Interim Results

DP Eurasia N.V
19 September 2023
 

 

 

 

For Immediate Release

19 September 2023

 

DP Eurasia N.V.

("DP Eurasia" or the "Company", and together with its subsidiaries, the "Group")

Interim Results for the six months ended 30 June 2023 (1)  

Highlights (2)

 

For the period ended 30 June

 

 

Number of stores

2023

2022

Change

 

Turkey (Domino's)

675*

628

47

 

Turkey (COFFY)

51

15

36

 

Azerbaijan

10

10

-

 

Georgia

6

5

1

 

Total continuing operations

742

658

84

 

Russia (discontinued operations)

142

184

-42

 

Grand Total

884

842

42

 

 

 

 

 

 

Group system sales (after IAS 29) (3)

2023

2022

Change

Change

(pre-IAS 29)

Turkey

2,424.0

1,864.6

30.0%

91.7%

Azerbaijan

42.7

44.8

-4.6%

40.7%

Georgia

30.6

22.4

36.2%

99.9%

COFFY

95.3

21.7

339.5%

529.5%

Total continuing operations

2,592.6

1,953.5

32.7%

95.6%

Russia (discontinued operations)

422.2

 492.7

-14.3%

-14.3%

Grand Total

3,014.8

2,446.2

23.2%

64.7%

 

 

 

System sales LfL growth(4)

(after IAS 29)

(pre-IAS 29)

 

2023

2022

2023

2022

Turkey

26.5%

-8.4%

86.2%

51.0%

Azerbaijan (based on AZN)

5.2%

3.7%

5.2%

3.7%

Georgia (based on GEL)

4.3%

32.2%

4.3%

32.2%

Total continuing operations

25.9%

-7.9%

84.1%

50.1%

Russia (discontinued operations, based on RUB)

-24.8%

-2.6%

-24.8%

-2.6%

 

* Including nine temporarily closed stores as a result of the earthquake in early 2023.

 

 

Group financials

           (after IAS 29)

                  (pre-IAS 29)

(in millions of TRY)

2023

2022

Change

2023

2022

Change

Revenue

1,581

1,268

24.7%

1,494

795

87.9%

Adjusted EBITDA(5)

265

197

34.4%

288

141

104%

Adjusted net income (from continuing operations) (6)

229

153

50.2%

131

83

150%

Adjusted net debt(7)

618

1,015

-39.1%

618

1,015

-39.1%

 

 

 

 

 

 

Financial Highlights (from continuing operations)

·     Strong overall performance with Group revenue up 24.7% (pre-IAS 29: 88%) and system sales up 32.7% (pre-IAS 29: 96%). LfL Group system sales for continuing operations were up 25.9%.

·      Excellent LfL growth in Turkey of 26.5% amid a sustained inflationary environment, reflecting the ongoing focus on maintaining franchisee profitability, network expansion, strategic pricing, and product and service innovation.

·      Azerbaijan and Georgian operations delivered LfL growth of 5.2% and 4.3% respectively (in local currencies).

·     Adjusted EBITDA increased 34.4% to TRY 265 million while the EBITDA margin improved to 16.8% from 15.6% year on year thanks to better operational leverage with increases sales performance.

·     Adjusted net income (from continuing operations) increased 50.2% to TRY 229 million (1H 2022: TRY 153 million).

·     The Group maintained a strong liquidity position with TRY 372 million cash and an undrawn bank facility of TRY 515 million as of 30 June 2023.

·     Adjusted net debt was TRY 618 million as of 30 June 2023 vs. TRY 849 million at the end of 2022. Net debt / EBITDA improved sharply to 1.3x from the 2.3x reported for the end of end-2022 (and vs. 2.8x year on year).

·     Leverage is expected to further improve by year-end given the enhanced profitability of the Group.

 

Operational Highlights (from continuing operations)

·     Online delivery system sales in Turkey increased to 83.9% (2022: 81.2%) as a share of delivery system sales(6), reflecting our robust positioning for the online ordering channel. Strong Turkish online system sales growth of 30.7% (pre-IAS 29: 93.0%).

·     Net new store opening momentum has been maintained:

o  The Turkish Domino's Pizza network has increased by 47 stores year on year, supported by 20 new store openings in H1. This reflects the strong demand profile, and the Group is therefore confident in its ability to comfortably reach the 35-40 net new store opening guidance for the full year. 

o  The COFFY network has now exceeded the 50-store milestone, having increased by 22 in the current financial year (or by 36 year-on-year) to 51. We are on track with our guidance of 50-60 net COFFY openings in FY23.

o  Georgia now has six Domino's Pizza stores, an increase of one.

·     The growth opportunity for COFFY remains significant, with excellent market dynamics in Turkey for the coffee sub-segment. COFFY delivered TRY 95 million to Group system sales, up 339%.

·     As announced on 21 August 2023, the Group has initiated bankruptcy proceedings for its Russian subsidiary. No sales process has occurred since this announcement, and bankruptcy proceedings are currently underway. The Group will continue to provide updates, particularly with regards to the financial impact of these proceedings, as necessary. The Russian segment continues to be classified as discontinued operations within the Company's audited financial statements.

 

 

 

2023 Outlook

·     The Group is mindful that 2023 has so far been another year of volatile macro-economic circumstance and uncertainty. The inflation risk persists, and while the Group has an excellent track record of managing and negating the impact of inflation, it may affect overall growth levels. Nevertheless, strong trading momentum has been sustained into the second half of the financial year. The Board is therefore confident that LfL inflation adjusted growth will be in the high teens for the full year 2023, better than low teens figure previously guided.

·     The Group anticipates that it will maintain organic and LfL sales momentum in 2023. This momentum will be driven by sustained network expansion, volume growth and targeted price adjustments. New customer acquisition and increased order frequency levels are expected to contribute to growing volumes.

·     The strong store openings momentum seen in Turkey is anticipated to continue for both Domino's and COFFY, driven by solid franchisee demand. Our commitment to maintaining franchisee profitability continues to be front and centre of this demand. The Group anticipates that FY23 will be another year of strong network expansion as the it seeks to broaden its coverage to cater to demand.

·     Capital expenditure expectations have increased to TRY 200 million (from TRY 160 million), owing to higher corporate store investments for new COFFY openings predominantly driven by currency depreciation impact.

·     Guidance for store openings, LfL growth rates and capital expenditure in Turkey for 2023 is as follows: 

 

Previous  

Revised

LfL growth rate 

Low teens

(pre IAS 29: 70-80%)

High teens

(pre IAS 29: 80-90%)

Domino's Pizza net store openings 

35 - 40 

35 - 40 

COFFY net store openings

50 - 60 

50 - 60 

Capital expenditure 

TRY 160 million

TRY 200 million

 

 

Commenting on the results, Chief Executive Officer, Aslan Saranga said:

 

"I am very pleased to be delivering very solid operational and financial results in the first half of 2023, which is a clear result of our targeted plans to mitigate the ongoing macro challenges. Strong trading momentum has been maintained; thanks to the healthy dynamics of the sub-sectors the Group operates within. Management's expertise in navigating inflation and the Group's resilience and agility in execution enabled strong store expansion dynamics and have resulted in a solid financial performance, from top to bottom line. 

 

"We have an innovative and customer-centric mindset, helping us to grow in a healthy manner as we pursue long-term and sustainable profitability. Our targeted strategy focuses on three areas - strategic pricing and product innovation, continued digital innovation, and operational excellence for everyday efficiency. This approach enabled us to combat the high volatility levels with the positive impact visible in terms of volume generation and customer acquisition. Despite ongoing cost pressures, adjusted EBITDA and net income grew significantly and our margins expanded pleasingly.

 

"Our focus on product innovation remains integral. We continue to broaden our entry price product range and launched a new mushroom pizza in January which has reached good volumes. Following the successful Pizzetta launch last year, we added new varieties to further enhance the potential of this product line. In addition, our new 'snacks from the oven' range was launched in February presenting a broad choice of attractively priced products to customers who increasingly seek value and affordability. The latest addition to our product range, Pizza XL, has contributed well and in line with our internal expectations. With a Turkish nationwide advertising campaign being rolled out in July, we expect the contribution from Pizza XL to continue to improve.

"We continue to improve the online proportion of our sales, and digital innovation remains an important enabler for us to enhance the customer experience and further solidify our robust positioning for the online ordering channel.

"We retain a fundamental commitment to ensuring franchisees remain profitable. As a result, franchisee demand for both Domino's Pizza and COFFY continues to be very healthy. We have a strong pipeline of new sites and are confident that 2023 will be another solid year for network expansion.

"Consumer demand for COFFY stands very strong thanks to its unique value proposition. Having developed multiple store concepts to fit in with local circumstances, the COFFY network exceeded the 50-store milestone, having increased by 22 in the current financial year. Franchisee demand stands very strong owing to COFFY's proven sales performance. This demand, alongside our ambitious targets for 2023, will enable us to add further scale in a sub-sector that is of increasing popularity.

"Overall, we are very pleased with the strong first half performance and will continue to deliver on our targeted strategy to make the most of what continues to be a significant growth opportunity."

 

 

Enquiries

DP Eurasia N.V.

 

İlknur Kocaer, CFA - Investor Relations Director

+90 212 280 9636



Buchanan (Financial Communications)      


Richard Oldworth / Toto Berger / Verity Parker

+44 20 7466 5000

dp@buchanan.uk.com

 

Analyst Briefing and Conference Call

A remote briefing will be held at 9.00am UK time via a conference call facility. The call will be accessible via the below details and will be accompanied with a presentation, which will be made available on the morning of results and accessed at www.dpeurasia.com. Please contact Buchanan on dp@buchanan.uk.com to register your attendance.

 

Conference call:

UK Toll: +44 (0) 20 3037 9299

UK Toll Free:  0808 109 0700



 

Notes

(1) Financial statements as of 30 June 2023 are subjected to limited review and non-IFRS measures are not audited.

(2) All Group figures exclude Russian business which is now a discontinued operation. COFFY numbers are included in all Turkey and Group figures, unless presented separately. Like-for-like figures exclude COFFY

(3) System sales are sales generated by the Group's corporate and franchised stores to external customers and do not represent revenue of the Group. These numbers are not audited.

 (4) 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). This is a non-IFRS measure and non-IFRS measures are not audited.

(5) EBITDA, adjusted EBITDA and non-recurring and non-trade income/expenses are not defined by IFRS and non-IFRS measures are not audited. 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. Reconciliation of EBITDA, adjusted EBITDA with consolidated financial statements will be presented in Note 3 of Group financial statements section of our annual report.

(6) Adjusted net income is not defined by IFRS and non-IFRS measures are not audited.  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.  Reconciliation of EBITDA, adjusted EBITDA with consolidated financial statements will be presented in Note 3 of Group financial statements section of our annual report.

(7) Net debt and adjusted net debt are not defined by IFRS and non-IFRS measures are not audited. 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. Net debt figure includes the external debt of DP Russia which was guaranteed by the Group and its Turkish subsidiary.

(8) Delivery system sales are system sales of the Group generated through the Group's delivery distribution channel.

(9) Online system sales are system sales of the Group generated through its online ordering channel.

 

Notes to Editors

 

DP Eurasia N.V. is the exclusive master franchisee of the Domino's Pizza brand in Turkey, 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. The Group offers pizza delivery and takeaway/ eat-in facilities at its 691 stores (675 in Turkey,  10 in Azerbaijan and 6 in Georgia) as of 30 June 2023 and operates through its owned corporate stores (12%) and franchised stores (88%). In addition to its pizza delivery business, the Group also has its own coffee brand, COFFY, which trades from 51 stores at period-end, 38 of which are franchised. 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.

 

In line with the announcement on 21 August 2023, the Company has initiated the steps to file for DP Russia's bankruptcy. This was preceded by the announcement on 28 December 2022, which confirmed that the Company was evaluating its presence in Russia, the impact of sanctions and its continuing ability to serve its customers in Russia. In this connection, the Russian segment was classified as discontinued operations within the Company's audited financial statements for the year ended 31 December 2022.

 

 

 

Performance Review

Store count

As of 30 June


2023

 

2022


Corporate

Franchised

Total


Corporate

Franchised

Total

Turkey (Domino's)

82

593

675


94

534

628

Azerbaijan

-

10

10


-

10

10

Georgia

-

6

6


-

5

5

COFFY

13

38

51


5

10

15

Total

95

647

742

 

99

559

658

 

DP Eurasia's store count for continuing operations increased by 84 year-on-year, or by 42 stores during the first six months of the year. The Group increased its system sales by 32.7% year-on-year. Growth on a pre-inflation adjustment basis would have been 95.6%.

System sales of our Domino's Pizza operations in Turkey grew by 30% year-on-year and by 91.7% on a pre-inflation adjustment.  The Group experienced robust franchisee demand in Turkey resulting in a strong store pipeline, laying solid foundations for ongoing network expansion and growth. The Domino's Pizza net store count in Turkey increased by 8% over the last twelve months, with 20 net additions in first half, on track with the guided range of 35-40 for full year and building on the strong growth year of 2022.

The COFFY network has now exceeded the 50-store milestone, having increased by 22 in the current financial year (or by 36 year-on-year) to 51. We are on track with guidance of 50-60 net COFFY openings in the full year 2023. 

Delivery Channel Mix

Online delivery system sales in Turkey increased to 83.9% (2022: 81.2%) as a share of delivery system sales, reflecting our robust positioning for the online ordering channel. Strong Turkish online system sales growth of 30.7% (pre-IAS 29: 93.0%). This performance was aided also by an increase in volumes through the aggregators.

The following table shows the Group's delivery system sales as a percentage of delivery system sales:

 

 

2023

2022

Store

 

15.5%

18.3%

Online

Group's online platform

22.0%

25.1%

Aggregator

61.8%

56.1%

Total online

83.9%

81.2%

Call centre

 

0.6%

0.5%

Total

 

100%

100%

 


 

Financial Review

For the period ended

30 June

 


2023

2022

Change


(in millions of TRY)

 


 

Revenue

1,581

1,268

24.7%

Cost of sales

(900)

(822)

9.4%

Gross Profit

681

446

52.9%

General administrative expenses

(271)

(176)

53.9%

Marketing and selling expenses

(245)

(172)

42.6%

Other operating income /(expenses), net

(13)

10

n.m.

Operating profit

151

107

40.8%

Foreign exchange gains/(losses)

59

60

-0.3%

Financial income

36

33

8.2%

Financial expense

(144)

(88)

63.0%

Monetary profit / (loss)

139

103

35.9%

Profit/(Loss) before income tax

242

215

12.9%

Tax expense

(40)

(68)

-41.5%

Profit/(Loss) after tax, from continuing operations

203

147

38.1%

Loss from discontinued operations

(178)

(12)

n.m.

(Loss) / Profit for the period

24

135

-82.2%





Adjusted EBITDA

265

197

34.4%

Adjusted net income (from continuing operations)

229

153

50.2%

 

Revenue

Group revenue grew by 24.7% to TRY 1,581 million on inflation adjusted basis. 

Adjusted EBITDA

Adjusted EBITDA, which includes the Azerbaijani and Georgian businesses along with COFFY, was TRY 265 million and demonstrated a year-on-year increase of 34.4%. For the six-month period ended 30 June 2023, the adjusted EBITDA margin as a percentage of revenues was 16.8% compared to 15.6% over the same period in 2022. Strong sales performance created operating leverage through the system despite the ongoing cost pressures across the board. The Group took the advantage of its robust purchasing power and agile cost management capabilities during the period to combat elevated food costs.

Adjusted Net Income

For the six-month period ended 30 June 2023, adjusted net income from continuing operations was TRY 229 million. The growth in revenue and adjusted EBITDA were the main drivers whereas a one-off tax advantage also contributed to the improved bottom line. The profit for the period was TRY 24 million, driven by non-cash write-offs related with Russian business.

 

Capital expenditure and Cash conversion

The Group incurred TRY 63 million of capital expenditure for continuing operations in the six months ended 30 June 2023. Cash conversion* was 73% (1H 2022: 67%) for continuing operations. 

Adjusted net debt and leverage

The Group's adjusted net debt as of 30 June 2023, including the external debt of DP Russia as it was guaranteed by the Group's Turkish subsidiary, was TRY 618 million, declining from TRY 849 million of end-2022. Note that that external debt of DP Russia with an amount of 159 million TRY was paid in the third quarter out of existing cash resources. Hence, net debt position could be expected to remain at around same levels by the end of the year. Total borrowings for the Group stood at TRY 1.1 billion as of 30 June 2023. 

The Group's leverage ratio (defined as adjusted net debt/adjusted EBITDA), based on continued operations, stood at 1.3x as of 30 June 2023, dropping sharply from 2.3x at the end of 2022 (and vs 2.8x at the end of H1 2022). Leverage ratio is expected to improve further by the end of the year thanks to improving operational profitability.

The Group had TRY 372 million cash and cash equivalents and an undrawn bank facility of TRY 515 million as of 30 June 2023.

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.

 


*Cash conversion defined as (Adj EBITDA - lease payment - capital expenditure)/ Adj EBITDA)

 

 

Appendices

Exchange Rates

For the period ended 30 June

2023

 

2022

Period End

Period Average

 

Period End

Period Average

28.154

21.407


17.522

16.196

0.303

0.256


0.321

0.200

95.105

83.651


53.858

83.520

 

Delivery - Take away / Eat in mix

 

For the period ended 30 June

 

2023

2022

 

Turkey

Russia

Total

Turkey

Russia

Total

Delivery

73.1%

72.6%

72.7%

75.7%

75.9%

75.4%

Take away / Eat in

26.9%

27.4%

27.3%

24.3%

24.1%

24.6%

Total

100%

100%

100%

100%

100%

100%

 

 

 

DP EURASIA N.V.

 

(UNAUDITED) CONDENSED CONSOLIDATED

INTERIM FINANCIAL STATEMENTS

AS AT 30 JUNE 2023

 

 

(UNAUDITED) CONDENSED CONSOLIDATED

STATEMENT OF COMPREHENSIVE INCOME..................................................................         1

 

(UNAUDITED) CONDENSED CONSOLIDATED

STATEMENT OF FINANCIAL POSITION...........................................................................      2-3

 

(UNAUDITED) CONDENSED CONSOLIDATED

STATEMENT OF CHANGES IN EQUITY............................................................................         4

 

(UNAUDITED) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS.............         5

 

(UNAUDITED) NOTES TO THE CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS................................................................................................. 6 - 31

 

INDEPENDENT AUDITOR'S REVIEW REPORT.................................................................       32

 

(UNAUDITED) CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2023

(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)


(unaudited)

(unaudited)

 

Notes

30-Jun-23

30-Jun-22

 




INCOME OR LOSS

 







Revenue

4

1,581,316

1,267,870

Cost of sales

4

(899,904)

(822,269)





Gross Profit

 

681,412

445,601

 




General administrative expenses


(271,490)

(176,460)

Marketing and selling expenses


(245,379)

(172,095)

Other operating (expense) / income, net


(13,382)

10,349





Operating profit

 

151,161

107,395

 




Foreign exchange gains

6

59,507

59,683

Financial income

6

35,926

33,200

Financial expense

6

(143,778)

(88,202)

Monetary gain


139,546

102,682





Profit from income tax

 

242,362

214,758

 




Tax expense

 

(39,845)

(68,103)

 




Income tax expense

20

(22,319)

(46,634)

Deferred tax expense

 20

(17,526)

(21,469)





Profit from continued operations

 

202,517

146,655

 




(Loss) from discontinued operations

22

(178,487)

(11,985)

 




(LOSS)/PROFIT FOR THE PERIOD

 

24,030

134,670

 




Other comprehensive expense

 

(183,363)

(252,817)

Items that will not be reclassified to profit or loss

 



- Remeasurements of post-employment




   benefit obligations, net of tax


(3,262)

706

Items that may be reclassified to profit or loss

 



- Currency translation differences


(75,803)

14,470

- Currency translation differences from discontinued operations


(104,298)

(267,993)





TOTAL COMPREHENSIVE LOSS

 

(159,333)

(118,147)

 




Profit per share for the period attributable




   to equity holders of the parent (1)

 7

0.16

0.93

Profit per share from continuing operations attributable




to equity holders of the parent (1)


1.38

1.01





(1) Amounts represent the basic and diluted earnings per share.




 

 

 

 

The accompanying notes on pages 6 till 32 form an integral part of these condensed consolidated interim financial statements.

(UNAUDITED) CONDENSED CONSOLIDATED STATEMENT OF

FINANCIAL POSITION AT 30 JUNE 2023

(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

 

 

 

(unaudited)

 


Notes

30-Jun-23

31-Dec-22

 




ASSETS

 







Trade receivables

13

25,808

19,601

Lease receivables

10

105,197

114,112

Right-of-use assets

10

142,202

118,028

Property and equipment

8

142,102

148,015

Intangible assets

9

123,121

110,157

Goodwill

11

280,988

280,988

Deferred tax assets

20

-

5,010

Other non-current assets

16

88,961

83,143





Non-current assets

 

908,379

879,054

 




Cash and cash equivalents

12

371,523

431,038

Trade receivables

13

491,202

355,737

Lease receivables

10

36,246

16,380

Inventories

15

359,789

286,039

Current income tax asset


23,099

54,400

Other current assets

16

128,124

193,992





Current assets

 

1,409,983

1,337,586

 




Asset held for sale

22

79,496

435,400

 




TOTAL ASSETS

 

2,397,858

2,652,040

 

 

 

The accompanying notes form on pages 6 till 32 an integral part of these condensed consolidated interim financial statements.


(unaudited)

 


Notes

30-Jun-23

31-Dec-22

 




LIABILITIES

 







EQUITY

 







Paid in share capital

19

36,353

36,353

Share premium


441,632

441,632

Contribution from shareholders


84,122

76,604

Other comprehensive income/expense




   not to be reclassified to profit or loss




   - Remeasurements of post-employment




      benefit obligations


(16,869)

(13,607)

Other comprehensive income/expense




   to be reclassified to profit or loss




   - Currency translation differences


(756,657)

(576,556)

Retained earnings


85,930

61,900





Total equity

 

(125,489)

26,326

 




Financial liabilities

17

34,680

64,921

Lease liabilities

10

162,692

182,563

Long term provisions for




   employee benefits

16

12,047

16,401

Deferred tax liability

20

12,011

-

Other non-current liabilities

16

148,026

185,541





Non - current liabilities

 

369,456

449,426

 




LIABILITIES

 







Financial liabilities

17

854,014

869,612

Lease liabilities

10

79,295

51,385

Trade payables

13

670,563

423,820

Current income tax liabilities


-

-

Provisions


7,096

4,118

Other current liabilities

16

185,539

162,555





Current liabilities

 

1,796,507

1,511,490

 




Liabilities related to assets held for sale

22

357,384

664,798

 




TOTAL LIABILITIES

 

2,523,347

2,625,714

 




TOTAL LIABILITIES & EQUITY

 

2,397,858

2,652,040

 

 

The accompanying notes form on pages 6 till 32 an integral part of these condensed consolidated interim financial statements.

(UNAUDITED) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED

 

30-Jun-23

 







(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)














Share capital

Share premium

Contribution from shareholders

Remeasurement of post- employment benefit obligations

Currency translation differences

Retained earnings

Total Equity

 








Balances at 1 January 2022 (unaudited)

36,353

441,632

85,998

(6,239)

(471,657)

2,748

88,835

 








Remeasurements of post-employment

 







   benefit obligations, net

-

-

-

706

-

-

706

Currency translation adjustments

-

-

-

-

(253,523)

-

(253,523)

Total profit for the period

-

-

-

-

-

134,670

134,670

 








Total comprehensive loss

-

-

-

706

(253,523)

134,670

(118,147)

 








Share-based incentive plans

-

-

2,296

-

-

-

2,296

 








Balances at 30 June 2022 (unaudited)

36,353

441,632

88,294

(5,553)

(725,180)

137,418

(27,036)

 








Balances at 1 January 2023

36,353

441,632

76,604

(13,607)

(576,556)

61,900

26,326

 








Remeasurements of post-employment

 







   benefit obligations, net

-

-

-

(3,262)

-

-

(3,262)

Currency translation adjustments

-

-

-

-

(180,101)

-

(180,101)

Total profit for the period

-

-

-

-

-

24,030

24,030

 








Total comprehensive loss

-

-

-

(3,262)

(180,101)

24,030

(159,333)

 








Share-based incentive plans

-

-

7,518

-

-

-

7,518

 








Balances at 30 June 2023 (unaudited)

36,353

441,632

84,122

(16,869)

(756,657)

85,930

(125,489)

 

 

The accompanying notes form on pages 6 till 32 an integral part of these condensed consolidated interim financial statements.

(UNAUDITED) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 FOR THE PERIOD ENDED 30 JUNE 2023 (unaudited)

(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

 

(unaudited)

(unaudited)


30-Jun-23

30-Jun-22

 



Profit before income tax

242,362

214,758

 



Adjustments for:

 





Depreciation

27,116

27,110

Amortisation

60,449

57,008

Performance bonus accrual

15,408

10,850

Non-cash employee benefits expense - share-based payments

7,518

2,296

Interest income

(35,926)

(33,200)

Interest expense

120,925

81,970

Impairment of tangible and intangible assets

-

4,145

Hyperinflation adjustments

(73,475)

(92,368)

Cash flows from discontinued operation

29,924

142,800




Changes in operating assets and liabilities

 


Changes in trade receivables

(141,672)

(37,498)

Changes in other receivables and assets

60,487

(94,857)

Changes in inventories

(73,750)

(179,745)

Changes in contract assets

(2,406)

(6,568)

Changes in contract liabilities

18,941

(10,367)

Changes in trade payables

246,743

281,106

Changes in other payables and liabilities

(25,441)

65,663

Income taxes paid

-

(42,303)

Performance bonuses paid

(28,582)

(37,243)




Cash flows generated from operating activities

448,621

353,557

 



Purchases of property and equipment

(21,101)

(15,311)

Purchases of intangible assets

(40,859)

(38,985)

Disposals from sale of tangible and intangible assets

1,378

(4,133)

Cash flows from discontinued operation

-

(13,126)




Cash flows used in investing activities

(60,582)

(71,555)

 



Interest paid

(74,373)

(98,380)

Interest on leases paid

(29,405)

(25,780)

Interest received

18,135

18,423

Loans obtained

689,778

998,288

Loans paid

(723,389)

(665,492)

Payment of lease liabilities

(28,671)

(32,179)

Cash flows from discontinued operation

(159,921)

(179,032)




Cash flows (used in)/generated from financing activities

(307,846)

15,848

 



Effect of currency translation differences

(50,163)

(134,177)




Net increase in cash and cash equivalents

30,030

163,673

 



Effects of inflation on cash and cash equivalents

(89,545)

(101,940)




Net increase in cash and cash equivalents

(59,515)

61,733

 



Cash and cash equivalents at the beginning of the period

431,038

309,478

 



Cash and cash equivalents at the end of the period

371,523

371,211

 

 

The accompanying notes on pages 6 till 32 form an integral part of these condensed consolidated interim financial statements.

NOTES TO THE (UNAUDITED) CONDENSED CONSOLIDATED INTERIM FINANCIALSTATEMENTS AS AT 30 JUNE 2023

(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

 

NOTE 1 - GROUP'S ORGANIZATION AND NATURE OF ACTIVITIES

 

DP Eurasia N.V. (the "Company"), public limited company, having its statutory seat in Amsterdam, the Netherlands, was incorporated under the law of the Netherlands on 18 October 2016. The Company has been incorporated by integrating shares of Fides Food Systems Coöperatief U.A. and Vision Lovemark Coöperatief U.A. in Fidesrus B.V. and Fides Food Systems B.V.. Acquisitions occurred on
18 October 2016 when the Company acquired Fidesrus and Fides Foods and their subsidiaries and from this point forward consolidated Group was formed. This was a transaction under common control.

 

The Company's registered address is: Herikerbergweg 238, Amsterdam, the Netherlands.

 

The Company and its subsidiaries (together referred as the "Group") operate corporate-owned and franchise-owned stores in Turkey and the Russian Federation, including providing technical support, control and consultancy services to the franchisees.

 

As at 30 June 2023, the Group, including Coffy, hold franchise operating and sub-franchising right in 884 stores (789 franchise stores, 95 corporate-owned stores) (31 December 2022: 859 stores
(697 franchise stores, 162 corporate-owned stores).

 

Subsidiaries

 

The Company has a total of four fully owned subsidiaries. The entities included in the scope of the condensed consolidated financial interim information and nature of their business is as follows:

 

30-Jun

30-Jun

 



2023

2022

 



Effective

Effective

Registered

Nature of

Subsidiaries

ownership (%)

ownership (%)

country

business

 





Pizza Restaurantları A.Ş. ("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






 

 

Pizza Restaurants LLC is established in the Russian Federation, Domino's Russia is operating a pizza delivery network of company and franchise-owned stores in Russian Federation. As of 30 June 2023, the Company only has franchise- owned stores. 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. Please refer to Note 21 and Note 22 for the details of the discontinued operations.

 

Pizza Restaurantları A.Ş. ("Domino's Turkey") is established in Turkey. Domino's Turkey is operating a pizza delivery network of corporate and franchised stores in Turkey and has corporate and franchised coffee stores under the brand of Coffy. 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.

 

Significant changes in the current reporting period

 

The condensed interim consolidated financial statements have been prepared assuming that the Group will continue as a going concern and be able to realise its assets and discharge its liabilities in the normal course of business. The Group recorded a net gain from continued operations of TL 202,517 for the first half of 2023. The Group's current liabilities exceed its current assets by TL 386,524 as of 30 June 2023, The Group realized operating profit of TL 151,517 for the first half of 2023.

NOTE 1 - GROUP'S ORGANIZATION AND NATURE OF ACTIVITIES (Continued)

 

Fidesrus BV has applied to the court for OOO Pizza LLC's bankruptcy on 12 September 2023. With the increasingly challenging environment, DP Russia's parent holding company is now compelled to take this step, which will bring about the termination of the attempted sale process of DP Russia as a going concern and, inevitably, the Group's presence in Russia.

 

The Group currently utilises internally generated cash flow and bank borrowings in Turkey to meet its financing needs. The Group's Turkish operations are well established and cash generative and act as a source of liquidity for the wider Group. The Group has additional borrowing capacity available from Turkish banks, which it can draw down for liquidity needs. The Group enters into general loan agreements with a range of Turkish banks. Based on the general practice in Turkey, events of default, seizure of assets held by the bank as securities for company loans, regular disclosure of financials and change of control clauses and which are rolled over at the end of the term. Nearly most of the Turkish bank borrowings are short term. The banks make periodic revisions to determine the risk limits they are willing to make available to the Group and regularly assess the Group's financial position. The Group has not received any call requests nor have the Turkish banks that lend to it under these facilities declined any drawdown requests during the period under review. As at 30 June 2023 the limits available under these types of facilities amount to TRY517 million. The average maturity period for bank loans is
1,2 years as of today.  Additionally, The Company declare that the external debt of the Russian segment is an amount of Ruble 520 million, which was guaranteed by, inter alia, the Group's Turkish subsidiary, has been fully and finally settled by the Turkish subsidiary out of existing cash resources on 21 August 2023.

 

 

NOTE 2 -    BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS

 

2.1       Basis of preparation

 

These condensed consolidated interim financial statements for the six months period ended
30 June 2023 have been prepared in accordance with International Accounting Standard 34 ("IAS 34") Interim Financial Reporting.

 

The interim report does not include all the notes of the type normally included in the annual financial statements. Accordingly, this report is to be read in conjunction with the annual report for the year ended

31 December 2022. These condensed interim financial statements were approved for issue on

19 September 2023. The financial statements have been reviewed, not audited.

 

The Turkish economy has been designated as a hyperinflationary economy in the first half of 2022 and, as a result, IAS 29 "Financial Reporting in Hyperinflationary Economies" ("IAS 29") has become applicable to the Group's subsidiaries whose functional currency is the Turkish Lira (Domino's Turkey), IAS 29 requires companies to report the results of the operations in Turkey, as if these had always been highly inflationary. Specifically, IAS 29 requires:

 

−       Adjustment of historical cost of the non-monetary assets and liabilities for the change in purchasing power caused by inflation from the date of initial recognition to the end of the reporting date,

−       Non-adjustment of the monetary assets and liabilities, as they are already expressed in the measuring unit current at the end of the reporting period,

−       Adjustment of the statement of comprehensive income for inflation and its translation with the average index rate,

 

NOTE 2 -    BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS (Continued)

 

2.1       Basis of preparation (Continued)

 

−       Recognition of gain or loss on net monetary position in profit or loss in order to reflect the impact of inflation rate movement on holding monetary assets and liabilities in local currency,

−       There are no items measured at current cost,

−       All items in the statement of cash flows are expressed in terms of the measuring unit current at the end of the reporting period,

−       The restatement of financial statements in accordance with this Standard may give rise to differences between the carrying amount of individual assets and liabilities in the statement of financial position and their tax bases. These differences are accounted for in accordance with IAS 12 Income Taxes,

−       Total cumulative effect of restating non-monetary items in accordance with IAS 29 on opening balance sheet of 1 January 2021 are recognised in retained earnings.

 

IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date, and that corresponding figures for previous periods be restated in the same terms. The restatement of the comparative amounts was calculated by means of conversion factors derived from the Turkish nationwide consumer price index ("CPI") published by the State Institute of Statistics ("SIS"), Indices and conversion factors used to restate the comparative amounts until 30 June 2023 are given below:

 

Date

Index

Conversion factor

Cumulative three-year inflation rate

 




30-Jun-23

1187.07

1.0000

178.3%

31-Dec-22

991.02

1.1978

123.5%

30-Jun-22

858.86

1.3821

93.7%

 

 

The financial statements of Group's subsidiaries, whose functional currency is the currency of a hyperinflationary economy, are adjusted for inflation and prior year comparatives have been restated for hyperinflation in the consolidated financial statements.

 

In the consolidated income statement for the six months period on 30 June 2023, the Group recognized a total gain on net monetary position of TRY 139,546 thousands (30 June 2022:TRY 102,682).

 

The Group used the conversion coefficient derived from the consumer price index published by Turkish Statistics Institute ("TUIK") The conversion coefficient was 1187.07 and 991.02 on 30 June 2023 and 31 December 2022, respectively. One conversion coefficient per period has been determined and calculated as purchases and sales are relatively fairly divided over the year.

 

Seasonality of operations

 

There is no significant seasonality effect on the Group's revenue. According to financial year ended
31 December 2022, 51% of revenues accumulated in the first half year, with 49 % accumulating in the second half.

 

 

NOTE 2 -    BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS (Continued)

 

2.1       Basis of preparation (Continued)

 

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 ('TRY'), 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:

30-Jun-23

31-Dec-22

30-Jun-22


Period

Period

Period

Period

Period

Period

Currency

End

Average

End

Average

End

Average

 







Euros

28.154

21.4727

19.9349

17.36424

17.5221

16.1964

Russian Roubles

0.3034

0.2559

0.25948

0.249513

0.3209

0.2004

 

 

2.2       New and amended international financial reporting standards as adopted by European Union

 

New and amended standards adopted by the Group, which are effective for the interim financial statements as at 30 June 2023

 

●       A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 37 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16; effective from annual periods beginning on or after 1 January 2022,

 

●       Amendments to IAS 16, 'Property, plant and equipment' prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use, Instead, a company will recognise such sales proceeds and related cost in profit or loss,

 

●       Amendments to IAS 37, 'Provisions, contingent liabilities and contingent assets' specify which costs a company includes when assessing whether a contract will be loss-making,

 

Annual improvements make minor amendments to IFRS 1, 'First-time Adoption of IFRS', IFRS 9, 'Financial Instruments', IAS 41, 'Agriculture' and the Illustrative Examples accompanying IFRS 16, 'Leases'.

 

These standards did not have any impact on the Group's accounting policies and did not require retrospective adjustments.

 

Standards, amendments, and interpretations that are issued but not effective as of 30 June 2023:

 

●          Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8; effective from annual periods beginning on or after 1 January 2023. The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies,

NOTE 2 -    BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS (Continued)

 

2.2       New and amended international financial reporting standards as adopted by European Union (Continued)

 

●          Amendment to IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction; effective from annual periods beginning on or after 1 January 2023. These amendments require companies to recognise deferred tax on transactions that, on initial recognition give rise to equal amounts of taxable and deductible temporary differences,

 

●          Amendment to IFRS 16 - Leases on sale and leaseback; effective from annual periods beginning on or after 1 January 2024. These amendments include requirements for sale and leaseback transactions in IFRS 16 to explain how an entity accounts for a sale and leaseback after the date of the transaction. Sale and leaseback transactions where some or all the lease payments are variable lease payments that do not depend on an index or rate are most likely to be impacted,

 

●          Amendment to IAS 1 - Non current liabilities with covenants; effective from annual periods beginning on or after 1 January 2024. These amendments clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability,

 

●          Amendment to IAS 12 - International tax reform - pillar two model rules; The deferred tax exemption and disclosure of the fact that the exception has been applied, is effective immediately, The other disclosure requirements are effective annual periods beginning on or after 1 January 2023. These amendments give companies temporary relief from accounting for deferred taxes arising from the Organisation for Economic Co-operation and Development's (OECD) international tax reform. The amendments also introduce targeted disclosure requirements for affected companies,

 

●          Amendments to IAS 7 and IFRS 7 on Supplier finance arrangements; effective from annual periods beginning on or after 1 January 2024. These amendments require disclosures to enhance the transparency of supplier finance arrangements and their effects on a company's liabilities, cash flows and exposure to liquidity risk. The disclosure requirements are the IASB's response to investors' concerns that some companies' supplier finance arrangements are not sufficiently visible, hindering investors' analysis,

 

●          IFRS S1, 'General requirements for disclosure of sustainability-related financial information; effective from annual periods beginning on or after 1 January 2024. This is subject to endorsement of the standards by local jurisdictions. This standard includes the core framework for the disclosure of material information about sustainability-related risks and opportunities across an entity's value chain,

 

●          IFRS S2, 'Climate-related disclosures'; effective from annual periods beginning on or after 1 January 2024. This is subject to endorsement of the standards by local jurisdictions. This is the first thematic standard issued that sets out requirements for entities to disclose information about climate-related risks and opportunities.

 

 

 

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 at 30 June 2023 and 2022 comprise the performance and the management of its Turkish and headquarter.

 

As of 31 December 2022, due to the intention to sales of Russian operation, the Group has reclassified the results of Russian operation as discontinued operations in the comprehensive income. As of 30 June 2023, 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 other 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,

 

Due to initial application of IAS 29 and its impact on the comparative periods, management information presented in segment reporting have been restated in accordance with IAS 29 application.

 

The segment analysis for the periods ended 30 June 2023 and 2022 are as follows:

 

1 January - 30 June 2023

Turkey

Other

Total

 




Corporate revenue

346,476

-

346,476

Franchise revenue and royalty revenue




   obtained from franchisees

1,119,365

-

1,119,365

Other revenue

115,475

-

115,475

Total revenue

1,581,316

-

1,581,316

- At a point in time

1,574,612

-

1,574,612

- Over time

6,704

-

6,704

Operating profit

183,443

(32,282)

151,161

Capital expenditures

63,439

-

63,439

Tangible and intangible disposals

(1,378)

-

(1,378)

Depreciation and amortization expenses

(87,564)

-

(87,564)





Adjusted EBITDA

284,901

(19,684)

265,217

 




1 January - 30 June 2023

Turkey

Other

Total

 




Borrowings

 



TRY

645,709

-

645,709

RUB

-

242,985

242,985






645,709

242,985

888,694

 




Lease liabilities

 



TRY

241,987

-

241,987






241,987

-

241,987

 




Total

887,696

242,985

1,130,681


 

NOTE 3 - SEGMENT REPORTING (Continued)

 

1 January - 30 June 2022

Turkey

Other

Total

 




Corporate revenue

288,724

-

288,724

Franchise revenue and royalty revenue




   obtained from franchisees

819,801

-

819,801

Other revenue

159,345

-

159,345

Total revenue

1,267,870

-

1,267,870

- At a point in time

1,216,624

-

1,216,624

- Over time

51,246

-

51,246

Operating profit

123,698

(16,303)

107,395

Capital expenditures

54,296

-

54,296

Tangible and intangible disposals

(4,133)

-

(4,133)

Depreciation and amortization expenses

(84,118)

-

(84,118)





Adjusted EBITDA

210,766

(13,406)

197,360

 




1 January - 31 December 2022

Turkey

Other

Total

 




Borrowings

 



TRY

850,269

-

850,269

RUB

-

84,264

84,264






850,269

84,264

934,533

 




Lease liabilities

 



TRY

233,948

-

233,948






233,948

-

233,948

 




Total

1,084,217

84,264

1,168,481

 

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.

 

 

 

NOTE 3 - SEGMENT REPORTING (Continued)

 

The reconciliation of adjusted EBITDA as of 30 June 2023 and June 2022 is as follows:

 

Turkey

30-Jun-23

30-Jun-22

 



Adjusted EBITDA (*)

284,901

210,766

 



Non-recurring and non-trade (income)

 


   /expenses per Group Management (*)

 


One off non-trading costs (**)

6,376

654

Share-based incentives

7,518

2,296




EBITDA

271,007

207,816

 



Depreciation and amortization

(87,564)

(84,118)




Operating profit

183,443

123,698

 

 

(*)        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.

 

(**)     The reason for the significant increase in one-off non-trading costs is mainly related to consultancy expenses due to the services related to the top management decisions.

 

Other

30-Jun-23

30-Jun-22

 



Adjusted EBITDA (*)

(19,684)

(13,406)

 



Non-recurring and non-trade (income)/expenses

 

   per Group Management

 


One-off Expenses

12,598

2,897




EBITDA

(32,282)

(16,303)

 



Depreciation and amortization

-

-

 



Operating profit

(32,282)

(16,303)

 

(*)        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 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.

 

 

NOTE 3 - SEGMENT REPORTING (Continued)

 

The reconciliation of adjusted net income as of 30 June 2023 and 2022 is as follows:

 

2023

2022

 



Profit for the period as reported

202,517

146,655

 



Non-recurring and non-trade (income)/expenses

 

   per Group Management

 


Share-based incentives

7,518

2,296

One-off expenses

18,974

3,551




Adjusted net profit for the period(*)

229,009

152,502

 

(*)        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.

 

 

NOTE 4 - REVENUE AND COST OF SALES

 

30-Jun-23

30-Jun-22

 



Corporate revenue

346,476

288,724

Franchise revenue and royalty



   revenue obtained from franchisees

1,119,365

819,801

Other revenue (*)

115,475

159,345




Revenue

1,581,316

1,267,870

 



Cost of sales

(899,904)

(822,269)




Gross profit

681,412

445,601

 

(*)        Other revenue mainly includes handover income, IT income and other income from franchisee.

 

 

NOTE 5 - EXPENSES BY NATURE

 




30-Jun-23

30-Jun-22

 



Employee benefit expenses (*)

(227,622)

(176,302)

Depreciation and amortization expenses (*)

(87,564)

(84,118)





(315,186)

(260,420)

 

(*)        These expenses are accounted in cost of sales, general administration expenses and marketing expenses.

NOTE 6 - FOREIGN EXCHANGE GAINS, FINANCIAL INCOME AND EXPENSES

 

Foreign exchange gains

30-Jun-23

30-Jun-22

 



Foreign exchange gains, net

59,507

59,683





59,507

59,683

 



Financial income

30-Jun-23

30-Jun-22

 



Interest income on lease liabilities

17,791

14,777

Interest income

18,135

18,423





35,926

33,200

 



Financial expense

30-Jun-23

30-Jun-22

 



Interest expense

(91,520)

(56,190)

Interest expense on lease liabilities

(29,405)

(25,780)

Other

(22,853)

(6,232)





(143,778)

(88,202)

 

 

NOTE 7 - EARNINGS (LOSS) PER SHARE

 

The reconciliation of adjusted profit per share as of 30 June 2023 and 2022 is as follows:

30-Jun-23

30-Jun-22

 



Average number of shares existing during the period

146,591

145,372

Net (loss) / profit for the period attributable



   to equity holders of the parent

24,030

134,670




Earnings per share

0.16

0.93

 




30-Jun-23

30-Jun-22

 



Average number of shares existing during the period

146,591

145,372

Net profit from continuing operations for the period attributable


   to equity holders of the parent

202,517

146,655




Earnings per share from continued operations

1.38

1.01

 




30-Jun-23

30-Jun-22

 



Average number of shares existing during the period

146,591

145,372

Net losses from discontinued operations for the period attributable

   to equity holders of the parent

(178,487)

(11,985)




Losses per share from discontinued operations

(1.22)

(0.08)

 

 

NOTE 7 - EARNINGS (LOSS) PER SHARE (Continued)





The reconciliation of adjusted earnings per share as of 30 June 2023 and 2022 is as follows:





30-Jun-23

30-Jun-22

 



Average number of shares existing during the period

146,591

145,372

Net profit for the period attributable to equity



   holders of the parent

24,030

134,670




Non-recurring and non-trade expenses

 


   per Group Management (*)

 


Share-based incentives

7,518

2,296

One-off expenses

18,974

3,551




Adjusted net gain for the period



   attributable to equity holders of the parent

50,522

140,517




Adjusted Earnings per share (*)

0.34

0.97

 

(*)        Adjusted earnings per share 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 the Group management comprises incomes/expenses which are assumed by the Group management that are not part of the normal course of business and are non-recurring 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.

 

There are no shares or options with a dilutive effect and hence the basic and diluted earnings per share are the same.

 

The earning/ (loss) per share presented for the period ended 30 June 2023 is based on the issued share capital of DP Eurasia N.V. as at 30 June 2023.

 

NOTE 8 - PROPERTY AND EQUIPMENT

 

01-Jan-23

Additions

Disposals

Transfers

30-Jun-23

 






Cost

 





Machinery and equipment

67,859

616

-

-

68,475

Motor vehicles

45,760

1,480

-

-

47,240

Furniture and fixtures

273,379

9,456

(5,836)

-

276,999

Leasehold improvements

257,827

9,270

(6,384)

462

261,175

Construction in progress

738

1,758

-

(462)

2,034








645,563

22,580

(12,220)

-

655,923

 






Accumulated depreciation

 





Machinery and equipment

(46,160)

(2,484)

-

-

(48,644)

Motor vehicles

(26,271)

(7,331)

-

-

(33,602)

Furniture and fixtures

(195,475)

(11,074)

4,746

-

(201,803)

Leasehold improvements

(229,642)

(6,226)

6,096

-

(229,772)








(497,548)

(27,115)

10,842

-

(513,821)

 

For the period ended 30 June 2023, depreciation expense of TRY 18,252 has been charged in cost of sales and TRY 8,863 has been charged in general administrative expenses.

NOTE 8 - PROPERTY AND EQUIPMENT (Continued)

 





Currency

Effect of

 






translation

Disposal of

 


01-Jan-22

Additions

Disposals

Transfers

adjustments

Subsidiaries

30-Jun-22

 








Cost

 







Machinery and equipment

172,899

7,137

(7,519)

3,946

92,716

(201,871)

67,308

Motor vehicles

70,137

-

-

100

331

(934)

69,634

Furniture and fixtures

334,797

9,804

(50,961)

-

6,588

(13,913)

286,315

Leasehold improvements

400,061

3,104

(14,060)

(4,046)

63,646

(177,698)

271,007

Construction in progress

5,567

475

(377)

-

(2,327)

(2,451)

887


983,461

20,520

(72,917)

-

160,954

(396,867)

695,151

 








Accumulated depreciation

 







Machinery and equipment

(102,939)

(11,129)

4,399

-

(55,671)

122,210

(43,130)

Motor vehicles

(45,253)

(6,871)

-

-

(379)

823

(51,680)

Furniture and fixtures

(249,959)

(13,032)

48,265

-

(4,507)

9,876

(209,357)

Leasehold improvements

(349,465)

(13,888)

12,044

-

(40,922)

140,402

(251,829)










(747,616)

(44,920)

64,708

-

(101,479)

273,311

(555,996)

 








Net book value

235,845

 





139,155

 

For the period ended 30 June 2022, depreciation expense of TRY 27,402 has been charged in cost of sales and TRY 17,518 has been charged in general administrative expenses.

NOTE 9 - INTANGIBLE ASSETS

 

Key money

Computer software

Franchise contracts

Total

 





Cost

 




01-Jan-23

53,181

376,490

365,959

795,630

 





Additions

-

40,859

-

40,859

Disposals

-

(47)

-

(47)

Currency Translation Disposal

-

-

-

-

Effect of disposal of subsidiaries

-

-

-

-







53,181

417,302

365,959

836,442

 





Accumulated depreciation

 




01-Jan-23

(48,882)

(270,632)

(365,959)

(685,473)

 





Additions

(2,062)

(25,833)

-

(27,895)

Disposals

-

47

-

47

Currency Translation Disposal

-

-

-

-

Effect of disposal of subsidiaries

-

-

-

-







(50,944)

(296,418)

(365,959)

(713,321)

Net book value

2,237

120,884

-

123,121

 

For the period ended 30 June 2023, amortisation expense of TRY 18,777 has been charged in cost of sales and TRY 9,118 has been charged in general administrative expenses.

 

Key money

Computer software

Franchise contracts

Total

 





01-Jan-22

78,193

 

400,725

365,949

 

844,867

 








Additions

2,618

48,630

-

51,248

Disposals

(7,940)

(6,012)

-

(13,952)

Currency Translation

5,885

56,753

-

62,638

Effect of disposal of subsidiaries

(13,229)

(124,674)

-

(137,903)







65,527

375,422

365,949

806,898

 





Accumulated depreciation

 




01-Jan-22

(56,438)

(287,555)

(365,949)

(709,942)

 





Additions

(6,005)

(27,628)

-

(33,633)

Disposals

6,462

5,768

-

12,230

Currency Translation

(1,949)

(28,110)

-

(30,059)

Effect of disposal of subsidiaries

4,282

61,424

-

65,706







(53,648)

(276,101)

(365,949)

(695,698)

Net book value

11,879

99,321

-

111,200

 

For the period ended 30 June 2022, amortisation expense of TRY 20,517 has been charged in cost of sales and TRY13,116 has been charged in general administrative expenses.

NOTE 10 - RIGHT OF USE ASSETS

 

Details of lease receivable as of 30 June 2023 and 31 December 2022 are as follows:

 

30-Jun-23

31-Dec-22

 



Lease receivables

 


Current

36,246

16,380

Non-current

105,197

114,112





141,443

130,492

 

Details of lease liabilities as of 30 June 2022 and 31 December 2021 are as follows:

 

30-Jun-23

31-Dec-22

 



Lease liabilities

 


Current

79,295

51,385

Non-current

162,692

182,563





241,987

233,948

 

The movement of right-of-use assets as of 30 June 2023 and 2022 are as follows:

 

2023

2022

 



Opening - 1 January

118,028

280,986

 



Depreciation

(32,554)

(76,469)

Current year additions

56,728

107,213

Current year disposals

-

(8,622)

Currency translation adjustments

-

149,883




Closing - 30 June

142,202

452,992

 

For the period ended 30 June 2023, amortisation expense of TRY 19,851 has been charged in cost of sales and TRY 12,703 has been charged in general administrative expenses (30 June 2022: TRY 63,852 and TRY 43,361 respectively).

 

NOTE 11 - GOODWILL                                                                                    

 

2023

2022

 



01-Jan

280,988

219,912

 



Currency translation impact

-

61,076




30-Jun

280,988

280,988

 

Management has concluded that the recoverable amount of the individual CGUs is higher than the carrying amount. The goodwill relates to Russian CGU has been classified as asset held for sale amounted TRY 16,613 as of 31 December 2022. Remaining balance is only related to Turkish CGU. As of 30 June 2023, the goodwill related to Russian CGU has been impaired amounted TRY16,613 from asset held for sale.

 

 

NOTE 12 - CASH AND CASH EQUIVALENTS

 

The details of cash and cash equivalents as of 30 June 2023 and 31 December 2022 are as follows:

 

30-Jun-23

31-Dec-22

 



Cash

1,133

1,522

Banks

195,308

144,089

Bank Term bank deposits (less than three months)

146,265

204,830

Credit card receivables

28,817

80,597





371,523

431,038

 

 

Maturity term of credit card receivables are 30 days on average (31 December 2022:30 days),

 

 

NOTE 13 - TRADE RECEIVABLES            AND PAYABLES

 

a)      Short-term trade receivables

 

30-Jun-23

31-Dec-22

 



Trade receivables

447,802

318,838

Post-dated cheques

45,220

38,524





493,022

357,362

 



Less: Doubtful trade receivables

(1,820)

(1,625)

 



Short-term trade receivables, net

491,202

355,737

 

The average collection period for trade receivables is between 30 and 60 days (2022: 30 and 60 days).

 

NOTE 13 - TRADE RECEIVABLES            AND PAYABLES (Continued)

 

b)         Long-term trade receivables

 

30-Jun-23

31-Dec-22

 



Trade receivables

7,494

5,855

Post-dated cheques (*)

18,314

13,746





25,808

19,601

 

(*)        Post-dated cheques are the receivables from franchisees resulting from store openings.

 

c)         Short-term trade and other payables

 

30-Jun-23

31-Dec-22

 



Trade payables

665,092

419,195

Other payables

5,471

4,625





670,563

423,820

 

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 2022: less than three months).

 

 

NOTE 14 - TRANSACTIONS WITH RELATED PARTIES

 

Key management compensation

 

30-Jun-23

30-Jun-22

 



Short-term employee benefits

34,931

33,378

Share-based incentives

7,518

2,296





42,449

35,674

 

There are no loans, advance payments or guarantees given to key management.

 

 

NOTE 15 - INVENTORIES

 

30-Jun-23

31-Dec-22

 



Raw materials

358,432

279,918

Other inventory

1,357

6,121





359,789

286,039

 

 

NOTE 16 - OTHER ASSETS AND LIABILITIES

 

Other current receivables and assets

 

30-Jun-23

31-Dec-22

 



Advance payments (1)

87,559

174,078

Lease receivables

36,246

16,380

Prepaid marketing expenses

21,894

8,786

Contract assets related to franchising contracts (2)

5,958

3,537

Prepaid taxes and VAT receivable

2,360

762

Prepaid insurance expenses

1,146

3,191

Other

9,207

3,638




Total

164,370

210,372

 

(1)       As of 30 June 2023, advance payments are composed of advances given to suppliers for the purchasing raw material and other services.

(2)       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.

 

Other non-current receivable and assets

30-Jun-23

31-Dec-22

 



Lease receivables

105,197

114,112

Prepaid marketing expenses

58,112

53,259

Contract assets related to franchising contracts(*)

24,345

24,360

Deposits given

6,298

5,516

Other

206

8




Total

194,158

197,255

 

(*)       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.

 

Other current liabilities

30-Jun-23

31-Dec-22

 



Contract liabilities from franchising contracts

43,946

30,879

Taxes and funds payable

27,870

25,335

Payable to personnel

18,923

12,310

Advances received from franchisees

16,894

6,822

Performance bonuses

15,408

35,438

Unused vacation liabilities

12,448

10,176

Social security premiums payable

9,174

14,154

Other expense accruals

40,876

27,441




Total

185,539

162,555

 

Other non-current liabilities          

30-Jun-23

31-Dec-22

 



Contract liabilities from franchising contracts

144,262

176,270

Unearned Revenue

-

9,271

Long term provisions for employee benefits

12,047

16,401

Other

3,764

-




Total

160,073

201,942

 

 

 

NOTE 17 - FINANCIAL LIABILITIES

30-Jun-23

31-Dec-22

 



Short term bank borrowings

854,014

850,269




Short-term financial liabilities

854,014

850,269

 



Short-term portions of long-term borrowings

-

19,343

Short-term portions of long-term leases

79,295

51,385




Current portion of long-term financial liabilities

79,295

70,728

 



Total short-term financial liabilities

933,309

920,997

 



Long-term bank borrowings

34,680

64,921

Long-term leases

162,692

182,563




Long-term financial liabilities

197,372

247,484

 



Total financial liabilities

1,130,681

1,168,481

 

30-Jun-23

 









Currency

Maturity

Interest rate (%)

Short-term

Long-term

 





TRY borrowings

2023

22.00%

645,709

-

RUB borrowings

2024

3mMosPrime+%5.30-9.70%

208,305

34,680









854,014

34,680

 





31-Dec-22

 









Currency

Maturity

Interest rate (%)

Short-term

Long-term

 





TRY borrowings

Revolving

19.14

850,269

-

RUB borrowings

2024

3mMosPrime+%5.30-9.70

19,343

64,921









869,612

64,921

 

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. As of 31 December 2022, loans from Sberbank has already been classified as short-term under 'Liabilities related to asset held for sale' line in balance sheet.  Sberbank amount of RUB 520 million of DP Russia, which was guaranteed by, inter alia, the Group's Turkish subsidiary, has been fully and finally settled by the Turkish subsidiary out of existing cash resources, with the Group's gross debt reducing accordingly and a resulting gross cash balance of TRY 162 million on the date of 21 August 2023 that is disclosed in note 21.

 

 

NOTE 17 - FINANCIAL LIABILITIES (Continued)

 

The redemption schedule of the borrowings as of 30 June 2023 and 31 December 2022 is as follows:

 

30-Jun-23

31-Dec-22

 



To be paid in one year

854,014

869,612

To be paid between one to two years

17,450

41,431

To be paid between two to three years

17,230

23,490





888,694

934,533

 

The details of the finance lease liabilities as of 30 June 2023 and 31 December 2022 are as follows:

                                                                                                                                                          

30-Jun-23

31-Dec-22

 



Leases to be paid in one year

79,295

51,385

Leases to be paid between one to two years

70,119

74,529

Leases to be paid between two to three years

35,097

51,930

Leases to be paid between three years and more

57,476

56,104





241,987

233,948

 

 

The reconciliation of adjusted net debt as of 30 June 2023 and 31 December 2022 is as follows:

 

30-Jun-23

31-Dec-22

 



Short term bank borrowings(*)

854,014

850,269

Short-term portions of long-term borrowings

-

19,343

Short-term portions of long-term leases

79,295

51,385

Long-term bank borrowings

34,680

64,921

Long-term leases

162,692

182,563




Total borrowings

1,130,681

1,168,481

 



Cash and cash equivalents (-)

(371,523)

(431,038)




Net debt

759,158

737,443

 



Non-recurring items per Group management

 


Long-term deposit for loan guarantee

(141,443)

(67,340)




Adjusted net debt (**)

617,715

670,103

 

 

(*)        As of 31 December 2022, loans from Sberbank has been classified as short-term under 'Liabilities for sale' line in balance sheet. As of 30 June 2023, loans from Sberbank has been classified as short term bank borrowings in the balance sheet.

(**)     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 consider deposits not otherwise considered cash and cash equivalents under IFRS.

 

NOTE 18 - COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES

 

a)       Guarantees given to third parties as of 30 June 2023 and December 2022 are as follows;

 

30-Jun-23

31-Dec-22

 



Guarantee letters given

41,992

40,906





41,992

40,906

 

 

b)      Guarantees received for trade receivables are as follows:

                                                                                                                                                             

30-Jun-23

31-Dec-22

 



Guarantee notes received

136,168

107,418

Guarantee letters received

221,510

197,555





357,678

304,973

 

c)       Bankruptcy proceedings under Russian Law

 

Fidesrus BV has applied to the court for OOO Pizza LLC's bankruptcy on 12 September 2023 Bankruptcy proceedings in Russia usually go through two stages that are supervision and receivership proceedings. The aim of the supervision proceeding is to improve the financial standing of the debtor. Receivership proceedings begin when the supervision is completed and is obvious that the company is unable to reinstate its financial standing. Receivership usually ends with liquidation of the company. Usually, the duration of this stage is approximately from one to three years. During these proceedings, there are 3 potential key risks that are subsidiary liability, claw back action and tax inspection which are not necessarily relevant in this case.

 

Subsidiary liability: If the debtor's assets are insufficient to satisfy all claims of the debtors as a result of actions (or omissions) of the debtor's controlling persons, such persons shall be liable for the debtor's obligations. The amount of such liability is equal to the amount of all unsatisfied claims of the creditors, i.e. the claims included into the registry of creditors' claims, current liabilities claims and claims outside the registry of creditors' claims.

 

Claw back action: Transactions made within three years prior to the acceptance of the bankruptcy petition by the court may be challenged if it is proven that the transaction (1) caused damage to creditors, (2) unequal or (3) favored certain creditors.

 

Tax inspection: During the bankruptcy process, there will be potential tax inspection for the statutory financials of OOO Pizza LLC.

 

It is too early to have an reliable estimate of the financial impact on the consolidated financial position and results of the Company, as it depends on the position of the creditors in the case and the bankruptcy receiver.

 

 

 

NOTE 19 - EQUITY

 

The shareholders and the shareholding structure of the Group at 30 June 2023 and 31 December 2022 are as follows:

 

30-Jun-23

31-Dec-22


Share (%)

Amount

Share (%)

Amount

 





Jubilant FoodWorks Netherlands B.V. (*)

48.8

17,755

49,0

17,828

Public share

44.6

16,224

45,9

16,671

Vision International N.V.(**)

5.3

1,938

4,9

1,781

Other

1.2

436

0,2

73








36,353

 

36,353

 

 

(*)        Fides Food Systems Coöperatief U.A. merged with Jubilant FoodWorks Netherlands B.V.(acquiring entity)

(**)     Vision Lovermark Coöperatief U.A. merged with Vision International N.V. (acquiring entity).

 

As of 30 June 2023, the Group's shares are issued and fully paid for.

 

As of 30 June 2023, the Group's 146,590,620 (31 December 2022: 145,372,414) shares are issued and fully paid for.

 

Share premium

 

Share premium represents differences resulting from the incorporation of Fides Food by Fides Food Systems Coöperatief U.A. at a price exceeding the face value of those shares and differences between the face value and the fair value of shares issued at the IPO.

 

Ultimate controlling party

 

The ultimate controlling party of the Company is Jubilant Foodworks Limited. There is no individual ultimately controlling the Group.

 

 

NOTE 20 - INCOME 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 condensed consolidated financial information, has been calculated on a separate-entity basis. On 30 June 2023, the tax is 20 % for Turkey, and %25.8 for the Netherlands.

 

Corporate tax liability for the year consists of the following:

 

30-Jun-23

31-Dec-22

 



Corporate tax calculated

22,319

-

Prepaid taxes (-)

(45,418)

(54,400)




Tax liability

(23,099)

(54,400)

 

 

NOTE 20 - INCOME TAX (Continued)

 

Tax income and expenses included in the statement of comprehensive income are as follows:

 

30-Jun-23

30-Jun-22

 



Current period corporate tax expense

(22,319)

(46,634)

Deferred tax (expense)/income

(17,526)

(21,469)




Tax expense

(39,845)

(68,103)

 

 

The breakdown of cumulative temporary differences and the resulting deferred income tax assets/liabilities at 30 June 2023 and 31 December 2022 using statutory tax rates are as follows:

 

                                                                                 

30-Jun-23

31-Dec-22



Deferred tax

 

Deferred tax

 

Temporary differences

assets/ (liabilities)

Temporary differences

assets/ (liabilities)

 





Contract liabilities from franchising contracts

(28,569)

5,714

(27,884)

5,577

Right of use assets and lease liability

41,084

(8,217)

21,064

(4,213)

Bonus accruals

505

(101)

505

(101)

Legal provisions

(7,096)

1,419

(3,438)

688

Unused vacation liabilities

(12,448)

2,490

(8,495)

1,699

Provision for employee termination benefit

(12,047)

2,409

(13,693)

2,739

Stock

29,397

(5,879)

13,070

(2,614)

Other

5,085

(1,017)

(5,720)

3,758

Property, equipment, and intangible assets

44,146

(8,829)

12,612

(2,522)






Deferred income tax assets, net

 

(12,011)

 

5,010

 

 

 

NOTE 21 - SUBSEQUENT EVENT

 

Since the management has not concluded the negotiation with the potential buyers positively, the Company announces the initiation of steps by Fides Rus B.V. parent holding company of OOO Pizza LLC to file for OOO Pizza LLC 's bankruptcy on 21 August 2023. Fidesrus BV has applied to the court for OOO Pizza LLC's bankruptcy on 12 September 2023. This is preceded by the announcement on
28 December 2022, which confirmed that the Company was evaluating its presence in Russia, the impact of sanctions and its continuing ability to serve its customers in Russia. In this connection, the Russian segment was classified as discontinued operations within the Company's audited financial statements for the year ended 31 December 2022. With the increasingly challenging environment, DP Russia's immediate holding company is now compelled to take this step, which will bring about the termination of the attempted sale process of DP Russia as a going concern and, inevitably, the Group's presence in Russia. A bankruptcy petition of DP Russia is filed at 12 September 2023 in accordance with the relevant statutory requirements in due course. It is too early to have an exact estimate of the financial impact of a potential insolvency of DP Russia on the consolidated financial position and results of the Company. As the company applied for bankruptcy for OOO Pizza LLC the related operations will not longer be presented as held for sale in future financial statements. The accounting impact will be reflected in future financial statements following the progress of the process.

 

The Company can confirm that the external debt of the Russian segment is an amount of RUB
520 million, which was guaranteed by, inter alia, the Group's Turkish subsidiary, has been fully and finally settled on 21 August 2023 by the Turkish subsidiary out of existing cash resources, with the Group's gross debt reducing accordingly and a resulting gross cash balance of TRY 162 million (based on the actual but unaudited cash position as at 18 August 2023).

NOTE 22 -            ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

 

The Group holds franchise operating and sub-franchising rights in 142 stores in Russia (142 franchised stores, no corporate-owned stores). In December 2022, the Board has decided to explore the options to sell its Russian operations. Since there are still potential buyers and the negotiation process is ongoing as of 30 June 2023, DP Russia operations are continued to be reported within discontinued operations and its assets and liabilities are recognised as assets held for sale and liabilities for sales. Refer to
Note 21 "Subsequent Event", for subsequent events impacting the selling process.

 

The following criterias have been met for a sale to be highly probable:

 

•           The board has decided to sell the asset and liability of Russian operation,

•           An active programme to locate a buyer and complete the plan has been initiated by the management. There are potential buyers, and the management has started the negotiation with the potential buyers and official offers have been obtained in 2022 and continued during the first half of 2023,

•           The management has expected to be completed the sale transaction within one year from the date of classification.

 

ASSETS

 


30-Jun-23

31-Dec-22

 




Trade receivables


2,256

6,844

Lease receivables


-

3,363

Right-of-use assets (*)


-

147,764

Property and equipment (**)


-

77,864

Intangible assets (**)


-

56,266

Goodwill (***)


-

16,614

Deferred tax assets (***)


-

13,357

Other non-current assets


3,454

7,755





Non-current assets

 

5,710

329,827

 




Cash and cash equivalents


1,487

4,478

Trade receivables


34,656

47,645

Lease receivables


-

7,850

Inventories


13,141

20,343

Other current assets


24,502

25,257





Current assets

 

73,786

105,573

 

 

(*)        Since all corporate owned stores have been transferred to franchise stores as at 30 June 2023, all right of use assets amount related the transferred stores have been fully impaired.

(**)     Property, plant equipment and intangible balances have been fully impaired.

(***)   Deferred tax assets and liabilities related to the temporary differences and goodwill amount have been transferred to income statement and fully impaired.

NOTE 22 -     ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS (Continued)

 

LIABILITIES

                                                                                                                                                             


30-Jun-23

31-Dec-22

 




Financial liabilities


-

138,164

Lease liabilities


15,187

121,593

Deferred tax liability


-

3,633

Other non-current liabilities


17,004

18,898





Non - current liabilities

 

32,191

282,288

 




LIABILITIES

 







Financial liabilities


-

35,351

Lease liabilities


11,159

58,415

Trade payables


231,884

206,970

Provisions


2,179

955

Other current liabilities


79,971

80,819





Current liabilities

 

325,193

382,510

 




TOTAL LIABILITIES

 

357,384

664,798

 




TOTAL EQUITY

 

(277,888)

(229,398)

 




TOTAL LIABILITIES & EQUITY

 

79,496

435,400

 

 

INCOME OR LOSS

                                                                                                                                           


30-Jun-23

30-Jun-22

 




Revenue


280,325

342,160

Cost of sales


(221,812)

(274,022)





Gross Profit

 

58,513

68,138

 




General administrative expenses


(65,959)

(57,741)

 Marketing and selling expenses


(47,783)

(66,305)

Other operating expense/(income), net (*)


(102,769)

10,916





Operating profit

 

(157,998)

(44,992)

 




Financial income


1,198

83,197

Financial expense


(15,597)

(47,142)





Losses from income tax

 

(172,397)

(8,937)

 




Tax expense

 

(6,090)

(3,048)

 




Losses for the period

 

(178,487)

(11,985)

 

 

(*)        Includes the impairment of  right of use assets, property, plant and equipment, intangible assets, goodwill, and deferred tax assets and liabilities related to the temporary differences due to transfer of all corporate-owned stores to franchise stores as of 30 June 2023.

NOTE 22 -     ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS (Continued)

 

After disposal of an asset or disposal group:

 

-        the associated currency translation difference, including amounts previously reported within equity, will be reclassified to the income statement as part of the gain or loss on disposal. This is estimated to be a TRY 732,759 million loss.

-        inter-group balances are eliminated against discontinued operations

 

Amsterdam, 19 September 2023

 

Executive Directors

 

Aslan Saranga

Frederieke Slot

 

Non- Executive directors

 

Shyam Bhartia

Hari Bhartia

David Adams

Ahmet Ashaboğlu (Chairman)

Burak Ertaş

Bijou Kurien

 

 

 

 

…………………

 

 

Review report

To: the board of directors of DP Eurasia N.V.


Introduction

We have reviewed the accompanying condensed consolidated interim financial statements for the six-month period ended 30 June 2023 of DP Eurasia N.V., Amsterdam, which comprises the condensed consolidated statement of financial position as at 30 June 2023, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows for the period then ended and the notes to the condensed consolidated interim financial statements. The board of directors is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope

We conducted our review in accordance with Dutch law including standard 2410, Review of Interim Financial Information Performed by the Independent Auditor of the entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements for the six-month period ended 30 June 2023 is not prepared, in all material respects, in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union.

Amsterdam, 19 September 2023

PricewaterhouseCoopers Accountants N.V.

Original version signed by B.A.A. Verhoeven RA

 

 

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