Trading Update

RNS Number : 5103U

DP Eurasia N.V

13 July 2018

 

For Immediate Release

13 July 2018

DP Eurasia N.V.

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

Trading Update for the Six Months Ended 30 June 2018

Continued top line growth and strong digital engagement

	For the period ended 30 June
	2018	2017	Change
	(in millions of TRY, unless otherwise indicated)
Number of stores	672	593	79
System Sales (1)
Turkey	351.6	304.1	15.6%
Russia	152.7	90.5	68.8%
Azerbaijan & Georgia	6.1	3.9	56.8%
Total	510.4	398.5	28.1%
Like-for-like System Sales growth(2)
Turkey	10.9%	6.9%
Russia (based on RUB)	18.0%	31.3%

Highlights

·     The Board expects the full year Adjusted EBITDA⁽⁵⁾ for 2018 to be in line with expectations

·     79 new stores were added over the last 12 months, bringing the total number to 672

·     Group system sales growth of 28.1% driven by strong growth in both Russia and Turkey

o  Turkish systems sales growth of 15.6%

o  Russian system sales growth of 68.8% (54.0% based on RUB)

·     Group online system sales growth of 64.5%

o  Turkish online systems sales growth of 46.9%

o  Russian online system sales growth of 106.9% (88.6% based on RUB)

·     Turkey and Russia like-for-like growth is strong, leveraging the Group's online ordering platforms - online delivery system sales as a share of delivery system sales reached 59.3% for the period (2017 H1: 49.7%)

·     Both Turkey and Russia were awarded the Gold Franny Award - the annual award that Domino's Pizza Inc. presents to its master franchisees for operational excellence, growth rate and increase in revenue

·     Agreement signed to refinance the Euro denominated Russian loans by a Rouble denominated loan

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

"We are very pleased with our performance for the first half of 2018.  We were able to record double-digit like-for like growth in both of our main markets, despite the election period in Turkey.  The growing  franchisee base and pipeline are encouraging in both markets.  In the first half of 2018, which is historically a slower period for store openings, we have added 29 stores - 21 in Russia, seven in Turkey and one in Azerbaijan, which was in line with our expectations as our geographic expansion outside of Greater Moscow in Russia continues, where we have added Voronezh, Kazan, and Nizhny Novgorod among other cities. 

We are happy to see that our advertising spend and capital expenditures on the digital front are paying off as the online portion of our business is continuing to increase.  We are continuing with the deployment of the GPS Tracker in Turkey to optimize delivery effectiveness and expect to finish it in the second half of the year.  Our project to unify the online ordering back-end systems across the Group is also on track to finish by the end of 2018.

The Board expects the full year Adjusted EBITDA⁽⁵⁾ for 2018 to be in line with expectations."

Enquiries

DP Eurasia N.V.
Selim Kender, Chief Strategy Officer & Head of Investor Relations	[phone]
Buchanan (Financial Communications)
Richard Oldworth / Maddie Seacombe	[phone] [e-mail]

A conference call for investors and analysts will be held at 9.00am this morning, which will be accessible using the following details:

Conference call:

UK Toll: 02034281542 UK Toll Free: 08082370040 Participant PIN code: 16201241# URL for international dial in numbers: http://events.arkadin.com/ev/docs/FEL_Events_International_Access_List.pdf

A recording of the conference call will subsequently be available at www.dpeurasia.com.

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 672 stores (521 in Turkey, 142 in Russia, six in Azerbaijan and three in Georgia as at 30 June 2018), 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 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

Store count	As at 30 June
	2018				2017
	Corporate	Franchised	Total		Corporate	Franchised	Total
Turkey	145	376	521		135	355	490
Russia	101	41	142		88	8	96
Azerbaijan	-	6	6		-	4	4
Georgia	-	3	3		-	3	3
Total	246	426	672		223	370	593

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 periods ended 30 June 2018 and 2017:

		For the period ended 30 June
		2018			2017
		Turkey	Russia	Total	Turkey	Russia	Total
Store		43.2%	25.7%	38.6%	49.1%	37.2%	46.8%
Online	Group's online platform	29.6%	74.3%	42.5%	24.3%	62.8%	32.6%
	Aggregator	24.1%	-	16.8%	22.1%	-	17.1%
	Total online	53.7%	74.3%	59.3%	46.4%	62.8%	49.7%
Call centre		3.0%	-	2.1%	4.5%	-	3.5%
Total(3)		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 periods ended 30 June 2018 and 2017:

	For the period ended 30 June
	2018	2017
Group online like-for-like growth(4)
Online system sales
Turkey	42.8%	32.5%
Russia (based on RUB)	52.5%	85.1%

Russia Refinancing

On 12 July 2018, the Group signed an agreement to refinance its Euro denominated loans in Russia with a Rouble denominated loan.  The RUB 2.2 billion facility has a 76 month term with a 12 month grace period and carries an interest rate of 9.7%.  The loan carries a RUB 420 million cash deposit condition to be made as collateral by the Russian operating company.

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 the Group considers to be mature operations. The Group considers mature stores to be those stores 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⁾ Delivery system sales are system sales of the Group generated through the Group's delivery distribution channel.

⁽⁴⁾ Online system sales are system sales of the Group generated through its online ordering channel.

⁽⁵⁾ Adjusted EBITDA is 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 and 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

Appendices

Exchange Rates

	Period ended 30 June
	2018			2017
Currency	Period End	Period Average		Period End	Period Average
EUR/TRY	5.309	4.942		4.003	3.931
RUB/TRY	0.072	0.068		0.059	0.062
EUR/RUB	72.992	71.822		67.499	62.719

Delivery - Take away / Eat in mix

	For the period ended 30 June
	2018			2017
	Turkey	Russia	Total	Turkey	Russia	Total
Delivery	63.9%	62.3%	63.3%	64.3%	61.7%	63.6%
Take away / Eat in	36.1%	37.7%	36.7%	35.7%	38.3%	36.4%
Total(2)	100%	100%	100%	100%	100%	100%

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.

 

END

 

 

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