Zabka Group S.A. (9M1.F) Earnings Call Transcript & Summary

Good morning, everyone. On behalf of Zabka Group, I'm delighted to welcome you to our Investor Day 2025, whether you're joining us here in the room or tuning in online. My name is Filip Paszke. I am a Group IR Director. And it's a pleasure to have you here with us to -- where we can share the Zabka story with you and give you an update on our strategy, which we have published just yesterday, highlight our progress and present our vision for the future. Now today's agenda is pretty packed. It features a focused block of presentations from our senior leadership team. And in a true Zabka spirit, where convenience and time are our currency, we've designed the sessions to be concise, insightful and hopefully impactful. While we can't promise you the same 2-minute experience that our customers have when they visit our stores, we will do our best to keep things efficient and engaging. Now a couple of housekeeping information. Following the presentations, we will open the floor to questions, Q&A session. And here is how it work. Those of you in the room, if you wish to ask the question, please raise your hand and there will be someone with a microphone coming to you. Online participants, you can use and submit your questions using Ask a Question button on the top right corner of your screen and you can ask the questions in writing throughout the duration of the session, and we will read these questions once we address all the questions from the audience. After the Q&A, we will break for lunch for about 45 minutes. And after the lunch, there will be buses outside of the hotel waiting for those of you who are joining us for the store visits and distribution center visits. Adam Manikowski, CEO of Zabka Polska unit, will join us for this trip alongside with our Chief Commercial Officer and Chief Operating Officer from Zabka Polska. So thank you again for being here with us. We look forward to an inspiring and productive session. And let me now welcome Mr. Tomasz Suchanski, CEO of Zabka Group. Thank you.

Good morning, and a warm welcome to our Investors Day presentation, which is 1 year -- exactly 1 year after our IPO. My name is Tomasz Suchanski, I'm CEO of Zabka Group, and I'm joined today with members of my management team that will present themselves during the presentation. Ladies and gentlemen, I'm very proud to tell you that we have delivered everything that we promised and we guided before and during IPO. We have progressed in all financial, operational and ESG KPIs that we have planned. Our like-for-like was 6.1% for the first half of the year. We improved our EBITDA margin by 0.4% to the upper limit of the range between 12% and 13%. We have opened 1,260 -- sorry, 1,256 stores during the last 12 months. We have today 12,000 stores in Poland, and we have more than 120 stores in Romania. We successfully introduced street food in all our stores, and we launched a new application, which is now responsible for 37% of Zabka sales. As you can see, we are speeding up our growth. Our business model is supported by structural, economic and social tailwinds. Less time, increasing wealth causes lifestyle shifts and urbanization that increasing demand for convenience and digital solutions. Our convenience ecosystem is the best positioned in the market to benefit from these changes. Growth has always been a part of our DNA. Everything started over 27 years ago when we opened the first store in Poznan, Poland. During the very first 18 years, we were focusing ourselves on building a chain of traditional corner stores. Everything changed in 2016 when we decided to go into direction of modern convenience. We decided to change everything in our stores, starting with logo through assortment, equipment of the sort to the communication. That move increased number of Poles visiting our stores every day, especially young people that we know are digitally natives. This fact led us to second transformation of our business, digital transformation based on data and AI. Zabka today is combining physical presence with expanded QMS with digital offering and services in Poland and Romania. Today, Zabka Group is tech-powered convenience ecosystem that is serving customers in 2 different worlds, the big ones, physical and digital. On the physical side, we have, as I said, 12,000 stores. We have 18 million Poles that has less than 500 meters to the nearest Zabka stores. On the daily basis, we serve 4.2 million customers. On the digital side, we have our application, which is somehow the gateway to this digital business where we operate such companies like Maczfit, Dietly; also in e-commerce, Jush and delio. All these businesses has more than 10 million users. Of course, to run this business, to run this touch point with customers, we have AI-powered tech backbone that we use on the daily basis. And of course, we do not forget our ESG commitments. We have improved in all pillars of our responsibility, sustainable lifestyle, employers engagement, mindful business impact and especially, transparency and validation, which we have been rated AAA by MSCI. And as you know, this is the highest rank possible. So ladies and gentlemen, growth and innovation is in everything that we do. Today, we will tell you how we want to grow, but also how we want to share the profits from that growth. Thank you. And Tomasz, the floor is yours.

Warm welcome, everyone, here in Warsaw, but also people in front of their screens in their offices and homes. My name is Tomasz Blicharski, and I'm a Chief Strategy and Development Officer of Zabka Group. A year ago, when we were having discussions before the IPO or just after IPO, we told you about our growth strategy. We told you that within the 5 years, we will double our business. We'll do that because we're going to be opening more than 1,000 stores per annum. We're going to be growing our like-for-like sales from mid- to high single digits, and we're going to grow the digital businesses by 5x during that period. I am pleased to say today that we upgrade this growth forecast. We upgraded in the aspect of store openings. We now plan to increase our chain, both in Poland and in Romania, by 1,300 stores plus in every single year until this 2028. And this is a significant change. What it means is that by the end of this forecast period, we'll have 16,000 stores operating in those 2 countries, which is 1,500 higher than what we have told you a year ago. What is also important is that our growth story in those 2 countries do not end there. In the long term, we plan to have 27,000 stores in Poland and in Romania, which is also an increase by 4,000 compared to the previous estimations. And this is on the back of our revised long-term outlook for Romanian business. What it means is that in this '28 that I just mentioned about, having 16,000 stores, we'll still have 11,000 stores to open in just those 2 countries. And why do we upgrade the growth prospects in particular now? Well, firstly, because we feel very confident in our growth trajectory in Poland. The newly opened stores in Poland performed very well. The sales of newly opened stores are higher and closer to our mature stores than they've ever been. We shared a lot of the information about that in prior quarters, but now we have a longer data that confirms this trend. Secondly, we have the highest number of new locations for stores to be opened secured with more than 1,700 locations to be opened. We now actually even signed the locations in some of the new builds to be opened in 2028. That gives us very long visibility on the pipeline of new stores to be opened. Thirdly, the cannibalization between the open -- between the chain remains at a very low level. Secondly, the second pillar is Romania. We started the Romanian adventure a year ago. Now we have more than 120 stores, and we see the performance of these stores is very good. We see that sales of the stores or, here, the number of store visits approach on average, the average for Polish stores, which is a great example of the customer attraction that these stores bring to the market given that they're relative youth. Secondly, in terms of Romanian stores, what we like about them is the attraction of our QMS offering. More than 30% of visits in the stores is for the QMS, which is at the benchmark of top Asian convenience players. All in all, that gives us a lot of confidence in the rollout, both in Poland and in Romania at a very attractive payback periods for years to come. Now the second and third pillar of our growth, we have not -- and we do not revise the forecast, so I'll just remind you what we have told you a year ago. And starting with the like-for-likes, we continue to plan to grow our like-for-likes from mid- to high single digit, and that will be based on 4 pillars. Firstly, we'll continue to grow the sales on the back of successful and improving street food offering. Here, even though we have finalized the remodeling of the entire chain to effectively include equipment that enables us to serve all the assortment, the job is not done. As you'll see later on in Adam's presentation, there is a long tailwind coming from this change as the habits and the perception of the offering by the customers evolve. Secondly, we'll continue to invest in the services, so nonfood-related services in our stores. We have more than 20 services in our stores. And this serves as a differentiation for our stores between us and any other player on the market. It brings the people in and those people not only use the services, but also they co-buy on the food and the grocery items. It is an important attraction of our format. Thirdly, we'll continue to do what we do very well, which means innovate and excite the customers with our assortment on the convenience side and grocery side. Last year, we changed more than 600 products, introduced 600 new ones, and we continue to be well known on the market from this, from attracting especially the younger part of the population with the innovation and excitement in our assortment. What is important is all of these 3 pillars that I just mentioned will be exacerbated and magnified by the fourth one, which is our consumer app. We'll talk more about it in the later part of the presentation, but the recently relaunched consumer app attracts more people into the store, which buy more stuff, and we will continue to invest in this aspect of the business and include also the new features that will continue to build on this trend. The third pillar of our growth that I mentioned before, the digital businesses. We plan to grow it at 5x between '23 and '28. And here, it's worthwhile to mention that our short-term focus in the last few quarters was predominantly on getting those businesses above the breakeven. We achieved that at the end of last year, and we continue to build on this, this year. Having said that we obviously remember about the growth aspect of this business, and these businesses are on track to grow by 5x by 2028. That includes the existing businesses, Maczfit, Lite, Nano and a few others as well as we incrementally boost that growth by adding new services into our ecosystem, including Zappka Pay, including izidrop, including In-Pulse and a few others, and Wojciech will talk more about that. We're confident that all of this together will result in the growth as we expected or maybe even higher in the future. What this brings us, all of this, is that company that, on one hand, grows in terms of the revenue and EBITDA. And secondly, and Marta will talk more about it in a moment, with financial and prudent financial management with respect to the capital expenditure, the company that significantly increases its free cash flow. And we are at this stage where a year ago, we told you that when we are at 1x, we'll tell you what to do with the capital allocation. So we're at the stage where we now can share with you that we want to go from good to great. We want to be a business that grows sustainably over years and, at the same time, share the profits of that growth with all the investors through dividend. And on the details of that, please, Marta join the scene. We have small technical problems. So Marta will join in a moment the scene, and we'll talk much more about it in a moment. Thank you very much.

Thank you. Good morning, everyone. It's good to see you. My name is Marta Wrochna Lastowska. I'm Chief Financial Officer of the group. Let me start saying that we are really proud of the outstanding financial performance, which we delivered. We delivered robust and profitable growth, growing our business, as you see from PLN 6 billion of sales in 2015, up to almost PLN 30 billion now. And when you look on the EBITDA growth, it has been even higher. Moreover, we see still very significant growth potential going forward. And we are on track to deliver on our IPO promise to double our sales by 2028. Since IPO, we have also significantly improved our balance sheet. So we deleveraged our balance sheet, improving the leverage from 2.3x, as you see on this page in 2023, to 1.5x as at the end of 2024. This is excluding leases. And now we are approaching the leverage of 1x, which we believe is right for us in the future. And given that we will generate the cash beyond what we need to invest in our growth. And therefore, I'm very pleased today to share with you the information about the dividend payment. We believe that this creates a truly unique shareholder return proposition with a combination of best-in-class growth, which you have seen already and meaningful capital return. When we met last year at IPO, we outlined the key building blocks of our value creation, including growth, profitability and cash flows. And I'm very pleased to say today that we have delivered on all the promises. And as you see on this page, in some areas, we have even outperformed our guidance. We have proven that we have a well thought out long-term strategy, and we know how to execute it. And now referring to the key parameters. We said that we will -- we said this year that we will accelerate our expansion, and we are on track to deliver 1,300 stores this year in Poland and in Romania. We continue to deliver like-for-like, which is above the market. For the first half, we had like-for-like of 6%. And despite poor weather, we are expecting to see mid-single-digit like-for-like in the third quarter, consistent with our guidance. We had EBITDA improvement, EBITDA margin improvement in the first half of this year, and we are in the upper end of our 12%, 13% guided range. You have seen also meaningful improvement in our net profit margin, benefiting from deleveraging, better terms of our financing and improved effective tax rate. And finally, we delever faster than initially planned. And in line with the discussion which we had with most of you, when -- as we approach the target leverage, we are ready to share with the shareholders the surplus of capital. We will introduce the new capital allocation policy, which I will describe in details further in my presentation. What you are going to see on the following slides are the key outputs of our value creation plan -- long-term value creation plan, which is the road map for us for the following years. You will see how Zabka financial model translates in very strong value creation through growth in operating cash flow, stable CapEx and declining debt service. So let me start with our increasing operating cash flow. As you know, the growth in our operating cash flows is driven by robust and profitable growth in our top line. In ultimate convenience, the growth comes from the healthy combination of new stores opening as well as growth of our existing stores. We have huge and highly compelling business in Poland, delivering high and what is important, still expanding margins. And we have a smaller business in Romania, which is still in early stages, but performing well. Tomasz said that the traffic in our -- that we see the traffic in our stores in Romania approaching the level, which we have in Poland. We have very good product mix with high share of QMS. And importantly, the stores we opened last year deliver positive and increasing contribution. This provides a great foundation, and I'm confident we can deliver attractive margin in Romania when we continue to scale. Digital convenience offering business, significantly smaller, but growing really fast. Last year, we achieved profitability. We shared that with you, a milestone moment for us, and we expect to see its benefit reflected in our margins in the years ahead. The combination of those 2, so ultimate convenience and digital convenience offering, creates a very compelling operating cash flow profile, which is visible here of our group, which provides both long-term growth as well as attractive margin. The second very important factor, which contributes to our value creation is our smart and disciplined CapEx. We have very strict and payback-driven approach to our capital investments. And therefore, we are able to invest in our expansion, in store upgrades, in franchisee solution, in logistics, in technology; while in the same time, to keep our CapEx constant in absolute terms or declining as a percentage of sales in the coming years. As a result, what you will see, we will see the free cash flows growing at a faster pace than both sales and EBITDA. And this is the beauty of our business. We can improve returns while in the same time, continue to investment in our future. And the last very important point, which contributes to our value creation is our financing and the deleveraging profile. Since IPO for the last 12 months, you have seen that we have diversified our source of financing, and we meaningfully improved our funding terms. As you may recall, in May this year, we issued PLN 1 billion of bonds with an attractive margin of 150 basis points. And a few weeks ago, we have completed the process of refinancing of our main facility agreement, PLN 3.5 billion, extending its tenure to 2031 and improving the margins. As I already mentioned, we have nearly reached our midterm leverage target of 1x, which we believe is the right one for our future. And given that, what you will see -- we will see the cash required for debt service, which is going to decline, creating surplus capital, which we will be able to share with our shareholders. Let me assure you that from my perspective, nothing has changed in our business. We have always had and we are going to have the business, which is highly cash generative. The only difference is that we increased scale, we improved leverage, and we improved our funding terms. And given that, we've built -- we are going to build a surplus of cash, which we will share with our shareholders. Why we believe that the 1x is the right leverage? So taking into account our expected cash flow profile, our planned investment and also expected cost of our funding, we believe that 1x is a sweet spot when we can still keep appropriate liquidity to have the operational flexibility and at the same time, ensure efficient balance sheet. So when you look on this chart, it is clear that any further deleveraging will not bring additional incremental benefits for our business. Therefore, we believe we have now headroom to start sharing capital with our shareholders through dividends. And before I will share with you the details of our new capital allocation policy, let me spend a few minutes on our CapEx because this is the topic we discussed frequently with the management team as well as we also answer some questions from -- on CapEx from the investor. So as mentioned during the IPO, the majority of our CapEx is growth related, approximately 80%. And the biggest portion of the growth CapEx relates to new store openings. And given that we are planning to open 1,300 stores in the coming years, it will remain the most important part of our spending. The second very important and significant part of our growth CapEx are investments in the existing stores. This investment position us to serve our customers better and to build the competitive advantages. They are to drive our like-for-like, so the traffic in our stores or drive efficiency of our operations. Approximately 20% of our CapEx is maintenance CapEx. And mostly store upkeep, as you see. This is extremely important for us to keep our network in excellent conditions. We need to have our stores attractive and welcoming to our customers so that they want to visit us. And we also make sure that we invest in our operation and technology to make sure that we keep the long-term strength of our business. As I said, we are planning to keep the constant CapEx in absolute terms in the following years and declining as a percentage of sales. Bringing all that together, we are extremely proud to share with you our new capital allocation policy. The policy was designed to deliver the long-term shareholder value through growth. You know that growth is and always will be the most important for us. We will also keep the target leverage of 1x, and I can assure you that all long-term and midterm plans are designed while keeping the leverage of 1x and also on the top of that, keeping the appropriate liquidity to have the flexibility in our operation. We will also have the optionality to allocate surplus capital for bolt-on acquisition. We -- the primary focus for us is organic growth, but we will continue to evaluate the selective value-accretive M&As, which can expand our capabilities. And finally, the surplus of capital will be shared with our shareholders through dividends. We are planning to start with 50% payout ratio from the profit of 2025, which will be payable as annual dividend in mid-2026. In the following years, you will see the payout ratio between 50% and 70%, depending on our investment needs. We will always keep the flexibility to do what is right for our business. And therefore, if we see we have incremental profits, we will -- we may decide to increase the dividend payout ratio. And alternatively, when we see interesting investment opportunity or M&A, we may temporarily decrease our dividend payout ratio. And if you want to look from the more longer-term perspective, we may consider also the share buyback. Tomasz started the meeting today saying that we delivered on our promises. I'm really pleased to share with you right now our upgraded midterm guidance. This guidance reflects the accelerated expansion as well as our new dividend policy. So we will continue to grow our business through a combination of new store opening and like-for-like growth. We are planning to open 1,300 stores per annum to reach the target of 16,000 stores in Poland and in Romania by 2028. You've seen we have great results of new stores. We have exceptional payback in Poland. We have great potential in Romania and our white space is 27,000 stores for us to capture on those 2 markets. We are planning to deliver the like-for-like in the mid- to high single-digit range. Tomasz shared the key initiatives, which will drive like-for-like, and you will hear more about that from Adam and Wojciech. We are planning to keep our EBITDA margin in the upper end of our 12%, 13% range. What you will see, you will see the slightly increasing profitability in Poland and disciplined and mindful investments in Romania. It is extremely important for us to keep the proper balance between profitability and growth. We want to make sure that we will deliver the EBITDA margin in the guided range, while also continue to invest and continue rollout in Romania. The elements to our profitability, our EBITDA margin will be benefiting from continued improvement in our product mix, deepening of relationship with our suppliers and improving terms of trade based on higher volumes. We will benefit from the investments we've done in digital and tech. We will continue to automate and digitalize our business. And we will see also benefits from -- coming from development of our digital convenience offering as well as new digital services, which will be presented by Wojciech. We are committed to keep our target leverage -- I skipped the net profit. So in line with the guidance, which we shared with you at IPO, we are planning to increase also net profit towards 4.5% in the medium term. And finally, we are committed to keep the leverage ratio at 1x. And given our cash flow profile, we will share the excess cash flow with our shareholders through creating a truly unique and compelling shareholder value proposition, combining best-in-class growth and meaningful capital return. Looking at our group, we have evolved our business from the traditional corner store into value proposition that extends far beyond that into modern convenience that resonates really well with a wide range of customers in Poland and recently also in Romania. We have shown that we can learn, we can adapt, we can change, we can innovate. And importantly, we know how to execute. We've delivered on our promises, which we gave you at IPO, and we will continue to do so. And now I would like to invite you to the second part of our meeting, of our presentation. Adam, Anna, Wojciech, and Jola will walk you through the key pillars of our strategy. And I hope this perspective will help you to understand even better our ambitions as well as the wide range of opportunities, which is ahead of us. I invite Adam to tell you more about how we are going to drive our business in Poland.

Hello, everyone, and welcome. Thank you for being with us today. In my part of the presentation, I would like to focus on the 2 important strategic pillars, which are helping us to deliver, to double the sales to the end customers from 2023 to 2028. The first one, very important as the growth is in our DNA is the expansion. We've been opening more than 1,000 stores in Poland for the last few years, maintaining the high quality of expansion. We are accelerating our growth, accelerating our number of new stores. And this year, we will open almost 1,300 stores, and we will continue accelerating. We know exactly where to open the stores, thanks to our exceptional modus operandi, know-how and technology. We invested a few years a lot in AI, machine learning and analytics to know exactly where we should open the stores and with what kind of economics. We scrapped almost 10 million addresses in Poland using 700 million different elements impacting the attractiveness of the locations. We created the heatmaps, and we exactly know where our expansion teams should look for the location. We also know that we have the models, which, once finding the location, can help us with 99% of the confidence set and predict the economics of each store. We also approve every single location centrally during our investment committees, making sure that the approved location is meeting all the financial and operational requirements. This is the proof that what we've been doing for the last many years keeps the high quality. So it's not only about opening the new stores itself, but it's about opening and growing with a high level of the quality of the new openings. We have, on average, 12 months paybacks from invested capital, which is one of the best in class. And as you can see, it's almost similar among different store clusters. And as to our growth, there are many questions where we are taking the location from. One of the big stores are, of course, the greenfield locations, the heatmap, which I described. But for example, you can see on a slide that we have in Poland still 5x more mom-and-pop stores than existing Zabka stores. So this is also a very important channel for us to grow and to open the new stores. The another example are the bank outlets. As you know, everything is going to digital and the banks were in the premium locations. It's also the very good source for us for the new stores. So having the technology, knowing where to look for location, having the access to prime locations and having the model allowing us to maintain the high quality of the expansions, we made this decision to accelerate and to continue. We are also successfully recruiting the new franchisees who are successfully operating our existing and our new stores. It's also thanks to the investment in the franchisee remuneration system. As you -- if you look at our white space, it's almost 20,000 stores. We know it because we scrapped 10 million addresses in Poland with sophisticated technology. So we are very confident that this is the white space. And historically, our expansion quality is showing that we are right. So we have 7,500 stores to open. And if you look at where we are, where is the white space, what's the breakout of the white space, you can see that it is still in Warsaw. It is in small cities, medium and the big cities. You can be surprised that still we have so much white space in Warsaw when you go out of this hotel, you will see many Zabkas. But that's true because after the detailed analysis of all the addresses in Warsaw, we see that saturation level in Warsaw is, for example, 58% only. So still a big headroom to grow. But it's not only about Warsaw. It's not only about the small cities or big, but it's also about medium cities. So all over Poland, we can grow because all over Poland, the level of saturation with Zabka stores is on the level of 60%. So this is the additional proof besides our historical performance that we can successfully be opening the new stores for next years. And if you look at the breakdown of existing store network, we are -- our existing store network, we are 9% in Warsaw, but we are almost evenly shared between large, medium and small cities. And this is also the proof that we are not planning to change our structural way where we open the stores. We are planning to open the stores across all Poland because we see the white space potential, but also we are confident that the data and analytics we use shows that those new stores will be maintaining and achieving the economics of the stores, which we opened so far. The next important level of how we are driving like-for-like are all our like-for-like initiatives. And being the growth-driven company, we have many different projects and initiatives, which we are focusing on in order to grow sales, but also to grow our like-for-like. And there are 2 aspects of these activities. There are aspects, which we cannot control and the one which we can control. One aspect which we cannot control and is very important for every convenience business in the world is the weather. And as you can see, this summer, for the ones for you who live in Poland, was one of the coldest one. I don't know if you know but we track it exactly. The temperature drop versus last year was the same like in 2017, which shows that this summer was a clear anomaly and all the industries connected to weather were negatively impacted by this. In our -- in convenience business, the better the weather is, the more traffic it is and the more sales of categories like beverages or ice cream. If the weather is bad, there is less traffic and there might be negative impacts. We estimate that the negative impact of this anomaly, which is the cold summer on our like-for-like is on a level between 1% to 2%. However, it does not change our guidance to deliver for Q3 the single mid-digit like-for-like. It does not also change our guidance for the full year where we want to deliver the lower end of the mid- to high single-digit like-for-like. But let's focus right now on what we can control. And we are a growth-driven company. We have many initiatives, as I said, I have chosen only 3 of them, which are the key pillars of the current and future growth. The first one is our gastronomic offer. From June, we introduced the oven to all our existing stores. Those are the special oven and special assortment with special visualization where we can sell the street food to our customers. And via this, we made a revolution on the street food offer in Poland, and we are the largest street food chain in Europe with almost 12,000 stores having this offer for the customers; however, it's a long journey. Already, this offering is the key driver of like-for-like for our QMS. We see the great traction with our customers. We see that we are growing with awareness. We are introducing new products. I encourage you to try during the break our offering. We have the stand with our seafood offering. We are investing in price and promo activities to convert the non-customers to customers of this offering. However, we see that it is a journey. So already starting well and creating a very strong driver for our sales growth, we see that like in an example of coffee, it takes time. That's why we see the huge potential in this -- with this offering. We started with coffee many years ago. Right now we are selling 40 million cups of coffee per year. We are the biggest coffee seller in Poland. We are selling 80 million hot dogs per year with the awareness of 90%. But I don't know if you know that with the awareness of pizza, which we sell only 30%, we sell 1 million pizzas per month. We are the biggest pizza seller on the market. And only awareness 30%. It shows how huge potential we have to drive sales, to drive like-for-like and to convert non-customers to customers of this offering. We have coffee and hot dogs on the stage of advocacy. We have very good products like French fries, paninis, tortillas and zapiekankis, who are going to the stage of retention. We have many novelties, which we know that in order to grow the awareness of them and moving the stage to advocacy, we need time. I'm mentioning this to show you the huge potential, which we see and the great tractions, which we see with the customers because you don't find any other retailer who has this kind of gastronomic offering. And this gastronomic offering has a quality comparable to the biggest QSR players at a much, much lower price, which makes value proposition for the customers very attractive. But when I say about the uniqueness of our stores, we always say that Zabka is not only the store, it's the convenience hub because of the services. This is important platform, not only from the perspective of building our competitive advantage, but also being true convenience for our customers. Right now we have almost more than 20 services in our stores. We recently started cooperation with Allegro Delivery. We are the biggest parcel operator in Poland, biggest coffee players in Poland, banking services, ATM services. Recently, we introduced gaming services and also prepaid vouchers, which is interesting. Our prepaid vouchers, you can customize them and pay, for example, only for coffee or certain given categories. We have more than 20 services. And why it's very important for us? Not only because it's the essence of every convenience business model, but also 50% of the customers are having halo effect, are co-buying, are co-buying our products, increasing our sales and increasing like-for-like. So this is the platform, very important platform, which helps us to grow, which help us to grow our sales. And the third very important pillar are the products. So the story is about the products. And I can proudly say that we have one of the best new product development team on the market. We are constantly innovating with our assortment using many different feedbacks. We are taking feedbacks from our franchisees, working closely with franchisee council. Our franchisee is the ambassador of the Zabka brand, very close to customers. But we are also, thanks to the technology, using monthly 500,000 of feedbacks from customers via our app. We are able to detect the new trends, but we are also able to see what customers are thinking about our assortment, what they are thinking about our new products. We are also taking the inspirations from around the world to predict the trends and to introduce new products, which no one has on the market. That's why -- having this know-how, we are able to introduce between 30 to 40 monthly new QMS products, which are the unique by itself and available only in Zabka. We are constantly innovating also with the packaging and with the design. And besides the private brand, besides growing the large QMS offer differentiating us from the others, we are yearly introducing 1,500 new branded products to our stores, out of which 500 branded products are exclusivity for Zabka. That's why almost 40% of our customers are the innovator seekers and ambassadors for the novelties. This is also another example of the uniqueness and another example how we can competitively grow our sales through incrementally introducing the new assortment. And the big enabler for this is the digitalization. We introduced a few years ago our app. Right now we have more than 10 million customers and more than 30% of the sales is going through the app. This tool helps us to not only loyalize our customers, but to increase the size of the basket, increase the frequency of their visit via personalized offers via coupons, via meal deals and other trading mechanics. But this app also helps us to spend all the marketing and promotional money very effectively with -- in a very targeted way. Wojciech will tell more. I just want to mention that we are constantly innovative in the digitalization. We are right now the biggest chain with almost 5,000 stores with the digital screens where we can display the content for the customers, which we can monetize and where we can, as the biggest -- this kind of player on the Polish retail market in a real-time influence customer shopping habit during their shopping trip. But this will be elaborated more by Wojciech. But before this, I would like to invite on the stage Anna, who will tell us more about our international business. Thank you very much.

Good morning, and a very warm welcome you here in the room, but also people online. My name is Anna Grabowska. I'm the Managing Director of Zabka International. You've just heard from Adam how we are developing in Poland. And now let's focus on international expansion. I will talk you through how we are doing in Romania. When we selected the first market for international expansion, we looked at 2 things: how customers are ready for convenience value proposition, but also what is the market growth potential. And Romania scores very high on both criteria. It is supported by tailwinds of the same market trends like growing GDP, very stable GDP, growing disposable income that is being transferred into consumption, low unemployment and great eagerness for convenience. Why? Because the lifestyles also shifts like in Poland. People are working long hours, women are educated and they are working also professionally. People don't want to cook as much as they used to, and they are in rush. So we have a great momentum for our expansion. We entered Romania only last year. We opened the first store in June last year. And today, we have 122 stores. We started our expansion from the capital city from Bucharest, but we also expanded to other 2 regions. We are present in Constanta. This is the biggest port harbor at the Black Sea. In fact, the biggest in Europe, given the war in Ukraine and also very popular summer destination. Romania has lovely beaches. So a lot of people are moving to the seaside during summer. We are also in Pitesti region. This is important industrial center, well known for Dutch carmaker. We obviously started from Bucharest. This is a very densely populated city. This is a population of Warsaw, but squeezed in the Poznan space. So twice as much people on the square meter, very big traffic, but also a lot of residential living in the small vicinity. We have a good presence in Bucharest already. So we started to expand to outskirts of the city to small, medium towns and cities outside of Bucharest to test our format. And how are we doing? Yes, yes, we opened to over 100 stores within a year, which I think is the #1, I think, effort compared to other retailers. And we're testing different locations. The vast majority of our stores are residential, giving the dense population, but we're also testing stores next to the railway station in the offices and next to university campuses. We know that the school locations are very good for us. And how are we doing? I think you've heard from Marta and Tomasz, but I think I will repeat that the QMS that performs ahead of our expectations. It already reached 30% of traffic, of daily traffic in stores. And it is the biggest attraction of customers as we launch something new, totally new to markets. Customers in Romania are very open to trying QMS. They have a long-standing tradition of eating out. Now weather is good, but this is also a Latin culture of just eating small things on the go, drinking coffee, eating croissants, et cetera. And they also have a habit of going out for lunch. This is supported by the state and employer supported lunch vouchers that have been present on the market for years. And they have money and they go for lunches. Yes, so we launched our QMS, 100% private brand. So it's a great competitive advantage. We have all the great products that Adam explained, but tailored to Romania, sandwiches, smoothies, juices, salads, ready meals, but also great bistro. This is equivalent of Zabka Cafe. We've already sold nearly 2 million of hot dogs in Romania, yes, and also burgers and pizza, yes. So this is a competitive edge for sure. But we also launched some innovation. Adam imports a lot of products to Poland to attract customers, and I proudly exported some products from Poland to Romania. So we have in our stores, Froo stores, Wedel, [indiscernible] and many others. And Polish products are very well received. These are perceived like premium products of great quality and great price. The stores look and feel is similar like Zabka, even though they are called Froo for some good reasons, not to call them Zabka as the Zabka name does not translate well into Romanian. They have something different meaning. But Froo is a nice word, they're easy to pronounce. And the store look and feel, although resembling Zabka is great. It's modern, contemporary, elite and clean, and it is standing out on the market. We started to communicate using traditional form, but we very quickly moved to the digital communication in using a bit disruptive tone as we are a newcomer to the market, so we have to stand out. And the brand awareness in a short period of time raised to like 44%. This is still half of the way to Poland, but giving the youth of the company, I think, is a great achievement. The B2B model is rooted in our franchisee system that you know from Poland. Although we have to tailor it to the market, in fact, we operate our store using agency model. So we cooperate with over 100 agents. We provide them with range. We provide them with promo price strategy. We deliver goods. So we are responsible as through for marketing, logistics, et cetera, but -- and we equip the stores. But they employ the personnel, they train them. They also look after customer service and provide great store standards. And finally, you remember that we acquired a majority stake of DRIM Distributie, the FMCG distributor that was the way for us to enter Romania. And since the acquisition, we managed to upgrade the distributor and now DRIM perform as our logistic platform. We now with the exception of tobacco, which is still being delivered directly to stores, everything else is being delivered through our distribution center in 4 temperature zones. So fruit and veg, chilled fresh, frozen and ambient are being delivered from stores -- from DC to our stores. And we are very proud that we have a very good traction with customers. And in fact, this is the most important. Customer is the king. They judge and they decide with the money where to go and customers really like us, yes. So the NPS is high. And also the feedback that we got is standing out from other retailers. We are original, we are surprising brand. We are modern, contemporary. This is something that they missed, yes, as you know when we were not there. And what is important, they say that if they have a full store nearby, they would spend more, yes. So I think it is something that we provide them incrementally. We concentrate our efforts to invite customers for the trial, meaning that if they try out our stores, they stay with us. So 80% of our customers are returning customers. So they repeat purchase. They like the store and how we perform. They also say that we are a destination for quick snack on the go. And 30% is not only a share of transaction, but also absolute number of coffee per stores, hot dogs or sandwiches per stores that we sell in big quantities. And we see that we're leapfrogging the traffic. So each quarter, we're growing the average traffic in our stores by 13%. Tomasz mentioned that we are catching up with the Polish operation very fast. In September, we've already matched the daily traffic in our stores in Romania compared to Polish stores. And remember, we have year-plus history in Romania. So it's a lot ahead of us. We also see that the stores in the second year of operation, they are still maturing. So we have a decent double-digit like-for-like growth, predominantly driven by new customers that are coming to our stores. We also see that the stores opened last year are already profitable and they grow profitability, increased sales, better margin, but also better disciplined costs. And I think ahead of us, there is also another movement of growth in traffic. We have not yet touched a lot of avenues. We have not yet launched services. We only trial with a couple of services. And we know that the convenience is not only about products, but also additional incremental services that give additional reason to come, but also help us to -- for cross-buying. The brand awareness, yes, it is half of what we have in Poland. So we will bring more customers in years to come. And finally, work on range and price, yes. And when we launched to Romania, we launched the same range all stores. And obviously, does not -- one fit does not fit all, does not size does not fit all. We started to differentiate the ranges from traffic to residential type of stores and also to more affluent and less affluent customers. But we have not touched yet the price differentiation, which is kind of obvious to optimize profit, but also to optimize sales. So this is, I think, ahead of us. We are very encouraged by performance so far. That's why we increased the white space potential forecast for Romania. When we started at IPO last year, we say, okay, there is 4,000, which was very conservative. Yesterday, one of the investors told me divide Polish white space by half, and you will get the right number, which also could be an exercise. But we did a bit of sophisticated exercise looking at demand and supply of location. And what we know that from our experience, we have a very good performance, not only in the capital city, but also in second and third tier cities. Second, we have a very good tailwind of all the new avenues opening for new locations. So what we see what's going on in the market, banks consolidation and digitalization of financial services and banks used to be on a very good prime location. So it's a good idea for us. Traditional trade is still big in Romania. It is still 40,000 outlets that we can convert, and we see the willingness of mom-and-pop stores to convert into Froo. We see the new legislation coming into betting system. Just to say that in Romania, you would see betting straight on because there is exactly the same number of bettings as pharmacies. So they are very visible. But their services also are being digitalized. So we will have a lot of locations. So -- and the third one, we have a very strong and very positive response for customers and in various locations. And this is important that we tested small and medium and bigger stores. And in all of them, our value proposition, including QMS is a differentiating point and customers respond very well to it. So that's why we increased the forecast, and now we see that the Romania can accommodate like 7,600 Froo stores. And we also are mindful when it comes to the investment, and we are being very disciplined when it comes to costs. So we do everything possible to get the synergies with the group and leverage the know-how and the technology that we have in group. So our approach is local. So whatever we can take from well-proven concept, we take to Romania. And whatever needs to be tailored, we tailor to local customers' needs. And a couple of examples. So obviously, the store look and feel, the branding, naming is different, but the branding, the brand position is exactly the same. International sourcing, we've already set up the structure that help us to get all the innovation from Poland, but in Romanian packaging in right secured recipes. We do some tailor-made changes, yes, like coffee in Romania is a bit stronger and had more robusta than in Poland, but we have exactly the same source and the same trade-off terms. Data and technology. We're developing greenfield straight-in-art POS system and ERP system for Romania. But we're doing it in a way that if we decide to scale up outside and beyond Romania, we can do it in an easy way. B2B, I discussed and processes. Processes, we try to outsource to shared service center, which is in Poland and those like routine AP processes or buying CapEx, everything is now outsourced to shared service center. And finally, process standards and know-how. So we lay the foundation at the moment that if we decide to go internationally, we can have a good playbook that we will take out and we'll say, okay, this is the way how we want to enter the next market. I know that some of you have been to Romania already. I had a pleasure to walk you through the stores. But also I got to know yesterday that some of you have never been to Romania as a country, not even say to our Froo stores. So I think that I will show you the film like a sneak peek of how we're doing in Romania. And after the video, I will invite Wojciech Krok to the stage. Thank you very much. [Presentation]

Good morning, everyone. My name is Wojciech Krok, and I'm the Managing Director of Zabka Future. As Tomasz mentioned in his intro, Zabka is a company extremely well positioned to take advantage of various trends, various shopper trends and societal trends that are happening in Poland. And one of the trends that we see is very profound, very important is the trend towards digitization. Poles are among the most digital nations in Europe, and we can see that increasing every year. You can see many numbers. We have multiple statistics that prove that point. And that is why in our growth story, we put digital growth as one of the key pillars of our strategy, one of the key 3 pillars of our strategy. Now at Zabka Future, what we do is we support this growth. We fuel this growth through a combination of 3 things. Number one, as was mentioned a couple of times by my colleagues, we develop our app. We have revamped it in the fall of last year. We invest and develop new digital businesses that fuel our growth. And finally, we provide effective technology, data and automation to underpin the growth of the entire group. So starting with our app. Our app is becoming an increasingly critical component of our whole ecosystem; firstly, supporting the stores, but more and more supporting the different digital businesses that we have. Now as mentioned, last fall, we have revamped our app, essentially building a new technology stack underneath, and we had 3 objectives in mind. Number one was to change the user experience and introduce features, very specific features that help with our like-for-like, help with our store growth. These are features like activated coupons, which you can see in some QSR restaurant apps, meal deals or things like personalized offers that allow us to stimulate customers and make them come to the stores more often. Number two was to integrate all of the businesses that we have in our group into a single -- we call it a super app, but basically a single user interface that makes it more convenient to access these businesses, but also add new digital services, making people lives easier. And finally, what we wanted to do is to get all of the data from that ecosystem into a single customer data platform that allows us to take better commercial decisions all across our group. So these were the 3 things. And of course, the key question is, how are we doing? So I'm quite pleased to report that we meet majority of the KPIs that we have put in front of ourselves. Number one was increasing engagement. We can see that only this year, the engagement of people as measured by sessions went up by 24%, by time spent in the app by 19%. And we also have an additional KPI that looks at what service people used. In the past, it was mainly focused around the store. Now more and more people use adjacent services that are available in our app. Of course, it's not only about engagement. It's also about monetization. And we can see that this parameter is going up even more. We see that 27% of all sales done with the group -- sorry, we see 27% growth in all sales done in the group done using a digital engagement, so primarily with our app. So that number is also growing quite heavily. And finally, we put a goal in front of ourselves, which is around using the app to stimulate sales in our group businesses. And as an example, the recent launch of Jush, which is our e-commerce proposition in Wroclaw, we were able to divert as much as 20% of traffic through the app to that new launch, which we believe is a good result. So the app is the first thing. We also invest and develop new digital businesses in the group. So all these businesses have a very clear strategy and are also aligned with the mission of Zabka, which is freeing up our customers free time. These are essentially all digital convenience businesses. So putting what we do in our convenience business into the digital world. They are highly synergistic with our core between each other and allow us to monetize the 10 million-plus digital customers that we have in our ecosystem. And again, in the spirit of delivering on promises, the question might be, how are we doing with the digital businesses? So number one, and this was mentioned, we promised to break even in 2024, and we have. We're keeping our commitment to increase our revenue from the digital businesses by 5x in 4 years, so between 2023 and 2028. We have strong trajectory in 2025 and plan to accelerate that growth in 2026, exceeding PLN 1 billion in revenue from the digital businesses. We will do that for a combination of 2 things. Number one, we see strong growth trajectory from our existing businesses. But as was mentioned, we are also introducing a couple of new businesses. I'll share that in a moment what they are and what they do. So starting with the existing businesses. Of course, each of them is a business of its own. Many things are there, many details, many detailed initiatives, but I only focus on the ones that are strategically important. So for Maczfit, what some of you might see in our stores, we already are starting with vertical integration with our core business. Already this year, we have sold 1 million products produced by Maczfit in our stores. We like this large-scale pilot. We like the results. Next year, we will 10x that. So we will sell around 10 million products produced by Maczfit in Zabka stores. And we think that is only the beginning. We see vertical integration between Maczfit as a producer and Zabka as a key strategic pillar. Number two, Lite, which is our e-commerce business. It operates Jush and delio, which are our, again, e-grocery propositions. We see that, that business is growing extremely well, faster than 60% each year. And we see that each order placed is contributing positively to EBITDA on a full operating cost perspective. So after all applicable operating costs. And there, the strategic move is, of course, scaling, and we have done the first step recently by entering a new city, Wroclaw, which we believe will take that business closer and closer to full EBITDA profitability. And finally, Nano, as we have shifted our strategy, we're now opening these autonomous stores. It still remains the largest chain of autonomous stores in Europe in so-called specialist locations, which are factories, which are university campuses with captive audiences. We see that strategy working extremely well with Nano able to save costs, increase tickets and basically be a very valid proposition in these areas. So these were the existing businesses. Now looking at what we have in store, what are we looking at to innovate. So number one, Zabka Ads. This is our digital out-of-home advertising business. Already today, we have approximately -- yesterday, it was 4,998. I think today it is 5,000 digital screens across our Zabka footprint, making us one of the largest digital advertising providers in the country. Now we use these screens for 2 reasons. Number one, we boost like-for-like sales from our existing stores. As mentioned by Adam, they're a very efficient way to drive our customers to buy more. And the second part is we're using to monetize them outside. So today, we're working with more than 90 FMCG brands, and our campaigns are seen by more than 25 million individual touch points of views each month already today. This is, of course, a business where the screens have very strong returns on investment. So we expect to grow further with our ads business. The second business is izidrop. It's a new business. It's something that we're in the process of launching. Essentially, think of it as Zabka having one of the largest pickup, drop-off points for parcels in the country. Combine that with our very efficient logistics backbone, we're able to provide a logistics product, whereas consumers are able to give a package in the store when they return an e-commerce product and that gets shipped back to the merchant. So we can offer potentially the cheapest product in e-commerce returns in Poland and scale it very rapidly. So that's what izidrop will be about. And of course, low CapEx, very high synergies with our core business. The next initiative we're taking, and this was always a big thing for us is looking at financial services. So Zappka Pay and what can I say today is not all the details, but we're working with a leading financial institution in Poland to create a suite of digital financial products. This includes payments and other financial services that we will then put through our app to our 10 million-plus digital customers. We're very excited about that one, but more details will come in the next sessions. And finally, we have launched In-Pulse, which is a joint venture between Zabka Group and Stagwell, which is a leading American digital marketing agency. This business allows us to monetize our data. So I was talking a lot about how much data we have. Stagwell is a leader in marketing technology that basically has products that our data can fuel. And already today, we're working with leading B2B customers and using these products to do market surveys and give them actionable customer insights based on real data, something that nobody else can do in Poland. So these are some of the new businesses. And the last piece of how we support the growth of Zabka Group is efficient technology, data and automation. I think a lot has been said both by Adam when he was explaining how we look for new stores and use AI by Anna when technology develops the new tech stack for Romania. I think what is relevant here is to say as we're doing all that, we're managing to do it very efficiently. So our total cost of ownership of technology in Zabka Group as a percentage of revenue is going down, and we expect it to be more efficient over time. In the spirit of efficiency, we're also launching -- I mean, already have launched a very large program on Gen AI together with the business, together with the operations to look at each and every process in our group. And as you have heard multiple times, Zabka is quite efficient in using AI. So we're going to review all the processes use Gen AI to optimize costs in our core business. And already, we're seeing first P&L results, and we expect that to be a relatively big driver of our group efficiency. So to sum up this part of the presentation, I think we are very well positioned as a company to take advantage of the digitization trend. So number one, our new mobile app is improving on virtually all parameters and is a key driver of what we do as a group. Number two, our digital businesses are growing not only in terms of revenue, but increasing very rapidly in terms of profitability. And number three, we're quite efficient with our -- the use of technology. We're innovating. We're supporting all the group businesses and elements in the growth. So as a whole, we believe we can take advantage of the digitization trend efficiently. And with that, thank you so much, and I'm giving the floor to Jola, who will talk about people.

Good morning, everybody. My name is Jola, I'm Chief People Officer, and I'm the last to speak on purpose. I'm the last to speak to demonstrate that we have the organization and people ready for the growth, ready to deliver all those initiatives that have been presented by my colleagues. And our strong leadership is proven by results and external recognition. Our organizational confidence is built on the operational framework, our focus and mindset and our disciplined execution. But of course, at the core of our success are our people, a diverse team of experts whose expertise and diverse background fuels our innovation and also fuels our adaptability to a dynamic market. As you can see, we have brought people from various locations with different background, different expertise, and it all creates the spirit of collaboration. What we are highly proud that we are an employer of choice. This year, we have received almost 120,000 of applications, people who want to join us, to join our story and our adventure. And we are also giving access to train our people by the best. And this combination of expertise, different backgrounds and continuous learning is giving us the confidence that we will grow. We are equally proud of our culture, our unique culture. We were sharing this across during our IPO that we are in the top of 25 most engaging organizations globally. Last year, we confirmed that we are again third in a row confirmed by the Gallup Institute that we are in the top 25% of organizations with the most engaging culture globally. And our culture is built on values. So it's all about responsibility. It's all about credibility, openness and, of course, ambition. Our employees, our organization and, yes, our employees, they are 8x more engaged than average Polish worker. So you can imagine how much fun we have at work, but also how far we can grow with our employees. And this culture that we have created, this is not only the driver of our success, driver of our performance. It also creates a great place for our people. So they are committed and they found a sense of purpose. So they want to stay with us for long-term success. And this stability -- this commitment translates to stability of teams. So we are observing longer years of service. We are observing strong age and gender diversity. Average Zabka employee is 36 years old. So still young, but with great experience. 12% of our workforce drives digital innovation. And again, it all gives us a great balance between stability and innovation. So summarizing, we have the right organization, which have proven already that we are able to deliver great results. We have high ability to attract and to retain the best people globally. So thank you. And with that, we have concluded both presentations. And now we will be moving to a Q&A session. Thank you.

Thank you all very much. This concludes the presentation part of our meeting. I hope you find these presentations insightful. Before we start the Q&A session, let me remind you of our agenda. After the Q&A, we will break for lunch for about 45 minutes. And after lunch, there will be buses waiting for you outside of the hotel to take you to the distribution center and store visits. And important information, there will be 4 mini buses, 20 seaters, and one of them will be going to the airport after the site visits. So if you want to go to the airport afterwards, just make sure you're on the right bus. In terms of Q&A, let me just remind you how it works. If you're here in person, please raise your hand and a person with a microphone will approach you. If you're joining us online, please use the Ask a Question function on your screen, and we will read your question once we will address the questions from the audience. At this time, I would like to invite the management team to the stage. Thank you.

Michal Potyra from UBS. I think it was very thorough, but I think one element was missing, and I want to challenge you a little bit. Maybe you could say something about your plan for your franchisees. I think that part was missing. So is your business plan assuming basically they will follow your success? And maybe you could provide a little bit of your plans about the reduction of the churn of your franchisees going forward?

Yes. Maybe I will take this. So you're right, franchisees is an important part of our business model. We say that in Zabka, we have 2 hearts. One is for customers, one is for franchisees. And Zabka success is the success of the franchisees. This accelerating expansion is also connected with accelerating recruitment of the franchisees. And this year, we recruited 15% more franchisees than last year. We are able to do this, and we decreased churn. The churn is below the budgeted churn. We are able to do this through constantly investing in our franchisee offer. So there was not much time today to discuss all franchisees part, but we have the separate and a big team working constantly on improving our franchisee offers. And this is not only connected with improving franchisee payout because we are sharing the margin with them, but also with all other additional benefits like trainings or benefits which we are using for them because of our scales connected with education, connected with car lease, with health care, insurance, et cetera. So we do not see any threats with the new candidates. We do not see any threats connected with a possible increase of the churn because of our close relations with the franchisees and franchisee council. But we are -- as I said, we are constantly, constantly improving franchisee offer.

So maybe just one another question. Maybe you could talk a little bit about the regulatory risks and challenges going forward. Particularly, I'm thinking about we've seen increased taxation effort from the Ministry of Finance, targeting banking sector for now. You are not in the scope of the retail tax. So any thoughts on that? Any thoughts on the Sunday shopping restrictions, any changes potentially? And maybe the last bit, maybe you could comment a little bit on this bottle deposit scheme, which I believe is launching just today. Do you expect any impact on your revenue and costs from this?

So maybe I will start with the overall view. So you touched upon a huge subject, right? So probably we could have a chat for many, many hours about what might be happening in Poland about that. But to go directly to the subjects you mentioned, so Sunday ban, I don't see any possible changes with that law. And actually, there are some rumors, but we have to remember that our stores are open because the franchisees are owners of the businesses. And they can be opened like other 50,000 or 60,000 traditional stores in Poland. So I don't think anybody wants to close that, especially when you take into consideration the fact that society took that ban easily because there are small stores that they can go to and buy water during the summertime or ice cream for the kids. So we have to take that into consideration, right? So the second one, which is the taxation on the -- our retail taxation, we were discussing that when the law was introduced, what, 3, 4 years ago, that the problem is how to do it, not making in a whole supply chain, each of the player paying across the supply chain. So we are wholesalers, right, from the point of view of the law or accountancy. And I cannot imagine that the whole supply chain will pay this retail tax. So it's always the final one. And again, the question is, do you want to tax the small operators? And what was the reason for that tax? If it goes across whole market, okay, we'll be paying that tax. But the thing is what was behind that thinking about retail tax at that time was to equalize possibility of the very big players, which are international with the local small players like traditional market or franchisees of Zabka. So again, it's a decision that has to be made. And about the deposit, maybe Tomasz.

Yes. The third question was around the deposit system. And indeed, it's a day-to-day that the system kind of officially starts. It's been a law that was in preparation for the last several years. It is actually following EU law, and I think we're the 19th country in Europe that introduces this. So we had ample time to prepare for this situation. And firstly, formally, vast majority of our stores, which are below 100, I think, 50 square meters are not formally subject to the law. Having said that, we see an opportunity to do incremental business with -- on the back of this change. That's why we prepared. We tested several different solutions over the last several years, and we are fully ready to start now. So the customers will be able to return plastic packages in all of our stores. In some of the stores, roughly half, there will be a machine standing there, which will facilitate the process. And these are the stores which we kind of based on these few years of test, estimated to have the greatest return potential. In the remaining part of the chain, there will be a possibility and the collection will be manual. We believe that we can differentiate against other small stores, and we can attract people into the stores and offer them a co-buying opportunity, which we always value, as you remember, when I mentioned about nonfood services.

Michal Majerski from Pure Alpha. I would like to ask about market segmentation and competition in Romania, especially in convenience, but also how big is this mom-and-pops store segment comparing to Poland?

Okay. Thank you very much for the question. Yes. So Romania is still very fragmented when it comes to retail market. There are like 40,000, 50,000 small mom-and-pop stores across the country. So taking into account this half of Polish population, so you'd extrapolate to like what we had like 7, 8 years ago in Poland. There are big international players when we talk about the modern trades, so like Auchan, Carrefour, Kaufland and Lidl. Lidl is the market leader. Although I think it's also fair to say that structurally, because the cities are very dense, structurally, the city centers are protected from kind of discounters entering the city centers, yes. So they are typically outskirts of the city, the same for hypermarkets. And recently, there's been a consolidation of the market in modern trade. So Ahold took over Profi player. And now by value, they are #1, #2 depending how many they had to sell stores. The transaction has been qualified by the [indiscernible] in Romania. And the remaining part has been bought by Annabella. This is the local Romanian supermarkets. I think when it comes to convenience market itself, you would see a lot of fast food providers or quick meal providers. As I said, Romania traditionally is habitually ready for eating out. So a lot of these outlets. And a lot of, I wouldn't say modern convenience, like convenience players. They don't have bistro, they don't have QMS. They are like small retail, good looking, but not modern convenience players like Shop&Go, like ProfiGO. I think they try to a bit take some solutions from us and copy us. I think we shake the market a bit. And what is fair to say that we are -- we've taken the niche of being on one side, the street food and QMS provider on the other side, the retail store. And you don't have such solution to compare with us.

Piotr Lopaciuk, PKO BP Securities. I have 3 questions. The first would be on potential alcohol sales ban on fuel stations. It seems there is a chance again for implementing this. Do you have like any analysis estimating the potential positive impact on your business? The second one would be on Romania. We heard a lot of warm words about the business development there. But so far, no acceleration visible in terms of openings. When we can expect it? And what could be the pace? And also on Romania, are there any regulative differences which might be material? I'm thinking about form of employment, Sunday ban or maybe something else. And the first question, you mentioned weather in 3Q. And I started to wonder, whether in 3Q last year, was there any negative impact on your business related to floodings in Poland in September? Or was it like immaterial?

Yes. So maybe I will take the first one because it's the first one. Alcohol on fuel stations, I mean, what we can comment here. I think it's a legal issue that may appear, and we will act accordingly, right? So probably you ask about the impact, but I cannot judge the impact before the -- something happens, right? So -- and I don't think we can prepare on this as it will be something that will happen or not, right? So I don't think we will build our strategy on this. So on Romania, maybe Tomasz; and then weather...

Yes. On Romania and kind of long-term expansion plans, I think what we tried to convey here is that we're optimistic in terms of the Romanian expansion. And it is one of the reasons why we expand our growth plans from 1,000 to 1,300-plus stores per annum. This number includes Romania, right, as well. In the first year, we opened 100-plus stores in Romania, and we intend to accelerate that figure. It is included in this revised number of stores. And I think that was the first part of your question around Romania. The second was around the legal restrictions to the business in Romania. And Romania is a country where there are no similar restrictions compared to Poland, including the Sunday trading ban or any other. I mean there are some kind of legal differences, but in the context of your question, they are not material. The third one was on like-for-like...

Good question about the weather in September. Why? Because this quarter 3 was very specific. It was anomaly in terms of the weather, and we track the data very carefully. And the temperature drop to last year is comparable to the year 2017, which shows this anomaly and everyone who lives in Poland knows that we had very cold summer, impacting negatively all the industries connected where results are connected with weather. We estimate our impact between 1% to 2% of like-for-like. However, we do not change our guidance for Q3 to deliver single mid-digit like-for-like. As to September specifically, you're right, there were floods second half of September last year, mainly on the south of Poland. It has -- we -- then we had around 11,000 stores. We had only, from what I remember, 15 stores closed. So it didn't have like huge material impact on our business. What had an impact is that this September, the rainfall was lower than last year. However, the temperature were colder. So paradoxically, this September was around 2 to 3 degrees on average colder than the September last year. That's why it was from a weather perspective, a difficult quarter in terms of the categories like beverages or ice cream. But to your question, lower rainfall this year versus last year, however, colder September and overall anomaly in Q3 in what concerns overall 3 months of weather and summer.

Okay. So we can move to the questions that are submitted online. We have a question on the Carrefour strategy in Poland. According to press reports, Carrefour is planning to exit from Poland. With this format, there are, among others, over 500 convenience stores. Would Zabka be interested in some form of participation in the exit of Carrefour?

I mean it's quite difficult always for retailer to comment on decisions and actions of other players on the market. I can only say that, okay, Carrefour has 500 convenience stores. We open 1,200 convenience stores per year. So having that into -- taking that into consideration, you can try to answer your question. It would never be any big move or change for us. That's the only comment I can have on that.

Okay. Another question that we have concerns Romania. In Romania, is there a time line or guidance for the business to become breakeven? And which factors are the main driver of the losses? If it scale? Any guidance on the number of stores required in Romania to breakeven?

Thank you for this question. We shared, I think, a lot today about the Romania, about our like performance of the stores, about our operations. I think it is too early for us to say what the number will be to breakeven. What we can say is that we have the stores, which we opened last year, which have already positive contribution. We have some stores even we opened like last month or 2 months ago, delivering positive contribution, which is very positive for us. And we see the performance of this business is really very, very, very good, in line or in some areas, even above our expectation. It gives us confidence that from the longer-term perspective, we will build substantial value in this country. Yes. And we will share with you, of course, if we have more details to share. But at this stage, I think this is something what we can say.

Maybe to build on what Marta said is unlike in Poland, as Anna mentioned, there is competition of some sort in Romania. And that impacts our ability combining the scale where Romania is now and the competition of giving you some of the very detailed information around that business.

Moving on to the online questions. How do you assess the business potential arising from retail media and Zabka? What steps are planned within the next year or 2 in the context of monetizing Zabka's potential in this area?

Okay. Thank you for that question. So on the Retail Media business, we see it as an extremely promising business. Today, we have, as mentioned during the presentation, around 5,000 screens. The payback on these screens is very attractive. It's actually one of the, I would say, best payback periods that we see across our investments. We see very big interest from both FMCG companies. As mentioned already today, we're working with more than 90 different players who advertise on our platform. And we also see additional benefits arising from increased like-for-likes. Our plan with that is to obviously scale that business. We don't have an exact number of stores to which we will go. For now, we will continue expanding. We measure the ROI on each screen in each specific location. So we know where to put the screens where not. But again, what I can say at this point is it is fast growing, both in terms of our expansion and in terms of the interest of advertisers and in terms of supporting our like-for-like, very, very solid.

Thank you, Wojciech. I'll pause. We have a few questions left online, but I'll pause here. Maybe there's some questions from the audience.

Piotr Bogusz. I have a question regarding the guidance -- near-term guidance for the net margin. This is 2.5% to 3% and was 3%. And what are the main reasons behind the lowering this?

The net profit margin, you mean?

Yes, net profit margin.

Yes. I think that the near-term guidance is 3%, and we have not changed that. And the near-term guidance and the midterm guidance is 4.5%. Maybe...

Yes. But in the presentation, it was stated 2.5% to 3%.

So maybe we -- yes, it is 3% in the near term. It is what we -- I think in the IPO, we said 2.3% and -- 2.5% to 3% and maybe, therefore, we presented that in the presentation as the IPO guidance. But we shared, I think, during the last call that it will be 3% in the near term and 4.5% in the midterm, and we will -- and this is the right guidance we should be looking at. Thank you for this question. It was good to clarify that.

Moving on to questions online. How is the share of QMS and transactions expected to evolve over the next 3 years? What actions are planned to further increase the share of QMS in the midterm?

Yes. So if you look at the categories, QMS is our fastest-growing category and the main incremental driver of our like-for-like. We see that it's creating differentiation and giving us the unique competitiveness, competitive advantage on the market. That's why we invest in QMS from different parts. We invest a lot for snacks, sandwiches to go. We invest in ready meals. And at the same time, we invest in our gastronomic offer, which is street food. The fastest growing is the street food, which is the main accelerated of all QMS. However, we see -- that's why we like to talk about all over QMS offer for customers because, as you know, our strategic objective to be part of the daily rituals of our customers, which means that right now, we have the offer for breakfast, for lunch and for dinner. We recently introduced our breakfast offer. You can buy toast, you can buy panini with scrambled eggs and bacons, coffee, et cetera. So we will be investing. It's our strategic priority on QMS, sandwiches, snacks to go, ready meals and gastronomic offer. And it will remain for next years, our key driver of like-for-like. And we are doing this via new product development, which I described and via our strong joint business plans with the selected suppliers, which are exclusively together with us delivering and creating those unique products under the QMS umbrella.

And to build on what Adam said, as we shared before, we're approaching 20% share in visits that include the QMS transactions, right? And if you look at the benchmarks of most developed convenience operators in the world in that aspect, typically from different Asian countries, you would see that the share of QMS is exceeding 30%. So this is our kind of North Star that we want to reach in the kind of longer term. Every year, as Adam mentioned, this is the highest growing category. So the share is increasing, and we're slowly and gradually getting there. As you have seen from the data that we shared around the coffee, which was one of the first products, QMS products that we introduced, this is a long-term process. And it takes several years because we have to not only put the machinery and products in stores, but also install in the customer minds certain kind of automatisms that they understand like by heart that such products are available at Zabka are of good quality and good offer.

Another question coming from online viewers. Store openings projection for 2025. Will you be reaching 1,300 stores opened in this year?

Yes, we will. As we shared with the presentation, we are on track to deliver the guidance of 1,300 stores to be opened this year in Poland and in Romania. Yes.

Last question that I have online at this point. In terms of regulatory environment, particularly in the area of franchise agreements, are any new regulations planned by the regulator that would impose obligations or fees on franchisors?

Yes. Yes. We are in the discussion on the retail boards. But we have to remember that we signed 2 years ago, I think, a code of conduct of the franchise companies that are providing franchise models. And this was agreed between all the groups. And hopefully, the new regulatory bill or changes that might be introduced in the future, we'll take that into consideration.

Thank you. The list of the online questions is -- there's no more questions. So any other questions from the audience? Yes, there are some over there.

Yes. One more question from my side. A question regarding churn. You mentioned that churn decreased than what you budgeted. Was it driven by voluntary churn or obligatory churn?

It's both, voluntary and obligatory and our decision.

Janusz Pieta, mBank. I've got a question regarding Romania strategy. What needs to happen for you to accelerate the rollout? I mean to open the similar number of stores as we see now openings in Poland.

Well, I think -- and I'll make a little joke here. Even though we have a very ambitious team, opening more than 1,000 stores in Romania that is half of the size of Poland would be extremely kind of ambitious task. So it would be very difficult because the people and kind of real estate and geographical limits, Romania being more or less half of the size in terms of population, right, of Poland. So we're not -- in our ambitious target, we're not as ambitious to get to the Polish levels. Having said that, I think our ambition in the midterm is to get to Polish levels, but adjusted by the size, right? So if you think about our kind of thinking around Romania and expansion, once we get all the machines working on 100%, by machines, meaning the expansion, we get to the certain level of maturity. This is the run rate level that I think can be expected. But it is a process, right? We kind of finalize the test phase. We move on to expanding at a higher pace, but it will take time for us to get to this kind of run rate similar level to Poland adjusted for the size type of levels.

I can build on that, that first and foremost, the most important is to refine the format, yes, and to make sure that if we scale, we scale the right one. And second, to build enablers. Remember that we're building the company from scratch when it comes to technology, people and also the expansion pipeline, yes. So we need to ensure that we have a backbone and all the enablers in place, up and running. And then nobody will catch us up.

Yes. And just to give you the color, before the galaxy, so before this logo that you can see on the wall, we were opening 260, if I remember well, the year before. And we introduced the new model. We're testing that model. We adapt that model to the needs of the Poles. And then we started to expand this model. There was 400 stores after 2 years, 600, and then it was a big jump to 1,000 stores. But as Tomasz was mentioning, Poland is Poland with 38 million. Romania is a different country. We are on a different stage. Anna knows that. Adam knows that because they do it on the daily basis. Thank you.

There's time for one last question from the audience. Okay. If there are no more questions, thank you very much for joining us today. There will be lunch served outside, buses taking you to the store visits and DC, and there are like colors on your badges, colored dots on your badges that is groups that will be -- we will divide you by groups in our distribution center.

Thank you.

Thank you.