent differences:Debt forgiveness income – (190) – (190)Amortisation of intangible assets 323 186 226 178Net other items (270) (148) (241) (134)

Impact of the tax consolidation system:Initial recognition of deferred tax balances of subsidiaries on implementation of the tax consolidation system – – (68) –Recognition of deferred tax balances of subsidiaries that have joined the tax consolidated group during the financial year – – 5 –Current and deferred taxes relating to transactions, events and balances of wholly-owned subsidiaries in the tax consolidated group – – (78) –

Income tax expense relating to ordinary activities 2,971 1,924 2,837 1,924

60


$’000 $’000 $’000 $’000

Franking accountAdjusted franking account balance (tax paid basis) 2,160 4,460 2,001 4,304

The franking account balances reflect actual tax payments and tax payable at 30%.


$ $ $ $

5. REMUNERATION OF AUDITORSAuditor of the parent entity:Audit or review of the financial statements 85,000 67,000 60,000 57,000Taxation services 1,700 – 1,700 –

86,700 67,000 61,700 57,000

Related practice of the parent entity auditor:Assurance services related to the initial public offering 183,000 – 183,000 –Audit or review of the financial statements – New Zealand 7,823 – – –Taxation services – New Zealand 4,474 – – –

195,297 – 183,000 –

The auditor of Domino’s Pizza Australia New Zealand Limited is Deloitte Touche Tohmatsu.

4. INCOME TAX The taxation benefits of tax losses and timingdifferences not brought to account will only beobtained if:

(a) assessable income is derived of a nature andof an amount sufficient to enable thebenefit from the deductions to be realised;

(b) conditions for deductibility imposed by thelaw are complied with; and

(c) no changes in tax legislation adversely affectthe realisation of the benefit from thedeductions.

Tax consolidation systemLegislation to allow groups, comprising a parententity and its Australian resident wholly-ownedentities, to elect to consolidate and be treated as

a single entity for income tax purposes wassubstantively enacted on 21 October 2002.

The Company and its wholly-owned Australianresident entities are eligible to consolidate for taxpurposes under this legislation and have electedto be taxed as a single entity from 1 July 2003.Thehead entity within the tax consolidated group forthe purposes of the tax consolidation system isDomino’s Pizza Australia New Zealand Limited.

The entities in the tax consolidated group havenot entered into a tax sharing agreement or taxfunding agreement and, as a result, all incometax expenses, revenues, assets and liabilities ofthe members of the tax consolidated group arerecognised in the financial statements of theparent entity.

61


$’000 $’000 $’000 $’000

6. CASH ASSETSCash at bank and on hand 2,737 4,655 2,668 4,323

7. CURRENT RECEIVABLESTrade receivables 5,053 4,504 4,278 4,463Allowance for doubtful debts (104) (43) (40) (43)

4,949 4,461 4,238 4,420

8. CURRENT INVENTORIESRaw materials – at cost 637 389 617 346Finished goods – at cost 506 251 368 185

1,143 640 985 531

9. OTHER CURRENT ASSETSPrepayments 2,591 1,500 2,326 1,319Work in progress – store builds 1,872 1,237 1,398 1,231Other related parties 97 – 97 –Other 1,553 1,176 1,476 1,160

6,113 3,913 5,297 3,710

10. NON-CURRENT RECEIVABLESNon interest-bearing loan advanced to:– wholly-owned entities – – 8,982 1,114– associates and joint venture entities – 53 – 53

– 53 8,982 1,167

11. OTHER NON-CURRENT FINANCIAL ASSETSInterest-bearing loans advanced to:– franchisees 4,894 3,655 4,117 3,656

62


$’000 $’000 $’000 $’000

12. PROPERTY, PLANT AND EQUIPMENTAt cost 42,670 35,403 36,706 30,466Accumulated depreciation (13,126) (9,637) (11,349) (8,639)

29,544 25,766 25,357 21,827

Leased plant and equipmentAt cost 3,094 3,890 2,894 3,723Accumulated amortisation (1,196) (1,320) (1,111) (1,287)

1,898 2,570 1,783 2,436

Total property, plant and equipment 31,442 28,336 27,140 24,263

ReconciliationsReconciliations of the carrying amount for each class of property, plant and equipment are setout below:Plant and equipmentCarrying amount at beginning of year 25,766 21,827Additions 16,232 15,448Acquisitions through entity acquired 2,068 –Transfer from leased plant and equipment 694 694Disposals (10,064) (8,141)Depreciation (4,991) (4,367)Net foreign currency differences on translation of self-sustaining operations 5 –Other expensed items (166) (104)

Carrying amount at end of year 29,544 25,357

Leased plant and equipmentCarrying amount at beginning of year 2,570 2,436Additions 623 621Disposals (376) (398)Transfers to plant and equipment (694) (694)Depreciation (225) (182)

Carrying amount at end of year 1,898 1,783

63


$’000 $’000 $’000 $’000

13. INTANGIBLESGoodwill – at cost 28,697 11,584 17,228 8,580Accumulated amortisation (2,348) (1,404) (1,456) (1,004)

26,349 10,180 15,772 7,576Franchise distribution network – at cost 430 430 430 430Accumulated amortisation (60) (52) (60) (52)

370 378 370 378

Total intangibles 26,719 10,558 16,142 7,954

Aggregate amortisation allocated, whether recognised as an expense or capitalised as part of the carrying amount of other assets during the year

Goodwill 944 539 633 477Franchise distribution network 8 9 8 9

952 548 641 486

14. DEFERRED TAX ASSETSFuture income tax benefitTiming differences attributable to:Entities in the tax consolidated group 500 249 493 248

15. ASSETS PLEDGED AS SECURITYIn accordance with the security arrangements of liabilities, effectively all non-current assets of theCompany, except goodwill and deferred tax assets, have been pledged as security.

The Company does not hold title to the equipment under finance lease pledged as security.

16. CURRENT PAYABLESTrade creditors 7,364 5,275 6,791 5,000Amounts owing to controlled entities – – 1,577 1,644Net goods and services tax payable 399 549 485 523Other creditors and accruals 3,387 2,152 3,047 1,980

11,150 7,976 11,900 9,147

17. CURRENT INTEREST-BEARING LIABILITIESOther loans – unsecured 157 386 135 386Lease liabilities – secured(i) 791 1,198 707 1,143

948 1,584 842 1,529(i) Secured by the assets leased, the current market value of which exceeds the value of the finance lease liability.

64


$’000 $’000 $’000 $’000

18. CURRENT TAX LIABILITIESIncome tax attributable to:Entities in the tax consolidated group 1,749 765 1,646 829

19. CURRENT PROVISIONSEmployee benefits 1,290 966 1,232 930Restructuring costs on acquisitions of:– Pizza Haven New Zealand operations 124 – – –– Pizza Haven New Zealand onerous lease contracts 363 – – –

1,777 966 1,232 930

ReconciliationsReconciliations of the carrying amounts of each class of provision, except for employee benefits, are setout below:

Restructuring costs on acquisition – Pizza Haven New Zealand operationsCarrying amount at beginning of year –Increase through acquisition of operation 1,121Payments made during the period (997)

Carrying amount at end of year 124

Pizza Haven New Zealand operations onerous lease contracts – currentCarrying amount at beginning of year –Increase through acquisition of operation 363Payments made during the period –

Carrying amount at end of year 363

65


$’000 $’000 $’000 $’000

20. OTHER CURRENT LIABILITIESAmounts owing to previous director(i) 1,399 1,400 1,399 1,400Franchisee store deposits 225 1,425 179 1,355

1,624 2,825 1,578 2,755(i) At the end of the financial year, an amount of $1,399,347 (2004: $2,799,347) remains payable to a related entity of Fel Bevacqua, a former

Director of Domino’s Pizza Australia Pty Ltd, as a result of a share buy-back. This amount is due to be repaid in December 2005. This is aninterest free loan. Refer to note 24 of the financial statements.

21. NON-CURRENT INTEREST-BEARING LIABILITIESAmount owing to other parties – unsecured 145 6,746 143 6,745Lease liabilities – secured(i) 970 1,340 900 1,239Commercial bills – secured(ii) 12,734 14,981 10,000 12,250

13,849 23,067 11,043 20,234

Loans from:Amount owing to other parties – unsecured:Associates and joint venture entities 143 287 143 287Other 2 6,459 – 6,458

145 6,746 143 6,745(i) Secured by the assets leased, the current market value of which exceeds the value of the finance lease liability.(ii) Secured over the assets and undertaking of Domino’s Pizza Australia New Zealand Limited.

22. DEFERRED TAX LIABILITIESDeferred income tax attributable to:Entities in the tax consolidated group 987 1,071 1,011 1,050

23. NON-CURRENT PROVISIONSEmployee benefits 216 202 216 202Deferred settlement 70 – 70 –

286 202 286 202

ReconciliationsReconciliations of the carrying amounts of each class of provision, except for employee benefits,are set out below:Deferred settlement – non-currentCarrying amount at beginning of year – – – –Increase through acquisition of operations 70 – 70 –Payments made during the period – – – –

Carrying amount at end of year 70 – 70 –

66


$’000 $’000 $’000 $’000

24. OTHER NON-CURRENT LIABILITIESAmounts owing to other parties(i) – 2,000 – 2,000Amounts owing to previous Director– share buy-back – 1,400 – 1,399

– 3,400 – 3,399(i) In accordance with the Prospectus dated 15 April 2005, proceeds from the initial public offering were used to repay the $2.0 million loan from

Somad Pty Ltd. No interest was incurred in respect of this loan.

25. EMPLOYEE BENEFITSThe aggregate employee benefit liability recognised and included in the financial statements is as follows:Provision for employee benefits:Current 1,290 966 1,232 930Non-current 216 202 216 202

1,506 1,168 1,448 1,132

The present value of employee entitlements not expected to be settled within 12 months of reportingdate have been calculated using the following weighted averages:


Assumed rate of increase in wages and salary rates 5.0% 5.0% 5.0% 5.0%Discount rate 5.1% 5.3% 5.1% 5.3%Settlement terms (years) 10 10 10 10Number of employees at end of financial year 1,106 861 978 799

Equity-based plansThe Company has two share and option plansavailable for employees and Directors andExecutives of the Company: the Exempt EmployeeShare Plan and the Executive Share and OptionPlan. Both plans were approved by a resolution ofthe Board on 11 April 2005. Fully paid ordinaryshares issued under these plans rank equally withall other existing fully paid ordinary shares, inrespect of voting and dividends rights and futurebonus and rights issues.

Exempt Employee Share PlanThe Exempt Employee Share Plan (“Plan”) wasestablished to provide employees the opportunityto contribute $1,000 of their salary to acquire anownership interest in the Company. The Plan isadministered by the Board, who must operate theplan on a non-discriminatory basis. In accordancewith the current Australian tax legislation, sharesacquired under the Plan must be held for aminimum of three years (or earlier cessation ofemployment), during which time the shares aresubject to a disposal restriction such that theparticipant cannot deal in the shares. Successfuleligible employees were able to apply for andreceive 454 shares (being approximately $1,000worth at the Offer Price).


$’000 $’000 $’000 $’000

Issued ordinary share capital – – – –

Number of options

Exercise date Exercise Options at end Grant date on or after Expiry date price granted of year10 March 2005 31 May 2005 16 May 2007 2.20 200,000 200,00015 March 2005(i) 31 May 2005 31 May 2007 2.20 457,500 457,50015 March 2005(i) 31 August 2006 31 August 2008 2.20 847,501 847,50115 March 2005(i) 31 August 2007 31 August 2009 2.20 847,501 847,50115 March 2005(i) 31 August 2008 31 August 2010 2.20 847,501 847,501

3,200,003 3,200,003(i) Options may be exercised subject to meeting exercise conditions as discussed in note 37 of the financial statements.

The Company did not issue options to Directors or Executives in 2004. No options lapsed or wereexercised during the year, nor were any proceeds received. Options carry no voting or dividend rights.

Exempt Employee Share PlanOpening Granted and vested Lapsed/forfeited balance during the year during the year Closing balance

Number Fair value Fair value Fair value Grant dates Number of shares per share Number per share Number aggregate

2005 – 44,946 2.20 (908) 2.20 44,038 96,884

The Company did not make any distributions to employees during the financial year.

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Executive Share and Option PlanThe Company established the ESOP to assist inthe recruitment, reward, retention andmotivation of Directors and Executives of theCompany (“participants”).

In accordance with the provisions of the scheme,executives within the Company, to bedetermined by the Board, are granted options topurchase parcels of shares at various issue prices.Each option confers an entitlement to subscribefor and be issued one share, credited as fully paid,at the exercise price.

Options issued under the ESOP may not betransferred unless the Board determinesotherwise. The Company has no obligation toapply for quotation of the options on the ASX.However, the Company must apply to the ASX forofficial quotation of shares issued on the exerciseof the options.

At any one time, the total number of options onissue under the ESOP that have neither beenexercised nor lapsed will not exceed 5.0% of thetotal number of shares in the capital of theCompany on issue.

Options issued to Don Meij and Grant Bourke areexcluded shares and will not be issued under theESOP, but the terms and conditions of the grantwill be substantially similar to options grantedunder the ESOP.

Summary of options over unissuedordinary sharesThe amounts recognised in the financial statementsof the Company in relation to Executive shareoptions exercised during the financial year were:

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Note $’000 $’000 $’000 $’000

26. CONTRIBUTED EQUITY60,000,000 (2004: nil) Ordinary shares,fully paid (a) 39,360 – 39,360 –Nil (2004: 943,333) A Class ordinary shares,fully paid (a) – 152 – 152Nil (2004: 531,829) B Class ordinary shares,fully paid (a) – – – –

Fully paid ordinary sharesBalance at beginning of financial year – – – –

Share conversion943,333 (2004: 943,333) A Class shares converted to ordinary shares 11/04/05 (a) 152 – 152 –531,829 (2004: 531,829) B Class shares converted to ordinary shares 11/04/05 – – – –

Shares issued40,044 (2004: nil) shares issued 22/12/04 at $55.73 per share (b) 2,232 – 2,232 –13,459 (2004: nil) share issued 17/01/05 at $55.73 per share (b) 750 – 750 –Transaction costs arising from shares issued 22/12/04 and 17/01/05 (b) (504) – (504) –47,107,669 (2004: nil) increase through share split 11/04/05 (a) – – – –18,046,000 (2004: nil) increase through shares issued 10/05/05 at $2.20 per share (d) 39,701 – 39,701 –Transaction costs arising from initial public offering (d) (2,861) – (2,861) –Nil (2004: nil) shares issued under dividend reinvestment plan (e) – – – –

Shares bought back6,682,364 (2004: nil) decrease through share buy-back and cancellation 11/04/05 at$2.20 per share (c) (110) – (110) –

Balance of fully paid ordinary shares at end of financial year 60,000,000 (2004: 1,475,162) Ordinary shares 39,360 – 39,360 –

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Total Number Exercise Expiry Category of security Note number quoted price date

OptionsUnlisted options (f) 200,000 – $2.20 16/05/07Unlisted options 457,500 – $2.20 31/05/07Unlisted options 847,501 – $2.20 31/08/08Unlisted options 847,501 – $2.20 31/08/09Unlisted options 847,501 – $2.20 31/08/10Issued during current period 3,200,003Exercised during current period –Expired during current period –

Notes for contributed equity:

(a) Share capital conversionIt was resolved on 11 April 2005 that the totalissued share capital of the Company comprising943,333 A Class ordinary shares and 585,332B Class ordinary shares be converted to a total of48,636,364 ordinary shares, effective immediately,with all fractions rounded to the nearest wholenumber at the discretion of the Board.

(b) AcquisitionsOn 22 December 2004, the Company issued 40,044B Class shares ($2,231,712) to Success Pizzas Pty Ltdas consideration for the purchase of the shares inShear Pizza Pty Ltd in accordance with the Contractfor Sale of Shares dated 22 December 2004.

On 17 January 2005, the Company issued 13,459 BClass shares ($750,142) to Success Pizzas Pty Ltd asconsideration for the purchase of shares in Reel(NT) Pty Ltd in accordance with the Contract forSale of Shares dated 17 January 2005.

Transactional costs arising from issue of shares toSuccess Pizzas Pty Ltd totalled approximately$504,000.

(c) Share buy-back and selective capitalreductionOn 11 April 2005 the Company completed a buy-back of 6,682,364 ordinary shares, representing13.74% of ordinary shares on issue on that date. Inaccordance with the Resolution of Shareholdersdated 11 April 2005, a capital reduction waseffected on that date by the cancellation of eachof the shares bought back.

The total consideration for shares bought back

was $14,701,201, being $2.20 per share. Theconsideration was allocated in the followingproportions:

Share capital $110,259; and

Retained profits $14,590,942.

Terms and conditions of the share buy-backand selective capital reductionIt was resolved that the capital reduction take effectsubject to the close of an offer for shares in theCompany and contemporaneously with the issueand transfer of shares in the Company ascontemplated in the Prospectus dated 15 April 2005.

(d) Public listingEffective 10 May 2005, the Company havingclosed its initial public offering, allotted newshares and transferred existing shares tosuccessful applicants pursuant to the Prospectus.The offer included 16,044,909 shares madeavailable via vendor shareholder sell down and18,046,000 new shares offered by the Company.

On 16 May 2005, the Company listed and begantrading on the ASX.

In preparation for listing, the Company changedits status from a private to public companyeffective 1 April 2005. The Company changed itsname to Domino’s Pizza Australia New ZealandLimited effective 4 April 2005.

Transactional costs arising from issue of sharespursuant to the Prospectus totalledapproximately $2,861,000.

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70

26. CONTRIBUTED EQUITY

(e) Dividend reinvestment planThe Board has adopted but not yet commencedoperation of a dividend reinvestment plan. Theplan will provide shareholders the choice ofreinvesting some or all of their dividends inshares rather than receiving those dividends incash.

(f) OptionsThe Company approved the establishment of theESOP to assist in the recruitment, reward andretention of its Directors and Executives. TheCompany will not apply for quotation of theoptions on the ASX.

Subject to any adjustment in the event of abonus issue, rights issue or reconstruction ofcapital, each option is convertible into oneordinary share.

Terms and conditions option planThe Company must not issue any shares or grantany options under the ESOP if the total numberof shares issued during the preceding five yearsunder the ESOP and any other employee

incentive scheme plus the total unissued sharesover which options have been granted (butdisregarding excluded shares) would exceed 5%of the total number of shares on issue at the timeof the proposed issue or grant.

Excluded shares are options issued to Don Meijand Grant Bourke. However, these options aregranted under substantially similar terms andconditions to the ESOP.

If the issue of shares or grant of options underthe ESOP would result in an individualshareholder owning or controlling the exercise ofvoting power attached to 5% or more of all shareson issue, the Company must not issue any sharesto that participant under the ESOP.

(g) Escrow agreementsPrior to listing, each of the existing shareholdersagreed to voluntary escrow arrangement withthe Company restricting them from disposingany of the Company shares held by them untilthe date which the Company releases to the ASXits preliminary final report for the year ending2 July 2006.


$’000 $’000 $’000 $’000

27. RESERVESForeign currency translation reserveBalance at beginning of financial year (30) – – –Translation of foreign operations 16 (30) – –

Balance at end of financial year (14) (30) – –

Exchange differences relating to foreign currency monetary items forming part of the net investmentin a self-sustaining foreign operation and the translation of self-sustaining foreign controlled entitiesare brought to account by entries made directly to the foreign currency translation reserve, asdescribed in note 1(j) of the financial statements.

71


$’000 $’000 $’000 $’000

28. RETAINED PROFITSBalance at beginning of financial year 14,635 9,640 14,554 9,579Net profit attributable to members of the parent entity 6,757 4,995 7,139 4,975Retained profits impact of selective capital reduction (14,591) – (14,591) –

Balance at end of financial year 6,801 14,635 7,102 14,554

29. EARNINGS PER SHAREConsolidated2005 2004

Cents per Cents per share share

Basic earnings per share 13.8 10.6

Diluted earnings per share 13.8 10.6

Basic earnings per shareThe earnings and weighted average number of ordinary shares used in the calculation of basicearnings per share are as follows:

2005 2004$’000 $’000

Earnings(i) 6,757 4,995

2005 2004No. ’000 No. ’000

Weighted average number of ordinary shares(ii) 48,847 46,934(i) Earnings used in the calculation of basic earnings per share reconciles to net profit in the statement of financial performance as follows:

2005 2004$’000 $’000

Net profit 6,757 4,995Earnings used in the calculation of basic EPS 6,757 4,995(ii) The options are considered to be potential ordinary shares and are therefore excluded from the weighted average number of ordinary shares

used in the calculation of basic earnings per share.Where dilutive, potential ordinary shares are included in the calculation of diluted earningsper share.

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29. EARNINGS PER SHARE

Diluted earnings per shareThe earnings and weighted average number of ordinary and potential ordinary shares used in thecalculation of diluted earnings per share are as follows:

Consolidated2005 2004

$’000 $’000

Earnings(i) 6,757 4,995

2005 2004No. ’000 No. ’000

Weighted average number of ordinary shares and potential ordinary shares(ii) 48,857 46,934(i) Earnings used in the calculation of diluted earnings per share reconciles to net profit in the statement of financial performance as follows:

2005 2004$’000 $’000

Net profit 6,757 4,995Earnings used in the calculation of diluted EPS 6,757 4,995(ii) Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share reconciles to

the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

2005 2004No. ’000 No. ’000

Weighted average number of ordinary shares used in the calculation of basic EPS 48,847 46,934Shares deemed to be issued for no consideration in respect of:Options on issue 10 –

Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted EPS 48,857 46,934

Restatement of earnings per shareBasic and diluted earnings per share figures disclosed for the prior period have been restated for theeffect of the change in the number of ordinary shares outstanding without a corresponding change inthe recognised resources of the entity, caused by the share split during the 2005 financial year.

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30. DIVIDENDSThe final fully franked dividend of 0.7 cents per share was approved by the Directors on 21 August 2005.In complying with accounting standards, as the dividend was not approved prior to year end, the totaldividend payable of $420,000 has not been recognised in these financial statements because the finaldividend was declared, determined or publicly recommended subsequent to 3 July 2005.


$’000 $’000 $’000 $’000

31. COMMITMENTS FOR EXPENDITURECapital expenditure commitmentsPlant and equipmentNot longer than one year 981 – 981 –Longer than one year and not longer than five years – – – –Longer than five years – – – –

981 – 981 –

32. CONTINGENT LIABILITIES AND CONTINGENT ASSETSContingent liabilities considered remote:Joint and several liabilityThe Company, as a 50% partner in a joint venture partnership, is jointly and severally liable for 100% of all liabilities incurred by that partnership.Total partnership liabilities amount to:Antecello Pty Ltd/Domino’s Pizza Australia Pty Ltd Partnership 532 166 532 166A Burt Investments Pty Ltd/Domino’s Pizza Australia Pty Ltd Partnership (2005: 0% ownership interest,2004: 50% ownership interest) – 546 – 546Jova Rivera Pty Ltd/Domino’s Pizza Australia Pty Ltd Partnership (2005: 0% ownership interest, 2004: 50% ownership interest) – 96 – 96Guarantees(i) Guarantees are provided on franchisee loans to Westpac Banking Corporation. The amount disclosed as a contingent liability represents the amounts guaranteed in respect of franchisees who would,without the guarantee, not have been granted the loans. The Directors believe that if the guarantees are ever called on, the Company will be able to recover the amounts paid upon disposal of the stores 11,809 7,021 11,809 7,021(ii) The entity has guaranteed the bank facilities of certain controlled entities – – 6,719 2,884

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33. LEASES

Finance leases

Finance leases relate to plant and equipment with lease terms between three and 10 years, and motorvehicles with lease terms between three and four years (2004: three and five years). The Company hasoptions to purchase the leased assets for a nominal amount at the completion of the leasearrangements.

Present value of Minimum future lease payments minimum future lease paymentsConsolidated Company Consolidated Company

2005 2004 2005 2004 2005 2004 2005 2004$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

No later than one year 903 1,342 814 1,284 791 1,198 707 1,143Later than one year and not later than five years 1,054 1,427 981 1,323 970 1,340 900 1,239Later than five years – – – – – – – –

Minimum lease payments 1,957 2,769 1,795 2,607 1,761 2,538 1,607 2,382Less future finance charges (196) (231) (188) (225) – – – –

Present value of minimum lease payments 1,761 2,538 1,607 2,382 1,761 2,538 1,607 2,382


$’000 $’000 $’000 $’000

Included in the financial statements as:Current interest-bearing liabilities (note 17) 791 1,198 707 1,143Non-current interest-bearing liabilities (note 21) 970 1,340 900 1,239

1,761 2,538 1,607 2,382

Operating leases

Operating leases relate to both property leases with lease terms of between five to 10 years, themajority of which have an option to renew for a further five-year period and motor vehicles with leaseterms of three years. All store related operating lease contracts contain market review clauses in theevent that the Company exercises its options to renew. The Company does not have an option topurchase the leased asset at the expiry of the lease period.

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$’000 $’000 $’000 $’000

Commitments under non-cancellable operating leases:Not longer than one year 8,259 5,887 7,756 5,525Longer than one year and not longer than five years 18,106 13,134 16,926 12,076Longer than five years 798 563 690 563

27,163 19,584 25,372 18,164

34. CONTROLLED ENTITIESCountry of

Name of entity incorporation Ownership interest2005 2004

% %

Parent entityDomino’s Pizza Australia New Zealand Limited(i) (vi) Australia

Controlled entitiesAshbourke Pty Ltd(ii) Australia 100% 100%Domino’s Development Fund Pty Ltd(ii) Australia 100% 100%Hot Cell Pty Ltd(ii) Australia 100% 100%MFT – DPA JV Nominee Pty Ltd Australia 100% 100%Reel (NT) Pty Ltd(ii) (iv) Australia 100% –Shear Pizza Pty Ltd(ii) (iii) Australia 100% –Silvio’s Dial a Pizza Pty Ltd(ii) Australia 100% 100%Twenty/Twenty Pizza Pty Ltd(ii) Australia 100% 100%Twenty/Twenty Pizza Pty Ltd & Domino’s Pizza Australia Pty Ltd Partnership(ii) Australia 100% 100%Domino’s Pizza New Zealand Limited New Zealand 100% 100%DPH NZ Holdings Limited(v) New Zealand 100% –(i) Domino’s Pizza Australia New Zealand Limited is the head entity within the tax consolidated group.(ii) These entities are members of the tax consolidated group.(iii) Shares of Shear Pizza Pty Ltd were acquired on 22 December 2004.(iv) Shares of Reel (NT) Pty Ltd were acquired on 17 January 2005.(v) DPH NZ Holdings Limited was incorporated on 19 January 2005.(vi) Prior to listing the ultimate holding company was Agrade Enterprises Pty Ltd.


$’000 $’000 $’000 $’000

InvestmentsInvestment in controlled entities – – 5,918 4,416Equity accounted investment in joint ventures (partnership)(i) (ii) 20 93 20 93(i) The partners of A Burt Investments Pty Ltd and Domino’s Pizza Australia Pty Ltd Partnership resolved to wind up the partnership effective

27 June 2005.(ii) The partners of Jova Rivera Pty Ltd and Domino’s Pizza Australia Pty Ltd Partnership resolved to wind up the partnership effective 27 June 2005.

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35. ACQUISITION OF BUSINESSESProportion

Name of entity/ Date of of shares Cost of operation acquired Principal activity acquisition acquired acquisition

% $’000

Controlled EntitiesShear Pizza Pty Ltd Operation of retail food outlets 22/12/04 100 2,250Reel (NT) Pty Ltd Operation of retail food outlets 17/01/05 100 750

OperationsPizza Haven New Zealand operations Operation of retail food outlets 07/03/05 – 2,115

Acquisition of controlled entitiesOn 22 December 2004, the Company issued40,044 B Class shares ($2,231,712) to SuccessPizzas Pty Ltd as consideration for the purchaseof the shares in Shear Pizza Pty Ltd inaccordance with the Contract for Sale of Sharesdated 22 December 2004. Incidental costsrelating to the acquisition totalled $17,920.

On 17 January 2005 the Company issued 13,459B Class shares ($750,142) to Success Pizzas Pty Ltdas consideration for the purchase of shares inReel (NT) Pty Ltd in accordance with the Contractfor Sale of Shares dated 17 January 2005.

Transactional costs arising from issue of sharesto Success Pizzas Pty Ltd totalled approximately$504,000.

The fair value of the shares issued asconsideration for the acquisition of Shear PizzaPty Ltd and Reel (NT) Pty Ltd was based on amultiple of EBITDA.

Acquisition of operationsIn March 2005, DPH NZ Holdings Limited(“DPH”), a subsidiary of Domino’s Pizza AustraliaNew Zealand Limited, acquired the Pizza Havenoperations in New Zealand and was appointedmaster franchisor for cash consideration of$2,320,000 NZD ($2,114,666 AUD). In addition,DPH subsequently acquired a number of PizzaHaven franchisee businesses.

DPH provided for restructuring costs in respectof the Pizza Haven acquisition. Restructuringcosts relate to the conversion of Pizza Havenstores into Domino’s stores, the shut down ofconflict stores and the assignment of leases tothe Company. Refer to note 19 of the financialstatements.

The cost of acquisition comprises equity for allof the acquisitions except for acquisition of thePizza Haven New Zealand operations, whichcomprises cash of $2,230,000 NZD. Refer tonote 39(b) of the financial statements.

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36. SEGMENT INFORMATION

Primary reporting – business segmentsCorporate

Corporate Franchise development Consolidated2005 2004 2005 2004 2005 2004 2005 2004

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

RevenueExternal segmentrevenue 98,821 80,802 30,625 20,797 17,724 5,028 147,170 106,627Other segmentrevenue 6 46 – – – – 6 46

Total segmentrevenue 98,827 80,848 30,625 20,797 17,724 5,028 147,176 106,673Unallocated revenue 3,967 2,977

Total revenue 151,143 109,650

ResultsSegment result 4,644 2,542 11,380 6,880 1,299 934 17,323 10,356Unallocated revenue less unallocated expenses (7,595) (3,437)

Profit from ordinary activities before income tax 9,728 6,919Income tax expense (2,971) (1,924)

Profit from ordinary activities after income tax 6,757 4,995

Segment assets and liabilitiesAssetsSegment assets 56,588 36,607 10,828 7,985 – – 67,416 44,592Unallocated assets 11,101 12,021

Consolidated total assets 78,517 56,613

LiabilitiesSegment liabilities 28,692 31,626 382 5,922 – – 29,074 37,548Unallocated liabilities 3,296 4,308

Consolidated total liabilities 32,370 41,856

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36. SEGMENT INFORMATION

Other segment informationCorporate

Corporate Franchise development2005 2004 2005 2004 2005 2004

$’000 $’000 $’000 $’000 $’000 $’000

Carrying value of investments accounted for using the equity method 20 93 – – – –Share of netprofit/(loss) of joint venture entities accounted for under the equity method 6 46 – – – –Acquisitions of non-current assets 30,158 16,675 4,698 840 – –Depreciation and amortisation of segment assets 5,049 4,619 30 325 – –Other non-cash expenses 228 – – – – –

Products and services within each business segmentFor management purposes, the Company is organised into three major operating divisions: corporate,franchise and corporate development. These divisions are the basis on which the Company reports itsprimary segment information.The principal products and services of each of these divisions are as follows:

• Corporate store operations Pizza retailing in Australia and New Zealand;

• Franchise store operations Franchise operations for pizza retailing businesses in Australiaand New Zealand; and

• Corporate development Profits generated from the sale of corporate stores in Australiaand New Zealand.

Secondary reporting – geographical segmentsAustralia New Zealand Consolidated

2005 2004 2005 2004 2005 2004$’000 $’000 $’000 $’000 $’000 $’000

Segment revenue 142,739 104,270 8,404 5,380 151,143 109,650Segment assets 75,341 54,720 3,176 1,893 78,517 56,613Acquisitions of non-current assets 31,353 14,770 4,392 3,959 35,745 18,729

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Information on geographical segmentsThe Company’s three divisions operate in two principal geographical areas – Australia and NewZealand. The composition of each geographical segment is as follows:

• Australia Corporate and franchise store operations and corporatedevelopment activities; and

• New Zealand Corporate and franchise store operations and corporatedevelopment activities.

37. RELATED PARTY AND SPECIFIED EXECUTIVES’ DISCLOSURES

(a) Equity interests in related parties

Equity interests in controlled entitiesDetails of the percentage of ordinary shares held in controlled entities are disclosed in note 34 of thefinancial statements.

Equity interests in joint venturesDetails of interests in joint ventures are disclosed in note 34 of the financial statements.

Equity interests in other related partiesThere are no equity interests in other related parties.

(b) Specified Directors’ and Specified Executives’ remunerationDetails of Specified Directors’ and Specified Executives’ remuneration are disclosed in the Directors’Report on pages 34 and 35.

(c) Loan disclosuresInterest

Balance at Interest not Balance 2005 beginning charged charged Write-off at end Number

$ $ $ $ $

Specified Directors – – – – 1,962 2Specified Executives – – – – 3,923 4

Total – – – – 5,885 6

The Company did not make any loans to Specified Directors or Specified Executives during the 2004financial year.

During the financial year the Company financed the issue of 454 shares to each employee who tookup the offer under the Exempt Employee Plan Offer. Applicants under the Plan agreed to salarysacrifice their gross remuneration by $1,000, payable in weekly instalments over a 12-month periodfrom July 2005 to July 2006, to repay the cost of the shares acquired. Each of the Specified Directorsand Executives who participated in the Plan had loans payable to the Company of $981 at year end. Nointerest is charged in respect of these loans.

An amount of $1,399,347 (2004: $2,799,347) remains payable to a related entity of Fel Bevacqua, aformer Director of Domino’s Pizza Australia Pty Ltd, as a result of a share buy-back. The amount is dueto be paid in December 2005.

An amount of $1,721 (2004: nil) remains payable to a related entity of Andrew Rennie, a specifiedDirector and former Director of Domino’s Pizza Australia Pty Ltd.

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(d) Specified Directors’ and Specified Executives’ equity holdings

Fully paid ordinary sharesGranted Received Balance

Balance as remun- on exercise Net other Balance held Note at 28/6/04 eration of options change at 3/7/05 nominally

No. No. No. No. No. No.

Specified DirectorsRoss Adler (iv) – – – 169,091 169,091 –Barry Alty (iv) – – – 50,000 50,000 –Grant Bourke (i), (ii), (iii), (iv) – – – 3,397,032 3,397,032 –Paul Cave (iv) – – – 682,000 682,000 –Don Meij (i), (iii), (iv) – – – 4,151,232 4,151,232 –Andrew Rennie (iv), (v), (vi) – – – 1,726,354 1,726,354 –Richard Coney (iv), (v) – – – 42,554 42,554 –

Specified ExecutivesMichael Locke – – – 9,454 9,454 –Andy Masood – – – 45,854 45,854 –Andrew Megson (iv) – – – 96,979 96,979 –Jon Saunders – – – 454 454 –Patrick McMichael (iv) – – – 13,635 13,635 –

– – – 10,384,639 10,384,639 –(i) Effective 11 April 2005, the share capital of the Company was converted from A and B Class shares to ordinary shares. On the same day the shares

were split resulting in an increase in issued capital from 1,528,665 shares to 48,636,364 shares. Refer to note 26 of the financial statements.(ii) Effective 11 April 2005, a share buy-back and selective capital reduction was completed by the Company. The transaction included a buy-back

of 255,516 ordinary shares held by Tiggerbell Enterprises Pty Ltd, a related entity of Grant Bourke, at $2.20 per share. Refer to note 26 of thefinancial statements.

(iii) Effective 16 May 2005, two of the specified Directors sold a portion of their existing shareholding at $2.20 per share. Don Meij sold 1,215,909shares and Grant Bourke and his personally-related entities sold 1,689,938 shares.

(iv) Includes shares held by personally-related entities.(v) Resigned as Director of Domino’s Pizza Australia Pty Ltd effective 31 March 2005.(vi) On 22 December 2004, the Company issued 40,044 B Class shares to Success Pizzas Pty Ltd, a personally-related entity of Andrew Rennie, as

consideration for the purchase of the shares in Shear Pizza Pty Ltd. On 17 January 2005, the Company issued 13,459 B Class shares to SuccessPizza Pty Ltd, a personally-related entity of Andrew Rennie, as consideration for the purchase of shares in Reel (NT) Pty Ltd.

Fully paid A Class sharesA Class shares were not held by Specified Directors or Specified Executives.

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Fully paid B Class sharesGranted Received Balance

Balance as remun- on exercise Net other Balance held Note at 28/6/04 eration of options change at 3/7/05 nominally

No. No. No. No. No. No.

Specified DirectorsRoss Adler – – – – – –Barry Alty – – – – – –Grant Bourke (i) 167,917 – – (167,917) – –Paul Cave – – – – – –Don Meij (i) 167,917 – – (167,917) – –Andrew Rennie – – – – – –Richard Coney – – – – – –Specified ExecutivesMichael Locke – – – – – –Andy Masood – – – – – –Andrew Megson – – – – – –Jon Saunders – – – – – –Patrick McMichael – – – – – –

335,834 – – (335,834) – –(i) Effective 11 April 2005, the share capital of the Company was converted from A and B Class shares to ordinary shares. On the same day the shares

were split resulting in an increase in issued capital from 1,528,665 shares to 48,636,364 shares. Refer to note 26 of the financial statements.

Executive share optionsVested Vested Options

Balance Granted Net Balance Balance but not and vestedat as remu- other at vested at exercis- exercis- during

28/6/04 neration Exercised change 3/7/05 3/7/05 able able yearNo. No. No. No. No. No. No. No. No.

Specified DirectorsRoss Adler – 50,000 – – 50,000 50,000 – 50,000 50,000Barry Alty – 50,000 – – 50,000 50,000 – 50,000 50,000Grant Bourke – 50,000 – – 50,000 50,000 – 50,000 50,000Paul Cave – 50,000 – – 50,000 50,000 – 50,000 50,000Don Meij – 1,380,000 – – 1,380,000 345,000 – 345,000 345,000Andrew Rennie – 450,000 – – 450,000 112,500 – 112,500 112,500Richard Coney – 210,000 – – 210,000 – – – –Specified ExecutivesMichael Locke – 105,000 – – 105,000 – – – –Andy Masood – 90,000 – – 90,000 – – – –Andrew Megson – 150,000 – – 150,000 – – – –Jon Saunders – 105,000 – – 105,000 – – – –Patrick McMichael – 60,000 – – 60,000 – – – –

– 2,750,000 – – 2,750,000 657,500 – 657,500 657,500

The Company granted share options in accordance with the provisions of the ESOP. Each share optionconverts on exercise to one ordinary share of Domino’s Pizza Australia New Zealand Limited. Noamounts are paid or payable by the recipient on receipt of the option.

During the financial year, no options were exercised. The exercise price of each option is $2.20.

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(d) Specified Directors’ and Specified Executives’ equity holdings The following table provides further detail in respect of options held by Specified Directors andSpecified Executives:

Fair Value Exercis- per option

Options Grant able Expiry Exercise at grant 2005 granted date date date conditions date

Specified DirectorsRoss Adler 50,000 10/05/05 31/05/05 16/05/07 Nil $0.21Don Meij 345,000 15/05/05 31/05/05 31/05/07 Nil $0.21

345,000 15/05/05 31/08/06 31/08/08 Achieving $0.22Prospectus EPS

345,000 15/05/05 31/08/07 31/08/09 EPS growth of 10% $0.35345,000 15/05/05 31/08/08 31/08/10 EPS growth of 10% $0.43

Barry Alty 50,000 10/05/05 31/05/05 16/05/07 Nil $0.21Grant Bourke 50,000 10/05/05 31/05/05 16/05/07 Nil $0.21Paul Cave 50,000 10/05/05 31/05/05 16/05/07 Nil $0.21Andrew Rennie 112,500 15/05/05 31/05/05 31/05/07 Nil $0.21

112,500 15/05/05 31/08/06 31/08/08 Achieving $0.22Prospectus EPS


Richard Coney 70,000 15/05/05 31/08/06 31/08/08 Achieving $0.22Prospectus EPS


Specified ExecutivesAndy Masood 30,000 15/05/05 31/08/06 31/08/08 Achieving $0.22

Prospectus EPS30,000 15/05/05 31/08/07 31/08/09 EPS growth of 10% $0.3530,000 15/05/05 31/08/08 31/08/10 EPS growth of 10% $0.43

Andrew Megson 50,000 15/05/05 31/08/06 31/08/08 Achieving $0.22Prospectus EPS


Michael Locke 35,000 15/05/05 31/08/06 31/08/08 Achieving $0.22Prospectus EPS


Jon Saunders 35,000 15/05/05 31/08/06 31/08/08 Achieving $0.22Prospectus EPS


Patrick McMichael 20,000 15/05/05 31/08/06 31/08/08 Achieving $0.22Prospectus EPS


Total 2,750,000

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(e) Other transactions with SpecifiedDirectorsDuring the financial year, directors and theirpersonally-related entities purchased goods,which were domestic or trivial in nature, from theCompany on the same terms and conditionsavailable to employees and customers.

(f) Other transactions with SpecifiedExecutivesDuring the financial year, executives and theirpersonally-related entities purchased goods,which were domestic or trivial in nature, from theCompany on the same terms and conditionsavailable to employees and customers.

(g) Transactions within thewholly-owned groupThe wholly-owned group includes:

• the ultimate parent entity in the wholly-ownedgroup;

• wholly-owned controlled entities; and

• other entities in the wholly-owned group.

Prior to listing the ultimate parent entity in thewholly-owned group was Agrade Enterprises PtyLtd. Refer to note 34 of the financial statements.

During the financial year, the Directors electedfor the wholly-owned Australian entities withinthe group to be taxed as a single entity effectivefrom 1 July 2003. The entities in the taxconsolidated group have not entered into a taxsharing agreement or tax funding agreementand, as a result, all income tax expenses,revenues, assets and liabilities of the members ofthe tax consolidated group are recognised in thefinancial statements of the parent entity. Refer tonote 4 of the financial statements.

In March 2005, the Company funded theacquisition of the Pizza Haven New Zealandoperations on behalf of its subsidiary, DPH NZHoldings Limited. In addition, during the yearDomino’s Pizza New Zealand Limited funded theacquisition of a number of Pizza Havenfranchisee businesses and collected debtorreceipts on behalf of DPH NZ Holdings Limited.

During the financial year the Company providedaccounting and administration services to entities inthe wholly-owned group.The Company also paid costson behalf of entities in the wholly-owned group andsubsequently on-charged these amounts to them.

During the financial year Domino’s Pizza NewZealand Limited provided management, franchiseeand store development services to the Company.

Other transactions that occurred during thefinancial year between entities in thewholly-owned group were:

• advancement of loans;

• sale of plant and equipment;

• market support fees;

• royalty fees;

• administration recharges; and

• withholding tax payments.

Where applicable, details of dividend and interestrevenue derived by the entity from entities in thewholly-owned group are disclosed in note 2(a) ofthe financial statements. Where applicable,details of interest expense, allowances fordoubtful receivables and write-downs ofreceivables in respect of transactions withentities in the wholly-owned group are disclosedin note 2(c) of the financial statements.

(h) Transactions with other relatedpartiesOther related parties include:

• associates and joint venture entities;

• Directors of related parties and theirDirector-related entities; and

• other related parties.

During the financial year, the partnerships 50%owned by the Company purchased goods from theCompany at the same terms and conditionsavailable to other franchisees. The Companyprovided loans to the partnerships on terms andconditions that vary to that available to otherfranchisees. The standard franchisee loan termsand conditions are variable at the WestpacIndicator Lending Rate (“WILR”), plus 3% comparedto WILR plus 1% available to the partnerships.

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37. RELATED PARTY AND SPECIFIEDEXECUTIVES’ DISCLOSURES

(h) Transactions with other relatedparties The Company also engaged in managementservices and business asset rental agreements atcommercial terms with the partnerships. Detailsof the asset rental revenue have been disclosed innote 2(a) of the financial statements.

The partners of A Burt Investments PtyLtd/Domino’s Pizza Australia Pty Ltd Partnershipresolved to wind up the partnership effective27 June 2005. A Burt Investments Pty Ltd agreedto purchase the Company’s share of thepartnership and the business assets for $423,013in accordance with the Sale Agreement.

The partners of Jova Rivera Pty Ltd/Domino’sPizza Australia Pty Ltd Partnership resolved towind up the partnership effective 27 June 2005.Jova Rivera Pty Ltd agreed to purchase theCompany’s share of the partnership and thebusiness assets for a consideration of $374,691 inaccordance with the Sale Agreement.

Where applicable, details of dividend and interestrevenue from other related parties are disclosedin note 2(a) of the financial statements.

Where applicable, details of interest expense,allowances for doubtful receivables andwrite-downs of receivables in respect oftransactions with other related parties aredisclosed in note 2(c) of the financial statements.

(i) Controlling entitiesThe parent entity and the ultimate parent entityin the consolidated entity is Domino’s PizzaAustralia New Zealand Limited.

Prior to listing, the ultimate parent entity in thewholly-owned group was Agrade Enterprises Pty Ltd.

38. SUBSEQUENT EVENTSOn 21 August 2005, the Directors declared a finaldividend for the financial year ended 3 July 2005,as set out in the Dividends section of this report.Refer to note 30 of the financial statements.There has not arisen in the interval between theend of the financial year and the date of thisreport any item, transaction or event of amaterial and unusual nature likely, in the opinionof the Directors of the Company, to affectsignificantly the operations of the Company, theresults of those operations, or the state of affairsof the Company, in future financial years.

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$’000 $’000 $’000 $’000

39. NOTES TO THE STATEMENT OF CASH FLOWS

(a) Reconciliation of cashFor the purposes of the statement of cash flows,cash includes cash on hand and in banks and investments in money market instruments,net of outstanding bank overdrafts. Cash atthe end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:Cash 2,737 4,655 2,668 4,323

(b) Businesses acquiredShear Pizza Pty Ltd and Reel (NT) Pty LtdDuring the financial year, two companies were acquired. Details of the acquisition are as follows:ConsiderationOrdinary Shares 3,000 – 3,000 –

3,000 – 3,000 –

Fair value of net assets acquiredCurrent assets:Cash 98 – 98 –Receivables 67 – 67 –Non-current assets:Property, plant and equipment 2,068 – 2,068 –Intangibles 3,804 – 3,804 –Current liabilities:Payables (149) – (149) –Interest-bearing liabilities (10) – (10) –Current tax liability (16) – (16) –Non-current liabilities:Interest-bearing liabilities (3,843) – (3,843) –

Net assets acquired 2,019 – 2,019 –

Goodwill on acquisition 981 – 981 –

3,000 – 3,000 –

Net cash outflow on acquisitionCash consideration – – – –Less cash balances acquired (98) – (98) –

(98) – (98) –

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$’000 $’000 $’000 $’000

39. NOTES TO THE STATEMENT OF CASH FLOWS

(b) Businesses acquired Pizza Haven New Zealand operationsDuring the financial year, Pizza Haven New Zealand operations were acquired. Details of the acquisition are as follows:ConsiderationCash 2,115 – – –

2,115 – – –

Fair value of net assets acquiredCurrent assets:Receivables 234 – – –Non-current assets:Property, plant and equipment 148 – – –Current liabilities:Provisions (1,385) – – –

Net assets acquired (1,003) – – –

Goodwill on acquisition 3,118 – – –

2,115 – – –

Net cash outflow on acquisitionCash consideration 2,115 – – –Less cash balances acquired – – – –

2,115 – – –

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$’000 $’000 $’000 $’000

(c) Reconciliation of profit from ordinary activities after income tax to net cash provided by operating activitiesOperating profit after income tax 6,757 4,995 7,139 4,975Less items classified as investing/financing activities

Profit on sale of non-current assets (1, 277) (1,140) (1,175) (1,035)Add/(less) non-cash items

Share of joint venture entities’ net profit (6) (46) (6) (46)Amortisation of goodwill 944 539 633 477Amounts set aside to provisions 825 503 314 469Depreciation 5,216 3,963 4,549 3,391Other 228 – – –

Net cash provided by operating activities before change in assets and liabilities 12,687 8,814 11,454 8,231Change in assets and liabilities during the financial year

(Increase)/decrease in other current assets (3,468) (666) (1,749) (1,398)(Increase)/decrease in trade debtors (273) (1,350) (182) (1,237)(Increase)/decrease in inventory (503) (206) (454) (122)Increase/(decrease) in accounts payable 3,055 (300) 2,876 (57)Increase/(decrease) in tax payable 633 (880) 533 (796)Increase/(decrease) in other current liabilities – 126 – 90Increase/(decrease) in other non-current liabilities – 96 – 96

Net cash provided by operating activities 12,131 5,634 12,478 4,807

(d) Financing facilitiesSecured commercial bill facility 23,320 14,981 16,800 12,250

Amount used 12,930 14,981 10,000 –Amount unused 10,390 – 6,800 12,250

Secured overdraft facility 2,000 – 2,000 –

Amount used – – – –Amount unused 2,000 – 2,000 –

Secured loan 241 – – –

Amount used – – – –Amount unused 241 – – –

Total financing facility 25,561 14,981 18,800 12,250

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39. NOTES TO THE STATEMENT OFCASH FLOWS

(d) Financing facilities

Bank overdraftsThe bank overdraft of the Company is securedby a guarantee from the Company. Interest onthe bank overdraft is based on the overdraftbusiness rate plus a margin to arrive at anaverage of 9% for the year. There was nooverdraft facility in the prior year.

The bank overdraft is repayable on demand andsubject to annual review.

Bank loansBank loans are denominated in Australiandollars. The business development loan wassourced to refinance debt with a six monthfinance term expiring on 31 July 2005. The loanis secured by a guarantee by Domino’s PizzaAustralia New Zealand Limited. The facilitybears interest of 8.60%. The facility was notutilised at year end.

Commercial bill facilityThe commercial bill facility consists of a numberof different sub-facilities established to fundthe Company’s working capital and storeexpansion plans. The rate of interest payable onthe commercial bill facility varies according tothe type of sub-facility in use.

SecurityThe bank overdraft, loan and commercial billfacilities are secured by way of first registeredmortgage debenture over the assets andundertakings of the Company and each of itswholly-owned subsidiaries.

(e) Non-cash financing and investingactivitiesOn 22 December 2004, the Company issued40,044 B Class shares ($2,231,712) to SuccessPizzas Pty Ltd as consideration for the purchaseof the shares in Shear Pizza Pty Ltd. On 17 January2005, the Company issued 13,459 B Class shares($750,142) to Success Pizzas Pty Ltd asconsideration for the purchase of shares in Reel(NT) Pty Ltd. These acquisitions are not reflectedin the statement of cash flows. Refer to note 35of the financial statements. The Companyacquired equipment financed under hirepurchase and lease as part of these acquisitions.

40. FINANCIAL INSTRUMENTS

(a) Significant accounting policiesDetails of the significant accounting policies andmethods adopted, including the criteria forrecognition, the basis of measurement and thebasis on which revenues and expenses arerecognised, in respect of each class of financialasset, financial liability and equity instrument aredisclosed in note 1 of the financial statements.

(b) Significant terms and conditionsThe Company enters into loans with tradedebtors to fund the purchase of franchises andstore equipment.These loans are secured by thefranchise agreement over the store assets, plusa registered charge over the store assets in themajority of cases.

Interest rate contractsThe Company holds an interest rate swapcontract to manage interest rate exposure. Underthe interest rate swap contract, the Companyagrees to exchange the difference between fixedand floating rate interest amounts calculated onan agreed notional principal amount. Thiscontract enables the Company to mitigate therisk of rising interest rates.

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The following table details the notional principal amount and remaining terms of the interest rateswap contract outstanding as at reporting date:

Average Notional Outstanding contracts interest rate principal amount

2005 2004 2005 2004% % $’000 $’000

Matures 22 April 2009, pays quarterly 6.03 6.03 10,000 10,000

10,000 10,000

(c) Objectives of derivative financial instrumentsThe Company enters into derivative financial instruments to manage its exposure to interest rate risk,namely interest rate swaps to mitigate the risk of rising interest rates.

The Company does not enter into or trade derivative financial instruments for speculative purposes.

(d) Interest rate riskThe following table details the Company’s exposure to interest rate risk as at 3 July 2005:

Fixed interest rate maturityAverage Variable More Non-interest interest Less than two to than interest-

2005 rate rate one year five years five years bearing Total% $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsCash 4.02 937 – – – 1,800 2,737Trade receivables – – – – – 4,949 4,949Loans to franchisees 12.37 4,894 – – – – 4,894Amounts owing by related parties – – – – – – –Loans to employees – – – – – 97 97

5,831 – – – 6,846 12,677

Financial liabilitiesTrade creditors – – – – – 11,150 11,150Finance lease liabilities 7.25 – 791 970 – – 1,761Commercial bills 7.56 12,734 – – – – 12,734Income tax payable – – – – – 1,749 1,749Employee entitlements – – – – – 1,506 1,506Amounts owing to other parties 7.48 302 – – – 1,624 1,926

13,036 791 970 – 16,029 30,826

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40. FINANCIAL INSTRUMENTS

(d) Interest rate risk The following table details the Company’s exposure to interest rate risk as at 27 June 2004:

Fixed interest rate maturityAverage Variable More Non-interest interest Less than two to than interest-

2004 rate rate one year five years five years bearing Total% $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsCash 3.95 2,807 – – – 1,848 4,655Trade receivables – – – – – 4,461 4,461Loans to franchisees 11.80 3,655 – – – – 3,655Amounts owing by related parties – – – – – 53 53Loans to employees – – – – – – –

6,462 – – – 6,362 12,824

Financial liabilitiesTrade creditors – – – – – 7,976 7,976Finance lease liabilities 7.64 – 1,198 1,340 – – 2,538Commercial bills 6.73 14,981 – – – – 14,981Income tax payable – – – – – 765 765Employee entitlements – – – – – 1,168 1,168Amounts owing to other parties 8.24 7,132 – – – 6,225 13,357

22,113 1,198 1,340 – 16,134 40,785

(e) Credit riskCredit risk refers to the risk that a counterparty willdefault on its contractual obligations resulting infinancial loss to the Company. The Company hasadopted the policy of only dealing with creditworthycounterparties and obtaining sufficient collateral orother security where appropriate, as a means ofmitigating the risk of financial loss from defaults.TheCompany measures credit risk on a fair value basis.

The Company does not have any significant creditrisk exposure to any single counterparty or any groupof counterparties having similar characteristics.

The carrying amount of financial assets recorded inthe financial statements, net of any allowances forlosses, represents the Company’s maximumexposure to credit risk without taking account of thevalue of any collateral or other security obtained.

(f) Net fair valueThe carrying amount of financial assets and financialliabilities recorded in the financial statementsapproximates their net fair values, determined inaccordance with the accounting policies disclosed innote 1 of the financial statements.

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In July 2002, the Financial Reporting Council(“FRC”), with subsequent reinforcement by theFederal Government CLERP 9 proposals,formalised its support for the adoption byAustralia of International Financial ReportingStandards by 1 January 2005.

For reporting periods beginning on or after1 January 2005, the Company must comply withAustralian equivalents to International FinancialReporting Standards (“A-IFRS”) as issued by theAustralian Accounting Standards Board.Accordingly, the Company’s first half-year reportprepared under A-IFRS will be for the half-yearreporting period ending 1 January 2006 and itsfirst annual financial report prepared underA-IFRS will be for the year ending 2 July 2006.

Entities complying with A-IFRS for the first timewill be required to restate their comparativefinancial statements to amounts reflecting theapplication of A-IFRS to that comparative period.Most adjustments required on transition toA-IFRS will be made, retrospectively, againstopening retained earnings as at 28 June 2004.

Transition managementThe Company has established a project team tomanage the transition to A-IFRS,monitored by theChief Financial Officer. This team is responsiblefor the assessment of the impact andimplementation of the accounting policy changesthat will be required to ensure compliance withA-IFRS reporting for the financial year ending2 July 2006. This team is also responsible for thetraining of staff and system and internal controlchanges necessary to gather all the requiredfinancial information. In addition, the Companyengaged expert consultants to conduct impactassessments to isolate key areas that would beimpacted by the transition to A-IFRS.

The project is achieving its scheduled milestonesand the Company is expected to be in a positionto fully comply with the requirements of A-IFRSfor the 2 July 2006 financial year.

Assessment and planning phaseThe assessment and planning phase generated ahigh level overview of the impacts of conversionto A-IFRS on existing accounting and reportingpolicies and procedures, systems and processes,business structures and staff.This phase included:

• high level identification of the key differencesin accounting policies and disclosures that areexpected to arise from adopting A-IFRS;

• assessment of new information requirementsaffecting management information systems,as well as the impact on the business and itskey processes;

• evaluation of the implications for staff, forexample training requirements; and

• preparation of a conversion plan for expectedchanges to accounting policies, reportingstructures, systems, accounting and businessprocesses and staff training.

The assessment and planning phase iscompleted as at 3 July 2005.

Design phaseThe design phase formulates the changesrequired to existing accounting policies,procedures, systems and processes in order toeffect the transition to A-IFRS. The design phaseincludes various project teams working on areassuch as treasury operations, application ofimpairment requirements and transitionalelections.

The design phase incorporates:

• formulating revised accounting policies andprocedures for compliance with A-IFRSrequirements;

• developing revised A-IFRS disclosures;

• identifying potential financial impacts as atthe transition date and for subsequentreporting periods prior to adoption of A-IFRS;

• formulating accounting and business processesto support A-IFRS reporting obligations;

41. IMPACT OF ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONALFINANCIAL REPORTING STANDARDS

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• identifying required changes to financialreporting and business source systems; and

• developing training programs for staff.

The design phase is substantially complete as at3 July 2005.

Implementation phaseThe implementation phase includesimplementation of identified changes toaccounting and business procedures, processesand systems and operational training for staffand enables the Company to generate therequired reconciliations and disclosures of AASB 1“First Time Adoption of Australian Equivalents toInternational Financial Reporting Standards”.

This phase will be completed in the periodOctober 2005 to November 2005.

Impact of transition to A-IFRSThe accounting standards below are thoseidentified to have a material impact on theCompany. Other differences will result from thefirst-time adoption of A-IFRS for the Company inthe year ending 2 July 2006 and the restatementof comparatives for the year ended 3 July 2005.These are based on A-IFRS standards thatmanagement expect to be in place, or whereapplicable, early adopted, when preparing thefirst complete A-IFRS financial report (being thehalf-year ending 1 January 2006). Only a completeset of financial statements and notes togetherwith comparative balances can provide a trueand fair presentation of the Company’s financialposition, results of operations and cash flows inaccordance with A-IFRS. This note provides only asummary; therefore, further disclosure andexplanations will be required in the firstcomplete A-IFRS financial report for a true andfair view to be presented under A-IFRS.

Revisions to the selection and application of theA-IFRS accounting policies may be required as aresult of:

• changes in financial reporting requirementsthat are relevant to the Company’s firstcompete A-IFRS financial report arising fromnew or revised accounting standards orinterpretations issued by the AustralianAccounting Standards Board subsequent to thepreparation of the 3 July 2005 financial report;

• additional guidance on the application of A-IFRSin a particular industry or to a particulartransaction; and

• changes to the Company’s operations.

Where the application or interpretation of anaccounting standard is currently being debated,the accounting policy adopted reflectsmanagement’s current assessment of the likelyoutcome of those deliberations.

The rules for the first time adoption of A-IFRS areset out in AASB 1 “First Time Adoption ofAustralian Equivalents to International FinancialReporting Standards”. In general, A-IFRSaccounting policies must be appliedretrospectively to determine the opening A-IFRSbalance sheet as at transition date, being 28 June2004. The Standard allows a number ofexemptions to this general principle to assist inthe transition to reporting under A-IFRS.

The following areas have significant potentialimpact for the Company:

Sales of corporate storesThe Company generates revenue associated withthe sale of corporate stores to franchisees. Underexisting accounting standards the revenue onthe sale of corporate stores is recorded as grossrevenue, however, under A-IFRS some of thecurrently recorded gross revenue on sale of stores


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will not be permitted to be reflected in grossrevenue and instead only the net profit/loss onthe sale of a store will be permitted to beincluded in the income/expenses. The profit/losswould not be included in revenue under A-IFRS.

Under the requirements of AASB 5 “Non-currentAssets Held for Sale and Discontinued Operations”and AASB 116 “Property, Plant and Equipment”, onlythe net profit/loss on the sale is to be disclosed inthe profit and loss statement. Specifically underparagraph 78 of AASB 116: “The gain or loss arisingfrom the derecognition of an item of property,plant and equipment shall be included in profit orloss when the item is derecognised” and “gainsshall not be classified as revenue”.

Assets held for sale are required to be held at thelower of carrying value and fair value less costs tosell. Assets held for sale are disclosed as aseparate category of assets on the balance sheetand are not depreciated where the sales of theidentified assets have not been consummated byyear end. In order to be classified as “held for sale”the consummation of the sale of the assets hasto be “highly probable” and the asset must beavailable for immediate sale in its presentcondition subject only to terms that arecustomary for sales of such assets.

It is estimated that as a consequence of A-IFRSrevenue recognition rules, the revenue from saleof corporate stores will be reduced by $17.3 millionfor the financial year ended 3 July 2005.

Impairment of assetsAASB 136 “Impairment of Assets” and AASB 138“Intangible Assets”do not allow for amortisation ofgoodwill or intangibles with indefinite useful lives.Currently, Australian Accounting Standards requiregoodwill to be amortised over not more than a20 year period. AASB 136 requires an annualimpairment test to be performed each period andthe amount of goodwill or intangible notconsidered recoverable to be expensed in the periodthat loss of value has been incurred. Goodwill willno longer be amortised.The Company believes it isreasonable to assume that intangible assets willnot be materially impacted by impairment tests forthe financial year ended 3 July 2005. Similarly itemsof property,plant and equipment are required to be

recorded at the lesser of cost, fair value or value inuse under A-IFRS. The Company believes it isreasonable to assume that property, plant andequipment assets will not be materially impactedby any required impairment tests for the financialyear ended 3 July 2005. Should any of the assets ofthe Company become impaired, then a write-downof the asset values would be required.

Formal calculations are yet to be prepared.

Share-based paymentsAASB 2 “Share-based Payments”requires the goodsor services received in share-based payments forequity settled transactions to be recorded whenthose services are obtained and a correspondingequity amount recorded for the transaction. Thepotential financial impact of the ESOP on theCompany’s profit following its adoption of A-IFRS isdependent on various factors, including the issueprice of the Company’s shares, the current marketprice of the Company’s shares, and the likelihoodof the shares vesting. The ESOP will create anexpense in the Company’s profit and lossstatement that is not currently recorded underAGAAP. A-IFRS requires an expense to berecognised at the time of vesting. One third of theoptions under the ESOP were exercisable(i.e. vested) upon listing. Based on the Offer Priceand the terms of the options, the financial impacton the Company’s pre-tax profit is estimated to beapproximately $0.2 million for the financial yearended 3 July 2005.

Income taxesAASB 112 “Income Taxes”will alter the measurementof tax assets and liabilities largely consistent withthe revised AASB 1020 “Income Taxes” currentlyadopted in Australia. A “balance sheet” approachwill be adopted, replacing the “statement offinancial performance” approach currently used byAustralian companies. This method recognisesdeferred tax balances when there is a differencebetween the carrying amount of an asset orliability, and its tax base. It is expected that thestandard may require the Company to carry higherlevels of deferred tax assets and liabilities. The neteffect on profit has been reviewed, and the overallimpact was not material.

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Costs of dismantling and removing assetsUnder A-IFRS, the cost of dismantling andremoving assets, if there was an obligation to doso when the asset was purchased or constructed,needs to be included within the costs of the assetand a corresponding liability needs to berecognised at a discounted amount. TheCompany has obligations under certain leases toremove leasehold improvements from leasedproperty. The Company has estimated therequired asset and liability that will be raised ontransition to A-IFRS as $1.1 million. The financialimpact on profit before tax from theamortisation of the asset and the unwinding ofthe discount is estimated at $0.2 million.

Business combinationsThe Company’s current accounting policy is toamortise goodwill on a straight line basis over theperiod which the benefits are expected to arise,which is currently 20 years. However under AASB 3“Business Combinations”,amortisation of goodwillwill be prohibited, and will be replaced by annualimpairment testing focusing on the cash flows ofthe related cash generating unit.As a consequenceof A-IFRS goodwill amortisation rules, the financialimpact on the Company’s pre-tax profit isestimated to be approximately $0.9 million for thefinancial year ended 3 July 2005.

The Company acquired the businesses of PizzaHaven New Zealand during the financial year.This transaction will be restated in the 2005comparative results and may result in changes tothose balances reported under AGAAP. Nocontingent liabilities or new intangible assets areexpected to be recognised upon adoption;however there is a possibility of additionaldeferred tax liabilities that may be required to berecognised. The amount of any potentialadjustment has not yet been calculated but isestimated not to be material.

As part of the Pizza Haven acquisition, theCompany undertook restructuring activitiesincluding the closure of 12 stores and theconversion of 22 stores to Domino’s Pizzabranding. To conduct these activities, a provisionfor restructuring of $1.121 million was raised in thecurrent financial year. Under AASB 3 “BusinessCombinations”, at the date of acquisition, PizzaHaven would have needed to be demonstrablycommitted to the restructuring even in theabsence of the acquisition proceeding. As thiswas not the case, the Company is not able torecognise a liability for such restructuring plansas part of allocating the cost of the combination.The impact of this will result in an adjustment tothe statement of financial performance for the2005 comparative year of $1.042 million andrecognition of $0.079 million to the statement offinancial performance for the 2006 financial year.

Under AASB 1 “First-time Adoption of AustralianEquivalents to International Financial ReportingStandards” transitional provisions, the Companyis electing not to take up the option to reopenpast acquisitions and retrospectively account forthem under the provisions of AASB 3 “BusinessCombinations”.

Derivative financial instrumentsThe Directors have elected to apply the first-timeadoption exemption available to defer the dateof transition of AASB 132 and AASB 139 until 4 July2005. Accordingly, there will be no quantitativeimpacts on the 3 July 2005 financial statements.

However, it is expected that required adjustmentson 4 July 2005 will be largely attributable toderivatives, including interest rate hedges,designated as fair value hedges recognised in thestatement of financial position at fair value.


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NUMBER OF HOLDERS OF EQUITY SECURITIES

Ordinary share capital• 60,000,000 fully paid ordinary shares are held by 1,861 individual shareholders.

Options• 3,200,003 options are held by 21 individual option holders.

• Options do not carry a right to vote.

Distribution of holders of equity securitiesConverting

Converting non-part-Fully paid Partly paid cumulative Redeemable icipating ordinary ordinary preference preference preference Convertible

shares shares shares shares shares notes Options

1 – 1,000 503 – – – – – –1,001 – 5,000 921 – – – – – –5,001 – 10,000 251 – – – – – –10,001 – 100,000 159 – – – – – 16100,001 and over 27 – – – – – 5

1,861 – – – – – 21

Holding less than a marketable parcel – – – – – – –

Substantial shareholdersOrdinary shareholders Fully paid Partly Paid

Number Percentage Number Percentage

Somad Holdings Pty Ltd 16,683,217 27.81% – –ANZ Nominees Limited 4,138,091 6.90% – –National Nominees Limited 3,371,910 5.62% – –Citicorp Nominees Pty Limited 3,105,740 5.18% – –

Twenty largest holders of quoted equity securitiesOrdinary shareholders Fully paid Partly Paid

Number Percentage Number Percentage

Somad Holdings Pty Ltd 16,683,217 27.81% – –ANZ Nominees Limited 4,138,091 6.90% – –National Nominees Limited 3,371,910 5.62% – –Citicorp Nominees Pty Limited 3,105,740 5.18% – –Westpac Custodian Nominees Limited 2,578,726 4.30% – –Don Meij and Esme Meij 2,567,061 4.28% – –JP Morgan Nominees Australia Limited 2,507,290 4.18% – –Citicorp Nominees Pty Limited 2,352,204 3.92% – –Grant Bourke 2,137,001 3.56% – –HSBC Custody Nominees (Australia) Limited 1,842,137 3.07% – –Success Pizzas Pty Ltd 1,702,264 2.84% – –Don Meij 1,559,517 2.60% – –Grant Bourke and Sandy Bourke 1,260,031 2.10% – –Redstream Pty Limited 682,000 1.14% – –HSBC Custody Nominees (Australia) Limited 530,000 0.88% – –Amcil Limited 500,000 0.83% – –Mirrabooka Investments Limited 500,000 0.83% – –AMP Life Limited 451,406 0.75% – –RBC Global Services Australia Nominees Pty Ltd 432,168 0.72% – –Somad Holdings Pty Ltd 400,000 0.67% – –

49,300,763 82.18% – –

Other ASX informationThe entity, in accordance with ASX Rule 1.3.2(b), utilised its cash and assets at the time of admission ina manner that was consistent with its business objectives.

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