DP Eurasia N.V Trading Update for the Year Ended 31 December 2017 (5890C)

TIDMDPEU

RNS Number : 5890C

DP Eurasia N.V

23 January 2018

 
 For Immediate Release   23 January 2018 
 

DP Eurasia N.V.

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

Trading Update for the Year Ended 31 December 2017

Robust top line growth, online engagement continuing momentum

 
                              For the year 
                            ended 31 December 
                        ------------------------ 
                            2017         2016      Change 
                        -----------  -----------  ------- 
                              (in millions 
                              of TRY, unless 
                           otherwise indicated) 
 
 Number of stores           643          567           76 
 
 System Sales (1) 
 Turkey                    645.7        565.5       14.2% 
 Russia                    205.4         76.4      169.0% 
 Azerbaijan & Georgia       8.7          5.5        58.3% 
 Total                     859.8        647.4       32.8% 
 
 Like-for-like System 
  Sales growth(2) 
 
 Turkey                    10.0%         7.0% 
 Russia (based on 
  RUB)                     28.9%        41.6% 
 
 

Highlights

   --     Group system sales growth of 32.8% driven by strong growth in both Russia and Turkey 

o Turkish systems sales growth of 14.2%

o Russian system sales growth of 169.0% (95.0% based on RUB)

-- Group online system sales growth of 72.2% continued to outpace the overall system sales growth

o Turkish online system sales growth of 41.5%

o Russian online system sales growth of 245.5% (150.4% based on RUB)

-- Turkey and Russia like-for-like growth continues to be mainly driven by the Group's online ordering platforms - online delivery system sales as a share of delivery system sales reached 51.8% for the period (2016: 42.4%)

-- 76 new stores were added in the year, bringing the total number to 643, including the 500(th) Turkish store and the 100(th) Russian store with Russia now expanding to cities outside of Greater Moscow

-- Store roll out for the year in Russia was ahead of management expectations, with 49 additions whilst Turkish openings were broadly in line. There was a greater skew towards corporate openings than anticipated to take advantage of opportunities in Turkey and accelerate growth in Russia with an associated increase in capital expenditure.

   --     Russian commissary expansion completed extending capacity to 250 stores 
   --     The Board expects the full year Adjusted EBITDA(5) for 2017 to be in line with expectations. 

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

"We are extremely pleased with our top line performance for 2017 in both of our main markets of Turkey and Russia. In Turkey, we achieved double digit like-for-like growth, an acceleration from the previous period, and in Russia it was another record breaking year in terms of store openings. We added 49 stores to the estate, including our first stores in St Petersburg and Krasnodar, our first expansion outside of Greater Moscow in Russia.

Innovation, both in terms of technology and product, continues to contribute to our growth. We revamped our smart phone apps in Turkey and Russia in 2017, both of which subsequently received industry awards. In Turkey, we have started rolling out our loyalty program. In early 2018, we launched oven baked sandwiches nationwide, after a successful test in the third quarter. In Russia, we introduced our mosaic cake from our Turkish menu to our Russian desert offering as well as the ultra-thin crust pizza offering. Although early days, initial sales have been encouraging.

The Board expects the full year Adjusted EBITDA(5) for 2017 to be in line with expectations."

Enquiries

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

A conference call for investors and analysts will be held at 8.30am this morning, which will be accessible using the following details:

 
 Conference   UK Toll: 020 3428 1542 
  call:        UK Toll Free: 080 8237 0040 
               Participant PIN code: 53354649# 
               URL for international dial in numbers: 
               http://events.arkadin.com/ev/docs/FEL_Events_International_Access_List.pdf 
 

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

Notes to Editors

DP Eurasia N.V. is the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia. The Company was admitted to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange plc on 3 July 2017. The Company (together with its subsidiaries, the "Group") is the largest pizza delivery company in Turkey and the third largest in Russia. The Group offers pizza delivery and takeaway/ eat-in facilities at its 643 stores (514 in Turkey, 121 in Russia, five in Azerbaijan and three in Georgia as at 31 December 2017), and operates through its owned corporate stores (37%) and franchised stores (63%). The Group maintains a strategic balance between corporate and franchised stores, establishing networks of corporate-owned stores in its most densely populated areas to provide a development platform upon which to promote best practice and maximise profitability. The Group has adapted the Domino's Pizza globally proven business model to its local markets.

Performance Review

 
 Store                                As at 31 December 
  count 
              ---------------------------------------------------------------- 
                            2017                             2016 
               Corporate   Franchised   Total   Corporate   Franchised   Total 
 Turkey           142         372        514       144         344        488 
 Russia           99           22        121       68           4         72 
 Azerbaijan        -           5          5         -           4          4 
 Georgia           -           3          3         -           3          3 
 Total            241         402        643       212         355        567 
 

Delivery channel mix and online like-for-like growth

The following table shows the Group's delivery system sales, broken down by ordering channel and by the Group's two largest countries in which it operates, as a percentage of delivery system sales for the periods ended 31 December 2017 and 2016:

 
                                          For the period ended 31 
                                                  December 
                            -------------------------------------------------- 
                                      2017                      2016 
                            ------------------------  ------------------------ 
                             Turkey   Russia   Total   Turkey   Russia   Total 
 Store                       48.0%    33.3%    45.0%   53.0%    47.5%    52.3% 
                Group's 
                 online 
 Online         platform     25.1%    66.7%    34.5%   21.1%    52.5%    24.8% 
         Aggregator          22.7%      -      17.3%   19.9%      -      17.5% 
        Total online         47.8%    66.7%    51.8%   41.0%    52.5%    42.4% 
 Call 
  centre                      4.2%      -      3.2%     6.0%      -      5.3% 
 Total(3)                     100%     100%    100%     100%     100%    100% 
 

The following table shows the Group's online like-for-like growth(2) , broken down by the Group's two largest countries in which it operates, for the periods ended 31 December 2017 and 2016:

 
                                  For the period 
                                 ended 31 December 
                              --------------------- 
                                 2017       2016 
                              ---------  ---------- 
 Group online like-for-like 
  growth(4) 
 Online system sales 
 Turkey                         37.7%       18.8% 
 Russia (based on 
  RUB)                          78.5%      140.7% 
 

Notes

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

(2) Like-for-like growth is a comparison of sales between two periods that compares system sales of existing system stores. The Group's system stores that are included in like-for-like system sales comparisons are those the Group considers to be mature operations. The Group considers mature stores to be those stores that have operated for at least 52 weeks preceding the beginning of the first month of the period used in the like-for-like comparisons for a certain reporting period, assuming the relevant system store has not subsequently closed or been "split" (which involves the Group opening an additional store within the same map of an existing store or in an overlapping area).

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

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

(5) Adjusted EBITDA is not defined by IFRS. Adjusted EBITDA excludes income and expenses which are not part of the

normal course of business and are non-recurring items, consisting of restructuring costs and IPO-related expenses and share based incentives. Management uses this measurement basis to focus on core trading activities of the business segments and to assist it in evaluating underlying business performance

Appendices

Exchange Rates

 
                    Year ended 31 December 
            -------------------------------------- 
                   2017                2016 
            ------------------  ------------------ 
             Period    Period    Period    Period 
 Currency      End     Average     End     Average 
            -------  ---------  -------  --------- 
 EUR/TRY     4.516     4.116     3.710     3.338 
 RUB/TRY     0.065     0.062     0.057     0.045 
 EUR/RUB     68.867    65.901    63.811    74.231 
 

Delivery - Take away / Eat in mix

 
                           For the period ended 31 
                                   December 
             -------------------------------------------------- 
                       2017                      2016 
             ------------------------  ------------------------ 
              Turkey   Russia   Total   Turkey   Russia   Total 
 Delivery     63.0%    60.2%    62.2%   62.6%    62.1%    62.6% 
 Take away 
  / Eat in    37.0%    39.8%    37.8%   37.4%    37.9%    37.4% 
 Total(2)      100%     100%    100%     100%     100%    100% 
 

Forward looking statements

This press release includes forward-looking statements which involve known and unknown risks and uncertainties, many of which are beyond the Group's control and all of which are based on the Directors' current beliefs and expectations about future events. They appear in a number of places throughout this press release and include all matters that are not historical facts and include predictions, statements regarding the intentions, beliefs or current expectations of the Directors or the Group concerning, among other things, the results of operations, financial condition, prospects, growth and strategies of the Group and the industry in which it operates.

No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Group. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed, or implied in such forward-looking statements.

Forward-looking statements contained in this press release speak only as of the date of this press release. The Company and the Directors expressly disclaim any obligation or undertaking to update these forward-looking statements contained in this press release to reflect any change in their expectations or any change in events, conditions, or circumstances on which such statements are based.

This information is provided by RNS

The company news service from the London Stock Exchange

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January 23, 2018 02:00 ET (07:00 GMT)