Interim Results for the Period ended 30 June 2018

Transcription

1 Interim Results for the Period ended 30 June

2 Disclaimer This Presentation is not an offer to buy or sell any securities. Save where otherwise indicated, the Company is the source of the content of this Presentation and, accordingly, although care has been taken to ensure that the facts stated in this Presentation are accurate and that the opinions expressed are fair and reasonable, no representation, warranty or undertaking, express or implied, is made by any of the Company, any of its directors, officers, employees, affiliates, advisors, shareholders or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither the Company nor any of its directors, officers, employees, affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection with the Presentation. Certain statements in this Presentation are not historical facts and are forward looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms believes, estimates, anticipates, expects, intends, plans, may, will or should or, in each case, their negative or other variations or comparable terminology. None of the Company, its directors, officers, employees, affiliates, advisors, shareholders or representatives intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this Presentation or to update or to keep current any other information contained in this Presentation. The information and opinions contained in this Presentation are provided as at the date of this Presentation and are subject to change without notice. As a result, you are cautioned not to place undue reliance on such forward looking statements. 2

3 Today s Agenda Highlights Aslan Saranga - Chief Executive Officer Operational Review Aslan Saranga Güvenç Dönmez - Chief Executive Officer of Russian Operations Financial Results Selim Kender - Chief Strategy Officer and Head of Investor Relations Conclusion Aslan Saranga Q&A 3

4 SECTION 1: Highlights

5 Macroeconomic headwinds TRY has devalued by c. 75% year-to-date until 31 August 2018 against the USD o o Local currency supplies, wages and rents No hard currency net debt position Turkish headline inflation at 17.9% as of August 2018 o o Frequent price hikes to preserve margins No observed decline in consumer demand Turkish bank loan interest rates at 30%s in early September 2018 o Closer observation of and cooperation with franchisees Source: Company Information 5

6 2018 H1 highlights SYSTEM SALES REVENUE Adjusted EBITDA TRY 510.4m (2017 H1: 398.5m) TRY 380.2m (2017 H1: 287.7m) TRY 36.5m (2017 H1: 32.5m) TRY 7.4m (2017 H1: 4.9m) TRY 40.3m (2017 H1: 37.3m) 28.1% 32.2% 12.1% 49.2% % LIKE-FOR-LIKE GROWTH STORE COUNT ONLINE DELIVERY 10.9% (2017 H1: 6.9%) 18.0% (2017 H1: 31.3%) 672 (2017 H1: 593) % (2017 H1: 49.7%) 9.6% points 6

7 SECTION 2: Operational Review

8 Innovation is at the core of DP Eurasia Enhanced Websites GPS Tracker Products Loyalty Program Launched in Turkey in August 2018, Russia to follow Progressive and responsive Centralize development process of digital solutions in Turkey and deliver to other countries concurrently Keep up with technology trends and design trends focused on best customer experience Installed in 400+ stores in Turkey, to be launched in early 2019 Efficiency increased delivered orders per driver Customer engagement real time order progression Driver safety speeding and harsh brake reporting Incremental sales opportunity Oven baked sandwich order mix at 13% in H without cannibalisation Product transfer from Turkey to Russia, e.g. ultrathin crust and mosaic cake Launched in Turkey in November k participants as of H % increase in onliine frequency, 15% increase in app frequency Source: Company Information 8

9 Like-for-like performance Lfl performance continues to be strong... System sales Lfl growth, % Turkey...with the revamped apps leading the charge App System sales Lfl growth, % Turkey 33% 43% 152% 7% 11% 57% Online Total Russia Russia 406% 85% 53% 31% 18% 26% Online Total 9

10 Digital growth Share of online ordering growing healthily Online system sales, % Turkey Russia 46% 54% 30% 39% 63% 74% 42% 52% Delivery Total Delivery Total Group 50% 59% 33% 42% Delivery Total Source: Company Information 10

11 Store count growth Continuous and significant store rollout # of stores at period end DP Turkey DP Russia Source: Company Information Turkey moving towards 550 stores... # of stores at period end (1) H1 Source: Company Information with Russia heading to 200th store # of stores at period end H1 Source: Company Information Notes: 1. Includes Azerbaijan and Georgia 11

12 Russian expansion Expansion outside of Greater Moscow progressing well European part of Russia Petersburg (4) Progress in Greater Moscow has been rapid Tver (1) Moscow 13 Tula (1) Nizhny Novgorod (1) Voronezh (1) Rostov-on-Don (1) Krasnodar (4) Kazan (1) H1 DPEU Papa John's Dodo St. Petersburg - 4 Corporate Stores Tver - 1 Franchise Store Kazan - 1 Franchise Store Nizhny Novgorod - 1 Franchise Store Tula - 1 Franchise Store Voronezh - 1 Franchise Store Rostov-on-Don - 1 Franchise Store Krasnodar - 4 Franchise Stores Having successfully implemented the castle strategy in Moscow, we are continuing to expand, further building upon our growing market presence Greater Moscow is the key region for Russia, that shows very high demand and still has high potential for further growth Key focus outside Moscow 8 new cities: St. Petersburg, Krasnodar, Rostov-on-Don, Tver, Nizhny Novgorod, Tula, Voronezh, Kazan New cities have a population of more than 1 million people; reachable from Moscow, which provides convenient delivery from commissary Continuing planned roll out to further cities Russia franchise store mix at 29%, up from 8% at H

13 SECTION 3: Financial Results

14 DP Eurasia: Financial snapshot Growth in system sales supported by store roll-out System Sales, TRY MM # of Outlets 28% % % % % Year on year growth Corporate Franchise Adjusted EBITDA with margin a function of sales mix effect Capex and cash conversion (2) TRY MM 9.4% % 40 TRY MM % 20% 17% Adj. EBITDA Margin (1) Capex Cash Conversion Source: IFRS Combined and Consolidated Financial Information, Management Accounts Notes: 1. As % of System Sales 2. Cash conversion defined as (Adj. EBITDA Capex ) / Adj. EBITDA 14

15 DP Turkey: Financial snapshot (1) System Sales System Sales, TRY MM Store count (2) # of Outlets 16% % 72% % % Year on year growth Corporate Franchise Adjusted EBITDA and margin Capex and cash conversion (4) TRY MM 10.6% 10.2% TRY MM % 66% % Adj. EBITDA Margin (3) Capex Cash Conversion Source: IFRS Combined and Consolidated Financial Information, Management Accounts Notes: 1. Including contributions from Azerbaijan and Georgia 2. Turkey only 3. As % of System Sales 4. Cash conversion defined as (Adj. EBITDA Capex ) / Adj. EBITDA 15

16 DP Russia: Financial snapshot System Sales System Sales, TRY MM Store count # of Outlets 69% % 41 29% % % Year on year growth Corporate Franchise Adjusted EBITDA and margin TRY MM 5.4% 4.8% Capex TRY MM Adj. EBITDA Margin (1) Source: IFRS Combined and Consolidated Financial Information, Management Accounts Notes: 1. As % of System Sales 16

17 Cash flow generation and debt profile Cash flow generation TRY MM 20% 17% (30) (33) Debt profile of DP Eurasia TRY MM x x H1 (1) (2) Adj. EBITDA Capex Adj. EBITDA - Capex Cash Conversion Adj. Net Debt Gross Debt Adj. Net Debt / Adj. EBITDA (2) (1) 2018 H1 adjusted net debt by currency Post Rouble Refinancing adjusted net debt by currency (3) 6% 14% 38% 56% 86% TRY EUR RUB Source: IFRS Combined and Consolidated Financial Information Notes: 1. Adjusted for activities that are not part of the normal course of business and are non-recurring including share-based incentives, IPO costs and severance costs for Turkey and Russia 2. Adjusted net debt is calculated as sum of short-term borrowings and long-term borrowings, less cash and cash equivalents and adjusted for non-recurring items including long term deposit for loan guarantee and delay in collection/payment day coinciding on a weekend 3. Calculation is based on the assumption that the Euro denominated debt in the Russian segment in Note 3 of the Consolidated Interim Financial Information is in Rubles as at 30 June TRY RUB 17

18 Management guidance Total potential store count 900 1,500 Targeted net store openings per year (medium term) 30 stores We expect franchise stores to be the main driver of new store openings stores We expect franchise and corporate stores to be the main drivers of new store openings LfL (medium term) High single digit LfL growth Low to mid-teens LfL growth CAPEX program c. TRY 30 MM in 2018 c. RUB 375 MM in

19 SECTION 4: Conclusion

20 Conclusion Macroeconomic headwinds in Turkey o Management focused on mitigation steps Strong topline and profitability growth o System Sales: 28.1% o Revenue: 32.2% Solid adjusted EBITDA growth in the segments o Turkey: 12.1% o Russia: 49.2% 29 stores opened in 2018 H1, visible pipeline for the remainder of the year Online share increasing: 59.3% of delivery (+9.6% year-on-year) Source: Company Information 20

21 SECTION 5: Appendix

22 DP Russia DP Turkey Future growth driven by four core strategy pillars 1 Innovation and online ordering to drive like-for-like growth 2 Large whitespace opportunity in countries of presence System sales LfL growth, % Domino s stores, # Turkey Russia c % 85% % 53% 2018 H1 Total Potential (1) 7% 11% 31% 18% c. 1,500 Online Total Online Total Source: Company information Russia Adj. EBITDA / System Sales, % Turkey Adj. EBITDA / System Sales, % Source: Company estimates H1 Total Potential 3 Leverage scale advantage to further improve profitability 4 Potential to export the platform 10.6% 10.2% 5.4% 4.8% Adj. EBITDA / System Sales DP Eurasia Source: Company information Notes: 1. Excluding Azerbaijan and Georgia 22

23 Attractive investment opportunity with high growth potential and proven business model 1 Leading market positions 2 Highly attractive, underpenetrated markets with substantial growth potential in the Group s addressable segments 3 Strong online capabilities underpin DP Eurasia s growth 4 Globally proven business model successfully applied and adapted to DP Eurasia s local markets 5 Simple and scalable, asset-light business model 6 Highly attractive customer proposition and strong brand equity 7 Track record of resilient and profitable growth as well as strong cash conversion 8 Founder-led, experienced management team 23

24 DP Eurasia: Financial summary Key KPIs 2018 H H1 Change Corporate Store Count Franchise Store Count System sales (TRY MM) % DP Eurasia income statement System sales Sales generated by the Group s system stores (both corporate and franchise) (TRY MM) 2018 H H1 Change Revenue % Cost of Sales (251.8) (184.7) 36.3% Gross Profit % General Administrative Expenses (63.0) (44.2) 42.4% Marketing and Selling Expenses (50.0) (41.3) 21.0% Other Operating Income / (Expense) (0.6) (0.9) n.m. Operating Profit % Foreign Exchange (losses)/gains (8.6) (7.3) n/a Financial Income n/a Financial Expense (16.8) (10.0) 68.8% Profit / (Loss) Before Tax (10.0) (0.4) n/a Tax Expense (0.3) (3.4) -90.1% Net Income (10.4) (3.8) n/a Corporate revenue Revenue from the Group s corporate stores Franchise revenue and royalty Cost of sales General and administrative expenses Consists of revenue from commissary sales to franchise stores and royalties calculated based on franchise store sales to customers, including the contribution to national advertising Corporate store costs; production related costs of the Group s commissaries, such as merchandise and raw materials; ingredients and non-food items (including those sold to the Group s subfranchisees); labour; rent; utilities and other, including D&A of corporate stores and commissaries Consists of headquarters expenses such as personnel (excl. marketing and selling personnel), rent, utilities, commissaries rents and nonproduction related personnel and headquartersrelated D&A expenses Adjusted EBITDA % Adjusted net income (9.1) (2.4) n/a Source: Company Information, IFRS Combined and Consolidated Financial Information, Management Accounts Marketing and selling expenses Includes marketing and selling personnel costs, royalties paid by the Group (on-going fees) and promotion and advertising expenses Notes: 1. One-off items include activities that are not part of the normal course of business and are non-recurring including share-based incentives, IPO costs and severance costs for Turkey and Russia 24

25 DP Eurasia: Revenue & Expense Breakdown (TRY MM) 2018H1 2017H1 Change 2018H1 2017H1 System sales % Corporate % as a % of system sales 43.5% 43.6% Franchise % as a % of system sales 56.5% 56.4% 2018H1 2017H1 Change 2018H1 2017H1 Revenue % Corporate % as a % of revenue 58.5% 60.4% Franchise % as a % of revenue 35.5% 36.0% Other revenue % as a % of revenue 6.0% 3.6% Cost of Sales (251.8) (184.7) 36% Cost of Food/Non-Food/Transportation (131.1) (100.5) 30% as a % of system sales 25.7% 25.2% Corporate Store Expenses (103.0) (70.5) 46% as a % of corporate system sales 46.3% 40.5% Depreciation and Amortization (17.7) (13.7) 30% as a % of system sales 3.5% 3.4% Gross Profit % as a % of system sales 25.2% 25.8% General Administrative Expenses (63.0) (44.2) 42% Overhead (Including Commisary) (55.3) (37.1) 49% as a % of system sales 10.8% 9.3% Depreciation and Amortization (6.4) (5.6) 15% Share based incentives (1.1) (0.1) n/a IPO Costs (0.2) (1.4) n/a Marketing and Selling Expenses (50.0) (41.3) 21% Marketing and Advertising (26.9) (23.0) 17% as a % of system sales 5.3% 5.8% Corporate Store Local Marketing (3.0) (2.5) 18% as a % of corporate system sales 1.3% 1.5% Royalty (20.1) (15.8) 28% as a % of system sales 3.9% 4.0% Other Operating Income / (Expense) (0.6) (0.9) n/a Operating Profit % Notes: 1. One-off items include activities that are not part of the normal course of business and are non-recurring including share-based incentives, IPO costs and severance costs for Turkey and Russia 25

26 Adjusted EBITDA and Net Debt calculation DP Turkey (TRY MM) 2018 H H1 System Sales Revenue Operating profit D&A EBITDA Non-recurring (income)/expenses Adjusted EBITDA % of system sales 10.2% 10.6% Adjusted EBIT % of system sales 6.3% 6.2% Capital expenditures Cash conversion 42.5% 66.1% DP Russia (TRY MM) 2018 H H1 System Sales Revenue Operating profit (3.6) (0.9) D&A EBITDA Non-recurring (income)/expenses Adjusted EBITDA % of system sales 4.8% 5.4% Adjusted EBIT (2.8) (0.8) % of system sales -1.8% -0.9% Capital expenditures Cash conversion n.m. n.m. DP Eurasia (TRY MM) 2018 H H1 System Sales Revenue Operating profit D&A EBITDA Non-recurring (income)/expenses Adjusted EBITDA % of system sales 7.9% 9.4% Adjusted EBIT % of system sales 3.2% 4.5% Capital expenditures Cash conversion 16.9% 19.5% (TRY MM) 2018 H Short term bank borrow ings Short-term portions of long-term financial lease borrow ings Long-term bank borrow ings Long-term financial lease borrow ings Total borrow ings Cash and cash equivalents (87.1) (76.1) Net debt Non-recurring items Long term deposit for loan guarantee (33.2) (28.2) Adjusting delay in collection/payment day coinciding on a weekend (14.1) (16.8) Adjusted net debt Notes: 1. Excludes income and expenses which are not part of normal course of business and are non-recurring items 26

27 Exchange Rates Period ended 30 June Currency Period End Period Average Period End Period Average EUR/TRY RUB/TRY EUR/RUB Source: Company Information 27

28 Delivery Take-away/Eat-in mix % of system sales Turkey Russia 36% 36% 38% 38% 64% 64% 62% 62% Delivery Take-away/Eat-in Delivery Take-away / Eat-in Group 36% 37% 64% 63% Delivery Take-away / Eat-in Source: Company Information 28