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LSLPF 2025 Q2 财报电话会议

Adam Castleton: Good morning. Thank you for joining LSL's Interim Results Presentation. I'm Adam Castleton, LSL's Group CEO, and I'm here with David Wolffe, Interim Group CFO. I'll first cover highlights, market context and progress we've made in our divisions. David will then take you through a financial review. I'll then talk about outlook and some key takeaways, and we'll take questions at the end. We're recording this event and a replay will be available on the LSL IR website. These are my maiden set of results as Group CEO. I'm really pleased to report the results are in line with expectations, and we continue to make good operational progress. Revenue and profit are up with operating margin maintained at a 15-year high. Return on capital employed of 31% for the last 12 months is much higher than historical levels. These reflect the improvements we've achieved following the transformation of the group in recent years, and this was achieved while continuing to invest for growth. This performance underlines that our capital-light resilient model is delivering consistently while we are reinvesting for the future and the full year outlook remains unchanged. Moving to key financial highlights. Group revenue increased by 5% to GBP 89.7 million, and we maintained our strong market share. Group underlying operating profit was up 3% to GBP 14.8 million, while we continue to invest strategically in our business and absorb the national insurance increase. We are a highly cash-generative business. Our cash conversion for the last 12 months was 95%. This is at the upper end of our target range of 75% to 100%. We performed well in a recovering market. Total mortgage lending in the market increased by 5% with a very different picture in new lending, which was up 22%, whilst product transfers rebalanced back 10% year-on-year. We gained market share with our new mortgage lending up 23%. U.K. residential sales were up 17% with a pull forward of demand given the stamp duty changes. We maintained our market share of this market. Mortgage approvals increased 10%, with the change in our lender mix slightly reducing our estimated share in surveying and valuations with revenue up 9%. We operate 3 divisions with leading market positions, each benefit from strong long-standing client relationships with scale and strength in their markets as well as expertise and deep domain knowledge. Each delivered operational progress during the period. In Surveying & Valuation, productivity per surveyor increased by 8%. B2C revenue increased by 43%, and we renewed a top 5 lender contract and started working with another new lender. In Financial Services, new mortgage lending was up 23%. Revenue per adviser increased by 8% and the implementation of the new CRM is progressing well. In our Estate Agency Franchising division, we increased the size of our lettings portfolio, making 3 acquisitions during the period with a strong pipeline, and we added 3 new branches to our franchise network. In summary, each division continues to execute well while maintaining discipline on margins and returns. I'll now hand over to David to take you through the financial review in more detail. David Wolffe: Thank you, Adam. Good morning. I'm David Wolffe, Interim CFO at LSL, previously CFO at a number of high-growth, tech-driven and listed businesses. Let's look at the group's financial performance in more detail. In the half year, revenue grew 5% to GBP 89.7 million, driven by 9% growth in our largest division, Surveying & Valuation. Underlying operating profit increased to GBP 14.8 million, up 3% year-on-year, and I'll come back to that increase in just a moment. Operating margin remained strong at 17% at the upper end of our historical range. Cash from operations at GBP 7.4 million reflects shareholder distributions, planned investment and some working capital timing. Again, more on that shortly. Return on capital employed for the last 12 months increased to 31%, very strong compared to historical levels. So the first half has delivered continuing growth while maintaining a high return on capital profile. Coming back to that operating profit increase, there are 2 main points to highlight. First, we have made positive operating performance progress with an underlying increase of GBP 3 million before strategic and investment decisions. This progress is driven by our volume growth across the business, improved pricing and the first positive contribution from the Pivotal Joint Venture. Second, we made strategic decisions in 2 areas, which reduced profit in the period. We stepped away from some protection-only business as we rebalanced our adviser firms towards mortgage and protection or composite firms, and we made investment across Financial Services and Surveying to drive future growth. So the headline growth of 3% is a combination of that underlying progress and the growth investment. Turning now to cash flow and capital allocation. In the half, we delivered positive operating cash flow of GBP 7.4 million after working capital movements around the 2024 year-end. I'll come back to this in just a moment. We deployed capital in 2 key areas in the period. First, in shareholder returns, we distributed GBP 9 million in dividends and share buybacks. The interim dividend is maintained at 4.0p, and the buyback program continues with GBP 3 million deployed to date. Second, in strategic investment, GBP 3.6 million of cash was spent across CRM development, data and lettings books acquisitions to drive future growth. Our balance sheet remains robust. With June cash at GBP 22 million and a GBP 60 million unutilized facility, we have strong liquidity and our capital-light model ensures ongoing flexibility. Looking at the positive operating cash flow and working capital in a bit more detail now. The line at the bottom of this slide shows our adjusted cash from operations performance over the last few half periods. The GBP 7.4 million we reported in H1 presents as a lower number than last year, but we had a timing effect of GBP 4 million excess working capital inflow just before the 2024 year-end that then unwound into an outflow into 2025. You can see this in the lines above. In operating profit, we have stable progression. Depreciation is flat and low, reflecting our capital-light operating model. Cash on lease liabilities continues to moderate after the transformation of the Estate Agency business. But on working capital, H2 2024 inflow of GBP 5.9 million you'll see in the box was an outlier, which illustrates these timing effects around the year-end. The unwind in H1 of 2025 makes our cash conversion look suppressed in the half, even though on a rolling 12 months basis, we made really good progress. We expect that the second half and full year 2025 cash conversion should be normalizing towards our target of 75% to 100%. Taking each division in turn, let's run through the story of the half. In Surveying & Valuation, revenue grew 9% to GBP 53.2 million, within which B2C was up 43%. Underlying operating profit was GBP 11.9 million, with margins at 22%. This is down on the elevated levels of H1 last year with Surveyor commissions now normalized, and this effect is in line with what we have flagged before. But in sequential performance compared to the second half of 2024, we have made good margin progress, up 200 basis points. Volumes grew with jobs up 7%. Fee per job was up 2% with better terms and more B2C activity, and we improved Surveyor productivity in jobs per surveyor, which was up 8%. In Financial Services, revenue was flat overall, but this illustrates the combination of mortgage-related revenue up 21% and protection revenue down 12%, following our strategic repositioning away from protection-only brokers. As a result, adviser numbers were down to 2,637, but adviser productivity increased 8% in completions per adviser, and we grew fee per completion by 3%. But overall, at a divisional level, despite the broker repositioning and some P&L investment in CRM, operating profit grew 23% to GBP 4.8 million, with Pivotal making that positive contribution. In Estate Agency Franchising, revenue overall grew 1%, but while residential sales revenue was up 24% and lettings revenue up 4%, our land and new homes business was pushed back by a contract change. As a result, underlying operating profit margin remained flat at 24%. We are expecting improvement in the second half with cost savings feeding through. Branches grew by 1% after 3 more openings in the half, with overall sales income per branch up 22%. The lettings portfolio now stands at over 37,400 properties after 7 lettings books acquisitions since mid-2024, with overall income per property now up 1%. So with progress in each of the divisions, the group delivered on expectations in the first half, whilst at the same time, positioning itself for stronger growth in the second half of the year. And with that, I'll hand you back to Adam to take you through the outlook. Adam Castleton: Thank you, David. Expectations for the full year remain unchanged. In the second half, we expect a sequential step-up in profit in each division with an increase in refinancing activity, a strong activity in 2-year and 5-year mortgages in 2020 and 2023 mature in large numbers. We've already seen this in July and August, with July the strongest refinancing month for us this year. We also came into the half with residential sales pipelines increased from this time last year. We will continue to invest in our business in the second half, for example, in lettings books and the FS CRM system. Indeed, in September, we've already completed a further 3 lettings books. When I presented our preliminary results back in April, just before I started out as Group CEO, I set out my early thoughts and priorities. These remain unchanged, and I'm pleased with early progress. Our senior leadership teams are responding well and are raising their sights and ambitions even higher for the future. We continue our investments in technology and data, notably the new CRM in FS and data in Surveying & Valuations, whilst we are also trialing new AI-enabled solutions to improve productivity. I'm already working closely with our divisional business leaders on the opportunity to leverage group strengths, and I'm encouraged by the early signs that I'm seeing. I'm working very hard and even more transparent and clear communication, both internally and to the market. For example, we've just rolled out the first wave of updates to our IR website, adding some fresh new elements to allow greater accessibility and transparency. This is all steady, deliberate progress, and I look forward to sharing news of our ongoing progress. We are a diversified, resilient cash-generative group, strategically positioned for growth. We're delivering, performing in line with expectations, and we're investing carefully while maintaining shareholder distributions. We're building consistently. The LSL of today is stronger and leaner, delivering higher-quality earnings. It is early days in my tenure as CEO, and I'm excited about the growth opportunities open to us as a group. With 2025 on track, we're looking ahead with renewed ambition and with confidence about our future. With that, operator, can we please move to Q&A. Operator: Thank you. [Operator Instructions] There appears to be no questions at this time. So I'd like to hand the call back over for questions via the webcast. Unknown Executive: Okay. Thank you. We've got a number of questions on the webcast. I'll ask them one at a time. The first question is from Glynis at Jefferies. Glynis asks about the Surveying division and the year-on-year movement in the operating margin. You talked about this as -- in the second half of 2024, you're talking about it again today. How should people think about the first half 2025 margin? And what sort of level is considered normal? Adam Castleton: Yes. Thank you, Glynis. Thank you for your question. So last year, as we flagged at the interims and the prelims, we had enhanced margins in the first half of last year as we came into the year in 2024. We had a burst of activity, and we didn't bring back the surveyor incentives immediately. And secondly, there were some administrative heads that we didn't bring back immediately as well. Therefore, there was quite an enhanced margin for the first half of, I think it was 25%, sequentially then that fell in H2 and has now recovered to about 21%, 22%. We expect that really to be the norm. So at the moment, 21%, 22% is really the norm for our margin going forward, the 25% was elevated in the very top end of what we might normally expect to see. Unknown Executive: Great. Thank you, Adam. The second question comes from Jonathan, who's at Edison. Jonathan asks about the impact of changes in stamp duty. Have you seen any material changes in demand in the month since the stamp duty changes came into effect? Adam Castleton: Yes. Thank you. Thank you for your question. Yes, there was a spike, particularly in March with the stamp duty changes. So we saw for the whole half, 17% up for the overall market, which we tracked. March was particularly strong. It was actually 170,000 transactions in the market for that month. What we've seen since then is a good market as we expected. In fact, because H1 2024 was a bit softer, the 17% looks very high. But in fact, the second half of this year will be a little bit more in transactions than it was in the first half. So we see sequential rises, notwithstanding the spike. So certainly, if the question is which -- from time to time, people have asked whether somehow there was a spike and then it sort of hollowed everything out, it certainly didn't. We entered this half year with increased pipelines, which is great. As I said, we expect residential sales to be a little bit more in the second half than it was in the first half, notwithstanding the spike duty spike. Unknown Executive: Great. Thanks, Adam. We have a follow-up question or a second question rather, sorry, from Glynis at Jefferies. There's been a lot of talk in recent weeks about potential government policy changes. How has this impacted your business in recent weeks? And if some of the changes that are being speculated in the press were put into place, what are the implications for the group? Adam Castleton: Thank you again, Glynis, for the question. Obviously, something that we're all reading in the newspapers. The autumn budget is obviously a couple of months away in November, and we read, as you do, Glynis, all the various either ideas or kites that are being flown, it's hard to tell which they are. I don't think I'll comment on speculating what may not come through and what that might mean. Obviously, as a business, we stay very close to what will happen, what we focus on are the facts that we have at hand and as a business that covers the whole range of services in the property and lending markets, we've got really deep knowledge and deep data. So if we look at all the information that we have across Surveying Financial Services and Estate Agency covering mortgage applications, completions, fall-throughs, which are when agreed sales fall through sometimes because the chain has fallen through because people pull out. We're seeing nothing of any of our metrics and -- because I expected some of these questions rather than checking these numbers once a day, I'm checking them twice a day with people and ringing people up. We're not seeing anything at the moment. Whether there's a question of sentiment, I can't say, but certainly, all of our metrics are showing no change of customer behavior. And I think depending on what does or doesn't transpire in the budget, as we've demonstrated over many, many years, we're a dynamic business. We're very quick to react and to change the market. We're well positioned for that. And for any negative shocks that comes to the market in the future, of course, following our franchising restructure, we're a lot more even in our earnings, less volatile. And so we're certainly less spiky. And we're very, very quick to react. And as I said, the data that we have is very, very specific. Just as a little example, when our friends across the water introduced the tariffs, I made a call and said, could they pull out fall-through data from Solihull, which is where the Land Rover factory is and in the Northeast where the Toyota factory is just in case people felt nervous because of the tariffs. So we really stay on top of data closely. And whilst I can't tell what may happen tomorrow or the day after in the budget, certainly, everything we've seen demonstrating that the customer behavior is unchanged and in line with what our expectations are. Unknown Executive: Great. We're actually going to move back to the conference call. We've had a question on the conference call, and then I've got another 2 questions on the web platform. Operator: And we take a question from Robert Sanders from Shore Capital. Robert Sanders: Just I suppose following on from that question about the government and sort of the other aspect of the market that's been a bit open to surveys has been the lettings market and [indiscernible] whatever saying that there's a downturn. Is that something that you're experiencing? And what do you think the outlook is going to be for the lettings market given renters rights [indiscernible] as we move into the next year? And then as a follow-on question, can I also ask you about what your -- you talked about the technology and data innovation and what you're seeing as the opportunities, particularly in the Surveying & Valuation division for the use of AI? Adam Castleton: Certainly, yes. Thank you. Thanks very much. Good question about the lettings market. The first thing I'll say is the lettings market is extremely resilient. If you actually look at the number of privately rented dwellings in the country, it's been very stable at GBP 5.4 million, GBP 5.5 million for the last few years, so we've seen no change of that. From our perspective, we have slightly increased our lettings portfolio, as David said, to over 37,000. And actually, as legislation, you mentioned the renters rights becomes a bit tighter. What we're seeing is that there's more interest from landlords who are self-managing to move towards a managed service. And we're starting to see that movement and that interest and we're certainly marketing to those landlords. It's interesting, you mentioned some of the metrics and the headlines that we see that forecast problems for the lettings market. I would just say that if you note some of those metrics, they don't necessarily show what they may appear to on the face of it. The first thing is there's been some publicity about lettings instructions being down, which is actually something we've seen over a number of years. One of the main reasons for that is that people are staying in their properties for longer, and therefore, there are less instructions than historically they were. Landlords will keep a good paying regular tenant and tenants will -- with everything going on in the market, will prefer to stay where they are. So that's certainly the reason -- one of the main reasons that instructions are down. It's not demonstrating that things are leaving the market. And also, we hear metrics quoted around there being more properties for sale that were previously rented. And whilst that might be the case, of course, those rental properties are often bought by other buy-to-let landlords. So certainly, we don't see a big change in the numbers of properties rented. We see opportunities for further growth. As David said, since the middle of '24, we've done to the end of the period 7. And actually, we did 3 lettings books during the half. And since the end of the half, actually in September, we've done 3 and just about to close to 4. So we see some good opportunities there. It's certainly not buoyant as it was when originally buy-to-let really grew quite strongly, but we're seeing no material change in the numbers of properties, dwellings that are privately let. In terms of the renters rights, as you mentioned, and as I say, just to reiterate, a, we don't see that changing materially the structure of the market. As I said, it may certainly lead to an opportunity for us to bring landlords who are currently self-managing over to a managed service. And that's probably a general point to make around regulation and regulatory changes. As a larger player, we're well placed to make the investments required to cover any changes necessary. And obviously, our deep relationships with whether it be our franchisees or our financial services, we're able to give our sort of trusted advices we have for many, many years. Unknown Executive: I've got 2 questions here from Robin from Zeus. Again, I'll ask them one at a time. In terms of the first question, could you please provide some more detail on Pivotal Growth in terms of current run rate of advisers, revenue, trading performance? Adam Castleton: Yes, Pivotals -- the Pivotal investments is scaling very well in terms of EBITDA, which is the actual entity results in the first half, that was -- again, these are within the interims, these are about GBP 3 million, GBP 4 million of EBITDA. So on a decent run rate for the year. So it's scaling up well. There were 2 small acquisitions during the half that we announced in the interims. And actually, in the post balance sheet note, you'll see that there was one further acquisition that completed after the end of the period. So scaling up nicely with over 500 advisers, the EBITDA run rate is going well. We're looking forward to continued growth and eventual realization of our investments. Certainly, we expect that to be well over our return on our weighted average cost of capital. Unknown Executive: Great. Thanks, Adam. And then there's a second question from Robin also about Pivotal growth. So Robin's question is, can you please expand on your reference about LSL being founded 21 years ago and it's being built on -- success being built on operational resilience, opportunistic dealmaking and entrepreneurial culture. What are LSL's strengths? And how does Pivotal fit into these strengths? Adam Castleton: Okay. That's okay, interesting. So yes, I mean, I won't repeat the words, but the business has -- it's quite entrepreneurial. It's very agile and it's very dynamic. We're very quick to move and to take opportunities. One of the examples actually I often use is when the pandemic hit at the same time that we were planning for the worst case for a year where we would have no business, we were also planning for the state agency to open immediately, and we're planning for both. And in the end, we really, really farmed the market well as it recovers. So very, very quick, and we're always agile. The opportunity -- the opportunistic element of Pivotal when it was founded was for a buy and build within the broking business, which exists in many other industries as we know, and there's an opportunity for us in the broking business, which we have launched. So really, it is an opportunistic approach to buy and build within a sector that had not seen it before. And so far, we're pleased with the scaling. And as I said, we expect a realization of our investments in due course. Unknown Executive: Great. That's all the questions covered on the web platform. No further questions. That's it. Back to you, Adam, for closing remarks. Adam Castleton: Listen, thank you for all the questions. I apologize for my colleague, David. They've all been pointed at me and I've answered them all. So I'm sorry that your -- all your numbers are not... David Wolffe: [indiscernible] Adam Castleton: Thank you very much. So listen, thank you for the questions. We're really excited about the opportunities ahead for the group. We're available for any follow-up that you may need. And I thank you all for your questions, your interest, and I look forward to carrying on the dialogue with you. Thank you.

Operator: Good morning all, and thank you for joining us on today's PZ Cussons full year results. My name is Drew, and I'll be the operator on the call today. [Operator Instructions] With that, it's my pleasure to hand over to Jonathan Myers to begin. Please go ahead when you're ready. Jonathan Myers: Thank you very much, Drew, and good morning, everyone, and thank you for dialing into our results presentation for the year ended 31st of May 2025. For those of you that can see the slides we're presenting this morning, it's worth calling out a successful example of our brand-building activities in the last year on the slide in front of you. Original Source advertising on a London bus as part of our Nature Hits Different campaign. I'll have some more detail on this later, but suffice to say for now that the activity helped deliver another year of growth for the brand in FY '25. Turning to the agenda then for this morning. I will start with a brief introduction before handing over to Sarah to take us through a review of the financials. I'll then provide a broader update on strategic progress and performance before moving to a summary and a chance for you to ask any questions. Note on this slide too, an example of how we've been building brands over the past year. This one, driving trial of Cussons Baby, specifically the Telon oil launched last year as shoppers browse a specialist baby store in Jakarta. Our Telon oil has now reached 10% household penetration in urban Indonesia and is growing market share. So moving to our main messages for this morning. We are making progress against our strategy. Our 4 priority markets delivered a strong performance. We have good momentum in the core of our business. The U.K. delivered a strong improvement in profitability, fueled by revenue growth and gross margin expansion. Indonesia ended the year with its fifth consecutive quarter of revenue growth with a healthy mix of high single-digit revenue and volume growth for the year. We continue to gain market share in Australia on each of our top 3 brands and grew operating profit overall, but we were still battling against the softer consumer backdrop holding back our revenue. Finally, our Nigerian business demonstrated its resilience, continuing to perform well in a high inflation environment. Meanwhile, we have also made progress pushing change through the business, strengthening our brand building capabilities, driving better integration of our marketing and R&D teams and extending our planning horizons to enable greater focus on sufficiency and quality of our multiyear innovation plans. Since the close of our financial year, we announced the sale of 50% stake in PZ Wilmar to our joint venture partner, Wilmar International, in line with the objectives of the strategic review we announced in April 2024 to streamline and simplify our portfolio. It was also after careful consideration of alternative value creation options that we announced the decision to retain St. Tropez, setting a new strategic direction with a new partner in the U.S. and a dedicated operating model within PZ to delivery. While I appreciate you will naturally have questions on our wider African business, all I'm able to say today is that we are continuing to progress our strategic review and will, of course, provide an update when we do have something to say. Finally, we are working hard on reducing costs and unlocking value in the business, whether that's through reducing discretionary spend, tacking our structural cost base or the sale of surplus nonoperating assets. I'll cover more on this later. So overall, we know there is more work to be done and that we have not yet delivered all that we set out to achieve, but there has been good progress to date, particularly the underlying momentum in the core of the business. And we are focused on delivering our strategic actions and operational improvements to evolve PZ Cussons into a business with a more focused portfolio and stronger brands, delivering sustainable, profitable growth. And with that, I'll hand over to Sarah to take us through the financials. Sarah Pollard: Thanks, Jonathan, and good morning, everyone. I'm going to share a summary of our FY '25 full year results, walk you through the key movements at the group level, then by segment and finish with current trading and guidance for the year ahead. As Jonathan mentioned, we've seen momentum across most of our portfolio, with a particularly strong performance in the U.K. and Indonesia. Group revenue declined by GBP 14 million to GBP 514 million, with a GBP 47 million reduction attributable to the naira, which while more stable in FY '25, was nearly 40% weaker on average versus sterling than in FY '24. Like-for-like revenue growth calculated on a constant currency basis was 8%, driven by pricing in Nigeria. Excluding Africa, like-for-like revenue growth was flat. Adjusted operating profit was GBP 55 million, down 6%, with adjusted operating profit margin lower by 30 basis points at 10.7%. However, as you can see from the bottom of the slide, excluding from each year's figures, the contribution of PZ Wilmar, the sale of which we announced in June, group adjusted operating profit margin would have increased by 30 basis points. On a statutory basis, operating profit was GBP 21 million compared to a loss of GBP 84 million in FY '24, which was primarily attributable to ForEx translation and U.S. dollar-denominated liability losses in our Nigerian subsidiaries following the currency devaluation of June 2023. And we have since significantly reduced our exposure to any future naira shocks as we have made good progress in extinguishing historical liabilities and repatriating surplus cash. We maintained a flat net interest charge in the year. With a higher adjusted effective tax rate more indicative of the higher rate going forward, adjusted FY '25 earnings per share declined ahead of operating profit, down 8.5%. The Board is proposing a final dividend of 2.1p per share, taking the total for the year to 3.6p, the same level as the prior year. Free cash flow was GBP 42 million, up slightly due to an improvement in working capital, partially offset by the reduction in operating profit. Net debt improved slightly to GBP 112 million with a net debt-to-EBITDA ratio of 1.7x. However, taking into account the proceeds from the sale of our Wilmar joint venture, which is expected to complete in the final quarter of calendar 2025, our pro forma ratio would have been 1.1x. Turning now to the financial performance details and firstly, revenue. To aid comparability, the first bar shows the impact of adjusting for FX translation, presenting FY '24 revenues at FY '25 exchange rates. The breakdown of the adverse GBP 55 million impact is, as usual, provided in the appendix. On this like-for-like currency basis, revenue increased 8% in the U.K. and Indonesia. And Jonathan will come on to the brand drivers of that revenue growth later. We again took pricing in Africa with multiple increases throughout the year to offset double-digit inflation in Nigeria. Jonathan will also outline the steps we're taking to turn around St. Tropez brand. Now to operating profit. As I mentioned, our overall adjusted operating profit margin decreased by 30 basis points to 10.7%. We've shown this chart excluding Wilmar, given this represents the more accurate basis for future profitability, lower in absolute sterling terms, but more cash-light and sustainable in nature versus an equity accounted share in a noncore, lower-margin joint venture. On a constant currency basis, group gross profit margin was lower in the year, reflecting the adverse mix impact of strong revenue growth in Nigeria, where gross margins are structurally lower. This was more than offset by a 220 basis point reduction in overheads. Around half of this represents structural cash savings relevant to our go-forward business. Also included within this number is a reduction in amortization to reflect the business decision to extend the useful economic life of our SAP software now that the manufacturer support period will run for longer, allowing us to extract a higher return from that IT asset. Marketing investment was broadly unchanged as a percentage of revenue, while the impact of ForEx translation had an overall adverse 70 basis point impact on margins. So let me now provide some more detail on the performance in each of our regional reporting segments. Looking first in Europe and Americas, where we saw growth in both like-for-like revenue and operating profit. Revenue grew 0.6%, driven by price/mix growth and with a very small overall volume decline. Growth in our main U.K. brands was offset by a challenging St. Tropez performance, without which Europe and Americas revenue growth would have been 2.4%. Adjusted operating profit was up GBP 4 million, with a margin increase of 230 basis points, driven by tight cost control and the full year impact of the integration of the U.K. Personal Care and Beauty businesses as well as ongoing revenue growth management and product margin improvement initiatives. This more than offset the GBP 3 million impact from the introduction in the U.K. of extended producer responsibility plans and new costs, which we will seek to mitigate over time through, among other things, a review of our entire packaging portfolio. Turning now to Asia Pac, where like-for-like revenue was flat. Continued momentum in Indonesia was offset by a decline in ANZ. All our core Cussons Baby segments drove volume-led growth in Indonesia, and ANZ saw market share gains in all 3 major brands despite the softer macro environment there. Both markets improved their profitability with higher gross margins and lower overheads. This, though, was offset by a reduction in profitability in some small Asian markets and lower profits in our business manufacturing non-branded [indiscernible]. Overall, adjusted operating profit reduced by GBP 3 million with a margin decline of 150 basis points. Revenue in Africa declined by 7% due to the depreciation of the naira. The 35% like-for-like revenue growth reflects 20 rounds of price increases as inflation in Nigeria remained elevated at over 30% for much of the year. Whilst volumes declined 12% as a result of those price increases, this was mitigated somewhat by further route-to-market improvements that Jonathan will describe later. We've seen our Nigerian business return to volume as well as price-led revenue growth so far this FY '26 financial year. Electricals revenue was GBP 47 million, up over 30% on a like-for-like basis. Adjusted Africa operating profit margin improved by 250 basis points or excluding PZ Wilmar, it improved by 450 basis points. The operating profit numbers shown here are excluding a GBP 9 million benefit that the Africa region reported in FY '24 related to intragroup debt forgiveness, the cost of which was shown in last year's central cost line and which had a net 0 impact to overall group operating profit. And I noted to explain that the Africa segmental results presented here are both comparable year-on-year and representative of underlying operations. So finally then, our central cost line, which equated to GBP 30.5 million in FY '25 and which was, on a reported basis, down slightly versus FY '24. However, we have also made the corresponding Nigerian debt forgiveness adjustment here to ensure comparability. And as such, central costs increased GBP 6.8 million in FY '25. This was split between underlying cost increases and investments in group-wide capabilities attributable to the performance of business units, but best housed at the corporate center for maximum return and so reported them. For example, the shifting of some marketing and some R&D roles to sit central. As we'll come on to, we see this number falling considerably over the next 12 months given the cost savings we're announcing today. So moving now to cash flow and net debt. Total free cash flow was GBP 42.3 million compared to GBP 41.6 million in the prior year, reflecting an improvement in working capital, offset by lower profits. Net debt was GBP 112 million compared to GBP 115.3 million last year, representing a net debt-to-EBITDA ratio of 1.7x, which, as mentioned earlier, will then see a significant reduction following the completion of the Wilmar sale. The group also continues to have no surplus cash held in Nigeria following our successful repatriation efforts. As we said in the statement this morning, trading year-to-date has been in line with our expectations. Group like-for-like revenue to the end of September is expected to be up around 10%. Strong revenue growth in Asia Pac is made up of Indonesia posting its sixth consecutive quarter of growth, plus ANZ also being up. Africa is showing encouraging volume momentum. Europe and Americas is down 2% or up 2%, excluding St. Tropez. We expect Europe and Americas to continue to strengthen across October and November, which would see us back to overall revenue growth there in half 1. In terms of profit guidance, we expect group adjusted operating profit to be between GBP 48 million and GBP 53 million. And this figure strips out any contribution from Wilmar, which is now treated as an asset held for sale in accounting terms. And so its profit contribution in FY '26 will be reported as part of the disposal calculations. Captured within the guidance are cost savings of between GBP 5 million and GBP 10 million, some of which will be reinvested in the business, subject to clear return criteria. Finally, net debt will fall significantly in FY '26 to less than 1x EBITDA. We expect cash proceeds of between GBP 15 million and GBP 20 million from the ongoing program to sell surplus nonoperating assets, of which we have received GBP 8 million so far this current financial year. We're expecting to receive proceeds of approximately GBP 47 million before the end of the calendar year from the sale of our Wilmar joint venture. Jonathan will talk a little more about the cost savings and noncore asset sale proceeds in a little detail. And so with that, I'll now hand back to him. Jonathan Myers: Thanks, Sarah. So let me give a broader update on progress and performance framed around the highlights and messages I covered at the beginning of the presentation. And let's start with the U.K. and what was behind the strong operating profit that I mentioned earlier. Beyond the cost savings Sarah talked about, a key driver of the revenue performance has been better commercial and brand building activities. Taking Original Source as an example, we delivered a bold marketing campaign from February through to May, firmly targeting younger consumers with an optimized mix of social media, out-of-home and TV, leveraging our partnership with social media influencer and personality, Jamie Laing. This is a good example of how we are enabling more competitive brand activation with the GBP 2 million media campaign reaching more than 15 million people. Pickup in brand awareness meant Original Source not only achieved its highest household penetration in almost 5 years, but thanks to considered price and promotional optimization as well, the brand also grew gross margin. Based on the success of the first wave of Nature Hits Different campaign, look out for the next wave of activity on Original Source over the next couple of months, a good example of us prioritizing brand support against activities with proven return on investment. Another way of driving revenue on our brands is to work in partnership with the owners of other brands to engage common target consumers and drive in-store activation. Six months ago, we highlighted the success of Carex and its Gruffalo partnership, which we have since expanded to Zog and Room on the Broom. Notably, Carex grew revenue and gross margin in FY '25, consolidating its #1 position in the hand wash market. We've also extended this type of brand partnership to Childs Farm to include a tie-up with Bluey and BBC Studios. Now if you don't have young kids or don't know Bluey, it's one of the most popular TV shows in the world for children and is enabling us to secure disproportionate levels of support across retail outlets. Just take a look at this tie-up with Bluey and Kellogg's at Sainsbury's as evidence. So we've seen encouraging FY '25 performance in the U.K., and we look forward to more to come, not least our plans for Christmas gifting, which is starting to hit the shelves this very month. Turning to Indonesia and Cussons Baby. You may remember the Childs Farm SlumberTime product range launch, addressing the importance of reassuring parents that their washing and baby products are giving their babies the best possible chance of a good night sleep for the wellbeing of both the baby and their parents. The CuddleCalm range takes the consumer insights and product formulation learnings from Childs Farm and applies them to Cussons Baby, albeit in a very different context. It's a good example of us leveraging shared baby insights across geographies and brands as we have sought to create a more integrated marketing and R&D organization. Elsewhere in our Indonesian business, we continue to see phenomenal growth in e-commerce, whether that's through established platforms such as Shopee or the ongoing success of our own live streaming capability. Turning to our business in Australia and New Zealand, where we continue to see softness in category values through the year, though reassuringly, we've seen the first signs of amelioration in the latest quarter. Against that backdrop, we continue to make market share gains on our top 3 brands, thanks to renewed efforts to drive better in-store presence, competitive pricing and promotion and broader distribution across retail channels. The Morning Fresh photo on the right-hand side is an example of those efforts. We are already the clear market leader in washing up liquid, and we are leveraging this strong position and our brand equity for winning performance and great value to help grow market share in the auto dish category. We've been using net hangers on bottles of Morning Fresh liquid to drive awareness and then offering hundreds of thousands of samples of auto dish tablets to drive trial. While auto dish is a highly competitive category, our position of strength in the washing up liquid market gives us a clear competitive advantage to leverage as we seek to build trial, distribution and market share. Turning to Nigeria. Perhaps the best example of brand activation was the recent relaunch of Carex. Carex has been available in Nigeria for some time, but has always been subscale as the product positioning has largely been taken from the U.K. Thanks to good work with Nigerian consumers, our campaign Win the War Against Germs means the brand now looks and feels new and relevant with clear antibacterial positioning, distinct brand assets, bold disruptive messaging and benefiting from professional endorsement. Just like the Original Source example I gave earlier, the execution was a multifaceted campaign: Digital, TV, out-of-home advertising and a series of in-person launch events. In fact, we estimate the campaign reached 125 million people. It's early days, but signs so far are promising. Carex will absolutely be one of the drivers of Nigeria's performance in FY '26. Beyond the excellent work on Carex, we have continued to strengthen our go-to-market presence. A key part of this, as we've mentioned before, has been the number of stores served directly by us as opposed to via wholesalers. Simply put, covering the stores directly leads to better retailer relationships and in-store presence as we can directly influence which products turn up in which types of outfit. From covering just under 70,000 stores directly 3 years ago, we exceeded our target of reaching 200,000 in FY '25, and we're now striving for even more stores in direct coverage in FY '26. A driving force in how we are seeking to serve consumers better in our core categories is the strengthened brand building operating model we have adopted over the past year as the next phase in the journey to raise the bar on how effectively and consistently we build stronger brands. Many of you will remember where we started, strong brands with good tactical plans, but more of a trading mindset and limited cohesion across the portfolio. We moved on from that in recent years, creating better alignment across the group and strengthening in-year plans. But we know there's more to do. So we now have put in place a brand-building setup, which balances staying close to consumers in our priority markets, whilst leveraging more effective integration and collaboration across both markets, meaning improved visibility of multiyear innovation and revenue growth plans in our priority market. Ultimately, we are building on our strength of in-year activation to add excellent multiyear innovation. Not only is this good for our consumers, it's also good for our marketing teams. We've seen a 7 percentage point improvement in engagement scores for the marketing function across the group. Ultimately, though, success will be measured in sustained progress on market share, revenue and profitability. Moving to portfolio transformation. In June, we announced the sale of our 50% stake in PZ Wilmar, our Nigerian cooking oils business to Wilmar International, our joint venture partner, for cash consideration of $70 million. This will simplify our portfolio and as Sarah said, significantly strengthen our balance sheet. It sees us exit a noncore category and reduce group reliance on Nigeria as part of our overall efforts to rebalance the portfolio and concentrate on our core categories of hygiene, beauty and baby. The sale also benefits a number of our wider sustainability metrics as PZ Wilmar represents around 10% of our Scope 3 inventory. Turning now to St. Tropez. As we explained back in June, although our intention was to sell the brand, after running a comprehensive process to do so, our firm belief is that the better course of action for our shareholders is to retain it and maximize value in the coming years. There are 3 reasons which give us the confidence. First, it's important to remember that whilst it's had a challenging performance recently, St. Tropez is regarded as an iconic brand. It established the self-tan category and has for many years been the driving force behind the market. It still has great brand equity and awareness with more than 30% share of the [indiscernible] self-tan beauty market in the U.S. and envy positions on the shelves of key U.S. beauty retailers such as Ulta and Sephora. Second, the key tenet of the new direction is the partnership we have formed with the Emerson Group, a leading U.S.-based partner to many brand owners, including some of the world's largest personal care and beauty businesses. They will provide customer management, logistics services and brand activation in the U.S. St. Tropez will be integrated into Emerson's dedicated selling teams to key U.S. retailers with initial meetings having already taken place. Not only does this partnership give us access to a strong go-to-market operator in the U.S. with significant scale and expertise, it also dramatically simplifies our own operating model. We no longer have a need for our own team on the ground nor the expense of a dedicated office in Manhattan. Next, for the U.S., our St. Tropez model is better, simpler and more cost effective. Finally, we have also appointed a new executive with significant experience of the beauty category, not least from many years spent at L'Oréal to lead the St. Tropez business with a single-minded focus on value creation and a dedicated team coming together beneath him. Looking ahead, therefore, we're busy with the innovation plans for the 2026 season and working on celebrating the 30th anniversary of the launch of St. Tropez next year. So lots more to come on St. Tropez. Moving now to the final slide before summing up. As Sarah touched on earlier, we have made progress driving cost efficiencies and identifying opportunities to unlock further pockets of value, all of which will help to fund future growth. To that end, we have announced this morning that we expect to generate GBP 5 million to GBP 10 million of cost savings in FY '26. It's a big number at the top end of the range, but we're hard at work to deliver it. We've already developed a track record and a playbook to do this with a GBP 3 million savings in the U.K. business as Sarah mentioned, removing duplicated structures and operating expense. But more importantly, the organization is increasingly building a mindset of ongoing cost optimization, sometimes through significant structural interventions driven by changes in operating model, but also through the relentless and rigorous pursuit of grinding out the inefficiencies that consumers do not value and should not be expected to pay for. Whether that's saving on the retendering of label production in the U.K., the shifting of surfactant suppliers for our Nigerian business or sourcing a different enzyme for our Radiant laundry brand in Australia. We're also unlocking value from noncore or nonoperating assets, mostly in Asia and Africa. These range from high-end residential property in Ghana and undeveloped land in Indonesia to empty warehouses in Nigeria that are no longer required by the business and pretty much everything in between. The market value of these assets is significant, and we estimate that after fees and taxes, we should generate net cash proceeds of around GBP 30 million from those disposals, the majority of which will complete during this financial year. Common across all the activities shown on this slide is a single-minded pursuit of simplification, whether processes, operations or portfolio and as a result, unlocking value. In summary, while there's a lot going on at PZ and still much more to do to deliver, I want to be really clear that our day-to-day focus is on continuing to drive the underlying business across our priority markets. We're building stronger brands in our core categories, and we're driving more competitive go-to-market execution in our largest markets. The combination of which means we can get more PZ products into the homes and hands of more consumers. So with that, enough of us and a chance for you to let us know what are your questions. Operator: [Operator Instructions] Our first question today comes from Sahill Shan from Singer Capital Markets. Sahill Shan: Forgive me, I'm fairly new to the story, but I've got a couple of questions, if that's okay. Firstly, just on the St. Tropez brand. You've retained it and outlined a new U.S.-focused strategy with Emerson. I suppose my question is what internal KPIs or milestones are you using to evaluate success? And how quickly should investors expect signs of recovery in the brand's P&L contribution? So that's my first question. And the second one is around capital allocation. I think with the Wilmar proceeds and asset disposals, it looks like expected to significantly reduce net debt this year. How are you thinking about capital deployment priorities going forward around reinvestment, M&A or maybe returning capital back to shareholders? Jonathan Myers: So why don't I take the first of those questions relating to St. Tropez and I'll pass over to Sarah on capital allocation. So you're absolutely right. After a very considered process, we took the call to retain the brand because we saw more potential to create future value in doing so than in selling it. We're very clear as we did that, what are the strengths and what are the challenges that we need to address. And the most broken, if I can use that phrase, part of the business was in North America where we had seen double-digit declines. And it's for that reason, we have taken the most dramatic action of any part of the business model in North America effectively to adopt a new route-to-market partner and one who is very, very qualified because they're already operating with the likes of Ulta and Sephora as well as more mainstream retailers in driving both personal care but also high-end beauty care. So that's a sign of confidence for us that we are putting our business in the hands of a proven partner, one who we've known previously, by the way, through work together on Childs Farm. So as we look to the future, ultimately, the most important measure will be value creation. And that is indeed how we have structured our thinking and also our incentivization as we look at the team that will be leading that business. But obviously, what really matters will be driving growth in market share, growth in in-store distribution because ultimately it is a brand that wins in-store and online, but with sufficient social media activation and influencer support. And as that goes through perhaps 1 or 2 seasons, so coming to your question on how long, it's a very seasonal business. The summer is all important or late spring into summer is all important. So we are working hard for summer of '26, but we're also trying to make sure we get ahead of the game for the summer of '27. So I would be expecting to report to you improved momentum as we exit next season, but more importantly, the season after once we have a longer lead time to really address some of the more fundamental opportunities and challenges we see with the brand. But we're very hopeful and confident that we will see that improvement in value creation. Over to you, Sarah? Sarah Pollard: Thanks, Jonathan. Let me touch on the capital allocation point. So you're absolutely right to say we were very clear that the first use of any cash proceeds from the portfolio transformation would be to reduce our level of debt. It takes us for FY '25 to a pro forma leverage ratio of 1.1x and then with further surplus asset disposals and ongoing cash generation in FY '26, south of 1x. And that we see very much within our target range and a level of leverage we feel comfortable with. Then in terms of our broader use of capital, it's first and foremost to drive the organic growth of the business. And of course, as a brand-building organization, that is behind R&D investments, behind marketing campaigns to drive our brands and also CapEx, both to give us more capacity to grow volume, also automation to make sure our product margins remain very competitive. So first and foremost, we see the highest return on our capital being in driving the organic growth of the business. We also are retaining sufficient capital to support a sustainable level of dividend. We don't have a stated policy, but internally, we think a little bit around a targeted cover of 2x and that growing in line with earnings going forward. And then in the surplus capital, I think you can see us putting towards bolt-on M&A if we see opportunities that both sit very neatly within our core markets and our core categories or indeed the opportunity to acquire some additional capabilities, be that digital, and Childs Farm is our last such example in March 2022. And you should think about Childs Farm as being an example of something we might do again when the time is right. And I think we would say all of those things we consider to take precedence over surplus returns because we can do it. We believe we can deliver more return by deploying the capital internally. Sahill Shan: Super. That's really helpful. Just one final one for me. It would be really appreciated. Post these results, it would be good to catch up. Could you get the relevant IR person on your side to reach out to me, and we can take it from there. Operator: Our next question comes from Matthew Webb from Investec. Matthew Webb: I appreciate you've touched on this already, but I wonder if you could just provide a bit more detail on where the GBP 5 million to GBP 10 million of targeted savings are coming from. Jonathan, I think you sort of mentioned that GBP 10 million is quite a big number at the top end, and I would agree with that. So anything that could bring that to life would be very helpful. And then maybe also where your priorities are in terms of reinvesting a portion of those savings? That's the first question. Second question on the EPR. I mean, I infer from the way that you've talked about that, that you've really absorbed that GBP 3 million. I just wondered whether that's correct, whether there were any sort of discussions with your customers about passing that on, at least in part. And then also, I know you mentioned that this had prompted a review of your approach to packaging. And without sort of prejudging that review, I just wonder whether you could give any examples of some of the things you might consider there. And then the third question is just on Indonesia, where obviously, I appreciate your trading has been very strong. So probably the answer is no. But I just wondered whether you'd seen any impact from the recent political unrest in that country. Jonathan Myers: Right. So three good questions, Matthew. Sarah is going to be number one, and I'll come in with the EPR and the Indonesia response for you. Sarah Pollard: So Matthew, let me try and unpack that GBP 5 million to GBP 10 million a little bit. And as Jonathan mentioned, we're establishing a better understanding of where -- if you like, there might be opportunity in our overhead cost base as well as the muscle that we think we very definitely built in terms of optimizing product costs, having in FY '25 integrated our legacy U.K. Personal Care and Beauty businesses. So I think in terms of where we sit today on top of that historical overhead work is recognizing that we inherited a business that needed to unashamedly invest behind capabilities. And they were both commercial to drive the business, but they were also, if I use the word corporate, to meet the PLC bar to make sure we are doing things in the right way. And we have shown both good hard and soft benefits from those investments over the last 3 to 4 years. And we recognize we're in a position now where we can afford to maybe unpick some of those capabilities. So we have quite a strong corporate cost base. And in some of the enabling functions, most notably very close to home and finance, perhaps in HR and IT, we've now reached a level of capability that we think is sufficient. So we have been looking at some of the capabilities we can take away there. That GBP 5 million or GBP 10 million, we've got a good line of sight to the GBP 5 million. We're working on the additional GBP 5 million. It's probably split 2/3 people from increasing spans of control from internal promotions rather than external hires and yes, the net reduction in overall headcount. And then 1/3 is more, if you like, a little bit more tactial, be it the use of consultants, managing travel and expenses and just good continuous improvement and being very cost conscious. So some central capabilities on which we think we now no longer generate a level of return, 2/3 people, 1/3 on [indiscernible]. Jonathan Myers: So if I pick up on the EPR question, then I'll come on to Indonesia, Matthew. So first of all, on EPR, I would say we, along with other manufacturers, have been getting our heads around the implications of this tax. And we're one of the first to report just as the nature of our financial year-end, and we'll be all keenly looking to see what other people are saying as they report in the coming months as well. But I would say exactly as you've identified, really, there are 2 levers that we can pull as we try to deal with what is effectively a new cost in our cost structure. The first is absolutely as part of a broader revenue growth management effort, always looking at our ongoing optimization of pricing and promotion. And sometimes that is tweaking our promotional activity where you nudge up the price per liter or the price per pack. And other times, that can be literally straightforward price increases that we are communicating to retailers and working with them as they choose how much or little of those increases they want to reflect on [indiscernible]. And so that has clearly been one lever that we have been pulling, and we will continue to look at that over time. But also over time, particularly as we learn more about the exact drivers of the EPR tax and how it is applied is how we can optimize our packaging across our portfolio, be that primary packaging or secondary packaging to literally reduce the weight or volume that we are using. And so for example, over time, lightweighting of bottles or lightweighting of caps and also looking at our secondary packaging can be very important and very helpful as we learn how to more effectively optimize the EPR impact, but also continue to provide packaging that consumers find useful and usable. But obviously, then what it's also doing is helping us on our journey of delivering against our sustainability KPIs as well. So we're embracing the challenge, but obviously, we're also learning exactly how the tax works along those manufacturers. As for Indonesia, so just in case anyone else on the line didn't pick it up, there was some social unrest in Indonesia at the very tail end of August and the beginning of September. It was related to housing allowances for MPs and it rather snowballed from there. We obviously triggered our business continuity plan, put it into action. There was minimal disruption to our business. We did actually have our people working from home. So we closed our offices for a period of about 4 working days. Our factories continue to run and our distributors continue to operate. The interesting insight is rather as we have seen with previous events in Indonesia, what it leads to is the shopper actually going to their local open market, I think a wet market rather than a modern supermarket. And so we see a channel switch. And the good news is our distributors are very well placed to be able to support that switch. Our distributors will carry around 7.5 weeks of inventory. So even if we were unable to get some deliveries through, they still have sufficient product in their warehouses to deliver in their localities. So there's minimal disruption. I think in Q1, there's a little bit maybe in our P4 numbers, but all of that will come back in Q2. Operator: Our next question comes from Damian McNeela from Deutsche Numis. Damian McNeela: Two from me, please, this morning. Firstly, U.K. washing and bathing seems to be growing at around about 2%. Can you provide a little bit of insight into both the consumer experience of the category and also the competitive dynamics that you're managing at the minute, please? And then the sort of the last question is around marketing spend. And I think it was held broadly flat this year. What are your sort of expectations for the current year? And also to what extent is AI being used to try and optimize your marketing spend as well, please? Jonathan Myers: Damian, so I'll pick up a little bit on the washing and bathing category dynamics. Sarah can talk a little bit about M&C spend expectations, and I'll then come back with AI and how that can help us optimize and drive higher return on investment. First of all, I think probably in keeping with other consumer categories in the U.K. retail environment, we are seeing an increasingly competitive category of washing and bathing. There's growth to be had. There's still some growth in the market. So it's still an exciting and interesting segment of the market to be playing in, absolutely, particularly if you've got strong brands and strong relationships with the retailers and good go-to-market capabilities. But there is no doubt there is a significant tranche of shoppers, not all, so I don't want to generalize, but a significant tranche that is seeking value. And that's where it collides a little bit with where you're asking about competitive dynamics because we're also seeing some of our competitors, and you will be able to work out from their own comments, which ones I'm talking about, who are trying to rebalance for themselves a focus on value versus volume and perhaps they've been chasing value too much rather than volume. So how is that manifesting itself? There's no doubt there's still an awful lot of people that are interested in shower gels that sell at GBP 1 or less. So we need to make sure that we have pack sizes and promotional price points are absolutely delivered for that. But what we're also seeing is an increasing intensity in the competitive environment on larger pack sizes, and in particular, 500 and 600-milliliter bottles. So whereas in the past, they may have been relatively unpromoted versus the smaller circa GBP 1 price point bottle, you're now beginning increasingly to see quite a lot of price promotion on 500 mL and up [indiscernible]. So we are absolutely sharpening our pencil. We're absolutely trying to respond. It's always a little bit of a lag, as you know, in planning promotions based on the retailers' promotional calendars. But as we move through this year, we will be trying to make sure that we are responding to not just competitive pressures, but also how shoppers are evolving too. So as I say, very interesting subcategory to play in, but very competitive too. Sarah Pollard: Damian, let me address the M&C -- sorry, Damian, you come back. Damian McNeela: No, I'm just saying thank you, Sarah. So yes, brilliant. Sarah Pollard: Thank you, Damian. Let me talk to M&C then. So you're right in terms of the FY '25 margin bridge that we shared this morning. Effectively, what we're saying is that there was no positive contribution to our margin performance in FY '25 from M&C. Or the other way of putting that is we grew our marketing spend in line with our revenue growth, which is actually a good thing. So we probably shouldn't in reality, color code it red. What we've not done and what we won't do is either set internally or guide externally to a set of prescriptive marketing spend targets, either in absolute terms or with reference to our overall revenue because our brand portfolio is so diverse. So Cussons Baby, as Jonathan referenced being sold in wet markets through distributors in Indonesia has a very different support model in terms of the levers of profitable growth than will a St. Tropez being sold in the U.S. So what we do, do on a case-by-case basis is work out a level of sufficiency for each of our brands. And then with increasing scrutiny and data capability, and maybe Jonathan will touch on that as part of the AI topic, really understanding whether that M&C delivered incremental return or not, and if it doesn't move it or optimizing it. But I think what you should be very certain of is the overall direction of travel to underpin our brand building ambition will be a net increase in marketing investments. And if I think about the GBP 5 million to GBP 10 million of overhead cost savings that we're committing to in FY '26, where we talk about reinvesting a portion, marketing investment will absolutely be the #1 candidate on that list for investment, Damian. So hopefully, that answers the question. Jonathan Myers: I'll pick up on the AI part. My flip in response to you, Damian, having known you for a few years, I can say [indiscernible]. So what I mean by lemons is if you look at that Nature Hits Different campaign on the side of the bus I talked about earlier, those very first graphics were actually AI generated. So we are trying to embrace artificial intelligence and how it can help us. I'll come on to some other ways in which [indiscernible] actually AI can help us in the core elements of brand building and as fundamental as generating the graphics, which in that particular campaign, we were able to test and modify and then ultimately bring to market, whether that was on boring old traditional TV or much more interesting and exciting social media. So that's a good example of where we have been developing campaigns using artificial intelligence. But somewhat more fundamentally, as a company, we are also spearheading the use of data analytics and artificial intelligence in how we can improve revenue but also optimize processes and save some of the cost involved with that. So as part of forming a partnership with Microsoft on the Microsoft Fabric platform, we have been exploring, for example, how we can more effectively use our market share data to drive market and consumer insights to help us unlock opportunities for the future, but also how we can optimize our pricing and promotion planning a little bit in that whole area of revenue growth management, but also tackling some of our processes to optimize some of those, not least some of our financial forecasting process internally. So we'll have more to say on that in the future. I don't want to say we're just scratching the surface. It's not that we're doing nothing, but we do see that AI has an opportunity and a part to play for us in the future. Operator: Thank you. With that, that concludes the Q&A portion of today's call, and I'll hand back over to Jonathan Myers for some closing remarks. Jonathan Myers: Thank you, Drew. Thank you to everyone who's called in today and those who asked questions. Hopefully, you've got a sense of we are hard at work. There's plenty done, but we are firmly on the ground. We have plenty more to do, and we have a lot to get on with. So that is what we are going to go and do and ask for all of you in the U.K. as you go shopping in the next few weeks and you see our Christmas gift sets on the shelves, make sure you pick one up and put it in the stocking for someone in your family. And we'll thank you next time we talk. Bye-bye. Operator: Thank you all for joining. That concludes today's call. You may now disconnect your lines.

40天前Insight Analytics约5分钟阅读

GRA.TO 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the Q4 and year-end 2025 Financial Results NanoXplore Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Pierre-Yves Terrisse, Vice President, Corporate Development. Please go ahead. Pierre-Yves Terrisse: [Foreign Language] Good morning, everyone, and thank you for joining this discussion of NanoXplore financial and operating results for the fourth quarter and year-end results of fiscal 2025. The press release reporting this result was published yesterday after market close and can also be found on our website along with our financial statements and MD&A. These documents are also available on SEDAR+. Before we begin, I'd like to remind you that today's remarks, including management's outlook and answer to questions, contain forward-looking statements. These forward-looking statements represent our expectation as of today, September 17, 2025, and accordingly, are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties. Actual results may differ materially, and listeners are cautioned not to place undue reliance on these forward-looking statements. A description of the risk factors that may affect future results is contained in NanoXplore annual information form available on our corporate website and in our filings with the Canadian Securities Administrator on SEDAR+. On the call with me this morning, we have Soroush Nazarpour, NanoXplore Chief Executive Officer; and Pedro Azevedo, our Chief Financial Officer. After remarks from Soroush and Pedro, we'll open the call to questions from financial analysts. Let me now turn the call over to Soroush. Soroush Nazarpour: Thank you, Pierre-Yves, and good morning to everyone joining us on the call. By now, you're all aware that I decided to step down from my CEO role at AGM. Stay on the board thereafter and support the corporation from a technical and a strategic point of view. This decision was taken for personal reasons. I have built this company from the ground up with the Nano team, and I'm very proud of what we have accomplished since inception. At this point, in the growth of the company, it's the right time to make this transition. NanoXplore will, in the very near future embark on the launch of a major graphene contract, which has been a major objective from the team. My successor is inheriting a graphene market leader on a strong footing and will bring the company to its next stage of growth. With that being said, nothing is changing until the AGM. So let's start with a quick review of the broader economic picture particularly tariffs since they continue to affect both our customers and us. Then I will move to our recently announced sales contract and finish with some comments on capital allocation and other parts of our business. From a macro standpoint, the current U.S. administration's trade and economic policies have been disruptive. The impact shows up directly in our customers' planning cycle and therefore, in our own visibility. Practically, this has meant delays in some of our announced contracts and volume reduction on some of our ongoing business. As it relates to our drilling fluid customer, we have made significant progress in the quarter. Specifically, we have completed well trials and are finalizing contract terms we should be able to discuss in the near future. This contract involves supplying our tribograph powder to a major U.S. oil and gas company for its lubricant for both onshore and offshore drilling fluid applications. Tribograph is a high-performance carbon powder, which is being produced in our graphene production facility in Montréal. This high-performance specialty carbon mixture is engineered particularly as lubricant additive for drilling fluids, metal working and stamping, providing superior friction reduction for protection and suspension stability. Tribograph when formulated in drilling fluids has demonstrated outstanding results in the industrial standard tribology and friction testing. Evaluation carried out under a wide range of conditions show that our solution consistently outperformed leading alternatives currently available on the market. This product is the result of years of development and fine-tuning and has already proved its reliability and performance during demanding extended reach drilling operations in the United States. More in-depth data collected during drilling operation has confirmed that Tribograph directly improved drilling performance. The results show faster drilling speeds, reduced rig time and lower overall operating cost. Furthermore, there is clear evidence that tribograph reduces wear on downhole tools, helping extend equipment life and further lowering operating and maintenance expenses. Now moving on to our North Carolina expansion. We have completed installation and commissioning of the equipment and preproduction parts have recently been shipped to our new customer. Those parts are pending final approval. Once that comes true, we will move quickly to scale production at Statesville at the beginning of October. Stepping back, Q4 was a tough operating environment. Revenue declined year-over-year. On the positive side, adjusted EBITDA margins improved, reflecting in part a broader adoption of our high-margin products and cost management. Regarding our dry process graphene and CSPG project, we have made significant inroads with both levels of government and for our electricity allocation. We are satisfied with the progress made with our stakeholders in the project. We will inform investors as we progress and reach key milestones. At the same time, we have ordered equipment to begin industrial scale production of our dry process graphene at our Thimens facility targeting early calendar 2026. This first module gives us between 500 and 1,000 tons per year of capacity depending on product grade. This first production module will allow us to supply larger volumes to our testing partners and will eventually be the first line installed in our new facility. Looking ahead to the fiscal year, we see 2 stages. Our Advanced materials, plastic and composite segment is currently seeing volume reduction from our 2 major customers. That will translate into a challenging Q1 and Q2. But as we move into the back half, we expect growth to be driven by higher margin graphene powder cells, Statesville production ramp up and by volumes resuming in graphene-enhanced SMC. To sum it up, while there are softer volumes in the near term, there's plenty of good news as well. Q4 delivered strong adjusted EBITDA margin, we are in the final stages of securing a major new oil and gas customer while progressing with other ones for our highest margin business segment. We completed the Statesville expansion and already have parts shipping, and we made solid progress on the dry graphene project as we gear up for future growth. Overall, we expect both growth and profitability to be weighted toward the second half of the year. With that, I'll now turn the call over to Pedro to walk you through our financial performance. Pedro Azevedo: Good morning, everyone. Today, I will begin with a review of our Q4 and full year financial results followed by an update on financial aspects of our 5-year plan and conclude with some commentary on near-term CapEx spending. Total revenues in Q4 were 17% lower than Q4 2024 at $31.7 million. This decrease was mainly due to a reduction in demand from our 2 largest customers as volumes have slowed to historically low levels after strong demand levels last year. Our 2 largest customers, along with others in the industry have reported layoffs and cadence reductions due to the current economic environment. Although revenues from parts and materials were lower, tooling revenues were higher due to the continued supply of tools for new programs and expansion of an existing program now completed. As previously indicated, this higher level of tooling will be the case during fiscal 2026 until part production starts on new programs during calendar 2026 and early 2027. Adjusted gross margins, which exclude depreciation as a percentage of sales continued to increase during the quarter to reach 24.7%, an increase of 110 basis points year-over-year driven mainly by positive variances on tooling revenue recognition, partly offset by lower manufacturing overhead cost absorption on lower volume. This year-over-year margin improvement has been the trend for over the last 12 quarters, and we are pleased that it is continuing. Looking back at the progress made over the quarters, I wanted to highlight that we started with an adjusted gross margin of 3% in Q1 of 2022 and have progressively improved quarter-by-quarter to reach 24.7% this past quarter. These improvements have come from improved operational efficiency, increased volume of both graphene-enhanced parts and other non-graphene enhanced parts, increasing graphene powder sales and a higher U.S. dollar. Adjusted EBITDA was $2.5 million, equal to last year and was comprised of $2.7 million in the Advanced materials, plastics and composite products segment, a decrease of $600,000 versus last year and by a loss of $247,000 in the Battery cells and materials segment, an improvement of $600,000 versus last year. With regard to our balance sheet and cash flows, we ended the quarter with $18.6 million in cash and cash equivalent and $5.2 million in short-term and long-term debt. Operating cash flows amounted to $1.8 million, mainly from changes in working capital items. Cash flows from financing activities were positive $1.8 million resulting from equipment lease financing advances inflow of $3.9 million and debt and lease repayments of $1.9 million. Finally, cash flows from investing activities were negative $5.4 million, mainly due to capital expenditure payments related to our 5-year strategic plan. Our cash, along with the unused space in our revolving credit lines resulted in a total liquidity of $28.6 million at June 30. Looking at our full year results. While sales were strong in the first half of our fiscal year and in line with expectations, the second half was disappointing as our 2 largest customers reduced their production cadence. Nevertheless, within our total sales, usage on sale of graphene powder continue to grow. Sales for the year were slightly below last year at $129 million, but with a record adjusted EBITDA of $6.1 million. If we look at the segments, adjusted EBITDA in the Advanced materials, plastics and composite Products segment reached $6.9 million, an improvement of $1.7 million versus fiscal year 2024. During the year, gross margins, excluding depreciation, increased from an average of 21.1% in fiscal 2024 to an average of 22.3% in fiscal 2025. Adjusted EBITDA loss in the Battery cells and materials segment was $725,000 compared to a loss of $2.7 million last year, mainly due to the cost reductions in the VoltaXplore initiative. With regard to the expansions of graphene-enhanced SMC capacity, expansion in our Beauce, Quebec plant was completed during the quarter. This expansion increased our capacity to produce parts for one customer by 50%. However, the capacity expansion currently remains underutilized due to the reduced demand in the mid- and heavy transportation industry. Our U.S. expansion, which includes both graphene enhanced SMC as well as additional capacity for the composites business is near completion with most of the equipment having been delivered and installed during the summer months. Start of production of a new program at the Statesville site will begin in early October, adding to revenues in our Q2. Lastly, in August 2025, NanoXplore was selected to receive up to $2.75 million over the next 3 years from Natural Resources Canada under the Energy Innovation Programs Battery Industry Acceleration call for proposals for the research and development on the use of silicon graphene in ultrahigh-powered cylindrical cells. Turning now to our near-term CapEx spending. With regard to CapEx spending, as expected, we spent approximately $5 million on CapEx in Q4. And expect to spend another $3 million to $5 million in each of the next 2 quarters as we complete the spending on the U.S. expansion initiative and the graphene-enhanced SMC initiative of the 5-year strategic plan. As previously mentioned, this will be financed through our RBC credit facility and mainly with equipment lease financing. With that, I will turn back to PY. Pierre-Yves Terrisse: Thank you, Pedro. Operator, we can now open the line for questions. Operator: [Operator Instructions] Our first question comes from the line of Amr Ezzat from Ventum Capital Markets. Amr Ezzat: I'd like to first acknowledge yesterday's news, Soroush, congrats on everything you've achieved in building NanoXplore has been certainly great to follow the story from your early days, and I'm glad to see that you remain involved as adviser and Vice Chair but maybe if we could start there, can you walk us through what drove the decision and the timing of the decision that you guys are in the cusp of commercialization. Then from an investor viewpoint, how should we think about I guess, the continuity in customer relationships, especially when it comes to powder commercialization as well as the strategy going forward? Is the change signaling a different direction? Soroush Nazarpour: Right. Right. All right. So let me start by saying I'm pretty happy with this transition, and it was a work in progress for quite some time. It's -- just let's step back. It's very normal for startups to be highly dependent to the founder. And this has been something that has been recognized in the company for the last few years. So throughout the time, Rocco and Pedro that are both pillars of the company. They are -- they took slowly some of the responsibility that I have throughout the years. And the best example of that the last 2 years, both of them have been involved directly as well with the Board of Directors reporting. So this has been a transition in the making for quite some time. Rocco is a fantastic executive. We have been working together for many years, and I'm very, very happy for this transition, seeing Rocco coming on board and taking lead from the December. Now on the personal side, I have decided to move on sometime in the next year. So we decided to put the transition really on the AGM. So I have still a good 6 to 9 months of being present physically actually to be able to support Rocco in the transition. Going forward, I'm also continuing in the Board of Nano and I'm a big supporter of the company. I started this, and I will continue to be the cheerleader regardless of the title. Having said that, I'm actually continuing with the company. The concept is not for me to move away. I will -- I'm still continuing to be here in supporting the business. So I see it as a very positive transition. I actually think highly dependent corporation to the founders are a risk, I believe we've done a great job with the Board of Directors of Nano and Rocco and Pedro to really manage the transition in a very positive way and something that we, I believe, removed the risk from the company. So all in all, very positive. I'm very happy. And on the timing of that. So we are in the cusp of signing a contract with a major oil and gas company. And that's what we have reflected in the script as well. This is -- the good news is actually we've been able to conclude this contract very soon, we will release the news related to that. And I think it's the best time the company is doing fantastic. The graphene sales is in the best shape possible. So I think it's a great time actually for this transition. Amr Ezzat: Fantastic. That's extremely helpful and congrats again. So let's go to the other big news like that you just mentioned on the prepared remarks. I think the wording that you used is you are finalizing the contracts on the drilling fluid side for powder commercialization, obviously, can you give us -- and I'm not sure if you can, like a sense of size and pricing of such a contract, then do we think of that as a one-off contract or is that a multiyear sort of contract? Soroush Nazarpour: So let me say that we actually recorded this script yesterday, but today, I can tell you the contract is concluded. So that's the positive side. I mean the contract is done. The press release will come out. Let me talk about what is this tribograph. So tribograph is, as I said in the script, is the mixture of carbon. It's technically produced in our Thimens facility. It has quite extensive lubricity properties. So it's very useful for the drilling fluid application and also other sort of metal working and so on. What it does is it brings down the friction while drilling. So moving away from the technical that how is doing it, it translates into cost reduction for the oil and gas companies and for the drillers. So this type of graphene type solution has -- are always exposed to extra cost for users, hasn't something that we have to manage today. This product is actually reducing the cost. So adoption going to be very strong. In terms of details of the contract, you got to wait for the press release to come, but it's a multiyear supply contract. That's what I can say today. But you will see the details of the contract and all the commitments very soon. Amr Ezzat: Fantastic congrats on that. And if you'll allow me 1 more. I mean, you guys spoke at length about the economic environment and your 2 largest customers have like been holding back volumes and certainly in Quebec, there's been a lot of local, I guess, coverage around PACCAR Sainte-Thérèse plant, whether it's the layoffs or the production cutbacks and a lot of it actually is post your Q4. So I'd like to understand the magnitude of the volume softness in Q1 for both your large clients relative to Q4, then when thinking about fiscal '26, should we view this as largely a Q1 event, then Q2 is a rebound? Is that a fair statement? Pedro Azevedo: So Amr, Q1, in terms of specific percentages, I'd rather not talk about those because it is a subset of the whole of NanoXplore. The decrease has continued throughout Q1 from Q4. So you can make it with what you will. You're right, the PACCAR plant closure of a shift and downsizing is definitely a direct impact on our Beauce plant. It's not an impact on other businesses, if that helps a little bit. When it comes to Q1, Q2, yes, it is mainly a Q1 issue because we have a lot of stuff coming into Q2 that we've talked about in the script. New programs are starting in Q2, new customers starting in Q2. While the issue related to the 2 largest customers might continue into Q1 and Q2, A couple of things. Number one, all of these new programs will offset some of that in H2 in our second half, we expect the transportation industry to start recovering, even if it's just a little bit with everything that's being built up, we see H2 being a recovery. So coming back to your point, Q1, probably the area where the softness will be mostly viewed, but then Q2 ramp-up will start. And then H2 will be, I would say, back to normal and then some... Operator: One moment for our next question. Our next question comes from the line of Baltej Sidhu from National Bank of Canada. Baltej Sidhu: Congratulations on the transition, Soroush. So just a question on the 5-year strategic plan and mainly the graphene and battery material expansion. Can we get an update on the outlook for this portion of the strategic plan? Have you had any further conversations with Hydro-Québec on the required power allocation? And this is a follow-up to that. If not, have you decided to make any change to the initial plan, whether it's exploring different geographies or manufacturing sites and the like. Soroush Nazarpour: Right. So we can only discuss what we have been able to discuss from the energy side. But I can tell you, we are happy with the outcome of that. There is no changes today. We're continuing -- we were in a point to mix switch to the program in the last during the summer. But I'm happy that things evolved, and we have -- we're happy with the outcome. Having said that, any sort of release needs to be managed by the government. So we have to follow those requirements. There is no change. We are still on -- the plan is still the same, and I hope that in the next couple of months, we will get -- you guys will get a lot of positive updates about that. Baltej Sidhu: Sounds great. And then just on the financing side of things. Have we seen any additional sources of financing come through or increased customer contributions or is that still that same stack with investment tax credits probably debt and the government funding? Soroush Nazarpour: We will update some of the CapEx numbers for sure, a little bit later. But the main component of this is to announce the government supports. And following that, we will have -- you will have more clarity about the numbers. Baltej Sidhu: Great. And then on the CSPG side of things, given the newly proposed tariffs by the U.S. on Chinese graphite, are you seeing any more indications of customer and down on this port product or any evolution in conversations that you've had in the past few months? Soroush Nazarpour: CSPG continues to be really undersupplied in North America, and the demand is there even though some of the demand related to EV looks to be slower than in terms of growth than anticipated, but the production is still pretty much nonexistent. So further pressure on Chinese graphite supply really doesn't change at this point. There is no -- there's not enough CSPG supply in North America. As the graphite and the graphite -- secondary transport graphite products are more tariffed, there is still -- there's more need for local production. So I don't see this to make significant changes in the landscape today, but it certainly makes it more difficult for Chinese suppliers to provide the product to North America. So it's a positive momentum for us. We're seeing as well new entrants of large companies into the CSPG. So again, that shows that this supply/demand is still attractive for us to play in it. But at the end of the day, I think the impact of the tariff on the graphite is minimum. Baltej Sidhu: Great. And then just on the tariff situation, just another follow up here is given the pressure on graphite supply, have you seen any changes in your contract with your supplier and/or your supply chains in sourcing graphite. And if you're able to give us any sense of kind of a contract length with the current Canadian supplier. Soroush Nazarpour: No, we have multiple sources for the graphite. The graphite availability is still a -- graphite market as a whole is oversupplied. So we don't really see any challenge in getting the graphite that we need. So again, it's not something that we are concerned at this point. Baltej Sidhu: Okay. And then just the last one for me, if I may, on the SMC expansion. What's the order book looking like for this facility? I recall in Q3, you had mentioned that there were around 4 programs for around $30 million to $35 million in sales. Have you seen increased traction or an evolution in conversations there? Pedro Azevedo: So as Soroush kind of mentioned, one of the issues that we did see is that the awards that were made and we've announced have been delayed. So we thought that they would have started by now, but they haven't, but they will be starting in Q2. When it comes to order book, there are various programs that are in the magnitude of $10 million to $20 million in the next 12 months, let's say, and then further another $10 million, give or say, take in 2017. So we've been awarded all of these projects into the next 2 years. But for the plant in Statesville and the North Carolina operations, these programs will start in the next few months in the next month, actually, and grow to 2027 when all these awards will now be in production. Operator: One moment for our next question. Our next question comes from the line of Marvin Wolff from Paradigm Capital. Marvin Wolff: Okay. I'll try to tone it down, Soroush. I'd just like to say congratulations. You've built a great company here, Soroush. Hats off to you, it's a big achievement. And sorry to hear you stepping aside, but I fully understand it from the evolution of the firm, and I think all shareholders down the road will find this as a good move. I had a question with regard to shovels in the ground. On the expansions. What can we kind of think of there now? Soroush Nazarpour: Well, I mean, we talked a little bit about the dry process and CSPG project. There has been a couple of milestones for us to get there before starting the construction. Of course, the power requirement was one, government support was the other one and then putting everything together and starting the construction. I think we are almost there. We can't -- I can't update you as like a press release or something because there are other partners that need to let us announce it, like Hydro-Québec as well. the government. But I'm quite confident that this project can move forward. What I'm seeing today is positive and we can go forward. Now in terms of the shovel in the ground, we have to build a plant, and this potentially starts. Marvin Wolff: Yes. Do you think you'll be able to catch this season or you got to wait through the winter? Soroush Nazarpour: Yet to be seen, but I think the supply-demand dynamic is not going to change by a couple of quarters. that's for sure. But I hope that we can start this very soon. Operator: One moment for our next question. Our next question comes from the line of Michael Glen from Raymond James. Michael Glen: Soroush, thank you for everything with NanoXplore over the years, all your patience with me in touring the facilities and bringing me up to speed on the future of graphene's all been really, really fun and interesting to watch. Soroush Nazarpour: Thank you very much. Michael Glen: Just to come back on the SMC facility and that outlook that was asked previously. When you -- Pedro, I think you were speaking to that. Like when you add all this together, you mentioned a number of different order items in the order book. When you add all those together, looking out say, in 2 years from now, what would the -- can you give a range like what the revenue contribution from all of this might look like? Pedro Azevedo: So just on the SMC initiative that we've been putting together, we expect a minimum in 2 years, and I think your time line is right because it's going to still take a little bit longer than from today to ramp up to that, but it is ramping up. So think of this as a ramp up over the next few years. It should reach around $30 million to $40 million in the next 2 years as these programs are all rolled out and the SMC initiative has really come to fruition, let's say, as we had originally planned. Michael Glen: Okay. And would you say that, that is largely in line with current gross margins? Pedro Azevedo: That will all be at current gross margins and possibly even a little bit more as we fill plants, the margins, the overheads gets absorbed by more revenue and therefore, the margin should improve. Michael Glen: Okay. Okay. And then back to the drilling fluid products. I can't remember the name of it, but is this a patent protected product or IP protected, just... Soroush Nazarpour: Yes. It's protected by intellectual properties. And it's pretty much coming out of the same graphene production line. It's the modification that we did on the output that to make it more suitable for lubrication properties... Michael Glen: And how does -- I know that we're waiting for some of the details, but how does the anticipated customer demand aligned with the installation you have right now? Soroush Nazarpour: It's -- I will -- I think it's better to wait and see the press release before I speculate on the volume. Michael Glen: Sorry, I missed the last part. What was that? Soroush Nazarpour: I think it's better to wait for the press release. This is a little bit of a speculation at this point. Let's get the press release details are in there. All in all, I would say I'm very happy with the outcomes, potentially the biggest graphene contract -- well, it's the biggest graphene contract for Nano and potentially the biggest graphene contract in the history. But let's wait for the contract to come out, and there's more details in there. Operator: Okay. Thank you. At this time, I would now like to turn the conference back over to Pierre-Yves for closing remarks. Pierre-Yves Terrisse: Thank you, operator. Is there any further questions from the analysts? Operator: There is not. Pierre-Yves Terrisse: Okay. Well, I'd like to thank everyone for participating in this call, and have a great day. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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