TIDMDPP
RNS Number : 3658N
DP Poland PLC
24 September 2019
DP Poland plc
("DP Poland" or the "Group")
Interim results for the half year to 30 June 2019
System sales up 10%, like-for-likes returning positive from
March and more sub-franchisees in place
Appointment of General Manager in Poland
Financial highlights:
-- 10% increase in System Sales(1) to 41m PLN H1 2019 (37m PLN H1 2018)
o including the three highest monthly levels of System Sales for
the Group to date
-- -1% like-for-like(2) growth in System Sales H1 2019 on H1
2018, reflecting the strong comparatives driven by TV advertising
in January and February 2018
o Latest like-for-like System Sales: July +1% and August +8%
o System Sales growth continuing in September to date
-- Pre-IFRS 16 Group EBITDA(5) losses increased, impacted as
expected by investment in operations and weaker commissary
performance
-- Net cash of GBP5.1m as at 30 June 2019 (GBP2.0m as at 31 December 2018)
-- Group performance in line with management expectations for 2019
Operational highlights:
-- 80% of delivery sales ordered online H1 2019 (77% H1 2018)
-- 4 new stores opened in H1 2019, 2 further opened since the period end
-- 69 stores open to-date, across 29 towns and cities
-- 2 further leases signed
-- 3 corporate stores acquired by 2 new sub-franchisees across Poland
-- 3 corporate stores taken under management contract by 1 existing sub-franchisee
-- Appointment of Iwona Olbrys as General Manager in Poland
joining from Telepizza Poland; an experienced Food & Beverage
executive
-- Positive interaction with aggregator Pyzszne
Nick Donaldson, non-executive Chairman, said:
"DP Poland delivered continued expansion and growth in System
Sales across both corporate stores and commissary during the first
half of the year, notwithstanding the strong comparatives driven by
TV advertising in January and February 2018. March to June 2019 saw
positive growth in both like-for-like System Sales and
like-for-like order count. Pleasingly, System Sales growth has
continued in July, August and September.
We have expanded the store estate to 69 stores. We intend to
continue to increase the number of stores through corporate and
sub-franchise openings.
We are delighted to announce the appointment of Iwona Olbrys as
our new General Manager in Poland, succeeding Peter Shaw. Iwona,
who is based in Warsaw, has significant experience in the Food
& Beverage sector in Poland, having been the general director
of Telepizza Poland - a business with 93 stores, both company owned
and sub-franchised - since 2011. This appointment is in line with
our strategy, announced in February, to focus our resources in
Poland.
The recent headwinds affecting the Polish food delivery sector,
including food and labour costs, and the impact of the aggregators
on the sector, continue. However we remain confident that,
underpinned by our well-invested infrastructure and world-renowned
service and products, Domino's Pizza in Poland will continue to
grow in this environment. The strong fundamentals in the Polish
economy and continued expansion of the delivery market support the
growing opportunity for the Domino's proposition in Poland."
(1) System Sales - total retail sales including sales from
corporate and sub-franchised stores, unaudited.
(2) Like-for-like growth in PLN, matching trading periods for
the same stores between 1 January and 30 June 2018 and 1 January
and 30 June 2019.
(3) When a store's delivery area is split, by opening a second
store in its original delivery area, a significant portion of the
original store's customer database is allocated to the new store,
resulting in the original store losing sales.
(4) Sales minus variable costs
(5) Excluding non-cash items, non-recurring items and store
pre-opening expenses
(6) Source: PizzaPortal
(7) Non-like-for-like stores that are less than 12 months old,
with no matching trading periods year on year.
(8) Exchange rate average for H1 2019 GBP1: 4.9158
(9) Exchange rate average for H1 2018 GBP1: 4.7988
Enquiries:
DP Poland PLC
Nick Donaldson, non-executive Chairman
www.dppoland.com 020 3393 6954
Peel Hunt LLP
Adrian Trimmings / George Sellar 020 7418 8900
Notes to editors:
DP Poland, through its wholly owned subsidiary DP Polska S.A.,
has the exclusive right to develop, operate and sub-franchise
Domino's Pizza stores in Poland. There are currently 69 Domino's
Pizza stores, 42 corporately managed (4 of which are under
management contract) and 27 sub-franchised.
Non-executive Chairman's Review
Group performance
System Sales increased by 10% in H1 2019. This was driven by
improved like-for-like growth during March-June 2019, following the
strong comparatives driven by our trial TV advertising in January
2018 (+24%) and February 2018 (+18%). Other positive factors
included the incremental growth from stores that are less than 12
months old and the contributions from 4 new corporate stores opened
during the course of H1 2019.
In the first half of 2019 we had the three highest monthly
levels of System Sales to date. These results were achieved despite
the increased cost of ingredients and higher labour rates. We
continue to focus upon controlling and, where possible, reducing
our costs.
Overall, Pre-IFRS 16 Group EBITDA losses increased in the period
by 20% year on year at constant exchange rates(8) . At actual
exchange rates(8,9) , Pre-IFRS 16 Group EBITDA losses increased by
18% year on year.
Group performance remains in line with management expectations
for 2019.
Store performance
System Sales in the period increased 10% year on year on the
back of -1% like-for-like sales growth, growth from
non-like-for-like(7) stores and four new store openings. Compound
like-for-like sales performance H1 2018-19 was 12%. Pre-IFRS 16
corporate store EBITDA decreased 11% year on year.
Sustained robust growth in the Polish economy continues to add
inflationary pressure to labour rates, particularly in Warsaw and
the other major cities. Although staff recruitment and retention
pressures continue, we believe that the fact that we are perceived
to be an attractive employer continues to be helpful to us.
Store roll-out
We currently have 69 stores in 29 towns and cities, having
expanded the store estate by 6 stores since the beginning of the
year.
Stores 1 Jan 2019 Opened 30 June 2019 24 Sept 2019
Corporate 39 4 43 42*
----------- ------- ------------- -------------
Sub-franchised 24 0 24 27
----------- ------- ------------- -------------
Total 63 4 67 69
----------- ------- ------------- -------------
* 4 corporate stores are run by sub-franchisees under management
contract, with the option to acquire and sub-franchise in the
future.
We have two further store leases signed and a pipeline of more
sites under negotiation.
We have satisfied the minimum store opening target under the
Master Franchise Agreement we have with Domino's Pizza, Inc.
Commissary performance
Our two commissaries are both performing efficiently in the
production of dough and the supply of all ingredients and non-food
items to pizza stores. The growing commissary revenue line is an
increasingly important component of the Group's total revenue and
directly reflects growth in System Sales. However, pre-IFRS 16
commissary gross profit(4) in the period decreased 7%, H1 2019 on
H1 2018, principally on account of sales incentives and other
support for sub-franchisees.
Cost pressures on ingredients impacted gross profit margins in
the first half, driven particularly by price inflation in respect
of flour in Q1 2019 and in respect of cheese and meat in Q2 2019.
Assisted by our increasing volume requirements we seek to buy
ingredients and non-food items at the best prices for our business,
sharing these cost reductions with our sub-franchisees.
We expect to see continued inflationary pressures on ingredients
in the second half. I am confident that our buying team will
continue to perform strongly.
Sub-franchising
Two new sub-franchisees acquired three existing corporate
stores. In addition, three corporate stores were taken under
management contract by one existing sub-franchisee. We currently
have 10 sub-franchisees across Poland. As at 30 June, 24 of our 67
stores were sub-franchised and a four further stores were managed
by sub-franchisees under management contract, with the option for
them to sub-franchise those stores in the future.
With 39% of the store estate operated today by sub-franchisees
we are seeing the establishment of successful sub-franchise
businesses. The emerging success stories should attract more
potential sub-franchisees to the brand. We are actively marketing
our sub-franchise proposition and strengthening our resources to
address this increasing interest.
We are in discussions with a number of third parties about
sub-franchising Domino's stores, which we expect complete later
this year and early 2020.
Marketing and product
We continue to invest in improving our digital presence,
including the effectiveness of our existing interfaces and the
creation of new ones. We are currently testing dynamic pricing on
our digital channels.
80% of all delivery orders were ordered online in H1 2019, up
from 77% in H1 2018. We are seeing a growing proportion of online
orders made on small screens (smart phones in particular),
presently accounting for 63% of online orders.
We introduced 2 new pizzas in H1 2019, SzparagoweLove and Lesne
Smaki, both created by Damian Kordas, the Polish MasterChef winner.
These new recipes have been well received by our customers.
Appointment of General Manager in Poland
DP Poland is a very different business from the start-up which
opened its first store in Warsaw in February 2011. DP Poland is now
a business of substance, requiring greater management resource in
Poland, with strong local knowledge.
We are therefore delighted to announce the appointment of Iwona
Olbrys as our new General Manager in Poland, succeeding Peter Shaw.
Iwona, who is based in Warsaw, has significant experience in the
Food & Beverage sector in Poland, having been the general
director of Telepizza Poland - a business with 93 stores, both
company owned and sub-franchised - since 2011. This appointment is
in line with our strategy, announced in February, to focus our
resources in Poland.
We are confident that Iwona, working closely with Maciej Jania,
will comprise a strong, experienced management team, focused on
taking DP Poland to its next stage of growth.
Current trading and outlook
We have expanded the store estate by 10% so far this year to 69
stores to date. We intend to continue to increase the number of
stores through corporate and sub-franchise openings.
As our business matures and the DP Poland sub-franchisee
proposition become more attractive, we expect to interest an
increasing number of sub-franchise candidates. We are in
discussions with both existing and potential sub-franchisees to
open stores and expect to see the sub-franchised estate expand in
H2 2019 and thereafter.
Our business has been affected by the rapid growth of new food
and beverage offers and by the growing presence of the aggregators
in Poland, particularly in Warsaw, notably Pyzszne, Pizza Portal
and UberEats. We believe that the aggregators now represent a
continuing feature of the Polish food service market, which can be
particularly helpful to DP Poland in regions where we are less well
known. We remain confident that Domino's will continue to grow
well, underpinned by the strength of our consumer proposition -
food quality, customer service, competitive pricing and the
investments we have made in our expansion.
Poland is arguably the last large high growth market opportunity
in Europe, a substantial and stable country of 38 million people
that is maturing into a sophisticated consumer economy. The food
delivery sector is growing(6) and we remain confident of the
long-term sales and growth prospects for Domino's Pizza in
Poland.
Nick Donaldson
Non-executive Chairman
24 September 2019
Finance Director's Review
In accordance with new accounting requirements, these half year
results are presented in accordance with IFRS 16, the new lease
accounting standard. On 1 January 2019 the Group adopted a new
accounting standard, IFRS 16 'Leases'. The Group has used the
modified retrospective transition approach as permitted by the
standard, which means that comparative figures in the financial
statements have not been restated. The adoption of IFRS 16 has had
a significant impact on the Group's financial statements, including
the important measure of Group EBITDA, which under IFRS 16 excludes
the rental cost of the Group's stores, commissaries and offices.
The Directors believe that a clearer picture of trading performance
compared to prior periods is given by looking at Group EBITDA
excluding the effect of IFRS 16 and therefore the figures for Group
EBITDA shown in the Non-executive Chairman's Statement and the
Finance Director's Review are shown excluding the effect of IFRS 16
('Pre-IFRS 16').
Unaudited Unaudited Unaudited
6 months 6 months
to 6 months to to
30.06.19 30.06.19 30.06.18
Pro-forma
Pre-IFRS 16
GBP GBP GBP
Revenue 6,887,081 6,945,328 6,394,787
Direct costs (5,820,311) (6,490,479) (5,820,464)
Selling, general and administrative
expenses - excluding:
store pre-opening expenses, depreciation,
amortisation and share based payments (1,332,591) (1,417,293) (1,388,409)
GROUP EBITDA - excluding non-cash
items, non-recurring items and store
pre-opening expenses (265,821) (962,444) (814,086)
------------ ------------ ------------
Store pre-opening expenses (30,971) (30,971) (45,852)
Other non-cash and non-recurring
items (220,043) (198,248) 335,960
Finance income 78,071 66,650 70,651
Finance costs (106,420) (10,178) (10,189)
Foreign exchange gains / (losses) (18,446) (18,446) (21,968)
Depreciation, amortisation and impairment (1,214,320) (631,985) (530,025)
Share based payments (72,902) (72,902) (95,573)
Loss before taxation (1,850,852) (1,858,524) (1,111,082)
------------ ------------ ------------
Direct costs
We continue to experience inflation in food costs. We work hard
to control these cost increases as well as possible, and we are
careful to share the benefits of any reduction in food costs with
our sub-franchisees.
Labour cost inflation continues in Poland's robust economy and
represents a challenge, particularly for our younger stores which
have fewer sales to absorb the fixed element of labour. National
Minimum Wage in Poland in 2019 has been increased by 7%
(year-on-year) on top of a 5% (year-on-year) increase in 2017. We
expect a further National Minimum Wage increase in 2020.
Selling, General and Administrative expenses
In H1 2019 Pre-IFRS 16 Selling, General and Administrative
expenses were 17% of System Sales, representing a 1% point
improvement on H1 2018 (H1 2018 18%) (measured using actual average
exchange rates).
Store count
6 stores have been opened in 2019 to-date, taking the total to
69 stores in 29 cities.
The table below sets out our current store estate.
Stores 1 Jan 2019 Opened Sold to Closed 30 June 24 Sept 2019
franchisees 2019
Corporate 39 4 0 0 43 42*
----------- ------- ------------- ------- -------- -------------
Sub-franchised 24 0 0 0 24 27
----------- ------- ------------- ------- -------- -------------
Total 63 4 0 0 67 69
----------- ------- ------------- ------- -------- -------------
*4 corporate stores are run by sub-franchises under the
management contract; with the option to acquire and sub-franchise
in the future.
Sales Key Performance Indicators
In H1 2019 we saw 10% growth in System Sales, on the back of -1%
like-for-like sales growth, growth from non-like-for-like(7) stores
and 4 new store openings in the period.
Delivery online sales continue to grow, a more cost-efficient
means of making sales, however newly opened stores need time to
build online customers. Mobile orders represented 63% of online
sales.
H1 2019 H1 2018 Change %
000 000
System Sales PLN 41,029 37,159 +10%
-------- -------- ---------
System Sales GBP * 8,346 7,559 +10%
-------- -------- ---------
L-F-L system sales PLN -1% +13%
-------- -------- ---------
Delivery system sales ordered
online +80% +77%
-------- -------- ---------
*Constant exchange rate of PLN 4.92:GBP1
Like-for-likes in July and August 2019 were: +1% and +8%
respectively; pre-split(3) : +1% and +9% post-split.
Group performance
11% growth of Pre-IFRS 16 Group Revenue in PLN is derivative of
10% growth of System Sales.
Group Revenue & EBITDA* H1 2019 H1 2018 Change %
(Pre IFRS 16)
------------------------- ---------
Revenue PLN 000 34,142 30,687 +11%
-------- -------- ---------
Revenue GBP000 * 6,945 6,243 +11%
-------- -------- ---------
Group EBITDA GBP000 (962) (800) -20%
-------- -------- ---------
*Constant exchange rate of PLN 4.92:GBP1
Group Revenue & EBITDA* H1 2019 H1 2018 Change
(Pre IFRS 16) %
------------------------- -------
Revenue PLN 000 34,142 30,687 +11%
-------- -------- -------
Revenue GBP000 * 6,945 6 395 +9%
-------- -------- -------
Group EBITDA GBP000 (962) (814) -18%
-------- -------- -------
*Actual exchange rates for H1 2019 and H1 2018
Group loss for the period
Pre-IFRS 16 Group EBITDA loss (at actual exchange rates)
increased by 18% against the comparative period in 2018, whereas
the Pre-IFRS 16 Group loss before tax (at actual exchange rates)
increased by 67%. The 49% difference between the increase in Group
EBITDA loss and Group loss before tax was due in part to higher
depreciation and amortization charges and an increase of Other
non-cash and non-recurring items. Higher depreciation and
amortization was triggered by the opening of new stores. The
increase of Other non-cash and non-recurring items resulted
principally from redundancy payments to the Group's former CEO and
the fact that, in H1 2018, DP Polska S.A. received a one-off VAT
repayment relating to prior years.
Group Loss for the period* H1 2019 H1 2018 Change %
(Pre IFRS 16) 000 000
Group loss for the period (1,859) (1,111) -67%
-------- -------- ---------
* Actual exchange rates for H1 2019 and H1 2018
Exchange rates
PLN : GBP1 H1 2019 H1 2018 Change %
Profit & Loss Account 4.9158 4.7988 +2.4%
-------- -------- ---------
Balance Sheet 4.7461 4.9443 -4.0%
-------- -------- ---------
Financial Statements for our Polish subsidiary DP Polska S.A.
are denominated in zloties (PLN) and translated to Sterling (GBP).
Under IFRS the Profit and Loss Account for the Group has been
converted from PLN at the average half-a-year exchange rate
applicable to PLN against GBP. The balance sheet has been converted
from PLN to GBP at the 30 June 2019 exchange rate applicable to PLN
against GBP.
Cash position
On 28 February 2019 the Group completed a placing of 96,666,666
new ordinary shares at the price of 6 pence per share, raising a
net total (after expenses) of c. GBP5.5m.
Cash of GBP2.7m was deployed in H1 2019 to cover Group losses,
store CAPEX, working capital and fundraising expenses.
1 January 2019 Cash movement 30 June 2019
GBP000 GBP000 GBP000
Cash in bank* 1,958 3,100 5,058
--------------- -------------- -------------
*Actual exchange rates as at 31 Dec 2018 and 30 June 2019
A note on like-for-like metrics
For this and future sets of results we will present
like-for-like sales growth pre-split, as we account for an
increasing number of splits across our store estate. When a store's
delivery area is split - by opening a second store in its original
delivery area - a significant portion of the original store's
customer database is allocated to the new store. It is expected
that the original store will recover its sales after 2-3 years, but
in the meantime its sales will have been reduced. The rationale for
splitting is that the combined sales of the two stores will in time
typically outstrip the original store's sales, as customers are
better served by faster delivery times. Pre-split like-for like
measure the sales growth by like-for-like delivery areas, up until
the first anniversary of the split, when we can revert to
like-for-like store measures. This is a standard approach adopted
by many Domino's Pizza master franchisees.
Maciej Jania
Finance Director
24 September 2019
Group Income Statement
for the six months ended 30
June 2019
Unaudited Unaudited Audited
6 months 6 months Year to
to to
30.06.19 30.06.18 31.12.18
Notes GBP GBP GBP
Revenue 2 6,887,081 6,394,787 12,369,815
Direct costs (5,820,311) (5,820,464) (11,426,271)
Selling, general and administrative expenses
- excluding:
store pre-opening expenses, depreciation,
amortisation and share based payments (1,332,591) (1,388,409) (2,863,992)
GROUP EBITDA - excluding non-cash items, non-recurring
items and store pre-opening expenses* (265,821) (814,086) (1,920,448)
------------ ------------
Store pre-opening expenses (30,971) (45,852) (72,900)
Other non-cash and non-recurring
items (220,043) 335,960 131,054
Finance income 78,071 70,651 129,315
Finance costs (106,420) (10,189) (21,254)
Foreign exchange gains
/ (losses) (18,446) (21,968) (6,513)
Depreciation, amortisation
and impairment (1,214,320) (530,025) (1,793,258)
Share based payments (72,902) (95,573) (239,268)
Loss before taxation (1,850,852) (1,111,082) (3,793,272)
-------- ------------ ------------ -------------
Taxation 3 - - -
Loss for the
period (1,850,852) (1,111,082) (3,793,272)
-------- ------------ ------------ -------------
(0.86 (0.74 (2.53
Loss per share Basic 4 p) p) p)
(0.86 (0.74 (2.53
Diluted 4 p) p) p)
* The Group has adopted IFRS 16 'Leases' on 1 January 2019 and applied
the modified retrospective method on adoption. Comparatives for 2018
have not been restated and therefore Group EBITDA for the comparative
periods includes the cash cost of rent on stores, commissaries and
head office, whereas under IFRS 16 the current period does not. The
Group EBITDA loss for the six months to 30 June 2019, excluding the
effect of IFRS 16, was GBP962,444.
Group Statement
of comprehensive income
for the six months ended 30
June 2019
Unaudited Unaudited Audited
6 months 6 months Year to
to to
30.06.19 30.06.18 31.12.18
GBP GBP GBP
--------------------------------------------- ------------ ------------ ------------
Loss for the
period (1,850,852) (1,111,082) (3,793,272)
Currency translation
differences 159,294 (518,905) (253,668)
----------------------------------------------
Other comprehensive expense for the period,
net of tax to be reclassified to profit or
loss in subsequent periods 159,294 (518,905) (253,668)
------------------------------------------------- ------------ ------------
Total comprehensive income
for the period (1,691,558) (1,629,987) (4,046,940)
----------------------------------------------- ------------ ------------ ------------
Group Balance Sheet
at 30 June 2019
Unaudited Unaudited Audited
30.06.19 30.06.18 31.12.18
GBP GBP GBP
----------------------------- ------------- ------------- -------------
Non-current assets
Intangible assets 568,938 547,240 604,392
Property, plant and
equipment 6,459,661 6,492,012 6,437,717
Leases - right of use 3,300,098 - -
assets
Trade and other receivables 1,853,389 1,683,556 1,730,633
------------------------------ ------------- ------------- -------------
12,182,086 8,722,808 8,772,742
Current assets
Inventories 404,860 467,158 464,102
Trade and other receivables 2,443,035 1,840,189 1,931,434
Cash and cash
equivalents 5,057,831 3,807,953 1,957,916
--------------------------------- ------------- ------------- -------------
7,905,726 6,115,300 4,353,452
Total assets 20,087,812 14,838,108 13,126,194
--------------------------------- ------------- ------------- -------------
Current liabilities
Trade and other
payables (1,689,412) (1,551,344) (2,132,199)
Borrowings (123,394) (118,965) (143,820)
Lease liabilities (1,433,843) - -
Provisions (22,666) (31,039) (27,296)
--------------------------------- ------------- ------------- -------------
(3,269,315) (1,701,348) (2,303,315)
----------------------------- ------------- ------------- -------------
Non-current liabilities
Lease liabilities (2,457,005) - -
Borrowings (180,056) (172,837) (131,963)
--------------------------------- ------------- ------------- -------------
(2,637,061) (172,837) (131,963)
Total liabilities (5,906,376) (1,874,185) (2,435,278)
--------------------------------- ------------- ------------- -------------
Net assets 14,181,436 12,963,923 10,690,916
--------------------------------- ------------- ------------- -------------
Equity
Called up share
capital 1,247,444 763,860 764,111
Share premium
account 36,838,450 31,829,463 31,829,463
Capital reserve - own
shares (48,163) (48,163) (48,163)
Retained earnings (24,214,926) (19,515,337) (22,053,832)
Currency translation
reserve 358,631 (65,900) 199,337
------------------------------ ------------- ------------- -------------
Total equity 14,181,436 12,963,923 10,690,916
--------------------------------- ------------- ------------- -------------
Group Statement of Cash Flows
for the six months ended
30 June 2019
Unaudited Unaudited Audited
6 months 6 months Year to
to to
30.06.19 30.06.18 31.12.18
GBP GBP GBP
------------------------------------------ ------------ ------------ ------------
Cash flows from operating
activities
Loss before taxation
for the period (1,850,852) (1,111,082) (3,793,272)
Adjustments for:
Finance income (78,071) (70,651) (129,315)
Finance costs 106,420 10,189 21,254
Depreciation and amortisation
and impairment 1,214,320 530,025 1,793,258
Share based payments
expense 72,902 95,573 239,268
------------------------------------------- ------------ ------------ ------------
Operating cash flows before movement
in working capital (535,281) (545,946) (1,868,807)
Change in inventories 61,539 35,039 142,777
Change in trade and
other receivables (612,654) 723,051 313,459
Change in trade and other payables
and provisions (457,019) 143,041 556,875
--------------------------------------------
Cash (used in) / provided by
operations (1,543,415) 355,185 (855,696)
Taxation paid - - -
Net cash from operating
activities (1,543,415) 355,185 (855,696)
Cash flows from investing
activities
Payments to acquire
software (1,852) (25,131) (109,307)
Payments to acquire property, plant
and equipment (491,597) (1,044,815) (1,534,529)
Payments to acquire intangible
fixed assets (11,451) (34,477) (93,468)
Net movement in loans to sub-franchisees 53,389 139,352 239,949
Interest received 15,350 6,776 20,544
---------------------------------------------- ------------ ------------ ------------
Net cash used in investing
activities (436,161) (958,295) (1,476,097)
Cash flows from financing
activities
Net proceeds from issue of
ordinary share capital 5,492,320 1,106 1,357
Repayment of borrowings and
lease liabilities (323,563) - (126,425)
Interest paid (124,866) (9,981) (18,805)
---------------------------------------------- ------------ ------------ ------------
Net cash from financing
activities 5,043,891 (8,875) (143,873)
Change in cash and cash
equivalents 3,064,315 (611,985) (2,475,666)
Exchange differences on cash
balances 35,600 (85,973) (72,329)
Cash and cash equivalents at
beginning of period 1,957,916 4,505,911 4,505,911
Cash and cash equivalents at
end of period 5,057,831 3,807,953 1,957,916
-------------------------------------------- ------------ ------------ ------------
Group Statement of Changes
in Equity
for the six months ended
30 June 2019
Share Currency Capital
Share premium Retained translation reserve
-
capital account earnings reserve own shares Total
GBP GBP GBP GBP GBP GBP
------------------------ ---------- ----------- ------------- ------------ ----------- ------------
At 31 December
2017 762,754 31,829,463 (18,499,828) 453,005 (48,163) 14,497,231
Shares issued 1,106 - - - - 1,106
Share based payments - - 95,573 - - 95,573
Translation difference - - - (518,905) - (518,905)
Loss for the
period - - (1,111,082) - - (1,111,082)
------------------------ ---------- ----------- ------------- ------------ ----------- ------------
At 30 June 2018 763,860 31,829,463 (19,515,337) (65,900) (48,163) 12,963,923
Shares issued 251 - - - - 251
Share based payments - - 143,695 - - 143,695
Translation difference - - - 265,237 - 265,237
Loss for the
period - - (2,682,190) - - (2,682,190)
------------------------ ---------- ----------- ------------- ------------ ----------- ------------
At 31 December
2018 764,111 31,829,463 (22,053,832) 199,337 (48,163) 10,690,916
Adjustment to reserves on
adoption of IFRS 16 (383,144) (383,144)
------------- ------------ -----------
Shares issued 483,333 5,316,667 - - - 5,800,000
Expenses of share
issue - (307,680) - - - (307,680)
Share based payments - - 72,902 - - 72,902
Translation difference - - - 159,294 - 159,294
Loss for the
period - - (1,850,852) - - (1,850,852)
At 30 June 2019 1,247,444 36,838,450 (24,214,926) 358,631 (48,163) 14,181,436
------------------------ ---------- ----------- ------------- ------------ ----------- ------------
Notes to the Interim Financial Statements
for the six months ended
30 June 2019
1 (a) Basis of
preparation
These condensed interim financial statements are unaudited and do
not constitute statutory accounts within the meaning of the Companies
Act 2006. These condensed interim financial statements have been prepared
in accordance with IAS 34 'Interim Financial Reporting' and were approved
on behalf of the Board by the Non-executive Chairman Nicholas Donaldson.
The accounting policies and methods of computation applied in these
condensed interim financial statements are consistent with those applied
in the Group's most recent annual financial statements for the year
ended 31 December 2018 apart from the new accounting standard; IFRS
16 'Leases', which was adopted by the Group on 1 January 2019. Further
information on the impact of IFRS 16 'Leases' is set out in note 1(b)
below.
The financial statements for the year ended 31 December 2018, which
were prepared in accordance with International Financial Reporting
Standards, as endorsed by the European Union ('IFRS'), and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS, have been delivered to the Registrar of Companies. The
auditors' opinion on those financial statements was unqualified and
did not contain a statement made under s498(2) or (3) of the Companies
Act 2006.
Copies of these condensed interim financial statements and the Group's
most recent annual financial statements are available on request by
writing to the Company Secretary at our registered office DP Poland
plc, Elder House, St Georges Business Park, 207 Brooklands Road, Weybridge,
Surrey KT13 0TS, or from our website www.dppoland.com.
1 (b) Change of accounting policy -
IFRS 16 'Leases'
The Group has adopted IFRS 16 'Leases' at 1 January 2019 and applied
the modified retrospective approach. Comparatives for 2018 have not
been restated and the cumulative impact of adoption has been recognised
as a decrease to net assets with a corresponding decrease in retained
earnings at 1 January 2019 as follows:
01 January 2019
-------------------------------------------------- ----------- ------------------------
Non-current assets
Property, plant and equipment (right-of-use
assets) 2,526,723
Trade and other receivables (sub-lease
receivables) 963,334
Current assets
Trade and other receivables (sub-lease
receivables) 286,332
Non-current liabilities
Financial liabilities
- lease liabilities (2,768,254)
Current liabilities
Financial liabilities
- lease liabilities (1,391,279)
Total decrease in retained earnings
at 1 January 2019 (383,144)
----------------------------------------------------- ----------- ---------- ------------
The Group's lease portfolio consists of approximately 70 property
leases together with a number of vehicle and equipment leases. The
lease liability has been measured at the present value of the remaining
lease payments, discounted using the incremental borrowing rate at
transition. The right-of-use asset has been measured at the carrying
amount as if the standard had been applied since the commencement
of the lease, discounted using the incremental borrowing rate at transition.
Where data was not available to enable this measurement to be made,
the right-of-use asset has been measured at an amount equal to the
lease liability. On transition the Group elected not to reassess whether
a contract is, or contains, a lease, instead relying on the assessment
already made applying IAS 17 'Leases' and IFRIC 4 'Determining whether
an Arrangement contains a Lease'. In addition, the Group applied the
available practical expedients as follows:
-- Relied on its assessment of whether leases are onerous immediately
prior to the date of initial application.
-- Applied the short-term leases exemptions to leases with a lease
term ending within 12 months at the date of the initial application.
-- Excluded the initial direct costs from the measurement of the right-of-use
asset at the date of initial application.
-- Used hindsight in determining the lease term where the contract
contains options to extend or terminate the lease.
The Group operates as an intermediate lessor for a proportion of its
leases, resulting in subleases to sub-franchisees. The Group has evaluated
and classified these subleases as either operating leases or finance
leases as required under IFRS 16. Where the sublease transfers substantially
all of the risks and rewards arising from right-of-use asset from
the head lease, the right-of-use asset from head lease has been derecognised
and a lease receivable equal to the net investment in the sublease
has been recognised. Where the sublease does not transfer substantially
all of the risks and rewards arising from right-of-use asset from
the head lease, these are classified as operating leases as required
under IFRS 16 and the accounting treatment has not changed.
Adoption of the new standard has a material impact on the Group. The
lease liability brought onto the balance sheet at transition was GBP4,159,533
with the corresponding right-of-use asset valued at GBP3,776,389.
The net impact on the balance sheet is a reduction of net assets of
GBP383,144.
There is no overall impact on the Group's cash and cash equivalents
although there is a change to the classification of cash flows in
the cash flow statement with lease payments and finance lease receipts
previously categorised as net cash used in operations now being split
between the principal element (categorised in financing activities
for payments and investing activities for receipts) and the interest
element (categorised as interest paid in operating activities or interest
received in investing activities).
From 1 January 2019, the Group's lease policy
is summarised as follows:
The Group recognises a right-of-use asset and a lease liability at
the lease commencement date. The right-of-use asset is initially measured
at cost, comprising the initial amount of the lease liability plus
any initial direct costs incurred and an estimate of costs to restore
the underlying asset, less any lease incentives received. The right-of-use
asset is subsequently depreciated using the straight-line method from
the commencement date to the earlier of the end of the useful life
of the asset or the end of the lease term. The lease liability is
initially measured at the present value of the lease payments that
are not paid at the commencement date, discounted using the incremental
borrowing rate. The lease liability is measured at amortised cost
using the effective interest method. It is remeasured when there is
a change in future lease payments arising from a change in an index
or a rate or a change in the Group's assessment of whether it will
exercise an extension or termination option. When the lease liability
is remeasured, a corresponding adjustment is made to the right-of-use
asset.
Where the Group acts as an intermediate lessor, the Group evaluates
and classifies these subleases as either operating leases or finance
leases. Where the sublease transfers substantially all of the risks
and rewards arising from right-of-use asset from the head lease, the
right-of-use asset from head lease is derecognised and a lease receivable
equal to the net investment in the sublease is recognised. Where the
sublease does not transfer substantially all of the risks and rewards
arising from right-of-use asset from the head lease, the sublease
is classified as an operating lease and rent received is recognised
in the income statement on a straight line basis over the lease term.
Copies of these condensed interim financial statements and the Group's
most recent annual financial statements are available on request by
writing to the Company Secretary at our registered office DP Poland
plc, Elder House, St Georges Business Park, 207 Brooklands Road, Weybridge,
Surrey KT13 0TS, or from our website www.dppoland.com.
2 Revenue
Unaudited Unaudited Audited
6 months 6 months Year to
to to
30.06.19 30.06.18 31.12.18
GBP GBP GBP
================================================== =========== ========== ============
Core revenue 6,887,081 6,349,950 12,325,147
Other revenue - 44,837 44,668
6,887,081 6,394,787 12,369,815
-------------------------------------------------- ----------- ---------- ------------
Core revenues are ongoing revenues including sales to the public from
corporate stores, sales of materials and services to sub-franchisees,
royalties received from sub-franchisees and rents received from sub-franchisees.
Other revenues are non-recurring transactions such as the sale of
stores, fittings and equipment to sub-franchisees.
3 Taxation
Unaudited Unaudited Audited
6 months 6 months Year to
to to
30.06.19 30.06.18 31.12.18
GBP GBP GBP
======================================== ============= ============ ============
Current tax - - -
Deferred tax charge relating to the
origination and reversal
of temporary - - -
differences
----------------------------------------
Total tax charge in - - -
income statement
----------------------------------------- ------------- ------------ ------------
4 Earnings per ordinary
share
The loss per ordinary share has been
calculated as follows:
Unaudited Unaudited Audited
6 months 6 months Year to
to to
30.06.19 30.06.18 31.12.18
---------------------------------------- ------------- ------------ ------------
Profit / (loss)
after tax (GBP) (1,850,852) (1,111,082) (3,793,272)
Weighted average number of
shares in issue 215,867,842 150,106,962 150,185,274
Basic and diluted earnings (0.86 (0.74 (2.53
per share (pence) p) p) p)
------------------------------------------ ------------- ------------ ------------
The weighted average number of shares for the period excludes those
shares in the Company held by the employee benefit trust. At 30 June
2019 the basic and diluted loss per share is the same, because the
vesting of share awards would reduce the loss per share and is, therefore,
anti-dilutive.
5 Principal risks and
uncertainties
The principal risks and uncertainties facing the Group are disclosed
in the Group's financial statements for the year ended 31 December
2018, available from www.dppoland.com and remain unchanged.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR CKNDQABKDFCB
(END) Dow Jones Newswires
September 24, 2019 02:00 ET (06:00 GMT)
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