Lpp Sa Uns/Adr

Monika Wszeborowska, welcome everybody wholeheartedly to the Results Presentation Conference. Marcin Bujka, Deputy Chair of the Board and Chief Financial Officer of the Group, and Magdalena Kopaczewska, Director for Investors Relations, are going to be your hosts. hosts today. Ladies and gentlemen, our meeting today is going to be devoted to summing up the results of the LBP group for the third quarter of the current year. In our case, that means August, September and October. And it is what we'll start with. Throughout the conference we will also tell you about our plans for the nearest future and more long-distance plans and we will complete the meeting with a Q&A session. You have a chat box at your disposal. You can see that chat box on your screen. It's going to stay active and is of use to you should you want to pose a question. If you still have any questions to clarify after the meeting has come to an end, please get in touch with our Investors Relations Department, lbb.investor.relations at and the media are invited to contact media at lpp.com. Our meeting today will last more or less an hour, so we'll try to have wrapped everything up by seven. Let's move on to summing up the financial results for the third quarter of the present year. Here's without further delay, since we have a lot of material to cover, let us move on to summing up Q3 2025. The most important pieces of information, like for like stores, that is those that have been in our network over 12 months, have 4.3% of growth in like for likes. In a moment we will see the details, but it is a very nice result. The stores that have been with us for a long time is not the only part of our business. We've been growing systemically. You've noticed that maybe recently that 232 stores opened, including 200 in Zinzi brand, but we also keep on growing in the other pillar of ours, that is e-commerce sales. So 1.7 billion lattes in sales increased by 22% year-on-year in constant currencies, so great dynamics. And what always comes as a good piece of knowledge is the payment of the second tranche of the dividends, 330 zlotys per share, so over 1.2 billion paid dividends. Recently, the percentage of the dividend is around 4. These are our plans. So this piece of information is always very positive, one that we eagerly share with you. These are our operational results. This is for financial results. Here we have four main indices indicators. Sales in the first third quarter, 6.1 billion. 22% dynamics. EBITDA, 1.7 billion. EBITDA, 1.2 billion. And net profit, 800 million. Big, nice numbers in Q3. they are really lifting our spirits when we look at the comparison EBITDA has 48% of growth year-on-year EBIT 61% and net profit 39% of growth year-on-year so increases over the dynamics of sales which of course means greater profitability as we will see in greater detail on the slides to come the business results that you've seen the previous slide nicely translate also onto the financial results And to begin with, maybe there is one more important disclaimer to share. The results that we've been looking at in terms of profit are those that have been adjusted, which means that they are purely business-like results. Everybody that is with us here today go over our cyclical reports. Two weeks ago we published one, the decision of the board having analysed the results market situation was to write off around 800 million zlotys from the result and the write-off result is from the situation of the Russian company of the Russian investor who in 2022 took over the business after this investment and we informed you about that in September. We talked about it at an extensor, but the situation is dynamic and after new information that we described in the current report, we had to re-evaluate the situation and that is what it led to in terms of business decisions. Just to remind you, the write-off is a non-cash one, so it does not mean any cash outflows from the company. The situation of the company is really comfortable, and I believe that this is something that is reflected in the results we are presenting today. We have enough resources to develop, to invest, including into logistic-related key picks, and as we have commented, That is also of course stemmed from the current analysis of the situation, but we see no reasons to change anything in the dividend policy either. We simply keep on focusing on pure business and the results that you see presented in this slide and in the slides to come focus purely on business. 2025 is also an acceleration of our growth and traditionally we show you the status 232 stores open in Q3 nearly two-fourth acceleration, over 30, 32 stores in ICMH, so Reserve Prop House Mojito, and the third quarter, and over 2,000 incidents. In the third quarter, we complete with a network that altogether has nearly 3,500 stores. Now moving on to the details of financial results, we are going to look at particular indices in greater detail. The comparable sales like for lights, this is what we started at the beginning with the 4.3% generated over the last quarter. In a broader context, 7.5% in third quarter of the last year. So the basis was high in the period that you can see presented in the slide that was the highest one. So the base was demanding. That is why we talk about 4.3% as something positive and something that we are actually happy about. Now let's take the results and compare likes for likes and we add new sales. Then we can see that in the third quarter, the increase in sales reached 22%, 22% offline and nearly 21% in e-commerce. But up to the nine months, the entire business growth by 20%. An additional piece of information is that there is an increase of sales. Foreign exchange rates, that was minus 1.5%. So if we purify the results by that macro impact, it would be higher by 1.5 percentage point. That's our first leverage. The other one is gross profit margin. After the last Q&A session that we had in September, During that session, he signaled that there is the mathematically logical potential for increasing the margin because the second half of the year is clearly better. We've contracted the collection at a more favorable exchange rate, and back then we could already signal that now I'm happy that nothing went wrong, and we can see that everything went according to our plan, and we can report nice high margin. And again, as was the case with like-for-likes on the scale that you can see here, the highest margin in the last period is to be seen. Zloty was very strong in recent years, and that's something that is also favorable. So sales gross margin in the third level, which that is a G&A cost. And in this context, we are most happy about this particular level, which everything is in our hands. At the end of last year, we commented that we are building the scales, the cost, the dynamics, they were higher. Some of the locations, logistical locations, only opened themselves and they only learned how to be efficient, but starting with Q1 this year, the costs behave the way we wish them to. We are efficient in the so-called back office, We have mastered the development rules there. We know that the teams that we have are sufficiently efficient and we can grow with them. But two greatest leverages standing behind the drop, of course, is, of course, logistics and marketing apart from the offline stores. when you think about the broadly understood largest this is the biggest group and owing to our investments in this area we can optimize the costs and then the other part is performance marketing and here giving you precise digits we spent not even 8% in relation to the profit from the e-commerce channel compared to 9% last year so this one percentage point is quite a leverage And all in all, when we put these three components together, what we get is a really nice dynamic in profits growth. We saw nice numbers at the beginning. We are very happy about those growths because probably at this point last year there was a lot of uncertainty. Of course, we believe in our strategy as well, thought over. And now we are bearing fruit of the hard work that we carried out over the last months. The increase in profitability of around 5% at the EBITDA or EBIT level. These are really great results. In the third quarter, in terms of net profit, it's around 2.5%. But again, giving you a broader context, this year we've accelerated with investments quite much. We used the existing banking limits that we have quite extensively. But it again, as informed, it was the end of November, a big success of the entire organization, and of the team involved in the project made it possible for us to close the complex refinancing structure for our debt, so we can enjoy financial stability for the next three to five years, depending on the area of financing. And ever since then, so ever since Q4, in consecutive periods, those financial costs are going to be even more optimized. Everything is heading in a really nice direction and the nine months with each quarter we were kept accelerating also show that when you look at the dynamics on average plus minus 30% of increase at any level reminding you that sales after nine months grew by 20% then automatically that translates into the increases in profitability at any level. Now we can smoothly go to the operational indexes, inventory. The image is really great. The last bar that you can see is below the second quarter, particularly the line that shows you the value of our inventory per square meter. It dropped quite significantly here during the first half of the year. Well, we entered the first half with higher inventory levels. You might remember that in June we reduced our guidance. With this stock we've been working pretty actively. What was supposed to be delayed was delayed in terms of supplies and then we lowered the purchase budgets for consecutive periods in order to make some space for this inventory. So this is the result that we got to. We still have some more goods coming before the end of the year, but I don't think that we will get anywhere near 2,000. I remember what I said in September when we commented on behalf of the company, Still in the first quarter, maybe in the first half, we'll be working in this inventory that we are shifting from those periods you can see, especially in the Sensei brand, this margin was under slight pressure, but we can see looking at Q3 that in terms of business challenge we can really generate nice results. Inventories of course are related to the working capital. This is a quite boring slide. We've been able for some time now to generate a negative level and new financing gives us additionally more comfort in terms of reverse factoring. So yet another area, as Warren Buffett said, banking should be like that. And we are happy to have this boring comfort, so to speak. Now in terms of logistics... It is marked by high CAPEX. Our CAPEX is foreseeable. The blue bars looking bottom up, these are expenditure for stores. So just to remind you, 150 euro per square meter, and since then about 800 in other brands is the average. And in terms of logistics, this is the medium bar. This is the area that we sped up on already last year, over 1.7 billion. But we will see on the slides that still next year we will be spending. We are spending a lot but less than this year is going to be spent. But as we saw in the OPEX part, these are high quality investments and they really allow us to generate nice savings, this operational level. And what makes us happy is that our growth is dynamic and fast, but all that is carried out with safe debt level. The first and second quarter slightly high, but then 1.3 debt to EBITDA that was really comfortable, now it's 1.1, so the situation is really safe. And I guess that the commentary is not really necessary here. So that was the summary of the third quarter and the ninth nine months. But it is December already, so in Q4.

We can now observe what is happening on the market, so over to Magda. Thank you. Before we move on to our plans and goals for 2025 and 2026, a few words about the fourth quarter. In November we have Black Friday and Black Week, so we can say this is the season for discounts in stores. Today, clients are not that enthusiastic, but the spending these days are much higher than on weekends before and after the Black Week. We started on the 26th of November, so on Wednesday, and that ended on the 1st of December, so during Cyber Monday. In conclusion we can say that we are very happy about the Black Week and this season. 32% in omnichannel, this is the increase, 40% online and 25% offline. Looking at the fourth quarter from the 1st November to 9th December, we can say that the fourth quarter began a bit below our expectations, but from the second weekend in Poland, the sales improved. Most probably this was affected by strong October where most of the clients did their shopping over there as for the autumn apparel and then the clients are waiting for the Christmas season. So this is presented here in the slide. As for the, when we look at the fourth quarter, we look at it positively because the trade in December might be supported by the calendar related effect. Christmas Eve is going to be a day off. We also have working Sundays and the data shows that the average Sunday, these are higher sales than on a Christmas Eve. In conclusion regarding the fourth quarter, I would like to say that we plan to open 350 to 400 new stores of all our brands, the majority related to Sensei. And now we can move on to detailed plans as for 2025 and 2026. Thank you. When we look at nine months, a very good nine months, and we add on top of that the prospects rather optimistic presented by Magda, we can see improving dynamics. We can confirm what we signalled in Q&A in September. So the market situation and the results that we saw at that time were delivered in the third quarter. So we have now a few weeks of this year and we can improve our guidance so the new expectations for This year, at least 23 billion of sales in both channels, 20% increase in offline and offline. It does not change compared to the previous information. significantly increased gross profit margin from 54 to 55, OPEX related to sales, so 40.5 to 41%, that is the SNG&A of sales, so whether this is a beta or net profits, Naturally, this is increasing compared to our expectations. CapEx, a small reduction. This is more cash that stays with the company. This results only from a smaller number of stores open and net debt rather comfortable 1.1. So such updated guidance for 25 is our new grounds for our goals for our targets for 26. The financial year is going to be reported in the second half of March, but we want to provide you the knowledge during this meeting, so here we have 25 in the first column, so the higher forecast for this year and from that we move on to 26 what do we expect 28 at least 28 billion of sales 20 over 20 percent maybe 25 in offline even as for the increase in 26 after the third and fourth quarter we can see that the cross-process margin is dropping a bit This results from the natural participation of Sensei. We know that this profit margin is a bit lower. With more development, it's going to be more diluted. As for S&G, NA of sales and CapEx give us still room to generate this positive profit. result, so around 40, 41, and when we see the EBITDA, similar results as this year, And 22, 23, this is the EBITDA margin. CAPEX a bit smaller compared to this year. This results from lower spending on logistics. This year we had accumulation in 26. We are going to spend for robotization and this is only one investment, one warehouse in Brześć. Debt net and the floor space increase comparable. So nothing is happening. This is really very positive, boring situation. So that was the conclusion. As for the nine months from spring, we have this three year strategy, a short term strategy in our company. We provide reports and we provide where we are up to 27. So after this strong acceleration we have some observations. We continue with our strategy but some things needed to be adjusted. So the direction does not change. So this is our direction since there is the growth engine for LPP. The development is going to involve opening of new stores in smaller towns. Maybe not so many locations here in heritage brands with brands that have significant ambitious goals, single digit like for likes to cover the inflation. And of course the top target growth with focus on profitability. In June, we showed you the update of the information, why Sensei is this drive engine, why we focus on Sensei, why this is working. We can see that after nine months of results, when we look at operational details and financial details, the offline store, 30% of EBITDA here, We know that we have some challenges as for managing the stock, so even with standards issue here, we can generate a significant EBITDA. Historically speaking, whether this is 24 or 25, you can see the share of profitable stores, this is much better. When we add more details, on the left, you can see a graphed Profitability per store size. So the mini, these are the smaller ones. You remember in June this format was stopped for a moment. So the tests are happening. We have first conclusions. It is very promising, but we want to make sure that when we go back to this plan, these stores are going to be profitable and we will have good know-how how to do that, what is happening, what is the offer for the customers. So until we have... certainty we freeze this idea we can see that other store size are very profitable and the bigger the biggest ones even much much better this translates into a very good payback period 16 months and this is one month lower than before when we compare the year with significant challenges in Eastern Europe, 12 or 13 months, this is a good result, so we are very happy about where we are with Sensei going into the future. I believe that from your perspective, a good important information, so the updated plan for the launch of new stores, So we planned 1,000. We can see that the fourth quarter is going to be the more intense. Some are going to be shifted to the next year. In some regions we observed a certain slowdown in Slovakia, in Czechia and Hungary. These are the regions we don't see a significant interest in such stores on the market. These regions are rather cautious in their approach, so we stop for a moment. The mini format, as I mentioned, until we have hard data and conclusions and certainty, we don't do that. We have a significant group, we have information coming to us, so when we have certainty, we will go back to that very quickly, but we need to be sure. And in the East Ukraine, we had a significant challenge related to the quality of data. So we entered 15,000 and 20,000 towns. And then it turned out that this town was much, much smaller. So we decided that we are not going to enter Ukraine. towns below 30, around 30,000 so when we take all these elements into consideration it means that we take care of the profitability and the updated forecast for the future results from that so we focus on the higher margin and in 26 and 27 we can see the potential for slow, gradual acceleration. The development of offline, not only Sensei, but our heritage brands, they also are ambitious in like for likes, but e-commerce, we also want to have 20, 20% plus as for growth. And we have significant leverage. So new markets, Central Asia, our mobile app, this is also working very well, 80% in online through an app in Sensei. And we broaden our often in non-government segment. in the following months. This is going to be a very intensive work for us as for optimisation of our offer, but we can see that the sales is good. We still need to work on the margin, but we had a lot of the tasks, and we are going to move on into these aspects. So that is all regarding to sales.

The allocation of capital, again a positive note, going bottom up, 1.6 billion of bonus lotties, simple number of openings, times, capex envisaged, and the medium one, these are the expenditure on logistics. We could see that leverage in this area is particularly And clearly invisible, there's a clear return on investment. So next year, 700 million. And we are continuing revitalization in main locations and completing one center in Brest in terms of a building. And 2027 will be the continuation of equipping warehouses and adding robotic facilities. We are still thinking about one more location in terms of e-commerce, but this is still under the analysis of 500 million. In two years' time, this is the upper number that we are to expect. Now, if we sum it all up, then 2027, that is the last year that we are running to in our three-year perspective, We are reducing top line a bit, so this growth in terms of revenue, so minimum 33 billion in 2027, 1.7 that's the growth factor versus 2024. Now two consecutive lines, so gross margin and OPEX. We are improving the quality here clearly and we see that this operation leverage is working. Increase of BIT is at level 1.8 versus 2024, so that's an improvement in profitability between 21.5% and 22.5%. So systematic growth of revenue, this is what we expect and of course that also means that we need to think about increasing dividends equally. We are a dividend company as I mentioned and it has been the case for some years now. The dividend yield is on the rise and we do not have any reason to modify this trajectory. Then I believe that, well, we started with this positive tone, and I guess we can end also on a similar note. So great results after nine months and updated strategy, but we are remaining on the same trajectory. We know where we are heading. We simply are approaching it in a slightly different way. The prospects of growth and dividend sharing with our stakeholders, of course, does not change. So I guess we can swiftly move on to our Q&A session now. Let us start then. Question number one concerns insurance related to the fire in Romania. There is a request to define insurance liabilities. What value do we have here in the balance sheet? How much was already given by the insurer and which quarter was it put into the balance? books. The main numbers and the main events in the second quarter 351 million zlotys of the right was the loss that we suffered concerning our assets and goods because we rented out the building itself but the equipment was ours and we also had the auditor made it possible for us to That was the second quarter. Now the current update around two weeks ago we got an advance payment that was precisely 20 million Polish zloty. Yesterday or the day before yesterday, that's the latest piece of information, we got informed that further 200 million would get into our account owing to this loss concerning the creation, the financial part of it. So we need to understand that from the formal side, these are thousands and thousands of documents that we need to deliver, but our accountants teams work on that regularly and we can see that it is heading in the right direction. So these are the amounts that are going to be booked in Q4. And we keep on working systematically on that, so further amounts will get into our account. The other part, business interruption insurance, so the loss of margin and additional operational costs. This period expires after nine months, so it will be only in spring, at the end of March, when we will start summing it up and talk about payments. So no earlier than probably in Q2, Q3, if we can expect any income from that side. Inventories quarter to quarter dropped by over 400 million zlotys. Could you explain that? Well yes, as I mentioned we simply had too much in terms of goods and once again 1500 stores, the initial plan we'll see that we'll open 910, talking about since then, so we entered it with a great stock, so this drop after the first quarter when the likes was positive, we would still be testing what the reason was, we didn't put the brake to a halt so much, but then as we saw months passing, it became clear that we need to do something about it, and the results offered themselves in quarter three, so there is no mysterious knowledge, it's simply hard work of our teams here, those that deliver the goods, and our designers, and it says 26, so the spring and summer season that we are entering slowly will have a greater share of the goods that were ordered beforehand. But we can see that in the first half of the year we will get it over and done with. It's just a standard business challenge that we are managing as we go. Still on the inventories and the stocks, it's about the optimum level of inventories for another year. So what would be the level we would like to keep it at? Between 1700 and 1800 PLN per square metre. Can you see any chance to increase, improve LFL in Sensei? What would contribute to that? It is a very good question and again a broader context. When we look at a slide from our presentation with like for likes, we will see that of course our appetites were greater, but it is the market, our teams do their utmost and we always offer the best possible collections, but the client voted with their decisions. We have our our conclusions we are entering and the SS season with our homework done and lessons learned and 2023 was another period when we had a lot of inventories and the margins were what they were, the likes were what they were, reserved as a different brand. The first half of the year was actually in the same situation, minus 5% in the first quarter and similar in the seven we know how to do our homework but number wise I would call for looking at 2024 and since I what quarterly dynamics we had 11 and even 12 percent in like for likes so quite naturally this is something that is going to be nearing the average and this bi-annual approach is not as pessimistic as this readout for the last quarter might suggest. Let me maybe add on the structure of likes for Sensei. The women collections have very good likes and a different group has lower likes. There are questions concerning competitors and whether women collection in Sensei has poor likes. Well, that's not the case. And since we talk about competitors, how do you evaluate the risk of aggressive strategy of Chinese platforms and their impact on LPP business? And how are you going to compete against these Chinese platforms? I believe that our business model is the best response and reply to that competition. We are present in two channels, offline and online. the client always has a choice to come and see. They do not need to buy something they've never seen. So we bet on quality, we bet on safety, our application and security. When you look at our application in the second but last quarter, our application was the top one in terms of fashion category. Then it was in top two, so those results are Improving, we can see that the app is appreciated by the customers. We offer good and fast, quickly delivered collections. So we can say that this is the reply to the competitors. And talking about the cost, this is the third biggest cost, that is performance marketing. Though that's advertising online, we spend ever less year on year, and thus the internal budget that we fund we spend even less. So we have quite a reserve here, and a lot of tools to sustain this competitive spirit we always have. observe our competitors humbly while we treat it as something that makes us perform better we can see that we have efficient tools that enable us to compete even now what do you expect when we talk about refinancing and savings and I can see that the margins given our scale and this oversubscription that we've commented over fifty percent the margins are much better than they were and versus even monitoring, say, the current reports of other players in the Polish market, those margins are attractive. In terms of a precise estimate of what kind of saving it is, we will leave it to ourselves, because all the consumption of it will simply be different. There are no two really comparable years. We can see that the Sinseng model is working, and there are... the close as we expect and what's most important is that in this new structure we have this comfort of three years of current limits that we can flexibly prolong and keep is financing of investment that's the prospect of five years to come that gives us a lot of comfort that in our strategy we can focus on the development of a business we are safe in terms of our assets we can pay our dividends And 21 financial institutions are interested, so that shows that the broadly understood financial market also believes in our model, because these amounts in time, they show the scale of this commitment and hope in the development of us as the LPP group. How about the current situation in the German, UK and Ukrainian markets? German and UK markets enjoy a very sound situation, to put it briefly. The likes are improving, that's obvious. Starting in 2023, autumn, in the UK we added to new stores. I'm talking about the reserved brand in Great Britain, in the UK. They've been on the rise. A bit is not positive there yet. But every quarter, every season is ever better. And starting from the beginning of the year, the likes are double-digit. Similar is the case in Germany. It's a great e-commerce market as well. When a new reserved store was opened in Oberhausen, we have 18 stores there altogether. I'm looking for confirmation, yes. So there are 18 stores there, and it's just the reserved brand. In e-commerce, of course, we offer other brands as well. Again, High increases. Post-COVID we negotiated favorable conditions. So last year the German company celebrated the 10th anniversary. We are very happy that last year they proved double-digit profitability and it sticks to it. And the third country asked about was Ukraine, right? Yes, and it nicely relates to the question about likes, because those who have been with us and follow our detailed data... Again, I encourage you to keep a close eye on our investors' relation websites. Anyhow, we keep developing the Ukrainian market, so it weighs a lot, particularly in Sinsei. And we're talking about certain normalization year on year, so very high, like last year, and now a natural drop. So Ukraine is the biggest market with this normalization. Really high. After the war there came a drop, then was the balance that was very high, 40-50%. Now we have a double digit minus there. So again, that's only natural, but when we look at the profitability, the eastern markets are still most profitable markets in the group. That is why we systematically keep investing there. I mentioned the number of openings. We look at the profitability week upon learning. That was the first year of the acceleration of our growth, but we draw conclusions as we go. June showed that we are not afraid to stop or to take a step backwards in order to take two steps ahead after. We are focusing on profitability. That's a natural process, so that's what it is like.

For some time we can observe negative LFL regarding sensei. What is the diagnosis in your opinion in this situation and what activities do you plan to improve the situation? I believe a similar situation was already asked, so natural like for likes, natural grounds. We start from figures, but of course the appetite is much, much higher. We learn from the past, new project, new season, new hope, so we can do the best work, but the client is going to actually come to the store and buy. So we discussed that good like for likes are grounds for the new motivation program for our teams, but I don't think they need additional motivation. We want to provide best collections for our clients. So natural motivation is the main factor. This is what we believe we can do and the history shows we can. Expansion, Uzbekistan, Kazakhstan, these are new markets with new stores you launched over there. Do you plan to open in new stores around Central Asia or perhaps other markets? Also, the topic, Central Asia. Yes, we opened almost all markets. In Moldavia, we are also there. Sorry, the end of the year is very intensive as for the financial aspect. So this was our debut in Moldavia. So this year was a record year as for the opening of stores in new markets. So as for the launch, this is all now. We are building the scale in particular markets. So we do not plan to launch new. stores and enter new markets. So this slowdown regarding Czech and Slovakia focuses our attention on the new market. So we are going to look for the potential. So 950 Simsei stores is going to be delivered. In the fourth quarter, What impact do we have from higher winter temperatures on the sales? We are looking at the calendar. We want to be fair and very transparent. So we are the last to look for excuses as for the temperature. I remember two times during my term of office when September was really difficult because the temperatures were really high and the demand shifted into October. That was 24 and 23. In May this year, it was the coldest May ever. So the first week of June was really difficult. And yes, these were the objective reasons for that. Now, higher temperatures, yes. As Magda presented, the dynamics are improving. That was a long weekend. The clients were probably waiting for the Black Week. So this is our diagnosis. So the trend is improving like for likes from negative are going to positive numbers from October, November to December. So let's not talk about temperatures now. We have still working Sundays, Christmas time and New Year's Eve. So let's wait for the final results. What are the plans regarding the marketplace? We've been analysing all options regarding e-commerce, the app is working really well, many clients are drawn by Sensei app, so this is 30% of business with e-commerce, so this is a really strong instrument and this marketplace is a natural step But I believe that this is too early now to talk about it. We are going to analyze that. So once we have precise information, we will go back during our regular quarterly meetings. The marketing level, what was the marketing level regarding the guidelines for 26? That was 9%. When we look at guidance 26, 27, you believe operational effectiveness is going to improve. In what areas do you plan the improvement and whether this is the result of opening new stores? A very good question with a partial answer. Yes, this is affected by a larger percentage of Sensei, so the gross margin is going to drop, but Sensei is lower. As for the CapEx, it's not that expensive as other markets. It's improving our leverage, but the area where we can see positive impact looking at the next two years, this is logistics. So more investment we can see after this sample in Bydgoszcz, our biggest e-commerce warehouse, 100,000 square meters. It is working perfectly on a larger scale, so the cost regarding to logistics, this is the second group of our cost. So that was a really small change that is generating a significant potential, so what is behind that? Can you tell what was the guidance for 26 regarding the level of sales within the whole group, but also regarding the Sensei brand? We have ambitious targets, but you know a model These are single digit or lower amounts within single digit figures. You decided not to enter towns smaller than 30,000 inhabitants. Do you believe this is related to the Polish market? No, that was a comment regarding Ukraine. From the logical point of view, so the data for smaller towns The situation regarding the war is difficult. We have doubtful quality regarding the data, so if we have a lower number of citizens in smaller towns, so we want to develop, but we want to be also profitable. So this is our cautious approach to that. On a long-term basis, when we look at the logic, so when we, do we want the company to grow 20% year over year? So don't we expect positive result from this operational leverage? Or perhaps, since it is less profitable than other brands, so maybe this is a side effect of this development. Well, here, This is also a good question. We have our internal targets. We also have guidance. So this year taught us a lot. We are more humble. So that was a really safe level that we can deliver internally. Our appetite is much larger, of course. This leverage is at the level of 1%. So close to EBIT. So zero plus we would say. But we believe that it's going to be there. So we have these brackets we want to operate in. So the top or low level of the margin. We believe that. With such approach, this margin will be noticeable, more noticeable. So within a two-year perspective, we are going to report that on a regular basis, so you will then be able to update with more recent information. Are you planning to have more write-offs regarding the Russian business? No? This 800 million in the backup we also have information regarding that. So this is the total write-off. So as a company, we are going to fight with the board as well. We are in close contact. We are going to fight back. But for now, to make it easier for us, for a discussion, we want to focus on business these days. So we don't want to go back to it every quarter. So this is a total write-off. What happens later on, that would be a plus result, so we just wanted to address this topic and talk about likes, improvement, growth, investments and new markets. What markets, in your opinion, are the weakest after the third and fourth quarter? I would like to repeat what I said before. Czechia, Slovakia and Hungary and Ukraine as well. We can assess that from the perspective of like for likes with least dynamics. Ukraine, of course, when the rates and the bombing is increasing, then we also have drops in the sales. Estonia, it's a small market. I also mentioned that before, we can see that in like for likes. The priority, the governmental priority is to focus on the fiscal approach and the taxation. So this is the situation. What about any potential attacks on your side in Ukraine? Well, we cannot predict that. We know the operational side. As for our stock, we don't have just one good location. We keep our stock in different locations so we have a diversity in our approach. This is what we've changed after recent events. Does the financing make it possible for takeovers, or maybe you are planning to approach that differently? Refinancing allows us to do much more, but for now, as for allocation of the capital, when we refer to capex, these are investments, expenditure, logistics, sensei, new stores, And the dividend paid to our shareholders, we don't have such M&A ideas. We can see that in 2025 we have a lot of data. We need to be flexible in our reaction, so we need to do business. Maybe another comment. We also have such topics or such offers regarding M&A, but as LPP we are generating bigger profits over weekends. So this is not like the scale we would like to look for. We focus on our organic growth. Another two questions refer to the prospects regarding Europe or Great Britain. Do you believe that Sensei expansion over this market is possible or do you plan a significant growth, better growth of reserved brand in these markets? As for the first question, Sensei in the West. No, not that we... close our options for us, but we want to focus on the quality. We observe the market, we can see the history as Marek, our CEO, is looking, we draw conclusions. Other companies went there, did wrong and had to close business and went bankrupt. So the SINSEI model is designed to be effective regarding OPEX in the West. It's difficult to look for such cost-related effectiveness so that the workforce and lower CAPEX. So we focus on Central Europe, Eastern Europe, Central Asia, Southern Europe. This is what we presented in the slide. So these are the regions that we really focus on with our activities. We can see that we have really good returns on investments. 12, 13, 16 months, so below our benchmark, much, much faster. And this is what we focus on. So since they and Western Europe, this is not the direction that we want to follow these days. As for reserved and other brands, commenting much wider, as I said with the strategy, with a larger space, reserved needs at least 1,600 meters. It's difficult to find in Western Europe referring to question regarding Germany or UK so in UK we needed 10 years for this profitability in Germany we are still working on it so when there is a situation favorable for investment we are going to go for it but when we have a good location we are going to consider that So like the new opening in Oberhausen, this proves that. But whether this is the scale? Well, right now we don't see this potential regarding to the size of the stores. We focus on the growth of reserved basically in online. We can see a significant potential. What is the payback period from investment in robotization? Up to two years. And the last question. We answered that, but we want whether this write-off from Russia is going to affect the payment of the dividend. A very good question. Yes, we started with the dividend, so I believe this is the last question regarding Q&A. So we are going to complete with a dividend as well. No, it is not going to affect the dividend. As we communicated, we have resources, but the board recommendation and the resolution is going to be adopted for the future. But business-wise, the write-off was a non-cash write-off, so the reported profit was just adjusted by this write-off. You can go back to the backup and clear net profit is going to be grounds for the payment of dividends. The dividend was on 70% of net profit. Nothing changes here. So, this is the level. We have resources, we have really comfortable situation. 1.1 leverage, a very good level. So, to reiterate about it, no, it is not going to affect the dividend payout sharing the profits with you. After nine months, this prospect is really good.

And it is on this optimistic note that we are closing our meeting. Since this is the last conference this year, on behalf of the entire LBB group, we would like to wish you first and foremost a very healthy, jolly Merry Christmas. May this season be the period of relief. from our everyday struggles and for next year we wish you all the best and making your dreams and targets come true both in your private and business life thank you very much for today and see you at another result conference that we are planning for spring thank you very much goodbye