Dominos 2020 Interim Results Tuesday, 11 th August 2020 Transcript - - PDF document

Dominos 2020 Interim Results

Tuesday, 11th August 2020

Transcript produced by Global Lingo London - 020 7870 7100 www.global-lingo.com

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 2

Overview

Dominic Paul CEO, Domino’s Pizza

Welcome Hello, and good morning, everyone. I am sorry we cannot be in person today, but hopefully you can all hear and see me clearly. And I do hope you and your families are keeping well. I am joined this morning, at an appropriate distance, of course, by Neil Smith, our Interim CFO, and Bethany Barnes, who is our Head of Investor Relations, who you will not be able to see in this shot, but she will be asking your questions later. Agenda So let us turn to the agenda for today. I am going to start by sharing my first impressions of the business since I joined, our priorities for the year and to give you a quick summary of our first half performance. Neil will then talk you through the financials in detail. I will then come back and update you more fully on our operational performance and share with you the strategy work we have commenced, before we then go to Q&A. The Q&A session today will, of course, be slightly different to normal. You should be able to see a tab on your screen, where you can type in any questions you have at any time during the presentation. Please tell us your name and who you work for at the start of the question. When we move to the Q&A session, Bethany will then read out your questions in turn and Neil and I will then answer them. First Impressions: A Resilient & Strong Core Business So let us turn to my first impressions. Now, joining a business during a global pandemic is not without its challenges. Getting to know the teams and the culture through a screen is unusual, to say the least. It has, however, offered me a unique chance to see the system during an unprecedented trading backdrop. I have been hugely impressed by the strength of the operational capabilities across our system, our supply chain and the customer engagement with the brand during the period. There are five key strengths of the business, which I will cover in more detail later on. Firstly, the brand is incredible. The level of customer awareness and engagement are world-class. And we need to do everything we can to protect and further enhance this. Secondly, we have highly experienced franchisees, who have tremendous passion for the brand and for the system. Thirdly, our supply chain is exceptional. This is the backbone of the system, and its performance during the COVID-19 crisis has been remarkable. Our model is dynamic and highly responsive. I will spend a bit of time later on talking you through some of the rapid changes the system made to ensure we could keep trading and keep our people safe. And finally, we have a highly cash-generative model, which Neil will talk through in his section in a moment.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 3 I am proud of the strength of our performance through this crisis and it demonstrates that when we work together with our franchisees and put our customers and our people at the heart of everything we do, we win. And as we look to the future and formulate our future growth strategy, I can see significant potential, which we look forward to talking to you about in more detail when the time is right to do so. First Half Performance So, let us touch on the first half performance. I am sure you have all read through our statement already this morning. But I did think it will be useful to share with you a quick summary of our first half performance. We saw UK like-for-like accelerate over the lockdown period and this was despite us moving to delivery only, so switching off collection, which accounted for over 20% of sales. Our Irish business, which accounts for 5% of system sales, saw its performance more impacted by lockdown and also faced some very strong comparatives. The strength of our business during the lockdown period, which was essentially our quarter two, was remarkable, with UK delivery like-for-like sales up 31% and total delivery orders up 24%. The crisis has also accelerated our evolution to a truly digital business, and that is most clearly seen in the performance of our app with sales up 26%. Ensuring the business traded safely meant that we incurred £6 million of COVID-19-related costs in making sure our supply chain could service stores and work safely, costs we chose to incur to support our franchisees, mainly through funding orders of safety equipment, and also running pizza giveaways to play a small part in thanking the amazing key workers of this country. These costs mean that first half profitability declined year-on-year, but they were the right actions to take. Most importantly, the actions we took and the difficult decisions we made to steer the business safely through the crisis have resulted in customer satisfaction at all-time highs. Our Business Priorities Before I hand over to Neil, I wanted to share with you how we have been managing the business during the first half and how we are thinking about our future. Upon joining, we quickly established three priorities through the COVID-19 crisis. One, keep serving our customers and looking after our people. This came first throughout and meant changing many ways of working and incurring some costs to enable us to keep trading. Secondly, build brand preference and helping our communities. We ensured our customer communications were appropriate and informative. We worked hard to further enhance the brand and we did whatever we could to help our communities and key workers during this time. And thirdly, coming together with our franchisees. We tried to use this period to start to rebuild our relationship with our franchisees, significantly increasing our communication,

• penness and transparency.

We have also started work to plan our future. As you know, the relationship with our franchisees is challenging, and this situation dates back several years. I firmly believe that

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 4 the way to resolve this situation and realign with our franchisees requires a long-term strategic plan, which this business certainly had for some time now. We have, therefore, commenced a detailed and wide-ranging strategy project in order to reignite growth of the system. I am now going to hand over to Neil to walk you through the financials.

Financial Performance

Neil Smith Interim CFO, Domino’s Pizza

Welcome Thanks, Dominic, and good morning everyone. It is a pleasure to be here this morning to present the financial results for the first half the year for Domino’s Pizza Group. You may observe some subtle changes in the slides this morning, but we have not made any radical changes to disclosures. Bethany and I would welcome any feedback from the analysts and investor community on future disclosures and reporting. Income Statement Let us start with the income statement. This slide refers to underlying numbers, so excludes non-underlying charges and charges from our discontinuing international activities. We will cover those items later. Underlying UK & Ireland EBITDA is broadly in line with last year, at £57.6 million, and within this number, we have two significant impacts. Firstly, we have adopted IFRS 16 this year with no change to our comparatives. This benefits EBITDA in the year-to-date by £3.6 million as we effectively remove lease charges and replace them with incremental depreciation. Secondly, we charge £6.2 million of COVID-related costs in the period. I will provide more details on those costs in a moment. At the profit before tax level, the IFRS 16 benefit is only £0.2 million due to increased depreciation of finance charges. And if we adjust the PBT for the IFRS 16 benefit and remove the COVID cost, then we would see normalised PBT grow by around 7% year-on-year. Our tax rate in the first half is 16%, which benefits from some prior year adjustments. Excluding these adjustments, the effective tax rate for the full year is estimated at 19%. The resultant underlying basic EPS is 8.7p, broadly in line with last year. And given the extraordinary circumstances prevalent in the first half, a very robust performance. COVID-19 related costs As I mentioned, we have incurred some significant incremental costs related to COVID in the first half, totalling £6.2 million. A significant investment, but the right thing to do in order to ensure that business could continue to trade throughout to COVID lockdown period, whilst protecting our employees, our franchisees and our customers. To trade safely, we’ve made significant changes to our supply chain processes, including changes to shift patterns so that deliveries were made when stores were closed; moving to single driver deliveries to maintain social distancing; and pay premiums to our teams in recognition of their increased workload.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 5 These supply chain costs were £2.1 million in the first half, pretty much all incurred in the second quarter. As lockdown restrictions have eased, so we have amended some of the procedural changes and have identified more efficient ways of working, such that we now estimate in the region of £2 million of such costs in the second half, a halving of the run rate incurred in Q2. We also wanted to look after our people and our communities. As part of this, we funded the food costs associated with the pizza giveaway to our key workers as a token of our thanks for their exceptional efforts and we have established the Partners Foundation to provide financial support to colleagues within the Domino’s system. Finally, as master franchisor, we thought it appropriate to provide financial assistance to our franchisees to ensure that the safety of their employees and customers was not a financial

• consideration. We have funded the cost of initial orders of safety equipment such as masks,

contactless boxes, and perspex screens at a total cost of £3.4 million. Assuming no further national lockdown, we do not anticipate further such costs in the second half. Analysis of UK & Ireland EBITDA On this next slide, we provide the analysis of our UK & Ireland EBITDA. As you will be aware, a significant proportion of our EBITDA comes from the supply chain centre through the procurement, manufacture and distribution of product to stores. Throughout the COVID period, we maintained excellent service levels. Our EBITDA from the SCC in the period was £48.4 million, after incurring both the direct SCC COVID-related cost of £2.1 million and the majority of the franchisee support cost £3.4 million. System sales have been strong in the first half of the year, up 5.5%, which has helped our net royalty income to grow by £1 million. The increase in overheads was due to increased investment in people, increased IT investment, some COVID-related costs and

• ther one-offs. For the full year, we would expect total overheads to be in the region of a

couple of million higher than last year. And we have seen a good performance from the share of our UK JVs, which is in line with many of our other UK franchisees. Sales Performance I mentioned on the previous slide that system sales growth had been strong, up 5.9% across the UK, with system sales in Ireland down a little. Given the circumstances, it is a very pleasing performance, which has been achieved by the hard work of our teams working in alignment with fantastic operational execution by our franchisees. As you know, system sales is the most relevant topline metric for our business. And I will provide more analysis of system sales in a moment. In terms of our reported revenue, we have delivered £247 million in the first half, down a little on the £250 million reported last year. This is largely due to an IFRS 16 adjustment, which removes £12 million of property-related rental revenue in the current year. If we adjust for that IFRS adjustment, then reported revenue would have grown by 3.6%. Our corporate stores have seen a small reduction in revenues, largely because these 36 stores are all based in London, which has been particularly impacted by lower footfall during the COVID period. Looking at EBIT margins as a percentage of system sales, and if we adjust

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 6 with IFRS 16 and the COVID-related costs, the normalised margins would have been 8.7%, in line with last year. UK & Ireland Trading Performance Let us dig into system sales and orders in a little more detail. During the lockdown period, in

• rder to ensure the safety of our employees, our franchisees and customers, we suspended
• ur collection business. This was a significant decision, given that collection accounted for

21% of sales and some 31% of orders last year. However, it was the right decision and enabled us to continue our delivery business throughout the first half of the year. With collections suspended throughout Q2, the impact was a 48% reduction in collection sales and 44% reduction in collection orders in the first half. More detail on these unit metrics is provided on slide 42, if you wanted to look at the quarterly profiles of delivery and collection. Pleasingly, we saw a significant growth in our delivery business during the first half, increasing sales by 20% and orders by 12%. The increased orders from delivery have not been sufficient to offset the loss from collections, such that total order count in the first half was down 4.7%. However, the average value per order is higher through the delivery channel and a 9.3% increase in items per order meant that whilst total orders were down, system sales were up 5.5% in the half. Clearly, the suspension of collection has had a major impact upon the profile of trading in the first half. It is pleasing to report that as lockdown has eased, so the vast majority of the system has now recommenced the provision of collection services to our customers. Collection sales are now in excess of 50% of the levels of last year. UK & Ireland LFL Sales On this chart, we show the like-for-like performance across the first half, both excluding and including the impact of splits. Within the UK in the first quarter, we achieved like-for-like growth of 2.8% including splits. This grew to 4.7% in Q2 during the lockdown period and in combination, first half UK like-for-like sales growth was 3.7% compared to 1.9% last year. Ireland, which represents some 5% of system sales, had a weaker half, which is due to a number of factors. Firstly, Ireland was facing tougher comparatives. Also Ireland went into lockdown earlier and deeper than the UK, and as such, Irish consumer spending has been impacted more so by lockdown. And finally, our Irish stores were more impacted by the removal of cash sales, which accounts for a higher percentage of sales in Ireland. Non-underlying & Discontinued Operations I mentioned earlier, we have so far concentrated on the underlying performance of the

• business. But we have some significant non-underlying and discontinued charges. So, let us

break these charges down. First, we have the trading losses from our international businesses in Iceland, Norway, Sweden and Switzerland. These entities are now classed as discontinued activities as we are in the process of disposing of them. Each of the businesses have suffered some impact from COVID-19 and the Norway results are for the period until its disposal on 22nd May. In total, the drain on Group resources is slightly better than last year and should reduce further in the second half due to the removal of Norway and the improvement in trade as each territory recovers from the effects of COVID.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 7 In addition, we had the accounting loss on disposal of Norway. The cash cost of disposal was £6.4 million in line with the shareholder circular, but the accounting charge is higher at £10.8 million due to the unwind of the minority interest and other costs of disposal. Finally, we have some non-underlying charges, which so far this year amount to only £1.6 million and relate primarily to one-off fees and charges associated with the amortisation

• f the corporate stores.

Group Cash Flow DPG is an asset-light business that has strong cash flow profile. We have amended the definition of free cash flow on this slide to exclude capital expenditure so that we can see the full extent of cash generation by the business, which in the first half was £46.9 million, significantly higher than the £20.7 million generated last year. However, a large proportion of that increase in the first half is a one-off benefit of some £21 million arising from the timing of payments around the year-end last year-end. Effectively cash payments were made just before the end of FY19 as opposed to the first few days of this financial year, which has resulted in a working capital swing. The taxation cash outflows are high relative to last year, but in line with our expectations as they are required by the accelerated HMRC quarterly payment requirements. This is a one-off timing change in the first half only and we will revert to the usual profile in the second half of the year. Use of Free Cash Flow As we develop our long-term strategic plans, we will look to optimise the free cash flow generated by the business and apply an appropriate capital allocation framework to determine the best use of that free cash. We will want to ensure that we can invest funds in high- returning opportunities to drive future growth and we will want to ensure we provide returns to shareholders whilst maintaining an appropriate level of leverage. In the first half, we have largely used free cash flow to reduce net debt. Capital investments were paused as we entered the COVID period in order to preserve cash. And we have now restarted those planned investments in our supply chain, such that we expect full year capital investment to be in the region of £20-25 million. The acquisition and disposals cash flow in the period largely relates to the £6.4 million of cash costs associated with the Norway disposal. As the COVID lockdown commenced ahead of the payment of the FY19 final dividend, the Board suspended the payment of our dividend to preserve Group cash flow. And I will return to dividends in a moment. Net Debt Bridge By utilising free cash flow to largely reduce net debt, we have seen net debt decline to £202 million at the half year, which on a reported EBITDA basis, including the dilutive effect

• f the discontinued international businesses, produces leverage at two times. In these times
• f significant uncertainty, it seems sensible to me to operate at or below this leverage level.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 8 The core UK & I businesses generated cash of £46 million whilst the international discontinued businesses consumed £6 million plus £6.4 million of cash outflow from the disposal of Norway. Current Trading, Outlook and Dividend Clearly, there remains a significant amount of uncertainty in the trading environment as we look forward to the second half. How consumer spending evolves is unclear. How the competitive landscape responds to changing market dynamics is unknown. A potential hard Brexit is possible. And ongoing localised COVID lockdowns, which may well escalate as we face into the winter months, all provide for a very uncertain period. Against this backdrop, in the first few weeks of the second half, we have seen encouraging trading, helped by growing return of collection services; more people in the UK enjoying staycations; the return of football to our screens; and help from the government with the VAT

• reduction. But of course it is very early days and the trading environment remains volatile.

Turning to shareholder returns. The Board recognises the importance of dividends to our shareholders and we also recognise that we must retain a prudent approach to balance sheet management in these uncertain times. However, we do believe it is now appropriate to pay the suspended FY19 final dividend of £26 million. We will consider the appropriate level of dividend for the current financial year at the time of

• ur prelim results in March.

Franchisee Profitabilty Before I hand over to Dominic with the operational update, let me touch on franchisee profitability in the first half. I have to emphasise that these numbers are extracted from submissions from our UK franchisees and we do not always have all submissions on a timely

• basis. We aggregate the submissions to derive these averages. We cannot guarantee their

accuracy or consistency, but they do provide us with some guide of profitability. On the basis of these submissions we have received, it would appear that the average franchisee profit level has increased during the first half relative to last year, with average EBITDA margins at the franchisee level growing from 10% to 12%. This performance will have been achieved by the franchisees having worked tirelessly through the COVID period to look after their employees and serve their customers. Our teams have worked hard to help them and we have provided financial assistance by way

• f the contribution to the cost of safety equipment and a reduction in the NAF from 4% to 2%

for 10 weeks. It is the aligned hard work of all employees of the broader Domino’s system that has enabled this robust performance for both DPG and our franchisees. Now let me hand you back to Dominic.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 9

Operational Update

Dominic Paul CEO, Domino’s Pizza

Thank you, Neil. I will discuss our operational performance in a bit more detail before we

• pen up to Q&A. Thank you to everyone who have submitted questions so far.

Three Priorities through COVID So let us turn to the priorities that we used to guide us through COVID-19. I have already shared these with you, but they really did guide everything we did through the crisis, so I think it is worth repeating them. Keep serving our customers and looking after our people Number one, keep serving our customers and looking after our people. We viewed it as a privilege and not a right to stay open and trading, and feel very fortunate that we were able to do so when so many other businesses had to shut up shop. Our absolute focus throughout was to ensure that we did everything we could to keep our customers and people safe. And this also involved incurring some necessary costs. As part of looking after our people, we launched the Partners Foundation, a hardship fund for anyone working for DPG or our franchisees who come into difficulties. I will talk through in more detail later some of the other changes that we made. Build brand preference and help our communities Number two, building brand preference and helping our communities to ensure that the brand came out of the crisis stronger than it went in, to ensure that our marketing was well thought through and to do the right things to support our communities. Come together with our franchisees And number three, coming together with our franchisees. As you all are aware, the relationship with our franchisee partners has been challenging and this is clearly in no one's

• interest. It is going to take some time to resolve. And the first step is to build trust between

this new management team and our franchisee partners. We have, therefore, worked really hard to step up our engagement and our communication. And I am proud of what we have achieved by working together. Core Strengths of Our Business Let us talk about some the core strengths of our business. I shared these on my first slide, and I now like to take a bit of time to talk through these in more detail. World Class Brand Actions taken have further strengthened customer engagement Neil has already talked to you through our cash performance, so I will not cover this again. But let us turn to number one, world class brand. I knew even before I joined this business that the brand was strong. Domino’s is almost synonymous with pizza in the UK and Ireland, and that is down to decades of hard work and investment across the system. Our job through the COVID-19 crisis has been to protect and enhance the brand. And as part of this, it was particularly important to ensure that our

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 10 communications were tonally appropriate and reassured customers about the steps we were taking to keep them safe. I will talk to this in a bit more detail later on. The chart on this slide, however, shows you the

• utput of these actions, with us ranking top in a recent survey, which asked members of the

public where they considered carryout food to be safest from. Experienced Franchises Stepped up communication and transparency The next slide is about experienced franchisees. Another very clear strength of our business is the phenomenal operational experience our franchisees have. Since joining the business a few months ago, I have had virtual meetings with pretty much every franchisee. And I am thrilled that with lockdown easing, I can now get out and about a bit and start to meet them in person as well. Our franchisees are simply fantastic operators and have a huge passion for the brand. And in my view, this COVID-19 crisis has demonstrated what we can achieve when we work

• together. I am not denying, however, that we have work to do on rebuilding the relationship

and we are putting considerable efforts and energies in this area. Exceptional Supply Chain The backbone of the system Next, our exceptional supply chain. I have been so impressed with our supply chain

• perations since joining. Our supply chain is the backbone of our system, delivering freshly

made dough and fresh ingredients to every UK and Ireland store at least three times a week. Through a huge amount of work by Pete Trundley and his team, we have maintained our 99.9% availability and accuracy levels. I know that those figures have been talked about in the past, but they genuinely are

• exceptional. This performance is all the more impressive when we consider we had to rapidly

change nearly every single way of working. We moved all drivers to one-person deliveries, stopping our two-person drops as they did not allow our drivers to social distance. We changed every single shift pattern to ensure that every store was closed when our drivers were restocking them. And to stagger all our shifts so drivers were not congregating at our supply chain centres at the start of shifts. We paid salary premiums to frontline workers to recognise their exceptional work and dedication during such a difficult period. And we worked very closely with our supplier base to maintain service levels and needed to rapidly source new items from new suppliers, such as masks, perspex screens, store signage and contact-free delivery boxes. We are further investing in our supply chain, as we have talked about in the past. Work on these projects needed to be paused during lockdown, but have now restarted and we are expecting to open Scotland in the spring, with the architect plans for the site shown on this

• slide. And our facility in Naas in Ireland will go live in autumn with this new production

facility, followed by refurbishment of the old site after that.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 11 Dynamic & Responsive Model Took swift action to keep customers and our people safe The next slide is about our dynamic and responsive model. The full strength of the business in my eyes is just how quickly we can change and adapt when required. And this was seen in almost every area through the COVID-19 crisis. Together, as a system, we took swift action to keep our customers and our people safe. Some of the ways we did this are listed on this slide, and I am now going to talk you through each one of these in turn. Moving to Contact-Free Delivery Dynamic and responsive model We moved to contact-free delivery. We decided very early on that we needed to ensure customers felt safe and confident ordering from us. And a very quick change we therefore made was to move entirely to contact-free delivery, whereby the delivery driver places the

• rder on the specially designed contact-free box and steps away to a safe distance, allowing

the customer to then collect their food from their doorstep with confidence. Another big change we made right at the start of lockdown was to switch off collections. This decision was made in collaboration with our franchisees. It was a brave decision to make given collection accounted for 21% of sales and 31% of orders last year. It did mean, however, that our stores were only open for team members, giving them peace of mind and meaning we could focus entirely on the delivery experience for our customers. Since lockdown restrictions have eased, we have reopened collection on a contact-free basis and the vast majority of our stores are now offering this service. Throughout the period, we used our corporate store estate to quickly trial and test things so that we could then share

• ur learnings and experiences with our franchisees, which helped roll them out in the stores.

Menu Rationalisation Dynamic and responsive model Let us talk about menu rationalisation. We also had to make some difficult decisions about

• ur menu and remove operationally complex items, which hindered staff being able to socially

distance in store, such as stuffed crust, half and half, chicken wings and cinni dippers. This rationalisation is likely to have dampened demand and it did also have a negative impact on

• ur margins but, again, it was the right thing to do.

From a customer perspective, we experienced a change in purchasing behaviour, with a higher proportion of sides and desserts resulting in more items per delivered order being sold. These generated additional sales but, again, did impact the margin achieved through our supply chain. Throughout, we engaged closely with the health authorities to ensure we have best-in-class health and safety procedures. And as part of this, gained primary authority assured advice

• status. As lockdown has eased, we have gradually reintroduced menu items, using a data-

driven approach to ensure we prioritise the right items first.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 12 Digital and Agile Business Dynamic and responsive model Turning to our digital capabilities. Whilst there is always more to do and improve, this business has long understood the importance of technology. And when we look across the Atlantic to DPI, it further reinforces the benefits of this. The lockdown period has really accelerated our evolution to a truly digital business. As the chart on the slide shows, quarter two is essentially the lockdown period, where we saw online sales up 22% and app sales up 26%. Internally, the vast majority of our head office colleagues continue to work from home today and have all rapidly adjusted to video calls, using digital platforms to connect and stay engaged, and other tools to allow us to operate effectively from home. Our technology teams delivered a good performance during the half. We quickly mobilised the teams to prioritise site stability, as we saw online traffic doubling at the start of the lockdown period. The many changes made to our offer and ways of working required considerable technology support and in one 10-day period, our teams completed over 40 systems releases. Behind the scenes, work continues on the next iteration of our app, which is on track for trialling in the autumn. This will make it even easier for customers to find deals, further simplify the navigation and enhance the look and feel. We will also be refreshing the website in association with this. Customer Reassurance and Key Worker Giveaway Dynamic and responsive model A crucially important part of our response to this crisis was to ensure that our marketing messages and customer engagement was informative, reassuring and tonally appropriate. When lockdown started, we quickly pulled any marketing activity that did not meet these criteria and stopped new product development that would increase store complexity. Within 10 days of lockdown starting, we advertised on TV communicating the enhanced hygiene steps we had implemented, including contact-free delivery. We made increased use of social media channels and emails to provide further customer reassurance and shifted weight of media spend to digital channels. You can see several examples of this activity on the slide, including a highly professional video of me filmed in my kitchen with my daughter! As lockdown restrictions have begun to lift, we have focused marketing activity on the reopening of contact-free collection and the reinstatement of key menu items. We have also positioned the brand around the return of the Premier League, with advertising encouraging customers to order in time for the match, and have launched a new TV spot demonstrating the relevance of the brand to the increased number of people expected to stay at home during this summer enjoying a staycation. We also felt it hugely important to support our communities and the key workers up and down the country who are doing so much and thank them for their phenomenal efforts. We launched a £4 million pizza giveaway, sending thousands of NHS workers, carers, pharmacists, postal workers, supermarket staff and firefighters free pizza on us.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 13 All Resulting in Record Customer Satisfaction When we work together we win So, we changed a lot. Our people and our franchisees worked incredibly hard. We incurred additional necessary costs and we made some difficult decisions. And the outcome? I am pleased to report the results of all of this was all-time high customer satisfaction, which, as you can see on the chart, grew during lockdown and has remained at these levels since then. Whilst there is always more we can do and improve, I am really encouraged with this performance and it truly demonstrates the strength of our system. In short, when we work together, we win. Looking Forward: Our Strategic Priorities Creating a framework for long-term growth So, let us look forward to our strategic priorities. As I have shared with you, we have worked exceptionally hard during the period to keep trading and to keep customers, our people and

• ur franchisees safe. We have also, however, been looking to the future. And as you can

imagine, as a new CEO, this is at the forefront of my mind. The relationship with our franchisees is currently a challenging one. And this situation dates back several years. In my view, the relationship breakdown is emotional as well as economic, and the first step is to build trust. I expect the resolution is going to take time. At the heart

• f this and crucial in order to realign with our franchisees, is a creation of a long-term

strategic plan for the system. We have, therefore, started work, creating this wide-ranging plan, assessing future growth avenues, internal capabilities, digital strategy and the optimal capital allocation. The success

• f this long-term plan will, of course, be dependent on us working together with our

franchisees and we are involving franchisees throughout this process. We look forward to sharing with you the outputs of the new strategy, which we will do so as soon as we are able to. Summary So, let us go to the summary. I know we have a lot of questions waiting, so I just wanted to briefly summarise our performance before we open up for Q&A. I will start with my first impressions of the business, which I know have talked a lot about already this morning, but it truly is an exceptional business at its core. We have an incredible brand and operate in the growing sector of delivered food. We have highly passionate franchisees, who are very experienced operators, and our supply chain, the backbone of our system, is world class. Combined, these are very strong foundations on which to grow. Our performance during H1 was resilient. It was a privilege to remain open and to stay trading throughout the COVID crisis. We focused on doing the right things for our people, our customers and our communities. The lockdown period has also accelerated our evolution to a digital business. And we have made sure that data was at the heart of every trading decision we have taken. In my view, what we achieved during the period demonstrates how good this system can be when we work together with our franchisee partners.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 14 Looking to the future, as I said, we have very strong foundations upon which to build. We are determined to realise the potential of this system and are spending time developing our long- term strategic plan. Coming together around a long-term plan for this system is crucial in

• rder to realign with our franchisees and we are giving this considerable focus and time.

So with that, we will start the Q&A session.

Q&A

Bethany Barnes: The first question is from Ross Broadfoot at Investec. Dominic, in your previous role at Costa, did you face similar challenges in the franchisee network? Dominic Paul: I will not particularly comment on Costa. I would say a couple of things on that question. There is always some inherent tension between a franchisor and a franchisee. And in fact, franchisee partners have a really important role to play in terms of constantly pushing the franchisor to run a better business and help them run their businesses better. So, I think there should always be some form of healthy tension within a franchisor and a franchisee system. We did have a number of franchisees within Costa. And I guess I learned a few really important lessons from that. Communication and trust are really important in order to run a good franchise business. Being open and honest in communication, spending time on the communications and building relationships and helping support those franchisees is really, really important. And I guess that is part of why I say a strong relationship with franchisees is partly emotional as well as economic. One of the other things I would just underline, which I touched on in that presentation, is the strength of our system in terms of the quality of operations that our franchisees run is

• fantastic. And I am super encouraged by that. I have been incredibly impressed by their

passion, by their operation and how much they understand this business and the brand. And I think that is a wonderful thing, and is actually a great foundation from which to build on. Bethany Barnes: Next question is from Richard Stuber at Numis. There are three questions all around sales patterns, so I will read them all together. So, how has delivery growth trended as collection has resumed? And do you expect it to revert back to the previous sales split? Secondly, to do with stores actually, are you finding more opportunities for new store locations given the increased availability and lower rents? And thirdly, are you seeing any regional differences in like-for-like sales trends? Dominic Paul: Do you want to cover the first and third one? I will do the one in the middle. Neil Smith: Yeah. I will have a go at that. You can see in the detail of the presentation, we give a breakdown of delivery and collection over quarter-on-quarter. I think it is probably a little early to say if there is a material impact as collection recovers. We have not seen delivery drop off, which we might have expected. So, what we are hoping is that the people that have used the delivery service are there to stay, and it is actually incremental business which will be great news.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 15 I think the third one on regional variances, I am not sure that we have seen anything that I can note that would be a significant change in regional patterns, no, in the stores. Dominic Paul: I think then the middle part of the question was about are we seeing more new store opportunities. It is a bit early to say or see that yet. I think there are a couple of points though to make, which are linked to that, which is, one, we have definitely seen an acceleration of delivery within this COVID crisis. And you can see that through the quarter two numbers. But we think that there has been a move to delivery over many years. And I think our belief that this is the age of delivery, I think it has accelerated that trend. And that will also

• bviously impact some of the more traditional operators who do not have delivery focused
• businesses. And obviously, as we come out of this crisis, I think we all know the restaurant

and leisure industry is facing some very tough time. So, I think the potential long-term opportunities for growth for this brand and this business are possibly stronger now coming out of this crisis. I think the brand has come out strong. I think our operations have done fantastically. And I think there are potentially a number of sites and locations we could see opening up that maybe we would not have had access to in the past. So, over time, yes, we think there could be some very interesting location opportunities coming up because of this crisis. Bethany Barnes: Two questions from Natasha Brilliant at Citi. I will ask them separately. First one on franchisees. Can you give us any more colour at all on initial discussions you have had with franchisees? Have the challenges over the last few months changed the relationship, either positively or negatively? Dominic Paul: I think I said it in the presentation, we have spent a lot of time as a system, so that is DPG and the franchisees together, working on how we continue to operate really effectively through the crisis. And I am really proud of what the business has done together through that crisis. And I think, as I said before, what I have been really impressed and encouraged by is the quality of the operations that the franchisees run, and the passion that they have for the

• business. And that gives me confidence that as a franchisee group, we will be able to, over

time, find a way to grow effectively together. That said, the challenges have been around for quite a long time. I think we all know this. They have been well documented. And it is really important that we move forward with our franchisees in the right way. And that is going to take some time to resolve. That is going to take some time to work through. We are anchoring it within a multiyear plan. The good news is, I think we can all see

• pportunities for growing this business. But we need to move forward in the right way with

the franchisees, and that is going to take some time. The first step has been working together closely during the COVID crisis, and I think we have done that really effectively together. Bethany Barnes: And then the second question is on international. Can you give us any more colour on the disposal process? Are you in active dialogue with any third parties? And given the challenges over the last few months, for practical reasons, I can see why the

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 16 process would take longer. But do you think you will have to make further changes in those markets, for example, store closures before you can progress with that process? Neil Smith: So obviously, first of all, we were delighted to get Norway away and completed

• n 22nd May, given this environment we were very, very happy to achieve that. And clearly,

M&A generally in the current environment is quite challenging. So, probably the timeline of disposal for the other countries is probably a little bit longer than we might have originally anticipated. In the meantime, we are busy. Our operational teams are busy. Our management teams are busy to mitigate the ongoing cash drain on the business. And that is from an operational point of view. They are trading it as hard as they can. Will there be further closures? We are not anticipating any more. I think we closed a couple coming out of the COVID period, but no more than that. Bethany Barnes: Next question is from Anubhav Malhotra at Liberum. Two questions on current trading. Can you provide month-on-month system sales like-for-like, if not absolute, then may be qualitatively? And secondly, are you seeing the same kind of customer engagement around consumption occasions like sports events as before COVID, given the restrictions on consumers gathering together? Dominic Paul: You can answer the first one, and I will take the second. Neil Smith: The first one is a no. I am sorry, but we will not provide monthly analysis. We have given quite a lot of detail I think in the pack in terms of quarterly profile. And current trading, we have said, within my presentation, as much as we are going to say. We are not going to quantify current trading at this stage. Dominic Paul: In terms of the sporting occasions, customer trends, I think the football certainly has helped in more recent weeks and months because pubs cannot show the big football games. There is not a big gathering. So, I think if there are gatherings of families and their bubbles, they are happening at home. And we have marketed to encourage people to have a pizza at the half time, and that definitely has helped. Bethany Barnes: Another one on current trading, probably similar answer. But encouraging trading in recent weeks; how does that compare to H1? And has the recent hot weather had any impact? Neil Smith: Again, we are not going to quantify it. But to some extent, reiterating what I said, what we are facing, what we are seeing is encouraging results. But some of what is encouraging is coming from what we think are relatively short-term assistance, which is the football that we just talked about, staycations – people are definitely staying in the country where otherwise they may well have travelled abroad. Now, the gradual reintroduction of collection will be sustainable. And then also the VAT benefit is helping from a consumption point of view, and that runs through until January. So we are not going to quantify it. We are pleased. It is encouraging. But I also mentioned there is a degree of volatility. There is certainly uncertainty ahead. Bethany Barnes: We now have three questions from Paul Ruddy at Goodbody. I will ask the first and then the second two. So, firstly, if you look at the basket composition over the last

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 17 18 months, has there been any major change in composition? And are there any medium- term trends we should think about in terms of customer preference? Dominic Paul: Really hard to answer that question accurately because we have seen changing trends during COVID. But of course, we do not know how quickly some of those trends might revert to the norm. So, for example, we have seen more sides and desserts with orders. We have seen more larger sized pizzas being bought. And that is generally because families are sharing. And actually, a lot of families are buying on one day and then buying more, so they have leftovers for the next day. I think increasingly, as people get out and about more, we would expect the trends to revert a little bit back to the norm. But I guess like anything at the moment, it is quite hard to predict when that will happen and what the norm actually is now. So, I think generally we would expect the slightly larger order size to continue and a slightly higher ratio of sides and desserts, but it is very, very hard to predict. I think the key thing for us is that we continue to operate as effectively as we have through the crisis. So, I touched on the franchisee performance. The strength of the operations through the crisis has been remarkable. And continuing that and showing to the new customers that we brought on how resilient our performance is and how consistent our performance is, is I think very important. Bethany Barnes: And then two questions on stores. Would you be able to approximate the percentage of stores still at the immature phase from an AWUS perspective? And secondly, in terms of the pipeline, how does the pipeline look in H2? Neil Smith: If it is approximate, I can probably have a go at that. I think in terms of immature state, it is probably less than 5% because if you look at the pipeline of sales of new stores that we have done, it has been relatively low in the last couple of years. And indeed, that feeds into the next question, which is, again, we are not going to give you specifics on the pipeline. We did eight new openings in the first half. We are now at 11 year-to-date, and that feels like a run rate for now that you might want to put in your model. Bethany Barnes: We now have several questions from Wayne Brown at Liberum. I will ask them in pairs. So, first two. Dominic, you talked about the significant growth potential and future growth avenues. Can you give us some more colour? And secondly, one for Neil. When you talk about £2 million supply chain costs in H2, what about franchisee support in H2

• r does that fall away?

Dominic Paul: Okay. So, should I take the first part of that question, so on the growth potential and growth avenues. I think we have been really encouraged by and proud of the performance during COVID and particularly during quarter two. And it is underlying the fact that the delivery space is a great space to be in. And actually, our carryout business, although a relatively smaller proportion of our sales, it is a very large business to go after in terms of competitors. So, I think we have a tailwind in terms of the delivery space growing, and I think a lot of customers have discovered and rediscovered food delivery during the COVID crisis and we think are likely to continue with that. So, we have this tailwind of delivery growth. Secondly, we have a very, very fast-changing competitive landscape. A number of Domino’s core

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 18 competitors are going through turbulent times at the moment and are, therefore, changing some of how they operate. For a trusted brand like Domino’s that has operated well during COVID, long-term, we think that creates opportunities for us as a business and a brand, to take advantage of some of those growth opportunities that we do think will come up. And I said in terms of other growth avenues, as part of that strategic plan, we are doing a detailed piece of work to analyse where we see that growth pipeline coming from over the next few years. But with the growth in delivery, the changing competitive environment and the opportunities open to us as a brand, we think that there are some really interesting long- term growth opportunities. Neil Smith: And on the supply chain, it is more a franchisee support question around the second half. At the moment, we are not paying for the cost of the safety equipment that we paid for in the first half of the year. What we did was we purchased the initial bulk purchases

• f the safety equipment and paid for that, passed it on to our franchisees in terms of the

equipment. And now what we have done is sourced new supply which has been passed on at cost to our

• franchisees. And we would anticipate that that would carry on through the second half. But

who knows? That is our expectation, but assuming no further national lockdown. Bethany Barnes: Next two questions from Wayne at Liberum. How will you get the collection business back or keep the delivery business as restaurants have opened? And secondly, how do you view the Amazon-Deliveroo tie-up as a threat to delivery? Dominic Paul: So, let me take the first part of that question. So, how are we are going to get collection up and keep hold of delivery business. I think I touched on, in the presentation, about making our decisions more data-led, and I think we did that really effectively during the COVID crisis. One of the clear bits of analysis that we did during the crisis was proving out the point that collection customers are largely incremental to delivery customers. It is not 100%, but they are largely incremental. It is fundamentally a different occasion. Reopening for collection has proven that point. I think as Neil said, we are at about 60% generally of our pre-COVID levels of collection. And that has built quite reassuringly over the last few weeks. Really hard to tell where that is going to go from now; as Neil said, part of the reason for some of the uncertainty that we are facing. So it is hard to see how and when that is going to grow from here, but we have been very encouraged that it has built up to 60% relatively quickly. I am very encouraged that we opened for collect so quickly. But the key point I think for us is the majority of customers for collect are incremental to delivery. On the Amazon question. So, I think you will all have seen, we filed an objection to the finding from the CMA. The CMA published a report a few days ago. I think it is 259 pages, so it is pretty lengthy. We are working through that report. The reason we filed the objection

• n it was because we are genuinely concerned about whether that leads to reduced

competition within the space. Actually, Domino's as a brand, we are very well placed to address that competition. I think we are in a very unique position with the strength of our

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 19 brands and the strength of our business. We are going through the report now to work out what our next steps on that. I think fundamentally, we have a lot of confidence and faith in our system, in our brand. And I think with some of the work we are starting on in terms of the multiyear plan, I think we will feel confident that we will be able to come up with a plan that is centred on growth, Amazon

• r no Amazon.

Bethany Barnes: And then the final two questions from Wayne at Liberum. Firstly, on e-

• commerce. What costs can we expect as catch-up investment is required? And could you

maybe provide more detail as to your view around the potential to leverage global knowledge there? And secondly, as the free cash flow benefit was timing, what year-end debt should we expect? Neil Smith: I think, let me do the year-end debt piece first. Obviously, that requires a degree of forecast, which is difficult in the current environment, which is why we have not given guidance on EBITDA, but there are certain things that we can give some guidance on. We would hope and expect the drain on cash from the international business to reduce, for example. We would expect CAPEX to be slightly higher in the second half versus the first half as we re- instigate the investment programme. And obviously, we would expect the EBITDA to perform well as collection comes back. So, I would anticipate that obviously we are going to pay the dividend, the £26 million dividend, which we have not paid in the first half. So, lots of moving parts, but I would imagine that net debt would not be materially different to where we are at the half year when all those factors have washed through. In terms of e-comm, I think e-comm and IT generally in terms of infrastructure, both DPG infrastructure and IT investment in terms of driving growth and efficiency within our franchisee system, is something that we can and should be doing more of. I do not think it is a massive quantum. It is just a staged investment to improve quality. And I think that will be absolutely part of the long-term plan, the thinking that we are coming up with. Bethany Barnes: Another question from Natasha Brilliant at Citi on corporate stores. What is the new management team's view of the corporate stores and what that opportunity looks like? Dominic Paul: So, again, we are including the thinking in the corporate stores within the multiyear plan. I think you all know, we have got 36 corporate stores. I have been pleasantly surprised by the role they have played for us during the COVID crisis. We have used them to test and learn different operating procedures and processes, and I think it is been very helpful for us to do that. But fundamentally, the role of corporate stores in our business moving forward needs to be centred in the work we are doing on the multiyear plan. Neil Smith: If I may just add, I think for those that cover the pub industry, I do think there is a good crossover in terms of learnings because at Ei Group, when we ran managed pubs, I think we understood much more how to operate a pub and take some of the learnings from that into the rest of the estate. And it is similar here to a degree. I would argue probably the

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 20 franchisees are very good operators already here, but taking some of the learnings is really

• important. However, what is the scale of that corporate store ambition is to be determined.

Bethany Barnes: Question from Raunak at Capital. Firstly, does the target of 1,600 stores still stand? Secondly, can you share your plans on product development and marketing going forward? And thirdly, what can we expect on capital allocation and leverage beyond this year? Dominic Paul: Okay. So, shall I take the stores, the product and the marketing and then you take the capital allocation? So I think, again, I guess, you would expect me to say at this stage, we are looking at the pipeline of new stores and the store target in the context of a multiyear plan. I think for sure, we can see opportunities for white space, for growth for the Domino's brand and therefore, the opportunity for new stores. The exact number, the target that we should have, we are not yet clear on. Will there be growth opportunities? Yes. What is the right target? To be determined as part of the multiyear plan. The second question or comment was about product and marketing. So, I think one of the things we have been encouraged about is our ability to continue on product innovation despite operating through this crisis, which I think has been really, really encouraging. We have done a vegan product test during the COVID crisis. I visited a number of stores that have been trialling the vegan pizza. I know a lot of our franchisee partners who have been involved in the creation of that product and are passionate about launching that product. And we have had really encouraging results from the trial. I think it is a great product, and we will be launching that later this year. And we are looking at continued innovation. I think it is clearly an area that is important to this business and will be increasingly important to the business moving forward. In terms of marketing, I actually think the agility we showed during the crisis on marketing, again, was encouraging. We very quickly pivoted our marketing to really focus on safety and reassurance for our customers. We are currently focusing our marketing on the staycation

• pportunity. There are many more people in the UK and Ireland than we expected there to
• be. So we are really getting that point out about when you are in a staycation, enjoy

Domino's. And are working on what the next stage of our marketing as we come out of the crisis. We think it is really important. And I think, as I said when we started this presentation, I have been blown away by the quality of the operations. During the COVID crisis, to have maintained, to have operated the business so effectively all the way through that crisis whilst recruiting thousands of new people to keep the business operational, I think has been really, really reassuring and gives us a lot of confidence. And therefore, moving our communications over time to really focus in on some of those unique strengths that Domino's has, the fact that we deliver so consistently, the quality of our product, the level of our customer satisfaction, the way we get those messages across is

• bviously very nuanced. But I think focusing a bit more on what really makes this brand

unique – and there are many things that make it unique – I think will strengthen our position as a brand in the marketplace.

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 21 Neil Smith: And I think the third question was around capital allocation. So, if I can take it into two chunks. I think in near-term capital allocation, I mentioned in my script that at around two times, I think, given the current world that we live in and the uncertainties that we have, two times leverage feels about right. In terms of dividend, we have announced the dividend payment of £26 million today and that we will revisit, come March, what we think is the appropriate dividend to pay at that point in time for the FY20 year. And I have also mentioned capital allocation with regard to capital investment will be around £20-25 million for the remainder of this year. If I look further forward, I am not going to give you precise numbers because I think it is really important that it is part of that long-range plan that we are coming up with. I think first and foremost, you come up with the operational plan to drive the growth for the business, and then you decide how do you monetise that growth in terms of returns to shareholders and best use of cash. And so when we are ready with the operational long-term plan, we will come also with a capital allocation framework that sits alongside that plan. Bethany Barnes: Another question from Ross Broadfoot at Investec. Could you please update us on average new store address counts in H1, please? And of the eight stores, how many were splits? Neil Smith: I am not sure how many were splits. I think pretty much all of them, probably most of them. Dominic Paul: Pretty much all of them. And what was the first question? Bethany Barnes: The first question was about average new store address counts. Neil Smith: Yeah, there is nothing materially different to call out, I do not think. Pretty much consistent with what we have before, nothing materially different. Bethany Barnes: Two questions from Owen Shirley at Berenberg. Firstly, with regards to the 2% reduction in the NAF fee for the 10 weeks, did you make up for this, or was marketing spend reduced by the same amount? And secondly, during the consultations that have taken place with franchisees so far, what are the main bits of feedback? What is the most significant concern? Dominic Paul: Okay. So, the first part of the question was about the marketing spend. So we cut the NAF fee, so the national advertising fund fee. It went from 4% to 2%. That cut the marketing in that period by approximately £5 million. We did not fund the difference. The marketing was cut during that period. Obviously, as we went into crisis, there was a lot of uncertainty as to whether we could keep

• perating or not. We are coming out of the crisis now and with the benefit of hindsight, we

can see that, obviously, we operated fantastically well during crisis. It was not that obvious right at the beginning of the crisis. So, I think cutting the marketing fund at the beginning was the right thing to do. We went to 2%. We cut the marketing spend. Interestingly, what we did find is that our marketing spend at that time went further than it normally would. Some of the media costs dropped, so we could get more airtime for our money. And in certain situations, certain areas, we

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 22 continue with some local marketing as well. But we are now back to 4% in terms of the NAF, and we are ramping up our marketing, as I think I said in the presentation. And then the second area of the question was about the points that are coming up in terms of the franchisee conversations. And I would not go into that in a lot of detail. I do not think that is appropriate. I think the key thing for me has been learning the business, getting to know the franchisees, and understanding that the relationship challenges are partly emotional and partly economic and will take some time to work through. The key thing for the franchisee community is wanting to understand that a multiyear growth plan gives them the ability to continue to grow their businesses and continue to grow their profits over time, which is exactly what DPG is interested in as well. So, as part of that plan will be showing both the franchisees but also DPG and our investors that we can create a multiyear growth plan that results in increased growth and profitability for all our key stakeholders. And I think there was a really interesting learning through the COVID period, which is I think we have shown together as a system that when we do work together and we really focus on winning in the marketplace, we do win overall. So, I would describe our work together with our franchisees during the COVID period as a really important first step in our new journey. Bethany Barnes: There is a question from a private shareholder, but that is around Amazon- Deliveroo, so I will not ask that as it is the same as a question we have already had. So, there is just one more question. And we have had two questions both from shareholders, but both effectively the same questions, so I will try and amalgamate them, which is how do you think about the aggregators? And how do you think your market share has performed against the aggregators? Dominic Paul: Should I take that first? I think a couple of things on the aggregators. Obviously, our business is completely centred on pizza, whereas aggregators have a wider choice of food offerings that they have. I think we have had some really interesting learnings though during COVID. We have, without doubt, taken significant market share within our core pizza segment. And it has been really, really encouraging to see the amount that our sales have increased. I think you saw in quarter two, 30% increase. I actually think the aggregators overall are helpful because what the aggregators have done is they have helped to grow the delivery space. Our uniqueness within the delivery space is the quality of our operations, and it comes through loud and clear from the customer research that we are doing. People love the reliability of our operational delivery and the quality of our

• product. And we own the supply chain and the product from inception all the way through to

the customer. And that is one of the things that we really learned during COVID, which is one

• f our edges for customers, we own that process from beginning to end. Obviously, an

aggregator cannot do that. So, I actually think what the aggregators do is help grow the overall delivery space. What we, as a very well-known and trusted brand, can do is really emphasise the core strengths that we have and that we offer to our customers and our customers' value from us. So, I think in terms of are they a threat or a help? I guess a little bit of both. But actually, in terms of growing the overall delivery space and therefore, giving us an opportunity to

Dominos 2020 Interim Results Tuesday, 11th August 2020 www.global-lingo.com 23 continue to grow our delivery space and outperform our key competitors in crucial areas, I think it is a great opportunity for us. Bethany Barnes: No further questions. Dominic Paul: All right. Thank you very much. So, I would like to thank you all for your time today and for your questions. And with that, we close the session today. Thank you very much. [END OF TRANSCRIPT]