For Immediate Release |
20 March 2018 |
DP Eurasia N.V.
("DP Eurasia" or the "Company", and together with its subsidiaries, the "Group")
Preliminary Results for the Year Ended 31 December 2017
Continued expansion driven by digital growth and store openings
DP Eurasia (DPEU.L), the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia, today announces its results for the year ended 31 December 2017.
Highlights
|
For the year ended 31 December |
|
|
|
2017 (unaudited) |
2016
|
Change
|
|
(in millions of TRY, unless otherwise indicated) |
|
|
|
|
||
Number of stores |
643 |
567 |
76 |
|
|
|
|
Group System Sales (1) |
|
|
|
Turkey |
645.7 |
565.5 |
14.2% |
Russia |
205.4 |
76.4 |
169.0% |
Azerbaijan & Georgia |
8.7 |
5.5 |
58.3% |
Total |
859.8 |
647.4 |
32.8% |
|
|
|
|
Group Like-for-like growth(2) |
|
|
|
System sales |
|
|
|
Turkey |
10.0% |
7.0% |
|
Russia (based on RUB) |
28.9% |
41.6% |
|
|
|
|
|
Revenue |
633.0 |
451.1 |
40.3% |
Adjusted EBITDA(3) |
96.8 |
75.1 |
28.9% |
Adjusted net income (4) |
21.7 |
35.8 |
(39.4%) |
Adjusted net debt(5) |
106.7 |
146.4 |
(27.1%) |
|
|
|
|
Financial Highlights
· Group revenue up 40.3% and system sales up 32.8%, driven by both like-for-like growth and store openings
o Turkish systems sales growth of 14.2%
o Russian system sales growth of 169.0% (95.0% based on RUB)
· Adjusted EBITDA up 28.9% to TRY 96.8 million (2016: TRY 75.1 million) mainly driven by the Group's strong sales growth
· Adjusted EBITDA margin as a percentage of system sales was 11.3%, with both regions delivering improved returns
o Turkey adjusted EBITDA margin increased by 0.5% points to 13.1%
o Russia adjusted EBITDA margin increased by 2.0% points to 6.1%
· Adjusted net income down 39.4% to TRY 21.7 million (2016: TRY 35.8 million) predominantly driven by the adverse movement of the Russian rouble against the Euro and additional depreciation and amortization driven by increased capital expenditure
Operational Highlights
· Turkey and Russia like-for-like growth predominantly driven by the Group's online ordering platforms - online delivery system sales as a share of delivery system sales reached 51.8% for the period (2016: 42.4%)
· 76 new stores were added in the year, bringing the total number to 643, including the opening of the 500th Turkish store and the 100th Russian store:
o Strong Russian store rollout with a record 49 additions, now expanding to cities outside of Greater Moscow
o 27 store openings in Turkey segment (including Azerbaijan and Georgia)
o A greater skew towards corporate openings than initially anticipated to take advantage of opportunities in Turkey and accelerate growth in Russia, with an associated increase in capital expenditure
· Russian commissary expansion completed, significantly extending capacity to service up to 250 stores across the region
Current Trading
System sales growth and like-for-like growth for the first two months of 2018 was as follows:
Group System Sales growth (1) |
For the two months ended 28 February 2018 |
Turkey |
15.2% |
Russia |
72.5% |
Azerbaijan & Georgia |
46.6% |
Total |
27.8% |
|
|
Group Like-for-like growth(2) |
|
System sales |
|
Turkey |
10.7% |
Russia (based on RUB) |
25.0% |
During the first two months of 2018, the Group opened net 2 stores (2017: 4). The Board is confident in the pipeline for the remainder of the year.
Commenting on the results, Chief Executive Officer, Aslan Saranga said:
"DP Eurasia has had another successful year and we are pleased to report good progress in our maiden annual results since becoming a public company. We have seen strong performance in both of our geographical segments. Turkey and Russia had solid top line growth driven by our store additions and like-for-like growth. This top line growth translated into a significant increase in our adjusted EBITDA, where we also saw increases in the adjusted EBITDA margins as a percentage of system sales in Turkey and Russia.
"Our growth continues to be driven by our innovation in technology and products. In 2017, we revamped our iOS and Android apps in both Turkey and Russia, which resulted in increasing app conversion rates and app like-for-like growth significantly higher than the total online like-for-like growth. In Turkey our apps like for like increased from 56.8% to 112.6% and in Russia our apps like for like increased from 34.7% to 317.5%, In Turkey, we launched our loyalty program, which is already showing encouraging signs of order frequency increase. On the product side, we launched oven baked sandwiches, mosaic cakes and popcorn chicken in Turkey, and salads in Russia. In February, oven baked sandwich revenue mix was 14% in Turkey and is encouragingly creating incremental sales and not cannibalising pizza sales. We are also transferring menu items from Turkey to Russia, such as our ultra-thin crust and our newly launched mosaic cake.
"Our expansion in Russia outside of Greater Moscow is continuing to progress strongly. After opening stores in St Petersburg and Krasnodar in December 2017, we have also expanded into Rostov-on-Don in January 2018.
"We had a strong start to 2018 in line with our expectations with like-for-like growth of 10.7% and 25.0% in Turkey and Russia, respectively, and the Board remain confident in the business and its growth opportunities for the rest of the year. I would like to thank all our employees who have contributed to our strong results and look forward to another successful year."
Enquiries
DP Eurasia N.V. |
|
Selim Kender, Chief Strategy Officer & Head of Investor Relations |
+90 212 280 9636 |
|
|
Buchanan (Financial Communications) |
|
Richard Oldworth / Henry Harrison-Topham / Madeleine Seacombe/ Catriona Flint |
+44 20 7466 5000 |
|
|
A meeting for analysts will be held at 10.30am, 20 March 2018 at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN. A live audio webcast and conference call facility will be available.
Webcast: |
http://vm.buchanan.uk.com/2018/dpeurasia200318/registration.htm |
|
|
Conference call: |
UK Toll: 02034281542 UK Toll Free: 08082370040 Participant PIN code: 19633725# URL for international dial in numbers: http://events.arkadin.com/ev/docs/FEL_Events_International_Access_List.pdf
|
DP Eurasia N.V.'s preliminary 2017 results and corporate presentation are available at www.dpeurasia.com. A webcast replay facility will be available after the analyst meeting via the same link.
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 and adjusted EBITDA are not defined by IFRS. Adjusted EBITDA excludes income and expenses which are not part of the normal course of business and are non-recurring items, consisting of restructuring costs, IPO-related expenses, and share based incentives. 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 Condensed 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 Condensed 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 3 in the Condensed 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.
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 643 stores (514 in Turkey, 121 in Russia, five in Azerbaijan and three in Georgia as at 31 December 2017), and operates through its owned corporate stores (37%) and franchised stores (63%). The Group maintains a strategic balance between corporate and franchised stores, establishing networks of corporate-owned 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
System Sales |
For the year ended 31 December |
|
|
|
2017 |
2016 |
Change |
|
(in millions of TRY, unless otherwise indicated) |
|
|
|
|
||
Group System sales(1) |
|
|
|
Turkey |
645.7 |
565.5 |
14.2% |
Russia |
205.4 |
76.4 |
169.0% |
Azerbaijan & Georgia |
8.7 |
5.5 |
58.3% |
Total |
859.8 |
647.4 |
32.8% |
|
|
|
|
Group Like-for-like growth (2) |
|
|
|
System sales |
|
|
|
Turkey |
10.0% |
7.0% |
|
Russia (based on RUB) |
28.9% |
41.6% |
|
Store Count |
As at 31 December |
||||||
|
2017 |
|
2016 |
||||
|
Corporate |
Franchised |
Total |
|
Corporate |
Franchised |
Total |
Turkey |
142 |
372 |
514 |
|
144 |
344 |
488 |
Russia |
99 |
22 |
121 |
|
68 |
4 |
72 |
Azerbaijan |
- |
5 |
5 |
|
- |
4 |
4 |
Georgia |
- |
3 |
3 |
|
- |
3 |
3 |
Total |
241 |
402 |
643 |
|
212 |
355 |
567 |
DP Eurasia achieved strong operational growth in the year, with record store openings in Russia. The Group increased its system sales by 32.8% year-on-year, driven by a combination of like-for-like sales growth and store openings.
The Turkish operations' system sales, which represent 75% of Group system sales, increased by 14.2%. This increase was mainly driven by like-for-like sales growth. Positive customer sentiment in the second quarter of 2017 continued to improve in the second half of the year. Despite a slow start to the year with 3.5% like-for-like growth in the first quarter of 2017, the Turkish operations closed the year with 10.0% like-for-like growth. The strong like-for-like growth in the second half of the year was aided by the continued soft macroeconomic environment in the second half of 2016 stemming from the unsuccessful coup attempt in July 2016. Including Azerbaijan and Georgia, the Turkish segment added 27 stores during the year through splits and opening stores in previously unpenetrated areas. Active management and optimisation of the Turkish estate, which is ordinary course of business for the Group, continued in 2017. 20 stores were transferred from corporate to franchise, with an additional eight transfers in the opposite direction.
The Russian operations' system sales, which represent 24% of Group system sales, increased by 169.0% (95.0% based on RUB). This increase was driven primarily by like-for-like sales growth and store openings. The Russian operations achieved like-for-like sales growth of 28.9% for the period. The Group opened a record 49 stores in Russia, including its first stores outside of Greater Moscow in St Petersburg and Krasnodar. These new cities, along with further expansion into Rostov-on-Don in January 2018, will be served by the newly expanded Moscow commissary which has the capacity to service 250 stores. Russian franchise stores reached 22, increasing by 18 in 2017, and the number of franchise partners reached 13 in 2017 from four in 2016. In Russia, corporate to franchise transfers totalled four in 2017 with one transfer in the opposite direction.
Delivery Channel Mix and Online like-for-like growth
The following table shows the Group's delivery system sales, broken down 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 |
|||||
|
|
2017 |
2016 |
||||
|
|
Turkey |
Russia |
Total |
Turkey |
Russia |
Total |
Store |
|
48.0% |
33.3% |
45.0% |
53.0% |
47.5% |
52.3% |
Online |
Group's online platform |
25.1% |
66.7% |
34.5% |
21.1% |
52.5% |
24.8% |
Aggregator |
22.7% |
- |
17.3% |
19.9% |
- |
17.5% |
|
Total online |
47.8% |
66.7% |
51.8% |
41.0% |
52.5% |
42.4% |
|
Call centre |
|
4.2% |
- |
3.2% |
6.0% |
- |
5.3% |
Total(6) |
|
100% |
100% |
100% |
100% |
100% |
100% |
The following table shows the Group's online like-for-like growth(2), broken down by the Group's two largest countries in which it operates:
|
For the year ended 31 December |
|
|
2017 |
2016 |
Group online like-for-like growth(2) |
|
|
Online system sales(7) |
|
|
Turkey |
37.7% |
18.8% |
Russia (based on RUB) |
78.5% |
140.7% |
The Group's like-for-like growth has been driven mainly by the performance of its online ordering platforms. Online delivery system sales as a share of delivery system sales was 51.8% for the period. This represented a 9.4% increase compared to 2016.
In Turkey, online system sales like-for-like growth for the period was 37.7% as a result of which online delivery system sales as a share of delivery system sales reached 47.8% for the period, a 6.8% increase from 2016.
In Russia, online system sales like-for-like growth for the period was 78.5% as a result of which online delivery system sales as a share of delivery system sales reached 66.7% for the period, a 14.2% increase from 2016.
Online system sales continued to outpace the overall system sales growth at 72.2% for the Group. Turkish online system sales grew by 41.5%, while Russian online system sales grew by 245.5% (150.4% based on RUB).
Financial Review
|
For the year ended 31 December |
|
|
|
2017 (unaudited) |
2016
|
Change
|
|
(in millions of TRY) |
|
|
|
|
||
Revenue |
633.0 |
451.1 |
40.3% |
Cost of sales |
(398.7) |
(279.6) |
42.6% |
Gross Profit |
234.3 |
171.5 |
36.6% |
General administrative expenses |
(109.1) |
(68.9) |
58.3% |
Marketing and selling expenses |
(82.6) |
(61.3) |
34.8% |
Other operating expenses, net |
(3.6) |
0.5 |
n/a |
Operating profit |
38.9 |
41.8 |
(7.1)% |
Foreign exchange (loses)/gains |
(11.7) |
12.0 |
n/a |
Financial income |
1.2 |
1.4 |
n/a |
Financial expense |
(21.6) |
(17.0) |
27.3% |
Profit before income tax |
6.8 |
38.3 |
|
Tax expense |
(1.9) |
(9.0) |
|
Profit/(Loss) after tax |
4.8 |
29.3 |
n/a |
|
|
|
|
Adjusted EBITDA(3) |
96.8 |
75.1 |
28.9% |
Adjusted net income(4) |
21.7 |
35.8 |
(39.4%) |
Adjusted net debt(5) |
106.7 |
146.4 |
(27.1%) |
Revenue
The Group revenue grew by 40.3% to TRY 633.0 million during the 12-month period. The Turkish segment revenue grew by 14.0% to TRY 425.7 million, while the Russian segment revenue grew by 166.8% to reach TRY 207.3 million.
Gross Profit
The Group gross profit increased by 36.6% to TRY 234.3 million during 2017. The main contributor to the growth in the gross profit was strong top line performance of the business. Gross margin as a percentage of system sales increased to 27.2% in 2017 from 26.5% in 2016.
Adjusted EBITDA
Management believes that adjusted EBITDA is the most relevant indicator of the Group's profitability at this stage of its development.
The Group's adjusted EBITDA grew by 28.9% to TRY 96.8 million. Both major segments of the Group were profitable from an adjusted EBITDA perspective. Adjusted EBITDA for the Turkish segment, which includes the Azerbaijani and Georgian businesses, was TRY 85.7 million, a year-on-year increase of 19.1%, and adjusted EBITDA for the Russian segment was TRY 12.5 million, a year-on-year increase of 296.5% (187.4% based on RUB). Additionally, costs relating to our Dutch corporate expenses (excluding those that relate to our initial public offering) reduced Adjusted EBITDA by TRY 1.3 million.
Adjusted EBITDA margin as a percentage of system sales for the Turkish segment increased to 13.1% from 12.6%. Adjusted EBITDA margin as a percentage of system sales for the Russian segment was 6.1%, an increase by 2% points compared to 2016.
For the year ended 31 December 2017, the Group's adjusted EBITDA margin as a percentage of system sales was 11.3%, a decrease of 0.3% points from 2016. This decrease is attributable to the Russian segment's increasing share in the total business of the Group and the expenses incurred as part of being a public company starting from the second half of 2017. Russia segment's share in Group system sales more than doubled in 2017, increasing to 23.9% from 11.8% in 2016.
Adjusted Net Income
For the year ended 31 December 2017, adjusted net income was down 39.4% to TRY 21.7 million from TRY 35.8 million. The reduction in adjusted net income was primarily driven by the movement of the Russian rouble against the Euro. While the Russian rouble appreciated against the Euro in 2016, it depreciated in 2017. As a result, the Group recorded foreign exchange losses of TRY 11.7 million in 2017 versus foreign exchange gains of TRY 12.0 million in 2016, a net swing of TRY 23.7 million year-on-year. Additionally, during the year depreciation and amortisation increased due to the growth in capital expenditures during 2017.
The adjustments that are included in the reconciliation of Net Income to Adjusted Net Income are IPO costs (2017: TRY 15.3 million, 2016: TRY 0.9 million), share based incentives (2017: TRY 1.5 million, 2016: TRY 5.7 million), and tax effect (2017: nil, 2016: TRY -0.2 million). The IPO costs and share based incentives along with the previously discussed Russian rouble volatility and increased depreciation and amortisation expense are also the main contributors to the change in profit before tax from 2016 to 2017.
Capital expenditure and Cash conversion
The Group incurred TRY 78.5 million of capital expenditures in 2017. The Turkish segment capital expenditures amounted to TRY 36.7 million and the Russian segment capital expenditures amounted to TRY 41.7 million (RUB 671 million).
The Group's capital expenditures were higher than management expectations in 2017 as management took advantage of additional growth opportunities. In the Turkish segment, the Group saw an opportunity to acquire some franchise stores and to open corporate stores. In the Russian segment, the Group opened additional corporate stores compared to the management guidance and built up its presence in areas more rapidly, in line with its 'castle strategy'.
The main elements of capital expenditure in Turkey were investments into corporate store openings, franchise store acquisitions, the online ordering platforms, store conversions to the Kaizen format and information technology; whereas in Russia, the Group invested primarily in corporate store openings, capacity expansion in the Moscow commissary, information technology and the new Moscow headquarters.
Cash conversion (defined as (adjusted EBITDA - capital expenditure)/adjusted EBITDA) for the year was 19.0% for the Group and 57.1% for the Turkish segment. The Russian segment had negative cash conversion as it is in a period of rapid expansion relative to its size.
Adjusted net debt and Leverage
The Group's adjusted net debt as at 31 December 2017 was TRY 106.7 million and it had gross borrowings of TRY 227.9 million, TRY 158.1 million of which was Euro-denominated. TRY 83.0 million of this amount is hedged via a Euro denominated long term cash deposit which a subsidiary within the Turkish segment holds as collateral on a borrowing of a subsidiary within the Russian segment and a Euro denominated cash deposit at the Company level.
The Group continues to monitor the Rouble interest rate developments with a view towards converting its Russian segment Euro exposure to Roubles.
The leverage ratio (defined as adjusted net debt/adjusted EBITDA) of the Group was 1.1x as of 31 December 2017 (2016: 1.9). The decrease in the leverage ratio was further helped by the primary proceeds the Group raised through its IPO.
Outlook
The management guidance for store openings and like-for-like growth for the medium term and capital expenditure for 2018 is as follows:
|
Turkey |
Russia |
Net store openings per year |
30 |
40 - 60 |
Annual like-for-like growth |
High single digit |
Low-to-mid teens |
2018 capital expenditure |
TRY 30 million |
RUB 375 million |
The management is raising its 2018 capital expenditure guidance in Turkey and Russia by TRY 8 million and RUB 75 million, respectively. The main drivers for this increase are the launch of a project to unify the online ordering back-end systems across the Group, GPS Tracker project's move from pilot phase to deployment phase and the weakness of TRY against the USD and EUR. The Group is targeting greater efficiencies and improved customer service through these projects.
Amsterdam, 20 March 2018
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*
Izzet Talu*
Aksel Şahin*
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
|
Year ended 31 December |
||||
|
2017 |
|
2016 |
||
Currency |
Period End |
Period Average |
|
Period End |
Period Average |
EUR/TRY |
4.516 |
4.116 |
|
3.710 |
3.338 |
RUB/TRY |
0.065 |
0.062 |
|
0.057 |
0.045 |
EUR/RUB |
68.867 |
65.901 |
|
63.811 |
74.231 |
Delivery - Take away / Eat in mix
|
For the year ended 31 December |
|||||
|
2017 |
2016 |
||||
|
Turkey |
Russia |
Total |
Turkey |
Russia |
Total |
Delivery |
63.0% |
60.2% |
62.2% |
62.6% |
62.1% |
62.6% |
Take away / Eat in |
37.0% |
39.8% |
37.8% |
37.4% |
37.9% |
37.4% |
Total |
100% |
100% |
100% |
100% |
100% |
100% |
DP EURASIA N.V.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017 (UNAUDITED) AND 2016
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated
|
Notes |
2017 |
2016 |
|
|
|
|
INCOME STATEMENT |
|
|
|
|
|
|
|
Revenue |
4 |
632,982 |
451,097 |
Cost of sales |
4 |
(398,717) |
(279,587) |
|
|
|
|
GROSS PROFIT |
4 |
234,265 |
171,510 |
|
|
|
|
General administrative expenses |
|
(109,122) |
(68,914) |
Marketing and selling expenses |
|
(82,630) |
(61,277) |
Other operating income / (expense) |
6 |
(3,637) |
528 |
|
|
|
|
OPERATING PROFIT |
|
38,876 |
41,847 |
|
|
|
|
Foreign exchange (losses)/gains |
|
(11,666) |
12,006 |
Financial income |
7 |
1,209 |
1,442 |
Financial expense |
7 |
(21,636) |
(16,992) |
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
6,783 |
38,303 |
|
|
|
|
Tax expense |
16 |
(1,948) |
(8,982) |
Income tax expense |
16 |
(8,270) |
(7,251) |
Deferred tax income/(expense) |
16 |
6,322 |
(1,731) |
|
|
|
|
PROFIT FOR THE YEAR |
|
4,835 |
29,321 |
|
|
|
|
OTHER COMPREHENSIVE/INCOME |
|
|
|
(LOSS) |
|
(2,987) |
(18,104) |
|
|
|
|
Items not be reclassified |
|
|
|
to profit or loss on other comprehensive |
|
(266) |
(629) |
- Remeasurements of post-employment |
|
|
|
benefit obligations, net |
|
(266) |
(629) |
|
|
|
|
Items to be reclassified |
|
|
|
to profit or loss on other comprehensive |
|
(2,721) |
(17,475) |
- Currency translation differences |
|
(2,721) |
(17,475) |
|
|
|
|
TOTAL COMPREHENSIVE |
|
|
|
INCOME/(LOSS) |
|
1,847 |
11,217 |
|
|
|
|
Earnings per share |
8 |
0.06 |
6.47 |
The accompanying notes form an integral part of these condensed consolidated financial statements.
DP EURASIA N.V.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2017 (UNAUDITED)
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
|
Notes |
31 December 2017 |
31 December 2016 |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Trade receivables |
12 |
14,949 |
9,611 |
Property and equipment |
9 |
128,396 |
97,848 |
Intangible assets |
10 |
40,331 |
34,043 |
Goodwill |
|
44,209 |
43,560 |
Deferred tax assets |
16 |
7,883 |
- |
Other non-current assets |
14 |
31,954 |
25,980 |
|
|
|
|
Non-current assets |
|
267,722 |
211,042 |
|
|
|
|
Cash and cash equivalents |
11 |
76,128 |
19,502 |
Trade receivables |
12 |
65,236 |
54,676 |
Due from related parties |
13 |
15 |
1,259 |
Inventories |
|
56,259 |
42,025 |
Other current assets |
14 |
27,852 |
22,048 |
|
|
|
|
Current assets |
|
225,490 |
139,510 |
|
|
|
|
TOTAL ASSETS |
|
493,212 |
350,552 |
The accompanying notes form an integral part of these condensed consolidated financial statements.
DP EURASIA N.V.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2017 (UNAUDITED)
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
|
Notes |
31 December 2017 |
31 December 2016 |
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Financial liabilities |
15 |
142,152 |
118,907 |
Trade payables |
12 |
60,070 |
39,356 |
Due to related parties |
13 |
- |
386 |
Current income tax liabilities |
16 |
2,181 |
2,317 |
Provisions |
|
7,692 |
4,478 |
Other current liabilities |
14 |
32,926 |
38,926 |
|
|
|
|
Current liabilities |
|
245,021 |
204,370 |
|
|
|
|
Financial liabilities |
15 |
85,753 |
80,594 |
Long term provisions for employee benefits |
14 |
1,374 |
922 |
Deferred tax liability |
16 |
6,350 |
5,193 |
Other non-current liabilities |
|
114 |
- |
|
|
|
|
Non - current liabilities |
|
93,591 |
86,709 |
|
|
|
|
TOTAL LIABILITIES |
|
338,612 |
291,079 |
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
Paid in share capital |
|
36,353 |
120 |
Share premium |
|
119,286 |
63,757 |
Contribution from shareholders |
|
18,183 |
16,666 |
Other comprehensive income/expense |
|
|
|
not to be reclassified to profit or loss |
|
|
|
- Remeasurements of post-employment |
|
|
|
benefit obligations |
|
(2,193) |
(1,927) |
Other comprehensive income/expense |
|
|
|
to be reclassified to profit or loss |
|
|
|
- Currency translation differences |
|
(10,802) |
(8,081) |
Retained earnings |
|
(6,227) |
(11,062) |
|
|
|
|
Non-controlling interest |
|
- |
- |
|
|
|
|
Total equity |
|
154,600 |
59,473 |
|
|
|
|
TOTAL LIABILITIES |
|
493,212 |
350,552 |
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of these condensed consolidated financial statements.
DP EURASIA N.V.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017 (UNAUDITED)
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
|
|
|
|
Contribution |
Remeasurement of |
Currency |
|
|
|
Share |
Invested |
Share |
from |
post employment |
translation |
Retained |
Total |
|
capital |
capital |
premium |
shareholders |
benefit obligations |
differences |
earnings |
Equity |
|
|
|
|
|
|
|
|
|
Balances at 1 January 2016 |
- |
118 |
63,759 |
10,970 |
(1,298) |
9,394 |
(40,383) |
42,560 |
|
|
|
|
|
|
|
|
|
Transfers |
120 |
(118) |
(2) |
- |
- |
- |
- |
- |
Remeasurements of post-employment |
|
|
|
|
|
|
|
|
benefit obligations, net |
- |
- |
- |
- |
(629) |
- |
- |
(629) |
Currency translation adjustments |
- |
- |
- |
- |
|
(17,475) |
- |
(17,475) |
Share-based incentive plans |
- |
- |
- |
5,696 |
- |
- |
- |
5,696 |
Total income for the year |
- |
- |
- |
- |
- |
- |
29,321 |
29,321 |
|
|
|
|
|
|
|
|
|
Balances at 31 December 2016 |
120 |
- |
63,757 |
16,666 |
(1,927) |
(8,081) |
(11,062) |
59,473 |
|
|
|
|
|
|
|
|
|
Balances at 1 January 2017 |
120 |
- |
63,757 |
16,666 |
(1,927) |
(8,081) |
(11,062) |
59,473 |
|
|
|
|
|
|
|
|
|
Capital increased |
4,994 |
- |
89,138 |
- |
- |
- |
- |
94,132 |
Transfers |
31,239 |
- |
(31,239) |
- |
- |
- |
- |
- |
Remeasurements of post-employment |
|
|
|
|
|
|
|
|
benefit obligations, net |
- |
- |
- |
- |
(266) |
- |
- |
(266) |
Currency translation adjustments |
- |
- |
- |
- |
- |
(2,721) |
- |
(2,721) |
Share-based incentive plans |
- |
- |
- |
1,517 |
- |
- |
- |
1,517 |
Total income for the year |
- |
- |
- |
- |
- |
- |
4,835 |
4,835 |
Transaction costs |
- |
- |
(2,370) |
- |
- |
- |
- |
(2,370) |
|
|
|
|
|
|
|
|
|
Balances at 31 December 2017 |
36,353 |
- |
119,286 |
18,183 |
(2,193) |
(10,802) |
(6,227) |
154,600 |
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of these condensed consolidated financial statements.
DP EURASIA N.V.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 2017 (UNAUDITED)
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
|
Notes |
2017 |
2016 |
|
|
|
|
Profit before income tax |
|
6,783 |
38,303 |
|
|
|
|
Adjustments for |
|
|
|
Depreciation |
9 |
29,274 |
19,755 |
Amortisation |
10 |
11,850 |
6,915 |
Losses on sale of property and equipment |
|
1,445 |
940 |
Provision for performance bonus |
|
5,576 |
3,244 |
Non-cash employee benefits expense - |
|
|
|
share based payments |
|
1,517 |
5,696 |
Transaction cost |
|
(2,370) |
- |
Interest income |
7 |
(1,209) |
(1,442) |
Interest expense |
7 |
20,565 |
16,617 |
Unrealised foreign exchange |
|
|
|
(gains) / losses on borrowings |
|
10,400 |
(15,447) |
|
|
|
|
Changes in operating assets and liabilities |
|
|
|
Changes in trade receivables |
|
(15,898) |
(23,187) |
Changes in other receivables and assets |
|
(10,534) |
(30,146) |
Changes in inventories |
|
(14,234) |
(7,185) |
Changes in trade payables |
|
20,714 |
(2,736) |
Changes in other payables and liabilities |
|
(5,269) |
876 |
Taxes paid |
16 |
(8,406) |
(7,547) |
Performance bonuses paid |
|
(3,244) |
(2,797) |
|
|
|
|
Cash flows generated from operating activities |
|
46,960 |
1,859 |
|
|
|
|
Purchases of property and equipment |
|
(50,450) |
(30,046) |
Purchases of intangible assets |
10 |
(17,891) |
(8,230) |
Disposal of tangible and intangible assets |
|
6,156 |
2,835 |
|
|
|
|
Cash flows used in investing activities |
|
(62,185) |
(35,441) |
|
|
|
|
Interest paid |
|
(18,283) |
(16,523) |
Interest received |
|
1,209 |
1,442 |
Loans obtained |
|
527,231 |
545,813 |
Loans paid |
|
(528,511) |
(487,879) |
Financial lease payments |
|
(8,325) |
(3,244) |
Share capital/share premium |
|
94,132 |
- |
|
|
|
|
Cash flows generated from financing activities |
|
67,453 |
39,609 |
|
|
|
|
Effect of currency translation differences |
|
4,398 |
16 |
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
56,626 |
6,043 |
|
|
|
|
Cash and cash equivalents at the |
|
|
|
beginning of the period |
11 |
19,502 |
13,459 |
|
|
|
|
Cash and cash equivalents at the |
|
|
|
end of the period |
11 |
76,128 |
19,502 |
The accompanying notes form an integral part of these condensed consolidated financial statements.
DP EURASIA N.V.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2017 (UNAUDITED)
(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 principal activity of the Company consists of acting as an investment company.
The Company's registered address is: Herikerbergweg 238, Amsterdam, the Netherlands.
The Company and its subsidiaries (together referred as the "Group") operate company and franchise-owned stores in Turkey and the Russian Federation, including provision of technical support, control and consultancy services to the franchisees.
As at 31 December 2017, the Group operates in 643 stores (402 franchise stores, 241 company-owned stores) (31 December 2016: 567 stores (355 franchise stores, 212 company-owned stores).
The condensed consolidated financial statements attached do not constitute the full statutory financial statements of DP Eurasia N.V. and include preliminary unaudited numbers. The full financial statements are expected to be published in April.
Subsidiaries
The Company has a total of five fully-owned subsidiaries. The entities included in the scope of the condensed consolidated financial statement and nature of their business is as follows:
Subsidiaries |
Registered country |
Nature of business |
|
|
|
|
|
Fides Grup Gıda Restaurant İşletmeciliği A.Ş. ("Fides Turkey") |
Turkey |
Food delivery |
|
Pizza Restaurantları A.Ş. ("Domino's Turkey") |
Turkey |
Food delivery |
|
OOO Pizza ("Domino's Russia") |
Russia |
Food delivery |
|
Fidesrus B.V. ("Fidesrus") |
the Netherlands |
Investment company |
|
Fides Food Systems B.V. ("Fides Food Systems") |
the Netherlands |
Investment company |
|
The Group's effective ownership of the subsidiaries are as follows:
|
31 December 2017 |
31 December 2016 |
|
Effective |
Effective |
Subsidiaries |
ownership (%) |
ownership (%) |
|
|
|
Fides Grup Gıda Restaurant |
|
|
İşletmeciliği A.Ş. ("Fides Turkey") |
100.00 |
100.00 |
Pizza Restaurantları A.Ş. ("Domino's Turkey") |
100.00 |
100.00 |
OOO Pizza Restaurants ("Domino's Russia") |
100.00 |
100.00 |
Fidesrus B.V. ("Fidesrus") |
100.00 |
100.00 |
Fides Food Systems B.V. ("Fides Food") |
100.00 |
100.00 |
NOTE 1 - GROUP'S ORGANIZATION AND NATURE OF ACTIVITIES (Continued)
OOO Pizza Restaurants ("Domino's Russia") is established in the Russian Federation. Domino's Russia is operating a pizza delivery network of company and franchise-owned stores in 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.
Fides Grup Gıda Restaurant İşletmeciliği A.Ş. and Pizza Restaurantları A.Ş. ("Fides Turkey" and "Domino's Turkey", respectively) are established in Turkey. Domino's Turkey is operating a pizza delivery network of company and franchise-owned stores in Turkey. Fides Turkey is an investment company, which has a Master Franchise Agreement (the "MFA Turkey") with Domino's Pizza International pizza delivery network in Turkey until 2032. The rights obtained under the MFA have been reassigned from Fides Turkey to Domino's Turkey in order for it to operate the pizza delivery network.
Fides Food Systems BV and Fidesrus BV ("Fides Food Systems" and "Fidesrus", respectively) are established in the Netherlands. Both Fides Food Systems and Fidesrus are acting as investment companies.
NOTE 2 - BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENT
2.1 Principles of consolidation
The condensed consolidated financial statements includes the parent company, DP Eurasia N.V. and its subsidiaries for the year ended at 31 December 2017. Subsidiaries are fully consolidated from the date on which control is transferred to the Company (the "Acquisition"). ation. Subsidiaries are fully consolidated from when control is transferred to the Company (the "Acquisition"). 18 October 2016 was the date of Acquisition and from this point forward the consolidated Group was formed. This occurred when the Company acquired the Fidesrus and Fides Foods and their subsidiaries. This was a transaction under common control.
Basis of Consolidation
The condensed 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.
The control is provided with influence on the activities of an entity's financial and operational policies in order to obtain economic benefit from those activities.
Subsidiaries are companies over which the company has the power to control the financial and operating policies for the benefit of the Company, either (a) through the power to exercise more than 50% of the voting rights relating to shares in the companies as a result of ownership interest owned directly and indirectly by itself, or (b) although not having the power to exercise more than 50% of the ownership interest, and/or as a result of agreements by certain the company members and companies owned by them whereby the company exercises control over the ownership interest of the shares held by them; otherwise the power to exercise control over the financial and operating policies.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
The subsidiaries fully consolidated, the proportion of ownership interest and the effective interest of the Group in these subsidiaries as of 31 December 2017 are disclosed in Note 1.
NOTE 2 - BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENT (Continued)
2.1 Principles of consolidation (Continued)
The result of operations of subsidiaries acquired or sold during the year are included in the consolidated statement of comprehensive income from the date of acquisition or until the date of sale.
The statements of financial position and statements of income of the subsidiaries are consolidated on line-by-line basis and the carrying value of the investment held by the Company and its subsidiaries is netted off against the related shareholders' equity. Intercompany transactions and balances between the Company and its Subsidiaries are netted off during the consolidation. The cost of, and the dividends arising from, shares held by the Group in its subsidiaries are netted off from shareholders' equity and income for the period, respectively.
Consolidation of foreign subsidiaries
Subsidiaries are companies over which the company has the power to control the financial and operating policies for the benefit of the Company, either (a) through the power to exercise more than 50% of the voting rights relating to shares in the companies as a result of ownership interest owned directly and indirectly by itself, or (b) although not having the power to exercise more than 50% of the ownership interest, and/or as a result of agreements by certain the company members and companies owned by them whereby the company exercises control over the ownership interest of the shares held by them; otherwise the power to exercise control over the financial and operating policies.
Financial statements of subsidiaries operating in foreign countries are prepared in local currency in accordance with the legislation of the country 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 of the opening net assets of foreign undertakings and differences between the average and statement of financial position date rates 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 December 2017 |
31 December 2016 |
|
||
|
Period |
Period |
Period |
Period |
|
Currency |
End |
Average |
End |
Average |
|
|
|
|
|
|
|
Euros |
4,515500 |
4,115884 |
3,70990 |
3,33755 |
|
Russian Rubles |
0,065070 |
0,062174 |
0,05732 |
0,04506 |
|
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 condensed consolidated financial statement are presented in TRY, which is the Group's presentation currency.
The business operations of the Group are organized and managed with respect to geographical positions of its operations. The information regarding the business activities of the Group as of
31 December 2017 and 2016 comprise the performance and the management of Turkish and Russian operations and Head Office.
NOTE 3 - SEGMENT REPORTING
The segment analysis for the period ended 31 December 2017 and 2016 are as follows:
|
|
|
Dutch |
|
|
1 January - 31 December 2017 |
Turkey |
Russia |
Corp. Expenses |
Elimination |
Total |
|
|
|
|
|
|
Corporate revenue |
183,473 |
187,197 |
- |
- |
370,670 |
Franchise revenue and royalty |
|||||
revenue obtained from franchisees |
218,262 |
8,362 |
- |
- |
226,624 |
Other revenue |
23,953 |
11,734 |
- |
- |
35,687 |
Total revenue |
425,689 |
207,293 |
- |
- |
632,982 |
Operating profit |
56,571 |
(2,949) |
(14,746) |
- |
38,876 |
Capital expenditures |
36,740 |
41,739 |
- |
- |
78,479 |
Depreciation and |
|
|
|
|
|
amortization expenses |
(27,107) |
(14,017) |
- |
- |
(41,124) |
|
|
|
Dutch |
|
|
31 December 2017 |
Turkey |
Russia |
Corp. Expenses |
Elimination |
Total |
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
- TRY |
56,439 |
- |
- |
- |
56,439 |
- EUR |
29,577 |
128,520 |
- |
- |
158,097 |
- RUB |
- |
13,369 |
- |
- |
13,369 |
|
|
|
|
|
|
Total |
86,016 |
141,889 |
- |
- |
227,905 |
|
|
|
Dutch |
|
|
1 January - 31 December 2016 |
Turkey |
Russia |
Corp. Expenses |
Elimination |
Total |
|
|
|
|
|
|
Corporate revenue |
175,040 |
75,036 |
- |
- |
250,076 |
Franchise revenue and royalty |
|||||
revenue obtained from franchisees |
181,122 |
2,652 |
- |
- |
183,774 |
Other revenue |
17,247 |
- |
- |
- |
17,247 |
Total revenue |
373,409 |
77,688 |
- |
- |
451,097 |
Operating profit |
44,194 |
(2,347) |
(467) |
467 |
41,847 |
Capital expenditures |
24,960 |
20,734 |
- |
- |
45,694 |
Depreciation and |
|||||
amortization expenses |
(21,558) |
(5,112) |
- |
- |
(26,670) |
|
|
|
Dutch |
|
|
31 December 2016 |
Turkey |
Russia |
Corp. Expenses |
Elimination |
Total |
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
- TRY |
55,894 |
- |
- |
- |
55,894 |
- EUR |
38,806 |
96,520 |
- |
- |
135,326 |
- RUB |
- |
8,281 |
- |
- |
8,281 |
|
|
|
|
|
|
Total |
94,700 |
104,801 |
- |
- |
199,501 |
NOTE 3 - SEGMENT REPORTING (Continued)
The reconciliation of adjusted EBITDAs as of 31 December 2017 and 2016 is as follows:
Turkey |
2017 |
2016 |
|
|
|
Revenue |
425,689 |
373,409 |
|
|
|
Operating profit |
56,571 |
44,194 |
Depreciation and amortisation |
(27,107) |
(21,558) |
|
|
|
EBITDA |
83,678 |
65,752 |
Non-recurring and non-trade |
|
|
(income)/expenses per Group Management (*) |
|
|
|
|
|
IPO Costs |
1,847 |
553 |
Share-based incentives |
195 |
5,696 |
|
|
|
Adjusted EBITDA (*) |
85,720 |
72,001 |
|
|
|
Russia |
2017 |
2016 |
|
|
|
Revenue |
207,293 |
77,688 |
|
|
|
Operating profit |
(2,949) |
(2,347) |
Depreciation and amortisation |
(14,018) |
(5,112) |
|
|
|
EBITDA |
11,069 |
2,765 |
|
|
|
Non-recurring and non-trade |
|
|
(income)/expenses per Group Management (*) |
|
|
|
|
|
Share-based incentives |
1,322 |
- |
IPO Costs |
63 |
376 |
|
|
|
Adjusted EBITDA (*) |
12,454 |
3,141 |
|
|
|
Dutch Corporate Expenses |
2017 |
2016 |
|
|
|
Operating profit |
(14,746) |
- |
|
|
|
EBITDA |
(14,746) |
- |
|
|
|
Non-recurring and non-trade |
|
|
(income)/expenses per Group Management (*) |
|
|
|
|
|
IPO Costs |
13,410 |
- |
|
|
|
Adjusted EBITDA (*) |
(1,336) |
- |
(*) EBITDA, adjusted EBITDA and non-recurring and non-trade income/expenses are not defined by IFRS. 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-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.
NOTE 3 - SEGMENT REPORTING (Continued)
The reconciliation of adjusted net debt as of 31 December 2017 and 2016 is as follows:
|
2017 |
2016 |
|
|
|
Short term bank borrowings |
136,931 |
115,873 |
Short-term portions of |
||
long-term financial lease borrowings |
5,221 |
3,034 |
Long-term bank borrowings |
74,545 |
73,343 |
Long-term financial lease borrowings |
11,208 |
7,251 |
|
|
|
Total borrowings |
227,905 |
199,501 |
|
|
|
Cash and cash equivalents (-) |
(76,128) |
(19,502) |
|
|
|
Net debt |
151,777 |
179,999 |
|
|
|
Non-recurring items |
|
|
per Group Management (*) |
|
|
Long term deposit for loan guarantee |
(28,217) |
(23,183) |
Adjusting delay in collection/payment |
|
|
day coinciding on a weekend |
(16,835) |
(10,408) |
|
|
|
Adjusted Net debt (**) |
106,725 |
146,408 |
(**) 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.
The reconciliation of adjusted net income as of 31 December 2017 and 2016 is as follows:
|
2017 |
2016 |
|
|
|
Profit/(Loss) for the year as reported |
4,835 |
29,321 |
|
|
|
Non-recurring and non-trade (income)/expenses |
|
|
per Group Management |
|
|
|
|
|
IPO Costs |
15,320 |
929 |
Share-based incentives |
1,517 |
5,696 |
Tax effect (-) |
- |
(186) |
|
|
|
Adjusted net income/(loss) for the year (***) |
21,672 |
35,760 |
(***) 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
|
2017 |
2016 |
|
|
|
Corporate revenue |
370,670 |
250,076 |
Franchise revenue and royalty |
||
revenue obtained from franchisees |
226,624 |
183,774 |
Other revenue |
35,688 |
17,247 |
|
|
|
Revenue |
632,982 |
451,097 |
|
|
|
Cost of sales |
(398,717) |
(279,587) |
|
|
|
Gross profit |
234,265 |
171,510 |
NOTE 5 - EXPENSES BY NATURE |
|
|
|
|
|
|
2017 |
2016 |
|
|
|
Personnel expenses |
144,212 |
104,060 |
Depreciation and amortization expenses |
41,124 |
26,670 |
|
|
|
|
185,336 |
130,730 |
NOTE 6 - OTHER OPERATING INCOME AND EXPENSES
Other income |
2017 |
2016 |
|
|
|
Foreign exchange gains |
1,016 |
2,892 |
Interest income arising from |
||
sales with extended terms |
906 |
1,727 |
Gain from sale of property and equipment |
496 |
- |
Other |
1,389 |
647 |
|
|
|
|
3,807 |
5,266 |
Other expense |
2017 |
2016 |
|
|
|
Foreign exchange losses |
1,454 |
1,171 |
Losses from sale of property and equipment |
1,941 |
940 |
Other |
4,049 |
2,627 |
|
|
|
|
7,444 |
4,738 |
|
|
|
Other operating income /(expense), net |
(3,637) |
528 |
NOTE 7 - FINANCIAL INCOME AND EXPENSES
Financial income |
2017 |
2016 |
|
|
|
Interest income |
1,209 |
1,442 |
|
|
|
|
1,209 |
1,442 |
Financial expense
Interest expense |
20,565 |
16,617 |
Other |
1,071 |
375 |
|
|
|
|
21,636 |
16,992 |
NOTE 8 - EARNINGS/(LOSS) PER SHARE
|
31 December 2017 |
31 December 2016 |
|
|
|
Average number of shares |
|
|
existing during the period |
74,565,655 |
4,532,740 |
Net profit for the period |
|
|
attributable to equity |
|
|
holders of the parent as reported |
4,835 |
29,321 |
|
|
|
Earnings per share as reported |
0.06 |
6.47 |
The reconciliation of adjusted earnings per share as of 31 December 2017 and 2016 is as follows:
|
31 December 2017 |
31 December 2016 |
|
|
|
Average number of shares |
|
|
existing during the period |
74,565,655 |
4,532,740 |
Net profit/(loss) for the period |
|
|
attributable to equity |
|
|
holders of the parent as reported |
4,835 |
29,321 |
|
|
|
Non-recurring and non-trade (income)/expenses |
|
|
per Group Management (*) |
|
|
|
|
|
IPO Costs |
15,320 |
929 |
Share-based incentives |
1,517 |
5,696 |
Tax effect (-) |
- |
(186) |
|
|
|
Adjusted net profit/(loss) for the period |
|
|
attributable to equity holders of the parent |
21,672 |
35,760 |
|
|
|
Adjusted Earnings/(loss) per share |
0.29 |
7.82 |
(*) Please refer to Note 3.
There are no shares or options with a dilutive effect and hence the basic and diluted earnings per share are the same.
The earning per share presented for the years ended 31 December 2017 is based on the issued share capital of DP Eurasia N.V. at the date of Acquisition (for further details, see Note 2).
NOTE 9 - PROPERTY AND EQUIPMENT
|
|
|
|
|
Currency translation |
|
|
1 January 2017 |
Additions |
Disposals |
Transfers |
adjustments |
31 December 2017 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
Machinery and equipment |
25,517 |
12,415 |
(1,278) |
2,273 |
3,167 |
42,094 |
Motor vehicles |
15,522 |
10,138 |
(1,071) |
- |
1,688 |
26,277 |
Furniture and fixtures |
50,942 |
11,430 |
(4,112) |
226 |
160 |
58,646 |
Leasehold improvements |
58,187 |
19,892 |
(5,143) |
1,414 |
3,149 |
77,499 |
Construction in progress |
8,738 |
6,713 |
(1,652) |
(4,061) |
473 |
10,211 |
|
|
|
|
|
|
|
|
158,906 |
60,588 |
(13,256) |
(148) |
8,637 |
214,727 |
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
Machinery and equipment |
(6,070) |
(5,189) |
454 |
- |
(689) |
(11,494) |
Motor vehicles |
(5,734) |
(5,957) |
1,104 |
- |
(455) |
(11,042) |
Furniture and fixtures |
(21,998) |
(6,640) |
1,723 |
- |
(38) |
(26,953) |
Leasehold improvements |
(27,256) |
(11,488) |
2,567 |
- |
(665) |
(36,842) |
|
|
|
|
|
|
|
|
(61,058) |
(29,274) |
5,848 |
- |
(1,847) |
(86,331) |
|
|
|
|
|
|
|
Net book value |
97,848 |
|
|
|
|
128,396 |
Depreciation expense of TRY 22,726 has been charged in cost of sales and TRY 6,548 has been charged in general administrative expenses.
NOTE 9 - PROPERTY AND EQUIPMENT (Continued)
|
|
|
|
|
Currency translation |
|
|
1 January 2016 |
Additions |
Disposals |
Transfers |
adjustments |
31 December 2016 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
Machinery and equipment |
13,374 |
7,119 |
- |
- |
5,024 |
25,517 |
Motor vehicles |
6,350 |
7,418 |
(941) |
- |
2,695 |
15,522 |
Furniture and fixtures |
46,289 |
7,814 |
(3,420) |
- |
259 |
50,942 |
Leasehold improvements |
46,477 |
7,025 |
(3,064) |
3,034 |
4,715 |
58,187 |
Construction in progress |
2,626 |
8,088 |
- |
(3,034) |
1,058 |
8,738 |
|
|
|
|
|
|
|
|
115,116 |
37,464 |
(7,425) |
- |
13,751 |
158,906 |
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
Machinery and equipment |
(2,871) |
(2,261) |
- |
- |
(938) |
(6,070) |
Motor vehicles |
(3,122) |
(2,788) |
819 |
- |
(643) |
(5,734) |
Furniture and fixtures |
(17,153) |
(6,981) |
2,191 |
- |
(55) |
(21,998) |
Leasehold improvements |
(20,273) |
(7,725) |
1,565 |
- |
(823) |
(27,256) |
|
|
|
|
|
|
|
|
(43,419) |
(19,755) |
4,575 |
- |
(2,459) |
(61,058) |
|
|
|
|
|
|
|
Net book value |
71,697 |
|
|
|
|
97,848 |
Depreciation expense of TRY 14,619 has been charged in cost of sales and TRY 5,136 has been charged in general administrative expenses.
NOTE 9 - PROPERTY PLANT AND EQUIPMENT (Continued)
At 31 December 2017 and 2016, leased assets included in the table above, where the Group is lessee under a finance lease are as follows:
|
31 December 2017 |
31 December 2016 |
|
|
|
Vehicles |
11,826 |
8,190 |
Accumulated depreciation |
(5,957) |
(1,607) |
|
|
|
Net book value |
5,869 |
6,583 |
The Group leases various vehicles and machinery and equipment under non-cancellable finance lease agreements. The lease terms are between 3 and 5 years.
Impairment test for tangible assets
In accordance with accounting policies explained in Note 2.5, all property and equipment is initially recorded at cost and recorded at cost less accumulated depreciation and any accumulated impairment loss. The Group assesses its performance separately for each store and decides whether to cease operating a store by reference to its discounted cash flows. For the purpose of assessing impairment, the discounted cash flows, calculated based on the Group's revenue projections for five years, are compared to the carrying value of the stores. The Group has assessed the performance of its stores and does not identified any events or changes in circumstances indicating that the carrying amount may not be recoverable as of 31 December 2017.
NOTE 10 - INTANGIBLE ASSETS
|
1 January 2017 |
Additions |
Disposals |
Currency translation adjustments |
Transfers |
31 December 2017 |
|||
|
|
|
|
|
|
|
|
||
Cost |
|
|
|
|
|
|
|||
Key money |
2,734 |
6,135 |
(152) |
- |
38 |
8,755 |
|||
Franchise contracts |
48,485 |
- |
- |
- |
- |
48,485 |
|||
Computer software |
19,502 |
11,756 |
(254) |
388 |
110 |
31,502 |
|||
|
70,721 |
17,891 |
(406) |
388 |
148 |
88,742 |
|||
|
|
|
|
|
|
|
|||
Accumulated amortization |
|
|
|
|
|
|
|||
Key money |
(1,320) |
(811) |
130 |
- |
- |
(2,001) |
|||
Franchise contracts |
(30,707) |
(4,848) |
- |
- |
- |
(35,555) |
|||
Computer software |
(4,651) |
(6,191) |
83 |
(96) |
- |
(10,855) |
|||
|
(36,678) |
(11,850) |
213 |
(96) |
- |
(48,411) |
|||
Net book value |
34,043 |
|
|
|
|
40,331 |
|||
Amortisation expense of TRY 6,660 has been charged in cost of sales and TRY 5,190 has been charged in general administrative expenses.
NOTE 10 - INTANGIBLE ASSETS (Continued)
Currency |
|||||
1 January |
translation |
31 December |
|||
2016 |
Additions |
Disposals |
adjustments |
2016 |
|
Cost |
|||||
Key money |
4,675 |
13 |
(1,954) |
- |
2,734 |
Franchise contracts |
48,485 |
- |
- |
- |
48,485 |
Computer software |
10,996 |
8,217 |
(116) |
405 |
19,502 |
|
|
|
|
|
|
|
64,156 |
8,230 |
(2,070) |
405 |
70,721 |
|
|
|
|
|
|
Accumulated amortization |
|
||||
Key money |
(1,483) |
(894) |
1,057 |
- |
(1,320) |
Franchise contracts |
(25,859) |
(4,848) |
- |
- |
(30,707) |
Computer software |
(3,422) |
(1,173) |
88 |
(144) |
(4,651) |
|
|
|
|
|
|
|
(30,764) |
(6,915) |
1,145 |
(144) |
(36,678) |
|
|
|
|
|
|
Net book value |
33,392 |
|
|
|
34,043 |
Amortisation expense of TRY 4,424 has been charged in cost of sales and TRY 2,491 has been charged in general administrative expenses.
Franchise contracts
The Group has recognized 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 statement.
NOTE 11 - CASH AND CASH EQUIVALENTS
The details of cash and cash equivalents as of 31 December 2017 and 2016 are as follows:
|
31 December 2017 |
31 December 2016 |
|
|
|
Cash |
1,365 |
987 |
Banks |
63,438 |
10,412 |
Credit card receivables |
11,325 |
8,103 |
|
|
|
|
76,128 |
19,502 |
Maturity term of credit card receivables are 30 days on average (31 December 2016 and 2015: 30 days).
The detail functional currency of the banks is as below;
|
31 December 2017 |
31 December 2016 |
EURO |
54,807 |
14 |
TRY |
7,664 |
3,697 |
RUB |
967 |
6,673 |
USD |
- |
28 |
|
|
|
|
63,438 |
10,412 |
NOTE 12 - TRADE RECEIVABLES AND PAYABLES
a) Short-term trade receivables
|
31 December 2017 |
31 December 2016 |
|
|
|
Trade receivables |
48,392 |
43,615 |
Post-dated cheques |
17,041 |
11,782 |
Receivables from |
||
related parties (Note 13) |
15 |
1,259 |
|
|
|
|
65,448 |
56,656 |
|
|
|
Less: Unearned financial income (-) |
(105) |
(580) |
Less: Doubtful trade receivable |
(92) |
(141) |
|
|
|
Short-term trade and |
|
|
other receivables, net |
65,251 |
55,935 |
The average collection period for trade receivables is between 30 and 60 days (2016 and 2015: 30 and 60 days).
NOTE 12 - TRADE RECEIVABLES AND PAYABLES (Continued)
Movement of provision for doubtful receivables is as follows:
|
|
2017 |
2016 |
|
|
|
|
1 January |
|
141 |
- |
(Collections)/current year charge |
|
(49) |
141 |
|
|
|
|
31 December |
|
92 |
141 |
b) Long-term trade receivables
|
31 December 2017 |
31 December 2016 |
|
|
|
Post-dated cheques |
14,949 |
9,611 |
|
|
|
|
14,949 |
9,611 |
c) Short-term trade and other payables
|
31 December 2017 |
31 December 2016 |
|
|
|
Trade payables |
57,297 |
36,063 |
Other payables |
2,773 |
3,293 |
|
|
|
|
60,070 |
39,356 |
The weighted average term of trade payables is less than 3 months. Short-term payables with no stated interest are measured at original invoice amount unless the effect of imputing interest is significant
(31 December 2017 and 2016: Less than 3 months).
NOTE 13 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES
The details of receivables and payables from related parties as of 31 December 2017 and 2016 and transactions is as follows:
a) Due from related parties
|
31 December 2017 |
31 December 2016 |
|
|
|
Receivables from key management |
- |
1,247 |
Other |
15 |
12 |
|
|
|
|
15 |
1,259 |
b) Due to related parties
|
31 December 2017 |
31 December 2016 |
|
|
|
Payables to key management |
- |
386 |
|
|
|
|
- |
386 |
c) Service expenses
|
2017 |
2016 |
|
|
|
Fides Food Coop. |
- |
12 |
|
|
|
|
- |
12 |
NOTE 14 - OTHER RECEIVABLES, ASSETS AND LIABILITIES
Other current assets
|
31 December 2017 |
31 December 2016 |
|
|
|
Advance payments to suppliers |
15,534 |
15,088 |
Prepaid rent expenses |
3,804 |
1,644 |
VAT receivable |
2,951 |
2,016 |
Prepaid marketing expenses |
951 |
864 |
Other |
4,612 |
2,436 |
|
|
|
Total |
27,852 |
22,048 |
Other non-current assets
|
31 December 2017 |
31 December 2016 |
|
|
|
Long term deposits for loan guarantees |
28,217 |
23,183 |
Deposits given |
3,737 |
2,797 |
|
|
|
Total |
31,954 |
25,980 |
Long term deposits for loan guarantees are provided as collateral to Denizbank AG by the Group's Turkish business for term loans made to the Group's Russian business. Maturity date of long term deposit is 11 February 2019 and annual interest rate is 3%. The principal of EUR 6,249 (TRY 28,217) is blocked until the Group's Russian business completes its loan repayments, however the Turkish business is entitled to receive the accrued interest on the deposit.
Other current liabilities
|
31 December 2017 |
31 December 2016 |
|
|
|
Advances received from franchises |
6,200 |
9,054 |
Payable to personnel |
5,236 |
3,599 |
Unused vacation liabilities |
5,070 |
3,909 |
Volume rebate advances |
4,819 |
11,562 |
Taxes and funds payable |
4,776 |
3,623 |
Social security premiums payable |
2,969 |
4,036 |
Other expense accruals |
3,856 |
3,143 |
|
|
|
Total |
32,926 |
38,926 |
Other non-current liabilities
|
31 December 2017 |
31 December 2016 |
|
|
|
Employee benefits |
1,374 |
922 |
|
|
|
Total |
1,374 |
922 |
NOTE 15 - FINANCIAL LIABILITIES
|
31 December 2017 |
31 December 2016 |
|
|
|
Short term bank borrowings |
75,174 |
73,557 |
|
|
|
Short-term borrowings |
75,174 |
73,557 |
|
|
|
Short-term portions of |
|
|
long-term borrowings |
61,757 |
42,316 |
Short-term portions of |
|
|
long-term financial lease borrowings |
5,221 |
3,034 |
|
|
|
Current portion of long-term borrowings |
66,978 |
45,350 |
|
|
|
Total short term borrowings |
142,152 |
118,907 |
|
|
|
Long-term bank borrowings |
74,545 |
73,343 |
Long-term financial lease borrowings |
11,208 |
7,251 |
|
|
|
Long-term borrowings |
85,753 |
80,594 |
|
|
|
Total financial liabilities |
227,905 |
199,501 |
NOTE 15 - FINANCIAL LIABILITIES (Continued)
The summary information of short-term and long-term bank borrowings is as follows:
31 December 2017
Currency |
Maturity |
Interest rate (%) |
Short-term |
Long-term |
|
|
|
|
|
EUR borrowings |
2016-2022 |
3.-5 - 8.00 |
83,551 |
74,545 |
TRY borrowings |
Revolving |
16 |
53,380 |
- |
|
|
|
|
|
|
|
|
136,931 |
74,545 |
31 December 2016
Currency |
Maturity |
Interest rate (%) |
Short-term |
Long-term |
|
|
|
|
|
EUR borrowings |
2016-2019 |
3.-5 - 7.50 |
61,984 |
73,343 |
TRY borrowings |
Revolving |
11.78 |
53,889 |
- |
|
|
|
|
|
|
|
|
115,873 |
73,343 |
The redemption schedule of the borrowings as of 31 December 2017 and 2016 is as follows:
|
31 December 2017 |
31 December 2016 |
|
|
|
To be paid in 1 year |
136,931 |
115,873 |
To be paid between 1-2 years |
48,080 |
40,424 |
To be paid between 2-3 years |
26,465 |
32,919 |
|
|
|
|
211,476 |
189,216 |
The loan agreement signed with Türkiye İş Bankası A.Ş. by Domino's Turkey is subject to covenant clauses whereby Domino's Turkey is required to meet certain ratios. The financial indicator of leverage ratio which requires the ratio of net debt to adjusted EBITDA for the relevant period should not be more than 2.50:1; and total free cash flow to total debt service ratio should not be less than 1.10 at the end of the each financial year. If the Company ends up with any ratio above 2.50:1 or below 1.10:1 at the end of financial period, they need to meet the covenant in the subsequent 15 working days.
Throughout the period Dominos's Turkey has met covenants clauses at Türkiye İş Bankası.
The loan agreement between Denizbank Moscow and Domino's Russia requires that unless there is written approval from Denizbank Moscow, there will not be any changes in more than 50% of the capital directly and that no agreements or documents that may result in the above results will be signed or interpreted this way.
Throughout the period Domino's Russia has met covenants clauses of Denizbank Moscow.
NOTE 15 - FINANCIAL LIABILITIES (Continued)
The details of the short term finance lease liabilities as of 31 December 2017 and 2016 are as follows:
|
31 December 2017 |
31 December 2016 |
|
|
|
Total financial lease payments |
26,651 |
15,523 |
Interest to be paid in upcoming years |
(10,222) |
(5,238) |
|
|
|
|
16,429 |
10,285 |
|
|
|
Financial lease liabilities to be paid in 1 year |
5,221 |
3,034 |
Financial lease liabilities to be paid between 1-2 years |
5,537 |
2,845 |
Financial lease liabilities to be paid between 2-3 years |
5,671 |
4,406 |
|
|
|
|
16,429 |
10,285 |
The fair values of the borrowings and finance lease liabilities as of 31 December 2017 and 2016 are as follow:
|
31 December 2017 |
31 December 2016 |
||
|
Carrying |
Fair |
Carrying |
Fair |
|
Value |
Value |
Value |
Value |
|
|
|
|
|
Borrowings |
211,476 |
224,487 |
189,216 |
191,476 |
Financial lease liabilities |
16,429 |
23,736 |
10,285 |
9,086 |
|
|
|
|
|
Total |
227,905 |
248,223 |
199,501 |
200,562 |
As of 31 December 2017 and 2016, net financial liabilities reconciliation is below;
|
31 December 2017 |
31 December 2016 |
|
|
|
Cash and cash equivalents |
76,128 |
19,502 |
Financial liabilities and lease to be paid in 1 year |
(142,152) |
(118,907) |
Financial liabilities and lease to be paid upcoming years |
(85,754) |
(80,594) |
|
|
|
|
(151,778) |
(179,999) |
|
31 December 2017 |
31 December 2016 |
|
|
|
Cash and cash equivalents |
76,128 |
19,502 |
Financial liabilities and lease - fixed rate |
(99,385) |
(113,430) |
Financial liabilities and lease - floating rate |
(128,521) |
(86,071) |
|
|
|
|
(151,778) |
(179,999) |
NOTE 15 - FINANCIAL LIABILITIES (Continued)
31 December 2017 |
Financial liabilities and lease to be paid in a year |
Financial liabilities and lease to be paid in upcoming year |
Total |
1 January net financial liabilities |
(118,907) |
(80,594) |
(199,501) |
Net cash effect |
(45,168) |
33,800 |
(11,368) |
Change in lease debt |
- |
(1,847) |
(1,847) |
Currency transaction cost |
21,923 |
(37,112) |
(15,189) |
31 December net financial debt |
(142,152) |
(85,753) |
(227,905) |
NOTE 16 - TAX ASSETS AND LIABILITIES
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 statement, has been calculated on a separate-entity basis.
The Netherland
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 25.5%. No further taxes are payable on this profit unless the profit is distributed.
If certain conditions are met, income derived from foreign subsidiaries is tax exempt 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 20% (31 December 2015: 20%) 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).
NOTE 16 - TAX ASSETS AND LIABILITIES (Continued)
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 20% 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 statement 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.
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 consist of the following:
|
2017 |
2016 |
|
|
|
Corporate tax calculated |
8,270 |
7,251 |
Prepaid taxes (-) |
(6,089) |
(4,934) |
|
|
|
Tax liability |
2,181 |
2,317 |
Tax income and expenses included in the statements of comprehensive income are as follows:
|
2017 |
2016 |
|
|
|
Current period corporate tax expense |
(8,270) |
(7,251) |
Deferred tax income/(expense) |
6,322 |
(1,731) |
|
|
|
Total tax expense |
(1,948) |
(8,982) |
NOTE 16 - TAX ASSETS AND LIABILITIES (Continued)
The reconciliation of the tax expense in the statement of comprehensive income is as follows:
|
2017 |
2016 |
|
|
|
Profit before tax |
6,783 |
38,303 |
|
|
|
Corporate tax at statutory rates (25.5%) |
(1,730) |
(9,767) |
Disallowable expenses |
(3,541) |
(1,271) |
Initial recognition of deferred tax in Russia |
7,254 |
- |
Differences in tax rates |
(3,996) |
2,148 |
Other, net |
65 |
(92) |
|
|
|
Total tax expense |
(1,948) |
(8,982) |
The breakdown of cumulative temporary differences and the resulting deferred income tax assets/liabilities at 31 December 2017 and 2016 using statutory tax rates are as follows:
|
31 December 2017 |
31 December 2016 |
||
|
Temporary differences |
Deferred Tax assets/(liabilities) |
Temporary differences |
Defered Tax assets/(liabilities) |
|
|
|
|
|
Carry forward tax losses (*) |
30,440 |
6,088 |
22,517 |
- |
Property and equipment |
|
|
|
|
and intangible assets |
(43,765) |
(8,753) |
(45,098) |
(9,018) |
Bonus accruals |
5,576 |
1,115 |
3,244 |
649 |
Unused vacation liabilities |
5,070 |
1,104 |
2,199 |
440 |
Volume rebate advances |
4,574 |
915 |
11,562 |
2,312 |
Other |
5,770 |
1,154 |
2,125 |
424 |
|
|
|
|
|
Deferred income tax assets |
|
10,672 |
|
3,825 |
Deferred income tax liabilities |
|
(9,139) |
|
(9,018) |
|
|
|
|
|
Deferred income tax, net |
|
1,533 |
|
(5,193) |
(*) 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 statement of profit or loss.
NOTE 16 - TAX ASSETS AND LIABILITIES (Continued)
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 10-year period has been abolished and any losses incurred since 2007 will be carried forward until fully recognised.
Domino's Russia recognizes tax assets for the tax losses carried forward to the extent that the realization of the related tax benefit through the future taxable profits is probable. Domino's Russia recognize deferred income tax assets arising from tax losses, tax discounts and other temporary differences with the estimates and assumptions rely on the Domino's Russia management's five years business plan and potential growth opportunities in Russia.
|
2017 |
2016 |
|
|
|
Balance at the beginning at the year |
(5,193) |
(3,619) |
|
|
|
Charged to the statement of income |
6,322 |
(1,731) |
Currency transaction difference |
337 |
- |
Charged to other comprehensive income |
67 |
157 |
|
|
|
Balance at the end of the year |
1,533 |
(5,193) |
NOTE 17 - SUBSEQUENT EVENTS
None.
………………………