TIDMDPP
RNS Number : 0941J
DP Poland PLC
18 December 2020
THIS ANNOUNCEMENT (INCLUDING THE APPICES) AND THE INFORMATION
CONTAINED IN THEM IS RESTRICTED AND IS NOT FOR RELEASE,
PUBLICATION, DISTRIBUTION OR FORWARDING, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES,
AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH
AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION
OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION,
OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE
OR DISPOSE OF ANY SECURITIES IN DP POLAND PLC OR ANY OTHER ENTITY
IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS
DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION
WITH, ANY INVESTMENT DECISION IN RESPECT OF DP POLAND PLC.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF MARKET ABUSE REGULATION (EU) NO. 596/2014 (" MAR
").
DP Poland plc
(" DP Poland " or " the Company ")
Proposed Acquisition of Dominium S.A.
Proposed Fundraising to raise gross proceeds of approximately
GBP5.2 million of which GBP3.5m to be raised for the Company and
approximately GBP1.7 million to be raised for the Seller
Admission of the Enlarged Share Capital to trading on AIM
Approval of Waiver of Obligations under Rule 9 of the City
Code
and
Notice of General Meeting
DP Poland (AIM: DPP), is pleased to announce that it has today
entered into a conditional share purchase agreement to acquire the
entire issued share capital of Dominium S.A. ("Dominium"), a Polish
pizza restaurant group (the "Acquisition").
The consideration for the Acquisition is to be satisfied by the
issue of 283,766,661 Consideration Shares at the Issue Price of 8
pence per share, credited as fully paid, and an unsecured Loan Note
of EUR1.3 million to Malaccan Holdings Limited ("Malaccan
Holdings"). In addition, outstanding debt of approximately EUR6.2
million, currently due from Dominium to Malaccan Holdings under
certain existing Shareholder Loans, will be converted into a
further unsecured Loan Note of EUR6.2 million that will be issued
to Malaccan Holdings on the same terms and in substitution for that
outstanding debt. In aggregate, therefore, EUR7.5 million Loan
Notes will be issued by the Company and remain to Malaccan Holdings
upon completion of the Acquisition. The Loan Notes are not
convertible.
The Acquisition constitutes a reverse takeover for the purposes
of Rule 14 of the AIM Rules for Companies and, as such, is
conditional, inter alia, upon Shareholder approval.
The Company is proposing to raise GBP3.5 million for the Company
through a Fundraising, which will be comprised of a Placing and
Subscription of 43,750,000 New Shares in aggregate at the Issue
Price of 8 pence per share. The Fundraising will also include a
placing of 21,828,204 Sale Shares which forms part of the
Consideration Shares issued to Malaccan Holdings and which will
also be placed at the same Issue Price. The Fundraising is
conditional, inter alia, upon completion of the Acquisition and
Admission.
HIGHLIGHTS
-- Net proceeds of the Fundraising receivable by the Company
will principally be applied towards capital expenditure for
integration and costs, network optimisation and for general working
capital purposes.
-- Placing to be conducted by way of an accelerated bookbuild
process (the "Bookbuild") by the Company's broker and sole
bookrunner, Nplus1 Singer Capital Markets Limited ("N+1
Singer").
-- The terms and conditions of the Placing are set out below and
in Appendix VI to this announcement.
-- Subscription to be made by an existing shareholder on the
basis of the Subscription Letter as part of the Fundraising.
-- Result of Fundraising expected to be announced later today.
-- The Directors believe that Dominium's operations are
complementary to the Company's. Certain Dominium restaurants are
located in some of the most prominent tourist destinations in
Poland which is considered by the Directors to be an extremely
valuable asset, given the importance of footfall on revenue
generation for both eat-in and takeaway sales
-- The Acquisition will almost double the number of stores
within the Company's portfolio to 126 stores, and will provide a
basis for further expansion and market penetration into new cities
and towns, enabling the Company to further build upon the
reputations which have been developed by DP Poland and Dominium
respectively.
-- The Directors also believe that the combination of the two
businesses will place the Company within the top three pizza chains
in Poland in terms of stores and restaurants. It is expected that
this improved scale will help the Company to achieve its objective
of becoming a market leader in Poland, and it will help defend its
current position from the growth noted amongst competitors.
-- There are a number of cost savings which are expected to
arise from the Acquisition, as well as the potential to optimise
processes and benefits from economies of scale which are driven by
an enlarged business. These synergies include procurement savings,
insourcing dough production, headquarters and systems integration,
store network optimisation, improved efficiency of food deliveries,
call centre savings, marketing savings and integrated menu and
marketing activity.
-- With effect from Admission, all of the Existing Directors
will resign from the Board other than Nicholas Donaldson and Robert
Morrish and the Proposed Directors, being Piotr Dzier ek,
Przemyslaw Glebocki and Jakub Chechelski, will be appointed. It is
the Board's intention to appoint Ma gorzata PotkaĆska, the current
Chief Financial Officer of Dominium, as Chief Financial Officer of
the Company shortly following Admission.
-- The Acquisition constitutes a reverse takeover under the AIM
Rules for Companies. The Acquisition and the Fundraising are both
subject to the approval of DP Poland Shareholders.
-- On completion of the Acquisition, the Concert Party will hold
261,938,457 Ordinary Shares on Admission, representing
approximately 45.0 per cent. of the Enlarged Share Capital. Under
Rule 9 of the City Code, the Concert Party would normally then be
obliged to make a general offer to all Shareholders (other than the
Concert Party) to acquire all the Ordinary Shares not owned by the
Concert Party. The Panel has agreed to waive this obligation
subject to the approval by the Independent Shareholders of the
Whitewash Resolution (on a poll) at the General Meeting. The
Acquisition is therefore also subject to the approval of the
Whitewash Resolution by the Independent Shareholders.
-- The Company expects to post the Admission Document to DP
Poland Shareholders on 21 December 2020 and publish an electronic
copy on its website: www.dppoland.com/2015 at the same time. The
Admission Document includes a notice convening a General Meeting of
the Company on for 7 January 2021 at 10.00 a.m. at which the
Resolutions to approve the Proposals will be put to the Company's
Shareholders. Please see the important notice below with regards to
completing a proxy form for this meeting as no physical attendance
at the meeting will be permitted.
Subject to the conditions to the Acquisition being satisfied,
admission of the Existing Ordinary Shares to trading on AIM will be
cancelled and the Enlarged Share Capital will be admitted to
trading on AIM. It is anticipated that Completion and Admission
will take place shortly following the General Meeting. Admission
and dealings in the Enlarged Share Capital is expected therefore to
take place on 8 January 2021.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Announcement of the result of the Bookbuild 18 December 2020
Publication of Re-Admission Document
(including the Notice of General Meeting/and Form of Proxy) 21
December 2020
Latest time and date for receipt of Form of Proxy and electronic
proxy 10.00 a.m. on 5 January 2021
General Meeting 10.00 a.m. on 7 January 2021
Announcement of result of General Meeting 7 January 2021
Completion of Proposals 8.00 a.m. on 8 January 2021
Issue of New Shares and Admission becomes effective
dealings in the Enlarged Share Capital commences on AIM 8.00
a.m. on 8 January 2021
Expected date for CREST accounts to be credited and
settlement to take place within CREST of the New Shares (where
applicable) 8 January 2021
Despatch of definitive share certificates for New Shares (where
applicable) By 22 January 2021
Note:
All future times and/or dates referred to in this Announcement
are subject to change at the discretion of the Company and N+1
Singer and if any of the above times or dates should change, the
revised times and/or dates will be notified by an announcement on a
regulatory information service.
All times are UK times, unless otherwise specified.
Further details on the Proposals is contained in Appendix I of
this Announcement.
The historical financial information on Dominium is contained
within Appendix II of this Announcement.
The unaudited interim financial information of the Dominium
Group is contained within Appendix III of this Announcement
The unaudited pro forma post-synergy results of the Enlarged
Group is contained within Appendix IV of this Announcement.
The unaudited pro forma statement of net assets of the Enlarged
Group is contained within Appendix V of this Announcement.
The terms and conditions of the Placing is contained within
Appendix VI of this Announcement.
The capitalised terms in this Announcement have the meanings
ascribed to them in Appendix VII
This Announcement should be read in its entirety and, for the
avoidance of doubt, the appendices form part of this
Announcement.
IMPORTANT NOTICE REGARDING THE GENERAL MEETING AND COVID-19
In light of the current COVID-19 pandemic and related legal and
other requirements of governmental authorities, we are requiring
that shareholders do not attend in person but instead appoint the
Chairman of the meeting as their proxy (either electronically or by
post) with their voting instructions. Shareholders should also bear
in mind that if they, or any alternative proxy, travel to attend
the meeting in person, they will be denied entry based on
prevailing circumstances.
RECOMMATION AND THE IMPORTANCE OF VOTE
The Existing Directors, who have been so advised by N+1 Singer,
consider the Proposals to be fair and reasonable and in the best
interests of Shareholders as a whole and the Company.
THE INDEPENT DIRECTORS' RECOMMATION IS THAT THE INDEPENT
SHAREHOLDERS VOTE IN FAVOUR OF RESOLUTION 1 AND THE DIRECTORS'
RECOMMATION IS THAT SHAREHOLDERS VOTE IN FAVOUR OF RESOLUTIONS 2-9
TO BE PROPOSED AT THE GENERAL MEETING WHICH HAS BEEN CONVENED FOR
10.00 A.M. ON 7 JANUARY 2021 TO PROTECT YOUR SHAREHOLDER VALUE.
UNLESS ALL OF THE RESOLUTIONS ARE PASSED WE CANNOT MOVE FORWARD TO
IMPLEMENT THE PROPOSALS. YOUR VOTE IS ACCORDINGLY CRITICAL.
The Independent Directors, who hold interests in Ordinary Shares
have irrevocably undertaken to vote in favour of the Resolutions to
be proposed at the General Meeting in respect of a total of
14,409,868 Ordinary Shares representing approximately 5.7 per cent.
of the Ordinary Shares in issue at the date of this
Announcement.
The person responsible for arranging the release of this
announcement on behalf of the Company is Nick Donaldson,
Non-Executive Chairman.
Enquires:
DP Poland PLC Tel: +44 (0) 20 3393 6954
Nick Donaldson, Non-Executive Chairman
N+1 Singer (Nominated Adviser and Tel: +44 (0) 20 7496 3000
Broker)
Shaun Dobson / Will Goode / George
Tzimas / Amanda Gray
Market soundings (as defined in MAR) were taken in respect of
the Placing and Subscription with the result that certain persons
became aware of inside information (as defined in MAR), as
permitted by MAR. This inside information is set out in this
Announcement. Therefore those persons that received inside
information in a market sounding are no longer in possession of
such inside information relating to the Company and its
securities.
Appendix VI to this Announcement (which forms part of this
Announcement) sets out further information relating to the
Bookbuild and the terms and conditions of the Placing.
Unless otherwise stated, capitalised terms in this Announcement
have the meanings ascribed to them in Appendix VII (which forms
part of this Announcement).
This Announcement should be read in its entirety. In particular,
you should read and understand the information provided in the "
Important Notices " section below and the Appendices to this
Announcement (which form part of this Announcement) which includes
the terms and conditions of the Placing. Persons who have chosen to
participate in the Fundraising, by making an oral or written offer
to acquire Placing Shares, will be deemed to have read and
understood this Announcement in its entirety (including the
Appendices) and to be making such offer on the terms and subject to
the conditions herein and, in respect of those persons
participating in the Placing, to be providing the representations,
warranties, agreements, confirmations, acknowledgements and
undertakings contained in Appendix VI.
IMPORTANT NOTICES
Neither this Announcement (including the appendices and the
information contained in them), nor any copy of it, may be taken or
transmitted, published or distributed, directly or indirectly, in
or into the United States, Australia, Canada, Japan, New Zealand or
the Republic of South Africa or to any persons in any of those
jurisdictions or any other jurisdiction where to do so would
constitute a violation of the relevant securities laws of such
jurisdiction. This Announcement is for information purposes only
and does not constitute an offer to sell or issue, or the
solicitation of an offer to buy, acquire or subscribe for any
shares in the capital of the Company in the United States,
Australia, Canada, Japan, New Zealand or the Republic of South
Africa or any other state or jurisdiction in which such offer or
solicitation is not authorised or to any person to whom it is
unlawful to make such offer or solicitation. Any failure to comply
with these restrictions may constitute a violation of securities
laws of such jurisdictions.
The Offer Shares have not been, and will not be, registered
under the US Securities Act of 1933, as amended (the " US
Securities Act "), or under any securities laws of any state or
other jurisdiction of the United States and may not be offered,
sold, resold, transferred or delivered, directly or indirectly, in
or into the United States except pursuant to an applicable
exemption from the registration requirements of the US Securities
Act and in compliance with the securities laws of any state or
other jurisdiction of the United States.
There is no intention to register any portion of the Fundraising
in the United States or to conduct any public offering of
securities in the United States or elsewhere. All offers of Offer
Shares will be made pursuant to an exemption under the Regulation
(EU) 2017/1129 (the " Prospectus Regulation ") as amended from time
to time from the requirement to produce a prospectus. No prospectus
will be made available in connection with the matters contained in
this Announcement and no such prospectus is required (in accordance
with the Prospectus Regulation) to be published. Persons needing
advice should consult an independent financial adviser.
Members of the public are not eligible to take part in the
Fundraising. This Announcement and the appendices (including the
terms and conditions set out in Appendix VI) are for information
purposes only and are directed only at persons whose ordinary
activities involve them in acquiring, holding, managing and
disposing of investments (as principal or agent) for the purposes
of their business and who have professional experience in matters
relating to investments and are: (a) if in a Member State of the
Economic European Area (the "EEA" ) qualified investors within the
meaning of article 2(e) of the Prospectus Regulation (" Qualified
Investors "); or (b) if in the United Kingdom, Qualified Investors
who (i) are persons who have professional experience in matters
relating to investments falling within the definition of
"investments professional" in article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005, as
amended (the " Order "); (ii) are persons falling within article
49(2)(a) to (d) ("high net worth companies, unincorporated
associations, etc") of the Order; or (c) are persons to whom it may
otherwise be lawfully communicated; (all such persons referred to
in (a), (b) and (c) above together being referred to as " Relevant
Persons "). This Announcement must not be acted on or relied on by
persons who are not Relevant Persons. Any investment or investment
activity to which this Announcement relates is available only to
Relevant Persons and will be engaged in only with Relevant
Persons.
The distribution of this Announcement (including the Appendices)
and the offering of the Offer Shares in certain jurisdictions may
be restricted by law. No action has been taken by the Company or
N+1 Singer or any of their respective partners, directors,
officers, employees, advisers, consultants, affiliates or agents
that would permit an offering of such shares or possession or
distribution of this Announcement or any other offering or
publicity material relating to such shares in any jurisdiction
where action for that purpose is required. Persons into whose
possession this Announcement comes are required by the Company, and
N+1 Singer to inform themselves about, and to observe, such
restrictions.
This Announcement is not being distributed by, nor has it been
approved for the purposes of section 21 of the Financial Services
and Markets Act 2000, as amended (" FSMA "), by a person authorised
under FSMA. This Announcement is being distributed to persons in
the United Kingdom only in circumstances in which section 21(1) of
FSMA does not apply.
Persons (including without limitation, nominees and trustees)
who have a contractual right or other legal obligations to forward
a copy of this Announcement should seek appropriate advice before
taking any action.
By participating in the Bookbuild and the Placing, each Placee
by making an oral or written and legally binding offer to subscribe
for and/or purchase Placing Shares will be deemed (i) to have read
and understood this Announcement (including the appendices) in its
entirety, (ii) to be participating, making an offer and acquiring
Placing Shares on the terms and conditions contained in Appendix VI
to this Announcement and (iii) to be providing the representations,
warranties, indemnities, acknowledgements and undertakings
contained in Appendix VI to this Announcement.
This Announcement has been issued by, and is the sole
responsibility of, the Company. No representation or warranty,
express or implied, is or will be made by N+1 Singer or by any of
its partners, directors, officers, employees, advisers,
consultants, affiliates or agents as to or in relation to, the
accuracy or completeness of this Announcement or any other written
or oral information made available to any interested person or
their advisers, and any liability therefore is expressly
disclaimed. None of the information in this Announcement has been
independently verified or approved by N+1 Singer or any of its
partners, directors, officers, employees, advisers, consultants,
affiliates or agents. Save for any responsibilities or liabilities,
if any, imposed on N+1 Singer by FSMA or by the regulator regime
established under it, no responsibility or liability is accepted by
N+1 Singer or any of its partners, directors, officers, employees,
advisers, consultants, affiliates or agents for any errors,
omissions or inaccuracies in such information or opinions or for
any loss, cost or damage suffered or incurred howsoever arising,
directly or indirectly, from any use of this Announcement or its
contents or otherwise in connection with this Announcement or from
any acts or omissions of the Company in relation to the
Placing.
N+1 Singer, which is authorised and regulated in the United
Kingdom by the FCA, is acting solely for the Company and no-one
else in connection with the transactions and arrangements described
in this Announcement and will not regard any other person (whether
or not a recipient of this Announcement) as a client in relation to
the transactions and arrangements described in this Announcement.
Neither N+1 Singer nor its partners, directors, officers,
employees, advisers, consultants, affiliates or agents are
responsible to anyone other than the Company for providing the
protections afforded to clients of N+1 Singer or for providing
advice in connection with the contents of this Announcement or for
any other matters referred to herein.
Cautionary statements
This Announcement may contain and the Company may make verbal
statements containing "forward-looking statements" with respect to
certain of the Company's plans and its current goals and
expectations relating to its future financial condition,
performance, strategic initiatives, objectives and results.
Forward-looking statements sometimes use words such as "aim",
"anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "seek", "may", "could", "outlook" or other words
of similar meaning. By their nature, all forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances which are beyond the control of the Company. As a
result, the actual future financial condition, performance and
results of the Company may differ materially from the plans, goals
and expectations set forth in any forward-looking statements. Any
forward-looking statements made in this Announcement by or on
behalf of the Company speak only as of the date they are made. The
information contained in this Announcement is subject to change
without notice and except as required by applicable law or
regulation (including to meet the requirements of the AIM Rules,
MAR, the Prospectus Regulation Rules and/or FSMA), the Company
expressly disclaims any obligation or undertaking to publish any
updates or revisions to any forward-looking statements contained in
this Announcement to reflect any changes in the Company's
expectations with regard thereto or any changes in events,
conditions or circumstances on which any such statements are based.
Such forward-looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results,
performance or achievements to differ materially from those
projected or implied in any forward-looking statements. The
important factors that could cause the Company's actual results,
performance or achievements to differ materially from those in the
forward-looking statements include, among others, economic and
business cycles, the terms and conditions of the Company's
financing arrangements, foreign currency rate fluctuations,
competition in the Company's principal markets, acquisitions or
disposals of businesses or assets and trends in the Company's
principal industries. Statements contained in this Announcement
regarding past trends or activities should not be taken as
representation that such trends or activities will continue in the
future. You should not place undue reliance on forward-looking
statements, which speak only as of the date of this
Announcement.
No statement in this Announcement is intended to be a profit
forecast and no statement in this Announcement should be
interpreted to mean that earnings per share of the Company for the
current or future years would necessarily match or exceed the
historical published earnings per share of the Company.
This Announcement does not identify or suggest, or purport to
identify or suggest, the risks (direct or indirect) that may be
associated with an investment in the Placing Shares. Any investment
decisions to buy Placing Shares in the Placing must be made solely
on the basis of publicly available information, which has not been
independently verified by N+1 Singer.
This Announcement does not constitute a recommendation
concerning any investor's investment decision with respect to the
Fundraising. The price of shares and any income expected from them
may go down as well as up and investors may not get back the full
amount invested upon disposal of the shares. Past performance is no
guide to future performance. The contents of this Announcement are
not to be construed as legal, business, financial or tax advice.
Each investor or prospective investor should consult his, her or
its own legal adviser, business adviser, financial adviser or tax
adviser for legal, financial, business or tax advice.
In connection with the Fundraising, N+1 Singer and its
respective partners, directors, officers, employees, advisers,
consultants, affiliates or agents may take up a portion of the
shares of the Company in the Placing in a principal position and in
that capacity may retain, purchase or sell for its own account such
shares and other securities of the Company or related investments
and may offer or sell such shares, securities or other investments
otherwise than in connection with the Placing. Accordingly,
references in this Announcement to Offer Shares being issued,
offered or placed should be read as including any issue, offering
or placement of such shares in the Company to N+1 Singer and any of
its respective partners, directors, officers, employees, advisers,
consultants, affiliates or agents as, acting in such capacity. In
addition, N+1 Singer and any of its respective partners, directors,
officers, employees, advisers, consultants, affiliates or agents
may enter into financing arrangements (including swaps, warrants or
contracts for difference) with investors in connection with which
N+1 Singer and any of its respective partners, directors, officers,
employees, advisers, consultants, affiliates or agents may from
time to time acquire, hold or dispose of such securities of the
Company, including the Placing Shares. Neither N+1 Singer nor any
of its respective partners, directors, officers, employees,
advisers, consultants, affiliates or agents intends to disclose the
extent of any such investment or transactions otherwise than in
accordance with any legal or regulatory obligation to do so.
The Placing Shares to be issued and/or purchased pursuant to the
Placing will not be admitted to trading on any stock exchange other
than AIM, a market operated by the London Stock Exchange plc.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into or forms part of this Announcement.
This Announcement has been prepared for the purposes of
complying with applicable law and regulation in the United Kingdom
and the information disclosed may not be the same as that which
would have been disclosed if this Announcement had been prepared in
accordance with the laws and regulations of any jurisdiction
outside the United Kingdom.
Risk Factors
There is a risk that synergies from the Acquisition and the
perceived benefits arising from the Acquisition, may fail to
materialise, or that they may be materially lower than have been
estimated. In addition, the costs of funding the process necessary
to achieve these synergies and benefits may exceed expectations.
There may be further additional and unforeseen expenses incurred in
connection with the Acquisition
There is no guarantee that the conditions for the Acquisition
will be satisfied (or waived, if applicable), in which case the
Placing and Acquisition will not complete.
Malaccan Holding's liability under the Acquisition Agreement is
capped and the Company has procured a warranty and indemnity
insurance policy which will meet claims arising pursuant to the
warranties and tax covenant in the Acquisition Agreement in excess
of such cap, up to a maximum aggregate amount of GBP3.5
million.
Dominium is a party to a number of court and administrative
proceedings, the subject of which is to determine the amount of VAT
paid by the company for the period 2011-2016. The liabilities
resulting from the decisions made to-date, totalling approximately
PLN 7.0 million, have been paid by Dominium, other than for the
period from 2015 to 2016 and in respect of which approximately PLN
331,000 remains to be paid in instalments.
DP Polska has applied VAT at the lower rate (5 per cent.) on
sales in Poland, which was consistent with its VAT policy and is in
line with professional advice it has received in respect of the
correct rate to be applied. However, there can be no assurance that
the tax authorities in Poland will not seek to challenge the rate
which, if successful, could result in the payment of sums for VAT
on sales applied at the higher rate. The Directors continue to keep
the situation under review and, having taken advice, maintain the
view that the appropriate rate has been and is being applied. From
July 2020, DP Polska started applying VAT at the higher 8 per cent.
rate, following a change in the law as described above .
The ongoing COVID-19 pandemic and any possible future outbreaks
of viruses may have a significant
adverse effect on the Group .
The success of the Enlarged Group is highly dependent on the
continuation of the MFA, which cannot be guaranteed if the Enlarged
Group commits breaches of its provisions which, if remediable, are
not cured within the period allowed under the MFA.
Dominium has recently sought financial assistance for the period
of the first lock down in Poland between March-April 2020 under the
Polish Anti-Crisis Shield Act 2020. The Directors consider that the
risk of the relevant Polish authorities seeking repayment of the
state aid is low, given that Dominium has complied with the
conditions attached to the funds advanced to it under the
scheme.
The premises on which the Enlarged Group's and its franchisees'
stores are situated within Poland are generally leased. The early
termination of any of the Group's leases due to non-compliance with
the lease terms (or a change of control) or any inability to renew
existing leases may result in, among other things, significant
alterations to rental terms. As part of the COVID-19 response
package, the Polish government issued a rent moratorium for the
benefit of tenants of shopping malls operating in Poland. Dominium
has been the beneficiary of these regulations, however, certain
landlords have interpreted the legislation in different ways and
have asserted then they should not be released from its rent
payment obligations and should have consequently paid the full
amount of rent due for the period between 14 March 2020 and 17 May
2020.
Following Admission, 45.0 per cent. of the Enlarged Share
Capital will be held by Malaccan Holdings. Whilst it has entered
into the Relationship Agreement, it may, nevertheless, be able to
exercise significant influence over the Enlarged Group's corporate
actions and activities and the outcome in general of matters
pertaining to the Enlarged Group, including the appointment of the
Enlarged Group's board of directors and the approval of significant
change of control transactions
Information to Distributors
Solely for the purposes of the product governance requirements
contained within: (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended (" MiFID II "); (b) Articles 9
and 10 of Commission Delegated Directive (EU) 2017/593
supplementing MiFID II; and (c) local implementing measures
(together, the " MiFID II Product Governance Requirements "), and
disclaiming all and any liability, whether arising in tort,
contract or otherwise, which any "manufacturer" (for the purposes
of the MiFID II Product Governance Requirements) may otherwise have
with respect thereto, the Placing Shares have been subject to a
product approval process, which has determined that the Placing
Shares are: (i) compatible with an end target market of retail
investors and investors who meet the criteria of professional
clients and eligible counterparties, each as defined in MiFID II;
and (ii) eligible for distribution through all distribution
channels as are permitted by MiFID II (the " Target Market
Assessment "). Notwithstanding the Target Market Assessment,
distributors should note that: the price of the Placing Shares may
decline and investors could lose all or part of their investment;
the Placing Shares offer no guaranteed income and no capital
protection; and an investment in the Placing Shares is compatible
only with investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources
to be able to bear any losses that may result therefrom. The Target
Market Assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation
to the Placing. Furthermore, it is noted that, notwithstanding the
Target Market Assessment, N+1 Singer will only procure investors
who meet the criteria of professional clients and eligible
counterparties.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase, or take
any other action whatsoever with respect to the Placing Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Placing Shares and determining
appropriate distribution channels.
APPIX I
FURTHER DETAILS OF THE PROPOSALS
Introduction
On 6 August 2020, the Company announced that an application had
been filed with UOKiK, the Polish Office of Competition and
Consumer Protection, in connection with the proposed acquisition by
the Company of the entire issued share capital of Dominium, a
Polish pizza restaurant group. The application to UOKiK was made by
AMC III, in anticipation of it acquiring majority control of the
Enlarged Group upon completion of the Acquisition. It was also
announced that the Company had entered into a non-binding letter of
intent with Dominium and AMC III, the ultimate parent company of
Malaccan Holdings, which contained the outline terms of the
proposed Acquisition and in order to advance discussions between
the parties on those terms. On 19 October 2020, the Company
announced that approval for the Acquisition had been granted by
UOKiK.
The Company is pleased to inform Shareholders that, amongst
other things, subject to Shareholders' approval of the Resolutions,
terms have been agreed to acquire the entire issued share capital
of Dominium. The consideration for the Acquisition is to be
satisfied by the issue to Malaccan Holdings of 283,766,661
Consideration Shares at the Issue Price of 8 pence per share,
credited as fully paid, and an unsecured Loan Note of EUR1.3
million (approximately GBP1.2 million). In addition, outstanding
debt of EUR6.2 million (approximately GBP5.6 million) that is
currently due from Dominium to Malaccan Holdings under certain
existing Shareholder Loans will be converted pursuant to the
Shareholder Loan Acquisition Agreements into a further unsecured
Loan Note of EUR6.2 million being issued to Malaccan Holdings on
the same terms and in substitution for that outstanding debt. In
aggregate, EUR7.5 million Loan Notes will be issued by the Company
and remain outstanding to Malaccan Holdings upon completion of the
Acquisition. The Loan Notes are not convertible.
The Acquisition constitutes a reverse takeover under AIM Rule 14
of the AIM Rules for Companies and as such is conditional, inter
alia, on approval by Shareholders which will be sought at the
General Meeting to be held on 7 January 2021. It is anticipated
that Completion and Admission will take place shortly following the
General Meeting on 8 January 2021 .
Details of the Fundraising
The Company intends to conduct a Fundraising of approximately
GBP 5.2 million at the Issue Price of 8 pence per Offer Share.
The Fundraising is expected to comprise a Placing and a separate
Subscription with the Company. In addition 21,828,204 Sale Shares
(comprising certain of the Consideration Shares to be issued to
Malaccan Holdings pursuant to the Acquisition) are also expected to
be placed with Placees at the Issue Price (amounting to
approximately GBP1.7 million sale proceeds (before expenses) for
the benefit of the Seller) as part of the Placing.
The Issue Price represents a premium of approximately 10.3 per
cent. to the middle market closing price per Existing Ordinary
Share of 7.25 pence on 17 December 2020 being the last business day
prior to the publication of this Announcement.
The Placing will be conducted by N+1 Singer in accordance with
the terms and conditions set out in Appendix VI to this
announcement. The Placing is being conducted through an accelerated
bookbuilding process which will commence immediately following this
Announcement in accordance with the terms and conditions set out in
Appendix VI to this Announcement.
The Subscription is being made pursuant to a separate
Subscription Letter to be entered into by the Company and the
Subscriber, following the release of this Announcement.
No prospectus has been or will be submitted to be approved by
the FCA in relation to the Fundraising, and the commitments of
Placees and the Subscriber will be made solely on the basis of the
information contained in (i) the Re-Admission Document; and (ii)
this Announcement (including all its appendices (in the case of the
Placees) or the Subscription Letter (in the case of the
Subscriber)).
The bookbuilding process will determine demand for and
participation in the Fundraising. The timing of the closing of the
books is at the absolute discretion of N+1 Singer in consultation
with the Company, but the books are expected to close no later than
4.00 p.m. today. However, N+1 Singer reserves the right to close
the books earlier or later without further notice. The allocations
will be determined by N+1 Singer in its absolute discretion
following consultation with the Company and will be confirmed
orally or by email by N+1 Singer following the close of the
bookbuilding process. A further announcement will be made following
the completion of the bookbuilding process. The Fundraising is not
being underwritten.
The Offer Shares will not be offered generally to the Company's
existing shareholders on a pre-emptive basis. Participation in the
Fundraising will be generally limited to certain qualifying
institutional investors who are invited, and who choose, to
participate. Certain of the Company's existing significant
shareholders have indicated their intention to participate in the
Placing. An existing Shareholder has also indicated its intention
to participate in the Fundraising pursuant to the Subscription. The
Offer Shares are not being made available to the public and,
subject to certain limited exceptions, are not being offered or
sold in, into or from the United States of America, Canada,
Australia, Japan, New Zealand or the Republic of South Africa or
any other jurisdiction where it would be unlawful to do so.
In order to effect the Placing, N+1 Singer has entered into the
Placing Agreement with the Company, Malaccan Holdings and the
Directors, pursuant to which it has agreed to use its reasonable
endeavours to procure Placees to subscribe for the Placing Shares
and acquire the Sale Shares, in each case at the Issue Price.
The Placing Agreement contains customary warranties given by the
Company and certain of the Existing and Proposed Directors as to
matters relating to the Company and its business and customary
indemnities from the Company to N+1 Singer in respect of
liabilities arising out of or in connection with the Placing and
Admission. Malaccan Holdings, as seller of the Sale Shares, is
providing customary title and capacity warranties in respect of
such Sale Shares. The Placing Agreement also contains customary
rights of termination which could enable N+1 Singer to terminate
the Placing in certain limited circumstances.
The Acquisition and Fundraising are each conditional, inter
alia, on:
-- the passing of all of the Resolutions by Shareholders at the
General Meeting, which is being convened for 10.00 a.m. on 7
January 2021.
-- the Placing Agreement having become unconditional in all
respects (save for the condition relating to Admission) and not
having been terminated in accordance with its terms;
-- the Acquisition Agreement having become unconditional in
accordance with its terms save for any condition relating to
Admission having occurred or to the Placing Agreement having become
unconditional;
-- the Subscriber having agreed to subscribe for the
Subscription Shares pursuant to the Subscription; and
-- Admission taking place by no later than 8.00 a.m. on 8
January 2021 (or such later date, not being later than 29 January
2021, as the Company and N+1 Singer may agree).
Application will be made to the London Stock Exchange for
Admission of the New Shares. It is expected that Admission of the
New Shares will become effective and that dealings in the New
Shares will commence at 8.00 a.m. on or around 8 January 2021 (or
such other time and/or date as the Company and N+1 Singer may
agree).
If the conditions relating to the issue of the Offer Shares are
not satisfied, or the Placing Agreement is terminated in accordance
with its terms, the Offer Shares will not be issued and the Company
will not receive the related fundraising monies. The Fundraising
and the Acquisition are each conditional (amongst other things)
upon the passing of all of the Resolutions in order to ensure that
the Directors have the necessary authorities and powers to allot
the New Shares and complete the Acquisition. The Acquisition is
also conditional on the Placing Agreement becoming unconditional in
all respects.
Use of proceeds of the Fundraising
The net proceeds of the Fundraising for the Company are expected
to be approximately GBP2.4 million (excluding VAT) and will be
applied towards capital expenditure for integration and costs,
network optimisation and for general working capital purposes.
Concert Party
On completion of the Acquisition, the Concert Party will hold
261,938,457 Ordinary Shares on Admission, representing
approximately 45.0 per cent. of the Enlarged Share Capital. Under
Rule 9 of the City Code, the Concert Party would normally then be
obliged to make a general offer to all Shareholders (other than the
Concert Party) to acquire all the Ordinary Shares not owned by the
Concert Party. The Panel has agreed to waive this obligation
subject to the approval by the Independent Shareholders of the
Whitewash Resolution (on a poll) at the General Meeting. The
Acquisition is therefore also subject to the approval of the
Whitewash Resolution by the Independent Shareholders.
The Proposals are to be put to Shareholders at the General
Meeting. Further details of the General Meeting are set at the end
of this Appendix I of this Announcement. The General Meeting of the
Company at which the Resolutions will be proposed has been convened
for 10.00 a.m. on 7 January 2021 at The Foster Room, West Meon
Village Hall, West Meon, Hampshire, GU32 1LH. If the Resolutions
are approved by Shareholders, it is expected that Admission will
become effective and dealings in the Enlarged Share Capital will
commence on AIM at 8.00 a.m. on or around 8 January 2021.
In light of the current COVID-19 pandemic and related legal and
other requirements of governmental authorities, we are requiring
that shareholders do not attend in person but instead appoint the
Chairman of the meeting as their proxy (either electronically or by
post) with their voting instructions. Shareholders should also bear
in mind that if they, or any alternative proxy, travel to attend
the meeting in person, they will be denied entry based on
prevailing circumstances.
BACKGROUND TO AND REASONS FOR THE ACQUISITION
The Board believes that the Acquisition is in the best interests
of the Company and have summarised the rationale behind the
Acquisition below:
Creating a leading player in Poland
The Company has grown since its initial listing on AIM in 2010,
and it continues to enhance awareness of the Domino's brand in
Poland. However, the Company has historically lacked both the
presence (in terms of store numbers) and the resources required to
promote the brand to a desired level.
The Acquisition will almost double the number of stores within
the Company's portfolio, and will provide a basis for further
expansion and market penetration into both existing and new cities
and towns, enabling the Company to further build upon the
reputations which have been developed by DP Poland and Dominium
respectively.
The Directors believe that Dominium's operations are
complementary to the Company's, particularly as the Dominium brand
is primarily recognised as an "eat-in" concept. Certain Dominium
restaurants are located in some of the most prominent tourist
destinations in Poland which is considered by the Directors to be
an extremely valuable asset, given the importance of footfall on
revenue generation for both eat-in and takeaway sales.
The Directors also believe that the combination of the two
businesses will place the Company within the top three pizza chains
in Poland in terms of stores and restaurants. It is expected that
this improved scale will help the Company to achieve its objective
of becoming a market leader in Poland, facilitate a step change in
revenue and will help defend its current position from the growth
noted amongst competitors. The Directors believe there is an
opportunity to leverage relationships with food aggregators to help
drive organic growth.
Synergistic opportunities
There are a number of cost savings which are expected to arise
from the Acquisition, as well as the potential to optimise
processes and benefits from economies of scale which are driven by
an enlarged business. The Directors believe the following synergies
will arise as a result of the Acquisition:
Procurement savings
The Enlarged Group will (i) select preferable suppliers from the
two supplier pools, basing its decision on those which offer a more
attractive value proposition for the individual ingredients; (ii)
expect to benefit from volume discounts on significantly larger
purchase volumes; and (iii) improve bargaining power through
increased significance within its market.
Insourcing dough production
The Company's commissaries will produce fresh dough for all of
the stores including Dominium's portfolio, which will generate cost
savings compared to the frozen dough currently purchased by
Dominium and improve production efficiency with increased volumes,
therefore further driving down the average unit cost.
Headquarters and systems integration
The Enlarged Group will be capable of being run by a smaller
head office team than the simple aggregate of the existing DPP
Group and Dominium head office teams, which the Directors expect
will lead to certain cost savings arising from headcount
optimisation.
The Enlarged Group will also be run from a single head office,
therefore crystallising savings on rent and other administrative
costs. Furthermore, the Enlarged Group will consolidate its IT
systems and discontinue less efficient or legacy systems, providing
further administrative savings.
Following the Proposals, certain director fees currently payable
to the founder of Dominium will be discontinued.
Store network optimisation
The Enlarged Group will be able to optimise its store footprint
which may include (i) selective shutdowns or relocations of
loss-making stores; (ii) selective shutdowns of neighbouring stores
where the combined volume of business does not justify maintaining
both locations; and (iii) selective buy outs of sub-franchisee
operated restaurants, particularly where these are nearby
competitors of a Dominium store. The buy-out of any sub-franchisee
operated restaurant will be subject to a negotiation process with
the individual franchisees.
Improved efficiency of food deliveries
At present, the two organisations deliver orders independently
of each other. The Company delivers using its own in-house drivers
and fleet of scooters and vans, whilst Dominium currently provides
its delivery service using a combination of its own logistics and a
number of third party food aggregators, including Uber Eats and
Glovo. Following completion of the Proposals, it is intended that
all deliveries will be undertaken by a fully integrated in-house
delivery team, which will help to reinforce the Domino's brand, and
is expected to be more efficient than using a combination of
in-house and outsourced delivery solutions.
Furthermore, where possible, it is expected that orders for
delivery will be fulfilled by the current DPP Group's stores, which
are equipped with more efficient equipment (i.e. ovens). This will
help to consolidate the delivery staff towards these stores, and
this is expected to have a positive impact on the unit cost of
delivery.
Call centre savings
In recent years, the Dominium Directors have noted that the
proportion of orders placed through either the Dominium mobile app
or website has been increasing; this trend has already resulted in
reducing the running costs of Dominium's call centres. By
integrating and promoting the online ordering platforms of both
businesses (which includes the websites and the mobile app) it is
expected that the current trend of reducing order volumes through
call centres will continue, potentially at an increased rate, which
should further reduce expenditure on call centres.
Marketing savings
Currently, the two organisations have separate marketing
budgets, with different suppliers used for print media and
mailshots such as promotional flyers. As a combined group, it is
expected that the marketing campaign and therefore budgets will be
consolidated, under the Domino's branding. In addition, the
similarity of the Dominium brand with Domino's will enable the
Enlarged Group to capitalise on the brand strength going forward.
The Dominium brand will be rebranded as "Dominium by Domino's" for
an interim period of up to three years to ensure a smooth
transition and maximise customer retention. Following the
transition period all Dominium stores will incorporate the Domino's
branding.
Integrated menu and marketing activity
The Enlarged Group will offer its products from a single
integrated menu, although the menu options may vary between eat-in
and delivery offerings. The Directors expect the integration of the
two menus is expected to bring about a number of significant
benefits, which include (i) focussing on best-selling products and
elimination of less popular or lower margin items; (ii) improved,
uniform price structure across the Enlarged Group and the product
range providing the opportunity to increase the average receipt
value of DP Poland (PLN43 during the six months ended 30 June
2020); (iii) targeted promotional effort; and (iv) streamlining
production processes. The Directors intend to introduce products
that generate incremental sales which is expected to broaden the
baskets of products per order.
Strengthening the business model
The Directors believe that the Acquisition will help to broaden
the Company's existing target market, with the addition of new
takeaway customers who are within the Dominium store's geographic
catchment areas and those looking to enjoy the eat-in facilities of
the restaurants. By adding a network of well-known and established
restaurants and stores to the Company's existing portfolio, the
Directors expect to attract a wider customer audience through the
addition of an eat-in offering.
Furthermore, the combination of eat-in and delivery is expected
to reduce the seasonality of DP Poland's business. The Directors
note that during warmer months, demand for delivery service weakens
as consumers seek to spend larger amounts of time outdoors and
prefer lighter meals.
The Directors envisage that the Acquisition will provide a
platform from which the Company can build upon the awareness and
brand loyalty which each of the brands have established, whilst
applying the Company's existing culture of quality and service in
order to provide a seamless service across an increased number of
stores and locations, with a greater product offering to satisfy
the demands of a wider customer base.
Improve market presence
Whilst the Company has an established presence in many desirable
locations in Poland, the Company strives to be one of the key
players in the Polish casual dining industry. The Directors believe
that a strategic and synergistic consolidation would facilitate
this strategic objective through an increased footprint.
Furthermore, the Acquisition complements the Company's existing
geographical footprint, as the Target has a number of locations in
the southern regions of Poland which provide access to a regional
market which the Company does not currently serve.
Earnings/EBITDA accretive
Taking into account the synergies above and under a number of
scenarios which have been extensively tested by the Company, the
Acquisition is expected by the Directors to be earnings
accretive.
Optimising existing capacity
DP Poland has two fully operational commissaries, located in Ăłd
and Warsaw, which supply the network of stores with fresh dough and
ingredients. Following the commissary expansion which was completed
in August 2017, the commissaries have a combined capacity to supply
approximately 150 stores. Taking into account that the Company
currently has 69 stores, it is apparent that the commissaries are
significantly underutilised, particularly when considering the
associated costs.
The Directors are of the opinion that the existing DP Poland
commissaries will provide an effective and efficient supply
solution to the Enlarged Group's network, whilst the remaining
commissary capacity will act as a platform for store growth.
Support from Domino's Pizza Inc.
The support from DPI is deemed to be of significant strategic
importance in the opinion of the Directors, in the context of both
the Proposals and the strategy of the Enlarged Group going forward.
DPI have agreed to support the Enlarged Group with its integration
and subsequently its expansion, by providing certain financial and
non-financial incentives. The details of the incentives are
confidential to the parties to the agreement. However, the key
elements of the agreement relate to the restaurant operations, such
as temporarily branding "Dominium by Domino's" for the eat-in
business, and operational support from DPI in the integration
process, for example by providing advice on restaurant conversion
and menu composition.
The agreement is conditional upon the Enlarged Group achieving
certain clauses in the Master Franchise Agreement.
Additionally, the Directors believe that the Enlarged Group's
opportunity for success will be strengthened by continuing to own
the exclusive rights to operate under the Domino's brand in
Poland.
INFORMATION ON DOMINIUM
Dominium was founded by Tomasz Plebaniak in 1993 as an
independent restaurant business, with its first restaurant located
in Warsaw.
In 2006, Dominium broadened its service offering and business
model by launching a call centre, enabling customers to order
takeaway pizzas in addition to the existing eat-in option. During
the following years, Dominium opened a small number of restaurants
in Romania, Lithuania and Ireland, however, these restaurants were
later closed.
In 2013, Dominium Group received its first institutional
investment from AMC III, a fund which focusses on providing
mezzanine and growth capital to small and medium sized businesses
in Central and Eastern Europe.
In December 2017, the founder of Dominium stepped down as Chief
Executive Officer and Piotr Dzierzek was appointed as his
replacement. Piotr has remained in this position since his
appointment. In parallel with Piotr Dzierzek's appointment, the
management board expanded with the appointments of Agnieszka Saczuk
as Head of HR and Malgorzata Potkanska as Chief Financial Officer.
Krzysztof Banasiak joined the board as the Chief Operating Officer
in January 2020.
Under the new management team, the company has expanded its
client base and increased its post IFRS 16 EBITDA by approximately
58 per cent. to PLN15.9 million (GBP3.2 million) in the financial
year ended 31 December 2019, representing an EBITDA margin (post
IFRS 16) of 18.7 per cent. (2018: PLN10.1 million (GBP2.1 million),
representing an EBITDA margin (post IFRS 16) of 12.2 per cent.).
Pre-IFRS 16 EBITDA was approximately PLN5.4 million (GBP1.1
million). Amongst other things, the use of high quality Italian
ingredients and improvements in quality of service (including
reducing delivery times) have resulted in like for like sales
growth of 11 per cent. and 7 per cent. in the financial years ended
31 December 2018 and 31 December 2019 respectively. In the
financial year ended 31 December 2019, system sales per Dominium
restaurant was approximately PLN1.5 million (GBP0.3 million).
During the two month period to February 2020, like for like sales
grew by 14 per cent. in comparison to the same period in the prior
year.
Currently, Dominium operates a total of 57 pizza restaurants in
various locations across Poland with a workforce of 698 employees.
Similarly to the Company, Dominium's presence is focussed in Warsaw
with a total of 21 restaurants located in the Polish capital.
Restaurants
All of Dominium's 57 pizza restaurants offer eat-in facilities
with only two not providing a delivery service. Customers have the
option of ordering takeaway pizza through the Dominium online app,
through the website, or by telephone. Delivery orders by telephone
are managed centrally through Dominium's call centre. Orders can
either be collected or delivered, providing the delivery address
falls within a determined catchment area. The majority of
deliveries are fulfilled by outsourced local contractors, however,
certain restaurants have contracted drivers who use their own
vehicles or scooters for use by restaurant staff.
Dominium categorises its restaurants as either standard,
shopping mall or franchise of which there are currently 32, 23 and
two respectively in operation. All of Dominium's restaurants
operate in locations that are leased from third parties. The
average age of Dominium's restaurants is 12 years.
Dominium's restaurants have typically been fitted to a similar
layout, as far as the respective lessor permits, and feature a
standardised interior design including a children's area in all
restaurants. The standard restaurant size is between 100 to 200
square meters depending on the size of the city and location. The
only variations between the restaurants is their location and the
provision of outdoor seating areas at selected premises.
Dominium's business typically demonstrates steady trade
throughout the year. Eat-in revenue is usually higher in the summer
months as a result of tourist trade in prime city centre locations
and during the festive period as a result of the Christmas
holidays.
Due to the strong footfall and high population density in
Warsaw, more than one third of Dominium's restaurants are located
within the Polish capital. Dominium also has a presence in other
major cities in Poland, with five restaurants in Krakow of which
four are located in shopping malls, and two restaurants in each of
Katowice, Lublin, Torun and Wroclaw. A further 23 restaurants are
located within other cities and towns in Poland.
Historically, the majority of Dominium's revenue has been
generated from eat-in business, accounting for approximately 60 per
cent. of the overall revenue in the financial year ended 31
December 2019, with delivery sales being an important contributor
but notably lower than eat-in sales. The revenue split has been
gradually changing, with delivery sales contributing to an
increasing proportion of revenue. This trend has continued during
the COVID-19 pandemic, as a result of lower footfall and lock-down
measures in Poland. The proportion of delivery sales for the month
of September 2020 accounted for approximately 58 per cent. of the
total revenue.
In the period between January 2019 and September 2020, delivery
sales increased per 29 per cent. and eat-in sales decreased by 27
per cent. on a like for like basis. The increase in the volume of
deliveries has been achieved without adversely impacting the
average value of delivery orders which has remained consistent. The
average order receipt for deliveries during the month of September
2020 was PLN 51, which is approximately 10 per cent. higher than
the average receipt value of customers dining in the restaurants.
The average order receipt for Dominium during the month of
September 2020 was PLN 49.
Delivery sales are generated predominantly through online
channels, being the website, the Dominium online app and food
aggregators, which accounted for 82 per cent. of the overall
delivery sales during the month of September 2020. The use of
online platforms has shown a persistent growth over time.
During the same period, Dominium's proprietary channels, being
its website and mobile app, represented approximately 55 per cent.
of the overall delivery sales compared to sales generated by
aggregators, which contributed to approximately 26 per cent. of
delivery sales. The volume of orders placed through these online
platforms has grown, and as a result, orders placed through the
call centre have reduced. In the period between January 2019 and
September 2020, delivery order volumes placed with call centres
have reduced from 54 per cent. to 18 per cent.. This trend has had
a positive impact on profitability, due to the lower customer
acquisition and maintenance costs associated with the online
platforms.
Menu
Dominium endeavours to provide a varied eat-in experience to its
customers with a seasonal menu which features limited-time products
such as winter teas and seasonal vegetables as side dishes or pizza
toppings. Currently, the Dominium menu includes over 40 types of
pizza, which can be served on four different types of base in
addition to a number of pasta dishes, calzones, salads, Italian
starters and desserts.
Furthermore, the eat-in offering provides additional menu items,
such as the 'Roman Pizza' which is served on a sourdough base
prepared using Italian style '00' flour. The differentiated product
offering between the delivery and eat-in menu has been designed to
attract customers to visit the restaurants, enable an independent
pricing policy but to also disassociate the eat-in offering from
the more competitively priced delivery menu. In order to further
improve the eat-in experience, with the exception of two
restaurants in Warsaw, all Dominium restaurants offer alcoholic
beverages to its customers.
The restaurants' menus cater for children as well as a range of
dietary requirements. These include but are not limited to,
vegetarian, vegan and gluten-free options for customers who suffer
from intolerances or allergies. The Dominium Directors believe that
providing such flexibility to its menu is one of the key factors
influencing a customer's choice of restaurant.
Pricing
Prices for pizza vary depending on the type of base, with thick
crust and whole grain bases costing more, the size and the
toppings. As an example, a medium sized pizza (around 12 inches in
diameter) on a traditional crust costs around PLN 40. In general,
all restaurants charge the same prices, as set by Dominium, albeit
with a few exceptions mostly in restaurants with high tourist
footfall.
The pricing strategy is different for eat-in and delivery.
Delivery pricing is closely benchmarked to Dominium's competitors
and is based upon a range of special offers and discounts. These
promotions vary by weekday, time of the day or target customers
(e.g. students). This approach enables Dominium to split its
customers by type and provide individual targeted offers to each
category.
Typical promotions being offered include:
-- 40 per cent. off for students;
-- two-for-one on classic pizzas (pizzas which tend to have more
basic toppings) for both eat-in and takeaway; and
-- 50 per cent. off for eat-in diners before 1.00 p.m.
Key strengths
The Directors believe that Dominium's key strengths include:
-- Experienced and dedicated team: Dominium has over 27 years of
operations in Poland over which time it has built a strong and
committed team across the corporate structure. The existing
management has transformed the organisation from a founder-led
company to a business driven by KPIs. Dominium has introduced a
number of incentive plans for low and mid-level personnel to help
focus on delivering sales and profits. The Dominium management team
has promptly reacted to the COVID-19 pandemic and the associated
risks by implementing cost cutting measures, renegotiating rental
payments, obtaining state aid and promoting the delivery
offering.
-- Established brand and wide customer reach: Dominium is one of
the leading pizza brands in the Polish pizza market and, with a
network of loyal customers, now processes over 130,000 order
receipts per month. The established brand attracts customers to the
restaurants in prime locations.
As a result of being a well-established brand, opening new
restaurants does not usually require incremental expenditure on
advertising, marketing or IT development. The large scale of
Dominium's operations is a powerful negotiation tool with suppliers
of products and services (e.g. logistics) which can bring economies
of scale to the Enlarged Group.
-- Efficient organisation, proven business practices: Dominium
has a consistent history of positive
EBITDA. The Directors believe that the business' efficient cost
management and internal procedures have enabled Dominium to provide
a high-quality offering whilst also being cash generative. Out of
the entire network of restaurants, only two were lossmaking during
the financial year ended 31 December 2019 and the company managed
to increase its EBITDA (post IFRS 16 adjustments) by approximately
58 per cent. on the prior year. The Directors believe the business
is well positioned for further growth but can also adapt to more
challenging periods. Despite the disruptions caused by the COVID-19
pandemic, Dominium generated PLN 2.7 million post-IFRS 16 EBITDA in
Q3 2020 (during a period when restaurants were open in Poland).
-- Flexible business model: Dominium operates a balanced
business model comprising both eat-in and delivery. The restaurants
provide customers with a high quality eat-in experience that
provides a platform for repeat orders by delivery at a later date.
Restaurants in high street locations and major cities serve as
showrooms and not only generate margin but also support the sales
on delivery.
The provision of a delivery and takeaway service has also
enabled Dominium to continue trading and adjust to the recent
restrictions imposed by the Polish Government in response to the
COVID-19 pandemic which included the closure of all restaurants
during March 2020 and the more recent restrictions, including
restaurant closures, in November 2020. During this period of
heightened restrictions, customers moved to ordering deliveries
online, with delivery revenue growing by 35 per cent. and 45 per
cent. in April 2020 and May 2020 respectively compared to the same
months in 2019. The Directors anticipate this trend of ordering
deliveries online will be repeated during the more recently
announced closure of restaurants during November 2020.
PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION
The Company entered into the Acquisition Agreement, pursuant to
which it has conditionally agreed to acquire the entire issued
share capital of Dominium in exchange for the issue to Malaccan
Holdings of the Consideration Shares at the Issue Price, credited
as fully paid, and the issue of EUR1.3 million Loan Note on the
terms of the Loan Note Instrument, in each case upon completion of
the Acquisition.
In addition, outstanding debt of EUR6.2 million that is
currently due from Dominium to Malaccan Holdings under certain
Shareholder Loans will be converted under the terms of the
Shareholder Loan Acquisition Agreements into a further unsecured
EUR6.2 million Loan Note that will also be issued by the Company to
Malaccan Holdings at the time of completion of the Acquisition.
This EUR6.2 million Loan Note will also be issued on the terms of
the Loan Note Instrument in substitution for and in settlement in
full of all amounts that are currently outstanding under the
Shareholder Loans.
In aggregate, therefore, EUR7.5 million aggregate principal of
Loan Notes will therefore remain outstanding from the Company to
Malaccan Holdings following completion of the Acquisition. Under
the Loan Note Instrument, the Loan Notes will carry interest at the
rate of 3 per cent. per annum and have a maturity date of three
years from the date of issue.
The Acquisition Agreement is conditional upon, inter alia:
-- the passing of all of the Resolutions at the General Meeting;
-- the Placing Agreement becoming unconditional in all respects; and
-- Admission becoming effective.
INFORMATION ON THE EXISTING GROUP
The Company was first admitted to trading on the AIM market of
the London Stock Exchange on 28 July 2010. At this time, GBP6.5
million was raised to commence the roll out targeting the opening
of over 50 Domino's Pizza stores in Poland, initially focussed in
Warsaw, within a four to five year period.
On admission, the Domino's brand did not have market operations
in Poland and this remained the case until February 2011, when the
Company opened the first Polish Domino's Pizza store in the
affluent MokotĂłw district of Warsaw.
Since then, DP Poland has raised a total of approximately GBP29
million through a total of five equity fundraisings, the most
recent of which took place in February 2019. The proceeds have
predominantly been used to fund the roll out of Domino's Pizza
stores, build two commissaries, sustain sales and marketing
expenditure in order to boost awareness of the brand and offering,
and to provide loans by the Company for sub-franchised store
openings.
In November 2017, the Company celebrated the opening of its 50th
store in Poland.
Locations
Currently, there are 69 Domino's Pizza stores across 29 Polish
towns and cities. Of these stores, 50 are corporately run with two
managed under management contract and 19 are operating under
sub-franchise agreements.
Each store services a defined delivery catchment area designed
to ensure that pizzas can be delivered within 25 minutes of an
order being received. Stores are typically located in high
population density areas, targeting Poland's younger and more
affluent residents.
Stores
The Company operates stores under a simple and cost-effective
model designed for delivery and takeaway. The stores have a small
footprint, typically around 70 to 90 square metres, have no or
limited eat-in facilities, and require limited capital to fit out.
The stores are fitted out in line with the latest Domino's store
design and are identifiable by the distinctive red, white and blue
Domino's Pizza branding.
All new stores in Poland are designed using the "S2 Store
Concept", incorporating the best store design features from both
the USA and Australia, with a focus on an efficient store footprint
and a cost-effective fit-out. The average age of DP Poland's stores
is approximately 4 years.
All stores use Domino's Pizza's PULSE point-of-sale system which
provides touch screen ordering, administrative and reporting
capabilities and customer relationship management that enables
customer recognition and tracking of customer preferences.
Alongside in-store orders and collection, delivery orders can be
placed both through the Company's website and the use of food
aggregators such as Pyszne (takeaway.com) and Glovo. The Directors
believe that the addition of partnership agreements with food
aggregators has had a positive impact on order numbers and
increases brand awareness in regions where the Domino's brand is
less well known.
Products
The Company offers a broad range of pizza that is typically
available in established European markets. However, in addition to
traditional pizzas such as pepperoni and margarita, it also offers
locally tailored pizzas using local high quality traditional
ingredients. Every pizza is freshly prepared in store using a fresh
dough ball, sourced from the Group's commissaries, and topped with
pizza sauce made from high quality tomatoes, real mozzarella cheese
and a choice of high quality meats, fresh fruit and vegetables. All
ingredients are required to meet Domino's Pizza's quality standards
and are prepared according to its prescribed methods and processes.
The stores also offer a range of starters, side items, desserts and
drinks approved by DPI.
The Company has two commissaries in operation with a total
capacity to serve approximately 150 stores. The first is in Warsaw
which serves the capital and east Poland, and the second in Ăłd ,
positioned with good transport links, serving the north, south and
west of Poland. The commissary produces fresh dough and sells a
range of products (from pizza toppings to packaging) to both
corporately owned stores and the franchisees.
Pricing varies depending on the size, type of pizza base and
toppings ordered. A typical medium pizza costs PLN 40.
DP Poland offers the same total satisfaction guarantee as other
Domino's Pizza franchise operations, that is, if a customer finds
any product to be below their expectations, they can at a minimum
receive a full refund or a replacement. The Existing Directors
believe that food quality is important in Poland and that,
historically, the perceived quality of home delivery pizza is poor
and delivery service is unreliable. The Company is committed to the
use of fresh produce, where possible, in the preparation of its
pizzas. The Existing Directors believe that this enables the
Company to consistently provide high quality products to its
customers.
The Existing Directors' previous experience with other serviced
food and drinks brands (including in Poland) has given them the
know-how to source, cost effectively, high quality foodstuffs,
packaging and equipment.
All stores are regularly inspected by the management team to
ensure the highest standards in product quality and customer
service are maintained.
Marketing
The Existing Directors believe marketing is critical to the
success of the Domino's brand in Poland and helps increase brand
awareness and market share.
The Company typically runs both national and local marketing
campaigns to attract new and retain existing customers. Promotions
include family deals, student discounts, pizza of the day deals and
discounts on multiple pizza purchases.
Master Franchise Agreement
The Master Franchise Agreement, dated 25 June 2010, sets out how
the Group is to manage and develop the Domino's Pizza system and
concept in Poland.
Under the Master Franchise Agreement, DPP SA pays DPIF, the
current franchiser entity and successor in interest to DPOF, an
ongoing sales royalty fee. In return DPP SA is granted exclusive
use of the Domino's Pizza brand in Poland and the use of the
systems and know-how of the DPI Group.
Under the Master Franchise Agreement, DPP SA enjoys its
exclusive rights for a period of 15 years, with an option (subject
to certain conditions) exercisable by DPP SA to renew for another
ten years on the DPI Group's then standard form master franchise
agreement. This agreement allows DPP SA to open and operate and
sub-franchise stores in Poland as well as to establish
commissaries.
MARKET OVERVIEW
A growing industry
The consumer food service sector in Poland, which includes
cafes, bars, restaurants, kiosks, home delivery and takeaway
generated approximately PLN 41.92 billion (GBP8.6 billion) in 2019.
The consumer food service sector recorded, a four-year compound
annual growth rate ("CAGR") of 9.3 per cent. from 2015 to 2019
(Source: Euromonitor International, "Consumer Foodservice in
Poland" April 2020, page 3) .
Prior to the outbreak of COVID-19, Euromonitor estimated that
the consumer foodservice sector in Poland would continue to grow at
CAGR of 5.0 per cent. for the next five years until 2024 (Source:
Euromonitor International, "Consumer Foodservice in Poland" April
2020, page 3) .
The growth in the industry has been attributed to, amongst other
factors, rising incomes and confidence in expenditure which has led
to consumers in Poland eating out more often. Additionally,
lifestyle changes, busy working days and a lack of time have driven
sales of takeaway, delivery and other convenient foodservice
solutions (Source: Euromonitor International, "Consumer Foodservice
in Poland" April 2020, page 1) .
During 2019, approximately 85 per cent. of Polish households
used a food delivery service with food delivery amounting to
approximately PLN 6.7 billion or 25 per cent. of the overall
restaurant market in 2019. During 2019, online delivery orders have
been growing by up to 50 per cent. per annum reaching approximately
PLN 1.3 billion.
Further technological advancements within Poland are expected to
increase the role of delivery services, mobile applications and
food e-commerce in the market (Source: Euromonitor International,
"Consumer Foodservice in Poland" April 2020, page 3) .
Potential for store roll-out
The Directors believe that, based on the success of other
Domino's business and taking into account the urban population of
Poland, there is currently the potential for material store and
restaurant expansion in Poland.
The opportunity
The Directors believe that the Acquisition will enable the
Company to take advantage of the current opportunity within its
industry, and to grow and consolidate from an improved position in
the market due to the following factors:
-- There are multiple sub-scale and loss-making brands
In the opinion of the Directors, there are a number of
competitors whose expansion plans have not materialised with some
even losing market share due to store closures. Additionally, the
Directors believe the issues faced by many of the Company's small
scale competitors will have been exacerbated by the COVID-19
pandemic.
-- The Acquisition provides immediate scale
The Acquisition will provide the Company with the opportunity to
reinforce its market position and become a major player in its
industry with 126 store and restaurant locations across Poland.
-- Impact of COVID-19
Furthermore, the Directors note that the Company's sales have
improved during the COVID-19 pandemic whereas sales of a number of
quick service restaurants have been impacted adversely.
Poland
The Directors believe that Poland provides an attractive market
for the Domino's brand, particularly as it has one of the largest
populations within the EU, with 38 million residents, providing a
sizeable target market coupled with its prolonged uninterrupted GDP
growth and increasing consumer expenditure.
Polish Economy
The Polish economy has been one of the fastest growing economies
in the EU over recent years, with
household consumption and wages increasing.
The Directors note that the demand for takeaway and delivery
food increased during 2019 due to the population's lack of time and
busy working days, whilst chain restaurants recorded further
growth, and are predicted to increase their share over independent
players in the coming years, with increased demand for vegetarian,
vegan and non-meat alternatives as well as a growing trend of
plant-based diets. The Directors believe that the Enlarged Group,
with its increased product offering, will enable the Company to
capitalise on each of these growing trends and capture an increased
share of the market, in line with the strategic aims of the
Board.
Consumer spending
Consumer spending in Poland has continuously grown over the last
decade, with the highest growth rate in that period being 4.48 per
cent. in 2017. In 2019, consumer spending in Poland grew 3.79 per
cent., and the five year CAGR between 2015 and 2019 was 3.34 per
cent. (Source:
https://www.macrotrends.net/countries/POL/poland/consumer-spending).
During September 2019, the Polish government announced plans to
increase the minimum monthly wage in Poland. At the time of the
announcement, the minimum gross monthly wage in Poland was PLN
2,600 per month. The increase is planned in phases, with the
minimum gross wage increasing to PLN 2,800 per month by the end of
2020 and to PLN 4,000 per month by the end of 2023.
Expectations of resilient performance
Whilst the European Commission anticipates the EU economy will
experience a deep recession this year as a result of the COVID-19
pandemic (Source: The European Commission, "A Deeper Recession with
Wider Divergences", page 1
https://ec.europa.eu/info/business-economyeuro/economic-performance-and-forecasts/economic-forecasts/summer-2020-economic-forecast-deeper-recession-wider-divergences_en)
, forecasts for Poland's performance in 2020, in terms of GDP
growth compared to the prior year, are expected to be among the
best of the 27 members (Source: The European Commission, "A Deeper
Recession with Wider Divergences", page 35). A number of
publications have noted expectations for Poland's economy to
demonstrate its resilience during the COVID- 19 pandemic (Source:
Bloomberg, "EU's Most Virus-Shielded Member Seen Headed for
U-Shaped Rebound"
https://www.bloomberg.com/news/articles/2020-05-11/eu-s-most-virus-shielded-member-seen-headed-for-u-shaped-rebound
) (Source: Fitch, "Fitch Affirms Poland at 'A-'; Outlook Stable"
https://www.fitchratings.com/research/sovereigns/fitch-affirms-poland-at-aoutlook-
stable-27-03-2020).
The International Monetary Fund ("IMF") recently revised
Poland's GDP forecast to minus 3.6 per cent. from minus 4.6 per
cent. which was previously forecast in June 2020. It is expected
that Poland's GDP will grow by 4.6 per cent. in 2021, rather than
4.2 per cent. forecast in June 2020. The IMF also estimates the
unemployment rate to remain largely unchanged at 3.8 per cent.
(2019: 3.3 per cent.)(Source: Warsaw Business Journal, "IMF revises
Poland's GDP forecast for 2020 up by 1 pp to minus 3.6%",
https://wbj.pl/imf-revisespolands-gdp-forecast-for-2020-up-by-1-pp-to-minus-36procent/post/128651
)(Source: The
International Monetary Fund, https://www.imf.org/external/datamapper/profile/POL, October 2020) .
Furthermore, in September and October this year, credit rating
agencies Fitch and S&P Global affirmed their respective ratings
of 'A-' and 'A-/A-2' for Poland, with both noting that the outlook
for their ratings remained stable (Source: Fitch,
https://www.fitchratings.com/research/sovereigns/fitch-affirms-poland-at-a-outlook-stable-25-09-2020#::text=Fitch%20
Ratings%20%2D%20Frankfurt%20am%20Main,%2D'%20with%20a%20Stable%20Outlook.)
(Source: Ministry of Finance, "S&P Global Ratings affirms
Poland's credit rating",
https://www.gov.pl/web/finance/sp-global-ratings-affirmspolands-credit-rating#::text=On%20October%202%2C%202020%20S%26P,
%2C%20respectively%2C%20in%20local%20currency) .
Competition
In recent years, the Polish pizza market has become increasingly
competitive particularly with the growth of existing chains such as
Da Grasso and Telepizza but also with the emergence of other
international chains such as Pizza Hut.
Alongside the growth of existing pizza chains in Poland, over
the last few years the new food delivery aggregators have
undertaken aggressive marketing activity. To counteract the
potential loss of market share, the Company is working with
Poland's delivery aggregators Glovo and Pryzne.
As demonstrated by the chart above, the Acquisition is expected
to bring immediate scale and as a result, enhance the Company's
position within its industry.
ENLARGED GROUP'S STRATEGY
The strategy of the Enlarged Group will be based on two key
principles: operational efficiency achieved through the realisation
of synergies; and growth initiatives aimed at driving profitability
and sustainable growth.
The Concert Party has informed the Existing Directors that it
intends to allow the Company to continue with its proposed strategy
for the Enlarged Group.
Store network optimisation
The Directors intend to conduct a detailed assessment and review
of the Enlarged Group's store network. This assessment may result
in:
(i) closures of certain stores which are deemed by the Directors
to be negatively impacting the financial performance of the
Enlarged Group;
(ii) closures of stores which duplicate presence within an area,
or are in close proximity to another store, where there is no
business justification to maintain both stores; and
(iii) buy-out of certain sub-franchised stores which are
currently competing with, or are in close proximity to, a Dominium
store.
Store roll-out
Following the store optimisation, the Enlarged Group intends to
restart a store roll-out programme, expanding its portfolio with a
mix of corporately managed as well as sub-franchised stores. The
Directors expect that the Enlarged Group will be able to open up to
five new locations (which will represent approximately 4 per cent.
growth in stores) during 2021, with momentum increasing from 2022
onwards with a target of 10 to 15 store openings per annum. The
Directors expect that the pace of roll-out may be further
increased, with new sub-franchisee store openings, once the store
model is proven. The growth is expected to be financed from
internal cash flows.
Streamline costs
By increasing the scale of the Enlarged Group by implementing
the store roll-out programme and achieving sales growth within the
existing portfolio, the Directors believe the Enlarged Group will
improve its operational efficiency. The key drivers for improved
efficiency include, in the opinion of the Directors:
(i) fully utilising the Company's two commissaries;
(ii) improving the utilisation of delivery staff with dynamic
staffing during peak delivery hours;
(iii) optimising unit cost of delivery;
(iv) bolstering purchasing power within its supply chain,
predominantly relating to the procurement of ingredients and other
food stuffs; and
(v) improving operational gearing, by achieving store growth
from the Enlarged Group's relatively fixed overhead costs.
The potential increase in operational efficiency, as outlined
above, is expected to be incremental to the synergies arising from
the Acquisition.
Leverage technology
The Directors anticipate that the Enlarged Group will be able to
integrate its technologies, use its combined resources to invest in
more sophisticated technology platforms and solutions, and optimise
its current technological capabilities as the scale of the
operations increase.
In order to expand the customer base, the Directors intend to
invest in the ordering platform of the Company's website and
convert the Dominium mobile app into a Domino's branded app. They
expect that this will help to grow the number of trial users,
improve conversion, generate upselling opportunities and help to
retain and improve existing customer loyalty by:
(i) improving user experience of the website and mobile app;
(ii) improving customer segmentation and targeting of promotions;
(iii) utilising information gathered from the ordering engine,
conducting more sophisticated data analytics; and
(iv) providing a more personalised customer engagement through
loyalty programme, order history and repeat ordering as well as
streamlined payment.
The Directors believe there is also scope to improve the
efficiency of the Enlarged Group's back-office
functions, such as the finance and accounting department,
through the use of more sophisticated technology packages.
Brand awareness
As a combined business, the Enlarged Group will focus its
advertising and marketing budget solely on the Domino's brand, in
addition to an almost doubled store footprint. The Directors expect
that this will accelerate the development of brand awareness among
Polish consumers and this will also improve the efficiency of the
advertising spend. The Directors also believe that an improvement
in brand awareness will appeal to potential sub-franchisees, which
is expected to lead store numbers.
Furthermore, the Directors anticipate that the eat-in setting of
the Dominium restaurants will complement the Company's existing
service and quality perception among customers, and the restaurants
will serve as a showroom for the delivery business, by providing
restaurant-quality food available for delivery to the customers'
doorsteps.
The Dominium brand will be rebranded as "Dominium by Domino's"
for an interim period of up to three years to ensure a smooth
transition and maximise customer retention. Following the
transition period all Dominium stores will incorporate the Domino's
branding.
The restart of the new store roll-out (including through
sub-franchised restaurants) will further support the development of
the Domino's brand within Poland.
Improve service and quality
The Directors expect that as a result of the Proposals, the
Enlarged Group will benefit from the reciprocal exchange of best
practices, key competences and competitive advantages of the two
organisations. As a result, the quality of product as well as
service level should improve across the footprint, with key
elements being:
(i) switch from frozen to fresh dough;
(ii) (consolidation of food ingredients purchases, driving
improved and/or more consistent quality;
(iii) improved delivery times; and
(iv) more convenient and consistent online and call centre
experience for the delivery and takeaway customers.
Integration
The Directors recognise that in order to achieve some of the
expected synergies it will be necessary to monitor and modify, as
appropriate, the integration of the two businesses. The Directors
believe there is potential to generate cost savings within the
Enlarged Group and their initial review has identified
opportunities to rationalise certain corporate overheads and
support functions, where there are overlapping teams within the
Enlarged Group.
The Directors attach great importance to the skills and
experience of the existing employees of DP Poland and Dominium and
believe that they will benefit from greater opportunities within
the Enlarged Group following the Acquisition. Subject to the
outcome of this review, there may be a low single digit percentage
reduction in the Enlarged Group's headcount and functions where
there is duplication across the Enlarged Group.
Furthermore, the Directors intend to operate the Enlarged
Group's business from a single headquarters in Poland. The Enlarged
Group will utilise the Dominium headquarters once DP Poland's lease
arrangements for its Polish headquarters have expired in H1 2021.
DP Poland will retain its registered office in Weybridge,
Surrey.
Implementation plan
The Directors have devised an implementation plan and set
internal targets for the Enlarged Group in order to maximise the
potential benefits of the Acquisition. These include the
following:
-- the Directors will focus on the integration of the two
businesses and expect to realise the synergies outlined in this
Announcement throughout the financial year 2021;
-- to smoothen the customer transition and utilise the brand
loyalty of the existing Dominium customer base, the Dominium eat-in
locations will operate under the "Dominium by Domino's" brand for a
period of up to three years;
-- the Directors will aim to complete the review and
optimisation of the Enlarged Group's store network by the end of Q2
2021;
-- the Directors aim to fully integrate the IT and systems
platform across the Enlarged Group by the end of Q4 2021;
-- up to five new locations are expected to open during 2021,
with this momentum increasing in 2022;
-- targeting positive consolidated, pre-IFRS 16 EBITDA for the Enlarged Group; and
-- the Directors will review the sub-franchise opportunities
once the corporate store model has been proven.
SUMMARY FINANCIAL INFORMATION
DP Poland
The following summary of financial information relating to the
Existing Group's activities for the three years to 31 December 2019
and the six months ended 30 June 2020 has been extracted without
material adjustment from the financial information on the Existing
Group.
Audited Audited Audited Unaudited
Year ended Year ended Year ended Period ended
31-Dec 31-Dec 31-Dec 30-Jun
2017 2018 2019 2020
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 10,378 12,370 14,007 6,992
EBITDA (1,785) (1,920) (419) (386)
Loss before taxation (2,635) (3,793) (3,512) (1,759)
Loss for the year (2,635) (3,793) (3,512) (1,759)
Other comprehensive
income 639 (254) (214) 226
Total comprehensive
loss for the period (1,995) (4,047) (3,726) (1,533)
Dominium
The following summary of financial information relating to
Dominium's activities for the three years to 31 December 2019 and
the six months ended 30 June 2020.
Audited Audited Audited Unaudited
Year ended Year ended Year ended Period ended
31-Dec 31-Dec 31-Dec 30-Jun
2017 2018 2019 2020
PLN'000 PLN'000 PLN'000 PLN'000
Revenue 74,174 82,102 84,937 33,778
Gross profit 10,775 11,040 13,078 1,907
Loss before taxation (14,955) (11,713) (5,158) (5,890)
Loss from continued
operations (16,308) (11,699) (5,269) (5,890)
Loss from discontinued
operation (881) (1,884) (642) (54)
Loss for the year (17,189) (13,583) (5,911) (5,944)
Other comprehensive (79) - - -
income
Total comprehensive
loss for the period (17,268) (13,583) (5,911) (5,944)
SUMMARY UNAUDITED PRO FORMA POST-SYNERGY RESULTS OF THE ENLARGED
GROUP FOR THE YEARED 31 DECEMBER 2019
The following summary unaudited pro forma post-synergy results
of the Enlarged Group for the year ended 31 December 2019 has been
extracted without material adjustment from the financial
information on the Enlarged Group
DPP Group Dominium Group Enlarged Group
Year ended Year ended Year ended
31 December 31 December 31 December Adjustment Pro forma
GBP'000 2019 2019 2019 Synergies results
Revenue 14,007 17,035 31,042 (181) 30,861
EBITDA (419) 3,449 3,030 2,730 5,760
CURRENT TRADING AND PROSPECTS OF THE ENLARGED GROUP
DPP Group
As announced on 30 October 2020, Group performance in H1 2020
was broadly in line with management's expectations, despite the
impact of COVID-19. The business operated during the period with
minimal interruption.
System Sales, being total retail sales including sales from
corporate and sub-franchised stores, increased by 2.5 per cent. to
PLN42 million in H1 2020 from PLN 41 million in H1 2019. Based on
H1 2020 performance, run-rate System Sales per store for the year
ended 31 December 2020 is approximately PLN1.2 million. During H1
2020, delivery sales accounted for 86 per cent. of total revenue.
Food aggregators generated 9 per cent. of delivery sales during
this period.
Like for like System Sales in the first quarter of the year were
negative at -4.1 per cent., reflecting the initial impact of
COVID-19. However, like for like System Sales growth resumed in the
second quarter of the year, resulting in positive 0.5 per cent.
like for like System Sales growth for that period, continuing in
the third quarter with a strong 8.9 per cent. increase in sales.
During the months of July, August and September during 2020, like
for like System Sales grew by 6.3 per cent., 12.6 per cent. and 7.7
per cent. respectively when compared to the prior period.
Overall, Pre-IFRS 16 Group EBITDA losses increased in the period
by 3.4 per cent. year on year at constant exchange rates. At actual
exchange rates, Pre-IFRS 16 Group EBITDA losses increased by 1.5
per cent. year on year.
The Company is facing the COVID-19 presence and its impact on
our lives and our businesses. Polish Government restrictions have
affected the food and beverage industry, although more recent
restrictions have not applied to delivery and take-away food.
Meanwhile, the Polish economy continues to be perceived as more
resilient than many of the other European countries. The Directors
believe that through their high-quality product offering, strong
delivery and digital platforms, the Company has proved its ability
to recover and to perform well under COVID-19.
The delivery market is growing, digital and online payments are
growing and in the current environment the Directors believe they
are well positioned to take advantage of this growth. Alongside
delivery expertise, the Company has a strong brand, an experienced
and dedicated team and a reputation for quality of product and
services.
Thus, despite the ongoing COVID-19 pandemic, the Directors
believe the Company is well positioned to continue to work on
growing the Domino's Pizza brand in Poland.
Dominium
During the six months ended 30 June 2020, like for like sales
decreased by 1 per cent. compared to same period last year. Despite
headwinds, Dominium generated positive EBITDA (post-IFRS 16) for H1
2020 of approximately PLN3.6 million (GBP0.7 million). Dominium's
performance in Q3 was similar to that in H1 2020, with like for
like sales decreasing by 2.7 per cent. compared to the comparable
period in the prior year. This was driven by a strong, 34 per cent.
increase in delivery sales coupled with a material decline of 25
per cent. in eat-in sales. This is the reflection of the consumers'
preference for ordering food deliveries to homes, rather than
visiting restaurants during the COVID-19 pandemic.
October 2020 saw a rapid increase in the number of COVID-19
cases in Poland, from 1,968 as of 1 October 2020 to 21,897 as of 31
October 2020. In October 2020, in order to curb the pace of
transmission of the coronavirus, the government has re-introduced
stricter restrictions on a range of businesses, including closing
down restaurants for eat-in service, with only takeaway and
delivery services being permitted. While the number of daily cases
has stabilised in the second half of November and marginally
started to fall (with a recent reading at 14,838 as of 3 December
2020), the ban on eat-in service is expected to continue until 17
January 2021.
Consumers adjusted their dining habits before official Polish
Government restrictions took place, as evidenced by the gradual
erosion of eat-in sales at Dominium during the month. October 2020
like for like sales were 13 per cent. down compared to prior year,
driven by a 39 per cent. increase in delivery sales and a 54 per
cent. decline in eat-in sales. The daily sales in November indicate
an 84 per cent. like for like decline in eat-in (the remaining 16
per cent. being takeaway sales) and a 30 per cent. increase in
deliveries, which brings a total like for like sales decline of
approximately 22 per cent.
After delivering post-IFRS 16 EBITDA of PLN 2.7 million in Q3
2020, Dominium is expected to record weaker performance in Q4 2020,
due to the reduction of eat-in revenue which is expected to
continue until 17 January 2021.
EXISTING DIRECTORS, PROPOSED DIRECTORS AND SENIOR MANAGEMENT
The Existing Directors are Nicholas John Donaldson
(Non-Executive Chairman), Robert Nicholas Lutwyche Morrish
(Non-Executive Director), Gerald William Ford (Non-Executive
Director) and Christopher Humphrey Robertson Moore (Non-Executive
Director).
On Admission of the Enlarged Share Capital of the Company to
AIM, all of the Existing Directors will resign from the Board other
than Nicholas Donaldson and Robert Morrish and the Proposed
Directors, being Piotr Dzier ek, Przemyslaw Glebocki and Jakub
Chechelski, will be appointed. It is the Board's intention to
appoint Ma gorzata PotkaĆska, the current Chief Financial Officer
of Dominium, as Chief Financial Officer of the Company shortly
following Admission. Further details of her biography are set out
below. Iwona OlbryĆ, who has acted as the Company's Chief Executive
Officer since 20 December 2019, recently stepped down from the
Board and left the Group on 30 November 2020.
On Admission, therefore, the Board will comprise one executive
director initially (but increasing to two shortly following
Admission) and four non-executive directors (two of whom the Board
have determined to be independent).
The biographical details of the Proposed Directors and senior
management are set below:
Proposed Directors
Piotr Dzier ek , Chief Executive Officer, aged 49
Piotr is the current Chief Executive Officer of Dominium, having
joined the company initially in 2000 as Regional Manager, in which
position he was responsible for overseeing the operations of 15
restaurants. In 2001 he was promoted to General Manager and until
the end of 2017 was responsible for operations, purchasing, IT and
office administration. Since 2017 Piotr has been the Chief
Executive Officer of Dominium and has led the company's
transformation to date. Prior to joining Dominium, Piotr gained
experience at Carrefour as pricing manager and buyer; as well as
Apollo Electronics, a branded consumer electronics business. Piotr
graduated from the faculty of Marketing and Management at the
Warsaw School of Economics. Piotr will join the board of the
Company upon Admission as the Chief Executive Officer of the
Company.
Przemyslaw Glebocki , Non-Executive Director, aged 41
Przemyslaw Glebocki has more than 17 years of experience in
private equity and corporate finance in Central Europe. He is a
Co-Managing Partner and Chief Investment Officer at Mezzanine
Management. Prior to joining Mezzanine Management, Przemyslaw was
with Ernst & Young's Corporate Finance and Audit departments.
He holds a Masters Degree in Finance and Banking from the Warsaw
School of Economics and has pursued study programmes in the U.S.
and the Netherlands. He currently sits on the boards of Dominium,
Spearhead, PrimoCollect, Flucar, Private Equity Managers, Nettle,
ATM and Netrisk. Przemyslaw is also Chairman of the LBO Committee
at the Polish Private Equity and Venture Capital Association.
Jakub Chechelski , Non-Executive Director, aged 40
Jakub Chechelski is an Investment Director of Mezzanine
Management in Poland. He has fifteen years of experience in
corporate finance and private equity. Jakub joined Mezzanine
Management from Bridgepoint, a leading European mid-cap fund where
he spent over six years, covering the CEE region and working on a
variety of projects. Prior to that he worked at Enterprise
Investors, a leading CEE-focused fund. His sector experience is
particularly strong in the consumer as well as business services
space. Prior to his first role in private equity, Jakub worked for
Ernst & Young Corporate Finance. Jakub graduated from the
faculty of Finance and Banking at the Warsaw School of
Economics.
The Proposed Directors hold, and have during the five years
preceding the date of this Announcement held, the following
directorships or partnerships:
Name Current directorships Previous directorships
/ partnerships / partnerships
Piotr JĂłzef Dominium S.A. Dominium sp. z o.o.
Dzier ek Cantina Italia sp. z
o.o.
Przemyslaw Glebocki Mezzanine Management (Poland) Travelplanet.pl S.A.
sp. z o.o. Netia S.A.
Dominium S.A. Flukar Invest sp. z o.o.
Veterinaro sp. z o.o. Risata Holdings Ltd
Private Equity Managers PCollect Holding Limited
S.A. Primo-Ru Limited
Rafineria w Jasle sp. Telelink Bulgaria EAD
z o.o. Invia.CZ. A.S.
Flukar sp. z o.o. Netrisk.hu Elso Online
Jasol S.A. Biztositasi
ATM S.A. Alkusz Kft.
Nettle S.A. Spearhead International
Krajowy Fundusz Spitalny
sp. z o.o.
Nessel sp. z o.o.
ACP Credit Advisory sp.
z o.o.
Profi sp. z o.o.
Growth Capital Partners
GmBH
Jakub Mi osz Dominium S.A. Smyk Holding sp. z o.o.
Chechelski Profi sp. z o.o. CTL Logistics sp. z o.o.
Fundacja Dajemy Dzieciom Bridgepoint sp. z o.o.
Si sp.k
None of the Proposed Directors has any matter to disclose
pursuant to paragraphs (g)(iii) to (viii) inclusive of Schedule Two
of the AIM Rules for Companies.
Senior Management
Ma gorzata PotkaĆska, Chief Financial Officer, Dominium
Ma gorzata joined Dominium in 2016. She has over 14 years of
experience in corporate finance in Europe. Previously she worked at
Fox International Channels Poland as Financial Controller and
within the PwC Audit department. Alongside her financial
experience, Ma gorzata has experience in implementation of
accounting and consolidations, IT systems, establishment and
implementation of internal controls, and also participation in
establishing and implementing group financial reporting.
Maciej Jania, Managing Director, DP Polska
Maciej Jania was appointed as Managing Director of DP Polska SA
in November 2010. In September 2012, he joined the board of the
Company as Finance Director, before subsequently stepping down from
this role in December 2019 whilst continuing in his role as
Managing Director of DP Polska. Prior to his appointment as
Managing Director of DP Polska, Maciej was Financial and Commercial
Director of DP Polska. Maciej has a strong commercial management
background in large multi-site businesses. He joined DP Polska from
Samsung Electronics (Poland) where he held a senior financial
position. Prior to this, Maciej was a key member of the highly
successful founding team at coffeeheaven International plc.
Agnieszka Saczuk, Head of Human Resources, Dominium
Agnieszka joined Dominium in 2005 where she is responsible for
Human Resources, administration and investment. She has 25 years of
experience in the area of human resource and project management.
Alongside her administrative experience, Agnieszka has knowledge of
optimising the investment area, modernising the infrastructure of
restaurants and developing procedures an regulations. Agnieszka
graduated from the faculty of Management at the College of
Management.
Krzysztof Banasiak, Head of Operations, Dominium
Krzysztof joined Dominium in 2002 where he started as a Regional
Operational Coordinator and became the COO of the business in 2017.
He is responsible for product quality assurance, delivery times,
effective cost controls and budget realisation. Previously, he
worked at Pepsico Poland and Fast Food Development Polska.
Krzysztof graduated from Warsaw Management University with a
Master's Degree in Management and Marketing.
Patrick Bodenham, Company Secretary, DP Poland
Patrick is a chartered certified accountant with over 20 years'
experience working with smaller retail companies. Since 1997 he has
worked with three AIM quoted companies. He has considerable
experience of managing the accounting function of food retail
businesses, including a multi-site bakery retailer and a franchised
hot food takeaway business. Previously he was responsible for UK
management and statutory financial reporting for coffeeheaven
international plc. Patrick has been company secretary of DP Poland
plc since 2010.
CITY CODE & RULE 9 WAIVER
The City Code applies to the Company and governs, inter alia,
transactions which may result in a change of control of a company
to which the City Code applies. Following Admission, the City Code
will continue to apply to the Company.
Rule 9 of the City Code
The City Code applies to a company whose shares are admitted to
trading on AIM if that company's registered office is in the United
Kingdom, the Channel Islands or the Isle of Man. The Company is
incorporated in the United Kingdom, the Existing Ordinary Shares
are currently admitted to trading on AIM and application will be
made for the Enlarged Share Capital to be re-admitted to trading on
AIM. Accordingly, the City Code applies, and will continue to
apply, to the Company.
Under Rule 9 of the City Code ("Rule 9"), any person who
acquires an interest in shares (as defined in the City Code),
whether by a series of transactions over a period of time or not,
which (taken together with any interest in shares held or acquired
by persons acting in concert (as defined in the City Code) with
him) in aggregate, carry 30 per cent. or more of the voting rights
of a company which is subject to the City Code, that person is
normally required by the Panel to make a general offer to all of
the remaining shareholders to acquire their shares.
Similarly, Rule 9 of the City Code also provides that when any
person, together with persons acting in concert with him, is
interested in shares which in aggregate carry not less than 30 per
cent. of the voting rights of such a company but does not hold
shares carrying more than 50 per cent. of such voting rights, a
general offer will normally be required if any further interests in
shares are acquired by any such person which increases the
percentage of shares carrying voting rights in which he is
interested.
An offer under Rule 9 must be in cash, or be accompanied by a
cash alternative, at the highest price paid by the person required
to make the offer, or any person acting in concert with him, for
any interest in shares of the company during the 12 months prior to
the announcement of the offer.
Under the City Code, a concert party arises where persons who,
pursuant to an agreement or understanding (whether formal or
informal), actively co-operate to obtain or consolidate control of
that company or to frustrate the successful outcome of an offer for
a company. Under the City Code control means an interest, or
aggregate interest, in shares carrying 30 per cent. or more of the
voting rights of the company, irrespective of whether the interest
or interests give de facto control.
The Panel considers the Concert Party as persons acting in
concert for the purposes of the City Code. On Admission, the
Concert Party will hold an interest in 261,938,457 Ordinary Shares,
in aggregate, representing 45.0 per cent. of the Enlarged Share
Capital (on an undiluted basis).
As noted above, immediately following Admission, the Concert
Party will hold an interest in shares carrying not less than 30 per
cent. of the voting rights of the Company but not hold shares
carrying more than 50 per cent. of the voting rights of the Company
and (for so long as they continue to be treated as acting in
concert) the Concert Party (and any person acting in concert with
them) will not be able to acquire any further Ordinary Shares which
increases their percentage of shares carrying voting rights of the
Company without incurring an obligation to make a general offer to
Shareholders under Rule 9 of the Code.
Details of the interests of the Concert Party are set out in
this Announcement .
Concert Party
Persons acting in concert include persons who, pursuant to an
agreement or understanding (whether formal or informal), co-operate
to obtain or consolidate control of a company.
Under presumption 9 of the City Code's definition of acting in
concert, shareholders in a private company who sell their shares in
that company in consideration for the issue of new shares in a
company to which the Code applies are presumed to be acting in
concert.
For the purposes of the City Code, the following are presumed to
be acting in concert:
Mezzanine Management Finanz- und Unternehmensberatungs GmbH
Accession Mezzanine Capital II GP Limited
Mezzanine Capital Partners GP Limited
Accession Mezzanine Capital GP S.Ă r.l.
Accession Mezzanine Capital II L.P.
Accession Mezzanine Capital III L.P.
Accession Mezzanine Capital IV S.C. Sp.
Accession Mezzanine Capital III Investment SLP
Accession Mezzanine Capital III Cooperatief U.A.
Malaccan Holdings Limited
Przemyslaw Glebocki
Jakub Chechelski
Malaccan Holdings Limited is the sole shareholder of Dominium
and which, following completion of the Acquisition at the time of
Admission, will receive the Consideration Shares in the
Company.
The Concert Party will be restricted from making an offer for
the Company under the provisions of the Relationship Agreement for
a period of 12 months from the date of Admission.
Maximum Controlling Position
Immediately following Admission, the Concert Party will hold, in
aggregate, New Shares, representing 45.0 per cent. of the Enlarged
Share Capital. The Concert Party's acquisition of New Shares would,
without a waiver of the obligations under Rule 9 of the City Code,
oblige the Concert Party to make a general offer to Shareholders
under Rule 9 of the City Code.
The following table sets out the Concert Party's shareholdings
in the Enlarged Group on Admission.
Total No. of No. of New % of Enlarged
Concert Party Dominium Shares % of total Shares in Enlarged Share Capital
Member held Dominium Shares Group on Admission on Admission*
Malaccan Holdings
Limited 8,060,000 100 261,938,457 45.0
----------------- ----------------- -------------------- ---------------
* Following the issue of the Consideration Shares, the Offer
Shares and post sale of Sale Shares
Waiver of Rule 9 of the City Code
Following the Acquisition, the Concert Party will hold 45.0 per
cent. of the Company's Ordinary Shares, which would normally result
in the requirement to make a general offer to all the remaining
Shareholders to acquire their shares.
The Company has applied to the Panel for a waiver of Rule 9 of
the City Code in order to permit the Acquisition without triggering
an obligation on the part of the Concert Party to make a general
offer to Shareholders. The Panel has agreed, subject to Independent
Shareholders' approval on a poll, to waive the requirement for the
Concert Party to make a general offer to all Shareholders where
such an obligation would arise as a result of the Acquisition.
Accordingly, the Whitewash Resolution being proposed at the
General Meeting will be taken by means of a poll of Independent
Shareholders voting at the General Meeting. None of the members of
the Concert Party (nor any adviser connected to them) are entitled
to exercise their voting rights in respect of the Whitewash
Resolution, but may exercise their voting rights in respect of the
remainder of the Resolutions. The waiver to which the Panel has
agreed under the Code will be invalidated if any purchases of
shares in the Company are made by any member of the Concert Party,
or any person acting in concert with it, in the period between the
date of this Announcement and the General Meeting.
In the event that the Whitewash Resolution is approved by the
Independent Shareholders, the Concert Party will hold 45.0 per
cent. of the Enlarged Share Capital and will hold an interest in
shares carrying not less than 30 per cent. of the voting rights of
the Company but not hold shares carrying more than 50 per cent. of
the voting rights of the Company and (for so long as they continue
to be treated as acting in concert) the Concert Party (and any
person acting in concert with them) will not be able to acquire any
further Ordinary Shares which increases their percentage of shares
carrying voting rights of the Company without incurring an
obligation to make a general offer to Shareholders under Rule 9 of
the Code (unless a dispensation from this requirement has been
obtained from the Panel in advance).
In the event that the Whitewash Resolution is approved at the
General Meeting, the Concert Party will be restricted from making
an offer for the Company under the provisions of the Relationship
Agreement for a period of 12 months from the date of Admission.
DIVID POLICY
The Directors do not intend to declare or pay a dividend in the
immediate foreseeable future but, subject to the availability of
sufficient distributable profits, intend to commence the payment of
dividends when it becomes commercially prudent to do so.
SHARE OPTIONS
The Directors consider that an important part of the Enlarged
Group's remuneration policy should include equity incentives
through the grant of share options to Directors and employees. The
Company has a Long Term Incentive Plan in place already. It is the
intention of the Directors to grant further options to current and
future employees of the Group under the LTIP following Admission.
The maximum number of Ordinary Shares which will be subject to
options granted to employees under the share option scheme and any
other share schemes adopted by the Company will not exceed 10 per
cent. of the Company's issued share capital from time to time. The
Company has previously operated a Share Incentive Plan although
there are no outstanding awards due under the plan and the
Directors do not intend to make any further awards going forwards
and to let it lapse in accordance with its terms.
LOCK-IN AND ORDERLY MARKET ARRANGEMENTS
Each of Malaccan Holdings, Nicholas Donaldson and Robert Morrish
has entered into a Lock-in Agreement with the Company and N+1
Singer, pursuant to which terms the Locked-in Shareholder has
undertaken to the Company and N+1 Singer that, save in specified
circumstances, they will not without the prior consent of N+1
Singer dispose of any interest in Ordinary Shares held by each of
them for a period of 12 months from Admission ("Lock-in Period").
The specified circumstances include:
(a) any disposal pursuant to acceptance of a general, partial or
tender offer made by an offeror other than the Concert Party
("Independent Offeror") to all shareholders of the Company for the
whole or a part of the issued share capital of the Company (other
than any shares already held by the Independent Offeror or persons
acting in concert with the Independent Offeror) or the execution of
an irrevocable commitment to accept a general, partial or tender
offer made by an Independent Offeror to all shareholders of the
Company for the whole or a part of the issued capital of the
Company (other than any shares already held by the Independent
Offeror or persons acting in concert with the Independent Offeror);
or
(b) any disposal pursuant to an intervening court order;
(c) pursuant to disposals under any scheme or reconstruction
under section 110 of the Insolvency Act 1986, any compromise or
arrangement or any takeover effected under part 26 of the Companies
Act or pursuant to any decision or ruling by an administrator,
administrative receiver or liquidator appointed to the Company in
connection with a winding up or liquidation of the Company;
(d) pursuant to any decision or ruling by an administrator,
receiver or liquidator on a winding-up or liquidation of the
Company;
(e) pursuant to an offer by the Company to purchase its own
shares which is made in identical terms to all shareholders;
(f) any disposal to personal representatives (in the case of an
individual) upon the death of a Locked in Shareholder;
(g) any disposal to the trustees of a trust (in the case of an
individual) of or an associated group company (in the case of a
corporate shareholder) of the Locked-in Shareholder, provided that
the transferee of the Ordinary Shares agrees to be bound by the
provisions of the Lock-in Agreement; or
(h) a transfer to an Associate (as such term is defined and is
applicable in the AIM Rules for Companies), subject to such
Associate having first entered into a deed of adherence to be bound
by the terms of the Lock-in Agreement.
Furthermore, each of the Locked-in Shareholders has also
undertaken to the Company and N+1 Singer not to dispose of their
Ordinary Shares for a period of 12 months from the expiry of the
Lock-in Period otherwise than through N+1 Singer and with its
consent in order to maintain an orderly market in the Company's
Ordinary Shares.
RELATIONSHIP AGREEMENT
The Company and N+1 Singer have entered into a Relationship
Agreement with Malaccan Holdings on 18 December 2020 to regulate
aspects of the continuing relationship between the Company and
Malaccan Holdings and which includes provisions, amongst other
things, designed to ensure that the Company is capable of
conducting its business at all times independently of Malaccan
Holdings and its associated parties (the "Related Party Group") and
that future transactions between the Company and Malaccan Holdings
or any other member of the Related Party Group are made on arms'
length terms and on a normal commercial basis.
Under the Relationship Agreement, any transaction, arrangement
or agreement between any part of the Enlarged Group and the Related
Party Group must have the prior approval of a majority of the
independent non-executive directors of the Company.
Malaccan Holdings has also undertaken to ensure that it will not
use its shareholding in the Company to requisition a general
meeting or otherwise exercise its voting rights in such a way that
would result in the independent non-executive directors appointed
to the Board from time to time representing less than two in number
of the total number of Directors appointed to the board or any of
the Directors that are connected to the Related Party Group
representing a majority in number of the combined total number of
such independent non-executive directors.
The Relationship Agreement contains a standstill arrangement
under which Malaccan Holdings and any other member of the Related
Party Group shall, for a period of 12 months from Admission, be
prevented from making an offer for the whole or any part of the
Company's share capital or from acquiring any Ordinary Shares or
other securities which would result in a mandatory offer being made
under Rule 9 of the City Code to acquire the remaining share
capital of the Company.
The Relationship Agreement applies for so long as Malaccan
Holdings (together with any of its associated parties) holds, in
aggregate, an interest in 25 per cent. or more of the Ordinary
Shares in issue.
CORPORATE GOVERNANCE AND INTERNAL CONTROLS
AIM companies are required to comply with a recognised corporate
governance code or, where a company does not so comply, disclose
the nature of and reasons for the departure from such code. In this
regard, the Directors have elected to comply with the QCA Code, in
so far as is appropriate, having regard to the size and development
of the Company and in consultation with the Company's Nominated
Adviser from time to time. From Admission, the Company's website
www.dppoland.com will set out the extent of any non-compliance with
the QCA Code by the Enlarged Group on Admission.
On Admission, the Company will have four Non-Executive Directors
of whom Nicholas Donaldson and Robert Morrish are considered by the
Board to be independent. The Board retains full and effective
control over the Company. The Company intends to hold regular
monthly Board meetings at which financial and other reports are
considered and, where appropriate, voted on. Apart from regular
meetings, additional meetings will be arranged when necessary to
review strategy, planning, operational and financial performance,
risk, capital expenditure and human resource and environmental
management. The Board is also responsible for monitoring the
activities of the executive management.
The Directors have established an audit committee and a combined
nominations and remuneration committee with formally delegated
duties and responsibilities to operate with effect from
Admission.
The audit committee will initially comprise Nicholas Donaldson,
Robert Morrish and Jakub Chechelski, with Robert Morrish acting as
Chairman. The committee will determine and examine any matters
relating to the financial affairs of the Company including the
terms of engagement of the Group's auditors and, in consultation
with the auditors, the scope of the audit. In addition it will
consider the financial performance, position and prospects of the
Company and ensure they are properly monitored and reported on.
The nominations and remuneration committee will initially
comprise Nicholas Donaldson, Robert Morrish, Jakub Chechelski and
Przemyslaw Glebocki, with Przemyslaw Glebocki acting as Chairman.
The committee will review and recommend nominees as new directors
to the Board. The committee will make recommendations to the Board
regarding future appointments of directors. It will also review the
performance of the executive Directors and set their remuneration,
determine the payment of bonuses to the executive Directors and
consider the Group's bonus and incentive arrangements for
employees.
The Directors will comply with Rule 21 of the AIM Rules for
Companies relating to Directors' dealings and will take all
reasonable steps to ensure compliance by the Company's applicable
employees.
The Company has adopted and will operate a share dealing code
for Directors and employees in accordance with the AIM Rules for
Companies and MAR.
ADMISSION, SETTLEMENT AND DEALINGS
Application has been made to the London Stock Exchange for all
of the Existing Ordinary Shares and the New Shares to be issued
pursuant to the Proposals, to be admitted to trading on AIM. It is
expected that Admission will become effective and dealings will
commence in the Ordinary Shares on 8 January 2021. No application
has or will be made for the Ordinary Shares to be admitted to
trading or to be listed on any other stock exchange.
The Articles permit the Company to issue Ordinary Shares in
uncertificated form in accordance with the CREST Regulations. CREST
is a voluntary computerised share transfer and settlement system.
The CREST system allows shares and other securities to be held in
electronic (uncertificated) form rather than paper form, although
shareholders who wish to receive and retain share certificates will
be able to do so.
The New Shares will be admitted to CREST and enabled for
settlement in CREST on the date of Admission. Accordingly,
settlement of transactions in Ordinary Shares following Admission
may take place within the CREST system if any individual
Shareholder so wishes.
For more information concerning CREST, Shareholders should
contact their independent financial adviser.
TAXATION
If you are in any doubt as to your tax position, you should
contact your independent financial adviser.
GENERAL MEETING AND PROPOSALS
The Notice of General Meeting convenes a general meeting of
Shareholders to be held at 10.00 a.m. on 7 January 2021 at The
Foster Room, West Meon Village Hall, West Meon, Hampshire, GU32
1LH.
The following Resolutions will be proposed at the General
Meeting (each such Resolution being conditional on the passing of
all of the other Resolutions):
1. Ordinary resolution by the Independent Shareholders to waive
their rights to receive a general offer from the Concert Party,
arising from Malaccan Holdings obtaining, through the Acquisition,
an interest in the Enlarged Share Capital of approximately 45.0 per
cent.
2. Ordinary Resolution to approve the Acquisition for the
purposes of Rule 14 of the AIM Rules.
3. Ordinary Resolution to appoint Piotr Dzier ek as a director of the Company.
4. Ordinary resolution to appoint Przemyslaw Glebocki as a director.
5. Ordinary resolution to appoint Jakub Chechelski as a director of the Company.
6. Ordinary resolution to authorise the Directors to allot the
New Shares pursuant to the Proposals
7. Ordinary resolution to authorise the Directors to issue
further equity securities of up to one third of the Enlarged Share
Capital before the Company's next annual general meeting.
8. Special resolution to disapply statutory pre-emption rights
in relation to the allotment of the New Shares pursuant to the
Proposals.
9. Special resolution to disapply statutory pre-emption rights
in relation to the issue of further equity securities of up to one
tenth of the Enlarged Share Capital before the Company's next
annual general meeting.
APPIX II
HISTORICAL FINANCIAL INFORMATION OF DOMINIUM GROUP
Consolidated statements of comprehensive income
The audited consolidated statements of comprehensive income of
Dominium Group for each of the three years ended 31 December 2017,
31 December 2018 and 31 December 2019 are set out below:
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
Note PLN'000 PLN'000 PLN'000
------------------------------------ ------ ----------- ----------- -----------
Revenue 7 74,174 82,102 84,937
Cost of sales (63,399) (71,062) (71,859)
Gross profit 10,775 11,040 13,078
Distribution costs (4,061) (4,877) (4,335)
Administrative expenses (8,334) (7,584) (7,337)
Other income 9 174 884 490
Other operating costs 10 (7,978) (3,630) (1,180)
------------------------------------ ------ ----------- ----------- -----------
Operating (loss)/profit (9,424) (4,167) 716
Finance income 18 1,006 32 218
Finance costs 18 (6,529) (7,578) (6,092)
Loss on liquidation of a subsidiary (8) - -
Loss before taxation (14,955) (11,713) (5,158)
Taxation 11 (1,353) 14 (111)
------------------------------------ ------ ----------- ----------- -----------
Loss after taxation from continuing
operations (16,308) (11,699) (5,269)
Loss from discontinued operation 30 (881) (1,884) (642)
------------------------------------ ------ ----------- ----------- -----------
Loss for the year (17,189) (13,583) (5,911)
Exchange rate differences arising
on consolidation (79) - -
Total comprehensive loss for
the year (17,268) (13,583) (5,911)
------------------------------------ ------ ----------- ----------- -----------
Loss attributable to:
Equity holders of Dominium (17,189) (13,583) (5,911)
------------------------------------ ------ ----------- ----------- -----------
Comprehensive Loss attributable
to:
Equity holders of Dominium (17,268) (13,583) (5,911)
Total comprehensive Loss for
the period attributable to
owners of Dominium arises from:
---------------------------------- ---------- ---------- ---------
Continuing operations (16,387) (11,699) (5,269)
---------------------------------- ---------- ---------- ---------
Discontinued operations 30 (881) (1 884) (642)
---------------------------------- ---------- ---------- ---------
Total comprehensive income
for the period attributable
to owners of Dominium (17,268) (13,583) (5,911)
---------------------------------- ---------- ---------- ---------
Consolidated statement of financial position
The audited consolidated statements of financial position of
Dominium Group as at 31 December 2017, 31 December 2018 and 31
December 2019 are set out below
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
Note PLN'000 PLN'000 PLN'000
------------------------------ ---- ----------- ----------- -----------
ASSETS
Property, plant and equipment 13 17,451 13,296 8,697
Right-of-use assets 20 37,768 31,002 23,105
Intangible assets 12 30,245 28,208 26,146
Trade and other receivables 15 162 - -
Deferred tax assets 11 245 272 155
Non-current assets 85,871 72,778 58,103
------------------------------ ---- ----------- ----------- -----------
Inventories 14 1,035 880 1,054
Trade and other receivables 15 2,717 2,291 2,291
Assets held for sale 30 2 2 12
Cash and cash equivalents 16 1,719 750 1,106
Current assets 5,473 3,923 4,465
------------------------------ ---- ----------- ----------- -----------
Total assets 91,344 76,701 62,568
------------------------------ ---- ----------- ----------- -----------
EQUITY AND LIABILITIES
Share capital 17 8,044 8,060 8,060
Share premium 18,340 20,848 20,848
Other equity 13,092 10,569 10,569
Retained deficit (23,177) (36,760) (42,671)
------------------------------ ---- ----------- ----------- -----------
Total equity 16,299 2,717 (3,194)
------------------------------ ---- ----------- ----------- -----------
Lease liabilities 20 31,200 25,479 18,446
Borrowings 18 18,884 23,094 -
Deferred tax liability 11 39 52 47
Trade and other payables 19 1,979 1,013 1,335
Total non-current liabilities 52,102 49,638 19,828
------------------------------ ---- ----------- ----------- -----------
Trade and other payables 19 9,263 9,983 9,401
Borrowings 18 1,360 1,222 25,273
Lease liabilities 20 7,153 7,632 7,347
Liabilities directly
related to non-current
assets classified as
held-for-sale 30 1,655 1,655 977
Provisions 21 3,512 3,854 2,934
Total current liabilities 22,943 24,346 45,934
------------------------------ ---- ----------- ----------- -----------
Total liabilities 75,045 73,984 65,762
------------------------------ ---- ----------- ----------- -----------
Total liabilities and
equity 91,344 76,701 62,568
------------------------------ ---- ----------- ----------- -----------
Consolidated statements of changes in shareholders' equity
The audited consolidated statements of changes in shareholders'
equity of Dominium Group for each of the three years ended 31
December 2017, 31 December 2018 and 31 December 2019 are set out
below:
Share Share Other Retained Total
capital Premium capital deficit equity
Note PLN'000 PLN'000 PLN'000 PLN'000 PLN'000
----------------------------- ----- -------- -------- -------- ------------------- --------
Balance as at 1 January 2017 8,044 18,340 10,648 (5,988) 31,044
Loss after taxation - - - (17,189) (17,189)
Total comprehensive loss
for the year - - - (17,189) (17,189)
------------------------------------ -------- -------- -------- ------------------- --------
Consideration received for
shares to be issued - - 2,523 - 2,523
Exchange rate differences
arising on consolidation - - (79) - (79)
------------------------------------ -------- -------- -------- ------------------- --------
Transactions with owners - - 2,444 - 2,444
------------------------------------ -------- -------- -------- ------------------- --------
Balance as at 31 December
2017 8,044 18,340 13,092 (23,177) 16,299
------------------------------------ -------- -------- -------- ------------------- --------
Loss after taxation - - - (13,583) (13,583)
Total comprehensive loss
for the year - - - (13,583) (13,583)
------------------------------------ -------- -------- -------- ------------------- --------
Issue of shares 16 2,508 (2,523) - 1
Transactions with owners 16 2,508 (2,523) - 1
------------------------------------ -------- -------- -------- ------------------- --------
Balance as at 31 December
2018 8,060 20,848 10,569 (36,760) 2,717
------------------------------------ -------- -------- -------- ------------------- --------
Loss after taxation - - - (5,911) (5,911)
Total comprehensive loss
for the year - - - (5,911) (5,911)
------------------------------------ -------- -------- -------- ------------------- --------
Transactions with owners - - - - -
Balance as at 31 December
2019 8,060 20,848 10,569 (42,671) (3,194)
------------------------------------ -------- -------- -------- ------------------- --------
Consolidated statements of cash flows
The audited consolidated statements of cash flows of Dominium
Group for each of the three years ended 31 December 2017, 31
December 2018 and 31 December 2019 are set out below:
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
------------------------------------------ ----------- ----------- -----------
Cash flows from operating activities
Loss after taxation (17,189) (13,583) (5,911)
Cash flow from operations reconciliation:
Depreciation 12,253 12,115 13,061
Income tax charge 1,532 (4) 111
Tax paid (179) (10) -
Amortisation 2,123 2,123 2,141
Foreign exchange gains/losses - 51 (165)
Foreign exchange gains/losses on
consolidation 63 (1) -
Interest net 6,102 6,431 6,063
Loss on investment activities 1,364 1,429 727
Working capital adjustments:
Change in trade receivables 1,647 588 (263)
Change in inventories 213 155 (174)
Change in trade and other payables 1,706 (246) (1,583)
Change in other current and non-current
liabilities 2,831 342 (920)
----------- ----------- -----------
Net cash provided by operating
activities 12,466 9 390 13,087
----------- ----------- -----------
Cash flows from investing activities
Sales of property, plant and equipment
and intangibles 224 187 80
Purchase of property, plant and
equipment and intangibles (1,833) (1,336) (991)
Net cash used in investing activities (1,609) (1,149) (911)
----------- ----------- -----------
Cash flows from financing activities
Repayment of borrowings (504) (192) (1,200)
Proceeds from borrowings 450 3,850 1 301
Repayment of bond (650) - -
Repayments of lease liabilities (7,394) (6,833) (7,074)
Interest paid (5,028) (6,037) (4,849)
Proceeds from the issue of equity 2,523 - -
Net cash outflow from financing
activities (10,603) (9,212) (11,822)
----------- ----------- -----------
Net increase/(decrease) in cash
and cash equivalents 254 (971) 354
=========== =========== ===========
Cash and cash equivalents - beginning
of the year 1,465 1,721 752
----------- ----------- -----------
Cash and cash equivalents - end
of the year 1,719 750 1,106
=========== =========== ===========
Notes to the Dominium Group Financial Information
1. General information
Dominium Group consists of Dominium and its subsidiaries.
Dominium was incorporated on 2 January 2008 in Poland as a
private company limited by shares under company number 0000295921.
Dominium's registered office is located at 03-932 Warsaw,
Dabrowiecka Street 30. Dominium Group's principal activities are
production of food products and beverages and catering
services.
2. Basis of preparation and measurement
(a) Basis of preparation
The Dominium Group Financial Information has been prepared in
accordance with the International Financial Reporting Standards
approved by the EU (" IFRS "). IFRS include standards and
interpretations approved by the International Accounting Standards
Board and the International Financial Reporting Interpretations
Committee. The Dominium Group Financial Information does not
constitute statutory financial statements within the meaning of the
Polish Accounting Act 29 September 1994.
Unless otherwise stated, the Dominium Group Financial
Information is presented in Polish Zloty (" PLN ") which is the
currency of the primary economic environment in which the Dominium
Group operates, and all values are rounded to the nearest thousand
PLN, except where otherwise indicated.
Transactions in foreign currencies are translated into PLN at
the rate of exchange on the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
translated at the exchange ruling at the reporting date.
The Dominium Group Financial Information has been prepared under
the historical cost convention, except for certain financial and
equity instruments that have been measured at fair value.
The Dominium Group Financial Information has been prepared on
the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and the
settlement of liabilities in the normal course of business. The
Dominium Directors have prepared detailed financial projections
covering the period ending 31 December 2022. These consider all
reasonably foreseeable circumstances and include consideration of
trading results, cash flows and the level of facilities that the
Enlarged Group will required on a month-by-month basis. The
financial projections incorporate the expected impact of COVID-19
and synergy savings resulting from the Acquisition.
As recorded in Note 32 "Events after the balance sheet date" to
the Dominium Group Financial Information, Dominium Group's
borrowings which were due to be repaid on 31 December 2020 have
been converted pursuant to Shareholder Loan Acquisition Agreements
to a further unsecured facility issued to Malaccan Holdings in
substitution for the outstanding debt. These new loans have a
maturity date three years from the date of issue.
Based on their enquiries and the information available to them
and considering the other risks and uncertainties set out herein,
the Dominium Directors have a reasonable expectation that Dominium
Group has adequate resources to continue operating for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the Dominium Group Financial
Information.
Until the date of preparation of the Dominium Group Financial
Information, there were no events that were not, and should have
been, included in the accounting records of the reporting period.
At the same time, in the Dominium Group Financial Information there
are no significant events relating to previous years.
(b) Basis of consolidation
The Dominium Group Financial Information comprises the financial
information of Dominium and those subsidiaries listed below:
Share
of share
Consolidation capital Share in
Name of entity HQ Range of activities method % votes %
s.c. Pizza
Dominium
Restaurant
SRL w upad Bucharest,
1. oĆci Romania Catering services Full 100% 100%
--------------- ----------- -------------------- -------------- ---------- ---------
Warsaw, D
Cantina Italia browiecka Management
2. Sp. z o.o. 30 consultancy Full 100% 100%
--------------- ----------- -------------------- -------------- ---------- ---------
In March 2018, the creditors of s.c. Pizza Dominium Restaurant
SRL filed a petition for bankruptcy of the company with the Court
in Romania. The Dominium Group's subsidiaries, s.c Pizza Dominium
Restaurant SRL in bankruptcy and Cantina Italia Sp. z o.o. in
liquidation, are presented as discontinued operations in the
Dominium Group Financial Information for year ended 31 December
2019. On 23 July 2019, the Extraordinary General Meeting of Cantina
Italia Sp. z o.o. decided to dissolve that company, open its
liquidation and accept the liquidation opening balance as at 23
July 2019. The Extraordinary Meeting of Shareholders decided that
the company's liquidator would be the only member of the Management
Board, Tomasz Plebaniak.
The Dominium Group Financial Information includes the financial
information of Dominium and the financial information of its
subsidiaries, prepared each time for the year ended 31 December
2017, 31 December 2018 and 31 December 2019. The historical
financial information of the subsidiaries are prepared for the same
reporting period as Dominium, using consistent accounting
principles, based on uniform accounting principles applied for
transactions and economic events of a similar nature. Adjustments
are made to eliminate any discrepancies in the applied accounting
principles.
All significant balances and transactions between Dominium Group
entities, including unrealised profits from transactions within the
Dominium Group, have been fully eliminated.
Subsidiaries are subject to consolidation in the period from the
date Dominium Group assumed control over them, and cease to be
consolidated from the date control ceases. Control by Dominium
Group takes place when it has, directly or indirectly, more than
half of the votes in a given company, unless it is possible to
prove that such ownership does not constitute control. Control is
also exercised when Dominium Group is able to influence the
financial and operating policy of a given entity.
(c) New standards and interpretations
Standards issued not effective (new standards and
interpretations)
In the Dominium Group Financial Information, the Dominium
Directors did not decide to apply any published standards or
interpretations before their effective date.
The following standards and interpretations have been issued by
the International Accounting Standards Board or the International
Financial Reporting Interpretations Committee and are not yet
effective at the reporting date:
-- Amendment to IFRS 3 "Business Combinations"
The amendment to IFRS 3 "Business Combinations" was published on
22 October 2018 and applies to annual periods beginning on or after
1 January 2020.
The purpose of the amendment was to clarify the definition of a
business and to make it easier to distinguish between acquisitions
of "businesses" and groups of assets for the purpose of settlement
of mergers.
Dominium Group will apply the changed standard from the date
indicated by the EU as the effective date of this amendment in EU
law.
-- Amendments to IAS 1 "Presentation of Financial Statements"
and IAS 8 "Accounting Policies, Changes in Accounting Estimates and
Errors"
Amendments to IAS 1 "Presentation of Financial Statements"and
IAS 8 "Accounting Policies, Changes in Accounting Estimates and
Errors"were published on 31 October 2018 and apply to annual
periods beginning on or after 1 January 2020.
The purpose of the changes was to clarify the definition of
"materiality" and to facilitate its application in practice.
Dominium Group will apply the changed standard from 1 January
2020.
Adopted
IFRS 16 "Leases"
In January 2016, the International Accounting Standards Board
issued IFRS 16 "Leases". The standard establishes the principles
for the recognition, measurement, presentation and disclosure of
leases for both the lessee and lessor. The standard requires all
lease transactions (with terms in excess of 12 months) to be
recognised on the balance sheet as lease assets and lease
liabilities, and to depreciate lease assets separately from
interest on lease liabilities in the income statement. IFRS 16
"Leases" replaces the previous lease standard, IAS 17 "Leases", and
related interpretations. This standard became effective on 1
January 2019. Early adoption is permitted only if Dominium also
applies IFRS 15 "Revenue from Contracts with Customers". The
standard can be applied using either the full retrospective
approach or a modified retrospective approach at the date of
adoption. For the purposes of the Dominium Group Financial
Information, modified retrospective adjustments have been applied
to the financial information for each of the financial years ended
31 December 2017, 31 December 2018 and 31 December 2019.
Balance as Correction resulting Balance as
at from the first adoption at
31 December of IFRS 16 on 1 January
2016 1 January 2017 2017
PLN'000 PLN'000 PLN'000
Right-of-use assets - 45,709 45,709
Tangible fixed assets 24,543 (3,262) 21,281
Other long-term assets 34,292 - 34,292
Total long-term fixed
assets 58,835 42,447 101,282
Current assets and receivables 6,884 - 6,884
TOTAL ASSETS 65,719 42,447 108,166
-------------------------------- ------------- ------------------------- -----------
Equity 31,044 - 31,044
Lease liabilities - 38,353 38,353
Other long-term liabilities 22,325 (870) 21,455
Total long-term liabilities 22,325 37,483 59,808
Lease liabilities 0 7,699 7,699
Other short-term liabilities 12,350 (2,735) 9,615
Total short-term liabilities 12,350 4,964 17,314
Total liabilities 34,675 42,447 77,122
-------------------------------- ------------- ------------------------- -----------
TOTAL EQUITY AND LIABILITIES 65,719 42,447 108,166
-------------------------------- ------------- ------------------------- -----------
Balance as Correction resulting Balance as
at from the first adoption at
31 December of IFRS 16 on 1 1 January
2017 January 2018 2018
PLN'000 PLN'000 PLN'000
Right-of-use assets - 37,768 37,768
Tangible fixed assets 19,999 (2,548) 17,451
Other long-term assets 30,652 - 30,652
Total long-term fixed
assets 50,651 35,220 85,871
Current assets and receivables 5,473 - 5,473
TOTAL ASSETS 56,124 35,220 91,344
-------------------------------- ------------- ------------------------- -----------
Equity 17,069 (770) 16,299
Lease liabilities - 31,200 31,200
Other long-term liabilities 22,503 (1,601) 20,902
Total long-term liabilities 22,503 29,599 52,102
Lease liabilities - 7,153 7,153
Other short-term liabilities 16,552 (762) 15,790
Total short-term liabilities 16,552 6,391 22,943
Total liabilities 39,055 35,990 75,045
-------------------------------- ------------- ------------------------- -----------
TOTAL EQUITY AND LIABILITIES 56,124 35,220 91,344
-------------------------------- ------------- ------------------------- -----------
Balance as Correction resulting Balance as
at from the first adoption at
31 December of IFRS 16 on 1 1 January
2018 January 2019 2019
PLN'000 PLN'000 PLN'000
Right-of-use assets - 31,002 31,002
Tangible fixed assets 15,093 (1,797) 13,296
Other long-term assets 28,480 28,480
Total long-term fixed
assets 43,573 29,205 72,778
Current assets and receivables 3,923 - 3,923
TOTAL ASSETS 47,496 29,205 76,701
-------------------------------- ------------- ------------------------- -----------
Equity 5,055 (2,338) 2,717
Lease liabilities - 25,479 25,479
Other long-term liabilities 25,135 (976) 24,159
Total long-term liabilities 25,135 24,503 49,638
Lease liabilities 7,632 7,632
Other short-term liabilities 17,306 (592) 16,714
Total short-term liabilities 17,306 7,040 24,346
Total liabilities 42,441 31,543 73,984
-------------------------------- ------------- ------------------------- -----------
TOTAL EQUITY AND LIABILITIES 47,496 29,205 76,701
-------------------------------- ------------- ------------------------- -----------
In line with IFRS 16 "Leases", the statement of financial
position recognises right-of-use assets and lease liabilities. The
exceptions are short-term leases and leases of low-value assets,
which Dominium Group also does not recognise in the statement of
financial position.
Dominium Group uses the following practical solutions for leases
previously classified as operating leases in accordance with IAS
17"Leases":
-- applies a single discount rate to a portfolio of leases with
relatively similar characteristics;
-- does not apply the requirements regarding the recognition of
lease assets and liabilities to leases whose lease period ends
after 12 months from the date of first application (these leases
are classified as short-term leases, i.e. their cost is recognised
in the financial result for the period and additionally disclosed
in the annual financial statements); and
-- does not recognise initial direct costs in the measurement of
the right-of-use asset on the date of initial application.
The above selection of practical simplifications was
consistently applied to all leasing contracts.
Dominium Group, as a lessee, in accordance with IFRS 16"Leases",
classifies as lease contracts all contracts that transfer the right
to control the use of an identified asset for a given period in
exchange for remuneration. As part of the permissible
simplifications, the Dominium Directors do not apply accounting
principles for leasing with respect to:
-- short-term leasing contracts; and
-- leases for which the underlying asset has a low value (" low-value leases ").
Fees related to the above. leases are recognised linearly as an
expense in profit or loss.
Low-value leases are mainly leases of assets such as scooters,
computers, catering equipment and restaurant equipment. For
low-value leases, the Dominium Directors select the treatment
method separately for each contract, i.e. it does not define the
global level below which the lease is considered low-value
lease.
Short-term leases are leases with a duration of up to 12
months.
For each lease contract, the Dominium Directors determine the
lease period as an irrevocable lease period with periods in which
there is an option:
-- an extension of the lease if the lessee is reasonably certain to exercise that option, and
-- to terminate the lease if it is reasonably certain that the
lessee will not exercise that option.
Dominium Group is a lessee of the following groups of
assets:
-- rental of premises, including: catering, office and warehouse premises;
-- devices and machines, including catering and office facilities;
-- motor vehicles, including: cars and scooters; and
-- restaurant equipment, including furniture.
Each of the leasing contracts is negotiated individually and
includes a wide range of conditions.
The leasing contracts concluded by Dominium Group do not contain
any covenants, however the assets related to the right-of-use asset
cannot be used as loan security.
In the opinion of the Dominium Directors, Dominium Group is not
exposed to a significant risk of future cash outflows resulting
from variable lease payments, the guaranteed residual value or not
yet started leases. Due to the nature of the contracts for the
lease of catering space (contracts for an indefinite period), in
the event of a change in assumptions regarding the expected lease
term, the liability will be appropriately revalued, and future
planned cash outflows will increase.
The Dominium Directors measure the Dominium Group's right-of-use
assets on the lease commencement date at the cost, which
includes:
-- the amount of the initial measurement of the lease liability;
-- lease payments paid on or before the commencement date, less
any lease incentives received; and
-- initial direct costs incurred by the lessee and an estimate
of the costs to be incurred by the lessee in disassembling and
removing the underlying asset, renovating the site where it was
located, or restoring the underlying asset to a condition required
by the lease terms.
After the lease commencement date, the Dominium Directors
measure the Dominium Group's right-of-use asset using the cost
model, i.e. the cost less total depreciation (amortisation) and
total impairment losses and the lease liability adjusted for
revaluation. Depreciation of a right-of-use asset is made using the
straight-line method over the lease period.
The right-of-use assets are presented in a separate line item in
the statement of financial position. The Dominium Directors group
these components according to the asset base classes. The main base
classes of assets used under the right of usufruct are: rental of
catering, office and warehouse space, equipment and machinery,
motor vehicles and equipment.
Cash outflow from leases, excluding short-term leases and
low-value leases, is presented in the net amount in the statement
of cash flows under "Interest paid (interest portion of
instalment)" and "Repayment of lease liabilities (principal portion
of instalment)".
The Dominium Directors measure the Dominium Group's lease
liabilities on the lease commencement date at the present value of
the lease payments outstanding on that date. Leasing fees are
discounted using the leasing interest rate. If the Dominium
Directors are unable to readily determine the lease interest rate,
they use the Dominium Group's own marginal rate of interest. The
marginal interest rate of Dominium Group is determined as the
interest rate that it would have to pay to borrow, for a similar
period and with similar security, the funds necessary to purchase
an asset with a value similar to the asset used under a lease
agreement.
For the purposes of the initial measurement of the lease
liability, the Dominium Directors determine the value of the
Dominium Group's lease payments, including in particular:
-- fixed lease payments and variable fees that depend on the index or rate;
-- the amounts that are expected to be paid by Dominium Group
within the guaranteed marginal value;
-- the exercise price of the call option, if it can be assumed
with sufficient certainty that Dominium Group will exercise this
option; and
-- financial penalties for lease termination, if the lease terms
provide that Dominium Group may use the lease termination
option.
After the lease commencement date, the Dominium Directors
measure the Dominium Group's lease liability by:
-- charging interest on the liability;
-- a decrease in the carrying amount by the paid lease payments; and
-- updating the measurement of the liability's carrying amount
to reflect any reassessment or modification of the lease.
Thus, each lease payment is allocated between the liability
(presented in a separate item in the statement of financial
position broken down into long-term and short-term) and the cost of
interest on the lease (recognised in the statement of comprehensive
income within "Finance costs").
3. Significant accounting policies
The preparation of the Dominium Group Financial Information in
compliance with IFRS requires the Dominium Directors to exercise
judgment in applying Dominium's accounting policies. The areas
involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the Dominium Group
Financial Information are disclosed in Note 4 "Significant
judgements, estimates and assumptions" to the Dominium Group
Financial Information.
(a) Foreign currency transactions and translation
Transactions expressed in currencies other than PLN are
converted into PLN using the exchange rate applicable on the
transaction date or the exchange rate specified in the "forward"
type contract accompanying a given transaction.
At the end of the reporting period, monetary assets and
liabilities expressed in currencies other than PLN are converted
into PLN using the average exchange rate established for a given
currency by the National Bank of Poland at the end of the reporting
period.
Non-monetary assets and liabilities recognised at historical
cost expressed in a foreign currency are disclosed at the
historical rate on the transaction date.
The following exchange rates were adopted for the needs of the
balance sheet valuation:
Year ended Year ended Year ended
Exchange rate for the last day 31 December 31 December 31 December
of the reporting period 2017 2018 2019
EUR 4.1709 4.3000 4.2585
RON 0.8953 0.9229 0.8901
Average exchange rate*
EUR 4.2447 4.2669 4.3018
RON 0.9282 0.9165 0.9053
* calculated as the mean of the rates applicable on the last day
of each month in a reporting period
(b) Property, plant and equipment
Tangible fixed assets are stated at purchase price or production
cost less depreciation and any impairment write-offs.
Costs incurred after the date of putting the fixed asset into
use, such as maintenance and repair costs, are charged to the
Statement of Comprehensive Income when incurred.
Items of property, plant and equipment, at the time of their
purchase, are divided into components that are items of significant
value, to which a separate useful life can be assigned.
Significant spare and service parts recognised as tangible fixed
assets are depreciated in accordance with the expected useful life,
but not longer than the useful life of the fixed assets they
service.
Property, plant and equipment are generally depreciated on a
straight-line basis over their estimated useful lives:
Buildings and leasehold improvements 40 years
Plant and equipment 5- 7 years
Motor vehicles 5 years
Office equipment 5 years
Leasehold improvements 10 years
If, while preparing the Dominium Group Financial Information,
there are circumstances which indicate that the carrying amount of
property, plant & equipment may not be recoverable, these
assets are reviewed for impairment. If there are premises
indicating that impairment may have occurred and the carrying
amount exceeds the estimated recoverable amount, then the value of
these assets or cash-generating units to which these assets belong
is reduced to the level of the recoverable amount. The recoverable
amount corresponds to the higher of the following two values: fair
value less selling costs or value-in-use. When determining
value-in-use, the estimated future cash flows are discounted to the
present value using a gross discount rate that reflects current
market assessments of the time value of money and the risk
associated with a given asset. In the case of an asset that does
not generate cash inflows in a significantly independent manner,
the recoverable amount is determined for the cash-generating unit
to which the asset belongs. Impairment losses are recognised in the
Statement of Comprehensive Income under other "Operating
costs".
A given item of property, plant and equipment may be removed
from the Statement of Financial Position after it is sold or when
no economic benefits are expected from further use of such asset.
Any profits or losses resulting from derecognition of a given asset
from the Statement of Financial Position (calculated as the
difference between any net proceeds from sale and the carrying
amount of a given item) are recognised in the Statement of
Comprehensive Income in the period in which such removal was
made.
Property, plant and equipment under construction or assembly and
are recognised at purchase price or manufacturing cost. Property,
plant and equipment under construction are not depreciated until
the construction is completed and the fixed asset is put into
use.
The residual value, useful life and depreciation method of
assets are verified and, if necessary, adjusted at the end of each
financial year.
(c) Research and development expenditure
Research costs are charged to the Statement of Comprehensive
Income as incurred. Outlays for development works performed under a
given project are capitalised, if it can be assumed that they will
be recovered in the future. After the initial recognition of
expenditure on development works, the historical cost model is
applied, which requires that the assets are recognised at cost less
accumulated amortisation and accumulated impairment losses. Any
development costs capitalised are amortised over the expected
period of obtaining revenues from sales from a given project.
Development costs are assessed for impairment annually if the
asset has not yet been put into use, or more frequently when an
indication of impairment appears during the reporting period
indicating that their carrying amount may not be recoverable.
(d) Intangible assets
Intangible assets acquired in a separate transaction are
initially measured at the purchase price or production cost. The
purchase price of intangible assets acquired in a business
combination is equal to their fair value as at the combination
date. After initial recognition, intangible assets are recognised
at purchase price or production cost less amortisation and
impairment losses. Outlays on internally generated intangible
assets, except for activated outlays incurred for development
works, are not activated and are recognised in the costs of the
period in which they were incurred.
The Dominium Directors determine whether the useful life of the
Dominium Group's intangible assets is limited or indefinite.
Intangible assets with a limited useful life are amortised over
their useful lives and tested for impairment each time there are
premises indicating their impairment. The period and method of
amortisation of intangible assets with a limited useful life are
verified at least at the end of each financial year. Changes in the
expected useful life or the expected pattern of consumption of
economic benefits from a given asset are recognised by changing the
amortisation period or method, respectively, and treated as changes
in estimated values. The amortisation charge for intangible assets
with a limited useful life is recognised in the statement of
comprehensive income in the category that corresponds to the
function of the given intangible asset.
Intangible assets with an indefinite useful life and those that
are not used are verified annually for impairment in relation to
individual assets or at the level of the cash generating unit. In
the case of other intangible assets, it is assessed each year
whether there are any impairment indicators. Useful lives are also
verified on an annual basis and, if necessary, adjusted with effect
from the beginning of the financial year.
Intangible assets are generally amortised on a straight-line
basis over their estimated useful lives:
Goodwill not amortised
Trademark 10 years
Software 5 years
Amortisation of the trademark is charged to "Cost of sales" in
the Statement of Comprehensive Income. Amortisation of software is
charged to "Cost of sales", "Distribution costs" or "Administrative
expenses" in Statement of Comprehensive Income.
(e) Goodwill
Goodwill on the acquisition of a business entity is initially
recognised at the purchase price being the excess of the costs of
the business combination over the acquirer's share of the net fair
value of identifiable assets, liabilities and contingent
liabilities. Following the initial recognition, goodwill is stated
at cost less any accumulated impairment losses. The impairment test
is carried out once a year. Goodwill is not amortised.
As at the acquisition date, any goodwill acquired is allocated
to each of the cash-generating units that may benefit from the
combination. Impairment is determined by estimating the recoverable
value of the cash-generating unit to which the given goodwill
relates. If the recoverable amount of the cash-generating unit is
lower than the carrying amount, an impairment loss is recognised.
If goodwill is part of a cash-generating unit and part of the
activities within this unit is sold, goodwill related to the sold
activity is included in its carrying amount when determining the
profit or loss on the sale of such activities. In such
circumstances, the goodwill sold is determined based on the
relative value of the business sold and the value of the part of
the cash-generating unit retained.
(f) Financial assets
Classification and valuation of financial assets
The Dominium Directors classify the Dominium Group's financial
assets into the following categories:
-- financial assets measured at amortised cost;
-- financial assets at fair value through profit or loss; and
-- financial assets measured at fair value through other comprehensive income.
The above classification is made at the time of initial
recognition. Belonging to a given category is determined by:
-- business model for managing a given asset portfolio; and
-- assessment of the contractual terms of a given financial asset.
(g) Financial assets measured at amortised cost
A financial asset is classified in the "financial assets
measured at amortised cost" category if both of the following
conditions are met:
-- it is held in accordance with a business model aimed at
holding financial assets to collect the contractual cash flows;
and
-- the terms of its contract give rise to cash flows at
specified times that are only payments of principal and interest on
the principal amount outstanding.
"Financial assets measured at amortised cost" , excluding trade
receivables that do not have a significant financing component are
initially recognised at fair value plus directly attributable
transaction costs. Trade receivables that do not have a significant
financing component are initially measured at fair value
(transaction price). Subsequent valuation is carried out at
amortised cost, using the effective interest rate method, less
impairment losses.
Interest on financial assets classified as "financial assets
measured at amortised cost", calculated using the effective
interest method, is recognised in profit or loss of the current
period in financial income.
The category "financial assets measured at amortised cost"
includes:
-- cash and cash equivalents;
-- trade receivables; and
-- other receivables.
(h) Impairment of financial assets
At each balance sheet date, Dominium Group recognises an
impairment charge (allowance for expected credit losses) on
financial assets. If the credit risk associated with a given
financial instrument has significantly increased since its initial
recognition, the Dominium Directors measure the allowance for
expected credit losses on the Dominium Group's financial instrument
at an amount equal to lifetime expected credit losses. If, as at
the reporting date, the credit risk related to a financial
instrument has not increased significantly since the initial
recognition, the Dominium Directors measure the allowance for
expected credit losses on the Dominium Group's financial instrument
at the amount equal to the 12-month expected credit losses.
In the case of financial assets measured at amortised cost,
except for trade receivables, the Dominium Directors measure a loss
allowance on the Dominium Group's financial instruments at an
amount equal to the 12-month expected credit losses, due to the low
credit risk associated with these financial instruments. The
Dominium Directors recognise that Dominium Group's cash and cash
equivalents, other receivables and other financial assets measured
at amortised cost have low credit risk.
(i) Impairment of non-financial assets
At each reporting date, the Dominium Directors assess whether
indications exist that an asset may be impaired. If any such
indication exists, the Dominium Directors formally estimate the
recoverable amount. If the carrying amount of a given asset or
cash-generating unit exceeds its recoverable amount, it is
considered impaired and a write-down is made to the recoverable
amount. The recoverable amount is one of two values, whichever is
higher: the fair value less costs to sell or the value in use of a
given asset or cash-generating unit.
(j) Taxation
Deferred taxation
Due to temporary differences between the value of assets and
liabilities shown in the accounting books and their tax value and
tax loss possible to be deducted in future years, Dominium Group
creates a provision and establishes a deferred tax asset.
The amount of the deferred tax liability and assets is
determined taking into account the income tax rates applicable in
the year in which the tax obligation arises.
Income taxation
Current income tax assets and liabilities for the years ended 31
December 2019, 31 December 2018 and 31 December 2017 are measured
at the amount to be recovered from, or paid to, the taxation
authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted at the
reporting date in the jurisdictions where Dominium Group operates
and generates taxable income.
(k) Employee benefits
Long-term benefits
Long-service awards and retirement benefits
Dominium Group is not required to pay jubilee awards and
therefore does not create a provision for long-service awards.
Awards or benefits related to the length of service are paid, but
the fact of awarding them and the form and amount are
discretionary.
Dominium Group pays retirement benefits in accordance with the
Polish Labour Code. Due to the high rotation of employment and the
amount of the possible provision for retirement gratuities (single
salary), which would not have a significant impact on the financial
result, Dominium Group does not create a provision for retirement
gratuities.
Termination of employment benefit
In the event of the termination of employment, employees of the
Dominium Group 's companies are entitled to benefits provided for
by the labour law in force in Poland, including the equivalent of
unused vacation leave and compensation for the obligation to
refrain from conducting business in competition with the
employer.
The amount of the provision for the equivalent unused leave is
updated as at the last day of the financial year and the last day
of the half-year of a given financial year.
Provisions for other benefits related to termination of
employment are created upon termination of employment.
(l) Finance income and expenses
Financing expenses comprise interest payable, interest on lease
liabilities recognised in profit or loss using the effective
interest method, unwinding of the discount on provisions, and net
foreign exchange losses that are recognised in the Statement of
Comprehensive Income.
Financing income comprise interest receivable on cash deposits
and net foreign exchange gains.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method.
Foreign currency gains and losses are reported on a net
basis.
(m) Cash and cash equivalents
Cash and short-term deposits disclosed in the statement of
financial position include cash at bank and in hand, as well as
short-term deposits with an original maturity of three months or
less.
The balance of cash and cash equivalents disclosed in the
consolidated cash flow statement consists of the above-mentioned
cash and cash equivalents.
(n) Trade and other receivables
Trade and other receivables are recognised and carried at
amounts initially invoiced, taking into account any allowances for
doubtful receivables. The allowance for doubtful receivables is
estimated when the recovery of the full amount of the receivable,
in accordance with the original terms, is no longer probable.
The probability of default is considered to be, among others,
failure to pay the amount due in a period exceeding 365 days beyond
the specified payment date.
(o) Inventories
Inventories are valued at the lower of purchase price or
production costs and net realisable value. Inventories comprise
food and packaging goods for resale. Dominium Group applies a
first-in-first-out basis of inventory valuation.
(p) Supplier incentives
Dominium Group receives supplier incentives in the form of cash
payments or allowances prior to merchandise being sold. Dominium
Group has agreements in place with each vendor setting forth the
specific conditions for each allowance or payment.
Dominium Group defers the allowance or payment over the life of
the vendor contract and recognises these amounts as a reduction to
the cost of merchandise in the Statement of Comprehensive
Income.
(q) Fixed assets held for sale
Fixed assets (or groups for sale) are classified as held for
sale if their carrying amount will be recovered through sales
transactions rather than continuing use, provided that they are
available for immediate sale in their present condition, subject to
customary conditions used in the sale of these assets (or groups
for sale) and their sale is highly probable.
Immediately prior to the initial classification of an asset (or
a group for sale) as held-for-sale, these assets are measured, i.e.
their carrying amount is determined in accordance with the
provisions of the relevant standards. Tangible fixed assets and
intangible assets are subject to depreciation until the date of
reclassification, and in the event of any indications of possible
impairment, an impairment test is performed and, consequently, an
impairment loss is recognised in accordance with IAS 36 "Impairment
of Assets".
Fixed assets (or groups for sale), the value of which has been
determined as above, are subject to reclassification into assets
held-for-sale. At the time of reclassification, these assets are
measured at the lower of the two values: the carrying amount or the
fair value less costs to sell. The difference from the measurement
to fair value is recognised in "Other operating expenses" in the
Statement of Comprehensive Income. Upon subsequent measurement, any
reversal of the fair value is recognised in other "Operating
income" in the Statement of Comprehensive Income.
When an entity no longer meets the criteria for an asset to be
classified as held-for-sale, the asset that is recognised in the
Statement of Financial Position item from which it was previously
reclassified is measured at the lower of:
-- the carrying amount on the day before the asset was
classified as held-for-sale, adjusted for depreciation or
revaluation, that would have been recognised had the asset not been
classified as held for sale; or
-- the recoverable amount as at the date of the decision not to sell it.
(r) Provisions
Provisions are made when Dominium Group has an existing
obligation (legal or constructive) resulting from past events, and
when it is probable that the fulfilment of this obligation will
result in an outflow of economic benefits and the amount of this
obligation can be reliably estimated.
(s) Contingent liabilities
Contingent liabilities are possible obligations whose existence
depends on the outcome of uncertain future events or present
obligations where the outflow of resources is uncertain or cannot
be measured reliably. Contingent liabilities are not recognised in
the financial statements but are disclosed unless they are
remote.
(t) Segmental reporting
An operating segment is a component of an entity:
-- that engages in business activities from which it may earn
income and incur costs (including income and expenses related to
transactions with other components of the same entity);
-- whose operating results are regularly reviewed by the
entity's chief operating decision maker and uses those results to
decide on the allocation of resources to the segment and when
assessing the segment's performance; and,
-- for which separate financial information is available.
The Dominium Group conducts gastronomic activity within one
operating segment one operating segment in two locations, Poland
and Romania. Due to the bankruptcy of Dominium Romania in 2018 and
the liquidation of the subsidiary, Cantina Italia Sp. z o.o., the
activities of Dominium Romania have been presented as a
discontinued operation. Going forward, the only operating segment
is the activity in Poland.
4. Uncertainty of estimates
The preparation of the Dominium Group Financial Information
requires Dominium Directors to make estimates, as much of the
information contained in the Dominium Group Financial Information
cannot be measured precisely. The Dominium Directors verify they
have adopted estimates based on changes in the factors taken into
account in their making, new information or past experiences.
Therefore, the estimates made as at 31 December 2019, 31 December
2018 and 31 December 2017 may be changed in the future.
5. Significant accounting judgements, estimates and assumptions
If a given transaction is not regulated by any standard or
interpretation, the Dominium Directors, guided by a subjective
judgment, determines and applies accounting policies that will
ensure that the Dominium Group Financial Information will contain
correct and reliable information and will:
-- correctly, clearly and fairly present the property and
financial situation of Dominium Group, the results of its
activities and cash flows;
-- reflect the economic content of the transaction;
-- be objective;
-- be prepared in accordance with the principle of prudent valuation; and
-- be complete in all material respects.
(a) Valuation of intangible assets
Intangible assets acquired in a separate transaction are
initially measured at the purchase price or production cost. The
purchase price of intangible assets acquired in a business
combination is equal to their fair value as at the combination
date. After initial recognition, intangible assets are recognised
at purchase price or production cost less amortisation and
impairment losses. Outlays on internally generated intangible
assets, except for activated outlays incurred for development
works, are not activated and are recognised in the costs of the
period in which they were incurred.
The Dominium Directors determine whether the useful life of
Dominium Group's intangible assets is limited or indefinite.
Intangible assets with a limited useful life are depreciated
throughout their useful life and tested for impairment each time
there are premises indicating their impairment. The period and
method of amortisation of intangible assets with a limited useful
life are verified at least at the end of each financial year.
Changes in the expected useful life or the expected pattern of
consumption of economic benefits from a given asset are recognised
by changing the amortisation period or method, respectively, and
treated as changes in estimated values. The amortisation charge for
intangible assets with a limited useful life is recognised in the
profit and loss account in the category that corresponds to the
function of the given intangible asset.
Intangible assets with an indefinite useful life and those that
are not used are verified annually for impairment in relation to
individual assets or at the level of the cash generating unit. In
the case of other intangible assets, it is assessed each year
whether there are any premises that may prove their impairment.
Useful lives are also verified on an annual basis and, if
necessary, adjusted with effect from the beginning of the financial
year.
For further details regarding intangible assets, see Note 12
"Intangible Assets" to the Dominium Group Financial
Information.
(b) Tax settlements
For further details regarding tax settlements, see Note 26 "Tax
settlement" to the Dominium Group Financial Information.
6. Subsidiaries
Details of Dominium's subsidiaries as at 31 December 2019 are as
follows:
Company Country of Registered Office Principal Percentage
Registration Activity of ordinary
or Incorporation shares held
by Company
Cantina Italia Management
Sp. Z o.o Poland Warsaw, Poland consultancy 100%
------------------- -------------------- -------------- -------------
Pizza Dominium
Restaurant SRL Romania Bucharest, Romania Restaurants 100%
------------------- -------------------- -------------- -------------
7. Revenue
Revenues were generated in Poland and Romania (see Note 30
"Discontinued operations" to the Dominium Group Financial
Information). The following table reconciles Dominium Group's
revenue for the periods presented:
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2018
PLN'000 PLN'000 PLN'000
--------------- ------------- ------------- -------------
Poland 74,174 82,102 84,937
Total revenue 74,174 82,102 84,937
--------------- ------------- ------------- -------------
8. Expenses by nature
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
---------------------------------------- ------------- ------------- -------------
Staff costs including Dominium
Directors, net of amounts capitalised 22,572 26,644 27,291
Materials and consumables 23,733 24,555 24,062
Depreciation and amortisation 14,376 14,238 15,202
External services 14,611 11,909 11,205
Other administrative expenses 7,732 7,003 5,762
---------------------------------------- ------------- ------------- -------------
Depreciation 4,138 3,834 4,722
Amortisation 2,123 2,123 2,141
Depreciation of the right-of-use
assets 8,115 8,281 8,339
---------------------------------------- ------------- ------------- -------------
Total depreciation and amortisation 14,376 14,238 15,202
---------------------------------------- ------------- ------------- -------------
Staff costs
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
Aggregate remuneration (including PLN'000 PLN'000 PLN'000
Dominium Directors):
Wages and salaries 16,351 19,409 19,993
Payroll taxes 6,221 7,235 7,298
---------------------------------------- ------------- ------------- -------------
Total employees and benefits expense 22,572 26,644 27,291
---------------------------------------- ------------- ------------- -------------
The average monthly number of employees
was as follows:
Employees and Dominium Directors 257 276 288
9. Other income
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
----------------------------------- ------------- ------------- -------------
Profit on disposal of non-current
assets 106 -
Compensation received 165 200 189
Reversal of an impairment loss - 491 -
Other 9 87 301
----------------------------------- ------------- ------------- -------------
Total other income 174 884 490
----------------------------------- ------------- ------------- -------------
10. Other operating costs
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
-------------------------------------- ------------ ------------ ------------
Loss on disposal of non-current
assets - - 35
Provisions for VAT liability (Note
26 "Tax settlement") 2,830 2,933 104
Impairment of assets and liquidation
costs 2,893 286 774
Taxes paid 1,654 - -
Compensation paid and other operating
costs 601 411 267
Total 7,978 3,630 1,180
-------------------------------------- ------------ ------------ ------------
11. Taxation
The main components of the tax burden for the period ended 31
December 2018, 31 December 2018 and 31 December 2017 are as
follows:
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Current income tax expense
Polish corporate taxes - - -
Romanian corporate income
taxes (Discontinued- Note
30 "Discontinued operations") 179 10 -
------------------------------------- ------------- ------------- -------------
Total current income tax
expense 179 10 -
------------------------------------- ------------- ------------- -------------
Deferred income tax expense
Poland 1,353 (14) 111
Romania (Discontinued- Note - - -
30"Discontinued operations")
------------------------------------- ------------- ------------- -------------
Total deferred income tax
expense 1,353 (14) 111
------------------------------------- ------------- ------------- -------------
Total income tax expense:
------------------------------------- ------------- ------------- -------------
Continuing operations 1,353 (14) 111
------------------------------------- ------------- ------------- -------------
Discontinued operations
(Note 30"Discontinued operations") 179 10 -
------------------------------------- ------------- ------------- -------------
The components of the net deferred income tax asset/liability
included in non-current liabilities are as follows:
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Deferred tax assets
Allowance for doubtful accounts 68 56 63
Trade liabilities 177 216 92
--------------------------------- ------------- ------------- -------------
Total deferred tax assets 245 272 155
--------------------------------- ------------- ------------- -------------
Deferred tax liabilities
Fixed asset timing differences 39 52 47
--------------------------------- ------------- ------------- -------------
Total deferred tax liabilities 39 52 47
--------------------------------- ------------- ------------- -------------
Net deferred tax liability 206 220 108
--------------------------------- ------------- ------------- -------------
12. Intangible assets
The following table summarises Dominium Group's intangibles for
each of the periods presented:
Goodwill Trademark Software Total
Cost PLN'000 PLN'000 PLN'000 PLN'000
As at 1 January 2017 23,642 22,963 2,040 48,645
Additions - - 4 4
Disposals - - (420) (420)
As at 31 December 2017 23,642 22,963 1,624 48,229
Additions - - 86 86
As at 31 December 2018 23,642 22,963 1,710 48,315
Additions - - 79 79
------------------------- --------- ---------- --------- --------
As at 31 December 2019 23,642 22,963 1,789 48,394
------------------------- --------- ---------- --------- --------
Amortisation/impairment
As at 1 January 2017 7,881 6,360 2,040 16,281
Charge for the year - 2,120 3 2,123
Disposals - - (420) (420)
As at 31 December 2017 7,881 8,480 1,623 17,984
Charge for the year - 2,120 3 2,123
As at 31 December 2018 7,881 10,600 1,626 20,107
Charge for the year - 2,119 22 2,141
------------------------- --------- ---------- --------- --------
As at 31 December 2019 7,881 12,719 1,648 22,248
------------------------- --------- ---------- --------- --------
Net book value
As at 31 December 2017 15,761 14,483 1 30,245
As at 31 December 2018 15,761 12,363 84 28,208
------------------------- --------- ---------- --------- --------
As at 31 December 2019 15,761 10,244 141 26,146
------------------------- --------- ---------- --------- --------
The main items of intangible assets are trademarks and
goodwill.
On 11 March 2008, an organised part of the Dominium Tomasz
Plebaniak enterprise was transferred to Dominium. This transaction
was settled in accordance with the principles of the Polish
Accounting Act and as a result Dominium identified positive
goodwill amounting to PLN 23,642,000. As at the date of transition
to IFRS, Dominium used the exemption from IFRS 1 "First-time
Adoption of International Financial Reporting Standards" and did
not restate the accounting for this transaction.
As the goodwill was created in an in-kind contribution of the
organised part of the enterprise, which is continues to be the main
part of the Dominium Group's operating activity, the goodwill was
allocated to the cash-generating unit constituting the geographical
segment "Poland", which corresponds to the lowest level in Dominium
Group at which goodwill is monitored internal management needs.
The test was performed by comparing the carrying amount of the
assets, including goodwill and trademarks, with its recoverable
amount determined as at each of 31 December 2017, 31 December 2018
and 31 December 2019 as its value in use.
Key Dominium Directors' assumptions on the basis of which the
cash flow projections were developed for the period covered by the
most recent projections:
-- an increase in the casual dining food consumption market, and
hence Dominium Group's sales volume by 13% in 2021, and by 4.2% in
2022-2024. In 2020, the Dominium Directors assume a decrease in
sales by 11.6% related to trade restrictions caused by the
announced pandemic. For the year ended 31 December 2018, revenue
increase in 2019 by 13% compared to the previous year due to
planned opening of new premises and undertaking marketing
activities together with an increase in the consumption of casual
dining dishes, and thus in volume Dominium Group's sales, by 1% in
the years 2020 - 2022. For the year ended 31 December 2017, an
increase in the consumption market for casual dining, and hence the
volume of food distribution, by 1% in 2018-2021;
-- an average increase in nominal prices of products sold by
Dominium Group by 2% annually (2018: 2% annually; 2017: 3.2%
annually).
-- operating costs determined as a fixed percentage of planned
revenues, calculated on the basis of historical data and budgeted
changes in their structure.
The period for which, for the purposes of the test, the Dominium
Directors have developed cash flow projections based on approved
financial projections is four years.
The growth rate used to extrapolate the cash flow projections
beyond the period covered by the most recent projections is 2%
(2018: 1.5%; 2017: 2.5%). The applied growth rate does not exceed
the average long-term growth rate for the industry in which
Dominium Group operates.
The discount rate used in the cash flow projections was 11.9%
(2018: 11.9%; 2017: 11%) and corresponds to the total gross cost of
the most expensive financing used by Dominium Group.
The prepared projections consider the market situation caused by
the COVID-19 pandemic and its impact on the financial situation of
the Dominium Group.
In the opinion of the Dominium Directors, there are no probable
changes in the key assumptions used to measure the recoverable
amount of the unit, which could cause the carrying amount of this
unit to exceed its recoverable value. The impairment test performed
did not show any impairment in each of the years.
13. Property, plant and equipment
Other
property, Assets
Technical plant Leasehold under
equipment Vehicles and equipment improvements construction Total
Cost PLN'000 PLN'000 PLN'000 PLN'000 PLN'000 PLN'000
As at 1 January
2017 4,370 173 4,507 35,557 67 44,674
Additions 199 20 476 1,114 35 1,844
Disposals (874) (12) (627) (262) - (1,775)
Reclassification - - - 67 (67) -
As at 31 December
2017 3,695 181 4,356 36,476 35 44,743
Additions 127 10 353 662 97 1,249
Disposals (147) (47) (39) (6,357) - (6,590)
Reclassification - - - 35 (35) -
Foreign exchange
translation 7 2 6 82 - 97
As at 31 December
2018 3,682 146 4,676 30,898 97 39,499
Additions 170 10 420 270 40 910
Disposals (180) (85) (252) (1,914) - (2,431)
Reclassification - - - 97 (97) -
As at 31 December
2019 3,672 71 4,844 29,351 40 37,978
--------------------- ----------- --------- --------------- -------------- -------------- --------
Depreciation
As at 1 January
2017 3,713 82 3,560 16,038 - 23,393
Charge for the
year 393 30 565 3,150 - 4,138
Disposals (891) (12) (600) (152) - (1,655)
As at 31 December
2017 3,215 100 3,525 19,036 - 25,876
Charge for the
year 277 41 608 2,908 - 3,834
Disposals (119) (31) (27) (3,506) - (3,683)
Foreign exchange
translation 6 1 2 44 - 53
As at 31 December
2018 3,379 111 4,108 18,482 - 26,080
Charge for the
year 276 25 554 3,867 - 4,722
Disposals (176) (73) (110) (1,162) - (1,521)
As at 31 December
2019 3,479 63 4,552 21,187 - 29,281
--------------------- ----------- --------- --------------- -------------- -------------- --------
Impairment
As at 1 January
2017 - - - - - -
Impairment charge 28 24 133 1,231 - 1,416
As at 31 December
2017 28 24 133 1,231 - 1,416
Impairment reversal (25) (13) (30) (1,268) - (1,336)
Foreign exchange
translation 1 1 4 37 - 43
As at 31 December
2018 4 12 107 - - 123
Impairment reversal (4) (12) (107) - - (123)
As at 31 December
2019 - - - - - -
--------------------- ----------- --------- --------------- -------------- -------------- --------
Net book value
As at 31 December
2017 452 57 698 16,209 35 17,451
--------------------- ----------- --------- --------------- -------------- -------------- --------
As at 31 December
2018 299 23 461 12,416 97 13,296
--------------------- ----------- --------- --------------- -------------- -------------- --------
As at 31 December
2019 193 8 292 8,164 40 8,697
--------------------- ----------- --------- --------------- -------------- -------------- --------
An impairment reversal has been recognised as Dominium Group has
been able to realise more on disposal of the property, plant and
equipment assets impaired than previously expected. Originally the
impairment was shown at a Dominium Group level in the year ended 31
December 2017, the impairment was adjusted following finalisation
of the impairment and disposal of assets in Dominium Romania
14. Inventory
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Materials 1,035 880 1,054
----------- ------------- ------------- -------------
TOTAL 1,035 880 1,054
----------- ------------- ------------- -------------
No inventory category was used as security for loans or
borrowings in the years ended 31 December 2019, 31 December 2018
and 31 December 2017. As at 31 December 2019, 31 December 2018 and
31 December 2017 there were no inventories carried at net selling
price.
15. Trade and other receivables
The majority of trade receivables are current and the Dominium
Directors believe these receivables are collectible. The Dominium
Directors consistently assess the collectability of these
receivables. As at 31 December 2019, the Dominium Directors
considered a portion of these receivables uncollectable and
recorded a provision in the amount of PLN 704,000 (2018: PLN
704,000, 2017: PLN 1,178,000).
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Non-current trade receivables
Other financial receivables 162 - -
------------------------------------- ------------- ------------- -------------
Total non-current trade receivables 162 - -
------------------------------------- ------------- ------------- -------------
Current trade receivables
Trade receivables 1,708 1,939 1,835
Guarantee deposits 219 220 344
Other financial receivables 29 54 80
Receivables from taxes, social
and health insurance and other
benefits 836 18 16
Prepayments 1,103 764 720
Less provision (1,178) (704) (704)
Total current trade receivables 2,717 2,291 2,291
------------------------------------- ------------- ------------- -------------
16. Cash and cash equivalents
The balance of cash and cash equivalents presented in the
Statement of Financial Position and the Statement of Cash Flows
consisted of the following items as at the reporting date:
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
--------------------------------- ------------- ------------- -------------
Cash at bank 1,232 521 755
Cash in hand 487 229 351
--------------------------------- ------------- ------------- -------------
Total cash and cash equivalents 1,719 750 1,106
--------------------------------- ------------- ------------- -------------
17. Share capital
The following table summarises the share capital of Dominium for
the years presented:
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 PLN'000 2018 PLN'000 2019
PLN'000
---------------------------- ----------------- -------------- -------------- -------------
Called up, allotted
and fully paid: 8,060,000
(2018: 8,060,000, Ordinary shares
2017: 8,044,000) of 1 PLN each 8,044 8,060 8,060
---------------------------- ----------------- -------------- -------------- -------------
Number Nominal value Consideration
PLN'000 PLN'000
------------------------ ---------- -------------- --------------
As at 1 January 2017 8,044,000 8,044 26,384
------------------------ ---------- -------------- --------------
As at 31 December 2017 8,044,000 8,044 26,384
------------------------ ---------- -------------- --------------
Placing of shares 16,000 16 2,523
------------------------ ---------- -------------- --------------
As at 31 December 2018 8,060,000 8,060 28,907
------------------------ ---------- -------------- --------------
As at 31 December 2019 8,060,000 8,060 28,907
------------------------ ---------- -------------- --------------
Share class No. of shares % total shares
-------------------------- -------------- ---------------
Malaccan Holdings
Class A 500,000 6.20%
Class B 3,928,000 48.70%
Class C 828,571 10.30%
Class D 961,731 11.90%
Class G 209,243 2.60%
Class H 1,206,676 15.00%
Class I 15,510 0.20%
7,649,731 94.90%
Mezzanine's AMC III Fund
Class D 410,269 5.10%
410,269 5.10%
Total 8,060,000 100.00%
-------------------------- -------------- ---------------
Shares of all classes carry one vote per share. The shares of
all classes have the same rights to receive dividends and return on
capital.
Nature and purpose of reserves
Share capital
The share capital account represents the nominal value of share
issued by Dominium.
Share premium
The share premium reserve represents the premium paid by
Dominium shareholders over the nominal value of the shares issued
less any directly attributable costs of issuing the shares.
Other equity
The other equity reserves represents a capital contribution
received by Dominium from its majority shareholder. The reserves
are non-redeemable and non-distributable.
Retained earnings
This reserve holds the accumulation of profits and losses
including any distributions to Dominium shareholders.
18. Borrowings
Dominium Group's borrowings consist of the following amounts for
the periods presented:
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
----------------------------------- ------------- ------------- -------------
Not later than one year 1,360 1,222 25,273
Later than one year and not later
than five years 18,884 23,094 -
----------------------------------- ------------- ------------- -------------
Total borrowings 20,244 24,316 25,273
----------------------------------- ------------- ------------- -------------
The following table represents Dominium Group's finance costs
and income for each of the periods presented:
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
----------------------------------- ------------- ------------- -------------
Interest payable:
* Related entities borrowings 1,936 2,860 2,745
* Other interest payable 51 287 14
* Bank borrowings 45 57 35
* Lease liabilities 4,037 3,504 2,829
* Foreign exchange loss 454 856 469
* Other 6 14 -
----------------------------------- ------------- ------------- -------------
Total finance costs 6,529 7,578 6,092
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
----------------------------------- ------------- ------------- -------------
Interest receivable 2 - -
Foreign exchange gain 1,004 32 218
----------------------------------- ------------- ------------- -------------
Total finance income 1,006 32 218
----------------------------------- ------------- ------------- -------------
19. Trade and other payables
The following table includes a detail of other liabilities as at
the periods presented:
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
Other non-current liabilities PLN'000 PLN'000 PLN'000
------------------------------------ ----------- --------------------- -----------
Supplier incentives 1,979 1,013 1,335
------------------------------------ ----------- --------------------- -----------
Total other non-current liabilities 1,979 1,013 1,335
------------------------------------ ----------- --------------------- -----------
Other current liabilities
Trade and other payables 4,882 4,478 4,460
Supplier incentives 707 784 632
Taxes payable 1,392 2,192 1,277
Accruals 333 443 827
Other current liabilities 1,949 2,086 2,205
------------------------------------ ----------- --------------------- -----------
Total other current liabilities 9,263 9,983 9,401
------------------------------------ ----------- --------------------- -----------
Total other liabilities 11,242 10,996 10,736
------------------------------------ ----------- --------------------- -----------
20. Right-of-use asset and lease liabilities
Right-of-use asset
Restaurants,
office and
warehouse Technical
space equipment Vehicles Equipment Total
Cost PLN'000 PLN'000 PLN'000 PLN'000 PLN'000
As at 1 January 2017 44,454 1,309 1,967 531 48,261
Additions - 47 111 68 226
Disposals - (295) (347) (113) (755)
As at 31 December
2017 44,454 1,061 1,731 486 47,732
Additions 1,531 29 - - 1,560
Disposals - (88) (354) - (442)
As at 31 December
2018 45,985 1,002 1,377 486 48,850
Additions 511 - - - 511
Disposals - - (229) - (229)
---------------------- ------------- ----------- --------- ---------- --------
As at 31 December
2019 46,496 1,002 1,148 486 49,132
---------------------- ------------- ----------- --------- ---------- --------
Depreciation
As at 1 January 2017 - 1,222 839 491 2,552
Additions 7,729 31 287 68 8,115
Disposals - (291) (339) (73) (703)
As at 31 December
2017 7,729 962 787 486 9,964
Additions 7,981 46 254 - 8,281
Disposals - (86) (311) - (397)
As at 31 December
2018 15,710 922 730 486 17,848
Additions 8,097 12 230 - 8,339
Disposals - - (160) - (160)
---------------------- ------------- ----------- --------- ---------- --------
As at 31 December
2019 23,807 934 800 486 26,027
---------------------- ------------- ----------- --------- ---------- --------
Carrying value
As at 31 December
2017 36,725 99 944 - 37,768
As at 31 December
2018 30,275 80 647 - 31,002
As at 31 December
2019 22,689 68 348 - 23,105
---------------------- ------------- ----------- --------- ---------- --------
Lease liability Audited
PLN'000
As at 1 January 2017 46,052
Additions 227
Interest 3,806
Amounts paid (10,733)
Foreign exchange revaluation (999)
As at 31 December 2017 38,353
Additions 1,560
Interest 3,400
Amounts paid (10,799)
Foreign exchange revaluation 597
As at 31 December 2018 33,111
Additions 511
Interest 2,821
Amounts paid (10,626)
Foreign exchange revaluation (24)
------------------------------ ---------
As at 31 December 2019 25,793
------------------------------ ---------
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
----------------------------------- ----------- ------------ -----------
Not later than one year 7,153 7,632 7,347
Later than one year and not later
than five years 31,200 25,479 18,446
----------------------------------- ----------- ------------ -----------
Total lease liability 38,353 33,111 25,793
----------------------------------- ----------- ------------ -----------
21. Provisions
Audited
Employee
benefits Audited Audited
Year ended 31 December 2019 provision Other provisions Total
PLN'000 PLN'000 PLN'000
----------- ------------------ --------
Opening balance 243 3,611 3,854
----------------------------- ----------- ------------------ --------
Additions 45 335 380
Released - - -
Utilised - (1,300) (1,300)
Closing balance 288 2,646 2,934
----------------------------- ----------- ------------------ --------
Audited
Year ended 31 December 2018 Employee Audited
benefits Other Audited
provision provisions Total
PLN'000 PLN'000 PLN'000
----------- ------------ --------
Opening balance 278 3,234 3,512
----------------------------- ----------- ------------ --------
Additions - 2,999 2,999
Released (35) (64) (99)
Utilised - (2,558) (2,558)
Closing balance 243 3,611 3,854
----------------------------- ----------- ------------ --------
Audited
Year ended 31 December 2017 Employee Audited
benefits Other Audited
provision provisions Total
PLN'000 PLN'000 PLN'000
----------- ------------ --------
Opening balance 204 477 681
----------------------------- ----------- ------------ --------
Additions 74 2,824 2,898
Released - - -
Utilised - (67) (67)
Closing balance 278 3,234 3,512
----------------------------- ----------- ------------ --------
Other provisions
The main items included in other provisions at 31 December
2019:
-- provision for VAT for the year ended 31 December 2015
amounting to PLN 1,149,000 - sales with a rate of 5% VAT tax;
-- provision for VAT for the year ended 31 December 2016
amounting to PLN 615,000 - sales with as rate of 5% VAT tax;
-- provisions for VAT refund for the year ended 31 December 2013 amounting to PLN 405,000;
-- provision for VAT for the years ended 31 December 2014-2016 amounting to PLN 221,000; and
-- provision for compensations costs of early termination of the lease agreement of PLN 210,000.
22. Financial instruments
The table below shows a comparison of the carrying amounts and
fair values of all the Dominium Group's financial instruments that
have been disclosed in the Dominium Group Financial Information at
values other than fair value, broken down by categories of assets
and liabilities.
For trade receivables, the Dominium Directors apply the
simplified approach permitted by IFRS 9 "Financial Instruments",
which requires expected lifetime losses to be recognised from
initial recognition of the receivables.
Financial liabilities are initially measured at fair value and
subsequently measured at amortised cost.
Year ended 31 Classification
December 2019 of financial
instrument
Fair value Book value Measured at
amortised cost
------------------------- ----------- ----------- ----------------
PLN'000 PLN'000 PLN'000
------------------------- ----------- ----------- ----------------
Lease liabilities 18,446 18,446 18,446
------------------------- ----------- ----------- ----------------
Non-current liabilities 18,446 18,446 18,446
------------------------- ----------- ----------- ----------------
Year ended 31 December Classification
2018 of financial
instrument
Fair value Book Measured at
value amortised cost
------------------------- -------------- --------- ----------------
PLN'000 PLN'000 PLN'000
------------------------- -------------- --------- ----------------
Borrowings 23,094 23,094 23,094
Lease liabilities 25,479 25,479 25,479
------------------------- -------------- --------- ----------------
Non-current liabilities 48,573 48,573 48,573
------------------------- -------------- --------- ----------------
Year ended 31 December Classification
2017 of financial
instrument
Measured at amortised
cost
Fair value Book value Borrowings and Other
receivables book value
-------------------- ------------ ----------- ---------------------- ------------
PLN'000 PLN'000 PLN'000 PLN'000
-------------------- ------------ ----------- ---------------------- ------------
Trade receivables 162 162 162 -
-------------------- ------------ ----------- ---------------------- ------------
Non-current assets 162 162 162 -
-------------------- ------------ ----------- ---------------------- ------------
Year ended 31 December Classification
2017 of financial
instrument
Fair value Book Measured at
value amortised
cost
------------------------- -------------- --------- ---------------
PLN'000 PLN'000 PLN'000
------------------------- -------------- --------- ---------------
Borrowings 18,884 18,884 18,884
Lease liabilities 31,200 31,200 31,200
------------------------- -------------- --------- ---------------
Non-current liabilities 50,084 50,084 50,084
------------------------- -------------- --------- ---------------
23. Financial risk management
The main financial instruments used by the Dominium Group
include bank loans, financial lease agreements and lease agreements
with purchase option, cash and short-term deposits. The main
purpose of these financial instruments is to raise funds for the
Dominium Group's operations. Dominium Group's also has other
financial instruments, such as trade receivables and liabilities
that arise directly in the course of its operations.
The principle applied by Dominium Group at present and
throughout the period covered by this historical financial
information is not to trade in financial instruments.
The main types of risk arising from the Dominium Group's
financial instruments include interest rate risk, liquidity risk,
currency risk and credit risk. Dominium Director's review and agree
rules for managing each of these risks - these rules are briefly
discussed below. Dominium Director's also monitor the risk of
market prices relating to all of its financial instruments.
(a) Currency risk
Dominium Group's sales revenues include foreign sales, which are
realised in Romanian Leu (RON). The volatility of fluctuations of
the PLN against these currencies may adversely affect the pricing
policy of products sold by the Dominium on foreign markets, which
may lead to a decline in profitability on foreign sales.
See below for table on assets held in RON
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
----------------------------------------------- ------------- ------------- -------------
Assets classified as assets held
for sale (Note 30 "Discontinued operations") 2 2 12
Liabilities directly related to non-current
assets classified as held for sale
(Note 30"Discontinued operations") 1,655 1,655 977
----------------------------------------------- ------------- ------------- -------------
Net liabilities (1,653) (1,653) (965)
----------------------------------------------- ------------- ------------- -------------
(b) Market risk
Dominium Group estimated the potential changes in market risk as
follows:
-- 1% change in the PLN interest rate (increase or decrease in the interest rate);
-- 1% change in the RON interest rate (increase or decrease in the interest rate);
-- 1% change in the EUR interest rate (increase or decrease in the interest rate);
-- 10% change in the PLN / RON exchange rate (increase or decrease in the interest rate); and
-- 10% change in the PLN / EUR exchange rate (increase or decrease in the interest rate).
The above-established values were established on an annual
basis.
Year ended 31 December 2019 Interest rate
risk gain/loss Forex risk gain/loss
impact impact
+1% in -1% in
PLN PLN
+1% in -1% in
PLN'000 RON RON +10% -10%
------------------------- -------- -------- -------- --------------- ----------
Trade Receivables 1,555 - - 12 (12)
Cash at bank 755 8 (8) - -
Cash in hand 351 - - - -
------------------------- -------- -------- -------- --------------- ----------
Current assets 2,661 8 (8) 12 (12)
------------------------- -------- -------- -------- --------------- ----------
Financial assets before
taxation 8 (8) 12 (12)
Taxation (19%) (2) 2 (2) 2
------------------------- -------- -------- -------- --------------- ----------
Financial assets after
taxation impact 6 (6) 10 (10)
------------------------- -------- -------- -------- --------------- ----------
Borrowings - - - - -
Lease liabilities 18,446 (184) 184 (877) 877
Trade liabilities - - - - -
Non-current liabilities 18,446 (184) 184 (877) 877
Borrowings 25,273 (253) 253 (613) 613
Lease liabilities 7,347 (74) 74 (289) 289
Trade liabilities 8,109 - - - -
------------------------- -------- -------- -------- --------------- ----------
Current liabilities 40,729 (327) 327 (902) 902
------------------------- -------- -------- -------- --------------- ----------
Financial liabilities
before taxation impact (511) 511 (1,779) 1,779
Taxation (19%) 97 (97) 338 (338)
------------------------- -------- -------- -------- --------------- ----------
Financial liabilities
after taxation impact (414) 414 (1,441) 1,441
------------------------- -------- -------- -------- --------------- ----------
Year ended 31 December 2018 Interest rate
risk gain/loss Forex risk gain/loss
impact impact
+1% in -1% in
PLN PLN
+1% in -1% in
PLN'000 RON RON +10% -10%
------------------------- ---------- ------------ --------- ------------ -----------
Trade Receivables 1,509 - - 12 (12)
Cash at bank 521 5 (5) 1 (1)
Cash in hand 231 - - - -
Current assets 2,261 5 (5) 13 (13)
------------------------- ---------- ------------ --------- ------------ -----------
Financial assets before
taxation 5 (5) 13 (13)
Taxation (19%) (1) 1 (2) 2
------------------------- ---------- ------------ --------- ------------ -----------
Financial assets after
taxation impact 4 (4) 11 (11)
------------------------- ---------- ------------ --------- ------------ -----------
Borrowings 23,094 (231) 231 (457) 457
Lease liabilities 25,479 (255) 255 - -
Non-current liabilities 48,573 (486) 486 (457) 457
Borrowings 1,222 (16) 16 - -
Lease liabilities 7,632 (76) 76 - -
Trade liabilities 8,331 - - (82) 82
Current liabilities 17,185 (92) 92 (82) 82
------------------------- ---------- ------------ --------- ------------ -----------
Financial liabilities
before taxation impact (578) 578 (539) 539
Taxation (19%) 110 (110) 102 (102)
------------------------- ---------- ------------ --------- ------------ -----------
Financial liabilities
after taxation impact (468) 468 (437) 437
------------------------- ---------- ------------ --------- ------------ -----------
Year ended 31 December 2017 Interest rate
risk gain/loss Forex risk
impact gain/loss impact
+1% in +1% in
PLN PLN
+1% in +1% in
PLN'000 RON RON +10% -10%
------------------------- -------- -------- -------- ---------- --------
Trade Receivables 1,669 - - 9 (9)
Cash at bank 1,232 12 (12) 8 (5)
Cash in hand 489 - - - -
Current assets 3,390 12 (12) 17 (14)
------------------------- -------- -------- -------- ---------- --------
Financial assets before
taxation 12 (12) 17 (14)
Taxation (19%) (2) 2 (3) 3
------------------------- -------- -------- -------- ---------- --------
Financial assets after
taxation impact 10 (10) 14 (11)
------------------------- -------- -------- -------- ---------- --------
Borrowings 18,884 (189) 189 (35) 35
Lease liabilities 31,200 (312) 312 - -
Non-current liabilities 50,084 (501) 501 (35) 35
Borrowings 1,360 (17) 17 - -
Lease liabilities 7,153 (72) 72 - -
Trade liabilities 8,488 - - (112) 112
Current liabilities 17,001 (89) 89 (112) 112
------------------------- -------- -------- -------- ---------- --------
Financial liabilities
before taxation impact (590) 590 (112) 112
Taxation (19%) 112 (112) 21 (21)
------------------------- -------- -------- -------- ---------- --------
Financial liabilities
after taxation impact (478) 478 (91) 91
------------------------- -------- -------- -------- ---------- --------
(c) Interest rate risk
The interest rate risk is the possibility of the occurrence of a
negative impact of changes in interest rates on the financial
condition of Dominium Group. The uncertainty of interest rates
negatively influencing the macroeconomic situation significantly
hinders the process of planning and making investment decisions.
The environment of rising interest rates significantly complicates
the preparation of a rational projection of the costs of financing
business activities. This problem is particularly visible when
preparing long-term investment projects, such as opening new
restaurants.
Dominium Group finances and takes into account the possibility
of further financing of the investments carried out with capital
from loans or bank loans. In such a situation, the increase in
interest rates translates into an increase in loan costs, therefore
the Dominium Directors expect an increase in financial costs
related to loan servicing.
The table below presents the carrying amount of the Dominium
Group's financial instruments exposed to the interest rate risk,
broken down by age category.
Year ended 31 December
2019
Fixed interest rate <1 year 2 years 3 years 4 years 5 years >5 years Total
Finance lease liabilities 7,350 5,819 4,418 3,866 4,340 - 25,793
Loan from related
parties 25,273 - - - - - 25,273
Total 32,623 5,819 4,418 3,866 4,340 - 51,063
--------------------------- -------- ---------- -------- ---------- ---------- ----------- ---------
Year ended 31 December
2018
Fixed interest rate <1 year 2 years 3 years 4 years 5 years >5 years Total
Finance lease liabilities 7,634 25,423 48 6 - - 33,111
Loan from related
parties 1,222 23,094 - - - - 24,316
Total 8,856 48,517 48 6 - - 57,427
--------------------------- ---------- ---------- ---------- ---------- -------- --------- --------
Floating Interest
rate interest rate <1 year 2 years 3 years 4 years 5 years >5 years Total
Overdraft 1,458 - - - - - 1,458
Total 1,458 - - - - - 1,458
--------------------------- ---------- ---------- ---------- ---------- -------- --------- --------
Year ended 31 December
2017
Fixed interest rate <1 year 2 years 3 years 4 years 5 years >5 years Total
Finance lease liabilities 7,154 31,049 121 29 - - 38,353
Loan from related
parties 1,360 - 16,947 - - 1,937 20,244
Total 8,514 31,049 17,068 29 - 1,937 58,597
--------------------------- -------- -------- ---------- -------- -------- ----------- ---------
Floating Interest
rate interest rate <1 year 2 years 3 years 4 years 5 years >5 years Total
Overdraft 1,650 - - - - - 1,650
Total 1,650 - - - - - 1,650
--------------------------- -------- -------- ---------- -------- -------- ----------- ---------
Interest rates on borrowings
Financing entity Currency Interest rate Termination date
Raiffeisen bank polska PLN WIBOR 1M +3.7% 30/06/2020
S.A. *
Malaccan Holdings PLN 10.8% per year 31/12/2020
Malaccan Holdings EUR 15% per year 30/12/2020
Malaccan Holdings EUR 15% per year 30/12/2020
Malaccan Holdings PLN 11% per year 31/12/2020
Malaccan Holdings PLN 11% per year 01/01/2021
Malaccan Holdings PLN 11% per year 31/12/2020
Malaccan Holdings PLN 11% per year 31/12/2020
Malaccan Holdings PLN 11% per year 31/12/2020
Malaccan Holdings PLN 11% per year 31/12/2020
--------- --------------- -----------------
* Security: Dominium Group has provided a registered pledge of
assets up to the amount of PLN 12,450,000
(d) Credit risk
Dominium Group is exposed to credit risk understood as the risk
that customers will not meet their obligations and thus cause
Dominium Group to incur losses. The maximum exposure to credit risk
is PLN 1,534,000 for 31 December 2019, PLN 1,509,000 for 31
December 2018 and PLN 1,831,000 for 31 December 2017 at the end of
the reporting period and was estimated as the balance sheet value
of financial receivables.
The Dominium Directors determine the Dominium Group's write-offs
updating the value of overdue or impaired receivables by means of
an individual risk analysis of non-payment. At the level of 100% of
the nominal value of overdue receivables, write-offs are created
for receivables overdue more than 365 days, unless there are
reasons to suggest Dominium Group receiving the payment. For
receivables less than 365 days old, the Dominium Directors create
write-offs when they have information about a difficult financial
situation at the Dominium Group's debtor.
The Dominium Directors consider the impact of the Dominium
Group's expected credit loss model on its trade receivables not to
be material to the Dominium Group Financial Information given the
nature of the business. As a whole the Dominium Directors consider
the non-payment of Dominium Group's trade receivables to be a low
risk. The Dominium Group has recognised a receivables provision of
PLN 704,000 as at 31 December 2018 and 31 December 2019 (see Note
15 "Trade and other receivables" to the Dominium Group Financial
Information) in respect of a balance owed by a related company.
This is considered an isolated occurrence as it relates to expenses
incurred by Dominium Group on behalf of the related company.
(e) Cash and cash equivalents
The credit risk from its cash and cash equivalents is limited
because the counter parties are banks with high credit ratings and
have not experienced any losses in such accounts.
(f) Trade receivables
Trade receivables are due from customers and collectability is
dependent on the financial condition of each individual company as
well as the general economic conditions of the industry. The
Dominium Directors review the financial condition of customers
prior to extending credit and generally does not require collateral
in support of Dominium Group's trade receivables. The majority of
trade receivables are current and the Dominium Directors believe
these receivables are collectible. Where there is an expectation
that receivables are not collectible a provision is made as
disclosed in Note 15 "Trade and other receivables" to the Dominium
Group Financial Information .
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
--------------------------- ----------- ------------ -----------
Balance at 1 January 35 1,178 704
New provision in the year 1,159 - -
Reversals - (474) -
Used (16) - -
--------------------------- ----------- ------------ -----------
Total borrowings 1,178 704 704
--------------------------- ----------- ------------ -----------
(g) Liquidity risk
The analysis of financial liabilities at intervals is presented
below. The amounts presented represent undiscounted cash flows,
which constitute Dominium Group's maximum exposure to risk.
Year ended Less than 3 -12 Between Between Over Total contractual Audited
31 December 3 months months 1 and 2 and 5 years cash flows Carrying
2019 2 years 5 years amount
------------- ----------------------------- --------------------- -------------------- ----------------------- -------------------- ------------------- -------------
Borrowings 47 25,226 - - - 25,273 25,273
Lease
liabilities 2,627 6,846 8,271 8,684 5,042 31,470 25,793
Trade
liabilities 4,284 176 - - - 4,460 4,460
Other
financial
liabilities 3,030 - - - - 3,030 3,030
Total 9,988 32,248 8,271 8,684 5,042 64,233 58,556
------------- ----------------------------- --------------------- -------------------- ----------------------- -------------------- ------------------- -------------
Year ended Less 3 -12 Between Between Over Total Audited
31 December than months 1 and 2 and 5 years contractual Carrying
2018 3 months 2 years 5 years cash flows amount
------------- -------------- ---------------- -------------- ------------- -------------- ------------- -------------
Borrowings 1,512 41 23,094 - - 24,647 24,316
Lease
liabilities 2,624 7,815 9,396 12,974 8,625 41,434 33,111
Trade
liabilities 4,392 86 - - - 4,478 4,478
Other
financial
liabilities 2,529 - - - - 2,529 2,529
Total 11,057 7,942 32,490 12,974 8,625 73,088 64,434
------------- -------------- ---------------- -------------- ------------- -------------- ------------- -------------
Year ended Less 3 -12 Between Between Over Total Audited
31 December than months 1 and 2 and 5 years contractual Carrying
2017 3 months 2 years 5 years cash flows amount
------------- -------------- ----------------------- ------------- ------------- -------------- ---------------- -------------
Borrowings 1,691 - - 16,947 1,937 20,575 20,244
Lease
liabilities 2,636 7,942 10,363 17,486 12,019 50,446 38,354
Trade
liabilities 4,882 - - - - 4,882 4,882
Other
financial
liabilities 1,949 - - - - 1,949 1,949
Total 11,158 7,942 10,363 34,433 13,956 77,852 65,429
------------- -------------- ----------------------- ------------- ------------- -------------- ---------------- -------------
The main creditor of the Dominium Group is the company which is
its main shareholder, Malaccan Holdings, and liabilities to it
constitute 92.2% of all interest-bearing liabilities of the
Dominium Group.
In the opinion of the Dominium Directors, the current structure
of debt financing secures the current needs of financing operating
activities and the planned expansion of the Dominium Group's
restaurant chain. Following the year end, the loan has been
converted into a further unsecured facility with a maturity date
three years from the date of issue (see Note 32 "Events after the
balance sheet date" to the Dominium Group Financial Information
).
24. Capital management
The Dominium Directors manage Dominium Group's capital to
maintain the ability for it to continue as a going concern, taking
into account the implementation of planned investments, so that it
can generate returns for shareholders and bring benefits to other
stakeholders.
In line with market practice, the Dominium Directors monitor
Dominium Group's capital, among others, on the basis of the equity
ratio and the ratio of credits, loans and other sources of
financing / EBITDA.
The equity ratio is calculated as the ratio of the net value of
tangible assets (equity less intangible assets) to the balance
sheet total.
The ratio of credits, loans and other sources of financing /
EBITDA is calculated as the ratio of credits, loans and other
sources of financing to EBITDA. Loans, borrowings and other sources
of financing mean the total amount of liabilities for loans,
borrowings and leasing, while EBITDA is the operating profit after
adding depreciation.
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Shareholders funds 16,299 2,717 (3,194)
Minus: intangible assets (30,245) (28,208) (26,146)
Value of share capital
after intangible assets
deduction (13,946) (25,491) (29,340)
-------------------------- ------------- ------------- -------------
Balance sheet total 91,344 76,701 62,566
========================== ============= ============= =============
Share capital rate -15% -33% -47%
-------------------------- ------------- ------------- -------------
Operating profit/(loss) (9,432) (4,167) 716
Plus: amortization and
depreciation 14,376 14,238 15,202
EBITDA 4,944 10,071 15,918
-------------------------- ------------- ------------- -------------
Borrowings 20,244 24,316 25,273
-------------------------- ------------- ------------- -------------
Rate: borrowings/EBITDA 4.1 2.4 1.6
-------------------------- ------------- ------------- -------------
25. Contingencies and provisions
As at 31 December 2019, Dominium Group had contingent
liabilities resulting from guarantees provided to landlords
amounting to PLN 2,970,000 (2018: PLN 3,188,000, 2017: PLN
3,801,000). These amounts only become payable if Dominium Group
does not meet its lease obligations.
26. Tax settlement
Tax settlements and other areas of activity that are subject to
regulations (e.g. customs or foreign exchange matters) may be the
subject of investigation by administrative authorities, who are
authorised to impose high penalties and sanctions. The lack of
reference to established legal regulations in Poland results in
ambiguities and inconsistencies in the applicable provisions.
Frequent differences in opinion with regard to the legal
interpretation of tax regulations, both within state authorities
and between state authorities and enterprises, create areas of
uncertainty and conflicts. This leads to an increased tax risk in
Poland than one that usually exists in countries with a more
developed tax system.
Tax settlements may be inspected for a period of five years,
starting from the end of the year in which the tax was paid. As a
result of the inspections, the Dominium Group 's current tax
settlements may be increased by additional tax liabilities.
In 2014, Dominium Group, in accordance with the received
individual tax interpretation, corrected the VAT-7 and VAT-7D
returns for 2008, 2009, 2010, 2011 and 2013. As a result of the
submitted corrections, Dominium Group received VAT refunds for the
years 2008, 2009, 2010 and 2011 of PLN 3,285,000. In January 2015,
Dominium Group received a request from the Tax Office to correct
the VAT received for 2010 and 2011. In 2015, Dominium Group
corrected its declarations for 2010 and 2011 and returned the
previously received VAT to the amount of PLN 1,689,000. As at 31
December 2015, Dominium Group created a provision for the return of
VAT for 2013 of PLN 405,000.
In 2016, Dominium Group received a notification from the Tax
Control Office about the intention to initiate a VAT inspection
(sale of ready-made meals to go) for the years 2011, 2012, 2013,
2014, 2015 and for the period 1 January 2016 to 30 June 2016.
As a result of the above-mentioned inspection, Dominium Group
was informed that it sold take-away meals at a 5% VAT rate. On 24
June 2016, the Minister of Finance issued a general ruling on the
sale of take-away meals, Dominium Group should sell take-away meals
with the VAT rate of 8%. In September 2016, Dominium Group received
notification from the Tax Control Office of its intention to
initiate VAT control proceedings regarding corrections to the 2011
VAT-7 declaration. As a result of the adjustments made, a tax
arrears of PLN 1,037,000 arose on the part of Dominium Group.
Dominium Group applied to settle the arrears with the refunds of
VAT surpluses arising in 2016. As a result of the above
adjustments, the Tax Office did not refund Dominium Group the VAT
refunds due for June, July and August 2016. The total value of the
above-mentioned refunds amounted to PLN 691,000 was included in the
VAT arrears for 2011.
In October 2016, Dominium Group made reverse corrections for
2011, taking the position that it was right to apply a 5% VAT rate
on sales for the indicated period (Dominium Group has an individual
interpretation and the opinion of experts confirming the
classification of goods in grouping 10.85.1 PKWiU). In the Dominium
Directors' opinion, the previously submitted corrections were not
justified, as the appropriate rate that Dominium Group should apply
for this type of sale is 5% VAT. As a result of the above
adjustments to the VAT-7 declaration, Dominium Group applied for a
VAT refund. In November 2016, the Tax Office initiated control
proceedings regarding the correctness of the VAT settlement for
2011. Pursuant to the decision after the inspection, the Tax Office
decided that Dominium Group incorrectly showed the sale of
take-away meals with a 5% VAT rate and determined the Dominium
Group's liability in the amount of PLN 1,005,000. In December 2016,
Dominium Group submitted to the Tax Office reservations relating to
the inspection report and appealed against the decision to the Tax
Chamber in Warsaw. On 12 September 2017, Dominium Group received
the decision of the Director of the Tax Administration Chamber,
Warsaw on upholding the decision of the Head of the 2nd Masovian
Tax Office in Warsaw. Dominium Group paid tax with interest and
filed a complaint with the Provincial Administrative Court in
Warsaw. On 10 August 2018, the Provincial Administrative Court in
Warsaw dismissed the complaint against the decision of the Tax
Administration Chamber in Warsaw.
On 17 September 2018, Dominium Group filed a cassation appeal to
the Supreme Administrative Court in Warsaw against the judgment of
the Provincial Administrative Court in Warsaw.
In October 2016, the Masovian Customs and Tax Office in Warsaw
initiated a VAT inspection procedure (sale of take-away meals) for
the period 2012, 2013, 2014, 2015 and 1 June 2016 to 30 June
2016.
In November 2017, Dominium Group received the decision from the
Head of the Masovian Customs and Tax Office in Warsaw for 2012, in
which he determined the VAT liability amounted to PLN 914,000. In
December 2017, Dominium Group appealed against the decision to the
Director of the Tax Administration Chamber in Warsaw.
On 15 June 2018, Dominium Group received the decision of the
Director of the Tax Administration Chamber in Warsaw upholding the
decision of the Masovian Customs and Tax Office in Warsaw. Dominium
Group paid tax with interest amounting to PLN 1,366,000 and filed a
complaint with the Provincial Administrative Court in Warsaw.
On 20 February 2019, the Provincial Administrative Court in
Warsaw dismissed the complaint against the decision of the Tax
Administration Chamber in Warsaw.
Dominium Group intends to file a cassation appeal to the Supreme
Administrative Court in Warsaw against the judgment of the
Provincial Administrative Court in Warsaw.
In February 2018, Dominium Group received the decision of the
Head of the Masovian Customs and Tax Office in Warsaw for 2013, in
which he determined the VAT liability amounted to PLN 839,000. In
February 2018, Dominium Group appealed against the decision to the
Director of the Tax Administration Chamber in Warsaw. In May 2018,
Dominium Group received the decision of the Director of the Tax
Administration Chamber in Warsaw upholding the decision of the Head
of the Masovian Customs and Tax Office in Warsaw. Dominium paid tax
with interest amounting to PLN 1,123,000 and filed a complaint with
the Provincial Administrative Court in Warsaw.
On 30 January 2019, the Provincial Administrative Court in
Warsaw dismissed the complaint against the decision of the Tax
Administration Chamber in Warsaw.
Dominium Group intends to file a cassation appeal to the Supreme
Administrative Court in Warsaw against the judgment of the
Provincial Administrative Court in Warsaw.
In December 2018, Dominium Group received the decision of the
Head of the Masovian Customs and Tax Office in Warsaw for 2014, in
which they determined the VAT liability in the amount of PLN
906,000. In December 2018, Dominium appealed against the decision
to the Director of the Tax Administration Chamber in Warsaw. Until
the date of preparation of the Dominium Group Financial
Information, Dominium Group has not received the decision of the
Director of the Tax Administration Chamber in Warsaw.
In February 2019, Dominium Group received a report from the Head
of the Customs and Tax Office in Warsaw on the audit of VAT records
for the period from January 2015 to June 2016, in which they
determined the VAT liability in the amount of PLN 1,330,000 plus
interest. In March 2019, Dominium Group submitted to the Masovian
Customs and Tax Office in Warsaw reservations to the
above-mentioned protocol. In June 2019, Dominium received the
decision of the Head of the Masovian Customs and Tax Office in
Warsaw for 2014 and in July 2019 Dominium appealed against the
decision to the Director of the Tax Administration Chamber in
Warsaw.
On 28 May 2020, Dominium Group received the decision of the
Director of the Tax Administration Chamber in Warsaw upholding the
decision of the Head of the Masovian Customs and Tax Office in
Warsaw. On 8 June 2020, Dominium Group filed a complaint with the
Provincial Administrative Court in Warsaw together with a request
to suspend the execution of the challenged Decision pursuant to
Art. 61 paragraph 3 of the PPSA, i.e. to be recognised directly by
the Provincial Administrative Court.
As at 31 December 2019, Dominium Group created provisions for
VAT with due interest as at the balance sheet date amounting to PLN
25,000 in respect of the year ended 31 December 2015 and PLN 34,000
in respect of the year ended 31 December 2016.
In Dominium Group's opinion, as at 31 December 31 2019,
appropriate provisions were created for the identified and
measurable tax risk.
27. Management board and Supervisory board remuneration
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Short-term employee benefits (wages
and salaries) 277 226 463
------------------------------------- ------------- ------------- -------------
The total amount of remuneration
paid to the Management Board and
Supervisory Board 277 226 463
------------------------------------- ------------- ------------- -------------
Management Board 277 226 463
Supervisory Board - - -
------------------------------------- ------------- ------------- -------------
Total 277 226 463
------------------------------------- ------------- ------------- -------------
28. Related party transactions
The following table presents the total amounts of transactions
concluded by Dominium Group with related entities for a given
financial year (transactions between the companies forming Dominium
Group were not included, as they were eliminated in the
consolidation process):
Year ending 31 December 2019
Revenue from sales to related
parties Product sales (PLN'000)
-------------------------------- -------------------------------
Other related entities 479
Purchases from related parties Purchase of services (PLN'000)
-------------------------------- -------------------------------
Other related entities 1,073
Year ending 31 December 2018
Revenue from sales to related
parties Product sales (PLN'000)
-------------------------------- -------------------------------
Other related entities 517
Purchases from related parties Purchase of services (PLN'000)
-------------------------------- -------------------------------
related entities 219
Year ending 31 December 2017
Revenue from sales to related
parties Product sales (PLN'000)
-------------------------------- -------------------------------
Other related entities 531
Purchases from related parties Purchase of services (PLN'000)
-------------------------------- -------------------------------
Other related entities 113
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
Receivables from related parties PLN'000 PLN'000 PLN'000
Controlling entity 92 120 174
Other related entities* 233 277 176
Total 325 397 350
--------------------------------- ------------ ------------ ------------
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
Liabilities to related parties PLN'000 PLN'000 PLN'000
Controlling entity (Malaccan Holdings
loan) 18,925 23,189 25,273
Other related entities* 27 - -
Total 18,952 23,189 25,273
-------------------------------------- ------------ ------------ ------------
*other entities are entities related personally to members of
Management Board or Supervisory Board.
29. Transactions with members of the Management Board and
Supervisory Board
In the reporting period, no loan was granted to any of the
Dominium Directors.
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Receivables from Dominium Tomasz
Plebaniak 233 277 176
Liabilities to Dominium Tomasz
Plebaniak 27 - -
Sales to Dominum Tomasz Plebaniak
(VAT not included) 531 517 479
Purchases reinvoiced by Dominum
Tomasz Plebaniak (VAT included) 41 183 479
Purchases and services for Dominium
Group provided by Dominium Directors 72 36 36
Services provided by members of
Dominium Directors - 382 558
--------------------------------------- ------------- ------------- -------------
Total 904 1,395 1,728
--------------------------------------- ------------- ------------- -------------
30. Discontinued operations
Assets and liabilities related to assets held for sale relate to
discontinued operations, ie assets and liabilities of the
subsidiary Cantina Italia Sp. z o.o. in liquidation and Dominium
Romania in bankruptcy.
Individual components of fixed and current assets as well as
liabilities and provisions for liabilities, the statement of
comprehensive income and the statement of cash flows are presented
below.
Audited Audited Audited
Year ended Year ended Year ended
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Revenue 6,983 489 -
Costs of sales (6,456) (811) (649)
Gross profit/(loss) 527 (322) (649)
Other income 202 9 7
Other costs (1,374) (1,552) -
Financial costs (57) (9) -
Operating loss (702) (1,874) (642)
Discontinued operations loss
before taxation (702) (1,874) 642
Income tax (179) (10) -
Net loss at discontinued operations (881) (1,884) (642)
Audited Audited Audited
As at As at As at
31 December 31 December 31 December
2017 2018 2019
PLN'000 PLN'000 PLN'000
Assets - - -
Intangible assets - - -
Property, plant and equipment - - -
Trade receivables - - 10
Cash and cash equivalents 2 2 2
Fixed assets classified as assets
held for sale 2 2 12
Liabilities - - -
Trade liabilities 1,324 1,324 617
Borrowings 331 331 360
Liabilities directly related
to non-current assets classified
as held for sale 1,655 1,655 977
Discontinued operations net
liabilities 1,653 1,653 965
31. Ultimate controlling party
The parent company of Dominium Group is Dominium.
As at 31 December 2019, Malaccan Holdings owned 94.91 per cent.
of ordinary shares in Dominium and, as such, was the ultimate
controlling party of Dominium.
32. Events after the balance sheet date
Refinancing
Pursuant to the Shareholder Loan Agreements, all borrowings were
due to be repaid on 31 December 2020. Due to the advanced stage of
completion with regard to the Acquisition, Malaccan Holdings did
not require the borrowings to be repaid and will be converted,
pursuant to the Loan Note Instrument, into a further unsecured
facility issued to Malaccan Holdings in substitution for the
outstanding debt. These new loans have a maturity date three years
from the date of issue.
COVID-19
Dominium Group provides catering services and is exposed to the
operational and financial risks associated with the COVID-19
pandemic.
Dominium Group has felt a significant impact of the coronavirus
on sales. In the period when all restaurants with eat-in sales were
closed, the restaurants fulfilled orders for delivery and personal
collection. Not all Dominium Group's restaurants carried out such
sales. The Dominium Directors decided to minimise costs and a
number of the Dominium Group's restaurants were completely closed
for the period of lockdown. The delivery area of the closed
restaurants was covered by deliveries from other premises. This
allowed Dominium Group to reduce personnel costs as it was not
necessary to employ as many staff members whilst retaining the
custom of the customers of closed restaurants.
As a result of the loss of the ability to generate a significant
part of revenues (eat-in sales), Dominium Group has reviewed the
budget for the year ending 31 December 2020 and changes have been
made to reflect the situation. As a result, the planned EBITDA for
2020 was reduced by 69 per cent.
During the period of limited eat-in sales, the Dominium
Directors undertook increased marketing activities aimed at
maximising delivery and take-out sales. As a result of these
activities, Dominium Group recorded a significant increase in sales
in delivery compared to the same period of the previous year - in
March by 8.7 per cent., in April by 22.7 per cent., and in May by
35.7 per cent.
The Dominium Directors implemented a number of actions to
minimise the above-mentioned risk. In addition to the
above-mentioned complete closure of some of the premises, the
Dominium Directors have taken immediate steps to reduce the rents
for all premises, both those located "on the street" and in
shopping centres, with a positive effect. The Dominium Directors
continue to negotiate with landlords in order to obtain further
rent reductions.
Furthermore, Dominium Group applied for co-financing of the
costs of remuneration under Art. 15g and 15zzb of the anti-crisis
shield. As at the date of preparation of the Dominium Group
Financial Information, two applications for emergency funding have
been made. Dominium Group received a grant in the amount of PLN
1,521,000, of which PLN 379,000 was reimbursed in accordance with
the provisions of the Act. In August 2020, Dominium Group applied
for further co-financing of the costs of remuneration under Art.
15gg of the anti-crisis shield and Dominium Group was entitled to
receive further PLN 519,000 of grant. The Dominium Directors
decided to reduce the salaries and reduce the working time of all
employees by 20 per cent. In addition, there was a slight reduction
in the part of jobs for people employed both under employment and
mandate contracts.
Dominium Group employs workers from Ukraine. As at the date of
the Dominium Group Financial
Information, no risk of outflow of these employees was
identified.
The costs of operating Dominium Group's Head Office were also
reduced.
The Dominium Directors applied to ZUS to defer ZUS payments for
February 2020, March 2020 and April 2020 which was approved, and an
agreement was signed in this regard. At the date of writing
Dominium Group has settled its deferred liabilities to ZUS for
February 2020, March 2020 and April 2020.
In October 2020, Dominium Group applied to ZUS for instalment
payment to ZUS for September 2020 and October 2020. As of the date
of the Dominium Group Financial Information, Dominium Group
received a positive decision to make monthly instalments to ZUS for
September 2020.
The Dominium Directors applied to the Tax Office to defer the
payment of PIT for the period March 2020 to May 2020 in accordance
with the possibilities provided by the relevant regulation to
Dominium Group. All liabilities resulting from this application
have been paid as of the date of the Dominium Group Financial
Information.
The Dominium Directors also entered into negotiations with
financial institutions (bank, leasing companies) in order to
suspend payments under the signed contracts. As a result, payments
under the overdraft agreement with BNP Paribas Bank were suspended
for a period of 3 months, with the simultaneous extension of the
financing period, the bank also suspended the charging of fees for
issued bank guarantees, and the leasing company suspended the
collection of the principal part of leasing instalments for a
period of 6 months, while extending the financing period.
In addition, the Dominium Directors entered into negotiations
with its main supplier of the goods in order to postpone payments
resulting from the invoices issued prior to the pandemic period.
Dominium Group has a 45-day payment period, therefore, during the
pandemic period, the invoices related to goods purchased during the
period when the restaurants were fully operational were due. As a
result of these negotiations, an agreement was signed to extend the
payment deadline and to divide the amount outstanding of
approximately PLN 450,000 into instalments.
Dominium Group has not filed any claims with its insurer
regarding the impact of COVID-19 on its operations.
Dominium Group occupies its restaurant premises under lease
agreements and commercial agreements for the delivery of goods to
restaurants. At the moment, the Dominium Directors do not consider
that there is a risk that the other parties to the agreements will
benefit from force majeure provisions. The Dominium Directors are
in constant contact with representatives of landlords and companies
delivering goods.
The Dominium Directors consider the possibility that the Polish
government will restore some or all of the restrictions, including
limiting the number of customers in Dominium Group's restaurants,
as well as the possibility of limiting eat-in sales. In order to
mitigate the risk, the Dominium Directors have taken further steps
to redirect as many sales as possible to deliveries. These steps
include an increase in marketing activities and activities aimed at
reducing delivery times.
As a result of all actions taken by the Dominium Directors, it
is their view that the financial situation of
Dominium Group is stable. Cash flow projections prepared by the
Dominium Directors show positive cash flows in the subsequent
period. Dominium Group is able to settle its short-term liabilities
and intends to cover them with positive cash flows in the
subsequent period.
APPIX III
UNAUDITED INTERIM FINANCIAL INFORMATION OF DOMINIUM GROUP
Consolidated statements of comprehensive income
The unaudited consolidated interim statements of comprehensive
income of Dominium Group for the six-month periods ended 30 June
2020 and 30 June 2019 are stated below:
Unaudited Unaudited
Period ended
Period ended 30 June
30 June 2019 2020
PLN'000 PLN'000
Revenue 40,134 33,778
Cost of sales (34,259) (31,871)
Gross profit 5,875 1,907
Distribution costs (2,229) (2,252)
Administrative expenses (3,696) (3,519)
Other income 387 1,181
Other operating costs (634) (482)
Net financial costs (3,049) (2,725)
Loss before taxation (3,346) (5,890)
Income tax - -
Loss from continued operations (3,346) (5,890)
Discontinued operations
Loss for the period from discontinued
operations (321) (54)
Loss for the period (3,667) (5,944)
Other comprehensive income
Exchange rate differences arising
on consolidation (4) -
Total comprehensive loss for the
period (3,671) (5,944)
Loss attributable to:
Equity holders of Dominium (3,667) (5,944)
(3,667) (5,944)
Comprehensive loss attributable
to:
Equity holders of Dominium (3,671) (5,944)
(3,671) (5,944)
Consolidated statements of financial position
The unaudited consolidated interim statements of financial
position of Dominium Group as at 30 June 2020 and as at 30 June
2019 are stated below:
Unaudited Unaudited
As at As at
30 June 30 June
2019 2020
Note PLN'000 PLN'000
Assets
Property, plant and equipment 12,921 7,816
Right-of-use assets 30,416 20,618
Intangible assets 27,141 25,217
Deferred tax assets 272 155
Non-current assets 70,750 53,806
Inventories 902 862
Trade and other receivables 7 2,517 2,883
Cash and cash equivalents 936 1,635
Current assets 4,355 5,380
Total Assets 75,105 59,186
EQUITY AND LIABILITIES
Share capital 8,060 8,060
Share premium 20,848 20,848
Other equity 10,565 10,565
Retained deficit (38,089) (48,615)
Total equity 1,384 (9,142)
Lease liabilities 23,803 18,233
Borrowings 8 23,951 -
Deferred tax liability 52 47
Trade and other payables 9 2,312 1,894
Non-current liabilities 50,118 20,174
Trade and other payables 9 11,055 10,562
Borrowings 8 1,183 27,575
Lease liabilities 7,522 7,298
Provisions 3,843 2,719
Current liabilities 23,603 48,154
Total liabilities 73,721 68,328
Total liabilities and equity 75,105 59,186
Consolidated statements of changes in shareholders' equity
The unaudited consolidated interim statements of changes in
shareholders' equity of Dominium Group for the six-month periods
ended 30 June 2020 and 30 June 2019 are stated below:
Share Share Other Retained Total
capital premium capital deficit equity
PLN'000 PLN'000 PLN'000 PLN'000 PLN'000
Balance as at 1 January
2019 (audited) 8,060 20,848 10,569 (34,422) 5,055
Total comprehensive loss
for the period - - (4) (3,667) (3,671)
Balance as at 30 June
2019 (unaudited) 8,060 20,848 10,565 (38,089) 1,384
Balance as at 1 January
2020 (audited) 8,060 20,848 10,565 (42,671) (3,198)
Total comprehensive loss
for the period - - - (5,944) (5,944)
Balance as at 30 June
2020 (unaudited) 8,060 20,848 10,565 (48,615) (9,142)
Consolidated statements of cash flows
The unaudited consolidated interim statements of cash flows of
Dominium for the six-month periods ended 30 June 2020 and 30 June
2019 are stated below:
Unaudited Unaudited
Period ended Period ended
30 June 30 June
2019 2020
PLN'000 PLN'000
Cash flows from operating activities
Loss after taxation (3,667) (5,889)
Cash flow from operations reconciliation:
Depreciation and amortization 7,281 6,790
Finance cost 2,831 2,690
Loss on investment activities 544 393
Working capital adjustments:
Change in trade receivables (226) (625)
Change in inventories (22) 192
Change in trade and other payables (21) 1,033
Change in accruals (11) (215)
Net cash provided by operating activities 6,709 4,369
Cash flows from investing activities
Sales of property, plant and equipment and
intangibles 65 17
Purchase of property, plant and equipment
and intangibles (437) (392)
Net cash used in investing activities (372) (375)
Cash flows from financing activities
Repayment of borrowings (275) (70)
Proceeds from borrowings - 878
Repayments of lease liabilities (3,756) (3,077)
Interest paid (2,122) (1,196)
Net cash used in financing activities (6,153) (3,465)
Net increase in cash and cash equivalents 184 529
Cash and cash equivalents - beginning of the
period 752 1,106
Cash and cash equivalents - end of the period 936 1,635
Notes to the Dominium Group Interim Financial Information
1. General information
The Dominium Group consists of Dominium and its
subsidiaries.
Dominium was incorporated on 2 January 2008 in Poland as a
private company limited by shares under company number 0000295921.
Dominium's registered office is located at 03-932 Warsaw,
Dabrowiecka Street 30. Dominium Group's principal activities are
production of food products and beverages and catering
services.
2. Basis of preparation
The Dominium Group Interim Financial Information has been
prepared in accordance with IAS 34 "Interim Financial Reporting".
The Dominium Group Interim Financial Information is not Dominium
Group's statutory financial statements and should be read in
conjunction with Appendix II "Historical Financial Information of
Dominium Group" of this announcement.
The Dominium Group Interim Financial Information is unaudited.
In the opinion of the Dominium Directors, the Dominium Group
Interim Financial Information presents fairly the financial
position, and results from operations and cash flows for the
period.
Unless otherwise stated, the Dominium Group Interim Financial
Information is presented in PLN which is the currency of the
primary economic environment in which Dominium Group operates, and
all values are rounded to the nearest thousand PLN except where
otherwise indicated.
The Dominium Group Interim Financial Information has been
prepared under the historical cost convention except for certain
financial and equity instruments that have been measured at fair
value.
The Dominium Group Interim Financial Information has been
prepared on the going concern basis, which contemplates the
continuity of normal business activity and the realisation of
assets and the settlement of liabilities in the normal course of
business. The Dominium Directors have prepared detailed financial
projections covering the period ending 31 December 2022. These
consider all reasonably foreseeable circumstances and include
consideration of trading results, cash flows and the level of
facilities that the Enlarged Group will required on a
month-by-month basis. The financial projections incorporate the
expected impact of COVID-19 and synergy savings resulting from the
Acquisition.
As recorded in Note 32 "Events after the balance sheet date" to
the Dominium Group Financial Information, set out in Appendix II
"Historical Financial Information of Dominium Group" of this
announcement. Dominium Group's borrowings which were due to be
repaid on 31 December 2020 have been converted pursuant to
Shareholder Loan Acquisition Agreements to a further unsecured
facility issued to Malaccan Holdings in substitution for the
outstanding debt. These new loans have a maturity date three years
from the date of issue.
Based on their enquiries and the information available to them
and considering the other risks and uncertainties set out herein,
the Dominium Directors have a reasonable expectation that Dominium
Group has adequate resources to continue operating for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the Dominium Group Interim
Financial Information.
3. Accounting policies
The principal accounting policies applied in preparation of the
Dominium Group Interim Financial Information are the same as those
used in the preparation of the Dominium Group Financial Information
set out in Appendix II "Historical Financial Information of
Dominium Group" of this announcement and have been consistently
applied unless otherwise stated.
(a) IFRS 16 "Leases"
For the purposes of the Dominium Group Interim Financial
Information Dominium Group has adopted IFRS 16 "Leases" by applying
the modified retrospective approach with effect from 1 January
2019. This treatment is consistent with Dominium Group's annual
financial statements for the year ended 31 December 2019 and will
be consistent with Dominium Group's next published set of annual
financial statements for the year ending 31 December 2020.
4. Significant accounting judgements, estimates and assumptions
The Dominium Directors have made the following judgments which
may have a significant effect on the amounts recognised in the
Dominium Group Interim Financial Information:
(a) Valuation of intangible assets
Intangible assets acquired in a separate transaction are
initially measured at the purchase price or production cost. The
purchase price of intangible assets acquired in a business
combination is equal to their fair value as at the combination
date. After initial recognition, intangible assets are recognised
at purchase price or production cost less amortisation and
impairment losses. Outlays on internally generated intangible
assets, except for activated outlays incurred for development
works, are not activated and are recognised in the costs of the
period in which they were incurred.
The Dominium Directors determine whether the useful life of
intangible assets is limited or indefinite. Intangible assets with
a limited useful life are amortised over their useful lives and
tested for impairment each time there are premises indicating their
impairment. The period and method of amortisation of intangible
assets with a limited useful life are verified at least at the end
of each financial year. Changes in the expected useful life or the
expected pattern of consumption of economic benefits from a given
asset are recognised by changing the amortisation period or method,
respectively, and treated as changes in estimated values. The
amortisation charge for intangible assets with a limited useful
life is recognised in the statement of comprehensive income in the
category that corresponds to the function of the given intangible
asset.
Intangible assets with an indefinite useful life and those that
are not used are verified annually for impairment in relation to
individual assets or at the level of the cash generating unit. In
the case of other intangible assets, it is assessed each year
whether there are any impairment indicators. Useful lives are also
verified on an annual basis and, if necessary, adjusted with effect
from the beginning of the financial year.
For further details regarding Intangible assets, see note 12
"Intangible Assets" to the Dominium Group Financial Information
included in Appendix II "Historical Financial Information of
Dominium Group" of this announcement .
(b) Tax settlements
For further details regarding tax settlements, see note 26 "Tax
settlement" to the Dominium Group Financial Information included in
Appendix II "Historical Financial Information of Dominium Group" of
this announcement .
5. Revenue
All revenues in the current and prior period were generated in
Poland.
6. Expenses by nature
Unaudited Unaudited
Period ended
Period ended 30 June
30 June 2019 2020
PLN'000 PLN'000
Depreciation and
amortisation 7,281 6,790
Staff costs 12,897 10,980
Materials and consumables 11,655 10,287
External services 5,746 6,883
Taxes 167 151
Insurances 167 140
Other costs 2,589 2,380
Unaudited Unaudited
Period ended
Period ended 30 June
30 June 2019 2020
Staff costs PLN'000 PLN'000
Wages and salaries 9,440 8,780
Payroll taxes 3,457 2,200
Total staff costs 12,897 10,980
7. Trade receivables
The majority of trade receivables are current and the Dominium
Directors believe these receivables are collectible. The Dominium
Directors consistently assess the collectability of these
receivables. As at 30 June 2020, the Dominium Directors considered
a portion of these receivables uncollectable and recorded a
provision in the amount of PLN 704,000 (2019: PLN 704,000).
Unaudited Unaudited
As at
As at 30 June
30 June 2019 2020
Current receivables PLN'000 PLN'000
Trade receivables 2,184 1,782
Guarantee deposits 223 354
Other financial receivables 69 74
Less provisions (704) (704)
Receivables from taxes,
social and health insurance
and other benefits - 465
Prepayments 745 912
Total current receivables 2,517 2,883
---------
8. Borrowings
The following table provides a reconciliation of Dominium
Group's future maturities of its total borrowings for each of the
periods presented:
Value at 30 June 2020
(unaudited)
In local
currency Interest Termination
Financing entity Currency Value ('000) in PLN'000 rate date
Raiffeisen bank WIBOR 1M
polska S.A. * PLN 640 - - +3.7% 30/06/2020
Malaccan Holdings EUR 600 825 3,523 15% per year 31/12/2020
Malaccan Holdings EUR 300 386 1,647 15% per year 31/12/2020
Malaccan Holdings EUR 300 337 1,440 15% per year 31/12/2020
Malaccan Holdings EUR 200 202 888 15% per year 31/12/2020
10.8% per
Malaccan Holdings PLN 18,152 - 18,390 year 31/12/2020
Malaccan Holdings PLN 400 - 226 11% per year 31/12/2020
Malaccan Holdings PLN 400 - 564 11% per year 31/12/2020
Malaccan Holdings PLN 100 - 4 11% per year 31/12/2020
Malaccan Holdings PLN 100 - 3 11% per year 31/12/2020
Malaccan Holdings PLN 300 - 380 11% per year 31/12/2020
Malaccan Holdings PLN 450 - 510 11% per year 31/12/2020
Total Borrowings 27,575
*Security: Dominium Group has provided a registered pledge of
assets up to the amount of PLN 12,450,000.z
Value at 30 June 2019
(unaudited)
In local
currency Interest Termination
Financing entity Currency Value ('000) in PLN'000 rate date
Raiffeisen bank WIBOR 1M
polska S.A. * PLN 2 000 - 843 +3.7% 30/06/2020
UniCredit Bank WIBOR 1M
S.A. LEI 390 369 340 +3.2% 31/08/2017
10.8% per
Malaccan Holdings PLN 18,153 - 17,440 year 31/12/2020
Malaccan Holdings EUR 600 716 3,082 15% per year 30/12/2020
Malaccan Holdings EUR 300 300 1,440 11% per year 31/12/2020
Malaccan Holdings PLN 400 - 352 11% per year 31/12/2020
Malaccan Holdings PLN 400 - 534 11% per year 01/01/2021
Malaccan Holdings PLN 100 - 131 11% per year 31/12/2020
Malaccan Holdings PLN 100 - 128 11% per year 31/12/2020
Malaccan Holdings PLN 300 - 360 11% per year 31/12/2020
Malaccan Holdings PLN 450 - 484 11% per year 31/12/2020
----------
Total Borrowings 25,134
* Security: Dominium Group has provided a registered pledge of
assets up to the amount of PLN 12,450,000.
9. Other non-current and current liabilities
Unaudited Unaudited
As at As at
30 June 30 June
2019 2020
Non-current liabilities PLN'000 PLN'000
Supplier incentives 2,312 1,894
Total non-current liabilities 2,312 1,894
---------
Current liabilities
Trade and other payables 6,506 6,584
Payroll liabilities 1,610 1,147
Other financial liabilities 479 273
Tax and social security liabilities 1,480 1,725
Supplier incentives 980 833
Total current liabilities 11,055 10,562
---------
Total liabilities 13,367 12,456
---------
10. Related party transactions
Period ended 30 June 2020
Product sales
Revenue from sales to related parties PLN'000
Other related entities 405
Purchase of
services
Purchases from related parties PLN'000
Other related entities 396
Period ended 30 June 2019
Product sales
Revenue from sales to related parties PLN'000
Other related entities 181
Purchase of
services
Purchases from related parties PLN'000
Other related entities 340
Unaudited Unaudited
Transactions with Management Board Members Period ended Period ended
and Supervisory Board Members 30 June 30 June
2019 2020
PLN'000 PLN'000
Receivables from Dominium Tomasz Plebaniak 312 64
Liabilities to Dominium Tomasz Plebaniak - 120
Sales to Dominium Tomasz Plebaniak (VAT not
included) 181 405
Purchases re-invoiced by Dominium Tomasz
Plebaniak (VAT included) 125 150
Purchases and services to Dominium Group
provided by members of Supervisory Board 18 18
Services provided to Dominium Group by members
of Management Board 187 228
11. Ultimate controlling party
The parent company of Dominium Group is Dominium.
As at 30 June 2020, Malaccan Holdings owned 94.91% of the
ordinary shares in Dominium. A s such, Malaccan Holdings is the
ultimate controlling party of Dominium and Dominium Group
12. Events after the balance sheet date
Refinancing
Pursuant to the Shareholder Loan Agreements, all borrowings were
due to be repaid on 31 December 2020. Due to the advanced stage of
completion with regard to the Acquisition, Malaccan Holdings did
not require the borrowings to be repaid and will be converted,
pursuant to the Loan Note Instrument, into a further unsecured
facility issued to Malaccan Holdings in substitution for the
outstanding debt. These new loans have a maturity date three years
from the date of issue.
Tax assessment payment
Between 30 June 2020 and 30 November 2020, Dominium Group paid
PLN 831,702 in cash in respect of the provisions for VAT payable
for the years ended 31 December 2015 and 31 December 2016 included
within "other provisions" in Note 21 "Provisions" and the tax
settlement set out in Note 26 "Tax settlement" to the Dominium
Group Historical Financial Information. In addition to the actual
cash paid of PLN 831,702, VAT recoverable of PLN 473,384 has arisen
between August 2020 and October 2020 from Dominium Group's normal
course of business. Dominium Group has requested that this
additional amount be offset against the same VAT payable
provisions.
COVID-19
Dominium Group provides catering services and is exposed to the
continuing operational and financial risks associated with the
COVID-19 pandemic.
The Dominium Directors consider the possibility that the Polish
government will restore some or all of the restrictions, including
limiting the number of customers in Dominium Group's restaurants,
as well as the possibility of limiting eat-in sales. In order to
mitigate the risk, the Dominium Directors have taken further steps
to redirect as many sales as possible to deliveries. These steps
include an increase in marketing activities and activities aimed at
reducing delivery times.
As a result of all actions taken by the Dominium Directors, it
is their view that the financial situation of Dominium Group is
stable.
13. Nature of the Dominium Group Interim Financial
Information
The Dominium Group Interim Financial Information presented above
does not constitute statutory financial statements for the periods
under review.
APPIX IV
UNAUDITED PRO FORMA POST-SYNERGY RESULTS OF THE ENLARGED
GROUP
There are a number of cost savings which are expected to arise
from the Acquisition, as well as the potential to optimise
processes and benefits from economies of scale which are driven by
an enlarged business.
The Directors expect to realise the following synergies:
Procurement savings (food costs and utilities)
The rationale underlying this category of cost synergy lies in
the following three principal assumptions:
-- that currently, DPP Group and Dominium Group have independent
trade supplier networks, each with differing rates and cost
structures. The Directors have assumed that post-Acquisition, food
purchases and utilities will be sourced from those suppliers
providing the lowest rates from within the current supplier pool.
As such, cost savings will be realised;
-- that the Enlarged Group will also benefit from economies of
scale from its condensed supply chain. At present, the DPP Group
and Dominium Group use a different supply chain to each other with
respect to ingredients and food stuffs as well as utilities. By
pooling purchase orders for the Enlarged Group, the Directors have
assumed that new supply terms can be negotiated from the chosen
supplier lists and that such terms will improve upon those
currently available to each of DPP Group and Dominium Group
individually; and
-- that Dominium Group currently sources frozen pizza dough from
a third party supplier, whilst DPP Group currently produces its own
fresh dough at its commissary facilities in Ăłd and Warsaw.
Post-Acquisition, the Directors are projecting that substantial
majority of the Enlarged Group's combined pizza dough requirement
will be made fresh at the DPP Commissaries, thereby generating a
cost saving. Only speciality doughs, for example gluten-free and
thin crust, will be sourced externally.
Considering that all production of pizza dough and ingredient
procurement will be migrated to DPP Group's commissary facility
post-Acquisition, it is expected that the fixed operating costs at
the facility will increase due to the increased throughput.
Optimisation program (administrative expenses)
The Directors intend to undertake a head office optimisation
program. They have assumed that the synergies will be achieved in a
phased manner, but within six months post-Acquisition. By way of
examples:
-- DPP Group operates from head offices in Warsaw, on which the
current lease is due to expire in July 2021. The Directors intend
to relocate staff from these premises to Dominium Group's head
office;
-- The Directors believe that the Enlarged Group will be capable
of being run by a smaller head office team than the aggregation of
the existing DPP Group and Dominium Group head office teams. The
Directors have assumed that operating from single premises
post-Acquisition will enable the Enlarged Group to be run more cost
efficiently compared to the current status;
-- Dominium Group operates a different accounting system from
DPP Group. Post-Acquisition, all transactions will be passed
through the DPP Group accounting system, thereby saving payroll, IT
hardware and IT software costs; and
-- certain Dominium Directors' costs will cease post-Acquisition.
Marketing savings
At present, both DPP Group and Dominium Group incur marketing
expenditure separately, as independent entities. Post-Acquisition,
such expenditure can be consolidated and savings realised.
Call centre savings
Recently, more and more of Dominium Group's customers have been
ordering pizzas through Dominium's mobile app and website. This has
already resulted in reduced call centre costs at Dominium
Group.
Currently, DPP Group does not operate a mobile app. Rather, most
pizza orders are taken through DPP Group's website, with the
balance taken through DPP Group's call centre. Post-Acquisition,
Dominium Group's mobile app will be converted into a DPP Group
mobile app which will add a further online sales channel. The
Directors have assumed that the current trend of Dominium Group's
customer orders migrating from the call centre to online platforms
will continue and may even accelerate. That said, the call centre
option will still be needed, albeit with a reduced capacity than
currently exists. Should less activity be put through the call
centre, operations can be scaled back with a consequential cost
saving in rent, salaries and utilities.
Delivery savings
DPP Group and Dominium Group currently deliver orders
independently of each other. DPP Group delivers its pizzas through
its own in-house drivers and fleet of scooters and vans, whilst
Dominium Group uses a combination of its own drivers and scooters
and third party suppliers to deliver its pizzas. The Directors have
assumed that post-Acquisition, all deliveries will be undertaken by
the integrated in-house delivery team comprising delivery staff
from both organisations. Naturally, additional drivers will need to
be employed and additional vans and scooters purchased. However,
these incremental costs are expected to be much lower than the
current third party costs charged. This cost-saving synergy is a
combination of:
-- integrating DPP Group's and Dominium Group's delivery drivers
and scooters to optimise capacity utilisation, reducing idle
time;
-- delivering orders from the nearest store, irrespective of
whether it is a DPP Group store or a Dominium Group store;
-- in selected cases, consolidating production and delivery through the more efficient stores;
-- optimising delivery bundles, for example including more than one order per trip; and
-- optimising delivery times.
Store closures
The Directors have assessed each DPP Group and Dominium Group
store as to its profitability. Following this exercise, certain
loss-making stores have been identified for closure. Such closures
will decrease revenues but will increase gross profit. As the
Enlarged Group will operate under a single brand, the Directors
will also seek to reduce duplicated presence where it is not
economically viable.
In addition, the Directors have identified that trade migration
from certain of the stores identified for closure to nearby stores
within the Enlarged Group's portfolio is possible.
Franchise buy-outs
The Directors have undertaken a strategic review of the DPP
Group stores, the Dominium Group stores and the effects that
franchise stores are having on the Enlarged Group's store
portfolios' trade and prospects. Following this review, the
Directors have identified opportunities to selectively purchase and
/ or shut down certain franchise stores. The rationale for such
purchases and / or shutdowns is to take advantage of growth
opportunity in a geographic location which is currently restricted
by the existence of a franchise store, or to de-duplicate presence
in instances, where a franchise store is located closely to a
Dominium store. These assumed franchise buy-outs are not contracted
and formal negotiations have yet to commence with the franchisees.
Should the franchisees opt not to sell, these stores will continue
to operate in their current format.
Pro forma synergy financial information
The following unaudited, consolidated pro forma financial
information has been prepared for illustrative purposes only, to
provide information about how synergies identified by the Directors
as a result of the Acquisition might have affected the trading
results of DPP Group and Dominium Group for the year ended 31
December 2019 (the "Synergy Financial Information").
The results of DPP Group have been extracted, without
adjustment, from the DPP Group Financial Information.
The results of Dominium Group have been extracted from the
Dominium Group Financial Information included in Appendix II
"Historical Financial Information of Dominium Group" of this
announcement, translated into GBP at the rate of GBP1 to PLN
4.98614, and adjusted as follows:
-- depreciation, amortisation and impairment charges have been
reclassified from "Direct costs", "Selling costs" and
"Administrative expenses" to "Depreciation, amortisation and
impairment" to present the EBITDA figure for Dominium Group;
-- "other income" and "other operating costs" have been
reclassified to "Other non-cash and non-recurring items" to enable
a comparable presentation to the DPP Group Financial Information;
and
-- the pro forma aggregate annual post-tax effect of the
synergies identified is to decrease the loss after tax by
GBP2,730,000 during the year ended 31 December 2019. Of this
amount, GBP1,365,000 can be substantiated and GBP1,365,000 relate
to the Directors' reasonable estimates, based upon their commercial
assessments.
Dominium Enlarged
DPP Group Group Group
Year ended Year ended Year ended Adjustment
31 December 31 December 31 December Synergies Pro forma
GBP'000 2019 2019 2019 (Note 1) results
Revenue 14,007 17,035 31,042 (181) 30,861
Direct costs (11,820) (11,371) (23,191) 1,057 (22,134)
Selling, general
and administrative
expenses (2,606) (2,215) (4,821) 1,854 (2,967)
EBITDA (419) 3,449 3,030 2,730 5,760
Store pre-opening
expenses (54) - (54) - (54)
Other non-cash
and non-recurring
items (190) (138) (328) - (328)
Finance income 160 44 204 - 204
Finance costs (600) (1,222) (1,822) - (1,822)
Foreign exchange
losses (11) - (11) - (11)
Depreciation, amortisation
and impairment (2,247) (3,167) (5,414) - (5,414)
Share-based payments (151) - (151) - (151)
Income before taxation (3,512) (1,034) (4,546) 2,730 (1,816)
Taxation - (22) (22) - (22)
(Loss)/income after
taxation (3,512) (1,056) (4,568) 2,730 (1,838)
Other comprehensive
loss - (129) (129) - (129)
Total comprehensive
(loss)/income (3,512) (1,185) (4,697) 2,730 (1,967)
Note 1
The adjustment represents the aggregate financial effects of the
following synergies:
GBP'000
Revenue
Store closures (Note 2) (766)
Franchise buy-outs (Note 2) 585
Direct costs
Store closures (Note 2) 1,135
Franchise buy-outs (Note 2) (476)
Procurement savings on food costs 478
Procurement savings on utilities 28
Additional DPP Group commissary costs (108)
Selling, general and administrative expenses
Franchise buy-outs (Note 2) 171
Three-phase optimisation program with respect
to administrative expenses 542
Savings from discontinued Dominium Group founders'
costs 60
Marketing savings 201
Call centre savings 178
Delivery savings 702
Note 2
The aggregate financial effects of the store closure and
franchise buy-out synergies can also be presented under the
following:
GBP'000
Closure of loss making stores 188
Closure of profitable stores (73)
Trade migration (from store closures and franchise
buy-outs) 351
Franchise buy-outs 240
Lost trade from franchise buy-outs (57)
APPIX V
UNAUDITED PRO FORMA STATEMENT OF NET ASSETS OF THE ENLARGED
GROUP
Unaudited Unaudited
pro
Company Adjustment forma
Acquisition net
As at Adjustment and assets
Dominium as
30 June Group consolidation Adjustment at
Issue
of Placing
Shares
and Subscription
Shares
and settlement 30
2020 adjustment adjustments of costs June
(Note (Note (Note (Note
1) 2) 3) 4) 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Intangible assets 521 5,160 - - 5,681
Property, plant and
equipment 5,678 1,599 - - 7,277
Right-of-use assets 5,576 4,219 - - 9,795
Trade and other receivables 1,719 - - - 1,719
Leases 515 - - - 515
Deferred tax assets - 32 - - 32
Non-current assets 14,009 11,010 - - 25,019
Inventories 365 176 - - 541
Trade and other receivables 2,288 590 - - 2,878
Leases 71 - - - 71
Cash and cash equivalents 2,688 335 - 2,393 5,416
Current assets 5,412 1,101 - 2,393 8,906
TOTAL ASSETS 19,421 12,111 - 2,393 33,925
Trade and other payables (1,976) (2,161) - - (4,137)
Borrowings (69) (5,643) (1,187) - (6,899)
Leases (1,055) (1,493) - - (2,548)
Provisions (14) (556) - - (570)
Current liabilities (3,114) (9,853) (1,187) - (14,154)
Leases (6,084) (3,731) - - (9,815)
Borrowings (53) - - - (53)
Deferred tax liabilities - (10) - - (10)
Trade and other payables - (388) - - (388)
Non-current liabilities (6,137) (4,129) - - (10,266)
TOTAL LIABILITIES (9,251) (13,982) (1,187) - (24,420)
NET ASSETS/(LIABILITIES) 10,170 (1,871) (1,187) 2,393 9,505
Notes
1. The financial information relating to DPP Group Company has
been extracted without adjustment from DPP Group's unaudited
interim financial information for the six months ended 30 June
2020.
2. The financial information relating to Dominium Group has been
extracted without adjustment from the Dominium Group Interim
Financial Information set out in Appendix III "Unaudited Interim
Financial Information of Dominium Group" of this announcement and
translated from PLN to GBP at the rate of GBP1 to PLN 4.887 as
follows:
Unaudited Adjustment
Dominium Group Dominium Group
As at As at
30 June 30 June
2020 2020
PLN'000 GBP'000
Intangible assets 25,217 5,160
Property, plant and equipment 7,816 1,599
Right-of-use assets 20,618 4,219
Deferred tax assets 155 32
Non-current assets 53,806 11,010
Inventories 862 176
Trade and other receivables 2,883 590
Cash and cash equivalents 1,635 335
Current assets 5,380 1,101
Total assets 59,186 12,111
Trade and other payables (10,562) (2,161)
Borrowings (27,575) (5,643)
Leases (7,298) (1,493)
Provisions (2,719) (556)
Current liabilities (48,154) (9,853)
Leases (18,233) (3,731)
Deferred tax liabilities (47) (10)
Trade and other payables (1,894) (388)
Non-current liabilities (20,174) (4,128)
Total liabilities (68,328) (13,982)
Net liabilities (9,142) (1,871)
3. The adjustment represents the Acquisition by the Company of
the entire issued share capital of Dominium, satisfied by the issue
of the 283,766,661 Consideration Shares at the Issue Price, and
additional borrowings of PLN 5,800,000 (or GBP1,187,000 at GBP1 to
PLN 4.887). In accordance with IFRS, GBP 1,419,000 has been
allocated to share capital and GBP 21,282,000 to share premium
within "equity" and GBP1,187,000 as an increase to borrowings
within "current liabilities".
4. The adjustment of GBP 2,393,000 to cash and cash equivalents
represents the aggregate proceeds from the issue of the Placing
Shares and the Subscription Shares of GBP 3,500,000 , less
settlement of the associated costs of GBP 1,107,000 .
5. The Pro Forma Financial Information does not reflect any
changes in the trading positions of either DPP Group or Dominium
Group, additional or subsequent acquisitions, or any other changes
arising from other transactions since 30 June 2020.
APPIX VI
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES
ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING.
THIS ANNOUNCEMENT AND THE APPICES (INCLUDING THE TERMS AND
CONDITIONS SET OUT HEREIN (TOGETHER THIS "ANNOUNCEMENT") (WHICH IS
FOR INFORMATION PURPOSES ONLY) ARE DIRECTED ONLY AT: (A) PERSONS IN
MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE "EEA") WHO ARE
QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF
DIRECTIVE 2003/71/EC, AS AMED FROM TIME TO TIME, INCLUDING BY
DIRECTIVE 2010/73/EC TO THE EXTENT IMPLEMENTED IN THE RELEVANT
MEMBER STATE AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE
MEASURE IN ANY MEMBER STATE (THE "PROSPECTUS DIRECTIVE")
("QUALIFIED INVESTORS"); AND (B) IN THE UNITED KINGDOM, QUALIFIED
INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN
MATTERS RELATING TO INVESTMENTS WHO FALL WITHIN ARTICLE 19(5) OF
THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION)
ORDER 2005 AS AMED (THE "ORDER") (INVESTMENT PROFESSIONALS); (II)
PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH
COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC) OF THE ORDER; OR (III)
ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL
SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
NEITHER THIS ANNOUNCEMENT NOR THE INFORMATION IN IT MUST BE
ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS.
PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT
IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO
WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT
PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS
ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR THE SALE OR
SUBSCRIPTION OR A SOLICITATION OF AN OFFER TO BUY OR ACQUIRE OF ANY
SECURITIES IN THE COMPANY IN THE UNITED STATES OR ELSEWHERE.
THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE US SECURITIES ACT OF 1933, AS AMED (THE "US SECURITIES
ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR
JURISDICTION OF THE UNITED STATES OR UNDER ANY SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE
OFFERED, SOLD, RESOLD, PLEDGED, TRANSFERRED OR DELIVERED, DIRECTLY
OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN
APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT, IN EACH CASE,
AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES. THE PLACING SHARES ARE BEING
OFFERED AND SOLD ONLY (I) OUTSIDE OF THE UNITED STATES IN
ACCORDANCE WITH REGULATION S UNDER THE US SECURITIES ACT AND
OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS AND; (II) IN THE
UNITED STATES TO A LIMITED NUMBER OF "QUALIFIED INSTITUTIONAL
BUYERS" AS DEFINED IN RULE 144A UNDER THE US SECURITIES ACT; OR
(III) OTHERWISE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE US SECURITIES ACT. ANY OFFER OR SALE OF PLACING
SHARES IN THE UNITED STATES WILL BE MADE ONLY BY BROKER-DEALERS WHO
ARE REGISTERED AS SUCH UNDER THE U.S. EXCHANGE ACT OF 1934, AS
AMED. THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES MENTIONED
HEREIN IN THE UNITED STATES. THIS ANNOUNCEMENT AND THE INFORMATION
CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION
OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR
INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW
ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN
WHICH SUCH RELEASE PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL
(THE "RESTRICTED JURISDICTIONS"). NO PUBLIC OFFERING OF THE PLACING
SHARES IS BEING MADE IN THE UNITED STATES, THE UNITED KINGDOM OR
ELSEWHERE WHERE SUCH OFFERING WOULD BE UNLAWFUL.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISORS AS TO LEGAL,
TAX, BUSINESS AND RELATED ASPECTS OF A PURCHASE OF PLACING
SHARES.
The Placing Shares have not been approved or disapproved by the
US Securities and Exchange Commission, any state securities
commission or other regulatory authority in the United States nor
have any of the foregoing authorities passed upon or endorsed the
merits of the Placing or the accuracy or adequacy of this
Announcement. Any representation to the contrary is a criminal
offence in the United States. The relevant clearances have not
been, nor will they be, obtained from the securities commission of
any province or territory of Canada, no prospectus has been lodged
with, or registered by, the Australian Securities and Investments
Commission or the Japanese Ministry of Finance; the relevant
clearances have not been, and will not be, obtained for the South
Africa Reserve Bank or any other applicable body in the Republic of
South Africa in relation to the Placing Shares and the Placing
Shares have not been, nor will they be registered under or offered
in compliance with the securities laws of any state, province or
territory of Australia, Canada, Japan or the Republic of South
Africa. Accordingly, the Placing Shares may not (unless an
exemption under the relevant securities laws is applicable) be
offered, sold, resold or delivered, directly or indirectly, in or
into Australia, Canada, Japan or the Republic of South Africa or
any other jurisdiction outside the EEA.
Persons (including without limitation, nominees and trustees)
who have a contractual right or other legal obligations to forward
a copy of this Announcement should seek appropriate advice before
taking any action.
This Announcement should be read in its entirety. In particular,
any Placee should read and understand the information provided in
the "Important Notice" section of this Announcement.
By participating in the Bookbuild and the Placing, each Placee
will be deemed to have read and understood this Announcement in its
entirety, to be participating, making an offer and acquiring
Placing Shares on the terms and conditions contained herein and to
be providing the representations, warranties, indemnities,
acknowledgements and undertakings contained herein.
In particular, each such Placee represents, warrants,
undertakes, agrees and acknowledges (amongst other things)
that:
1. it is a Relevant Person and undertakes that it will acquire,
hold, manage or dispose of any Placing Shares that are allocated to
it for the purposes of its business;
2. in the case of a Relevant Person in the United Kingdom or a
member state of the EEA which has implemented the Prospectus
Directive (each, a "Relevant Member State") who acquires any
Placing Shares pursuant to the Placing:
(a) it is a Qualified Investor within the meaning of Article
2(1)(e) of the Prospectus Directive; and
(b) in the case of any Placing Shares acquired by it as a
financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive:
(i) the Placing Shares acquired by it in the Placing have not
been acquired on behalf of, nor have they been acquired with a view
to their offer or resale to, persons in any Relevant Member State
other than Qualified Investors or in circumstances in which the
prior consent of N+1 Singer has been given to the offer or
resale;
(ii) where Placing Shares have been acquired by it on behalf of
persons in any Relevant Member State other than Qualified
Investors, the offer of those Placing Shares to it is not treated
under the Prospectus Directive as having been made to such
persons;
3. it is acquiring the Placing Shares for its own account or is
acquiring the Placing Shares for an account with respect to which
it exercises sole investment discretion and has the authority to
make and does make the representations, warranties, indemnities,
acknowledgements, undertakings and agreements contained herein;
4. it understands (or if acting for the account of another
person, such person has confirmed that such person understands) the
resale and transfer restrictions set out in this Announcement;
and
5. except as otherwise permitted by the Company and subject to
any available exemptions from applicable securities laws, it (and
any account referred to in paragraph 4 above) is either:
(a) outside the United States acquiring the Placing Shares in
offshore transactions as defined in, and in accordance with,
Regulation S under the US Securities Act; or
(b) a "qualified institutional buyer" as defined in Rule 144A
under the US Securities Act (a "QIB").
No prospectus
The Placing Shares are being offered to a limited number of
specifically invited persons only and will not be offered in such a
way as to require any prospectus or other offering document to be
published. No prospectus or other offering document has been or
will be submitted to be approved by the FCA in relation to the
Placing or the Placing Shares and Placees' commitments will be made
solely on the basis of their own assessment of the Company, the
Placing Shares and the Placing based on the information contained
in this Announcement, the announcement of the results of the
Placing (the "Result of Placing Announcement") and the Re-Admission
Document (together, the "Placing Documents") and any information
publicly announced through a regulatory information service ("RIS")
by or on behalf of the Company on or prior to the date of this
Announcement (the "Publicly Available Information") and subject to
any further terms set forth in the trade confirmation sent to
Placees.
Each Placee, by participating in the Placing, agrees that the
content of the Placing Documents is exclusively the responsibility
of the Company and confirms that it has neither received nor relied
on any information (other than the Publicly Available Information),
representation, warranty or statement made by or on behalf of N+1
Singer or the Company or any other person and none of N+1 Singer,
the Company nor any other person acting on such person's behalf nor
any of their respective affiliates has or shall have any
responsibility or liability for any Placee's decision to
participate in the Placing based on any other information,
representation, warranty or statement (regardless of whether or not
such information, representation, warranty or statement was given
or made by or on behalf of any such persons). Each Placee
acknowledges and agrees that it has relied on its own investigation
of the business, financial or other position of the Company in
accepting a participation in the Placing. No Placee should consider
any information in this Announcement to be legal, tax or business
advice. Each Placee should consult its own attorney, tax advisor
and business advisor for legal, tax and business advice regarding
an investment in the Placing Shares. Nothing in this paragraph
shall exclude the liability of any person for fraudulent
misrepresentation.
Details of the Placing Agreement and the Placing Shares
N+1 Singer is acting as sole bookrunner in connection with the
Placing and has entered into the Placing Agreement with, amongst
others, the Company and the Seller under which, on the terms and
subject to the conditions set out in the Placing Agreement, N+1
Singer, as agent for and on behalf of the Company and the Seller,
has agreed to use its reasonable endeavours to procure placees for
the Placing Shares. The Placing is not being underwritten by N+1
Singer or any other person.
The price per Ordinary Share at which the Placing Shares are to
be placed is 8 pence (the "Issue Price"). The timing of the closing
of the book and allocations are at the discretion of the Company
and N+1 Singer.
The Placing Shares will be made up of a number of new Ordinary
Shares issued and allotted by the Company and a transfer of the
Sale Shares by the Seller. Accordingly, by participating in the
Placing, Placees agree to subscribe for and/or purchase Placing
Shares (as applicable).
The Placing Shares have been or will be duly authorised and
will, when issued, be credited as fully paid up and will be issued
subject to the Company's Articles of Association and rank pari
passu in all respects with the existing Ordinary Shares, including
the right to receive all dividends and other distributions
declared, made or paid on or in respect of the Ordinary Shares
after the date of issue of the Placing Shares, and will on issue be
free of all pre-emption rights, claims, liens, charges,
encumbrances and equities.
Application for listing and admission to trading
Application will be made to the London Stock Exchange for
Admission of the Enlarged Share Capital (which includes the Placing
Shares) on AIM (the "Admission Application").
It is expected that Admission of the Placing Shares will occur
at or before 8.00 a.m. on 8 January 2021 (or such later time or
date as N+1 Singer may agree with the Company, being no later than
8.00 a.m. on 29 January 2021) and that dealings in the Placing
Shares will commence at that time.
Bookbuild
N+1 Singer will today commence the accelerated bookbuilding
process to determine demand for participation in the Placing by
Placees (the "Bookbuild"). This Appendix gives details of the terms
and conditions of, and the mechanics of participation in, the
Placing. No commissions will be paid to Placees or by Placees in
respect of any Placing Shares.
N+1 Singer, the Company and the Seller shall be entitled to
effect the Placing by such alternative method to the Bookbuild as
they may, in their sole discretion, determine.
Participation in, and principal terms of, the Placing
1. N+1 Singer is arranging the Placing as sole bookrunner and
placing agent of the Company and the Seller.
2. Participation in the Placing will only be available to
persons who may lawfully be, and are, invited to participate by N+1
Singer. N+1 Singer may itself agree to be a Placee in respect of
all or some of the Placing Shares or may nominate any member of its
group to do so.
3. Following a successful completion of the Bookbuild, the
Company will confirm the closing of the Placing via the Result of
Placing Announcement.
4. To bid in the Bookbuild, prospective Placees should
communicate their bid orally by telephone or in writing to their
usual sales contact at N+1 Singer. Each bid should state the number
of Placing Shares which the prospective Placee wishes to subscribe
for/purchase at the Issue Price. Bids may be scaled down by N+1
Singer on the basis referred to in paragraph 6 below. N+1 Singer
reserves the right not to accept bids or to accept bids in part
rather than in whole. The acceptance of the bids shall be at N+1
Singer's absolute discretion, subject to agreement with the Company
and the Seller.
5. The Bookbuild is expected to close no later than 4.00 p.m. on
18 December 2020 but may be closed earlier or later at the
discretion of N+1 Singer. N+1 Singer may, in agreement with the
Company and the Seller, accept bids that are received after the
Bookbuild has closed. The Company and the Seller severally reserve
the right (upon the prior agreement of N+1 Singer) to reduce the
number of shares to be issued and/or purchased pursuant to the
Placing, in their absolute discretion.
6. Allocations of the Placing Shares will be determined by N+1
Singer after consultation with the Company (and in accordance with
N+1 Singer's allocation policy as has been supplied by N+1 Singer
to the Company in advance of such consultation). Allocations will
be confirmed orally by N+1 Singer and a trade confirmation will be
despatched as soon as possible thereafter. N+1 Singer's oral
confirmation to such Placee constitutes an irrevocable legally
binding commitment upon such person (who will at that point become
a Placee), in favour of N+1 Singer, the Company and the Seller, to
subscribe for/purchase the number of Placing Shares allocated to it
and to pay the Issue Price in respect of each such shares on the
terms and conditions set out in this Appendix and in accordance
with the Company's Articles of Association. A bid in the Bookbuild
will be made on the terms and subject to the conditions in this
Appendix and will be legally binding on the Placee on behalf of
which it is made and except with N+1 Singer's consent, such
commitment will not be capable of variation or revocation after the
time at which it is submitted.
7. Each Placee's allocation and commitment will be evidenced by
a trade confirmation issued to such Placee. The terms of this
Appendix will be deemed incorporated in that trade
confirmation.
8. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be subscribed/purchased for pursuant to the Placing will
be required to be made at the same time, on the basis explained
below under "Registration and Settlement".
9. All obligations under the Bookbuild and the Placing will be
subject to fulfilment or (where applicable) waiver of the
conditions referred to below under "Conditions of the Placing" and
to the Placing not being terminated on the basis referred to below
under "Right to terminate under the Placing Agreement".
10. By participating in the Placing, each Placee agrees that its
rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by the Placee.
11. To the fullest extent permissible by law, none of N+1
Singer, the Company, the Seller nor any of their respective
affiliates, agents, directors, officers or employees shall have any
responsibility or liability to Placees (or to any other person
whether acting on behalf of a Placee or otherwise). In particular,
none of N+1 Singer, the Company, the Seller nor any of their
respective affiliates, agents, directors, officers or employees
shall have any responsibility or liability (including to the extent
permissible by law, any fiduciary duties) in respect of N+1
Singer's conduct of the Placing.
12. The Placing Shares will be issued/transferred subject to the
terms and conditions of this Appendix and each Placee's commitment
to subscribe/purchase for Placing Shares on the terms set out
herein will continue notwithstanding any amendment that may in
future be made to the terms and conditions of the Placing and
Placees will have no right to be consulted or require that their
consent be obtained with respect to the Company's, Seller's or N+1
Singer's conduct of the Placing.
13. All times and dates in this Announcement may be subject to
amendment. N+1 Singer shall notify the Placees and any person
acting on behalf of the Placees of any changes.
Conditions of the Placing
The Placing is conditional, amongst others, upon the Placing
Agreement becoming unconditional and not having been terminated in
accordance with its terms. N+1 Singer's obligations under the
Placing Agreement are conditional on customary conditions,
including (amongst others) (the "Conditions"):
1. Admission occurring no later than 8.00 a.m. on 8 January 2021
(or such later time or date as N+1 Singer may otherwise agree with
the Company, being no later than 8.00 a.m. on 29 January 2021) (the
"Closing Date");
2. all of the Resolutions (as set out in the Notice of Meeting
contained within the Re-Admission Document) being approved, without
amendment, by the requisite majority of Shareholders attending and
voting at the General Meeting;
3. the Acquisition Agreement having become unconditional (save
in respect of any condition relating to the Placing Agreement
becoming unconditional and Admission) and not being terminated or
rescinded prior to Admission;
4. suspension in the trading of the Ordinary Shares on AIM
having been lifted by the London Stock Exchange following
publication of the Re-Admission Document;
5. there having been no development or event resulting in a
material adverse effect which could materially and adversely affect
the Proposals;
6. the delivery to N+1 Singer of a certificate from and signed
by each of the Company, Directors and Seller in terms of the
warranties being provided by such persons under the Placing
Agreement ("Warranties") not later than 5.00 p.m. on the Business
Day immediately prior to the date on which Admission is expected to
occur (and dated as of such date);
7. each of the Company, Directors and Seller having complied
with their respective obligations which fall to be performed on or
prior to Admission under the Placing Agreement;
8. there not having arisen or been noted prior to Admission any
fact or circumstance which would or might reasonably be expected to
require a supplementary admission document to be published by or on
behalf of the Company; and
9. none of the Warranties on the part of the Company, Directors
and Seller in the Placing Agreement being untrue or inaccurate or
misleading when made and none of the Warranties ceasing to be true
and accurate or becoming misleading at any time prior to Admission
by reference to the facts and circumstances then subsisting.
N+1 Singer may, at its discretion and upon such terms as it
thinks fit, waive compliance by the Company, Directors and Seller
with the whole or any part of any of their respective obligations
in relation to the Conditions or extend the time or date provided
for fulfilment of any such Conditions in respect of all or any part
of the performance thereof, save in respect of condition 1 above
relating to Admission taking place. Any such extension or waiver
will not affect Placees' commitments as set out in this
Appendix.
If: (i) any of the Conditions are not fulfilled or (where
permitted) waived by N+1 Singer by the relevant time or date
specified (or such later time or date as N+1 Singer may agree with
the Company, being no later than 8.00 a.m. on 29 January 2021); or
(ii) the Placing Agreement is terminated in the circumstances
specified below under "Right to terminate under the Placing
Agreement", the Placing will not proceed and the Placees' rights
and obligations hereunder in relation to the Placing Shares shall
cease and terminate at such time and each Placee agrees that no
claim can be made by it or on its behalf (or any person on whose
behalf the Placee is acting) in respect thereof.
None of N+1 Singer, the Company, nor the Seller, nor any of
their respective affiliates, agents, directors, officers or
employees shall have any liability to any Placee (or to any other
person whether acting on behalf of a Placee or otherwise) in
respect of any decision they may make as to whether or not to waive
or to extend the time and/or date for the satisfaction of any
Condition to the Placing, nor for any decision they may make as to
the satisfaction of any Condition or in respect of the Placing
generally, and by participating in the Placing each Placee agrees
that any such decision is within the absolute discretion of N+1
Singer.
Right to terminate under the Placing Agreement
N+1 Singer is entitled, at any time before Admission, to
terminate the Placing Agreement in accordance with its terms in
certain circumstances, including (amongst other things):
1. where there has been a breach of any of the Warranties contained in the Placing Agreement;
2. if any of the Conditions have (i) become incapable of
satisfaction or (ii) not been satisfied before the latest time
provided in the Placing Agreement and have not been waived if
capable of being waived by N+1 Singer;
3. there has been a development or event resulting in a material
adverse effect which could in the good faith opinion of N+1 Singer,
materially and adversely affect the Placing or dealings in the
Ordinary Shares following Admission whether or not foreseeable at
the date of the Placing Agreement;
4. an event having occurred, or is likely to occur, which
constitutes or (if it occurs) will, in the context of the
Proposals, constitute a material new factor, mistake or inaccuracy
relating to the information contained in the Placing Documents
(notwithstanding that a supplementary admission document could be
or may be published in connection with such material new factor,
mistake or inaccuracy) or such an event is or (if it occurs) will,
in the context of the Proposals, be material in the context of any
assumption or other matter relevant to any estimate or statement
about the prospects of the Enlarged Group in the Placing
Documents;
5. the Company, any Director or the Seller failing to comply in
any respect with any obligation under the Placing Agreement or
otherwise relating to the Proposals which N+1 Singer (acting in
good faith) considers material; or
6. the occurrence of a material adverse change or certain force
majeure events including, but not limited to, an escalation of the
COVID-19 pandemic in the United Kingdom or Poland.
Upon termination, the parties to the Placing Agreement shall be
released and discharged (except for any liability arising before or
in relation to such termination) from their respective obligations
under or pursuant to the Placing Agreement, subject to certain
exceptions.
By participating in the Placing, each Placee agrees that (i) the
exercise by N+1 Singer of any right of termination or of any other
discretion under the Placing Agreement shall be within the absolute
discretion of N+1 Singer and that it need not make any reference
to, or consult with, Placees and that it shall have no liability to
Placees whatsoever in connection with any such exercise or failure
to so exercise and (ii) its rights and obligations terminate only
in the circumstances described above under "Right to terminate
under the Placing Agreement" and "Conditions of the Placing", and
its participation will not be capable of rescission or termination
by it after oral confirmation by N+1 Singer of the allocation and
commitments following the close of the Bookbuild.
Restriction on Further Issue of Shares
The Company has undertaken to N+1 Singer that, between the date
of the Placing Agreement and a period of 9 months from Admission
(the "Restricted Period"), it will not, without the prior written
consent of N+1 Singer directly or indirectly offer, issue, lend,
sell or contract to sell, issue options in respect of or otherwise
dispose of or announce an offering or issue of any Ordinary Shares
(or any interest therein or in respect thereof) or any other
securities exchangeable for or convertible into, or substantially
similar to, Ordinary Shares or enter into any transaction with the
same economic effect as, or agree to do, any of the foregoing
(whether or not legally or contractually obliged to do so) provided
that the foregoing restrictions shall not restrict the ability of
the Company or any other member of the Group during the Restricted
Period to grant of options under, or the allotment and issue of
shares pursuant to options under, any employee or non- executive
share or option schemes or long term incentive plans of the Company
(in accordance with its normal practice) or the allotment and issue
of the Consideration Shares pursuant to the Acquisition or the
issuance of the Subscription Shares pursuant to the Subscription
and the issuance of shares in connection with the settlement of
outstanding Director's fees due to certain of the Directors (as set
out in the Re-Admission Document).
By participating in the Placing, Placees agree that the exercise
by N+1 Singer of any power to grant consent to the undertaking by
the Company of a transaction which would otherwise be subject to
the restrictive provisions on further issuance under the Placing
Agreement shall be within the absolute discretion of N+1 Singer and
that it need not make any reference to, or consult with, Placees
and that it shall have no liability to Placees whatsoever in
connection with any such exercise of the power to grant
consent.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN:
GB00B3Q74M51) following Admission will take place within the system
administered by Euroclear UK & Ireland Limited ("CREST"),
subject to certain exceptions. N+1 Singer reserves the right to
require settlement for, and delivery of, the Placing Shares (or any
part thereof) to Placees by such other means that they may deem
necessary if delivery or settlement is not possible or practicable
within the CREST system or would not be consistent with the
regulatory requirements in the Placee's jurisdiction.
N+1 Singer is acting as settlement bank. Following the close of
the Bookbuild, each Placee to be allocated Placing Shares in the
Placing will be sent a trade confirmation stating the number of
Placing Shares allocated to them at the Issue Price, the aggregate
amount owed by such Placee to N+1 Singer and settlement
instructions. Each Placee agrees that it will do all things
necessary to ensure that delivery and payment is completed in
accordance with the standing CREST or certificated settlement
instructions in respect of the Placing Shares that it has in place
with N+1 Singer.
The Company and the Seller will deliver (or will procure the
delivery of) the Placing Shares to a CREST account operated by N+1
Singer as agent for the Company and the Seller and N+1 Singer will
enter its delivery instruction into the CREST system. The input to
CREST by a Placee of a matching or acceptance instruction will then
allow delivery of the relevant Placing Shares to that Placee
against payment.
It is expected that settlement in respect of the Placing Shares
will take place on 8 January 2021 on a delivery versus payment
basis.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two percentage points above LIBOR as
determined by N+1 Singer.
Each Placee is deemed to agree that, if it does not comply with
these obligations, N+1 Singer may sell any or all of the Placing
Shares allocated to that Placee on such Placee's behalf and retain
from the proceeds, for N+1 Singer's account and benefit, an amount
equal to the aggregate amount owed by the Placee plus any interest
due. The relevant Placee will, however, remain liable for any
shortfall below the aggregate amount owed by it and will be
required to bear any stamp duty or stamp duty reserve tax or other
taxes or duties (together with any interest or penalties) imposed
in any jurisdiction which may arise upon the sale of such Placing
Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the trade confirmation
is copied and delivered immediately to the relevant person within
that organisation. Insofar as Placing Shares are issued in a
Placee's name or that of its nominee or in the name of any person
for whom a Placee is contracting as agent or that of a nominee for
such person, such Placing Shares should, subject as provided below,
be so registered free from any liability to UK stamp duty or stamp
duty reserve tax. If there are any circumstances in which any stamp
duty or stamp duty reserve tax or other similar taxes or duties
(including any interest and penalties relating thereto) is payable
in respect of the allocation, allotment, issue, sale, transfer or
delivery of the Placing Shares (or, for the avoidance of doubt, if
any stamp duty or stamp duty reserve tax is payable in connection
with any subsequent transfer of or agreement to transfer Placing
Shares), none of N+1 Singer, the Company nor the Seller shall be
responsible for payment thereof.
Re-Admission Document
The Placing Shares are being offered to a limited number of
specifically invited persons only and have not been nor will be
offered in such a way as to require the publication of a prospectus
in the United Kingdom or in any other jurisdiction. No prospectus
has been or will be submitted to be approved by the FCA in relation
to the Placing, and Placees' commitments will be made solely on the
basis of the information contained in the Placing Documents and the
Publicly Available Information. Each Placee, by accepting a
participation in the Placing, agrees that the content of the
Placing Documents is exclusively the responsibility of the Company
and confirms that it has neither received nor relied on any other
information, representation, warranty, or statement made by N+1
Singer or any other person and neither N+1 Singer nor the Company
nor any other person will be liable for any Placee's decision to
participate in the Placing based on any other information,
representation, warranty or statement which the Placees may have
obtained or received and, if given or made, such information,
representation, warranty or statement must not be relied upon as
having been authorised by N+1 Singer, the Company, or their
respective officers, directors, employees or agents. Each Placee
acknowledges and agrees that it has relied on its own investigation
of the business, financial or other position of the Company in
accepting a participation in the Placing. Neither the Company nor
N+1 Singer are making any undertaking or warranty to any Placee
regarding the legality of an investment in the Placing Shares by
such Placee under any legal, investment or similar laws or
regulations. Each Placee should not consider any information in the
Placing Documents to be legal, tax or business advice. Each Placee
should consult its own solicitor, tax adviser and financial adviser
for independent legal, tax and financial advice regarding an
investment in the Placing Shares. Nothing in this paragraph shall
exclude the liability of any person for fraudulent
misrepresentation.
Representations, warranties, undertakings and
acknowledgements
By participating in the Placing each Placee (and any person
acting on such Placee's behalf) irrevocably acknowledges, confirms,
undertakes, represents, warrants and agrees (as the case may be)
with N+1 Singer (in its capacity as bookrunner and placing agent of
the Company and the Seller in respect of the Placing), the Company
and the Seller, in each case as a fundamental term of their
application for Placing Shares, the following:
1. it has read and understood this Announcement in its entirety
and its subscription for/purchase of Placing Shares is subject to
and based upon all the terms, conditions, representations,
warranties, acknowledgements, agreements and undertakings and other
information contained herein and it has not relied on, and will not
rely on, any information given or any representations, warranties
or statements made at any time by any person in connection with the
Placing, the Company, the Placing Shares or otherwise other than
the information contained in the Placing Documents and the Publicly
Available Information;
2. the Ordinary Shares are admitted to trading on AIM and that
the Company is therefore required to publish certain business and
financial information in accordance with the rules and practices of
AIM, which includes a description of the Company's business and the
Company's financial information, including balance sheets and
income statements, and that it is able to obtain or has access to
such information without undue difficulty, and is able to obtain
access to such information or comparable information concerning any
other publicly traded companies, without undue difficulty;
3. to be bound by the terms of the Articles of Association of the Company;
4. the person whom it specifies for registration as holder of
the Placing Shares will be (a) itself or (b) its nominee, as the
case may be. None of N+1 Singer, the Company or the Seller will be
responsible for any liability to stamp duty or stamp duty reserve
tax or other similar taxes or duties imposed in any jurisdiction
(including interest and penalties relating thereto) ("Indemnified
Taxes"). Each Placee and any person acting on behalf of such Placee
agrees to indemnify N+1 Singer, the Company and the Seller on an
after-tax basis in respect of any Indemnified Taxes;
5. neither N+1 Singer nor any of its affiliates agents,
directors, officers and employees accepts any responsibility for
any acts or omissions of the Company or any of the directors of the
Company or the Seller or any other person in connection with the
Placing;
6. time is of the essence as regards its obligations under this Appendix;
7. any document that is to be sent to it in connection with the
Placing will be sent at its risk and may be sent to it at any
address provided by it to N+1 Singer;
8. it will not redistribute, forward, transfer, duplicate or
otherwise transmit this Announcement or any part of it, or any
other presentational or other material concerning the Placing,
including the Re-Admission Document (including electronic copies
thereof) to any person and represents that it has not
redistributed, forwarded, transferred, duplicated, or otherwise
transmitted any such documents to any person;
9. no prospectus or other offering document is required under
the Prospectus Directive, nor will one be prepared in connection
with the Bookbuild, the Placing or the Placing Shares and it has
not received and will not receive a prospectus or other offering
document in connection with the Bookbuild, the Placing or the
Placing Shares;
10. in connection with the Placing, N+1 Singer and any of its
affiliates acting as an investor for its own account may subscribe
for/purchase Placing Shares in the Company and in that capacity may
retain, purchase or sell for its own account such Placing Shares in
the Company and any securities of the Company or related
investments and may offer or sell such securities or other
investments otherwise than in connection with the Placing.
Accordingly, references in this Announcement to the Placing Shares
being issued, offered or placed should be read as including any
issue, offering or placement of such shares in the Company to N+1
Singer or any of its affiliates acting in such capacity;
11. N+1 Singer and its affiliates may enter into financing
arrangements and swaps with investors in connection with which N+1
Singer and any of its affiliates may from time to time acquire,
hold or dispose of such securities of the Company, including the
Placing Shares;
12. N+1 Singer does not intend to disclose the extent of any
investment or transactions referred to in paragraphs 10 and 11
above otherwise than in accordance with any legal or regulatory
obligation to do so;
13. N+1 Singer does not owe any fiduciary or other duties to any
Placee in respect of any representations, warranties, undertakings
or indemnities in the Placing Agreement;
14. its participation in the Placing is on the basis that it is
not and will not be a client of any of N+1 Singer in connection
with its participation in the Placing and that N+1 Singer has no
duties or responsibilities to it for providing the protections
afforded to its clients or customers or for providing advice in
relation to the Placing nor in respect of any representations,
warranties, undertakings or indemnities contained in the Placing
Agreement nor for the exercise or performance of any of its rights
and obligations thereunder including any rights to waive or vary
any conditions or exercise any termination right;
15. the content of the Placing Documents and the Publicly
Available Information has been prepared by and is exclusively the
responsibility of the Company (and such other persons specifically
identified as accepting responsibility to certain parts thereto)
and neither N+1 Singer nor any of its affiliates agents, directors,
officers or employees nor any person acting on behalf of any of
them is responsible for or has or shall have any responsibility or
liability for any information, representation or statement
contained in, or omission from, the Placing Documents, the Publicly
Available Information or otherwise nor will they be liable for any
Placee's decision to participate in the Placing based on any
information, representation, warranty or statement contained in the
Placing Documents, the Publicly Available Information or otherwise,
provided that nothing in this paragraph excludes the liability of
any person for fraudulent misrepresentation made by such
person;
16. the only information on which it is entitled to rely and on
which such Placee has relied in committing itself to subscribe
for/purchase Placing Shares is contained in the Placing Documents
or any Publicly Available Information (save that in the case of
Publicly Available Information, a Placee's right to rely on that
information is limited to the right that such Placee would have as
a matter of law in the absence of this paragraph 16), such
information being all that such Placee deems necessary or
appropriate and sufficient to make an investment decision in
respect of the Placing Shares;
17. it has neither received nor relied on any other information
given, or representations, warranties or statements, express or
implied, made, by N+1 Singer, the Company nor the Seller nor any of
their respective affiliates, agents, directors, officers or
employees acting on behalf of any of them (including in any
management presentation delivered in respect of the Bookbuild) with
respect to the Company, the Placing or the Placing Shares or the
accuracy, completeness or adequacy of any information contained in
the Placing Documents, or the Publicly Available Information or
otherwise;
18. none of N+1 Singer, the Company, nor the Seller nor any of
their respective affiliates, agents, directors, officers or
employees or any person acting on behalf of any of them has
provided, nor will provide, it with any material or information
regarding the Placing Shares or the Company or any other person
other than the information in the Placing Documents or the Publicly
Available Information; nor has it requested any of N+1 Singer, the
Company, the Seller or any of their respective affiliates or any
person acting on behalf of any of them to provide it with any such
material or information;
19. none of N+1 Singer, the Company nor the Seller will be
liable for any Placee's decision to participate in the Placing
based on any other information, representation, warranty or
statement, provided that nothing in this paragraph excludes the
liability of any person for fraudulent misrepresentation made by
that person;
20. it may not rely, and has not relied, on any investigation
that N+1 Singer, any of its affiliates or any person acting on its
behalf, may have conducted with respect to the Placing Shares, the
terms of the Placing or the Company, and none of such persons has
made any representation, express or implied, with respect to the
Company, the Placing, the Placing Shares or the accuracy,
completeness or adequacy of the information in the Placing
Documents, the Publicly Available Information or any other
information;
21. in making any decision to subscribe for/purchase Placing Shares it:
(a) has such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of
subscribing for the Placing Shares;
(b) will not look to N+1 Singer for all or part of any such loss it may suffer;
(c) is experienced in investing in securities of this nature in
this sector and is aware that it may be required to bear, and is
able to bear, the economic risk of an investment in the Placing
Shares;
(d) is able to sustain a complete loss of an investment in the Placing Shares;
(e) has no need for liquidity with respect to its investment in the Placing Shares;
(f) has made its own assessment and has satisfied itself
concerning the relevant tax, legal, currency and other economic
considerations relevant to its investment in the Placing Shares;
and
(g) has conducted its own due diligence, examination,
investigation and assessment of the Company and Enlarged Group, the
Placing Shares and the terms of the Placing and has satisfied
itself that the information resulting from such investigation is
still current and relied on that investigation for the purposes of
its decision to participate in the Placing;
22. it is subscribing for and/or purchasing the Placing Shares
for its own account or for an account with respect to which it
exercises sole investment discretion and has the authority to make
and does make the acknowledgements, representations and agreements
contained in this Appendix;
23. it is acting as principal only in respect of the Placing or,
if it is acting for any other person, it is:
(a) duly authorised to do so and has full power to make the
acknowledgments, representations and agreements herein on behalf of
each such person; and
(b) will remain liable to the Company and/or N+1 Singer and/or
the Seller for the performance of all its obligations as a Placee
in respect of the Placing (regardless of the fact that it is acting
for another person);
24. it and any person acting on its behalf is entitled to
subscribe for/purchase the Placing Shares under the laws and
regulations of all relevant jurisdictions that apply to it and that
it has fully observed such laws and regulations, has capacity and
authority and is entitled to enter into and perform its obligations
as a subscriber/purchaser of Placing Shares and will honour such
obligations, and has obtained all such governmental and other
guarantees, permits, authorisations, approvals and consents which
may be required thereunder and complied with all necessary
formalities to enable it to commit to this participation in the
Placing and to perform its obligations in relation thereto
(including, without limitation, in the case of any person on whose
behalf it is acting, all necessary consents and authorities to
agree to the terms set out or referred to in this Appendix) and
will honour such obligations and that it has not taken any action
or omitted to take any action which will or may result in N+1
Singer, the Company, the Seller or any of their respective
directors, officers, agents, employees or advisers acting in breach
of the legal or regulatory requirements of any jurisdiction in
connection with the Placing;
25. where it is subscribing for/purchasing Placing Shares for
one or more managed accounts, it is authorised in writing by each
managed account to subscribe for/purchase the Placing Shares for
each managed account;
26. it irrevocably appoints any duly authorised officer of N+1
Singer as its agent for the purpose of executing and delivering to
the Company and/or its registrars any documents on its behalf
necessary to enable it to be registered as the holder of any of the
Placing Shares for which it agrees to subscribe for/purchase upon
the terms of this Appendix;
27. the Placing Shares have not been and will not be registered
or otherwise qualified and that a prospectus will not be cleared in
respect of any of the Placing Shares under the securities laws or
legislation of the Restricted Jurisdictions, or any state,
province, territory or jurisdiction thereof;
28. the Placing Shares may not be offered, sold, or delivered or
transferred, directly or indirectly, in or into the Restricted
Jurisdictions or any jurisdiction (subject to certain exceptions)
in which it would be unlawful to do so and no action has been or
will be taken by any of the Company, N+1 Singer, the Seller or any
person acting on behalf of the Company, N+1 Singer or the Seller
that would, or is intended to, permit a public offer of the Placing
Shares in the Restricted Jurisdictions or any country or
jurisdiction, or any state, province, territory or jurisdiction
thereof, where any such action for that purpose is required;
29. no action has been or will be taken by any of the Company,
N+1 Singer, the Seller or any person acting on behalf of the
Company, N+1 Singer or the Seller that would, or is intended to,
permit a public offer of the Placing Shares in the United States or
in any country or jurisdiction where any such action for that
purpose is required;
30. unless otherwise specifically agreed with N+1 Singer, it is
not and at the time the Placing Shares are subscribed
for/purchased, neither it nor the beneficial owner of the Placing
Shares will be, a resident of, nor have an address in, Australia,
New Zealand, Japan, the Republic of South Africa or any province or
territory of Canada;
31. it may be asked to disclose in writing or orally to N+1 Singer:
(a) if he or she is an individual, his or her nationality; or
(b) if he or she is a discretionary fund manager, the
jurisdiction in which the funds are managed or owned;
32. it is and the prospective beneficial owner of the Placing
Shares is, and at the time the Placing Shares are subscribed
for/purchased will be outside the United States and is acquiring
the Placing Shares in an "offshore transaction" as defined in, and
in accordance with, Regulation S under the US Securities Act;
33. it has not been offered to purchase or subscribe for Placing
Shares by means of any "directed selling efforts" as defined in
Regulation S under the US Securities Act or by means of any
"general solicitation" or "general advertising" within the meaning
of Regulation D under the US Securities Act;
34. it understands that the Placing Shares have not been, and
will not be, registered under the US Securities Act and may not be
offered, sold or resold, pledged or delivered in or into or from
the United States except pursuant to (i) an effective registration
statement under the US Securities Act; or (ii) pursuant to an
exemption from the registration requirements of the US Securities
Act and, in each case, in accordance with applicable United States
state securities laws and regulations;
35. it (and any account for which it is purchasing) is not
acquiring the Placing Shares with a view to any offer, sale or
distribution thereof within the meaning of the US Securities
Act;
36. it will not distribute, forward, transfer or otherwise
transmit this Announcement or any part of it, or any other
presentational or other materials concerning the Placing (including
the Re-Admission Document) in or into or from the United States
(including electronic copies thereof) to any person, and it has not
distributed, forwarded, transferred or otherwise transmitted any
such materials to any person;
37. it understands that there may be certain consequences under
United States and other tax laws resulting from an investment in
the Placing and it has made such investigation and has consulted
its own independent advisers or otherwise has satisfied itself
concerning, without limitation, the effects of United States
federal, state and local income tax laws and foreign tax laws
generally;
38. it understands that the Company has not undertaken to
determine whether it will be treated as a passive foreign
investment company ("PFIC") for US federal income tax purposes for
the current year, or whether it is likely to be so treated for
future years and neither the Company nor N+1 Singer make any
representation or warranty with respect to the same. Accordingly,
neither the Company nor N+1 Singer can provide any advice to United
States investors as to whether the Company is or is not a PFIC for
the current tax year, or whether it will be in future tax years.
Accordingly, neither the Company nor N+1 Singer undertakes to
provide to United States investors or shareholders any information
necessary or desirable to facilitate their filing of annual
information returns, and United States investors and shareholders
should not assume that this information will be made available to
them;
39. if in a member state of the EEA, unless otherwise
specifically agreed with N+1 Singer in writing, it is a Qualified
Investor;
40. it has not offered or sold and will not offer or sell any
Placing Shares to persons in the EEA except to Qualified Investors
or otherwise in circumstances which have not resulted in and which
will not result in an offer to the public in any member state of
the EEA within the meaning of the Prospectus Directive;
41. if a financial intermediary, as that term is used in Article
3(2) of the Prospectus Directive, the Placing Shares subscribed
for/purchased by it in the Placing will not be acquired on a
non-discretionary basis on behalf of, nor will they be acquired
with a view to their offer or resale to, persons in a member state
of the EEA which has implemented the Prospectus Directive other
than Qualified Investors, or in circumstances in which the prior
consent of N+1 Singer has been given to each proposed offer or
resale;
42. if in the United Kingdom, that it is a person (i) having
professional experience in matters relating to investments who
falls within the definition of "investment professionals" in
Article 19(5) of the Order or (ii) who falls within Article 49(2)
(a) to (d) (" High Net Worth Companies, Unincorporated
Associations, etc ") of the Order, or (iii) to whom it may
otherwise lawfully be communicated;
43. it has not offered or sold and will not offer or sell any
Placing Shares to persons in the United Kingdom, except to persons
whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for
the purposes of their business or otherwise in circumstances which
have not resulted and which will not result in an offer to the
public in the United Kingdom within the meaning of section 85(1) of
the Financial Services and Markets Act 2000, as amended
("FSMA");
44. it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances
in which section 21(1) of FSMA does not require approval of the
communication by an authorised person and it acknowledges and
agrees that the Placing Documents have not and will not have been
approved by N+1 Singer in its capacity as an authorised person
under section 21 of the FSMA and it may not therefore be subject to
the controls which would apply if it was made or approved as a
financial promotion by an authorised person;
45. it has complied and will comply with all applicable laws
with respect to anything done by it or on its behalf in relation to
the Placing Shares (including all applicable provisions in FSMA and
MAR) in respect of anything done in, from or otherwise involving,
the United Kingdom);
46. if it is a pension fund or investment company, its
subscription for/purchase of Placing Shares is in full compliance
with applicable laws and regulations;
47. it has complied with its obligations under the Criminal
Justice Act 1993 and Articles 8, 10 and 12 of MAR and in connection
with money laundering and terrorist financing under the Proceeds of
Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism
Act 2006 and the Money Laundering, Terrorist Financing and Transfer
of Funds (Information on the Payer) Regulations 2017 and any
related or similar rules, regulations or guidelines, issued,
administered or enforced by any government agency having
jurisdiction in respect thereof (the "Regulations") and the Money
Laundering Sourcebook of the FCA and, if making payment on behalf
of a third party, that satisfactory evidence has been obtained and
recorded by it to verify the identity of the third party as
required by the Regulations;
48. in order to ensure compliance with the Regulations, N+1
Singer (for itself and as agent on behalf of the Company and the
Seller) or the Company's registrars may, in their absolute
discretion, require verification of its identity. Pending the
provision to N+1 Singer or the Company's registrars, as applicable,
of evidence of identity, definitive certificates in respect of the
Placing Shares may be retained at N+1 Singer's absolute discretion
or, where appropriate, delivery of the Placing Shares to it in
uncertificated form may be delayed at N+1 Singer's or the Company's
registrars', as the case may be, absolute discretion. If within a
reasonable time after a request for verification of identify N+1
Singer (for itself and as agent on behalf of the Company and the
Seller) or the Company's registrars have not received evidence
satisfactory to them, either N+1 Singer and/or the Company and/or
the Seller may, at its absolute discretion, terminate its
commitment in respect of the Placing, in which event the monies
payable on acceptance of allotment/transfer will, if already paid,
be returned without interest to the account of the drawee's bank
from which they were originally debited;
49. the allocation, allotment, issue, transfer and delivery to
it, or the person specified by it for registration as holder, of
Placing Shares will not give rise to a stamp duty or stamp duty
reserve tax liability under (or at a rate determined under) any of
sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary
receipts and clearance services) and that the Placing Shares are
not being acquired in connection with arrangements to issue
depositary receipts or to issue or transfer Placing Shares into a
clearance service;
50. it (and any person acting on its behalf) has the funds
available to pay for the Placing Shares for which it has agreed to
subscribe/purchase and acknowledges and agrees that it will make
payment in respect of the Placing Shares allocated to it in
accordance with this Appendix on the due time and date set out
herein, failing which the relevant Placing Shares may be placed
with other subscribers/purchasers or sold as N+1 Singer may in its
sole discretion determine and without liability to such Placee, who
will remain liable for any amount by which the net proceeds of such
sale falls short of the product of the relevant Issue Price and the
number of Placing Shares allocated to it and will be required to
bear any stamp duty, stamp duty reserve tax or other taxes or
duties (together with any interest, fines or penalties) imposed in
any jurisdiction which may arise upon the sale of such Placee's
Placing Shares;
51. any money held in an account with N+1 Singer on behalf of
the Placee and/or any person acting on behalf of the Placee and/or
any person acting on behalf of the Placee will not be treated as
client money within the meaning of the relevant rules and
regulations of the FCA made under the FSMA. Each Placee
acknowledges that the money will not be subject to the protections
conferred by the client money rules: as a consequence this money
will not be segregated from N+1 Singer's money in accordance with
the client money rules and will be held by it under a banking
relationship and not as trustee;
52. its allocation (if any) of Placing Shares will represent a
maximum number of Placing Shares which it will be entitled, and
required, to subscribe for/purchase, and that N+1 Singer or the
Company or the Seller may call upon it to subscribe for/purchase a
lower number of Placing Shares (if any), but in no event in
aggregate more than the aforementioned maximum;
53. neither N+1 Singer nor any of its affiliates, nor any person
acting on behalf of them, is making any recommendations to it,
advising it regarding the suitability of any transactions it may
enter into in connection with the Placing;
54. if it has received any 'inside information' (for the
purposes of MAR and section 56 of the Criminal Justice Act 1993) in
relation to the Company and its securities in advance of the
Placing, it confirms that it has received such information within
the market soundings regime provided for in article 11 of MAR and
associated delegated regulations and it has not:
(a) used that inside information to acquire or dispose of
securities of the Company or financial instruments related thereto
or cancel or amend an order concerning the Company's securities or
any such financial instruments;
(b) used that inside information to encourage, require,
recommend or induce another person to deal in the securities of the
Company or financial instruments related thereto or to cancel or
amend an order concerning the Company's securities or such
financial instruments; or
(c) disclosed such information to any person, prior to the
information being made publicly available;
55. the rights and remedies of the Company, N+1 Singer and the
Seller under the terms and conditions in this Appendix are in
addition to any rights and remedies which would otherwise be
available to each of them and the exercise or partial exercise of
one will not prevent the exercise of others; and
56. these terms and conditions of the Placing and any agreements
entered into by it pursuant to the terms and conditions of the
Placing, and all non-contractual or other obligations arising out
of or in connection with them, shall be governed by and construed
in accordance with the laws of England and it submits (on behalf of
itself and on behalf of any person on whose behalf it is acting) to
the exclusive jurisdiction of the English courts as regards any
claim, dispute or matter arising out of any such contract
(including any dispute regarding the existence, validity or
termination of such contract or relating to any non- contractual or
other obligation arising out of or in connection with such
contract), except that enforcement proceedings in respect of the
obligation to make payment for the Placing Shares (together with
any interest chargeable thereon) may be taken by either the Company
or N+1 Singer or the Seller in any jurisdiction in which the
relevant Placee is incorporated or in which any of its securities
have a quotation on a recognised stock exchange.
The foregoing representations, warranties, confirmations,
acknowledgements, agreements and undertakings are given for the
benefit of the Company as well N+1 Singer and the Seller and are
irrevocable. N+1 Singer, the Company, the Seller and their
respective affiliates and others will rely upon the truth and
accuracy of the foregoing representations, warranties,
confirmations, acknowledgements, agreements and undertakings.
Each prospective Placee, and any person acting on behalf of such
Placee, irrevocably authorises the Company, the Seller and N+1
Singer to produce this Announcement, pursuant to, in connection
with, or as may be required by any applicable law or regulation,
administrative or legal proceeding or official inquiry with respect
to the matters set forth herein.
By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) agrees to indemnify on an after tax
basis and hold the Company, N+1 Singer, the Seller and their
respective affiliates, agents, directors, officers and employees
harmless from any and all costs, claims, liabilities and expenses
(including legal fees and expenses) arising out of or in connection
with any breach of the representations, warranties,
acknowledgements, agreements and undertakings given by the Placee
(and any person acting on such Placee's behalf) in this Appendix or
incurred by N+1 Singer, the Company, the Seller or any of their
respective affiliates, agents, directors, officers or employees
arising from the performance of the Placees' obligations as set out
in this Announcement, and further agrees that the provisions of
this Appendix shall survive after completion of the Placing.
Taxation
The agreement to allot and issue certain of the Placing Shares
by the Company to Placees (and/or to persons for whom such Placee
is contracting as agent) free of stamp duty and stamp duty reserve
tax relates only to their allotment and issue to Placees, or such
persons as they nominate as their agents, direct from the Company
for the Placing Shares in question.
There should be no liability to stamp duty or SDRT arising on
the allotment of the Placing Shares by the Company. The
registration of and the issue of definitive share certificates to
Ordinary Shareholders should not give rise to any liability to
stamp duty or SDRT.
In addition, neither UK stamp duty nor SDRT should arise on the
transfers/sale of Ordinary Shares on AIM (including instruments
transferring Shares and agreements to transfer Ordinary Shares,
such as the transfer of the Sale Shares to Placees as part of the
Placing).
Such agreement also assumes that the Placing Shares are not
being acquired in connection with arrangements to issue depositary
receipts or to issue or transfer the Placing Shares into a
clearance service. If there are any such arrangements, or the
settlement relates to any other dealing in the Placing Shares,
stamp duty or stamp duty reserve tax or other similar taxes or
duties may be payable, for which none of the Company, N+1 Singer
nor the Seller will be responsible and the Placees shall indemnify
the Company, the Seller and N+1 Singer on an after-tax basis for
any stamp duty or stamp duty reserve tax or other similar taxes or
duties (together with interest, fines and penalties) in any
jurisdiction paid by the Company, the Seller or N+1 Singer in
respect of any such arrangements or dealings. If this is the case,
each Placee should seek its own advice and notify N+1 Singer
accordingly. Placees are advised to consult with their own advisers
regarding the tax aspects of the subscription for/purchase of
Placing Shares.
The Company, the Seller and N+1 Singer are not liable to bear
any taxes that arise on a sale of Placing Shares subsequent to
their acquisition by Placees, including any taxes arising otherwise
than under the laws of any country in the EEA. Each prospective
Placee should, therefore, take its own advice as to whether any
such tax liability arises and notify N+1 Singer and the Company
accordingly. Furthermore, each prospective Placee agrees to
indemnify on an after-tax basis and hold N+1 Singer and/or the
Company and/or the Seller and their respective affiliates harmless
from any and all interest, fines or penalties in relation to stamp
duty, stamp duty reserve tax and all other similar duties or taxes
in any jurisdiction to the extent that such interest, fines or
penalties arise from the unreasonable default or delay of that
Placee or its agent.
In addition, Placees should note that they will be liable for
any stamp duty and all other stamp, issue, securities, transfer,
registration, documentary or other duties or taxes (including any
interest, fines or penalties relating thereto) payable, whether
inside or outside the UK, by them or any other person on the
subscription, acquisition, transfer or sale by them of any Placing
Shares or the agreement by them to subscribe for, acquire, transfer
or sell any Placing Shares.
No statement in the Placing Documents is intended to be a profit
forecast or estimate, and no statement in the Placing Documents
should be interpreted to mean that earnings per share of the
Company for the current or future financial years would necessarily
match or exceed the historical published earnings per share of the
Company. Past performance is no guide to future performance and
persons needing advice should consult an independent financial
adviser.
The price of shares and any income expected from them may go
down as well as up and investors may not get back the full amount
invested upon disposal of the shares. Past performance is no guide
to future performance, and persons needing advice should consult an
independent financial adviser.
The New Shares to be issued or transferred pursuant to the
Proposals will not be admitted to trading on any stock exchange
other than AIM, a market operated by the London Stock Exchange
plc.
APPIX VII
The following definitions apply to this Announcement as the
context shall admit:
"GBP", "GBP", "pounds", "pound sterling" or "sterling", are to the lawful currency of the UK
"p", "penny" or "pence"
Acquisition the proposed acquisition by the Company of the entire
issued share capital of Dominium pursuant
to the terms of the Acquisition Agreement;
Acquisition Agreement the conditional acquisition agreement entered into on 17
December 2020 between (1) the Company;
(2) the Seller and (3) Accession Mezzanine Capital III
Coöperatief U.A. in relation to
the sale and purchase of the entire issued ordinary share
capital of Dominium;
Admission admission of the Enlarged Share Capital to trading on AIM
becoming effective in accordance
with the AIM Rules;
AIM AIM, a market operated by the London Stock Exchange;
AIM Rules the AIM Rules for Companies published by the London Stock
Exchange;
AIM Rules for Nominated Advisers the AIM Rules for Nominated Advisers issued by the London
Stock Exchange setting out the eligibility,
ongoing responsibilities and certain disciplinary matters
in relation to nominated advisers,
as amended or re-issued from time to time
AMC III Accession Mezzanine Capital III, L.P., being a member of
the Concert Party and ultimate beneficial
owner of the Dominium Shares
Announcement this Announcement, including the appendices and the terms
and conditions of the Placing set
out in Appendix VI;
Articles of Association or Articles the articles of association of the Company as at the date
of this Agreement;
Bookbuild the bookbuilding process to be conducted by N+1 Singer to
arrange participation by Placees
in the Placing;
Certificated or in Certificated form not in uncertificated form (that is, not in CREST)
City Code The City Code on Takeovers and Mergers;
Company or DP Poland DP Poland plc;
Concert Party the Seller and certain other persons associated with the
Seller (including the Proposed Non-Executive
Directors), as more fully set out in this Announcement,
all of whom are considered to be acting
in concert with each other under the City Code
Consideration Shares 283,766,661 Ordinary Shares to be issued to the Seller
pursuant to the terms of the Acquisition
Agreement
CREST the computerised settlement system to facilitate transfer
of the title to an interest in securities
in uncertificated form operated by Euroclear UK & Ireland
CREST Regulations the Uncertificated Securities Regulations 2001, including
(i) any enactment or subordinate
legislation which amends or supersedes those regulations;
and (ii) any applicable rules made
under those regulations or any such enactment or
subordinate legislation for the time being
in force
Directors or Board the Existing Directors and the Proposed Directors, as
applicable
Dominium Dominium S.A., a company incorporated in Poland with
company registration number 0000295921
Dominium Directors the directors of Dominium
Dominium Group Dominium and its subsidiary, Dominium Romania immediately
prior to completion of the Proposals
Dominium Romania s.c. Pizza Dominium Restaurant SRL, a wholly owned
subsidiary of Dominium. Dominium Romania
is currently in the latter stages of being liquidated and
is classified as a discontinued
activity within the Dominium Group Financial Information
Dominium Shares the 8,060,000 shares of PLN 1.00 each in issue in the
capital of Dominium
Domino's Pizza the brand owned and exploited by the DPI Group
DPI Group DPI and its affiliates
DPP Group, DP Poland Group, Existing Group or Group the Company and its subsidiaries immediately prior to
completion of the Proposals
DP Polska or DPP SA DP Polska S.A., a company incorporated in Poland with
company registration number 0000359582
EEA European Economic Area
Enlarged Group the Group as enlarged by the Acquisition
Enlarged Share Capital the Existing Ordinary Shares, together with the
Consideration Shares, Placing Shares and Subscription
Shares, being the Ordinary Shares in issue immediately
following Admission
Euroclear UK & Ireland Euroclear UK & Ireland Limited
Existing Directors Nicholas John Donaldson, Robert Nicholas Lutwyche Morrish,
Gerald William Ford and Christopher
Humphrey Robertson Moore
EUR or Euro Euros
Existing Ordinary Shares the 253,969,093 Ordinary Shares in issue at the date of
this Announcement
FCA the UK Financial Conduct Authority
Form of Proxy the form of proxy for use by holders of Existing Ordinary
Shares in connection with the General
Meeting
FSMA the Financial Services and Markets Act 2000
Fundraising together the Placing and Subscription
General Meeting the general meeting of the holders of the Existing
Ordinary Shares to be held on 7 January
2021 (or any adjournment thereof), notice of which will be
set out in the Re-Admission Document
Group the Company and its subsidiary undertakings (and "Group
Company" shall be construed accordingly)
Independent Directors Nicholas John Donaldson, Robert Nicholas Lutwyche Morrish,
Gerald William Ford and Christopher
Humphrey Robertson Moore
Independent Shareholders the holders of Existing Ordinary Shares, other than any
person who is a member of the Concert
Party
Issue Price 8p per Ordinary Share
Loan Note Instrument the loan note instrument constituting the Loan Note and
which contains the terms and conditions
on which the Loan Notes will be issued by the Company to
Malaccan Holdings at the time of
completion of the Acquisition
Loan Notes the EUR7.5 million aggregate principal 3 per cent. fixed
rate unsecured loan notes (comprising
a EUR1.3 million principal Loan Note and a EUR6.2 million
principal Loan Note), each of which
are to be issued by the Company to Malaccan Holdings at
the time of completion of the Acquisition,
on the terms and subject to the conditions of the Loan
Note Instrument
Lock-in Agreements the lock-in agreements between the Company, N+1 Singer and
each of the Locked-in Shareholders
Locked-in Shareholders those holders of Existing Ordinary Shares and Malaccan
Holdings who have each entered into
a Lock-in Agreement, details of which are set out in this
Announcement
London Stock Exchange London Stock Exchange plc
Malaccan Holdings or Seller Malaccan Holdings Limited, being the sole shareholder of
Dominium, and a member of the Concert
Party
MAR the EU Market Abuse Regulation (2014/596/EU)
MFA the master franchise agreement dated 25 June 2010 between
Domino's Pizza Overseas Franchising
B.V., DP Polska and Richard Worthington, as amended from
time to time
N+1 Singer Nplus1 Singer Capital Markets Limited
New Shares the 327,516,661 new Ordinary Shares expected to be issued
pursuant to the Proposals, comprising
the Placing Shares, the Subscription Shares and the
Consideration Shares
Notice of General Meeting means the notice of general meeting to be contained within
the Re-Admission Document;
Offer Shares together the Placing Shares, the Sale Shares and
Subscription Shares
Ordinary Shares ordinary shares of GBP0.005 each in the capital of the
Company
Panel the UK Panel on Takeovers and Mergers
Placees persons who agree to subscribe for Placing Shares or
purchase Sale Shares (as applicable)
at the Issue Price
Placing the conditional placing by N+1 Singer (or its respective
agents) as agent of the Company of
the Placing Shares and as agent of the Seller of the Sale
Shares, in each case, at the Issue
Price, in accordance with the Placing Agreement
Placing Agreement the agreement dated 18 December 2020 between the Company,
the Directors, the Proposed Directors,
the Seller and N+1 Singer relating to the Placing
Placing Documents this Announcement, the announcement of the results of the
Placing and the Re-Admission Document
Placing Shares the new Ordinary Shares expected to be issued pursuant to
the Placing
Poland the Republic of Poland
Proposals the Acquisition, the Whitewash Resolution, the Placing,
Subscription and Admission
Proposed Directors Piotr Dzierzek and the Proposed Non-Executive Directors
Proposed Non-Executive Directors Przemyslaw Glebocki and Jakub Chechelski
Prospectus Regulation the Prospectus Regulation (EU) 2017/1129
Publicly Available Information any information publicly announced through a regulatory
information service by or on behalf
of the Company on or prior to the date of this
Announcement
QCA The Quoted Companies Alliance
QCA Code the QCA's Corporate Governance Code for Small and
Mid-Sized Quoted Companies 2018 (as amended)
Relationship Agreement the relationship agreement between the Company, N+1 Singer
and Malaccan Holdings
Resolutions the resolutions to be proposed at the General Meeting,
which are contained in the notice of
General Meeting in the Re-Admission Document
RON the lawful currency of Romania
Sale Shares 21,828,204 Ordinary Shares (being part of the
Consideration Shares) which are expected to
be sold by Malaccan pursuant to the Placing;
SDRT Stamp Duty Reserve Tax
Shareholder Loan Agreements the various loan agreements entered into between Dominium
and Malaccan Holdings pursuant to
which terms the Shareholder Loans have been advanced by
Malaccan Holdings to Dominium
Shareholder Loans the PLN and Euro unsecured loans advanced to Dominium by
Malaccan Holdings on the terms and
subject to the conditions of the Shareholder Loan
Agreements which are outstanding in the
aggregate principal amount of approximately EUR6.2
million, the obligations and rights of
which will all be taken on by the Company and converted
into a EUR6.2 million Loan Note issued
on the terms of the Loan Note Instrument at the time of
completion of the Acquisition
Shareholder a holder of Existing Ordinary Shares
Subscription the proposed subscription of the Subscription Shares at
the Issue Price pursuant to the terms
of the Subscription Letter
Subscription Letter the conditional subscription letter expected to be entered
into following the release of this
Announcement between the Company and an existing
shareholder pursuant to which terms it shall
subscribe for the Subscription Shares
Subscription Shares the new Ordinary Shares expected to be issued by the
Company pursuant to Subscription;
subsidiary or subsidiary undertaking have the meaning given to such term in the Companies Act
2006
uncertificated or in uncertificated form in respect of a share or other security, where that share
or other security is recorded on
the relevant register of the share or security concerned
as being held in uncertificated form
in CREST and title to which may be transferred by means of
CREST
UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland
UOKiK Urz d Ochrony Konkurencji i KonsumentĂłw, the Polish
Office of Competition and Consumer
Protection
United States or United States of America the United States of America, its territories and
possessions, any state of the United States
of America, the District of Columbia and all other areas
subject to its jurisdiction and any
political sub-division thereof.
US dollar or $ the lawful currency of the United States
VAT UK value added tax or its equivalent in Poland, as
applicable
Waiver the waiver which has been granted by the Panel,
conditional upon the approval by Independent
Shareholders of the Whitewash Resolution on a poll, of the
obligations to make a mandatory
offer for the entire issued share capital of the Company
not already held by the Concert Party
which might otherwise be imposed on the Concert Party
under Rule 9 of the City Code, as a
result of, inter alia, the issue of the Consideration
Shares to the Seller pursuant to the
Acquisition;
Whitewash Resolution Resolution 1 to be contained in the Notice of General
Meeting being an ordinary resolution
to be voted on of Independent Shareholders (on a poll) in
order to approve the Waiver;
Zloty or PLN the lawful currency of Poland
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December 18, 2020 02:00 ET (07:00 GMT)
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