DP Eurasia N.V. Interim Results for the Period ended 30 June 2017
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
Presentation Team Aslan Saranga Chief Executive Officer Selim Kender Chief Strategy Officer and Head of Investor Relations 3
SECTION 1 Overview
DP Eurasia overview Growing regional expansion from an established strong base in Turkey (1) Moscow combined with strong growth in System Sales TRY MM 8 88 Russia 470 543 647 Georgia Turkey 355 135 x4 3 4 Azerbaijan 2014 2015 2016 Franchise stores Corporate stores Commissaries DP Turkey DP Russia Source: Management Accounts resulted in accelerating Adjusted EBITDA (3) performance TRY MM Market Position H1 2017 (by number of stores) #1 #1 #1 #3 5% 6% 12% Number of Stores H1 2017 Corporate 490 4 3 96 135 - - 88 75 Franchise 355 4 3 8 Number of Commissaries H1 2017 4 - - 1 25 34 System Sales CAGR 14-16 Average LfL (2) 14-16 13% 6% 96% 40% 2014 2015 2016 Adj. EBITDA Margin (Adj. EBITDA / System Sales) Source: Company Information, Management Accounts Source: IFRS Combined and Consolidated Financial Information, Management Accounts Notes: 1. Number of stores as of H1 2017 2. LfL calculation includes stores which are operational for more than 52 weeks and aren t considered as split stores for the underlying period. Arithmetic average of non-split LfL for 3 years ( 13-14, 14-15 and 15-16); excluding Azerbaijan and Georgia due to no LfL stores in the period 3. 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 5
H1 2017 Highlights SYSTEM SALES REVENUE Adjusted EBITDA TRY 398.5 m TRY 289.8 m TRY 39.4 m 29.0% 38.5% - - - 26.4% LIKE-FOR-LIKE GROWTH STORE COUNT CAPEX AUG JUN 6.9% 31.3% 602 593 TRY 30.0 m 6
SECTION 2 Operational Review
Store count growth Continuous and significant store rollout # of stores at period end DP Turkey DP Russia +27 +23 130 103 80 +30 160 +59 219 +70 289 +94 383 13 370 +68 +35 +58 +58 567 602 509 451 72 104 43 19 432 466 495 498 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Aug 2017 Source: Company Information 500th store in Turkey imminent... # of stores at period end with Russia surpassing 100 in less than 4 years # of stores at period end 600 150 +51 500 400 +26 +27 100 +29 50 96 104 488 490 490 72 462 463 43 45 0 2015 2016 Aug 2017 2015 2016 Aug 2017 Source: Company Information Source: Company Information 8
Like-for-like performance LfL performance in line with guidance System sales LfL growth, % Turkey Russia 33% 225% 18% 7% 7% 85% 59% 31% Online Total Online Total Source: Company Information 9
Online channel Share of online ordering growing healthily Online system sales, % Turkey Russia 39% 46% 25% 30% 48% 63% 32% 42% Delivery Total Delivery Total Group 40% 50% 25% 33% Delivery Total Source: Company Information 10
Market positioning Why do consumers choose DP Eurasia? I Attractive pricing vs competitors in Turkey and Russia with high value for money II Quick delivery times all year round in Turkey and Russia, despite the challenging weather conditions Value for money? % of affirmative respondents 65 Value for money? (1) % of affirmative respondents Delivery on Time, % Delivery on Time, % 93.2 85.6 24 20 50 47 40 33 28 Domino's Pizza Pizza Hut Little Caesar's Burger King Mc Donald's Source: Ipsos Connect Brand Health and Ad Tracking, Feb/Mar 2017 III Innovation New Products Domino's Pizza Pizza Hut Papa John's Source: "Russian OHD market and dining habits" consumer survey in 2016 conducted by Ipsos H1 2017 Source: Company Information H1 2017 Turkey Russia Chicken popcorn Cold chocolate bites Greek salad Caesar salad Source: Company Information Notes: 1. The figures are representing only Moscow 11
SECTION 3 Financial Results
DP Eurasia: Financial snapshot Growth in system sales supported by store roll-out System Sales, TRY MM # of Outlets 309 29% 399 514 326 63% 593 370 62% 188 37% 223 38% Year on year growth Corporate Franchise Adjusted EBITDA and margin Capex and cash conversion (2) TRY MM 10.1% 9.9% TRY MM % 39 64% 31 30 11 24% 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 13
DP Turkey: Financial snapshot (1) System Sales System Sales, TRY MM Store count (2) # of Outlets 11% 279 308 463 490 320 69% 355 72% 143 31% 135 28% Year on year growth Corporate Franchise Adjusted EBITDA and margin Capex and cash conversion (4) TRY MM 10.5% 11.1% TRY MM % 29 34 78% 68% 6 11 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 14
DP Russia: Financial snapshot System Sales System Sales, TRY MM Store count # of Outlets 200% 96 8 8% 91 45 88 92% 30 Year on year growth Corporate Franchise Adjusted EBITDA TRY MM 5.9% 5.6% Capex TRY MM 19 2 5 5 Adj. EBITDA Margin (1) Source: IFRS Combined and Consolidated Financial Information, Management Accounts Notes: 1. As % of System Sales 15
Cash flow generation and debt profile Cash flow generation TRY MM Debt profile of DP Eurasia TRY MM 31 64% 24% 20 39 9 217 200 47 53 1.9x 2.0x (11) 146 171 (30) 2016 H1 2017 (1) Adj. EBITDA Capex Adj. EBITDA - Capex Cash Conversion (2) Adj. Net Debt Gross Debt Adj. Net Debt / Adj. EBITDA LTM (2) (1) DP Eurasia s debt profile by currency DP Eurasia s debt profile by segment H1 2017 Gross Debt TRY 217 MM H1 2017 Turkish Gross Debt TRY 93 MM H1 2017 Russian Gross Debt TRY 124 MM 5% 28% 35% 8% 75% Hedged via EUR deposit 65% 68% 92% TRY EUR RUB TRY EUR RUB EUR 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 16
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 2017: 40 stores Medium term: 40 60 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 20 MM in 2017 c. TRY 22 MM in 2018 c. RUB 500 MM in 2017 c. RUB 300 MM in 2018 17
SECTION 4 Conclusion
Conclusion Solid topline and profitability growth o System Sales: 29.0% o Adjusted EBITDA: 26.4% LfL growth in line with guidance Online share increasing: ~ 50% of delivery Milestone store openings achieved in August o Group: exceeded 600 o Russia: exceeded 100 Source: Company Information 19
APPENDIX
DP Eurasia: Financial summary Key KPIs DP Eurasia income statement 1H 2017 1H 2016 Change Corporate Store Count 223 188 35 Franchise Store Count 370 326 44 System sales (TRY MM) 398.5 308.8 29.0% System sales Sales generated by the Group s system stores (both corporate and franchise) (TRY MM) 1H 2017 1H 2016 Change Revenue 289.8 209.3 38.5% Cost of Sales (184.7) (135.0) 36.8% Gross Profit 105.1 74.2 41.6% General Administrative Expenses (44.3) (33.9) 30.6% Marketing and Selling Expenses (41.3) (30.1) 37.0% Other Operating Income / (Expense) (0.9) 1.2 n.m. Operating Profit 18.6 11.4 63.7% Foreign Exchange (losses)/gains (7.3) 5.5 n/a Financial Income 0.4 0.1 n/a Financial Expense (10.0) (7.9) 27.2% Profit / (Loss) Before Tax 1.7 9.1 n/a Tax Expense (3.8) (2.2) 71.4% Net Income (2.1) 6.9 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 EBITDA 37.9 27.0 40.3% Adjusted EBITDA 39.4 31.2 26.4% Adjusted net income (0.8) 11.0 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 21
DP Eurasia: Revenue & Expense Breakdown (TRY MM) 1H 2017 1H 2016 Change 1H 2017 1H 2016 System sales 398.5 308.8 29% Corporate 173.8 117.9 48% as a % of system sales 43.6% 38.2% Franchise 224.7 190.9 18% as a % of system sales 56.4% 61.8% 1H 2017 1H 2016 Change 1H 2017 1H 2016 Revenue 289.8 209.3 38% Corporate 173.8 117.9 48% as a % of revenue 60.0% 56.3% Franchise 103.4 85.2 21% as a % of revenue 35.7% 40.7% Other revenue 12.5 6.2 102% as a % of revenue 4.3% 3.0% Cost of Sales (184.7) (135.0) 37% Cost of Food/Non-Food/Transportation (100.5) (76.4) 32% as a % of system sales 25.2% 24.7% Corporate Store Expenses (70.5) (46.8) 51% as a % of corporate system sales 40.5% 39.7% Depreciation and Amortization (13.7) (11.8) 16% Gross Profit 105.1 74.2 42% as a % of system sales 26.4% 24.0% General Administrative Expenses (44.3) (33.9) 31% Overhead (Including Commisary) (38.6) (26.1) 48% of w hich one-off (1.4) (0.2) Overhead (excluding one-offs) (37.2) (25.9) 44% as a % of system sales 9.3% 8.4% Share based incentives (0.1) (4.0) n/a Depreciation and Amortization (5.6) (3.8) 46% Marketing and Selling Expenses (41.3) (30.1) 37% Marketing and Advertising (23.0) (16.3) 41% as a % of system sales 5.8% 5.3% Corporate Store Local Marketing (2.5) (1.9) 31% as a % of corporate system sales 1.5% 1.6% Royalty (15.8) (11.9) 32% as a % of system sales 4.0% 3.9% Other Operating Income / (Expense) (0.9) 1.2 n/a Operating Profit 18.6 11.4 64% 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 22
Adjusted EBITDA and Net Debt calculation DP Turkey DP Russia (TRY MM) 1H 2017 1H 2016 System Sales 308.0 278.7 Operating profit 19.4 11.8 D&A 13.5 13.6 EBITDA 32.8 25.4 Non-recurring (income)/expenses 1.5 4.0 Adjusted EBITDA 34.3 29.4 % of system sales 11.1% 10.5% Adjusted EBIT 20.8 15.8 % of system sales 6.8% 5.7% Capital expenditures 11.0 6.5 Cash conversion 67.9% 78.0% (TRY MM) 1H 2017 1H 2016 System Sales 90.5 30.1 Operating profit (0.8) (0.4) D&A 5.8 2.0 EBITDA 5.0 1.6 Non-recurring (income)/expenses 0.0 0.2 Adjusted EBITDA 5.1 1.8 % of system sales 5.6% 5.9% Adjusted EBIT (0.7) (0.2) % of system sales -0.8% -0.8% Capital expenditures 19.0 4.7 Cash conversion n.m. n.m. DP Eurasia (TRY MM) 1H 2017 1H 2016 System Sales 398.5 308.8 Operating profit 18.6 11.4 D&A 19.3 15.6 EBITDA 37.9 27.0 Non-recurring (income)/expenses 1.5 4.2 Adjusted EBITDA 39.4 31.2 % of system sales 9.9% 10.1% Adjusted EBIT 20.1 15.5 % of system sales 5.0% 5.0% Capital expenditures 30.0 11.2 Cash conversion 23.7% 64.2% (TRY MM) 1H 2017 2016 Short term bank borrowings 113.4 115.9 Short-term portions of long-term financial lease borrowings 3.9 3.0 Long-term bank borrowings 91.6 73.3 Long-term financial lease borrowings 8.5 7.3 Total borrowings 217.5 199.5 Cash and cash equivalents 21.6 19.5 Net debt 195.9 180.0 Non-recurring items Long term deposit for loan guarantee (25.0) (23.2) Adjusting delay in collection/payment day coinciding on a weekend - (10.4) Adjusted net debt 170.9 146.4 Notes: 1. Excludes income and expenses which are not part of normal course of business and are non-recurring items 23
Exchange Rates Period ended 30 June 2017 2016 Currency Period End Period Average Period End Period Average EUR/TRY 4.003 3.931 3.204 3.256 RUB/TRY 0.059 0.062 0.045 0.041 EUR/RUB 67.499 62.719 71.210 78.367 Year ended 31 Decem ber 2016 2015 Currency Period End Period Average Period End Period Average EUR/TRY 3.710 3.338 3.178 3.019 RUB/TRY 0.057 0.045 0.040 0.045 EUR/RUB 63.811 74.231 79.697 67.777 Source: Company Information 24
Delivery Take-away / Eat-in mix % of system sales Turkey Russia 38% 36% 37% 38% 62% 64% 63% 62% Delivery Take-away / Eat-in Delivery Take-away / Eat-in Group 38% 36% 62% 64% Source: Company Information Delivery Take-away / Eat-in 25