DP Eurasia N.V. Annual Report and Accounts 2022 Delivering together About us DP Eurasia N.V. is the exclusive master franchisee of the Domino’s Pizza brand in Turkey, Russia, Azerbaijan and Georgia. Domino’s Pizza is one of the most successful fast‑food brands worldwide and a global leader in home delivery. Ambition Integrity Cohesion Team spirit Strategy in action Find out more on pages 15 to 26 Sustainability in action Find out more on pages 42 to 44 Culture in action Find out more on pages 40 and 41 Our values 1 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information What’s inside Strategic report At a glance 2 Highlights 4 Key fi nancial fi gures 5 2022 Highlights 6 Chairman’s statement 7 Message from the CEO 9 Competitive advantages 12 Business model 13 Our purpose and strategy 14 Strategy in action: Innovation 15 Strategy in action: Growth 21 Strategy in action: Brand 22 COFFY 27 Strategic review 32 Stakeholder engagement 38 Culture in action 40 Sustainability in action 42 Task Force on Climate-related Financial Disclosures (“TCFD”) 45 Risk management 59 Group structure 77 Corporate governance Board 79 Leadership team 81 Board attendance and composition 82 Corporate governance report 83 Remuneration report 95 Directors’ remuneration policy 99 Annual remuneration report 110 Board declaration 121 Shares and shareholders 122 Financial statements Consolidated statement 127 of comprehensive income Consolidated statement 128 of fi nancial position Consolidated statement of 129 changes in equity Consolidated statement of 130 cash fl ows Notes to the consolidated 131 fi nancial statements Company income statement 178 Notes to the Company 180 fi nancial statements Additional information Independent auditor’s report 185 ESG appendix 195 Glossary 196 Contacts IBC COMPLIANCE STATEMENT This document is the PDF/printed version of the 2022 Annual Report of DP Eurasia and has been prepared for ease of use. The 2022 Annual Report was made publicly available, and was fi led with the NSM in European single electronic reporting format (the ESEF package). The ESEF package is available on the company’s website at www.dpeurasia.com and includes a human readable XHMTL version of the 2022 Annual Report. In any case of discrepancies between this PDF version and the ESEF package, the latter prevails. Time for COFFY Find out more on pages 27 to 31 CEO Q&A Find out more on pages 10 and 11 Community support Find out more on pages 42 and 43 A smart idea: Pizzetta Find out more on pages 16 and 17 2 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information At a glance Values Vision Mission Underpinning the Group’s ethical principles and business conduct are its core values of ambition, integrity, cohesion and team spirit. The Group’s vision is to be an international leader by utilising the best market practices to provide excellent services to both customers and the community. The Group’s mission is to create value for shareholders, whilst respecting the community in a socially responsible way. Ambition Integrity Cohesion Team spirit The Group is committed to improving its brand to overcome new challenges whilst demonstrating an eagerness to adapt and grow. The Group is dedicated to choosing the path that helps strengthen its principles of honesty, truth, loyalty and justice in the daily conduct of all workers. The Group aims to achieve the ambitious goals it sets through the contribution of all business units. Building on experience, the Group comes together to overcome new challenges. The Group operates globally in culturally diverse contexts and encourages a respect for diff erences, a sense of belonging, loyalty and reciprocity amongst all workers. Domino’s Pizza is one of the most successful fast-food brands and an international leader in home delivery, with global retail sales of over $17.5 billion in 2022 and more than 19,800 stores in over 90 markets. DP Eurasia is the fi fth-largest franchisee of the Domino’s Pizza brand owned by Domino’s Pizza, Inc. 3 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information At a glance continued The Group operates through both corporate and franchised stores. As of 31 December 2022, 14% of the Group were corporate stores, principally located in densely populated cities, while 86% were franchised stores. The corporate stores serve as a platform to develop best practices that the Group subsequently deploys in its franchised stores. TRY 3.6 billion system sales (2021: TRY 3.5 bn) 700 stores across three countries (2021: 629) 86% franchised store mix (2021: 83%) 81% of delivery online (2021: 76%) Where we operate Turkey 4 566 89 Georgia 6 — Azerbaijan 10 — COFFY Stores 10 19 Franchised stores Corporate stores Commissaries COFFY Domino’s • All Group figures exclude Russian business, which is now a discontinued operation. • All Group figures are restated according to hyper inflation accounting. • All Group and Turkey figures include COFFY. Like-for-like and online delivery figures exclude COFFY. 4 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Highlights Operational highlights (from continuing operations) • Online delivery system sales increased to 81.2% (2021: 76.3%) as a share of delivery system sales(1), reflecting our robust positioning of the online ordering channel. Turkish online system sales(2) growth was 1.6% (pre-IAS 29: 75.7%). • Turkish net new store openings of 48 for Domino’s Pizza, higher than guidance range of 30-40 for 2022, reflects strong demand and maintained network expansion momentum, building on the record year experienced in 2021. • The Group opened two new stores in Georgia, bringing the total number of stores to six in the country. • The COFFY network increased by 21 stores to reach 29, with solid ongoing franchisee demand. COFFY continues to represent an excellent growth opportunity for the Group. • The Board is deeply saddened by the earthquake that devastated prominent cities in Turkey in February, and regrets to disclose that four colleagues lost their lives. Twelve out of the total 655 Domino’s Pizza stores in Turkey are not operational, and the Group is working on several options, including moving those stores to other cities. A specific project currently being developed is opening prefabricated stores in the affected regions. The impact of the earthquake on our operations is not expected to be material to 2023. Financial highlights (from continuing operations) • Group revenue increased 7.6% (pre-IAS 29: 86%) and system sales(3) were up 1.5% (pre-IAS 29: 76%), reflecting healthy growth against very strong comparatives. • Removing the beneficial impact of the 2021 VAT reduction, the Group’s LfL performance was flat as the pace of inflation was met. The VAT reduction, of 7pp to 1%, lasted until the end of September 2021. Overall, the Group’s LfL performance(4) was -5.3%. • Adjusted EBITDA(5) increased 5.3% to TRY 311 million and was achieved in a difficult cost environment as Turkish operations faced an average 72% headline inflation during the year. • Adjusted net income(6) (from continuing operations) increased 50% to TRY 214 million (2021: TRY 143 million). • The Group maintained a strong liquidity position as of 31 December 2022, with TRY 360 million cash (excluding cash of Russia) and an undrawn bank facility of TRY 225 million as of 31 December 2022. • Adjusted net debt(7) was TRY 562 million as of 31 December 2022. 5 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Notes: • All Group figures exclude Russian business, which is now a discontinued operation. COFFY numbers are included in all Turkey and Group figures, unless presented separately. Like-for-like figures exclude COFFY. (1) Delivery system sales are system sales of the Group generated through the Group’s delivery distribution channel. (2) Online system sales are system sales of the Group generated through its online ordering channel. (3) System sales are sales generated by the Group’s corporate and franchised stores to external customers and do not represent revenue of the Group. These numbers are not audited. (4) Like-for-like growth is a comparison of sales between two periods that compares system sales of existing system stores. The Group’s system stores that are included in like-for-like system sales comparisons are those that have operated for at least 52 weeks preceding the beginning of the first month of the period used in the like-for-like comparisons for a certain reporting period, assuming the relevant system store has not subsequently closed or been “split” (which involves the Group opening an additional store within the same map of an existing store or in an overlapping area). This is a non-IFRS measure and non-IFRS measures are not audited. (5) EBITDA, adjusted EBITDA and non-recurring and non-trade income/expenses are not defined by IFRS and non-IFRS measures are not audited. These items are determined by the principles defined by the Group management and comprise income/expenses which are assumed by the Group management to not be part of the normal course of business and are non-trading items. These items which are not defined by IFRS are disclosed by the Group management separately for a better understanding and measurement of the sustainable performance of the Group. Reconciliation of EBITDA, adjusted EBITDA with consolidated financial statements will be presented in Note 3 of Group financial statements section of our annual report. (6) Adjusted net income is not defined by IFRS and non-IFRS measures are not audited. Adjusted net income excludes income and expenses which are not part of the normal course of business and are non-recurring items. Management uses this measurement basis to focus on core trading activities of the business segments and to assist it in evaluating underlying business performance. Reconciliation of EBITDA, adjusted EBITDA with consolidated financial statements will be presented in Note 3 of Group financial statements section of our annual report. (7) Net debt and adjusted net debt are not defined by IFRS and non-IFRS measures are not audited. Adjusted net debt includes cash deposits used as a loan guarantee and cash paid, but not collected during the non-working day at the year end. Management uses these numbers to focus on net debt including deposits not otherwise considered cash and cash equivalents under IFRS. Adjusted net income (from continuing operations) in TRY million 214 Growth: 50% (pre IAS29: 156%) Key financial figures (after IAS 29) System sales in TRY million 3,573 Growth: 1.5% (pre IAS29: 76%) Adjusted EBITDA in TRY million 311 Growth: 5.3% (pre IAS29: 93%) Like-for-like growth -5.3% Growth: VAT adjusted flattish LFL (pre IAS29: 62%) Revenue in TRY million 2,220 Growth: 7.6% (pre IAS29: 86%) Online as a % of delivery 81.2% Growth: 4.9pps 3,521 2,063 3,573 2,220 2022 2022 2021 2021 296 311 2022 2021 26% 2022 2021 76.3% 81.2% 2022 2021 -5.3% 143 214 2022 2021 6 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information 2022 Highlights Turkey’s Lovemarks While 2022 was a challenging year, our customers rewarded us with the Lovemark. We felt proud of being the most loved pizza store in Turkey, and winning showed us how well-suited our action plan was in gaining and maintaining customers. We know that this award refl ects both the steps we have taken this year and the love and support that we receive from our customers. COFFY We have created a new model in coff ee culture in Turkey by off ering all types of coff ee at a single price. In addition to coff ee, we have brought our innovative brand approach to new products which have been greatly appreciated by our customers. In 2022, COFFY made many improvements to enhance the customer experience in both the app and the store. As at the end of 2022, we have 29 COFFY branches in fi ve cities of Turkey helping us achieve healthy growth by applying the castle strategy that has supported Domino’s growth. Sustainability Our eff orts and interest in sustainability continues to grow with new and existing projects. The Group’s aim is to strengthen and incorporate our sustainability strategy throughout all operations. This year, community support was very important to us and we developed projects with the Education Volunteers Foundation of Turkey (“TEGV”), Turkey’s most widespread non-governmental organisation operating in the fi eld of education. We are also focused on decreasing our environmental impact, and will take continued action to mitigate and adapt to the possible impacts of climate change through our operations. Innovation Innovation lies at the heart of our business. At Domino’s, we expand our menu every year with brand-new products based on our expertise in pizza. This year, due to changing economic conditions and rising food costs, we developed more aff ordable off erings for our customers. On the digital side, we strengthened the food-tech company perspective with new innovations in our online channels. The success of this can be seen in our improved new user acquisition and retention rates 7 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Chairman’s statement This year, we refl ect on a year in which the Turkish economy faced major infl ation challenges and serious challenges to our Russian operations. Despite these diffi culties, our colleagues have delivered another year of strong performance. The Board remains committed to the development of the business and continues to invest in our people, technology and products. Financial results Group system sales increased by 13.1% (pre-IAS 29: 76.5%), refl ecting our ongoing focus on network expansion, strategic pricing, and product innovation, as well as excellent growth in and demand from our COFFY proposition. In Turkey, we opened 48 new stores (net), refl ecting strong demand, and maintained network expansion, building on the record year in 2021. Our focus Innovation, in respect to both our products and technology, continues to be the main driver of our strong performance. In 2022, the Group remained dedicated to maintaining Domino’s unique cultural elements in food and integrating them with new technology-driven business needs. With the investment in innovations made in our digital channel, and the inclusion of new channels in the aggregator in our system, we achieved 79.6% growth in digital channels and increased the digital share of online channels in total sales to 69%. Corporate governance We continue to strive for transparency for shareholders and other stakeholders, with a view to maintaining and enhancing our corporate culture and governance framework. The corporate governance report set out on pages 78 to 125 provides details on how we are continuing to foster an environment of entrepreneurial leadership and innovation through a framework of responsible governance and risk management. Minority shareholder protection Following Jubilant’s reverse bookbuild process in October 2021, and the shareholder feedback during that process, it had become clear that the UK Takeover Code and the Dutch takeover rules were no longer applicable to the Company as a consequence of Brexit. This was a situation that needed to be addressed as soon as possible. The Board has unanimously proposed additional takeover protection for minority shareholders. At the extraordinary general meeting on 13th April 2022, a large majority of the registered shareholders voted in favour of the proposed resolution to ensure share protection is embedded in the Articles. People These results are a tribute to the ongoing dedication and commitment of Aslan and his teams during the past year; especially managing the business so well through uncertainty due to infl ation challenges. I would like to thank Aslan and all of our employees and franchisees for their valuable contribution and determination to succeed. Situation in Russia As announced earlier, the Board continues to evaluate its presence in Russia and is considering various options, which may include a divestment of Russian operations. Whilst work on a potential transaction is ongoing, there can be no certainty as to the outcome. Outlook The Board has been closely monitoring the Group’s strategy as well as the fi nancial and operational performance throughout the year. We believe that with a sound management team and with committed franchisees, the Group is in a solid position to continue its growth strategy. We thank you for your ongoing trust and commitment to the Group. The Board is committed to focus on the development of the business by continuing to invest in people, technology and products. Peter Williams Chairman February April June August October December January Cheddarlı Dev Sosisli Pizza and Chessy Bread variant launch Bol Lezzetler Series launch (Bol Malzemos Pizza, Ocakbaşı Pizza, Cheddarlı Dev Sosisli Pizza and Cheesy Bread Variant Tenth store opening (Ankara Kızılay) New city (Bursa) opening Wallet pay back development Pizzetta launch Basketball court renovation with Tegv in Mardin Çokominos new variant (Çokominos with cherry and Çokominos with caramel) Coff y expanded into Izmir, with three corporate store openings Five-Segment Transition Kantin Pizza and Favori İkili Pizza launch Opening of the second university campus store (Doğuş Üniversitesi) New cold drink, Bubble Bombs, launch. New city (Antalya) opening Two new corporate stores opened in Instanbul Pendik fl agship store opened First kiosk store opening (İstanbul Hilltown). New sandwiches launch Domino’s Turkey awarded the Lovemark March May July September November 8 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Chairman’s statement continued Changes in the Board In recognition of the importance of good governance as a Board, we committed in our last Annual Report that we would recruit additional independent Non-Executive Directors to ensure that the composition of the Board and its committees would be fully compliant with the UK Code. In 2022, we welcomed Mr Burak Ertas as Independent Non-Executive Director. He was appointed at the Annual General Meeting (“AGM”) in June. After six years as Chairman of the Board, I have taken the decision to retire at the 2023 AGM. I will be succeeded by Mr Ahmet Ashaboğlu, who was appointed as an Independent Non-Executive Director at an EGM in September 2022. Ahmet Ashaboğlu has already made a signifi cant contribution to the board discussions and I wish him well in his new role. On a wider note, I would like to thank the Board and the senior team for their support and work over the period I have had the privilege to be Chairman. I wish them, and the Company, every success for the future. Peter Williams Chairman 19 April 2023 Key Events 2022 Domino’s Coff y 9 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information I would like to extend our condolences to all grieving families who lost loved ones during the devastating earthquake that impacted prominent cities in our country. We continue to stand in solidarity with our employees, business partners and community in this diffi cult time. Having worked extremely hard to combat the high levels of fi nancial volatility in the regions where we operate, I am pleased to report solid results for the year. Strong trading momentum was maintained, thanks to the healthy dynamics of the sub-sectors the Group operates within and the team’s careful navigation of the obvious challenges, infl ation being one. Our growth is continuing and 2023 has started well, with solid LfL growth rates resulting from our capabilities, experienced team, and culture. We have an innovative and customer-centric mindset, helping us to grow in a healthy manner as we pursue long term and sustainable profi t. In 2022, our LfL performance caught up with the rapid pace of infl ation, as we successfully implemented our targeted action plan to overcome macro factors largely outside of our control. Whilst work on a potential transaction is ongoing, there can be no certainty as to the outcome Our clear and targeted strategy focuses on three areas – strategic pricing and product innovation, continued digital innovation, and operational excellence for everyday effi ciency. This approach has enabled us to combat the high volatility levels, which has been demonstrated through our volume generation and customer acquisition. Despite unprecedented cost pressures, adjusted EBITDA grew 5.3% and adjusted net income increased by 50%. Our focus on product innovation is integral, allowing us to present a broad choice to customers who increasingly seek value and aff ordability amidst the infl ationary environment. Pizzetta, which costs USD $1, has become very successful since its launch in Q4. We also introduced a ‘snacks from the oven’ range, completing our suite of value options and highlighting our drive for sustained innovation. In 2022, we continued to improve the online proportion of our sales, and digital innovation remains an important enabler for us to enhance the customer experience and solidify our robust positioning for the online ordering channel. We retain a fundamental commitment to ensuring franchisees remain profi table. As a result, franchisee demand was very strong in 2022 and our Domino’s Pizza network in Turkey grew by 48 stores. We maintain a healthy pipeline with sustained franchisee interest and are confi dent that 2023 will be another excellent year for network expansion. COFFY, our own brand, strengthened its presence in the Turkish market with an accelerated expansion programme. Having developed multiple store concepts to fi t in with local circumstances, the COFFY network reached 29 stores in fi ve cities at year-end. Franchisee demand stands very strong owing to COFFY’s proven sales performance. This demand, alongside our ambitious targets for 2023, will enable us to add further scale in a sub-sector that is of increasing popularity. 2022 was a year that proved our resilience and agile executing capabilities. I am very pleased to be delivering strong store growth and maintaining healthy profi tability levels at the same time. Our regional markets are blessed with unique growth opportunities and, while volatility is set to continue, the Board expects another set of strong results in 2023. Aslan Saranga Chief Executive Offi cer 19 April 2023 On behalf of the Board, I am pleased to report solid results for 2022 as we worked hard to combat the high levels of fi nancial volatility in the regions in which we operate. Aslan Saranga CEO Message from the CEO 10 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Q&A with our CEO How important is growth potential to the business? How are you addressing hyperinfl ation in Turkey? Growth is an essential part of our strategy. “Nobody delivers like Dominos” has been our unfailing motto over the years. And we always kept our promise thanks to our “castle strategy”, which enabled us to establish greater area coverage throughout the country. We will further capitalise on our strong market positions when demand supports profi table growth. The Group evaluates store openings on competition, number of households and GDP per capita. This has been a clear challenge for our business, but thanks to our solid action plan and strong positioning in the Turkish market, we have maintained our business momentum and acquired new customers in these diffi cult times. Product and digital innovation, together with diligent pricing and campaign strategies, have been the backbone of our targeted action plan. Meanwhile, our Group’s robust purchasing power and smart supplier agreements through the year enabled us to be fl exible in a high-cost environment. How signifi cant is digital to your growth? We always emphasise our ambition to be a regional “food-tech company” that brings digital excellence to the pizza delivery business. Therefore, digital innovation lies at the core of our operations. Our Group’s online capabilities and platform off er many tangible benefi ts, including ease of ordering, higher frequency, lower in-store labour costs and increased consumer loyalty and brand awareness. The majority of our investments focus on further advancing our digital off ering to improve our customers’ delivery and takeaway ordering experience. Aslan Saranga Chief Executive Offi cer 11 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Q&A with our CEO continued What drove the changes to the Board this year? In recognition of the importance of good governance, we committed in our last Annual Report that we would recruit additional independent Non-Executive Directors in order to improve compliance regarding the composition of the Board and its committees with the UK Code. In 2022, we welcomed both Mr Burak Ertas and Mr Ahmet Ashaboğlu as Independent Non-Executive Directors. What do you see as the biggest challenges to delivering DPE’s strategy in 2023? We managed to weather challenges and deliver strong growth in both profi tability and the store network. I believe this is strong proof of our outstanding ability to execute on our strategy. We are operating in a region with unique growth opportunities, as well as volatile macroeconomic and geopolitical conditions. While keeping this in our minds, and managing our business very carefully, we believe that we will deliver strong growth and fi nancial performance in 2023. What’s the situation regarding Russia? During the year, we monitored the situation in the region closely, with the safety and welfare of all the Group’s employees and customers remaining our top priority. In the meantime, the Group limited investment in Russia and focused on optimising the existing store coverage; resulting in the closure of 29 stores in 2022. As we have announced publicly, our Group is now considering various options which may include a divestment of its Russian operations. Whilst work on a potential transaction is ongoing, there can be no certainty as to the outcome. 12 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information 12 DP Eurasia N.V. Annual Report and Accounts 2022 [•] continued Competitive advantages Founder-led, experienced management team Leading market positions Strong online capabilities underpin DP Eurasia’s growth Simple and scalable, asset-light business model Track record of resilient and profitable growth as well as strong cash conversion Highly attractive, under-penetrated markets with substantial growth potential in the Group’s addressable segments Globally proven business model successfully applied and adapted to DP Eurasia’s local markets Highly attractive customer proposition and strong brand equity 13 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Business model Our asset-light and scalable business model allows for continuous investment in our people, our products and our digital platforms, delivering sustainable value to all our stakeholders. Large-scale network Low-cost centralised supply chain Globally recognised brand Disciplined approach Competitive strengths Our operating model Corporate and Franchised stores Sales and delivery Local marketing Headquarters Commissaries Centralised strategy, marketing and IT Procurement (food and non-food) logistics Corporate and Franchised stores Sales and delivery Local marketing Aligned to our stakeholders’ interests Customers Shareholders Franchisees Employees Suppliers Community 14 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Store network growth Our purpose and strategy Our purpose DP Eurasia’s objective is to be a tech company delivering pizza. Our purpose is to create value by bringing people together through our collaborative workplaces, intuitive digital platforms and a popular range of products, enabling us to reinvest in our priorities: people, product and digital. Strategic pillars Ambition As the online channel becomes more prominent in the Group’s sales mix and continues to drive like-for-like growth, the Group’s ordering channel strategy is focused on the development of proprietary online ordering platforms for delivery and takeaway. The Group plans to capitalise on its strong market positions in its existing markets, where it believes there is signifi cant capacity for further Domino’s Pizza stores. It intends to open new corporate and franchised stores, including “splits” of existing stores where demand supports further profi table growth. The Group evaluates its store locations from the perspective of potential sales, level of competition, number of households and GDP per capita. The Group believes that the operating leverage in its business in Turkey can create further value as the store and online footprint continues to increase. The nationwide scale of the Group’s operations reinforces brand awareness, making Domino’s Pizza a household name in Turkish fast food, thereby further driving sales and the system stores’ contribution to the Group’s national advertising initiatives. While the Group’s current focus is on the development of the business in its current markets, the Group may consider acquiring other master franchise licences and expanding to territories currently unpenetrated by the Domino’s System, as well as expanding with new brands in its existing markets. The Group’s online delivery system sales as a percentage of delivery system sales has reached 81.2%. Franchisee demand was very strong in 2022 and Domino’s Pizza network in Turkey grew by net 48 stores. 2022 was also the year that the Group’s own brand, COFFY, strengthened its presence in the Turkish market. COFFY’s network reached 29 stores in fi ve cities at the year end. 2022 was underpinned by high food infl ation and supply bottlenecks. The Group navigated these challenges thanks to its leading position in the market. In a diffi cult year, the Group managed to increase its EBITDA by 5.3% infl ation adjusted growth. The Group’s own innovative brand, COFFY, strengthened its position in the Turkish coff ee market with increased customer awareness and store network. The Group actively evaluates the opportunities that could create similar synergies with the existing business lines. 2022 performance Focus on innovation and online ordering to drive like-for-like growth Leveraging scale advantage to further improve profi tability Potential for further international and brand expansion Growth Brand 15 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Innovation Strategy in action Product innovation is our key strength The Group believes that its disciplined approach to product innovation is a key diff erentiator from its competitors and is based on: • an understanding of customer preferences based on data from the Group’s customer relationship management (“CRM”) database, direct customer questionnaires in stores and market research; • strict food cost and ingredient planning in creating new recipes; • fi eld tests before in-store pilot testing with consumers who visit the store; and • in-store pilot testing four to eight weeks before rollout across the system stores. Due to changing economic conditions and rising food costs, we have developed the Pizzetta product to offer an affordable product to the customer. Although Pizzetta is defined as a by-product, it is actually a type of pizza. 16 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Which product innovations have made an impact this year? Pizzetta We’ve made two standout moves in this product: 1. by calculating the area, we concluded that less product was used in a rectangular shape than a circle; and 2. instead of the high-cost pizza box, we broke the mould and presented the pizza to the customer in paper bags. Thanks to these two moves, we were able to offer the customer a product with a starting price of TRY 19.99. In particular, offering the pizza in paper bags allowed the customer to “eat pizza whilst walking”. We offered customers the opportunity to dine in and eat the Pizzetta on the premises if preferred. By implementing a 360° launch plan, we also attracted new customers to Domino’s. With the success of the launch, we sold 450 pizzas per week per store. By creating a new category, we increased our order level from 820 average weekly orders (“AWO”) to 980 AWO. Pizzetta launch – brand As Domino’s, we expand our menu every year with brand new products based on our expertise in pizza. This year, with Domino’s continuous innovation approach, we have launched the four-edge pizza, Pizzetta, which an alternative, affordable pizza during a period of hyper inflation. To launch Pizzetta, we planned a large-scale launch campaign using both mainstream and digital channels. During the launch period, we have adopted the motto of “Low in price, great in taste”. Our aim was to get a share of the growing take away market, with an offering at the most affordable price. We emphasised the differentiating shape of the four-edge Pizzetta in our commercials and other materials. We have included three different target groups with mother‑child, youths, and tradesmen; three different occasions and three different ways of eating with three different commercials. In the commercials, the young eat the Pizzetta without slicing it in the park, the tradesmen sliced it at lunch, and the mothers and children divided the Pizzetta into two after school. We collaborated with creators on TikTok to launch Pizzetta as the platform is growing daily and has a great overlap with our target audience. We decided to partner with TikTok creators who are mothers and young people to reach our target audience. We got content from each creator for different occasions as they promoted Pizzetta. With a total of eleven different influencers, we have gained access to 9 million unique people from different target groups with the content shown 105 million times. Each unique user watched the relevant content 2.5 times on average. We had 214 thousand visitors to our website through these campaigns. In addition, 536 comments, over 81 thousand likes, and more than 10 thousand followers were acquired. In total, more than 437 thousand interactions were achieved with the relevant target audience. Strategy in action continued Innovation 17 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategy in action continued Innovation Following the positive response we received via digital channels during the launch of Pizzetta, we planned another digital project with our brand ambassador, actor Enis Arıkan. We did an “Instagram Takeover” where Enis Arıkan shares moments on the official Domino’s Turkey account of him surprising people by going to various Domino’s branches and ordering Pizzetta. In Masterchef, the most watched cooking competition TV show in Turkey, we carried out two separate advertorials focusing on the taste and attractive price of Pizzetta to large audiences. We received 796 million impressions and 3.5 million clicks in total at the launch. We reached 23.4 million new people in total, providing 112 million impressions and 50 thousand web visitors. We achieved 14 billion post likes, 421 comments, 154 post registrations, and 1,919 posts shared. On YouTube, we achieved 30 million viewers, 317 million impressions and 360 thousand in traffic. As a result of all these launch efforts, we sold 4.2 million Pizzettas in four months from the launch period. 18 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Digital: How have we enhanced customer experience? With the investments we made in our digital channels, and the inclusion of new channels in the aggregator in our system, we achieved 79.6% growth in digital channels and increased the digital share of online channels in total sales to 69%. We have included Trendyol Yemek, a new player on the aggregator side, in our sales channels this year. In addition to the special campaigns we made with all aggregators, we have maximised our new customer acquisition through the media support they generate. In addition, we provided average order value management and coupon maximisation with the menu strategy we applied for all aggregators. We continued innovations to increase new user acquisition and retention rates in online ordering (“OLO”). We implemented the use of Storyly on the mobile app and website, which users are familiar with from other social media platforms, producing a 5% increase in conversion rate, as well as doubling spend through the Domino’s wallet. Our most crucial implementation in terms of personalisation is the development of the “Suggested Menu” where we highlight comparisons to the previous orders of the users. In addition, we have completed the upsell development in the basket step, where we recommend products based on past purchases and current baskets. With these steps, we realised an uplift of +2.81 points in the conversion rate, or a 10% increased basket size. At the same time, we increased items per order and users’ interaction on our online channels by showing discounted products to users with our third-party gamifi cation schemes such as Wheels and Scratchcards. To improve our registered customer data and increase our app users, we have built a feature where we can off er special discounts to the fi rst and second orders of users who download the app and are members of the loyalty program. Through this, we have raised the number of new app users by 9%. Moreover, we have grown our active users by 14%, especially with the campaign setups we ran specifi cally for the mobile app. In June, we added a payback feature to the Domino’s wallet development that we integrated in 2021, where customers can load money, spend on online channels, and earn money as they load. Through this, we started to return a certain amount of money to the wallet when customers spent from Domino’s wallet. Additionally, we have developed an additional module that can quickly load money at the checkout step when the wallet balance is low. Due to this, the use of Domino’s wallet has doubled. Strategy in action continued Innovation As Domino’s, we strengthened the food-tech company perspective with new innovations in our online channels. 19 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategy in action continued Innovation Product: The Group’s store menu off ers globally recognised pizza products, which are tailored to local tastes. It also off ers products outside of pizzas to suit customer preferences such as oven-baked sandwiches, wraps and a wide chicken off er. There are also complementary products such as desserts and other side dishes – some of which have been developed by the Group’s innovation centre in Istanbul and subsequently adopted by other master franchisees of Domino’s Pizza around the world. 20 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategy in action continued Innovation New product innovations of the Group in 2022 Cheddar Dev Sosisli Pizza After the Ocakbaşı launch in 2021, we launched the Cheddar Giant Hot Dog Pizza, where we targeted the Generation Z demographic and brought them together with the trending cheddar-sausage duo. In this way, our pizza range has reached 27 items. Cheddar Dev Sosli Pizza sold 20 units weekly per branch and generated TRY 750 average weekly unit sales (“AWUS”). It received a 1.5% share from Pizza mix. Cheese Bread variant In order to increase the share of the much-loved Cheesy Bread product, which is among the iconic products of Domino’s Turkey, two new Cheesy Bread varieties have been added to the system: Mediterranean Cheesy Bread and Cheesy Bread with Sausage. Because of this initiative, sales in the Bread category increased from 55 to 70 pieces per week per store. Bol Malzemeli Seri launch – brand At Domino’s, we have had another year where we continued to create systems and campaigns that respond to the requests of our customers. We were inspired by one of our most loved products, Bol Malzemos, and set off to produce a new product. In this context, we created a new sub-category for pizza with the concept being for the customer who enjoys plenty of ingredients in their orders. In this sub-category, we have included a wide variety of breads with cheese, a large meat Ocakbaşı Pizza, a giant sausage pizza, amongst other products to suit diff erent preferences. To communicate the launch of abundant tastes, we created our table theme, which emphasised our diversity in local store marketing (“LSM”) materials, and during the launch we drew attention to the taste of more than one of our products with imagery. With the emphasis on “very aff ordable and plentiful tastes” in our visuals, which was broadcast on television screens from 4 February 2022, we made a signifi cant contribution to our goal of strengthening our price, service, product and image-oriented communications that we set at the beginning of the year. This was the year where we listened to our customers and said “Taste is at its peak again” with Domino’s. Five-segment transition In response to rising raw material prices, we switched to a fi ve-segment to manage food cost profi tability. Our new segment name is “Trend” and we moved most pizzas to an upper segment group and received +1 TRY uplift per pizza and received inc TRY 1,000 average weekly unit sales. We also achieved 2% food cost1 saving. The original four-segment structure consisted of: Original 4-segment structure 49% enterprise pizzas 34% mixed pizzas 11% special pizzas 6% gourmet pizzas When transitioning to the fi ve-segment structure, the fi gures switched to: 42% enterprise pizzas 30% mixed pizzas 15% special pizzas 6% gourmet pizzas 7% trend pizzas New 5-segment structure Kantin Pizza and Favorili İkili Pizza With the new fi ve-segment transition, we created an intermediate price point due to increasing food costs, and added two new pizzas in order not to lose a share in the entry price due to the segment transition. Thus, we have maintained our pizza variety in the entry segment. In addition, these pizzas made up 4% of our total range of pizzas. Çokominos – new variants In order to expand the dessert category, we decided to increase the popular Çokominos varieties. Taking advantage of the cherry and caramel ingredients that were trending at that time. We released new cherry and caramel sprinkles and the Cherry Cokominos and Caramel Cokominos. Although there was no launch investment, the number of Cokominos products increased from seven to nine per week per store. In addition, we have expanded the product range that we will use in the hourly digital off ering. (1) Food cost shows how much the cost in the bill of materials (“BOM”) covers the sales price, excluding VAT. 21 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategy in action continued Brand Innovation Growth In the 2022 fi nancial year, we opened a total of 50 new Domino’s stores in Turkey. 24 of these stores are in new locations and 26 of them are split stores. In December 2022 alone, 17 new stores were opened. With the opening of these stores, our total number of stores reached 655 as of 31 December 2022, comprising 89 corporate stores and 566 franchise stores. While opening new and split stores, we focused on optimising the target number of households to 20,000, and the population to 50,000. We selected the new locations by comparing them with the system average based on the delivery and takeaway forecasts. For the whole system, delivery share was 75% and the carry-out share was 25%. For the stores we opened in 2022, delivery share was 66% and the carry-out share was 34%. In addition to the store openings, we had eleven corporate-to-franchisee and 38 franchisee-to-franchisee handovers during 2022 (six homegrown). 18 new franchisees were added to the system (new openings and handovers). As of the end of 2022, we had 295 legal entities, which corresponds to 436 franchisees, including partners. We currently have 140 single store, 22 fi ve+ store, and four ten+ store franchisees. With four new female franchisees, the total number of female franchisees reached 39. While opening these stores we utilised diff erent partnership models, such as FR and Operator, Operator and Investor and FR and Investor, helping us reach 50 new store openings. During 2022, we have developed the existing ‘Kaizen Plus’ concept and came up with a new concept, Kaizen Flex, which has a lower investment value and a shorter ROI. 48 new Domino’s store openings in Turkey 4 Franchise s have more than ten stores 39 female franchisees 22 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategy in action continued Brand We have shaped the price, service, product and image-oriented communications to the needs and expectations of our customers to create new stories and memories, and enhance brand-customer relations in 2022. Sponsorship EuroLeague At Domino’s Turkey, we are in our third sponsorship year with the EuroLeague, the most prestigious basketball organisation in Europe.. The sponsorship is one of our main projects that supports the “Domino’s Feeds Sports” slogan, which is used in our communications with young and sporty audiences. This year, thanks to this sponsorship, we have reached millions of basketball fans. As in previous years, we continued our EuroLeague-specifi c campaigns in 2022. In addition to the campaigns which brought incremental sales, the brand perception of Domino’s and the awareness of sponsorship among our target audiences were both enhanced by increasing our communications, especially during the Final Four period. In this respect, we actively used TV commercials, the design of our restaurants, digital advertisements and social media channels throughout the season. During the Final Four period, we shared the excitement of more than 500 thousand people with our EuroLeague fi lter, which was specially prepared for Instagram. Due to the pandemic, in recent years we had to move forward with a diff erent structure regarding EuroLeague related content. As the impact of the pandemic starts to lessen, this year we looked to social media as our key platform to promote the sponsorship. Within the scope of our sponsorship agreement, we gave more weight to digital channels in the 2022-2023 season for the content we receive from all teams. Special content for TikTok and Instagram was shot with Turkish teams Anadolu Efes and Fenerbahçe Beko. While appreciating digital channels, we aimed to reach the target audiences more eff ectively with our strength in our App and Web channels. We shared the excitement of our target audiences by having content that is much more coherent with the social media world on the days of the Turkish teams’ matches, and in line with this content, we reached more than 8 million views and experienced more engagement. In terms of our sales performance during EuroLeague match hours, we reached our highest performance in the sponsorship period. I Innovation Growth 23 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Lovemark Domino’s has been awarded with the Lovemark While it was a tumultuous year in regards to economic challenges, it was also a year that customer behaviours changed and transformed. But the trust and love our customers have for us has been offi cially recognised with the Lovemark Reward for the fi rst time for Domino’s Turkey. We have emerged through a period that was full of distrust, anxiety and economic challenges, where customers limited their arbitrary spendings and increased their savings. While struggling with high infl ation, we have never turned a blind eye to the needs of our customers whilst they struggled with infl ation. We knew our customers were loyal to us and would return to us if we provided them with the necessary service. In the fast-food restaurant/pizza category, we have become “The Technological Brand of Turkey”. We aspired and achieved to become the lead in the pizza category, and were announced as a reputable name in that list in March 2021. One of our largest demographics, Generation Z, proved their loyalty to the brand by presenting the academy youth index G250 reward. We have not just become the most infl uential brand in the pizza category, but also became the most trusted and preferred brand in Turkey for the younger generation. As we pass through a challenging year, our customers rewarded us with the Lovemark. This year we felt proud of being the most loved pizza store of Turkey, and it demonstrated the success of our strategy to gain and maintain customers. This award recognises the unwavering love and support of our customers, as well as the steps we have taken in the year. By successfully analysing the buying habits of our customers, we knew that we were taking the steps that were infl uencing their actions and habits. We will continue to grow that love as a brand that has succeeded to win customers’ favour during crises such as the COVID-19 pandemic and the cost-of-living crisis. Strategy in action continued Brand 24 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategy in action continued Brand How have we used social media to engage customers?: Social media and TikTok According to recent research, almost half of all internet users of working age actively visit their social platforms to learn about brands and research the products/services they are considering purchasing(1). According to statistics, an average internet user spends more than two and a half hours on social media per day. This year, social media has been one of the most important tools to strengthen our image and communicate with our customers as Domino’s, being active in the places where our customers are. This year, we differentiated our social media platforms and actualised the strategy of publishing content for each social media channel. We have supported our “We need to be wherever our customers are” motto by including TikTok and using it effectively through ongoing IG posts, reels and stories. Our main aim was to build strong connections with our target audience over different social platforms. We have accomplished our projects on social platforms by delivering the right content to the right people, our posts are especially effective with the younger generations, who are our main target audience. In 2022 we entered a new era that will use TikTok more frequently with the announcement of the Pizzetta. By utilising influencer marketing as a key tool, in the year we have strengthened our marketing by having unique, digital only projects for the first time. Until this year, our celebrity‑sponsored projects were mainly broadcast on television, so we have expanded our digital influence this year by producing only digital projects. We have achieved 9 million singular views and 105 million views by working with eleven influencers during the Pizzetta launch. Our main objective was to expand the reach of a standard communication strategy and directly communicate with our target audience while building our strategy for TikTok. During this process we have reached different audiences by publishing different content. Platform-based customer communication was one of the subjects we have highlighted this year. The lesson we have taken from this will shape our future. In order to increase the awareness of our new product, the rectangular pizza Pizzetta, we launched the “Dikkat Enis Çıkabilir” Project together with the face of our brand, Enis Arıkan. Due to the pandemic, consumer behaviour changed and the takeaway and digital market soared. To reflect this, the project was developed only for digital platforms, with the project specifically active on just Instagram to meet these consumers. We took advantage of both the celebrity and influencer power of our brand spokesman to interact directly with our customers. In this project, Enis Arikan went to our branches and pretended to be one of the Domino’s employees, we shared a teaser that we shot with a hidden camera on our Instagram accounts and told our customers, ‘You can meet Enis at Domino’s branches at any time’. After our teaser, we prepared a survey for our customers and asked which branch they would like to see Enis in. As a result of the feedback, we determined which branches in Istanbul that Enis would go to. When Enis Arıkan arrived at our branches, he communicated which branch he was in from our social media accounts with the ’take over’ model. After each share, the excitement of our customers increased further as they tried to discover the next branch he would be in. With the completion of Enis’ branch visits, we shared a final video from our social media accounts featuring Enis’ adventures and customer reactions during this process. The “Dikkat Enis Çıkabilir” Project significantly strengthened our connection with our target audience. One of the main aims of the project was to convey the dine-in experience to our followers at Domino’s, which is geared towards the uptrend market. With this project, we directed our customers to branches. We wanted to reach a wider audience, so we focused on vertical screen-based platforms. At the end of the project we had reached more than 7.8 million individuals and had more than 21.4 million views to our content. We have had 3 million singular views, 3.3 million interactions derived from the content, 17 thousand likes, 268 comments, 66 saves, 607 shares, and more than 30 thousand poll answers. We have established strong connections with our customers this year by aiming to keep our social platforms ad-free and authentic to encourage communication with our target audience directly. (1) We Are Social, 2022 4. Quarter Report. 25 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategy in action continued Brand Like other years, 2022 was full of awards. As a brand that always prioritises improving the customer experience through innovation, our customers nominate us for awards from many leading reputable organisations. Based on the results of Turkey’s Lovemarks research made by IPSOS (a credible global research company), for MediaCat, Lovemark Awards surveyed which brand had succeeded the most in establishing a bond with their consumers, Domino’s has been crowned with the Lovemark award by a large margin amongst other brands in the pizza category. In the Hammers Awards, where marketing teams in Turkey were evaluated by a jury formed with CMOs, the Domino’s Marketing team gained two Silver Awards as the best Marketing Team in the Retail sector and the best Sponsorship and Brand Collaborations Team. In the Brandverse Awards, organised by Marketing Turkey and BoomSonar, which evaluates the comprehensive marketing projects, Domino’s has received two bronze awards in the Fast Food category for Data Analytics studies, and in the Sponsorship category with EuroLeague Sponsorship projects. Moreover, the launch of Makarnos has been honoured with a bronze award from Effie, one of the most prestigious marketing competitions in the world, organised jointly by EACA (European Association of Communications Agencies) member Advertising Agencies Associations and Advertiser Associations in 55 countries around the world. Awards 26 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategy in action continued Brand Thanks to our CRM adjustments, online orders (“OLOs”) (Domino’s App and Web) customer scores increased to 8.02 points in 2022 (2021: 7.92 points). Our Net Promoter Score (“NPS”) rose from 24 points in 2021 to 37 points in 2022, an increase of 54%. The rate of customers whose requests were met with satisfaction in one hour increased to 80% in 2022 (2021: 66%). The complaint rate dropped from 0.13% in 2021 to 0.11% in 2022. Resolution of complaints at first contact: With the first contact solution project in the call centre for complaints, customers are provided with a solution at the first contact regarding their problem after a negative experience. It aims to ensure customer happiness on the scene without escalating the complaint to the branch. If there are unavoidable order‑based compensations, a compensation product is defined for our customer’s account. With the project, 80% of our customers’ complaints are resolved within the first hour. Special follow-up and development of branches: We started to follow the branches that were in the bottom 20 places in customer satisfaction KPIs in each two-month period. We have taken an active role in targeting improvement points and sharing focus areas for improvement every week. During the follow-up period, we offered one-to-one support to those branches that were continuing to experience problems. With referrals and data tracking, the branches that were in the last 20 places were successful in improving their ranking and getting out of the bottom 20. Customer experience newsletter: We have compiled a monthly newsletter in which we share our customers’ recent feedback on Domino’s, – both positive and negative. By sharing the newsletter with the whole system, we showed the expectations of Domino’s customers and focused on points that could improve the system in this way. Customer happiness committee: Customer happiness committee meetings were held once a month with the operations team. During the committee meetings, operational customer data was shared with the team. Guidance was given on areas to develop and general data was provided in terms of branch and regional operations. Staff attitude complaints: Personnel attitude complaints were handled privately and started to be shared directly with the operations team independent of the branch. With this change, we started to follow the process one-to-one in taking operational action to resolve personnel attitude issues, which are critical issues. Branch calls evaluation, supervision and reporting: The process of listening to branch calls was handled as a whole. In addition to the routine calls from the branches, random inspections were carried out for the branches that experienced problems. Instant detections and one-to-one feedback was shared with the branch executives and the operations team. In addition, at the end of each evaluation period, the findings were reported and shared by post on a regular basis, with action being taken if needed. Customer complaint experience 8.02 points Customer score 2021: 7.92 points 37 points NPS 2021: 24 points 0.11% Complaint rate 2021: 0.13% 27 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information COFFY A coff ee brand that disrupts conventional thinking by off ering coff ee at a single price, bringing innovation to the industry and a smile to customers’ faces. COFFY: high-quality and aff ordable coff ee! Innovation With COFFY, we have created a new model in coff ee culture in Turkey by off ering all types of coff ee at a single price. We continued our single price strategy in 2022, taking coff ee out of the luxury consumption category and making it a part of daily life. This year, we positioned ourselves as the neighbourhood coff ee shop; bringing a new brand to the industry that is accessible to everyone, establishing an organic connection with its customers, and truly living up to its name. Our prices, franchise system strength, quality varieties, and technological infrastructure have set us apart in the industry. As COFFY grows, we have started to reach our customers through diff erent mediums. As of 2022, we have three diff erent concepts: large stores (cafe format), corner stores (takeaway format) and kiosks. With COFFY, we have not only created a unique Turkish brand with our prices, quality, and fl avours, but also with the strength of our technological base. We have continued to develop our digital tools at COFFY with the highly innovative order tracking screens that enhance our customers’ comfort while they wait for their order. Our COFFY App stands out with its “Get it without waiting” feature, which saves time and eliminates waiting in line for coff ee. 10 3 28 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information COFFY continued COFFY outlets across Turkey COFFY locations(1) Istanbul Ankara Bursa Antalya İzmir 12 7 5 3 1 1 Franchised stores Corporate stores Growth COFFY reached 29 active branches in 2022 (ten corporate and 19 franchised). In order to support the growth in the Aegean region, three corporate branches were opened in Izmir, followed by Istanbul and Ankara; two cities with the highest population in Turkey. As of 2022, we have 19 branches in Istanbul, fi ve in Ankara, three in Izmir, one in Bursa and one in Antalya. We have sustained a healthy growth by applying the “castle” strategy that has supported Domino’s growth. We opened our fi rst two branches in Antalya and Cankaya, Ankara in the same location as Domino’s in order to use the franchise potential with Domino’s experience to increase the customer interaction between the two brands. We aim to be at every point where the customer is, with three diff erent branch concepts (cafe, corner, kiosk). New franchise candidate applications are received from the website, franchise fairs and monthly webinar meetings. Franchised stores Corporate stores 19 5 2022 2021 29 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information COFFY continued Brand Beyond consuming just for pleasure, coff ee has become a necessity for gaining energy, increasing creativity, and keeping our morale high in order to continue with the day at full speed. We have created a new model in coff ee culture; COFFY is a brand that promotes quality coff ee by off ering it at a reasonable price, ensuring it is quick and easy with simple digital experiences that provide comfort and happiness to customers. The most important point that sets us apart from our competitors is that we are a “single priced technological coff ee point”. We have brought a whole new dimension to the industry by saying “our coff ee is not cheap – they are expensive” with our prices, franchise system strength, quality varieties and technological infrastructure. We kept our single price strategy in 2022. There are more than 20 coff ee-related drinks, such as fi lter coff ee, macchiato and espresso that can be served both hot and cold. Hot coff ees are available in three diff erent sizes at a fi xed price. At the beginning of 2022, these were TRY 9.99, 12.99 or 15.99. There are two diff erent sizes for cold drinks, priced at TRY 12.99 and 15.99. Milk, skimmed milk, vegan milk, marshmallows and cookies can be added for the same fi xed price. COFFY also sells water, fruit juices and other canned beverages, and the food menu is made up of sandwiches, various bakery products, both sweet and salted, and many healthy snacks. Some larger sandwiches were added to the product list to satisfy higher price levels and encourage larger purchases. During the year, we increased our prices four times due to infl ation and we ended up with the cost at TRY 17.99, 20.99 and 24.99, which is a 70% increase from the previous year. In these price hikes, we observed our competitors implemented tests among various fi xed price options and we continued to position ourselves at 30% to 40% cheaper than the competition. With its aff ordable prices and quality coff ee, COFFY’s biggest customer base is students and people between the ages of 16-25. In the U&A research, we learned what is important for Gen Z and determined our action plan for store experience and communication. A good coff ee experience comes with good cafe design. In 2022, we made improvements to store design and created tote bags as part of COFFY merchandise and started selling them in stores. With Green COFFY, we contributed to sustainability by preventing paper cup waste with our thermos cups. We aim to further advance the Green COFFY brand created within COFFY. We have brought our innovative brand approach to our products, which has been greatly appreciated by our customers. In addition to fresh coff ee, we off er all of our daily prepared sweet and savoury snacks, as well as our new delicious sandwiches, at an aff ordable price. In the second quarter of 2022 at COFFY, the “Bubble” beverage line went on sale to off er a new experience to our consumers with apple and blueberry fl avours added to the lemonade. We have grown the cold drinks category by 25%. By adding tiramisu, profi teroles and cheesecake in the dessert options, we opened the system for sale in the second quarter. Consumers with a larger appetite can enjoy a variety of sandwiches alongside their coff ee, such as hash-brown hummus triangle sandwiches, Ezine cheese focaccia sandwiches, chicken baguette sandwiches with curry sauce, and plenty of cheese-based sandwiches. 30 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information COFFY continued What can our customers expect? Simplicity • Single price for diff erent choices • Good quality coff ee and food assortments • Supported by continuous product innovation Value for Money • More attractive pricing • Supported by shared services with DPEU • Diff erent store concepts for diverse customer profi les Convenience • Easy & fast App experience • Supported with advantage of single online ordering platform and advanced franchisee management know-how • Loyalty programs to increase frequency and build lifetime value 10% share of app in total sales Food turnover has grown by 15% We supported growth, one of our main goals for 2022, in many areas of our marketing. We organised grand opening events in cities where we opened a COFFY store for the fi rst time, such as Izmir. We off ered tastings at the branch during these opening events, received press coverage and supported them with infl uencer marketing. We also supported our franchises by increasing brand awareness through other media platforms, such as appearing in industry magazines with news of our store openings and communicating with investors. This year, as 85% of our sales were takeaway, we communicated with customers at the point of contact within the store. We communicated our single price initiative on panels such as BTL and used cutouts for the products we wanted to highlight. We used digital screens in stores as a new way to share news. We were active on social media and shared at least one post a day that would encourage interaction. Communication during events increased the sales rate and app usage. World Coff ee Day was one of the most important occasions for us, and the communication we made contributed to brand awareness. We mainly used the COFFY App during these events to engage with consumers, and continue to do so through monthly plans, both in-store and on social media. We also continued to work with aggregators, taking advantage of the opportunities by off ering various menus to our customers. We have not forgotten our student and employee customers as we off er a delivery service which includes suitable menus to meet diff erent meals of the day. By co-operating with aggregators via coupons, adverts and mailings, we introduced the COFFY brand to target new customers. Brand continued 31 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information COFFY continued Digital This year, COFFY has made many improvements to enhance the customer experience in both the app and the store. We made one of the most significant impacts by introducing a free take away experience which skips the queues. A structure was designed for our customers to place their orders from the app before they arrive at the store to enable the shop to prepare the order. Once the “I arrived” button is selected, customers can receive their order without any delay. By implementing this structure, a seamless experience was created where the customer can follow their order on the screens when they enter the COFFY store and quickly retrieve their order at the delivery point. The total digital sales of the app in the last four months is at 34%, increasing by 9.8% compared to the same period of last year. Other user experience improvements have been added to the application. Customers can join the order stage quicker, customise many products whilst placing their order and can repeat the previous order with a single click; this has increased the conversion rate by 20%. In addition to the online payment opportunities offered to customers, payment alternatives such as Sodexo and MultiNet were added. This increased app usage by 45%. To further increase consumers using the app, a mechanism was added that offers non-coffee recommendations based on the basket. We can upsell with by-products and front‑of‑the-box products through this development. We look forward to increased order sales and loyalty from the customers in 2023. Along with the app improvements, this year accelerated direct marketing communications through advertising investments and Insider integration, which led to 80% more new installs. In addition to Insider re-marketing efforts, Storyly integration was provided, which increased customer engagement and minimised the risk of uninstalling the app. Customers who opened the application interacted with Storyly features such as questionnaires (which were used from other social media tools), achieving an engagement rate of 25%. These developments gained more users and secured their loyalty to the brand. A CRM infrastructure was established where we could analyse the customer base better, create market profiles and scrutinise customer changes. With the building of the CRM infrastructure, we can better understand the COFFY customer and see which segments could be lost or likely to change, even on a store basis. Thus, we continue to entice a better roadmap to our innovations, such as product developments and marketing communications. 32 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information DP Eurasia’s store count grew by an outstanding 71 year‑on‑year. Performance review Group System sales (after IAS 29)(3) (in millions of TRY, unless otherwise indicated) 2022 2021 Change Change (pre-IAS 29) Group system sales(1) Turkey 3,391.5 3,417.1 (0.7%) 72.1% Azerbaijan 79.2 64.9 22.0% 109.8% Georgia 42.6 27.4 55.5% 165.1% COFFY 59.2 11.2 428.6% 828.8% Total continuing operations 3,572.5 3,520.5 1.5% 76.0% Russia (discontinued operations) 1,119.9 629.4 77.9% 77.9% Grand total 4,692.4 4,149.9 13.1% 76.5% (after IAS 29) (pre-IAS 29) Group system sales like-for-like growth(4) 2022 2021 2022 2021 Turkey (5.6%) 25.9% 63.5% 50.4% Azerbaijan (based on AZN) 8.0% 7.1% 8.0% 7.1% Georgia (based on GEL) 12.6% 67.2% 12.6% 67.2% Total continuing operations (5.3%) 26.0% 62.2% 49.9% Russia (discontinued operations, based on RUB) (9.8%) 9.6% (9.8%) 9.6% As of 31 December 2022 2021 Store count Corporate Franchised Total Corporate Franchised Total Turkey (Domino’s) 89 566 655 100 507 607 Azerbaijan — 10 10 — 10 10 Georgia — 6 6 — 4 4 COFFY 10 19 29 5 3 8 Total 99 601 700 105 524 629 Russia 63 96 159 94 94 188 Grand total 162 697 859 199 618 817 Strategic review 33 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information COFFY has demonstrated very strong sales performance and now represents an outstanding growth opportunity for the Group. DP Eurasia’s store count for continuing operations increased by 71 year-on-year, or by 42 stores when including Russia – the difference being the store rationalisation programme in the territory. As a result of this growth in our core territories, the Group increased its system sales by 1.5% year-on-year. Growth on a pre-inflation adjustment basis would have been 76%. System sales of Turkish Domino’s operations stayed almost flat on inflation adjusted basis. Nonetheless, adjusted for last year’s VAT reduction of 7pp to 1% (which lasted until the end of July), system sales growth would be around 4.4%. The Group experienced robust franchisee interest in Turkey resulting in a strong store pipeline, laying solid foundations for future growth. Domino’s Pizza net store count in Turkey increased by c.8% over the last twelve months. The 48 net store addition was higher than the guidance range of 30-40, building on a record year in 2021. COFFY has demonstrated very strong sales performance and now represents an outstanding growth opportunity for the Group. The COFFY network growth accelerated in 2022 with a 21 new store opening. This was in line with guidance to reach 29 stores in total thanks to solid franchisee demand. System sales of the Russian operations, which are now classified as discontinued, increased by 77.9% (-14.8% based on RUB). Like-for-like growth was -9.8% in Russia during the period. In Russia, we faced a strong comparable period while operating in a difficult geo-political and economic environment. As previously announced, the Group is considering various options which may include a divestment of its Russian operations. Whilst work on a potential transaction is ongoing, there can be no certainty as to the outcome. In the meantime, the Group continues to limit investment in Russia and remains focused on optimising the existing store coverage. Following the closure of 31 stores and opening of two new franchise stores over the course of 2022, the number of Russian stores stood at 159 as of 31 December 2022. Strategic review continued 34 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Delivery channel mix and online like-for-like growth Online delivery system sales as a share of delivery system sales in Turkey reached 81.2% for the period, which represents almost five percentage point increase on a year-on-year basis. The following table shows the Group’s delivery system sales, analysed by ordering channel and by the Group’s two largest countries in which it operates, as a percentage of delivery system sales: For the period ended 31 Dec 2022 2021 Turkey Russia(1) Total Turkey Russia(1) Total Store 18.2% 6.1% 16.9% 23.3% 7.1% 22.3% Online – Group’s online platform 24.8% 71.0% 35.6% 25.2% 69.1% 31.4% – Aggregator 56.4% 23.0% 47.0% 51.1% 23.8% 46.0% – Total online 81.2% 94.0% 82.6% 76.3% 92.9% 77.4% Call centre 0.6% — 0.4% 0.4% — 0.3% Total 100% 100% 100% 100% 100% 100% (1) Discontinued operations. The following table shows the Group’s online LfL growth(4), broken down by the Group’s two largest countries in which it operates, for the periods ended 31 December 2022 and 2021: (after IAS 29) (pre-IAS 29) Group online system sales LfL growth(4) 2022 2021 2022 2021 Turkey (2.8%) 45.2% 67.9% 73.3% Russia (discontinued operations, based on RUB) (9.5%) 12.4% (9.5%) 12.4% Strategic review continued Online delivery system sales as a share of delivery system sales in Turkey reached 81.2% for the period, which represents almost five percentage point increase on a year-on-year basis. This performance was also aided by an increase in volumes through the aggregators. 35 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information For the year ended 31 Dec (in millions of TRY) 2022 2021 Change Revenue 2,220 2,063 7.6% Cost of sales (1,396) (1,268) 10.1% Gross profit 823 794 3.6% General administrative expenses (282) (263) 7.2% Marketing and selling expenses (347) (343) 1.1% Other operating expenses, net (5.7) 7.2 n.m. Operating profit/(loss) 189 196 -3.6% Foreign exchange gains/(losses) 85 50 71.7% Financial income 110 54 104.8% Financial expense (240) (133) 81.1% Monetary profit/(loss) 47 49 -2.4% Profit/(loss) before income tax 191 215 -11.2% Tax expense 11 (81) n.m. Profit/(Loss) after tax, from continuing operations 202 134 50.5% Loss from discontinued operations (211) (71) 197.2% (Loss)/Profit for the period (9) 63 n.m. Turkey adjusted EBITDA(5) 337 313 7.5% Adjusted EBITDA(5) 311 296 5.3% Adjusted net income (from continuing operations)(6) 214 143 50% Financial review Strategic review continued 36 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategic review continued Revenue Group revenue grew by 7.6% to TRY 2,220 million on an inflation adjusted basis. Adjusted EBITDA Adjusted EBITDA, which now excludes Russia, was TRY 311 million, a year-on-year increase of 5.3%. The adjusted EBITDA of Turkey, which includes the Azerbaijani and Georgian businesses along with COFFY, realised at TRY 337 million, which demonstrated a 7.5% year-on-year increase. Please note that the adjusted EBITDA for the Russian segment, which is now a discontinued operation, for the period was TRY 2 million. For the period ended 31 December 2022, the adjusted EBITDA margin as a percentage of revenues was 15.1% compared to 15.2% over the same period in 2021. Unprecedented increases in food costs across the board and higher personnel expenses were the main negative factors that weakened profitability in 2022. Meanwhile, strong sales performance created operating leverage through the system despite the above-mentioned cost pressure. The Group took advantage of its robust purchasing power and built-up additional inventory during the period to combat elevated food costs. Adjusted net income For the period ended 31 December 2022, adjusted net income from continuing operations was TRY 214 million. The growth in revenue and adjusted EBITDA as well as the foreign exchange gains due to the devaluation of the TRY against the RUB were the main reasons for the return to profitability. On the other hand, discontinued operation loss was TRY 211 million due to non-cash write-offs driven by accounting treatment to the Russian business. Capital expenditure and cash conversion The Group incurred TRY 82 million of capital expenditure for the continuing operations in the period ended 31 December 2022. Cash conversion, defined as (adjusted EBITDA excluding IFRS 16 impact - capital expenditure) / (adjusted EBITDA excluding IFRS 16 impact) for the period was 70% (2021: 74%) for the Group (continuing operations). Adjusted net debt and leverage The Group’s adjusted net debt, excluding discontinued Russia financials, as of 31 December 2022 was TRY 562 million, staying flat compared to the inflation adjusted net debt of end-2021. Including the Russian business, this equates to TRY 909 million net debt. The Group’s leverage ratio (defined as adjusted net debt/adjusted EBITDA) based on continued operations, stood at 1.8x as of 31 December 2022 (after IAS 29) versus 1.9x at the end of 2021. Including all Russian related debt (both Sberbank loan and lease liabilities), our leverage ratio would go up to 2.9x by the end of 2022. Including only the Sber bank loan (for which DPEU is the debt guarantee) to debt calculations, this equates to a 2.3x leverage ratio, which is unchanged versus the 2021 year-end. In an increasing rate environment, c.90% of the Group’s bank borrowings had fixed rates whereas average maturity stood at 1.5 years. The Group had TRY 360 million of cash (excluding cash of Russia) and access to an additional banking facility of TRY 225 million as of 31 December 2022. Current trading System sales growth and like-for-like growth for the eleven weeks ended 19 March of 2023 compared to the same period in 2022 were as follows: Group system sales growth (after IAS 29) For the eleven weeks ended 17 March 2023 Turkey 15.5% Azerbaijan (10.8%) Georgia 40.9% COFFY 469.1% Total continuing operations 18.2% Russia (discontinued operations) 11.6% Group system sales growth (after IAS 29) Turkey 11.5% Russia (discontinued operations, based on RUB) (20.8%) 37 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Strategic review continued 2023 Outlook • Strong momentum from store openings in Turkey is anticipated to continue for both Domino’s and COFFY, driven by solid franchisee demand. Our commitment to maintaining franchisee profitability is front and centre of this demand. 2023 is therefore anticipated to be another year of strong network expansion as the Group seeks to broaden its coverage to cater to demand. • The Group anticipates that it will maintain organic and LfL sales momentum in 2023 driven by sustained network growth, volume expansion and targeted price adjustments. New customer acquisition and increased order frequency levels are expected to contribute to growing volumes. • Group system sales growth performance has started strongly in the first 11 weeks of 2023, up 18.2% for continuing operations and up 11.5% in Turkey on a like‑for‑like basis.(3,4) • The Group is mindful that 2023 will be another year of volatile macro-economic circumstance and uncertainty. The inflation risk persists, and while the Group has a good track record of managing and negating the impact of inflation, it may affect overall growth levels. Nevertheless, the Group believes that it can continue to appropriately manage the inflationary risk. • Guidance for store openings, LfL growth rates and capital expenditure in Turkey for 2023 is as follows: LfL growth rate Mid single digit (pre IAS 29: 60-70%) Domino’s Pizza net store openings 35-40 COFFY net store openings 50-60 Capital expenditure TRY 160 m Notes (1) All Group figures exclude Russian business which is now a discontinued operation. (2) COFFY numbers are included in all Turkey and Group figures, unless presented separately. Like-for-like figures exclude COFFY. (3) System sales are sales generated by the Group’s corporate and franchised stores to external customers and do not represent revenue of the Group. These numbers are not audited. (4) Like-for-like growth is a comparison of sales between two periods that compares system sales of existing system stores. The Group’s system stores that are included in like-for-like system sales comparisons are those that have operated for at least 52 weeks preceding the beginning of the first month of the period used in the like-for-like comparisons for a certain reporting period, assuming the relevant system store has not subsequently closed or been “split” (which involves the Group opening an additional store within the same map of an existing store or in an overlapping area). This is a non-IFRS measure and non-IFRS measures are not audited. (5) EBITDA, adjusted EBITDA and non-recurring and non-trade income/expenses are not defined by IFRS and non-IFRS measures are not audited. These items are determined by the principles defined by Group management and comprise income/expenses which are assumed by Group management to not be part of the normal course of business and are non-trading items. These items, which are not defined by IFRS, are disclosed by Group management separately for a better understanding and measurement of the sustainable performance of the Group. Please refer to Note 3 in the Consolidated Financial statements for a reconciliation of these items with IFRS. (6) Adjusted net income is not defined by IFRS and non-IFRS measures are not audited. Adjusted net income excludes income and expenses which are not part of the normal course of business and are non-recurring items. Management uses this measurement basis to focus on core trading activities of the business segments and to assist it in evaluating underlying business performance. Please refer to Note 3 in the Consolidated Financial statements for a reconciliation of this item with IFRS. (7) Net debt and adjusted net debt are not defined by IFRS and non-IFRS measures are not audited. Adjusted net debt includes cash deposits used as a loan guarantee and cash paid, but not collected during the non-working day at the year end. Management uses these numbers to focus on net debt including deposits not otherwise considered cash and cash equivalents under IFRS. (8) Delivery system sales are system sales of the Group generated through the Group’s delivery distribution channel. (9) Online system sales are system sales of the Group generated through its online ordering channel. (10) Group like-for-like growth is a weighted average of the country like-for-like growths based on store numbers as described in Note (2). This is a non-IFRS measure and non-IFRS measures are not audited. 38 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Stakeholder engagement Our customers Our shareholders Our franchisees What matters to them? The most critical aspects for our customers are service, image and product. Whilst meeting the expectations of our customers with our fast service, we also provide them with a digital experience. We respond to the needs of our customers with our delicious and customer-oriented products. Our work on social responsibility and sponsorship creates value. How we engage? We communicate with our customers 365 days a year without interruption. We maintain communication in both online and offline channels, and communicate with our customers on both the omni-channel and media-oriented platforms. We engage with our customers thanks to this strategy we have established. What matters to them? Sustained ability of our Group to deliver strong operational and financial performance, along with consistent communication, matters most to our shareholders, who plays a central role in the growth strategy and action plans of the Group. How we engage? We have a clear and targeted engagement strategy with both our existing and prospective shareholders, which is transparently managed by our Investor Relations department. This strategy is also supported by the leadership team to understand the views of our shareholders with regards to the execution of the strategy. What matters to them? What matters most to the franchisees is the return on investment and profitability while maintaining a sustainable system which shows potential for sales and store growth. Excellence in operations and customer satisfaction is key. How we engage? We have a variety of ways to engage and support franchisees in terms of operations training, local marketing support and store growth incentives. Our aim is to convert low‑performing stores to high-performing ones by keeping a close eye on each individual store’s performance. Periodic store and franchisee visits, and tight communication, plays a critical role. Read more on page 18 Read more on page 83 – corporate governance Read more on page 41 39 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Stakeholder engagement continued Our employees Our community Our suppliers What matters to them? Employees expect to be a part of a growing organisation where they are also encouraged to grow. Growing means to learn more, to promote and to be satisfied with the culture that surrounds the business. The Group offers these alternatives with new brands and increased store numbers. Employees also seek a dynamic environment, transparency, open and trusted relationships, and a strong leadership team. How we engage? The Group incorporates different activities to engage its workforce: they can be categorised into three groups: 1. Engage them with business: Open communication about vision and results. 2. Learning and development opportunities: Homegrown opportunity is a strong proposition that most companies can’t offer. 3. Reward, recognition and motivational activities: The Group also wants to receive employees’ feedback and use this input to improve engagement strategies. What matters to them? We strive to add value to the environment and society with our mission of becoming the “Pizza of the Neighbourhood”. Our prime motivation is creating value and building relationships with society. As a brand that respects nature and the environment, we take care to keep community culture alive and support art, education and sports. How we engage? While contributing to the development of village schools, we renewed the basketball court in Mardin in co-operation with TEGV. Acting with a sense of responsibility towards stray animals, we supported the Hachiko Association. We believe that seeing wishes come true is unforgettable for every child, and we touch the lives of children with our collaboration with the Make-A-Wish Foundation and Koruncuk Foundation. What matters to them? The most material issues on the supplier side are volatile raw material prices along with the high increase in production costs, unstable economical situation and high inflation on commodity prices. Therefore, trust and building long-term relations with a win-win policy is what matters most to them. How we engage? It is crucial for DPEU to accept all suppliers as our long-term business partners. We engage via open communication in line with our vision and targets. Despite the negative effects of the unstable economic circumstances, providing transparent procurement processes, an open book structure, and fair pricing strategies secures our long-term partnerships. Also, establishing all our purchasing and procurement processes on a firm, legal basis creates a strong and trustworthy environment. Read more on page 41 Read more on pages 42 and 43 Read more on page 71 40 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Culture in action The Group is focused on keeping Domino’s unique cultural elements alive and integrating them with its new technology‑driven business needs. In 2022, The Group worked with a well-known consultancy company to prepare for future organisational needs in a multi-country and multi-brand setting. This project was led by the Domino’s Pizza Turkey HR Director, and an organisational structure was proposed where country leaders and brand leaders worked effectively together. The Group is in the transition phase right now, keeping in mind this ultimate goal. A consultancy company also designed responsibilities, a decision matrix and possible KPIs for roles. Our people have a shared vision of how to achieve our Company’s strategic goals. To ensure all employees are informed of business objectives and performance, we hold a variety of corporate events throughout the year. The Domino’s Rally is one of the largest and most important of our communication events. In 2022, the Rally was held online again because of the pandemic to prevent possible risks. We held Dashboard meetings with our wider leadership team three times in 2022, where we discussed our strategy and updated plans. We also organised town halls for our headquarters employees to share our roadmap and business updates. At DP Eurasia, with the guidance of our human resources policy, we acquire new talent who will become tomorrow’s leaders, as well as promoting new leaders within the Group. The Group implemented its talent management plans with respect to this strategy. To achieve this, Human Resources worked with assessors to identify talents, provide development plans and follow-ups to them. This promotion strategy ensures continuity in company culture as well. As part of the talent strategy, we use our onboarding system, called Onboar’D, as we know that we will make a difference if the new talent is adapted to the Company culture with the mentoring of existing leaders. At DP Eurasia, new employees also join the Pizza Prep School to learn about the Company and its culture. Since dough, pizza and restaurants are the core of our business, it is an important part of our recruitment process for our new employees to be able to work with the dough; learning how to make pizza and understand more about Domino’s restaurants and operations. In 2022, we expanded to include a new brand, COFFY, with a specific focus on growth. This required both incorporating systems for the second brand as well as differentiating some of them, since the new brand offers a different customer experience. The Group started a long‑term leadership development programme, “Be the Best”, in Turkey in 2019. Leadership attributes were redefined within this programme in accordance with the Group’s future vision and strategies. In 2022, as a follow-up to this initiative, New Generation Agile Management Training was conducted for 38 selected first-level managers. To create constant learning environment we made our online learning platform accessible from all devices, including mobile, with both technological and structural changes. By 2022, we had integrated a new soft-skill training catalogue into the platform and transformed it into an integrated learning platform rather than a technical training library. DP Eurasia continues to make a difference through its objective to become a Food‑Tech company. How do we create a culture that is driven by entrepreneurial spirit? The Group supports this culture with numerous practices, such as supporting employees to become owners of their own stores. “Homegrowns” are our unique differentiated cultural symbol and the key to our success. To support homegrown candidates in developing business skills, the “School of Entrepreneurship” opened its doors for the fourth time last year, in which participants learned about franchise system dynamics, profitability models, and other fundamentals. We are proud to grow with them and have a deep sense of satisfaction at the mutual value created, both in their lives and in our business. Additionally, headquarters employees are supported to try alternative work practices, to learn what worked or did not work, take decisions, and be accountable in their roles, just as they would if they managed their own business. 41 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Culture in action continued Our workforce engagement The Group has incorporated different ways to engage with its workforce. Most activities were held online for the last two years; in 2022, some activities continued in virtual meetings while others went back to the original in-person format. Hybrid meetings are also widely used, combining two models. We intend to engage with all employees, but for certain activities, 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 general business operations. Below is an overview of the different activities enrolled to engage with the Group’s employees and franchisees: • councils: online/offline 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 on business plans; • regular headquarters employee meetings: monthly online meetings with each functional department head, held by HR business partners; • quarterly top ten restaurant employee online meetings: high-performing restaurants come together with management to celebrate successes and to receive suggestions on marketing, people practices and operational plans; • regular employee meetings: online meetings with each headquarters department. Although these online meetings were initially instigated to improve the bonds of trust between HR and the other departments, it is also another informal way to hear the voices of individual employees or the input or concerns of a certain department; • onboarding meetings: a planned activity with the HR Director and CEO to meet new headquarters employees to get their first impressions of the Company and to also share cultural initiatives with them; • HR business partner observations: a regular activity in which dedicated partners spend time with employees in one-to-one interviews. Their observations are shared with senior management; • feedback surveys: sent after every activity to monitor engagement and get ideas for the next event; • pulse surveys: organised for headquarters employees to share feedback about their morale and motivation; and • focus groups: organised for specific subjects when needed. How have we enhanced our workforce engagement? Employee engagement levels were monitored by the Employee Engagement Survey. This survey was carried out by a third-party company to understand employee thoughts about company practices in Domino’s Pizza Türkiye (“DPT”). Also, we organised a Franchise Engagement Survey to hear franchisees’ needs. The feedback received helps the Group to better understand the visions, standpoints, and comments on the Group’s human resources policy and the general business operations, so that they can take this into account when developing or amending policies and future decision‑making. 42 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Sustainability in action How have we supported our local communities? About TEGV The Educational Volunteers Foundation of Türkiye (“TEGV”) was established on 23 January 1995, with the initiatives by a group of industrialists, managers and academicians wholeheartedly believing that education comes fi rst. In particular, Suna Kıraç, who initially took this path as an education volunteer for the future of her country – Turkey – and then the world, with a view to support the basic education provided by the state. Since the day of its foundation, TEGV has focused on delivering non-formal education to children of primary school age, on the basis of the motto of “As each child changes, Turkey fl ourishes”. TEGV became the most widespread non-governmental organisation operating in the fi eld of education in Türkiye over the course of many years. 43 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Sustainability in action continued In 2009, TEGV was recognised as one of the foundations entitled with the right to “collect charity without permission” by the Council of Ministers. TEGV continues providing educational support to children by adopting a contemporary mission and vision at eight education parks, 29 learning units and 18 Firefly Learning Units across 24 cities in Turkey, under the co‑operation protocol signed with the Ministry of National Education (“MEB”) on 28 December 2018. In co-operation with the Education Volunteers Foundation of Turkey (“TEGV”), Turkey’s most widespread non‑governmental organisation operating in the field of education, TEGV Mardin Savur Learning Unit renovated the basketball court in Abdulgani Aras Event Center, which was mostly used by girls. Within the scope of the project we made with TEGV, based on our strategy of “Domino’s is Everywhere, Sharing is Everything”, the basketball court, which was renewed in line with its contemporary mission to prepare for the future through education, is a part of the approach that wholeheartedly believes that education is at the centre of everything. It aims to encourage young people to train their minds and bodies with sports in the completely renovated basketball court. This project was important to both TEGV and Domino’s, whose mission is to connect with society. New Year’s Eve was also meaningful for us. This year we strengthened our strong connection with our customers with our New Year’s Eve project. We have tried to make dreams come true for children that are from disadvantaged parts of the country. We wanted to thank our customers, who made us proud this year with the Lovemark award, with a worthwhile New Year’s gift. As the most loved pizza store of Turkey, Domino’s have renovated two Dreams Workshops that significantly contribute to the education of children in co-ordination with TEGV. Dreams Workshop is a project that aims to create an interest in the children towards art and makes an effort to educate the children on the basic concepts of art. The workshop aims to inform the children about different subjects, materials and methods without using templates that were prepared beforehand. Dreams Workshop also supports the core knowledge and ability of children by introducing well-known artists and artwork to them. We also experienced the joy of renovating two Dreams Workshops in Diyarbakır and Siirt by supporting this significant project that brings imagination and creativity together, and shares the happiness of gifting this project to our customers. 44 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Sustainability in action continued Providing food safety and high quality Reducing the impact on climate change Environmentally friendly packaging design and waste reduction Adopting responsible sourcing The Group’s efforts and interest in sustainability continues to grow with new and existing projects and initiatives. DP Eurasia’s contribution to sustainability is driven by the Group’s efforts and interest in initiating new projects, adapting our strategy to current regulations, and investing in future generations. Our aim is to strengthen and incorporate our sustainability strategy throughout all of our operations. The expectations of our stakeholders commands a greater focus on sustainability, and in business this is not an option, but an obligation. Alongside our stakeholders, the expectations and interests of companies are also aligned to sustainability concerns such as climate change and employee welfare. As the business starts to adopt sustainability as a core value, we empower and grow our strategy according to business demands and trends. This is not only a business requirement, but an issue of evolving global consciousness. Consequently, we are pleased to announce that 2022 has been a remarkable year for us in terms of complying with our business model from a sustainability perspective. Our strategy and goals will be a driving success for the business and will create value for all our stakeholders. We are highly motivated to decrease our environmental impacts and will take continued actions to mitigate and adapt to the possible impacts of climate change through our Eurasia operations. On that account, we are lining up our reporting with an external framework that is promoted by the Sustainability Accounting Standards Board (“SASB”) and the Task Force on Climate-Related Financial Disclosures (“TCFD”). This part of the report displays information on DP Eurasia’s actions, assessments and related application towards aligning the recommendations of the TCFD, which is the first self-standing risk assessment in line with this framework. 1 2 3 4 By publishing this report, we aim to summarise the progress we have made by including climate change risks and opportunities into our overall business strategy. Our communications on this progress include the 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 emissions assessments and targets according to our baseline year, which is 2021. 45 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) The methodology of defining DP Eurasia’s focus on climate‑related areas For the first step of the study, both the global and local agenda, and sectoral best practice examples, were discussed in the analysis of sustainability trends and climate‑related risks. Industry-specific materiality issues recommended by the Sustainability Accounting Standards Board (“SASB”) and the World Economic Forum’s global risk projections were reviewed in depth. In the next step of the study, climate-related risk assessments and actions were discussed in the ESG meetings, where it was highlighted by the participation of the top Board members, Chairs of related committees, department leaders and operational managers. In the respect of primary operational action plans, climate‑related risks were determined. Annual actions and prioritised targets were evaluated and, by doing so, four main climate-related focus areas were decided upon by taking four different geographical operations of DP Eurasia. As previously reported, the risk assessment was decided regarding the operation size, dynamics and potential opportunities, and an annual target plan within the scope of environmental metrics was also established for DP Eurasia. The four highlighted themes are being tracked by DP Eurasia’s Sustainability Committee. The committee has a leading role in connecting related activities and targets by aligning them with TCFD recommendations and managing the operation at a global level. Our governance structure DP Eurasia Board Internal Audit and Risk Management Director Nomination and Governance Committee Remuneration Committee Audit Committee Sustainability Committee Task Force on Climate‑related Financial Disclosures (“TCFD”) Governance DP Eurasia N.V. is a limited liability company incorporated under the laws of the Netherlands on 18 October 2016. The principal activity of DP Eurasia consists of acting as a holding company. Given the importance of the TCFD recommendations, the entire Board has committed to taking further action in accordance with the climate-related risks and opportunities by combining them to net zero emissions targets. DP Eurasia strongly believes that good governance is the objective in achieving success and furthering sustainable development in the business. Embracing environmental, social and governance issues is about having good governance; therefore, DP Eurasia brings ESG topics to the forefront by aligning them with TCFD recommendations. Climate-related issues, risks and opportunities are elevated by the Board of Directors, and a management mechanism is initiated in order to respond to possible climate-related risks and opportunities. On the other hand, the Board of Directors needs to be ready for risks that our sector may, or will, face for the upcoming period. For that reason, not all climate‑related risks and opportunities are managed by the Board, but relevant risks and opportunities are managed meticulously by the Board members. Consequently, all climate risks, opportunities and trends are monitored and reviewed by associated working groups. Afterwards, the issues are elevated to Board level and appropriate actions and initiatives are taken accordingly. CEO Nomination and Governance Committee Remuneration Committee Audit Committee Sustainability Committee Steering Committee Leading all ESG practices including TCFD progress management 46 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Governance Disclose the organisation’s governance around climate-related risks and opportunities. a) Describe the Board’s oversight of climate‑related actions, risks and opportunities. The Group believes that the oversight of the climate-related risks, actions and opportunities will bring success in business and put DP Eurasia one step forward. Oversight of the environmental, social and governance issues is considered by Board members and meticulously detailed and analysed in order to take further steps. Identifying the climate-related risks and opportunities and contributing employee awareness in terms of expanding our ESG understanding through responsible citizen profile is already on the agenda for the Board of Directors. Stakeholders take the significant role to transform determined climate-related risks into opportunities in our operation. The Board encloses the climate-related risks in terms of their possible effects that could cause business interruptions to Group operations. The Board is working on updating its business continuity policies to be more prepared for the potential climate change impacts: 1. crisis management; 2. disaster recovery plans; and 3. business continuity management. In 2022, considering geopolitical changes in Russia, the Group continues to assess its position there and evaluates several possibilities, including a potential divestment of our Russian operations. Furthermore, as a protection, the Company continues to limit investment in Russia and focuses on optimising existing store coverage. With the net closing of 31 locations and opening of two franchise stores in 2022, the number of Russian stores stood at 159 on 31 December 2022. 47 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Governance Disclose the organisation’s governance around climate-related risks and opportunities. b) Describe the management’s role in assessing and managing climate‑related risks and opportunities. The Group established an ESG Committee in 2021 that consists of Board members and several working groups. Each working group under the ESG Committee deals with particular climate-related issues. Working group heads are assigned by the Board members, and leaders are selected from high‑level executives in order to co-ordinate climate-related risks and actions. In 2022, climate-related issues began to be discussed periodically with meetings initiated by the Board of Directors. These issues are followed by the responsible leaders of the relevant ESG Committee members. The tasks of the ESG Committee are: 1. evaluating risks and opportunities in environmental, social and governance areas and decreasing effects of climate-related risks in business; 2. to follow and analyse the sustainability issues related to the sector and focusing on the sustainable model of business by taking financial outcomes into consideration; 3. determining the Company’s ESG strategy and updating it, when necessary; 4. operating the Group in line with sustainable roadmaps by including further climate-related actions into its business area; 5. carrying out projects to achieve the determined ESG targets; 6. to report the results obtained from all studies on ESG issues to the Board of Directors; and 7. working closely with the Audit Committee in order to track the Company’s commitments and actions. An ESG Committee meeting was held in the third quarter of 2022 and in the meeting we discussed: • our roadmap Through ESG Transformation; • ESG Standards, Frameworks and Examples; • “E” goals from DP Eurasia 2022 ESG; and • in the “S” and “G” headings of ESG, the targets with which we can track performance. After the action plans were determined, the results and financial impacts were closely scrutinised by the members of the Board of Directors, consisting of the CEO, CFO, Investor Relations Director and Internal Audit Director. In order to follow the climate-related strategy, Board members will be adding additional C-level KPIs for the upcoming years. Also, the following KPIs are being tracked at managerial level and above, and the ESG Committee is periodically reporting to Board level. • KPI #1: Scope 1 emissions Responsible: Corporate Leader, Co & Supply Chain Leader, Administrative 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). 48 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Strategy Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning. a) Describe the climate‑related risks and opportunities the organisation has identified over the short, medium and long term. Based on the main operation points, transition and physical risks recommended by TCFD were mapped by matching the short, medium and long-term actions under the framework of four determined themes. Regulatory transition risk: Policy and legal risks are defined under the umbrella of climate-related regulations that must be followed. Market risk: Changes and unpredictability in the market increases the cost of raw materials and energy prices; this also changes the customers’ consuming habits as climate change risks are considered in the scope of market. Technology risk: Innovations in agricultural practices, operations and supply chains, and alternative technological solutions to delivery are identified as technology risk. Our evaluation is based on tracking green and clean technologies. Reputation risk: Changes in client preferences, and adaptation to new sectoral changes, are considered as top priority risks related to reputation. Also, the service quality and the feedback of consumers in line with our sustainable practices could be evaluated. Acute risk: Due to extreme weather events or natural disasters, increases in insurance premiums and operational disruptions are defined as acute risks. Our evaluation generally comprehends the 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 99 Corporate and 601 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. 49 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information 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 make preparations for the future. Scenario analysis is a crucial tool for strategic planning, risk management and assessing the Group’s strategic resilience. For the upcoming years, DP Eurasia commits itself to follow TCFD scenario analysis. The main goal will be towards cutting gas emissions generated by stores. Task Force on Climate‑related Financial Disclosures (“TCFD”) continued 50 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued TCFD climate-related risks Focused themes Transition risks Physical risks Time horizon Progress from 2021 to 2022 Main climate-related risks and actions of DP Eurasia Regulations Market Reputation Technology Acute Chronic (short, mid or long term)(1) Climate change Switching to electrical vehicles Mid term While there were only seven electric motors in 2021, there are currently 47 motors in 2022. There is a cost advantage of 100₺/month per engine. The test phase of the use of electric motorcycles and electric kick scooters has been started in certain branches. Route optimisation Short term Our related works are continuing, and we will start to move in line with this target in 2023. GPS project to track kms, fuel consumption Short term The iUGO GPS system was used to track orders, increase efficiency, and track mileage and gasoline more closely. Partly switching to renewable energy resources Mid term Solar energy panels have been installed for the Co&Supply chain in İzmir in 2022, but it is planned to activate in 2023. New warehouse installations at critic delivery points within the geography Mid term We intend to build new warehouses in the medium term. When purchasing a new warehouse, purchases will be made from optimum locations that allow for effective route design and are not affected by physical risks associated to climate change. In this regard, feasibility and environmental and social due diligence studies will be conducted in order to purchase the warehouse. Energy efficient equipment range at the kitchens Long term An agreement was made with SADEIO company to control the make- line and walk-in temperatures in the branches, and to prevent excessive energy consumption. This system is centrally managed and sends notifications to the specified communication channels when there is a degree of non-conformity. Adapting the climate-related regulations (Paris Agreement and Green Deal) Long term We are closely following the COP27 outputs. There is a relevant team that follows all newly formed legislation and policy changes regarding climate change. Compliance with all potential regulations will be ensured. We plan to be a part of the solution and lead the change. (1) Short term: 0-2 years, Mid term: 2-12 years, Long term: 12+ years. 51 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Focused themes Transition risks Physical risks Time horizon Progress from 2021 to 2022 Main climate-related risks and actions of DP Eurasia Regulations Market Reputation Technology Acute Chronic (short, mid or long term)(1) Packing and waste Redesign of packaging (reduction in surface area of boxes, increase in the number of products per box) Short term The transition to the cutting-edged pizza box had a 0.5% m2 reduction effect. However, in 2022, 250 million boxes were purchased with 1.2 million little box savings. In addition, 19 and 23cm paper plates were delisted, and 15cm plates were used instead. Reducing the use of plastic cutlery Short term Removing knives from the service set to reduce the use of plastic is planned for 2023. Digital menu application instead of paper based (QR) Short term Digital screens have started to be used in 252 of 650 shops, and printed menu boards have been left out of the system. All new shops are opened with the digital menu board concept. As the renovations of other shops are made, the transition to digital screens will be provided. Digital menus have been used in newly opened branches for a long time. This system is centrally managed, so the Company prevented printed menu board images and reduced paper usage. Removed QR-based prescriptions used in make-line branches, and the number of printed materials were reduced and QR-based applications started to be used. (1) Short term: 0-2 years, Mid term: 2-12 years, Long term: 12+ years. 52 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Focused themes Transition risks Physical risks Time horizon Progress from 2021 to 2022 Main climate-related risks and actions of DP Eurasia Regulations Market Reputation Technology Acute Chronic (short, mid or long term)(1) Food safety and quality Client voice (surveys for healthy product range and options) Short term(2) In the services we provide through third-party sales channels, customer satisfaction is always measured and improvement actions are taken. 30-minute delivery Short term(2) 30-minute delivery guarantee continues. Using food grade and recyclable materials (pizza papers) through craft Mid term Activities are planned to encourage our customers to recycle pizza boxes when ordering pizza from home. It will be implemented in the medium term. More saving was achieved by reducing the size of pizza boxes. The transition to the cutting-edged pizza box had a 0.5% m2 reduction effect. Understanding of “All from Oven” Short term(2) Our motto and strategy continues. After baking all our products, they are delivered straight to the consumer. (1) Short term: 0-2 years, Mid term: 2-12 years, Long term: 12+ years. (2) The time horizon is taken as short term. However, regarding risk assessment of the potential demand, actions have already been taken and started to be implemented at the operational level. 53 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Focused themes Transition risks Physical risks Time horizon Progress from 2021 to 2022 Main climate-related risks and actions of DP Eurasia Regulations Market Reputation Technology Acute Chronic (short, mid or long term)(1) Responsible sourcing Localisation of raw material procurement (primarily wheat and corn) Short term From the beginning of 2022, we have been capable of getting corn locally. On the flour aspect, we still need to utilise strong wheat growth in the northern Black Sea region since the characteristics of the local wheat do not fulfil our standards for the flour we use for our seven-day shelf-life dough. Yet, we are still looking for methods to enhance the proportion of local wheat in our flour. Enhancing the menu options regarding client preferences that also include performing R&D processes towards plant‑based meat and vegan choices Short term Within the scope of the project, vegan sausage and vegan mozzarella R&D studies continue. In addition, our short-term goals include the development of vegan pizza. Training farmers, suppliers and monitoring the agriculture within the sustainability framework Mid term Global and local examples on the subject are examined. In addition, development plans are being prepared. Shelf-life management, preventing food waste and at the same time providing a high quality of service Short term It went from 24 in sole products to 32 in a box. The Company has examined the packaging enlargement studies in other products within the scope of productivity projects it is planned to implement this in the upcoming periods. To prevent waste, the “fifo system” is applied in the branches. Dual sourcing (alternative suppliers) Short term A supplier risk assessment report is kept, and alternative supplier studies are continuously carried out. (1) Short term: 0-2 years, Mid term: 2-12 years, Long term: 12+ years. (2) The time horizon is taken as short term. However, regarding risk assessment of the potential demand, actions have already been taken and started to be implemented at the operational level. 54 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Risk management Climate-related risks and opportunities are managed, evaluated, and monitored by DP Eurasia risk management operations to formulate a comprehensive and effective climate-related strategy that covers DP Eurasia’s four main climate-related focus areas. Climate-related risks are managed by the risk management team and filtered through our organisational and operational scope to identify and respond to risks which have a direct impact on our business/sector. Risk management Disclose how the organisation identifies, assesses and manages climate-related risks. a) Describe the organisation’s processes for identifying and assessing climate‑related risks. The Group, and in particular the supply chain team and other relevant stakeholders, continuously try to identify and monitor principal and emerging risks, and implement mitigation actions to minimise or eliminate their potential impact. Risks are categorised under four areas: • strategic risks: the Group is willing to take a certain level of risk by assessing a risk/return approach when doing business; • operational risks: the Group has a responsible approach to operational risk management. High quality products, customer satisfaction and continuity of production are the prioritised areas; • financial risks: the Group continuously assesses its financial risks and seeks to minimise the potential impact; and • compliance risks: compliance with laws and regulations is essential for the Group, which does not tolerate non-compliance with laws. b) Describe the Company’s processes for managing climate‑related risks. The identified risks are managed by using supply risk assessment methodology depending on the supply chain team. The corporate leadership team and newly established ESG Committee will be leading the further management progress. The corporate leadership team has the following remit: • designing and implementing an overall risk management process for the organisation, which includes an analysis of the financial impacts on the Company when risks occur; • performing a risk assessment: analysing current risks and identifying potential risks that are 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. 55 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Risk management Disclose how the organisation identifies, assesses and manages climate-related risks. c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the Company’s overall risk management. The risks represent a snapshot of the Group’s principal risks. The 2022 risk assessment has been managed through the potential climate change effects that may cause business interruption on DP Eurasia’s operations. In 2022, current risk assessment was reviewed. Considering geopolitical changes in Russia, the Group continues to assess its position there, evaluating several possibilities, including a potential divestment of our Russian operations. Furthermore, as a protection, the Company continues to limit investment in Russia and focuses on optimising existing store coverage. With the closing of 29 locations in 2022, the number of Russian stores stood at 159 on 31 December 2022. The Company’s risk management processes identify, prioritise and address a broad range of risks that can directly or indirectly impact the organisation in the short, medium and long term, and we tier risks accordingly. The Audit Committee and management monitor the risk management, 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. 56 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Within the TCFD framework the risks are determined as below. TCFD risks DP Eurasia’s definition Transition risks Policy and legal Policy and legal risks are defined under the umbrella of new climate‑related regulations such as the Climate Change Action Plan of Türkiye, Paris Agreement and Green Deal. Also, increased costs from fines and judgements are taken into consideration under policy and legal risks. At DP Eurasia, we are ready to take all preventive measures in order to mitigate risks. However, note that in Russia there are no obligatory regulations adopted; therefore, policy and legal risks will be evaluated for upcoming years. Market Market risks emerge from the unpredictability of the potential increase in costs (energy, raw materials, etc.) or changing customer preferences related with inadequate climate actions of the Company. DP Eurasia’s approach focused on the competitor and sector analysis, and customer feedback about health and safety issues. Technology Technology risks are evaluated as more green or digital innovations in agricultural practices, and solutions regarding delivery or alternative options in the operations and supply chain. Reputation Reputational risks are described as related shifts in customer preferences due to 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. Physical risks Acute Acute driven risks include severe weather conditions and natural disasters that could harm the operation and supply chain. DP Eurasia’s evaluation concentrates on operational disruption and increases in insurance premiums against such unexpected climate events. Particularly for the supply chain, such weather events could result in a shortage or interruption in the availability of certain food products or supplies (especially wheat-related agricultural practices). Chronic Chronic risks are evaluated as long-term climate risks that could cause operational disruption, a decrease in the raw material portfolio and product quality for agriculture in the supply chain. 57 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued Metrics and targets Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities. a) Disclose the metrics used by the Company to assess climate-related risks and opportunities in line with its strategy and risk management process. b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (“GHG”) emissions, and the related risks. c) Describe the targets used by the Company to manage climate-related risks and opportunities and performance against targets. DP Eurasia has completed the step of collecting the most important environment metrics that are being tracked by Franchise, Corporate, Co & Supply Chain and General Management building. The Company publicly discloses annual Scope 1, 2 and 3 GHG emissions data. For the upcoming reporting periods, the relevant KPIs have been determined for responsible leaders. The KPIs that will be tracked are: KPI #1: electricity consumption/number of pizzas Responsible authority: corporate operation manager Time horizon: short term Target: reducing the amount of Scope 2 emissions KPI #2: electricity consumption/number of pizzas Responsible authority: franchise operation manager Time horizon: mid term Target: reducing the amount of Scope 3 emissions KPI #3: electricity consumption/number of crates Responsible authority: Co & Supply Chain Manager Time horizon: short term Target: 3% electricity consumption decrease in supply chain below 2021 level KPI #4: electricity consumption/number of employees Responsible authority: administrative affairs manager/unit Time horizon: mid term Target: reducing the amount of scope 2 emissions DP Eurasia is committed to the following climate-related targets in the mid term: Commitments Accomplishments in 2022 1. implement water usage standards in each store; In progress. 2. by 2030, reduce Scope 1 and 2 GHG emissions generated by corporate stores and offices to 9% below 2019 levels in line with National Russian Standards; Emission reduction activities have been carried out. There was a 7% reduction in total scope 1 emissions according to 2019 baseline. Scope 2 decreased by 17% compared to 2019 baseline. Scope 3 increased by 27% compared to 2019 baseline. 3. 3% electricity consumption decrease per crate in supply chain below 2021 level; 25% reduction has been recorded in total electricity consumption according to 2021 emission level and reduction activities have been carried out in our supply chain. 4. aspiration to reach net zero emissions by 2050; In progress. 5. 4% decrease in water consumption per crate in supply chain below 2021 level; 7% reduction in water consumption has been achieved in our supply chain according to 2021 consumption and further reduction activities have tried to be implemented. 6. decrease natural gas consumption by 3% per crate below 2021 level; and 11% reduction in total natural gas consumption in 2022 has been reported. 7. developing energy efficient projects for upcoming periods in terms of energy saving and offsetting our carbon footprint. New energy efficient projects are tried to be adopted and planned for upcoming periods. The given KPIs will be periodically reviewed under the internal and external circumstances. The relevant data and given targets will be updated at least every five years, if necessary. GHG emission scope 2022 Value (tonCO2e) Gross direct (Scope 1)(1) 12,117 Gross indirect (Scope 2 – Location Based)(2) 10,432 Other indirect (Scope 3)(3): Franchise (Buildings Scope 1 and Scope 2) 7,282 (1) Scope 1 consists of direct GHG emissions from sources that are owned or controlled by DP Eurasia. (2) Scope 2 relates to indirect emissions resulting from the generation of electricity, heat or steam purchased by DP Eurasia. Scope 2 emissions have been recalculated according to IEA location-based electricity values. Accordingly, 2021 Scope 2 emissions have been calculated as 12,680 tonCO2e. The decrease in Scope 2 emission value is due to the decrease in electricity consumption. (3) Scope 3 relates to indirect emissions from sources not owned or directly controlled by DP Eurasia but related to the Company’s activities, such as franchisee and supplier operation. Note that only related consumptions of franchise stores are covered under the Scope 3 emissions. 58 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Task Force on Climate‑related Financial Disclosures (“TCFD”) continued DP Eurasia environmental metrics DP Eurasia also publicly discloses the metrics used to assess and manage relevant climate-related risks and opportunities. Annual Scope 1, 2 and 3 GHG emissions data within the Annual Report has been reported below. The relevant data reporting is being tracked monthly and reporting has been attached in the “Appendix” section. The following represents the last three years’ values: Total energy consumption DP Eurasia Unit 2020 2021 2022 Scope 1 Natural gas m3 788,849 765,188 688,577 LPG litres — — Generator fuel – gasoline litres 1,725 1,530 1,362 R404a kg 543 473 785 CO2 kg 191 207 216 FM200 kg 20.00 — 180 Transportation – gasoline litres 1,313,603 1,283,912 659,446 Transportation – diesel litres 1,834,006 2,165,137 2,197,753 Electricity used for electric vehicles kWh — 1,021 7,961 Scope 2 Purchased electricity kWh 28,817,438 28,710,768 23,041,503 Centralised hot water Gcal 3,274 3,096 2,207 Scope 3 Franchisees (Buildings Scope 1 and 2) Natural gas m3 2,390,966 2,879,793 3,214,917 Centralised hot water Gcal 1,793 1,404 2,106 LPG litres 3,240 3,240 3,617 Generator fuel – gasoline litres 6,255 7,080 7,904 R404a kg 334 378 422 CO2 kg 626 708 790 Purchased electricity kWh 30,826,856 36,095,991 41,086,382 Transportation (leased cars) – petrol litres 1,436,471 1,625,933 1,815,144 Transportation (leased cars) – diesel litres — — 0 Electricity used for electric vehicles (leased) litres — 13,500 13,500 59 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management DP Eurasia Risk Management and Control Framework We identify our risks We assess and prioritise the risks We monitor this through the Audit Committee We implement controls to mitigate the risks We prepare an internal audit plan We conduct process audits The Audit Committee and management monitor the risk management, effectiveness and timely implementation of the internal controls and provide guidance for prioritisation and further improvement. How we manage risk The Board, Audit Committee and management continued to monitor risks and implement internal controls to mitigate risks throughout the year. A risk‑based management approach and a continuous culture of improvement are integral to the Group’s strategy and business management. The Group registers the principal risks to the risk inventory and regularly evaluates these risks. The DP Eurasia Risk Management and Control Framework is based on the “COSO Enterprise Risk Management – Integrated Framework”, managing financial, operational and compliance risks to meet the business strategy. 60 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued As a key element of a robust risk management and control framework, the internal audit functions are carried out independently by the DP Eurasia Internal Audit and Risk Management Directorate (“Internal Audit”), which directly reports to the Audit Committee and has full access to all Group entities. Internal Audit provides reasonable assurance to the Audit Committee and the Board on the design and effectiveness of the business processes and internal controls. 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. Corporate governance and ethics culture The Group continues to develop its corporate governance by implementing awareness programmes, conducting training and standardising business processes. The Group’s values, “doing the right thing” principle and “tone at the top as well as in the middle” approach are key drivers of the corporate governance strategy. The Code of Ethics and Business Conduct Policy, Anti‑Corruption and Anti-Bribery Policy and Whistleblower Policy are the key elements of the Group’s corporate governance framework. As clearly highlighted in the policies, the Group respects and promotes human rights in all the cultural, socioeconomic, and geographic contexts in which it operates, respecting the traditions and cultures of, and providing support for, local communities in accordance with specific interests in each region. Also, the Group prohibits any situation involving or pertaining to child or forced labour. Our employees as well as our business partners and suppliers are required to comply with the corporate governance policies. All incidents of actual or suspected integrity-related cases reported through the hotline or other resources are promptly and thoroughly investigated. In 2022, we have received, investigated and reported 289 cases. To the best of our knowledge, we had no cases of fraud, bribery or corruption which would have a significant impact on our business. Although we are occasionally confronted with less desirable behaviour, we consider the Code of Ethics and Business Conduct Policy, the Anti-Corruption and Anti‑Bribery Policy and the Whistleblower Policy to be 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. 61 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued The Group’s risk assessment In 2022, no major failings in the risk management and control systems were identified. The Group will continue to identify and monitor principal and emerging risks and implement mitigation actions to minimise or eliminate their potential impact. The Group categorises risks into four types: 1. Strategic risks The Group is willing to take a certain level of risk by assessing a risk/return approach when doing business. 2. Operational risks The Group has a responsible approach to operational risk management. High quality products, customer satisfaction and continuity to production are the prioritised areas. 3. Financial risks The Group continuously assesses its financial risks and seeks to minimise the potential impact. 4. Compliance risks Compliance with laws and regulations is essential for the Group, which does not tolerate non-compliance with laws. The risks represent a snapshot of the Group’s principal risks. Risk appetite Our risk appetite is defined by our Board, Audit Committee and Executive Team members and is integrated into the businesses through our strategy, policies, procedures, controls and budgets. Our appetite for each risk is determined by considering key opportunities and potential threats to achieving our strategic objectives and can be categorised as follows: Strategic risks These originate from trends, developments or events that could prevent us from executing and realising our strategic objectives. Risk appetite: Medium DP Eurasia has a diverse geographic footprint and business structure. Because of this, it is critically important that we manage risks in a proactive and responsible way to ensure we can deliver on our strategy. We use fact-based analysis that derives insights from our 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 These include unforeseen incidents that could result from failures in internal processes or systems, human error or adverse external events and could negatively impact the day-to-day operation of our business. Risk appetite: Medium We strive to minimise the possibility of business disruptions and the related impact of operational failures. We establish and manage a Governance, Risk, Management and Compliance (“GRC”) framework with policies, procedures and standards that regulate the achievement of our objectives. We constantly review and invest in our structure and processes to ensure they are fit for purpose and address any identified operational risk. Financial risks These include uncertainty of financial returns on investments, reduction in liquidity, erosion of profits, potential financial losses due to financing policies, and other external factors such as the macroeconomic environment, unreliability of suppliers, economic restrictions, and reduction of customer base. Risk appetite: Medium We are averse to any risks that could jeopardise the integrity of our financial reporting. Compliance risks These relate to unanticipated failures to comply with applicable laws and regulations as well as our own policies and procedures. Risk appetite: Medium At DP Eurasia, our values are an essential part of our strategic framework. “Integrity” is one of our key values. We strive for full compliance with laws and regulations and with our policies and procedures everywhere we do business. The GRC framework incorporates risk assessment, control activities and monitoring into our business practices at entity-wide and functional levels. We have adopted a “three lines of defence” model to provide reasonable assurance that risks to achieving important objectives are identified and mitigated. 62 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Strategic risks 1 Business dependency on Master Franchise Agreements (“MFAs”) Potential impact High Group risk • Expiration or termination of an MFA due to a breach of the agreement or store franchise agreements may affect the Group’s business operationally and financially. Mitigation • The Group has strong relations with Domino’s Pizza International. • Since the Group’s ability to renew the MFAs is dependent upon the good standing of the Group with respect to its contractual relationships with the Master Franchisors (including under the store franchise agreements) and its ability to agree a revised development plan in the relevant country, the KPIs (e.g. store openings, royalty performance etc.) are monitored very closely by management and the Board, and required actions are taken in order to mitigate the risks. Likelihood Low Ownership DPE CEO, DPT CEO, DPR CEO Change from 2021 2 Operations and growth strategy dependency on the success of the sub‑franchisees Potential impact Medium Group risk • The Group is reliant on the performance of sub‑franchisees in successfully opening and operating franchised stores and paying for supplies, royalties and other fees to the Group on a timely basis. • Franchise system risks are failure of sub-franchisees to make payments to the Group, sub-franchisee independence that may result in conflicts with Group standards or financial performance issues going undetected, non‑renewal of a store franchise agreement with sub‑franchisees, etc. Mitigation • The Group spends significant 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 is conducting Food Safety Evaluation Audits in the stores to monitor compliance. • The Group has increased the marketing, advertisement and consultancy support on the existing sub-franchisees to ensure strong business management, profit and loss management and cash flow. Likelihood Low Ownership DPT Lead Team, DPR Lead Team Change from 2021 63 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Strategic risks 3 Growth strategy dependency on opening profitable new system stores Potential impact Medium Group risk • Failure to identify key geographical areas to open stores may result in failure to meet future expectations. • Market saturation may become significant in the future and could adversely 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. Likelihood Low Ownership DPT Lead Team, DPR Lead Team Change from 2021 64 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information 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 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 in 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 of customer behaviour and proactive approach. • The Group is continuously developing its information technology (“IT”) architecture to strengthen the system’s capacity and ensure business continuity. • The Group periodically monitors its IT restructuring needs in order to serve the rapidly changing challenges of the digital world. • The IT team continuously analyses the system security requirements, planning and taking actions accordingly. • The increase of the Group’s online presence in different channels, and better customer experience on online ordering platforms, distinctly improves access to consumers and penetration. • The Group is strengthening and improving its online platform technology in order to serve increasing consumer demands and follow technological and innovative changes. • The desktop and mobile web platforms run at the Microsoft Azure Cloud environment which provides security, scalability, availability and performance, and consequently serves growth. • The DP Eurasia Internal Audit and Risk Management Directorate conducts business process audits, performs risk assessments and evaluates design and 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. Likelihood Low Ownership DPE Marketing & IT Directors Change from 2021 65 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Strategic risks 5 Reliance on successful marketing initiatives Potential impact Medium Group risk • Failure to succeed in marketing initiatives may result in not generating higher sales. • The Group’s spending of significant time and resources in product innovation, advertising campaigns and store designs and refurbishments may not generate increased sales or profits. Mitigation • The Group has an agile and responsive working model as a retailer. • Closely monitoring its competitors and adopting best practice benchmarks enables the Group to implement new opportunities quickly and maximise the benefit from the marketing and product innovation 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. Likelihood Low Ownership DPE Marketing Directors Change from 2021 66 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Strategic risks 6 Climate change Potential impact Medium 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. Likelihood Medium Ownership ESG Committee Change from 2021 67 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Strategic risks 7 The Domino’s Pizza brand and the Group’s reputation are critical to its business and success Potential impact Medium Group risk • The Group’s business could be negatively 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. Mitigation • The Group conducts random audits in stores and on the supplier sites, monitors the results and takes the required actions. • Stores are regularly audited to prevent or detect any financial, operational or compliance risks (food safety audits, operational evaluation reviews, store audits, mystery shopper audits, etc.). • Domino’s Pizza International and the Group have started to conduct Food Safety Evaluation Audits in stores to monitor compliance with standards. • Commissaries are audited annually by Domino’s Pizza International in terms of quality, food safety and occupational health and safety. • In Russia, the Moscow commissary and stores are certified to HACCP (Hazard Analysis and Critical Control Point). HACCP is an internationally recognised system for reducing the risk of safety hazards in food. • In Turkey, the four commissaries are certified to ISO 22000. ISO 22000 is a food safety management system. • The Group monitors health and safety compliance requirements in its corporate stores and premises and takes preventive and detective actions accordingly. Likelihood Medium Ownership DPE Lead Team Change from 2021 68 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Strategic risks 8 Competition from other pizza chains and fast-food restaurant chains may adversely affect the Group’s business Potential impact Medium 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. Likelihood Medium Ownership DPE Lead Team Change from 2021 9 Changes in consumer preferences Potential impact Medium Group risk • The fast-food restaurant market is 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 speed 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 and faster delivery opportunities etc. Likelihood Medium low Ownership DPE Marketing Directors Change from 2021 69 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Strategic risks 10 The Domino’s Pizza brand and the Group’s reputation are critical to its business and success Potential impact Low Group risk • The Group’s successful implementation of its strategy is dependent on its ability to recruit, retain and motivate high quality senior management and other personnel with extensive knowledge in the fast-food restaurant industry. • The loss of the services of any of the Group’s senior managers could have a material adverse effect on its business plans, product development, growth strategy, marketing and other plans. Mitigation • The Selection and Appointment Committee draws up a plan for the succession of Directors and senior managers, makes proposals for appointments and reappointments and supervises the policy of the Board regarding the selection criteria and appointment procedures for Directors and senior managers to improve employee retention and mitigate the risk of losing services of the Directors and/or senior managers during the year. • People Review Committee is held monthly to discuss people practices of the Group concentrating on vacant managerial roles, new manager onboarding, critical role successors and promotions. Committee follows actions regularly. • HR monitors the job market with consultancy companies to analyse market conditions in remuneration, to follow talent movements and changes in senior roles in relevant industries. HR uses this information in reviewing current conditions during the year. • Every Head and Manager in the organisation has a specific target about people management and succession planning in their individual scorecards. • A new and structured model of Talent Management will be deployed in the organisation in 2023. Likelihood Medium low Ownership DPE HR Directors Change from 2021 70 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Strategic risks 11 Macroeconomic and political developments Potential impact Medium Group risk • Macroeconomic and political developments in the world and in Turkey, Russia and the other jurisdictions in which the Group operates may negatively 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. 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. • Regarding the geopolitical developments in Russia, the Group continues to evaluate its presence in Russia, considering various options which may include a divestment of its Russian operations. Whilst work on a potential transaction is ongoing, there can be no certainty as to the outcome. In the meantime, as a mitigation, the Group continues to limit investment in Russia and remains focused on optimising the existing store coverage. Following the closure of 29 stores over the course of 2022, the number of Russian stores stood at 159 as of 31 December 2022. Likelihood High Ownership DPE Lead Team Change from 2021 71 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Operational risks 1 Reliance on third-party suppliers Potential impact Medium Group risk • Reliance on third-party suppliers and service providers may result in shortages or interruptions in the supply of raw materials, ingredients or complementary products. • The Group’s and its sub‑franchisees’ business is dependent on frequent deliveries from third‑party suppliers of raw materials, ingredients and complementary products that meet the Group’s specifications. Suppliers may fail to provide necessary products on a timely basis or to the agreed upon standard, may discontinue or limit their products or may seek to charge the Group higher prices. • Shortages or interruptions from suppliers may be caused by unanticipated demand, problems in production or distribution, inclement weather or other conditions. Mitigation • The Group continuously seeks alternative suppliers for critical materials and services to prevent any material shortages in case of a disruption in our principal suppliers’ operations. • The Group also has emergency plans in place in the event of a disruption of operations at our commissaries or suppliers. • Supplier audits are periodically performed in order to monitor supplier performance and compliance. • Supplier evaluation is performed periodically to monitor the supplier performance as per the risk criteria and take the required actions. • The Group assesses suppliers’ business continuity plans to strengthen the contingency plans. Likelihood Low Ownership DPE Supply Chain Directors Change from 2021 72 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Financial risks 1 Increase in food cost and other supplies Potential impact Medium Group risk Increased costs of food and other supplies could decrease the Group’s operating margins or cause the Group to limit or otherwise modify its product variety. • The Group’s profitability depends in part on its ability to manage changes in the price and availability of food (including dairy, meat, poultry and flour) and other commodities such as cardboard. Prices may be 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. 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. Likelihood High Ownership DPE Supply Chain Directors and CFO Change from 2021 73 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Financial risks 2 Exchange rate fluctuations and cash flow management Potential impact Low 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. Mitigation • The Group mitigates this risk by agreeing fixed exchange rates with its suppliers, wherever possible. • The Group controls exposure to the exchange rate fluctuations by minimising the foreign currency nominated borrowing. • The Group’s bank loans consist of TRY and RUB currencies (related to the country’s local currency) in order to eliminate hard currency risk. The Group currently utilises internal cash flow and bank borrowings in Turkey and Russia for its financing needs. The Group has debt covenants with respect to its bank borrowings in Russia. The Group’s strong liquidity position enables it to prepay its bank borrowings in Russia, despite the recent devaluation of TRY, if required, and still maintain a strong liquidity position. Likelihood Medium Ownership DPE CFO Change from 2021 74 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Compliance risks 1 Risk of litigation from customers, sub-franchisees, employees and others in the ordinary course of business Potential impact Medium Group risk • Risk of litigation from customers, sub-franchisees, employees and others in the ordinary course of business, which diverts financial and management resources. • Claims of illness or injury relating to food quality or food handling are common in the food service industry. In addition, class action lawsuits have been filed, and may continue to be filed, against various fast‑food restaurants alleging, among other things, that fast-food restaurants have engaged in deceptive advertising, sales and promotions which encourage obesity. • Further, the Group may be subject to employee, sub‑franchisee and other claims in the future based on, among other things, discrimination, harassment, wrongful termination, wages and overtime compensation as well as rest break and meal break issues. Such claims and disputes may divert management resources, create adverse publicity and could lead to an adverse judgement against the Group, which could adversely affect the Group’s business, results of operations, financial condition, cash flows and prospects. Mitigation • Stores are regularly audited to prevent or detect any financial, operational or compliance risks (food safety audits, operational evaluation reviews, store audits, mystery shopper audits, etc.). • Employees are regularly trained on the Group Code of Conduct, corporate governance policies, changing laws and regulations as needed to increase awareness. • The legal and regulative requirements based on changing laws and regulations are reflected in the contracts via additional protocols to prevent any disputes. • The supplier Code of Conduct is shared with all suppliers as part of the contract to ensure compliance and increase awareness. • The Group has an independent hotline enabling internal and external parties to report Code of Conduct conflicts such as potential monetary frauds, quality concerns, wrongful termination, wages issues, etc. The cases are investigated by the Internal Audit and Risk Management Directorate and preventive/detective actions are taken in order to enhance business processes and prevent repetition of these cases. • Both Turkey and Russia have in-house lawyers on top of an external law firm to work closely with business units and mitigate litigation cases. Likelihood Low Ownership DPE HR Directors and Operations Directors Change from 2021 75 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Compliance risks 2 Violation of data protection laws Potential impact High Group risk Violations of data protection laws carry fines and expose the Group and its employees to criminal sanctions and civil suits. • Non-compliance with data protection laws could expose the Group to regulatory investigations, which could result in fines and penalties. • Regulators may issue orders to stop processing personal data in addition to imposing fines, which could disrupt operations. • The Group could be subject to litigation from persons or corporations allegedly 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. Mitigation • The Group periodically reviews data protection law compliance with internal and external support and takes required actions as needed. • Personal data protection law compliance audits are conducted periodically. • System security requirements regarding data protection laws are continuously assessed by the IT team to take the required measures. Likelihood Medium Ownership DPE IT Director Change from 2021 3 Violation of changing regulations Potential impact Medium Group risk • Regulatory changes (e.g. personal data protection law, quality regulations, product regulations etc.) are 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. Likelihood Low Ownership DPE CFO Change from 2021 76 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Risk management continued Compliance risks 4 Risk of litigation from customers, sub-franchisees, employees and others in the ordinary course of business Potential impact High Group risk • The Group is heavily reliant, as part of its online strategy, on information systems, including for online ordering platforms, point of sale processing in its system stores, management of its supply chain, accounting, payment of obligations, collection of cash, processing of credit and debit card transactions and other processes and procedures. • Breaches of the Group’s cybersecurity measures could result in unauthorised access to the Group’s systems, misappropriation of information or data, including personal information, deletion or modification of user information, or a denial-of-service or other interruption to the Group’s business operations. • As techniques used to obtain unauthorised access to, or sabotage, systems change frequently and may not be known until launched against the Group or the Group’s third-party service providers, the Group may be unable to anticipate, or implement adequate measures to protect against these attacks. Mitigation • The Group is continuously developing the information technology (“IT”) architecture to strengthen the system capacity and ensure business continuity. • The IT team continuously analyses the system security requirements, plans and takes action accordingly. • A data leak prevention system is used for prevention and detection of data leaks in enterprise business applications. • A data classification is in place, to create the data inventory and ensure stronger data management and protection with preventive and detective actions. • IT General Control Audits are periodically conducted to define the improvement areas and follow up management action implementation to mitigate the risks. • As part of the system security actions, ERP System Access Rights are reviewed periodically. • The Group has significantly increased system security investment to provide a safer IT environment for employees and customers. Moreover, the IT security team has expanded to meet the rapidly changing needs of technology. • The security projects are monitored closely by management to ensure 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. Likelihood Medium Ownership DPE IT Director Change from 2021 77 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Group structure The Group’s organisation and nature of activities DP Eurasia N.V. is a limited liability company (naamloze vennootschap) incorporated under the laws of the Netherlands on 18 October 2016. The principal activity of DP Eurasia consists of acting as a holding company. DP Eurasia operates corporate stores and franchise stores in Turkey and Russia, including provision of technical support, control and consultancy services to the franchisees. As of 31 December 2022, the Group operated 830 stores (655 in Turkey, 159 in Russia, ten in Azerbaijan and six in Georgia) through its owned corporate stores (18%) and franchised stores (82%). In addition to its pizza delivery business, the Group also has its own coffee brand, COFFY, which trades from 29 stores at period-end, 19 of which are franchised. Subsidiaries DP Eurasia has a total of four fully owned subsidiaries. The entities included in the scope of the consolidated financial information and nature of their business are as follows: DP Eurasia is committed to conducting all of its business and relationships with dedication, professionalism and integrity. The business ethics of the Group are based on compliance with criteria which promote the values, culture and management model of DP Eurasia, encouraging respect for individuals and their rights. Structure Group and subsidiaries DP Eurasia N.V Pizza Restaurants LLC Pizza Restaurantları A.Ş. Fidesrus B.V. Fides Food Systems B.V. Subsidiaries 2022 effective ownership (%) 2021 effective ownership (%) Registered country Nature of business Pizza Restaurantları A.Ş. (“Domino’s Turkey”) 100 100 Turkey Food delivery Pizza Restaurants LLC (“Domino’s Russia”) 100 100 Russia Food delivery Fidesrus B.V. (“Fidesrus”) 100 100 The Netherlands Investment company Fides Food Systems B.V. (“Fides Food”) 100 100 The Netherlands Investment company 78 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Heading continued Corporate governance What’s in this section? Board 79 Leadership team 81 Board attendance and composition 82 Corporate governance report 83 Remuneration report 95 Directors’ remuneration policy 99 Annual remuneration report 110 Board declaration 121 Shares and shareholders 122 78 DP Eurasia N.V. Annual Report and Accounts 2022 79 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Board Year of birth: 1952 Nationality: Indian Initial appointment: April 2021 Year of birth: 1982 Nationality: Dutch Initial appointment: July 2017 Shyam S. Bhartia Non‑Executive Director SAC Frederieke Slot Company Secretary and Executive Director Aslan Saranga Chief Executive Offi cer and Executive Director Year of birth: 1969 Nationality: Turkish Initial appointment: June 2017 Year of birth: 1953 Nationality: British Initial appointment: July 2017 Peter Williams Chairman and Independent Non‑Executive Director AC RC SAC Key: AC Audit Committee | RC Remuneration Committee | SAC Selection and Appointment Committee Mr Williams has spent over 30 years in both executive and non‑executive positions in consumer‑facing businesses comprising retail, leisure, media and consumer products. Mr Williams also serves as Chairman of Mister Spex (a multi‑channel eyewear retailer based in Berlin). During the 13 years up to 2004, he served as chief fi nancial offi cer and then as chief executive of Selfridges. Alongside this experience, Mr Williams has also served on the boards of ASOS plc, boohoo Group plc, Rightmove plc, Cineworld Group plc, Blacks Leisure Group plc, JJB Sports plc, U and I Group plc and Superdry plc. He is also a chartered accountant and has a bachelor’s degree in Mathematics from Bristol University. Mr Saranga is the Chief Executive Offi cer, having been appointed as the founding chief executive offi cer of the exclusive master franchisee of the Domino’s System in Turkey on its inception in 1996. Alongside this position, Mr Saranga is also the Chairman of the Board of Directors at Domino’s Russia. He currently sits as a board member of the Food Retailers Association, a leading industry group in Turkey, and is a member of Domino’s Pizza General Management Council, which is comprised of the CEOs of the top ten countries in the global Domino’s Pizza network. Mr Saranga has a master’s degree in Finance from the University of Istanbul. Ms Slot served as senior legal counsel of USG People between 2014 and 2017 (a large HR service provider that was listed on the Amsterdam Stock Exchange until June 2016). She spent the early part of her career as an attorney‑at‑law with various large Dutch law fi rms, advising on restructuring, mergers and acquisitions, and advising national and international companies on a wide range of strategic legal issues, corporate governance matters and legal and regulatory responsibilities. Ms Slot has a degree in Law from the University of Leiden. Mr Shyam S Bhartia is founder and chairman of Jubilant Bhartia Group, headquartered in New Delhi, India. With strong global presence in diverse sectors, the Group has four companies listed on the Indian Stock Exchanges. Mr Bhartia is chairman of Jubilant Pharmova, Jubilant Ingrevia and Jubilant FoodWorks Limited (a food service company and master franchisee of Domino’s Pizza in India, Sri Lanka, Bangladesh and Nepal). He is also Chairman and managing director of Jubilant Pharma, Singapore. Mr Bhartia holds a bachelors’ degree in Commerce from St Xavier’s College and Calcutta University, and is a qualifi ed cost and works accountant. 80 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Mr Hari S Bhartia is founder and co‑chairman of Jubilant Bhartia Group, headquartered in New Delhi, India. With a strong global presence in diverse sectors, the Group has four companies listed on Indian Stock Exchanges. Mr Bhartia is co‑chairman and managing director of Jubilant Pharmova and co‑chairman of Jubilant Ingrevia and Jubilant FoodWorks Limited (a food service company and master franchisee of Domino’s Pizza in India, Sri Lanka, Bangladesh and Nepal). He is a Chemical Engineering graduate from the Indian Institute of Technology (“IIT”), Delhi and former President of the Confederation of Indian Industry (“CII”). He is also a member of several educational, scientifi c and technological programmes of the Government of India. Mr Adams also serves as Chairman of EV Limited (a UK based soft fruit producer), and sits on the Board of two UK charities. In the last six years, Mr Adams has served on the boards of PizzaExpress UK, Thinksmart plc, Halfords plc, Debenhams plc, Conviviality plc, Fever Tree Drinks plc, Hornby plc and Elegant Hotels plc. He holds an MA from Edinburgh University and a Diploma in Business Administration from the Scottish Business School. Mr Ertas is currently the Chief Executive Offi cer at sahibinden.com, (an online classifi eds and marketplace platform in Turkey). Prior to Sahibinden, Mr Ertas worked in executive leadership roles in marketing, product management and development and software engineering at Turkcell, Telenity and Telsoft. Mr Ertas has more than 30 years of experience in the information and communications technology (“ICT”) sector. He is also the vice‑chairman at Interactive Advertising Association (“TR”) and a member of the board at Turkish Informatics Industry Association. Mr Ertaş holds an Executive MBA from Koç University in Istanbul and a BSc Electrical & Electronics Engineering from the Middle East Technical University in Ankara. Mr Ashaboğlu is currently a board director at Mavi, Yapi Kredi Bank, Hepsiburada (“NASDAQ”), Koc Financial Services, Koc Finansman, and Sirena Marine. He began his career as a Research Assistant at MIT in 1994 and held various positions in capital markets within UBS Warburg, New York. After serving as a management consultant at McKinsey & Company, New York, Mr Ashaboğlu moved back to Turkey and joined Koc Holding as Finance Group Coordinator in 2003. He was appointed Group CFO in 2006, serving until April 2022. Mr Ashaboğlu holds a BSc from Tufts University and a Master of Science from Massachusetts Institute of Technology, both in Mechanical Engineering. Year of birth: 1969 Nationality: Turkish Initial appointment: June 2022 Year of birth: 1971 Nationality: Turkish Initial appointment: September 2022 Year of birth: 1954 Nationality: British Initial appointment: April 2021 Year of birth: 1956 Nationality: Indian Initial appointment: April 2021 Burak Ertaş Independent Non‑Executive Director RC Ahmet Ashaboğlu Independent Non‑Executive Director AC David Adams Senior Independent Non‑Executive Director AC RC SAC Hari S. Bhartia Non‑Executive Director SAC Board continued 81 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Leadership team Ms Alpagut became Chief Financial Offi cer in 2017. She joined the Group in 2006 as the Chief Financial Offi cer of the Turkish Operations. Ms Alpagut has a degree in Business Administration from İstanbul University. Mr Ciritci became Chief Executive Offi cer of the Turkish Operations in 2022. Since 2010 he has been Business Development, Franchise Operations and International Development Director and Chief Growth Offi cer of the Turkish Operations. Mr Ciritci has a degree in Tourism Administration from Boğaziçi University. Mr Rubinowski was appointed as the CEO of Russian Operations in 2021. Prior to this, he was Marketing Director of KFC for Russia & CIS for over four years at Yum!. Mr Rubinowski has a degree in Economics from the Poznan University of Economics. Ms Togay became Chief Marketing & Digital Business Offi cer of Turkey and Russia Operations from January 2022. She was previously the Marketing Director of the Turkish Operations since 2019. Ms Togay has a degree in International Relations from Galatasaray University. See biography on page 79. Pınar Togay Chief Marketing & Digital Business Offi cer Daniel Rubinowski Chief Executive Offi cer of Russian Operations Kerem Ciritci Chief Executive Offi cer of Turkish Operations Neval Korucu Alpagut Chief Financial Offi cer Aslan Saranga Chief Executive Offi cer and Executive Director 82 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Board attendance and composition During the year, Directors attended seven Board meetings, with some Directors attending meetings of committees established by the Board to conclude certain matters. Board diversity Women Men Board 12.5% | 87.5% Executive Directors 50% | 50% Senior management 50% | 50% Non-Executive Directors 0% | 100% Directors’ skills and experience Skills/experience Number of Directors Retail Remuneration/people Finance Marketing/brand Product specific Listed entity experience Legal, governance and compliance IT/digital International markets Attendance of Board meetings Attendance at Attendance at meetings of the meetings of the Duration of Attendance at Audit and Selection and Date of possible unexpired term planned Board Attendance Remuneration Appointment reappointment of appointment meetings/calls site visits Committees Committee Peter Williams 2022 2 months 7 1/1 9 2 Aslan Saranga 2022 2 months 7 1/1 n/a n/a Frederieke Slot 2022 2 months 7 1/1 n/a n/a Shyam Bhartia 2022 2 months 5 1/1 n/a n/a Hari Bhartia 2022 2 months 6 1/1 n/a n/a Pratik Pota1 2022 2 months 4 1/1 n/a n/a David Adams 2022 2 months 7 1/1 9 2 Burak Ertas2 n/a n/a 2 n/a 1 n/a Ahmet Ashaboğlu3 n/a n/a 0 n/a n/a n/a (1) Pratik Pota ceased to be a Board member on 8 June 2022. (2) Burak Ertas joined the Board on 8 June 2022. (3) Ahmet Ashaboğlu joined the Board on 20 September 2022. 83 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Corporate governance report Corporate governance DP Eurasia is a limited liability company incorporated under the laws of the Netherlands. DP Eurasia has a premium listing of ordinary shares on the London Stock Exchange. The Company has a one‑tier Board structure. The following sections explain how the Company applies the main provisions set out in the UK Corporate Governance Code and the Dutch Corporate Governance Code, and how they have been prepared in line with the UK Listing Authority Listing Rules (the “Listing Rules”). This part of the Annual Report covers: The structure and role of the Board and its committees Page 85 Relations with the Company’s shareholders and the General Meeting Pages 124-125 The reports of the Audit Committee, the Remuneration Committee and the Selection and Appointment Committee Pages 87-89 Information that needs to be included pursuant to the Listing Rules, if not included in the consolidated financial statements, the remuneration report (payment for loss of office) and the shares and shareholders paragraph (Relationship Agreement and the controlling shareholder). Page 107 and 124 The Board is committed to maintaining a governance framework that is appropriate to the business, supports effective decision‑making and promotes decisions focused on the long‑term success of the Group. Corporate governance statement The information required to be included in this corporate governance statement, as described in articles 3, 3a and 3b of the Dutch Decree on the contents of Directors’ report (the “Decree”), is incorporated and published in the corporate governance section of the Company’s website. How did the Board engage with stakeholders in 2022? The Chairman, Chief Executive Officer and Senior Independent Director have regular contact with the Company’s major shareholders. Their views are taken into account when the Board makes decisions. The Company also recognises that the business has a role in contributing to wider society. The Board encourages the support provided to hospitals during the COVID-19 pandemic and the aid provided to victims in the Turkey-Syria earthquake. 84 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information How did the Board spend their time in 2022? The meetings addressed routine commercial, operational and financial matters and focused on key resource levels and strategic implementation. As well as day-to-day matters, the Non‑Executive Directors paid particular attention to the activities regarding investors. Furthermore, the Board was regularly updated on the situation in Russia. The Board This section of the corporate governance report explains how the Board has fulfilled its duties and obligations during the year 2022. Role and responsibilities The Board is a one-tier board, and the Directors have joint powers and responsibilities. The Directors share responsibility for all decisions, resolutions and acts of the Board and for the acts of each Director. Each Director has a duty towards the Company to properly perform the responsibilities assigned to him or her. In performing their duties, each Director is guided by the interests of the Company and its business enterprise, taking into consideration the interests of stakeholders (which include, but are not limited to, consumers, franchisees, employees, creditors and shareholders). The composition of the Board in 2022 was in line with its profile, as published on the Company’s corporate website, in terms of experience, expertise, nationality and age. Regarding gender diversity, as at 31 December 2022, the Board has no female Non-Executive Directors. Addressing gender diversity will be a priority when the Board considers to appoint another Non-Executive Director. At any time, the Board, as a whole, is entitled to represent and act on behalf of the Company. Additionally, the Chief Executive 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 79 and 80. 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. Our culture Ambition Integrity Cohesion Team spirit The Group is committed to improving its brand to overcome new challenges whilst demonstrating an eagerness to adapt and grow. The Group is dedicated to choosing the path which strengthens its principles of truth, loyalty, and justice in the daily conduct of all workers. The Group aims to achieve the ambitious goals it sets through the contribution of all business units. The Group’s experience facilitates the bringing together of necessary resources to overcome new challenges. The Group operates globally in culturally diverse contexts and encourages, a respect for differences, a sense of belonging, loyalty and reciprocity, amongst all workers. Corporate governance report continued 85 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Corporate governance report continued Board committees and roles Shareholders 96 shareholders as at 31 December 2022 Board Remuneration Committee Audit Committee The Selection and Appointment Committee assists and advises the Board and prepares the Board’s decision‑making. The Selection and Appointment Committee, among other things, focuses on: (a) drawing up selection criteria and appointment procedures for Directors; (b) periodically assessing the size and composition of the Board, and making a proposal for a composition profile of the Board; (c) periodically assessing the functioning of individual Directors, and reporting this to the Board; (d) drawing up a plan for the succession of Directors; (e) making proposals for appointments and reappointments; and (f) supervising the policy of the Board regarding the selection criteria and appointment procedures for senior management. The Audit Committee assists and advises the Board and prepares the decision‑making of the Board on the supervision of the integrity and quality of the Company’s audit, accounting and financial reporting processes and the 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. The Remuneration Committee assists and advises the Board and prepares the Board’s decision‑making regarding the determination of remuneration of the Executive Directors, the proposed target for the LTIP, and the review and monitoring of overall remuneration packages for senior management. Selection and Appointment Committee See Remuneration Committee report on pages 88 and 89. See Audit Committee report on pages 87 and 88. See Selection and Appointment Committee report on page 89. Executive team Chief Executive Officer CEO of the Russian Operations Chief Financial Officer Company Secretary Head of IR CEO of the Turkish Operations CFO Russia 86 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Appointment, dismissal and suspension Pursuant to the Company’s articles of association, the Board must consist of at least one Executive Director and one Non-Executive Director. The Board determines the total number of Directors. The General Meeting appoints, suspends and dismisses each Director. As long as there is a controlling shareholder (for the purposes of the Listing Rules), the Board rules allow for the election or re-election of any independent Director to be approved by separate resolutions of: (i) the Company’s shareholders; and (ii) the Company’s shareholders excluding any controlling shareholder. If either of the resolutions is defeated, the Company may propose a further resolution to elect or re-elect the proposed independent Director, which (a) may be voted on within a period commencing 90 days and ending 120 days from the original vote, and (b) may be passed by a vote of the shareholders of the Company voting as a single class. Each Executive Director may at any time be suspended by the Board. The General Meeting determines the term of appointment for each Director. A Director’s appointment may be renewed at General Meetings, with due observance to the rules and regulations as applicable to the Company. Ultimately, the Directors’ main responsibility is to promote the long-term success of the Company, acting in shareholders’ best interests. All of our Directors submit themselves for re‑election at each AGM and we provide shareholders with sufficient information in the meeting papers for them to decide whether their commitment and performance warrant a further year in office. At the 2022 AGM, each serving Director was re-elected. A resolution of the General Meeting to appoint, suspend or dismiss a Director requires an absolute majority of the votes cast. The General Meeting can suspend or dismiss a Director at any time. Jubilant will be able to nominate up to three Non-Executive Directors to the Board for appointment, for as long as it and its associates are entitled to exercise or to control the exercise of 10% or more of the votes cast on all, or substantially all, General Meetings. More information relating to the nomination rights of Jubilant can be found on page 86. Executive Directors The Board has delegated the operational running of the Group to the Executive Directors with the exception of the following matters which are reserved for the full Board: structural and constitutional matters; corporate governance matters; dividend proposals; developing and approval of the overall strategy and decisions on managing the corporate portfolio; approval of the business plan and budget; oversight of the operational and financial performance of the business; review and approval of any publication by the Company of any information required by applicable laws and regulations; approval of significant transactions or arrangements in relation to mergers, acquisitions, joint ventures and disposals; approval of changes made to franchise agreements or other significant agreements; settlement of material litigation issues, significant financial injections and capital expenditures; and approval of material changes to pension liabilities. Non-Executive Directors The Non-Executive Directors share full responsibility for the execution of the Board’s duties. Within this broad responsibility, the Non‑Executive Directors are essentially supervising and advising the Board and management regarding the strategy, the implementation of the strategy and the principal risks associated with it, and focus on the 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. 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 2023 AGM, it is proposed that the current Executive Directors and Non-Executive Directors will be reappointed. Mr Peter Williams will retire from the Board at the end of the 2023 AGM. He will be succeeded by Mr Ahmet Ashaboğlu who was appointed as an Independent Non-Executive Director in September 2022. As discussed in the 2021 Annual Report and Accounts, the Board recognised that it would require additional independent Non-Executive Directors to comply with the applicable corporate governance best practice principles. Following the 2022 AGM and the EGM in September 2022, two new independent Non-Executive Directors were appointed. Taking into account that Mr Williams will not be up for re-election, the Selection and Appointment Committee has started the search for another independent Non‑Executive Director. Corporate governance report continued 87 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Corporate governance report continued The Board has taken into account the other demands of the relevant Directors and has no concerns on their time commitment using the prior year as a reference point. Any additional appointments Directors are contemplating taking on are discussed with the Chairman in advance, including the likely time commitment and whether these could in any way constitute a conflict of interest. Committees The Company has established three committees: an Audit Committee, a Remuneration Committee and a Selection and Appointment Committee. These committees each have written terms of reference, and are currently composed as described below. The members of each of these three committees are appointed from among the Non‑Executive Directors. From time to time, separate committees may be established by the Board to consider specific issues when the need arises. The committees operate pursuant to the terms of reference approved by the Board in accordance with the law, the Dutch Corporate Governance Code and the UK Corporate Governance Code. The terms of reference are reviewed by each committee during the year. The committees’ terms of reference are available on the Company’s corporate governance website, including attendance at meetings in 2022, which can be found on page 82. The Audit Committee met four times in 2022. In general, all meetings of the Audit Committee are attended by the CEO, the CFO, the Internal Audit and Risk Management Director and the external auditor. The Company Secretary attends meetings in her capacity as Secretary of the Audit Committee. At the end of each meeting, it was chosen to discuss matters without management being present and there is regular dialogue with the audit partner. The Investor Relations Director joined the meetings during which the press releases regarding annual and half‑year results were discussed. Other members of the Board and senior management were invited when necessary or appropriate. The Audit Committee is chaired by Mr Adams and its other members are Mr Williams and Mr Ashaboğlu, who joined the Audit Committee after his appointment in September 2022. The UK Corporate Governance Code recommends that the Audit Committee has a minimum of two members, taking into account that the Company is seen as a smaller company, and that all members of the Audit Committee be Non‑Executive Directors, independent in character and judgement, and free from any relationship or circumstance which may, could or would be likely to, or appear to, 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 92. The Audit Committee’s focus in 2022 was, among other things, on overseeing the integrity and quality of the Group’s financial reporting, the effectiveness of the internal risk and control systems, the relevant 2022 tax matters, debt covenant compliance and the impact and consequences of the introduction of IAS 29, ‘Financial Reporting in Hyperinflationary Economies’ in Turkey. The Audit Committee reviewed the Company’s annual and interim financial statements and related press releases, as well as the outcomes of the year-end audit. The Audit Committee discussed relevant accounting principles and the recoverability of deferred tax assets (“DTA”) from carry forward tax losses of DP Russia. Another item that was discussed in more depth was the overall cyber security of the Group, including the 2022 cyber security projects, disaster recovery cycles, the 2022 IT budget and the cyber insurance agreement. Audit Committee Meetings in 2022: 4 Members: David Adams (Chair), Peter Williams, and Ahmet Ashaboğlu (member since September 2022) How many times did the Board meet in 2022? During the year, Directors attended seven Board meetings and calls, with some Directors attending meetings of committees established by the Board to conclude certain matters. Attendance at all of these meetings is shown on page 82. 88 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Furthermore, the Audit Committee reviewed and approved the audit plans of the internal and external auditors, with a focus on scoping, materiality and key risks. The Audit Committee monitored the progress of the internal and external audit activities, including a review of observations identified as a result of the internal audit activities during the quarter, quarterly procedures performed by the external auditor, and the audit performance at year end by the external auditor. The Audit Committee oversaw a follow-up by management on the recommendations made by the internal and external audit reports. The Audit Committee extensively discussed the 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 2022. The Audit Committee provided advice to the Board on whether the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s financial position and performance, business model and strategy. Each Director was also asked to provide this confirmation. When doing so, both the Audit Committee and the individual Directors were provided by management with a formal assessment of the key messages included in the Annual Report and Accounts. This assessment was designed to test the quality of reporting and to enable the Directors to satisfy themselves that the levels of disclosure were appropriate. The Audit Committee has reviewed the independence, 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 2022, and confirmed that it has been, and is, compliant with these independence requirements. With respect to the external auditor’s Board report on the 2022 financial year, the Audit Committee confirms that the Board report contained no significant items that need to be mentioned in this report. DP Eurasia N.V. was incorporated on 18 October 2016 and listed its shares on the London Stock Exchange as of 3 July 2017. As a consequence, PricewaterhouseCoopers Accountants N.V. was appointed as the statutory auditor of the listed entity. Prior to the listing, PwC Turkey was already the statutory auditor of the consolidated financial information of all the operating entities since 31 December 2014. The shareholders reappointed PwC during the AGM on 8 June 2022. The Audit Committee agrees the fees for the external auditor and has agreed strict rules regarding the provision of non-audit services by the external auditor. These include specific pre-approvals for proposed non-audit work. The Remuneration Committee is chaired by Mr Adams and its other member is Mr Williams. Mr Ertas joined the Remuneration Committee after his appointment in June 2022. Members of the Remuneration Committee are appointed by the Board. The UK Corporate Governance Code recommends that all members of the Remuneration Committee be Non‑Executive Directors, independent in character and judgement, and free from any relationship or circumstance which may, could or would be likely to, or appear to, 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 2022, the Remuneration Committee met four times. Remuneration Committee Meetings in 2022: 4 Members: David Adams (Chair), Peter Williams, and Burak Ertas (member since June 2022) Corporate governance report continued 89 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Corporate governance report continued 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 of two independent Non‑Executive Directors and one non‑independent Non‑Executive Director. The Selection and Appointment Committee met two times in 2022. The meetings of the Selection and Appointment Committee were attended by the Chief Executive 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 succession of the Chairman. 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 2023 AGM. The Board recognises its responsibility of having Directors with the appropriate balance of educational background, experience, independence and knowledge of the Company to enable them to discharge their respective duties and responsibilities 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, the Group’s business is diverse and people are recruited regardless of their gender, nationality or possible other characteristics to make sure that people are recruited from the widest pool of talent. Details of the Board diversity data are shown on page 82. The meetings of the Remuneration Committee were attended by the CEO and the Human Resources Director (by phone and in person) whenever necessary. The Company Secretary attends meetings in her capacity as Secretary of the Remuneration Committee. Other members of the Board and senior management were invited when necessary or appropriate. In the case of topics concerning the remuneration of the Chief Executive 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 110 to 111. in the remuneration report, which includes a further explanation of the Remuneration Policy and the actual remuneration and relationship between remuneration and performance of the Executive Directors for 2022. Read the remuneration report on pages 95-98 Selection and Appointment Committee Meetings in 2022: 2 Members: Peter Williams (Chair), David Adams, Pratik Pota (until June 2022), and Hari Bhartia (member since June 2022) 90 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information 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 site visits to 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 limited face-to-face meetings and the rest were hybrid meetings or held via video conference only. The Board resumed face-to-face meetings and meetings in Amsterdam in the second half of 2022. The virtual meetings were held with all Directors present. Throughout the year, the Chairman and other Non‑Executive Directors had regular contact with the Chief Executive 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 2022 can be found on page 82. At each Board meeting and with respect to any proposed resolution submitted to the Board, each Director holds the right to cast one vote provided that such Director does not have a conflict of interest with respect to the proposed resolution. Where the articles of association or the Board Rules do not prescribe a larger majority, all resolutions submitted to a Board meeting may only be adopted by a majority of the votes cast in such a meeting. In the event of a tie, the proposed resolution will be deemed to have been rejected. Corporate governance report continued A Strategy (financial and operational) 10% B Remuneration Policy and approach 6% C Investments, shareholder returns and dividends 4% D Performance conditions and employee share scheme awards, including executive management oversight and performance 7% E Risk management and mitigation 5% F Budgeting 9% G Investor relations 4% H Compliance 5% I Key policies and governance arrangements 5% J Board composition 5% K Auditor reports, appointments and fees 5% L Going concern and viability statement 5% M Board evaluation 5% N Annual Report 4% O Trading updates and financial performance 9% P Innovation 4% Q Cyber security 2% R COVID‑19 1% S Situation in Russia 3% T Impact of sanctions 2% B D E F G H I J K L M N O P A C Q R S T Board activities 91 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Corporate governance report 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 2022 annual internal evaluation and determined that, since the majority of the Directors had only been in function for a few meetings or will leave the Company in due course, it would assess its own functioning again in 2023. After this first assessment, the Board will discuss the elements assessed and lessons learnt together. However, the Board has discussed whether any immediate improvements or changes should be made. The Board’s view was that a good start had been made in working together. The internal control procedures are described in more detail on page 60 of this report. The Board is of the opinion that these fulfil the needs of the Group. Non-Executive Director meetings The Non-Executive Directors meet as a group, without the Executive Directors present, to consider specific agenda items set by them at least once a year, including to review the performance of the Chairman, the committees and the Executive Directors. The Chairman, or in his absence the Senior Independent Director, chairs such meetings. Composition and diversity of the Board The composition of the Board, including the Non‑Executive Directors, can be found on pages 79 and 80. The Board has a diverse composition in terms of educational background, professional expertise, age and nationality. In this respect, DP Eurasia’s ambition is to have a blend of industry knowledge and financial, legal, executive and non‑executive expertise. The target for a balanced Board composition is a minimum of 30% female representatives. This target is currently met by DP Eurasia for the Executive Directors (50%), but not for the Non‑Executive Directors. DP Eurasia, however, regards the full Board as being well balanced in terms of knowledge, experience and diversity. The Selection and Appointment Committee will strive for a diverse composition in the process of appointing and reappointing members to the Board in the future. At the same time, necessary knowledge of the Company, franchise, digital retail and the Company’s key market areas will stay as key appointment criteria. With regard to the appointments of Messrs Burak Ertas and Ahmet Ashaboğlu, the Selection and Appointment Committee did not use an external search agency to look for a suitable Director. The Board endeavours to ensure that the composition of the Board is such that its members are able to act critically and independently of one another, the Executive Board and any particular interest. The Board reviews the independence of its Non-Executive Directors annually. In assessing the independence of each Director, the Board considers whether each is independent in character and judgement and whether there are relationships or circumstances which are likely to 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 and Mr Hari Bhartia are independent as they are appointed upon the nomination of Jubilant, the controlling shareholder. Director induction All the new Directors participated in an induction programme when they joined the Board. The Chairman ensures that ongoing training is provided for Directors by way of site visits and presentations. All Directors have access to the services of the Company Secretary, and the opportunity to seek independent professional advice at the Company’s expense where they judge it necessary to discharge their responsibilities as Directors or as members of Board committees. The Board is supplied with information in a form and of a quality appropriate to enable it to discharge its duties 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 2022 and is currently in force. 92 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Conflicts of interest Any conflict of interest by a member of the Board shall immediately be reported to the Board. In the event that a Director is uncertain whether or not he has a conflict of interest, he may request the Chairman to have the Non‑Executive Directors determine whether there is a conflict of interest. A Director may not participate in the deliberation and decision-making process if he or she has a conflict of interest. In 2022, no transactions were reported under which a Director had a conflict of interest which was of material significance to the Company or to the individual Director. Insider dealing code The Board has adopted a code of securities dealings in relation to the shares and a policy with respect to the entry into of transactions with persons related to the Group. The code is based on the rules of the UK Market Abuse Regulation and will apply to the Directors and other relevant employees of the Group. The policy is based on the mandatory provisions of the Listing Rules which apply to the Group. Accountability: Takeover Directive (Article 10) Decree The relevant information referred to in Section 1 of the Takeover Directive (Article 10) Decree is included in the Annual Report on page 86 (Appointment, dismissal and suspension), page 122 (Our shares), pages 123 and 124 (Controlling shareholder and Relationship Agreement) and page 144 (Share‑based incentives). Accountability: UK and Dutch Corporate Governance Codes UK Corporate Governance Code The Company complies with and, except in the case of any future deviation, subject to explanation thereof at the relevant time, intends to continue to comply with the relevant recommendations of the UK Corporate Governance Code. The UK Corporate Governance Code contains 18 main principles, which are expanded on in supporting principles and detailed provisions. Together, these set out the key components of effective Board practice and corporate governance, and we explain in this report how we have applied these during the year. Jubilant FoodWorks Netherlands B.V. (“Jubilant”), the wholly owned subsidiary of Jubilant FoodWorks Limited, is the largest holder of shares in the Company. The Company will continue to represent a significant investment for Jubilant. The Board and Jubilant are mindful of the need to consider the interests of the Company’s minority investors and the Group believes the composition of the Board and the committees, with the independent Chairman (being Mr Peter Williams and after the 2023 AGM, Mr. Ahmet Ashaboglu) and the Independent Non‑Executive Directors (being Messrs David Adams, Burak Ertas and Ahmet Ashaboğlu), will provide the appropriate corporate governance balance and the interests of both Fides Food Systems and minority shareholders. Pursuant to the Relationship Agreement (see page 124), Jubilant will be able to nominate three Non‑Executive Directors to the Board for so long as it and its associates are entitled to exercise or to control the exercise of 30% or more of the votes able to be cast on all, or substantially all, matters at General Meetings; two Non‑Executive Directors for so long as it and its associates are entitled to exercise or control the exercise of 20% or more; and one Non‑Executive Director for so long as it and its associates are entitled to exercise or control the exercise of 10% or more. The current appointees are Messrs Shyam Bhartia and Hari Bhartia. The UK Corporate Governance Code recommends that the board of directors of a company with a premium listing on the 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. At the 2021 AGM, Mr David Adams was appointed as Senior Independent Director. The Board will follow the recommendation of the UK Corporate Governance Code that an Executive Director is expected to build up a shareholding worth 100% or a significant amount of their salary. Pursuant to the Remuneration Policy 2021‑2024, the Chief Executive Officer will be required to retain a minimum of 5,000,000 shares subject to remaining as an employee. Corporate governance report continued 93 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Corporate governance report 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 Jubilant holds at least 30% of the shares, it shall have the right to nominate three of the five Non‑Executive Directors, and the nominees do not need to be “independent”. The Company believes this deviation is justified by Jubilant’s shareholding in the Company due to the specific knowledge and experience of the business of the Company held by these Directors. Further, in order to comply with this best practice provision and with the agreement that was made with Jubilant, the Company should appoint three additional independent Non-Executive Directors so it will have a Board consisting of ten Board members. The Company believes that this would not be feasible taking into account the size and resources of the Company. However, the Company recognised that it should take steps to comply with this best practice provision and has appointed two additional independent Non-Executive Directors. During this process and following the 2022 AGM, Jubilant agreed to reduce their representation from three Directors to two. Best practice provision 24 (“Audit Committee”) The Company does not comply with best practice provision 24, which determines that the Chairman of the Board should not be a member of the Audit Committee. The Company believes that the members of the Audit Committee should be independent Non‑Executive Directors with relevant recent financial experience and therefore believes it justified that Mr Williams remains as a member of the Audit Committee taking into account the size and resources of the Company and the right of Jubilant to nominate three Non‑Executive Directors. Dutch Corporate Governance Code The Dutch Corporate Governance Code, dated 8 December 2016, became 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”) For the first half of the year, the Company did not comply with best practice provision 2.1.7, which determines, inter alia, that more than half of the total number of Non‑Executive Directors should meet the independence criteria as defined in the Dutch Corporate Governance Code. As long as Jubilant holds at least 30% of the shares, it shall have the right to nominate three of the five Non-Executive Directors, and the nominees do not need to be “independent”. The Company believes this deviation is justified by Jubilant’s shareholding in the Company due to the specific knowledge and experience of the business of the Company held by these Directors. However, the Company recognised that it should take steps to comply with this best practice provision and has appointed two additional independent Non-Executive Directors. During this process and following the 2022 AGM, Jubilant agreed to reduce their representation from three Directors to two. 94 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information 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 2021‑2024 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 19 April 2023 Corporate governance report continued 95 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Heading continued Statement from the Chairman of the Remuneration Committee Remuneration report Remuneration principles Our remuneration arrangements are designed with the following key principles in mind: • to provide alignment with Group strategy; • to complement our mission of delivering sustainable long-term value for shareholders; • to deliver remuneration levels that are justifiable to internal and external stakeholders; and • to attract, motivate and retain outstanding talent. Dear Shareholder I am pleased to present to you the Directors’ Remuneration Report for the year ended 31 December 2022, which includes: • the Directors’ Remuneration Policy approved by shareholders at the 2021 AGM; and • the Annual Remuneration Report. This outlines how we implemented the Remuneration Policy in 2022 and how we intend to apply it in 2023. This section of the Remuneration Report is subject to an advisory vote by shareholders at the 2023 AGM. As outlined elsewhere in this Annual Report, over the past year, the Company has been faced by significant macro factors largely outside of its control in both Turkey and Russia. As I advised in my statement last year, this has required the Remuneration Committee to make a number of decisions and adapt aspects of our remuneration arrangements to ensure they continued to deliver the remuneration principles set out below. Details of the key Committee decisions are summarised and explained on the following pages. 95 DP Eurasia N.V. Annual Report and Accounts 2022 96 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Remuneration report continued Performance and incentive outturn for 2022 Performance As the Chief Executive Officer outlined in his message, 2022 has seen sustained trading performance as the clear and targeted strategy enabled the Group to combat the high levels of volatility. Group system sales increased by 13.1% and group online system sales grew by 15.3%, which are both inflation adjusted figures. In 2022, the Group continued to improve the online proportion of the sales (from 77.4% to 82.7% in 2021) while digital innovation remained an important enabler to enhance the customer experience and further solidify the robust positioning for the online ordering channel. Store growth in such a challenging year was also outstanding. With a solid franchisee demand, Domino’s Pizza network in Turkey grew by net 48 stores. 2022 was also the year that COFFY strengthened its presence in the Turkish market as the store network reached 29 stores in five cities by the year end. Incentive outturns As outlined elsewhere in this Annual Report, our 2022 financial statements incorporate two significant accounting issues: i) the high level of Turkish inflation throughout 2022 and consequent adoption of IAS 29 (“Financial Reporting in Hyperinflationary Economies”); and ii) the treatment of DP Russia as a discontinued operation. The Remuneration Committee has given considerable thought as to the appropriate way these issues should be dealt with in our incentive plans to ensure they fairly reward performance delivery over the relevant performance periods. (i) 2022 Annual Bonus – The Chief Executive Officer’s annual bonus was based 75% on Group EBITDA (with targets set in Turkish Lira) and 25% on strategic measures. The Committee agreed that the hyperinflationary environment made the setting of robust annual EBITDA targets impossible for 2022. Instead, the Committee set EBITDA targets at the start of each quarter which were more accurately able to incorporate the prevailing level of inflation, and therefore provide a stretching level of challenge (full details of the amalgamated quarterly targets are on page 113). The strong financial performance described above meant that these targets were exceeded which resulted in an overall bonus scorecard outcome of 100% of maximum. The Committee carefully assessed the appropriateness of this outcome based on a thorough assessment of overall annual performance. Factors considered included the Group’s performance in 2022 relative to 2021 as reflected in the 5.1% increase in the reported IAS 29 EBITDA figure, the strong trading performance and strategic progress outlined above, share price performance and the experience of our other stakeholders during the year. Following this assessment, the Committee was satisfied that the formulaic bonus scorecard outcome was a fair measure of the strong performance achieved during the year and that no discretionary adjustment was required. (ii) 2020-2022 LTIP – The Chief Executive Officer’s 2020-2022 LTIP award was based on cumulative Group EBITDA (excluding IFRS 16) over the three-year period (with targets set in Turkish Lira). During 2022, the Committee agreed two amendments to the original targets so that the principles underlying the targets were consistent with the accounting changes outlined above: • the original targets were adjusted upwards to reflect actual Turkish inflation in 2022 rather than the level originally budgeted for 2022; and • as a discontinued operation, DP Russia was removed from both the targets and outcome for performance in 2022. The Committee agreed that its performance should remain in the assessment for both 2020 and 2021 which pre-date the accounting change. The overall impact of these amendments is to increase the original cumulative EBITDA target range from TRY 330.2 million – 369.1 million to TRY 378.5 million – 423 million. Actual cumulative Group EBITDA (excluding IFRS 16 and excluding DP Russia in 2022) for the period 2020-2022 was TRY 513.5 million. The award therefore vests at 100%. The Committee was satisfied that this outcome was consistent with the strong performance of the business over the past three years. It also noted that all previous LTIP awards granted to the CEO since IPO had vested at zero. The Committee also considered current shareholder guidance on windfall gains and noted its previous decision to use an extended twelve-month average share price for the 2020-2022 LTIP award had reduced the original grant date value of the award from 100% to 75% of salary. Having considered all of these factors, the Committee agreed that no discretionary adjustment was required. 97 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Remuneration report continued Other issues considered by the Committee in relation to 2022 • Increases in salaries denominated in Turkish Lira – The sustained high inflationary environment in Turkey has required two separate salary reviews during 2022 to ensure that our affected employees are fairly protected from the negative effects of high inflation. The average increase for employee salaries denominated in Turkish Lira has been set at a level consistent with increases in the statutory minimum wage, namely 50% in January 2022 (with the adjustment to salaries applied in two tranches in January and April) and 30% in July 2022 (with the adjustment to salaries applied in July). These increases were also applied to the CEO’s Turkish Lira denominated salary. • Workforce remuneration – We are firmly committed to a culture of pay for performance and our reward structure provides a close link between performance of individual businesses and incentive payouts. As a result, a particularly strong set of business results by DP Turkey in 2022 was reflected in above average levels of annual bonus outturn and LTIP vesting for employees in that business. • 2022 LTIP award – The 2022 LTIP award was granted in June 2022 with the Committee determining that 100% of the award should vest for EBIDTA growth (excluding DP Russia) between 2021 and 2024 of 7.5% CAGR reducing on a straight-line basis to 0% vesting for flat EBIDTA performance. IAS 29 adjusted figures will be used in this calculation. This structure represents two changes from the 2021 LTIP award: • Use of growth targets rather than cumulative targets – Due to the continuing high level of Turkish inflation, the Committee concluded that it would be very challenging to reliably set cumulative targets for the 2022-24 period and that growth targets, using IAS 29 adjusted figures, would provide a more robust basis of assessment. • Use of EBITDA as the sole performance measure compared to a combination of EBITDA and EPS performance in 2021. This change was made because the relevant EPS ‘base’ figure for 2021 was negative so setting growth targets would be problematic. The Remuneration Committee is looking to return EBITDA to 75% of the performance metrics in the 2023 award. A final decision has not been made on which measure will be used and this will be communicated. Chief Executive Officer’s remuneration in 2023 The Board is acutely conscious of the importance of there being support for senior executive remuneration levels from employees, shareholders and society more widely. Accordingly, remuneration decisions include a consideration of factors including internal pay ratios and scenario analyses as well as feedback received from stakeholders. In this context, the Remuneration Committee has determined the Chief Executive Officer’s remuneration for 2023 as detailed overleaf which is consistent with our remuneration principles and the principles of provision 40 of the UK Corporate Governance Code. Shareholder engagement Representatives of Jubilant FoodWorks Limited have attended Remuneration Committee meetings during the year and I would like to thank them for their guidance and support for the Committee’s decisions during the year. I would also like to thank other shareholders who have provided us with feedback during the year and I am grateful to all shareholders for their support in approving the Annual Remuneration Report at the 2022 AGM. We value all feedback and look forward to receiving your support at the forthcoming AGM where there will be a vote to approve our Annual Remuneration Report (pages 110 to 120). David Adams Chairman of the Remuneration Committee 19 April 2023 98 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Remuneration report continued Fixed Remuneration 2023 salary: €25,000 p.a. and TRY 8,049,240 p.a. with effect from January 2023 (2022 salary: €25,000 p.a. and TRY 3,633,641 p.a. with effect from January – March 2022, TRY 4,127,816 p.a. with effect from April – June 2022 and TRY 5,366,160 p.a. with effect from July – December 2022) • 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 2023. The Chief Executive Officer’s salary has been increased in line with the average increase for Turkish employees and the increase in the statutory minimum wage effective January 2023 may be subject to further increase(s) in 2023 taking into account inflationary and other factors during the course of 2023. Notwithstanding these adjustments, due to the significant depreciation of the Turkish Lira over recent years, the Chief Executive Officer’s January 2023 salary is still worth around 10% less in Pound Sterling than his post-IPO salary was when set at the start of 2018. • In common with other Turkish employees, the Chief Executive Officer does not receive any pension provision. Variable Remuneration 2023 Annual Bonus • Maximum potential: 100% of salary (unchanged from 2022) • Paid in cash if compliant with shareholding guideline otherwise 40% deferred in shares • Based on EBITDA (75%) and strategic measures (25%) (unchanged from 2022) • Targets are considered commercially sensitive so will be disclosed retrospectively in next year’s Remuneration Report 2023-2025 LTIP • Award level: 100% of salary (unchanged from 2022) • The current intention is that the award will be based 75% on EBITDA with ongoing Remuneration Committee discussions about the appropriate strategically aligned measure for the remaining 25% of the award. The Remuneration Committee will finalise its decision on this matter ahead of the intended grant in May and will disclose details thereafter (2022: 100% based on EBITDA) • The EBITDA element of the award will be based on the same growth target range as the 2022-2024 LTIP (unchanged from 2022) • Awards vest on the third anniversary of grant • Our strategy in 2023 will be expanding the store network for both Domino’s and COFFY, predominantly via solid franchisee demand. Meanwhile, management will remain focused on delivering healthy profitability and improving leverage ratios with a sustained investment in people and digital. The Remuneration Committee considers that the performance measures outlined above provide appropriate alignment with this growth strategy. • The Chief Executive Officer’s 2023 annual bonus opportunity and 2023-25 LTIP award level will be set in line with the normal maximum limits contained in the Remuneration Policy. • One of our key remuneration principles is that remuneration should complement our mission of delivering sustainable long-term value for shareholders. In that context, the Remuneration Committee considered whether the Chief Executive Officer’s 2023 bonus should be partially deferred in shares or whether a holding period should apply to his 2023‑2025 LTIP award after vesting. However, given the Remuneration Policy requirement for the Chief Executive 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. Chief Executive Officer’s remuneration in 2023 continued 99 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Directors’ remuneration policy 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 2023. The Remuneration Policy text as approved by shareholders is on pages 36 to 46 of the 2020 Annual Report available on our website. The Remuneration Committee discussed the Remuneration Policy over a series of meetings which considered the strategic priorities of the Group, governance requirements, evolving market practice and remuneration practice amongst the wider workforce. Input was sought from the CEO while ensuring that conflicts of interest were suitably mitigated. An external perspective was provided by our major shareholders and our independent advisers, Deloitte. Remuneration principles The aim of DP Eurasia is to attract, retain and motivate the best talent to help ensure continued growth and success in the listed company environment. The Remuneration Policy aims to align the interests of the Executive Directors to the long‑term interests of shareholders and supports a high-performance culture with appropriate reward for superior performance without creating incentives that will encourage excessive risk taking or unsustainable performance. The Remuneration Policy also sets out the remuneration structure of the Non‑Executive Directors. In accordance with Dutch corporate governance, the remuneration of: • the Executive Directors shall be determined by the Non-Executive Directors with due observance of the Remuneration Policy; and • the Non-Executive Directors shall be determined by the General Meeting upon a proposal by the Board with due observance of the Remuneration Policy, each at a level that is considered by the Remuneration Committee to be appropriate for the size and nature of the business, in order to ensure that the policies and remuneration structure are appropriate for the listed company environment. The Remuneration Committee will review annually the remuneration arrangements for the Executive Directors and key senior employees by taking into consideration: • business strategy over the period; • overall corporate performance; • market conditions 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 incentives. To support this aim, the Board has adopted two incentive plans: the annual and deferred bonus plan (the “ADBP”) and the long‑term incentive plan (the “LTIP”). The remuneration structure of the Non‑Executive Directors will consist of a fixed fee. 100 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Directors’ remuneration policy continued Remuneration Policy table for Executive Directors Component/Purpose and link to strategy Operation Maximum Performance framework Base salary Core element of remuneration set at a level to attract and retain Executive Directors with the experience and expertise needed to develop and implement DP Eurasia’s long‑term strategy. An Executive Director’s base salary is set on appointment and reviewed annually or when there is a change in position or responsibility. When determining an appropriate level of salary, the Non‑Executive Directors consider: • the individual Executive Director’s role, experience and performance; • the general operational performance of the Group and individual performance (if applicable); • the economic environment and the sustainable development of the Group; • remuneration structures in companies that are comparable in terms of business activities, complexity and size; • any change in scope, role and responsibilities; and • remuneration practices within DP Eurasia. Individuals recruited or promoted to the Board may, on occasion, have their salaries set below the targeted policy level until they become established in their role. In such cases subsequent increases in salary may be higher than the general rises for employees until the target positioning is achieved. To avoid setting the expectations of Executive Directors and other employees, there is no overall maximum salary for Executive Directors under the Remuneration Policy. Any increase in salaries will be determined by the Non‑Executive Directors, taking into account the factors stated in this table and the following principles: • salary increases for Executive Directors will typically be in line with the average salary increase (in percentage of salary terms) for other permanent employees in the country in which the Executive Director is resident; • increases may be made above this in certain circumstances, such as: • progression within the role; • increase in scope and responsibility of the role; • increase in experience where an individual has been recruited on a lower salary initially; and • increase in size and complexity of the Group. None 101 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Directors’ remuneration policy continued Component/Purpose and link to strategy Operation Maximum Performance framework Benefits To provide market‑competitive benefits. Benefits are role specific and take into account local market practice. The Executive Directors are eligible to receive benefits (or an equivalent cash allowance) including private health cover, medical disability insurance, life assurance, education, communication and IT allowances, mobility allowance or a company car. Executive Directors are entitled to reimbursement of reasonable expenses. The Non-Executive Directors recognise the need to maintain suitable flexibility in the benefits provided to ensure they support the objective of attracting and retaining high-calibre personnel. Additional benefits may therefore be offered, such as reasonable tax advice and support, statutory payments required by local labour laws or consistent with established custom and practice in the local market, relocation allowances on recruitment and other reasonable costs incurred by an individual in relation to their appointment. There is no overall maximum level, but benefits are set at an appropriate level for the specific nature of the role and depend on the annual cost of providing individual benefits. None 102 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Directors’ remuneration policy continued Component/Purpose and link to strategy Operation Maximum Performance framework Pension To provide market‑competitive retirement benefits. Executive Directors are eligible to receive a contribution to their personal pension arrangements or direct to their pension plans. Alternatively, Executive Directors may receive a cash allowance in lieu of pension. Pension provision for Executive Directors will not exceed the standard rate for DP Eurasia employees in the country in which the Director is resident or 10% of salary if there is no relevant employee comparator in that country. None LTIP To link reward to the achievement of long-term performance and strategic objectives of DP Eurasia and to retain Executive Directors. The Executive Directors may receive LTIP awards which will usually be made in the form of a contingent award of shares or nil‑cost options (and may also be granted as share options or settled in cash). Vesting of the award is dependent on the achievement of performance targets, typically measured over a three‑year period. The Non-Executive Directors have the discretion to apply a holding period of two years post-vesting. An additional payment (in the form of cash or shares) may be made in respect of vested shares to reflect the value of dividends which would have been paid on those shares during the period since award (this payment may assume that dividends had been reinvested in DP Eurasia shares on a cumulative basis). Normal maximum value of 100% of annual base salary based on the market value at the date of grant. In exceptional circumstances, an award worth up to 150% of annual base salary may be granted. Vesting of LTIP awards is dependent on the achievement of key financial, strategic, ESG and/or operational measures determined by the Non‑Executive Directors ahead of each award. For achieving a “threshold” level of performance against a performance measure, no more than 25% of the award will vest. Vesting then increases on a sliding scale to 100% for achieving a stretching maximum performance target. 103 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Component/Purpose and link to strategy Operation Maximum Performance framework Annual and deferred bonus (“ADBP”) To link reward to the achievement of key business objectives of DP Eurasia for the year. The Executive Directors may participate in the ADBP, which is reviewed annually to ensure bonus opportunity, performance measures, targets and objectives remain appropriate. The Non-Executive Directors determine the level of bonus to be awarded at their discretion, taking into account the extent to which the targets have been met and the overall business and personal performance. Unless an Executive Director is already compliant with their shareholding guideline, 40% of their annual bonus will usually be delivered in shares deferred for two years. Deferred awards are usually granted in the form of a contingent award of shares or nil-cost options (and may also be settled in cash). An additional payment (in the form of cash or shares) may be made in respect of shares which vest under deferred awards to reflect the value of dividends which would have been paid on those shares during the deferral period (this payment may assume that dividends had been reinvested in DP Eurasia shares on a cumulative basis). The maximum annual bonus potential is 100% of base salary. Levels of bonus payout for achieving threshold and on‑target performance will be set each year by the Non‑Executive Directors taking into account the degree of stretch in the performance targets. The bonus is normally based on performance assessed over one year using appropriate financial, strategic, ESG, operational or other suitable business measures appropriate to the individual Director that are closely aligned with DP Eurasia’s strategy and the creation of value for shareholders. The majority of the bonus will be determined by measure(s) of financial performance. Directors’ remuneration policy continued 104 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Component/Purpose and link to strategy Operation Maximum Performance framework Shareholding guideline To provide long-term alignment with shareholder interests. Whilst in employment, the current Chief Executive 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. Not applicable Not applicable Fee arrangements for Non-Executive Directors Purpose and link to strategy Operation Maximum Provides a level of fees to support recruitment and retention of high calibre Non-Executive Directors with the necessary experience to advise and assist with establishing and monitoring DP Eurasia’s strategic objectives. Shareholder approval was received at the 2021 AGM for a fee structure that currently applies to all Non-Executive Directors. A resolution will be put to the 2023 AGM for a revised fee structure. The Chairman of the Board receives an all‑inclusive fee. Other Non‑Executive Directors, apart from representatives of Jubilant FoodWorks Limited, receive a basic Board fee and an additional fee for additional responsibilities such as acting as the Senior Independent Director or for chairmanship of a Board Committee. Expenses incurred by the Non‑Executive Directors reasonably required for the performance of their duties may be reimbursed. Non-Executive Directors do not participate in any variable remuneration arrangements and will not be awarded remuneration in the form of shares and/or rights to shares. Fees are set at an appropriate level that is market competitive and reflective of the responsibilities and time commitment associated with specific roles. Directors’ remuneration policy continued 105 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information 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. Choice of performance measures and approach to target setting Non-Executive Directors set performance metrics under both the ADBP and the LTIP which are clearly aligned to DP Eurasia’s strategy and are usually part of its KPIs. Any personal objective performance measures within the ADBP are also directly linked to key strategic objectives. Targets are set at the start of each performance period by the Non‑Executive Directors taking into account relevant internal and external reference points and are designed to be appropriately stretching. Directors’ remuneration policy continued 106 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Remuneration scenarios The charts on the left show hypothetical values of the 2023 remuneration package for the current Executive Directors in the Remuneration Policy under four assumed performance scenarios. The Remuneration Committee regularly reviews the impact of 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. Assumptions Fixed pay • Salary: as set out on page 98. • Pension: Frederieke Slot 10% of base salary. • Benefits: estimate based on -2022 reported taxable benefits. Variable pay • ADBP: maximum of 100% of base salary for Aslan Saranga (assumed half of maximum paid as midpoint); Frederieke Slot will not participate in the ADBP in 2023. • LTIP: maximum award of 100% of base salary for Aslan Saranga (assumed half of maximum vests as midpoint); Frederieke Slot will not receive an LTIP award in 2022. • No share price growth or dividend accrual considered other than in the final scenario which shows the value if 50% share price appreciation is assumed over the three-year performance period of the LTIP awards. New appointments In the event of appointing a new Executive Director to the Board, the Non-Executive Directors will generally align their remuneration package with the Remuneration Policy table set out in this Remuneration Policy. Where appropriate, the Non‑Executive Directors may apply their discretion in the following regards: • ADBP – in the first year of employment, 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; Directors’ remuneration policy continued Aslan Saranga Maximum including share price appreciation Maximum Midpoint Minimum Fixed pay Annual bonus LTIP TRY 9,049k TRY 17,671k TRY 26,293k TRY 30,604k 100% 52% 24% 24% 34% 33% 33% 30% 28% 42% TRY 30.0m TRY 0.0m TRY 10.0m TRY 20.0m Frederieke Slot Maximum including share price appreciation Maximum Midpoint Minimum €0 €100,000 €50,000 €172k €172k €172k €172k 100% 100% 100% 100% €200,000 €150,000 107 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information • in the case of internal appointments or appointments following the Group’s acquisition of or merger with another company or business, any variable pay element or legacy arrangements in respect of the prior role would normally be allowed to pay out according to its terms, adjusted as relevant to take into account the appointment; and • in the event that a Non-Executive Director is required to temporarily take on the role of an Executive Director, his/her remuneration may include any of the elements listed in the Remuneration Policy table for Executive Directors. In the event of the appointment of a new Non-Executive Director, his/her fee will be set in accordance with the fee arrangements for Non‑Executive Directors as approved by the General Meeting. Malus and clawback Pursuant to Dutch law and best practice UK corporate governance, the Non-Executive Directors have the right to reduce payments that are not yet paid out and to reclaim payments pertaining to these events that have already been paid out. The Non‑Executive Directors may furthermore adjust the variable remuneration to an appropriate level if payment thereof is unacceptable according to the requirements of reasonableness and fairness. The ADBP and the LTIP include best practice malus and clawback provisions. Malus is the adjustment of unpaid bonus and deferred share awards under the ADBP and outstanding LTIP awards. The adjustment may result in the value being reduced to nil. Clawback is the recovery of payments or vested awards under the ADBP and vested LTIP awards. Malus and clawback can be enacted as a result of the occurrence of the following events: • discovery of a material misstatement resulting in an adjustment in the audited accounts of the Group or any Group company; • the assessment of any performance condition or condition in respect of an ADBP and LTIP award was based on error, or inaccurate or misleading information; • the discovery that any information used to determine the cash payment under the ADBP or the number of shares subject to an ADBP or LTIP award was based on error, or inaccurate or misleading information; • in the event of a business failure; • action or conduct of a participant which amounts to fraud or gross misconduct; or • events or the behaviour of a participant have led to the censure of a Group company by a regulatory authority or have had a significant detrimental impact on the reputation of any Group company provided that the Board is satisfied that the relevant participant was responsible for the censure or reputational damage and that the censure or reputational damage is attributable to the participant. Clawback may apply to all or part of a participant’s award and may be affected, among other means, by requiring the transfer of shares, payment of cash or reduction of awards or bonuses. 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. Directors’ remuneration policy continued 108 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Payment for loss of office continued The incentive schemes, the ADBP and the LTIP are subject to standard good/bad leaver terms. A good leaver reason is defined as cessation in the following circumstances: death, ill‑health, injury or disability, retirement, redundancy, employing company ceasing to be a Group company, transfer of employment to a company which is not a Group company or at the discretion of the Non‑Executive Directors. The table below provides a summary of the treatment of incentive remuneration in the event of cessation of employment or a change of control before awards vest or become exercisable (full details are contained in the ADBP and LTIP plan rules). Cessation of employment or a change of control during an award’s holding period does not 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 ADBP – cash bonus Performance will usually be measured at the bonus measurement date based on appropriate performance measures as determined by the Remuneration Committee. Bonus will be pro-rated for the period worked during the financial year unless the Non‑Executive Directors, at their discretion, determine otherwise. Any bonus may, at the Remuneration Committee’s discretion, be paid entirely in cash. No bonus payable in relation to year of cessation. The Non-Executive Directors have discretion to determine the bonus taking into account such factors as they consider appropriate, including the extent to which any applicable performance conditions have been satisfied. Bonus will be pro-rated for the period of the financial year elapsed unless the Non-Executive Directors, at their discretion, determine otherwise. ADBP – deferred share bonus and LTIP Awards will usually vest on a time‑apportioned basis on the normal vesting date subject to any relevant performance condition(s) measured over the full performance period. However, in the event of death, or at the Non‑Executive Directors’ discretion, awards may vest early taking into account such factors as they consider appropriate including the extent to which any applicable performance conditions have been satisfied. The Non-Executive Directors have the discretion, acting fairly and reasonably, to dis‑apply time apportionment. Outstanding awards lapse. The Non-Executive Directors have the discretion to determine the proportion of the award which vests taking into account, among other factors, the period of time the award has been held by the Executive Director and the extent to which any applicable performance conditions have been satisfied. The Non-Executive Directors will apply discretion where there is an appropriate business case, which will be explained in full to shareholders. Payments in the event of a change of control will be subject to applicable law in force at the time of the change of control. All Non-Executive Directors have an agreement with DP Eurasia ending at the end of the AGM in the third year following their appointment to the Board. No compensation is payable on termination, except for fees and expenses accrued to date. Directors’ remuneration policy continued 109 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information 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. Directors’ remuneration policy continued 110 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information The annual remuneration report sets out how DP Eurasia’s Remuneration Policy (pages 99 to 109) will be implemented in 2023 and how it was implemented in 2022. Implementation of the Remuneration Policy in 2023 Executive Directors DP Eurasia has two Executive Directors: the Chief Executive 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. His increase for 2023 is consistent with this policy and more details are set out in the Committee Chair’s statement. Frederieke Slot’s salary was reviewed with reference to inflation in the Netherlands. Base salary Base Salary Executive Director January 2023 July 2022 Aslan Saranga TRY 8,049,240 TRY 5,366,160(1) +EUR 25,000 +EUR 25,000 Frederieke Slot(2) EUR 135,707 EUR 129,245 (1) This figure is the Group CEO’s salary following the last salary adjustment in 2022. Consistent with other Turkish headquarters employees, his salary was increased in January, April and July during 2022 at a rate consistent with the increase in the statutory minimum wage. Further details are on page 113. (2) Frederieke Slot’s salary change is effective from April 2023. Pension and benefits Frederieke Slot receives a pension allowance worth 10% of base salary. Aslan Saranga receives no pension allowance. They will additionally both receive other benefits consistent with local market practice. ADBP In 2023, Aslan Saranga will be able to receive an annual bonus of up to 100% of salary. It is currently envisaged that it will be based on Group adjusted EBITDA (75%) and strategic measures (25%). 40% of any bonus earned will be deferred into shares for two years unless he is compliant with his “in-employment” shareholding requirement when the bonus is determined, in which case his bonus will be settled wholly in cash. Frederieke Slot will not participate in the ADBP in 2023. The Remuneration Committee has discretion to override the formulaic outturn of the ADBP where such an approach is felt to be appropriate taking into account all relevant factors. Malus and clawback may be applied to a bonus up to three years from the determination of the bonus. Annual remuneration report 111 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Annual remuneration report continued LTIP Aslan Saranga will receive an LTIP award over shares worth 100% of salary in 2023 with vesting on the third anniversary of grant. Frederieke Slot will not receive an LTIP award in 2023. It is currently intended that 75% of the award will be determined by adjusted Group EBITDA growth (excluding DP Russia consistent with its treatment as a discontinued operation in the financial statements) measured over the period 2023-2025. The Remuneration Committee agreed to continue using growth targets (rather than cumulative targets) as for the 2022-24 LTIP award, given the anticipated continuation of high Turkish inflation. Targets for growth are set as 0% vesting for 0% CAGR growth increasing to 100% vesting for 7.5% CAGR growth. The Remuneration Committee is having ongoing discussions about the appropriate strategically aligned measure for the remaining 25% of the award. The Remuneration Committee will finalise its decision on this matter ahead of the intended grant in May and will disclose details of the measure and its targets thereafter. The Remuneration Committee has discretion to override the formulaic outturn of the LTIP where such an approach is felt to be appropriate taking into account all relevant factors. Malus and clawback may be applied to LTIP awards up to two years following the vesting date. Non-Executive Directors Non-Executive Director fees were determined by the General Meeting upon proposal of the Board. At the 2021 AGM, shareholders approved the fee table set out below. Annual fee (GBP) Chairman of the Board 150,000 Basic Non-Executive Director fee 30,000 Audit Committee Chairman additional fee 2,000 Remuneration Committee Chairman additional fee 2,000 Senior Independent Director additional fee 2,000 Shareholder approval will be sought at the 2023 AGM for a slightly revised fee structure – details will be contained in the upcoming Notice of Annual General Meeting. In addition, the Non-Executive Directors are reimbursed for expenses that are reasonably required for the performance of their duties. 112 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Annual remuneration report continued Total remuneration The following table sets out the total remuneration for Executive Directors and Non-Executive Directors for 2022. Base Salary Total Fixed Annual Long-term Total Variable & Fees Benefits Pension Remuneration Bonus incentives Remuneration Total Total local Year ending 31 December 2022 TRY TRY TRY TRY % TRY TRY TRY % TRY currency Executive Directors Aslan Saranga 5,057,348 427,428 5,484,776 34% 5,800,063 4,766,765 10,566,828 66% 16,051,604 ₺16,051,604 Frederieke Slot 2,243,180 399,189 224,318 2,866,687 100% 2,866,687 €165,169 Non-Executive Directors Peter Williams 3,046,890 3,046,890 100% 3,046,890 £150,000 David Adams 731,254 731,254 100% 731,254 £36,000 Burak Ertaş 343,923 343,923 100% 343,923 £16,932 Ahmet Ashaboğlu 170,292 170,292 100% 170,292 £8,384 Shyam S.Bhartia — — — — — 0 — Hari S.Bhartia — — — — — 0 — Local currency totals Part of Aslan Saranga’s remuneration and the whole of Frederieke Slot’s remuneration are paid in Euros and Peter Williams, David Adams, Burak Ertaş and Ahmet Ashaboğlu remuneration is wholly paid in Pound Sterling. Total amounts received by each individual in local currency are recorded in the final line of the above table. In the other lines of the table, remuneration has been converted into Turkish Lira for consistency with the financial statements. 113 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Annual remuneration report continued Notes to the table on page 112 – methodology Base salary/fees This represents the cash paid or receivable in respect of the financial year. 1. Executive CEO Aslan Saranga’s salary consists of both salary (TRY 4,623,445) and €25,000 management fee (converted to TRY 433,903 in the above table). The salary element comprises TRY 3,633,641 p.a. with effect from January – March 2022, TRY 4,127,816 p.a. with effect from April – June 2022 and TRY 5,366,160 p.a. with effect from July – December 2022. As explained in the Committee Chair’s statement, the sustained high inflationary environment in Turkey required additional salary reviews during 2022 to ensure that affected employees were fairly protected from the negative effects of high inflation. 2. Burak Ertaş was appointed as Independent Non-Executive Director as of 8 June 2022; his fee is paid proportionally for 2022. His annual fee is £30,000. 3. Ahmet Ashaboğlu was appointed as Independent Non-Executive Director as of 20th September 2022; his fee is paid proportionally for 2022. His annual fee is £30,000. Benefits This represents the taxable value of all benefits paid or receivable in respect to the relevant financial year. Aslan Saranga’s benefits included private health cover, company car and lunch ticket. Frederieke Slot’s benefits included medical disability allowance, mobility allowance and education, communication and IT allowances. Pension Aslan Saranga receives no pension provision; Frederieke Slot received a pension allowance worth 10% of base salary. Annual bonus This represents the total bonus payable for the relevant financial year under the ADBP. In 2022, the Chief Executive Officer’s annual bonus was based 75% on the adjusted Group EBITDA and 25% on strategic measures. 1. Adjusted Group EBITDA (75% weighting) As explained in the Committee Chair’s statement, the Remuneration Committee agreed that the hyperinflationary environment made the setting of robust annual EBITDA targets impossible for 2022. Instead, the Committee set EBITDA targets at the start of each quarter which were more accurately able to incorporate the prevailing level of inflation and therefore provide a stretching level of challenge. The strong financial performance described elsewhere in this Annual Report meant that the maximum target was exceeded. Threshold Maximum Actual % of max Performance measure performance performance performance payable Adjusted EBITDA (with IFRS 16) TRY 264.9m(1) TRY 331.1m(1) TRY 359.1m 100% (75% of salary) Zero payout 100% payout (1) Targets shown in this table are an amalgamation of the four quarterly targets set for 2022: Threshold Q1: TRY 51.8 million; Q2: TRY 58.2 million; Q3: TRY 71.1 million Q4: TRY 83.8 million. Maximum Q1: TRY 64.8 million; Q2: TRY 72.7 million; Q3: TRY 88.9 million; Q4 TRY 104.7 million. 114 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Annual remuneration report continued 2. Strategic targets (25% weighting) Targets set for the CEO for 2022 related to key areas of strategic development. 1. One Digital: Creating future operating model and structure (10% weighting): To strengthen our food tech company perspective and increase digital share in sales, a new operating model has been successfully introduced which contains restructured digital architecture to activate additional features in online channels. As a result, we achieved 1.6% inflation adjusted (pre-IAS 29: 75.7%) growth in digital channels and online delivery system sales as a share of delivery system sales reached 81.2% for the year, which represents a 4.9 percentage point increase on a year-on-year basis. In order to successfully build this structure, digital organisation has been strengthened: in particular new leaders were hired, and IT employee turnover decreased significantly. 2. Development and management of Top-level Management (7.5% weighting): In DP Turkey, the top‑level management development program has been continued successfully: there was no turnover in the leadership team and recent joiners have been successfully integrated and delivered strong performance. The Group also started to build its future organisation and business model for a multi country and multi brand base and agreed to work with a well-known HR consultancy company. This project helped leaders to function in a more productive way identifying decision making matrix and critical KPI’s. DP Russia started 2022 with new leaders in the team and new structures: despite a highly challenging political backdrop, strategy was kept in line and, although sales fell, franchisees did not leave the business. 3. COFFY Business (7.5% weighting): COFFY strengthened its presence in the Turkish market with successful delivery of an accelerated expansion programme as the store network reached 29 stores in five cities by the year end. COFFY’s proven sales performance has generated strong ongoing franchisee demand. In aggregate, the Remuneration Committee agreed that these strategic targets had been met to a high degree and accordingly agreed 100% achievement (25% of salary) for the Chief Executive Officer’s performance against these strategic targets. The overall formulaic outcome of the bonus was 100% of maximum available, namely 100% of salary. At its meeting on 22 February 2023, the Remuneration Committee gave careful consideration to this outcome in the context of a broad range of factors, including hyperinflation in Turkey, the strong trading performance and strategic progress outlined elsewhere in the Annual Report, share price performance and the experience of our other stakeholders during the year. Following this assessment, the Committee was satisfied that the bonus outcome was appropriate, and that no discretionary adjustment was required. Due to the hyperinflationary environment, the Remuneration Committee determined that it was fair to use salary levels prevailing at 31 December 2022 as the basis for calculating annual bonus for all Turkish headquarters employees, including the CEO. Accordingly, the CEO’s maximum bonus opportunity was TRY 5,800,063 (being 100% of his December 2022 salary of TRY 5,366,160 p.a. plus his €25,000 p.a. management fee (converted to TRY 433,903 as in the single figure table). Long-term incentive This column relates to the value of LTIP awards whose performance period ends in the period under review. The vested value is an estimate based on the average share price in Q4 2022 of 0.43 GBP and an average exchange rate in Q4 2022 of GBP1: TRY21.87. In May 2020, Aslan Saranga was granted an LTIP award over 506,212 shares vesting in May 2023 subject to achievement of adjusted EBITDA targets measured over the period 2020-2022. As explained in the Committee Chair’s statement, the Committee agreed two amendments to the original targets in order that the principles underlying the targets were consistent with the accounting changes in the 2022 financial statements, namely the adoption of IAS 29 and the treatment of DP Russia as a discontinued operation. • The original targets were adjusted upwards to reflect actual Turkish inflation in 2022 rather than the materially lower level originally budgeted for 2022. • As a discontinued operation, DP Russia was removed from both the targets and outcome for performance in 2022. The Committee agreed that its performance should though remain in the assessment for both 2020 and 2021 which pre-date the accounting change. 115 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Original target Revised target(1) Actual(1) %of award vesting Adjusted Group Adjusted Group Adjusted Group cumulative EBITDA cumulative EBITDA cumulative EBITDA 2020 LTIP award 513.5 100% Threshold (0% vests) TRY 330.2m TRY 378.5m Maximum (100% vests) TRY 369.1m TRY 423m (1) Excluding IFRS 16 and excluding DP Russia in 2022. The Committee was satisfied that this outcome was consistent with the strong performance of the business over the past three years. It also noted that all previous LTIP awards granted to the CEO since IPO had vested at zero. The Committee also considered current shareholder guidance on windfall gains and noted its previous decision to use an extended twelve-month average share price for the 2020-2022 LTIP award had reduced the original grant date value of the award from 100% to 75% of salary. Having considered all of these factors, the Committee agreed that no discretionary adjustment was required. 2021 Directors’ remuneration table Base Salary Total Fixed Annual Long-term Total Variable & Fees Benefits Pension Remuneration Bonus incentives Remuneration Total Total local Year ending 31 December 2021 TRY TRY TRY TRY % TRY TRY TRY % TRY currency Executive Directors Aslan Saranga(1) 3,013,325 1,567,657 4,580,982 71% 1,868,262 — 1,868,262 29% 6,449,244 ₺6,449,244 Frederieke Slot(2) 1,052,560 239,721 21,930 1,314,211 100% — — — — 1,314,211 €145,918 Non-Executive Directors Peter Williams(3) 1,514,515 — — 1,514,515 100% — — — — 1,514,515 £125,000 Tom Singer(4) 350,863 — — 350,863 100% — — — — 350,863 £28,958 David Adams(5) 415,987 — — 415,987 100% — — — — 415,987 £34,333 Shyam S. Bhartia — — — — — — — — — — — Hari S. Bhartia — — — — — — — — — — — Pratik R. Pota — — — — — — — — — — — Annual remuneration report continued 116 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Notes to the table on page 115 – methodology Base salary/fees This represents the cash paid or receivable in respect of the financial year. 1. Executive CEO Aslan Saranga’s salary consists of both salary and €25,000 management fee. 2. In local currency, Frederieke Slot’s salary is €123,090 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. 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 2022. Statement of Directors’ shareholdings and share interests The table below shows the Directors’ share ownership as of 31 December 2022. For the duration of the Remuneration Policy, the Chief Executive 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. Outstanding share awards Shares owned granted under outright at LTIP at 31 Dec 2022 31 Dec 2022 (number (number Director of shares) of shares) Aslan Saranga(1) 8,106,310 1,374,485 Frederieke Slot — — Peter Williams 131,776 — David Adams — — Burak Ertaş — — Ahmet Ashaboğlu — — Shyam S.Bhartia — — Hari S.Bhartia — — (1) Aslan Saranga owns shares through his wholly owned entity Vision Lovemark Coöperatief U.A. Between 31 December 2022 and the date of this report, there were no changes in the shareholdings outlined in the above table. Annual remuneration report continued 117 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Aslan Saranga was granted an LTIP conditional share award which will vest in June 2025. As discussed in the Committee Chair’s statement, the Committee agreed that this LTIP award should be 100% based on adjusted EBITDA growth (excluding DP Russia) using IAS 29 adjusted figures. Aslan Saranga was entitled to receive an award worth 100% of base salary which resulted in 394,702 shares with a face value of TRY 4,455,775 based on a share price of 0.54 GBP (6 June 2022) and an exchange rate of GBP1: TRY20.79 (6 June 2022). Performance conditions for the award, to be assessed over the three year period to 31 December 2024, are set out below. Adjusted Group EBITDA growth (excluding DP Russia) 2022-2024 Proportion 100% weighting vesting Threshold 0% CAGR 0% Maximum 7.5% CAGR 100% Performance graph and Chief Executive 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. The table below shows the total remuneration payable to the Chief Executive Officer as a percentage of the maximum opportunity. Year ended Year ended Year ended Year ended Year ended 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 Chief Executive Officer total remuneration (TRY) 2,929,266 3,215,510 2,731,591 6,449,244 16,051,604 ADBP payout (% of maximum) 49% 41% 0% 62% 100% LTIP vesting n/a (no award n/a (no award — — 100% vested during vested during 2018) 2019) £50 £0 £100 £150 DP Eurasia’s total shareholder return compared against total shareholder return of the FTSE All-Share Index since Admission on 3 July 2017 Jun 17 Dec 17 Dec 21 Jun 18 Dec 18 Jun 19 DP Eurasia FTSE All-Share Index Dec 19 Jun 20 Dec 20 Jun 21 Dec 22 Jun 22 Annual remuneration report continued 118 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Percentage change in remuneration of the DP Board members and average employee The table below illustrates the percentage change in annual salary, benefits and bonus between 2019 and 2022 for all Board members including the Chairman and the average for all other Turkish headquarters employees. Since DP Eurasia has no employees in the parent company and the Chief Executive Officer resides in Turkey, Turkish employees are chosen as the comparator. Salary change Benefits change Annual bonus change 2019-2020 2020-2021 2021-2022 2019-2020 2020-2021 2021-2022 2019-2020 2020-2021 2021-2022 Average for all Turkish headquarters employees 15% 19% 104% 10% 28% 127% 130% 91% 48% Executive Directors Aslan Saranga 10% 20% 68% 27% 621% (73%) (100%) n/a 209% Frederieke Slot (3%) 1% 13% 0% 0% 0% — — — Chairman & Non-Executive Directors Peter Williams (3%) (14%) 20% — — — — — — David Adams — — 5% — — — — — — Burak Ertaş — — — — — — — — — Ahmet Ashaboğlu — — — — — — — — — Shyam S.Bhartia — — — — — — — — — Hari S.Bhartia — — — — — — — — — Notes to the table • This table compares data between 2019 and 2022. • Changes are all in local currency. The increase in Turkish salaries and CEO salary reflect Turkish inflation and exchange rates effect. • Frederieke Slot agreed a 12% reduction in her salary for 2021. • Peter Williams agreed a GBP 25,000 reduction in his fee for 2021. • David Adams got partial fee for Committees in 2021. • As explained in this report, the Chief Executive Officer’s annual bonus is based on Group adjusted EBITDA (75%) and strategic targets (25%). It paid out at 100% of maximum for 2022 compared to 62% for 2021. • Chief Executive Officer Aslan Saranga was paid a statutory payment of TRY 1,154K in 2021 as one-off benefit so that year-on-year percentage is negative. • 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 five KPIs) and success rates against individual targets. Company performance directly impacts the bonus amount to be distributed; above or below target realisation will increase or decrease the bonus pool accordingly. Changes reflect the Turkish business company KPI effect in the bonus pool. Annual remuneration report continued 119 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Internal pay ratio 2022 The internal pay ratio between the average pay of DP Eurasia employees vis-a-vis the average pay of the CEO and the Executive Directors was calculated based on the average remuneration of the Group vis-a‑vis remuneration (including all components) of the CEO, and average remuneration (including all components) of the Executive Directors in 2022. The pay ratio is 73:1 (2021: 50:1) for the CEO Aslan Saranga and 43:1 (2021: 31:1) for the Executive Directors. The difference is derived from increase in variable remuneration of Group CEO and TRY-Euro exchange effect. For reference, the above pay ratio disclosure is for compliance with Dutch corporate governance. As DP Eurasia has no UK employees, the Board decided that it was inappropriate to also include the pay ratio disclosures set out in UK legislation (The Companies (Miscellaneous Reporting) Regulations 2018). Relative importance of the spend on pay The table below illustrates the total expenditure on pay for all of the Group’s employees compared to dividends payable to shareholders in respect of the year ending 31 December 2022. A 2021 comparative figure is also provided. Year ended Year ended 31 Dec 2022 31 Dec 2021 Total staff costs (further details are provided in Note 5 to the consolidated financial statements (page 149)) TRY 290,817m TRY 153,380m Total dividends — — Consideration by Directors of matters relating to Directors’ remuneration The Remuneration Committee is responsible for reviewing and making recommendations to the Board regarding the Remuneration Policy and for reviewing compliance with the Remuneration Policy. The Remuneration Committee consisted of David Adams, Burak Ertaş (after June 2022) and Peter Williams during the year ending 31 December 2022, The Remuneration Committee met on five occasions during the period between 1 January 2022 and 31 December 2022. Workforce engagement DP Eurasia’s approach to investing in, and engaging, the workforce is explained in the Stakeholder engagement and Culture in action sections of this report on pages 38 to 41. The Remuneration Committee was also updated for Company‑wide salary increases and levels of annual bonus for the general employee population so that they can compare the Executive Directors’ total remuneration with the wider workforce. Internal advice The Chief Executive 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. Annual remuneration report continued 120 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information External advice Following the IPO, Deloitte LLP was appointed by DP Eurasia to provide advice on executive remuneration matters and it continued to do so during 2022. The Remuneration Committee received independent and objective advice from Deloitte, principally on the preparation of the remuneration report, 2022 LTIP grant, 2020-2022 LTIP vesting, 2022 annual bonus of Group CEO and on queries raised by the Remuneration Committee Chairman. Deloitte also joined Remuneration Committee meetings by phone. Deloitte was paid £24,250 in fees during the period ending 31 December 2022 for these services to the Remuneration Committee (charged on a time plus expense basis). DP Eurasia also works with Deloitte in GDPR compliance regarding administrative and technical (IT) requirements. Deloitte is a founding member of the Remuneration Consultants Group and, as such, voluntarily operates under the code of conduct in relation to executive remuneration consulting in the UK. The Remuneration Committee is satisfied that the Deloitte engagement partner and advisory team that provide remuneration advice to the Committee do not have any connections with DP Eurasia or individual Directors that may impair their independence. External Board appointments Executive Directors are normally entitled to accept external appointments outside DP Eurasia with the consent of the Non-Executive Directors. Any fees received may be retained by the Executive Director. As at the date of this report, neither of the Executive Directors held an external appointment for which they received a fee. Shareholder voting on remuneration report resolutions: Votes for Votes against Votes withheld Approval of the Annual Report on Remuneration 2022 AGM 103,666,032 (100%) 0 (0%) 0 Approval of Adoption of new Directors’ Remuneration Policy 2021 AGM 82,075,046 (93%) 6,211,574 (7%) 0 On behalf of the Board David Adams Chairman of Remuneration Committee 19 April 2023 Annual remuneration report continued 121 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Board declaration The Board of DP Eurasia N.V. hereby declares, in accordance with best practice provision 1.4.3 of the Dutch Corporate Governance Code, that to the best of its knowledge: • the financial statements as included on pages 126 to 130 of the Annual Report provide a true and fair view of the assets, liabilities and financial position as at 31 December 2022 as well as the profit or loss of DP Eurasia N.V. and all the business undertakings included in the consolidation in accordance with IFRS as adopted in the European Union and Part 9 of Book 2 of the Dutch Civil Code; • the management report included in this Annual Report provides a true and fair view of the condition on the balance sheet date and of the business performance during the financial year of DP Eurasia N.V. and the companies associated with it whose details are included in the financial statements, together with a description of the main risks DP Eurasia N.V. faces. The members of the Board have signed the financial statements pursuant to their statutory obligation under article 2:101(2) of the Dutch Civil Code; • the Board is responsible for preparing the Annual Report in accordance with applicable laws and regulations and the Board considers that the Annual Report, taken as a whole, is fair, balanced and understandable and provides information necessary for shareholders to assess the Company’s position and performance, business model and strategy; • based on their assessment of prospects and viability, the Board confirms it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next twelve months; • the management report included in this Annual Report provides 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; • based on the current state of affairs, it is justified that the financial reporting is prepared on a going concern basis that the Group will continue as a going concern and be able to realise its assets and discharge its liabilities in the normal course of business; and • the management report included in this Annual Report states those material risks and uncertainties that are relevant to the expectation of the Company’s continuity for the period of twelve months after the preparation of this management report. By order of: Aslan Saranga (Chief Executive Officer) Frederieke Slot (Executive Director) Peter Williams (Non-Executive Director) Shyam Bhartia (Non-Executive Director) Hari Bhartia (Non-Executive Director) David Adams (Non-Executive Director) Ahmet Ashaboglu Non-Executive Director 19 April 2023 122 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Shares and shareholders Shares Our shares The shares that are traded on the London Stock Exchange are traded under the symbol DPEU with ISIN code NL0012328801. DP Eurasia is included in the FTSE SmallCap and FTSE All-Share indices. The authorised capital of the Company comprises a single class of registered shares. Shares that are traded via the CREST system, the paperless settlement system of the London Stock Exchange, are registered under the name and address of Link Market Services Trustee Limited (the “Depositary”). All issued shares are fully paid up and each share confers the right to cast a single vote in the General Meeting. DP Eurasia’s issued share capital on 31 December 2022 was €17,444,689.70 consisting of 145,372,414 ordinary shares of €0.12 each. At the 2022 AGM, the Board was designated as the corporate body authorised to issue shares or to grant rights to subscribe for shares limited to a maximum of one-third of the issued share capital of the Company as at 8 June 2022 and to restrict or exclude pre-emptive rights accruing to shareholders of the Company: (i) in connection with the issuance of shares limited to a maximum of 5% of the issued share capital as at 8 June 2022 but so that such authorisation may be used only for general corporate purposes; and (ii) in connection with the issuance of shares limited to a maximum of 5% of the issued share capital as at 8 June 2022, but so that such authorisation may be used only for the purposes of financing (or refinancing, if the authorisation is to be used within six months after the original transaction) a transaction which the Board determines to be an acquisition or other capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre‑Emption Rights most recently published by the UK Pre-Emption Group prior to the date of the 2022 AGM. By virtue of its authorisation by the General Meeting, the Board is also authorised to acquire fully paid-up shares in the capital of the Company, up to a maximum of 10% of the issued share capital, provided that the Company will not hold more shares in its own capital than a maximum of 50% of the issued capital of the Company, either through a purchase on a stock exchange or otherwise, the repurchase can take place for a minimal price, excluding expenses, of the nominal value of the shares and a maximum price of the higher of: (i) an amount equal to 5% above the average of the middle market quotations for the shares taken from the London Stock Exchange Daily 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 2023. Such authorities are renewed annually and authority will be sought at the 2023 AGM. Dividend policy The Group does not expect to declare any dividends in 2022. In future years, the Group will consider the payout of dividends, taking into account the amount of profits, the need for cash for capital expenditure and further expansion and its debt profile. As such, while the Group’s policy is to eventually pay out dividends in the appropriate circumstances, there is no immediate prospect of dividends being paid out, nor can there be any assurance as to when and in what amount any dividends may be eventually paid out. Shareholders Major shareholders At the IPO, shares were 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 6 April 2023, the Company had been notified, in accordance with the FCA’s Disclosure, Guidance and Transparency Rules (DTR 5.3.1R(1), of the following holdings of voting rights attaching to the Company’s shares: 6 April 2023 Share/vote % Amount Jubilant FoodWorks Netherlands B.V.(1) 49.04 71,413,939 Jeffrey R. Fieler 13.02 19,217,854 Barca Global Master Fund, LP 8.30 12,087,470 Mr Saranga 5.57 8,106,310 (1) Fides Food Systems Coöperatief U.A. merged with Jubilant FoodWorks Netherlands B.V. (acquiring entity) on 2 March 2022. 123 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information General Meeting The Company will organise a General Meeting at least once a year. The agenda with notes and the registration process are published with the notice convening the meeting at least 42 days beforehand and are also available on the Company’s website. The notes contain all relevant information with regard to the resolutions on the agenda. Each shareholder may attend General Meetings, address the General Meeting and exercise voting rights pro rata to their shareholding, either in person or by proxy. Shareholders may exercise these rights if they are the holders of shares on the record date, which is the 28th day before the day of the General Meeting, and they or their proxy have notified the Company of their intention to attend the General Meeting. The Company shall give shareholders and other persons entitled to vote the possibility of issuing proxy votes to an independent third party. All proxy votes received are counted with the balance for and against, and any votes withheld are announced at the General Meeting and published on the Company’s website after the meeting. The Company’s articles of association set out in detail the power of the General Meeting. Resolutions requiring the prior approval of the General Meeting are, amongst others: • adoption of the Company’s annual accounts; • amendments to the articles of association; • deciding on the remuneration policy of the Board; • appointment and dismissal of Board members; • appropriation of profits to the extent not added to the reserves; • appointing the external auditor; • transferring the Company or virtually the entire Company to a third party; and • dissolution of the Company. Subject to certain exceptions as set forth by law or the articles of association, resolutions of the General Meeting are passed by an absolute majority of the votes cast. Draft minutes of the meeting will be released within three months of the meeting and will be available for comments for three months thereafter. The final minutes will be published on the Company’s website. This year, the AGM is scheduled to be held on 13 June 2023 in Amsterdam, the Netherlands. Controlling shareholder For as long as there is a controlling shareholder (defined in the Listing Rules as any person who exercises or controls on their own or together with any person with whom they are acting in concert, 30% or more of the votes able to be cast on all or substantially all matters at general meetings of a company), the Board rules allow for the election or re‑election of any independent Director to be approved by separate resolutions of: (i) the Company’s shareholders; and (ii) the Company’s shareholders excluding any controlling shareholder. If either of the resolutions is defeated, the Company may propose a further resolution to elect or re-elect the proposed independent Director, which: (a) may be voted on within a period commencing 90 days and ending 120 days from the original vote; and (b) may be passed by a vote of the shareholders of the Company voting as a single class. Furthermore, in the event that the Company wishes the FCA to cancel the listing of the shares on the premium listing segment of the 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 the shares voted on the resolution; and (ii) a majority of the votes attaching to the shares voted on the resolution excluding any shares voted by a controlling shareholder. In all other circumstances, controlling shareholders have and will have the same voting rights attached to the shares as all other shareholders. Impact of Brexit on the Group and minority shareholder protection As a result of Brexit, companies which formerly had their registered 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. Shares and shareholders continued 124 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Shares and shareholders continued As a result of this, neither the Dutch nor the UK takeover codes now apply to the Company, and consequently the minority protections contained in the takeover codes no longer apply to the Company’s shareholders. For example, a shareholder will no longer be required to make a mandatory 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 Jubilant; • the UK legal regime applying to premium listed companies (in particular, as contained in the Listing Rules); and • Dutch corporate law. An independent committee of the Board of the Company, comprised of Peter Williams (Chairman) and David Adams (Senior Independent Non-Executive Director), (the “Independent Committee”) assured shareholders that it would seek to address greater minority shareholder protection with the wider Board. To a certain extent, some of the concerns of shareholders communicated during the recent reverse bookbuild process were addressed by the reduction in free float requirements under the Listing Rules to 10%, from 25%, in December 2021 – thereby lessening the risk of de-listing in circumstances where a controlling shareholder seeks to increase its shareholding. However, as a result of shareholder feedback during that process, it had become clear that the UK Takeover Code and the Dutch takeover rules no longer applying to the Company, as a consequence of Brexit, was a situation that should be addressed as soon as possible. The Board has proposed additional takeover protection for minority shareholders. This takeover protection is embedded in the Company’s articles of association as from 13 April 2022. From this date, the articles include the requirement to launch a mandatory offer by any investor which acquires 50% or more of the Company’s issued share capital. A shareholder/investor is entitled to increase its stake to a level below 50% without triggering a requirement to make a mandatory offer. Relationship Agreement and the controlling shareholder The Company considers that Jubilant exercises or controls on its own, or together with any person with whom it is acting in concert, more than 30% of the votes to be cast on all or substantially all matters at General Meetings. In order to ensure that the Company can carry on as an independent business as its main activity, on 28 June 2017, the Company and Fides Food Systems entered into a Relationship Agreement which regulates the ongoing relationship between the Company and Fides Food Systems and its associates, including Jubilant. The Relationship Agreement was amended by a deed of amendment dated 29 September 2021 between the parties, in order to govern the relationship between the controlling shareholder and the Company after Jubilant acquired the shareholding in Fides Food Systems and in order to comply with Listing Rule 6.1.4BR(1) which requires that the Company and the controlling shareholder had in place a written and legally binding agreement upon admission which is intended to ensure that the controlling shareholder and the Company comply with the independence provisions set out in Listing Rule 6.1.4DR. Another amendment to the Relationship Agreement was agreed on 15 February 2022 to include additional takeover protection for minority shareholders. Fides Food Systems merged with Jubilant on 2 March 2022 and therefore Jubilant is the current contract party of the Company. 125 DP Eurasia N.V. Annual Report and Accounts 2022 Strategic report Corporate governance Financial statements Additional information Shares and shareholders continued The Relationship Agreement contains, among others, undertakings from Jubilant that: (i) transactions and arrangements with it (and/or any of its associates (including Jubilant’s parent company)) will be conducted at arm’s length and on normal commercial terms; (ii) neither it nor any of its associates will take any action that would have the 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 Jubilant nor any of its associates will take any action that would affect the ability of the Company to carry on its business independently of Jubilant; and (v) it will not cause or authorise anything to be done which would prejudice either the Company’s status as a company whose shares are admitted to the premium listing segment of the 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 as 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) Jubilant, together with its associates, is entitled to exercise or to control the exercise of 10% or more of the votes able to be cast on all, or substantially all, matters at General Meetings. The Group believes that the terms of the Relationship Agreement will enable the Group to carry on its business independently of Jubilant. Furthermore, Jubilant has agreed to procure the compliance of its associates with the Independence Provisions. The Company has complied with, and so far as the Company is aware, Jubilant has complied with, sub-paragraphs (i), (ii) and (iii) of the Independence Provisions set out above. Conflicts of interest Save as set out under “Relationship Agreement and the controlling shareholder”, there are no potential conflicts of interest between any duties owed by the Directors or senior managers to the Company and their private interests or other duties. Investor relations policy The Company is committed to maintaining an open and constructive dialogue with the investment community. The Company is aiming to keep its shareholders updated by informing them equally, simultaneously, clearly and accurately about the Company’s strategy, performance and other Company matters and developments that could be relevant to investors’ decisions. The Company will act in accordance with applicable rules and regulations, including provisions on price‑sensitive information, fair and non-selective disclosure and equal treatment of shareholders that are in the same position. The Company communicates with all of its investors and analysts through organising or attending meetings such as the AGM, roadshows, broker conferences and one-off meetings and calls. The Chair and SID are available for meetings with shareholders on request. Furthermore, the Company publishes Annual Reports, Half-yearly Reports and trading updates. Meetings Briefings are given to update the market after each quarterly announcement via Group meetings or teleconference and are accessible by telephone or through the internet. Meetings with investors (bilateral and general) are held regularly to ensure that the investment community receives a balanced and complete view of the Company’s performance and the issues faced by the business, while always observing applicable rules concerning selective disclosure, equal treatment of shareholders and insider trading. Analysts’ reports and valuations are not assessed, commented upon or corrected, other than factually, by the Company. DP Eurasia does not pay any fee(s) to parties for carrying out research for analysts’ reports or for the production or publication of analysts’ reports. Contacts with the capital markets are dealt with by the Chief Executive Officer, the Chief Strategy Officer and Head of Investor Relations and, from time to time, certain Non‑Executive Directors. Financial statements What’s in this section? Consolidated statement of comprehensive income 127 Consolidated statement of fi nancial position 128 Consolidated statement of changes in equity 129 Consolidated statement of cash fl ows 130 Notes to the consolidated fi nancial statements 131 Company income statement 178 Notes to the company fi nancial statements 180 Independent auditor’s report 185 ESG appendix 195 Glossary 196 Contacts 197 Strategic report Corporate governance Financial statements Additional information 126 DP Eurasia N.V. Annual Report and Accounts 2022 Consolidated statement of comprehensive income For the years ended 31 December 2022 and 2021 Notes 2022 2021 Revenue 4 2,219,703 2,062,747 Cost of sales 4 (1,396,461) (1,268,290) Gross profit 823,242 794,457 General administrative expenses (281,987) (262,616) Marketing and selling expenses (346,550) (342,867) Other operating (loss)/income, net (5,685) 7,198 Operating profit 189,020 196,172 Foreign exchange income 6 85,518 49,805 Financial income 6 109,626 53,521 Financial expense 6 (240,348) (132,740) Monetary gain 2.1 47,497 48,646 Profit/(loss) before income tax 191,313 215,404 Tax expense 19 10,736 (81,165) Profit from continuing operations 202,049 134,239 Loss from discontinued operations 24 (211,090) (71,365) (Loss)/profit for the period (9,041) 62,874 Other comprehensive expense (260,057) (35,356) Items that will not be reclassified to profit or loss – Remeasurements of post-employment benefit obligations, net of tax (5,856) 124 Items that may be reclassified to profit or loss – Currency translation differences (248,176) (70,069) – Currency translation differences from discontinued operations (6,025) 34,589 Total comprehensive loss (269,098) 27,518 Profit per share for the period attributable to equity holders of the parent (1) (0.06) 0.43 Profit per share from continuing operations attributable to equity holders of the parent (1) 1.39 0.92 (1) Amounts represent the basic and diluted earnings per share. The accompanying notes form an integral part of these consolidated financial statements. Strategic report Corporate governance Financial statements Additional information 127 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Consolidated statement of financial position For the years ended 31 December 2022 and 2021 31 Dec 31 Dec Notes 2022 2021 Assets Trade receivables 13 16,365 21,203 Lease receivables 16 95,272 109,391 Right-of-use assets 10 98,542 218,969 Property and equipment 8 123,577 211,063 Intangible assets 9 91,970 117,291 Goodwill 11 234,597 251,210 Deferred tax assets 19 4,183 27,531 Other non-current assets 16 69,415 64,850 Non-current assets 733,921 1,021,508 Cash and cash equivalents 12 360,059 254,700 Trade receivables 13 297,960 385,793 Lease receivables 16 13,676 32,270 Inventories 15 238,814 223,943 Current income tax assets 45,418 — Other current assets 16 162,150 169,407 Current assets 1,118,077 1,066,113 Assets held for sale 24 435,400 — Total assets 2,287,398 2,087,621 Equity Paid in share capital 21 36,353 36,353 Share premium 441,632 441,632 Contribution from shareholders 20 76,604 71,715 Other reserves not to be reclassified to profit or loss – Remeasurements of post-employment benefit obligations (11,360) (5,504) Other reserves to be reclassified to profit or loss – Currency translation differences (633,889) (379,688) Retained earnings 61,366 70,407 Total equity (29,294) 234,915 31 Dec 31 Dec Notes 2022 2021 Liabilities Financial liabilities 17 64,923 230,196 Lease liabilities 17 152,422 281,692 Long-term provisions for employee benefits 16 13,693 6,883 Deferred tax liability 19 — 8,362 Other non-current liabilities 16 154,906 118,571 Non-current liabilities 385,944 645,704 Financial liabilities 17 729,232 521,862 Lease liabilities 17 42,901 91,072 Trade payables 13 354,419 395,363 Current income tax liabilities 19 — 21,003 Provisions 3,438 8,904 Other current liabilities 16 135,960 168,798 Current liabilities 1,265,950 1,207,002 Liabilities related to assets held for sale 24 664,798 — Total liabilities 2,316,692 1,852,706 Total liabilities and equity 2,287,398 2,087,621 The accompanying notes form an integral part of these consolidated financial statements. Strategic report Corporate governance Financial statements Additional information 128 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Consolidated statement of changes in equity For the year ended 31 December 2022 Remeasurement of post- Contribution employment Currency Share Share from benefit translation Retained Total capital premium shareholders obligations differences earnings equity Balances at 1 January 2021 36,353 441,632 69,233 (5,628) (344,208) 7,533 204,915 Remeasurements of post-employment benefit obligations, net — — — 124 — — 124 Currency translation adjustments — — — — (35,480) — (35,480) Total loss for the period — — — — — 62,874 62,874 Total comprehensive loss — — — 124 (35,480) 62,874 27,518 Share-based incentive plans (Note 20) — — 2,482 — — — 2,482 Balances at 31 December 2021 36,353 441,632 71,715 (5,504) (379,688) 70,407 234,915 Balances at 1 January 2022 36,353 441,632 71,715 (5,504) (379,688) 70,407 234,915 Remeasurements of post-employment benefit obligations, net — — — (5,856) — — (5,856) Currency translation adjustments — — — — (254,201) — (254,201) Total loss for the period — — — — — (9,041) (9,041) Total comprehensive loss — — — (5,856) (254,201) (9,041) (269,098) Share-based incentive plans (Note 20) — — 4,889 — — — 4,889 Balances at 31 December 2022 36,353 441,632 76,604 (11,360) (633,889) 61,366 (29,294) The accompanying notes form an integral part of these consolidated financial statements. Strategic report Corporate governance Financial statements Additional information 129 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Consolidated statement of cash flows For the year ended 31 December 2022 31 Dec 31 Dec Notes 2022 2021 Profit before income tax 191,313 215,404 Adjustments for: Depreciation 8 42,374 32,616 Amortisation 9,10 67,549 58,195 Performance bonus accrual 16 29,585 31,034 Non-cash employee benefits expense – share-based payments 20 4,889 2,482 Interest income 6 (109,626) (53,521) Interest expense 6 223,847 128,172 Impairment of tangible and intangible assets — 1,921 Hyperinflation adjustments (187,160) 71,051 Cash flows from discontinued operation 268,562 159,655 Effect of currency translation differences (145,804) 26,165 Changes in operating assets and liabilities Changes in trade receivables 92,671 (282,529) Changes in other receivables and assets 35,912 (220,470) Changes in inventories (14,871) (162,199) Changes in contract assets (507) (409) Changes in contract liabilities (27,923) (11,343) Changes in trade payables (40,944) 222,004 Changes in other payables and liabilities (4,141) 180,428 Income taxes paid 19 (66,421) (58,530) Cash flows generated from operating activities 359,305 340,126 Purchases of property and equipment 8 (41,678) (60,585) Purchases of intangible assets 9 (58,311) (42,929) Cash flows from discontinued operation (29,791) (6,157) Disposals from sale of tangible and intangible assets 18,967 1,692 31 Dec 31 Dec Notes 2022 2021 Cash flows used in investing activities (110,813) (107,979) Interest paid (135,364) (92,312) Interest on leases paid (53,487) (6,003) Interest received 109,626 30,972 Loans obtained 17 1,144,060 302,054 Loans paid 17 (867,989) (192,519) Cash flows from discontinued operation (159,666) (63,517) Payment of lease liabilities 17 (64,543) (41,890) Cash flows (used in)/generated from financing activities (27,363) (63,215) Effects of inflation on cash and cash equivalents (115,770) (23,268) Net increase in cash and cash equivalents 105,359 145,664 Cash and cash equivalents at the beginning of the period 254,700 109,036 Cash and cash equivalents at the end of the period 360,059 254,700 The accompanying notes form an integral part of these consolidated financial statements. Strategic report Corporate governance Financial statements Additional information 130 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements For the year ended 31 December 2022 Note 1 – The Group’s organisation and nature of activities DP Eurasia N.V. (the “Company”), a public limited company, having its statutory seat in Amsterdam, the Netherlands, was incorporated under the law of the Netherlands on 18 October 2016. Upon incorporation, Fides Food Systems Coöperatief U.A. and Vision Lovemark Coöperatief U.A. contributed and transferred all shares in Fidesrus B.V. and Fides Food Systems B.V. and their subsidiaries to the Company. From this point forward, the consolidated Group was formed. This was a transaction under common control. The consolidated financial statements of DP Eurasia N.V. have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The consolidated financial statements also comply with the financial reporting requirements included in Title 9 of Book 2 of the Dutch Civil Code, as far as applicable. The Company’s registered address is: Herikerbergweg 238, Amsterdam, the Netherlands. The Company and its subsidiaries (together referred to as the “Group”) perform its activities in corporate‑owned and franchised stores in Turkey and the Russian Federation, including providing technical support, control and consultancy services to the franchisees. As at 31 December 2022, the Group holds franchise operating and sub-franchising rights in 859 stores (697 franchised stores, 162 corporate-owned stores) (31 December 2021: 809 stores (615 franchised stores, 194 corporate-owned stores)). The consolidated financial statements as at and for the period ended 31 December 2022 have been approved and authorised for issue on 19 April 2023 by authorisation of the Board. The financial statements are subject to adoption by the Annual General Meeting. Subsidiaries The Company has a total of four fully owned subsidiaries. These entities and the nature of their businesses are as follows: 2022 2021 Effective Effective ownership ownership Registered Nature of Subsidiaries (%) (%) country business Pizza Restaurantları A.Ş. (“Domino’s Turkey”) 100 100 Turkey Food delivery Pizza Restaurants LLC (“Domino’s Russia”) 100 100 Russia Food delivery Fidesrus B.V. (“Fidesrus”) 100 100 The Netherlands Investment company Fides Food Systems B.V. (“Fides Food”) 100 100 The Netherlands Investment company Domino’s Russia is established in the Russian Federation. Domino’s Russia is operating a pizza delivery network of corporate and franchised stores in the Russian Federation. Domino’s Russia has a Master Franchise Agreement (the “MFA Russia”) with Domino’s Pizza International for the pizza delivery network in Russia until 2030. Please refer to Note 2.4 and Note 24 for the details of the discontinued operations. Domino’s Turkey is established in Turkey. Domino’s Turkey is operating a pizza delivery network of corporate and franchised stores in Turkey. Domino’s Turkey is a food delivery company, which has a Master Franchise Agreement (the “MFA Turkey”) with Domino’s Pizza International for the pizza delivery network in Turkey until 2032. The Group expects the terms of the MFAs to be extended. Fides Food Systems and Fidesrus are established in the Netherlands; both Fides Food Systems and Fidesrus are acting as investment companies. Strategic report Corporate governance Financial statements Additional information 131 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Basis of presentation of consolidated financial statements 2.1 Financial reporting standards The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS as adopted by EU”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (“IASB”) and Title 9 of Book 2 of the Dutch Civil Code. The policies set out below have been consistently applied to all the periods and the years presented, unless otherwise stated. The consolidated financial statements have been prepared under the historical cost convention. Domino’s Turkey is registered in Turkey; it individually maintains its accounting records in TRY and prepares its statutory financial statements in accordance with the Turkish Financial Reporting Standards (“TFRS”). The stand-alone financial statements of Domino’s Turkey are based on the statutory accounting records, with adjustments and reclassifications recorded for the purpose of fair presentation in accordance with IFRS as adopted by the EU. Domino’s Russia is registered in the Russian Federation; it individually maintains its accounting records in RUB and prepares its statutory financial statements in accordance with the Regulations on Accounting and Reporting (“RAR”) of the Russian Federation. The stand-alone financial statements of Domino’s Russia are based on the statutory accounting records, with adjustments and reclassifications recorded for the purpose of fair presentation in accordance with IFRS as adopted by the EU. Application of IAS 29 - Hyperinflation in Turkey The Turkish economy was designated as a hyperinflationary economy in the first half of 2022 and, as a result, IAS 29, ‘Financial Reporting in Hyperinflationary Economies’ has become applicable to the Group’s subsidiaries whose functional currency is the Turkish Lira (Domino’s Turkey). IAS 29 requires companies to report the results of the operations in Turkey, as if these had always been highly inflationary, Specifically, IAS 29 requires: • adjustment of historical cost of the non-monetary assets and liabilities for the change in purchasing power caused by inflation from the date of initial recognition to the end of the reporting date; • non-adjustment of the monetary assets and liabilities, as they are already expressed in the measuring unit current at the end of the reporting period; • adjustment of the statement of comprehensive income for inflation and its translation with the average index rate; • recognition of gain or loss on net monetary position in profit or loss in order to reflect the impact of inflation rate movement on holding monetary assets and liabilities in local currency; • there are no items measured at current cost; • all items in the statement of cash flows are expressed in terms of the measuring unit current at the end of the reporting period; • the restatement of financial statements in accordance with this Standard may give rise to differences between the carrying amount of individual assets and liabilities in the statement of financial position and their tax bases. These differences are accounted for in accordance with IAS 12 Income Taxes; and • total cumulative effect of restating non-monetary items in accordance with IAS 29 on opening balance sheet of 1 January 2021 are recognised in retained earnings. IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date, and that corresponding figures for previous periods be restated in the same terms. The restatement of the comparative amounts was calculated by means of conversion factors derived from the Turkish nationwide consumer price index (“CPI”) published by the State Institute of Statistics (“SIS”). Indices and conversion factors used to restate the comparative amounts until 31 December 2022 are given below: Cumulative Conversion three-year Date Index factor inflation rate 31 December 2022 1128.45 1.0000 156.2% 31 December 2021 686.95 1.6427 74.4% 31 December 2020 504.81 2.2354 54.2% Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 132 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Basis of presentation of consolidated financial statements continued 2.1 Financial reporting standards continued Application of IAS 29 – Hyperinflation in Turkey continued The financial statements of the Group’s subsidiaries, whose functional currency is the currency of a hyperinflationary economy, are adjusted for inflation and prior year comparatives have been restated for hyperinflation in the consolidated financial statements. In the consolidated income statement for the twelve months ended 31 December 2022, the Group recognised a total gain on net monetary position of TRY 47,497 thousands. (31 December 2021: TRY 48,646) The Group used the conversion coefficient derived from the consumer price index published by Turkish Statistics Institute (“TUIK”). The conversion coefficients were 1128.45 and 686.95 on 31 December 2022 and 31 December 2021, respectively. One conversion coefficient per period has been determined and calculated as purchases and sales are relatively fairly divided over the year. Going concern assumption The consolidated financial statements have been prepared assuming that the Group will continue as a going concern and be able to realise its assets and discharge its liabilities in the normal course of business. Risks and uncertainties At this stage there has been no material disruption to the Group’s operations in Russia from the ongoing situation in Ukraine. From, a DP Eurasia perspective, the right to close/cease the operation in Russia belongs to DP Eurasia (not DP International) as per the Master Franchise Agreement and the Group management is determined to continue to operate in Russia. Suspension of all international settlements with counterparties not from Russia is not expected to have a material impact on the Company since the operations are run and supplied locally. 95% of the raw materials are supplied locally, sanctions or disruptions in imports will likely have an insignificant impact on operations. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Climate change The climate-related risks can be divided into two major categories: risks related to the transition to a lower-carbon economy (transition risks) and risks related to the physical impacts of climate change (physical risks). Transition risks: Our financial performance may be affected by the nature, speed and focus of policy, legal, technology and market changes. Physical risks: Our financial performance may be affected in the future by changes in water availability, sourcing and quality; food security; and extreme temperature changes. We consider the impact of climate change in assessing whether assets may be impaired or whether the useful life of assets needs to be shortened due to early replacement We also consider climate-related risks for larger projects and limit financial losses by procuring Property Damage and Business Interruption (PDBI) insurance against damage from natural catastrophes and weather-related events, such as floods, hurricanes and winter storms. Sanctions and business continuity The conflict between Russia and Ukraine has been increasing the tension in the region, negatively affecting commodity and financial markets and increasing volatility, especially the exchange rates. In addition to this, the Russian economy has faced heavy sanctions imposed mainly by Western countries. In December 2022, the Board decided to explore the options to sell its Russian operations and initiated a plan to locate a buyer and complete the sell-out with a reasonable market price. The transaction is expected to be completed within twelve months of the balance sheet date, subject to receiving regulatory approvals. Accordingly, DP Russia operations are to be reported within discontinued operations and its assets and liabilities are recognised as assets held for sale and liabilities for sale as at 31 December 2022. (Note 24). Actions on capex and expenditure The Board has determined it prudent to limit any further investment into its operations and will keep this under review going forward in light of the geopolitical situation. In addition, the Group announced that royalty payments from its Russian operations have been suspended until further notice. The Company also took actions to minimise fixed costs and capital expenditure, together with the postponement of royalties. Strategic report Corporate governance Financial statements Additional information 133 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 2 – Basis of presentation of consolidated financial statements continued 2.1 Financial reporting standards continued Going concern assumption continued Risk assessment As per the sensitivity test run with different pessimistic scenarios (in case of zero sales growth and 10% decrease of average weekly sales orders, possible transaction costs related to intention to sell-out Russian operations),the Company is still able to operate with its own cash flow. If there is any further cash needed, this can be funded by using unused loan limits available in local Turkish market. Impairment of long-lived assets, goodwill and indefinite-lived intangibles In preparation of the consolidated financial statements as at 31 December 2022, the Group has assessed the possible impacts of the ongoing situation in Russia on the financial statements and reviewed the critical estimates and assumptions. Within this scope, the Group has tested the property and equipment, intangible assets, goodwill, deferred tax assets and trade receivables for possible impairment. Impact on financial liabilities and liquidity The Group currently utilises internally generated cash flow and bank borrowings in Turkey to meet its financing needs. The Group’s Turkish operations are well established and cash generative and act as a source of liquidity for the wider Group. The Group has additional borrowing capacity available from Turkish banks, which it can draw down for liquidity needs. Even though the Company obtained waivers for all quarters of 2022 from Sberbank regarding its loan, since assets and liabilities of the Russian operations are classified as held for sale, all assets and liabilities are reclassified as short-term as of the balance sheet date. 2.2 Principles of consolidation Uncommitted facilities The Group enters into general loan agreements with a range of Turkish banks. Based on the general practice in Turkey, events of default, seizure of assets held by the bank as securities for company loans, regular disclosure of financials and change of control clauses and which are rolled over at the end of the term. Nearly all of the Turkish bank borrowings are short term. The banks make periodic revisions to determine the risk limits they are willing to make available to the Group and regularly assess the Group’s financial position. The Group has not received any call requests nor have the Turkish banks that lend to it under these facilities declined any drawdown requests during the period under review. As at 31 March 2023 the limits available under these types of facilities amount to TRY350 million. The consolidated financial statements include the parent company, DP Eurasia N.V. and its subsidiaries for the year ended 31 December 2022. Subsidiaries are fully consolidated from the date on which control is transferred to the Company (the “acquisition date”). Basis of consolidation The consolidated financial statements include the accounts of the Group on the basis set out in the sections below. The financial results of the subsidiaries are fully consolidated from the date on which control is transferred to the Group or deconsolidated from the date that control ceases. Subsidiaries are all companies over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power to direct the activities of the entity. The subsidiaries fully consolidated, the proportion of ownership interest and the effective interest of the Group in these subsidiaries as at 31 December 2022 are disclosed in Note 1. The results of operations of subsidiaries acquired or sold during the year are included in the consolidated statement of comprehensive income from the acquisition date or until the date of sale. The statements of financial position and statements of comprehensive income of the subsidiaries are consolidated on a line-by-line basis and the carrying values of the investment held by the Company and its subsidiaries are eliminated against the related shareholders’ equity. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. After disposal of an asset or disposal group, inter‑group balances are eliminated against discontinued operations. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Strategic report Corporate governance Financial statements Additional information 134 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Basis of presentation of consolidated financial statements continued 2.2 Principles of consolidation continued Consolidation of foreign subsidiaries Financial statements of subsidiaries operating in foreign countries are prepared in the currency of the primary economic environment in which they operate. Assets and liabilities in the financial statements prepared according to the Group’s accounting policies are translated into the Group’s presentation currency, Turkish Lira, from the foreign exchange rate at the statement of financial position date, whereas income and expenses are translated into TRY at the average foreign exchange rate. Exchange rate differences arising on the translation of a monetary item that forms part of a legal entity’s net investment in a foreign operation are recognised in the foreign exchange translation reserve in equity. Exchange 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: 31 Dec 2022 31 Dec 2021 Period Period Period Period Currency end average end average Euros (“EUR”) 19.9349 17.36424 14.6823 10.4408 Russian Roubles (“RUB”) 0.25948 0.249513 0.1730 0.1196 2.3 New and amended international financial reporting standards New and amended standards adopted by the Group, which are applicable for the financial statements as at 31 December 2022 A number of new or amended standards became applicable for the current reporting period and the Group has applied the following standards and amendments for the first time for the annual reporting period commencing 1 January 2022: • amendment to IFRS 16, ‘Leases’ – Covid-19 related rent concessions – extension of the practical expedient (effective 1 April 2021); and • a number of narrow-scope amendments to IFRS 3, IAS 16 and IAS 37, and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16. Notes to the consolidated financial statements continued For the year ended 31 December 2022 The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly 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 2022: • narrow scope amendments to IAS 1, Practice statement 2 and IAS 8; • amendment to IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction; • amendment to IFRS 16 – Leases on sale and leaseback; • amendment to IAS 1 – Non-current liabilities with covenants; and • IFRS 17, ‘Insurance Contracts’, as amended in December 2021. The amendments are not expected to have an impact on the financial position or performance of the Group. 2.4 Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”), see Note 2.5 for the accounting of foreign currency transactions. Foreign currency transactions are translated using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rates at the balance sheet date. Foreign exchange gains and losses resulting from trading activities (trade receivables and payables) denominated in foreign currencies of the Group companies have been accounted for under “other operating income/expenses” whereas foreign exchange gains and losses resulting from the translation of other monetary assets and liabilities denominated in foreign currencies have been accounted for under “financial income/expenses” in the consolidated income statement. The consolidated financial statements are presented in TRY, which is the Group’s presentation currency. Strategic report Corporate governance Financial statements Additional information 135 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies Revenue recognition (i) Sale of goods – wholesale The Group sells raw materials and equipment to franchise-owned stores. Sales are recognised at a point in time when control of the products has transferred, being when the products are delivered to the franchisees, franchisees have full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could 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. (v) Revenue from franchise fees The Group receives a franchise fee from each franchise that joins the Group and operates under the name of Domino’s Pizza; however, the performance obligation of the Group is related to the services provided during the agreement. These franchise fee revenues are deferred during the period of the franchise agreement and those deferred revenues are included in the other non-current liabilities. Revenue generated from royalties is classified under “Other revenues” in Notes 3 and 4. Franchise arrangement involves the right to operate in a specific location as well as other goods and services, such as point-of-sale systems, restaurant concept, menus and benefits from national advertising campaigns. Revenue generated from franchise fees is generated in proportion to time passed since the inception of the franchise contract. In determining the transaction price, the Group adjusts the promised amount of consideration for the 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. Strategic report Corporate governance Financial statements Additional information 136 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Revenue recognition continued (vi) Costs to fulfil a contract The Group incurs certain costs with Domino’s Pizza International related to the set up of each franchise contract and IT systems used for recording of franchise revenue. The costs relate directly to the franchise contract, generate resources used in satisfying the contract and are expected to be recovered. They are therefore capitalised as costs to fulfil a contract and are expensed over the life of the contract. Costs to fulfil a contract are classified under “Other assets” in the statement of financial position. Cash and cash equivalents Cash and cash equivalents comprise cash balances, credit card receivables and cash at banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value. Trade receivables Trade receivables, that are recognised by way of providing goods or services directly to a debtor, are accounted for initially at fair value and subsequently measured at amortised cost, using the 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. 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. Strategic report Corporate governance Financial statements Additional information 137 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Financial assets carried at amortised cost Impairment The Group has applied a simplified approach for the calculation of impairment on its receivables carried at amortised cost. In accordance with this method, if no provision has been recognised on the trade receivables, lease receivables and other receivables because of a specific event, the Group measures the expected credit loss from these receivables by the lifetime expected credit loss. The calculation of expected credit loss is performed based on the experience of the Group and its expectation based on the macroeconomic indications. Financial assets carried at fair value Assets that are held by management for collection of contractual cash flows and/ or for selling the financial assets are measured at their fair value. If management does not plan to dispose of these assets in twelve months after the balance sheet date, they are classified as non-current assets. The Group makes a choice for the equity instruments during the initial recognition and elects profit or loss or other comprehensive income for the presentation of fair value gain and loss. The Group has no financial assets carried at fair value in the current financial statements. (i) Financial assets carried at fair value through profit or loss Financial assets carried at fair value through profit or loss comprise of “derivative instruments” in the statement of financial position. Derivative instruments are recognised as an asset when the fair value of the instrument is positive, and as a liability when the fair value of the instrument is negative. (ii) Financial assets carried at fair value through other comprehensive income Financial assets carried at fair value through other comprehensive income comprise “financial assets” in the statement of financial position. When the financial assets carried at fair value through other comprehensive income are sold, the fair value gain or loss classified in other comprehensive income is classified to retained earnings. Property and equipment Property and equipment are carried at cost less accumulated depreciation and any impairment in value. When assets are sold or retired, their cost and accumulated depreciation are eliminated from the related accounts and any gain or loss resulting from their disposal is included in the income statement. The initial cost of property and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset ready for use. Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance, are normally charged to the income statement in the year the costs are incurred. If the asset recognition criteria are met, the expenditures are capitalised as an additional cost of property and equipment. Except for the construction in progress, depreciation is computed on a straight-line basis over the estimated useful lives. The depreciation terms are as follows: Useful life (years) Machinery and equipment 3-40 Motor vehicles 3 Furniture and fixtures 6-10 Leasehold improvements 5 The expected useful life, residual value and depreciation method are evaluated every year for the probable 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. Strategic report Corporate governance Financial statements Additional information 138 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Intangible assets continued Franchise contracts Franchise contracts are composed of fees paid for the acquisition of the master franchise for the markets in which the Group operates. These are carried at cost less accumulated amortisation and any impairment loss. The useful economic lives of the assets are ten years and are amortised on a straight-line basis. Software Computer software, amongst others for online customer interface and financial reporting, is carried at cost less accumulated amortisation and any impairment loss. Externally acquired computer software and software licences are capitalised at the cost incurred to acquire and bring into use the specific software. Internally developed computer software programmes are capitalised to the extent that costs can be separately identified and attributed to software programmes, measured reliably, and that the asset developed can be shown to generate future economic benefits. These assets are considered to have finite useful lives and are amortised on a straight-line basis over the estimated useful economic lives of each of the assets, considered to be between three and five years. Estimated useful lives and the amortisation method are reviewed at the end of each year and the 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. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or group of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed. Goodwill is not amortised, but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Impairment of non-financial assets The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised at the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. Value in use is the present value of estimated future cash flows expected to arise from the use of an asset and from its disposal at the end of its useful life while the fair value less cost to sell is the amount that will be collected from the sale of the asset less costs of disposal. Estimated future cash flows are typically based on five-year forecasts and terminal values are considered where the asset has an indefinite useful economic life. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash flows from other assets or group of assets. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 139 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Foreign currency transactions Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised on the income statement. Foreign exchange gains and losses related to operational activities are classified above operating profit, whereas foreign exchange gains and losses related to financing are classified below operating profit. See Note 2.4 regarding presentation currency. Lease transactions The Group as the lessee The Group leases various 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). 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: Useful life (years) Properties 5 Motor vehicles 4-5 For the purpose of impairment testing, right-of-use assets are allocated to each of the stores. Each store to which the right-of-use assets are allocated represents the lowest level within the entity at which the right-of-use assets are monitored for internal management purposes. Right-of-use assets are monitored at the store level. Impairment reviews for right-of-use assets are undertaken if events or changes in circumstances indicate a potential impairment. An impairment loss is recognised at the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Fair value less cost to sell is the amount obtainable from the sale of an asset less the costs of disposal. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 140 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Lease transactions continued Right-of-use assets continued Payments associated with the leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. There are no residual value guarantees and the initial direct costs are negligible. Sub-leases The Group operates as intermediate lessor for a significant proportion of its leases. The Group has evaluated its rent agreements and classified its sub-leases as financial leases as required in IFRS 16. Where the Group recognised a leasing agreement from a sub-lease transaction, classified as financial leasing, the right‑of‑use asset from the head-lease is derecognised and a lease receivable equal to the derecognised right-of-use assets is recognised. Lease liability The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. Lease liabilities are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Lease payments included in the measurement of the lease liability comprise the following: (a) fixed payments, including in-substance fixed payments; and (b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date. After initial recognition, the lease liability is measured by: (a) increasing the carrying amount to reflect interest on the lease liability; (b) reducing the carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in‑substance fixed lease payments. (i) Extension and termination options In determining the lease liability, the Group considers the extension and termination options. Most of the extension and termination options held are exercisable both by the Group and by the respective lessor. Extension options are available for all contracts. In more than 90% of the contracts, DP Eurasia has the right to extend the contract unilaterally, which does not need the consent of the landlord. Periods covered by an option to extend the lease term are included in the lease term if the lessee is reasonably certain to exercise that option. The same rationale applies to termination options. The term covered by a termination option is not included in the lease term if the lessee is reasonably certain not to exercise the option. Otherwise, the lease term ends at the point in time when the leasee can exercise the termination option. (i) Critical judgements in determining the lease term Lease terms are generally negotiated locally. Contracts are negotiated on an individual basis and contain a wide range of terms and conditions, such as early termination clauses and renewal rights. Termination clauses and renewal rights are included in several leases across the Group’s lease agreements. They are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise a renewal right, or not exercise a termination clause. Both options are only included in the lease term if the lease is reasonably certain to be extended or not terminated. After the commencement date, the Group reassesses the lease term for each contract if there is a significant event or change in circumstances that is within its control and 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. Strategic report Corporate governance Financial statements Additional information 141 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Lease liability continued (i) Extension and termination options continued (i) Critical judgements in determining the lease term continued The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. Factors that are considered in terminating or renewing leases include, amongst others: • location of the store; • leasehold improvements made with a significant remaining value; and • costs and business disruption required to replace a leased asset. (ii) Discount rates used The discount rate to be used should be the interest rate implicit in the lease if that rate can be readily determined. This is the rate of interest that causes the present value of: (a) lease payments; and (b) the unguaranteed residual value to equal the sum of: (i) the fair value of the underlying asset; and (ii) any initial direct costs of the lessor. However, since the implicit rate cannot be readily determined, the incremental borrowing rate is used in calculating the present value of lease payments during the lease terms that are not paid at that date. Incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The incremental borrowing rate is calculated separately for each operating company, based on currencies that lease agreements are based on. The rate is calculated based on a build-up approach whereby each category of lease has an incremental borrowing rate based on the country (and currency) of the lessee and the lease term. The Group uses recent third-party financing from banks and adjusts (if necessary) to reflect changes in financing conditions. The discount rate is a key variable for lease liabilities and a 1% increase or decrease in the discount rate would decrease or increase total lease liabilities by approximately TRY 3,684 and TRY (4,055), respectively. (iii) Variable elements used The variable element is the rent increase rate and is calculated based on the consumer price index (“CPI”), producer price index (“PPI”) or an average of both. Variable lease payments are based on an index or a rate and are initially measured using the index or the rate at the commencement date. Estimation uncertainty arising from variable lease payments The Group does not forecast future changes of the index/rate; these changes are considered when the lease payments change. Variable lease payments that are not based on an index or a rate are not part of the lease liability, but they are recognised in the income statement when the event or condition that triggers those payments occurs. Nearly 90% of future lease payments for stores are linked to CPI, PPI or an average of both. Variable payment terms are mostly used to make up for the volatile inflation rates in a country. Exemptions and simplifications Payments for leases of low-value assets such as IT equipment (mainly printers, laptops and mobile phones etc.) are not included in the measurement of the lease liabilities within the scope of IFRS 16. Lease payments of these contracts continue to be recognised in profit or loss in the related period. Provisions, contingent assets and liabilities Provisions are recognised in the consolidated financial statements when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Where the 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. Strategic report Corporate governance Financial statements Additional information 142 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Volume rebate advances Volume rebates received in advance are recognised as income within cost of sales on an accruals basis on the expected entitlement earned up to the statement of financial position date. Up-front fees received as volume rebates are recognised as a liability in the financial statements. Performance bonus accruals Realisation of the performance bonus depends on the financial and non-financial performance of the Group. Performance bonus accrual is recognised when the Group achieves its minimum requirements and recognised within related payroll expense accounts. Related parties Key management personnel, including Directors of the Company and its subsidiaries and members of the senior leadership team, together with their families and companies controlled by or 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 at the date of the statement of financial position and adjustments provided for the previous years’ income tax liabilities. Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled. The Group recognises tax assets for the tax losses carried forward to the extent that the realisation of the related tax benefit through the future taxable profits is probable. Deferred income tax liabilities are recognised for all taxable temporary 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. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 143 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Unused vacation rights Unused vacation rights accrued in the consolidated financial statements represent the estimated total liabilities related to employees’ unused vacation days as at the statement of financial position date. Share-based incentives Share-based compensation benefits are provided to members of management via various incentive plans. Information relating to the equity-settled incentive scheme is set out in Note 20. The fair value of options and share awards granted are recognised as a share-based payment expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the awards granted: • including any market performance conditions (e.g. the entity’s share price); and • excluding the impact of any service and non-market performance vesting conditions (e.g. remaining an employee of the Group over a specified time). The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the Group revises its estimates of the number of awards that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. When options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium. Earnings/(loss) per share Earnings per share disclosed in the consolidated income statement is determined by dividing net income/(loss) by the weighted average number of shares circulating during the year concerned. Statement of cash flows The Group has used the indirect method to prepare the consolidated statement of cash flows. Cash flows in foreign currencies have been translated at transaction rates. Subsequent events The Group adjusts the amounts recognised in the consolidated financial statements to reflect the adjusting events after the statement of financial position date. If non-adjusting events after the statement of financial position date have material influences on the economic decisions of users of the consolidated financial statements, they are disclosed in the notes to the consolidated financial statements. One-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. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 144 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Basis of presentation of consolidated financial statements continued 2.5 Summary of significant accounting policies continued Segment reporting The Group had two business segments, determined by management according to the information used for the evaluation of performance and the allocation of resources: the Turkish and Russian operations. Other operations are composed of corporate expenses of Dutch companies. These segments are managed separately because they are affected by economic conditions and geographical positions in terms of risks and returns. However, along with the intention to sell‑out Russian operations, the Company has presented operational results of Russian operations in the “discontinued operations” line in its consolidated statement of comprehensive income in the year ending 31 December 2022 and the presentation for the year ending 31 December 2021 has been restated in accordance with IFRS 5, ‘Non‑current Assets Held for Sale and Discontinued Operations’. As a result, segment reporting disclosures are presented as Turkey and other segments. IFRS 8 requires operating segments to be reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the management team, including the Chief Executive 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 are not directly comparable. Group management assesses liquidity and levels of borrowing by net debt (total borrowings less cash and cash equivalents) and by additionally removing the 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 are not directly comparable. Assets and liabilities held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits and financial assets that are carried at fair value, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. Prior year classification of such assets and liabilities has not been restated. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss and respective balances for the prior years have been restated accordingly. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 145 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 2 – Basis of presentation of consolidated financial statements continued 2.6 Significant accounting estimates The preparation of consolidated financial statements requires estimates and assumptions to be made regarding the amounts for assets and liabilities at the statement of financial position date and bases for the contingent assets and liabilities as well as the amounts of income and expenses realised in the reporting period. The Group makes estimates and assumptions concerning the future, which, by definition, may not equate to the related actual results. The estimates and assumptions that may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial period are addressed below: The areas involving significant estimates or judgements are: • impairment tests for goodwill (Note 11); • impairment tests for tangible and intangible assets (Notes 8 and 9); • right-of-use assets, lease receivables and liabilities (Note 10); • non-deductible expenses on corporate income tax liability calculation (Note 19); and • intention to sell-out Russian operation (Note 24). Significant judgements or estimates are disclosed in the related notes. Note 3 – Segment reporting The business operations of the Group are organised and managed with respect to geographical positions of its operations. The information regarding the business activities of the Group as at 31 December 2022 and 2021 comprise the performance and the management of its Turkish operations and headquarters. In previous year, the Group had three business segments, Turkey, Russian and other. Due to the intention to sales of Russian operation, the Group has reclassified the results of Russian operation as discontinued operations in the comprehensive income The segment results of Russian operations has been presented in Note 24. As of 31 December 2022, the Group has two business segments, determined by management according to the information used for the evaluation of performance and the allocation of resources: the Turkish and other operations. Other operations are composed of corporate expenses of Dutch companies. These segments are managed separately because they are affected by economic conditions and geographical positions in terms of risks and returns. Due to initial application of IAS 29 and its impact on the comparative periods, management information presented in segment reporting have been restated in accordance with IAS 29 application. The segment analysis for the periods ended 31 December 2022 and 2021 is as follows: 1 January - 31 December 2022 Turkey Other Total Corporate revenue 512,567 — 512,567 Franchise revenue and royalty revenue obtained from franchisees 1,547,498 — 1,547,498 Other revenue 159,638 — 159,638 Total revenue 2,219,703 — 2,219,703 – At a point in time 2,217,863 — 2,217,863 – Over time 1,840 — 1,840 Operating profit 218,979 (29,959) 189,020 Capital expenditure 82,323 — 82,323 Tangible and intangible disposals (16,861) — (16,861) Depreciation and amortisation expenses 109,923 — 109,923 Adjusted EBITDA 336,638 (25,589) 311,049 1 January - 31 December 2022 Turkey Other Total Borrowings TRY 709,889 — 709,889 RUB — 84,266 84,266 709,889 84,266 794,155 Lease liabilities TRY 195,323 — 195,323 RUB — — — 195,323 — 195,323 Total 905,212 84,266 989,478 Strategic report Corporate governance Financial statements Additional information 146 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 3 – Segment reporting continued 1 January - 31 December 2021 Turkey Other Total Corporate revenue 565,914 — 565,914 Franchise revenue and royalty revenue obtained from franchisees 1,365,414 — 1,365,414 Other revenue 131,419 — 131,419 Total revenue 2,062,747 — 2,062,747 – At a point in time 2,051,277 — 2,051,277 – Over time 11,470 — 11,470 Operating profit 216,926 (20,754) 196,172 Capital expenditure 65,458 — 65,458 Tangible and intangible disposals (3,033) — (3,033) Depreciation and amortisation expenses 90,811 — 90,811 Adjusted EBITDA 313,097 (17,590) 295,507 1 January – 31 December 2021 Turkey Other Total Borrowings TRY 540,738 — 540,738 RUB — 211,320 211,320 540,738 211,320 752,058 Lease liabilities TRY 372,764 — 372,764 RUB — — — 372,764 — 372,764 Total 913,502 211,320 1,124,822 EBITDA, adjusted EBITDA, net debt, adjusted net debt, adjusted net income and non-recurring and non-trade income/expenses are not defined by IFRS. The amounts provided with respect to operating segments are measured in a manner consistent with that of the financial statements. These items, determined by the principles defined by Group management, comprise income/expenses which are assumed by the Group management to not be part of the normal course of business and are non-recurring items. These items, which are not defined by IFRS, are disclosed by Group management separately for a better understanding and measurement of the sustainable performance of the Group. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 147 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 3 – Segment reporting continued 31 Dec 31 Dec Turkey 2022 2021 Adjusted EBITDA(1) 336,638 313,097 Non-recurring and non-trade (income)/expenses per Group management(1) One-off non-trading costs 2,847 — Share-based incentives 4,889 5,360 EBITDA 328,902 307,737 Depreciation and amortisation (109,923) (90,811) Operating profit 218,979 216,926 31 Dec 31 Dec Other 2022 2021 Adjusted EBITDA(1) (25,589) (17,590) Non-recurring and non-trade (income)/expenses per Group management (1) One-off non-trading costs 4,370 3,164 EBITDA (29,959) (20,754) Depreciation and amortisation — — Operating loss (29,959) (20,754) (1) Adjusted net income and non-recurring and non-trade income/expenses are not defined by IFRS. Adjusted net income excludes income and expenses which are not part of the normal course of business and are non-recurring items. Management uses this measurement basis to focus on core trading activities of the business segments, and to assist it in evaluating underlying business performance. The reconciliation of adjusted EBITDA for 2022 and 2021 is as follows: 1. EBITDA, adjusted EBITDA and non-recurring and non-trade income/expenses are not defined by IFRS. These items are determined by the principles defined by Group management and comprise income/expenses which are assumed by Group management to not be part of the normal course of business and are non-trading items. These items, which are not defined by IFRS, are disclosed by Group management separately for a better understanding and measurement of the sustainable performance of the Group; and 2. the reason for the significant increase in one-off non-trading costs is mainly related to impairment expenses of the tangible and intangible assets and consultancy expenses due to the cost reduction programme. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 148 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 3 – Segment reporting continued The reconciliation of adjusted net income from continuing operations as at 31 December 2022 and 2021 is as follows: 2022 2021 (Loss)/Profit for the period as reported 202,049 134,239 Non-recurring and non-trade (income)/ expenses per Group management Share-based incentives 4,889 5,360 One-off expenses/(income)(2) 7,217 3,164 Adjusted net income for the period(1) 214,155 142,763 (1) Adjusted net income and non-recurring and non-trade income/expenses are not defined by IFRS. Adjusted net income excludes income and expenses which are not part of the normal course of business and are non-recurring items. Management uses this measurement basis to focus on core trading activities of the business segments, and to assist it in evaluating underlying business performance. (2) As at 31 December 2022, the one-off expenses include TRY 20,576 impairment expense of tangible and intangible assets and TRY 1,501 severance payment expenses. The average headcount for the Group is as follows: 2022 2021 Category of activities Turkey Netherlands Turkey Netherlands Executive and senior management 12 3 11 3 Store employees 1,155 — 1,288 — Support employees 241 — 227 — Support – other 5 — — — Commissary employees 41 — 44 — Total 1,454 3 1,570 3 Note 4 – Revenue and cost of sales 2022 2021 Corporate revenue 512,567 565,914 Franchise revenue and royalty revenue obtained from franchisees 1,547,498 1,365,414 Other revenue(1) 159,638 131,419 Revenue 2,219,703 2,062,747 Cost of sales (1,396,461) (1,268,290) Gross profit 823,242 794,457 (1) Other revenue mainly includes handover income, IT income and other income from franchisee. Revenue recognised in relation to contract liabilities The movements of performance obligations and revenue recognised in relation to contract liabilities for the years ended 31 December 2022 and 2021 are as follows: 2022 2021 As at 1 January 167,805 79,442 Recognised as revenue (1,840) (11,470) Increases due to new franchise agreements entered 30,270 99,833 As at 31 December 196,235 167,805 Unsatisfied long-term franchisee contracts The amount of performance obligations relating to ongoing contracts of the Group that will be recognised in the future is TRY 196,235 (31 December 2021: TRY 167,805). The Group expects that this amount will be recorded as revenue within ten to fifteen years. Note 5 – Expenses by nature 2022 2021 Employee benefit expenses(1) 290,817 153,380 Depreciation and amortisation expenses(1) 109,923 90,811 400,740 244,191 (1) These expenses are accounted for in cost of sales, general administration expenses and marketing expenses. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 149 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 6 – Financial income and expenses Foreign exchange (losses)/gains 2022 2021 Foreign exchange gains, net 82,438 49,805 Foreign exchange gains on lease liabilities 3,080 — 85,518 49,805 Financial income 2022 2021 Interest income on lease receivables 26,459 22,549 Interest income 83,167 30,972 109,626 53,521 Financial expense 2022 2021 Interest expense (170,360) (92,312) Interest expense on lease liabilities (53,487) (35,860) Other (16,501) (4,568) (240,348) (132,740) Note 7 – (Loss)/profit per share 31 Dec 31 Dec 2022 2021 Average number of shares existing during the period 145,372 145,372 Net (loss)/profit for the period attributable to equity holders of the parent (9,041) 62,874 (Loss)/Profit per share (0.06) 0.43 31 Dec 31 Dec 2022 2021 Average number of shares existing during the period 145,372 145,372 Net profit from continuing operations attributable to equity holders of the parent 202,049 134,239 Earnings per share 1.39 0.92 31 Dec 31 Dec 2022 2021 Average number of shares existing during the period 145,372 145,372 Net loss from discontinued operations attributable to equity holders of the parent (211,090) (71,365) (Loss)/profit per share (1.45) (0.49) The reconciliation of adjusted earnings per share as at 31 December 2022 and 2021 is as follows: 31 Dec 31 Dec 2022 2021 Average number of shares existing during the period 145,372 145,372 Net loss for the period from continuing operations attributable to equity holders of the parent (9,041) 62,874 Non-recurring and non-trade expenses per Group management(1) Share-based incentives 4,889 5,360 One-off expenses 7,217 — Adjusted net earnings for the period from continuing operations attributable to equity holders of the parent 3,065 71,397 Adjusted income/(loss) per share(1) 0.02 0.49 (1) Adjusted earnings per share and non-recurring and non-trade income/expenses are not defined by IFRS. The amounts provided with respect to operating segments are measured in a manner consistent with that of the financial statements. These items, determined by the principles defined by Group management, comprise income/expenses which are assumed by Group management to not be part of the normal course of business and are non‑recurring items. These items, which are not defined by IFRS, are disclosed by Group management separately for a better understanding and measurement of the sustainable performance of the Group. There are no shares or options with a dilutive effect and hence the basic and diluted earnings per share are the same. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 150 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 8 – Property and equipment Machinery and Motor Furniture and Leasehold Construction equipment vehicles fixtures improvements in progress Total Cost 1 January 2022 142,872 93,326 284,549 300,682 4,308 825,737 Additions 9,654 14,232 19,332 706 11,986 55,910 Disposals (10,884) (34,419) (64,931) (23,075) (27,791) (161,100) Transfers 4,908 — 125 (457) (4,576) — Currency translation adjustments 53,458 241 3,952 36,175 1,941 95,767 Effect of disposal of subsidiaries (162,471) (491) (11,080) (131,073) (1,944) (307,059) 31 December 2022 37,537 72,889 231,947 182,958 (16,076) 509,255 Accumulated depreciation 1 January 2022 (81,645) (66,289) (207,795) (258,945) — (614,674) Additions (24,578) (11,143) (21,252) (18,844) — (75,817) Disposals 6,071 26,860 61,516 41,491 — 135,938 Currency translation adjustments (31,450) (210) (2,563) (32,063) — (66,286) Effect of disposal of subsidiaries 107,561 415 8,626 118,559 — 235,161 31 December 2022 (24,041) (50,367) (161,468) (149,802) — (385,678) Net book value 13,496 22,522 70,479 33,156 (16,076) 123,577 (1) Impact of assets transferred to asset held for sale. Depreciation expense of TRY 62,019 has been charged in cost of sales and TRY 13,798 has been charged in general administrative expenses. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 151 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 8 – Property and equipment continued Machinery and Motor Furniture and Leasehold Construction equipment vehicles fixtures improvements in progress Total Cost 1 January 2021 121,821 61,068 264,422 287,537 5,100 739,948 Additions 2,322 26,768 11,653 2,291 544 43,578 Disposals (1,810) (3,844) (4,073) (1,787) (699) (12,213) Transfers 49 11 1,322 (598) (784) — Impairment — — — (5,446) — (5,446) Currency translation adjustments 20,490 9,323 11,225 18,685 147 59,870 31 December 2021 142,872 93,326 284,549 300,682 4,308 825,737 Accumulated depreciation 1 January 2021 (64,458) (50,756) (188,741) (232,866) — (536,821) Additions (10,098) (9,207) (11,586) (15,795) — (46,686) Disposals 902 3,844 3,084 1,350 — 9,180 Impairment — — — 3,525 — 3,525 Currency translation adjustments (7,991) (10,170) (10,552) (15,159) — (43,872) 31 December 2021 (81,645) (66,289) (207,795) (258,945) — (614,674) Net book value 61,227 27,037 76,754 41,737 4,308 211,063 Amortisation expense of TRY 38,186 has been charged in cost of sales and TRY 8,500 has been charged in general administrative expenses. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 152 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 9 – Intangible assets Computer Key money software Total Cost 1 January 2022 83,927 318,506 402,433 Additions 3,257 55,054 58,311 Disposals (20,707) (22,256) (42,963) Currency translation adjustments 2,835 31,344 34,179 Effect of disposal of subsidiaries (7,225) (93,806) (101,031) 31 December 2022 62,087 288,842 350,929 Accumulated depreciation 1 January 2022 (55,778) (229,364) (285,142) Additions (8,173) (29,107) (37,280) Disposals 13,440 22,009 35,449 Currency translation adjustments (1,043) (15,707) (16,750) Effect of disposal of subsidiaries 2,441 42,323 44,764 31 December 2022 (49,113) (209,846) (258,959) Net book value 12,974 78,996 91,970 (1) Impact of assets transferred to asset held for sale. Amortisation expense of TRY 17,137 has been charged in cost of sales and TRY 20,143 has been charged in general administrative expenses. Strategic report Corporate governance Financial statements Additional information 153 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 9 – Intangible assets continued Computer Key money software Total Cost 1 January 2021 87,607 260,233 347,840 Additions 481 32,098 32,579 Disposals (15,185) (3,368) (18,553) Currency translation adjustments 11,024 29,543 40,567 31 December 2021 83,927 318,506 402,433 Accumulated depreciation 1 January 2021 (44,466) (191,724) (236,190) Additions (10,588) (34,802) (45,390) Disposals 5,553 740 6,293 Currency translation adjustments (6,277) (3,578) (9,855) 31 December 2021 (55,778) (229,364) (285,142) Net book value 28,149 89,142 117,291 As at 31 December 2021, disposals include an impairment charge of TRY 14,001. Amortisation expense of TRY 25,405 has been charged in cost of sales and TRY 19,985 has been charged in general administrative expenses. The Group does not have any intangible assets with an indefinite useful life. Note 10 – Right-of-use assets Details of right-of-use assets as at 31 December 2022 and 2021 are as follows: 31 Dec 31 Dec Right-of-use assets 2022 2021 Stores and building 90,766 200,658 Cars 7,776 18,311 98,542 218,969 Details of lease receivables as at 31 December 2022 and 2021 are as follows: 31 Dec 31 Dec 2022 2021 Lease receivables Current 13,676 32,270 Non-current 95,272 109,391 108,948 141,661 Strategic report Corporate governance Financial statements Additional information 154 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 10 – Right-of-use assets continued Details of lease liabilities as at 31 December 2022 and 2021 are as follows: 31 Dec 31 Dec 2022 2021 Lease liabilities Current 42,901 91,072 Non-current 152,422 281,692 195,323 372,764 Movement of right-of-use assets Stores and building Vehicles Total Cost 1 January 2022 402,209 27,785 429,994 Additions 166,398 4,807 171,205 Disposals (319,042) (287) (319,329) Effect of disposal of subsidiaries (260,044) — (260,044) Currency translation adjustments 130,173 — 130,173 31 December 2022 119,694 32,305 151,999 Accumulated depreciation 1 January 2022 (201,551) (9,474) (211,025) Additions (103,526) (16,162) (119,688) Disposals 242,199 1,107 243,306 Effect of disposal of subsidiaries 112,279 — 112,279 Currency translation adjustments (78,329) — (78,329) 31 December 2022 (28,928) (24,529) (53,457) Net book value 90,766 7,776 98,542 For the year ended 31 December 2022, depreciation expense of TRY 103,854 has been charged to cost of sales and TRY 15,834 has been charged to general administrative expenses (31 December 2021: TRY 31,912 and TRY 4,865 respectively). Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 155 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 10 – Right-of-use assets continued Stores and building Vehicles Total Cost 1 January 2021 262,797 11,983 274,780 Additions 90,259 16,817 107,076 Disposals (51,429) (1,015) (52,444) Currency translation adjustments 100,582 — 100,582 31 December 2021 402,209 27,785 429,994 Accumulated depreciation 1 January 2021 (96,022) (5,450) (101,472) Additions (32,750) (4,027) (36,777) Disposals 38,241 3 38,244 Currency translation adjustments (111,020) — (111,020) 31 December 2021 (201,551) (9,474) (211,025) Net book value 200,658 18,311 218,969 In 2022, interest expense on lease liabilities is TRY 53,487 and the total amount of interest of sub-lease expense is TRY 26,459 (31 December 2021: TRY 35,860 and TRY 22,549 respectively). In 2022, the total cash outflow for principal of leases and interest of leases is TRY 107,176 and TRY 53,487 respectively. In 2022, the total cash inflow for interest of leases is TRY 26,459 (31 December 2021: TRY 109,466, TRY 31,051 and TRY 15,839 respectively). Note 11 – Goodwill Movement of goodwill is as follows: 31 Dec 31 Dec 2022 2021 1 January 251,210 251,210 Effect of disposal of subsidiary (16,613) — 31 December 234,597 251,210 Management has carried out an impairment test and concluded that the recoverable amount of the individual CGUs is higher than the carrying amount. The goodwill relating to the Russian CGU has been classified as asset held for sale in the amount of TRY 16,613. Remaining balance is only related to Turkish CGU. Strategic report Corporate governance Financial statements Additional information 156 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 11 – Goodwill continued Goodwill impairment test In accordance with IFRS and the accounting policies explained in Note 2.5, the Group performs impairment tests on goodwill to assess whether impairment exists. The Group is obliged to test goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired, as goodwill is deemed to have an indefinite useful life. In order to perform this test, management is required to compare the carrying value of the relevant cash-generating unit (“CGU”), defined as stores of the Group including goodwill, with its recoverable amount. The recoverable amounts of the CGU are determined based on a value in use calculation. These calculations require estimations and use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. For the purpose of assessing impairment, the discounted cash flows calculated based on the Group’s revenue projections for five years are compared to the carrying value of all assets in CGUs, including allocated goodwill. The Group prepares pre-tax cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows for the remaining term based on the average long‑term growth rate of 14.2% for the Turkish market and 2.3% for the Russian market (31 December 2021: 13.2% for the Turkish market and 3.1% for the Russian market). Other key assumptions applied in the impairment tests include the expected product price, capital expenditures, demand for the products, product cost and related expenses which are reflected in the sales growth rate for the upcoming years. Management used a sales growth projection rate of 5.1% for Turkey and 12.3% for Russia respectively (31 December 2021: 7.4% for Turkey and 15.1% for Russia respectively). Growth projections include inflation expectations for the related CGUs; management determined these key assumptions based on past performance and its expectations on market development. Further, management applied capital expenditure increases of 7.0% for Turkey and Russia operations and pre-tax discount rates of 27.6% for 2022 and 29.8% for 2021 for Turkey and 15.8% for 2022 and for the Russian Federation to reflect country-specific Group risks. Sensitivities – Turkish operations The assumptions used for value in use calculations to which the recoverable amount is more sensitive are growth rate beyond five years and pre-tax discount rate. Management determined these key assumptions based on past performance and its expectations on market development. Further, management adopts different discount rates each year that reflect specific risks related to the Group as discount rates. Impairment loss has not been recognised for Turkish operations as a result of the impairment tests performed with the above assumptions as at 31 December 2022. A further test with 5% increase in WACC or 5% decrease in growth rate to the above assumptions did not result in any impairment loss, either. Sensitivities – Russian operations The assumptions used for value in use calculations to which the recoverable amount is more sensitive are growth rate beyond five years and pre-tax discount rate. Management determined these key assumptions based on past performance and its expectations on market development. Impairment loss has not been recognised as a result of the impairment tests performed with the above assumptions as at 31 December 2022. A further test with a 5% adverse change to the above assumptions did not result in any impairment loss either. Note 12 – Cash and cash equivalents The details of cash and cash equivalents as at 31 December 2022 and 2021 are as follows: 31 Dec 31 Dec 2022 2021 Cash 1,392 5,596 Banks 120,355 114,847 Term bank deposits (less than three months) 171,000 119,917 Credit card receivables(1) 67,312 14,340 360,059 254,700 (2) Maturity terms of credit card receivables are 30 days on average (31 December 2021: 30 days). There is no restricted cash as at 31 December 2022 and 2021. The details of currency of the banks are as follows: 31 Dec 31 Dec 2022 2021 Turkish Lira 261,922 192,775 Russian Roubles 78 273 US Dollars 28,725 38,479 Euro 630 3,237 291,355 234,764 Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 157 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 13 – Trade receivables and payables a) Short-term trade receivables 31 Dec 31 Dec 2022 2021 Trade receivables 267,135 350,745 Post-dated cheques(1) 32,182 38,555 299,317 389,300 Less: Doubtful trade receivables (1,357) (3,507) Short-term trade receivables, net 297,960 385,793 (1) Post-dated cheques are the receivables from franchisees resulting from store openings. The average collection period for trade receivables is between 30 and 60 days (2021: between 30 and 60 days). Movement of provision for doubtful receivables is as follows: 2022 2021 1 January 3,507 7,003 Current year (reversals)/charges (778) (2,128) Monetary gain/loss (1,372) (1,368) 31 December 1,357 3,507 The Group applied IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade, lease and other receivables based on historical losses. The Group analysed the impact of IFRS 9 and the historical losses that were incurred in 2022 also impacted the expected credit losses going forward, resulting in a disposal of TRY 764 recorded as provision for doubtful receivables (31 December 2021: TRY 588). The Group also assessed whether the historic pattern would change materially in the future. The expected credit loss applied per ageing bucket is shown as below: Not 0-30 31-90 91-180 181-360 Over 360 due days days days days days 0.12% 1.46% 4.77% 9.93% 27.55% 52.02% Lease receivables have no history if default and expected credit loss percentages are close to zero and its effect is immaterial, so the table below consists of only trade and other receivables. b) Long-term trade receivables 31 Dec 31 Dec 2022 2021 Trade receivables 4,889 2,123 Post-dated cheques(1) 11,476 19,080 16,365 21,203 (1) Post-dated cheques are the receivables from franchisees resulting from store openings. c) Short-term trade and other payables 31 Dec 31 Dec 2022 2021 Trade payables 350,533 388,000 Other payables 3,886 7,363 354,419 395,363 The weighted average term of trade payables is less than three months; short-term payables with no stated interest are measured at original invoice amount unless the effect of imputing interest is significant (31 December 2022 and 2021: less than three months). Note 14 – Transactions and balances with related parties The details of receivables and payables from related parties as at 31 December 2022 and 2021 and transactions are as follows: a) Key management compensation 31 Dec 31 Dec 2022 2021 Short-term employee benefits 37,035 36,075 Share-based incentives 4,889 2,482 41,924 38,557 There are no loans, advance payments or guarantees given to key management. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 158 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 14 – Transactions and balances with related parties continued b) Board compensation Executive Directors Non-Executive Directors Aslan Frederieke Peter David Ahmet Burak Shyam S. Hari S. Year ended 31 December 2022 Saranga Slot Williams Adams Ashaboğlu Ertaş Bartia Bartia Base salary (TRY) 5,057,348 2,243,180 3,046,890 731,254 170,292 343,923 — — Benefits (TRY) 427,428 399,189 — — — — — — Pension (TRY) — 224,318 — — — — — — Annual bonus (TRY) 5,800,063 — — — — — — — Long-term incentives (TRY) 4,766,765 — — — — — — — Total (TRY) 16,051,604 2,866,687 3,046,890 731,254 170,292 343,923 — — Total (local currency) ₺16,051,604 £165,169 £150,000 £36,000 £8,384 £16,932 — — Executive Directors Non-Executive Directors Aslan Frederieke Peter David Ahmet Burak Shyam S. Hari S. Year ended 31 December 2021 Saranga Slot Williams Adams Ashaboğlu Ertaş Bartia Bartia Base salary (TRY) 3,013,325 1,052,560 1,514,515 415,987 — — — — Benefits (TRY) 1,567,657 239,721 — — — — — — Pension (TRY) — 21,930 — — — — — — Annual bonus (TRY) 1,868,262 — — — — — — — Long-term incentives (TRY) 1,164,469 — — — — — — — Total (TRY) 7,613,713 1,314,211 1,514,515 415,987 — — — — Total (local currency) ₺7,613,713 £145,918 £125,000 £34,333 — — — — Strategic report Corporate governance Financial statements Additional information 159 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 14 – Transactions and balances with related parties continued b) Board compensation continued Notes to the table – methodology Base salary This represents the cash paid or receivable in respect of the financial year. Benefits This represents the taxable value of all benefits paid or receivable in respect of the relevant financial year. Aslan Saranga’s benefits included private health cover and company car. Frederieke Slot’s benefits included medical disability allowance, mobility allowance and education, communication and IT allowances. Pension Frederieke Slot receives a pension allowance worth 2% of base salary. Aslan Saranga receives no pension allowance. They will additionally both receive other benefits consistent with local market practice. Annual bonus This represents the total bonus payable for the relevant financial year under the ADBP. In 2022, the Chief Executive 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 111 to 115, the value of vested LTIP awards is included in the remuneration table. Since no LTIP awards have been vested to Executive Directors during the period, this column has a zero figure in the remuneration report. In May 2019, Aslan Saranga was granted an LTIP award over 332,706 shares vesting in May 2022 subject to achievement of adjusted EBITDA targets measured over the period 2019-2021. As the performance condition was not achieved, no shares will vest for Aslan Saranga in May 2022. In May 2020, Aslan Saranga was granted an LTIP award over 506,212 shares vesting in May 2023 subject to achievement of adjusted EBITDA targets measured over the period 2020-2022. Local currency totals Part of Aslan Saranga’s remuneration and the whole of Frederieke Slot’s remuneration is paid in Euros and Peter Williams’ and Tom Singer’s remuneration is wholly paid in Pound Sterling. Total amounts received by each individual in local currency are shown in the final row of the above table. In the other columns of the table, remuneration has been converted into Turkish Lira for consistency with the financial statements. Note 15 – Inventories 31 Dec 31 Dec 2022 2021 Raw materials 233,704 214,496 Other inventory 5,110 9,447 Total 238,814 223,943 The cost of inventories recognised as expense and included in “cost of sales” amounted to TRY 1,082,737 in 2022 (2021: TRY 656,091). Note 16 – Other current/non-current receivables, assets and liabilities 31 Dec 31 Dec Other current receivables and assets 2022 2021 Advance payments(1) 145,328 112,609 Lease receivables 13,676 32,270 Prepaid marketing expenses 7,335 5,379 Contract assets related to franchising contracts(2) 2,953 7,426 Prepaid insurance expenses 2,664 1,815 Prepaid taxes and VAT receivable 762 1,297 Deposits for loan guarantees(3) — 37,583 Other(4) 3,108 3,297 Total 175,826 201,677 (1) As at 31 December 2022 and 2021, advance payments are composed of advances given to suppliers for purchasing raw materials and other services. (2) The Group incurs certain costs with Domino’s Pizza International related to the setup of each franchise contract and IT systems used for recording of franchise revenue. (3) In 2021, the Group repaid a portion of its loans to Sberbank Moscow and the TRY 37,583 (RUB 205 million) cash deposit condition that was made as collateral by Fidesrus. This amount has been reclassified in the “Asset held for sale” line in the balance sheet. (4) As at 31 December 2022 and 2021, other includes job and personnel advances, short-term security deposits and other prepayments such as subscriptions and travel expenses. Strategic report Corporate governance Financial statements Additional information 160 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 16 – Other current/non-current receivables, assets and liabilities continued 31 Dec 31 Dec Other non-current receivables and assets 2022 2021 Lease receivables 95,272 109,391 Prepaid marketing expenses 44,463 36,565 Contract assets related to franchising contracts(1) 20,337 15,356 Deposits given 4,615 11,835 Other non-current assets — 1,094 Total 164,687 174,241 (1) The Group incurs certain costs with DP International related to the set up of each franchise contract and IT systems used for recording of franchise revenue. 31 Dec 31 Dec Other current liabilities 2022 2021 Performance bonuses 29,585 31,034 Contract liabilities from franchising contracts(1) 25,779 50,703 Taxes and funds payable 21,151 15,257 Social security premiums payable 11,845 8,370 Payable to personnel 10,244 15,968 Unused vacation liabilities 8,495 14,825 Advances received from franchisees 5,696 7,037 Volume rebate advances — 3,424 Other expense accruals 23,165 22,180 Total 135,960 168,798 (1) The Group incurs certain revenue with the set up of each franchise contract and these franchise fee revenues are deferred over the period of the franchise agreement. 31 Dec 31 Dec Other non-current liabilities 2022 2021 Contract liabilities from franchising contracts(1) 147,166 94,319 Unearned revenue 7,740 19,119 Long-term provisions for employee benefits 13,693 6,883 Other — 5,133 Total 168,599 125,454 (1) The Group incurs certain revenue with the set up of each franchise contract and these franchise fee revenues are deferred over the period of the franchise agreement. Note 17 – Financial liabilities 31 Dec 31 Dec 2022 2021 Short-term bank borrowings 709,889 474,598 Short-term financial liabilities 709,889 474,598 Short-term portions of long-term borrowings 19,343 47,264 Short-term portions of long-term leases 42,901 91,072 Current portion of long-term financial liabilities 62,244 138,336 Total short-term financial liabilities 772,133 612,934 Long-term bank borrowings 64,923 230,196 Long-term leases 152,422 281,692 Long-term financial liabilities 217,345 511,888 Total financial liabilities 989,478 1,124,822 As at 31 December 2022, the fair value of the financial liabilities is TRY 786,632 (31 December 2021: TRY 740,308). Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 161 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 17 – Financial liabilities continued The summary information of short-term and long-term bank borrowings is as follows: 31 December 2022 Interest Currency Maturity rate (%) Short-term Long-term TRY borrowings Revolving 16.95% 709,889 — RUB borrowings 2025 9.70%-14.30% 19,343 64,923 729,232 64,923 31 December 2021 Interest Currency Maturity rate (%) Short-term Long-term TRY borrowings Revolving 19.14% 474,598 66,140 RUB borrowings 2024 9.70%-14.30% 47,264 164,056 521,862 230,196 The loan agreement between Sberbank Moscow and Domino’s Russia is subject to covenant clauses whereby the Group, Domino’s Turkey and Domino’s Russia are required to meet certain ratios. As at 31 December 2022, Sberbank has waived the covenant conditions based on the EBITDA figures for all quarters of 2022; but Sberbank has not waived the covenant conditions based on the turnover, however, loans from Sberbank have already been classified as short-term under the “Liabilities for sale” line in the balance sheet. The redemption schedule of the borrowings as at 31 December 2022 and 2021 is as follows: 31 Dec 31 Dec 2022 2021 To be paid in one year 729,232 521,862 To be paid between one to two years 41,431 120,953 To be paid between two to three years 23,492 109,243 794,155 752,058 The redemption schedule of the leases as at 31 December 2022 and 2021 is as follows: 31 Dec 31 Dec 2022 2021 Leases to be paid in one year 42,901 91,072 Leases to be paid between one to two years 62,217 55,321 Leases to be paid between two to three years 43,353 95,951 Leases to be paid in three years and more 46,852 130,420 195,323 372,764 Please refer to Note 23 for financial risk management disclosures. As at 31 December 2022 and 2021, the net financial liabilities reconciliation is as follows: 31 Dec 31 Dec 2022 2021 Cash and cash equivalents 360,059 254,700 Financial liabilities and leases to be paid in one year (772,133) (612,934) Financial liabilities and leases to be paid in one to five years (217,345) (511,888) (629,419) (870,122) 31 Dec 31 Dec 2022 2021 Cash and cash equivalents 360,059 254,700 Financial liabilities and leases – fixed rate (989,478) (1,124,822) (629,419) (870,122) Strategic report Corporate governance Financial statements Additional information 162 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 17 – Financial liabilities continued Short-term Long-term financial financial liabilities liabilities 31 December 2022 and leases and leases Total 1 January financial liabilities (612,934) (511,888) (1,124,822) Net cash flow effect, loans received (1,144,060) — (1,144,060) Net cash flow effect, loans paid 792,731 40,262 832,993 Net cash flow effect, leasing payments 118,986 40,020 159,006 Other non-cash transaction (182,784) (82,802) (265,586) Currency translation adjustments (43,586) (56,446) (100,032) Effect of disposal of subsidiaries 93,766 259,757 353,523 Inflation impact 205,748 93,752 299,500 31 December financial liabilities (772,133) (217,345) (989,478) (1) Other non-cash transactions are comprised of new lease additions, cancellations and/or modifications. Short-term Long-term financial financial liabilities liabilities 31 December 2021 and leases and leases Total 1 January financial liabilities (286,621) (363,052) (649,673) Net cash flow effect, loans received (506,408) 51,185 (455,223) Net cash flow effect, loans paid 315,752 — 315,752 Net cash flow effect, leasing payments 109,466 — 109,466 Other non-cash transactions(1) (93,784) (91,646) (185,430) Currency translation adjustments (151,339) (108,375) (259,714) 31 December financial liabilities (612,934) (511,888) (1,124,822) (1) Other non-cash transactions are comprised of new lease additions, cancellations and/or modifications. Notes to the consolidated financial statements continued For the year ended 31 December 2022 The reconciliation of adjusted net debt as at 31 December 2022 and 2021 is as follows: 31 Dec 31 Dec 2022 2021 Short-term bank borrowings 709,889 474,598 Short-term portions of long-term borrowings 19,343 47,264 Short-term portions of long-term leases 42,901 91,072 Long-term bank borrowings 64,923 230,196 Long-term leases 152,422 281,692 Total borrowings 989,478 1,124,822 Cash and cash equivalents (-) (360,059) (254,700) Net debt 629,419 870,122 Non-recurring items per Group management Guarantees from franchises (67,340) (40,747) Adjusted net debt(1) 562,079 829,375 (1) Net debt, adjusted net debt and non-recurring and non-trade items are not defined by IFRS. Adjusted net debt includes guarantees taken from the franchises related to the lease liabilities. Management uses these numbers to focus on net debt to take into account deposits not otherwise considered cash and cash equivalents under IFRS. Note 18 – Commitments, contingent assets and liabilities a) Guarantees given and received for trade receivables are as follows: 31 Dec 31 Dec 2022 2021 Guarantee letters given 40,906 67,543 40,906 67,543 31 Dec 31 Dec 2022 2021 Guarantee notes received 107,418 107,263 Guarantee letters received 197,555 104,677 304,973 211,940 Guarantee notes and letters are received as collateral for trade receivables. Strategic report Corporate governance Financial statements Additional information 163 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 18 – Commitments, contingent assets and liabilities b) Tax contingencies continued The Russian transfer pricing legislation is generally aligned with the international transfer pricing principles developed by the Organisation for Economic Co‑operation and Development (“OECD”) but has specific characteristics. This legislation provides the possibility for tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of controlled transactions (transactions with related parties and some types of transactions with unrelated parties), provided that the transaction price is not arm’s length. Tax liabilities arising from transactions between companies within the Group are determined using actual transaction prices. It is possible, with the evolution of the interpretation of the transfer pricing rules, that such transfer prices could be challenged. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the overall operations of the Group. The Group includes companies incorporated outside of Russia. The tax liabilities of the Group are determined on the assumption that these companies are not subject to Russian profits tax, because they do not have a permanent establishment in Russia. This interpretation of relevant legislation may be challenged but the impact of any such challenge cannot be reliably estimated currently; however, it may be significant to the financial position and/or the overall operations of the Group. As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, interpretations of such uncertain areas that reduce the overall tax rate of the Group. While management currently estimates that the tax positions and interpretations that it has taken can probably be sustained, there is a possible risk that an outflow of resources will be required should such tax positions and interpretations be challenged by the tax authorities. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the overall operations of the Group. Management will vigorously defend the Group’s positions and interpretations that were applied in determining taxes recognised in these consolidated financial statements if these are challenged by the authorities. c) Legal cases The Group does not expect any material risk in any current legal cases in accordance with the opinions of its legal advisers; therefore, it has not recognised any provision for these legal cases in the consolidated financial statements as at 31 December 2022. Note 19 – Tax assets, liabilities and tax expense Corporate tax The Group is subject to taxation in accordance with the tax regulations and the legislation 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 25.8%. No further taxes are payable on this profit unless the profit is distributed. Services incurred by Dutch parent companies may generally be divided into two kinds of services, being group services for which costs are incurred for the economic and commercial benefit of subsidiaries and shareholder services for which costs are incurred for activities provided in the capacity of the shareholder. All costs incurred by the Company are shareholder services (costs incurred for activities provided in the capacity of shareholder) and not group services (costs incurred for the economic or commercial benefit of subsidiaries). Since shareholder services are not for the benefit of any one specific subsidiary, it is not required to re-charge these fees or costs to a subsidiary or to subsidiaries. If certain conditions are met, income derived from foreign subsidiaries is tax exempted in the Netherlands under the rules of the Dutch participation exemption. However, certain costs such as acquisition costs are not deductible for Dutch corporate income tax purposes. Furthermore, in some cases the interest payable on loans to 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. Strategic report Corporate governance Financial statements Additional information 164 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 19 – Tax assets, liabilities and tax expense continued Turkey The Corporate Tax Law was amended by Law No 5520, dated 13 June 2006. Most of the articles of the new Corporate Tax Law (No 5520) came into force on 1 January 2006. Corporate tax is payable at a rate of 23% (31 December 2021: 25%) on the total income of the Group after adjusting for certain disallowable expenses, exempt income and investment and other allowances (e.g. research and development allowance). No further tax is payable unless the profit is distributed (except for withholding tax at the rate of 19.8%, calculated on an exemption amount if an investment allowance is granted in the scope of Income Tax Law Temporary Article 61). In accordance with the amendment to the Corporate Tax Law published in the Official Gazette numbered 31462 on 22 April 2021, the corporate tax rate in Turkey, which was 20% as at 31 March 2021, was increased to 25% for 2021 and 23% for 2022. The amendment is 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 2021: 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: 31 Dec 31 Dec 2022 2021 Corporate tax calculated — 60,028 Prepaid taxes (-) (45,418) (39,025) Current income tax asset/liability (45,418) 21,003 Tax income and expenses included in the statement of comprehensive income are as follows: 2022 2021 Current period corporate tax expense — (70,602) Deferred tax income/(expense) 10,736 (10,563) Total tax expense 10,736 (81,165) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 165 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 19 – Tax assets, liabilities and tax expense continued The reconciliation of the tax expense in the statement of comprehensive income is as follows: 2022 2021 Profit/(loss) before tax 191,313 215,404 Tax rate 25.8% 25.0% Corporate tax at statutory rates (49,359) (53,851) Disallowable expenses (3,479) (1,160) Unrecognised tax losses (8,630) (5,369) Differences in tax rates 4,002 (167) Inflation adjustments, not subject to tax (49,179) (20,520) Discounts and exceptions 117,487 — Other, net (106) (98) Total tax expense 10,736 (81,165) The breakdown of cumulative temporary differences and the resulting deferred income tax assets/liabilities at 31 December 2022 and 2021 using statutory tax rates are as follows: 31 Dec 2022 31 Dec 2021 Deferred tax Deferred tax Temporary assets/ Temporary assets/ differences (liabilities) differences (liabilities) Carry forward tax losses(1) — — 72,427 14,485 Contract liabilities from franchising contracts 164,053 32,811 163,752 39,990 Right-of-use assets and lease liability (20,732) (4,146) 13,635 1,992 Legal provisions 3,438 688 8,904 2,226 Unused vacation liabilities 8,495 1,699 14,825 3,347 Provision for employee termination benefit 13,693 2,739 6,883 1,720 Other (41,354) (8,269) (21,906) (5,302) Property, equipment and intangible assets (106,695) (21,339) (154,327) (39,289) Deferred income tax assets, net 4,183 19,169 (1) Consists of carry forward losses of Domino’s Russia. Total amount has been impaired during 2022. Strategic report Corporate governance Financial statements Additional information 166 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 20 – Share-based payments The Phantom Option Scheme 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 in 2021 after the 100% stake sale by Turkish Private Equity Fund II L.P.. Senior management long-term incentive plan A new share incentive scheme was put in place on 8 May 2018. According to the incentive scheme employees were granted an option to acquire shares, at a strike price of GBP 1.85 with an expiry date of 8 May 2021, based on performance targets of the Group for the upcoming three years, and continuing employment until the date of vesting. Vesting of the 2018‑2020 LTIP cycle was completed as at 8 May 2021. No shares vested for Aslan Saranga or other employees as the performance condition was not met for the 2018-2020 cycle. In May 2019, Aslan Saranga was granted an LTIP award over 332,706 shares vesting in May 2022 subject to achievement of adjusted EBITDA targets measured over the period 2019‑2021. As the performance condition was not achieved, no shares will vest for Aslan Saranga in May 2022. In May 2020, Aslan Saranga was granted an LTIP award over 506,212 shares vesting in May 2023 subject to achievement of adjusted EBITDA targets measured over the period 2020-2022. Additionally, on 7 May 2021, Aslan Saranga was granted an LTIP conditional share award which will vest in May 2024 subject to achievement of a Group adjusted EBITDA (75%) and adjusted LTIP EPS (25%) target. Aslan Saranga was entitled to receive an award worth 100% of base salary which resulted in 394,702 shares with a face value of TRY 4,455,775 based on a share price of 0.543 GBP (6 June 2022) and an exchange rate of GBP1: TRY20.79 (6 June 2022). Long-term incentive plan for new Board Adviser On 7 September 2020, Andrew Rennie, Domino’s Pizza Enterprises Limited’s ex-CEO of European Operations, agreed to join the Group as Board Adviser. He obtained a call option from the major shareholder Fides Coop for 4 million DPEU shares at a strike price of GBP 1.05 with an expiry date of 30 September 2022. The weighted‑average fair value of the options granted under the plan is TRY 190 per option and has been estimated using the Black-Scholes option pricing model: Under these three existing plans, an amount of TRY 4,889 has been charged for 2022, whereas TRY 2,482 has been charged for 2021 and the cumulative charge is TRY 76,604 as at 31 December 2022 (31 December 2021: TRY 71,715). Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 167 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 21 – Equity The shareholders and the shareholding structure of the Group at 31 December 2022 and 2021 are as follows: 31 Dec 2022 31 Dec 2021 Share (%) Amount Share (%) Amount Jubilant FoodWorks Netherlands B.V.(1) 49.0 17,828 7.5 2,722 Fides Food Systems Coöperatief U.A.(1) — — 32.8 11,928 Public shares 45.3 16,453 54.6 19,849 Vision International N.V.(2) 5.6 2,027 4.9 1,781 Other 0.1 45 0.2 73 36,353 36,353 (1) Fides Food Systems Coöperatief U.A. merged with Jubilant FoodWorks Netherlands B.V. (acquiring entity). (2) Vision Lovemark Coöperatief U.A. merged with Vision International N.V. (acquiring entity). As at 31 December 2022, the Group’s 145,372,414 (31 December 2021: 145,372,414) shares are issued and fully paid for. On 3 July 2017, just prior to the IPO, the Company issued (i) 13,046,726 ordinary shares, with a nominal value of EUR 0.12 each, in the capital of the Company to Vision Lovemark Coöperatief U.A. and (ii) 117,420,534 ordinary shares, with a nominal value of EUR 0.12 each, in the capital of the Company to Fides Food Systems Coöperatief U.A., which was paid up by debiting the Company’s share premium reserve by TRY 31,239. Also, on 3 July 2017, as part of its IPO, the Company issued 10,372,414 new ordinary shares with a nominal value of EUR 0.12 each. As a result, the Company’s issued and outstanding share capital increased to TRY 36,353 (divided into 145,372,414 ordinary shares). After the IPO, 52.1% of the shares became public. The net proceeds received by the Company from the IPO is TRY 94,132 (TRY 9,075 per share). DP Eurasia’s authorised share capital is EUR 60,000,000. Share amount 2022 2021 1 January 145,372,414 145,372,414 Addition — — 31 December 145,372,414 145,372,414 The nominal value of each share is EUR 0.12 (2021: EUR 0.12). There is no preference stock. Share premium Share premium represents 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 Jubilant Food Works Limited and Arslan Saranga, all together, are the ultimate controlling party of the Company. Strategic report Corporate governance Financial statements Additional information 168 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 22 – Financial instruments and financial risk management a) Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. To maintain or re-arrange the capital and debt structure, the Group may change the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets. Group management decided the capital structure by reference to the adjusted net debt by dividing the adjusted EBITDA. 31 Dec 31 Dec 2022 2021 Total borrowings 989,478 1,124,821 Cash and cash equivalents (-) (360,059) (254,700) Net debt 629,419 870,121 Non-recurring items per Group management Guarantees from franchises (67,340) (40,747) Adjusted net debt(1) 562,079 829,375 Adjusted EBITDA(1) 336,638 313,097 Adjusted net debt/adjusted EBITDA(1) 1.67 2.65 (1) EBITDA, adjusted EBITDA, net debt, adjusted net debt, adjusted net income and non‑recurring and non-trade income/expenses are not defined by IFRS. The amounts provided with respect to operating segments are measured in a manner consistent with that of the financial statements. These items, determined by the principles defined by Group management, comprise income/expenses which are assumed by Group management to not be part of the normal course of business and are non-recurring items. These items, which are not defined by IFRS, are disclosed by Group management separately for a better understanding and measurement of the sustainable performance of the Group. b) Financial risk factors The Group is exposed to a variety of financial risks due to its operations. These risks include credit risk, market risk (foreign exchange risk, price risk and interest rate risk) and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and performance. b.1) Credit risk The Group considers its maximum credit risk at 31 December 2022 to be TRY 282,543 (31 December 2021: TRY 182,563), which is the total of the Group’s financial assets. Credit risk is managed on a Group basis, except for credit risk relating to trade receivable and other receivable balances. Each local entity is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are 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. The ageing of past due but not impaired financial assets is as follows: 31 Dec 31 Dec 2022 2021 Less than a month 1,155 3,644 One to three months 4,217 2,205 Three to six months 688 829 Over six months 274 38 Total 6,334 6,716 Strategic report Corporate governance Financial statements Additional information 169 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 22 – Financial instruments and financial risk management continued b) Financial risk factors continued b.1) Credit risk continued 31 Dec 31 Dec 2022 2021 Trade receivables Counterparties without external credit rating Group 1 4,294 7,054 Group 2 311,388 402,676 Group 3 — 773 Total 315,682 410,503 • Group 1 – New customers (less than six months); • Group 2 – Existing customers (more than six months) with no defaults in the past; and • Group 3 – Existing customers (more than six months) with some defaults in the past. b.2) Liquidity risk The Group uses banks as well as its suppliers and shareholders as funding resources. The Group’s liquidity risk is continuously evaluated through determining and monitoring changes in funding conditions required for achieving the targets set in the Group’s strategy. The Group manages its liquidity risk by monitoring expected and actual cash flows on a regular basis and by maintaining continuity of funds, borrowings and reserves through matching the maturities of financial assets and liabilities. The Group periodically reviews its covenant compliance and uses loans between Group companies to ensure there is enough liquidity to carry out its operations. As at 31 December 2022 and 2021, the liquidity risks arising from the Group’s financial liabilities consisted of the following: 31 Dec 2022 Total cash outflows in Carrying accordance Less than 3 3-12 1-5 Over 5 Maturities in accordance with agreements value with contract months months years years Non-derivative financial liabilities Borrowings 794,155 841,735 306,706 453,568 81,461 — Leases 195,323 244,347 18,033 53,067 173,247 — Third-party trade payables 354,419 354,418 354,418 — — — Total 1,343,897 1,440,500 679,157 506,635 254,708 — Strategic report Corporate governance Financial statements Additional information 170 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 22 – Financial instruments and financial risk management continued b) Financial risk factors continued b.2) Liquidity risk continued 31 Dec 2021 Total cash outflows in Carrying accordance Less than 3 3-12 1-5 Over 5 Maturities in accordance with agreements value with contract months months years years Non-derivative financial liabilities Borrowings 752,058 852,702 133,676 472,231 246,795 - Leases 372,764 512,185 35,203 105,710 328,170 43,101 Third-party trade payables 395,363 395,363 395,363 — — — Total 1,520,185 1,760,250 564,242 577,941 574,965 43,101 Loans from banks comprise short-term loans obtained for working capital needs and other long-term loans. The total amount includes accrued interest and the related loans. As at 31 December 2022 and 2021, the categories of financial instruments of the Group are as follows: Financial assets Assets and Available or liabilities liabilities at for sale at fair value amortised Loans and financial through profit Carrying 31 December 2022 cost receivables assets or loss value Financial assets 360,059 423,273 — — 783,332 Cash and cash equivalents 360,059 — — — 360,059 Trade receivables — 314,325 — — 314,325 Lease receivables — 108,948 — — 108,948 Other current assets — — — — — Financial liabilities 1,343,897 — — — 1,343,897 Financial liabilities 794,155 — — — 794,155 Leases 195,323 — — — 195,323 Trade and other payables 354,419 — — — 354,419 Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 171 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 22 – Financial instruments and financial risk management continued b) Financial risk factors continued b.2) Liquidity risk continued Financial assets Assets and Available or liabilities liabilities at for sale at fair value amortised Loans and financial through profit Carrying 31 December 2021 cost receivables assets or loss value Financial assets 254,700 586,240 — — 840,940 Cash and cash equivalents 254,700 — — — 254,700 Trade receivables — 406,996 — — 406,996 Lease receivables — 141,661 — — 141,661 Other current assets — 37,583 — — 37,583 Financial liabilities 1,520,185 — — — 1,520,185 Financial liabilities 752,058 — — — 752,058 Leases 372,764 — — — 372,764 Trade and other payables 395,363 — — — 395,363 b.3) Market risk The Group’s activities also expose it to market risk, including interest rate risk, foreign currency risk, and price risk. The Group doesn’t carry any loans in currencies other than the operating company currencies on its balance sheet. The Group manages its financial instruments centrally in accordance with the Group’s risk policies via the Treasury Group in the Finance Department. The Group’s cash inflows and outflows are monitored on a regular basis and compared to the monthly and yearly cash flow budgets and forecasts. Interest rate risk The Group is exposed to market interest rate fluctuations on its floating rate debt. Increases in benchmark interest rates could increase the interest cost of floating rate debt and increase the cost of future borrowings. The Group’s ability to manage interest costs also has an impact on reported results. On 31 December 2022, interest rates were fixed on approximately 100% of the net debt for 2022 (100% for 2021). The average interest rate on short-term borrowings in 2022 was 18.48% (2021: 14.38%). Strategic report Corporate governance Financial statements Additional information 172 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 22 – Financial instruments and financial risk management continued b) Financial risk factors continued b.3) Market risk continued Interest rate risk continued The financial instruments of the Group which are sensitive to interest rates are stated in the following table: 31 Dec 31 Dec 2022 2021 Financial instruments with floating interest Financial liabilities 84,262 — – 6 months or less 5,160 — – 6-12 months 37,743 — – 1-5 years 41,359 — Financial instruments with fixed interest Financial liabilities – repricing dates 905,216 1,124,822 – 6 months or less 662,979 198,824 – 6-12 months 90,486 409,037 – 1-5 years 151,751 516,961 Assuming that all other variables remain constant, a 1.0 percentage point increase in floating interest rates on a full‑year basis as at 31 December 2022 would have led to no additional finance costs (2021: no additional finance costs). A 1.0 percentage point decrease in floating interest rates on a full-year basis would have an equal but opposite 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 2022, the exposure to the Group from companies holding assets and liabilities other than in their functional currency amounted to TRY (7,861) (31 December 2021: TRY 15,482). As an estimation of the approximate impact of the residual risk, with respect to financial instruments, the Group has calculated the impact of a 20% change in exchange rates. Impact on income statement A 20% strengthening of the Euro against key currencies to which the Group is exposed would have led to approximately an additional TRY (1,237) loss in the income statement (2021: TRY 3,142 gain). A 20% weakening of the Euro against these currencies would have led to an equal but opposite effect. Price risk As at 31 December 2022, the Group does not have financial instruments classified as available for sale, or fair value through profit and loss, which are exposed to market price fluctuations. Price risk does arise from an increase in commodity prices. This price risk is managed locally where advanced purchases of raw materials are made to achieve lower prices and bulk purchases are made to achieve discounts from suppliers. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 173 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Note 23 – Subsequent events On 6 and 20 February 2023, earthquakes occurred and severely affected ten cities in the east of Turkey. The expected impact of the disaster on the Group’s financial statements is summarised as follows. In total, 50 restaurants have been affected. At present, an evaluation shows that twelve of these restaurants have become unusable. In addition to the operational impacts above, the Group made donations for earthquake relief and provided financial support to its employees in the region. Information about insurance compensation processes and clarification of donations and contributions will be stated in the 2023 reports. Note 24 – Assets and liabilities held for sale and discontinued operations The Group holds franchise operating and sub-franchising rights in 159 stores in Russia (96 franchised stores, 63 corporate-owned stores). In December 2022, the Board decided to explore the options to sell its Russian operations, with completion expected in the second half of 2023. Accordingly, DP Russia operations are to be reported within discontinued operations and its assets and liabilities are recognised as assets held for sale and liabilities for sale as at 31 December 2022. The following criterias have been met for a sale to be highly probable: • the board has decided to sell the asset and liability of Russian operation; • an active programme to locate a buyer and complete the plan has been initiated by the management. There are potential buyers, and the management has started the negotiation with the potential buyers and official offers have been obtained; and • the management has expected to be completed the sale transaction within one year from the date of classification. Assets 31 Dec 2022 Trade receivables 6,844 Lease receivables 3,363 Right-of-use assets 147,764 Property and equipment 71,898 Intangible assets 56,266 Goodwill 16,614 Deferred tax assets 13,357 Other non-current assets 13,722 Non-current assets 329,828 Cash and cash equivalents 4,478 Trade receivables 47,645 Lease receivables 7,850 Inventories 20,343 Other current assets 25,256 Current assets 105,572 Total assets 435,400 Strategic report Corporate governance Financial statements Additional information 174 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 24 – Assets and liabilities held for sale and discontinued operations continued Liabilities 31 Dec 2022 Financial liabilities 138,164 Lease liabilities 121,593 Deferred tax liability 3,633 Other non-current liabilities 18,898 Non-current liabilities 282,288 Financial liabilities 35,351 Lease liabilities 58,415 Trade payables 206,970 Provisions 955 Other current liabilities 80,819 Current liabilities 382,510 Total liabilities 664,798 Total liabilities and equity 229,398 Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 175 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 24 – Assets and liabilities held for sale and discontinued operations continued 31 Dec 31 Dec 2022 2021 Income or loss Revenue 760,480 465,325 Cost of sales (582,370) (384,644) Gross profit 178,110 80,681 General administrative expenses (143,813) (75,248) Marketing and selling expenses (145,500) (84,558) Other operating income, net (846,656) (15,751) Operating profit/(loss) (957,859) (94,876) Foreign exchange losses 41,251 55,965 Financial income 841,100 5,346 Financial expense (105,266) (27,364) (Loss) before income tax (180,774) (60,929) Tax expense (30,316) (10,436) Income tax expense — (2,049) Deferred tax expense(1) (30,316) (8,387) Loss from discontinued operations (211,090) (71,365) (1) Carry forward losses of Domino’s Russia have been transferred to deferred tax expense and then fully impaired. After disposal of an asset or disposal group: • the associated currency translation difference, including amounts previously reported within equity, will be reclassified to the income statement as part of the gain or loss on disposal. This is estimated to be a TRY 686,920 million loss; and • inter-group balances are eliminated against discontinued operations. Notes to the consolidated financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 176 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 24 – Assets and liabilities held for sale and discontinued operations continued Russia 2022 2021 Corporate revenue 410,337 301,357 Franchise revenue and royalty revenue obtained from franchisees 310,028 141,798 Other revenue 40,115 22,171 Total revenue 760,480 465,326 - At a point in time 745,700 462,456 - Over time 14,780 2,870 Operating profit/(loss) (128,673) (94,876) Capital expenditures 138,297 15,675 Tangible and intangible disposals (56,505) (29,958) Depreciation and amortisation expenses (107,890) (87,990) Adjusted EBITDA 1,660 23,248 Russia 2022 2021 Adjusted EBITDA 1,660 23,248 Non-recurring and non-trade (income)/expenses per Group management One-off non-trading costs 22,442 30,134 Share-based incentives — — EBITDA (20,782) (6,886) Depreciation and amortisation (107,890) (87,990) Operating (loss)/profit (128,672) (94,876) Strategic report Corporate governance Financial statements Additional information 177 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the consolidated financial statements continued For the year ended 31 December 2022 Notes 2022 2021 Income statement General administrative expenses 6 (28,115) (12,441) Operating profit (28,115) (12,441) Foreign exchange gains/(losses) 4,869 (192) Financial income/(expense) (10,791) 1,839 Net income from subsidiaries 2 254,394 73,668 Profit before income tax 220,357 62,874 Tax expense — — Profit for the year 220,357 62,874 Company income statement For the years ended 31 December 2022 and 2021 Strategic report Corporate governance Financial statements Additional information 178 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) 31 Dec 31 Dec Notes 2022 2021 Assets Subsidiaries 280,315 453,460 Non-current assets 280,315 453,460 Cash and cash equivalents 3 388 3,365 Trade receivables 5,789 64 Other current assets 365 694 Current assets 6,542 4,123 Total assets 286,857 457,583 Equity Paid in share capital 4 36,353 36,353 Share premium 518,236 513,347 Other legal reserves (633,889) (379,688) Retained earnings 59,047 2,029 Result for the year 220,357 62,874 Total equity 200,104 234,915 Liabilities Subsidiaries — 158,055 Financial liabilities 64,921 48,429 Non-current liabilities 64,921 206,484 Financial liabilities 19,341 14,065 Accounts payable 566 1,750 Other current liabilities 1,925 369 Current liabilities 21,832 16,184 Total liabilities 86,753 222,668 Total liabilities and equity 286,857 457,583 The accompanying notes form an integral part of these financial statements. Company income statement continued For the years ended 31 December 2022 and 2021 Strategic report Corporate governance Financial statements Additional information 179 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 1 – Basis of presentation of statutory financial statements 1.1 Basis of preparation The Company financial statements of DP Eurasia N.V. (hereafter, the “Company”) have been prepared in accordance with Part 9, Book 2 of the Dutch Civil Code. In accordance with sub 8 of article 362, Book 2 of the Dutch Civil Code, the Company’s financial statements are prepared based on the accounting principles of recognition, measurement and determination of profit, as applied in the consolidated financial statements. These principles also include the classification and presentation of financial instruments, being equity instruments or financial liabilities. The Company has prepared its Annual Report in accordance with EU directives as implemented in Part 9, Book 2 of the Dutch Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board for the year ended 31 December 2022. In case no other policies are mentioned, refer to the accounting policies in the consolidated financial statements of this Annual Report. For an appropriate interpretation, the Company financial statements of DP Eurasia N.V. should be read in conjunction with the consolidated financial statements. The Company is registered with the trade register of the Chamber of Commerce in the Netherlands under the number 67090753. The Company prepared its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. The remuneration paragraph is included in the remuneration section of the consolidated financial statements. 1.2 Summary of significant accounting policies Investments in consolidated subsidiaries Consolidated subsidiaries are all entities (including intermediate subsidiaries) over which the Company has control. The Company controls an entity when it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to 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. Subsidiaries of the parent company are accounted for using the equity method. In case of a negative net asset value of a subsidiary a provision will be formed when the company has a contractual obligation. When measuring interests in a participating interest with an equity deficit, other long-term interests in the participating interest that actually shall be regarded as part of the net investment are also taken into account. To the extent that there are receivables still outstanding after these items have been written down, further reduction in value is taken into account. The Company applies the acquisition method to account for acquiring subsidiaries, consistent with the approach identified in the consolidated financial statements. The consideration transferred for the acquisition of a subsidiary is the fair value of assets transferred by the Company, liabilities incurred to the former owners of the acquiree, and the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in an acquisition are measured initially at their fair values at the acquisition date and are subsumed in the net asset value of the investment in consolidated subsidiaries. Acquisition-related costs are expensed as incurred. Notes to the company financial statements For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 180 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 2 – Subsidiaries The movement schedule for the investment in subsidiaries as at 31 December 2022 and 2021 is as follows: 1 January 2021 227,686 Net income from subsidiaries 73,668 Currency translation difference (8,555) Remeasurement of post-employment benefit obligations 124 Share-based incentive plans 2,482 Cancellation of share-based incentive plans — 1 January 2022 295,405 Net income from subsidiaries 254,394 Currency translation difference 26,232 Remeasurement of post-employment benefit obligations (5,856) Share-based incentive plans 4,889 Hyperinflation impact on Turkish subsidary (294,749) 31 December 2022 280,315 The Company is liable for the finance liabilities of its subsidiary in Russia, for which a provision was recognised as per 31 December 2021. In 2022, however the Russian business is classified as held for sale and discontinued operation, which results in a release in 2022 of the provision for the negative asset value in the company income statement. This also leads to a difference between group equity and company only equity balance as per 31 December 2022 and the result of 2022 of TRY 229 million. Note 3 – Cash and cash equivalents The details of cash and cash equivalents as at 31 December 2022 and 2021 are as follows: 31 Dec 31 Dec 2022 2021 Cash 388 3,365 388 3,365 31 Dec 31 Dec 2022 2021 Euro 303 3,078 US Dollars 29 16 Russian Roubles 41 235 Other 15 35 388 3,365 Notes to the company financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 181 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 4 – Equity The movements in shareholders’ equity are as follows: Currency Share Share translation Retained Result for Total capital premium reserves earnings the year equity Balances at 1 January 2021 36,353 510,865 (344,208) (104,574) 106,479 204,915 Remeasurements of post-employment benefit obligations, net — — — 124 — 124 Appropriation of the result of the preceding year — — — 106,479 (106,479) — Currency translation adjustments — — (35,480) — — (35,480) Share-based incentive plans — 2,482 — — — 2,482 Total income for the year — — — — 62,874 62,874 Balances at 31 December 2021 36,353 513,347 (379,688) 2,029 62,874 234,915 Remeasurements of post-employment benefit obligations, net — — — (5,856) — (5,856) Appropriation of the result of the preceding year — — — 62,874 (62,874) — Currency translation adjustments — — (254,201) — — (254,201) Share-based incentive plans — 4,889 — — — 4,889 Total income for the year — — — — 220,357 220,357 Balances at 31 December 2022 36,353 518,236 (633,889) 59,047 220,357 200,104 The difference between total result for the year in the consolidated financial statements and company-only financial statements is resulting from release of provisions related to Russian entity in the company-only financial statements, amounting to TRY229 million. The Group has no dividend payment to the Company as at 31 December 2022 (31 December 2021: none). The Group has no dividend payment to the Company as at 31 December 2022 (31 December 2021: none). The shareholders and the shareholding structure of the Company at 31 December 2022 and 2021 are as follows: 31 December 2022 31 December 2021 Share (%) Amount Share (%) Amount Jubilant FoodWorks Netherlands B.V.(1) 49.0 17,828 7.5 2,722 Fides Food Systems Coöperatief U.A.(1) — — 32.8 11,928 Public shares 45.3 16,453 54.6 19,849 Vision International N.V.(2) 5.6 2,027 4.9 1,781 Other 0.1 45 0.2 73 36,353 36,353 (1) Fides Food Systems Coöperatief U.A. merged with Jubilant FoodWorks Netherlands B.V. (acquiring entity). (2) Vision Lovemark Coöperatief U.A. merged with Vision International N.V. (acquiring entity). Notes to the company financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 182 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Notes to the company financial statements continued For the year ended 31 December 2022 Note 4 – Equity continued As at 31 December 2022, the Company’s 145,372,414 (31 December 2021: 145,372,414) shares are issued and fully paid for. On 3 July 2017, just prior to the IPO, the Company issued (i) 13,046,726 ordinary shares, with a nominal value of EUR 0.12 each, in the capital of the Company to Vision Lovemark Coöperatief U.A. and (ii) 117,420,534 ordinary shares, with a nominal value of EUR 0.12 each, in the capital of the Company to Fides Food Systems Coöperatief U.A., which was paid up by debiting the Company’s share premium reserve by TRY 31,239. Also, on 3 July 2017, as part of its IPO, the Company issued 10,372,414 new ordinary shares with a nominal value of EUR 0.12 each. As a result, the Company’s issued and outstanding share capital increased to TRY 36,353 (divided into 145,372,414 ordinary shares). After the IPO, 52.1% of the shares became public. The net proceeds received by the Company from the IPO is TRY 94,132 (TRY 9,075 per share). DP Eurasia’s authorised share capital is EUR 60,000,000. In February 2019, Fides Food Systems Coöperatief U.A. sold 14,537,241 existing ordinary shares in DP Eurasia N.V. in an accelerated bookbuild offering addressed to institutional investors. After this transaction, 62.1% of the shares became public. 2022 2021 1 January 145,372,414 145,372,414 Addition — — 31 December 145,372,414 145,372,414 The nominal value of each share is EUR 0.12 (2021: EUR 0.12). There is no preference stock. Share premium Share premium represents the total of 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 2022 as follows: 2022 2021 Retained earnings 59,047 2,029 Net result for the year 59,047 2,029 Note 5 – General administrative expenses 2022 2021 Consultancy expenses 19,508 11,549 Payroll expenses 7,731 3,640 Miscellaneous expenses — 2,299 Management expenses 486 168 Other 390 2,775 Total 28,115 12,441 Note 6 – Audit fees Other PwC Other audit Total PwC For the year ended 31 Dec 2022 PwC NL network firm network Audit of financial statements 2,726 1,287 1,746 5,759 Other audit service 469 591 698 1758 Total audit services 3,195 1,878 2,444 7,517 Tax services — 235 — 235 Other non-audit services — 22 — 22 Total 3,195 2,135 2,444 7,774 The fees listed above relate to the procedures applied to the Company and its consolidated Group entities by accounting firms and external auditors as referred to in article 1(1) of the Dutch Accounting Firms Oversight Act (Dutch acronym; “Wta”) as well as by Dutch and foreign-based accounting firms, including their tax services and advisory groups. Strategic report Corporate governance Financial statements Additional information 183 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Note 6 – Audit fees continued These fees relate to the audit of the 2021 financial statements, regardless of whether the work was performed during the financial year. Other PwC Total PwC For the year ended 31 Dec 2021 PwC NL network network Audit of financial statements 1,211 1,069 2,280 Other audit service 277 876 1,153 Total audit services 1,488 1,945 3,433 Tax services — 184 184 Other non-audit services — 750 750 Total 1, 488 2,879 4,367 Note 7 – Employees During 2022, the average number of employees, based on full-time equivalents, was three (2021: three). Of these, two employees are working outside of the Netherlands. Note 8 – Commitments and contingencies not included in the balance sheet Tax group liability The Company is the parent of the Group’s fiscal unity in the Netherlands and is therefore liable for the liabilities of said fiscal unity as a whole. The fiscal unity consists of DP Eurasia N.V., Fidesrus B.V. and Fides Food Systems B.V. Other information Proposal for profit allocation With due observance of Dutch law and the articles of association, it is proposed that the net income of TRY 220,357 is added to the retained earnings. Furthermore, with due observance of article 43, paragraph 7, it is proposed that no dividend payment will be paid over 2022. Details of special shareholder rights DP Eurasia N.V. shareholders have no special rights; see Corporate governance for more information about voting rights. Details of shares without profit rights and non-voting rights DP Eurasia N.V. has no common shares without profit rights and no non-voting shares. Amsterdam, the Netherlands 19 April 2023 Management Board Aslan Saranga Frederieke Slot Supervisory Board Peter Williams Shyam Bhartia Hari Bhartia Pratik Pota David Adams Ahmet Ashaboğlu Burak Ertaş Notes to the company financial statements continued For the year ended 31 December 2022 Strategic report Corporate governance Financial statements Additional information 184 DP Eurasia N.V. Annual Report and Accounts 2022 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.) Report on the financial statements 2022 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 2022, 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 2022 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 2022 of DP Eurasia N.V., Amsterdam. The financial statements comprise the consolidated financial statements of the Group and the company financial statements. The group financial statements comprise: • the consolidated statement of financial position as at 31 December 2022; • the following consolidated statements for 2022: 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 2022; • 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). Strategic report Corporate governance Financial statements Additional information 185 DP Eurasia N.V. Annual Report and Accounts 2022 Independent auditor’s report To: the general meeting and the board of directors of DP Eurasia N.V. Our audit approach We designed our audit procedures with respect to the key audit matters, fraud and going concern, and the matters resulting from that, in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The information in support of our opinion, such as our findings and observations related to individual key audit matters, the audit approach fraud risk and the audit approach going concern was addressed 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 consists 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 these considerations, we paid attention to, amongst others, the assumptions underlying the physical and transition risk related to climate change. 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 valuation of goodwill and the Russian operations recorded as held for sale and discontinued operations, we considered these matters as key audit matters as set out in the section ‘Key audit matters’ of this report. We also included the accuracy of hyperinflation accounting for the financial position and results of operations of Domino’s in Turkey as key audit matter due to the complexity involved. Contrary to last year the recoverability of deferred tax assets at Pizza Restaurants LLC (‘Domino’s Russia’) is not considered a Key Audit matter, as the deferred tax asset has been fully provided for in 2022. Other areas of focus, that were not considered as key audit matters were valuation of intangible assets, debt covenant compliance at Domino’s Russia and the IT implementation at Domino’s Russia. 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, including underlying assumptions and estimates. The impact of climate related risks is not considered to be a separate key audit matter in the audit of 2022. We ensured that the audit teams at both group and component level included the appropriate skills and competences which are needed for the audit of a group company operating in retail and consumer industry. We therefore included experts and specialists in the areas of amongst others of IT audit, income tax, experts in areas of valuation, share-based payments in our team. Strategic report Corporate governance Financial statements Additional information 186 DP Eurasia N.V. Annual Report and Accounts 2022 Independent auditor’s report continued To: the general meeting and the board of directors of DP Eurasia N.V. Our audit approach continued The outline of our audit approach was as follows: Materiality Audit scope Key audit matters Materiality • Overall materiality: TRY 22 million (2021: TRY 15 million) Audit scope • Audit work is conducted in Turkey, Russia and the Netherlands. • 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 100% of consolidated profit before tax. Key audit matters • Valuation of goodwill • Russian operations recorded as held for sale and discontinued operations • Accuracy of hyperinflation accounting for the financial position, results and cashflows of operations of Domino’s in Turkey 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 22 million (2021: TRY 15 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 (2021: 1% of revenues). Rationale for benchmark applied 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 are 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. Component materiality 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 20 million and TRY 22 million. We also take misstatements and/or possible misstatements into account that, in our judgement, are material for qualitative reasons. We agreed with the board of directors that we would report to them any misstatement identified during our audit above TRY 1.1 million (2021: TRY 750 thousand) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. Strategic report Corporate governance Financial statements Additional information 187 DP Eurasia N.V. Annual Report and Accounts 2022 Independent auditor’s report continued To: the general meeting and the board of directors of DP Eurasia N.V. Our audit approach continued 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 Restaurantlari 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 in order to achieve appropriate coverage of financial line items in the group financial statements. In total, in performing these procedures, we achieved the following coverage on the financial line items: Revenue 100% Total assets 100% Profit before tax 100% 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. Where component auditors performed the work, we determined the level of involvement we needed to have in their work to be able to conclude whether we had obtained sufficient and appropriate audit evidence as a basis for our opinion on the consolidated financial statements as a whole. We issued instructions to the Domino’s Turkey and the Russian component audit teams. These instructions included among others our risk analysis, materiality and scope of the work. We explained to the component audit teams 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 outlined above at the components, combined with additional procedures exercised at group level, we have been able to obtain sufficient and appropriate audit evidence on the Group’s financial information, to provide a basis for our opinion on the financial statements. Audit approach fraud risks We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of DP Eurasia N.V. and its environment and the components of the internal control system. This included management’s risk assessment process, management’s process for responding to the risks of fraud and monitoring the internal control system. We refer to Risk Management section of the management report for management’s fraud risk assessment. We evaluated the design and relevant aspects of the internal control system with respect to the risks of material misstatements due to fraud and in particular the fraud risk assessment, as well as the code of conduct, whistle-blower procedures, incident investigation protocols, among other things. We evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness of internal controls designed to mitigate fraud risks. Strategic report Corporate governance Financial statements Additional information 188 DP Eurasia N.V. Annual Report and Accounts 2022 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 fraud risks continued We asked members of the board of directors as well as the internal audit department, finance team and human resources whether they are aware of any actual or suspected fraud. This did not result in signals of actual or suspected fraud that may lead to a material misstatement. 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 to fraud is present. We identified the following fraud risks and performed the following specific procedures: Identified fraud risks Our audit work 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 judgements made by management. Management may perceive pressure to manipulate accounting estimates that require significant judgement 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 judgements 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. We incorporated an element of unpredictability in our audit. We reviewed lawyer’s letters and correspondence with regulators. 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 identify any indications of fraud, we re-evaluate our fraud risk assessment and its impact on our audit procedures. Strategic report Corporate governance Financial statements Additional information 189 DP Eurasia N.V. Annual Report and Accounts 2022 Independent auditor’s report continued To: the general meeting and the board of directors of DP Eurasia N.V. Audit approach going concern Management prepared the financial statements on the assumption that the entity is a going concern and that it will continue all its operations for at least twelve months from the date of preparation of the financial statements. Our procedures to evaluate management’s going concern assessment included, amongst others: • considering whether management identified events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern (hereafter: going concern risks); • considering whether management’s going concern assessment includes all relevant information of which we are aware as a result of our audit by inquiring with management regarding management’s most important assumptions underlying its going concern assessment. Amongst others, we took into consideration; • evaluating management’s current budget including cash flows for at least twelve months from the date of preparation of the financial statements taken into account current developments in the industry and all relevant information of which we are aware as a result of our audit; • analysing 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; • performing inquiries of management as to its 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. 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 2022, we have added the accuracy of hyperinflation accounting for the financial position, results and cashflows of the operations of Domino’s in Turkey and the Russian operations recorded as held for sale and discontinued operations as a key audit matter. The key audit matter identified in 2021 for the recoverability of deferred tax assets at Pizza restaurants LLC (‘Domino’s Russia’) is no longer applicable, as this has been fully provided for. In this section, we describe the key audit matters and include a summary of the audit procedures we performed on those matters. Strategic report Corporate governance Financial statements Additional information 190 DP Eurasia N.V. Annual Report and Accounts 2022 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 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 11. We focused on this area due to the significance of the goodwill balance of TRY 236 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 236 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 reflect 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 2022 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. Russian operations recorded as held for sale and discontinued operations The Group describes its accounting policies concerning held for sale and discontinued operations in note 2.5 and provides significant accounting estimates involved in notes 2.6, as well as the assets and liabilities and the income or loss of the discontinued operations in note 24. In December 2022, DP Eurasia announced their plans to dispose their Russian operations. Management concluded that the Russian operations will be reported in accordance with IFRS 5 – ‘Non-Current Assets Held for Sale and Discontinued Operations’ in the 2022 consolidated financial statements. The application of IFRS 5 ‘Non-Current Asset Held for Sale and Discontinued operations’ is significant to our audit because the assessment of the classification is complex, the transaction and its accounting is non-routine and involves significant management judgements. These include, amongst others, the date of classification of the non-current assets as held for sale, the fair value less cost of disposal of the Russia business, and the presentation of its results as discontinued operations. As a result of these conclusions, there are requirements around the valuation of the assets of the disposal group and presentation in the consolidated financial statements and disclosure notes, the identification of income and expenses allocated to the Russian operations. Our audit procedures included, among others, an evaluation of DP Eurasia’s conclusions on the classification of the disposal group as held for sale and the results of the Russian operations as discontinued operations. This included evaluating whether the Russian operations classifies as one disposal group, assessing the valuation of the assets of the disposal group as the lower of the carrying amount and fair value less cost of disposal, the presentation of the assets in the financial statements and the date as of which the Russian operations is classified as held for sale. In addition, we evaluated the presentation of the results of the Russian operations as discontinued operations. Following our procedures we did not identify material exceptions and we found management’s assumptions to be supported by available evidence. Audit approach going concern continued Key audit matters continued Strategic report Corporate governance Financial statements Additional information 191 DP Eurasia N.V. Annual Report and Accounts 2022 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 Accuracy of hyperinflation accounting for the financial position, results and cashflows of the operations of Domino’s in Turkey The Group describes its accounting policies concerning hyperinflation accounting within 2.1 The group performed hyperinflation calculations and used the consumer price index by Turkish Statistics Institute as key input for the calculations. The results and financial position of the Turkish operations are adjusted for inflation and prior year comparatives have been restated for hyperinflation in the consolidated financial statements. The gain on the monetary position is calculated as difference resulting from the restatement of net non- monetary assets, equity and items in the income statement and other comprehensive income. The total hyperinflation adjustment results in a net other comprehensive income of TRY 47 million. Given the significant quantitative impact, complexity associated with hyperinflation accounting and extent of audit effort required, the accuracy of hyperinflation accounting and disclosures were deemed to be a key audit matter in 2022. We obtained understanding of the process implemented by DP Eurasia to determine the hyperinflation calculations, adjustments, DP Eurasia’s accounting policies and disclosures. We have evaluated the initial application of the standard and tested the completeness and accuracy of the underlying data used in calculation. We obtained detailed listings of non-monetary items and agreed the original cost and dates of acquisition to supporting documentation. We determined whether the segregation of monetary and non-monetary items made by the management is in accordance with IFRS. We tested the restatement of non-monetary items, the income statement and preparation of the cash flow with recognition of inflationary effects by checking the methodology and general price index rates used. We assessed the inputs into the hyperinflation calculations and agreed the inputs to independent sources. We determined the mathematical accuracy of the hyperinflation adjustment calculation. We assessed the adequacy of disclosures in the notes to the financial statements regarding IAS 29. Based on our procedures we did not identify material exceptions and we found management’s assumptions to be supported by available evidence. 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; and • 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. Audit approach going concern continued Key audit matters continued Strategic report Corporate governance Financial statements Additional information 192 DP Eurasia N.V. Annual Report and Accounts 2022 Independent auditor’s report continued To: the general meeting and the board of directors of DP Eurasia N.V. Report on the other information included in the annual report continued 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. Report on other legal and regulatory requirements Our appointment We were appointed as auditors of DP Eurasia N.V., since 2017, followed the passing of a resolution by the board of directors. Our appointment has been renewed annually by shareholders and now represents a total period of uninterrupted engagement of six years. 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. Responsibilities for the financial statements and the audit Responsibilities of the board of directors 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. 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. Amsterdam, 19 April 2023 PricewaterhouseCoopers Accountants N.V. Original has been signed by B.A.A. Verhoeven RA Strategic report Corporate governance Financial statements Additional information 193 DP Eurasia N.V. Annual Report and Accounts 2022 Independent auditor’s report continued To: the general meeting and the board of directors of DP Eurasia N.V. Appendix to our auditor’s report on the financial statements 2022 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. Strategic report Corporate governance Financial statements Additional information 194 DP Eurasia N.V. Annual Report and Accounts 2022 Independent auditor’s report continued To: the general meeting and the board of directors of DP Eurasia N.V. Reporting guidance for environment metrics Key definitions and reporting scope For the purpose of this report, the Company defines: Natural gas consumption (m3) 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. Generator fuel – diesel (l) This indicator reflects the total purchased diesel consumption used for generators at the relevant locations of the Company during the reporting period. It is reported in litres on a consolidated basis. Diesel consumption (l) This indicator reflects the total purchased diesel (volume – l) consumption used for Company-leased cars at the relevant locations of the Company during the reporting period. It is reported in litres on a consolidated basis. Gasoline consumption (l) This indicator reflects the total purchased gasoline (volume – l) consumption used for generators at the relevant locations of the Company during the reporting period. It is reported in litres on a consolidated basis. Petrol & Super Grade consumption (l) This indicator reflects the total purchased Petrol & Super Grade consumption used for Company-leased cars at the relevant locations of the Company during the reporting period. It is reported in litres on a consolidated basis. Electricity consumption (kWh) This indicator reflects the total purchased electricity consumption used for air conditioning, lighting, electrical equipment uses and other business operations that require electricity, at the relevant locations of the Company during the reporting period. It is reported in MWh on a consolidated basis. LPG consumption (l) This indicator reflects the total purchased LPG for the locations if the store does not have natural gas purchase. Cooling gas (kg) This indicator reflects the amount of R404a refrigerant purchased and used at relevant locations. Fire extinguisher (kg) This indicator reflects the amount of 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. Strategic report Corporate governance Financial statements Additional information 195 DP Eurasia N.V. Annual Report and Accounts 2022 ESG appendix ADBP Annual and deferred bonus plan AFM Dutch Authority for the Financial Markets AGM Annual General Meeting AWUS Average weekly unit of sales Board The Board of the Company CEO Chief Executive 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. Fides Food Systems Fides Food Systems Coöperatief U.A. As per 2 March 2022, Fides Food Systems (disappearing entity) merged with Jubilant FoodWorks Netherlands B.V. (acquiring entity) Fidesrus Fidesrus B.V. Founding Shareholders Fides Food Systems Coöperatief U.A. and Vision Lovemark Coöperatief U.A. GBP Great British Pound General Meeting General Meeting of shareholders of the Company Group The Company and its subsidiaries IFRS International Financial Reporting Standards as adopted in the European Union IPO The initial public 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 Glossary Strategic report Corporate governance Financial statements Additional information 196 DP Eurasia N.V. Annual Report and Accounts 2022 Designed and produced by www.lyonsbennett.com Contacts Company registered office and business address DP Eurasia N.V. Herikerbergweg 238 Luna Arena 1101 CM Amsterdam The Netherlands Corporate Broker Liberum Capital Limited Level 12 Ropemaker Place 25 Ropemaker Street London EC2Y 9LY United Kingdom English Legal Advisers to the Company Dentons UK and Middle East LLP One Fleet Place London EC4M 7WS United Kingdom External Auditors PricewaterhouseCoopers Accountants N.V. Thomas R Malthusstraat 5 1066 JR Amsterdam The Netherlands UK Depositary Interest Register Link Market Services Trustees Limited 4 Beckenham Road Beckenham Kent BR3 4TU United Kingdom Financial PR Buchanan 107 Cheapside London EC2V 6DN United Kingdom www.dpeurasia.com