Interim Results for the Period ended 30 June 2018 1 Disclaimer - - PowerPoint PPT Presentation

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Interim Results

for the Period ended 30 June 2018

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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

• r 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.

Disclaimer

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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

Today’s Agenda

Highlights

SECTION 1:

5

Macroeconomic headwinds

Source: Company Information

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

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2018 H1 highlights

• 10.9%

(2017 H1: 6.9%)

18.0%

(2017 H1: 31.3%) LIKE-FOR-LIKE GROWTH 32.2% REVENUE

TRY 380.2m

(2017 H1: 287.7m) STORE COUNT SYSTEM SALES Adjusted EBITDA

TRY 510.4m

(2017 H1: 398.5m) TRY 40.3m

(2017 H1: 37.3m)

8.0%

59.3%

(2017 H1: 49.7%) 28.1% ONLINE DELIVERY 79

672

(2017 H1: 593) 9.6% points TRY 36.5m

(2017 H1: 32.5m)

TRY 7.4m

(2017 H1: 4.9m)

12.1% 49.2%

Operational Review

SECTION 2:

8

Innovation is at the core of DP Eurasia

Source: Company Information

GPS Tracker

• 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

• rders per driver
• Customer

engagement – real time order progression

• Driver safety –

speeding and harsh brake reporting

Enhanced Websites

• Incremental sales
• pportunity
• Oven baked

sandwich order mix at 13% in H1 2018 without cannibalisation

• Product transfer

from Turkey to Russia, e.g. ultra- thin crust and mosaic cake

Products Loyalty Program

• Launched in

Turkey in November’17

• 790k participants

as of H1 2018

• 4% increase in
• nliine frequency,

15% increase in app frequency

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33% 7% 43% 11% Online Total

2017 H1 2018 H1

85% 31% 53% 18% Online Total

2017 H1 2018 H1

Like-for-like performance

Lfl performance continues to be strong...

System sales Lfl growth, %

Russia Turkey

57% 152% 2017 H1 2018 H1 26% 406% 2017 H1 2018 H1

...with the revamped apps leading the charge

App System sales Lfl growth, %

Russia Turkey

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63% 42% 74% 52% Delivery Total

2017 H1 2018 H1

46% 30% 54% 39% Delivery Total

2017 H1 2018 H1

50% 33% 59% 42% Delivery Total

2017 H1 2018 H1

Digital growth

Share of online ordering growing healthily

Online system sales, %

Russia Turkey Group

Source: Company Information

11

Store count growth

…with Russia heading to 200th store

# of stores at period end

Turkey moving towards 550 stores...

# of stores at period end (1) # of stores at period end

Continuous and significant store rollout

Source: Company Information Source: Company Information

469 497 530 450 550 2016 H1 2017 H1 2018 H1 45 96 142 50 100 150 2016 H1 2017 H1 2018 H1 +33 +51 +46

370 432 466 495 522 497 530 13 19 43 72 121 96 142 80 103 130 160 219 289 383 451 509 567 643 593 672 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017 H1 2018 H1 +23 +27 +30 +59 +70 +94 +68 +58 +58 +76 DP Russia DP Turkey

Source: Company Information

+28

Notes:

• 1. Includes Azerbaijan and Georgia

+79

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Russian expansion

• 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

H1 2017.

Progress in Greater Moscow has been rapid Expansion outside of Greater Moscow progressing well

European part of Russia 43 72 116 129 42 52 70 84 13 37 61 74 2015 2016 2017 2018 H1 DPEU Papa John's Dodo

• St. Petersburg - 4 Corporate Stores

Krasnodar - 4 Franchise Stores Kazan - 1 Franchise Store Nizhny Novgorod - 1 Franchise Store Rostov-on-Don - 1 Franchise Store Voronezh - 1 Franchise Store Tula - 1 Franchise Store Tver - 1 Franchise Store

Petersburg (4) Tver’ (1) Kazan (1) Nizhny Novgorod (1) Tula (1) Voronezh (1) Rostov-on-Don (1) Krasnodar (4) Moscow

Financial Results

SECTION 3:

14

37 40 2017 H1 2018 H1 399 510 2017 H1 2018 H1 Year on year growth 223 246 370 426 593 672 2017 H1 2018 H1 Corporate Franchise

DP Eurasia: Financial snapshot

System Sales, TRY MM

30 33 20% 17% 2017 H1 2018 H1 Capex Cash Conversion

TRY MM %

62% 38%

# of Outlets

28%

TRY MM

Growth in system sales supported by store roll-out Adjusted EBITDA with margin a function of sales mix effect Capex and cash conversion(2)

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

9.4%

• Adj. EBITDA Margin(1)

7.9% 63% 37%

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DP Turkey: Financial snapshot(1)

33 36 2017 H1 2018 H1 308 358 2017 H1 2018 H1 Year on year growth 135 145 355 376 490 521 2017 H1 2018 H1 Corporate Franchise

System Sales, TRY MM TRY MM %

72% 28%

# of Outlets

16%

TRY MM

System Sales Adjusted EBITDA and margin Capex and cash conversion(4)

Source: IFRS Combined and Consolidated Financial Information, Management Accounts Notes:

• 1. Including contributions from Azerbaijan and Georgia
• 2. Turkey only

10.6%

• Adj. EBITDA Margin(3)

10.2% 72% 28%

Store count(2)

• 3. As % of System Sales
• 4. Cash conversion defined as (Adj. EBITDA – Capex ) / Adj. EBITDA

11 21 66% 43% 2017 H1 2018 H1 Capex Cash Conversion

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DP Russia: Financial snapshot

5 7 2017 H1 2018 H1 91 153 2017 H1 2018 H1 Year on year growth 88 101 8 41 96 142 2017 H1 2018 H1 Corporate Franchise

System Sales, TRY MM TRY MM # of Outlets

69%

TRY MM

System Sales Adjusted EBITDA and margin Capex

Source: IFRS Combined and Consolidated Financial Information, Management Accounts Notes:

• 1. As % of System Sales

5.4%

• Adj. EBITDA Margin(1)

4.8% 29% 71%

Store count

19 13 2017 H1 2018 H1 8% 92%

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Cash flow generation and debt profile

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 2018.

37 40 (30) (33) 7 7 2017 H1 2018 H1

• Adj. EBITDA

Capex

• Adj. EBITDA - Capex

Cash Conversion 107 150 121 134 228 284 1.1x 1.6x 2017 2018 H1

• Adj. Net Debt

Gross Debt

TRY MM TRY MM

Cash flow generation 2018 H1 adjusted net debt by currency Post Rouble Refinancing adjusted net debt by currency(3)

Source: IFRS Combined and Consolidated Financial Information

Debt profile of DP Eurasia

20% 17%

(1)

• Adj. Net Debt / Adj. EBITDA

(2) (1) (2)

38% 56% 6% TRY EUR RUB 14% 86% TRY RUB

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Management guidance

Total potential store count Targeted net store

• penings per year

(medium term) LfL (medium term) CAPEX program

• 900
• 1,500
• High single digit LfL growth
• Low to mid-teens LfL growth
• 30 stores
• We expect franchise stores to be the main driver of

new store openings

• 40 – 60 stores
• We expect franchise and corporate stores to be the

main drivers of new store openings

• c. TRY 30 MM in 2018
• c. RUB 375 MM in 2018

Conclusion

SECTION 4:

20

Conclusion

Source: Company Information

• Macroeconomic headwinds in Turkey
• Management focused on mitigation steps
• Strong topline and profitability growth
• System Sales: 28.1%
• Revenue: 32.2%
• Solid adjusted EBITDA growth in the segments
• Turkey: 12.1%
• 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)

Appendix

SECTION 5:

22

Future growth driven by four core strategy pillars

Innovation and online ordering to drive like-for-like growth

Source: Company information

Potential to export the platform Large whitespace opportunity in countries of presence

Domino’s stores, #

Source: Company estimates Notes:

• 1. Excluding Azerbaijan and Georgia

Russia Adj. EBITDA / System Sales, %

Source: Company information

Leverage scale advantage to further improve profitability

System sales LfL growth, % 33% 7% 43% 11% Online Total 85% 31% 53% 18% Online Total

Turkey Russia 2017 H1 2018 H1

2018 H1 Total Potential 521

• c. 900

2018 H1 Total Potential 142

DP Russia DP Turkey

• c. 1,500

(1)

Turkey Adj. EBITDA / System Sales, % DP Eurasia

1 2 3 4

• Adj. EBITDA / System Sales

5.4% 4.8% 2017 H1 2018 H1 10.6% 10.2% 2017 H1 2018 H1

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Attractive investment opportunity with high growth potential and proven business model

Leading market positions

1

Highly attractive, underpenetrated markets with substantial growth potential in the Group’s addressable segments

2

Strong online capabilities underpin DP Eurasia’s growth

3

Globally proven business model successfully applied and adapted to DP Eurasia’s local markets

4

Simple and scalable, asset-light business model

5

Track record of resilient and profitable growth as well as strong cash conversion

7

Founder-led, experienced management team

8

Highly attractive customer proposition and strong brand equity

6

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DP Eurasia: Financial summary

Key KPIs DP Eurasia income statement

System sales

• Sales generated by the Group’s system stores

(both corporate and franchise) Corporate revenue

• Revenue from the Group’s corporate stores

Franchise revenue and royalty

• 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 Cost of sales

• 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 sub- franchisees); labour; rent; utilities and other, including D&A of corporate stores and commissaries General and administrative expenses

• Consists of headquarters expenses such as

personnel (excl. marketing and selling personnel), rent, utilities, commissaries’ rents and non- production related personnel and headquarters- related D&A expenses Marketing and selling expenses

• Includes marketing and selling personnel costs,

royalties paid by the Group (on-going fees) and promotion and advertising expenses

Source: Company Information, IFRS Combined and Consolidated Financial Information, Management Accounts 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

(TRY MM) 2018 H1 2017 H1 Change Revenue 380.2 287.7 32.2% Cost of Sales (251.8) (184.7) 36.3% Gross Profit 128.5 103.0 24.8% 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 14.9 16.5

• 10.2%

Foreign Exchange (losses)/gains (8.6) (7.3) n/a Financial Income 0.5 0.4 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 Adjusted EBITDA 40.3 37.3 8.0% Adjusted net income (9.1) (2.4) n/a

2018 H1 2017 H1 Change Corporate Store Count 246 223 23 Franchise Store Count 426 370 56 System sales (TRY MM) 510.4 398.5 28.1%

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DP Eurasia: Revenue & Expense Breakdown

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

(TRY MM) 2018H1 2017H1 Change 2018H1 2017H1 System sales 510.4 398.5 28% Corporate 222.3 173.8 28% as a % of system sales 43.5% 43.6% Franchise 288.2 224.6 28% as a % of system sales 56.5% 56.4% 2018H1 2017H1 Change 2018H1 2017H1 Revenue 380.2 287.7 32% Corporate 222.3 173.8 28% as a % of revenue 58.5% 60.4% Franchise 135.0 103.4 30% as a % of revenue 35.5% 36.0% Other revenue 23.0 10.4 121% 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 128.5 103.0 25% 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 14.9 16.6

• 10%

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Adjusted EBITDA and Net Debt calculation

DP Turkey DP Russia DP Eurasia

Notes:

• 1. Excludes income and expenses which are not part of normal course of business and are non-recurring items

(TRY MM) 2018 H1 2017 H1 System Sales 357.7 308.0 Revenue 228.3 197.3 Operating profit 22.1 18.9 D&A 14.0 13.5 EBITDA 36.1 32.4 Non-recurring (income)/expenses 0.4 0.1 Adjusted EBITDA 36.5 32.5 % of system sales 10.2% 10.6% Adjusted EBIT 22.4 19.0 % of system sales 6.3% 6.2% Capital expenditures 21.0 11.0 Cash conversion 42.5% 66.1% (TRY MM) 2018 H1 2017 H1 System Sales 152.7 90.5 Revenue 151.9 90.3 Operating profit (3.6) (0.9) D&A 10.1 5.8 EBITDA 6.5 4.9 Non-recurring (income)/expenses 0.8 0.0 Adjusted EBITDA 7.4 4.9 % of system sales 4.8% 5.4% Adjusted EBIT (2.8) (0.8) % of system sales

• 1.8%
• 0.9%

Capital expenditures 12.5 19.0 Cash conversion n.m. n.m. (TRY MM) 2018 H1 2017 H1 System Sales 510.4 398.5 Revenue 380.2 287.7 Operating profit 14.9 16.5 D&A 24.2 19.3 EBITDA 39.0 35.8 Non-recurring (income)/expenses 1.3 1.5 Adjusted EBITDA 40.3 37.3 % of system sales 7.9% 9.4% Adjusted EBIT 16.1 18.1 % of system sales 3.2% 4.5% Capital expenditures 33.5 30.0 Cash conversion 16.9% 19.5% (TRY MM) 2018 H1 2017 Short term bank borrow ings 224.4 136.9 Short-term portions of long-term financial lease borrow ings 6.5 5.2 Long-term bank borrow ings 42.0 74.5 Long-term financial lease borrow ings 10.9 11.2 Total borrow ings 283.8 227.9 Cash and cash equivalents (87.1) (76.1) Net debt 196.8 151.8 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 149.5 106.7

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Exchange Rates

Period ended 30 June 2018 2017 Currency Period End Period Average Period End Period Average EUR/TRY 5.309 4.942 4.003 3.931 RUB/TRY 0.072 0.068 0.059 0.062 EUR/RUB 72.992 71.822 67.499 62.719

Source: Company Information

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64% 63% 36% 37% 2017 H1 2018 H1 Delivery Take-away / Eat-in 64% 64% 36% 36% 2017 H1 2018 H1 Delivery Take-away/Eat-in 62% 62% 38% 38% 2017 H1 2018 H1 Delivery Take-away / Eat-in

Delivery – Take-away/Eat-in mix

% of system sales

Russia Turkey Group

Source: Company Information