DP Eurasia N.V COVID-19 Update (5417K)
April 22 2020 - 8:43AM
UK Regulatory
TIDMDPEU
RNS Number : 5417K
DP Eurasia N.V
22 April 2020
For Immediate Release 22 April 2020
DP Eurasia N.V.
COVID-19 update and Russian loan covenant relaxation
DP Eurasia N.V. ("DP Eurasia" or the "Company", and together
with its subsidiaries, the " Group ") today provides an update on
its operations with respect to the developments that have taken
place since the announcement of its 2019 financial results on 27
March 2020 and its liquidity including as a result of recent
supportive discussions with its lender in Russia.
Operations
The Group's Turkish stores are currently operational except for
54 stores that were shut down due to either being located in
shopping malls which were closed or as a result of optimising
labour efficiency through combining delivery zones. Under
government decree, stores are closed for eat-in business but
continue to provide take-away and delivery services. The Turkish
government instituted a strict curfew for the weekends of 11-12 and
18-19 April 2020 that also covered food delivery. It has also
instituted a strict curfew for the long weekend of 23-26 April
2020, however food delivery has been granted an exemption. The
Group is optimistic that food delivery will continue to enjoy
exempt status in possible future curfews. In Russia, except for 26
stores that were shut down for reasons of labour optimisation, all
stores continue to provide delivery and take-away services;
however, due to the stricter social distancing measures in Russia
compared to Turkey, take-away system sales have been minimal
whereas delivery service has been performing well. As a result of
the aforementioned operational constraints, the Group's
like-for-like growth rates in Turkey and Russia were as
follows:
Pre-COVID Post-COVID
System sales(1) like-for-like growth(2) (3) (4)
Turkey 23.5% -12.2%
Russia (based on RUB) -10.2% -31.2%
Amongst a number of initiatives undertaken with respect to the
outbreak that were announced by the Group on 27 March 2020, the
Group continues to provide contactless payment and delivery
services in both its markets to minimise infection risk for both
its customers and colleagues, who are the Group's foremost
priority.
Liquidity
In light of recent market developments related to COVID-19, the
Group has been drawing down on its unutilised bank lines in excess
of its immediate needs to ensure that the Group has sufficient
available funds to cover any short-term reduction in cashflow
resulting from the COVID-19 outbreak, as a prudent measure. The
Group continues to have a strong liquidity position, having access
to cash at hand and additional borrowing capacity available from
Turkish banks.
The Group's banks are being supportive in both countries. The
Turkish banks have provided DP Eurasia with additional bank lines
since the outbreak. The Group's Russian subsidiary did not meet its
leverage covenant (defined as the ratio of financial debt to
adjusted EBITDA) as at 31 March 2020. Following discussions,
Sberbank today agreed to waive the covenant as at that date. The
Group is in constructive dialogue with Sberbank with respect to its
covenants for the remainder of the year and its ability to meet
them depends on the progression of the COVID-19 outbreak. The
principal outstanding under the Sberbank loan currently amounts to
RUB 1.6 billion of which RUB 0.3 billion is supported by a cash
collateral deposit. The Group's strong liquidity position enables
it to cure any potential covenant breaches with respect to its bank
borrowings in Russia without materially adversely affecting its
prospects under the current circumstances.
Outlook
Assuming the current operational constraints do not worsen, the
Group does not foresee any issues with business continuity and cash
flow. The Board is confident that the Group's balance sheet is
strong enough for the Group to operate for six months under its
current cost structure even if all its operations are shut down by
government action in response to the COVID-19 outbreak.
Furthermore, the Group has the ability to extend this period by
taking certain additional cost cutting measures.
This Announcement contains Inside Information.
Enquiries
DP Eurasia N.V.
Selim Kender, Chief Strategy Officer &
Head of Investor Relations +90 212 280 9636
Buchanan (Financial Communications)
Richard Oldworth / Victoria Hayns / Tilly +44 20 7466 5000
Abraham dp@buchanan.uk.com
Notes
(1) System sales are sales generated by the Group's corporate
and franchised stores to external customers and do not represent
revenue of the Group.
(2) Like-for-like growth is a comparison of sales between two
periods that compares system sales of existing system stores. The
Group's system stores that are included in like-for-like system
sales comparisons are those that have operated for at least 52
weeks preceding the beginning of the first month of the period used
in the like-for-like comparisons for a certain reporting period,
assuming the relevant system store has not subsequently closed or
been "split" (which involves the Group opening an additional store
within the same map of an existing store or in an overlapping
area).
(3) The period defined as 1 January - 15 March 2020.
(4) The period defined as 16 March - 19 April 2020.
Notes to Editors
DP Eurasia N.V. is the exclusive master franchisee of the
Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia. The
Company was admitted to the premium listing segment of the Official
List of the Financial Conduct Authority and to trading on the main
market for listed securities of the London Stock Exchange plc on 3
July 2017. The Company (together with its subsidiaries, the " Group
" ) is the largest pizza delivery company in Turkey and the third
largest in Russia. The Group offers pizza delivery and takeaway/
eat-in facilities at its 765 stores (550 in Turkey, 203 in Russia,
eight in Azerbaijan and four in Georgia as at 31 December 2019),
and operates through its owned corporate stores (32%) and
franchised stores (68%). The Group maintains a strategic balance
between corporate and franchised stores, establishing networks of
corporate stores in its most densely populated areas to provide a
development platform upon which to promote best practice and
maximise profitability. The Group has adapted the Domino's Pizza
globally proven business model to its local markets.
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END
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