DP Eurasia N.V.
Annual Report and Accounts 2022
Delivering
together
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About us
DP Eurasia N.V. is the
exclusive master franchisee
of the Domino’s Pizza
brand in Turkey, Russia,
Azerbaijan and Georgia.
Domino’s Pizza is one of the
most successful fast‑food brands
worldwide and a global leader in
home delivery.
Ambition
Integrity
Cohesion
Teamspirit
Strategy
inaction
Find out more on
pages 15 to 26
Sustainability
inaction
Find out more on
pages 42 to 44
Culture
in action
Find out more on
pages 40 and 41
Our values
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DP Eurasia N.V.
Annual Report and Accounts 2022
Strategic report Corporate governance Financial statements Additional information
What’s inside
Strategic report
At a glance 2
Highlights 4
Key fi nancial fi gures 5
2022 Highlights 6
Chairman’s statement 7
Message from the CEO 9
Competitive advantages 12
Business model 13
Our purpose and strategy 14
Strategy in action: Innovation 15
Strategy in action: Growth 21
Strategy in action: Brand 22
COFFY 27
Strategic review 32
Stakeholder engagement 38
Culture in action 40
Sustainability in action 42
Task Force on Climate-related Financial
Disclosures (“TCFD”) 45
Risk management 59
Group structure 77
Corporate governance
Board 79
Leadership team 81
Board attendance and composition 82
Corporate governance report 83
Remuneration report 95
Directors’ remuneration policy 99
Annual remuneration report 110
Board declaration 121
Shares and shareholders 122
Financial statements
Consolidated statement 127
ofcomprehensiveincome
Consolidated statement 128
offi nancialposition
Consolidated statement of 129
changesin equity
Consolidated statement of 130
cashfl ows
Notes to the consolidated 131
fi nancial statements
Company income statement 178
Notes to the Company 180
fi nancialstatements
Additional information
Independent auditor’s report 185
ESG appendix 195
Glossary 196
Contacts 197
COMPLIANCE STATEMENT
This document is the PDF/printed version of the 2022
Annual Report of DP Eurasia and has been prepared for
ease of use. The 2022 Annual Report was made
publicly available, and was fi led with the NSM in
European single electronic reporting format (the ESEF
package). The ESEF package is available on the
company’s website at www.dpeurasia.com and
includes a human readable XHMTL version of the 2022
Annual Report. In any case of discrepancies between
this PDF version and the ESEF package, the latter
prevails.
Time for
COFFY
Find out more on
pages 27 to 31
CEO
Q&A
Find out more on
pages 10 and 11
Community
support
Find out more on
pages 42 and 43
A
smart idea:
Pizzetta
Find out more on
pages 16 and 17
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At a glance
Values
Vision
Mission
Underpinning the Group’s
ethical principles and business
conduct are its core values of
ambition, integrity, cohesion and
team spirit.
The Group’s vision is to be an
international leader by utilising
the best market practices to
provide excellent services to both
customers and the community.
The Group’s mission is to create
value for shareholders, whilst
respecting the community in a
socially responsible way.
Ambition
Integrity
Cohesion
Team spirit
The Group is committed to
improving its brand to
overcomenew challenges
whilstdemonstrating an
eagerness to adapt and grow.
The Group is dedicated to
choosing the path that helps
strengthen its principles
ofhonesty, truth, loyalty and
justice in the daily conduct
ofallworkers.
The Group aims to achieve the
ambitious goals it sets through
the contribution of all business
units. Building on experience,
the Group comes together to
overcome new challenges.
The Group operates globally
inculturally diverse contexts
and encourages a respect for
di erences, a sense of
belonging, loyalty and
reciprocity amongst allworkers.
Domino’s Pizza is one of the most
successful fast-food brands and an
international leader in home delivery,
with global retail sales of over
$17.5billion in 2022 and more than
19,800stores in over 90 markets.
DP Eurasia is the fi fth-largest
franchisee of the Domino’s Pizza
brand owned by Domino’s Pizza, Inc.
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At a glance continued
The Group operates through both corporate and franchised stores.
As of 31 December 2022, 14% of the Group were corporate stores,
principally located in densely populated cities, while 86% were
franchised stores.
The corporate stores serve as a platform to develop best practices
that the Group subsequently deploys in its franchised stores.
TRY
3.6 billion
system sales
(2021: TRY 3.5 bn)
700
stores across
three countries
(2021: 629)
86%
franchised
store mix
(2021: 83%)
81%
of delivery online
(2021: 76%)
Where we operate
Turkey
4
566
89
Georgia
6
—
Azerbaijan
10
—
COFFY Stores
10 19
Franchised stores
Corporate stores
Commissaries
COFFY
Domino’s
• All Group figures exclude Russian business, which is now a discontinued operation.
• All Group figures are restated according to hyper inflation accounting.
• All Group and Turkey figures include COFFY. Like-for-like and online delivery figures exclude COFFY.
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Highlights
Operational highlights (from continuing operations)
• Online delivery system sales increased to 81.2% (2021: 76.3%) as a
share of delivery system sales
(1)
, reflecting our robust positioning
ofthe online ordering channel. Turkish online system sales
(2)
growth
was1.6% (pre-IAS 29: 75.7%).
• Turkish net new store openings of 48 for Domino’s Pizza, higher
than guidance range of 30-40 for 2022, reflects strong demand and
maintained network expansion momentum, building on the record year
experienced in 2021.
• The Group opened two new stores in Georgia, bringing the total
number of stores to six in the country.
• The COFFY network increased by 21 stores to reach 29, with solid
ongoing franchisee demand. COFFY continues to represent an
excellent growth opportunity for the Group.
• The Board is deeply saddened by the earthquake that devastated
prominent cities in Turkey in February, and regrets to disclose that
four colleagues lost their lives. Twelve out of the total 655 Domino’s
Pizza stores in Turkey are not operational, and the Group is working
on several options, including moving those stores to other cities.
Aspecific project currently being developed is opening prefabricated
stores in the aected regions. The impact of the earthquake on our
operations is not expected to be material to 2023.
Financial highlights (from continuing operations)
• Group revenue increased 7.6% (pre-IAS 29: 86%) and system sales
(3)
were up 1.5% (pre-IAS 29: 76%), reflecting healthy growth against
very strong comparatives.
• Removing the beneficial impact of the 2021 VAT reduction, the
Group’s LfL performance was flat as the pace of inflation was met.
The VAT reduction, of 7pp to 1%, lasted until the end of September
2021. Overall, the Group’s LfL performance
(4)
was -5.3%.
• Adjusted EBITDA
(5)
increased 5.3% to TRY 311 million and was
achieved in a dicult cost environment as Turkish operations faced
an average 72% headline inflation during the year.
• Adjusted net income
(6)
(from continuing operations) increased 50%
to TRY 214 million (2021: TRY 143 million).
• The Group maintained a strong liquidity position as of
31December2022, with TRY 360 million cash (excluding cash
ofRussia) and an undrawn bank facility of TRY 225 million as of
31December 2022.
• Adjusted net debt
(7)
was TRY 562 million as of 31 December 2022.
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Notes:
• All Group figures exclude Russian business, which is
now a discontinued operation. COFFY numbers are
included in all Turkey and Group figures, unless
presented separately. Like-for-like figures exclude
COFFY.
(1) Delivery system sales are system sales of the Group
generated through the Group’s delivery distribution
channel.
(2) Online system sales are system sales of the Group
generated through its online ordering channel.
(3) System sales are sales generated by the Group’s
corporate and franchised stores to external
customers and do not represent revenue of the
Group. These numbers are not audited.
(4) Like-for-like growth is a comparison of sales
between two periods that compares system sales of
existing system stores. The Group’s system stores
that are included in like-for-like system sales
comparisons are those that have operated for at
least 52 weeks preceding the beginning of the first
month of the period used in the like-for-like
comparisons for a certain reporting period,
assuming the relevant system store has not
subsequently closed or been “split” (which involves
the Group opening an additional store within the
same map of an existing store or in an overlapping
area). This is a non-IFRS measure and non-IFRS
measures are not audited.
(5) EBITDA, adjusted EBITDA and non-recurring and
non-trade income/expenses are not defined by IFRS
and non-IFRS measures are not audited. These items
are determined by the principles defined by the
Group management and comprise income/expenses
which are assumed by the Group management to
not be part of the normal course of business and are
non-trading items. These items which are not
defined by IFRS are disclosed by the Group
management separately for a better understanding
and measurement of the sustainable performance of
the Group. Reconciliation of EBITDA, adjusted
EBITDA with consolidated financial statements will
be presented in Note 3 of Group financial statements
section of our annual report.
(6) Adjusted net income is not defined by IFRS and
non-IFRS measures are not audited. Adjusted net
income excludes income and expenses which are
not part of the normal course of business and are
non-recurring items. Management uses this
measurement basis to focus on core trading
activities of the business segments and to assist it in
evaluating underlying business performance.
Reconciliation of EBITDA, adjusted EBITDA with
consolidated financial statements will be presented
in Note 3 of Group financial statements section of
our annual report.
(7) Net debt and adjusted net debt are not defined by
IFRS and non-IFRS measures are not audited.
Adjusted net debt includes cash deposits used as a
loan guarantee and cash paid, but not collected
during the non-working day at the year end.
Management uses these numbers to focus on net
debt including deposits not otherwise considered
cash and cash equivalents under IFRS.
Adjusted net income (from continuing
operations) in TRY million
214
Growth: 50% (pre IAS29: 156%)
Key financial figures
(after IAS 29)
System sales in TRY million
3,573
Growth: 1.5% (pre IAS29: 76%)
Adjusted EBITDA in TRY million
311
Growth: 5.3% (pre IAS29: 93%)
Like-for-like growth
-5.3%
Growth: VAT adjusted flattish LFL
(pre IAS29: 62%)
Revenue in TRY million
2,220
Growth: 7.6% (pre IAS29: 86%)
Online as a % of delivery
81.2%
Growth: 4.9pps
3,521
2,063
3,573
2,220
2022
2022
2021
2021
296
3112022
2021
26%
2022
2021
76.3%
81.2%2022
2021
-5.3%
143
2142022
2021
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2022 Highlights
Turkey’s
Lovemarks
While 2022 was a challenging year, our customers
rewarded us with the Lovemark. We felt proud of being
the most loved pizza store in Turkey, and winning
showed us how well-suited our action plan was in
gaining and maintaining customers. We know that
thisaward refl ects both the steps we have taken this
year and the love and support that we receive from
ourcustomers.
COFFY
We have created a new model in co ee culture in
Turkey by o ering all types of co ee at a single price.
In addition to co ee, we have brought our innovative
brand approach to new products which have been
greatly appreciated by our customers. In 2022, COFFY
made many improvements to enhance the customer
experience in both the app and the store. As at the end
of 2022, we have 29 COFFY branches in fi ve cities of
Turkey helping us achieve healthy growth by applying
the castle strategy that has supported
Domino’sgrowth.
Sustainability
Our e orts and interest in sustainability continues to
grow with new and existing projects. The Group’s aim is to
strengthen and incorporate our sustainability strategy
throughout all operations. This year, community support
was very important to us and we developed projects with
the Education Volunteers Foundation of Turkey (“TEGV”),
Turkey’s most widespread non-governmental
organisation operating in the fi eld of education. We are
also focused on decreasing our environmental impact,
and will take continued action to mitigate and adapt to
the possible impacts of climate change through our
operations.
Innovation
Innovation lies at the heart of our business. At Domino’s,
we expand our menu every year with brand-new products
based on our expertise in pizza. This year, due to
changing economic conditions and rising food costs,
wedeveloped more a ordable o erings for our
customers. On the digital side, we strengthened the
food-tech company perspective with new innovations in
our online channels. The success of this can be seen in our
improved new user acquisition and retention rates
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Chairman’s statement
This year, we refl ect on a year in which the Turkish
economyfaced major infl ation challenges and serious
challenges to our Russian operations. Despitethese
di culties, our colleagues have delivered another year
of strong performance. The Board remains committed to
the development of the business and continues to invest
inourpeople, technology and products.
Financial results
Group system sales increased by 13.1% (pre-IAS 29: 76.5%),
refl ecting our ongoing focus on network expansion, strategic
pricing, and product innovation, as well as excellent growth
in and demand from our COFFY proposition. In Turkey,
weopened 48 new stores (net), refl ecting strong demand,
and maintained network expansion, building on the record
year in2021.
Our focus
Innovation, in respect to both our products and technology,
continues to be the main driver of our strong performance.
In2022, the Group remained dedicated to maintaining
Domino’s unique cultural elements in food and integrating
them with new technology-driven business needs. With the
investment in innovations made in our digital channel, and
the inclusion of new channels in the aggregator in our
system, we achieved 79.6% growth in digital channels and
increased the digital share of online channels in total sales
to69%.
Corporate governance
We continue to strive for transparency for shareholders and
other stakeholders, with a view to maintaining and enhancing
our corporate culture and governance framework.
Thecorporate governance report set out on pages 78 to 125
provides details on how we are continuing to foster an
environment of entrepreneurial leadership and innovation
through a framework of responsible governance and
riskmanagement.
Minority shareholder protection
Following Jubilant’s reverse bookbuild process in October
2021, and the shareholder feedback during that process, it
had become clear that the UK Takeover Code and the Dutch
takeover rules were no longer applicable to the Company as
a consequence of Brexit. This was a situation that needed to
be addressed as soon as possible. The Board has
unanimously proposed additional takeover protection for
minority shareholders. At the extraordinary general meeting
on 13th April 2022, a large majority of the registered
shareholders voted in favour of the proposed resolution
toensure share protection is embedded in the Articles.
People
These results are a tribute to the ongoing dedication and
commitment of Aslan and his teams during the past year;
especially managing the business so well through
uncertainty due to infl ation challenges. I would like to thank
Aslan and all of our employees and franchisees for their
valuable contribution and determination to succeed.
Situation in Russia
As announced earlier, the Board continues to evaluate
itspresence in Russia and is considering various options,
which may include a divestment of Russian operations.
Whilst work on a potential transaction is ongoing, there
can be no certainty as totheoutcome.
Outlook
The Board has been closely monitoring the Group’s strategy
as well as the fi nancial and operational performance
throughout the year.
We believe that with a sound management team and with
committed franchisees, the Group is in a solid position to
continue its growth strategy. We thank you for your ongoing
trust and commitment to the Group.
The Board is committed
to focus on the development
of the business
by continuing to invest
inpeople, technology
andproducts.
Peter Williams
Chairman
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February April June August October December
January
Cheddarlı Dev Sosisli Pizza
and Chessy Bread variant
launch
Bol Lezzetler Series launch
(Bol Malzemos Pizza,
Ocakbaşı Pizza, Cheddarlı
Dev Sosisli Pizza and
Cheesy Bread Variant
Tenth store opening
(Ankara Kızılay)
New city (Bursa) opening
Wallet pay back
development
Pizzetta launch Basketball court renovation
with Tegv in Mardin
Çokominos new variant
(Çokominos with cherry and
Çokominos with caramel)
Co y expanded into Izmir,
with three corporate
storeopenings
Five-Segment
TransitionKantin Pizza
and Favori İkili Pizza launch
Opening of the second
university campus store
(Doğuş Üniversitesi)
New cold drink, Bubble
Bombs, launch.
New city (Antalya) opening
Two new corporate stores
opened in Instanbul
Pendik fl agship store
opened
First kiosk store opening
(İstanbul Hilltown).
Newsandwiches launch
Domino’s Turkey awarded
the Lovemark
March May July September November
8
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Chairman’s statement continued
Changes in the Board
In recognition of the importance of good governance as
aBoard, we committed in our last Annual Report that we
would recruit additional independent Non-Executive
Directors to ensure that the composition of the Board and
itscommittees would be fully compliant with the UK Code.
In2022, we welcomed Mr Burak Ertas as Independent
Non-Executive Director. He was appointed at the Annual
General Meeting (“AGM”) inJune.
After six years as Chairman of the Board, I have taken the
decision to retire at the 2023 AGM. I will be succeeded by
MrAhmet Ashaboğlu, who was appointed as an Independent
Non-Executive Director at an EGM in September 2022.
Ahmet Ashaboğlu has already made a signifi cant
contribution to the board discussions and I wish him well in
his new role.
On a wider note, I would like to thank the Board and the
senior team for their support and work over the period
Ihavehad the privilege to be Chairman. I wish them,
andtheCompany, every success for the future.
Peter Williams
Chairman
19 April 2023
Key Events 2022
Domino’s
C o  y
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I would like to extend our condolences to all grieving families
who lost loved ones during the devastating earthquake that
impacted prominent cities in our country. We continue to
stand in solidarity with our employees, business partners and
community in this di cult time.
Having worked extremely hard to combat the high levels
offi nancial volatility in the regions where we operate, I am
pleased to report solid results for the year. Strong trading
momentum was maintained, thanks to the healthy dynamics
of the sub-sectors the Group operates within and the team’s
careful navigation of the obvious challenges, infl ation
beingone.
Our growth is continuing and 2023 has started well,
withsolid LfL growth rates resulting from our capabilities,
experienced team, and culture. We have an innovative and
customer-centric mindset, helping us to grow in a healthy
manner as we pursue long term and sustainable profi t.
In 2022, our LfL performance caught up with the rapid pace
of infl ation, as we successfully implemented our targeted
action plan to overcome macro factors largely outside of our
control. Whilst work on a potential transaction is ongoing,
there can be no certainty as to the outcome Our clear and
targeted strategy focuses on three areas – strategic pricing
and product innovation, continued digital innovation, and
operational excellence for everyday e ciency. This approach
has enabled us to combat the high volatility levels, which has
been demonstrated through our volume generation and
customer acquisition. Despite unprecedented cost pressures,
adjusted EBITDA grew 5.3% and adjusted net income
increased by 50%.
Our focus on product innovation is integral, allowing us to
present a broad choice to customers who increasingly seek
value and a ordability amidst the infl ationary environment.
Pizzetta, which costs USD $1, has become very successful
since its launch in Q4. We also introduced a ‘snacks from
the oven’ range, completing our suite of value options and
highlighting our drive for sustained innovation.
In 2022, we continued to improve the online proportion
of our sales, and digital innovation remains an important
enabler for us to enhance the customer experience and
solidify our robust positioning for the online ordering
channel.
We retain a fundamental commitment to ensuring
franchisees remain profi table. As a result, franchisee demand
was very strong in 2022 and our Domino’s Pizza network in
Turkey grew by 48 stores. We maintain a healthy pipeline
with sustained franchisee interest and are confi dent that
2023 will be another excellent year for network expansion.
COFFY, our own brand, strengthened its presence in the
Turkish market with an accelerated expansion programme.
Having developed multiple store concepts to fi t in with local
circumstances, the COFFY network reached 29 stores in fi ve
cities at year-end. Franchisee demand stands very strong
owing to COFFY’s proven sales performance. This demand,
alongside our ambitious targets for 2023, will enable us to
add further scale in a sub-sector that is of increasing
popularity.
2022 was a year that proved our resilience and agile
executing capabilities. I am very pleased to be delivering
strong store growth and maintaining healthy profi tability
levels at the same time. Our regional markets are blessed
with unique growth opportunities and, while volatility is set
to continue, the Board expects another set of strong results
in 2023.
Aslan Saranga
Chief Executive O cer
19 April 2023
On behalf of the Board,
Iampleased to report solid
results for 2022 as we worked
hard to combat the high levels
of fi nancial volatility in the
regions in which we operate.
Aslan Saranga
CEO
Message from the CEO
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Q&A with our CEO
How important is
growth potential
to the business?
How are you
addressing
hyperinfl ation
inTurkey?
Growth is an essential part of our
strategy. “Nobody delivers like
Dominos” has been our unfailing motto
over the years. And we always kept our
promise thanks to our “castle strategy”,
which enabled us to establish greater
area coverage throughout the country.
We will further capitalise on our strong
market positions when demand
supports profi table growth. The Group
evaluates store openings on
competition, number of households
and GDP per capita.
This has been a clear challenge for our
business, but thanks to our solid action
plan and strong positioning in the
Turkish market, we have maintained our
business momentum and acquired new
customers in these di cult times.
Product and digital innovation, together
with diligent pricing and campaign
strategies, have been the backbone of
our targeted action plan. Meanwhile,
our Group’s robust purchasing power
and smart supplier agreements through
the year enabled us to be fl exible in a
high-cost environment.
How signifi cant
is digital to your
growth?
We always emphasise our ambition
to be a regional “food-tech
company” that brings digital
excellence to the pizza delivery
business. Therefore, digital
innovation lies at the core of our
operations. Our Group’s online
capabilities and platform o er
many tangible benefi ts, including
ease of ordering, higher frequency,
lower in-store labour costs and
increased consumer loyalty and
brand awareness. The majority of
our investments focus on further
advancing our digital o ering to
improve our customers’ delivery
and takeaway ordering experience.
Aslan Saranga
Chief Executive O cer
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Q&A with our CEO continued
What drove the
changes to the
Board this year?
In recognition of the importance
ofgood governance, we committed
in our last Annual Report that we
would recruit additional
independent Non-Executive
Directors in order to improve
compliance regarding the
composition of the Board and
itscommittees with the UK Code.
In2022, we welcomed both
MrBurak Ertas and Mr Ahmet
Ashaboğlu as Independent
Non-Executive Directors.
What do you see
as the biggest
challenges to
delivering DPE’s
strategy in 2023?
We managed to weather challenges
and deliver strong growth in both
profi tability and the store network.
Ibelieve this is strong proof of our
outstanding ability to execute on our
strategy. We are operating in a region
with unique growth opportunities, as
well as volatile macroeconomic and
geopolitical conditions. While keeping
this in our minds, and managing our
business very carefully, we believe that
we will deliver strong growth and
fi nancial performance in 2023.
What’s the
situation regarding
Russia?
During the year, we monitored the
situation in the region closely, with
thesafety and welfare of all the
Group’s employees and customers
remaining our top priority.
Inthemeantime, the Group limited
investment in Russia and focused on
optimising the existing store coverage;
resulting in the closure of 29 stores in
2022. As we have announced publicly,
our Group is now considering various
options which may include a
divestment of its Russianoperations.
Whilst work on a potential transaction
is ongoing, there can be no certainty
as to the outcome.
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DP Eurasia N.V.
Annual Report and Accounts 2022
[•] continuedCompetitive advantages
Founder-led, experienced
management team
Leading market positions
Strong online capabilities underpin
DPEurasia’sgrowth
Simple and scalable, asset-light
business model
Track record of resilient and profitable
growthas well as strong cash conversion
Highly attractive, under-penetrated markets
withsubstantial growth potential in the
Group’saddressable segments
Globally proven business model successfully
applied and adapted to DP Eurasia’s
localmarkets
Highly attractive customer proposition
andstrong brand equity
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Business model
Our asset-light and scalable business model allows for continuous investment in our people,
our products and our digital platforms, delivering sustainable value to all our stakeholders.
Large-scale
network
Low-cost
centralised
supply
chain
Globally
recognised
brand
Disciplined
approach
Competitive
strengths
Our operating
model
Corporate and
Franchised stores
Sales and delivery
Local marketing
Corporate stores
Headquarters
Commissaries
Centralised
strategy,
marketing
and IT
Procurement
(food and
non-food)
logistics
Corporate and
Franchised stores
Sales and delivery
Local marketing
Aligned to our
stakeholders’
interests
Customers
Shareholders
Franchisees
Employees
Suppliers
Community
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Store network
growth
Our purpose and strategy
Our purpose
DP Eurasia’s objective is to be
atech company delivering pizza.
Our purpose is to create value
by bringing people together
through our collaborative
workplaces, intuitive digital
platforms and a popular
range of products, enabling
us to reinvest in our priorities:
people,productand digital.
Strategic pillars Ambition
As the online channel becomes more prominent in the
Group’s sales mix and continues to drive like-for-like
growth, theGroup’s ordering channel strategy is focused
on the development of proprietary online ordering
platforms for delivery and takeaway.
The Group plans to capitalise on its strong market positions
in its existing markets, where it believes there is signifi cant
capacity for further Domino’s Pizza stores. Itintends to
open new corporate and franchised stores, including “splits”
of existing stores where demand supports further profi table
growth. TheGroup evaluates its store locations from the
perspective of potential sales, level of competition, number
of households and GDP per capita.
The Group believes that the operating leverage in its
business in Turkey can create further value as the store
and online footprint continues to increase. Thenationwide
scale of the Group’s operations reinforcesbrand awareness,
making Domino’s Pizza a household name in Turkish fast
food, thereby further driving sales and the system stores’
contribution to the Group’s national advertising initiatives.
While the Group’s current focus is on the development
of the business in its current markets, the Group may
consider acquiring other master franchise licences and
expanding to territories currently unpenetrated by the
Domino’s System, as well as expanding with new brands
in its existing markets.
The Group’s online delivery system sales
as a percentage of delivery system sales
has reached 81.2%.
Franchisee demand was very strong in
2022 and Domino’s Pizza network in
Turkey grew by net 48 stores.
2022 was also the year that the Group’s
own brand, COFFY, strengthened its
presence in the Turkish market. COFFY’s
network reached 29stores in fi ve cities at
the year end.
2022 was underpinned by high food
infl ation and supply bottlenecks.
TheGroup navigated these challenges
thanks to its leading position in the market.
Ina di cult year, the Group managed
to increase its EBITDA by 5.3% infl ation
adjusted growth.
The Group’s own innovative brand, COFFY,
strengthened its position in the Turkish
co ee market with increased customer
awareness and store network. The Group
actively evaluates the opportunities that
could create similar synergies with the
existing business lines.
2022 performance
Focus on
innovation and
online ordering
to drive
like-for-like
growth
Leveraging
scale advantage
to further
improve
profi tability
Potential
for further
international
and brand
expansion
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Brand
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Innovation
Strategy in action
Product innovation is our key strength
The Group believes that its disciplined approach to product innovation is a key di erentiator
from its competitors and is based on:
• an understanding of customer preferences based on data from the Group’s customer
relationship management (“CRM”) database, direct customer questionnaires in stores and
market research;
• strict food cost and ingredient planning in creating new recipes;
• fi eld tests before in-store pilot testing with consumers who visit the store; and
• in-store pilot testing four to eight weeks before rollout across the system stores.
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Due to changing economic conditions
and rising food costs, we have
developed the Pizzetta product to
oer an aordable product to the
customer. Although Pizzetta is
defined as a by-product, it is actually
a type of pizza.
16
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Which product innovations
have made animpact
thisyear?
Pizzetta
We’ve made two standout moves in this product:
1. by calculating the area, we concluded that less product
was used in a rectangular shape than a circle; and
2. instead of the high-cost pizza box, we broke the mould
and presented the pizza to the customer in paper bags.
Thanks to these two moves, we were able to oer the
customer a product with a starting price of TRY 19.99.
Inparticular, oering the pizza in paper bags allowed the
customer to “eat pizza whilst walking”. Weoered customers
the opportunity to dine in and eat the Pizzetta on the
premises if preferred. By implementing a 360° launch plan,
we also attracted new customers toDomino’s.
With the success of the launch, we sold 450 pizzas per week
per store. By creating a new category, we increased our
order level from 820 average weekly orders (“AWO”) to
980AWO.
Pizzetta launch – brand
As Domino’s, we expand our menu every year with
brandnew products based on our expertise in pizza.
Thisyear, with Domino’s continuous innovation approach,
wehave launched the four-edge pizza, Pizzetta, which an
alternative, aordable pizza during a period of hyper
inflation. To launch Pizzetta, we planned a large-scale launch
campaign using both mainstream and digital channels.
During the launch period, we have adopted the motto of
“Low in price, great intaste”.
Our aim was to get a share of the growing take away market,
with an oering at the most aordable price. We emphasised
the dierentiating shape of the four-edge Pizzetta in our
commercials and othermaterials.
We have included three dierent target groups with
mother-child, youths, and tradesmen; three dierent
occasions and three dierent ways of eating with three
dierent commercials. In the commercials, the young eat the
Pizzetta without slicing it in the park, the tradesmen sliced it
at lunch, and the mothers and children divided the Pizzetta
into two after school.
We collaborated with creators on TikTok to launch Pizzetta
as the platform is growing daily and has a great overlap with
our target audience. We decided to partner with TikTok
creators who are mothers and young people to reach our
target audience. We got content from each creator for
dierent occasions as they promoted Pizzetta. With a total
ofeleven dierent influencers, we have gained access to
9million unique people from dierent target groups with the
content shown 105 million times. Eachunique user watched
the relevant content 2.5 times onaverage. We had
214thousand visitors to our website through these
campaigns. Inaddition, 536 comments, over 81thousand
likes, and more than 10thousand followers wereacquired.
Intotal, more than 437thousand interactions were achieved
with the relevant target audience.
Strategy in action continued
Innovation
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Strategy in action continued
Innovation
Following the positive response we received via digital
channels during the launch of Pizzetta, we planned another
digital project with our brand ambassador, actor Enis Arıkan.
We did an “Instagram Takeover” where Enis Arıkan shares
moments on the ocial Domino’s Turkey account of him
surprising people by going to various Domino’s branches
and ordering Pizzetta. In Masterchef, themost watched
cooking competition TV show in Turkey, we carried out two
separate advertorials focusing on the taste and attractive
price of Pizzetta to large audiences.
We received 796million impressions and 3.5million clicks in
total at the launch. We reached 23.4million new people in
total, providing 112million impressions and 50thousand
webvisitors. We achieved 14billion post likes, 421comments,
154post registrations, and 1,919posts shared. On YouTube,
we achieved 30million viewers, 317million impressions and
360 thousand in trac. As a result of all these launch eorts,
we sold 4.2million Pizzettas in four months from the
launchperiod.
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Digital:
How have
we enhanced
customer
experience?
With the investments we made in our digital channels, and
the inclusion of new channels in the aggregator in our
system, we achieved 79.6% growth in digital channels and
increased the digital share of online channels in total sales
to 69%.
We have included Trendyol Yemek, a new player on the
aggregator side, in our sales channels this year. In addition
to the special campaigns we made with all aggregators,
wehave maximised our new customer acquisition through
the media support they generate. In addition, we provided
average order value management and coupon maximisation
with the menu strategy we applied for all aggregators.
We continued innovations to increase new user acquisition
and retention rates in online ordering (“OLO”).
We implemented the use of Storyly on the mobile app and
website, which users are familiar with from other social
media platforms, producing a 5% increase in conversion rate,
aswell as doubling spend through the Domino’s wallet.
Our most crucial implementation in terms of personalisation
is the development of the “Suggested Menu” where we
highlight comparisons to the previous orders of the users.
Inaddition, we have completed the upsell development in
the basket step, where we recommend products based on
past purchases and current baskets. With these steps,
werealised an uplift of +2.81 points in the conversion rate,
ora 10% increased basket size.
At the same time, we increased items per order and users’
interaction on our online channels by showing discounted
products to users with our third-party gamifi cation schemes
such as Wheels and Scratchcards.
To improve our registered customer data and increase
ourapp users, we have built a feature where we can o er
special discounts to the fi rst and second orders of users
who download the app and are members of the
loyaltyprogram.
Through this, we have raised the number of new app users
by 9%. Moreover, we have grown our active users by 14%,
especially with the campaign setups we ran specifi cally for
the mobile app.
In June, we added a payback feature to the Domino’s wallet
development that we integrated in 2021, where customers
can load money, spend on online channels, and earn money
as they load. Through this, we started to return a certain
amount of money to the wallet when customers spent from
Domino’s wallet. Additionally, we have developed an
additional module that can quickly load money at the
checkout step when the wallet balance is low. Dueto this,
the use of Domino’s wallet has doubled.
Strategy in action continued
Innovation
As Domino’s, we strengthened the
food-tech company perspective
with new innovations in our
onlinechannels.
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Strategy in action continued
Innovation
Product:
The Group’s store menu o ers globally
recognised pizza products, which are
tailored to local tastes. It also o ers
products outside of pizzas to suit
customer preferences such as
oven-baked sandwiches, wraps and a
wide chicken o er. There are also
complementary products such as
desserts and other side dishes – some
ofwhich have been developed by the
Group’s innovation centre in Istanbul and
subsequently adopted by other master
franchisees of Domino’s Pizza around
theworld.
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Strategy in action continued
Innovation
New product innovations of the Group in 2022
Cheddar Dev Sosisli Pizza
After the Ocakbaşı launch in 2021, we launched the Cheddar
Giant Hot Dog Pizza, where we targeted the GenerationZ
demographic and brought them together with the trending
cheddar-sausage duo. In this way, our pizza range has
reached 27 items. Cheddar Dev Sosli Pizza sold 20 units
weekly per branch and generated TRY 750 average weekly
unit sales (“AWUS”). It received a 1.5% share from Pizza mix.
Cheese Bread variant
In order to increase the share of the much-loved Cheesy
Bread product, which is among the iconic products of
Domino’s Turkey, two new Cheesy Bread varieties have been
added to the system: Mediterranean Cheesy Bread and
Cheesy Bread with Sausage. Because ofthis initiative, sales
in the Bread category increased from 55 to70pieces per
week per store.
Bol Malzemeli Seri launch – brand
At Domino’s, we have had another year where we continued
to create systems and campaigns that respond to the
requests of our customers. We were inspired by one of our
most loved products, Bol Malzemos, and set o toproduce a
new product. In this context, we created a new sub-category for
pizza with the concept being for the customer who enjoys
plenty of ingredients in their orders. In this sub-category,
wehave included a wide variety of breads with cheese, a large
meat Ocakbaşı Pizza, agiant sausage pizza, amongst other
products to suit di erent preferences. Tocommunicate the
launch of abundant tastes, wecreated our table theme,
whichemphasised our diversity in local store marketing
(“LSM”) materials, and during the launch we drew attention
tothe taste of more than one of our products with imagery.
Withthe emphasis on “very a ordable and plentiful tastes” in our
visuals, which was broadcast on television screens from
4February 2022, wemade a signifi cant contribution to our goal
of strengthening our price, service, product and image-oriented
communications that we set at the beginning of theyear.
This was the year where we listened to our customers and said
“Taste is at its peak again” with Domino’s.
Five-segment transition
In response to rising raw material prices, we switched
to a fi ve-segment to manage food cost profi tability.
Ournew segment name is “Trend” and we moved most
pizzas to an upper segment group and received +1 TRY
uplift per pizza and received inc TRY 1,000 average
weekly unit sales. Wealso achieved 2% food cost
1
saving.
The original four-segment structure consisted of:
Original
4-segment
structure
49% enterprise pizzas
34% mixed pizzas
11% special pizzas
6% gourmet pizzas
When transitioning to the fi ve-segment structure, the fi gures
switched to:
42% enterprise pizzas
30% mixed pizzas
15% special pizzas
6% gourmet pizzas
7% trendpizzas
New
5-segment
structure
Kantin Pizza and Favorili İkili Pizza
With the new fi ve-segment transition, we created an
intermediate price point due to increasing food costs,
andadded two new pizzas in order not to lose a share in
theentry price due to the segment transition. Thus, wehave
maintained our pizza variety in the entry segment.
Inaddition, these pizzas made up 4% of our total range
ofpizzas.
Çokominos – new variants
In order to expand the dessert category, we decided to
increase the popular Çokominos varieties. Takingadvantage
of the cherry and caramel ingredients that were trending at
that time. We released new cherry and caramel sprinkles and
the Cherry Cokominos and Caramel Cokominos. Although
there was no launch investment, thenumber of Cokominos
products increased fromsevento nine per week per store.
Inaddition, wehaveexpanded the product range thatwe
willuse in the hourly digitalo ering.
(1) Food cost shows how much the cost in the bill of materials
(“BOM”) covers the sales price, excluding VAT.
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Strategy in action continued
Brand
Innovation
Growth
In the 2022 fi nancial year, we opened a total of 50 new Domino’s stores in Turkey. 24 of these
stores arein new locations and 26 of them are split stores.
In December 2022 alone, 17new stores were opened. With the opening of these stores,
ourtotal number of stores reached 655 as of 31December2022, comprising 89corporate
stores and 566franchise stores.
While opening new and split stores, we focused on optimising the target number of
households to20,000, and the population to 50,000. We selected the new locations
bycomparing them with the system average based on the delivery and takeaway forecasts.
For the whole system, delivery share was 75% and the carry-out share was 25%. For the
stores we opened in 2022, delivery share was 66% and the carry-out share was 34%.
Inaddition to the store openings, we had eleven corporate-to-franchisee and 38
franchisee-to-franchisee handovers during 2022 (six homegrown). 18 new franchisees
wereadded to the system (newopenings and handovers).
As of the end of 2022, we had 295 legal entities, which corresponds to 436 franchisees,
including partners. Wecurrently have 140 single store, 22 fi ve+ store, and four ten+ store
franchisees. With four new female franchisees, the total number of female franchisees
reached 39.
While opening these stores we utilised di erent partnership models, such as FR and
Operator, Operator and Investor and FR and Investor, helping us reach 50 new
storeopenings.
During 2022, we have developed the existing ‘Kaizen Plus’ concept and came up with a
newconcept, Kaizen Flex, whichhas a lower investment value and a shorter ROI.
48
new Domino’s store
openings in Turkey
4
Franchise s have more
than ten stores
39
female franchisees
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Strategy in action continued
Brand
We have shaped the price, service, product and image-oriented communications to the
needs and expectations of our customers to create new stories and memories, and enhance
brand-customer relations in 2022.
Sponsorship
EuroLeague
At Domino’s Turkey, we are in our third sponsorship year with the EuroLeague, the most
prestigious basketball organisation in Europe.. The sponsorship is one of our main projects
that supports the “Domino’s Feeds Sports” slogan, which is used in our communications with
young and sporty audiences. This year, thanks to this sponsorship, we have reached millions
of basketball fans. As in previous years, we continued our EuroLeague-specifi c campaigns in
2022. In addition to the campaigns which brought incremental sales, the brand perception of
Domino’s and the awareness of sponsorship among our target audiences were both
enhanced by increasing our communications, especially during the Final Four period.
Inthisrespect, we actively used TV commercials, the design of our restaurants, digital
advertisements and social media channels throughout the season. During the Final Four
period, we shared the excitement of more than 500 thousand people with our EuroLeague
fi lter, which was specially prepared for Instagram.
Due to the pandemic, in recent years we had to move forward with a di erent structure
regarding EuroLeague related content. As the impact of the pandemic starts to lessen, this
year we looked to social media as our key platform to promote the sponsorship. Within the
scope of our sponsorship agreement, we gave more weight to digital channels in the
2022-2023 season for the content we receive from all teams. Special content for TikTok and
Instagram was shot with Turkish teams Anadolu Efes and Fenerbahçe Beko. While
appreciating digital channels, we aimed to reach the target audiences more e ectively with
our strength in our App and Web channels. We shared the excitement of our target
audiences by having content that is much more coherent with the social media world on the
days of the Turkish teams’ matches, and in line with this content, wereached more than 8
million views and experienced more engagement. In terms of our sales performance during
EuroLeague match hours, wereached our highest performance in the sponsorship period.
I
Innovation
Growth
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Lovemark
Domino’s has been awarded with the Lovemark
While it was a tumultuous year in regards to economic
challenges, it was also a year that customer behaviours
changed and transformed. But the trust and love our
customers have for us has been o cially recognised with
the Lovemark Reward for the fi rst time for Domino’s Turkey.
We have emerged through a period that was full of distrust,
anxiety and economic challenges, where customers limited
their arbitrary spendings and increasedtheir savings.
Whilestruggling with high infl ation, wehave never turned a
blind eye to the needs of our customers whilst they struggled
with infl ation. We knew our customers were loyal to us and
would return to us ifwe provided them with the necessary
service. In the fast-food restaurant/pizza category, we have
become “TheTechnological Brand of Turkey”. We aspired
and achieved to become the lead in the pizza category, and
were announced as a reputable name in that list in March
2021. One of our largest demographics, Generation Z,
provedtheir loyalty to the brand by presenting the academy
youth index G250 reward. We have not just become the
most infl uential brand in the pizza category, but also became
themost trusted and preferred brand in Turkey for the
youngergeneration.
As we pass through a challenging year, our customers
rewarded us with the Lovemark. This year we felt proud of
being the most loved pizza store of Turkey, and it
demonstrated the success of our strategy to gain and
maintain customers. This award recognises the unwavering
love and support of our customers, as well as the steps we
have taken in the year. By successfully analysing the buying
habits of our customers, we knew that we were taking the
steps that were infl uencing their actions and habits. Wewill
continue to grow that love as a brand that has succeeded to
win customers’ favour during crises such as the COVID-19
pandemic and the cost-of-living crisis.
Strategy in action continued
Brand
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Brand
How have we used social media to engage customers?:
Social media and TikTok
According to recent research, almost half of all internet users
of working age actively visit their social platforms to learn
about brands and research the products/services they are
considering purchasing
(1)
. According to statistics, an
averageinternet user spends more than two and a half hours
on social media per day. This year, social media has been one
of the most important tools to strengthen our image and
communicate with our customers as Domino’s, being active
in the places where our customers are. This year, we
dierentiated our social media platforms and actualised the
strategy of publishing content for each social media channel.
We have supported our“We need to be wherever our
customers are” motto by including TikTok and using it
eectively through ongoing IGposts, reels andstories.
Our main aim was to build strong connections with our
target audience over dierent social platforms. We have
accomplished our projects on social platforms by delivering
the right content to the right people, our posts are especially
eective with the younger generations, who are our main
target audience. In 2022 we entered a new era that willuse
TikTok more frequently with the announcement of the
Pizzetta. By utilising influencer marketing as a key tool, in the
year we have strengthened our marketing by having unique,
digital only projects for the first time. Until this year,
ourcelebrity-sponsored projects were mainly broadcast on
television, so we have expanded our digital influence this
year by producing only digitalprojects.
We have achieved 9million singular views and 105million
views by working with eleven influencers during the
Pizzettalaunch.
Our main objective was to expand the reach of a standard
communication strategy and directly communicate with our
target audience while building our strategy for TikTok.
During this process we have reached dierent audiences
bypublishing dierent content. Platform-based customer
communication was one of the subjects we have highlighted
this year. The lesson we have taken from this will shape
ourfuture.
In order to increase the awareness of our new product,
therectangular pizza Pizzetta, we launched the “Dikkat Enis
Çıkabilir” Project together with the face of our brand,
EnisArıkan. Due to the pandemic, consumer behaviour
changed and thetakeaway and digital market soared.
Toreflect this, theproject was developed only for digital
platforms, with theproject specifically active on just
Instagram to meet these consumers. We took advantage
ofboth the celebrity and influencer power of our brand
spokesman to interact directly with our customers. In this
project, EnisArikan went to ourbranches and pretended to
be one of the Domino’s employees, we shared a teaser that
we shot with a hidden camera on our Instagram accounts
and told our customers, ‘You can meet Enis at Domino’s
branches at any time’. Afterour teaser, we prepared a survey
for our customers andasked which branch they would like to
see Enis in. Asaresult of the feedback, we determined which
branches in Istanbul that Enis would go to.
When Enis Arıkan arrived atour branches, he communicated
which branch he was infrom our social media accounts with
the ’take over’ model. After each share, the excitement of our
customers increased further as they tried to discover the
next branch he would bein. With the completion of Enis’
branch visits, we shared afinal video from our social media
accounts featuring Enis’ adventures and customer reactions
during this process.
The “Dikkat Enis Çıkabilir” Project significantly strengthened
our connection with our target audience. One of the main
aims of the project was to convey the dine-in experience
toour followers at Domino’s, which is geared towards the
uptrend market. With this project, we directed our
customersto branches. We wanted to reach a wider
audience, so we focused on vertical screen-based platforms.
At the end of the project we had reached more than
7.8million individuals and had more than 21.4 million views to
our content. We have had 3 million singular views, 3.3 million
interactions derived from the content, 17thousand likes,
268comments, 66 saves, 607 shares, andmore than
30thousand poll answers.
We have established strong connections with our customers
this year by aiming to keep our social platforms ad-free and
authentic to encourage communication with our target
audience directly.
(1) We Are Social, 2022 4. QuarterReport.
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Strategy in action continued
Brand
Like other years, 2022 was full of awards. Asabrand that
always prioritises improving the customer experience
through innovation, our customers nominate us for awards
from many leading reputable organisations. Based on the
results of Turkey’s Lovemarks research made by IPSOS (a
credible global research company), for MediaCat, Lovemark
Awards surveyed which brand had succeeded the most in
establishing a bond with their consumers, Domino’s has been
crowned with the Lovemark award by a large margin
amongst other brands in the pizza category. In the Hammers
Awards, where marketing teams in Turkey were evaluated by
a jury formed with CMOs, the Domino’s Marketing team
gained two Silver Awards as the best Marketing Team in the
Retail sector and the best Sponsorship and Brand
Collaborations Team. In the Brandverse Awards, organised
by Marketing Turkey and BoomSonar, which evaluates the
comprehensive marketing projects, Domino’s has received
two bronze awards in the Fast Food category for Data
Analytics studies, and in the Sponsorship category with
EuroLeague Sponsorship projects. Moreover, the launch of
Makarnos has been honoured with a bronze award from
Ee, one of the most prestigious marketing competitions in
the world, organised jointly by EACA (European Association
of Communications Agencies) member Advertising Agencies
Associations and Advertiser Associations in 55 countries
around the world.
Awards
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Strategy in action continued
Brand
Thanks to our CRM adjustments, online orders (“OLOs”)
(Domino’s App and Web) customer scores increased to
8.02points in 2022 (2021: 7.92 points). Our Net Promoter
Score (“NPS”) rose from 24 points in 2021 to 37 points in
2022, an increase of 54%. The rate of customers whose
requests were met with satisfaction in one hour increased
to80% in 2022 (2021: 66%). The complaint rate dropped
from 0.13% in 2021 to 0.11% in 2022.
Resolution of complaints at first contact:
With the first contact solution project in the call centre for
complaints, customers are provided with a solution at the
first contact regarding their problem after a negative
experience. It aims to ensure customer happiness on the
scene without escalating the complaint to the branch.
Ifthere are unavoidable order-based compensations,
acompensation product is defined for our customer’s
account. With the project, 80% of our customers’
complaints are resolved within the first hour.
Special follow-up and development of branches:
We started to follow the branches that were in the bottom
20 places in customer satisfaction KPIs in each two-month
period. We have taken an active role in targeting
improvement points and sharing focus areas for
improvement every week. During the follow-up period,
weoered one-to-one support to those branches that were
continuing to experience problems. With referrals and data
tracking, thebranches that were in the last 20 places were
successful in improving their ranking and getting out of the
bottom 20.
Customer experience newsletter:
We have compiled a monthly newsletter in which we share
our customers’ recent feedback on Domino’s, – both positive
and negative. By sharing the newsletter with the whole
system, we showed the expectations of Domino’s customers
and focused on points that could improve the system in
thisway.
Customer happiness committee:
Customer happiness committee meetings were held once
a month with the operations team. During the committee
meetings, operational customer data was shared with the
team. Guidance was given on areas to develop and general
data was provided in terms of branch and regional
operations.
Sta attitude complaints:
Personnel attitude complaints were handled privately and
started to be shared directly with the operations team
independent of the branch. With this change, we started to
follow the process one-to-one in taking operational action
to resolve personnel attitude issues, which are critical issues.
Branch calls evaluation, supervision and reporting:
The process of listening to branch calls was handled as a
whole. In addition to the routine calls from the branches,
random inspections were carried out for the branches that
experienced problems. Instant detections and one-to-one
feedback was shared with the branch executives and the
operations team. In addition, at the end of each evaluation
period, the findings were reported and shared by post on a
regular basis, with action being taken if needed.
Customer complaint experience
8.02
points
Customer score
2021: 7.92 points
37
points
NPS
2021: 24 points
0.11%
Complaint rate
2021: 0.13%
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COFFY
A co ee brand that disrupts conventional
thinking by o ering co ee at a single price,
bringing innovation to the industry and a
smile to customers’ faces.
COFFY: high-quality and a ordable co ee!
Innovation
With COFFY, we have created a new model in co ee culture in Turkey by o ering all
typesof co ee at a single price. We continued our single price strategy in 2022, taking
co ee out of the luxury consumption category and making it a part of daily life. This year,
wepositioned ourselves as the neighbourhood co ee shop; bringing a new brand to
theindustry that is accessible to everyone, establishing an organic connection with its
customers, and truly living up to its name. Our prices, franchise system strength, quality
varieties, and technological infrastructure have set us apart in the industry. As COFFY
grows, we have started to reach our customers through di erent mediums. As of 2022,
wehave three di erent concepts: large stores (cafe format), corner stores (takeaway
format) and kiosks. With COFFY, we have not only created a unique Turkish brand with
our prices, quality, and fl avours, but also with the strength of our technological base.
Wehave continued to develop our digital tools at COFFY with the highly innovative order
trackingscreens that enhance our customers’ comfort while they wait for their order.
OurCOFFY App stands out with its “Get it without waiting” feature, which saves time and
eliminates waiting in line for co ee.
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COFFY continued
COFFY outlets across Turkey COFFY locations
(1)
Istanbul
Ankara
Bursa
Antalya
İzmir
127
5
3
1
1
Franchised stores
Corporate stores
Growth
COFFY reached 29 active branches in 2022 (tencorporate
and 19 franchised). In order to support the growth in the
Aegean region, three corporate branches were opened in
Izmir, followed by Istanbul and Ankara; two cities with the
highest population in Turkey.
As of 2022, we have 19 branches in Istanbul, fi ve in Ankara,
three in Izmir, one in Bursa and one in Antalya. We have
sustained a healthy growth by applying the “castle” strategy
that has supported Domino’s growth.
We opened our fi rst two branches in Antalya and Cankaya,
Ankara in the same location as Domino’s in order to use
thefranchise potential with Domino’s experience to
increasethe customer interaction between the two brands.
We aim to be at every point where the customer is, with
three di erent branch concepts (cafe, corner, kiosk).
Newfranchise candidate applications are received from
thewebsite, franchise fairs and monthly webinar meetings.
Franchised stores
Corporate stores
19
5
2022
2021
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COFFY continued
Brand
Beyond consuming just for pleasure, co ee has become
anecessity for gaining energy, increasing creativity, and
keeping our morale high in order to continue with the day
atfull speed. We have created a new model in co ee culture;
COFFY is a brand that promotes quality co ee by o ering
itat a reasonable price, ensuring it is quick and easy with
simple digital experiences that provide comfort and
happiness to customers. The most important point that sets
us apart from our competitors is that we are a “single priced
technological co ee point”. We have brought a whole new
dimension to the industry by saying “our co ee is not cheap
– they are expensive” with our prices, franchise system
strength, quality varieties and technological infrastructure.
We kept our single price strategy in 2022. There are more
than 20 co ee-related drinks, such as fi lter co ee, macchiato
and espresso that can be served both hot and cold. Hot
co ees are available in three di erent sizes at a fi xed price.
Atthe beginning of 2022, these were TRY 9.99, 12.99 or
15.99. There are two di erent sizes for cold drinks, priced
atTRY 12.99 and 15.99. Milk,skimmed milk, vegan milk,
marshmallows and cookies can be added for the same fi xed
price. COFFY also sells water, fruit juices and other canned
beverages, and the food menu is made up of sandwiches,
various bakery products, both sweet and salted, and many
healthy snacks. Some larger sandwiches were added to the
product list to satisfy higher price levels and encourage
larger purchases.
During the year, we increased our prices four times due to
infl ation and we ended up with the cost at TRY 17.99, 20.99
and 24.99, which is a 70% increase from the previous year.
Inthese price hikes, we observed our competitors
implemented tests among various fi xed price options and we
continued to position ourselves at 30% to 40% cheaper than
the competition.
With its a ordable prices and quality co ee, COFFY’s
biggest customer base is students and people between the
ages of 16-25. In the U&A research, we learned what is
important for Gen Z and determined our action plan for store
experience and communication. A good co ee experience
comes with good cafe design. In 2022, we made
improvements to store design and created tote bags as part
of COFFY merchandise and started selling them in stores.
With Green COFFY, we contributed to sustainability by
preventing paper cup waste with our thermos cups.
Weaimto further advance the Green COFFY brand
createdwithinCOFFY.
We have brought our innovative brand approach to our
products, which has been greatly appreciated by our
customers. In addition to fresh co ee, we o er all of our
daily prepared sweet and savoury snacks, as well as our
new delicious sandwiches, at an a ordable price.
In the second quarter of 2022 at COFFY, the “Bubble”
beverage line went on sale to o er a new experience to
our consumers with apple and blueberry fl avours added
to thelemonade.
We have grown the cold
drinks category by 25%.
By adding tiramisu, profi teroles and cheesecake in the
dessert options, we opened the system forsale in the
secondquarter.
Consumers with a larger appetite can enjoy a variety of
sandwiches alongside their co ee, such as hash-brown
hummus triangle sandwiches, Ezine cheese focaccia
sandwiches, chicken baguette sandwiches with curry
sauce, and plenty of cheese-based sandwiches.
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COFFY continued
What can our
customersexpect?
Simplicity
• Single price for di erent choices
• Good quality co ee and food assortments
• Supported by continuous product innovation
Value for Money
• More attractive pricing
• Supported by shared services with DPEU
• Di erent store concepts for diverse customer profi les
Convenience
• Easy & fast App experience
• Supported with advantage of single online ordering
platform and advanced franchisee management
know-how
• Loyalty programs to increase frequency and build
lifetime value
10%
share of app
intotal sales
Food turnover has grown by 15%
We supported growth, one of our main goals for 2022, in many areas of our marketing. We organised
grand opening events in cities where we opened a COFFY store for the fi rst time, such as Izmir.
Weo ered tastings at the branch during these opening events, received press coverage and
supportedthem with infl uencer marketing. We also supported our franchises by increasing brand
awareness through other media platforms, such as appearing in industry magazines with news of our
store openings and communicating with investors.
This year, as 85% of our sales were takeaway, we communicated with customers at the point of contact
within the store. We communicated our single price initiative on panels such as BTL and used cutouts
forthe products we wanted to highlight. We used digital screens in stores as a new way to share news.
Wewere active on social media and shared at least one post a day that would encourage interaction.
Communication during events increased the sales rate and app usage. World Co ee Day was one of the
most important occasions for us, and the communication we made contributed to brand awareness.
Wemainly used the COFFY App during these events to engage with consumers, and continue to do so
through monthly plans, both in-store and on social media. We also continued to work with aggregators,
taking advantage of the opportunities by o ering various menus to our customers. We have not
forgotten our student and employee customers aswe o er a delivery service which includes suitable
menus to meet di erent meals of the day. Byco-operating with aggregators via coupons, adverts and
mailings, we introduced the COFFY brand totarget new customers.
Brand continued
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COFFY continued
Digital
This year, COFFY has made many improvements to enhance
the customer experience in both the app and the store.
Wemade one of the most significant impacts by introducing
a free take away experience which skips the queues.
Astructure was designed for our customers to place their
orders from the app before they arrive at the store to enable
the shop to prepare the order. Once the “I arrived” button is
selected, customers can receive their order without any
delay. By implementing this structure, a seamless experience
was created where the customer can follow their order on
the screens when they enter the COFFY store and quickly
retrieve their order at the delivery point. The total digital
sales of the app in the last four months is at 34%, increasing
by 9.8% compared to the same period of last year.
Other user experience improvements have been added to
the application. Customers can join the order stage quicker,
customise many products whilst placing their order and can
repeat the previous order with a single click; this has
increased the conversion rate by 20%.
In addition to the online payment opportunities oered to
customers, payment alternatives such as Sodexo and
MultiNet were added. This increased app usage by 45%.
To further increase consumers using the app, a mechanism
was added that oers non-coee recommendations based
on the basket. We can upsell with by-products and
front-of-the-box products through this development.
Welook forward to increased order sales and loyalty from
the customers in 2023.
Along with the app improvements, this year accelerated
direct marketing communications through advertising
investments and Insider integration, which led to 80% more
new installs. In addition to Insider re-marketing eorts,
Storyly integration was provided, which increased customer
engagement and minimised the risk of uninstalling the app.
Customers who opened the application interacted with
Storyly features such as questionnaires (which were used
from other social media tools), achieving an engagement rate
of 25%.
These developments gained more users and secured their
loyalty to the brand. A CRM infrastructure was established
where we could analyse the customer base better, create
market profiles and scrutinise customer changes. With the
building of the CRM infrastructure, we can better understand
the COFFY customer and see which segments could be lost
or likely to change, even on a store basis. Thus, we continue
to entice a better roadmap to our innovations, such as
product developments and marketing communications.
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DP Eurasia’s store count
grewby an outstanding
71year-on-year.
Performance review
Group System sales (after IAS 29)
(3)
(in millions of TRY, unless otherwise indicated) 2022 2021 Change
Change
(pre-IAS 29)
Group system sales
(1)
Turkey 3,391.5 3,417.1 (0.7%) 72.1%
Azerbaijan 79.2 64.9 22.0% 109.8%
Georgia 42.6 27.4 55.5% 165.1%
COFFY 59.2 11.2 428.6% 828.8%
Total continuing operations 3,572.5 3,520.5 1.5% 76.0%
Russia (discontinued operations) 1,119.9 629.4 77. 9% 77. 9%
Grand total 4,692.4 4,149.9 13.1% 76.5%
(after IAS 29) (pre-IAS 29)
Group system sales like-for-like growth
(4)
2022 2021 2022 2021
Turkey (5.6%) 25.9% 63.5% 50.4%
Azerbaijan (based on AZN) 8.0% 7.1% 8.0% 7.1%
Georgia (based on GEL) 12.6% 67.2% 12.6% 67.2%
Total continuing operations (5.3%) 26.0% 62.2% 49.9%
Russia (discontinued operations, based on RUB) (9.8%) 9.6% (9.8%) 9.6%
As of 31 December
2022 2021
Store count Corporate Franchised Total Corporate Franchised Total
Turkey (Domino’s) 89 566 655 100 507 607
Azerbaijan — 10 10 — 10 10
Georgia — 6 6 — 4 4
COFFY 10 19 29 5 3 8
Total 99 601 700 105 524 629
Russia 63 96 159 94 94 188
Grand total 162 697 859 199 618 817
Strategic review
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COFFY has demonstrated
verystrong sales performance
and now represents an
outstanding growth
opportunity for the Group.
DP Eurasia’s store count for continuing operations increased
by 71 year-on-year, or by 42 stores when including Russia –
the dierence being the store rationalisation programme in
the territory. As a result of this growth in our core territories,
the Group increased its system sales by 1.5% year-on-year.
Growth on a pre-inflation adjustment basis would have
been76%.
System sales of Turkish Domino’s operations stayed almost
flat on inflation adjusted basis. Nonetheless, adjusted for last
year’s VAT reduction of 7pp to 1% (which lasted until the end
of July), system sales growth would be around 4.4%. The
Group experienced robust franchisee interest in Turkey
resulting in a strong store pipeline, laying solid foundations
for future growth. Domino’s Pizza net store count in Turkey
increased by c.8% over the last twelve months. The 48 net
store addition was higher than the guidance range of 30-40,
building on a record year in 2021.
COFFY has demonstrated very strong sales performance
and now represents an outstanding growth opportunity for
the Group. The COFFY network growth accelerated in 2022
with a 21 new store opening. This was in line with guidance to
reach 29 stores in total thanks to solid franchisee demand.
System sales of the Russian operations, which are now
classified as discontinued, increased by 77.9% (-14.8% based
on RUB). Like-for-like growth was -9.8% in Russia during the
period. In Russia, we faced a strong comparable period while
operating in a dicult geo-political and economic
environment. As previously announced, the Group is
considering various options which may include a divestment
of its Russian operations. Whilst work on a potential
transaction is ongoing, there can be no certainty as to the
outcome. In the meantime, the Group continues to limit
investment in Russia and remains focused on optimising the
existing store coverage. Following the closure of 31 stores
and opening of two new franchise stores over the course of
2022, the number of Russian stores stood at 159 as of
31December 2022.
Strategic review continued
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Delivery channel mix and online like-for-like growth
Online delivery system sales
asa share of delivery system
sales in Turkey reached 81.2%
for the period, which
represents almost five
percentage point increase
onayear-on-year basis.
The following table shows the Group’s delivery system sales, analysed by ordering channel and by the Group’s two largest
countries in which it operates, as a percentage of delivery system sales:
For the period ended 31 Dec
2022 2021
Turkey Russia
(1)
Total Turkey Russia
(1)
Total
Store 18.2% 6.1% 16.9% 23.3% 7.1% 22.3%
Online
– Group’s online platform 24.8% 71.0% 35.6% 25.2% 69.1% 31.4%
– Aggregator 56.4% 23.0% 47.0% 51.1% 23.8% 46.0%
– Total online 81.2% 94.0% 82.6% 76.3% 92.9% 77.4%
Call centre 0.6% — 0.4% 0.4% — 0.3%
Total 100% 100% 100% 100% 100% 100%
(1) Discontinued operations.
The following table shows the Group’s online LfL growth
(4)
, broken down by the Group’s two largest countries in which it
operates, for the periods ended 31 December 2022 and 2021:
(after IAS 29) (pre-IAS 29)
Group online system sales LfL growth
(4)
2022 2021 2022 2021
Turkey (2.8%) 45.2% 67.9% 73.3%
Russia (discontinued operations, based on RUB) (9.5%) 12.4% (9.5%) 12.4%
Strategic review continued
Online delivery system sales as a share of delivery system sales in Turkey reached 81.2% for the period, which represents
almost five percentage point increase on a year-on-year basis. This performance was also aided by an increase in volumes
through the aggregators.
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For the year ended
31 Dec
(in millions of TRY) 2022 2021 Change
Revenue 2,220 2,063 7.6%
Cost of sales (1,396) (1,268) 10.1%
Gross profit 823 794 3.6%
General administrative expenses (282) (263) 7.2%
Marketing and selling expenses (347) (343) 1.1%
Other operating expenses, net (5.7) 7.2 n.m.
Operating profit/(loss) 189 196 -3.6%
Foreign exchange gains/(losses) 85 50 71.7%
Financial income 110 54 104.8%
Financial expense (240) (133) 81.1%
Monetary profit/(loss) 47 49 -2.4%
Profit/(loss) before income tax 191 215 -11.2%
Tax expense 11 (81) n.m.
Profit/(Loss) after tax, from continuing operations 202 134 50.5%
Loss from discontinued operations (211) (71) 197. 2%
(Loss)/Profit for the period (9) 63 n.m.
Turkey adjusted EBITDA
(5)
337 313 7. 5%
Adjusted EBITDA
(5)
311 296 5.3%
Adjusted net income (from continuing operations)
(6)
214 143 50%
Financial review
Strategic review continued
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Strategic review continued
Revenue
Group revenue grew by 7.6% to TRY 2,220 million on an
inflation adjusted basis.
Adjusted EBITDA
Adjusted EBITDA, which now excludes Russia, was TRY
311million, a year-on-year increase of 5.3%. The adjusted
EBITDA of Turkey, which includes the Azerbaijani and
Georgian businesses along with COFFY, realised at TRY
337million, which demonstrated a 7.5% year-on-year
increase. Please note that the adjusted EBITDA for the
Russian segment, which is now a discontinued operation,
forthe period was TRY2million.
For the period ended 31 December 2022, the adjusted
EBITDA margin as a percentage of revenues was 15.1%
compared to 15.2% over the same period in 2021.
Unprecedented increases in food costs across the board and
higher personnel expenses were the main negative factors
that weakened profitability in 2022. Meanwhile, strong sales
performance created operating leverage through the system
despite the above-mentioned cost pressure. The Group took
advantage of its robust purchasing power and built-up
additional inventory during the period to combat elevated
food costs.
Adjusted net income
For the period ended 31 December 2022, adjusted net
income from continuing operations was TRY 214 million.
Thegrowth in revenue and adjusted EBITDA as well as the
foreign exchange gains due to the devaluation of the TRY
against the RUB were the main reasons for the return to
profitability. On the other hand, discontinued operation loss
was TRY 211 million due to non-cash write-os driven by
accounting treatment to the Russian business.
Capital expenditure and cash conversion
The Group incurred TRY 82 million of capital expenditure for
the continuing operations in the period ended 31 December
2022. Cash conversion, defined as (adjusted EBITDA
excluding IFRS 16 impact - capital expenditure) / (adjusted
EBITDA excluding IFRS 16 impact) for the period was 70%
(2021: 74%) for the Group (continuing operations).
Adjusted net debt and leverage
The Group’s adjusted net debt, excluding discontinued
Russia financials, as of 31 December 2022 was TRY 562
million, staying flat compared to the inflation adjusted net
debt of end-2021. Including the Russian business, this
equates to TRY 909 million net debt.
The Group’s leverage ratio (defined as adjusted net
debt/adjusted EBITDA) based on continued operations,
stood at 1.8x as of 31 December 2022 (after IAS 29) versus
1.9x at the end of 2021. Including all Russian related debt
(both Sberbank loan and lease liabilities), our leverage ratio
would go up to 2.9x by the end of 2022. Including only the
Sber bank loan (for which DPEU is the debt guarantee) to
debt calculations, this equates to a 2.3x leverage ratio, which
is unchanged versus the 2021 year-end.
In an increasing rate environment, c.90% of the Group’s bank
borrowings had fixed rates whereas average maturity stood
at 1.5years.
The Group had TRY 360 million of cash (excluding cash of
Russia) and access to an additional banking facility of TRY
225 million as of 31 December 2022.
Current trading
System sales growth and like-for-like growth for the eleven
weeks ended 19 March of 2023 compared to the same period
in 2022 were as follows:
Group system sales growth (after IAS 29)
For the eleven
weeks ended
17 March 2023
Turkey 15.5%
Azerbaijan (10.8%)
Georgia 40.9%
COFFY 469.1%
Total continuing operations 18.2%
Russia (discontinued operations) 11.6%
Group system sales growth (after IAS 29)
Turkey 11.5%
Russia (discontinued operations,
based on RUB) (20.8%)
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Strategic review continued
2023 Outlook
• Strong momentum from store openings in Turkey is
anticipated to continue for both Domino’s and COFFY,
driven by solid franchisee demand. Our commitment to
maintaining franchisee profitability is front and centre of
this demand. 2023 is therefore anticipated to be another
year of strong network expansion as the Group seeks to
broaden its coverage to cater to demand.
• The Group anticipates that it will maintain organic and LfL
sales momentum in 2023 driven by sustained network
growth, volume expansion and targeted price adjustments.
New customer acquisition and increased order frequency
levels are expected to contribute to growing volumes.
• Group system sales growth performance has started
strongly in the first 11 weeks of 2023, up 18.2% for
continuing operations and up 11.5% in Turkey on a
like-for-like basis.
(3,4)
• The Group is mindful that 2023 will be another year of
volatile macro-economic circumstance and uncertainty.
The inflation risk persists, and while the Group has a good
track record of managing and negating the impact of
inflation, it may aect overall growth levels. Nevertheless,
the Group believes that it can continue to appropriately
manage the inflationary risk.
• Guidance for store openings, LfL growth rates and capital
expenditure in Turkey for 2023 is as follows:
LfL growth rate
Mid single digit
(pre IAS 29: 60-70%)
Domino’s Pizza net store openings 35-40
COFFY net store openings 50-60
Capital expenditure TRY 160 m
Notes
(1) All Group figures exclude Russian business which is now a discontinued operation.
(2) COFFY numbers are included in all Turkey and Group figures, unless presented separately. Like-for-like figures exclude COFFY.
(3) System sales are sales generated by the Group’s corporate and franchised stores to external customers and do not represent
revenue of the Group. These numbers are not audited.
(4) Like-for-like growth is a comparison of sales between two periods that compares system sales of existing system stores.
TheGroup’s system stores that are included in like-for-like system sales comparisons are those that have operated for at least
52weeks preceding the beginning of the first month of the period used in the like-for-like comparisons for a certain reporting
period, assuming the relevant system store has not subsequently closed or been “split” (which involves the Group opening an
additional store within the same map of an existing store or in an overlapping area). This is a non-IFRS measure and non-IFRS
measures are notaudited.
(5) EBITDA, adjusted EBITDA and non-recurring and non-trade income/expenses are not defined by IFRS and non-IFRS measures are
not audited. These items are determined by the principles defined by Group management and comprise income/expenses whichare
assumed by Group management to not be part of the normal course of business and are non-trading items. These items, which are
not defined by IFRS, are disclosed by Group management separately for a better understanding and measurement of the
sustainable performance of the Group. Please refer to Note 3 in the Consolidated Financial statements for a reconciliation of these
items with IFRS.
(6) Adjusted net income is not defined by IFRS and non-IFRS measures are not audited. Adjusted net income excludes income and
expenses which are not part of the normal course of business and are non-recurring items. Management uses this measurement
basis to focus on core trading activities of the business segments and to assist it in evaluating underlying business performance.
Please refer to Note 3 in the Consolidated Financial statements for a reconciliation of this item with IFRS.
(7) Net debt and adjusted net debt are not defined by IFRS and non-IFRS measures are not audited. Adjusted net debt includes cash
deposits used as a loan guarantee and cash paid, but not collected during the non-working day at the year end. Management uses
these numbers to focus on net debt including deposits not otherwise considered cash and cash equivalents under IFRS.
(8) Delivery system sales are system sales of the Group generated through the Group’s delivery distribution channel.
(9) Online system sales are system sales of the Group generated through its online ordering channel.
(10) Group like-for-like growth is a weighted average of the country like-for-like growths based on store numbers as described
inNote(2). This is a non-IFRS measure and non-IFRS measures are not audited.
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Stakeholder engagement
Our customers Our shareholders Our franchisees
What matters to them?
The most critical aspects for our customers are
service, image and product. Whilst meeting the
expectations of our customers with our fast service,
we also provide them with a digital experience.
Werespond to the needs of our customers with our
delicious and customer-oriented products. Our work
on social responsibility and sponsorship creates value.
How we engage?
We communicate with our customers 365 days a year
without interruption. We maintain communication in
both online and oine channels, and communicate
with our customers on both the omni-channel and
media-oriented platforms. Weengage with our
customers thanks to this strategy wehave established.
What matters to them?
Sustained ability of our Group to deliver strong
operationaland financial performance, along with
consistent communication, matters most to
ourshareholders, who plays a central role in the
growth strategy and actionplans of the Group.
How we engage?
We have a clear and targeted engagement strategy
with both our existing and prospective shareholders,
which is transparently managed by our Investor
Relations department. This strategy is also supported
by the leadership team to understand the views of
ourshareholders with regards to the execution of
thestrategy.
What matters to them?
What matters most to the franchisees is the return
oninvestment and profitability while maintaining a
sustainable system which shows potential for sales
andstore growth. Excellence in operations and
customersatisfaction is key.
How we engage?
We have a variety of ways to engage and support
franchiseesin terms of operations training, local
marketingsupport and store growth incentives.
Ouraim is to convert low-performing stores to
high-performing ones by keeping a close eye on
eachindividual store’s performance. Periodic store
andfranchisee visits, and tightcommunication, plays
acritical role.
Read more on page 18 Read more on page 83 – corporate governance Read more on page 41
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Stakeholder engagement continued
Our employees Our communityOur suppliers
What matters to them?
Employees expect to be a part of a growing
organisation where they are also encouraged to grow.
Growing means to learn more, topromote and to be
satisfied with the culture that surrounds the business.
The Group oers these alternatives with new brands
and increased store numbers. Employees also seek a
dynamic environment, transparency, open and trusted
relationships, and a strong leadership team.
How we engage?
The Group incorporates dierent activities to engage
itsworkforce: they can be categorised into three
groups:
1. Engage them with business:
Open communication about vision and results.
2. Learning and development opportunities:
Homegrownopportunity is a strong proposition
that most companies can’t oer.
3. Reward, recognition and motivational activities:
TheGroup also wants to receive employees’
feedback and usethis input to improve
engagement strategies.
What matters to them?
We strive to add value to the environment and society
with our mission of becoming the “Pizza of the
Neighbourhood”. Our prime motivation is creating
value and building relationships with society. As a
brand that respects nature and the environment, we
take care to keep community culture alive and support
art, education and sports.
How we engage?
While contributing to the development of village
schools, we renewed the basketball court in Mardin
inco-operation with TEGV. Acting with a sense of
responsibility towards stray animals, we supported
theHachiko Association. We believe that seeing
wishes come true is unforgettable for every child, and
we touch the lives of children with our collaboration
withthe Make-A-Wish Foundation and
KoruncukFoundation.
What matters to them?
The most material issues on the supplier side are
volatile raw material prices along with the high
increase in production costs, unstable economical
situation and high inflation on commodity prices.
Therefore, trust and building long-term relations
with a win-win policy is what matters most to them.
How we engage?
It is crucial for DPEU to accept all suppliers as our
long-term business partners. We engage via open
communication in line with our vision and targets.
Despite the negative eects of the unstable economic
circumstances, providing transparent procurement
processes, an open book structure, and fair pricing
strategies secures our long-term partnerships.
Also,establishing all our purchasing and procurement
processes on a firm, legal basis creates astrong and
trustworthy environment.
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Culture in action
The Group is focused on keeping Domino’s unique cultural
elements alive and integrating them with its new
technology-driven business needs. In 2022, The Group
worked with a well-known consultancy company to prepare
for future organisational needs in a multi-country and
multi-brand setting. This project was led by the Domino’s
Pizza Turkey HR Director, and an organisational structure
was proposed where country leaders and brand leaders
worked eectively together. The Group isin the transition
phase right now, keeping in mind this ultimate goal.
Aconsultancy company also designed responsibilities,
adecision matrix and possible KPIs for roles.
Our people have a shared vision of how to achieve our
Company’s strategic goals. To ensure all employees are
informed of business objectives and performance,
weholdavariety of corporate events throughout the year.
TheDomino’s Rally is one of the largest and most important
of our communication events. In 2022, the Rally was held
online again because of the pandemic to prevent possible
risks. We held Dashboard meetings with our wider leadership
team three times in 2022, where we discussed our strategy
and updated plans. We also organised town halls for our
headquarters employees to share our roadmap and
businessupdates.
At DP Eurasia, with the guidance of our human resources
policy, we acquire new talent who will become tomorrow’s
leaders, as well as promoting new leaders within the Group.
TheGroup implemented its talent management plans with
respect to this strategy. To achieve this, Human Resources
worked with assessors to identify talents, provide
development plans and follow-ups to them. This promotion
strategy ensures continuity in company culture as well.
As part of the talent strategy, we use our onboarding system,
called Onboar’D, as we know that we will make adierence if
the new talent is adapted to the Company culture with the
mentoring of existing leaders. At DP Eurasia, new employees
also join the Pizza Prep School to learn about the Company
and its culture. Since dough, pizza and restaurants are the
core of our business, it is an important part of our
recruitment process for our new employees to beable to
work with the dough; learning how to make pizza and
understand more about Domino’s restaurants and
operations.
In 2022, we expanded to include a new brand, COFFY, with a
specific focus on growth. This required both incorporating
systems for the second brand as well as dierentiating some
of them, since the new brand oers adierent customer
experience.
The Group started a long-term leadership development
programme, “Be the Best”, in Turkey in 2019. Leadership
attributes were redefined within this programme in
accordance with the Group’s future vision and strategies.
In2022, as a follow-up to this initiative, New Generation
AgileManagement Training was conducted for
38selectedfirst-level managers.
To create constant learning environment we made our online
learning platform accessible from all devices, including
mobile, with both technological and structural changes.
By2022, we had integrated a new soft-skill training
catalogue into the platform and transformed it into an
integrated learning platform rather than a technical
traininglibrary.
DP Eurasia continues to make a dierencethrough
its objective tobecomeaFood-Techcompany.
How do wecreate
aculture that isdriven by
entrepreneurial spirit?
The Group supports this culture with numerous
practices, such as supporting employees to
become owners of their own stores. “Homegrowns”
are our unique dierentiated cultural symbol and
the key toour success. To support homegrown
candidates in developing business skills,
the“School of Entrepreneurship” opened its doors
for the fourth time last year, inwhich participants
learned about franchise system dynamics,
profitability models, and other fundamentals.
Weare proud to grow with them and have a deep
sense of satisfaction at the mutual value created,
both in their lives and in ourbusiness.
Additionally, headquarters employees are
supported to try alternative work practices, to learn
what worked or did not work, take decisions, and
be accountable in their roles, just as they would if
they managed their ownbusiness.
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Culture in action continued
Our workforce
engagement
The Group has incorporated dierent ways to engage with
its workforce. Most activities were held online for the last two
years; in 2022, some activities continued in virtual meetings
while others went back to the original in-person format.
Hybrid meetings are also widely used, combining two
models.
We intend to engage with all employees, but for certain
activities, dierent people are invited every year to oer new
perspectives, or only a certain target group will be invited.
The feedback received helps the Group to better understand
the visions, standpoints, and comments on the Group’s
human resource policy and general business operations.
Below is an overview of the dierent activities enrolled to
engage with the Group’s employees and franchisees:
• councils: online/oine meetings, including multiple
departments. These meetings are organised around a
specific subject such as operational improvements or
product development. Councils discuss current practices,
improvement areas, and new innovations. Franchisees are
also invited to these councils. Thesemeetings are a great
opportunity to hear dierent voices from all over the
organisation and empower employees to improve
business processes;
• regular employee meetings: monthly online meetings with
all restaurant managers to update them on new
developments and to receive their feedback on the
operational calendar;
• regular franchisee meetings: online meetings with
franchisees to update them on business plans;
• regular headquarters employee meetings: monthly online
meetings with each functional department head, held by
HR business partners;
• quarterly top ten restaurant employee online meetings:
high-performing restaurants come together with
management to celebrate successes and to receive
suggestions on marketing, people practices and
operational plans;
• regular employee meetings: online meetings with
eachheadquarters department. Although these online
meetings were initially instigated to improve the bonds
of trust between HR and the other departments, it is
alsoanother informal way to hear the voices of
individualemployees or the input or concerns of a
certain department;
• onboarding meetings: a planned activity with the
HRDirector and CEO to meet new headquarters
employees to get their first impressions of the Company
and to also share cultural initiatives with them;
• HR business partner observations: a regular activity
inwhich dedicated partners spend time with employees
inone-to-one interviews. Their observations are shared
with senior management;
• feedback surveys: sent after every activity to monitor
engagement and get ideas for the next event;
• pulse surveys: organised for headquarters employees
toshare feedback about their morale and motivation; and
• focus groups: organised for specific subjects
whenneeded.
How have we enhanced
our workforce
engagement?
Employee engagement levels were monitored by
the Employee Engagement Survey. This survey
wascarried out by a third-party company to
understand employee thoughts about company
practices in Domino’s Pizza Türkiye (“DPT”).
Also,weorganised a Franchise Engagement
Survey to hear franchisees’ needs.
The feedback received helps the Group to better
understand the visions, standpoints, and comments
on the Group’s human resources policy and the
general business operations, so that they can take
this into account when developing or amending
policies and future decision-making.
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Sustainability in action
How have we
supported our
localcommunities?
About TEGV
The Educational Volunteers Foundation of Türkiye (“TEGV”)
was established on 23 January 1995, with the initiatives
byagroup of industrialists, managers and academicians
wholeheartedly believing that education comes fi rst. In
particular, Suna Kıraç, who initially took this path as an
education volunteer for the future of her country –
Turkey–and then the world, with a view to support the basic
education provided by the state. Since the day of its
foundation, TEGV has focused on delivering non-formal
education to children of primary school age, on the basis of
the motto of “As each child changes, Turkey fl ourishes”.
TEGV became the most widespread non-governmental
organisation operating in the fi eld of education in Türkiye
over the course of many years.
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Sustainability in action continued
In 2009, TEGV was recognised as one of the foundations
entitled with the right to “collect charity without permission”
by the Council of Ministers.
TEGV continues providing educational support tochildren
by adopting a contemporary mission and vision ateight
education parks, 29 learning units and 18 Firefly Learning
Units across 24 cities in Turkey, under the co-operation
protocol signed with the Ministry of National Education
(“MEB”) on 28 December 2018.
In co-operation with the Education Volunteers Foundation
ofTurkey (“TEGV”), Turkey’s most widespread
non-governmental organisation operating in the field of
education, TEGV Mardin Savur Learning Unit renovated
the basketball court in Abdulgani Aras Event Center, which
was mostly used by girls. Within the scope of the project we
made with TEGV, based on our strategy of “Domino’s is
Everywhere, Sharing is Everything”, the basketball court,
which was renewed in line with its contemporary mission
toprepare for the future through education, is a part of the
approach that wholeheartedly believes that education is at
the centre of everything.
It aims to encourage young people to train their minds and
bodies with sports in the completely renovated basketball
court. This project was important to both TEGV and
Domino’s, whose mission is to connect with society.
New Year’s Eve was also meaningful for us. Thisyearwe
strengthened our strong connection with our customers with
our NewYear’s Eve project. We have tried to make dreams
come true for children that are from disadvantaged parts of
the country. We wanted to thank our customers, who made
us proud this year with the Lovemark award, witha
worthwhile New Year’sgift.
As the most loved pizza store of Turkey, Domino’s have
renovated two Dreams Workshops that significantly
contribute to the education of children in co-ordination
withTEGV. Dreams Workshop is a project that aims to
createan interest in the children towards art and makes an
eort to educate the children on the basic concepts ofart.
Theworkshop aims to inform the children about dierent
subjects, materials and methods without using templates
that were prepared beforehand. Dreams Workshop also
supports the core knowledge and ability ofchildren by
introducing well-known artists and artwork to them.
We also experienced the joy of renovating two Dreams
Workshops in Diyarbakır and Siirt by supporting this
significant project that brings imagination and creativity
together, and shares the happiness of gifting this project
toour customers.
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Sustainability in action continued
Providing food safety
and high quality
Reducing the impact
on climate change
Environmentally
friendly packaging
design and waste
reduction
Adopting responsible
sourcing
The Group’s eorts and
interest in sustainability
continues to grow with new
and existing projects and
initiatives.
DP Eurasia’s contribution to sustainability is driven by the
Group’s eorts and interest in initiating new projects,
adapting our strategy to current regulations, and investing in
future generations. Our aim is to strengthen and incorporate
our sustainability strategy throughout all of our operations.
The expectations of our stakeholders commands a greater
focus on sustainability, and in business this is not an option,
but an obligation. Alongside our stakeholders, the
expectations and interests of companies are also aligned to
sustainability concerns such as climate change and
employee welfare. As the business starts to adopt
sustainability as a core value, we empower and grow our
strategy according to business demands and trends. This is
not only a business requirement, but an issue of evolving
global consciousness. Consequently, we are pleased to
announce that 2022 has been a remarkable year for us in
terms of complying with our business model from a
sustainability perspective.
Our strategy and goals will be a driving success for the
business and will create value for all our stakeholders. We are
highly motivated to decrease our environmental impacts and
will take continued actions to mitigate and adapt to the
possible impacts of climate change through our Eurasia
operations. On that account, we are lining up our reporting
with an external framework that is promoted by the
Sustainability Accounting Standards Board (“SASB”)
and the Task Force on Climate-Related Financial Disclosures
(“TCFD”). This part of the report displays information
on DP Eurasia’s actions, assessments and related application
towards aligning the recommendations of the TCFD,
which is the first self-standing risk assessment in line with
this framework.
1
2
4
By publishing this report, we aim to summarise the progress we
have made by including climate change risks and opportunities
into our overall business strategy. Our communications on this
progress include the dierent geographic locations where DP
Eurasia operations are conducted. Regarding the dierent
dimensions of operations, some countries are taking the lead in
building their understanding of climate risks and opportunities.
We are glad to announce that we are not alone in this
journey, since the Group’s eorts and interest in sustainability
continues to grow with the new and existing projects and
initiatives. Asa consequence, this report represents an
important development which will enhance and expand our
sustainability understanding towards our stakeholders.
DP Eurasia has committed itself to achieving net zero
emissions by 2050. This part of the report discloses our first
emissions assessments and targets according to our baseline
year, which is 2021.
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Task Force on Climate-related
Financial Disclosures (“TCFD”)
The methodology of defining
DP Eurasia’s focus on
climate-related areas
For the first step of the study, both the global and local
agenda, and sectoral best practice examples, were
discussedin the analysis of sustainability trends and
climate-related risks. Industry-specific materiality issues
recommended by the Sustainability Accounting Standards
Board (“SASB”) andthe World Economic Forum’s global
riskprojections were reviewed in depth.
In the next step of the study, climate-related risk
assessmentsand actions were discussed in the ESG
meetings, where it was highlighted by the participation
ofthe top Board members, Chairs of related committees,
department leaders and operational managers.
In the respect of primary operational action plans,
climate-related risks were determined. Annual actions
andprioritised targets were evaluated and, by doing so,
fourmain climate-related focus areas were decided upon
bytaking four dierent geographical operations of DP
Eurasia. As previously reported, the risk assessment was
decided regarding the operation size, dynamics and
potentialopportunities, and an annual target plan within
thescope ofenvironmental metrics was also established
forDP Eurasia.
The four highlighted themes are being tracked by DP
Eurasia’s Sustainability Committee. The committee has
aleading role in connecting related activities and targets
byaligning them with TCFD recommendations and
managing the operation at a global level.
Our governance structure
DP Eurasia
Board
Internal Audit and
Risk Management
Director
Nomination
and Governance
Committee
Remuneration
Committee
Audit
Committee
Sustainability
Committee
Task Force on Climate-related
Financial Disclosures (“TCFD”)
Governance
DP Eurasia N.V. is a limited liability company incorporated
under the laws of the Netherlands on 18 October 2016.
Theprincipal activity of DP Eurasia consists of acting as
aholding company.
Given the importance of the TCFD recommendations, the
entire Board has committed to taking further action in
accordance with the climate-related risks and opportunities
by combining them to net zero emissions targets. DP Eurasia
strongly believes that good governance is the objective in
achieving success and furthering sustainable development
inthe business. Embracing environmental, social and
governance issues is about having good governance;
therefore, DP Eurasia brings ESG topics to the forefront by
aligning them with TCFD recommendations. Climate-related
issues, risks and opportunities are elevated by the Board of
Directors, and a management mechanism is initiated in order
to respond to possible climate-related risks and
opportunities. On the other hand, the Board of Directors
needs to be ready for risks that our sector may, or will,
facefor the upcoming period. For that reason, not all
climate-related risks and opportunities are managed by
theBoard, but relevant risks and opportunities are
managedmeticulously by the Board members.
Consequently, all climate risks, opportunities and trends
aremonitored and reviewed by associated working groups.
Afterwards, the issues are elevated to Board level and
appropriate actions and initiatives are taken accordingly.
CEO
Nomination
and Governance
Committee
Remuneration
Committee
Audit
Committee
Sustainability
Committee
Steering Committee
Leading all ESG
practices including
TCFD progress
management
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Task Force on Climate-related
Financial Disclosures (“TCFD”)
continued
Governance
Disclose the organisation’s governance around climate-related risks and opportunities.
a) Describe the Board’s
oversight of
climate-related
actions, risks and
opportunities.
The Group believes that the oversight of the climate-related risks, actions and opportunities will bring success in business and put DP Eurasia one step
forward. Oversight of the environmental, social and governance issues is considered by Board members and meticulously detailed and analysed in order
to take further steps. Identifying the climate-related risks and opportunities and contributing employee awareness in terms of expanding our ESG
understanding through responsible citizen profile is already on the agenda for the Board of Directors. Stakeholders take the significant role to transform
determined climate-related risks into opportunities in our operation.
The Board encloses the climate-related risks in terms of their possible eects that could cause business interruptions to Group operations.
The Board is working on updating its business continuity policies to be more prepared for the potential climate change impacts:
1. crisis management;
2. disaster recovery plans; and
3. business continuity management.
In 2022, considering geopolitical changes in Russia, the Group continues to assess its position there and evaluates several possibilities, including a
potential divestment of our Russian operations. Furthermore, as a protection, the Company continues to limit investment in Russia and focuses on
optimising existing store coverage. With the net closing of 31 locations and opening of two franchise stores in 2022, the number of Russian stores stood at
159 on 31December2022.
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Task Force on Climate-related
Financial Disclosures (“TCFD”)
continued
Governance
Disclose the organisation’s governance around climate-related risks and opportunities.
b) Describe the
management’s role
inassessing and
managing
climate-related risks
and opportunities.
The Group established an ESG Committee in 2021 that consists of Board members and several working groups. Each working group under theESG
Committee deals with particular climate-related issues. Working group heads are assigned by the Board members, and leaders are selected from
high-level executives in order to co-ordinate climate-related risks and actions.
In 2022, climate-related issues began to be discussed periodically with meetings initiated by the Board of Directors. These issues are followed by
theresponsible leaders of the relevant ESG Committee members. The tasks of the ESG Committee are:
1. evaluating risks and opportunities in environmental, social and governance areas and decreasing eects of climate-related risks in business;
2. to follow and analyse the sustainability issues related to the sector and focusing on the sustainable model of business by taking financial outcomes
intoconsideration;
3. determining the Company’s ESG strategy and updating it, when necessary;
4. operating the Group in line with sustainable roadmaps by including further climate-related actions into its business area;
5. carrying out projects to achieve the determined ESG targets;
6. to report the results obtained from all studies on ESG issues to the Board of Directors; and
7. working closely with the Audit Committee in order to track the Company’s commitments and actions.
An ESG Committee meeting was held in the third quarter of 2022 and in the meeting we discussed:
• our roadmap Through ESG Transformation;
• ESG Standards, Frameworks and Examples;
• “E” goals from DP Eurasia 2022 ESG; and
• in the “S” and “G” headings of ESG, the targets with which we can track performance.
After the action plans were determined, the results and financial impacts were closely scrutinised by the members of the Board of Directors,
consistingofthe CEO, CFO, Investor Relations Director and Internal Audit Director.
In order to follow the climate-related strategy, Board members will be adding additional C-level KPIs for the upcoming years. Also, the following KPIs
arebeing tracked at managerial level and above, and the ESG Committee is periodically reporting to Board level.
• KPI #1: Scope 1 emissions Responsible: Corporate Leader, Co & Supply Chain Leader, Administrative Aairs Leader, Franchise Leader.
• KPI #2: Scope 2 emissions Responsible: Corporate Leader, Co & Supply Chain Leader, Administrative Aairs Leader, Franchise Leader.
• KPI #3: Amount of purchased renewable energy Responsible: management team (in 2023 and beyond).
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Task Force on Climate-related
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continued
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning.
a) Describe the
climate-related risks
and opportunities the
organisation has
identified over the
short, medium and
long term.
Based on the main operation points, transition and physical risks recommended by TCFD were mapped by matching the short, medium and long-term
actions under the framework of four determined themes.
Regulatory transition risk: Policy and legal risks are defined under the umbrella of climate-related regulations that must be followed.
Market risk: Changes and unpredictability in the market increases the cost of raw materials and energy prices; this also changes the customers’ consuming
habits as climate change risks are considered in the scope of market.
Technology risk: Innovations in agricultural practices, operations and supply chains, and alternative technological solutions to delivery are identified
astechnology risk. Our evaluation is based on tracking green and clean technologies.
Reputation risk: Changes in client preferences, and adaptation to new sectoral changes, are considered as top priority risks related to reputation.
Also, the service quality and the feedback of consumers in line with our sustainable practices could be evaluated.
Acute risk: Due to extreme weather events or natural disasters, increases in insurance premiums and operational disruptions are defined as acute risks.
Ourevaluation generally comprehends the eects of possible extreme weather events on our supply chain and operations.
Chronic risk: Longer-term climate shifts can result in the deterioration in quality of raw materials. We are highly bound to wheat quality due to our core
product, pizza.
Stores
• With a total of 99 Corporate and 601 franchise stores located in dierent countries, climate-related risk assessments are more likely to be related to
local impacts, particularly for regulatory and physical risks.
• Our stores located in cold climate conditions are more sensitive to acute risks due to intense weather conditions. At the same time, the stores located
atmoderate climatic conditions are classified as more sensitive to chronic risks due to temperature rises. Both defined climate-related risks have been
assessed.
Suppliers
• The sensitivity of our suppliers to acute physical events is similar to our stores in more fragile locations and predominantly non-resistant to weather
shifts. The sensitivity to chronic physical events is greatest in Russia.
• Our risk assessments of suppliers are location based due to dierent geographical conditions that can result in dierent impacts and outcomes
inoursupply chain.
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Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning.
b) Describe the impact of
climate-related risks
and opportunities on
the organisation’s
businesses, strategy
and financial planning.
The financial impact assessments for the selected risk scenarios have not been completed. Evaluations of the risks and relative material topics are being
tracked by department leaders. Action plans against the selected risks are shared at the following parts.
DP Eurasia is responsive to climate-related risks through identification of opportunities to mitigate the dierent location-based operations and adapt
toclimate-related risk factors. TCFD recommended categories for climate-related opportunities primarily include:
• providing food safety and quality management;
• ability to access new market trends;
• pursuing lower emission goods and energy resources; and
• pursuing enhanced resilience within the supply chain and material procurement.
No financial impact has been encountered so far, but new alternatives and solutions are constantly sought to reduce or minimise these risks.
c) Describe the resilience
of the organisation’s
strategy, taking into
consideration dierent
climate-related
scenarios, including a
2°C or lower scenario.
Scenario analysis does not predict the future, but it does help to mitigate potential risks of climate change and make preparations for the future.
Scenario analysis is a crucial tool for strategic planning, risk management and assessing the Group’s strategic resilience. For the upcoming years,
DPEurasia commits itself to follow TCFD scenario analysis. The main goal will be towards cutting gas emissions generated by stores.
Task Force on Climate-related
Financial Disclosures (“TCFD”)
continued
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TCFD climate-related risks
Focused themes Transition risks Physical risks Time horizon Progress from 2021 to 2022
Main climate-related risks
and actions of DP Eurasia Regulations Market Reputation Technology Acute Chronic
(short, mid or
long term)
(1)
Climate change
Switching to electrical vehicles Mid term
While there were only seven electric motors in 2021, there are currently
47motors in 2022. There is a cost advantage of 100₺/month per engine.
The test phase of the use of electric motorcycles and electric kick
scooters has been started in certain branches.
Route optimisation
Short term
Our related works are continuing, and we will start to move inline with
this target in 2023.
GPS project to track kms,
fuelconsumption
Short term
The iUGO GPS system was used to track orders, increase eciency,
andtrack mileage and gasoline more closely.
Partly switching to renewable
energy resources
Mid term
Solar energy panels have been installed for the Co&Supply chain in İzmir
in2022, but it is planned to activate in2023.
New warehouse installations
atcritic delivery points within
the geography
Mid term
We intend to build new warehouses in the medium term. When
purchasing a new warehouse, purchases will be made from optimum
locations that allow for eective route design and are not aected by
physical risks associated to climate change. In this regard, feasibility and
environmental and social due diligence studies will be conducted in order
to purchase the warehouse.
Energy ecient equipment
range atthe kitchens
Long term
An agreement was made with SADEIO company to control the make-
line and walk-in temperatures in the branches, andto prevent excessive
energy consumption. Thissystem is centrally managed and sends
notifications to the specified communication channels when there is
adegree of non-conformity.
Adapting the climate-related
regulations (Paris Agreement
andGreen Deal)
Long term
We are closely following the COP27 outputs. There is a relevant team that
follows all newly formed legislation and policy changes regarding climate
change. Compliance with all potential regulations will be ensured. We
plan to be a part of the solution and lead the change.
(1) Short term: 0-2 years, Mid term: 2-12 years, Long term: 12+ years.
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Focused themes Transition risks Physical risks Time horizon Progress from 2021 to 2022
Main climate-related risks
and actions of DP Eurasia Regulations Market Reputation Technology Acute Chronic
(short, mid or
long term)
(1)
Packing and waste
Redesign of packaging
(reduction in surface area of
boxes, increase in the number
of products per box)
Short term
The transition to the cutting-edged pizza box had a 0.5% m
2
reduction
eect. However, in 2022, 250million boxes were purchased with
1.2million little box savings. In addition, 19 and 23cm paper plates
weredelisted, and15cm plates were used instead.
Reducing the use of plastic
cutlery
Short term
Removing knives from the service set to reduce the use of plastic
isplanned for 2023.
Digital menu application
instead of paper based (QR)
Short term
Digital screens have started to be used in 252 of 650shops, and printed
menu boards have been left out of the system. All new shops are opened
with the digital menu board concept. As the renovations of other shops
are made, the transition to digital screens will be provided. Digital menus
have been used in newly opened branches for a long time. This system
is centrally managed, so the Company prevented printed menu board
images and reduced paper usage. Removed QR-based prescriptions used
in make-line branches, and the number of printed materials were reduced
and QR-based applications started to be used.
(1) Short term: 0-2 years, Mid term: 2-12 years, Long term: 12+ years.
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Task Force on Climate-related
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Focused themes Transition risks Physical risks Time horizon Progress from 2021 to 2022
Main climate-related risks
and actions of DP Eurasia Regulations Market Reputation Technology Acute Chronic
(short, mid or
long term)
(1)
Food safety and quality
Client voice (surveys for
healthy product range
andoptions)
Short term
(2)
In the services we provide through third-party sales channels, customer
satisfaction is always measured and improvement actions are taken.
30-minute delivery
Short term
(2)
30-minute delivery guarantee continues.
Using food grade and
recyclable materials
(pizzapapers) through craft
Mid term
Activities are planned to encourage our customers to recycle pizza
boxes when ordering pizza from home. It will be implemented in the
medium term. More saving was achieved by reducing the size of pizza
boxes. Thetransition to the cutting-edged pizza box had a 0.5% m
2
reductioneect.
Understanding of
“AllfromOven”
Short term
(2)
Our motto and strategy continues. After baking all our products, theyare
delivered straight to the consumer.
(1) Short term: 0-2 years, Mid term: 2-12 years, Long term: 12+ years.
(2) The time horizon is taken as short term. However, regarding risk assessment of the potential demand, actions have already been taken and started to be implemented at the operational level.
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Focused themes Transition risks Physical risks Time horizon Progress from 2021 to 2022
Main climate-related risks
and actions of DP Eurasia Regulations Market Reputation Technology Acute Chronic
(short, mid or
long term)
(1)
Responsible sourcing
Localisation of raw material
procurement (primarily wheat
and corn)
Short term
From the beginning of 2022, we have been capable of getting corn
locally. On the flour aspect, we still need to utilise strong wheat growth in
the northern Black Sea region since the characteristics of the local wheat
do not fulfil our standards for the flour we use for our seven-day shelf-life
dough. Yet, we are still looking for methods to enhance the proportion
oflocal wheat in our flour.
Enhancing the menu options
regarding client preferences
that also include performing
R&D processes towards
plant-based meat and vegan
choices
Short term
Within the scope of the project, vegan sausage and vegan mozzarella
R&D studies continue. In addition, our short-term goals include the
development of vegan pizza.
Training farmers, suppliers
and monitoring the agriculture
within the sustainability
framework
Mid term
Global and local examples on the subject are examined. In addition,
development plans are being prepared.
Shelf-life management,
preventing food waste and
at the same time providing
ahighquality of service
Short term
It went from 24 in sole products to 32 in a box. The Company has
examined the packaging enlargement studies in other products within
the scope of productivity projects it is planned to implement this
intheupcoming periods.
To prevent waste, the “fifo system” is applied in the branches.
Dual sourcing (alternative
suppliers)
Short term
A supplier risk assessment report is kept, and alternative supplier studies
are continuously carried out.
(1) Short term: 0-2 years, Mid term: 2-12 years, Long term: 12+ years.
(2) The time horizon is taken as short term. However, regarding risk assessment of the potential demand, actions have already been taken and started to be implemented at the operational level.
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Task Force on Climate-related
Financial Disclosures (“TCFD”)
continued
Risk management
Climate-related risks and opportunities are managed, evaluated, and monitored by DP Eurasia risk management operations to formulate a comprehensive and eective climate-related
strategy that covers DP Eurasia’s four main climate-related focus areas. Climate-related risks are managed by the risk management team and filtered through our organisational
andoperational scope to identify and respond to risks which have a direct impact on our business/sector.
Risk management
Disclose how the organisation identifies, assesses and manages climate-related risks.
a) Describe the
organisation’s
processes for
identifying and
assessing
climate-related risks.
The Group, and in particular the supply chain team and other relevant stakeholders, continuously try to identify and monitor principal and emerging risks,
and implement mitigation actions to minimise or eliminate their potential impact.
Risks are categorised under four areas:
• strategic risks: the Group is willing to take a certain level of risk by assessing a risk/return approach when doing business;
• operational risks: the Group has a responsible approach to operational risk management. High quality products, customer satisfaction and continuity
ofproduction are the prioritised areas;
• financial risks: the Group continuously assesses its financial risks and seeks to minimise the potential impact; and
• compliance risks: compliance with laws and regulations is essential for the Group, which does not tolerate non-compliance with laws.
b) Describe the
Company’s
processes for
managing
climate-related risks.
The identified risks are managed by using supply risk assessment methodology depending on the supply chain team. The corporate leadership team and
newly established ESG Committee will be leading the further management progress.
The corporate leadership team has the following remit:
• designing and implementing an overall risk management process for the organisation, which includes an analysis of the financial impacts on the
Company when risks occur;
• performing a risk assessment: analysing current risks and identifying potential risks that are aecting the Company;
• performing a risk evaluation: evaluating the Company’s previous handling of risks, and comparing potential risks with criteria set out by the Company
such as costs and legal requirement;
• establishing the level of risk the Company is willing to take;
• preparing risk management and insurance budgets;
• creating business continuity plans to limit risks;
• implementing health and safety measures, and purchasing insurance, including cyber security insurance;
• conducting policy and compliance audits, which will include liaising with internal and external auditors;
• maintaining records of insurance policies and claims;
• reviewing any new major contracts or internal business proposals; and
• building risk awareness amongst sta by providing support and training within the Company.
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Task Force on Climate-related
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Risk management
Disclose how the organisation identifies, assesses and manages climate-related risks.
c) Describe how
processes for
identifying, assessing
and managing
climate-related risks
are integrated into
the Company’s
overall risk
management.
The risks represent a snapshot of the Group’s principal risks. The 2022 risk assessment has been managed through the potential climate change eects that
may cause business interruption on DP Eurasia’s operations. In 2022, current risk assessment was reviewed. Considering geopolitical changes in Russia, the
Group continues to assess its position there, evaluating several possibilities, including a potential divestment of our Russian operations. Furthermore, as a
protection, the Company continues to limit investment in Russia and focuses on optimising existing store coverage. With the closing of 29 locations in 2022,
the number of Russian stores stood at 159 on 31 December 2022.
The Company’s risk management processes identify, prioritise and address a broad range of risks that can directly or indirectly impact the organisation in
the short, medium and long term, and we tier risks accordingly.
The Audit Committee and management monitor the risk management, eectiveness and timely implementation of the internal controls, and provide
guidance for prioritisation and further improvement. A risk-based management approach and a continuous culture of improvement are integral to the
Group’s strategy and business management. The Group registers the principal risks to the risk inventory and regularly evaluates these risks.
Within the DP Eurasia risk management framework, the DP Eurasia Risk Management and Control Framework is based on the “COSO 2017 Enterprise Risk
Management – Integrated Framework”, managing financial, operational and compliance risks to meet the business strategy.
As a key element of a robust risk management and control framework, the internal audit functions are carried out independently by the DP Eurasia Internal
Audit and Risk Management Directorate, which directly reports to the Audit Committee and has full access to all Group entities.
The significant risk areas, audit issues and eectiveness of management action plans are periodically reported to the Audit Committee of DP Eurasia.
TheAudit Committee and management monitor the risk management, eectiveness and timely implementation of the internal controls and provide
guidance for prioritisation and further improvement.
The risks represent a snapshot of the Group’s principal risks that lay the foundation for the Group’s risk footprint. Moreover, the Group has ISO 22000,
HACCP and, ISO 10002 standards and is carrying out its ISO audits according to these standards as well.
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Task Force on Climate-related
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continued
Within the TCFD framework the risks are determined as below.
TCFD risks DP Eurasia’s definition
Transition risks
Policy and legal Policy and legal risks are defined under the umbrella of new climate-related regulations such as the Climate Change Action Plan of Türkiye, Paris Agreement
and Green Deal. Also, increased costs from fines and judgements are taken into consideration under policy and legal risks. At DP Eurasia, we are ready to
take all preventive measures in order to mitigate risks.
However, note that in Russia there are no obligatory regulations adopted; therefore, policy and legal risks will be evaluated for upcoming years.
Market Market risks emerge from the unpredictability of the potential increase in costs (energy, raw materials, etc.) or changing customer preferences related with
inadequate climate actions of the Company. DP Eurasia’s approach focused on the competitor and sector analysis, and customer feedback about health and
safety issues.
Technology Technology risks are evaluated as more green or digital innovations in agricultural practices, and solutions regarding delivery or alternative options in the
operations and supply chain.
Reputation Reputational risks are described as related shifts in customer preferences due to insucient fulfilment in climate requirements. DP Eurasia’s evaluation
focuses on adaptation to sectoral changes and feedback as well as waste management. It should be noted that in Russia’s operations, recycled material
usage is forbidden; therefore, waste management has a crucial risk assessment process for the product range.
Physical risks
Acute Acute driven risks include severe weather conditions and natural disasters that could harm the operation and supply chain. DP Eurasia’s evaluation
concentrates on operational disruption and increases in insurance premiums against such unexpected climate events. Particularly for the supply chain,
suchweather events could result in a shortage or interruption in the availability of certain food products or supplies (especially wheat-related
agriculturalpractices).
Chronic Chronic risks are evaluated as long-term climate risks that could cause operational disruption, a decrease in the raw material portfolio and product quality
for agriculture in the supply chain.
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Task Force on Climate-related
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Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities.
a) Disclose the metrics
used by the
Company to assess
climate-related risks
and opportunities in
line with its strategy
and risk
management
process.
b) Disclose Scope 1,
Scope 2, and, if
appropriate, Scope3
greenhouse gas
(“GHG”) emissions,
and the related risks.
c) Describe the targets
used by the
Company to manage
climate-related risks
and opportunities
and performance
against targets.
DP Eurasia has completed the step of collecting the most
importantenvironment metrics that are being tracked
by Franchise,Corporate, Co&Supply Chain and General
Managementbuilding.
The Company publicly discloses annual Scope 1, 2 and 3 GHG
emissions data. For the upcoming reporting periods, the relevant
KPIs have been determined for responsible leaders.
The KPIs that will be tracked are:
KPI #1: electricity consumption/number of pizzas
Responsible authority: corporate operation manager
Time horizon: short term
Target: reducing the amount of Scope 2 emissions
KPI #2: electricity consumption/number of pizzas
Responsible authority: franchise operation manager
Time horizon: mid term
Target: reducing the amount of Scope 3 emissions
KPI #3: electricity consumption/number of crates
Responsible authority: Co & Supply Chain Manager
Time horizon: short term
Target: 3% electricity consumption decrease in supply chain below
2021 level
KPI #4: electricity consumption/number of employees
Responsible authority: administrative aairs manager/unit
Time horizon: mid term
Target: reducing the amount of scope 2 emissions
DP Eurasia is committed to the following climate-related targets in the mid term:
Commitments Accomplishments in 2022
1. implement water usage standards in
eachstore;
In progress.
2. by 2030, reduce Scope 1 and 2 GHG
emissions generated by corporate stores
and oces to 9% below 2019 levels in line
with National Russian Standards;
Emission reduction activities have been carried out.
There was a 7% reduction in total scope 1 emissions
according to 2019 baseline. Scope 2 decreased
by 17% compared to 2019 baseline. Scope 3
increased by 27% compared to 2019baseline.
3. 3% electricity consumption decrease per
crate in supply chain below 2021 level;
25% reduction has been recorded in total
electricity consumption according to 2021
emission level and reduction activities have been
carried out in our supply chain.
4. aspiration to reach net zero emissions
by2050;
In progress.
5. 4% decrease in water consumption per
crate in supply chain below 2021 level;
7% reduction in water consumption has been
achieved in our supply chain according to 2021
consumption and further reduction activities have
tried to be implemented.
6. decrease natural gas consumption by 3%
per crate below 2021 level; and
11% reduction in total natural gas consumption
in2022 has been reported.
7. developing energy ecient projects for
upcoming periods in terms of energy
saving and osetting our carbon footprint.
New energy ecient projects are tried to be
adopted and planned for upcoming periods.
The given KPIs will be periodically reviewed under the internal and external circumstances.
Therelevant data and given targets will be updated at least every five years, if necessary.
GHG emission scope 2022 Value (tonCO
2
e)
Gross direct (Scope 1)
(1)
12,117
Gross indirect (Scope 2 – Location Based)
(2)
10,432
Other indirect (Scope 3)
(3)
: Franchise (Buildings Scope 1 and Scope 2)
7,282
(1) Scope 1 consists of direct GHG emissions from sources that are owned or controlled by DP Eurasia.
(2) Scope 2 relates to indirect emissions resulting from the generation of electricity, heat or steam purchased
byDPEurasia. Scope 2 emissions have been recalculated according to IEA location-based electricity values.
Accordingly, 2021 Scope 2 emissions have been calculated as 12,680 tonCO
2
e. The decrease in Scope 2 emission
value is due to the decrease in electricity consumption.
(3) Scope 3 relates to indirect emissions from sources not owned or directly controlled by DP Eurasia but related
tothe Company’s activities, such as franchisee and supplier operation. Note that only related consumptions
offranchise stores are covered under the Scope 3 emissions.
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Task Force on Climate-related
Financial Disclosures (“TCFD”)
continued
DP Eurasia environmental metrics
DP Eurasia also publicly discloses the metrics used to assess and manage relevant climate-related risks and opportunities. Annual Scope 1, 2 and 3 GHG emissions data within the
AnnualReport has been reported below. The relevant data reporting is being tracked monthly and reporting has been attached in the “Appendix” section.
The following represents the last three years’ values:
Total energy consumption
DP Eurasia Unit 2020 2021 2022
Scope 1
Natural gas m
3
788,849 765,188 688,577
LPG litres — —
Generator fuel – gasoline litres 1,725 1,530 1,362
R404a kg 543 473 785
CO
2
kg 191 207 216
FM200 kg 20.00 — 180
Transportation – gasoline litres 1,313,603 1,283,912 659,446
Transportation – diesel litres 1,834,006 2,165,137 2,197,753
Electricity used for electric vehicles kWh — 1,021 7,961
Scope 2
Purchased electricity kWh 28,817,438 28,710,768 23,041,503
Centralised hot water Gcal 3,274 3,096 2,207
Scope 3
Franchisees (Buildings Scope 1 and 2)
Natural gas m
3
2,390,966 2,879,793 3,214,917
Centralised hot water Gcal 1,793 1,404 2,106
LPG litres 3,240 3,240 3,617
Generator fuel – gasoline litres 6,255 7,080 7,904
R404a kg 334 378 422
CO
2
kg 626 708 790
Purchased electricity kWh 30,826,856 36,095,991 41,086,382
Transportation (leased cars) – petrol litres 1,436,471 1,625,933 1,815,144
Transportation (leased cars) – diesel litres — — 0
Electricity used for electric vehicles (leased) litres — 13,500 13,500
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Risk management
DP Eurasia
RiskManagement and
Control Framework
W e identify
ourrisks
We assess and
prioritise the
risks
We monitor
this through
the Audit
Committee
We implement
controls to
mitigate the
risks
We prepare an
internal audit
plan
We conduct
process audits
The Audit Committee and
management monitor the risk
management, eectiveness
and timely implementation
of the internal controls
and provide guidance for
prioritisation and further
improvement.
How we manage risk
The Board, Audit Committee and management continued to
monitor risks and implement internal controls to mitigate
risks throughout the year. A risk-based management
approach and a continuous culture of improvement are
integral to the Group’s strategy and business management.
The Group registers the principal risks to the risk inventory
and regularly evaluates these risks.
The DP Eurasia Risk Management and Control Framework is
based on the “COSO Enterprise Risk Management –
Integrated Framework”, managing financial, operational and
compliance risks to meet the business strategy.
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Risk management continued
As a key element of a robust risk management and control
framework, the internal audit functions are carried out
independently by the DP Eurasia Internal Audit and Risk
Management Directorate (“Internal Audit”), which directly
reports to the Audit Committee and has full access to all
Group entities. Internal Audit provides reasonable assurance
to the Audit Committee and the Board on the design and
eectiveness of the business processes and internal controls.
The significant risk areas, audit issues and eectiveness of
management action plans are periodically reported to the
Audit Committee.
The Audit Committee and management monitor the risk
management, eectiveness and timely implementation of
the internal controls and provide guidance for prioritisation
and further improvement.
Corporate governance and ethics culture
The Group continues to develop its corporate governance by
implementing awareness programmes, conducting training
and standardising business processes. The Group’s values,
“doing the right thing” principle and “tone at the top as well
as in the middle” approach are key drivers of the corporate
governance strategy.
The Code of Ethics and Business Conduct Policy,
Anti-Corruption and Anti-Bribery Policy and Whistleblower
Policy are the key elements of the Group’s corporate
governance framework. As clearly highlighted in the policies,
the Group respects and promotes human rights in all the
cultural, socioeconomic, and geographic contexts in which
it operates, respecting the traditions and cultures of, and
providing support for, local communities in accordance
with specific interests in each region.
Also, the Group prohibits any situation involving or
pertaining to child or forced labour. Our employees as well
as our business partners and suppliers are required to
comply with the corporate governance policies.
All incidents of actual or suspected integrity-related cases
reported through the hotline or other resources are promptly
and thoroughly investigated. In 2022, we have received,
investigated and reported 289 cases. To the best of our
knowledge, we had no cases of fraud, bribery or corruption
which would have a significant impact on our business.
Although we are occasionally confronted with less desirable
behaviour, we consider the Code of Ethics and Business
Conduct Policy, the Anti-Corruption and Anti-Bribery Policy
and the Whistleblower Policy to be eective. We aim to
address such less desirable behaviour eectively,
appropriately and securely, for instance by ensuring new or
revised policies and procedures are put into place to mitigate
such occurrences in the future.
Personal data protection
The Group has established policies regarding personal data
protection law in accordance with the applicable legislation
of the related countries where it operates. These policies
explain the principles of personal data management in line
with security and processing measures.
The Group closely follows the regulative requirements and
takes technical and administrative actions defined in the
legislations accordingly. Penetration tests, class trainings
ande-learning classes are conducted in order to increase
employee awareness on the personal data protection
lawrequirements.
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Risk management continued
The Group’s risk assessment
In 2022, no major failings in the risk management and control
systems were identified. The Group will continue to identify
and monitor principal and emerging risks and implement
mitigation actions to minimise or eliminate their
potentialimpact.
The Group categorises risks into four types:
1. Strategic risks
The Group is willing to take a certain level of risk by
assessing a risk/return approach when doing business.
2. Operational risks
The Group has a responsible approach to operational
riskmanagement. High quality products, customer
satisfaction and continuity to production are the
prioritised areas.
3. Financial risks
The Group continuously assesses its financial risks and
seeks to minimise the potential impact.
4. Compliance risks
Compliance with laws and regulations is essential for the
Group, which does not tolerate non-compliance with laws.
The risks represent a snapshot of the Group’s principal risks.
Risk appetite
Our risk appetite is defined by our Board, Audit Committee
and Executive Team members and is integrated into the
businesses through our strategy, policies, procedures,
controls and budgets. Our appetite for each risk is
determined by considering key opportunities and potential
threats to achieving our strategic objectives and can be
categorised as follows:
Strategic risks
These originate from trends, developments or events that
could prevent us from executing and realising our strategic
objectives.
Risk appetite: Medium
DP Eurasia has a diverse geographic footprint and business
structure. Because of this, it is critically important that we manage
risks in a proactive and responsible way to ensure we can deliver
on our strategy. We use fact-based analysis that derives insights
from our dierent markets and brands to support our strategic
decision-making process in a way that considers the financial,
economic, social and political developments that may impact
our ability to achieve our strategic objectives.
Operational risks
These include unforeseen incidents that could result from
failures in internal processes or systems, human error or
adverse external events and could negatively impact the
day-to-day operation of our business.
Risk appetite: Medium
We strive to minimise the possibility of business disruptions
and the related impact of operational failures.
We establish and manage a Governance, Risk, Management
and Compliance (“GRC”) framework with policies,
procedures and standards that regulate the achievement
ofour objectives. We constantly review and invest in our
structure and processes to ensure they are fit for purpose
and address any identified operational risk.
Financial risks
These include uncertainty of financial returns on investments,
reduction in liquidity, erosion of profits, potential financial
losses due to financing policies, and other external factors
such as the macroeconomic environment, unreliability of
suppliers, economic restrictions, and reduction of
customerbase.
Risk appetite: Medium
We are averse to any risks that could jeopardise the integrity
of our financial reporting.
Compliance risks
These relate to unanticipated failures to comply with
applicable laws and regulations as well as our own policies
and procedures.
Risk appetite: Medium
At DP Eurasia, our values are an essential part of our
strategic framework. “Integrity” is one of our key values.
Westrive for full compliance with laws and regulations and
with our policies and procedures everywhere we do
business. TheGRC framework incorporates risk assessment,
control activities and monitoring into our business practices
at entity-wide and functional levels. We have adopted a
“three lines of defence” model to provide reasonable
assurance that risks to achieving important objectives
areidentified and mitigated.
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Strategic risks
1
 Business dependency on Master Franchise Agreements (“MFAs”)
Potential impact
High
Group risk
• Expiration or termination of an MFA due to a breach of
theagreement or store franchise agreements may aect
the Group’s business operationally and financially.
Mitigation
• The Group has strong relations with Domino’s Pizza International.
• Since the Group’s ability to renew the MFAs is dependent upon the good standing
oftheGroup with respect to its contractual relationships with the Master Franchisors
(includingunder the store franchise agreements) and its ability to agree a revised
development plan in the relevant country, the KPIs (e.g. store openings, royalty
performance etc.) aremonitored very closely by management and the Board,
andrequired actions are taken inorder to mitigate the risks.
Likelihood
Low
Ownership
DPE CEO, DPT CEO,
DPR CEO
Change from 2021
2
Operations and growth strategy dependency on the success of the sub-franchisees
Potential impact
Medium
Group risk
• The Group is reliant on the performance of
sub-franchisees in successfully opening and operating
franchised stores and paying for supplies, royalties and
other fees to the Group on a timely basis.
• Franchise system risks are failure of sub-franchisees
tomake payments to the Group, sub-franchisee
independence that may result in conflicts with Group
standards or financial performance issues going
undetected, non-renewal of a store franchise agreement
with sub-franchisees, etc.
Mitigation
• The Group spends significant eorts on pricing strategies to increase profitability
ofthefranchised stores.
• The franchised stores’ financial and operating performance is continually monitored.
• The payment performance of the stores is monitored by management and remediation
actions are taken to boost the low-performing stores.
• Stores are regularly audited to prevent or detect any financial, operational or
compliancerisks.
• Domino’s Pizza International and the Group is conducting Food Safety Evaluation
Auditsin the stores to monitor compliance.
• The Group has increased the marketing, advertisement and consultancy support on
theexisting sub-franchisees to ensure strong business management, profit and loss
management and cash flow.
Likelihood
Low
Ownership
DPT Lead Team, DPR
Lead Team
Change from 2021
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Strategic risks
3
Growth strategy dependency on opening profitable new system stores
Potential impact
Medium
Group risk
• Failure to identify key geographical areas to open stores
may result in failure to meet future expectations.
• Market saturation may become significant in the future
and could adversely aect system store sales growth.
Mitigation
• The Group spends significant eorts on obtaining and training sub-franchisees and
personnel, creating customer awareness by advertising and marketing activities.
• The Group continuously monitors the pipeline of proposed store openings in terms
ofstrategic location and profitability.
• Franchisee development programmes are continuously improving to support the
franchised stores.
• The Group works on improving the premise assessment and rental process.
Likelihood
Low
Ownership
DPT Lead Team, DPR
Lead Team
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Strategic risks
4
 The Group’s dependency on infrastructure and internal systems to support the Group’s planned growth and strategy:
Digitalisation, disruptive technology and other innovation
Potential impact
High
Group risk
• Failure to enhance the Group’s existing internal systems
and controls, distribution and delivery networks and
information technology systems may adversely aect
theplanned expansion.
• Failure to locate, hire, train and retain management and
operating personnel may result in not responding in a
timely basis to the changing demands of the Group,
operating the existing business less eectively.
Mitigation
• The Group has launched the data lake project providing profound data analysis
forabetter understanding of customer behaviour and proactive approach.
• The Group is continuously developing its information technology (“IT”) architecture
tostrengthen the system’s capacity and ensure business continuity.
• The Group periodically monitors its IT restructuring needs in order to serve the rapidly
changing challenges of the digital world.
• The IT team continuously analyses the system security requirements, planning and
taking actions accordingly.
• The increase of the Group’s online presence in dierent channels, and better customer
experience on online ordering platforms, distinctly improves access to consumers and
penetration.
• The Group is strengthening and improving its online platform technology in order to
serve increasing consumer demands and follow technological and innovative changes.
• The desktop and mobile web platforms run at the Microsoft Azure Cloud environment which
provides security, scalability, availability and performance, and consequently serves growth.
• The DP Eurasia Internal Audit and Risk Management Directorate conducts business
process audits, performs risk assessments and evaluates design and eectiveness of
theprocess controls. They monitor the remediation actions in terms of preventive/
detective and manual/system controls and provide consultancy services to standardise
the processes in order to mitigate the risks. Additionally, IT General Control Audits are
periodically conducted to define the improvement areas and follow up management
action implementation to mitigate the risks.
• The Group moves the manual processes into the Workflow and Document Management
Platform which will enable business process standardisation, preventive and detective
control implementation to the business processes and significant risk mitigation.
Business processes to be implemented to this platform are subject to risk-based
prioritisation and best practice benchmarks.
• As part of the system security actions, ERP System Access Rights are reviewedperiodically.
Likelihood
Low
Ownership
DPE Marketing & IT
Directors
Change from 2021
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Strategic risks
5
Reliance on successful marketing initiatives
Potential impact
Medium
Group risk
• Failure to succeed in marketing initiatives may result innot
generating higher sales.
• The Group’s spending of significant time and resources in
product innovation, advertising campaigns and store
designs and refurbishments may not generate increased
sales or profits.
Mitigation
• The Group has an agile and responsive working model as a retailer.
• Closely monitoring its competitors and adopting best practice benchmarks enables
theGroup to implement new opportunities quickly and maximise the benefit from the
marketing and product innovation eorts.
• The Group continuously works on new product innovation projects and performs pilot
tests to enhance and expand the product portfolio, consequently serving sales increase.
• The Group enhances the pricing methodology to meet customer needs and expectations
with a layered and sound model including big data analysis.
• The Group works on restructuring and enhancing new product development and
product enhancement processes to ensure agility, instant responsiveness and a wide
variety.
• The Group is enhancing its product trial assessment processes to accelerate the success
criteria assessment and subsequent selection decisions.
• The Group provides sucient resources for the marketing and advertisement activities
and new product development to implement proactive actions as well as meet the
customer expectations.
Likelihood
Low
Ownership
DPE Marketing
Directors
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Strategic risks
6
Climate change
Potential impact
Medium
Group risk
• Climate change eects may cause business interruption
on the Group’s operations.
Mitigation
• The Group is working on updating its business continuity policies in order to be more
prepared for the potential climate change impacts:
• crisis management;
• disaster recovery plan; and
• business continuity management.
• A new ESG Committee was established to monitor climate change related risks and KPIs.
A roadmap is instituted to follow the TCFD requirements.
Likelihood
Medium
Ownership
ESG Committee
Change from 2021
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Strategic risks
7
The Domino’s Pizza brand and the Group’s reputation are critical to its business and success
Potential impact
Medium
Group risk
• The Group’s business could be negatively aected if
brand or reputation is harmed.
• Any negative incident that aects consumer loyalty tothe
brand could significantly reduce its value and damage the
Group’s business, such as:
• food safety concerns, including food tampering or
contamination;
• incidents of food-borne illness;
• the quality of ingredients and food products;
• employee or customer injury, including driver accidents
causing serious injury; and/or
• employment-related claims relating to alleged
employment discrimination, wage and hour violations,
labour standards or healthcare and benefit issues.
Mitigation
• The Group conducts random audits in stores and on the supplier sites, monitors the
results and takes the required actions.
• Stores are regularly audited to prevent or detect any financial, operational or compliance
risks (food safety audits, operational evaluation reviews, store audits, mystery shopper
audits, etc.).
• Domino’s Pizza International and the Group have started to conduct Food Safety
Evaluation Audits in stores to monitor compliance with standards.
• Commissaries are audited annually by Domino’s Pizza International in terms of quality,
food safety and occupational health and safety.
• In Russia, the Moscow commissary and stores are certified to HACCP (Hazard Analysis
and Critical Control Point). HACCP is an internationally recognised system for reducing
the risk of safety hazards in food.
• In Turkey, the four commissaries are certified to ISO 22000. ISO 22000 is a food safety
management system.
• The Group monitors health and safety compliance requirements in its corporate stores
and premises and takes preventive and detective actions accordingly.
Likelihood
Medium
Ownership
DPE Lead Team
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Strategic risks
8
Competition from other pizza chains and fast-food restaurant chains may adversely aect the Group’s business
Potential impact
Medium
Group risk
• Increased presence and competition from aggregators
(which provide a food ordering and delivery platform by
oering access to multiple delivery restaurants through
asingle online portal) supplying food ordering platforms
could lead to an increased level of competition for the
Group, as they improve access to delivery food options
forconsumers.
Mitigation
• The Group closely monitors its competitors and markets to prioritise significant
challenges and focuses on increasing the positive impact of its marketing, product
innovation, online channels and suitable store location eorts accordingly.
• The increase in the Group’s online presence in dierent channels and better customer
experience on online ordering platforms distinctly improve access to consumers and
penetration.
• The Group has launched a comprehensive price policy restructuring project to enhance
and implement pricing methodology depending on dierent factors.
• Regular price perception research is conducted to analyse consumer behaviour.
• Regular competitor price analyses are conducted and monitored closely to take
relatedactions.
Likelihood
Medium
Ownership
DPE Lead Team
Change from 2021
9
Changes in consumer preferences
Potential impact
Medium
Group risk
• The fast-food restaurant market is aected by consumer
preferences and perceptions, and changes in these
preferences and perceptions may reduce the demand
forthe Group’s products.
• Consumers’ expectations and health consciousness is
increasing, which may require the Group to adopt
changes to products.
• New generation consumers’ expectations are becoming
more challenging.
Mitigation
• The Group works consistently on enhancing and diversifying the products and
menuinorder to meet customer preferences.
• Qualitative and quantitative marketing tests are frequently used for analysis.
• The Group works on restructuring and enhancing the new product development
andproduct enhancement processes to ensure agility, instant responsiveness
andwidevariety.
• The Group is enhancing the product trial assessment process to speed upthesuccess
criteria assessment and replacement decisions.
• The Group is working on dierent projects to meet changing customer demands
suchasexpanding online payment options, contactless delivery, wallet, pizza tracker
and fasterdelivery opportunities etc.
Likelihood
Medium low
Ownership
DPE Marketing Directors
Change from 2021
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Strategic risks
10
The Domino’s Pizza brand and the Group’s reputation are critical to its business and success
Potential impact
Low
Group risk
• The Group’s successful implementation of its strategy is
dependent on its ability to recruit, retain and motivate
high quality senior management and other personnel with
extensive knowledge in the fast-food restaurant industry.
• The loss of the services of any of the Group’s senior
managers could have a material adverse eect on its
business plans, product development, growth strategy,
marketing and other plans.
Mitigation
• The Selection and Appointment Committee draws up a plan for the succession of
Directors and senior managers, makes proposals for appointments and reappointments
and supervises the policy of the Board regarding the selection criteria and appointment
procedures for Directors and senior managers to improve employee retention and
mitigate the risk of losing services of the Directors and/or senior managers during
theyear.
• People Review Committee is held monthly to discuss people practices of the Group
concentrating on vacant managerial roles, new manager onboarding, critical role
successors and promotions. Committee follows actions regularly.
• HR monitors the job market with consultancy companies to analyse market conditions
in remuneration, to follow talent movements and changes in senior roles in relevant
industries. HR uses this information in reviewing current conditions during the year.
• Every Head and Manager in the organisation has a specific target about people
management and succession planning in their individual scorecards.
• A new and structured model of Talent Management will be deployed in the organisation
in2023.
Likelihood
Medium low
Ownership
DPE HR Directors
Change from 2021
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Strategic risks
11
Macroeconomic and political developments
Potential impact
Medium
Group risk
• Macroeconomic and political developments in the world
and in Turkey, Russia and the other jurisdictions in which
the Group operates may negatively aect the Group’s
business, results of operations, financial condition, cash
flows and prospects.
• The Group’s operations are located in Turkey, Russia,
Azerbaijan and Georgia, which are generally categorised
as emerging markets. Emerging markets are generally
subject to greater risk of being perceived negatively by
investors based upon external events than more
developed markets, and financial turmoil in any emerging
market (or global markets generally) could disrupt the
business environment of the jurisdictions in which the
Group operates.
• Financial or political turmoil in one emerging market
country tends to adversely aect prices in credit, equity
and foreign exchange markets in other emerging market
countries, as investors move their money to more stable
and developed markets.
Mitigation
• Macroeconomic and political changes are closely monitored by the Group in order to
mitigate or eliminate the potential eects by implementing business continuity planning
and crisis management and incorporating those risks into the Group’s business
strategies.
• Regarding the geopolitical developments in Russia, the Group continues to evaluate its
presence in Russia, considering various options which may include a divestment of its
Russian operations. Whilst work on a potential transaction is ongoing, there can be no
certainty as to the outcome. In the meantime, as a mitigation, the Group continues to
limit investment in Russia and remains focused on optimising the existing store coverage.
Following the closure of 29 stores over the course of 2022, the number of Russian stores
stood at 159 as of 31December2022.
Likelihood
High
Ownership
DPE Lead Team
Change from 2021
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Operational risks
1
Reliance on third-party suppliers
Potential impact
Medium
Group risk
• Reliance on third-party suppliers and service providers
may result in shortages or interruptions in the supply of
raw materials, ingredients or complementary products.
• The Group’s and its sub-franchisees’ business is
dependent on frequent deliveries from third-party
suppliers of raw materials, ingredients and
complementary products that meet the Group’s
specifications. Suppliers may fail to provide necessary
products on a timely basis or to the agreed upon
standard, may discontinue or limit their products or may
seek to charge the Group higher prices.
• Shortages or interruptions from suppliers may be caused
by unanticipated demand, problems in production or
distribution, inclement weather or other conditions.
Mitigation
• The Group continuously seeks alternative suppliers for critical materials and services
toprevent any material shortages in case of a disruption in our principal suppliers’
operations.
• The Group also has emergency plans in place in the event of a disruption of operations
atour commissaries or suppliers.
• Supplier audits are periodically performed in order to monitor supplier performance
andcompliance.
• Supplier evaluation is performed periodically to monitor the supplier performance
asperthe risk criteria and take the required actions.
• The Group assesses suppliers’ business continuity plans to strengthen the
contingencyplans.
Likelihood
Low
Ownership
DPE Supply Chain
Directors
Change from 2021
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Financial risks
1
Increase in food cost and other supplies
Potential impact
Medium
Group risk
Increased costs of food and other supplies could decrease
theGroup’s operating margins or cause the Group to limit
orotherwise modify its product variety.
• The Group’s profitability depends in part on its ability
to manage changes in the price and availability of food
(including dairy, meat, poultry and flour) and other
commodities such as cardboard. Prices may be aected
by market movements, seasonality, increased
competition, the general risk of inflation, shortages or
interruptions in supply due to the weather, disease or
other conditions beyond the Group’s control.
• These events, combined with other more general
economic and demographic conditions, could impact
the Group’s pricing and negatively aect the Group’s
system sales, theGroup’s commissary sales and
operatingmargins.
Mitigation
The Group continuously looks for ways to partially oset inflation and other changes
inthecosts of core raw materials by:
• applying ecient purchasing practices;
• productivity improvements;
• greater economies of scale; and
• gradually increasing certain product prices.
Likelihood
High
Ownership
DPE Supply Chain
Directors and CFO
Change from 2021
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Financial risks
2
Exchange rate fluctuations and cash flow management
Potential impact
Low
Group risk
Exchange rate fluctuations could have an adverse eect
onthe Group.
• The Group’s financial condition and results of operations
have been, and will continue to be, aected by changes
inthe value of the Turkish Lira (the Group’s presentation
currency) against the Russian Rouble or Euro, and
between the Euro and the Russian Rouble, because a
portion of the Group’s revenue and costs is linked to
thesecurrencies.
• Cash flow risk and not meeting the debt covenant may
adversely aect the business.
Mitigation
• The Group mitigates this risk by agreeing fixed exchange rates with its suppliers,
wherever possible.
• The Group controls exposure to the exchange rate fluctuations by minimising the foreign
currency nominated borrowing.
• The Group’s bank loans consist of TRY and RUB currencies (related to the country’s local
currency) in order to eliminate hard currency risk.
The Group currently utilises internal cash flow and bank borrowings in Turkey and Russia
forits financing needs. The Group has debt covenants with respect to its bank borrowings
in Russia. The Group’s strong liquidity position enables it to prepay its bank borrowings in
Russia, despite the recent devaluation of TRY, if required, and still maintain a strong
liquidityposition.
Likelihood
Medium
Ownership
DPE CFO
Change from 2021
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Compliance risks
1
Risk of litigation from customers, sub-franchisees, employees and others in the ordinary course of business
Potential impact
Medium
Group risk
• Risk of litigation from customers, sub-franchisees,
employees and others in the ordinary course of business,
which diverts financial and management resources.
• Claims of illness or injury relating to food quality or food
handling are common in the food service industry.
Inaddition, class action lawsuits have been filed, and may
continue to be filed, against various fast-food restaurants
alleging, among other things, that fast-food restaurants
have engaged in deceptive advertising, sales and
promotions which encourage obesity.
• Further, the Group may be subject to employee,
sub-franchisee and other claims in the future based on,
among other things, discrimination, harassment, wrongful
termination, wages and overtime compensation as well as
rest break and meal break issues. Such claims and
disputes may divert management resources, create
adverse publicity and could lead to an adverse judgement
against the Group, which could adversely aect the
Group’s business, results of operations, financial
condition, cash flows and prospects.
Mitigation
• Stores are regularly audited to prevent or detect any financial, operational or compliance
risks (food safety audits, operational evaluation reviews, store audits, mystery shopper
audits, etc.).
• Employees are regularly trained on the Group Code of Conduct, corporate governance
policies, changing laws and regulations as needed to increase awareness.
• The legal and regulative requirements based on changing laws and regulations are
reflected in the contracts via additional protocols to prevent any disputes.
• The supplier Code of Conduct is shared with all suppliers as part of the contract to
ensure compliance and increase awareness.
• The Group has an independent hotline enabling internal and external parties to report
Code of Conduct conflicts such as potential monetary frauds, quality concerns, wrongful
termination, wages issues, etc. The cases are investigated by the Internal Audit and Risk
Management Directorate and preventive/detective actions are taken in order to enhance
business processes and prevent repetition of these cases.
• Both Turkey and Russia have in-house lawyers on top of an external law firm to work
closely with business units and mitigate litigation cases.
Likelihood
Low
Ownership
DPE HR Directors and
Operations Directors
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Compliance risks
2
Violation of data protection laws
Potential impact
High
Group risk
Violations of data protection laws carry fines and expose the
Group and its employees to criminal sanctions and civil suits.
• Non-compliance with data protection laws could expose
the Group to regulatory investigations, which could result
in fines and penalties.
• Regulators may issue orders to stop processing personal
data in addition to imposing fines, which could disrupt
operations.
• The Group could be subject to litigation from persons or
corporations allegedly aected by data protection
violations.
• Any violation of these laws could harm the Group’s
reputation, which could have a material adverse eect on
the Group’s earnings, cash flows and financial condition.
Mitigation
• The Group periodically reviews data protection law compliance with internal and external
support and takes required actions as needed.
• Personal data protection law compliance audits are conducted periodically.
• System security requirements regarding data protection laws are continuously assessed
by the IT team to take the required measures.
Likelihood
Medium
Ownership
DPE IT Director
Change from 2021
3
Violation of changing regulations
Potential impact
Medium
Group risk
• Regulatory changes (e.g. personal data protection law,
quality regulations, product regulations etc.) are aecting
the business processes and non-compliance may result in
penalties and reputation risk.
Mitigation
• The Group is closely monitoring the changes in regulatory requirements and taking
necessary measures in order to ensure compliance.
• Online or class training is conducted for our employees to increase awareness and
ensure compliance related to new regulations or laws.
• Consultancy services are received from third parties with expertise related to regulatory
or legal changes.
Likelihood
Low
Ownership
DPE CFO
Change from 2021
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Risk management continued
Compliance risks
4
Risk of litigation from customers, sub-franchisees, employees and others in the ordinary course of business
Potential impact
High
Group risk
• The Group is heavily reliant, as part of its online strategy,
oninformation systems, including for online ordering
platforms, point of sale processing in its system stores,
management of its supply chain, accounting, payment
ofobligations, collection of cash, processing of credit
anddebit card transactions and other processes and
procedures.
• Breaches of the Group’s cybersecurity measures could
result in unauthorised access to the Group’s systems,
misappropriation of information or data, including
personal information, deletion or modification of user
information, ora denial-of-service or other interruption
to the Group’s business operations.
• As techniques used to obtain unauthorised access to,
or sabotage, systems change frequently and may not be
known until launched against the Group or the Group’s
third-party service providers, the Group may be unable
to anticipate, or implement adequate measures to protect
against these attacks.
Mitigation
• The Group is continuously developing the information technology (“IT”) architecture
tostrengthen the system capacity and ensure business continuity.
• The IT team continuously analyses the system security requirements, plans and takes
action accordingly.
• A data leak prevention system is used for prevention and detection of data leaks
inenterprise business applications.
• A data classification is in place, to create the data inventory and ensure stronger
datamanagement and protection with preventive and detective actions.
• IT General Control Audits are periodically conducted to define the improvement
areasand follow up management action implementation to mitigate the risks.
• As part of the system security actions, ERP System Access Rights are reviewed
periodically.
• The Group has significantly increased system security investment to provide a safer IT
environment for employees and customers. Moreover, the IT security team has expanded
to meet the rapidly changing needs of technology.
• The security projects are monitored closely by management to ensure eective
implementation and to prevent or mitigate potential risks.
• DP Eurasia is committed to the highest standards of accountability and transparency,
and the Group proactively works to ensure the safety and security of its customers
andnetworks in an evolving landscape of online threats. Its investment in cyber security
related issues allows the IT security team to continue to take significant steps to enhance
the security where payment card and bank data are not kept in DP Eurasia’s database,
which means in case of such a cyber attack there is no risk for payment card and bank
data to be stolen.
Likelihood
Medium
Ownership
DPE IT Director
Change from 2021
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Group structure
The Group’s organisation and nature of activities
DP Eurasia N.V. is a limited liability company (naamloze
vennootschap) incorporated under the laws of the
Netherlands on 18 October 2016. The principal activity of
DP Eurasia consists of acting as a holding company.
DP Eurasia operates corporate stores and franchise stores in
Turkey and Russia, including provision of technical support,
control and consultancy services to the franchisees.
As of 31 December 2022, the Group operated 830 stores
(655 in Turkey, 159 in Russia, ten in Azerbaijan and six in
Georgia) through its owned corporate stores (18%) and
franchised stores (82%). In addition to its pizza delivery
business, the Group also has its own coee brand, COFFY,
which trades from 29 stores at period-end, 19 of which are
franchised.
Subsidiaries
DP Eurasia has a total of four fully owned subsidiaries.
Theentities included in the scope of the consolidated
financial information and nature of their business are
asfollows:
DP Eurasia is committed
to conducting all of its
business and relationships
with dedication,
professionalism and
integrity. The business
ethics of the Group are
based on compliance with
criteria which promote
the values, culture and
management model of
DP Eurasia, encouraging
respect for individuals and
their rights.
Structure
Group and subsidiaries
DP Eurasia N.V
Pizza Restaurants LLC
Pizza Restaurantları A.Ş.
Fidesrus B.V.
Fides Food Systems B.V.
Subsidiaries
2022 eective
ownership (%)
2021 eective
ownership (%)
Registered
country
Nature of
business
Pizza Restaurantları A.Ş.
(“Domino’s Turkey”)
100 100 Turkey Food delivery
Pizza Restaurants LLC
(“Domino’sRussia”)
100 100 Russia Food delivery
Fidesrus B.V. (“Fidesrus”) 100 100 The Netherlands Investment
company
Fides Food Systems B.V.
(“FidesFood”)
100 100 The Netherlands Investment
company
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Heading continued
Corporate
governance
What’s in this section?
Board 79
Leadership team 81
Board attendance and composition 82
Corporate governance report 83
Remuneration report 95
Directors’ remuneration policy 99
Annual remuneration report 110
Board declaration 121
Shares and shareholders 122
78
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Board
Year of birth: 1952
Nationality: Indian
Initial appointment: April 2021
Year of birth: 1982
Nationality: Dutch
Initial appointment: July 2017
Shyam S. Bhartia
Non‑Executive Director
SAC
Frederieke Slot
Company Secretary
andExecutive Director
Aslan Saranga
Chief Executive O cer
andExecutive Director
Year of birth: 1969
Nationality: Turkish
Initial appointment: June 2017
Year of birth: 1953
Nationality: British
Initial appointment: July 2017
Peter Williams
Chairman and Independent
Non‑Executive Director
AC RC SAC
Key:

AC

Audit Committee|

RC

Remuneration Committee|

SAC
 Selection and Appointment Committee
Mr Williams has spent over 30 years in both
executive and non‑executive positions in
consumer‑facing businesses comprising retail,
leisure, media and consumer products.
MrWilliams also serves as Chairman of Mister
Spex (a multi‑channel eyewear retailer based
in Berlin). During the 13 years up to 2004,
heserved as chief fi nancial o cer and then
aschief executive of Selfridges. Alongside
this experience, Mr Williams has also served
on the boards of ASOS plc, boohoo Group
plc, Rightmove plc, Cineworld Group plc,
Blacks Leisure Group plc, JJB Sports plc,
Uand I Group plc and Superdry plc. He is also
a chartered accountant and has a bachelor’s
degree in Mathematics from Bristol University.
Mr Saranga is the Chief Executive O cer,
having been appointed as the founding chief
executive o cer of the exclusive master
franchisee of the Domino’s System in Turkey
on its inception in 1996. Alongside this
position, Mr Saranga is also the Chairman of
the Board of Directors at Domino’s Russia.
Hecurrently sits as a board member of the
Food Retailers Association, a leading industry
group in Turkey, and is a member of Domino’s
Pizza General Management Council, which is
comprised of the CEOs of the top ten
countries in the global Domino’s Pizza
network. Mr Saranga has a master’s degree
inFinance from the University of Istanbul.
Ms Slot served as senior legal counsel of USG
People between 2014 and 2017 (a large HR
service provider that was listed on the
Amsterdam Stock Exchange until June 2016).
She spent the early part of her career as an
attorney‑at‑law with various large Dutch law
fi rms, advising on restructuring, mergers and
acquisitions, and advising national and
international companies on a wide range of
strategic legal issues, corporate governance
matters and legal and regulatory
responsibilities. Ms Slot has a degree in Law
from the University of Leiden.
Mr Shyam S Bhartia is founder and chairman
of Jubilant Bhartia Group, headquartered in
New Delhi, India. With strong global presence
in diverse sectors, the Group has four
companies listed on the Indian Stock
Exchanges. Mr Bhartia is chairman of Jubilant
Pharmova, Jubilant Ingrevia and Jubilant
FoodWorks Limited (a food service company
and master franchisee of Domino’s Pizza in
India, Sri Lanka, Bangladesh and Nepal).
Heisalso Chairman and managing director of
Jubilant Pharma, Singapore. Mr Bhartia holds
a bachelors’ degree in Commerce from
StXavier’s College and Calcutta University,
and is a qualifi ed cost and works accountant.
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Mr Hari S Bhartia is founder and co‑chairman
ofJubilant Bhartia Group, headquartered in
NewDelhi, India. With a strong global
presence in diverse sectors, the Group has
four companies listed on Indian Stock
Exchanges. Mr Bhartia is co‑chairman and
managing director of Jubilant Pharmova and
co‑chairman of Jubilant Ingrevia and Jubilant
FoodWorks Limited (a food service company
and master franchisee of Domino’s Pizza in
India, SriLanka, Bangladesh and Nepal).
Heisa Chemical Engineering graduate from
the Indian Institute of Technology (“IIT”),
Delhi and former President of the
Confederation ofIndian Industry (“CII”).
Heisalso a member of several educational,
scientifi c and technological programmes of
the Government of India.
Mr Adams also serves as Chairman of EV
Limited (a UK based soft fruit producer),
andsits on the Board of two UK charities.
Inthe last six years,
Mr Adams has served on the boards of
PizzaExpress UK, Thinksmart plc, Halfords
plc, Debenhams plc, Conviviality plc,
FeverTree Drinks plc, Hornby plc and
ElegantHotels plc. He holds an MA from
Edinburgh University and a Diploma in
Business Administration from the Scottish
Business School.
Mr Ertas is currently the Chief Executive O cer
at
sahibinden.com, (an online classifi eds and
marketplace platform in Turkey). Prior to
Sahibinden, Mr Ertas worked in executive
leadership roles in marketing, product
management and development and software
engineering at Turkcell, Telenity and Telsoft.
MrErtas has more than 30 years of experience
in the information and communications
technology (“ICT”)
sector.
He is also the vice‑chairman at Interactive
Advertising Association (“TR”) and a member
of the board at Turkish Informatics Industry
Association.
Mr Ertaş holds an Executive MBA from Koç
University in Istanbul and a BSc Electrical &
Electronics Engineering from the Middle East
Technical University in Ankara.
Mr Ashaboğlu is currently a board director
atMavi, Yapi Kredi Bank, Hepsiburada
(“NASDAQ”), Koc Financial Services, Koc
Finansman, and Sirena Marine. He began his
career as a Research Assistant at MIT in 1994
and held various positions in capital markets
within UBS Warburg, New York. After serving
as a management consultant at McKinsey &
Company, New York, Mr Ashaboğlu moved
back to Turkey and joined Koc Holding as
Finance Group Coordinator in 2003. He was
appointed Group CFO in 2006, serving until
April 2022.
Mr Ashaboğlu holds a BSc from Tufts
University and a Master of Science from
Massachusetts Institute of Technology,
bothin Mechanical Engineering.
Year of birth: 1969
Nationality: Turkish
Initial appointment: June 2022
Year of birth: 1971
Nationality: Turkish
Initial appointment: September 2022
Year of birth: 1954
Nationality: British
Initial appointment: April 2021
Year of birth: 1956
Nationality: Indian
Initial appointment: April 2021
Burak Ertaş
Independent Non‑Executive Director
RC
Ahmet Ashaboğlu
Independent
Non‑Executive Director
AC
David Adams
Senior Independent
Non‑Executive Director
AC RC SAC
Hari S. Bhartia
Non‑Executive Director
SAC
Board continued
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Leadership team
Ms Alpagut became Chief Financial O cer
in2017. She joined the Group in 2006 as
theChiefFinancial O cer of the Turkish
Operations. MsAlpagut has a degree
inBusiness Administration from
İstanbulUniversity.
Mr Ciritci became Chief Executive O cer
ofthe Turkish Operations in 2022. Since 2010
hehas been Business Development, Franchise
Operations and International Development
Director and Chief Growth O cer of the
Turkish Operations. Mr Ciritci has a degree
inTourism Administration from
BoğaziçiUniversity.
Mr Rubinowski was appointed as the CEO of
Russian Operations in 2021. Prior to this,
hewas Marketing Director of KFC for Russia &
CIS for over four years at Yum!. Mr Rubinowski
has a degree in Economics from the Poznan
University of Economics.
Ms Togay became Chief Marketing & Digital
Business O cer of Turkey and Russia
Operations from January 2022. She was
previously the Marketing Director of the
Turkish Operations since 2019. Ms Togay
hasadegree in International Relations
fromGalatasaray University.
See biography on page 79.
Pınar Togay
Chief Marketing & Digital Business O cer
Daniel Rubinowski
Chief Executive O cer of Russian Operations
Kerem Ciritci
Chief Executive O cer of Turkish Operations
Neval Korucu Alpagut
Chief Financial O cer
Aslan Saranga
Chief Executive O cer
and Executive Director
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Board attendance and composition
During the year, Directors
attended seven Board meetings,
with some Directors attending
meetings of committees
established by the Board to
conclude certain matters.
Board diversity
Women
Men
Board
12.5%
|
87.5%
Executive
Directors
50% | 50%
Senior
management
50% | 50%
Non-Executive
Directors
0% | 100%
Directors’ skills and experience
Skills/experience Number of Directors
Retail
Remuneration/people
Finance
Marketing/brand
Product specific
Listed entity experience
Legal, governance and compliance
IT/digital
International markets
Attendance of Board meetings
Attendance at Attendance at
meetings of the meetings of the
Duration of Attendance at Audit and Selection and
Date of possible unexpired term planned Board Attendance Remuneration Appointment
reappointment of appointment meetings/calls site visits Committees Committee
Peter Williams 2022 2 months 7 1/1 9 2
Aslan Saranga 2022 2 months 7 1/1 n/a n/a
Frederieke Slot 2022 2 months 7 1/1 n/a n/a
Shyam Bhartia 2022 2 months 5 1/1 n/a n/a
Hari Bhartia 2022 2 months 6 1/1 n/a n/a
Pratik Pota
1
2022 2 months 4 1/1 n/a n/a
David Adams 2022 2 months 7 1/1 9 2
Burak Ertas
2
n/a n/a 2 n/a 1 n/a
Ahmet Ashaboğlu
3
n/a n/a 0 n/a n/a n/a
(1) Pratik Pota ceased to be a Board member on 8 June 2022.
(2) Burak Ertas joined the Board on 8 June 2022.
(3) Ahmet Ashaboğlu joined the Board on 20 September 2022.
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Corporate governance report
Corporate governance
DP Eurasia is a limited liability company incorporated
under the laws of the Netherlands. DP Eurasia has a
premium listing of ordinary shares on the London Stock
Exchange. TheCompany has a one‑tier Board structure.
The following sections explain how the Company applies
themain provisions set out in the UK Corporate
Governance Code and the Dutch Corporate Governance
Code, and how they have been prepared in line with the
UK Listing Authority Listing Rules (the “Listing Rules”).
This part of the Annual Report covers:
The structure and role of the Board and
itscommittees Page 85
Relations with the Company’s shareholders
and the General Meeting
Pages
124‑125
The reports of the Audit Committee,
the Remuneration Committee and
the Selection and Appointment Committee
Pages
87‑89
Information that needs to be included pursuant
to the Listing Rules, if not included
in the consolidated financial statements,
theremuneration report (payment for loss
of oce) and the shares and shareholders
paragraph (Relationship Agreement and
the controlling shareholder).
Page 107
and 124
The Board is committed to
maintaining a governance
framework that is appropriate
to the business, supports
eective decision‑making and
promotes decisions focused
on the long‑term success of
the Group.
Corporate governance
statement
The information required to be included in this corporate
governance statement, as described in articles 3, 3a and 3b
of the Dutch Decree on the contents of Directors’ report
(the“Decree”), is incorporated and published inthe
corporate governance section of the Company’swebsite.
  How did the Board
engage with
stakeholders in
2022?
The Chairman, Chief Executive Ocer and Senior
Independent Director have regular contact with
the Company’s major shareholders. Their views are
taken into account when the Board makes
decisions. The Company also recognises that the
business has a role in contributing to wider society.
The Board encourages the support provided to
hospitals during the COVID‑19 pandemic and the
aid provided to victims in the Turkey‑Syria
earthquake.
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  How did the Board
spend their time
in2022?
The meetings addressed routine commercial,
operational and financial matters and focused on
key resource levels and strategic implementation.
As well as day‑to‑day matters, the Non‑Executive
Directors paid particular attention to the activities
regarding investors. Furthermore, the Board was
regularly updated on the situation in Russia.
The Board
This section of the corporate governance report explains
how the Board has fulfilled its duties and obligations during
the year 2022.
Role and responsibilities
The Board is a one‑tier board, and the Directors have
jointpowers and responsibilities. The Directors share
responsibility for all decisions, resolutions and acts of the
Board and for the acts of each Director. Each Director
hasaduty towards the Company to properly perform the
responsibilities assigned to him or her. In performing their
duties, each Director is guided by the interests of the
Company and its business enterprise, taking into
consideration the interests of stakeholders (which include,
but are not limited to, consumers, franchisees, employees,
creditors and shareholders).
The composition of the Board in 2022 was in line with its
profile, as published on the Company’s corporate website,
interms of experience, expertise, nationality and age.
Regarding gender diversity, as at 31 December 2022,
theBoard has no female Non‑Executive Directors.
Addressing gender diversity will be a priority when the
Board considers to appoint another Non‑Executive Director.
At any time, the Board, as a whole, is entitled to represent
and act on behalf of the Company. Additionally, the Chief
Executive Ocer and another Executive Director acting
jointly are authorised to represent and act on behalf of the
Company. The majority of the Directors are Non‑Executive
Directors who essentially have a supervisory role.
The names and biographical details of the serving Directors,
their role on the Board, their dates of appointment and their
other major appointments can be found on pages 79 and 80.
The Board is responsible for the management, general
aairs, strategy and operations of the Company. The Board
may perform all acts necessary or useful for achieving the
Company’s corporate objectives, except for actions and
resolutions expressly attributed to the General Meeting as
amatter of Dutch law or pursuant to the Company’s articles
ofassociation.
Our culture
Ambition Integrity Cohesion Team spirit
The Group is committed
toimproving its brand to
overcome new challenges
whilst demonstrating an
eagerness to adapt
andgrow.
The Group is dedicated
tochoosing the path
which strengthens its
principles of truth, loyalty,
and justice in the daily
conduct of all workers.
The Group aims to
achieve the ambitious
goals it sets through the
contribution of all
business units.
TheGroup’s experience
facilitates the bringing
together of necessary
resources to overcome
new challenges.
The Group operates
globally in culturally
diverse contexts and
encourages, a respect
fordierences, a sense
ofbelonging, loyalty
andreciprocity, amongst
allworkers.
Corporate governance report con tinued
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Corporate governance report con tinued
Board committees and roles
Shareholders
96 shareholders as at 31 December 2022
Board
Remuneration CommitteeAudit Committee
The Selection and Appointment Committee assists and
advises the Board and prepares the Board’s decision‑making.
The Selection and Appointment Committee, among other
things, focuses on: (a) drawing up selection criteria and
appointment procedures for Directors; (b) periodically
assessing the size and composition of the Board, and
making a proposal for a composition profile of the Board;
(c) periodically assessing the functioning of individual
Directors, and reporting this to the Board; (d) drawing up a
plan for the succession of Directors; (e) making proposals for
appointments and reappointments; and (f) supervising the
policy of the Board regarding the selection criteria and
appointment procedures for senior management.
The Audit Committee assists and advises the Board and
prepares the decision‑making of the Board on the
supervision of the integrity and quality of the Company’s
audit, accounting and financial reporting processes and
theeectiveness of the Company’s internal risk
managementand control systems. Among other things,
itfocuses on monitoring the Board with regard to:
(a) relations with, andcompliance with, recommendations
andfollowing up ofcomments by the internal and external
auditors; (b) the funding of the Company; and (c) the
application of information and communication technology
by the Company, including risks relating to cybersecurity.
The Remuneration Committee assists and advises the
Boardand prepares the Board’s decision‑making regarding
the determination of remuneration of the Executive
Directors, the proposed target for the LTIP, and the review
and monitoring of overall remuneration packages for
seniormanagement.
Selection and Appointment Committee
See Remuneration Committee report on pages 88 and 89.See Audit Committee report on pages 87 and 88.See Selection and Appointment Committee report on page89.
Executive team
Chief Executive Ocer
CEO of the Russian
Operations
Chief Financial
Ocer
Company
Secretary
HeadofIR
CEO of the Turkish
Operations
CFO
Russia
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Appointment, dismissal and suspension
Pursuant to the Company’s articles of association, the
Boardmust consist of at least one Executive Director and
one Non‑Executive Director. The Board determines the total
number of Directors. The General Meeting appoints,
suspends and dismisses each Director. As long as there is
acontrolling shareholder (for the purposes of the Listing
Rules), the Board rules allow for the election or re‑election
ofany independent Director to be approved by separate
resolutions of: (i) the Company’s shareholders; and (ii)
theCompany’s shareholders excluding any controlling
shareholder. If either of the resolutions is defeated, the
Company may propose a further resolution to elect or
re‑elect the proposed independent Director, which (a)
maybe voted on within a period commencing 90 days
andending 120 days from the original vote, and (b) may
bepassed by a vote of the shareholders of the Company
voting as a single class.
Each Executive Director may at any time be suspended by
the Board.
The General Meeting determines the term of appointment
foreach Director. A Director’s appointment may be
renewedat General Meetings, with due observance to
therules and regulations as applicable to the Company.
Ultimately, the Directors’ main responsibility is to promote
the long‑term success of the Company, acting in
shareholders’ best interests. All of our Directors submit
themselves for re‑election at each AGM and we provide
shareholders with sucient information in the meeting
papers for them to decide whether their commitment and
performance warrant a further year in oce. At the 2022
AGM, each serving Director was re‑elected.
A resolution of the General Meeting to appoint, suspend
ordismiss a Director requires an absolute majority of the
votes cast. The General Meeting can suspend or dismiss
aDirector at any time.
Jubilant will be able to nominate up to three Non‑Executive
Directors to the Board for appointment, for as long as it and
its associates are entitled to exercise or to control the
exercise of 10% or more of the votes cast on all, or
substantially all, General Meetings. More information
relatingto the nomination rights of Jubilant can be found
onpage 86.
Executive Directors
The Board has delegated the operational running of the
Group to the Executive Directors with the exception of
thefollowing matters which are reserved for the full Board:
structural and constitutional matters; corporate governance
matters; dividend proposals; developing and approval of the
overall strategy and decisions on managing the corporate
portfolio; approval of the business plan and budget;
oversight of the operational and financial performance of
thebusiness; review and approval of any publication by the
Company of any information required by applicable laws
andregulations; approval of significant transactions or
arrangements in relation to mergers, acquisitions, joint
ventures and disposals; approval of changes made to
franchise agreements or other significant agreements;
settlement of material litigation issues, significant financial
injections and capital expenditures; and approval of material
changes to pension liabilities.
Non-Executive Directors
The Non‑Executive Directors share full responsibility for
the execution of the Board’s duties. Within this broad
responsibility, the Non‑Executive Directors are essentially
supervising and advising the Board and management
regarding the strategy, the implementation of the strategy
and the principal risks associated with it, and focus on the
eectiveness of the Company’s internal risk management
and control systems and the integrity and quality of the
financial reporting.
Further, the Non‑Executive Directors scrutinise the
performance of management in meeting the agreed goals
and objectives and supervise the relations with shareholders.
The Board acknowledges that it is important that the
Non‑Executive Directors develop an understanding of the
views of major minority shareholders about the Company.
Inrelation herewith, the Non‑Executive Directors are
regularly provided with analysts’ updates and briefings and
are invited to join meetings with major minority shareholders.
Incarrying out their duties, the Non‑Executive Directors are
guided by the Dutch Civil Code, the Dutch Corporate
Governance Code, the UK Corporate Governance Code,
theCompany’s articles of association, and the overall
interests of the Group, its business and stakeholders.
Each Non‑Executive Director has committed to the Company
that they are able to allocate sucient time to the Company
to discharge their responsibilities eectively. At the 2023
AGM, it is proposed that the current Executive Directors
and Non‑Executive Directors will be reappointed. Mr Peter
Williams will retire from the Board at the end of the 2023
AGM. He will be succeeded by Mr Ahmet Ashaboğlu who
was appointed as an Independent Non‑Executive Director
inSeptember 2022.
As discussed in the 2021 Annual Report and Accounts,
theBoard recognised that it would require additional
independent Non‑Executive Directors to comply with the
applicable corporate governance best practice principles.
Following the2022 AGM and the EGM in September 2022,
two new independent Non‑Executive Directors were
appointed. Taking into account that Mr Williams will
notbeup for re‑election, the Selection and Appointment
Committee hasstarted the search for another independent
Non‑ExecutiveDirector.
Corporate governance report con tinued
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The Board has taken into account the other demands of
therelevant Directors and has no concerns on their time
commitment using the prior year as a reference point.
Anyadditional appointments Directors are contemplating
taking on are discussed with the Chairman in advance,
including the likely time commitment and whether these
could in any way constitute a conflict of interest.
Committees
The Company has established three committees: an
AuditCommittee, a Remuneration Committee and a
Selection and Appointment Committee. These committees
each have written terms of reference, and are currently
composed as described below. The members of each of
these three committees are appointed from among the
Non‑Executive Directors. From time to time, separate
committees may be established by the Board to consider
specific issues when the need arises. The committees
operate pursuant to the terms of reference approved by
theBoard in accordance with the law, the Dutch Corporate
Governance Code and the UK Corporate Governance Code.
The terms of reference are reviewed by each committee
during the year. The committees’ terms of reference are
available on the Company’s corporate governance website,
including attendance at meetings in 2022, which can be
found on page 82.
The Audit Committee met four times in 2022. In general,
allmeetings of the Audit Committee are attended by the
CEO, the CFO, the Internal Audit and Risk Management
Director and the external auditor. The Company Secretary
attends meetings in her capacity as Secretary of the
AuditCommittee.
At the end of each meeting, it was chosen to discuss matters
without management being present and there is regular
dialogue with the audit partner. The Investor Relations
Director joined the meetings during which the press releases
regarding annual and half‑year results werediscussed.
Other members of the Board and senior management were
invited when necessary or appropriate. The Audit Committee
is chaired by Mr Adams and its other members are
MrWilliams and Mr Ashaboğlu, who joined the Audit
Committee after his appointment in September 2022.
The UK Corporate Governance Code recommends that the
Audit Committee has a minimum of two members,
takinginto account that the Company is seen as a smaller
company, and that all members of the Audit Committee be
Non‑Executive Directors, independent in character and
judgement, and free from any relationship or circumstance
which may, could or would be likely to, or appear to, aect
their judgement.
The Dutch Corporate Governance Code requires that all
members of the Audit Committee be Non‑Executive
Directors and that more than half of the members should
beindependent. The Board considers that the Company
complies with the independence requirements of the UK
Corporate Governance Code and the Dutch Corporate
Governance Code as to the composition of the Audit
Committee, because it comprises two independent
Non‑Executive Directors. The UK Corporate Governance
Code also recommends that the Chairman of the Board
should not be a member of the Audit Committee.
TheCompany cannot comply with this principle.
Moreinformation on the accountability regarding this
bestpractice provision of the UK Corporate Governance
Code can be found on page 92.
The Audit Committee’s focus in 2022 was, among other
things, on overseeing the integrity and quality of the Group’s
financial reporting, the eectiveness of the internal risk and
control systems, the relevant 2022 tax matters, debt
covenant compliance and the impact and consequences
ofthe introduction of IAS 29, ‘Financial Reporting in
Hyperinflationary Economies’ in Turkey. The Audit
Committee reviewed the Company’s annual and interim
financial statements and related press releases, as well as
the outcomes of the year‑end audit.
The Audit Committee discussed relevant accounting
principles and the recoverability of deferred tax assets
(“DTA”) from carry forward tax losses of DP Russia. Another
item that was discussed in more depth was the overall cyber
security of the Group, including the 2022 cyber security
projects, disaster recovery cycles, the 2022 IT budget and
the cyber insurance agreement.
Audit Committee
Meetings in 2022: 4
Members: David Adams (Chair), Peter Williams,
and AhmetAshaboğlu (member since
September2022)
  How many times
did the Board meet
in 2022?
During the year, Directors attended seven Board
meetings and calls, with some Directors attending
meetings of committees established by the Board
to conclude certain matters. Attendance at all of
these meetings is shown on page 82.
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Furthermore, the Audit Committee reviewed and approved
the audit plans of the internal and external auditors, with a
focus on scoping, materiality and key risks. The Audit
Committee monitored the progress of the internal and
external audit activities, including a review of observations
identified as a result of the internal audit activities during
thequarter, quarterly procedures performed by the external
auditor, and the audit performance at year end by the
external auditor. The Audit Committee oversaw a follow‑up
by management on the recommendations made by the
internal and external audit reports.
The Audit Committee extensively discussed the eectiveness
of the internal control framework. Each quarter, the agenda
includes a discussion on current control topics, including
internal audit findings and the external auditor’s reflections
on the control framework. These discussions guided
management and internal audit to focus on the right
priorities throughout the year and to build a relevant internal
audit plan for 2022.
The Audit Committee provided advice to the Board on
whether the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
financial position and performance, business model and
strategy. Each Director was also asked to provide this
confirmation. When doing so, both the Audit Committee and
the individual Directors were provided by management with
a formal assessment of the key messages included in the
Annual Report and Accounts. This assessment was designed
to test the quality of reporting and to enable the Directors to
satisfy themselves that the levels of disclosure
wereappropriate.
The Audit Committee has reviewed the independence,
eectiveness and objectivity of the external auditor, PwC,
and considers that PwC possesses the skill and experience
required to fulfil its duties eectively and eciently.
TheAudit Committee’s review of the eectiveness of PwC
asthe external auditor is based on the interaction of the
Audit Committee with PwC, discussions with the senior
finance team, discussions with the lead audit partner and his
team, robustness of the audit and the quality of reporting to
the Audit Committee.
PwC has monitored its compliance with external standards,
the PwC Global Independence Policy and DP Eurasia’s
independence policy, with respect to services provided in
2022, and confirmed that it has been, and is, compliant with
these independence requirements. With respect to the
external auditor’s Board report on the 2022 financial year,
the Audit Committee confirms that the Board report
contained no significant items that need to be mentioned
inthis report.
DP Eurasia N.V. was incorporated on 18 October 2016 and
listed its shares on the London Stock Exchange as of
3July2017.
As a consequence, PricewaterhouseCoopers Accountants
N.V. was appointed as the statutory auditor of the listed
entity. Prior to the listing, PwC Turkey was already the
statutory auditor of the consolidated financial information
ofall the operating entities since 31 December 2014.
Theshareholders reappointed PwC during the AGM on
8June2022.
The Audit Committee agrees the fees for the external
auditorand has agreed strict rules regarding the provision
ofnon‑audit services by the external auditor. These include
specific pre‑approvals for proposed non‑audit work.
The Remuneration Committee is chaired by Mr Adams and
its other member is Mr Williams. Mr Ertas joined the
Remuneration Committee after his appointment in June
2022. Members of the Remuneration Committee are
appointed bythe Board. The UK Corporate Governance
Code recommends that all members of the Remuneration
Committee be Non‑Executive Directors, independent in
character and judgement, and free from any relationship
orcircumstance which may, could or would be likely to,
orappear to, aect their judgement. The Dutch Corporate
Governance Code requires that all members of the
Remuneration Committee be Non‑Executive Directors
andthat more than half of the members be independent.
TheBoard considers that the Company complies with the
requirements of the UK Corporate Governance Code and
theDutch Corporate Governance Code as to the
composition of the Remuneration Committee because
theRemuneration Committee comprises two independent
Non‑Executive Directors. In 2022, the Remuneration
Committee met four times.
Remuneration Committee
Meetings in 2022: 4
Members: David Adams (Chair), Peter Williams,
and Burak Ertas (member since June 2022)
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The Selection and Appointment Committee is chaired
byMrWilliams and its other members are Mr Adams and
MrH.Bhartia. Members of the Selection and Appointment
Committee are appointed by the Board. The UK Corporate
Governance Code recommends that a majority of the
Selection and Appointment Committee be Non‑Executive
Directors, independent in character and judgement, and free
from any relationship or circumstance which may, could or
would be likely to, or appear to, aect their judgement, and
the Dutch Corporate Governance Code requires that all
members of the Selection and Appointment Committee be
Non‑Executive Directors and that more than half of the
members be independent.
The Board considers that the Company complies with the
requirements of the UK Corporate Governance Code and
therequirements of the Dutch Corporate Governance Code
as to its composition of the Selection and Appointment
Committee because the Selection and Appointment
Committee comprises of two independent Non‑Executive
Directors and one non‑independent Non‑Executive Director.
The Selection and Appointment Committee met two times
in2022. The meetings of the Selection and Appointment
Committee were attended by the Chief Executive Ocer
andthe Company Secretary in her capacity as Secretary
ofthe Selection and Appointment Committee.
The Selection and Appointment Committee discussed
thepossible succession planning of Executive Directors,
Non‑Executive Directors and the succession of the Chairman.
The Selection and Appointment Committee also discussed
the Board’s approach to its annual self‑assessment on Board
eectiveness, the appointment of additional Non‑Executive
Directors and the composition of the Board ingeneral.
Further, the committee reviewed the performance of the
Directors seeking re‑election at the 2023 AGM.
The Board recognises its responsibility of having Directors
with the appropriate balance of educational background,
experience, independence and knowledge of the Company
to enable them to discharge their respective duties and
responsibilities eectively. The Board has a key role to
protect shareholders’ interests by ensuring that the Board
and management are challenged, constructively and
eectively, and it is important that they do so from a range
of perspectives. Fortunately, the Group’s business is diverse
and people are recruited regardless of their gender,
nationality or possible other characteristics to make sure that
people are recruited from the widest pool of talent.
Details of the Board diversity data are shown on page82.
The meetings of the Remuneration Committee were
attended by the CEO and the Human Resources Director
(byphone and in person) whenever necessary. The Company
Secretary attends meetings in her capacity as Secretary of
the Remuneration Committee.
Other members of the Board and senior management were
invited when necessary or appropriate. In the case of topics
concerning the remuneration of the Chief Executive Ocer,
it was chosen to discuss these matters without the Chief
Executive Ocer being present. Further detail on
remuneration of the Board can be found on pages 110 to 111.
inthe remuneration report, which includes a further
explanation of the Remuneration Policy and the actual
remuneration and relationship between remuneration and
performance of the Executive Directors for 2022.
Read the remuneration
report on pages 95‑98
Selection and Appointment
Committee
Meetings in 2022: 2
Members: Peter Williams (Chair), David Adams,
Pratik Pota (until June 2022), and Hari Bhartia
(member since June2022)
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Main matters discussed during the year’s Board meetings:
• developing and approval of the overall strategy;
• the impact and consequences of COVID‑19;
• progress on implementing the overall strategy;
• cyber security;
• long‑term value creation and the strategy for realisation;
• budget for 2022;
• oversight of the operational and financial performance of
the business;
• review of risks and internal risk management and control
systems;
• potential collaborations and acquisition opportunities;
• investor relations activities;
• capital structure;
• significant human resources matters;
• major capital investments;
• the half‑year results, including the announcement and
investor presentations of these half‑year results; and
• innovation.
Board eectiveness
Activities of the Board
In general, a minimum of four face‑to‑face meetings are
planned throughout the calendar year to consider, for example,
the half‑year and full‑year results announcements of the Group
and the strategy of the Group. Meetings of the Board are held
in Amsterdam, with two site visits to Istanbul a year.
TheChairman sets the Board’s agenda, ensures the Directors
receive accurate, timely and clear information, andpromotes
eective relationships and open communication between the
Executive and Non‑Executive Directors. Duetothe travelling
restrictions in connection withthe COVID‑19 pandemic, the
Board held limited face‑to‑face meetings and the rest were
hybrid meetings orheld via video conference only. The Board
resumed face‑to‑face meetings and meetings in Amsterdam in
the second half of2022.
The virtual meetings were held with all Directors present.
Throughout the year, the Chairman and other Non‑Executive
Directors had regular contact with the Chief Executive Ocer.
None of the Non‑Executive Directors were frequently absent,
and in all meetings there was sucient presence to constitute
a valid quorum. The table showing the attendance of Directors
at Board meetings in 2022 can be found on page82.
At each Board meeting and with respect to any proposed
resolution submitted to the Board, each Director holds the
right to cast one vote provided that such Director does not
have a conflict of interest with respect to the proposed
resolution. Where the articles of association or the Board Rules
do not prescribe a larger majority, all resolutions submitted to
a Board meeting may only be adopted by a majority of the
votes cast in such a meeting. In the event ofatie, the proposed
resolution will be deemed to have beenrejected.
Corporate governance report con tinued
A
Strategy (financial
andoperational)
10%
B
Remuneration Policy
andapproach
6%
C
Investments, shareholder
returns and dividends
4%
D
Performance conditions
andemployee share
scheme awards, including
executive management
oversight and performance
7%
E
Risk management
andmitigation
5%
F
Budgeting 9%
G
Investor relations 4%
H
Compliance 5%
I
Key policies and
governancearrangements
5%
J
Board composition 5%
K
Auditor reports,
appointmentsand fees
5%
L
Going concern and
viabilitystatement
5%
M
Board evaluation 5%
N
Annual Report 4%
O
Trading updates and
financialperformance
9%
P
Innovation 4%
Q
Cyber security 2%
R
COVID‑19 1%
S
Situation in Russia 3%
T
Impact of sanctions 2%
B
D
E
F
G
H
I
J
K
L
M
N
O
P
A
C
Q
R
S
T
Board activities
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Board evaluation
The Board is required to assess its own eectiveness. This is
a healthy process for the Board as a whole, the committees,
and the individual Directors. The Board discussed the 2022
annual internal evaluation and determined that, since the
majority of the Directors had only been in function for a few
meetings or will leave the Company in due course, it would
assess its own functioning again in 2023. After this first
assessment, the Board will discuss the elements assessed
and lessons learnt together. However, the Board has
discussed whether any immediate improvements or changes
should be made. The Board’s view was that a good start had
been made in working together.
The internal control procedures are described in more detail
on page 60 of this report. The Board is of the opinion that
these fulfil the needs of the Group.
Non-Executive Director meetings
The Non‑Executive Directors meet as a group, without the
Executive Directors present, to consider specific agenda
items set by them at least once a year, including to review
the performance of the Chairman, the committees and the
Executive Directors. The Chairman, or in his absence the
Senior Independent Director, chairs such meetings.
Composition and diversity of the Board
The composition of the Board, including the Non‑Executive
Directors, can be found on pages 79 and 80.
The Board has a diverse composition in terms of educational
background, professional expertise, age and nationality.
Inthis respect, DP Eurasia’s ambition is to have a blend of
industry knowledge and financial, legal, executive and
non‑executive expertise. The target for a balanced Board
composition is a minimum of 30% female representatives.
This target is currently met by DP Eurasia for the Executive
Directors (50%), but not for the Non‑Executive Directors.
DPEurasia, however, regards the full Board as being well
balanced in terms of knowledge, experience and diversity.
The Selection and Appointment Committee will strive for a
diverse composition in the process of appointing and
reappointing members to the Board in the future. At the
same time, necessary knowledge of the Company, franchise,
digital retail and the Company’s key market areas will stay as
key appointment criteria. With regard to the appointments of
Messrs Burak Ertas and Ahmet Ashaboğlu, the Selection and
Appointment Committee did not use an external search
agency to look for a suitable Director.
The Board endeavours to ensure that the composition of the
Board is such that its members are able to act critically and
independently of one another, the Executive Board and any
particular interest.
The Board reviews the independence of its Non‑Executive
Directors annually. In assessing the independence of each
Director, the Board considers whether each is independent
incharacter and judgement and whether there are
relationships or circumstances which are likely to aect,
orcould appear to aect, the Director’s judgement.
TheBoard has considered the independence of the current
Non‑Executive Directors. It does not regard that MrShyam
Bhartia and Mr Hari Bhartia are independent as they are
appointed upon the nomination of Jubilant, the controlling
shareholder.
Director induction
All the new Directors participated in an induction
programme when they joined the Board. The Chairman
ensures that ongoing training is provided for Directors by
way of site visits and presentations. All Directors have access
to the services of the Company Secretary, and the
opportunity to seek independent professional advice at the
Company’s expense where they judge it necessary to
discharge their responsibilities as Directors or as members
ofBoard committees. The Board is supplied with information
in a form and of a quality appropriate to enable it to
discharge its duties eectively. This is provided in good time
ahead of all meetings and decisions, and Non‑Executive
Directors are encouraged to seek clarification from
management whenever they feel appropriate.
Indemnification
The terms of the indemnification granted to the Directors are
set out in the Company’s articles of association. An excess
Directors’ and Ocers’ Liability and Corporate
Reimbursement Insurance was in place for all Directors
in2022 and is currently in force.
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Conflicts of interest
Any conflict of interest by a member of the Board shall
immediately be reported to the Board. In the event that
aDirector is uncertain whether or not he has a conflict
ofinterest, he may request the Chairman to have the
Non‑Executive Directors determine whether there is a
conflict of interest. A Director may not participate in the
deliberation and decision‑making process if he or she has
aconflict of interest. In 2022, no transactions were reported
under which a Director had a conflict of interest which was
ofmaterial significance to the Company or to the
individualDirector.
Insider dealing code
The Board has adopted a code of securities dealings in
relation to the shares and a policy with respect to the entry
into of transactions with persons related to the Group.
Thecode is based on the rules of the UK Market Abuse
Regulation and will apply to the Directors and other relevant
employees of the Group. The policy is based on the
mandatory provisions of the Listing Rules which apply to
theGroup.
Accountability: Takeover
Directive (Article 10) Decree
The relevant information referred to in Section 1 of the
Takeover Directive (Article 10) Decree is included in the
Annual Report on page 86 (Appointment, dismissal and
suspension), page 122 (Our shares), pages 123 and 124
(Controlling shareholder and Relationship Agreement)
andpage 144 (Share‑based incentives).
Accountability: UK and Dutch
Corporate Governance Codes
UK Corporate Governance Code
The Company complies with and, except in the case of any
future deviation, subject to explanation thereof at the
relevant time, intends to continue to comply with the relevant
recommendations of the UK Corporate Governance Code.
The UK Corporate Governance Code contains 18main
principles, which are expanded on in supporting principles
and detailed provisions. Together, these set out the key
components of eective Board practice and corporate
governance, and we explain in this report how we have
applied these during the year.
Jubilant FoodWorks Netherlands B.V. (“Jubilant”), the wholly
owned subsidiary of Jubilant FoodWorks Limited, is the
largest holder of shares in the Company. The Company will
continue to represent a significant investment for Jubilant.
The Board and Jubilant are mindful of the need to consider
the interests of the Company’s minority investors and the
Group believes the composition of the Board and the
committees, with the independent Chairman (being
MrPeterWilliams and after the 2023 AGM, Mr. Ahmet
Ashaboglu) and the Independent Non‑Executive Directors
(being Messrs David Adams, Burak Ertas and Ahmet
Ashaboğlu), will provide the appropriate corporate
governance balance and the interests of both Fides Food
Systems and minority shareholders.
Pursuant to the Relationship Agreement (see page 124),
Jubilant will be able to nominate three Non‑Executive
Directors to the Board for so long as it and its associates
areentitled to exercise or to control the exercise of 30%
ormore of the votes able to be cast on all, or substantially
all, mattersat General Meetings; two Non‑Executive
Directors for so long as it and its associates are entitled to
exercise orcontrol the exercise of 20% or more; and one
Non‑Executive Director for so long as it and its associates
areentitled to exercise or control the exercise of 10% or
more. The current appointees are Messrs Shyam Bhartia
andHari Bhartia.
The UK Corporate Governance Code recommends that the
board of directors of a company with a premium listing on
the Ocial List of the FCA should appoint one of the
non‑executive directors to be the senior independent
director to provide a sounding board for the chairman
andtoserve as an intermediary for the other directors
whennecessary. The senior independent director should
beavailable to shareholders if they have concerns which
contact through the normal channels of chairman or
executive directors has failed to resolve or for which such
contact is inappropriate. At the 2021 AGM, MrDavidAdams
was appointed as Senior Independent Director.
The Board will follow the recommendation of the UK
Corporate Governance Code that an Executive Director is
expected to build up a shareholding worth 100% or a
significant amount of their salary. Pursuant to the
Remuneration Policy 2021‑2024, the Chief Executive Ocer
will be required to retain a minimum of 5,000,000 shares
subject to remaining as anemployee.
Corporate governance report con tinued
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The Company does not currently comply with the following
principles and best practice provisions of the UK Corporate
Governance Code:
Best practice provision 11 (“Independence of the Board”)
The Company does not comply with best practice provision
11, which determines that at least half of the Board, excluding
the Chairman, should be considered independent by the
Board. As long as Jubilant holds at least 30% of the shares,
itshall have the right to nominate three of the five
Non‑Executive Directors, and the nominees do not need to
be “independent”.
The Company believes this deviation is justified by Jubilant’s
shareholding in the Company due to the specific knowledge
and experience of the business of the Company held by
these Directors. Further, in order to comply with this best
practice provision and with the agreement that was made
with Jubilant, the Company should appoint three additional
independent Non‑Executive Directors so it will have a Board
consisting of ten Board members. The Company believes
that this would not be feasible taking into account the size
and resources of the Company.
However, the Company recognised that it should take steps
to comply with this best practice provision and has
appointed two additional independent Non‑Executive
Directors. During this process and following the 2022 AGM,
Jubilant agreed to reduce their representation from three
Directors to two.
Best practice provision 24 (“Audit Committee”)
The Company does not comply with best practice provision
24, which determines that the Chairman of the Board should
not be a member of the Audit Committee. The Company
believes that the members of the Audit Committee should
beindependent Non‑Executive Directors with relevant
recent financial experience and therefore believes it justified
that MrWilliams remains as a member of the Audit
Committee taking into account the size and resources of
theCompany and the right of Jubilant to nominate three
Non‑ExecutiveDirectors.
Dutch Corporate Governance Code
The Dutch Corporate Governance Code, dated
8December2016, became eective on 1January2017 and
has its statutory basis in Book 2 of the Dutch Civil Code.
Dutch companies whose shares are listed on a regulated
market (such as the London Stock Exchange) are required
under Dutch law to disclose in their annual reports whether
or not they apply the provisions of the Dutch Corporate
Governance Code and, in the event that they do not apply
acertain provision, to explain the reasons why. The Board
has reviewed the Dutch Corporate Governance Code and
supports the best practice provisions thereof.
Therefore, except: (i) where the Dutch Corporate
Governance Code cannot be reconciled to the UK Corporate
Governance Code; (ii) as noted below; or (iii) in the case of
any future deviation, subject to explanation thereof at the
relevant time, the Company intends to comply with the
relevant best practice provisions of the Dutch Corporate
Governance Code (publicly available at www.mccg.nl).
The Company will not comply with the following principles
and best practice provisions of the Dutch Corporate
Governance Code:
Best practice provision 2.1.7 (“Independence of the
Supervisory Board”)
For the first half of the year, the Company did not comply
with best practice provision 2.1.7, which determines, inter alia,
that more than half of the total number of Non‑Executive
Directors should meet the independence criteria as defined
in the Dutch Corporate Governance Code. As long as
Jubilant holds at least 30% of the shares, it shall have the
right to nominate three of the five Non‑Executive Directors,
and the nominees do not need to be “independent”.
The Company believes this deviation is justified by Jubilant’s
shareholding in the Company due to the specific knowledge
and experience of the business of the Company held by
these Directors.
However, the Company recognised that it should take steps
to comply with this best practice provision and has
appointed two additional independent Non‑Executive
Directors. During this process and following the 2022 AGM,
Jubilant agreed to reduce their representation from three
Directors to two.
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Best practice provision 2.7.5 (“Accountability regarding
transactions: majority shareholders”)
The Company does not comply with best practice provision
2.7.5, which determines, inter alia, that all transactions
between the Company and legal or natural persons who
holdat least 10% of the shares must be agreed on terms
thatare customary in the market and require the approval
ofthe Supervisory Board (or the Non‑Executive Directors
ina one‑tier board). The Company will alternatively comply
with Listing Rule 11, which requires shareholder approval
forrelated party transactions which, by value, exceed a
deminimis threshold.
The Company believes this deviation is justified because
theListing Rules requirements are mandatory.
Best practice provision 3.1.2 (“Remuneration Policy”)
The Company does not comply with best practice provision
3.1.2 (vi), which determines that shares should be held for at
least five years after they are awarded. The Company felt it
important to demonstrate to the executive team that the
scheme would deliver value in the first three years to build
confidence in this unfamiliar type of arrangement for Turkish
and Russian executives. Having a five‑year delay in getting
any benefits would reduce its eectiveness. However, for
the duration of the 2021‑2024 Remuneration Policy, the Chief
Executive Ocer will be required to retain a minimum of
5,000,000 shares. The Company believes that a further
two‑year holding period provides little additional incentive
given the size of his minimum shareholding, subject to
remaining an employee. The Company believes that with
the current Remuneration Policy, it ensured an alignment
with the interests of the shareholders.
Best practice provision 3.2.3 (“Severance payments”)
The Company does not comply with best practice provision
3.2.3, which determines, inter alia, that remuneration in the
event of dismissal of employees should not exceed one
year’s salary. Although, in the Company’s case, the Executive
Directors will normally, under their contracts, not be entitled
to be paid a severance payment upon termination that
exceeds one year’s annual base salary (the fixed
remuneration) in the preceding financial year and no
contractual severance payment will be awarded in the event
of seriously culpable or negligent behaviour on the part of
the Executive Director. Mr Saranga’s contract provides for
anadditional compensation payment of one year’s annual
base salary payable only in the event that termination of his
employment is due to him being unable to work because
ofahealth condition. Where a contract is terminated, the
Company reserves the right to make additional payments
where such payments aremade in good faith in discharge of
an existing statutory or legal obligation (or by way of
damages for breach of suchanobligation) or by way of
settlement or compromise of anyclaim arising in connection
with the termination of anExecutive Director’s oce or
employment. Any such payments may include, but are not
limited to, paying statutory severance compensation, any
fees for outplacement assistance and/or the Executive
Director’s legal and/or professional advice fees in connection
with his or her cessation of oce or employment. Payment
would also be made for any outstanding vacation days
unused atthe date of cessation of employment.
Peter Williams
Chairman
19 April 2023
Corporate governance report con tinued
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Heading continued
Statement from
the Chairman of
the Remuneration
Committee
Remuneration report
Remuneration principles
Our remuneration arrangements are designed with the
following key principles in mind:
• to provide alignment with Group strategy;
• to complement our mission of delivering sustainable
long‑term value for shareholders;
• to deliver remuneration levels that are justifiable to
internal and external stakeholders; and
• to attract, motivate and retain outstanding talent.
Dear Shareholder
I am pleased to present to you the Directors’ Remuneration Report for the year
ended 31 December 2022, which includes:
• the Directors’ Remuneration Policy approved by shareholders at the 2021
AGM; and
• the Annual Remuneration Report. This outlines how we implemented the
Remuneration Policy in 2022 and how we intend to apply it in 2023.
Thissection of the Remuneration Report is subject to an advisory vote by
shareholders at the 2023 AGM.
As outlined elsewhere in this Annual Report, over the past year, the Company
has been faced by significant macro factors largely outside of its control in
both Turkey and Russia. As I advised in my statement last year, this has
required the Remuneration Committee to make a number of decisions and
adapt aspects of our remuneration arrangements to ensure they continued to
deliver the remuneration principles set out below. Details of the key
Committee decisions are summarised and explained on the following pages.
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Remuneration report continued
Performance and incentive outturn for 2022
Performance
As the Chief Executive Ocer outlined in his message,
2022has seen sustained trading performance as the clear
and targeted strategy enabled the Group to combat the high
levels of volatility. Group system sales increased by 13.1% and
group online system sales grew by 15.3%, which are both
inflation adjusted figures. In 2022, the Group continued
toimprove the online proportion of the sales (from 77.4%
to82.7% in 2021) while digital innovation remained an
important enabler to enhance the customer experience and
further solidify the robust positioning for the online ordering
channel. Store growth in such a challenging year was also
outstanding. With a solid franchisee demand, Domino’sPizza
network in Turkey grew by net 48 stores. 2022 was also the
year that COFFY strengthened its presence in the Turkish
market as the store network reached 29 stores in five cities
by the year end.
Incentive outturns
As outlined elsewhere in this Annual Report, our 2022
financial statements incorporate two significant accounting
issues: i) the high level of Turkish inflation throughout 2022
and consequent adoption of IAS 29 (“Financial Reporting in
Hyperinflationary Economies”); and ii) the treatment of
DPRussia as a discontinued operation. The Remuneration
Committee has given considerable thought as to the
appropriate way these issues should be dealt with in our
incentive plans to ensure they fairly reward performance
delivery over the relevant performance periods.
(i) 2022 Annual Bonus – The Chief Executive Ocer’s
annual bonus was based 75% on Group EBITDA
(withtargets set in Turkish Lira) and 25% on strategic
measures. The Committee agreed that the
hyperinflationary environment made the setting of
robust annual EBITDA targets impossible for 2022.
Instead, the Committee set EBITDA targets at the start
of each quarter which were more accurately able to
incorporate the prevailing level of inflation, and therefore
provide a stretching level of challenge (full details of the
amalgamated quarterly targets are on page 113).
Thestrong financial performance described above
meant that these targets were exceeded which resulted
in an overall bonus scorecard outcome of 100%
ofmaximum.
The Committee carefully assessed the appropriateness
of this outcome based on a thorough assessment of
overall annual performance. Factors considered included
the Group’s performance in 2022 relative to 2021 as
reflected in the 5.1% increase in the reported IAS 29
EBITDA figure, the strong trading performance and
strategic progress outlined above, share price
performance and the experience of our other
stakeholders during the year. Following this assessment,
the Committee was satisfied that the formulaic bonus
scorecard outcome was a fair measure of the strong
performance achieved during the year and that no
discretionary adjustment was required.
(ii) 2020-2022 LTIP – The Chief Executive Ocer’s
2020‑2022 LTIP award was based on cumulative Group
EBITDA (excluding IFRS 16) over the three‑year period
(with targets set in Turkish Lira). During 2022, the
Committee agreed two amendments to the original
targets so that the principles underlying the targets were
consistent with the accounting changes outlinedabove:
• the original targets were adjusted upwards to reflect
actual Turkish inflation in 2022 rather than the level
originally budgeted for 2022; and
• as a discontinued operation, DP Russia was removed
from both the targets and outcome for performance
in2022. The Committee agreed that its performance
should remain in the assessment for both 2020 and
2021 which pre‑date the accountingchange.
The overall impact of these amendments is to increase
the original cumulative EBITDA target range from
TRY330.2million – 369.1million to TRY 378.5million
– 423million. Actual cumulative Group EBITDA
(excluding IFRS 16 and excluding DP Russia in 2022) for
the period 2020‑2022 was TRY 513.5million. The award
therefore vests at 100%. TheCommittee was satisfied
that this outcome was consistent with the strong
performance of the business over the past three years.
Italso noted that all previous LTIP awards granted to the
CEO since IPO had vested at zero. The Committee also
considered current shareholder guidance on windfall
gains and noted its previous decision to use an extended
twelve‑month average share price for the 2020‑2022
LTIP award had reduced the original grant date value of
the award from 100% to 75% of salary. Having
considered all of these factors, the Committee agreed
that no discretionary adjustment was required.
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Remuneration report continued
Other issues considered by the Committee
inrelationto 2022
• Increases in salaries denominated in Turkish Lira–
Thesustained high inflationary environment in Turkey
has required two separate salary reviews during 2022 to
ensure that our aected employees are fairly protected
from the negative eects of high inflation. The average
increase for employee salaries denominated in Turkish Lira
has been set at a level consistent with increases in the
statutory minimum wage, namely 50% in January 2022
(with the adjustment to salaries applied in two tranches
inJanuary and April) and 30% in July 2022 (with the
adjustment to salaries applied in July). These increases
were also applied to the CEO’s Turkish Lira
denominatedsalary.
• Workforce remuneration – We are firmly committed to a
culture of pay for performance and our reward structure
provides a close link between performance of individual
businesses and incentive payouts. As a result, a
particularly strong set of business results by DP Turkey
in2022 was reflected in above average levels of annual
bonus outturn and LTIP vesting for employees in
thatbusiness.
• 2022 LTIP award – The 2022 LTIP award was granted in
June 2022 with the Committee determining that 100%
ofthe award should vest for EBIDTA growth (excluding
DPRussia) between 2021 and 2024 of 7.5% CAGR
reducing on a straight‑line basis to 0% vesting for flat
EBIDTA performance. IAS 29 adjusted figures will be
used in this calculation. This structure represents two
changes from the 2021 LTIP award:
• Use of growth targets rather than cumulative targets–
Due to the continuing high level of Turkish inflation,
theCommittee concluded that it would be very
challenging to reliably set cumulative targets forthe
2022‑24 period and that growth targets, usingIAS 29
adjusted figures, would provide a morerobust basis
ofassessment.
• Use of EBITDA as the sole performance measure
compared to a combination of EBITDA and EPS
performance in 2021. This change was made because
the relevant EPS ‘base’ figure for 2021 was negative
sosetting growth targets would be problematic.
The Remuneration Committee is looking to return
EBITDA to 75% of the performance metrics in the 2023
award. Afinal decision has not been made on which
measure will be used and this will be communicated.
Chief Executive Ocer’s remuneration in 2023
The Board is acutely conscious of the importance of there
being support for senior executive remuneration levels
fromemployees, shareholders and society more widely.
Accordingly, remuneration decisions include a consideration
of factors including internal pay ratios and scenario analyses
as well as feedback received from stakeholders. In this
context, the Remuneration Committee has determined the
Chief Executive Ocer’s remuneration for 2023 as detailed
overleaf which is consistent with our remuneration principles
and the principles of provision 40 of the UK Corporate
Governance Code.
Shareholder engagement
Representatives of Jubilant FoodWorks Limited have
attended Remuneration Committee meetings during the
year and I would like to thank them for their guidance and
support for the Committee’s decisions during the year.
Iwould also like to thank other shareholders who have
provided us with feedback during the year and I am grateful
to all shareholders for their support in approving the Annual
Remuneration Report at the 2022 AGM.
We value all feedback and look forward to receiving your
support at the forthcoming AGM where there will be a vote
to approve our Annual Remuneration Report (pages 110
to120).
David Adams
Chairman of the Remuneration Committee
19 April 2023
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Remuneration report continued
Fixed Remuneration
2023 salary: €25,000 p.a. and TRY 8,049,240 p.a. with eect from January 2023
(2022 salary: €25,000 p.a. and TRY 3,633,641 p.a. with eect from January – March 2022, TRY 4,127,816 p.a. with eect from April – June 2022 and
TRY5,366,160 p.a. with eect from July – December 2022)
• The element of the Chief Executive Ocer’s salary paid in Turkish Lira is reviewed by reference to the salary settlement for other employees based in Turkey and Turkish inflation.
Giventhe current high level of Turkish inflation, periodic salary increases are possible for Turkish employees throughout 2023. The Chief Executive Ocer’s salary has been increased
inline with the average increase for Turkish employees and the increase in the statutory minimum wage eective January 2023 may be subject to further increase(s) in 2023 taking into
account inflationary and other factors during the course of 2023. Notwithstanding these adjustments, due to the significant depreciation of the Turkish Lira over recent years, the Chief
Executive Ocer’s January 2023 salary is still worth around 10% less in Pound Sterling than his post‑IPO salary was when set at the start of 2018.
• In common with other Turkish employees, the Chief Executive Ocer does not receive any pension provision.
Variable Remuneration
2023 Annual Bonus
• Maximum potential: 100% of salary (unchanged from 2022)
• Paid in cash if compliant with shareholding guideline otherwise 40% deferred in shares
• Based on EBITDA (75%) and strategic measures (25%) (unchanged from 2022)
• Targets are considered commercially sensitive so will be disclosed retrospectively in next year’s Remuneration Report
2023-2025 LTIP
• Award level: 100% of salary (unchanged from 2022)
• The current intention is that the award will be based 75% on EBITDA with ongoing Remuneration Committee discussions about the appropriate
strategically aligned measure for the remaining 25% of the award. The Remuneration Committee will finalise its decision on this matter ahead of the
intended grant in May and will disclose details thereafter (2022: 100% based on EBITDA)
• The EBITDA element of the award will be based on the same growth target range as the 2022‑2024 LTIP (unchanged from 2022)
• Awards vest on the third anniversary of grant
• Our strategy in 2023 will be expanding the store network for both Domino’s and COFFY, predominantly via solid franchisee demand. Meanwhile, management will remain focused on
delivering healthy profitability and improving leverage ratios with a sustained investment in people and digital. The Remuneration Committee considers that the performance measures
outlined above provide appropriate alignment with this growth strategy.
• The Chief Executive Ocer’s 2023 annual bonus opportunity and 2023‑25 LTIP award level will be set in line with the normal maximum limits contained in the Remuneration Policy.
• One of our key remuneration principles is that remuneration should complement our mission of delivering sustainable long‑term value for shareholders. In that context,
theRemuneration Committee considered whether the Chief Executive Ocer’s 2023 bonus should be partially deferred in shares or whether a holding period should apply to his
2023‑2025 LTIP award after vesting. However, given the Remuneration Policy requirement for the Chief Executive Ocer to hold at least 5,000,000 shares, the Committee concluded
he is already firmly aligned with other long‑term shareholders and that, in his case, it would be unnecessary to add these further layers of alignment so long as he remains compliant
with his shareholding requirement.
Chief Executive Ocer’s remuneration in 2023 continued
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Directors’ remuneration policy
DP Eurasia’s current Directors’
Remuneration Policy was approved at
the2021 AGM. It took eect immediately
after the AGM with the intention that it
will apply for three years although the
Board may seek approval for a new
Remuneration Policy at an earlier point,
ifit is considered appropriate.
TheRemuneration Policy is set out below
with minor textual updates and also
updated remuneration scenarios for 2023.
The Remuneration Policy text as
approved by shareholders is on pages
36to 46 of the 2020 Annual Report
available on our website.
The Remuneration Committee discussed the Remuneration
Policy over a series of meetings which considered the
strategic priorities of the Group, governance requirements,
evolving market practice and remuneration practice
amongst the wider workforce. Input was sought from the
CEO while ensuring that conflicts of interest were suitably
mitigated. An external perspective was provided by our
major shareholders and our independent advisers, Deloitte.
Remuneration principles
The aim of DP Eurasia is to attract, retain and motivate the
best talent to help ensure continued growth and success
inthe listed company environment.
The Remuneration Policy aims to align the interests of
theExecutive Directors to the long‑term interests of
shareholders and supports a high‑performance culture
withappropriate reward for superior performance without
creating incentives that will encourage excessive risk taking
or unsustainable performance. The Remuneration Policy also
sets out the remuneration structure of the Non‑Executive
Directors.
In accordance with Dutch corporate governance,
theremuneration of:
• the Executive Directors shall be determined by the
Non‑Executive Directors with due observance of the
Remuneration Policy; and
• the Non‑Executive Directors shall be determined by the
General Meeting upon a proposal by the Board with due
observance of the Remuneration Policy, each at a level
that is considered by the Remuneration Committee to
beappropriate for the size and nature of the business,
inorder to ensure that the policies and remuneration
structure are appropriate for the listed company
environment.
The Remuneration Committee will review annually the
remuneration arrangements for the Executive Directors
andkey senior employees by taking into consideration:
• business strategy over the period;
• overall corporate performance;
• market conditions aecting the Group;
• the recruitment market and the remuneration of the
overall employee population;
• changing practice in the markets where the Group
competes for talent;
• the pay ratios within the Group; and
• views of institutional shareholders and their representative
bodies.
Remuneration components
The remuneration structure for the Executive Directors can
consist of: (a) base salary; (b) benefits; (c) pension; (d) annual
and deferred bonus; and (e) long‑term incentives. To support
this aim, the Board has adopted two incentive plans: the
annual and deferred bonus plan (the “ADBP”) and the
long‑term incentive plan (the “LTIP”). The remuneration
structure of the Non‑Executive Directors will consist of a
fixed fee.
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Directors’ remuneration policy continued
Remuneration Policy table for Executive Directors
Component/Purpose
andlink to strategy
Operation Maximum Performance framework
Base salary
Core element of
remuneration set at a level
to attract and retain
Executive Directors with
the experience and
expertise needed to
develop and implement
DPEurasia’s long‑term
strategy.
An Executive Director’s base salary is set on appointment
and reviewed annually or when there is a change in
position or responsibility.
When determining an appropriate level of salary,
theNon‑Executive Directors consider:
• the individual Executive Director’s role, experience
andperformance;
• the general operational performance of the Group
andindividual performance (if applicable);
• the economic environment and the sustainable
development of the Group;
• remuneration structures in companies that are
comparable in terms of business activities, complexity
and size;
• any change in scope, role and responsibilities; and
• remuneration practices within DP Eurasia.
Individuals recruited or promoted to the Board may,
onoccasion, have their salaries set below the targeted
policy level until they become established in their role.
Insuch cases subsequent increases in salary may be
higher than the general rises for employees until the
target positioning is achieved.
To avoid setting the expectations of Executive Directors
and other employees, there is no overall maximum salary
for Executive Directors under the Remuneration Policy.
Any increase in salaries will be determined by the
Non‑Executive Directors, taking into account the factors
stated in this table and the following principles:
• salary increases for Executive Directors will typically
bein line with the average salary increase
(inpercentage of salary terms) for other permanent
employees in the country in which the Executive
Director is resident;
• increases may be made above this in certain
circumstances, such as:
• progression within the role;
• increase in scope and responsibility of the role;
• increase in experience where an individual has been
recruited on a lower salary initially; and
• increase in size and complexity of the Group.
None
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Directors’ remuneration policy continued
Component/Purpose
andlink to strategy
Operation Maximum Performance framework
Benefits
To provide
market‑competitive
benefits.
Benefits are role specific and take into account local
market practice.
The Executive Directors are eligible to receive benefits
(oran equivalent cash allowance) including private health
cover, medical disability insurance, life assurance,
education, communication and IT allowances, mobility
allowance or a company car.
Executive Directors are entitled to reimbursement of
reasonable expenses.
The Non‑Executive Directors recognise the need to
maintain suitable flexibility in the benefits provided to
ensure they support the objective of attracting and
retaining high‑calibre personnel. Additional benefits may
therefore be oered, such as reasonable tax advice and
support, statutory payments required by local labour laws
or consistent with established custom and practice in the
local market, relocation allowances on recruitment and
other reasonable costs incurred by an individual in relation
to their appointment.
There is no overall maximum level, but benefits are set at
an appropriate level for the specific nature of the role and
depend on the annual cost of providing
individualbenefits.
None
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Directors’ remuneration policy continued
Component/Purpose
andlink to strategy
Operation Maximum Performance framework
Pension
To provide
market‑competitive
retirement benefits.
Executive Directors are eligible to receive a contribution
to their personal pension arrangements or direct to their
pension plans.
Alternatively, Executive Directors may receive a cash
allowance in lieu of pension.
Pension provision for Executive Directors will not exceed
the standard rate for DP Eurasia employees in the country
in which the Director is resident or 10% of salary if there is
no relevant employee comparator in that country.
None
LTIP
To link reward to the
achievement of long‑term
performance and strategic
objectives of DP Eurasia
and to retain Executive
Directors.
The Executive Directors may receive LTIP awards which
will usually be made in the form of a contingent award of
shares or nil‑cost options (and may also be granted as
share options or settled in cash).
Vesting of the award is dependent on the achievement of
performance targets, typically measured over a three‑year
period.
The Non‑Executive Directors have the discretion to apply
a holding period of two years post‑vesting.
An additional payment (in the form of cash or shares) may
be made in respect of vested shares to reflect the value of
dividends which would have been paid on those shares
during the period since award (this payment may assume
that dividends had been reinvested in DP Eurasia shares
on a cumulative basis).
Normal maximum value of 100% of annual base salary
based on the market value at the date of grant.
In exceptional circumstances, an award worth up to 150%
of annual base salary may be granted.
Vesting of LTIP awards
isdependent on the
achievement of key
financial, strategic, ESG
and/or operational
measures determined by
the Non‑Executive
Directors ahead of
eachaward.
For achieving a “threshold”
level of performance
against a performance
measure, no more than 25%
of the award will vest.
Vesting then increases on
asliding scale to 100% for
achieving a stretching
maximum
performancetarget.
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Component/Purpose
andlink to strategy
Operation Maximum Performance framework
Annual and deferred bonus (“ADBP”)
To link reward to the
achievement of key
business objectives of
DPEurasia for the year.
The Executive Directors may participate in the ADBP,
which is reviewed annually to ensure bonus opportunity,
performance measures, targets and objectives remain
appropriate.
The Non‑Executive Directors determine the level of bonus
to be awarded at their discretion, taking into account the
extent to which the targets have been met and the overall
business and personal performance.
Unless an Executive Director is already compliant with
their shareholding guideline, 40% of their annual bonus
will usually be delivered in shares deferred for two years.
Deferred awards are usually granted in the form of a
contingent award of shares or nil‑cost options (and may
also be settled in cash).
An additional payment (in the form of cash or shares) may
be made in respect of shares which vest under deferred
awards to reflect the value of dividends which would have
been paid on those shares during the deferral period (this
payment may assume that dividends had been reinvested
in DP Eurasia shares on a cumulative basis).
The maximum annual bonus potential is 100% of
basesalary.
Levels of bonus payout for achieving threshold and
on‑target performance will be set each year by the
Non‑Executive Directors taking into account the
degree of stretch in the performance targets.
The bonus is normally
based on performance
assessed over one year
using appropriate financial,
strategic, ESG, operational
or other suitable business
measures appropriate to
the individual Director that
are closely aligned with DP
Eurasia’s strategy and the
creation of value for
shareholders.
The majority of the bonus
will be determined by
measure(s) of financial
performance.
Directors’ remuneration policy continued
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Component/Purpose
andlink to strategy
Operation Maximum Performance framework
Shareholding guideline
To provide long‑term
alignment with shareholder
interests.
Whilst in employment, the current Chief Executive Ocer will be required to retain a
minimum of 5,000,000 shares and any other Executive Director that participates in equity
plans will be expected to build up a shareholding worth 200% of salary.
The Remuneration Committee will review progress towards the guideline on an annual
basis and have the discretion to adjust the guideline in what it feels are appropriate
circumstances.
Executive Directors who participate in equity plans will also be required to maintain a
shareholding worth 200% of salary for two years after stepping down as a Director.
Thisrequirement will apply to all equity awards (post‑tax) that vest after the approval
ofthis Remuneration Policy at the 2021 AGM. The Non‑Executive Directors will retain
discretion to amend or waive this guideline if it is not considered appropriate in the
specificcircumstances.
Not applicable Not applicable
Fee arrangements for Non-Executive Directors
Purpose and link
tostrategy
Operation Maximum
Provides a level of fees to
support recruitment and
retention of high calibre
Non‑Executive Directors
with the necessary
experience to advise and
assist with establishing and
monitoring DP Eurasia’s
strategic objectives.
Shareholder approval was received at the 2021 AGM for a fee structure that currently applies to all Non‑Executive Directors.
A resolution will be put to the 2023 AGM for a revised fee structure.
The Chairman of the Board receives an all‑inclusive fee.
Other Non‑Executive Directors, apart from representatives of Jubilant FoodWorks Limited, receive a basic Board fee and
an additional fee for additional responsibilities such as acting as the Senior Independent Director or for chairmanship of a
Board Committee.
Expenses incurred by the Non‑Executive Directors reasonably required for the performance of their duties may be
reimbursed.
Non‑Executive Directors do not participate in any variable remuneration arrangements and will not be awarded
remuneration in the form of shares and/or rights to shares.
Fees are set at an
appropriate level that is
market competitive and
reflective of the
responsibilities and time
commitment associated
with specific roles.
Directors’ remuneration policy continued
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Discretion
Non‑Executive Directors will operate the ADBP and LTIP
according to their respective rules, including flexibility in a
number of regards. These include:
• when to make awards and payments;
• how to determine the size of an award or a payment, or
when and how much of an award should vest;
• who receives an award or payment;
• how to deal with a change of control or restructuring of
the Group;
• whether a participant is a good/bad leaver for incentive
plan purposes, and whether and what proportion of
awards vest and timing of delivery;
• how and whether an award (or an award of shares
outlined in this Remuneration Policy that is yet to be
granted) may be adjusted in certain circumstances (e.g.
rights issues, corporaterestructuring, events and special
dividends); and
• what the weighting, measures and targets should be for
the ADBP and LTIP from year to year.
If an event occurs which causes the Non‑Executive Directors
to determine that a performance condition is no longer
appropriate, the Non‑Executive Directors have discretion
under therulesof the ADBP and LTIP to substitute or vary
that performance condition in such manner as is reasonable
in the circumstances and produces a fairer measure of
performance thatisnotmaterially less dicult to satisfy than
if the event had not occurred.
Prior to any payment or vesting under the ADBP and LTIP,
the Non‑Executive Directors will review the underlying
financial performance of the Group over the performance
period, andthenon‑financial performance of the Group and
participants, to ensure the payment or vesting is justified.
Following this review, the Non‑Executive Directors have the
discretion toamend the final payment/vesting level if they
do not consider that it is appropriate.
The Non‑Executive Directors may make minor amendments
to the Remuneration Policy (for regulatory, exchange control,
tax or administrative purposes or to take account of a
change in legislation) without obtaining shareholder
approval for that amendment.
Legacy awards
The Non‑Executive Directors reserve the right to make any
remuneration payments notwithstanding that they are not
inline with this Remuneration Policy where the terms of the
payment were agreed: (i) before this Remuneration Policy
came into eect, provided that the terms of the payment
were consistent with the approved Remuneration Policy at
the time they were agreed; or (ii) at a time when the relevant
individual was not an Executive Director of DP Eurasia and,
inthe opinion of the Non‑Executive Directors, the payment
was not in consideration for the individual becoming an
Executive Director of DP Eurasia. For these purposes,
“payments” includes the Non‑Executive Directors satisfying
awards of variable remuneration and, in relation to an award
over shares, the terms of the payment are “agreed” at the
time theaward is granted.
Choice of performance measures and
approachtotarget setting
Non‑Executive Directors set performance metrics under
both the ADBP and the LTIP which are clearly aligned to
DPEurasia’s strategy and are usually part of its KPIs.
Anypersonal objective performance measures within the
ADBP are also directly linked to key strategic objectives.
Targets are set at the start of each performance period by
the Non‑Executive Directors taking into account relevant
internal and external reference points and are designed to
beappropriately stretching.
Directors’ remuneration policy continued
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Remuneration scenarios
The charts on the left show hypothetical values of the 2023
remuneration package for the current Executive Directors in
the Remuneration Policy under four assumed performance
scenarios.
The Remuneration Committee regularly reviews the impact
of dierent performance scenarios on the potential reward
opportunity and payouts to be received by Executive
Directors and the alignment of these with long‑term value
creation for shareholders.
The Remuneration Committee believes that the level of
remuneration that can be delivered in the various scenarios is
appropriate for the level of performance delivered and the
value that would be delivered to shareholders.
Assumptions
Fixed pay
• Salary: as set out on page 98.
• Pension: Frederieke Slot 10% of base salary.
• Benefits: estimate based on ‑2022 reported taxable
benefits.
Variable pay
• ADBP: maximum of 100% of base salary for Aslan Saranga
(assumed half of maximum paid as midpoint); Frederieke
Slot will not participate in the ADBP in 2023.
• LTIP: maximum award of 100% of base salary for Aslan
Saranga (assumed half of maximum vests as midpoint);
Frederieke Slot will not receive an LTIP award in 2022.
• No share price growth or dividend accrual considered
other than in the final scenario which shows the value
if50% share price appreciation is assumed over the
three‑year performance period of the LTIP awards.
New appointments
In the event of appointing a new Executive Director to the
Board, the Non‑Executive Directors will generally align their
remuneration package with the Remuneration Policy table
set out in this Remuneration Policy. Where appropriate,
theNon‑Executive Directors may apply their discretion in the
following regards:
• ADBP – in the first year of employment, dierent
performance measures and targets may be set to those of
the other Executive Directors, depending on the timing
and scope of any appointment. In order to facilitate the
recruitment, the Non‑Executive Directors may deem it
necessary to guarantee a level of bonus, in compensation
for any bonus forgone at their current employer.
Thisguarantee will be limited to the bonus in relation to
the first year of employment;
• LTIP – in the first year of employment, dierent
performance measures and targets may be set for the
LTIP to those of the other Executive Directors, depending
on the timing and scope of any appointment;
• buy‑out awards – to potentially facilitate the recruitment
through the buy‑out of existing awards and compensation
arrangements that are forfeited on cessation of
employment from their current employer, the
Non‑Executive Directors will retain the ability to make a
one‑o buy‑out award. In doing so, the Non‑Executive
Directors will take account of all relevant factors, including
any performance conditions attached to incentive awards,
the likelihood of those conditions being met, the
proportion of the vesting/performance period remaining
and the form of the award (e.g. cash or shares). The
overriding principle will be that any replacement buy‑out
award should be of comparable commercial value to the
compensation which has been forfeited. Shareholders will
be informed of any such payments at the time of
appointment;
Directors’ remuneration policy continued
Aslan Saranga
Maximum
including
share price
appreciation
Maximum
Midpoint
Minimum
Fixed pay
Annual bonus
LTIP
TRY 9,049k
TRY 17,671k
TRY 26,293k
TRY 30,604k
100%
52% 24% 24%
34% 33% 33%
30% 28% 42%
TRY
30.0m
TRY
0.0m
TRY
10.0m
TRY
20.0m
Frederieke Slot
Maximum
including
share price
appreciation
Maximum
Midpoint
Minimum
€0 €100,000€50,000
€172k
€172k
€172k
€172k
100%
100%
100%
100%
€200,000€150,000
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• in the case of internal appointments or appointments
following the Group’s acquisition of or merger with
another company or business, any variable pay element or
legacy arrangements in respect of the prior role would
normally be allowed to pay out according to its terms,
adjusted as relevant to take into account the appointment;
and
• in the event that a Non‑Executive Director is required
totemporarily take on the role of an Executive Director,
his/her remuneration may include any of the elements
listed in the Remuneration Policy table for Executive
Directors.
In the event of the appointment of a new Non‑Executive
Director, his/her fee will be set in accordance with the fee
arrangements for Non‑Executive Directors as approved by
the General Meeting.
Malus and clawback
Pursuant to Dutch law and best practice UK corporate
governance, the Non‑Executive Directors have the right to
reduce payments that are not yet paid out and to reclaim
payments pertaining to these events that have already been
paid out. The Non‑Executive Directors may furthermore
adjust the variable remuneration to an appropriate level
ifpayment thereof is unacceptable according to the
requirements of reasonableness and fairness.
The ADBP and the LTIP include best practice malus and
clawback provisions. Malus is the adjustment of unpaid
bonus and deferred share awards under the ADBP and
outstanding LTIP awards. The adjustment may result in
the value being reduced to nil. Clawback is the recovery of
payments or vested awards under the ADBP and vested
LTIP awards. Malus and clawback can be enacted as a result
of the occurrence of the following events:
• discovery of a material misstatement resulting in an
adjustment in the audited accounts of the Group or any
Group company;
• the assessment of any performance condition or
condition in respect of an ADBP and LTIP award was
based on error, or inaccurate or misleading information;
• the discovery that any information used to determine the
cash payment under the ADBP or the number of shares
subject to an ADBP or LTIP award was based on error, or
inaccurate or misleading information;
• in the event of a business failure;
• action or conduct of a participant which amounts to fraud
or gross misconduct; or
• events or the behaviour of a participant have led to the
censure of a Group company by a regulatory authority or
have had a significant detrimental impact on the
reputation of any Group company provided that the
Board is satisfied that the relevant participant was
responsible for the censure or reputational damage and
that the censure or reputational damage is attributable to
the participant.
Clawback may apply to all or part of a participant’s award
and may be aected, among other means, by requiring the
transfer of shares, payment of cash or reduction of awards
orbonuses.
Payment for loss of oce
Pursuant to the UK Corporate Governance Code, Directors
should retire and stand for re‑election each year. Therefore,
the management agreements have been concluded for a
definite period ending by operation of law on the day after
the Annual General Meeting to be held in the next year.
IfaDirector is reappointed by the General Meeting in
accordance with the Articles for an additional period of one
year until the end of the Annual General Meeting to be held
in the next year, the management agreement shall
automatically be extended for such an additional period.
Thisapplies mutatis mutandis to any subsequent
reappointments.
Executive Directors will, under their contract, not normally
beentitled to be paid a severance payment upon termination
that exceeds one year’s annual base salary (the fixed
remuneration) in the preceding financial year. No contractual
severance payment will be awarded in the event of seriously
culpable or negligent behaviour on the part of the
ExecutiveDirector.
Aslan Saranga’s contract provides for an additional
compensation payment of one year’s annual base salary
payable only in the event that termination of his employment
is due to him being unable to work because of a health
condition. This is a legacy clause in Mr Saranga’s Turkish
contract which will not be replicated in any future Executive
Director’s contract.
Where a contract is to be terminated, the Non‑Executive
Directors will determine such mitigation (if required) as they
consider fair and reasonable in each case. The Non‑Executive
Directors reserve the right to make additional payments
where such payments are made in good faith in discharge
ofan existing statutory or legal obligation (or by way of
damages for breach of such an obligation); or by way of
settlement or compromise of any claim arising in connection
with the termination of an Executive Director’s oce or
employment. Any such payments may include, but are not
limited to, paying statutory severance compensation, any
fees for outplacement assistance and/or the Executive
Director’s legal and/or professional advice fees in connection
with his or her cessation of oce or employment. Payment
would also be made for any outstanding vacation days
unused at the date of cessation of employment.
Directors’ remuneration policy continued
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Payment for loss of oce con tinued
The incentive schemes, the ADBP and the LTIP are subject tostandard good/bad leaver terms. A good leaver reason is defined as cessation in the following circumstances: death, ill‑health,
injury or disability, retirement, redundancy, employing company ceasing to be a Group company, transfer of employment to a company which is not a Group company or at the discretion of
the Non‑Executive Directors.
The table below provides a summary of the treatment of incentive remuneration in the event of cessation of employment or a change of control before awards vest or become exercisable
(full details are contained in the ADBP and LTIP plan rules). Cessation of employment or a change ofcontrol during an award’s holding period does not aect an individual’s right to that
award.
Plan Treatment for good leaver
Treatment for any other
leaver
Treatment on a change of control/voluntary winding up/
demerger
ADBP – cash bonus Performance will usually be measured at the bonus
measurement date based on appropriate performance
measures as determined by the Remuneration Committee.
Bonus will be pro‑rated for the period worked during the
financial year unless the Non‑Executive Directors, at their
discretion, determine otherwise. Any bonus may, at the
Remuneration Committee’s discretion, be paid entirely
incash.
No bonus payable
inrelation to year
ofcessation.
The Non‑Executive Directors have discretion to determine
the bonus taking into account such factors as they consider
appropriate, including the extent to which any applicable
performance conditions have been satisfied. Bonus will be
pro‑rated for the period of the financial year elapsed unless
the Non‑Executive Directors, at their discretion, determine
otherwise.
ADBP – deferred share
bonus and LTIP
Awards will usually vest on a time‑apportioned basis on
the normal vesting date subject to any relevant
performance condition(s) measured over the full
performance period.
However, in the event of death, or at the Non‑Executive
Directors’ discretion, awards may vest early taking into
account such factors as they consider appropriate
including the extent to which any applicable performance
conditions have been satisfied.
The Non‑Executive Directors have the discretion, acting
fairly and reasonably, to dis‑apply time apportionment.
Outstanding awards
lapse.
The Non‑Executive Directors have the discretion to
determine the proportion of the award which vests taking
into account, among other factors, the period of time the
award has been held by the Executive Director and the
extent to which any applicable performance conditions
have been satisfied.
The Non‑Executive Directors will apply discretion where there is an appropriate business case, which will be explained in full to shareholders. Payments in the event of a change of control
willbe subject to applicable law in force at the time of the change of control.
All Non‑Executive Directors have an agreement with DP Eurasia ending at the end of the AGM in the third year following their appointment to the Board. No compensation is payable
ontermination, except for fees and expenses accrued to date.
Directors’ remuneration policy continued
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Dierences in remuneration between Executive
Directors and other employees
The overall remuneration package for the Chief Executive
Ocer is structured so that the variable performance‑related
pay element forms a more significant portion compared to
pay for other employees. This Remuneration Policy is to
ensure there is a clear link between the individual and
corporate performance achieved, the value this creates for
shareholders and overall reward. The weighting of variable
pay will vary based on the seniority of the individual, the role
and specific responsibilities. Whilst annual bonuses are
oered to a large number of employees, LTIP awards are
targeted at individuals with roles that have the most
influence on overall value creation.
Consideration of conditions elsewhere in DP Eurasia
Although there is no active consultation with employees on
matters relating to the Directors’ remuneration, the
Remuneration Committee and other Non‑Executive
Directors are kept informed of employee pay and
employment conditions and this is factored into deliberations
when setting the Remuneration Policy for Executive
Directors. The Group‑wide salary increase budget and the
proposed increase for employees of such country within
which the Executive Directors operate or reside, will be
considered by the Non‑Executive Directors when
determining any basic salary increase for Executive
Directors.
Consideration of shareholder views
The Board members appointed by our longest shareholder
at the time when the Remuneration Policy was discussed
(Fides Food Systems) had representatives at the
Remuneration Committee meetings; accordingly, the
structure of this Remuneration Policy was subject to
significant consultation with them. In addition, this
Remuneration Policy has been structured with regard to
theviews of major institutional shareholders and leading
advisory bodies.
Directors’ remuneration policy continued
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The annual remuneration report sets out how DP Eurasia’s Remuneration Policy
(pages 99 to 109) will be implemented in 2023 and how it was implemented in 2022.
Implementation of the Remuneration Policy in 2023
Executive Directors
DP Eurasia has two Executive Directors: the Chief Executive Ocer (Aslan Saranga) and the Company Secretary (Frederieke Slot). Aslan Saranga has a remuneration package comprising
a mixture of fixed pay and variable pay; Frederieke Slot solely receives fixed pay.
As described in the Statement from the Chairman of the Remuneration Committee, the Remuneration Committee reviews Aslan Saranga’s base salary taking into consideration Turkish
inflation and the salary settlement for other employees based in Turkey. His increase for 2023 is consistent with this policy and more details are set out in the Committee Chair’s
statement. Frederieke Slot’s salary was reviewed with reference to inflation in the Netherlands.
Base salary
Base Salary
Executive Director January 2023 July 2022
Aslan Saranga TRY 8,049,240 TRY 5,366,160
(1)
+EUR 25,000 +EUR 25,000
Frederieke Slot
(2)
EUR 135,707 EUR 129,245
(1) This figure is the Group CEO’s salary following the last salary adjustment in 2022. Consistent with other Turkish headquarters employees, his salary was increased in January, April and July during 2022 at a rate
consistent with the increase in the statutory minimum wage. Further details are on page 113.
(2) Frederieke Slot’s salary change is eective from April 2023.
Pension and benefits
Frederieke Slot receives a pension allowance worth 10% of base salary. Aslan Saranga receives no pension allowance. They will additionally both receive other benefits consistent with
local market practice.
ADBP
In 2023, Aslan Saranga will be able to receive an annual bonus of up to 100% of salary. It is currently envisaged that it will be based on Group adjusted EBITDA (75%) and strategic
measures (25%). 40% of any bonus earned will be deferred into shares for two years unless he is compliant with his “in‑employment” shareholding requirement when the bonus is
determined, in which case his bonus will be settled wholly in cash. Frederieke Slot will not participate in the ADBP in 2023.
The Remuneration Committee has discretion to override the formulaic outturn of the ADBP where such an approach is felt to be appropriate taking into account all relevant factors.
Malus and clawback may be applied to a bonus up to three years from the determination of the bonus.
Annual remuneration report
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Annual remuneration report continued
LTIP
Aslan Saranga will receive an LTIP award over shares worth 100% of salary in 2023 with vesting on the third anniversary of grant. Frederieke Slot will not receive an LTIP award in 2023.
It is currently intended that 75% of the award will be determined by adjusted Group EBITDA growth (excluding DP Russia consistent with its treatment as a discontinued operation
in the financial statements) measured over the period 2023‑2025. The Remuneration Committee agreed to continue using growth targets (rather than cumulative targets) as for the
2022‑24 LTIP award, given the anticipated continuation of high Turkish inflation. Targets for growth are set as 0% vesting for 0% CAGR growth increasing to 100% vesting for 7.5%
CAGR growth.
The Remuneration Committee is having ongoing discussions about the appropriate strategically aligned measure for the remaining 25% of the award. The Remuneration Committee
will finalise its decision on this matter ahead of the intended grant in May and will disclose details of the measure and its targets thereafter.
The Remuneration Committee has discretion to override the formulaic outturn of the LTIP where such an approach is felt to be appropriate taking into account all relevant factors.
Malus and clawback may be applied to LTIP awards up to two years following the vesting date.
Non-Executive Directors
Non‑Executive Director fees were determined by the General Meeting upon proposal of the Board. At the 2021 AGM, shareholders approved the fee table set out below.
Annual
fee (GBP)
Chairman of the Board 150,000
Basic Non‑Executive Director fee 30,000
Audit Committee Chairman additional fee 2,000
Remuneration Committee Chairman additional fee 2,000
Senior Independent Director additional fee 2,000
Shareholder approval will be sought at the 2023 AGM for a slightly revised fee structure – details will be contained in the upcoming Notice of Annual General Meeting.
In addition, the Non‑Executive Directors are reimbursed for expenses that are reasonably required for the performance of their duties.
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Annual remuneration report continued
Total remuneration
The following table sets out the total remuneration for Executive Directors and Non‑Executive Directors for 2022.
Base Salary
Total Fixed
Annual Long‑term
Total Variable
& Fees Benefits Pension
Remuneration
Bonus incentives
Remuneration
Total Total local
Year ending 31 December 2022 TRY TRY TRY TRY % TRY TRY TRY % TRY currency
Executive Directors
Aslan Saranga 5,057,348 427,428 5,484,776 34% 5,800,063 4,766,765 10,566,828 66% 16,051,604 ₺16,051,604
Frederieke Slot 2,243,180 399,189 224,318 2,866,687 100% 2,866,687 €165,169
Non-Executive Directors
Peter Williams 3,046,890 3,046,890 100% 3,046,890 £150,000
David Adams 731,254 731,254 100% 731,254 £36,000
Burak Ertaş 343,923 343,923 100% 343,923 £16,932
Ahmet Ashaboğlu 170,292 170,292 100% 170,292 £8,384
Shyam S.Bhartia — — — — — 0 —
Hari S.Bhartia — — — — — 0 —
Local currency totals
Part of Aslan Saranga’s remuneration and the whole of Frederieke Slot’s remuneration are paid in Euros and Peter Williams, David Adams, Burak Ertaş and Ahmet Ashaboğlu
remuneration is wholly paid in Pound Sterling. Total amounts received by each individual in local currency are recorded in the final line of the above table. In the other lines of
thetable, remuneration has been converted into Turkish Lira for consistency with the financial statements.
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Annual remuneration report continued
Notes to the table on page 112 – methodology
Base salary/fees
This represents the cash paid or receivable in respect of the financial year.
1. Executive CEO Aslan Saranga’s salary consists of both salary (TRY 4,623,445) and €25,000 management fee (converted to TRY 433,903 in the above table). The salary element
comprises TRY 3,633,641 p.a. with eect from January – March 2022, TRY 4,127,816 p.a. with eect from April – June 2022 and TRY 5,366,160 p.a. with eect from July –
December2022. As explained in the Committee Chair’s statement, the sustained high inflationary environment in Turkey required additional salary reviews during 2022 to ensure
thataected employees were fairly protected from the negative eects of high inflation.
2. Burak Ertaş was appointed as Independent Non‑Executive Director as of 8 June 2022; his fee is paid proportionally for 2022. His annual fee is £30,000.
3. Ahmet Ashaboğlu was appointed as Independent Non‑Executive Director as of 20th September 2022; his fee is paid proportionally for 2022. His annual fee is £30,000.
Benefits
This represents the taxable value of all benefits paid or receivable in respect to the relevant financial year. Aslan Saranga’s benefits included private health cover, company car
andlunch ticket. Frederieke Slot’s benefits included medical disability allowance, mobility allowance and education, communication and IT allowances.
Pension
Aslan Saranga receives no pension provision; Frederieke Slot received a pension allowance worth 10% of base salary.
Annual bonus
This represents the total bonus payable for the relevant financial year under the ADBP. In 2022, the Chief Executive Ocer’s annual bonus was based 75% on the adjusted Group
EBITDA and 25% on strategic measures.
1. Adjusted Group EBITDA (75% weighting)
As explained in the Committee Chair’s statement, the Remuneration Committee agreed that the hyperinflationary environment made the setting of robust annual EBITDA targets
impossible for 2022. Instead, the Committee set EBITDA targets at the start of each quarter which were more accurately able to incorporate the prevailing level of inflation and
therefore provide a stretching level of challenge. The strong financial performance described elsewhere in this Annual Report meant that the maximum target was exceeded.
Threshold Maximum Actual % of max
Performance measure performance performance performance payable
Adjusted EBITDA (with IFRS 16) TRY 264.9m
(1)
TRY 331.1m
(1)
TRY 359.1m 100%
(75% of salary)
Zero payout 100% payout
(1) Targets shown in this table are an amalgamation of the four quarterly targets set for 2022: Threshold Q1: TRY 51.8 million; Q2: TRY 58.2 million; Q3: TRY 71.1 million Q4: TRY 83.8 million. Maximum Q1: TRY 64.8
million; Q2: TRY 72.7 million; Q3:TRY 88.9 million; Q4 TRY 104.7 million.
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Annual remuneration report continued
2. Strategic targets (25% weighting)
Targets set for the CEO for 2022 related to key areas of
strategic development.
1. One Digital: Creating future operating model and
structure (10% weighting): To strengthen our food
tech company perspective and increase digital share
in sales, a new operating model has been
successfully introduced which contains restructured
digital architecture to activate additional features in
online channels. As a result, we achieved 1.6%
inflation adjusted (pre‑IAS 29: 75.7%) growth
indigital channels and online delivery system sales
as a share of delivery system sales reached 81.2% for
the year, which represents a 4.9 percentage point
increase on a year‑on‑year basis. In order to
successfully build this structure, digital organisation
has been strengthened: inparticular new leaders
were hired, and IT employee turnover decreased
significantly.
2. Development and management of Top‑level
Management (7.5% weighting): In DP Turkey,
thetop‑level management development program
has been continued successfully: there was no
turnover in the leadership team and recent joiners
have been successfully integrated and delivered
strong performance. The Group also started to build
its future organisation and business model for a multi
country and multi brand base and agreed to work
with a well‑known HR consultancy company.
Thisproject helped leaders to function in a more
productive way identifying decision making matrix
and critical KPI’s. DP Russia started 2022 with new
leaders in the team and new structures: despite a
highly challenging political backdrop, strategy was
kept in line and, although sales fell, franchisees did
not leave the business.
3. COFFY Business (7.5% weighting): COFFY
strengthened its presence in the Turkish market with
successful delivery of an accelerated expansion
programme as the store network reached 29 stores
in five cities by the year end. COFFY’s proven sales
performance has generated strong ongoing
franchisee demand.
In aggregate, the Remuneration Committee agreed
that these strategic targets had been met to a high
degree and accordingly agreed 100% achievement
(25% of salary) for the Chief Executive Ocer’s
performance against these strategic targets.
The overall formulaic outcome of the bonus was 100%
of maximum available, namely 100% of salary. At its
meeting on 22 February 2023, the Remuneration
Committee gave careful consideration to this
outcome in the context of a broad range of factors,
including hyperinflation in Turkey, the strong trading
performance and strategic progress outlined elsewhere
in the Annual Report, share price performance and
the experience of our other stakeholders during the
year. Following this assessment, the Committee was
satisfied that the bonus outcome was appropriate, and
that no discretionary adjustment wasrequired.
Due to the hyperinflationary environment, the
Remuneration Committee determined that it was fair
to use salary levels prevailing at 31 December2022
as the basis for calculating annual bonus for all
Turkish headquarters employees, including the CEO.
Accordingly, the CEO’s maximum bonus opportunity
was TRY 5,800,063 (being 100% of his December
2022 salary of TRY 5,366,160p.a. plus his €25,000p.a.
management fee (converted to TRY 433,903 as in the
single figure table).
Long-term incentive
This column relates to the value of LTIP awards whose
performance period ends in the period under review.
The vested value is an estimate based on the average
share price in Q4 2022 of 0.43 GBP and an average
exchange rate in Q4 2022 of GBP1: TRY21.87.
In May 2020, Aslan Saranga was granted an LTIP award
over 506,212 shares vesting in May 2023 subject to
achievement of adjusted EBITDA targets measured
over the period 2020‑2022.
As explained in the Committee Chair’s statement,
theCommittee agreed two amendments to the
original targets in order that the principles underlying
the targets were consistent with the accounting
changes in the 2022 financial statements, namely the
adoption of IAS 29 and the treatment of DP Russia as
adiscontinued operation.
• The original targets were adjusted upwards to reflect
actual Turkish inflation in 2022 rather than the materially
lower level originally budgeted for 2022.
• As a discontinued operation, DP Russia was removed
from both the targets and outcome for performance in
2022. The Committee agreed that its performance should
though remain in the assessment for both 2020 and 2021
which pre‑date the accounting change.
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Original target Revised target
(1)
Actual
(1)
%of award vesting
Adjusted Group Adjusted Group Adjusted Group
cumulative EBITDA cumulative EBITDA cumulative EBITDA
2020 LTIP award 513.5 100%
Threshold (0% vests) TRY 330.2m TRY 378.5m
Maximum (100% vests) TRY 369.1m TRY 423m
(1) Excluding IFRS 16 and excluding DP Russia in 2022.
The Committee was satisfied that this outcome was consistent with the strong performance of the business over the past three years. It also noted that all previous LTIP awards
granted to the CEO since IPO had vested at zero. The Committee also considered current shareholder guidance on windfall gains and noted its previous decision to use an extended
twelve‑month average share price for the 2020‑2022 LTIP award had reduced the original grant date value of the award from 100% to 75% of salary. Having considered all of these
factors, the Committee agreed that no discretionary adjustment was required.
2021 Directors’ remuneration table
Base Salary
Total Fixed
Annual Long‑term
Total Variable
& Fees Benefits Pension
Remuneration
Bonus incentives
Remuneration
Total Total local
Year ending 31 December 2021 TRY TRY TRY TRY % TRY TRY TRY % TRY currency
Executive Directors
Aslan Saranga
(1)
3,013,325 1,567,657 4,580,982 71% 1,868,262 — 1,868,262 29% 6,449,244 ₺6,449,244
Frederieke Slot
(2)
1,052,560 239,721 21,930 1,314,211 100% — — — — 1,314,211 €145,918
Non-Executive Directors
Peter Williams
(3)
1,514,515 — — 1,514,515 100% — — — — 1,514,515 £125,000
Tom Singer
(4)
350,863 — — 350,863 100% — — — — 350,863 £28,958
David Adams
(5)
415,987 — — 415,987 100% — — — — 415,987 £34,333
Shyam S. Bhartia — — — — — — — — — — —
Hari S. Bhartia — — — — — — — — — — —
Pratik R. Pota — — — — — — — — — — —
Annual remuneration report continued
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Notes to the table on page 115 – methodology
Base salary/fees
This represents the cash paid or receivable in respect of the financial year.
1. Executive CEO Aslan Saranga’s salary consists of both salary and €25,000 management fee.
2. In local currency, Frederieke Slot’s salary is €123,090 eective from 2021 AGM. She voluntarily accepted a 12% reduction in her salary starting from February to support the business.
3. The Chairman, Peter Williams, voluntarily agreed to a temporary £25,000 reduction in his fee for 2021 to £125,000 in response to the economic size of the business, market cap
andprofitability.
4. Tom Singer worked as Senior Independent Director, Audit Committee Chairman and Remuneration Committee Chairman for 5 months in 2021 and his fee is £69,500 annually
(includingadditional fees for his positions).
5. David Adams appointed as Audit Committee Chairman and Remuneration Committee Chairman eective from 2021 AGM.
Payments to past Directors and payments for loss of oce
There were no payments to past Directors nor payments for loss of oce to Directors during the year ended 31 December 2022.
Statement of Directors’ shareholdings and share interests
The table below shows the Directors’ share ownership as of 31 December 2022.
For the duration of the Remuneration Policy, the Chief Executive Ocer is required to retain a minimum of 5,000,000 shares. He is currently compliant with this requirement.
AstheCompanySecretary does not currently participate in the ADBP or LTIP, she is not currently subject to a shareholding guideline.
Outstanding
share awards
Shares owned granted under
outright at LTIP at
31 Dec 2022 31 Dec 2022
(number (number
Director of shares) of shares)
Aslan Saranga
(1)
8,106,310 1,374,485
Frederieke Slot — —
Peter Williams 131,776 —
David Adams — —
Burak Ertaş — —
Ahmet Ashaboğlu — —
Shyam S.Bhartia — —
Hari S.Bhartia — —
(1) Aslan Saranga owns shares through his wholly owned entity Vision Lovemark Coöperatief U.A.
Between 31 December 2022 and the date of this report, there were no changes in the shareholdings outlined in the above table.
Annual remuneration report continued
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Aslan Saranga was granted an LTIP conditional share award which will vest in June 2025. As discussed in the Committee Chair’s statement, the Committee agreed that this LTIP
awardshould be 100% based on adjusted EBITDA growth (excluding DP Russia) using IAS 29 adjusted figures.
Aslan Saranga was entitled to receive an award worth 100% of base salary which resulted in 394,702 shares with a face value of TRY 4,455,775 based on a share price of 0.54 GBP
(6June 2022) and an exchange rate of GBP1: TRY20.79 (6 June 2022).
Performance conditions for the award, to be assessed over the three year period to 31 December 2024, are set out below.
Adjusted Group EBITDA growth
(excluding DP Russia) 2022‑2024 Proportion
100% weighting vesting
Threshold 0% CAGR 0%
Maximum 7.5% CAGR 100%
Performance graph and Chief Executive Ocer remuneration table
The chart compares the total shareholder return (“TSR”) performance of DP Eurasia during the period since the IPO to the FTSE All‑Share Index. This index has been chosen because it is a
recognised equity market index of which DP Eurasia is a member.
The table below shows the total remuneration payable to the Chief Executive Ocer as a percentage of the maximum opportunity.
Year ended Year ended Year ended Year ended Year ended
31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022
Chief Executive Ocer total remuneration (TRY) 2,929,266 3,215,510 2,731,591 6,449,244 16,051,604
ADBP payout (% of maximum) 49% 41% 0% 62% 100%
LTIP vesting n/a (no award n/a (no award — — 100%
vested during vested during
2018) 2019)
£50
£0
Jun 17 Dec 17 Dec 21Jun 18 Dec 18 Jun 19
DP Eurasia
FTSE All-Share Index
Dec 19 Jun 20 Dec 20 Jun 21 Dec 22Jun 22
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Percentage change in remuneration of the DP Board members and average employee
The table below illustrates the percentage change in annual salary, benefits and bonus between 2019 and 2022 for all Board members including the Chairman and the average for all other
Turkish headquarters employees. Since DP Eurasia has no employees in the parent company and the Chief Executive Ocer resides in Turkey, Turkish employees are chosen as the comparator.
Salary change Benefits change Annual bonus change
2019‑2020 2020‑2021 2021-2022 2019‑2020 2020‑2021 2021-2022 2019‑2020 2020‑2021 2021-2022
Average for all Turkish
headquarters employees 15% 19% 104% 10% 28% 127% 130% 91% 48%
Executive Directors
Aslan Saranga 10% 20% 68% 27% 621% (73%) (100%) n/a 209%
Frederieke Slot (3%) 1% 13% 0% 0% 0% — — —
Chairman & Non-Executive Directors
Peter Williams (3%) (14%) 20% — — — — — —
David Adams — — 5% — — — — — —
Burak Ertaş — — — — — — — — —
Ahmet Ashaboğlu — — — — — — — — —
Shyam S.Bhartia — — — — — — — — —
Hari S.Bhartia — — — — — — — — —
Notes to the table
• This table compares data between 2019 and 2022.
• Changes are all in local currency. The increase in Turkish salaries and CEO salary reflect Turkish inflation and exchange rates eect.
• Frederieke Slot agreed a 12% reduction in her salary for 2021.
• Peter Williams agreed a GBP 25,000 reduction in his fee for 2021.
• David Adams got partial fee for Committees in 2021.
• As explained in this report, the Chief Executive Ocer’s annual bonus is based on Group adjusted EBITDA (75%) and strategic targets (25%). It paid out at 100% of maximum for 2022
compared to 62% for 2021.
• Chief Executive Ocer Aslan Saranga was paid a statutory payment of TRY 1,154K in 2021 as one‑o benefit so that year‑on‑year percentage is negative.
• All other Turkish employees benefit from a structured performance management system: the bonus earned is aected by both the performance of the Turkish business (measured by five
KPIs) and success rates against individual targets. Company performance directly impacts the bonus amount to be distributed; above or below target realisation will increase or decrease
thebonus pool accordingly. Changes reflect the Turkish business company KPI eect in the bonus pool.
Annual remuneration report continued
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Internal pay ratio 2022
The internal pay ratio between the average pay of DP Eurasia employees vis‑a‑vis the average pay of the CEO and the Executive Directors was calculated based on the average
remuneration of the Group vis‑a‑vis remuneration (including all components) of the CEO, and average remuneration (including all components) of the Executive Directors in 2022.
The pay ratio is 73:1 (2021: 50:1) for the CEO Aslan Saranga and 43:1 (2021: 31:1) for the Executive Directors. The dierence is derived from increase in variable remuneration of Group
CEO and TRY‑Euro exchange eect. For reference, the above pay ratio disclosure is for compliance with Dutch corporate governance. As DP Eurasia has no UK employees, the Board
decided that it was inappropriate to also include the pay ratio disclosures set out in UK legislation (TheCompanies (Miscellaneous Reporting) Regulations 2018).
Relative importance of the spend on pay
The table below illustrates the total expenditure on pay for all of the Group’s employees compared to dividends payable to shareholders in respect of the year ending
31December2022. A2021 comparative figure is also provided.
Year ended Year ended
31 Dec 2022 31 Dec 2021
Total sta costs (further details are provided in Note 5
to the consolidated financial statements (page 149)) TRY 290,817m TRY 153,380m
Total dividends — —
Consideration by Directors of matters relating to Directors’ remuneration
The Remuneration Committee is responsible for reviewing and making recommendations to the Board regarding the Remuneration Policy and for reviewing compliance with
the Remuneration Policy. The Remuneration Committee consisted of David Adams, Burak Ertaş (after June 2022) and Peter Williams during the year ending 31 December 2022,
TheRemuneration Committee met on five occasions during the period between 1 January 2022 and 31 December 2022.
Workforce engagement
DP Eurasia’s approach to investing in, and engaging, the workforce is explained in the Stakeholder engagement and Culture in action sections of this report on pages 38 to 41.
The Remuneration Committee was also updated for Company‑wide salary increases and levels of annual bonus for the general employee population so that they can compare the
Executive Directors’ total remuneration with the wider workforce.
Internal advice
The Chief Executive Ocer, the Human Resources Director and representatives of DP Eurasia’s major shareholder, Jubilant Foods, joined Remuneration Committee meetings to
provide valuable input. The Company Secretary acted as secretary to the Remuneration Committee. No individual was present when their own remuneration was being discussed.
Annual remuneration report continued
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External advice
Following the IPO, Deloitte LLP was appointed by DP Eurasia to provide advice on executive remuneration matters and it continued to do so during 2022. The Remuneration
Committee received independent and objective advice from Deloitte, principally on the preparation of the remuneration report, 2022 LTIP grant, 2020‑2022 LTIP vesting, 2022 annual
bonus of Group CEO and on queries raised by the Remuneration Committee Chairman. Deloitte also joined Remuneration Committee meetings by phone. Deloitte was paid £24,250
in fees during the period ending 31 December 2022 for these services to the Remuneration Committee (charged on a time plus expense basis). DP Eurasia also works with Deloitte in
GDPR compliance regarding administrative and technical (IT) requirements. Deloitte is a founding member of the Remuneration Consultants Group and, as such, voluntarily operates
under the code of conduct in relation to executive remuneration consulting in the UK. The Remuneration Committee is satisfied that the Deloitte engagement partner and advisory
team that provide remuneration advice to the Committee do not have any connections with DP Eurasia or individual Directors that may impair their independence.
External Board appointments
Executive Directors are normally entitled to accept external appointments outside DP Eurasia with the consent of the Non‑Executive Directors. Any fees received may be retained by
theExecutive Director. As at the date of this report, neither of the Executive Directors held an external appointment for which they received a fee.
Shareholder voting on remuneration report resolutions:
Votes for Votes against Votes withheld
Approval of the Annual Report on Remuneration
2022 AGM 103,666,032 (100%) 0 (0%) 0
Approval of Adoption of new Directors’ Remuneration Policy
2021 AGM 82,075,046 (93%) 6,211,574 (7%) 0
On behalf of the Board
David Adams
Chairman of Remuneration Committee
19 April 2023
Annual remuneration report continued
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Board declaration
The Board of DP Eurasia N.V. hereby declares, in accordance
with best practice provision 1.4.3 of the Dutch Corporate
Governance Code, that to the best of its knowledge:
• the financial statements as included on pages 126 to 130
ofthe Annual Report provide a true and fair view of the
assets, liabilities and financial position as at 31 December
2022 as well as the profit or loss of DP Eurasia N.V. and all
the business undertakings included in the consolidation in
accordance with IFRS as adopted in the European Union
and Part 9 of Book 2 of the Dutch Civil Code;
• the management report included in this Annual Report
provides a true and fair view of the condition on the
balance sheet date and of the business performance
during the financial year of DP Eurasia N.V. and the
companies associated with it whose details are included
inthe financial statements, together with a description of
the main risks DP Eurasia N.V. faces. The members of the
Board have signed the financial statements pursuant to
their statutory obligation under article 2:101(2) of the
Dutch Civil Code;
• the Board is responsible for preparing the Annual Report
in accordance with applicable laws and regulations and
the Board considers that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy;
• based on their assessment of prospects and viability,
theBoard confirms it has a reasonable expectation that
the Group will be able to continue in operation and meet
its liabilities as they fall due over the next twelve months;
• the management report included in this Annual Report
provides sucient insights into any failings and the
eectiveness of the internal risk management and control
systems, whose systems provide reasonable assurance
that the financial reporting does not contain any material
inaccuracies;
• based on the current state of aairs, it is justified that the
financial reporting is prepared on a going concern basis
that the Group will continue as a going concern and be
able to realise its assets and discharge its liabilities in the
normal course of business; and
• the management report included in this Annual Report
states those material risks and uncertainties that are
relevant to the expectation of the Company’s continuity
for the period of twelve months after the preparation of
this management report.
By order of:
Aslan Saranga
(Chief Executive Ocer)
Frederieke Slot
(Executive Director)
Peter Williams
(Non‑Executive Director)
Shyam Bhartia
(Non‑Executive Director)
Hari Bhartia
(Non‑Executive Director)
David Adams
(Non‑Executive Director)
Ahmet Ashaboglu
Non‑Executive Director
19 April 2023
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Shares and shareholders
Shares
Our shares
The shares that are traded on the London Stock Exchange
are traded under the symbol DPEU with ISIN code
NL0012328801. DP Eurasia is included in the FTSE SmallCap
and FTSE All‑Share indices.
The authorised capital of the Company comprises a single
class of registered shares. Shares that are traded via the
CREST system, the paperless settlement system of the
London Stock Exchange, are registered under the name
andaddress of Link Market Services Trustee Limited
(the“Depositary”). All issued shares are fully paid up and
each share confers the right to cast a single vote in the
General Meeting. DP Eurasia’s issued share capital on
31December2022 was €17,444,689.70 consisting of
145,372,414 ordinary shares of €0.12 each.
At the 2022 AGM, the Board was designated as the
corporate body authorised to issue shares or to grant rights
to subscribe for shares limited to a maximum of one‑third of
the issued share capital of the Company as at 8 June 2022
and to restrict or exclude pre‑emptive rights accruing to
shareholders of the Company: (i) in connection with the
issuance of shares limited to a maximum of 5% of the issued
share capital as at 8 June 2022 but so that such authorisation
may be used only for general corporate purposes; and (ii) in
connection with the issuance of shares limited to a maximum
of 5% of the issued share capital as at 8 June 2022, but so
that such authorisation may be used only for the purposes
offinancing (or refinancing, if the authorisation is to be used
within six months after the original transaction) a transaction
which the Board determines to be an acquisition or other
capital investment of a kind contemplated by the Statement
of Principles on Disapplying Pre‑Emption Rights most
recently published by the UK Pre‑Emption Group prior to
thedate of the 2022 AGM.
By virtue of its authorisation by the General Meeting,
theBoard is also authorised to acquire fully paid‑up shares
inthe capital of the Company, up to a maximum of 10% of
theissued share capital, provided that the Company will not
hold more shares in its own capital than a maximum of 50%
of the issued capital of the Company, either through a
purchase on a stock exchange or otherwise, the repurchase
can take place for a minimal price, excluding expenses, of
thenominal value of the shares and a maximum price of
thehigher of: (i) an amount equal to 5% above the average
ofthe middle market quotations for the shares taken from
the London Stock Exchange Daily Ocial List for the five
business days immediately preceding the day on which such
shares are contracted to be purchased; and (ii) the highest
current independent bid on the London Stock Exchange
Daily Ocial List at the time that the purchase is carried
outas stipulated by the Commission – adopted Regulatory
Technical Standards pursuant to Article 5 paragraph 6 of
theMarket Abuse Regulation.
These designations and authorisations have been given
foraperiod of 15 months ending on the earlier of the
conclusionof the 2022 AGM or the close of business
on8September2023. Such authorities are renewed
annuallyand authority will be sought at the 2023 AGM.
Dividend policy
The Group does not expect to declare any dividends in
2022. In future years, the Group will consider the payout
ofdividends, taking into account the amount of profits,
theneed for cash for capital expenditure and further
expansion and its debt profile.
As such, while the Group’s policy is to eventually pay
outdividends in the appropriate circumstances, there
isnoimmediate prospect of dividends being paid out,
norcanthere be any assurance as to when and in what
amount any dividends may be eventually paid out.
Shareholders
Major shareholders
At the IPO, shares were oered to institutional investors in
the UK and certain other jurisdictions. The listing significantly
broadened the Company’s shareholder base, and the
Company’s shares are widely spread over a large number
ofshareholders in various countries.
Shareholder structure
Under UK law, shareholders must disclose percentage
holdings in the capital and/or voting rights in the Company
to the issuer when such holding reaches, exceeds or falls
below 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75% and 95%.
Such shareholders must notify the Company as soon
aspossible and in any event within four trading days.
TheCompany must notify the market by the end of the
thirdtrading day after it receives the notification. As at
6April2023, the Company had been notified, in accordance
with the FCA’s Disclosure, Guidance and Transparency Rules
(DTR 5.3.1R(1), of the following holdings of voting rights
attaching to the Company’s shares:
6 April 2023 Share/vote % Amount
Jubilant FoodWorks
Netherlands B.V.
(1)
49.04 71,413,939
Jerey R. Fieler 13.02 19,217,854
Barca Global Master Fund, LP 8.30 12,087,470
Mr Saranga 5.57 8,106,310
(1) Fides Food Systems Coöperatief U.A. merged with Jubilant
FoodWorks Netherlands B.V. (acquiring entity) on
2March2022.
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General Meeting
The Company will organise a General Meeting at least once a
year. The agenda with notes and the registration process are
published with the notice convening the meeting at least
42days beforehand and are also available on the Company’s
website. The notes contain all relevant information with
regard to the resolutions on the agenda. Each shareholder
may attend General Meetings, address the General Meeting
and exercise voting rights pro rata to their shareholding,
either in person or by proxy. Shareholders may exercise
these rights if they are the holders of shares on the record
date, which is the 28th day before the day of the General
Meeting, and they or their proxy have notified the Company
of their intention to attend the General Meeting.
TheCompany shall give shareholders and other persons
entitled to vote the possibility of issuing proxy votes to an
independent third party. All proxy votes received are
counted with the balance for and against, and any votes
withheld are announced at the General Meeting and
published on the Company’s website after the meeting.
The Company’s articles of association set out in detail the
power of the General Meeting. Resolutions requiring the
priorapproval of the General Meeting are, amongst others:
• adoption of the Company’s annual accounts;
• amendments to the articles of association;
• deciding on the remuneration policy of the Board;
• appointment and dismissal of Board members;
• appropriation of profits to the extent not added to
thereserves;
• appointing the external auditor;
• transferring the Company or virtually the entire Company
to a third party; and
• dissolution of the Company.
Subject to certain exceptions as set forth by law or the
articles of association, resolutions of the General Meeting
arepassed by an absolute majority of the votes cast.
Draft minutes of the meeting will be released within three
months of the meeting and will be available for comments
for three months thereafter. The final minutes will be
published on the Company’s website. This year, the AGM
isscheduled to be held on 13 June 2023 in Amsterdam,
theNetherlands.
Controlling shareholder
For as long as there is a controlling shareholder (defined in
the Listing Rules as any person who exercises or controls
ontheir own or together with any person with whom they are
acting in concert, 30% or more of the votes able to be cast
on all or substantially all matters at general meetings of a
company), the Board rules allow for the election or
re‑election of any independent Director to be approved
byseparate resolutions of: (i) the Company’s shareholders;
and(ii) the Company’s shareholders excluding any
controlling shareholder. If either of the resolutions is
defeated, the Company may propose a further resolution to
elect or re‑elect the proposed independent Director, which:
(a) may be voted on within a period commencing 90 days
and ending 120 days from the original vote; and (b) may be
passed by a vote of the shareholders of the Company voting
as a single class.
Furthermore, in the event that the Company wishes the FCA
to cancel the listing of the shares on the premium listing
segment of the Ocial List or transfer the shares to the
standard listing segment of the Ocial List, the Company
must obtain at a General Meeting prior approval of:
(i) a majority of not less than 75% of the votes attaching
tothe shares voted on the resolution; and
(ii) a majority of the votes attaching to the shares voted
onthe resolution excluding any shares voted by a
controlling shareholder. In all other circumstances,
controlling shareholders have and will have the same
voting rights attached to the shares as all other
shareholders.
Impact of Brexit on the Group and minority
shareholder protection
As a result of Brexit, companies which formerly had their
registered oce in one EEA member state and their shares
admitted to trading on a regulated market in the UK have
now fallen outside the “shared jurisdiction” regime.
Theshared jurisdiction regime provided that, for such
companies, certain rules from the UK Takeover Code and
certain rules of the state in which the Company is registered
apply to takeover activity. Following the end of the transition
period at midnight on 31 December 2020, this regime no
longer applies such that neither the UK Takeover Code
regime nor the home state regime applies.
Certain jurisdictions, such as Ireland, reacted unilaterally
byextending the reach of their local takeover regime in
ordertofill the void. The Netherlands did not do this.
Shares and shareholders continued
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Shares and shareholders continued
As a result of this, neither the Dutch nor the UK takeover
codes now apply to the Company, and consequently the
minority protections contained in the takeover codes no
longer apply to the Company’s shareholders. For example,
ashareholder will no longer be required to make a
mandatory oer to all shareholders when it reaches the
threshold of holding 30% of the Company’s shares and the
price at which such a shareholder would acquire shares
would be negotiated.
The principal protections applying to the Company will be
those contained in:
• the Company’s articles of association;
• the indirect undertakings of the controlling shareholder
via the Relationship Agreement between the Company
and Jubilant;
• the UK legal regime applying to premium listed
companies (in particular, as contained in the Listing
Rules); and
• Dutch corporate law.
An independent committee of the Board of the Company,
comprised of Peter Williams (Chairman) and David Adams
(Senior Independent Non‑Executive Director),
(the“Independent Committee”) assured shareholders
thatitwould seek to address greater minority shareholder
protection with the wider Board.
To a certain extent, someofthe concerns of shareholders
communicated duringthe recent reverse bookbuild process
were addressed by the reduction in free float requirements
under the ListingRules to 10%, from 25%, in December 2021
– therebylessening the risk of de‑listing in circumstances
where a controlling shareholder seeks to increase its
shareholding. However, asaresult of shareholder feedback
during that process, ithad become clear that the UK
Takeover Code and the Dutch takeover rules no longer
applying to the Company, asa consequence of Brexit,
wasasituation that should be addressed as soon as possible.
The Board has proposed additional takeover protection
forminority shareholders. This takeover protection is
embedded in the Company’s articles of association as
from13April2022. From this date, the articles include
therequirement tolaunch a mandatory oer by any investor
which acquires 50% or more of the Company’s issued share
capital. Ashareholder/investor is entitled to increase its stake
to alevel below 50% without triggering a requirement
tomake amandatory oer.
Relationship Agreement and the controlling
shareholder
The Company considers that Jubilant exercises or controls
on its own, or together with any person with whom it is
acting in concert, more than 30% of the votes to be cast
onall or substantially all matters at General Meetings.
Inorder toensure that the Company can carry on as an
independent business as its main activity, on 28 June 2017,
the Company and Fides Food Systems entered into a
Relationship Agreement which regulates the ongoing
relationship between the Company and Fides Food Systems
and its associates, including Jubilant. The Relationship
Agreement was amended by a deed of amendment dated
29September2021 between the parties, in order to govern
the relationship between the controlling shareholder and
theCompany after Jubilant acquired the shareholding in
Fides Food Systems and in order to comply with Listing Rule
6.1.4BR(1) which requires that the Company and the
controlling shareholder had in place a written and legally
binding agreement upon admission which is intended to
ensure that the controlling shareholder and the Company
comply with the independence provisions set out in Listing
Rule 6.1.4DR. Another amendment to the Relationship
Agreement was agreed on 15 February 2022 to include
additional takeover protection for minority shareholders.
Fides Food Systems merged with Jubilant on 2 March 2022
and therefore Jubilant is the current contract party of
theCompany.
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Strategic report Corporate governance Financial statements Additional information
Shares and shareholders continued
The Relationship Agreement contains, among others,
undertakings from Jubilant that: (i) transactions and
arrangements with it (and/or any of its associates
(includingJubilant’s parent company)) will be conducted
atarm’s length and on normal commercial terms; (ii) neither
itnor any of its associates will take any action that would
have theeect of preventing the Company from complying
with its obligations under the Listing Rules; (iii) neither it nor
any ofits associates will propose or procure the proposal of
ashareholder resolution which is intended or appears to be
intended to circumvent the proper application of the Listing
Rules; (iv) neither Jubilant nor any of its associates will take
any action that would aect the ability of the Company to
carry on its business independently of Jubilant; and (v) it
will not cause or authorise anything to be done which would
prejudice either the Company’s status as a company whose
shares are admitted to the premium listing segment of the
Ocial List and to trading on the London Stock Exchange’s
main market for listed securities or its suitability for listing
(the “Independence Provisions”).
The Relationship Agreement will continue for as long as:
(a) the shares are listed on the premium listing segment of
the Ocial List and traded on the London Stock Exchange’s
main market for listed securities; and (b) Jubilant, together
with its associates, is entitled to exercise or to control the
exercise of 10% or more of the votes able to be cast on all,
orsubstantially all, matters at General Meetings. The Group
believes that the terms of the Relationship Agreement will
enable the Group to carry on its business independently
ofJubilant.
Furthermore, Jubilant has agreed to procure the compliance
of its associates with the Independence Provisions.
The Company has complied with, and so far as the Company
is aware, Jubilant has complied with, sub‑paragraphs (i), (ii)
and (iii) of the Independence Provisions set out above.
Conflicts of interest
Save as set out under “Relationship Agreement and the
controlling shareholder”, there are no potential conflicts of
interest between any duties owed by the Directors or senior
managers to the Company and their private interests or
other duties.
Investor relations policy
The Company is committed to maintaining an open and
constructive dialogue with the investment community.
TheCompany is aiming to keep its shareholders updated
byinforming them equally, simultaneously, clearly and
accurately about the Company’s strategy, performance
andother Company matters and developments that could
be relevant to investors’ decisions.
The Company will act in accordance with applicable rules
and regulations, including provisions on price‑sensitive
information, fair and non‑selective disclosure and equal
treatment of shareholders that are in the same position.
The Company communicates with all of its investors and
analysts through organising or attending meetings such
asthe AGM, roadshows, broker conferences and one‑o
meetings and calls. The Chair and SID are available for
meetings with shareholders on request. Furthermore,
theCompany publishes Annual Reports, Half‑yearly
Reportsandtrading updates.
Meetings
Briefings are given to update the market after each
quarterlyannouncement via Group meetings or
teleconference and are accessible by telephone or through
the internet. Meetingswith investors (bilateral and general)
are held regularly to ensure that the investment community
receives abalanced and complete view of the Company’s
performance and the issues faced by the business,
whilealways observing applicable rules concerning
selectivedisclosure, equal treatment of shareholders
andinsidertrading.
Analysts’ reports and valuations are not assessed,
commented upon or corrected, other than factually,
bytheCompany. DP Eurasia does not pay any fee(s)
toparties for carrying out research for analysts’ reports
orforthe production or publication of analysts’ reports.
Contacts with the capital markets are dealt with by the
ChiefExecutiveOcer, the Chief Strategy Ocer and
Headof Investor Relations and, from time to time,
certainNon‑Executive Directors.
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Financial
statements
What’s in this section?
Consolidated statement of comprehensive income 127
Consolidated statement of fi nancial position 128
Consolidated statement of changes in equity 129
Consolidated statement of cash fl ows 130
Notes to the consolidated fi nancial statements 131
Company income statement 178
Notes to the company fi nancial statements 180
Independent auditor’s report 185
ESG appendix 195
Glossary 196
Contacts 197
Strategic report Corporate governance Financial statements Additional information
126
DP Eurasia N.V.
Annual Report and Accounts 2022
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Consolidated statement of comprehensive income
For the years ended 31 December 2022 and 2021
Notes 2022 2021
Revenue 4 2,219,703 2,062,747
Cost of sales 4 (1,396,461) (1,268,290)
Gross profit 823,242 794,457
General administrative expenses (281,987) (262,616)
Marketing and selling expenses (346,550) (342,867)
Other operating (loss)/income, net (5,685) 7,198
Operating profit 189,020 196,172
Foreign exchange income 6 85,518 49,805
Financial income 6 109,626 53,521
Financial expense 6 (240,348) (132,740)
Monetary gain 2.1 47,497 48,646
Profit/(loss) before income tax 191,313 215,404
Tax expense 19 10,736 (81,165)
Profit from continuing operations 202,049 134,239
Loss from discontinued operations 24 (211,090) (71,365)
(Loss)/profit for the period (9,041) 62,874
Other comprehensive expense (260,057) (35,356)
Items that will not be reclassified to profit or loss
– Remeasurements of post-employment benefit obligations, net of tax (5,856) 124
Items that may be reclassified to profit or loss
– Currency translation dierences (248,176) (70,069)
– Currency translation dierences from discontinued operations (6,025) 34,589
Total comprehensive loss (269,098) 27,518
Profit per share for the period attributable to equity holders of the parent
(1)
(0.06) 0.43
Profit per share from continuing operations attributable to equity holders of the parent
(1)
1.39 0.92
(1) Amounts represent the basic and diluted earnings per share.
The accompanying notes form an integral part of these consolidated financial statements.
Strategic report Corporate governance Financial statements Additional information
127
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Consolidated statement of financial position
For the years ended 31 December 2022 and 2021
31 Dec 31 Dec
Notes 2022 2021
Assets
Trade receivables 13 16,365 21,203
Lease receivables 16 95,272 109,391
Right-of-use assets 10 98,542 218,969
Property and equipment 8 123,577 211,063
Intangible assets 9 91,970 117,291
Goodwill 11 234,597 251,210
Deferred tax assets 19 4,183 27,531
Other non-current assets 16 69,415 64,850
Non-current assets 733,921 1,021,508
Cash and cash equivalents 12 360,059 254,700
Trade receivables 13 297,960 385,793
Lease receivables 16 13,676 32,270
Inventories 15 238,814 223,943
Current income tax assets 45,418 —
Other current assets 16 162,150 169,407
Current assets 1,118,077 1,066,113
Assets held for sale 24 435,400 —
Total assets 2,287,398 2,087,621
Equity
Paid in share capital 21 36,353 36,353
Share premium 441,632 441,632
Contribution from shareholders 20 76,604 71,715
Other reserves not to be reclassified to profit or loss
– Remeasurements of post-employment benefit obligations (11,360) (5,504)
Other reserves to be reclassified to profit or loss
– Currency translation dierences (633,889) (379,688)
Retained earnings 61,366 70,407
Total equity (29,294) 234,915
31 Dec 31 Dec
Notes 2022 2021
Liabilities
Financial liabilities 17 64,923 230,196
Lease liabilities 17 152,422 281,692
Long-term provisions for employee benefits 16 13,693 6,883
Deferred tax liability 19 — 8,362
Other non-current liabilities 16 154,906 118,571
Non-current liabilities 385,944 645,704
Financial liabilities 17 729,232 521,862
Lease liabilities 17 42,901 91,072
Trade payables 13 354,419 395,363
Current income tax liabilities 19 — 21,003
Provisions 3,438 8,904
Other current liabilities 16 135,960 168,798
Current liabilities 1,265,950 1,207,002
Liabilities related to assets held for sale 24 664,798 —
Total liabilities 2,316,692 1,852,706
Total liabilities and equity 2,287,398 2,087,621
The accompanying notes form an integral part of these consolidated financial
statements.
Strategic report Corporate governance Financial statements Additional information
128
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Consolidated statement of changes in equity
For the year ended 31 December 2022
Remeasurement
of post-
Contribution employment Currency
Share Share from benefit translation Retained Total
capital premium shareholders obligations dierences earnings equity
Balances at 1 January 2021 36,353 441,632 69,233 (5,628) (344,208) 7,533 204,915
Remeasurements of post-employment benefit obligations, net — — — 124 — — 124
Currency translation adjustments — — — — (35,480) — (35,480)
Total loss for the period — — — — — 62,874 62,874
Total comprehensive loss — — — 124 (35,480) 62,874 27,518
Share-based incentive plans (Note 20) — — 2,482 — — — 2,482
Balances at 31 December 2021 36,353 441,632 71,715 (5,504) (379,688) 70,407 234,915
Balances at 1 January 2022 36,353 441,632 71,715 (5,504) (379,688) 70,407 234,915
Remeasurements of post-employment benefit obligations, net — — — (5,856) — — (5,856)
Currency translation adjustments — — — — (254,201) — (254,201)
Total loss for the period — — — — — (9,041) (9,041)
Total comprehensive loss — — — (5,856) (254,201) (9,041) (269,098)
Share-based incentive plans (Note 20) — — 4,889 — — — 4,889
Balances at 31 December 2022 36,353 441,632 76,604 (11,360) (633,889) 61,366 (29,294)
The accompanying notes form an integral part of these consolidated financial statements.
Strategic report Corporate governance Financial statements Additional information
129
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Consolidated statement of cash flows
For the year ended 31 December 2022
31 Dec 31 Dec
Notes 2022 2021
Profit before income tax 191,313 215,404
Adjustments for:
Depreciation 8 42,374 32,616
Amortisation 9,10 67,549 58,195
Performance bonus accrual 16 29,585 31,034
Non-cash employee benefits expense
– share-based payments 20 4,889 2,482
Interest income 6 (109,626) (53,521)
Interest expense 6 223,847 128,172
Impairment of tangible and intangible assets — 1,921
Hyperinflation adjustments (187,160) 71,051
Cash flows from discontinued operation 268,562 159,655
Eect of currency translation dierences (145,804) 26,165
Changes in operating assets and liabilities
Changes in trade receivables 92,671 (282,529)
Changes in other receivables and assets 35,912 (220,470)
Changes in inventories (14,871) (162,199)
Changes in contract assets (507) (409)
Changes in contract liabilities (27,923) (11,343)
Changes in trade payables (40,944) 222,004
Changes in other payables and liabilities (4,141) 180,428
Income taxes paid 19 (66,421) (58,530)
Cash flows generated from operating activities 359,305 340,126
Purchases of property and equipment 8 (41,678) (60,585)
Purchases of intangible assets 9 (58,311) (42,929)
Cash flows from discontinued operation (29,791) (6,157)
Disposals from sale of tangible and intangible assets 18,967 1,692
31 Dec 31 Dec
Notes 2022 2021
Cash flows used in investing activities (110,813) (107,979)
Interest paid (135,364) (92,312)
Interest on leases paid (53,487) (6,003)
Interest received 109,626 30,972
Loans obtained 17 1,144,060 302,054
Loans paid 17 (867,989) (192,519)
Cash flows from discontinued operation (159,666) (63,517)
Payment of lease liabilities 17 (64,543) (41,890)
Cash flows (used in)/generated from financing activities (27,363) (63,215)
Eects of inflation on cash and cash equivalents (115,770) (23,268)
Net increase in cash and cash equivalents 105,359 145,664
Cash and cash equivalents at the beginning of the period 254,700 109,036
Cash and cash equivalents at the end of the period 360,059 254,700
The accompanying notes form an integral part of these consolidated financial
statements.
Strategic report Corporate governance Financial statements Additional information
130
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements
For the year ended 31 December 2022
Note 1 – The Group’s organisation and nature of activities
DP Eurasia N.V. (the “Company”), a public limited company, having its statutory seat in Amsterdam, the Netherlands, was incorporated under the law of the Netherlands on 18 October
2016. Upon incorporation, Fides Food Systems Coöperatief U.A. and Vision Lovemark Coöperatief U.A. contributed and transferred all shares in Fidesrus B.V. and Fides Food Systems
B.V. and their subsidiaries to the Company. From this point forward, the consolidated Group was formed. This was a transaction under common control.
The consolidated financial statements of DP Eurasia N.V. have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
Theconsolidated financial statements also comply with the financial reporting requirements included in Title 9 of Book 2 of the Dutch Civil Code, as far as applicable.
The Company’s registered address is: Herikerbergweg 238, Amsterdam, the Netherlands.
The Company and its subsidiaries (together referred to as the “Group”) perform its activities in corporate-owned and franchised stores in Turkey and the Russian Federation,
including providing technical support, control and consultancy services to the franchisees.
As at 31 December 2022, the Group holds franchise operating and sub-franchising rights in 859 stores (697 franchised stores, 162 corporate-owned stores) (31 December 2021: 809
stores (615 franchised stores, 194 corporate-owned stores)).
The consolidated financial statements as at and for the period ended 31 December 2022 have been approved and authorised for issue on 19 April 2023 by authorisation of the Board.
The financial statements are subject to adoption by the Annual General Meeting.
Subsidiaries
The Company has a total of four fully owned subsidiaries. These entities and the nature of their businesses are as follows:
2022 2021
Eective Eective
ownership ownership Registered Nature of
Subsidiaries (%) (%) country business
Pizza Restaurantları A.Ş. (“Domino’s Turkey”) 100 100 Turkey Food delivery
Pizza Restaurants LLC (“Domino’s Russia”) 100 100 Russia Food delivery
Fidesrus B.V. (“Fidesrus”) 100 100 The Netherlands Investment company
Fides Food Systems B.V. (“Fides Food”) 100 100 The Netherlands Investment company
Domino’s Russia is established in the Russian Federation. Domino’s Russia is operating a pizza delivery network of corporate and franchised stores in the Russian Federation.
Domino’s Russia has a Master Franchise Agreement (the “MFA Russia”) with Domino’s Pizza International for the pizza delivery network in Russia until 2030. Please refer to Note 2.4
and Note 24 for the details of the discontinued operations.
Domino’s Turkey is established in Turkey. Domino’s Turkey is operating a pizza delivery network of corporate and franchised stores in Turkey. Domino’s Turkey is a food delivery
company, which has a Master Franchise Agreement (the “MFA Turkey”) with Domino’s Pizza International for the pizza delivery network in Turkey until 2032. The Group expects the
terms of the MFAs to be extended. Fides Food Systems and Fidesrus are established in the Netherlands; both Fides Food Systems and Fidesrus are acting as investment companies.
Strategic report Corporate governance Financial statements Additional information
131
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Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 2 – Basis of presentation of consolidated financial statements
2.1 Financial reporting standards
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union (“IFRS
as adopted by EU”) and interpretations issued by the IFRS Interpretations Committee
(“IFRS IC”) applicable to companies reporting under IFRS. The financial statements
comply with IFRS as issued by the International Accounting Standards Board (“IASB”)
and Title 9 of Book 2 of the Dutch Civil Code. The policies set out below have been
consistently applied to all the periods and the years presented, unless otherwise
stated. The consolidated financial statements have been prepared under the historical
cost convention.
Domino’s Turkey is registered in Turkey; it individually maintains its accounting records
in TRY and prepares its statutory financial statements in accordance with the Turkish
Financial Reporting Standards (“TFRS”). The stand-alone financial statements of
Domino’s Turkey are based on the statutory accounting records, with adjustments and
reclassifications recorded for the purpose of fair presentation in accordance with IFRS
as adopted by the EU.
Domino’s Russia is registered in the Russian Federation; it individually maintains
its accounting records in RUB and prepares its statutory financial statements in
accordance with the Regulations on Accounting and Reporting (“RAR”) of the Russian
Federation. The stand-alone financial statements of Domino’s Russia are based on the
statutory accounting records, with adjustments and reclassifications recorded for the
purpose of fair presentation in accordance with IFRS as adopted by the EU.
Application of IAS 29 - Hyperinflation in Turkey
The Turkish economy was designated as a hyperinflationary economy in the first half
of 2022 and, as a result, IAS 29, ‘Financial Reporting in Hyperinflationary Economies’
has become applicable to the Group’s subsidiaries whose functional currency is the
Turkish Lira (Domino’s Turkey). IAS 29 requires companies to report the results of the
operations in Turkey, as if these had always been highly inflationary,
Specifically, IAS 29 requires:
• adjustment of historical cost of the non-monetary assets and liabilities for the
change in purchasing power caused by inflation from the date of initial recognition
to the end of the reporting date;
• non-adjustment of the monetary assets and liabilities, as they are already expressed
in the measuring unit current at the end of the reporting period;
• adjustment of the statement of comprehensive income for inflation and its
translation with the average index rate;
• recognition of gain or loss on net monetary position in profit or loss in order to
reflect the impact of inflation rate movement on holding monetary assets and
liabilities in local currency;
• there are no items measured at current cost;
• all items in the statement of cash flows are expressed in terms of the measuring unit
current at the end of the reporting period;
• the restatement of financial statements in accordance with this Standard may give
rise to dierences between the carrying amount of individual assets and liabilities
in the statement of financial position and their tax bases. These dierences are
accounted for in accordance with IAS 12 Income Taxes; and
• total cumulative eect of restating non-monetary items in accordance with IAS 29
on opening balance sheet of 1 January 2021 are recognised in retained earnings.
IAS 29 requires that financial statements prepared in the currency of a hyperinflationary
economy be stated in terms of the measuring unit current at the balance sheet date,
and that corresponding figures for previous periods be restated in the same terms. The
restatement of the comparative amounts was calculated by means of conversion factors
derived from the Turkish nationwide consumer price index (“CPI”) published by the
State Institute of Statistics (“SIS”). Indices and conversion factors used to restate the
comparative amounts until 31December2022 are given below:
Cumulative
Conversion three-year
Date Index factor inflation rate
31 December 2022 1128.45 1.0000 156.2%
31 December 2021 686.95 1.6427 74.4%
31 December 2020 504.81 2.2354 54.2%
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 2 – Basis of presentation of consolidated financial statements continued
2.1 Financial reporting standards continued
Application of IAS 29 – Hyperinflation in Turkey continued
The financial statements of the Group’s subsidiaries, whose functional currency
is the currency of a hyperinflationary economy, are adjusted for inflation and
prior year comparatives have been restated for hyperinflation in the consolidated
financial statements.
In the consolidated income statement for the twelve months ended 31December2022,
the Group recognised a total gain on net monetary positionofTRY 47,497
thousands. (31 December 2021: TRY 48,646)
The Group used the conversion coecient derived from the consumer price index
published by Turkish Statistics Institute (“TUIK”). The conversion coecients were
1128.45 and 686.95 on 31 December 2022 and 31 December 2021, respectively.
Oneconversion coecient per period has been determined and calculated as
purchases and sales are relatively fairly divided over the year.
Going concern assumption
The consolidated financial statements have been prepared assuming that the Group
will continue as a going concern and be able to realise its assets and discharge its
liabilities in the normal course of business.
Risks and uncertainties
At this stage there has been no material disruption to the Group’s operations in
Russia from the ongoing situation in Ukraine. From, a DP Eurasia perspective,
the right to close/cease the operation in Russia belongs to DP Eurasia (not DP
International) as per the Master Franchise Agreement and the Group management
is determined to continue to operate in Russia. Suspension of all international
settlements with counterparties not from Russia is not expected to have a material
impact on the Company since the operations are run and supplied locally. 95% of
the raw materials are supplied locally, sanctions or disruptions in imports will likely
have an insignificant impact on operations.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Climate change
The climate-related risks can be divided into two major categories: risks related to
the transition to a lower-carbon economy (transition risks) and risks related to the
physical impacts of climate change (physical risks).
Transition risks: Our financial performance may be aected by the nature, speed
and focus of policy, legal, technology and market changes.
Physical risks: Our financial performance may be aected in the future by changes in
water availability, sourcing and quality; food security; and extreme temperature changes.
We consider the impact of climate change in assessing whether assets may be
impaired or whether the useful life of assets needs to be shortened due to early
replacement We also consider climate-related risks for larger projects and limit
financial losses by procuring Property Damage and Business Interruption (PDBI)
insurance against damage from natural catastrophes and weather-related events,
such as floods, hurricanes and winter storms.
Sanctions and business continuity
The conflict between Russia and Ukraine has been increasing the tension in the
region, negatively aecting commodity and financial markets and increasing
volatility, especially the exchange rates. In addition to this, the Russian economy has
faced heavy sanctions imposed mainly by Western countries.
In December 2022, the Board decided to explore the options to sell its Russian
operations and initiated a plan to locate a buyer and complete the sell-out with
a reasonable market price. The transaction is expected to be completed within
twelve months of the balance sheet date, subject to receiving regulatory approvals.
Accordingly, DP Russia operations are to be reported within discontinued
operations and its assets and liabilities are recognised as assets held for sale and
liabilities for sale as at 31 December 2022. (Note 24).
Actions on capex and expenditure
The Board has determined it prudent to limit any further investment into its
operations and will keep this under review going forward in light of the geopolitical
situation. In addition, the Group announced that royalty payments from its
Russian operations have been suspended until further notice. The Company also
took actions to minimise fixed costs and capital expenditure, together with the
postponement of royalties.
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DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 2 – Basis of presentation of consolidated financial statements continued
2.1 Financial reporting standards continued
Going concern assumption continued
Risk assessment
As per the sensitivity test run with dierent pessimistic scenarios (in case of zero
sales growth and 10% decrease of average weekly sales orders, possible transaction
costs related to intention to sell-out Russian operations),the Company is still able
to operate with its own cash flow. If there is any further cash needed, this can be
funded by using unused loan limits available in local Turkish market.
Impairment of long-lived assets, goodwill and indefinite-lived intangibles
In preparation of the consolidated financial statements as at 31 December 2022,
theGroup has assessed the possible impacts of the ongoing situation in Russia
on the financial statements and reviewed the critical estimates and assumptions.
Within this scope, the Group has tested the property and equipment, intangible
assets, goodwill, deferred tax assets and trade receivables for possible impairment.
Impact on financial liabilities and liquidity
The Group currently utilises internally generated cash flow and bank borrowings
in Turkey to meet its financing needs. The Group’s Turkish operations are well
established and cash generative and act as a source of liquidity for the wider Group.
The Group has additional borrowing capacity available from Turkish banks, which
it can draw down for liquidity needs. Even though the Company obtained waivers
for all quarters of 2022 from Sberbank regarding its loan, since assets and liabilities
of the Russian operations are classified as held for sale, all assets and liabilities are
reclassified as short-term as of the balance sheet date.
2.2 Principles of consolidation
Uncommitted facilities
The Group enters into general loan agreements with a range of Turkish banks.
Based on the general practice in Turkey, events of default, seizure of assets held
by the bank as securities for company loans, regular disclosure of financials
and change of control clauses and which are rolled over at the end of the term.
Nearly all of the Turkish bank borrowings are short term. The banks make periodic
revisions to determine the risk limits they are willing to make available to the Group
and regularly assess the Group’s financial position. The Group has not received
any call requests nor have the Turkish banks that lend to it under these facilities
declined any drawdown requests during the period under review.
As at 31 March 2023 the limits available under these types of facilities amount to
TRY350 million.
The consolidated financial statements include the parent company, DP Eurasia N.V.
and its subsidiaries for the year ended 31 December 2022. Subsidiaries are fully
consolidated from the date on which control is transferred to the Company (the
“acquisition date”).
Basis of consolidation
The consolidated financial statements include the accounts of the Group on the
basis set out in the sections below. The financial results of the subsidiaries are
fully consolidated from the date on which control is transferred to the Group or
deconsolidated from the date that control ceases.
Subsidiaries are all companies over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and can aect those returns through its power
to direct the activities of the entity.
The subsidiaries fully consolidated, the proportion of ownership interest and the
eective interest of the Group in these subsidiaries as at 31 December 2022 are
disclosed in Note 1.
The results of operations of subsidiaries acquired or sold during the year are
included in the consolidated statement of comprehensive income from the
acquisition date or until the date of sale.
The statements of financial position and statements of comprehensive income of
the subsidiaries are consolidated on a line-by-line basis and the carrying values of
the investment held by the Company and its subsidiaries are eliminated against the
related shareholders’ equity. Intercompany transactions, balances and unrealised
gains on transactions between Group companies are eliminated.
After disposal of an asset or disposal group, inter-group balances are eliminated
against discontinued operations. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the transferred asset.
Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Strategic report Corporate governance Financial statements Additional information
134
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 2 – Basis of presentation of consolidated financial statements continued
2.2 Principles of consolidation continued
Consolidation of foreign subsidiaries
Financial statements of subsidiaries operating in foreign countries are prepared
in the currency of the primary economic environment in which they operate.
Assets and liabilities in the financial statements prepared according to the Group’s
accounting policies are translated into the Group’s presentation currency, Turkish
Lira, from the foreign exchange rate at the statement of financial position date,
whereas income and expenses are translated into TRY at the average foreign
exchange rate. Exchange rate dierences arising on the translation of a monetary
item that forms part of a legal entity’s net investment in a foreign operation
are recognised in the foreign exchange translation reserve in equity. Exchange
dierences arising from the translation are included in the “currency translation
dierences” under shareholders’ equity.
The foreign currency exchange rates used in the translation of the foreign
operations within the scope of consolidation are as follows:
31 Dec 2022 31 Dec 2021
Period Period Period Period
Currency end average end average
Euros (“EUR”) 19.9349 17.36424 14.6823 10.4408
Russian Roubles (“RUB”) 0.25948 0.249513 0.1730 0.1196
2.3 New and amended international financial reporting standards
New and amended standards adopted by the Group, which are applicable for the
financial statements as at 31 December 2022
A number of new or amended standards became applicable for the current
reporting period and the Group has applied the following standards and
amendments for the first time for the annual reporting period commencing
1January 2022:
• amendment to IFRS 16, ‘Leases’ – Covid-19 related rent concessions – extension
of the practical expedient (eective 1 April 2021); and
• a number of narrow-scope amendments to IFRS 3, IAS 16 and IAS 37, and some
annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
The amendments listed above did not have any impact on the amounts recognised
in prior periods and are not expected to significantly aect the current or future
periods.
The new standards, amendments and interpretations, which are issued but not
eective for the financial statements as at 31 December 2022:
• narrow scope amendments to IAS 1, Practice statement 2 and IAS 8;
• amendment to IAS 12 – Deferred tax related to assets and liabilities arising from a
single transaction;
• amendment to IFRS 16 – Leases on sale and leaseback;
• amendment to IAS 1 – Non-current liabilities with covenants; and
• IFRS 17, ‘Insurance Contracts’, as amended in December 2021.
The amendments are not expected to have an impact on the financial position or
performance of the Group.
2.4 Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are
measured using the currency of the primary economic environment in which the
entity operates (the “functional currency”), see Note 2.5 for the accounting of
foreign currency transactions.
Foreign currency transactions are translated using the exchange rates prevailing
at the dates of the transactions. Monetary assets and liabilities denominated in
foreign currencies are translated using the exchange rates at the balance sheet
date. Foreign exchange gains and losses resulting from trading activities (trade
receivables and payables) denominated in foreign currencies of the Group
companies have been accounted for under “other operating income/expenses”
whereas foreign exchange gains and losses resulting from the translation of other
monetary assets and liabilities denominated in foreign currencies have been
accounted for under “financial income/expenses” in the consolidated income
statement.
The consolidated financial statements are presented in TRY, which is the Group’s
presentation currency.
Strategic report Corporate governance Financial statements Additional information
135
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
PricewaterhouseCoopers
Accountants N.V.
For identification
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies
Revenue recognition
(i) Sale of goods – wholesale
The Group sells raw materials and equipment to franchise-owned stores. Sales
are recognised at a point in time when control of the products has transferred,
being when the products are delivered to the franchisees, franchisees have full
discretion over the channel and price to sell the products, and there is no unfulfilled
obligation that could aect the franchisees’ acceptance of the products. Delivery
occurs when the products have been shipped to the specific location, the risks
of obsolescence and loss have been transferred to the franchisee, and either the
franchisee has accepted the products in accordance with the sales contract, the
acceptance provisions have lapsed, or the Group has objective evidence that all
criteria for acceptance have been satisfied. The financing component is only taken
into consideration when the length of the time between the transfer of services and
the related consideration is expected to exceed one year, and the eect is material.
The Group adjusts the promised amount of consideration for the eects of the time
value of money when the timing of payments agreed provides either the customer
or the entity with a significant benefit of financing.
Revenue generated from sale of raw materials and equipment to franchise-owned
stores is classified under “Franchise revenue and royalty revenue obtained from
franchisees” in Notes 3 and 4.
(ii) Sale of goods – retail
The Group operates a chain of stores selling and delivering pizza. Revenue from
the sale of goods is recognised at a point in time when the store sells a product to
the customer. Revenue generated from chain stores selling and delivering pizza is
classified under “Corporate revenues” in Notes 3 and 4.
Payment of the transaction price is due immediately when the customer purchases
the pizza and the pizza is delivered to the customer.
(iii) Revenue from royalties
Royalties are calculated based on franchise-owned store sales to customers,
whichare recognised on the same basis as the corporate (retail) sales by the Group.
Royalties are recognised in the period the related sale occurs. Revenue generated
from royalties is classified under “Franchise revenue and royalty revenue obtained
from franchisees” in Notes 3 and 4.
(iv) Sale of goods – customer loyalty programme
The Group operates a loyalty programme where retail customers accumulate points
for purchases made which entitle them to discounts on future purchases. Acontract
liability for the award points is recognised at the time of the sale. Revenue is
recognised when the points are redeemed or when they expire twelve months after
the initial sale.
The points provide a material right to customers that they would not receive
without entering a contract. Therefore, the promise to provide points to the
customer is a separate performance obligation. The transaction price is allocated to
the product and the points on a relative stand-alone selling price basis.
Management estimates the stand-alone selling price per point based on the
discount granted when the points are redeemed and based on the likelihood of
redemption, based on past experience. The stand-alone selling price of the product
sold is estimated based on the retail price. Other discounts are not considered as
they are only given in rare circumstances.
A contract liability is recognised until the points are redeemed or expire.
(v) Revenue from franchise fees
The Group receives a franchise fee from each franchise that joins the Group and
operates under the name of Domino’s Pizza; however, the performance obligation
of the Group is related to the services provided during the agreement. These
franchise fee revenues are deferred during the period of the franchise agreement
and those deferred revenues are included in the other non-current liabilities.
Revenue generated from royalties is classified under “Other revenues” in Notes 3
and 4.
Franchise arrangement involves the right to operate in a specific location as well
as other goods and services, such as point-of-sale systems, restaurant concept,
menus and benefits from national advertising campaigns. Revenue generated from
franchise fees is generated in proportion to time passed since the inception of the
franchise contract.
In determining the transaction price, the Group adjusts the promised amount of
consideration for the eects of the time value of money if the timing of payments
agreed to by the parties to the contract provides the customer or the Group with
a significant benefit of financing the transfer of goods or services to the customer.
Inthose circumstances, the contract contains a significant financing component.
Strategic report Corporate governance Financial statements Additional information
136
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Revenue recognition continued
(vi) Costs to fulfil a contract
The Group incurs certain costs with Domino’s Pizza International related to the set up
of each franchise contract and IT systems used for recording of franchise revenue. The
costs relate directly to the franchise contract, generate resources used in satisfying
the contract and are expected to be recovered. They are therefore capitalised as
costs to fulfil a contract and are expensed over the life of the contract. Costs to fulfil
a contract are classified under “Other assets” in the statement of financial position.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, credit card receivables and
cash at banks. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash with original maturities of three
months or less and that are subject to an insignificant risk of change in value.
Trade receivables
Trade receivables, that are recognised by way of providing goods or services
directly to a debtor, are accounted for initially at fair value and subsequently
measured at amortised cost, using the eective interest method, less allowance for
expected credit losses, if any.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade receivables
and contract assets. The allowance for expected credit losses (“ECL”) of trade
receivables is based on individual assessments of expected non-recoverable
receivables as well as on expected credit losses estimated using a provision matrix
by reference to past default experience on the trade receivables.
A receivable is recognised when the goods are delivered as this is the point in time
that the consideration is unconditional because only the passage of time is required
before the payment is due.
Trade and other payables
Trade payables are obligations to pay for goods and services that have been
acquired in the ordinary course of business from suppliers. Trade payables are
recognised initially at fair value and subsequently measured at amortised cost.
Trade payables are classified as current liabilities if payment is due within one year
or less, otherwise they are presented as non-current liabilities.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred.
Borrowings are subsequently carried at amortised cost; any dierence between the
proceeds and the redemption value is recognised in the income statement over the
period of borrowing using the eective interest rate method.
Inventories
Raw materials and trade goods are stated at the lower of cost and net realisable
value. Cost comprises direct materials, direct labour and an appropriate proportion
of variable and fixed overhead expenditure; costs are assigned to individual items
of inventory based on weighted average costs. Costs of purchased inventory are
determined after deducting rebates and discounts. Net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs
necessary to make the sale.
Financial investments
Classification and measurement
The Group classifies its financial assets in three categories: financial assets carried
at amortised cost, financial assets carried at fair value through profit or loss
and financial assets carried at fair value through other comprehensive income.
Classification is performed in accordance with the business model determined
based on the purpose of benefits from financial assets and expected cash flows.
Management performs the classification of financial assets at the acquisition date.
Financial assets measured at amortised cost are non-derivative financial assets that
are held as part of a business model that aims to collect contractual cash flows and
that have cash flows that include interest payments on principal dates and principal
balances on certain dates under contractual terms.
The Group’s financial assets which are recognised at amortised cost include cash
and cash equivalents, trade receivables, lease receivables and other receivables.
The assets are measured at their fair values in the initial recognition of financial
assets and discounted values by using the eective interest rate method in
the subsequent accounting. Gains and losses resulting from the valuation of
non-derivative financial assets measured at amortised cost are recognised in the
consolidated statement of profit and loss.
Strategic report Corporate governance Financial statements Additional information
137
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Financial assets carried at amortised cost
Impairment
The Group has applied a simplified approach for the calculation of impairment
on its receivables carried at amortised cost. In accordance with this method, if no
provision has been recognised on the trade receivables, lease receivables and other
receivables because of a specific event, the Group measures the expected credit
loss from these receivables by the lifetime expected credit loss. The calculation of
expected credit loss is performed based on the experience of the Group and its
expectation based on the macroeconomic indications.
Financial assets carried at fair value
Assets that are held by management for collection of contractual cash flows and/
or for selling the financial assets are measured at their fair value. If management
does not plan to dispose of these assets in twelve months after the balance sheet
date, they are classified as non-current assets. The Group makes a choice for the
equity instruments during the initial recognition and elects profit or loss or other
comprehensive income for the presentation of fair value gain and loss. The Group
has no financial assets carried at fair value in the current financial statements.
(i) Financial assets carried at fair value through profit or loss
Financial assets carried at fair value through profit or loss comprise of “derivative
instruments” in the statement of financial position. Derivative instruments are
recognised as an asset when the fair value of the instrument is positive, and as a
liability when the fair value of the instrument is negative.
(ii) Financial assets carried at fair value through other comprehensive income
Financial assets carried at fair value through other comprehensive income comprise
“financial assets” in the statement of financial position. When the financial assets
carried at fair value through other comprehensive income are sold, the fair value
gain or loss classified in other comprehensive income is classified to retained
earnings.
Property and equipment
Property and equipment are carried at cost less accumulated depreciation and any
impairment in value. When assets are sold or retired, their cost and accumulated
depreciation are eliminated from the related accounts and any gain or loss resulting
from their disposal is included in the income statement.
The initial cost of property and equipment comprises its purchase price, including
import duties and non-refundable purchase taxes and any directly attributable
costs of bringing the asset ready for use. Expenditures incurred after the fixed
assets have been put into operation, such as repairs and maintenance, are normally
charged to the income statement in the year the costs are incurred. If the asset
recognition criteria are met, the expenditures are capitalised as an additional cost
of property and equipment.
Except for the construction in progress, depreciation is computed on a straight-line
basis over the estimated useful lives. The depreciation terms are as follows:
Useful
life (years)
Machinery and equipment 3-40
Motor vehicles 3
Furniture and fixtures 6-10
Leasehold improvements 5
The expected useful life, residual value and depreciation method are evaluated
every year for the probable eects of changes arising in the expectations and are
accounted for prospectively.
Property and equipment are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. Fair value less cost to sell is the amount
obtainable from the sale of an asset less the costs of disposal.
Gains or losses on disposals or suspension of property and equipment are
determined by sale revenue less net book value and collected amount and included
in the related other income or other expense accounts, as appropriate.
Intangible assets
Key money
Key money comprises payments made to former franchisees of the Group to obtain
franchising rights back from them (e.g. the area map and related rights). Key money
is capitalised as long-lived assets and amortised over five years on a straight-line
basis and subject to impairment reviews. Impairment reviews for key money are
undertaken if events or changes in circumstances indicate a potential impairment.
Strategic report Corporate governance Financial statements Additional information
138
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Intangible assets continued
Franchise contracts
Franchise contracts are composed of fees paid for the acquisition of the master
franchise for the markets in which the Group operates. These are carried at cost less
accumulated amortisation and any impairment loss. The useful economic lives of the
assets are ten years and are amortised on a straight-line basis.
Software
Computer software, amongst others for online customer interface and financial
reporting, is carried at cost less accumulated amortisation and any impairment
loss. Externally acquired computer software and software licences are capitalised
at the cost incurred to acquire and bring into use the specific software. Internally
developed computer software programmes are capitalised to the extent that costs
can be separately identified and attributed to software programmes, measured
reliably, and that the asset developed can be shown to generate future economic
benefits. These assets are considered to have finite useful lives and are amortised
on a straight-line basis over the estimated useful economic lives of each of the
assets, considered to be between three and five years. Estimated useful lives and
the amortisation method are reviewed at the end of each year and the eect of any
change in the estimate is accounted for prospectively.
Advertising, promotion and marketing costs are not capitalised and are recognised
in the income statement.
Business combinations and goodwill
A business combination is the bringing together of separate entities or businesses
into one reporting entity. Business combinations are accounted for using the
acquisition method in accordance with IFRS 3.
The consideration transferred for a business combination is the fair value, at
the date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the acquirer, in exchange for control of the acquired business
and, in addition, any costs directly attributable to the business combination.
Thecost of the business combination at the date of the acquisition is adjusted if a
business combination contract includes clauses that enable adjustments to the cost
of the business combination depending on events after the acquisition date, and
the adjustment is measurable more probable than not. Costs of the acquisition are
recognised in the related period.
Goodwill arises on the acquisition of subsidiaries and represents the excess of
the consideration transferred over the Group’s interest in net fair value of the net
identifiable assets, liabilities and contingent liabilities of the acquire and the fair
value of the non-controlling interest in the acquire.
For the purpose of impairment testing, goodwill acquired in a business combination
is allocated to each of the cash-generating units (“CGUs”), or group of CGUs, that
is expected to benefit from the synergies of the combination. Each unit or group
of units to which the goodwill is allocated represents the lowest level within the
entity at which the goodwill is monitored for internal management purposes.
Goodwill is monitored at the operating segment level. Goodwill impairment reviews
are undertaken annually or more frequently if events or changes in circumstances
indicate a potential impairment.
The carrying value of goodwill is compared to the recoverable amount, which is
the higher of value in use and the fair value less costs to sell. Any impairment is
recognised immediately as an expense and is not subsequently reversed.
Goodwill is not amortised, but it is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might be impaired
and is carried at cost less accumulated impairment losses. Gains and losses on
the disposal of an entity include the carrying amount of goodwill relating to the
entitysold.
Impairment of non-financial assets
The carrying values of assets are reviewed for impairment when events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. An impairment loss is recognised at the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs of disposal and value in use. Value in use
is the present value of estimated future cash flows expected to arise from the use
of an asset and from its disposal at the end of its useful life while the fair value less
cost to sell is the amount that will be collected from the sale of the asset less costs
of disposal.
Estimated future cash flows are typically based on five-year forecasts and terminal
values are considered where the asset has an indefinite useful economic life.
Acash-generating unit is the smallest identifiable group of assets that generates
cash inflows that are largely independent of the cash flows from other assets or
group of assets.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Strategic report Corporate governance Financial statements Additional information
139
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Foreign currency transactions
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised on the income statement. Foreign
exchange gains and losses related to operational activities are classified above
operating profit, whereas foreign exchange gains and losses related to financing are
classified below operating profit. See Note 2.4 regarding presentation currency.
Lease transactions
The Group as the lessee
The Group leases various oces, warehouses, retail stores and cars. Rental
contracts are typically entered into for fixed periods of three to five years but may
have extension options as described in (i) below. Lease terms are negotiated on
an individual basis and contain a wide range of dierent terms and conditions.
Lease agreements are not included in net debt calculations on loan covenants and
therefore do not aect the covenant ratios of the Group.
In terms of cash outflows, each lease payment is allocated between the liability and
finance cost. The finance cost is charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period.
Lease transactions are subject to the same rules as other temporary dierences.
The Company considers the lease as a single transaction in which the asset and
liability are integrally linked, so there is no net temporary dierence at inception.
Subsequently, as dierences arise on settlement of the liability and the amortisation
of the leased asset, there will be a net temporary dierence on which deferred tax
isrecognised.
Right-of-use assets
Right-of-use assets comprising mainly of stores and vehicles are measured at cost
less accumulated depreciation and impairment losses. The right-of-use asset is
initially recognised at cost, comprising:
(a) amount of the initial measurement of the lease liability;
(b) any lease payments made at or before the commencement date, less any lease
incentives received;
(c) any initial direct costs incurred by the Group; and
(d) an estimate of costs to be incurred by the lessee for restoring the underlying
asset to the condition required by the terms and conditions of the lease (unless
those costs are incurred to produce inventories).
The Group performs subsequent measurement for the right-of-use asset by:
(a) netting-o depreciation and reducing impairment losses from the right-of-use
assets; and
(b) adjusting for certain remeasurements of the lease liability recognised at the
present value.
Depreciation is computed on a straight-line basis over the estimated useful lives,
weighing the estimated life of the asset, future economic benefits expected and
lease term of the asset and chooses the shorter of the three. The depreciation terms
are as follows:
Useful
life (years)
Properties 5
Motor vehicles 4-5
For the purpose of impairment testing, right-of-use assets are allocated to each
of the stores. Each store to which the right-of-use assets are allocated represents
the lowest level within the entity at which the right-of-use assets are monitored for
internal management purposes. Right-of-use assets are monitored at the store level.
Impairment reviews for right-of-use assets are undertaken if events or changes in
circumstances indicate a potential impairment. An impairment loss is recognised at
the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use. Fair value less cost to sell is the amount obtainable from the sale of an
asset less the costs of disposal.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Strategic report Corporate governance Financial statements Additional information
140
DP Eurasia N.V.
Annual Report and Accounts 2022
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Lease transactions continued
Right-of-use assets continued
Payments associated with the leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss. There are no residual value
guarantees and the initial direct costs are negligible.
Sub-leases
The Group operates as intermediate lessor for a significant proportion of its leases.
The Group has evaluated its rent agreements and classified its sub-leases as
financial leases as required in IFRS 16.
Where the Group recognised a leasing agreement from a sub-lease transaction,
classified as financial leasing, the right-of-use asset from the head-lease is
derecognised and a lease receivable equal to the derecognised right-of-use assets
is recognised.
Lease liability
The lease liability is initially measured at the present value of the lease payments
that are not paid at the commencement date. Lease liabilities are discounted using
the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value in a similar
economic environment with similar terms and conditions.
Lease payments included in the measurement of the lease liability comprise the
following:
(a) fixed payments, including in-substance fixed payments; and
(b) variable lease payments that depend on an index or a rate, initially measured
using the index or rate as at the commencement date.
After initial recognition, the lease liability is measured by:
(a) increasing the carrying amount to reflect interest on the lease liability;
(b) reducing the carrying amount to reflect the lease payments made; and
(c) remeasuring the carrying amount to reflect any reassessment or lease
modifications or to reflect revised in-substance fixed lease payments.
(i) Extension and termination options
In determining the lease liability, the Group considers the extension and termination
options. Most of the extension and termination options held are exercisable both by
the Group and by the respective lessor.
Extension options are available for all contracts. In more than 90% of the contracts,
DP Eurasia has the right to extend the contract unilaterally, which does not need
the consent of the landlord. Periods covered by an option to extend the lease term
are included in the lease term if the lessee is reasonably certain to exercise that
option. The same rationale applies to termination options. The term covered by
a termination option is not included in the lease term if the lessee is reasonably
certain not to exercise the option. Otherwise, the lease term ends at the point in
time when the leasee can exercise the termination option.
(i) Critical judgements in determining the lease term
Lease terms are generally negotiated locally. Contracts are negotiated on an
individual basis and contain a wide range of terms and conditions, such as early
termination clauses and renewal rights. Termination clauses and renewal rights are
included in several leases across the Group’s lease agreements. They are used to
maximise operational flexibility in terms of managing the assets used in the Group’s
operations. In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise a renewal right, or not
exercise a termination clause. Both options are only included in the lease term if the
lease is reasonably certain to be extended or not terminated.
After the commencement date, the Group reassesses the lease term for each
contract if there is a significant event or change in circumstances that is within its
control and aects its ability to exercise (or not to exercise) the option to renew.
Critical judgements used in determining the lease terms are:
• the Group extends the lease term of properties’ lease contracts between one and
five years; and
• the Group does not extend the lease term on the vehicles’ lease contracts.
During the current financial year, there were no revisions related to initially
recognised lease liabilities.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Lease liability continued
(i) Extension and termination options continued
(i) Critical judgements in determining the lease term continued
The Group applies judgement in evaluating whether it is reasonably certain to
exercise the option to renew. That is, it considers all relevant factors that create an
economic incentive for it to exercise the renewal. Factors that are considered in
terminating or renewing leases include, amongst others:
• location of the store;
• leasehold improvements made with a significant remaining value; and
• costs and business disruption required to replace a leased asset.
(ii) Discount rates used
The discount rate to be used should be the interest rate implicit in the lease if
that rate can be readily determined. This is the rate of interest that causes the
present value of: (a) lease payments; and (b) the unguaranteed residual value to
equal the sum of: (i) the fair value of the underlying asset; and (ii) any initial direct
costs of the lessor. However, since the implicit rate cannot be readily determined,
the incremental borrowing rate is used in calculating the present value of lease
payments during the lease terms that are not paid at that date. Incremental
borrowing rate is the rate of interest that a lessee would have to pay to borrow over
a similar term, and with a similar security, the funds necessary to obtain an asset of
a similar value to the right-of-use asset in a similar economic environment.
The incremental borrowing rate is calculated separately for each operating
company, based on currencies that lease agreements are based on. The rate is
calculated based on a build-up approach whereby each category of lease has an
incremental borrowing rate based on the country (and currency) of the lessee and
the lease term. The Group uses recent third-party financing from banks and adjusts
(if necessary) to reflect changes in financing conditions.
The discount rate is a key variable for lease liabilities and a 1% increase or
decrease in the discount rate would decrease or increase total lease liabilities by
approximately TRY 3,684 and TRY (4,055), respectively.
(iii) Variable elements used
The variable element is the rent increase rate and is calculated based on the
consumer price index (“CPI”), producer price index (“PPI”) or an average of both.
Variable lease payments are based on an index or a rate and are initially measured
using the index or the rate at the commencement date.
Estimation uncertainty arising from variable lease payments
The Group does not forecast future changes of the index/rate; these changes
are considered when the lease payments change. Variable lease payments that
are not based on an index or a rate are not part of the lease liability, but they are
recognised in the income statement when the event or condition that triggers those
payments occurs.
Nearly 90% of future lease payments for stores are linked to CPI, PPI or an average
of both. Variable payment terms are mostly used to make up for the volatile
inflation rates in a country.
Exemptions and simplifications
Payments for leases of low-value assets such as IT equipment (mainly printers,
laptops and mobile phones etc.) are not included in the measurement of the lease
liabilities within the scope of IFRS 16. Lease payments of these contracts continue
to be recognised in profit or loss in the related period.
Provisions, contingent assets and liabilities
Provisions are recognised in the consolidated financial statements when the Group
has a present legal or constructive obligation as a result of past events; it is more
likely than not that an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated.
Where the eect of the time value of money is material, the amount of a provision
is the present value of the expenditures expected to be required to settle the
obligation. The discount rate used to calculate the present value of the provision
should be the pre-tax rate reflecting the functional current market assessments of
the time value of money and the risks specific to the liability. The discount rate shall
not reflect risks for which future cash flow estimates have been adjusted.
A possible obligation or asset that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Group have not been recognised
in these consolidated financial statements and are treated as contingent liabilities
and contingent assets.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Volume rebate advances
Volume rebates received in advance are recognised as income within cost of sales
on an accruals basis on the expected entitlement earned up to the statement of
financial position date. Up-front fees received as volume rebates are recognised as
a liability in the financial statements.
Performance bonus accruals
Realisation of the performance bonus depends on the financial and non-financial
performance of the Group. Performance bonus accrual is recognised when the
Group achieves its minimum requirements and recognised within related payroll
expense accounts.
Related parties
Key management personnel, including Directors of the Company and its
subsidiaries and members of the senior leadership team, together with their families
and companies controlled by or aliated with them, are considered and referred
to as related parties. The Group has determined key management personnel as
Executive Directors, members of the Board of Directors and the leadership team.
Alltransactions between related parties have been made considering an arm’s
length policy.
Parties are considered related to the Group if directly, or indirectly through one or
more intermediaries, the party:
• is an associate of the Group;
• is a joint venture in which the Group is a venture;
• is a member of the key management personnel of the Group or its parent;
• is an entity that is controlled, jointly controlled or significantly influenced by,
or for which significant voting power in such entity resides with, directly or
indirectly, any individual referred to; and
• has a post-employment benefit plan for the benefit of employees of the Group,
or of an entity that is a related party of the Group.
Taxes
Current and deferred tax
Taxes on income for the year comprise current tax and the change in deferred
income taxes. Current year tax liability consists of the taxes calculated over the
taxable portion of the current year income by reference to corporate income tax
rates enacted as at the date of the statement of financial position and adjustments
provided for the previous years’ income tax liabilities.
Deferred income tax is determined using tax rates and laws that have been enacted
or substantially enacted by the statement of financial position date and are
expected to apply when the related deferred income tax asset is realised, or the
deferred income tax liability is settled.
The Group recognises tax assets for the tax losses carried forward to the extent
that the realisation of the related tax benefit through the future taxable profits is
probable.
Deferred income tax liabilities are recognised for all taxable temporary dierences,
whereas deferred income tax assets resulting from deductible temporary
dierences are recognised to the extent that it is probable that future taxable profit
will be available against which the deductible temporary dierence can be utilised.
Deferred income tax assets and deferred income tax liabilities related to income
taxes levied by the same taxation authority are oset when there is a legally
enforceable right to set o current tax assets against current tax liabilities.
Employment termination benefit
Provision for employment termination benefits, as required by Turkish labour law,
represents the estimated present value of the total reserve of the future probable
obligation of the Group companies operating in Turkey arising in case of the
retirement of the employees, termination of employment without due cause or
call for military service. The provision is based upon actuarial estimations using
the estimated liability method. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are recorded to the income
statement and movements through the statement of changes in equity in the period
in which they arise.
Wages, salaries, contributions to the Russian Federation state pension and social
insurance funds, paid annual leave and sick leave and bonuses are accrued in the
year in which the associated services are rendered by the employees. The Group
has no legal or constructive obligation to make pension or similar benefit payments
beyond the unified social tax for its employees in its Russian operations.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Strategic report Corporate governance Financial statements Additional information
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Unused vacation rights
Unused vacation rights accrued in the consolidated financial statements represent
the estimated total liabilities related to employees’ unused vacation days as at the
statement of financial position date.
Share-based incentives
Share-based compensation benefits are provided to members of management via
various incentive plans. Information relating to the equity-settled incentive scheme
is set out in Note 20.
The fair value of options and share awards granted are recognised as a share-based
payment expense with a corresponding increase in equity. The total amount to be
expensed is determined by reference to the fair value of the awards granted:
• including any market performance conditions (e.g. the entity’s share price); and
• excluding the impact of any service and non-market performance vesting
conditions (e.g. remaining an employee of the Group over a specified time).
The total expense is recognised over the vesting period, which is the period over
which all the specified vesting conditions are to be satisfied. At the end of each
period, the Group revises its estimates of the number of awards that are expected
to vest based on the non-market vesting and service conditions. It recognises
the impact of the revision to original estimates, if any, in profit or loss, with a
corresponding adjustment to equity.
When options are exercised, the proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and share premium.
Earnings/(loss) per share
Earnings per share disclosed in the consolidated income statement is determined
by dividing net income/(loss) by the weighted average number of shares circulating
during the year concerned.
Statement of cash flows
The Group has used the indirect method to prepare the consolidated statement
of cash flows. Cash flows in foreign currencies have been translated at
transactionrates.
Subsequent events
The Group adjusts the amounts recognised in the consolidated financial statements
to reflect the adjusting events after the statement of financial position date.
Ifnon-adjusting events after the statement of financial position date have material
influences on the economic decisions of users of the consolidated financial
statements, they are disclosed in the notes to the consolidated financial statements.
One-o items
Regarding the one-o items policy approved by the Group management, in the
presentation of the consolidated income statement, the Group separates one-o
items in order to disclose significant non-recurring items and income/expenses
which are assumed by the Group management as not part of the normal course of
business.
A one-o item is a one-time cost or gain, or series of connected costs or gains,
greater than TRY 500 that is non-recurring, does not arise in the ordinary course
of business, but from circumstances or events that are approved by Group
management, such as:
• business combinations (including integration and restructuring costs);
• public oerings;
• litigation settlements;
• significant disposals of assets and businesses;
• other non-recurring events such as:
• share-based incentives; or
• excess pension charges such as those arising from a change in legislation and
income arising from curtailments of pension plans.
One-o items are applied on a consistent and accrual basis in the consolidated
financial statements. In the presentation of the consolidated income statement,
the Group separates one-o items in order to disclose significant non-recurring
items and income/expenses which are assumed by the Group management as not
part of the normal course of business. The principal events which may give rise to a
one-o item include the restructuring and integration of businesses, public oerings,
material litigation costs/gains, the cost of implementing a cost containment
programme, income and expenses arising from significant disposals of assets and
businesses, sheltered abnormal cost and other specific income and expenses such
as share-based incentives and excess pension charges. The Group discloses the
consolidated income statement in this way as it provides relevant information which
is more closely aligned to how management monitors the performance of theGroup.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Strategic report Corporate governance Financial statements Additional information
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Segment reporting
The Group had two business segments, determined by management according
to the information used for the evaluation of performance and the allocation of
resources: the Turkish and Russian operations. Other operations are composed
of corporate expenses of Dutch companies. These segments are managed
separately because they are aected by economic conditions and geographical
positions in terms of risks and returns. However, along with the intention to sell-out
Russian operations, the Company has presented operational results of Russian
operations in the “discontinued operations” line in its consolidated statement of
comprehensive income in the year ending 31 December 2022 and the presentation
for the year ending 31 December 2021 has been restated in accordance with IFRS5,
‘Non-current Assets Held for Sale and Discontinued Operations’. As a result,
segment reporting disclosures are presented as Turkey and other segments.
IFRS 8 requires operating segments to be reported in a manner consistent with
the internal reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the management
team, including the Chief Executive Ocer, Chief Strategy Ocer and Chief
Financial Ocer.
The Group management assesses the performance of operating segments by the
earnings before interest, tax, depreciation and amortisation (“EBITDA”), adjusted
net debt, adjusted net income and adjusted earnings per share figures generated
by adjusting the EBITDA, net debt, net income and earnings per share calculated
based on the financial statements prepared in accordance with IFRS with necessary
adjustments and reclassifications. Those adjustments and reclassifications are
adding back the net eect of the time dierence and foreign exchange gains and
losses generated from commercial operations in accordance with IFRS and the
one-o items policy as reflected above.
EBITDA calculated based on this approach is defined as “adjusted EBITDA”.
Management primarily uses the adjusted EBITDA measure when making decisions
about the Group’s activities. As EBITDA and adjusted EBITDA are non-GAAP
measures, adjusted EBITDA and adjusted operating profit measures used by
other entities may not be calculated in the same way and hence are not directly
comparable.
Group management assesses liquidity and levels of borrowing by net debt (total
borrowings less cash and cash equivalents) and by additionally removing the
eect of long-term guarantee deposits and cash in transit not included in the
year-end cash balance to arrive at adjusted net debt. Management primarily uses
the adjusted net debt measure when making decisions about the Group’s financing.
As net debt and adjusted net debt are non-GAAP measures, adjusted net debt
measures used by other entities may not be calculated in the same way and hence
are not directly comparable.
Assets and liabilities held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying
amount will be recovered principally through a sale transaction rather than through
continuing use and a sale is considered highly probable. They are measured at the
lower of their carrying amount and fair value less costs to sell, except for assets such
as deferred tax assets, assets arising from employee benefits and financial assets
that are carried at fair value, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the
asset (or disposal group) to fair value less costs to sell. A gain is recognised for any
subsequent increases in fair value less costs to sell of an asset (or disposal group),
but not in excess of any cumulative impairment loss previously recognised. A gain
or loss not previously recognised by the date of the sale of the non-current asset
(ordisposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not
depreciated or amortised while they are classified as held for sale. Interest and
other expenses attributable to the liabilities of a disposal group classified as held
for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group
classified as held for sale are presented separately from the other assets in
the balance sheet. The liabilities of a disposal group classified as held for sale
are presented separately from other liabilities in the balance sheet. Prior year
classification of such assets and liabilities has not been restated.
A discontinued operation is a component of the entity that has been disposed of or
is classified as held for sale and that represents a separate major line of business or
geographical area of operations, is part of a single co-ordinated plan to dispose of such a
line of business or area of operations, or is a subsidiary acquired exclusively with a view to
resale. The results of discontinued operations are presented separately in the statement of
profit or loss and respective balances for the prior years have been restated accordingly.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Strategic report Corporate governance Financial statements Additional information
145
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 2 – Basis of presentation of consolidated financial statements continued
2.6 Significant accounting estimates
The preparation of consolidated financial statements requires estimates and
assumptions to be made regarding the amounts for assets and liabilities at the
statement of financial position date and bases for the contingent assets and
liabilities as well as the amounts of income and expenses realised in the reporting
period. The Group makes estimates and assumptions concerning the future, which,
by definition, may not equate to the related actual results. The estimates and
assumptions that may cause a material adjustment to the carrying amounts of
assets and liabilities within the next financial period are addressed below:
The areas involving significant estimates or judgements are:
• impairment tests for goodwill (Note 11);
• impairment tests for tangible and intangible assets (Notes 8 and 9);
• right-of-use assets, lease receivables and liabilities (Note 10);
• non-deductible expenses on corporate income tax liability calculation (Note 19);
and
• intention to sell-out Russian operation (Note 24).
Significant judgements or estimates are disclosed in the related notes.
Note 3 – Segment reporting
The business operations of the Group are organised and managed with respect to
geographical positions of its operations. The information regarding the business
activities of the Group as at 31 December 2022 and 2021 comprise the performance
and the management of its Turkish operations and headquarters.
In previous year, the Group had three business segments, Turkey, Russian and
other. Due to the intention to sales of Russian operation, the Group has reclassified
the results of Russian operation as discontinued operations in the comprehensive
income The segment results of Russian operations has been presented in Note 24.
As of 31December 2022, the Group has two business segments, determined by
management according to the information used for the evaluation of performance
and the allocation of resources: the Turkish and other operations. Other operations
are composed of corporate expenses of Dutch companies. These segments are
managed separately because they are aected by economic conditions and
geographical positions in terms of risks and returns.
Due to initial application of IAS 29 and its impact on the comparative periods,
management information presented in segment reporting have been restated in
accordance with IAS 29 application.
The segment analysis for the periods ended 31 December 2022 and 2021 is
asfollows:
1 January - 31 December 2022 Turkey Other Total
Corporate revenue 512,567 — 512,567
Franchise revenue and
royalty revenue obtained from franchisees 1,547,498 — 1,547,498
Other revenue 159,638 — 159,638
Total revenue 2,219,703 — 2,219,703
– At a point in time 2,217,863 — 2,217,863
– Over time 1,840 — 1,840
Operating profit 218,979 (29,959) 189,020
Capital expenditure 82,323 — 82,323
Tangible and intangible disposals (16,861) — (16,861)
Depreciation and amortisation expenses 109,923 — 109,923
Adjusted EBITDA 336,638 (25,589) 311,049
1 January - 31 December 2022 Turkey Other Total
Borrowings
TRY 709,889 — 709,889
RUB — 84,266 84,266
709,889 84,266 794,155
Lease liabilities
TRY 195,323 — 195,323
RUB — — —
195,323 — 195,323
Total 905,212 84,266 989,478
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146
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 3 – Segment reporting continued
1 January - 31 December 2021 Turkey Other Total
Corporate revenue 565,914 — 565,914
Franchise revenue and royalty revenue obtained from franchisees 1,365,414 — 1,365,414
Other revenue 131,419 — 131,419
Total revenue 2,062,747 — 2,062,747
– At a point in time 2,051,277 — 2,051,277
– Over time 11,470 — 11,470
Operating profit 216,926 (20,754) 196,172
Capital expenditure 65,458 — 65,458
Tangible and intangible disposals (3,033) — (3,033)
Depreciation and amortisation expenses 90,811 — 90,811
Adjusted EBITDA 313,097 (17,590) 295,507
1 January – 31 December 2021 Turkey Other Total
Borrowings
TRY 540,738 — 540,738
RUB — 211,320 211,320
540,738 211,320 752,058
Lease liabilities
TRY 372,764 — 372,764
RUB — — —
372,764 — 372,764
Total 913,502 211,320 1,124,822
EBITDA, adjusted EBITDA, net debt, adjusted net debt, adjusted net income and non-recurring and non-trade income/expenses are not defined by IFRS. The amounts provided with
respect to operating segments are measured in a manner consistent with that of the financial statements. These items, determined by the principles defined by Group management,
comprise income/expenses which are assumed by the Group management to not be part of the normal course of business and are non-recurring items. These items, which are not
defined by IFRS, are disclosed by Group management separately for a better understanding and measurement of the sustainable performance of the Group.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Strategic report Corporate governance Financial statements Additional information
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 3 – Segment reporting continued
31 Dec 31 Dec
Turkey 2022 2021
Adjusted EBITDA
(1)
336,638 313,097
Non-recurring and non-trade (income)/expenses per Group management
(1)
One-o non-trading costs 2,847 —
Share-based incentives 4,889 5,360
EBITDA 328,902 307,737
Depreciation and amortisation (109,923) (90,811)
Operating profit 218,979 216,926
31 Dec 31 Dec
Other 2022 2021
Adjusted EBITDA
(1)
(25,589) (17,590)
Non-recurring and non-trade (income)/expenses per Group management
(1)
One-o non-trading costs 4,370 3,164
EBITDA (29,959) (20,754)
Depreciation and amortisation — —
Operating loss (29,959) (20,754)
(1) Adjusted net income and non-recurring and non-trade income/expenses are not defined by IFRS. Adjusted net income excludes income and expenses which are not part of the normal course of business
and are non-recurring items. Management uses this measurement basis to focus on core trading activities of the business segments, and to assist it in evaluating underlying business performance.
The reconciliation of adjusted EBITDA for 2022 and 2021 is as follows:
1. EBITDA, adjusted EBITDA and non-recurring and non-trade income/expenses are not defined by IFRS. These items are determined by the principles defined by Group
management and comprise income/expenses which are assumed by Group management to not be part of the normal course of business and are non-trading items. These items,
which are not defined by IFRS, are disclosed by Group management separately for a better understanding and measurement of the sustainable performance of the Group; and
2. the reason for the significant increase in one-o non-trading costs is mainly related to impairment expenses of the tangible and intangible assets and consultancy expenses due
to the cost reduction programme.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 3 – Segment reporting continued
The reconciliation of adjusted net income from continuing operations as at
31December 2022 and 2021 is as follows:
2022 2021
(Loss)/Profit for the period as reported 202,049 134,239
Non-recurring and non-trade (income)/
expenses per Group management
Share-based incentives 4,889 5,360
One-o expenses/(income)
(2)
7,217 3,164
Adjusted net income for the period
(1)
214,155 142,763
(1) Adjusted net income and non-recurring and non-trade income/expenses are not defined by
IFRS. Adjusted net income excludes income and expenses which are not part of the normal
course of business and are non-recurring items. Management uses this measurement basis
to focus on core trading activities of the business segments, and to assist it in evaluating
underlying business performance.
(2) As at 31 December 2022, the one-o expenses include TRY 20,576 impairment expense of
tangible and intangible assets and TRY 1,501 severance payment expenses.
The average headcount for the Group is as follows:
2022 2021
Category of activities Turkey Netherlands Turkey Netherlands
Executive and senior management 12 3 11 3
Store employees 1,155 — 1,288 —
Support employees 241 — 227 —
Support – other 5 — — —
Commissary employees 41 — 44 —
Total 1,454 3 1,570
3
Note 4 – Revenue and cost of sales
2022 2021
Corporate revenue 512,567 565,914
Franchise revenue and royalty revenue
obtained from franchisees 1, 547,498 1,365,414
Other revenue
(1)
159,638 131,419
Revenue 2,219,703 2,062,747
Cost of sales (1,396,461) (1,268,290)
Gross profit 823,242 794,457
(1) Other revenue mainly includes handover income, IT income and other income from
franchisee.
Revenue recognised in relation to contract liabilities
The movements of performance obligations and revenue recognised in relation to
contract liabilities for the years ended 31 December 2022 and 2021 are as follows:
2022 2021
As at 1 January 167,805 79,442
Recognised as revenue (1,840) (11,470)
Increases due to new franchise agreements entered 30,270 99,833
As at 31 December 196,235 167,805
Unsatisfied long-term franchisee contracts
The amount of performance obligations relating to ongoing contracts of the
Group that will be recognised in the future is TRY 196,235 (31 December 2021:
TRY167,805). The Group expects that this amount will be recorded as revenue
within tento fifteen years.
Note 5 – Expenses by nature
2022 2021
Employee benefit expenses
(1)
290,817 153,380
Depreciation and amortisation expenses
(1)
109,923 90,811
400,740 244,191
(1) These expenses are accounted for in cost of sales, general administration expenses and
marketing expenses.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 6 – Financial income and expenses
Foreign exchange (losses)/gains 2022 2021
Foreign exchange gains, net 82,438 49,805
Foreign exchange gains on lease liabilities 3,080 —
85,518 49,805
Financial income 2022 2021
Interest income on lease receivables 26,459 22,549
Interest income 83,167 30,972
109,626 53,521
Financial expense 2022 2021
Interest expense (170,360) (92,312)
Interest expense on lease liabilities (53,487) (35,860)
Other (16,501) (4,568)
(240,348) (132,740)
Note 7 – (Loss)/profit per share
31 Dec 31 Dec
2022 2021
Average number of shares existing during the period 145,372 145,372
Net (loss)/profit for the period attributable
to equity holders of the parent (9,041) 62,874
(Loss)/Profit per share (0.06) 0.43
31 Dec 31 Dec
2022 2021
Average number of shares existing during the period 145,372 145,372
Net profit from continuing operations attributable
to equity holders of the parent 202,049 134,239
Earnings per share 1.39 0.92
31 Dec 31 Dec
2022 2021
Average number of shares existing during the period 145,372 145,372
Net loss from discontinued operations attributable
to equity holders of the parent (211,090) (71,365)
(Loss)/profit per share (1.45) (0.49)
The reconciliation of adjusted earnings per share as at 31 December 2022 and 2021 is
as follows:
31 Dec 31 Dec
2022 2021
Average number of shares existing during the period 145,372 145,372
Net loss for the period from continuing operations attributable
to equity holders of the parent (9,041) 62,874
Non-recurring and non-trade expenses per Group management
(1)
Share-based incentives 4,889 5,360
One-o expenses 7, 217 —
Adjusted net earnings for the period from continuing
operations attributable to equity holders of the parent 3,065 71,397
Adjusted income/(loss) per share
(1)
0.02 0.49
(1) Adjusted earnings per share and non-recurring and non-trade income/expenses are not
defined by IFRS. The amounts provided with respect to operating segments are measured
in a manner consistent with that of the financial statements. These items, determined by the
principles defined by Group management, comprise income/expenses which are assumed
by Group management to not be part of the normal course of business and are
non-recurring items. These items, which are not defined by IFRS, are disclosed by Group
management separately for a better understanding and measurement of the sustainable
performance of the Group.
There are no shares or options with a dilutive eect and hence the basic and diluted
earnings per share are the same.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 8 – Property and equipment
Machinery and Motor Furniture and Leasehold Construction
equipment vehicles fixtures improvements in progress Total
Cost
1 January 2022 142,872 93,326 284,549 300,682 4,308 825,737
Additions 9,654 14,232 19,332 706 11,986 55,910
Disposals (10,884) (34,419) (64,931) (23,075) (27,791) (161,100)
Transfers 4,908 — 125 (457) (4,576) —
Currency translation adjustments 53,458 241 3,952 36,175 1,941 95,767
Eect of disposal of subsidiaries (162,471) (491) (11,080) (131,073) (1,944) (307,059)
31 December 2022 37,537 72,889 231,947 182,958 (16,076) 509,255
Accumulated depreciation
1 January 2022 (81,645) (66,289) (207,795) (258,945) — (614,674)
Additions (24,578) (11,143) (21,252) (18,844) — (75,817)
Disposals 6,071 26,860 61,516 41,491 — 135,938
Currency translation adjustments (31,450) (210) (2,563) (32,063) — (66,286)
Eect of disposal of subsidiaries 107,561 415 8,626 118,559 — 235,161
31 December 2022 (24,041) (50,367) (161,468) (149,802) — (385,678)
Net book value 13,496 22,522 70,479 33,156 (16,076) 123,577
(1) Impact of assets transferred to asset held for sale.
Depreciation expense of TRY 62,019 has been charged in cost of sales and TRY 13,798 has been charged in general administrative expenses.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 8 – Property and equipment continued
Machinery and Motor Furniture and Leasehold Construction
equipment vehicles fixtures improvements in progress Total
Cost
1 January 2021 121,821 61,068 264,422 287,537 5,100 739,948
Additions 2,322 26,768 11,653 2,291 544 43,578
Disposals (1,810) (3,844) (4,073) (1,787) (699) (12,213)
Transfers 49 11 1,322 (598) (784) —
Impairment — — — (5,446) — (5,446)
Currency translation adjustments 20,490 9,323 11,225 18,685 147 59,870
31 December 2021 142,872 93,326 284,549 300,682 4,308 825,737
Accumulated depreciation
1 January 2021 (64,458) (50,756) (188,741) (232,866) — (536,821)
Additions (10,098) (9,207) (11,586) (15,795) — (46,686)
Disposals 902 3,844 3,084 1,350 — 9,180
Impairment — — — 3,525 — 3,525
Currency translation adjustments (7,991) (10,170) (10,552) (15,159) — (43,872)
31 December 2021 (81,645) (66,289) (207,795) (258,945) — (614,674)
Net book value 61,227 27,037 76,754 41,737 4,308 211,063
Amortisation expense of TRY 38,186 has been charged in cost of sales and TRY 8,500 has been charged in general administrative expenses.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 9 – Intangible assets
Computer
Key money software Total
Cost
1 January 2022 83,927 318,506 402,433
Additions 3,257 55,054 58,311
Disposals (20,707) (22,256) (42,963)
Currency translation adjustments 2,835 31,344 34,179
Eect of disposal of subsidiaries (7,225) (93,806) (101,031)
31 December 2022 62,087 288,842 350,929
Accumulated depreciation
1 January 2022 (55,778) (229,364) (285,142)
Additions (8,173) (29,107) (37,280)
Disposals 13,440 22,009 35,449
Currency translation adjustments (1,043) (15,707) (16,750)
Eect of disposal of subsidiaries 2,441 42,323 44,764
31 December 2022 (49,113) (209,846) (258,959)
Net book value 12,974 78,996 91,970
(1) Impact of assets transferred to asset held for sale.
Amortisation expense of TRY 17,137 has been charged in cost of sales and TRY 20,143 has been charged in general administrative expenses.
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 9 – Intangible assets continued
Computer
Key money software Total
Cost
1 January 2021 87,607 260,233 347,840
Additions 481 32,098 32,579
Disposals (15,185) (3,368) (18,553)
Currency translation adjustments 11,024 29,543 40,567
31 December 2021 83,927 318,506 402,433
Accumulated depreciation
1 January 2021 (44,466) (191,724) (236,190)
Additions (10,588) (34,802) (45,390)
Disposals 5,553 740 6,293
Currency translation adjustments (6,277) (3,578) (9,855)
31 December 2021 (55,778) (229,364) (285,142)
Net book value 28,149 89,142 117,291
As at 31 December 2021, disposals include an impairment charge of TRY 14,001.
Amortisation expense of TRY 25,405 has been charged in cost of sales and TRY 19,985 has been charged in general administrative expenses.
The Group does not have any intangible assets with an indefinite useful life.
Note 10 – Right-of-use assets
Details of right-of-use assets as at 31 December 2022 and 2021 are as follows:
31 Dec
31 Dec
Right-of-use assets 2022
2021
Stores and building 90,766 200,658
Cars 7,776 18,311
98,542 218,969
Details of lease receivables as at 31 December 2022 and 2021 are as follows:
31 Dec
31
Dec
2022
2021
Lease receivables
Current 13,676 32,270
Non-current 95,272 109,391
108,948 141,661
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 10 – Right-of-use assets continued
Details of lease liabilities as at 31 December 2022 and 2021 are as follows:
31 Dec 31 Dec
2022 2021
Lease liabilities
Current 42,901 91,072
Non-current 152,422 281,692
195,323 372,764
Movement of right-of-use assets
Stores and building Vehicles Total
Cost
1 January 2022 402,209 27,785 429,994
Additions 166,398 4,807 171,205
Disposals (319,042) (287) (319,329)
Eect of disposal of subsidiaries (260,044) — (260,044)
Currency translation adjustments 130,173 — 130,173
31 December 2022 119,694 32,305 151,999
Accumulated depreciation
1 January 2022 (201,551) (9,474) (211,025)
Additions (103,526) (16,162) (119,688)
Disposals 242,199 1,107 243,306
Eect of disposal of subsidiaries 112,279 — 112,279
Currency translation adjustments (78,329) — (78,329)
31 December 2022 (28,928) (24,529) (53,457)
Net book value 90,766 7,776 98,542
For the year ended 31 December 2022, depreciation expense of TRY 103,854 has been charged to cost of sales and TRY 15,834 has been charged to general administrative expenses
(31 December 2021: TRY 31,912 and TRY 4,865 respectively).
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 10 – Right-of-use assets continued
Stores and
building Vehicles Total
Cost
1 January 2021 262,797 11,983 274,780
Additions 90,259 16,817 107,076
Disposals (51,429) (1,015) (52,444)
Currency translation adjustments 100,582 — 100,582
31 December 2021 402,209 27,785 429,994
Accumulated depreciation
1 January 2021 (96,022) (5,450) (101,472)
Additions (32,750) (4,027) (36,777)
Disposals 38,241 3 38,244
Currency translation adjustments (111,020) — (111,020)
31 December 2021 (201,551) (9,474) (211,025)
Net book value 200,658 18,311 218,969
In 2022, interest expense on lease liabilities is TRY 53,487 and the total amount of interest of sub-lease expense is TRY 26,459 (31 December 2021: TRY 35,860 and TRY 22,549
respectively).
In 2022, the total cash outflow for principal of leases and interest of leases is TRY 107,176 and TRY 53,487 respectively. In 2022, the total cash inflow for interest of leases is TRY 26,459
(31 December 2021: TRY 109,466, TRY 31,051 and TRY 15,839 respectively).
Note 11 – Goodwill
Movement of goodwill is as follows:
31 Dec 31 Dec
2022 2021
1 January 251,210 251,210
Eect of disposal of subsidiary (16,613) —
31 December 234,597 251,210
Management has carried out an impairment test and concluded that the recoverable amount of the individual CGUs is higher than the carrying amount. The goodwill relating to the
Russian CGU has been classified as asset held for sale in the amount of TRY 16,613. Remaining balance is only related to Turkish CGU.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 11 – Goodwill continued
Goodwill impairment test
In accordance with IFRS and the accounting policies explained in Note 2.5, the Group
performs impairment tests on goodwill to assess whether impairment exists. The Group is
obliged to test goodwill annually for impairment, or more frequently if there are indications
that goodwill might be impaired, as goodwill is deemed to have an indefinite useful life.
In order to perform this test, management is required to compare the carrying value
of the relevant cash-generating unit (“CGU”), defined as stores of the Group including
goodwill, with its recoverable amount. The recoverable amounts of the CGU are
determined based on a value in use calculation.
These calculations require estimations and use pre-tax cash flow projections based on
financial budgets approved by management covering a five-year period. Cash flows
beyond the five-year period are extrapolated using the estimated growth rates stated
below. For the purpose of assessing impairment, the discounted cash flows calculated
based on the Group’s revenue projections for five years are compared to the carrying
value of all assets in CGUs, including allocated goodwill.
The Group prepares pre-tax cash flow forecasts derived from the most recent financial
budgets approved by management for the next five years and extrapolates cash flows
for the remaining term based on the average long-term growth rate of 14.2% for the
Turkish market and 2.3% for the Russian market (31 December 2021: 13.2% for the
Turkish market and 3.1% for the Russian market).
Other key assumptions applied in the impairment tests include the expected product price,
capital expenditures, demand for the products, product cost and related expenses which are
reflected in the sales growth rate for the upcoming years. Management used a sales growth
projection rate of 5.1% for Turkey and 12.3% for Russia respectively (31December2021:
7.4% for Turkey and 15.1% for Russia respectively). Growth projections include inflation
expectations for the related CGUs; management determined these key assumptions based
on past performance and its expectations on market development. Further, management
applied capital expenditure increases of 7.0% for Turkey and Russia operations and pre-tax
discount rates of 27.6% for 2022 and 29.8% for 2021 for Turkey and 15.8% for 2022 and for
the Russian Federation to reflect country-specific Group risks.
Sensitivities – Turkish operations
The assumptions used for value in use calculations to which the recoverable
amount is more sensitive are growth rate beyond five years and pre-tax discount
rate. Management determined these key assumptions based on past performance
and its expectations on market development. Further, management adopts
dierent discount rates each year that reflect specific risks related to the Group
as discount rates. Impairment loss has not been recognised for Turkish operations
as a result of the impairment tests performed with the above assumptions as at
31December2022. A further test with 5% increase in WACC or 5% decrease in
growth rate to the above assumptions did not result in any impairment loss, either.
Sensitivities – Russian operations
The assumptions used for value in use calculations to which the recoverable amount
is more sensitive are growth rate beyond five years and pre-tax discount rate.
Management determined these key assumptions based on past performance and its
expectations on market development.
Impairment loss has not been recognised as a result of the impairment tests performed
with the above assumptions as at 31 December 2022. A further test with a 5% adverse
change to the above assumptions did not result in any impairment loss either.
Note 12 – Cash and cash equivalents
The details of cash and cash equivalents as at 31 December 2022 and 2021 are as follows:
31 Dec 31 Dec
2022 2021
Cash 1,392 5,596
Banks 120,355 114,847
Term bank deposits (less than three months) 171,000 119,917
Credit card receivables
(1)
67,312 14,340
360,059 254,700
(2) Maturity terms of credit card receivables are 30 days on average (31 December 2021:
30days).
There is no restricted cash as at 31 December 2022 and 2021.
The details of currency of the banks are as follows:
31 Dec 31 Dec
2022 2021
Turkish Lira 261,922 192,775
Russian Roubles 78 273
US Dollars 28,725 38,479
Euro 630 3,237
291,355 234,764
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 13 – Trade receivables and payables
a) Short-term trade receivables
31 Dec 31 Dec
2022 2021
Trade receivables 267,135 350,745
Post-dated cheques
(1)
32,182 38,555
299,317 389,300
Less: Doubtful trade receivables (1,357) (3,507)
Short-term trade receivables, net 297,960 385,793
(1) Post-dated cheques are the receivables from franchisees resulting from store openings.
The average collection period for trade receivables is between 30 and 60 days (2021:
between 30 and 60 days).
Movement of provision for doubtful receivables is as follows:
2022 2021
1 January 3,507 7,003
Current year (reversals)/charges (778) (2,128)
Monetary gain/loss (1,372) (1,368)
31 December 1,357 3,507
The Group applied IFRS 9 simplified approach to measuring expected credit losses,
which uses a lifetime expected loss allowance for all trade, lease and other receivables
based on historical losses. The Group analysed the impact of IFRS 9 and the historical
losses that were incurred in 2022 also impacted the expected credit losses going
forward, resulting in a disposal of TRY 764 recorded as provision for doubtful
receivables (31 December 2021: TRY 588). The Group also assessed whether the
historic pattern would change materially in the future. The expected credit loss applied
per ageing bucket is shown as below:
Not 0-30 31-90 91-180 181-360 Over 360
due days days days days days
0.12% 1.46% 4.77% 9.93% 27.55% 52.02%
Lease receivables have no history if default and expected credit loss percentages are
close to zero and its eect is immaterial, so the table below consists of only trade and
other receivables.
b) Long-term trade receivables
31 Dec 31 Dec
2022 2021
Trade receivables 4,889 2,123
Post-dated cheques
(1)
11,476 19,080
16,365 21,203
(1) Post-dated cheques are the receivables from franchisees resulting from store openings.
c) Short-term trade and other payables
31 Dec 31 Dec
2022 2021
Trade payables 350,533 388,000
Other payables 3,886 7,363
354,419 395,363
The weighted average term of trade payables is less than three months; short-term
payables with no stated interest are measured at original invoice amount unless the
eect of imputing interest is significant (31 December 2022 and 2021: less than three
months).
Note 14 – Transactions and balances with related parties
The details of receivables and payables from related parties as at 31 December 2022
and 2021 and transactions are as follows:
a) Key management compensation
31 Dec 31 Dec
2022 2021
Short-term employee benefits 37,035 36,075
Share-based incentives 4,889 2,482
41,924 38,557
There are no loans, advance payments or guarantees given to key management.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 14 – Transactions and balances with related parties continued
b) Board compensation
Executive Directors Non-Executive Directors
Aslan Frederieke Peter David Ahmet Burak Shyam S. Hari S.
Year ended 31 December 2022 Saranga Slot Williams Adams Ashaboğlu Ertaş Bartia Bartia
Base salary (TRY) 5,057,348 2,243,180 3,046,890 731,254 170,292 343,923 — —
Benefits (TRY) 427,428 399,189 — — — — — —
Pension (TRY) — 224,318 — — — — — —
Annual bonus (TRY) 5,800,063 — — — — — — —
Long-term incentives (TRY) 4,766,765 — — — — — — —
Total (TRY) 16,051,604 2,866,687 3,046,890 731,254 170,292 343,923 — —
Total (local currency) ₺16,051,604 £165,169 £150,000 £36,000 £8,384 £16,932 — —
Executive Directors Non-Executive Directors
Aslan Frederieke Peter David Ahmet Burak Shyam S. Hari S.
Year ended 31 December 2021 Saranga Slot Williams Adams Ashaboğlu Ertaş Bartia Bartia
Base salary (TRY) 3,013,325 1,052,560 1,514,515 415,987 — — — —
Benefits (TRY) 1,567,657 239,721 — — — — — —
Pension (TRY) — 21,930 — — — — — —
Annual bonus (TRY) 1,868,262 — — — — — — —
Long-term incentives (TRY) 1,164,469 — — — — — — —
Total (TRY) 7,613,713 1,314,211 1,514,515 415,987 — — — —
Total (local currency) ₺7,613,713 £145,918 £125,000 £34,333 — — — —
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 14 – Transactions and balances with related parties continued
b) Board compensation continued
Notes to the table – methodology
Base salary
This represents the cash paid or receivable in respect of the financial year.
Benefits
This represents the taxable value of all benefits paid or receivable in respect of the
relevant financial year. Aslan Saranga’s benefits included private health cover and
company car. Frederieke Slot’s benefits included medical disability allowance, mobility
allowance and education, communication and IT allowances.
Pension
Frederieke Slot receives a pension allowance worth 2% of base salary. Aslan Saranga
receives no pension allowance. They will additionally both receive other benefits
consistent with local market practice.
Annual bonus
This represents the total bonus payable for the relevant financial year under the ADBP.
In 2022, the Chief Executive Ocer’s annual bonus was based on 75% of the Group
EBITDA and 25% on strategic measures.
Long-term incentives
This row relates to the expense recognised for the LTIP awards during the period in
accordance with IFRS. Please note that in the remuneration report on pages 111 to 115,
the value of vested LTIP awards is included in the remuneration table. Since no LTIP
awards have been vested to Executive Directors during the period, this column has a
zero figure in the remuneration report.
In May 2019, Aslan Saranga was granted an LTIP award over 332,706 shares vesting
in May 2022 subject to achievement of adjusted EBITDA targets measured over the
period 2019-2021. As the performance condition was not achieved, no shares will vest
for Aslan Saranga in May 2022.
In May 2020, Aslan Saranga was granted an LTIP award over 506,212 shares vesting
in May 2023 subject to achievement of adjusted EBITDA targets measured over the
period 2020-2022.
Local currency totals
Part of Aslan Saranga’s remuneration and the whole of Frederieke Slot’s
remuneration is paid in Euros and Peter Williams’ and Tom Singer’s remuneration
is wholly paid in Pound Sterling. Total amounts received by each individual in local
currency are shown in the final row of the above table. In the other columns of the
table, remuneration has been converted into Turkish Lira for consistency with the
financial statements.
Note 15 – Inventories
31 Dec 31 Dec
2022 2021
Raw materials 233,704 214,496
Other inventory 5,110 9,447
Total 238,814 223,943
The cost of inventories recognised as expense and included in “cost of sales”
amounted to TRY 1,082,737 in 2022 (2021: TRY 656,091).
Note 16 – Other current/non-current receivables, assets and liabilities
31 Dec 31 Dec
Other current receivables and assets 2022 2021
Advance payments
(1)
145,328 112,609
Lease receivables 13,676 32,270
Prepaid marketing expenses 7, 335 5,379
Contract assets related to franchising contracts
(2)
2,953 7,426
Prepaid insurance expenses 2,664 1,815
Prepaid taxes and VAT receivable 762 1,297
Deposits for loan guarantees
(3)
— 37,583
Other
(4)
3,108 3,297
Total 175,826 201,677
(1) As at 31 December 2022 and 2021, advance payments are composed of advances given to
suppliers for purchasing raw materials and other services.
(2) The Group incurs certain costs with Domino’s Pizza International related to the setup of
each franchise contract and IT systems used for recording of franchise revenue.
(3) In 2021, the Group repaid a portion of its loans to Sberbank Moscow and the TRY 37,583
(RUB 205 million) cash deposit condition that was made as collateral by Fidesrus. This
amount has been reclassified in the “Asset held for sale” line in the balance sheet.
(4) As at 31 December 2022 and 2021, other includes job and personnel advances, short-term
security deposits and other prepayments such as subscriptions and travel expenses.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 16 – Other current/non-current receivables, assets and liabilities
continued
31 Dec 31 Dec
Other non-current receivables and assets 2022 2021
Lease receivables 95,272 109,391
Prepaid marketing expenses 44,463 36,565
Contract assets related to franchising contracts
(1)
20,337 15,356
Deposits given 4,615 11,835
Other non-current assets — 1,094
Total 164,687 174,241
(1) The Group incurs certain costs with DP International related to the set up of each franchise
contract and IT systems used for recording of franchise revenue.
31 Dec 31 Dec
Other current liabilities 2022 2021
Performance bonuses 29,585 31,034
Contract liabilities from franchising contracts
(1)
25,779 50,703
Taxes and funds payable 21,151 15,257
Social security premiums payable 11,845 8,370
Payable to personnel 10,244 15,968
Unused vacation liabilities 8,495 14,825
Advances received from franchisees 5,696 7,037
Volume rebate advances — 3,424
Other expense accruals 23,165 22,180
Total 135,960 168,798
(1) The Group incurs certain revenue with the set up of each franchise contract and these
franchise fee revenues are deferred over the period of the franchise agreement.
31 Dec 31 Dec
Other non-current liabilities 2022 2021
Contract liabilities from franchising contracts
(1)
147,166 94,319
Unearned revenue 7,740 19,119
Long-term provisions for employee benefits 13,693 6,883
Other — 5,133
Total 168,599 125,454
(1) The Group incurs certain revenue with the set up of each franchise contract and these
franchise fee revenues are deferred over the period of the franchise agreement.
Note 17 – Financial liabilities
31 Dec 31 Dec
2022 2021
Short-term bank borrowings 709,889 474,598
Short-term financial liabilities 709,889 474,598
Short-term portions of long-term borrowings 19,343 47,264
Short-term portions of long-term leases 42,901 91,072
Current portion of long-term financial liabilities 62,244 138,336
Total short-term financial liabilities 772,133 612,934
Long-term bank borrowings 64,923 230,196
Long-term leases 152,422 281,692
Long-term financial liabilities 217,345 511,888
Total financial liabilities 989,478 1,124,822
As at 31 December 2022, the fair value of the financial liabilities is TRY 786,632
(31 December 2021: TRY 740,308).
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 17 – Financial liabilities continued
The summary information of short-term and long-term bank borrowings is as follows:
31 December 2022 Interest
Currency Maturity rate (%) Short-term Long-term
TRY borrowings Revolving 16.95% 709,889 —
RUB borrowings 2025 9.70%-14.30% 19,343 64,923
729,232 64,923
31 December 2021 Interest
Currency Maturity rate (%) Short-term Long-term
TRY borrowings Revolving 19.14% 474,598 66,140
RUB borrowings 2024 9.70%-14.30% 47,264 164,056
521,862 230,196
The loan agreement between Sberbank Moscow and Domino’s Russia is subject to
covenant clauses whereby the Group, Domino’s Turkey and Domino’s Russia are
required to meet certain ratios.
As at 31 December 2022, Sberbank has waived the covenant conditions based on the
EBITDA figures for all quarters of 2022; but Sberbank has not waived the covenant
conditions based on the turnover, however, loans from Sberbank have already been
classified as short-term under the “Liabilities for sale” line in the balance sheet.
The redemption schedule of the borrowings as at 31 December 2022 and 2021 is as
follows:
31 Dec 31 Dec
2022 2021
To be paid in one year 729,232 521,862
To be paid between one to two years 41,431 120,953
To be paid between two to three years 23,492 109,243
794,155 752,058
The redemption schedule of the leases as at 31 December 2022 and 2021 is as follows:
31 Dec 31 Dec
2022 2021
Leases to be paid in one year 42,901 91,072
Leases to be paid between one to two years 62,217 55,321
Leases to be paid between two to three years 43,353 95,951
Leases to be paid in three years and more 46,852 130,420
195,323 372,764
Please refer to Note 23 for financial risk management disclosures.
As at 31 December 2022 and 2021, the net financial liabilities reconciliation is as follows:
31 Dec 31 Dec
2022 2021
Cash and cash equivalents 360,059 254,700
Financial liabilities and leases to be paid in one year (772,133) (612,934)
Financial liabilities and leases to be paid in one to five years (217,345) (511,888)
(629,419) (870,122)
31 Dec 31 Dec
2022 2021
Cash and cash equivalents 360,059 254,700
Financial liabilities and leases – fixed rate (989,478) (1,124,822)
(629,419) (870,122)
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 17 – Financial liabilities continued
Short-term Long-term
financial financial
liabilities liabilities
31 December 2022 and leases and leases Total
1 January financial liabilities (612,934) (511,888) (1,124,822)
Net cash flow eect, loans received (1,144,060) — (1,144,060)
Net cash flow eect, loans paid 792,731 40,262 832,993
Net cash flow eect, leasing payments 118,986 40,020 159,006
Other non-cash transaction (182,784) (82,802) (265,586)
Currency translation adjustments (43,586) (56,446) (100,032)
Eect of disposal of subsidiaries 93,766 259,757 353,523
Inflation impact 205,748 93,752 299,500
31 December financial liabilities (772,133) (217,345) (989,478)
(1) Other non-cash transactions are comprised of new lease additions, cancellations and/or
modifications.
Short-term Long-term
financial financial
liabilities liabilities
31 December 2021 and leases and leases Total
1 January financial liabilities (286,621) (363,052) (649,673)
Net cash flow eect, loans received (506,408) 51,185 (455,223)
Net cash flow eect, loans paid 315,752 — 315,752
Net cash flow eect, leasing payments 109,466 — 109,466
Other non-cash transactions
(1)
(93,784) (91,646) (185,430)
Currency translation adjustments (151,339) (108,375) (259,714)
31 December financial liabilities (612,934) (511,888) (1,124,822)
(1) Other non-cash transactions are comprised of new lease additions, cancellations and/or
modifications.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
The reconciliation of adjusted net debt as at 31 December 2022 and 2021 is as follows:
31 Dec 31 Dec
2022 2021
Short-term bank borrowings 709,889 474,598
Short-term portions of long-term borrowings 19,343 47,264
Short-term portions of long-term leases 42,901 91,072
Long-term bank borrowings 64,923 230,196
Long-term leases 152,422 281,692
Total borrowings 989,478 1,124,822
Cash and cash equivalents (-) (360,059) (254,700)
Net debt 629,419 870,122
Non-recurring items per Group management
Guarantees from franchises (67,340) (40,747)
Adjusted net debt
(1)
562,079 829,375
(1) Net debt, adjusted net debt and non-recurring and non-trade items are not defined by IFRS.
Adjusted net debt includes guarantees taken from the franchises related to the lease
liabilities. Management uses these numbers to focus on net debt to take into account
deposits not otherwise considered cash and cash equivalents under IFRS.
Note 18 – Commitments, contingent assets and liabilities
a) Guarantees given and received for trade receivables are as follows:
31 Dec 31 Dec
2022 2021
Guarantee letters given 40,906 67,543
40,906 67, 543
31 Dec 31 Dec
2022 2021
Guarantee notes received 107,418 107,263
Guarantee letters received 197,555 104,677
304,973 211,940
Guarantee notes and letters are received as collateral for trade receivables.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 18 – Commitments, contingent assets and liabilities
b) Tax contingencies continued
The Russian transfer pricing legislation is generally aligned with the international
transfer pricing principles developed by the Organisation for Economic Co-operation
and Development (“OECD”) but has specific characteristics. This legislation provides
the possibility for tax authorities to make transfer pricing adjustments and impose
additional tax liabilities in respect of controlled transactions (transactions with related
parties and some types of transactions with unrelated parties), provided that the
transaction price is not arm’s length.
Tax liabilities arising from transactions between companies within the Group are
determined using actual transaction prices. It is possible, with the evolution of
the interpretation of the transfer pricing rules, that such transfer prices could be
challenged. The impact of any such challenge cannot be reliably estimated; however,
itmay be significant to the financial position and/or the overall operations of
theGroup.
The Group includes companies incorporated outside of Russia. The tax liabilities of
the Group are determined on the assumption that these companies are not subject to
Russian profits tax, because they do not have a permanent establishment in Russia.
This interpretation of relevant legislation may be challenged but the impact of any such
challenge cannot be reliably estimated currently; however, it may be significant to the
financial position and/or the overall operations of the Group.
As Russian tax legislation does not provide definitive guidance in certain areas, the
Group adopts, from time to time, interpretations of such uncertain areas that reduce
the overall tax rate of the Group. While management currently estimates that the tax
positions and interpretations that it has taken can probably be sustained, there is a
possible risk that an outflow of resources will be required should such tax positions
andinterpretations be challenged by the tax authorities. The impact of any such
challenge cannot be reliably estimated; however, it may be significant to the financial
position and/or the overall operations of the Group.
Management will vigorously defend the Group’s positions and interpretations that were
applied in determining taxes recognised in these consolidated financial statements if
these are challenged by the authorities.
c) Legal cases
The Group does not expect any material risk in any current legal cases in accordance
with the opinions of its legal advisers; therefore, it has not recognised any provision
forthese legal cases in the consolidated financial statements as at 31 December 2022.
Note 19 – Tax assets, liabilities and tax expense
Corporate tax
The Group is subject to taxation in accordance with the tax regulations and the
legislation eective in the countries in which the Group companies operate.
Therefore, provision for taxes, as reflected in the consolidated financial statements,
has been calculated on a separate-entity basis.
The Netherlands
Dutch tax legislation does not permit a Dutch parent company and its foreign
subsidiaries to file a consolidated Dutch tax return. Dutch resident companies are
taxed on their worldwide income for corporate income tax purposes at a statutory
rate of 25.8%. No further taxes are payable on this profit unless the profit is
distributed.
Services incurred by Dutch parent companies may generally be divided into
two kinds of services, being group services for which costs are incurred for the
economic and commercial benefit of subsidiaries and shareholder services for
which costs are incurred for activities provided in the capacity of the shareholder.
All costs incurred by the Company are shareholder services (costs incurred for
activities provided in the capacity of shareholder) and not group services (costs
incurred for the economic or commercial benefit of subsidiaries).
Since shareholder services are not for the benefit of any one specific subsidiary,
itisnot required to re-charge these fees or costs to a subsidiary or to subsidiaries.
If certain conditions are met, income derived from foreign subsidiaries is tax
exempted in the Netherlands under the rules of the Dutch participation exemption.
However, certain costs such as acquisition costs are not deductible for Dutch
corporate income tax purposes. Furthermore, in some cases the interest payable on
loans to aliated companies is non-deductible.
When income derived by a Dutch company is subject to taxation in the
Netherlands as well as in other countries, generally avoidance of double taxation
can be obtained under the extensive Dutch tax treaty network or under Dutch
domesticlaw.
Dividend distributions are subject to 15% Dutch withholding tax. However, under
the Netherlands’ extensive tax treaty network, this rate can, in many cases, be
significantly reduced if certain conditions are met.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 19 – Tax assets, liabilities and tax expense continued
Turkey
The Corporate Tax Law was amended by Law No 5520, dated 13 June 2006. Most of
the articles of the new Corporate Tax Law (No 5520) came into force on 1 January
2006. Corporate tax is payable at a rate of 23% (31 December 2021: 25%) on the total
income of the Group after adjusting for certain disallowable expenses, exempt income
and investment and other allowances (e.g. research and development allowance).
Nofurther tax is payable unless the profit is distributed (except for withholding tax
at the rate of 19.8%, calculated on an exemption amount if an investment allowance is
granted in the scope of Income Tax Law Temporary Article 61).
In accordance with the amendment to the Corporate Tax Law published in the Ocial
Gazette numbered 31462 on 22 April 2021, the corporate tax rate in Turkey, which
was 20% as at 31 March 2021, was increased to 25% for 2021 and 23% for 2022. The
amendment is eective from 1 January 2021.
Companies are required to pay advance corporate tax quarterly at the rate of 25% on
their corporate income in Turkey. Advance tax is payable by the 17th of the second
month following each calendar quarter end. Advance tax paid by corporations is
credited against the annual corporate tax liability. If, despite osetting, there remains
a paid advance tax amount, it may be refunded or oset against other liabilities to the
government.
Russia
Income taxes have been provided for in the consolidated financial statements in
accordance with legislation enacted or substantively enacted by the end of the
reporting period. The income tax charge comprises current tax and deferred tax
and is recognised in profit or loss for the year, except if it is recognised in other
comprehensive income or directly in equity because it relates to transactions that are
also recognised, in the same or a dierent period, in other comprehensive income or
directly in equity.
Current tax is the amount expected to be paid to, or recovered from, the taxation
authorities in respect of taxable profits or losses for the current and prior periods.
Taxable profits or losses are based on estimates if financial statements are authorised
prior to filing relevant tax returns. Taxes other than on income are recorded within
operating expenses as established in Chapter 25 of the Tax Code of the Russian
Federation. Corporate tax is payable at a rate of 20% (31 December 2021: 20%) as
identified in Article 247 of the Tax Code of the Russian Federation. Special rules may
apply in cases where a dierent from 20% tax rate is used.
Deferred income tax is provided using the balance sheet liability method for tax
loss carry forwards and temporary dierences arising between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
In accordance with the initial recognition exemption, deferred taxes are not
recorded for temporary dierences on initial recognition of an asset or a liability
in a transaction other than a business combination if the transaction, when initially
recorded, aects neither accounting nor taxable profit. Deferred tax balances are
measured at tax rates enacted or substantively enacted at the end of the reporting
period, which are expected to apply to the period when the temporary dierences
will reverse, or the tax loss carry forwards will be utilised.
Corporate tax liability for the year consists of the following:
31 Dec 31 Dec
2022 2021
Corporate tax calculated — 60,028
Prepaid taxes (-) (45,418) (39,025)
Current income tax asset/liability (45,418) 21,003
Tax income and expenses included in the statement of comprehensive income are as
follows:
2022 2021
Current period corporate tax expense — (70,602)
Deferred tax income/(expense) 10,736 (10,563)
Total tax expense 10,736 (81,165)
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 19 – Tax assets, liabilities and tax expense continued
The reconciliation of the tax expense in the statement of comprehensive income is as follows:
2022 2021
Profit/(loss) before tax 191,313 215,404
Tax rate 25.8% 25.0%
Corporate tax at statutory rates (49,359) (53,851)
Disallowable expenses (3,479) (1,160)
Unrecognised tax losses (8,630) (5,369)
Dierences in tax rates 4,002 (167)
Inflation adjustments, not subject to tax (49,179) (20,520)
Discounts and exceptions 117,487 —
Other, net (106) (98)
Total tax expense 10,736 (81,165)
The breakdown of cumulative temporary dierences and the resulting deferred income tax assets/liabilities at 31 December 2022 and 2021 using statutory tax rates are as follows:
31 Dec 2022
31
Dec 2021
Deferred tax
Defe
rred tax
Temporary assets/
Temporary
assets/
dierences (liabilities)
dierences
(liabilities)
Carry forward tax losses
(1)
— — 72,427 14,485
Contract liabilities from franchising contracts 164,053 32,811 163,752 39,990
Right-of-use assets and lease liability (20,732) (4,146) 13,635 1,992
Legal provisions 3,438 688 8,904 2,226
Unused vacation liabilities 8,495 1,699 14,825 3,347
Provision for employee termination benefit 13,693 2,739 6,883 1,720
Other (41,354) (8,269) (21,906)
(5,302)
Property, equipment and intangible assets (106,695) (21,339) (154,327)
(39,289)
Deferred income tax assets, net 4,183
19,169
(1) Consists of carry forward losses of Domino’s Russia. Total amount has been impaired during 2022.
Strategic report Corporate governance Financial statements Additional information
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 20 – Share-based payments
The Phantom Option Scheme
The Phantom Option Scheme was put in place prior to the initial public oering in 2017 to incentivise senior members of management. The incentive plan entitles the employees to a
cash payment at the date of an exit by shareholders. The amount payable will be determined based on the dierence between the equity value of the entities at the time of exit and
their grant dates. Granted options will only vest if certain conditions are met, including continued employment with the Group, and if there is an event of a 100% exit by Fides Food
Systems Coöperatief U.A. and Vision Lovemark Coöperatief U.A. The Phantom Option Scheme was completed in 2021 after the 100% stake sale by Turkish Private Equity Fund II L.P..
Senior management long-term incentive plan
A new share incentive scheme was put in place on 8 May 2018. According to the incentive scheme employees were granted an option to acquire shares, at a strike price of GBP 1.85
with an expiry date of 8 May 2021, based on performance targets of the Group for the upcoming three years, and continuing employment until the date of vesting. Vesting of the
2018-2020 LTIP cycle was completed as at 8 May 2021. No shares vested for Aslan Saranga or other employees as the performance condition was not met for the 2018-2020 cycle.
In May 2019, Aslan Saranga was granted an LTIP award over 332,706 shares vesting in May 2022 subject to achievement of adjusted EBITDA targets measured over the period
2019-2021. As the performance condition was not achieved, no shares will vest for Aslan Saranga in May 2022. In May 2020, Aslan Saranga was granted an LTIP award over 506,212
shares vesting in May 2023 subject to achievement of adjusted EBITDA targets measured over the period 2020-2022.
Additionally, on 7 May 2021, Aslan Saranga was granted an LTIP conditional share award which will vest in May 2024 subject to achievement of a Group adjusted EBITDA (75%) and
adjusted LTIP EPS (25%) target. Aslan Saranga was entitled to receive an award worth 100% of base salary which resulted in 394,702 shares with a face value of TRY 4,455,775 based
on a share price of 0.543 GBP (6 June 2022) and an exchange rate of GBP1: TRY20.79 (6 June 2022).
Long-term incentive plan for new Board Adviser
On 7 September 2020, Andrew Rennie, Domino’s Pizza Enterprises Limited’s ex-CEO of European Operations, agreed to join the Group as Board Adviser. He obtained a call option
from the major shareholder Fides Coop for 4 million DPEU shares at a strike price of GBP 1.05 with an expiry date of 30 September 2022.
The weighted-average fair value of the options granted under the plan is TRY 190 per option and has been estimated using the Black-Scholes option pricing model:
Under these three existing plans, an amount of TRY 4,889 has been charged for 2022, whereas TRY 2,482 has been charged for 2021 and the cumulative charge is TRY 76,604 as at
31December 2022 (31 December 2021: TRY 71,715).
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 21 – Equity
The shareholders and the shareholding structure of the Group at 31 December 2022 and 2021 are as follows:
31 Dec 2022
31 Dec 2021
Share (%) Amount Share (%)
Amount
Jubilant FoodWorks Netherlands B.V.
(1)
49.0 17,828 7.5
2,7
22
Fides Food Systems Coöperatief U.A.
(1)
— — 32.8 11,928
Public shares 45.3 16,453
54.6 19,849
Vision International N.V.
(2)
5.6 2,027 4.9
1,781
Other 0.1 45 0.2 73
3
6,353
36,353
(1) Fides Food Systems Coöperatief U.A. merged with Jubilant FoodWorks Netherlands B.V. (acquiring entity).
(2) Vision Lovemark Coöperatief U.A. merged with Vision International N.V. (acquiring entity).
As at 31 December 2022, the Group’s 145,372,414 (31 December 2021: 145,372,414) shares are issued and fully paid for. On 3 July 2017, just prior to the IPO, the Company issued (i)
13,046,726 ordinary shares, with a nominal value of EUR 0.12 each, in the capital of the Company to Vision Lovemark Coöperatief U.A. and (ii) 117,420,534 ordinary shares, with a
nominal value of EUR 0.12 each, in the capital of the Company to Fides Food Systems Coöperatief U.A., which was paid up by debiting the Company’s share premium reserve by
TRY 31,239. Also, on 3 July 2017, as part of its IPO, the Company issued 10,372,414 new ordinary shares with a nominal value of EUR 0.12 each. As a result, the Company’s issued and
outstanding share capital increased to TRY 36,353 (divided into 145,372,414 ordinary shares). After the IPO, 52.1% of the shares became public. The net proceeds received by the
Company from the IPO is TRY 94,132 (TRY 9,075 per share). DP Eurasia’s authorised share capital is EUR 60,000,000.
Share amount 2022 2021
1 January 145,372,414 145,372,414
Addition — —
31 December 145,372,414 145,372,414
The nominal value of each share is EUR 0.12 (2021: EUR 0.12). There is no preference stock. 
Share premium
Share premium represents dierences resulting from the incorporation of Fides Food by Fides Food Systems Coöperatief U.A. at a price exceeding the face value of those shares and
dierences between the face value and the fair value of shares issued at the IPO.
Ultimate controlling party
Jubilant Food Works Limited and Arslan Saranga, all together, are the ultimate controlling party of the Company.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 22 – Financial instruments and financial risk management
a) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability
to continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
To maintain or re-arrange the capital and debt structure, the Group may change the
amount of dividends paid to shareholders, return capital to shareholders, issue new
shares, or sell assets.
Group management decided the capital structure by reference to the adjusted net
debt by dividing the adjusted EBITDA.
31 Dec 31 Dec
2022 2021
Total borrowings 989,478 1,124,821
Cash and cash equivalents (-) (360,059) (254,700)
Net debt 629,419 870,121
Non-recurring items per Group management
Guarantees from franchises (67,340) (40,747)
Adjusted net debt
(1)
562,079 829,375
Adjusted EBITDA
(1)
336,638 313,097
Adjusted net debt/adjusted EBITDA
(1)
1.67 2.65
(1) EBITDA, adjusted EBITDA, net debt, adjusted net debt, adjusted net income and
non-recurring and non-trade income/expenses are not defined by IFRS. The amounts
provided with respect to operating segments are measured in a manner consistent with that
of the financial statements. These items, determined by the principles defined by Group
management, comprise income/expenses which are assumed by Group management to not
be part of the normal course of business and are non-recurring items. These items, which
are not defined by IFRS, are disclosed by Group management separately for a better
understanding and measurement of the sustainable performance of the Group.
b) Financial risk factors
The Group is exposed to a variety of financial risks due to its operations. These risks
include credit risk, market risk (foreign exchange risk, price risk and interest rate
risk) and liquidity risk. The Group’s overall risk management programme focuses
on the unpredictability of financial markets and seeks to minimise potential adverse
eects on the Group’s financial position and performance.
b.1) Credit risk
The Group considers its maximum credit risk at 31 December 2022 to be TRY 282,543
(31 December 2021: TRY 182,563), which is the total of the Group’s financial assets.
Credit risk is managed on a Group basis, except for credit risk relating to trade
receivable and other receivable balances. Each local entity is responsible for
managing and analysing the credit risk for each of their new clients before standard
payment and delivery terms and conditions are oered. Risk control assesses the
credit quality of the customer, considering its financial position, past experience
and other factors. Individual risk limits are set based on internal or external ratings
in accordance with limits set by the Board. It is Group policy that deposits are made
with repositories of BA2 credit rating or higher as defined by Moody’s.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade receivables, lease
receivables, other receivables and contract assets. To measure the expected credit
losses, trade receivables, lease receivables, other receivables and contract assets
have been grouped based on shared credit risk characteristics and the days past
due. The contract assets relate to payments to Domino’s Pizza International and
have substantially the same risk characteristics as the trade receivables for the
same types of contracts. The Group has therefore concluded that the expected loss
rates for trade receivables are a reasonable approximation of the loss rates for the
contract assets.
The ageing of past due but not impaired financial assets is as follows:
31 Dec 31 Dec
2022 2021
Less than a month 1,155 3,644
One to three months 4,217 2,205
Three to six months 688 829
Over six months 274 38
Total 6,334 6,716
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 22 – Financial instruments and financial risk management continued
b) Financial risk factors continued
b.1) Credit risk continued
31 Dec
31 Dec
2022
2021
Trade receivables
Counterparties without external credit rating
Group 1 4,294 7,054
Group 2 311,388 402,676
Group 3 — 773
Total 315,682 410,503
• Group 1 – New customers (less than six months);
• Group 2 – Existing customers (more than six months) with no defaults in the past; and
• Group 3 – Existing customers (more than six months) with some defaults in the past.
b.2) Liquidity risk
The Group uses banks as well as its suppliers and shareholders as funding resources. The Group’s liquidity risk is continuously evaluated through determining and monitoring changes
in funding conditions required for achieving the targets set in the Group’s strategy.
The Group manages its liquidity risk by monitoring expected and actual cash flows on a regular basis and by maintaining continuity of funds, borrowings and reserves through
matching the maturities of financial assets and liabilities. The Group periodically reviews its covenant compliance and uses loans between Group companies to ensure there is enough
liquidity to carry out its operations.
As at 31 December 2022 and 2021, the liquidity risks arising from the Group’s financial liabilities consisted of the following:
31 Dec 2022
Total cash
outflows in
Carrying accordance Less than 3 3-12 1-5 Over 5
Maturities in accordance with agreements value with contract months months years years
Non-derivative financial liabilities
Borrowings 794,155 841,735 306,706 453,568 81,461 —
Leases 195,323 244,347 18,033 53,067 173,247 —
Third-party trade payables 354,419 354,418 354,418 — — —
Total 1,343,897 1,440,500 679,157 506,635 254,708 —
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Note 22 – Financial instruments and financial risk management continued
b) Financial risk factors continued
b.2) Liquidity risk continued
31 Dec 2021
Total cash
outflows in
Carrying accordance Less than 3 3-12 1-5 Over 5
Maturities in accordance with agreements value with contract months months years years
Non-derivative financial liabilities
Borrowings 752,058 852,702 133,676 472,231 246,795 -
Leases 372,764 512,185 35,203 105,710 328,170 43,101
Third-party trade payables 395,363 395,363 395,363 — — —
Total 1,520,185 1,760,250 564,242 577,941 574,965 43,101
Loans from banks comprise short-term loans obtained for working capital needs and other long-term loans. The total amount includes accrued interest and the related loans.
As at 31 December 2022 and 2021, the categories of financial instruments of the Group are as follows:
Financial
assets
Assets and Available or liabilities
liabilities at for sale at fair value
amortised Loans and financial through profit Carrying
31 December 2022 cost receivables assets or loss value
Financial assets 360,059 423,273 — — 783,332
Cash and cash equivalents 360,059 — — — 360,059
Trade receivables — 314,325 — — 314,325
Lease receivables — 108,948 — — 108,948
Other current assets — — — — —
Financial liabilities 1,343,897 — — — 1,343,897
Financial liabilities 794,155 — — — 794,155
Leases 195,323 — — — 195,323
Trade and other payables 354,419 — — — 354,419
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 22 – Financial instruments and financial risk management continued
b) Financial risk factors continued
b.2) Liquidity risk continued
Financial
assets
Assets and Available or liabilities
liabilities at for sale at fair value
amortised Loans and financial through profit Carrying
31 December 2021 cost receivables assets or loss value
Financial assets 254,700 586,240 — — 840,940
Cash and cash equivalents 254,700 — — — 254,700
Trade receivables — 406,996 — — 406,996
Lease receivables — 141,661 — — 141,661
Other current assets — 37,583 — — 37,583
Financial liabilities 1,520,185 — — — 1,520,185
Financial liabilities 752,058 — — — 752,058
Leases 372,764 — — — 372,764
Trade and other payables 395,363 — — — 395,363
b.3) Market risk
The Group’s activities also expose it to market risk, including interest rate risk, foreign currency risk, and price risk. The Group doesn’t carry any loans in currencies other than the
operating company currencies on its balance sheet.
The Group manages its financial instruments centrally in accordance with the Group’s risk policies via the Treasury Group in the Finance Department. The Group’s cash inflows and
outflows are monitored on a regular basis and compared to the monthly and yearly cash flow budgets and forecasts.
Interest rate risk
The Group is exposed to market interest rate fluctuations on its floating rate debt. Increases in benchmark interest rates could increase the interest cost of floating rate debt and
increase the cost of future borrowings. The Group’s ability to manage interest costs also has an impact on reported results.
On 31 December 2022, interest rates were fixed on approximately 100% of the net debt for 2022 (100% for 2021). The average interest rate on short-term borrowings in 2022 was
18.48% (2021: 14.38%).
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 22 – Financial instruments and financial risk management continued
b) Financial risk factors continued
b.3) Market risk continued
Interest rate risk continued
The financial instruments of the Group which are sensitive to interest rates are stated in the following table:
31 Dec 31 Dec
2022 2021
Financial instruments with floating interest
Financial liabilities 84,262 —
– 6 months or less 5,160 —
– 6-12 months 37,743 —
– 1-5 years 41,359 —
Financial instruments with fixed interest
Financial liabilities – repricing dates 905,216 1,124,822
– 6 months or less 662,979 198,824
– 6-12 months 90,486 409,037
– 1-5 years 151,751 516,961
Assuming that all other variables remain constant, a 1.0 percentage point increase in floating interest rates on a full-year basis as at 31 December 2022 would have led to no additional
finance costs (2021: no additional finance costs). A 1.0 percentage point decrease in floating interest rates on a full-year basis would have an equal but opposite eect.
The Group’s objective is to minimise net interest cost and balance the amounts of debt at fixed and floating rates over time. Most of the debt has interest charged at a fixed rate.
Thislimits the impact that changes to floating rates have on the Group’s finance expenses.
Foreign currency risk
The Group is operating in multiple countries and is subject to the risk that changes in foreign currency values impact the value of the Group’s sales, purchases, assets and borrowings. On
31December 2022, the exposure to the Group from companies holding assets and liabilities other than in their functional currency amounted to TRY (7,861) (31 December 2021: TRY 15,482).
As an estimation of the approximate impact of the residual risk, with respect to financial instruments, the Group has calculated the impact of a 20% change in exchange rates.
Impact on income statement
A 20% strengthening of the Euro against key currencies to which the Group is exposed would have led to approximately an additional TRY (1,237) loss in the income statement (2021: TRY 3,142 gain).
A 20% weakening of the Euro against these currencies would have led to an equal but opposite eect.
Price risk
As at 31 December 2022, the Group does not have financial instruments classified as available for sale, or fair value through profit and loss, which are exposed to market price
fluctuations. Price risk does arise from an increase in commodity prices. This price risk is managed locally where advanced purchases of raw materials are made to achieve lower prices
and bulk purchases are made to achieve discounts from suppliers.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Note 23 – Subsequent events
On 6 and 20 February 2023, earthquakes occurred and severely aected ten cities in the east of Turkey. The expected impact of the disaster on the Group’s financial statements
is summarised as follows. In total, 50 restaurants have been aected. At present, an evaluation shows that twelve of these restaurants have become unusable. In addition to the
operational impacts above, the Group made donations for earthquake relief and provided financial support to its employees in the region. Information about insurance compensation
processes and clarification of donations and contributions will be stated in the 2023 reports.
Note 24 – Assets and liabilities held for sale and discontinued operations
The Group holds franchise operating and sub-franchising rights in 159 stores in Russia (96 franchised stores, 63 corporate-owned stores). In December 2022, the Board decided to
explore the options to sell its Russian operations, with completion expected in the second half of 2023. Accordingly, DP Russia operations are to be reported within discontinued
operations and its assets and liabilities are recognised as assets held for sale and liabilities for sale as at 31 December 2022.
The following criterias have been met for a sale to be highly probable:
• the board has decided to sell the asset and liability of Russian operation;
• an active programme to locate a buyer and complete the plan has been initiated by the management. There are potential buyers, and the management has started the negotiation
with the potential buyers and ocial oers have been obtained; and
• the management has expected to be completed the sale transaction within one year from the date of classification.
Assets 31 Dec 2022
Trade receivables 6,844
Lease receivables 3,363
Right-of-use assets 147,764
Property and equipment 71,898
Intangible assets 56,266
Goodwill 16,614
Deferred tax assets 13,357
Other non-current assets 13,722
Non-current assets 329,828
Cash and cash equivalents 4,478
Trade receivables 47,645
Lease receivables 7,850
Inventories 20,343
Other current assets 25,256
Current assets 105,572
Total assets 435,400
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 24 – Assets and liabilities held for sale and discontinued operations continued
Liabilities 31 Dec 2022
Financial liabilities 138,164
Lease liabilities 121,593
Deferred tax liability 3,633
Other non-current liabilities 18,898
Non-current liabilities 282,288
Financial liabilities 35,351
Lease liabilities 58,415
Trade payables 206,970
Provisions 955
Other current liabilities 80,819
Current liabilities 382,510
Total liabilities 664,798
Total liabilities and equity 229,398
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 24 – Assets and liabilities held for sale and discontinued operations continued
31 Dec 31 Dec
2022 2021
Income or loss
Revenue 760,480 465,325
Cost of sales (582,370) (384,644)
Gross profit 178,110 80,681
General administrative expenses (143,813) (75,248)
Marketing and selling expenses (145,500) (84,558)
Other operating income, net (846,656) (15,751)
Operating profit/(loss) (957,859) (94,876)
Foreign exchange losses 41,251 55,965
Financial income 841,100 5,346
Financial expense (105,266) (27, 364)
(Loss) before income tax (180,774) (60,929)
Tax expense (30,316) (10,436)
Income tax expense — (2,049)
Deferred tax expense
(1)
(30,316) (8,387)
Loss from discontinued operations (211,090) (71,365)
(1) Carry forward losses of Domino’s Russia have been transferred to deferred tax expense and then fully impaired.
After disposal of an asset or disposal group:
• the associated currency translation dierence, including amounts previously reported within equity, will be reclassified to the income statement as part of the gain or loss on disposal.
This is estimated to be a TRY 686,920 million loss; and
• inter-group balances are eliminated against discontinued operations.
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 24 – Assets and liabilities held for sale and discontinued operations continued
Russia 2022 2021
Corporate revenue 410,337 301,357
Franchise revenue and royalty revenue obtained from franchisees 310,028 141,798
Other revenue 40,115 22,171
Total revenue 760,480 465,326
- At a point in time 745,700 462,456
- Over time 14,780 2,870
Operating profit/(loss) (128,673) (94,876)
Capital expenditures 138,297 15,675
Tangible and intangible disposals (56,505) (29,958)
Depreciation and amortisation expenses (107,890) (87,990)
Adjusted EBITDA 1,660 23,248
Russia 2022 2021
Adjusted EBITDA 1,660 23,248
Non-recurring and non-trade (income)/expenses per Group management
One-o non-trading costs 22,442 30,134
Share-based incentives — —
EBITDA (20,782)
(
6,886)
Depreciation and amortisation (107,890) (87,990)
Operating (loss)/profit (128,672) (94,876)
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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Notes 2022 2021
Income statement
General administrative expenses 6 (28,115) (12,441)
Operating profit (28,115) (12,441)
Foreign exchange gains/(losses) 4,869 (192)
Financial income/(expense) (10,791) 1,839
Net income from subsidiaries 2 254,394 73,668
Profit before income tax 220,357 62,874
Tax expense — —
Profit for the year 220,357 62,874
Company income statement
For the years ended 31 December 2022 and 2021
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31 Dec 31 Dec
Notes 2022 2021
Assets
Subsidiaries 280,315 453,460
Non-current assets 280,315 453,460
Cash and cash equivalents 3 388 3,365
Trade receivables 5,789 64
Other current assets 365 694
Current assets 6,542 4,123
Total assets 286,857 457,583
Equity
Paid in share capital 4 36,353 36,353
Share premium 518,236 513,347
Other legal reserves (633,889) (379,688)
Retained earnings 59,047 2,029
Result for the year 220,357 62,874
Total equity 200,104 234,915
Liabilities
Subsidiaries — 158,055
Financial liabilities 64,921 48,429
Non-current liabilities 64,921 206,484
Financial liabilities 19,341 14,065
Accounts payable 566 1,750
Other current liabilities 1,925 369
Current liabilities 21,832 16,184
Total liabilities 86,753 222,668
Total liabilities and equity 286,857 457,583
The accompanying notes form an integral part of these financial statements.
Company income statement co ntinued
For the years ended 31 December 2022 and 2021
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Note 1 – Basis of presentation of statutory financial statements
1.1 Basis of preparation
The Company financial statements of DP Eurasia N.V. (hereafter, the “Company”)
have been prepared in accordance with Part 9, Book 2 of the Dutch Civil Code. In
accordance with sub 8 of article 362, Book 2 of the Dutch Civil Code, the Company’s
financial statements are prepared based on the accounting principles of recognition,
measurement and determination of profit, as applied in the consolidated financial
statements. These principles also include the classification and presentation of financial
instruments, being equity instruments or financial liabilities.
The Company has prepared its Annual Report in accordance with EU directives as
implemented in Part 9, Book 2 of the Dutch Civil Code and the firm pronouncements
in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch
Accounting Standards Board for the year ended 31 December 2022.
In case no other policies are mentioned, refer to the accounting policies in the
consolidated financial statements of this Annual Report. For an appropriate
interpretation, the Company financial statements of DP Eurasia N.V. should be read in
conjunction with the consolidated financial statements.
The Company is registered with the trade register of the Chamber of Commerce in the
Netherlands under the number 67090753.
The Company prepared its consolidated financial statements in accordance
with International Financial Reporting Standards (“IFRS”) as adopted by the
EuropeanUnion.
The remuneration paragraph is included in the remuneration section of the
consolidated financial statements.
1.2 Summary of significant accounting policies
Investments in consolidated subsidiaries
Consolidated subsidiaries are all entities (including intermediate subsidiaries)
over which the Company has control. The Company controls an entity when it is
exposed, or has rights, to variable returns from its involvement with the subsidiary
and has the ability to aect those returns through its power over the subsidiary.
Subsidiaries are recognised from the date on which control is transferred to the
Company or its intermediate holding entities. They are derecognised from the date
that control ceases. Subsidiaries of the parent company are accounted for using the
equity method. In case of a negative net asset value of a subsidiary a provision will
be formed when the company has a contractual obligation.
When measuring interests in a participating interest with an equity deficit, other
long-term interests in the participating interest that actually shall be regarded as
part of the net investment are also taken into account. To the extent that there
are receivables still outstanding after these items have been written down, further
reduction in value is taken into account.
The Company applies the acquisition method to account for acquiring subsidiaries,
consistent with the approach identified in the consolidated financial statements.
The consideration transferred for the acquisition of a subsidiary is the fair value
of assets transferred by the Company, liabilities incurred to the former owners of
the acquiree, and the equity interests issued by the Company. The consideration
transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired and liabilities
and contingent liabilities assumed in an acquisition are measured initially at their
fair values at the acquisition date and are subsumed in the net asset value of the
investment in consolidated subsidiaries. Acquisition-related costs are expensed
asincurred.
Notes to the company financial statements
For the year ended 31 December 2022
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Note 2 – Subsidiaries
The movement schedule for the investment in subsidiaries as at 31 December 2022 and 2021 is as follows:
1 January 2021 227,686
Net income from subsidiaries 73,668
Currency translation dierence (8,555)
Remeasurement of post-employment benefit obligations 124
Share-based incentive plans 2,482
Cancellation of share-based incentive plans —
1 January 2022 295,405
Net income from subsidiaries 254,394
Currency translation dierence 26,232
Remeasurement of post-employment benefit obligations (5,856)
Share-based incentive plans 4,889
Hyperinflation impact on Turkish subsidary (294,749)
31 December 2022 280,315
The Company is liable for the finance liabilities of its subsidiary in Russia, for which a provision was recognised as per 31 December 2021. In 2022, however the Russian business is
classified as held for sale and discontinued operation, which results in a release in 2022 of the provision for the negative asset value in the company income statement. This also leads to a
dierence between group equity and company only equity balance as per 31 December 2022 and the result of 2022 of TRY 229 million.
Note 3 – Cash and cash equivalents
The details of cash and cash equivalents as at 31 December 2022 and 2021 are as follows:
31 Dec 31 Dec
2022 2021
Cash 388 3,365
388 3,365
31 Dec 31 Dec
2022 2021
Euro 303 3,078
US Dollars 29 16
Russian Roubles 41 235
Other 15 35
388 3,365
Notes to the company financial statements co ntinued
For the year ended 31 December 2022
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Note 4 – Equity
The movements in shareholders’ equity are as follows:
Currency
Share Share translation Retained Result for Total
capital premium reserves earnings the year equity
Balances at 1 January 2021 36,353 510,865 (344,208) (104,574) 106,479 204,915
Remeasurements of post-employment benefit obligations, net — — — 124 — 124
Appropriation of the result of the preceding year — — — 106,479 (106,479) —
Currency translation adjustments — — (35,480) — — (35,480)
Share-based incentive plans — 2,482 — — — 2,482
Total income for the year — — — — 62,874 62,874
Balances at 31 December 2021 36,353 513,347 (379,688) 2,029 62,874 234,915
Remeasurements of post-employment benefit obligations, net — — — (5,856) — (5,856)
Appropriation of the result of the preceding year — — — 62,874 (62,874) —
Currency translation adjustments — — (254,201) — — (254,201)
Share-based incentive plans — 4,889 — — — 4,889
Total income for the year — — — — 220,357 220,357
Balances at 31 December 2022 36,353 518,236 (633,889) 59,047 220,357 200,104
The dierence between total result for the year in the consolidated financial statements and company-only financial statements is resulting from release of provisions related to
Russianentity in the company-only financial statements, amounting to TRY229 million.
The Group has no dividend payment to the Company as at 31 December 2022 (31 December 2021: none).
The Group has no dividend payment to the Company as at 31 December 2022 (31 December 2021: none).
The shareholders and the shareholding structure of the Company at 31 December 2022 and 2021 are as follows:
31 December 2022 31 December 2021
Share (%) Amount Share (%) Amount
Jubilant FoodWorks Netherlands B.V.
(1)
49.0 17,828 7.5 2,72 2
Fides Food Systems Coöperatief U.A.
(1)
— — 32.8 11,928
Public shares 45.3 16,453 54.6 19,849
Vision International N.V.
(2)
5.6 2,027 4.9 1,781
Other 0.1 45 0.2 73
36,353 36,353
(1) Fides Food Systems Coöperatief U.A. merged with Jubilant FoodWorks Netherlands B.V. (acquiring entity).
(2) Vision Lovemark Coöperatief U.A. merged with Vision International N.V. (acquiring entity).
Notes to the company financial statements co ntinued
For the year ended 31 December 2022
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Notes to the company financial statements co ntinued
For the year ended 31 December 2022
Note 4 – Equity continued
As at 31 December 2022, the Company’s 145,372,414 (31 December 2021:
145,372,414) shares are issued and fully paid for.
On 3 July 2017, just prior to the IPO, the Company issued (i) 13,046,726 ordinary
shares, with a nominal value of EUR 0.12 each, in the capital of the Company
to Vision Lovemark Coöperatief U.A. and (ii) 117,420,534 ordinary shares, with
a nominal value of EUR 0.12 each, in the capital of the Company to Fides Food
Systems Coöperatief U.A., which was paid up by debiting the Company’s share
premium reserve by TRY 31,239. Also, on 3 July 2017, as part of its IPO, the
Company issued 10,372,414 new ordinary shares with a nominal value of EUR 0.12
each. As a result, the Company’s issued and outstanding share capital increased to
TRY 36,353 (divided into 145,372,414 ordinary shares). After the IPO, 52.1% of the
shares became public. The net proceeds received by the Company from the IPO
is TRY 94,132 (TRY 9,075 per share). DP Eurasia’s authorised share capital is EUR
60,000,000.
In February 2019, Fides Food Systems Coöperatief U.A. sold 14,537,241 existing
ordinary shares in DP Eurasia N.V. in an accelerated bookbuild oering addressed to
institutional investors. After this transaction, 62.1% of the shares became public.
2022 2021
1 January 145,372,414 145,372,414
Addition — —
31 December 145,372,414 145,372,414
The nominal value of each share is EUR 0.12 (2021: EUR 0.12). There is no preference
stock.
Share premium
Share premium represents the total of dierences resulting from the contribution of
Fides Food Systems by Fides Food Systems Coöperatief U.A. at a price exceeding
the face value of those shares and dierences between the face value and the fair
value of shares issued for acquired companies and the dierences between the
proceeds and the nominal value of the shares issued at the IPO.
Retained earnings
The Board determined the result over 2022 as follows:
2022 2021
Retained earnings 59,047 2,029
Net result for the year 59,047 2,029
Note 5 – General administrative expenses
2022 2021
Consultancy expenses 19,508 11,549
Payroll expenses 7,731 3,640
Miscellaneous expenses — 2,299
Management expenses 486 168
Other 390 2,775
Total 28,115 12,441
Note 6 – Audit fees
Other PwC Other audit Total PwC
For the year ended 31 Dec 2022 PwC NL network firm network
Audit of financial statements 2,726 1,287 1,746 5,759
Other audit service 469 591 698 1758
Total audit services 3,195 1,878 2,444 7,517
Tax services — 235 — 235
Other non-audit services — 22 — 22
Total 3,195 2,135 2,444 7,774
The fees listed above relate to the procedures applied to the Company and its
consolidated Group entities by accounting firms and external auditors as referred to
in article 1(1) of the Dutch Accounting Firms Oversight Act (Dutch acronym; “Wta”)
as well as by Dutch and foreign-based accounting firms, including their tax services
and advisory groups.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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Note 6 – Audit fees continued
These fees relate to the audit of the 2021 financial statements, regardless of whether
the work was performed during the financial year.
Other PwC Total PwC
For the year ended 31 Dec 2021 PwC NL network network
Audit of financial statements 1,211 1,069 2,280
Other audit service 277 876 1,153
Total audit services 1,488 1,945 3,433
Tax services — 184 184
Other non-audit services — 750 750
Total 1, 488 2,879 4,367
Note 7 – Employees
During 2022, the average number of employees, based on full-time equivalents, was
three (2021: three).
Of these, two employees are working outside of the Netherlands.
Note 8 – Commitments and contingencies not included in the balance sheet
Tax group liability
The Company is the parent of the Group’s fiscal unity in the Netherlands and is
therefore liable for the liabilities of said fiscal unity as a whole. The fiscal unity consists
of DP Eurasia N.V., Fidesrus B.V. and Fides Food Systems B.V.
Other information
Proposal for profit allocation
With due observance of Dutch law and the articles of association, it is proposed that
the net income of TRY 220,357 is added to the retained earnings. Furthermore, with
due observance of article 43, paragraph 7, it is proposed that no dividend payment will
be paid over 2022.
Details of special shareholder rights
DP Eurasia N.V. shareholders have no special rights; see Corporate governance for
more information about voting rights.
Details of shares without profit rights and non-voting rights
DP Eurasia N.V. has no common shares without profit rights and no non-voting shares.
Amsterdam, the Netherlands 19 April 2023
Management Board
Aslan Saranga
Frederieke Slot
Supervisory Board
Peter Williams
Shyam Bhartia
Hari Bhartia
Pratik Pota
David Adams
Ahmet Ashaboğlu
Burak Ertaş
Notes to the company financial statements co ntinued
For the year ended 31 December 2022
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Reporting guidance for environment metrics
Key definitions and reporting scope
For the purpose of this report, the Company defines:
Natural gas
consumption(m
3
)
This indicator reflects the total purchased natural gas
(volume – m
3
) consumption used for heating, cooking
and other business operations that require natural gas,
at the relevant locations (Corporate, Co & Supply Chain,
Franchise), of the Company during the reporting period.
Itis reported in m
3
on a consolidated basis.
Generator fuel – diesel (l) This indicator reflects the total purchased diesel
consumption used for generators at the relevant
locations of the Company during the reporting period.
It is reported in litres on a consolidated basis.
Diesel consumption (l) This indicator reflects the total purchased diesel (volume
– l) consumption used for Company-leased cars at the
relevant locations of the Company during the reporting
period. It is reported in litres on a consolidated basis.
Gasoline consumption (l) This indicator reflects the total purchased gasoline
(volume– l) consumption used for generators at the
relevant locations of the Company during the reporting
period. It is reported in litres on a consolidated basis.
Petrol & Super Grade
consumption (l)
This indicator reflects the total purchased Petrol & Super
Grade consumption used for Company-leased cars at the
relevant locations of the Company during the reporting
period. It is reported in litres on a consolidated basis.
Electricity consumption
(kWh)
This indicator reflects the total purchased electricity
consumption used for air conditioning, lighting, electrical
equipment uses and other business operations that
require electricity, at the relevant locations of the
Company during the reporting period. It is reported in
MWh on a consolidated basis.
LPG consumption (l) This indicator reflects the total purchased LPG for the
locations if the store does not have natural gas purchase.
Cooling gas (kg) This indicator reflects the amount of R404a refrigerant
purchased and used at relevant locations.
Fire extinguisher (kg) This indicator reflects the amount of CO
2
extinguisher
purchased and used in the relevant locations.
Direct (Scope 1)
greenhouse gas emissions
(tCO
2
e)
This indicator reflects the emissions of greenhouse
gases due to the use of natural gas, diesel, gasoline
consumption, SF6 and refrigerant gases and fire
extinguishing devices at the relevant locations of the
Company during the reporting period.
Energy-related indirect
(Scope 2) greenhouse gas
emissions (tCO
2
e)
This indicator reflects the emissions of greenhouse gases
due to the use of purchased electricity at the relevant
locations of the Company during the reporting period.
Other indirect (Scope 3)
greenhouse gas emissions
(tCO
2
e)
This indicator reflects the emissions of greenhouse gases
due to non-Company and non-directly controlled sources
of franchise stores such as electricity, natural gas, LPG,
diesel, which are not considered under Scope 1 and
Scope 2 during the reporting period.
Total water consumption
(m
3
)
This indicator reflects the total water withdrawal by
source (volume – m
3
) at the relevant locations of the
Company during the reporting period.
Strategic report Corporate governance Financial statements Additional information
195
DP Eurasia N.V.
Annual Report and Accounts 2022
ESG appendix
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
ADBP Annual and deferred bonus plan
AFM Dutch Authority for the FinancialMarkets
AGM Annual General Meeting
AWUS Average weekly unit of sales
Board The Board of the Company
CEO Chief Executive Ocer
CGU Cash-generating unit
Company DP Eurasia N.V.
Domino’s Turkey Pizza Restaurantları A.Ş.
Domino’s Russia Pizza Restaurants LLC
DP Eurasia DP Eurasia N.V.
EBITDA Earnings before interest, tax, depreciation and
amortisation
EUR Euro
Fides Food Fides Food Systems B.V.
Fides Food Systems Fides Food Systems Coöperatief
U.A. As per 2March 2022, Fides Food Systems
(disappearing entity) merged with Jubilant FoodWorks
Netherlands B.V. (acquiring entity)
Fidesrus Fidesrus B.V.
Founding Shareholders Fides Food Systems Coöperatief
U.A. and Vision Lovemark Coöperatief U.A.
GBP Great British Pound
General Meeting General Meeting of shareholders of
the Company
Group The Company and its subsidiaries
IFRS International Financial ReportingStandards as
adopted in theEuropean Union
IPO The initial public oering of the Company and the
admission of its shares totrading on the main market of
the London Stock Exchange
LTIP Long-term incentive plan
Master Franchisors Domino’s Pizza International
Franchising Inc. and, priorto the assignment to DPIF in
2012, Domino’sPizza Overseas Franchising B.V.
MFA Master Franchise Agreement
OLO Online ordering
PwC PricewaterhouseCoopers AccountantsN.V.
PwC Turkey PwC Bağımsız Denetim ve Serbest
Muhasebeci Mali Müşavirlik A.Ş
RUB Russian Rouble
System stores Corporate stores and franchised stores
TPEF II Turkish Private Equity FundII L.P.
TRY Turkish Lira
USD US Dollar
Glossary
Strategic report Corporate governance Financial statements Additional information
196
DP Eurasia N.V.
Annual Report and Accounts 2022
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
Contacts
Company registered oce and business address
DP Eurasia N.V.
Herikerbergweg 238
Luna Arena
1101 CM Amsterdam
The Netherlands
Corporate Broker
Liberum Capital Limited
Level 12
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
United Kingdom
English Legal Advisers
to the Company
Dentons UK and Middle East LLP
One Fleet Place
London EC4M 7WS
United Kingdom
External Auditors
PricewaterhouseCoopers Accountants N.V.
Thomas R Malthusstraat 5
1066 JR Amsterdam
The Netherlands
UK Depositary Interest Register
Link Market Services
Trustees Limited
4 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Financial PR
Buchanan
107 Cheapside
London EC2V 6DN
United Kingdom
Strategic report Corporate governance Financial statements Additional information
197
DP Eurasia N.V.
Annual Report and Accounts 2022
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
www.dpeurasia.com
PricewaterhouseCoopers
Accountants N.V.
For identification
purposes only
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