This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

 

 

DP Poland plc

("DP Poland", the "Group" or the "Company")

 

Final Results, Trading Update and Investor Presentation

 

DP Poland, the operator of pizza stores and restaurants across Poland, announces its audited results for the year ended 31 December 2021.

 

Financial highlights*:

 

·      Cash at bank of £2.7m as at 31 December 2021 (£1.3m as at 31 December 2020)

·      Revenue increased by 3.1% to £29.9m (2020: £29.0m)

o  Strong LFL revenue growth in Q4 of 21%

o  Growth of dine-in and delivery LFL System Sales of 9% and 4% respectively compared to prior year

·      System Sales were up 4.6% to £31.2m (2020: £29.8m)

·      Group EBITDA increased from -£0.2m to £1.1m

·      Group loss for the period decreased by 51.2% from -£8.8m to -£4.3m

 

Operational highlights:

 

·      85% of delivery sales were ordered online (2020: 85%)

·      Full integration of Dominium S.A. completed in July 2021

·      The Group had 121 stores at the end of 2021, with the acquisition of Dominium S.A. almost doubling the number of stores from 69

·      Substantial investment in driver recruitment to improve delivery times

·      FY21 highly affected by the challenges of the Covid-19 pandemic

o  Restrictions negatively impacted restaurants' dine-in performance however food delivery sector thrived

·      Polish GDP and inflation increased in 2021 resulting in increased labour costs with a 7.7% increase in the national minimum wage

 

Summary Financial Information

 

£'000	Pro-forma unaudited consolidated data 2020	2021	% change
System Sales	29,779	31,160	4.6%
Revenue	28,959	29,866	3.1%
EBITDA**	(152)	1,137	-846%
margin %	-0.5%	3.8%
Loss for the period	(8,826)	(4,309)	-51.2%

 

*FY20 comparatives are unaudited pro-forma Group financials for the year ended 31 December 2020 in order to provide comparable data for the two periods

**excluding non-cash items, non-recurring items and store pre-opening expenses

 

Trading Update and Investor Presentation

 

DP Poland also provide an unaudited trading update for the five month period to 31 May 2022 ("YTD22"):

 

·      LFL System Sales up 21.3% in Q1 and 25% YTD22

o  Dine in sales experiencing significantly increased demand with sales up 172% YTD22

o  Delivery sales up 1% YTD22

 

·      Substantial investment in driver recruitment has improved delivery times

 

·      Implementation of various initiatives in response to rising food costs and wage inflation, including:

o  Reduced discounts and increased prices

o  Undertaking a review of recipes to reduce food costs

o  Insourcing of delivery from third-party operators

o  Introduced minimum order value

o  Replenished scooter fleet, resulting in savings in mileage and maintenance costs

 

·      Two new stores opened in June, in Szczecin and Siedlce

 

·      Appointed experienced Marketing and Strategy Director

 

PLN'000	YTD20	YTD21	YTD22	% change vs YTD20	% change vs YTD21
System Sales	62,910	62,500	78,158	24%	25%
LFL System Sales	62,200	62,500	78,158	26%	25%
Dine-in	15,184	8,791	23,912	57%	172%
Delivery	47,017	53,709	54,246	15%	1%
Non-LFL System Sales	710	0	0	-100%	n/a

 

A presentation has been published in relation to the Group's unaudited trading update for the YTD22. The presentation will be made available on the Company's website at https://dppoland.com/. 

 

Enquiries:

 

DP Poland plc		Tel: +48 22 654 64 15
Przemyslaw Glebocki, Non-Executive Director
Singer Capital Markets (Nominated Adviser and Broker)		Tel: +44 (0) 20 7496 3000
Shaun Dobson / Will Goode / Amanda Gray

 

Notes for editors

 

About DP Poland plc

 

DP Poland, through its wholly owned subsidiary DP Polska S.A., has the exclusive right to develop, operate and sub-franchise Domino's Pizza stores in Poland. Following its acquisition of Dominium S.A., which constituted a reverse takeover under the AIM Rules for Companies, the group now operates over 100 stores and restaurants across a number of cities and towns in Poland.

 

 

Chairman's Statement

 

2021 was a transformational year for DP Poland PLC, having completed the acquisition of Dominium S.A. ("Dominium") in January 2021. This is the first DP Poland Annual Report to be published after twelve months have passed since the businesses came together.

 

Against the background of unprecedented challenges presented by the COVID-19 pandemic, much has been achieved by your management team. Piotr, our CEO, will provide more detail about this in his statement.

 

Your board believes the acquisition of Dominium has delivered a level of critical mass which makes the Company a key player in the Polish Food & Beverage sector. At the end of 2021, the Group operated 121 stores across Poland, providing an opportunity to leverage economies of scale in operations, procurement and marketing. I am truly excited about the future for DP Poland - we see a long and exciting roadmap ahead, driven by both organic and other opportunities.

 

In 2021 DP Poland won the Golden Franny award from DPI for its operational excellence. We congratulate Piotr and his team on this huge achievement in the maiden year following the acquisition of Dominium. I am confident that our management team will perform well in any trading environment. Despite the headwinds of COVID-19 and current inflationary pressures, we look forward to the day when these headwinds become tailwinds.

 

Meanwhile, at the time of writing this statement, the terrible events in Ukraine, a close neighbour of Poland, continue. Shareholders will, I am sure, be pleased to know that DP Poland is working hard to help the citizens of Ukraine in every way we can. DP Poland has no operations in Ukraine, but does so, in Poland, near the Ukraine border. 

 

Several important changes in the composition of the Board have taken place since year-end 2021. In January 2022, Jeremy Dibb joined the Board as a Non-Executive Director, bringing a wealth of public market experience through his previous roles. In March 2022, Robert Morrish, Non-Executive Director, stepped down after 11 years of dedicated service to DP Poland. In April 2022, Peter Furlong joined the Board as a Non-Executive Director. Peter is a Director of Pageant Holdings, DPP's second largest shareholder, and has been a long-term investor in the Company.

 

Following these changes, I believe that the composition of the Board provides a strong and diverse range of know-how and experience, well suited to the business and the challenges ahead. We have a strong team of highly skilled Executives and Non-Executives, whose interests are 100% focused on creating shareholder value. 

 

Further changes will occur in 2022 when I will retire as Non-Executive Chairman of DP Poland. It was announced to the London Stock Exchange in April 2022 that I would stand down as Non-Executive Chairman of DP Poland at the Company's 2022 AGM in July 2022. However, I have agreed to stay on until the end of calendar 2022, at the request of the wider Board, in order to help complete certain on-going initiatives whilst providing time to find a suitable successor. I am happy to assist. 

 

I would like to end my final statement as Non-Executive Chairman by thanking our management team and all employees for their superb efforts over the last year. I would like to thank our Board members for their guidance and input in this pivotal year for the Company.  Finally, I would like to thank our shareholder base, who have patiently supported DP Poland since my tenure began. It has been a long road to where DP Poland is today. I am excited about the road ahead and what that means for our shareholder base.

 

With best my wishes.

Nicholas Donaldson

Non-Executive Chairman

14 June 2022

 

 

Chief Executive's Review

 

2021 was a transformational year for DPP following the acquisition of Dominium in January 2021.

 

It was a year of hard work integrating Dominos and Dominium. We have successfully converted Dominium restaurants to Domino's standards, which required a transition to fresh pizza dough, an investment in 28 walk-in chiller rooms, the redesign of the production areas, the re-organization of 54 makelines, and the installation of 177 new, larger refrigerators. Additionally, 54 signages have been replaced. 

 

The capital investment required for this integration was significant and hampered by various COVID disruptions. However, encouragingly the integration is complete and we are now well positioned for the future. 

 

The operational merger took place and completed in July 2021, as both businesses migrated onto the same I.T. system 'PULSE'. This brought unforeseen challenges and resulted in some delays, but we now are starting to reap the benefits.

 

As part of the merger, we also took the opportunity to re-design our delivery areas. As a result, in cities such as Warsaw, Wrocław and Kraków, we have been able to reduce our delivery times. We now offer one of the most compelling delivery services in Poland and hope to build further on this competitive advantage.  In fact, we have invested further since year end, hiring more drivers and training our staff to be best in class. We believe that this investment will help us to build a sustainable competitive advantage as we continue to be the pizza company of choice in Poland.

We now are working at scale and are happy to say that our commissaries is growing from strength to strength. Profitability in this segment continues to grow and our stores benefit from the economies of scale derived from this core business line. Capacity rates at our commissaries have increased to their highest level and we continue to look for ways to drive more efficiencies here. Production capacity at the branch in Warsaw is at 100%, while the production capacity of the Commissary in Łódź is at 80%. Our partnership with Berto has allowed us to reduce distribution costs, whilst still maintaining the highest quality standards. 

 

These changes required significant investment, which impeded our short-term profitability and cashflows, however the business is now benefitting from this investment. We are looking at ways to increase capacity rates further, including adding overnight shifts in our commissaries to accommodate our increased market share and associated volumes. 

 

Tourism in Poland has yet to recover to the levels experienced pre-COVID, which has negatively impacted our dine-in business. Having said that, we consider the business is getting back to a 'new normal'. On 14th February 2022 students officially went back to school. The more challenging situation has been with regard to selling to offices, even after the lockdown has ended. Most companies have noticed the benefits of working remotely and decided not to return to work in the traditional model. We do hope for further revenue growth when tourism fully returns, and employees return to their offices over time.

 

We have implemented a Digital Experience Platform and launched our new website and a new smartphone app for placing orders. We have merged many marketing functions and areas, including Google Analytics and Google Ads. Our stores are now fully integrated with the website, on both Android and iOS, as well as with the central data warehouse. In addition, we have been designing customer segmentation models, and applying Marketing Automation. 

 

Thanks to the doubling of the business by number of stores, we have managed to negotiate better terms of cooperation with the largest aggregators in Poland, such as: Pyszne.pl (known in Europe as 'Just take away'), Uber Eats and Glovo. Our objective is to generate new orders incrementally, with a higher average spend. 

 

All these activities have allowed us to develop more quickly. Q3 was a steep learning curve, with the first effects already visible in Q4.  Q4 delivered 21% like for like growth (5.3% on delivery and 110.8% on dine-in). Our enlarged group continues to benefit from the fine tuning of our business, which is largely driven by the first class analytical tools that come from being a Domino's business. We feel that we are only really starting to gather momentum now and the best is ahead of us.  

 

As previously announced in April, our trading through to the end of March was up 21.3% LFL. I am pleased to say that since March our sales have accelerated further. YTD through May our LFL sales are up 25% for the group.

 

A new strong foundation for the DPP business has been built in 2021. This is the first financial statements which presents the consolidated business, but I believe it does not show its full potential yet. The numbers reflect the true financial performance, but include a lot of one-off items related to integration and the learning curve.  

 

We have seen improvement in profitability, but we aspire for more. Since year end, we have faced an unprecedented inflationary environment that has had an impact on our profitability. As announced to the market, we are seeking to reduce the impact through various cost-efficiency initiatives and price increases. Due to the scale of our business, we believe we are in a much better position than other small players in Poland. We want to use our comparative strength to drive market share, our brand awareness and consolidate the market further - picking up assets and consolidating at attractive prices. The board is fully behind this stated strategy of growing market share. Margin expansion can be optimised at the appropriate time when we have completed our acquisition drive. 

 

At the end of 2020 and the beginning of 2021, we acquired a total of 17 stores from existing sub-franchisees. We also reorganised delivery zones to improve the efficiency of both franchise and corporate stores. As a result, all sub-franchise stores are showing very positive like for like growth. In line with previous strategy, we have developed an incentive programme for existing sub-franchisees. As a result, in 2022 we started a store-opening programme and a sell-down of corporate stores to sub-franchisees. At the same time, we launched a comprehensive programme called the Franchise Academy, which will enable current employees to take over existing corporate stores. 

 

We continue to actively monitor growth opportunities, both organically and through acquisitions.  

 

The Russian invasion of Ukraine is a tragedy. We have started a number of initiatives to help our Ukrainian neighbours, such as: 

·      We are providing free pizzas for volunteers and refugees. 

·      We are transporting people and material gifts with our company cars. 

·      We are organizing collections and donations in our stores and at our office. 

·      We temporarily hosted 11 special guests in our office. Currently, our new friends are living in a company apartment in the centre of Warsaw. 

·      We are in contact with the CEO of Domino's Ukraine, in order to help employees from stores which have been shut-down. 

·      For this purpose, we have created a team responsible for coordinating assistance in employment and accommodation. We have already received the first applications and are organising the formalities. 

·      We are currently looking for a place to live for other new guests. In the coming days, we will propose a method of financing for aid activities. We also want to take advantage of the help offered by Domino's Germany and Domino's Netherlands. 

We know that help will be needed for a long time and our actions must be well coordinated. 

 

I remain very optimistic about the outlook. We are on the right track to further solidify the leading position of Domino's in Poland. We look forward to talking directly with our shareholders to answer any questions and to tell you about further exciting trends and opportunities since our financial year-end. 

 

Piotr Dzierżek

Chief Executive Officer

14 June 2022

 

Chief Financial Officer's Review

 

Overview

 

It is a great pleasure for me to comment on the financial performance of the enlarged Group for the first time as the Company's Chief Financial Officer.

 

2021 continued to be highly affected by challenges of the COVID-19 pandemic, which had a severe impact on the operations and performance of many industries worldwide, including the restaurant and food delivery sectors in Poland. The ability to provide indoor dine-in services was restricted by Polish Government guidelines twice in 2020: once during the Spring (for 9 weeks) as well as the Autumn (for the last 10 weeks of 2020 since late October 2020, but continuing in 2021 for a further 21 weeks until late May 2021). These restrictions have, inevitably, negatively impacted restaurants' performance, however in contrast, the food delivery sector has thrived. The food delivery sector in Poland has grown significantly during the pandemic and the Group, with its short delivery times, contactless payments and contactless delivery/collection service has benefitted from this sector's growth despite the unfortunate circumstances.

 

Despite rapid like-for-like sales growth and consistent store rollout program, the Group has been facing continued pressure on labour costs which have been coupled with underutilised operations as a result of its sub-optimal store footprint. We expect that the integration with Dominium will alleviate these pressures.

 

Reverse takeover

 

 

On 8 January 2021 the Company completed a reverse acquisition of Dominium S.A. a company registered in Poland. Further information about the transaction is disclosed in note 18. Although the transaction resulted in Dominium S.A. becoming a wholly owned subsidiary of the Company in accordance with IFRS 3 'Business Combinations' the transaction constitutes a reverse acquisition as the previous shareholders of Dominium S.A. own the majority of the shares of the Company and the directors of Dominium S.A. make up the majority of the Company's board. In substance, the shareholders of Dominium S.A. acquired a controlling interest in the Company and therefore the transaction has been accounted for as a reverse acquisition.

 

In accordance with IFRS 3 'Business Combinations' Dominium S.A. has been identified as the accounting acquirer (although it is the legal subsidiary) and therefore the comparative consolidated data presented in these financial statements represents the results for and the position of Dominium S.A. only.

 

 

Financial Performance

 

				2021	2020
				£	£
System sales				31,159,781	13,982,764
Revenue				29,866,189	13,982,764
Direct Costs				(24,427,738)	(10,998,475)
Selling, general and administrative expenses -  excluding: store pre-opening expenses, depreciation, amortisation and share based payments				(4,301,176)	(2,314,333)
GROUP EBITDA - excluding non-cash items, non-recurring items and store pre-opening expenses				1,137,275	669,955
Store pre-opening expenses				(3,429)	-
Other non-cash and non-recurring items				59,278	479,901
Finance income				1,155,806	4,017
Finance costs				(1,669,527)	(1,312,995)
Foreign exchange losses				(61,911)	(195,381)
Depreciation, amortisation and impairment				(4,867,679)	(2,652,861)
Share based payments				(51,301)	-
Loss before taxation				(4,301,488)	(3,007,364)
Taxation				(58,983)	-
Loss for the period				(4,360,471)	(3,007,364)

 

 

The Group Income Statement presented above represents incomparable data for the two periods. As already mentioned due to the IFRS 3 'Business Combinations' requirements comparative data presented in these financial statements represents the results for the position of Dominium S.A. only.

 

To comment on the financial performance of the Group we present below unaudited pro-forma Group Income Statement for the period ended 31 December 2020.

 

 

 

 

				2021	Pro-forma unaudited consolidated data 2020
				£	£
System sales				31,159,781	29,778,642
Revenue				29,866,189	28,958,607
Direct Costs				(24,427,738)	(23,997,851)
Selling, general and administrative expenses -  excluding: store pre-opening expenses, depreciation, amortisation and share based payments				(4,301,176)	(5,113,105)
GROUP EBITDA - excluding non-cash items, non-recurring items and store pre-opening expenses				1,137,275	(152,350)
Store pre-opening expenses				(3,429)	(323)
Other non-cash and non-recurring items				59,278	(1,785,710)
Finance income				1,155,806	87,236
Finance costs				(1,669,527)	(1,849,358)
Foreign exchange losses				(61,911)	(271,548)
Depreciation, amortisation and impairment				(4,867,679)	(4,636,275)
Share based payments				(51,301)	(217,332)
Loss before taxation				(4,301,488)	(8,825,660)
Taxation				(58,983)	-
Loss for the period				(4,360,471)	(8,825,660)

 

 

Revenue

The increase in Group's revenue of 3.1% is primarily due to the Group's delivery operations benefitting from the Covid-19 restrictions still relevant for the period January - May 2021 and the improved food delivery dynamics in Poland. The primary drivers for the 7% LFL growth in 2021 was due to an increase in average order value as well as effective price increases. From a phasing perspective, as profiled later in the Key Performance Indicators section, DP Poland's performance in 2021 consistently improved from quarter to quarter, with negative LFL growth during the outset of the Covid-19 pandemic in Q1 to a 21% increase in the last quarter of 2021.

 

Direct costs

Direct costs increased by 1.8% in 2021 which is lower than the increase in revenues mainly as a result of achieving part of expected reverse takeover synergies. The key drivers of this movement included a substantial increase in national minimum wage in Poland but also high inflation rate in Poland impacting purchases of food to stores. Furthermore, the Group experienced a general increase in costs as a result of franchise stores being acquired from sub-franchisee owners.

 

Although the Polish economy was subject to one of the highest inflation rates in Europe during 2021, the Group managed to achieve savings on food cost and decrease these costs (as % of revenue) in comparison to 2020. This decrease is a result of achieved synergies on the reverse acquisition.

 

Throughout 2021 labour cost inflation continued in Poland, representing a challenge for the Group, particularly for newer stores which usually have insufficient sales to absorb the fixed cost element of labour during their early stages. The national minimum wage in Poland in 2021 has been increased by 7.7% (year-on-year) on top of a 16% (year-on-year) increase in 2020.

 

Selling, general and administrative expenses ("SG&A")

SG&A were equivalent to 14% of revenue, which is 4 p.p. lower than in 2020. The Group achieved assumed synergies in the area of SG&A by reducing the HQ office rent, several advisory services and other costs.

 

Other non-cash and non-recurring items

The Group recognised non-cash and non-recurring items in 2021. These include non-recurring income positions like sub-franchise leasehold totaling £122,905 which was the result of the takeover of franchise assets as per signed agreement following the termination of the sub-franchise agreement, release of Frito Lay bonus received by Dominium S.A. before the reverse acquisition totaling £252,004, but also IFRS16 adjustments resulting from changes in lease period and discounts received on some rents for the Covid-19 lockdown periods amounting to £220,014.

 

Group loss for the period

Group loss for the period decreased by 51%. This is mainly due to achievement of part of the synergies assumed on the reverse acquisition, and increased revenue but also significant decrease in non-recurring costs.

 

Group Loss for the period*	2021	2020 Pro-forma unaudited consolidated data	Change %
Group loss for the period	(4,360,471)	(8,825,660)	+51%

* Actual exchange rates for 2021 and 2020

 

Store count before reverse acquisition

Store count	1 Jan 2021	Opened	Closed	Transferred	31 Dec 2021
Corporate	53	1	-2	8	60
Sub-Franchised	16	0	0	-8	8
Total	69	1	-2	0	68

 

Reverse takeover

Store count	1 Jan 2021	Opened	Closed	Transferred	31 Dec 2021
Corporate	56	0	-3	0	53
Sub-Franchised	1	0	-1	0	0
Total	57	0	-4	0	53

 

Enlarged Group

Store count	1 Jan 2021	Opened	Closed	Transferred	31 Dec 2021
Corporate	109	1	-5	8	113
Sub-Franchised	17	0	-1	-8	8
Total	126	1	-6	0	121

 

In 2021 DP Poland opened 1 new corporate store and closed 5 stores. 8 stores were transferred to Corporate and 2 stores were transferred to Franchisees. The reverse takeover has almost doubled the number of stores in chain in comparison to 2020. The chain managed to shorten delivery times in large cities for example in the Warsaw agglomeration where over 40 stores are placed.

 

Sales Key Performance Indicators (KPIs)

System Sales were up 4.6% as a result of a 13.0% like-for-like System Sales growth compared to the previous year.

 

	2021	2020 Pro-forma unaudited consolidated data	Change %
System Sales PLN	165,483,363	158,148,412	4.6%
System Sales £*	31,159,781	29,778,642	4.6%
LFL system sales	7%	-6%	13%
LFL system order count	0%	-10%	10%
LFL system order count pre-split	0%	-10%	10%
Delivery System Sales ordered online	85%	85%	-

 

 

*For exchange rates please refer to a separate table below (page 13)

Like-for-like System Sales growth per quarter were as follows:

Q1	- 2.4%
Q2	+10.0%
Q3	+0.3%
Q4	+21%

 

 

Exchange rates

PLN :  £1	2021	2020	Change %
Profit & Loss Account	5.3108	4.9965	+6%
Balance Sheet	5.4702	5.0661	+8%

 

Financial Statements for our Polish subsidiaries DP Polska S.A. and Dominium S.A. are denominated in Polish Zloty ("PLN") and translated to Pound Sterling ("GBP"). Under IFRS accounting standards the Income Statement for the Group has been converted from PLN at the average annual exchange rate applicable. The balance sheet has been converted from PLN to GBP as at the exchange rate at 31 December 2021.

 

Cash position

 

	1st January 2021 Pro-forma unaudited consolidated data	Cash movement	31st December 2021
Cash in bank	1,370,996	1,330,650	2,701,646

 

The large cash movement is a result of fundraising completed in November 2021, partially offset by expenses incurred with connection to the reverse acquisition.

 

Macro-economic conditions in Poland

 

Polish GDP increased during 2021 against a drop in 2020. The country is expected to face further increased inflation during 2022. The board is constantly monitoring purchase prices to ensure the Group can react to any price increases from its suppliers.

 

The unemployment rate improved in 2021 with a further improvement to note during the start of 2022.

 

Macro KPIs	2021	2020
Real GDP growth (% growth)	5.9	-2.8
Inflation (% growth)	5.1	3.4
Unemployment Rate (% of economically active population)	2.9	3.2

 

Going concern

 

The board considered the Group's forecasts, in particular those relating to the ongoing integration of Dominium operations into the Group and its expected impact on the Group's performance, to satisfy itself that the Group has sufficient resources to continue in operation for the foreseeable future.

 

Over the past quarters in 2020 and 2021, the board of DP Poland has given considerable thought as to how the Group might define, quantify and minimise the risks related to the Covid-19 pandemic. As the number of new Covid-19 cases recorded in Poland reached its peak during the months of March and April in 2021, and has reduced since then, and with the rapid roll-out of the vaccination program, all government restrictions removed on 1 June 2021 the board considers that the pandemic-related risks are reducing. The Company's recent equity fundraise made in November 2021, which provided an additional £3m (before expenses) of resource, has further improved the Company's cash balances and its ability to settle the substantial transactions, capital expenditure as well as operating losses, in expectation of the synergistic benefits of the merger.

 

Having considered the Group's cash flows and its liquidity position, and after reviewing the forecast for the next twelve months and beyond, the Directors believe that the Group have adequate resources to continue operations for the foreseeable future and for this reason they continue to adopt the going concern basis in preparing the financial statements.

 

That said, the board does take into account the uncertainty related to the future dynamics of the Covid-19 pandemic and inflationary pressures, as well as the uncertainty related to the actual quantum and timing of full synergies being delivered, which remain the most pronounced risks to our going concern assumptions.

 

Malgorzata Potkanska

Chief Financial Officer

14 June 2022

 

Financial Statements

 

Group Income Statement

 

					2021			2020
				Notes	£			£
Revenue				2	29,866,189			13,982,764
Direct Costs					(24,427,738)			(10,998,475)
Selling, general and administrative expenses -  excluding: store pre-opening expenses, depreciation, amortisation and share based payments					(4,301,176)			(2,314,333)
GROUP EBITDA - excluding non-cash items, non-recurring items and store pre-opening expenses*					1,137,275			669,956
Store pre-opening expenses					(3,429)			-
Other non-cash and non-recurring items				5	59,278			479,901
Finance income				7	1,155,806			4,017
Finance costs				8	(1,669,527)			(1,312,995)
Foreign exchange losses					(61,911)			(195,381)
Depreciation, amortisation and impairment					(4,867,679)			(2,652,861)
Share based payments					(51,301)			-
Loss before taxation				4	(4,301,488)			(3,007,363)
Taxation				9	(58,983)			-
Loss for the period					(4,360,471)			(3,007,363)
Loss per share	Basic			11	(0.75 p)			(1.06 p)
	Diluted			11	(0.75 p)			(1.06 p)
All of the loss for the year is attributable to the owners of the Parent Company.

 

 

 

 

Group Statement of Comprehensive Income

 

					2021			2020
					£			£
Loss for the period					(4,360,471)			(3,007,363)
Currency translation differences					24,798			46,152
Other comprehensive expense for the period, net of tax to be reclassified to profit or loss in subsequent periods					24,798			46,152
Total comprehensive income for the period					(4,335,673)			(2,961,211)
All of the comprehensive expense for the year is attributable to the owners of the Parent Company.

 

 

Group Balance Sheet

 

					2021			2020
				Notes	£			£
Non-current assets
Goodwill				32	15,008,736			3,111,110
Intangible assets				12	2,207,448			1,651,047
Property, plant and equipment				13	6,135,097			1,289,390
Leases - right of use assets				19	8,237,471			4,222,502
Deferred tax asset				15	-			30,645
Financial assets					-			987
Trade and other receivables				16	820,871			-
					32,409,623			10,305,681
Current assets
Inventories				17	667,898			193,660
Trade and other receivables				16	1,219,447			556,812
Cash and cash equivalents				22	2,701,646			34,651
					4,588,991			785,123
Total assets					36,998,614			11,090,804
Current liabilities
Trade and other payables				23	(4,983,665)			(3,384,308)
Borrowings				24	(11,068)			-
Lease liabilities				20	(2,656,091)			(1,515,523)
					(7,650,824)			(4,899,831)
Non-current liabilities
Lease liabilities				20	(7,027,146)			(3,313,908)
Deferred tax				15	(213,797)			(9,261)
Borrowings				24	(5,840,594)			(5,966,881)
					(13,081,537)			(9,290,050)
Total liabilities					(20,732,361)			(14,189,881)
Net assets					16,266,253			(3,099,077)
Equity				21
Called up share capital				27	3,097,933			1,648,700
Share premium account					42,551,453			8,124,915
Capital reserve - own shares					(48,163)			-
Retained earnings					(17,228,015)			(12,918,845)
Merger relief reserve					21,282,500			-
Reverse Takeover reserve					(33,460,406)			-
Currency translation reserve					70,951			46,153
Total equity					16,266,253			(3,099,077)

 

 

Group Statement of Cash Flows

 

					2021			2020
				Note	£			£
Cash flows from operating activities
Loss before taxation for the period					(4,301,488)			(3,007,364)
Adjustments for:
Finance income					(1,155,806)			(4,017)
Finance costs					1,669,527			1,312,995
Foreign exchange movements					1,180,246			-
Depreciation, amortisation and impairment					4,867,679			2,652,861
Loss on fixed asset disposal					267,866			75,479
Share based payments expense				28	51,301			-
Operating cash flows before movement in working capital					2,579,325			1,029,954
(Increase) / decrease in inventories					(32,569)			14,604
Decrease / (increase) in trade and other receivables					144,647			(122,625)
(Decrease)/increase in trade and other payables					(2,276,572)			763,327
Cash generated from operations					414,831			1,685,260
Taxation payable					-			-
Net cash generated from operations					414,831			1,685,260
Cash flows from investing activities
Payments to acquire software					(170,637)			-
Payments to acquire property, plant and equipment					(720,381)			(115,656)
Payments to acquire intangible fixed assets					(208,004)			(33,393)
Proceeds from disposal of property plant and equipment					90,892			8,183
Repayment of sub-franchisee loans				16	25,233			-
Interest received					3,811			-
Cash acquired from subsidiaries					1,336,256			-
Net cash generated from/(used in) investing activities					357,170			(140,866)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital					6,121,561			-
Repayment of lease liabilities					(3,474,856)			(1,414,978)
Proceeds from borrowings					-			234,725
Interest paid					(751,711)			(550,266)
Net cash from/(used in) financing activities					1,894,994			(1,730,519)
Net increase/(decrease) in cash					2,666,995			(186,125)
Exchange differences on cash balances					-			2,557
Cash and cash equivalents at beginning of period					34,651			218,219
Cash and cash equivalents at end of period				22	2,701,646			34,651

 

 

 

Group Statement of Changes in Equity

		Share		Currency	Capital	Reverse	Merger
	Share	premium	Retained	translation	reserve -	Takeover	Relief
	capital	account	earnings	reserve	own shares	reserve	reserve	Total
	£	£	£	£	£	£	£	£
At 1 January 2020	1,648,700	8,124,915	(9,911,482)	-	-	-	-	(137,867)
Translation difference	-	-	-	46,153	-			46,153
Loss for the period	-	-	(3,007,363)	-	-			(3,007,363)
Total comprehensive income for the year	-	-	(3,007,363)	46,153	-	-	-	(2,961,210)
At 31 December 2020	1,648,700	8,124,915	(12,918,845)	46,153	-	-	-	(3,099,077)
Translation difference	-	-		24,798	-	-	-	24,798
Loss for the period	-	-	(4,360,471)	-	-	-	-	(4,360,471)
Total comprehensive income for the year	-	-	(4,360,471)	24,798	-	-	-	(4,335,673)
Transfer to reverse takeover reserve	(1,648,700)	(8,124,915)	-	-	-	9,773,615	-	-
Recognition of DP Poland Plc equity	1,270,543	36,838,450	-	-	(48,163)	(20,532,689)	-	17,528,141
Reverse takeover of Dominium	1,418,832	-	-	-	-	(22,701,332)	21,282,500	-
Shares issued (net of expenses)	408,558	5,713,003	-	-	-	-	-	6,121,561
Share based payments	-	-	51,301	-	-	-	-	51,301
Transactions with owners in their capacity as owners	1,449,233	34,426,538	51,301	-	(48,163)	(33,460,406)	21,282,500	23,701,003
At 31 December 2021	3,097,933	42,551,453	(17,228,015)	70,951	(48,163)	(33,460,406)	21,282,500	16,266,253

 

 

1. ACCOUNTING POLICIES
Authorisation of financial statements and statement of compliance with IFRSs
The DP Poland plc Group and Company financial statements for the period ended 31 December 2021 were authorised for issue by the Board of the Directors on 14 June 2022 and the balance sheets were signed on the Board's behalf by Piotr Dzierżek and Malgorzata Potkanska.  DP Poland plc is a public limited company incorporated and domiciled in England & Wales. The Company's ordinary shares are traded on the Alternative Investment Market of the London Stock Exchange.
Basis of preparation
Both the Group financial statements and the Company financial statements have been prepared and approved by the directors in accordance with UK-adopted international accounting standards, IFRIC Interpretations and the Companies Act 2006. The preparation of financial statements in accordance with UK-adopted international accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Company's accounting policies.
An additional line item for 'Group EBITDA - excluding non-cash items, non-recurring items and store pre-opening expenses' has been presented on the face of the income statement as the Board believes this presentation is relevant to the understanding of the Group's financial performance and is a useful indicator for the underlying cash generated from operations. The Directors believe that presenting store pre-opening expenses separately on the face of the Group Income Statement, below the Group EBITDA line, better reflects the underlying trading performance. Other non-GAAP performance measures used are:  - System sales (the sum of all sales made by both sub-franchised and corporate stores to consumers)  - Like-for-like sales (same store sales for those stores which traded throughout the current and comparative period). The non-GAAP performance measures may not be comparable with similarly described items reported by other entities.
The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 December 2021.
The Group and Company financial statements are presented in Sterling. The assets and liabilities of the foreign subsidiaries, whose functional currency is Polish Zloty, are translated into sterling at the rate of exchange ruling at the balance sheet date and their income statements are translated at the average rate for the year. Differences arising from the translation of the opening net investment in the subsidiary are taken to reserves and reported in the Group statement of comprehensive income.
Basis of consolidation
The Group financial statements comprise the financial statements of DP Poland plc, its subsidiary undertakings and the Employee Benefit Trust ("EBT") drawn up to 31 December of each year, using consistent accounting policies. Subsidiary undertakings have been included in the Group financial statements using the purchase method of accounting. Accordingly the Group Income Statement and Group Statement of Cash Flows include the results and cash flows of subsidiaries from the date of acquisition.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement. The financial statements of subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated on consolidation. The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. On 8 January 2021 the Company completed a reverse acquisition of Dominium S.A. a company registered in Poland. Further information about the transaction is disclosed in note 18. Although the transaction resulted in Dominium S.A. becoming a wholly owned subsidiary of the Company in accordance with IFRS 3 'Business Combinations' the transaction constitutes a reverse acquisition as the previous shareholders of Dominium S.A. own the majority of the shares of the Company and the directors of Dominium S.A. make up the majority of the Company's board. In substance, the shareholders of Dominium S.A. acquired a controlling interest in the Company and therefore the transaction has been accounted for as a reverse acquisition. In accordance with IFRS 3 'Business Combinations' Dominium S.A. has been identified as the accounting acquirer (although it is the legal subsidiary) and therefore the comparative consolidated data presented in these financial statements represents the results for and the position of Dominium S.A. only.
Adoption of new and revised standards
The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2021
- Definition of Material - Amendments to IAS 1 and IAS 8 and
- Revised Conceptual Framework for Financial Reporting
The Group has also decided to adopt the following amendment early:                                                                                                                      -Annual Improvements to IFRS Standards 2018-2020 Cycle.                                                                                                                                                                               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.
New standards and interpretations not applied
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the Group. None of these are expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.
Intangible assets
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired separately from a business are carried initially at cost. An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable or arises from contractual or other legal rights and its fair value can be measured reliably. Intangible assets with a finite life are amortised and charged to administrative expenses on a straight line basis over their expected useful lives, as follows:
- Licences:  over the duration of the legal agreement;
- Computer software: 2 years from the date when the software is brought into use
- Capitalised loan discounts:  over the remaining term of the sub-franchise agreement
The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.
Goodwill
Goodwill is initially measured at cost and any previous interest held over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the income statement. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. The Group performs impairment reviews at the reporting period end to identify any goodwill or intangible assets that have a carrying value that is in excess of its recoverable amount. Determining the recoverability of goodwill and the intangible assets requires judgement in both the methodology applied and the key variables within that methodology. Where it is determined that an asset is impaired, the carrying value of the asset will be reduced to its recoverable amount with the difference recorded as an impairment charge in the income statement. In accordance with IAS 36, the Group has tested goodwill for impairment at the reporting date. No goodwill impairment was deemed necessary as at 31 December 2021. For further details on the impairment review please refer to note 32.
Fixtures, fittings and equipment
Fixtures, fittings and equipment are stated at cost less accumulated depreciation and any impairment in value. Leasehold property comprises leasehold improvements including shopfitting and associated costs.
Depreciation
Depreciation is provided on all tangible non-current assets at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the balance sheet date, of each asset on a straight line basis over its expected useful life, as follows:
Leasehold property		- over the expected lease term
Fixtures, fittings and equipment		- 3 to 10 years
The carrying values of tangible non-current assets are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable.
The asset's residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end.
Assets Under Construction
Assets under construction comprise the cost of tangible fixed assets in respect of stores that have not yet opened and therefore no depreciation has yet been charged. Depreciation will be charged on the assets from the date that they are available for use.
Impairment
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the income statement under the expense category: Depreciation, amortisation and impairment.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Financial instruments
Financial instruments are measured initially at cost, which is the fair value of whatever was paid or received to acquire or incur them.
Financial assets
All of the Group's financial assets are held within a business model whose objective is to collect contractual cash flows which are solely payments of principals and interest and therefore classified as subsequently measured at amortised cost
Financial assets at amortised cost are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group's financial assets at amortised cost comprise trade and other receivables, loans to sub-franchisees and cash and cash equivalents in the balance sheet. Loans to sub-franchisees are provided at below market interest rates. The difference between the present value of loans recognised and the cash advanced has been capitalised as an intangible asset in recognition of the future value that will be generated via the royalty income and Commissary sales that will be generated. These assets are amortised over the life of a new franchise agreement of 10 years.
The Group recognises an allowance for expected credit losses ('ECLs') for all financial assets. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or as  financial liabilities measured at amortised cost. Financial liabilities at amortised cost comprise trade and other payables, loans and accruals.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less. For the purpose of the consolidated and company cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Store pre-opening costs
Operating costs incurred by stores prior to opening are written off to the income statement in the period in which they are incurred and disclosed separately on the face of the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Inventories comprise food and packaging goods for resale. The Group applies a first in first out basis of inventory valuation.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Foreign Currency Translation
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 year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
c) all resulting exchange differences are recognised within other comprehensive income as a separate component of equity
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders' equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Employee share incentive plans
The Group issues equity-settled share-based payments to certain employees (including Directors). These payments are measured at fair value at the date of grant by use of a Black-Scholes model. Vesting is dependent on performance conditions other than conditions linked to the price of the shares of DP Poland plc (market conditions). In valuing equity-settled transactions, no account is taken of these performance conditions. This fair value cost of equity-settled awards is recognised on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. No cost is recognised for awards that do not ultimately vest.
Leases
The Group as a lessee
At the balance sheet date, the Group leased hundred and twenty one stores, one office, two commissaries and a number of vehicles. Leases for land and buildings are normally for an initial term of 5 years with an option to renew thereafter. Lease payments are subject to regular rent reviews to reflect market rates. The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:  • Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;  • Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;  • The amount expected to be payable by the lessee under residual value guarantees;  • The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and  • Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated balance sheet. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. Extension and termination options In determining the lease liability, the Group considers the extension and termination options. For the majority of leases the Group 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. Critical judgements in determining the lease term Leases 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 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. An adjustment to the lease term is only made if the lease is reasonably certain to be extended or not terminated.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the consolidated balance sheet. The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the 'Property, Plant and Equipment' policy. Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in 'Other expenses' in profit or loss. As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient. For a contracts that contain a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
The Group as lessor
The Group enters into lease agreements as an intermediate lessor with respect to stores operated by sub-franchisees. Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The Group evaluates and classifies these subleases as either operating leases or finance leases. Where the sublease transfers substantially all of the risks and rewards arising from right-of-use asset from the head lease, the right-of-use asset from head lease is derecognised and a lease receivable equal to the net investment in the sublease is recognised.  Where the sublease does not transfer substantially all of the risks and rewards arising from right-of-use asset from the head lease, the sublease is classified as an operating lease and rent received is recognised in the income statement on a straight line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group's net investment outstanding in respect of the leases. When a contract includes lease and non-lease components, the Group applies IFRS 15 to allocate the consideration under the contract to each component.
Current tax
Current tax is the amount of income tax payable on the taxable profit for the period. Current tax assets and liabilities for the current and prior periods are measured at the amounts expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts with the exception of: - Where the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. - For taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures and where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred tax balances are not discounted.
Capital instruments
Ordinary shares are classified as equity instruments. Other instruments are classified as liabilities if they contain an obligation to transfer economic benefits and if not they are included in equity. The finance costs recognised in the Income Statement in respect of capital instruments other than equity shares are allocated to periods over the term of the instrument at a constant rate on the carrying amount applying the effective interest method.
Capital reserve - own shares
DP Poland plc shares which are held within the Company's employee benefit trust, for the purpose of providing share based incentives to Group employees are classified as shareholders' equity as 'Capital reserve - own shares' and are recognised at cost. No gain or loss is recognised in the income statement on the purchase or sale of such shares.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration net of returns and value-added taxes. The criteria for recognising revenues are set out in note 2.
Direct Costs
Direct costs comprises foods costs and direct store expenses.
Finance income
Revenue is recognised as interest accrues applying the effective interest method.
Going concern
The Directors must make an assessment as to whether the Group is a going concern. In forming their views, the Directors have prepared cash flow forecasts for a 12 month period following the date of signing the balance sheet. As part of the preparation of these forecasts, the Directors have estimated the likely outcome for the number of new stores opened. Before entering into a contract to acquire a new site, the Directors ensure that the Group has sufficient working capital available to allow the completion of the outlet. Based on these forecasts, the Directors have confirmed that there are sufficient cash reserves to fund the  business for the period under review. After reviewing these forecasts, consideration of the Group's cash resources and other appropriate enquiries, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements.
Accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and judgements. It also requires management to exercise judgement in the process of applying the Company's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group's determination of whether intangibles and investments in subsidiary undertaking are impaired requires an estimation of the value in use of the cash generating units to which the relevant asset or investment is allocated. This requires estimation of future cash flows and the selection of a suitable discount rate. The recoverable amount of the cash generating unit has been determined based on fair value calculated using discounted future cash flows, which are subject to significant estimates due to the growth phase of the business. Future cash flows are based on the Group's business plan. The calculation of the value in use is most sensitive to the following assumptions: store performance; discount rates; store openings in Poland; foreign exchange rates. The discount rate reflects management's estimate of the return on capital employed for the investment in Poland. The store openings are based on the current business model being used by management, which is progressing in line with expectations. The parent company's investment in DP Polska S.A. had a historical cost of £31.9m prior to the impairment review. The impairment test carried out showed that the investment was  impaired and the carrying value after impairment was £28.66m.  With effect from 8 January 2021, the Company became the legal parent of Dominium S.A.. As a result of the reverse acquisition the investment value was raised by the amount of £34,26m.The Group has considered its market capitalisation from April 2022 as part of the impairment review. The Group has determined that an impairment of £11.1m in the investment value should be recognised in the accounts of DP Poland plc. The Group's determination of the amortised cost of sub-franchisee loan receivables also requires an estimation of future cash flows and the selection of a appropriate market rate of interest. The calculation of the Group's total tax charge involves a degree of estimation and judgement in respect of the recoverability of tax losses. Further details of the treatment of deferred tax can be found in note 15.
In applying IFRS 16 'leases' the Group uses estimates and judgement in determining the term of the lease (including extensions), the incremental borrowing rate to be used and the classification of sub-leases between operating leases and finance leases.  Further details are shown in the Leases accounting policy above and in note 19. The Group has also determined a market rate for the loan note presented as borrowing in balance sheet using judgement. Further details are shown in note 24. Applying IFRS 3 for accounting of reverse acquisition also required Group's judgement. Further details are shown in note 18.
2.  REVENUE
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. All of the revenue is derived in Poland. Corporate store sales: Contracts with customers for the sale of products to end consumers include one performance obligation. The Group has concluded that revenue from the sale of products should be recognised at a point in time when control of the goods is transferred to the consumer, which is the point of delivery or collection. Sales are recorded approximately 30 minutes before delivery or collection. Revenue is measured at the menu price less any discounts offered. Royalties, franchise fees and sales to franchisees: Contracts with customers for the sale of products include one performance obligation, being the delivery of products to the end customer. The Group has concluded that revenue from the sale of products should be recognised at a point in time when control of the goods are transferred to the franchisee, generally on delivery. Revenue is recognised at the invoiced price less any estimated rebates. The performance obligation relating to royalties is the use of the Domino's brand. This represents a sales-based royalty with revenue recognised at the point the franchisee makes a sale to an end consumer. Revenue from franchisee fees is recognised when a franchisee opens a store for trading or on completion of sale of one or more stores to a third party, as this is the point at which all performance obligations have been satisfied. Rental income on leasehold property: Rental income arising from leasehold properties where the lease is an operating lease is recognised on a straight-line basis in accordance with the lease terms.  Rental payments are recognised over the period to which they relate. Under IFRS 16 'leases'  rents received under finance leases are treated as capital repayments and interest receipts and are excluded from revenues.
Core revenues are ongoing revenues including sales to the public from corporate stores, sales of materials and services to sub-franchisees, royalties received from sub-franchisees and rents received from sub-franchisees. Other revenues are non-recurring transactions such as the sale of stores, fittings and equipment to sub-franchisees. Revenue recognised in the income statement is analysed as follows:
Revenue is divided into 'core revenues' and 'other revenues' as follows:
					2021			2020
					£			£
Core revenue					29,782,191			13,982,764
Other revenue					83,998			-
					29,866,189			13,982,764
Revenue is further analysed as follows:
					2021			2020
					£			£
Corporate store sales					28,204,421			13,982,764
Fixtures and equipment sales to sub-franchisees					83,998			-
Royalties and other sales to sub-franchisees					1,331,355			-
Rental income on leasehold property					246,415			-
					29,866,189			13,982,764
3.  SEGMENTAL REPORTING
The Board monitors the performance of the corporate stores and the commissary operations separately and therefore those are considered to be the Group's two operating segments. Corporate store sales comprise sales to the public. Commissary operations comprise sales to sub-franchisees of food, services and fixtures and equipment. Commissary operations also include the receipt of royalty income from sub-franchisees. The Board monitors the performance of the two segments based on their contribution towards Group EBITDA - excluding non-cash items, non-recurring items and store pre-opening expenses. In accordance with IFRS 8,  the segmental analysis presented reflects the information used by the Board.  No separate balance sheets are prepared for the two operating segments and therefore no analysis of segment assets and liabilities is presented.
Operating Segment contribution
			2021	2021				2020
			£	£				£
			Corporate stores	Commissary				Corporate stores
Revenues from external customers			28,204,421	1,661,768				13,982,764
Direct Costs - corporate stores			(23,791,549)					(10,998,475)
Direct Costs - commissary (variable cost only)				(743,105)
Store EBITDA			4,412,872					2,984,289
Commissary gross profit				918,663
Total segment profit				5,331,535				2,984,289
Unallocated expenses				(4,194,260)				(2,314,333)
GROUP EBITDA - excluding non-cash items, non-recurring items and store pre-opening expenses				1,137,275				669,956
Commissary direct costs shown above do not include labour and occupancy costs. These costs are shared across both segments as the commissary supplies corporate stores as well as supplying sub-franchisees. Corporate store direct costs include all costs directly attributable to operating the stores. Store EBITDA represents corporate store sales less store food costs and direct store expenses.
4.  LOSS BEFORE TAXATION
This is stated after charging
					2021			2020
					£			£
Auditors and their associates' remuneration					80,407			12,609
					2,345			-
Directors' emoluments					188,521			-
Amortisation of intangible fixed assets					674,030			437,815
Depreciation of property, plant and equipment					2,027,915			684,964
and after crediting					-			-
Operating lease income from sub-franchisees					246,415			-
Foreign exchange gains /(losses)					(61,911)			(195,381)
5.  OTHER NON-CASH AND NON-RECURRING ITEMS
					2021			2020
					£			£
Acquisition - advisors and other expenses					(70,320)			-
Leasehold overtaken					122,905			-
IFRS 16 adjustment					220,014			294,419
Bonus received					252,004			-
Other non-cash and non-recurring items					(465,325)			185,482
					59,278			479,901
Non-recurring Items
Non-recurring items include items, which are not sufficiently large to be classified as exceptional, but in the opinion of the Directors, are not part of the underlying trading performance of the Group. Leasehold overtaken refers to take over of franchise assets as per signed agreement following the termination of the sub-franchise agreement and IFRS 16 adjustment refers to changes in lease agreement periods and discounts received for the Covid-19 lockdown periods. The other non-cash and non-recurring items position includes the amount of £280,918 of transformation cost.
6.  STAFF COSTS
Details of directors' remuneration, which is included in the amounts below, are given in the remuneration report.
					2021			2020
					£			£
Wages and salaries and directors' fees					2,359,144			1,558,449
Social security costs					500,177			296,105
Share based payments					51,301			-
					2,910,622			1,854,554
The average monthly number of employees during the year was as follows:
					2021			2020
					Number			Number
Operational					243			216
Administration					44			26
Total					287			242
The cost of employees on zero hours contract in stores amounted to 2021 £6,902,503 (2020: £2,030,904).
7.  FINANCE INCOME
					2021			2020
					£			£
Interest on short-term deposits					3,811			-
Unwinding of discount on loans to sub-franchisees					13,059			-
Finance income on sublease loans					26,131			-
Other finance income					1,112,805			4,017
					1,155,806			4,017
Other finance income comprises mainly of loans written off in Dominium S.A. as a result of the refinancing for the reverse acquisition.
8.  FINANCE COSTS
					2021			2020
					£			£
Interest expense on lease liabilities					742,862			536,563
Other interest					926,665			776,432
					1,669,527			1,312,995
9.  TAXATION
					2021			2020
					£			£
Current tax					-			-
Deferred tax expense relating to write down of deferred tax asset					58,983
Other taxes					-			-
Total tax charge in income statement					58,983			-
The tax on the Group's loss before tax differs from the theoretical amount that would arise using the tax rate applicable to profits of the consolidated entities as follows:
					2021			2020
					£			£
Loss before tax					(4,301,488)			(3,007,364)
Tax credit calculated at applicable rate of 19%					(817,283)			(571,399)
Income taxable but not recognised in financial statements					312,041			426,091
Income not subject to tax					(647,083)			(404,481)
Expenses not deductible for tax purposes					1,196,148			161,592
Deferred tax					58,983
Tax losses for which no deferred income tax asset was recognised					(43,823)			388,197
Total tax charge in income statement					58,983			-
The Directors have reviewed the tax rates applicable in the different tax jurisdictions in which the Group operates. They have concluded that a tax rate of 19% represents the overall tax rate applicable to the Group.
10.  LOSS ATTRIBUTABLE TO MEMBERS OF PARENT COMPANY
The loss relating to transactions in the financial statements of the parent company was £11,557,307 (2020: £3,007,364).
11.  LOSS PER SHARE
The loss per ordinary share has been calculated as follows:
			2021	2021	2020			2020
				£				£
			Weighted average number of shares	Profit / (loss) after tax	Weighted average number of shares			Profit / (loss) after tax
		Basic	578,123,216	(4,360,471)	283,766,661			(3,007,363)
		Diluted	578,123,216	(4,360,471)	283,766,661			(3,007,363)
The weighted average number of shares for the year excludes those shares in the Company held by the employee benefit trust. At 31st December 2021 the basic and diluted loss per share is the same, as the vesting of JOSS, SIP or share option awards would reduce the loss per share and is, therefore, anti-dilutive.
12.  INTANGIBLE ASSETS
			Franchise fees		Capitalised
			and intellectual	Software	loan			Total
			property rights		discount
Group			£	£	£			£
Cost:
At 31 December 2019			4,614,842	324,354	-			4,939,196
Foreign exchange movements			(49,462)	(3,477)	-			(52,939)
Additions			29,855	3,079	-			32,934
At 31 December 2020			4,595,235	323,956	-			4,919,191
Acquisition of business			883,853	85,957	59,854			1,029,664
Foreign exchange movements			(391,076)	(55,389)	(17,865)			(464,330)
Additions			149,125	208,004	21,512			378,640
Disposals			(42,717)		(89,294)			(132,011)
At 31 December 2021			5,194,420	562,528	(25,793)			5,731,155
Amortisation
At 31 December 2019			2,544,338	322,737	-			2,867,075
Foreign exchange movements			(33,244)	(3,502)	-			(36,746)
Amortisation charged for the year			434,693	3,122	-			437,815
At 31 December 2020			2,945,787	322,357	-			3,268,144
Foreign exchange movements			(250,900)	(61,675)	(11,468)			(324,043)
Amortisation charged for the year			524,397	138,097	11,536			674,030
Disposals			(15,139)	-	(79,285)			(94,423)
At 31 December 2021			3,204,145	398,779	(79,216)			3,523,708
Net book value:
At 31 December 2021			1,990,274	163,749	53,424			2,207,447
At 31 December 2020			1,649,448	1,599	-			1,651,047
Franchise fees consisting of the cost of purchasing the Master Franchise Agreement (MFA) from Domino's Pizza Overseas Franchising B.V. have been capitalised and are written off over the term of the MFA. The difference between the present value of loans to sub-franchisees recognised and the cash advanced has been capitalised as an intangible asset and are amortised over the life of a new franchise agreement of 10 years. The amortisation of intangible fixed assets is included within administrative expenses in the Income Statement. The Group has performed an annual impairment test for the franchise fees and loan discounts and the recoverable amount of the cash generating unit has been determined based on fair value calculated using discounted future cash flows based on the Group's business plan, and incorporating the Directors' estimated 11% discount rate, future store openings and the average Polish Zloty exchange rate for the year ended 31 December 2021. The fair value calculation indicates that no impairment is required. As at 31 December 2021, no reasonably anticipated change in the assumptions would give rise to a material impairment charge.
.
13.  PROPERTY, PLANT AND EQUIPMENT
				Fixtures	Assets
			Leasehold	fittings and	under
			property	equipment	construction			Total
Group			£	£	£			£
Cost:
At 31 December 2019			6,228,563	2,238,326	7,975			8,474,864
Foreign exchange movements			(66,760)	(23,991)	(85)			(90,836)
Additions			8,891	83,448	51,583			143,922
Disposals			(246,532)	(25,333)	-			(271,865)
Transfers			2,655	7,874	(40,384)			(29,855)
At 31 December 2020			5,926,817	2,280,324	19,089			8,226,230
Acquisition of business			3,634,600	2,124,650	19,658			5,778,908
Foreign exchange movements			(849,042)	(545,878)	(2,862)			(1,397,783)
Additions			766,548	392,046	392,169			1,550,762
Disposals			(781,849)	(222,194)	-			(1,004,043)
Transfers			27,912	380,569	(408,481)			0
At 31 December 2021			8,724,986	4,409,517	19,572			13,154,075
Depreciation:
At 31 December 2019			4,463,156	2,057,409	-			6,520,565
Foreign exchange movements			(52,910)	(23,755)	-			(76,665)
Depreciation charged for the year			535,418	149,546	-			684,964
Disposals			(166,303)	(25,722)	-			(192,025)
At 31 December 2020			4,779,361	2,157,478	-			6,936,839
Foreign exchange movements			(509,507)	(398,978)	-			(908,485)
Depreciation charged for the year			924,736	1,103,179	-			2,027,915
Impairment			-	(262,089)	-			(262,089)
Disposals			(590,478)	(184,724)	-			(775,202)
At 31 December 2021			4,604,112	2,414,866	-			7,018,978
Net book value:
At 31 December 2021			4,120,874	1,994,650	19,572			6,135,097
At 31 December 2020			1,147,456	122,845	19,089			1,289,390
14.  NON CURRENT ASSET INVESTMENTS
				Group				Company
				£				£
Investments in Group undertakings
At 31 December 2019				-				30,273,155
Investment in subsidiary company - shares subscribed				-				1,600,000
Investment in subsidiary company - capital contribution				-				62,477
Impairment charge				-				(3,275,632)
At 31 December 2020				-				28,660,000
Investment in subsidiary company - shares subscribed				-				34,241,330
Investment in subsidiary company - capital contribution				-				19,267
Impairment charge				-				(11,130,429)
At 31 December 2021				-				51,790,168
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid. The parent company's investment in DP Polska S.A. had a historical cost of £31.9m prior to the impairment review. The impairment test carried out showed that the investment was  impaired and the carrying value after impairment was £28.7m.  With effect from 8 January 2021, the Company became the legal parent of Dominium S.A.. As a result of the reverse acquisition the investment value was raised by the amount of £34.3m. The Group has determined that an impairment of £11.1m in the investment value should be recognised in the accounts of DP Poland plc. The impairment assessment brought the figure down to £51.8m and was arrived at by looking at the most recent share issue in November 2021 of 8p. The Company holds 20% or more of the share capital of the following companies, which are included in the consolidation:
Company	Nature of business		Location		Class			% holding
DP Polska S.A.	Operation of Pizza delivery restaurants		Poland		Ordinary			100
Dominium S.A.	Operation of Pizza delivery restaurants		Poland		Ordinary			100
The registered office of DP Polska S.A. and Dominium S.A. is: 30 Dabrowiecka Street, 03-932 Warsaw,  Poland.
The acquisition of Dominium S.A. was completed on 8th January 2021 - further details are given in note 18. Dominium's business is the operation of delivery and dine-in pizza restaurants.
15.  DEFERRED TAX
The Group has unused tax losses of £18,651,179 available for offset against future profits. Polish tax losses are only recognised for deferred tax purposes to the extent that they are expected to be used to reduce tax payable of future profits.  Under Polish law, losses can only be carried forward for five years and only 50% of the losses brought forward can be set off in any one year. Polish tax losses expire as follows: £3,891,430  in 2022; £3,186,939 in 2023;  £2,384,268 in 2024; £1,686,448  in 2025 and £697,874  in 2026. UK tax losses carried forward at the balance sheet date were £6,136,991.
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
Deferred tax liability
Deferred tax liability
Property, plant and equipment			(46,622)	(9,261)	-			-
Intangible assets			(167,175)	-	-			-
			(213,797)	(9,261)	-			-
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
Deferred tax asset
Deferred tax asset
Short term timing differences			-	30,645	-			-
			-	30,645	-			-
Movements in deferred tax
			Property, plant and equipment	Intangible assets	Short term timing differences			Total
			£	£	£			£
At 31 December 2020			(9,261)	-	30,645			21,384
Acquisition of a business			(164,319)	(12,018)	-			(176,337)
Credited to equity			-	-	-			-
Credited to profit and loss			(28,099)	-	(30,645)			(58,744)
At 31 December 2021			(201,679)	(12,018)	-			(213,697)
16.  TRADE AND OTHER RECEIVABLES
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
Current
Trade receivables			362,407	258,256	-			-
Trade receivables from subsidiaries			-	-	396,000			346,000
Other receivables			635,420	161,943	25,594			49,214
Prepayments and accrued income			221,620	90,208	-			76,978
Rent and supplier deposits				46,405	-			-
			1,219,447	556,812	421,594			472,192
Non-current
Other receivables			820,871	-	-			-
At 31 December			2,040,318	556,812	421,594			472,192
Other receivables includes  loans to sub-franchisees which are repayable over between three and seven years. Repayments may be made earlier in the event that sub-franchised stores achieve certain turnover targets earlier than expected. The loans are secured by a charge over certain assets of the sub-franchisees. Other receivables also includes Polish value added tax recoverable in future periods. No receivables are materially past due date. Other than amounts held by the Company, all trade and other receivables are in Polish Zloty.  Trade receivables are non - interest bearing and are generally on 30 - 60 days terms.
17.  INVENTORIES
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
Raw materials and consumables			667,898	193,660	-			-
At 31 December			667,898	193,660	-			-
The cost of inventories recognised as an expense and included in cost of sales amounted to £7,573,606 (2020: £3,363,802).
18.  REVERSE ACQUISITION
With effect from 8 January 2021, the Company became the legal parent of Dominium S.A.. The aggregate consideration paid by the legal acquirer was £23,871,998 satisfied by the issue of 283,766,661 new ordinary shares of the Company issued at 8p per ordinary share and £1,170,665 by way of a 1.3m EUR loan note issued in favour of Malaccan Holdings Ltd the former owner of Dominium S.A..
Under IFRS 3, due to the relative values of the companies, the transaction is treated as a reverse acquisition with Dominium S.A. as the accounting acquirer and the pre-acquisition DP Poland Group as the accounting acquiree. As a result of preparing these financial statements in accordance with IFRS 3 comparative data represents Dominium S.A. only. The loss of the acquiree since the acquisition date amounted to £1,747,861. Malaccan Holdings Ltd became the majority shareholder with approximately 52.8% of the share capital of the enlarged Group at the time of the transaction. Malaccan Holdings Ltd has subsequently reduced its holding to 45% of the issued share capital.
The Directors believe that the combination of the two businesses will place the Company within the top three pizza chains in Poland in terms of stores and restaurants. The acquisition has almost doubled the number of stores within the Company's portfolio and will provide a basis for further expansion and market penetration into new cities and towns. There are a number of cost savings and synergies which have arisen from the acquisition.
The fair value of the assets and liabilities acquired by the accounting acquirer are as follows:
					Note	8 January 2021	Fair value adjustment	Total
						£'000	£'000	£'000
Intangible assets						461,665	568,000	1,029,665
Property, plant and equipment						5,778,908	-	5,778,908
Leases - right of use assets						5,173,815	-	5,173,815
Inventories						441,669	-	441,669
Trade and other receivables						2,494,340	-	2,494,340
Cash and cash equivalents						1,336,256	-	1,336,256
Trade and other payables						(3,412,865)	-	(3,412,865)
Income tax payables						-	-	-
Borrowings						(92,000)	-	(92,000)
Lease liabilities						(6,312,464)	-	(6,312,464)
Deferred tax						-	(142,000)	(142,000)
Total identifiable net assets						5,869,324	426,000	6,295,324
					32
Goodwill on acquisition of the DP Poland Group								12,127,453
Consideration paid by the accounting acquirer						-	-	18,422,777
Acquisition expenses
The advisors' and other costs incurred by DP Poland plc (the legal acquirer) in acquiring Dominium S.A. amounted to £1,129,643 of which £1,085,573 was incurred during 2020.
Intangible assets
The intangible assets acquired by the accounting acquirer relate to: Franchise fees, intellectual property rights, software and the capitalised loan discount relating to sub-franchisee loans
Trade and other receivables
The Directors consider that the gross contractual amounts of trade receivables and loan receivables are not materially different to the fair values
Borrowings
As part of the reverse acquisition DP Poland plc (the legal acquirer) issued a €1.3million  loan note in favour of Malaccan Holdings Ltd the former owner of Dominium S.A.. In addition, outstanding debt of €6.2 million (approximately £5.6 million) that was previously due from Dominium to Malaccan Holdings under certain existing Shareholder Loans was converted into a further unsecured loan note of €6.2 million being issued to Malaccan Holdings on the same terms and in substitution for that outstanding debt. In aggregate, therefore, €7.5 million Loan Notes were issued by DP Poland plc and remain outstanding to Malaccan Holdings upon completion of the acquisition of Dominium S.A.. The Loan Notes are not convertible.
Goodwill
The goodwill recognised by the accounting acquirer is equal to the consideration (as determined under IFRS 3) which was paid by the accounting acquirer less the fair value of the assets and liabilities acquired with the accounting acquiree. The fair value adjustment amounted to £0.6 million and is presented in Intangible Assets as Master Franchise Agreement asset. The asset will be amortised over the franchise period. The goodwill recognised is made up by the expected synergies of the enlarged business and it is expected that the improved scale of the enlarged business will help the Company to achieve its objective of becoming a market leader in Poland. In accordance with IAS 36 the Group has performed impairment review of goodwill at the reporting period end. The review included discounted cash flow projections to determine the recoverability of goodwill and the intangible assets. We compared the carrying amount of the assets, inclusive of assigned goodwill, to its respective fair value. Significant assumptions inherent in the valuation methodologies for goodwill are employed and include, but are not limited to, prospective financial information, growth rates, terminal value and discount rates. Based on this quantitative test, we determined that the fair value of assets including goodwill exceeded its carrying amount. After completing our annual impairment reviews we concluded that goodwill was not impaired.
19.  LEASES - GROUP AS A LESSEE
Right of Use Assets
				Leasehold
				property				Total
Cost:				£				£
At 1 January 2020				6,539,393				6,539,393
Foreign exchange movements				(70,091)				(70,091)
Additions				905,282				905,282
Disposals				(192,346)				(192,346)
At 31 December 2020				7,182,238				7,182,238
Acquisition of business				5,173,815				5,173,815
Foreign exchange movements				(1,190,615)				(1,190,615)
Additions				2,811,295				2,811,295
Adjustment to right-of-use asset lease term				599,283				599,283
Disposal				(244,793)				(244,793)
At 31 December 2021				14,331,222				14,331,222
Accumulated depreciation
At 1 January 2020				1,656,318				1,656,318
Foreign exchange movements				(36,161)				(36,161)
Charge for the year				1,339,579				1,339,579
At 31 December 2020				2,959,736				2,959,736
Foreign exchange movements				(605,447)				(605,447)
Adjustment to right-of-use asset lease term				1,464,104				1,464,104
Disposal				(152,464)				(152,464)
Charge for the year				2,427,823				2,427,823
At 31 December 2021				6,093,751				6,093,751
Carrying amount
At 31 December 2021				8,237,471				8,237,471
At 31 December 2020				4,222,502				4,222,502
At the Balance sheet date, the Group's portfolio of leases consisted of 124 leases over 121 store premises, one office and two commissaries. Leases generally have an initial term of 10 years, with an option to extend for an additional period of between 5 and 10 years. Rents payable are generally reviewed at five year intervals. The adjustment to right-of-use asset lease term refers to change in presentation to gross amount and depreciation.
					2021			2020
Amounts recognised in profit and loss					£			£
Depreciation expense on right-of-use assets					2,427,823			1,339,579
Interest expense on lease liabilities					742,863			536,563
					2021			2020
					£			£
The total cash outflow for leases amounted to					3,120,050			1,627,884
20.  LEASE LIABILITIES
					2021			2020
					£			£
Total lease liabilities					9,683,237			4,829,431
Analysed as:
Non-current					7,027,146			3,313,908
Current					2,656,091			1,515,523
					2021			2020
Maturity analysis					£			£
Within one year					2,656,091			1,515,523
1 - 2 years					2,310,187			1,040,855
2 - 3 years					1,787,291			941,882
3 - 4 years					1,506,870			507,577
4 - 5 years					1,061,573			567,515
5 - 6 years					259,627			143,618
Onwards					101,599			91,727
It is the Group's policy to lease certain of its fixtures and equipment under leases. The average lease term is 10 years. For the year ended 31 December 2021, the average effective borrowing rate was 7.72 per cent. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. All lease obligations are denominated in Polish Zloty, Euros or US Dollars The fair value of the Group's lease obligations as at 31 December 2021 is estimated to be £9,683,237 using 7.72%  discount rate. This is based on a the rate for Polish Government bonds with a similar maturity to the lease terms and adding a credit margin that reflects the secured nature of the lease obligation. The Group's obligations under leases are secured by the lessors' rights over the leased assets.
21.  EQUITY
"Called up share capital" represents the nominal value of equity shares issued.
"Share premium account" represents the premium paid on the Company's 0.5p Ordinary shares.
"Capital reserve - own shares" represents the cost of shares repurchased and held in the employee benefit trust (EBT).
"Retained earnings" represents retained losses of the Group.
"Merger relief reserve" represents the excess of the value of the consideration shares issued to the shareholders upon the reverse takeover over the fair value of the assets acquired.
"Reverse Takeover reserve" represents the accounting adjustments required to reflect the reverse takeover upon consolidation.
"Currency translation reserve" represents exchange differences arising from the translation of the financial statements of the Group's foreign subsidiaries.
22.  CASH AND CASH EQUIVALENTS
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
Cash at bank and in hand			2,701,646	34,651	302,509			1,007,647
At 31 December			2,701,646	34,651	302,509			1,007,647
23.  TRADE AND OTHER PAYABLES
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
Current
Trade payables			3,248,333	1,821,157	54,669			361,086
Other payables			546,734	612,799	6,667			5,603
Accrued expenses			1,188,598	950,352	69,333			535,897
At 31 December			4,983,665	3,384,308	130,669			902,586
24.  BORROWINGS
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
Current interest bearing borrowings
Finance lease liabilities			11,068	-	-			-
At 31 December			11,068	-	-			-
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
Non current interest bearing loans and borrowings
Finance lease liabilities			11,133	-	-			-
Borrowing			5,829,461	5,966,881	5,829,461			-
At 31 December			5,840,594	5,966,881	5,829,461			-
Finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. As part of the reverse acquisition DP Poland plc (the legal acquirer) issued a €1.3million  loan note in favour of Malaccan Holdings Ltd the former owner of Dominium S.A.. In addition, outstanding debt of €6.2 million (approximately £5.6 million) that was previously due from Dominium to Malaccan Holdings under certain existing Shareholder Loans was converted into a further unsecured loan note of €6.2 million being issued to Malaccan Holdings on the same terms and in substitution for that outstanding debt. In aggregate, therefore, €7.5 million Loan Notes were issued by DP Poland plc and remain outstanding to Malaccan Holdings upon completion of the acquisition of Dominium S.A.. The loans are repayable in 2024, is unsecured with 3% interest payable and have been discounted to a market rate of 8% in accordance with IAS 39.
Gross finance lease liabilities - minimum lease payments:
			Group	Group	Company			Company
			2021	2020	2021			2020
			£	£	£			£
No later than 1 year			11,068	-	-			-
Later than 1 year and no later than 5 years			11,133	-	-			-
Later than 5 years			-	-	-			-
Future finance charges on finance leases					-			-
					-			-
Present value of finance lease liabilities			22,201	-	-			-
25.  ANALYSIS OF MOVEMENTS IN NET FUNDS
			01 January	Acquisition	Cash	Non	Foreign	31 December
			2020		flows	cash	exchange	2020
						movements	movements
			£	£	£	£	£	£
Cash and cash equivalents			218,219	-	(186,125)	-	2,557	34,651
Borrowings			(5,042,710)	-	(234,725)	(635,397)	(54,049)	(5,966,881)
Lease liabilities - current			(1,380,043)	-	53,618	(174,306)	(14,792)	(1,515,523)
Lease liabilities - non-current			(3,812,181)	-	1,361,360	(822,227)	(40,860)	(3,313,908)
Net debt			(10,016,715)	-	994,128	(1,631,930)	(107,144)	(10,761,661)
			01 January	Acquisition	Cash	Non	Foreign	31 December
			2021		flows	cash	exchange	2021
						movements	movements
			£	£	£	£	£	£
Cash and cash equivalents			34,651	1,336,256	1,330,739	-	-	2,701,646
Borrowings: finance leases - current			-	(55,740)	44,672	-	-	(11,068)
Borrowings: finance leases  - non-current			-	(36,185)	25,052	-	-	(11,133)
Borrowings			(5,966,881)	(1,107,409)		834,925	409,904	(5,829,461)
Lease liabilities - current			(1,515,523)	(971,592)	228,351	(397,327)	-	(2,656,091)
Lease liabilities - non-current			(3,313,908)	(5,340,872)	3,176,781	(1,549,147)	-	(7,027,146)
Net debt			(10,761,661)	(6,175,542)	4,805,595	(1,111,549)	409,904	(12,833,253)
26.  FINANCIAL INSTRUMENTS
Categories of financial instruments
			2021	2021	2021	2020		2020
			Financial assets at amortised cost	Financial liabilities at amortised cost	Financial liabilities at fair value	Financial assets at amortised cost		Financial liabilities at amortised cost
			£	£	£	£		£
GROUP
Financial Assets
Cash at bank			2,701,646			34,651
Trade receivables			362,407			258,256
Other receivables - current			635,420			161,943
Other receivables - non current			463,800			-
Sublease receivables			-			-
Total			4,163,273			454,850
Financial Liabilities
Trade payables				(3,248,333)				(1,821,157)
Borrowing				(5,829,461)				-
Finance leases - current				(11,068)				-
Finance leases - non current				(11,133)				-
Other liabilities - current				(546,734)				(612,799)
Lease liabilities - current				(2,656,091)				(1,515,523)
Lease liabilities - non current				(7,027,146)				(3,313,908)
Accruals - current				(1,188,598)				(950,352)
Total				(20,518,564)				(8,213,739)
Net				(16,355,291)				(7,758,889)
			2021	2021	2020			2020
			Financial assets at amortised cost	Financial liabilities at amortised cost	Financial assets at amortised cost			Financial liabilities at amortised cost
			£	£	£			£
COMPANY
Financial Assets
Cash at bank			302,509		1,007,647
Trade receivables			396,000		346,000
Other receivables			25,894		49,214
Total			724,403		1,402,861
Financial Liabilities
Trade payables				(54,669)				(361,086)
Other liabilities - current				-				(5,187)
Accruals				(69,333)				(535,897)
Total				(124,002)				(902,170)
Net			600,401		500,691
The fair value of the Group's financial assets and liabilities is not considered to be materially different from the carrying amount as set out above. No financial assets are significantly past due or impaired.
Maturity of the Group's financial liabilities
	2021	2021	2021	2021	2020	2020	2020	2020
	Finance leases	Trade and other payables	Borrowings	Total	Finance leases	Trade and other payables	Borrowings	Total
	£	£	£	£	£	£	£	£
Due within one year	11,068	4,983,665	-	4,994,733	-	3,384,308	-	3,384,308
Due within two to five years	11,133	-	5,829,461	5,840,594	-	-	5,966,881	5,966,881
Due after five years	-	-	-	-	-	-	-	-
	22,201	4,983,665	5,829,461	10,835,327	-	3,384,308	5,966,881	9,351,189
Capital Risk Management
The Group aims to manage its overall capital so as to ensure that companies within the Group continue to operate as going concerns, whilst maintaining an optimal capital structure to reduce the cost of capital.
The Group's capital structure represents the equity attributable to shareholders of the company together with borrowings and cash and cash equivalents.
Currency Risk
The foreign currency risk stems from the Group's foreign subsidiary which trades in Poland and whose revenues and expenses are mainly denominated in local currencies. Additionally, some Group transactions are also denominated in US Dollar and Euro currencies. The Group is therefore subject to foreign currency risk due to exchange rate movements that will affect the Group's operating activities and the Group's net investment in its foreign subsidiary. In each case where revenues of the Group are in a foreign currency, there is a material match between the currency of each operating company's revenue stream, primary assets, debt and debt servicing (if applicable).
The carrying amount in Sterling, of the Group's foreign currency denominated monetary assets and liabilities at the reporting dates is as follows:
					2021			2020
Assets					£			£
Polish Zlotys					4,092,403			1,422,838
Liabilities
Polish Zlotys					15,572,709			9,223,592
Euro					5,840,594			5,966,881
Sensitivity analysis
The potential impact on Group net loss and equity reserves from a 20% weakening of the Polish Zloty against sterling affecting the reported value of financial assets and liabilities would be an increased net loss and reduction in Group reserves of £2,265,973. A depreciation of 20% has been selected for the analysis as an illustration on the basis that it is a reasonable estimate of a likely market fluctuation. An appreciation of 20% against Sterling would produce an equal and opposite effect.
Interest Rate Risk
Interest rate risk arises on the Group's cash and cash equivalents.  All of the Group's cash and cash equivalents earn interest at variable rates.
Sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest on the financial instrument balances at the reporting date and the stipulated change taking place at the beginning of the financial period and held constant throughout the reporting period. At the reporting date, if interest rates had been 1% higher and all other variables were held constant, the effect on the Group's net result and equity reserves would have been an increase of £27,016. If exchange rates had been changed by 1% and all other variables were held constant, the effect on the Group's financial result  would have been an amount of £10,0640.
Credit Risk
Exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date, namely cash and cash equivalents, trade and other receivables and loans to subfranchisees. The Group manages its exposure to this risk by applying Board-approved limits to the amount of credit exposure to any one counterparty and employs minimum credit worthiness criteria as to the choice of counterparty, thereby ensuring that there are no significant concentrations of credit risk. All sub-franchisees who are provided with loans from the Group have been through the franchisee selection process, which is considered to be sufficiently robust to ensure an appropriate credit verification procedure. The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
Impairment of financial assets
The Group recognises an allowance for expected credit losses ('ECLs') for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs and recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision procedure that is based on the percentage cost if insuring its receivables against loss from default. Historic credit loss experience, adjusted for forward-looking factors specific to the debtors, the economic environment and relevant security and guarantees from sub-franchisees are also taken into account. The movement in the allowance for doubtful debts during the year is as follows:
					2021			2020
					£			£
Balance at 01 January					-			-
Acquisition of business					934,132			-
Impairment loss made during the year					222,528			-
Reversal of previously recognised impairment loss					(670,744)			-
Balance at 31 December					485,916			-
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Surplus funds are invested on a short term basis at money market rates and therefore such funds are available at short notice.
27.  SHARE CAPITAL
					2021			2020
					£			£
Called up, allotted and fully paid:
254,108,324 (2020: 254,108,324)		Ordinary shares of 0.5 pence each			3,097,933			1,270,542
Movement in share capital during the period
				Nominal
			Number	value				Consideration
				£				£
At 31 December 2019			253,555,798	1,267,779				40,692,904
Management share awards 2020			413,295	2,067				2,067
Share options exercised 2020			139,231	696				696
At 31 December 2020			254,108,324	1,270,543				40,695,668
Placing January 2021			327,516,661	1,637,583				26,201,333
Placing November 2021			37,500,000	187,500				3,000,000
Share options exercised 2021			461,530	2,308				2,308
At 31 December 2021			619,586,515	3,097,934				69,899,308
The Company does not have an authorised share capital.
DP Poland Employee Benefit Trust ("EBT")
The trustee of the EBT holds 2,482,928 ordinary shares in the Company for the purposes of satisfying outstanding and potential awards under the Company's Joint Ownership Share Scheme, Share Option Scheme and the Share Incentive Plans. The historic cost of these shares was £51,565 with a net contribution of £6,115 made by the JOSS award holders to acquire their joint interests. The shares held by the EBT had a market value of £155,181 at 31 December 2021.
28.  SHARE BASED PAYMENTS
					Group			Group
					2021			2020
					£			£
Share based payments expense					51,301			-
The Company has provided four types of share-based incentive arrangements.
Type of arrangement			Vesting period		Vesting conditions
Joint Ownership Share Scheme			2.5 - 3.5 years		Achievement of store growth and financial targets
Employee Share Incentive Plan			2 years		Two years service
Non-Executive Directors' Share Incentive Plan			2 years		Two years service
Employee Share Option Plan			Variable*		Detailed individual
					performance targets
Long Term Incentive Option Plan			2.3 years		Detailed company performance targets
The Company established the Joint Ownership Share Scheme ("JOSS") and the Share Incentive Plans on 25 June 2010, the Employee Share Option Plan on 06 May 2011 and the Long Term Incentive Share Option Plan on 19th December 2014. The Group has calculated charges for the JOSS and share option awards  using a Black-Scholes model. Volatility and risk free rates have been calculated for each JOSS grant based on expected volatility over the vesting period and current risk free rates at the time of each award. Volatility assumptions are estimates of future volatility based on historic volatility and current market conditions .
Assumptions used in the valuation of share option awards were as follows:
Award date	Exercise price	Expected volatility	Risk free rate	Expected dividends	Option life in years			IFRS2 fair value per share option
11 January 2018	0.5 pence	50%	0.50%	-	3 Years			£0.4115
01 June 2018	0.5 pence	50%	0.50%	-	2 Years			£0.3331
11 October 2018	0.5 pence	50%	0.50%	-	3 Years			£0.3062
14 May 2019	0.5 pence	50%	0.50%	-	3 Years			£0.0865
The share based payments charge for the year by scheme was as follows:
					2021			2020
Share Incentive Plan					-			-
Other Share Options					51,301			-
Long Term Incentive Share Option Plan					-			-
					51,301			-
All of the above amounts related to equity-settled share based payment transactions.
Share scheme awards outstanding
Scheme and date of award	Hurdle or exercise  price	Outstanding  31.12.20 No.	Awarded in period No.	Exercised  in period No.	Lapsed  in period No.			Outstanding  31.12.21 No.
JOSS  25 June 2010	23.08 pence + 3% per annum	283,936	-	-	-			283,936
SIP  27 July 2010	n/a	100,000	-	-	-			100,000
SIP  30 May 2012	n/a	75,000	-	-	-			75,000
SIP  19 June 2013	n/a	279,221	-	-	-			279,221
SIP  18 June 2014	n/a	413,604	-	-	-			413,604
SIP  17 April 2015	n/a	486,486	-	-	-			486,486
SIP  03 May 2016	n/a	346,154	-	-	-			346,154
SIP 24 May 2017	n/a	191,490	-	-	-			191,490
SIP 24 May 2018	n/a	173,913	-	-	-			173,913
Share options 03 May 2016	0.5 pence	383,158	-	249,834	133,324			-
Share options 22 May 2017	0.5 pence	206,770	-	41,354	-			165,416
Share options 11 January 2018	0.5 pence	96,000	-	72,000	-			24,000
Share options 01 June 2018	0.5 pence	88,236	-	-	-			88,236
Share options 11 October 2018	0.5 pence	355,469	-	-	-			355,469
2020 performance bonus share awards	0.5 pence	-	82,959	82,959	-			-
The weighted average remaining contractual life of outstanding share options is 1.34 years (2020: 1.36 years). The number share options exercisable at 31 December 2021 was 633,122 with a weighted average exercise price of 0.5 pence (2020: 1,129,633 shares with a weighted average exercise price of 0.5 pence).
29.  CAPITAL COMMITMENTS
At 31 December 2021 there were no amounts contracted for but not provided in the financial statements (2020: £0) for the Group.
30.  RELATED PARTY TRANSACTIONS
During the period the group and company entered into transactions, in the ordinary course of business, with other related parties. The transactions with directors of the company are disclosed in the Directors' Remuneration Report. Transactions with key management personnel (comprising the Directors and key members of management in Poland) are disclosed below:
					Group			Group
					2021			2020
					£			£
Short-term employee benefits					271,005			91,865
Share-based payments					-			-
At 31 December					271,005			91,865
The Company made a charge of £50,000 to DP Polska S.A. for management services provided in 2021. The balance owed by DP Polska S.A. to DP Poland plc as at 31 December 2021 was £396,000 (2020: £346,000). The Company also has a borrowing from Malaccan Holdings Ltd. a significant shareholder which totalled £5,840,594 (2020:£5,966,881)
31.  EVENTS AFTER THE BALANCE SHEET DATE
Issue of ordinary shares
On 18 January 2022, 226,563 ordinary shares of 0.5 pence each in the capital of the Company were issued to satisfy the exercise of options granted to some employees of the Company.                                                                                      On 7 March 2022 Gerald Ford and Christopher Moore, previous Non-Executive Directors of the Company, were issued 187,500 and 375,000 ordinary shares of 0.5 pence each in the capital of the Company respectively.  On 29 March 2022, 82,959 ordinary shares of 0.5 pence each in the share capital of the Company were issued at a price of 7.25 pence to satisfy the payment of a bonus for the H2 2020 period, payable in shares, to a former employee. The number of ordinary shares in issue at the date of this report is 620,458,537 ordinary shares of 0.5 pence each.
The war in Ukraine started in February 2022 and as of the date of publishing this financial statement it has not impacted the profitability of the Group.
32.  GOODWILL
Cost								Group
								£
At 1 January 2020								2,881,283
Additions								-
At 31 December 2020								2,881,283
Additions								12,127,453
At 31 December 2021								15,008,736
Carrying amount								Group
								£
At 31 December 2021								15,008,736
The goodwill recognised by the accounting acquirer is equal to the consideration (as determined under IFRS 3) which was paid by the accounting acquirer less the fair value of the assets and liabilities acquired with the accounting acquiree. The fair value adjustment amounted to £0.6 million and is presented in Intangible Assets as Master Franchise Agreement asset. The asset will be amortised over the franchise period. The goodwill recognised is made up by the expected synergies of the enlarged business and it is expected that the improved scale of the enlarged business will help the Company to achieve its objective of becoming a market leader in Poland. In accordance with IAS 36 the Group has performed impairment review of goodwill at the reporting period end. The impairment test has been undertaken by assessment recoverable amount of the CGU  to which the goodwill has been allocated, against the carrying value of this CGU. The review included discounted cash flow projections to determine the recoverability of goodwill and the intangible assets. We compared the carrying amount of the assets, inclusive of assigned goodwill, to its respective fair value. Significant assumptions inherent in the valuation methodologies for goodwill are employed and include, but are not limited to, prospective financial information, growth rates, terminal value and discount rates. The discount rate is reviewed annually to take into account the current market assessment of the time value of money and the risks specific to the CGU and rates used by comparable companies. The discount rate used to calculate value-in-use is 8%. Costs are reviewed for inflation and other cost pressures. The long term growth rate used was 3%. Based on this quantitative test, we determined that the fair value of assets including goodwill exceeded its carrying amount. After completing our annual impairment reviews we concluded that goodwill was not impaired.
33.  VAT
Dominium is a party to a number of court and administrative proceedings, the subject of which is to determine the amount of VAT paid by the company for the period 2011-2016. The disputes relate to the rate at which VAT is applied on sales made by Dominium, which is something that is affecting a number of companies operating in the fast food sector in Poland (including DP Polska). Dominium were applying a lower (5 per cent.) rate of VAT on sales, whereas the tax authorities in Poland were of the opinion that a higher (8 per cent.) rate should have been applied instead. As a result, Dominium have retrospectively applied the higher (8 per cent.) rate for this period and have made additional VAT payments to cover the shortfall to the tax authorities in Poland. Accordingly, Dominium started to apply the higher 8 per cent. rate and have sought recovery of the additional amounts paid due to the application of the higher rate. Some of the proceedings that Dominium brought have been suspended due to certain questions affecting major food service operators in Poland, which have been resolved by the European Court of Justice in favour of food service operators. In other proceedings, applications for a suspension of payment of the VAT liability arising from the increased VAT rate have been filed due to these issues and these have been approved for suspension. The liabilities resulting from the decisions made to-date, totalling approximately PLN 7.0 million, have been paid by Dominium. The dispute has been resolved in favour of Dominium with reference to VAT for the year 2014 and Dominium is entitled to refund the VAT paid to Polish tax authorities in the amount of approximately PLN 2.0 million. The dispute is separated for all of the years mentioned above but Polish courts should follow the favourable decision given by Supreme Administrative Administrative Court for year 2014. Under the terms of the Acquisition Agreement, one half of any amounts that have been overpaid in respect of the application of the higher VAT rate and which may be refunded by the Polish tax authorities to Dominium shall be paid by the Group to Malaccan Holdings Ltd..