DP Poland (LSE:DPP) — HY Results

0:00 Hi, everybody. Afternoon and welcome apologies there. Good afternoon and welcome to the DP POLAND PLC Half Year Results Investor Presentation. For this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press that. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses, which is appropriate to do so. Before we begin, I would like to

0:31 submit the following poll. And I would now like to hand you over to CEO, Niels Gornall. Good afternoon to you. Thank you very much. Thanks, everybody. Thanks for your time. So today, I'll be presenting with my CFO, Edward over here. So my name is Niels Cornell. I've been in the Domino's game for for thirty years. I'm an Australian living in Poland. I've been the CEO for DPP since June or August 2022. I've been with Domino's my whole life. I started as a a 15 year old, and this is all I've ever done. So I come from Australia, I was a franchisee in Australia, and I moved to Croatia and bought the master franchise agreement for Domino's Pizza in Croatia, and my last adventure has been for Polish Domino's for the last two years.

1:24 We also have Edward, our CFO. Hello, everyone. Happy to be here with you. I joined Domino's Pizza Poland about two years ago in December 2022.

1:37 I hold a different position for the twenty years. There were financial, strategic, and management positions in in

1:46 Poland and also in the region. Right now, I'm happy to be with Domino's and ready to present some numbers. Thank you. Okay. So, look, it's it's been another big half for us, but, you know, sales are still going crazy. And, you know, we're really excited and proud to deliver our results today, and I think we've really set up the stage for the future with, you know, more profits, more stores, and more franchisees. It's taken us a couple of years to get the business to exactly where we like it to be, and now we're ready for growth in building stores and attracting franchise partners to our business. So today, we'll be going through and sharing a whole lot of things.

2:35 The big one is our sales momentum. So we've seen strong double digit like for like sales again this half. Our average weekly order count is exceeding expectations. We're in the third year of double digit growth, which we're extremely proud of. The momentum continues. So June was a record month for us, and we also announced in July and August we were again 20% like for like sales. Our EBITDA, it's definitely flowing through to the bottom line, we added another million pound to our bottom line, and what's really exciting to me is our franchisees profitability is 30% up this year on the first half of last year, and they're sitting on about 13% EBITDA for the h one twenty twenty four. Now when the franchisees are making money, this makes my job much easier.

3:30 Focus for for the rest of the year. Look, you know, we, you know, we've been very, very good in the last two years. I think since I've joined DPP, we've been very, very good at growing sales and growing customer accounts. And what we've been slow along is building the stores and selling the franchises.

3:47 And, you know, that was just evolution. We needed to get to where we are today to start going down that path. So in the second half of this year, we are opening stores, we'll be sharing that with you. We've opened six stores already in Q3, and we have nine stores under construction that will be opened by the end of this year. So that'll be 15 new locations for the second half of this year. So I think we're starting to prove that we can build these stores, I see no issues with repeating this next year, and hopefully we can, you know, build another 25, 30 organic stores. Transitioning to a franchise model, so that's also started as well, we have some news to share on that. The big one is that we've sold four corporate stores to a franchisee in Q3, and we have a few more to sell in q four and many more in the pipeline for the next few years.

4:42 Okay. So next page there. Okay. So group revenue, look, up a massive 26 for the first half year on year. So we're really pushing the sales, you know, 26% is a really big number, so we couldn't be prouder. Our a one months ago, we're growing at a big number. Eight twenty five for us is a big number, you know, but our short term goal has been to hit hit 900 in the year 2026. You know, at this pace, you know, we'll hit nine fifty this time next year. So, you know, it's going really well. I see a thousand on the horizon, and I really want to catch our creation market which is well above 1,200. So, you know, I think we've got lots more opportunity, and that's where we need to be. We need to be a thousand and then 1,200.

5:33 Our group EBITDA, Edward will share much more information about our EBITDA, but we're 95% up year on year, so the top end revenue is certainly flowing through to the bottom. Our balance sheet is looking much healthier, we've paid off more than half of our debt, so now we're below 4,000,000 debt to the company, that was thanks to the fundraise we did earlier this year, it was oversubscribed by double, so we decided to increase the raise by 4,000,000, and we paid that straight off our debt.

6:09 Referring to the revenue growth, 26% is a very good number, but the most important thing is the what are the growth rate? So when we look into like for likes, it's following the main pattern. We grew 22% up over the h one versus the last year. And 19% growth we grew 90% up in the volumes. That gives about 80% plus factor for the volume being responsible for the growth of the top line. And this is exactly what we wanted to achieve just to grow the base of our consumers and prepare for for the further expansion. What is also very important is the structure of the growth.

6:55 We see that the bulk channels delivery and non delivery channels are growing more or at the same pace. And majority of the of the sales for the delivery channel, a vast majority is coming from from the Internet and digital orders. That is also recognizable in the net promoter score that went up by 22% year on year, and altogether impacted the such a good results for the top line. On the cost side basis, we have two factors that's worth mentioning. The first one concerns the food cost, which started dropping about a year ago and have a massive positive impact on the on the structure of the p and l. The second factor concerns the labor costs. Poland and Trisha is still under the inflationary pressure in this area because of the minimal wage increase.

7:58 Just to mention, over the last four years, the minimum wage grew almost 100%. But even with those growth, we are able to keep the labor costs under control with different optimization activities around on the store level and also in the headquarters. All in all, it translates to the EBITDA growing a million up year on year. This is almost 100% improvement versus 2023. And what is even more important, the prior IFRS EBITDA is, for the first time in the history, positive for this company, and we reached o point 2,000,000 plus. Below EBITDA, there are no big changes, which we are also very happy of. And the the impact on the loss before EBITDA is more or less the same as for the

8:53 loss before taxation is more or less the same as for the EBITDA. We improved this line by more than a million, and we are negative only 0.5. Referring to the balance sheet, it's it's looking much better than a year ago mainly because of the funds raised, but there are also a couple of factors that are worth mentioning. The first one is the refund of the VAT. After the dispute with the tax authorities, we were able to regain the £1,500,000 of the VAT back to our company, and this value will be reused for the investments and further expansion. In the balance sheet, it is presented under the receivables because at that time, it wasn't paid out. The the payment took place in July.

9:49 On the passive side, the borrowings dropped from 7.1 to 3.1, and this is connected with the Malacan debt that was paid off more than a half. The maturity of the debt is June 25. And by by that time, definitely, there won't be a problem to to get rid of this debt. Company for now is not leveraged in any way. However, with this development of the company and improving, it helps of the p and l, we send return to the banks for the discussion about the commercial leveraging of our business. Thank you. Okay. So high volume mentality is definitely delivering our results. So we've moved the ball dramatically on our AWOP. That's our average weekly order counts in our stores.

10:43 Like I mentioned before, we've been growing at 19, you know, adding a 120,130 orders per week for every store in the country. So, you know, but we really feel that the runway is there for all. We want 1,200, and you can see by this graph, we are going to get there. The good news is at these levels, we're starting to be really profitable. So our franchisees are making 38% EBITDA at these levels, and in the corporate structure, we have stores matching our franchisees, we have stores doing better than our franchisees as well. But we have a bottom end of our corporate stores that we've identified that we need to improve the EBITDA to match our franchisees. So we feel that we can certainly bridge the gap profitability of doing our own stores and franchisee stores, so that's an exciting opportunity for us in the future.

11:38 Suppose I really wanted to point out this, you know, we're growing we're growing the sales with volume. So it's healthy growth Half one, like for like, 22.2% on our existing stores. There's some really big numbers. We're pushing through a lot of orders through our existing stores, and there's a lot more to come. And we're doing it with volume. So very, very healthy growth. Okay. So where are the sales coming from? Look. It's pretty obvious, but there's three ways to increase your sales. More customers, customers order more frequently, or the customer paying more for their for their pizzas. New customers. So you can see here this half, we are dragging in a lot of new customers. So on the left hand side, that's in thousand. So half one twenty twenty four, we added over a 100,000 new customers coming into the Domino's system in Poland.

12:34 Now the first half, we only opened up one store, so so this is all in our existing stores. So new customers coming into our existing stores, we're growing at 22% We're doing such a great job there. Now that we're building the new stores, we're going to be bringing new customers in into the Domino's system because we're opening up stores where we don't have an existing presence. So that's where a lot of our growth is coming from. Our brand is becoming stronger, and the customers are flowing in. Order frequency. So that started to pick up about six

13:06 months after I joined the company. So, you know, and I see that with, you know, we just got our operations right, you know, we've got our menu right where we changed our menu, our offerings, we changed the specs on some of our pizzas, and we started delivering our pizzas much faster. So, you know, we got our operations right. At the same time, our CFO joined us, so she was with our company for six months as well,

13:32 and, you know, it just took her that six months as well to learn how to speak to the customers in the pizza game. I think between Patricia and the great marketing team and our great operations team, know, that's when we saw the frequency starting to kick six months after we joined the company. Ticket value, you know, we haven't increased ticket value with inflation. You know, that's a fool's game. If we passed on all of the inflation that we saw in Poland, you know, we'll be doing $400 a week, and we'll be losing we'll in the red. So, you know, we decided as a company, we're gonna bank customers, and we're gonna grab market share. So that's what we did, and and we increased EBITDA with volume. So we're in a very, very good position now.

14:17 We couldn't be prouder, and I think our company's strategy really, really worked. Net Promoter Score. Look, I suppose this, you know, this graph really show show shows it all. The Polish team are doing a great job. You know, the brand has never been stronger in Poland. I know the marketing team do a lot of research, you know, for our brand within the system on what we need to do better,

14:42 and, you know, we've gone from a clear third and fourth to a clear second in all the research that we're doing. So and their promoter score is heading north just like this. You know, we're doing the basics right. You know, we're making a great pizza. We're delivering it fast. We're doing it with a smile, and we're backed up with great marketing. So not much more to talk about there, but you can see why our sales are increasing because we're just doing a better job, and the customers are really noticing it.

15:12 Better than me. Right? So when we talk about the drop of the volumes and the profitability, it it is strongly visible on the slide that volume drives the EBITDA. I think you see this slide, some of you, for the first time, but this is the first time in the in the history where we can show free periods next to each other. On the left hand side, you can see how was the structure of our stores with regard to the volume sample of all this they generated. And two years ago, just one quarter of

15:44 the stores were generating more than $750. Right now, this is close to two third of the of the stores doing that number. And it translates directly to the profitability of the stores. One quarter of our store network was profitable in 2022 for h one. And this year, we can say that there's more than a half and 85% almost being breakeven plus. So adding

16:11 year on year about 120,130 orders on average to every week and every store gives us a move up on the b d a by about three three percentage points. If we keep this trend, the the forecast for the next year is very positive.

16:33 Going further, this is a b d a by Sol, the the the corporate source in Poland. And here, you have a different perspective of what's happening in Poland in the thirty months period. When we compare h ones for the different years, you can see that 2022 was a a massively loss making period for our company. Last year, after the introduction of the high volume mentality and a big work done on the

17:04 consumer awareness and brand awareness and in in standardization of the consumers for the brand. We moved to the breakeven around major. And from that moment onwards, we are positive on the the EBITDA. The whole h one for 2024 is positive EBITDA. The trajectory, the trend is still positive, and we expect it to continue.

17:33 Thank you. Okay. So, this is the Polish estate over time. A little frustrating, that we've been going backwards. You know, it's really frustrating to sit here and see less stores in the Polish market than when I started two years ago. But the facts are, you know, we had a dozen or so stores, a dozen or more stores that, you know, we didn't feel had the opportunity for a future. So, you know, we you know, if it was inside of a shopping center and we had a store on the outside, we simply cut our losses and shut the store and moved on. If we didn't have one on the outside, we took our time to find the right location, to keep the customers that we had, and move the shop outside the shopping center. So it's we just need to move on. You know? It's frustrating that we had to close the stores, but we're really happy with the with the store locations that we have now.

18:23 And, you know, I mean, we're we're doing 25% more volume out of less stores. So I think what we did was the right decision. Very frustrating, but it is what it is, and I think sometimes you need to take a few steps backwards to move forward. So now we can simply get on and get to 200 stores. You can see here this is the big blue graph bar, and this is what we need more of. This is what you'll see over the next few years. So I've repeated it again, but I'll say it again. We have opened six stores in q three. We had nine being opened for the remainder of the year. It'll be 15 for the half. So I think we've I think the the proof is in the pudding, and I and I believe we can we can open up lots of stores organically over the next few years.

19:09 Franchisee partners. Okay. So look, we're just getting started with this. Know, until we had the store profitability, you know, it was a pipe dream trying to sell franchises to people, and it wasn't a good investment. You know? Now we're down to under a three year payback ROI on buying a Domino's store in Poland. So, you know, it makes my job easy when our franchisees want to expand. We have two franchisees that are nearing the end of their debt, they're seeing that the ROI is under three, and they're building new stores. So it certainly makes my job much easier. We've put a new head of franchising, he started with the July 1, he comes with a wealth of experience, he's also on the share option plan just like Edward and I, so he's highly incentivized, has got lots of goals, lots of big goals, lots of good ideas. So I'm really looking forward to seeing the franchisees that he can bring to Domino's in Poland.

20:10 So far, we've sold four corporate stores in Q3, and we have three more to sell before the end of the year, and then next year we'll continue through selling our corporate stores down and attracting new franchise partners to Donnoy's and POLAND. In Croatia, we're excited to announce that we have our first franchisee building the store. His goal is to get that opened before Christmas, so really good to see the confidence in the Croatian market and the expansion in Croatia. And the last point in this slide is the, you know, the strong profitability, 13% up there, three percentage points up on the first half of last year. This is really exciting to see, and I can't wait to see what sort of profits these guys can produce by the end of the year.

20:59 Okay. Store number of potentials. So this is the current status of of us in Poland. So this is how many Domino's stores per million population. So we'd like to put UK and Australia up there. This is who we all aspire to and who we want our markets to be like.

21:18 So you can see there, Poland today, we're sitting at three stores for every million people. You know, Poland's a market of 36,000 plus million people, the opportunity is massive. Our goal, our short term goal is 200 stores, you know, that only puts us just over five stores per million people. If we can hit the European average, the European average is 11.2 stores per million people. If we can just hit the the European average, we'll be at 400 stores.

21:50 I've been sitting here for the last two years saying that the Polish market should have 500 plus stores, and I think you can see it here. With Warsaw in there, I know it's I know it's a bit tricky sort of, you know, putting a city versus a country, but we really just wanted to show that it is possible in Poland. They do eat pizza just like everybody else. In Warsaw, we are a saturation. We have a lot of stores in Warsaw. We beat all of our competition in Warsaw, and and and we're sort of matching up with The UK numbers. So, you know, this shows what's possible. Okay. Croatia. Okay. So in Croatia, like for like system sales are positive at 6.1. So we had Pizza Hut enter the market in December last year, and they entered SaigRev Zagreb. Is where all of our like for like stores are, and we're still tracking up 6%. So I think it's a really good result, and we're pushing for more. It wasn't slowing us down, but we had to be cautious. So I think we've come out of that

22:52 looking like champions in the market, and we're more excited than ever to build more stores. Not too much to say on this, we have five stores currently. We're in the process of building two stores. We hope to get them both open by the end of the year. That will get us to seven, and the target for next year is to get to 10. Okay, our targets. So this is our targets for 2026 and '27. So, know, we're, you know, this is, you know, growing far faster than we expected. We changed our short term goal to 940 by 2026. I think it will hit that, you know, hopefully sometime next year. Let's see. But like I said, you know, I rarely see see us hitting a thousand, and then I really want us to be to be matching the creation market at 1,200 plus.

23:46 Number of stores. So I see a clear path to 200. Yes. Without the m and a, it's gonna be hard to grow at 25% a year and get to 200 stores by the end of twenty twenty six. But we are in the market. We are looking, but we are building organic, and we will get to organic sometime. If we find no m and a, we'll be there in 2027 at some time some stage just building organic. So but there's no issues that there. I think we're proof that we can build the stores. We've got plenty of opportunity all over the country. We're finding it very easy to get into leases and build stores. So, again, watch this space and we'll be excited to present our store openings.

24:32 Franchise share, you know, I suppose what's really encouraging there is, you know, we've got a really good team in place, we've got two fantastic guys that are driving this, we've got lots of great ideas and lots of things to push. So I think that's the most encouraging sign on the franchisees. The franchisee evident is also very encouraging, and the fact that we're starting to sell down our stores now, and that one particular franchisee is doing really well since since he's bought our stores. So I think everything's going to plan, our targets are going to plan, and, yeah, we couldn't be happier. So in summary, you know, strong financial outcome. You know, our top end sales are growing fast, and it is flowing down to the bottom to the bottom line. We want it more, just give us time.

25:21 Current growth in customer accounts is positioning our stores for future growth. You know, we're now at a level where we can make good money out of our stores. Two years ago, it was tough. You know? And now we're we're we're at a very, very nice level, and we're just getting started. We want to hold uphold the high and all mentality. You know, we don't want our our growth to slow down. I would love to sit here today and say we're gonna grow it another 22%. Who knows? But we're pushing for it. We wanna preserve our like for likes, and we remain with our high volume mentality. Core store profitability is rising, but we want more. You know? We want to bridge the gap between our franchisees, so I think there's some big opportunities there. We are actively recruiting new franchisees from the Domino's network and from external sources, and we've got a dedicated team, incentivized, put in place driving this.

26:18 We're committed to rapidly increasing our store counts, the goal is 200 stores in the next two or three years, and H2 store openings are just the beginning, know, have a strong pipeline of planned openings set for 2025, and store openings to date have been going great, so we couldn't be happier. Thank you very much for your time today. Thanks for listening, and, I'm sure we'll be speaking soon. Neil, Edward, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via investor dashboard.

27:04 I'm Niels Edward. As you can see, we have received a number of questions throughout today's presentation. And Alex, if I may now hand back to you to chair the q and a and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you at the end. Thank you. The first question that we've got is on, franchisees. What does it cost a first time franchisee to buy a Domino's franchise in Poland? Is there an upfront fee plus cost of buying an existing store, or do or do they just have to buy the store from you? And will you sell franchise areas to new franchisees? It's only, I suppose. Do want So, yeah, it's not a problem. Yeah. So indeed, we sell the stores to the new franchisees. We guarantee some areas where the future franchisee will operate.

27:53 For specific quotes, it's difficult to talk with this audience. If you're interested in some more detailed discussions, we you feel invited to to some direct one to one discussions or or or sessions on that. Definitely, we are committed to grow our network in franchise world, and we are ready to to discuss case by case specific solutions. Yes. And there was plenty of chance to choose from. So absolutely. Right. Thank you. The the second question also on franchisees. Can you share indicative terms of store sales to franchisees? And is this a source of capital inflow for DPP? Sorry.

28:40 Can you ask that again? Do do we I think they're asking how much how much are you selling the the the stores to franchisees for? Look. It it it just depends. It needs to be it needs to be an hour a return on investment. So, you know, typically, businesses are selling for for three times ROI. You know, the more demands in in a in a network, the more we can sell. So it real it really depends. At the moment, it would be three. In the future, we'd like to sell them for more. Three MBDA. Three times MBDA. Yeah. Correct. Cool. Again, on franchisees, can you give some detail on the makeup of the pipeline of franchisees? Have they run pizza outlets before or worked in franchise businesses?

29:27 Okay. Yes. So so the pipeline of franchisees is all from within the business. So from within our business or from within the business outside of Poland. So all we've done is experience. You know, we are yet to go. I know Edward's sitting on a franchise panel in two weeks' time. We've got plans for franchise expos for the remainder of the year, but, no, we we are still yet to be advertising externally. Okay. Thank you. Next question. How many stores are still not profitable? I think I put answer that one. You can probably repeat. That that goes from one of the slides. About 70% of the store network is still unprofitable, but there is one important remark to to be added to this statement.

30:15 Namely, a year ago, we had in our portfolio stores that were unprofitable and had no chance to be profitable in the future, and those stores were dedicated for the closure. Now we have some stores that tactically, for the midterm, we keep them in our portfolio even as unprofitable because they are located in the cities or in the regions that are not saturated with the number of the stores. A good example is a city in the Western part of Poland, which is Poznan. It has about 600,000 citizens there, and we are present there only with two stores. So basing on the numbers that Niels showed, the average per 1,000,000 citizens and so on, We could easily be there with ten, twelve stores.

31:06 So such regions, even if the specifics are isn't profitable, those stores are kept because in the near future, let's say, one to two years, we want to saturate such a region with additional stores. And as a network, the profitability of every single store will grow. We have a proof of that in other cities in Poland. Thank you. The 13% EBITDA July year to date, is that pre IFRS store margins for franchisees? And does this does this also include royalty franchisees paid to DP POLAND? Yes. Yeah. Thank you. Yeah. That's that's the cost after It's EBITDA. It's EBITDA.

31:52 Yes. After all, expenses, royalties Yeah. Food calls, ordering online, all this stuff. Okay. Next question. I I think they mean to say, if this level of AWOC is maintained, what is expected payback on the stores being opened? So, look, looking at the moments, you know, going on the on on the franchisee profitability, it is under three years. So going on the average core store profitability is past three years. So it's it it it's really it's really hard to say. But, you know, the stores that we're opening up are opening up with far with pretty good sales. So, you know I would say it's like whenever we decide to open the store, it goes through a specific funeral to decide which one should be open. And one of the elements of the analysis, of course, the financial forecasts.

32:47 We will not take a decision on the stores with the payback longer than four to five years, and this is definitely no go for us because we do not want to lose our money. Most of the analyzers that we are planning right now are between three point five to four point five years as a payback period. And we accept that because we believe that with the ramp up period of specific store and growing volumes for the specific period and growing saturation of the the Polish territory, those stores should pay back quicker than the analysis shown. Next question here. Has the product innovation played a role in your sales performance, or will that come at a later stage as you finish fixing the basics?

33:38 Yeah. Look. We've used that tool the whole way along. So, you know, just like we do, you need to have new news. You need to have news for the for the marketing team team to to yell and scream. You need new products for existing customers to come back. So, you know, we we we just called McDonald's. They bring out new products that have ins and outs, new products all the time. We do exactly the same. So, you know, it's not so it it's not exactly because of it's not that strong all ourselves. It's it's one of many things that we do, and we've been doing it for the last two years, we plan to do it for the for the future ahead. Absolutely. It's a big part of our business. Can Polish customers track delivery drivers on their way to delivering the pizza? And in order to reach a twenty two minute delivery target, do you need to split stores?

34:28 So look. No. We do not have GPS, so that's one area we're falling behind the aggregators. Let's call that an opportunity. So, no, at the moment, we do not track from we we track the whole process so the customer can see the whole process in the store because we're all automated in the store. So the customer knows when we're making the pizza, when it's going into the oven, the customer knows when it's leaving, when it's ready for carryout. They also know when it's leaving for delivery. We also send a little text saying the driver is leaving. If the order is ready to pick up, we send them an SMS saying the order is ready to pick up. We are not tracking from the from the door to the customer's from the Domino's door to the customer's door, but it's a project we're working on. So we'll be there in the future. Thank you. Next question here. How are you finding the property market in Poland? Is it relatively easy to find the store sites?

35:20 And how particular demanding are potential sub franchisees about which stores they can or can't buy? Yes. Real estate is is a pleasure to work with in Poland. You know, there seems to be four or five players that are growing. We all seem to be going into the same retail parks, and it it it's it's just a symbol. It's working really well for the retail parks because we can sign up early. The five big brands get the good positions, helps them sell the rest of the leases. So we're finding it's very, very easy. In Poland, they seem to build the perfect sizes that we need. So getting the leases at the right price at this stage is proving proving well.

36:08 Then there was a second part of the question concerning how close we are in the process of the decision, which location to offer or not. You know, our goal, in general, is to make the franchisee to some extent happy so that we are happy. Yes. If the franchisee entering a new locations causes losses for himself, very quickly, it will become losses for us. So the the strategy is that whatever the location is chosen for the openings, we want also our field force, the operational managers, to look at this location because most of the time, they know the neighborhood very well. And we also go through the financial calculations just to benchmark to other stores that we already operating just to to to to find out what's the probability of the success.

37:03 And we will not be stopping the franchisees to open the new stores, but probably we will invite all of them to go through this process just to secure their packets and our packets in the future. Yes. Any franchise store lease needs to be approved by by by the master franchisee. Thank you. I think you answered this question in response to an earlier question, but I'm gonna ask it again so that you can make this clear. Can you make all of your current stores profitable? Yes. I I will look on this point a bit differently. If some of the store will not be profitable in long term, we will close it. Thank you. Next question. How long would you let a nonprofitable store run before you decide to close it or relocate it? Would you help the franchisee to choose the relocation site?

37:55 Look. It it it depends on the reason. So the stores that we've shut will because they are in shopping centers and malls, the the rents are too high and most of the business was a dine in business. And, you know, we're a business. So when you're in a shopping center and it takes the the port delivery driver four or five minutes to get to his scooter, you know, that's that's four or five minutes that the pizza's gonna be cold. I mean, we're on average seven minutes to the consumer. If you add five minutes running around the shopping center going up and down lifts trying to find a car park, you know, it's now a twelve minute old pizza. So it just doesn't suit our it just doesn't suit our business. The stores that we've got left, it's a volume issue. And like Edward said, it's because we don't have the presence in that in in in that town. So how long would leave it? It depends on the scenario.

38:43 Thank you. The initial term of the master franchise agreement terminates next year, being fifteen years since signing. Is DPP in discussions to extend for ten years as per the initial agreement? Yes. Yes. We are. Yeah. And there there will be no hiccups with that. We're one of the fastest growing countries in the world, and now we've got store openings in in this half. Yeah. The the the master franchisee in America is very, very pleased with us, and, I'll be delighted to resign. Going back to franchisees, can you explain what ongoing fees a franchisee could pay the franchisor in addition to the royalty fee, e g advertising and training fees?

39:28 And if the franchisee signed up to all the options, what proportion of the store's revenue would the franchisee pay? Look. I don't you know, we're not gonna give out the exact percentages on on on this forum today, but, you know, we we have several there is several face that the franchisee faces that have royalties, and we have had funds. So all of the stores, including our corporate stores, are put in a percentage of our sales, and that goes to a pool for our marketing department to advertise all over all over BOLAND. We we own and operate our own online ordering, so there's fees included in that. But it it's mainly a royalty and ad funds fee system. Yeah. That there would be, like, call center fees, online ordering, that's what you said. There might be some fixed fees concerning with the firewalls and with the system security because that is more and more important from the global perspective, and we need to secure those systems. We we have couple of examples in the world where the systems collapse for a week or so because of some hacker attack.

40:35 So so these are the elements, but they do not they they are not massive comparing to the royalties and all the stuff that we mentioned at the beginning. And and, yeah, overall season ad funds is is in line with, you know, your typical franchise numbers. Yes. Next question. Is there any update on the GPS delivery? No. We're we're working on big projects at the moment, and that seems to be next in next to now in on our list. So it will be coming. We've been dragging on. Yes. But we're we're still working on the exciting project. We need to deliver that first, and then and then GPS will be next. Thank you. I think we've got time for one last question. So let me ask you this. There any more countries that DPP can claim in or move into in Europe?

41:29 Look. I still think we've got 400 stores in Poland to build. There there are countries. But I would say priorities Priorities first. First. Yeah. We have plenty of things to do in Poland. We see that there is a big potential to grow. And if we stabilize one guard, then then we will move to the other. But definitely, there are opportunities. So Our balance sheet and p and l need needs to support us buying other countries. So we're not afraid of it. It makes sense for us, you know, being in the Central Europe. We can run countries around us. You know, it makes sense for Croatia to run Slovakia I mean, Slovenia. But, know, the balance sheet and our profitability needs to be right to support that. So we know what we need to achieve, and and, look, hopefully, we can do that in the future.

42:19 That's great. Nils, Edward, Alex, thank you for addressing those questions for investors today. And of course, the company can review all questions submitted today, and we will publish those responses on the Investor Meet company platform. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of DP POLAND PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you. Thank you.