Good day. Welcome to the DP Eurasia full year results presentation. Please note this call is being recorded. For the duration of the call, your lines will be in listen only. However, you will have the opportunity to ask questions. Questions will come from the floor first and then the telephone audience. To ask a question over the phone, please press star one on your telephone keypad. I will now hand off to Aslan Saranga, CEO. Please go ahead. Good morning, everybody. Welcome to the preliminary results for the period ended 2022. I have my colleagues with me, our Group CFO, Neval Korucu, and our Head of Investor Relations, İlknur Kocaer are with me. First of all, I would like to start with the horrible earthquake in Turkey. We are deeply saddened by the earthquake that devastated prominent cities of Turkey on February 6, 2023. We regret to disclose that four of our colleagues lost their lives. 50,000 people in Turkey lost their lives. We extend our condolences to all grieving families who lost their loved ones. In order to alleviate the impact of the horrible disaster, we have organized donation campaigns in the form of cash, food, clothing with our employees, suppliers and aggregators. In order to better understand the urgent needs, an emergency helpline has been designated. Domino's Pizza International also organized a separate campaign as a part of Partners Foundation Program. We'll continue to stand in solidarity with our employees, business partners and community in this difficult time. Now, I want to also give an update our Russia situation. We retain a fundamental commitment to the safety and welfare of our employees and customers. As of now, the group continues to evaluate its presence in Russia, and as previously announced, is considering various options which may include the divestment of its Russian operations. In the meantime, the group continues to limit investment in Russia and remains focused on optimizing the existing store coverage. Following the closure of 29 stores over the course of 2022, the number of Russian stores stood at 159 as of 31st December 2022. We'll continue to communicate in the same transparent and consistent manner as this matter progress. All the group figures that we are going to present here exclude Russian business, which is now classified as a discontinued operation. In the appendix of the presentation you have the Russian numbers. In today's agenda, I am going to present the group highlights in the beginning, we'll give overview about Domino's and COFFY. Some financial overview and management guidance. After the conclusions, we will be happy to get your questions and give answers. About the group highlights for 2022. Having worked extremely hard to combat the high levels of financial volatility in the regions we operate, I am pleased to be reporting solid results. There are 3 important positive developments in our business in 2022. I'm also happy to say that we have seen further improvements in these areas into the first quarter of 2023. We had a solid store expansion in Turkey. We had opened 48 new store openings of Domino's. This is number one. Number two, EBITDA growth was solid with 93% growth, the inflation-adjusted growth is 5.3%. We had a promising improvement in the leverage ratio. Last time I spoke to you, our leverage ratio was 4x by the end of June 2022. It dropped to 2.5x by the end of 2022. In this number, all Russia related debt is included. Number three, of course, COFFY. COFFY continues to represent an excellent growth opportunity to the group. COFFY network increased by 21 stores to reach 29, thanks to so-solid ongoing demands. Our presence with COFFY reached to 40 stores as of today, this is the highest for 2022, we have opened 71 stores. This is the highest net store openings since 2013 for the group. About our group key indicators. As I mentioned earlier, we are now 700 stores, we have 159 stores in Russia also. We have opened 48 Domino's Pizza, 21 COFFY and 2 Domino's Pizza in Georgia. That makes 71 stores. With 48 Domino's Pizza, we have performed better than our guidance. In COFFY, we are in line with our guidance. Our like-for-like is in line with our guidance, which was 62%. When we look at the inflation-adjusted figure, it's - 5.3%. I would like to remind you that from January to September, we had a VAT incentive from the government, which is 7%. If we add the 7%, our like-for-like is 1% or 2% positive. Our online delivery is still increasing. It's 5 percentage point more than 2021. 81% of our sales is through online delivery. Our system sales has increased 1.5%. Our revenue has increased 7.6%, and our EBITDA came to TRY 311 million, and the increase is 5.33%. Our adjusted net income is TRY 214 million. This is 50% increase, inflation-adjusted. That is driven by a tax benefit write-off of Russia debt in Turkey accounts. Next page, you can see the comparison of pre-inflation adjusted and post-inflation adjusted. If you go, look at on it, is net system sales is 76% pre-inflation adjusted. Post-inflation adjustment is 1.5%. Revenue, pre-inflation 86%, post-inflation 7.6%. EBITDA pre-inflation 93% increase, post-inflation 5.3% increase. Net income, increase pre-inflation 156%, post-inflation 50% increase. Like I said earlier, these are quite strong results. Here you can see the breakdown of our sales. Domino's Turkey sale is TRY 3.4 billion. Azerbaijan, TRY 79 million. Georgia, TRY 49 million. COFFY, TRY 59 million. Russia, TRY 1.1 billion. Here you can see the breakdown of our stores. We have 700 stores in Turkey, and 29 of them is from COFFY. 16 is Azerbaijan and Georgia. We have 10 stores in Azerbaijan, six stores in Georgia, and we have opened two more stores in Georgia on 2022. Store number in Turkey is 655. Breakdown of corporate and franchise. Going forward, we mainly open franchise stores. 86% of our store count is franchise, 601. 14% of our stores are corporate, which is 99 stores. Let's get into the details of our Domino's Pizza business in Turkey. In Turkey, you see on the left side of the page, nice image of our stores. There's a big demand for store openings in Turkey through our franchising. This year we opened 48 stores. All of them was franchise openings. 86% of our Domino's stores in Turkey are franchise. 14% is corporate stores. We have 89 corporate stores in Turkey. In this page, I would like to talk about the earthquake impact. Domino's Pizza Turkey has 50 stores in the affected 10 cities. 38 stores were operational within 15 days following the devastating disaster. 12 of our total 655 Domino's stores in Turkey are still damaged, not operational, which are predominantly franchise-owned stores. Here, I would like to say that these 12 stores is not a significant number for our business, and it will not impact our overall year-end results. We are working on several options for these stores, including moving to other cities. I expect by the end of the year, is all these 12 stores will be opened. Here in this project, in these pictures, you see a specific project that we, that we are working on is opening prefabricated stores in the affected regions. Government especially is incentivizing the opening of the factories in this region. We are building prefabricated stores in this area. This is the first time. Probably we'll open it next or in the coming weeks. I would like to thank my team also here for being so fast on opening these stores. About the online share, as you know, you know, when the online share of our business is increasing, frequency of our customers are increasing. The share of online sales in Turkey delivery system reached 81%. This corresponds to 5 percentage point increase over the last 12 months. It's also 65% of our overall sales. Takeaway share improved last year. It improved from 21% - 26%. But delivery share is still above the pre-pandemic due to shift of consumer preferences. Right now, 74% of our sales is through delivery, 26% is through takeaway. Inflation. As I said earlier, our we had a resilient performance despite inflation challenge. Our like-for-like performance was -5.3%, but that includes the positive impact of last year's VAT reduction of 7%, which makes our like-for-like 1%-2% for this year. Our growth performance had started very well this year also. Our group's system sales in the first 11 weeks of 2023 is up 18.2%, and our like-for-like in Turkey is 11%. I would like to remind again, this is inflation-adjusted numbers. We have one of the highest inflation in Europe and how Domino's Turkey manage inflation in 2022. I believe inflation is a challenge, also is an opportunity for our business, 'cause there are a lot of customers trading down to our to our foods, both in COFFY and Domino's, and we have a lot of experience on managing this. We have successfully implemented our targeted action plan to overcome macro factors largely outside of our control. Our clear and targeted strategy focuses on three areas. Number one. strategic pricing and product innovation. Number two. continuous digital innovation for better customer experience. Number three. operational e-efficiency to enhance store profitability. About strategic pricing and product innovation, in my last presentation, I have told you that we have come up with a product called Pizzetta, which is more or less around $1 for a one person, to feed one person. This kind of products helps us when the prices are increasing, to acquire new customers with a lower budget. In the first quarter, we have also come up with side items of Pizzetta, like some desserts, some garlic breads, which is half dollar. It's also working very well for the business. In the digital side, we are focusing on, especially on app because our frequency in app is higher than rest of the digital sales. We have app-only offers, and we have also recommendation engines, so we can personalize our offer, and we can offer personal offers to our customers, which is also helping to increase the frequency. About operational efficiency, we are fanatically focusing on franchise profitability. As you see from the numbers, it's working very well. Last year, we opened 48 stores. We have long-term partnership with our cheese supplier, tomato supplier, and Coca-Cola, which is helping our costs. By the flexible labor management also, our efficiency in store helping to combat the inflation. Let's talk about coffee a little bit. This is really a very exciting business for us. Coffee business, espresso-based coffee business is growing very fast in Turkey. In the last, eight, 10 years, you know, our competition has opened more than 1,000 stores. Starbucks is in Turkey, it's one of their biggest markets. With this big coffee market, we believe we can, with our expertise from Domino's, with our digital infrastructure, with our logistic infrastructure, with our franchise network, we believe we can be one of the biggest players in coffee business in Turkey. Our coffee, our own brands, [audio distortion] is present in the Turkish market with accelerated expansion programs. Here you see the three years story timeline story of coffee. We opened our first store in October 2019, which reached a break-even point in the third month. In 2020, we started delivery. Around 20% of our sales are through delivery in coffee. Then, by the end of, by the beginning of 2021, we first opened our franchise stores, which became profitable. We opened our first stores outside of Istanbul, in Ankara. We launched our app in 2021, and 10% of our sales are through our app. We believe it's an important competitive edge. February 2022, we opened our 10th stores. In 2022 we accelerated the growth. In this, we are now in six cities. As of today, we have 40 coffee shops, different coffee concepts. You know, we have kiosks in the universities, takeaway units, and big coffee shops. The pipeline is really very strong. One of the... The other big advantage of our coffee business is the synergy that we are using the franchise network, we are using the online infrastructure, we are using our head office. As coffee business grows, the overall DPU business will be more efficient in terms of head office costs and commissary costs. It also helps us the logistic infrastructure, franchise network, online infrastructures, helps us to grow very fast in different cities for coffee. Page 22, you see the, our pipeline. We have a solid store growth plans for coffee. By the end of first half, we are planning to be minimum 50 stores. By the end of 2023, we are targeting to be minimum 80 stores for coffee. This page you see, you know, one of our latest openings. It's a big coffee shop around 300 meters square, which is a new city in Sakarya. How do we keep our value promise? It's very clear that right now coffee is a strong business model. What is this business model about? There are three important value promise for coffee. One of them is the simplicity. Single price for different choices. You enter to a coffee shops and you have single price strategy, and you have 20 variety of coffee and different varieties of sandwiches, desserts, and you can buy them with a single price. Second one is the value for money. We have more attractive pricing, thanks to the, our purchasing power and good infrastructure. We continue to position ourselves at 30%-40% more attractive prices than the competition. I would like to tell you that last year we were able to increase our prices by 70%, which is parallel to inflation in Turkey. Third, one is the convenience. We continue to improve our app experience. It's a very easy and fast app experience, and we improve it. For example, one of the latest one. A structure to place the orders via app before the customer arrive at the stores. Because nobody wants to wait in the line in the coffee shop. When you come to the stores, once you arrive, you push the I arrived button, and customers can receive their order without any delay. We have a very good loyalty program. As I mentioned earlier, our share of app in total sales is 10%. A small reminder about our strong financial performance maintained with 40 shops. We still have the same good financial performance. Our average investment per store in coffee is TRY 1.5 million-TRY 2 million, which is around $75,000-$100,000. Average weekly unit sales is TRY 89,000. This is around also $4,500. We do weekly 3,000 orders for coffee. This is 2.5 years average return on investment. You put $100,000, and you take your investment back in 2.5 years. These are the numbers for the franchisees. Franchisee store margin is 12%-13%. Last year we have increased our sales to TRY 60 million, which is 430% increase. Hopefully, we'll have a more solid business by the end of this year. Some financial numbers about our business. This year, our net system sales has increased 1.5% inflation-adjusted to TRY 3.5 billion. I would like to remind you that last year our increase was 34%. It is very difficult to keep the margins in an inflationary environment, and we have succeeded that also. Last year, our margin was 15.1%, more or less the same number, like the previous year. Our CapEx and cash conversion is still very high. 70% of our cash is converted to cash. There's a promising improvement in leverage ratio. These good results helped us to decrease our leverage ratio. Our leverage ratio, including the Russian loan, is down from 2.9 to 2.5. You might remember in June 2022, our leverage ratio was 4. For only Turkey business, our leverage ratio is 1.6. From 1.9, it's down to 1.6. You can see the numbers here. Let's look into to our management guidance for the year 2023. Strong store openings momentum in Turkey is anticipated to continue for both Domino's and COFFY stores, driven by solid franchise demand and driven by, you know, big market of 81 million in Turkey. On top of an outstanding year of growth and challenging year, 2023 will be another year of increasing the coverage to cater customer needs in a fast and seamless manner. Solid sales momentum will be maintained in 2023, along with sustained network growth. The group is committed to deliver like-for-like growth through the year with a volume expansion and targeted price adjustments. New customer acquisition and increasing the order frequency of our existing customers will contribute to improve our volumes. The group is mindful of the fact that 2023 will be another year of trading in a volatile environment, with the potential for further economic uncertainties. Inflation risk persists this year as well, which could impact overall growth levels. Nevertheless, we'll continue to manage the risk carefully as we successfully did last year. We have three strategic priorities for 2023. One, focus on sustainable profitability. Number two, improve leverage ratios, reduce indebtedness. Number three, continue to invest in digital and people. The like-for-like growth rate, we are targeting to beat inflation with high single digits this year. The pre-inflation, that means pre-inflation, our target will be around 60%-70%. We expect inflation to be around 50% this year. It might change, I mean. Domino's Pizza net store openings will be 35-40. I would like to remind you that we have 655 stores, we believe the potential in Turkey for Domino's is 1,200 stores. Still have a lot of room to grow. COFFY, as I said already, is a very big market. We are planning to open 50-60 stores this year on COFFY. Most of this growth will come by franchise openings. We might open some strategical corporate openings, but not something really big. Our capital expenditure will be TRY 160 million. As a conclusion, if we conclude all the presentation, our strategic actions have effectively elevated impact of inflation. This is number one. Number two, we delivered inflation-adjusted growth in profitability year-on-year, despite unprecedented cost pressures across the board. Number two, we opened 71 net stores during the year, which is a record year after 2013, including COFFY and Azerbaijan and Georgia. Our commitment to keeping the store profitability at healthy levels will drive further store expansions. Number four, high growth potential from COFFY business, which has delivered solid unit economics. As openings continue at full speed in 2023, we expect to reach a solid scale of business at the end of this year. For Russia, we'll continue to communicate in same transparent and consistent manner as this matter progress. Thank you for listening to us, and if you have any further questions, we'll be happy to answer. I think we'll start first with the floor. Um, can, uh- Yeah, yeah, please. I just wanted to understand how regularly are you updating prices now, your menu prices, given inflation has at least gone from what I see on the reported numbers or down somewhat? Second on the CapEx, TRY 160 million, because you're telling me that most of the stores are going to be opened on franchising. What is driving the CapEx to TRY 160 million? Lastly, on the competition, I mean, you are quite big in size in Turkey as you have dominated the market. You have been able to manage the 70%-80% inflation that's been happening. How has competition fared in the market? Give us an idea on whether. Yeah. You have taken share. Yeah. Now, about the price increases, we are increasing prices almost every month, sometimes every 15 days. It's a very dynamic pricing, and we don't have one pricing for all of our stores. We have five different pricing strategy for different cluster of stores, depending on competition and income levels. It's really a very complicated job for us, but we are doing a good job. About the CapEx, there will be no corporate openings in Domino's Pizza. In order to accelerate the store growth, we might open some stores in COFFY. The idea is to accelerate the growth because we see the market, we see the opportunity, we want to go really fast there. Other than that, in the CapEx, we have most of our CapEx, like some coffee investment. I.T. IT. I.T. investment. Biggest part comes from the I.T. investment. I can say half-. Yeah, developments. Half of it comes from, the. Security. Keeping the I.T. security and, development Mm-hmm. in the online ordering platform. Yeah. Of course, there is the maintenance of our commissaries, maintenance of our existing corporate stores. These are the main items. About the competition. Look, I mean, you know Our area is a challenging area, but on the other hand, it's a huge opportunity. 82 million, still growing economy, very young economy. Because of inflation, people are trading down to fast food, let's say. All the market is growing, by the way. We are still very small. I mean, when you look at all the markets, I mean, the food market is around TRY 100 billion now. We are doing around TRY 3.5 billion, so we are like 3.5%. The short answer, competition is growing also. We see that. I think it's going to grow next five, 10 years, by the records. 80 million people will need food. Can I ask just a couple on coffee and while I was saying. Yes. Would you at the moment to franchise? Mm-hmm. The second one would just be, on the mix of coffee and adding your range of these three adding on. Finally, just on that of course the outcome of. Mm-hmm. Prefabricated stores. Uh-huh. Those that were affected by the earthquake. I just wondered whether going forward, like, sort of, to use those types of stores for further expansion and whether that might accelerate? Thank you. I mean, buying and selling stores in Domino's, when you look at the last 10 years, is a part of our ongoing business. We buy and sell stores, and that's mainly the decision-making is about which one brings us a more value. For example, if a corporate stores makes more money than the franchise store, why should I sell it? I always try to keep some number of corporate stores because that gives us a muscle. We understand the franchisees. It's not part of my strategy plan, whether I need to sell it or buy it. If there is an opportunity, and if we can sell it to a better price, we can sell. If not, all the stores in COFFY are making money. I don't have drive for that. My only drive for coffee is to grow. About attachment rate in coffee, you have the numbers? I know the mix. The around 66% comes from the drinks. The attachment rate around 20%-25%. Yeah, we try to check the with the competition. It seems like to me it's a good numbers. That's what I've been told. About the prefabricated stores. Out of we have 10 cities which the government called them, like affected cities. In the except three cities, in the seven cities, life is normal. I mean, these are really gone. I mean, I don't think next one or two years, this is Hatay, Adıyaman and Kahramanmaraş, like there's no city. As I said earlier, there is a, they are trying to put the factories working and putting some prefabricated houses for the workers to live there. We'll put prefabricated stores. Is it a big part of our business? I don't think so. Maybe we might have five, 10 stores there. Should we take questions from the conference call line? Marion, if you could open that up, that would be great. Thank you. If you would like to ask a question over the phone, please press star one. Again, it's star one on your telephone keypad to ask a question. There are no questions on the phone at this time. Okay. Can I just ask one more? Yes. On sustainable profitability, that's one of your focus for this year. Can you give us some more color on what do you think is the sustainable profitability level of Domino's business? Maybe on free cash flow, when do you think this year would be free cash flow positive for you, the amount of CapEx and your portion of EBITDA and-. Yes. I mean, about, Shay, you have shown a financial order profitable by 50.1%. Page 26. This is our EBITDA margin more or less, you know, is 0.5% up. We try to keep it. For me, the most important thing is the franchisee will get his payback. This is numbers around in Domino's is around three years-3.5 years. If we can manage it for the franchisee, we can make our profit also. This is, this is I believe is very important. What was the second question? Free cash flow for this year, you think would you be free cash flow generative this year? Uh, I think- You are looking for 2023? Yes. Yes. Yes. We are expecting to get a free cash flow. Okay. Yeah, with estimation. After paying off your interest and your debt. Yes. Yes. Yes. Therefore, our expectation to decrease our levered ratio as well. Okay. Okay. I think we can now conclude the call then. Thank you. Thank you for listening to us. See you next program. Thank you. Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.