Proposed Placing of new Ordinary SharesDP Poland PLC (“DP Poland or the “Company”)
DP Poland plc announced on 5 June 2017 a proposed placing of new ordinary shares in the Company, to raise net proceeds of approximately £5 million for the Company.
The Company intends to use the net proceeds of the Placing to maintain the roll-out of new stores, with the planned opening in 2018 of 15 new corporate stores, against a target of up to 20 store openings that year and in 2019 providing loans by the Company for 5 sub-franchised store openings against a target of up to 15 store openings that year. In addition, the Company intends to increase its investment in marketing.
Peter Shaw, Chief Executive of DP Poland plc said:
“We continue to make strong progress, with 9 store openings to date this year and our 18th consecutive quarter of double digit like-for-like sales growth.
In this positive context we wish to underpin our store opening momentum through 2018 and 2019, while encouraging sub-franchisee funded store openings. To this end an additional investment in the business of £5m would enable us to open additional corporate stores, provide loan capital for further sub-franchised store openings and support additional marketing in support of sales growth, all contributing to the establishment of Domino’s Pizza as a key player in the Polish pizza delivery market.”
5 May 2017
Background to and reasons for the Placing
The Company is continuing to build its store-opening momentum having opened 12 stores in 2016 and so far 9 stores in 2017, bringing the current total stores to 44. The Group is on target to have at least 50 owned and sub-franchised stores by the year end.
The business achieved its 18th consecutive quarter of double digit like-for-like System Sales1 growth in Q1 2017; January-April like-for-likes were +19%.
Maintaining momentum in store openings is important as the Company drives towards critical mass for the business. It takes time and resource to establish a pipeline of store openings; the Directors believe the business is well positioned for 2017 and have already identified a number of sites for 2018. At present, there are not sufficient grounds for confidence that enough of the targeted 2018 store openings will be stores opened by sub-franchisees; for this reason the Company is seeking to raise £5m net of costs to fund a combination of additional corporate store openings and loans to sub-franchisees, plus additional marketing activity to support sales growth in the expanding estate of owned and sub-franchised stores, deploying strict return on investment criteria. The Company also plans to invest further in online ordering technology for the business, with the aim of ensuring that customers’ online experience is ‘best of class’. The Company expects sub-franchisees to continue to fund a proportion of store openings through 2017 and 2018 and while it is difficult to predict the Directors believe that proportion will grow as the business matures.
The market in Poland is evolving with the growing influence of food service aggregators; Uber Eats entered the Warsaw market in Q1 2017 and the restaurant group Amrest announced in April that it was acquiring a 51% stake in the Polish Delivery Hero portal Pizza Portal. The Company expects more competitive activity as the Polish delivery market develops and becomes yet more attractive. The Company welcomes this competition, in the strong belief that a growing market will disproportionately benefit the Domino’s Pizza brand as the Group’s sales growth continues to outstrip growth in the Polish pizza market.
Full announcement can be downloaded here: DPP ABB Announcement 5-6-17
- 020 3393 6954DP Poland PLC
- Peter Shaw, Chief Executive
- 020 7418 8900 Peel Hunt
- Adrian Trimmings/George Sellar
(1 System Sales are total retail sales including sales from corporate and sub-franchised stores, unaudited.)