TIDMDPEU
RNS Number : 1033T
DP Eurasia N.V
23 March 2021
For Immediate Release 23 March 2021
DP Eurasia N.V.
("DP Eurasia" or the "Company", and together with its
subsidiaries, the " Group ")
Preliminary Results for the Year Ended 31 December 2020
Growth in online and product innovation drive resilient
performance; strong momentum into 2021
Highlights
For the year ended
31 December
-------------------------------
2020 2019 Change
---------------- ------------- -------
(in millions of TRY,
unless otherwise indicated)
Number of stores 771 765 6
Group system sales (1)
Group 1,569.9 1,370.3 14.6%
Turkey 1,069.1 845.7 26.4%
Russia 471.6 503.3 -6.3%
Azerbaijan & Georgia 29.2 21.2 37.9%
Group system sales like-for-like growth(2)
Group(8) 17.4% 10.7%
Turkey 26.0% 13.1%
Russia (based on RUB) -12.6% 0.7%
Group revenue 1,019.2 980.2 4.0%
Group adjusted EBITDA(3)
(excl. IFRS 16) 69.6 124.5 -44.1%
Group adjusted net income
(4) (excl. IFRS 16) (87.1) 2.9 n.m.
Group adjusted net debt(5)
(excl. IFRS 16) 242.0 226.5
Group adjusted EBITDA(3) 131.5 189.8 -30.7%
Group adjusted net loss(4) (94.0) (6.3) n.m.
Turkey adjusted EBITDA(3) 140.9 134.6 4.7%
Turkey adjusted EBITDA(3)
(excl. IFRS 16) 118.6 108.7 9.1%
Russia adjusted EBITDA(3) 2.3 63.9 n.m.
Russia adjusted EBITDA(3)
(excl. IFRS 16) (37.3) 24.5 n.m.
Group net loss (107.6) (5.6) n.m.
Financial Highlights
-- Group revenue up 4.0% and system sales up 14.6%, driven by
like-for-like growth and store openings
o Turkish systems sales growth of 26.4%
o Russian system sales decrease of 6.3% (15.3% based on RUB)
-- Adjusted EBITDA (excl. IFRS 16) down 44.1% to TRY 69.6 million (2019: TRY 124.5 million)
-- Adjusted net loss (excl. IFRS 16) of TRY 87.1 million versus
an adjusted net income of TRY 2.9 million in 2019
-- Strong liquidity position - TRY 128 million of cash on hand
and additional available bank lines of TRY 142 million as at 31
December 2020
-- Post-period end, Turkish Private Equity Fund II L.P. sold its
remaining 32.81% stake to Jubilant Foodworks Netherlands B.V.,
wholly-owned subsidiary of Jubilant Foodworks Limited
Operational Highlights
-- Six net stores were added in the year, bringing the total
number to 771; robust franchisee demand in Turkey more than offset
the store closures in Turkey and Russia due to Covid-19 - 33 new
store openings vs. 27 store closures in 2020
-- Online delivery system sales(6) as a share of delivery system
sales surpassed 75% (2019: 70%), reflecting our strong online
offering and positioning
-- Group online system sales(7) growth of 40.3%
o Turkish online system sales(7) growth of 55.2%
o Russian online system sales(7) growth of 20.3% (8.8% based on
RUB)
-- Appointment of Mr. Daniel Rubinowski, ex-Marketing Director
of KFC for Russia and CIS, as CEO of Russian Operations to further
strengthen the team
Current Trading
System sales growth and like-for-like growth for the first two
months of 2021 compared to the same period in 2020 were as
follows:
For the two months
ended 28 February
Group system sales growth(1) 2021
Group 31.4 %
Turkey 48.8%
Russia 1.6%
Azerbaijan & Georgia 29.9%
Group system sales like-for-like growth(2)
Group(8) 37.8%
Turkey 49.0%
Russia (based on RUB) 6.4%
2021 Outlook
The Group is reinstating guidance for 2021. The management
guidance for store openings, like-for-like growth rates and capital
expenditure for 2021 is as follows:
Turkey Russia
Net store openings 30 - 40 15 - 20*
Like-for-like growth
rate 21 - 25% 12 - 15%
Capital expenditure TRY 45 million RUB 160 million
* Subject to H1'2021 performance
Commenting on the results, Chief Executive Officer, Aslan
Saranga said:
"On behalf of the Board, I am pleased to report resilient
results for the year in the face of unprecedented trading
conditions, which saw operational constraints such as curfews and
the suspension of dine-in service resulting from the Covid-19
pandemic. We were able to increase our system sales by 14.6% on the
back of our strong Turkish performance. Despite 27 store closures
in Turkey and Russia due to Covid-19, we were also able to increase
our store portfolio by six during 2020, reaching a total of 771
stores across our four countries of operation.
"The Turkish business performed very strongly from a top line
point of view, especially with record-breaking like-for-like growth
rates in the second half of the year. New product introductions,
such as the extension of the oven-baked sandwich line, new chicken
offerings and Döner (chawarma) suite products along with
celebrity-endorsed advertising campaigns, and brand-building
Euroleague and Eurocup sponsorships contributed significantly to
the increase in system sales. Furthermore, as mentioned in our
latest trading update, there has also been a Covid-19 inspired
shift to home delivery across all consumer sectors. The strong
trading in Turkey is continuing in 2021 with like-for-like growth
rate of 49.0% in January/February.
"After a slow start to 2020 and further depressed sales
performance due to 72 days' curfew in Moscow during the second
quarter, the Russian business saw an improving top line performance
in the second half of the year. While we recorded a like-for-like
growth rate of -12.6% for 2020, we are encouraged by the steady
improvement to -1.9% like-for-like growth rate during the last two
months of 2020 which gives us momentum going into 2021, as
evidenced by the 6.4% like-for-like growth rate in
January/February. In line with the Russian Plan outlined in our
2019 results announcement, we began a TV advertising campaign in
October and introduced our "New and Improved" Pizza with a new
dough formulation and new meat toppings, based on the feedback from
our market research. We also introduced two new pizzas and garlic
bread in October. These initiatives have been well received and,
alongside our Moscow-targeted TV advertising campaigns, have
contributed to the improvement in the like-for-like growth
rates.
"2020 also saw us surpass the 75% milestone for Group online
delivery system sales as a percentage of total delivery system
sales. The steady increase of this mix over the last few years is
important for the Group as online customers have a higher ordering
frequency, customers can be analysed by our CRM systems to come up
with different offerings for different segments, and we can provide
more targeted advertising to them.
"I would like to welcome Mr. Daniel Rubinowski as our newly
appointed CEO of Russian Operations, who brings with him a wealth
of QSR experience in the Russian and CIS markets. I would also like
to thank our outgoing CEO of Russian Operations, Mr. Mustafa Özgül,
for his dedicated service to the company over the years and wish
him success in his future endeavours.
"I would also like to thank our outgoing shareholder, Turkish
Private Equity Fund II L.P., for its continuous contribution and
support to the business since 2010, whilst welcoming Jubilant
Foodworks Limited as a new and substantial shareholder.
"2021 has seen the start of the vaccination programmes in Turkey
and Russia, and whilst this brings some relief, the Covid-19
pandemic continues to create uncertainty in our markets. However,
the resilience shown by the Group in 2020 and the trading momentum
carried over to the first two months of 2021 give the Board
confidence regarding our market positioning and the prospects for
our business in the long term."
Enquiries
DP Eurasia N.V.
Selim Kender, Chief Strategy Officer &
Head of Investor Relations +90 212 280 9636
Buchanan (Financial Communications)
Richard Oldworth / Giles Stewart / Tilly +44 20 7466 5000
Abraham dp@buchanan.uk.com
A conference call will be held at 9.30am (GMT) on 23 March 2021
for analysts and investors via the following dial-in details:
Conference UK Toll: +44 333 300 0804
call: UK Toll Free: 0800 358 9473
Participant PIN code: 17853063#
URL for international dial in numbers:
https://event.sharefile.com/d-s7bae1d9235d495a8
DP Eurasia N.V.'s preliminary 2020 results and corporate
presentation are available at www.dpeurasia.com . A conference call
replay will be available on the website in due course.
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) EBITDA, adjusted EBITDA and non-recurring and non-trade
income/expenses are not defined by IFRS. These items are determined
by the principles defined by the Group management and comprise
income/expenses which are assumed by the Group management to not be
part of the normal course of business and are non-trading items.
These items which are not defined by IFRS are disclosed by the
Group management separately for a better understanding and
measurement of the sustainable performance of the Group. Please
refer to Note 3 in the Consolidated Financial statements for a
reconciliation of these items with IFRS.
(4) Adjusted net income is not defined by IFRS. Adjusted net
income excludes income and expenses which are not part of the
normal course of business and are non-recurring items. Management
uses this measurement basis to focus on core trading activities of
the business segments and to assist it in evaluating underlying
business performance. Please refer to Note 3 in the Consolidated
Financial statements for a reconciliation of this item with
IFRS.
(5) Net debt and adjusted net debt are not defined by IFRS.
Adjusted net debt includes cash deposits used as a loan guarantee
and cash paid, but not collected during the non-working day at the
year end. Management uses these numbers to focus on net debt
including deposits not otherwise considered cash and cash
equivalents under IFRS. Please refer to Note 16 in the Consolidated
Financial statements for a reconciliation of these items with
IFRS.
(6) Delivery system sales are system sales of the Group
generated through the Group's delivery distribution channel.
(7) Online system sales are system sales of the Group generated
through its online ordering channel.
(8) Group like-for-like growth is a weighted average of the
country like-for-like growths based on store numbers as described
in Note (2) above.
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 771 stores (568 in Turkey, 190 in Russia,
nine in Azerbaijan and four in Georgia as at 31 December 2020), and
operates through its owned corporate stores (29%) and franchised
stores (71%). 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.
Performance Review
For the year ended
System sales 31 December
-------------------------------
2020 2019 Change
--------------- -------------- -------
(in millions of TRY,
unless otherwise indicated)
Group system sales (1)
Group 1,569.9 1,370.3 14.6%
Turkey 1,069.1 845.7 26.4%
Russia 471.6 503.3 -6.3%
Azerbaijan & Georgia 29.2 21.2 37.9%
Group system sales like-for-like
growth(2)
Group(8) 17.4% 10.7%
Turkey 26.0% 13.1%
Russia (based on RUB) -12.6% 0.7%
Store Count As at 31 December
----------------------------------------------------------------
2020 2019
Corporate Franchised Total Corporate Franchised Total
Turkey 106 462 568 123 427 550
Russia 115 75 190 121 82 203
Azerbaijan - 9 9 - 8 8
Georgia - 4 4 - 4 4
Total 221 550 771 244 521 765
Although 27 stores were closed due to the pandemic, DP Eurasia
was able to finish the year with six net stores added compared to
2019. The Group increased its system sales by 14.6% year-on-year,
driven by the strong like-for-like sales growth in Turkey.
The Turkish operations' system sales, representing 68% of Group
system sales, increased by 26.4%. The start to the year was strong;
however, due to the effects of Covid-19, the second quarter's
like-for-like growth lagged the first quarter. In the second half
of the year, the Turkish business recorded very strong
like-for-like growth rates, partially aided by the tail effect of
the reduction of the VAT rate from 8% to 1%. Despite periodical
operational constraints due to curfews that hurt the take-away and
eat-in channels, the Group achieved a robust 26.0% like-for-like
growth in Turkey, mainly attributable to the strategies that were
undertaken in sales and marketing. The new product launches,
continued celebrity-endorsed marketing and increased delivery focus
and demand due to the pandemic were key to the strong like-for-like
growth rates. As a result of the pandemic, a total of 14 stores
were closed in Turkey; however, on the back of strong like-for-like
growth in Turkey in the second half of the year and franchisee
demand, a total of 33 stores were opened in the Turkish segment.
Active management and optimisation of the Turkish estate, which is
ordinary course of business for the Group, continued in 2020. 14
stores were transferred from corporate to franchisee ownership, and
one transfer in the opposite direction.
The Russian operations' system sales, representing 30% of Group
system sales, decreased by 6.3% (15.3% based on RUB). The Russian
operations had like-for-like sales growth of -12.6% for the year,
with growth affected by the increased competition, especially in
terms of aggregators and fast-food players that are supported by
them, as well as the 72-day strict Moscow curfew due to Covid-19 in
the second quarter, where like-for-like growth recorded rates of
-30-35% in some weeks. The Group embarked on the execution of its
Russia plan at the beginning of 2020 and saw a recovery in its
like-for-like growth rates to -1.9% in November/December. The Group
had 13 store closures due to Covid-19 in Russia. Refranchising
activity was low, with one store transferred from corporate to
franchisee ownership, and two store transfers in the opposite
direction. Russian franchised stores amounted to 75, representing
39% of the Russian store portfolio.
Delivery Channel Mix and Online like-for-like growth
The following table shows the Group's delivery system sales,
analysed by ordering channel and by the Group's two largest
countries in which it operates, as a percentage of delivery system
sales:
For the year ended 31 December
--------------------------------------------------
2020 2019
------------------------ ------------------------
Turkey Russia Total Turkey Russia Total
Store 28.5% 10.3% 23.9% 32.0% 18.0% 27.8%
Group's online
Online platform 25.9% 71.4% 40.0% 28.5% 80.5% 47.0%
Aggregator 44.3% 18.3% 35.3% 35.7% 1.5% 22.8%
Total online 70.2% 89.7% 75.3% 64.2% 82.0% 69.9%
Call centre 1.3% - 0.9% 3.8% - 2.1%
Total(6) 100% 100% 100% 100% 100% 100%
The following table shows the Group's online like-for-like
growth (2) , analysed by the Group's two largest countries in which
it operates:
For the year ended
31 December
---------------------
2020 2019
---------- ---------
Group online system sales like-for-like growth(2)(7)
Group(8) 45.2% 29.0%
Turkey 54.4% 32.6%
Russia (based on RUB) 13.1% 15.4%
The Group's like-for-like growth continues to be driven mainly
by the performance of its online ordering platforms. Online
delivery system sales as a share of delivery system sales reached
75.3% for the year, which represents a 5.4 percentage point
increase on a year-on-year basis.
In Turkey, online system sales like-for-like growth for the
period was 54.4%, as a result of which online delivery system sales
as a share of delivery system sales reached 70.2% for the period, a
6.0 percentage point increase from a year ago, aided also by an
increase in volumes through the aggregator.
In Russia, online system sales like-for-like growth for the
period was 13.1%, as a result of which online delivery system sales
as a share of delivery system sales reached 89.7% for the period, a
7.7 percentage point increase from a year ago, which was also
boosted by the Group's inclusion in an aggregator platform in May
after a six-month trial period.
Online system sales continued to outpace the overall system
sales growth at 40.3% for the Group. Turkish online system sales
grew by 55.2%, while Russian online system sales grew by 20.3%
(8.8% based on RUB).
Financial Review
For the year ended
31 December
-----------------------
2020 2019 Change
----------- ---------- -------
(in millions of TRY)
Revenue 1,019.2 980.2 4.0%
Cost of sales (excl. IFRS 16) (695.5) (645.7) 7.7%
Gross Profit (excl. IFRS 16) 323.7 334.5 -3.2%
General administrative expenses
(excl. IFRS 16) (165.3) (154.0) 7.3%
Marketing and selling expenses (169.5) (137.0) 23.7%
Other operating expenses, net
(excl. IFRS 16) (7.5) 15.1 n.m.
Operating profit (excl. IFRS
16) (18.6) 58.5 n.m.
Foreign exchange (losses)/gains
(excl. IFRS 16) (16.5) 6.8 n.m.
Financial income (excl. IFRS
16) 10.9 2.4 359.8%
Financial expense (excl. IFRS
16) (61.0) (49.3) 23.6%
(Loss)/Profit before income
tax (excl. IFRS 16) (85.2) 18.4 n.m.
Tax expense (excl. IFRS 16) (15.6) (14.8) 5.4%
(Loss)/Profit after tax (excl.
IFRS 16) (100.7) 3.6 n.m.
Group adjusted EBITDA(3) (excl.
IFRS 16) 69.6 124.5 -44.1%
Group adjusted net income (4)
(excl. IFRS 16) (87.1) 2.9 n.m.
Group adjusted net debt(5)
(excl. IFRS 16) 242.0 226.5
Group adjusted EBITDA(3) 131.5 189.8 -30.7%
Group adjusted net loss (4) (94.0) (6.3) n.m.
Turkey adjusted EBITDA(3) 140.9 134.6 4.7%
Turkey adjusted EBITDA(3) (excl.
IFRS 16) 118.6 108.7 9.1%
Russia adjusted EBITDA(3) 2.3 63.9 n.m.
Russia adjusted EBITDA(3) (excl.
IFRS 16) (37.3) 24.5 n.m.
Group net loss (107.6) (5.6) n.m.
Revenue
Group revenue grew by 4.0% to TRY 1,019.2 million. Turkish
segment revenue grew by 20.4% to TRY 673.6 million, while Russian
segment revenue decreased by 17.9% to TRY 345.6 million.
Adjusted EBITDA
The Group's adjusted EBITDA (excluding IFRS 16) contracted by
44.1% to TRY 69.6 million. Adjusted EBITDA (excluding IFRS 16) for
the Turkish segment, which includes the Azerbaijani and Georgian
businesses, was TRY 118.6 million, a year-on-year increase of 9.1%,
and adjusted EBITDA (excluding IFRS 16) for the Russian segment was
TRY -37.3 million, a decrease from the TRY 24.5 million figure of a
year ago. The Group's adjusted EBITDA figure includes TRY 11.9
million of Covid--19 related costs, of which TRY 9.1 million are
considered to be of non--recurring nature. The breakdown of these
costs between Turkey and Russia was TRY 6.6 million and TRY 5.3
million, respectively. Additionally, costs relating to our Dutch
corporate expenses reduced adjusted EBITDA by TRY 11.7 million in
2020. The comparable adverse effect of this item was TRY 8.7
million in 2019, with the increase in 2020 primarily due to the
devaluation of the TRY against the EUR and the GBP.
In 2020, the Group's adjusted EBITDA (excluding IFRS 16) margin
as a percentage of system sales was 4.4% compared to 9.1% in 2019.
The main reasons for the decrease were the contraction in the
Russian business due to the operational constraints levied for
Covid-19, increased competition, especially due to the aggregators,
and the Covid-19 related costs.
Adjusted EBITDA (excluding IFRS 16) margin as a percentage of
system sales for the Turkish segment (including Azerbaijan and
Georgia) recorded a decrease to 10.8% from 12.5%, mainly due to
Covid-19 related costs and an increase in marketing.
The Russian segment margin decreased to -7.9% from 4.9%. The
main reason for the decrease is the system sales contraction caused
by the pandemic and increased competition from the aggregators.
Management has continued with the execution of the plan announced
at last year's results announcement and has recorded an improvement
on the 2020 adjusted EBITDA margin compared to the H1'2020 adjusted
EBITDA margin. The Board continues to remain confident in the
medium and long-term potential of the Russian market for DP
Eurasia.
Adjusted Net Income
For the year ended 31 December 2020, adjusted net loss
(excluding IFRS 16) was TRY 87.1 million. The main reasons for the
deterioration in adjusted net income were the contraction in EBITDA
as explained previously and the switch to a foreign exchange loss
in 2020 from a foreign exchange gain in 2019. The Group does not
have any hard currency denominated bank borrowings; however, the
Group recorded a foreign exchange loss of TRY 16.5 million due to
the intragroup loans made between different jurisdictions versus a
foreign exchange gain of TRY 6.8 million in the previous year.
Capital expenditure and Cash conversion
The Group invested TRY 49.0 million of capital expenditure in
2020. The Turkish segment capital expenditure was TRY 32.5 million
and the Russian segment capital expenditures amounted to TRY 16.4
million (RUB 171 million).
Cash conversion, defined as (adjusted EBITDA (excluding IFRS 16)
- capital expenditure)/adjusted EBITDA (excluding IFRS 16)) for the
period was 29.7% (2019: 14.2%) for the Group as a result of prudent
capital expenditure management and 72.6% (2019: 65.8%) for the
Turkish segment as a result of its strong performance. The Russian
segment had negative cash conversion due to its negative adjusted
EBITDA.
Adjusted net debt and Leverage
Excluding the impact of IFRS 16, the Group's adjusted net debt
at 31 December 2020 was TRY 242.0 million, representing an increase
of 2.0% from 30 June 2020 and an increase of 6.8% from 31 December
2019. The Group's bank borrowings continue to be denominated in its
operational currencies of TRY and RUB. As at 31 December 2020, 73%
of the Group's bank borrowings were denominated in TRY, compared to
52% as at 31 December 2019, while the remainder is denominated in
RUB.
The Group continues its prudent and conservative approach to
debt and its absolute net debt position has stayed materially
constant as compared to a year ago. However, as a result of the
reduced EBITDA performance during the year ended 31 December 2020,
its leverage ratio (defined as adjusted net debt (excluding IFRS
16)/adjusted EBITDA (excluding IFRS 16)) was 3.5x as at 31 December
2020 (2019: 1.8x).
The Group's Russian loan facility carries financial covenants,
which the Group was unable to meet in 2020 and for which the Group
was granted waivers. The Group was also granted waivers for the
first two quarters of 2021. In July 2020, DP Eurasia made a
prepayment of RUB 0.6 billion under its Russian loan, reducing the
principal outstanding to RUB 1.0 billion, of which RUB 0.2 billion
is supported by a cash collateral deposit. The Group's strong
liquidity position enables it to repay its bank borrowings in
Russia if required, and still maintain a strong liquidity position.
As at 31 December 2020, DP Eurasia had TRY 128 million of cash at
hand (including the TRY 19 million deposit amount in Sberbank) and
additional available bank lines of TRY 142 million.
Shareholder Update
On 19 February 2021, Jubilant Foodworks Limited ("JFL"), the
largest foodservice company in India, and Fides Food Systems
Coöperatief U.A. announced that Jubilant Foodworks Limited and its
wholly owned subsidiary, Jubilant Foodworks Netherlands B.V., have
entered into a purchase agreement with Turkish Private Equity Fund
II L.P. to fully acquire Fides Food Systems Coöperatief U.A., which
holds 32.81% of the ordinary share capital of DP Eurasia, for a
price of approximately GBP 24.80 million. The transaction was
closed on 9 March 2021.
Jubilant Foodworks Limited is India's largest foodservice
company. Its Domino's Pizza franchise extends across a network of
1,314 restaurants in 285 cities (as of 31 December 2020). JFL has
the exclusive rights to develop and operate Domino's Pizza brand in
India, Sri Lanka, Bangladesh and Nepal. At present, it operates in
India, and through its subsidiary companies in Sri Lanka and
Bangladesh. JFL also has the exclusive rights to develop and
operate Dunkin' Donuts restaurants in India and has 27 restaurants
in operation across eight cities in India (as of 31 December 2020).
JFL also operates its owned restaurant brands: 'Hong's Kitchen',
which serves two cities with seven restaurants in India (as of 31
December 2020) and Ekdum! with three restaurants. JFL is also
offering ready-to-cook range of sauces, gravies and pastes under
the brand 'ChefBoss'.
The takeover regimes of both the UK and the Netherlands no
longer apply to DPEU, including in relation to the recent share
acquisition and any further stake-building by a controlling
shareholder
As a result of Brexit, companies which formerly had their
registered office in one EEA member state and their shares admitted
to trading on a regulated market in the UK have now fallen outside
the "shared jurisdiction" regime. The shared jurisdiction regime
provided that, for such companies, certain rules from the UK
Takeover Code and certain rules of the state in which the company
is registered apply to takeover activity. Following the end of the
transition period at midnight on 31 December 2020, this regime no
longer applies such that neither the UK Takeover Code regime nor
the home state regime applies since the Dutch mandatory public
offer rules only apply to Dutch companies that are listed on a
regulated market in the EU/EEA and the London Stock Exchange is no
longer an EU/EEA regulated market.
New Appointment
Mr. Daniel Rubinowski has been appointed as the CEO of Russian
Operations and is expected to start his role in April. Prior to
this, he was Marketing Director of KFC for Russia & CIS for
over four years at Yum!. Previously, he spent more than ten years
in Beiersdorf AG working in its headquarters in Germany and
affiliates in Poland and Russia. Mr. Rubinowski has a degree in
Economics from Poznan University of Economics.
Consideration of additional listing
As previously announced, the Board is considering an additional
listing on a major stock exchange to complement its current listing
on the Main Market of the London Stock Exchange. Upon its initial
review, the Board has taken the decision to further investigate the
dual listing of DP Eurasia at the Borsa Istanbul. This process
remains ongoing and the Company will provide a further update in
due course.
Amsterdam, 22 March 2021
The Directors of DP Eurasia N.V. as at the date of this
announcement are as set out below:
Peter Williams*
Aslan Saranga, Chief Executive Officer
Frederieke Slot, Company Secretary
Seymur Tarı*
Neil Harper*
Aksel ahin*
Thomas Singer*
* Non-Executive Directors
Forward looking statements
This press release includes forward-looking statements which
involve known and unknown risks and uncertainties, many of which
are beyond the Group's control and all of which are based on the
Directors' current beliefs and expectations about future events.
They appear in a number of places throughout this press release and
include all matters that are not historical facts and include
predictions, statements regarding the intentions, beliefs or
current expectations of the Directors or the Group concerning,
among other things, the results of operations, financial condition,
prospects, growth and strategies of the Group and the industry in
which it operates.
No assurance can be given that such future results will be
achieved; actual events or results may differ materially as a
result of risks and uncertainties facing the Group. Such risks and
uncertainties could cause actual results to vary materially from
the future results indicated, expressed, or implied in such
forward-looking statements.
Forward-looking statements contained in this press release speak
only as of the date of this press release. The Company and the
Directors expressly disclaim any obligation or undertaking to
update these forward-looking statements contained in this press
release to reflect any change in their expectations or any change
in events, conditions, or circumstances on which such statements
are based.
Appendices
Exchange Rates
For the year ended 31 December
----------------------------------------------------------
2020 2019
---------------------------- ----------------------------
Currency Period End Period Average Period End Period Average
----------- --------------- ----------- ---------------
EUR/TRY 9.008 8.014 6.651 6.348
RUB/TRY 0.098 0.096 0.096 0.087
EUR/RUB 90.682 82.408 69.341 72.513
Delivery - Take away / Eat in mix
For the year ended 31 December
--------------------------------------------------
2020 2019
------------------------ ------------------------
Turkey Russia Total Turkey Russia Total
Delivery 72.5% 77.7% 74.0% 63.8% 62.2% 63.1%
Take away / Eat
in 27.5% 22.3% 26.0% 36.2% 37.8% 36.9%
Total(2) 100% 100% 100% 100% 100% 100%
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the years ended 31 December 2020 and 2019
Notes 2020 2019
--------------------------------------------- ------ ---------- ----------
Revenue 4 1,019,163 980,208
Cost of sales 4 (689,762) (636,466)
--------------------------------------------- ------ ---------- ----------
Gross profit 329,401 343,742
--------------------------------------------- ------ ---------- ----------
General administrative expenses (161,728) (150,175)
Marketing and selling expenses (169,515) (137,043)
Other operating income 6 15,053 22,411
Other operating expense 6 (22,743) (7,869)
--------------------------------------------- ------ ---------- ----------
Operating profit (9,532) 71,066
--------------------------------------------- ------ ---------- ----------
Foreign exchange (losses)/income 7 (16,419) 4,665
Financial income 7 23,166 16,100
Financial expense 7 (90,829) (85,103)
--------------------------------------------- ------ ---------- ----------
(Loss)/profit before income tax (93,614) 6,728
--------------------------------------------- ------ ---------- ----------
Income tax expense (13,969) (12,344)
Loss for the period (107,583) (5,616)
--------------------------------------------- ------ ---------- ----------
Other comprehensive income/(expense) 10,162 (21,708)
Items that will not be reclassified to
profit or loss
- Remeasurements of post-employment benefit
obligations (1,179) (137)
- Tax income of these obligations 236 30
Items that may be reclassified to profit
or loss
- Currency translation differences 11,105 (21,601)
--------------------------------------------- ------ ---------- ----------
Total comprehensive loss (97,421) (27,324)
--------------------------------------------- ------ ---------- ----------
Loss per share (1) 8 (0.7401) (0.0386)
--------------------------------------------- ------ ---------- ----------
1. Amounts represent the basic and diluted earnings per share.
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2020
31 Dec 31 Dec
Assets Notes 2020 2019
----------------------------------------------- ------ ---------- ---------
Trade receivables 13 16,707 23,422
Lease receivables 15 24,674 39,568
Right-of-use assets 11 112,895 180,236
Property and equipment 9 131,203 160,043
Intangible assets 10 73,516 81,424
Goodwill 47,413 47,133
Deferred tax assets 17 26,500 18,060
Other non-current assets 15 40,256 35,903
----------------------------------------------- ------ ---------- ---------
Non-current assets 473,164 585,789
----------------------------------------------- ------ ---------- ---------
Cash and cash equivalents 12 109,036 70,928
Trade receivables 13 107,760 114,493
Lease receivables 15 16,621 16,618
Inventories 61,744 70,062
Other current assets 15 73,488 65,247
----------------------------------------------- ------ ---------- ---------
Current assets 368,649 337,348
----------------------------------------------- ------ ---------- ---------
Total assets 841,813 923,137
----------------------------------------------- ------ ---------- ---------
Equity
Paid in share capital 36,353 36,353
Share premium 119,286 119,286
Contribution from shareholders 20,600 19,970
Other reserves not to be reclassified to
profit or loss
- Remeasurements of post-employment benefit
obligations (3,534) (2,591)
Other reserves to be reclassified to profit
or loss
- Currency translation differences (11,183) (22,288)
Retained earnings (147,915) (40,332)
----------------------------------------------- ------ ---------- ---------
Total equity 13,607 110,398
----------------------------------------------- ------ ---------- ---------
Liabilities
Financial liabilities 16 193,015 153,159
Lease liabilities 16 110,549 184,708
Long-term provisions for employee benefits 15 2,874 2,051
Other non-current liabilities 15 39,867 37,041
----------------------------------------------- ------ ---------- ---------
Non-current liabilities 346,305 376,959
----------------------------------------------- ------ ---------- ---------
Financial liabilities 16 167,181 164,854
Lease liabilities 16 72,476 71,427
Trade payables 13 173,359 121,178
Current income tax liabilities 17 8,931 8,955
Provisions 5,740 5,354
Other current liabilities 15 54,214 64,012
----------------------------------------------- ------ ---------- ---------
Current liabilities 481,901 435,780
----------------------------------------------- ------ ---------- ---------
Total liabilities 828,206 812,739
----------------------------------------------- ------ ---------- ---------
Total liabilities and equity 841,813 923,137
----------------------------------------------- ------ ---------- ---------
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
Remeasurement
of
Contribution post-employment Currency
Share Share from benefit translation Retained Total
capital premium shareholders obligations differences earnings equity
Balances at 1
January 2019 36,353 119,286 20,697 (2,484) (687) (34,716) 138,449
----------------- ----------- ------------ ------------- ---------------- ------------ ----------- ------------
Remeasurements
of
post-employment
benefit
obligations,
net - - - (107) - - (107)
Currency
translation
adjustments - - - - (21,601) - (21,601)
Total loss for
the period - - - - - (5,616) (5,616)
Total
comprehensive
loss - - - (107) (21,601) (5,616) (27,324)
Share-based
incentive plans
cancelled - - (2,729) - - - (2,729)
Share-based
incentive plans - - 2,002 - - - 2,002
Balances at 31
December 2019 36,353 119,286 19,970 (2,591) (22,288) (40,332) 110,398
----------------- ----------- ------------ ------------- ---------------- ------------ ----------- ------------
Balances at 1
January 2020 36,353 119,286 19,970 (2,591) (22,288) (40,332) 110,398
----------------- ----------- ------------ ------------- ---------------- ------------ ----------- ------------
Remeasurements
of
post-employment
benefit
obligations,
net - - - (943) - - (943)
Currency
translation
adjustments - - - - 11,105 - 11,105
Total loss for
the period - - - - - (107,583) (107,583)
Total
comprehensive
(loss)/profit - - - (943) 11,105 (107,583) (97,421)
Share-based
incentive plans
cancelled - - (833) - - - (833)
Share-based
incentive plans - - 1,463 - - - 1,463
Balances at 31
December 2020 36,353 119,286 20,600 (3,534) (11,183) (147,915) 13,607
----------------- ----------- ------------ ------------- ---------------- ------------ ----------- ------------
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
31 Dec 31 Dec
Notes 2020 2019
---------------------------------------------------------- ----- --------- --------
Profit/(loss) before income tax (93,614) 6,728
Adjustments for:
Depreciation 9-11 98,185 94,746
Amortisation 10 29,237 21,960
Gains on sale of property and equipment 6 753 11
Performance bonus accrual 9,619 4,562
Non-cash employee benefits expense - share-based payments 630 (727)
Interest income 7 (23,166) (16,100)
Interest expense 7 85,986 78,506
Impairment of tangible and intangible assets 11,118 -
---------------------------------------------------------- ----- --------- --------
Changes in operating assets and liabilities
Changes in trade receivables 13,672 (52,348)
Changes in other receivables and assets (11,148) (23,794)
Changes in inventories 8,318 7,557
Changes in contract assets 15 (502) (294)
Changes in contract liabilities 15 6,411 4,246
Changes in trade payables 13 52,181 47,030
Changes in other payables and liabilities (18,071) 27,010
Income taxes paid 17 (22,224) (15,918)
Performance bonuses paid (4,047) (7,009)
---------------------------------------------------------- ----- --------- --------
Cash flows generated from operating activities 143,338 176,166
---------------------------------------------------------- ----- --------- --------
Purchases of property and equipment 9 (15,915) (54,715)
Purchases of intangible assets 10 (26,450) (48,228)
Disposals from sale of tangible and intangible assets 2,967 15,039
---------------------------------------------------------- ----- --------- --------
Cash flows used in investing activities (39,398) (87,904)
---------------------------------------------------------- ----- --------- --------
Interest paid (39,894) (40,255)
Interest on leases paid 16 (20,781) (22,031)
Interest received 9,953 1,837
Loans obtained 16 299,497 165,233
Loans paid 16 (270,916) (85,453)
Payment of lease liabilities 16 (50,911) (60,875)
---------------------------------------------------------- ----- --------- --------
Cash flows (used in)/generated from financing activities (73,052) (41,544)
---------------------------------------------------------- ----- --------- --------
Effect of currency translation differences 7,220 (4,234)
---------------------------------------------------------- ----- --------- --------
Net increase in cash and cash equivalents 38,108 42,484
---------------------------------------------------------- ----- --------- --------
Cash and cash equivalents at the beginning of the period 12 70,928 28,444
---------------------------------------------------------- ----- --------- --------
Cash and cash equivalents at the end of the period 12 109,036 70,928
---------------------------------------------------------- ----- --------- --------
The accompanying notes form an integral part of these
consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2020
NOTE 1 - THE GROUP'S ORGANISATION AND NATURE OF ACTIVITIES
DP Eurasia N.V. (the "Company"), a public limited company,
having its statutory seat in Amsterdam, the Netherlands, was
incorporated under the law of the Netherlands on 18 October 2016.
Upon incorporation Fides Food Systems Coöperatief U.A. and Vision
Lovemark Coöperatief U.A. contributed and transferred all shares in
Fidesrus B.V. and Fides Food Systems B.V. and their subsidiaries to
the Company. From this point forward, the consolidated Group was
formed. This was a transaction under common control.
The consolidated financial statements of DP Eurasia N.V. have
been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union. The consolidated
financial statements also comply with the financial reporting
requirements included in Title 9 of Book 2 of the Dutch Civil Code,
as far as applicable.
The Company's registered address is: Herikerbergweg 238,
Amsterdam, the Netherlands.
The management report within the meaning of Article 391 of Book
2 of the Dutch Civil Code consists of the following parts of the
Annual Report:
The management report within the meaning of Article 391 of Book
2 of the Dutch Civil Code consists of the following parts of the
Annual Report:
-- Overview: At a glance, Highlights and Key financial figures;
-- Management report: Chairman's statement, Competitive
advantages, Vision and strategy, Message from the CEO, Key events,
Business model, People, Product, Digital, Strategic review, Group
Structure and Markets, Remuneration report, Directors' remuneration
policy, Annual remuneration report, Board, Leadership team, Board
attendance and composition, Corporate governance report, How we
manage risk, Board declaration and Shares and shareholders;
-- Group financial statements; Consolidated statement of
comprehensive income, Consolidated statement of financial position,
Consolidated statement of changes in equity, Consolidated statement
of cash flows and Notes to the consolidated financial
statement;
-- Company financial statements: Company income statement,
Company balance sheet and Notes to the Company financial
statements; and
-- Additional information: Independent auditor's report, Contacts and Glossary.
The Company and its subsidiaries (together referred to as the
"Group") perform its activities in corporate -- owned and
franchised stores in Turkey and the Russian Federation, including
providing technical support, control and consultancy services to
the franchisees.
As at 31 December 2020, the Group holds franchise operating and
sub-franchising rights in 771 stores (550 franchised stores, 221
corporate-owned stores) (31 December 2019: 765 stores (521
franchised stores, 244 corporate-owned stores)).
The consolidated financial statements as at and for the period
ended 31 December 2020 have been approved and authorised for issue
on 22 March 2021 by authorisation of the Board. The financial
statements are subject to adoption by the Annual General
Meeting.
Subsidiaries
The Company has a total of four fully owned subsidiaries. These
entities and the nature of their businesses are as follows:
2020 2019
effective effective
ownership ownership Registered Nature of
Subsidiaries (%) (%) country business
--------------------------------------------------- ---------- ---------- --------------- ------------------
Pizza Restaurantları A. . ("Domino's Turkey") 100 100 Turkey Food delivery
Pizza Restaurants LLC ("Domino's Russia") 100 100 Russia Food delivery
Fidesrus B.V. ("Fidesrus") 100 100 The Netherlands Investment company
Fides Food Systems B.V. ("Fides Food") 100 100 The Netherlands Investment company
--------------------------------------------------- ---------- ---------- --------------- ------------------
Domino's Russia is established in the Russian Federation.
Domino's Russia is operating a pizza delivery network of corporate
and franchised stores in the Russian Federation. Domino's Russia
has a Master Franchise Agreement (the "MFA Russia") with Domino's
Pizza International for the pizza delivery network in Russia until
2030.
Domino's Turkey is established in Turkey. Domino's Turkey is
operating a pizza delivery network of corporate and franchised
stores in Turkey. Domino's Turkey is a food delivery company, which
has a Master Franchise Agreement (the "MFA Turkey") with Domino's
Pizza International pizza delivery network in Turkey until 2032.
The Group expects the terms of the MFAs to be extended.
Fides Food and Fidesrus are established in the Netherlands. Both
Fides Food Systems and Fidesrus are acting as investment
companies.
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL
STATEMENTS
2.1 Principles of consolidation
The consolidated financial statements include the parent
company, DP Eurasia N.V. and its subsidiaries for the year ended at
31 December 2020. Subsidiaries are fully consolidated from the date
on which control is transferred to the Company (the "acquisition
date").
Basis of consolidation
The consolidated financial statements include the accounts of
the Group on the basis set out in sections below. The financial
results of the subsidiaries are fully consolidated from the date on
which control is transferred to the Group or deconsolidated from
the date that control ceases.
Subsidiaries are all companies over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to
direct the activities of the entity.
The subsidiaries fully consolidated, the proportion of ownership
interest and the effective interest of the Group in these
subsidiaries as of 31 December 2020 are disclosed in Note 1.
The result of operations of subsidiaries acquired or sold during
the year are included in the consolidated statement of
comprehensive income from the acquisition date or until the date of
sale.
The statements of financial position and statements of
comprehensive income of the subsidiaries are consolidated on a
line-by-line basis and the carrying value of the investment held by
the Company and its subsidiaries are eliminated against the related
shareholders' equity. Intercompany transactions, balances and
unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
Consolidation of foreign subsidiaries
Financial statements of subsidiaries operating in foreign
countries are prepared in the currency of the primary economic
environment in which they operate. Assets and liabilities in
financial statements prepared according to the Group's accounting
policies are translated into the Group's presentation currency,
Turkish Liras, from the foreign exchange rate at the statement of
financial position date whereas income and expenses are translated
into TRY at the average foreign exchange rate. Exchange differences
arising from the translation are included in the "currency
translation differences" under shareholders' equity.
The foreign currency exchange rates used in the translation of
the foreign operations within the scope of consolidation are as
follows:
31 Dec 2020 31 Dec 2019
--------------- ---------------
Period Period Period Period
Currency end average end average
---------------- ------ ------- ------ -------
Euros 9.0079 8.0138 6.6506 6.3484
Russian Roubles 0.0984 0.0964 0.0955 0.0872
---------------- ------ ------- ------ -------
2.2 Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the "functional
currency").
The consolidated financial statements are presented in TRY,
which is the Group's presentation currency.
NOTE 3 - SEGMENT REPORTING
The business operations of the Group are organised and managed
with respect to geographical positions of its operations. The
information regarding the business activities of the Group as of 31
December 2020 and 2019 comprise the performance and the management
of its Turkish and Russian operations and head office.
The Group has two business segments, determined by management
according to the information used for the evaluation of performance
and the allocation of resources, the Turkish and Russian
operations. Other operations are composed of corporate expenses of
Dutch companies. These segments are managed separately because they
are affected by economic conditions and geographical positions in
terms of risks and returns.
The segment analysis for the periods ended 31 December 2020 and
2019 are as follows:
1 January - 31 December 2020 Turkey Russia Other Total
---------------------------------------- --------- --------- --------- ----------
Corporate revenue 219,499 240,199 - 459,698
Franchise revenue and royalty revenue
obtained from franchisees 423,490 98,020 - 521,510
Other revenue 30,566 7,389 - 37,955
Total revenue 673,555 345,608 - 1,019,163
- At a point in time 666,218 343,102 - 1,009,320
- Over time 7,337 2,506 - 9,843
---------------------------------------- --------- --------- --------- ----------
Operating profit/(loss) 91,905 (88,996) (12,441) (9,532)
Capital expenditures 32,513 16,446 - 48,959
Tangible and intangible disposals (5,548) (9,290) - (14,838)
Depreciation and amortisation expenses (46,787) (80,635) - (127,422)
---------------------------------------- --------- --------- --------- ----------
Adjusted EBITDA(1) 140,903 2,309 (11,696) 131,516
---------------------------------------- --------- --------- --------- ----------
31 December 2020 Turkey Russia Other Total
---------------------------------------- --------- --------- --------- ----------
Borrowings
TRY 264,001 - - 264,001
RUB - 96,195 - 96,195
---------------------------------------- --------- --------- --------- ----------
264,001 96,195 - 360,196
---------------------------------------- --------- --------- --------- ----------
Lease liabilities
TRY 62,390 - - 62,390
RUB - 120,635 - 120,635
---------------------------------------- --------- --------- --------- ----------
62,390 120,635 - 183,025
Total 326,391 216,830 - 543,221
---------------------------------------- --------- --------- --------- ----------
1 January - 31 December 2019 Turkey Russia Other Total
---------------------------------------- --------- --------- --------- ----------
Corporate revenue 210,833 283,567 - 494,400
Franchise revenue and royalty revenue
obtained from franchisees 314,772 91,440 - 406,212
Other revenue 33,729 45,867 - 79,596
Total revenue 559,334 420,874 - 980,208
- At a point in time 553,396 417,732 - 971,128
- Over time 5,938 3,142 - 9,080
---------------------------------------- --------- --------- --------- ----------
Operating profit/(loss) 82,664 175 (11,773) 71,066
Capital expenditures 37,171 69,597 - 106,768
Tangible and intangible disposals (4,442) (10,608) - (15,051)
Depreciation and amortisation expenses (50,468) (66,238) - (116,706)
Adjusted EBITDA 134,599 63,889 (8,691) 189,797
---------------------------------------- --------- --------- --------- ----------
31 December 2019 Turkey Russia Other Total
------------------- -------- -------- ------ --------
Borrowings
TRY 164,800 - - 164,800
RUB - 153,213 - 153,213
------------------- -------- -------- ------ --------
164,800 153,213 - 318,013
------------------- -------- -------- ------ --------
Lease liabilities
TRY 93,054 - - 93,054
RUB - 163,081 - 163,081
------------------- -------- -------- ------ --------
93,054 163,081 - 256,135
Total 257,854 316,294 - 574,148
------------------- -------- -------- ------ --------
EBITDA, adjusted EBITDA, net debt, adjusted net debt, adjusted
net income and non-recurring and non-trade income/expenses are not
defined by IFRS. The amounts provided with respect to operating
segments are measured in a manner consistent with that of the
financial statements. These items determined by the principles
defined by Group management comprise income/expenses which are
assumed by the Group management to not be part of the normal course
of business and are non-recurring items. These items which are not
defined by IFRS are disclosed by Group management separately for a
better understanding and measurement of the sustainable performance
of the Group.
The reconciliation of adjusted EBITDAs for 2020 and 2019 is as
follows:
Turkey 2020 2019
--------------------------------------------------- --------- ---------
Adjusted EBITDA(1) 140,903 134,599
--------------------------------------------------- --------- ---------
Non-recurring and non-trade (income)/expenses per
Group management(1)
One off non-trading costs (2) 1,449 131
Share-based incentives 762 1,336
--------------------------------------------------- --------- ---------
EBITDA 138,692 133,132
--------------------------------------------------- --------- ---------
Depreciation and amortisation (46,787) (50,468)
--------------------------------------------------- --------- ---------
Operating profit 91,905 82,664
--------------------------------------------------- --------- ---------
Domino's Turkey EBITDA includes TRY 6,629 COVID-19 related
costs.
Russia 2020 2019
----------------------------------------------- --------- ---------
Adjusted EBITDA(1) 2,309 63,889
----------------------------------------------- --------- ---------
Non-recurring and non-trade (income)/expenses
per Group management(1)
One-off non-trading costs (2) 11,547 (461)
Share-based incentives (877) (2,063)
----------------------------------------------- --------- ---------
EBITDA (8,361) 66,413
----------------------------------------------- --------- ---------
Depreciation and amortisation (80,635) (66,238)
----------------------------------------------- --------- ---------
Operating (loss)/profit (88,996) 175
----------------------------------------------- --------- ---------
Domino's Russia EBITDA includes TRY 5,279 COVID-19 related
costs.
Other 2020 2019
----------------------------------------------- --------- ---------
Adjusted EBITDA(1) (11,696) (8,691)
----------------------------------------------- --------- ---------
Non-recurring and non-trade (income)/expenses
per Group management(1)
Share-based incentives 745 -
One off non-trading costs - 3,082
----------------------------------------------- --------- ---------
EBITDA (12,441) (11,773)
----------------------------------------------- --------- ---------
Depreciation and amortisation - -
----------------------------------------------- --------- ---------
Operating loss (12,441) (11,773)
----------------------------------------------- --------- ---------
1. EBITDA, adjusted EBITDA and non-recurring and non-trade
income/expenses are not defined by IFRS. These items are determined
by the principles defined by Group management and comprise
income/expenses which are assumed by Group management to not be
part of the normal course of business and are non-trading items.
These items, which are not defined by IFRS, are disclosed by Group
management separately for a better understanding and measurement of
the sustainable performance of the Group.
2. The reason for the significant increase in one-off
non-trading costs is mainly related to impairment expenses of the
tangible and intangible assets.
The reconciliation of adjusted net income as of 31 December 2020
and 2019 is as follows:
2020 2019
--------------------------------------------------- ---------- --------
Loss for the period as reported (107,583) (5,616)
--------------------------------------------------- ---------- --------
Non-recurring and non-trade (income)/expenses per
Group management(1)
Share-based incentives 630 (727)
One-off expenses/(income)(2) 12,996 18
--------------------------------------------------- ---------- --------
Adjusted net loss for the period (93,957) (6,325)
--------------------------------------------------- ---------- --------
1. Adjusted net income and non-recurring and non-trade
income/expenses are not defined by IFRS. Adjusted net income
excludes income and expenses which are not part of the normal
course of business and are non-recurring items. Management uses
this measurement basis to focus on core trading activities of the
business segments, and to assist it in evaluating underlying
business performance.
2. As of 31 December 2020, the one-off expenses include TRY
11,118 impairment expense of tangible and intangible assets and TRY
1,878 severance payment expenses.
The average headcount for the Group is as follows:
2020 2019
Category of activities Turkey Russia Netherlands Turkey Russia Netherlands
------------------------ ------- ------- ------------ ------- ------- ------------
Executive and senior
management 11 9 3 11 10 3
Store employees 1,243 1,745 - 1,392 1,751 -
Support employees 205 128 - 207 155 -
Commissary employees 43 24 - 41 26 -
Total 1,502 1,906 3 1,651 1,942 3
------------------------ ------- ------- ------------ ------- ------- ------------
NOTE 4 - REVENUE AND COST OF SALES
2020 2019
----------------------------------------------------------------- ---------- ----------
Corporate revenue 459,698 494,400
Franchise revenue and royalty revenue obtained from franchisees 521,510 406,212
Other revenue(1) 37,955 79,596
----------------------------------------------------------------- ---------- ----------
Revenue 1,019,163 980,208
----------------------------------------------------------------- ---------- ----------
Cost of sales (689,762) (636,466)
----------------------------------------------------------------- ---------- ----------
Gross profit 329,401 343,742
----------------------------------------------------------------- ---------- ----------
(1) Other revenue mainly includes handover income, IT income and
other income from franchisee.
Revenue recognised in relation to contract liabilities
The movements of performance obligations and revenue recognised
in relation to contract liabilities for the years ended 31 December
2020 and 2019 are as follows:
2020 2019
-------------------------------------------------- ------- -------
As of 1 January 32,905 28,943
Recognised as revenue (9,843) (9,080)
Increases due to new franchise agreements entered 15,751 13,042
-------------------------------------------------- ------- -------
As of 31 December 38,813 32,905
-------------------------------------------------- ------- -------
Unsatisfied long-term franchisee contracts
The Group recognised net sales amounting to TRY 5,170 with
respect to the performance obligations satisfied at a point in time
for the year ended 31 December 2020 (31 December 2019: TRY
4,668).
The amount of performance obligations relating to ongoing
contracts of the Group that will be recognised in the future is TRY
43,983 (31 December 2019: TRY 37,572). The Group expects that this
amount will be recorded as revenue within 10 to15 years.
NOTE 5 - EXPENSES BY NATURE
2020 2019
-------------------------------------------- -------- --------
Employee benefit expenses (1) 217,368 204,091
Depreciation and amortisation expenses (1) 127,422 116,706
--------------------------------------------- -------- --------
344,790 320,797
-------------------------------------------- -------- --------
(1) These expenses are accounted in cost of sales, general
administration expenses and marketing expenses.
NOTE 6 - OTHER OPERATING INCOME AND EXPENSES
Other income 2020 2019
-------------------------------------------------------- -------- -------
Marketing service income(1) 4,054 9,152
Interest income arising from sales with extended terms 3,831 4,841
Foreign exchange gains 2,921 2,674
Gain from sale of property and equipment 447 2,222
Other 3,800 3,522
-------------------------------------------------------- -------- -------
15,053 22,411
-------------------------------------------------------- -------- -------
Other expense 2020 2019
-------------------------------------------------------- -------- -------
Impairment expenses (2) 11,118 -
Legal and other provision expenses 3,813 3,783
Foreign exchange losses 2,757 1,348
Losses from sale of property and equipment 1,200 1,666
Other 3,855 1,072
-------------------------------------------------------- -------- -------
22,743 7,869
-------------------------------------------------------- -------- -------
Other operating (expense)/ income, net (7,690) 14,542
-------------------------------------------------------- -------- -------
1. The marketing income mainly includes cross-promotion income.
2. Impairment expenses includes write- offs related to long term assets of low performing stores.
NOTE 7 - FINANCIAL INCOME AND EXPENSES
Foreign exchange (losses)/gains 2020 2019
---------------------------------------------- --------- ---------
Foreign exchange (losses)/gains, net (16,357) 6,840
Foreign exchange losses on lease liabilities (62) (2,175)
---------------------------------------------- --------- ---------
(16,419) 4,665
---------------------------------------------- --------- ---------
Financial income 2020 2019
---------------------------------------------- --------- ---------
Interest income on lease liabilities 13,804 13,736
Interest income 9,362 2,364
---------------------------------------------- --------- ---------
23,166 16,100
---------------------------------------------- --------- ---------
Financial expense 2020 2019
---------------------------------------------- --------- ---------
Interest expense (51,401) (42,739)
Interest expense on lease liabilities (34,585) (35,767)
Other (4,843) (6,597)
---------------------------------------------- --------- ---------
(90,829) (85,103)
---------------------------------------------- --------- ---------
NOTE 8 - EARNINGS/(LOSS) PER SHARE
31 Dec 31 Dec
2020 2019
------------------------------------------ ------------ ------------
Average number of shares existing during
the period 145,372,414 145,372,414
Net loss for the period attributable
to equity holders of the parent (107,583) (5,616)
------------------------------------------ ------------ ------------
Loss per share (0.7401) (0.0386)
------------------------------------------ ------------ ------------
The reconciliation of adjusted earnings per share as of 31
December 2020 and 2019 is as follows:
31 Dec 31 Dec
2020 2019
--------------------------------------------------------------------------------------- ----------- -----------
Average number of shares existing during the period 145,372,414 145,372,414
Net (loss)/profit for the period attributable to equity holders of the parent (107,583) (5,616)
--------------------------------------------------------------------------------------- ----------- -----------
Non-recurring and non-trade expenses per Group management(1)
Share-based incentives 630 (727)
One-off expenses 12,996 18
--------------------------------------------------------------------------------------- ----------- -----------
Adjusted net (loss)/profit for the period attributable to equity holders of the parent (93,957) (6,325)
--------------------------------------------------------------------------------------- ----------- -----------
Adjusted earnings per share(1) (0.6463) (0.0435)
--------------------------------------------------------------------------------------- ----------- -----------
1. Adjusted earnings per share and non-recurring and non-trade
income/expenses are not defined by IFRS. The amounts provided with
respect to operating segments are measured in a manner consistent
with that of the financial statements. These items determined by
the principles defined by Group management comprises
income/expenses which are assumed by Group management to not be
part of the normal course of business and are non-recurring items.
These items which are not defined by IFRS are disclosed by Group
management separately for a better understanding and measurement of
the sustainable performance of the Group.
There are no shares or options with a dilutive effect and hence
the basic and diluted earnings per share are the same.
NOTE 9 - PROPERTY AND EQUIPMENT
Currency
1 Jan translation 31 Dec
2020 Additions Disposals(1) Transfers adjustments 2020
-------------------------- ---------- ---------- ------------- ---------- ------------- ----------
Cost
Machinery and equipment 76,825 2,681 (548) 1,942 2,120 83,020
Motor vehicles 29,975 6,594 (87) - 939 37,421
Furniture and fixtures 62,552 6,364 (4,945) - 138 64,109
Leasehold improvements 113,118 6,119 (12,631) 1,789 1,953 110,348
Construction in
progress 7,425 751 (98) (3,731) 162 4,509
-------------------------- ---------- ---------- ------------- ---------- ------------- ----------
289,895 22,509 (18,309) - 5,312 299,407
-------------------------- ---------- ---------- ------------- ---------- ------------- ----------
Accumulated depreciation
Machinery and equipment (26,380) (12,652) 258 - (917) (39,691)
Motor vehicles (19,601) (8,618) 87 - (688) (28,820)
Furniture and fixtures (28,778) (7,418) 2,947 - (61) (33,310)
Leasehold improvements (55,093) (16,644) 6,303 - (949) (66,383)
-------------------------- ---------- ---------- ------------- ---------- ------------- ----------
(129,852) (45,332) 9,595 - (2,615) (168,204)
-------------------------- ---------- ---------- ------------- ---------- ------------- ----------
Net book value 160,043 131,203
-------------------------- ---------- ---------- ------------- ---------- ------------- ----------
(1) As of 31 December 2020, disposals include an impairment
charge of TRY 5,279 (31 December 2019: None).
Depreciation expense of TRY 37,079 has been charged in cost of
sales and TRY 8,253 has been charged in general administrative
expenses.
Currency
1 Jan translation 31 Dec
2019 Additions Disposals Transfers adjustments 2019
------------------------- --------- --------- --------- --------- ----------- ---------
Cost
Machinery and equipment 55,668 20,911 (11,553) - 11,799 76,825
Motor vehicles 32,963 3,825 (13,082) - 6,269 29,975
Furniture and fixtures 62,109 9,211 (9,544) - 776 62,552
Leasehold improvements 91,207 22,798 (13,987) - 13,100 113,118
Construction in progress 3,024 1,795 - - 2,606 7,425
------------------------- --------- --------- --------- --------- ----------- ---------
244,971 58,540 (48,166) - 34,550 289,895
------------------------- --------- --------- --------- --------- ----------- ---------
Accumulated depreciation
Machinery and equipment (17,975) (11,120) 6,868 - (4,153) (26,380)
Motor vehicles (18,218) (8,290) 10,168 - (3,261) (19,601)
Furniture and fixtures (27,848) (7,271) 6,600 - (259) (28,778)
Leasehold improvements (44,889) (15,319) 9,242 - (4,127) (55,093)
------------------------- --------- --------- --------- --------- ----------- ---------
(108,930) (42,000) 32,878 - (11,800) (129,852)
------------------------- --------- --------- --------- --------- ----------- ---------
Net book value 136,041 160,043
------------------------- --------- --------- --------- --------- ----------- ---------
Depreciation expense of TRY 33,705 has been charged in cost of
sales and TRY 8,295 has been charged in general administrative
expenses.
NOTE 10 - INTANGIBLE ASSETS
Currency
1 Jan translation 31 Dec
2020 Additions Disposals(1) Transfers adjustments 2020
-------------------------- --------- ---------- ------------- ---------- ------------- ----------
Cost
Key money 50,622 800 (7,183) - 503 44,742
Computer software 68,672 25,650 (5,326) - 951 89,947
Franchise contracts 48,485 - - - - 48,485
-------------------------- --------- ---------- ------------- ---------- ------------- ----------
167,779 26,450 (12,509) - 1,454 183,174
-------------------------- --------- ---------- ------------- ---------- ------------- ----------
Accumulated amortisation
Key money (12,038) (7,257) 1,942 - (78) (17,431)
Computer software (28,989) (18,823) 4,443 - (373) (43,742)
Franchise contracts (45,328) (3,157) - - - (48,485)
-------------------------- --------- ---------- ------------- ---------- ------------- ----------
(86,355) (29,237) 6,385 - (451) (109,658)
-------------------------- --------- ---------- ------------- ---------- ------------- ----------
Net book value 81,424 73,516
-------------------------- --------- ---------- ------------- ---------- ------------- ----------
(1) As of 31 December 2020, disposals include an impairment
charge of TRY 5,109 (31 December 2019: None).
Amortisation expense of TRY 14,520 has been charged in cost of
sales and TRY 14,717 has been charged in general administrative
expenses.
The Group does not have any intangible assets with an indefinite
useful life.
Currency
1 Jan translation 31 Dec
2019 Additions Disposals Transfers adjustments 2019
------------------------- -------- --------- --------- --------- ----------- --------
Cost
Key money 17,456 29,725 (1,192) - 4,633 50,622
Computer software 45,573 18,503 (1,349) - 5,945 68,672
Franchise contracts 48,485 - - - 48,485
------------------------- -------- --------- --------- --------- ----------- --------
111,514 48,228 (2,541) - 10,578 167,779
------------------------- -------- --------- --------- --------- ----------- --------
Accumulated amortisation
Key money (5,342) (6,967) 1,193 - (922) (12,038)
Computer software (17,178) (10,145) 1,220 - (2,886) (28,989)
Franchise contracts (40,480) (4,848) - - - (45,328)
------------------------- -------- --------- --------- --------- ----------- --------
(63,000) (21,960) 2,413 - (3,808) (86,355)
------------------------- -------- --------- --------- --------- ----------- --------
Net book value 48,514 81,424
------------------------- -------- --------- --------- --------- ----------- --------
Amortisation expense of TRY 12,994 has been charged in cost of
sales and TRY 8,966 has been charged in general administrative
expenses.
Franchise contracts
The Group has recognised franchise contracts resulting from a
business combination on 26 January 2011 amounting to TRY 48,485 and
accounted for them as intangible assets in its consolidated
financial statements.
NOTE 11 - RIGHT-OF-USE ASSETS
Details of right-of-use assets as of 31 December 2020 and 2019
are as follows:
31 Dec 31 Dec
2020 2019()
------------------------ ------- -------
Right-of-use assets
Properties and vehicles 112,895 180,236
112,895 180,236
------------------------ ------- -------
Details of lease receivable as of 31 December 2020 and 2019 are
as follows:
31 Dec 31 Dec
2020 2019()
------------------ ------ ------
Lease receivables
Current 16,621 16,618
Non-current 24,674 39,568
------------------ ------ ------
41,295 56,186
------------------ ------ ------
Details of lease liabilities as of 31 December 2020 and 2019 are
as follows:
31 Dec 31 Dec
2020 2019()
------------------ ------- -------
Lease liabilities
Current 72,476 71,427
Non-current 110,549 184,708
------------------ ------- -------
183,025 256,135
------------------ ------- -------
Movement of right-of-use assets
Currency
1 Jan translation 31 Dec
2020 Additions Disposals adjustments 2020
------------------------------------------- -------- --------- --------- ----------- --------
Right-of-use assets
Properties and vehicles 229,432 13,285 (42,682) 4,766 204,801
229,432 13,285 (42,682) 4,766 204,801
------------------------------------------- -------- --------- --------- ----------- --------
Depreciation charge of right-of-use assets
Properties and vehicles (49,196) (52,853) 10,199 (56) (91,906)
(49,196) (52,853) 10,199 (56) (91,906)
------------------------------------------- -------- --------- --------- ----------- --------
180,236 112,895
------------------------------------------- -------- --------- --------- ----------- --------
For the year ended 31 December 2020, depreciation expense of TRY
45,655 has been charged to the cost of sales and TRY 7,198 has been
charged to general administrative expenses (31 December 2019: TRY
44,859 and TRY 7,887, respectively).
Currency
1 Jan translation 31 Dec
2019 Additions Disposals adjustments 2019
------------------------------------------- ------- --------- --------- ----------- --------
Right-of-use assets
Properties and vehicles 162,446 64,855 (30,006) 32,137 229,432
162,446 64,855 (30,006) 32,137 229,432
------------------------------------------- ------- --------- --------- ----------- --------
Depreciation charge of right-of-use assets
Properties and vehicles - (52,746) 6,325 (2,775) (49,196)
- (52,746) 6,325 (2,775) (49,196)
------------------------------------------- ------- --------- --------- ----------- --------
162,446 180,236
------------------------------------------- ------- --------- --------- ----------- --------
In 2020, interest expense on lease liabilities is TRY 20,781 and
the total amount of interest of sub-lease expense is TRY 13,804 (31
December 2019: TRY 22,031 and TRY 13,736, respectively).
In 2020, the total cash outflow for principle of leases and
interest of leases is TRY 44,317 and TRY 34,585, respectively. In
2020, the total cash inflow for interest of leases is TRY 13,804,
respectively (31 December 2019: TRY 60,875, TRY 35,767 and TRY
13,736).
Expenses of low-value assets are TRY 62 (31 December 2020: TRY
60).
NOTE 12 - CASH AND CASH EQUIVALENTS
The details of cash and cash equivalents as of 31 December 2020
and 2019 are as follows:
31 Dec 31 Dec
2020 2019
--------------------------------------------- -------- -------
Cash 1,249 897
Banks 19,867 16,744
Term bank deposits (less than three months) 69,500 42,745
Credit card receivables(1) 18,420 10,542
--------------------------------------------- -------- -------
109,036 70,928
--------------------------------------------- -------- -------
1. Maturity term of credit card receivables are 30 days on average (31 December 2019: 30 days).
There is no restricted cash as of 31 December 2020 and 2019.
The details of functional currency of the banks is as
follows:
31 Dec 31 Dec
2020 2019
------- ------- -------
TRY 75,546 12,228
RUB 1,490 45,451
USD 12,057 -
EUR 274 1,276
Other - 534
------- ------- -------
89,367 59,489
------- ------- -------
NOTE 13 - TRADE RECEIVABLES AND PAYABLES
a) Short-term trade receivables
31 Dec 31 Dec
2020 2019
----------------------------------- -------- --------
Trade receivables 89,091 89,419
Post-dated cheques (1) 22,932 27,154
----------------------------------- -------- --------
112,023 116,573
----------------------------------- -------- --------
Less: Doubtful trade receivable (4,263) (2,080)
----------------------------------- -------- --------
Short-term trade receivables, net 107,760 114,493
----------------------------------- -------- --------
1. Post-dated cheques are the receivables from franchisees resulting from store openings.
The average collection period for trade receivables is between
30 and 60 days (2019: between 30 and 60 days).
Movement of provision for doubtful receivables is as
follows:
2020 2019
---------------------- ------ ------
1 January 2,080 92
Current year charges 2,657 1,988
Write-off (474) -
------ ------
4,263 2,080
---------------------- ------ ------
The Group applied IFRS 9 simplified approach to measuring
expected credit losses, which uses a lifetime expected loss
allowance for all trade, lease and other receivables based on
historical losses. The Group analysed the impact of IFRS 9 and the
historical losses that were incurred in 2020 also impacted the
expected credit losses going forward, resulting in an additional
TRY 955 recorded as provision for doubtful receivables (31 December
2019: TRY 606). The Group also assessed whether the historic
pattern would change materially in the future. The expected credit
loss applied per aging bucket is shown as below:
Not 0-30 31-90 91-180 181-360 Over 360
due days days days days days
----- ----- ----- ------ ------- --------
0.20% 2.00% 4.07% 7.92% 16.86% 46.80%
----- ----- ----- ------ ------- --------
Lease receivables have no history if default and expected credit
loss percentages are close to zero and its effect is immaterial, so
the table below consists of only trade and other receivables.
b) Long-term trade receivables
31 Dec 31 Dec
2020 2019
----------------------- ------- -------
Trade receivables 539 7,467
Post-dated cheques(1) 16,168 15,955
----------------------- ------- -------
16,707 23,422
----------------------- ------- -------
1. Post-dated cheques are the receivables from franchisees resulting from store openings.
c) Short-term trade and other payables
31 Dec 31 Dec
2020 2019
---------------- -------- --------
Trade payables 168,329 108,995
Other payables 5,030 12,183
---------------- -------- --------
173,359 121,178
---------------- -------- --------
The weighted average term of trade payables is less than three
months. Short-term payables with no stated interest are measured at
original invoice amount unless the effect of imputing interest is
significant (31 December 2020 and 2019: less than three
months).
NOTE 14 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES
The details of receivables and payables from related parties as
of 31 December 2020 and 2019 and transactions is as follows:
a) Key management compensation
31 Dec 31 Dec
2020 2019
------------------------------ ------- -------
Short-term employee benefits 22,399 18,212
Share-based incentives 1,463 2,002
------------------------------ ------- -------
23,862 20,214
------------------------------ ------- -------
There are no loans, advance payments or guarantees given to key
management.
b) Board compensation
Executive Directors Non-Executive Directors
--------------------- ------------------------------------------------
Aslan Frederieke Peter Tom Seymur İzzet Aksel
Year ending 31 December 2020 Saranga Slot Williams Singer Tari Talu Sahin
------------------------------ --------- ---------- ---------- --------- ------ ---------- -----
Base salary (TRY) 2,514,253 774,647 1,302,397 603,444 - - -
Benefits (TRY) 217,338 184,312 - - - - -
Pension (TRY) - 283,681 - - - - -
Annual bonus (TRY) - - - - - - -
Long -- term incentives (TRY) 544,131 - - - - - -
------------------------------ --------- ---------- ---------- --------- ------ ---------- -----
Total (TRY) 3,275,722 1,242,640 1,302,397 603,444 - - -
Total (local currency) 3,275,722 EUR153,120 GBP145,000 GBP67,183 - - -
------------------------------ --------- ---------- ---------- --------- ------ ---------- -----
Executive Directors Non-Executive Directors
--------------------- ------------------------------------------------
Aslan Frederieke Peter Tom Seymur İzzet Aksel
Year ending 31 December 2019 Saranga Slot Williams Singer Tari Talu Sahin
------------------------------ --------- ---------- ---------- --------- ------ ---------- -----
Base salary (TRY) 2,295,945 634,840 1,083,930 502,221 - - -
Benefits (TRY) 171,479 146,013 - - - - -
Pension (TRY) - 224,733 - - - - -
Annual bonus (TRY) 748,086 - - - - - -
Long -- term incentives (TRY) 614,971 - - - - - -
------------------------------ --------- ---------- ---------- --------- ------ ---------- -----
Total (TRY) 3,830,481 1,005,586 1,083,930 502,221 - - -
Total (local currency) 3,830,481 EUR158,400 GBP150,000 GBP69,500 - - -
------------------------------ --------- ---------- ---------- --------- ------ ---------- -----
Notes to the table - methodology
Base salary
This represents the cash paid or receivable in respect of the
financial year.
Benefits
This represents the taxable value of all benefits paid or
receivable in respect of the relevant financial year. Aslan
Saranga's benefits included private health cover and company car.
Frederieke Slot's benefits included medical disability allowance,
mobility allowance and education, communication and IT
allowances.
Pension
Aslan Saranga receives no pension provision; Frederieke Slot
received a pension allowance worth 36% of base salary. As explained
in Remuneration report, this allowance has been reduced to 10% of
base salary in 2021.
Annual bonus
This represents the total bonus payable for the relevant
financial year under the ADBP. Chief Executive Officer's 2020
annual bonus pays out at zero
Long-term incentives
This row relates to the expense recognised for the LTIP awards
during the period in accordance with IFRS. Since no LTIP awards
have been vested to Executive Directors during the period, this
column has a zero figure in the remuneration report.
On 8 May 2018, Aslan Saranga was granted an LTIP award amounting
to 279,322 shares (share price GBP 1.88), with a vesting date of
May 2021 subject to achievement of an EBITDA growth target. As the
performance condition was not achieved, no shares will vest for
Aslan Saranga as LTIP awards for 2018 in May 2021. On 3 May 2019,
Aslan Saranga was granted an LTIP award amounting to 332,706 shares
(share price GBP 0.88) which will vest in May 2022 subject to
achievement of an EBITDA growth target. On 14 May 2020, Aslan
Saranga was granted an LTIP award amounting to 506,212 shares
(share price GBP 0.59) which will vest in May 2023 subject to
achievement of an EBITDA growth target.
Local currency totals
Part of Aslan Saranga's remuneration and the whole of Frederieke
Slot's remuneration is paid in Euros and Peter Williams' and Tom
Singer's remuneration is wholly paid in Pound Sterling. Total
amounts received by each individual in local currency are shown in
the final row of the above table. In the other columns of the
table, remuneration has been converted into Turkish Lira for
consistency with the financial statements.
NOTE 15 - OTHER RECEIVABLES, ASSETS AND LIABILITIES
31 Dec 31 Dec
Other current receivable and assets 2020 2019
---------------------------------------------------- ------ ------
Advance payments(1) 56,208 36,217
Lease receivables 16,621 16,618
Prepaid taxes and VAT receivable 4,175 2,740
Prepaid marketing expenses 3,001 1,486
Prepaid insurance expenses 1,532 1,029
Deposits for loan guarantees(2) 1,437 18,683
Contract assets related to franchising contracts(3) 879 482
Other (4) 6,256 4,610
---------------------------------------------------- ------ ------
Total 90,109 81,865
---------------------------------------------------- ------ ------
1. As of 31 December 2020 and 2019, advance payments are
composed of advances given to suppliers for the purchasing raw
material and other services.
2. In 2020, the Group repaid a portion of its loans to Sberbank
Moscow and the TRY 19,197 (RUB 195 million) cash deposit condition
that was made as collateral by Fidesrus.
3. The Group incurs certain costs with Domino's Pizza
International related to the set-up of each franchise contract and
IT systems used for recording of franchise revenue.
4. As of 31 December 2020 and 2019, other includes job and
personnel advances, short-term security deposits and other
prepayments such as subscriptions and travel expenses.
31 Dec 31 Dec
Other non-current receivable and assets 2020 2019
---------------------------------------------------- ------ ------
Lease receivables 24,674 39,568
Long-term deposits for loan guarantees(1) 17,760 15,570
Prepaid marketing expenses 12,620 8,232
Contract assets related to franchising contracts(2) 4,291 4,186
Deposits given 5,585 7,915
---------------------------------------------------- ------ ------
Total 64,930 75,471
---------------------------------------------------- ------ ------
1. In 2020, the Group repaid a portion of its loans to Sberbank
Moscow and the TRY 19,197 (RUB 195 million) cash deposit condition
that was made as collateral by Fidesrus.
2. The Group incurs certain costs with DP International related
to the set-up of each franchise contract and IT systems used for
recording of franchise revenue.
31 Dec 31 Dec
Other current liabilities 2020 2019
---------------------------------------------------- ------- -------
Performance bonuses 9,619 4,961
Unused vacation liabilities 7,977 7,523
Payable to personnel 6,368 8,044
Contract liabilities from franchising contracts(1) 5,672 2,908
Volume rebate advances 5,364 7,805
Taxes and funds payable 5,212 13,351
Advances received from franchisees 4,239 4,057
Social security premiums payable 4,077 4,109
Other expense accruals 5,686 11,254
---------------------------------------------------- ------- -------
Total 54,214 64,012
---------------------------------------------------- ------- -------
1. The Group incurs certain revenue with the set-up of each
franchise contract and these franchise fee revenues are deferred
over the period of the franchise agreement.
31 Dec 31 Dec
Other non-current liabilities 2020 2019
------------------------------------------------- ------- -------
Contract liabilities from franchising contracts
(1) 38,311 34,664
Long-term provision for employee benefits 2,874 2,051
Other 1,556 2,377
------------------------------------------------- ------- -------
Total 42,741 39,092
------------------------------------------------- ------- -------
1. The Group incurs certain revenue with the set-up of each
franchise contract and these franchise fee revenues are deferred
over the period of the franchise agreement.
NOTE 16 - FINANCIAL LIABILITIES
31 Dec 31 Dec
2020 2019
--------------------------------------------------- ------- -------
Short-term bank borrowings 54,088 164,800
--------------------------------------------------- ------- -------
Short-term financial liabilities 54,088 164,800
--------------------------------------------------- ------- -------
Short-term portions of long-term borrowings 113,093 54
Short-term portions of long-term leases 72,476 71,427
--------------------------------------------------- ------- -------
Current portion of long-term financial liabilities 185,569 71,481
--------------------------------------------------- ------- -------
Total short-term financial liabilities 239,657 236,281
--------------------------------------------------- ------- -------
Long-term bank borrowings 193,015 153,159
Long-term leases 110,549 184,708
--------------------------------------------------- ------- -------
Long-term financial liabilities 303,564 337,867
--------------------------------------------------- ------- -------
Total financial liabilities 543,221 574,148
--------------------------------------------------- ------- -------
As of 31 December 2020, the fair value of the financial
liabilities is TRY 532,408 (31 December 2019: TRY 572,439).
The summary information of short-term and long-term bank
borrowings is as follows:
31 December 2020 Interest
Currency Maturity rate (%) Short-term Long-term
----------------- ---------- -------- ---------- ---------
TRY borrowings Revolving 10.48 154,960 109,041
RUB borrowings 2024 9.70 12,221 83,974
----------------- ---------- -------- ---------- ---------
167,181 193,015
---------------------------- -------- ---------- ---------
31 December 2019 Interest
Currency Maturity rate (%) Short-term Long-term
----------------- ---------- -------- ---------- ---------
TRY borrowings Revolving 10,88 164,800 -
RUB borrowings 2024 9.70 54 153,159
----------------- ---------- -------- ---------- ---------
164,854 153,159
---------------------------- -------- ---------- ---------
The loan agreement between Sberbank Moscow and Domino's Russia
is subject to covenant clauses whereby the Group, Domino's Turkey
and Domino's Russia are required to meet certain ratios. The
financial indicator of:
Domino's Russia, which requires the ratio of financial debt to
adjusted EBITDA for the relevant period should not be more than
4.5;
Domino's Turkey, which requires the ratio of financial debt to
adjusted EBITDA for the relevant period should not be more than
2.5; and
the Group, which requires the ratio of financial debt to
adjusted EBITDA for the relevant period, should not be more than
3.5.
As of 31 December 2020, Sberbank has waived the covenant
conditions for 2020 year end, as well as the first and second
quarters of 2021. The Group is currently in discussions with
Sberbank to reset the covenants for 2021.
The redemption schedule of the borrowings as of 31 December 2020
and 2019 is as follows:
31 Dec 31 Dec
2020 2019
---------------------------------------- ------- -------
To be paid in one year 167,181 164,854
To be paid between one to two years 63,762 4,627
To be paid between two to three years 76,941 44,522
To be paid between three years and more 52,312 104,010
---------------------------------------- ------- -------
360,196 318,013
---------------------------------------- ------- -------
The redemption schedule of the leases as of 31 December 2020 and
2019 is as follows:
31 Dec 31 Dec
2020 2019
----------------------------------------------- ------- -------
Leases to be paid in one year 72,476 71,427
Leases to be paid between one to two years 37,045 77,979
Leases to be paid between two to three years 28,403 39,897
Leases to be paid between three years and more 45,101 66,832
----------------------------------------------- ------- -------
183,025 256,135
----------------------------------------------- ------- -------
As of 31 December 2020 and 2019, the net financial liabilities
reconciliation is as follows:
31 Dec 31 Dec
2020 2019
----------------------------------------------------------------- --------- ---------
Cash and cash equivalents 109,036 70,928
Financial liabilities and leases to be paid in one year (239,657) (236,281)
Financial liabilities and leases to be paid in one to five years (303,564) (337,867)
----------------------------------------------------------------- --------- ---------
(434,185) (503,220)
----------------------------------------------------------------- --------- ---------
31 Dec 31 Dec
2020 2019
----------------------------------------------------------------- --------- ---------
Cash and cash equivalents 109,036 70,928
Financial liabilities and leases - fixed rate (543,221) (316,294)
Financial liabilities - floating rate - (257,854)
----------------------------------------------------------------- --------- ---------
(434,185) (503,220)
----------------------------------------------------------------- --------- ---------
Short-term Long-term
financial financial
liabilities liabilities
31 December 2020 and leases and leases Total
--------------------------------------------- ------------- ------------- ----------
1 January financial liabilities (236,281) (337,867) (574,148)
--------------------------------------------- ------------- ------------- ----------
Net cash flow effect, loans received (201,166) (98,331) (299,497)
Net cash flow effect, loans paid 136,397 134,519 270,916
Net cash flow effect, leasing payments 50,911 - 50,911
Other non-cash transaction, leasing payment 20,781 - 20,781
Interest on financial liabilities (2,345) (2,345)
Currency translation adjustments (7,954) (1,885) (9,839)
---------------------------------------------
31 December financial liabilities (239,657) (303,564) (543,221)
--------------------------------------------- ------------- ------------- ----------
Short-term Long-term
financial financial
liabilities liabilities
31 December 2019 and leases and leases Total
-------------------------------------------- ------------ ------------ ---------
1 January financial liabilities (44,330) (171,276) (215,606)
-------------------------------------------- ------------ ------------ ---------
Net cash flow effect, loans received (147,443) (17,790) (165,233)
Net cash flow effect, loans paid 5,668 79,785 85,453
Net cash flow effect, leasing payments 60,875 - 60,875
Other non-cash transaction, leasing payment 22,031 - 22,031
Unrealised FX gain and loss (88,045) (211,662) (299,707)
Interest on financial liabilities (17,311) - (17,311)
Currency translation adjustments (27,726) (16,924) (44,650)
-------------------------------------------- ------------ ------------ ---------
31 December financial liabilities (236,281) (337,867) (574,148)
-------------------------------------------- ------------ ------------ ---------
The reconciliation of adjusted net debt as of 31 December 2020
and 2019 is as follows:
31 Dec 31 Dec
2020 2019
-------------------------------------------------- --------- --------
Short-term bank borrowings 54,088 164,854
Short-term portions of long-term lease borrowings 185,569 71,427
Long-term bank borrowings 193,015 153,159
Long-term lease and borrowings 110,549 184,708
-------------------------------------------------- --------- --------
Total borrowings 543,221 574,148
-------------------------------------------------- --------- --------
Cash and cash equivalents (-) (109,036) (70,928)
-------------------------------------------------- --------- --------
Net debt 434,185 503,220
-------------------------------------------------- --------- --------
Non-recurring items per Group management
Long-term deposit for loan guarantee (19,197) (34,253)
-------------------------------------------------- --------- --------
Adjusted net debt(1) 414,988 468,967
-------------------------------------------------- --------- --------
1. Net debt, adjusted net debt and non-recurring and non-trade
items are not defined by IFRS. Adjusted net debt includes cash
deposits used as a loan guarantee and cash paid, but not collected,
during the non-working day at the year end. Management uses these
numbers to focus on net debt to take into account deposits not
otherwise considered cash and cash equivalents under IFRS.
NOTE 17 - TAX ASSETS, LIABILITIES AND TAX EXPENSE
Corporate tax
The Group is subject to taxation in accordance with the tax
regulations and the legislation effective in the countries in which
the Group companies operate. Therefore, provision for taxes, as
reflected in the consolidated financial statements, has been
calculated on a separate-entity basis.
The Netherlands
Dutch tax legislation does not permit a Dutch parent company and
its foreign subsidiaries to file a consolidated Dutch tax return.
Dutch resident companies are taxed on their worldwide income for
corporate income tax purposes at a statutory rate of 25%. No
further taxes are payable on this profit unless the profit is
distributed.
Services incurred by Dutch parent companies may generally be
divided into two kinds of services being group services for which
costs are incurred for the economic and commercial benefit of
subsidiaries and shareholder services for which costs are incurred
for activities provided in the capacity of the shareholder. All
costs incurred by the Company are shareholder services (costs
incurred for activities provided in the capacity of shareholder)
and not group services (costs incurred for the economic or
commercial benefit of subsidiaries).
Since shareholder services are not for the benefit of any one
specific subsidiary, it is not required to re-charge these fees or
costs to a subsidiary or to subsidiaries.
If certain conditions are met, income derived from foreign
subsidiaries is tax exempted in the Netherlands under the rules of
the Dutch participation exemption. However, certain costs such as
acquisition costs are not deductible for Dutch corporate income tax
purposes. Furthermore, in some cases the interest payable on loans
to affiliated companies is non-deductible.
When income derived by a Dutch company is subject to taxation in
the Netherlands as well as in other countries, generally avoidance
of double taxation can be obtained under the extensive Dutch tax
treaty network or under Dutch domestic law.
Dividend distributions are subject to 15% Dutch withholding tax.
However, under the Netherlands' extensive tax treaty network, this
rate can, in many cases, be significantly reduced if certain
conditions are met.
Turkey
The Corporate Tax Law was amended by Law No, 5520, dated 13 June
2006. Most of the articles of the new Corporate Tax Law (No 5520)
came into force on 1 January 2006. Corporate tax is payable at a
rate of 22% (31 December 2019: 22%) on the total income of the
Group after adjusting for certain disallowable expenses, exempt
income and investment and other allowances (e.g. research and
development allowance). No further tax is payable unless the profit
is distributed (except for withholding tax at the rate of 19.8%,
calculated on an exemption amount if an investment allowance is
granted in the scope of Income Tax Law Temporary Article 61).
With the Law on Amendments to Certain Laws and Tax Laws and
Decrees by the Courts dated 28 November 2017, the tax rate has been
changed to 22% for corporate tax and advance tax of corporate
earnings for the 2018, 2019 and 2020 taxation periods.
Companies are required to pay advance corporate tax quarterly at
the rate of 22% on their corporate income in Turkey. Advance tax is
payable by the 17th of the second month following each calendar
quarter end. Advance tax paid by corporations is credited against
the annual corporate tax liability. If, despite offsetting, there
remains a paid advance tax amount, it may be refunded or offset
against other liabilities to the government.
Russia
Income taxes have been provided for in the consolidated
financial statements in accordance with legislation enacted or
substantively enacted by the end of the reporting period. The
income tax charge comprises current tax and deferred tax and is
recognised in profit or loss for the year, except if it is
recognised in other comprehensive income or directly in equity
because it relates to transactions that are also recognised, in the
same or a different period, in other comprehensive income or
directly in equity.
Current tax is the amount expected to be paid to, or recovered
from, the taxation authorities in respect of taxable profits or
losses for the current and prior periods. Taxable profits or losses
are based on estimates if financial statements are authorised prior
to filing relevant tax returns. Taxes other than on income are
recorded within operating expenses as established in Chapter 25 of
the Tax Code of the Russian Federation. Corporate tax is payable at
a rate of 20% (31 December 2019: 20%) as identified in Article 247
of the Tax Code of the Russian Federation Special rules may apply
in cases where a different from 20% tax rate is used.
Deferred income tax is provided using the balance sheet
liability method for tax loss carry forwards and temporary
differences arising between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes. In
accordance with the initial recognition exemption, deferred taxes
are not recorded for temporary differences on initial recognition
of an asset or a liability in a transaction other than a business
combination if the transaction, when initially recorded, affects
neither accounting nor taxable profit. Deferred tax balances are
measured at tax rates enacted or substantively enacted at the end
of the reporting period, which are expected to apply to the period
when the temporary differences will reverse, or the tax loss carry
forwards will be utilised.
Corporate tax liability for the year consists of the
following:
31 Dec 31 Dec
2020 2019
------------------------- -------- -------
Corporate tax calculated 22,201 15,318
Prepaid taxes (-) (13,270) (6,363)
------------------------- -------- -------
Tax liability 8,931 8,955
------------------------- -------- -------
Tax income and expenses included in the statement of
comprehensive income are as follows:
2020 2019
------------------------------------- -------- --------
Current period corporate tax expense (22,201) (15,318)
Deferred tax income/(expense) 8,232 2,974
------------------------------------- -------- --------
Tax expense (13,969) (12,344)
------------------------------------- -------- --------
The reconciliation of the tax expense in the statement of
comprehensive income is as follows:
2020 2019
--------------------------------------- -------- --------
Profit before tax (93,614) 6,728
Corporate tax at statutory rates (25%) 23,404 (1,682)
Disallowable expenses (15,672) (7,423)
Unrecognised tax losses (15,623) (5,287)
Differences in tax rates (5,351) 1,646
Other, net (727) 402
--------------------------------------- -------- --------
Total tax expense (13,969) (12,344)
--------------------------------------- -------- --------
The effective tax rate, calculated as a percentage of income
before income tax, was (15)% in 2020 (2019: 183%).
The breakdown of cumulative temporary differences and the
resulting deferred income tax assets/liabilities at 31 December
2020 and 2019 using statutory tax rates are as follows:
31 Dec 2020 31 Dec 2019
-------------------------- --------------------------
Deferred Deferred
Temporary tax assets/ Temporary tax assets/
differences (liabilities) differences (liabilities)
------------------------------------------------ ----------- ------------- ----------- -------------
Carry forward tax losses(1) 49,653 9,931 48,180 9,636
Contract liabilities from franchising contracts 42,959 8,592 34,826 7,486
Expense accruals 21,804 4,361 15,275 3,057
Right-of-use assets and lease liability 19,639 3,928 13,625 2,845
Bonus accruals 9,132 1,826 4,695 1,011
Legal provisions 5,740 1,148 5,354 1,143
Unused vacation liabilities 4,021 804 3,368 741
Provision for employee termination benefit 2,874 575 2,051 451
Other 4,440 888 1,173 211
------------------------------------------------ ----------- ------------- ----------- -------------
160,262 32,053 128,547 26,581
Property and equipment and intangible assets (27,763) (5,553) (38,390) (8,521)
------------------------------------------------ ----------- ------------- ----------- -------------
(27,763) (5,553) (38,390) (8,521)
Deferred income tax assets, net 26,500 18,060
------------------------------------------------ ----------- ------------- ----------- -------------
1. Consists of carry forward losses of Domino's Russia.
Deferred income tax assets recognition of Fidesrus
Deferred tax assets are reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Various factors are considered
to assess the probability of the future utilisation of deferred tax
assets, including past operating results, operational plan,
expiration of tax losses carried forward, and tax planning
strategies. If actual results differ from these estimates or if
these estimates must be adjusted in future periods, the financial
position, results of operations and cash flows may be negatively
affected. In the event that the assessment of future utilisation of
deferred tax assets must be reduced, this reduction will be
recognised in the income statement.
Based on the change in the tax code in the Russian Federation
after 31 December 2015, previously applied limitation on carry
forward tax losses for a ten-year period has been abolished and any
losses incurred since 2007 will be carried forward until fully
recognised.
Domino's Russia recognises tax assets for the tax losses carried
forward to the extent that the realisation of the related tax
benefit through the future taxable profits is probable. Domino's
Russia recognises deferred income tax assets arising from tax
losses, tax discounts and other temporary differences with the
estimates and assumptions relying on Domino's Russia management's
five -- year business plan and potential growth opportunities in
Russia.
Movement of the deferred tax for the years ended 31 December
2020 and 2019 are as follows:
31 Dec 31 Dec
2020 2019
-------------------------------------- ------ ------
Balance at the beginning of the year 18,060 11,622
Charged to the statement of income 8,232 2,974
Currency translation difference (28) 3,434
Charged to other comprehensive income 236 30
-------------------------------------- ------ ------
Balance at the end of the year 26,500 18,060
-------------------------------------- ------ ------
NOTE 18 - SUBSEQUENT EVENTS
On 19 February 2021, Jubilant Foodworks Limited, the largest
foodservice company in India, and Fides Food Systems Coöperatief
U.A. announced that Jubilant Foodworks Limited and its wholly owned
subsidiary, Jubilant Foodworks Netherlands B.V., have entered into
a purchase agreement with Turkish Private Equity Fund II L.P. to
fully acquire Fides Food Systems Coöperatief U.A., which holds
32.81% of the ordinary share capital of DP Eurasia, for a price of
approximately GBP 24.80 million. The transaction was closed on 9
March 2021. Following the closing of the transaction, the Company
announced that it will hold an extraordinary General Meeting on 21
April 2021. The business of the EGM will be to consider and, if
thought fit, approve certain resolutions including the appointment
of Messrs Shyam S. Bhartia, Hari S. Bhartia and Pratik R. Pota as
non-executive directors replacing Mr Seymur Tari, Ms Aksel ahin and
Mr Neil Harper as shareholder representatives pursuant to the
relationship agreement between the Company and Fides Food Systems.
Mr. Seymur Tari, Ms. Aksel ahin and Mr. Neil Harper have tendered
their resignations to take effect immediately after the appointment
of Messrs Shyam S. Bhartia, Hari S. Bhartia and Pratik R. Pota.
According to the waiver obtained from Sberbank on 24 December
2020, the Company, Fidesrus B.V. and its Turkish subsidiary are
required to sign additional agreements as guarantors until 15 April
2021, as required by the amendment to the Sberbank Loan Agreement
dated 20 December 2019. The Group expects no difficulty in meeting
this requirement.
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END
FR SEWFUEEFSEFD
(END) Dow Jones Newswires
March 23, 2021 03:00 ET (07:00 GMT)
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