TIDMDPP
RNS Number : 5393A
DP Poland PLC
27 March 2017
DP Poland PLC ("DP Poland" or the "Company")
Final results for the full year to 31 December 2016.
Accelerated store roll-out and strong like-for-likes drive sales
volume and improved contributions from corporate stores and
commissary
DP Poland, through its wholly owned subsidiary DP Polska S.A.,
has the exclusive right to develop, operate and sub-franchise
Domino's Pizza stores in Poland. There are currently 39 Domino's
Pizza stores in 14 Polish cities, 16 corporately managed and 23
sub-franchised.
Highlights
-- 39 stores open to-date, 4 stores already opened in 2017
-- 6 stores currently under construction
-- Expecting to cross the 50 stores mark during 2017
-- System Sales(1) up +62% (PLN) 2016 on 2015
-- Like-for-like(2) System Sales (PLN) up +27%
-- 17 consecutive quarters of double digit like-for-like System
Sales growth, Q4 2012 - Q4 2016
-- Total corporate store EBITDA up +76% at +1.76m PLN
(+GBP329k(3) ) 2016 vs +1.00m PLN (+GBP173k(4) ) 2015
-- Top 3 corporate stores averaged +468k PLN (+GBP88k(3) )
EBITDA each in 2016 vs +332k PLN (+GBP58k(4) ) each in 2015
-- Top store delivered +536k PLN (+GBP100k(3) ) EBITDA
-- Commissary gross profit5 up +155% at +1.71m PLN (+GBP321k(3)
) vs +673k PLN (+GBP117k(4) ) in 2015
-- Group EBITDA(6) losses marginally reduced (GBP1.58m)(3) 2016 vs (GBP1.63m)(4) 2015
-- Second commissary on plan to open Summer 2017 taking total
commissary capacity to c.150 stores
-- Double digit like-for-like System Sales growth January-February 16%
o March like-for-likes on track to be 20%+
Peter Shaw, Chief Executive of DP Poland said:
"Our accelerated store roll-out plan and strong like-for-like
performance drove sales volume and improved contributions from
corporate stores and commissary. We will continue to drive sales
volume growth through 2017 and anticipate Group EBITDA losses
further reduced for YE 2017.
During 2017 we expect to cross the 50 store mark, which will be
a key milestone for Domino's Pizza in Poland, as we extend our
footprint and seek further economies of scale in this market of
38.5 million people."
27 March 2017
(1) System Sales - total retail sales including sales from
corporate and sub-franchised stores
(2) Like-for-like growth in PLN, matching trading periods for
the same stores between 1 January and 31
December, 2016 and 1 January and 31 December, 2015
(3) Exchange rate average for 2016 GBP1:PLN 5.3391
(4) Exchange rate average for 2015 GBP1:PLN 5.7657
(5) Sales minus variable costs
(6) Excluding non-cash items, non-recurring items and store
pre-opening expenses
This announcement contains inside information for the purposes
of the Market Abuse Regulation.
Enquiries:
DP Poland PLC
Peter Shaw, Chief Executive
www.dppoland.com 020 3393 6954
Peel Hunt LLP
Adrian Trimmings / George
Sellar 020 7418 8900
Chairman's Statement
2016 was a year of robust System Sales(1) growth, driven by
strong like-for-likes(2) and the roll-out of new stores to more
towns and cities. This growth in System Sales enhanced both store
EBITDA and commissary gross profit(5) , albeit in the context of a
marginally reduced Group EBITDA(6) loss. The growth in commissary
gross profit is particularly driven by the addition of new
sub-franchised stores and the growth in sub-franchised store sales,
through the provision of dough balls, ingredients, boxes and other
items to sub-franchisees, plus sales royalties.
Today we have 8 sub-franchise partners, 6 more than we had this
time last year and we expect to welcome more in the coming year.
The addition of more sub-franchisees is further confirmation of the
potential of the Polish market, as more individuals commit to
building their own Domino's businesses in a country of 38.5 million
people. Today over half of our estate is sub-franchised, compared
to less than one third this time last year. The mix of corporately
managed and sub-franchised stores will vary as we build out over
the coming years, but we expect sub-franchised stores to be a key
growth engine in the medium to longer term.
We work closely with our sub-franchisees to create strong sales
and marketing programmes, to run in tandem with those of our
corporate stores. Local store marketing (LSM) lies at the heart of
Domino's marketing, communicating to our customers and potential
customers through menus, leaflets and other activities. LSM is
supported by various media, including digital, out-of-home poster
campaigns and radio. As our store estate grows and our ability to
deliver to more customers increases we can foresee the introduction
of national television advertising; we believe this will mark a
further step change to the performance of the Domino's business in
Poland.
Our most mature corporate stores continue to deliver robust
growth, alongside our newer stores, with both sales and Store
EBITDA significantly ahead in 2016 over 2015. The growing traction
of the Domino's brand in Poland is founded on the satisfaction of a
loyal and growing customer base at each store, through our offer of
great service, great product and great value.
While expansion requires resource, with strengthened real estate
and store opening teams and extended commissary capacity, the
growing store contribution to marketing and the economies of scale
in procurement will further strengthen the positive feedback cycle
inherent to revenue growth. As we progress through this growth
phase, to establish a national presence, we expect the reduction in
Group EBITDA losses, compared to the growth in revenues, to
rebalance as we approach critical mass in stores numbers and System
Sales. With that rebalancing there will come an inflection point
when the relative costs of running a high growth business steadily
reduce in proportion to the growth in revenues and improvements in
Group EBITDA.
Our fund raising of GBP3.2m gross in October 2016 was strongly
supported by our investors and enables us to maintain the pace in
the opening of corporate stores and in certain cases to support our
own managers, through loans, to acquire their own stores.
Supporting in-house talent in this way is a success model that is
tried and tested across the Domino's system worldwide, in tandem
with encouraging and supporting third parties to sub-franchise the
Domino's brand.
The opportunity for Domino's in Poland is founded on the size of
the population - the eighth largest in Europe - and the evident
appetite for the Domino's offer of high quality pizza, delivered
fast and hot to the door. Delivering against that opportunity
requires a mix of careful management, energy and determination
which I believe is ably demonstrated by our team; I would like to
take this opportunity to thank both them and our sub-franchisees
for delivering a strong performance in 2016.
In 2017 we remain focused on building out the store estate to
achieve critical mass and to establish Domino's Pizza as a national
brand in Poland.
Nicholas Donaldson
Non-Executive Chairman
24 March 2017
Chief Executive's Review
Group performance
Group EBITDA(6) losses marginally improved 2016 (GBP1.58m(3) )
on 2015 (GBP1.63m(4) ) at average exchange rates for 2016 and
2015.
At constant exchange rates (GBP1: 5.34PLN, the 2016 average)
Group EBITDA(6) losses, improved by 8%, 2016 on 2015.
As described in the Finance Director's Report below, the Group
loss for the period of (GBP2,493,401(3) ) 2016, at actual exchange
rates increased by 14%, mainly due to the increases in
depreciation, amortisation and impairment and share based
payments.
Investment in the real estate and store opening teams reduced
the positive impact of the growth in store EBITDA and commissary
gross profit on Group EBITDA. As revenues continue to grow we
expect them to outstrip growth in Direct Costs (including the new
commissary) and S,G&A and for the benefits to show in
improvement in Group EBITDA for YE 2017 and beyond.
Store performance
2016 delivered a strong store performance in both
like-for-like(2) sales and sales from stores that were opened
during the year.
Like-for-like System Sales(1) were up +27% 2016 on 2015.
2016 closed with our 17(th) consecutive quarter of double digit
like-for-like System Sales growth.
Like-for-like store performance was driven by a combination of
successful sales and marketing activity and, we believe, increasing
traction of the Domino's brand with existing and prospective
customers, overlaid on a bouyant consumer economy.
Total System Sales were up +62% (PLN) 2016 on 2015.
Total Corporate Store EBITDA 2016 was +1.76m PLN (+GBP329k(3) )
vs +1.0m PLN (+GBP173k(4) ) in 2015, growth of +76%.
Total Corporate Store EBITDA performance benefited from
improvement in the cost of goods, in part due to commodity
deflation in the first part of the year and in part due to growing
volumes benefiting commissary procurement. In contrast, higher
store labour costs had some impact on store EBITDA in the second
part of the year. The upward pressure on store labour was impacted
both by the introduction of a minimum wage and its subsequent
increase and by a drop in unemployment, impacting wage levels. On
the plus side, in the macroeconomic context, lower unemployment and
increased wages feed through to increased disposable income and a
higher propensity to purchase.
We are very encouraged that our top 3 corporate stores averaged
+468kPLN (+GBP88k(3) ) EBITDA each in 2016 vs +332kPLN (+GBP58k(4)
) each in 2015. Our top store delivered +536kPLN (+GBP100k(3) )
EBITDA.
New store sales growth was driven by the opening of 12 stores in
2016.
Store roll-out
12 stores were opened in 2016, 8 sub-franchised and 4 corporate,
ending the year with 35 stores.
The table below shows store openings and sales of stores to
sub-franchisees in 2016
Stores 1 Jan 2016 Opened Sold to Closed 31 Dec 2016
franchisees
------------ ----------- ------- ------------- ------- ------------
Corporate 15 4 -6 0 13
------------ ----------- ------- ------------- ------- ------------
Franchised 8 8 +6 0 22
------------ ----------- ------- ------------- ------- ------------
Total 23 12 0 0 35
------------ ----------- ------- ------------- ------- ------------
In 2017 to-date we have opened 4 stores, of which 3 are
corporate stores and 1 sub-franchised. We currently have 39 stores
in operation.
We started 2016 with Domino's stores in 4 cities; we ended the
year with stores in 10 towns/cities and today there are stores in
14 towns/cities. The overall performance of our new stores is
encouraging, with inevitable variations in performance between
individual stores.
In Warsaw we have started to split the delivery areas of some of
our more mature stores, as the sales of those stores are healthy
enough to share part of their delivery areas. The reason for
splitting delivery areas with the opening of a second store is to
serve our customers even better with even faster delivery times.
The better we serve our customers with fast delivery the more
likely they are to repeat their purchase with us and the combined
sales and EBITDA of 2 stores will exceed the sales of the original
store.
Sub-franchisees
We finished the year with 8 sub-franchise partners, who are
operating 23 stores out of a total of 39 stores open to-date. We
have witnessed a swing from a predominantly corporately managed
estate in 2015 to a predominantly sub-franchised estate today.
While we expect this mix to vary as new stores are opened, we
believe that sub-franchise store openings will be a very important
engine of our store-rollout.
Our sub-franchisees are a mix of former Domino's Pizza area
managers and third parties who have come from outside the Domino's
system.
Commissary
The performance of our commissary in 2016 was marked by a step
change increase in sales to stores as System Sales grew by 62%
(PLN). Commissary gross profit5 increased by 155% to +1.71m PLN
(+GBP321k(3) ) in 2016, from +673k PLN (+GBP117k(4) ) in 2015.
The high proportion of sub-franchised stores positively impacted
commissary gross profit as we retain a proportion of sales
royalties and are able to add margin to the sales of goods to
sub-franchised stores, while still offering sub-franchisees highly
competitive prices compared to those achievable in the open market.
These goods include dough balls, ingredients, boxes and
services.
Our ability to procure high quality goods cost effectively
improves as our sales volumes grow. 2016 was marked by commodity
deflation for much of the year, although by the fourth quarter we
saw prices of certain commodities, such as cheese and meat, start
to increase.
In the summer of 2017 we will have finished the construction of
our second commissary which will give us the production and
warehousing capacity to open an additional c.100 stores. Together
with our current commissary will take our commissary capacity to up
to c.150 stores, dependent on store sales volumes.
The opening of our second commissary will have an impact on
Direct Costs, nevertheless, this capacity is required and the new
commissary's more central location, on the outskirts of the city of
ód , will benefit distribution costs to many of our stores that are
not in the vicinity of Warsaw or to the east of Warsaw.
Marketing
We continue to invest in marketing at both the store and
town/city level. Digital marketing is an important component for us
as are the more traditional media of direct marketing, out-of-home
posters and radio. Return on investment is a critical metric in our
choice of marketing spend; as our experience of marketing Domino's
in Poland grows so does our efficiency of spend on media.
The growth in our store estate will lead to more opportunities
to market to our existing and prospective customers. As we expand
our national coverage of stores the prospect of national television
advertising becomes more realistic, both in terms of the efficiency
of media spend and the availability of Domino's Pizza to potential
customers.
With the growth in our online sales - we saw 71% of delivery
orders made online in 2016, compared to 67% in 2015 - we see the
benefits of a closer relationship with our customers. Our online
interface is tailored to the way our consumers wish to use it, be
that through our app or our responsive website which adapts to the
format of the device that our consumers decide to use. By the same
token we are able to tailor our offers and their timing to suit our
customers
Innovation
We regularly introduce new pizza recipes to delight our
customers. In 2016 we launched two stuffed crust options: Cheesy
Crust and Hot Dog Crust, following in the footsteps of other
Domino's Pizza markets. These crust types can be ordered to
supplement any of our pizza recipes.
New pizza recipes introduced last year included Italian
Meatballs, Tuna Light and Big Meat.
Product innovation will continue to play an important part in
attracting new customers and delighting our existing customers.
October fundraising
In October, 2016 we raised GBP3.2m before expenses, c.GBP3m net,
in order to support our continued roll-out of store openings, with
an additional 20 stores, increasing our target to 100 stores open
by YE 2020. This fund raising was well supported by our existing
investors and new investors, resulting in a placing price discount
to the prior-day closing price of only 1.3%.
Outlook and current trading
Our like-for-like System Sales were 16% Jan-Feb 2017; while
lower than the exceptional like-for-likes in 2016, due to strong
comparables, we anticipate our like-for-like performance for the
full year 2017 to be stronger. March 2017 like-for-likes are on
track to be 20%+.
We had 35 stores open at the beginning of 2017 and we expect to
push through the 50 store mark this year. 4 stores were opened by
early February 2017 and we have 6 further stores under
construction. While we expect the majority of these store openings
to be corporate stores, a number of our existing sub-franchisees
have committed to open stores in 2017 and we anticipate new
sub-franchisees opening stores during the year.
The Polish economy continues to deliver healthy consumer
spending and we expect this consumer behaviour to continue through
2017, supported by falling unemployment and growing wage levels,
which in turn boost disposable incomes. On the cost front the
reduction in unemployment has impacted labour rates, but we
continue to respond with competitive rates and a supportive working
environment, retaining and attracting the talent that we need. We
saw some inflation in food prices in the fourth quarter of 2016,
following the deflation that we experienced in the first half of
the year, but so far the increases have not been dramatic. Our
management of pricing is designed to minimise the impact of such
commodity price increases.
2017 will be the year when we expect to push through the 50
store mark, a key milestone. The growth in store numbers and
positive like-for-likes will deliver growing economies of scale and
growing store EBITDA and commissary gross profit, positively
impacting Group EBITDA losses for YE 2017.
Peter Shaw
Chief Executive
24 March 2017
Finance Director's Review
Overview
In 2016 we achieved our 17(th) consecutive quarter of double
digit like-for-like(2) System Sales(1) growth; through improved
corporate store EBITDA and commissary gross profit5. Total
corporate store EBITDA grew +75% (PLN) and commissary gross profit
grew
+155% (PLN). Growth of System Sales in 2016 was supported by
Local Store Marketing and digital media, radio and billboards,
carefully planned against specific Return on Marketing Investment
criteria. The loss for the year was in line with expectations at
(GBP2,493,401(3) ).
While the Polish economy in 2016 experienced deflation, we
experienced some inflation in food and wages in Q4 2016, following
deflation in those goods earlier in the year. From the broader
macro-economic viewpoint wage inflation translates to an increase
in internal consumption, which should in-turn stimulate demand and
growth in our System Sales. We have been managing those
inflationary pressures through pricing management and enhanced
procurement through volume growth.
In 2016 we decided to invest in store expansion and to
accelerate store openings. We opened 12 new stores and added 6 more
towns/ cities. In the period January-March 2017 we added 4 new
stores in 4 new towns/cities; today there are 39 Domino's Pizza
stores in 14 towns/cities. We expect to reach the 50 store mark
during this year.
Selling, General and Administrative expenses (S,G&A)
In 2016 Selling, General and Administrative expenses (S,G&A)
were 29% of System Sales, a 15 percentage points improvement
against 2015 (44% in 2015), both measured using the actual average
exchange rates for 2016 and 2015.
The opening of new stores in new towns and cities requires
investment in the store expansion team and additional area managers
to oversee both corporate and sub-franchised store performance. As
we open more stores these additional costs will become
proportionately less significant and the overall impact of
S,G&A on Group EBITDA will continue to reduce.
As our national coverage of stores grows the prospect of
national television advertising becomes more realistic, both in
terms of the efficiency of media spend and the availability of
Domino's Pizza to potential consumers.
Direct costs
In preparation for further store openings and continuing growth
in System Sales we will be extending our commissary capacity in
2017 with the construction of a new facility on the outskirts of ód
, a large city in the centre of Poland with excellent access to the
motorway network. We have approached this investment with the same
capital light model that we applied to our Warsaw facility. This
additional commissary capacity will impact our Direct Costs through
additional rent and operating costs, production labour and
warehousing labour. As System Sales grow the impact of this
additional commissary capacity on Direct Costs will be
proportionately less marked and the benefits of lower production
costs and warehouse product handling costs will be seen in further
improved corporate store EBITDA and commissary gross profit.
The opening of new stores in new towns and cities results in
higher distribution costs, which in turn will become proportionally
less significant as those costs are spread across towns and cities
with growing store penetrations. The opening of our second
commissary in the centre of Poland will reduce distribution
expenses with stores located in the west, north and south of
Poland. The current commissary in Warsaw will service Warsaw and
stores located to the east.
Store count
Stores 1 Jan Opened Sold Closed 31 Dec
2016 to franchisees 2016
------------ ------ ------- ---------------- ------- -------
Corporate 15 4 -6 0 13
------------ ------ ------- ---------------- ------- -------
Franchised 8 8 +6 0 22
------------ ------ ------- ---------------- ------- -------
Total 23 12 0 0 35
------------ ------ ------- ---------------- ------- -------
4 stores have been opened in 4 new towns and cities since 1
January 2017, totalling 39 stores to-date.
Sales Key Performance Indicators
62% growth in System Sales (PLN) was supported by 27% growth in
like-for-like System Sales (PLN) and the opening of 12 new stores
in 2016. 27% like-for-like System Sales growth comprises a mix of
24% like-for-like System order count growth and a 3% growth in
average net check. Delivery System Sales ordered online are
growing, however newly opened stores need time to build online
customers and that will dilute the System average.
2016 2015 Change
%
-------------------------- ----------- ----------- -------
System Sales PLN 38,531,225 23,714,687 +62%
-------------------------- ----------- ----------- -------
System Sales* GBP 7,216,802 4,441,701 +62%
-------------------------- ----------- ----------- -------
L-F-L System Sales (PLN) +27% +16%
-------------------------- ----------- ----------- -------
L-F-L System order count +24% +14%
-------------------------- ----------- ----------- -------
Delivery System Sales
ordered online +71% +67%
-------------------------- ----------- ----------- -------
*Constant exchange rate of GBP1: 5.3391 PLN
Group performance
97% growth of Group Revenue at a constant exchange rate of GBP1:
5.3391 PLN is derivative of 62% growth of System Sales, opening 8
sub-franchised stores and selling 6 corporate stores to
sub-franchisees.
Group Revenue & 2016 2015 Change %
EBITDA
----------------- ------------ ------------ ---------
Revenue PLN 40,346,077 20,515,866 +97%
----------------- ------------ ------------ ---------
Revenue* GBP 7,556,719 3,842,570 +97%
----------------- ------------ ------------ ---------
Group EBITDA(6)
* GBP (1,579,565) (1,713,241) +8%
----------------- ------------ ------------ ---------
*Constant exchange rate of GBP1: 5.3391 PLN
The Group Income statement at actual average exchange rate for
2016 and 2015 was impacted by GBP weakening against the PLN by 7%
in 2016.
Group Revenue & 2016 2015 Change %
EBITDA
----------------- ------------ ------------ ---------
Revenue PLN 40,346,077 20,515,866 +97%
----------------- ------------ ------------ ---------
Revenue GBP 7,556,719 3,558,261 +112%
----------------- ------------ ------------ ---------
Group EBITDA(6)
GBP (1,579,565) (1,625,267) +3%
----------------- ------------ ------------ ---------
Actual average exchange rates for 2016 and 2015
Group Loss for the period
Group EBITDA(6) at actual average exchange rates for 2016 and
2015, improved by GBP45,702 (GBP133,676 improvement at constant
exchange rate of GBP1: 5.3391 PLN) against the prior year. The
Group loss for the year at actual average exchange rates for 2016
and 2015 increased by GBP300,138 against 2015, mainly due to the
effect of non-cash expenses as follows: the depreciation,
amortisation and impairment charge increased by GBP118,560 and the
share based payments charge increased by GBP137,931.
Group Loss for 2016 2015 Change %
the period
--------------------- ------------ ------------ ---------
Loss for the period
GBP (2,493,401) (2,193,263) -14%
--------------------- ------------ ------------ ---------
Actual average exchange rates for 2016 and 2015
Exchange rates
PLN : GBP1 2016 2015 Change %
------------------ ------- ------- ---------
Income Statement 5.3391 5.7657 -7%
------------------ ------- ------- ---------
Balance Sheet 5.1437 5.8011 -11%
------------------ ------- ------- ---------
Financial Statements for our Polish subsidiary DP Polska S.A.
are denominated in PLN and translated to GBP. Under IFRS accounting
standards the Income Statement for the Group has been converted
from PLN at the average annual exchange rate applicable to PLN
against GBP. The balance sheet has been converted from PLN to GBP
at the 31 December 2016 exchange rate applicable to PLN against
GBP. In 2016 the PLN strengthened against GBP and impacted numbers
presented at 2016 and 2015 rates accordingly.
Cash position
Cash reduced by 10% from 1 January 2016, with the net cash at
31(st) December 2016 being GBP6.3m. The Company raised
approximately GBP3 million after expenses in October through the
placing of 6,667,000 new Ordinary Shares at 48 pence per share. The
net proceeds of the Placing are expected to provide the Company
with the funds required to open an additional 20 stores, with the
target of 100 stores open by 2020.
The Company has spent GBP3.7 million covering Group losses and
store CAPEX and to finance sub-franchisee store openings. The store
opening costs are repaid by sub-franchisees over a period of 3 to
10 years.
1 January Cash movement 31 December
2016 2016
-------------- ---------- -------------- ------------
Cash in bank 6,987,503 (679,243) 6,308,260
-------------- ---------- -------------- ------------
Actual exchange rates for 2016 and 2015
Macro situation in Poland
In 2016 we saw GDP growth combined with continued deflation.
However, in Q4 2016 we experienced inflation of food and wages. GDP
growth was supported by growth in Internal Consumption. The 3 Month
Warsaw Interbank Offered Rate is virtually unchanged.
Macro KPI 2016 2015
------------------------- ------- -------
Real GDP growth
(% growth)(7) 2.5 3.5
------------------------- ------- -------
Inflation (% growth)(8) -0.7 -0.9
------------------------- ------- -------
31 Dec 31 Dec
2016 2015
------------------------- ------- -------
Interest rate (%)(9) 1.7300 1.7200
------------------------- ------- -------
Maciej Jania
Finance Director
24 March 2017
(1) System Sales - total retail sales including sales from
corporate and sub-franchised stores
(2) Like-for-like growth in PLN, matching trading periods for
the same stores between 1 January and 31
December, 2016 and 1 January and 31 December, 2015
(3) Exchange rate average for 2016 GBP1: 5.3391 PLN
(4) Exchange rate average for 2015 GBP1: 5.7657 PLN
(5) Sales minus variable costs
(6) Excluding non-cash items, non-recurring items and store
pre-opening expenses
(7) source:
http://www.euromonitor.com/poland/country-factfile#
(8) source:
http://www.euromonitor.com/poland/country-factfile#
(9) 3M WIBOR at 30(th) of December; source: www.money.pl
FINANCIAL STATEMENTS
--------------------------------------- ----------- -----------
Group Income Statement
for the year ended 31 December 2016
2016 2015
GBP GBP
Revenue 7,556,718 3,558,261
Direct Costs (7,022,673) (3,367,684)
Selling, general and administrative
expenses - excluding:
store pre-opening expenses,
depreciation, amortisation and
share based payments (2,113,610) (1,815,844)
GROUP EBITDA - excluding non-cash
items, non-recurring items and
store pre-opening expenses (1,579,565) (1,625,267)
----------------------------------------- ----------- -----------
Store pre-opening
expenses (47,850) (20,165)
Other non-cash and
non-recurring items (99,302) (73,944)
Finance income 65,116 46,464
Finance costs (12,478) (4,519)
Foreign exchange
(losses) / gains (7,915) 39,084
Depreciation, amortisation
and impairment (458,722) (340,162)
Share based
payments (352,685) (214,754)
Loss before
taxation (2,493,401) (2,193,263)
------------------------------------------ ----------- -----------
Taxation - -
Loss for the
period (2,493,401) (2,193,263)
------------------------------------------ ----------- -----------
(2.01
Loss per share Basic (1.93 p) p)
(2.01
Diluted (1.93 p) p)
All of the loss for the year is attributable to
the owners of the Parent Company.
Group Statement
of comprehensive income
for the year ended 31 December
2016
2016 2015
GBP GBP
----------------------------------------- ----------- -----------
Loss for the period (2,493,401) (2,193,263)
Currency translation differences 618,614 (218,117)
Other comprehensive expense for the
period, net of tax to be reclassified
to profit or loss in subsequent periods 618,614 (218,117)
--------------------------------------------- ----------- -----------
Total comprehensive income for the
period (1,874,787) (2,411,380)
------------------------------------------- ----------- -----------
All of the comprehensive expense for the year
is attributable to the owners of the Parent Company.
Group Balance Sheet
at 31 December 2016
2016 2015
GBP GBP
------------------------------ --------- ------------ ------------
Non-current assets
Intangible assets 442,764 251,697
Property, plant and equipment 2,765,748 2,053,207
Trade and other receivables 1,217,231 287,351
------------------------------- --------- ------------ ------------
4,425,743 2,592,255
Current assets
Inventories 271,525 116,668
Trade and other receivables 1,818,425 1,040,702
Cash and cash equivalents 6,308,260 6,987,503
-------------------------------------------- ------------ ------------
8,398,210 8,144,873
Total assets 12,823,953 10,737,128
-------------------------------------------- ------------ ------------
Current liabilities
Trade and other payables (1,218,991) (853,209)
Borrowings (73,007) (34,416)
Provisions (37,294) (35,274)
-------------------------------------------- ------------ ------------
(1,329,292) (922,899)
---------------------------------------- ------------ ------------
Non-current liabilities
Provisions (50,532) (39,899)
Borrowings (234,276) (97,801)
-------------------------------------------- ------------ ------------
(284,808) (137,700)
Total liabilities (1,614,100) (1,060,599)
-------------------------------------------- ------------ ------------
Net assets 11,209,853 9,676,529
-------------------------------------------- ------------ ------------
Equity
Called up share capital 684,576 651,241
Share premium account 26,878,887 23,856,796
Capital reserve - own shares (50,463) (56,361)
Retained earnings (16,116,724) (13,970,110)
Currency translation reserve (186,423) (805,037)
------------------------------- --------- ------------ ------------
Total equity 11,209,853 9,676,529
-------------------------------------------- ------------ ------------
The financial statements were approved by the
Board of Directors and authorised for issue on
24 March 2017 and were signed on its behalf by:
Peter Shaw Maciej Jania
Direc
Director tor
Group Statement of Cash Flows
for the year ended
31 December 2016
2016 2015
GBP GBP
--------------------------------------- ----------- -----------
Cash flows from operating
activities
Loss before taxation
for the period (2,493,401) (2,193,263)
Adjustments for:
Finance income (65,116) (46,464)
Finance costs 12,478 4,519
Depreciation, amortisation
and impairment 458,722 340,162
Share based payments
expense 352,685 214,754
---------------------------------------- ----------- -----------
Operating cash flows before movement
in working capital (1,734,632) (1,680,292)
(Increase)/decrease
in inventories (134,825) (22,103)
(Increase)/decrease in trade
and other receivables (254,038) (532,689)
Increase in trade
and other payables 461,664 314,941
Increase in provisions 50,532 -
------------------------------------------- ----------- -----------
Cash generated from
operations (1,611,299) (1,920,143)
Taxation paid - -
Net cash from operating
activities (1,611,299) (1,920,143)
Cash flows from investing
activities
Payments to acquire software (25,114) (6,433)
Payments to acquire property, plant
and equipment (1,714,215) (814,485)
Payments to acquire intangible
fixed assets (23,699) (15,895)
Lease deposits net amount repaid
/ (advanced) (62,052) (45,203)
Proceeds from disposal of property
plant and equipment 698,882 140,864
Decrease/(increase) in loans
to sub-franchisees (1,214,743) 28,091
Interest received 36,745 46,464
Net cash used in
investing activities (2,304,196) (666,597)
Cash flows from financing
activities
Net proceeds from issue
of ordinary share capital 3,055,426 5,205,180
Interest paid (12,478) (4,519)
------------------------------------------- ----------- -----------
Net cash from financing
activities 3,042,948 5,200,661
Net increase/(decrease) in cash
and cash equivalents (872,547) 2,613,921
Exchange differences
on cash balances 193,304 (92,845)
Cash and cash equivalents at beginning
of period 6,987,503 4,466,427
Cash and cash equivalents at end
of period 6,308,260 6,987,503
------------------------------------------ ----------- -----------
The principal non-cash transaction was the acquisition
of property, plant and equipment under finance
lease agreements as disclosed in note 21.
Group Statement of Changes in Equity
for the year ended
31 December 2016
Share Currency Capital
reserve
Share premium Retained translation -
capital account earnings reserve own shares Total
GBP GBP GBP GBP GBP GBP
----------------------- ------- ---------- ------------ ----------- ---------- -----------
At 31 December
2014 477,190 18,825,667 (11,991,601) (586,920) (56,361) 6,667,975
Shares issued 174,051 5,325,949 - - - 5,500,000
Expenses of share
issue - (294,820) - - - (294,820)
Share based payments - - 214,754 - - 214,754
Shares acquired
by EBT - - - - - -
Translation difference - - - (218,117) - (218,117)
Loss for the period - - (2,193,263) - - (2,193,263)
----------------------- ------- ---------- ------------ ----------- ---------- -----------
At 31 December
2015 651,241 23,856,796 (13,970,110) (805,037) (56,361) 9,676,529
Shares issued 33,335 3,166,825 - - - 3,200,160
Expenses of share
issue - (144,734) - - - (144,734)
Share based payments - - 352,685 - - 352,685
Shares transferred
out
of EBT - - (5,898) - 5,898 -
Translation difference - - - 618,614 - 618,614
Loss for the period - - (2,493,401) - - (2,493,401)
At 31 December
2016 684,576 26,878,887 (16,116,724) (186,423) (50,463) 11,209,853
----------------------- ------- ---------- ------------ ----------- ---------- -----------
1. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared
on the historical cost basis, with the exception
of certain financial instruments and share based
payments. The consolidated and Company financial
statements of DP Poland plc have been prepared
in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European
Union, IFRIC Interpretations and the Companies
Act 2006 applicable to Companies reporting under
IFRS. The financial statements have been prepared
in accordance with IFRS and IFRIC interpretations
issued and effective or issued and early adopted
as at the time of preparing these statements
(March 2017). The preparation of financial statements
in accordance with IFRS requires the use of
certain critical accounting estimates. It also
requires management to exercise judgement in
the process of applying the Company's accounting
policies.
2. SEGMENTAL REPORTING
The Board monitors the performance of the corporate
stores and the commissary operations separately
and therefore those are considered to be the Group's
two operating segments. Corporate store sales
comprise sales to the public. Commissary operations
comprise sales to sub-franchisees of food, services
and fixtures and equipment. Commissary operations
also include the receipt of royalty income from
sub-franchisees. The Board monitors the performance
of the two segments based on their contribution
towards Group EBITDA - excluding non-cash items,
non-recurring items and store pre-opening expenses.
In accordance with IFRS 8, the segmental analysis
presented reflects the information used by the
Board. No separate balance sheets are prepared
for the two operating segments and therefore no
analysis of segment assets and liabilities is
presented.
Operating Segment EBITDA
contribution
2016 2015
GBP GBP
---------------------------------- ----------- -----------
Corporate stores 328,906 173,490
Commissary gross
profit 321,171 116,762
Unallocated expenses (2,229,642) (1,915,519)
------------------------------------- ----------- -----------
GROUP EBITDA - excluding non-cash
items, non-recurring items and
store pre-opening expenses (1,579,565) (1,625,267)
------------------------------------- ----------- -----------
3. LOSS BEFORE TAXATION
This is stated after
charging
2016 2015
GBP GBP
--------------------------- ---------------------------- ------- -------
Auditors and
their
associates' - audit of company and
remuneration group financial statements 30,400 22,500
- tax compliance
services 1,400 1,400
- remuneration
Directors' emoluments and fees 352,974 329,288
Amortisation of intangible
fixed assets 64,173 63,523
Depreciation of property,
plant and equipment 394,549 256,708
Impairment of property,
plant and equipment - 19,931
Operating lease - land and
rentals buildings 476,928 624,272
and after crediting
Operating lease income
from sub-franchisees 263,191 166,019
Foreign exchange
gains /(losses) (7,915) 39,084
4. OTHER NON-CASH AND NON-RECURRING
ITEMS
2016 2015
GBP GBP
------------------------------------- -------- --------
Provision for additional
VAT payable (50,532) -
Other non-cash and
non-recurring items (48,770) (73,944)
(99,302) (73,944)
------------------------------------- -------- --------
Non-recurring
Items
Non-recurring items include items which are not
sufficiently large to be classified as exceptional,
but in the opinion of the Directors, are not part
of the underlying trading performance of the Group.
The provision for additional VAT payable has been
recognised following the reversal of a previous
ruling by the Polish VAT authorities.
5. TAXATION
2016 2015
GBP GBP
---------------------------------------- ----------- -----------
Current tax - -
Total tax charge
in income statement - -
----------------------------------------- ----------- -----------
The tax on the Group's loss before tax differs
from the theoretical amount that would arise using
the tax rate applicable to profits of the consolidated
entities as follows:
2016 2015
GBP GBP
---------------------------------------- ----------- -----------
Loss before
tax (2,493,401) (2,193,263)
Tax credit calculated
at applicable rate of
19% (473,746) (416,720)
Income taxable but not recognised
in financial statements 20,536 19,017
Income not subject
to tax (2,487) (2,303)
Expenses not deductible
for tax purposes 74,338 63,447
Tax losses for which no deferred income
tax asset was recognised 381,359 336,559
Total tax charge
in income statement - -
----------------------------------------- ----------- -----------
The Directors have reviewed the tax rates applicable
in the different tax jurisdictions in which the
Group operates. They have concluded that a tax
rate of 19% represents the overall tax rate applicable
to the Group.
6. LOSS PER
SHARE
The loss per ordinary share has been calculated
as follows:
2016 2016 2015 2015
GBP GBP
Weighted Profit Weighted Profit
average / (loss) average / (loss)
number after number after
of shares tax of shares tax
------------ -------- ----------- ----------- ----------- -----------
Basic 128,931,485 (2,493,401) 109,369,484 (2,193,263)
Diluted 128,931,485 (2,493,401) 109,369,484 (2,193,263)
--------------------- ----------- ----------- ----------- -----------
The weighted average number of shares for the
year excludes those shares in the Company held
by the employee benefit trust. At 31st December
2016 the basic and diluted loss per share is the
same, as the vesting of JOSS, SIP or share option
awards would reduce the loss per share and is,
therefore, anti-dilutive.
7. INTANGIBLE ASSETS
Franchise
fees Capitalised
and intellectual Software loan Total
property
rights discount
Group GBP GBP GBP GBP
--------------------- ---------------- -------- ----------- --------
Cost:
At 31 December 2014 334,955 187,557 - 522,512
Foreign currency
difference (17,684) (9,885) - (27,569)
Additions 15,895 6,433 - 22,328
Disposals - (399) - (399)
At 31 December 2015 333,166 183,706 - 516,872
Foreign currency
difference 43,480 24,255 - 67,735
Additions 23,699 25,114 178,269 227,082
Disposals - (4,668) - (4,668)
At 31 December 2016 400,345 228,407 178,269 807,021
----------------------- ---------------- -------- ----------- --------
Amortisation
At 31 December 2014 114,815 98,597 - 213,412
Foreign currency
difference (6,256) (5,338) - (11,594)
Amortisation charged
for the year 37,187 26,336 - 63,523
Disposals - (166) - (166)
At 31 December 2015 145,746 119,429 - 265,175
Foreign currency
difference 19,850 16,236 - 36,086
Amortisation charged
for the year 32,192 26,756 5,225 64,173
Disposals - (1,177) (1,177)
At 31 December 2016 197,788 161,244 5,225 364,257
----------------------- ---------------- -------- ----------- --------
Net book value:
At 31 December 2016 202,557 67,163 173,044 442,764
----------------------- ---------------- -------- ----------- --------
At 31 December 2015 187,420 64,277 - 251,697
Franchise fees consisting of the cost of purchasing
the Master Franchise Agreement (MFA) from Domino's
Pizza Overseas Franchising B.V. have been capitalised
and are written off over the term of the MFA.
The difference between the present value of loans
to sub-franchisees recognised and the cash advanced
has been capitalised as an intangible asset and
are amortised over the life of a new franchise
agreement of 10 years. The amortisation of intangible
fixed assets is included within administrative
expenses in the Income Statement.
8. PROPERTY, PLANT AND
EQUIPMENT
Fixtures Assets
fittings
Leasehold and under
property equipment construction Total
Group GBP GBP GBP GBP
---------------------------- --------- --------- ------------ -----------
Cost:
At 31 December 2014 1,517,251 1,212,582 76,581 2,806,414
Foreign currency difference (80,511) (65,027) (4,717) (150,255)
Additions 353,225 103,316 396,961 853,502
Transfers (257,197) (107,339) (14,273) (378,809)
Disposals 42,220 226,564 (268,784) -
At 31 December 2015 1,574,988 1,370,096 185,768 3,130,852
Foreign currency difference 226,639 349,204 (158,605) 417,238
Additions 581,957 336,619 605,016 1,523,592
Disposals (679,424) (394,242) - (1,073,666)
Transfers 78,037 496,304 (574,341) -
At 31 December 2016 1,782,197 2,157,981 57,838 3,998,016
------------------------------ --------- --------- ------------ -----------
Depreciation:
At 31 December 2014 638,061 458,960 - 1,097,021
Foreign currency difference (32,994) (24,843) - (57,837)
Depreciation charged for
the year 76,769 179,939 - 256,708
Impairment 19,931 - - 19,931
Disposals (180,142) (58,036) - (238,178)
At 31 December 2015 521,625 556,020 - 1,077,645
Foreign currency difference (26,465) 164,815 - 138,350
Depreciation charged for
the year 178,035 216,514 - 394,549
Disposals (248,843) (129,433) - (378,276)
At 31 December 2016 424,352 807,916 - 1,232,268
------------------------------ --------- --------- ------------ -----------
Net book value:
At 31 December 2016 1,357,845 1,350,065 57,838 2,765,748
------------------------------ --------- --------- ------------ -----------
At 31 December 2015 1,053,363 814,076 185,768 2,053,207
9. SHARE CAPITAL
2016 2015
GBP GBP
------------------------- ----------- ------- ------- -------------
Called up, allotted
and fully paid:
136,915,112 (2015: Ordinary shares
130,248,112 ) of 0.5 pence each 684,576 651,241
--------------------------- ---------------------- ------- -------------
Movement in share capital
during the period
Nominal
Number value Consideration
GBP GBP
------------------------- ----------- ------- ------- -------------
At 31 December
2014 95,437,986 477,190 20,907,874
Placing 07 July
2015 34,810,126 174,051 5,500,000
At 31 December
2015 130,248,112 651,241 26,407,874
Placing 05 October
2016 6,667,000 33,335 3,200,160
At 31 December
2016 136,915,112 684,576 29,608,034
------------------------- ----------- ------- ------- -------------
10. ANNUAL GENERAL MEETING
The Annual General Meeting of DP Poland plc will
be held at the Offices of Peel Hunt, 120 London
Wall, London EC2Y 5ET on 5 May 2017 at 11.00 a,m,
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCGDXGGDBGRL
(END) Dow Jones Newswires
March 27, 2017 02:00 ET (06:00 GMT)
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