Placing of New Shares and Open Offer

DP Poland PLC (“DP Poland” ,“DPP”, “the Company” or “the Group”)

Placing of New Shares

£2.75 million Placing of New Ordinary Shares at 60p and Open Offer to raise up to £1 million

DP Poland plc holds the exclusive rights to develop and operate Domino’s Pizza stores in Poland, through its wholly owned subsidiary DP Polska SA.

  • Approximately £2.58 million raised conditionally (net of expenses) through a Placing
    • All Directors participating
  • Open Offer to all qualifying shareholders to raise a maximum of £1 million
    • 1 Open Offer Share for every 11.86714 Ordinary Shares held
    • excess applications possible to extent not otherwise taken up
    • discount of approximately 9.8% to closing middle market price on 22 December 2011
    • eligible for EIS (income tax and CGT) tax relief
    • Existing DPP shares will trade cum entitlement until 13 January
  • Proceeds and existing cash resources to be utilised to fund the 2012 roll out programme particularly in reaching 20 stores enabling the Group to sub-franchise
  • Seymour Pierce acted as nomad and broker to the Company
  • Trading in Placing shares anticipated to commence 20 January 2012 and trading in Open Offer shares anticipated to commence 7 February 2012
  • Encouraging current trading

Peter Shaw, Chief Executive, said:

“Our first year has been successful. We have fulfilled our promise to open 12 stores and sales have grown steadily as the stores have opened. Our most recent research demonstrates that, as anticipated, customers are buying our pizzas for their quality and speed of delivery, the opportunity that was identified prior to launch.

“Our first target for 2012 is to reach 20 owned stores which will enable us to gain critical mass and will allow us to begin to sub-franchise, an important part of our model going forward.

“We are delighted with the support for our Placing. We have structured the Open Offer in an optimal way with a discount to the current market price and eligibility for EIS tax relief, allowing individual investors to shelter income tax and potentially avoid any CGT. Assuming eligibility for the available tax breaks and retention for three years, shareholders and those who purchase in the market before 13 January can effectively buy into the Company through the Open Offer at 42p.”

22 December 2011

Enquiries:

  • Today c/o Collage Hill 07831 379 122DP Poland PLC
  • Peter Shaw, Chief Executive Thereafter 020 3393 122
  • 07831 379 122 College Hill
  • Matthew Smallwood
  • 020 7107 8000 Seymour Pierce
  • Guy Peters/Catherine Leftley – Corporate Finance
  • David Banks/Jacqui Briscoe – Corporate Broking

Introduction

DPP is pleased to announce that it has conditionally raised approximately £2.58 million (net of the expenses of the Placing) by means of a placing by Seymour Pierce, as agent for the Company, of 4,583,334 Placing Shares, at 60 pence per share which is conditional on, amongst other things, the passing of the Resolutions at the General Meeting and Admission (save in respect of 815,000 Placing Shares) and Admission. The General Meeting will be held at 11a.m. on 19 January 2012.

Reasons for the Placing and Open Offer

DPP was admitted to trading on AIM on 28 July 2010. It was a newly formed company owning the entire issued share capital of DPP SA, a Polish company having the exclusive master franchise in Poland for Domino’s Pizza, the world’s leading pizza delivery brand. DPP SA has the exclusive right itself to develop and operate and to sub-franchise to others the right to develop and operate Domino’s Pizza stores in Poland.

DPP is aiming to roll out Domino’s Pizza stores in Poland, initially in Warsaw. Under its Master Franchise Agreement, DPP SA is required to meet minimum store growth targets, and DPP SA’s initial target of opening 12 stores in Warsaw by 31 December 2011 has been achieved. The first store was opened in February 2011, located in the affluent Mokotów district of Warsaw and the eleventh and twelfth stores were opened on 21st December 2011 on Jerozolimskie Street in central Warsaw and on Wincentego Street on the eastern side of the city. Whilst the initial focus for 2012 will be on opening Group owned stores the Master Franchise Agreement allows DPP SA to sub-franchise once it has 20 stores of its own. Sub-franchising is fundamental to the Domino’s Pizza business model and DPP anticipates that sub-franchising will be central to its expansion plans over the coming years. The Domino’s Pizza sub-franchise model requires the sub-franchisee to meet all capital and operational costs of constructing and equipping their sub-franchised stores.

As at 1 November 2011 the Company’s cash balance totalled £1.53 million. The proceeds of the Placing and Open Offer, which will together total approximately £3.52million after expenses (on the assumption that the Open Offer is taken up in full by Qualifying Shareholders), are expected to provide the additional funding for the anticipated roll out of new Domino’s Pizza stores in Poland in 2012.

Current Trading and Prospects

The original plan to open 12 stores in 2011 has been fulfilled. Total Group sales have grown steadily as stores have opened. Sales (by value) in the 10 stores open in the week ended 18 December 2011 totalled approximately 104,000 pln. Sales (by value) at the first store have been steadily growing over the 9.5 months since opening with weekly sales being over 17,500 pln (net) for the week ended 18 December 2011. The average transaction value for all stores has also been growing since the first store opened, and averaged over 38 pln (net) up to the week ending 18 December.

The first store has averaged 461 transactions a week over the 9.5 months that it has been trading, including in the summer months when a dip in sales as consumers took long weekends and holidays was predicted. It is anticipated that the winter months will see a boost in sales as people choose to stay at home and order delivery food.

Research undertaken among the Group’s customers at its first store has indicated that they are buying Domino’s Pizza products on account of superior product quality and speed of delivery. This research is supported by anecdotal evidence of very positive customer feedback regarding product quality and service.

The Board believes that DPP SA should achieve critical mass in 2012. This is largely on account of the increasing number of stores – and, in consequence, wider coverage of the Warsaw population – and the increasing awareness of the Domino’s Pizza brand.

Details of the Placing

The Company has conditionally raised £2.75 million (approximately £2.58 million net of the expenses of the Placing) by means of a placing by Seymour Pierce on behalf of the Company of 4,583,334 new Ordinary Shares at the Issue Price for the benefit of the Company. One of the institutional placees in the Placing requires its participation of 815,000 new Ordinary Shares to be issued by 30 December 2011 and accordingly the Company intends to issue those new Ordinary Shares utilising its existing authorities on or before 30 December 2011.

The Placing is, save as mentioned above, conditional, inter alia, upon:

  • the passing of the Resolutions at the GM;
  • the Placing Agreement becoming unconditional and not having been terminated prior to Admission; and
  • Admission of the Placing Shares to trading on AIM.

The Placing Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after their date of issue.

The Company has obtained advance assurance from HM Revenue & Customs that on the basis of information provided (i) following receipt of a properly completed form EIS 1 they will be able to authorise the Company to issue certificates under Section 204, ITA 2007 in respect of the Placing Shares to be issued in the Placing; and (ii) the New Ordinary Shares will be eligible shares for the purposes of Section 285(3), ITA 2007 and may be part of a qualifying holding for the purposes of Chapter 4 of Part 6, ITA 2007. The Directors are not aware of any subsequent change in the qualifying conditions or the Company’s circumstances that would prevent the Placing Shares from being eligible VCT and EIS investments on this occasion. Further details as regards VCT and EIS reliefs are set out below.

It is expected that subject to the passing of the Resolutions at the GM, Admission will become effective and dealings in the Placing Shares will commence from 20 January 2011.

Directors’ participation in the Placing

Mr Nicholas Donaldson and Mr Robert Morrish, both non-executive directors of the Company are participating in the Placing and have agreed to subscribe for 41,667 and 50,000 Placing Shares respectively at the Issue Price. Mr Peter Shaw, Chief Executive Officer of the Company is also participating in the Placing and has agreed to subscribe for 33,334 Ordinary Shares at the Issue Price. Mr Shaw already holds 1,220,000 Ordinary Shares in the Company and has an interest in a further 283,936 Existing Ordinary Shares held within the Company’s Joint Ownership Share Scheme.

Open Offer

In order to provide Shareholders who have not taken part in the Placing with an opportunity to participate in the proposed issue of New Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe at the Issue Price for an aggregate of 1,666,667 Open Offer Shares. The Open Offer provides Qualifying Shareholders with an opportunity to participate in the proposed issue of the Open Offer Shares on a pre-emptive basis whilst providing the Company with additional equity capital to invest in the business of the Group.

Pursuant to the Open Offer, Qualifying Shareholders will be offered the opportunity to apply for Open Offer Shares on the basis of:

1 Open Offer Share for every 11.86714 Ordinary Shares held on the Record Date.

In addition, Qualifying Shareholders will if they so wish, be able to apply to subscribe for additional Open Offer Shares in excess of their pro rata entitlements to the extent that any Open Offer Entitlements are not taken up in full. In the event that applications are received under the Excess Application Facility for more than the total number of Open Offer Shares available following the take up of Open Offer Entitlements, such applications will be scaled back pro rata to existing shareholdings. The Open Offer Shares have not been placed subject to clawback nor have they been underwritten. Consequently, there may be no more, but potentially fewer than 1,666,667 Open Offer Shares issued pursuant to the Open Offer.

Open Offer Shares are being offered to Qualifying Shareholders at a discount of approximately 9.8 per cent. to the closing middle-market price of the Ordinary Shares on AIM of 66.5 pence per Ordinary Share on 22 December 2011, being the last trading day before the details of the Placing and Open Offer were announced.

The Open Offer Shares when issued and fully paid will rank pari passu with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid, after their date of issue.

The estimated total proceeds of the Placing and Open Offer, after payment of all expenses incurred in relation to the issue of the New Ordinary Shares and assuming the Open Offer is fully subscribed, would amount to approximately £3.52 million.

It is expected that subject to the passing of the Resolutions at the GM and the Placing Agreement becoming unconditional, Admission will become effective and that dealings in the Open Offer Shares for which valid application is made pursuant to the Open Offer, will commence on 7 February 2012.

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