TIDMDPP
RNS Number : 5896N
DP Poland PLC
26 September 2023
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation and the Directors of the Company
are responsible for the release of this announcement.
DP Poland plc
("DP Poland", the "Group" or the "Company")
Interim Results for the Period Ended 30 June 2023 and Trading
Update
DP Poland, the operator of Domino's pizza stores and restaurants
across Poland and Croatia, is pleased to announce its unaudited
results for the six months ended 30 June 2023.
Unaudited Financial Information
Currency: GBP000 H1 2023 H1 2022 % change
Group System Sales 21,386 17,098 25.1%
-------- -------- ---------
Group Revenue 20,960 16,575 26.5%
-------- -------- ---------
EBITDA* 1,051 388 171.2%
-------- -------- ---------
EBITDA*(Pre-IFRS
16) (720) (1,130) 36.3%
-------- -------- ---------
EBITDA margin
% 5.02% 2.34%
-------- -------- ---------
Loss for the period (1,592) (2,200) 27.6%
-------- -------- ---------
* excluding non-cash items, non-recurring items and store
pre-opening expenses
Financial highlights
-- Overall Group revenue increased by 26.5% to GBP21.0m (H1
2022: GBP16.6m), including Croatia.
-- Poland revenue increased by 21.0% to GBP20.1m (H1 2022: GBP16.6m)
-- Group system sales were up 25.1% to GBP21.4m including Croatia (H1 2022: GBP17.1m)
-- Poland system sales increased by 14.9% to PLN 108.1m (H1 2022: PLN 94.1m)
o Strong Poland LFL revenue growth of 18.0% in H1 2023 compared
to H1 2022 driven by increased order count (11.3%) and average
ticket price (5.8%)
o Growth of delivery and non-delivery Poland LFL System Sales of
15.8% and 22.6%, respectively, compared to prior period
-- Group EBITDA increased by 171.2% to GBP1.1m (H1 2022: GBP0.4m)
-- Group loss before tax improved from GBP(2.2)m for H1 2022 to GBP(1.6)m for H1 2023
-- Cash at bank of GBP2.7m as at 30 June 2023 (GBP1.7m as at 30 June 2022)
Operational highlights
-- The Group operated 116 stores at the end of June 2023,
including 112 Domino's Pizza stores across Poland and 4 across
Croatia
-- One new store was opened in Poland and one in Croatia in the
first half of 2023. At the same time, four ex-Dominium stores have
been upgraded to Domino's standards and two stores were closed as
part of the store network optimisation plan
-- Average delivery times reduced by 13.0% in H1 2023 (vs H1
2022), resulting in improved Net Promoter Scores and customer
satisfaction
-- Further development of digital capabilities
-- Mitigating actions were taken in H1 to reduce the impact of
inflationary pressures particularly in food and energy which have
now begun to ease, however, labour inflationary pressures have
remained
Nils Gornall, CEO, commented:
"H1 2023 saw the company move into positive store EBITDA and I
am confident that we can build on this in the second half of the
year. Delivery times are coming down, which are driving improved
customer satisfaction and increased orders which are now regularly
exceeding 700 orders per store per week. Driving order count higher
is our prime objective in the second half as this is a key driver
of consistent and improved profitability.
The results we have achieved position the Company firmly for
ongoing market share expansion. This growth will be fueled by
continued operational excellence, enhancing our digital solutions
for customer orders and internal processes, and maintaining an
unwavering commitment to our customer value proposition. We
anticipate that these efforts will lead to the creation of new
sales records for the Company, and continued improvement in
EBITDA".
Post period end trading update
Polish trading remains strong with double digit sales and order
count LFL growth. In July and August, Polish LFL sales grew by
10.6% and 17.3%, respectively, compared to 2022, with the growth
split evenly between sales channels. Performance in the first half
of September has so far been strong.
In the year to August 2023, the Polish market has seen
double-digit revenue growth compared to 2022:
-- 16.9% increase in LFL System Sales
o 18.9% LFL non-delivery revenue growth
o 15.7% LFL delivery revenue growth
-- 12.3% increase in total System Sales, despite a reduction of 8 store locations vs 2022
The Croatian market has been impacted by inflationary pressures
and consumers enjoying the summer on the coast where we are not
currently present. This resulted in LFL sales growth in July and
August of (14,0%) and 0.1%, respectively, compared to 2022.
Overall, the addition of one new store resulted in system sales
growth of 10.9% and 25.5% in July and August, respectively, versus
the prior year.
In the year to August 2023, Croatia grew system sales 35.9% and
LFL sales 4.4% with the prospects for September and the rest of the
year looking encouraging.
We expect to deliver a solid performance for the Group in Q3 and
to be in line with expectations for Q4. In the coming months, we
expect to open another two stores in Poland and one store in
Croatia, further improve our cost position through additional cost
saving initiatives and driving market share.
Investor Presentation
The Company is pleased to announce that Nils Gornall and Edward
Kacyrz will provide a live presentation relating to the Interim
Results via Investor Meet Company on 27th Sep 2023 at 3:00pm
BST.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via your
Investor Meet Company dashboard up until 9am the day before the
meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet DP POLAND PLC via:
https://www.investormeetcompany.com/dp-poland-plc/register-investor
Investors who already follow DP Poland plc on the Investor Meet
Company platform will automatically be invited.
Enquiries:
DP Poland plc
Nils Gornall, CEO
Tel: +44 (0) 20 3393 6954
Email: ir@dppoland.com
Singer Capital Markets (Nominated Adviser and Broker)
Shaun Dobson
Tel: +44 (0) 20 7496 3000
Notes for editors
About DP Poland plc
DP Poland, has the exclusive right to develop, operate and
sub-franchise Domino's Pizza stores in Poland and Croatia. The
group operates 116 stores and restaurants throughout cities and
towns in Poland and Croatia.
Chief Executive Officer's Review
After twelve months of leading DP Poland plc, it is a great
pleasure to share with you insights to visibly improving
performance of the Company, which prove that the proposed
transformation strategy for the Company is working, despite
challenging market conditions, predominantly related to
inflationary pressures visible in food, labour and utility
cost.
I feel confident that current results and Company setup build
strong foundations for further Company growth. Supported by an
energised team, we will enter into the second stage of our
transformation plan, concentrating on further company expansion and
transition towards a franchisee model, which allows us to
capitalise on the opportunity to grow market share and sales
volumes under our High-Volume Mentality.
Store performance
The Company has seen strong top line performance in the first
six months of 2023, recording 18.0% and 10.2% LFL system sales
growth in Poland and Croatia, respectively, compared to the prior
year. At the same time, Company total system sales grew by more
than 25% year-on-year, driven by the third store opening in Croatia
and store network optimization in Poland. The sales growth vs.
prior year was achieved through a combination of (i) 11.3% growth
in order count in Poland; (ii) continued simultaneous dynamic
growth in both delivery and non-delivery channels, and (iii)
improved product quality and reduced delivery times in both
markets.
In Poland, a Q1'23 TV campaign targeting the carry-out offering
helped deliver a 22.6% year-on-year growth, and delivery sales
continued growing at double-digits, delivering a 15.8% year-on-year
growth.
In Croatia, the transition of the Croatian currency from the
Kuna to the Euro at the beginning of 2023 contributed to weaker
sales in January, whilst also impacting higher inflation. However,
the market returned to strong double-digit LFL sales growth from
February, delivering 10.2% year-on-year growth in H1 and average
weekly order count per store exceeded 1,100, which sets an
aspirational benchmark for the Polish market.
Value for money
In the current trading environment, our focus on providing the
consumer with the best value-for-money is essential for building
market share and, thus, our strong value message together with
delivery promise is key to success.
We aim to attract and retain new consumers with a strong
pipeline of promotions, new pizzas and sides to increase frequency
of purchase. We started the year with the compelling offer for
carry-out and delivery, medium pizzas for 19.99PLN and 24.99PLN,
respectively. This drew new customers to Domino's, a key factor in
the ongoing sales momentum we've experienced this year. In the
second quarter, we focused on product quality and our menu offering
by upgrading recipes with additional ingredients, launching new
menus purely dedicated for the dine-in channel as well as
implementing one-topping pizzas with the entry price points at
17.99PLN for a medium pizza. Our promotions have proved successful
with consumers and the changes made in the portfolio mix have
started contributing positively to the Company performance.
In H1 2023 we continued to improve on the pizza delivery
process, adding eBikes and rejuvenating our scooter fleet , which
allowed us to substantially shorten our delivery times by 13%
year-on-year to around 25 minutes. As a direct result of these
initiatives, we have seen an improving Net Promoter Score. Although
our delivery times are already at the European average for Dominos
stores in the coming year we are introducing GPS technologies to
improve driver route planning to further reduce delivery times to
22 minutes.
Input cost inflation and mitigating action
High inflation in labour, energy and food costs over the last
two years has had an adverse implication on the restaurant sector
in the region. In Q2 2023, high inflation in energy and food have
started to abate, however, labour rates are still under
inflationary pressures.
In the first half of the year, we have worked hard to mitigate
against these inflationary pressures through renegotiating supply
chain contracts and reducing distribution costs to our stores.
Additionally, we have improved labour efficiency by implementing
the 'Tanda' scheduling system across our entire store network,
which resulted in visible labour costs reduction and allowed us to
remain competitive on our pizza prices. These actions have made our
Company much more resistant to economic fluctuations and put us in
a strong position to grow market share.
We expect to further improve our cost position in the second
half of the year through additional cost saving initiatives.
Digital
In the past six months, we've witnessed a substantial leap in
our digital capabilities. The Company has focused on further
development of the mobile app and improvements in the webpage
layout to enhance the consumer experience at every touchpoint with
Domino's. This has resulted in a faster ordering process and higher
basket values. Overall sales growth through the mobile app almost
quadrupled year-on-year and app downloads have doubled.
Additionally, customers' consents for text messages have grown 20%
and consents for email marketing have grown 44%. Digital orders now
account for 89% of all delivery orders and we are well on our way
to our 90% target. Towards the end of the year, we plan to launch a
dine-in self-ordering solution via mobile app and trial
self-ordering kiosks for carry-out and dine-in customers.
At the beginning of 2023 we upgraded our ERP system bringing us
closer towards a paperless organisation. This change has been
followed with the introduction of a digital approval process (Q2
2023), and in the coming months will be supplemented with automatic
bookings and cash reconciliation processes - all for the purpose of
simplified and integrated accounting and controlling.
Outlook
We have made a strong start to the second half of the year and
expect to see a continued improvement in profitability as we grow
our sales. We are confident that the drive for order growth and
network expansion is the key to success and will soon bring us to a
pre-IFRS 16 positive EBITDA.
The improvement of business profitability and positive cash flow
is the prime goal for the entire team. Demonstrating consistently
profitable stores will enable us to move to the second stage of
planned transformation and accelerate the growth of our stores'
portfolio using the franchise model to become the market leader in
Poland over the next 3-5 years with 250+ stores.
FINANCIAL STATEMENTS
Group Income Statement
for 6 months to 30.06.2023
Unaudited Unaudited Audited
6 months 6 months Year to
to 30.06.2023 to 30.06.2022 31.12.2022
Notes GBP GBP GBP
Revenue 2 20,959,825 16,575,350 35,694,098
Direct Costs (16,345,959) (13,529,067) (28,312,921)
Selling, general and administrative
expenses - excluding:
store pre-opening expenses, depreciation,
amortisation and share based payments (3,562,483) (2,658,585) (5,687,720)
Group adjusted EBITDA - excluding
non-cash items, non-recurring items
and store pre-opening expenses 1,051,383 387,698 1,693,457
Store pre-opening
expenses - (32,894) (37,584)
Other non-cash and non-recurring
items 191,282 23,035 (500,971)
Depreciation and amortisation (2,406,520) (2,079,335) (4,336,210)
Share based payments
(1) (198,483) - (137,748)
Foreign exchange gains /
(losses) 290,825 276,382 17,406
Finance income 13,199 11,648 257,984
Finance costs (499,865) (786,469) (1,258,850)
Loss before taxation (1,558,179) (2,199,935) (4,302,516)
------ --------------- --------------- -------------
Taxation (2) 3 (33,806) - (57,429)
Loss for the period (1,591,985) (2,199,935) (4,359,945)
------ --------------- ---------------
Loss per share Basic 4 (0.22 p) (0.38 p) (0.67 p)
Diluted 4 (0.22 p) (0.38 p) (0.67 p)
(1, 2) - share based payments and taxation for 6 months to
30.06.2022 have not been included into Group income statement due
to the amount being immaterial
All the loss for the year is attributable to the owners of the
Parent Company.
Group Statement
of comprehensive income
for 6 months to 30.06.2023
Unaudited Unaudited Audited
6 months 6 months Year
to 30.06.2023 to 30.06.2022 to 31.12.2022
GBP GBP GBP
------------------------------------------ --------------- --------------- ---------------
Loss for the period (1,591,985) (2,199,935) (4,359,945)
Currency translation differences (192,317) 11,380 (333,785)
--------------------------------------------
Other comprehensive expense for the
period, net of tax to be reclassified
to profit or loss in subsequent periods (192,317) 11,380 (333,785)
-------------------------------------------- --------------- ---------------
Total comprehensive income for the
period (1,784,302) (2,188,555) (4,693,730)
-------------------------------------------- --------------- --------------- ---------------
All of the comprehensive expense for the year is attributable to
the owners of the Parent Company.
Group Balance Sheet
on 30 June 2023
Unaudited Unaudited Audited
30.06.2023 30.06.2022 31.12.2022
GBP GBP GBP
------------------------------- ------------- ------------- -------------
Non-current assets
Goodwill 15,179,109 15,016,129 15,111,002
Intangible assets 3,528,313 1,969,417 3,714,479
Property, plant and equipment 6,669,521 5,915,292 6,645,301
Leases - right of
use assets 6,678,007 7,512,357 6,472,965
Trade and other
receivables 848,060 800,448 822,042
--------------------------------- ------------- ------------- -------------
32,903,010 31,213,643 32,765,789
Current assets
Inventories 852,198 522,300 982,110
Trade and other receivables 2,017,944 1,354,550 1,966,987
Cash and cash equivalents 2,715,746 1,730,716 4,110,322
--------------------------------- ------------- ------------- -------------
5,585,888 3,607,566 7,059,419
Total assets 38,488,898 34,821,209 39,825,208
--------------------------------- ------------- ------------- -------------
Current liabilities
Trade and other payables (5,341,623) (5,415,603) (5,343,028)
Lease liabilities (2,990,580) (2,813,656) (2,834,336)
--------------------------------- ------------- ------------- -------------
(8,332,203) (8,229,259) (8,177,364)
Non-current liabilities
Lease liabilities (5,771,073) (6,107,204) (5,666,835)
Deferred tax (313,703) (213,982) (276,099)
Borrowings (6,715,686) (6,217,469) (6,763,297)
--------------------------------- ------------- ------------- -------------
(12,800,462) (12,538,655) (12,706,231)
Total liabilities (21,132,665) (20,767,914) (20,883,595)
--------------------------------- ------------- ------------- -------------
Net assets 17,356,233 14,053,295 18,941,613
--------------------------------- ------------- ------------- -------------
Equity
Called up share capital 3,562,409 3,102,293 3,561,969
Share premium account 46,925,141 42,593,641 46,925,141
Capital reserve -
own shares (48,163) (48,163) (48,163)
Retained earnings (22,843,714) (19,427,950) (21,450,212)
Merger relief reserve 23,676,117 21,282,500 23,676,117
Reverse Takeover
reserve (33,460,406) (33,460,406) (33,460,406)
Currency translation
reserve (455,151) 11,380 (262,834)
-------------------------------- ------------- ------------- -------------
Total equity 17,356,233 14,053,295 18,941,613
--------------------------------- ------------- ------------- -------------
Group Statement of Cash Flows
for 6 months to 30.06.2023
Unaudited Unaudited Audited
6 months 6 months Year
to 30.06.2023 to 30.06.2022 to 31.12.2022
GBP GBP GBP
-------------------------------------- --------------- --------------- ---------------
Cash flows from operating
activities
Loss before taxation for
the period (1,558,179) (2,199,935) (4,302,516)
Adjustments for:
Finance income (13,199) (11,648) (257,984)
Finance costs 499,865 786,470 1,258,850
Foreign exchange movements (891,037) 150,204 (144,025)
Depreciation, amortisation
and impairment 2,406,520 2,079,335 4,336,210
Loss on fixed asset
disposal (529) 5,563 136,974
VAT refund - interests - - 231,476
Dismantling provision - - 20,466
Share based payments expense 198,483 - 137,748
--------------------------------------- --------------- --------------- ---------------
Operating cash flows before movement
in working capital 641,924 809,989 1,417,199
Decrease / (increase) in
inventories 129,912 285,332 (314,212)
Decrease / (increase) in trade
and other receivables (76,975) (79,915) (748,711)
Increase / (decrease) in trade
and other payables (1,405) 94,096 359,363
---------------------------------------- --------------- --------------- ---------------
Cash generated from operations 693,456 1,109,502 713,639
Taxation payable - - -
Net cash generated from
operations 693,456 1,109,502 713,639
Cash flows from investing
activities
Payments to acquire software (161,007) (32,856) (241,032)
Payments to acquire property,
plant and equipment (605,693) (453,236) (1,072,811)
Payments to acquire intangible
fixed assets (65,646) (19,721) (62,831)
Proceeds from disposal of property
plant and equipment 23,474 37,349 46,063
Interest received on sub-franchisee
loans 8,651 27,020 16,767
Interest received on short-term - 8,048 -
deposits
Cash flows of acquiring a
subsidiary - - (2,241,534)
Net cash (used in) investing
activities (800,221) (433,396) (3,555,378)
Cash flows from financing
activities
Net proceeds from issue of ordinary
share capital 440 - 7,231,341
Repayment of lease
liabilities (926,962) (1,313,525) (2,068,948)
Repayment of borrowings - - (163,539)
Interest paid on lease liabilities (305,924) (347,824) (665,084)
--------------------------------------- --------------- --------------- ---------------
Net cash from/(used in) financing
activities (1,232,446) (1,661,349) 4,333,770
Net increase / (decrease)
in cash (1,339,211) (985,243) 1,492,031
Exchange differences on cash
balances (55,365) 14,313 (83,355)
Cash and cash equivalents at
beginning of period 4,110,322 2,701,646 2,701,646
Cash and cash equivalents at
end of period 2,715,746 1,730,716 4,110,322
---------------------------------------- --------------- --------------- ---------------
Group Statement of Changes in Equity
for 6 months to 30.06.2023
Share Currency Capital Reverse Merger
reserve
Share premium Retained translation - Takeover Relief
own
capital account earnings reserve shares reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------- ----------- ------------- ------------ --------- ------------- ----------- ------------
At 30 June
2022 3,102,293 42,593,641 (19,427,950) 11,380 (48,163) (33,460,406) 21,282,500 14,053,295
Translation
difference - - - (275,484) - - - (275,484)
Loss for the
period - - (2,160,010) - - - - (2,160,010)
Total
comprehensive
income for
the year - - (2,160,010) (275,484) - - - (2,435,494)
Shares issued
(net
of expenses) 459,676 4,331,500 - - - - 2,393,617 7,184,793
Share based
payments - - 137,748 - - - - 137,748
Transactions
with
owners in
their
capacity as
owners 459,676 4,331,500 137,748 - - - 2,393,617 7,322,541
At 31 December
2022 3,561,969 46,925,141 (21,450,212) (262,834) (48,163) (33,460,406) 23,676,117 18,941,613
--------------- ---------- ----------- ------------- ------------ --------- ------------- ----------- ------------
Translation
difference - - - (192,317) - - - (192,317)
Loss for the
period - - (1,591,985) - - - - (1,591,985)
Total
comprehensive
income for
the year - - (1,591,985) (192,317) - - - (1,784,302)
Shares issued
(net
of expenses) 440 - - - - - - 440
Share based
payments - - 198,483 - - - - 198,483
Transactions
with
owners in
their
capacity as
owners 440 - 198,483 - - - - 198,923
At 30 June
2023 3,562,409 46,925,141 (22,843,714) (455,151) (48,163) (33,460,406) 23,676,117 17,356,233
--------------- ---------- ----------- ------------- ------------ --------- ------------- ----------- ------------
Notes to the Financial Statements
for 6 months to 30.06.2023
1 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 Chairman
David Wild.
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 2022.
The financial statements for the year ended 31 December 2022,
which were prepared in accordance with UK-adopted international
accounting standards, IFRIC Interpretations and the Companies Act
2006 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, One Chamberlain Square, Birmingham, B3 3AX,
United Kingdom, or from our website www.dppoland.com .
2 Revenue
Unaudited Unaudited Audited
6 months 6 months Year to
to 30.06.2023 to 30.06.2022 31.12.2022
GBP GBP GBP
--------------- --------------- --------------- ------------
Core revenue 20,959,825 16,575,350 35,693,133
Other revenue - - 965
20,959,825 16,575,350 - 35,694,098
--------------- --------------- --------------- ------------
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 30.06.2023 to 30.06.2022 31.12.2022
GBP GBP GBP
--------------------------------- --------------- --------------- ------------
Current tax - -
Deferred tax charge relating to
the origination and reversal
of temporary differences 33,806 - 57,429
-
Total tax charge in income
statement 33,806 - 57,429
---------------------------------- --------------- --------------- ------------
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 30.06.2023 to 30.06.2022 31.12.2022
GBP GBP GBP
----------------------------------- --------------- --------------- ------------
Profit / (loss)
after tax (GBP) (1,591,985) (2,199,935) (4,359,945)
Weighted average number of shares
in issue (excluding EBT held
shares) 710,642,415 578,123,216 653,776,085
Basic and diluted earnings per
share (pence) (0.22 p) (0.38 p) (0.67 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 2023 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 2022, available from www.dppoland.com and remain
unchanged.
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