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Delivering happiness
through taste
DP Eurasia N.V.
Annual Report and Accounts 2021
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.
Our values
Ambition
Integrity
Cohesion
Team spirit
Our priorities
People
Product
Digital
Find out more on
page 14
Find out more on
page 18
Find out more on
page 20
What’s inside
Overview
2 At a glance
4 Highlights
5 Key financial figures
Management report
6 Chairman’s statement
8 Message from the CEO
9 Competitive advantages
10 Business model
12 Our purpose and strategy
14 People
18 Product
20 Digital
22 Strategic initiative: COFFY
24 Our sustainability approach
37 Strategic review
42 Group structure
43 Markets
44 Remuneration report
47 Directors’ remuneration policy
58 Annual remuneration report
66 Board
68 Leadership team
69 Board attendance and
composition
70 Corporate governance report
82 Risk management
100 Board declaration
101 Shares and shareholders
Group financial statements
106 Consolidated statement
of comprehensive income
107 Consolidated statement
of financial position
108 Consolidated statement
of changes in equity
109 Consolidated statement
of cash flows
110 Notes to the consolidated
financial statements
Company financial statements
150 Company income statement
151 Company balance sheet
152 Notes to the Company
financial statements
Additional information
156 Independent auditor’s report
166 ESG appendix
167 Glossary
168 Contacts
Food
at your
fingertips
Find out more
on page 20
Aslan
Saranga
CEO
Find out more
on page 8
Record
breakers
Find out more
on page 14
COMPLIANCE STATEMENT
This document is the PDF/printed version of the 2021 Annual Report of
DP Eurasia and has been prepared for ease of use. The 2021 Annual Report
was made publicly available, and was filed 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 2021 Annual Report. In any case of discrepancies
between this PDF version and the ESEF package, the latter prevails.
DP Eurasia N.V. Annual Report and Accounts 2021
1
At a glance
Domino’s Pizza is one of the most successful fast-food
brands and an international leader in home delivery
with global retail sales of nearly USD 17.8 billion in 2021.
DP Eurasia is the fifth-largest franchisee of the Domino’s
Pizza brand owned by Domino’s Pizza, Inc.
Vision
Mission
Values
The Group’s vision is to be
an international leader in the
areas in which it operates
by utilising the best market
practices and continually
innovating to provide excellent
services to both customers
and the community.
The Group’s mission
is to create value for
shareholders and respect the
community in a socially
responsible way.
Underpinning the Group’s
ethical principles and business
conduct are its core values of
ambition, integrity, cohesion
and team spirit.
The Group operates through
its corporate stores and
franchised stores (together,
its “system stores”). As of
31 December 2021, 24% of the
Group’s system stores were
corporate stores, principally
located in densely populated
cities, and 76% were
franchised stores.
The Group intends to continue
to rapidly expand its store
network in the future.
The Group offers consumers
high quality, freshly made
pizzas, which it tailors to local
tastes, at attractive prices,
delivered within 30 minutes
of ordering.
2
DP Eurasia N.V. Annual Report and Accounts 2021
TRY 2.4
billion
system sales
809
stores across
4 countries
76%
franchised
store mix
80%
of delivery
online
Where we operate Domino’s
Russia
94
94
3
Georgia
4
10
Azerbaijan
Turkey
507
100
4
Franchised stores
Corporate stores
Commissaries
DP Eurasia N.V. Annual Report and Accounts 2021
3
Management reportFinancial statementsAdditional informationOverview Highlights
Financial highlights
Operational highlights
• Group revenue up 46.9% and system sales
up 51.5%, driven by like-for-like growth and
store openings
• 38 net store openings in the year for the
Company and a record year in Turkey
since 2014, with 39 openings
– Turkish systems sales growth of 59.4%
– Russian system sales growth of 33.5%
(7.8% based on RUB)
• Adjusted EBITDA up 58.5% to
TRY 208.4 million (2020: TRY 131.5 million)
• Adjusted net income of TRY 23.9 million
versus an adjusted net loss of
TRY 94.0 million in 2020
• Strong liquidity position – TRY 200 million
of cash on hand, including the promissory
note in Sberbank, and additional
available bank lines of TRY 186 million
as at 31 December 2021
• Online delivery system sales(6) as a share
of delivery system sales reached 80%
(2020: 75%), reflecting our strong online
offering and positioning
• Group online system sales(7) growth
of 66.9%
– Turkish online system sales(7) growth
of 84.2%
– Russian online system sales(7) growth
of 37.6% (11.0% based on RUB)
• Product innovation and focused offering
continues to attract a diverse and growing
customer base
• Launch of new coffee-related brand in
Turkey, COFFY, represents important
growth opportunity in the long term
(1) System sales are sales generated by the Group’s corporate and franchised stores to external customers and do not represent
revenue of the Group.
(2) 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).
(3) 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 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. Please refer to Note 3 in the Consolidated Financial statements for a reconciliation of these items
with IFRS.
(4) Adjusted net income is 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. Please refer to Note 3 in the
Consolidated Financial statements for a reconciliation of this item with IFRS.
(5) Net debt and adjusted net debt are not defined by IFRS. 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. Please refer to Note 18 in the Consolidated
Financial statements for a reconciliation of these items with IFRS.
(6) Delivery system sales are system sales of the Group generated through the Group’s delivery distribution channel.
(7) Online system sales are system sales of the Group generated through its online ordering channel.
(8) Group like-for-like growth is a weighted average of the country like-for-like growth rates based on store numbers as described
in Note (2) above.
4
DP Eurasia N.V. Annual Report and Accounts 2021
Key financial figures
System sales in TRY million
Revenue in TRY million
Adjusted EBITDA in TRY million
2,378.9
1,496.9
189.8
208.4
1,569.9
1,370.3
980.2
1,019.2
131.5
19
20
21
19
20
21
19
20
21
Online as a % of delivery
Like-for-like growth % – Turkey
Like-for-like growth % – Russia
75.3%
79.6%
69.9%
50.4%
9.6%
26.0%
13.1%
0.7%
19
20
21
19
20
21
19
-12.6%
20
21
For the year ended 31 December
(in millions of TRY, unless otherwise indicated)
Domino’s store count
Group system sales(1)
Group
Turkey
Russia
Azerbaijan and Georgia
Group system sales like-for-like growth(2)
Group(8)
Turkey
Russia (based on RUB)
Group revenue
Turkey adjusted EBITDA(3)
Russia adjusted EBITDA(3)
Adjusted EBITDA(3)
Adjusted net income(4)
Adjusted net debt(5)
2021
809
2020
771
Change
38
2,378.9
1,569.9
1,704.2
1,069.1
629.4
45.3
471.6
29.2
51.5%
59.4%
33.5%
55.3%
40.6%
50.4%
17.4%
26.0%
9.6%
(12.6)%
1,496.9
1,019.2
202.4
23.2
208.4
23.9
622.3
46.9%
43.6%
140.9
2.3
907.0%
131.5
58.5%
(94.0)
n.m.
415.0
50.0%
DP Eurasia N.V. Annual Report and Accounts 2021
5
Management reportFinancial statementsAdditional informationOverview
Chairman’s statement
This year, we reflect on
the serious challenges and
uncertainty our business and
our colleagues have faced but
also on another year of strong
performance.
Peter Williams
Chairman
This year, we reflect on the serious challenges and
uncertainty our business and our colleagues have faced
but also on another year of strong performance, despite this
challenging environment. The Board is committed to keep
the focus on developing the business by continuing to invest
in people, technology and products.
Financial results
The strength of our business model and the Domino’s
brand underpins our resilient financial results in 2021. Group
revenue is up by 46.9% and system sales are up 51.5%, driven
by like-for-like growth and store openings.
Adjusted EBITDA increased by 58.5% to TRY 208.4 million
(2021: TRY 131.5 million). The Group has a strong liquidity
position of TRY 200 million cash on hand including a
promissory note in Sberbank and additional available bank
lines of TRY 186 million as at 31 December 2021. A net
38 stores were added to the Group in the year, with a record
39 opening in Turkey, the highest since 2014. The total
number of stores in the Group now stands at 809.
Our focus
Innovation, in respect of both our products and technology,
continues to be the main driver of our strong performance
with significant revenue increases in both of our markets.
Online ordering as a percentage of delivery has now
reached 80%. In 2021 the Group remained focused on
maintaining Domino’s unique local cultural elements in food
and integrating them with new technology-driven business
needs. DP Eurasia continues to make a difference through its
mission to become a tech company selling pizza.
Corporate governance
As a Board, we have had to hold all our meetings virtually
since March 2020. The executive team have kept us well
informed of developments within each of the Group’s
markets and operating businesses with regular video
conference calls. We are planning to resume physical
meetings as soon as possible subject to local restrictions.
We continue to strive for transparency for shareholders
and other stakeholders, with a view to maintaining and
enhancing our corporate culture and governance framework.
Key events
We never closed our doors; working for our community continuously, even including the tough pandemic period.
January:
Paketos launch campaign
March:
Tostilla launch
May:
Makarnos line launch
January 2021
March 2021
May 2021
February:
Chicken category relaunch
April:
QR dine-in menu
integration to restaurants
June:
Domino’s – New aggregator
collaboration launch
6
DP Eurasia N.V. Annual Report and Accounts 2021
The corporate governance report set out on pages 70 to
81 provides details on how we are continuing to foster an
environment of entrepreneurial leadership and innovation
in a framework of responsible governance and risk
management.
Change of major shareholder
In March 2021, the sale was completed pursuant to which
Turkish Private Equity Fund II L.P. sold its (at that time)
32.81% shareholding in the Company to Jubilant FoodWorks
Limited together with its wholly owned subsidiary Jubilant
FoodWorks Netherlands B.V. Jubilant FoodWorks Limited is
the master franchisee of Domino’s Pizza in India, Sri Lanka,
Bangladesh and Nepal.
Following completion of the sale in March and pursuant
to the relationship agreement between the Company
and Fides Food Systems Coöperatief U.A., the General
Meeting appointed Mr Shyam S. Bhartia, Mr Hari S. Bhartia
and Mr Pratik R. Pota as Non-Executive Directors at the
Extraordinary General Meeting held in April 2021.
Minority shareholder protection
An independent committee, comprising David Adams and
myself, also addressed certain concerns of shareholders
communicated during Jubilant’s recent reverse bookbuild
process in October 2021. As a result of shareholder feedback
during that process, it had become clear that the UK
Takeover Code and the Dutch takeover rules were no longer
applying to the Company, as a consequence of Brexit. This
was a situation that had to be urgently addressed. The Board
has therefore unanimously proposed additional takeover
protection for minority shareholders.
As a temporary measure, the Company has entered into
an amendment to the existing relationship agreement
(the "Relationship Agreement"). Under the Relationship
Agreement, Fides or a nominee in its group must (subject
to certain exceptions) launch a takeover offer for all of
the issued share capital of the Company if it, its affiliates
or such persons acting in concert with it, own shares
resulting in their aggregate holding being 50% or more
of the Company’s issued share capital. As a longer-term
measure, the Company has convened a General Meeting for
13 April 2022, at which it will propose that such shareholder
protection is embedded in the Articles.
Changes to the Board
We also welcomed Mr David Adams as an independent
Non-Executive Director, who was also appointed at the
EGM in April. He took over the roles of Mr Tom Singer
who stepped down from his roles as Senior Independent
Director, Audit Committee Chairman and Remuneration
Committee Chairman as of the AGM 2021. I would like to
take this opportunity to thank Tom for all his hard work and
wise counsel over the four years he has been on the Board
of the Company. He has been a very supportive member
of the Board and has provided significant direction to the
executive team through his chairmanship of both the Audit
and Remuneration Committees.
People
These results are a tribute to the ongoing dedication and
commitment of Aslan and his teams during the past year
and, especially, managing the business so well through the
COVID-19 period. I would like to thank Aslan and all of our
employees and franchisees for their valuable contribution
and determination to succeed.
Situation regarding Russia
As announced earlier, the Board is shocked and saddened
by the conflict and the effect it has had on all of the innocent
civilians across the region. The safety and welfare of all
of the employees, franchisees and customers remains a
primary priority. The Board will continue to monitor and
review the rapidly developing geopolitical situation.
Outlook
The Board has been closely monitoring the Group’s strategy
as well as the financial 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 trust
and commitment in the months and years ahead.
Peter Williams
Chairman
4 April 2022
July:
4 Seasons
Pizza Launch
September:
Euroleague sponsorship
continues for season 2021-2022
November:
600th store opening in Turkey
/800th store in DPEU
December:
FR NSO Launch out of
Moscow (Yaroslavl)
August 2021
October 2021
December 2021
October:
First TV campaign with
aggregator
December:
Ocakbaşı pizza launch/
Dönerli Dürümos renovation
8th COFFY store opening
DP Eurasia N.V. Annual Report and Accounts 2021
7
Management reportFinancial statementsAdditional informationOverview Message from the CEO
On behalf of the Board, I am
pleased to report another
set of strong results for 2021.
We increased our Group system
sales and adjusted EBITDA by
51.5% and 58.5%, respectively.
Aslan Saranga
CEO
The Turkish business continues to build on its very
strong performance since the second half of 2020 with
a like-for-like growth rate exceeding 50% in 2021, and
2022 has started strongly as well, achieving a like-for-like
growth rate of 50.3% for the twelve weeks ended
27 March 2022.
In Russia, 2021 was a strong recovery year in which we
alleviated the negative developments of the previous
year. We returned to a positive like-for-like growth rate
of almost 10% and increased our adjusted EBITDA.
Although 2022 started somewhat sluggishly with a
like-for-like growth rate of -4.7% for the twelve weeks
ended 27 March 2022, it is important to note that early
2021 trading was especially strong and the corresponding
period in 2022 also saw a spike in COVID-19 Omicron
cases. Our Russian like-for-like growth rate for the twelve
weeks ended 27 March 2022 compared to pre-COVID
2020 was 7.6%. Both markets continued to benefit from
the COVID-19 inspired shift to home delivery in 2021.
Post-year end, we have been shocked and saddened to
witness the unfolding conflict involving Russia and Ukraine
and the effect it has had on all of the innocent civilians
across the region. The safety and welfare of all of the
Group’s employees and customers remains our primary
priority at this time and we continue to monitor the
situation closely.
Product innovation continued in both markets. In
Turkey, we introduced new pizzas, like Ocakbaşı that we
mentioned in our latest trading update, as well as new
side offerings, such as the extension of the oven-baked
sandwich line, new chicken offerings and Döner
(chawarma) products ranges. In Russia, new product
launches included the pear-and-blue cheese pizza,
half-and-half pizza, and a range of breads.
Once again 2021 saw online delivery system sales increase
as a percentage of total delivery system sales and both
markets reached all-time high figures with 76.5% in Turkey
and 92.9% in Russia. The steady increase of this mix is
beneficial for us as we get to know our customers and
tailor our approach with better-focused offerings.
I am also very excited to announce the launch of our
new coffee shop and product brand, COFFY, which has
opened eleven stores in Turkey. I believe COFFY will be an
important contributor to our growth in the Turkish market
over the coming years.
Whilst the pandemic seems to have lost momentum in
recent months, we expect general inflationary pressures
and recent geopolitical developments in the region to
create headwinds in 2022. Whilst the Board is cognisant
of these facts, it expects a resilient performance for 2022.
Aslan Saranga
Chief Executive Officer
4 April 2022
8
DP Eurasia N.V. Annual Report and Accounts 2021
Competitive advantages
DP Eurasia is well positioned to continue
delivering against its strategy with its unique
competitive advantages.
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, underpenetrated
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
Founder-led, experienced
management team
DP Eurasia N.V. Annual Report and Accounts 2021
9
Management reportFinancial statementsAdditional informationOverview Business model
Our asset-light and scalable business
model allows for continuous investment
in our people, our product and our digital
platforms, delivering value to all our
stakeholders.
Our business model
Headquarters
Sales and delivery
Local marketing
Customer data
Commissaries
Centralised
strategy,
marketing and IT
Dough and other
ingredients
Logistics
Franchised stores
Sales and delivery
Local marketing
Customer data
Corporate stores
10
DP Eurasia N.V. Annual Report and Accounts 2021
Competitive strengths
Globally
recognised
brand
Large-scale
network
Low-cost
centralised
supply chain
Disciplined
approach
Our stakeholders
Customers
Shareholders
Franchisees
Employees
Community
Suppliers
Priorities
People
Product
Digital
Investment in our workforce –
continuing to serve communities
while working remotely
Investment in product innovation
for local tastes, leading to improved
customer loyalty
Investment in superior online
capabilities and platform drives
improved user experience and
order frequency
Underpinned by our culture
Ambition
Integrity
Cohesion
Team spirit
DP Eurasia N.V. Annual Report and Accounts 2021
11
Management reportFinancial statementsAdditional informationOverview Our purpose and strategy
Through focusing on our goals, we are able
to deliver our purpose through investing in
our priorities of people, product and digital.
Our purpose
Our priorities
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
popular range of products,
enabling us to reinvest in our
priorities: people, product and
digital.
Domino’s is Turkey’s
most-downloaded
restaurant app(1)
Domino’s is the
number one pizza chain
that reaches the greatest
number of individuals in
Turkey(2)
People
Find out more
on page 14
Product
Find out more
on page 18
(1) Source: Sensor Tower Data (Total download number
between Jan’14-Oct’21; including Android & iOS; excluding
aggregator apps).
(2) Source: Ipsos Food&Beverage Consumption Research
Report_Q4 2021.
Digital
Find out more
on page 20
12
DP Eurasia N.V. Annual Report and Accounts 2021
Strategic pillars
Focus on innovation and
online ordering to drive
like-for-like growth
1
Like-for-like growth 2021
Group
40.6%
50.4%
9.6%
Store network
growth
2
New stores 2021
+38
Leveraging scale
advantage to further
improve profitability
3
Adjusted EBITDA as a % of system
sales
11.6%
3.7%
1.2%
3.2%
Potential for further
international and brand
expansion
4
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 development
of proprietary online ordering platforms for delivery
and takeaway.
The Group’s online delivery system sales as a percentage of
delivery system sales has reached 80%, with Russia exceeding
90% in 2021.
The Group plans to capitalise on its strong market positions
in its existing markets, where it believes there is significant
capacity for further Domino’s Pizza store locations. It intends
to open new corporate and franchised stores, including “splits”
of existing stores where demand supports further profitable
growth. The Group evaluates its store locations from the
perspective of potential sales, level of competition, number
of households and GDP per capita.
By pursuing its “castle” strategy, the Group is able to rapidly roll
out clusters of complementary corporate and franchised stores,
establishing greater area coverage, fulfilling its 30-minute delivery.
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. In Russia, the Group
expects to extract similar value from the operating leverage
as the franchise grows.
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.
Such international or brand expansion is a discretionary
strategy that the Group will consider and pursue on an
opportunistic basis should valuations prove attractive.
DP Eurasia N.V. Annual Report and Accounts 2021
13
Management reportFinancial statementsAdditional informationOverview
People
In 2021, the Group focused on
keeping Domino’s High Volume
Mentality as a unique cultural
element to grow.
Culture
Ever since the world has been getting used to living
alongside COVID-19, we, the Group, have been focusing
on what we do best. We believe that our culture is the
only thing that unifies us towards a common target,
which is created through team collaboration. High Volume
Mentality (“HVM”) is a powerful tool that supports our
growth mindset by focusing on creating the best possible
operation for customer engagement and inspiring team
members to further their careers.
We have worked to internalise the HVM in every part
of our organisation and have inspired more Domino’s
employees to adopt our manifesto in 2021. We prepared
the HVM manifesto and have made it a central focus within
our internal communications. These are some of the steps
from the HVM deployment plan:
• we shot videos of the senior management team
embracing each item in the HVM manifesto;
• we included each of the nine items from the HVM
manifesto in our training programme;
• after the launch, we shared HVM posters with each store,
which were to be used in rush meetings;
• we organised visits to stores that achieved extraordinary
results and shared their best practices with the rest of
the Group; and
• we prepared symbolic HVM badges: our successful
teammates love badges and feel it is an honour to put
them on their hats.
DP Eurasia’s culture is driven by entrepreneurial spirit: it
is also one of the principles of HVM. The Group supports
this culture with numerous practices, such as supporting
“homegrowns”, franchisees who have worked in stores
previously. In 2021, the “School of Entrepreneurship”
was held for the third time. The twelve participants learnt
about franchise system dynamics, profitability models and
other fundamentals over the three-day course. We are
proud to grow with them.
Engagement
In the face of the pandemic and its challenges, we had to
adapt human resources management practices quickly.
We started to adapt to “the new normal” during 2020 and
we improved our practices for the best results in 2021.
We have continued to operate following the rules
and regulations set by the authorities in 2021, and our
headquarters experienced a remote working percentage
of over 70% at the height of the incident curve of the
pandemic. During the work-from-home era, it was
important to create new communication channels, monitor
morale and motivation and to take action to understand
the needs of the ecosystem. We regularly organised our
meetings on Townhall and Dashboard to share more with
each other online.
The Domino’s Rally is one of the largest and the most
important of our communication events. The Rally was held
with much success online in 2021. The large virtual gathering,
which is held for franchisees and team members across the
network, is an opportunity to share annual strategic plans
and to inspire colleagues with spectacular opening shows,
surprise stage shows, and an awards ceremony.
Slogan meetings were held online every Monday to start
the week enthusiastically and to share weekly updates from
several departments. Within these meetings, all Domino’s
employees could align their learning and goals, and had a
chance to collaborate on actions to achieve Group targets.
We used virtual formats to our advantage, with our store
managers able to participate even more frequently.
14
DP Eurasia N.V. Annual Report and Accounts 2021
Overview
Management
report
Financial
statements
Additional
information
At DP Eurasia, all new employees go through an
onboarding process called Pizza Prep School to learn about
the Company and its culture. We continued our Pizza Prep
School, starting it from the second half of the year during
the COVID-19 pandemic, as learning how to make pizza is
an essential part of our onboarding process. In 2021, the
Pizza Prep School was strengthened with the participation
of the management team at each event.
Our most exciting event, “Fastest Pizza Maker”, is an
integral part of our Domino’s culture and generates
exceptional enthusiasm, where the top performers are
selected to represent their local team in regional and global
Domino’s competitions. The contest, which is organised as
a tournament, was run virtually in 2021.
As we all experienced, companies had to create or adapt
their delivery methods throughout the COVID-19 pandemic,
and this new approach created a labour shortage of drivers
in the ecosystem. Like in other Domino’s countries, DP
Eurasia was affected by this, so developed some plans to
hire and retain drivers. As a best practice in the Domino’s
System, we organised detailed research to look deeper
into the life of Domino’s drivers, to understand their
preferences, expectations, daily working practices and
gain an insight into the engagement strategy. As a result
of this research, we put in place several initiatives, such as
new or revised incentives, piloting new working models and
preparing new learning opportunities based on employees’
needs. We are still working to improve our practices to
mitigate the risk of a labour shortage.
Development
At DP Eurasia, one of the key pillars of our human
resources policy is to recruit new team members who have
future potential; to develop them alongside the Group’s
strategy, and prepare them for promotion throughout
several roles within the Group. For this reason, we create
different development programmes for different needs,
and all of them are structured to enable rollout across all
our sites including selection, development, evaluation,
and follow-up phases.
In 2021, we hired junior talent to develop into mid-level
managers for our operations. The MIT (management in
training) Programme ran throughout the year, including
both functional operational training and detailed
onboarding of the Domino’s System. We aim to continue
with similar programmes to continue to develop future
store leaders.
We continued the “A-Team” Development Programme,
designed specifically to prepare high-calibre store
managers for the role of Area Manager with operation
training, soft skill training, online training, and individual
studies. We completed the 11th “A Team” Development
Programme and started the 12th in 2021. The programme,
which was completed in five months with a total of 86
hours of training per person, saw five out of eleven
graduates appointed as Area Managers, starting a new
chapter in their career with Domino’s.
DP Eurasia N.V. Annual Report and Accounts 2021
15
People continued
Development continued
We also focused on current leaders in 2021, completing
two major programmes:
1.
2.
the High-Performance Area Managers’ Development
Programme was designed for current Area Managers:
17 Area Managers completed 60 hours of training
per person. The programme was developed after the
assessment process across eight competencies and
consisted of online training, workshops, webinars and
one-to-one feedback interviews, as well as homework
on the online platform before and after the studies;
and
the Grand Master Programme was designed for eight
Franchise Advisors working within the franchise
operation. They had the opportunity to receive
dedicated, specialised training for the first time,
consisting of four different topics and 15 sessions
of individual assessments, practice assignments,
feedback and case studies.
These development programmes are currently held for
Turkey’s operations team, and will be adapted to Russian
operations. We’re determined to make the most of the
opportunity to share our leadership culture throughout
the Group, from the highest levels to every member of
our teams around the world.
The digitalisation of HR
Fast adaptation creates the difference
We revised our recruitment approach and focused
on digital processes in 2021. We also tried to increase
applicant numbers by using several sources such as
professional social media channels.
Turkey’s onboarding system, Onboar’D, is our digital
innovative HR tool with which we can create various tasks
and briefings. This tool transforms the first 90 days into
a journey to facilitate the adaptation of a new employee
into the Company culture. With Onboar’D, we were
awarded with a silver medal in the Brilliance in Innovative
Use of Technology category at the BOC International
Brilliance Awards 2021.
Digital file management
As an important step in the digitalisation of internal
processes, we switched to a digital archiving system
for all our employees’ files. We are now able to store
and manage large volumes of employee data, including
sensitive personal and professional information of our
employees, in digital environments. Thanks to digital
file management, we were also able to save countless
man-hours.
Creativity in next-generation education
After moving to a new, technologically, and structurally
more advanced version of our online training system
in Turkey, we made learning accessible from anywhere,
whether from your mobile device or your computer. In
2021, we ensured all our store employees were able to
access all functional training through our online training
platform as e-training.
Prepare for the future
In order to strengthen our organisation to reach future
goals, we made critical structural changes and hired
high-calibre talent. Daniel Rubinowski was hired as
CEO of DP Russia in 2021 and the Russian leadership
team was refreshed. Kerem Ciritçi was also appointed
as CEO of DP Turkey, and Pınar Togay appointed as
Group Chief Sales & Marketing Officer as of January 2022.
International awards
DP Eurasia won several awards in the Domino’s world;
73 stores had also been awarded the Rolex, a valuable
award which is delivered to those with the most consecutive
sales success. Also, Domino’s Turkey won the International
Rookie Manager Award in 2021.
Health and safety
The Group aims to create a comfortable working
environment for employees through an integrated safety
programme which continuously monitors and improves
labour conditions and accelerates efforts to upgrade work
processes. Our dedicated Anti-COVID Committee worked
during 2021 with a similar structure to 2020, ensuring
that we followed new rules and regulations set by the
authorities. This included organising business units under
these regulations, designing special training programmes
and safety manuals, and closely monitoring all incidents.
Regular Health and Safety Committee meetings were
held online during 2021. All cases were reviewed, and
precautions were suggested on a frequent basis to further
reduce risk. As one of the results of these discussions, we
worked with Turkey’s leading Driving Academy to prepare
safe driving training videos to prevent possible accidents
in traffic. We provided this video training for all drivers
through our online training platform. At the same time, we
trained a group of our senior drivers as master trainers by
providing them with safe driving techniques and trainer
capability.
16
DP Eurasia N.V. Annual Report and Accounts 2021
• 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;
• Job Security and Safety Committee meetings:
bi-monthly online meetings in which representatives
from certain stores are invited to attend in order to
understand and share their opinions about the current
safety practices in place;
• 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
understand satisfaction and get ideas for the next
event;
• pulse surveys: organised for headquarters employees
to get feedback about their morale and motivation; and
• focus groups: organised for specific subjects when
needed.
Human rights
We do not discriminate on the basis of gender, colour,
ethnicity, religion or disability and provide equal
opportunities in all areas of work including employment,
wage policy and career development. We recognise
these rights in our Code of Conduct document and all
employees are required to take an online course to ensure
expectations and behaviours are aligned to our Company
values.
Workforce engagement
The Group has incorporated different ways to engage with
its workforce. In 2021, most activities were held online like
the previous year and virtual meetings were held regularly
to keep communication channels open.
We intend to engage with all employees, but for certain
activities, different people are invited every year to offer
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 the general business
operations. Below is an overview of the different activities
enrolled to engage with the Group’s employees and
franchisees:
• councils: online 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 different
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 about 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;
DP Eurasia N.V. Annual Report and Accounts 2021
17
Management reportFinancial statementsAdditional informationOverview Product
The Group’s store menu offers
globally recognised pizza
products, which are tailored
to local tastes.
It also offers and extends products that can be chosen
instead of pizza, such as oven-baked sandwiches, wraps
with size option, wide chicken offers and a variety of
pasta options. There are 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.
In July, a further extension of the chicken category
launched two types of chicken finger and potato
combinations. Chicken finger was one of the best sellers
among other chicken options. These two options were
differentiated with different sauces, including barbecue
sauce, mozzarella cheese and cheddar cheese with
mayonnaise. It has reached 3% product mix within its
category.
New product innovations of the Group in 2021 began with
the extension of the Paketos offering by adding a new
large size to the Paketos line. The launch increased sales
of Paketos by taking a 4% share from the pizza mix and an
impressive 85% satisfaction rating by consumers.
Also in July, the Vegi, Callypso and Social pizzas were
reconfigured due to low taste scores. With these
reconfigurations, the product mix of these pizzas
increased by one point and the taste scores rose
to nine points.
The chicken category was also renewed with new menu
segmentation. The number of options was increased to
17 offers. Chicken options are divided by a piece and box
approach. This innovation increased the product mix by
2% among all categories.
As a market-leading brand, Domino’s caught the digital
trend of the “Tortilla challenge” launching three options
with bestseller toppings such as sausage, roasted meat
and pastrami combined with selected cheese variations.
The Group also launched pasta as the first QSR brand in
Turkey. Four options were launched – Spicy Arrabiatta,
Chicken with sauces, Triple cheese, Bol malzemeli – using
multiple ingredients such as sausages and vegetables. This
change realised a 2% product mix among all categories.
The Group extended the dessert category with Çokominos
which is the perfect combination of chocolate and
mozzarella. The delicacy takes a 10% mix within the
dessert category.
In October, Pizza with Domino’s including “Bol Malzemos
with Domino’s Sauce”, “Sucuksever with BBQ Sauce”, and
“Chicken Pizza with Honey Mustard”, were relaunched due
to their limited release in the earlier part of the pandemic.
During the relaunch period, the total sales of these pizzas
increased by 20%.
This year was also a breakthrough for Russian operations;
ultra-thin dough and the chocolate soufflé were localised,
and a mainstream four seasons pizza and premium
segment pear and blue cheese pizza were launched.
Additionally, Sweet Chili Chicken was launched in both
chicken alone and wrap formats, to catch the growing
trend in the exotic and spicy tastes. Two additional
products extended the dessert category. Finally, a hot
drink – Raspberry Punch – was added to the drinks
category as a delicacy.
18
DP Eurasia N.V. Annual Report and Accounts 2021
Overview
Management
report
Financial
statements
Additional
information
The Group maintains a focused menu in all the
countries in which it operates, presenting a
value-based, attractive and high-quality offering
to customers, while simplifying and expediting the
order-taking and food preparation processes. The
Group believes that its focused menu creates a strong
identity for its products among consumers, as well
as improving operating efficiency and maintaining
food quality and consistency. The Group’s system
stores purchase their ingredients such as pizza dough,
sauces and toppings, their supplies such as beverages
and their materials such as pizza boxes, menus and
uniforms from the Group’s commissaries. In Azerbaijan
and Georgia, the Group sometimes approves locally
sourced substitutes.
Thus, the Group seeks to centralise the supply of key
ingredients, which gives its products a consistent taste
and presentation across all geographies.
“I have one piece of
advice: you must eat
Domino’s Cheese
Bread before you die…
I can eat it every day,
every hour, every
minute”
Customer feedback via Twitter,
2021
The Group adapts its product offering to the various
cultures and consumption patterns in the different
countries in which it is present. For example, pork
products are not used in the system stores in
Azerbaijan and Turkey.
The Group believes that its disciplined approach to
product innovation is a key differentiator 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;
• field tests before in-store pilot testing with
consumers who visit the store; and
•
in-store pilot testing for four to eight weeks before
rollout across the system stores.
The Group’s system stores offer a variety of side
dishes, which use the same oven equipment as pizzas,
expanding its total offering and contributing to
increased average ticket price. The Group offers soft
drinks from Coca-Cola Company brands in Turkey,
Georgia and Azerbaijan and PepsiCo brands in Russia.
The Group’s dessert selection features items such
as mosaic cakes (chocolate bites) and a chocolate
soufflé product, another Group innovation which has
been adopted in other territories within the worldwide
Domino’s System.
DP Eurasia N.V. Annual Report and Accounts 2021
19
Digital
DP Eurasia’s online capabilities
and platform offer many tangible
benefits, including ease of ordering,
higher-order frequency, lower in-store
labour costs and increased consumer
loyalty and brand awareness.
The Group’s online approach uses a single backend
platform for each country in which it operates, thereby
centrally driving sales to its stores. The digital solution
development process has been centralised in Turkey to
develop multilingual, in-house, multi-tenant applications,
including responsive and attractive desktop/mobile
website functionality, that strives to deliver a superior user
experience for all countries of operation.
New omnichannel e-commerce platform
Omnichannel is a lead user engagement approach in
which a company gives access to its products, offers
and support services to customers across all channels,
platforms and devices. With the Group’s new omnichannel
platform project customers will experience the same
platform across Domino’s and other brands, in all
countries.
Personalised user experience
The increase in the usage rates of online channels with
the effect of the pandemic has made the user experience
essential. With improvements to the user experience made
in online channels, efforts have been made to increase
conversion rates, to optimise increases in market share
across all sales channels.
The development of the new e-commerce platform
will work on multi-cloud platforms with Microservice
architecture. Product management, payment systems,
loyalty structures, campaigns and offer suggestions
are designed to be used by more than one brand on
this platform by transforming them into independent
products.
The main goal has been to customise the user experience
according to customers’ behaviour and purchasing
experience. It adds improvements for additional product
recommendations, especially in online channels, by
referencing customers’ product choices and purchase
behaviours.
Specifically, it increases upsell sales opportunities by
making developments that provide the right campaign
strategy for the right customer.
Payment options diversity
The diversity of payment systems is one of the important
factors that increase user engagement. Turkey Domino’s,
in partnership with Sodexho, has added Sodexho mobile
payment to its online payment systems. Additionally,
projects have been developed and implemented which
add different credit cards payment options.
20
DP Eurasia N.V. Annual Report and Accounts 2021
Co-operation with aggregators
The Group aims to increase collaboration with online food
platforms by keeping its digital platform shares in the
market. As one of the inevitable digital transformation
steps, the platform maintains its channels while ensuring
collaborations. Delivery Club managed to keep the
Group’s web and mobile application channels stable, while
the Getir platforms provided integrations. The Group will
continue to determine its technology investments and
roadmap, taking into account the sales performance in its
channels and the implementation of new sales channels.
Information technology
The monitoring infrastructure has been established to
effectively monitor all platforms so that all security and
performance actions are tracked and reviewed quickly.
The Group has improved its security measures on
platforms such as the SAP ecosystem and Azure Cloud.
It is fully transformed into Kubernetes technology and has
become auto scale, real-time and a fault-tolerant elastic
cloud architecture.
Business intelligence
The Group renewed the reporting platform by increasing
its co-operation with Microsoft and implemented a project
to share data analysis with relevant stakeholders via
PowerBI. Franchisees and corporate restaurants consider
their KPIs through the new reporting platform, including
channel sales performance.
Cyber security
Cyber security is increasing rapidly worldwide with
countries within the Group experiencing a growing
number of cyber-attacks. The Group has expanded its
cyber security investment to protect customer data and
ensure business continuity. Security awareness has gained
importance and pace in the Group. It has strengthened
its infrastructure with its experienced business partners
in cyber security worldwide and continues with ongoing
control measures.
The Group owns all online ordering platforms and related
software, including website-based and mobile-based
platforms, mobile apps and a mobile-optimised website.
Store infrastructure improvement
The Group continued to invest in the infrastructure of
the stores in its restaurants network, with 800 stores
in operation. The sales application of the store has
upgraded the PULSE™ software and the renovation of
store infrastructure continues, with the aim of providing
a seamless customer experience.
DP Eurasia N.V. Annual Report and Accounts 2021
21
Management reportFinancial statementsAdditional informationOverview Strategic initiative: COFFY
COFFY’s story began with a simple idea:
everyone deserves to enjoy great coffee
at reasonable prices.
Everything COFFY does, it does to fulfil this idea.
Coffee-based beverages are too expensive for most
people to enjoy regularly, and the Group saw an
opportunity in creating a rival business plan that drives
prices down by 40%.
COFFY set out to democratise the coffee ecosystem by
cutting costs, simplifying its menu and using technology.
While the competition aims to offer a home away from
home, COFFY focuses on the product – meaning COFFY
does not need big spaces, expensive furniture nor a high
headcount to produce and serve high-quality coffee.
COFFY also aims to make it easier for customers to
understand and order from the menu by creating single
price points for each size, rather than different price
points for each beverage at every size. It has only three
price points, whereas its rivals have more than 25. This
lean approach is the core of COFFY’s business. It provides
quality coffee without the excessive price tag.
COFFY is a pioneer in using technology. It uses
technology to serve its customers better by running a
loyalty programme via the app and by partnering with
last-mile delivery companies to reach more people, as well
as trialling robots for quick delivery – and in June 2021
it became the first company to deliver products with a
robot. COFFY operates via its mobile app extensively, with
the app already having 100K users, and we continue to
innovate and develop its capabilities.
100,000
app users across
Turkey
22
DP Eurasia N.V. Annual Report and Accounts 2021
In short, COFFY is a ground-breaking coffee concept that
offers great products at a reasonable single price; starting
at just TRY 9.99. There are more than 20 coffee-related
drinks, such as filter coffee, macchiato and espresso,
served both hot and cold. Hot coffees are available at
three different sizes at price points of TRY 9.99, 11.99
or 14.99. There are two different sizes for cold drinks at
the two higher price points of TRY 11.99 and 14.99. Milk,
skimmed milk, vegan milk, marshmallows and cookies can
be added for the same fixed price. COFFY also sells water,
fruit juices and other canned beverages. COFFY’s food
menu is made up of sandwiches, various bakery products,
both sweet and salted, and various healthy snacks.
COFFY was established with a trial store at the end
of 2020 at Istanbul’s Kadıkoy district and now there
are eleven stores around the country, five of which are
corporate and six are franchise.
11
Coffy outlets
across Turkey
COFFY locations(1)
Istanbul
5
3
Ankara
3
Franchised location
Corporate location
(1) As at 31 March 2022.
DP Eurasia N.V. Annual Report and Accounts 2021
23
Management reportFinancial statementsAdditional informationOverview Our sustainability approach
The Group’s efforts and interest in
sustainability continues to grow with new
and existing projects.
1
Reducing the impact
on climate change
4
Adopting
responsible
sourcing
Delivering happiness
through taste
2
Environmentally
friendly packaging
design and waste
reduction
3
Providing food safety
and high quality
DP Eurasia’s contribution to sustainability is driven by the
Group’s efforts and interest by 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. Yet this is not only a business requirement, but an
issue of evolving global consciousness. Consequently, we
are pleased to announce that 2021 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 action 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.
24
DP Eurasia N.V. Annual Report and Accounts 2021
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 different geographic
locations where DP Eurasia operations are conducted. Regarding the different 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 efforts 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 year
emissions assessments and targets according to our baseline year, which is 2021.
The methodology of defining DP Eurasia’s focus 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
different geographical operations of DP Eurasia. As has been reported, the risk assessment was decided in regard to
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
CEO
Steering Committee
DP Eurasia
Board
Nomination
and Governance
Committee
Remuneration
Committee
Sustainability
Committee
Audit Committee
Leading all ESG
practices including
TCFD progress
management
Internal Audit and
Risk Management
Director
Supply Chain
Director
HR Director
Marketing Director
Operations
Director
DP Eurasia N.V. Annual Report and Accounts 2021
25
Management reportFinancial statementsAdditional informationOverview Our sustainability approach continued
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.
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 taken into account 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 effects
that could cause business interruptions to Group operations. The Board is
working on updating its business continuity policies in order to be more
prepared for the potential climate change impacts:
1.
crisis management;
2. disaster recovery plans; and
3. business continuity management.
26
DP Eurasia N.V. Annual Report and Accounts 2021
Governance
Disclose the organisation’s governance around climate-related risks and opportunities.
b) Describe management’s role
in assessing and managing
climate-related risks and
opportunities.
The Group has already established an ESG Committee 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 the 2022 agenda, climate-related topics will be periodically discussed
through meetings that will be initiated by the Board of Directors; these
topics will be tracked by the responsible leaders of the related Sustainability
Committee members. After determining the action plans, the outcomes and
financial impacts will be reviewed closely by Board members, comprising 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. 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
Affairs Leader, Franchise Leader
• KPI #2: Scope 2 emissions
Responsible: Corporate Leader, Co & Supply Chain Leader, Administrative
Affairs Leader, Franchise Leader
• KPI #3: Amount of purchased renewable energy
Responsible: Management team (in 2023 and beyond)
In general, the Board is responsible for:
1. decreasing effects of climate-related risks in business;
2.
3.
focusing on the sustainable model of business by taking financial
outcomes into consideration;
the Group operating in line with sustainable roadmaps by including
further climate-related actions into its business area; and
4. working closely with the Audit Committee in order to track the
Company’s commitments and actions.
DP Eurasia N.V. Annual Report and Accounts 2021
27
Management reportFinancial statementsAdditional informationOverview Our sustainability approach continued
Task Force on Climate-related Financial Disclosures (“TCFD”) continued
Strategy
At DP Eurasia, our commitment to strengthen and broaden our climate-related activities to identify risks and opportunities
is the first step to frame our sustainability strategy. Without identification of the risks, we do not believe that measures will
be taken accordingly. Identifications can be described as the first step towards shaping the sustainability strategy. As a
second step, DP Eurasia assumes that risk assessment plays a crucial role in embedding outcomes to our risk management
framework. Regarding the operational outputs, the TCFD framework describes the general outlines of our strategy and
the four focus areas represent core departure points for our climate commitments.
Our climate-related risks and opportunities and net zero emissions targets are integrated in order to augment our
sustainability strategy as well as our risk management process.
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 medium, long and
short-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 effects 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 194 corporate and 615 franchise stores located in different
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 different
geographical conditions that can result in different impacts and outcomes
in our supply chain.
28
DP Eurasia N.V. Annual Report and Accounts 2021
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 different 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 different
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 be ready for what the future can hold.
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.
DP Eurasia N.V. Annual Report and Accounts 2021
29
Management reportFinancial statementsAdditional informationOverview Our sustainability approach continued
Task Force on Climate-related Financial Disclosures (“TCFD”) continued
Strategy continued
Focused themes
Transition risks
Physical risks
TCFD climate-related risks
Main climate-related risks and
actions of DP Eurasia
Regulations Market
Reputation
Technology
Acute
Chronic
Climate change
Switching to electrical vehicles
Route optimisation
GPS project to track kms, fuel
consumption
Partly switching to renewable
energy resources
New warehouse installations at
critic delivery points within the
geography
Energy efficient equipment range
at the kitchens
Adapting the climate-related
regulations (Paris Agreement and
Green Deal)
Packing and waste
Redesign of packaging (reduction
in surface area of boxes, increase in
the number of products per box)
Reducing the use of plastic cutlery
Digital menu application instead of
paper based (QR)
Time horizon
(short, mid or
long term)(1)
Mid term
Short term
Short term
Mid term
Mid term
Long term
Long term
Short term
Short term
Short term
30
DP Eurasia N.V. Annual Report and Accounts 2021
Focused themes
Transition risks
Physical risks
TCFD climate-related risks
Main climate-related risks and
actions of DP Eurasia
Regulations Market
Reputation
Technology
Acute
Chronic
Food safety and quality
Client voice (surveys for healthy
product range and options)
30-min delivery
Using food grade and recyclable
materials (pizza papers) through craft
Understanding of “All from Oven”
Responsible sourcing
Localisation of raw material
procurement (primarily wheat and
corn)
Enhancing the menu options
regarding client preferences that
also include performing R&D
processes towards plant-based
meat and vegan choices
Training farmers, suppliers and
monitoring the agriculture within
the sustainability framework
Shelf-life management, preventing
food waste and at the same time
providing a high quality of service
Dual sourcing (alternative suppliers)
Time horizon
(short, mid or
long term)(1)
Short
term(2)
Short
term(2)
Mid term
Short
term(2)
Short term
Short term
Mid term
Short term
Short term
(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.
DP Eurasia N.V. Annual Report and Accounts 2021
31
Management reportFinancial statementsAdditional informationOverview Our sustainability approach continued
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 in order to formulate a comprehensive and effective climate-related strategy that covers DP Eurasia’s four
main climate-related focus areas. Climate change-related risks are managed by the risk management team and filtered
through our organisational and operational scope in order 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:
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 of production are the prioritised areas;
3. financial risks: the Group continuously assesses its financial risks
and seeks for the mitigations to minimise the potential impact; and
4. 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 affecting 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 staff by providing support and training
within the Company.
32
DP Eurasia N.V. Annual Report and Accounts 2021
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 2021 risk
assessment has been managed through the potential climate change effects
that may cause business interruption on DP Eurasia's operations.
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,
effectiveness 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 effectiveness of management
action plans are periodically reported to the Audit Committee of DP Eurasia.
The Audit Committee and management monitor the risk management,
effectiveness 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.
DP Eurasia N.V. Annual Report and Accounts 2021
33
Management reportFinancial statementsAdditional informationOverview Our sustainability approach continued
Task Force on Climate-related Financial Disclosures (“TCFD”) continued
Risk management continued
Within the TCFD framework the risks are determined as below.
TCFD risks
Transition risks
Policy and legal
Market
Technology
Reputation
Physical risks
Acute
Chronic
DP Eurasia’s definition
Policy and legal risks are defined under the umbrella of new
climate-related regulations such as the Climate Change Action Plan of
Turkey, 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 risks emerge from the unpredictability due to 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 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.
Reputational risks are described as related shifts in customer preferences
due to insufficient 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.
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 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.
34
DP Eurasia N.V. Annual Report and Accounts 2021
Metrics and targets
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
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
used by the Company to
manage climate-related
risks and opportunities and
performance against targets.
• 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 affairs manager/unit
Time horizon: mid term
Target: reducing the amount of scope 2 emissions
GHG emission scope
Gross direct (Scope 1)(1)
Gross indirect (Scope 2 – Location Based)(2)
Other indirect (Scope 3)(3)
2021 Value (tonCO2e)
12,873.29
23,284.31
• Franchise (Buildings Scope 1 and Scope 2)
6,301.88
DP Eurasia is committed to the following climate-related targets in the mid term:
1.
implement water usage standards in each store;
2. by 2030, reduce Scope 1 and 2 GHG emissions generated by corporate
stores and offices to 9% below 2019 levels in line with National Russian
Standards;
3. 3% electricity consumption decrease per crate in Supply Chain below
2021 level;
4. aspiration to reach net zero emissions by 2050;
5. 4% decrease in water consumption per crate in Supply Chain below
2021 level;
6. decrease natural gas consumption by 3% per crate below 2021 level; and
7. developing energy efficient projects for upcoming periods in terms of
energy saving and offsetting our carbon footprint.
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.
(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.
(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.
DP Eurasia N.V. Annual Report and Accounts 2021
35
Management reportFinancial statementsAdditional informationOverview Our sustainability approach continued
Task Force on Climate-related Financial Disclosures (“TCFD”) continued
Metrics and targets 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 as 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:
DP Eurasia
Scope 1
Natural gas
LPG
Generator fuel – gasoline
R404a
CO2
FM200
Transportation (leased cars) – petrol
Transportation (leased cars) – diesel
Transportation (owned cars)
Adblue (leased)
Total energy consumption
Unit
2019
2020
2021
m3
lt
lt
kg
kg
kg
lt
lt
lt
lt
900,374
788,849
765,188
—
1,995
676.8
259.5
—
—
1,725
542.8
190.5
20.00
—
1,530
472.8
207.0
—
1,339,535
1,309,503
1,277,463
1,783,942
1,834,006
2,165,137
3,250
4,100
59,580
62,330
6,450
71,500
1,021
Electricity used for electric vehicles
kWh
—
—
Scope 2
Purchased electricity
Centralised hot water
Scope 3
Franchisees (Buildings Scope 1 and 2)
Natural gas
Centralised hot water
LPG
Generator fuel – gasoline
R404a
CO2
kWh
29,910,279
28,817,438
28,710,768
Gcal
3,365.19
3,273.81
3,095.84
m3
2,280,845
2,390,966
2,879,793
Gcal
1,785.11
1,793.28
1,404.42
lt
lt
kg
kg
3,240
5,940
317
594
3,240
6,255
334
626
3,240
7,080
378
708
Purchased electricity
kWh
30,643,904
30,826,856
36,095,991
Transportation (leased cars) – petrol
Transportation (leased cars) – diesel
Electricity used for electric vehicles (leased)
lt
lt
lt
1,364,130
1,436,471
1,625,933
—
—
—
—
—
13,500
36
DP Eurasia N.V. Annual Report and Accounts 2021
Strategic review
Record online sales performance
and resilient outlook.
Performance review
System sales
(in millions of TRY, unless otherwise indicated)
Group system sales(1)
Group
Turkey
Russia
Azerbaijan and Georgia
Group system sales like-for-like growth(2)
Group(8)
Turkey
Russia (based on RUB)
Domino's store count
Turkey
Russia
Azerbaijan
Georgia
Total
For the year
ended 31 December
2021
2020
Change
2,378.9
1,569.9
1,704.2
1,069.1
629.4
45.3
471.6
29.2
51.5%
59.4%
33.5%
55.3%
40.6%
50.4%
17.4%
26.0%
9.6%
(12.6)%
As at 31 December
Total
607
188
10
4
809
2020
Corporate
Franchised
106
115
—
—
221
462
75
9
4
550
Total
568
190
9
4
771
2021
Corporate
Franchised
100
94
—
—
194
507
94
10
4
615
DP Eurasia increased its net store count by 38 in 2021, primarily through Turkey. The Group increased its system sales by
51.5% year-on-year, driven by the strong like-for-like sales growth in Turkey and with like-for-like sales growth returning
to positive territory in Russia.
The Turkish operations’ system sales, representing 72% of Group system sales, increased by 59.4%. Despite the
macroeconomic volatility, especially in the last quarter of the year, the Turkish business recorded very strong
like-for-like growth rate throughout the year. The creative marketing campaigns stressing value-for-money, Euroleague
brand sponsorship and new product launches were key to the very strong top line performance. As a result, the Turkish
operations posted a like-for-like growth rate of 50.4% for the year, even though the temporary VAT reduction ended at
the end of the third quarter. The Turkish store count increased by 39, the Group’s best year in terms of store openings in
Turkey since 2014 on the back of robust franchisee demand. Active management and optimisation of the Turkish estate,
which is ordinary course of business for the Group, continued in 2021. Six stores were transferred from corporate to
franchisee ownership.
The Russian operations’ system sales, representing 26% of Group system sales, increased by 33.5% (7.8% based on
RUB). The Russian operations had like-for-like sales growth of 9.6% for the year. The improved management team under
the newly appointed CEO started to bear fruit by improving the top line. Although the like-for-like store sales did not
quite reach pre-COVID levels, the Russian business encouragingly posted a positive like-for-like growth rate for the
period covering the last four months of the year compared to the same period in 2019. New product launches and more
focused marketing were the main drivers in the recovery in sales. The Group focused on optimising the existing store
coverage areas, which resulted in a decrease of two stores for the year. 17 stores were transferred from corporate to
franchisee ownership, and four stores were transferred in the opposite direction. Russian franchised store count reached
94, representing 50% of the Russian store portfolio, for the first time.
DP Eurasia N.V. Annual Report and Accounts 2021
37
Management reportFinancial statementsAdditional informationOverview
Strategic review continued
Delivery channel mix and online like-for-like growth
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:
Store
Online
– Group’s online platform
– Aggregator
– Total online
Call centre
Total
For the year ended 31 December
Turkey
23.1%
25.1%
51.4%
76.5%
0.4%
100%
2021
Russia
7.1%
69.1%
23.8%
92.9%
—
100%
Total
20.1%
Turkey
28.5%
36.3%
43.2%
79.6%
0.3%
100%
25.9%
44.3%
70.2%
1.3%
100%
2020
Russia
10.3%
71.4%
18.3%
89.7%
—
100%
Total
23.9%
40.0%
35.3%
75.3%
0.9%
100%
The following table shows the Group’s online like-for-like growth(2), analysed by the Group’s two largest countries in
which it operates:
Group online system sales like-for-like growth(2,7)
Group(8)
Turkey
Russia (based on RUB)
For the year ended
31 December
2021
2020
48.8%
60.3%
12.4%
45.2%
54.4%
13.1%
The Group’s like-for-like growth continues to be driven mainly by the performance of its online ordering platforms.
Online delivery system sales as a share of delivery system sales reached 79.6% for the year, which represents a
4.3 percentage point increase on a year-on-year basis.
In Turkey, online system sales like-for-like growth for the period was 60.3%, as a result of which online delivery system
sales as a share of delivery system sales reached 76.5% for the period, a 6.3 percentage point increase from a year ago,
aided also by introducing two new aggregators to the system.
In Russia, online system sales like-for-like growth for the period was 12.4%, as a result of which online delivery system
sales as a share of delivery system sales reached 92.9% for the period, a 3.2 percentage point increase from a year ago,
aided also by an increase in volumes through the aggregator.
Online system sales continued to outpace the overall system sales growth at 66.9% for the Group. Turkish online system
sales grew by 84.2%, while Russian online system sales grew by 37.6% (11.0% based on RUB).
New brand launch: COFFY
During the year, the Group launched a new coffee shop brand, COFFY, in the Turkish market. There are currently a
total of eleven stores in Istanbul and Ankara with six of the stores being franchises. The brand’s concept is to introduce
reasonably priced high-quality coffee to consumers at three different prices depending on the size of the product,
including the food products.
38
DP Eurasia N.V. Annual Report and Accounts 2021
Financial review
(in millions of TRY)
Revenue
Cost of sales
Gross profit
General administrative expenses
Marketing and selling expenses
Other operating expenses, net
Operating profit/(loss)
Foreign exchange gains/(losses)
Financial income
Financial expense
Profit/(loss) before income tax
Tax expense
Loss for the period
Turkey adjusted EBITDA(3)
Russia adjusted EBITDA(3)
Adjusted EBITDA(3)
Adjusted net income(4)
Adjusted net debt(5)
For the year ended
31 December
2021
2020
Change
1,496.9
1,019.2
(986.1)
(689.8)
510.8
329.4
46.9%
43.0%
55.1%
(215.7)
(161.7)
33.4%
(252.2)
(169.5)
(11.4)
31.5
82.2
18.8
(7.7)
(9.5)
(16.4)
23.2
(99.8)
(90.8)
48.8%
48.6%
n.m.
n.m.
n.m.
9.9%
32.7
(48.7)
(16.0)
202.4
23.2
208.4
23.9
622.3
(93.6)
(18.9%)
(14.0)
248.9%
(107.6)
n.m.
140.9
43.6%
2.3
907.0%
131.5
58.5%
(94.0)
n.m.
415.0
50.0%
Revenue
Group revenue grew by 46.9% to TRY 1,496.9 million. In the Group’s Turkish segment, which includes the Azerbaijani
and Georgian businesses, revenue grew by 53.2% to TRY 1,031.6 million, whilst Russian segment revenue increased by
34.6% to TRY 465.3 million.
Adjusted EBITDA
The Group’s adjusted EBITDA increased by 58.5% to TRY 208.4 million. Adjusted EBITDA for the Turkish segment
was TRY 202.4 million, a year-on-year increase of 43.6%, and adjusted EBITDA for the Russian segment was
TRY 23.2 million, a significant increase from the almost breakeven level of TRY 2.3 million a year ago. Additionally,
costs relating to our Dutch corporate expenses reduced adjusted EBITDA by TRY 17.3 million in 2021. The comparable
adverse effect of this item was TRY 11.7 million in 2020, with the increase in 2021 primarily due to the devaluation of the
TRY against the EUR and the GBP.
In 2021, the Group’s adjusted EBITDA margin as a percentage of system sales was 8.8% compared to 8.4% in 2020.
The main reason for the slight increase was the improved performance in Russia.
Adjusted EBITDA margin as a percentage of system sales for the Turkish segment recorded a decrease to 11.6% from
12.8%, primarily due to increased marketing and inflationary pressure in supply costs.
The Russian segment margin increased to 3.7% from 0.5%. The main reason for the increase is the operating leverage
created on the fixed costs through increase in sales. The Board continues to remain confident in the medium and
long-term potential of the Russian market for DP Eurasia subject to the resolution of the conflict in Ukraine.
Adjusted net income
For the year ended 31 December 2021, adjusted net income turned positive at TRY 23.9 million. The main reasons for
the improvement were the improved adjusted EBITDA performance as explained previously, the switch to a foreign
exchange gain in 2021 from a foreign exchange loss in 2020 and an increase in financial income. The Group does
not have any hard currency denominated bank borrowings; however, the Group recorded a foreign exchange gain of
TRY 82.2 million due to the intragroup loans made between different jurisdictions versus a foreign exchange loss of
TRY 16.4 million in the previous year.
DP Eurasia N.V. Annual Report and Accounts 2021
39
Management reportFinancial statementsAdditional informationOverview
Strategic review continued
Capital expenditure and cash conversion
The Group invested TRY 55.5 million of capital expenditure in 2021. The Turkish segment capital expenditure was
TRY 39.8 million and the Russian segment capital expenditure amounted to TRY 15.7 million (RUB 132 million).
Cash conversion (defined as (adjusted EBITDA (excluding IFRS 16) - capital expenditure)/(adjusted EBITDA (excluding
IFRS 16))) for the period was 58.6% (2020: 39.2%) for the Group as a result of prudent capital expenditure management
and improved adjusted EBITDA performance and 77.7% (2020: 75.8%) for the Turkish segment as a result of its strong
performance. The Russian segment had negative cash conversion due to its negative adjusted EBITDA.
Adjusted net debt and leverage
The Group’s adjusted net debt at 31 December 2021 was TRY 622.3 million, representing an increase of 50.0% from
31 December 2020. The Group’s bank borrowings continue to be denominated in its operational currencies of TRY and
RUB. As at 31 December 2021, 61% of the Group’s bank borrowings were denominated in TRY, while the remainder is
denominated in RUB.
The Group continues its prudent and conservative approach to debt management. Its leverage ratio (defined as
adjusted net debt/adjusted EBITDA) was 3.0x as at 31 December 2021 (2020: 3.2x). Whilst the Group’s leverage
ratio had decreased to 2.5x as at 30 June 2021, the increase in the second half of the year was primarily due to the
appreciation of the RUB against the TRY and increased inventory and advance levels to limit the upward pressure in
supply prices.
The Group continues to have a strong liquidity position, having access to cash at hand and additional borrowing
capacity available from its Turkish banks. As at 31 December 2021, the Group had TRY 200 million of cash on hand,
including the promissory note in Sberbank, and additional available bank lines of TRY 186 million.
The Group’s sufficient 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. The Group obtained a waiver from Sberbank
with respect to its covenants for all four quarters of 2022. The principal outstanding under the Sberbank loan currently
amounts to RUB 0.9 billion, of which RUB 0.2 billion is supported by a cash collateral deposit.
Shareholder update
Jubilant FoodWorks Limited (“JFL”), through its wholly-owned subsidiary Jubilant FoodWorks Netherlands B.V.,
increased its shareholding to 41.3% from their initial purchase of 32.8% on 9 March 2021 via a reverse bookbuild process
and open market purchases.
Board composition
The Board has decided to appoint two additional Independent Non-Executive Directors and is in advanced stages of
appointing the first. During this process and following the 2022 AGM, JFL has agreed to reduce their representation
from three Board Directors to two.
Takeover protection for minority shareholders
As a temporary measure, the Company has entered into an amendment to the existing relationship agreement
between it and its major shareholder, Fides Food Systems Coöperatief U.A. (“Fides”) (an indirect subsidiary of JFL)
(the “Relationship Agreement”). Under the Relationship Agreement, Fides or a nominee in its group must (subject to
certain exceptions) launch a takeover offer for all of the issued share capital of the Company if it, its affiliates or such
persons acting in concert with it, own shares resulting in their aggregate holding being 50% or more of the Company’s
issued share capital.
As a longer-term measure, the Company has agreed to convene an EGM on 13 April 2022 at which it will propose that such
shareholder protection is embedded in the articles of association of the Company. Fides has agreed that it and its related
parties shall vote in favour of such a resolution. If approved at the EGM, the requirement to launch a mandatory offer will
be applicable to any investor (and not only Fides) which acquires 50% or more of the Company’s issued share capital.
40
DP Eurasia N.V. Annual Report and Accounts 2021
Current trading
System sales growth and like-for-like growth for the twelve weeks ended 27 March of 2022 compared to the same
period in 2021 were as follows:
Group system sales growth(1)
Group
Turkey
Russia
Azerbaijan and Georgia
Group system sales like-for-like growth(2)
Group(8)
Turkey
Russia (based on RUB)
For the twelve
weeks ended
27 March 2022
56.0%
56.5%
50.4%
122.3%
37.3%
50.3%
(4.7)%
2022 outlook
Turkey has been experiencing high inflation over the last three years; however, the Group has consistently performed
above the inflation rate during this period. Owing to management’s experience in navigating through periods of high
inflation, the Group expects to manage the situation to deliver long-term sustainable growth. The Group is tackling
inflation via frequent price increases on its sales to consumers and franchisees whilst remaining mindful of keeping its
best value for money consumer proposition and franchisee profitability.
At this stage there has been no material disruption to the Group’s operations in Russia from the ongoing situation in
Ukraine. Trading from the Group’s 188 stores in Russia continues and the Group remains dedicated to the communities
it serves. The Board has, however, determined it prudent to limit any further investment into its operations in Russia and
will keep this under review going forward in light of the geopolitical situation. Furthermore, the Group has suspended
royalty payments from its Russian operations until further notice.
Given the ongoing uncertainty around the geopolitical tensions regarding Russia and the high inflationary environment
in Turkey, the Group is not able to provide meaningful guidance on the likely financial and operating results for the
current year at this stage.
Notes
(1) System sales are sales generated by the Group’s corporate and franchised stores to external customers and do not represent
revenue of the Group.
(2) 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).
(3) 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 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.
Please refer to Note 3 in the Consolidated Financial statements for a reconciliation of these items with IFRS.
(4) Adjusted net income is 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. Please refer to Note 3 in the Consolidated
Financial statements for a reconciliation of this item with IFRS.
(5) Net debt and adjusted net debt are not defined by IFRS. 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. Please refer to Note 18 in the Consolidated
Financial statements for a reconciliation of these items with IFRS.
(6) Delivery system sales are system sales of the Group generated through the Group’s delivery distribution channel.
(7) Online system sales are system sales of the Group generated through its online ordering channel.
(8) Group like-for-like growth is a weighted average of the country like-for-like growth rates based on store numbers as described
in Note (2) above.
DP Eurasia N.V. Annual Report and Accounts 2021
41
Management reportFinancial statementsAdditional informationOverview
Group structure
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
DP Eurasia N.V.
Fidesrus B.V.
Pizza
Restaurants LLC
Fides Food
Systems B.V.
Pizza
Restaurantları A.Ş.
Group and subsidiaries
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 franchised
stores in Turkey and Russia, including provision of
technical support, control and consultancy services to
the franchisees.
As at 31 December 2021, the Group operated 809 stores
(615 franchised stores, including ten in Azerbaijan and four
in Georgia, and 194 corporate stores).
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:
Subsidiaries
Pizza Restaurantları A.Ş.
(“Domino’s Turkey”)
Pizza Restaurants LLC
(“Domino’s Russia”)
Fidesrus B.V. (“Fidesrus”)
Fides Food Systems B.V.
(“Fides Food”)
2021 effective
ownership (%)
2020 effective
ownership (%)
Registered
country
Nature of
business
100
100
100
100
100
100
100
100
Turkey
Food delivery
Russia
Food delivery
The Netherlands Investment company
The Netherlands Investment company
42
DP Eurasia N.V. Annual Report and Accounts 2021
Markets
27%
app order share
increase in RU
73%
73%
share of registered
customers
increase in RU
increased new user
in total digital
channel in TR
46%
increased orders
from app in TR
18%
increase in OLO
Take Away Share
in TR
Turkey
The Group was founded in Turkey, with its first store opening in Istanbul in 1996. Since then the Group has expanded
rapidly, opening its 100th store in Istanbul in 2008. The Group is the largest pizza delivery company in Turkey in
terms of system sales and number of stores. As at 31 December 2021, based on the Group’s data on competition, the
Group’s store network in Turkey was more than four times larger than the next largest chained competitor in the pizza
sub-segment, and larger than the next seven chained pizza competitors combined, with 607 stores.
Russia
Russia is the Group’s second largest market. The Group has improved its market position since acquiring the exclusive
master franchise rights in 2012. As at 31 December 2021, based on the Group’s data on competition, the Group had the
third-largest store network in the chained pizza sub-segment in Russia with 188 stores, representing a more than ten
times increase in the number of its stores since 2014. In Moscow and the Greater Moscow region, the Group estimates
that it was the largest player by number of stores as at 31 December 2021. The Group started to expand outside of
Greater Moscow in December 2017.
Azerbaijan and Georgia
The Group was granted the exclusive master franchise of the Domino’s System for Azerbaijan and Georgia and has since
gone on to open ten and four stores, respectively.
Store growth
Number of stores at period end
DP Turkey
DP Russia
+68
451
19
+94
383
13
432
370
+70
+59
+30
+27
103
130
289
219
160
+41
+6
765
771
203
190
+38
809
188
+81
724
179
+76
643
121
+58
567
72
+58
509
43
466
495
522
545
562
581
621
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Source: Company information
DP Eurasia N.V. Annual Report and Accounts 2021
43
Management reportFinancial statementsAdditional informationOverview
Remuneration report
Statement from the Chairman
of the Remuneration Committee
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
• To attract, motivate and retain outstanding talent
44
DP Eurasia N.V. Annual Report and Accounts 2021
Dear Shareholder
I was delighted to be appointed as Chairman of the
Remuneration Committee following the 2021 AGM.
I am pleased to present to you the Directors’
Remuneration Report for the year ended
31 December 2021, 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 2021 and
how we intend to apply it in 2022. This section of the
Remuneration Report is subject to an advisory vote by
shareholders at the 2022 AGM.
At the time of writing, there is considerable political and
economic uncertainty arising from events in Ukraine.
Full implications for our business and strategy are
only likely to become clear during the coming months.
Accordingly, the Remuneration Committee may,
during the coming year, need to adapt aspects of our
remuneration arrangements from those set out in this
Remuneration Report to ensure they continue to deliver
the remuneration principles set out above whilst remaining
consistent with our remuneration policy.
Any such changes would be disclosed and explained in
next year's remuneration report.
Performance and incentive outturn for 2021
Performance
As the Chief Executive Officer outlined in his message,
2021 has seen strong trading performance on the back
of sustained strong demand in Turkey and improving
performance in Russia. Group system sales increased by
51.5% and Group online system sales grew by 66.9%, both
significantly outpacing inflation over the same period. The
share of digital in our delivery system sales has improved
to 80% (2020: 75%) reflecting the Group’s strong online
offering and positioning. We have also continued to build
for the future with an increase in our net store count of
38 to 809 which represents a 42% increase since the IPO
when the Group had 571 stores.
Incentive outturns
In 2021, the Chief Executive Officer’s annual bonus was
based 75% on Group EBITDA and 25% on strategic
measures and the overall formulaic outcome of his
bonus scorecard was 62% of maximum (full details of
targets are on page 61). At its meeting of 15 February
2022, the Committee gave careful consideration to this
outcome in the context of a broad range of factors,
including 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 bonus outcome was appropriate and that no
discretionary adjustment was required.
The performance period for the Chief Executive Officer’s
2019-21 LTIP award was completed at the end of 2021.
As this award was based on cumulative Group EBITDA
performance for a three-year period that was significantly
impacted by the COVID-19 pandemic, the formulaic
vesting outcome was inevitably zero. Whilst conscious that
this outcome was not wholly consistent with the strong
performance of the business prior to March 2020 and
the resilient performance during the pandemic itself, the
Committee agreed that discretion should not be applied
and that the vesting outcome should remain at zero.
Other issues in 2021
• Temporary salary/fee reductions – Due to prevailing
business conditions, the Company Secretary voluntarily
agreed to a temporary 12% reduction in her salary
for the period February – December 2021. For similar
reasons, the Chairman agreed a temporary £25,000
reduction in his fee in 2021. Both of these voluntary
reductions ceased at the end of 2021.
• 2021 LTIP award – For the 2020 LTIP award, the
Remuneration Committee used an extended 12-month
average share price to determine the number of shares
in the award to take account of share price volatility
and avoid granting an award over an excessive number
of shares. A similar analysis took place ahead of the
2021 LTIP award but, in this instance, reduced share
price volatility meant that no adjustment was required
and our standard methodology (based on share price
at grant) was used to determine the number of shares.
We will undertake a similar assessment ahead of the
grant of the 2022 LTIP award.
• 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 2021 was reflected in above average levels
of annual bonus outturn and LTIP vesting for employees
in that business.
Chief Executive Officer’s remuneration in 2022
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 Officer’s remuneration
for 2022 as detailed below which is consistent with our
remuneration principles and the principles of provision 40
of the UK Corporate Governance Code.
DP Eurasia N.V. Annual Report and Accounts 2021
45
Management reportFinancial statementsAdditional informationOverview Remuneration report continued
Chief Executive Officer’s remuneration in 2022 continued
Fixed Remuneration
2022 salary: TRY 4,127,816 p.a. with effect from April 2022 (TRY 3,633,641
p.a with effect from January - March 2022) and €25,000 p.a.
(2021 salary: TRY 2,752,758 p.a. and €25,000 p.a.)
• The element of the Chief Executive Officer’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 2022. The Chief Executive
Officer’s salary has been increased in line with the median increase for Turkish employees and will be subject to
review and possible further increase(s) on a basis consistent with other Turkish employees during the remainder
of 2022. Notwithstanding these adjustments, due to the significant depreciation of the Turkish Lira during 2021,
the Chief Executive Officer’s April 2022 salary is currently worth around 20% less in Pound Sterling than his 2021
salary was when set at the start of 2021.
•
In common with other Turkish employees, the Chief Executive Officer does not receive any pension provision.
Variable Remuneration
2022 Annual Bonus
• Maximum potential: 100% of salary (unchanged from 2021)
• Paid in cash if compliant with shareholding guideline otherwise 40%
deferred in shares
• Currently intended to be based on EBITDA (75%) and strategic measures
(25%) (unchanged from 2021)
2022-2024 LTIP
• Award level: 100% of salary (2021: 125% of salary)
• Currently intended to be based on EBITDA (75%) and Adjusted LTIP EPS
(25%) (unchanged from 2021)
• Awards vest on the third anniversary of grant
• Our strategy in 2022 will be to continue to place emphasis on innovation and online growth, store growth,
increased profitability and the achievement of profitable growth. It is currently intended that the diversified
set of performance measures introduced in 2021 will be retained in 2022 as they remain aligned with this
growth strategy.
• The Remuneration Committee has delayed the setting of performance targets for the 2022 annual bonus and
2022-24 LTIP until there is more certainty to enable the setting of robust targets. Those targets will be disclosed
in the next remuneration report so long as they are not commercially sensitive at that time.
• The Chief Executive Officer’s 2022 annual bonus opportunity and 2022-24 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 Officer’s 2022 bonus should be partially deferred in shares or whether a holding period should
apply to his 2022-2024 LTIP award after vesting. However, given the Remuneration Policy requirement for the
Chief Executive Officer 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.
Shareholder engagement
I would like to thank shareholders and investor bodies for the constructive input and engagement that they provided
as we developed our Remuneration Policy earlier in the year and I am grateful to shareholders for their support in
approving both the Policy and Annual Remuneration Report at the 2021 AGM.
We value all feedback from shareholders and look forward to receiving your support at the forthcoming AGM where
there will be a vote to approve our Annual Remuneration Report (pages 58 to 65).
David Adams
Chairman of the Remuneration Committee
4 April 2022
46
DP Eurasia N.V. Annual Report and Accounts 2021
Directors’ remuneration policy
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 affecting 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
incentive. 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.
DP Eurasia’s current Directors’ Remuneration Policy was
approved at the 2021 AGM. It took effect 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 2022. The Remuneration Policy text as
approved by shareholders is on pages 58 to 65 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.
DP Eurasia N.V. Annual Report and Accounts 2021
47
Management reportFinancial statementsAdditional informationOverview 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.
Benefits
To provide market-competitive benefits
Pension
To provide market-competitive retirement benefits.
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.
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 offered, such as reasonable tax advice/
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.
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.
48
DP Eurasia N.V. Annual Report and Accounts 2021
To avoid setting the expectations of Executive Directors
None
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.
There is no overall maximum level, but benefits are set
None
at an appropriate level for the specific nature of the role
and depend on the annual cost of providing individual
benefits.
Pension provision for Executive Directors will not exceed
None
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.
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
position or responsibility.
and expertise needed to develop and implement DP
When determining an appropriate level of salary, the
Eurasia’s long-term strategy.
Non-Executive Directors consider:
An Executive Director’s base salary is set on appointment
and reviewed annually or when there is a change in
To avoid setting the expectations of Executive Directors
and other employees, there is no overall maximum salary
for Executive Directors under the Remuneration Policy.
None
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.
Benefits
Benefits are role specific and take into account local
To provide market-competitive benefits
market practice.
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
Pension
To provide market-competitive retirement benefits.
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
DP Eurasia N.V. Annual Report and Accounts 2021
49
• 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.
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 offered, such as reasonable tax advice/
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.
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.
Management reportFinancial statementsAdditional informationOverview Directors’ remuneration policy continued
Remuneration Policy table for Executive Directors continued
Component/Purpose and link to strategy
Operation
Maximum
Performance framework
Normal maximum value of 100% of annual base salary
Vesting of LTIP awards is dependent on the achievement
based on the market value at the date of grant.
of key financial, strategic, ESG and/or operational
In exceptional circumstances, an award worth up to 150%
of annual base salary may be granted.
ahead of each award.
measures determined by the Non-Executive Directors
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.
The maximum annual bonus potential is 100% of
The bonus is normally based on performance assessed
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.
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.
Not applicable
Not applicable
LTIP
To link reward to the achievement of long-term
performance and strategic objectives of DP Eurasia and
to retain Executive Directors.
Annual and deferred bonus (“ADBP”)
To link reward to the achievement of key business
objectives of DP Eurasia for the year.
Shareholding guideline
To provide long-term alignment with shareholder
interests.
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).
The Executive Directors may participate in the ADBP,
which is reviewed annually to ensure bonus opportunity,
performance measures and 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 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).
Whilst in employment, the current Chief Executive Officer
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.
50
DP Eurasia N.V. Annual Report and Accounts 2021
Component/Purpose and link to strategy
Operation
Maximum
Performance framework
LTIP
To link reward to the achievement of long-term
performance and strategic objectives of DP Eurasia and
to retain Executive Directors.
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.
Annual and deferred bonus (“ADBP”)
The Executive Directors may participate in the ADBP,
To link reward to the achievement of key business
objectives of DP Eurasia for the year.
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.
Shareholding guideline
To provide long-term alignment with shareholder
interests.
Not applicable
Not applicable
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).
which is reviewed annually to ensure bonus opportunity,
performance measures and 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 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).
Whilst in employment, the current Chief Executive Officer
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.
DP Eurasia N.V. Annual Report and Accounts 2021
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Management reportFinancial statementsAdditional informationOverview Directors’ remuneration policy continued
Fee arrangements for Non-Executive Directors
Purpose and link to strategy
Operation
Maximum
Fees are set at an appropriate level
that is market competitive and
reflective of the responsibilities and
time commitment associated with
specific roles.
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 revised
fee structure that applies to all
Non Executive Directors.
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.
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
difficult 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 effect, 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.
52
DP Eurasia N.V. Annual Report and Accounts 2021
Aslan Saranga
Minimum
100%
TRY 4,860k
Fixed pay
Annual bonus
LTIP
Midpoint
52%
24% 24%
TRY 9,306k
Maximum
36%
32%
32%
TRY 13,753k
Maximum
including
share price
appreciation
30%
28%
42%
TRY 15,976k
TRY 0
TRY
3.0m
TRY
6.0m
TRY
9.0m
TRY
12.0m
TRY
15.0m
TRY
18.0m
Frederieke Slot
Minimum
100%
€165k
Midpoint
100%
€165k
Maximum
100%
€165k
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.
Remuneration scenarios
The charts on the left show hypothetical values of the
2022 remuneration package for the current Executive
Directors in the Remuneration Policy under four assumed
performance scenarios.
The Remuneration Committee regularly reviews the
impact of different 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.
Maximum
including
share price
appreciation
100%
€165k
• Salary: as set out on page 58
Assumptions
Fixed pay
€0
€50,000
€100,000
€150,000
€200,000
• Pension: Frederieke Slot 10% of base salary
• Benefits: estimate based on 2021 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 2022.
• 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.
DP Eurasia N.V. Annual Report and Accounts 2021
53
Management reportFinancial statementsAdditional informationOverview Directors’ remuneration policy continued
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 affected, among other means, by requiring the
transfer of shares, payment of cash or reduction of awards
or bonuses.
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, different
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, different
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-off 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;
•
•
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.
54
DP Eurasia N.V. Annual Report and Accounts 2021
Payment for loss of office
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 office 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 office or employment. Payment would also
be made for any outstanding vacation days unused at
the date of cessation of employment.
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.
DP Eurasia N.V. Annual Report and Accounts 2021
55
Management reportFinancial statementsAdditional informationOverview Directors’ remuneration policy continued
Payment for loss of office continued
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 affect
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
No bonus
payable
in relation
to year of
cessation.
Outstanding
awards lapse.
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.
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.
ADBP – cash
bonus
ADBP –
deferred share
bonus and
LTIP
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.
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.
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.
56
DP Eurasia N.V. Annual Report and Accounts 2021
Differences in remuneration between Executive
Directors and other employees
The overall remuneration package for the Chief
Executive Officer 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 offered
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.
DP Eurasia N.V. Annual Report and Accounts 2021
57
Management reportFinancial statementsAdditional informationOverview Annual remuneration report
The annual remuneration report sets out how
DP Eurasia’s Remuneration Policy (pages 58 to 65)
will be implemented in 2022 and how the existing
Remuneration Policy was implemented in 2021.
Implementation of the Remuneration Policy in 2022
Executive Directors
DP Eurasia has two Executive Directors: the Chief Executive Officer (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. Frederieke Slot’s salary was reviewed with reference to inflation in the Netherlands.
Base salary
Executive Director
Aslan Saranga
Frederieke Slot
Base Salary
Current
2021
TRY 4,127,816(1)
+EUR 25,000
TRY 2,752,758
+EUR 25,000
EUR 129,245
EUR 123,090(2)
(1) Aslan Saranga's salary was increased to TRY 3,633,641 with effect from 1 January 2022 and further increased to TRY 4,127,816 with
effect from 1 April 2022. As outlined in the Statement from the Chairman of the Remuneration Committee, his salary will be subject
to review and potential further amendment throughout 2022 on a basis consistent with other Turkish employees.
(2) Effective from 2021 AGM and before voluntary reduction.
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 2022, 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 2022.
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.
58
DP Eurasia N.V. Annual Report and Accounts 2021
LTIP
Aslan Saranga will receive an LTIP award over shares worth 100% of salary in 2022. Frederieke Slot will not receive
an LTIP award in 2022.
It is currently envisaged that the award will vest on the third anniversary of grant subject to Group adjusted EBITDA
(75%) and adjusted LTIP EPS (25%) measured over the period 2022-24. In order to ensure the EPS measure used in
the LTIP is a fair representation of underlying Group performance, it will be defined so as to exclude non-recurring
income/expenses which are not part of the normal course of business and income/expenses which are particularly
volatile in a Turkish context (e.g. FX gains and losses; net interest expense). This is consistent with the approach
adopted for the 2021-2023 LTIP.
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.
Variable remuneration targets
At the date of this report, there is significant political and economic uncertainty arising from recent events in Ukraine.
Accordingly, the Remuneration Committee has delayed the setting of performance targets for the 2022 ADBP and
2022-24 LTIP until there is more certainty to enable the setting of robust targets. Those targets will be disclosed in the
next remuneration report so long as they are not commercially sensitive at that time.
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.
Chairman of the Board
Basic Non-Executive Director fee
Audit Committee Chairman additional fee
Remuneration Committee Chairman additional fee
Senior Independent Director additional fee
Annual
fee (GBP)
150,000
30,000
2,000
2,000
2,000
In addition, the Non-Executive Directors are reimbursed for expenses that are reasonably required for the performance
of their duties.
DP Eurasia N.V. Annual Report and Accounts 2021
59
Management reportFinancial statementsAdditional informationOverview
Annual remuneration report continued
Total remuneration
The following table sets out the total remuneration for Executive Directors and Non-Executive Directors for 2021.
Year ending 31 December 2021
Aslan
Saranga(1)
Frederieke
Slot(2)
Peter
Williams(3)
Tom
Singer(4)
David
Adams(5)
Shyam
S.Bhartia
Hari
S.Bhartia
Pratik
R.Pota
Executive Directors
Non-Executive Directors
Base salary and
fees (TRY)
3,013,325
1,052,560
1,514,515
350,863
415,987
Benefits (TRY)
1,567,657
239,721
Pension (TRY)
—
21,930
—
—
—
—
—
—
Total fixed
remuneration (TRY)
Total fixed
remuneration (%)
4,580,982
1,314,211
1,514,515
350,863
415,987
71%
100%
100%
100%
100%
Annual bonus (TRY)
1,868,262
Long-term incentives (TRY)
—
—
—
Total variable
remuneration (TRY)
Total variable
remuneration (%)
1,868,262
29%
—
—
—
—
—
—
—
—
—
—
—
—
—
Total (TRY)
6,449,244
1,314,211
1,514,515
350,863
415,987
Total (local currency) ₺6,449,244 €145,918 £125,000
£28,958
£34,333
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Local currency totals
Part of Aslan Saranga’s remuneration and the whole of Frederieke Slot’s remuneration are paid in Euros and Peter
Williams, Tom Singer and David Adams 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.
Notes to the table on page 60 – 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 effective 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 effective from 2021 AGM.
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, company car, lunch ticket and a statutory payment of TRY 1,154k
required under Turkish Labour Law to permit him to receive state pension. 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
following the 2021 AGM (35.4% of base salary prior to the 2021 AGM).
60
DP Eurasia N.V. Annual Report and Accounts 2021
Annual bonus
This represents the total bonus payable for the relevant financial year under the ADBP. In 2021, the Chief Executive
Officer’s annual bonus was based on 75% of the Group EBITDA and 25% on strategic measures.
1. Adjusted Group EBITDA (75% weighting)
Performance measure
Adjusted EBITDA (excluding IFRS 16)
Threshold
performance
TRY 117.7
Maximum
performance
TRY 147.1
Actual
performance
TRY 134.1
% of max
payable
56%
(42% of salary)
Zero payout
100% payout
2. Strategic targets (25% weighting)
Targets set for the CEO for 2021 related to key areas of strategic development within our Russian and Turkish
businesses.
1.
Strategic development in Russian business (15% weighting)
There was good progress in this area in 2021. Notable goals achieved during the year included the timely
appointment and successful integration of a new CEO and management team for the Russian business, Board
approval of a refreshed Russian strategic business plan and successful implementation of a Franchise Plan.
2. Strategic development in Turkish business (10% weighting)
There was strong progress in this area in 2021. A particularly key strategic focus, overseen by the Group CEO,
was the development of a successful internal succession plan for the Turkish CEO role. This was delivered to a
high standard with the identification of high calibre talents in the Turkey business, coupled with implementation
and successful management of a development programme. All participants completed the year with above
average performance scores and have been assigned additional responsibilities or promotions within the Turkish
business in 2022.
In aggregate, the Remuneration Committee agreed 80% achievement (20% of salary) for the Chief Executive Officer’s
performance against these strategic targets.
The overall formulaic outcome of the bonus was 62% of maximum available. At its meeting of 15 February 2022,
the Remuneration Committee gave careful consideration to this outcome in the context of a broad range of factors,
including 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.
Total annual bonus
Long-term incentive
Maximum potential
annual bonus
Actual bonus
TRY 3,013,325
TRY 1,868,262
(62% of salary)
This column relates to the value of LTIP awards whose performance period ends in the period under review.
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.
2019 LTIP award
Threshold
(0% vests)
TRY 434m
Maximum
(100% vests)
TRY 482m
Actual
performance
TRY 328.2m
% of award
vesting
0%
Cumulative adjusted
EBITDA 2019-2021
(excluding IFRS 16)
Cumulative adjusted
EBITDA 2019-2021
(excluding IFRS 16)
DP Eurasia N.V. Annual Report and Accounts 2021
61
Management reportFinancial statementsAdditional informationOverview
Annual remuneration report continued
2020 Directors’ remuneration table
Year ending 31 December 2020
Executive Directors
Non-Executive Directors
Aslan
Saranga
Frederieke
Slot
Peter
Williams
Tom
Singer
Seymur
Tari
Aksel
Sahin
Base salary and fees (TRY)
2,514,253(1) 774,647(2) 1,302,397(2) 603,444(2)
Benefits (TRY)
Pension (TRY)
217,338
184,312
—
283,681
—
—
—
—
Total fixed remuneration (TRY)
2,731,591
1,242,640
1,302,397
603,444
Total fixed remuneration (%)
Annual bonus (TRY)
Long-term incentives (TRY)
Total variable remuneration (TRY)
Total variable remuneration (%)
Total (TRY)
Total (local currency)
100%
100%
100%
100%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,731,591
1,242,640
1,302,397
603,444
₺2,731,591
€153,120 £145,000
£67,183
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Notes to the table on page 62 – 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 €100,000, Peter Williams’ fee as Chairman is £150,000 and Tom
Singer’s fee is £69,500 (including additional fees for his positions as Senior Independent Director, Audit Committee
Chairman and Remuneration Committee Chairman). All of them voluntarily accepted a 20% reduction in their
salary/fees for two months in 2020 to support the business.
Payments to past Directors and payments for loss of office
There were no payments to past Directors nor payments for loss of office to Directors during the year ended
31 December 2021.
Statement of Directors’ shareholdings and share interests
The table below shows the Directors’ share ownership as at 31 December 2021.
For the duration of the Remuneration Policy, the Chief Executive Officer 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.
Director
Aslan Saranga(1)
Frederieke Slot
Peter Williams
Tom Singer
David Adams
Seymur Tarı
Aksel Şahin
Shyam S.Bhartia
Hari S.Bhartia
Pratik R.Pota
Outstanding
share awards
Shares owned granted under
LTIP at
31 Dec 2021
(number
of shares)
outright at
31 Dec 2021
(number
of shares)
8,106,310
1,312,489
—
131,776
50,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1) Aslan Saranga owns shares through his wholly owned entity Vision Lovemark Coöperatief U.A.
62
DP Eurasia N.V. Annual Report and Accounts 2021
Between 31 December 2021 and the date of this report, there were no changes in the shareholdings outlined in the
above table.
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 125% of base salary which resulted in 473,571 shares with a face value of TRY
3,752,340 based on a share price of 68.9p (6 May 2021) and an exchange rate of GBP1: TRY11.5 (6 May 2021).
Performance conditions for the award, to be assessed over the three year period to 31 December 2023,
are set out below.
Threshold
Maximum
Cumulative
adjusted
Group EBITDA
2021-2023
TRY million
Cumulative
adjusted
LTIP EPS
2021-2023
TRY
75% weighting 25% weighting
604.2
675.3
0.93
1.03
Proportion
vesting
0%
100%
Performance graph and Chief Executive Officer 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.
DP Eurasia’s total shareholder return compared against total shareholder return of the FTSE All-Share Index since Admission on 3 July 2017
£150
£100
£50
£0
Jun 17
DP Eurasia
FTSE All-Share Index
Dec 17
Jun 18
Dec 18
Jun 19
Dec 19
Jun 20
Dec 20
Jun 21
Dec 21
The table below shows the total remuneration payable to the Chief Executive Officer as a percentage of the maximum
opportunity.
Chief Executive Officer
total remuneration (TRY)
Year ended
31 Dec 2018
2,929,266
ADBP payout (% of maximum)
49%
Year ended
31 Dec 2019
3,215,510
41%
Year ended
31 Dec 2020
2,731,591
0%
Year ended
31 Dec 2021
6,449,244
62%
LTIP vesting
n/a (no award
vested during
2018)
n/a (no award
vested during
2019)
—
—
DP Eurasia N.V. Annual Report and Accounts 2021
63
Management reportFinancial statementsAdditional informationOverview
Average for all Turkish
headquarters employees
Executive Directors
Aslan Saranga
Frederieke Slot
Annual remuneration report continued
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 2018 and 2021 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 Officer resides in Turkey, Turkish employees are
chosen as the comparator.
Salary change
Benefits change
Annual bonus change
2018-2019
2019-2020
2020-2021
2018-2019
2019-2020
2020-2021
2018-2019
2019-2020
2020-2021
22%
15%
19%
15%
10%
28%
(7%)
130%
91%
15%
0%
10%
(3%)
20%
1%
14%
0%
27%
0%
621%
0%
Chairman & Non-Executive Directors
Peter Williams
Tom Singer
David Adams
Shyam S.Bhartia
Hari S.Bhartia
Pratik R.Pota
Notes to the table:
0%
0%
—
—
—
—
(3%)
(3%)
(14%)
(57%)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4%)
(100)%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
n/a
—
—
—
—
—
—
—
• This table compares data between 2018 and 2021.
• Changes are all in local currency and the increase in Turkish salaries and CEO salary reflect Turkish inflation.
• The Chief Executive Officer’s salary change was determined in line with Turkish headquarters employees.
• Frederieke Slot agreed a 12% reduction in her salary starting from February 2021.
• Peter Williams agreed a GBP25,000 reduction in his fee for 2021.
• Tom Singer stepped down from his roles as Senior Independent Director, Audit Committee Chairman and
Remuneration Committee Chairman as of AGM 2021.
• As explained in this report, the Chief Executive Officer’s annual bonus is based on Group adjusted EBITDA (75%)
and strategic targets (25%). It paid out at 62% of maximum for 2021 compared to zero for 2020 and accordingly
no year-on-year percentage increase can be shown.
• The year-on-year change in the Chief Executive Officer’s benefits relates to a statutory payment of TRY 1,154k
required under Turkish Labour Law to permit him to receive state pension.
• All other Turkish employees benefit from a structured performance management system: the bonus earned
is affected by both the performance of the Turkish business (measured by six 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. The bonus pool has grown in 2021 because
of “over achievement” in the Turkish business company KPIs.
Internal pay ratio 2021
The internal pay ratio between the average pay of DP Eurasia employees vis-à-vis the average pay of the CEO
and the Executive Directors was calculated based on the average remuneration (base salary and bonus) of the
Group vis-à-vis the base salary and bonus of the CEO and average base salary and bonus of the Executive Directors
in 2020. For the purposes of this ratio, total remuneration including all remuneration components has been taken into
account in 2021 on a basis consistent with guidance issued in December 2020 by the Dutch Corporate Governance
Monitoring Committee.
The pay ratio is 50:1 (2020: 41:1) for the CEO Aslan Saranga and 31:1 (2020: 27:1) for the Executive Directors.
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).
64
DP Eurasia N.V. Annual Report and Accounts 2021
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 2021. A 2020 comparative figure is also provided.
Total staff costs (further details are provided in Note 5
to the consolidated financial statements (page 127))
Total dividends
Year ended
31 Dec
2021
Year ended
31 Dec
2020
TRY 285.6m
TRY 217.4m
—
—
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. Remuneration Committee consisted
of David Adams, Tom Singer (until the 2021 AGM) and Peter Williams during the year ending 31 December 2021, David
Adams was appointed as Chairman of the Remuneration Committee to replace Tom Singer following the 2021 AGM,
The Remuneration Committee met on three occasions during the period between 1 January 2021 and 31 December 2021.
Workforce engagement
DP Eurasia’s approach to investing in, and engaging, the workforce is explained in the People section of this report on
page 16.
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 Officer, 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.
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 2021. The Remuneration Committee received independent and objective advice from Deloitte,
principally on the preparation of the remuneration report, grant process, and on the queries raised by the Remuneration
Committee Chairman. Deloitte also joined Remuneration Committee meetings by phone. In addition, Deloitte assisted
DP Eurasia during the year with the UK Corporate Governance Code changes. Deloitte was paid £27,370 in fees during
the period ending 31 December 2021 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,
none 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
2021 AGM
81,981,304 (92.9%)
6,305,316 (7.1%)
Approval of Adoption of new Directors’ Remuneration Policy
2021 AGM
82,075,046 (93%)
6,211,574 (7%)
On behalf of the Board
David Adams
Chairman of Remuneration Committee
4 April 2022
DP Eurasia N.V. Annual Report and Accounts 2021
0
0
65
Management reportFinancial statementsAdditional informationOverview
Board
The Board aims to represent all stakeholders and to
provide leadership and control in order to ensure the
growth and development of a successful business.
Peter Williams
Aslan Saranga
Frederieke Slot
Shyam S. Bhartia
Hari S. Bhartia
Pratik Pota
David Adams
Chairman and Independent
Non‑Executive Director
Chief Executive Officer
and Executive Director
Company Secretary
and Executive Director
Non‑Executive Director
Non‑Executive Director
Non‑Executive Director
Senior Independent
Non‑Executive Director
Year of birth: 1953
Nationality: British
Initial appointment:
July 2017
Year of birth: 1969
Nationality: Turkish
Initial appointment:
June 2017
Year of birth: 1982
Nationality: Dutch
Initial appointment:
July 2017
Year of birth: 1952
Nationality: Indian
Initial appointment:
April 2021
Year of birth: 1956
Nationality: Indian
Year of birth: 1968
Nationality: Indian
Year of birth: 1954
Nationality: British
Initial appointment:
Initial appointment:
Initial appointment:
April 2021
April 2021
April 2021
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, Mr Williams served as
chief financial officer and
then as chief executive of
Selfridges. Amongst others,
Mr Williams has 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 bachelors degree in
Mathematics from Bristol
University.
Mr Saranga is the Chief
Executive Officer, having
been appointed as the
founding chief executive
officer of the exclusive
master franchisee of the
Domino’s System in Turkey
on its inception in 1996. He
also serves as the Chief
Executive Officer of the
Turkish Operations as well
as the Chairman of the
Domino’s Russia Board of
Directors. 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
masters 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
firms 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 & Chairman,
Jubilant Bhartia Group
headquartered in New Delhi,
India. With strong global
presence in diverse sectors
the Group has four
companies listed on Indian
Stock Exchanges.
Mr. Bhartia is Chairman –
Jubilant Pharmova, Jubilant
Ingrevia and Jubilant
FoodWorks Limited (a food
service company & master
franchisee of Domino’s
Pizza in India, Sri Lanka,
Bangladesh & Nepal).
He is also Chairman & MD of
Jubilant Pharma, Singapore.
Mr Bhartia holds a
bachelors’ degree in
commerce from St. Xavier’s
College, Calcutta University
and is a qualified cost and
works accountant.
AC RC SAC
66
SAC
SAC
AC RC SAC
DP Eurasia N.V. Annual Report and Accounts 2021
Mr Adams also serves as a
non-executive director of
Thinksmart plc (a financial
technology company). In the
last six years, Mr Adams has
served on the boards of
PizzaExpress UK, 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 Hari S Bhartia is
Founder & Co-Chairman,
Jubilant Bhartia Group,
Mr Pota is the Chief
Executive Officer and
Whole-time Director
headquartered in New Delhi,
(Executive Director) at
India. With strong global
Jubilant FoodWorks Ltd
presence in diverse sectors
(“JFL”).
the Group has four
companies listed on
Indian Stock Exchanges.
Mr Bhartia is Co-Chairman
& MD of Jubilant Pharmova,
Co-Chairman of Jubilant
Ingrevia & Jubilant
FoodWorks Limited (a food
service company & master
franchisee of Domino’s
Pizza in India, Sri Lanka,
Bangladesh & 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, scientific
& technological programs
of the Government of India.
He is the Chairman of
Jubilant Golden Harvest Ltd.
and also serves as the Vice
President of the National
Restaurant Association of
India (“NRAI”).
Mr Pota has 30 years of
diverse experience across
sales, marketing and general
management in leading
large and established
businesses, and also in
managing turnarounds
and start-ups. Prior to
JFL, Mr Pota worked
in leadership positions
at PepsiCo, Airtel and
Hindustan Unilever.
Mr Pota is an alumnus
of the Indian Institute of
Management, Kolkata from
which he holds an MBA
degree, and of BITS Pilani
from which he holds a
bachelor of engineering
degree.
Key:
AC Audit Committee
RC
Remuneration
Committee
SAC
Selection and
Appointment
Committee
Peter Williams
Aslan Saranga
Frederieke Slot
Shyam S. Bhartia
Hari S. Bhartia
Pratik Pota
David Adams
Chairman and Independent
Chief Executive Officer
Non‑Executive Director
and Executive Director
Company Secretary
and Executive Director
Non‑Executive Director
Non‑Executive Director
Non‑Executive Director
Year of birth: 1953
Nationality: British
Year of birth: 1969
Nationality: Turkish
Year of birth: 1982
Nationality: Dutch
Year of birth: 1952
Nationality: Indian
Initial appointment:
Initial appointment:
Initial appointment:
Initial appointment:
July 2017
June 2017
July 2017
April 2021
Mr Williams has spent over
Mr Saranga is the Chief
Ms Slot served as senior
Mr Shyam S Bhartia is
30 years in both executive
Executive Officer, having
legal counsel of USG People
Founder & Chairman,
and non-executive positions
been appointed as the
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
founding chief executive
officer of the exclusive
master franchisee of the
Domino’s System in Turkey
on its inception in 1996. He
also serves as the Chief
Executive Officer of the
between 2014 and 2017 (a
large HR service provider
that was listed on the
Jubilant Bhartia Group
headquartered in New Delhi,
India. With strong global
Amsterdam Stock Exchange
presence in diverse sectors
until June 2016). She spent
the Group has four
the early part of her career
companies listed on Indian
as an attorney-at-law with
Stock Exchanges.
various large Dutch law
Mr. Bhartia is Chairman –
Turkish Operations as well
firms advising on
Jubilant Pharmova, Jubilant
as the Chairman of the
restructuring, mergers and
Ingrevia and Jubilant
2004, Mr Williams served as
Domino’s Russia Board of
chief financial officer and
then as chief executive of
Directors. He currently sits
as a board member of the
acquisitions and advising
national and international
FoodWorks Limited (a food
service company & master
companies on a wide range
franchisee of Domino’s
Selfridges. Amongst others,
Food Retailers Association,
of strategic legal issues,
a leading industry group in
Turkey, and is a member of
Domino’s Pizza General
corporate governance
matters and legal and
regulatory responsibilities.
Jubilant Pharma, Singapore.
Pizza in India, Sri Lanka,
Bangladesh & Nepal).
He is also Chairman & MD of
Management Council, which
Ms Slot has a degree in Law
Mr Bhartia holds a
is comprised of the CEOs of
from the University of
bachelors’ degree in
the top ten countries in the
Leiden.
Mr Williams has 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 bachelors degree in
Mathematics from Bristol
University.
global Domino’s Pizza
network. Mr Saranga has a
masters degree in Finance
from the University of
Istanbul.
commerce from St. Xavier’s
College, Calcutta University
and is a qualified cost and
works accountant.
Year of birth: 1956
Nationality: Indian
Initial appointment:
April 2021
Mr Hari S Bhartia is
Founder & Co-Chairman,
Jubilant Bhartia Group,
headquartered in New Delhi,
India. With strong global
presence in diverse sectors
the Group has four
companies listed on
Indian Stock Exchanges.
Mr Bhartia is Co-Chairman
& MD of Jubilant Pharmova,
Co-Chairman of Jubilant
Ingrevia & Jubilant
FoodWorks Limited (a food
service company & master
franchisee of Domino’s
Pizza in India, Sri Lanka,
Bangladesh & 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, scientific
& technological programs
of the Government of India.
Year of birth: 1968
Nationality: Indian
Initial appointment:
April 2021
Mr Pota is the Chief
Executive Officer and
Whole-time Director
(Executive Director) at
Jubilant FoodWorks Ltd
(“JFL”).
He is the Chairman of
Jubilant Golden Harvest Ltd.
and also serves as the Vice
President of the National
Restaurant Association of
India (“NRAI”).
Mr Pota has 30 years of
diverse experience across
sales, marketing and general
management in leading
large and established
businesses, and also in
managing turnarounds
and start-ups. Prior to
JFL, Mr Pota worked
in leadership positions
at PepsiCo, Airtel and
Hindustan Unilever.
Mr Pota is an alumnus
of the Indian Institute of
Management, Kolkata from
which he holds an MBA
degree, and of BITS Pilani
from which he holds a
bachelor of engineering
degree.
Senior Independent
Non‑Executive Director
Year of birth: 1954
Nationality: British
Initial appointment:
April 2021
Mr Adams also serves as a
non-executive director of
Thinksmart plc (a financial
technology company). In the
last six years, Mr Adams has
served on the boards of
PizzaExpress UK, 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.
AC RC SAC
SAC
SAC
AC RC SAC
Key:
AC Audit Committee
RC
SAC
Remuneration
Committee
Selection and
Appointment
Committee
DP Eurasia N.V. Annual Report and Accounts 2021
67
Management reportFinancial statementsAdditional informationOverview
Leadership team
Aslan Saranga
Chief Executive Officer
and Executive Director
See biography on page 66.
Neval Korucu Alpagut
Kerem Ciritci
Daniel Rubinowski
Pınar Togay
Chief Financial Officer
Chief Executive Officer of
Turkish Operations
Chief Executive Officer of
Russian Operations
Chief Marketing &
Digital Business Officer
Ms Alpagut became Chief
Financial Officer in 2017.
She joined the Group in 2006
as the Chief Financial Officer
of the Turkish Operations.
Ms Alpagut has a degree
in Business Administration
from İstanbul University
(Turkey).
Mr Ciritci became Chief
Growth Officer in 2018. Since
2010 he has been Business
Development, Franchise
Operations and International
Development Director of the
Turkish Operations. Mr Ciritci
has a degree in Tourism
Administration from
Boğaziçi University (Turkey).
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 Poznan
University of Economics.
Ms Togay became Chief
Marketing & Digital Business
Officer of Turkey and Russia
Operations from January
2022. Since 2019, she had
been Marketing Director of
the Turkish Operations.
Ms Togay has a degree in
International Relations from
Galatasaray University
(Turkey).
68
DP Eurasia N.V. Annual Report and Accounts 2021
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.
Attendance at all of these meetings is shown below.
Board diversity
Board
Executive Directors
Non‑Executive Directors
Senior management
Women
14%
Women
50%
Women
0%
Women
43%
Men
86%
Men
50%
Men
100%
Men
57%
Directors’ skills and experience
Skills/experience
Retail
Remuneration/people
Finance
Marketing/brand
Product specific
Listed entity experience
Legal, governance and compliance
IT/digital
International markets
Number of Directors
Due to the travelling restrictions in connection with the COVID-19 pandemic, all Board meetings were held virtually.
Date of possible
reappointment
Duration of
unexpired term
of appointment
Attendance at
planned Board
meetings/calls
Attendance
site visits
Attendance at
meetings of the
Audit and
Remuneration
Committees
Attendance at
meetings of the
Selection and
Appointment
Committee
Peter Williams
Aslan Saranga
Frederieke Slot
Shyam Bhartia(1)
Hari Bhartia(1)
Pratik Pota(1)
David Adams(1)
Seymur Tarı(2)
Aksel Şahin(2)
Neil Harper(2)
Thomas Singer(3)
2022
2022
2022
2022
2022
2022
2022
n/a
n/a
n/a
n/a
2 months
2 months
2 months
2 months
2 months
2 months
2 months
n/a
n/a
n/a
n/a
7
7
7
5
5
5
5
2
2
2
4
1/1
1/1
1/1
1/1
1/1
1/1
1/1
n/a
n/a
n/a
n/a
7
n/a
n/a
n/a
n/a
n/a
4
n/a
n/a
n/a
5
(1) Shyam Bhartia, Hari Bhartia, Pratik Pota and David Adams joined the Board on 21 April 2021.
(2) Seymur Tari, Aksel Şahin and Neil Harper ceased to be Directors in April 2021.
(3) Thomas Singer ceased to be a Director in June 2021.
DP Eurasia N.V. Annual Report and Accounts 2021
2
n/a
n/a
n/a
n/a
n/a
1
n/a
n/a
n/a
1
69
Management reportFinancial statementsAdditional informationOverview
Corporate governance report
The Board is committed to maintaining a
governance framework that is appropriate to
the business, supports effective decision‑making
and promotes decisions focused on the
long‑term success of the Group.
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 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 72
• relations with the Company’s shareholders
and the General Meeting;
Page 101
• the reports of the Audit Committee,
the Remuneration Committee and
the Selection and Appointment
Committee; and
Page 74
•
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 office) and the
shares and shareholders paragraph
(Relationship Agreement and the
controlling shareholder).
Pages 55 and 101
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.
The Board
This section of the corporate governance report explains
how the Board has fulfilled its duties and obligations
during the year 2021.
On 21 April 2021, during an Extraordinary General
Meeting of Shareholders (“EGM”), Mr Shyam Bhartia,
Mr Hari Bhartia and Mr Pratik Pota were appointed as
Non-Executive Directors, replacing Mr Seymur Tari,
Ms Aksel Şahin and Mr Neil Harper as shareholder
representatives pursuant to the Relationship Agreement
between the Company and Fides Food Systems.
At that same EGM, Mr David Adams was appointed as
Non-Executive Director in order to replace Mr Thomas
Singer as Senior Independent Non-Executive Director,
who retired from the Board at the end of the 2021
AGM. All Executive Directors and the Chairman
were reappointed at the Annual General Meeting on
8 June 2021.
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
duties 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 2021 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
2021, 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.
70
DP Eurasia N.V. Annual Report and Accounts 2021
This means that EUI can no longer provide central
maintenance services in respect of the shares of the
Company (having its corporate seat in the Netherlands),
which are represented in the EUI CREST system by means
of depositary interests. The Company had until 30 June
2021 to arrange for the eligibility of the shares in an EU
CSD. The Company has decided to transfer its shares to
Nederlands Centraal Instituut voor Giraal Effectenverkeer
B.V., trading under the name Euroclear Nederland,
the CSD established in the Netherlands (“Euroclear
Nederland”). To facilitate this transfer, technical
changes had to be made to the articles. During the
EGM on 3 February 2021, the shareholders approved
the amendment to the articles. On 25 June 2021, the
Company’s articles of association were amended.
At any time, the Board, as a whole, is entitled to represent
and act on behalf of the Company. Additionally, the Chief
Executive Officer 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 66 and 67.
The Board is responsible for the management, general
affairs, 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.
Since 31 January 2020, the United Kingdom has ceased to
be a member of the European Union. Following the end
of the United Kingdom’s transition period for leaving the
European Union on 31 December 2020, Euroclear UK &
Ireland Limited (“EUI”), the central securities depository
(“CSD”) established in the United Kingdom, is no longer
recognised as an EU CSD, but is recognised as a
third-country CSD.
Our culture
Ambition
Integrity
Cohesion
Team spirit
The Group is committed
to improving and
demonstrating an
eagerness to develop to
overcome new challenges
in order to contribute to
its growth.
The Group is dedicated to
choosing the path which
strengthens its principles
of honesty, truth, loyalty,
rectitude and justice in
the daily conduct of all
workers.
The Group aims to
guarantee that the
ambitious goals it sets
are achieved through the
contribution of all business
units.
The Group operates
globally in culturally diverse
contexts and encourages,
amongst all workers, a
sense of belonging, respect
for differences, loyalty and
reciprocity.
DP Eurasia N.V. Annual Report and Accounts 2021
71
Management reportFinancial statementsAdditional informationOverview Corporate governance report continued
Board committees and roles
Shareholders
107 shareholders as at 31 December 2021
Board
Selection and
Appointment 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 on
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.
Audit Committee
Remuneration Committee
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.
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
effectiveness 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.
See Selection and Appointment
Committee report on page 76.
See Audit Committee report on
pages 74 and 75.
See Remuneration Committee
report on page 76.
Executive team
Chief Executive Officer
Chief
Financial
Officer
Chief
Strategy
Officer and
Head of IR
Chief
Growth
Officer
CEO
Russia
COO
Russia
CFO Russia
Company
Secretary
72
DP Eurasia N.V. Annual Report and Accounts 2021
Appointment, dismissal and suspension
Executive Directors
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. For so
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 sufficient information in the meeting
papers for them to decide whether their commitment and
performance warrant a further year in office. At the 2021
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. Board resolutions to suspend or
dismiss an Executive Director require an absolute majority
of the votes cast.
Fides Food Systems will be able to nominate for
appointment up to 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 10% or more of the
votes able to be cast on all or substantially all General
Meetings. More information relating to the nomination
rights of Fides Food Systems can be found on pages 101
and 102.
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
effectiveness 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.
DP Eurasia N.V. Annual Report and Accounts 2021
73
Management reportFinancial statementsAdditional informationOverview Corporate governance report continued
The Board continued
Non‑Executive Directors continued
Each Non-Executive Director has committed to the
Company that they are able to allocate sufficient time to
the Company to discharge their responsibilities effectively.
At the 2022 AGM, it is proposed that the current Executive
Directors, Non-Executive Directors and Chairman will be
reappointed.
The Board recognised that it will require additional
Independent Non-Executive Directors to comply with the
applicable corporate governance best practice principles.
This has been discussed in both the Board as well as the
meetings of the Selection and Appointment Committee.
The Board has decided to appoint two additional
independent Non-Executive Directors and is in advanced
stages of appointing the first. During this process and
following the 2022 AGM, Jubilant has agreed to reduce
their representation from three Directors to two.
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 were revised in January
2019 and further 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 2021, which can be found on
page 69.
Audit Committee
Meetings in 2021: 4
Members: Thomas Singer (Chair until June 2021),
David Adams (Chair from June 2021),
Peter Williams
The Audit Committee met four times in 2021. 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 Chief
Strategy Officer and Head of Investor Relations 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 member
is Mr Williams.
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, affect
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 79.
74
DP Eurasia N.V. Annual Report and Accounts 2021
The Audit Committee has reviewed the independence,
effectiveness and objectivity of the external auditor, PwC,
and considers that PwC possesses the skill and experience
required to fulfil its duties effectively and efficiently. The
Audit Committee’s review of the effectiveness 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 2021 and confirmed that it has been and is
compliant with these independence requirements. With
respect to the external auditor’s Board report on the 2021
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 2021.
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 Audit Committee’s focus in 2021 was, among other
things, on overseeing the integrity and quality of the
Group’s financial reporting, the effectiveness of the
internal risk and control systems, the relevant 2021 tax
matters, debt covenant compliance and the impact
and consequences of COVID-19. 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.
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 performed at year end by the external auditor.
The Audit Committee oversaw follow-up by management
on the recommendations made by the internal and
external audit reports.
The Audit Committee extensively discussed the
effectiveness 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 2021.
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.
DP Eurasia N.V. Annual Report and Accounts 2021
75
Management reportFinancial statementsAdditional informationOverview Corporate governance report continued
Remuneration Committee
Meetings in 2021: 3
Selection and Appointment
Committee
Members: Thomas Singer (Chair until June 2021),
David Adams (Chair from June 2021),
Peter Williams
Meetings in 2021: 2
Members: Peter Williams (Chair), Thomas Singer
(until June 2021), David Adams (Chair from June
2021) and Hari Bhartia
The Remuneration Committee is chaired by Mr Adams
and its other member is Mr Williams. 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, affect
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 2021, the Remuneration Committee met three
times. 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
Officer, it was chosen to discuss these matters without
the Chief Executive Officer being present. Further detail
on remuneration of the Board can be found on pages 58
to 65 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 2021.
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, affect 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 two independent Non-Executive
Directors and one non-independent Non-Executive Director.
The Selection and Appointment Committee met two times
in 2021. The meetings of the Selection and Appointment
Committee were attended by the Chief Executive Officer
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 executives in Turkey and
Russia. The Selection and Appointment Committee also
discussed the Board’s approach to its annual self-assessment
on Board effectiveness 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 2022 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 effectively. The Board has a key role to
protect shareholders’ interests by ensuring that the Board
and management are challenged, constructively and
effectively, and it is important that they do so from a range
of perspectives. Fortunately, our 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 Group-wide diversity data are shown
on page 69.
76
DP Eurasia N.V. Annual Report and Accounts 2021
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.
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 effectiveness
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 to three site visits to Moscow and Istanbul a
year. The Chairman sets the Board’s agenda, ensures
the Directors receive accurate, timely and clear
information, and promotes effective 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
only one face-to-face meeting and the rest were held via
video conference. It is the Board’s intention to resume
face-to-face meetings and meetings in Amsterdam as
soon as practically possible.
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 Officer. None of the Non-Executive
Directors were frequently absent, and in all meetings
there was sufficient presence to constitute a valid quorum.
The table showing the attendance of Directors at Board
meetings in 2021 can be found on page 69.
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.
Board activities
R S T
A
Q
P
O
N
M
L
K
J
I
H
B
C
D
E
F
G
A Strategy (financial
and operational)
B Remuneration Policy
and approach
C
Investments, shareholder
returns and dividends
D Performance conditions
and employee share
scheme awards, including
executive management
oversight and performance
E Risk management
and mitigation
F Budgeting
G
Investor relations
H Compliance
10%
I Key policies and
governance arrangements
6%
4%
7%
5%
6%
4%
5%
J Board composition
K Auditor reports,
appointments and fees
L Going concern and
viability statement
M Board evaluation
N Annual Report
O Trading updates and
financial performance
P
Innovation
Q Cyber security
R COVID-19
S Situation in Russia
T
Impact of sanctions
5%
5%
5%
5%
5%
5%
10%
4%
2%
3%
2%
2%
DP Eurasia N.V. Annual Report and Accounts 2021
77
Management reportFinancial statementsAdditional informationOverview Corporate governance report continued
Board effectiveness continued
Board evaluation
The Board is required to assess its own effectiveness.
This is a healthy process for the Board as a whole, the
committees, and the individual Directors. The Board
discussed the 2021 annual internal evaluation and
determined that, since the majority of the Directors
had only been in function for a few meetings, it would
assess its own functioning again in 2022. 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 82 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
66 and 67.
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 Shyam Bhartia,
Hari Bhartia, Pratik Pota and David Adams, the Selection
and Appointment Committee has not used 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
affect, or could appear to affect, the Director’s judgement.
The Board has considered the independence of the
current Non-Executive Directors. It does not regard that
Mr Shyam Bhartia, Mr Hari Bhartia and Mr Pratik Pota are
independent as they are appointed upon the nomination
of Fides Food Systems, 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 effectively.
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 Officers’ Liability and Corporate
Reimbursement Insurance was in place for all Directors
in 2021 and is currently in force.
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 2021, 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.
78
DP Eurasia N.V. Annual Report and Accounts 2021
Pursuant to the Relationship Agreement (see page 104),
Fides Food Systems 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, Hari Bhartia and Pratik Pota.
The UK Corporate Governance Code recommends that the
board of directors of a company with a premium listing
on the Official 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. Mr Thomas Singer had
been appointed as Senior Independent Director until his
retirement from the Board at the end of the 2021 AGM.
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 2018-2020, the Chief
Executive Officer will be required to retain a minimum
of 5,000,000 shares (based on the Group’s share price
as at 31 December 2020, this equates to a value of
c.£2.25 million) subject to remaining as an employee.
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 73 (Appointment, dismissal and
suspension), page 101 (Our shares), pages 102 and 104
(Controlling shareholder and Relationship Agreement)
and page 122 (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 effective Board
practice and corporate governance, and we explain in this
report how we have applied these during the year.
Fides Food Systems is the largest holder of shares in
the Company and a subsidiary of Jubilant FoodWorks
Netherlands B.V. (“Jubilant”), the wholly owned subsidiary
of Jubilant FoodWorks Limited. The Company will
continue to represent a significant investment for Fides
Food Systems.
The Board and Fides Food Systems 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 the independent
Non-Executive Director (being Mr David Adams), will
provide the appropriate corporate governance balance
and the interests of both Fides Food Systems and minority
shareholders.
DP Eurasia N.V. Annual Report and Accounts 2021
79
Management reportFinancial statementsAdditional informationOverview Corporate governance report continued
Accountability: UK and Dutch Corporate
Governance Codes continued
UK Corporate Governance Code continued
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 Fides Food Systems
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 Fides
Food Systems’ 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 Fides Food Systems, 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 recognises that it should take
steps to comply with this best practice provision and
is in the advanced stages of recruiting two additional
Independent Non-Executive Directors and is in the
advanced stages of appointing the first. 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 Fides
Food Systems to nominate three Non-Executive Directors.
Dutch Corporate Governance Code
The Dutch Corporate Governance Code, dated
8 December 2016, became effective 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”)
The Company does 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 Fides Food Systems 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 Fides
Food Systems’ 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 Fides Food Systems, the
Company should appoint two additional independent
Non-Executive Directors so it will have a Board consisting
of nine Board members. The Company believes that this
would not be feasible taking into account the size and
resources of the Company.
However, the Company recognises that it should take
steps to comply with this best practice provision and
is in the advanced stages of recruiting two additional
Independent Non-Executive Directors and is in the
advanced stages of appointing the first. During this
process and following the 2022 AGM, Jubilant agreed to
reduce their representation from three Directors to two.
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DP Eurasia N.V. Annual Report and Accounts 2021
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
effectiveness. However, for the duration of the 2018-2020
Remuneration Policy, the Chief Executive Officer 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 office 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
office or employment. Payment would also be made for
any outstanding vacation days unused at the date of
cessation of employment.
Peter Williams
Chairman
4 April 2022
DP Eurasia N.V. Annual Report and Accounts 2021
81
Management reportFinancial statementsAdditional informationOverview Risk management
The Audit Committee and management monitor
the risk management, effectiveness and timely
implementation of the internal controls and
provide guidance for prioritisation and further
improvement.
Monitored
by the Audit
Committee
We identify
our risks
We
implement
controls to
mitigate the
risks
DP Eurasia Risk
Management and
Control Framework
We assess and
prioritise the
risks
We conduct
process audits
We prepare an
internal audit
plan
How we manage risk
The Board, Audit Committee and management continued
to monitor risks and implementation of the 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.
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
effectiveness of the business processes and internal controls.
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.
The significant risk areas, audit issues and effectiveness of
management action plans are periodically reported to the
Audit Committee.
The Audit Committee and management monitor the risk
management, effectiveness and timely implementation
of the internal controls and provide guidance for
prioritisation and further improvement.
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DP Eurasia N.V. Annual Report and Accounts 2021
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 2021, we have
received, investigated and reported 258 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 thus 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
effective. We aim to address such less desirable behaviour
effectively, 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.
The Group’s risk assessment
In 2021, 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:
Strategic risks
Operational risks
Financial risks
Compliance risks
The Group is willing
to take a certain level
of risk by assessing a
risk/return approach
when doing business.
The Group has a
responsible approach
to operational risk
management. High
quality products,
customer satisfaction and
continuity to production
are the prioritised areas.
The risks represent a snapshot of the Group’s principal risks.
The Group continuously
assesses its financial
risks and seeks for the
mitigations to minimise
the potential impact.
Compliance with
laws and regulations
is essential for the
Group, which does not
tolerate non-compliance
with laws.
DP Eurasia N.V. Annual Report and Accounts 2021
83
Management reportFinancial statementsAdditional informationOverview Risk management continued
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 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 different 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 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.
Strategic risks
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 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 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.
1
Business dependency on Master Franchise Agreements (“MFAs”)
Potential impact
High
Group risk
• Expiration or termination
Mitigation
• The Group has strong relations with Domino’s
Likelihood
Low
Ownership
DPE CEO, DPT CEO,
DPR CEO
Change from 2020
of an MFA due to a
breach of the agreement
or store franchise
agreements may affect
the Group’s business
operationally and
financially.
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.
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DP Eurasia N.V. Annual Report and Accounts 2021
2
Operations and growth strategy dependency on the success of the
sub‑franchisees
Potential impact
Medium
Likelihood
Low
Ownership
DPT Lead Team,
DPR Lead Team
Change from 2020
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 efforts 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 have
started to conduct 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.
3
Growth strategy dependency on opening profitable new system stores
Potential impact
Medium
Likelihood
Low
Ownership
DPT Lead Team,
DPR Lead Team
Change from 2020
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 affect system
store sales growth.
Mitigation
• The Group spends significant efforts 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.
DP Eurasia N.V. Annual Report and Accounts 2021
85
Management reportFinancial statementsAdditional informationOverview Risk management continued
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
Likelihood
Low
Ownership
DPE Marketing &
IT Directors
Change from 2020
the Group’s existing
internal systems and
controls, distribution and
delivery networks and
information technology
systems may adversely
affect the planned
expansion.
• Failure to locate,
hire, train and retain
management and
operating personnel may
result in not responding
on a timely basis to the
changing demands of
the Group, operating the
existing business less
effectively.
Mitigation
• The Group has launched the data lake project providing
profound data analysis for a better understanding on
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 in the Group’s online presence in different
channels and better customer experience on online
ordering platforms distinctly improve 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
effectiveness 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.
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5
Reliance on successful marketing initiatives
Potential impact
Medium
Group risk
• Failure to succeed in
Mitigation
• The Group has an agile and responsive working model
Likelihood
Low
Ownership
DPE Marketing
Directors
Change from 2020
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.
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 efforts.
• 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 sufficient resources for the
marketing and advertisement activities and new
product development to implement proactive actions
as well as meet the customer expectations.
6
Climate change
Potential impact
Medium
Likelihood
Medium
Ownership
ESG Committee
Change from 2020
Group risk
• Climate change effects
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.
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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
Likelihood
Medium
Ownership
DPE Lead Team
Change from 2020
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.
Group risk
• The Group’s business
could be negatively
affected if brand or
reputation is harmed.
• Any negative incident
that affects 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.
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8
Competition from other pizza chains and fast‑food restaurant chains may
adversely affect the Group’s business
Potential impact
Medium
Likelihood
Medium
Ownership
DPE Lead Team
Change from 2020
Group risk
•
Increased presence
and competition from
aggregators (which
provide a food ordering
and delivery platform
by offering 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 efforts accordingly.
• The increase in the Group’s online presence in
different 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 different factors.
• Regular price perception research is conducted to
analyse consumer behaviour.
• Regular competitor price analyses are conducted and
monitored closely to take related actions.
9
Changes in consumer preferences
Potential impact
Medium
Likelihood
Medium
Ownership
DPE Marketing
Directors
Change from 2020
Group risk
• The fast-food restaurant
market is affected 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 ensure speeding up the success criteria
assessment and replacement decisions.
• The Group is working on different projects to meet
changing customer demands such as expanding
online payment options, contactless delivery, wallet,
pizza tracker, faster delivery opportunities etc.
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Strategic risks
10 The Group’s dependency on key members of its senior management
Potential impact
Low
Likelihood
Medium
Ownership
DPE HR Directors
Change from 2020
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 effect on its
business plans, product
development, growth
strategy, marketing and
other plans.
Mitigation
• The Group’s Selection and Appointment Committee
focuses on drawing up selection criteria and
appointment procedures for its Directors and senior
managers.
• The Selection and Appointment Committee
periodically assesses the size and composition of the
Board and makes a proposal for a composition profile
of the Board, periodically assesses the functioning of
individual senior managers, and reports on this to the
Board.
• 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.
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11 Macroeconomic and political developments
Mitigation
• Macroeconomic and political changes are closely
monitored by the Group in order to mitigate or
eliminate the potential effects by implementing
business continuity planning and crisis management
and incorporating those risks into the Group’s
business strategies.
Potential impact
Medium
Group risk
• Macroeconomic and
Likelihood
High
Ownership
DPE Lead Team
Change from 2020
political developments in
the world and in Turkey,
Russia and the other
jurisdictions in which
the Group operates may
negatively affect 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 affect prices in
credit, equity and foreign
exchange markets in
other emerging market
countries, as investors
move their money
to more stable and
developed markets.
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Strategic risks
12
Impact of continuing to live in a pandemic environment
Potential impact
High
Likelihood
Medium
Ownership
DPE Lead Team
Change from 2020
Mitigation
• The Group assesses the potential impact/worst
case scenarios and takes many measures to ensure
business continuity. The main focus areas are:
• people;
• operations;
• supply chain;
• suppliers; and
• finance.
• As part of the Group’s crisis management policy, the
crisis management teams are taking the required
measures, and closely following the guidelines
announced by global and local health authorities.
• The Group has adopted the strategic and regulatory
changes encouraged in 2020 by different parties
(e.g. governmental authorities, consumers, suppliers,
employees etc.) promptly and widely into the
business.
• The changing needs and requirements are
continuously monitored to ensure timely and effective
adoption.
• Some of the changes which emerged during the
2020 pandemic have become a regular part of daily
business management and risk assessment.
Group risk
The Group could be
adversely affected by the
global COVID-19 pandemic.
• We see increased
uncertainties following
the COVID-19 worldwide
outbreak and market
volatility, which have no
relation to the business
operations in the year
to date.
• While our stores are
open and operating
under the ordinary
course of business
currently, we believe
our business could be
impacted for a period
of time. These impacts
could vary from reduced
store operating hours
to cancellation of eat-in
and/or takeaway, to
complete store closures
for an unspecified period
of time at the extreme.
• These conditions could
indicate the possible
existence of a material
uncertainty which may
cast significant doubt
on the entity’s ability
to continue as a going
concern and, therefore,
that it may be unable
to realise its assets and
discharge its liabilities
in the normal course of
business.
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Mitigation
• The Group periodically 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 annually 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.
Operational risks
1
Reliance on third‑party suppliers
Potential impact
Medium
Group risk
• Reliance on third-
Likelihood
Low
Ownership
DPE Supply Chain
Directors
Change from 2020
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.
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Risk management continued
Operational risks
2
Labour shortages
Potential impact
Low
Likelihood
High
Ownership
DPE HR Directors and
Operations Directors
Change from 2020
Mitigation
• The Group is employing different engagement
activities to decrease employee turnover, and attract,
motivate and retain qualified employees.
• The Group also closely monitors and anticipates
governmental laws and government incentives in
order to obtain an advantage in potential labour cost
increases.
• The Group is implementing new technologies such as
its GPS project to monitor operating effectiveness and
take the required measures.
• The Group is working on alternative models like a
premium/bonus system or reward/incentives etc. for
employee retention in the stores to mitigate business
continuity risk.
• The Group is working on alternative delivery models
to mitigate labour shortages by increasing variety in
work structures.
Group risk
Labour shortages or
increased labour costs
would negatively affect the
Group’s business.
• Labour is a significant
component in the cost
of operating the Group’s
corporate stores. If the
Group faces labour
shortages or increased
labour costs because of
increases in competition
for employees, employee
turnover, employee
benefits costs, minimum
wage raises or changes
in employment law
requirements in the
countries in which the
Group operates, its
operating expenses
could increase and the
Group’s growth and
profitability could be
adversely affected.
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Financial risks
1
Increase in food cost and other supplies
Potential impact
Medium
Likelihood
High
Ownership
DPE Supply Chain
Directors and CFO
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.
Change from 2020
• The Group’s profitability
Mitigation
The Group continuously looks for ways to partially offset
inflation and other changes in the costs of core raw
materials by:
• applying efficient purchasing practices;
• productivity improvements;
• greater economies of scale; and
• gradually increasing certain product prices.
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 affected 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
affect the Group’s
system sales, the Group’s
commissary sales and
operating margins.
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Risk management continued
Financial risks
2
Exchange rate fluctuations and cash flow management
Potential impact
Low
Likelihood
Medium
Ownership
DPE CFO
Change from 2020
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. The Group obtained a waiver from Sberbank
with respect to its covenants for the first quarter of
2022 and is in negotiations to reset the covenants or
repay the remaining loan.
Group risk
Exchange rate fluctuations
could have an adverse
effect on the Group.
• The Group’s financial
condition and results
of operations have
been, and will continue
to be, affected 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
affect the business.
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Compliance risks
1
Risk of litigation from customers, sub‑franchisees, employees and others
in the ordinary course of business
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.
Potential impact
Medium
Likelihood
Low
Ownership
DPE HR Directors and
Operations Directors
Change from 2020
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 affect
the Group’s business,
results of operations,
financial condition, cash
flows and prospects.
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Risk management continued
Compliance risks
2
Violation of data protection laws
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 annually.
• System security requirements regarding data
protection laws are continuously assessed by the
IT team to take the required measures.
Potential impact
Medium
Likelihood
Medium
Ownership
DPE IT Director
Change from 2020
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 affected
by data protection
violations.
• Any violation of these
laws could harm the
Group’s reputation,
which could have a
material adverse effect
on the Group’s earnings,
cash flows and financial
condition.
3
Violation of changing regulations
Potential impact
Medium
Likelihood
Low
Ownership
DPE CFO
Change from 2020
Group risk
• Regulatory changes (e.g.
personal data protection
law, quality regulations,
product regulations
etc.) are affecting 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
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4
Reliance on information technology and risk of security breaches or failures
Potential impact
High
Likelihood
Medium
Ownership
DPE IT Director
Change from 2020
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 project has started, 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 on technology.
• The security projects are monitored closely by
management to ensure effective 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.
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.
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Management reportFinancial statementsAdditional informationOverview By order of:
Aslan Saranga
(Chief Executive Officer)
Frederieke Slot
(Executive Director)
Peter Williams
(Non-Executive Director)
Shyam Bhartia
(Non-Executive Director)
Hari Bhartia
(Non-Executive Director)
Pratik Pota
(Non-Executive Director)
David Adams
(Non-Executive Director)
4 April 2022
Board declaration
The Board of DP Eurasia N.V. hereby declares,
in accordance with article 5:25c of the Dutch Act on
Financial Supervision and 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 106
to 155 of the Annual Report provide a true and fair
view of the assets, liabilities and financial position
as at 31 December 2021 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 sufficient insights into any failings and the
effectiveness of the internal risk management and
control systems, whose systems provide reasonable
assurance that the financial reporting does not contain
any material inaccuracies. The Board confirms that
in 2021 no major failings in the risk management and
control systems were identified;
• based on the current state of affairs, it is justified that
the financial reporting is prepared on a going concern
basis; 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.
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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
2021 was €17,444,689.68, consisting of 145,372,414
ordinary shares of €0.12 each.
At the 2021 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 2021 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 2021 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 2021, 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
2021 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 Official 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 Official 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 2022. Such authorities are renewed annually
and authority will be sought at the 2022 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 offered 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 4 April 2022, 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:
4 April 2022
Share/vote %
Amount
Jubilant FoodWorks
Netherlands B.V.(1)
Jeffrey R. Fieler
Mr Saranga
Barca Global Master Fund, LP
Wellington
Management Group LLP
41.32
60,072,476
13.17
5.57
5.52
19,139,873
8,106,310
8,020,544
5.05
7,342,756
(1) Fides Food Systems Coöperatief U.A. merged with Jubilant
FoodWorks Netherlands B.V. (acquiring entity) on
2 March 2022.
DP Eurasia N.V. Annual Report and Accounts 2021
101
Management reportFinancial statementsAdditional informationOverview Shares and shareholders continued
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 his 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
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:
Controlling shareholder
For so 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 Official List or transfer the shares
to the standard listing segment of the Official 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
• adoption of the Company’s annual accounts;
the shares voted on the resolution; and
• amendments to the articles of association;
(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.
• 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 8 June 2022 in Amsterdam, the
Netherlands.
102
DP Eurasia N.V. Annual Report and Accounts 2021
The Board has proposed additional takeover protection
for minority shareholders. As a temporary measure,
the Company has entered into an amendment to the
existing relationship agreement between it and its
major shareholder, Fides Food Systems (an indirect
subsidiary of Jubilant FoodWorks Limited (“Jubilant”))
(the “Relationship Agreement”). Under the Relationship
Agreement, Fides Food Systems or a nominee in its group
must (subject to certain exceptions) launch a takeover
offer for all of the issued share capital of the Company if it,
its affiliates or such persons acting in concert with it, own
shares resulting in their aggregate holding being 50% or
more of the Company’s issued share capital.
These amendments to the Relationship Agreement
have taken effect from 15 February 2022 and will apply
until the date of the EGM. As a longer-term measure,
the Company has convened an Extraordinary General
Meeting on 13 April 2022 (the “EGM”), at which it is
proposed that such shareholder protection is embedded
in the Company’s articles of association. Fides Food
Systems has agreed that it and its related parties shall
vote in favour of such a resolution. If approved at the
EGM, the requirement to launch a mandatory offer will
be applicable to any investor (and not only Fides Food
Systems) which acquires 50% or more of the Company’s
issued share capital. Pursuant to the above, minority
shareholder protection measures will be provided in the
Relationship Agreement for the interim period and in
the articles for the longer term. From 15 February 2022,
Jubilant continues to be entitled to increase its stake to a
level below 50% without triggering a requirement to make
a mandatory offer. On the date of the EGM, the changes
to the Relationship Agreement will lapse. If the changes
to the articles are approved, the takeover protection
will apply to all shareholders and, consequently, all
shareholders will be entitled to increase their shareholding
to a level below 50% without triggering a requirement to
make a mandatory offer.
Impact of Brexit on the Group and minority
shareholder protection
As a result of Brexit, companies which formerly had their
registered office 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.
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 offer 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 Fides Food Systems;
• 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.
DP Eurasia N.V. Annual Report and Accounts 2021
103
Management reportFinancial statementsAdditional informationOverview Shares and shareholders continued
Relationship Agreement and the
controlling shareholder
The Company considers that Jubilant, through its
subsidiary Fides Food Systems(1), 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.
The Relationship Agreement contains, among
others, undertakings from Fides Food Systems that:
(i) transactions and arrangements with it (and/or any of its
associates (including Jubilant)) 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 effect 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 Fides Food Systems nor any of its
associates will take any action that would affect the ability
of the Company to carry on its business independently of
Fides Food Systems; and (v) it will not cause or authorise
to be done anything which would prejudice either the
Company’s status as a company whose shares are
admitted to the premium listing segment of the Official
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 so long as:
(a) the shares are listed on the premium listing segment
of the Official List and traded on the London Stock
Exchange’s main market for listed securities; and (b) Fides
Food Systems, 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.
(1) Please refer to page 101 or Note 25 in the financial statements for an explanation.
104
DP Eurasia N.V. Annual Report and Accounts 2021
Furthermore, Fides Food Systems has agreed to procure
the compliance of its associates (including Jubilant) with
the Independence Provisions.
The Company has complied with, and so far as the
Company is aware, Fides Food Systems 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 capital
market days. 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 Officer, the Chief Strategy Officer and
Head of Investor Relations and, from time to time, certain
Non-Executive Directors.
DP Eurasia N.V. Annual Report and Accounts 2021
105
Management reportFinancial statementsAdditional informationOverview Consolidated statement of comprehensive income
For the years ended 31 December 2021 and 2020
Revenue
Cost of sales
Gross profit
General administrative expenses
Marketing and selling expenses
Other operating income
Other operating expense
Operating profit/(loss)
Foreign exchange income/(losses)
Financial income
Financial expense
Profit/(loss) before income tax
Income tax expense
Deferred tax income
Loss for the period
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss
– Remeasurements of post-employment benefit obligations
– Tax income of these obligations
– Remeasurements of post-employment benefit obligations, net
Items that may be reclassified to profit or loss
– Currency translation differences
Total comprehensive loss
Loss per share(1)
(1) Amounts represent the basic and diluted earnings per share.
The accompanying notes form an integral part of these consolidated financial statements.
Notes
2021
2020
4
4
6
6
7
7
7
21
21
1,496,914
1,019,163
(986,106)
(689,762)
510,808
329,401
(215,679)
(161,728)
(252,157)
(169,515)
31,235
15,053
(42,665)
(22,743)
31,542
82,166
18,798
(9,532)
(16,419)
23,166
(99,790)
(90,829)
32,716
(93,614)
(38,591)
(22,201)
(10,148)
8,232
(16,023)
(107,583)
(121,586)
10,162
(1,307)
(1,179)
327
236
(980)
(943)
(120,606)
11,105
(137,609)
(97,421)
8
(0.1102)
(0.7401)
106
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Consolidated statement of financial position
At 31 December 2021
Assets
Trade receivables
Lease receivables
Right-of-use assets
Property and equipment
Intangible assets
Goodwill
Deferred tax assets
Other non-current assets
Non-current assets
Cash and cash equivalents
Trade receivables
Lease receivables
Inventories
Other current assets
Current assets
Total assets
Equity
Paid in share capital
Share premium
Contribution from shareholders
Other reserves not to be reclassified to profit or loss
Notes
31 Dec
2021
31 Dec
2020
14
17
11
9
10
12
21
17
13
14
17
16
17
13,657
16,707
69,455
24,674
151,725
112,895
139,295
131,203
75,803
54,575
73,516
47,413
30,019
26,500
40,257
40,256
574,786
473,164
164,412
109,036
159,970
107,760
22,057
133,088
16,621
61,744
116,610
73,488
596,137
368,649
1,170,923
841,813
23
36,353
36,353
119,286
119,286
22,573
20,600
– Remeasurements of post-employment benefit obligations
(4,514)
(3,534)
Other reserves to be reclassified to profit or loss
– Currency translation differences
Retained earnings
Total equity
Liabilities
Financial liabilities
Lease liabilities
Long-term provisions for employee benefits
Other non-current liabilities
Non-current liabilities
Financial liabilities
Lease liabilities
Trade payables
Current income tax liabilities
Provisions
Other current liabilities
Current liabilities
Total liabilities
Total liabilities and equity
(131,789)
(11,183)
(163,938)
(147,915)
(122,029)
13,607
18
18
17
17
18
18
14
21
19
17
204,320
193,015
211,226
110,549
4,190
2,874
50,775
39,867
470,511
346,305
336,178
70,523
167,181
72,476
297,548
173,359
12,791
5,421
8,931
5,740
99,980
54,214
822,441
481,901
1,292,952
828,206
1,170,923
841,813
The accompanying notes form an integral part of these consolidated financial statements.
DP Eurasia N.V. Annual Report and Accounts 2021
107
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share
capital
Share
premium
Remeasurement
of post-
employment
benefit
obligations
Contribution
from
shareholders
Currency
translation
differences
Retained
earnings
Total
equity
Balances at 1 January 2020
36,353
119,286
19,970
(2,591)
(22,288)
(40,332)
110,398
Remeasurements of post-employment
benefit obligations, net
Currency translation adjustments
Total loss for the period
Total comprehensive loss
Share-based incentive plans cancelled
Share-based incentive plans (Note 22)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(943)
—
—
—
11,105
—
—
(943)
11,105
—
(107,583)
(107,583)
(943)
11,105
(107,583)
(97,421)
(833)
1,463
—
—
—
—
—
—
(833)
1,463
Balances at 31 December 2020
36,353
119,286
20,600
(3,534)
(11,183)
(147,915)
13,607
Balances at 1 January 2021
36,353
119,286
20,600
(3,534)
(11,183)
(147,915)
13,607
Remeasurements of post-employment
benefit obligations, net
Currency translation adjustments
Total loss for the period
Total comprehensive (loss)/profit
Share-based incentive plans cancelled
Share-based incentive plans (Note 22)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,973
—
—
(980)
—
(120,606)
—
—
(980)
(120,606)
—
(16,023)
(16,023)
(980)
(120,606)
(16,023)
(137,609)
—
—
—
—
—
—
—
1,973
Balances at 31 December 2021
36,353
119,286
22,573
(4,514)
(131,789)
(163,938)
(122,029)
The accompanying notes form an integral part of these consolidated financial statements.
108
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Consolidated statement of cash flows
For the year ended 31 December 2021
Profit/(loss) before income tax
Adjustments for:
Depreciation
Amortisation
Adjustments for doubtful receivables
(Gain)/loss on sale of property and equipment
Performance bonus accrual
Non-cash employee benefits expense – share-based payments
Interest income
Interest expense
Impairment of tangible and intangible assets
Changes in operating assets and liabilities
Changes in trade receivables
Changes in other receivables and assets
Changes in inventories
Changes in contract assets
Changes in contract liabilities
Changes in trade payables
Changes in other payables and liabilities
Income taxes paid
Performance bonuses paid
Cash flows generated from operating activities
Purchases of property and equipment
Purchases of intangible assets
Notes
31 Dec
2021
31 Dec
2020
32,716
(93,614)
9-11
106,766
34,807
(2,128)
489
18,650
1,973
98,185
29,237
2,183
753
9,619
630
(18,798)
(23,166)
83,527
85,986
20,576
11,118
(47,032)
11,489
(38,885)
(11,148)
(71,344)
8,318
(4,238)
21,568
124,189
(502)
6,411
52,181
25,765
(18,071)
(34,731)
(22,224)
(9,619)
(4,047)
244,251
143,338
(21,319)
(15,915)
(34,192)
(26,450)
10
14
6
17
22
7
7
6
14
17
16
17
17
14
17
21
9
10
Disposals from sale of tangible and intangible assets
9-10
13,232
2,967
Cash flows used in investing activities
Interest paid
Interest on leases paid
Interest received
Loans obtained
Loans paid
Payment of lease liabilities
Cash flows (used in)/generated from financing activities
Effect of currency translation differences
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
The accompanying notes form an integral part of these consolidated financial statements.
(42,279)
(39,398)
(46,648)
(39,894)
(5,159)
(5,311)
6,936
9,953
302,054
299,497
(209,513) (286,386)
(72,634)
(50,911)
(24,964)
(73,052)
(121,632)
7,220
55,376
109,036
38,108
70,928
164,412
109,036
18
18
18
18
18
18
13
13
DP Eurasia N.V. Annual Report and Accounts 2021
109
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements
For the year ended 31 December 2021
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 management report within the meaning of Article 391 of Book 2 of the Dutch Civil Code consists of the following parts
of the Annual Report:
• Overview: At a glance, Highlights and Key financial figures;
• Management report: Chairman’s statement, Competitive advantages, Vision and strategy, Message from the CEO,
Key events, Business model, People, Product, Digital, Strategic review, Group structure and Markets, Remuneration
report, Directors’ remuneration policy, Annual remuneration report, Board, Leadership team, Board attendance and
composition, Corporate governance report, How we manage risk, Board declaration and Shares and shareholders;
• Group financial statements: Consolidated statement of comprehensive income, Consolidated statement of financial
position, Consolidated statement of changes in equity, Consolidated statement of cash flows and Notes to the
consolidated financial statements;
• Company financial statements: Company income statement, Company balance sheet and Notes to the Company
financial statements; and
• Additional information: Independent auditor’s report, Contacts and Glossary.
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 2021, the Group holds franchise operating and sub-franchising rights in 809 stores (615 franchised
stores, 194 corporate-owned stores) (31 December 2020: 771 stores (550 franchised stores, 221 corporate-owned stores)).
The consolidated financial statements as at and for the period ended 31 December 2021 have been approved and
authorised for issue on 4 April 2022 by authorisation of the Board. The financial statements are subject to adoption by the
Annual General Meeting.
On 19 February 2021, Jubilant FoodWorks Limited, the largest food service company in India, and Fides Food Systems
Coöperatief U.A. announced that Jubilant FoodWorks Limited and its wholly owned subsidiary, Jubilant FoodWorks
Netherlands B.V., had entered into a purchase agreement with Turkish Private Equity Fund II L.P. to fully acquire
Fides Food Systems Coöperatief U.A., which holds 32.81% of the ordinary share capital of DP Eurasia, for a price of
approximately GBP 24.80 million. The transaction was closed on 9 March 2021.
Subsidiaries
The Company has a total of four fully owned subsidiaries. These entities and the nature of their businesses are as follows:
Subsidiaries
Pizza Restaurantları A.Ş. (“Domino’s Turkey”)
Pizza Restaurants LLC (“Domino’s Russia”)
Fidesrus B.V. (“Fidesrus”)
Fides Food Systems B.V. (“Fides Food”)
2021
Effective
ownership
(%)
2020
Effective
ownership
(%)
100
100
100
100
100
100
100
100
Registered
country
Turkey
Russia
Nature of
business
Food delivery
Food delivery
The Netherlands
Investment company
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.
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DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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 and Fidesrus are established in the Netherlands; both Fides Food Systems and Fidesrus are acting as
investment companies.
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.
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.
Sanctions and business continuity
The conflict between Russia and Ukraine has been increasing the tension in the region, negatively affecting commodity
and financial markets and increasing volatility, especially the exchange rates. In addition to this, Russian economy has faced
heavy sanctions imposed mainly by the Western countries.
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 Franchisee 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. DPI also made an announcement
on 9 March 2022 to declare the continuity of business in Russia. The Company does not have any significant contracts that
are at the peril of cancellation or failure to be carried out. The Company does not expect a decline in customer demand on
this respect.
DP Eurasia N.V. Annual Report and Accounts 2021
111
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 2 – Basis of presentation of consolidated financial statements continued
2.1 Financial reporting standards continued
Going concern assumption continued
Actions on capex and expenditures
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 expenditures, together with the postponement of royalties.
Risk assessment
As per the sensitivity test run with different pessimistic scenarios in case of (zero sales growth and 10% decrease of sales,
together with postponement of royalty payments), the Company is still able to operate with its own cash flow. If there is
any further cash needed, this can be funded by intra-group cash injections, and loan guarantees from its Turkish affiliate.
Impairment of long-lived assets, goodwill and indefinite-lived intangibles
In preparation of the consolidated financial statements as of 31 December 2021, 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 Company obtained waivers for all quarters of 2022 from Sberbank regarding its loan. The Group currently utilises
internally generated cash flow and bank borrowings in Turkey and Russia 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 and
to cure any potential covenant breaches with respect to its bank borrowings in Russia. The Group’s Russian business does
not yet generate cash so is funded by local bank borrowings and intra-group cash injections and loan guarantees from its
Turkish subsidiary.
In addition, the Group announced that royalty payments from its Russian operations have been suspended until further
notice – this is expected to have a positive impact on liquidity of the Russian operations. In the future, there may be a
recall of RUB-based loans because of possible additional sanctions; however, since the Group has a sufficient liquidity
position, it can make repayments promptly. The Group has a liquidity position of TRY 200 million cash on hand including
a promissory note in Sberbank and additional available bank lines of TRY 186 million as at 31 December 2021.
2.2 Principles of consolidation
The consolidated financial statements include the parent company, DP Eurasia N.V. and its subsidiaries for the year
ended 31 December 2021. 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 affect those returns through
its power to direct the activities of the entity.
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DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) The subsidiaries fully consolidated, the proportion of ownership interest and the effective interest of the Group in these
subsidiaries as of 31 December 2021 are disclosed in Note 1.
The result 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 value 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. 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.
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 financial statements prepared according to the Group’s
accounting policies are translated into the Group’s presentation currency, Turkish Liras, 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 differences arising from the translation are included in the “currency translation differences”
under shareholders’ equity.
The foreign currency exchange rates used in the translation of the foreign operations within the scope of consolidation
are as follows:
Currency
Euros (“EUR”)
Russian Roubles (“RUB”)
31 Dec 2021
31 Dec 2020
Period
end
Period
average
Period
end
Period
average
14.6823
10.4408
9.0079
8.0138
0.1730
0.1196
0.0984
0.0964
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 2021
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 their annual reporting period commencing 1 January 2021:
• amendments to IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform Phase 2; effective from annual periods
beginning on or after 1 January 2021. The Phase 2 amendments address issues that arise from the implementation of
the reforms, including the replacement of one benchmark with an alternative one. The Phase 2 amendments provide
additional temporary reliefs from applying specific IAS 39 and IFRS 9 hedge accounting requirements to hedging
relationships directly affected by IBOR reform; and
• amendments to IFRS 4, ‘Insurance Contracts’ – deferral of IFRS 9.
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not
expected to significantly affect the current or future periods.
The new standards, amendments and interpretations, which are issued but not effective for the financial statements
as at 31 December 2021:
• amendment to IFRS 16, ‘Leases’ – COVID-19 related rent concessions, Extension of the Practical expedient;
•
IFRS 17, ‘Insurance contracts’;
• amendments to IAS 1, ‘Presentation of financial statements’ on classification of liabilities
• a number of narrow-scope amendments to IFRS 3, IAS 16, IAS 37 and some annual improvements on IFRS 1, IFRS 9,
IAS 41 and IFRS 16;
• narrow scope amendments to IAS 1, Practice statement 2 and IAS 8; and
• amendment to IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction.
The amendments are not expected to have an impact on the financial position or performance of the Group.
DP Eurasia N.V. Annual Report and Accounts 2021
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 2 – Basis of presentation of consolidated financial statements continued
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.
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. The franchisees have
full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect 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 effect is material. The Group adjusts the promised amount of consideration for the effects 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.
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DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) (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. Revenues
generated from franchise fees are 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 effects 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.
(vi) Costs to fulfil a contract
The Group incurs certain costs with Domino’s Pizza International related to 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 effective 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 difference between the proceeds and the redemption value is recognised in the income
statement over the period of borrowing using the effective 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.
DP Eurasia N.V. Annual Report and Accounts 2021
115
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
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 effective 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.
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.
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DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) 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:
Machinery and equipment
Motor vehicles
Furniture and fixtures
Leasehold improvements
Useful life (years)
3-40
3
6-10
5
The expected useful life, residual value and depreciation method are evaluated every year for the probable effects 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.
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 effect 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.
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Business combinations and goodwill continued
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.
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 offices, 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 different terms and conditions. Lease agreements are not included in net
debt calculations on loan covenants, and therefore do not affect 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 differences. The Company considers the lease
as a single transaction in which the asset and liability are integrally linked, so there is no net temporary difference at
inception. Subsequently, as differences arise on settlement of the liability and the amortisation of the leased asset,
there will be a net temporary difference 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).
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DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) The Group performs subsequent measurement for the right-of-use asset by:
a. netting-off 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:
Properties
Motor vehicles
Useful
life (years)
5
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.
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 lessee can
exercise the termination option.
DP Eurasia N.V. Annual Report and Accounts 2021
119
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
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
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 affects 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.
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 leases 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 approximately by 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, an average of a 5% increase in the CPI.
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DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) 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 effect 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.
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 affiliated 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 of 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.
DP Eurasia N.V. Annual Report and Accounts 2021
121
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 2 – Basis of presentation of consolidated financial statements continued
2.5 Summary of significant accounting policies continued
Taxes continued
Current and deferred tax continued
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 differences, whereas deferred income tax assets
resulting from deductible temporary differences are recognised to the extent that it is probable that future taxable
profit will be available against which the deductible temporary difference can be utilised.
Deferred income tax assets and deferred income tax liabilities related to income taxes levied by the same taxation
authority are offset when there is a legally enforceable right to set off 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.
Unused vacation rights
Unused vacation rights accrued in the consolidated financial statements represent the estimated total liabilities related
to employees’ unused vacation days as of 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 22.
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.
122
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) One-off items
Regarding the one-off items policy approved by the Group management, in the presentation of the consolidated income
statement, the Group separates one-off 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-off 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 offerings;
•
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-off 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-off 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-off item include the restructuring and integration of businesses,
public offerings, 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.
Segment reporting
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 Russian operations. These segments are
managed separately because they are affected by economic conditions and geographical positions in terms of risks and
returns.
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 Officer, Chief Strategy Officer and Chief Financial Officer.
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 effect of the time difference and foreign exchange gains and
losses generated from commercial operations in accordance with IFRS and the one-off 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 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 effect 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 not directly
comparable.
DP Eurasia N.V. Annual Report and Accounts 2021
123
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview Notes to the consolidated financial statements continued
For the year ended 31 December 2021
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 12);
impairment tests for tangible and intangible assets (Notes 9 and 10);
• deferred income tax assets recognition of Fidesrus (Note 21); and
• right-of-use assets, lease receivables and liabilities (Note 11).
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 of 31 December 2021 and 2020 comprise
the performance and the management of its Turkish and Russian operations and headquarters.
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 Russian operations. Other operations are
composed of corporate expenses of Dutch companies. These segments are managed separately because they are
affected by economic conditions and geographical positions in terms of risks and returns.
The segment analysis for the periods ended 31 December 2021 and 2020 is as follows:
Franchise revenue and royalty revenue obtained from franchisees
682,849
141,798
1 January - 31 December 2021
Corporate revenue
Other revenue
Total revenue
— At a point in time
— Over time
Operating profit/(loss)
Capital expenditures
Tangible and intangible disposals
Depreciation and amortisation expenses
Adjusted EBITDA(1)
31 December 2021
Borrowings
TRY
RUB
Lease liabilities
TRY
RUB
Total
124
Turkey
Russia
Other
Total
283,016
301,357
65,723
22,171
1,031,588
465,326
—
—
—
—
584,373
824,647
87,894
1,496,914
1,022,988
462,456
—
1,485,444
8,600
2,870
—
11,470
146,849
(94,876)
(20,431)
31,542
39,836
15,675
(4,339)
(29,958)
(53,583)
(87,990)
—
—
—
55,511
(34,297)
(141,573)
202,405
23,248
(17,268)
208,385
Turkey
Russia
Other
Total
329,177
—
—
329,177
—
148,827
62,494
211,321
329,177
148,827
62,494
540,498
142,518
—
—
139,231
142,518
139,231
—
—
—
142,518
139,231
281,749
471,695
288,058
62,494
822,247
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Franchise revenue and royalty revenue obtained from franchisees
423,490
98,020
1 January - 31 December 2020
Corporate revenue
Other revenue
Total revenue
— At a point in time
— Over time
Operating profit/(loss)
Capital expenditures
Tangible and intangible disposals
Depreciation and amortisation expenses
Adjusted EBITDA(1)
31 December 2020
Borrowings
TRY
RUB
Lease liabilities
TRY
RUB
Total
Turkey
Russia
Other
Total
219,499
240,199
30,566
7,389
673,555
345,608
666,218
343,102
7,337
2,506
—
—
—
—
—
—
459,698
521,510
37,955
1,019,163
1,009,320
9,843
91,905
(88,996)
(12,441)
(9,532)
28,733
13,632
(5,548)
(9,290)
(46,787)
(80,635)
—
—
—
42,365
(14,838)
(127,422)
140,903
2,309
(11,696)
131,516
Turkey
Russia
Other
Total
264,001
—
264,001
—
96,195
96,195
62,390
—
—
120,635
62,390
120,635
326,391
216,830
—
—
—
—
—
—
—
264,001
96,195
360,196
62,390
120,635
183,025
543,221
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.
The reconciliation of adjusted EBITDA for 2021 and 2020 is as follows:
Turkey
Adjusted EBITDA(1)
Non-recurring and non-trade (income)/expenses per Group management(1)
One-off non-trading costs(2)
Share-based incentives
EBITDA
Depreciation and amortisation
Operating profit
Russia
Adjusted EBITDA(1)
Non-recurring and non-trade (income)/expenses per Group management(1)
One-off non-trading costs(2)
Share-based incentives
EBITDA
Depreciation and amortisation
Operating (loss)/profit
2021
2020
202,405
140,903
—
1,973
1,449
762
200,432
138,692
(53,583)
(46,787)
146,849
91,905
2021
23,248
2020
2,309
30,134
11,547
—
(877)
(6,886)
(8,361)
(87,990)
(80,635)
(94,876)
(88,996)
DP Eurasia N.V. Annual Report and Accounts 2021
125
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 3 – Segment reporting continued
Other
Adjusted EBITDA(1)
Non-recurring and non-trade (income)/expenses per Group management(1)
Share-based incentives
One-off non-trading costs(2)
EBITDA
Depreciation and amortisation
Operating loss
2021
2020
(17,268)
(11,696)
—
3,163
745
—
(20,431)
(12,441)
—
—
(20,431)
(12,441)
(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.
(2) The reason for the significant increase in one-off non-trading costs is mainly related to impairment expenses of the tangible and
intangible assets and consultancy expenses.
The reconciliation of adjusted net income/(loss) as of 31 December 2021 and 2020 is as follows:
(Loss) for the period as reported
Non-recurring and non-trade (income)/expenses per Group management
Share-based incentives
One-off expenses/(income)(1)
Adjusted net income/(loss) for the period(2)
2021
2020
(16,023)
(107,583)
1,973
630
37,905
12,996
23,855
(93,957)
(1) As of 31 December 2021, the one-off expenses include TRY 20,576 impairment expense of tangible and intangible assets and
TRY 1,501 severance payment expenses.
(2) 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 average headcount for the Group is as follows:
Category of activities
Turkey
Russia
Netherlands
Turkey
Russia
Netherlands
2021
2020
Executive and senior management
Store employees
Support employees
Commissary employees
Total
11
1,288
227
44
1,570
9
974
116
22
1,121
3
—
—
—
3
11
9
1,243
1,745
205
43
128
24
1,502
1,906
3
—
—
—
3
126
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Note 4 – Revenue and cost of sales
Corporate revenue
Franchise revenue and royalty revenue obtained from franchisees
Other revenue(1)
Revenue
Cost of sales
Gross profit
2021
2020
584,373
459,698
824,647
521,510
87,894
37,955
1,496,914
1,019,163
(986,106)
(689,762)
510,808
329,401
(1) Other revenue mainly includes handover income, IT income and other income from franchisees.
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 2021 and 2020 are as follows:
As of 1 January
Recognised as revenue
Increases due to new franchise agreements entered
As of 31 December
Unsatisfied long-term franchisee contracts
2021
2020
38,813
32,905
(11,470)
(9,843)
28,800
56,143
15,751
38,813
The amount of performance obligations relating to ongoing contracts of the Group that will be recognised in the future
is TRY 65,551 (31 December 2020: TRY 43,983). The Group expects that this amount will be recorded as revenue within
10 to 15 years.
Note 5 – Expenses by nature
Employee benefit expenses(1)
Depreciation and amortisation expenses(1)
(1) These expenses are accounted for in cost of sales, general administration expenses and marketing expenses.
Note 6 – Other operating income and expenses
Other income
Foreign exchange gains
Marketing service income(1)
Interest income arising from sales with extended terms
Gain from sale of property and equipment
Other
(1) The marketing income mainly includes cross-promotion income.
Other expense
Impairment expenses(1)
Foreign exchange losses
Losses from sale of property and equipment
Other
Other operating (expense)/income, net
(1) Impairment expenses includes write-offs related to long-term assets of low-performing stores.
2021
2020
285,621
217,368
141,573
127,422
427,194
344,790
2021
12,741
5,079
4,098
383
8,934
31,235
2021
20,576
11,557
872
9,660
2020
2,921
4,054
3,831
447
3,800
15,053
2020
11,118
2,757
1,200
7,668
42,665
22,743
(11,430)
(7,690)
DP Eurasia N.V. Annual Report and Accounts 2021
127
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 7 – Financial income and expenses
Foreign exchange (losses)/gains
Foreign exchange (losses)/gains, net
Foreign exchange losses on lease liabilities
Financial income
Interest income on lease receivables
Interest income
Financial expense
Interest expense
Interest expense on lease liabilities
Other
Note 8 – Loss per share
Average number of shares existing during the period
Net loss for the period attributable to equity holders of the parent
Loss per share
2021
2020
82,485
(16,357)
(319)
(62)
82,166
(16,419)
2021
2020
15,839
13,804
2,959
18,798
9,362
23,166
2021
2020
(52,476)
(51,401)
(31,051)
(34,585)
(16,263)
(4,843)
(99,790)
(90,829)
31 Dec
2021
31 Dec
2020
145,372,414 145,372,414
(16,023)
(107,583)
(0.1102)
(0.7401)
The reconciliation of adjusted earnings per share as of 31 December 2021 and 2020 is as follows:
Average number of shares existing during the period
Net loss for the period attributable to equity holders of the parent
Non-recurring and non-trade expenses per Group management(1)
Share-based incentives
One-off expenses
Adjusted net earnings for the period attributable to equity holders of the parent
Adjusted income/(loss) per share(1)
31 Dec
2021
31 Dec
2020
145,372,414 145,372,414
(16,023)
(107,583)
1,973
630
37,905
12,996
23,855
(93,957)
0.1641
(0.6463)
(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 effect and hence the basic and diluted earnings per share are the same.
128
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Note 9 – Property and equipment
Cost
Machinery and equipment
Motor vehicles
Furniture and fixtures
Leasehold improvements
Construction in progress
Accumulated depreciation
Machinery and equipment
Motor vehicles
Furniture and fixtures
Leasehold improvements
1 Jan
2021
Additions
Disposals
Transfers
Currency
translation
adjustments
31 Dec
2021
83,020
5,815
(16,967)
(191)
48,530
120,207
37,421
10,774
(13,598)
—
22,596
64,109
9,390
(3,404)
2,357
3,467
57,193
75,919
110,348
5,772
(30,164)
(679)
37,040
122,317
4,509
342
(236)
(1,487)
2,081
5,209
299,407
32,093
(64,369)
—
113,714
380,845
(39,691)
(13,259)
11,465
(28,820)
(8,859)
12,042
(33,310)
(8,472)
2,074
(66,383)
(15,803)
19,046
(168,204)
(46,393)
44,627
—
—
—
—
—
(27,111)
(68,596)
(19,176)
(44,813)
(2,053)
(41,761)
(23,240)
(86,380)
(71,580)
(241,550)
139,295
Net book value
131,203
(1) As of 31 December 2021, disposals include an impairment charge of TRY 6,575 (31 December 2020: TRY 5,109).
Depreciation expense of TRY 37,145 has been charged in cost of sales and TRY 9,248 has been charged in general
administrative expenses.
Cost
Machinery and equipment
Motor vehicles
Furniture and fixtures
Leasehold improvements
Construction in progress
Accumulated depreciation
Machinery and equipment
Motor vehicles
Furniture and fixtures
Leasehold improvements
Net book value
1 Jan
2020
76,825
29,975
62,552
113,118
7,425
Additions
Disposals
Transfers
Currency
translation
adjustments
31 Dec
2020
2,681
6,594
6,364
(548)
1,942
2,120
83,020
(87)
(4,945)
—
—
939
138
37,421
64,109
6,119
(12,631)
1,789
1,953
110,348
751
(98)
(3,731)
162
4,509
289,895
22,509
(18,309)
(26,380)
(12,652)
(19,601)
(8,618)
(28,778)
(7,418)
(55,093)
(16,644)
(129,852)
(45,332)
160,043
258
87
2,947
6,303
9,595
—
—
—
—
—
—
5,312
299,407
(917)
(39,691)
(688)
(28,820)
(61)
(33,310)
(949)
(66,383)
(2,615)
(168,204)
131,203
Amortisation expense of TRY 37,079 has been charged in cost of sales and TRY 8,253 has been charged in general
administrative expenses.
DP Eurasia N.V. Annual Report and Accounts 2021
129
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 10 – Intangible assets
Cost
Key money
Computer software
Franchise contracts
Accumulated amortisation
Key money
Computer software
Franchise contracts
1 Jan
2021
Additions
Disposals
Transfers
Currency
translation
adjustments
31 Dec
2021
44,742
5,145
(22,184)
89,947
29,047
(3,765)
48,485
—
—
183,174
34,192
(25,949)
(17,431)
(10,316)
(43,742)
(24,491)
(48,485)
—
7,924
3,470
—
(109,658)
(34,807)
11,394
—
—
—
—
—
—
—
—
16,650
44,353
14,894
130,123
—
48,485
31,544
222,961
(7,459)
(27,282)
(6,628)
(71,391)
—
(48,485)
(14,087)
(147,158)
75,803
Net book value
73,516
As at 31 December 2021, disposals include an impairment charge of TRY 14,001 (31 December 2020: TRY 6,009).
Amortisation expense of TRY 16,001 has been charged in cost of sales and TRY 18,806 has been charged in general
administrative expenses.
1 Jan
2020
Additions
Disposals
Transfers
Currency
translation
adjustments
31 Dec
2020
Cost
Key money
Computer software
Franchise contracts
Accumulated amortisation
Key money
Computer software
Franchise contracts
50,622
800
(7,183)
68,672
25,650
(5,326)
48,485
—
—
167,779
26,450
(12,509)
(12,038)
(7,257)
1,942
(28,989)
(18,823)
4,443
(45,328)
(3,157)
—
(86,355)
(29,237)
6,385
Net book value
81,424
—
—
—
—
—
—
—
—
503
951
44,742
89,947
—
48,485
1,454
183,174
(78)
(17,431)
(373)
(43,742)
—
(48,485)
(451)
(109,658)
73,516
Amortisation expense of TRY 14,520 has been charged in cost of sales and TRY 14,717 has been charged in general
administrative expenses.
The Group does not have any intangible assets with an indefinite useful life.
Franchise contracts
The Group has recognised franchise contracts resulting from a business combination on 26 January 2011 amounting to
TRY 48,485 and accounted for them as intangible assets in its consolidated financial statements.
Note 11 – Right-of-use assets
Details of right-of-use assets as of 31 December 2021 and 2020 are as follows:
Right-of-use assets
Stores and buildings
Cars
31 Dec
2021
31 Dec
2020
139,037
104,426
12,688
8,469
151,725
112,895
130
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Details of lease receivable, as of 31 December 2021 and 2020 are as follows:
Lease receivables
Current
Non-current
Details of lease liabilities as of 31 December 2021 and 2020 are as follows:
Lease liabilities
Current
Non-current
Movement of right-of-use assets
Right-of-use assets
Stores and buildings
Cars
Depreciation charge of right-of-use assets
Stores and buildings
Cars
31 Dec
2021
31 Dec
2020
22,057
69,455
91,512
16,621
24,674
41,295
31 Dec
2021
31 Dec
2020
70,523
72,476
211,226
110,549
281,749
183,025
1 Jan
2021
Additions
Disposals
Currency
translation
adjustments
31 Dec
2021
167,003
57,296
(57,475)
100,582
267,406
37,798
7,350
(14)
—
45,134
204,801
64,646
(57,489)
100,582
312,540
(62,577)
(57,254)
42,013
(50,551)
(128,369)
(29,329)
(3,119)
2
—
(32,446)
(91,906)
(60,373)
42,015
(50,551)
(160,815)
112,895
151,725
For the year ended 31 December 2021, depreciation expense of TRY 52,386 has been charged to the cost of sales
and TRY 7,987 has been charged to general administrative expenses. (31 December 2020: TRY 45,655 and TRY 7,198
respectively).
Right-of-use assets
Stores and buildings
Cars
Depreciation charge of right-of-use assets
Stores and buildings
Cars
1 Jan
2020
Additions
Disposals
Currency
translation
adjustments
31 Dec
2020
195,285
13,285
(45,409)
3,842
167,003
34,147
2,814
(87)
924
37,798
229,432
16,099
(45,496)
4,766
204,801
(29,145)
(44,164)
11,648
(916)
(62,577)
(20,051)
(8,689)
87
(676)
(29,329)
(49,196)
(52,853)
11,735
(1,592)
(91,906)
180,236
112,895
In 2021, interest expense on lease liabilities is TRY 31,051 and the total amount of interest of sub-lease expense is
TRY 15,839 (31 December 2020: interest expense on lease liabilities TRY 34,585 and TRY 13,804 respectively).
In 2021, the total cash outflow for principal of leases and interest of leases is TRY 72,634 and TRY 31,051, respectively.
In 2021, the total cash inflow for interest of leases is TRY 15,839, (31 December 2020: TRY 50,911, TRY 34,585 and TRY
13,804 respectively).
There are no low-value assets in 2021 (31 December 2020: TRY 62).
DP Eurasia N.V. Annual Report and Accounts 2021
131
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 12 – Goodwill
Movement of goodwill is as follows:
1 January
Currency translation impact
31 December
31 Dec
2021
47,413
7,162
31 Dec
2020
47,133
280
54,575
47,413
The goodwill relates to Turkish and Russian CGUs at the amounts TRY 36,023 and TRY 18,552 (RUB 96,016) respectively
(31 December 2020: TRY 36,023 and TRY 11,390 (RUB 96,016) respectively).
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 23.2% for the Turkish market and 3.1% for the Russian market (31 December 2020: 9.5% for the Turkish
market and 3.1% for the Russian market). The impact of IFRS 16 has been included in the discounted cash flow
models and resulted in an increase in weighted average cost of capital.
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 sales growth projection rates of 28.7% for Turkey and 15.1% for Russia respectively
(31 December 2020: 18.9% for Turkey and 14.6% for Russia). 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 5% for both Turkey and Russia
operations, pre-tax discount rates of 29.8% for 2021, 20% for 2020 for Turkey and 17.2% for 2021 and 15.8% for 2020
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 different discount rates each
year that reflect specific risks related to the Group as discount rates. Impairment loss has not been recognised as a
result of the impairment tests performed with the above assumptions as at 31 December 2021. A further test with 5%
increase in WACC or 5% decreases 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 2021. A further test with a 5% adverse change to the above assumptions did not result in any
impairment loss, either.
132
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Note 13 – Cash and cash equivalents
The details of cash and cash equivalents as of 31 December 2021 and 2020 are as follows:
Cash
Banks
Term bank deposits (less than three months)
Credit card receivables(1)
(1) Maturity term of credit card receivables are 30 days on average (31 December 2020: 30 days).
There is no restricted cash as of 31 December 2021 and 2020.
The details of currency of the banks are as follows:
Turkish Liras
Russian Roubles
US Dollars
Euro
Note 14 – Trade receivables and payables
a) Short-term trade receivables
Trade receivables
Post-dated cheques(1)
Less: Doubtful trade receivables
Short-term trade receivables, net
31 Dec
2021
1,917
31 Dec
2020
1,249
80,250
19,867
73,000
69,500
9,245
18,420
164,412
109,036
31 Dec
2021
31 Dec
2020
93,448
75,546
17,402
38,479
3,921
1,490
12,057
274
153,250
89,367
31 Dec
2021
138,634
23,471
31 Dec
2020
89,091
22,932
162,105
112,023
(2,135)
(4,263)
159,970
107,760
(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 (2020: between 30 and 60 days).
Movement of provision for doubtful receivables is as follows:
1 January
Current year (reversals)/charges
Write-off
31 December
2021
4,263
(2,128)
2020
2,080
2,657
—
(474)
2,135
4,263
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 2021 also impacted the expected credit losses going forward, resulting
in a disposal of TRY 588 recorded as provision for doubtful receivables (31 December 2020: TRY 955). 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
due
0-30
days
31-90
days
91-180
days
181-360
days
Over 360
days
0.14%
1.64%
3.73%
7.50%
17.17%
46.55%
Lease receivables have no history if default and expected credit loss percentages are close to zero and its effect is
immaterial, so the table below consists of only trade and other receivables.
DP Eurasia N.V. Annual Report and Accounts 2021
133
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 14 – Trade receivables and payables continued
b) Long-term trade receivables
Trade receivables
Post-dated cheques(1)
(1) Post-dated cheques are the receivables from franchisees resulting from store openings.
c) Short-term trade and other payables
Trade payables
Other payables
31 Dec
2021
2,042
11,615
13,657
31 Dec
2020
539
16,168
16,707
31 Dec
2021
31 Dec
2020
290,954
168,329
6,594
5,030
297,548
173,359
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 effect of imputing interest is significant (31 December 2021 and 2020:
less than three months).
Note 15 – Transactions and balances with related parties
The details of receivables and payables from related parties as of 31 December 2021 and 2020 and transactions are as
follows:
a) Key management compensation
Short-term employee benefits
Share-based incentives
31 Dec
2021
31 Dec
2020
36,075
22,399
1,973
1,463
38,048
23,862
There are no loans, advance payments or guarantees given to key management.
b) Board compensation
Year ending 31 December 2021
Aslan
Saranga
Frederieke
Slot
Peter
Williams
Tom
Singer
David
Adams
Shyam S.
Bhartia
Hari S.
Bhartia
Pratik R.
Pota
Executive Directors
Non-Executive Directors
Base salary (TRY)
3,013,325 1,052,560
1,514,515 350,863
415,987
Benefits (TRY)
Pension (TRY)
1,567,657
239,721
—
21,930
Annual bonus (TRY)
1,868,262
Long-term incentives (TRY)
1,164,469
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total (TRY)
7,613,713
1,314,211
1,514,515 350,863
415,987
Total (local currency)
₺7,613,713 €145,918 £125,000 £28,953 £34,333
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Year ending 31 December 2020
Aslan
Saranga
Frederieke
Slot
Peter
Williams
Tom
Singer
Seymur
Tari
İzzet
Talu
Aksel
Sahin
Executive Directors
Non-Executive Directors
Base salary (TRY)
2,514,253
774,647
1,302,397
603,444
Benefits (TRY)
Pension (TRY)
Annual bonus (TRY)
217,338
184,312
—
—
283,681
—
—
—
—
—
—
—
—
—
—
Long-term incentives (TRY)
544,131
Total (TRY)
3,275,722
1,242,640
1,302,397
603,444
Total (local currency)
₺3,275,722
€153,120 £145,000
£67,183
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
134
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
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 2021, the Chief Executive
Officer’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 60 and 62, 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.
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 16 – Inventories
Raw materials
Other inventory
Total
31 Dec
2021
126,459
6,629
133,088
31 Dec
2020
57,292
4,452
61,744
The cost of inventories recognised as expense and included in “cost of sales” amounted to TRY 656,091 in 2021
(2020: TRY 406,069).
DP Eurasia N.V. Annual Report and Accounts 2021
135
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 17 – Other current/non-current receivables, assets and liabilities
Other current receivables and assets
Advance payments(1)
Deposits for loan guarantees(2)
Lease receivables
Prepaid marketing expenses
Contract assets related to franchising contracts(3)
Prepaid insurance expenses
Prepaid taxes and VAT receivable
Other(4)
Total
31 Dec
2021
31 Dec
2020
69,411
56,208
35,527
22,057
3,275
1,317
1,105
17
1,437
16,621
3,001
879
1,532
4,175
5,958
6,256
138,667
90,109
(1) As of 31 December 2021 and 2020, advance payments are composed of advances given to suppliers for purchasing raw materials and
other services.
(2) In 2021, the Group repaid a portion of its loans to Sberbank Moscow and the TRY 35,527 (RUB 205 million) cash deposit condition
that was made as collateral by Fidesrus.
(3) 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.
(4) As of 31 December 2021 and 2020, other includes job and personnel advances, short-term security deposits and other prepayments
such as subscriptions and travel expenses.
Other non-current receivables and assets
Lease receivables
Prepaid marketing expenses
Deposits given
Contract assets related to franchising contracts(1)
Long-term deposits for loan guarantees
Total
31 Dec
2021
69,455
22,259
9,907
8,091
—
31 Dec
2020
24,674
12,620
5,585
4,291
17,760
109,712
64,930
(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.
Other current liabilities
Performance bonuses
Contract liabilities from franchising contracts(1)
Payable to personnel
Unused vacation liabilities
Taxes and funds payable
Social security premiums payable
Advances received from franchisees
Volume rebate advances
Other expense accruals
Total
31 Dec
2021
18,650
17,633
12,322
11,839
8,755
6,113
4,918
3,424
16,326
31 Dec
2020
9,619
5,672
6,368
7,977
5,212
4,077
4,239
5,364
5,686
99,980
54,214
(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.
Other non-current liabilities
Contract liabilities from franchising contracts(1)
Unearned revenue
Long-term provisions for employee benefits
Other
Total
31 Dec
2021
31 Dec
2020
47,918
38,311
155
4,190
2,702
170
2,874
1,386
54,965
42,741
(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.
136
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Note 18 – Financial liabilities
Short-term bank borrowings
Short-term financial liabilities
Short-term portions of long-term borrowings
Short-term portions of long-term leases
Current portion of long-term financial liabilities
Total short-term financial liabilities
Long-term bank borrowings
Long-term leases
Long-term financial liabilities
Total financial liabilities
31 Dec
2021
31 Dec
2020
226,342
54,088
226,342
54,088
109,836
113,093
70,523
72,476
180,359
185,569
406,701
239,657
204,320
193,015
211,226
110,549
415,546
303,564
822,247
543,221
As of 31 December 2021, the fair value of the financial liabilities is TRY 740,308 (31 December 2020: TRY 532,408).
The summary information of short-term and long-term bank borrowings is as follows:
31 December 2021
Currency
TRY borrowings
RUB borrowings
31 December 2020
Currency
TRY borrowings
RUB borrowings
Maturity
Revolving
Interest
rate (%)
Short-term
Long-term
19.14%
288,914
40,263
2024
9.70%-14.30%
47,264
164,057
Maturity
Revolving
2024
336,178
204,320
Interest
rate (%)
Short-term
Long-term
10.48%
154,960
109,041
9.70%
12,221
83,974
167,181
193,015
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. The financial indicator of:
• Domino’s Russia, which requires the ratio of financial debt to adjusted EBITDA for the relevant period, should not be
more than 3.0;
• Domino’s Turkey, which requires the ratio of financial debt to adjusted EBITDA for the relevant period, should not be
more than 2.5; and
• the Group, which requires the ratio of financial debt to adjusted EBITDA for the relevant period, should not be more
than 3.5.
As of 31 December 2021, Sberbank has waived the covenant conditions for 2021, as well as for all quarters of 2022.
The redemption schedule of the borrowings as of 31 December 2021 and 2020 is as follows:
To be paid in one year
To be paid between one to two years
To be paid between two to three years
To be paid in three years and more
31 Dec
2021
31 Dec
2020
336,178
167,181
95,076
63,762
109,244
—
76,941
52,312
540,498
360,196
DP Eurasia N.V. Annual Report and Accounts 2021
137
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
31 Dec
2021
31 Dec
2020
70,523
72,470
69,684
37,051
58,067
28,403
83,475
45,101
281,749
183,025
31 Dec
2021
31 Dec
2020
164,412
109,036
(406,701)
(239,651)
(415,546)
(303,570)
(657,835)
(434,185)
31 Dec
2021
31 Dec
2020
164,412
109,036
(822,247)
(543,221)
(657,835)
(434,185)
Short-term
financial
liabilities
and leases
Long-term
financial
liabilities
and leases
Total
(239,657) (303,564)
(543,221)
(336,018)
33,963
(302,054)
209,512
72,634
—
—
209,512
72,634
(62,229)
(64,646)
(126,875)
(50,943)
(81,299)
(132,242)
(406,701)
(415,546)
(822,247)
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 18 – Financial liabilities continued
The redemption schedule of the leases as of 31 December 2021 and 2020 is as follows:
Leases to be paid in one year
Leases to be paid between one to two years
Leases to be paid between two to three years
Leases to be paid in three years and more
Please refer to Note 24 for financial risk management disclosures.
As of 31 December 2021 and 2020, the net financial liabilities reconciliation is as follows:
Cash and cash equivalents
Financial liabilities and leases to be paid in one year
Financial liabilities and leases to be paid in one to five years
Cash and cash equivalents
Financial liabilities and leases – fixed rate
31 December 2021
1 January financial liabilities
Net cash flow effect, loans received
Net cash flow effect, loans paid
Net cash flow effect, leasing payments
Other non-cash transactions(1)
Currency translation adjustments
31 December financial liabilities
(1) Other non-cash transactions are comprised of new lease additions, cancellations and/or modifications.
31 December 2020
1 January financial liabilities
Net cash flow effect, loans received
Net cash flow effect, loans paid
Net cash flow effect, leasing payments
Other non-cash transactions
Currency translation adjustments
31 December financial liabilities
Short-term
financial
liabilities
and leases
Long-term
financial
liabilities
and leases
Total
(236,281)
(337,867)
(574,148)
(201,166)
(98,331)
(299,497)
151,867
134,519
286,386
50,911
2,966
—
—
50,911
2,966
(7,954)
(1,885)
(9,839)
(239,657) (303,564)
(543,221)
138
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
The reconciliation of adjusted net debt as of 31 December 2021 and 2020 is as follows:
Short-term bank borrowings
Short-term portions of long-term lease borrowings
Long-term bank borrowings
Long-term lease and borrowings
Total borrowings
Cash and cash equivalents (-)
Net debt
Non-recurring items per Group management
Long-term deposit for loan guarantee
Adjusted net debt(1)
31 Dec
2021
31 Dec
2020
226,342
54,088
180,359
185,569
204,320
193,015
211,226
110,549
822,247
543,221
(164,412)
(109,036)
657,835
434,185
(35,527)
(19,197)
622,308
414,988
(1) Net debt, adjusted net debt and non-recurring and non-trade items are not defined by IFRS. 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 to take into account deposits not otherwise considered cash and cash equivalents under IFRS.
Note 19 – Provision
Short-term provisions
Legal provisions and other
Legal provisions are mostly resulting from labour and rent disputes.
The movement of provisions as of 31 December 2021 and 2020 is as follows:
Balance at 1 January
Provision set during the period
Paid during the period
Balance as at 31 December
Note 20 – Commitments, contingent assets and liabilities
a) Guarantees given and received for trade receivables are as follows:
Guarantee letters given
Guarantee notes received
Guarantee letters received
Guarantee notes and letters are received as collateral for trade receivables.
31 Dec
2021
5,421
5,421
2021
5,740
93
(412)
5,421
31 Dec
2021
47,447
47,447
31 Dec
2021
75,349
73,533
31 Dec
2020
5,740
5,740
2020
5,354
1,547
(1,161)
5,740
31 Dec
2020
4,451
4,451
31 Dec
2020
54,174
23,315
148,882
77,489
DP Eurasia N.V. Annual Report and Accounts 2021
139
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 20 – Commitments, contingent assets and liabilities continued
b) Tax contingencies
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
of 31 December 2021.
Note 21 – Tax assets, liabilities and tax expense
Corporate tax
The Group is subject to taxation in accordance with the tax regulations and the legislation effective 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%. 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 affiliated 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.
140
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) 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 25%
(31 December 2020: 22%) 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 Official Gazette numbered 31462 on
22 April 2021, the corporate tax rate in Turkey, which was 20% as of 31 March 2021, was increased to 25% for 2021 and
23% for 2022. The amendment is effective 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 offsetting, there remains a paid advance
tax amount, it may be refunded or offset 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 different 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 2020: 20%) as identified in Article 247 of the Tax Code of the Russian Federation. Special rules may
apply in cases where a different from 20% tax rate is used.
Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary
differences 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
differences on initial recognition of an asset or a liability in a transaction other than a business combination if the
transaction, when initially recorded, affects 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 differences will reverse, or the tax loss carry forwards will be utilised.
Corporate tax liability for the year consists of the following:
Corporate tax calculated
Prepaid taxes (-)
Tax liability
Tax income and expenses included in the statement of comprehensive income are as follows:
Current period corporate tax expense
Deferred tax income/(expense)
Total tax expense
31 Dec
2021
31 Dec
2020
38,591
22,201
(25,800)
(13,270)
12,791
8,931
2021
2020
(38,591)
(22,201)
(10,148)
8,232
(48,739)
(13,969)
DP Eurasia N.V. Annual Report and Accounts 2021
141
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 21 – Tax assets, liabilities and tax expense continued
Russia continued
The reconciliation of the tax expense in the statement of comprehensive income is as follows:
Profit/(loss) before tax
Corporate tax at statutory rates (25%)
Disallowable expenses
Unrecognised tax losses
Differences in tax rates
Other, net
Total tax expense
2021
2020
32,716
(93,614)
(8,179)
23,404
(28,021)
(15,672)
(5,369)
(15,623)
(4,969)
(5,351)
(2,201)
(727)
(48,739)
(13,969)
The breakdown of cumulative temporary differences and the resulting deferred income tax assets/liabilities at
31 December 2021 and 2020 using statutory tax rates are as follows:
Carry forward tax losses(1)
Contract liabilities from franchising contracts
Right-of-use assets and lease liabilities
Expense accruals
Performance bonuses accruals
Legal provisions
Unused vacation liabilities
Provision for employee termination benefit
Other
Property, equipment and intangible assets
Deferred income tax assets, net
31 December 2021
31 December 2020
Temporary
differences
Deferred tax
assets/
(liabilities)
Temporary
differences
Deferred tax
assets/
(liabilities)
72,427
14,485
52,462
10,492
65,551
38,512
16,326
18,650
5,421
11,839
4,190
13,110
7,702
4,082
4,663
1,084
2,960
838
(64,910)
(12,982)
43,983
28,835
5,686
9,132
5,740
4,021
2,874
4,441
8,797
5,767
1,137
1,826
1,148
804
575
1,507
168,006
35,942
157,174
32,053
(19,421)
(5,923)
(27,763)
(5,553)
(19,421)
(5,923)
(27,763)
(5,553)
30,019
26,500
(1) Consists of carry forward losses of Domino’s Russia. Domino’s Russia has not recognised any additional tax assets on carry forward
losses in 2020 and 2021, the change is the result of the currency translation differences between Russian Roubles and Turkish Lira.
Deferred income tax assets recognition of Fidesrus
Deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Various factors
are considered to assess the probability of the future utilisation of deferred tax assets, including past operating results,
operational plan, expiration of tax losses carried forward, and tax planning strategies. If actual results differ from these
estimates or if these estimates must be adjusted in future periods, the financial position, results of operations and cash
flows may be negatively affected. If the assessment of future utilisation of deferred tax assets must be reduced, this
reduction will be recognised in the income statement.
Based on the change in the tax code in the Russian Federation after 31 December 2015, previously applied limitation
on carry forward tax losses for a ten-year period has been abolished and any losses incurred since 2007 will be carried
forward until fully recognised.
Domino’s Russia 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. Domino’s Russia recognises deferred income tax assets arising
from tax losses, tax discounts and other temporary differences with the estimates and assumptions relying on Domino’s
Russia management’s ten-year business plan and potential growth opportunities in Russia.
142
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Movement of the deferred tax for the years ended 31 December 2021 and 2020 are as follows:
Balance at the beginning of the year
Charged to the statement of income
Currency translation difference
Charged to other comprehensive income
Balance at the end of the year
Note 22 – Share-based payments
The Phantom Option Scheme
31 Dec
2021
31 Dec
2020
26,500
18,060
(10,148)
8,232
13,340
327
(28)
236
30,019
26,500
The Phantom Option Scheme was put in place prior to the initial public offering 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 difference 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 after the 100% stake sale by Turkish Private
Equity Fund II L.P. (Note 1).
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.
The shares under the option will vest at the end of the scheme period.
Vesting of the 2018-2020 LTIP cycle was completed as of 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. On 14 May 2020, Aslan Saranga was granted an LTIP
award amounting to 506,212 shares (fair value equal to share price GBP 0.59) which will vest in May 2023 subject to
achievement of an EBITDA growth target.
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 125% of base salary which resulted in 473,571 shares with a fair value of
TRY 3,752,340 based on a share price of GBP 0.689 (6 May 2021) and an exchange rate of GBP: TRY11.5 (6 May 2021).
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:
• expected average option term in years: 2.6 years;
• expected volatility: 54.6%;
• expected dividend yield: 0%; and
• risk-free interest rate: 0.001%.
Under these three existing plans, an amount of TRY 1,973 has been charged for 2021, whereas TRY 1,463 has been
charged for 2020 and the cumulative charge is TRY 22,572 as at 31 December 2021 (31 December 2020: TRY 20,600).
DP Eurasia N.V. Annual Report and Accounts 2021
143
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 23 – Equity
The shareholders and the shareholding structure of the Group at 31 December 2021 and 2020 are as follows:
Fides Food Systems Coöperatief U.A.
Public shares
Vision Lovemark Coöperatief U.A.
Other
31 Dec 2021
31 Dec 2020
Share (%)
Amount
Share (%)
Amount
40.3
54.6
4.9
0.2
14,670
19,849
1,777
57
36,353
32.8
62.1
4.9
0.2
11,928
22,591
1,777
57
36,353
As of 31 December 2021, the Group’s 145,372,414 (31 December 2020: 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 million existing ordinary shares in DP Eurasia
N.V. in an accelerated bookbuild offering addressed to institutional investors. After this transaction, 62.1% of the shares
became public.
Share amount
1 January
Addition
31 December
2021
2020
145,372,414 145,372,414
—
—
145,372,414 145,372,414
The nominal value of each share is EUR 0.12 (2020: EUR 0.12). There is no preference stock.
Share premium
Share premium represents differences 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 differences between the face value and the fair
value of shares issued at the IPO.
Ultimate controlling party
The ultimate controlling party of the Company is Jubilant FoodWorks Limited. There is no individual ultimately
controlling the Group.
144
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Note 24 – 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.
Total borrowings and lease liabilities
Cash and cash equivalents (-)
Net debt
Non-recurring items per Group management
Short and long-term deposit for loan guarantee
Adjusted net debt(1)
Adjusted EBITDA(1)
Adjusted net debt/adjusted EBITDA
31 Dec
2021
31 Dec
2020
822,247
543,221
(164,412)
(109,036)
657,835
434,185
(35,527)
(19,197)
622,308
414,988
208,385
131,516
2.99x
3.16x
(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 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.
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 effects on
the Group’s financial position and performance.
b.1) Credit risk
The Group considers its maximum credit risk at 31 December 2021 to be TRY 182,563 (31 December 2020: TRY 124,917),
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 offered. 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.
DP Eurasia N.V. Annual Report and Accounts 2021
145
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 24 – Financial instruments and financial risk management continued
b) Financial risk factors continued
b.1) Credit risk continued
The ageing of past due but not impaired financial assets is as follows:
Less than a month
One to three months
Three to six months
Over six months
Total
Trade receivables
Counterparties without external credit rating
Group 1
Group 2
Group 3
Total
31 Dec
2021
2,834
1,436
505
23
31 Dec
2020
2,599
377
288
233
4,798
3,497
31 Dec
2021
31 Dec
2020
4,294
1,555
169,333
122,912
2,135
4,263
175,762
128,730
• 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 of 31 December 2021 and 2020, the liquidity risks arising from the Group’s financial liabilities consisted of the
following:
Maturities in accordance with agreements
Non-derivative financial liabilities
Borrowings
Leases
31 December 2021
Total cash
outflows in
accordance
value with contract
Carrying
Less than 3
months
3-12
months
1-5
years
Over 5
years
540,498
605,218
94,365
291,252
219,601
—
281,749
365,802
25,070
75,270
233,585
31,877
Third-party trade payables
297,548
297,548
297,548
—
—
—
Total
1,119,795
1,268,567
416,983
366,522
453,186
31,877
146
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Maturities in accordance with agreements
Non-derivative financial liabilities
Borrowings
Leases
31 December 2020
Total cash
outflows in
accordance
value with contract
Carrying
Less than 3
months
3-12
months
1-5
years
Over 5
years
360,196
387,504
77,424
106,291
203,789
—
183,025
212,353
22,226
61,443
122,864
5,820
Third-party trade payables
173,359
173,359
173,359
—
—
—
Total
716,580
773,216
273,009
167,734
326,653
5,820
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 of 31 December 2021 and 2020, the categories of financial instruments of the Group is as follows:
31 December 2021
Financial assets
Cash and cash equivalents
Trade receivables
Lease receivables
Other current assets
Financial liabilities
Financial liabilities
Leases
Trade and other payables
31 December 2020
Financial assets
Cash and cash equivalents
Trade receivables
Lease receivables
Other current assets
Financial liabilities
Financial liabilities
Leases
Trade and other payables
b.3) Market risk
Assets and
liabilities at
amortised
cost
Note
Loans and
receivables
164,412
233,346
164,412
—
—
—
—
175,762
22,057
35,527
1,119,795
540,498
281,749
297,548
—
—
—
—
13
14
17
17
18
18
14
Assets and
liabilities at
amortised
cost
Note
Loans and
receivables
109,036
146,788
109,036
—
—
—
—
128,730
16,621
1,437
716,580
360,196
183,025
173,359
—
—
—
—
13
14
17
17
18
18
14
Available
for sale
Financial
assets
or liabilities
at fair value
financial through profit
or loss
assets
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Financial
assets
or liabilities
at fair value
through profit
or loss
Available
for sale
financial
assets
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Carrying
value
397,758
164,412
175,762
22,057
35,527
1,119,795
540,498
281,749
297,548
Carrying
value
255,824
109,036
128,730
16,621
1,437
716,580
360,196
183,025
173,359
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.
DP Eurasia N.V. Annual Report and Accounts 2021
147
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Note 24 – Financial instruments and financial risk management continued
b) Financial risk factors continued
b.3) Market risk continued
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 2021, interest rates were fixed on approximately 100% of the net debt for 2021 (100% for 2020).
The average interest rate on short-term borrowings in 2021 was 14.38% (2020: 10.09%).
The financial instruments of the Group which are sensitive to interest rates are stated in the following table:
Financial instruments with floating interest
Financial liabilities
Financial instruments with fixed interest
Financial liabilities – repricing dates
– six months or less
– six to twelve months
– one to five years
31 Dec
2021
31 Dec
2020
—
—
822,247
543,221
140,460
162,225
266,241
77,432
415,546
303,564
822,247
543,221
Assuming that all other variables remain constant, a 1.0 percentage point increase in floating interest rates on a full-year
basis as of 31 December 2021 would have led to no additional finance costs (2020: 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 effect.
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 2021, the exposure to the
Group from companies holding assets and liabilities other than in their functional currency amounted to TRY 15,482
(31 December 2020: TRY 19,418).
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 3,142 gain in the income statement (2020: TRY 209 gain).
A 20% weakening of the Euro against these currencies would have led to an equal but opposite effect.
Price risk
As of 31 December 2021, 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.
Note 25 – Subsequent events
Conflict in Ukraine
The conflict between Russia and Ukraine has been increasing the tension in the region, negatively affecting commodity
and financial markets and increasing volatility, especially the exchange rates. In addition to this, Russian economy has
faced heavy sanctions imposed mainly by the Western countries.
To minimise the impact of unstable market conditions and sanctions, the Russian financial authorities introduced new
measures to support domestic financial stability and protect the national currency. However, so far, precautions which
have been taken could not bring stability to the markets and prevent the depreciation on RUB.
148
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
As of the report’s signing date, RUB has lost more than 8% of its value against USD compared to the year-end rates.
The European Union announced an important financial restriction on Russia with a new ban that blocks several Russian
banks from using SWIFT system. As of reporting date, the Group maintains its financial operations in this territory
through its subsidiaries established and operating in the Russian Federation. Accordingly, none of the sanctions
announced to date preclude the Group’s Russian subsidiaries to carry out any transactions with those financial
institutions that have been subjected to the financial restrictions. The Group is closely monitoring the additional
regulations and its contractual undertakings to ensure its continued compliance with the legal and contractual
framework. The Group has limited dollar/ euro dependency. The Group already announced that royalty payments
from its Russian operations have been suspended until further notice.
In terms of the Group’s financial position, devaluation of RUB does not constitute a threat to the Group with regards to
the financial liabilities. As of reporting date; 39% of the bank borrowings are in RUB all of which are attributable to the
borrowings of DP Russia where the functional currency of the Company is RUB. On the other hand, on the operational
perspective, depreciation of RUB will bring considerable increase in price of raw materials. As of 31 December 2021, the
share of RUB revenue in all over the Group is 31% and the negative effect of RUB devaluation is limited. Furthermore,
sales performance of Russian operation, is in positive trend, compared to pre-ongoing situation in Russia.
Given the recent developments, Central Bank of Russia (“CBR”) made a 20% hike to its key rate on 28 February 2022.
Accordingly, CBR’s key rate had risen from 9.5% to 20%. The Group’s effective RUB borrowing cost is between 9.7% and
14.3% and despite the increased interest rates on loans, according to the Group’s cash flow pattern, no event of default
on repayment or any debt service shortfall is expected.
Lastly, the Group assets’ performance is linked to general economic conditions in the country. As of the reporting date,
due to the increase in the CBR interest rates, the values arrived using the discounted cash flow models may be less than
the accounted fair values for the assets in Russia. Parallel to the uncertainties, it is not certain how much of the value of
assets will decline or recover in the near future.
The Group’s management analysed the possible impact of changing micro and macroeconomic conditions on the
Group's financial position and results of operations, parallel with the developments on a daily basis and planning
and implementing business continuity measures for various adverse scenarios.
If the geopolitical situation in Russia persists or continues to develop adversely, there might be a material uncertainty
in the Russian subsidiary’s financial position and performance. Currently, the Group cannot reliably estimate
the magnitude of the impact, if any. However, this is not expected to impact the Group's ability to continue as a
going concern.
Other events
The regulations included in the Law No. 7352 published in the Official Gazette dated 29 January 2022 and
No. 31734 provide various tax advantages for accounts converted into Turkish Lira within the scope of supporting
the conversion to Turkish Lira deposit and participation accounts. For accounts that have been converted to
Turkish Lira between 31 December 2021 and the date the financial statements are approved for issue, Domino’s
Turkey has incurred a tax advantage of TRY 1.6 million for the last quarter of 2021. However, the aforementioned
law was not in effect as of 31 December 2021, and in accordance with IAS 10, ‘Events After the Reporting Period’,
the tax advantage of TRY 1.6 million has not been reflected as adjusting subsequent events.
The tax advantage amount in question will be reflected in the financial statements in the following accounting period.
On 7 February 2022, Jubilant FoodWorks Netherlands B.V. acquired a total of 961,339 ordinary shares, at an average
87 pence (in Sterling) per share, in DP Eurasia N.V. from market purchases.
In addition, on 10 February 2022, Jubilant FoodWorks Netherlands B.V. acquired additional 547,783 ordinary shares,
at an average 81 pence (in Sterling) per share, giving Jubilant and its group undertakings 60,072,476 ordinary shares
in total. As at 13 February 2022, Fides and its parent owned 41.32% of the Company’s issued share capital.
On 2 March 2022, Fides Foodsystems Coöperatief U.A. merged into Jubilant FoodWorks Netherlands B.V., which is now
the holder of a total of 60,072,476 ordinary shares in DP Eurasia N.V.
According to an amendment to the Sberbank Loan Agreement signed by the Group’s Russian subsidiary and
Sberbank, an inter-credit agreement subordinating all borrowings from the Group and DP Turkey should be signed
by 30 September 2022. The Group expects no difficulty in meeting this requirement.
DP Eurasia N.V. Annual Report and Accounts 2021
149
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview Company income statement
For the years ended 31 December 2021 and 2020
Income statement
General administrative expenses
Operating profit
Foreign exchange income/(losses)
Financial income/(expense)
Net income/(loss) from subsidiaries
Loss before income tax
Tax expense
Loss for the year
The accompanying notes form an integral part of these financial statements.
Notes
2021
2020
6
(20,431)
(12,441)
(20,431)
(12,441)
629
(192)
(1,675)
1,839
2
5,454
(96,789)
(16,023)
(107,583)
—
—
(16,023)
(107,583)
150
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Company balance sheet
As at 31 December 2021 (before appropriation of profit)
Assets
Subsidiaries
Non-current assets
Cash and cash equivalents
Trade receivables
Due from related parties
Other current assets
Current assets
Total assets
Equity
Paid in share capital
Share premium
Other legal reserves
Retained earnings
Result for the year
Total equity
Liabilities
Subsidiaries
Financial liabilities
Non-current liabilities
Financial liabilities
Accounts payable
Other current liabilities
Current liabilities
Total liabilities
Total liabilities and equity
The accompanying notes form an integral part of these financial statements.
Notes
31 Dec
2021
31 Dec
2020
2
512,066
267,671
512,066
267,671
3
3,365
64
77
—
4
142,159
68,982
694
146,282
658,348
382
69,441
337,112
5
36,353
36,353
141,859
139,886
(131,789)
(11,183)
(152,429)
(43,866)
(16,023)
(107,583)
(122,029)
13,607
2
715,765
322,229
48,429
—
764,194
322,229
14,065
1,750
369
—
453
823
16,184
1,276
780,378
323,505
658,349
337,112
DP Eurasia N.V. Annual Report and Accounts 2021
151
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the Company financial statements
For the year ended 31 December 2021
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 2021.
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 affect 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. Investments in consolidated subsidiaries are measured at net asset value. Net asset
value is based on the measurement of assets, provisions and liabilities and determination of profit based on the
principles applied in the consolidated financial statements.
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.
Note 2 – Subsidiaries
The movement schedule for the investment in subsidiaries as of 31 December 2021 and 2020 is as follows:
1 January 2020
Net income from subsidiaries
Currency translation difference
Remeasurement of post-employment benefit obligations
Share-based incentive plans
Cancellation of share-based incentive plans
1 January 2021
Net income from subsidiaries
Currency translation difference
Remeasurement of post-employment benefit obligations
Share-based incentive plans
Cancellation of share-based incentive plans
31 December 2021
51,604
(96,789)
(8,315)
(943)
718
(833)
(54,558)
5,454
(155,587)
(980)
1,973
—
(203,698)
152
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Note 3 – Cash and cash equivalents
The details of cash and cash equivalents as of 31 December 2021 and 2020 are as follows:
Cash
Euro
US Dollars
Russian Roubles
Other
Note 4 – Due to/from related parties
The details of due from related parties as of 31 December 2021 and 2020 are as follows:
Pizza Restaurants LLC(1)
Pizza Restaurantları A.Ş.(1)
Fidesrus B.V.
Fides Food Systems B.V.
31 Dec
2021
3,365
3,365
31 Dec
2021
3,078
16
235
35
3,364
31 Dec
2020
77
77
31 Dec
2020
68
9
—
—
77
31 Dec
2021
31 Dec
2020
162,217
57,606
(20,898)
11,071
407
432
111
194
142,158
68,982
(1) There is an average 4.5% interest increase on the Pizza Restaurants LLC balance.
Carrying and fair value of the receivables due from related parties approximate each other.
Note 5 – Equity
The movements in shareholders’ equity are as follows:
Balances 1 January 2020
36,353
139,256
(22,288)
(37,307)
(5,616)
110,398
Share
capital
Share
premium
Currency
translation
reserves
Retained
earnings
Result for
the year
Total
equity
Remeasurements of post-employment
benefit obligations, net
Appropriation of the result preceding year
Currency translation adjustments
Share-based incentive plans
Cancellation of share-based incentive plans
Total loss for the year
—
—
—
—
—
—
—
—
—
1,463
(833)
—
—
—
11,105
—
—
—
(943)
—
(943)
(5,616)
5,616
—
11,105
1,463
(833)
—
—
—
(107,583)
(107,583)
—
—
—
—
Balances at 31 December 2020
36,353
139,886
(11,183)
(43,866)
(107,583)
13,607
Remeasurements of post-employment
benefit obligations, net
Appropriation of the result preceding year
Currency translation adjustments
Share-based incentive plans
Cancellation of share-based incentive plans
Total loss for the year
—
—
—
—
—
—
—
—
—
1,973
—
—
—
—
(980)
—
(980)
(107,583)
107,583
—
(120,606)
—
—
—
—
—
—
—
—
—
—
(120,606)
1,973
—
(16,023)
(16,023)
Balances at 31 December 2021
36,353
141,859
(131,789)
(152,429)
(16,023)
(122,029)
The Group has no dividend payment to the Company as of 31 December 2021 (31 December 2020: none).
DP Eurasia N.V. Annual Report and Accounts 2021
153
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Notes to the Company financial statements continued
For the year ended 31 December 2021
Note 5 – Equity continued
The shareholders and the shareholding structure of the Company at 31 December 2021 and 2020 are as follows:
Fides Food Systems Coöperatief U.A.
Public shares
Vision Lovemark Coöperatief U.A.
Other
31 December 2021
31 December 2020
Share (%)
Amount
Share (%)
Amount
40.3
54.6
4.9
0.2
14,670
19,849
1,777
57
36,353
32.8
62.1
4.9
0.2
11,928
22,591
1,777
57
36,353
As of 31 December 2021, the Company’s 145,372,414 (31 December 2020: 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 million existing ordinary shares in DP Eurasia
N.V. in an accelerated bookbuild offering addressed to institutional investors. After this transaction, 62.1% of the shares
became public.
1 January
Addition
31 December
2021
2020
145,372,414 145,372,414
—
—
145,372,414 145,372,414
The nominal value of each share is EUR 0.12 (2020: EUR 0.12). There is no preference stock.
Share premium
Share premium represents the total of differences 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 differences between the face value
and the fair value of shares issued for acquired companies and the differences between the proceeds and the nominal
value of the shares issued at the IPO.
Retained earnings
The Board determined the result over 2020 as follows:
Retained earnings
Net result for the year
Note 6 – General administrative expenses
Consultancy expenses
Payroll expenses
Miscellaneous expenses(1)
Management expenses
Other
Total
2020
(107,583)
(107,583)
2021
11,549
3,640
2,299
168
2,775
2020
4,452
4,274
2,044
284
1,387
20,431
12,441
(1) Miscellaneous expenses mainly include the travel, accommodation and other expenses of Domino’s Turkey personnel.
154
DP Eurasia N.V. Annual Report and Accounts 2021
(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)
Note 7 – Audit fees
For the year ended 31 Dec 2021
Audit of financial statements
Other audit service
Total audit services
Tax services
Other non-audit services
Total
PwC NL
1,211
277
1,488
—
—
Other PwC
network
Total PwC
network
1,069
876
1,945
184
750
2,280
1,153
3,432
184
750
1,488
2,879
4,365
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.
These fees relate to the audit of the 2021 financial statements, regardless of whether the work was performed during the
financial year.
For the year ended 31 Dec 2020
Audit of financial statements
Other audit service
Total audit services
Tax services
Other non-audit services
Total
PwC NL
Other PwC
network
Total PwC
network
704
210
914
—
—
818
274
522
484
1,092
2,006
154
—
154
—
914
1,246
2,160
Note 8 – Employees
During 2021, the average number of employees, based on full-time equivalents, was three (2020: three).
Of these, two employees are working outside of the Netherlands.
Note 9 – 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 loss of TRY (16,023) is
deducted from the retained earnings. Furthermore, with due observance of article 43, paragraph 7, it is proposed that
no dividend payment will be paid over 2021.
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 4 April 2022
Management Board
Aslan Saranga
Frederieke Slot
Supervisory Board
Peter Williams
Shyam Bhartia
Hari Bhartia
Pratik Pota
David Adams
DP Eurasia N.V. Annual Report and Accounts 2021
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(Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)Management reportFinancial statementsAdditional informationOverview
Independent auditor’s report
To: the general meeting and the Board of Directors of DP Eurasia N.V.
Report on the financial statements 2021
Our opinion
In our opinion:
• the group financial statements of DP Eurasia N.V. (‘the Company’) give a true and fair view of the financial
position of the Company and the Group (the company together with its subsidiaries) as at 31 December 2021,
and of its result and its cash flows for the year then ended in accordance with International Financial Reporting
Standards as adopted by the European Union (‘EU-IFRS’) and with Part 9 of Book 2 of the Dutch Civil Code.
• the company financial statements of DP Eurasia N.V. (‘the Company’) give a true and fair view of the financial
position of the Company as at 31 December 2021 and of its result for the year then ended in accordance with
Part 9 of Book 2 of the Dutch Civil Code.
What we have audited
We have audited the accompanying financial statements 2021 of DP Eurasia N.V., Amsterdam. The financial statements
include the group financial statements and the company financial statements.
The group financial statements comprise:
• the consolidated statement of financial position as at 31 December 2021;
• the following consolidated statements for 2021: the statements of comprehensive income, changes in equity and
cash flows; and
• the notes to the consolidated financial statements, comprising the significant accounting policies and other
explanatory information.
The company financial statements comprise:
• the company balance sheet as at 31 December 2021;
• the company income statement for the year then ended;
• the notes to the company financial statements, comprising the accounting policies applied and other explanatory
information.
The financial reporting framework applied in the preparation of the financial statements is EU-IFRS and the relevant
provisions of Part 9 of Book 2 of the Dutch Civil Code for the group financial statements and Part 9 of Book 2 of the
Dutch Civil Code for the company financial statements.
The basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. We have further
described our responsibilities under those standards in the section ‘Our responsibilities for the audit of the financial
statements’ of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of DP Eurasia N.V. in accordance with the European Union Regulation on specific requirements
regarding statutory audit of public-interest entities, the ‘Wet toezicht accountantsorganisaties’ (Wta, Audit firms
supervision act), the ‘Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten’ (ViO, Code
of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence
regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels
accountants’ (VGBA, Dutch Code of Ethics).
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Our audit approach
We designed our audit procedures in the context of our audit of the financial statements as a whole and forming our
opinion thereon. The information in support of our opinion, e.g. comments and observations regarding individual key
audit matters, our audit approach regarding fraud risks and our audit approach regarding going concern was set up
in this context and we do not provide a separate opinion or conclusion on these matters.
Overview and context
DP Eurasia N.V. is a public limited company, having its statutory seat in Amsterdam, the Netherlands. The Company and
its subsidiaries operate company-owned stores in Turkey, the Russian Federation, Azerbaijan and Georgia. Furthermore,
the Group provides technical support and consultancy services to franchise stores in these regions. The Group is
comprised of several components and therefore we considered our group audit scope and approach as set out in the
section ‘The scope of our group audit’. We paid specific attention to the areas of focus driven by the operations of the
Group, as set out below.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we considered where the board of directors made important judgements, for
example, in respect of significant accounting estimates that involved making assumptions and considering future
events that are inherently uncertain. In paragraph 2.6 of the financial statements the Company describes the areas
of judgement in applying accounting policies and the key sources of estimation uncertainty. Given the significant
estimation uncertainty and the related higher inherent risks of material misstatement in the recoverability of deferred
tax assets at Pizza Restaurants LLC (‘Domino’s Russia’) and the valuation of goodwill, we considered these matters as
key audit matters as set out in the section ‘Key audit matters’ of this report.
Other areas of focus, that were not considered as key audit matters were valuation of intangible assets, the impact
of COVID 19 on the business, revenue recognition and debt covenant compliance at Domino’s Russia. The potential
impact of the conflict in Ukraine on the business has not been considered a key audit matter, as the impact on the
going concern of DP Eurasia N.V. is not expected to be significant.
We ensured that the audit teams both at group and at component level included the appropriate skills and competences
that are needed for the audit of a group operating in the retail and consumer industry. We included specialists in the
areas of IT audit and income tax and experts in the areas of valuations and share-based payments in our team.
The outline of our audit approach was as follows:
Materiality
Audit
scope
Materiality
• Overall materiality: TRY 15 million (2020: TRY 10.2 million)
Audit scope
• We conducted audit work in Turkey, Russia and the Netherlands.
• As a result of COVID-19, no physical site visits were conducted. We fulfilled our
oversight obligations through frequent virtual meetings with our component auditors,
as well as virtual meetings with group and local management.
• Audit coverage: 100% of consolidated revenue, 100% of consolidated total assets and
Key audit
matters
100% of consolidated profit before tax.
Key audit matters
• Valuation of Goodwill
• Recoverability of deferred tax assets at Pizza Restaurants LLC (“Domino’s Russia”)
DP Eurasia N.V. Annual Report and Accounts 2021
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Management reportFinancial statementsAdditional informationOverview Independent auditor’s report continued
To: the general meeting and the Board of Directors of DP Eurasia N.V.
Our audit approach continued
Materiality
The scope of our audit was influenced by the application of materiality, which is further explained in the section
‘Our responsibilities for the audit of the financial statements’.
Based on our professional judgement we determined certain quantitative thresholds for materiality, including the
overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative
considerations, helped us to determine the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and to evaluate the effect of identified misstatements, both individually and in
aggregate, on the financial statements as a whole and on our opinion.
Overall group materiality
TRY 15 million (2020: TRY 10.2 million).
Basis for determining materiality
We used our professional judgement to determine overall materiality.
As a basis for our judgement we used 1% of revenues (2020: 1% of revenues).
Rationale for benchmark applied
Component materiality
We used total revenues as the primary benchmark, based on our analysis of
the common information needs of users of the financial statements. We believe
that total revenues is an important metric for the financial performance of
the Group. Although we believe that the profit of the business is one of the
ultimate key performance measures, at this stage of expansion through foreign
markets, the key stakeholders are focused on the entity’s growth in revenue.
After evaluating alternative benchmarks together with the generally accepted
benchmark of profit before tax, we believe that total revenue is an appropriate
benchmark.
To each component in our audit scope, we, based on our judgement,
allocate materiality that is less than our overall group materiality. The range
of materiality allocated across components was between TRY 10 million and
TRY 10.5 million.
We also take misstatements and/or possible misstatements into account that, in our judgement, are material for
qualitative reasons.
We agreed with the audit committee that we would report to them any misstatement identified during our audit above
TRY 750 thousand (2020: TRY 509 thousand) as well as misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
The scope of our group audit
DP Eurasia N.V. is the parent company of a group of entities. The financial information of this group is included in the
consolidated financial statements of DP Eurasia N.V.
We tailored the scope of our audit to ensure that we, in aggregate, provide sufficient coverage of the financial
statements for us to be able to give an opinion on the financial statements as a whole, taking into account the
management structure of the Group, the nature of operations of its components, the accounting processes and controls,
and the markets in which the components of the Group operate. In establishing the overall group audit strategy and
plan, we determined the type of work required to be performed at component level by the group engagement team
and by each component auditor.
The group audit primarily focussed on the significant components: Pizza Restaurantları A.Ş. (‘Domino’s Turkey’) and
Pizza Restaurants LLC (‘Domino’s Russia’), and these were subjected to audits of their complete financial information,
as those components are individually financially significant to the Group. Additionally, we selected one component,
the DP Eurasia N.V. stand-alone entity, for audit procedures to achieve appropriate coverage on financial line items
in the group financial statements.
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In total, in performing these procedures, we achieved the following coverage on the financial line items:
Revenue
Total assets
Profit before tax
100%
100%
99%
For group entities DP Eurasia N.V. and Domino’s Turkey the group engagement team performed the audit work in the
Netherlands and Turkey. For Domino’s Russia, we used a component auditor who is familiar with the local laws and
regulations to perform the audit work.
Where the component auditor performed the work, we determined the level of involvement we needed to have in their
audit work to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our
opinion on the group financial statements as a whole.
We issued instructions to the Domino’s Turkey component audit team and the Russia component audit team. These
instructions included among others our risk analysis, materiality and scope of the work. We explained to the component
audit team the structure of the group, the main developments that are relevant for the component auditor, the risks
identified, the materiality levels to be applied and our group audit approach. We had calls with the component audit
team and local management, during the audit as well as upon completion of their audit work. During these calls,
we discussed the significant accounting and audit issues identified by the component auditor, the reports of the
component auditor, the findings of their procedures and other matters, which could be of relevance for the group
financial statements. We reviewed selected working papers remotely.
The financial statement disclosures and a number of complex items were audited by the group engagement team at
the head office. These include share-based payments, as well as compliance with Dutch law disclosure requirements.
By performing the procedures above at components, combined with additional procedures at group level, we have been
able to obtain sufficient and appropriate audit evidence on the Group’s financial information, as a whole, to provide a
basis for our opinion on the financial statements.
The impact of climate change on our audit
DP Eurasia N.V. assessed the possible effects of climate change on its financial position, refer to ‘Our sustainability
approach’ and ‘Risk management’ sections of the Management report. The Company committed to measure, manage
and reduce their environmental impacts from carbon emissions. The impact of climate change and the Company’s
commitments to reach their targets are of significant importance for the Company and its stakeholders. We discussed
the Company’s assessment and governance thereof with management and evaluated the potential impact on the
financial position. The impact of climate related risks is not considered to be a separate key audit matter in the audit
of 2021.
Audit approach on fraud risk
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit
we obtained an understanding of the entity and its environment and the components of the system of internal control,
including the risk assessment process and management’s process for responding to the risks of fraud and monitoring
the system of internal control and how the audit committee and the board of directors exercises oversight, as well as
the outcomes.
We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk
assessment, as well as among others the code of conduct, whistle blower procedures and incident registration.
We evaluated the design and the implementation and, where considered appropriate, tested the operating
effectiveness, of internal controls designed to mitigate fraud risks.
We incorporated an element of unpredictability in our audit and we reviewed the lawyer’s letters. During the audit we
remained alert to indications of fraud. We also considered the outcome of our other audit procedures and evaluated
whether any findings were indicative of fraud or non-compliance of laws and regulations. Whenever we identified any
indications of fraud, we re-evaluated our fraud risk assessment and its impact on our audit procedures.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting
fraud, misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a risk
of material misstatement due fraud is present.
DP Eurasia N.V. Annual Report and Accounts 2021
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Management reportFinancial statementsAdditional informationOverview Independent auditor’s report continued
To: the general meeting and the Board of Directors of DP Eurasia N.V.
Our audit approach continued
Audit approach on fraud risk continued
We identified the following fraud risks and performed the following specific procedures:
Fraud risk
Audit procedures and observations
Risk of fraud through management override
of controls
As in all of our audits, we address the risk of
management override of controls. This includes
evaluating whether there is evidence of bias by
management that may represent a risk of material
misstatement due to fraud.
In this context, we paid particular attention to
the significant estimates and judgments made
by management.
Management may perceive pressure to manipulate
accounting estimates that require significant judgment
in order to improve results. Additionally, inappropriate
accounting policies and treatments may be adopted to
achieve the desired outcomes.
Where relevant to our audit, we have evaluated the
design of the internal control measures that are intended
to mitigate the risk of management override of controls
and assessed the effectiveness of those measures in the
processes of generating and processing journal entries
and forming estimates. We also paid specific attention to
the access safeguards in the IT system and the possibility
of functional segregation as a result.
We selected journal entries on the basis of risk
criteria and performed specific audit procedures on
them. We assessed significant judgments made by
management, unusual transactions, related party
transactions. We assessed the appropriateness
and accurate application of accounting policies
in accordance with EU-IFRS.
We did not identify any specific indications of fraud or
suspicion of fraud in respect of management override
of controls.
Risk of fraud in revenue recognition
As part of our risk assessment and based on a
presumption that there are risks of fraud in revenue
recognition, we addressed the risk of fraud in revenue
recognition. This relates to the presumed management
incentive that exists to overstate revenue. As the
majority of the company’s revenue is recorded at the
time of sale, much of which is recorded through point
of sales systems and payment is made at the time of sale,
there is limited risk of management manipulation. Rather,
the risk of fraud in revenue recognition is focused on the
occurrence of inappropriate manual transactions.
Where relevant to our audit, we have evaluated
the design of the internal control measures that
are intended to mitigate the risk of fraud and error in
revenue recognition and assessed the effectiveness of
those measures. We also paid specific attention to the
processes surrounding the relevant IT systems.
Through data analysis, we tested both expected and
unexpected journal entries and performed relevant testing
on revenue transactions throughout the year and the
receivable balances at year end.
We did not identify any specific indications of fraud or
suspicion of fraud in respect of revenue recognition.
Audit approach on going concern
Management prepared the financial statements on the assumption that the entity is a going concern and that it will
continue its operations for the foreseeable future. Our procedures to evaluate management’s going concern assessment
included, amongst others:
• Considering whether management’s going concern assessment includes all relevant information of which we are
aware as a result of our audit, inquired with management regarding management’s most important assumptions
underlying their going concern assessment and considering whether management identified events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern;
• Analyzing the financial position per balance sheet date in relation to the financial position per prior year balance
sheet date to assess whether events or circumstances exist that may lead to a going concern risk;
• Analyzing whether the current and the required financing has been secured to enable the continuation of the entirety
of the entity’s operations, including compliance with relevant covenants;
• Evaluating management’s current budget including cash flows in comparison with the prior year, current
developments in the industry and all relevant information of which we are aware as a result of our audit; and
• Performing inquiries of management as to their knowledge of going concern risks beyond the period of
management’s assessment.
Our procedures did not result in outcomes contrary to management’s assumptions and judgments used in the
application of the going concern assumption.
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Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the
financial statements. We have communicated the key audit matters to the board of directors. The key audit matters are
not a comprehensive reflection of all matters identified by our audit and that we discussed. In this section, we described
the key audit matters and included a summary of the audit procedures we performed on those matters.
We addressed the key audit matters in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon. We do not provide separate opinions on these matters or on specific elements of the financial
statements. Any comment or observation we made on the results of our procedures should be read in this context.
Key audit matter
Our audit work and observations
Valuation of Goodwill
The Group describes its accounting policies
concerning business combinations and goodwill within
note 2.5 and provides details on the carrying amount
of goodwill and significant accounting estimates
involved in notes 2.6 and 12.
We focused on this area due to the significance
of the goodwill balance of TRY 54.5 million to the
financial statements and because the assessment of
management of the recoverable amount of the Group’s
Cash Generating Units (‘CGU’) involves judgements and
estimates such as the future results of the business and
the discount rates applied to future cash flow forecasts.
In particular, we focused our audit effort on
goodwill recognised in relation to the acquisition
of Pizza Restaurantları A.Ş. in Turkey amounting to
TRY 36 million in 2010.
The Group prepared a goodwill impairment assessment
as required by IAS36. Key assumptions applied in
the impairment assessment include amongst others,
the expected (average) product price, revenue
growth rates, product cost and related expenses.
Management determined these key assumptions based
on past performance and its expectations on market
developments. Additionally, management applies
discount rates, which reflects country specific risks.
Management concluded that there is sufficient
headroom between the recoverable amount of the
CGUs and the carrying values.
We evaluated and challenged the composition of
management’s future cash flow forecasts, the process
by which they were drawn up, and the consistency with
the by the board of directors approved budgets.
We compared the current year actual results with the
2021 figures as included in the prior year forecast and
concluded that the forecasts included assumptions that,
with hindsight, had been realistic. With the support of our
valuation expert, we benchmarked key market related
assumptions in management’s valuation model used to
determine recoverable amounts against external data,
including assumptions of future prices, revenue growth
rates and discount rates. Furthermore, we checked the
mathematical accuracy of management’s valuation model
and agreed relevant data, including assumptions on timing
and future capital and operating expenditure, to the latest
plans and budgets.
We assessed whether possible changes in the
key assumptions could lead to an impairment of the
recognised goodwill and assessed the likelihood of such a
change occurring given past and forecasted performance.
We found the Group’s estimates and judgements
used in the goodwill impairment assessment to be
supported by the available evidence and have not
noted material exceptions.
DP Eurasia N.V. Annual Report and Accounts 2021
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Management reportFinancial statementsAdditional informationOverview Independent auditor’s report continued
To: the general meeting and the Board of Directors of DP Eurasia N.V.
Key audit matter
Our audit work and observations
Recoverability of Deferred tax assets at Pizza
restaurants LLC (‘Domino Russia’)
The Group describes its accounting policies concerning
deferred tax assets recognition within note 2.5 under
‘Taxes’ and provides details on deferred tax positions
and accumulated tax losses within note 21, section
‘Deferred income tax assets recognition of Fidesrus’,
to the consolidated financial statements.
As of 31 December 2021, Domino’s Russia has carry
forward tax losses amounting to TRY 72.4 million,
which relate to the years 2013 to 2018.
Management considers that, despite the losses incurred
over past years, there is sufficient evidence that the
Company will be able to earn taxable profits in the near
future, which can be used to offset the carry forward
tax losses. In reaching this conclusion, management
considered the approved budgets, their track record in
meeting the budgets, its expansion strategy with own
stores as well as franchise-owned stores and the results
in the first three months of 2022. Based on the expected
taxable income and considering the related and inherent
risk of uncertainty related to future taxable profits,
Domino’s Russia’s recognition of deferred tax assets
amounts to TRY 14.5 million.
Due to the inherent level of uncertainty, the potential
limitations in the recoverability of deferred tax assets
and the significant management’s judgement involved,
we considered this a key audit matter for our audit.
Management provided us with a breakdown of the historic
losses by year and the composition of the carry-forward
deferred tax assets relating to tax losses.
With the support from our income tax specialists,
we evaluated and tested corporate income tax positions
taken by management and coordinated local tax issues.
We examined supporting documentation of the deferred
tax assets and assessed the recoverability through
agreeing the forecasted future taxable profits with
the approved business plan. We assessed whether
management’s five years business plan and potential
growth opportunities used in the forecasts were
consistent with those used in the impairment tests,
including the goodwill impairment assessment and
found no inconsistencies.
We have challenged the underlying assumptions
forecasted revenues and costs, ascertained inclusion
of all required elements in the forecasts and recalculated
taxable profits based on the applicable tax rates in Russia.
We also assessed the past performance and current year
results against previous business plans used by Domino’s
Russia to determine the future taxable income.
With the procedures performed above, we determined
that the methodologies and assumptions used by the
Group to assess recoverability of deferred tax assets
as at 31 December 2021 are reasonable.
Emphasis of matter – subsequent events (‘Conflict in Ukraine’)
We draw attention to the subsequent events paragraph (‘Conflict in Ukraine’) in the notes on page 149 of the financial
statements which describes the potential impact of the conflict in Ukraine on the business and the financial position of the
company. Our opinion is not modified in respect of this matter.
Report on the other information included in the annual report
The annual report contains other information. This includes all information in the annual report in addition to the
financial statements and our auditor’s report thereon.
Based on the procedures performed as set out below, we conclude that the other information:
•
is consistent with the financial statements and does not contain material misstatements;
• contains all the information regarding the directors’ report and the other information that is required by Part 9 of
Book 2 and regarding the remuneration report required by the sections 2:135b and 2:145 subsection 2 of the Dutch
Civil Code.
We have read the other information. Based on our knowledge and the understanding obtained in our audit of the
financial statements or otherwise, we have considered whether the other information contains material misstatements.
By performing our procedures, we comply with the requirements of Part 9 of Book 2 and section 2:135b subsection 7 of
the Dutch Civil Code and the Dutch Standard 720. The scope of such procedures was substantially less than the scope
of those procedures performed in our audit of the financial statements.
The board of directors is responsible for the preparation of the other information, including the directors’ report and the
other information in accordance with Part 9 of Book 2 of the Dutch Civil Code. The board of directors are responsible
for ensuring that the remuneration report is drawn up and published in accordance with sections 2:135b and 2:145
subsection 2 of the Dutch Civil Code.
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Report on other legal and regulatory requirements and ESEF
Our appointment
We were appointed as auditors of DP Eurasia N.V. since 2017 following the passing of a resolution by the board of
directors. Our appointment has been renewed annually by the shareholders representing a total period of uninterrupted
engagement appointment of five years.
European Single Electronic Format (ESEF)
DP Eurasia N.V. has prepared the annual report, including the financial statements, in ESEF. The requirements for this
format are set out in the Commission Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards
on the specification of a single electronic reporting format (these requirements are hereinafter referred to as: the RTS
on ESEF).
In our opinion, the annual report prepared in XHTML format, including the partially tagged consolidated financial
statements as included in the reporting package by DP Eurasia N.V., has been prepared in all material respects in
accordance with the RTS on ESEF.
The board of directors is responsible for preparing the annual report, including the financial statements, in accordance
with the RTS on ESEF, whereby the board of directors combines the various components into a single reporting
package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this
reporting package, is in accordance with the RTS on ESEF.
Our procedures, taking into account Alert 43 of the NBA (Royal Netherlands Institute of Chartered Accountants),
included amongst others:
• Obtaining an understanding of the entity’s financial reporting process, including the preparation of the reporting
package.
• Obtaining the reporting package and performing validations to determine whether the reporting package, containing
the Inline XBRL instance document and the XBRL extension taxonomy files, has been prepared, in all material
respects, in accordance with the technical specifications as included in the RTS on ESEF.
• Examining the information related to the consolidated financial statements in the reporting package to determine
whether all required taggings have been applied and whether these are in accordance with the RTS on ESEF.
No prohibited non-audit services
To the best of our knowledge and belief, we have not provided prohibited non-audit services as referred to in article 5(1)
of the European Regulation on specific requirements regarding statutory audit of public-interest entities.
Services rendered
The services, in addition to the audit, that we have provided to the Company or its controlled entities, for the period to
which our statutory audit relates, are disclosed in note 7 to the company financial statements.
DP Eurasia N.V. Annual Report and Accounts 2021
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To: the general meeting and the Board of Directors of DP Eurasia N.V.
Responsibilities for the financial statements and the audit
Responsibilities of the board of directors for the financial statements
The board of directors is responsible for:
• the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of
the Dutch Civil Code; and for
• such internal control as the board of directors determines is necessary to enable the preparation of the financial
statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, the board of directors is responsible for assessing the Company’s
ability to continue as a going-concern. Based on the financial reporting frameworks mentioned, the board of directors
should prepare the financial statements using the going-concern basis of accounting unless the board of directors
either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so. The board of
directors should disclose in the financial statements any event and circumstances that may cast significant doubt on the
Company’s ability to continue as a going concern.
The board of directors is responsible for overseeing the Company’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain sufficient and
appropriate audit evidence to provide a basis for our opinion. Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high but not absolute level of assurance,
which makes it possible that we may not detect all material misstatements. Misstatements may arise due to fraud or
error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of the financial statements.
Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified
misstatements on our opinion.
A more detailed description of our responsibilities is set out in the appendix to our report.
PricewaterhouseCoopers Accountants N.V.
B.A.A. Verhoeven RA
Amsterdam, the Netherlands, 4 April 2022
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DP Eurasia N.V. Annual Report and Accounts 2021
Appendix to our auditor’s report on the financial statements 2021 of DP Eurasia N.V.
In addition to what is included in our auditor’s report, we have further set out in this appendix our responsibilities
for the audit of the financial statements and explained what an audit involves.
The auditor’s responsibilities for the audit of the financial statements
We have exercised professional judgement and have maintained professional scepticism throughout the audit in
accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit
consisted, among other things of the following:
•
Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or
error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the intentional override of internal control.
• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
• Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the board of directors.
• Concluding on the appropriateness of the board of directors’ use of the going-concern basis of accounting, and
based on the audit evidence obtained, concluding whether a material uncertainty exists related to events and/or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report and are made in the context of our opinion on the
financial statements as a whole. However, future events or conditions may cause the Company to cease to continue
as a going concern.
• Evaluating the overall presentation, structure and content of the financial statements, including the disclosures,
and evaluating whether the financial statements represent the underlying transactions and events in a manner
that achieves fair presentation.
Considering our ultimate responsibility for the opinion on the consolidated financial statements, we are responsible
for the direction, supervision and performance of the group audit. In this context, we have determined the nature and
extent of the audit procedures for components of the Group to ensure that we performed enough work to be able
to give an opinion on the financial statements as a whole. Determining factors are the geographic structure of the
Group, the significance and/or risk profile of group entities or activities, the accounting processes and controls, and
the industry in which the Group operates. On this basis, we selected group entities for which an audit or review of
financial information or specific balances was considered necessary.
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit. In this respect, we also issue an additional report to the audit committee in accordance with article 11 of the EU
Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in
this additional report is consistent with our audit opinion in this auditor’s report.
We provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related actions taken to eliminate threats or safeguards applied.
From the matters communicated with the board of directors, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, not communicating the matter is in the public interest.
DP Eurasia N.V. Annual Report and Accounts 2021
165
Management reportFinancial statementsAdditional informationOverview ESG appendix
Reporting Guidance for environment metrics
Key Definitions and Reporting Scope
For the purpose of this report, the Company defines:
Natural gas consumption (m3)
Generator fuel – diesel (l)
Diesel consumption (l)
Gasoline consumption (l)
This indicator reflects the total purchased natural gas (volume – m3)
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 m3
on a consolidated basis.
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.
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.
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)
LPG consumption (l)
Cooling gas (kg)
Fire extinguisher (kg)
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.
This indicator reflects the total purchased LPG for the locations if the store
does not have natural gas purchase.
This indicator reflects the amount of R404a refrigerant purchased and used
at relevant locations.
This indicator reflects the amount of CO2 extinguisher purchased and used in
the relevant locations.
Direct (Scope 1) greenhouse gas
emissions (tCO2e)
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 (tCO2e)
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 (tCO2e)
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 (m3)
This indicator reflects the total water withdrawal by source (volume – m3)
at the relevant locations of the Company during the reporting period.
166
DP Eurasia N.V. Annual Report and Accounts 2021
Glossary
ADBP Annual and deferred
bonus plan
AFM Dutch Authority for the
Financial Markets
AGM Annual General Meeting
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)
Board The Board of the Company
Fidesrus Fidesrus B.V.
CEO Chief Executive Officer
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.
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 offering 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
DP Eurasia N.V. Annual Report and Accounts 2021
167
Management reportFinancial statementsAdditional informationOverview Contacts
Advisers
Company registered office and
business address
Dutch Legal Advisers to the
Company
Houthoff Coöperatief U.A.
UK Depositary Interest Register
Link Market Services
Trustees Limited
Gustav Mahlerplein 50
1082 MA Amsterdam
The Netherlands
External Auditors
PricewaterhouseCoopers
Accountants N.V.
Thomas R Malthusstraat 5
1066 JR Amsterdam
The Netherlands
4 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Financial PR
Buchanan
107 Cheapside
London EC2V 6DN
United Kingdom
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
168
DP Eurasia N.V. Annual Report and Accounts 2021
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